The Performance of Job and Stock Markets Through 48 Years and 8 Presidencies

Here is data for the last 48 years on labor and capital markets.

The stock market performance (orange line) represents the average annual return of the three major indices (Dow, NASDAQ, and S&P 500). The timeframe runs from the day after each presidential election to the day the next president is declared the winner.

The job number reflects the average monthly employment figure reported by the Bureau of Labor Statistics (BLS) during each president's full term, from their first to last complete month in office.
There are many factors outside a president's control—and many within it. For instance, the Great Recession that tanked George W. Bush’s economic numbers was largely a consequence of policies championed during his presidency. Bush’s administration embraced financial deregulation, undoing safeguards put in place after the Great Depression. These included the repeal of the Glass-Steagall Act and looser oversight of financial derivatives. The ensuing financial crisis was not mere coincidence but evidence that, as in sports, financial markets thrive best when they strike a balance between free competition and effective regulation. Bush’s poor stock market and job performance stemmed from these flawed policies.

Luck matters too. For example, Donald Trump faced the worst pandemic in a century, which disrupted the economy and labor markets worldwide. However, governance also plays a role. Trump refused to coordinate a national COVID-19 response, leaving states to act independently. In his final month in office, his focus was not on the pandemic but on contesting the results of the 2020 election, culminating in a riot at the Capitol. Meanwhile, COVID-19 deaths reached staggering levels, averaging 3,000 deaths per day—equivalent to a 9/11 attack every 24 hours.

Joe Biden inherited these challenges but immediately launched a coordinated national COVID-19 response. His administration passed a sweeping recovery bill to support job creation and stabilize the economy. This proactive approach likely prevented the sharp contraction or sluggish recovery that could have occurred under a laissez-faire approach, akin to the post-Great Recession recovery during Obama’s presidency. At that time, Congress pressured Obama into austerity measures that prioritized deficit reduction over aggressive job creation, resulting in years of depressed employment growth.

The takeaway? Demographics, pandemics, and policy all play roles in shaping labor and capital markets. Like in bull riding, the difficulty of the circumstances ("the bull") matters as much as the skill of the president ("the rider"). Strong governance can make all the difference between a sharp fall and a smooth landing.

The 14th Amendment As an Obstacle to Trump's Policies

Today Trump stated that he was going to end birthright citizenship - something granted by the 14th amendment.

The 14th Amendment was created after Republicans recognized that Southern Democrats were freeing slaves but denying them citizenship based on race. This amendment redefined citizenship, making it about more than bloodlines or tribal affiliations—it became a shared commitment to ideals and opportunities. It stands as one of the most fascinating experiments in the broader sweep of American innovation, defining the nation as something profoundly different from what had come before. Here was identity rooted in shared ideals, not shared ancestry—a nation striving for equal opportunity, despite its diverse histories and conditions.

The 13th Amendment ended slavery. The 14th Amendment completed the transformation by granting citizenship, guaranteeing it through the simple fact of being born in this country. To ignore the 14th Amendment and deny citizenship to those born here is to abandon the principle that defines America. It reduces citizenship to ancestry rather than potential, binding people to their parents’ past rather than opening the door to their own future.

Unsurprisingly, Trump and the MAGA boys who are fascinated by race, heritage and genes find the 14th amendment an obstacle to his policy. We fought a civil war to put up that obstacle. He thinks he can remove it with an executive order.

The Invention of Psychology Predated the Invention of Macroeconomics

What I can tell you: Sell your stock at the market’s peak and buy when it hits bottom.
What I can’t tell you: When the market is at its peak or when it’s hit bottom.

Finance and economics exist at the intersection of hard facts and human behavior—the interplay between mathematical calculations and animal spirits. In retrospect, it seemed inevitable that William James and Sigmund Freud would invent modern psychology before John Maynard Keynes invented macroeconomics. Human psychology is as influential as industrial capital in shaping economies and markets, driven in part by the power of mood and in part by analysts making precise calculations with inherently speculative numbers.

A Long Walk and a Moonwalk - Armstrong and Aldrin's & Lewis and Clark's Journey's To Define America

Neil Armstrong and Buzz Aldrin (A&A) traveled to the Moon in 1969.
Lewis and Clark (L&C) explored the American frontier, reaching Oregon and returning, from 1804 to 1806.
Here are some intriguing comparisons between their historic journeys.
________________________________________
Top Speed:
• L&C: ~3 mph (on foot, horseback, and by boat).
• A&A: ~25,000 mph (during re-entry to Earth's atmosphere).

Total Distance Traveled:
• L&C: ~8,000 miles (round trip).
• A&A: ~478,000 miles (round trip).

Support Crew:
• L&C: 33 members in the Corps of Discovery.
• A&A: Over 400,000 NASA employees and contractors supported the mission.

Length of the Journey:
• L&C: 2 years, 4 months, and 8 days.
• A&A: 8 days.

Communication
• L&C were out of contact with Washington, D.C., for their entire journey (~2.5 years).
• A&A maintained near-continuous communication with NASA Mission Control, with brief blackouts during lunar orbit.

Languages Encountered:
• L&C: In addition to English and French, they encountered ~50 Native American tribes, each with their own language or dialect.
• A&A: In addition to English, they navigated the specialized "dialects" of engineering, computer science, and flight operations.

Legacy:
• L&C: Lewis & Clark’s expedition led to westward expansion and the transformation and settlement of the American frontier, changing the lives of millions of Americans who have turned a former frontier into home.
• A&A: Armstrong and Aldrin’s mission pioneered a different kind of frontier—one settled not by homesteaders but by computer scientists, entrepreneurs, communication satellites, and new technologies. Their journey was a catalyst for the creation of new industries, companies, wealth, products, and technologies, transforming the lives of people around the globe. Like the Apollo team, people today communicate almost instantly across vast distances, connecting through spaces as immense as the surface of the Earth that was first seen as a whole on a NASA mission and now is increasingly treated as one globe in daily communication, trade, development and finance.

William Browder on Russia's Curious Lose-Lose Tendencies

William Browder ran the largest investment fund in Russia until Vladimir Putin effectively drove him out of the country. Ironically, Browder's grandfather had run against FDR as the Communist Party candidate. As a teenager, Browder rebelled against his family’s history by embracing capitalism. The symmetry appealed to him: just as his grandfather became a communist in capitalist America, Browder would become a capitalist in communist Russia.

By the early 2000s, he was managing the biggest investment firm in Russia, achieving years of extraordinary returns. But he describes Russian culture as deeply rooted in a peculiar form of lose-lose thinking. He cites a popular Russian folktale that illustrates this mindset: A man discovers a genie who grants him one wish, with the caveat that whatever he wishes for himself, his neighbor will receive double. Immediately the man says, “Poke out one of my eyes.”

Biden's Very Wise Choice to Pardon His Son

Trump has made it clear that he intends to use the presidency as a tool for revenge.

Mitt Romney, a former Republican nominee for president, has reported spending thousands of dollars per day on protection for his family after publicly criticizing Trump. Trump has also made shocking, violent comments about Liz Cheney, once one of the most powerful Republicans, whom he despises for having the courage to stand against him.

Trump and his MAGA allies have already targeted Hunter Biden with a relentless barrage of accusations, many of which have been debunked or exaggerated. Let’s not forget that Trump pressured Ukrainian President Volodymyr Zelensky to falsely implicate Hunter Biden in Ukrainian politics, threatening to withhold congressionally approved military aid if Zelensky did not comply. This was a key element of Trump’s first impeachment.

Given Trump’s vindictive nature, it’s almost certain that he would weaponize the presidency to make Hunter Biden’s life as difficult as possible, turning his son into a proxy for his ongoing grudge against President Biden.

President Biden, a man who has endured profound personal tragedy—the loss of his first wife and daughter in a car accident and his son Beau to cancer—is someone who deeply loves his family and his country. Pardoning his son to spare him from relentless harassment and potential imprisonment by the world’s most powerful man is a decision I can understand.

Perhaps Trump supporters might struggle to see it this way, but as a father who loves my son, I can relate. Moreover, I believe it’s profoundly un-American to use the highest office in the land to settle personal scores. Biden’s choice resonates with me because it reflects values that stand in stark contrast to vindictiveness and abuse of power.

Once Upon a Time ... They Set Aside Some Time for When There Was No Time

Once upon a time, December was the 10th month, and the Roman calendar from January through December covered about 300 days. That left roughly 60 days off the calendar—a stretch of time with no farming schedules, no religious obligations, and not even named months to worry about.
Imagine it: two whole months without tracking months, let alone days. 

Not just free time, but free of time.

Am I the only one who finds that idea incredibly appealing?

Post-WWII Germany: A Four-Zone Experiment in Governance

After World War II, Germany became a real-world experiment in governance, divided into four zones administered by the USSR, France, the UK, and the US. Each zone reflected the priorities and ideologies of its occupiers, creating strikingly different paths to recovery.

In the American zone, the focus was on "denazification, re-education, and democratization." As Tony Judt noted, the U.S. sought to “abolish the Nazi Party, tear up its roots, and plant the seeds of democracy and liberty.” U.S. efforts extended beyond politics to include cultural reconstruction, economic revitalization, and the use of psychologists to understand and address the emotional underpinnings of the German collapse. Americans uniquely understood that emotions like fear and hope shaped not just politics but economics.

By contrast, the Soviet zone aimed to suppress Germany's industrial capacity and promote communism. The command economy imposed by the USSR prioritized heavy industry over prosperity, creating stagnation and a legacy of underdevelopment that persisted after reunification.

The French zone was marked by reparations and resource extraction. France’s own communist influence after the war—reflected in a parliament where communists won 26% of seats—meant greater reliance on central planning than in the American zone, though not to Soviet extremes. French policies, combined with less Marshall Plan aid, slowed the zone's recovery.

The British zone, home to the Ruhr Valley’s critical industrial base, initially prioritized controlling industrial output to prevent German rearmament. While this delayed recovery, the region ultimately became a cornerstone of West Germany’s economic strength.

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Why the U.S. Zone Succeeded
The American zone outpaced the others in economic growth, innovation, and cultural development, thanks to its emphasis on market liberalization, infrastructure investment, and fostering entrepreneurship. Success included:
- Economic Hubs
- Frankfurt became Germany’s—and later the EU’s—financial center.
- Munich emerged as a cultural capital and hub for technology and media.
- Stuttgart and Bavaria (formerly more rural areas) transformed into centers of high-tech industries and manufacturing, driven by companies like Siemens and BMW.
- Cultural and Educational Reconstruction:
The U.S. rebuilt universities and promoted democratic ideals, creating a foundation for long-term prosperity.

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The Broader Takeaway
To be clear, Germany was the most advanced economy in Europe - and for quite some time was more advanced than the US. By no stretch of the imagination is its success simply the product of post-WWII American administration. But the difference in the four zones administered by four different countries does suggest lessons about effective governance. The American approach struck a balance between markets and government intervention, avoiding the extremes of Soviet central planning and libertarian laissez-faire economics. This pragmatic strategy fostered stability, growth, and innovation. In contrast, the Soviet zone lagged significantly, and the French and British zones, while successful, lacked the same dynamism.

The division of Germany was more than a political boundary—it was a test of competing ideologies, with the American zone emerging as a model of balanced governance driving long-term prosperity and innovation.

Conversation Starters for Thanksgiving Dinner

At tomorrow's Thanksgiving dinner, here are some conversation starters, rated from safe to hell-bent on never getting invited anywhere ever again:

1. Isn't this delicious? (Safe. Everyone loves a compliment to the chef.)

2. Do you like my hat? (Mildly quirky, harmless.)

3. Do you think AI will make us all smarter but feel dumber, or dumber but make us all feel smarter? (Moderately provocative. Good for the tech-savvy crowd.)

4. Should I put my life savings into crypto, NVDA, or Russian rubles? (Risky. Proceed with caution if you had any plans for enjoying that pumpkin pie.)

5. Do you think Revelation 13:7-8—“And it was given authority over every tribe, people, language and nation. All inhabitants of the earth will worship the beast”—is proof that Trump is the Antichrist? (Nuclear. Just hand them the mashed potatoes and prepare for exile.)

Money Spent on Presidential Campaigns Ballooned After 2010 Citizens United Ruling

U.S. presidential campaign spending has grown dramatically over the past few decades.

The 2010 Citizens United ruling changed campaign finance by allowing corporations and unions to spend unlimited amounts on independent political ads, fueling the rise of Super PACs.

While U.S. GDP has grown roughly sevenfold since 1984, spending on presidential campaigns has increased by an astonishing 154 times. To put it another way: in 1984, campaigns spent about 120,000 times the president’s four-year salary. By 2024, that figure had ballooned to nearly 10 million times the president’s pay—which itself had doubled during that time.

And even with all that, this last election is the first in which we finally got past the amount we spend on Halloween - the other Fall classic designed to frighten people.

Trump's Zero-Sum Notions of Trade and How Far That Falls From The Ideal

In an exchange with my friend Brian Blackwell, we were discussing tariffs. One often-overlooked aspect of this topic is the extent to which the U.S., as a dominant global power—both militarily and economically—could theoretically force trading partners into agreements that disproportionately benefit itself at the expense of other nations. This approach would echo the exploitative dynamics of empires and their colonies, where economic relationships were heavily one-sided.

If you view the world as zero-sum, your goal is straightforward: to take as many of their marbles as possible. But if you adopt a variable-sum perspective, you’d focus on creating arrangements that inspire and enable others to produce even more marbles—or perhaps something entirely new and better.

The first objection to exploitative trade practices is clear: while a monopolist might coerce workers into accepting pay cuts because they lack alternatives, such behavior is widely regarded as amoral. Exploitation—even when driven by power rather than necessity—raises ethical concerns that shouldn't be ignored.

The second objection is subtler but equally compelling. Trade, at its core, is a partnership. If you’re going to engage in trade, wouldn’t you prefer a partner who is prosperous, innovative, creative, and productive—someone capable of generating value comparable to your own? And someone just as excited about your trade arrangement as you are, just as motivated to innovate and profit? Why enter into a trade agreement with 'Dennis the Peasant,' whose only offering is mud? Wouldn't you rather trade with someone rich than someone poor - someone who makes or has great goods and services? A really valuable trade relationship is one where both sides contribute meaningfully, fostering mutual growth and long-term prosperity.
If history teaches us anything, it is that progress emerges from cooperation - from people playing variable-sum rather than zero-sum games and creating wider and wider circles of collaboration and mutual benefit.

American Politics: Rich Communities Voting for More Help for Poor Communities Lose to Poor Communities Voting for More Tax Cuts for Rich Communities

Silicon Valley (SV) and King County, Washington (KCW) have created more wealth—in the form of market capitalization—than all of Europe. Let that sink in for a moment.

Now consider the population difference:
- SV and KCW: 6 million
- Europe: 742 million

That’s right: a tiny fraction of America’s population has outpaced an entire continent in generating financial wealth.

And here’s another striking detail: the Americans who create this wealth happen to live in counties with the highest average wages. Unsurprisingly, they also overwhelmingly voted for Harris in the last election. Just look at the five U.S. counties with the highest wages—they went blue by huge margins.

Cambridge, Massachusetts—the intellectual hub home to Harvard and MIT—gave Harris a 79-point margin of victory. So, the counties that generate the bulk of our financial and intellectual capital were decidedly out of sync with the nation as a whole.

Here’s the weird thing: these affluent communities didn’t vote for policies that just benefit themselves. They voted for aggressive investments in health, education, infrastructure, and subsidies to factories—the kinds of policies that help poorer communities most. Meanwhile, less affluent communities, often struggling economically, voted for policies favoring tax cuts for the wealthy.

It feels like voters are going against their self-interests. Wealthy communities are voting to share the pie, while poorer ones are voting to give the wealthiest an even bigger slice. What’s driving this? Are voters in less affluent areas being misled by cultural wedge issues? Have tax-cut advocates turned elections into culture wars, distracting from policy discussions that would directly improve lives?

It’s a paradox worth pondering: why are those with the most often the ones pushing hardest to help those with the least?

Trump’s Paradoxical Path to a Popular Presidency

Donald Trump’s best strategy for his second term might be to do... nothing. If he adopts an “inactive executive” approach—focusing on rallies rather than policy—he could leave office boasting of presiding over one of the strongest economies in recent history.

Here’s why: Trump is inheriting what may be the most remarkable economy of our lifetimes, certainly since the late 1990s. The forces driving this prosperity have built-in momentum that could generate stellar results—if Trump doesn’t derail them with his campaign promises.

The private sector is creating new businesses at double the rate it was in 2000, even in the face of high borrowing costs. As interest rates fall, we can reasonably expect that rate of new business formation to accelerate further. Private sector R&D spending is also at an all-time high, growing nearly twice as fast under Biden as it did during Trump’s first term. These investments are the seeds of future growth, sparking breakthroughs that will compound over time.

The public sector, too, is contributing. Biden’s extensive infrastructure plan is stimulating the economy and creating jobs on a scale never before seen. With over 60,000 projects underway, the effects of these investments will ripple through the economy for years, much like Eisenhower’s interstate highways did in the 1950s.

This combination of research, entrepreneurship, and public investment creates a virtuous cycle. Wealth, knowledge, and innovation all compound over time. Consider how mapping the human genome has enabled thousands of new projects, each one paving the way for tens of thousands more breakthroughs. Or how Amazon’s success didn’t just enrich Jeff Bezos—it empowered millions of small businesses to grow. Growth begets growth.

If Trump simply stays the course, GDP growth and job creation are poised to shine. A strong stock market and falling interest rates could provide further fuel, making the economy virtually self-sustaining.

But Trump’s campaign promises—tariffs and mass deportations—could wreck this golden opportunity.

A 10% tariff would add hundreds of billions in consumer costs, cut GDP growth in half, and stoke inflation. Mass deportations would be even worse: removing 16 million workers and consumers could shrink GDP by 4-7%, a blow greater than the Great Recession. Beyond the economic devastation, these policies would uproot families and communities, triggering public outrage—and for a president who thrives on adulation, that could mean a steep decline in popularity.

Ironically, the most effective path for Trump might be inaction. By allowing private investments and the long-term benefits of Biden’s infrastructure projects to work their magic, Trump could ride the wave of economic growth without lifting a finger. For a man whose greatest strength is holding rallies and energizing his base, doing less might actually achieve more.

In short, Trump’s best chance at a successful and popular presidency is to resist the urge to meddle. The economy’s trajectory is already set to thrive—if left undisturbed. He might do best if, instead of implementing policy, he just travels the country holding rallies. And given he’ll soon once again be our president, we, too, will benefit from him doing his best – even if it comes from him doing very little.

Elections as a Choice Between Exploring New Frontiers or Settling Into the Past

Every four years, 338 million Americans—roughly 160 million of them voters—engage in the process of choosing the next president. It’s remarkable that such a diverse electorate can narrow its choice down to two candidates, much less settle on one. But beyond selecting a candidate, this choice represents something deeper.

Embedded in the national conversation is a debate over which future is desirable: one grounded in familiar tradition or one open to progress. Louis Menand explores this contrast between premodern and modern life: “The problem of change is the problem of modern cultures. In a premodern society, the ends of life are given at the beginning of life. When you are born you understand what your tasks are because it is given to you by your family, your community, your nation. And the task of the community and the task of the nation is the same as your task – which is to reproduce the customs, the practices and the values of that group. So at the end of life you can look back and see that you have fulfilled this role that you were born into, with the understanding that if you have been successful in reproducing the customs, you are successful in life.”

“In modern cultures,” Menand continues, “you don’t have that assurance because the ends of life are not given at the beginning of life.” Modernity replaces certainty with choice, creating a life path that is less defined by the past and more open to the future.
Each election, Americans vote not only for a leader but for a vision of the future—whether to reach toward a familiar past or to embrace an uncertain future. This tension represents an ongoing national decision between the comfort of tradition and the potential of change. 

Tradition offers a certain future, where continuity defines success, while progress introduces the potential for a better, if unpredictable, future.

In 1800, when Thomas Jefferson—who would double the size of the country through the Louisiana Purchase—was elected, America’s frontier faced uncharted lands. By moving the frontier westward by a thousand miles, he expanded the nation's horizon physically. Today, in 2024, our frontiers are less geographic and more conceptual. They encompass unexplored ideas, evolving lifestyles, innovative policies, new business models, institutions, products, and cultures. The American choice is no longer simply a physical frontier but one that asks whether we embrace unknown ideas or cling to familiar ways.

Do Americans put their trust in tradition or innovation? In the familiar or the unknown? In nostalgia or hope? Are they eager to make the country great again or to make it great in genuinely new ways? This is one of the defining choices of each campaign: a vote for a culture rooted in continuity or one committed to progress. Every election reopens this profound choice—a cyclical conflict between preserving what we know and daring to move into an unknown frontier.

How the Election Could Impact the Stock Market

All the usual caveats apply to this stock market forecast. [which is to say, this is speculation not prophecy]

November could be a tough month for stocks. At the end of this post, I’ll share a tip for those of you who feel like you’ve missed out on the past year’s bull market and are wondering if now’s the time to jump in.

Election Impact on the Market

A Trump Victory: A Trump win could trigger a sell-off due to the potential for aggressive policies like mass deportations and tariffs. Deporting 16 million people would likely reduce GDP, and tariffs would disrupt supply chains and foreign markets critical to major companies like Apple and NVIDIA. Given that these top companies are deeply integrated into a global market, tariffs and retaliatory tariffs would threaten their supply chains and earnings. If the market believes Trump will pursue these policies, it may price in this risk, leading to a drop.

A Harris Victory: Harris’s election, on the other hand, might prompt a temporary sell-off but for different reasons. While she hasn’t proposed wealth or estate taxes explicitly, some investors might anticipate future tax changes and choose to lock in gains under the current tax code. However, her policies aren’t expected to disrupt economic fundamentals. Harris advocates for trade continuity, foreign investment, and tax policies favorable to new businesses, suggesting stability for the global brands driving the stock market. Any initial sell-off would likely be short-term.

The Opportunity
Here’s the tip: If Harris is elected, any post-election drop could be a good chance to buy in at a discount, as the long-term trajectory of the market is likely to stay positive. Her policies aim to sustain growth by supporting trade and investment, so a brief sell-off could offer a smart entry point.
If Trump wins, the market will face a different scenario. His policies would likely shift the economy away from the global approach that benefits major corporations. U.S.-based global brands depend on open trade, supply chains, and diverse talent pools, so immigration restrictions and tariffs would put strain on these companies. For investors, this could mean a stagnant or declining market if Trump follows through on his anti-globalization policies, as the values of globally oriented companies could suffer.

The MAGA Coalition and Next Week's Potential Reversal of Progress

MAGA is essentially a coalition of losers from history: those who opposed FDR’s regulation of capital, Lincoln’s shift from tariffs to income taxes and public investment, and Jefferson’s push to separate church and state. Each was a minority in its day, but together—and fueled by disinformation—they’ve turned next week’s election into a coin flip. Now, they have a real shot at overturning the three most defining and positive political transformations of the modern world.

What Was Possible With Even An Average COVID Response

In the first year after the outbreak, COVID fatalities in the U.S. occurred at roughly twice the rate of the average OECD country. This suggests that, had the pandemic been managed as effectively as in other countries, around 40% of the Americans who died from COVID in that first year might have survived.

Pennsylvania - Still a Swing State 224 Years Later

In the 1800 election between Federalist John Adams and Democratic-Republican Thomas Jefferson, Pennsylvania was the swing state that tipped the scales. 224 years later, it’s still a swing state with the power to deliver the presidency. (A client from Philadelphia once told me, 'Pennsylvania is Philadelphia on one side, Pittsburgh on the other, and Alabama in between.' That's a formula for a purple state.)


It’s almost as if the ghosts of the Founding Fathers are making sure the state that hosted the creation of the Declaration of Independence and the Constitution still has the final say in this country’s direction. (And if ghosts are haunting the country, it might explain why Election Day is just a week after Halloween.)

Zero-sum Thinking and Resultant Slowdown at the Heart of Economic Stagnation, BREXIT, and MAGA-nomics

The UK's GDP growth per person slowed dramatically from 2.5% to around 0.5% annually following Brexit—a drastic change, largely attributable to the economic effects of Britain's withdrawal from the EU and the global economy.
Just as Britons narrowly voted for Brexit, we Americans might similarly (and narrowly) vote for Trump, potentially embracing policies that involve withdrawing from the global economy through tariffs, deportations, and other isolationist measures. If so, we could experience a comparable economic slowdown, starkly contrasting with the thriving economy of recent years.
This isn’t surprising. While economies are complex and unpredictable, one certainty is that zero-sum thinking—where gains are seen only at others' expense—leads to economic decline. The mindset behind Brexit was that Europe was prospering at Britain's expense, just as Trump's supporters believe that the world is prospering at the expense of the U.S. Zero-sum thinking is not only the root of conflict but a path to scarcity. Unfortunately, it’s also at the core of both Brexit and "MAGA-nomics."

Acemoglu, Johnson and Robinson - A Couple of Key Ideas Behind Today's Nobel Prize in Economics

Today, Daron Acemoglu, Simon Johnson, and James A. Robinson won the Nobel Prize in Economics. That pleases me. I’ve mentioned Acemoglu in 20 of my Facebook posts, and I believe his two most popular books (one co-authored with Johnson, the other with Robinson) are profoundly important. For those who haven’t read his longer works, here’s a simple summary of his key ideas.

In Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Acemoglu and Robinson emphasize that the design of institutions is fundamental to economic outcomes. They illustrate this by contrasting British and Spanish colonies in the Americas. Why did one set of colonies lead to economic abundance, while the other led to relative poverty?
In the British colonies, institutions were more inclusive. This meant that not only did the sponsors back in Britain receive a share of the returns, but those actually living and working the land in North America benefited even more. If the colonial settlers worked harder or innovated, they reaped the rewards, fostering a culture of productivity and improvement.
In contrast, the Spanish colonies were designed as extractive. The Spanish elites back in Spain extracted nearly all the wealth from the colonies’ mines and plantations, leaving the native laborers destitute regardless of their efforts. These workers had little incentive to work harder, innovate, or improve their conditions since they wouldn’t benefit from any additional effort or creativity.

The extractive institutions stifled growth and innovation.

Acemoglu’s more recent work with Johnson - Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity - builds on this by examining the role of technology in economic outcomes. They argue that there is nothing automatic about technological advancements benefiting the majority. History shows periods where the elites captured the overwhelming share of productivity gains, and other periods when those gains were more broadly shared, improving the lives of workers as well as capitalists.

Focusing specifically on AI, Acemoglu is skeptical about whether its potential gains will be shared widely or remain concentrated among a few. He argues that the outcome—whether gains are broadly shared or narrowly held—will depend on deliberate policy decisions, not on the simple evolution of the technology itself or market forces.

I share Acemoglu’s sense that with economics’ small 1 to 3% annual changes, all the really fascinating progress plays out over generations and not months or years. Economic progress has deep causes and the design of institutions is even more important than the design of tools or products. It's gratifying to see that recognized by the Nobel Prize committee.

Well It Seemed Funny at the Time

 "He’s the kind of guy who’ll pee on your leg and call it trickle-down economics."

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"I'm cooking, Jerome! You said this hike would be shady!"

"Shady? No, I said this hike is hotter than Hades."

***

What are the odds that Miss Universe actually is?

*****

I’m so tired of Southern California being overrun with illegals. You see them everywhere—on the freeway, where the speed limit is clearly 65 mph, and yet at least a third of the cars are driving faster than that! Illegals... shamelessly speeding in plain sight.

*********

They keep saying the stock market is booming, but I'm not convinced— the S&P has been stuck at 500 for so long that it's now reached the point of absurdity.

*************

Manny Machado.
Is there a name with a higher testosterone count?

***********

I've defined a new kind of economic cycle: Buliminomics.

In Buliminomics the economy undergoes a binge (excessive spending, often fueled by borrowing or credit) followed by a "purge" phase (where consumers cut back on spending to manage or pay off debt), before returning to another cycle of splurge.

Buliminomics: the splurge and purge that leads to dangerous economic excess.

***********

My economic plan is bold, visionary, and - with a positive attitude - achievable: get everyone into the top 1%. Because even the average person deserves to be better than average.

"Some are born great, some achieve greatness, and some... well, they vote for me."

************

I get that the label "all natural" helps sell products, but honestly, if I saw something labeled “10% supernatural,” I’d probably buy it—at least once.

**************

Sobering to think that I’ve reached an age where if I say, “I’m literally dying,” people really would take me literally. Which is kind of ironic.

**********

But enough about me, he said. Now I'd like to tell you about my hobbies.

********

"I was really surprised that our relationship didn't work out," he said.

"Oh? Why was that," I asked.

"Well we were both Geminis. I felt like we would totally understand each other. I mean, I've been reading her horoscope every day for years."

**************

It is all well and good to dream big but a chicken who never accepts the fact that he can't fly is just going to create a lot of squawking and mad flailing of wings and rob the whole barnyard of peace.

***********

Sitting in Costco with 3 vaccinations freshly coursing through my veins wondering if medieval peasants would be more amazed by immunizations against plagues or a vast building with stacks of food 20+ feet high in every direction.

And progress isn't even done yet.

**********

All this talk about “utopia,” but what he really meant was “me-topia”

*********

After a few too many drinks, he tried to say he was a policy analyst, but what came out was "Pollyanna-ish." Given what we'd heard from him all night, it seemed like an apt confession.

**********

He woke up confused, having slept in latte and hastily splashed pumpkin spice cologne on his face. Fall always left him feeling a little disoriented.

*********

“The best material model for a cat is another, or preferably the same cat.”

- Norbert Wiener

**********

He was really excited to hear that the Fed was planning a hate cut ... until someone corrected him to point out that they were actually talking about a rate cut ... which somehow seemed less imperative to him.

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In 2025, Pluto goes into the public domain. In 2028, Goofy does.

I'm looking forward to a heartwarming story in about 2030 in which Pluto and Goofy look at each other soberly and Goofy says, "I don't know why we go through this charade. You're his pet and I'm his friend and nobody can explain why he treats us so differently and we pretend to be so happy about it. This has to stop. Either you join us at the dinner table or I join you at the doggy dish but we have to stop letting a manipulative mouse come between us like this."

It'll be a heartwarming story about rising above the scripts we've been handed and living life as our true self, of treating others as equals.

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Waiter or waitress has always connotated waiting. I think there was a time in history when it referred to the server waiting on the diner and not the diner waiting on the server. But I'm not sure. I'll wait for you to look that up.

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I'm going to call my AI model "elves on the Internet" and cater to the market of folks too savvy to fall for the notion that so-called algorithms are sufficient to generate such results.

I expect that I'll capture nearly half the market.

If you would like to be an early investor, there are two options:

1. Invest $100k into the startup.

2. Provide job references for at least 2 elves.

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I have strong opinions about everything. Except, you know, strong opinions. I'm not sure if it's a good or bad thing to have so many strong opinions.

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John Gray points out that Freud wasn't intent on transforming people or their potential or sense of self. Freud stated, “the goal of psychoanalysis is to turn neurotic misery into ordinary unhappiness.”

Probably harder to sell as a promise but ordinary unhappiness does sound like an attainable goal.

What are your goals for 2025, Fred?

I'd like ordinary unhappiness for a change.

Oh, well good luck with that.

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The promise of social security seemed both noble and absurd to him… until he discovered it was just about monthly payments, and had nothing to do with alleviating social anxiety or tackling the tougher issues of status, acceptance, or belonging.

Christian Nationalists - People Who Would Like You To Think They Understand Christianity More Than Christ and Government More Than the Founding Fathers

In the four Gospels, Jesus doesn’t mention abortion or homosexuality—not once.

But in three of the four, He gives the same advice to a rich young man who wants eternal life: sell everything you have and give it to the poor. Also, in three of the four, He says it’s easier for a camel to go through the eye of a needle than for a rich person to enter the Kingdom of Heaven.

The Bill of Rights has 10 amendments, and the very first begins with, "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof..."

So, if you don’t want to sell all your possessions—despite the fact that Jesus explicitly taught it—the First Amendment suggests you don’t have to. And if you don’t want to lose your right to decide whether or not to have a child, not only does the Constitution forbid others from legislating their religion onto you, but the religion they want to impose on you isn’t one Christ taught anyway.

I suppose it’s possible that Christian nationalists who want to legislate their beliefs understand politics better than the Founding Fathers who gave us the First Amendment and understand Christianity better than Christ. Possible—but unlikely. Because if they did, the real Christian nationalists would be out here pushing for a 100% wealth tax. And I guarantee you, when that happens, these faux Christian nationalists will be waving the First Amendment faster than you can say, “seize the means of reproduction!”

How Trump Uses Nonsense to Distract From His Nonsense

Let's talk nonsense this morning. Or, more specifically, let’s talk about why Trump talks so much nonsense. He does it to distract reasonable people from his unreasonable policies.

Let's start with some facts.
The number of children living in poverty doubled from 5 million to 10 million between 2021 and 2023. Why? Because the expanded Child Tax Credit (CTC) expired at the end of 2021.
Meanwhile, the U.S. has 800 billionaires. This morning the five richest Americans are worth a combined one trillion dollars.

Trump’s policy is simple: He sees 10 million children in poverty and believes we should cut their benefits. He sees 800 billionaires and thinks we should cut their taxes.

Trump believes that the rich and powerful should be richer and more powerful, and that the poor should be poorer.

That is nonsense.

So, how does he distract you from this nonsense? With other nonsense.

"I'm still gonna call them an illegal alien," JD Vance recently said about Haitian migrants who are in Ohio legally. This echoes Trump's rhetoric, who claimed during his one debate with Harris that immigrants were eating people’s pets —a claim that originated from a false Facebook post and has no basis in reality.

When Trump pushes this nonsense about Haitians eating pets, it does two things: First, it excites racists and fuels racial division. Second, and more importantly, it distracts voters from his agenda based on his conviction that poor children are not poor enough and the wealthy are not wealthy enough.

He spouts nonsense about immigrants eating your pets or claims that children are coming home from school to unsuspecting parents surprised to learn that their child has had transgender surgery between classes. He spouts nonsense to distract you from the fact that the combined wealth of the five richest Americans is one trillion dollars, and he plans to give these men even more tax breaks.

In short, he’s distracting you from his nonsensical policies with nonsensical lies - his hope apparently that we will be made numb, or senseless with all of his nonsense.

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Here fact checker Daniel Dale of CNN lists some of the completely fictional stories Trump has been recently telling.
https://www.cnn.com/2024/09/19/politics/fact-check-donald-trump-fictional-stories/index.html

2 Reckless but Potentially Valuable Forecasts for This Week

I'm going to make a couple of reckless forecasts for this week.

On Wednesday, September 18, Fed Chair Jerome Powell will announce a 50 basis point rate cut, signaling the end of an aggressive rate-hiking cycle that began in 2022. This will be the first cut in over four years.

As a result, the NASDAQ will rise more than 1%, maybe as as high as 3% by week's end. With inflation moderating and further rate cuts probable, investors could flock back to tech stocks, pushing the index higher. The NASDAQ has historically responded positively to rate cuts, with the index rising an average of 2.4% in the month following similar announcements.

2 Ways to Define Conservative and Liberal and How R&D Spending Predicts How Communities Vote

In America, we use "conservative" in two main ways. One, to describe those who want less government. And two, for those who protect traditions and reject change.
Similarly, "liberal" covers both people who distrust wealth and corporations, and progressives who want society to evolve and improve, prioritizing quality of life and individual freedom over tradition.

New data on R&D spending as a percentage of state GDP supports the idea that conservatives resist novelty while progressives embrace it. States investing more in R&D, aiming to change the world, voted overwhelmingly for Biden in 2020. Conversely, states spending less on R&D favored Trump. The contrast is striking: the 10 states with the highest R&D spending voted for Biden by an average margin of 19 points, while the 10 states with the lowest R&D spending backed Trump by 18 points.

Data on the 10 states with the most and least R&D spending below.

Source for data here:
https://www.bea.gov/news/blog/2024-05-09/experimental-rd-value-added-statistics-us-and-states-now-available

Trump of McCain - I Like People Who Weren't Captured. McCain of Trump - I Like People Who Weren't Shot

In July 2015, during a campaign event in Ames, Iowa, Donald Trump made controversial remarks about John McCain. Trump said, "He's not a war hero. He was a war hero because he was captured. I like people who weren't captured"

John McCain was not drafted during Vietnam. He enlisted.

McCain was held as a prisoner of war in Vietnam for 5 years and 10 months, from October 26, 1967, until his release on March 14, 1973.

After being captured and enduring severe injuries and torture, McCain was offered early release by his captors in 1968. This offer came because his father, Admiral John S. McCain Jr., was a high-ranking naval officer and had been named Commander-in-Chief of Pacific Command.

However, McCain refused the offer of early release, adhering to the military code of conduct, which stipulates that prisoners should be released in the order they were captured. McCain believed it was important to maintain solidarity with his fellow prisoners and to prevent the enemy from using his release for propaganda purposes. He insisted that those captured before him be released first​​. This decision resulted in McCain enduring additional years of brutal treatment and torture until his eventual release in 1973.

The reason McCain was unable to lift his arms over his head was due to the torture and harsh treatment he endured during his captivity. After being shot down and captured, McCain was subjected to severe beatings, torture, and was often kept in solitary confinement. His injuries included broken arms and a broken leg, and the inadequate medical treatment he received exacerbated his condition. The physical abuse led to lasting damage, particularly to his shoulders, which is why he had difficulty lifting his arms above his head.

Imagine dismissing all that with the comment, "He's not a war hero. He was a war hero because he was captured. I like people who weren't captured" It would be as if McCain were still alive and said of Trump, "I like candidates who weren't shot." The idea that someone would dismiss an assassination attempt should horrify you - nearly as much the idea that any candidate aspiring to be Commander of Chief would dismiss the ordeal of a POW.

For the MAGA crowd, enduring years of torture by a military enemy is to be dismissed. Shot at by a deranged teenager is to be reverenced.

And of course when you're in a cult, you can't trust your own judgement about whether something is to be ridiculed or reverenced until you know what the cult leader thinks. So now Republicans know - one is supposed to dismiss the suffering of a Prisoner of War but show sympathy and outrage for someone attacked by a would-be assassin. Well, they are half right. Pity that echoing Trump's mood and philosophy doesn't quite allow someone to be fully human.

Kamala Harris, Immigration, Progress and Trump's Internment Camps

Kamala Harris is a product of a very different immigration policy than the one that came before LBJ and the one that will come after Trump.

Prior to LBJ, immigration was essentially proportionate to countries already represented in the US. Lots of Americans of British and German descent, for instance, was matched by lots of immigrants from Britain and Germany. LBJ changed that, making immigration increasingly dependent on academic achievement or potential, understanding the importance of knowledge workers and diversity in the information economy.

Kamala Harris's parents met at grad school at UC Berkeley - he from Jamaica and her from India. Once they graduated they became part of the academic and research professionals who define the leading edge of progress in developed nations. Her father taught economics at Stanford. Her mother was a cancer researcher at UC Berkeley and Lawrence Berkeley National Laboratory. The Bay Area where they worked and Kamala lived before moving east for work has an immigration rate that is nearly triple that of the US as a whole. (And, of course, plenty of children of immigrants as well.)

Quite a few Americans were thrown by the fact that these immigrants were less likely to look like the folks who'd previously immigrated here from places like Northern Europe. LBJ's new immigration policy also resulted in immigrants who are generally more productive, innovative, and entrepreneurial.

The Bay Area, for example, has levels of entrepreneurship that has led to the creation of more wealth than anywhere else in the world - a rate of entrepreneurship enhanced by the portion of immigrants it has. The 12 most valuable companies in the Bay Area alone have a combined value that is 6X the value of Germany's entire stock market, 4X the value of France or the UK's entire stock market, and 2X the value of Japan's. There is no place or time in history that has even come close to the Bay Area's ability to create wealth, an ability enhanced by its diversity.

Of course most Americans are far more interested in taking power from women over their own bodies and lowering the portion of immigrants in their communities than they are in creating wealth and prosperity.

And the American leading in the polls for president thinks that state legislatures rather than individual women should have control over women's bodies, and actually thought that the country's first African-American president was literally from Africa ... and because of that won the affection of nearly half of Americans for whom such a claim seemed sensible and brave. In the eyes of some, Kamala Harris is a wonderful success story: in the eyes of most Americans she is alarming.

Biden - and presumably Harris - will win the Bay Area by a 4 to 1 vote but will lose rural Mississippi and quite possibly Ohio, Georgia and other states that value "tradition" more than progress, places that find immigrants alarming.

How alarming? Trump is leading in the polls, a majority of Americans delighted with his promise to deport about 15 to 20 million immigrants. To put the scale of this roundup, internment and deportation in context, only 4 states have populations greater than 15 million. Trump has expressed a willingness to to create internment camps to hold these immigrants. We could have a total internment camp population greater than the population of all but 36 states. And Americans who got angry about wearing face masks are very excited by the prospect of armed immigration officers busting into homes and businesses across the US to roundup people without proper documentation. (And of course this will mean millions of children born here, with citizenship, who presumably have a choice between orphanages or being deported from a country in which they have citizenship, causing the numbers who will be rounded up to swell.)

Hitler's was the last administration in the West to attempt internments at this scale.

But Joe Biden is old so we'll have to go with the much younger (by more than 2 years) Donald who promises us chaos and violence that will dwarf his last presidency. (How violent was his last presidency? His own VP had his life threatened on January 6 and now refuses to endorse the president he served with. Only one other time in all of American history has a VP turned against the president he served under. In 1832 - nearly a century ago - Calhoun resigned as Jackson's VP.)

It is doubtful that we'll have Harris as VP next year - and certainly won't have a minority woman as president. Not in a country where nearly half of Americans are convinced that if only history gave some nation a second chance at internment camps they could get it right. We have millions of angry Americans because, you know, egg prices went up last year. Polls now suggest that most Americans prefer the prospect of immigrant roundups and internment camps with populations greater than Ohio's to a president who stutters. It's a curious set of values we have.

Americans. We're not interested in creating wealth or in progress. We just don't want to be around people who look different.

The Transformation in Trade Has Made Tariffs More Terrible Since the Time of David Ricardo in the Early 1800s

I don't think that enough is made of the inflation impact of Trump's tariffs.

When David Ricardo introduced the concept of comparative advantage in trade in 1817, he explained it using the example of Portugal trading wine for England's cloth. He demonstrated that even if one country could produce both goods more efficiently, it still benefits from specializing in the good it can produce at a relatively lower cost and trading for the other.

Today, trade is much more complex. Products like cars, computers, smartphones, and TVs involve hundreds of parts and multiple production steps across different countries.
In Ricardo's time, tariffs would typically be applied once to a simple finished product, like a bottle of wine. Today, with global supply chains, each part of a product might cross several borders before the final product is assembled. Each crossing could incur a tariff, leading to multiple tariffs on a single product.

With multiple border crossings for complex products like TVs, cars, and smartphones, a world with tariffs could mean prices 10 to 100 percent higher. In Ricardo's world, a tariff would impact a single product once. In our world, tariffs can affect each component multiple times, significantly increasing costs. This makes modern tariffs a much more expensive proposition, as they add up with each border crossing.

High tariffs in such a world are a curious proposal from a party that has incessantly complained about inflation that is now about 2 to 3 percent and quickly falling.

AI Writes About My Book The Fourth Economy and The Transformation of Church, State, Bank and Corporation

The concept from "The Fourth Economy" posits that since the Dark Ages, major societal transformations have been driven by shifts in defining institutions, shaping how these institutions serve individuals. Here’s an evaluation and explanation of this idea:

Historical Transformations of Defining Institutions:

The Protestant Reformation:
Transformation: The Protestant Reformation in the 16th century fundamentally altered the religious landscape of Europe.
Outcome: It challenged the authority of the Catholic Church, leading to religious freedom and pluralism. The church's role shifted from a monolithic authority to a tool that individuals could use to explore their faith.
Impact: This laid the groundwork for individual rights and freedom of conscience, influencing modern concepts of religious liberty.

The Democratic Revolution:
Transformation: The democratic revolutions of the 18th and 19th centuries (e.g., the American Revolution, the French Revolution) redefined the role of the state.
Outcome: These revolutions established democracy, transforming the state from a sovereign entity into a mechanism of governance that serves the people.
Impact: This shift empowered individuals with political agency and rights, institutionalizing concepts of citizenship and representative government.

The American Dream:
Transformation: The notion of the American Dream in the 20th century democratized finance and credit.
Outcome: Access to credit and investment opportunities expanded, allowing a broader segment of the population to participate in economic growth and wealth creation.
Impact: This economic democratization contributed to a burgeoning middle class and widespread prosperity, emphasizing the individual's potential for upward mobility.

Prediction: Transformation of the Corporation:
The Fourth Economy:
Prediction: The book predicts that the next major transformation will involve the corporation, shifting it to become a tool for individuals who work within it.
Rationale: This prediction is based on emerging trends where employees seek more autonomy, purpose, and a stake in their organizations.
Possible Outcomes:
Employee Empowerment: Corporations could evolve to offer more democratic work environments, profit-sharing, and collaborative decision-making processes.
Corporate Social Responsibility (CSR): A greater emphasis on CSR could align corporate goals with the broader interests of society and the environment.
Innovation and Flexibility: Empowering employees could lead to greater innovation and adaptability, essential in the rapidly changing global economy.
Evaluation:
Historical Continuity: The notion aligns with historical trends where transformative periods redefined major institutions to better serve individual needs and rights.
Current Trends: There is evidence supporting this prediction. For instance, the rise of employee-owned companies, the gig economy, and increased focus on workplace culture and values suggest a shift towards more inclusive and employee-centric corporate models.
Challenges: The transition may face resistance from entrenched corporate interests and require substantial changes in corporate governance, legal frameworks, and cultural attitudes towards work and employment.
Conclusion:
The Fourth Economy’s notion is a compelling framework for understanding societal transformations. By drawing parallels with historical shifts, it provides a coherent narrative for the potential future evolution of corporations. If corporations do transform as predicted, the change could herald a new era where businesses not only drive economic growth but also enhance individual well-being and societal progress.

Is the Fourth Economy Still Valid? - What Chat GPT Has to Say About My First Book, the Fourth Economy (Part One)

Part One:

"Is the Fourth economy still valid?"

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The validity of the "Fourth Economy" theory can be evaluated based on its relevance to current economic trends, technological advancements, and societal impacts. Here’s an analysis of its ongoing relevance:

*1. Technological Advancements*
- *Still Relevant:* The theory's emphasis on technology as a key driver of economic change remains valid, particularly with the rise of AI, machine learning, blockchain, and other cutting-edge technologies.
- *Current Examples:* AI is transforming industries, enhancing productivity, and creating new markets, consistent with the Fourth Economy's focus on innovation.

*2. Innovation and Entrepreneurship*
- *Still Relevant:* The importance of fostering innovation and entrepreneurship continues to be a cornerstone of modern economies.
- *Current Examples:* Startups, especially in tech, continue to disrupt traditional industries, and innovation hubs like Silicon Valley remain vital economic engines.

*3. Globalization and Competition*
- *Still Relevant:* The interconnectedness and competition on a global scale, as highlighted in the Fourth Economy, are more pronounced than ever.
- *Current Examples:* Global supply chains, international trade, and multinational corporations thrive, driven by technological advancements and digital platforms.

*4. Impact on the Workforce*
- *Still Relevant:* The shift in skill requirements, job displacement, and creation of new roles align with current trends.
- *Current Examples:* The need for digital literacy, AI expertise, and continuous learning are evident in today’s job market.

*5. Flexible Work Arrangements*
- *Still Relevant:* The trend towards remote work and gig economy jobs predicted by the Fourth Economy has accelerated.
- *Current Examples:* The COVID-19 pandemic has further entrenched remote work and freelance opportunities, supported by digital tools.

*6. Education and Training*
- *Still Relevant:* The call for changes in education systems to prepare for a rapidly evolving job market remains pertinent.
- *Current Examples:* Increasing emphasis on STEM education, coding boot camps, and lifelong learning programs.

*7. Urban and Rural Transformation*
- *Still Relevant:* The growth of tech hubs and the transformation of urban and rural areas continue.
- *Current Examples:* Smart cities, tech parks, and digital infrastructure projects are expanding globally.

*8. Income Inequality*
- *Still Relevant:* Addressing potential income inequality remains a critical issue.
- *Current Examples:* The disparity between high-skilled tech jobs and low-skilled jobs is growing, necessitating inclusive policies.

*9. Sustainability and Inclusivity*
- *Still Relevant:* The focus on sustainable and inclusive growth is increasingly important.
- *Current Examples:* Growing emphasis on green technologies, corporate social responsibility, and inclusive economic policies.

*10. Proactive Measures*
- *Still Relevant:* The need for proactive measures by governments, businesses, and individuals to navigate economic changes remains crucial.
- *Current Examples:* Regulatory frameworks for AI, public-private partnerships, and individual reskilling initiatives.

*Conclusion*
The "Fourth Economy" theory remains a valid and insightful framework for understanding contemporary economic trends and preparing for future challenges. Its emphasis on technology, innovation, globalization, workforce transformation, and proactive measures continues to resonate with the current and evolving economic landscape.

2024 Lost Perspective in Politics

History books in 50 years:

One candidate had tried to violently overthrow democracy when he lost his last election, shrugged his shoulders at the mob's attempt to assassinate his VP, was found guilty of 32 felony counts, told NATO allies he would do nothing to stop Putin from invading their countries and proposed tariff policies that would cause inflation to surge, and only gained an endorsement from 4 of the 44 cabinet members from his presidency.

The other candidate looked old and didn't finish a few sentences in a debate.

Pundits across the spectrum called for the other candidate to drop out of the race.

Mellon's $50 Million MAGA Donation Sets New Record for Single Donation to a Political Campaign

Andrew Mellon, a financier who served as Treasury Secretary, faced investigation by the Roosevelt administration for alleged tax evasion starting in 1933. Mellon had a vast collection of art. For years, after his tax bill was calculated, Mellon would “donate” art to a nonprofit institution he had formed, a donation each year equal in value to his tax bill. The art would not move, most continuing to hang in one of his homes. By the time of the trial, he had donated some $40 million worth of art, yet he had done nothing to suggest that the paintings would be used for public good.
In 1936, amidst the scrutiny, Mellon announced his plan to donate his collection to the nation, and he provided funds for a national gallery. This donation led to the establishment of the National Gallery of Art, which opened on the National Mall in Washington, D.C., in 1941. Mellon's collection formed a significant part of the museum's initial holdings.

Related, Timothy Mellon - an heir of Andrew Mellon’s – recently made the largest political donation on record - $50 million to Trump’s campaign through the MAGA PAC. No word as to whether any art was included.

Parenting, Politics, and Stages of Development

The actual meaning of the word parent evolves all the time. The parents of an infant, a kindergartener, and a teenager have vastly different responsibilities. There are a number of ways to succeed or mess up as a parent but one sure way to mess up as a parent is to master what it means to parent, say, a 9-month old and then never change your behavior towards the child even as they grow older. It would be a disaster to parent a toddler as if they were 15 or a teenager as if they were a toddler.

I think something very similar is true of politics and policy with evolving economies. What makes for great policy during a time when 90% of your population is farming is very different from what makes for great policy when you're in an industrial or information economy. Originalists who seem to dominate the Supreme Court and have really robust representation in Congress are the folks who insist that what made you a great parent of a toddler is just what will make a teenager love you.

Income Tax and The Contrast Between the Republican Party's First President (Lincoln) and Last President (Trump)

Trump has suggested that he could get rid of income tax and simply replace it with tariffs. As Catherine Rampell of the Washington Post points out, 40% of Americans don't pay income tax (and some of them actually "pay" a negative income tax) but everyone would pay tariffs. (Tariffs are not charged to foreign producers. They are paid by any American who buys an import, from an avocado to a smart phone.)

I've argued before that Lincoln was the first Republican president and Trump will be the last. This policy proposal is just one of many reasons why.

Trump was born rich and thinks that government does too much for the poor. Lincoln was born poor and thought that the government could do so much more for the poor. Lincoln initiated the income tax and sweeping public investments; Trump may end both.

The Democrats dominated American politics from the time of Jefferson to Lincoln, from 1801 to 1861. One of their core beliefs was that government should not engage in any investments - not roads or canals or schools or research. Everything should depend on individual rather than government initiative. It is weirdly congruent with the philosophy of a lot of conservatives, libertarians and Republicans today. That is, the modern Republican Party is a lot like the old Democratic Party. The one presidential portrait Trump hung in the Oval Office was of Jackson - the Democratic president who vetoed the national bank that Lincoln did so much to resurrect.

Lincoln was a strong proponent of government investment to create more affluence and opportunity for ordinary Americans. He signed legislation that created Morrill Land-Grant Colleges - creating a list of state universities that includes Iowa State, Michigan State, Pennsylvania State, Texas A&M, University of California, Berkeley, University of Illinois at Urbana-Champaign, and University of Wisconsin-Madison - more than 100 universities.
Lincoln grew up poor - born in a one-room log cabin (not a one-bedroom but one-room) and had only one year of formal education. He strongly believed that government should invest to improve the lives of everyone - particularly children born in poverty.

What were the result of Lincoln's investments in the country? During the time of Lincoln's administration and the decades after, the US economy grew faster than any other economy in the world and faster than any economy had in the history of the world.

Lincoln's policies faced fierce opposition from Democrats who thought government had no role in making investments like transcontinental railroads or universities or regulating banks and financial markets. Democrats who thought that the federal government could get all the financing it needed from ... tariffs.

Lincoln's most significant act was freeing slaves but that was almost incidental to his broader vision of creating an industrial economy and opportunity. Lincoln thought that more could be done to create opportunity for everyone - particularly the poor and enslaved.

Unlike some of my liberal friends, I don't think billionaires are a sign that the economy is broken. I think its awesome. Unlike my conservative friends who support Trump, I don't look at current reality and say, "What the rich need are more tax cuts and what the poor need is less welfare." I think that's demonstrably absurd. (Rather than get rid of income tax I think we should begin wealth tax.) At least as much as in the time of Lincoln we can and should tax the rich to fund investments in the poor. But of course, no contemporary Republican would agree with Lincoln's economic policies today. It's not Lincoln's party anymore. It's Trump's. And he has actually resurrected the party of Andrew Jackson - and is putting the final knife into the party of Abraham Lincoln.

No D-Day with the Donald

Before American troops ever landed in Europe, FDR had said, "We must be the great arsenal of democracy. For us, this is an emergency as serious as war itself. We must apply ourselves to our task with the same resolution, the same sense of urgency, the same spirit of patriotism and sacrifice as we would show were we at war."

In his radio address to the nation on the evening of June 6, 1944 - 80 years ago today on D-Day - Roosevelt led the nation in prayer. Here’s an excerpt from that address about American soldiers and our allies:

"They fight not for the lust of conquest. They fight to end conquest. They fight to liberate. They fight to let justice arise, and tolerance and good will among all Thy people. They yearn but for the end of battle, for their return to the haven of home."

Putin is the first European leader to lead an invasion of a neighboring country since Hitler. Here's what Trump said to European allies concerned about Putin's invasion of Ukraine and his threat to other European neighbors.

"No, I would not protect you. In fact, I would encourage them [Putin and the Russians] to do whatever the hell they want."

Imagine WWII with Trump in the White House instead of FDR. There would be no D-Day celebration today. Hitler would have been unstopped. Stop pretending that there is anything normal or noble about Donald Trump.

Women Will Decide the 2024 Election

In 2020, if only women voted, Biden would have won the states 5 to 1 and the electoral college nearly 3 to 1.

Women. You will decide this election.

America's Great Institutional Recession

In 1984, over 60% of Americans were satisfied with democracy. Today, that number has plummeted to just 28%, reflecting a deep disillusionment with our 236-year-old system of government. There is a particular kind of poignancy in the fact that in the world’s first modern democracy, democracy itself no longer has enough support to win an election.

Gallup tracks the nation’s trust in some of America’s most defining institutions - churches, banks, the Supreme Court, the military, public schools, newspapers, Congress, organized labor, and big business. To varying degrees, Americans have lost confidence in all of them. In 1979, nearly half of the population had a great deal or quite a lot of confidence in these institutions. Now just 26% do.

We are in the middle of a very weird and long recession, one that has left many Americans anxious, angry, and convinced that conditions are bad and getting worse.

We are not in an economic recession. Labor and capital markets are thriving. Last month continued the longest streak of unemployment under 4% in half a century. The NASDAQ is up 12% so far this year – up 35% from a year ago. Inflation at 3.4% is still higher than its 21st century average of 2.6% but it continues to fall. In most periods of American history these numbers would be feeding talk about an economic boom.

We are in an institutional recession. That’s scarier. Why? We know how to deal with an economic recession but haven’t even begun the discussion about how to confront an institutional recession. Save for the dwindling handful of nerds who stand up to argue for the importance of church, universities, big-tech, or government bureaucracies, you’re more likely to hear loud criticism of institutions than any defense of them.

And that’s dangerous because our quality of life depends on institutions. We depend on thousands – millions - of people we don’t even know to grow, ship, and prepare our food, to make our clothes, to update our apps, and operate the seemingly invisible systems with thousands of parts that regulate our supply of goods, water, electricity, and information. And through "tasks" like work, worship, and learning, these institutions even create meaning.

These strangers create value for us through a vast web of institutions: schools that educate workers, law enforcement and courts that regulate, and corporations that make, ship, and deliver goods and services. Our small network of family and friends would collapse under the weight of the complexity our quality of life depends on. The decline in quality of life from where we are now to what we could sustain with the small groups our tribal impulses draw us toward would be precipitous. While we can afford to be unhappy with the myriad institutions that define our lives, we cannot afford to discard them or follow our worst impulses into a world of Hatfield and McCoy-style alliances. Our modern world depends on millions of strangers working through and within hundreds of thousands of institutions. We need them to function.

It is difficult to understand Trump's allure without recognizing the deep disenchantment Americans feel toward their institutions. When people anywhere grow frustrated with their institutions, they often turn to strong men who promise to blowup or marginalize institutions.

There is a big problem with this. Strong men never deliver. The modern world is simply too complex to be run by dictate.
It's true that Putin literally kills political opponents. More prosaically, 20% of Russians do not have indoor plumbing. While the US has never defaulted on its bonds, Russia has al always defaulted on its 30-year bonds. Putin doesn’t deliver.

North and South Korea have been divided by a border since 1948. The stark contrast between the two countries cannot be attributed to differences in race, deep history, or language. One nation has been ruled by dictators, while the other has been led by democratic leaders who have generally respected South Korea’s institutions. The difference between strong men and strong institutions is striking. A South Korean generates as much GDP in seven days as a North Korean does in an entire year. South Korea’s per capita GDP exceeds $33,000, compared to just $900 per year in North Korea. Strong men capture attention and create great lives for themselves but deliver dismal results for their people.

We are living through a dramatic institutional recession that has been largely ignored and yet explains so much about America’s current mood and politics. The first step to addressing it is to appreciate how vital institutions are, how much they define us. The second step is to begin a conversation about how to redefine the institutions that define us. These steps could mark the beginning of the end of our institutional recession.