WIN WITH A ROOMIER MIDDLE, DITCH SOCIALISM

If anyone says American socialism isn’t possible, point them toward the bowling shoe. ~ Hari Nef   

It seems Thomas Hobson could become a choice in the Dems’ presidential election candidate sweepstakes. It’s not a happy feeling because like most people I’ve never liked having to make a Hobson’s choice, aka my way or the highway.

Now that the chimera of impeachment has evaporated, the only way to get rid of this thoroughly hazardous president is by tried-and-true-blue voting him out of office – and assuming he’ll thereby vacate the White House.

Sen. Bernie Sanders’ steady advance in New Hampshire’s polls together with his virtual first-place tie with Pete Buttigieg in Iowa has me concerned. Why? Because Bernie is #45’s best hope for an opponent in November.

A presidential ballot choice between Bernie and #45 seems all too Hobson for me. I’d vote for Bernie if it comes to that, but it will seem feckless – socialism v. egoism.

We’re a long way from choosing a candidate that can beat #45. Although it’s not obvious when listening to the media, which has been in “today’s the day that will influence everything” status for all too long. It’s about five months until the Dems’ National Convention. Nevertheless, the Dems’ now not-so-latent schizophrenia between selecting a radical progressive versus a moderate is becoming ever-more palpable. Alas, Thorazine isn’t appropriate for treating alleged widespread and early-stage political psychosis.

Hence, the primaries must appropriately provide a voter-based choice. I expect that the media’s relentless focus on the utterly squishy concept of ex ante “electability” will thankfully dissipate. Electability will be determined ipso facto from the actual primary election results of real voters, not by confused, inconsistent polls.

We’ve just witnessed the first of the 57 rounds (that’s right, 57) of Dem primaries and caucuses. This initial round in the farmy, app-seizured state of Iowa was unexpectedly exasperating. Under 9% of voting-age Iowans attended the 1,681 Democratic caucuses last Monday. So much for participatory democracy and Bernie’s mantra of bringing more voters to his and the Dems’ table. Pete Buttigieg unexpectedly eked out an ever-so-slender win over Bernie in terms of the Iowans’ obscurely-determined state delegate equivalents (SDEs). So slender that Pete and Bernie are now uneasy co-winners. Sen. Elizabeth Warren came in a distant third and Joe Biden badly batted clean-up.

The quadrennial political spotlight shone brightly on Iowa and its caucuses, at least before they actually occurred. As we now know, the Iowa Democratic Party failed to provide timely, accurate results of their convoluted caucus process.

During the past months we once again learned a smidgen about Des Moines, Cedar Rapids, and even Muscatine. Due to the media’s obsessions, we’ve heard about all manner of things Iowan for close to a political eternity – even about the alleged “predictive power of Indian food.”

Yup, this story in the New York Times posited how Iowans’ apparent preferences for Indian food, say tasty tandoori tofu, can predict their political choice, specifically people who’ll vote for Bernie in the caucuses. This is another fine example of copy-desperate journalists falling on their cum hoc ergo propter hoc swords. According to this story, 71% of Bernie backers have eaten at an Indian restaurant (in the last decade!), as contrasted with only 40% of people who support Joe Biden. So all one had to do is ask folks going to the caucuses if they’ve eaten Indian food within the last 10 years to determine who won the caucuses. OMG, please stop; tandoori tofu won’t help you on any campaign trail, including Iowa’s.

I offer congratulations to Pete and Bernie. They managed to physically traverse not only most of Iowa’s 99 counties, but the intricacies of its byzantine, opaque caucus system. It’s a system that next to no one beyond Iowa’s border understands, or cares to. To confuse things even more, the Iowa Democratic Party provides three different sets of results for their caucuses: state delegate equivalents, the final caucus vote total and the initial caucus vote total. It’s so complicated we waited for four days to get complete, hand-on-Bible/Torah/Koran-accurate results. As one Iowa caucus secretary said, “It’s just so absurd.” Exactly.

What happened to simple, straightforward voting with a private ballot? Fortunately, that’s what the New Hampshire primary offers. It’s even smaller and whiter than Iowa – referring to both its people and its snow-covered ground. Oh well. Taking a thoroughly non-electronic, time-tested approach to voting, the Granite State's procedure uses no apps or machines; just paper ballots and pencils. Onward in lead-based security. 

Hawkeye State denizens are now back in their usual non-media-fixated political penumbra, without non-stop political ads. Ah, what a relief it is.  Meanwhile the Iowa Democratic Party attempts to cure its critically-wounded system for next time(?), while weathering much-deserved criticism.

The New Hampshire primary vote is tomorrow. At this point, according to the polls, the semi-native son Bernie is 6 points ahead of Pete Buttigieg, with Joe Biden nipping a bit at Pete’s heels. Unfortunately semi-native daughter Sen. Elizabeth Warren hasn’t fared as well. But not to worry Liz or Joe or Amy or Andrew. South Carolina’s Dem primary is just three weeks away, on leap-year day, a much-shortened eternity you all have been preparing for, right? Four days after that there’s the 15-state, Super Tuesday Armageddon – March 3.

The chart below provides several characteristics of the first three states where the Dems’ primaries-caucuses are being held, plus California the largest state in the Super Tuesday marathon. I haven’t mentioned here Nevada’s caucuses on our first president’s birthday; I’m caucused out.

PRIMARY STATES’ CHARACTERISTICS

Characteristic\State	US	Iowa	New Hampshire	South Carolina	Calif-ornia
Population (1000s)	328,240	3,155	1,360	5,149	39,572
Population Growth	6.3%	3.6%	3.3%	11.3%	6.1%
Percent of US Population		1.0%	0.4%	1.6%	12.1%
Median Age (years)	37.8	38.1	42.7	39.0	36.1
Persons under 18 years	22.4%	23.2%	19.0%	21.8%	22.7%
Persons 65+ years	16.0%	17.1%	18.1%	17.7%	14.3%
White	76.5%	90.7%	93.2%	68.5%	72.1%
Black/African American	13.4%	4.0%	1.7%	27.1%	6.5%
Hispanic/Latino	18.3%	6.2%	3.9%	5.8%	39.3%
BA or higher degree	31.5%	28.2%	36.5%	27.4%	33.3%
Median Household Income	$60,293	$58,580	$74,057	$51,015	$71,228
Persons in Poverty	11.8%	11.2%	7.6%	15.3%	12.8%

Iowa and New Hampshire have much whiter, less ethnically diverse populations. South Carolina and California have the most ethnically diverse populations of the four. California’s Hispanic/Latino population is more than twice the US average. New Hampshire represents well under one percent of the US population, and it’s much older having the highest median age of these states. New Hampshire has fewer people living in poverty and under 18 years old, and a higher share of folks who’ve gotten at least a college degree. Granite Staters also have the highest median household income, over 20% more than the US average. South Carolina has the fastest growing population during the past decade of any of these states, growing almost twice as fast as the nation.  
As seen in the chart and unsurprisingly, no individual state exactly compares to the nation, despite journalists’ superficial attempts every four years to plug their favorite substitute for Iowa or New Hampshire. Nevertheless, using the characteristics shown in the chart, California is overall the most “similar” of these states to the US characteristics.

Bernie’s (and Liz’s) “Big Structural Changes” that they advocate will not be incremental, by design. He has been consistent and clear about this for a long time; which means he’s “authentic,” an attribute the media believes 2020 Dem voters may place key importance on. There is nothing incremental, or inexpensive, about Bernie’s goals, including Medicare for All [that will provide free, government healthcare to everyone (near and dear to Dems), including illegal immigrants (not so near and dear)], eliminating all student debt, providing free tuition for public college education, or implementing the Green New Deal.

Bernie’s program appeals to big-time progressives, folks who want big-time change and those who are less concerned about how these fantasy goals (see here) could be achieved in the actual world of political and fiscal limitations. They’re not troubled about significantly expanding government that will be required to implement his vision. Bernie’s stated goals will create a form of democratic socialism that will be broader in many ways than any Nordic or European nation –encompassing over 50% of the nation’s GDP and doubling government employment. In the US, all levels of government account for about 38% of GDP. About 15% of the US labor force now works in government.

Nor are his acolytes fretful about his programs’ sizeable costs, because they haven’t read the fine, fiscal print or considered the nation’s existing financial condition, which will make his vision’s high costs a barrier to implementation. Bernie’s progressive devotees believe his political dream has got to be better than what’s happening now. These progressive stalwarts have a very low threshold for fury when anyone proposes some less than a 100% Bernie-true programmatic idea; witness Liz’s demise in polling. I strongly doubt general election voters will see Bernie’s ideas the same way as his puritanical followers do.

The president has already characterized any Democrat running for office as a “socialist” in honor of Bernie’s inescapable affiliation. More to the point, #45 and his cronies are discharging to the public that if elected, the Dems will take away your choices (e.g., private health insurance) and increase your taxes. That’s certainly a possibility if Bernie occupies 1600 Pennsylvania Avenue.

Our economy continues its decade-long growth cycle with unemployment very, very low (3.6%) and workers’ real wages finally edging upward. That’s wonderful news. Unfortunately, if they continue such macroeconomic advantages have favored the incumbent president in the past rather than his challenger, especially if the challenger’s support is not broadly-based.

Should we be wishing for a significant recessionary trend to materialize to “help” the Dems? No. But regrettably, the Dems have yet to broadcast clear-cut, convincing, economics-based arguments that voters can adopt in choosing the Dem candidates to continue and increase our economic growth. The Dems‘ focus is on how it is divided, not enlarging the pie. They have to own our decade-long success. The Dems simply aren’t talking about it. That’s a large mistake.

The Dems’ political prospects will likely change again, after New Hampshire and South Carolina hold their primaries. And then change again after Super Tuesday. But no matter which Dem hopeful ends in the lead after Super Tuesday and ultimately the convention, he or she will need to swiftly consolidate their support to be as broad, roomy and inviting as possible to win in November. That’s assuming there will soon be a unique multi-primary winner, which at the moment seems a large-ish assumption. That consolidation will be most difficult for Bernie, in no small part because of how narrowly he’s defined his authenticity and how he behaved after he lost the 2016 Dem presidential candidacy.

I’m not a purist or a puritan. I consider myself a realist. My over-riding goal is for the Dems to beat #45 as decisively as possible. There aren’t enough socialists, even democratic ones, in our voting public for Bernie to win. That will happen with a roomier, centered candidate, perhaps even an “extreme moderate.” Here’s hoping… 

Here are my post-NH primary observations (2/12/2020).

Bernie did as expected in New Hampshire yesterday. He won his next-door primary besting Pete, but without the anticipated margin of victory, which was an ever-so-slender 1.3% of the total vote. Both of them were awarded the grand sum of nine delegates, meaning Bernie only needs an additional 1,969 to secure his nomination. And like the fractured Iowa caucuses, Bernie did not induce hordes more voters to the polls. On that note, his goal of persuading many more “disaffected” and young voters to the polls has yet to be realized. Maybe his third try, in Nevada, will be a charm. The surprise that this hasn’t happened is itself a surprise.

Perhaps Bernie’s lean victory happened because of the plethora of names on the ballot. Amazingly, 33 different Dems were listed on the New Hampshire primary ballot; including many who have already dropped out but nevertheless received a smattering of votes.

Oh well, the media now sees Bernie as the Dem (oops, Democratic Socialist) to beat at this very early point in the primary season. He’s king for more than a day; indeed for 10 days, until the Nevada caucuses end. The big media play now is Amy’s unexpected “win” (actually her third-place finish) in tiny New Hampshire. As if primaries are a horseshoe game where near-enough to the winning stake actually counts. I guess it does, Amy now has six delegates.

The Dems’ quandary – who can actually beat #45 – remains, and will continue until the number of moderates, I’ll call them the “Mod Squad” [Pete, Amy, Joe, Tulsi, Deval (Patrick), Tom (Steyer) and Michael], slims way, way down so their votes don’t get spread around to as many folks as they do now. Even though 19 Dems have already dropped out of the race, at this point (Michael Bennett and Andrew Yang departed yesterday), nine still remain. Seven of these nine are members of the Mod Squad.

Having nine candidates in the Dems’ primaries is as confusing as the famous John Lennon song, Revolution 9 on the White Album, that entirely consists of strange, continuous loops. It’s too many loops, and candidates.

The too-large number of Mod Squaders predictably makes it easier for Bernie to win with a minor plurality, now that Liz’s star continues to fade. As the media has now continuously reminded us, Bernie’s tiny winning margin and his 25.7% share of the New Hampshire vote is the smallest in decades, and way below his winning 22% margin (and 60% share) against Hillary in 2016. Those were different times, principally because there were only two Dem candidates.

Unfortunately, winnowing down the Dem field of dreaming candidates will not happen soon. The lagging Mod Squad members, say Tulsi and Deval and likely Amy and (OMG) Joe, understandably aren’t willing to simply draw straws to see who departs now. Although the “weakest” of them might succumb before South Carolina, my bet is we’ll have to wait for nearly another month, after the March 3 Super Tuesday marathon.

The fiscal and logistical requirements for winning the 17 contests between now and Super Tuesday is staggering and will precipitate drop-outs. Other than the leaders, very few Dem candidates now have money in their political wallets or the field staff for this 17-ring circus. Will that be soon enough for the numbers-diminished Mod Squad to rally vote-wise against Bernie? I hope so. Many Dems, including me, are nervous about this answer.

MODERN MONEY ILLUSION

Money is an abstraction, a political confection, a set of castles built on air. ~Sebastian Mallaby  

The aura of money has existed for a very, very long time. Ecclesiastes 10:19 asserts: Money answereth all things. During the course of human history many objects have been used as money to transact sales and pursue commerce including cocoa beans (in Mesoamerica) and cowrie shells (in Africa, India and China). Paleo-economists believe the first precious-metal coins were used as money in several places about the same time, around 600-500BC; in China’s Yellow River valley, in India’s Ganges River valley and by the king of Lydia in western Asia Minor (modern Turkey). In 1024, the Chinese government started issuing paper notes in standard denominations, which showed that banknotes (paper currency) could be a viable and facile form of money. The first European banknotes were issued in late 17th century Sweden.

But what about money here in the United States (US)? Glad you asked. In the 17th and much of the 18th centuries each of the original 13 American colonies issued their own banknotes (paper money). Thus, Pennsylvania and Rhode Island each had their own distinct currencies. Understandably, this was a hindrance to trade between the colonies, probably promoting a fair amount of barter exchange. Foreign coins, including the Spanish dollar, were also widely used as currency in the US until 1857. After a previous and unsuccessful attempt to create a useful, single currency for the new country, the US Continental Congress authorized the issuance of the US dollar in July 1785, backed by gold and silver.

US Federal banknotes were issued as the currency of our nation in 1863 to finance the Civil War. We finally discarded the Gold Standard in August 1971; meaning the government no longer officially backed its banknotes with gold bullion stored at Fort Knox and the New York Federal Reserve Bank. Somehow, we’ve survived much to the surprise of the gold “bugs.” After 1971, the only “promise” the government offers for your $20 Hamilton bill is another $20 bill.

Naturally, not everyone was happy about this lack of precious metal “backing.” Remember William Jennings Bryan’s “Cross of Gold” speech? It’s what’s lurking somewhere behind Martin Amis’ quote: Money is a fiction, an addiction and a tacit conspiracy. So it goes…

In January 2020, the US economy has $1.75 trillion circulating as Federal Reserve banknotes and about $245 million in coins. Interestingly, the $100 bill – with the almost-smiling Ben Franklin on its front side – is the most common bill now in circulation, just ahead of George Washington’s $1 bill. There were 13.4 billion $100 bills circulating at the end of 2018, representing over 75% of the total value of our currency.

As much as 80% of all our Ben Franklins is being used outside the US, making them one of our largest, and unreported, exports. Economically-ruptured Venezuela is the latest nation to become more “dollarized,” given that its peso is next-to-worthless. In fact, Ecuador and Zimbabwe officially use US dollars (especially $100 bills) as their currency. Other countries, including Panama, Cambodia, and the Bahamas, use the US dollar alongside their own currencies. Ben Franklin has taken many foreign excursions.

Now there’s a panoply of alternative “currencies” beyond cash, including credit cards (the pioneering Diners Club card was first used in 1950), debit cards and various electronic forms, including the (in)famous Bitcoin, as well as Apple Pay. According to the Federal Reserve Bank of San Francisco, US consumers use credit and debit cards for 34% of their purchases, electronic payments for 34%, checks for 20% and cash for only 9% of (mostly low-value) purchases.

Because money is such an elemental part of any economy, economists have spent lots of time thinking about it over the years and examining how the amount of it and its use affects economic conditions. Concepts such as the “velocity of money” and “money illusion” have sprouted from lofty ivory towers. We’ve come a long way from just using cowrie shells and precious-metal coins.

Money illusion was first discussed over 90 years ago by Yale professor Irving Fisher who observed that most people believe the illusion that the face value of their money (say the $20 value of Hamilton’s bill; the bill’s “nominal value” in econ-speak) represents its actual purchasing power. That’s not necessarily true. Such people aren’t aware that money’s purchasing power depends on general price level changes, the $20 bill’s “real value.” If overall prices rise due to inflationary forces, the $20 bill’s actual purchasing power is reduced; it doesn’t buy as much as it used to. Thus, this money illusion is present if there’s underlying broad pressure affecting many goods’ prices, but not (yet) changing people’s income/wage levels.

After 1990 the US average annual inflation rate has been very low, 1.6% per year, despite the vociferous, misguided fears of many conservatives. That’s in stark contrast to 1974 and 1980 when the OPEC-induced oil price shocks pushed our annual inflation rate to 11.0% and 13.5%, respectively. Those were the days. Not.

I believe there is a newer version of Prof. Fisher’s money illusion. It has arrived along-side several progressive Democrats’ plans for dramatically changing the scope and operations of the federal government.

Bernie Sanders and, to a lesser degree, Elizabeth Warren have expansive ideas about reprioritizing domestic policies to guarantee every man, woman and child their “basic economic rights” (BERs). Bernie has stated, “We must take up the unfinished business of the New Deal.” His unfinished BERs consist of:

Quality health care	As much education as needed to succeed	A good job paying a living wage with 12-weeks family leave
Affordable housing	Living in a clean environment	A secure retirement

The possible costs of providing Medicare for All, “free” college tuition, elimination of student loan debt, government-guaranteed jobs, increased Social Security payments, renewed environmental protection and other, unstinting progressive programs have been dutifully estimated. One guesstimate stated these programs could cost $42.5 trillion (T) over the first decade.

This titanic sum, $42.5T, would almost double the size of the federal government’s current expenditures. In the current fiscal year the government has budgeted $4.75T for all its expenditures, which represents about 21% of our GDP. Possibly doubling the size of the government over a fairly short period would be a very big deal that so far doesn’t seem to have garnered very much real (or nominal) discussion; it’s an illusory topic.

In a sense, because these costs are so profuse, and in the future, we seemingly don’t have to worry now. This thinking is consistent with the liberal Modern Money Theory which suggests that the government can pay for its expenditures and achieve full employment by issuing more money.

The above sum does not include undertaking the extensive Green New Deal (GND) programs announced last February by Rep. Ocasio-Cortez and Sen. Markley. If implemented, the GND endorses a “ten-year mobilization” that would include large-scale, national social programs like universal health care, food security and government-guaranteed jobs as the “new deal” portion of the GND. Its substantial Green initiatives portion would include creating net zero emissions energy production from both a thoroughly updated, totally non-fossil-fueled national electricity grid and an electrified national transportation network.

Ten-year cost estimates for the GND programs by Doug Holtz-Eakin, previously director of the Congressional Budget Office and very familiar with government fiscal programs and expenditures, are $52T to $93T. Mr. Holtz-Eakin believes the bulk of the estimated costs would be faced in implementing the GND’s new deal programs, although the Green initiatives would also have a very substantial price tag due to their inclusive scope and tight schedule.

The trillions of dollar sums for the progressives’ programs and the GND are unimaginably large, and thus subject to a more modern type of money illusion, principally because of these programs’ size, complexity and span.

If we arbitrarily assume there’s a 25% overlap between the GND’s new deal programs and Bernie’s BERs programs and use the mid-point of the mentioned GND cost estimates, the grand total of the combined efforts of the GND and BERs for ten-years would be $97,000,000,000,000 or ninety-seven trillion dollars. It’s nearly five times as big as our current GDP, the world’s largest.

To get a better visual sense of just how large $97T is, imagine Ben Franklin $100 bills that have been tightly stacked upright on their long side, so we can answer the question; gee, how long a heap of such Franklin $100s would equal $97 trillion? Not how large is $97T; how long is it? This stack would go around the world about 2¼ times at its circumference; a bit more than 56,400 miles of $100 bills. That’s a lot of money.

Our inability to sense just how large these numbers (and the programs’ expenditures/activities) could be is likely why we can’t fathom exactly what is being proposed. It’s a next-to-impossible illusion to imagine in much detail because it’s so big. Certainly, the Law of Unintended Consequences will be functioning throughout these efforts, as always.

This very progressive political vision would be very distinct from others that are now being promoted by different candidates. But should we as a nation try it? That’s what the true left-field progressives pretty much demand. When asked, how can we afford this? They evasively reply, how can we not afford it; continuing the illusion. Our collective answer is what this year’s primaries and election, in a mere 285 days, will hopefully help decide. The inaugural Democratic caucuses and primaries begin in a mere 12 days across farmy Iowa. 

Not to worry if you don’t get to Des Moines in time. After Iowa there are 56 more Dems primaries and/or caucuses, including the Northern Mariana Island caucuses, the Democrats Abroad primary and last but certainly not least, the US Virgin Island caucuses on June 6. No wonder we call it a party. I hope our money and programmatic illusions will be at least partially dispelled after mid-July’s convention. As Adam Smith aptly stated, all money is a matter of belief. So is politics.

MAMMA MIA, ITALY!

All roads lead to Rome. ~ Alain de Lille (1175) 

 Italy, La Repubblica Italiana, enjoys an impressive, lengthy history and has provided a formidable mark on Western culture and cuisine. Over 60 million tourists visit Italy each year, making it the fifth most visited country in the world. Italy’s rich culture contains more UNESCO World Heritage Sites than any other nation on Earth – including Herculaneum, Assisi and Rome with its shrines of antiquity like the Coliseum, as well as the ancient cities of Naples and Ragusa. Rome, its capital, is one of the oldest of the world’s great cities and a favorite of visitors from around the planet who go there to enjoy its celebrated shrines, monuments, artworks and gastronomy, as well as to revel in the city's dolce vita, or "sweet life."

This blog takes a tour of the many "courses" that Italy has encountered from the distant past to the present, some more gratifying than others.

L’Antipasto. Appetizer, such as fritto misto (mixed fried shrimp, calamari, meat or vegetables depending on where you are in Italy). Here we’re tasting the Roman Empire. Italy’s past spans millennia. Before the modern era, the Roman Empire was the most notable western civilization in the world. For centuries, it was the central hub of technology, culture and architecture in the west’s ancient world, although the Greeks might dispute this. Roman engineers built about 50,000 miles of roads (which is more than the entire US Interstate system), bridges and aqueducts. At the pinnacle of its power in the first and second centuries AD, the Roman Empire covered about 2.2 million square miles; from Hadrian’s wall in cold Northern England to the Euphrates in sun-drenched Syria; from the Rhine-Danube rivers in Europe to the Black Sea; from the western North African coast to the Nile Valley in Egypt. Roman territory encircled the Mediterranean Sea. Italy’s current land area is about five percent of the vast Roman Empire’s. Historians believe as much as one-fifth of the world’s population, 60 million people (Italy's population now), were Roman citizens, with as many as 120 million folks living within the Roman Empire’s borders. 

There were well over 100 Roman Emperors (depending on how you count them), some very bad (e.g., Nero and Tiberius), some were better (e.g., Caesar Augustus and Trajan). Perhaps 20% of them were assassinated while in office; it could be rough sitting on those gilded thrones. The last Western Roman Emperor was deposed by Germanic tribes in 476. The final Eastern Roman Emperor was overthrown in 1453 by the victorious Ottoman Turks. And don’t forget almost 40 years later that one of Italy’s own, sailed ailed away from good ol’ Castile, Spain to discover The New World in October 1492. Nice work Christopher Columbus. 

Il Primo. First courses, such as Tagliatelle or Lasagna alla Bolognese (pasta with the traditional slow-cooked veal, pork, beef and a little tomato ragu.) How many shapes/types of Italian pasta are there? Italy’s primo culinary accountants estimate there are at least 350 different types of pasta.[2] 

In this Primo course we’ll be enjoying the Italian Renaissance. The Renaissance marked the transition from the darkish Middle Ages to something brighter and closer to Western Modernity. Taking a somewhat expansive view of this seminal historic period, it began in the 14th century continuing through the 17th century. Whatever its length, the Renaissance started in Florence, Italy, promoted under the patronage of the Medici family.

The Renaissance’s “new thinking” was manifest in architecture, science, literature, politics and art. Last year, celebrated the quincentenary of the death of Leonardo da Vinci, the original polymath “Renaissance Man.” This year, on April 6th, we will commemorate the 500th anniversary of the death of Raphael (né Raffaelio Sanzio), one of the premier artists and architects of the High Renaissance. Together with Michelangelo, Raphael and Leonardo form the traditional Italian trinity of great masters of the Renaissance. After beginning in Florence, the Renaissance further blossomed in the city-states of Venice, Genoa, Milan, Bologna and finally Rome. The world has benefited ever since.

Il Secondo. Second course, such as sogliola alla griglia, (grilled petrale sole) or cotoletta alla Milanese (bone in veal cutlet). Here we’re tasting Italy’s more recent past. After the Renaissance Italy has been transformed and modernized, along with the rest of the world despite detours and challenges. On March 17, 1861 Victor Emmanuel II became the first king of unified Italy, with considerable help from Giuseppe Garibaldi. During the inter-war years Italy succumbed to Benito Mussolini’s despotic fascism.

The new Italian Republic was born in 1946 after World War II (WWII), and its return to parliamentary democracy. Italy became a founding member of the UN, NATO, the WTO, the European Union (EU) and the G-7. Culturally speaking, can anyone forget Italy's Spaghetti Westerns of the 1960s and 1970s that starred actors including even a young Clint Eastwood? No. 
More seriously, on January 1, 1999 Italy was among the first members of the EU to adopt officially the Euro as its currency, and shed its Lira. It is the third largest economy in the Euro Zone. Some current information about Italy is given in the chart below.

ITALIAN FACTS AND FIGURES            

Population	60.5 million
Population growth rate	0.16%
Population 65 years and older	26.69%
Population 15-24 years	9.61%
Birth rate	7.51 births/1000 persons
Median age	45.5 years
Land area	294,140 sq. km
Coastline	7,600 km
GDP (PPP)	$2.32 trillion or €2.08 trillion
GDP/capita (PPP)	$39,637
GDP growth rate	0.4%
Inflation rate	0.5%
Unemployment rate	9.7%
Youth unemployment rate	32.2%
Public Debt/GPP	138.0%
Sources: Eurostat, CIA World Factbook, The Economist

Italy has roughly one and one-half times as many people as California. From a demographic perspective Italy’s population is stagnant and growing ever hoarier. Its median age, 45.5 years, is over 15 years older than the global average. Italy’s birth rate is nearly the lowest of any nation. People 65 years and older represent nearly 27% of the total population; population growth is virtually non-existent, an anemic 0.16%. Italy’s Age Dependency Ratio that measures the proportion of older dependents (older than 64) relative to the working-age population (age 15 to 64) is the second- highest in the world, behind Japan. Despite government programs to reverse the country’s “apocalyptically” low birth/fertility rate, it hasn’t changed much. In 2018 it declined from the previous year.

Politics and economics aside, it’s virtually impossible for a nation to grow sustainably when its population isn’t. Italy’s population growth is, at best, torpid. Unlike the Cohen Brothers’ 2007 Academy Awards Best Picture “No Country for Old Men,” Italy is filled to the brim with them. 

Geographically, Italy is a mid-sized nation with about the same land area as Arizona. In Rome a two-mile border encircles the world’s smallest nation. Vatican City is a 100-acre ecclesiastical city-state and the center of Roman Catholicism. Its population of 1,000 includes not just ordinary folks. 

Being a peninsula, Italy is often defined by its dramatic coastline, which is the 15th longest. The Adriatic Sea, Ionian Sea, Tyrrhenian Sea, Ligurian Sea, Sea of Sardinia, Mediterranean Sea and Strait of Sicily surround the Italian peninsula and islands. Throughout history, Italian explorers navigators and sailors including Amerigo Vespucci, Marco Polo and Christopher Columbus, have discovered many foreign lands.

Italy’s Gross Domestic Product (GDP) is 12th highest in the world on a purchasing power parity (PPP) basis, and comparable to that of Mexico. Its annual macroeconomic growth has long been in the doldrums and not exceeded 2% in 18 years. Last year it was a feeble 0.4%. The nation’s per capita GDP is ranked 33rd highest by the World Bank.

Unemployment remains a relatively high 9.7%, not that surprising given lackluster economic growth. Italy’s youth unemployment also is stubbornly very elevated, more than twice the EU average. Italy remains saddled with a large public debt. This debt, relative to its GDP, ranks 6th highest in the world. Italy's debt-GDP ratio is the second highest in the EU, after Greece. 

Together with its political affairs, Italy’s macroeconomic conditions often seem to trammel its opportunities. An example is the now uncertain fate of Europe’s largest steelworks, called ILVA, located in the Southern Italian city of Taranto. The plant employs over 10,000 workers. In 2018 the facility was bought from the Italian government by multinational steel manufacturing giant ArcelorMittal, based in Luxembourg. The firm's multiple negotiations with successive Italian governments have been fraught, without final settlement.

When negotiations collapsed with the new Italian government last November ArcelorMittal said it would end its operations at ILVA. Italy’s Prime Minister Giuseppe Conte visited the steelworks on Christmas Eve, attempting to be Santa bearing economic gifts. But no gifts were offered under a blast furnace, and the plant’s future remains doubtful. The government’s former Minister for Economic Development, who led the original deal for ILVA’s purchase, said the current situation is “Totally crazy. You cannot better explain the Italian crisis than to explain what is happening in ILVA.”

The challenge remains because the Italian populist Five Star Movement, one of the two controlling political parties in the current government, is adamantly opposed to ArcelorMittal and wants the government to once again take over ILVA’s operations. Which brings us to the next course. 

Il Contorno. A side dish, such as cavoletti di Bruxelles in padella (sautéed Brussel sprouts). Here we’re sipping a side order of mixed political "salad" greens. The world has been fascinated with Italian politics for a long, long time, which Italians themselves hardly view as a “side dish.” One fascination is the astounding turnover of multi-party governments and prime ministers. A high degree of fragmentation and instability, often leading to short-lived coalition governments, has been characteristic of Italian politics.

Since the end of WWII, the Republic of Italy has had 69 governments and 43 prime ministers. Impressionate. The only prime minister to serve a full five-year term since 1989 is Silvio Berlusconi, the scandal-ridden, impetuous billionaire (in his beginning years, he would sing on cruise liners and sell vacuum cleaners)  and a European ally of Russian President Vladimir Putin. Does this make Mr. Berlusconi an appetizer for our #45? That’s food for thought. In the US and Italy Mr. Berlusconi is probably better remembered for his “bunga -bunga” parties with young women; so it goes. He has been prime minister of Italy on three occasions, starting in 1994 ending in 2011, reigning for almost 8½ years. 

One cause of this unsteadiness was Italy’s adoption of a purely proportional voting system right after WWII — meaning that seats in Parliament were given to parties in strict proportion to the votes they received, no matter how small. This resulted in many small parties, frequent and complex coalition governments and consequent political stalemates. In 1994, following a significant corruption scandal – the Tangentopoli (Kickback City) scandal - when Mr. Berlusconi was prime minister, the parliamentary voting system was altered, with damaging results to several aspects of political stability in Italy. In particular, the new reform dissolved the popular and broader-based Christian Democracy party and others, which were washed away into the Tyrrhenian Sea. After this alteration, there have been several other fruitless attempts at further reforms aimed at providing more political stability.

Over the past decade one small, fringe party – the Five Star Movement (M5S) – has evolved and grown into a major political force in Italy. The M5S was founded in 2009 by Beppe Grillo, a comedian and blogger and Gianroberto Casaleggio, a web strategist. The M5S has been described with various representations: populist, anti-globalist, Eurosceptic and anti-establishment. The "five stars" are a reference to five proclaimed key issues for the movement: right to Internet access, environmentalism, public water, sustainable development and sustainable transport. From the beginning, Mr. Grillo and M5S members decreed that it was not a party, but a movement. Virtually all its pronouncements and messages are Web-based. The movement also advocates for direct democracy and degrowth. Hence, M5S’s strong disdain and opposition to private businesses like ArcelorMittal. 

In Italy’s 2018 general election, the M5S succeeded in becoming the largest individual party in Parliament and entered into government with the far-right Northern League. This oil-and-water coalition collapsed last summer after just a year in office and was replaced by another coalition, this time between M5S and the center-left Democratic Party. Remarkably, Giuseppe Conte has been prime minister during each of these last two Italian government coalitions. How long this alliance will last is a matter of open conjecture.  

Interestingly, a new grassroots left-wing political movement against Matteo Salvini, head of the Northern League, is forming called the “Sardine” (sardines, of course!) and they have been attracting thousands of people and protesting in the piazzas/squares of major Italian cities. Up to now they wisely refuse to become a political party because they can more easily pressure the current politicians to work harder and better.

Il Dolce. Dessert such as panna cotta, tiramisu and cannoli. Yum! Here I will be nibbling on the tasty, wide slice of Italian cuisine that thankfully migrated to America, much beyond the gorgeous Italian dolce delicacies mentioned above. I’m talking “red sauce restaurants.”

Brimmingly-full plates of fettuccine with meatballs and marinara gravy (aka, red sauce), eggplant parmigiana, garlic bread with delicious Italian olive oil, red-and-white checkered tablecloths suffused with nostalgia. These dishes among others, are primo ingredients for the beautiful cuisine that has affectionately become known on America’s main streets as red sauce Italian. There are over 63,000 Italian restaurants in the US. Oh, and let's not forget bottles of straw-flasked Chianti that is making a comeback in Italy and beyond. 

From 1900 to 1910, at least 2 million Italian immigrants passed the Statue of Liberty to Ellis Island, and other US destinations, including my dear wife’s predecessors. Like others, they dreamt of improving their lives and hoped to escape the poverty of that surrounded them in Italy. Besides a few trunks, they brought their culinary heritage and adapted it to American life. They cooked remembered Italian family recipes, and used ingredients that likely were not always accessible or attainable in the old country. Larger portions and new, savory tastes have followed. Buonissimo. 

Italy produces 5.5 million (M) tons or 14% of global processed (mostly plum) tomatoes per year. Here in the New World, California’s Central Valley produces 12.3M tons of processed tomatoes that represents 34% of world production and 95% of US production. The US enjoys being the world’s largest market for pasta, 2.7M tons per year. But on a per person basis Italians are kings and queens of the pasta dish, eating 26.0 kg (57.3lb) of pasta each year, three times as much as Americans.

Except for a finishing espresso Italiano, this completes my culinary-based overview of the Italian universe.  I mie migliori auguri per il 2020 e arrivederci...

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[2] Pasta shapes are specifically designed to hold the sauce in the best possible way. Many regions have created their own pasta shapes: for example, bigoli (thick, noodle-like spaghetti) are from Veneto; strozzapreti (meaning, ‘priest strangler’) are from Emilia-Romagna; trofie (perfect with pesto) are from Liguria, and orecchiette (or, ‘little ears’) are from Puglia.

BEWARE, SUBSIDIES BITE BACK

In the game of baseball, you live by the sword and die by it. You hit and get hit. Remember that. ~ Alvin Dark[1] 

The world is awash in subsidies. Many sorts of taxpayer-paid benefits to customers and producers inhabit all types of markets. Unsurprisingly, benefited producers and consumers, like you and me, enjoy them because they provide lower costs and prices. Subsidies are like ghosts; most folks are not even aware of them; but they’re lurking in lots of marketplaces including fuel and food. We do not relish it at all when subsidies are taken away.

Around the world, when governments attempt to scale-back costly subsidies, citizens get very offended. As it has in the past, this has been happening recently. Just ask the leaders of Chile, Ecuador, France, Iran and the US, among other nations.

Every subsidy is initially justified as an incentive to promote the “public good” be it oil exploration in 1913 or mortgage interest tax deduction also in 1913. But inevitably, subsidies soon become seen as deserved entitlements, when they are thought about at all. That’s why the “best” subsidies should always have an explicit end date, like the California state subsidy for solar panel installations.

Historically speaking the grandest subsidy of all were the Homestead Acts, first signed by President Lincoln in 1862, that incentivized western migration. Any citizen, including freed slaves, could claim up to 160 acres of federally-owned land. If they lived on the claimed property for five continuous years, built a home and grew crops, they could then file a deed to own the property. More than 160 million acres were homesteaded, representing almost 10% of the US, mostly west of the Mississippi River.

Subsidies have come in an impressive variety of new, old and strange flavors. New ones include credits for green energy technologies (like solar and wind power) and electric vehicle purchases. Agricultural subsidies, probably created not long after farmers first started purposefully tilling fields 10,000 years ago, are ancient as well as relatively large and spanning the globe. Food – and subsidies supporting it – usually comes first on anyone’s menu.  

Downright strange subsidies include a $47,000 grant to a New York jitney service to improve its shuttle operations for wealthy New Yorkers going to their summer homes in the Hamptons on Long Island; a $50,000 subsidy spent on a tattoo-removal program in San Luis Obispo, California; and a $225,000 grant in Minnesota to determine whether poultry litter (aka, chicken poop) could be used as a fuel for generating electricity.

Question: What is the largest subsidy that the US government now provides?

No, it’s not the very tall heap of Ben Franklins [over $26 billion (B) worth] that the fossil-fuel industry receives from federal and state governments. This impressive sum fuels about $12B for renewable energy and energy efficiency efforts. This total does not include $14B to corn farmers who produce ethanol. We’ll get back to fuel subsidies in a moment.

The largest subsidy also does not include the $150B per year of tax-breaks that home mortgage-holders receive as well as other aid to encourage home ownership in America. This subsidy is the second biggest.

American farmers have long benefited from several types of subsidies, which total about $25B every year. Federal support for agriculture (ag) includes the establishment of our land-grant colleges beginning in 1862 with Kansas State University. In 1887 federally-funded agricultural research was initiated. Direct subsidies that provide “farm income stabilization” were first introduced in the 1930s.

We taxpayers provide subsidies that seek to protect farmers against fluctuations in prices, revenues and yields (the amount of crop produced per acre). These agricultural subsidies do cover price-supports for commodity crops like corn, wheat, rice and soybeans, as well as crop insurance. About 40% of the nation's 2 million farms receive subsidies. A recent analysis found that 60% of the largest ag subsidies go to the biggest 10% of farms.

Crop insurance can be vital. It is purchased by farmers and subsidized by the federal government, to protect against the loss of their crops due to natural disasters, or revenue losses due to declines in agricultural commodity prices. Over 80% of US crop acreage is insured via the federal crop insurance program. Five years ago, the portion of total cotton acreage covered by crop insurance was 96%; and soybeans, 88%. And who said commodity farmers are defenseless against mother nature?

The $25B sum for all farm subsidies does not include the additional $15.3B that the Trump administration has provided farmers since 2018 as “trade aid” to ameliorate the nasty effects that retaliatory Chinese tariffs have laid upon one of his most stalwart constituencies. It is nearly certain that more trade aid will be provided to US farmers, as the US-China tariff “war” drags on.

Agriculture subsidies cover much more than US farms. The European Union (EU) spends even more money on ag subsidies; 37% of its budget is devoted to Common Agricultural Policy (CAP) subsidies, or about $65B per year. These subsidies are designed to protect European farmers’ livelihoods. They are so substantial that according to the New York Times, the Hungarian Prime Minister, the Czech Republic Prime Minister, as well as very senior officials in Slovakia and Bulgaria, have re-directed part of their nations’ CAP subsidy gravy train to their family members and political friends. Is there a quid pro quo down on the farm? Seems so.

Whenever EU politicians initiate preliminary discussions about reducing their massive CAP expenditures, farmers protest by driving their huge tractors into capital cities to disrupt commerce. In late November this happened once again, in Amsterdam, Berlin, Dublin and Paris.

Subsidy recipients in the US also protest when valued benefits are threatened. In January 2015 the Obama administration proposed ending the popular Sec. 529 tax benefit to pay for college expenses. The hue and cry from many of the millions of folks who took advantage of this tax-reduced means of paying for their children’s college was loud and clear. President Obama abandoned his proposal within a week. His staff called it “such a distraction” for the State of the Union address preparation. Back to the drawing board.

Answer: The very largest subsidies that the federal and state governments proffer are for healthcare, about $290B each year. In addition to subsidized Medicare and Medicaid, healthcare supports include the key tax-exclusion that employer-paid health care insurance receives. Employers provide 56% of all healthcare policies in the US and pay over 80% of their employees’ healthcare premiums (it used to be a higher percentage). Employers’ premium payments are exempt from federal income and payroll taxes. In addition, there are direct subsidies that reduce premiums for lower-income citizens through the ACA and tax-deductibility for large, personal medical expenses. If Bernie Sanders or Elizabeth Warren is elected president next November, many of these subsidies probably would disappear. Instead, the federal government would directly pay for virtually all our healthcare expenses, perhaps over $3 trillion per year, ten times the current healthcare subsidies.

Let’s return to another market that receives significant subsidies in many nations, energy.

To get a sense of how large energy subsidies can be, the table below calculates the implied subsidy for each listed country, based on its domestic gasoline price versus the world average price.

As shown, Venezuela completely subsidies (100%) its domestic price of gasoline, basically offering one gallon to consumers for a worthless 

Price of Gasoline by Nation

Nation (Price rank in parentheses)	Price of Gasoline* ($/gal)	Implicit Subsidy
Venezuela (1)	$0.00	100%
Iran (2)	$0.47	89%
Ecuador (11)	$1.85	55%
USA (31)	$2.93	29%
World Average	$4.14

*Average prices as of Nov. 25, 2019.

Source: https://www.globalpetrolprices.com/

1 Bolivar, a price fixed in 1997 despite hyperbolic inflation since 2018. This giant subsidy is costly; it represents over 20% of the Venezuelan GDP.

For perspective, a liter of milk – when available – costs about 20,000 Bolivars in Caracas. On the Venezuelan black market – the illegal, “parallel market” – one US dollar is worth well over 1 million Bolivars. The Venezuelan government’s official exchange rate states 1 Bolivar is worth about 10 US cents, which everyone considers a grotesque fiscal joke. Gas may be free at pumps in Venezuela, but only if a person can afford to wait in line for days to buy some due to significant shortages.

Iran provides the second most-subsidized (and thus least-expensive) gasoline in the world, where it currently sells for $0.47 per gallon; that’s a gasoline price level the US hasn’t seen since 1973. Iran’s gasoline subsidy is 89%, relative to the world average price. Iran’s fossil-fuel price subsidies represent more than 15% of its GDP.

Iranian gasoline consumers rioted across the country in mid-November after their government increased the price of fuel by about 50%. Multitudes of very unhappy demonstrators – most of whom believe that super cheap gasoline is an entitlement – have continued to burn gas stations and block traffic in Tehran and dozens of other cities. Many have been killed. Iran’s theocrats have yet to back down.

In early October Ecuador’s government removed its costly 40-year old subsidy, now 55%, on gasoline that increased the price by about 25%; the price of diesel doubled. Protests happened immediately led by indigenous groups that turned increasingly violent despite a military-enforced curfew. With two weeks the President of Ecuador retreated and re-imposed the subsidy.

Remember the country-wide “yellow vest” protests in France? In November 2018 these protests were precipitated when the French president raised the gasoline tax. That didn’t last long. President Macron soon cancelled the tax increase due to the protests’ intensity and potency. Despite this victory, the yellow-vest protests have continued.

Similar widespread, popular protests against gasoline price hikes have occurred in Indonesia, Myanmar and Nigeria during the past 20 years. Indonesian strong-man Suharto’s government was deposed in no small part by gasoline price-induced protests. In effect, he lived by the subsidized sword, and also died by it politically. Perhaps baseball and politics really are not all that different.

The pervasive protests I have mentioned above raise a challenging dilemma for political leaders: How can governments reduce and reform fuel (and other) subsidies, which can be both fiscally and environmentally ruinous, without setting off extensive protests? So far, there seems to be no answer. Once a subsidy of any kind has been established, the beneficiaries (consumers and/or producers) will cry wolf, bite back, or worse if it is reduced or eliminated. It is a beyond-holiday gift we pay for that keeps on giving.

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[1] Alvin Dark won World Series rings both as a player and a manager during his 31-year career. He managed five major league teams including the Oakland A’s. He oversaw the A’s World Series championship in 1974.