Corrections: 4.1% . . . July 31, 2018July 30, 2018 It seems the White House did not intentionally edit out a key couple of seconds of the Putin-Trump Helsinki news conference, as many understandably assumed (given that those seconds were, unquestionably, missing). At least that’s the view of the Washington Post. Rachel Maddow back-tracked a bit but emphasized that even once alerted, the White House did not correct the transcript. Then, ten days after Helsinki, they did — but not the video. So there’s almost surely no “there” there to the notion of an intentional effort to erase from history what we all saw live, in real time. I, too, stand corrected. And yet can objective observers much fault us for assuming the worst? This is the man who said he had investigators in Hawaii who couldn’t believe what they were finding about Obama’s true country of birth . . . who promised he would “absolutely” release his tax returns if he ran for office . . . who claimed the largest Inaugural crowd on the Mall ever . . . who said his new tax law would cost him a fortune . . . who has made more than 3,000 false or misleading statements since being sworn in, or six-and-a-half a day. Over the weekend, he touted last quarter’s 4.1% GDP growth rate as “amazing” — I mean, my God, only a superman president could produce results like that! Who ever even heard of results like that? Except that, as noted on Morning Joe yesterday (thanks, Steve Rattner), President Obama had two quarters during his first term and another two during his second term when growth was significantly better. If 4.1% is amazing, how about 4.5%, 4.7%, 4.9%, and 5.1%? Bill Clinton, meanwhile, beat Trump’s “amazing” quarter 13 separate times in his two terms. And both Obama and Clinton did this while raising taxes on the best off to get the National Debt back to shrinking relative to GDP, as it had from 1946 all the way up until Ronald Reagan . . . and then the Bushes and now Trump, with full backing of the Republican Party . . . exploded it. (Yes, the Debt grew under Clinton and Obama — it takes a while to turn battleships around. But it shrank relative to GDP under Clinton almost from the get go; and under Obama once he averted the total financial collapse and imminent global depression that he was handed.) As also noted, in these past 18 months under Trump, monthly job growth has averaged 193,000 — less good than the 206,000 average of the preceding 18 months under Obama. Wage growth has also fallen when you compare those two 18 month periods. Better under Obama than Trump. And this 4.1%? Most economists think it’s a blip largely caused by purchases to get ahead of Trump’s grossly ill-advised tariffs. Granted, everybody now has “great healthcare at a tiny fraction of the cost.” It’s hard not to love that. And we can all sleep soundly now that North Korea is no longer a threat. And sure enough, as promised ad nauseam, Mexico has paid for the wall. So you can see why Trump’s popularity among Republicans is — as he noted this past weekend — is the highest in history. (Except that Eisenhower’s and Reagan’s popularity was higher among Republicans at this point in their first terms.) And why a state like Wisconsin — that he proudly notes hadn’t gone Republican since 1952 — chose him in 2016. (The only slight correction to that presidential statement is that Wisconsin went Republican in 1956 and 1960 and 1968 and 1972 and 1980 and 1984.) And on and on and on. Putin is winning. The autocrats are winning. The kleptocrats are winning. Democracy is losing. Decency is losing. Integrity is losing. Everybody needs to volunteer to fix this nightmare. And, if they can, fund the effort as well. The election is in 98 days.
Here’s What Courage Looks Like July 30, 2018July 29, 2018 I never knew Dick Leitsch, a Kentucky boy turned New Yorker, who died last month. But what courage it must have taken to be openly gay back in the Fifties — even in New York — when he first began advocating for equal rights. (A New York Times headline describing his work at the time: “3 DEVIATES INVITE EXCLUSION BY BARS.”) Read his life here. And the wonderful way he handled his death, here. (“If I knew dying was this fun, I would have done it years ago!”) Love is love. Friendship is everything. And guess who else liked MY LIFE ON A DIET? The New York Times! (Here.) Lots of good little press prior to the opening and afterward, but we were worried about the Times, because, well, it’s not exactly Shakespeare. But they seemed as charmed as everyone else. (” There is something spicy going on at the Theater at St. Clement’s. Ms. Taylor mixes reminiscences about her childhood and beginnings as an actress and writer with a lighthearted look at her self-image and quest for love. A veritable depository of old-fashioned zingers … one-liners and well-timed pauses.”) As our tag line says, “You’ll drop 300 calories laughing.” And won’t it be fun to be one of the youngest members of an audience, for a change? But the youngsters I saw it with, 22 and 33, really enjoyed it, too. So don’t be put off by the octogenarians in the crowd — for all you know, they’re each as special, in their own ways, as the octogenarian on stage.
So . . . July 27, 2018July 26, 2018 So fun. “There’s A Genius Street Artist Running Loose In The Streets, And Let’s Hope Nobody Catches Him.” (Thanks, Mel!) Once few jobs are truly “necessary” and a Universal Basic Income scheme is deployed so all can enjoy the fruits of the technology that has rendered them obsolete (and everything is powered “virtually free” by the sun), we should pay talented folks to do this EVERYWHERE! So horrifying. Rachel takes a long time to lay this out, but it comes down to this: We all saw Putin asked in Helsinki whether he wanted Trump to win the Presidency. We all saw him say yes, and explain why. Both the White House and the Kremlin have edited that out of the official transcripts — and the White House has edited it out of the video. So it never happened. Can you define Orwellian? “Orwellian” . . . denotes an attitude and a brutal policy of draconian control by propaganda, surveillance, misinformation, denial of truth, and manipulation of the past, including the “unperson”—a person whose past existence is expunged from the public record and memory, practised by modern repressive governments. Often, this includes the circumstances depicted in his novels, particularly Nineteen Eighty-Four . . . And while we’re at it, can you define sociopath? Have a great weekend. (Oh, and look at this: WheelTug signed a second airline this week. Can you define speculation?)
My Life On A Diet July 26, 2018July 28, 2018 But first: “Mr. Trump likes to call anyone who disagrees with him ‘fake news.'” writes the White House stenographer who quit after five years because she couldn’t stomach working for a liar. “But if he’s really the victim of so much inaccurate reporting, why is he so averse to having the facts recorded and transcribed?” Read her story here. Also: Have you read Elizabeth Holzman’s resignation letter? . . . As an author of the Refugee Act of 1980 . . . I believe the treatment of refugees by you and President Trump violates that law and our treaty obligations to refugees. . . . The Act was adopted against the background of the Holocaust, in which the US took only a tiny handful of refugees from the Nazis [and] also in response to the massive exodus of boat people from Vietnam. There was a time that the US welcomed refugees.We readily accepted and absorbed more than 600,000 refugees from Cuba, 750,000 refugees from Vietnam, and more than 100,000 Jews from the Soviet Union. Considering that history, the thought that the U.S. government is afraid today of 2,000 children and their parents is both laughable and appalling. Under your administration and that of Donald Trump, OHS has been transformed into an agency that is making war on immigrants and refugees. . . . The final straw has been the separation of children from their parents at the Southwest border. This is child kidnapping, plain and simple. Seizing children from their parents in violation of the constitutional rights of both is bad enough (mentally harmful to the children and infinitely painful to both the parents and children), but doing so without creating proper records to enable family reunification shows utter depravity on the part of the government officials involved. Although it is I who am resigning in protest against these policies, it is you who should be tendering your resignation instead. Penultimately: With regard to yesterday’s post one of you writes: “You think you can convince these folks? They know Trump is flawed, but believe he is sent from God to save America.” Seriously. Trump: God’s gift to mankind. But mainly: My Life On A Diet opened last night for a limited run. If you were a fan of The Nanny, or of Marilyn Monroe, or of Perry Como — if you know who Jack Paar was or have ever struggled with your weight — well, this is a lovely little piece of theater. “A sheer delight.” “Dishes out laughs.“ Let’s hear it for 85-year-olds (specifically, Renée Taylor) and 53-year marriages (hers, to Joe Bologna). Full disclosure: if you buy a ticket, I am one step closer to retirement.
Evangelical Politics: Are You A Sheep Or A Goat? July 25, 2018July 24, 2018 Jim Burt writes . . . Let’s assume for a moment that “Christian” teaching and notions of morality track the teachings of Jesus as reported in the gospels. Namely, that the corporal acts of mercy, feeding the hungry, nursing the sick, visiting the imprisoned, clothing the naked, etc., are both sufficient and necessary to enable a person to receive a favorable nod on Judgment Day, while mere belief is insufficient. It’s fair to say that most self-characterized “fundamentalists” and “evangelicals” don’t accept this as the essence of Christianity, adopting various theological gymnastics instead; or else regard it as merely a consequence of true and enthusiastic belief, rather than as the sine qua non of salvation . . . as Matthew tells us Jesus said unequivocally it was: When the Son of Man comes in his glory, and all the angels with him, he will sit on his glorious throne. All the nations will be gathered before him, and he will separate the people one from another as a shepherd separates the sheep from the goats. He will put the sheep on his right and the goats on his left. Then the King will say to those on his right, “Come, you who are blessed by my Father; take your inheritance, the kingdom prepared for you since the creation of the world. For I was hungry and you gave me something to eat, I was thirsty and you gave me something to drink, I was a stranger and you invited me in, I needed clothes and you clothed me, I was sick and you looked after me, I was in prison and you came to visit me.’” Then the righteous will answer him, “Lord, when did we see you hungry and feed you, or thirsty and give you something to drink? When did we see you a stranger and invite you in, or needing clothes and clothe you? When did we see you sick or in prison and go to visit you?” The King will reply, “Truly I tell you, whatever you did for one of the least of these brothers and sisters of mine, you did for me.” Then he will say to those on his left, “Depart from me, you who are cursed, into the eternal fire prepared for the devil and his angels. For I was hungry and you gave me nothing to eat, I was thirsty and you gave me nothing to drink, I was a stranger and you did not invite me in, I needed clothes and you did not clothe me, I was sick and in prison and you did not look after me.” They also will answer, “Lord, when did we see you hungry or thirsty or a stranger or needing clothes or sick or in prison, and did not help you?” He will reply, “Truly I tell you, whatever you did not do for one of the least of these, you did not do for me.” Then they will go away to eternal punishment, but the righteous to eternal life. One wonders, then, why 80% or so of self-characterized “fundamentalists” and “evangelicals” (hereinafter “fundagelicals” for short) embrace as their political leader a sociopath who not only rejects the corporal acts of mercy for his own behavior and for our nation but is a virtual poster boy for lying, cheating, abusing, sexually assaulting, debt-welching, family-destroying, and generally criminal behavior . . . and has a track record of never, ever, doing anything in his life for anyone but himself and, possibly, his immediate family. It has been suggested that this is “tribal behavior.” It has been suggested that his supporters obtain their information about him and public affairs generally in a state of “epistemic closure” in which the only information they receive is tailored to exclude the negative truth and reinforce the positive falsehoods. I suggest, though, that even if one or both these explanations are true, what has provided the necessary foundation for this situation is that the 80% or so of fundagelicals who support Trump have been schooled in sects which reject science, reject logic, reject the application of reason to any of their foundational propositions . . . accepting at face value the claims of their leaders and denying reality. Worse, this group appears to hold the balance of electoral power for Republican officeholders at all levels. Almost a century ago, the ancestors of today’s fundagelicals achieved substantial political power, resulting in Prohibition, the first Red Scare, and other negative developments, but they were shamed back into the shadows and largely withdrew from active involvement in politics after the famous Scopes Monkey Trial and the Depression, the latter of which showed the inadequacy of church-based charity and the efficacy of using government to — as the Preamble to the Constitution suggests — “promote the general welfare”. What will it take this time to break their grip this time? Dunno. A massive Democratic turn-out in November and continued progress in “fair districting” (to combat gerrymandering) would be terrific first steps. WheelTug just signed another airline, flydubai. That makes 24, I think. It remains a speculation, for sure; but don’t sell your Borealis. Our RSPP, suggested in March at $40, got acquired at $45 in the stock of Concho Resources CXO. My smart friend had hoped for a lot more, but likes the combined company anyway, and is holding on. Not least because — while he hopes, with the rest of us, that fossil fuels will eventually fade away — he sees oil prices shooting back up first.
Your Own 1-Square-Foot Indoor Victory Garden July 24, 2018July 24, 2018 I just signed up to grow my own vegetables. “Hey — I love this pitch,” I wrote my microbiome Ph.D. genius pal Matt Wipperman, “but I’m curious to know what you think. Could it possibly be true that lettuce loses 90% of its nutritive value within 24 hours of being picked?” He checked out the pitch and replied: “Very cool idea — I love it! The lettuce assertion is incredibly misleading (aka, false). Sure, some nutrients like Vitamin C are lost after picking (see here). But it is highly misleading to say that 90% is ‘lost’ after 24h of picking. Lettuce that is picked and several days old has TONS of nutrients — fiber! vitamins A, E, and K and minerals like iron and calcium, etc. So why should people grow their own food? They learn about cooking, it makes them think about how their choices impact the environment, and it’s fun. Also, cooking is a good way to prevent yourself from eating junk food, since you’re more aware of what you eat.”
Michelle, Tom Hanks, Lin-Manuel, Janelle Monae . . . July 22, 2018July 22, 2018 . . . made you this little video. Pass it on to everyone you know? Of less interest — except to me — Farnborough’s official 5-minute video recap of last week’s biennial air show. There are something like 1,400 exhibitors at the show, but once the camera takes you past the giant Boeing sign outside the hall, the first exhibit you’ll see inside — albeit briefly — is WheelTug. First of 1,400. “That and 15 cents will get you a ride on the subway,” as we used to say. But take it as a good sign. And back to saving our democracy from Putin for a minute . . . given our stable genius’s affinity for dictators and the book he used to dip into by his bedside . . . here is a piece I missed this past winter that’s cause for hope. By Theda Skocpol: “Middle America Reboots Democracy.” Let’s hope.
Money Stuff July 20, 2018July 19, 2018 But first: Breathtaking: “WATCH: House Dems Chant ‘USA!’ As Republicans Strip Funding From Election Security.” And second: If you attended the biennial Farnborough Airshow this week, here’s what you saw at WheelTug’s double-decker stand. One feature: a cockpit simulator pilots can sit in, driving the adjacent scale-model aircraft. WheelTug now has north of 20 airlines in queue to lease its systems if and when it gains FAA approval. (A pre-certification agreement is in place, making it more likely a matter of when.) Some of you have asked about this competition — a giant high-tech tow truck. The short answer: with WheelTug, the truck in effect fits inside the nose wheel. A more elegant solution — and with no burden on the airport to manage another vehicle every time an aircraft taxis from the gate. And this competition. The short answer: better . . . but the pilot still has to hook up to one, and de-hook from one . . . and would he be able to perform “the twist,” turning 90 degrees to park parallel for boarding and deplaning from both front AND rear doors? I don’t know, but it doesn’t look that way. I find it encouraging that people are actively seeking solutions to the gate-taxi problem. My hope? Most will conclude WheelTug is the best. And now: Matt Levine writes about “money stuff” for Bloomberg here. Or you could subscribe here. I liked this recent post: Gifts. What do you get if you buy a share of Snap Inc. stock? A conventional simple answer is that you own a small fraction—roughly 1/ 1,258,171,112—of the company, but that is obviously imprecise. You can’t walk into their offices and take 1/1,258,171,112 of their pens. You can’t walk into their offices at all, unless they invite you. You don’t seem to “own” the company in any normal sense of that term. A more sophisticated answer would talk about the bundle of rights attaching to stock, but … what rights? You can’t vote to elect the directors and officers who actually run Snap: Snap’s public shares are non-voting, and the voting power is actually controlled by the company’s founders. (My Bloomberg Opinion colleague Shira Ovide points out that Snap won’t even bother holding an in-person annual meeting with its shareholders.) You are entitled to your 1/1,258,171,112 share of any dividends that Snap pays, but Snap has no obligation to pay any dividends, and it never has, and it has said that it does “not anticipate paying any cash dividends in the foreseeable future.” If Snap is liquidated then you get your 1/1,258,171,112 share of whatever money is left over after paying off its debt, but don’t count on that paying your kids’ college tuition. If Snap is sold to another company then, yes, you probably do get your 1/1,258,171,112 share of the proceeds, so that is something; that is a real ownership-like right. But remember that Snap is controlled by its founders, who have already cashed out hundreds of millions of dollars, so there is no particular reason to expect Snap to be acquired in any shareholder’s lifetime, and no way for the shareholders to force a sale. There are other, more faux-sophisticated answers. You might point out that you own a share in the company that grows in value as the company does, and that right now you can sell that share on the stock exchange for $13.31. But that evades rather than answering the question: What does the person who buys the share from you expect to get from it? The value of a stock in the market is supposed to be equal to the present value of its future cash flows, and there’s nothing about the stock itself that promises you any cash flows. Or you might say that Snap’s directors and officers have a fiduciary duty to you to maximize the profits of the company and the value of your shares, but even if that were true—it’s pretty debatable—it continues to avoid the question. If Snap made massive consistent profits for decades, it would still never have to give any money back to shareholders, and the shareholders would have no way to force it to. “I own a 1/1,258,171,112 share of a massive pile of cash,” you could say, but you could never spend it. This is all standard dorm-room financial capitalism I guess but here is a fun paper from Amy and David Westbrook about “ Snapchat’s Gift: Equity Culture in High-Tech Firms.” They argue that, under conventional theories, there is no reason for Snap shareholders to expect anything: This article explores the familiar rationales for equity investing, including stock appreciation and dividends, and the logical shortcomings of those rationales in these circumstances. Adopting Henry Manne’s “two systems” of corporate affairs, law and economics, we show that corporate law fails to ensure that corporations return business profits to shareholders. A similar analysis of the market for corporate control, concludes (with Manne) that the market for corporate control depends upon shareholder voting. So why do they invest? Here’s the Westbrooks’ answer: In expecting a return on investment even in the absence of legal or market mechanisms to secure such return, shareholders are not irrational. Instead, investors rely on cultural understandings of appropriate reciprocity. Marcel Mauss’ path-breaking essay, The Gift, helps to explain the equity culture in which shareholders invest in Snap and other high-technology firms, and in which such firms operate. It is an anthropological approach to corporate governance: Just as in traditional societies, chieftains give each other gifts that create obligations of reciprocity without any formal legal contracts or any explicit notion of exchange, so Snap’s managers have received a gift from its shareholders and thus have a cultural obligation to reward those shareholders’ generosity. Even if the Snap shareholders lack a legal right to compel certain behavior on the part of the Snap managers, they have taken the always risky step of investment, and have thereby been connected to the management. The shareholders are committed, and in some moral sense owed good faith management, and so it may yet be rational, morally if not legally, for the shareholders to expect something in return for their investment. Perhaps contra the suspicion of management at the center of corporation law since at least Berle and Means, there is no self-evident reason to believe that Snap’s management will not do the right thing, at least more or less. As Mauss explains, “[t]he unreciprocated gift still makes the person who has accepted it inferior, particularly when it has been accepted with no thought of returning it.” … To the extent that the founders are in a particular “tribal group,” they may act in the best interests of their companies and their shareholders regardless of whether such behavior is “required” by legal doctrines like shareholder wealth maximization or by pressures from the market for corporate control. I have no particular problem with any of this. I am constantly going around saying that the financial industry is a Maussian gift economy, and I agree that traditional norms are as important as legal requirements in explaining how people act in corporate settings. But I don’t actually think that’s what’s going on here. My analogy would be to the rise of paper currency and the demise of the gold standard. A stylized history: Once upon a time, people thought gold was intrinsically valuable, so they used it as money. Eventually they realized that carrying around pieces of paper that said “exchangeable for one gold” was more convenient than carrying around the actual gold, particularly if there were sufficiently robust legal mechanisms to make sure that the paper was actually exchangeable for the gold. And then the pieces of paper—and even more abstract instruments, like electronic ledgers listing how many pieces of paper each person owned—became just incredibly, incredibly convenient, a centerpiece of an economic life that was vastly richer and more efficient than the old economy where you had to cart around gold ingots. And then one day, after many years of this, the government said “you know what, these pieces of paper aren’t exchangeable for gold anymore.” And everyone just sort of shrugged and said, it’s fine, we like the paper, it’s not like we were exchanging it for gold much anyway, that was a nice idea but it’s not really central to how the system actually operates. And now the pieces of paper work because they work, not because they reference some other thing. Similarly, people like common stock of public companies. Like, it’s a nice thing. You can trade it, and put it into indexes, or keep it out of indexes, and structure derivatives on it, and decompose it into factors, and read and write quarterly stories about the company’s earnings, and use the stock to express a thesis on those earnings or the macroeconomy or the social-media era generally. You can build models of the value of the company—based on discounted cash flows or comparable-company multiples or user-based metrics—and then divide that value by 1,258,171,112 to get the expected price of a share of stock, and if the actual price is higher or lower then you have a trading opportunity. You can build vast edifices of financial capitalism out of tradable shares of stock in corporations. And sure it says on page 1 of the textbook that the share of stock represents a claim on the future cash flows of the corporation, and sure that fact is in some sense the foundation on which the whole thing rests. But the whole thing is good, and people and business models and industries rely on it, and the notion of treating shares of stock as part-ownership in a corporation is so useful that it doesn’t particularly matter if it’s true. The shares of stock have a particular kind of value because everyone treats them as having that particular kind of value, and everyone treats them that way because that is a collectively useful way to live. It turns out in practice that if you chip away at the foundation, the edifice is so artfully constructed that it will keep on standing in midair. Incidentally this mostly explains initial coin offerings too. Have a great weekend.
Juulers Against Juul; Jonesing for Obama July 19, 2018July 18, 2018 And now there’s an e-cigarette crisis. Three million adolescents addicted to nicotine. Listen to these teenagers. Eight minutes on Nightline. I’m guessing you saw and read President Obama’s speech Tuesday, shortly after he delivered it in South Africa. If not, here it is. Dignity, decency, humility, and hope.
I Do Solemnly Swear . . . July 18, 2018July 17, 2018 We are a deeply stupid country, writes Dana Milbank in the Washington Post. Just ask our “very stable genius” president. Laugh through the tears of our national emergency. Writes George W. Bush speechwriter David Frum in the Atlantic: . . . The reasons for Trump’s striking behavior—whether he was bribed or blackmailed or something else—remain to be ascertained. That he has publicly refused to defend his country’s independent electoral process—and did so jointly with the foreign dictator who perverted that process—is video-recorded fact. And it’s a fact that has to be seen in the larger context of his actions in office: denouncing the European Union as a “foe,” threatening to break up nato, wrecking the U.S.-led world trading system, intervening in both U.K. and German politics in support of extremist and pro-Russian forces, and continually refusing to act to protect the integrity of U.S. voting systems—it all adds up to a political indictment, whether or not it quite qualifies as a criminal one. . . . Yep. We all watched. It’s time for Republican patriots to fulfill their oath of office.