Weekly Letter to the President
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ofthisandthat.org. All rights
INAUGURATION, January 20, 2009
Drunk in its stale air
For two hundred years.
Fettered in mind and body,
The soul, the safe escape
To let me breathe the cries
Of my heart singing
Tears of mel-an-choly.
The tears flow free today
Washing the stains of blood
And sweat in brotherhood.
Raise the curtain then an'
Let the world look in
On this promised land --
We breathe free today.... almost.
--- Arshad M. Khan
We will be known forever by the tracks we leave.
--- Native American proverb
February 10, 2017 (posted February 14, 2017)
Mr. President: It is a conceit of democracy that opposing parties, after months of
trying to convince the public the other would be a disaster for the country, should
after the election cooperate for the good of the whole.
In fact, with rare exception, what happens was postulated by the Italian economist
Vilfredo Pareto over a century ago. Power is contested between competing elites,
each wooing the general public, and to the winner the spoils, distributing enough
crumbs to maintain an orderly society.
The last U.S. president was a multi-millionaire. His party's 2016 candidate, Hillary
Clinton, was even wealthier, contesting of course a billionaire rival. A majority of U.S.
congressmen are millionaires and the median net worth of Senators is $2.7 million.
Since the election of Donald Trump, the stock market has been booming. He
promises huge tax cuts for corporations and Wall Street is salivating. This is all
nothing new. Tax cuts for corporations is supposed to increase their retained profits
allowing them a chance to invest more and create jobs. It has all been tried before.
Asset holders get richer and income and asset inequality rises. The corporations of
course continue to invest where shareholder gains are maximized.
In the past decades since Ronald Reagan, when the trickle-down theory (often
accompanied by a loosening of financial regulations) has been applied, there has
been a Savings and Loan institutions disaster -- checks on their behavior were
loosened -- followed by an identical scenario for large commercial banks in 2008.
Meanwhile, the U.S. Gini coefficient, measuring income inequality, is near the bottom
among developed countries, and is even worse than India. As could be expected,
Scandinavian countries score well.
The courts have reversed the Trump anti-immigration order and deregulation is going
to require Congressional approval; governing is turning out to be not quite the same
as running a business.
What's more, when bombast hits reality, Mr. Trump reverses policy. Following a brief
flirtation with Taiwan and the questioning of a 'one-China' policy, the new news is that
the President affirmed his support for a 'one-China' in a telephone conversation with
Mr. Xi Jinping, the Chinese leader.
Bombast also turned to whimper with the visit of Japanese Prime Minister Shinzo Abe.
No more talk about the Japanese getting a free ride on the defense of their country
and the U.S. nuclear umbrella. Mr. Trump promised to defend Japan and its
territories without reservation.
The truth of the matter is great powers are not in the charity business. Their actions
are motivated by self-interest. The U.S. needs alliances with Japan, South Korea,
Philippines to meet the rising power of China, a country also capable of projecting
power globally. There is a good reason for the hub-and-spoke plan used in the east
as opposed to a unified alliance, NATO, in the west. The countries involved in the
east differ enormously in their economic development from the advanced industrial
democracy in Japan to a third world Philippines.
As a postscript on the rule of elite consider the recent 'demonetization' -- a misleading
term -- in India. Supposedly designed to flush out black (untaxed) money, it withdrew
the five hundred and thousand rupee notes causing economic chaos and hardship
for the poor, who do not have bank accounts. Required to exchange the money for
new notes, the latter had to choose between standing in long lines at banks or
working to feed themselves. Of course, it pushed the middle classes towards banks
and credit cards, a huge bonus for the providers. In the end, about Rs 15 trillion out
of the Rs 15.4 trillion removed from circulation was retrieved. Wherever the black
money was hidden -- possibly in gold and real estate -- it was not in currency.
Another pointless sock-in-the-eye to the poor in the world's largest economy.