The State Laboratory

On this day:
1935
United States Social Security Act passes, creating a government pension system for the retired.
1945
Japan accepts the Allied terms of surrender in World War II, and the Emperor records the Imperial Rescript on Surrender (August 15 in Japan standard time)
2003
Widescale power blackout in the northeast United States and Canada.

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Pittsburgh Pirates catcher and first baseman Endy Rodriguez is officially done for the season after undergoing ulnar nerve transposition surgery, per Alex Stumpf of MLB.com.

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In a candid and far-reaching discussion on Nikhil Kamath’s YouTube channel, legendary venture capitalist Vinod Khosla, one of Fortune’s most powerful people in business, delivered some advice for Gen Z. It could be seen as a stark warning or as simple pragmatism: The single most important skill for young workers at this moment is not specialization, but the ability to learn rapidly and adapt continuously. His reasoning is simple yet profound: “ChatGPT can teach you any new areas,” rendering traditional academic paths and fixed skill sets increasingly obsolete. The title of the episode was more blunt: “College Degrees Are Becoming Useless.”--Fortune

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Production may or may not cover desires. New York City has erroneously considered this a crisis. But it is not. A crisis occurs when production does not cover needs. The confusion of desires with needs is a virtual definition of adolescence.

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The State Laboratory

The Tenth Amendment of the United States Constitution provides that "all powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

"Laboratories of democracy" is a phrase popularized by U.S. Supreme Court Justice Louis Brandeis in New State Ice Co. v. Liebmann to describe how "a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country." Brandeis was an associate justice of the Supreme Court of the United States from 1916 to 1939.

For example, the Massachusetts legislature established a health care reform law in 2006 that became the model for the subsequent Affordable Care Act at the national level in 2010, or the various concealed carry state reciprocity agreements that motivated the subsequent proposed federal Concealed Carry Reciprocity Act of 2017.

But there are dangers here. For example, what about polygamy?

The federal government was opposed to the practice of polygamy and refused to make Utah a state while it was still being practiced. As a territory, the governor and judges were all federally appointed. But if they were a state, the population could elect their own governor and judges who would be sympathetic to the cause of polygamy and wouldn’t prosecute it to the fullest extent.

The Republican Party famously had a platform against polygamy, saying, “Congress... [must prohibit]... in the territories those twin relics of barbarism, polygamy and slavery.” With the Civil War over, the Republican Party turned its attention to Utah. They made the first attempt to pass a bill that would limit polygamy in 1870. The Cullom Bill passed the House on March 23, 1870.

The judges who were federally appointed cracked down on polygamy. The most prominent judge was Judge McKean, who attempted to convict Brigham Young of bigamy. However, the U S Supreme Court found the jury selection unlawful, and the case was dismissed.

George Reynolds, Brigham Young’s personal secretary and husband to three women, was offered up as a test case in 1874. Reynolds was convicted, and eventually the case went to the US Supreme Court. Reynolds’ conviction was upheld, and he was sentenced to two years in prison and a fine of five hundred dollars.

In 1882, the Edmunds Act made cohabitation unlawful, disenfranchised polygamists, and made it impossible for polygamists to hold public offices or serve on a jury. The Act invalidated all Utah voter registration and immediately vacated all public offices to ensure that polygamists weren’t serving. The Utah Commission was established and given authority over elections to ensure that the Edmunds Act would be carried out.

The decline of the female population, along with the federal prosecution of polygamy and the Edmunds-Tucker Act, caused the leader of the Church, Wilford Woodruff, to issue a manifesto in 1890 that ended the practice of plural marriage in the Church.

After the manifesto, there were no more obstacles on the road to statehood, and in 1896, Utah was admitted to the Union as a state.

Currently, the state of Utah does not grant multiple marriage licenses to one individual; that act remains against the law. However, a significant legal shift occurred in 2020 with Senate Bill 102. This legislation decriminalized bigamy among consenting adults, reclassifying it from a felony to an infraction. This means adults who cohabitate and present themselves as married to more than one person are no longer committing a serious crime.

This distinction allows for risk, a contagious social risk that originally disallowed its statehood. But it does allow for free thought. And allows the nation diversity. There's risk, and the Islam question is coming, but the nation is up to it.

So, what about Mamdani? Is he just another dumb lab tech in the democracy lab? We know this is a bad idea, and we know that it will fail. Should he have the opportunity anyway?

Like polygamy, it has risks. But this country allows risk, even encourages it. Strangely, the subsidy-obsessed Left is actually opposed to risk and constantly tries to soften any risk in life. The only caution is the concern that those taking the risk, like Silicon Valley Bank and Signature Bank, would count on others to underwrite them. For example, multiple wives and children should not have their neighbors pay for them. Nor should Mississippi have to cover the debts that Momdani will undoubtedly incur.

If you take the risk, you should be responsible for it.

Subsidizing Unproductivity

Boston Bruins defenseman Charlie McAvoy is reportedly in a Boston hospital after sustaining an upper-body injury during a recent 4 Nations game. McAvoy was admitted to Massachusetts General Hospital, according to the Boston Globe.

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The previously unreported operations of the Department of Special Tasks have included sabotage and a plot to put incendiary devices on planes, Western intelligence officials say. The unit was set up in 2023 in response to Western support for Ukraine and includes veterans of some of Russia’s most recent clandestine operations, reports Bojan Pancevski. The group, known by its Russian acronym SSD, is believed to be behind a host of covert attacks on the West, including the attempted killing of the CEO of a German arms maker. --wsj

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Asteroid 2024 YR4 currently has a 2.3 percent chance of hitting Earth on 22 December, 2032, making it the biggest extra-terrestrial threat in more than two decades.
Scientists have calculated the impact risk corridor of the space rock stretches eastwards from the Pacific Ocean, over South America, the Atlantic Ocean, Africa, the Middle East, and into Asia.

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Bill Gates envisions a world where smartphones are supplanted by electronic tattoos. These temporary, electrically conductive tattoos would be applied directly to the skin, effectively turning our bodies into living, breathing communication devices.

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Subsidizing Unproductivity

Vance's speech in Europe raised some uncomfortable ideas. There are more.

An article in The Telegraph has raised questions about England's disability program.  

Expenditure on incapacity and disability benefits for people of working age has risen from £36bn four years ago to £48bn in 2023 to 2024. And the number of new claimants each year has doubled to nearly 500,000.

it’s not got much to do with growing levels of ill health. It’s much more likely because incapacity benefits are quite a lot higher than ordinary unemployment entitlements, and in some cases, rather better than working for a living.

Combine this difference with a medical profession that seems prepared to sign patients off as long-term sick at the drop of a hat and create an immediate incentive for worklessness, especially for those in dead-end, low-paid, physical work who are approaching retirement age.

Young people who have never worked also seem particularly prone to jump aboard the incapacity bandwagon.

What we seem to have, according to the Resolution Foundation analysis, is a country where growing numbers are signed off sick, with the effect being offset by a similar number of previously inactive people, due to childcare or other responsibilities, coming back into the workforce.

In any case, none of this is good for growth and is a long way from the welfare state originally envisaged by its founding fathers.

More, it raises questions about the basic values the West has assumed for years.

UBI

TD Bank pled guilty to money laundering.


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Death by Lightning has wrapped filming. The upcoming Netflix historical drama, created by Mike Makowsky, is based on the Candace Millard novel Destiny of the Republic and follows the events leading up to the assassination of President James A. Garfield by Charles J. Guiteau. The show is executive produced by David Benioff and D. B. Weiss, the duo behind multiple hit literary adaptations, including HBO's Game of Thrones and co-creating Netflix's 3 Body Problem with Alexander Woo.


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UBI

Universal basic income (UBI) is a notion that would provide federal cash for everyone, no strings attached. An annual payout to every citizen--age limits to be determined--to guarantee the basic necessities of life.

Comedian Dave Chappelle, a serious guy, thinks UBI would "save my community almost instantly."

UBI activist Conrad Shaw agrees, "You would effectively get rid of extreme poverty immediately."

He says a UBI will help people "start businesses, fix their homes, or invest in sustainable gardens."

Sustainable gardens.

Sam Altman, the guy behind ChatGPT, helped create a test. His big study gave 1,000 low-income people $1,000 per month for three years—no strings attached. What happened?

Not the great things that were promised. After three years of getting $1,000/month, UBI recipients were actually a little deeper in debt than before.

Why? Because they worked less. Their partners did, too.

Some recipients talked about starting businesses, but few actually tried it. Most who said they did start a business waited until the third year of the study—when their free money was about to end.

Funding/Benefits

Funding Benefits

If a guy like Tim Murphy designed the Social Security system or Medicare, would you trust it to work well? Dennis Hastert? How about William Jefferson? Mark Foley?

An old statute requires the Treasury to issue an annual financial statement, similar to a corporation’s annual report. The 2016 edition is 274 pages.
It contains a table on page 63 that reveals the net present value of the US government’s 75-year future liability for Social Security and Medicare. That amount exceeds the net present value of the tax revenue designated to pay those benefits by $46.7 trillion. Yes, trillions.

Note that this chart expresses the various items as percentages of GDP, not dollars. So the relatively flat spending categories simply mean they are forecasted to grow in line with the economy, or just a little faster. But the space representing net interest grows much faster than GDP does – fast enough to make total federal spending add up to one-third of GDP by 2090.

This must, at some point, must be reconciled. How?
First, the benefits must be reduced. Initially it will be done righteously: "You earn too much to get benefits too." Then more generally. The essence will be a decline in living standards as those promises--and taxes that were committed to them--are slowly denied.
Second, taxes will go up. This will make less money available to people to spend and invest. That will create ....as above..."a decline in living standards as those promises--and taxes that were committed to them--are slowly denied."

Jones

The Jones Act

One of the Impediments to assisting Puerto Rico is the famous Jones Act, originally known as The Merchant Marine Act of 1920.

The Jones Act requires that shipments between two US seaports travel only on US-flagged vessels, built in US shipyards, with American owners and crews.
The original reason was to ensure the US kept a viable commercial shipping industry in case of war. World War I had just ended, so this need was evident at the time. Moreover, the act helped Seattle-based shipping lines pick up Alaskan freight business. (The Jones of the Jones Act was a legislator from Seattle.)

Today, the Jones Act gives a few US companies a legally enforced monopoly on cargo between the mainland US and Alaska, Hawaii, Puerto Rico, and Guam.

A 2012 New York Fed study found it costs twice as much to ship a freight container from the US East Coast to Puerto Rico than to nearby Haiti. And, as always, monopoly shows up in higher prices---for Puerto Ricans and other ports. More, it requires the unnecessary and redundant off-loading of ships bound for Puerto Rico in some intermediate designated rentier port so they can be reloaded by the designated rentier workmen on to the appropriate, designated rentier ship.

Pivin

The Cloward–Piven strategy is a political strategy outlined in 1966 by American sociologists and political activists Richard Cloward and Frances Fox Piven that called for overloading the U.S. public welfare system in order to precipitate a crisis that would lead to a replacement of the welfare system with a national system of "a guaranteed annual income and thus an end to poverty". (Wiki)
In their 1966 article, titled "The Weight of the Poor: A Strategy to End Poverty" in the May 2, 1966 issue of The Nation , Cloward and Piven charged that the ruling classes used welfare to weaken the poor; that by providing a sip of sustenance, the rich doused the fires of rebellion. Poor people can advance only when "the rest of society is afraid of them," Cloward told The New York Times on September 27, 1970. So the welfare system acted as "an opiate of the people," sedating them and their anger. An increase in the demands upon the current welfare system would collapse it and force the government into a national guaranteed income. They wrote, "The ultimate objective of this strategy—to wipe out poverty by establishing a guaranteed annual income—will be questioned by some. Because the ideal of individual social and economic mobility has deep roots, even activists seem reluctant to call for national programs to eliminate poverty by the outright redistribution of income."
Social policy through fear.

So the idea is to show the current system impossibly ineffective and replace it with a new one, presumably effective. There seems to be confidence in the government's ability to build a good new system despite its failure to build the old one. (In fairness, the failure to build the first welfare system apparently is the result of the insincerity of "the ruling class" who wants only to calm the poor, not help them. Apparently this "ruling class" will not be involved in the new system.) And this new system, which will not collapse, would be initiated by loading the current system which is so bad it inevitably will collapse.

Some--especially Glenn Beck--have expanded this "strategy" in to a more aggressive and purposeful "conspiracy." It is interesting to watch the ebb and flow. The Cloward–Piven people are confident in the ability of the government to create a new system despite its original failure; they also admit to the "strategy" but deny the "conspiracy." Beck and his supporters cannot actually prove the "conspiracy" but, I suppose, when you can't see a clandestine operation, that's the beginning of proof it is there.

Zombieland

Ours is a time of social upheaval and financial worry. There have been many theories offered as to the causes of these problems but one elephant in the room is never discussed: The Welfare State.

The acceptance by the working population for the support of the nonworking, the young for the old and the healthy for the ill is a remarkable development and may define the modern world more accurately than war or disillusion. It is simply an overwhelmingly modern characteristic strangely devoid of religious mandate. It is a responsibility that crosses race, age, values, gender and offers the recipients much and the givers little. And it is running on fumes.

Two problems loom. First, with the traditional surplus of economic growth less available will such charity be practical and affordable? And second, the Camp of the Saints question, will this charity cross national borders? Debt, declining living standards and deficits raise the first question, globalization the second.

The obvious problems in Europe where the productive north is being asked to support the debt of the retired south, where the have-littles riot in the London streets, where Muslim neighborhoods have become totally isolated except for monthly checks from strangers--these are all burdens which have financial limits. The average worker can support only so many, the average community can tolerate only so much damage, the average culture can absorb only so much disruption.

Yet, despite these obvious problems, somehow they are never discussed. These social welfare problems are simply not being solved and those that are being disguised will not be for much longer.

The bureaucrats are bravely showing up every day, tweaking and transfusing the monster. But the monster is quite dead. We in a are post welfare state; we just don't seem to know it.

Greece: Not a Pretty Picture

The Greeks are rioting in front of the Parliament building. From a recent report, about 200 people are furiously fighting the police. While there may be some question as to the significance of the size of the crowd, there is much more of a question as to the cause of their discontent. Why are they so angry and at whom is their anger directed? Certainly this is not just vague and antisocial animosity toward the police--unless they are just nondescript malcontents and witless troublemakers disguised as anarchists. One gets the impression they are objecting to the economic changes like lengthening the work week and delaying retirement to the range of other Common Market countries but, if that is their complaint, what is their alternative? The rest of Europe is furious at the Greek early retirement and short work week and it is doubtful they will underwrite the debt if these disparities continue; what do the rioters propose?

Are the rioters angry at the politicians who are cutting the benefits? Are they angry at the politicians who, in the past, promised benefits the nation--indeed, Europe--could not afford? Are they angry at the other Europeans who refuse to pay for the Greek benefits they themselves can not afford?

One often hears people remark as they look at their passport, "What an awful picture!", as if what was pictured had some other, subtle, occult explanation.

A Living Room Elephant

The economic problems of the world are becoming more difficult to understand--or perhaps the reaction to the problems are. The standard debate is over debt, taxes and spending, sometimes with the spice of bailouts added. The focus varies. In Greece the threat of austerity is met with riots led by unions fearful their benefits might be sacrificed. In the U.S. the concern is over the debt and the taxes necessary to combat it. In Germany the country has followed a frugal course and has set its collective square jaw against inflation and, indirectly, the debasing of the Euro. All of these problems, though, stem from a basic notion common to all and somehow immune to question: The concept of the Welfare State.

The problems of overspending and debt are the direct result of foolishly promising more money to people in various benefits than they put in. Their citizens are certainly complicit in this but not much. They thought they were trading for these benefits. Those that were asking for something for nothing were just being Keynesian. A program like Social Security or Medicare, as much as the politicians seeking cover might pretend, is not an entitlement program; the citizens who put money into these programs, as required by law every year of their working lives, thought this contribution was an investment in their future and expected the principle to be there when they needed it. They even expected a little interest as well. So confident were they in these political promises they did not save for retirement or medical insurance as much as they otherwise might have. Now the promises have landed. The citizens, unions and public workers want their money; they want their promises fulfilled. The citizens voted on these promises and gave their money, the union worker eschewed his raise and signed his contract. The politician now condescendingly asks which benefits the citizens want to cut, as if it is their fault. All of these unrealistic promises, all of these economically unfeasible notions where a decreasing work base could pay for a larger retired group, all of these unfounded and untried theories have resulted in the current crisis of many people waiting with heightened expectations for a check that will never come.

What is so amazing is their patience and their goodwill. I have not read a single furious letter, seen a single angry sign protesting this outrageous insincerity. The closest rebellion is the attack on incumbents in the U.S. and that rebellion is only a few months old, is emotional and diffuse, and may well not last. Indeed most people want to reestablish the same problem; they want a "rescue" using the same nonexistent money, a guarantee of that which cannot be guaranteed and will never be delivered.

We are obsessed with effect; we apparently have no head or heart for cause.