Another Stark Contrast Between The Republican Party's First and Last Presidents: Lincoln, Trump and Time

I've previously argued that Lincoln was the Republican Party's first president (okay, that's not an argument) and Trump will be its last.

The simplest framing of that argument is simply that in 1860, the brand new Republican Party's plan for a national (rather than rural) industrial economy dependent on capital (rather than slavery) was truly visionary, an advance on every front. The decades that followed were unprecedented in terms of productivity growth, improvement in quality of life and the rapid growth in products and wealth. Now, in 2020, Trump's plan for a national (rather than global, as the economy dependent on a worldwide web and container ships has become) industrial economy dependent on financial and industrial capital (rather than an information economy dependent on intellectual capital) is reactionary, representing regress rather than progress. The telegraph was awesome once upon a time but today people prefer to text or video conference. Factory work once represented the future of job creation. Not today.

Lincoln had to create a national, industrial economy. Trump is trying to destroy a global, information economy.

Here is another way that Trump and Lincoln differ.

The conversations to create a new world have to be thoughtful, sustained, and zoom out to big pictures and zoom in to the small details; explore consequences and nuance and paint a picture of the new world proposed. Construction takes sustained planning, execution, and coordination with others.

The Lincoln - Douglas debates that brought the Republican Party's first president into the national limelight had a curious format. They were adversarial but each speaker had sufficient time to make his point. "The first speaker spoke for 60 minutes, the second had a 90 minute rebuttal, and then the first speaker had a 30 minute rebuttal/time for closing arguments."

I was unable to find what was the longest time Trump made it without interrupting or speaking in last night's debate but I don't think he remained silent for even one of Biden's two minute windows. For Lincoln, 30 minutes was the shortest time slot and 90 was the longest. In last night's debate, 2 minutes was the longest window and Trump could not even remain silent that long.

Singer and Brooking in LikeWar share a study that in 2000, the average attention span of an internet user was measured at twelve seconds. By 2015, it had shrunk to eight seconds - slightly less than the average attention span of a goldfish. We barely have time for tweets and memes. (What does a goldfish think? "Oh look! A castle." Pause. "Oh look! A castle!")

Lincoln had time enough to speak a new world into existence. Trump only wants time enough to destroy one. And the less time you have to think about what he's doing, the less likely you are to see how destructive he is, much less have time enough to imagine the next one.

Donald Trump's Precarious Finances - the New York Times Study of His Taxes Summarized

The New York Times study of Donald Trump’s tax returns revealed a few remarkable things. You’ve probably heard that he paid only $750 in federal income taxes the year he won the presidency and then another $750 in taxes the year he moved into the White House.

It gets far more interesting.

One, the only time in this century that he actually made money was when he was on TV playing a guy who made a lot of money. From 2005 to 2007, he made $120 million - mostly from the Celebrity Apprentice.

Sadly for him, he has not found another way to make money.

In the early 1990s, he nearly lost everything, taking nearly $1 billion in losses.
Then he had success with the Celebrity Apprentice TV show.
Then he began losing money again.

“Since 2000, Mr. Trump has reported losses of $315. 6 million at the golf courses that are his prized possessions.”
His Washington Hotel, opened in 2016, showed losses of $55.5 million through 2018. “And Trump Corporation, a real estate services company, has reported losing $134 million since 2000.”

You may wonder how someone can sustain losses like that. Well, in addition to TV revenue, he’s been taking out loans and liquidating assets.

In 2014, he liquidated $98 million in stocks and bonds.
In 2015, another $54 million.
In 2016, another $68.2 million.
Also, in the last five years, he’s drawn down his cash reserves $23 million.

Where does that leave him?

As of July, he has only $873,000 in securities left to sell and another $34.7 million in cash. You may think that $35.6 million is a lot. The problem is, those assets pale in comparison to what he owes.

Donald Trump currently has $421 million in loans outstanding, most of it coming due within four years.

Joe Biden should not be surprised to find that Donald has taken out a mortgage on the White House before he leaves.

https://www.nytimes.com/interactive/2020/09/27/us/donald-trump-taxes.html?action=click&module=Spotlight&pgtype=Homepage

The Weirdest Thing About 2020 - Nobody Clarifies to Trump the Penalty for Treason

Maybe the weirdest thing about 2020 is that Trump can say that he'll violently resist leaving office if he loses the election and we learn that Republicans and Democrats alike are too timid to clarify to him that treason comes with a death penalty. Trump is a thug who refuses to play by the rules and the GOP are cowards intimidated by this thug and Democrats insist on playing by the rules that he will ignore. And so we’re going to get rid of democracy because a reality TV star who thinks he’s being paid $400,000 a year to tweet decides that he doesn’t like elections.

T.S. Elliot's Poem the Hollow Men closes,

“This is the way the world ends
Not with a bang but with a whimper.”

It seems like it's also the way that democracy will end in America, everyone afraid to mention the penalty for destroying the democracy that so many Americans died to create and protect, afraid to make a fuss out of the fact that a sitting president won’t accept election results. One of the aha’s I had reading history is that people have exactly as much power as other people give them. The Pope could have you burned at the stake for saying the wrong thing … until people decided that he didn’t.

So does Trump have the power to end our 231 year old democracy? If people decide that his feelings and opinion are more important than our democracy, he does. People will argue precedent and tradition and process and laws but it is not that complicated. We decide which is more important: our democracy or Trump’s feelings.

Or maybe this is the weirdest thing about 2020. There are millions of Americans who are actually debating which is more important.

Why the Richest States Are Voting for Biden and the Poorest States Are Voting for Trump: A Study in Economic Policy Cause and Effect

Ranked by personal per capita income, 8 of the 10 highest income states will probably go for Biden and 7 or 8 of the 10 lowest income states will probably go for Trump. 

Why are the richest states so very Democratic? It is partly cause and partly effect.

First the cause. Intellectual capital has surpassed industrial capital as the source of wealth and income in this information economy. The communities around the various University of California campuses, for instance, have become host to a lot of exciting companies that have spun off from the staff, students and studies on those campuses. Democratic states invest more in the science and education that create jobs and wealth.

The only two states in the top ten by personal per capita income that Trump will win are Wyoming and Alaska. These are land-based economies, rich with oil, mines, livestock, grains, and forests. And of course, these economies are not the kind that create jobs; Wyoming's total population is 580,000 and Alaska's only slightly more at 730,000.

The economies in states like Connecticut and Massachusetts depend on a heavy public investment in schools and research, classic Democratic policy prescriptions. 42% of Massachusetts has a BA; only 26% of Wyoming does. By contrast, Wyoming and Alaska's economies depend on continued subsidies to oil and gas and lax regulation on greenhouse gases, classic Republican policy prescriptions.

Every year, more people can profit from technology advances in computing and genetics or new materials, the sorts of research and industries that spin off from universities. An oil well is zero-sum, though. If I own it, you don't. Meanwhile, knowledge builds on knowledge. You're going to hear more about AI and genetics in the next decade, the confluence of two research areas that promise products that might analyze patterns in your genetic code that make you more susceptible to Alzheimer's, for instance. This does not come at the expense of genetics or computing research but instead makes both more valuable. Oil wells and mines are zero sum but research and development literally stimulate more research and development; knowledge creates more knowledge.

Folks in places like Wyoming see the world as zero-sum because their economy actually is. The state can't even sustain a population the size of the cities in LA county that you've never heard of. Folks in places like Cambridge, Massachusetts tend to be more win-win because their economies actually lend themselves to that. If you give me an acre and I give you an acre, we leave the transaction unchanged. If you give me an idea and I give you an idea, we may both leave better off. You better understanding my AI technology and me better understanding your genetic analysis might enable us to collaborate to create a new industry with trillions in wealth and millions of jobs.

Zero-sum communities are also more susceptible to conspiracy theories that point them towards threats, that turn complex phenomenon into simple us vs. them narratives, a stark contrast to the pragmatic relationship knowledge workers in the information economy have to reality and theories about it.

So that's the cause. Wealth, income and jobs in the modern economy are increasingly the product of intellectual capital and the communities like New York and California that do the most to invest in it are the ones that will create the most jobs and highest incomes.

What is the effect? Well, richer people are less tolerant of low-quality of life. A poor person in West Virginia who lives near a mine doesn't have the resources to take on a business that endangers their child's health. Meanwhile, some mother in Santa Clara, CA - where per capita income is $106,000 a year - is not about to put up with risks to her child's health ... and she and her neighbors have the resources to fight a business that would put their children's health at risk. It is true that blue states have more regulations. Why? They are democracies and the residents of those states demand more regulations. There is little sense in making twice the national average income and then having to listen to the loud noises of a jack hammer at 4 AM or breathe noxious fumes from a factory.

Weirdly, though, the US rewards states unable to create jobs with more political power. The 21 least populous states have 42 senators and less population than California with its 2 senators. What does that mean in practical terms? If your policies can't create jobs to grow your population, your political policies have more influence. This may be the biggest design flaw in our current political system.

This design flaw is slowing the creation of jobs and wealth and improvements to quality of life. It is a weird thing to give more influence to less advanced communities, as if we were bringing in economic advisers from Afghanistan to decide what to do with Manhattan.

It is a weird election. The 30 states in between the top and bottom 10 are debating whether to follow the lead of the country's richest states - states that include Silicon Valley, Wall Street and the nation's top universities - or rural Mississippi, West Virginia, Kentucky, and Alabama. You might think that such a debate would have an obvious outcome. It does not. And that may be the weirdest thing about this very weird year.

The Disaster Trump Will Blame on Biden: Jobs, COVID, and Protests

The Biden - Trump election is very simple.

Trump's task is to convince voters that the bad numbers that so define America today - COVID deaths, lost jobs, and protests - are Joe Biden's fault and not Trump's.

Let's start with facts. This table shows the number of deaths from protests and from pandemics, and the number of jobs created or lost in the economy inherited or passed on.

The 1 death during the protests at Ferguson was Michael Brown's, the young man whose death triggered the protests. If more teenage white supremacists with AK-47s show up at protests, the death toll from these 2020 protests could continue to rise, making the contrast even more stark.

And of course 1,000 Americans are still dying of COVID every day. A safe prediction is that between 200,000 to 300,000 Americans will have died from COVID by election day.

The job market each president inherited is an interesting metric. There were ways to calculate this that made the difference even more dramatic but I chose a simple measure: how many jobs were created in the twelve months before Obama or Trump took office?

The economy Obama and Biden inherited was in free fall. They were sworn in on 20 January 2009 and in that month the economy destroyed 784,000 jobs. Trump inherited an economy in the midst of the longest run of uninterrupted job creation in history. In the month that Trump was sworn in - January 2017 - the economy created 969,000 (yep, nearly a million) more jobs than the month in which Obama was sworn in. How much is a million? In a great decade the American economy creates about two million jobs per year. The two presidents inherited vastly different economies. So are the economies each passed on. (Or in Trump's case, will pass on.)

In the twelve months before Obama and Biden took office, the economy lost 4.3 million jobs. They handed off an economy to Trump and Pence that had created 2.5 million jobs in the previous year. Obama and Biden inherited a train wreck and passed along an economy that was on track for the longest uninterrupted streak of job creation on record. 

What has Trump done with this inheritance? In the last 12 months the American economy has destroyed 11.3 million jobs. The economy Obama and Biden inherited - one that had destroyed 4.3 million jobs in the previous year - was the worst in a lifetime. The one Trump is about to pass on is more than twice as bad.  

(It is worth noting that the man's main measure of productivity has gone up, though. Trump is tweeeting 6X as often as he did in his first six months in office - 33 times a day - so you can't really say that he's done nothing.)

The numbers under Trump are awful. Americans are traumatized by his leadership and incredibly dissatisfied with the way things are going.  Trump is going to tell his loyal followers what he tells them about all facts: these are fake. He's going to tell the swing voters, these numbers are Biden's fault.

The number of people who believe him is the most important number of all: that will determine in which direction these numbers go during the next four years.

Underground Tunnels and News Feeds - how the right exploits the parallel worlds we live in

My mom was having trouble with her computer about 4 years ago. I eventually got things restored and launched her Facebook. (She rather charmingly assumed that when a friend posted they had sent her a personal note, so found it exciting.)

Conceptually I knew part of the genius of Facebook is that each one of us has our own Facebook. First of all, everyone has different friends and subjects to follow. Then our comments and likes determine who gets to the top and who we rarely see. In place of the daily newspaper we once shared, we now have a minute by minute privately customized publication - and they're wildly different.

My mind was boggled by how different hers was. First, it had page after page of seemingly random posts. Random as in the URLs they pointed to were literally strings of words. None were Newsweek.com or sandiegouniontribune.com. And the posts were a mix of weird allegations ("Hillary is sick!") to weird "news" ("Melania wears beautiful summer dress" or "The First Lady's dress makes her arms look so masculine!"). None of it was news as I think of it. It was all praise or criticism of outfits or manners and the occasional distortion or outright lie. Through this window on the world, mom saw the Obamas as an embarrassment, Trump as powerful, Melania as beautiful and Hillary as a threat.

Facebook is market driven. One of the many things that I love about markets is that they are driven to create exactly what you want. You want a sandwich made with a croissant? We got you. Rye? Check. English muffin? Fine. You don't like reggae or hard rock but you do like the fusion of those two? Listen to Dread Zeppelin. (Seriously. Listen to Dread Zeppelin.) Markets treat every one of us as unique and the mix of things I consume is different from the things that you do. The same is true of us as producers, as employees. Specialization means that we all bring something different to the market in terms of what we make and take. It's a beautiful thing.

But politics is not about the thousands of ways each one of us is unique. It is about the dozen or so things we share in common. We have to agree on where the road will be built, what we teach in schools and who gets public assistance and who does not. What is brilliant and beautiful in markets is divisive in politics.

Facebook also enables conspiracy theories. Yesterday a friend who is a fan of Trump sent me a link to an article about 35,000 children released from tunnels under New York. As if this were a real story. The link was to a website with the name operationdisclosure1. It is a complete nonsense story, totally fabricated, and easily debunked, offered as proof that Trump is a hero and the world is full of evil from which he will save us. These are posts that only show up in the feed of people who've already shown their willingness to believe such things - so many of us don't even know about them.

QAnon has emerged as a weird amalgam of conspiracy theories. Folks who like or react to stories about 35,000 children coming out of underground tunnels in big cities are likely to get a stream of QAnon conspiracies. One of the common theories is about the deep state, the notion that the government is actually run by nefarious civil servants intent on stealing your money, guns, and freedoms. Just as he has done with the 35,000 children living underground, Trump is intent on freeing us from the imprisonment of this deep state.

If you are not fed a stream of nonsense, deep state means nothing to you. If you are steeped in QAnon, use of the term "deep state" is a sign that "you're one of us." You get it. It is like a random line from a song or video game or movie; meaningless to folks who are not a fan and a sign that "you're one of us!" to the folks who are. And Trump says "deep state" a lot.

Yesterday Trump was asked about QAnon. He said only positive, if vague things. A couple of people on my post about this are now arguing that he didn't really endorse QAnon. Technically they are right. (Trump didn't technically say Obama and Harris were constitutionally unqualified for office ... he just quoted "some people" as claiming they were born elsewhere. Repeatedly. Same with calling COVID a hoax or masks as useless or snake oil a sure cure for the pandemic.)

You have to know that everyone has a different media diet to understand what they hear. One person is being fed continual QAnon nonsense about the "deep state" that is working against Trump. Another hears nothing about this. When Trump says, "Deep State," it just sounds like nonsense to the person whose feed isn't full of QAnon garbage but is confirmation of the veracity of QAnon to the folks who feed on it. Millions of people are fed a steady diet of conspiracies and told that credible sources are fake news. Trump regularly affirms to his fans that this world is the real one, the only one they can trust. And their feed is a daily confirmation of that.

Exclusion: What the Black Lives Matter and Trump Supporters Have in Common

I've read a ton of history and it has made me think that I know something about the dominoes that fall across a generation. Even history has a history and things in one generation define another. For example, Sir Edward Coke introduced patent law in 1624, a Brit invented the first steam engine in 1699 and by 1800 the West was in the midst of an industrial revolution that raised productivity and wages for the first time since the ancient Greeks. A string of dominoes that fell across generations.

It goes the other way as well. John Maynard Keynes protested the Treaty of Versailles that ended WWI. He was British but knew that the allies' insistence that Germany pay for World War One would be an impossible burden for Germany and would devastate its economy. A big reason Hitler came to power was because Germans were impoverished and humiliated by their defeat and were susceptible to the rantings of a madman who promised a return to greatness. A string of dominoes that fell across a generation.

The people who elected Donald Trump and the Black Lives Matter protesters have something in common. Both are protesting exclusion, showing disdain for systems they think don't benefit them.
Globalization - the shift away from the nationalism that fueled two world wars - has been a clear success. It has made rich nations richer and drastically lowered poverty in poor nations and dramatically reduced deaths from war.

But progress is always disruptive and while globalization has made goods cheaper for everyone and profits and wages higher for some, it has also meant the loss of jobs and industries for some people and regions. Globalization is wonderful but we have not done enough to make its benefits widespread. Trump supporters protest this globalization that they feel excluded from.

Our law enforcement and legal system has been a clear success. Crime rates are lower than at any time in history. The odds that you will be killed go down every decade. But these benefits have not been evenly shared. Blacks still disproportionately get arrested and even killed by police. This weekend people have protested this legal and law enforcement protection from which they feel excluded.

I am so upset when I see Trump destroy, vandalize or attack another institution that supports globalization, that makes the world and not just our country better. Last week he announced - in the middle of a pandemic - that he would stop funding the World Health Organization. Nothing could be more destructive and stupid and yet his supporters cheered him on. Same when he has attacked the WTO, NAFTA, NATO and the UN. He's wantonly destroying these international alliances that support a better world in which we trade goods rather than bullets across borders. As I mentioned, I have a strong opinion about how dominoes fall. Unchecked, his vandalizing international organizations will mean less prosperity and more warfare in the future. It might happen within a year or two. It may take a generation. It will lead to tragedy. You either move in the direction of more harmony between nations or less. Nothing is static. I know that almost no one believes me in this but I'm horrified and gut sick at what Trump is doing and even more so by the fact that all the Trumpbros are cheering him on.

To a lesser extent - because riots and a few buildings is so much less destructive than war and the cost to national economies from trade wars - I'm horrified by the looting and rioting in cities this weekend. But it comes from the same place. People who don't feel like they are benefiting from something don't care if it burns. Trumpbros cheer the destruction of international institutions and some protesters cheer the destruction of businesses or police stations.

We have to do a better job of inclusion. The difference between how fast I can run and how fast you can run is trivial compared to how much faster we both can go riding in a car or plane. Prosperity is not about individual self-reliance. It is about the systems individuals are included in, from education and financial systems to business and legal systems. When a country does better from trade, it needs to do more to include the communities hurt by trade, to heavily subsidize their re-training, re-location and even pump huge sums into the area in the form of startup funding to let that community of talent find a new market, new set of products that can provide wages and a sense of pride.

The same thing needs to occur within our minority communities. These communities need to feel like this is "our police force," not a group of strangers who view them suspiciously and treat them badly. 

The same thing with the courts.

When people feel excluded from an institution or a privilege or a system, they won't care if it gets destroyed. They might even cheer as it burns down.

My visceral reaction to Trump supporters and protesters destroying things is one of incredulity and anger. I'm trying to change that, to figure out what we need to do to make those people feel included in the story of progress that transformed our grandparents' lives and will transform our grandchildren's lives. Progress is a beautiful thing. Rather than get angry at the people who are angry about not being included in it, I need to figure out how we better include them in it rather than tell them that they should care about the systems they don't believe care about them.

The Meta-Conspiracy Theory of Trump Supporters

To be a Trump supporter now means having to believe or defend any number of conspiracy theories.

Which is the most popular of the many conspiracy theories Trump supporters believe? That supporting Trump doesn't require believing in conspiracy theories.

Why Trump is Re-Opening the Economy (And Why It Will End Badly)

You might be wondering why Trump announced the dissolution of the COVID task force on the day that we passed 70,000 deaths nationally. Every 3 to 4 days, another 10,000 Americans die. So why shift the focus to re-opening now?

He's got an election and he's trailing badly in the polls. How badly? Hoover is the last incumbent to trail by such a large margin. Trump has to turn things around and wants to look like he's addressing the economy before Friday's numbers come in.

Friday we will learn how many jobs were destroyed in the last month. It will be millions, dwarfing any previous month on record. The talking points for every politician and reporter will be, "Is this virus costing us too many jobs?" You watch. The fact that Trump shifted to reopening will actually make his poll numbers go up a couple of points.

But of course the virus could care less about his poll numbers. It will simply exploit more opportunities to spread as the country re-opens. Meanwhile, it will be tough to get people to shop, dine out, and mingle like they did in 2019 while the number dying is actually accelerating. Trump loves PR but hates actual executive responsibility. The PR boost he'll get for pushing to re-open the economy will fall as people realize that his impatience has given us the worst of both worlds: high death rates AND economic contraction. No healthy economy is going to emerge atop rampant spread of and fears of illness.

How Trump's Policy Turned a Catastrophe into a Tragedy

Greek tragedies were based on the notion of a dilemma, a character forced to choose between two bad options. Kill your mother or your father. Be sat on by an elephant or eaten by a tiger. Crash the economy or kill millions of people. There is no happy ending in a tragedy.

Right now the US is choosing to crash the economy rather than kill more people. The virus has already cost us trillions in lost equity. It will likely cost us millions in lost jobs. Most of us support that choice but there is another option.

We have this dilemma in part because we don't know who has the virus and so we're acting as if everyone does. Why don't we know? A paucity of testing.

If you know who has the virus you don't have to quarantine everyone and shutdown everything. You track who has the virus and who they've come into contact with and you restrict their movements. People they've not come into contact with are free to go about their day. It's business as usual for some portion of the community.

It costs money and takes executive expertise to do this kind of testing and tracking. One of the things that Singapore does is take government seriously; just as in the private sector, they pay some government executives millions and can compete with corporations for the best and brightest. They did extensive testing and tracking of people with the virus and took a very targeted approach.

Michael Lewis's The Fifth Risk may become the source for explaining the deeper cause of why 2020 became a tragedy. Lewis (author of Moneyball, Blind Side, The Undoing Projct and other best sellers) documents how the Trump administration at turns gutted and neglected the various agencies that employed the experts who do things like track hurricanes or nuclear weapons. Trump slashed funding to the Center for Disease Control (CDC), which included eliminating the team responsible for simulating, setting policy for, and coordinating responses to a global pandemic. That cost us in response time and decision quality when this pandemic hit. It's like the difference between calling the fire department that is sitting around the firehouse and waiting for your call and figuring out who could help to fight the fire and where they might find hoses and ladders and how to use them ... while the fire is burning.

Trump has largely replaced any experts who might challenge him with sycophants who only praise him. The World Health Organization (WHO) offered testing kits early on in this pandemic. His administration - biased against anything global - said "No" to this offer and chose to manufacture the kits themselves. Consulting on product development projects, one thing I've learned is that it always takes longer to develop something than you think it will, even if you allow for it taking longer than you think it will. It took longer to create testing capacity than the experts hastily drafted into roles as pandemic response team members hoped. We lost valuable time. And now the virus has spread without check or without good information about where it is. Vietnam - a country with a fraction of our per capita GDP - had conducted more testing than us early on.

We saved a few billion dollars by not taking government seriously Now we're going to lose trillions and trillions. (I know. It's a global pandemic. Lives would have been lost regardless. Trillions of dollars would have been destroyed regardless. My argument is not that this could have been completely avoided. My argument is that it could have been significantly mitigated. The fallout could have been much less severe.)

I understand that Singapore is city-state rather than a sprawl of a nation-state spread over a continent. Still, they pulled off this strategy of extensive testing and tracking and have been able to avoid the tragedy we face. They've had no deaths. Schools without cases of the virus are open, as are shops and restaurants. The American disdain for the importance of good people in strong agencies who are not forced to operate in the equivalent of a pop-up store to deal with something of this magnitude is going to cost us dearly, in lives and dollars. It's tragic.

https://www.npr.org/…/singapore-wins-praise-for-its-covid-1…

How Trump's Fixation on Wealth and Disinterest in People Has Exacerbated the Stock Market Crash

Right now, Trump seems focused on the stock market. You can see why. The stock market that he has taken as an affirmation of his leadership and wisdom is now in free fall. The Dow did well under Clinton and Obama's presidencies (gaining the equivalent of 15.9% a year and 12.1% a year) and disastrously under George W. Bush's 8 year term (losing the equivalent of 3.5% a year). With this coronavirus rippling through markets, Trump's annual compound returns equates to 1.1%. By another measure, as of 12 March 2020, the market had lost the entire $11.5 trillion it gained since his election.


Trump's travel ban and the Fed's attempt to add liquidity and dramatically lower interest rates has done little thus far to slow the fall of markets. Trump's fixation on wealth and disinterest in people and complex problems has caused him to work backwards on the catastrophe before him.

1. The first priority is lives and healthcare. Trump has done little to suggest more lives will be saved by his actions. Test kits have been slow to emerge. Treatment centers are not set up across the country. More will die than need to. He's announced a travel ban from Europe because he's xenophobic, not because it is likely to make much difference at this point. Tests and treatments should be made free and capacity for testing and treatment should be radically increased.

2. The economy is the second priority. People will lose jobs and will need income. Children may be turned away from schools and will need childcare. Businesses like airlines and hotels will suffer severe income loss and will likely layoff workers. Plans need to be in place to keep the economy operating and to keep people financially secure with things like mortgage payments and grocery money, to say nothing of healthcare.

3. Last, actions should be taken to stabilize markets. Without a foundation of good healthcare and protected economy, actions to stabilize the stock market simply ring hollow and seem insufficient. And in truth, the stock market is one way to predict the future. Without good plans in place to change that future, tinkering with the stock market is likely to be ineffectual. With credible healthcare and economic plans in place, stock markets may correct on their own.

Lives matter more than the economy. The economy matters more than the stock market. And if policy makers work on these issues in that order, they could return things to normal by year end. If they try to rush things and gloss over these real world issues and "fix" the stock market first, they will exacerbate a catastrophe that will include the stock market. The stock market is not the game. It is merely the scoreboard. If you want to change the score, you focus on the field of play. What's on the field are real lives and their medical and economic health. Thus far, the market is not convinced that Trump has a good game plan for those realities and if Trump wants to change the score he has to turn the game around.

Unprepared for a Pandemic

A standing army is a fairly new thing in the history of humanity. Now we likely spend too much on the military but the notion is that a community needs the ability to rapidly respond to a threat as serious as invasion. And it turns out that a strong military is a deterrent. The fact of having it makes us less likely to need it. (Although sadly, not less likely to use it ... which is another story.)

Trump's 2020 budget proposed an increase in military spending of $210 billion over 2016. Increase. He proposed a total of $2.7 trillion.

Meanwhile, he proposed only $136 billion in public health and safety, a cut from the $140 billion in 2016.

He proposed a bigger increase in military spending than he proposed in total for public health and safety. Military, INCREASE by $210 billion; health and safety, FUNDING of only $136 billion.

Infrastructure, staffing and research to rapidly respond to a threat as serious as a pandemic will - like a standing army - save lives and perhaps even make us less likely to need to respond to a pandemic because it might help us prevent such an event.

In an interview about five years ago, Bill Gates called a global pandemic the most predictable catastrophe of our time and said that there was no excuse not to be prepared.

And if you think that it cost too much to have the equivalent of a standing army for battling pandemics, consider this: in the last 3 weeks, the market has lost about $4 trillion in value. Even more than Trump wants to spend this year on the whole of our military. It may cost you more but the life you save could be your own.

Is the Future Non-Factory Jobs? (One Way to Understand the Jobs Numbers for Manufacturing)

Each month bls.gov releases the new jobs numbers. "The economy created 130,000 jobs last month." The technical title for this jobs number report includes the phrase, "nonfarm." Farming is such an insignificant and volatile portion of the nation's workforce that it is excluded from the official record of new jobs created or destroyed.

Once upon a time, farming was hugely important. Now it is not. We may eventually say something similar about manufacturing jobs.

The other day in the airport, I struck up a conversation with a guy from Wisconsin. He told me that his dad was one of 11 and his mom was one of 4. All 15 of that generation (we're talking about folks who started careers in the 1950s) were dairy farmers. There were 64 cousins in his generation. Of those, only one is a dairy farmer and he's going bankrupt. (This cousin has only hundreds of cows; the dairies that are surviving are big businesses with thousands of cows.) Nobody in that group of cousins is encouraging their children to prepare for life as dairy farmers.

Manufacturing jobs as a percentage of the total workforce are now where farm jobs were in 1963: 8.4%, suggesting that manufacturing is running about 60 years behind farming. Defining factory jobs is harder than defining farming jobs, though. I've seen a note at BLS.gov to the effect that an increasing number of jobs in manufacturing fall into the category of knowledge work. Programmers for the robots and process design experts are among the folks who now fall into the category of manufacturing; a decreasing percentage of the folks in manufacturing are not working on production lines as we classically envision it from pictures of the 1950s. They are as much a part of the information economy as are the programmers and analysts sitting in cubicles for software or service companies.

Of late I've seen an uptick in our consulting for projects that are production line transfers. The vast majority of our work is with companies developing new products. These production line transfers have literally gone from zero percent of what we do to about 10%.  What does it mean to transfer a production line? A factory line in, say, Pennsylvania is being transferred to Monterrey, Mexico. The savings are huge and irresistible and when the transfer is done, the US has fewer manufacturing jobs.

Trump has defined his presidency in large part by two things: radically slowing immigration and bringing back factory jobs. Immigration has dropped under his watch. Initially, factory jobs rose as well but there is a problem with that.

His sudden imposition of tariffs made domestic sources more favorable and seemed to have raised the percentage of jobs created in manufacturing to meet this uptick in demand. The problem is, though, that supply chains are complicated. If I bought cheaper steel from China to manufacture a car, say, a tariff on Chinese goods may cause me to shift over to an American supplier of steel within a month or so. Short-term, that would raise the number of manufacturing jobs. But given that ultimately I need to compete on the global market, this need to pay more for a key input might cause me to make a more dramatic change over the next year; I may shift my entire production line out of the US to where tariffs don't distort input costs and threaten my profit margins. Short-term, the tariffs may raise manufacturing in the US; longer-term, they may drive it out. And that seems to be what is happening.

When Trump was sworn in, manufacturing was 8.4% of the total workforce. As a percentage of new jobs created in the prior 12 months, that rose above 10%. For nearly a year. During the last twelve months, though, it has dropped to about 2%. During the last twelve months, manufacturing jobs as a percentage of new jobs created is about one-quarter of what it was when he took office.

This is not something to celebrate or to mourn. This is simply a fact. Once upon a time we were in an agricultural economy and children grew up expecting to work on farms. Decades later, that expectation shifted from farms to factories. A good society prepares its children for jobs that will keep them employed at good wages, though, and cares less about whether they will work on farms in factories or in cubicles or in the home office than if they are making good wages. A bad society forces traditions on its children and tries to prepare their children for jobs that were suitable for their grandparents but not for them.  It's not an agricultural or industrial economy any longer.

It is true that there are problems with the information economy and some evidence that we're getting diminishing returns from encouraging more children to get college degrees to prepare for work. That said, children are much more likely to grow up to work on a laptop than they are in a factory or on a farm. Promising to bring back factory jobs is like promising to make your skin look younger; it may work for a time but the long-term trend is against you.

Now It's a Cult

In a Facebook conversation yesterday, I pointed out to a Trump supporter that believing Trump means that you have to discount the CIA, the NSA, the FBI, our courts, the media and scientists. For starters. His response was that I couldn't know who was right because I didn't actually see whatever it is that Trump is talking about this time.

This is how members of a cult talk. There is no objective reality that can be tested with observation or theories. There are no facts. Really, you have just two choices: either believe the leader or don't. You can be part of the conspiracy against him or you can be part of the group that supports him.

Trump as Your Rogue Mailman

Trump creates so much daily chaos that it is easy to lose track of why Congress has moved ahead with impeachment hearings. A simple analogy to explain his conversation with the Ukrainian president might help.

Congress authorizes social security payments. Of course, they are just legislators so they don’t actually deliver the check to recipients. Your mailman – a part of the executive branch – does that.

Imagine that the mailman tells the social security recipients on his route that he’s running for city council and he will give them their check but first they have to make a public statement claiming that his political opponent is involved in a corruption scandal.

Once this is revealed, you would expect an investigation into the mailman’s behavior. You would not be surprised if he were fired.

So, what does that have to do with Trump’s situation?

Congress – the House and Senate – authorized money for the Ukraine. Why? Largely to defend itself from Russia. Russia has already invaded – and now occupies – the Crimea. (Another quick analogy? Imagine that Mexico had taken Texas from the US because a chunk of its residents spoke Spanish. That’s essentially what Russia did by invading and taking Crimea from the Ukraine.) Russia may have plans to take more – perhaps even all – of the Ukraine. The US would rather deter Russia with a show of support than to wait for Russia to again attack and force the US and NATO to either just watch Russia conquer the Ukraine or force a war between NATO (the Ukraine is not a member of NATO but has applied to join) and Russia. Congress wants to check Putin’s aspiration for conquering former Soviet territory.

Trump, apparently, does not.

Just like social security checks, Congress has authorized money for the Ukraine. Just like social security checks, Congress does not actually deliver the check. Trump’s White House – which is, like the post office, a part of the executive branch – delivers that money. And just like our rogue mailman, Trump was using his position of power to withhold money as a way to get something of personal value. He was asking the Ukrainian president to declare that they were investigating Joe Biden for corruption before Trump would deliver the Ukraine money Congress had already authorized.

Trump is not a monarch. He is subject to laws just as every other citizen. And when he uses the executive office to extort foreign heads of state to do him a personal favor, he is as much in violation of law as the mailman who extorts the social security check recipients on his route. 

Beyond Win-Win or Win-Lose into the Strange Mind of Donald Trump

Stephen Covey's 4th habit is the building block to relationships. It also gives us a way to better understand the danger of Trump.

Think Win-Win is how we approach others. It's a belief that relationships make things better for us and them, for you and me, whether the you is a romantic or business partner or simply a friend.

Covey's 5th habit is Seek first to understand and then to be understood. You have to understand their perspective and their win and then communicate your own. His 6th habit is Synergize which could be stated more clumsily as, Create a solution that will not just give you your win and them theirs but might actually result in something extra that neither of you could have anticipated, a solution that encompasses both of your wins in a manner that might actually create wins you hadn't anticipated - whether for you or people outside the relationship.

Back to the 4th habit of Think win-win, the approach to take into a relationship or even a quick encounter.

To get to win-win, one needs both courage and consideration. You need courage enough to articulate and fight for your own win. You need consideration enough to listen and fight for the other's win. 

If you have only courage but no consideration, you'll likely become either a win-lose person who must beat the other while getting your own win or simply a win person who doesn't care at all whether the other person gets a win or a loss as long as you get your win.

If you have only consideration but no courage, you'll likely become a lose-win person who takes on the role of martyr, simply swallowing your own needs and dreams and deferring to the needs and dreams of others.

I think one obstacle to win-win is that it isn't natural to both be willing for combat for our own win and willing for empathy to understand the other's win. We tend to toggle into either courage or consideration rather than try to encompass both.

Trump introduces a new variable in this model that I hadn't really considered before: the role of comparison or status. It takes him to a new and odd place.

Trump's trade wars seem to have played a factor in the fact that Germany and China's economies are now stuttering. Automobile production has fallen dramatically in Germany. China's growth has slowed. In response to these sorts of issues, bond markets suggest there is a higher probability of a global recession. None of this seems to deter Trump from his trade war.

Part of Trump's bulldoggery of course is related to the fact that Trump has never once admitted to a mistake of any kind. I suspect, though, that it actually points to something else that is so defining of Trump: his quest for status above all else. In the wake of the 9-11 tragedy he called in to announce that with the collapse of the World Trade Center, his building was now New York's tallest. There was a tragedy but it gave him more status and that was what he wanted to talk about. Trump cares less about living in time of antibiotics and internet than being the top dog and if he had to choose between being Attila to the Huns or middle-class guy in a wildly affluent future, he'd choose to be Attila. What matters most is to be at the top.

China's economy has grown more rapidly than ours for the last 20+ years. This makes perfect sense given their relative stage of economic development. (It takes the average Chinese all week to make as much as the average American makes by the end of the day Monday.) This contrast outrages Trump who wants to be better.

I get the very real sense that given the choice between winning less than China wins (for instance, our economy grows 3% and theirs grows 6%) or losing less than China loses (our economy contracts only 1% while China's economy contracts 3%), he would choose losing less. It doesn't matter nearly as much that we're winning as it does that our position is better than our rivals.

Trump's little graph is not about win-win or win-lose quadrants. It is simply this: we're doing better or worse than the other guy. Better can include a loss in real terms as long as our loss is not as bad as the other guy's loss.

The probability that the US economy tips into recession goes up every time Trump's Twitter Tourettes drives him to spew out trade war nonsense. Remarkably, the probability of recession still seems considerably less than 50%; recession within the year is unlikely. In any case, our economy will likely be doing worse in 2020 than it was in 2016 but China and Germany's economies will likely be doing even worse even than ours. The global economy doesn't matter to him. Our relative position does. I'm not even sure what to call Trump's mindset. (Who cares about winning as long as we're doing better than than the other guy?)

Trump's 2020 campaign slogan could simply be, "You should see the other guy."  

It's Time to Stop Pretending That Both Sides are Equal: Trump's Parade is Leading Backwards on Progress

From about 1830 to about 1900, the Democratic party was all madness and defense of the agricultural economy and the Republicans were the progressives. While Democrats were defending slavery, Republicans were figuring out capitalism. Now the Republican Party under Trump has gone full bore mad, fighting for the waning industrial economy the way Democrats once fought for the waning agricultural party. While Trump is fighting trade wars, Democrats are trying to figure out how to finance education and R-n-D for projects like global warming.

This divide between defending an old economy and trying to navigate a new one is why Democratic support is so high everywhere that the economy is strong and Republican support is so strong everywhere the economy is weak. (In the regions with the highest wages, Hillary Clinton won twice as many votes as Trump. (See below for details.)) Communities whose policies support the information economy are more prosperous than those still defending the industrial economy.

One of the many things absurd about this current battle between information and industrial economies is that rather than engage in a really great conversation about policies that better support an information or entrepreneurial economy and how to transition into the latter, we're debating something settled decades ago ... whether we should give preference to policies to support an information or an industrial economy. It is a complete waste of time to defend Trump's 1950s vision of the world and yet that is exactly what you have to do if you're a Republican. It's the political equivalent of selling rotary dial phones. There was no legitimate "both sides are equal" argument in 1870 and there is no both sides are equal argument today. 

Progress is heading in a particular direction and that's not the direction Trump is leading his parade.

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The claim that the most prosperous areas voted most strongly against Trump's call to defend the industrial economy is based on facts. Among them is this fact: the 15 counties with the highest average weekly wages voted 2-to-1 for Clinton and against Trump.

The average vote for Clinton in these regions was 66% . (Details here.) 

Contrasting the Districts that Supported and Opposed Trump: It Comes Down to a Divide Between Industrial vs. Information Economies

Nerd that I am, I collected some data on the 15 congressional districts where Trump won the largest percentage of votes and the 15 districts where he won the lowest percentage of votes. 30 districts out of the 535 lets us look at the contrast by looking at extremes.

The biggest difference is the ratio of folks with Bachelor's degrees or higher to the folks employed in manufacturing. (I still don't know of a simpler proxy for knowledge worker than a Bachelor's degree.)

In the least Trumpian districts, the ratio of folks with college degrees to folks working in manufacturing is 6 to 1. These are districts in the information economy. Not only are they more likely to be knowledge workers than factory workers but they create more jobs. There are 43 jobs for every 100 people living in such districts, 1.5X as many as found in the most Trumpian districts. The information economy is still growing even as the industrial economy shrinks. This not only explains the fact that districts in the information economy have more jobs but likely explains why they're 4 years younger, on average. The regions creating the most jobs are going to attract more people starting their careers.

In the most Trumpian districts, people are 3X more likely to work in manufacturing and household income is $22k lower. These are related. Generally, folks with a degree make about $22k more than folks without one.

Trump is the warrior chief for the folks in the waning industrial economy. It is just one of the ways that he is the opposite of Lincoln, the GOP's first president. In 1860, the industrial economy was cutting edge. Today it is on the wane, being eclipsed by the information economy just as the industrial economy eclipsed the agricultural economy during the time of the first Republican presidents. 

Republicans - the Party That Does What It's Told

When it comes to how we're wired, liberals prioritize equality and care while conservatives focus more on loyalty, authority and purity. Once Republicans know who the authorities are, they'll reliably do what they're told.

No Republican has been more popular - not Eisenhower or Reagan, not Bush or Bush, not Nixon or Ford - than Trump. Trump defines and owns his Party in a way that no president since FDR has. This is only possible because Republicans so readily cede to authority.

Concerned Republican, "Trump had sex with a porn star while his wife was home with a new baby and then used campaign funds to hush her up. Oh, and then lied about it. We were really upset about sex and lies with Clinton, right?"
"Right. But that doesn't matter now."
"Oh, okay."

Concerned Republican, "Trump has doubled the deficit to a trillion dollars. We were really upset that the deficit grew so fast during the Great Recession under Obama, right?"
"Right. But that doesn't matter now."
"Oh, okay."

Concerned Republican, "Trump has insulted prisoners of war, discounting their sacrifice and heroism. We really love our veterans and in particular those who suffered as prisoners of war, no?"
"No. Not any more. A prisoner of war is a loser who got caught."
"Oh. Okay."

Concerned Republican, "Trump is against free trade. Aren't we against government interference in markets and for free trade?"
"Not anymore. Now we like trade wars."
"Oh. Okay."

Concerned Republican, "Trump is telling businesses that they can't do business in China or with China. Isn't government telling businesses what to do socialism?"
"Not anymore. We like this."
"Oh. Okay."

Concerned Republican, "Russia helped Trump to win. Don't we hate the Russians and isn't that foreign interference in our elections?"
"Not anymore. Democrats just hate Putin because he didn't help them to get elected."
"Oh. Okay."

Concerned Republican, "Every time Trump tweets the stock market falls. Don't we care about the stock market?"
"Not anymore. We think trade wars are more important than prosperity."
"Oh. Okay."

Concerned Republican, "Trump claimed that he was the chosen one and that he is the second coming of God. Should we be worried that he's going crazy?"
"No. He actually is the chosen one. God loves him best."
"Oh. Okay."

Concerned Republican, "Should we be drinking this kool-aid? It looks like it made those other people really sick."
"Everyone feels worse right before they feel better. Just close your eyes and swallow it quickly."
"Oh. Okay."

There was a reason Putin wanted Trump to win. Democrats will reject a Democrat because he posed for a picture pretending to touch a sleeping woman or because she was paid for a speech by bankers. You can't get Democrats to reliably vote AGAINST a madman. Republicans? You just have to tell them to vote for and what to support this year and they'll happily do it. It's a pretty easy group to herd. If you tell them they're supposed to, they'll even reliably vote FOR a madman.

GDP Growth Under Last Four Presidents (Or What Trump Lied About This Time)

This morning the new GDP numbers were announced here. The numbers compare the second quarter of 2019 with the second quarter of 2018.

GDP is up 2.1% for 2Q 2019
Personal consumption is up 4.3%
Private domestic investment is down 5.5%
Exports are down 5.1%
Federal government spending is up 7.9%

So what does this mean in simple English?
GDP growth was below average. Since 1993, quarterly growth has averaged 2.6%. Hitting 2.1% rather than 2.6% is a difference of $100 billion. ($107 billion, to be exact. Which works out to about $300 per American.)  GDP rose because personal consumption and government spending is up and in spite of the fact that exports and investment are down.

It's dicey to play psychologist based on one quarter but this suggests that the great job market, long boom and easy credit have made American consumers more comfortable buying stuff. So personal consumption is up.

Meanwhile, Trump's constant trade war talk has made businesses nervous about investing more and has already hurt their ability to sell to foreign markets. So business investment and exports are down.

Households are comfortable and businesses are nervous. It's tough to sustain increases in household and government spending when investment and exports are dropping.

There is another element worth noting. I've heard from more than one Trump supporter that GDP growth under Trump has been unprecedented and that he's hit quarterly growth levels that Obama thought impossible. Like so many of the claims originating from the fake president, this is an absurd claim that quickly dissolves on contact with facts. 

This graph shows quarterly GDP growth for the last four presidents. Specifically, it shows the average for each one (blue bar), their highest quarter (orange), their lowest quarter (gray) and the difference between the average of their first three quarters (the economy they inherited) and the average of their last three quarters (the economy they left for the next president) (yellow). 

Studying this graph quickly makes a few things obvious. 

Trump has the lowest high. In his best quarter, GDP grew by 3.2% from a year earlier. For Clinton, Bush, and Obama, the highs were 5.3%, 4.3%, and 4.0%. GDP is not growing at unprecedented highs under Trump. It is not even growing at precedented highs. Clinton, Bush, and Obama all had better quarters. (Clinton alone enjoyed 24 quarters of better GDP growth than Trump's best quarter. 24.)

Bush inherited a great economy and made it worse, GDP growth dropping by 2.8 percentage points from what it was in his first three quarters to what it was in his last three quarters. Obama inherited an awful economy and made it better, GDP growth increasing by 5.1 percentage points. Clinton inherited a decent economy and made it great, increasing GDP growth by 1.3 percentage point. Trump? Trump hasn't really changed things. He inherited a good economy and made it somewhat better, an uptick of 0.3 percentage points from his first few quarters to his most recent three. It is fascinating that so many of his critics who thought he would blow up the economy (in a disastrous way, as I did) and so many of his supporters who thought he would blow up the economy (in a great way), have found themselves in the calm before a clear direction. For the most part, the economy has continued on the same trajectory in which he found it.

Of course none of this is what he promised.

Trump promised GDP growth of 4, 5 or 6% after he passed his tax cut. (Video here.) He's currently averaging 2.6%, about two-thirds of what the economy averaged under Clinton and less than half of what he promised. It's not just that his tax bill has doubled the deficit; it has failed to make any discernible change in GDP growth.

If he just shut up, the economy might do better. Businesses might invest more and find it easier to sell abroad without dodging the tariffs of Trump's trade wars. Of course expecting Trump to shut up is like expecting the heads on Mount Rushmore to speak out. 

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Catherine Rampell puts the surge in government spending into perspective.