Why Haven’t Conservative Thinkers Denounced Trump?

This headline was in the New Yorker today (December 7th). I think I have a much shorter answer than it provided. They are hoping that when he finds out how much more complicated the job is than he imagined, he will turn to them for help and their power, like a magic spell wearing off, will be miraculously restored. That would certainly give us the devil we know. But equally, Trump's ego may get in the way; then we have the devil we don't.

Ambiguity

Recently a couple of things got me thinking about the strategic use of use ambiguity. The first is the "Special Relationship" between the US and the UK. The Economist describes is as resting on three pillars:

For America, the alliance has long rested on three pillars. One: the historical links and shared values between the two countries. Two: the chemistry between their political and cultural elites. Three: the case-by-case alignment of their interests"¹.

The beauty of this lies in the scope it affords for interpretation. Whatever happens on the ground whether it is acting in cooperatively or when actions diverge, politicians (perhaps the people interested in using the construct) can always find a way (cherry picking a pillar for example) of framing action as consistent with the Special Relationship.

The second is "the silent majority", useful since one can ascribe to this imaginary group any position. Because they are silent, one doesn’t actually know what their views are so one cannot be wrong.

One could say "the silent majority believes in life after death" or  "the silent majority believes in life on Mars". While one is more likely than the other, in the moment such assertions can't be definitively contradicted.           

¹Some Brits, the article suggests, see a fourth pillar: "a common foreign-policy doctrine evolving in lock-step".

Gwen Ifill - a tribute

Yesterday brought some very sad news. Gwen Ifill, co-host of the PBS News Hour, had died. The tributes to her on last night's News Hour have been hard to watch. Amy Walter and John Dickerson, both journalists whose work I admire, were close to tears (as I was). Although I never had the privilege of meeting her, she had become, in an odd way, a regular part of my life - over supper with the News Hour and on Fridays with Washington week. Like Tim Russert, who we lost 8 years ago, she asked probing, insightful question (interestingly, the kind interviewees call "tough" rather than "good"), but did so in a disarmingly pleasant, even cheerful, way; occasionally with a hint of a mischievous smile, perhaps when she knew it was one with which her guest was going to struggle. She was part of a diminishing circle of serious, highly competent journalists, the few who take seriously their role to inform intelligently. This election cycle, if it is has shown us anything, is testament to just how much we need the kind of dedication to journalistic integrity for which Gwen Ifill was justifiably an icon, the country truly needs.

What we do know

While Trump's comments after his meeting with Obama were a cause for a slight lessening of dread, irrespective of whether he turns out to be more moderate when in office than his campaign suggested, there are still three things that really trouble me.

First, he he has to deal with a Tea Party controlled Republican Congress; Mitch McConnell and Paul Ryan haven't gone anywhere.

Next, his VP pick has a truly horrifying track record of intolerance and religiously justified bigotry.

And finally, the messages that put him in the White House tell us something about the country or parts of it. That 48% of those who voted either believed the BS or were prepared to dismiss and ignore it is deeply worrying.

When he said "I love the poorly educated" it's quite clear what he meant.

The loosers

The losers in this election result are not so much one or other candidate, but trust in institutions; in politicians, in the police, in the media, in the judicial system, the FBI, in academia, in science, in experts, in punditry. Promises that come to nothing finally come back to bite you - on either side of the aisle.

And ultimately the people, particularly those for whom Twitter is their only "reliable" source of information.

Unless America gets its act together, just as Britain ceded its position to the US in the 20th century, so America will to China in this one.

Trumpocalypse

Whether Donald Trump wins or not tonight, the message is clear. Much of the electorate does not want an establishment candidate and is not prepared to settle for more of the same.

Had the Democrats nominated Warren or Sanders, this would not have been a close race; Trump would have lost. But the party misunderstood the degree to which they (and their Republican colleagues in Congress) were perceived as having betrayed the working class with false promises of the benefits of globalization. And now the political establishment is, deservedly, paying the price. (Regrettably we may soon be too).

While it's unlikely that Trump can actually do anything about the corruption (about which I have written often here), the Republicans have already been split by Trump (the elites no longer represent the majority of their party) and the Democrats are now going to have to face up to the same issue, post November 8th. Whether Trump wins or looses by a whisker the signals is the same; the status quo is not longer acceptable.

One possible outcome is that this will lead to even greater polarization. If so we can expect a fairly horrific disruption until the mid-terms and possibly then a return to gridlock. And that pattern may repeat, da capo al fine.

Alternatively--one can only hope--there will emerge two new dominant forces, one in each party that understands that they have more in common in dealing with issues germane to those who both have left behind, the working class, the "poorly educated" (Trump's terms), those for whom the knowledge economy was never really a possibility. They will discard the discredited Chicago school of trickle-down-lessaiz-faire policies and actually do something to lift 46 million people, last I looked, out of poverty.

We do indeed need to "drain the swamp". Whether Trump is the right person for the job remains to be seen. But either way, we are never going back to the way things were yesterday.

Brexit or not to Brexit

A court ruling in the UK yesterday may pave the way for a Brexit win-win. The court's decision, which the Government is appealing, is that Article 50 cannot be triggered without a vote in Parliament. (The Government will be claiming that in voting for a referendum, Parliament has already delegated its authority to the people and the Government is simply implementing their choice).

But if the ruling stands, those who want a do-over will have their chance, and it seems likely that MPs will vote not to leave (though this may have to be preceded by a general election in which this is the central issue).

If Parliament chooses not to leave, the threat of Brexit will have triggered the first serious re-examination of the EU's purpose and direction in decades (indeed it could be argued, the first since it founding). Given the anti-establishment, anti-centralized-power mood in many other European countries, including France, a founding member or the club, that process may give rise to the kind of Europe that Brexiteers want. And they will have achieved this without having to negotiate access to European markets from the outside.  

To Laugh or Cry

I am not a US citizen so I will not be voting on Tuesday. I would have liked to have taken part in the 2008 and 2012 election, if only to have been able to say I had played a part electing Barack Obama. His 2008 campaign was exciting, optimistic and uplifting. This time I am thankful to be able to disavow, utterly and completely, any involvement in something so sordid, so depressingly uninspiring, so shameful, so deserving of contempt and ridicule.

Vladimir Putin's attempts to swing the election toward Trump are (probably) motivated in part by his antipathy toward Hillary (she criticised the integrity of the Russian electoral process while serving as Secretary of State), but also because in Trump he has found someone whom he parade in front of Russians, as he rigs his elections, to say "that's what freedom and democracy looks like". Authoritarian regimes all over the world must be rejoicing at the ugly spectacle that is this general election and the extent to which it has sullied the ideal of the democratic process.           

How we got here is complex but George Packer, talking to Terri Gross this week, provided one of the most interesting explanations for the rise of Trump. He noted that the the working class were gradually deserted by the Democrats, who saw the decline of the power of trades unions and sought to shift their power base so the professional and educated liberals. Of course the unions were in part decimated by globalization and off-shoring, policies promoted by Bill Clinton. This was coupled with the general shift to the right of previously left-leaning parties (just as with "New Labour" in Britain) to gain the centre ground as their 1960s policies were being seen as increasingly outdated and irrelevant.

Packer also noted that the 90s answer to the rise of off-shoring, recently termed "Educationalist Elitism" by Hillary Clinton, was a college education. This was to be the way that the West would compete in the "knowledge economy" as manual jobs moved out. But that solution turned out to be doomed since the West doesn't have a monopoly on intelligence and its educational system has no distinctive competencies. So we are no more competitive in the knowledge economy than many other countries, and certainly not China and India.

If there is anything good to come out of this...

Well, I have to say nothing comes immediately to mind. Something did occur to me as I sat down to write, but now its gone. Time will tell.

Some are waking up - others are not.

Suddenly, post Brexit, some politicians (other than those the left, the Warren Wing or the Bernie supporters) are talking about the effect of middle class wage stagnation and increasing inequality. Obama mentioned it albeit somewhat pejoratively in remarks at the NAFTA summit.  Even the Tories (Theresa May) noted that both parties had failed the working class.

However, not everyone has woken up to smell the roses. Segolene Royal, speaking to Jeremy Saker, made clear that she was still hell bent on protecting the European project as was. And she intends to exact revenge for what she sees as David Cameron's stupidity "asking the wrong question". What she and the establishment more broadly aren't seeing is that there would be no need for threats and punishment were there any tangible benefits the majority of voters could point to for remaining in Europe. If there were, and if she could articulate them, Europe would have nothing to fear; no one in their right minds would want to leave the fold.

But since there isn't and she can't, everyone must be locked in their rooms until they see the "benefits" of staying.      

A(nother) self-inflicted wound

Congress voted yesterday to over-ride the President's veto of a bill that allows private citizens to sue in US Federal Court any state and government that they believe might have been involved in sponsoring terrorism.

This is absurdly short sighted, and the fact that 28 of the senators who almost unanimously voted to over-ride the veto signed a letter today saying they didn't like the bill for which they had just voted simply reinforces the perception of the stupidity, incompetence, and unworldliness of our elected representatives.

Mitch McConnell, ludicrously, blamed the President for not getting involved, despite that fact they Obama explicitly warned the Senate in advance that he would veto the bill and set out exactly why - but they took no notice, and voted not once, but twice, on a bill they now say they don't like (or didn't read) despite being warned of its broader implications.

The bill is not one that limits its reach to the Saudi government and to the 911 attack but could be used to sue any government for any alleged involvement with terrorism.

For example, suppose a terrorist enters the US via Canada and kills a US citizen. The relative of the victim might allege that the Canadians knew he was a terrorist when he crossed into the US and sue the Canadian government in US court for supporting terrorism through negligence. In the process, the plaintiffs might demand that Canada make public (or at least available to the court) information that it could not disclose for national security reasons, effectively forcing it to settle the claim rather than fight the allegations; in the business world, that known as greenmail.     

Since this sets a precedent, other countries would be likely to pass similar legislation of their own. Thus, a Nicaraguan national whose relatives had been killed by the Contras might sue the US government in Nicaraguan court for the US' involvement in supplying arms to the rebels.

And to McConnell to say he wasn't warned (Obama made statements on the implications of the law in April) and that he hadn't thought it though when it came to the vote is simply an embarrassment. And yet another shameful black eye for the US Congress.

2020 Foresight

Some years ago, I was in Chicago. My flight home was early in the afternoon so I decided to use the morning to take a brief look round the Chicago Art Institute. From my outbound journey I knew the rail link from the airport took about an hour (as far as I remember), so I left the gallery at about 11:30, waked to the station and got onto a train to the airport.

For whatever reason (longer than expected wait for the train, a slower train going west than east, misremembered timing...) I arrived only 20 minutes before my flight. I ran all the way to the gate, arrived in the nick of time, the last to board, and took my seat completely out of breath and (to the probably discomfort of my fellow passengers) drenched in sweat. But I made it!

So what did I learn? The literature on learning suggests that a positive result reinforces the antecedent behavior. So if one considered making the flight a positive outcome, then my visit to the gallery and my somewhat cavalier attitude to being early is likely to be repeated. Alternatively if one considers my discomfort and stress, then this was a negative outcome and the behavior that caused it is likely to diminish.

Assuming that (thank the Good Lord), Trump doesn’t move into 1600 Pennsylvania Avenue in January, the question we need to ponder is do we consider this to have been a positive or a negative outcome? On the face of it, it would seem to be rather positive, a seriously dogged bullet. But I think that would be wrong. Looking at averting disaster as a positive outcome means we are destined to repeat the same fiasco in another four (or possibly 8) years.

We should, rather, consider what led us to this point. Better, I think to face the fact that there are some serious problem of which Trump is the most visible and obnoxious manifestation. Slow or stagnant economic growth for all but the wealthiest and growing income inequality, a broken justice system with many minor offenders locked up for decades, latent racial animosity (see also Hillary's list of -phobias), a structurally corrupt political system (campaign finance, lobbying and the revolving door), out-of-control health care costs and rapacious drugs companies, concentration of oligopolistic corporate power, the conflation of money and free speech... The worst sentiments that the Republicans have spent the last 8 years fanning ferociously will be hard to extinguish; just putting out the flames will be hard enough.

And if we think we averted the Trumpocalpse, the incentive to fix any of this will be gone, and the history that is now being made may well repeat itself with a less inept character in the starring role in 2020. Then God help us all.

After the fire

If, as now seems likely, Hilary Clinton wins the presidential election this November, she will almost certainly face a Republican Congress. She can expect little more cooperation from Paul Ryan and Mitch McConnell that Obama enjoyed.

First, Congress has gotten into the habit of doing nothing; while it could be argued that they lost the White house as a result of 6 years of obstructionism, the GOP failed to reach out to minorities after the its loss in 2012, so learning doesn't seem to be its strongest suit; thus more of the same isn't off the table.

Second, much of the latent motivation for that obstructionism might be attributable to the unarticulated (until Trump) bigotry of many in the GOP. And that applies as much to women, and thus to Hilary Clinton, as racial bigotry did to Barak Obama.

Finally, another loss, particularly after all the shit-stirring Trump has done this last year, will only fuel the anger and resentment of those who feel disenfranchised and there will be still more pressure on GOP representative not to give an inch.

So we may well dodge the Trumpocalypse, but get ready for another 4 years of Congressional inaction.   

The Aftermarth

Monumental; earth shattering; stupendous. The enormity is taking time to sink in, as a relatively certain future shatters into a thousand alternative scenarios. Some final thoughts for the day.

Markets
That the European stock markets fell further than the UK's suggests that the consequences of Brexit for Europe are potentially more uncertain and more consequential than for Britain. 

Xenophibia or national pride?
David Cameron gave a terrific concession speech this morning;  it was a rare example of a political leader putting the good of the people he was elected to serve ahead of himself. Resigning for the good of others is unceasingly rare and in the US almost unheard of. As one of the conservative pundits on one of the Sunday morning talk shows said, many years ago after some screwup or other:  "ours is not a resigning culture".  Doing the right and honorable thing, as Cameron did today, shows character and the values that make me proud to be British. When immigration is on a large scale and ill organized, pockets of homogeneous incoming groups form, do not assimilate and do not adopt the host countries values; they then feel (or are made to feel) excluded and separate, all of which is a recipe for the kind of unrest that, for example, the French have to deal with in the Algerian banlieue in the North of Paris.

The worldly rich and the uneducated poor
Pundits have been looking at voting patterns and have characterized the vote to stay as predominantly rich and educated and to leave, white, poor and uneducated (and by implication, ignorant). That's precisely the kind of patronizing condescension that makes the man in the street angry at, and distrustful of, the elites. And take note, the political class did a terrible job during the campaign of explaining complex questions in honest but simple terms. Instead, in a ludicrous attempt to make the issues intelligible they resorted to half truths, sound-bites and fear-mongering. It was pretty shameful.  
  
Free trade and economic growth; who benefits?
Certainly trade benefits economies as a whole - no argument there. But who in their right mind would agree to a bigger pie if their slice was every smaller then the slice they used to get from a smaller pie? Trade and globalization has raised GDP; but it has also depressed middle class wages. No surprise therefore that many are less enthusiastic about trade agreements than economists, wealthy business leaders and others with sizable equity holdings and stock options, and politicians who hope to be invited (and paid) to lobby for those companies when they leave office.  

Balance of power; East/West and inside Europe
Certainly a Europe that speaks with many voices is less powerful than one that speaks in unison. And not doubt Putin will be please at recent events. But to suggest as Richard Haass (President, Council on Foreign Relations) did today on the NewsHour that a shooting war between countries in Europe is now on the cards seems a little far fetched¹.    

Cultural insensitivity; zip it.
The day before the vote, Jean-Claude Juncker, the European Commission president, warned, rather injudiciously, that "out is out". It's unlikely that the British public took kindly to being threatened by the very unaccountable institution from which many were hoping to disentangle themselves. In the same vein, Barack Obama's ill-considered comment about "getting to the back of the queue" for trade negotiations if Britain left the EU probably made a lot of Brits (myself included) a little deaf to warnings of dire consequences (and now suspicious of his statement today that the special relationship will endure).     

Junker and Merkle
And interesting aspect of the post Brexit rhetoric is the contrast between Angela Merkel (a politician) and Jean-Claude Juncker (bureaucrat). Juncker, who warned, perhaps injudiciously the day before the vote, that "out is out", said today that he wants Britain to complete the Article 50 withdrawal process as soon as possible. Angela Merkel, in contrast, said this afternoon "there is no quick key solution that we can take from this referendum decision. That would only divide Europe even more". One interpretation of this divergence of opinion is that Angela Merkel is accountable to an electorate while Jean-Claude Juncker is not.

An American-centric world view.
Most of the last two days I've been glued to the BBC. One of the fascinating aspects of watching the PB NewsHour has been the US-centric perspective. The claim Richard Haass made was that the widening of Europe to include the Eastern block ex-Iron Curtain countries into the EU was a carefully orchestrated plan by the US to weaken Russia. European agency in this telling was absent. My own perspective, living though this from the other side of the Atlantic was that this was an extension of Maggie Thatcher's "wider not deeper strategy" that John Major continued to promote in the 1990s. I'm not saying one or other is right, simply that these are quite different perspective on the same set of events.

Haass also suggested that the terms of exit were all but set in stone (and weren't that good from the UK's perspective). That seems to demonstrate a surprising lack of understanding of the current dynamics of European politics. Indeed if things were so preordained, financial markets would not be concerned about uncertainty - but that's not what most economic commentators as suggesting.
 
^1. a British understatement - translation: "You have got to be kidding - that's simply preposterous".

The Wake-up Call

A phrase echoing across Europe this morning is that Brexit is a "wake-up call" to the political elites. That they needed waking up speaks volumes to their ivory tower isolation and a fundamental lack of understanding and empathy with their electorates. 

Many interpret the Leave vote as xenophobic; while that clearly was a component, we may find, as we pick over the entrails of the campaigns, that fear and loathing alone would not have been sufficient to have given us the result that is, in essence, a repudiation of the EU project and a vote of no confidence in both seemingly unaccountable European institutions and national politicians.

Ask most people who their MEP is and I doubt many could give you an answer; nor, I suspect, do they much care; that's the opposite of the US where citizens are generally more familiar with their federal representatives than those who represent them at the state level.

Looking back

Perhaps one reason for the vote is that political leaders failed to see that they needed to re-sell the benefits of EU membership on an on-going basis. The burden of EU regulation was clear to small business owners; large businesses probably gained more than it cost them but those that didn't trade much with Europe may have seen only bureaucratic costs and constraints. And of course the media made hay with all the negatives because that's what the media does. So as a climate of resentment was being gently cultivated for years, politicians took the benefits for granted and failed to draw attention to them on a consistent and regular basis. And now that simmering cauldron of irritation has boiled over.

Britain has never been an enthusiastic European. It joined late (after being blocked by the French at the EEC's inception, which now doubt set the tone for Britain's relationship with European relations many years), it got the thin end of the wedge early on in terms financial flows, for example benefiting little from the Common Agricultural Policy (CAP) which rewarded French but not British farmers, it joined and then fell out of the exchange rate mechanism (ERM), a precursor to the single currency, and it stayed out of both the Schengen Area and the single currency. Taking Britain's membership of the EU as the default position was a mistake made by politicians not just during the campaign but for many years before.

Looking forward      

That many European officials, politicians and business leaders are talking about a wake-up call suggests two things; first the realization that their assumptions about the inevitability of the European project may be flawed and that Europe in its current form faces an existential crisis; and second that despite the dire warnings issues across the board before the vote things look rather different after the fact.

What is clear is that we are in for a period of great uncertainty, something reflected in the market jitters over night and this morning. That being said, the FTSE recovered much of the shock-related "chute", down only 2.5%; if the markets are a guide and given that some of this may simply be an uncertainty discount, British businesses may suffer less than "Remain" had been suggesting. Of course it won't be plain sailing particularly for companies embedded in European supply chains (Airbus for example), but the flip side is that there is a strong economic incentive to make Brexit as painless as possible. 

Of course, that is in stark contrast to the political; those working in European institutions (the European Commission, the European Parliament, and the ECB) have a strong vested interest in maintaining the status quo, regardless of the benefits to the citizens of European. Not only do their jobs depend on those institutions continuing in their current from, but they are emotionally invested in the project and will have a hard time seeing issues through any lens other than that they have been using for a generation. Ross and Staw (1993) have a very useful model in this regard

My guess is that as long as large businesses' profits are at risk from Brexit, economics will trump politics, particularly when politicians realize, as many now appear to be doing, that they do not have widespread backing from their electorates. Although punishing Britain for upsetting the apple cart may seem like a good way to keep things together, this is short sighted. If other countries (and many do) share many of Britain's concerns with lack of accountability and central government over-reach, forcing them to remain "in" will do nothing to enhance those politicians' re-election prospects in the longer term.

That's why it matters to Britain not to invoke Article 50 of the Treaty of Rome immediately; once done, the two year clock starts ticking, and time is Britain's friend. The longer Brexit implementation takes, the better the terms are likely to be. A rush to the exit will lead to ill-thought out arrangements, driven by those who want to make sure there are "consequences", to use Francois Holland's term, for leaving the club.

I suspect that over time, as emotions subside, and hopefully clearer heads prevail, proposals for a pragmatic arrangement that benefits both Europe and Britain may emerge. Whether Europe can get behind such a practical solution with one voice is an open question, indeed one that itself speaks to the long term viability of the European project.   

The Big Day Finally Arrives

Today Britons vote in potentially the most consequential and potentially irrevocable collective decision of a generation.

I have followed the reporting by the BBC, watched the final debate, and listened to advocates and experts. And I while I am in favour of remaining part of the EU, the two campaigns and all the discussion have been so superficial and insubstantial as to leave me little more informed than when the discussions began.

The final debate on Tuesday night was long on sound-bites and short on engagement with the points the other side made. How anyone can make a reasoned decision given the paucity of information is a mystery.
What I think I know is this: leaving would likely lead to a reduction in exports to Europe as the EU punished a defector, and fewer imports in retaliation. As a result there would be reduction in GDP and unemployment might rise. In the longer run, whether the UK could compensate for this with an pivot to the Commonwealth and other countries outside Europe is hard to say. Economic migration would be reduced though the economic impact might be negative or possibly a wash. EU constraints (aka red-tape) on small business would become less burdensome, which would amongst other things give business more labour market flexibility which would degrade working conditions and depress wages.

Whether greater "local autonomy" makes much more than a feel-good difference is unclear. Since Britain is a net contributor to the EU budget, there would be a financial saving for UK taxpayers. The City would could lose its place as the financial centre of Europe, and the finance sector would shrink. But on the other hand that might reduce the upward pressure on London house prices. If Britain were to leave, Scotland much secede from the UK in order to stay in the EU. The UK's "out-sized influence" might be reduced as it is no longer an "influencer" of affairs in Brussels, but it is still the worlds 5th largest economy, still has (for the moment) a seat on the UN Security Council, and still has a variety of institutions that play an historically influential role in world affairs. But as Britain's role in shaping European issues declines, to the extent that Europe becomes more factious and burdened with internal problems, countries outside the UK might find it easier to deal with and bilateral WTO based trade, not to mention broader relations, might benefit. And finally Europe itself; were Britain to leave, other countries might be inclined to follow, and the entire European project might well be up for a major revision and re-negotiation. Ironically would be exactly what the UK had wanted but was unable to achieve in its recent attempt at renegotiations; but then, outside of Europe, it would no longer be able either to influence that debate or benefit from any new deal.

Ultimately it seems that in the swirl of speculation, claims and counter claims, one must simply find a narrative that is consistent with ones priors and emotional response to the issue and call that a reason to vote one way or the other.

The news cycle of tears

The reporting of news-worthy events evolves. Here I suggest a model for television news reporting that has been increasingly widely adopted. I will explore the model in the context four television outlets, Fox, MSNBC, CNN and the BBC.

The premise on which this model is based is that information is developed in a linear fashion, a straight line function of available resources. If the news-gathering resources are constrained and constant, the rate at which information is acquired is constant and the accumulation of information (the integration of the rate of acquisition) is linear. I posit also that the demand for news falls exponentially over time. In this diagram I suggest a relationship of the form 1/exp(xt) with time, measured in hours and x parameter that characterizes the rate of interest "decay".

The scope for quazi-informed speculation is defined a N_t*(N_t-1) where N is the number of facts available at time t. The zone of speculation is defined at the product of scope and demand. Of course baseless speculation is always possible (and often found) but is not a feature of this model. Here I confine myself to speculation that is at least to some degree rooted in facts.

From the figure it is clear that as we move away from the instant at which the story breaks, the zone of speculation increases. Of course not all news organizations will make use of the space offered; the function represents an outer envelope within which news organization may chose different levels of speculation depending on their business models.

For example, the conservative BBC generally chooses to stay fairly close the axis, waiting for confirmation and corroboration before using limited data to make speculative assumptions.

The business model employed by the more sensational media outlets (Fox for example) is to exploit the envelope to the full before moving on as facts narrow down the speculative domain. By focusing its narrative at the widest part of the envelope for each new story, and then moving on before the speculation is dis-confirmed by additional data it is able to generate the greatest scope for agenda-based reporting. The model is analogous to the rhetorical device "I'm not saying, I'm just asking" as a means to making a point without the need for data. And there can be little doubt that the "tear-drop" mode of the zone of speculation has been increasingly successful.

In the diagram below, for the purposes of illustration I have modeled a lower limit in blue and an upper limit in red. The units might be the the degree is venal self interest.

Fox generally occupies the region near to the upper edge of the envelope while MSNBC takes a position the diametrically opposite to Fox's.  

CNN by contrast has has little in the ways of a political agent to guide and constraint its speculation allowing it to wander more randomly and more widely in the available speculative space.

And the more conservative BBC generally speculates later, and stays closer to the x-axis.

Of course the is a simply a theoretical model; I leave it to others to test it empirically. But at least the model is something worth speculating about...

Clinton or Sanders

In an email from Sanders the morning I realized (belatedly) why Sanders will fight to the bitter end. Although has been in politics most of his adult life, he's not a career politician - he's a conviction politician. He's driven not by opportunities for him personally but by the vision of changing society for the better. He sees this is an inflection point, a once in a generation opportunity to make lasting and significant change. His goal is not the presidency, but change itself, for which the presidency and the campaign are but a means to an end. And he has nothing to lose by fighting on; the worst that can happen is that the status quo prevails.

Sanders or Clinton

It looks this evening as though Clinton will have a majority of pledged delegates. It is possible that Sanders could persuade the super-delegates to come over to his side to give him the nomination, given his better polling against Trump, but this is unlikely given that the super-delegates belong to the elite that stands to loose were Sanders to push through campaign finance reform. Moreover, they have already given their pledges to Clinton, and are nervous, perhaps, that the issues that Sanders has campaigned on are a shift too far to the left.

Of course that is only one reading of the situation; another, given the overlap between Trump and Sanders on international trade and campaign finance, is that the increasingly poor, disillusioned and disenfranchised middle class are rebelling  and, as one establishment figure noted tonight, flocking to the "populist" candidates. For populist read "people who don't buy the elites' argument that things are too complicated for the humble man in the street to understand - so let us get on with running things (and profiting nicely from it)". I'm not unsympathetic to Trump's remark that the Clintons have turned turned fund-raising into a self-enrichment art form.

Since the most likely scenario is that the pledged delegates won't switch sides, Clinton will be the Democratic Party's nominee in the fall. So what can Sander hope to accomplish? Just getting his issues onto the party manifesto (or "platform") is no guarantee that Clinton if she were to be elected, would act on any of it. Sanders needs leverage.

When Clinton lost to Obama eight years ago, she needed to keep on his good side since, anticipating this campaign's run, a cabinet position would look far better on her CV than another few years in the Senate - she needed that "executive experience". So she was in no position to get her pet policies into Obama's agenda (even if she had any other than "stay the course", which is far from clear to me).

Sanders on the other hand now has a brand which he didn't a year ago, and could easily mount another campaign in four years time; and he has had no support from, and therefore no obligation not to stick it to, the party establishment. That's Sander's leverage; "adopt these policies or I will challenge you again in four years" (possibly as an independent).

That's my take. It'll be nteresting to see how this plays out over the next few days.  

Neoclassical referendum

The problem for both Democrats and Republicans is that this election is not about left and right, at least the way those labels have come to represent a set of cultural attitudes and values on issues like freedom and government, religion and tolerance, the right to life, and the right to bear arms. Rather it is a referendum on neoclassical economics, the free market, the invisible hand. And while both parties had become magnets for zealots on these value sets, in the process neither paid much attention to their members' views on economic issues. Now that economics have come to the fore, both parties find themselves with a mix of free marketeers and protectionists, laissez-fare and interventionists. Thirty years of a dwindling middle class, increasing economic hardship at the bottom and growing wealth and extravagance for the 1% has put values on the back burner; "it's the economy stupid".

How politicians can have ignored this for so long is a mystery. Democrats were diverted by the allure of the symbolism of a black president, who promised change (on which he delivered far less that was expected of him). Republicans thought they could avoid defeat by feeding xenophobic rhetoric to the increasingly hard-up and angry whites seeing the promise of the American dream of improving living standards and social mobility being trashed in less than a generation; and who easier to blame than immigrants and foreigners? The Republicans' conundrum was that their core message was appealing to a shrinking share of the electorate and yet to appeal more broadly would mean a message that would alienate their core (or at least contradict the narrative the fear and loathing they had been promulgating since the mid-90s).

So here were are; a referendum on the legacy of Ragan and Thatcher, on the policies of trickle-down and supply-side economics. Yet neither party has a coherent position; the establishment in both are fluent in Adam Smith and the neoclassical economics of Milton Friedman, while the base -- the "maleficiaries", those on the loosing end of what turns out to have been a zero sum, not a positive sum game -- want something more Keynesian.

Given the enormous institutional inertia of the political system, don't expect the question to be resolved this year, perhaps not even for another two or three election cycles; if then; if ever.

The effects of laissez faire policy and free trade in Port Talbot.

The Port Talbot steelworks looks likely to close as Tata steel looks for a buyer.  Tata has made enormous investments in the plant but can't reasonably be expected to continue to do so. This is a case in which the government needs to intervene.

The Economist (April 9th) argues against anti-dumping previsions: "A general duty on steel would punish Britain’s most successful manufacturers. It makes no sense to save jobs in an ailing industry like steel by taking them away from a successful one like cars." This argument is completely spurious.

First, consider what has happened in the steel industry, world-wide. China built more capacity than it needed before its economic growth slowed.  Now it must either close the pants or prop them up and put the output on the market. Supply currently exceeds demand and the price of steel has fallen sharply to the point where no one is making money; most are making a loss. This is not a stable equilibrium but a temporary state until either demand rises to meet supply, unlikely in the short term, or supply falls to match demand. Once capacity is reduced prices will stabilize - but the question is who will shutter their plants first?

Next, consider the assertion that a duty would "punish" users of steel. This is of course nonsense. Restricting steel inputs or imposing a tariff would put the price of steel in the UK back to its pre-overcapacity equilibrium price. If manufacturers are indeed "punished" by such a price they couldn't have had a viable business model to begin with - which is clearly not the case.

The other interpretation is that this so called "punishment" is really about depriving them of a windfall from an unexpected fall input costs. The Economist traditionally goes on to argue that this hurts consumers as products cost more then they should. Again the argument is specious. First, taking the auto industry as an example, it assumes car prices would fall as steel prices did - but there is scant evidence that consumers benefit from a fall in manufacturers input prices.

Assuming users of steel had a viable business model, and savings are not passed on to consumers, a slump in prices means a possible windfall for only two groups; employees through higher wages or shareholders in higher dividends or stock prices. Employees have almost never been the beneficiaries of such windfalls, except in some small family owned business since managers incentives are increasingly aligned with those of shareholders so they will maximise shareholder returns rather than pay some of that windfall surplus to employees.

So to sum up; the steel glut leads to a transfer of wealth from shareholders in steel plants to owners of shares in manufactures that use that steel. And in the process thousands of people are put out of work.

Economists (and the eponymous weekly newspaper) would then argue that shareholders of steel companies should then replace the management that got them into the mess that tanked the values of their shares in the company; capacity will be closed and sanity and equilibrium will be restored.

That argument falls on two grounds. First, the majority of shares are held in funds that almost certainly are on both sides of the trade; just as shares in steel companies fall, shares in steel users - which they also hold - rise, effectively making the crisis a wash from the fund manager's perspective; so they won't do anything. And even if it weren't, fund managers rarely intervene actively, instead simply selling steel producers stock -- which is likely bought by other funds looking for a possible steel [sic].

Moreover, the 'culprits' here, if there are any, are the state planners in China who predicted continued growth and over-invested in production capacity; and I doubt they, or the mangers in Chinas steel companies will be fired. Indeed, China would probably prefer to keep their SOEs open correctly assuming that private firms like Tata will fold, leaving Chinese firms with larger market share and increased pricing power.

(Even if this weren't the result of state planning, forecasting uncertainty generally leads to a prisoners dilemma game in capacity; no one wants to be left out so everyone invests and overcapacity is the result -- see James Henderson's dissertation).

This suggest that a laissez faire policy will play right into China's hands. And China is right to assume that the British government, having discarded intervention in favour of free market dogma in the 1980s, will simply let Port Talbot die. It should not.

First it should impose duties on imported steel that maintain prices at a reasonable level relative to historical trends. This will hurt no one; users of steel will get steel a prices that they were able to support prior to the glut, their shareholders won't get windfall profits, customers and fund managers (and owners of those funds) will be unaffected anyway. The Port Talbot will make a modest profit, sufficient to keep it in business, its worker will keep their jobs,  and Chinese steel makers won't capture the UK market.

It will mean that Chinese exporters will look elsewhere to get rid of their excess capacity, but if everyone follows suit, China will have no option but to dismantle capacity.

But there will be retaliation the argument runs. China will stop importing British goods. There are only two reason China imports from Britain - because it can't replicate the product (for example Whisky) or because it hoping to eventually. Tit-for-tat import restrictions will hurt Chinese consumers at a time when there is considerable domestic unrest in part a function of the wild sings in the stock market and the housing market bubble. China's leaders may not want to exacerbate this by depriving them of imports they have grown accustomed to.

Anachronistic indicators

In the 1950 and 1960 "what was good for GM was good for America." Then it made sense to track proxy measure of well being such as GDP or the Dow Jones Industrial Average (an 'index' that tracks the share price of the top 30 largest companies on the New York Stock Exchange).

But in the 1990s a shift took place that had corporations senior managers focusing increasingly if not exclusively on shareholder value. Value appropriation began to dominate value creation. If creating shareholder value is all one cares about, there are far easier ways of doing that than competing with rivals to out-innovate one another.

When firms create value, shareholders generally benefit, but so do consumers, with better or cheaper products. But when value appropriation dominates, for example as industries consolidate and firms raise prices, consumer surplus is reduced as profits and shareholder wealth rises. Firm profits and broad-based societal welfare decouple.

The Economist, in its Briefing section this week, bemoaned corporate consolidation and high profits as a symptom of the tamping down of Joseph Schumpeter's "gales of creative destruction"; yet interestingly it didn't cross the writer's mind that one choice managers make concerns the allocation of resources in the wages paid to employees. Increasing consumer surplus through increased competition is certainly one way of making everyone (except shareholders) better off; but so is a pay raise for the company's employees.

Since few people working two part-time jobs to put food on the table have a portfolio of equity investments, they won't benefit from higher corporate profits, rising stock prices or, when they happen, dividend payments. Those profits in many cases come from the elimination of full time positions and their replacement with part-time ones that don't come with any benefits, not to mention job elimination from off-shoreing and the increasing use of cheapening technology.

And since GDP measures sales, not incomes, and as an average, is distorted by a widening distribution (rising mean but falling modal average) this too doesn't reflect most peoples; lived experiences.     

Lessons from the SDP

As the GOP stares into the abyss, driven there by the Frankenstein monster it has created after 20 years of appealing to peoples' baser instincts, some have called for the setting up of another party, one that embodies "conservative principles" without the overt racism and infantile attacks, one that remains aligned with, and beholden to, the special interests that have sustained it for so long. History, is never a perfect predictor of the future, but the fate of the SDP in the in the late 70s and early 80s provides a cautionary tale.

The two main political parties in Britain at the turn of the 20th century were the Tories and the Liberals. With the rise of the more left-of-centre Labor party in 1900, the Liberals won their last election in 1922, shrinking to a small centrist third party by the mid 20th century.

After Labor's defeat to Margaret Thatcher in the 1979 election, four senior members of the Labor shadow cabinet broke away to form a new fourth party, the Social Democratic Party, which was intended to be to the right of an increasingly left-leaning Labor, but slightly to the left of the Liberals. The SDP effectively split the independent vote and struggled to gain any traction in the general elections of 1983 and 1987, and in 1988 merged with the Liberal Party to create the Liberal Democrats.

With Labor's fairly dramatic shift to the centre under Tony Blair's leadership, which brought Labor to power in 1997, the LibDems found themselves hung out to dry on the left of the political spectrum. A deal with the minority Tories in 2010 gave the LibDems access to the levers of power for the first time in almost a century but undermined their support from those in the SDP who felt that they were the last of the left of centre political parties.

The lesson, if there is one, is that breaking away from a well established political party is a risky decision and likely will end in failure. What it would leave in its wake is hard to predict, but it could amount to the "political revolution" others have predicted.

The Frankenstein Monster

The GOP is panicking. Mitt Romney was wheeled out lasts week to assail Trump, (a man whose money and endorsement he was only too happy to have 4 years ago). The irony is that they (or at least the establishment wing of the GOP) have been steadily sowing the seeds of their own destruction for at least the last 8 years. After stoking racist sentiment and mean spirited, xenophobic nationalism, Trump realized that by using the very memes the GOP had crated and pushing  them past when most people thought were acceptable limits, he could outflank them on the right - which he has done very deftly. While much of his rhetoric is utterly deplorable, one must acknowledge the sophistication of his strategy.

So what happens next? The pundits seem to favour a Trump nomination, though whether the establishment can put the genie they conjured up back in the bottle is up for debate. No one really know where Trump stands on the issues since as a businessman he donated to very politician he thought  me might need to further his business empire. He's been all over the map and the primary season is simple an stage for his reality publicity show. Strangely he often sounds a bit like Sarah Palin; but she wasn't acting. He could once he gets the nomination simply say "Look, this was all an act to get round the establishment gate-keepers, I'm actually a reasonable centrist".

If as now seems likely, Hilary wins for the Dems, she would then have a fight on her hands. They've been BFFs so she can't disown him; that means she's fighting on the high ground which, in the new Trumpian alternate universe, is a disadvantage. Trump can shift positions and attack her from any angle and she can't respond in kind (one only has to look at Rubio's futile attempt to see how well that will work). Does Trump need a centrist running mate?  Probably not, but I suspect Christie is angling for that job, and Trump might seem him as simpatico.      

Another possibility is that the GOP manages to put the genie back in the bottle. The most likely nominee would probably be Ted Cruz. Then the race looks fairly "traditional" two establishment nominees (though its interesting that one is now thinking of Rubio and Cruz as establishment when 6 years ago they were the Tea Party home-wreckers). we will then have the traditional mundane mud-slinging and all that will probably matter is party allegiance and turnout. Hilary, with a better ground game, will probably win.   

Who she picks as her running mate ill matter. Assuming Bernie either isn't offered the job or turns it down, a good choice would be Liz Warren, who would bring Bernie supporters and hopefully keep Hilary from backsliding on the things she said after Bernie entered the race. Should she pick another establishment Democrat, she may well lose to Trump and might lose to Cruz and Rubio. It's going to be an interesting 9 months.

...on Super Tuesday

Cruz and Rubio are in a bit of a bind; if one drops out the other might get the nomination; but if neither do, Trump will. I don't expect either to back down. Christie looks like he's grinning and bearing it in order to be Trump's running mate, get to be Veep and then run again in 8 years if Trump is elected, or 4 if he isn't.

On the other side, Hilary looks set to get the nomination. But it may be a pyrrhic victory. Bernie's army might just pack up and go home (it's predominantly young) and not come out to vote in November. Worse still, some may even defect (in common with many of Trump's supporters, they are thoroughly fed up with the Washington establishment). That might just cost her the White House.

Batten down the hatches; the next 5 years may be highly unpredictable.  

Don't confuse me with details

I suspect one of the reasons for Trump's popularity is apparent disdain for detail and specifics. His opponents on the GOP side and most informed pundits assumed that this will do him in in the end. The public, they reasoned, will eventually see that he has no plans only rhetoric and defect to a more solid wonkish establishment type like Rubio. This is a miscalculation.

The public isn't interested in detail for several reasons.  First thinking though complexity is hard and simple sound bytes are easier to take in. Second, detail and nuance are less clear cut and thus less conformable than bright lines (like good and evil - as in "the Axis of..."). Third, when you don't like to think too hard, having someone as self-professedly-self-evidently as successful as Trump validate your choice to ignore the hard to remember / hard to think about stuff is very affirming; and the better you feel about yourself the more you approve of the person who made you feel that way.  And finally, complex policy and wonkish debate is what Washington is all about, and Washington has hardly covered itself in glory these last 6 years. And as people are fed up with Congress, so too they have had enough of establishment politicians lying and playing political games while the country burns (or so says The Donald).

What voters, particularly on the GOP side, seem to want are some simple prescriptions from someone who doesn't confuse them with detail. And that's why Trump will be the GOP's candidate.

Apple vs the DOJ

Although it would certainly be helpful to law enforcement to access private encrypted information on suspected terrorists cell phones, trying to get the San Bernardino shooter's phone open seems like the wrong place to start.

Since there is no pending prosecution (both these terrorists are dead), the information is of no use to the judicial process. And if it contains only information about the shooting and the shooters' process of radicalization, it will likely only confirm what is already known.

It may, however, contain information on contacts with other groups and people involved in planning terrorism; indeed if a court has said this is a lawful search one assumes evidence to this effect much have been shown to the court.  

The issue here is not whether the FBI can look at information, but whether Apple can be compelled to help them do so; Tim Cook for Apple has refused.

There are probably a number of reasons for this; the obvious one is that he does not want to make his customers feel less secure.  But there are others. For example, if any ruling is fairly narrow (for example limited to Apple), that gives Android and thus Google a competitive advantage, at least temporarily. So Cook must balance his duty to Apple shareholders with his duty to the Government.

To do what the FBI is asking appears to require a patch to the operating system that would be applied to the phone allowing it to be unlocked. But that patch, once created, is "out there" and will likely 1) be requested again so would either have to be recreated each time a request is made or 2) have to be kept under lock and key thus affording hackers the opportunity to steal it and render all iPhones vulnerable.

And it's not just local hackers we have to worry about. Some maybe working for unfriendly governments (think of China's hacking of US corporations). Yahoo's rather sorry history here (it was forced to provide the name of one of its email users to the Chinese government who then jailed him for sedition on the basis of one email he had sent to a friend at the New York Times). Then there are those who would pay hackers for the patch to sift though any personal information iPhone users keep on their devices, credit card information, for example. Or your home address and social security number. The potential for mischief once the patch is out there is enormous.

That's the dilemma Tim Cook is wrestling with. Not an easy one; but easier than had the FBI claimed with certainty that the phone contained information needed to foil an imminent terror plot. 

Backfire?

Almost before Justice Antonin Scalia's body was cold, Mitch McConnell called a pre-emptive press conference to announce that he would block any Obama nomination to the Court.  That seems a risk strategy.

First, while it may be music to the ears of the Obama-haters, it plays right into the hands of those (and they are not just Democrats, but many Trump supporters too) who see the Tea-Party-dominated Republican legislature as belligerent and obstructionist, more interested in grand gestures than getting anything done. It makes him look, particularity to independents, as high-handed, manipulative, and unreasonable. The problem with "just saying No" without heading the case, is that when things need fixing, doing nothing isn't a good answer, no matter how you try to spin it.

And as terrible as an Obama nomination may seem to McConnell, his grandstanding may help the Democrats take the White House, in which case he'll be no better off since he can't kick the can down the road much further once Hilary moves into 1600 Pennsylvania Av.

Worse still it could improve the odds that the Democrats retake the Senate which would be a disaster for Republicans since if Ruth Bader Ginsburg retires,  Democrats had a good shot at getting two seats on the Court and a 6-3 majority.

Trump and the media

Wherever else one might say about Donald Trump, I can't help having a modicum of grudging admiration for his campaign, specifically the way he plays the media for fools.

The trick is this:

1. Say something utterly outrageous
2. Get interviewed on all the major television channels
3. When questioned about that outrageous statement, make a completely different point
4. When pressed again about that outrageous statement, make another completely different point
5. (He now has gotten a minute or more of completely free air time that would otherwise have cost him millions) 
6. Finally, either lie, or back away from the original statement that got him the interview time.    

What's depressing is the way reputedly sophisticated news anchors like George Stephanopoulos let themselves be tricked into this. Trump managed to make a variety of completely unrelated points while Stephanopoulos pressed him on his statement about George W Bush and 911.

Perhaps the best media response was, ironically, on the Late Show with Stephen Colbert:

Colbert:	"Of course, Donald Trump had to have the last word".
Clip of Donald Trump:	"So I just wrote this out very quickly about the Pope - do you want to hear it"?
Colbert:	"No".

And he moved straight on to introduce the rest of the show.     

Protest vote

A phrase I haven't heard in a long while popped into my head a few days ago and I think it captures the current mood of US voters: it's "protest vote". It's a vote not so much for something as it is against the status quo, a vote that people know won't count in the end but provides a way for them to vent their frustration at the current state of affairs.

Trump's support falls into that category, as - if one is honest - does Sanders'. Neither really have a clear coherent plan for achieving the vision they are setting out.

That's a pity because realistically we will be left in November with a choice between two fairly similar results while Clinton and Rubio (or possibly Cruz) differ vociferously on many things neither will do anything significant on campaign finance, lobbying, the power of special interests, or health care, poverty, education, inequality and  inequality of opportunity. 

Something else I realized too, is that as unlikely a candidate as Sanders seems to many Americans, many of his supporters were born after the Berlin Wall fell. The visceral loathing of socialist government that the cold war stirred up is foreign to many of them, a distant echo of an older generation.

And finally, it dawned on me that the reason none of the central themes of  Sander's campaign seem odd is that they were all things that Britain had when I was growing up: free higher education, universal health care and an electoral system free of the overly corrupting influence of political advertising, money, and the revolving door between the private and the public sector (at least there was a sense that where it did go on, it was improper).  He's campaigning for the kind of government (pre-Maggie) I grew up with; not in the least bit extreme, just the way it was...  

Too little, too late

GPS host Fareed Zakaria led with a piece yesterday on the role of social media in propagating lies and prejudice at the expense of facts and the effect this has on polarization. Sadly this isn't a new phenomenon; I commented on this in 2011.

Sadder still perhaps, is that the reason he drew attention to this issue, one that has profound implications for society and civil discourse, is that he was personally the subject of malicious rumour-mongering.

While it's unfortunate that he has been personally maligned, it's far worse that the phenomenon he belatedly laments has infantilized public debate, fuelled the polarizing of society, and made political compromise needed to get things done in the political sphere significantly harder.

Regrettably, the news media is (as in the case) partly to blame for failing in their responsibility to shine a light on falsehoods, duplicity, and dis-ingenuousness. News, even that purporting to be serious (Fox not included here), has crossed into the realm of  entertainment, leaving journalistic principles and integrity behind.  

The Second Amendment

"A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed."

First, a "militia" has three seemingly relevant definitions:

a) "A military force raised from the civilian population of a country or region, esp. to supplement a regular army in an emergency, freq. as distinguished from mercenaries or professional soldiers"

b) "A paramilitary force motivated by religious or political ideology, esp. one that engages in rebel or terrorist activities in opposition to a regular army."

c) "The name of various military units and forces, raised locally (and usually for the purpose of local defence) from the civilian population of an area, and distinguished from professional standing armies as the latter developed."

So the first question is: which definition of a militia best fits Amon Bundy's group and those like his?

It can't be a) since it is clearly not "to supplement a regular army in an emergency". 

It probably isn't c) either since i) there is no threat against which they are mounting a defence and ii)  standing armies have been developed.

So that leaves b), "A paramilitary force motivated by religious or political ideology". 

Next, consider the second clause: "being necessary to the security of a free State". It's hard to see exactly how such a "paramilitary force motivated by religious or political ideology" is necessary to the security of a free State. 

Arguably groups like this represent the opposite, a threat to a free state and the power of an elected government. They are simply anarchists, refusing to accept the rules collectively created for the functioning of a society.

So the question we must eventually confront is this; do we want an amendment in our constitution that protects the right of anarchists to get what they want at the barrel of a gun?

(De)escalation

The recent arrest and prompt release of 10 US service personal illustrates the importance of a measured response and the bearing fruit of improving diplomatic relations; blow-hards please take note.

In a similar incident several years ago, British naval personal were held for a week. In contrast the US service members were treated to a good meal in almost luxurious conditions. Of course some might argue that is a reflection of US projection of power, but thsoe are the same people who complain about how little fear and respected the US has has abroad; both can't be true.

Escalation, generally though bellicose rhetoric, would have been unlikely to provoke anything but a similarly belligerent response. And that goes nowhere  but stalemate very quickly from which climb-downs are hard for both sides. Better not to get into a position you later have to back away from.

The same dynamic is played out at an individual level when the police act aggressively in their initial encounter and meet indignation, particularly from  from innocent members of the public; that indignation is perceived as belligerent un-cooperativeness and leads to further escalation. The result is ugly an confrontation that could easily have been avoided, as for example in the tragic case of Sandra Bland.