The Wrongologist – Page 211 – Geopolitics, Power and Political Economy

Sunday Cartoon Blogging – July 19, 2015

We live in an amazing time. Donald Trump is again running for President, and the Huffington Post has decided it will not cover his run, because they consider him to be a joke.

Yet, the Republican base is happy with Mr. Trump. WaPo reports that 57% of Republicans now have a favorable view of Trump, compared to 40% who have an unfavorable view. That is a complete reversal from a late-May Post-ABC poll, in which 65% of Republicans saw Trump unfavorably. The Donald has pushed some candidates polling numbers down to the point where it could affect their ability to raise money.

Since Trump is currently polling at the top of the big group of Republican presidential candidates, the media shouldn’t assume his candidacy is a joke. They should be taking him seriously. Trump’s approval numbers with Republicans is currently the biggest story in the political campaign, and the reasons why he’s so popular deserves to be front and center.

He is the Cliff’s Notes version of today’s Republican Party.

What he is saying resonates with many in their base, which has been diligently cultivated and grown for the last 40 years. Now, their crop is coming in. Consider that Sen. Ted Cruz is only in his third year of his first term in office and Sen. Rand Paul is only in his fifth year. Except for Scott Walker, not one of them has a political record they can run on. The rest are bottom of the barrel careerist pols.

Once, we thought that no one could be lower in that barrel than Nixon. Then we had Reagan. And then, GWB. Hard to believe that the next Republican presidential candidate could be lower in the barrel than GWB, but if there is someone, the GOP will find him/her, and about 45% of the electorate will vote for him/her.

So, don’t focus simply on the media’s carping about Trump’s comments on Mexicans, because 55+% of American Republicans agree with him.

Trump’s bombast actually helps the others:

Pluto is clearer to us than the 2016 Super PACs:

Obama now has to deal with our domestic Ayatollahs about Iran:

Iran deal will never be good enough for some on the Right:

Harper Lee’s book has startling revelation:

The Greek deal is mythic:

Obamacare: A Success?

Gallup and Healthways 2015 Q2 survey shows that the uninsured rate among US adults aged 18 and older was 11.4% in the second quarter of 2015, down from 11.9% in the first quarter. The uninsured rate has dropped nearly six percentage points since the fourth quarter of 2013, just before the requirement for Americans to carry health insurance took effect. The latest quarterly uninsured rate is the lowest Gallup and Healthways have recorded since daily tracking of this metric began in 2008. The recent Supreme Court ruling in King v. Burwell affirmed the legality of subsidies provided to those obtaining insurance through the Affordable Care Act via a federal or state exchange. Here are Gallup’s findings:

So, a byzantine insurance scheme originally designed by the Heritage Foundation as a way to keep the insurance cartel from suffering too much, now looks like a success, if reducing the numbers of the uninsured was the goal. But, once it went into effect, it became collectivism to Republicans, with the label “Obamacare” as if it had sprung fully formed from the mind of a Kenyan Socialist.

Here is a second data point, the use of subsidies by ACA insured by state:

Why Bloomberg thinks Massachusetts is a red state is unexplainable, despite the fact that it has a Republican governor. But, it does serve to lower the red state average a bit. Poor states use more subsidies. Not exactly a surprise:

• These are the states where workers regularly vote against unions, even when it means job losses as in the case of Volkswagen in Tennessee.
• Where else but in a red state could the US manager of the new Mercedes plant be arrested at a traffic stop as a potential illegal immigrant?
• Where else would they fly a rebel flag 150 years after surrender? Many of these same states also get large federal agricultural subsidies, but that is acceptable, because the subsidies mainly go to wealthy individuals and corporations.

But, almost half of Americans still oppose Obamacare. Failure was inevitable, success inconceivable, and therefore failure must have happened.

Now there is an agreement in principle to the Greek debt crisis after all. Here, as explained in terms of Grease the musical, is your cliff notes version of the situation. You will not be disappointed if you watch:

For those who read the Wrongologist in email, you can view the video here.

Monday Wake Up Call – July 13, 2015

Today’s wake-up call is for the Eurozone. Despite Wrongo’s generally pessimistic worldview, it was hard to imagine that we’d arrive at the insane juncture we have now reached, that of a Grexit (Greek withdrawal from the Eurozone), but it is all but certain. As this column is written, the Guardian is reporting that a four-page proposal is now circulating in Brussels that indicates that Greece could be offered a ‘temporary’ exit from the Eurozone if it doesn’t agree to a deal with its creditors.

If a Grexit comes to pass, it would be catastrophic, most of all for the Greek 99%. But it should blacken the names of everyone involved, most of all German Prime Minister Merkel. This sorry trajectory is occurring despite the Greek government prostrating itself, offering to meet much more stringent conditions than its voters overwhelmingly rejected in a referendum less than a week ago. Krugman writes that Greek PM Tsipras allowed himself to be convinced, some time ago, that euro exit was impossible. It appears that Syriza (the leading Greek political party) didn’t do any contingency planning for a parallel currency. This has left PM Tsipras in a hopeless bargaining position.

But surrender isn’t enough. There’s a substantial faction of the other Eurozone leaders that want to push Greece out. Germany seems willing to welcome them as the most Southern province of the new German Empire. They are asking for control of $50 billion of pledged Greek assets. This really means control of Greece.

It gives the Eurozone leaders a failed state as an object lesson for the rest of Europe’s near-deadbeats.

Since there are only terrible alternatives at this point, here is a wake up tune for the Eurozone leaders. Perhaps it will help Merkel find a way to offer a less destructive plan to Greece. Perhaps she can remember the debt relief and credit support given to post-Nazi Germany by the Allies, who wrote off 93% of the Nazi era debt in the early 1950s and stretched out the pre-Nazi debt incurred during World War I and the Weimar period well into the 21st century.

Here is our 2nd song of summer, Sheryl Crow’s “Soak Up the Sun”:

https://www.youtube.com/watch?v=ecW0nSrMEY4

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

Sample Lyrics:
My friend the communist
Holds meetings in his RV
I can’t afford his gas
So I’m stuck here watching TV
I don’t have digital
I don’t have diddly squat…

Your Monday Hot Links:

NASA’s New Horizons spacecraft took the first detailed photos of Pluto. The image below was taken on July 9, 2015 from 3.3 million miles away, with a resolution of 17 miles per pixel. It took nine and a half years to get this close, but at this range, Pluto is beginning to reveal the first signs of discrete geologic features:

London has become the money-laundering center of the world’s drug trade. According to an internationally acclaimed crime expert, UK banks and financial services have ignored so-called “know your customer” rules designed to curb criminals’ abilities to launder the proceeds of crime. The National Crime Agency (NCA) states:

We assess that hundreds of billions of US dollars of criminal money almost certainly continue to be laundered through UK banks, including their subsidiaries, each year.

Google’s algorithm shows prestigious job ads to men, but not to women. Researchers from Carnegie Mellon University built an app that found that when Google presumed users to be male job seekers, they were much more likely to be shown ads for high-paying executive jobs. Google showed the ads 1,852 times to the male group, but just 318 times to the female group. Well, you know Google’s use of its corporate motto “Don’t Be Evil”, ended in 2012 so this is probably OK.

Utah Valley University creates a ‘texting lane’ for busy staircase:

Good idea? You be the judge.

Sunday Cartoon Blogging – July 12, 2015

In recent years, many on the right talk as if they have inside knowledge of what the Creator wants us to think and do. As reported here last week, we have been arguing about the role of religion in our politics since the founding of the Republic. In 1789, George Washington declared a day of “public thanksgiving and prayer.” 12 years later, Thomas Jefferson abruptly canceled the ritual. The First Amendment, explained Jefferson, erected a “wall of separation between church and state.”

But Jefferson’s contractor failed to make that wall strong enough.

So, Wrongo is adding a book to his summer reading list. It is “One Nation Under God: How Corporate America Invented Christian America” by Kevin Kruse. The book tries to explain the religiosity in our politics. Kruse investigates how the idea of America as a Christian nation was promoted in the 1930s and ’40s when industrialists and business lobbies, chafing against the government regulations of the New Deal, recruited and funded conservative clergy to preach faith, freedom and free enterprise. He says this conflation of Christianity and capitalism moved to center stage under Eisenhower’s watch in the ’50s, when the words “Under God” in the Pledge of Allegiance and the phrase “In God we trust” was inserted on the back of the dollar bill.

This week saw the USA Women’s soccer team take Manhattan, the NYSE go dark, Greece on the verge of going dark, the Confederate flag comes down in Charleston and Trump jumps into the lead in Republican opinion polls.

Women’s soccer is America’s new role model:

Stock Exchange glitch wasn’t explained clearly, so speculation ensued:

South Carolina makes something old new again:

Clay Bennett, Chattanooga Times Free Press

Socratic Method not enough to fix Greek quagmire:

Trump divides Republicans:

And forces a new strategy:

While W keeps rolling along:

Defining Business Success in the 21st Century

In 2012, the Wrongologist reported on the bankruptcy of Hostess, the iconic bakery behind Ding Dongs, Ho Hos and Twinkies. Hostess’ closing was something of a national moment, with people mourning the Twinkie, and possibly, something lost from a better, more optimistic time.

It was also a symbol of the dire state of American manufacturing. Hostess died after a decade of failing health that saw two bankruptcies and five different CEOs. It left behind 36 factories, 5,600 delivery routes and 19,000 jobs.

Then, a partnership between private-equity giant Apollo Global Management and C. Dean Metropoulos, a billionaire turnaround artist known as “Mr. Shelf Space” for his revival of retail brands like Vlasic, Hungry-Man and Chef Boyardee, bought the assets of the defunct Hostess. Now, two years into the comeback of Hostess, we are learning what the cost of putting Ho-Hos and Ding Dongs back on shelves really means: The new Hostess Brands has automated more than 90% of the company’s bakery jobs.

How did they do it? Cherry picking the best assets, modernizing manufacturing and distribution, doubling the shelf life of products and capitalizing on the rare place in pop culture that Hostess products enjoyed:

• The new, smaller Hostess kept just five of the 14 original bakery plants: Of those five, one was sold, and another bakery with 400 employees closed in October.
• They invested in automation: One 500-worker Kansas bakery outfitted with a $20 million Auto-Bake system, now spits out more than a million Twinkies a day, doing 80% of the work once done by 9,000 workers across 14 plants.
• They spent on chemical research, trying to create a longer Twinkie shelf life, and succeeded in extending it to 65 days.
• The longer shelf life enabled a change in distribution. The old Hostess relied on more than 5,000 delivery routes to drop off product to individual stores. It was incredibly expensive (each route required a driver, a truck, gas and insurance), eating up 36% of revenue each year. Even with a great delivery route planner that’s a big chunk of revenue.

What kind of “cream filling” has a shelf life of 65 days?

Now, the company has arisen from the ashes to find a new place on America’s shelves, and they are thinking of an IPO at Hostess. From 9,000 bakery employees at 14 plants to 500 at one plant in Kansas. That’s just the bakery division. Thousands of more supporting jobs were lost when the plants closed for good. This may be an extreme example of automation in the 21st century, but more of it is coming, and it’s going to put a lot of people out of work very quickly.

It used to be that layoffs were a sign of bad management, now they are a sign of good management. Back in the day, bankruptcy was the last thing management wanted. Today, it is a strategic choice.

Destroying jobs is now a badge of honor.

But, no one should blame Metropoulos or Apollo for a winning strategy when, in the prior decade, five different CEOs failed at the task of saving Hostess. They have created a huge turnaround, from Chapter 11 to an IPO in two years. But, it cost thousands of jobs. Automation, layoffs or not, made sense for this business.

We all know that technology creates fewer jobs than it destroys. By some estimates technology could cost half of all current jobs in the next 20 years. So, we can expect an ever-greater number of unemployed chasing the ever-shrinking number of jobs that can’t be eliminated or simplified by technology. Thus, the prognosis for many medium and some higher-skilled workers appears grim. In fact, a good question to ask today is how much can we attribute the fact that the US labor force participation rate is the lowest in 50 years to automation?

The issue is not technology, or robots, or restoring our manufacturing base. Nor is the issue better skills, or technology or outsourcing. We have too many people chasing too few good jobs.

If we forecast continuing technology breakthroughs (and we should), and combine that with the 3 billion people currently looking for work globally, we have to conclude that the planet is overpopulated if the goal is a growing global middle class.

This is why the quest for better technology has become the enemy of sustaining middle class growth in America and the rest of the developed world.

Enjoy that Twinkie while you can still pay for it.

See you on Sunday.

Roger Williams and Separation of Church and State

Wrongo spent part of vacation reading John Barry’s Roger Williams and the Creation of the American Soul, an important (and very readable) book that describes the evolution of Williams’ beliefs about the proper role of religion in civil society. To the extent that we know anything about Roger Williams, it is that he founded Rhode Island. But, Barry makes a very persuasive case that he is an important reason why America has separation of church and state today, since Williams was the first person to describe individual liberty in modern terms.

We all learned in high school that colonists came to America for reasons of religious freedom. What few know is that, once they got here, the Puritans were more than willing to persecute those of the “wrong” religion. They built a society in which the heads of the church also ran the government, and only those who were admitted to their church (requiring a unanimous vote) had the right to vote. In fact, Barry says that one study found that only 21% of emigrants to New England were know to have ever been admitted to church membership. This was very similar everywhere else in the Christian world in the early 1600’s.

The Puritan-run Massachusetts Bay colony was a place of religious authoritarianism. The origin of the conflict between church and state was the view of John Winthrop’s “city on a hill”, an authoritative and theocentric state, while Williams called for utter separation of church and state and respect for individual rights, such as the right not to attend church services.

Massachusetts banished Williams, who moved first to Plymouth and then was banished again to what is modern Rhode Island. Over time, Williams provided both an example, and an intellectual foundation that led to America institutionalizing religious freedom.

Americans are rightly grateful to our founding fathers, who set our Constitution in the right direction, imbedding in it that there would be no official religion, no religious requirement for public office, and a separation of church and state.

The founders didn’t develop those ideas on their own. The philosopher John Locke is often credited with inspiring the idea of religious freedom in Jefferson and Madison. Barry shows that Locke was influenced by Roger Williams, and that Williams had an even more inclusive idea of religious freedom than Locke, thinking that atheists and Catholics should also have religious freedom, ideas that Locke didn’t share.

Williams got his ideas about the supremacy of individual liberty from his work in England with Sir Edward Coke. Williams worked for Coke, taking shorthand, and Coke was a major intellectual influence on Williams’s philosophy. When King James tried to assert the divine right of kings in England, Coke stood up against him with little behind him but the common law. Coke fought to establish the power of habeas corpus. He said “every Englishman’s home is as his castle.” He fought for the supremacy of Parliament over the King, and the supremacy of the Magna Carta as a basis for deciding individual vs. state rights.

Some of the rights Coke fought for in England, and spent time in the Tower of London for espousing, ended up embedded in our American Constitution.

With Rhode Island, Williams created the first government in the world which broke church and state apart. King Charles II copied the concept and some of the language on religious freedom in Rhode Island’s charter into the charters of New Jersey and Carolina, despite establishing the Anglican Church there. Rhode Island was also the first colony to declare independence from England in 1776, two months before the rest of the colonies.

Barry makes the point that few of the founders read Roger Williams, who had died in 1683, but they had read Coke, and most members of the Constitutional Convention knew Williams as a symbol of religious and political liberty.

Since the rise of Christian conservatives in the 1970s, the debate over these issues sounds depressingly similar to that between Williams and Winthrop in Massachusetts. In more obvious ways, each day brings us a new conflict in America over defining the proper role of religion in the matters of state, whether it is pharmacists refusing to dispense birth control, states closing abortion clinics, bakeries refusing to provide wedding cakes to same sex couples, or companies refusing insurance coverage for drugs or procedures they believe violate their religious principles.

Williams risked his life for freedom. His ideas, and his kind of courage were both rare in the 17th century. His was not the 21st century, cartoon-kind. We need more of his kind of courage today.

He was a rare man of faith who thought religious freedom and personal liberty were completely consistent with religious faith.

The Story Behind Iran’s Nuclear Story

Reuters reported last night that Iran and major powers extended the deadline to negotiate an agreement on the Iranian nuclear program to at least Friday. The comprehensive deal under discussion is aimed at curbing, and reversing in some cases, Iran’s nuclear work for the last decade or more, in exchange for relief from economic sanctions that have slashed Iran’s oil exports and crippled its economy.

It is unclear whether an agreement will be reached, but it is sure that few in Congress will be happy with the outcome, regardless if there is an agreement or not.

It may be useful to remember that Iran’s Nuclear Program was a child of Washington in the first place. It is possible to date the start of Iran’s nuclear program to December 8, 1953, the date that President Dwight D. Eisenhower delivered what was later called his Atoms for Peace speech to the UN.

Eisenhower laid out a program to use atomic energy “to provide abundant electrical energy in the power-starved areas of the world.” Under the program, the US would provide research reactors, fuel, and scientific training to developing countries eager to harness the power of the atom.

Among the first countries to take the United States up on its offer was Iran.

In 1957, Tehran and the US signed a nuclear cooperation agreement, called the Cooperation Concerning Civil Uses of Atoms. Two years later, in 1959, the Shah of Iran created a Nuclear Research Center at the University of Tehran, and in 1967, the US delivered a five-megawatt nuclear research reactor and the enriched uranium needed to fuel it. In addition, the Atoms for Peace program offered Iran a chance to study in the US, since they had no homegrown nuclear experts. This lack of nuclear engineers meant that Iran could not use the US-delivered Tehran research reactor for nearly a decade.

Needing nuclear experts, Iran turned to MIT in 1975 to create a special program to provide Iranian experts with scientific and technological training on nuclear energy. This program gave Iran its first group of professional nuclear engineers. The first nuclear reactor that we provided would later be used by Tehran to carry out some of its more controversial work, including some of the country’s earliest experiments with uranium enrichment.

Iran later admitted to using that same reactor in the early 1990s for the production of small amounts of Polonium-210, a radioactive substance that could be used to start a chain reaction inside a nuclear weapon.

Iran signed the Nuclear Nonproliferation Treaty (NPT) in July 1968, on the first day it was opened for signature. Tehran ratified the treaty in 1970, putting it among the first states to do so and on paper, giving it the right to enrich uranium.

It is useful to remember that Israel, the most vocal critic of a nuclear deal with Iran, remains one of just four nuclear capable states (India, Pakistan and North Korea) that have not signed the NPT.

But despite early cooperation, signs of distrust between Washington and Tehran emerged early. Like today, Washington was concerned with Iranian plans to reprocess used (“spent”) nuclear fuel. The separated plutonium from this process can be used to fuel reactors, but also can be used to make nuclear weapons. To make sure nuclear materials were not diverted to making weapons, Mr. Eisenhower proposed establishing a watchdog within the UN. That watchdog would later become the International Atomic Energy Agency (IAEA) that we rely on today for nuclear inspections.

Juan Cole reports that, according to declassified national security documents, from 1975 and 1976, Washington opposed Iranian plans to build a nuclear reprocessing facility, and the issue became a major sticking point in negotiations to sell US nuclear power reactors to Iran:

The US used to have a policy of promoting reprocessing because it was a way of recycling useful atoms…But this policy changed right at the end of the Gerald Ford administration and then reinforced by Jimmy Carter…to no longer support, and, in fact, to oppose reprocessing.

Washington’s nuclear cooperation with Iran came to an abrupt halt in 1979, swept away by the Iranian Revolution that ended the rule of the Shah. With the capture of our embassy in Tehran and the holding of American hostages for 444 days, all formal ties between Washington and Tehran were cut off until the start of the current nuclear negotiations.

Atoms for Peace provided Iran with a foundation for its nuclear program. It offered both key technologies along with education in nuclear engineering and physics. The program clearly helped Iran move up the nuclear learning curve.

Now, the question is, can Secretary of State Kerry put the toothpaste back in the tube?

Charleston: The Beat Goes On

Here is a photo with commentary by the indispensable Charles Gaba, who runs the site, ACA Signups, the go-to place for data about the Affordable Care Act:

Apparently, 12 people showed up for the Confederate flag rally.

Monday Wake Up Call – June 29, 2015

Mylan, a generic drug maker based outside Pittsburgh, abandoned its status as a US corporation, gaining tax advantages by moving its headquarters to the Netherlands. The move reduced the taxes the company pays on profits from sales of drugs overseas, but Mylan continues to maintain most of its operations in Pennsylvania.

Mylan was viewed by some in Congress and the Obama administration as a symbol of corporate greed when they undertook a corporate inversion that placed profits above any commitment to its home country.

But now, Mylan is demanding that the US Federal Trade Commission (FTC) protect it from a hostile takeover bid by an Israeli company, Teva Pharmaceuticals. Mylan asked the FTC to examine Teva’s purchase of Mylan stock for possible violation of the requirement that large purchases of stock of US firms must be reviewed by antitrust authorities, because Mylan is still listed on the NYSE. The company claims that its principal office remains in Pennsylvania, which makes it a “US issuer” of stock for federal anti-trust purposes.

The irony of this is not lost in Washington. Rep. Chris Van Hollen (D-MD), the senior Democrat on the House Budget Committee said:

Mylan is trying to have its cake and eat it too…It is an intolerable abuse of a loophole when US corporations pretend they are based overseas in order to get out of paying their fair share and duck their responsibilities to the United States. It’s just plain hypocrisy when one of those same inverted companies claims that it is actually a US company because it needs the special protections US law gives to American companies.

Mylan may have a case. Its plea for help from the US government could pass legal muster but, the optics of a company that abandoned its US citizenship in order to pay less in federal taxes, and then seeking the protection of a federal agency is problematic.

Compounding the farce, Mylan is attempting its own hostile takeover of Perrigo, in order to stave off Teva.

Mylan’s unabashed lack of shame is impressive. Maybe the FTC’s decision-making on this case should take quite a while.

So, wake up Congress, and deal conclusively with corporate inversions! Our wake-up calls for the next few weeks will be songs about summer. We start with the Lovin’ Spoonful’s only #1 hit, “Summer in the City”:

For those who read the Wrongologist in email, you can view the video here.

Monday’s Hot Links:

The return trip often seems shorter than the initial trip, even though the distance traveled and the actual time spent traveling are identical. This is called the “return trip effect”. Two studies say it is real, but you already knew that.

Trucker jobs will be the first casualty of driving robots. Trucker salaries average $40,000/year. Most truck accidents are due to user error: Driving too fast, driving while tired, or driving while intoxicated. Robots don’t drink, don’t get tired, and won’t drive unsafely in order to get to a destination faster. Drivers will still be needed for inner-city driving (at least initially), but most long-haul operations will quickly vanish as soon as licensing is complete in most states.

Three years ago, Saudi Arabia announced a goal of building, by 2032, 41 gigawatts of solar capacity by 2032, slightly more than Germany has today. The Saudis burn about a quarter of the oil they produce—and their domestic consumption has been rising at 7% a year, nearly three times the rate of population growth. According to a British think tank, if this trend continues, domestic consumption could eat into Saudi oil exports by 2021 and make the kingdom a net oil importer by 2038.

Privail Diagnostics, has developed a simple, portable blood test that can detect the HIV virus (not antibodies) for the first time. That means an earlier diagnosis, and reduced infection rates. Privail’s at-home testing device is like a diabetes test, needing only one drop of blood. It shows the results in a color bar, like an at-home pregnancy test or digital output, like a diabetes meter. Invest at your own risk.

Hackers have apparently cracked the computer systems responsible for issuing flight plans to pilots of every airline. The apparent weak link? The flight plan-delivery protocol used by every airline. Ground computers calculate the appropriate flight plan for planes, and someone on ground approves the plan before distributing it to pilots. Pilots receive plans before taking off, as well as enroute, when a change occurs during a flight. Plans are uploaded to planes via a datalink. Once a hacker figures out those protocols, it is possible to issue a bogus flight plan. But, the industry says, not to worry.

Your thought for the week: Giving money to poor people is socialism, or even communism…..giving money to AIG or Goldman Sachs is capitalism, and that’s what made this nation grrrreat!!!

Sunday Cartoon Blogging – June 28, 2015

There will be limited blogging for the next seven days, as the Wrongologist and Ms. Right head to Bermuda.

It was an epic news week, from the killings in Charleston to the ACA decision by the Supreme Court, 6-3, in which Antonin Scalia wrote the 21 page dissent. Then came the Marriage Equality decision. Antonin Scalia wrote another dissent, starting with: