CNBC & the GOP - The Press Loses Debate

The Republicans in Wednesday's debate turned on the moderators, largely refusing to answer any question they found uncomfortable. Their disdain for the media was applauded by an obviously partisan audience who seemed to see the moderators' challenges as proof that "the liberal media" was biased against their candidates.

The clearest evidence that you're operating in a developed nation is the relationship between the media and government. In less developed countries with more oppressive governments, the media is cowed into submission, forced to simply echo government positions or risk bullying, arrest, or even death. In more developed, more open governments, politicians are forced to account for their decisions and actions to a media that keeps the polity informed and holds politicians accountable.

GOP candidates showed no interest in being held accountable for explaining their policies, responsible to explain numbers that didn't add up or policies that clashed with earlier statements or reality.

If they get away with it during campaigning, no one can act surprised when they are elected if they put in place an opaque administration that refuses to answer the questions of a media that would dare to challenge them. If they're this outraged when interviewing for the job of commander in chief, think how imperial they'll act once they've landed the job. and have tanks behind them to fully intimidate those silly reporters.

More about why the Republicans were so intent to discredit the journalists here.

"You Take Your Fancy Facts Off to Some Other Party, Sir. We Don't Need Them Here."

It says volumes about the current state of the Republican Party that Donald Trump's simple statement of fact about George W. Bush being the president on the day of 9-11 would be wildly controversial.

The Exciting Possibility of Joe Biden

There is a very different bar for "would you marry this man?" and "I do!" The list of people we might consider as spouses is much longer than the list of people we actually do marry. Dating often puts an end to exciting possibilities. Going to the polls is different than having someone query you for a poll.

Which brings me to this odd clamor for Joe Biden to run. He's at the stage of candidacy akin to your aunt telling you that you should date this guy because he's really nice. You're open to this possibility but given we're talking about meeting for coffee, it's hard to say "no." Later, before you actually begin shopping for a wedding dress, it'll be harder to say "yes." 

There are real issues in this campaign. By far the biggest and most urgent is 24/7 news agencies' need to run stories that drive ratings and click-throughs. As it turns out, we're less interested in politics than politicians, and it doesn't take us long to go through the entire cycle of intrigue, approval, skepticism, and dismissal with a candidate. The process from intrigue to dismissal has never been quicker and the period of serious campaigning has never been longer. So, there is a lot of demand for shiny new objects in the form of candidates. And while we aren't really sure that we want Joe for president, we are sure that we want him in that candidate parade. "We need you to run, Joe, if only for ratings bump."

Mass Killing - What if it Has Nothing To Do With Mental Health?

If we legalized bombs and every time a crazy person detonated a bomb it killed 200 people, we wouldn't say that we've never had more problems with mental health.

If we legalized atomic bombs and every time a crazy person detonated an atomic bomb it killed a million people in a city, we wouldn't say that we have unprecedented levels of mental health problems.

If "More than half of the mass killers of the last 30 years possessed assault weapons or high- capacity magazines, [that] allow a gun to fire without the need to reload, maximizing damage, increasing body count and minimizing risk to the shooter," we might not have any more health problems than we had half a century ago. 

If mass killers can double the number of victims even if we could reduce the number of mass killers by half, maybe it is time to give some consideration to the technology we include under the umbrella of right to bear arms.

Baby Boom Now Senior Bust

After World War II, procreation resumed. The men who'd been shipped off to Europe and Asia came back and started families. Their children became a bulge in the American population that has re-shaped everything since.

When they hit campuses in the 1960s, they changed education, politics, and pop culture. Frank Sinatra gave way to Crosby Stills, Nash & Young. Segregation gave way to integration. And university enrollment grew at rates never seen before or since.

When they hit the work force, they drove up labor participation rates twice. Once because so many kids were becoming adults, transitioning from student to employee. Second because so many of those kids were enlightened females who were likely to take jobs rather than stay home to bake. The percentage of women working went up as baby boomers came of age.

When they formed families in the 1970s, their demand for housing drove up home prices. People got rich just building homes and speculating on their prices.

And now, when those baby boomers are retiring at a rate of 10,000 a day, workforce participation is dropping again. Baby boomers are the pig on the python, the big bulge in the population that distorts everything each time they enter a new phase of life.

In the graph above, you can see two things. For one, as they came of age, civilian labor rate participation rose and is now falling. Two, as they came of age, they drove up home prices. Home prices took their first real fall only as these baby boomers began to retire and downsize. 

Labor participation rate has fallen in part because of the Great Recession and our slow recovery from it. But the Great Recession hit in part because of falling labor participation rates that are simply a function of aging baby boomers.

The baby boom has become a senior bust. The ripple effect of this generational bulge is not over yet.

Why Corporate Cash Hordes Make PE Ratios Look High

US corporations are holding more cash than ever. In 1980, they held nearly $500 billion. By 2011, they were holding nearly $5 trillion. [St. Louis Fed data and theories here.] In 30 years, the amount went up 10X.

Meanwhile, P/E are also higher than in 1980. Around that time, P/E ratios were about 10. Now, they are around 20.

While cash doesn't account for the whole of the difference in P/E, I think it gets overlooked in the popular press. 

For instance, Microsoft is selling for about $45 a share and its P/E ratio is just over 30. But Microsoft also has $12 of cash per share. If you pay $45 for Microsoft, you're really just paying $33. Your first $12 gets you $12. You pay cash for the stock and immediately get $12 in cash, almost like a rebate. (Okay. You don't actually get the cash. It stays with the corporation. But it is easier to price cash than it is to price future profits.) If you adjust Microsoft's P/E for this, the P/E is closer to 23. That's still high (apparently investors are still excited that Steve Ballmer has been replaced by the new CEO Satya Nadella? They really like Windows 10? Who knows?)

7 Biggest US Companies by Market Cap, PE Adjusted for Cash

Adjusting for cash adjusts PE ratios for companies to varying degrees. Apple's PE drops from 12.76 to 12.05. Berkshire Hathaway's PE ratio drops from 17.89 to 14.32. Johnson & Johnson's from 16.54 to 14.38. Google's 29.54 to 24.89. The companies with higher PE ratios are still companies with more exciting growth potential but PE ratios are generally higher because of all this cash. (PE is the ratio of today's price to the earnings, or profits, of the last 12 months - not the next 12 months. If your profit is expected to double in the next year, your PE ratio should be double that of a company whose profits are expected to remain unchanged.) 

Again, higher PE ratios are not just a function of companies carrying more cash, but adjusting for this phenomenon does lower PE ratios to something closer to historic norms. And it buttresses another claim as well. We live in a time when capital no longer limits. As investors look for places to put their trillions of dollars in capital, they are more likely to use it to purchase stock. Even if stocks seem over-priced by historic standards, what else are they to do with their money? Bonds pay ridiculously low rates. Commodities - even oil and gold - are falling in price. So they put their cash towards the purchase of companies. 

Oddly, the companies they're buying also have more cash than they know what to do with. Maybe its time to start shifting all that capital into entrepreneurial ventures that promise to create new jobs and wealth.

So, What's Really Going on in the Job Market? (Why 2015 Will Still Be the 2nd Best Year of The Century)

Many analysts were disappointed in the jobs report today. The forecast - based on ADP's Wednesday report - was for 200,000. Not only did the jobs report come in 57,000 below that (it hit 143,000), but the two previous months were revised downwards by 59,000. When the dust settled, the economy had nearly 120,000 fewer jobs at 8:30 eastern than people had been assuming at 8:29. That's a lot of jobs to lose in a minute.

So is that reason for concern?

First of all, let's put it in perspective. The longest run of uninterrupted job creation streak before this was exactly four years. The next longest was 46 months. This streak? It is now at 5 years and counting. No streak on record (data goes back to 1939) has ever stayed above zero for this long. And when this streak falters .... it hits 144,000 jobs gained? 60 months in, the next two longest streaks had "faltered" to the tune of losing 1.6 million and 856,000 jobs. At this point they weren't falling below average for the streak. No. They were instead shedding jobs at a rapid rate. If job gains of 144,00 is our equivalent to actual job losses of around a million, let out a loud hallelujah now.

Secondly, the question is whether this is meaningful. In any given month, the American economy destroys and creates more than 2 million jobs. We might talk about a net gain of 144,000 jobs, but obviously there were jobs lost in September as well as gained. The jobs report gives us the difference between these two. In a typical month during this recovery, the economy might create 2.4 million jobs and destroy 2.2 million for a net gain of 200,000. (Which is about the average for this 5 year streak.)  Missing a consensus forecast by 70,000 means that one of those numbers was off by about 3%. It is noise in the signal, static on the radio, normal variation.

Even with the weak numbers, the number of employed Americans is up about 2.2 million from this time last year. Meanwhile, an estimated 10,000 baby boomers are retiring every day. This works out to about 3.6 million in the last year. The job participation rate is dropping now as they leave the job market just as it rose when they entered it in the 1960s. (This point about job participation rate is made here by urban camel.) Baby boomers are like a pig in a python - creating a bulge in the numbers every time they enter a phase of life (whether university enrollment, job creation, home prices, or - now - retirement).

Is there reason to worry? Always. Just as there are always reasons for hope in a recession. The economy could turn within a quarter. Having said that, the reports of the last few months are not cause for alarm. They fall within normal variation for this recovery.

My prediction? The last three months of this year will be so strong that the analysts will change their tune to one of wonder. This year will turn out to be the second best year of this century for job creation. (That means at least 243,000+ jobs a month average, between revisions and new reports.)

Why You Will Never Again Earn Interest Rates Higher Than Zero (or, why capital wants to be free in a post-information, entrepreneurial economy)

In The Fourth Economy, I argue that capital no longer limits. We now have trillions in capital and unsurprisingly, returns to capital have fallen. When the market is flooded with potatoes, the price drops. When the market is flooded with financial capital, the price drops. The price of capital shows up as risk-free interest rates, and those seemingly want to be zero. Or less.

Frances Coppola concludes her post today with this (emphasis added)

 I suspect the post-Depression natural (real) rate is lower than we would like it to be, and it's just taken us best part of a century to understand this. If so, then this is not simply a matter of getting fiscal and structural policies right. It raises serious questions about the ordering of society. After all, a large number of people depend on there being significantly positive real returns on essentially risk-free assets. If significantly positive real returns on risk-free assets are a thing of the past, we owe it to those people to stop pretending we can restore their lost returns through "confidence-boosting fiscal consolidation" and "growth-friendly structural reforms". They simply aren't going to be able to live comfortably in their old age on the interest on risk-free savings.
The truth is we do not know when, or if, positive real returns on risk-free assets will return. If the future path for growth in future is low to zero, then they may never return. If this is the case, then the solution to the "Great Divergence" must be for nominal risk-free rates to drop. Permanently.

Gavyn Davies at the Financial Times questions whether the Fed might be wrong to raise rates this year. If Yellen is wrong about the economic recovery, and triggers a recession, she'll have little room to maneuver. Rates will still be low and she won't have many options then. Better, he suggests, not to risk another recession just yet and to keep rates at zero for a while longer.

Pete Spence reports on Sweden's Riksbank in the Telegraph. They have lowered interest rates to below zero.  Sweden has the third highest savings rate in the developed world and unemployment is still high. They have plenty of capital but low interest rates still don't seem to stimulate investment enough to create jobs.

What does this mean?

During the Industrial Economy from about 1700 to 1900, financial and industrial capital was the limit to progress. There was not enough of it and returns to capital were high. Returns to capital made the West rich.

During the Information Economy from about 1900 to 2000, knowledge workers were the limit to progress. Creating the public school systems to educate them took a lot of capital. So did creating the corporations for them to work in, the R&D labs, the information technology, and the factories able to produce the new products they designed. Between the demands of government and the burgeoning private sector, capital was still in demand and the price of capital - interest rates - was still high.

We seem to be past the limits of capital and knowledge work now. That doesn't mean that capital and knowledge workers are unnecessary.  It means that they no longer lead progress. Entrepreneurship is the limit.

Last century, we popularized knowledge work. In the US in 1900, less than 10% of 14 to 17 year olds were formally enrolled in education. By 2000, less than 10% were not. In a century, we transformed from an industrial economy dependent on child labor to an information economy dependent on adult education. The knowledge workers who were rare - who were often forced to be autodidacts who taught themselves during the 1800s - became the new normal.

Now, we will popularize entrepreneurship. Entrepreneurs who were largely self made in the last century will increasingly become the product of the system, just as knowledge workers are today. Along with a growing number of entrepreneurs, more employees will become more entrepreneurial.

This matters to capital because it gives capital a place for a return. Risk-free returns for government and corporate bonds may remain close to zero. Perhaps even negative. There is an abundance of capital. But all of these entrepreneurial ventures - most of which will fail - will require enormous sums of capital. The entrepreneurial economy will mean higher risks and higher returns for capital but of course those can be mitigated as corporations and investors diversify.

There are so many implications for this new, entrepreneurial economy. But from the perspective of capital, it means that it is going to be harder to get a return on investments without actually taking the risk to finance something new. And it means that we'll continue to have bubbles with startups as long as entrepreneurship remains the limit.

Probably for the next decade or two, capital will chase returns in corporations and IPOs. Already corporations have more money than they know what to do with, sitting on trillions in idle cash. The IPOs that really do have great potential - the products of great entrepreneurship - will command ridiculous equity valuations. It is going to be awhile before we manage to popularize entrepreneurship to the point that entrepreneurship no longer limits. Until then, stocks and IPO prices will be highly volatile, with trillions in capital chasing too few new opportunities.

But there is so much good that follow from shifting into this fourth, entrepreneurial economy. Among other things, it will do for unemployment what economic progress since medieval times has done for starvation. All of these startups will require employees. Just as the 20th century saw a growing proliferation of products, in the first half of this century we will see a growing proliferation of companies.

For now, central banks are flummoxed by capital markets. Given that capital no longer limits, though, it doesn't make a huge difference when they flood the market with more capital. And given that there is an abundance of capital even without central bank intervention, there is little or no reason to raise interest rates. Risk-free interest rates will stay close to zero in the developed world.

All of this means that governments are going to have to come up with a whole new bag of tricks for spurring development. And this time, the effective new tricks won't center around monetary or education policies that make it easier to invest or become a knowledge worker. This time the new tricks will center around the popularization of entrepreneurship.

The Republican Party Has the Same Problem as Islam

According to a 31 August poll from Quinnipiac University,

Only 8% of Republicans approve of the job Obama is doing as president.
Only 6% of Democrats approve of the job House Republicans are doing.

That is not a big difference. And it is hardly surprising given how different are the opinions of Democrats and Republicans about what makes for good policy. But the poll gets more interesting when it comes to each party's view of their own.

86% of Democrats approve of the job Obama is doing.
23% of Republicans approve of the job the House Republicans are doing.

That is a huge, nearly 4 to 1 difference. Most Democrats like their Democratic president. Few Republicans like their Republican House.

Obama's low approval ratings can be attributed to a difference in ideology between the Republican and Democratic Party. The House Republicans' low approval rating, by contrast, has to be attributed to a difference in ideology within the Republican Party.

I'm old. I can remember when Republicans were the more pragmatic party. You could question their policies but they were the first to point out that Democrats' starry-eyed proposals to end all suffering might not be practical or that certain regulations might make it nearly impossible for a small business owner to continue to operate. It's not like that now.

For a certain wing of today's Republican Party, pragmatism is an ugly word.They don't care about practical. Would freezing the debt ceiling and suddenly pulling 10% of GDP out of the economy actually trigger a recession? So what. It has to be done in order to protect their ideals of a smaller government. Would shutting down the government over funding for Planned Parenthood hurt the economy and potentially put people out of work? So what. It has to be done in order to protect the sanctity of life. For them, to give in a little on ideals is like being just a little pregnant. Compromising on ideals is proof that you aren't sincerely idealistic. It's proof that you are ... pragmatic.

Right now, the Republican Party has a fight similar to the one between factions of Muslims in the Middle East. On the one side are pragmatic moderates who are more interested in progress than ideological purity. On the other side are ideologues who are convinced that God is with them and to compromise with moderates shows a lack of faith, corrupts something pure. Whether you hate or love Muslims or Republicans, you better hope that the moderates among each win. Because ideologues prefer war to compromise.

Quinnipiac Poll numbers here:

Why House Leader John Boehner Should Be Replaced by an Algorithm

John Boehner is retiring from his job as Speaker of the House 30 October. The next day, on Halloween, he might just dress up as someone with actual power.

If you look at history or even across the world now, it seems obvious that as countries advance, power is dispersed. Theocracy gives way to religious freedom. Monarchies are replaced by democracies.

What we sometimes miss is that this matter of democratization, this continual dispersal of power to more and more people, doesn't stop. The founding fathers of this country forced aristocrats to share their power. Later generations forced the founding fathers' type to share power even with people who weren't Protestants, weren't land owners, weren't men, and weren't white. Power continues to diffuse.

John Boehner has had to negotiate deals with conservative fundamentalists who have been prepared to wreck the economy in order to limit debt and de-fund Planned Parenthood. It's not enough that he has to negotiate with the White House and Senate, or even House Democrats. He has to negotiate with extremist factions of his own party.

The problem is not John Boehner. Or even these radical conservatives. The problem is the process for negotiating deals in the House and Senate.

A good process is realistic. The model of Speaker of the House negotiating in backrooms assumes that power is still concentrated in an individual or small group. John Boehner doesn't actually have much power. But neither does any other congressperson and any model that assumes they do is bound to be frustrating and flawed.

Liberals and tea party conservatives seem pretty excited about making it to Congress. The problem is, no matter what promises they made to their constituents, a single Congressperson has no power to affect change. Well, not "no power." Just "very little power." To be precise, as one of 435 representatives, the power of an individual Congressperson is 0.2%. That's two-tenth of one percent.

Rather than expect someone to negotiate a deal between rural conservatives and urban liberals, why not just turn vote mediation over to an algorithm? A simple spreadsheet could suffice.

One congressperson wants to increase defense spending by $30 billion. Another wants to cut it by $20 billion. 433 other congresspeople would like to change it by varying amounts. Why not simply let every congress person submit a budget and simply take the average of those? If the average of all congress person's votes is to cut defense spending by 7% or raise it by 13%, that's what gets sent to the Senate for vote there. (A vote that could be done in the same way, only with 100 senators instead of 435 representatives.)

This does more than disperse power. It means that the most conservative rural Kentucky district gets the same representation as the most liberal San Francisco district. Exactly. Regardless of who is in the majority.

Among democracy's many flaws is this: it can easily leave 49.9% of voters feeling like losers. Their guy doesn't get in and they feel like they've lost their voice. Better to let everyone have a voice - and with it the message that with 307,000,000 other Americans, their voice is just one of many. Everyone will expect to be heard and everyone will expect their shout to become a whisper as it is averaged with the views of hundreds of million other Americans.

It probably won't be on October 31, but eventually, John Boehner will be replaced by an algorithm. It's not just because of the evolution of technology. It's because of the evolution of power. It's no longer enough to give it to just 50.1% of the voters. Averaging in everyone's views will disperse power to something closer to 100% of the population. And that is the direction this dispersal of power is going.

State and Local Spending Finally a Boost to - Rather than a Brake on - Economy

We are finally at the point in the recovery when spending at the state and local level can be a boon to the boom.

The Commerce Department revised its final estimate of second quarter GDP growth upwards today. In current dollars, GDP is up 3.9%. In current dollar GDP is up by 6.1%, an increase of $264.4 billion, which brings GDP to $17.9 trillion.

Why is it up? In large part because personal consumption, exports and home construction are up. New home sales are at their highest since before the Great Recession. The revised numbers for July report that new home sales were up 12%, a fairly stunning leap. Sluggish home construction and home sales have been a brake on the economy until recently. The same could be said of government spending.

Federal spending has gone down in each of the last 3 years. During 2012 - 2014, on average, federal spending dropped by 3.3%. State and local spending dropped by nearly 1%  per year on average. Now, in the most recent quarter, federal spending was unchanged and state and local spending rose a remarkable 4.3%. This trajectory could continue, helping to prime local economies.

Most of the states mandate balanced budgets. Taxpayers have this naive notion that this makes for sound policy, arguing that households have to balance their budgets and so should government. This is absurd, of course. What it means in practice is that during a recession, states are a huge drag on the economy and during a boom, their spending is likely to overheat the economy. During a recession, states have to layoff employees, adding to the employment carnage. They might also raise taxes to help fund services like, say, third grade classrooms; this adds to the pressure on households to cut back on spending, further exacerbating the recession. During a recovery, this amplification process is reverses. States spend more because they have more, and that adds to the boom. Even if they "given the money back to taxpayers" through tax cuts, they stimulate the economy because now households have more money to spend. Mandated balance budgets is a farce fueled by confusion. And at least for now, it is going to work in our favor.

Headlines I'd Like to See for Pope's Visit to US

Pope visits White House gift shop: passes on "I Slept in the Lincoln Bedroom" t-shirt and buys Supreme Court Justice souvenir robe instead

Pope visits NY, is kicked out of performance of Book of Mormon for laughing too loudly and shouting, "19 Year Old Proselytizers! Damn that Joseph Smith!"

Pope spokesperson apologizes for pope's behavior next day. Says pope was still confused that something as innocently named as a "hoppy ale" could be so disorienting.

Pope visits Philadelphia and adds his signature to Declaration of Independence. Shouts, "Down w/ the Church of England! Damn that King Henry!"

Pope spokesperson apologizes for pope's behavior next day. Says pope is sleeping off his first Cheese Steak and Hard Cider, still confused that a cider could be so disorienting

Pope weary of Explaining that He Was Not Referring to Doris Day in His Speech to Congress, snaps at reporter

Pope misquotes Yogi Berra in New York: Hell? Nobody Goes There anymore. It's Too Crowded.

Pope, driving Fiat, is pulled over by a New York cop for driving onto sidewalks, pulling up beside frightened hot dog vendors and shouting, "Is this the drive up window? Could you make me one with everything?" before turning to reporters to confess, "I stole that joke from the Dalai Lama." 

Pope spokesperson holds press conference to apologize for pope's behavior next day. After scanning sea of reporters, folds his notes, sighs, and just walks to the back of the room to help himself to a hard cider.

Vonnegut's Rule Predicts the Political Furor Over the Pope

The rarely seen dual pope

Vonnegut once quipped, "Thanks to TV and for the convenience of TV, you can only be one of two kinds of human beings, either a liberal or a conservative." You might consider this Vonnegut's rule.

Of course it is true that a century ago, in the days before TV, politics in this country was rich and varied. We actually had anarchists and communists, progressives and conservatives, royalists (yes - still) and robber barons, people whose politics centered around issues like abolishing religion and marriage or people whose politics was defined strictly by staying out of all foreign entanglements, from Cuba and the Philippines' movements' to gain independence from Spain to World War I and of course peace mongers who saw the League of Nations as prelude to one world government that would end war (Einstein was in this last group). Politics was fascinating and more varied than it is today.

TV today has to be quick, though. They don't have time for that much variety and confusion. They have commercials to get to. Any political stance that takes more than 2 minutes to fully explain won't be heard. This isn't just true of casual commentators on TV talk shows. Even candidates running for office have to stop talking after 90 seconds by most debate rules. Concision compels conformity to pre-existing conditions.

Now, the Pope is here and liberals are upset that conservatives are upset about his positions on climate change and income inequality. Popes - who predate Charlemagne, Machiavelli, Cromwell, John Locke, Thomas Jefferson and even Ronald Reagan - are now required to neatly fit into a pre-made mold of conservative or liberal that hasn't even remained static since the 1980s. And of course people tend to forget that this pope is free to take chances. Pope Benedict is still alive. For the first time in 600 years, there is a back up pope. If you have no quarterback on the bench, you play him carefully. If, on the other hand, you do have a backup quarterback, you can run plays that include comments about atheists making it to heaven, the acceptance of gays, criticism of capitalism, and riding around in a toy-sized Fiat rather than an imposing SUV or pope-mobile.

Of course it is absurd to think that the pope would fit so neatly into boxes designed for maximum reaction and minimal thought. You don't ask the world's last remaining absolute monarch what party he belongs to. And even if he did belong to a party, it certainly wouldn't be the party of a foreign country. His position on contraceptives and abortion, and women's role in the church aligns him squarely - perhaps even to the right of - most of this country's conservatives. And his position on poverty and income and wealth inequality aligns him neatly - perhaps even to the left of - most of this country's liberals. It's not just his fashion choices and hats that make him hard to neatly categorize.

And in this sense, the pope is probably like more of this country's population than the parties would care to acknowledge: a character whose sensibilities defy easy categorization. But we don't have time for nuance or elaboration before the commercial break. Besides, nothing is more exhausting than actually having to consider someone as unique. So, the pope, like everyone else, is required to abide by Vonnegut's rule. He's either with us or with them. Even with that distinctive hat, he can't be allowed to stand outside of our clearly demarcated lines.

The President Reminds us Where The Economy Was 7 Years Ago

I read a wide variety of sources. Still, I don't see anyone as simply report the facts as the president. No wonder his approval ratings remain low: his focus on facts makes him an atypical politician.

Here is an excerpt of remarks made by President Obama about the economy the day after the GOP debate.

Seven years ago today was one of the worst days in the history of our economy. If you picked up the Wall Street Journal that morning, you read that the shocks from AIG and Lehman were spreading worldwide. The day before, stocks had suffered their worst loss since 9/11. In the months after, businesses would go bankrupt, millions of Americans would lose their jobs and their homes, and our economy would reach the brink of collapse.

That’s where we were when I became chief executive. Here’s where we are today: Businesses like yours have created more than 13 million new jobs over the past 66 months -– the longest streak of job growth on record. The unemployment rate is lower than it’s been in over seven years. There are more job openings right now than at any time in our history. Housing has bounced back. Household wealth is higher than it was before the recession. We have made enormous strides in both traditional energy sources and clean energy sources while reducing our carbon emissions. And our education system is actually making significant progress with significant gains in reducing the dropout rate, reading scores increasing, math scores increasing. And, by the way, more than 16 million people have health insurance that didn’t have it before.
So this progress is a testament to American business and innovation. It’s a testament to the workers that you employ. But I’m going to take a little credit, too. It’s a testament to some good policy decisions. Soon after we took office, we passed the Recovery Act, rescued our auto industry, worked to rebuild our economy on a stronger foundation for growth. Other countries in some cases embraced austerity as an ideology without looking at the data and the facts, tried to cut their way out of recession. The results speak for themselves. America has come back from crisis faster than almost every other advanced nation on Earth. And at a time of significant global volatility, we remain the world’s safest, smartest investment.
Of course, I will not be satisfied -- and we as a country shouldn’t be satisfied -- until more working families are feeling the recovery in their own lives. But the fact is that what I’ve called middle-class economics has been good for business. Corporate profits have hit an all-time high. Slowing health care prices and plummeting energy costs have helped your bottom lines. Manufacturing is growing at the fastest clip in about two decades. Our workforce is more educated than ever before. The stock market has more than doubled since 2009, and 2015 is on pace to be the year with the highest consumer confidence since 2004. And America’s technological entrepreneurs have continued to make incredible products that are changing our lives rapidly.

Now, you wouldn’t know any of this if you were listening to the folks who are seeking this office that I occupy. (Laughter.) In the echo chamber that is presidential politics, everything is dark and everything is terrible. They don’t seem to offer many solutions for the disasters that they perceive -– but they’re quick to tell you who to blame.

Social Inventions Determine Whether Bright, Irreverent, Charismatic Kids Become Head of Apple or Head of ISIL

How you do in life is largely defined by a few lotteries that happen before you are conscious. We could mitigate that but it would require taking social evolution and social invention - what I'll just call memes - more seriously than we do now.

The first and most obvious lottery is parents. Do they have resources and wisdom to pass on? Or are they distracted by their own drama and deprivation? Are they connected to dozens of people who can help your career or are their friends drug dealers and ex-cons?

The second is the lottery that determines when you are born. No matter how well things are going, your life can be devastated - ended even - by being born shortly before a major war or plague or natural catastrophe. There were a lot of prosperous, intelligent, hard-working and ethical Jews who had the bad luck of being born in Europe before Hitler became Chancellor. Being born in Medieval Times means fewer options than being born in 2050. Being born so that your career begins with a major recession means lifetime earnings that are 10+% lower than had you started your career during a boom.

The third lottery to define your life is your nationality. Born in Canada or Sweden in the late 20th century? Or born in Iraq or Syria at that same time?

Which brings me to this poignant shot of Homs, Syria posted by Kumar Thangudu.  Steve Jobs' father was born and raised here and now the city itself has been razed by Assad's military. This community - like so many in Syria - is itself a casualty of the Civil War. This picture of Steve Jobs' father's home town reminds us of the vast gulf between Silicon Valley and Syria. Jobs was not raised here; he was instead raised in Sunnyvale at the dawn of the personal computer era. Here's what we know: there are kids streaming out of Syria now, displaced by devastation and death threats, who could have become the founders of Fortune 500 firms. They might yet, but the odds are so much lower than they would be had their parents raised them in Sunnyvale, CA instead of places like Homs, Syria. Their development has been stunted and every month their potential shrinks. Before the civil war, 97% of primary aged children attended school and now about 2.2 million children within Syria and about 500,000 who are refugees are not receiving education. These are not just normal kids who are being displaced, their lives disrupted. One of these kids was going to devise the cure for the cancer that will now kill you. Another was going to found the company that would have provided you with a great job so that you no longer have to rely on intermittent contract work. It is not just that their lives are made worse by this tragedy. Our lives are too.

Finally, the two lotteries that determine when and where you are born matter because at different stages of social evolution, in different places, you are born into a different sea of memes. Genes define biology; memes define society. One of the reasons that Medieval times were worse than now is because the memes were less evolved. People looked to supernatural explanations for a dead cow or neighbor rather than a biological cause. Today, if you get sick you might be asked to take a particular medicine in order to get well but rarely are you told to pay penance by praying 4 Hail Marys in the hopes that will make you well. Being born into a time when diagnosis that focuses on natural causes is common means that you'll be more healthy than people born into a time (or place even today) when the first cause is suspected to be supernatural, where people cast spells, chant incantations, burn incense or read palms for clues about what is wrong with you. Superstition and science both look for causes but the meme that says, "let's do science," makes for a better community than the meme that says, "let's do superstition."

The memes that make a country a great or awful place to live have a similar impact. A meme that says that Jews or the Irish or blacks or Hispanics are lesser people and should be treated as such are memes that can make the difference between a child who grows up performing at piano recitals and studying for the SAT and a child who learns to define her goals as simply avoiding violence.

Memes matter and in the same way that a complex set of genes orchestrate to create a leg or even a predisposition for a particular sort of heart disease or schizophrenia, memes orchestrate to create a prosperous, open community or one that's violent and oppressive. Memes define policies, governments, and cultural norms.

Few San Diegans know that when Jonas Salk founded the Salk Institute in 1960, his original intention was to gather the best and brightest to study social evolution. He felt that humanity's progress now depended on social evolution, not biological evolution that that social evolution deserves serious study. Nothing has happened since to suggest that he is wrong.

Get memes wrong and irreverent, charismatic, brilliant kids grow up to become Abu Bakr al-Baghdadi, head of ISIL. Get memes right and those kids become a Steve Jobs. It is the memes kids grow up with, not the genes they grow up with that define them and their options. Communities can shape memes and the processes by which memes accidentally evolve and are intentionally changed (social evolution and social invention) deserve at least as much funding as research into genetic engineering. There is too much at stake to leave the evolution of memes to random mutation.

Am I the Only One Who Thought ... at the GOP debate

Am I the only one who ....

Watching the candidates parade out in their identical business suits

... thought, "You can't help but admire their commitment to fiscal austerity to go so far as to buy their clothing in bulk."


Am I the only one who ....

Listening to Marco Rubio and Ted Cruz say that they'd put Rosa Parks on the 10 dollar bill

... thought, "Hmm. This year's conservatives are essentially last century's liberals. It's like those poorer countries where you see technology that you'd forgotten about, like old style Coke bottles in Mexico. If Sanders is an iPhone, even Rubio is a flip phone. (Well, okay, I guess that would mean Huckabee is still a can on a string. And Jindal is rotary dial. And Trump just looks like a phone until you try to speak back and then you realize that it's not a phone at all. He can't hear you. But I digress.)

Am I the only one who ...

When Jeb said, "As it relates to my brother, there's one thing I know for sure. He kept us safe."

... thought, "Well, yeah, except for that whole 9-11 thing."


Am I the only one who ...

When Rick Santorum talked about the minimum wage, saying, ""Republicans are losing elections because we aren’t taking about [workers], all we want to talk about is what happened to business, there are people that work in those businesses."


... thought, "Well doesn't that show a great mix of self-reflection and compassion?"


Am I the only one who ...

When Carly Fiorina said, "We doubled the size of the company [HP]..."

... thought, "Well yeah, by acquiring Compaq," and then got lost in a tangent that went something like this? Hmm. I wonder what country we'd be able to acquire under her presidency? Canada? Maybe something smaller and more profitable, like Luxembourg? And would she do it with military force or with debt financing? This could be as big as the Louisiana Purchase. She is a bold leader."

Am I the only one who ...

Watching the candidates get so excited about putting troops on the ground in Iran and Syria and Iraq (again)

... thought, "Did they actually pay any attention to the Iraq War? The one that killed thousands of American and allied soldiers and hundreds of thousands of the Iraqis we were pretending to liberate? The war that created 4 million refugees who - along with displaced Syrians - are streaming across Europe now? That war? Do they actually think that war turned out well or do they just think that the way to make it better is to go back into Iraq and add Syria and Iran to the list of countries to invade and rebuild? Is denial really that integral to the Republican identity now?"

Am I the only one who ...

Every time Lindsey Graham spoke about the war on radical Islam

.. thought, "Has any closeted gay ever gone to greater extremes to appear masculine than to demand an invasion of every middle eastern country? Does no one here realize how mad this is, as if he's trying to create an anti-Caliphate? He doesn't need a podium. He needs a psychiatrist's couch."


Am I the only one who ...

When listening to Ted Cruz and Bobby Jindal and Mike Huckabee express their anger with the Supreme Court and Congress

... thought, "He's not running for president. He doesn't want a balance of powers. He is running for king."



Am I the only one who ....

Every time Scott Walker looked into the camera with that oddly vacant expression


... thought, "We need a poster of him with this expression that simply says: "I couldn't make it through four years of college but, with your help, I'd very much like a chance to make it through four years in the Oval Office. This time, I think I can make it work."

Am I the only one who ...


When Rand Paul said, "Iran is now stronger because Hussein is gone. Hussein was the great bulwark and counterbalance to the Iranians. So when we complain about the Iranians, you need to remember that the Iraq War made it worse.
Originally, Governor Bush was asked, was the Iraq War a mistake, and he said, 'No. We'd do it again.'
We have to learn sometimes the interventions backfire. The Iraq War backfired and did not help us. We're still paying the repercussions of a bad decision."

... thought, This is why some people love Rand Paul. Here is a perfect example of reason and honesty about the limits of our ability to change any and every political problem around the globe.

Am I the only one who ...

Each time Republican candidates bragged about how they would face down Putin - arguably the world's most intimidating leader, a centa-billionaire despot with nuclear weapons -

... thought it odd that they would demonstrate their courage by pleasantly demurring from the moderator's invitation to actually elaborate on some accusation they'd made of a fellow candidate standing next to them, saying, "Well, you know, that's not what I really said ..."


Am I the only one ...

Who every time a candidate would rant about how terrible the economy is

... thought, If this is bad, I wonder what you would call it during the time you guys had the White House and both houses of Congress, when Dubya walked away from a crashing market and job losses of 796,000 in his final month in office. What adjective properly describes that? And what conceivable theory do you have for this catastrophe? Would that - too - simply be something that needs to be remedied with tax cuts?

Am I the only one ...

Who wondered when the Republican Party would look at the progression from Lincoln to Eisenhower to Reagan to Dubya to Trump and decide it might be time to change direction?

A Nation Prejudiced Against the South: What Ahmed Mohammed's Case Reveals About Group Psychology, Social Media and the Rush to Judgment

A black high school freshmen named Ahmed Mohamed was arrested in Texas for bringing a clock to school. Excited about the device he'd made, he brought it in to show his teacher. Soon he was walked into a back room to face four cops who insisted he tell them what it was. When he repeated that it was a clock, they accused him of being vague and put him in handcuffs.

And at this point, the rest of the nation kicked into its own prejudice, quickly judging Texas for its quick judgment of a black Muslim kid. The Texas authorities were accused of racism. Of being prejudiced against Muslims. The rest of the nation has such narrow views of the former confederacy that it's nearly its own kind of racism. It certainly falls into the category of judging a whole group of people by stereotype.

And it turns out, the rest of the nation was wrong. The arrest of 14 year old Ahmed had nothing to do with race or religion. Texas authorities had simply heard that Ahmed's invention involved science.

The Eventual GOP Winner Will be in Tonight's JV Debate

In August, Republicans had so many candidates that they held two debates. The main stage had the 10 top candidates and then there was a junior varsity (JV) debate that included the 7 "also-rans."

Now, a month later, the second tier group has only 4 left standing.

You can project this trend. 7 last month. 4 this month. That means there will be just one candidate in next month's JV debate. Think about that. A national platform without competition. An audience that would dwarf any that Donald Trump or Bernie Sanders could hope for. The ability to make your points without interruption or contradiction from other candidates. The luxury of acting stately, above the petty bickering that will surely define the more crowded stage later that day. To be the last JV candidate standing would surely catapult any candidate into the lead, perhaps the White House.

Keep an eye on the four JV candidates tonight. One of them is a strategic wizard, angling for a coveted solo debate slot that the rest of the GOP hasn't even considered.

Why We Should be Glad that Teachers are Not Treated like NFL Players

This video is hilarious because it contrasts the way we treat NFL players with the way we treat teachers.

My wife is a teacher and she works as hard - puts in as many hours - as any corporate client employees I've worked with. And it is no mean trick keeping 28 7 year olds engaged all day, every day. They learn in various ways, they come in - and go out - at different levels, and unlike university students, their behavior is her responsibility. I have huge respect for teachers. And I also know that teachers should be glad that they are not treated like NFL players.

The median salary for elementary school teachers is $42,000. That is a pretty stark contrast to the $2 million average salary for NFL players. It does seem outrageous that we show so little respect for teachers in comparison to grown men who run around dressed like 10 year old Pop Warner kids. 

But there are between 3 to 4 million teachers nationwide. There are only 1,700 NFL players. It's true that the NFL pays its players a lot of money but collectively, they make only $3.4 billion. By contrast, this nation pays teachers about $150 billion each year. If we paid teachers the same average of $2 million a year, they would cost us $7 trillion a year. To give you an idea of how much that is, the US is the only country in the world - out of 200+ - with a GDP of more than $7 trillion a year.

It certainly is possible that teachers will eventually be treated with the same respect, held to the same difficult standards, made to compete for a few select slots the way that NFL players do. In 20 years, it may be that it is teachers who students pay to learn from and not universities. Some modern version of YouTube might give students an immersive learning experience that comes complete great lecture, personalized conversation tailored to your speed, background, and potential, and simulations of experiences as varied as touching a whale and sitting on the ground during a battle. Traditional teaching could be dead and the new means of teaching could depend on a talented personality who gets the pay and respect normally accorded to a professional athlete, a news anchor, or a popular singer or actor.  

At that point, teaching could become a career structured more like the music industry or professional sports. A very few will make quite a lot and many will make little or nothing. Popular teachers - like popular singer / songwriters - might make all the money previously paid in tuition to schools and universities. Less popular teachers might fret about how to get more "hits" to be able to earn enough to move out of their parent's basement.

For now, teaching is a good, even if not lucrative career. In a generation or two, it could be a lucrative but not good career, supporting so few families that career counselors will dissuade most kids who think about pursuing it as a career. Like acting or music, aspiring teachers will be advised to have a fallback plan that is more reasonable, advising them that maybe - just to be safe - they should consider a career like professional sports.

Why Ted Cruz is Lunging Past Rand Paul to Vacant Anarchist's Slot in GOP Primary

Ted Cruz is threatening to shut down the government unless teenagers stop having sex. In the race to the right in the GOP primary, he's sprinted past Rand Paul's libertarian philosophy and seemingly put in the first official bid for the party's empty anarchist slot. Hard to imagine a more vivid anarchist's dream than a landscape littered with citizens (or whatever they call them in anarchy land) engaged in free sex unencumbered with any government representatives or regulations.

Okay, he wouldn't put it like that. Cruz would say that he's trying to stop funding for Planned Parenthood and will stop any budget coming through Congress with funding for the group. He can't get enough votes to stop Planned Parenthood funding but he might be able to get enough votes withheld from any budget that includes it. He can hold over opponents the threat of government shutdown, once again playing that popular Fall classic of chicken with the American economy.

Cruz is courting the Republican base which is literally dying off. People in their 70s and 80s really like this sort of courage in the face of poor women with the temerity to have sex. Meanwhile, young women who are dealing with the complicated reality of being female are the ones who are literally raising the next generation. They're outraged that he'd try to take away one of their rare healthcare options.

Cruz and the neo-theocrats (which would not be such a good band name), are not just pushing an agenda. By courting the dying by alienating the young, they're not just putting the economy at risk. They're hastening the demise of the Republican Party.

You might push back to say that Republicans still have - and conceivably will have for some time - Congress and a majority of state governor's mansions and legislative bodies. You're right. They won't lose their hold on certain swaths of this country any faster than the confederacy lost its ideological grip on the south. But in terms of serious bids for the White House (and Congress within a decade), they're out.

So why would Ted Cruz do this? He could just be stupid but I don't think so.

In her book, The March of Folly, Barbara Tuchman defines folly as the pursuit of policies that are harmful to the institution. Why did Renaissance popes do the very thing that seemed to encourage the Protestant Revolution? Well, their lives of excess and wealth may have been bad for the church but they were pretty delightful for them. If you have to live during the early 16th century, it's pretty nice to do it as pope.

Why do folks like Huckabee and Cruz make so many odd and outrageous comments guaranteed to alienate the average voter? There is good money to be made in speaking fees and talk radio contracts. While you need roughly half of the 300 million Americans to win an election, you need only one percent of them to win a lucrative contract at Fox. Their lives of excess and wealth may be bad for the Republican Party, but they are pretty delightful for them. And so the race to the right continues.