Death Of The Middle Man

Imagine you are a rich guy, maybe a banker working at an investment house, and your neighborhood starts to have a crime problem. Maybe you get mugged on the way to your car or perhaps you start hearing about break-ins in the area. All of a sudden, your safe world is no longer safe. You think that maybe it is time to hire some private security to enforce the rules, but you find that they do not exist. All of a sudden, your cash is not all that important to maintaining your lifestyle.

That is the position of Western political elites as they come to terms with the reality playing out on the Ukraine battlefront. The West has lots of cash. They can literally create what they need from thin air. Sure, it has created inflation for the Dirt People, but only a sucker cares about them. Ukraine is what matters. Even though Congress is slow walking the next pile of cash, there is still plenty to send Ukraine. The EU and now the U.S. are plotting to “loan” Ukraine the money.

The trouble is dollars and euros are not much use on the battlefield. What Ukraine needs is machines, ammunition for the machines and men to run the machines, but that is something the West is struggling to produce. CNN has a story up that reports the Russians now produce three times the number of artillery shells as America and Europe combined, which is probably an understatement. The production numbers cited are more theoretical than actual for the West.

The industrial aspect of this war has been a topic of discussion around here since the war started, but like the rich guys living in their fantasy world of wealth and access, the political class of the West has not thought about it. Making stuff, inventing stuff and fixing stuff is for the Dirt People. Cloud People need their time and energy to think about new ways to describe the glorious future or turn bits of invented money into more bits of invented money so they can underwrite their lifestyle.

What the war in Ukraine is doing is reminding the world that the strength of a country is not magical numbers in reports that no one reads, but the hard cold reality of making stuff, fixing stuff, and inventing new ways to make and fix stuff. You can probably throw in food production, which is a form of making stuff, but a unique form, along with digging stuff out of the ground, like energy products and minerals. Countries good at these things will be strong countries.

The West no longer does these things. America and Europe still grow lots of food but the war on food production, as part of the Gaia cult, is threatening to kill off whole swaths of farm production. The war on digging up the ground is mostly about aesthetics, as the Cloud People hate seeing people do dirty work like farming or digging minerals out of the ground. Manufacturing employment in the U.S. has dropped by half over the last half century, despite the population growing by a third.

This is why the West is losing this proxy war with Russia. Despite having a far smaller population and smaller GDP, Russia still makes things and has the facilities and work force to make more things. If you can grow your own food in vast excess, supply your own energy needs, plus much more for export and you make things that people around the world want to buy, you are going to be immune from the machinations of the money changers in New York and London.

It goes beyond this though. China is the world’s biggest manufacturer and the world’s biggest consumer market. India is the second largest consumer market, and it is emerging as a manufacturing powerhouse. Russia is now the fifth largest economy in the world, despite the sanctions. What is happening here is the places where things are made and dug out of the ground are getting rich, which means they can also buy things, like the stuff they make for Western markets.

What we are seeing here is the death of the middle-man economy. For the last half century, America has positioned itself to be the money lender, the regulator, and the facilitator of economic activity, rather than the producer. To finance this, much of the manufacturing base was auctioned off and the economy became reliant on the production of credit to the global economy. To a lesser degree, the EU has done the same thing, as the junior partner of the United States.

What the war on Russia is revealing is that in a street fight, the banker has no chance against the guy who works on a factory floor. Sure, the banker has a Brazilian Jujitsu trainer and access to the finest steroids, but the working man knows how to fight and win, so it can never be much of a match. Further, in the contest of countries, it is the rules of the street that matter, not the rules of the boardroom. The competition of nations is always a street fight.

Long ago, the paleos made the point that you cannot have an economy based on everyone doing each other’s laundry. The great transition from an industrial economy to  a service economy was cheered by the Cloud People but people like Pat Buchanan and Ross Perot warned that it was unsustainable. A generation on and the world is learning that those old guys were right. A country that does not make things, fix things, and invent things is no longer a serious country.

Twenty years ago, Yuri Slezkine observed in his book, The Jewish Century, that the American economy had been transformed into one that primarily served the interests of the facilitators and middle-men. Jews, he argued, were unusually skilled at these tasks and that is why they have been so successful. According to the Atlantic, the golden age of American Jews is ending, and probably taking America with it. It turns out that the middle-man economy is not sustainable.