Monday, March 27, 2017

The Overlapping Crises Are Coming, Regardless of Who's in Power

No leader can reverse the dynamics of mutually reinforcing crises.
Commentators seem split into three camps: those who see Trump as a manifestation of smouldering social/economic ills, those who see Trump and his supporters as the cause of those ills, and those who see Trump as both manifestation and cause of those ills.
I think this misses the point, which is the overlapping crises unfolding in this decade-- diminishing returns on skyrocketing debts, the demographics of an aging populace, the erosion of the social contract and the profound disunity of political elites--will continue expanding and feeding on each other regardless of who is in power.
Historical analysis seems to swing between the "Big Man/Woman" narrative that views individuals as the drivers of history, and the "Big Forces/it's all economics" narrative that sees individual leaders as secondary to the broad sweep of forces beyond the control of any individual or group.
So while the mainstream views President Lincoln as the linchpin of the Civil War--his election triggered the southern secession--from the "Big Forces/it's all economics" view, Lincoln was no more than the match that lit a conflict that was made inevitable by forces larger than the 1860 election.
The tension between these two narratives is valuable, as history cannot be entirely reduced to individual decisions or broad forces (weather, resource depletion, financial crisis, geopolitical upheaval, demographics, plague, etc.). The dynamic interplay between the two shapes history.
Individuals do matter--but they cannot offset structural crises for long.
Which brings us to Trump. The status quo is falling apart for profoundly structural reasons: promises made when growth was robust, debt was modest, energy was cheap and abundant and the work force was far more numerous than those dependent on the central state's "pay as you go" pension and welfare programs-- these promises made in yesteryear can no longer be kept, regardless of who's in power.
We cannot get blood out of a turnip, and those who claim we can are only exacerbating the coming crises with their fantasies and denials.
I've been addressing these slow-moving, inevitable crises for the past 10 years. Despite the illusion of tepid "growth" and the maintenance of the status quo, beneath the surface everything is becoming much more fragile and increasingly brittle.
Even Timothy Geithner concedes this in his recent Foreign Affairs article on how to deal with the next global financial crisis. The central banks and states have expended all their ammunition-- lowering interest rates, creating money out of thin air to bolster systemic liquidity, buying bonds and other assets to prop up shaky markets, and borrowing immense sums to prop up government spending-- and there is little left for the next crisis.
And this sober view--that some additional central bank trickery can save the system in the next financial crisis--assumes things that are unlikely to be true: what if energy is no longer cheap and abundant? What if gobal weather isn't conducive to grain surpluses? What if central banks buying stocks no longer props up the market? What if debt finally reaches levels that cannot be sustained?
Could Hillary, or some other leader, forestall these deeply structural crises? The short answer is no. The only thing a leader can actually do is lower expectations so the erosion of promises that cannot be kept will be accepted as inevitable, and bolster hope while demanding sacrifices of all those who have benefited from the status quo.
If we look back on great leaders who dealt with one crisis after another, we find they didn't actually make the crises disappear; they only managed them on the margins, and spoke to the need to make sacrifices for a better future.
If we set aside the rose-colored glasses, we find that Franklin Roosevelt didn't actually "lead the nation out of Depression." The nation was still deeply entrenched in the Depression in 1940, after 8 years of FDR's leadership. It took World War II and federal borrowing and spending on an unimaginable scale to extricate the U.S. from the grip of bad debt the powers that be refused to write off and the resulting stagnation.
Which brings us again to Trump. Since no one can actually resolve these overlapping crises, a focus on the individual leader's actions is a distraction. Yes, an individual can manage the margins of crisis more or less effectively.
But overlapping mutually reinforcing crises are not a war, with a victorious and a vanquished side. As Peter Turchin and other writers I have quoted and discussed for many years have detailed, these structural trends play out regardless of policy tweaks or grand pronouncements. Leaders who manage to ease the decline or temporarily reverse it are considered successes; those who exacerbate the decline are considered failures.
No leader can reverse the dynamics of mutually reinforcing crises. No one can reverse the diminishing returns on financialization, debt, centralization, financial fakery, rentier state-cartel parasitism, or reverse the decline in paid work, the erosion of well-being and health and rising inequality.
There is no way to actually forestall the reckoning as the forces of demographics, financial predation, Imperial over-reach, soaring debts, political disunity, technology disruption and the failings of state-cartel centralization grind up the status quo.
This essay was drawn from Musings Report 5. The weekly Musings Reports are emailed exclusively to major donors and patrons ($5/month or $50 annually).
Recent podcasts/video programs:
Rogue Money (56:59 min.)


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Sunday, March 26, 2017

Forget ObamaCare, RyanCare, and any Future ReformCare--the Healthcare System Is Completely Broken

It's time to start planning for what we'll do when the current healthcare system implodes.
As with many other complex, opaque systems in the U.S., only those toiling in the murky depths of the healthcare system know just how broken the entire system is. Only those dealing daily with the perverse incentives, the Kafkaesque procedures, the endlessly negative unintended consequences, the soul-deadening paper-shuffling, the myriad forms of fraud, the recalcitrant patients who don't follow recommendations but demand to be magically returned to health anyway, and of course the hopelessness of the financial future of a system with runaway costs, a rapidly aging populace and profiteering cartels focused on maintaining their rackets regardless of the cost to the nation or the health of its people.
Ask any doctor or nurse, and you will hear first-hand how broken the system is, and how minor policy tweaks and reforms cannot possibly save the system from imploding. Based on my own first-hand experience and first-hand reports by physicians, here are a few of the hundreds of reasons why the system cannot be reformed or saved.
Say 6-year old Carlos gets a tummy-ache at school. To avoid liability, the school doesn't allow teachers to provide any care whatsoever. The school nurse (assuming the school has one) doesn't have the diagnostic tools on hand to absolutely rule out the possibility that Carlos has some serious condition, so the parents are called and told to take Carlos to their own doctor.
Their pediatrician is already booked, so Carlos ends up waiting in the ER (emergency room). Neither the school nurse nor the parents see the symptoms as worrisome or dangerous, but here they are in ER, where standards of care require a CT scan and bloodwork.
Hours later, Carlos is released and some entity somewhere gets an $8,000 bill--for a tummy-ache that went away on its own without any treatment at all.
Since the Kafkaesque billing system rewards quick turn-arounds, observation is frowned upon unless it can be billed. So if observation is deemed necessary (to avoid any liability, of course), Carlos might be wheeled into an "observation room" filled with other people, where a nurse pops in every once in a while. This adds $3,000 to the bill.
(Never mind the stress on Carlos being in such unfamiliar surroundings; he might have felt better if he hadn't been subjected to the anxieties that come with being enmeshed in the healthcare system's straight-jacket of standards of care.)
If Carlos doesn't feel better after all this, then the bill is set to balloon bigtime because an overnight stay in the hospital is the next step--and if there isn't a 100% certainty that there is no chance of his stomach-ache becoming something serious, then the system will insist on overnight observation as the only legally defensible option.
There are other ways to increase the fees without actually providing additional care; was Carlos receiving "critical care"? Of course he was, because, well, it pays better, and by definition any ER visit is critical care.
This example is just the tip of the iceberg, but you get the point: all institutional care decisions ultimately revolve around thwarting future liability claims and maximizing the billing value of each interaction or procedure.
You've probably seen some of the racketeering that passes for "business as usual" in the pharmaceutical arm of the "healthcare" industry. A pharma company that spent $500,000 trying to keep pot illegal just got DEA approval for synthetic marijuana (via Chad D.)
Off-patent medications double or triple in cost, and then double or triple again with a few years, without any justification. To extend expiring patents, Big Pharma corporations petition the FDA to change the target audience for the med, and this trivial administrative change awards the corporation years more of lucrative patent protection.
The scams are endless, the skims are endless, the fraud is endless, the waste is endless, the fortunes expended to limit "winner take all" liability claims are endless, the paperwork churn is endless and the perverse incentives and negative unintended consequences are endless.
Everyone knows the system is unsustainable, perverse and insane, but they are powerless to change it within the system as it is. The usual sort of political horsetrading that passes for "reform" yielded ObamaCare, which did essentially zero to limit costs or cartel rackets.
A system based on parasitic predation by all the cartel players cannot be reformed or saved from its own perverse incentives and skyrocketing costs. The foundations of U.S. healthcare are rotten to the core. "Reform" is an appealing delusion, but the rot is so deep and so pervasive it is embedded in the society and the culture, beyond the reach of legislative overhauls, no matter how well-meaning.
This chart-fest reflects the trends that cannot be reversed by policy tweaks and tucks: The U.S. spends more than twice as much per person than our advanced competitors such as Japan and France.
The U.S. spends 2.5 times more per person than the OECD (i.e. the industrialized nations) average:
Wages have risen 16%, GDP rose 168%, and healthcare soared 818%. Do you reckon wage earners might have a hard time paying for healthcare nowadays?
If healthcare had risen only as much as official inflation, each household would be saving $10,000 per year--$100,000 each decade. $100K here and $100K there, and pretty soon you're talking real money in a conventional wage-earner household budget.
Projections of skyrocketing Medicare and Medicaid program costs guarantee national bankruptcy. The projection of 90 million Medicare enrollees is predictable, but there is no reason to believe costs will be limited to $20,000 per enrollee annually.
U.S. healthcare costs more in every category than other healthcare systems.Tweaking  policy in one slice does nothing to limit the staggering increases being logged in all the other tranches of the system.
America's healthcare system is the perfection of the fraud triangle: the pressure to increase billings, fees and profits is immense, the rationalizations are unlimited (it's within the legal guidelines, etc.) and the opportunities for fraud are equally unlimited.
Individual caregivers and administrators want a different, better role and a better outcome, but each is trapped in the system as it is--and reform is impossible given the systemic foundations, incentives and legal framework.
It's time to start planning for what we'll do when the current system implodes.We might start by considering The "Impossible" Healthcare Solution: Go Back to Cash(2009).


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Thursday, March 23, 2017

The Deep State's Dominant Narratives and Authority Are Crumbling

This is why the Deep State is fracturing: its narratives no longer align with the evidence.
As this chart from Google Trends illustrates, interest in the Deep State has increased dramatically in 2017. The term/topic has clearly moved from the specialist realm to the mainstream. I've been writing about the Deep State, and specifically, the fractures in the Deep State, for years.
Amusingly, now that "Progressives" have prostituted themselves to the Security Agencies and the Neocons/Neoliberals, they are busy denying the Deep State exists. For example, There is No Deep State (The New Yorker).
In this risible view, there is no Deep State "conspiracy" (the media's favorite term of dismissal/ridicule), just a bunch of "good German" bureaucrats industriously doing the Empire's essential work of undermining democracies that happen not to prostrate themselves at the feet of the Empire, murdering various civilians via drone strikes, surveilling the U.S. populace, planting bugs in new iPhones, issuing fake news while denouncing anything that questions the dominant narratives as "fake news," arranging sweetheart deals with dictators and corporations, and so on.
The New Yorker is right about one thing--the Deep State is not a "conspiracy:" it is a vast machine of control that is largely impervious to the views or demands of elected representatives or the American people. The key to understanding this social-political-economic control is to grasp that control of the narratives, expertise and authority is control of everything. Allow me to illustrate how this works.
The typical politician has a busy daily schedule of speaking at the National Motherhood and Apple Pie Day celebration, listening to the "concerns" of important corporate constituents, attending a lunch campaign fundraiser, meeting with lobbyists and party committees, being briefed by senior staff, and so on.
Senior administrators share similarly crowded schedules, minus the fundraising but adding budget meetings, reviewing employee complaints and multiple meetings with senior managers and working groups.
Both senior elected officials and senior state administrators must rely on narratives, expertise and authority because they have insufficient time and experience to do original research and assessment.
Narratives create an instant context that "makes sense" of various data points and events. Narratives distill causal factors into an explanatory story with an implicit teleology--because of this and that, the future will be thus and so.
For example: because Iraq has weapons of mass destruction (WMD), the future promises the terrible likelihood (more than a possibility, given Iraqi deployment of poison gas in the Iraq-Iran War) that America or its allies will be devastated by Iraqi weapons of mass destruction. This teleology leads to the inescapable need to eliminate Iraq's weapons of mass destruction by any means necessary, and remove the political will to use them by removing Iraq's leader from power.
Politicos and senior administrators rely on expertise and authority as the basis of deciding whether something is accurate and actionable. Professional specialists are assumed to have the highest available levels of expertise, and their position in institutions that embody the highest authority give their conclusions the additional weight of being authoritative. The experts' conclusion doesn't just carry the weight of expertise, it has been reviewed by senior officials of the institution, and so it also carries the weight of institutional authority.
So when the C.I.A. briefing by its experts claims Iraq has WMD, and the briefing includes various threads of evidence that the institution declares definitive, who is a non-expert to challenge this conclusion and teleology? On what technical basis does the skeptic reject the expertise and authority of the institution?
We can now define the Deep State with some precision. The Deep State is fundamentally the public-private centralized nodes that collect, archive and curate dominant narratives and their supporting evidence, and disseminate these narratives (and their implicit teleologies) to the public via the media and to the state agencies via formal and informal inter-departmental communication channels.
By gaining control of the narratives, evidence, curation and teleology, each node concentrates power. the power to edit out whatever bits contradict the dominant narrative is the source of power, for once the contradictory evidence is buried or expunged, it ceases to exist.
For example, the contradictory evidence in the Pentagon Papers was buried by being declared Top Secret. The bureaucratic means to bury skeptical (i.e. heretical) views or evidence are many. Sending the authors to figurative Siberia is remarkably effective, as is burying the heretical claims in a veritable mountain of data that few if any will ever survey.
Curation is a critical factor in maintaining control of the narrative and thus of control; the evidence is constantly curated to best support the chosen narrative which in turn supports the desired teleology, which then sets the agenda and the end-game.
The senior apparatchiks of the old Soviet Union were masters of curation; when a Soviet leader fell from favor, he was literally excised from the picture--his image was erased from photos.
This is how narratives are adjusted to better fit the evidence. Thus the accusation that "the Russians hacked our election" has been tabled because it simply doesn't align with any plausible evidence. That narrative has been replaced with variants, such as "the Russians hacked the Democratic National Committee." Now that this claim has also been shown to be false, new variants are popping up weekly, with equally poor alignment with evidence.
The primary claim of each Deep State node is that its expertise and authority cannot be questioned. In other words, while the dominant narrative can be questioned (but only cursorily, of course), the expertise and authority of the institutional node cannot be questioned.
This is why the Deep State is fracturing: the expertise and authority of its nodes are delaminating because its narratives no longer align with the evidence. If various Security Agencies sign off on the narrative that "Russia hacked our election" (a nonsense claim from the start, given the absurd imprecision of the "hacking"--hacking into what? Voting machines? Electoral tallies?), and that narrative is evidence-free and fact-free, i.e. false, then the expertise and authority of those agencies comes into legitimate question.
Once the legitimacy of the expertise and authority is questioned, control of the narrative is imperiled. The control of the narrative is control of the teleology, the agenda and the end-game--in other words, everything. If the institution loses control of the dominant narrative, it loses its hold on power.
This is why the Deep State is in turmoil--its narratives no longer make sense, or are in direct conflict with other nodes' narratives or have been delegitimized by widening gaps between "definitive" claims and actual evidence.
There is indeed a Deep State, but its control of dominant narratives, and thus its source of control and power, is crumbling. The gap between the narratives and the evidence that supports them has widened to the point of collapse.



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Wednesday, March 22, 2017

The Divided Deep State is a Symptom, Not the Disease

If we understand the profound political disunity fracturing the nation and its Imperial Project, we understand the Deep State must also fracture along the same fault lines.
I've been writing about the divided Deep State for a number of years, most recently in The Conflict within the Deep State Just Broke into Open Warfare. The topic appears to be one of widespread interest, as this essay drew over 300,000 views.
It's impossible to understand the divided Deep State unless we situate it in the larger context of profound political disunity, a concept I learned from historian Michael Grant, whose slim but insightful volume The Fall of the Roman Empire I have been recommending since 2009.
As I noted in my 2009 book Survival+, this was a key feature of the Roman Empire in its final slide to collapse. The shared values and consensus which had held the Empire's core together dissolved, leaving petty fiefdoms to war among themselves for what power and swag remained.
A funny thing happens when a nation allows itself to be ruled by Imperial kleptocrats: such rule is intrinsically destabilizing, as there is no longer any moral or political center to bind the nation together. The public sees the value system at the top is maximize my personal profit by whatever means are available, i.e. complicity, corruption, monopoly and rentier rackets, and they follow suit by pursuing whatever petty frauds and rackets are within reach: tax avoidance, cheating on entrance exams, gaming the disability system, lying on mortgage and job applications, and so on.
But the scope of the rentier rackets is so large, the bottom 95% cannot possibly keep up with the expanding wealth and income of the top .1% and their army of technocrats and enablers, so a rising sense of injustice widens the already yawning fissures in the body politic.
Meanwhile, diverting the national income into a few power centers is also destabilizing, as Central Planning and Market Manipulation (a.k.a. the Federal Reserve) are intrinsically unstable as price can no longer be discovered by unfettered markets. As a result, imbalances grow until some seemingly tiny incident or disruption triggers a cascading collapse, a.k.a. a phase shift or system re-set.
As the Power Elites squabble over the dwindling crumbs left by the various rentier rackets, there's no one left to fight for the national interest because the entire Status Quo of self-interested fiefdoms and cartels has been co-opted and is now wedded to the Imperial Oligarchy as their guarantor of financial security.
The divided Deep State is a symptom of this larger systemic political disunity. I have characterized the divide as between the Wall Street-Neocon-Globalist Neoliberal camp--currently the dominant public face of the Deep State, the one desperately attempting to exploit the "Russia hacked our elections and is trying to destroy us" narrative--and a much less public, less organized "rogue Progressive" camp, largely based in the military services and fringes of the Deep State, that sees the dangers of a runaway expansionist Empire and the resulting decay of the nation's moral/political center.
What few observers seem to understand is that concentrating power in centralized nodes is intrinsically unstable. Contrast a system in which power, control and wealth is extremely concentrated in a few nodes (the current U.S. Imperial Project) and a decentralized network of numerous dynamic nodes.
The disruption of any of the few centralized nodes quickly destabilizes the entire system because each centralized node is highly dependent on the others. This in effect what happened in the 2008-09 Financial Meltdown: the Wall Street node failed and that quickly imperiled the entire economy and thus the entire political order, up to and including the Global Imperial Project.
Historian Peter Turchin has proposed that the dynamics of profound political disunity (i.e. social, financial and political disintegration) can be quantified in a Political Stress Index, a concept he describes in his new book Ages of Discord.
If we understand the profound political disunity fracturing the nation and its Imperial Project, we understand the Deep State must also fracture along the same fault lines. There is no other possible output of a system of highly concentrated nodes of power, wealth and control and the competing rentier rackets of these dependent, increasingly fragile centralized nodes.
Of related interest:
Is the Deep State Fracturing into Disunity? (March 14, 2014)


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