Ian Welsh – The horizon is not so far as we can see, but as far as we can imagine

There’s book from the 2000’s called “The Management Myth” by Stewart on my bookshelf. It didn’t sell all that well, but it’s an important book because it explains what management science is really about.

Stewart was a consultant, he reported from the belly of the beast.

Here’s the short of it: while Economics is crap, it is right about a few things, and one of those is that actual competitive markets have almost no profits.

A competitive market has:

low barriers to entry
many buyers and sellers
no one with pricing power,
and products are similar, meaning not identical but that competitors can quickly catch up with any advances.

If you’re a businessman, you don’t want to be in a market like this. You won’t make much money. Nor do you want to be in a regulated market where they attempt to make sure that anyone who has pricing power or another “moat” as they like to call it these days doesn’t make huge profits although more than in a competitive market. This is how the West was run between about 1933 to 1979. If your market was competitive, other than baseline rules, you were left alone. If it wasn’t, you were regulated. The most extreme case was usually utilities, which made x% (usually about five percent) profit a year. Not more. Not less.

Anyway, this sucks ass if you want to be as filthy rich as mud wrestlers are dirty.

So what Western businessmen (and a few women, but mostly men) did was take over government and dismantle all the rules and regulations intended to make sure that monopolies and oligopolies and so on didn’t form, and that if they did, they were regulated to protect consumers.

And now companies make MASSIVE profits. It’s sweet.

Except in China, where they mostly don’t. China’s notorious for having a low ROI.

That’s because China runs competitive markets or regulated markets, and very little in between. The CPC is on this like Nancy Pelosi trading inside information. They put CEOs in prison. They execute them. They regulate. You will compete, and if you disobey the law in a way that becomes big enough to notice, they will suggest you come in for a nice little chat.

There’s some talk that China’s low ROI is a “crisis”. And it could maybe bit a little higher. But only a little, to help avoid a deflationary depression trap (see “Great Depression.”)

But if China tackles this by allowing competitive markets to become un-competitive they’ll lose the juggernaut that is crushing industries in the rest of the world. People buy Chinese because it’s cheaper, and sometimes better. Product cycles are blazing fast, everyone’s cutting prices and improving models. This is why China has cars for under $20K—they aren’t able to charge oligopoly pricing. This is also why you can’t buy Chinese cars in America or much of Europe, because Western car makers would wind up like Carthage: burned to the ground, with the earth salted.

To simplify, but not to over-simplify, America and the West lost their lead because their businesses wanted to make lots and lots of money, so they destroyed competitive markets. This is also why you see this happening as the wave of MBAs and quants and other people who know nothing about product but have studies management science take over from the Engineers as CEOs.

Your economy can make lots of profits, or it can be competitive and thus keep prices low for consumers. It cannot do both. Pick one.

BYD also sells a LOT more cars, their revenue is only comparable with Tesla because Teslas cost MUCH more.

Anyway, if you want the details, read the book, though it’s somewhat out of date now, it gets the basics down better than any other one I’ve read. And since prices keep going up, and since this blog is free to read, perhaps consider subscribing or donating. I promise the money is only, occasionally, wasted on eating something nice and buying books. No I don’t have a book problem. Why are you looking at me like that?

How Many Poor People Could Elon’s Trillion Lift Out Of Poverty?

By Ian Welsh

On June 30, 2026

23 Comments

Every once in a while a complete tool graces the comments and inspires a post with their sheer stupidity.

A trillion dollars is a million million dollars. Elon is worth over a trillion dollars. Let us say that all of that minus 20 million was taken from him and it added up to on trillion. He should be fine on just 20 million. (I sure would be. Perhaps your need to snort cocaine off naked models is greater than mine. Hey, I’m not judging.)

Now let’s take that trillion dollars and give it to the homeless. Supposedly there’s about 750K, but we’ll give the next poorest 250K money too.

That’s a million each.

“But Ian”, you cavil, “they must be irresponsible people because only bad, stupid drug addled bad bad bad people wind up homeless. They can’t manage a million dollars and they’ll just spend it all on drugs in a few months and be homeless again!”

That’s not actually what the evidence shows. When you just give homeless people money, they mostly use it on smart stuff, but let’s pretend it is and admit that some of them, like some of us, don’t make the best decisions.

We’ll buy them annuities. Assuming age 40, that’s about $3,500 a month. Age 60, over $5,000 a month.

So, Elon has enough money to make every homeless person not homeless. And he’s only one billionaire+.

All total America’s billionaires hold about 8.5 trillion dollars. If we knock them all down to 20 million we could give at least 8 million of the poorest people in America annuities that pay about $3,500 a month. (One does feel for the cocaine dealers and models in this scenario, however. Oh, an the mega-yacht builders. No progress without someone suffering, I guess.)

Now do “use the money corporations spend on stock buybacks.” Left for the reader, but… there won’t be any poor people left in America.

The fact is that the really rich people are, well, so amazingly rich that it boggles comprehension. They don’t have a lot of money. They don’t have a LOT of money. They don’t have a LOT of money.

They have a LOT of money.

OK?

And yes, they do get a lot of it by making other people poor, they receive massive public subsidies, blah, blah, blah. I’ve written a bunch of those articles and if you’re making the argument that they did it all on their own Atlas Shrugged’esque, you an idiot. A very useful idiot for the people with so much money.

(This proposal is illustrative, not expected and yes, if taken seriously it would cause a lot of economic re-balancing and lots of people would whine it wasn’t fair. It’s illustrative. Illustrative. Repeat after Ian, “illustrative”. It’d still be a better way of using the money than the AI bubble though.)

America has poor people because the people with money and power want it that way. The details of how it is done are complicated, but it really is that simple.

What I write here is for the benefit of everyone, but alas, I live in capitalism and I, and the site, take money to keep running. If you value the writing here and can, please subscribe or donate.

Russia War Situation & A Possible EU/Russia War

By Ian Welsh

On June 29, 2026

34 Comments

This is elevated from comments, by Purple Library Guy.

Picked up and posted on the front page because it’s a balanced assessment. No, Russia isn’t losing, and it’s interesting that so much Western media is suggesting it is. That said, Russia isn’t having everything its way either. – Ian

As to the current war, Russia is winning, but I’d have to say I don’t think they’re real happy with how it’s going. The damage Ukraine is doing to Russia is real, the damage they’re doing to Russian logistics in Crimea is serious and could lead to a Ukrainian offensive with some success in that area. They have had some success in counterattacks in Zaporozhia. Drones have allowed them to hang tough on the defensive for far longer than they could have without that huge technological shift on the battlefield. It is not going all Russia’s way, or how the Russian high command would prefer it to be going. They’d really prefer all that stuff wasn’t happening.

But that said, Russia has nonetheless done FAR more damage to Ukraine and the Ukrainian armed forces than Ukraine has done to them. At the moment, Ukraine and Russia are attacking each other with similar amounts of long-distance drones, but Russia has much better defenses so does not get actually hit with as many. Still more than they’d like, but not as many. But on top of that, Russia is still doing damage with bombs dropped from planes, missiles, and even some old fashioned artillery. Ukraine doesn’t have much of any of that. They do have some missiles, mostly from the Brits, but not in comparable numbers. Where Russia has lost serious logistics capability in one place on the front, Ukraine’s logistics and military capabilities and manufacturing have been seriously eroded over the whole country.

And the attrition at the military level continues at a solid pace. Some hackers claim to have gotten hold of Ukrainian casualty numbers; apparently 2.4 million Ukrainian troops dead or missing, 400,000 of which are from so far this year. I don’t think Ukraine is replacing troops at a rate of 400,000 per half-year. Already I hear some sections of the front are held almost entirely by a few drone squads. At some point men, materiel and/or logistics erode to the point where sections of the front just can’t be held. Probably if they mount a serious counterattack around Crimea, that just accelerates the time when that happens, even if the counterattack is tactically successful.

As to a possible more direct war between Europe and Russia . . . I think they would find themselves dealing with the same problem Russia has, only much worse. Drones favour the defense massively at the level of taking territory. In such a war, Russia would be on the defensive, and Europe would be getting creamed by drones as they tried to advance. The difference being that Russia is fundamentally much stronger than Ukraine, and so the drone revolution on the battlefield can drastically slow the Russian win but cannot in the end stop it. Whereas Europe is not fundamentally much stronger than Russia in military matters, and so trying to take the offensive against a Russia with, now, much more experience in drone warfare than Europe, would lead to European armies being fed into a meat-grinder. And I don’t think Europe has the stones or the unity to keep up an aggressive war of attrition for all that long once the casualties start mounting up.

This is a very good thing, because if Europe attacked Russia and Russia felt really threatened, there would be a nuclear war and we would all die. It really creeps me out that hardly anyone seems to notice this problem any more.

Week-end Wrap – Political Economy – June 28, 2026

By Tony Wikrent

On June 28, 2026

15 Comments

Week-end Wrap – Political Economy – June 28, 2026

by Tony Wikrent

Trump administration begins mass layoffs at ODNI

Drop Site Daily, June 23, 2026

The Trump administration has begun mass layoffs at the Office of the Director of National Intelligence, with hundreds of employees expected to lose their jobs, CNN reported Monday.

Acting ODNI Director Bill Pulte, whom President Donald Trump tasked with downsizing the agency, is overseeing cuts expected to hit the National Counterterrorism Center and National Counterintelligence and Security Center, with as many as 400 employees at the counterterrorism center reportedly targeted.

War on voting

The Real Reason Trump Never Stops Talking About Voter Fraud

Jamelle Bouie, June 17, 2026 [New York Times]

… To say, in the face of all evidence to the contrary, that there was systematic voter fraud is to lie. And Trump, again, was lying. But he was also making a specific political claim. If there were no shenanigans but there was still “fraud” because the election was “rigged,” then it’s clear that the meaning of fraud has less to do with any particular set of rules and procedures than it does with the more elemental aspects of American political life. And it doesn’t take much work to decipher the president’s conception of “fraud.”

There was a reason, to put it differently, that Trump centered his crusade on ferreting out “illegal votes”; there was a reason he focused on cities with large Black populations like Atlanta, Detroit, Milwaukee and Philadelphia; and there was a reason that when his supporters fought their way into the Capitol, they unfurled Confederate flags to mark their achievement.

The president’s convoluted and false claims about “fraud” were little more than a smoke screen for a more basic claim about who belongs to the community — about who counts as a voter and who counts as a citizen. To say that Democratic victories in Pennsylvania or Georgia were the product of fraud in Philadelphia or Atlanta was to say, in short, that the wrong people were voting. And in the same way that Trump’s “birtherism” wasn’t really about whether Barack Obama was born in the United States, his crusade to “stop the steal” wasn’t about the nation’s election procedures. It was a declaration that the only real voters were his own….

“Voter fraud” is not about fraud. It is about who votes and how. It is about the breadth and scope of the political community. It is, as with most MAGA obsessions, about who can call themselves Americans — entitled to govern as equals — and who are mere subjects. Trump’s obsession with voter fraud is just another expression of the reactionary populist belief that the people who inhabit a place are not equivalent to the people, who are entitled to rule.

We should treat this contretemps in Los Angeles, as silly as it is, as a dress rehearsal for what will probably happen in November, if and when Republicans lose control of Congress. Any result short of victory for Trump and his allies will be denounced as “fraud.” Not because there is anything wrong with the system, but because, as they see it, this is their country and theirs alone.

‘Yeah, That’s Illegal’: USPS Chief Says States Won’t Receive Mail Ballots Unless They Hand Voter Rolls to Trump

Brad Reed, June 25, 2026 [CommonDreams]

Letters from an American, June 24, 2026

Heather Cox Richardson, Jun 25, 2026

… this morning at 9:49, Trump suddenly announced he will not sign the bill into law until Congress passes the so-called Safeguard American Voter Eligibility Act, known as the SAVE or SAVE America Act, that he keeps pushing….

Then, at 10:26, he posted: “Today’s Housing News Conference and Signing is hereby cancelled until such time as we pass the desperately needed SAVE AMERICA ACT, which I consider to be a National Emergency. Thank you for your attention to this matter!”

That language is important. Since retaking office in 2025, Trump has used official emergency declarations at an unprecedented rate in order to claim emergency powers under which he can ignore laws. Although the Republicans hold a majority in both the House and the Senate, meaning Trump could work with Congress to pass legislation, he and his advisors appear to be applying the strategy of Nazi political theorist Carl Schmitt.

Much of Schmitt’s philosophy centered around the idea that in a nation that is based in a constitution and the rule of law, power belongs to the man who can exploit emergencies that create exceptions to the constitutional order, enabling him to exercise power without regard to the law. Trump—who himself almost certainly has not read Schmitt—asserted this view in August of last year when he said: “I have the right to do anything I want to do. I’m the president of the United States. If I think our country’s in danger—and it is in danger in the cities—I can do it.”

Alex Kaplan of Media Matters notes that since Trump took office in 2025, his loyalists have urged him simply to declare a national emergency in order to justify dictating new voting and election rules to the states.

The U.S. Constitution gives to the states the authority to conduct elections, but the Trump administration wants state voter lists, at least in part so it can run them through a tool designed to find noncitizens who might have applied for benefits for which they’re ineligible. That system, known as Systematic Alien Verification for Entitlements and, confusingly, also abbreviated as SAVE, is not designed for voter rolls, and as Liz Dye explained today in Public Notice, it explicitly did not cover U.S. citizens.

But, Dye explains, between last April and last August, employees of the Department of Government Efficiency (DOGE), the Department of Homeland Security, and the Social Security Administration linked the Systematic Alien Verification for Entitlements to the master file from Social Security, called NUMIDENT. Then they reprogrammed SAVE to upload voter rolls for mass citizenship screening.

Certain Republican-dominated states, like Texas, handed over their voter rolls. An investigation by Jen Fifield of ProPublica and Zach Despart of ProPublica and the Texas Tribune in February showed that when used to try to identify noncitizen voters, the system had an error rate of at least 14%, misidentifying legal voters as illegal ones.

In addition to the system’s inaccuracy, the uploading of the files, Dye notes, was “a gross violation of the Privacy Act of 1974,” which prohibits the government from repurposing an individual’s data for a new use without notice and without providing for 30 days of public comment….

Marc Elias: The Stakes in November – The famed election lawyer sizes up where we stand

Win McCormack, June 26, 2026 [The New Republic]

War

Negotiating Without Leverage And With Lies – What We Are Seeing Is Astonishing For The USA

Phillips P. OBrien, June 24, 2026 [via Letters from an American, June 24, 2026]

… Personally, I have never seen the US in such a position of weakness.

Because the US has no significant leverage over Iran, the Trump administration (as it has been for months, it needs to be said) will simply have to dissemble about non-existent Iranian concessions to try and make it seem that they have not been completely routed. And that is the second part of this update. The US government has reached the stage where the default assumption must be that it is lying when it comes to Iran making any concessions. For months the Administration has been claiming that Iran was agreeing to this concession or that concession—and none of these claims has been true. Now that the US has even less leverage, the lies will probably get larger.

We are witnessing the most extraordinary negotiating moment in the history of US foreign relations, and that alone makes it worthy of note….

Open Thread

By Ian Welsh

On June 27, 2026

40 Comments

Use to discuss topics unrelated to recent posts.

Brief Iran Update

By Ian Welsh

On June 26, 2026

24 Comments

So, Iran closed the Strait because Israel wouldn’t leave Lebanon. Some ships tried to leave to Iran struck the ships. Trump called that a violation of the truce and struck targets in Iran.

As predicted, there is no peace possible if the US won’t control Israel.

Meanwhile in Lebanon the government signed an agreement with Israel saying that Hezbollah is to be disarmed. Hezbollah straight up said:

Hezbollah MP Hassan Fadlallah: ‘Hezbollah considers the Lebanese presidency and government illegal and unconstitutional. We shall not permit this unconstitutional institution to implement any deal on the ground.’

The Lebanese army can’t disarm Hezbollah, Hezbollah is far stronger. I doubt they’ll seriously try, whatever Aoun orders. The deal would amount to ceding southern Lebanon to Israel permanently. Aoun might not care, it’s all Shia land, but Hezbollah won’t go along.

No peace is possible if the US won’t either restrain Israel or cut it loose. “If Iran and Israel fight, we will not intervene.”

Controlling Israel is easy. What Kissinger and Nixon did was just stop weapon shipments. That’s all it takes.

Oh, and Israel lost its battle to take Ali Taher Hill. Wound up begging Hezbollah to allow them to retrieve the corpses of their fallen soldiers. The Israeli ground forces really are absolute crap.

The MOU was very one sided: everything was what Iran wanted, not what the US wanted. That’s because the Strait being closed really will wreck America. This remains true. Iran appears to believe this, and they are willing to go back to war or semi-war until the US disciplines Israel. No signs of cutting Hezbollah loose.

Hope you’re looking forward to very high food prices, bare shelves and eventual food riots. Because if the US doesn’t make peace these are all coming to America. Oil prices have been held artificially low by market manipulation, but there is a real world and in that real world distillates like diesel are running very low.

At this point it’s clear Trump has to go, for America’s sake. Vance is scum, but he’s realistic scum. If it was up to him, there’d be peace.

Here’s hoping the MOU gets back on track. I don’t like the world where it doesn’t.

The Only Thing That Matters Is Winning Primaries

By Ian Welsh

On June 26, 2026

29 Comments

From Stoller:

Last night, something happened that I’ve never seen in my time in politics – a bunch of Democratic incumbent politicians in New York and Maryland lost to left-wing challengers. New York in particular has an intensely wired Democratic machine, with advocacy groups, unions, and identity rights groups cemented together with big money. This machine rarely loses, and never loses en masse. Yesterday, they did, as voters said no to the entire political establishment.

The winners mostly ran on a platform of opposition to the U.S. alliance with Israel, as well as subordinate themes like opposition to corporate greed. For instance, Antonio Reynoso, the Brooklyn borough president and a well-respected establishment figure with virtually every endorsement possible from both liberal groups and real estate interests, lost to Democratic Socialist Claire Valdez by more than 25 percentage points. Adriano Espaillat, the head of the Congressional Hispanic Caucus, was unseated by fellow DSA member Darializa Avila Chevalier. State assembly incumbents lost, and both the state and Federal delegation are now far more progressive.

The New York machine, in other words, got wrecked.

I came out of the netroots: the blogosphere. We had a motto “more and better democrats” but every time we tried to primary some shitheel Democrat, we got wrecked.

We didn’t have the juice.

And in American politics the most important thing is whether you can win primaries. In a duopoly, even if your candidate loses the general this time, they’ll eventually back into power if the district is competitive. If it’s not competitive, and the party you can win elections in is the shoe in, well, it’s the same as winning the election.

The reason the populist right has been pandered to by Republicans on many issues (but not corporate governance) is that they can win primaries.

The reason Kathy Hochui kept her implicit deal with Mamdani and has given him money for New York and other help is that Mamdani is a powerhouse and a bellweather. Opposing him would mean he and the movement he is the standard bearer for would have come for her next.

This is localized so far, but if it spreads the Democratic party will change. And unlike the Republican right, which can be bought off with culture war bullshit, this a left wing populist movement which is explicitly anti-oligarchy. Mamdani has been very successful so far, coming thru on many of his promises. I recently saw someone earning six figures say that Mamdani’s childcare plan had saved him 30K. That’s not chump change and it dwarfs anything the well off, but not rich, will lose from Mamdani’s other changes. In other words the 80% to 95% benefit, as does everyone under 80%.

That is one one hell of a big coalition.

Democrats and Republicans, since Reagan, have largely refused to compete on doing things for ordinary Americans: at least anything pocket book related. The competition has all been kabuki, symbolic gestures or cultural red meat. Some of it has really hurt people, to be sure (abortion bans for example) but overall the idea has been that money should be given to the rich and programs which help ordinary people’s finances are a no go.

Since the US is a duopoly and you only get to vote for two options, neither of which intend to help, the only solution was to change the nature of one of the parties.

That has now begun. How far it will go and whether it will succeed, I do not know.

I do know that if it does, the Democrats will rule for another 50 years, like they did from 32 to 80. Republicans will get in sometimes, but they will be like Eisenhower: ruling in a populist left fashion. The mirror of Clinton or Obama, who in most respects might as well have been Republicans. They were certainly arch-neoliberals.

This is your moment of actual hope. Not the fake Obama stuff, the real thing. It’s not certain, of course, there is a ton of power opposing it, but it is real hope.

Can Europe Win A War With Russia?

By Ian Welsh

On June 25, 2026

58 Comments

European elites appear to be preparing for war with Russia. Lots of new military spending, lots of anti-Russia rhetoric, willingness to let Ukraine launch drones from their territory and plenty of provocations like seizing tankers. They’re pretty open about preparing for war.

So, can they win such a war, starting in say 2030?

On paper it shouldn’t be much of a contest. Europe’s GDP is about 8x larger and its population is 3x larger. In principle, Russia should be smoked. Nor does history support “you can never beat Russia”, Germany lost in WWII, yes, but it won in World War one, nor was all of Europe fighting with it.

I’m gong to keep this simple. It isn’t GDP that matters, it’s resources and the ability to turn them into war materials, plus the willingness of the population to fight and die in large numbers.

Right now Russia alone produces more of the type of armaments that matter than all of Europe. Missiles, artillery, drones, glide bombs and so on. It has more oil and more minerals. It does have less population, but Russia’s historically been willing to absorb massive losses to defend the motherland.

Then we come to allies: Europe might have America, Russia might have China.

China is stronger. A lot stronger. Everything that Russia can’t make itself China can provide. Everything Russia needs that it can’t grow or dig up itself can be sent thru China to Russia from China’s African and Asian allies and there is no way for either the US or Europe to intercept all of that.

Nor is there any possibility that China will let Russia lose in any big way to Europe. Europe wants Russia broken up and subordinate to America and Europe. That would be an existential threat to China, and they know it. America can lose Europe and it will suck, but it isn’t existential.

This is how I predicted that Western sanctions would not work on Russia. I predicted it when the war started. Again, because everything Russia needed they could either produce themselves or get from China and even then Western elites were clear that the idea was to break up Russia and that China was the ultimate enemy.

The Chinese would have to be morons not to give Russia whatever support they needed, and unlike the West, China is not ruled by idiots or fools.

Europe can fight a very nasty war with Russia which wrecks both of them. But it can’t win in any meaningful fashion. European elites selling war or genuinely planning on war are either liars or fools or both. Europe’s problems cannot be fixed by war. Keynesian war stimulus will not fix their economic problems which are a result of the fact that they’re falling behind technologically and losing their industry to high input costs, including energy. They have less and less manufactured goods to sell to the rest of the world, can’t force the rest of the world to give them what they want or sell it below cost any more, and have no significant natural resources to sell to the rest of the world. Nor are they big leaders culturally any more, especially as China’s cultural sector takes on the standard great power glow—tons of money and people to work on it, and it must be great because China is great.

If Europe fights a real war with Russia all it will do is drive itself into the ground so it can go back to what it was for most of history: a barbaric backwater irrelevant to most of the rest of the world.

They need to fix their society and economy, and starting wars they can no longer win won’t do that.