Peter, Paul & Putin February 28, 2017February 27, 2017 Paul, of Peter, Paul & Mary, sings sweetly about impeachment. Here. Tom Friedman, of the New York Times, writes compellingly about The Five Trump Administrations. . . . It is hard to avert your gaze from a president who will say anything about anything. It’s so unusual, like a flying elephant or a horse that can talk, that you can’t help but stare. But it’s such a waste of energy. I wonder if the Chinese are spending their days this way. I suspect they’ve added another high-speed rail line just since Trump’s election. . . . My pal David Pepper used to know Putin, back in their St. Petersburg days (Putin now heads Russia; David, the Ohio Democratic Party) and published a novel this past July — The People’s House — that uncannily depicts Russian hacking of an American election over a huge oil treasure. Five bucks for the e-book, two bucks on Audible. The Wall Street Journal called it “a candidate for the sleeper political thriller of the year .” Enjoy.
Hidden Figures and 18 February 26, 2017 I’m writing this before the Oscars. La-La Land is nice enough, but if Hidden Figures doesn’t win Best Picture, I hope you’ll see it anyway, because it surely was. And speaking of our long, bumpy — but ultimately magnificent — march toward equality, here is the story of a remarkable week on the Tonight Show Starring Johnny Carson when it was guest starring Harry Belafonte instead. Wow. Finally, please join me in welcoming a terrific new DNC Chair, former Labor Secretary Tom Perez — whose passion is matched only by his intelligence, effectiveness, and compassion — and a terrific new DNC Treasurer, Bill Derrough (pronounced DAR-row), who we are fortunate has signed on for this 18-year gig. (Turns out, DNC Treasurer carries an 18-year term.) The son of a mom who spoke no English when she arrived from Central America and a decorated war veteran dad who was 35 years a union carpenter . . . the product of our public school system . . . Bill has made his fortune helping hundreds of troubled companies restructure, as when he worked with unions to help save thousands of jobs and tens of thousands of pensions, while returning creditors’ 100 cents on the dollar, in the American Airlines reorganization. (My own level of financial expertise, when I took on the treasurer’s role, was in advising financially troubled individuals to cut up their credit cards.) Now that I won’t still be asking you for money. (Click here to make real the “dollar a year” nature of the job. Give $18, if you’re a normal person; $180 if you’re a little bit affluent and determined to help launch a 2018 blue tide; $1,800 if you’re the white sheep in the Koch brothers’ family. I’ll see it the minute you do, if I’m on-line, to jump through the screen and say thanks.)
Paul Krugman On Economic Arrogance February 22, 2017 But first . . . It may not be too late to find a town hall at which to express your views. Click here and enter your zip code. And also . . . Borealis shareholders may recall my writing — here and, mainly, here — about IATA’s first “e-taxi” conference two years ago. IATA is the International Air Transport Association. E-taxi is “electric taxi” — where planes won’t have to wait for tugs to back out of their gates, and can park parallel to the gate instead of nose-in, for boarding and deplaning from BOTH front and rear doors. So I was heartened to see that IATA’s second e-taxi conference has been scheduled for Singapore May 23-24. In the intervening two years, as noted here from time to time, WheelTug’s primary competitor, Honeywell/Safran, has suspended its e-taxi effort, and the FAA has signed a pre-certification agreement with WheelTug that could lead to full FAA approval and “entry into service” in a couple of years (but may not, or may take longer). So this is a lottery ticket I would be loath to cash in any time soon . . . even though, as with even the best lottery tickets, there is a real chance of total loss. But mainly . . . Paul Krugman writing in the New York Times (subscribe!) on “economic arrogance” — According to press reports, the Trump administration is basing its budget projections on the assumption that the U.S. economy will grow very rapidly over the next decade . . . I guess this was only to be expected from a man who keeps insisting that crime, which is actually near record lows, is at a record high, that millions of illegal ballots were responsible for his popular vote loss, and so on: In Trumpworld, numbers are what you want them to be, and anything else is fake news. But the truth is that unwarranted arrogance about economics isn’t Trump-specific. On the contrary, it’s the modern Republican norm. And the question is why. Before I get there, a word about why extreme growth optimism is unwarranted. The Trump team is apparently projecting growth at between 3 and 3.5 percent for a decade. This wouldn’t be unprecedented: the U.S. economy grew at a 3.4 percent rate during the Reagan years, 3.7 percent under Bill Clinton. But a repeat performance is unlikely. For one thing, in the Reagan years baby boomers were still entering the work force. Now they’re on their way out, and the rise in the working-age population has slowed to a crawl. This demographic shift alone should, other things being equal, subtract around a percentage point from U.S. growth. Furthermore, both Reagan and Clinton inherited depressed economies, with unemployment well over 7 percent. This meant that there was a lot of economic slack, allowing rapid growth as the unemployed went back to work. Today, by contrast, unemployment is under 5 percent, and other indicators suggest an economy close to full employment. This leaves much less scope for rapid growth. The only way we could have a growth miracle now would be a huge takeoff in productivity — output per worker-hour. This could, of course, happen . . . But it’s hardly something one should assume for a baseline projection. And it’s certainly not something one should count on as a result of conservative economic policies. Which brings me to the strange arrogance of the economic right. As I said, belief that tax cuts and deregulation will reliably produce awesome growth isn’t unique to the Trump-Putin administration. We heard the same thing from Jeb Bush (who?); we hear it from congressional Republicans like Paul Ryan. The question is why. After all, there is nothing — nothing at all — in the historical record to justify this arrogance. Yes, Reagan presided over pretty fast growth. But Bill Clinton, who raised taxes on the rich, amid confident predictions from the right that this would cause an economic disaster, presided over even faster growth. President Obama presided over much more rapid private-sector job growth than George W. Bush, even if you leave out the 2008 collapse. Furthermore, two Obama policies that the right totally hated – the 2013 hike in tax rates on the rich, and the 2014 implementation of the Affordable Care Act – produced no slowdown at all in job creation. Meanwhile, the growing polarization of American politics has given us what amount to economic policy experiments at the state level. Kansas, dominated by conservative true believers, implemented sharp tax cuts with the promise that these cuts would jump-start rapid growth; they didn’t, and caused a budget crisis instead. Last week Kansas legislators threw in the towel and passed a big tax hike. At the same time Kansas was turning hard right, California’s newly dominant Democratic majority raised taxes. Conservatives declared it “economic suicide” — but the state is in fact doing fine. The evidence, then, is totally at odds with claims that tax-cutting and deregulation are economic wonder drugs. So why does a whole political party continue to insist that they are the answer to all problems? It would be nice to pretend that we’re still having a serious, honest discussion here, but we aren’t. At this point we have to get real and talk about whose interests are being served. Never mind whether slashing taxes on billionaires while giving scammers and polluters the freedom to scam and pollute is good for the economy as a whole; it’s clearly good for billionaires, scammers, and polluters. Campaign finance being what it is, this creates a clear incentive for politicians to keep espousing a failed doctrine, for think tanks to keep inventing new excuses for that doctrine, and more. And on such matters Donald Trump is really no worse than the rest of his party. Unfortunately, he’s also no better. Off to Atlanta for the DNC elections. If you missed who’s running, and whom I think you should support, click here.
The Next DNC Chair February 20, 2017February 23, 2017 But first . . . watch what Fox News is saying about our president. Fox! It’s barely a minute. Watch! And now . . . a few words on the election of DNC officers to be held in Atlanta Saturday . There are nine, all elected to four-year terms. By far the most important is the chair. (The other eight get voted on in this order: Treasurer, Secretary, Finance Chair, Vice Chair for Voter Participation and Civic Engagement, and three generic vice chairs. The final vice chair spot automatically goes to the president of the Association of State Democratic Chairs, who will be elected separately by his or her fellow state party chairs.) We have a whole slew of really excellent candidates. That’s how I see it: not that there’s one right choice and all the others are bad. That’s not how Henry Kujawa sees it. He writes: I would like to strongly urge you to vote for SAM RONAN for DNC Chair. I’ve been listening to interviews with him, and it is very clear to me, beyond any shadow of a doubt, that HE is the best possible hope for the future of the DNC. He is EXACTLY what the party desperately needs, if it is to continue to survive AT ALL as a viable political entity. It’s hard to watch Sam and not be excited by his passion. Here’s his story — a terrific 27-year-old who has lots to offer, whether or not he wins. I wrote Henry back to ask whether he’s listened to our other candidates as well, because it’s hard for me to imagine doing that and coming away certain that any one of them is “beyond any shadow of doubt” the best — let alone the only good — choice. What about Pete Buttigieg (watch!), the 35-year-old mayor of South Bend, Rhodes Scholar, Afghanistan war vet (BOOT-edge-edge — say it four times fast and it begins to flow), endorsed by five past DNC chairs including Howard Dean? Or the other openly gay candidate, New Hampshire state party chair Ray Buckley (watch!), who’s guided his state to a terrific record of wins, four times elected President of all the state party chairs by his colleagues? He’s not young, but boy is he passionate and boy does he ever know his stuff. Except that Ray has just thrown his support to Keith Ellison, the choice of Bernie Sanders, Chuck Schumer, Elizabeth Warren, MoveOn.org, and multiple union leaders. He, too, knows about grassroots organizing and winning elections, having taken his congressional district from Minnesota’s lowest turn-out to its highest. Watch! He will give up his seat in Congress if elected chair. And what about Tom Perez, who put himself through Brown on the back of a garbage truck, earned joint graduate degrees at Harvard, worked with Ted Kennedy and the Justice Department to fight for the downtrodden, and, in his years just ended running the 17,000-employee Labor Department, was one of the Obama Administration’s very most effective Cabinet secretaries (just ask Joe Biden!), fighting alongside Elizabeth Warren and Bernie Sanders, among others, to advance the rights of workers. Or South Carolina state party chair Jaime Harrison? (Watch!) Wait – he’s just endorsed Tom Perez. Or my old pal Jehmu Green? (Watch!) Or Sally Boynton Brown? (Watch!) Or election-protection Peter Peckarsky, an MIT grad whose senior thesis Ted Kennedy once placed in the Congressional Record? (Watch!) Or Robert Vinson Brannum? (Watch!) It’s likely to come down to Perez, Ellison or Buttigieg — and I would be thrilled to work with any one of them. Admirable for their passion but not helpful for saving the world, in my view, are ultimatums like this one from Michael C.: Dear DNC Establishment Party, I was a lifetime Democrat until this past election cycle and witness the horrible destruction of a party that I supported and put my blood, sweat, and tears into, win or lose. 2016 however, was the last straw with the DNC, crushing the Progressive mantle. As a result, I and hundreds of thousands #DemExited. In fact, I convinced a great many myself to: never vote for another Democrat again. leave the Democratic Party unless the DNC re-organizes with a Progressive mantle encourage friends and family to leave the Democratic Party unless the DNC and Congressional leaders change never come back to the Democratic Party. and to never donate to the DCCC, the Party, or a Democratic Party candidate ever again. For Democrats to win in 2020 they MUST either reform the Party or I/WE will push for an aggressive #DemExit until the “Corporate/Elitist Establishment” decide to make the necessary leadership and party CHANGES. You can CHANGE with the times or you can continue turning a blind eye and being the PROBLEM. You MUST CHOOSE either truly supporting progressive philosophies or end up destroying the Democratic Party by remaining the “Party of WALL STREET”! Respectfully, Michael C. Oregon I replied: Hey, Michael — What were the principal differences you saw between the Bernie policy positions and Hillary’s, and with what parts of the Democratic platform did/do you disagree? I ask to try to better understand why you think the Democrats are insufficiently progressive and why your energy would go into tearing it down rather than building it up. Same questions on all the folks currently running for DNC chair (and the other officer positions). It strikes me that whoever wins February 25 will be quite wonderfully progressive and light years better than the Republican alternative. No? Thanks for taking the time to offer your perspective. Andy Or this from Lisa P, in Virginia, who voted for Jill Stein. She is also supporting Sam Ronan, but would accept Keith Ellison. . . . I am NOT OKAY WITH ANY OF THE OTHER CANDIDATES FOR DNC CHAIR, and should one of them prevail I would consider myself more firmly estranged from the Democrats and their future candidates. The level of mistrust the DNC and the Clintons have earned is quite high, and it’s time for the party elders and insiders such as yourself to take the necessary steps to repair that trust, starting with voting for one of the above progressive candidates this coming weekend. . . . Sincerely, Lisa P. I replied: Thanks, Lisa. Unless you were absolutely certain Virginia would go for Hillary, it strikes me as awfully reckless to have voted for Stein. We got Trump because of passionate, idealistic people who said the heck with the Supreme Court for the next 30 years, if it’s not Bernie, I just don’t care. I’ll stay home. Or vote for Stein. Or Johnson. Or even for Trump, “to send a message.” And now you’re saying it about Sam or Keith (both of whom ARE great, you’re right about that). Those idealists who voted for Nader gave us Bush and the war in Iraq and the Scalia Court that made it easier for Trump to win . . . and a good bit else. (Pushed mankind past the point of no return on climate change?) I get the appeal of adamant idealism, but I’ve always thought the true idealist does what’s necessary to move the world toward her ideals. Nader voters gave us Bush, who moved the world exactly backward. Idealists who refused to vote for Hillary (though she was strongly endorsed by Bernie and they shared virtually all the same goals and platform positions) gave us Trump/Pence/Bannon and all that will entail. I would have said the same of anyone who failed to vote for Bernie, had he won the nomination. That said, I appreciate your input and, of course, strongly share your goals. We all do. Andy And lots more, but you get the gist. People are upset. They should be upset. I’m upset! (As Trump’s sister is alleged to have said when a friend asked why she didn’t live in Trump Tower: “Have you met my brother?”) Even Fox News is becoming upset. I refer you again to the minute at the top of this post. But the solution is not to attack each other or expect the one perfect savior. It’s contributing our effort and resources — and enthusiasm — toward a massive 2018 turn-out that turns state legislative chambers and Congress blue. That won’t solve all the world’s problems. But it’s the necessary first step. And we have some terrific people running to lead the charge.
Attend A Town Hall? -- Also: SPRT February 19, 2017February 17, 2017 CNN: How liberals are preparing for Congressional Recess. Enter your zip code and join them! You don’t even have to be all that liberal — just horrified. (That’s what I am: just horrified.) Since I suggested it last month, SPRT reported a quarterly loss, driving its shares even a bit lower. I bought more at $2.16 Friday. The company burning through $1.1 million of its cash and short-term investments last quarter, bringing them down to $53.4 million — $2.85 a share. That compares with a burn of $2.7 million in the same quarter a year ago. The new CEO‘s distinctions include having graduated summa cum laude from Wharton and, perhaps even better, not being the old CEO. If he is able to fully stabilize the company — which actually earned $10 million once upon a time — we could find ourselves having paid $2.16 for: $2.85 in cash and short-term securities (or perhaps $2.50 after a few more quarterly losses until the ship is righted) a business with $60 million in sales and motivated new management (if it ever commanded 1X current sales, that would be $3 more) $120 million in net operating losses applicable against future profits In the company’s words: Support.com, Inc. (NASDAQ:SPRT) is the leading provider of cloud-based software and services to deliver next-generation technical support. Support.com helps leading brands in software, electronics, communications, retail, Internet of Things (IoT) and other connected technology industries deepen their customer relationships. Customers want technology that works the way it’s intended. By using Support.com software and services, companies can deliver a fantastic customer experience, leading to happier customers, greater brand loyalty and growing revenues. There are no sure things on Wall Street — to say the least — so, as always: only with money you can truly afford to lose. Now go join a peaceful protest.
Arthur’s 60th Reunion February 17, 2017February 16, 2017 So I have this terrific, tall, lean, wry pal — Arthur Lambert — one of whose several portraits by David Hockney you see here. Recently, he wrote to say he’d been badgered into writing something for his college reunion. My class is doing a 60th anniversary yearbook, although for the life of me I can’t imagine why. All my class is over 80 and practically dead. Isn’t it a little late for such a compendium? In any event, the Yearbook people have been unrelenting in torturing me for this thing. I had no idea what to write. They said we could include political views, grandchildren, but we must note classmates whom we particularly admire. Other than Robert Caro, my class has Carl Icahn, but do I admire him? Anyway, here is the result of my efforts. I thought you might like it. I did — and got his permission to share it with you. I thought you might enjoy meeting him. A family snapshot in two minutes. ARTHUR LAMBERT, CLASS OF 1957 My father, Princeton Class of 1922, practiced law in Washington, D.C. He was an attorney, his father (class of 1874) was an attorney, and his father as well. He hoped that either I or my brother (class of 1949) would land in the firm, but we escaped. My father had contacts with various Agency directors and used to play golf with Stansfield Turner, Director of the CIA. Once to arrange a golf date, my father had his secretary phone Turner’s office but was put on hold for so long she forgot she had initiated the call. She picked up the receiver lying on her desk to check who was on the phone and heard “Central Intelligence.” With conviction, she replied, “You must have the wrong number. There’s no intelligence here. This is a lawyer’s office.” While I didn’t completely agree with this assessment, I tried law school for two years but was then offered the opportunity to work as a foreign correspondent for a 2nd class newspaper. I thought it was too good a chance to pass up and a great excuse to depart from law school. After that it was the Army*, and then four years of working in the UK in a financial firm. Upon return a high school classmate and I took over a failing savings and loan in Maryland and recapitalized it. The first few years, growth was slow and I left the bank in the hands of my partner while l moved to California to run two answering services with live operators. We had all the stars. The girls knew more about Joan Crawford’s activities than Christina did even though listening was not permitted. However, this was a business soon to be eliminated by technology. While in California I met the English painter, David Hockney, and the only fame I have managed is to be drawn or painted by him numerous times. That is a little concerning as he always points out, “I don’t flatter.” After four years I returned to the bank and stayed until we were bought out for a small profit in the 1980’s after almost being destroyed by the rise in rates during that time and the resulting partial collapse of the savings and loan industry. As I was living in NYC, I stayed at my parents when I was in Maryland working at the bank. In the 1980’s my father was having problems with his sight which was affecting his driving. The only way he could renew his driver’s license was by getting an optometrist to certify his vision. To achieve this he had found some optometrist in MS willing to affirm his vision without an examination. While he drove very slowly he would often bump into the rear of other cars when they halted at a stop sign. For this he kept a checkbook in his glove compartment and would write the driver a $500 check. When the accountant asked what all these $500 checks were he wouldn’t say. My friends were always after me to find out his route. Another time he remarked that he was amazed how many people seemed to know him, as, when he was driving, people would constantly honk and wave at him. I pointed out this was because he drove in the middle lane over the double yellow line so no one could get by him. Everything changed when he got his cataracts removed, however. I asked him if he were driving more comfortably. He assured me it was much better. He said, “Now, I can finally see what I am running into.” My father was devoted to Princeton. He and my Mother were obsessed with books and my Mother had a large library. As a child I was often ill so I was at home and accessed her library from a young age. However, all her books were about famous women in history, Elizabeth the Great, Catherine of Russia, Madame Curie, Anne Morrow Lindbergh. It wasn’t until I was about eleven that I discovered that men had also done things. I think this childhood experience and the years at Princeton stimulated a life long interest in learning. I often have the desire to be back studying and discussing – so many things, how would Nixon have handled the Bay of Pigs or the Cuban missile crisis? My speculations are endless even though I realize in this case there are no answers. Works such as those by classmate Robert Caro make life even more interesting. I like the saying attributed to various people including Plato and Ghandi which directs, “Live life as if you are going to die tomorrow. Learn as if you are going to live forever.” Phyllis Diller said she didn’t know who else would miss her, but she knew she would miss herself when she died. I will probably miss myself but I’ll also miss Robert Caro. I’m waiting for his next volume. Have a great weekend! *As for that, Arthur tells me, “I had a strange experience when I showed up for active duty at the American base in Frankfurt. When I entered headquarters I noticed a very cute boy scrubbing the floor before I went off to the duty clerk for assignment. The duty clerk turned out to have an obvious interest in me so I got cushy assignments. The kid scrubbing the floor had been caught by the MP’s a few days before [doing something untoward] and this was his punishment. No expulsion then. Remember my service was in the late 1950’s, long before “don’t ask.” Practically the whole headquarters staff was gay and every night we exited to go to a gay dance bar in Karlsruhe. The only guy left in the barracks always wanted to know how come everyone was so busy every night and he was just sitting around. At the club it was an eye opener for me to see American military officers dancing with each other. I really had had little experience in the whole scene by this point so I was transfixed. It reminds me of James Lord, My Queer War. He was busier than me as I never did anything at that point but look.”
Meet Hass February 16, 2017February 16, 2017 He is the only Libyan refugee we allowed in last year. (Libya is one of Trump’s seven.) His story brings to life the current vetting process that some consider insufficiently extreme. Let me know what you think — and any questions you might have for him. (Here’s a good one: “Did you literally see friends of yours beheaded? Really?”) Also, let me know if you have connections to a medical school that might give him credit for some of his course work. He was one exam away from graduating. If you want to help him repay his airfare to America (the US gives refugees six months to do that), and perhaps help a bit with other expenses of starting a new life, here’s how. But truthfully, he’s one of the lucky ones: he’s here.
Have You Done Your Brain Exercises Today? February 15, 2017 I keep coming back to BrainHq partly because I want to get rich enough to be able to quit writing this column and retire* . . . . . . and partly because if I don’t quit writing it, I don’t want to lose your readership to dementia — the chances of your becoming afflicted with which 10 years from now are apparently reduced 48% with just 14 hours of exercise (so perhaps 90% with 14 hours a year). TIME just named BrainHQ to its list of 2016 scientific discoveries. Tom Brady, as you know, swears by it. And old folks will have fewer car crashes if they use it (according to at least one insurance company study). You can watch a four-minute summary of it here on “The Today Show.” It’s free to try. Get to work! Meanwhile, is this piece in The Atlantic by a former George W. Bush speechwriter all hokum? Or could there be something to it? What do you think? *I own a sliver of BrainHq.
Lightening Up On Stocks February 14, 2017February 13, 2017 Long-time readers of this column know I have entrusted an ever-growing portion of my retirement account to Chris Brown’s small Aristides Fund, because he’s smarter than I am (which is annoying) and far more disciplined when it comes to investing (which is why it’s the portion of my retirement account that’s been ever-growing). I thought you might find his February 4 letter, in which he’s become increasingly cautious about the market, interesting. Between longs and shorts, he is now only 23% long. He writes: Dear Partners, I feel oddly disconnected with the general confidence reflected in the broad market these days. . . . When the fire alarm goes off in your office building, what do you do? Most people tend to look at the other people around them, to see what they are doing. If everyone else just goes back to work, it is likely you will also just go back to work. If people start to leave, you will probably leave. It’s like in college where if a couple of folks stand outside of a closed classroom door, the other folks who come behind them will assume it is locked, and wait for someone to unlock it. I’m the odd bird who can’t resist just trying to twist the knob anyway, even if I am the 14th person to arrive. It’s no secret that I’m not a fan of President Donald Trump. Because he is the President of the United States I want him to succeed, from a policy perspective. I’d actually be very happy to see him reelected in 2020 if it was because of successful policy and not because we were engaged in a major war or because people come to be brainwashed by a propaganda campaign. I am trying my best not to let my personal opinion of the President influence my view of the U.S. macroeconomy, but it is hard. . . . Since Trump’s election, other than one brief trade on election night, we hadn’t really tilted our total net exposure one way or the other because of him. But it seems like it might be time for that to change, and on Thursday, we tweaked our net exposure down from 26% to 23%, via a short in the Russell 2000 Index ETF. In the first two weeks of the Trump presidency, instead of getting the best parts of Trump, and the best parts of Bannon, and the best parts of the Republican leadership, instead of there being some sort of thoughtfulness and synergy, where meaningful conversation cancels out most of the bad ideas or the rash moves, and sensible policy prevails, what has actually emerged has been nearly the opposite. Take Steve Bannon, the President’s chief adviser, for example. Bannon believes that the force for good in the world is an enlightened form of capitalism tightly combined with Judeo-Christian beliefs. This good is under assault from state-sponsored “crony” capitalism, from a kind of libertarian capitalism (a Marxist caricature of capitalism, in which people are treated as commodities), from atheists, secularists, from elites and globalists, and most notably, from the new Caliphate, which we are we are in the early phases of a global war with. Islam, in Bannon’s public comments, is not ever similarly placed as Judaism and Christianity as a major world monotheistic religion, but is only discussed as an ideology, for example “the ideology of expansionist Islam.” Now, let’s compare Steve Bannon’s stated belief system with the things Republicans did in the last week: ban travelers and U.S. permanent residents from seven predominantly Muslim nations (Bannon approves), eliminate the fiduciary rule for financial advisors (crony capitalism), allow coal companies to dump pollution in streams (crony capitalism), allow oil and natural gas companies to make undisclosed payments to foreign governments (crony capitalism), make it easier for mentally ill people to buy guns (libertarian capitalism). Literally, only the worst, most objectionable parts of Steve Bannon’s agenda are actually getting done. I am somewhat at a loss as to how Americans are currently demonstrably more afraid of terror attacks than they are of gun violence (this has been shown in reputable polling), in spite of gun violence being greater than 50-fold more of an actual threat. I am also at a loss as to how American fear crime from immigrants, who have been shown to commit less crime than non-immigrants. And I am likewise at a loss that people are scared of men and women who literally risked their lives to translate for and to help our soldiers in Iraq, so scared that they don’t want to let them into our country, even after two years of vetting. It doesn’t make rational sense. But it does make sense in the realm of confirmation bias, if one is constantly exposed to anecdote upon anecdote that paints a picture, an untrue picture, that we live each day under an existential threat of radical Islamic terror, and that we “don’t know anything” about these people who want to come live here. The administration is constantly fomenting this fear, both with ridiculousness such as Kellyanne Conway’s “Bowling Green massacre,” and with choices about what facts they do and not consider worthy of attention. For example, Trump quickly and repeatedly condemned the “radical Islamic terrorist” who threatened the Louvre with a machete, while saying nothing about the slaughter of six Muslims by a Christian white extremist in Quebec this week. Trump’s recent immigration order even included a provision to publish a weekly comprehensive list of crimes committed by non-citizens. These actions, aside leading us towards an unwinnable perpetual war against 1.6 billion people, strike at the very heart of the American economy. The number one correlate of long-term economic growth is educational attainment. In the United States, we have experienced unprecedented prosperity in spite of a fairly middling K-12 educational system, because we have the best university system in the world, attract many of the world’s top students to our colleges and universities, and keep many of those graduates employed here, in many job-creating enterprises. We also have immigrant-visa programs that attract high- skilled labor from other countries, helping to power our most successful businesses, and in turn creating more jobs. Sergei Brin, Andy Grove, Jerry Yang, Elon Musk, Do Won Chang, Vinod Dham, and other immigrants have created tens of millions of American jobs. The number of students, professors, physicians, and engineers affected by the recent ban of travelers from seven predominantly Muslim countries is relatively small, but it speaks to a growing sense that immigrants of all stripes, or at least non-white/non-Judeo-Christian immigrants are less welcome here. It has been reported that certain agency heads advised President Trump against including green card holders (U.S. permanent residents) in the recent ban, but Steve Bannon prevailed over their objections. This is the same Bannon who believes there are too many Asian and South Asian executives in Silicon Valley, and the same Bannon that, when Trump expressed in a radio interview that we should try to keep the best and brightest students from around the world as citizens after they have studied here, did not agree. The result of Trump’s presidency thus far is that the rest of the world is starting to view us as unwelcoming. My father-in-law, a typical Right-leaning, family values, middle-class Hindu engineer, in Hyderabad, India, doesn’t usually talk politics when he calls his daughter, but this week he couldn’t resist commenting on the “crazy” stuff Trump was doing and hoping that Americans speak out against it. This cannot be good for foreign student enrollment in U.S. universities. We don’t know what the Federal budget is going to look like yet, but there are strong rumors that the President’s advisers are using a blueprint from the Heritage Foundation which would largely gut non-defense spending by nearly 40% in several large categories. If that happens, it’s highly likely that there will be large cuts to the funding of scientific grants which now sustain America’s global lead in basic science research. If, as has been rumored, visa programs change such that Apple, Google, Facebook, Microsoft, First Solar, and other advanced technology companies will no longer be able to hire sufficient talent in the United States, these companies will be forced to hire incrementally more staff in other locations, or to outsource work to companies outside of our borders. Direct investment in U.S. has benefited tremendously from the fact that we have such strong institutions, world-leading intellectual capital, and a reasonable and welcoming immigration policy. Capital goes where it is treated best. Tax rates are certainly a huge part of that equation as well, but it’s important to remember that effective U.S. corporate income taxes are already in-line with other large developed nations around the world. There’s only so much room to lower them, and lowering them in a revenue neutral fashion (while closing loopholes) is only a very small net positive catalyst for the economy. Most people are only going to want to put their capital here if they feel welcome here. So, long story short, I’m quite wary of the political influence on the U.S. economy right now, and stock market prices (and recent asset flows) suggest there is a pretty good amount of optimism already baked into valuations. We are likely to proceed with caution “until our country’s representatives can figure out what the hell is going on,” to quote our President. Kidding, but not kidding. I am not sold on a bearish view; anything as complicated as running the country is a learning process, and hopefully our strong institutions, including the judiciary and business leaders, can help the President put things on a more constructive path going forward. Narcissistic Personality Disorder, though, is a really big challenge for a guy who has to look out for 319 million people who are not himself. Also, you should probably know that we spend almost all of our time working on bottoms up, one company at a time, investment ideas, not top down macroeconomic thinking, especially now, when it is earnings season. But, this letter was more fun to write than one that describes the selection process behind a bunch of new small positions. I hope it was more fun to read. Thank you, as always, for your partnership. Have a kind February. Christopher M. Brown I’d also like to put in a word for red cabbage. It’s been a while since I offered a Cooking Like A Guy™ recipe, so here it is. Buy a head of red cabbage. It’s cheap. And heavy! But you’re a guy! Just carrying it home along with the beer will work biceps. Now put it in the refrigerator. It will stay good for weeks. Now, when you’re hungry, just peel off a leaf and eat it. Kinda crunchy. Or use those leaves instead of bread — if you’re on some kind of low-carb cave man diet — to make sandwiches. (That’s right: with the chicken salad wrapped in a cabbage leaf.) I’m not a fan of red meat, as you know — bad for the planet, bad for your arteries, no fun for the cows — but I’m a fan of red cabbage. Oh! And don’t forget to call your Valentine.
How Russia Is Winning February 13, 2017 Bad enough that Trump has needlessly handed China a major victory, getting nothing in return.* Or that with all his talk of banning Muslims he has advanced ISIS’s effort to ignite a war of civilizations. The person who’s really happy about Trump’s election is Putin, who dismantled Russia’s fragile democracy and is now hard at work on ours. All without firing a shot. (Except for killing the occasional journalist or political opponent.) From Foreign Affairs: “Russia’s Art of War.” Trump, writes Mark Sumner for Daily Kos — perhaps recognizing this — “has successfully buried the story that worries him most.” Don’t let him. Click the links and spread the word. *Instead of pulling out of Obama’s TransPacific Partnership, Hillary would have won a few face-saving improvements and then signed it.