Perverse Incentives, Ctd

A reader remarks on Senator Klobuchar’s response to my letter regarding civil forfeiture:

Yes, her past probably gives her an opinion on civil forfeiture. She may also not have a p[public opinion on it yet because she doesn’t have to.

If she has a different opinion from mine, I would have appreciated her (or her staff) replying with it. A Senator should be out there leading with the best reasoned opinions they can come up with, not equivocating or hiding out on such an issue.

And while her past experience may inform her opinions, it should not dictate them. She’s not representing the interests of prosecutors, she’s representing the citizens, and should be keeping in mind the best interests of everyone and the principles of justice.

From Party To Cult

Remember Martha Roby (R-AL), forced into a runoff not because she’s insufficiently Republican, but because she’s insufficiently Trumpist? That she insists on moral standards from our leaders?

Well, score a casualty in this department. Mark Sanford (R-SC), who I was surprised to learn still had a political career after being caught cheating on his wife when he was the governor of South Carolina, had managed to get himself elected as a Representative in a special election in 2013. That career appears to have come to an end as he lost his primary run yesterday, despite having a FiveThirtyEight TrumpScore of 73%.

Sanford had been known for criticizing President Trump’s behavior, and his opponent, Katie Arrington, proclaimed upon claiming victory,

“We are the party of President Donald J. Trump,” Arrington said to her backers.

Mark another intra-party victory for the cultists who now appear to make up a large part of the former Republican party. Certainly, Sanford was no saint, having been caught cheating on his wife, and a 73% score isn’t as stellar as fellow Representative Roby’s 97%.

But in years past, it was not beyond the pale to criticize one’s own leaders. Intra-party criticism should not, and mostly is not, meant to wound, but to help focus the recipient on problems they may not perceive, improve processes, and make themselves better.

Donald Trump, though, considers himself nearly perfect already, as does his supporters. The Party faithful will never mind the embarrassment of EPA Administrator Scott Pruitt. So when Sanford offered criticism, as did Roby, rather than something to be considered soberly by the President and his advisors, they considered it an attack – and Trump backed amateur Arrington over the veteran politico Sanford.

This is how you end up with a party consisting of third- and fourth- raters. The sober, temperate folks learn they’re not wanted. Some leave without being asked, while others are conducted to the railroad and given a boost into the empty freight car. Only the absolutists stick around, those so absolutely certain of their positions, their wisdom, and their judgment that compromise becomes a dirty word. And they can’t admit mistakes, because of that certainty and the Party structure that will result in them being thrown to the sharks that are waiting for people who make mistakes.

This is how you build a political party which is, quite frankly, contemptuous of the entire liberal democracy concept. How long will it take for independents to figure this out and refuse to vote for the GOP until they evict everyone with this awful political consciousness?

That may never happen, I fear.

Is The End Near?

The Martian rover Opportunity, 15 years old now, may have sung it’s last, reports (you may have to consult their archive for June 13, 2018, to see this report in its entirety) Spaceweather. Have you ever wondered how the designers tried to prepare for adverse weather events?

Soon after [the dust storm] appeared on May 31st, it swirled south to envelope Opportunity. Right now, the dust is so thick in Perseverance Valley, day has been turned into night. The solar powered rover is being deprived of the sunlight it needs to charge its batteries.

NASA is now operating under the assumption that the charge in Opportunity’s batteries has dipped below 24 volts and the rover has entered low power fault mode, a condition where all subsystems, except a mission clock, are turned off. The rover’s mission clock is programmed to wake Opportunity at intervals so it can check power levels. If the batteries don’t have enough charge, the rover will put itself back to sleep again.

And how long can it keep doing that, I wonder.

The Sluggish Stream Of Singapore Commentary

As one might expect, the commentary concerning the Singapore Summit follows ideological lines. Let’s start with Trump apologist Conrad Black on National Review:

Senator Ed Markey (D., Mass.) — who announced as the president emplaned for Singapore that the U.S. military and civilians in South Korea would all be hostages in the face of conflict, that the U.S. would suffer greater casualties than in the Korean War, and that “there is no military option” — laid naked the bankruptcy and ignorance of the bipartisan bad policy that brought matters to this extremity. If there wasn’t a military option this meeting would not have happened. The hypocrisy of the Democrats, elected and in the media, is picturesque. First it was “two madmen,” Trump’s threats were a menace to the world, the on-and-off meeting would give Kim “a giggle-fit” (House Democratic leader Pelosi), Trump would give too much away and be foxed by the 34-year old demented hermit. How dare Trump legitimize this Hitlerian murderer? How could he make placatory noises to Kim or speak cordially about him? Trump gave up nothing, denuclearization has been pledged, and though not described in writing, it was verbally clear what it means, and maximum force, economic and military, remains in place. And Kim cannot be uninterested in the possibilities for the end of Pyongyang’s isolationism and impoverishment.

Markey’s stance is of a piece with the fatuities about trade wars as Trump dismantles the country’s $865 billion trade deficit. The American public will support a rebuff to the international trade pickpockets, though Trump should not have singled out Canada, which is a fair-trade country. It is assumed by Trump’s critics implicitly that the United States has the moral duty to be scammed out of $865 billion a year in foreign trade because it stabilizes world relations and finances and helps developing countries. But it doesn’t. It just enriches the ungrateful world and casts the U.S. in the role Richard Nixon warned against: that of “a pitiful, helpless giant.” The political and psychological battle lines are going up across the full public-policy range. Trump is not xenophobic, and he supports immigration, including Mexican immigration, but the Democrats have been pushed to the edge of the political cliff opposing an enforceable border, supporting practically unlimited entry to undocumented foreigners and their right to vote once in the U.S., capped by the denial of the right of census-takers required by the Constitution to compute the size of state delegations in the House of Representatives and the Electoral College, even to ask about citizenship, and in support of sanctuary cities in which the law of the country is willfully violated and defied by local officials. The political and media Democrats are almost all aboard on open borders and sanctuary cities, and electorally, that ship will sink.

We know Black is an apologist because he tries to defend all of Trump’s behaviors and cast aspersions upon Trump’s opponents, rather than present an analysis of the event. I didn’t bother to read the whole thing.

Kevin Drum, off on the other end of the spectrum:

At this point, I suppose there’s little reason to keep writing about the Singapore summit. It obviously accomplished nothing, no matter how much Donald Trump tweets otherwise, and there’s nothing left to do except see if Pompeo and his team make any concrete progress in upcoming negotiations. If they do, then all kudos to them. But until then, stop insulting our intelligence.

David French, on National Review, steps out of line:

In other words, there’s a presidential sucker born every four years. In spite of the deep differences from president to president, incentives are still incentives, national interests are still national interests, and weakness is still weakness. The laws of power politics and international diplomacy still apply.

Consider the Singapore summit. Why, pray tell, would North Korea ever give up nuclear weapons if the race to build the weapons — and the race to create a credible missile program — landed the world’s pariah state not just in the center of the world stage but also in the position to demand (and receive!) important concessions from the most powerful nation in the history of the world?

The image of Trump and Kim together in front of the flags of their countries sent a message to the North Korean people that they had arrived. It was a vindication of juche, the national ideology of self-reliance and cultural and racial superiority. When Kim extracted from Trump a promise to end “war games” with the South, it was a vindication of North Korean strength. Unless reversed, the decision also undermines American and South Korean military readiness. …

Unless more rational heads can prevail, Trump’s hubris will continue to elevate Kim and harm our national interests.

French may be excommunicated for that column.

James Hohmann on WaPo’s PowerPost:

Trump’s certitude about Kim’s intentions was reminiscent of when George W. Bush proclaimed early in his presidency that he peered into Vladimir Putin’s eyes, saw his soul and concluded that the Russian leader was trustworthy.

“This is complete denuclearization,” Trump insisted. “I really believe that it’s going to go quickly. I really believe it’s going to go fast. … We will do it as fast as it can mechanically and physically be done.”

When a reporter at the news conference asked how he’ll ensure Kim follows through, Trump was dismissive: “Can you ensure anything? Can I ensure you are going to be able to sit down properly when you sit down?”

That’s a far cry from Ronald Reagan’s mantra during arms control talks with the Soviets: “Trust but verify.”

Jennifer Rubin of Right Turn:

The president of the United States was fleeced, and worse, has no doubt impressed upon Kim that this country can be played for fools and strung along. Trump gave Kim newfound legitimacy and Kim’s nuclear weapons program can go on and on.

She’s a never-Trumper conservative.

An appalled Steve Berman on The Resurgent:

Instead, Trump is following his instincts. He likes to be flattered, so he flatters others. But decent people don’t flatter monsters. Or at least they shouldn’t. In this case, Trump’s instincts are leading him somewhere he should not go.

Inviting Kim to the White House is probably a mistake. If Trump follows through with it, and Kim actually shows up, honoring this man would be a terrible misstep for America. In fact, Kim deserves to be arrested the moment he sets foot on American soil. If Trump really meant that Otto Warmbier’s death was not in vain, he would not treat Kim like a dignitary in the seat of American government.

Perhaps I’ll stop here and get off the beaten track. The analyses, to a large extent (David French appears to be a noted exception), follow the ideological inclinations of the writers, or, to use my old analogy, everyone persistently stares through their favorite prism.

So what is an independent voter supposed to make of the situation? Precious few of us have any expertise on North Korean. I’ve read a book or two, but I don’t expect that means much.

So, at least for me, we have to seek out the non-partisan experts. Remember the Iran nuclear deal (JCPOA), so universally condemned by the GOP? Even though the Democrats had a good intra-party debate on it before coming out for it, mostly, I had to wonder if they were just singing in the Obama chorus. The answer to the question of whether it was a good deal or not?

Finding those non-partisan analyses. In the Iran nuclear deal, those analyses seemed to be nearly universal in their conclusion that it was a good deal. Thus, amateur I chose to be for the deal. As further proof, the hard right political factions of Iran screamed their heads off. In this respect, President Trump’s recent decision to abrogate the JCPOA without reason may be seen as giving help and comfort to some of our most determined adversaries.

My Arts Editor often accuses me of trying to see the best in people, and it’s true – eternal cynicism is really a harsh way to spend your life. But I find that a measure of wariness is in order when it comes to proven ideologues of any stripe. Most of the folks I quoted above fall into the ideologue camps with varying degrees of devotedness, or at least appear to (Berman is new to me, but The Resurgent is a known hangout for right wing never-Trumpers).

For my nickel, 38 North is a good source of analyses. So far, I have not been able to detect an endemic Western political ideology; they appear to be what they claim, a bunch of old North Korean diplomatic and intelligence hands, giving out their opinions based on observation and experience. So what are they publishing? Robert Gallucci is nonplussed:

The only possible reaction to the summit is disappointment. We all knew that both leaders wanted a good show and a lot of positive talk, and there was no reason to think that they would fail to deliver. They delivered. The only real question was whether the American president would get more—specifically some clarity from the North Korean chairman on what he meant by denuclearization and when it might happen. We got none of that.

We should feel good about the apparent commitment of both leaders to the process of reducing tensions and movement to new stable, peaceful relations. As Churchill said, “Meeting jaw to jaw is better than war.” But it was these same two leaders whose words in 2017 brought us to the verge of war, perhaps nuclear war, who we now would celebrate for possibly bringing us peace. Cynicism, or at least skepticism, would not be entirely inappropriate right now.

But he remains cautiously – and sensibly – hopeful of small steps. William McKinney, on the other hand, sees some positivity in canceling the joint exercises with the South Koreans:

Given how much the North Koreans detest exercises that are intended to demonstrate the US-ROK capacity to “decapitate” the North Korean leadership and overthrow the Kim regime, his surprising commitment is the most strategically significant confidence-building measure (CBM) that could be made, especially since it was offered unilaterally and outside the formal talks with the North Koreans. In effect, the president’s statement also reciprocates the North’s earlier stoppage of missile and nuclear tests—a CBM tit-for-tat.

In some ways, the opinions of the folks I read on the general purpose ideological blogs are like candy – they may taste good, they may reinforce my tawdry and ill-informed opinions, but what are they really worth? How much are they just repeating each other? The folks on 38 North, on the other hand, are more likely to be correct about a difficult to understand, to say nothing of resolving, situation. I’ll continue to keep an eye on 38 North and consider their opinions as far more relevant than the ideologically driven, who have goals little-related to the actual situation.

Word Of The Day

Clathrate:

And most of the methane that we do have is produced by biology. Things die and their hydrocarbons get trapped in stores deep underground or in permafrost, where it’s known as a clathrate. [Curiosity Rover Finds Organics Hidden In Mars’ Mudstones And Methane In Its Atmosphere,” Eric Betz, D-brief]

Clathrates are of some concern to climate scientists as methane, while it doesn’t survive long in our atmosphere, is a more highly potent climate change component than CO2. Clathrates are known to exist buried in sediment of the ocean floor of the colder oceans.

I Hope They Weren’t Sweating Too Hard On This Policy

Jeffrey Goldberg notes in The Atlantic the essence of the Trump attitude towards the rest of the world:

The best distillation of the Trump Doctrine I heard, though, came from a senior White House official with direct access to the president and his thinking. I was talking to this person several weeks ago, and I said, by way of introduction, that I thought it might perhaps be too early to discern a definitive Trump Doctrine.

“No,” the official said. “There’s definitely a Trump Doctrine.”

“What is it?” I asked. Here is the answer I received:

“The Trump Doctrine is ‘We’re America, Bitch.’ That’s the Trump Doctrine.”

It’s amateurism at its best, isn’t it? A noisy little bit of street jargon, dressed up with attitude, masquerading as a master policy, promulgated by a profoundly incurious narcissist. As if that’s going to help America advance its national interests. Goldberg also mentions the analysis by Thomas Wright of Trump during the Presidential primaries:

The Brookings Institution scholar (and frequent Atlantic contributor) Thomas Wright argued in a January 2016 essay that Trump’s views are both discernible and explicable. Wright, who published his analysis at a time when most everyone in the foreign-policy establishment considered Trump’s candidacy to be a farce, wrote that Trump loathes the liberal international order and would work against it as president; he wrote that Trump also dislikes America’s military alliances, and would work against them; he argued that Trump believes in his bones that the global economy is unfair to the U.S.; and, finally, he wrote that Trump has an innate sympathy for “authoritarian strongmen.”

Give the man a prize. The next President, assuming they are a more conventional politician, will have a tall order in restoring American prestige and influence world-wide.

Perverse Incentives, Ctd

Regarding my letters to my various representatives concerning civil forfeiture, Senator Klobuchar is the first to respond, after about a week. Here’s the complete content of the letter:

Dear Mr. White:

Thank you for taking the time to write to my office about civil asset forfeiture. Based on your comments, it is clear to me that you have thought about this issue at length. It is always helpful to hear people’s ideas and our office will consider your views as we go forward. I appreciate that you shared your thoughts and concerns with me.

Again, thank you for taking the time to contact me. I continue to be humbled to be your Senator, and one of the most important parts of my job is listening to the people of Minnesota. I am here in our nation’s capital to do the public’s business. I hope you will contact me again about matters of concern to you.

Sincerely,

Amy Klobuchar
United States Senator

Doggedly noncommittal. I wonder if her previous career as a prosecutor inclines her favorably towards civil forfeiture.

Suffering In Pursuit Of Your Art

But not your suffering. Richard Webb describes the process for creating Indian yellow in NewScientist (26 May 2018, paywall):

No longer commercially available, Indian yellow was supposedly extracted from the boiled urine of emaciated cows fed exclusively on poisonous mango leaves. A recent chemical analysis seems to support this idea, indicating the presence of both plant and animal metabolites in the pigment.

They also have a video of the blackest black you may ever see.

A trickle of new pigments enters the Forbes collection every year, mostly from the labs of organic chemists. Vantablack is something different – a black so black it flattens reality. Developed by the UK-based company Surrey Nanosystems, it is made of a forest of evenly spaced carbon nanotubes that bounce photons of light between them, eventually absorbing 99.96 per cent. This removes the subtle differences in the scattering of light that give us a perception of depth (see video, below). Even a crinkled foil covered with this shadiest of shades looks pancake-flat (as in the photo above).

 

Word Of The Day

Plus ça change:

A short form (specifically, an anapodoton) of French plus ça change, plus c’est la même chose (the more it changes, the more it’s the same thing). [Wiktionary]

Noted in “There’s a new kind of superfood – and it’s not what you think,” Michael Le Page, NewScientist (26 May 2018, paywall):

The arrival of a generation of GM crops with clear benefits for consumers should be big news. But far from helping to win over hearts and minds, it seems few people will even realise what they are eating. Plus ça change.

Sowing Chaos, Ctd

Allegations continue that the Brexit debacle may have been the result of unfair manipulations, as I noted in the beginning post of this thread, allegedly by the Russians. Charlie Stross on Antipope has a round-up of some follow-on information:

Then, last week, something happened. Or several somethings. (From the outside it’s hard to be sure.)

One of those somethings was the retirement of Daily Mail editor Paul Dacre and his replacement by Mail on Sunday editor Georgie Greig, a pro-European journalist. Newspaper owner Lord Rothermere remains the same, but an unattributed source described Greig’s appointment as part of a process of “detoxifying the Daily Mail”.

Next, the Murdoch press began an extraordinary about-face on Brexit. For about a year now Carol Cadwalladr of The Guardian has been digging into Cambridge Analytica, the Leave.EU campaign, and possible links to Russian state agencies and oligarchs. These links were known to some pro-leave journalists as much as two years ago, but they’re only now coming to public view. Aaron Banks is one of the main bankers of the Brexit campaign and appears to have very cordial relations with the Russian government, not to mention half a dozen Russian gold mines; he’s been called to testify before a House of Commons committee tomorrow and last week was refusing to attend. This week he appears to be on the back foot, with The Times going after him Revealed: Brexit backer Arron Banks’s golden Kremlin connection. Indeed, The Observer reports that Arron Banks ‘met Russian embassy officials multiple times before Brexit vote’. The newspaper goes on to say, “Towards the end of last year, Banks issued a statement saying his contacts with “the Russians” consisted of “one boozy lunch” at the Russian embassy. Documents seen by the Observer, suggest a different version of events.” (Note that Banks has a net worth in the ~£100M range: you don’t print anything about him in an English newspaper without getting a legal opinion first.) Oh, and the Fair Vote Project is going after him in court in the US, following allegations that two companies owned by Banks may have illegally exported information on British voters to the USA (in violation of UK data protection rules) for purposes of data mining (Banks had negotiated with Cambridge Analytica prior to this move).

Stipulating certain events and allegations are proven factual, then we’ve been inadvertent witnesses to the return stroke from Russia – no great surprise there. It was quite subtle, taking advantage of the Internet and advanced social technologies, along with very old fashioned human weaknesses to sucker a society into a vote it probably wouldn’t have taken after a rational analysis, but only mildly modify.

One wonders how Kremlin-initiated comparisons of the strategic threat of the UK compare to just three years ago.

Morality Is Relative

As is the goodness of many things. I was reading about the controversy of GM (Genetically Modified, and, by implication, artificially genetically modified) foods as depicted in Michael Le Page’s “There’s a new kind of superfood – and it’s not what you think.” Seeing as it’s in NewScientist (26 May 2018, paywall), it’s not surprising that there’s a negative strain to it when they discuss opposition to GM foods. I ran across this bit …

Take the efforts to enrich rice to prevent vitamin A deficiency, which causes blindness and even death. Golden Rice, as the vitamin-enriched GM version is called, promises to improve the lives of millions of children, yet anti-GM organisations have fervently opposed it.

There are two facets to GM foods. First, there’s the matter of nutrition, as exemplified by the comparison of natural rice and Golden Rice – the latter is far more nutritious in terms of Vitamin A.

The second facet is implicit in Le Page’s next paragraph:

The stakes are high. GM crops could help us produce better foods in a more environmentally friendly way, which will be ever more important as the population grows and the planet warms. For instance, Napier is developing crops rich in beneficial omega-3 oils. As these oils typically come from wild fish caught to feed farmed fish, this could make fish farming more sustainable as well as having health benefits.

By being more environmental and more nutritious, this permits the support of more people.

In a ridiculously overcrowded world.

Being the Let’s have a dig at the assumptions type, I decided to wonder if the anti-GM forces might be right in action, if not in reason (which tend toward the metaphysical). Now, there’s a common argument often made that by using techniques which result in more nutritious food being grown, both in content and in volume, we preserving the environment more so than if we didn’t.

But this is an improper argument.

Researchers often talk of independent and dependent variables. In the former, changing one parameter of an experiment is a safe thing to do because the value of that parameter is not thought to influence the behavior of other parameters.

Dependent variables, on the other hand, are influenced by the values of other parameters, sometimes in unpredictable ways, making the modification of a parameter more of an adventure. Without a good understanding one parameter’s influence on others, changing that value and the result of the experiment may be difficult to understand, or, contrariwise, the change may illuminate the nature of the influence.

My contention here is that there’s an assumption of parameter independence which is not true. My precise (ok, that’s a lie, but let’s get on with it) suggestion is that such factors as availability, price, and nutrition values of food are signals to the entire species of the viability of large, small, or non-existent (beyond the adult pairing). Naturally, there are other factors, such as infant mortality and that sort of thing, but my point is this:

If we adjust the food signals to suggest to the human organism that food is nutritious and easy to come by, then any reduction in agricultural land use gained through the use of GM foods will be erased by the additional land used by those offspring “validated” by the signals generated by the GM foods. After all, agricultural land isn’t the only land used by humans; there’s housing, transportation, recreation, and some of it requires far more land per capita than others.

If this whole “signaling” seems ludicrous to you, consider this post, referencing serious scientific research into the landscape of fear, wherein deer are inhibited from feeding in certain zones because they know predators hunt in that area. While these are grosser signals than what I’m proposing, they fall into the same class.

In the end, a non-partisan analysis of these factors may find that the anti-GM forces have a point, if inadvertently, in the context of the overpopulation of this planet, and – crucially – finding a non-violent manner to reduce the overall population. Feeding more people more efficiently ignores the other uses of land those people will engender, and thus endanger the supporting environments even moreso than is already true.

Are The Pilings Deep Enough?

The Kaiser Family Foundation (KFF) has released its latest tracking poll of the public’s view of the ACA. It’s a nice display which lets you lay out how long to show and breaks out the respondents in various demographics. For example, since the inception of the ACA, here’s the results for all adults as to whether their opinion of the ACA is favorable, unfavorable, or no opinion. The no opinions are dropping and the favorables appear to have a clear lead.


This one shows results for high-income folks.


Kevin Drum on Mother Jones sees this as close to victory for the pro-ACA forces:

In 2015, with Obamacare favorability languishing around 35-40 percent, repealing it wouldn’t have been too hard if President Obama himself hadn’t stood in the way. Today, Obama is gone but ACA’s favorability is 50-55 percent and rising. Even the rich favor keeping it around. There’s just not much appetite for destroying Obamacare anymore except among the tea party-ish base of the Republican Party.

I don’t know how far Donald Trump can go toward sabotaging Obamacare out of existence. Polls mean nothing to him in the face of getting revenge of Obama, and there’s obviously a lot of damage he can do. But can he do enough damage to wreck it for good before Democrats take over Congress or toss him out of the White House?

The Democrats must make it clear that, so long as the individual mandate is no longer part of the ACA, it’s no longer correct to call it ObamaCare. That individual mandate is the central mechanism that makes the whole jury-rigged contraption work, because, like any insurance, it’s the money from the the non-injured members which, to the extent possible, makes the injured parties whole again. If that individual mandate is not in place, then it’s

TrumpCare

And the Democrats need to trumpet that. TrumpCare means your healthcare costs go up! That needs to be an anchor around Trump’s neck, because then it can become an anchor around the jowly neck of every GOP candidate that has clasped Trump more tightly to their bosom than their own spouses – and that seems to be the trend these days in the GOP.

In my mind, one of the more pernicious trends of the current mid-term elections is the entire competition to be the most Trump-like and Trump-loyal partisan in the election. This is what leads to absolute corruption at the upper-most levels. There is a difference between sharing policy views, and loyalty to the Party leader (also known as team politics, of which I’ve written too much), and the latter is a poison in our water.

So I hope the Democrats can defeat every GOP candidate who’s frenching President Trump, if only in his dreams, and make it clear that this is not the American Way.

Looking Like Kansas On A Big Scale

Professor Pearlstein has written an unsettling article for WaPo on the current financial trends in the corporate world:

Now, 12 years later, it’s happening again. This time, however, it’s not households using cheap debt to take cash out of their overvalued homes. Rather, it is giant corporations using cheap debt — and a one-time tax windfall — to take cash from their balance sheets and send it to shareholders in the form of increased dividends and, in particular, stock buybacks. As before, the cash-outs are helping to drive debt — corporate debt — to record levels. As before, they are adding a short-term sugar high to an already booming economy. And once again, they are diverting capital from productive long-term investment to further inflate a financial bubble — this one in corporate stocks and bonds — that, when it bursts, will send the economy into another recession.

Welcome to the Buyback Economy. Today’s economic boom is driven not by any great burst of innovation or growth in productivity. Rather, it is driven by another round of financial engineering that converts equity into debt. It sacrifices future growth for present consumption. And it redistributes even more of the nation’s wealth to corporate executives, wealthy investors and Wall Street financiers.

Corporate executives and directors are apparently bereft of ideas and the confidence to make long-term investments. Rather than using record profits, and record amounts of borrowed money, to invest in new plants and equipment, develop new products, improve service, lower prices or raise the wages and skills of their employees, they are “returning” that money to shareholders. Corporate America, in effect, has transformed itself into one giant leveraged buyout.

But wait, it gets worse:

As a result of all this corporate borrowing, Daniel Arbess of Xerion Investments calculates that more than a third of the largest global companies now are highly leveraged — that is, they have at least $5 of debt for every $1 in earnings — which makes them vulnerable to any downturn in profits or increase in interest rates. And 1 in 5 companies have debt-service obligations that already exceed cash flow — “zombies,” in the felicitous argot of Wall Street.

“A new cycle of distressed corporate credit looks to be just around the corner,” Arbess warned in February in an article published in Fortune.

Mariarosa Verde, senior credit officer at Moody’s, the rating agency, warned in May that “the record number of highly-leveraged companies has set the stage for a particularly large wave of defaults when the next period of broad economic stress eventually arrives.”

Right out front, I’ll say my expertise in corporate finance is extremely limited. When I invest, I specialize in the story the potential investment is trying to tell me, and I try to evaluate for whether it’s a credible story. Sometimes I’m right, sometimes not. My advisor conducts his own investigation, and then we get together and thrash it out.

When I look at something like this, I try to translate the numerical measures into something more concrete, yet somehow allegorical. In this case, I’m seeing a great deal of what I’ll call innocent greed. It’s the belief that the naked pursuit of money is a good thing, a sort of libertarian trope, true or not. Whether it’s share buybacks to force the price of shares up (a disastrous move when the market chooses – or, to force more responsibility on the companies in question, the company’s results – to force the price of the shares down, leaving the company executing the buyback holding shares worth less than what they paid for them), often financed through debt, or dividends backed not by corporate profits but, again, by debt, the basic story seems to be about pride, prestige, face.

We’ve kept our dividends going for fifty years now, never mind how! Look at that, our stock price climbed another 20%! Isn’t it wonderful?! And we hold ever so many of our own shares!

A few years after the Great Recession that started in 2008, I read an article on the demise of Lehman Brothers. For younger readers and those who don’t recall, Lehman Brothers was more than just an obscure name appearing in Despicable Me (2010), it was one of the monster investment banks of Wall Street. One might write, Lehman Brothers (1850-2008), because it was the distressed institution that was not rescued by either the Bush or Obama Administrations during the Great Recession. The article, which might have been written by Morgan Housel of The Motley Fool, but I cannot recall with certainty, purported to recount one of the last meetings Lehman Brothers exec had with investors, and the theme of the meeting was how Lehman Brothers was dedicated to making profits for those investors.

Sounds harmless, even typical, doesn’t it? Yet, a few days later Lehman Brothers was dead, the victim of its own mad financial machinations, ripped to pieces when those knotted messes were ripped apart by the inertia of a falling market and a world wide recession.

I would contend, as did the author of that article, that it was a primary symptom of a foundational illness that ultimately doomed Lehman Brothers. Look, from a societal point of view, companies do not exist to make money. I know the general wisdom of the private sector would differ with me, but if you think it through, it becomes obviously right. The proper formulation is, Companies provide specific services thought to be useful to their consumers, and the best ones are profitable because they have the right combination of efficiency and service content.

Why is this important? It brings back into focus that a company is not an instrument for the implementation of greed, for the collection of more and more proxies of wealth, which can fluctuate in their value to a dismaying degree, by which I mean dollars (or whatever might be your local currency). The private sector wisdom leads to a corporate function which contributes nothing to the advancement of society. Stock buybacks as a form of returning profits to shareholders, dividends as expression of pride, the drive to use tax loopholes, none of these are reflective of the purpose of companies as seen from a societal viewpoint, and they are all the spawn of the prevailing wisdom of the purpose of the private company.

By contrast, a company which concentrates on providing those services of value, whether it be your local supermarket working to satisfy the local appetite for apples or for being localvores, or Apple, Inc, providing advances in communication technology which arguably does advance society, and then collects the profit … well, I’m sure it sounds very unsophisticated, even Puritan-like, to the advanced private sector investment banker who is deep into ETFs, and maybe advocated credit default swaps just prior to the Great Recession.

But I think getting back to the roots of the motivation for companies in the societal view is an instructive exercise in evaluating just what the hell is going on in Pearlstein’s article. I recommend reading it in full, whether or not you’re an investor, and thinking about what it may mean for your future. The Trump Recession may be far worse than the Great Recession. It may become the Trump Depression, and it’ll be caused by the nakedly greedy pursuit of wealth, rather than the wise pursuit of stability and justice.

Americans have always been distracted by the tangibles, haven’t they?

It’s Just A Maneuver, Ctd

Senator Gardner (R-CO) accomplished his goal, I think, as Ilya Somin reports on The Volokh Conspiracy:

For reasons I outlined in a previous post on Senator Gardner’s efforts on this issue, the passage of the STATES Act would be an important victory for both marijuana legalization and federalism. Nine states and the District of Columbia have already legalized recreational marijuana, and twenty-nine states and DC have legalized medical marijuana. Both figures are highly likely to increase. In all of those jurisdictions, the STATES Act would largely eliminate the federal ban on marijuana possession and distribution. Gardner and [Senator Elizabeth Warren (D-MA)] deserve credit for reaching across partisan lines to make progress here. …

The introduction of this legislation is the result of a deal Senator Gardner struck with President Donald Trump in April. In January, Attorney General Jeff Sessions ended an Obama-era policy that limited federal prosecution of marijuana user and distributors in states that had legalized pot under their own state laws. In retaliation, Gardner, who represents the first state that legalized recreational marijuana, held up Trump Administration nominees for Justice Department posts in order to pressure Sessions into reversing his decision. Under the deal, Gardner lifted his blockade on the Justice Department nominees and Trump apparently agreed to support the passage of legislation similar to that which Gardner and Warren have now introduced.

And, later, Trump public announced his support – for what it’s worth. I suppose this will guarantee Gardner’s reelection in 2020, especially if it passes the House as well.

But I remain sad that the judicial confirmation process was held hostage by Gardner, and is not respected on its terms for what it is, the manner in which the third leg of the stool of government is populated. Gardner has basically said he’ll return to being a rubber stamp for Trump’s nominees, rather than demanding the best and brightest.

All the pot in the world won’t make that nightmare go away.

Word Of The Day

Fissiparous:

  1. Reproducing by biological fission.
  2. Tending to break up into parts or break away from a main body; factious. [The Free Dictionary]

Noted in “‘Riyadhology’ and Muhammad bin Salman’s Telltale Succession,” Chibli Mallat, Lawfare:

Put all this together and the information shows a large substratum of dissent in Saudi Arabia and a sizable group of significant Saudi personalities living in exile. The history of dissent in Saudi Arabia is getting better known. The opposition is large but remains fissiparous and disorganized. With little support in the West outside prominent human rights organizations, the focus will remain on the domestic opposition. The most significant elements of that opposition lie within the royal family and among the business elite.

Is It A Malfunction Or An Improvement?

NewScientist (26 May 2018) reports on the latest synaesthesia:

A WOMAN can’t help laughing uproariously when she sees other people being tickled.

She has mirror-touch synaesthesia, a condition that makes people feel sensations on their own body when they watch other people touching things.

To see how this relates to tickling, Vilayanur Ramachandran and Claudia Sellers at the University of California, San Diego, recorded how much the woman laughed in different cases, such as when she was spontaneously tickled or when viewing funny situations.

They found that, in general, she didn’t laugh any more than a non-synaesthete. However, when watching someone else being tickled under an armpit, she burst out laughing and tried to make it stop by placing her hand under her own armpit – which seemed to help (Neurocase, doi.org/cpsb).

The spectrum of connections the human brain can experiment with can be a bit dizzying. You can call it mistakes or you can call it evolutionary dead-ends, but in the end the deviance from the neurotypical can be quite unsettling.

Just Who Do You Count?

Noting a fine point of which I was not aware, and importantly, Avi Berman remarks in Mother Jones on the real purpose of the addition to the census form asking questions about citizenship:

In March, the Trump administration added a question about US citizenship to the 2020 census for the first time since 1950, leading critics to charge that the question was a deliberate effort to reduce the response rate among immigrants and the political power of the cities and states where they live. But at a congressional hearing on Friday, another potential motive for the controversial census question was on full display: using the data to allocate political representation on the basis of the number of citizens in a district or state rather than the total population.

Such a move would mean a fundamental shift in the way representation is determined, dating back to the country’s founding, when the framers of the Constitution decided the balance of representation would take into account populations that didn’t have the full rights of citizenship, such as slaves and women. It would also significantly diminish representation for areas with large numbers of immigrants and shift political power to whiter and more Republican areas.

It is an interesting question to me; perhaps everyone else is aware of it, though. Disentangling the third-rate GOPers‘ influence from it is a bit sticky, of course, but it helps to pretend this is actually a proposal of, say, General George Washington. If such a personage would present such a proposal, how would you react to it?

My first impulse is to agree: representation is for citizens, now isn’t it? It seems commonsensical. Yet, the Founding Fathers might not agree. One of the compromises reached among them was the counting of slaves for purposes of the Census, fixed at counting each as three fifths of a free person:

Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.

A slave is not a citizen, for a citizen is a free person, absent imprisonment for criminal activities. Yet, they were to be represented regardless.

Despite the Constitution’s apparent provision for the non-citizen, we might soberly consider reasons for or against. Occurring to me:

  1. Proper assessment of the needs of a given region cannot be achieved without knowing the number of real persons consuming any Federally-provided resources. In cases of emergency, asking for proof of citizenship is both impractical and ungenerous.
  2. Failing to give proper representation to those non-citizens may lead to sentiments of discontent, and while the pro side of the argument for representation for citizens only may view this as a discouragement to potential illegal immigrants, discontent in situ may result in violence perpetrated on citizens.
  3. Discouraging illegal immigrants has the potential to turn away those ambitious enough to leave their home countries for the strange, new world of the United States. There is something to the idea that those willing to emigrate have qualities desirable to the United States; this xenophobic hostility does little good for natives in the long run.
  4. Discouraging illegal immigrants shuts out crime. This is indisputable, but measuring this good is difficult. Is there an identification of the number of such immigrants in ratio to the total illegal immigrants? What is an acceptable percentage vs the indisputable desirable immigrants of point 3?
  5. It is remarkably difficult to find reasons for the pro side of this argument beyond the problematic point 4 and the hypothetical Representation is for citizens!; indeed, I begin to suspect that the argument is little more than an empty slogan. One might argue that a naturalized citizen, through investment of the time and energy to gain citizenship, is naturally loyal to the state, but that hardly addressed the first three points.

So has SCOTUS weighed in on this debate? Avi provides an answer to that question:

Ceasing to count noncitizens, documented or undocumented, toward redistricting and reapportionment would mark a dramatic departure from longstanding democratic norms and recent Supreme Court precedent. In the 2016 case Evenwel v. Abbott, the Supreme Court unanimously ruled that states should draw legislative maps based on total population, not the number of citizens in a district. “It remains beyond doubt that the principle of representational equality figured prominently in the decision to count people, whether or not they qualify as voters,” wrote Justice Ruth Bader Ginsburg in a unanimous 8-0 opinion.

Unanimous, no less. It makes me wonder if the Republicans are just spinning their xenophobic wheels on this one.

Current Movie Reviews

Don’t fart so loud, dammit!

The power of a story depends, to a large extent, on how much the audience buys into the story. This can be accomplished in a variety of ways, through verisimilitude, magnetic characters, and sensory overload. The movie A Quiet Place (2018), however, inverts that last method to accomplish its goals. Set in roughly contemporary times, humanity is being hunted by creatures that primarily use the sense of sound for detection of their prey. This is the story of one farming family, surviving by their adherence of to their code of silence, a code that, on abuse, results in the sudden and violent death of the apostate.

This results in a movie with nearly as little dialogue as The Artist (2011), where the silence has a reason both integral to the story and as a mechanism for focusing the audience’s attention. Similarly, in this movie, the silence with which the characters must live focuses our attention on how the noise we generate that we ordinarily don’t even notice signals our location to anything that cares to listen: other humans, cats, dogs … predators. Their care to minimize their sonic signals acts to emphasize those powerful moments when a misstep puts them in mortal danger.

Or, worse, when the emergence of new life, engendering the cries of pain for us thin-hipped evolutionary trade-offs, brings on the worst.

The storytellers are wise, for the very manner in which mankind is being hunted is also used to fight back, and that cleverness, even if accidental, makes the story that much more interesting. Hearkening back to my preferred theory of story, that stories remain central to the human experience because they teach lessons of survival and success through depictions of the consequences of choices in specific situations, this story is a reminder that not all curses are unalloyed, that the sharpest spear may be turned against its wielder.

I said that stories succeed on how well they engage their audiences, and part of that engagement acts as a barrier to hide the holes that develop in most stories. A Quiet Place has one or two holes. For example, the hunters appear to have specialized completely in sonics, being completely blind, and apparently insensitive to odors. Does this make sense? Would a predator the size of a human, more or less, really be completely incapable of sensing odor or light? While not impossible, it seems highly unlikely.

My Arts Editor pointed out that another approach to the problem of sonic-oriented predators might be to go the opposite way: magnify the general sonic landscape. A wind-chime in every tree, perhaps.

But I think these are minor quibbles. If you violently hate horror movies, you won’t like this.

Otherwise, Recommended.