What Boris Johnson really wants out of Brexit

The UK prime minister is looking for an excuse to blame the EU for the breakdown of talks

Philip Stephens

web_Boris’s new Brexit plan
© Ingram Pinn/Financial Times


It is hard to identify precisely the point at which cynical opportunism meets whimsical nostalgia. There are large measures of both in Boris Johnson’s drive for Britain’s departure from the EU. Let’s get Brexit done, the prime minister never tires of saying as he bangs the drum of English nationalism. This is nonsense. Britain will be getting Brexit “done” for years, perhaps for a decade, beyond the day of leaving.

Start with the cynicism. It has been obvious since Mr Johnson crossed the threshold of 10 Downing Street in July that the negotiations with Brussels were to be guided by a new purpose. Declaring Britain’s scheduled leaving date of October 31 to be an inviolable deadline had the same aim. The new goal was to keep Mr Johnson in office. Forget about reaching an understanding with the EU that best served the national interest.

Mr Johnson knew he faced an early election. As long as Britain remains in the EU, the Conservatives can be outflanked on the anti-European right by Nigel Farage’s Brexit party. The fear was that Mr Farage would win over enough traditionally Tory voters to deny the party a majority. So a deadline had to be fixed to change the political calculus.

The prime minister says he would prefer to negotiate a deal than see Britain crash out. His actions suggest otherwise. When he took office he was briefed by senior officials that demanding the removal of the so-called Northern Ireland backstop from the agreement signed by his predecessor, Theresa May, was a sure route to deadlock. The Dublin government and the rest of the EU would not abandon the guarantee of an open border between the north and the Republic.

The officials could be certain of this because Mrs May had tried and failed to sell to the EU27 every conceivable alternative. Mr Johnson dismissed that advice, and insisted on an alternative to the backstop that would allow Northern Ireland as well as the rest of Britain to leave the EU customs union.

The plan now submitted to Brussels is a stitching together of various ideas floated by Mrs May and rejected by the EU. Absurdly, it now suggests two borders — one on the island of Ireland itself and another in the Irish Sea. The key proposal is the restoration of customs checks between north and south, albeit not on the frontier itself. This ditches the formal accord signed by Mrs May with the EU27 in 2017 and, if implemented, would grievously undermine the Belfast peace agreement.

Advanced technology may make such a border less visible, but this is to miss the point. The guarantee in the peace settlement was not directed at economic efficiency or bureaucratic convenience. It was designed to underpin mutual respect for the identities of the two communities in Northern Ireland. An open border allows unionists to assert allegiance to the UK while nationalists can embrace an Irish identity.

In the circumstances, Michel Barnier, the EU’s lead negotiator, can be forgiven for concluding that Mr Johnson’s plan is a cynical feint on the way to a no-deal departure. The prime minister is looking for an excuse to blame the “foreigners” for the breakdown of talks. A sensible response would be for the European Commission to show itself willing to examine his plan before asking Mr Johnson to come up with something serious.

One other possibility is that the prime minister thinks he can put his Irish counterpart, Leo Varadkar, into a corner. Faced with the dire consequences for the Republic of a disorderly Brexit, Mr Varadkar might throw in his hand. If Dublin gave ground, Brussels would fall into line. Some would call this blackmail. My view is that it is anyway a miscalculation. The Republic will not surrender its long-term interests to avoid short-term economic disruption.

Vitally important as it is, there is more to Brexit than the arrangement for the Irish border. Mrs May was proposing a hard Brexit, one that would see Britain outside not only the single market and customs unions, but also beyond most of the other institutions and programmes — political and well as economic — of the EU. Mr Johnson wants to go further. He has been rewriting the political statement in which the two sides set out their aspirations for a post-Brexit relationship.

The aim is to remove the few mutual commitments to a unique relationship that remained in Mrs May’s text. By the account of some Whitehall insiders, Mr Johnson envisages an ultra-hard Brexit that would leave Britain further from the EU than are many other third countries. He seems to believe that Britain can prosper in the wider world only if it breaks all ties with Europe.

Here the nostalgic delusions set in. Britain will rediscover the energy and ambition of the first Elizabethan age; nations from every corner of the world will queue up to strike trade deals; foreign investors will flock to the UK carrying suitcases of cash. US president Donald Trump will offer the best trade deal ever . . . no, really. All that is required is that the nation closes its eyes and hurls itself over the cliff on October 31.

Mr Johnson says he will ignore the act of parliament that requires him to request an extension of the Article 50 process if the alternative is a no-deal Brexit. My guess is that he is bluffing. Even if he is not, there are enough law-abiding members of the cabinet to force his hand. Given his record, however, no one can be sure. Mr Johnson’s only real concern is to stay in office.

Parliament must now prepare to remove him — whatever it takes.

Will Fannie and Freddie be a gift of the Trump administration?

Reprivatisation and profit harvesting plans have became more realistic

John Dizard


The price of one junior preferred issue, the Fannie Mae 8.25 per cent non-cumulative Series T, has risen by more than 136 per cent over the past 12 months © AP


The US autumn political season is not only about earnest debates, vicious tweets and tendentious Congressional hearings. It is also about who gets paid before the clock runs out on the Trump administration’s first and possibly last term.

Even with a divided Congress, there is a lot of value in the gift of the administration. Not much can be done in the way of tax advantages, but there are decisions on antitrust cases, tariff carve-outs, and regulatory agency appointments that can involve real money.

Possibly the biggest prizes (or losses) of all are those to be had through the administration’s restructuring of Fannie Mae and Freddie Mac, the quasi-public housing government-sponsored enterprises (GSE). These two GSEs have more than $4tn of government supported corporate debt and guaranteed mortgages outstanding. Oh, and before I forget, some common and junior preferred shares which went into penny-stock pricing land after the crisis-era bailout of Fannie and Freddie.

The GSE equities were rendered virtually worthless by the post-bailout sweeps of the GSE’s profits into the Treasury. The sweeps were not that controversial, except among some plaintiffs’ lawyers, until after the Treasury was fully repaid for its nearly $200bn in support for GSEs. But the sweeps continued after the Treasury got back its money, to the outrage of the securities holders and libertarians, if not the public.

As long as a Democratic administration was in office, the prospect that the sweeps could end and the equities regain real value was quite dim. The GSE paper looked like American cousins to yellowing Russian Imperial bonds.

However, libertarian and conservative think tanks and securities lawyers continued to puzzle out an array of plans for GSE “reform”, “recapitalisation” or “catch and release”.

With the advent of the Trump administration, these reprivatisation and profit harvesting plans became more realistic. Mark Calabria, the director of the Federal Housing Finance Agency, the GSE’s regulator, has been busy developing recapitalisation plans that can be carried out administratively, without the approval of sceptical Congressional Democrats.

The common shares have been volatile speculative vehicles played by day traders and professional investors. Even many GSE privatisers are not convinced of their long term value. The senior preferreds have been owned by the Treasury. The junior preferreds, though, of which some $30bn are outstanding, have a less toylike quality than the common and have been more concentrated in the accounts of hedge funds and other large investors.

These holders have become among the most active lobbyists around the Trump administration and the GSE regulator. Some, including John Paulson, the hedge fund manager, have been significant political contributors to Trumpworld vehicles. Mr Paulson is hosting a New York fundraising event for the president at the end of this month.

The market seems to believe these efforts will work. For example, the price of one junior preferred issue, the Fannie Mae 8.25 per cent non-cumulative Series T, has risen by more than 136 per cent over the past 12 months. If, in a settlement between the preferred holders and the government, it is redeemed at par it could nearly double again in value.

On September 6, a federal appeals court handed down a junior-preferred-holder friendly opinion, just in time for the political and liquidity crisis season. The Democratic left has seized on the people v hedge funds angle. Most Republicans, particularly Treasury Secretary Steven Mnuchin, believe the GSEs’ “conservatorship” is unnatural. Last week, Mr Calabria’s FHFA issued a report laying out an array of proposals for GSE “catch and release”.

Chuck Gabriel of Capital Analytics, a Washington advisory group that is working with junior preferred holders, says: “Mnuchin wants this all wrapped up by midsummer of next year. We know there are some mixed feelings on [Capitol] Hill, but they should have an opportunity to come in [on the planning].”

On the not unreasonable assumption that the Democrats will scoff at that, Mr Gabriel says: “There is a road less travelled in [Calabria’s] road map that Mnuchin is committed to. Suspend the earnings sweep, renegotiate the senior preferreds [presumably with himself], get leverage and capital ratios set, and set a commitment fee to cover the value of an explicit [Treasury] guarantee [on outstanding GSE securities] going forward.”

And, incidentally, “maybe cut a deal to handle challenges from the junior preferreds”.

Interestingly, according to Gabriel and the other junior preferred-reprivatisation advocates, the deal with the juniors could be cut and carried out before the fall 2020 elections.

Just a couple of minor issues would stand in the way. The first of these is that most mortgage market people do not believe it is possible to sell Fannie and Freddie mortgage-backed securities without a government “wrap”. They have seen all the recapitalisation plans and leverage ratios and do not believe them. “This is the children’s hour,” says one.

And then there is the $4tn of outstanding Fannie and Freddie paper out there. What if the “catch and release” privatisers are almost entirely right, and writedowns in the value of GSE paper only amount to a couple of hundred billion? Would you want to take the calls from large foreign investors?

The Real Cure for Inequality

Income gains are now rising faster for low-wage workers.

By The Editorial Board

Photo: i Stock/Getty Images 


The left’s apocalyptic economic predictions for the Trump Presidency haven’t panned out.

With jobs plentiful and wages rising at the fastest rate in a decade, liberals are doubling down on alarms about inequality.

The inconvenient evidence is that low- and middle-income folks are reaping more economic benefits than during the Obama years.

Democrats flogged last week’s Census report that showed health coverage and Medicaid enrollment declined in 2018. But they ignored the other side of that story: Worker earnings increased by 3.4% while the poverty rate declined 0.5 percentage points to 11.8%, the lowest level since 2001.

Benefit rolls are shrinking as low-income workers earn more.

According to the Census Bureau, the number of full-time, year-round workers increased by 2.3 million in 2018, and employment gains were biggest among minority female-led households.

The share of workers in female-led households who worked full-time year-round increased by 4.2 percentage points among blacks and 3.6 percentage points among Hispanics.

As a result, real median earnings for female households with no spouse present jumped 7.6% last year. The poverty rate among female households declined 2.7 percentage points for blacks, four percentage points for Hispanics and 7.1 percentage points for their children.

Remember this the next time Senator Kamala Harris complains that Mr. Trump’s policies are harming women and minorities.

These findings reinforce Labor Department monthly reports that have shown stronger employment and earnings gains in industries dominated by women such as health care and hospitality.

The jobless rate for black women last month fell to a historic low of 4.4% and neared a nadir for Hispanic women at 4.2%.

Democrats also keep saying the middle class is shrinking, but income gains are being distributed more evenly. The share of households making less than $35,000 in inflation-adjusted dollars has fallen 1.2 percentage points since 2016 while those earning between $50,000 and $150,000 and more than $200,000 have both increased by 0.8 percentage points.

More Americans are making more across the income spectrum, which has kicked some in the middle class into the ranks of the affluent. The Census Bureau reported no significant increase in real median household incomes last year, but this is probably because a decline in transfer payments and investment income offset wage and salary increases.

Seniors are also retiring in greater numbers, which usually results in an income drop. But, notably, real median incomes increased in households between the ages of 15 to 24 and 25 to 34 by 9.1% and 5%, respectively. Avocado toast-eatingBernie Sandersvoters are among the biggest beneficiaries of the Trump years.

Democrats focus on income inequality in part because it will always exist to some extent, and some statistic can always be found to show that some people are much richer than others. What really matters for a healthy democratic society, however, are economic opportunity and income mobility.

By that measure the faster growth and tight labor markets of the Trump years are finally lifting incomes for folks at the bottom after the slow-growth Obama years. The Obama policy mix, which Democrats want to return to only more so, put a priority on reducing inequality rather than increasing economic growth. But higher taxes, hyper-regulation and income redistribution resulted in slower growth and more inequality during the Obama Presidency.

The Federal Reserve’s policy of lifting asset prices also favored wealthier Americans with financial assets rather than lower-income workers who received smaller wage gains.

With the major exception of misguided trade policy, the Trump economic policy mix has been targeted at increasing the pace of growth. The gains to workers that have resulted underscore that the best way to reduce inequality are faster growth and job creation that require employers to compete for employees.

This is a lesson for the left and those on the big-government right who want to use tax policy and subsidies to redistribute income to reduce inequality. Policies that hurt growth hurt lower-income workers the most.

Juul and the damage done to e-cigarettes

The US is in danger of lurching from lax oversight of vaping to banning it unwisely

John Gapper

web_Vaping crackdown
© Ingram Pinn/Financial Times


The crisis at the US vaping group Juul that contributed to the collapse of a possible $200bn merger between Altria and Philip Morris International is another example of a fashionable disrupter of a traditional industry faltering. WeWork has shelved its initial public offering and Juul’s $38bn valuation is evaporating.

But Juul’s troubles, which led to its chief executive being replaced last week, are not merely a financial shock to its investors, including Altria. The company’s misbehaviour could cause public health damage by sparking a broad US crackdown on the best alternative to smoking so far, apart from giving up nicotine entirely.

The US is in danger of lurching from an overly permissive approach, which encouraged vaping to spread among teenagers, to barring e-cigarettes. Asian countries are already imposing bans.

Neither is the best way to regulate vaping and to wean citizens off their dangerous addiction to tobacco.

The trouble started with a teenage craze that led to 21 per cent of US high school students inhaling nicotine through devices at least occasionally last year. Like other countries, the US prohibits television and other kinds of advertising for cigarettes, but it allowed Juul and others to advertise e-cigarettes widely, and to enlist celebrities and social media influencers.

The damage done by this loophole was compounded by lax regulation. Juul was permitted to sell higher strength pods in the US than in Europe and to add flavours. Although US retailers are barred from selling e-cigarettes to under-18s, 80 per cent of Juul’s US sales are estimated to come from teen-friendly flavours such as mint.

It became a crisis with the discovery of 805 (and counting) cases of unexplained lung injuries among vapers, including 12 deaths in 10 states. That led to a warning by the US Centers for Disease Control and Prevention for all Americans to consider stopping vaping. Walmart has stopped selling e-cigarettes, San Francisco has prohibited sales, and states are leaping into action.

Parents are understandably worried about their children becoming addicted to nicotine, and fears are growing that vaping will turn out like cigarette smoking: a habit that seemed benign in the early days, but turned out to be very dangerous. Some 480,000 people die every year in the US from smoking-related diseases.

But nicotine vaping does not appear to be the cause of most of the recent lung injuries. The CDC disclosed on Friday that 77 per cent of the cases it analysed involved people who had used devices to inhale the cannabis compound THC.

THC is often mixed by street sellers of cannabis vapes with Vitamin E acetate, an oil that can irritate lungs and cause a form of pneumonia.

Only 16 per cent of patients claimed to have inhaled only nicotine vapour, which is water-based and contains few chemicals, compared with an estimated 7,000 chemicals in tobacco smoke. “There is some risk with nicotine vaping but the health benefits of reducing smoking hugely outweigh it,” says John Britton, director of the UK Centre for Tobacco and Alcohol Studies.

The UK’s Royal College of Physicians estimates that nicotine vaping could carry 5 per cent of the health risk of smoking in the long term. This is equivalent to 24,000 deaths per year in the US if every smoker vaped instead (and had never smoked). It would be a heavy toll, but tiny compared with smoking.

The best public health outcome remains to persuade as many adult smokers as possible either to give up cigarettes, or limit their risk by switching to vaping nicotine from regulated suppliers. That means keeping e-cigarettes available for sale while trying to prevent young people from taking up vaping and becoming addicted to nicotine, with the risk of later turning to smoking.

This strategy has worked quite well in European countries including the UK, despite the US crisis. Cigarette smoking is in long-term decline and while 3.6m British people now vape, only 6 per cent of them never smoked. Meanwhile, only 1.6 per cent of 11 to 18-year-olds vape more than once a week.

Unlike in the US, e-cigarette advertising is banned in Europe and an EU directive in 2014 set stricter standards for the regulation of vaping. European countries including Finland have barred flavours, and regulators have not faced the same political backlash as the US Food and Drug Administration.

The FDA has changed course under pressure. It wrote a warning letter to Juul last month asking it to justify claims that vaping is safer than smoking and accusing it of ignoring the law. That begs the question of why the FDA has not found out for itself, and why so much marketing was allowed.

The danger is that the US compensates for past laxity and cracks down so heavily that it snuffs out proper uses for e-cigarettes; vaping companies face a deadline of next May to submit existing products for approval. Outlawing vaping would be easy, but the side effect would be heavier smoking.

Amid fears about the spread of teen vaping, it is easy to miss another vital statistic: the number of US adult cigarette smokers fell by 9 per cent in 2017 as people gave up or found alternatives.

Something is going right.

Buttonwood

How T. Boone Pickens changed corporate finance in America

An early proponent of debt-financed takeover bids found many followers




IN THE EARLY 1950s Thomas Boone Pickens worked as a geologist at Phillips, an oil firm based in Bartlesville, Oklahoma. He hated it. His working day was regimented. His colleagues lacked ambition.

He found the waste and inefficiency sickening. “At Phillips, I met the monster: Big Oil,” he wrote. Mr Pickens left to form his own firm, Mesa Petroleum.

Impatient with its progress, he devised an audacious plan. He would slay the monster by using Mesa to buy out larger, badly managed firms.

Against the odds Mesa’s first big bid, for Hugoton, a far larger natural-gas firm, succeeded in 1969. But Mr Pickens, who died on September 11th, is best remembered for the daring takeover bids he made in the 1980s, not least for his old employer, Phillips. These failed, but not before driving the targets’ shares up and making Mr Pickens a small fortune.

The one that had the most lasting impact on corporate America was his tilt at the Gulf Oil Company. Gulf was one of America’s top six oil firms in 1984; Mesa was a minnow by comparison. So it was a gutsy move.

But what set it apart was that it was the first big attempt at a hostile buyout to be backed by junk bonds. Drexel Burnham Lambert, an upstart investment bank, supplied the financial muscle; Mr Pickens provided the oil-industry know-how. Corporate finance would never be quite the same.

Leveraged buyouts (LBOs) were not entirely new. In the 1960s they were used as a way for small, family-owned firms to sell out to managers without the cost of a public listing. But by the early 1980s the financial landscape was changing.

Specialist buyout firms were coming to prominence, including Kohlberg Kravis Roberts (KKR). Mergers were looked upon more kindly by trustbusters. And debt financing was on tap.

Michael Milken, Drexel’s junk-bond king, had cultivated a network of investors who were hungry for new issues. He boasted that he could raise $4bn-5bn for T. Boone’s run at Gulf.

Ideas about corporate finance were changing, too. Decades previously, Franco Modigliani and Merton Miller proposed that a firm’s capital structure—its mix of equity and debt finance—should not affect its value. It is firms’ cashflows that matter, not the nature of the claims on them.

But the theory does not work well in the real world, with its bankruptcy costs and tax-deductible interest payments.

The ideal capital structure came to be seen as a trade-off between the penalty for holding too much debt (bankruptcy) and the penalty for holding too little (forgone tax benefits). A paper in 1976 by Michael Jensen and William Meckling said that even this theory was incomplete.

Debt, they argued, was a device used by shareholders to keep a firm’s management honest.

Bosses feel greater pressure to cut costs and raise revenues if they are faced with a hefty interest burden each quarter.

The debt-is-good doctrine appealed to a new breed of corporate raider. Mr Pickens dusted off the Hugoton blueprint. He would seek out a big, undervalued energy firm, take a large stake in it and then seek to take it over—or at least push the management to improve returns.

Gulf Oil met his criteria. His bid failed, but a competing bid by Chevron, another oil giant, succeeded. Mesa made hundreds of millions of dollars on its stake. And Mr Pickens’s run at Gulf became the model for many successful LBOs.

The legacy of the Mesa-Gulf bid is all around today. High-yield (junk) bonds are no longer the shameful offspring of the fixed-income family; they are an established asset class. The median credit rating for an American corporate has fallen to BBB, a notch above junk.

That is largely because of corporate-finance strategy: lots of established firms have chosen to load up on debt to boost shareholder returns. If a firm declines to “optimise” its balance-sheet by taking on more debt, a band of capital-rich buyout firms stand ready to do the job.

Trends in finance tend to go too far before reversing. But there is already a sense of the forces that might eventually make debt finance less attractive. Tax reforms, in America and elsewhere, have sought to limit the tax breaks on debt. Another catalyst is the changing nature of firms.

With the advent of the Internet of Things, the leading digital companies need to demonstrate that they are sure to stay in business for decades in order to persuade customers to sign up with them. Firms that hold a lot of debt will be seen as riskier counterparties. Who knows? Perhaps a future T. Boone Pickens will make the case for a bigger buffer of equity as the essential element of an optimal capital structure.


Why the State Is a “Parasite on Society”

By Doug Casey, founder, Casey Research


Allow me to say a few things that some of you may find shocking, offensive, or even incomprehensible. On the other hand, I suspect many or most of you may agree – but either haven’t crystallized your thoughts, or are hesitant to express them. I wonder if it will be safe to say them in another five years…

You’re likely aware that I’m a libertarian. But I’m actually more than a libertarian, I’m an anarcho-capitalist.

In other words, I actually don’t believe in the right of the State to exist. Why not? The State isn’t a magical entity; it’s a parasite on society. Anything useful the State does could be, and would be, provided by entrepreneurs seeking a profit. And would be better and cheaper by virtue of that.

More important, the State represents institutionalized coercion. It has a monopoly of force, and that’s always extremely dangerous. As Mao Tse-tung, lately one of the world’s leading experts on government, said: “The power of the State comes out of a barrel of a gun.” The State is not your friend.

There are two possible ways for people to relate to each other: either voluntarily or coercively.

The State is pure institutionalized coercion. As such, it’s not just unnecessary, but antithetical, to a civilized society. And that’s increasingly true as technology advances. It was never moral, but at least it was possible in oxcart days for bureaucrats to order things around. Today the idea is ridiculous.

The State is a dead hand that imposes itself on society, mainly benefitting those who control it, and their cronies. It shouldn’t be reformed; it should be abolished. That belief makes me, of course, an anarchist.

People have a misconception about anarchists – that they’re violent people, running around in black capes with little round bombs. This is nonsense. Of course there are violent anarchists.

There are violent dentists. There are violent Christians. Violence, however, has nothing to do with anarchism.

Anarchism is simply a belief that a ruler isn’t necessary, that society organizes itself, that individuals own themselves, and the State is actually counterproductive.

It’s always been a battle between the individual and the collective. I’m on the side of the individual. An anarcho-capitalist simply doesn’t believe anyone has a right to initiate aggression against anyone else. Is that an unreasonable belief?

Let me put it this way. Since government is institutionalized coercion – a very dangerous thing – if you want a government it should do nothing but protect people in its bailiwick from physical coercion.

What does that imply? It implies a police force to protect you from coercion within its boundaries, an army to protect you from coercion from outsiders, and a court system to allow you to adjudicate disputes without resorting to coercion.

I could live happily enough with a government that did just those things. Unfortunately the US Government is only marginally competent in providing services in those three areas. Instead, it tries to do everything else conceivable.

The argument can be made that the largest criminal entity today is not some Colombian cocaine gang, but the US Government. And they’re far more dangerous. They have a legal monopoly on the force to do anything they want with you.

Don’t conflate the government with America; they’re different and separate entities. The US Government has its own interests, as distinct as those of General Motors or the Mafia. In fact, I’d probably rather deal with the Mafia than I would with any agency of the US Government.

Even under the worst circumstances – even if the Mafia controlled the United States – I don’t believe Tony Soprano or Al Capone would try to steal 40% of people’s income every year. They couldn’t get away with it. But – because we’re said to be a democracy – the US Government is able to masquerade as “We the People,” and pull it off.

Incidentally, the idea of democracy is an anachronism, at best. The US has mutated into a domestic multicultural empire. The average person has been propagandized into believing that it’s patriotic to do as he’s told. “We need libraries of regulations, and I’m happy to pay my taxes. It’s the price we pay for civilization.” No, that’s just the opposite of the fact.

Those things are signs that civilization is degrading, that the members of society are becoming less individually responsible. And therefore that the country has to be held together by force.

It’s all about control. Power corrupts, and absolute power corrupts absolutely. The type of people that gravitate to government like to control other people. Contrary to what we’re told to think, that’s why the worst people – not the best – want to get into government.

What about voting? Can that change and improve things? Unlikely. I can give you five reasons why you should not vote in an election (see this article). See if you agree.

Hark back to the ‘60s when they said, “Suppose they gave a war and nobody came?” But let’s take it further: Suppose they gave a tax and nobody paid? Suppose they gave an election and nobody voted? That would delegitimize the State.

I therefore applaud the fact that only half of Americans vote – although it’s out of apathy, not as a philosophical statement. If that number dropped to 25%, 10%, then 0%, perhaps everybody would look around and say, “Wait a minute, none of us believe in this evil charade. I don’t like Tweedledee from the left wing of the Demopublican Party any more than I like Tweedledum from its right wing…”

Remember, you don’t get the best and the brightest going into government. That’s because there are two kinds of people. You’ve got people that like to control physical reality – things. And people that like to control other people. That second group, those who like to lord it over their fellows, are naturally drawn to government and politics.

Some might ask: “Aren’t you loyal to America?” and “How can you say these terrible things?” My response is, “Of course I’m loyal to America, but America is an idea, it’s not necessarily a place. At least not any longer…”

America was once unique among the world’s countries. Unfortunately that’s no longer the case. The idea is still unique, but the country no longer is.

I’ll go further than that. It’s said that you’re supposed to be loyal to your fellow Americans. Well, here’s a revelation. I have less in common with my average fellow American than I do with friends of mine in the Congo, or Argentina, or China.

The reason is that I share values with my friends; we look at the world the same way, and have the same worldview. But how much do I have in common with my fellow Americans who live in the trailer parks, barrios, and ghettos? Or even Hollywood and Washington? Not much.

How much do you really have in common with your fellow Americans who support Bernie Sanders, AOC, antifa, or Elizabeth Warren?

You probably have very little in common with them, besides sharing the same government ID. Most of your fellow Americans are actually welfare recipients, dependent on the State in some way. And therefore an active threat to your personal freedom and economic wellbeing.

Everyone has to be judged as an individual. So I choose my countrymen based on their character and beliefs, not their nationality. The fact we may all carry US passports is simply an accident of birth.

Those who find that thought offensive likely suffer from a psychological aberration called “nationalism”; in serious cases it may become “jingoism.” The authorities and the general public prefer to call it “patriotism.”

It’s understandable, though. Everyone, including the North Koreans, tends to identify with the place they were born, and the State that rules them. But that should be fairly low on any list of virtues.

Nationalism is the belief that my country is the best country in the world just because I happen to have been born there. It’s scary any time, but most virulent during wars and elections. It’s like watching a bunch of chimpanzees hooting and panting at another tribe of chimpanzees across the watering hole.

It’s actually dangerous not to be a nationalist, especially as the State grows more powerful. The growth of the State is actually destroying the idea of America. Over the last 100 years the State has grown at an exponential rate; it’s the enemy of the individual.

I see no reason why this trend is going to stop. And certainly no reason why it’s going to reverse. Even though the election of Trump in 2016 was vastly preferable to Hillary from a personal freedom and economic prosperity point of view, it hardly amounts to a change in trend.

The decline of the US is like a giant snowball rolling downhill from the top of the mountain. It could have been stopped early in its descent, but now the thing is a behemoth. If you stand in its way you’ll get crushed. It will stop only when it smashes the village at the bottom of the valley.

I’m quite pessimistic about the future of freedom in the US. It’s been in a downtrend for many decades. But the events of September 11, 2001, turbocharged the loss of liberty in the US. At some point either foreign or domestic enemies will cause another 9/11, either real or imagined.

When there is another 9/11 – and we will have another one – the State will lock down the US like one of their numerous new prisons. I was afraid that the shooting deaths and injuries of several hundred people in Las Vegas on October 1, 2017, might have been the catalyst.

But, strangely, the news cycle has driven on, leaving scores of serious unanswered questions in its wake. No competent reporting, and about zero public concern. Further testimony to the degraded state of the US today.

It’s going to become very unpleasant in the US at some point soon. It seems to me the inevitable is becoming imminent.