How The Smartphone And The Printing Press Changed The World

The printing press made monks obsolete.  They no longer had a monopoly on the scriptures.  The bible was published in popular languages and could be read and interpreted by the faithful.  That led to the reformation and years of warfare within the Christian community.  It also enabled scientists, philosophers and others to share their ideas with each other.  The exchange of information and ideas led to the industrial revolution and the formation of democratic governments.  Monarchies were overthrown along with the monks who lost their monopoly.  The US revolution was based upon ideas and principles that were easily shared through the print media.  The French Revolution was also inspired by the spread of ideas by way of the print media. 

This article argues that the smartphone is changing the world much like the advent of the printing press.  It argues that Mitch McConnell, who is the Republican leader of the Senate,  is much like the monks who lost their monopoly over the scriptures.  He possessed the levers of power that are granted to his position by the Republican Party. He could use his powers to allocate resources to senators and political candidates that met with his favor.  Donald Trump is not a Republican.  He won a primary campaign against tradition Republicans who were supported by the Republican Party and its apparatus.  He used the smartphone and the social media to reach his audience without help from the Republican Party.  He was also assisted in the general election by his campaign, and other supporters who effectively used the social media to win the election.  Bernie Sanders also used the social media to wage a battle with Hillary Clinton for the Democratic nomination.  He did much better in the primary campaign than might have been expected by his effective use of the social media.  It would appear that the smartphone, and the social media, may have seriously weakened the monopoly that political parties had before the revolution in the distribution of information.  We may only be in the beginning of this revolution.  It will affect other institutions beyond our political parties.  We are in a new era and we don't know where it will lead us.

The Conservative Coalition That Pushed Trump To Leave Paris Accord

Donald Trump campaigned against the Paris Accord and after being elected his intent is to abolish the Environmental Protection Agency (EPA).  A coalition of "free market activists" led by Myron Ebell who is the CEO of the Competitive Enterprise Institute, wrote a letter to Trump which reminded him to keep his promise about leaving the Paris Accord.  Trump put Ebell in charge of the EPA transition team.  His first step in the plan to eliminate  the EPA was to make substantial cuts in the number of EPA professionals.  Trump placed the Attorney General from Oklahoma, who had sued the EPA numerous times, as the head of the EPA.  He has been carrying out the plan to weaken and eliminate the EPA since assuming his position.

This article describes the coalition of conservative "charities" that receive tax deductible  contributions from energy firms and wealthy individuals.  They promote themselves as educational organizations. It is a group of non-scientists that challenge the findings of the scientific community. They believe that government regulations are the enemy of the free market economy, and they believe that the threat of global warming provides governments with an excuse to regulate economic activity.  They also claim that government regulation of economic activity is responsible for slower economic growth rates and the loss of jobs.  Trump jumped on this bandwagon as part of his promise to stimulate the economy and promote job growth.  Trump, of course, has no interest in the science, or in the longer term consequences of his policies.  The speech that he gave when he announced our departure from the Paris Accord was simply a victory speech to his base which proves that he is winning the battle to drain the swamp. Myron Ebell was an invited guest in Rose Garden where Trump made his victory speech.

Adam Smith On The Value Of Public Education

Way back in 1776 Adam Smith argued that public education provided a valuable asset to the state.  It not only provided workers with knowledge and skills, which were essential for the economy, it was essential for good citizenship.  Educated citizens would be able to properly evaluate the performance of government and they would less influenced by superstitions and misinformation.  This must seem like an obvious point today.  However,  conservatives, particularly in the Southern states, opposed public education for many years.  Even today, the funding of public education, and the preparation of teachers, differs substantially between our states.  Moreover, the level of education that is required to participate fully in a modern state like the US goes well beyond acquiring basic skills.  Smith reserved higher education for those in higher ranks in 1776.  He did not anticipate the modern economy and the development of a democratic society.  The GI Bill Of Rights which enabled returning soldiers to attend college, and the state university system, contributed enormously to the development of the US economy and to responsible participation in a democratic society.  Public funding for higher education today has been reduced while the costs have increased dramatically.  Student debt in the US is a drag on the economy and family formation.  We have also seen how the less educated segment of our nation is vulnerable to the influence of demagogues and forms of propaganda that are facilitated by the social media.  Our system of government and our modern economy is more education dependent than it has ever been to our future.

The Relationship Between Corporate Profits And Investment Is Zero

The details of the tax plan that is being debated by Republicans have not been determined.  However, it is clear that the final plan will call for a cut in the corporate tax rate.  The rationale for cutting the corporate tax rate is that it will increase corporate profits.  It is assumed that corporations will invest the additional profits.  That would be a good idea if there were a positive relationship between corporate profits and the level of investment.  The graph below shows that there is no positive relationship between corporate profits and corporate investments.  The profits can also be used for stock buybacks and to increase dividends payouts.  Stock buybacks increase the stock price by reducing the number of shares outstanding.  CEO's tend to manage the stock price for two reasons. Their performance and their bonuses are strongly influenced by increases in the stock price.  Moreover,  their compensation plans typically pay out less in salary than they do in stock options.  Since they are large holders of stock they also benefit from dividend payouts which are taxed at a much lower rate than their salaries.  A higher stock price also lowers the cost of acquiring another firm which typically involves swapping your stock for the acquired firms stock.  Acquisitions also tend to increase the stock price since the combined firm will have larger revenues and profits as soon as the acquisition is completed.  The return on capital investments is less certain and the profits may not be realized for several years.  The average tenure of a CEO is around seven years.  Capital investments could be more reliably increased by changing the form of CEO compensation than by cutting the corporate tax rate.

The blue line in the graph shows corporate after tax profits as a percent of GDP.  The red line is corporate fixed investment as a percent of GDP.  The relationship between profits and investment is pretty random.  After tax profits were low in 1980s because taxes were high, but investment was higher during this period than they were after the tax rates were lowered.

This does not mean that we should not reform corporate taxes.  The current system creates an incentive for corporations to engage in tax avoidance strategies by shifting their profits to tax havens. It also encourages corporations to borrow money to pay out dividends because interest payments are tax deductible.  That rewards current stockholders while lowering the effective tax rate.

Paul Manafort May Be The Weak Link In The Russian Investigation

Paul Manafort was Trump's campaign manager and he was also present at a meeting set up by Donald Trump Jr. to meet with a lawyer who promised to provide the Trump campaign with damaging information about Hillary Clinton.  Most people don't really know much about Manafort and what the Special Counsel has been uncovering in his investigation of Manafort.  This article tells you all you need to know about Manafort and how he might be used in the Russian investigation.

Getting Ready For Cyberwar In Coming Elections

This article describes some of the methods that were used on the social media to influence the presidential election.  Russian hackers successfully employed bots on Twitter and elsewhere in an effort to influence the presidential election.  They are not going away.  Their primary goal is to disrupt the operation of the US government domestically and globally.  They helped Donald Trump's campaign and Trump has given them more than they could have expected.  He has been a wrecking ball that has badly damaged our system of governance and our relationships with international allies. The are clicking their heels in Russia and Ukraine while they explore new ways to use the social media.  This article describes some of the programs underway to limit the effectiveness of the bot attacks but they will find new ways to respond to our defense system.  The social media will remain vulnerable to cyberwarfare in their current form.  The bots are still at work and they will be out in force in 2018.  They have demonstrated their effectiveness and that will get them as much support as they need to develop their capability.

The Arizona Senate Primary Will Determine The Soul Of The GOP

Some people believe that Trump is a singularity who will disappear while the Republican Party returns to its ideological orthodoxies.  The looming Republican primary that Senator Jeff Flake will face next year may provide the answer.  Jeff Flake is a Bary Goldwater type conservative who wrote a book which argues for a return to Goldwater's ideological roots.  That would usually be a winning strategy in Arizona.  However, the book was critical of Donald Trump and Flake has not been supportive of Trump's policies or his behavior in office.  Predictably, Trump has not been happy with a Republican senator who does not genuflect to his majesty.  Trump has publically criticized Flake and one of his billionaire friends has given $300,000 to a potential opponent's campaign.  November is a long way off and lots of things can happen during that time.  However, if a Bary Goldwater type conservative cannot win a primary in Arizona, while facing criticism from Trump, it may single the end of GOP orthodoxy.  The Republican Party will have been transformed to the Trump Party.