27 February 2017

The Truly Bizarre Policies of Donald Trump

How abnormal is Trump?

Today Jeffrey Immelt wrote in his annual letter to GE stockholders that basic concepts like "innovation, productivity, and globalization" were being challenged and that he still believed in globalization's future.

George W. Bush called a free press indispensable to democracy. (And said that a special prosecutor may need to be appointed to investigate the connection between Russia and Trump.)

This is seen as news and - rightfully as it turns out - a criticism of Trump's policies. A CEO in favor of globalization and a president in favor of the first amendment is like a mother who loves children. It's lovely but it's hardly remarkable. And yet, with a Trump presidency, it is news.

25 February 2017

What Border Agents Might Consider

Today Muhammad Ali Jr. was detained by border agents as he returned to the US from Jamaica. He was held for nearly 2 hours as they repeatedly questioned him about his religion, where he was born, and his name. He's considering legal action.

This sort of thing did not happen before Trump's election. Trump wants to ban Muslims and border agents are acting on his wishes even though courts have thrown out his first executive order aimed at enacting that ban.

This is blatantly unconstitutional and there are only a couple of ways this can go.

The most unlikely direction is that this sort of discrimination becomes the new normal and we become a less open and diverse country, realizing the ideal of white nationalists like Steven Bannon. The implications of this direction are so dire - our universities, corporations, conferences, tech hubs, intellects and inventors all become second rate as the best in the world begin to choose new places to learn, work, live, and collaborate. Too many rich and powerful people will oppose this to allow people as small as Trump and Bannon to vandalize our country like this. This is certainly a possible outcome but it is unlikely to be sustainable.

A more probable outcome is that this gross infraction of constitutional law will prove to be temporary. At that point the border agents engaged in this behavior will have to be prepared for investigations that could result in legal action against them. Unconstitutional behavior has consequences for everyone from president to entry-level agent. The only reason there is currently no consequence for this is because Republicans have the House and Senate and they don't care about constitutional niceties nearly as much as they care about offending Trump and his base and exploiting a monopoly on power to get their agenda passed. But when they lose even one branch of Congress, the investigations will begin. Once a special investigator was appointed for Watergate or Lewinsky, impeachment followed and nobody in Congress could stop that train. This will happen eventually. Either the Republicans do it now or the Democrats will do it later. And when it does, border agents and people throughout the organization below Trump will either be on the side of the constitution or find themselves in legal trouble.

It might be exciting to go against the constitution in pursuit of some grand vision but American history isn't kind to parties who do. Rather than being excited about the opportunity to crack down on people they don't care for, border agents might think about trouble with other people they don't care for: lawyers. It's wildly improbable that any of the Muslim immigrants or visitors that worry them will take action against them; it is distinctly possible that lawyers will. This might be worth considering.

The Price of a Simplistic View of Intelligence - A Trumpian Tragedy

We like the simple notion of a person being either smart or stupid. It's tempting to say, "She's intelligent," or "He's so dumb," as if it's settled.

As it turns out, that's not a particularly intelligent way to think about it.

Almost everyone is either really smart or really stupid in the right context, situation, or task. I can think of half a dozen things I'm stupid at (art composition, foreign languages, dance steps, etc.) and half a dozen things I'm smart at (project management, history, economics, listing half a dozen things). Part of life is getting smart at some things that matter and the bigger part of life is then finding or creating situations in which those smarts create value and make you feel accomplished.

When you blithely assume that someone is just smart or dumb, you can get into all sorts of trouble. You gloss over the fact that the guy you dismissed as dumb is actually really insightful about the kindness of strangers or really clever at tying fishing lures or any of a number of other things. And if you get caught up in the fact that a guy is really smart, you miss the fact that you should distrust all his recommendations for good music or never let him help you to assemble anything from IKEA. Nobody is smart at everything. Almost nobody is stupid at everything.

This distinction always seems to matter but in this Trumpian Twitocracy, it seems to matter even more. Is Trump brilliant and calculating or a bumbling idiot? It seems to me that the only accurate answer is "Yes." When it comes to knowing how to arouse great affection among his base, how to exploit cynicism of swing voters, and completely confuse and baffle his opposition, he's genius. I doubt that anyone in the history of American politics has better understood how to push and pull all the levers of politics as well as him. But when it comes to policy, the man is an idiot. He doesn't understand the difference between the deficit and debt. His protectionist policies to save jobs will actually make them more difficult to keep and create, and all of his understanding of any issue is rooted in his perception of personality rather than appreciation for system dynamics.

It doesn't matter whether you think Trump is brilliant or an idiot, you're right. The more important question - and the important question for everyone - is brilliant or an idiot in what situation? Trump himself knows this. Baffled at his new job, unable even to nominate hundreds of people for key positions, he retreated last weekend to a campaign rally, to feel what it is like to again have command of the situation, to feel his natural talent for soliciting cheers and fierce devotion come to the fore and his natural bumbling at articulating useful policy fade into the shadows.

Your happiness and success will depend on how deftly you create, find or insinuate yourself into situations in which your natural talents and genius bloom and, conversely, how well you avoid those situations that illustrate to the world the ways in which you're an idiot. One of the many things so fascinating about Trump is that his very genius - the ability, against all odds - to get elected has put him into the very situation that reveals his idiocy. Trump's biggest strength actually put him into a situation that reveals his biggest weakness. This isn't a Greek tragedy. It's something unique. Perhaps we could call it a Trumpian tragedy, a genius for getting into situations in which one looks like an idiot.

21 February 2017

Different Worldviews or Different Worlds?

An overlooked possibility of the seemingly different worldviews of Americans is this: people actually do live in different worlds.

In The Fourth Economy, I explore how very different are agricultural, industrial, information, and entrepreneurial economies. An economy focused on the limit of land has a very different set of values, philosophy, and institutions than one based on the limit of knowledge workers.

If land is your limit, zero-sum thinking dominates. Cooperation is not going to create a new oil well or acre of farmland.* Either I get that oil well or you do and if we have to fight over it - in literal battle or legal battle - we will.

In a land-based economy, reality is fairly black and white. No amount of discussion will change the fact that we're arguing over rich farmland or desolate outback. The reality we deal with is fairly non-negotiable.

In an information economy based on the work of knowledge workers, reality is very different. One problem with the efforts of knowledge workers is that nothing they do has value in isolation. Knowledge workers depend on others to create value. If you design a great new heart valve, it has no value without a skilled tech to make it. That skilled tech is worthless without advanced machinery to aid in that task. And the dozens or hundreds of people working towards completion of the design and manufacture of that heart valve would have all their efforts for naught if it weren't for the surgeon and her team able to put that valve into place. Knowledge workers depend on others to create value. They're dependent on others for negotiation and cooperation. The better they do this, the more value they create.

The more someone in an information economy cooperates, the more value they can create. The more someone in a land-based economy competes, the more value they can seize. People in an information economy want a leader who negotiates and understands the others point of view; people in a land based economy want a leader who is a fighter.

The reality of the person embedded in a land based economy is so very different from that of the person embedded in an information economy. It's not a surprise that the old guy in rural Kentucky has a different worldview than the young woman in San Francisco because they do, in so many ways, actually live in very different worlds.

* Cooperation is not going to create a new acre of land? Well, actually it can. Talk to the Dutch about their cooperative efforts to reclaim low lands from the sea to create acreage. The "fact" of a land based economy doesn't have to dictate your worldview, it just makes it more probable.

09 February 2017

Trumpian Twitocracy (For proper pronunciation, imagine an angry Elmer Fudd saying this)

There is a lot of criticism of Trump for his tweets designed to punish companies he's mad at or reward the companies he's happy with.

To be fair to Trump, it is the first time that anyone has tried to manage an entire economy with tweets. Not the first time a leader has tried to make friends rich and opponents poor, just the first time to do it  140 characters at a time.

Feudalism, communism, capitalism ... twitterism? Twitocracy? Not sure what to call it but it is a fascinating new development in economics.

I'm trying to influence the small economy of Estonia with tweets but so far to no avail. I'll continue to experiment and report back once I've collected data.

06 February 2017

Trump's Wildly Impractical Immigration Ban and Why 120 Companies Are Suing Him Over It

Trump's ban on immigrants shows a disrespect for our constitution and an ignorance of modern economic realities. 

Let's start with Syria, a country on the banned list. Put aside for a moment the motivation of simple human compassion to help people who've been bombed out of their homes. Among the other reasons to challenge this ban is one ancient and one modern.

First the ancient. Jesus healed people in Syria and Paul preached there, which suggests a connection to a predominantly Christian nation.

Then the modern. Steve Jobs' father came to the US from Homs, Syria. This is what it looks like now.

This is what the Apple campus looks like, headquarters to the world's most valuable publicly traded company, a company currently worth nearly $700 billion (about 9X Syria's GDP), a company co-founded and reinvented by Steve Jobs, son of Syrian immigrant.

And that brings us to the heart of this argument: modern business is international business. This is bigger than Syria. Immigrants are an integral part of the American economy. Friday I was with a client in Orange County and met with 3 project managers and their core technical teams of four. As so often is the case in those situations, the teams were dominated by immigrants. One team of four had two people from the Middle East (Orange County has a very large Iranian community and they may have been part of that) but each of the three four-person teams had at least two foreign born team members. One team member, Peter, I just thought was American until he spoke in an impeccable British accent. The project managers were all from California but their team members were from China, Philippines, Iran, the UK, and India. Oh, and a couple were from California.

I once sat in a conference room with a technical team making a next generation computer chip for a Fortune 100 company. There were about 12 of us in the room. The conversation at lunch time went to green cards and visas and every single person had a story. (Mine was about my Canadian wife.Theirs was about their own experience of migrating to the US for school or work.) 

About a week ago, one of the team leads I had worked with last year at a startup on Google's campus posted something about giving a demonstration of the surgical robot he'd helped to create to Sergei Brin, the co-founder of Google who is now worth nearly $40 billion. He was delighted by that but almost more delighted that Brin had gone to the protest against Trump's ban at the San Francisco airport. Why was he so delighted? He's from Iran. Brin's show of solidarity not only was affirming but raises the probability that as he pursues his career in the US his own parents will be able to come to visit him. 

The teams within our leading companies are so intertwined with other countries. Monday of last week, the second person I spoke to at my new client's campus was a man from Iran whose mother is on her deathbed. He had to cancel his trip to see her, losing thousands of dollars in nonrefundable fares and - more poignantly - the chance to see his mother one last time. 

What Trump supporters don't realize is that banning travel between countries is - to the modern corporation - as impractical as banning travel between states for American families. Imagine not being able to visit your mother in Oregon because you'd taken a job in and married a fellow from California. It's inane and it's no wonder that leading tech companies like Alphabet (nee Google), Apple, Airbnb, Facebook, Microsoft, Tesla, Intel, Lyft, Netflix, Snap and Uber are among the technology companies that participated" in the legal brief to oppose Trump's ban

The modern corporation is a multinational institution. It's customers and suppliers come from around the world and even its development teams are scattered across continents.  For American based companies, 10 PM meetings with teams in India are normal, as are 6 AM meetings with teams in Europe. So many of the essential specialists who know how to design a computer circuit or heart valve or nanotechnology scope or the machinery on which such intricate and advanced equipment can be made are rare. It is normal - not unusual - for the technical teams I work with who are creating the next generation product to come from half a dozen different countries. I don't remember a single instance of working with a product development team made up only of Americans but I can remember multiple instances of working with teams who were completely from foreign countries.

What Americans don't realize is that if those team members aren't here, they will still get hired to create next generation products. They will just work in Mumbai or Shanghai or Eindhoven, Netherlands. And when that happens, the restaurants, dry cleaners, carpenters, car repair crew, hundreds of other service people who work with and for them will be in Mumbai, Shanghai and Eindhoven. They won't be here in San Jose or Austin or Boston. The result will be fewer, not more jobs. We're not protecting jobs by barring immigrants; we're shifting them to other places where multi-national teams are free to assemble. The teams of experts will assemble, the only question is where. Given how open we've been here in the US, the natural answer to the question of where best to assemble those teams has been the US. That could change.

It would be enough if Trump's ban was simply unconstitutional. It would be enough if it simply banned immigrants from countries who have never once killed an American on our soil, a policy based on irrational fear. But even if all that doesn't matter - and it should, it should matter greatly - this ban is based on such a wildly naive and ignorant model of how modern corporations actually work, how dependent we are on a vast web of specialists, technologies, and knowledge that respects borders about as much as the flow of air currents. The ban is ignorant. The global economy is a vast, evolving, and interdependent thing that has lifted billions out of poverty and given us a quality of life the description of which generations 100 to 150 ago would find fantastical, nonsensical and about as believable as teams made up of men and women from every continent working together on next generation products. I'm sure that there were elements of Stalin's Five Year plans that were more firmly planted in economic reality than Trump's immigrant ban. 

The companies who oppose his ban aren't trying to be cute or politically correct or compassionate. They're simply trying to run a business and when borders become walls that becomes incredibly difficult. Difficult enough that some of our best jobs might just go outside of the US. 

05 February 2017

Obama by the Numbers - Comparing America Under the Last Five Presidents

Obama was my kind of president. He was a wonk who guided his decisions by probabilities. He was compassionate and careful. He had a clear sense of how progress is made and promoted education, science and entrepreneurship for everyone and made a special effort to extend opportunities to women and minorities. 

He stepped into the Oval Office when the economy was in free fall. In the twelve months leading into his presidency, the American economy had destroyed 4.4 million jobs. Never had so many been put out of work so quickly. Those were not ideal circumstances. And yet things turned out well.

Here are some numbers comparing him to the four previous presidents.


Of the most recent five presidents, only Reagan gave fewer press conferences per year.

After his first two years, the House and Senate opposed his initiatives, no matter how reasonable. The fact that he gave so few press conferences could not have helped him to make his case to the American people. This seems to me like the biggest mistake of his presidency. 24-7 news channels were hungry for news of any kind and he could have done more to circumvent Congress by talking directly to the media, giving him an opportunity to shape public opinion. 

FDR gave an average of 73 press conferences per year - more than double what any of the most recent five did. I don't think it's a coincidence that he passed more defining legislation than any of them could have imagined.


Our American military are a precious resource and should be sparingly used.

Obama was determined to extract our service people from harm's way. Not only did his policies result in death rates for our military that were about one-third of what they were under the Bush presidents and one-fourth of what they were under Reagan, by his eighth and final year the fatalities had dropped to an unprecedented 19. By contrast, between 2004 - 2007, fatalities averaged roughly 1,900 and - as you can see - averaged 2,150 during Reagan's presidency. Under each of the last five presidents, we lost an average of at least one person a day but at least in the final year of his presidency, that number had dropped to closer to one per month.


The unemployment rate was high and rapidly rising when Obama took office. Nonetheless, it dropped even from that initial rate.

Under George W. Bush and George H. Bush, the unemployment rate rose 3.6 and 1.9 percentage points. Under Reagan, Clinton and Obama it fell. 

In Reagan's last month, the unemployment rate hit 5.4%. In Clinton's last month, it hit 4.2% and in Obama's last month it hit 4.8%.

This stat is tough on Obama. In his very first year in office, the Great Recession destroyed 5 million jobs. No year on record was that bad and in a normal, healthy year the economy creates about 2 million jobs so from the start he was battling against a 7 million job deficit, something that took a long time from which to recover. 

The average annual job creation rate over his 8 years puts him between the Bush presidents and Reagan and Clinton. However, in his second term the economy created 10 million jobs - just as it did in Reagan's second term. (In each of Clinton's two terms, the economy created 11 million jobs.)

This is the one bit of data which still isn't complete. It does not include the fourth and final quarter of his second term, so it will go up. Even so, this stat is good for Obama. Not only was the economy destroying jobs when he took office, but home and stock prices had been brought low. When the economy recovered, so did markets. Net worth soared under his presidency.

It's easy to dismiss this as being of concern for only the wealthy but here's a fact: if you plan to retire, you need for stock values to rise. It doesn't matter if your retirement is going to be funded by a pension fund or your 401(k) or your financially stable son-in-law, you are dependent on the creation of wealth to fund your retirement. 

On so many measures that matter - from the number of uninsured, the percentage unemployed, soldiers killed, and the net worth of American households - the country did wonderfully well under Obama. Not only did we have no scandals - personal or administrative - but the country prospered. If you voted for him, you showed good judgement.