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Heeee’s Back…Karl, Is That You?

Summary:
In case you missed it, or don’t read the Drudge Report,  here is the current banner headline: Should we?  Ah, uh, well…we can’t help ourselves:   YOU HEARD IT HERE FIRST! In February 2018, we looked at the data of the political preferences of younger voters and wrote the post, Karl, The Comeback Kid? Posted on February 20, 2018 By the way, after that post in early 2018, everyone began to jump on the comeback Karl train. Socialism Socialism is a trigger word, which will be ubiquitous in the 2020 presidential campaign, is not well understood, is ambiguous, and ill-defined by most who toss it around, and ultimately means whatever you want it to mean to lend support for your politics. Is Danish and Nordic socialism, or capitalism,  the same as Venezuelan or Cuban socialism?  What

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Heeee’s Back…Karl, Is That You?

In case you missed it, or don’t read the Drudge Report,  here is the current banner headline:

Heeee’s Back…Karl, Is That You?

Should we?  Ah, uh, well…we can’t help ourselves:   YOU HEARD IT HERE FIRST!

In February 2018, we looked at the data of the political preferences of younger voters and wrote the post,

Karl, The Comeback Kid?

By the way, after that post in early 2018, everyone began to jump on the comeback Karl train.

Socialism

Socialism is a trigger word, which will be ubiquitous in the 2020 presidential campaign, is not well understood, is ambiguous, and ill-defined by most who toss it around, and ultimately means whatever you want it to mean to lend support for your politics.

Is Danish and Nordic socialism, or capitalism,  the same as Venezuelan or Cuban socialism?  What exactly does socialism with Chinese characteristics mean?

Closer To Home

Closer to home,  if you ride Amtrak and prefer the U.S. post office over FedEx or letting brown do it for you, does that make you a socialist?

Is our progressive marginal tax system socialist?

Is golf’s handicap system a form of socialism?

Are you a socialist if you believe the government should not allow markets to clear and Fed is increasingly called upon to intervene in the stock market to bail out risk-takers and traders who have racked up steep losses?  We call these the “market socialists,” by the way, and include the POTUS and Jim Cramer.  Others call it “socialism for the rich.”

Is deposit insurance (the FDIC government guarantee)  on your checking account a form of socialism?

What does it mean for the government to control the “commanding heights” of the economy?

What Is The Role Of Government

We are not confident the majority of the public has a clear understanding of the term “socialism” but very confident it won’t stop the politicos — who, most likely,  have an even more limited understanding —  from exploiting that ignorance to obtain power.

After all, a recent poll showed that 56 percent of the public does not support the use of Arabic numerals being used in public schools.   The term “Arabic” in the survey question is also a trigger word and probably confused many to the fact Arabic numerals are ubiquitous in the United States (0,1,2,3,4,5,6,7,8,9).

Heeee’s Back…Karl, Is That You?

Let us be clear so you know where we stand.

  1. Free markets, i.e., the private sector, usually work better than the government but sometimes don’t, such as the case of public goods — clean air and waterways, roads, law enforcement, and the national military.  Markets do fail sometimes, not incorporating the cost of side effects, such as pollution,  what economists call externalities.
  2. True free markets do not exist.  As we once heard, “life is the search to find a monopoly.”    So too it is with the business sector,  they don’t like competition and will, if possible, lobby the government for protection from competition, either foreign (very relevant today) or domestic.   No judgment, it is just what they do and it needs to be regulated lest the economy becomes the economy of the few.   Only the buyer and the bought benefit when big corporate money meets politics.  But, hey, it’s freedom of speech, no?   Corporations are people too.
  3. Incentives are a good thing.  Public sector unions, especially the teachers, could do better by adopting more of them.
  4. People enter the economy with unlevel playing fields and unequal resource endowments, such as human capital, most importantly, the strength and efficacy of the family unit they’re born into.  The government does have a role pulling up the less fortunate, trying to increase their chances of being productive taxpayers, mainly through education and training.   Also providing the necessary resources to develop the human capital to succeed in the modern day labor force, including adequate nutrition for children   If you are a golfer on the first tee of a skins game, think, “what is your handicap?” The golf handicap is the biggest form of socialism in all of sport, ironically, predominantly played by some of the wealthiest self-professing capitalists.
  5. If you are reading this blog, you’re part of the  “Lucky Sperm Club” and that realization will help you better internalize the concept of “grace” and impact your values and world view.

We define socialism as government control of the means of production and main channels of commerce.

Mixed Economy

Heeee’s Back…Karl, Is That You?

Let’s get real, folks,  the U.S. is a mixed economy.   The production of goods and services is dominated by the business sector but also has a relatively large government value added (production) as a percent of GDP.   The public sector arm also reaches much further into the economy than just producing goods & services, however, in the form of spending, taxation, redistribution, and regulation, just to name a few.

Good or bad?  You decide.

Heeee’s Back…Karl, Is That You?

The Clash Of Generations Is Here

We have been writing for several years about the coming “Clash of Generations.”   See here.

Heeee’s Back…Karl, Is That You?

It’s here folks, and we are going to see it played out in the 2020 presidential election.  The scenario may play out not like any elections we have witnessed since the passing of the political torch that torched the summer of 1968 when the parents and grandparents of those now fighting for a seat at the table of political power were doing the same.   This time, it ain’t about Vietnam, however.

Millennials cannot be blamed for concluding that the economy is rigged against them. True, in absolute terms, Americans under 40 carry less debt than middle-aged Americans. But their debt profile is toxic. Nearly half of it comes from student loans and credit cards. In contrast, 72 percent of the debt held by Americans aged 40 to 49 is mortgage debt, which comes with tax advantages and allows debtors to build home equity as they repay their loans…

Young people then struggle to stay above water financially after they graduate. The net worth of the median Millennial household has fallen nearly 40 percent since 2007. This is not because they eat too much avocado toast; it is because student loan payments consume the income that they would otherwise save. Headline unemployment figures show that the labor market is humming. It does not feel that way for Millennials, who have never experienced a “good economy.” – The Coming Generation War,  The Atlantic 

Heeee’s Back…Karl, Is That You?

We hope 2020 will not be as violent and disruptive as in 1968.   Make no mistake, however,  the Summer of Discontent cometh.

Finally, we leave you with a caveat about trying to predict the future on such matters,

In 1960, Friedrich Hayek predicted in The Constitution of Liberty “that most of those who will retire at the end of the century will be dependent on the charity of the younger generation. And ultimately not morals but the fact that the young supply the police and the army will decide the issue: concentration camps for the aged unable to maintain themselves are likely to be the fate of an old generation whose income is entirely dependent on coercing the young.” It hasn’t turned out that way at all—a salutary warning that it is much easier to identify generational conflicts of interest than to anticipate correctly the political form they will take. – The Coming Generation War,  The Atlantic 

Stay tuned.

Gregor Samsa
This site is designed as a “go to” source for traders, investors, policymakers and any interested in markets and the global economy. We provide informed opinion, timely market information, sources, and links.

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