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The Wrongologist

Geopolitics, Power and Political Economy

Silicon Valley Will Escape the Revolution

The Daily Escape:

Waterfall Jumping Competition (from 69 feet up), Bosnia, August 5th – photo by Amel Emric

Antonio Garcia Martinez:

Every time I meet someone from outside Silicon Valley – a normy – I can think of 10 companies that are working madly to put that person out of a job…

Well, that makes most of us “normies”. In context, we are the people who do not work in Silicon Valley. We are the people who use technology, rather than invent technology, and many of us ought to see technology as a threat to our jobs and our place in society.

We are not in the beautiful peoples’ club. Our names are not on the list. We’re not software engineers who work just to pay the taxes on their company stock.

And who is this Martinez guy? From Mashable:

He’d sold his online ad company to Twitter for a small fortune, and was working as a senior exec at Facebook (an experience he wrote up in his best-selling book, Chaos Monkeys). But at some point in 2015, he looked into the not-too-distant future and saw a very bleak world, one that was nothing like the polished utopia of connectivity and total information promised by his colleagues.

Martinez pointed out that there are enough guns for every man, woman and child in this country, and they’re in the hands of people who would be hurt most by automation:

You don’t realize it but we’re in a race between technology and politics, and technologists are winning…

Martinez worries about how the combination of automation and artificial intelligence will develop faster than we expect, and that the consequences are lost jobs.

Martinez’s response was to become a tech prepper, another rich guy who buys an escape pod somewhere off the grid, where he thinks he will be safe from the revolution that he helped bring about. More from Mashable: (brackets by the Wrongologist)

So, just passing [after turning] 40, Antonio decided he needed some form of getaway, a place to escape if things turn sour. He now lives most of his life on a small Island called Orcas off the coast of Washington State, on five Walt Whitman acres that are only accessible by 4×4 via a bumpy dirt path that…cuts through densely packed trees.

He’s not alone. Reid Hoffman, co-founder of LinkedIn told The New Yorker earlier this year that around half of Silicon Valley billionaires have some degree of “apocalypse insurance.” Pay-Pal co-founder and venture capitalist Peter Thiel recently bought a 477-acre escape hatch in New Zealand, and became a Kiwi. Other techies are getting together on secret Facebook groups to discuss survivalist tactics.

We’ve got to expect that with AI and automation, our economy will change dramatically. We will see both economic and social disruption until we achieve some form of new equilibrium in 30 years or so.

It will be a world where either you work for the machines, or the machines work for you.

Robert Shiller, of the famous Case-Shiller Index, wrote in the NYT about the changing meaning of the “American Dream” from the 1930s where it meant:

…ideals rather than material goods, [where]…life should be better and richer and fuller for every man, with opportunity for each according to his ability or achievement…It is not a dream of motor cars and high wages merely, but a dream of a social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable…

That dream has left the building, replaced by this:

Forbes Magazine started what it calls the “American Dream Index.” It is based on seven statistical measures of material prosperity: bankruptcies, building permits, entrepreneurship, goods-producing employment, labor participation rate, layoffs and unemployment claims. This kind of characterization is commonplace today, and very different from the original spirit of the American dream.

How will the “Normies” survive in a society that doesn’t care if you have a job? That refuses to provide a safety net precisely when it celebrates the progress of technology that costs jobs?

The Silicon Valley survivalists understand that, when this happens, people will look for scapegoats. And we just might decide that the techies are it.

Today’s music is “Guest List” by the Eels from the 1996 album “Beautiful Freak”:

 Takeaway Lyric:

Are you one of the beautiful people
Is my name on the list
Wanna be one of the beautiful people
Wanna feel like I’m missed

Are you one of the beautiful people
Am I on the wrong track
Sometimes it feels like I’m made of eggshell
And it feels like I’m gonna crack

Those who read the Wrongologist in email can view the video here.

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IMF Reports US Standard of Living is Falling

The Daily Escape:

Haleakala Crater, Maui

Is it the best of times or the worst of times? This is no longer a partisan discussion. We have an economy in the midst of a long expansion, the third longest since 1850. The statistics say we are close to full employment. But, our mortality rate is moving in the wrong direction, and we have an opioid epidemic that is serious enough to cause jobs to go unfilled. The NYT reports that in Youngstown Ohio, middle class factory jobs go begging:

It’s not that local workers lack the skills for these positions, many of which do not even require a high school diploma but pay $15 to $25 an hour and offer full benefits. Rather, the problem is that too many applicants — nearly half, in some cases — fail a drug test.

The Fed’s regular Beige Book surveys of economic activity across the country in April, May and July all noted the inability of employers to find workers able to pass drug screenings.

So the best of times? Probably not. Bloomberg reports that the International Monetary Fund (IMF) looked at the US economy. This is what they see:

For some time now there has been a general sense that household incomes are stagnating for a large share of the population, job opportunities are deteriorating, prospects for upward mobility are waning, and economic gains are increasingly accruing to those that are already wealthy. This sense is generally borne out by economic data and when comparing the US with other advanced economies.

The IMF then goes on to compare the US with 23 other advanced economies in the Organization for Economic Cooperation and Development (OECD) in this chart:

The chart is a bit of an eye test unless it’s viewed on a big monitor, but its overall point is that the US has been losing ground relative to its past OECD reports by several measures of living standards. 35 countries make up the OECD. The members include all of Western Europe, Russia, Japan, Australia, and several developing nations like Korea and Panama.

This from Bloomberg:

And in the areas where the US hasn’t lost ground (poverty rates, high school graduation rates), it was at or near the bottom of the heap to begin with. The clear message is that the US — the richest nation on Earth, as is frequently proclaimed, although it’s actually not the richest per capita — is increasingly becoming the developed world’s poor relation as far as the actual living standards of most of its population go.

This analysis is contained in the staff report of the IMF’s annual “consultation” with the U.S., which was published last week. The IMF economists haven’t turned up anything shocking or new, it’s just that as outsiders, they have a different perspective than what we hear from our politicians and economists.

For example:

Income polarization is suppressing consumption…weighing on labor supply and reducing the ability of households to adapt to shocks. High levels of poverty are creating disparities in the education system, hampering human capital formation and eating into future productivity.

What is to be done? Well, the IMF report concludes:

Reforms should include building a more efficient tax system; establishing a more effective regulatory system; raising infrastructure spending; improving education and developing skills; strengthening healthcare coverage while containing costs; offering family-friendly benefits; maintaining a free, fair, and mutually beneficial trade and investment regime; and reforming the immigration and welfare systems.

In other words, they suggest substantial reform. It’s doubtful that America can take care of these things anytime soon.

The subtext to most of their suggestions is that other affluent countries have found ways to improve in these areas, while the US has not. We don’t have to look too far into the past to see when those countries were modeling their economies on ours. But today, on all sorts of issues, like taxation, labor markets, health care, and education, the opposite is now true.

One major difference between the US and the rest of the developed world is ideological: Voters and politicians in the US are less willing to raise taxes to finance a better life for our citizens.

Other wealthy countries have figured out how to raise revenue, provide quality education, help the the unemployed, reduce poverty, and keep their citizens healthier than America has.

We must catch up, or admit our time as the world’s indispensable economy is over.

Today’s music (dis)honors the turmoil in the White House. See ‘ya Mooch! Remember that in just six months, Trump has gone through two National Security Advisers, two Chiefs of Staff, two Communications Directors, two Press Secretaries, and two Directors of the FBI.

Here is “Disorder in the House” by the late Warren Zevon and Bruce Springsteen:

Those who read the Wrongologist in email can view the video here.

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Today’s Conservatives’ Southern Roots

The Daily Escape:

Vasconcelos Library – Mexico City

From The Atlantic’s Sam Tannenhaus:

…the most populous region in America, by far, is the South. Nearly four in 10 Americans live there, roughly 122 million people, by the latest official estimate. And the number is climbing. For that reason alone, the South deserves more attention than it seems to be getting in political discussion today.

Ain’t demographics great? Tannenhaus continues:

The South is the cradle of modern conservatism. This, too, may come as a surprise, so entrenched is the origin myth of the far-westerners Barry Goldwater, Richard Nixon, and Ronald Reagan as leaders of a Sun Belt realignment and forerunners of today’s polarizing GOP. But each of those politicians had his own “southern strategy,” playing to white backlash against the civil-rights revolution—“hunting where the ducks are,” as Goldwater explained—though it was encrypted in the states’-rights ideology that has been vital to southern politics since the days of John C. Calhoun.

Tannenhaus is reviewing Nancy MacLean’s Democracy in Chains, and using it as a jumping off point to explore the roots of modern conservatism. Why does all this matter today? Donald Trump.

Tannenhaus points out that Trump won the South bigly:

Lost amid the many 2016 postmortems, and the careful parsing of returns in Ohio swing counties, was Donald Trump’s prodigious conquest of the South: 60% or more of the vote in Alabama, Arkansas, Kentucky, Oklahoma, Tennessee, and West Virginia, with similar margins in Louisiana and Mississippi.

And we need to look at Trump’s Cabinet: 10 Cabinet appointees are from the South, including Attorney General Sessions (Alabama) and Secretary of State Tillerson (Texas).

MacLean’s view is that modern conservatives draw on Southern resistance to 1954’s Supreme Court decision in Brown vs. Board of Education. After the New Deal, conservatives pushed back hard against the expanding federal government. Tannenhaus says:

But it was an uphill battle; the public was grateful for Social Security. Brown changed all that. More than the economic order was now under siege…A new postwar conservatism was born, mingling states’-rights doctrine with odes to the freedom-loving individual and resistance to the “social engineering” pursued by what conservative writers in the mid-1950s began to call the “liberal establishment.”

MacLean focuses on James Buchanan, a Virginian, and a Nobel Prize-winning economist, who argued that the crux of the desegregation problem was that “state-run” schools had become a “monopoly”.

Buchanan argued for privatization of schools. If local towns and cities limited their involvement in education to setting minimum standards, then many kinds of schools might flourish. Each parent “would cast his vote in the marketplace and have it count.”

Sounds like Betsy DeVos.

But, Buchanan wasn’t done. In his book “The Calculus of Consent” (1962), he argued that politicians were looking out for themselves, and they could do real damage that citizens were unable to avoid. The high-priced programs they devised were paid for by taxes, and citizens had little choice but to pay them. Reinforced by the steep progressive tax rates of the time, he called it licensed theft. Not long after Buchanan’s book, Medicare was passed, then the War on Poverty, and then the Great Society— each another example of social engineering delivered by the liberal establishment.

Buchanan’s ideas live on today. The right believes that liberal values cost us our liberty.

Today’s Freedom Caucus is Buchanan’s ideological descendant. They believe they are the guardians of liberty, that drastic measures, like shutting down the government, or defaulting on the national debt are legitimate uses of political power that serves their higher objective. More from Tannenhaus:

This is what drives House Republicans to scale back social programs, or to shift the tax burden from the 1% onto the parasitic mob, or to come up with a health-care plan that would leave Trump’s own voters out in the cold.

Conservatives and Libertarians say that “government is trampling our way of life”. That sets people against government programs, even when the specific program doesn’t need to be attacked. Consider Medicaid. It is attacked as both social engineering and a gift to minorities, even though the majority of those benefiting from it are elderly or white.

Conservatives and Libertarians prefer “individual choice” for poor elderly, or children who can’t afford healthcare. A broadly-based social safety net isn’t consistent with their ideological purity.

They fail to see the value of government as a moderating force in markets.

Accordingly, their thinking cannot advance human society in any meaningful way.

Today’s tune: “Revolution” by The Beatles recorded in September 1968. It was released as the B-side of the “Hey Jude” single in late August 1968, and we hear the live studio version from a month later:

Takeaway Lyric:

You say you’ll change the constitution
Well, you know
We all want to change your head
You tell me it’s the institution
Well, you know
You better free you mind instead

Those who read the Wrongologist in email can view the video here.

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Saturday Soother – May 13, 2017

The Daily Escape:

Bluebells, Brussels Belgium April 2017 photo by Francois Lenoir

In many ways, it is too easy to criticize Donald Trump. While we can have differing opinions on matters of policy, they only account for a few of the issues Wrongo has with Trump. Most are his unfathomable attempts to avoid telling the truth. Consider his interview with The Economist which posted the entire transcript on Thursday. Let’s focus on this excerpt:

The Economist: Another part of your overall plan, the tax reform plan. Is it OK if that tax plan increases the deficit? Ronald Reagan’s tax reform didn’t.
Trump: Well, it actually did. But, but it’s called priming the pump. You know, if you don’t do that, you’re never going to bring your taxes down.

[Snip]

Economist: But beyond that it’s OK if the tax plan increases the deficit?
Trump: It is OK, because it won’t increase it for long. You may have two years where you’ll…you understand the expression “prime the pump”?

Yes.
We have to prime the pump.

It’s very Keynesian.
We’re the highest-taxed nation in the world. Have you heard that expression before, for this particular type of an event?

Priming the pump?
Yeah, have you heard it?

Yes.
Have you heard that expression used before? Because I haven’t heard it. I mean, I just…I came up with it a couple of days ago and I thought it was good. It’s what you have to do.

Ok, so how did the guy from the Economist keep a straight face? The reporter is thinking John Maynard Keynes, the great British Economist, who came up with the idea of “priming the pump” in the 1930’s. By the way, Keynesian pump-priming is temporary government spending to boost temporarily weak demand. It is designed to boost growth, (and jobs) during a downturn, but we can’t assume that it will boost the economy’s growth rate.

Trump’s idea for pump-priming is more tax cuts. He’s following classic trickle-down economics, and claims that his tax cuts will boost investment, productivity growth, and labor supply, and thus raise the long-term growth rate of the economy. In this regard, Trump conflates Keynes, who’s been proven right, with Arthur Laffer, who wasn’t.

But, didn’t Trump graduate from Wharton with a business degree? Nobody gets out of Wharton without knowing that Keynes was the “pump primer”. And his saying that he coined the phrase ‘prime the pump’ a few days ago? Unfortunately, there are only two explanations: first, Trump is 70 years old and his cognitive skills are starting to desert him. Or second, he is a pathological liar.

Wrongo wants to go with #2.

He just wants to sell America something with his name stamped on it. But since America isn’t buying a hotel, he’s trying to sell Trumponomics, Trumpcare, etc. He does not really care about the details, he just wants to pass it, and to claim it is a success. That’s America’s tragedy.

So with Comeygate, Trumpcare and pump-priming, we all need to unplug and try, just try to relax on Saturday. We had a full moon and clear skies over the fields of Wrong on Thursday, so today we listen to “Claire du Lune” by Claude Debussy. It is the third movement of “Suite bergamasque”. Its name comes from Verlaine’s poem Clair de Lune, “moonlight” in French. Here it is played by Dame Moura Lympany, British pianist, who died in 2005:

Those who read the Wrongologist in email can view the video here.

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Sunday Cartoon Blogging – April 30, 2017

It only took 100 days for Donald Trump to reduce the office of the presidency to the point of near-zero credibility. Unfortunately, it appears as though his base and Republicans in Congress remain very accepting of him as president. In Twitter speak, #So Sad.

Back to the administration’s one page tax plan: The plan works if we assume 6% annual GDP growth for the full 8 years of a Trump presidency. Since the end of the Great Recession, annual GDP growth has been about 2%. More to the point, we now have a 3.5% (of GDP) budget deficit, and we are at the top of the current business cycle, with a 75% debt-to-GDP ratio.

Republicans used to refer to that as being broke.

Mostly, what has been accomplished in the last 100 days are a blizzard of executive orders and proclamations. We all remember when executive orders like Trump’s were considered tyranny by Fox News. On to cartoons. The GOP walks out on its long-term companion, the deficit hawks:

Trump’s first 100 days did NOT include tons of winning:

The clown show about trickle-down economics continues:

Trump explains his new tax brackets:

Arkansas needs help after botching another execution:

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Thoughts on Tax Day

The Daily Escape:

Tu Lien Bridge (design, to be built) – Hanoi, Vietnam

Today is officially the day our federal income tax returns are due. That’s because April 15 was a Saturday, while Monday is a holiday in Massachusetts. And as the Bay State goes, so goes America when it comes to filing taxes. Wrongo appreciated the extra time.

Americans shouldn’t mind paying their taxes. We live in a great country, and if you want to fly first class, you gotta pay the fare (unless, of course, you’re flying Air Force One).

The process of filing taxes could (and should) be simplified, but reducing taxes would be a mistake. America has deferred spending for social needs and for infrastructure, and not just on the federal level. Wrongo sits on his town’s Roads Committee. If we were to continue to fix our local roads at the same rate going forward as we have for the past few years, it will take us 40 years to fix just the roads that are rated “poor” quality or worse. Still, many in town think we should spend less, so they could be taxed less. As Justice Oliver Wendell Holmes noted in a dissenting opinion in a 1927 Supreme Court case:

Taxes are the price we pay for a civilized society.

Some of us are still learning that.

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Democrats Have Failed

The Daily Escape:

Lavender in Provence – 2017 Photo by Fabio Antenore

This week, Wrongo wrote that 50% of US births are paid for by Medicaid, and how worry about hunger and homelessness has never been higher among Americans. Both of these issues are symptoms of how our economy fails low-income and lower middle class Americans, and neither political party is truly interested in addressing the problems.

Trump won because he led people who used to vote for Democrats to believe that they had nothing to lose if they voted for him. Below-median income voters had long ago lost faith that Democrats, and Hillary in particular, would ever do anything to change their plight.

Trump said he would look out for them. Whether he does or not, remains an open question, but even before Trump, Democrats had already lost a big swath of America. From the American Prospect:

In the race for the White House, the Democratic presidential candidate has won…fewer US counties with average incomes under the national median and with populations that are more than 85% white in every general election since 1996. Concentrated in the Midwest, Appalachia, and the upper Rocky Mountains, there are 660 such counties today. Hillary Clinton won two of them.

Think about that: The Democratic Party’s influence in mostly white, lower-income America has eroded to nearly nothing since Bill Clinton was president. This chart documenting their fall is stunning:

 

 

 

 

 

 

 

 

 

 

 

 

The Parties basically split below-median income counties that were 85% white in 1996. Over a 20-year period, the erosion of the Democrats’ control was steady, and complete. This isn’t just the result of a poor 2016 presidential candidate, it is an indictment of the Democratic Party, its leadership, and its strategy.

The American Prospect article is about Montana’s Democratic Governor, Steve Bullock, who won his state by 4 points while Trump was beating Clinton by 20. Bullock is a rural populist in a party of technocrats. Obama lost Montana by 2 points in 2008. Bill Clinton won Montana in 1992.

But, the electoral failure of Democrats is worse than its showing in these below-median income white counties. The following graphically illustrates the abject failure of Democrats to be competitive in political contests at all levels:

Nothing that Barack Obama did by holding on to the White House for that entire period compensates for these terrible losses.

Democrats remain divided about their Party strategy, many clinging to the thought that if Hillary could have turned about 80k voters in Michigan, Pennsylvania, and Wisconsin, where white working-class people are abundant, she would be president.

But she would not control either legislative branch, and she would have had to propose Supreme Court Justices similar to Neil Gorsuch to get one confirmed by the Senate.

The question is where will the DNC be taking the Party in 2018? In a 2018 mid-term election where the president has a historically poor approval rating with independents and Democrats, like Trump has now, victory is possible.

If Democrats want to win back Congress, and the White House in 2020, they need to field candidates who believe in jobs and economic growth first. The candidates need to be authentic people, who listen more than they talk. And when they do speak, they should use PIE as a metaphor for America’s economy, as in: (H/T Seth Godin)

  • How big is the pie?
  • Is the pie growing?
  • What will my share of the pie be tomorrow?
  • Who allocates the slices of pie? Can they be trusted?

When voters think the economy isn’t growing, things begin to feel zero-sum. People begin to think that they may permanently lose their place in our society.

If the Democrats want to win back Congress, they need to describe concretely what they plan to do when they say they support their working-class constituents, regardless of color.

They need to get to be better than Trump on jobs, economic growth and finding a peace dividend.

All of that, and Medicare for all. In Wrongo’s Thursday column, Gallup found that health care concerns ranked highest across all income cohorts.

Shouldn’t these principles be credible with working-class people—including whites?

A song about pie: Here is D’Angelo with “Devil’s Pie” from 1998. It’s a dystopian vision of capitalism, where everybody’s fighting for more of the tasty, materialistic dish. All is fair in pursuit of a bigger paycheck:

Those who read the Wrongologist in email can view the video here.

Takeaway Lyric:

Fuck the slice we want the pie
Why ask why till we fry
Watch us all stand in line
For a slice of the devil’s pie

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Worry About Hunger and Homelessness Higher Than Ever

The Daily Escape:

White-Faced (Capuchin) Monkey, Costa Rica, 2015 – photo by Wrongo

The American economy has never been very kind to people at the lower income levels. In most ways, since 2008’s Great Recession, the economy has become riskier, and more tension-filled for lower income Americans, those making $30,000 or less per year. Nothing makes this clearer than this Gallup poll conducted March 1-5, 2017. Gallup surveyed 1,018 adults in all 50 US states. From Gallup:

Over the past two years, an average of 67% of lower-income US adults, up from 51% from 2010-2011, have worried “a great deal” about the problem of hunger and homelessness in the country.

More from Gallup:

Concern about hunger and homelessness now ranks as high as, or higher than, concern about most other issues tested in Gallup’s annual Environment survey. The only issue with a significantly higher “worried a great deal” percentage in this year’s poll is the availability and affordability of healthcare, at 57%.

People’s perspectives are based on their experience, so it shouldn’t be surprising that Gallup found that people making more than $75k/year had other concerns, and ranked hunger and homelessness much lower, at 37%. Still, even that number is up substantially from 23% in 2001.

The survey asks participants to rank their concern about 13 elements, and the differences between the concerns of the $30k or less cohort and the $75k or more cohort are stark.

  1. Americans making $30k and less rank their top seven worries in this order:
  • Hunger/homelessness
  • Crime/violence
  • Healthcare
  • Drug use
  • Terrorism
  • Social Security
  • Economy
  1. Americans making $75k or more ranked their top seven in this order:
  • Healthcare
  • Budget deficit
  • Economy
  • Social Security
  • Environment
  • Race relations
  • Hunger/homelessness

One reality is that the lower income Americans list “terrorism” in their top five, while it does not appear at all as a top worry of higher income Americans. Lower-income Americans worry more in general than those with higher incomes; everything is riskier and tougher for them. But nothing compares to the worries about hunger and homelessness. Gallup:

On average, across the 13 issues, the percentage of lower-income adults who worry a great deal is seven percentage points higher than among middle-income Americans, and 17 points higher than among upper-income Americans.

Here is Gallup’s chart showing the relative degree of “worry” by economic group:

No surprise that more money brings one fewer big worries. No individual worry of the $75k+ cohort was felt by as many people as the seventh-ranking worry by the $30k or less cohort.

In fact, the greater than $75k cohort sees the “budget deficit” as its second-most worried about item. Of course, this dooms any chance for the people making less than $30k to have greater security in life. Congratulations to Pete Peterson and the GOP deficit hawks on a job well done! Their decades of propaganda have made austerity a political obsession for the well-off, because government must tighten its belt, and cut its way to greatness.

Paging Dr. Maslow! Your theory of the hierarchy of needs is again demonstrated in the real world by Gallup. Here it is 2017, near the twilight of the empire. Physiological and safety needs are in the top five of the major worries of a population that is hanging on to our society by their fingernails.

Tighten your belts. Lower your dreams. Ignore the fact WE live in 10,000 sq. ft. mansions. We deserve it, and you don’t.

The American dream is a fallacy. Free markets are a fallacy. They are propaganda used to fool those poor Americans who live every day in all-too visible peonage.

Here is a 2005 tune by Coldplay, “Fix You” from their album “X&Y”. It gives a few words of empathy:

Those who read the Wrongologist in email can view the video here.

Takeaway Lyric:

When you try your best, but you don’t succeed
When you get what you want, but not what you need
When you feel so tired, but you can’t sleep
Stuck in reverse
And the tears come streaming down your face
When you lose something you can’t replace
When you love someone, but it goes to waste
Could it be worse?

 

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Monday Wake Up Call – March 27, 2017

The Daily Escape:

(Many Glacier, Glacier National Park, August 2016 – photo by Wrongo)

What’s next for the White House? Many are saying that the collapse of the Republicans’ failed effort to pass Trumpcare demonstrated that the ideological cleavage within the House and Senate Republicans will not be easy to overcome. This could make it more difficult for Trump to get much of his agenda passed in the immediate future.

Trump wants to move on many things, including tax reform and passing a budget, but the biggest challenge facing Republicans is the Debt Ceiling. The clock started ticking on the need to raise the debt limit, because it already expired on March 15th. That was a “soft” deadline, since the Treasury department can fire up a well-used arsenal of “extraordinary” measures to delay a reckoning, meaning that Congress can take until the early fall to enact a debt ceiling increase.

More time may not mean that a solution will be forthcoming, since the main adversaries to increasing the debt ceiling are the same people who helped derail Trumpcare. The House Freedom Caucus and their allies in the Senate have in the past, expressed a willingness to let the country default, rather than increase the level of the Treasury’s debt.

Since they were able to face down Trump on health care, they may well be emboldened to stand up to the president and Congressional leadership again on an issue that is so close to their hard hearts.

If America were to default on its debts, Trump would be presiding over the Bananaization of our Republic, and our ability to lead in the world would be eclipsed. Wrongo plans to write more about this in the future, but it will take real management by Trump to head this off, at a time that his management skills have been called into question.

So far, he has shown himself to be little more than a salesman for his ideas.

The famed management guru Peter Drucker, who wrote about management for corporations, non-profits and governments, at one point wrote management rules for presidents, in a 1993 article for the WSJ:

It’s hard to imagine a more diverse group than Bill Clinton’s predecessors in the American presidency — in abilities, personalities, values, styles and achievements. But even the weakest of them had considerable effectiveness as long as they observed six management rules. And even the most powerful lost effectiveness as soon as they violated these rules.

Wrongo has condensed Drucker’s management rules for presidents for your convenience:

  • What Needs to be Done? Is the first thing the President must ask. He must not stubbornly do what he wants to do, even if it was the focus of his campaign
  • Concentrate, Don’t Splinter Yourself. There usually are half a dozen right answers to “What needs to be done?” Yet unless a president makes the risky and controversial choice of only one, he will achieve nothing.
  • Don’t Bet on a Sure Thing…Roosevelt had every reason to believe that his plan to “pack” the Supreme Court…would be a sure thing. It immediately blew up in is face – so much so that he never regained control of Congress
  • An Effective President Does Not Micromanage…the tasks that a President must do himself are already well beyond what any but the best organized and most energetic person can possibly accomplish
  • A President Has No Friends in the Administration…they are always tempted to abuse their position as a friend and the power that comes with it
  • Sixth rule? Harry Truman advised JFK: “Once you’re elected, stop campaigning”

(h/t Barry Ritholtz)

Just how many of these rules does Trump follow, and how many does he violate? Discuss.

Perhaps if he followed all of them, the country would avoid Trumageddon, be less divided, and get a middle of the road agenda enacted.

So here’s a wake-up call for Donald Trump and his advisors: FOCUS!! To help them wake up and get focused, here is the Canadian group Bachman Turner Overdrive with their big hit (#12 in the US) from 1973, “Takin’ Care of Business”:

Wrongo used to take the 8:15 in to the city. Working from home is a major improvement.

Those who read the Wrongologist in email can view the video here.

Sample Lyrics:

And I’ll be taking care of business (every day)
Taking care of business (every way)
I’ve been taking care of business (it’s all mine)
Taking care of business and working overtime, work out

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Why Trump Doesn’t Talk About Jobs Anymore

The Daily Escape:

(Bamboo after snowfall in January, near Kyoto. Photo by Hiroki Kondo)

During the 2016 presidential race, Trump campaigned on populist themes. Now that he is in office, it is clear that his policies will be neither populist nor popular, but strictly pro-business. The first clue was his choice of Cabinet members. Despite promising to “drain the swamp”, nobody realized that he could do that by making lobbyists pointless, as their clients are in charge of the government: The CEO of Exxon is head of foreign policy, a former Goldman Sachs partner heads Treasury, the daughter of a ship owner heads Transportation, a corporate raider is at Commerce, and so it goes.

Two months into his presidency, it is clear that the Trump economic policy is pro-business, not pro-jobs, or pro-little guy. If you still have doubt, the Republicans just rolled back a series of Obama-era worker safety regulations. The Senate voted 49-48 to kill a rule that required federal contractors to disclose and correct serious safety violations.

It’s clear that industry CEOs can’t believe their good luck, despite having opposed Trump at every step before the election. He’s only asking them for some vague promises to add new American jobs in return. Acting normal when they are interviewed after leaving a Trump meeting must be the hardest part of their day.

Trump hardly mentions jobs anymore, because he knows there aren’t many. His bogey man of weak domestic manufacturing needs to be addressed: China’s total exports in 2015 were $2.3 Trillion. The US total exports in 2015 were $1.5 Trillion, second in the world.

And the total value of US manufacturing in 2015 was $6.2 Trillion and we are doing it with fewer people than ever before. Today, US factories produce twice as much stuff as they did in 1984, but with one-third fewer workers.

Trump’s carrot and stick approach with US companies is theater. He is now industry’s number one value creator: When he commended Ford for deciding not to build a new plant in Mexico, the price of its shares rose 4.5%.

Softbank shares went up 6.2% after being praised by Trump for investing $50 billion in the US. Softbank’s motive was simple: Softbank owns Sprint, who would like to merge with T-Mobile. The authority to permit this merger lies with the new head of the FTC, yet to be named by Trump. Trump’s positive tweets feed Softbank’s hopes that the merger will be approved.

The Trump presidency has begun in the worst possible way for all who believed he would be an activist in new jobs creation for the lightly skilled, the people who overwhelmingly helped to elect him.

If the opposition wants to take Trump down, they should stop talking about Russia, and focus on Trump’s record with jobs creation. He made big promises – a job for everyone. It will be a long time (if ever) before a significant number of new manufacturing jobs materialize. This is true because Trump’s plan is to cut the fat out of government, cutting so many jobs that he might never add enough to make up for those he eliminates.

His plan is to use the freed-up funds to do something splashy with infrastructure. This would allow him to boast significant job creation, while downplaying the lost jobs in government. If Trump can figure out how to take unemployed, 50+ year old white males living in small town West Virginia, and make them productive, employed workers, then he’s a genius.

Capitalism hasn’t changed. A subset of oligarchs led by Trump have seized control of the US government. They are “nationalists”. Another subset, the “globalists” lost control of the state.

OTOH, the American people would have lost regardless of who won.

This is being repeated around the industrialized world, from Brexit, to Marine Le Pen’s right-wing challenge in France, to far right challenges to Angela Merkel in Germany.

The chaos described in Naomi Klein’s Shock Doctrine: The Rise of Disaster Capitalism is engulfing the world.

In honor of those who still believe that Trumpy will solve the jobs equation, here is Alan Jackson with “Hard Hat and a Hammer”:

Those who read the Wrongologist in email can view the video here.

Sample Lyrics:

Lace-up boots and faded jeans
A homemade sandwich, and a half a jug of tea
Average Joe, average pay
Same ol’ end, same ol’ day

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