Is The Trump Bump Running Out of Steam?

It is normal for our economy to get a bump when new and promising things happen. Economic measures go up at the first of the year, when a new president is inaugurated and following tax reform legislation. People are generally more optimistic at those times and spend more freely boosting the economy.

Those events contribute to the marginally better economy we are experiencing, but there are some troubling blips on the radar. The smooth sailing may be over and we might be facing turbulent times.

First, the effects of the Trump tax cuts are diminishing. IRS policy changes for the 2019 and 2020 tax years will result in increasing taxes. Standard deductions will be going up in response to anticipated inflation, meaning that a larger share of income will be subject to taxation. This will have the effect of taking money out of the economy in 2019 without returning any real value. That might slow inflation, but at the expense of a decrease in the standard of living for most people.

Here is a chart comparing the rise of tax receipts with the rise in average hourly wages over the last couple of years:

Source: U.S. Bureau of Economic Analysis, Federal government current tax receipts: Personal current taxes [A074RC1Q027SBEA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/A074RC1Q027SBEA, November 17, 2018.

The important thing to compare are the angles of the two lines. Generally the blue line, tax receipts, is stepper than the orange line representing hourly income. That means that taxes are increasing at a greater rate than income, lowering real income. Even though we might make more money the increases are eaten up by taxes that are increasing even faster than wages. The sharp dogleg in tax receipts is the temporary bump in paychecks we saw right after the Trump tax bill was passed.

Another troubling development is the increase in household debt and delinquencies on payments. Household debt reached a new record of $13.5 trillion dollars last quarter. Household debt is the aggregate of all personal debt arising from personal loans, credit cards, auto loans, home mortgages and student loans. Debt can be a good thing when it is being reliably paid down, but payments have become less reliable.

Student loans, credit card and auto debt delinquencies have been rising, especially student loan delinquencies which have increased from 8.6% to 9.1% in the last quarter. This implies that increases in wages are not keeping up with the ability to service debt.

The troubling thing about student load debt is that it does not result in a net wealth increase for people holding it. Education is not a good investment when jobs are scarce, yet that is when people tend to go to school. The chart below starkly illustrates the lack of a relationship between education and income. Education is a good investment only during good economic times. Going into education debt during a downturn only ensures more poverty.

Source: U.S. Bureau of the Census, Real Median Household Income in the United States [MEHOINUSA672N], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MEHOINUSA672N, November 17, 2018.

Other signs of a weakening economy are jittery tech stocks. The FAAMG stocks — Facebook, Amazon, Apple, Microsoft and Alphabet – have an outsize effect on the stock market. When the techs experience a downturn, so does the rest of the stock market.

Although the FAAMG stocks are generally healthy, trends are gathering that might have an impact on their volatility. Facebook is losing members and its stock value has been declining since the summer when foreign manipulation of public opinion came to light during the 2016 election. IPhone sales are down, and holiday buying expectations are guarded.

None of this means a recession is imminent. What is concerning, though is that our new economy is not nearly as resilient as the one that disappeared in 2008, and even a modest downturn could have catastrophic effects on so many members of our economy living and dying with poverty.

How Progressivism Can Lead to Fascism

Photo by Spenser on Unsplash

Lately I’ve been thinking about the Progressive Era in the United States – that time between roughly 1880 and 1920, which saw so many reforms to industry and politics.

Upton Sinclair wrote The Jungle about the meat packing industry, and that brought us the USDA and child labor laws. Lincoln Steffens wrote Shame of the Cities and we got political reform.

These Progressive Era reforms brought needed changes, but Progressivism can be taken too far.

Progressive ideology contends that government is the best way to drive social change. Laws are passed with the idea of changing people’s behavior for the better. That works pretty well, but only in small doses. It seems that whenever government gets too much power it abuses it. That is why we have constitutions – constitutions are rules that limit government.

The United States is a liberal democracy.

In this case “liberal” is a political science concept alluding to freedom, particularly freedom from excessive government constraints that violate natural law. A liberal democracy is one that gives special protections to personal liberties, such as those guaranteed by our Bill of Rights. This is the traditional meaning of liberal, and one of the bedrock principles of the Libertarian political philosophy.

The Founders of the United States wrote protections against the over reach of political power into the Constitution. Slowly those protections have worn away.

This is where the dark side of Progressivism begins to emerge.

For example, Oregon school District 24 J turns over to police students who school officials believe may be having sex. Imagine government entities actively policing the naturally occurring hormone driven sex lives of teenagers. This is especially ironic given that schools can’t seem accomplish their prime duty of teaching reading writing and arithmetic.

In the 1980’s a flurry of new Progressive laws intended to prevent children from economic exploitation in agriculture went into effect. Now one of the unintended consequences – low teen employment – is becoming an issue. Teenagers not only face grim employment prospects, now they face criticism for not knowing how to work once they make it into the labor force. At one time, summer jobs on farms taught teens about work.

Although the Founders argued against “standing armies” and the use of the military to enforce civil laws our militarized police force amount to just that. Inner cities of places like Baltimore and Chicago are under military occupation in the form of police with military weapons, military equipment and military tactics. Essentially a military force.

Their intention is to maintain social order – one of the fundamental aims of Progressive ideology.

Progressivism and authoritarianism go hand in hand.

Glaring examples of this is the trend towards insulating police from laws the rest of us must obey. It is illegal for us to lie to a police officer, but it is not illegal for the police office to lie to us. In fact, they are trained to do just that. You may recall the FBI attempt to dupe Richard Jewel, the hero of the 1996 Atlanta Olympics, into making a “training film” documenting scripted self-incriminating statements.

The controversy and court cases arising out of the police use of Stingray is another example of how Progressivism is perverted by powerful government. Stingray is a device about the size of a briefcase that acts as a surveillance device by disguising itself as a cell tower and sucking up all cell phone traffic in the immediate area. The police claim to limit themselves to targeting only individuals under investigation.

This is nothing new. Attorney General John Ashcroft told Congress the Patriot Act would target only international terrorist suspects. Within eighteen months, the FBI used it to seize financial records of a Las Vegas nudie bar.

As if all this is not enough, the Supreme Court continues to issue rulings further insulating police and prosecutors from legal consequences when they lie, cheat and kill.

Birth control was a Progressive idea originally intended to end poverty. Margret Sanger’s goal was to convince poor people to limit the number of kids they had so there would not be as many people impoverished.

That might seem like a laudable goal, but when government applies it to the mentally ill and mentally retarded — over their objections — in the form of castration and hysterectomy it becomes a crime against humanity. (Yes. This still happens. Twenty-one states have laws regulating involuntary sterilization.)

Birth control does not always mean limiting births. Sometimes it means creating babies. The right kind of babies. In Germany, the government took birth control to the logical extreme with Lebensborn, a government program assisting people considered genetically elite to mate and produce children. China enforced the one child rule on their population for a generation and now faces a host of unintended consequences.

Sincere Progressive goals lend themselves to the emergence of Fascism by this process.

It is not as if a democracy accidentally elects a fascist leader, then repeats that mistake until the entire government becomes fascist. It is bureaucracies – organizations that, by design, are undemocratic and run by unelected officials – pushing their mission of managing social policies to fascist extremes.

Like school districts reporting sexually active students to law enforcement.

Or the Justice Department promising restraint when using the Patriot Act, then directing their agents to use it to go after owners of topless bars.

And birth control — intended to mitigate poverty — used by government agencies for eugenics and genocide.

Here are a few things to keep in mind when thinking about how far Progressivism goes.

First, Fascism is just another form of government like any other. It is not inherently evil, but it allows evil to flourish.

Fascism is dedicated to social unity and harmony. Anything threatening those social goals are ruthlessly suppressed. Like conservative speakers at Progressive universities or Populist organizations meeting in Progressive cities.

This lack of tolerance for the expression of social or political speech show how Fascism depends on authoritarianism to squelch competing ideas. Bureaucracies create endless rules that generally carry the force of law. Bureaucracies create and cite these rules when denying social or political comment. A dramatic example is threatening high school teachers with career ending and possibly criminal sanctions if they do not report sexually active students.

Next, Fascism features very tight relationships between government and business. Like the military industrial complex, or the ObamaCare medical industrial complex. (For a chilling documented example, see Conspiracy, a recreation of The Wannsee Conference – German military leaders and industrialists planning the logistics of the Final Solution.)

Finally, instead of the government existing for the good of the people, Fascism holds that people exist for the good of the government. Hence, it is permissible for police to shoot innocent civilians in the name of “officer safety” because the safety of government agents is more important than civilian lives. (Even to the extent of ordering a man to get naked, crawl on his hands and knees while begging for his life and then machine-gunning him in the back.)

So that’s a little about Progressivism and Fascism. I hope that by writing this I can encourage a little more thought and less emotion into our current political thought and discussion.