Saturday Soother – February 17, 2023

The Daily Escape:

Where desert meets mountains, near CA/NV border –  February 2023 photo by Austin James Jackson

Liz Hoffman at Semafor has a short analysis of the value of credit card loyalty programs to airlines. Many of us have them and we use them to purchase our everyday goods in order to earn air miles or points that we later use to get a seat upgrade, or to fly for free.

Everyone knows about this “perk” from the airlines, but few of us know just how profitable these programs are to the carriers. It turns out that they are the most lucrative assets on airlines’ balance sheets. The uncertain profitability of the airline business makes them very important since the airlines often lose money.

The airlines used to be secretive about just how profitable their frequent-flier programs were. But, when they were in deep financial trouble during the pandemic, several US carriers pledged their loyalty programs as collateral for new loans when other financing failed.

That required the airlines to open the books on their loyalty programs. And now we’ve learned that their credit card businesses are more valuable to shareholders than their basic business of flying planes. From Hoffman:

“It turns out that United’s rewards card program with JPMorgan Chase is valued today at $22 billion. But United’s market capitalization is $16 billion, meaning investors are assigning negative value to the part of its business that flies airplanes. The same goes for American and Delta.”

From a market valuation perspective, the basic businesses of the big three US airlines are under water. Hoffman provides an eye-opening chart showing that the airlines’ huge investment in aircraft and ground operations doesn’t produce a dime of market value for their shareholders:

As you can see, none of the big three US carriers get any incremental market value from flying planes. So should they either sell off all of that hardware, or spin off their credit card businesses?

They can’t. They need the flights to create demand for the points/miles. The secret sauce behind the success of their loyalty programs is that the actual value of an air mile isn’t clear. Customers think they’re getting a $3,000 upgrade to first class for a few thousand points, while the airlines know that the upgraded seat is unlikely to sell at all, and if it does, it won’t be for anything like that amount.

Foreign carriers have less reliance on their rewards programs. Many operate with government subsidies, so their flights are more profitable. And they serve consumers who are less comfortable with plastic. So their market valuation is less dependent on loyalty programs:

We have to assume that the board members of the airlines have always known about the value of their loyalty programs. But now everyone is seeing the potential value, and the airlines might be thinking that they can wring even more value from them.

What’s distressing about this is that the airlines needed bailouts only two years ago during Covid. The US airlines received $54 billion in federal aid to pay workers during the Covid pandemic. That agreement prohibited them from share buybacks.

That’s because they had continuously bought back shares in the years prior to the bailout. The four biggest US carriers — Delta, United, American, and Southwest — spent about $40 billion buying back their companies’ stock between 2015 and 2020. That effort to improve their market valuation failed spectacularly, since their loyalty programs are now worth more than the companies themselves.

America added a 1% tax on buybacks excise tax for buybacks this year, passed as a part of the Inflation Reduction Act. This will help reduce the deficit and might dampen American corporations’ appetite for stock buybacks. The largest US airlines are making money again, and labor unions don’t want them to spend it on more stock buybacks. In a public petition, some of the largest airline labor unions — representing more than 170,000 pilots, flight attendants, customer service agents — are urging carriers to stabilize operations and invest in workers before spending on buying back more of their stock. We’ll see if that ever happens.

Enough high finance, it’s time for our Saturday Soother. Here on the Fields of Wrong, we’ve had a few warm days that led to the beginning of our spring cleanup. To settle into your soother, grab a mug of coffee and a seat by the window. Start by forgetting about Nikki Haley’s campaign or what to do now that football is over.

Now listen and watch Renée Fleming sing “Nacht und Träume” (Night and Dreams) written in 1825 by Franz Schubert conducted by Claudio Abbado with The Lucerne Festival Orchestra in 2005:

 

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GOP Attacks ESG Investing Rule

The Daily Escape:

Lake Sammamish, Issaquah, WA – February 2023 photo by Everything Washington

Are you following the Republican war on ESG? ESG stands for Environmental, Social, and Governance, key criteria that may impact a company’s market valuation and its business behavior. ESG has become a red line for Conservatives, who argue that companies that follow it are failing to live up to their fiduciary duty to maximize profits for investors.

The jury is still out on whether ESG investing delivers the same, better, or worse returns. But, despite any definitive evidence, Republicans hate ESG investing. From Semafor’s Liz Hoffman:

“Last year, Republican-controlled legislatures began passing laws blacklisting state investment funds from doing business with money managers that pushed what they deemed to be liberal agendas, like boycotting gun manufacturers and mining companies. BlackRock, run by Larry Fink, an outspoken supporter of so-called ESG principles, has taken the brunt of the pressure, with at least 10 states pulling their money from his firm or threatening to.”

For the many Republican state governors, treasurers, and attorneys-general who joined in, it’s turned out that several hadn’t done their financial homework before joining the culture war. Some failed to calculate the financial cost of their ideological stance. Semafor cites a few examples:

  • Indiana’s budget office found that a bill forcing state pension funds to divest from “woke” money managers would cost $6.7 billion over the next decade in lower-than-market returns. That also would force retirees to increase their paycheck contributions.
  • Executives in one of Kentucky’s retirement funds argued with the state’s treasurer that a recent law requiring them to pull money from BlackRock and 10 other firms seen as hostile to the energy industry would violate their duty to get the highest returns for pensioners.
  • A 2021 Texas investment blacklist cost municipalities an additional $303 million to $532 million in bond interest, according to a study by University of Pennsylvania. JPMorgan, Citigroup, and other banks left the state after the law was passed, leaving less competition for bond underwriting. That raised interest rates about 40 basis points.
  • North Dakota voted down, 90-3, a Texas-style bill that would have required the state treasurer to prepare a blacklist of financial firms that have committed to reducing carbon emissions, but would have stopped short of banning state investment funds from doing business with them.

Hoffman concludes that:

“Owning the libs turns out to be expensive.”

There are always trade-offs between principles and profits. Whether Republican politicians decide the political value of the fight offsets the lost profits is another question. This will at some point become a question for voters, who are the taxpayers and pensioners effected by these decisions.

In one way the GOP has already won a battle in the culture war on ESG. BlackRock has changed its marketing to tout its investments in fossil fuels. It also deployed new technology that allows investors to cast their own ballots in corporate elections instead of outsourcing their votes to the firm. Black Rock hopes these moves may blunt criticism that they are pushing a progressive agenda.

But the GOP isn’t giving up on fighting ESG. Politico is reporting that Sen. Mike Braun (R-IN) has offered a joint resolution under the little-known Congressional Review Act  (CRA) to overturn the Department of Labor’s recent rulemaking on ESG investing. The new rule took effect on January 30.

The rule allows fiduciaries to take ESG factors into consideration when choosing retirement investments. It potentially impacts the retirement savings of 152 million American workers whose accounts are governed by the Employee Retirement Income Security Act, or ERISA. From Braun:

“You cannot direct funds…to ESG. You’ve gotta go for whatever is going to give you the best financial return….That doesn’t mean that someone couldn’t choose to tell their broker to invest in ESG.”

Braun has 60 days to gather a majority in the Senate to overturn the rule. His has all 49 Republican Senators and Democrat Sen. Joe Manchin. If Braun can get 51 votes in the Senate, and given that the House is controlled by Republicans, the new rule would go away.

OTOH, a study by Penn State found that 70% of registered Republicans surveyed opposed government interference in ESG investments, higher than Democrats with the same position (57%). From Forbes:

“This exposes an irony at the heart of the ESG culture war: right-wing critics are seeking to actively interfere in decisions made by investment professionals about how to safeguard their clients’ money. In any other context, they’d be up in arms about the very thing they’re doing here.”

How silly to expect consistency from the GOP. We’ll see if Braun can find another Democrat in the Senate to join the Republican culture war on ESG.

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Ohio’s Airborne Toxic Event

The Daily Escape:

Roan Mountain, NC – February 2023 photo by Spencer Carter. Roan Mountain has the largest naturally growing gardens of Catawba rhododendrons in the world.

Back on February 3, a Norfolk Southern (NS) train carrying hazardous materials derailed near the town of East Palestine, Ohio. Federal investigators say a mechanical issue with a rail car axle caused the derailment. After several days of underreporting, we now know what happened.

Here are some facts: The derailment included 50 cars, 20 of which carried toxic materials, 14 of those contained vinyl chloride. The subsequent fire burned for three days. Then there was a “controlled release” of poisonous gas. And finally, effects of the poison were felt on locals, their animals, and local waterways.

The axle problem is important since it is the cause of all the hardship in East Palestine. Trains use steel wheels on steel rails because they produce 85+ % less friction than rubber truck tires do on roads. The contact point of a wheel on the rail is about the size of a dime. Compared to trucks, trains are cheaper (4 cents vs 20 cents per ton-mile in the US), and more sustainable: One ton of freight can be moved over 470 miles on a single gallon of diesel fuel.

But sustaining that economic advantage requires the railroads to maintain all that steel in good working order. Otherwise if things go wrong with a train that’s 4.5 miles long, they can go very, very wrong. And reporting seems to indicate that NS didn’t maintain its steel wheels correctly.

Also, the derailed NS train was not classified as a “high-hazard flammable train,” despite its hazardous and flammable cargo. Such a classification would have lowered its speed and affected its route. From Lever News:

“Though the company’s 150-car train in Ohio reportedly burst into 100-foot flames upon derailing — and was transporting materials that triggered a fireball when they were released and incinerated — it was not being regulated as a “high-hazard flammable train,” federal officials told The Lever.”

Apparently when current transportation safety rules were first created, a federal agency sided with industry lobbyists and limited regulations governing the rail transport of hazardous compounds. That decision effectively exempted many trains hauling dangerous materials including the NS train in Ohio, from the “high-hazard” classification and its more stringent safety requirements.

Generally, workers want safety and the bosses want money. Safety requires additional time, more workers, and money. Deregulation contributes to the lack of safety. Using vinyl chloride in a chemistry lab requires safety equipment. Tank cars containing thousands of gallons of it should require more than the government apparently thinks is safe.

Wrongo always looks at the politics in these sorts of industrial disasters because they are usually caused by the economics created by politics.

Given how dangerous these chemicals are, and given how they are used and transported, we have to expect accidents like this to happen. But the government should be able to tell us whether the current accident rate is higher or lower than expected, and if higher, what should be done to correct the problem.

We trust the bureaucrats that make the rules to balance safe operations against the risk of an airborne toxic event like this. Wrongo’s brief look into this one incident doesn’t evidence that kind of trust. It appears that the bureaucrats who make the rules on railroad safety were influenced by the industry and wrote a rule that puts the economics for the railroad industry ahead of public safety.

These issues exist everywhere in the relationship between industry and government. There’s always pressure by the industry on the bureaucrats to deregulate. In a man-made disaster, that can place greater burdens on the communities, like just happened in East Palestine.

This is what the Michael Lewis’s book “The Fifth Risk” is about: People who go to school, get extensive training and then work in obscure corners of the government. Lewis talks about how important these people are, and how for decades they’ve been denigrated, vilified, and ignored, largely by Republicans.

This is another area in which the GOP is awful in a completely lopsided way to Democrats.

The existence of corporations who can impose risks on the rest of us is what happens when there is unequal political power. We need a state with a strong regulatory system to protect us. The state must build regulatory regimes for chemical spills that shift the risks back onto those who create them.

NS in this case, has said that they will be fully responsible for the damages caused in East Palestine.

That’s encouraging, but how does that little town with a population of less than 5,000, or even the state of Ohio hold NS to their word?

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It’s Impossible To Buy A $200k Home Anymore

The Daily Escape:

Mt. Hood sunrise – February 2023 photo by Mitch Schreiber Photography

Happy Valentine’s Day for those who celebrate! If you don’t celebrate, find someone or something to give a little bit of love to.

In all of the hype about the Super Bowl and Rihanna’s halftime show, you may have missed that homes selling for less than $200k have basically disappeared in America.

John Burns, a real estate consultant, reports that they are now 0% of the new home market. They were 40% of the market 10 years ago. Burns also says that $500k+ new homes have grown from 17% of the market to 38% of the market during Covid. He provides this handy chart showing how average home prices have changed since 2010:

At the same time, sales of homes going for $500k or more (red line) have shot up from less than 10% to nearly 40% of the new homes market and represent the largest share of new home sales.

This isn’t great for Millennials looking to buy their first homes, or for retirees who have to downsize. It also explains why many first-time homebuyers are angry.

It’s not only the $200k and under segment that has fallen off a cliff. New homes going for between $200k – $300k now make up just 11% of the total, down from 80% of all new home sales in the year 2000.

Ben Carlson shows Federal Reserve new home price data going back to 2000 that breaks down new homes price points more clearly. He says that those being sold for $750k and up have gone from less than 1% to more than 10% of the market.

A few reasons for the shifts: First, we’re not building enough new houses anymore. Second, we’ve seen changing tastes drive demand toward larger homes, helping move the market to a new floor in home prices. Inflation didn’t help either.

We overbuilt in the 2000s housing bubble, and that led to more than a decade of underbuilding ever since. There was a brief spike during the pandemic housing craze but that has abated with mortgage rates rising so rapidly in the past year.

In 2002-2006, we were building around 120,000 new homes per year. In 2022, it was more like 65,000 units per year. Tastes have changed as well. Houses today are substantially larger than they were in the 1950s, 1960s, and 1970s.

In his book The Fifties, David Halberstam talks about how the housing market played a huge role in the rise of the suburbs following World War II. Then houses were about 1,300 square feet. In the 1970s, the median size of a new home in the US was 1,525 square feet. Today it’s around 2,500 square feet.

Tastes have changed. People want bigger houses. They want open floor plans for entertaining, bigger bedrooms with more bathrooms, and more storage space for all of their stuff.

It’s also true that homebuilders aren’t incentivized to build starter homes anymore. In the 1950s the government helped out the troops and their families. With the GI Bill, the federal government took some of the risk that homebuilders wouldn’t be able to find mortgages for all the new houses they were building.

Local zoning regulations have made it difficult to get approvals to build new homes. So builders have moved upmarket in home size to justify those upfront expenses. Starter homes aren’t as profitable as they once were.

There’s a big change in the buyer’s market as well. The WSJ quotes John Burns: (emphasis by Wrongo)

“You now have permanent capital competing with a young couple trying to buy a house.” Burns estimates that in many of the nation’s top markets, roughly one in every five houses sold is bought by someone who never moves in.”

The Atlanta Journal-Constitution in an article last week entitled: “American Dream For Rent: Investors elbow out individual home buyers. Metro Atlanta is ground zero for corporate purchases, locking families into renting’. The Journal says a generational housing shortage, inflated construction costs and a surge in consumer demand all contributed to the historic rise in prices.

But there’s little doubt that a flood of cash from institutional investors has exacerbated it. They quote Maura Neill, a realtor in Alpharetta:

“They go after every listing under $500,000…it’s like clockwork…The property gets listed and, sight unseen, they make offers within an hour.”

This is late-stage capitalism at work. Young working couples are increasingly shut out of buying homes. America is failing them. It would be helpful for families to build equity by purchasing homes instead of renting.

Pricing families out of home ownership carries risks to a cohesive society.

We should have a federal tax policy that disincentivizes ownership of multiple single-family homes, by investment funds. The way to remedy this is to steer investors to other assets that don’t directly impact individual welfare to the same degree as single family housing.

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Biden’s Speech Showed His 2024 Strategy

The Daily Escape:

Sea smoke at Portland Head Light – February 2023 photo by Rick Berk Photography

(The Wrongologist is taking a few days off. The next column will appear on Tuesday, 2/14. Enjoy your nachos and jalapeno dip on Sunday.)

Wrongo and Ms. Right watched the State of the Union (SOTU) extravaganza. You have already read many insightful observations, so Wrongo’s facing the daunting task to come up with something original for you. Let’s start with some data. CNN’s flash poll of SOTU viewers found that 72% had a positive reaction to Biden’s speech, while:

“71% said Biden’s policies will move the country in right direction — up 19 percentage points from before his speech.”

That’s a win. Politico reported that:

“…the White House is ecstatic that the GOP’s ‘boos, taunts, groans, and sarcastic chortles’ helped Biden paint them as ‘unreasonable and chaotic.’”

It was the most confrontational SOTU address ever, but Biden seemed up to handling the catcalls. Like CNN, most pundits gave Biden good marks for the speech. It ran from “best Biden speech ever!” to “Biden Kills It” to Kate Riga of Talking Points Memo tweeting:

Everyone’s talking about how House Republicans underestimated old man Biden. His speech was an early look at his 2024 general election strategy. Biden is a career politician. Maybe he learned somewhere along his way to the Oval Office that you are only as unpopular as your enemies are popular. In that case, he’s a winner.

Based on Sarah Huckabee Sanders’ GOP rebuttal, Trumpists and their ilk plan to treat 2024 as another braying appeal to their grievance-filled base. They’re adding a rich creamy layer of culture war to help spin up their base, along with their evergreen awfulizing about the national deficit.  From JV Last:

“Where Biden spent the majority of his speech talking about steel workers, bridge projects, insulin prices, and junk fees, Sanders insisted that Biden has surrendered to “a woke mob that can’t even tell you what a woman is.” And that “his administration has been completely hijacked by the radical left.”

OTOH, Biden’s 2024 strategy won’t be a re-run. It’s different and new. As Eugene Robinson says in the WaPo:

“The call to action during President Biden’s State of the Union address on Tuesday — “Let’s finish the job” — would never be mistaken for soaring poetry.”

That also resonated with Jon Last, who agrees that “Finish the Job” will be the campaign’s guiding theme. Here are the implied pillars of Biden 2024:

  • The economy has to keep growing and it must help everyone.
  • The deficit must be cut to the extent possible over the next six years.
  • Biden’s great accomplishments were achieved with bipartisan help of centrist Republicans.
  • The government needs to keep funneling money to small towns and rural areas, something that he started with the infrastructure bill.
  • The risky ideas of the MAGA Republicans who plan to torpedo Social Security and Medicare will be front and center in the campaign.

Instead of the Republicans’ embrace of the culture wars, here’s what Biden had to say: (emphasis by Wrongo)

“My economic plan is about investing in places and people that have been forgotten. Amid the economic upheaval of the past four decades too many people have been left behind or treated like they’re invisible.

Maybe that’s you watching at home.

You remember the jobs that went away. And you wonder whether a path even exists anymore for you and your children to get ahead without moving away. I get it.

That’s why we’re building an economy where no one is left behind. Jobs are coming back; pride is coming back because of the choices we made in the last two years.

This is a blue-collar blueprint to rebuild America and make a real difference in your lives.”

A “Blue-Collar Blueprint” is a smart way to brand your 2024 agenda, instead of some focus-group tested acronym or clever name. Sometimes it just makes sense to say what you mean. As Ron Brownstein wrote in The Atlantic: (brackets by Wrongo)

“He [Biden] repeatedly noted how many of the jobs created by his economic agenda are not expected to require a four-year college degree.”

Jon Last contrasts Biden’s strategy with the GOP strategy, which he thinks is doomed to failure:

“Republicans believe they can increase the number of votes from one group of Americans (their base) by….attacking another group (the coastal elites). Further, Republicans believe that the number of votes they will win through this use of negative polarization will be greater than the number of votes they might otherwise gain by trying to empathize with and persuade the out-group.”

That’s a re-run of Trump 2020.

Biden isn’t going to play defense in 2024. The GOP’s core strategy is always to sway working-class voters and use that political base to implement policies that enrich corporations and the wealthy at the expense of their base.

If Biden can find a way to drive a wedge into that Republican coalition, and peel off 3%-5% of their working-class supporters, it would translate into a big victory in 2024.

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Republican Purity: Who’s Good Enough For Them?

The Daily Escape:

Walker River, NV – February 2023 photo by TheOsideBish

According to the GOP, your organization has to toe the line or else you could be banished or investigated. CNBC is reporting that House Speaker Kevin McCarthy (R-CA) and House Majority Leader Steve Scalise (R-LA) are set to banish the US Chamber of Commerce from Capitol Hill for endorsing Democrats in some 2020 and 2022 House races.

CNBC quotes Mark Bednar, a spokesman for McCarthy:

“The priorities of the US Chamber of Commerce have not aligned with the priorities of House Republicans or the interests of their own members, and they should not expect a meeting with Speaker McCarthy as long as that’s the case…”

CNBC says Scalise also won’t meet with them either, quoting his spokeswoman Lauren Fine: (brackets by Wrongo)

“[the Chamber headquarters in] Washington has radically shifted away from the pro-business philosophy of most local Chambers across America….unless the Chamber gets back to their traditional pro-business roots, they should not expect to have any engagement with Majority Leader Scalise’s office.”

This all started in 2020, when the Chamber endorsed 23 House Democrats in swing districts, a sharp break from the past practice of endorsing a nearly exclusive slate of Republicans, with one or two Democrats thrown on the list for a patina of bipartisan perception. And Republicans failed to regain the majority. The Chamber then reportedly endorsed 23 House Republican candidates and just four Democrats during the 2022 election. But that hasn’t made them “pure” enough for Kevin McCarthy, despite the Chamber providing $3 million to Mehmet Oz in his losing effort for a Senate seat in Pennsylvania.

Wrongo met often with the US Chamber of Commerce during his days at the big bank. They are far from being anti-GOP. On Monday, Tim Doyle, a spokesman for the Chamber, told CNBC:

“The Chamber’s priorities include lower taxes, reduced spending, fighting over regulation and numerous other issues, and we are aligned with House Republicans on many of the issues that are important to American businesses of all sizes,”

That sounds to Wrongo like it’s aligned with the Republicans. Doyle did go on to say:

“We do disagree with those who believe the Chamber should become a single-party partisan organization….”

The Intercept is reporting that the new House Republican majority wants to investigate the Chamber over its commitment to ESG regulations. ESG stands for environmental, social, and governance, key criteria that can impact company market valuations and its behavior. But ESG has become a red line for Conservatives, who argue that companies that follow it are failing to live up to their fiduciary duty to maximize profits for investors.

Apparently, Republicans in the House are also questioning the Chamber’s own conduct, including reportedly allowing former Chamber CEO Thomas Donohue to use the organization’s corporate jet for personal trips.

Look, the Chamber can be pretty terrible. They’re planning to sue the Securities and Exchange Commission if it goes forward with a climate change-related disclosure rule. But forcing them to only give money to Republicans is a new low, even for these nihilists.

Separately, Florida’s Governor DeSantis is set to take over Disney’s special Reedy Creek tax district in order to force the company to cough up $1 billion. Wrongo reported on DeSantis’ fight with Disney in April 2022 here and here. Targeting Disney became a thing after the company spoke out about Florida’s “don’t say gay” law.

Back in April, DeSantis pushed lawmakers to dissolve the Reedy Creek Improvement District, which for 55 years effectively gave Disney control of the land around its Florida properties. Republicans complied, and the district was scheduled to sunset on June 1, 2023.

But on Monday, Republican lawmakers unveiled a bill to turn over control of Disney’s special taxing district to a five-member board to be chosen by DeSantis. The proposal also comes with a rebrand; Reedy Creek would become the “Central Florida Tourism Oversight District.”

This gives DeSantis a new form of control over Disney, the state’s largest employer. And the opportunity for extorting collecting an additional $1 billion from a company that is on the DeSantis enemies list (which will ultimately be paid by the park’s patrons) is totally on brand for DeSantis.

Anyone else getting really tired of Republicans telling us we can’t say certain words, we can’t read certain books, we can’t teach certain things, we can’t talk about certain history, or we can’t donate to a few Democrats?

What’s Conservative about any of that?

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China’s Spy Balloon

The Daily Escape:

Zion NP in snow – January 2023 photo by Rich Vintage Photography

What is it about the Chinese balloon story? Why did the media and politicians go totally nuts about it? Here’s what  Damon Linker thinks:

Degraded American public life”. This is another example of Wrongo’s column yesterday about how we’re all living in our virtual vertical communities. The Republican political vertical immediately locked in, like a cat watching a laser pointer, to this mostly low-risk intrusion into US airspace by China. From Forbes:

“Talking heads on cable TV are up in arms about the Chinese spy balloon that was floating across the continental US, before it was shot down Saturday afternoon. Conservative commentators have insisted President Joe Biden should’ve ordered the balloon be shot down earlier and that a foreign balloon flying over US territory never would’ve happened under President Donald Trump. But it did happen under Trump…”

It happened under Trump at least three times.

The Pentagon says it was definitely a surveillance balloon and that China had the ability to maneuver it using external propellers. OK, if you’ve ever sailed a boat even in a moderate breeze, paddled a canoe across a windy lake, or bicycled on a windy day, you know maneuvering in high winds is very difficult. So how will a balloon generate enough power to overcome the prevailing winds at 60,000’? And the balloon doesn’t have an aerodynamic shape. So bottom line, you aren’t controlling the path of a balloon in any sizable wind.

A balloon actually sucks for spying. A quick look at earth.nullschool.net shows that the current winds at the specified latitude are running between 50-100 mph. No balloon with a propeller can plow through that. It’s likely that the propellers aren’t for propulsion, but for changing the direction that the antenna is pointing, so that it can phone home.

It’s possible that as the Pentagon says, the deceased balloon was gathering data on our defenses, but all nations do that all the time. So where’s our politicians’ and the media’s common sense? Their hysterical reaction is totally on brand, but as always, very depressing.

We have to hope the politicians and generals who control America’s nukes have better minds than our GOP politicians.

Let’s deal with the question about why Biden didn’t shoot it down over land. One issue was that the debris field when the balloon remains hit the ocean was seven miles long. One advantage of knocking it down where they did is that the ocean is only about 50’ deep off the Carolina coast. Imagine a seven-mile debris field spread across any American state: It would be a fantastic opportunity for souvenir hunting.

Back in 1945, before WWII ended, Japan sent thousands of bomb-carrying paper balloons via the jet stream towards North America. Only a small percentage of the balloons reached land. But six people, five of them children, were killed by one balloon that landed in Oregon.

There’s a (possibly apocryphal) story about a US Navy ship firing on a suspected Japanese balloon until they finally realized that they were shooting at Venus.

Bottom line, Biden and the US military showed professionalism and caution in tracking and attacking the balloon. The US military was able to jam the balloon’s instruments as it crossed America, while collecting information about Chinese intelligence gathering capabilities. They shot it down when and where the risk to civilian casualties and property damage was deminimis. From Robert Hubbell:

“But the ‘spy balloon’ did allow the Chinese military to glean one significant piece of intelligence about America—that Republicans are clowns who cannot be trusted to run the US military again.”

One Republican said Biden should be impeached. Several wanted to “SHOOT IT DOWN NOW”. Consider this tweet from Rep. Joe Wilson (R-SC):

Does anyone believe the balloon threatened the lives of millions of American families? Or that Biden and Harris should resign? Wilson forgets to say that resignation would make House Speaker Republican Kevin McCarthy president. It’s just awesome how serious the Republican Party has become.

All of the hostile one-upmanship aimed at China over the balloon served to show that there is no downside to an American politician taking a hawkish stance towards China.

China remains a crucial trading and economic partner and competitor, but both Republicans and many Democrats are happy to take a battering ram to our relationship with China. And the media decided to work the Chinese balloon story rather than spend time talking about Friday’s blockbuster jobs report, or how unemployment reached a 50-year low.

That news wasn’t important or exciting enough when there was a Chinese balloon on the horizon.

America’s relationship with China has always been fraught. If you’re as old as Wrongo, you remember 1971’s Ping-Pong diplomacy, one of the first official contacts between the countries since before the Cold War.

You may ask, what’s happened since then? Well, the balls have gotten bigger.

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Monday Wake Up Call – February 6, 2023

The Daily Escape:

Sea smoke, South Portland, ME looking towards Portland Head light – February 2023 photo by Benjamin Williamson Photography

On Saturday, Wrongo and Ms. Right went to a dinner party with friends and two generations of family. The after dinner talk turned to how quite a few of the kids and grandkids weren’t planning on having children.

We tossed around ideas about why they were unlikely to procreate, and somethings stood out. First, they see climate change as an existential threat that society is unwilling to solve, even though the technology already exists. Why bring a kid into that?

Second, society seems broken. Our group meant that we face simultaneous crises, layered on top of each other.  This situation involving simultaneous global challenges, for which we have few solutions, is called Polycrisis.

And a crisis in one global system can spill over into other global systems. They interact with each another so that each new crisis worsens the overall harm. The Polycrisis environment weakens every individual’s sense of security and their place in the world.

One impact that seems related to the simultaneous climate, health, economic and geopolitical challenges are the effects on children. The needs for special education and special services for the very young has never been greater in America. It’s forcing big changes in public school budgets across the country.

No one is really sure why this is happening.

Wrongo isn’t proposing a solution, just suggesting we need to think more about how the problems of declining birth rates, coupled with the growing issues our young children are facing, might be interrelated.

Noah Smith an economist, has an interesting newsletter about how we define community:

“In the past, our communities were primarily horizontal — they were simply the people we lived close to….Increasingly, though, new technology has enabled us to construct communities that I’ve decided to call vertical — groups of people united by identities, interests, and values rather than by physical proximity.”

Smith says that in the past few decades, Americans became disengaged from their local communities, hunkering down in their houses, and failing to interact with the people around them. That led to a well-documented decline in Americans’ participation in civic organizations, local clubs, etc. Our neighbors can also be stifling and/or repressive because they impose uncomfortable community norms on us.

We’ve always had Smith’s vertical communities: “the Jewish community”, “the LGBT community”, and many others. But in the past, an identity grouping wasn’t a true community. We all have identities that connect us with faraway people — other Irishmen, other Taylor Swift fans.

Prior to the internet, we couldn’t have much contact with them. These loose vertical communities weren’t efficient ways to exchange ideas. Before email, text and streaming video, getting the word out was very slow, and our horizontal communities would decide whether what we wanted to share was worthwhile.

Now, we’re no longer isolated. The internet brought us a world of human interaction: social media feeds, chat apps, and so on. Suddenly we’re surrounded by people through their words, their pictures, and their videos.

Now we organize much of our human interaction around virtual vertical communities. Former occasional connections became Facebook groups, subreddits and personal networks on Twitter. And like our small towns back in the day, vertical communities use social ostracism to punish those who deviate from consensus norms.

But vertical communities can’t provide things like public education, national defense, courts of law, property rights, product standards, and infrastructure that we all depend on.

These require a government to administer them. And governments are organized horizontally; mostly defined by lines on maps. But what if we socialize, cooperate, and fall in love with the people from our vertical community? What if we grow apart from the people next door and the relationship is irreparable?

We see this every day in America when citizens go to a PTA meeting and discover a bunch of strangers saying things that they despise.

Wrongo isn’t saying that vertical communities are another enemy. But they can and do exacerbate the polycrisis by making truth harder to see. And by making effective action more difficult.

If you doubt this, remember how powerful the anti-vaxx vertical was at the height of the Covid pandemic. Today’s vertical communities are strong enough to keep our government from getting much of anything done. How can we work together with neighbors when we share few common bonds?

America today is a predatory society. We predate on politics, ideas, values, and culture. Biden’s trying to change this, but can he succeed? How many of us are trying to help? Changing a society that’s this broken, one that’s moving deeper into vertical communities will be a very heavy lift.

Time to wake up America! What can we do to maintain what Lincoln in his first inaugural address said:

“We are not enemies, but friends. We must not be enemies. Though passion may have strained, it must not break our bonds of affection.”

To help you wake up, listen and watch the Nitty Gritty Dirt Band’s 2022 cover of Bob Dylan’s “I Shall Be Released” with Larkin Poe (Rebecca Lovell and Megan Lovell) on vocals and a fabulous slide guitar solo:

Sample of Lyrics:

Standing next to me in this lonely crowd
Is a man who swears he’s not to blame
All day long I hear him shout so loud
Just crying out that he was framed

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Sunday Cartoon Blogging – February 5, 2023

Everybody was talking about the Chinese balloon: It’s spying on us, and if Biden had balls he’d shoot it down. Well, on Saturday, Biden did just that. The Airforce shot it down in the Atlantic off of the Carolina coast. Wrongo is sure that our military will recover the important parts of the balloon. Once we take a look at the technology that the Chinese are using, we’ll know why the balloon was sent over the US, and confirm whether it is a device for spying or not.

We need to view the balloon saga in the larger context of our relationship with China. John Dean has a good observation:

“I’m starting to see China as an enemy. I type those words, of course, on my Chinese-made HP laptop. I watched news reports of the balloon on my Chinese-made TV. The chair I’m sitting in may even be Chinese. The only thing I’ve bought recently that isn’t Chinese, I’m sad to say, is the Chinese food I had for dinner last night, but I could be wrong.”

Our current relationship with China is complicated by our dependence on them for much of our manufacturing. They also are a huge export market for US commodities. As China has flexed its muscles, they have become an economic and geopolitical competitor with the US. Our relationship with them will become much more difficult in the coming years as we wrestle to contain them geopolitically in Asia, while blunting their advances in the rest of the world.

Dean points out that our trade with China has provided them with the resources it is using to build its military force. We need to wake up and wean ourselves off of Chinese goods. Otherwise, we’re paying for two militaries, ours, and theirs. On to cartoons.

One plan for the Chinese balloon:

The new DeSantis school library:

Revised College Board AP course seems fine:

Economy’s too good for GOP:

Sad truth:

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Saturday Soother – February 4, 2023

The Daily Escape:

Grist Mill, Brewster, Cape Cod, MA – February 2023 photo by Nick Haveran

Ah, Florida. Wrongo and Ms. Right will be making our annual visit to the land of DeSantis in late March to see family. Florida has always been a destination for older Americans who are tired of the -2°F with the windchill making it feel like -25°F that we had last night in Northwestern Connecticut.

Martin Edic in his Medium column has it right:

“Picture a…retirement community with rules set by a Homeowner’s Association or HOA. An idyllic place to see out one’s final years, undisturbed by the reality of the outside world.

And then a man is elected leader of your HOA and he becomes consumed by writing rules and dictating how you should live your life….Welcome to the State of Florida under Ron DeSantis.”

Historically, Florida’s population skewed older. But its demographics have changed, driven in part by a large Latino population that is traditionally politically conservative. The older voters and the Latino block have become fertile ground for wedge cultural issues like those put forth by its governor Ron DeSantis.

DeSantis has a vision for Florida: His vision says that slavery really never happened in the Deep South, but if it did, it wasn’t as bad as people in the North say.

But since that’s controversial, DeSantis has ordered the Florida educational system to eliminate curriculum that differs from his worldview: No black history. No recognition that gay and gender fluid people exist.

His vision is to lesson plan by state government. If DeSantis says slavery was not a legitimate issue in Florida history, then it wasn’t. If kids have questions about their sexuality or gender preference, make it illegal for them to learn about it. Also make it illegal to help them.

So it’s no surprise that as we enter Black History Month, DeSantis announced a proposal to all but remove both the teaching about that history and the descendants of those who survived it from Florida’s public schools and universities:

“Florida Gov. Ron DeSantis said Tuesday that he intends to ban state universities from spending money on diversity, equity and inclusion initiatives….It really serves as an ideological filter, a political filter…”

In a press release about the legislation, his office called diversity, equity and inclusion programs “discriminatory” and vowed to prohibit universities from funding them. From CNN:

“The proposal is a top priority for DeSantis’ higher education agenda this year, which also includes giving politically appointed presidents and university boards of trustees more power over hiring and firing at universities and urging schools to focus their missions on Florida’s future workforce needs.”

DeSantis has seen his standing among conservatives soar nationwide following his public stances on hot-button cultural and education issues.

He announced his higher education agenda in Bradenton, a 15-minute drive from New College of Florida, a public liberal arts college where DeSantis has installed a new board with a mandate to remake the school into his conservative vision for higher education.

On top of all that, DeSantis wants to radically change the curriculum of Florida’s public education system:

“The core curriculum must be grounded in actual history, the actual philosophy that has shaped Western civilization,….We don’t want students to go…at taxpayer expense, and graduate with a degree in Zombie studies.”

Say goodbye to Black history, gender study, and any queer history courses in the state. And there’s also DeSantis’ criticism of the College Board’s new curriculum for its AP course in African American Studies.

DeSantis announced in January that he would ban it, because state education officials said it wasn’t historically accurate and violated state law that regulates precisely how race-related issues are taught in public schools.

That sent the College Board into edit mode, stripping much of the subject matter that had angered DeSantis and other conservatives:

“The College Board purged the names of many Black writers and scholars associated with critical race theory, the queer experience and Black feminism. It ushered out some politically fraught topics, like Black Lives Matter, from the formal curriculum. And it added something new: “Black conservatism” is now offered as an idea for a research project.”

The College Board’s revisions address most of the DeSantis’s objections. Why? Because the College Board makes most of its revenue from AP courses. From Popular Information:

“In 2019, the College Board made over $1.1 billion dollars in revenue, according to documents filed with the IRS. Almost half of this revenue came from “AP and Instruction,” and 40% came from “assessments” like SAT exams. In 2020, revenue shrunk to $800 million dollars. “AP and Instruction” now constituted the majority of revenue…”

For the College Board, right-wing criticism of the AP African American Studies course presents a financial threat. Assessments are dying: Compared to 2019, when 55% of colleges required test scores, only 4 % of schools had a testing requirement this past fall. So it needs more students than ever to enroll in its AP courses.

So much for the Republican’s vision of “limited government.” DeSantis’ objective is seemingly to provide White Floridians with a version of the past that they can be comfortable with, regardless of whether it’s true.

On to our frigid weekend here in the Northeast: It’s time for our Saturday Soother. Try to forget about the Chinese spy balloon slowly traversing the US, or why Nikki Haley thinks she has a path to the presidency.

Instead, put on a turtleneck and grab a seat by a window. Now, listen to Gustav Holst’s “The Planets – IV. Jupiter, the Bringer of Jollity” which can mean gayness (sorry DeSantis) played in Royal Albert Hall in London at the 2015 Proms by the BBC Symphony Orchestra conducted by Susanna Mälkki:

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