From Heather Cox Richardson: A Wall Street Journal–NORC poll released yesterday found that only 25% of Americans believe they have a good chance of improving their standard of living. Nearly 70% said it was no longer possible to work hard and get ahead. A majority of those polled said the generation before them had an easier time starting a business, buying a home, or staying at home to parent a child.
A different piece in the Wall Street Journal explained that there were 927 American billionaires in 2020 and 1,135 in 2024. Together, they are worth about $5.7 trillion. The 100 richest of the set control more than half of the total at about $3.86 trillion. As the number of billionaires grew, “supply side” economic policies in the U.S., designed to concentrate wealth at the top of the economy among investors rather than on the “demand side” made up of consumers, hollowed out the middle class. From 1975 to 2018, at least $50 trillion moved from the bottom 90% to the top 1%.
Yet another piece in the Wall Street Journal, this one by Katherine Hamilton and Alison Sider, noted that consumer confidence is sliding. While wealthier Americans seem to be doing fine, they write, rising distress about the economy is obvious among the middle class: those making about $53,000 to $161,000 a year. Chief economist at Morning Consult John Leer told the reporters: “There was a period of time, briefly, where the middle-income consumer looked like they were being dragged up by all that was going well in the world. Then things fell off a cliff.”
In an interview with the Financial Times published yesterday, billionaire Ray Dalio, the founder of hedge fund Bridgewater Associates, warned that the U.S. today looks a lot like “what happened around the world in the 1930–1940 period.” Dalio identified the policies of President Donald J. Trump as the sort of “strong autocratic leadership that sprang out of the desire to take control of the financial and economic situation” in the 1930s.
Trump’s rise in 2016 was fueled in part by his promise to defend those left behind in the supply-side economy. But he abandoned his economic promises with his 2017 tax cuts that benefited the wealthy and corporations far more than average Americans, and rallied his supporters with culture-war issues.
In 2024, Trump ran on the argument that Democrat Joe Biden had not adequately addressed inflation—although the U.S. managed the post-pandemic inflation spike better than any other developed economy—promising that he would make prices come down “immediately.” Instead, his tariffs and deportations have sent inflation upward again, and the budget reconciliation bill he forced through Congress is already pushing people off their healthcare insurance and threatening the survival of rural hospitals.
The law Trump and the Republicans dubbed the “One Big, Beautiful Bill Act” is profoundly unpopular, with about two thirds of Americans opposed to it. So today, White House press secretary Karoline Leavitt, Trump pollster Tony Fabrizio, and Trump political director James Blair met with Republican congress members to tell them that people will come to like the law if “they completely rebrand it and talk about it differently.”
The administration officials told the congress members, who have been hearing from constituents angry about the law’s deep spending cuts, that they should be pushing the idea that the law helps “working families.” Vice President J.D. Vance tried this last week in Wisconsin, and this afternoon, House speaker Mike Johnson (R-LA) appeared to take that advice out for a spin, publicly referring to the law the same way Vance did: as the “working families tax cut act.”
The nonpartisan Center on Budget and Policy Priorities notes that under the law, a family earning less than $50,000 a year would get less than $300 in tax cuts in 2027 while losing access to Medicaid and food assistance, while a filer earning more than $1 million would receive about $90,000 in tax breaks. The nonpartisan Congressional Budget Office estimates that the 10% of Americans at the bottom of the economy will lose about $1,200 a year.
Trump’s policies are working well for his family, though. Angus Berwick of the Wall Street Journal reported that the Monday launch of their WLFI cryptocurrency netted them about $5 billion on paper. Today Eric Trump launched American Bitcoin, a cryptocurrency mining company; Kyle Khan-Mullins and Dan Alexander of Forbes reported today that he is now worth at least $3.2 billion.
Meanwhile, Trump continues to insist that he must have the powers of a dictator to make the country prosperous again. When a court found his use of the International Emergency Economic Powers Act to justify his sweeping tariffs was illegal, he said, “If you took away tariffs, we could end up being a third-world country,” although the U.S. was not a third-world country before Trump launched his tariff war in April. He has said he will take the case before the Supreme Court.
If he loses there, as Elisabeth Buchwald wrote for CNN, the U.S. might have to pay back more than $210 billion to the American businesses that have paid the tariffs. On Monday, Josh Marshall at Talking Points Memo pointed to a story Louise Matsakis and Zoë Schiffer of Wired reported in late July: Wall Street companies, including Cantor Fitzgerald, a financial services company run by the sons of billionaire commerce secretary Howard Lutnick since Lutnick joined the Trump administration, have been buying up the rights to collect tariff refunds if the tariffs are struck down.
Marshall notes that while making a bet on an uncertain outcome is a huge part of modern finance, the idea that a commerce secretary’s company is making bets on something the commerce secretary has significant authority over is a perfect symbol of the Trump era.
While the Trump family and loyalists cash in on their control of the government, Trump continues to assert that he requires authoritarian powers to “Make America Great Again.”
Trump has relied heavily on the Supreme Court’s defense of his leeway as the nation’s leader in foreign affairs, and after being stymied by the courts for its actions at home, the administration yesterday announced it had blown up a boat in international waters in the Caribbean with eleven people on it, alleging the boat was carrying illegal drugs to the United States from Venezuela. Although U.S. forces could have stopped the boat without destroying it and often do so, shooting at engines, Secretary of State Marco Rubio said the boat posed an “immediate threat to the United States,” so the U.S. had the right to destroy it. Perhaps thinking it demonstrated power, the administration circulated a video of the strike.
Legal analyst Ryan Goodman wrote: “I worked at [the Department of Defense]. I literally cannot imagine lawyers coming up with a legal basis for [the] lethal strike of [a] suspected Venezuelan drug boat. Hard to see how this would not be "murder" or war crime under international law that DoD considers applicable.”
Notre Dame law professor Mary Ellen O’Connell told John Hudson, Samantha Schmidt, and Alex Horton of the Washington Post that the strike violated international law. “When the president decides this is a person who can be killed summarily, there’s no restraint on him,” she told the reporters. “It’s a very dangerous new move,” since he could decide to launch similar strikes within the United States in pursuit of those he calls drug traffickers.
Representative Adam Smith of Washington, the top Democrat on the House Armed Services Committee, said the strike was “deeply concerning,” noting that “[t]he administration has not identified the authority under which this action was taken, raising the question of its legality and constitutionality.” Smith added: “The lack of information and transparency from the administration is even more concerning. Does this mean Trump thinks he can use the U.S. military anywhere drugs exist, are sold, or shipped? What is the risk of dragging the United States into yet another military conflict?”
Legal analyst Joyce White Vance noted that the justification for the strike was dubious enough that even Rubio appeared to want a little distance from it, as he made a point of specifying that the U.S. acted “on the president’s orders.”
Trump has attempted to demonstrate authoritarian power with his military displays in Los Angeles and Washington, D.C., and yesterday he announced that “we’re going in” to Chicago, although he didn’t offer any specifics. After Illinois governor J.B. Pritzker rejected the idea the president could simply send troops, Trump appeared to back off, saying Pritzker should ask him for help. “When did we become a country where it’s OK for the U.S. president to insist on national television that a state should call him to beg for anything—especially something we don’t want?” Pritzker said. “Have we truly lost all sense of sanity in this nation, that we treat this as normal?”
A recent Reuters/Ipsos poll shows just 38% of Americans approve of Trump’s deployment of troops in Washington, D.C.
Trump has reason to be afraid of the American people for another reason, too: they want to see the files from the federal investigation of convicted sex offender Jeffrey Epstein, especially now that they know Trump is mentioned in those files. Speaker Johnson dismissed the House early for its August break this year to avoid having to deal with the demands of members for the release of the files, but now Congress is back in session and the demands are right back on the table. Trump has tried to stop Republicans from asking for the files by warning such a demand would be seen as a hostile act against the administration.
Today the administration arranged a military flyover during the visit of President Karol Nawrocki of Poland, in honor of a Polish army pilot killed in a training exercise. The flyover occurred just at the time more than 100 of the women who survived sexual grooming, assault, and rape in their association with Epstein and his associate, convicted sex trafficker Ghislaine Maxwell, spoke at a press conference outside the U.S. Capitol, drowning out their words.
But it did not silence the words of survivor Jess Michaels.
“For 27 years, I thought I was the only one that Jeffrey Epstein raped. I believed I was alone, and I was kept silent by the shame that was inside me and by the fear outside in the world,” she said. “But I wasn't the only one. None of us were. And what once kept us silent now fuels that fire and the power of our voices. We are not the footnotes in some infamous predator’s tabloid article. We are the experts and the subjects of this story. We are the proof that fear did not break us. And we don't just speak for ourselves, but for every survivor whose story is still unspoken…. This is what power looks like. Survivors united, voices joined, refusing to be dismissed. Know this: justice and accountability are not favors from the powerful. They are obligations, decades overdue. This moment began with Epstein's crimes, but it's going to be remembered for survivors demanding justice, demanding truth, demanding accountability, and we will not stop until survivor voices shape justice, transform culture, and define the future. We are no longer whispers. We are one powerful voice, too loud to ignore, and we will never be silenced again.”
file:///var/mobile/Library/SMS/Attachments/62/02/DA5C9444-B2F4-469D-A9B9-CE166881FF9C/IMG_0246.png
GM
Heather Cox Richardson
Aug 14 - Social Security
On August 14, 1935, President Franklin Delano Roosevelt signed the Social Security Act into law. While he had already put in place new measures to regulate business and banking and had provided temporary work relief to combat the Depression, this law permanently changed the nature of the American government.
The Social Security Act established a federal system of old-age benefits; unemployment insurance; aid to homeless, dependent, and neglected children; funds to promote maternal and child welfare; and public health services. It was a sweeping reworking of the relationship between the government and its citizens, using the power of taxation to pool funds to provide a basic social safety net.
The driving force behind the law was FDR’s secretary of labor, Frances Perkins. She was the first woman to hold a position in the U.S. Cabinet and still holds the record for having the longest tenure in that job: she served from 1933 to 1945.
Perkins brought to the position a vision of government very different from that of the Republicans who had run it in the 1920s. While men like President Herbert Hoover had embraced the idea of a “rugged individualism” in which men provided for their families on their own, Perkins recognized that the vision of a hardworking man supporting his wife and children was more myth than reality: her own husband suffered from bipolar disorder, making her the family’s primary support. She understood that Americans had always supported each other.
As a child, Perkins spent summers with her grandmother, with whom she was very close, in the small town of Newcastle, Maine, surrounded by a supportive community. In college, at Mount Holyoke, she majored in chemistry and physics, but after a professor required students to tour a factory to observe working conditions, Perkins became committed to improving the lives of those trapped in industrial jobs. After college, Perkins became a social worker and, in 1910, earned a masters degree in economics and sociology from Columbia University. She became the head of the New York office of the National Consumers League, urging consumers to use their buying power to demand better conditions and wages for the workers who made the products they were buying.
The next year, in 1911, she witnessed a fire at the Triangle Shirtwaist Factory in which 146 workers, mostly women and girls, died. They were trapped in the building when the fire broke out because the factory owner had ordered the doors to the stairwells and exits locked to make sure no one slipped outside for a break. Unable to escape the smoke and fire in the factory, the workers—some of them on fire—leaped from the eighth, ninth, and tenth floors of the building, dying on the pavement.
The Triangle Shirtwaist Fire proved to Perkins that voluntary organizations would never be enough to improve workers’ lives. She turned toward using the government to adjust the harsh conditions of industrialization. She began to work with the Democratic politicians at Tammany Hall, who presided over communities in the city that mirrored rural towns and who exercised a form of social welfare for their voters, making sure they had jobs, food, and shelter and that wives and children had a support network if a husband and father died. In that system the voices of women like Perkins were valuable, for their work in the immigrant wards of the city meant that they were the ones who knew what working families needed to survive.
The overwhelming unemployment, hunger, and suffering during the Great Depression convinced Perkins that state governments alone could not adjust the conditions of the modern world to create a safe, supportive community for ordinary people. She came to believe that, as she said: “The people are what matter to government, and a government should aim to give all the people under its jurisdiction the best possible life.”
Perkins met FDR through her Tammany connections, and when he asked her to be his secretary of labor, she told him that she wanted the federal government to provide unemployment insurance, health insurance, and old-age insurance. She later recalled: “I remember he looked so startled, and he said, ‘Well, do you think it can be done?’”
Creating federal unemployment insurance became her primary concern. Congressmen had little interest in passing such legislation, claiming that unemployment insurance and federal aid to dependent families would undermine a man’s willingness to work. But Perkins recognized that the Depression had added pressure to the idea of social insurance by emphasizing the needs of older Americans. In Long Beach, California, Dr. Francis Townsend had looked out of his window one day to see elderly women rooting through garbage cans for food. Appalled, he came up with a plan to help the elderly and stimulate the economy at the same time. Townsend proposed that the government provide every retired person over 60 years old with $200 a month, on the condition that they spend it within 30 days, a condition designed to stimulate the economy.
Townsend’s plan was wildly popular. More than that, though, it sparked people across the country to start coming up with their own plans for protecting the elderly and the nation’s social fabric.
It also spurred Congress to action. Perkins recalled that Townsend “startled the Congress of the United States because the aged have votes. The wandering boys didn't have any votes; the evicted women and their children had very few votes. If the unemployed didn't stay long enough in any one place, they didn't have a vote. But the aged people lived in one place and they had votes, so every Congressman had heard from the Townsend Plan people.”
FDR put together a committee to come up with a plan, but committee members could not make up their minds how to move forward. Perkins continued to hammer on the idea they must come up with something, and finally locked the members of the committee in a room. As she recalled: “Well, we locked the door and we had a lot of talk. I laid out a couple of bottles of something or other to cheer their lagging spirits. Anyhow, we stayed in session until about 2 a.m. We then voted finally, having taken our solemn oath that this was the end; we were never going to review it again.”
By the time the bill came to a vote, it was hugely popular. The vote was 371 to 33 in the House and 77 to 6 in the Senate.
When asked to describe the origins of the Social Security Act, Perkins mused that its roots came from the very beginnings of the nation. When Alexis de Toqueville wrote Democracy in America in 1835, she noted, he thought Americans were uniquely “so generous, so kind, so charitably disposed.” “Well, I don't know anything about the times in which De Tocqueville visited America,” she said, but “I do know that at the time I came into the field of social work, these feelings were real.”
With the Social Security Act, Perkins helped to write into our laws a longstanding political impulse in America that stood in dramatic contrast to the 1920s philosophy of rugged individualism. She recognized that the ideas of community values and pooling resources to keep the economic playing field level and take care of everyone are at least as deeply seated in our political philosophy as the idea of every man for himself.
In a 1962 speech recalling the origins of the Social Security Act, Perkins reflected: “Of course, the Act had to be amended, and has been amended, and amended, and amended, and amended, until it has now grown into a large and important project, for which, by the way, I think the people of the United States are deeply thankful. One thing I know: Social Security is so firmly embedded in the American psychology today that no politician, no political party, no political group could possibly destroy this Act and still maintain our democratic system. It is safe. It is safe forever, and for the everlasting benefit of the people of the United States.”
Major implications for NOStR and free speech!
Fire and Ice! Who knows the degree of refraction?
A King or a Digital Democracy?
A King or a Digital Democracy?
Democracy is a System. Systems Can Be Rewritten.
Frank Kashner
May 27, 2025
Like many in my generation, I once believed that all bosses were bastards. Then I became one.
I tried to be a good one. And it turns out—some bosses are good. Just like some institutions are good. Or can be. For a while.
But I’ve also spent a lifetime watching organizations and individuals lose their way.
Unions. Schools. Governments. Platforms. I’ve seen them get captured, corrupted, or calcified, as have you.
It’s hard for us to tell if it is the system or particular people, until we try them.
Thanks for reading! Subscribe for free to receive new posts and support my work.
The clearest example?
Citizens United—a Supreme Court decision that turned money into speech and gutted what was left of functional democracy in the United States.
After that ruling, most politicians became dependent on corporate capital to survive.
I knew the system was broken.
But it was reading historian Nancy MacLean’s Democracy in Chains that explained to me and to many others how we got here.
Her book lays out how libertarian billionaires—especially the Koch network—have worked for decades to undermine public institutions, corrupt education, disempower workers, and consolidate control.
The goal was not just deregulation. It was the end of democracy itself. Project 2025 spells it out. It lays out the path to a powerful Executive, a king.
After I read that book, I helped bring Nancy to speak at Salem State University.
She spoke the day before the country shut down for Covid.
It was a kind of punctuation mark. The end of one era.
Then, I discovered Audrey Tang and the story of digital democracy in Taiwan.
And I saw that something new might be possible using technology for good.
Taiwan’s Model: Tools That Listen
Taiwan developed civic infrastructure that doesn't divide—it listens at a large scale.
They use tools like Pol.is, a lightweight, AI-assisted platform that finds areas of consensus, instead of amplifying disagreement.
Unlike forums or social media, Pol.is isn’t about debate.
Participants respond to statements, not each other, by agreeing, disagreeing, or adding their own.
The system then maps opinion clusters and surfaces shared ground—often across ideological lines.
It’s already being used to shape law and policy in Taiwan.
Here’s a simple summary of what it does:
“Input crowd, output meaning, ending polarization.”
Groups like RadicalXChange are now helping expand these systems globally.
🔗
🔗
RadicalxChange
RadicalxChange Wiki
We are a community of activists, artists, entrepreneurs, and scholars committed to using mechanism design to inspire radical social change.
🔗
🔗
Opinion | A Strong Democracy Is a Digital Democracy (Published 2019)
In Taiwan, online platforms powered by artificial intelligence are giving citizens a chance to have their say — while keeping the trolls at bay.
What’s Next
I want to help bring these tools into local government.
Just as I once helped reform a toxic school by building a parent-teacher-student coalition,
just as I helped prosecute a complicit local union president at GE,
just as I watched the same old hierarchies sabotage client councils in mental health care—
—I now want to help towns, cities, and schools listen better.
Not just by having meetings.
But by adopting tools that actually show where we agree, what we value, and how to move forward together.
If you’re a public servant, city official, or school leader in New England who wants to try this—
I’m ready to help and to find others who will help.
And if you’ve been wondering what democracy could look like if it wasn’t broken from the start—
you might want to watch that Audrey Tang video.
Let’s build something that listens.
A story I posted on Substack. Does it also belong here?
200 Pennies Ruin the Country
A story of legal tender, petty tyranny, and the postal workers who laughed last
Frank Kashner
May 24, 2025
A pile of U.S. pennies — legal tender?
Time: Autumn, 1964
Place: University Avenue, Madison, Wisconsin
In the fall of 1964, Madison police found a new way to show university students who was boss: ticket them for jaywalking as they rushed to class. It was a petty scheme—part revenue grab, part harassment. When my turn came, I couldn’t resist responding.
One day, as I crossed the broad avenue with a crowd of fellow students, a policeman stopped me. “Jaywalking,” he said curtly. He may have been on piecework. He handed me an envelope labeled “Postage Paid by Madison Police Department.” It instructed me to write my name and address, insert two dollars (the checked violation), seal the envelope, and mail it.
I did as told—sort of. I filled out the envelope, put in 200 pennies, taped it shut, and mailed it off with a small sense of triumph.
At 2 a.m. the next morning, a group of angry policemen pounded on my door. They hauled me, groggy and confused, off to jail. No charges were filed. I was locked in a cell and told I’d wait until the judge arrived.
I learned years later that the police had been humiliated. Apparently, the postmen found the envelope hilarious—a tightly packed rebellion—and they competed to deliver it to the station. The police, evidently, didn’t share the joke.
The judge—whose name I’ve long forgotten but might as well have been Christ Redeemer—was not amused.
He spent what felt like an eternity yelling at me, declaring that it was people like me who were ruining the country. I couldn’t see how that was true, but I wisely kept that to myself. His rage was both frightening and impressive.
Eventually, he ran out of steam and asked if I had anything to say. Mustering my courage, I quietly asked, “But Your Honor... aren’t pennies legal tender?”
That did not go over well.
Standing to his full height behind his desk, atop a three-foot platform, he grabbed the unopened envelope and flung it at me.
“Yes,” he thundered. “They are legal tender. You go spend them.”
“$28 fine and court costs,” he added. Gavel bang. Case closed.
I paid the fine—which, adjusted for inflation, is about $258 today—and was escorted out.
Somehow, the story made its way to United Press International, which ran it under the headline: “Pennywise Proves Pound Foolish.”
My poor mother, reading it from a third of a continent away, called in tears to ask if this was the beginning of a life of crime.
A couple of years later, I was working at the post office during the holiday rush. My coworkers already knew I’d been the source of their earlier amusement.
While sorting mail at the facing table—where you orient each envelope for processing—a familiar object dropped in front of me. A sealed envelope, same as the one I’d mailed years earlier, now torn open. It was a $20 traffic ticket. No bills—empty.
I recognized the game. Someone had faked payment, hoping to blame a postal worker for stealing the cash. I called over my supervisor and explained my theory. He took the envelope without a word.
The next day, I was told the FBI wanted to speak with me. I went upstairs to their office, where the agent—mid-flirt with his secretary—told me to wait inside.
On his desk sat loose bills: tens, twenties. A test.
I sat quietly.
When the agent finally entered, he scanned the cash, asked me a few routine questions, and sent me back to work.
I had passed. But both he and the judge had made their point. I needed to pick my battles more carefully.
About the Author
Frank Kashner writes true stories from a lifetime of collaboration, conflict, and change. A veteran of the dance between inane authority and defiance, he brings humor and insight to collisions between parents, students, teachers, and workers—and the schools, corporations, and bureaucracies they confront. Memoirs of Minor and Not-So-Minor Insurrections is his first Substack series.
GA
As much as I do not like him, I must admit that Trump is able to treat countries and billions of people as if they are cats, while he swings the cat toy around for them to try to catch.
This is probably not a good thing, and I can imagine countries wanting to insulate themselves from him.
The Varoufakis article:
Will Liberation Day transform the world? The Nixon Shock set a radical precedent
by Yanis Varoufakis, April 3, 2025, Defend Democracy Press (The Delphi Initiative)
“My philosophy, Mr President, is that all foreigners are out to screw us and it’s our job to screw them first.” With these words, the US Treasury Secretary convinced the President to deliver a colossal shock to the global economy. In the words of one of the President’s men, the objective was to trigger “a controlled disintegration of the world economy”.
No, those words were not spoken by members of President Trump’s team in advance of their “Liberation Day” tariff splurge. While the “foreigners are out to screw us” certainly has a Trumpian ring, it was uttered in the summer of 1971 by then Treasury Secretary John Connally, who succeeded in convincing his President to unleash the infamous Nixon Shock a couple of days later.
Commentators should know better than to pretend that the shock Trump is now delivering is both “unprecedented” and bound to fail like all “reckless” assaults on the prevailing order. The Nixon Shock was more devastating than the one delivered today, especially for Europeans. And precisely because of the economic devastation caused, its architects achieved their main long-term objective: to ensure American hegemony grew alongside America’s twin (trade and government budget) deficits.
The success of the Nixon Shock in no way guarantees the success of Trump’s version, but it does remind us that what is good for America’s rulers is not necessarily good for most Americans or, indeed, for the world. One of the smartest Nixon advisers, who helped to convince Connally of the need for a shock, articulated this point with brilliant clarity:
“It is tempting to look at the market as an impartial arbiter. But balancing the requirements of a stable international system against the desirability of retaining freedom of action for national policy, a number of countries, including the US, opted for the latter.”
Then with one additional phrase he undermined all of the assumptions on which Western Europe and Japan had erected their post-war economic miracles: “A controlled disintegration in the world economy is a legitimate objective for the Eighties.”
And 10 months after giving this lecture, the man in question, Paul Volcker, rose to the Presidency of the Federal Reserve. Soon, US interest rates were doubled, then trebled. The controlled disintegration of the world economy, which had started when President Nixon was convinced by Connally and Volcker to dismantle the hitherto stable exchange rates regime, was now being completed with interest rate hikes that were far more devastating than Trump’s tariffs can ever be today.
Trump is therefore not the first President to seek the controlled disintegration of the world economy by means of a devastating blow. Nor is he the first to purposely damage America’s allies to renew and prolong US hegemony. Nor the first who was prepared to hurt Wall Street in the short run in the process of strengthening US capital accumulation in the long term. Nixon had done all that half a century earlier.
And the irony is that the world the Western liberal establishment is grieving over today came into being as a result of the Nixon Shock. While admonishing the idea of a US President delivering a rude shock to the world economy, they are lamenting the passing of what only came into being because of another President’s readiness to deliver an even ruder shock. That is, the Nixon Shock gave birth to the darlings of today’s liberal establishment: neoliberalism, financialisation and globalisation.
The Nixon team’s fundamental question was: how could America remain hegemonic once it became a deficit country? Was there an alternative to belt-tightening which would risk a recession and curtail America’s military might? The only alternative, they surmised, was to do the very opposite of belt-tightening: to boost the US trade deficit and make foreign capitalists pay for it. (This was the “Screw them before they screw us” strategy that Connally convinced Nixon to adopt).
Their audacious strategy to make foreigners pay for the US twin deficits relied on creating circuits of capital by which foreign dollars could be repatriated and then recycled. That meant unshackling Wall Street from all the constraints placed upon it under the New Deal, the War Economy and the Bretton Woods system. After four decades of controlling the bankers so they would not inflict another 1929, Nixon’s team liberated them. But doing so required a new economic theory wrapped up in a suitable political ideology.
Under neoliberalism’s ideological and pseudo-scientific cover, bankers found themselves with billions of foreign dollars to play with in a deregulated environment: financialisation. The more this new world system relied on US deficits that generated the necessary demand for European and Asian exports, the greater the volume of trade necessary to stabilise this purposely imbalanced globalised system. And thus globalisation was born.
Many refer to this world — the one in which Gen X grew up — as the neoliberal era, others associate it with globalisation, some identify it with financialisation. It’s all the same thing — the world the Nixon Shock begat and which the 2008 financial crash shook to its foundations. After the 2009 bailouts, although US hegemony continued unabated, it lost much of its dynamism. Today, the Nixon Shock has run out of steam — at least from the perspective of the Trumpists who want to give US hegemony a second (or is it a third?) wind. This is the whole point of the Trump Shock and its masterplan, including tactical moves such as enlisting crypto to their cause.
But there are differences between the two shocks. While both aimed substantially to devalue the dollar, while also strengthening its status of being be the world’s reserve currency, the means were different. The Nixon Shock relied on letting money markets devalue the dollar’s exchange rates, adding further pain to America’s allies through the explosion in the price of oil – which damaged Europe and Japan significantly more than US producers. Trump might be taking a (small-ish) leaf out of Nixon’s book regarding oil prices, but he is trying to make his tariffs do for him what the Volcker-led Federal Reserve used interest rates for: as a weapon that inflicts more pain on European and Asian capitalists than it does on American ones.
The outcome of the Trump Shock will depend on whether it has staying power, for which it will probably need bipartisan support. After all, Nixon’s equivalent worked because President Carter appointed Volcker to the Federal Reserve and allowed him to continue the Nixon project unhindered; before President Reagan turbocharged it further with the help of Alan Greenspan whom he appointed in 1987 to succeed Volcker. Is the US political system still capable of that degree of bipartisanship? It seems unlikely but, then again, who would have imagined that Biden would embrace Trump’s China tariffs and escalate the New Cold War his predecessor started?
And if the Trump Shock has anything like the success of the Nixon Shock, what will this world look like? Perhaps it is too early to tell, but neoliberalism is already being contested by the techno-feudal creed of neoreactionaries such as Peter Thiel. Cloud capital is displacing financial capital, and replacing the divine role of the market with the holy grail of the transhuman condition (the merger of cloud capital, AI and the biological individual).
Financialisation will soon be under similar pressure. As AI develops, Wall Street will not be able to continue resisting the merging of cloud capital and finance, as seen in Elon Musk’s ambition to turn X into an “everything app”. Such developments will do to payments what the internet did to fax machines, with serious repercussions for financial stability, including any future role for the Federal Reserve. And in place of the dream of a Global Village, we will have the Walled Nation.
Nevertheless, that globalisation recedes does not mean that autarky is possible. The Trump Shock is pushing us into a Bisected Planet, one part of it comprising vassal countries that have yielded to the Trump Plan, and a second part where the BRICS experiment is allowed to take its course.
Every generation likes to think it is on a cusp of some historic transformation. But ours is cursed enough to actually be on such a cusp. So rather than focusing too much on the character of the man in the White House, we would do well to recall that the Nixon Shock was much more important than Nixon. If Nixon reshaped the world once, leaving it nastier and more unbalanced, Trump can certainly do it again.
From Yanis Varoufakis in Defend Democracy Press
“...the irony is that the world the Western liberal establishment is grieving over today came into being as a result of the Nixon Shock. While admonishing the idea of a US President delivering a rude shock to the world economy, they are lamenting the passing of what only came into being because of another President’s readiness to deliver an even ruder shock. That is, the Nixon Shock gave birth to the darlings of today’s liberal establishment: neoliberalism financialisation and globalisation … Many refer to this world — the one in which Gen X grew up — as the neoliberal era; others associate it with globalisation; some identify it with financialisation. It’s all the same thing — the world the Nixon Shock begat, and which the 2008 financial crash shook to its foundations. After the 2009 bailouts, although US hegemony continued unabated, it lost much of its dynamism. Today the Nixon Shock has run out of steam — at least from the perspective of the Trumpists who want to give US hegemony a second (or is it a third?) wind. This is the whole point of the Trump Shock and its masterplan … Nevertheless, that globalisation recedes does not mean that autarky is possible. The Trump Shock is pushing us into a Bisected Planet, one part of it comprising vassal countries that have yielded to the Trump Plan; and a second part where the BRICS experiment is allowed to take its course.”
A hawk ate our doves!
Introduction: Frank (aka Dove):
I was born 7 days after FDR died and got my name from him. I’m retired after 4 different careers in motion picture film (16 & 35mm) editing of educational films; as a machinist, labor activist and shop steward in a major GE factory; as a manager of QA and software development organizations; and finally as a social worker in public schools and private practice.
My anti-authoritarian perspective brought me into productive conflict with various governmental, corporate, non-profit, and political entities. I was a member and activist in several labor unions and ad hoc groups in each career. I can point with pride to several conflicts which helped improve peoples’ lives.
While I calculated the surplus value produced by labor, I did not appreciate the theft of labor committed at the government level through currency manipulation, money printing, selective taxation, and corporate bailouts. It is the corporate control of the government that gets us corrupt government.
Since retiring, I have been an advocate of democracy through various organizations, and see the Digital Democracy of Taiwan as a model for rebuilding public trust and creating a participatory democratic world. I reject the call for a new king!
I see bitcoin, lightning, and Nostr as tools to enable human freedom and cooperation. To this end, I support the Human Rights Foundation in its work. I look forward to participating in this platform.
