I’m going to admit that I do not understand George Friedman’s reaction to Alexei Anatolyevich Navalny’s death.

My own reaction is that I deplore his death which seems so unnecessary and offer sympathies to his widow and the Russian people. It illustrates the sorry state of Russian politics.

The graphic above is from Visual Capitalist.

I sincerely wish they had gone all the way back to 1970—the trend is even more pronounced.

This development concerns me because I don’t think it is consistent with an egalitarian society. Basically, we’re increasingly becoming a plutocracy with hereditary plutocrats, a large portion of the society largely dependent on government handouts, and a struggling middle class.

At Tablet Michael Lind recounts a debate on immigration between two formidable, Nobel award-winning economists: Paul Krugman in 2006 and Paul Krugman in 2024. Here’s the conclusion:

In fact, nothing has changed in the field of labor economics over the last two decades to refute the views that Paul Krugman held about immigration in 2006. What has changed is the class composition of America’s two major parties. In 2006, Sens. Barack Obama and Hillary Clinton voted to erect massive fences along the U.S.-Mexican border. A decade earlier, in 1996, Democratic President Bill Clinton signed the Illegal Immigration Reform and Immigrant Responsibility Act, which expanded the list of offenses to be punished by deportation. Clinton had appointed the U.S. Commission on Immigration Reform, chaired by Black liberal former U.S. Rep. Barbara Jordan, which called for cracking down on illegal immigration, punishing employers of illegal immigrants, and drastically slashing legal immigration numbers in order to protect American workers, including former immigrants, from unfair competition. All of these measures and policies were denounced at the time by Republican libertarians and U.S. business lobbies, for all the reasons that Krugman 2006 made clear.

Within the last generation, however, the Democratic Party has lost the allegiance of most white working-class voters, along with a growing share of working-class Black and Hispanic voters. Meanwhile it has become the home of affluent, educated whites, a dwindling number of nonwhites, and most immigrants, along with many large corporations and the billionaires who profit from them.

Just as Republicans favored wage-suppressing mass immigration when they were the party of the affluent, college-educated overclass, today’s elitist Democrats now favor a never-ending stream of immigrant workers with little or no bargaining power for their constituents—like Silicon Valley donors whose firms depend on exploiting H-1B indentured servants, and urban professionals whose two-income lifestyle depends on a bountiful supply of cheap nannies, maids, restaurant workers, and Uber drivers.

Actually, I think he’s drawing a false dichotomy there. The neoliberal strains remain quite strong in both the Democratic and Republican Parties, just as they were 30 years ago. They were as wrong and feckless then as they are now. And here’s why:

Between 1980 and 2010, chiefly as a result of the massive expansion of the H-1B program, the number of American computer science jobs held by foreign-born workers exploded from 7.1% to 27.8%. In 2021, 74.1% of the 407,071 H-1B visas issued to specialty foreign workers by the U.S. went to nationals from India. The overwhelming share of young Indian men among H-1Bs reflects not any extraordinary skills that they alone possess but rather their willingness to work for lower wages and benefits than their American counterparts, as well as the accidental importance of Indian labor contractors or “body shops” as suppliers of indentured servants to U.S. companies beginning in the 1990s.

The U.S. Department of Labor sets four H-1B wage levels, based on the median wage of other workers in the same occupation and region, with the help of survey data from the Occupational Employment Statistics survey by the Bureau of Labor Statistics (BLS). As Daniel Costa and Ron Hira point out in a 2020 study, the Department of Labor sets the two lowest wage levels for H-1Bs well below the local median wage. “Not surprisingly,” Costa and Hira write, “three-fifths of all H-1B jobs were certified at the two lowest prevailing wage levels in 2019.”

This finding bears some attention. If H-1Bs are all geniuses with unique and valuable skills that both American workers and immigrants with green cards lack, then why are tech firms and their contractors so determined to pay most of their H-1Bs the very lowest wages permissible under U.S. law? Costa and Hira point to corporate savings on wages: “Wage-level data make clear that most H-1B employers—but especially the biggest users, by nature of the sheer volume of workers they employ—are taking advantage of a flawed H-1B prevailing wage rule to underpay their workers relative to market wage standards, resulting in major savings in labor costs for companies that use the H-1B.”

The main effects of this development are to place downwards pressure on wages for software developers and boost the stock values of companies that depend primarily on software development. My next post today will be a graphic illustrating the increasing amount of national wealth being held by a very small number of people. If you want to know why that might be, this is it.

I very much liked Matthew Karp’s piece at The Nation, largely a review of Teixeira and Judis’s books, The Emerging Democratic Majority and their recent Where Have All the Democrats Gone?. Here’s the quick summary of the latter work:

To examine how and why, Judis and Teixeira have broken Where Have All the Democrats Gone? into two main parts that assert two distinct arguments, each existing in some tension with the other. The first part is essentially historical and offers a detailed review of national politics since the 1960s, with a special focus on the causes and chronology of class dealignment. Here Judis and Teixeira contend, as forcefully as any member of the Democratic Socialists of America, that “neoliberal” economic policies—under presidents Carter, Clinton, and Obama—bear the lion’s share of blame for the working-class defections from the Democratic Party.

The second part of the book goes in a different direction. It is prescriptive, with the authors offering plainspoken, poll-tested advice to the Democratic Party today. To once again become “the party of the people,” the Democrats must do more than merely return to the liberal economics of the New Deal; they must also break with the “cultural radicalism” that, Judis and Teixeira contend, continues to alienate working-class voters from the party. Now sounding less like leftist tribunes than centrist op-ed columnists, the authors call for a pragmatic “middle ground” on questions of race, gender, climate, and immigration.

Predictably enough for an author writing in the reliably progressive The Nation, Mr. Karp scoffs at their prescriptions.

But Judis and Teixeira are not edgy cultural conservatives, just unfashionable moderates. They advocate a suite of positions, from anti-discrimination laws to mixed investment in gas, nuclear, and green energy, that might have passed for liberal common sense in the 1980s but promise to win few disciples today.

What follows is a pretty good description of the development of the two parties since the early 1970s. I found the description of recent developments interesting:

Judis and Teixeira think they know why. As organized labor’s strength has declined, its influence within the Democratic coalition, they argue, has been replaced by progressive think tanks, foundations, media outlets, activist groups, donors, and academics. These institutions, which function as what the authors call a “shadow party,” largely reflect the liberal and left-wing values of “young professionals in the large postindustrial metro centers and college towns.”

I think it was Matt Yglesias who characterized this evolution of the party more succinctly as people who contribute to campaigns or work on campaign staffs. This is the kernel of Mssrs. Teixeira and Judis’s prescriptions:

To regain these voters, Judis and Teixeira conclude, Democrats must trim their sails on these subjects and reclaim a middle ground. In the authors’ view, this does not mean altering the party’s basic commitments to civil rights, lawful immigration, and action to combat climate change. But it does involve a retreat from positions that, polls suggest, have put the party at odds with a majority of voters, such as supporting trans athletes in women’s sports or opposing the use of natural gas. It would also mean adopting a more cautious, moderate vocabulary on these and related questions. Rather than heighten the tensions in an unwinnable war of values, Democrats should seek to lower the temperature with bland affirmations of patriotism, simple opposition to prejudice, and a general openness to disagreement.

That leads to the crux of the piece:

Judis and Teixeira can brandish all the polls and surveys they like, but they are proposing a cease-fire to an army that has swept the field: Why should Democrats abandon the culture war when it has yielded them so much fruit?

The Democratic coalition today is built to fight, and perhaps to win, this struggle. It is not built to become a “party of the people,” a vehicle to oppose elite rule, or a force for major economic reform. Insofar as the upper-middle-class Democratic base finds itself pinched or bruised by the reckless march of capital, it may consider mild adjustments to the fiscal or regulatory order; insofar as it wishes to reward the less-advantaged voters inside the coalition, it may support mild increases in welfare spending. But a party that wins 60 percent support from the wealthiest 10 percent of the country and 75 percent support from top earners in business and finance and that claims enthusiastic allegiance from much of the billionaire class will not organize a new New Deal. Its “material interest and social position” simply does not favor a transformation of class power in the United States—or, to say the same thing in different words, a government that can deliver good jobs, healthcare, housing, and education to all its people. To change the world, the Democrats will first have to change themselves

While I hail self-examination I doubt that the party is capable of doing it for a reason alluded to above: the sense of entitlement.

My interpretation of what has happened over the last 50 years is somewhat different, either from Mr. Karp’s or from Mssrs. Teixeira and Judis. I think that the Democratic Party has increasingly become the party of government, which includes not just the civil bureaucracy but public employees’ unions, “progressive think tanks, foundations, media outlets, activist groups, donors, and academics”, and others who owe their livelihoods in whole or in part to government including lawyers, healthcare workers, and even ABC, Meta, Amazon, and Microsoft. In preemptive response to complaints about my including those last four, there is nothing natural about any of their business models and they could be wiped out overnight by regulation. Their managements are surely aware of that which is why they are acting to prevent that from happening.

The dirty little secret is that government depends on a healthy private sector. It can’t prosper without it. What people tend to forget is that government’s revenues derive from two sources: taxes and what is sometimes referred to as “money creation”. Taxes by their very definition remove money from the private sector, reducing its output. Government redirecting that money inevitably results in deadweight loss. “Money creation” beyond the growth of aggregate product, similarly, takes money away from the private sector.

One might wonder why, based on those sentiments, I am a Democrat. The reason is simple. Anarcho-capitalism does not result in paradise on earth but in “nature, red in tooth and claw” with the strong preying on the weak. I want a prudent, temperate, moderate, non-corrupt government rather than no government at all and the only way I see to accomplish that is with better Democrats.

At The Hill international relations prof Andrew Latham warns about Ukraine’s meager prospects for victory in its war with Russia:

In professional journals, on influential websites and across the full spectrum of media outlets, observers, analysts and pundits alike continue to inform us that, yes, there is a way for Ukraine to prevail over Russia, expelling the latter from all of its territory, including Crimea.

One might claim that these arguments are being advanced because the facts on the ground warrant them; because the shifting geopolitical and battlefield realities clearly indicate that the military balance is tipping in Ukraine’s favor. As Ukraine acquires more weapons (and more sophisticated weapons), it will inevitably achieve the kind of tactical advantages that will propel it first to operational and then to strategic breakthroughs, culminating in total victory. All that’s required is one more mobilization of Ukrainian youth, one more tranche of Western financial aid, one more delivery of American, French or British wonder weapons.

But the strategic, operational and tactical realities of the war simply don’t support any version of this argument. Ukraine is not prevailing at the tactical level — if anything, Russia’s advantage at there is growing rather than diminishing, as Russia outpaces Ukraine in adapting to the evolving realities of the battlefield. The net result? Russia not only remains capable of sustaining the kind of defense-in-depth that has completely frustrated all Ukrainian offensive efforts, but is increasingly able to mount successful offensives in places like Avdiivka.

In short, Russia is winning the war and there is little to suggest that any foreseeable political, economic, tactical or technological developments are likely to alter that fundamental reality. So why are we seeing arguments about an ultimate Ukrainian battlefield triumph, in the face of all the devastatingly contradictory evidence?

Well, applying Occam’s razor — the principle that “other things being equal, simpler explanations are generally better than more complex ones” — I would suggest that the delusional belief that there is a pathway to total victory for Ukraine is based less on evolving military or geopolitical realities than on a simple psychological dynamic, one best summed up in the concept of “commitment escalation.”

According to this concept, individuals or groups sometimes exhibit a tendency to persist with a failing argument, even as that argument becomes increasingly untenable in light of the facts. This behavior is marked above all by an adherence to prior commitments — sunk costs, as the economists might put it — regardless of their present plausibility or rationality. It is a psychological dysfunction.

I arrived at that conclusion well over a year ago and I think that any rational reasonably well-informed individual would. What has transpired since is the futile loss of thousands of Ukrainian lives and the destruction of billions of dollars worth of property.

The challenge today is not how to produce a total Ukrainian victory but how to avoid total Ukrainian defeat. That’s why I support continued U. S. support for Ukraine. I also emphasize that we have a moral obligation to ensure that out aid is used properly, something the Ukrainians have amply demonstrated is necessary.

Via this post by Elizabeth Beattie at Japan Times comes the news that Japan’s GDP has declined to the fourth largest in the world, behind Germany, China, and the United States:

Setting aside the debate over the state of the Japanese economy, the figures have seen the country lose its position as the world’s No. 3 economy in dollar terms — slipping behind Germany — as was projected last year by the International Monetary Fund.

India is ultimately projected to overtake both countries.

Despite a prolonged period of low growth, Japan had managed to maintain its standing as the world’s third-largest economy for more than a decade. It was previously the world’s No. 2 economy after the United States, but China claimed that position in 2010.

Japan’s step down the economic rankings is partly a symptom of the yen’s stubborn weakness against the dollar. At the same time, the Japanese currency’s weakness is also reducing consumer purchasing power by contributing to inflation through increased import costs. Private consumption declined 0.2% in the October-December period from the previous quarter.

It’s hard to know how to react to this news. For the couple of decades Japan’s per capita GDP although noisy has been more or less flat.

Find more statistics at Statista
That means that despite Japan’s declining population and deteriorating dependency ratio, standards of living in Japan have been pretty stable.

Japan’s public debt to GDP ratio is simply staggering—264%. That debt overhang is clearly a drag on Japan’s GDP. The questions are when will that be felt and what the reaction of the Japanese people to it will be?

Karl Rove offers advice to the Biden campaign in a piece at the Wall Street Journal. Here’s the kernel of the piece:

Mr. Biden made a mistake when he complained at an already ill-conceived press conference last Thursday that it “wasn’t any of their damn business” when the special counsel asked when his son Beau died. The president’s attempt to sidestep his failure to recall the date fell flat.

It won’t turn things around, either, to ask voters to “look at all he’s accomplished,” as Jill Biden did in a campaign email after the special counsel’s report. Team Biden has beaten this drum for more than a year, yet his numbers remain underwater at 39% favorable, 57% unfavorable in the RealClearPolitics average. If bragging could raise numbers, Mr. Biden’s would be in the stratosphere.

Vice President Kamala Harris didn’t help by asserting that she’s “ready to serve” if something happens to Mr. Biden. That was better left unsaid. Ms. Harris boasted that anyone who observes her as vice president “walks away fully aware of my capacity to lead.” That reminds swing voters that Mr. Biden might not last until the end of a second term.

Similarly, Mr. Biden’s attempts at humor underscore the problem more than they obscure it. Joking as he did Monday that “I’ve been around a while, I do remember that” won’t make him sharper, younger or stronger. To voters looking at an increasingly dangerous world, this is no laughing matter.

To win, Team Biden has only one option—an all-out attack on Mr. Trump, using every means of communication every day in an assault of unusual scope and expense. Victory would require Mr. Trump’s cooperation in making truly outrageous appeals to his hard-core supporters that alienate swing voters. Fortunately for Mr. Biden, the former president has done his best to help.

He continues by considering what he refers to as the “LBJ option”—the president withdraws after April 3:

By April 3, almost 78% of Democratic convention delegates will have been selected and by April 29 nearly 85%.

Note that VP Harris would not automatically inherit President Biden’s delegates. Essentially, it would be up to the party leadership to determine who the candidate would be. The “smoke-filled room” would be a Donnybrook. But that is what would happen. Don’t be surprised if that’s exactly what happens. I wouldn’t be surprised if the party leadership starts putting pressure on President Biden to do just that.

Last night I made shrimp gumbo for our dinner. No paczkis here.

Although I didn’t grow up with cajun cooking I feel that I come by my fondness for it honestly. My French ancestry in the United States goes back about 180 years.

Tonight I plan to make a variation on Beef Wellington. My wife doesn’t care for foie gras so my variation will approximate the texture but not the flavor. To disabuse any notion that all of this is pretty lavish, my shrimp gumbo had about two 16-20 shrimp per serving and my Beef Wellington will have about 3 oz. of filet per serving. So it’s a little expensive but not excessively so. I’ve got to do something nice for Valentine’s Day.

I wanted to call notice to this piece at The Hill by Jacque Porter both because it illustrates some assumptions and patterns of thought and because it’s so consistent:

Minimum wage is a topic that draws a lot of attention, especially in California, a state that has one of the highest minimum wages in the United States.

In a debate Monday night, Rep. Barbara Lee (D) defended her previous advocacy for a $50 minimum wage.

“In the Bay Area, I believe it was the United Way that came out with a report that very recently $127,000 for a family of four is just barely enough to get by,” Lee said. “Another survey very recently: $104,000. For a family of one, barely enough to get by low income because of the affordability crisis.”

A wage of $50 an hour would total $104,000 over the course of a year.

“Just do the math. Of course we have national minimum wages that we need to raise to a living wage,” Lee said. “We’re talking about $20, $25 – fine. But I have got to be focused on what California needs and what the affordability factor is when we calculate this wage.”

Here are some of the assumptions made:

• It assumes that the price elasticity of demand for labor is zero.
• It assumes that the price elasticity of demand for a Big Mac is zero.
• It assumes that fast food franchise owners make a lot more money than they actually do.
• It assumes taxes as a percentage of GDP can be raised indefinitely OR that we can extend credit to ourselves indefinitely without adverse effect.

If those things were not being assumed, Rep. Lee would recognize that were the minimum wage raised to $50/hour it would either decrease the number of minimum wage jobs sharply or people who employ workers at minimum wage would raise prices to make up the difference or take a pay cut or both. I don’t believe that the price of a Big Mac can be increased to say, $25 without reducing the number of Big Macs sold. I also recognize that the margins on fast food franchise are in fact quite tight or, said another way, the owner can’t take a pay cut for such a large raise to minimum wage earners without reducing his or her earnings to zero.

But it’s enormously consistent. I suspect she believes that you can increase the number of low-wage workers indefinitely without putting downwards pressure on wages, that these low-wage workers should be able to support a family on minimum wage, and that if the number of low-wage jobs decreases drastically as a consequence of an excessively high minimum wage, the government should make up the difference, either with tax dollars or borrowing.