Sunday, January 29, 2017

President Trump Proving Too Much

Yesterday, President issued an executive order directing that refugees and other people from seven mostly Muslim countries be prevented from entering the United States.  Since then, the President's order has been brought before at least four federal judges, who have constrained its implementation in one way or another.  Within a day, the President is 0-4 in the federal courts.

The issuance of this order proves too much.  President Trump apparently intended to demonstrate to his supporters that he would fulfill a campaign promise to prevent the entry of terrorists into the country.  Perhaps they feel that he has been true to his word.  But his detractors believe that prejudice and bigotry underlie his actions and that the order may not be lawful.  The fact that at least four federal judges have seen fit to act heightens doubts about the President's order.

It also appears from news reports that the President may not have consulted all the knowledgeable departments and offices about this order before issuing it.  Had he done so, he might have learned more about what could lawfully be done and how it could be lawfully accomplished.

In other words, the President has managed to prove that he's what people thought he was, whatever that was.  This doesn't help.  We just had a very divisive election.  Continuing the contentiousness will only exacerbate the nation's problems.  There is a great deal of concern among Trump's detractors that he will be a lawless President, hellbent on imposing nativistic and bigoted policies in a despotic way.  He just managed to confirm those fears.  There's little evidence that this order will improve national security.  But by sowing chaos and instigating opposition and litigation, the President has managed to hinder his own ability to function.  Certainly, his opponents will be pleased that he unwittingly aimed at his foot and pulled the trigger.  But there have been innocent victims and collateral damage.  The President has to do better.

Friday, January 13, 2017

How Putin Has Already Blown It

On election day in 2016, Vladimir Putin must have thought he was a pretty smart guy.  The candidate for President of the U.S. that he favored, Donald Trump, had won.  Putin, according to America's intelligence agencies, tried to help Trump out through various nefarious means to discredit Hillary Clinton.  Although it's unclear how much Putin's underhanded tactics affected the actual vote, he probably wasn't averse to giving himself a pat on the back.

That was then.  Things are different now, just two months later.  U.S. intelligence agencies have revealed Putin's shenanigans. Important leaders in Congress, including Republicans as well as Democrats, are alarmed.  Trump nominees for cabinet positions, when asked about Russia, have been very careful to distance themselves from Putin and Russia.  Even Trump has had to admit that Russia tried to interfere in the election.

The uproar will limit Trump's options with Russia and Putin.  Congress won't give him a free hand in dealing with them.  It will be tough on the issue of sanctions.  It will insist that the U.S. honor its pledge to defend NATO members.  It will insist that human rights still exist and must be defended.  It will insist that Russia's military aggression not be rewarded with friendship,

Putin has already blown it.  He incorrectly assumed that his misdeeds would go undetected.  But that didn't happen, and now he's been exposed.  He's proven to be an embarrassment and a liability to his buddy, Trump.  The bromance may have to cool off.  Trump has been on the defensive about Putin and Russia, and his post-election sheen is a little tarnished.  Trump has lost some power even before he took office, power he might have needed to cozy up to Russia and Putin.  Too bad, Vlad.  You may have outsmarted yourself.

Wednesday, December 7, 2016

Why a College Education Matters

A recent study released by the Georgetown Center for Education and the Workforce starkly illustrates why getting at least some education after high school really, really matters.  Data from the study ( shows that during the Great Recession, 7.4 million jobs for people with high school diplomas or less education were lost.  During the recovery from the Great Recession, some 11.6 million jobs were created but 11.5 million of these were for people who had at least some postgraduate education.  Only about 80,000 of the new jobs were for people with high school educations or less.

In other words, people with high school educations or less who lost their jobs during the Great Recession are probably still unemployed, unless they managed to get some postgraduate education after being laid off.  And they are likely to stay unemployed unless they advance their educational level or President-elect Trump creates a remarkable jobs program that somehow includes a very large number of low skills jobs with wages high enough to be acceptable to Americans. The latter would be a tough, tough challenge.

We are now in a time of policy flux, with the election of a President whose policy toward postgraduate education seems to be a work in progress at best.  If you're planning for the future, don't wait for the government to decide what it's going to do.  Find a way yourself to get some postgraduate education or training.  Sure, there are ways to make a good living without a college degree.  But electricians and plumbers need a fair amount of training after high school before they can get a license.  It's virtually impossible to attain a middle-class standard of living with just a high school diploma.  Investing in yourself is the most obvious way to step up above flipping hamburgers for a living.  The data shows this to be true.

Thursday, December 1, 2016

Donald Trump's Head Fakes

Donald Trump loves Twitter.  At least, so it would seem with his irrepressible use of the 140-character megaphone.  It grabs peoples' attention, particularly the attention of the press.  A 140-character message is usually easy to grasp and react to.  Not much work for a reader or a reporter.

But what's the purpose of his tweeting?  During the election, he tweeted or retweeted about a deceased Muslim veteran, a former Miss Universe, assertions by white supremacists, and other things that contravened the social values of the Democratic electorate, provoking vigorous and extended efforts by his opponent to argue that he was unfit for the Presidency.

Meanwhile, back on Main Street, Trump was holding rallies and talking about jobs, jobs and jobs.  He kept his eye on the ball (i.e., the economy, stupid), while diverting his opponent with social values head fakes.  She took the bait, and lost sight of the fact that economic distress drives elections more than the character flaws of candidates.  She paid for her mistakes.

Now, Trump has tweeted that flag burners should be imprisoned and lose their citizenship.  Surely he knows that flag burning is protected by the First Amendment to the Constitution and cannot be punished with criminal prosecution or deprivation of citizenship. So why tweet?  Could it be that he wants to divert attention from other things he's doing?  His tax proposals look like they'll make the rich a lot richer, and maybe even increase taxes on some members of the middle class.  His possible changes to Medicaid might leave some folks less well-insured.  His infrastructure proposal seems to focus more on giving businesses tax breaks than fixing the roads and bridges that are in the worst shape.  He's promised to repeal Obamacare, and to roll back financial regulatory reforms of the Dodd-Frank Act.

If you're concerned about what soon-to-be President Trump is going to do, watch out for his head fakes.  Don't be diverted by transparent attempts to yank your chain.  Focus on the big stuff, the things that will change things fundamentally.  Keep your eye on the bottom line, because that's what our incoming businessman President will do.

Monday, November 21, 2016

Why Children Are Afraid of Donald Trump

After the election, newspapers and news services were filled with stories about children crying and suffering anxiety and distress over the election of Donald Trump as President.  Many adults may have thought this to be an over-reaction.  But we're talking about our youngest citizens, who have the sometimes disarming and sometimes disquieting tendency to speak the truth without the convenient filters adults use to soften the harshness of reality.  Why would kids harbor such fear?  There's a simple reason.

The generation that's now in primary schools is approximately half minority.  By 2020, children under 18 will be majority minority. When Trump blew a fuse over a racial category, a religion, or an ethnic group, the blast hit perhaps up to half these kids in a very personal way.  And when Trump delved into misogynistic ranting about women, a partially different half of this generation was directly impacted.  They've been raised to believe that girls and women are worthy, and deserving of dignity and respect.  The specter of a boorish pig in the White House flies in the face of everything that today's parents and schools try to teach.   And remember also that large numbers of white children believe in diversity and respectfulness for all.  They're more colorblind than the Boomer Generation.  Many of their good friends aren't white, and they cherish and value their friends.

So, it would seem that Donald Trump, with his hateful cacophony, has likely frightened and offended over half of today's children one way or another.  As they grow older, these childhood fears may well morph into anger and a desire for change.  By the 2040s, America as a whole will be majority minority.  Today belongs to the Republican Party.  But its victory may have sown the seeds for its demise.

Wednesday, November 9, 2016

Winners and Losers in the 2016 Election

This was one wacky election, and there are some unusual winners and losers.
Winners.  Among the least obvious, but most important winners are liberal Democrats.  The middle-of-the-road, milk-the-liberals-for-votes-and-then-abandon-them strategy of Bill and Hillary Clinton is definitively dead, with a stake driven through its heart.  Bernie Sanders is a major victor from yesterday's election, as he now has a chance, along with Elizabeth Warren, to reshape the Democratic Party.  The Clintons' decades old strategy of cozying up to Wall Street and other obscenely rich donors while talking but not walking like progressives blinded them to the prairie fire boiling up from people who work hard but for not a lot of money.  Sanders and Warren, who may be the most influential Senators today, won't make that mistake.  They will reach out and try to help the people who are driving politics today.  Politics is ultimately about the flow of crowds, and you can't capture the energy of insurgents by condemning them as deplorable. 

Another major winner is the FBI.  Had Hillary Clinton been elected, the specter of possibly wholesale "personnel changes," shall we say, might have hung over the FBI, crippling its ability to function in numerous crucially important arenas.  Donald Trump and whoever he appoints as Attorney General would be wise to leave the FBI unconstrained to conduct business regular way, with no hint of a political agenda.  Everyone benefits when law enforcement is evenhanded. 

And, of course, another winner is that . . . what's his name?  Oh, yes, Trump.  That Trump fellow will find out that running for President is a whole lot easier than being President.  It's one thing to make speeches.  It's another altogether to make things happen.  Even though the Republicans control both the House and the Senate, that doesn't mean Trump will have a successful Presidency.  Barack Obama had the advantage of a Democratically-controlled Congress at the beginning of his first term, and his approval ratings have fallen dramatically since then.  Donald Trump will have to find a way to work with all kinds of people, and lashing out at them isn't likely to be productive.

Losers.  One of the biggest losers is the Establishment.  Both the Democratic and Republican establishments got their heads handed to them yesterday.  An outside observer can readily tell that it's time for change.  But people holding power rarely give it up without a struggle.  George Washington set a noble example when he refused to run for a third term as President and returned to Mount Vernon.  Try to find someone as noble as that in today's political establishment and you'll have more luck seeking the Seven Cities of Cibola.  Things are likely to get ugly as both parties struggle to change. 

Big Money Donors got hammered in this election.  They bet on Hillary Clinton and a platoon of mainstream Republican primary candidates, and wound up only with much smaller bank accounts.  It turns out that, in democratic politics, money isn't everything.

The Democratic Message was lost.  In fact, perhaps the most important reason Hillary Clinton lost was she had no message.  All she seemingly did was attack Trump and proclaim, ad nauseum, that she wasn't Trump.  Trump had a message, a message of hope for working people who usually have only stagnation and despair.  This was not a message that Clinton or the elitist mainstream press clearly discerned.  But Trump got through loud and clear to his supporters.  Nothing drives voters as much as hope.  Trump instilled hope in his constituents.  Clinton didn't seem to have hardly anything positive to say about the future, and her potential constituents lacked the most powerful motivation in politics to vote.

Of course, there is Hillary Clinton.  Bill and Hillary's time in politics is over.  One wonders if they know it and will be able to step aside graciously.  The successful resurrection of the Democratic Party depends on the establishment of new leadership.  But the tremendous cash flow the Clintons have enjoyed since Bill left the White House appears closely linked to their power in the Democratic Party.  If they give up the power, the cash is likely to flow to the new power players.  Since Bill and Hillary have an obvious love of money, the struggle to rebuild the Democratic Party could be grisly. The Clintons, now more than ever, need to think about their legacy.  They already have more than enough money to live in luxury for the rest of their lives.  But, given their baggage that was recounted ad infinitum during the campaign, their legacy needs a lot of work.  Graciousness would be a very valuable first step.

Sunday, October 30, 2016

Happy Halloween, America

This may be the scariest Halloween ever.  Two ghouls are in the lead for the Presidency.  They claim to be people, but that seems to be just a masquerade.  Even in their guises as humans, they are horrifying.  Parents could use their names to scare children to eat their vegetables and do their homework.  But then the children would have nightmares.  The parents already do.

The financial markets are being inflated by the Federal Reserve into a monstrous bubble, a bloated spectral presence that could bring back the demons and vampires of the 2008 financial crisis.  Pension plans, annuities and long term care insurance are being scared to death by ultra-low interest rates.  Anyone hoping to retire is hanging garlic over their front doors.

Overseas, demons, banshees and poltergeists bedevil us.  The Middle East is a seething mass of murderous conflict, seemingly a nightmare from which we can't wake up.  North of the Middle East, a fiendish demon toils at midnight, boiling eye of newt, toe of frog, wool of bat, and tongue of dog into a toxic mix that he flings in all directions while chanting diabolically in a language not heard since ancient times.  In North Korea, a beast with curved horns labors with a crooked smile revealing jagged teeth to find ways to deliver inferno thousands of miles.

Our industrialized economy spews noxious fumes that heat the Earth hotter and hotter.  Everything we ingest--food, water, and air--causes cancer or heart disease.  Even sweetness itself, in the form of sugar and other natural sweeteners, silently stalks our health. 

Alfred Hitchcock never made a movie so scary.  The real world would scare the bejesus out of Vincent Price.  If Stephen King needs inspiration, he can simply pick up a newspaper.  The truth is we have Halloween year round.  The only thing that happens on October 31 is people wear costumes.  The rest of the time, we can only try to stay safe, if that's possible.  Happy Halloween, America.

Friday, October 14, 2016

The Nobel Committee Got it Right

Awarding the Nobel Prize for Literature to Bob Dylan was exactly the right thing to do.  He's a great singer-songwriter, whose songs touched millions and influenced generations of musicians and composers.  He richly deserved the prize.  Equally important, the Nobel Committee recognized that literature isn't just a dry, narrowly defined collection of dusty texts appreciated only by tweedy, dust-covered obscurants.  It's an organic, dynamic concept that evolves and grows over time.  Stories are told in many ways and today's troubadours are among the modern world's best story tellers.  There's a lot of literature to be found in smoke-filled bars smelling of stale beer and cut rate whiskey, a lot of story telling set to the simple chord progressions of the blues and rock and roll.  The Nobel Committee could have a great time selecting future prize winners from the vast literature of popular music, rocking out instead of plowing through another snoozer of a book.

Who might be eligible for the Prize in today's new, expanded literature?  There are plenty of potential nominees.  How about:

Bill Haley and His Comets.  Rock Around the Clock was the song that start the rock and roll revolution.

B.B. King.  The King of the Blues brought the blues out of the honky tonks into the larger world.  Sweet Sixteen is one of his finest ballads.

The Rolling Stones.  Among the greatest of the rock and roll literati, the Stones give us so many choices.  Honky Tonk Women is a gem.

Mountain.  The Nobel Committee sometimes looks at works of the less well-known.  One of the hardest rocking bands of the 60's and 70's was Mountain, four guys who created a bigger sound than ten other guys could and inspired generations of hard rockers to follow.  Their best song is Mississippi Queen.

Wednesday, September 21, 2016

Would the Fed Please Shut Up?

At the beginning of 2016, the Federal Reserve Board anticipated four quarterly interest rate hikes for the year.  Three quarters of the way through the year, the Fed hasn't lift rates even once.  And it's far from certain it will in December.

Why such a divergence between expectations and reality?  In a nutshell, because economists can't predict the future.  Essentially all leading and well-regarded economists get it wrong when they try to predict future economic growth.  Since the Fed is an economist-driven agency, it devotes a lot of time and energy to being wrong.  And it has been wrong early and often this year.  It's probably wrong in suggesting a significant likelihood of a December increase.  The truth is it has no way (i.e., zero percent probability) of knowing whether or not it will raise rates in December.  Its capacity for error has been copiously demonstrated and its "guidance" is worth less than a palm reader's prognostications.

Who benefits from the Fed's "guidance"?  Not investors, who only profit if they disbelieve what the Fed says.  Not consumers, whose bank accounts and certificates of deposit, money market accounts, bond holdings, pensions, and long term care insurance policies are being devastated by the perpetuation of Lilliputian interest earnings.  Those who would prepare for the future with life insurance and annuities face ever-escalating costs.  Comfortable retirement is increasingly available only for those who have both very high incomes and a ferocious propensity to save.  Everyone else will become a burden on public retirement financing.  Anyone who thinks the government will be balancing the budget by cutting the cost of Social Security and Medicare is chilling on angel dust.  Tax increases and more deficit spending will be necessary--full stop, end of discussion.  The bulk of retirees will be largely or entirely dependent on the government and any thought of cutting retirement benefits will prompt a political insurgency that would make this year's election look like a circle of kindergartners singing Kumbaya.

There are people who benefit from the Fed's "guidance."  Speculators, who make fast money bets on what some Fed official or other will say in the next three days.  Derivatives dealers, who write contracts for those who want to hedge or speculate about the Fed's "guidance."  Pundits and journalists, who try to say something profound about every cough or facial tic from one Fed official or another.  Stock and bond market dealers, who profit when the market churns each time a Fed governor smiles or frowns.  In other words, Wall Street is making money off of this.  But the "guidance" isn't making an overall contribution to the well-being of society.

The Fed used to be pretty discrete.  Back in the 1950's and 60's, we had robust growth, low unemployment, and ebullient optimism, all without a stream of prattle from the Fed.  There's no obvious need for the Fed to yack, yack, yack all the time.  We could do without all the false expectations created by inaccurate Fed prognostications.  Would the Fed just please shut up?

Wednesday, September 14, 2016

Does the Internet Hamper Economic Growth?

The sharing economy--Uber, Airbnb, Zipcar, bike sharing and so on--makes more efficient use of resources.  Cars that might sit around are instead used more often.  Living space that might remain empty provides accommodation.  People don't have to buy a bike any more.  They can just rent the short term use of one. 

But does all this sharing hinder economic growth?  If people use cars, bikes, homes and other things more efficiently, fewer of these items need to be produced and sold.  Manufacturers may see decreased demand.  Jobs may be lost.  Growth could slacken.  The country's tax base might stagnate, just at a time when increased government funding is sought for everything from national defense and security to infrastructure repair and expansion to Social Security and Medicare.

Gig-based employment could have similar implications.  People who work short term gigs tend to earn less than full-time employees, reducing their ability to contribute to the consumer demand that comprises 70% of America's economy.  Employers have little or no incentive to improve the abilities and productivity of gig employees, so improvements in worker productivity could be hampered.  Without productivity growth, we won't have long term gains in employee compensation or national wealth.  Gig employees may be unable to save significantly for retirement, which would place more of the burden of their golden years on public funding.  These increased tax burdens could further impair growth.  As gig-based employment grows, so would these problems. 

The Internet greatly enhances globalization.  Customer support centers in Third World countries can inexpensively serve the needs of corporations in the industrialized world.  All manner of services, from manufacturing to radiology to routine legal work, can be cheaply coordinated and/or delivered from distant, low wage places over the Internet.  Workers in America who provided those services are out of luck.

The Internet provides the communications process that allows the sharing economy, gig-based employment, and globalization of services, to operate.  But greater micro-economic efficiencies such as these may have negative macro-economic implications.  One of the great mysteries of modern economics is why the economy is growing so slowly.  Increased efficiency creates losers as well as winners.  Those losses will have aggregate impact eventually, when they grow large enough. 

The Internet is an astonishingly effective conveyor of information.  But, as regards the sharing economy, gig-based employment, and globalization, owners of assets, holders of capital, and employers benefit more than employees--except employees willing to work for lower wages  The Internet may have enhanced total global economic growth.  But the distribution of that increased growth may well favor low wage countries, leaving industrialized nations with dimmer futures.   

It's impossible to stop the march of technological advance.  But the Internet is almost too effective in cutting costs and creating efficiencies.  When artificial intelligence and robots have driven millions of people out of the labor force, leaving them penniless, economic stagnation may be more likely than prosperity.  We had damn well better come up with a way to maintain social equilibrium in such a circumstance, or the political insurgencies of today will seem like gentle summer breezes.