Wednesday, February 20, 2019

The Defining Moment of Donald Trump's Presidency


Special Prosecutor Robert Mueller's report may be finalized as early as next week, according to a news story (see https://www.cnn.com/2019/02/20/politics/special-counsel-conclusion-announcement/index.html).  The report presumably will address crucial questions about President Trump.  Did he collude (conspire would be the legal term) with Russian authorities to undermine American democracy?  Was he a Russian intelligence asset, as one former acting FBI director has speculated (see https://www.cnn.com/2019/02/19/politics/andrew-mccabe-trump-law-enforcement/index.html)?  Did he obstruct justice or suborn perjury?  Did he violate federal campaign finance laws?  Did he engage in money laundering?  Did he violate the tax laws?  These and perhaps many other questions could be encompassed by the Mueller Report.  The answers may go a long way to defining President Trump's legacy.

Will the report be released publicly?  The President has said he'll leave that up to newly installed Attorney General William Barr.  Barr has said he wants to be as transparent as possible and will release at least a summary of the report to Congress.  But there is a view in the Justice Department that "derogatory" information about uncharged individuals should usually not be revealed, and Barr may give weight to the this practice.  If Trump is not charged because he is the current sitting President, which is what traditional Justice Department thinking could dictate, then one might wonder whether Barr would engage in legal convolutions to reason that because the President hasn't yet been charged, derogatory information about him shouldn't be released.  Such a contorted line of reasoning would defy the logic of democracy.  If the President is a crook, the people need to know it whether or not the President is charged.  But only time will tell whether Barr is inclined toward something verging on a lawyer's trickery to protect President Trump.

In addition, Barr will have to think through the issue of executive privilege, a doctrine that often shields the President's conversations with other Executive Branch personnel from disclosure.  However, executive privilege is not unlimited, and a President's general interest in confidentiality does not override the needs of the criminal justice process (see United States v. Nixon, 418 U.S. 683 (1974)(a case in which the Supreme Court enforced a subpoena issued by Watergate special prosecutor Leon Jaworski for President Nixon's tape-recordings of conversations in his office).  Moreover, it is a time-honored tradition in American law that discussions concerning a crime or fraud cannot be protected by a legal privilege.  (See Alexander v. United States, 201 U.S. 117 (1906)).  If Mueller's investigation shows that Donald Trump was engaged in criminal conduct, release of that information cannot be blocked by a privilege.

How William Barr handles the question of releasing the Mueller Report will define his legacy.  Although he has had a highly successful career, nothing he has done thus far will compare in significance to his handling of the Mueller Report.  He will be well-remembered, or not, depending on what he does with the report.

If Barr disappoints the curious members of Congress and the public, remember this.  Many, and perhaps most, of the investigations into President Trump and his doings are outside the scope of Mueller's investigation.  The U.S. Attorney's Office in Manhattan is looking into activities of Trump's former personal attorney, Michael Cohen, in relation to various Trump matters and also activities of the Trump Inaugural Committee.  The U.S. Attorney's Office in Washington, D.C. and the main Justice Department in Washington are involved in some of the cases brought by Mueller's staff, and other cases (like the Maria Butina case).  The Attorney General of New York is looking into the Trump Foundation and some of Trump's activities as a landlord.  Trump's continued ownership in the Trump International Hotel in Washington, D.C. is the subject of litigation brought by the Attorney Generals of the District of Columbia and Maryland.  As these cases progress, we will learn more and more about Donald Trump.  Even if we don't learn everything in the Mueller Report, we will eventually learn a heck of a lot about Donald Trump.  And the totality of this growing tidal wave of investigations and litigation will define Trump's legacy.  Facing, as he does, a Democratically controlled House of Representatives, he won't have any more major legislative achievements.  And his erratic wackiness on the international stage make major diplomatic accomplishments highly unlikely.  It's a sad time when a President's legacy is defined by the legal investigations into his activities.  But Donald Trump has done what he has done, and the chickens are coming home to roost.

Saturday, January 12, 2019

Donald Trump Doesn't Want to Govern


The current federal government shutdown has now become the longest on record. Lots of folks are hurting, from furloughed government employees to furloughed government contractors to the beneficiaries of numerous government programs, such as farmers, small businesses needing SBA loans, prospective homebuyers seeking an FHA or USDA loan, and women seeking protection in one of the many domestic violence shelters that receive federal funds.  Although a lot of government leaders in Washington are creating the appearance of activity, there is no sign of a resolution.  The reason is simple.

President Trump doesn't want to govern.  He wants to win.  Winning, for him, is an imperative.  He looks at life as a competition, where there are winners and losers.  And he is obsessed with winning. 

Governing, however, requires magnanimity, open-mindedness, a concern for others, and an interest in the welfare of the polity as a whole.  In a democracy, governing involves a willingness to accommodate the wishes of those of differing views and compromise.  Leaders, to be successful, must forbear from pressing for the lion's share.  The people are the lion in a democracy.

Trump has shut down the government in a contest over funding for his wall on the border with Mexico, where he wins if the wall is funded and he loses if the wall isn't funded.  By turning what was a political issue that was quite susceptible to compromise into a zero-sum situation, he has pushed the newly empowered Democratic leadership of the current 116th Congress into a joust.  The Democratic leadership in Congress, now wielding majority control in the House and understandably feeling they have a mandate from the electorate not to do things the Trumpian way, see no reason to concede.

President Trump has set a record--for the longest government shutdown ever.  He's not winning.  He's losing.  His legacy, already tenuous, now careens toward abysmal infamy.  The government will re-open, because it must.  Americans, fed up with the dysfunction in Washington, won't accept non-function.  A little graciousness from Donald Trump would be all it takes to get the government up and running again quickly, without an inordinate amount of fallout.  But he's not a gracious man.  So the eventual re-opening of the government is likely to be as ugly as the shutdown.  Whatever the circumstances under which the government re-opens, Trump will have revealed a senseless pettiness that tarnishes his Presidency for the remainder of his time in the White House.

Friday, January 11, 2019

Apple's Dilemma


Apple Corp. is facing mortality--the mortality of the smart phone.  Not that the smart phone is going away any time soon.  It will be around in various iterations for decades.  But it's reached the point in the product cycle where it has become a commodity.  There are lots of different types of smart phones made by many different manufacturers at prices ranging from almost $2,000 to almost zero.  Competition has intensified immensely from the time the iPhone was introduced in 2007, and the iPhone is not always at the cutting edge of technology. 

Last fall, Apple announced that it would no longer report unit sales of iPhones, its most important product.  That was a bad sign, indicating sales were no longer exuberant.  Apple also significantly raised the prices of many products, and said it would endeavor to increase sales of services.  Then, at the beginning of 2019, Apple announced that sales in China were more disappointing than expected.  Not surprisingly, its stock has sagged. 

Apple is swimming against the current.  While it continues to make excellent products, it raised prices at a time when its prices were already at premium levels and the world's economy was slowing.  Even though its products include upgrades, none were astounding, must-have innovations.  Ten years ago, people were willing to pay premium prices for Apple products because they were superior to the competition, in terms of technical capability and quality of manufacture.  Today, other manufacturers turn out very high quality products, sometimes with better features than Apple has, at competitive or lower prices.  Apple seems to be betting that consumers will pay up for a brand name.  That's not ultimately a winning strategy.  Mercedes, which has never been a luxury brand in Germany, tried to do that in America by charging premium prices and creating an aura of exclusivity.  Although it succeeded for a while, its outsized prices attracted a flock of competitors.  Today, Mercedes is no longer a show-stopping dazzler, with some of its lower end models selling for less than many pickup trucks. 

Econ 101 teaches that when Apple raised prices, it shrank the pool of its potential customers because fewer and fewer people can and will pay escalating prices.  And hoping to sell more services is predicated on people buying more Apple hardware.  But if hardware sales are lagging because of price increases and a slowing economy, something has to give--and it has, in Apple's recent disappointing news announcements.

Most consumers don't use more than a few of the myriad features in iPhones and other high-end smart phones.  Indeed, most consumers don't even know what those features are.  When you can buy a smart phone for $100 or $200 that does the few things you care about well, there's no point to paying $1,000+ for a brand name.  Probably most millionaires in America drive ordinary cars.  You don't get to be a millionaire by burning up money on a brand name. 

Apple's dilemma is that it is a giant consumer products company trying to be a high-end luxury company.  That doesn't work.  Highly priced luxury products can only be sold in market niches that serve the wealthy.  Apple cannot afford to become a niche company, lest it lose most of its customer base.  The key to Apple's past success is that it appealed to a lot of middle class but aspirational people.  But those folks can't shell out thousands of dollars a year for computing devices plus wireless service plus other services.  Instead, Apple should take a close look at Toyota, another company known for excellent products made with very high quality of manufacture.  While Toyota vehicles are not always at the cutting edge of technology, they have a strong, loyal customer base because they deliver value--excellent quality at reasonable prices.  While Apple can try to use clever marketing to boost financial performance for the next quarter, or two or three, its long term prospects won't be well-served by hoping that consumers will embrace its cute logo and ever increasing prices.