Waiting For The Next Election

 

From Bernstein's Mass.

Real v. Monetary Inflation

A recent headline noted that the Fed is considering raising interest rates to fight inflation.

Spoiler alert: It won't work.

Usually, inflation is due to the money supply expanding faster than the pool of goods and services out there to spend money on. And when that is the case, raising interest rates can tame inflation.

But while monetary inflation, i.e. inflation driven by growth in the money supply, is the most common cause for inflation, it isn't the only one.

There can also be "real" inflation. Real inflation can happen because the supply of goods and services suddenly gets smaller for some reason. Real inflation can also happen because we have to fork over more goods and services equivalents to get imports we need - usually petroleum products and/or food, but not always.

Real inflation makes us, collectively, poorer. In contrast, monetary inflation doesn't change the aggregate amount of goods and services we consume, although it make redistribute them if wages grow faster or slower than the cost of good and services.

Interest rates don't do anything to address real inflation, because interest rates act on the money supply, and if the money supply isn't the problem, this tool doesn't work. Instead, increasing interest rates to address real inflation produces "stagflation", where increased interest rates slow down economic growth in the real economy, while inflation rises, because inflation isn't being driven by the money supply.

Of course, I'm oversimplifying. But sometimes it is important to focus on the essentials that drive the big outcomes, rather than losing sight of the forest for the trees.

Don't Believe The Hype

 

This narrative is common and it's mostly wrong.

First, it vastly overestimates the electoral strength of progressive Democrats in particular races. Sure, there are places, like CO-1 in Denver, where a progressive can be elected. But a whole lot of Democrats don't come from those jurisdictions.

Second, the main reason that Democrats have failed to elect their agenda is that they haven't controlled the Presidency, the U.S. House, the U.S. Senate, and the U.S. Supreme Court at the same time. And, even when they have, by narrow margins, usually, a handful of "moderate" or "conservative" Democrats have thwarted them - usually Democrats elected from jurisdictions very inclined to vote for Republicans.

Democrats have consistently been the party pushing to protect and enhance the social safety net. LBJ's war on poverty brought us programs including Medicaid. Obama brought us the ACA. Democrats have pushed for fair elections. Democrats have pushed to protect civil rights.

Also, not all "corporate Democratic" policies have been bad ones for the working-class and middle class. Free trade and more open immigration rules pushed by "corporate Democrats" have been central to American prosperity. Fiscal responsibility kept deficits smaller and sometimes produced surpluses. Democrats reduced military spending after the Cold War. Most of the corporate bailouts during the financial crisis ended up paying for themselves with interest.

"Corporate democrats" haven't been clamoring for a return of child labor, didn't gut scientific research, didn't gut food safety, worker safety, consumer safety, consumer fraud protections, and public health measures. "Corporate democrats" didn't push to pardon drug kingpins, white collar criminals who committed tens of million dollar to billion dollar fraud, and violent criminals who attacked police and tried to overthrow an election. They resisted Republican efforts to give massive tax cuts to the rich. They tried to support farmers economically, even though farmers didn't vote for them.

The push to make every Democrat campaign on a progressive platform is not a winning strategy nationwide. There are races where it can work, and there are races where it won't. You aren't going to elect a progressive Democrat in West Virginia or Kentucky or Nebraska. But politics is a team sport, and without national majorities you can't accomplish anything.

Lying

If you lie once, you have to keep lying to protect that first lie. Eventually, the lies will pile up.

- Please Excuse My Younger Brothers (Ep. 9).

Replacing MAGA

The MAGA Republican Party is horrifically bad. Weimer Republic Nazi party bad. Cambodian Communist party bad. Iranian government of 1979 bad. George Wallace bad. Less sane than the John Birch society. More criminal and less moral than Al Capone. Proven to be absolutely incapable of governing competently.

While the Democratic Party in the United States is a big tent party, MAGA has left a Democratic Party which was already straining to find common ground for its immensely ideologically diverse coalition ripping at the seams, which has produced a lot of unproductive infighting.

This is not good for America. A country with only one viable political party capable of governing is not a healthy democracy.

In the British Commonwealth, there is a concept called a "loyal opposition". A loyal opposite disagrees on lots of important policy issues with the party or coalition that it opposes, but in not an existential threat to the government it is seeking office in, and shares fundamental process and normative values with the party it opposes that are ultimately more important that its policy disagreements with the other party or coalition that it opposes.

Our current election laws, as a practical matter, lock the U.S. into a system with two dominant political parties in any one political jurisdiction at one time. But that doesn't mean that it isn't possible to have a different pair of political parties in one state from another state, and it doesn't mean that it isn't possible for one of those two dominant political parties to be replaced with a different dominant political party.

This has happened several times in U.S. history, most recently when the Republican Party replaced the Whigs, which collapsed around 1860. It has happened in other countries, like Canada, with similar electoral rules, too.

The U.S. is engaged in an experiment along those lines this year in the Nebraska Senate race, in a deep red state that no Democratic Party candidate had any chance of winning, but which is a state that is also not happy with the way MAGA Republicans are running our country. The Democratic Party declined to field a U.S. Senate candidate in that race to clear the way for a center-right independent candidate, Dan Osborn, to run against a GOP nominee who would toe the MAGA line. 

If he is elected in November, he surely won't be a reliable party line vote for the Democratic Party, but he will also be willing to stand up to the insanity of Trump 2.0 when it goes beyond favoring partisan policy preferences to undermining the previously shared foundations of our political system. He won't embrace blatant corruption. He won't support gross incompetence. He won't be a friend of Putin. He won't agree that pedophiles and fraudsters should be protected. He won't try to undermine the rule of law. He won't lie about things that are obvious lies to everyone who hears them. He will understand that there were no air bases in the Revolutionary War. He will understand that the U.S. did not have diplomatic relations with the classical Roman Empire. He will not try to impose tariffs on islands inhabited entirely by penguins. He won't fall asleep in the middle of important meetings. He won't support the violent overthrow of free and fair U.S. election results. He won't completely disregard science. He will provide people with conservative political views who aren't evil or stupid, and don't want the United States to become a failed dictatorship an alternative that they can stomach.

Will he win? 

Who knows? The polls are all over the place in this race (according to the New York Times):

But the vast majority of candidates running for statewide office without being either major party's nominee has no chance of winning at all and would face a complete blow out. But he's been within the statistical margin of error of the Republican or winning in four of the seven general election polls conducted in the race. The only poll conducted since May (about three weeks ago) put him in a tie with the Republican, when the Republican was favored by 16 percentage points in one poll at the end of May. 

Maybe other deep red states can follow suit. Maybe if enough people like him start winning elections, they can band together and form a new political party that is conservative without sharing the worse vices of MAGA Republicans.

Nebraska might be a special case. Its unicameral state legislature is nominally non-partisan, and that might influence the political attitudes that voters have towards independent candidates.

But it is also possible that a lot of red state voters, despite being poisoned by anti-Democratic party rhetoric so deeply that they can't bring themselves to support a Democrat, and holding only moderate views, would support a center-right party not unlike the one that the GOP used to be, over the far-right party that the GOP has become.

Indeed, the mere existence of a credible threat to their re-election from the center instead of the left could be enough to give the GOP in red states like Nebraska to moderate its positions in a way that they didn't need to when it was certain that a Democrat couldn't win in their state, no matter how despicable the candidate running for the GOP.

And, this isn't just about getting the GOP itself to be more moderate (or better yet, replacing the MAGA GOP with a center-right party that is capable of governing sensibly and supports some shared fundamental values that used to be shared across the political spectrum).

It is also about making the Democratic party less of a herd of cats in places where it does have a chance of electing people to public office.

There are lots of pretty conservative people who hold their noses and vote Democratic, and try to influence the Democratic party in their direction, because the MAGA GOP is an existential threat to them personally, or because the MAGA GOP is not a recipe for securing a tolerably functional government.

There are cattle ranchers and food company executives out there who recognize that a healthy food inspection system is good for business, and that high tariffs, sky high diesel and fertilizer prices, and buying tainted meat from Argentina in deals that even the Secretary of Agriculture knows nothing about, are not good for business. So, MAGA may not be right for them. But that doesn't mean that the agree with much of the Democratic Party platform, and trying to make everyone happy just isn't possible.

There are wealthy doctors out there who are economically conservative and socially moderate rather than liberal, who still have no patience for a MAGA regime that is anti-vax, that votes to shut down rural hospitals, that orders the CDC to fake data on measles deaths, and encourages people to eat beef tallow to be more healthy.

There are cold war veterans out there who don't like having a President who cozies up to Russia and North Korea and China. They aren't impressed with a President who runs such a loose ship that destroyers go a week without power in the middle of the Pacific Ocean, that sailors on aircraft carriers don't have adequate food or working toilets, that commissaries on military bases have spoiled food because their freezers don't work, that military family members and people who risked their lives to be translators for U.S. troops are being deported for no fault of their own to places where they face serious risks of harm, that service members are being ordered to commit war crimes, and that sycophants are promoted while seasoned generals and admirals are purged. Those things don't make you proud of your country.

There are probably plenty of god and country conservatives who are absolute disgusted with the way that Trump has held cage fights on the White House lawn, demolished half the White House, put his scowling image on everything like some third-world dictator, told obvious lies to their face, disrespected veterans, shown not a scintilla of understanding of the Bible, blasphemously portrayed himself as Jesus, mocked disabled people, engaged in rampant infidelity with multiple wives and mistresses, corruptly enriched himself and his family, engaged in insider trading, been convicted of crimes, raped children, paved over the White House rose garden, shown utter ignorance of basic facts in his public speeches, encouraged and promoted immoral aides, and been embarrassed by him falling asleep at important meetings and shitting his pants at public functions, even if they agree with him of many economic and social issues.

There are states like New Mexico which by all race neutral economic and social indicators looks like a red state, where a lot of people are very conservative in their political views, but where they won't support Republicans for office, because MAGA Republicans show open contempt and hate for Hispanics and Native Americans who make up a huge share of the state's voters, President Trump demonizes them, and MAGA thinks that Native Americans and partially Native American mestizos should be deported despite having ancestors who have lived there since long before their land was part of the United States.

There are plenty of Muslim voters who are as socially conservative as the average Evangelical Christian and who are economically moderate at most, who can't in good conscience vote for the GOP because Republicans consider them terrorists and want to actively persecute them, so their stuck in the big tent Democratic Party instead. Many Black Evangelical Christian voters are in a similar boat.

The far right extremism and just plain mendacity and incompetence of MAGA Republicans is probably going to get a lot of Democratic candidates who wouldn't have a chance running against a center-right GOP elected to Congress in two months, in what is likely to be a blue wave election (knock on wood). But a country with only one functional major political party isn't a healthy democracy.

If someone launched a center-right party in the U.S. called, for example, the "Conservative party", it could and should have a good shot at replacing the MAGA Republican party in the U.S. And, that may be the only solution, because the MAGA Republican party may at this point, after more than a decade under Donald Trump's thumb as a cult of personality for him, be beyond saving as an institution.

I'd rather live in a country with two viable reasonably functional political parties than one that's a lost cause and the other that's become a tent where it is very hard for everyone to fit comfortably. But until MAGA is replaced, or the election system is reformed to be a proportional representation system, this is the situation we have to live with and try to make work as best we can.

Fossil Fuels And The Bulk Freight Market (And More)

Executive Summary

Fossil fuels account for 40% of ocean freight, 51% of train freight, and 56% of barge freight. 

New technologies in renewable energy, nuclear energy, electric vehicles, batteries, and heat pumps, could dramatically reduce the importance of fossil fuels in the global economy, eliminating the need for this bulk freight. 

This shift away from fossil fuels would also greatly reduce pollution, slow or stop climate change, improve workplace and transportation safety, strengthen democracy in the world's most authoritarian states and far-right domestic politics, and reduce economic vulnerability and military logistics vulnerability to unrest and military activity in countries that produce oil and gas.

How Are Fossil Fuels Used? What Substitutes Are Available?

The predominant use of coal is to generate electricity and its market share of electricity generation is plummeting, mostly to renewables like solar power and wind power, and to a lesser extent to tidal, geothermal, hydropower, and biofuels like corn based ethanol and biodiesel made mostly from restaurant waste fats. Nuclear power provides a significant share of non-fossil fuel electricity and has been pretty stagnant, neither growing nor shrinking in market share much for decades, although new advances are poised to tweak up nuclear power use in some niche applications. A very small share of coal is used for making steel, for purifying water, and in other industrial applications. Coal can also be industrially transformed into a liquid petroleum fuel substitute or a natural gas substitute when oil and gas prices are high enough for this to make economic sense, which is rarely and too briefly to justify building the infrastructure to do it.

The increasing affordability of renewables combined with environmental regulation are making coal obsolete for electrical power generation which is its predominant use.

The predominant use of oil is as a transportation fuel and its market share of vehicle fuel types is also steadily losing ground to electric vehicles (and to a tiny extent, other non-fossil fuel powered transportation modes). 

Oil is used for electricity generation in Alaska, in Hawaii (which has fairly low per capita electricity demand), during disasters and at construction sites, for heating oils (mostly in the Northeast U.S.), for fertilizers, for lubricants, and to make plastics. But all of these non-transportation fuel uses collectively are a much smaller share of oil consumption than as transportation fuels. 

There are good alternatives to oil to generate electricity in Alaska and Hawaii. Better batteries can limit the need to fossil fuel electricity generation in natural  disasters, in remote locations, and at construction sites. Organic farming and eliminate the need for petroleum based fertilizers (and pesticides). Non-plastic materials can be substituted for plastics in many cases. Heating oils can be replaced by natural gas furnaces or heat pumps (which are powered by electricity).

Natural gas (and other gas state hydrocarbons like propane) is predominantly used for space heating and water heating and as a greener alternative for generating electricity on demand at power plants compared to coal or oil. But very small shares of natural gas use are also used for cooking, ornamental lighting, and as a niche transportation fuel (especially for United Parcel Service trucks, and to a lesser extent, other fleet vehicles). Electrically powered heat pumps, electrically powered evaporative coolers, electric cooking appliances, electric water heaters, and electric vehicles are the main alternatives to direct natural gas use, and renewables (paired with utility scale batteries) and nuclear power are the main alternatives to natural gas for electricity generation.

Fossil Fuels And The Bulk Freight Market

 

The 40% breaks down as roughy 7-8% of total global ocean-going deadweight tonnage and vessel count (there are about 770 active LNG carriers in the world, which are specialized ships necessary to carry liquid natural gas) and about 32%-33% of total global ocean-going deadweight tonnage for coal and oil.[1] Natural gas is primarily transported on intra-continental pipelines, however, with some last mile transportation by truck, rather than by ships, trains or barges.

The numbers are similar for freight transported by freight train (51% of train freight is coal and oil) and over rivers and lakes by barges (56% of barge freight is coal and oil).

As of December 2009: "About 49% of rail freight is coal and another 2% is oil. About 10% consists of grain and grain products. Wood and paper account for 4%. About 10% of loads are non-petroleum chemicals. Stones, gravel, sand, clay and glass account for about 10% Most of the rest (13%) consists of other food products, metals and metal products, motor vehicles, waste and scrap materials."

As of September 2024: "In 2007, coal was the primary commodity moved by barge, accounting for 29% of all tonnages. Petroleum was the second largest commodity group in 2007, accounting for 27% of all tonnages. Crude materials, such as forest products, sand, gravel, ores, scrap, and salt, were the third largest commodity group in 2007, accounting for 18% of all tonnages. Food and farm products were the fourth largest commodity group in 2007, accounting for 12% of all tonnages."

Oil and gas firms accounted for 13.3% of U.S. capital expenditures in 2015, but only about 0.13% of U.S. employment (about 180,000 people); while in the same year the coal industry accounted for 0.16% of U.S. capital expenditures and 0.05% of U.S. employment (about 68,000 people) (and the coal industry has significantly contracted by more than 20% since 2015). By comparison, the retail trade industry accounts for 5.2% of U.S. capital expenditures in 2015 but 11.3% of U.S. employment. Wal-Mart alone employs about six times as many people as the entire oil and gas and coal industries combined. The U.S. oil and gas industry is important to Wall Street, but accounts for less than one in 500 U.S. jobs.

Fossil Fuels and Democracy

The share of an economy that comes from oil, gas, and coal is a good indicator of how authoritarian and far-right wing its politics are likely to be. The absence of production of these fuels in an economy, or reduced reliance of fossil fuel production, favors more democratic and more liberal government.

All of the world's remaining absolute monarchies (as opposed to merely symbolic constitutional monarchies) are in economies dominated by oil and gas revenues. Just one of the 36 countries with oil revenues as more than 2% or more of GDP has a healthy democracy (the outlier is Norway at #28 with 4.8% of its GDP from oil revenues is Norway). Norway's relatively healthy non-fossil fuel economy and democracy is in part due to the fact that it developed its oil and gas resources (mostly in the North Sea) fairly late in the history of these industries.

Among U.S. states ranked by fossil fuel production per capita, the only blue state in the top 8, is New Mexico (where it is 21% of GDP and which at #4 has all sorts of demographic and economic characteristics typical of red states, but votes blue because New Mexico has large Hispanic and Native American populations who are not welcome in the Republican party). Purple Pennsylvania at #9 and Colorado at #10 (each at about 5-6% of per capita GDP) are the only other blue states in the top 18 by fossil fuel production per capita. California at #19 has only $323 per capital of fossil fuel production (about 0.5% of per  capita GDP) and 17 states have no appreciable fossil fuel production per capita.

Environmental and Climate Harm

Coal and oil are probably the biggest drivers of air pollution and global climate change. They are also responsible for the workplace and transportation accidents associated with their extraction, delivery, and use. They are a very significant source of water pollution (including ground water pollution) and a major source of toxic and radioactive waste (coal has somewhat more than trace levels of radioactive elements in it). And, the extraction process destroys otherwise pristine open space and agricultural land, with coal being particularly damaging.

National Military and Economic Security

Reliance on fossil fuels, especially oil in the U.S., and both oil and natural gas in Europe, is also a major national security and economic stability risk, that subjecting economies that consume them to supply interruptions and risks caused by global military unrest associated with the authoritarian regimes that oil production based economies are so prone to be (e.g. unrest in the Middle East, Venezuela, Nigeria, and Russia). 

The Ukraine War has illustrated how vulnerable Russia has been to attacks on its oil and gas industry, which is not easy to defend, how dependent modern militaries are logistically on oil, and how dependent Europe and other world economies are on Russian oil and gas.

Reduced reliance of ocean shipping of fossil fuels also makes naval warfare and military control of seaways at choke points like the Red Sea, the Strait of Hormuz and the Persian Gulf, the Bight of Benin, the Panama Canal, the Strait of Malacca, the Bosporus Strait, the Strait of Gibraltar, and the Baltic Sea much less important and much less tempting for states that want to flex their military power and pirates.

References

[1] According to the U.S. Energy Information Administration (EIA) in an entry about Liquefied natural gas made on June 21, 2024, and a report by Fortune Business Insights, Report ID: FBI103940 updated August 17, 2026 entitled "LNG Bunkering Market Size, Share & Industry Analysis, By End-User (Tanker Fleet, Bulk and General Cargo, Offshore Support Vessels and Ferries, Other) and regional Forecast, 2026-2034.