Tuesday, January 31, 2017

Senate Committee Votes To Send Betsy Devos Nomination For Vote In Senate

Betsy Devos is probably the least qualified candidate ever nominated for Secretary of Education.  The Senate committee voted on party lines 12-11 to send her nomination to the full Senate for a vote.  Since Republicans outnumber Democrats in the Senate an enemy of public education will be our next Secretary of Education.  The only hope for our public education system is that most of the funding and control of public education takes place at the state and local levels.  Its a sad day in America when one of Trump's least qualified nominees for a cabinet position wins 100% of Republican votes.  This is Trump's political party and our nation will pay the price for his election.

Trump's Lies Will Cause Foreign Leaders To Distrust Him

Every nation, including the US, depends upon agreements with leaders of foreign nations.  These agreements depend primarily on trust.  Even written treaties depend upon trust because people like Trump have shown that they can easily be shredded.  Trump's history of lying is causing foreign leaders to worry that he cannot be trusted.  They expect leaders to shade the truth on occasion for tactical reasons.  However, they worry about Trump's lies because they are not tactical falsehoods.  Trump really believes that his lies are true.  He cannot tell the difference and his mind can easily change and he will replace one lie with a new lie.

Mr. Republican Warns His Party Against Making A Pact With The Devil

David Brooks has been a literate supporter of Republican ideology for his entire career.  He is concerned that his favorite party has made a pact with the devil who is now our president.   He argues that Trump is not a Republican and that they risk losing their souls by refusing to contain the excesses of a person who has demonstrated his incompetence and psychological unfitness for the office that he holds.  For those who need to be reminded,  Brooks provides the reasons for his case against Trump and the consequences for the nation if his favorite party decides to put its soul on the market.

The Mistake Of Not Taking Trump Literally

Republicans, and conservatives like the Koch brothers,  did not take Trump's promises on the campaign trail literally.  They believed that he would not act on his campaign promises if he were elected.  This article describes the many ways in which Trump has proved them wrong.  Trump's power comes from his hold on the populist base which he has carefully cultivated since he entered the Republican primaries.  Most of what he has done since assuming office is to strengthen his position with his base.  The election campaign is over but Trump is still campaigning.  The hold that he has on his base is a powerful weapon that he will use against Republicans who want him to behave like a typical president.  Trump is not a typical president.  He is accustomed to operating his businesses without a board of directors to hold him accountable.  He is in the process of increasing the power and authority of Steven Bannon and others in his inner circle while reducing the power of elected officials and government agencies.  Our system of checks and balances on presidential power are not in his interest.  He will continue to marginalize those who oppose his efforts to concentrate power in his inner circle as long as leaders in both of our political parties permit him to do what he pleases.  It may be too late by the time it takes them to understand his game plan.

Monday, January 30, 2017

The Political Battle Is No Longer Left Versus Right

Jennifer Rubin has been one of the conservative opinion writers on the Washington Post for many years.  She argues that the real issue is whether that assumptions that underlie our democracy will survive.  She worries that her political party is split between those who wish to ride on the Trump wave and those who have real concerns about the consequences of enabling an autocrat.

Why Jew's Were Not Mentioned In Trump's Holocaust Day Rembrance

Steve Bannon's associate explained why there was no mention of Jews in Trump's Holocaust remembrance day.  She claimed that it was because this is an inclusive administration (no joke).  Jews were not the only group persecuted by the Nazi's.  Instead of including those groups in the announcement, no groups were mentioned in the remembrance.  It had nothing to do with many hints of antisemitism  that have been evident in an administration that caters to evangelical Christian voters, and which were common on Breitbart News

One Million In Britain Sign Petition Opposing Trump State Visit

The Donald was invited to a state visit with Queen Elizabeth during the Prime Minister's recent visit.  Nothing would be better for The Donald's ego.  It would be like one would- be Monarch being sanctified by a real Monarch.  Over one million citizens in Britain signed a petition to reverse the invitation.  Since it was signed by more than 100,000 citizens it must be reviewed in Parliament.  The Donald may have to wait for the Queen to greet him and his royal family.

Rudy Giuliani Influenced Trump's Muslim Ban

Trump asked Giuliani to provide the legal basis for his ban on Muslim entry into the US.  Giuliani, who many believe to be behind the FBI Director's decision to announce the reopening of the Clinton email probe, came up with a solution.  It is against the Constitution to discriminate against religion so the ban was portrayed as a ban against entry by seven nations.  This provides cover against the ban against Muslim entry on religious grounds.  That is the defense that The Donald is making following the uproar against his executive order.  A major problem with that defense is the Christians from the banned nations are not covered by the ban.  If any Christians take advantage of that exclusion it will raise serious legal questions for Trump.  The Donald took an oath to defend the Constitution when he was inaugurated.  He is obviously more interested in providing a bone to his base than he is about defending the Constitution which he was sworn to protect.

Koch Network Opposes Many Trump Policies

Charles Koch has a large network of wealthy Americans who have contributed at least $100,000 per year to his organization.  Many in Congress have been financially supported by the Koch network. At the annual meeting of the Koch Network several concerns were raised about The Donald.  The core area of disagreement is about the ideology at the core of the Koch Network.  The Koch brothers are extreme libertarians who oppose government intervention in the free market economy that joins them together.  They support globalization and they oppose Trump's protectionist policies; they also oppose Trump's immigration policies as well as his recent ban on Muslim entry into the US.  On the other hand, they support Trump's efforts to weaken agencies that regulate the energy industry and the healthcare industry.  The Koch Network may turn out to be one of our most effective weapons against Trump's efforts to establish an authoritarian government under his leadership.

Captain Chaos Strikes Again

David Brooks, who is a conservative columnist for the NYT, appropriately attached the Captain Chaos label to The Donald in a recent op-ed.  Brooks is very close to Republican leaders and they expressed concerns about The Donald's management style which is to shoot first and ask questions later.  The Donald's most recent attempt to allay the fears of his base, whose fears he has cultivated, is a case in point.  He issued an executive order banning Muslim entry into the US from seven countries.  His order may be unconstitutional, but it may also be a conflict of interest.  His ban only applied to nations in which he has no business interests. Muslims from nations where he has business interests were excluded from his ban.  Since he refuses to release his tax returns it is impossible to determine the extent of his business interests in the nations excluded from his ban but there are Trump hotels and golf courses in several of them.

I attended a protest rally in Boston yesterday with my daughter.  Over 20,000 protesters took the opportunity to display their furor at Captain Chaos.  The protest in Boston was only one of several protests that occurred in many of our large cities whose airports admit international visitors to the US.  The posters on display by the protesters covered many of the concerns that people have about The Donald.  Most were about his ban on Muslims,  but even deeper concerns were evident.  Fascism was not an uncommon concern.  Nor was his elevation of Steve Bannon to his top national security group that does not typically include political advisers in its deliberations.  Bannon operated Breitbart News, which is one of many alt-right fake news organizations in the US, before Trump gave him a top position in his government.  Some view Bannon as the Joseph Goebbels of the Trump Administration.  Goebbels was not modest about his top position in Hitler's government.  He claimed that his propaganda was better than that of his opponents. His job is to turn a small base into the dominant political force in America.

Sunday, January 29, 2017

We Elected A President Who Flaunts The Rule of Law But Republican Leaders Don't Care

Donald Trump's order to prevent people from certain states from entering the US has been widely criticized and a judge ordered a stay of the order under certain conditions.  Many Republicans were critical of The Donald's order and the resulting chaos it has created.  Trump fed his core base a bone which they can nibble on, while they cringe in fear, but Paul Ryan who is the Speaker of the House defended his order and Mitch McConnell who leads the Republican Senate was silent.  The Donald has become the sole leader of the Republican Party by pitting his base against GOP leaders who fail to salute The Donald's actions.  Trump also nominated McConnell's wife to cabinet position to insure support from the Republican Senate.  She is well qualified for the job but that is no why she was appointed.  She is part of Trump's insurance policy.

Trump Is Developing An Alternative TV Station For HIs Alternative Facts

This article describes The Donald as an aspiring TV star who happens to be president.  He uses Twitter to feed his core base of supporters and his tweets are picked up by the mass media.  He regards many of the mass media outlets as his opposition because they fact check his tweets and report his lies. He enjoys the celebrity from being constantly in the news but he can't stand criticism.
His base doesn't care about whether he is lying or not.  He gives them the feeling that he is a man of action.  That is important because he has cast himself as a superhero.  He has also used fake news sources (which includes Fox News) to counter the fact checking.  Apparently, that has not been adequate for The Donald.  He is going to produce his own TV news in the White House.  That will make it difficult for journalists to cover the White House as they have in the past through press briefings which inform them about the president and his response to world events.  The press briefings are being modified to make them less open and we will be getting The Donald and his chosen surrogates in our living rooms.  We can watch The Donald fire his enemies without having to put up with advertising. There is a reason why The Donald is so good at spreading lies and getting away with it.  His business career is full of similar examples.

Saturday, January 28, 2017

Trump's Erratic First Week In Office Was All About Him

Trump put his temperament and erratic behavior on full display in first week as president.   This article provides a handy list of them which is useful because there were so many of them.  He may have set a record in one week that few president have ever achieved.  It has not escaped my attention that few of them were about policy issues or ideology.  They illustrated instead that he does not have the ability to behave like we expect a president to behave.  On the other hand, the post below shows that he gave his base exactly what they want.  He showed that he is man of action, and not a typical politician who, like Hamlet, may be overcome by thought.  He may act like a five year old child but that distracts us from focusing of the terrible policies that he is pushing on a divided nation.

Trump's Base Loves Him

Interviews with Trump supporters show that they have concerns about his Twitter storm but they believe that he is doing what he said he would do.  They are correct.  Trump's first days in office have been devoted to showing his base that he means business.  Much of what Trump has done in his first days as president may not turn into real changes but he has attended to his greatest asset.  As long as his base loves him, he will be feared by politicians who fear that he will turn his base against them in subsequent elections.  The Republican Party is his party for the time being.  Trump would like to maintain ownership and turn our country into a single party autocracy.  The majority of our nation would be held hostage by Trump's hold over his base.  This is what our founders feared when they established our democratic system.  Trump's success illustrates the flaws that they had foreseen. 

Friday, January 27, 2017

David Brooks Warns College Students About Trump's Republican Party

David Brooks was a devoted Republican in the Reagan era.  He was also part of the team that encouraged college students to join the Republican Party when it was out of favor during the Vietnam protest movement.  In this article, he contrasts Trump's Republican Party with Ronald Reagan's Party.  He argues that Reagan's party was one of courage and optimism.  The Donald's party has become a party of cowardice.  It is capitalizing on the fears that many have about foreigners and about their economic plight.  Cowardice is what people turn to when their fears are elevated.  His message to college students is to reject the Republican Party that he loved when he was a young man.

I have not always agreed with David Brooks but he has a better understanding about what is happening in his political party than most people.  Brooks has studied Steve Bannon's ideology and he knows the direction in which he is pushing The Donald.  Bannon is wedded to the nationalism that is spreading in Europe.  Ultimately, it rejects democracy in favor of authoritarian leaders who cultivate fear and a retreat to cowardice.  There is no place for optimism and courage in Trump's version of Republicanism.  He is cultivating fear in order to develop voter dependence on him and the force of his promise to protect them.  This contrasts remarkably with FDR's slogan during the midst of the Great Depression.  "The only thing we have to fear is fear itself."  Brooks is telling college students not to fall prey to fear and cowardice.  The end result is the rejection of democracy and the acceptance of autocracy. 

The Republican Party Now Exists Only In Name

This article describes the meeting between The Donald and Republican leaders during a retreat in Philadelphia.  The simplest way to declare the winner of the discussions was the action taken by the Speaker of the House Paul Ryan.  Prior to the retreat Ryan's website supported the TPP trade deal that The Donald opposed.  After the meeting Ryan removed support for TPP off of his website.  TPP was dead before Trump took office but Republican orthodoxy about free trade disappeared when Ryan removed it from his website.  Some the decisions below show the surrender of the Republican Party to The Donald.  Winning elections is the only meaningful objective of the GOP.  The Donald has taken possession of a large segment of its base and he has shown how to win elections with that segment and left overs from the top 1% who care only about getting their taxes cut. 

* They approved spending $15 billion on the Mexican wall.  Earlier they claimed that they could not spend $600 million to provide clean water for Flint, Michigan.

* They agreed to spending up to $1 trillion on Trump's infrastructure plan.  That was more than they gave Obama to stimulate the economy during the financial crisis.

* Similarly they approved of Trump's flurry of executive orders that circumvent Congress.  They had opposed Obama's use of executive orders in this last term.

* They agreed with Trump on the use of torture that violates international law

* They agreed with Trump's plan to investigate voter fraud despite no evidence of voter fraud

The Donald's tax proposal which cuts taxes for corporations and the super rich has been a consistent part of the GOP platform.  There was little disagreement on Trump's plan to cut taxes.  Paul Ryan now refers to the tax cuts as a way to make our tax system competitive with the rest of the world.

If you want to lean more about The Donald's plans going forward take a good look at what has happened in Poland and Hungary after they elected populist nationalists like Trump as their president. Steve Bannon, who is Trump's chief strategist intends to copy their formula.  

Thursday, January 26, 2017

All Four Of State Department's Senior Management Just Resigned

Its not going to easy for Trump's new secretary of state.  Four of the senior managers resigned from their positions.  Apparently, they have determined that working for new administration is something they would rather avoid. 

Trump Wishes US Press Liked Him As Much As Russian Press

Trump's election, and his great transition, is praised in the Russian press.  Trump's "American First" plan is good news for the Kremlin.  They don't want America to team up with other nations to oppose their interests.  That is understandable.  They also seem to like the fact that Trump never used the word "democracy" in any of his statements or tweets.  Apparently, an American autocracy would end American efforts to impose democracy on autocratic nations.  Even better, autocratic nations in NATO, teamed with Trump, would be terrific.  Trump is doing his part, by delegitimatizing the major news sources that are critical of him, and by claiming that 5 million votes were cast illegally in the election.  That's a good step in Trump's direction toward autocratic rule.  We can't believe the press and we can't believe election results.  With Steve Bannon directing Trump's alignment with the far right in Europe, and his communication strategy, Trump may succeed in establishing autocratic rule.  The only real limit in his efforts is the Republican Party.  It is conflicted about Trump.  They like a Republican in the White House but some Republicans worry that their Party will become the Trump Party.  Republicans who do not support Trump 100% will have to face the fury of Trump's core constituents who are under his control.

Wednesday, January 25, 2017

The US Constituton Does Not Guarantee A Free Press

Donald Trump has been attacking newspapers and TV news networks that do not tell the public what he wants them to hear.  He declares that the media are dishonest when they fact check the false claims that he makes on Twitter and in his public appearances.  His surrogates defend his lies by inventing an "alternative fact" universe in which facts are invented to protect lies from falsification.  The bulk of Americans are repelled by his lies and by his demands for worship.  Unfortunately, Trump's true believers are not interested in the truth, and those who believe that they will benefit from his policies don't care either.  Without a free press liars like Trump have the freedom to use the power of government for their own purposes.  There are no limits on Trump's ambition.  He wants to be in total control of the government just as he is in the businesses that he owns.  Democracy only works for Trump when he can control the information that voters need to make decisions that are in their interest.  Fake news, the social media, and foreign sources of information are the enemy of democracy and a free press is its only protection.

Americans who are offended by Trump's bizarre behavior believe that the US Constitution provides the legal grounds for free speech.  This article explains why the Constitution is a necessary but not a sufficient guarantor of press freedom and our democratic form of government.  Trump will only be happy when the press and the media declare his greatness.  He has the power of government and the support of many Americans who are more concerned about the freedom to bear arms than they are about protecting the press and media sources who do not feed their prejudices.

The bottom line is that Trump should be taken seriously by Americans when he attacks sources of information that are not under his control.  Americans need to understand what is really happening in Trump's government and redouble their support for our free press.  Support for the free press ought to be as important as many of the other freedoms that have motivated those who have marched against the would be dictator that is now our president.

Tuesday, January 24, 2017

Video Of Trump's Speech At CIA

The media have shown segments of Trump's speech at CIA headquarters.  I have posted a link to the video for those who would like to see the entire speech.

Trump's White House And Republican Orthodoxy

Steve Bannon is one of Trump's closest advisors.  He has strengthened his position by building a bond with Trump's son-in-law who is also an advisor to Trump.  A new hire in the White House, who worked for Bannon's alt-right fake news site Breitbart News, has raised questions about the direction that Trump might take as he develops his policy agenda.  Bannon has been opponent of the Republican establishment that Trump defeated in his primary campaign.  The new hire from Breitbart News has written critical articles about Paul Ryan who is viewed as the key architect of orthodox Republican policy development.  Bannon and the new hire will direct their attention to motivating and expanding the populist base that helped him to win the primary and the general election.  Trump's chief of staff has focused his attention on building relationships between more traditional Republican leaders in Congress and the more populist wing headed up by Bannon.  Trump's policy directions take twists and turns between these two centers of influence. 

Paul Ryan is responsible for developing the Republican budget proposal in the House.  Like most Republicans he wants to cut taxes, primarily for corporations and the super rich,  and pay for the tax cuts with a reduction in spending on social welfare programs like Social Security and Medicare which account for a major portion of the budget.  Trump promised not to cut Social Security or Medicare during his campaign.  That promise, along with an attack on free trade, helped him to secure his hold on the populist base that was a critical element of Bannon's communication strategy. 

The battle over the ideological direction Trump's policy proposals is really a battle over the future of the Republican Party.  Will Bannon and his allies transform the Party into a populist party like those that are emerging in Europe, or will Trump be able to blend them together.  One of Trump's first moves yesterday was to cut US participation in a trade agreement sponsored by the Obama Administration. That was largely a symbolic message for his populist base since the trade agreement was not supported by many Democrats in the Senate.  We will have to see how Trump's promises to cut the US trade deficit mix with Republican orthodoxy on free trade.

Monday, January 23, 2017

The Dumbest Idea In The World Leads To Slower Corporate Growth And Inequality

Jack Welch, the former CEO of General Electric called the corporate goal of maximizing shareholder value (MSV) the dumbest idea in the world.  This article explains why corporate executives subscribe to the idea and some of the consequences of the dumb idea.  It is great for the CEO but terrible for economic growth; it is also a major contributor to the growth in income inequality.  The quote below from the article provides a good summary of the consequences:

The stock-price manipulation involved in massive buybacks—and the resulting exorbitant executive pay—are thus not just moral or legal problems. The consequences of MSV and share buybacks are a macro-economic and social disaster: net disinvestment, loss of shareholder value, diminished investment in innovation, destruction of jobs, exploitation of workers, windfall gains for activist insiders, rapidly increasing inequality and sustained economic stagnation. Stock buybacks are thus a financial bonanza for stockholders and senior managers, but they destroy economic value for society.

MSV might be a good idea if the intent was to maximize long term shareholder value.  Instead it has been used to maximize short term stock prices for several reasons.  CEO's want to get the payback from investments during their tenure which averages around seven years.  There are also less risky and easier ways to manipulate the short term stock price.  Cost cutting by shifting jobs to lower wage locations and lower wages for local employees works well because labor compensation is around 60% of costs in the typical corporation.  Its also easier to increase the stock price with stock buybacks which reduce the number of shares outstanding.  That, of course, improves the earnings per share ratio which ordinarily increases the stock price.

Its easy to understand why CEO's subscribe to the dumbest idea in the world if one looks at how they are compensated.  CEO's in F500 corporations receive 82% of their compensation in the form of stock options.  When they cash in their options and sell their stocks they are taxed at the capital gains rate which is much lower than the tax on wage income.  That is also one of the reasons why they reward shareholders dividends.  They are also taxed at a much lower rate than wage income.  Between 2006 and 2015 public firms spent $3.9 trillion on stock buybacks. That was 54% of their net income.  They also spent 37% of their net income on dividend payouts.

CEO's also have to protect themselves from corporate raiders who target firms that are not rewarding shareholders at the level that the corporate raiders would like.  The goal of the raiders is to divest assets and extract value for themselves.  It is not surprising that firms listed on the stock exchange invest only 3.7% of their assets.  Privately held firms invest 6.8% of their assets.  Large corporations are also job destroyers instead of job creators as they like to claim.  Corporations in business longer than five years are net destroyers of jobs. 

Large corporations have also found ways to avoid taxes by retaining their profits earned overseas instead of investing them in the US.  Congress has proposed that we allow corporations to return the $2 trillion of profits held overseas by eliminating or cutting the tax on profits held overseas.  Those in Congress who favor this plan should look at what executives at Cisco said that they would do with the returned profits.  They would use the funds to finance stock buybacks, make dividend payouts and engage in merger and acquisition activity.

There are a small number of firms that reject the MSV goal in favor of the notion that the main purpose of firm is to attract and retain customers.  Amazon is one of the good examples of this practice.  It has grown very fast and its stock price has grown with its rapid growth. Amazon invests in technologies and services that create new business opportunities and delight customers.  The two charts below do a nice job of contrasting the short term MSV strategy with the goal of customer addition and expansion.

Even Fox Newa Rejects Trump's Alternative Fact Universe

This is a link to to two videos of Fox News' Chris Wallace interview with The Donald's chief of staff.  They were arguing over the size inauguration crowd and Wallace put up a photo that proved his point.  That was not enough evidence for Trump's defender.  They also argued about another Trump's awful speech at the CIA where he blamed the media for intelligence leaks.  There were no leaks to the media.  The intelligence report was made public after it was presented to Congress.  That does not matter to Trump's team.  They insist upon an alternative fact universe that even Fox News does not want to live in.

Trump's War Against The Media Will Hurt Him

The White House press meetings are a form of access journalism.  The press secretary gets a chance to inform the White House press corp about important issues.  The press also gets a chance to raise questions.  Sean Spicer was sent on a mission by his boss to tell the press corp that they did not accurately report the size of the crowd at his inauguration.  He took no questions; he was there to scold them.  That will be costly to The Donald.  The White House press corp will not play that game.  Instead of digging deeper into issues presented by the press secretary at these meetings they will find other ways to get the information they need to inform the public.  Donald Trump will have to depend upon Fox News, and other sources of yellow journalism, to tell Trump's base what he wants them to believe.  That will not silence the media.  They are much stronger than media sources in nations without a strong history of democracy and freedom of the press.  Trump will not be able to silence them as autocrats in other countries have done.  He would have been better off if he had decided to use White House briefings to shape the news rather than to dictate it.

Sunday, January 22, 2017

Trump's Alternative Fact Universe

Trump's ego is boundless.  He can't tolerate information that threatens his inflated self image.  Following the inauguration he has been highly critical of the media for reporting that the attendance at his inauguration was less than Obama's in 2009.  The media showed photos of both events and it was obvious that there were more people at Obama's inauguration.  That did no convince Trump.  He sent his Press Secretary to press briefing in which he told them that they had misreported the attendance.  He did not take any questions.  This was his first meeting with the press and it set a new precedent.  His purpose was to scold them following the president's order.  That is not how press conferences have typically worked.  His press secretary is going to have tough job.  The press will not report information that is not supported by evidence.

That brings us to another of Trump's emissaries to the media.  She was interviewed on national TV and held the party line on the attendance reports.  She defended her position by arguing that facts are not facts.  She claims that there are "alternative facts" that the Trump team uses to defend obvious falsehoods.  This makes life tough for reporters.  They can't rely on facts when alternative facts can be manufactured by a person who rejects facts that he does not like.  Moreover, Trump uses these occasions to convince his base that they cannot not trust the media.  He will provide them with alternative facts so that they do not have to question his majesty. 

Democracy depends upon the press to evaluate and verify the information they are provided by government officials.  Consequently, politicians are often critical of well trained journalists who try to do a good job.  Trump has taken that conflict to a new level.  There is no such things as facts and the media who challenge him with facts cannot be trusted.  Its not surprising that Trump prefers using Twitter which does not check his statements for fact, and that he prefers fake news sources that provide his base with the information that they want to hear.  Fox News and talk radio have historically played that role but the social media have made it easier for people to choose the information that they want to obtain and reject other sources.  This does not auger well for democracy. 

Saturday, January 21, 2017

Women's March In Washington Will Outnumber Attendees For Inauguration

Trump's inauguration was not as well attended as recent presidential inaugurations.  The Women's March on Washington is estimated to be around 500,000.  The plan was for 200,000 marchers but the issue of Women's Rights is much broader than expected; it will dwarf the attendance at the inauguration. However, it is not primarily an Anti-Trump rally; it is a demonstration of solidarity among women who will continue to support their rights under an administration that is led by a president who has demonstrated that his interest in women is rather restricted to his access to certain aspects of their anatomy.  He made an enemy out of a smart and energized group of women.  The war has only started.

The American Debt Trap

Most of the comments in the media about a "debt trap" refer to the rise in government debt.  The source of these comments is typically from Republicans who want to cut government spending on programs that do not benefit them or their rich donors.  This article takes a different slant. It describes the problem facing many millennial"s.  They are the most indebted generation in our history. Student loans to finance a college education is one of their biggest debt burdens.  Some of that debt is the result of cuts in state spending on state universities.  Students are forced to take out loans so that state governments can reduce state taxes.  In any case, the debt trap reduces the options of indebted millennial"s in many ways.  It is not good for them or for the economy.  Options are valuable but they are a hidden cost of the debt trap. 

Larry Summers Is Critical Of Business Elite At Davos

The global elite that party together annually at Davos are often the target of criticism by populists who are not happy with globalization.  Larry Summers has made his annual visit to Davos and he reports that the global elite deserve criticism for ignoring the populist movement that has swept Europe and has found a home in the US under The Donald.  He quotes Edmund Burke, who is widely admired in conservative circles, to make his point. 
"the only thing necessary for the triumph of evil is for good men to do nothing.” 

          Summers is not taking issues on Trump's economic policies.  He is concerned that the business           leaders at Davos are indifferent to the political transformation that is underway.  They should 
          be in the vanguard to moderate the political tide.  Instead they seem to be accommodating to it.
          Apparently, Trump's promise to cut corporate taxes and business regulation is the good news.  
          They don't really believe that Trump will take any steps that limit their global opportunities. 
          They expect that Trump will give his base meaningless tidbits like his action with Currier that
          get tweeted to his fans in the Rust Belt but he is really on their side.  After all, he is part of their
          business class.

Friday, January 20, 2017

The Inauguration Of Captain Chaos

David Brooks, the ultimate conservative Republican, has been struggling with the nomination and the election of Donald Trump for some time.  The political party to which he has been aligned for his entire career turned over its command to a man who was the right kind of person for many disaffected citizens, but not the kind of person we need to run a very complex government in a very difficult world.  He describes the misfit between Trump the person and the demands of the presidency on the day of his inauguration.  He points to some of the efforts by Trump's associates and some in Congress to contain the chaos that could be unleashed if Captain Chaos is not contained.  He disagrees with Trump critics on the left who are concerned about fascism and argues that Trump provides us with an opportunity to come together in order to contain a president who is totally unprepared by personality,  temperament and ability to operate the system that he will lead.

I hope that Brooks is correct and that Democrat and Republican leaders will be able to contain Captain Chaos.  I have not been reassured by the choices he has made for his cabinet and other key government positions.  Some of them disagree with Trump on critical policy issues and many of them seem to have been selected to dismantle the department that they have been chosen to lead. Nothing but chaos can result from this situation.  We will need to be very lucky in the next four years.

Thursday, January 19, 2017

Presidential Politics And The Use Of Debt To Finance Spending

Donald Trump and his Republican colleagues plan to cut taxes and make large investments in infrastructure.  That raises a question of how the government can pay for the tax cuts and infrastructure investment without increasing the federal budget deficit.  The answer is to this question is simple.  They will have to borrow the money to pay for tax cuts and infrastructure investments.  That raises a second question.  Should we believe that Republican's are really fiscal conservatives who care about the size of the federal budget deficit?  This article, by a Republican economist, tells us that Ronald Reagan and George Bush did exactly what Trump and the Republican Congress plan to do.  The result will be be the same.  Federal budget deficits increased dramatically under both Reagan and Bush and they will also rise under Trump's plan.  Democrats become fiscal conservatives when a Republican is in the White House and Republican's assume the role of fiscal conservatives during Democratic administrations.  Neither political party wants the other political party to use fiscal policy to their advantage.  Republicans are generally willing to accept budget deficits to reward their large donors with tax cuts.  Democrats are generally willing to run budget deficits in order to provide public welfare programs to their base.

The bottom line is fiscal conservatism is a function presidential politics.  On the other hand, we should be concerned about the likely consequences of fiscal policy under Donald Trump.  His policies will require the US treasury to increase its borrowing to pay for his tax cuts and infrastructure investment.  At present the government can borrow money short term at very low interest rates.  Therefore,  Trump's policies will be relatively easy to manage by the Treasury.  The real danger in Trump's policies, and the use of short term debt to fund his deficits,  is that interest rates are likely to increase in the near term.  Interest payments as percent of federal spending are likely to increase substantially.  That will make it more difficult to finance federal spending without increasing taxes or cutting back on popular programs.

Wednesday, January 18, 2017

We Have A New Nation With Right Wing Billionaires Taking Care Of The Poor

This article is ostensibly about the nomination hearing for Trump's nominee to become the Secretary Of Education in the United States of America.  Her only qualification for the job is that she wants to dismantle the system of public education in the United States of America.  She has been given the opportunity to get that job by donating large sums of money to Republican politicians and by her advocacy for a fundamental Republican idea; that is, the idea that private enterprise can do everything better than government. The conservative economist Milton Friedman championed that idea during the cold war when the US and the USSR were battling for the hearts and minds of much of the world.  He argued that almost everything that was being done by governments was less efficient than the market system.  He wrote a book called "Fee To Choose" which championed the idea of consumer sovereignty.  He applied that idea to the education system by introducing the idea of a voucher system in which public funds would be provided to "consumers" who were free to choose schools provided by private entities.  The voucher system, and the related idea of charter schools operated by private entities, have been tried out in various parts of the country since the idea was introduced by Milton Friedman.  The results have been mixed.  Charter schools were a disaster in Michigan where they were promoted by Trump's candidate for the US Secretary of Education.  She managed to get the Republican state legislature to take actions which would not hold the Charter schools accountable for academic performance.

The questions and answers in this hearing tell us a lot about the future of public education in the United States of Trump.  Public school performance, like the performance of Charter schools, are mixed.  We have excellent public schools in many school districts and also poor performing public schools, particularly in inner city school districts.  That led to one line of defense for Trump's nominee by Republican senators.  The public schools are failing to educate blacks and other poor families in the inner cities.  Therefore, we need alternatives that will give poor families the choice to send their children to Charter schools or voucher supported alternative schools.  Freedom of choice is the market based solution for educating the poor.  That idea would be sound if families were free to choose from a variety of private high performing schools.  In Detroit the Charter schools have not provided a better alternative than the public schools but "free to choose" is the selling point for the failing Charter schools.  It does not matter whether they provide a better education.  Those who oppose the privatization of the public education are enemies of the poor and Republicans are the champions for the poor.

One Republican senator argued that one of the best education programs ever developed by our government was the GI bill of rights which provided veterans returning from World War ll with vouchers that they could use to attend college.  That was a very successful government program that benefited them and our society.  The difference between that program and the promotion of vouchers in our public schools are obvious to almost anyone but Republican senators.  The veterans were able to choose any college for which they qualified.  There were a large number of high quality colleges and universities with excellent reputations for them to attend.  Poor families in our inner cities do not have the "free choice" to select from a large number of high performing alternatives to the public schools in their districts.  Many of the alternative schools that have been successful have been able to select the most promising applicants just like our successful colleges.  In some states high performing suburban schools have accepted a limited number of inner city students.  Those students have performed well, and they also widened the social experience of the local students in these districts.  The basic problem with the public education system has nothing to do with our ability to operate high performing public schools,

The answers given by Trump's nominee to many of the questions, asked by Senators not under the influence of Milton Friedman, are also revealing.  She has no experience or educational credentials that prepare her for the job that she seeks.  She is like several other Trump nominees in that she he is an opponent of the system that she is supposed to be leading.  Trump's nominee to run the Environment Protection Agency is an attorney who has filed 18 lawsuits against the EPA.  Trump has a mission to weaken government agencies that promote the general welfare and to strengthen government agencies that advance the interests of the social elites who he has pretended to oppose.

Tuesday, January 17, 2017

David Brooks Will No Longer Respond To Trump The Fool

David Brooks has been looking for things to write about now that his Party has been taken over by Donald Trump.  Most of the article is about the crucial role played by fools in cultures that have become too serious and hierarchical.  The fools, job along with carnivals, is to make fun of social conventions.  They were a good way for letting off steam for ordinary people who had tough lives.  He argues that Trump is partly fool and perhaps partly a serious person who is ready to become more presidential.  Trump plays the fool with his Twitter account.  It delights the ordinary people who want to make fun out of serious issues and participate in his carnival.  Brooks has decided not to write about Trump the fool.  He hopes that other journalists will follow his lead.  He will focus his attention on the serious issues that Trump must be hiding from us.  He may not have much to write about.  Trump frequently raises serious issues but does not offer many details about the solutions that he tweets about.

Healthcare is a serious issue.  Trump and the Republican Congress intend to repeal Obamacare which its base has been taught to hate.  Brooks wrote a serious article about the replacement plan being developed in Congress.  He defended the core of the congressional plan which treats healthcare as a typical commodity that will respond well to market forces.  He attacked Kenneth Arrow's argument that healthcare is not like other commodities that respond well to market forces by claiming that it is old fashioned and does not consider the impact of digital media which gives everyone to information that used to be only available to doctors.  We can all be good consumers and the market will become more competitive just like the market for commodities.

Its easy to understand why Brooks has turned his attention to Congress on serious issues.  He believes that Trump will continue to play the fool on healthcare and Congress will produce the replacement for Obamacare. However, he may need to pay more attention to Trump's tweets about healthcare.  There are serious disagreements between Trump and the orthodoxy in Congress which insists that market forces will cure our healthcare problems.

Thursday, January 12, 2017

Why The Economics Profession Is Worried About Trump's Economy

This article describes the sentiment of professional economists at its recent annual meeting.  Conservative and liberal economists expressed real concerns about Trump's attempt to make America great again.  Most of them don't believe that Trump's plan will be good for the economy and some worry that it might be catastrophic.  Their concerns contrast remarkably with those of small business owners and Wall Street traders.  Its not surprising that small business owners are positive about Trump.  Trump has focused his attacks on major corporations and they typically complain about government regulations and the cost of compliance.  They may believe that Trump will drastically reduce government regulations.  Wall Street likes anything that shakes up the economy and stimulates banking activities in response to major change.  They may also believe that Republicans will allow a Republican president to employ fiscal stimulus to the economy that they deny to Democratic presidents. 

I have a deeper concern than those expressed in this article.  Economists are rational, perhaps to a fault.  Economic theories presume rational behavior by households, firms and government.  Donald Trump's ideas are all over the map and they lack internal consistency.  Trump and many of his supporters have little respect in general for science or for the truth.  Trump and his followers place their belief systems beyond the traditional rules that govern the conduct of academic inquiry.  Facts that contradict strongly held belief's are rejected out of hand.  False facts that support a belief are commonly used to incite and engage support for Trump's positions on almost every subject.  Economists are not the only academics who are concerned about Trump's anti-intellectualism and his lack of respect for the normal rules of rational debate. 

Wednesday, January 11, 2017

The Growth Of Partisanship Is Larger Threat To Democraccy Than Fake News

Fake news has become a big problem that is magnified by the use of social media.  This study shows that we have become much more partisan since 1980 and it even affects our decisions on who to marry.  The political party to which we belong has become part of our identity.  Members of the other political party come to be viewed as members of different tribe.  That makes it much more difficult for politicians to collaborate on important issues.  As partisanship grows the opportunity to run our nation democratically declines.  Cooperation with the enemy is equivalent to treason and extremism on many issues grows along with the rise of partisanship.

Tuesday, January 10, 2017

The Real Reason Why Republican's Want To Repeal Obamacare

Mitt Romney passed a healthcare bill in liberal Massachusetts that was inspired by the conservative Heritage Foundation.  It has worked well in Massachusetts and it is very similar to the the Affordable Care Act that was introduced by President Obama.  It was hard to understand why Republican's reacted so strongly against Obamacare.  The answer is very simple.  The Republican's know how we are paying for Obamacare.
Obamacare extended health insurance to more than 20 million people — middle-class, poor and sick people — and paid for it with taxes on the wealthy and corporations. It was the biggest attack on economic inequality since inequality began rising four decades ago.

Steve Bannon's Ideology And Donald Trump

Donald Trump latched onto Steve Bannon during his campaign because Bannon understood the messages that were working for populists in Europe, and Trump learned that they were effective in his rallies.  David Brooks has taken a good look at Bannon's ideology and he understands its origins and its implications.  If Trump is really a disciple of Bannon's ideology, and he can sell it to what remains of the Republican establishment, we will see a significant change in US foreign policy and perhaps a new world order.  David Brooks is betting against that because he does not believe that Trump is motivated by ideas.  He dismisses Trump as a narcissist who is intent upon feeding an insatiable ego, and who has no grand strategy in his immature brain.  He also believes that the Republican Party will resist the efforts of Bannon to change the direction of US foreign policy.  The jury is out.  We will have to wait and see how this plays out.  I have little confidence in a Republican Party that has been given access to presidential power and authority with little competition from Democrats.  I also suspect that Trump is smarter than he may appear when he gives his sermons to his followers.  He tells them what they want to hear.  It may not be what he believes.

Monday, January 9, 2017

Who Will Donald Trump Turn Out To Be?

Brad DeLong compares Trump to Ronald Reagan, Silvio Bersculoni, Arnold Schwarzenegger, and regretfully, even Mussolini.  Each of them had a chaotic set of ideas without a clear idea about how they might work out.  Reagan was full of ideas but those who worked for him were uncertain about how to implement any of the pieces.  A mythology exists about Reagan but the reality is much different.  Nothing good came from Governor Schwarzenegger, Bersculoni or Mussolini.  We can expect the same from Trump.  We just don't know how the puzzle pieces will fit together.  In any case, he is more likely to impair our nation rather than making it great again. 

Why Trump Won't Bring Manufacturing Jobs Back To US

This article describes the affect of automation on the global manufacturing labor market.  The use of robots, especially in developed countries like China, is growing very fast.  Even low wage countries will have an incentive to replace workers with robots in manufacturing.  "Premature Deindustrialization" will likely occur in developing economies.  That will have a big impact on the path towards a higher consuming middle class in developing countries.  Developed economies will find it more difficult to export expensive manufacturing products to developing nations.  Shrinking demand for manufacturing labor means that US manufacturing jobs that were outsourced to low wage countries are not coming back to the US.  The services sector will also be affected by digital technologies.  Self driving vehicles will replace truck drivers and cab drivers and new technologies will make it easier to engage in many activities without the help of high paid professionals.

Donald Trump's attack on globalization helped him to win an election but the outsourcing of manufacturing jobs to low wage countries may be yesterday's problem.  His efforts to jawbone manufacturing firms in the US is primarily a political activity.  It won't bring jobs back that have been lost to robots.  The major problem for developed nations will be to adjust to a world in which less labor is needed to produce much of what we consume.  Perhaps that is why so much effort is taking place in developed nations to capture a larger share of government spending on education, medical services, prison services and military services by for- profit businesses..

Meryl Streep's Speech And The Donald's Response

Meryl Streep accepted an award and gave a speech which was critical of the culture that is inspired by Donald Trump.  Her short speech was a tribute actors who put themselves in the place of others so that they can reveal something, perhaps hidden, about human nature.  It was also about a person whose name was not mentioned but who represents aspects of our society that she despises.  It did not take long for her target to respond with tweets that were critical of Streep.  He told his faithful to dismiss her remarks because she is a liberal from Hollywood who supported Hillary Clinton.  That will probably work for most of his base but he could not resist the opportunity to brag about his coming inauguration party.  It will be loaded with celebrities, and all of the expensive dresses in Washington have been sold out because so many want to participate in his celebration which, of course, will be the greatest inauguration in history.  There is a link to Trump's Twitter storm for those who live by his tweets. 

Saturday, January 7, 2017

US Intelligence Report Concludes That Russian Cyber Attack Was Against Clinton

The combined efforts of the US intelligence community issued their report on the extent of Russian efforts to influence the US election. The report was unequivocal in its conclusion that President Putin ordered the campaign.  Initially the campaign was to discredit the democratic processes in the US.  However, after Donald Trump won the GOP nomination, the campaign focused its attention on discrediting Hillary Clinton who they expected to win the election.

Donald Trump, even after receiving the report from the intelligence agencies, denies that the Russian campaign influenced the results of the election.  The intelligence report avoided any attempt to assess the effectiveness of campaign in the election.  Trump tells his supporters that he won the electoral vote by a landslide and that he lost the popular vote by 2.8 million because of voter fraud.

Hillary Clinton was favored to win the election because polls showed that she would win three states which had voted for a Democrat in the presidential election since 1988.  She lost Wisconsin, Michigan and Pennsylvania by a very small margin of around 100,000 votes out of around 13 million votes in those three states. If 51,000 of those votes went to Clinton she would be our President Elect. In other words, the Russian campaign only had to swing 51,000 votes out of 13 million to change the outcome of the election.  Its hard to imagine that all of the negative information released by Wikileaks did not influence the results of the election.  Donald Trump stated that he loved the information that was being leaked, and asked for more reports of leaks during the campaign.  He clearly knew that they were impacting the campaign.  The media reported the leaks and they had two important effects. Clinton's campaign had to respond to negative information about herself, and it was revealed that the DNC favored Clinton over Bernie Sanders in the primary campaign.  If only a small number of Sanders supporters decided not to vote, or if they voted for third party candidate, that could have determined the outcome of the election in the three states that handed the election to Trump.

The public response to the report will not be good.  Trump supporters are attached to his persona and they reject any negative information about their leader.  On the other hand,  we will have to run the country for the next four years with a tainted president.  Putin will be very happy with this result.

Monday, January 2, 2017

Paul Ryan's Unified Republican Government

Donald Trump won the Republican nomination by running against the Republican "establishment".  Now that the Republican Party controls each branch of government, what will the voters who elected Donald Trump get in return?  The answer is that they will get the establishment Republican agenda that was pushed by the Republican candidates that Donald Trump defeated in the primaries.  Paul Ryan has put the "unified" Republican plan in place and his discussions with Donald Trump have been primarily about developing the timeline for the unified plan.  They have the clarity that is absent from Trump's tweets and campaign speeches and the GOP will use a process that prevents Democrats from thwarting the implementation of the plan.  The major pieces of the plan are described in this article.  The Republican establishment has been enabled by Donald Trump's victory over the Republican establishment in the GOP primaries.  It is Republicanism on steroids.  Trump, of course, will put enough spin on the plan to convince his base that the plan is the result of his greatness.  He will keep his Twitter account active to make a plan for billionaires created by billionaires look like a plan that will benefit his base.