The Top .0001%

There’s a lot of whining going on the major news outlets about former Theranos CEO Elizabeth Holmes to the effect that the only female equivalent of Steve Jobs is a fraud, trying to draw some sort of gender solidarity message from it.

I question whether anybody can draw meaningful conclusions about a group (billionaires) with so few members other than that they’re really, really rich. Don’t look at them as members of some other group whether it’s women, white folk, blondes, people who attended Stanford, or any other group. They’re sui generis, a group unto themselves.

Maybe it’s true as Honoré de Balzac alleged that every great fortune begins with a crime. I don’t know. I’ve never known any billionaires that well.


Nevertheless She Persisted

In her weekly column at the Wall Street Journal Peggy Noonan succinctly summarizes Hillary Clinton’s persistent error and the quandary in which Democrats find themselves:

“If you look at the map of the United States,” she said, “there’s all that red in the middle where Trump won. I win the coasts. . . . But what the map doesn’t show you is that I won the places that represent two-thirds of America’s gross domestic product. So I won the places that are optimistic, diverse, dynamic, moving forward.” Mr. Trump’s campaign “was looking backwards. You know, you didn’t like black people getting rights, you don’t like women getting jobs, you don’t wanna see that Indian-American succeeding more than you are.”

Why did 52% of white women support Mr. Trump? Because the Democratic Party doesn’t do well with white men and married white women. “Part of that is an identification with the Republican Party, and a sort of ongoing pressure to vote the way that your husband, your boss, your son, whoever, believes you should.” James Comey announced that he had reopened the investigation of her State Department emails, and “white women who were going to vote for me, and frankly standing up to the men in their lives and the men in their workplaces, were being told, ‘She’s going to jail. You don’t want to vote for her.’ ”

So, to recap: Trump supporters were racist, narrow and ignorant, and Trump women are not tough and modern but fearful, cowering and easily led. They live in a big mass of red in the middle (like an ugly wound, or an inflammation!) while we have the coasts—better real estate. And better people.

The point of her column is that Ms. Clinton and others who hold her views are clinging bitterly to a “Deliverance” view of America beyond the urban megalopolises. I think she’s got the wrong movie. More like The Hills Have Eyes. Or maybe Wrong Turn.

However, let me provide an alternative explanation to the one proposed by Ms. Clinton to why big cities are prospering. They’re being highly subsidized and the calculations of government subsidy generally don’t capture the actual value of those subsidies. The interstate highway system subsidizes major cities. Intellectual property law subsidizes big cities. Banking laws subsidize big cities. Uncontrolled imports of hard goods while controlling the provision of services subsidizes cities. Concentrating federal government offices in Washington, DC and its environs subsidizes the East Coast megalopolis.

Then there are the direct subsidies. In the wake of 9/11 New York City received between $20 billion and $50 billion in direct subsidies from government at various levels. Then there are the huge infusions of cash the big, mostly New York-located banks received during the financial crisis. That New York is prospering from all of these subsidies is not surprising what would be surprising is if it didn’t.

Not all major cities are flourishing. Chicago is not. Philadelphia is not. Baltimore is not. St. Louis is not. That effectively refutes the urban/rural dichotomy being proposed. What should be more closely examined is subsidized vs. unsubsidized. In today’s economy what is subsidized flourishes while what is not struggles.


The Illinois Governor’s Race Primary

The Illinois Democratic primary race for governor is coming down to the finish line. On Tuesday there was a final debate among the candidates. The Chicago Tribune reported:

Leading Democratic governor candidate J.B. Pritzker was called a “liar” and a “fraud” by two rivals as the billionaire businessman’s ties to secret offshore shell companies became the focus of the final forum of the campaign Wednesday night.

For his part, Pritzker avoided getting into specifics of his financial holdings, and claimed the offshore companies were investment instruments of family trusts established long ago and that charity was the beneficiary, not himself.

“I have no control over those trusts, the entities that are created. Just like all trusts, they make investments, so they were created by the people who control those trusts. And remember, those trusts are focused on charitable giving,” said Pritzker, who has declined to make available his complete tax returns or any returns from the trusts.

Rival Daniel Biss called Pritzker’s explanation an “unbelievable mess of word salad” in contending the Hyatt Hotel fortune heir was trying to “avoid taxes” through the offshore companies “and spent the last year lying about it.”

“This is just exposing the fraud that is the J.B. campaign for governor,” said Biss, a state senator from Evanston.

And another contender, Kenilworth developer Chris Kennedy, said voters should consider Pritzker’s words as if they were conducting a job interview for governor.

“I’ve hired a lot of people and I can tell you just one piece of advice to the voters of this state: You should never hire someone who lies to you during a job interview. If they’ll lie to you to get the job, they’ll lie to you to keep the job. And you do not want a liar as the governor of the state of Illinois,” said Kennedy, a member of the iconic Massachusetts political family.

According to the reports I’ve heard, The debate largely consisted of a shouting match with Kennedy and Biss complaining about Pritzker but with nothing much to say about the issues. Pritzker showed more gravitas (no pun intended) and talked about the issues. All three candidates are running on a platform of tax hikes and increased spending.

The Sun-Times remarked:

Each painted the picture of himself he wanted voters to see:

The true “progressive.” The one with values. And the one who can defeat Republican Gov. Bruce Rauner come November.

During Wednesday night’s final televised debate before next week’s primary, billionaire entrepreneur J.B. Pritzker tried to look ahead to November while fending off his rivals’ attacks; state Sen. Daniel Biss touted his record in Springfield as proof of his progressive values; and businessman Chris Kennedy defended his statements and policy positions, while vowing to be an honest and untethered candidate.

There were no pleasantries or how-do-you-dos. The three major candidates — excluded were former Ceasefire Director Tio Hardiman, Madison County Schools Supt. Bob Daiber and Burr Ridge doctor Robert Marshall— took rapid-fire shots at each other.

“It seems to me once again you don’t know who Dan Biss really is,” Pritzker said about the senator from Evanston criticizing state House Speaker Mike Madigan — but voting for him as speaker, accepting Madigan’s money, and helping to run a super PAC for him.

Biss called the attack “bananas,” reiterating that he has worked with Democrats and will continue to work with Democrats if elected.

I’m in a quandary about whom to vote for in the primary. I like Biss’s anti-Madigan stance, belied as it is by his vote to re-elected Madigan as Illinois House Speaker but he doesn’t really represent my views; I hate political dynasties; and I think Pritzker is as crooked as a dog’s hind leg. In all likelihood the race in November will be our billionaire vs. their billionaire.


Still Evil After All These Years

In the Wall Street Journal Richard Goldberg and Mark Dubowitz recommend scrapping the Iran nuclear deal to defang North Korea:

Former Obama-administration officials warn that if Mr. Trump abandons their Iran nuclear deal, North Korea will view the U.S. as an untrustworthy partner. The opposite is true. The North Korean dictator wants to talk because the Trump administration’s campaign of maximum economic sanctions pressure is working.

But if the president agrees to a fictional fix to the JCPOA, or if he responds to a stalemate by backing down from the threat to reimpose maximum economic sanctions, North Korea will see Mr. Trump as a paper tiger. Conversely, if North Korea sees that Iran is held to tough nuclear and missile standards, backed by the credible threat of crippling sanctions, Mr. Trump will be better positioned to make it clear to Pyongyang that he means business.

The path to a denuclearized Korean Peninsula thus runs through Tehran. If Mr. Trump fixes the fatal flaws of the Iran deal, or even if he scraps it because the Europeans balk, his high-stakes North Korean gamble may yet succeed. Even if it doesn’t, he’ll have stopped Iran from following North Korea’s path to nuclear weapons and the missiles to deliver them.

While I continue to be skeptical of the Iran nuclear deal, I don’t think it should be scrapped. The costs to us are already sunk costs. They were heavily loaded to the beginning of the deal. The benefits were mostly backloaded. Abandoning it now would be foolhardy.

I seriously doubt that President Trump will wring any concessions from Kim Jong Un. Even deified dictators have political considerations and I believe that either Kim is playing to his or he believes his own advance press and in his supreme power as a negotiator.


How Not to Win

In the Washington Post Philippe Reines offers advice for beating Trump in 2020, assuming he seeks re-election:

  • Go high when you can. But when he goes low, take advantage of the kneeling to knock his block off.
  • Don’t apologize. Ever. Not over money you took from Harvey Weinstein. Not even for attacking the pope. In fact, proactively attack the pope. Your kid is a shoplifter? You’re proud of them for exposing inadequate security.
  • A lot of industries are going to want to hedge their bets. Don’t declare you won’t take money from lobbyists. Take cigarette money. Counterfeit your own.
  • Swing at every pitch. Trump never says, “I’m not dignifying that with an answer.” He has no dignity. He leaves no attack unanswered. I spent 15 years recommending ignoring stupidity. “It has no legs. Don’t give it oxygen. There’s no pickup.” I was wrong.
  • Do it yourself. Every time. On camera. Online. Surrogates are no match.
  • Don’t cede Fox News.
  • Boast. Gloat. About your accomplishments. Your biceps. Your everything. You didn’t co-sponsor; you got it done on your inevitable path to Mount Rushmore.

There are more at the link. I think most of them are terrible advice and one should keep in mind that Mr. Reines was an advisor to Hillary Clinton and Al Gore.

I don’t know whether beating Donald Trump’s re-election in 2020 will be easy, difficult, or impossible. I only have two pieces of advice:

  • Don’t run a septuagenarian (or older).
  • Don’t run against a majority of the American people and an even larger majority of the electorate.

One of the great problems with Mr. Reines’s advice is that it’s predicated on the belief that the situations of Democrats and Republicans, of Trump and whoever might oppose him are symmetrical. They aren’t.


Why the Truth Limps

In her most recent column in the Washington Post Megan McArdle considers the scientific explanation for Jonathan Swift’s wisecrack “Falsehood flies, and the Truth comes limping after it” (frequently attributed in various forms to Sam Clemens):

Do lies really spread faster than truth?

Definitely yes, according to a new paper from Soroush Vosoughi and Deb Roy of MIT’s Media Lab, and Sinan Aral, a professor at the institute’s Sloan School of Management. In fact, these researchers found, “It took the truth about six times as long as falsehood to reach 1,500 people.” You might comfort yourself that lies and the truth must be the proverbial hare and tortoise, with the lies racing out of the starting gate, and the truth eventually catching up, perhaps? Sadly no, at least not on social media: “Falsehood also reached far more people than the truth.”

Why are lies so much more powerful than the truth? The authors suggest “novelty” may be one answer: Fake news stories offer more of it than does real news. And yet, that seems incomplete. There would, after all, be a certain novelty in learning that former president Barack Obama was aces at mumblety-peg. But that sort of rumor seems unlikely to spread as far or as fast as the suggestion that he was a secret Muslim born in Kenya.

The truth is banal; it is quotidien. It is boring—it is Squire Trelawney to falsehood’s Long John Silver. Few remember the former while the latter is indelible.

The simplest explanation is usually the best. There is a reason the prevailing wisdom is the prevailing wisdom.


The Truth About Afghanistan

Obama Administration national security advisor Susan Rice takes to the pages of the New York Times with an op-ed outlining the alternatives for U. S. policy in Afghanistan. After acknowledging that the Obama Administration erred in its “Afghan surge”:

The fact is the Taliban remain strong, controlling or contesting over a third of the country. Their share continues to grow slowly, despite persistent Afghan and American efforts to weaken them. The early Obama-era surge to 100,000 United States troops, plus the infusion of an additional 40,000 troops from NATO nations, did not defeat or even permanently debilitate the Taliban.

during which period most of the U. S. casualties were incurred, she goes on to outline three potential courses of action for the United States:

First, the Trump administration could refocus its objectives, returning to the previous administration’s more limited goal of fighting foreign terrorists and providing training, equipment and advice, but not direct combat support, to help the Afghan government control Kabul and other cities. This would enable a reduction in United States forces, while protecting the American diplomatic presence in Kabul and preventing Afghanistan from re-emerging as a major terrorist safe haven. This approach would probably slow, but not halt, the progress of the Taliban.

Second, the United States could withdraw its forces, on the premise that it cannot “win” in Afghanistan. This would leave Afghanistan and the United States vulnerable to a reinvigorated terrorist presence and, perhaps, the replacement of the American-led presence by Russia, Iran, China or India.

In this scenario, the Kabul government would most likely lose more territory to the Taliban and eventually fall. Arguably, the deaths of more than 2,400 American servicemen and women would have been in vain. This choice conjures haunting images of the United States retreat from Saigon in 1975, and no American president has yet been willing to accept this scenario.

Finally, the United States could acknowledge and resolve that its presence in Afghanistan is essentially permanent — but in doing so, it should understand the cost. The United States will stay at whatever troop level our commanders deem necessary to combat terrorists and prop up the Kabul government. Mr. Trump has, in effect, chosen this option at an annual cost of at least $45 billion and about 15,000 American troops. But this approach will not result in the military defeat of the Taliban.

We have had three consecutive administrations that have lied to the American people about the real prospects for Afghanistan. Afghanistan has never been a viable state and in all likelihood will never become one. It doesn’t have and cannot support a military capable of defending its borders against incursions either by the Taliban or “terrorists”.

The alternatives we have for Afghanistan are actually two. We can leave or we can stay. In either case the president must summon up the moral and political courage to tell the truth about Afghanistan. If we leave, we must be prepared to engage in punitive bombing raids with the potential of killing many, many civilians, raids which might need to be repeated over and over with increasing levels of ferocity. If we stay, we must be prepared for the expenses in lives, money, and time that will entail.

1 comment

D. O. A.

Let me answer Vessela Tcherneva’s question asked at the Heinrich Boll Foundation. “The West” is not just a dead concept. It was dead on arrival, stillborn. The entire idea was a propaganda victory of Great Britain’s used to draw us into World War II in Europe. The weakness of the concept is just more obvious now that there isn’t a Soviet Union with which to contrast it.

Almost immediately following the end of the war, there were already three Wests: the United States, the United Kingdom, and Western Europe. Our interests were not synonymous and sometimes not even congruent. Look at the Suez Canal crisis for an example of that.

How frequently has Germany acted against our interests over the period of the last 30 years? German reunification was a vital interest for Germany but not of the U. S. Germany promoted the collapse of Yugoslavia, again not one of our interests. German companies traded dual-use technology to allow Iraq and Iran to pursue their weapons programs and built China’s factories. Where were the complaints about the decline of “the West” then?

The United States is neither the United Kingdom nor Europe. We are demographically, historically, economically, politically, socially, and culturally distinct from both of them. When they need us it’s “the West”; when they don’t it’s full speed ahead following their own national interests.


There Are More Alternatives

There’s an interesting article by Robin Wright at New Yorker that reflects some of my concerns about the changing roster of foreign policy resources in the Trump Administration. Here’s a telling quote from diplomat Richard Boucher:

“I don’t know if it’s a victory by the über-hawks, but it reflects a mind-set about how Trump sees the world. He relies on generals,” Boucher told me. “He’s looking for people who see every problem as a threat that needs to be dealt with by military force, rather than an issue that can be countered through diplomacy. There’s an over-all failure by this Administration to understand what diplomacy can do for the country—and the world.”

There’s more than one thing I find compelling about the quotation. Not every problem is a threat, not every threat calls for the use of military force, and there are more alternatives than military force, diplomacy, or military force and diplomacy.

Most real-world problems in foreign policies don’t have solutions. They’re “wicked problems” that require a process rather than a solution. Viewing every risk as a problem to be solved narrows the focus too much.

U. S. foreign policy is an emergent phenomenon. The absurd Logan Act notwithstanding, U. S. foreign policy is not the sole domain of the president who chooses between the Department of Defense (military force) and the Department of State (diplomacy). Every large company or NGO CEO and every company or individual who buys from Ali Baba is conducting foreign policy. It’s the sum of all of those that go to make up U. S. foreign policy and, frankly, private companies and individuals have been a lot more influential in shaping our foreign policy than the generals at the DoD or the cookie-pushers at State. The White House, Pentagon, and Foggy Bottom have been doing an enormous amount wrong for a very long time while private companies and individuals are doing a lot right.


The Revolving Door

The major media outlets didn’t like Rex Tillerson because he didn’t have government experience. They don’t like Mike Pompeo because he has the wrong kind of government experience. I doubt they’d like anybody that Trump could appoint.

In some circles there’s rejoicing over Pompeo’s appointment on the grounds that it signals a “tougher” foreign policy. I’m not opposed to a foreign policy that considers U. S. interests more narrowly than U. S. foreign policy has in recent decades. We’ve taken too many courses of action to further the interests of Germany, Israel, or ExxonMobil. Keep in mind that the last set round of WTO trade talks broke down largely because of U. S. insistence on more robust protections for intellectual property than Brazil, India, and China were willing to give.

I’m actually surprised that Tillerson lasted as long as he did. Disagreeing in public with the boss is a sure way to get fired in just about any sitting I’ve ever expereienced.