Karl Marx on Donald Trump

Karl Marx on Donald Trump:

“He behaved like an unrecognized genius, whom all the world takes for a simpleton.”

Actually, he wrote that about French president Louis-Napoléon Bonaparte, nephew of Napoleon I, who in an 1851 coup turned the French Second Republic into the authoritarian Second Empire and had himself crowned Emperor Napoleon III.

Angola: Dying Children in an Oil Country

I was watching an old re-run of “Columbo” on a commercial cable channel the other day. The ads in the commercial breaks were fundraising ads by Unicef, showing malnourished little children in Angola. I remember when civil war raged in Angola after independence and during the Cold War, with different countries supporting different independence movements. Cuba and the Soviet Union supported the Marxist MPLA while South Africa and the CIA supporting pro-Western UNITA. After the cold war ended, Angola finally found peace. It is still ruled by the MPLA but has become the second biggest oil producer in Africa after Nigeria.

Now why would a country whose oil wells bring in billions of dollars every year literally become a poster child for UNICEF fundraising for starving children? The truth is, Angola is one of the most corrupt countries in the world. Little of that oil wealth finds its ways to Angola’s most vulnerable citizens. Much of it ends up in foreign bank accounts owned by the politically well connected.

For example, Isabel dos Santos, the oldest daughter of Angolan President José Eduardo dos Santos, has made billions in government related business that her father had a say in. She has become the richest woman in Africa. Forbes did an excellent exposé a few years ago, based largely on the research of brave Angolan investigative journalist Rafael Marques de Morais that showed how she systematically received huge chunks of businesses due to favouritism by her father, the president who has already been in power for 38 years.

Hundreds of millions and billions of dollars from diamond exports, oil and other resources that should be funding health care and education for Angola’s poorest instead have ended up in the pockets of the president’s family members. This seems especially ironic, given that MPLA claimed to be a socialist party, which is supposed to be about equality. Now it’s just another kleptocracy and the world is looking the other way.

What’s the Deal with Son and Trump?

President-elect Trump got plenty of headlines out of his recent meeting with Softbank president Masayoshi Son, boasting afterwards:

“Masa, a great guy of Japan, he’s pledged that he’s going to put $50 billion into the United States because of our victory. He wasn’t investing in our country — $50 billion. Fifty thousand jobs — 50,000 jobs he’s going to be investing in. He is a great guy.”
Donald Trump, in Fayetteville, N.C., 2016-12-06

Clearly, Trump is hoping to get some mileage out of this meeting with Son, but what’s in it for Softbank? Why is he meeting up with the next president and not just with business leaders?

It’s unlikely the surprise victory for Trump was much of a factor in the announced investment plans. Three weeks before the election, when most pundits were still expecting a Clinton victory, Softbank already announced it was setting up a $100 billion dollar investment fund, with Saudi Arabia supplying the biggest share of the funds. Given the size of it and the special role the US plays for technology startups, it is unlikely most of it wasn’t meant to be invested there anyway. So take any claims that Son will be investing in the US only because Trump won with more than a pinch of salt.

Softbank already made a huge investment in the US under Trump’s predecessor, President Obama. In 2013 Softbank acquired US mobile carrier Sprint for $22 billion. However, its plans to acquire smaller carrier T-Mobile were thwarted by the FCC. And this is the likely background for the recent meeting and announcement:

Analysts said Son may be seeking to improve the chances of a merger between Sprint and T-Mobile. Sprint and SoftBank abandoned an effort to buy T-Mobile in 2014 after the Federal Communications Commission signaled the deal might violate antitrust laws.

Trump will be responsible for appointing the next FCC chairman. Speaking from the lobby of the Trump Tower on Tuesday, Son said that he wanted to celebrate Trump’s election “because he would do a lot of deregulation.”

“SoftBank’s original plan may come true with the new FCC chairman,” Naoshi Nema, analyst at Cantor Fitzgerald, said in a note.
The SoftBank investment Trump touted looks pretty great for SoftBank (LA Times, 2016-12-07)

By flattering Trump’s ego, Son is hoping to gain political influence to pull off a plan that was shot down by the FCC because it would be bad for competition and bad for consumers. With fewer players in the market, mobile plans will go up in price. Most likely a merger of Sprint and T-Mobile would would also lead to “synergies” (aka layoffs) as the companies would share infrastructure and other resources. Sprint already laid off thousands of employees to save billions of dollars under Softbank. But never mind reality when headlines of “50,000 new jobs” sound much better! 😉

This is not how a market economy should work in a country operating under the rule of law. Trump has not even taken office yet and the US is already starting to look like a Third World country, where the key to doing well in business is to cozy up to the president.

Donald Trump’s most outrageous statement

There has been no shortage of outrageous statements by Republican candidate Donald Trump in the US presidential election campaign. However, the one that shocked me most was this boast about the loyalty of his supporters:

“I could stand in the middle of 5th Avenue and shoot somebody and wouldn’t lose any voters, ok? It’s, like, incredible.” (Donald Trump, 23-Jan-2016)

The statement says something about both Trump and his supporters.

It would never occur to most people to even think about murdering someone, let alone boasting about the hypothetical ability to get away with murder — not because murder is illegal, but because killing is wrong. It’s one of the most basic moral rules in any society. That this doesn’t apply to Trump is revealing. He doesn’t have this moral compass that most people at any layer of society have. He’s the ultimate narcissist who would do anything that he thinks benefits him, from stiffing his contractors to “grabbing (women) by the pussy”. That makes him totally unsuitable for the most powerful position on the planet.

Trump has said many things that would have sunk the campaigns of ordinary politicians, but this is not politics as usual any more. For a certain segment of voters, the fact that he does not behave like a regular politician is the very reason they vote for him. Decades of rabid propaganda and conspiracy theories on talk radio by the likes of Rush Limbaugh and on Fox News have established an alternate reality for them where the system is totally broken and has to be trashed before it can be rebuilt from scratch. In this alternate reality crime is at an all-time high, rather than 50% below what it was under President Reagan as it actually is. Facts don’t matter.

These people are scared and prepared take their chances, almost regardless of the evidence. In reality, Trump has no solution for them. He will not bring back the lost industrial jobs that largely went to computers rather than to Mexico. His anti-trade policies would send the economy into a tail spin and his budget proposals would drown the country in debt. His victory would have foreign dictators cheering and would encourage imitators in other countries.

When Hitler came to power in my homeland in 1933, he did not win a majority in free elections, but he managed to get enough support from other parties and politicians who feared a communist revolution more than they disliked the Nazis. Most of Hitler’s plans that he executed so brutally once firmly in power, from “Lebensraum im Osten” (living space to the east, i.e. the invasion of Poland and the Soviet Union) to the mass murder of Jews had already been openly announced in “Mein Kampf” a decade before the Nazi takeover, but people on the right did not care too much about that. They were happy as long as Hitler was going to smash the communists.

Likewise, most of what Trump says doesn’t really matter to his followers, as long as he is the anti-Obama. No other Republican candidate was as different from Obama as Trump is. People voting for Trump despite his glaringly obvious character flaws are willing to write him a blank check, the same way the German Reichstag gave Hitler a blank check when it signed the Enabling Act (Ermächtigungsgesetz) that effectively gave him unlimited powers and put parliament out of business.

Even if, as most of the world hopes, voters will manage to stop Trump this coming Tuesday, this alone will not end the problem. His voters and their alternate reality views will still be there. They will impact the political culture for years to come. The Republican party and its media circus has nurtured an ever more toxic political base that it now has trouble controlling. In some ways it reminds me of the jihadists the US supported in Pakistan and Afghanistan in the 1970s/80s against the Soviet Union, which now have become the West’s enemy #1.

Unfortunately, even if the most unqualified US presidential candidate ever is defeated at the polls it will take a long time for the US to recover from the political poison the Republicans have been brewing for decades in order to secure power to further the interests of the top 1%.

Syria and the war against IS

The situation in Syria is getting ever more complex, with the Turkish air force shooting down a Russian SU-24 bomber on November 24, 2015. Several foreign countries are taking sides in the Syrian civil war and their declared objectives do not necessarily match up with their actions or those of their supposed allies.

The US is divided over its involvement in the war. President Obama made his name in national politics through his opposition to his predecessor’s war in Iraq. Sending US ground troops into Syria would carry many of the same risks encountered in Iraq. Therefore the US has restricted itself to air strikes and support of local proxies, including the Kurds.

Initially the US was aiming for regime change in Damascus, but more recently the fight against the “Islamic State” (IS) seems to have taken top priority. If the government in Damascus was defeated before an acceptable political alternative was ready to take over, the risk is that IS would acquire a huge amount of weapons, ammunition, territory and infrastructure from the collapsed regime.

Trying to step up its air warfare against IS, the US struck a bargain with next door Turkey, a NATO member, to use its Incirlik Air Base for attacks in Syria, a request that Turkey had denied them for a long time. No sooner had the US launched the first attacks from Turkish soil that Turkish airplanes started bombing Kurdish forces in Syria. According to President Erdogan, Turkey’s goal is “fighting terrorists”, and by that it mostly means the Kurdish PKK in Turkey and the Kurdish YPG in Syria.

It soon became obvious that the Turkish government sees the Kurds and not IS as enemy #1 within Syria. This had already transpired a year earlier in the siege of Kobani, when Turkey delayed and restricted reinforcements for the Kurdish defenders of the city against IS and asked the US not to make any air drops in their support.

Most foreign fighters joining IS arrive via Turkey and exports of fuel to Turkey are a major source of hard currency for IS. Turkey seems to have done little to stop either the flow of recruits or cash to IS, the Kurds’ worst enemy in Syria. Right now, the Kurds are America’s closest ally in Syria and Turkey’s worst enemy, even though the US and Turkey — as fellow NATO members — are supposed to be allies.

President Assad of Syria is fighting a war on several fronts, against the Al Qaeda-affiliated al-Nusra Front, the western-supported Free Syrian Army (FSA), IS and the Kurds. It is supported by Iran, by Hezbollah from Lebanon and by Russia. Assad and many members of the government and military are Alawites, a religious minority that is part of Shia Islam. The Alawites mostly live in the mountainous coastal region between Lebanon to the south and Turkish Hatay province in the north. Russia has its only naval base in the Mediterranean in Tartus, in the Alawite region. Regardless of whether the Assad family will remain in power or if the government can hold on to the capital of Damascus, the Alawites as an ethnic group have nowhere to go. Fear of Sunni Islamists taking revenge and maybe even committing genocide against the ethnic group of the current rulers ensures that Alawite forces will fight tenaciously to not lose control of their homeland in the west. Most observers agree that Syria is likely to end up divided, with a de-facto independent Alawite region established along the coast even if Sunni opposition forces conquer Damascus and set up a new national government.

Russia’s objective in supporting Assad is to remain relevant as a geo-political player. It has little to gain militarily, politically or economically by propping up the current bankrupt regime. But as long as Russia can be a thorn in the side of the US, Putin can demonstrate to Russians that their country is still a force to be reckoned with. In some ways Putin benefits domestically the same way as Erdogan, both burnishing their image as the local tough guy. That makes the Turkish-Russian clash even more dangerous. Just like Turkey, Russia got involved militarily to “fight terrorism”, only in its case the main target have been anti-government forces operating to the West of the IS-controlled territory, as opposed to the Kurds to the east. This also includes Turkmen, ethnic Turks in northern Syria, who were the target of the bombing run before the SU-24 was shot down by Turkish jets.

Neither Assad nor Russia place a high priority on fighting IS: If they were to defeat the barbaric hordes of IS, achieving regime change in Damascus would instantly rise to become the top priority of the US in this war again. Keeping IS in the mix is like a life insurance policy for Assad.

Shiite militia Hezbollah in Lebanon is supporting Assad with fighters. Shiites in Lebanon feel threatened by the prospect of militant Sunnis taking over next door. Lebanon suffered through a long period of civil war starting in the 1970s and is host to more than a million Syrian refugees now.

Talks have been ongoing for negotiating a cease-fire towards a political settlement. The idea is that all parties but IS would stop fighting each other, then gang up on IS and wipe it out. Finally they would agree to a new government, presumably led by the Sunni majority with some kind of autonomy for the Alawites and the Kurds. The shooting down of the Russian bomber has made this even less likely to happen any time soon. Erdogan is not particularly keen on any settlement that will create an autonomous or independent Kurdish entity south of the border, or linked up with Iraqi Kurdistan. As long as IS is there the Kurds will keep bleeding as a proxy for US ground troops that won’t get deployed.

IS will keep fighting as long as it can keep up the stream of recruits from outside the region and money from whatever sources they can lay their hands on. The more the west and Russia retaliate with military strikes and troops for acts of terrorism such as the ones in Paris or against the Russian tourists in Sinai, the easier it is for IS to sell its story as defending the “caliphate” against western “crusaders”. The war in Syria is still young compared to the jihad that has been going on in Afghanistan since the Russian invasion in 1979 and the US invasion in 2001.

I haven’t said much about Saudi Arabia and Qatar yet, two countries that would like to see a Sunni victory in Syria but are denying that they support Islamist extremists such as IS and al-Nusra Front. What mostly differentiates Saudi-Arabia from IS is not its ideology, but its oil wealth and its royal family. Ideologically they are actually quite close, for example both the Saudis and IS still practice crucifixion and neither tolerates other religions. The Saudi government opposes the likes of IS and Al-Qaeda not because they had different values, but because those militants regard the Saudi royals as corrupt and don’t recognize their authority. Saudi Arabia’s major rival in the Middle East is Iran, Syria’s main supporter. Supporting Sunni Islamists against Assad is a way of hurting Iran.

So, what will the outcome? Frankly, I am not hopeful. When next door neighbour Lebanon erupted into civil war in 1975, it took 15 years before the country could return to a fragile peace again. There are too many external powers involved in a proxy war in Syria and so much blood has been shed already, that a political settlement is unlikely any time soon. The conflict between the Saudis and Iran has recently escalated, following the execution of Shiite cleric Nimr al-Nimr, while Turkey has escalated its conflict with the Kurds and Russia. Even if Assad lost control of the capital, Russia is likely to keep supporting an Alawite rump state on the coast to keep its naval base and a seat at the table.

I would not be surprised if the war in Syria lasts another 10 years or more, if not for the sectarian and ethnic divisions within the country then because of the countries running the Syrian war as a regional proxy war, turning Syria into a burnt-out graveyard.

Turkey attacks Kurds while supporting bombing of IS

I’m a bit puzzled about the timing of Turkey’s recent attacks on Kurdish bases in northern Iraq, right after finally permitting the US to fly attacks against IS from Turkish bases. That sounds like playing both sides of the war to me… Weaken IS and its major enemy at the same time.

Does Erdoğan think the US will have to shut up about Turkish attacks on Kurdish forces if they don’t want to lose the long demanded use of Turkish bases against IS? Use of Turkish bases for the war in Syria will allow the US to step up attacks against IS, which might strengthen the position of Kurdish forces. During the siege of Kobanî, Turkey seemed determined to block Kurdish reinforcements against IS, as if it saw genocidal IS as the lesser of two evils.

Or is it simply payback time for the parliamentary triumph of the (Kurdish) People’s Democratic party (HDP), which deprived Erdoğan’s AKP of a majority in the general elections in June? Ending the peace process with Kurds may be an attempt to drive a wedge between the HDP and non-Kurdish voters, to split the opposition.

Abenomics and the Pension Bubble

Last week it was reported that the Japanese Government Pension Investment Fund (GPIF) had made a record annual return of over 12 percent last year. Considering the rapidly aging population in Japan and the related problem of how to finance pensions for large numbers of retirees with a shrinking active workforce, this may have seemed very welcome news. However, if you look a bit closer, it isn’t all what it seems.

The GPIF owes the record return mainly to increasing share prices of Japanese companies, of which it is holding stocks. The Nikkei 225 recently reached its highest level in about 15 years and it wasn’t all because Japanese exporters profited from the weakening yen. Another big factor was the decision of the Abe government to have the GPIF shift its asset allocation from government bonds to stocks. It reduced the bond target from 60% to 35% while increasing the stock target from 9% to 25%. Most of the above-target bonds have since been sold to the Bank of Japan (BoJ), which under “Abenomics” will buy up any volume of government bonds.

With the money from the bond sales the GPIF could go on a buying spree, while individual investors have actually been selling more shares than they bought. The GPIF has been sucking up shares like a vacuum cleaner with money basically printed by the Bank of Japan and this extra demand has inflated market values for shares, whether held by the GPIF or by banks, insurance companies or private investors. Beating deflation was a major declared goal of Abenomics, but so far the stock market is the only part of the economy where the government has succeeded in that goal (albeit only by some impressive stage magic by the Bank of Japan and the GPIF).

Will this recent on-paper gain shore up public finances for pension payments and health care for the elderly? Not really. The stock market can be a tricky beast. Just ask the Chinese, who had experienced an even more impressive stock market bull run until their bubble burst!

If the GPIF holds 25% of its assets in shares and it needs to pay pensions, it can only do so by selling shares at whatever the market rate happens to be at the time, which will directly influence those market rates. And if it needs a lot of cash because there aren’t many workers relative to pensioners it will need to sell a lot of shares. Share prices went up because the GPIF was a huge buyer; if it were to become a huge seller, the opposite would happen. This is even true if the GPIF were to reduce its share allocation before the pension problem will reach its peak.

If the real economy tanks, it will hit tax revenues and the stock market at the same time: With the GPIF heavily invested there, the government finances and the pensioners will be doubly exposed.

For the GPIF to do well out of stock sales it will need a huge number of individual buyers, as it keeps liquidating its portfolio. But who is going to invest in stocks when they know the market will keep on getting flooded with sell orders for years to come?

Instead of addressing the real problems, the government of Shinzo Abe has been using smoke and mirrors to con the public. While pensions are no more secure than before, a lot of stock market investors have made a mint out of the BoJ-financed buying binge, enriching wealthy Abe supporters.

There are no easy answers to the pension problem. As the age pyramid changes and inverts itself, lots of things will have to change. For one, the retirement age needs to increase to re-balance the number of workers vs. pensioners. Japan will need to open its doors more for immigration. We’ll all have to work more years and the sooner the changes are made, the less painful it will be later. More emphasis will have to be put on covering the minimum needs of retirees vs. tying payments to previous income levels and contributions. Wealthier pensioners will have to make bigger sacrifices. The necessary steps will be painful and controversial, but they are unavoidable. Smoke and mirror “Abenomics” are no way around that.

The End of Prohibition

At the beginning of 2014, sales of cannabis (marijuana) to adults became legal again in Colorado. It was legal there until 1927. Personal possession and cultivation have already been legal again for one year in both Colorado and Washington, following referendums in which a majority of voters supported ending prohibition in both states. In late December, Uruguay become the first sovereign country to officially permit regulated sales of Cannabis to adults again.

What I find remarkable about these legislative changes is how relatively little fuss they caused. Unlike the 1980s, where political crusades led to increasingly harsh drug laws in many countries, with little regard for human rights, the cost of enforcement and lack of effectiveness, the responses this time have been largely dispassionate and rational. In the US the federal government has adopted a wait and see attitude, deciding to give the states space to enforce their laws as they see fit, as long as cannabis does not cross state lines. Other states are likely to follow in the next couple of years.

America has experimented with Prohibition before, as production and sales of alcohol were illegal from 1919-1933. As we know, alcohol prohibition was an abysmal failure, handing organized crime a huge business opportunity. The US then repeated that mistake with the 1937 “Marihuana Tax Act”. When the US Supreme Court finally declared it unconstitutional in 1969, President Nixon soon replaced it with the Controlled Substances Act. He ignored the recommendations of the Shafer Commission that he had tasked with investigating its harmfulness and the best way to regulate it. The Shafer commission had recommended to decriminalize it.

Over the last decades several countries and states (including the Netherlands, Spain and Portugal) have decriminalized cannabis without legalising sales. Retail sales in Dutch coffee shops are only tolerated, but technically still illegal. Suppliers of coffee shops still operate in a Black Market and can be prosecuted. Spain chose a different model, permitting personal cultivation at home as well as within cannabis social clubs. The model in Uruguay and Colorado goes one step further and is similar to how production and sale of alcohol is handled in many countries.

While there are still international conventions, such as the 1961 Single Convention that restrict national drugs laws of signatory states, they will ultimately have no permanent effect, as they permit member states to withdraw and rejoin with reservations. Bolivia did that a few years ago, to be able to legalise its traditional use of the coca plant. Any other country can do the same for cannabis.

The legal changes in Uruguay, Washington and Colorado reflect a generational change. As people who gathered personal experience with cannabis and had found it less harmful than alcohol gradually aged into their 40s, 50s and 60s, cannabis is less associated with a particular generation. It became increasingly difficult to demonize this herb. Medical use of cannabis further contributed to changes in attitudes.

It makes no sense to use heavy handed criminal law to try to deny adults the use of a less harmful alternative to alcohol. Even if we acknowledge that cannabis use is not entirely benign, laws that would be harsh enough to have a deterrent effect will almost certainly cause more harm to individuals when enforced than use of the substance itself might have. This realization will take longer in some countries than in others, but it will come. Legal discrimination against users of cannabis for recreational, spiritual and medicinal purposes will one day go the way of racial discrimination and homophobia. It took a century from the US civil war to the end of formal segregation in southern states. It has taken decades to dismantle discrimination against homosexual couples. One day we will look back on the war on cannabis users the same way and wonder how come it lasted for so long.

Time has come for marriage equality

As the United States Supreme Courts starts considering the issue of same sex marriage, I can’t help thinking of the fact that as recently as 1967 my wife and I could not have got married in some US states because of racist laws. That was when the Supreme Court ruled in Loving v. Virginia that the state’s anti-miscegenation laws violated the constitutional rights of interracial couples. I think I can empathize with same-sex couples who are still denied the right to marry by unjust state laws today.

Today the historic reality of those racist laws is shocking to us. To our children and grandchildren, discrimination against gays and lesbians will be equally offensive. Same sex marriage takes nothing away from marriage between man and woman, it adds to it. If formally recognized long term commitments are beneficial between men and women, why deny them to other loving couples? I am confident that equality for same sex couples will come.

Google privacy and account cancellations

After Google announced its new privacy policy to take in effect on March 1, 2012, some people announced their intention to cancel their Google accounts. In a Washington Post online poll almost 2/3 of readers said they would cancel their accounts due to privacy changes. My answer to that is: Oh, really?

Despite what the self-selecting samples of voters on that straw poll suggests, I doubt we’ll hardly see any significant response to the new policy. It won’t even be a blip on Google’s radar screen. I think it is safe to bet that most users of the Google+ service also have Facebook accounts, whether they use them much or not. Facebook and its history of data privacy (or lack thereof) is not exactly a benign alternative to anything Google offers. I can not see people stop using Youtube, cut themselves off from their Gmail accounts and switching to what, Yahoo or Bing for web searches? The fact remains, Google may not live up to its “do no evil” credo at all times or forever, but most of us have even less confidence in companies like Facebook or Microsoft.

Google’s move is all about more clicks, i.e. more advertising revenue, which is their life blood. If they can show better targeted ads on web searches based on what you write about in Gmail or watch on Youtube, that’s more clicks that their advertisers pay for.

What worries me is if their data gets opened to the NSA, police, etc especially under the loose rules of something like the Patriot’s Act. Inside the US the constitution has been eroded further and further over the years, while its protections have never applied to most fellow humans who do not happen to be US citizens, as far as the US government is concerned. That is not a problem specific to Google latest move though. It’s something that ultimately only US voters can solve.