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As the New Year begins, and the final year of Trump’s first term commences, readers may be interested in the following review of my just released book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump‘, Clarity Press, 2020, by David Baker.

The book takes a different perspective than most to date on the subject of Neoliberalism. One of its major themes is that Neoliberal policies, which had dominated US economic policy since the late 1970s decade, entered a crisis with the crash of 2008-09 and the weak global recovery that followed. The Obama administration could not fully restore the Neoliberal project in original form, and the material conditions responsible for Obama’s failure to restore Neoliberalism on its original trajectory, it is argued, gave rise to the ascendance of Trump in 2016. Trump should therefore be understood as representing a more aggressive attempt to restore US Neoliberalism, albeit in a new, more virulent ‘neoliberalism 2.0’ form.

After three years of Trump, the book assesses the Trump more aggressive restoration effort, its ‘successes’ and where it still has thus far failed to restore. Nearly 100 pages of the book’s analysis addresses the evolution of Trump policies in Neoliberalism’s four major dimensions of Neoliberalism: Industrial Policy, Fiscal Policy, Monetary Policy, and External-Trade-Currency Policy.

The book also critiques most prior accounts of Neoliberalism and their excessive estimation of the role of Ideas in lieu of the role of material forces in its rise, evolution, and now emerging crisis as its internal contradictions have multiplied since 2000. Most accounts to date fail to distinguish the Ideology of Neoliberalism from its actual, historical practice, it is argued.

The book thus places more causation on material factors and forces explaining the rise, evolution, and now emerging crisis of Neoliberal policies in the US. It predicts Trump’s 2.0 restoration will ultimately fail.

The next to last chapter describes the material-technological forces emerging and developing in the US and global capitalist economies that will bring about that failure, now in development and soon to emerge in the 2020s decade full blown.

And in the final chapter, the unstable relationship between Neoliberal economic policy and the US political system is addressed. It is argued that Neoliberalism has always been incompatible with even the limited form of capitalist democracy in the US and the ‘west’. And that incompatibility has been intensifying since 2000 in the US. As it has entered a crisis, it is now becoming more clear that democratic forms, norms, and institutions are now giving way–creating Constitutional Crises in the ‘heartland’ of Neoliberalism (USA and UK)–that will lead to a US political system crisis next decade as well as economic.

The following is David Baker’s early review of the book, which is available at discount on this blog via Paypal, and available on Amazon and other public outlets by mid-January 2020:

Dr. Jack Rasmus
January 1, 2020

The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump, by Dr. Jack Rasmus, Clarity Press, January 2020 ; A REVIEW by David Baker, (forthcoming next issue of Z magazine)

At 272 pages, Dr, Jack Rasmus’s new book “The Scourge of Neoliberalism: US Economic Policy From Reagan to Trump” is a big little book. To understand its importance a comparison to another big little book by John Maynard Keynes entitled The Economic Consequences of the Peace, “Economic Consequences” is helpful.

Economic Consequences grew out of Keynes’s participation in the post-World War I peace negotiation as an English representative. When Keynes discovered the extraordinary punitive nature of the peace being imposed upon Germany he walked out in protest. His book explains why.

Economic Consequences begins with a careful, common sense explanation as to how the economies of Germany France and England had become interlocked and interdependent which we would now describe as a global economy in the making. So to punish one, in this case Germany, was to punish all. Likewise, the punitive economic sanctions imposed upon Germany were so severe that Keynes predicted that a political monster would arise in Germany. That political monster was ultimately embodied in the person of Adolf Hitler.

Although our present political monsters, Trump and the Republican Party, have not reached the level of Hitler, it was not a rhetorical flourish when Noam Chomsky called them worse than ISIS. The Scourge describes how our home-going grown political monsters came into being.

Rasmus excels at economic history. His brief account of American economic history since 1900 rings true. His baseline is that economic structures are not static but constantly changing to control an evolving economy as well as political changes.

He divides the American economy since 1900 into three periods; roughly Pre World War I, during and after World War II, and the Reagan era which kicked off neoliberalism. In the two World War eras, America faced a happy challenge: how to manage America’s growing economic might so it would become an unsurpassed superpower. The first restructuring, the Pre WWI restructuring was to make the US capitalists a co equal partner with Britain and European capital; the second, during and immediately after WWII, was to make the US a global economic superpower. The third era, was and is, an unhappy time for America’s policymakers because they are and were faced with real challenges and real decline; the goal was to defeat domestic challengers, such as unions, as well as global challengers, such as Japan and Germany, for decades to come.

The stage was set for the third era in the early 1970s. Unions were extremely powerful and had made unprecedented wage gains of up to 25% in the early as 1970’s . Meanwhile America could not compete with Japan and Europe due to its lagging and aging industrial infrastructure. So the policymakers faced a real dilemma: what to do? Their choice came to be called neoliberalism which is neither new or liberal but a marketing term exploited by an all too compliant intellectual class.

Neoliberalism is essentially a set of crude policies that maintains high short-term profits at the expense of long-term profits and prosperity for all. The policymakers did not want to plunge say 35% of GDP into research and development and infrastructure upgrades because that would cut into their profits. Instead they took the easy way out: they cut taxes for businesses and the wealthy; they destroyed unions; the offshored US manufacturing to low-wage countries; they repealed decades of important regulations; they destroyed real pension plans for the lower 90%; robbed Social Security; they onshored cheap high-tech help from foreign country; they unleashed rivers of capital across the globe; they let the banks gamble with esoteric financial instruments; they destroyed public education and crippled the young with more than $1.5 trillion in student loans; they poured at least $5 trillion of virtually free money into the banks and investors from the Fed and on and on and on.

The Democratic Party’s response to all this was appalling: one campaign promise after another was broken and the lower 90% were faced with an active enabler of neoliberal policies—— Bill Clinton—– or a passive enabler of neoliberal policies, Barack Obama.

Rasmus also excels at the economic consequences of these policies: stagnating incomes and standard of living for the lower 90%; grotesque income inequality; a rotting infrastructure; lack of access by the lower 90% to adequate housing, healthcare, transportation and education. America has become a second rate country with an angry precariat.

Rasmus is also gifted at demonstrating how this intricate web of policies create negative feedback systems and leads us into an economic and political dead end. Two important issues may help demonstrate how this is occurring. His discussion of war/defense spending is illuminating. At no time since 1900 was any country a military threat to the United States. That ended in 1812. And yet, beginning with Reagan and continuing through Obama/Trump war/defense spending has gone through the roof. Why? A variety of reasons.

First, war/defense spending is an easy money conduit for the Fortune 500 since by definition there is no foreign competition. Likewise, it is a major way of funding research and development without calling it that: who would be willing to pour tens of billions of tax dollars into IT to make, say, Bill Gates rich? So we label it defense spending. But third and finally there was a tacit acknowledgment that since America could not compete economically then it would continue to compete militarily. Rasmus excels at demonstrating how this is a complete policy dead-end.

This war/defense policy created the dilemma of double deficits. That is, how can America cut taxes and increase war/defense spending? Answer: the double deficit. The US agreed to allow its allies to import significantly more to the US than the US was exporting to them but to fund this chronic and growing trade deficit the allies agreed to buy by large quantities of US debt to close the gap in deficit spending. Likewise taxes for businesses and wealthy investors have been cut by $15 Trillion since 2001 which also pushed the domestic deficit through the roof. But this rising debt generated huge interest payments, which the Congressional Budget Office estimates in ten years will be about $1 trillion in interest payments alone per year. Meanwhile the lack of real research and development investment by the US led to low productivity growth which in turn led to the further compression of wages/income for the lower 90%. The US economy has become a zero-sum game where the gains of the upper percentiles are taken from the lower 90% and is part of the reason we have the grotesque inequality of income and wealth we have.

Then finally there is what I call the China Challenge which demonstrates the dead end of this policy choice. Several years ago, China announced its 2025 policy plan which would put China in the lead of new IT development such as G5, cybersecurity and artificial intelligence. This is a real and significant threat to military leadership by the US because new IT developments have obvious and long-term military applications. This in turn prompted Trump’s trade war with China that ultimately collapsed.

As trade war talk intensified, the purchase of American debt by Asian countries slowed; equally important the Chinese stopped buying American agricultural products which was one of the core political constituencies of Trump: Midwest farmers, large and small, many of whom went bankrupt, started screaming at the Trump administration to back off from China. So Trump backed off despite his public announcements that he had won the trade war. The Chinese will steam ahead to become the world leader in IT while the US falls farther and farther behind which critically impairs even its grotesque military supremacy.

The Chinese Challenge is just one example of how Rasmus demonstrates the long-term failure of neoliberal policy. Another important policy dead end is the Greenspan “put”. The Greenspan put is to maintain low interest rates through the Federal Reserve. Those low interest rates allows multinationals to achieve high profits on their foreign manufacture subsidiaries. How? Low rates keep the value of the US dollar low and therefore the exchange rate value of the foreign currency of multinationals in the country of their operation high. This in turn allows the multinationals to “buy” more dollars and thus return more profits in US dollars to their main offices. It also allows US exporters to other countries to sell more, raise profits, and beat out competitors. But the low interest rate also allows financial institutions to gamble in financial instruments which has prompted one asset spike after another and the inevitable collapse of the same, such as Dot.com bust, the savings-and-loan collapse, the subprime meltdown. Each collapse becomes more severe than the prior but the regulated banks and the unregulated banks—-shadow banks—— continue to speculate in financial assets because of the billions of dollars in immediate profits.

Likewise, the low interest rates benefits major businesses by allowing stock buy backs, dividend payouts, mergers and acquisitions and offshoring of jobs. Little if anything goes into the real economy in the US to improve productivity and create full time jobs for Americans.

This makes financial markets more more unstable and requires the Federal Reserve to pump more and more money into the system——– trillions of dollars which should have gone into real jobs in the real economy in the US. Instead, they went into stock buybacks, mergers and acquisitions, dividend payouts, off shoring of manufacturing units, and the hoarding of hundreds of billions of dollars offshore by major multinationals. Apple alone is hoarding over $250 billion in various countries outside of the US.

And then the problem becomes that even a modest spike in interest rates causes a collapse in assets such as 35% decline in the stock market in 2018 which prompted a fight between the Fed and Trump which Trump “won” so the Fed lowered rates which only means the next collapse will be more severe than the last one as the scared bankers well understood who protested against Trump’s non negotiable demand to lower interest rates.

Rasmus has a wonderful way of describing the natural and structural changes that are coming to the economy. The key driver is energy production which has moved from water, to coal, to gas and oil, and is now moving toward solar and hydrogen production. At each stage of this transformation of energy production, the economy has to be retooled and refitted to meet the challenges of the transformation in question. This in turn stretches many businesses to the breaking point, i.e. bankruptcy.

The energy component is changing at the same time that IT development is pushing economic structures into a whole new dimension through artificial intelligence, cybersecurity, G5 Communications Systems, and biotechnology. The problem is that neoliberalism has no answer to these significant problems and has no means of dealing with for example what I’ve called the China Challenge. Bloated with debt the major multinationals cannot and will not make the necessary investments required to meet the challenges of these new developments and remain competitive. It is a bizarre situation where one of the most undemocratic countries in the world is leaping ahead of us toward the new challenges that we are facing while the US becomes a second and perhaps even third rate country.

But Rasmus pushes the future even farther and describes how our political institutions are becoming more and more distorted and less and less democratic. The means of making America oligarchic is through a multitude of devices such as the electoral college, the US Supreme Court, gerrymandering, voter suppression, and the rivers upon rivers of money that flow from the 1% throughout our political institutions utterly corrupting them.
Even a great book has flaws. Missing from The Scourge is a discussion of how the war on drugs originally launched by Reagan which continues to this day is a potent weapon of neoliberalism to permanently disenfranchise tens of millions of poor people of color from any meaningful participation in US society by labeling them felons. The obvious economic and political use of the drug wars is to criminalize a potentially political disruptive segment of our society and make sure that the US has no obligation to help them with decent jobs, housing, education or healthcare. See The New Jim Crow.

The New Jim Crow brings up a related issue re Neo Liberalism: over determination of policies, that is a policy has multiple uses. As with the drug wars, students loans now at $1.5 trillion have the same result of disabling a large potentially politically disruptive element of society that the “drug wars” have: student loans disable the young from political activism, forcing them to spend much of their adult lives just managing debt. Likewise, as David Stockman observed the unrelenting march toward the ocean of debt called the deficit is a weapon to destroy socially important programs such as social security and Medicare.

Rasmus’s relentless drumbeat that the future only holds endless job losses to automation is true but there is a deeper issue. Automation, artificial intelligence and other IT developments, could free up critical and needed human resources to meet the challenges of the future. Think about climate change. Think about the tens of millions of jobs that could be created that are not only necessary but fundamental to avoid the coming environmental collapse. Every building and every parking lot in the United States should have solar panels on them; all of the hundreds of oil refineries must be dismantled; all of the tens of thousands of miles of gas and oil lines must be removed. Please see Bill McKibben’s description of this job creation which he has called World War III to emphasize the huge job creation and necessary fiscal injections on the level of WWII which soared from 35% to 70% of GDP.

Rasmus is a powerful advocate for Medicare for all but should also consider that this also would demand huge human resources—-the training of thousands of healthcare workers in the US. Healthcare workers, like IT workers, are on shored by the thousands. We must train our own to take on the difficult task of caring for all throughout the country and not just in wealthy areas along the coasts. The lack of access to quality health care by the rural poor is criminal; it is not a “mistake” that many of Trump’s most ardent supporters are the rural poor.

Finally, I wish Rasmus would provide a glossary. Such terms as median versus average income and negative interest rates, continuously escape me despite the fact that I’ve read about them in context at least 10 times.
The Scourge a powerful, important book. We ignore it at our peril. The utter daily degradation which results in the stunted lives of hundreds of millions of Americans is at stake, who now lash out at each other about such nonsense as race and gender while Trump and his kind laugh and the world spins out of control into environmental hell. In many of his other writings Rasmus has given a clear road map out of the dead end of Neo-Liberalism; at the risk of repetition it would help to have that map articulated again.

David Baker
December 2019

Listen to my recent radio interview discussion on the oft-reported 3.1% wage growth for US workers by the mainstream media. How Bankrate, Gallup, EPI, and other surveys contradict the official media mantra about how well US workers are doing.

TO LISTEN GO TO: http://television.data99.com.ar/video/paDBXVlP_X0

A couple weeks ago on this blog I posted an article once again raising doubts about the official US Labor Dept. stats on jobs. The November jobs report showed an official 266,000 jobs created, while the respected business payroll company, ADP, showed a mere 66,000. I noted other reasons for the severe discrepancy.

For months this blog has been raising alternative estimates and sources on US jobs and US GDP numbers.

We’ve also been doing the same questioning the oft-cited official (and widespread mainstream press reported) 3.1% annual rise in US wages the past year. As has been explained previously, this 3.1% is a worthless statistic that gross over-estimates wage gains in the US.

To reiterate, the 3.1% wage increase reported figure is not adjusted for inflation, so it doesn’t reflect real wage change. Even underestimated official inflation data would reduce real wages to no more than 1.5% per the US PCE price index. Or even less if the official CPI index is used to adjust for inflation. In addition to reducing for inflation, the 3.1% is also an ‘average’, with actual wage increases highly skewed to the top 10% of the work force, so workers at the median or below are likely seeing no wage increases or even wage reductions and the top getting more than 1.5%. Moreover, as it has been pointed out, the 3.1% figure is for full time employed workers only, and ignores therefore the 50 million or so part time, temp, gig, contract and other workers in the estimate. Factor all that in and the real wage change for the vast majority of the US work force is flat at best and falling for many–not rising at 3.1%

Various independent business, bank and other wage surveys support this ‘unofficial’ view that wages have hardly risen at all–either under Trump or before under Obama. Or for decades now for that matter.

Here’s two more recent, independent surveys support that conclusion.

The latest Bankrate survey, released just this past week, showed that 51% of all workers (about 82 million) in the US DID NOT GET A WAGE INCREASE at all this past year. (And 22% of the remaining 49%, who did get a raise, got it by moving to another job and not from their employer actually hiking their pay. Moreover, the employer they changed to may have not actually raised their wage on their new job, even if the worker who changed jobs realized a high wage. But the Labor Dept. considers that a wage increase, even if in the real economy no wages were actually raised. So for the economy as a whole even that 22% is likely overestimated as well, even if the individual worker realized a wage hike).

The same Bankrate survey showed that last year nearly two-thirds (62% or 99 million) of US workers said got no wage increase whatsoever.

According to mainstream economists, standard economic theory says that a labor market as tight as today’s (3.7% unemployment) should result in a big demand for labor and therefore a big rise in wages. But it has not, which must mean either the 3.1% wage increase numbers are false; or the unemployment numbers (3.7%) are wrong and the labor market is not as ‘tight’ as they are saying; or that economists’ theory about the relationship of wages to employment is just bullshit. Or maybe all the above!

As this blog has argued in the past, it is likely the wage hikes are going to the top 10% of professionals, tech workers, managers & supervisors, etc. And the majority of jobs being created are actually added-on 2nd and 3rd part time, temp, contingent, contract jobs that the Labor Dept. stats aren’t reflecting accurately; that is, the official Labor Dept. stats are picking up those contingent jobs that are primary (first) jobs and not counting second or third jobs.

An interesting alternative source also throwing light on the questionable official labor stats is the report released last month by the Brookings Institute. Among the report’s other interesting results, it found that 44% of all US workers, age 18-64 (53 million) now hold low wage jobs with median annual earning of just $17,950. With the cutoff of age 64, that 53 million should be even higher, since the fastest growing segment of new entrants to the labor force are senior workers older than 64, going back to work because they can’t make ends meet in retirement any longer (given the collapse of savings, minimal pensions, and the rise of social security retirement to age 67–soon to go higher). So add at least another 5 million of senior returnees to the labor force to the Brookings’ estimate of 53 million making less than $18,000 a year in wage income.

The 58 million working part time/temp/gig jobs and earning barely $8/hr. likely constitute the majority of the 51% of all US who received no wage hike from their employers this past year (and 62% the year before) per the aforementioned Bankrate Survey.

This has been going on for decades, and not just in recent years: more and more part time/temp/contract/gig jobs are being created while wages are stagnating or even declining. What capitalists, employers, and politicians are saying to 90% of the work force is: “if you want a raise, get a second or third job. Work longer hours for more pay. Don’t expect to get a wage increase for the primary job you’re working. Only if you’re really critical for boosting our productivity and therefore profits, or are highly skilled and necessary for our new tech industry, or if you’re one of us managers–will we give you a wage increase. If not, work more and work harder!”

Talking about working harder, according to the Economic Policy Institute, Americans’ productivity went up 70% from 1979-2019, but wages rose by a mere 12%. That’s an ‘average’ annual wage gain of 12% over the last 40 years! Or about 0.3% of one percent per year. And again even that’s an average. Reduce it for inflation and it’s been a wage reduction for most that’s been going on for a generation and more!

In yet another survey, reported last week by Jonathan Rothwell of the New York Times, the IRS data on jobs increasingly contradicts the official US Labor Dept. data: The latter indicates self-employed (contract, gig, etc.) at only 10% of the labor force, and actually declining in per cent terms last year. Whereas the IRS data indicates 17% and rising in per cent terms. The difference suggested by Rothwell is that the Labor Dept. data shows part time and contract work only for those whose part time job is primary–i.e. is the majority of their work time. Second, third such jobs, cobbled together to try to make ends meet are not being reflected in the Labor Dept. data on contingent jobs (part time, temp, contractor, gig, etc.).

The Labor Dept. officially estimates only 5% of workers (8 million) now hold multiple jobs. That’s of course a joke that few really believe. Even a Gallup survey estimates 28% (45 million) now hold multiple jobs. In other words, like the Labor Dept.’s 3.1% wage increase official estimate, it’s jobs data is also inaccurate and suspect.

Yet another study just released questioning the official data, called ‘Our Great Jobs Demonstration Survey’, the results of which are available in the December 20, 2019 New York Times, showed that 36% of the work force are no longer employed in the traditional one-job with one-employer relationship that the Labor Dept. seems to be myopically focused on. That’s equal to about 57.6 million–and thus about equivalent to our 53-58 million estimate of workers earning $8 an hour or less who likely received no wage increase at all (unless the blue state in which they lived raised its minimum wage above the still federal minimum of only $7.2 an hour).

To summarize, accumulating evidence from various respected independent research and survey sources–including business research companies like Bankrate, ADP, and others–are providing mounting evidence that the official US government estimate of a 3.1% wage increase is a gross misrepresentation of reality which the mainstream press is more than happy to propagate to maintain the myth that the US economy is doing great for everyone. Ditto for the official jobs data that inaccurately reflects what’s going on with part time/temp/contract/gig work where the absence of wage increases are predominantly located.

And once the next recession around the corner hits with full impact, the wage and job numbers will no doubt be even worse. Not even the official obfuscation will be able to cover it up.

The majority of the American public knows from their everyday experience that the official government economic data trumpeted daily in the press and from the mouths of politicians does not reflect their actual experience. They know this isn’t the ‘greatest economy in US history’ (Trump’s tweet). Even the chairman of the executive committee of the US Chamber of Commerce, Mr. Wilson, admitted to the Wall St. Journal last week (December 13, 20109, p. R2): “We’re in a place where people’s lives have not been made better off”. To which he added “A good portion of the public has lost faith in the capitalist system”.

Got that right, Wilson.

Dr. Jack Rasmus is author of the just published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, January 2020, which is available at discount from his blog and website at http://jackrasmus.com

In France a general strike has been underway now for days (all but ignored by the US press and media). The demands of the strikers are to prevent France’s president, Macron, from imposing what is in essence the ‘American Retirement System model’ on France’s workers. That ‘American Model’ itself has been a gross failure in the US–as more than half of all US workers now have no savings whatsoever; as 401k private pensions have replaced traditional defined benefit pension plans; as 401ks now provide barely $50k in total retirement resources for those at retirement age; and as Social Security monthly benefits barely average $1,200.

More cuts of pensions and social security benefits are forthcoming in 2021, moreover, as US budget deficits now exceed more than $1 trillion per year and as the US National Debt exceeds $23 trillion, projected to grow further by more than $1 trillion throughout the next decade.

As tens of millions of US retirees now face a growing crisis of incomes insufficient in retirement, more of them 65 and older are re-entering the labor force to try to make ends meet, making the 65 and over age group the fastest growing in the US labor force. The ‘American Model’ itself has failed terribly and continues to unravel still further next decade–as savings collapse and disappear, more defined benefit pension plans disappear, and as attacks on social security intensify after the 2020 election to pay for US deficits and debt.

LISTEN TO MY December 20, 2019 Alternative Visions radio show on the evolution and collapse of the US retirement system from 1980 to the present, and how France’s elites are trying to impose a similar failing American Model retirement system–and why French workers are protesting in the streets across the country in an epic struggle that may topple France’s president Macron.

GO TO: http://alternativevisions.podbean.com

SHOW ANNOUNCEMENT:

For the past week a general strike has been happening in France, the focus of which is to protest and prevent President Macron from introducing an ‘American Model’ of retirement system that would raise retirement age and reduce pension retirement benefits. What’s the ‘American Model’? Dr. Rasmus provides a historical overview of that model, created in the late 1940s based on the so-called ‘triple stool’ of retirement: social security, defined benefit pension plans (DBPs), and personal savings. Each was supposed to provide one-third of income of a reasonable retirement. Rasmus explains the evolution of social security, DBPs, and savings since Reagan and how all three have been steadily undermined, reduced, or destroyed since the 1980s—replaced by 401ks, cash balance plans, raised retirement years, and privatization of pensions. Today more than half of workers have no savings whatsoever, 401ks provide less than $50k on average for the rest of lifetimes, and social security averages less than $1,200 a month. Retirees are forced to work until they drop now, the fastest growing segment of the US labor force as they return to part time employment. Tens of millions are now facing a retirement crisis of unimaginable dimensions. (Next week: a guest, Alan Benjamin, an eyewitness to the strike in progress, will describe what’s actually going on in the French strike to prevent the ‘Americanization’ of the retirement system in France).

Check out my radio interview last week on the state of the much hyped US-China Phase 1 trade deal. (Listen to first 5 minutes of Critical Hour radio show for my comments, from link posted at end of this article post).

Since Trump and US trade rep, Lighthizer, declared last week that US-China have a ‘done deal’, it has been increasingly reported the deal is not done or signed off. In the interim, Trump and friends continue to exaggerate dimensions of China commitment to buy US farm and other goods. From an initial declaration of $8B more (over $24B in 2017 base) in each of next two years–i.e. $16B–Trump hyperbole now saying $40-$50B in each of the next two years for farm goods purchases by China, and $200B over the next two years ($100B per year) for all China purchases.

But China refuses to say how much and when it will increase purchases. Why? Because it has always made clear the amount purchased will depend on the amount of still existing tariffs Trump will remove. For China, it is always a ‘quid pro quo’ for tariff reductions.

But Trump wants to keep tariffs on $250B (at 25%) and on $130B (at 7.5%) to go after China again in a Phase 2 next year. So China won’t agree to buy more unless Trump reduces tariffs more, and Trump won’t do it. (Did he make some assurance to his neocon, anti-China, pro-US Pentagon trade faction he’d keep the tariffs if they went along to decouple tech demands on China to allow Trump to sign a Phase 1 min-deal trading tariffs for farm purchases?).

So Trump now between a rock and a hard place, as they say: Cut tariffs more to get China to buy more farm goods (as his midwestern farm base gets more antsy and threatens to drop their support in 2020), or keep the tariffs to retain support of his anti-China neocon and military industrial complex wing?

If no more tariff reductions, then Trade War with China is over. What you see is what you get in 2020: Half of Trump tariffs on China remain and China buys token more farm goods no more than $8-$16B. China may ‘talk’ about buying more but that’s just enticement talk to get Trump to reduce more.

China total imports from US on everything–farm, energy, services, etc.–in 2017 was $186B. Trump’s declared $100B overnight increase, in both 2020 & 2021, an impossible ramp up.

Per the Wall St. Journal December 19, 2019, China government to date “has made no mention of the purchase targets announced by U.S. officials”. US economists and trade experts don’t see how China could ramp up to $50B a year, let alone $100B. So, just more typical Trump unbelievable exaggeration and hyperbole. But stock market lemming investors love it.

TO LISTEN TO MY INTERVIEW by the Critical Hour Radio Show, (timeline 0-4:40 minutes into the show) on the China-US trade deal ‘fiction’,

GO TO: https://drive.google.com/file/d/1Qj2qrjf5CKWoAUF3h9TLeiThkGN1YtZs/view

(And for my 20 page coverage of the origins and evolution of the US-China trade war, read my Chapter 8 (Trump’s Neoliberal 2.0 Restoration) in my just published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, January 2020).

Yesterday, December 12, 2019,\ the British parliamentary election gave conservative Boris Johnson a big victory, and leveled an historic defeat on the British Labour Party not witnessed since 1935. Johnson now has an absolute majority in Parliament and his quick march to a hard Brexit is now very likely.

Once the leading global capitalist economic world power, Britain is now doomed eventually to decline economically to a force in the global economy more or less equal to that of northern Italy in terms of GDP. Its last major role in the global economy, as a world financial center, will now atrophy as well, as finance capital exits Britain in the aftermath of the election and Brexit to points elsewhere: to Frankfurt, Paris, Singapore, and New York.

It is important to understand why Boris won big, why Brexit is now on the fast track once again, and what are the likely consequences. One immediate consequence is Jeremy Corbyn has already announced he will not lead the party further after its crushing defeat. That means the ‘moderate’ interests will now ascend to control of the Labour party again and purge the progressives that were behind Corbyn. It also means the Scottish Nationalist Party will demand a second vote on leaving the UK. Its leaders have already so declared. The British Constitutional crisis is again on the agenda.

It is important not only to assess the short term failures or success of the Conservative vs. Labour parties’ respective election strategies, but to understand the longer term historical forces at work that have been undermining Social Democracy and social democratic politics (and thus the Labour Party) in the advanced economies in recent decades. Those long term historical forces have been building and accumulating for decades. They have played at least as great a role as election strategy and tactics in Labour’s now historic defeat.

There are no doubt several reasons why British voters handed Labour its defeat and opened the door again, now even wider, to Boris Johnson to leave the European Union. The election shows that a large number of voters still wanted to leave the EU, despite three and a half years of British Parliamentary maneuvering and delay. Another voter block that weren’t so sure of leaving the EU perhaps probably voted conservative because they just wanted to ‘get the damn thing over with’. Three and half years of debate and parliamentary maneuvers since the original 2016 Brexit vote have left many disgusted with the political efforts of the British elite to block the 2016 democratic vote of the will of the majority in the country. Another short term factor in the election outcome no doubt is that Johnson cleverly manipulated voter sentiment with promises he would protect–and even expand–social programs, add more government spending, end austerity, save the health service, etc. That’s a cynical tactic directly out of the Trump playbook. Another factor probably was the slanderous business-media campaign to depict Corbyn and the Labour party as anti-semitic. As in the US with Trump, manipulating the ‘jewish vote’ and painting Corbyn-Labour as discriminatory, or even racist, played a role in Boris’ victory. Corbyn and Labour fell for the ploy and spent too much time defending against it, instead of pushing their own proposals more forcefully. They were caught off guard and didn’t know how to respond, and did so only after losing valuable time. Of course, having the capitalist media and press running interference on the issue on behalf of Boris and the Conservatives didn’t help either. As in France in support of Macron, British capitalists rallied and united together against Corbyn, terrified that if he and Labour won it would mean the re-nationalization of industries long privatized under British Neoliberalism since the 1980s. Finally, Labour’s strategy was itself equivocating at times and on a number of fronts insufficiently differentiating from the Conservatives. In many voters minds, especially youth, Labour was viewed as still the junior partner in pro-business Neoliberal policies and not to be fully trusted. The legacies of Blair and Gordon continue to haunt the part (just as Clinton and Obama do in the USA for the Democrats).

But there’s more than just electoral strategies and tactics that explain yesterday’s vote outcome and Labour’s historic defeat in the British Parliamentary election.

In Britain, as well as in the USA and Europe and elsewhere, the capitalist system has clearly entered an era of ‘nationalist reaction’ to its now declining growth prospects. Nationalism is the ideological reaction to that decline. More prescient and clever capitalists, and the political class that represents them, have grabbed on to nationalist appeals and policies and are riding that horse into office on the backs of growing economic discontent. Brexit thus represents a nationalist response to Britain’s economic decline. “Its the fault of those Europeans and the EU. If only we can leave the EU, Britain will return to its glory days of economic power”. So goes the political refrain–in the UK and elsewhere.

Overlaid on this ideological appeal in England, Wales and Northern Ireland is the curious counter ideological ‘nationalist’ appeal of the Scots, who employ Scottish nationalism as the justification for staying in the EU instead of leaving it. So we have two nationalisms–one countering the other–in the case of the UK and Brexit. Scotland will no doubt soon vote somehow again to leave the UK–becoming a kind of ‘Catalonia Writ Large’. Unlike the latter, however, it is unlikely that members of the Scottish Nationalist party will be successfully charged with treason and jailed. Watch for Boris and his conservatives to try to cleverly structure some solution similar to the so-called Northern Ireland ‘backstop’ for Scotland in relation to the EU. Boris and buddies will try to keep Scotland politically in the UK by allowing it to economically remain in the EU. Or allow Scotland to keep all the North Sea oil and US trade revenue for itself, which is also what Scotland staying in the EU is mostly about.

Nationalism is undermining national unity in the UK–just as it is doing so in the USA…and in Spain, Italy, and elsewhere in Europe, and let’s not forget India and Kashmir, and other locales in Asia. Capitalism in crisis always turns to nationalism as a shield to divert blame for its economic and social troubles on ‘the others’. The extreme version of this nationalist ‘blame it on the outsiders game’ is called Fascism.

There’s another longer term historic force also at play here in the Brexit phenomenon–apart from Nationalism and the short term electoral strategy and tactic failures. That’s the decline and collapse of traditional Social Democracy and social democratic parties. That decline is partly due to decades of mis-leadership by the social democratic parties’ leadership who have aligned themselves with the Neoliberal policies of the business parties in their countries. By partnering with business interests, in the hope of obtaining some minor concessions, they have painted themselves with the consequences of those Neoliberal pro-business, pro-investor policies. Those policies for their social democratic constituencies have meant: declining job opportunities, stagnant wages, privatization and loss of social insurance and benefits, loss of retirement and pension guarantees, and destruction of their unions that once protected those war time and post-1945 gains of the early 20th century. Of course, social democracy party leaders personally gained by securing a junior role at the political table with business and their capitalist parties. The Tony Blairs and Bill Clintons are today multi-millionaires serving on corporate boards and as business consultants being nicely rewarded for their past services. But they traded that role and personal gain for the the living standards of their working class members.

At its extreme, and in the worst case, the collaboration of the social democratic parties over the last 40 years with their business party ‘opponents’ has meant allowing the mass reverse immigration–i.e. deportation–of tens of millions of industrial working class jobs from the UK, the USA, Europe, and Japan to emerging market economies. (Where their respective corporations also migrated for cheap labor, open markets, and indigenous local politicians on the make). Ultimately, that reverse immigration of jobs and deportation of living standards explains in large part the collapse of electoral support for the social democratic parties in the ‘West’.

Entire generations of workers in the UK, USA, and Europe–who are today condemned to part time, temp, gig, and precarious work, to small service company employment, and with no experience of belonging to unions–no longer see any affinity with the traditional social democratic parties. This development is not only relevant to the UK and the collapse of British Labour as an electoral force. It is true of that even weaker and lesser ‘social democratic’ party organization called the Democrat Party in the USA. As it is true for the Socialist Party in France that was recently defeated and has all but disappeared from the electoral scene. And as it is becoming as well for the SPD party in Germany, as it continues its partnership and collaboration with business parties and interests in that country.

The Social Democratic parties in the west have been hollowed out by the deportation of their industrial jobs (aka offshoring or sometimes euphemistically called by the business media as ‘supply chain relocation’). And parallel structural changes in western economy labor markets have chipped away at the margins of what working class support that remained for those parties by throwing many not deported into precarious and contingent work that fragments and de-politicizes the class.

The core industrial working class backbone of those parties has thus been shipped offshore in the Neoliberal era and otherwise captured by nationalist appeals or who see nothing in it for them to vote for anyone. Social Democratic party leaders in recent decades have thus participated in, and presided over, the destruction of their own organizations and their own erstwhile political-electoral base. And as they allowed the decimation of their own industrial working class, the atrophy and disappearance of the unions as an organized electoral support force followed.

Today neither the class nor the unions existed to deliver the vote for Labour (or for the Democrats, or the Socialist Party, or the SPD, etc.) in strategic contests like the recent British election and Brexit votes.

Corbyn in the UK represented a last futile effort to re-transform the British Labour party, trying to turn the clock back into what it was once. But the core and base for that reconstitution no longer exists. And that’s also, at least in part, why Labour suffered the historic defeat yesterday. And why Nationalism is on the ascend once again.

And why, after the next crisis, even ascendant Nationalism as we see it today may not be sufficient for the continuation of late Neoliberal rule for global capitalism.

Dr. Jack Rasmus is author of the just published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, January 2020, which is available from his blog, jackrasmus.com, and his website, http://kyklosproductions.com, and publicly everywhere after December 20.

A China-US trade deal will be announced later today, per business media reports: Trump caves in, agrees not only to add no new $160b tariffs but also to a 50% cut in existing US tariffs. Trade war is over! Trump puts re-election & farm base before neocon-military demand for tech rollback by China. US-China Tech War now begins in earnest no longer under the cover of trade and tariffs but by other means. 2020 will mean more talks on Phase 2 trade deal with China, but it will be only talk. Nothing new will be agreed to (unless Trump removes all remaining China tariffs which is highly unlikely) during the US election year. Watch Trump to boast, exaggerate and lie about the terms of the deal. Ditto the just also announced USMCA free trade treaty. But after 18 months of Trump trade war little to nothing new has been gained–with China or with all other trade partners.

Trump’s business tax cuts of 2018 ($4T) and trade deals of 2019 + massive business deregulations of 2017 make him the darling of the US business-investor class. Stock market will continue to surge benefiting the investor class and income inequality will now intensify even further. The Trump media machine will now shift into high gear. Democrats’ impeachment message will be drowned out in the noise.

(More detailed analysis soon to follow)

Dr. Jack Rasmus, 3pm, pst, December 12