Banana republic watch
How do you know when your country is becoming a banana republic? Let’s call our imaginary banana republic “Costaguava”.
1. Voter do not judge foreign leaders on the basis of whether they are mass murderers, but rather on how they get along with the leader of Costaguava:
2. When political parties lose an election in Costaguava, they try to change the rules to invalidate the will of the voters:
RALEIGH, N.C. — Amid a tense and dramatic backdrop of outrage and frustration, North Carolina’s Republican-controlled legislature on Friday approved a sweeping package of restrictions on the power of the governor’s office in advance of the swearing in of the Democratic governor-elect, Roy Cooper.
Protesters spent a second day chanting and disrupting debate, as some were arrested and led away from the state legislative building in plastic wrist restraints.
3. In Costaguava, it’s difficult to discern the line between the leader’s official duties, and the ruling family’s far-flung business empire:
4. It’s hard to draw the line between real news and fake news in Costaguava.
Part 2: Trust the process.
Lots of people totally miss the elephant in the room, debating minor issues like whether Russia hacked the election. Trump said the CIA’s claim was ridiculous, but could offer no reason other than that, if true, it would make Trump’s win look less impressive. The problem with Trump’s claim has nothing at all to do with whether Trump is right or wrong, rather it reflects a deep flaw in his thinking process. Indeed Trump would be equally culpable for his remarks even if it turned out the CIA had been mistaken.
The problem here is that if you degenerate into a banana republic, decision-making will suffer, and eventually there will be a price to pay in terms of policy screw-ups. For a time, you might get lucky with economic policy, as when Pinochet stumbled into the Chicago Boys. But that’s a weak reed to lean on. In the long run, well-governed countries will do well, and banana republics will do poorly. Chile graduated from banana republic status in 1989. Venezuela never did. The US seems to be falling back into that category today.
PS. I just saw this item:
Earlier Saturday, he announced the nomination of South Carolina Rep. Mick Mulvaney to head the Office of Management and Budget, choosing a tea partyer and fiscal conservative with no experience assembling a government spending plan.
No experience? Isn’t that unpresidented? What could go wrong?
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18. December 2016 at 05:55
To paraphrase Ludwig Von Mises, Come, come, the biggest errors in economic/political reasoning have already been made by the experienced professionals.
18. December 2016 at 05:58
BTW, in banana republics they don’t have elections that the dictator can lose. Also, as a libertarian you should be happy with anything done to take power away from politicians. It’s an expansion of freedom.
18. December 2016 at 06:35
Please, go back to blogging about crazy macroeconomic theories. Or you will lose me as a reader. I’m serious.
18. December 2016 at 06:55
Bye Ray. Don’t come back.
18. December 2016 at 07:02
Scott
This is a bit off-topic, but to continue with a conversation in which I claimed China is challenging freedom of sea lanes, see this:
https://www.cnas.org/publications/reports/power-and-order-in-the-south-china-sea
My view is not so uncommon within the international relations community.
Since China is challenging international norms in the sea, we can threaten to challenge their One China policy behind the scenes, if need be.
18. December 2016 at 07:12
Wow, so much wrong with this post it’s hard to know where to begin. I’ll try just taking things in order:
1. Voter do not judge foreign leaders on the basis of whether they are mass murderers, but rather on how they get along with the leader of Costaguava
I’ve never heard of this being a characteristic of voters in banana republics. Really. But when leaders of the two countries with the most nuclear weapons are actually civil to each other and don’t make nutty allegations about rigging each others elections, I think that’s a good thing. Don’t you?
2. When political parties lose an election in Costaguava, they try to change the rules to invalidate the will of the voters
Or they demand selective recounts (Florida in 2000, Wisconsin, Michigan and Pennsylvania this time) or demand that the Electoral College overturn the election result.
3. It’s getting hard to tell the difference between fake and real news. True, but your criticism would be better directed at some of the mainstream media. In fact, if you were to just look at the posts Ann Althouse has tagged with the fake news tag, you might just realize how bad it really is. Glenn Reynolds calls liberal journalists “Democratic operatives with bylines” and he’s not wrong to do so.
4. In Costaguava, it’s difficult to discern the line between the leader’s official duties, and the ruling family’s far-flung business empire.
The fact that you can imply that Trump has potential, prospective (i.e., they haven’t materialized yet) conflicts of interest (which are apparently not even illegal, since the President is specifically exempted from some of the relevant statutes) and not mention the Clinton Foundation shows some pretty extreme bias on your part.
5. Election hacking. Nevermind that Julian Assange says the Russians were not his source, and nevermind that the Podesta hack was not a sophisticated hack at all but a simple phish that he was dumb enough to fall for. The real point is that none of the information revealed by these “hacks” was untruthful. What upsets the Clinton supporters is not that the Clinton campaign cheated in both the primaries (why did Wasserman-Schultz resign?) and the general election (Donna Brazile fed them debate questions). No, what upsets them is that voters found out about it. You don’t see how lame this is? Really?
6. I know very little about Mick Mulvaney, and I bet you don’t either.
7. Sometimes it seems you need a dictator to get beyond the banana republic stage. Economic ideology matters more than how democratic a regime is. Relatively honest capitalist dictators Lee Kuan Yew, Park Chung Hee and Augusto Pinochet were each instrumental in transforming their countries into modern economies, while leftists Hugo Chavez, the Castro brothers and Juan and Evita Peron ran their countries into the ground. It was not just an accident that Pinochet did well.
18. December 2016 at 07:50
Ray, I do just as many macro posts as ever. Do you know what macro is? I just did one 10 minutes ago. But please don’t leave, I need the ad revenue from your frequent hits.
Scott, That’s off topic.
Jeff, You said:
“I’ve never heard of this being a characteristic of voters in banana republics.”
Now you have.
You said:
“Or they demand selective recounts (Florida in 2000, Wisconsin, Michigan and Pennsylvania this time) or demand that the Electoral College overturn the election result.”
Umm, doesn’t that support my point?
You said:
“since the President is specifically exempted from some of the relevant statutes) and not mention the Clinton Foundation shows some pretty extreme bias on your part.”
Umm, doesn’t that support my point, if Clinton’s just as corrupt?
You said:
“Election hacking. Nevermind that Julian Assange says the Russians were not his source,”
Well there you are!! Obviously you missed the point about it not mattering whether the CIA’s story is true.
In any case, it’s kind of silly to worry about this, given that Trump is on record supporting the Russian hack, and actually encouraged them to do more. The question is not whether Trump is guilty of encouraging the Russians to hack, he admits it, it’s whether hacking is a crime at all.
Next time you might try to actually read my post, instead of imposing your own interpretation (that I am an apologist for the Dems) on what I have said. I have frequently compared Hillary to Nixon. Almost none of your comments have any bearing on what I actually wrote in this particular post.
BTW, your point 7 is very naive. You never know ahead of time if the dictator will be bad or good, and on average they are much more likely to be bad. So no, you don’t “need” a dictator.
18. December 2016 at 08:37
You really do not want to become Fed chair, do you. Because posts like this aren’t helping.
You need to look at this from a utilitarian perspective: Market monetarism seems to be the best solution for monetary policy (for the FED, for the US, for the world). And you seem to be the only one who really gets this theory and is also totally convinced by it. Ergo you must become FED chair. It’s not really about what you want personally, it’s about maximum utility.
And don’t complain about the US becoming a banana republic when the most competent people don’t even want to run.
And no the US is not becoming a banana republic, that’s just so obvious, it doesn’t deserve any further statement. It is also lacking one essential thing: bananas.
18. December 2016 at 08:56
This post is true but…I think a Banana Republic might have a better foreign policy than the US has at the present time.
What is the US foreign policy and military position? To prop up an Islamic narco-state in Afghanistan? Create total chaos in Iraq? To help all sides in Syria depending on the day of the week? Banana republics usually do not waste resources on worthless overseas missions.
And as for monetary policy, the banana guys usually like it a little bit looser. A good idea for the US at present.
Banana-rama to the moon. If Trump can oust Yellen, might be some good times ahead.
Trump: “I want a central banker who looks like Paul Volcker or Rex Tillerson, not some frumpy Cub Scout den grandmother. Find me a real central banker!”
Right for all the wrong reasons.
18. December 2016 at 09:17
#1 -Show that same graph for Fidel Castro and the Iranian leadership.
PS: I thought you’d like Mulvaney as OMB director, given that he often aligns himself with the libertarian wing of the party and is a strong fiscal conservative, which you feared Trump might not be.
18. December 2016 at 09:39
How should we feel about Putin?
Hillary was pretty active in Bill’s administration. Non-story.
The NC thing – either they are following the rules or not. Are they acting in the public interest or not? If not, they’ll be punished by the courts and the public. NC is a conservative state with lots of liberals that have moved there due to quality of life, great higher education, and good jobs for college-educated folks. They want to believe they live in a liberal state.
18. December 2016 at 09:41
Following up on “How should we feel about Putin?” If Trump starts to shift on climate change and drags his followers along with him in terms of public opinion, is that a good thing?
Point being, it’s not enough to just say that public opinion shifted because of Trump’s view. Is the view correct or not – that’s the only thing that matters.
18. December 2016 at 09:42
On behalf of the Banana Commonwealth of Massachusetts, I welcome North Carolina to the club.
18. December 2016 at 10:06
Christian, If I were made Fed chair that would remove any doubt about the US becoming a banana republic. As long as I am not Fed chair, there’s still hope for America.
ant1900, You said:
“Is the view correct or not – that’s the only thing that matters.”
Looks like you entirely missed the point of the post. Process is what matters.
18. December 2016 at 10:34
Paul, Yup, my state’s been there for a long time—it’s what happens with one party government.
18. December 2016 at 10:53
Scott,
Yes, foreign policy is only tangentially related to this post, at best, but you don’t do many foreign policy posts, so I thought I’d post that. Trump’s foreign policy is very banana republic so far.
I don’t care if you comment on it, but it’s a good read.
18. December 2016 at 10:54
In Costaguava, it’s difficult to discern the line between the leader’s official duties, and the ruling family’s far-flung business empire:
Trump has children he’s relied on to help run his business, as his father relied on him. BO’s children are sullen teenagers, Bush’s children were college girls with the interests of college girls, Clinton’s daughter was another adolescent (sweet little girl once snarled at a Secret Service agent that he was her ‘personally trained pig’); Reagan’s daughter actually did have a patronage job with the Republican National Committee, one of his sons was a satisfactory boat salesman (and that’s it), and the other two’s talents are exhausted by doing color commentary at dog shows and giving vulgar magazine interviews; Gerald Ford’s children were all about college age, and only one of them had much vim and vigor (much less brains); Richard Nixon’s older daughter is by all appearances neurasthenic and his younger daughter actually did go on contentious speaking tours on his behalf; Lynda Johnson Robb is a society wife who has never manifested any professional interests in her life and they called her sister ‘Watusi Luci’ for a reason; John Kennedy’s children were pre-school children; Dwight Eisenhower’s son was pre-occupied with his military postings (and did serve on his father’s staff during the war); Harry Truman’s daughter was college age and then employed in the entertainment biz.
While we’re at it, 3 Roosevelts were at least shin deep in politics, Dwight Eisenhower was not averse to consulting his brothers; Robert Kennedy, Sargent Shriver, and Steven Smith all had important positions in the Administration or campaigns; Jack Ford attended White House staff meetings, Rosalynn Carter attended cabinet meetings, Hillary Clinton attended cabinet meetings and ran a policy task force (badly, per B. deLong), and five scions of Prescott Bush Sr have run for important public offices. The Carter sons and some of Richard Nixon’s nearest were about the only crews with a useful skill set who were assiduous about being off stage.
18. December 2016 at 11:06
Regarding:
“The problem here is that if you degenerate into a banana republic, decision-making will suffer, and eventually there will be a price to pay in terms of policy screw-ups.”
This is precisely why I voted for Trump. I viewed Obama’s way of governing with “phone and pen” as moving us towards a banana republic. With Clinton we were on the road to more of the same. I think Trump is showing that he plans to reverse this trend and govern by more constitutional means.
18. December 2016 at 11:36
Excellent new post by David Glasner at his new blog: “The Trump Rally”
I agree with his last paragraph in particular:
“I am more inclined to believe that the recent increases in stock prices and inflation expectations reflect expectations that Trump will fulfill his commitments to conduct irresponsible fiscal policies generating increased budget deficits, which the Republican majorities in Congress will now meekly accept and dutifully applaud, and that Trump will be able either to cajole or intimidate enough officials at the Federal Reserve to accommodate those policies or will appoint enough willing accomplices to the Fed to overcome the opposition of the current FOMC.”
18. December 2016 at 11:36
Excuse me! Correction: Glasner does not have a new blog.
18. December 2016 at 12:09
I agree that unconstitutional (banana republic like) behavior by our presidents is a big problem.
But, I don’t think this post convinced me there’s a sudden change in banana republicanism. Obama’s pen and a phone quote and his hot mic promise to Medvedev show Obama as a man unconcerned with process and happy to accommodate mass murderers.
And, regarding Trump’s family being present at his meeting with tech moguls: it might show nepotism but in a banana republic the leader uses political power to create a business empire; he doesn’t create a business empire then attain political power.
18. December 2016 at 13:17
Scott, it would be a lot easier to interpret your posts as nonpartisan criticisms of both sides if your examples were actually drawn from both sides. But you tend to post criticisms of Trump and the Republicans and then when someone like me points out that both sides engage in the kinds of behavior you criticized, you say “of course they do”. Then a few days later you do another one-sided criticism of Trump and/or Republicans. And I really don’t remember you criticizing Obama anywhere near as much as you do Trump, who hasn’t even taken office yet.
18. December 2016 at 14:25
How do you know when your country is becoming a banana republic?
Continued…
#5- Even the climate starts skewing tropical. (b/c anti global warming)
18. December 2016 at 14:54
Jeff,
Trump is a total moron who doesn’t even necessarily have good intentions. He’s so far beyond the pale in nearly every way that everyone discusses him more than Obama. Also, Obama’s almost out of office and Democrats control almost nothing in the country, so why are they worth much discussion? If you’d just step back and think and read the blog for a while, you’d find it’s easy to guess Scott’s criticisms of Obama and the Democrats, for the most part.
18. December 2016 at 16:39
Bob O’Brien
18. December 2016 at 11:06
“Regarding:
“The problem here is that if you degenerate into a banana republic, decision-making will suffer, and eventually there will be a price to pay in terms of policy screw-ups.”
This is precisely why I voted for Trump. I viewed Obama’s way of governing with “phone and pen” as moving us towards a banana republic. With Clinton we were on the road to more of the same. I think Trump is showing that he plans to reverse this trend and govern by more constitutional means.”
The fact that this is a serious post is frightening…
18. December 2016 at 17:40
“I think Trump is showing that he plans to reverse this trend and govern by more constitutional means.”
War is Peace. Slavery is Freedom. Ignorance is Strength.
18. December 2016 at 19:04
Isn’t NGDP targeting completely isomorphic to velocity-induced policy adjustments under free banking?
18. December 2016 at 22:54
[…] Sumner has an interesting piece titled as Banana Republic […]
18. December 2016 at 23:33
By the way Jeff’s arguments are directly from trolling/bullshitting playbook. I bet he’s a paid troll.
19. December 2016 at 03:02
@Jeff
I really don’t remember you criticizing Obama anywhere near as much as you do Trump, who hasn’t even taken office yet.
I totally agree.
@Freelander
you’d find it’s easy to guess Scott’s criticisms of Obama and the Democrats, for the most part.
So in other words, there aren’t nearly any existing posts during 8 years of Obama, we need to imagine those entries, while so far during 0 years of Trump we get one post every 24 hours about every tiny little Trump fart. I guess his farts are really important.
And maybe they are. Maybe Trump showed more influence, understanding and willpower to really change things in just a few weeks than Mr. Lame Duck Obama showed during his whole 8 years.
I read Obama and the media are warning Trump how dangerous Putin is. Those are the same guys who ridiculed Bush in 2007 and 2008 for being so hard on Putin, and ridiculed Romney in 2012 again. This is just really surreal.
19. December 2016 at 08:20
Art, You said:
“Trump has children he’s relied on to help run his business, as his father relied on him. BO’s children are sullen teenagers, Bush’s children were college girls with the interests of college girls, Clinton’s daughter was another adolescent (sweet little girl once snarled at a Secret Service agent that he was her ‘personally trained pig’);”
This sort of garbage tells one much more about the author, than the people being described.
Bob, You said:
“I think Trump is showing that he plans to reverse this trend and govern by more constitutional means.”
Of, I forgot, Trump shows a deep appreciation of the importance of restraining the power of the executive. Silly me.
Travis, I strongly disagree with that, the Fed strongly disagrees with that, the consensus of private forecasters strongly disagrees with that, the TIPS spreads strongly disagree with that. I’m afraid 2% inflation is locked in right now, and Trump won’t do anything about it (even if he wanted to, which is unlikely)
Jeff, You said:
“Scott, it would be a lot easier to interpret your posts as nonpartisan criticisms of both sides if your examples were actually drawn from both sides.”
I’ve done plenty of posts critical of the brain dead Dems, perhaps you haven’t paid attention. Left wing bloggers almost universally treat me as if I’m a right winger. Check out my posts on big government, minimum wages, fiscal stimulus and lots of other issues. But right now the biggest threat is Trump, that’s why I focus on him. Four of the last 5 GOP candidates didn’t even support him, he’s not a normal Republican, he’s a right wing pro-Putin, pro-Duterte nationalist. You may not have a problem with that, I do. You didn’t see me bashing Romney in 2012
In any case, I’m a blogger not a news anchor, and I have no interest in being “balanced”, I just want to be correct.
Ricardo, Good one.
19. December 2016 at 11:03
This sort of garbage tells one much more about the author, than the people being described.
No, it doesn’t tell you that, but you don’t have a response, so you resort to striking poses like this.
The point is plainly stated: the predecessors who had children who might have been of assistance to them were Eisenhower, Carter, and Bush the Elder. Eisenhower’s son had worked on his staff, just not during his time in office. Bush the Elder’s children were pre-occupied with establishing themselves in business. With the qualified exception of George P. Bush, all Bush scions who have entered politics have made themselves well-to-do in business pursuits beforehand: finance, oil exploration, insurance, banking, real estate, &c. Neither Eisenhower nor Bush I were adverse to seeking counsel from relatives (and most of Bush I’s children also campaigned for him). Jimmy Carter is the only President whose adult sons kept out of sight. All of Carter’s sons were younger and less established than the Trump trio and none were employed in the family business (which was run by Billy Carter). Of course, none of that prevented Carter from having his wife at cabinet meetings; the much maligned Nancy Reagan limited her involvement in the administration to scheduling and special events; it’s just that in keeping the President’s schedule, she was giving orders to his Chief of Staff, something Mr. D.T. Regan found baffling.
19. December 2016 at 13:54
Scott,
It seems that when some of your long-time readers observe that your blogging style has changed, you accuse them of being blind (and/or Trump supporters). Let me just give an example of where these people are coming from.
Back in late May 2012, the NYT ran a front page story explaining that President Obama had a “secret kill list” (the headline’s term, not mine) where he and his advisors could decide to deliberately target and kill an American citizen in the War on Terror, with no trial.
Now some of us flipped out at the time. I don’t remember you mentioning it. I went and did a cursory review of your blog archives from late May through all of June 2012 and didn’t see any discussion. You talked entirely about NGDP targeting, Paul Krugman, praised stagflation, mocked Ludwig von Mises, but no mention of the President’s secret kill list, according to my admittedly quick review.
Now maybe you *did* talk about it and I missed it, but it didn’t seem like the kind of thing you would’ve talked about, back then.
But now, you’re warning your readers on a daily basis about how awful the political scene is. We are supposed to think our country is now sliding towards a banana republic because, e.g., Trump brings his daughter to work.
Can you see why some people think your style has changed?
19. December 2016 at 17:47
Bob, I have criticized Obama a number of times for continuing the Bush II war on terror.
But until this year, politics has not been a focus of this blog. That’s because until this year we had normal politicians, not a lunatic running for president.
Don’t you think it’s a bit “unpresidented” for us to have a GOP presidential candidate that 4 of the past 5 GOP presidential candidates were not willing to support? I guy who told the Russians (at a press conference) that he wanted them to hack our election and release 30,000 Hillary emails? I guy who supports Duterte’s policy of mass murder? A guy who think’s Putin’s a good role model for a leader? I guy who publicly says he thinks the CIA/FBI claim of Russian hacking is “ridiculous”, and when asked why says because if true it would make his victory seem less impressive? A guy who appoints a self-described alt-right mouthpiece as a top aide? A guy who questions the One China policy?
You are right that politics was not a focus of this blog in 2012, and that’s because we had a normal election between 2 normal candidates.
You said:
“according to my admittedly quick review”
Your admittedly quick review is quite inaccurate. I’m a fan of von Mises. Human Action is on my bookshelf.
(unread)
20. December 2016 at 21:21
Bob, I have criticized Obama a number of times for continuing the Bush II war on terror.
IOW, for one thing a partisan Democrat or a palaeoclown might chastise him about.
20. December 2016 at 21:25
Don’t you think it’s a bit “unpresidented” for us to have a GOP presidential candidate that 4 of the past 5 GOP presidential candidates were not willing to support?
Which of them was someone you’d take any cues from? Endorsements hardly matter to ordinary voters in Presidential contests (and I cannot recall a time when a soi-disant libertarian even feigned interest in a politician as a character).
21. December 2016 at 09:43
” I’m a fan of von Mises. Human Action is on my bookshelf (unread)”
I can beat that. I have a small sub woofer sitting on top of Schumpeter’s History of Economic Analysis to keep it from vibrating the desk which touches the wall and annoys the guy in the next office. It used to serve as a nice stand for an electric hot water pot.
Who says economics is useless?