Post Script

Posting has been relatively steady for almost a decade at about thirty a year.

Right wing contempt for academia

A simple explanation for why the right hates academia is that it embraces inclusivity which the far right abhors; it prioritizes data and logic over emotion in argumentation; and it seen as out of touch and overly prescriptive, telling those outside the ivory tower how to think. But an element that may be missing from this list is a feeling of resentment that  academia is offering a solution to peoples' problems that is out of reach for many.

For decades academics (and politicians) have warned of the effects of globalization and the disappearance of manual jobs. Their solution was the "knowledge economy" where we would all become "knowledge workers"; and the passport to that nirvana was a college education. Unlike the lottery, or starting your own business, many were excluded from that opportunity early on in life with poor high school grades. You can still dream of becoming rich and famous in middle age; but getting a college degree is probably not on many people's radar; it may be too heavy a lift, intellectually and financially. And since that was the only solution the political establishment was offering, it led to disillusion with that institution as well. 

Globalization and the developed world's botched response over thirty years has created an ear of great tumult. How we choose extricate ourself from it will define our trajectory for at least a generation.    

Chance encounters

In "The Naked Sun" Isaac Asimov describes a world in which people never venture out and communicate electronically. While we are not there, you were are moving rapidly in that direction.

Asimov's fear was that people would never see the outside. What he didn't envision is that people would never have chance encounters with people they had not "friended".

Fifty years ago we might meet people on public transport on the way to work, or at theatres, movie and otherwise, and concerts, or in the shops. Today we telecommute, we get our entertainment streamed into our homes, and we shop online.  The opportunities to mix with people other than those we work with or have friended in social media are diminishing. That will likely make us more asocial if not anti-social.          

Timeo Danaos et dona ferentes

Democrats are celebrating the silver lining on the dark cloud of the GOP's unipartisan tax reform package; they are hoping that it is so unpopular, that along with Trump's low polling numbers, the GOP could lose the House as well as the Senate next November. Those chickens aren't ready to be counted just yet.

Astonishingly, the day of the bill's signing, a slew of large corporations has offered to pay their employees a $1,000 bonus this Christmas. What might be behind such unusual largess? AT&T and Comcast, two of those early adopters of these generous handouts are not known for their corporate social responsibility.  One explanation is that is this was a deal struck with the White House, possibly for "points" or to make corporate tax cuts permanent. While, we may never know what if anything was promised, in return the GOP gets re-election insurance.

Even if the individual tax cuts for the vast majority are piffling, these will be overshadowed for all those in the private sector whose employer's signed on the the bonus scheme, one that it's worth noting is a one time payment, and far better, from an employer's perspective, than raising wages which is would be recurring and permanent. That's a huge public relations coup for the GOP, allowing them to say in November that the new tax bill put real money in a lot of peoples' pockets.  The halo will have gone by 2020, but it shores up the mid-terms at a time when the GOP was looking potentially vulnerable.

Representative democracy

From time to time my House representative holds telephone town hall meetings. During his last one, about two weeks before the tax bill was passed, two callers in particular caught my attention.

The first was a pensioner who was worried that he and his wife's taxes would rise; it was not that simple a question, but my representative assured him that they would be fine.

A little later another caller noted that she would be losing a tax deduction for clearing beetle infested trees from her property. She had several hundred trees that needed to be felled and removed. My representative offered to set up an appointment with his office staff to help sort out her issue presumably by trying to get something that would solve the problem into the tax bill.

I could be wrong, but it seemed as though the constituent with enough property (presumably quite a large ranch) was more likely to be writing him a large check come the next election and therefore was afforded the red carpet treatment.

And that's how money translates into legislation.

Comment on Congressman Tom McClintock's Facebook timeline

I remain doubtful that the cut in corporate taxes will flow to investment, new job creation and higher wages; more likely it will be used to pay dividends and finance share buy-backs. This helps those with significant equity holdings or pension plans, but I imagine that is a relatively small proportion of your constituents.  The recent run-up in stock market is a pricing-in of the expected increase in corporate earnings. If the market expected that taxes would be used to pay higher wages, the impact on earnings would be a wash and share prices would not have moved. That they did suggests that the markets expect most if not all of the tax saving to be passed directly on to shareholders. 

Moreover, few if any economists expected the corporate tax cut to produce the administration's forecast 6% GDP growth, needed for the bill to be revenue neutral. The consensus is that the bill will add $1.5T to the national debt. The likelihood is that Speaker Ryan will now propose reducing the deficit by cutting social security. As long as this is done progressively, that may not be such a bad thing - but a simple across-the-board cut will fall disproportionately on your constituents. 

Lagged effects and pain concentration

The first trick to passing potentially unpopular legislation is to delay the pain until at least after the next electoral cycle, but still till after you are out of office and in that cushy lobbying job that "public service" was just a stepping stone for. So it is with the GOP tax bill. The tax cuts expire long after current administration has gone back to golfing on his own dime rather than the taxpayers'.

The second is to ensure that the pain is concentrated on a small segment that is too small or disenfranchised to matter: African Americans, the sick, poor families' kids. Then only the vicarious indignation of others will matter. Politicians bank on the fact that by distracting them with other shiny objects the mildly empathetic will forget about the disenfranchised.       

MAGA Hat

Today, my wife challenged me to walk onto our campus wearing a MAGA hat.

My immediate reaction was "No way. Do you want to get me lynched?" That was foolish; she immediately pounced on the fact that this was exactly what was wrong with universities; that they create an environment of such social pressure for conformity that no one with nonconformist (in this context right wing) views could express them publicly. She has a point. There is a degree of liberal values "one-upmanship", an "I'm holier than thou" scramble for the highest of moral high-grounds.

So I began to wonder what might happen were I to do as she dared me. How might such an episode unfold?  Here's how I imagined it.

I enter the room. There are shocked looks. No one says anything initially. After some polite conversation I may be asked "WTF?" but I demure and say simply that I'll have a few words to say later on.

Then, at an appropriate moment (not sure yet what that moment would be), I pick up a glass and tap it repeatedly with a knife until the room quietens down. Then I say this. 

"You may have noticed my hat this evening? I think many of you were a little shocked, perhaps by the crassness and vulgarity of wearing a hat indoors. 

But I suspect that you are more disturbed by what this hat represents. Since it was popularised by a lazy, misogynistic narcissist who ran for office only to massage his own ego and to enrich himself financially, a man who tacitly endorses white supremacists and explicitly endorses accused child sex offenders, this hat, then, comes with a considerable amount of baggage. 

But if we step back for a moment and think in the abstract about the words themselves, are they necessarily contentious? "Make America Great Again". 

Perhaps one's immediate reaction, and one not contradicted by the tweets, speeches and actions of, to use Rex Tillerson's pithy description, the "fucking moron" in the White House, is that he is hearkening back to a 'golden age', perhaps the 1950's, of "Mad Men", a growing middle class, rising economic prosperity for everyone, "what's good for General Motors is good for America", 2.2 kids and suburban tranquillity. But that was a fiction, for all but white Middle America. It wasn't the lived experience for minorities, for people of color, for non-heterosexuals, for Jews, for civil rights campaigners. It is an artificial image, a narrative written by the white men who held the reins of power; in government, in business, in society, at home.

So while a goal of "American Greatness", by the way, a construct open to a myriad of different and possibly contradictory interpretations, may seem only mildly controversial, perhaps it is the word "Again" that is problematic, implying that somehow America is no longer "great". 

And that opens up a more liberal, progressive interpretation of the slogan. If American greatness lies in its moral leadership, in tolerance for a multi-ethnic society, in social mobility, and a striving for social justice, there is, now, an urgent need to make America great again. For in less than two years, the orange buffoon has done more damage to that notion of greatness than anyone in their worst nightmares might have imagined. 

He has systematically undermined trust in the essential institutions of civil society. He has disparaged the serious press, the courts, experts and intellectuals, the civil service, and occasionally Congress, its members on both sides, and the military. He has stirred racial and religious hatred. He lies so frequently (and poorly) that the joke "How can you tell when he is lying?" "When his lips are moving" is no longer funny. With a few exceptions, he has surrounded himself with incompetent sycophants instead of well informed thoughtful advisers. He has, with bull-in-a-china-shop finesse, tried to disrupt a delicately balanced international order for no good reason, other than to differentiate himself from a predecessor he clearly hated, (probably just because he was black). He is a laughing stock in our corridors of power for his ignorance and his lack of judgement. He is considered a joke by foreign leaders; "stupefyingly ignorant" was Britain's Foreign Secretary's description. For many he is a poster boy for the Dunning-Kruger effect.

Thanks to the electoral college, Russian meddling, Rupert Murdoch and Fox News, Jim Comey's bizarre announcement about Hilary's emails just before the election, and some miss-steps by the Clinton campaign, there is quite suddenly a huge opportunity to make America, if not great, then not as reviled and ridiculed as it has become since June 16, 2015. 

So MAGA really means kicking Trump out of the White House (and his spineless enablers in the GOP--whose dogmatic lust for power has obliterated any semblance of morality, humanity and compassion--out of Congress to boot)".

Hypocracy it wasn't; but something worse

For the last few days, as the GOP has been ramming through its tax reform before anyone who might object could see what was in it, there was considerable discussion about the negative impact on the national debt which  was scored as being likely to add between 1 and 1.5 trillion dollars. That appeared hypocritical from a party that has been complaining vociferously about the national debt for almost the entire Obama administration.

Yet it turns out that they hadn't abandoned their hawkish stance after all. Now that they have given tax breaks to their donors with the limit on pass-through taxation for S-corporations, deductions for golf course owners (like Trump), private jet users (like Trump), not to mention the reduction in the corporate rate without closing loopholes to make up the difference, they are now turning to the question of how to cut costs to narrow the deficit.

Having reduced tax revenues, they "must" now cut costs or add to the debt; and since there isn't nearly enough room in the budget to close the gap by cutting discretionary spending, they have "no choice" but to cut entitlements, social security, Medicare and Medicaid.

You have to admit, while morally indefensible, it is tactically very astute. Kudos Paul Ryan!             

Reflection on reflection

In May last year I suggested that the election was at its heart a referendum on neoclassical economics and in particular the supply siders and free trade globalization enthusiasts of the Chicago school. Eighteen months on and it is clear while the supply siders and free trade globalization enthusiasts may have sown the seeds of the current disaffection with broken promises of greater wealth, they are not being blamed. Instead, anger has been redirected at immigrants and minorities. To make matters worse the GOP in its tax bill is sticking dogmatically to its trickle-down mantra, despite evidence that it doesn't work and the indications that corporations have little intention of diverting any of the money saved from lower taxes towards investment or salaries and wages. After all that's up to the market.

There is a lesson here. Politicians (and prognosticators) can promise all they want; except in highly unusual cases, they can claim that historic parallels are not appropriate and that circumstances changed in ways that could not have been foreseen. Ultimately,they will never be held to account.  

The Trump Doctrine

If Trump has a doctrine (other than narcissistic self-promotion and enrichment) perhaps it's best captured by these quotes.

"Do I really look like a guy with a plan? You know what I am? I'm a dog chasing cars. I wouldn't know what to do with one if I caught it! You know, I just...DO things."

"Introduce a little anarchy, upset the established order and everything becomes chaos. I am an agent of chaos".

"It's not about money... it’s about sending a message. Everything burns!"

("The Joker", from the "Dark Knight" 2008) 

Sauce for the gander

Mitch McConnell had no qualms dismissing the accusation that the tax bill was being rushed though with proper bipartisan consultation, despite the fact that amendments were hand written scrawls in a 500 page bill that almost no one voting on it had read in its entirety, and even those that had probably didn't understand much of it. His argument that "the rules were followed" is not an answer. Giving someone 5 minutes to read War and Peace may count as transparent consultation in the strictest sense but clearly fails the smell test.

It's worth noting in passing that McConnell was one of the loudest voices complaining about lack of adherence to process when Obamacare was passed even though as I recall far more more consultation took place for that piece of legislation. 

Two other noteworthy points; first what the GOP failed to do in their abortive "skinny repeal" they have managed to do in this tax bill, eliminating the individual mandate and effectively hobbling Obamacare. Whether this is the final straw remains to be seen but premiums will undoubtedly rise. For some this will effectively deny them health insurance; for others who qualify for the ACA's subsidies this will raise the federal deficit.  Second, while for obvious reasons, Trump has never released his tax returns, this bill will almost certainly benefit him personally and directly. That we have elected someone who stood for public office principally to line his own pockets and consistently lied about his motives is a terrible reflection on the motives and insight of the America electorate.

Tax reform

Republicans say that cutting corporation tax will boost growth sufficiently that the growth profits will generate a net increase in tax revenue. Non-partisan economic analysis says this is almost certainly not going to happen.

Republicans also claim that cutting corporation tax will lead to higher wages and more jobs. There is no historical evidence to support this; in the current climate, corporations are more likely to use the money pay higher dividends or buy back shares.

Unfortunately in our post-truth anti-intellectual anti-expert world, assertions made by people who have little or no expertise or training are treated as equally valid as predictions made by people who have ("fair and balanced", "on the one hand, on the other hand").

Experts don't always get it right; but on balance, they probably to a better job than the utterly clueless who rely on dogma and articles of faith. One commentator noted today that this isn't a tax bill but a political hit list.

The Deficit

While out of office the Republicans vehemently opposed anything that would raise the national debt. Now in office, they are proposing legislation that by most sensible estimates will raise the national debt by $1.7 trillion, or about 8%. 

When Democrats controlled the White House they were in favor of allowing the national debt to rise so that they could provide a fiscal stimulus to the economy. Now in opposition (or perhaps more accurately, in the wildness) they are drawing attention to the national debt implications of the Republicans' tax giveaway.

The issue then is not the national debt, but what that borrowed money would be spent on. If it is to be on tax cuts for corporations and the rich, Republicans are all for it and the Dems oppose it.  If it is to go to social programs, Democrats are for it.  In the end, ones approach to borrowing is less to do with probity, but more a reflection of ones underlying values regarding equity and wealth distribution. 

Do social media threaten democracy?

In the best tradition of economists, I think "it depends".

The instances in which social media have been of benefit to democracy are generally those in which information is tightly controlled by governments; the official media often peddle information that may be misleading or false, more propaganda than news. Here people have learned to be skeptical so they are better prepared to filter out fake news. Social media become a channel for ‘good’ information.

In democracies with a robust free press, many have become complacent and aren’t equipped with the instincts to sniff out fake news. The success of right wing talk radio and Fox news are testament to this societal weakness. In seemingly well-functioning democracies, truth telling has been taken for granted. There is no need to view social media platforms as tools for disseminating truth; they are entertainment, and pranks and conspiracy theories are their fare.

The metaphor of an echo chamber is often invoked when discussing social media. I suggest an alternative – a lens. It brings some things into sharper focus. Where there is a single unifying goal such as the search for an alternative to oppression and miss-rule, social media focuses attention on that goal. Where there is marked division, whether it be black vs. white, left vs. right, social conservative vs. liberal, focusing on these exacerbates the stark contrasts in positions, while domains of agreement are under served and ultimately ignored.

So, social media are useful where the press is not free and probably harmful where it is. Thus, to the extent that government control of traditional media goes hand in hand with illiberal, undemocratic regimes, then social media do threaten democracy.

The cost of our Democracy

An average winning Senate race costs $10; a House race, $1.5m.

Assuming a 6 day week, 10 hour days, 50 weeks a year, in one election cycle Senators put in 9,000 hours and Members of Congress 3,000. If half of that is legislating and the other half fund-raising (i.e., talking to donors), then a $100 dollar donation should buy me a 4.5 minute conversation with my representative in the Senate, and 10 minutes with my House representative...

Alternatively, the billing rate for a Senator is $1,333 per hour and a member of congress $600. Lawyers without particular high charge rate specializations might bill their time at $250 for associates and perhaps $400 for partners.  So democratic representation is more expensive to buy - by the hour - than legal counsel. Could that explain why we are such a litigious society?

S/360 legacy

IBM dominated the computer industry in the 1960s and 1970s with its S/360 architecture mainframes. With the introduction of the PC, IBM's ability to control accounts from the center - a key part of its sales strategy - disappeared, and the company has been trying to find its way in a "post S/360 world" ever since.

But despite the rise of client-server and the web, S/360 will be around for a while. Companies invested in COBOL applications and customized MRP systems that can't easily be replaced and indeed in might not be cost justifiable to do so. So MVS, VSE, VM, IMS, CICS and CMS are likley to be around for quite some time.       

Corporations face a dilemma - when their core business is shrinking slowly but not going away, they are held hostage by the past, committed to supporting those legacy systems and customers and unable to make a clean break (even if they could come up with another 'killer app", which is anyway far from certain).

Microsoft is in the same position today that IBM was twenty years ago.  And Apple may well be there twenty years from now.

As the 21st century matures, the tech landscape may well become littered with semi-zombie companies that are dying but haven't quite stopped moving yet...   

Gun control, again

Another mass shooting, and as usual the gun rights faction of congress (and Fox) give us: "thoughts and prayers" and "this is not the time".

Senator Dick Durbin pleaded that "this should not be the new normal", but if one is being realistic it has been the "normal" for years. Every atrocity is followed by the same pattern of rhetoric from both sides and every time nothing changes. That's our normal now.

The "bump stock" an ingenious modification to a semi automatic rifle that gives it roughly the same rate of fire as a manufactured fully automatic is a simple and cheap way of circumventing an overly  narrowly written law restricting the sale of fully automatic weapons. That is a simple loophole that should be closed for starters. 

But the broader problem is the assertion of "rights".  The right granted by the second amendment, ignoring the debate over whether it was intended only to apply to a "well regulated militia" ignores the externality that flows from its granting.  The right of an individual to "bear arms" indirectly represents an externality, in the "costs" that flow from non-self-defense gun related homicides. Without cast iron prevention, it is inevitable that innocent people will die.

Thoughts and prayers are nice, but getting a little old. Nicer would be collective action that prevents another mass shooting.

Provenance

This image appeared in a Breitbart post on the Antifa movement's participation in the events at Charottesville last Saturday. In the Breitbart post, it it attributed to Chip Somodevilla/Getty Images.

I looked up Chip Somodevilla on the Getty Image website and could find no reference to the image.

Next I did a Google search on the image and got a hit. It was this link in Yahoo news. The Yahoo news post is actually a re-posting of this Time Magazine article of Aug 14, 2017 by Katy Steinmetz. Yet the  original article does not carry this image.  

That raises the question as to the provenance of the image. The photograph doesn't appear in the Getty catalog. It is not in the original Time article. So who took it, when and where was it actually taken, and how did it get associated on Yahoo with Katy Steinmetz' article?

Brinkmanship

To many people, Trump's comment that he would reign "fire and fury" on North Korea seemed a counterproductive escalation of tensions. It appeared remarkably intemperate, particularly since the US had just scored what must be seen as an important and unexpected victory with unanimous support for tighter sanction by the UN Security Council.

That Russia and China voted in the affirmative is surprising and has received remarkably little media attention. That these two US adversaries - or at least non-allies - voted with the US suggests the situation has changed, either (or both) on the ground, or in their calculation of likely US actions. Compounding this was a remarkable statement from Beijing that it would not interceded on North Korea's behalf if DPRK were the aggressor.

First, it's worth considering how things might unfold. It is possible that the US might launch a preemptive strike against the DPRK. However, this is unlikely to gain any international support and could probably result in DPRK either launching an attack on the South or possibly on the US (though that would be suicidal and therefore highly unlikely). An attack on the South by the DPRK would be carnage for the population of Seoul. But a US first strike seems a low probably event.  But if the US were the aggressor, it would have to consider China's possible response so US military reaction might be muted.

Alternatively, the DPRK might strike first, either by firing missiles at the US base on Guam or firing them somewhere nearby but off-shore. The US response could be either defensive -- using the THAD system to destroy the Korean strike -- or offensive with an attack on DPRK military installations or even on Pyong Yang itself.  In either case, China has now said it will not come to the DPRK's aid so Kim must understand that there is little to restrain Trump from either military response. This must change Kim's calculus; without China's support, Kim could not escalate to an attack on the South or the US since either would provoke a strong response from the US and probably its allies in the region, which would spell the end for his regime.    

So back to Trump's intemperate comment. The uncharitable interpretation is that it was the ill considered bluster of a school-yard bully who is accustomed to getting his way by issuing threats. A second is that Trumps wants to provoke Kim into a first strike, giving him the cover and rationale for taking action to crush the Kim'd regime militarily. ( Of course the two interpretations are not mutually exclusive ). So the question remains, crazy like a fox or just plain crazy.

Time for some sharper interviewing on the News Hour

I never thought I’d say this but I think someone needs to take over from Judy Woodruff on the News Hour. Tonight she interviewed James Lankford, R-Okla. In discussing the “skinny” repeal of the ACA, he suggested that CBO scoring of those who would lose insurance assumed that all who were added to the rolls under the ACA mandate would leave once the mandate was removed adding nine million to the number of uninsured. He implied that some proportion of the 9m would not leave the market and thus the CBO estimate should not be taken as gospel. At which point Woodruff moved on.

This was an opportunity missed. She should not have taken the statement at face value; the follow up question she ought to have asked was: “So if some but not all people leave, and premiums rise, which they must do since an increasing proportion of the insured will be those with high medical bills for whom it’s cheaper to pay even the higher premiums than their medical bills, why any would those who are only buying because of the mandate continue to buy after the premiums rise”? This seemed to be a logical flaw in Langford’s argument. But it was allowed to stand, unchallenged. (Economists term this adverse selection – simply put, only those who expect to get more in payouts than they pay premiums will buy insurance, which means insurers are left with a pool who cost more than they take in – and the market fails). This is a case where the interview should perhaps have been conducted by someone who better understands the insurance marketplace.

As the show’s executive producer the decision not to bring in someone who could conduct a sharper line of questioning ( for example Stephen Saker on the BBC’s Hard Talk, a great example of someone who really gets to grips with the material and can ask the penetrating follow-up questions), is hers. Not doing so is a disservice to her audience and the profession.

Containing Kim Jong Un

North Korea's imminent acquisition of an intercontinental ballistic missile carrying a nuclear warhead is a serious threat to the current geopolitical system. However, asking China and  Russia to help is pointless.

First, both benefit from having North Korea behaving badly since it gives them a big bargaining tool over the US. Once the North Korean threat goes away, so does their leverage. So their best course is to make small gestures ostensively aimed at slowing North Korea's nuclear ambitions while at the same time extracting large concessions from the US.

Second, neither China nor Russia are threatened by North Korea so they have no intrinsic desire to curb Kim Jong-Un's military ambitions.

Third, China fears that exerting too much pressure may cause the North Korean regime to collapse which would have two possible outcomes, neither to its liking. The first would be a flood of refugees crossing into China. The second is a unified Korea, less sympathetic to China,  larger and ultimately more powerful than the the South was on its own, and with a significant US military presence.

So the problem that has bedevilled four US presidents remains as intractable as it ever was.

The only suggestion I've heard recently that might change this came from Charles Krauthammer, who suggested providing nuclear weapons to Japan and South Korea. Japan's recent move to amend its constitution signals a shift in its thinking regarding regarding the use of military force and may make it open to the idea. South Korea's new president seems less hawkish than his predecessor so the plan might not go over well there (the THUD system deployment has already caused a bit of a stir).

But this would certainly change the regional balance of power and not in a way that China would like so the such a threat might get China to do more to constrain Kim. But it does so with enormous risks of unintended consequences.    

An obsession with choice

I confess I'm baffled by the GOP's near obsession, at least rhetorically, with "choice". In the context of the Congress' two health care bills they suggest that people want choice over benefits - for example the opportunity to choose between two (or more) terrible options rather than have to "accept" a fairly decent one.

For example, you may soon get to choose between three low premium health care plans, one with huge deductibles, another which precludes coverage for a wide variety of ailments, and a third which caps payouts at a low level.

Personally, I'd prefer one good plan over an array of bad ones.

Fundamentally nothing gets round the fact that until health care costs less, someone has to pay; whether that's the person who is sick (and may not be able to), other members of the plan who are less sick, or taxpayers, the money has to come from somewhere.

The Trump Tapes - Truth as Something to be Negotiated

"James Comey better hope that there are no 'tapes' of our conversations before he starts leaking to the press!". With that tweet Donald Trump created an uproar (in Washington at least) as to whether there were indeed any Watergate-esque recordings of his private conversation with James Comey.

Six weeks later, after archfully creating a huge media hullabaloo, Trump announced yesterday that there were no tapes (or at least not that he'd made - and he can claim that he never said there were; he didn't). The Wapo wrote that this only damaged his credibility and could see no rationale for the ruse. But viewed through a lense of negotiation it actually does make sense.

If the truth is seen not as absolute but as something to be negotiated, then Trump wanted Comey's opening offer to be "reasonable" and the possible existence of tapes helps ensure that. To paraphrase Henry Kissinger in Trump's vocabulary: "A reasonable opening offer is for losers." In Trump's mind raising the spectre of tapes constrained Comey's account, forcing his opening offer to be fairly close to what was actually said.

Imagine a linear negotiation space where the "ends" are degree of distortion in one or other party's favor. The ZOPA is bounded at either side by each party's credibility. Once the one says something too unbelievable the other can walk away claiming victory.




Trump may have worried that absent the the existence of something that would reveal the truth, Comey's account would have been to the left (in the diagram) of the possible true range, (since we don't know what was actually said I represent the truth as a range, show in in red, rather than a point). In other words Comey's statement might have been be more 'extreme' were he to think that it was his word against Trump's.


However, Trump now (almost) admits that are actually no tapes, and is thus free to give whatever account he likes  - up to his credibility limit - and since Comey's position is in the middle of the ZOPA, rather than at one end (or off the end) the negotiated agreement will be nearer to Trump's end of the spectrum than Comey's.



Whether or not he avails himself of the negotiating space he has created, a reasonable explanation of the fictional tapes is that they were simply a negotiating strategy.

This framing appears to provide a reasonable account of something that otherwise seemed to have no rationale. It suggests too that Trump might view all his statements not a true or false, or sincere beliefs but simply as one means of winning.

Many people expect high office holders to feel constrained not to make statements that might later be falsified. That's why Trump's string of falsehoods have been so shocking to so many. However, viewing his statements as a negotiating ploy rather than a reflection of a coherent understanding of the facts, then Trump's seemingly inconsistent statements are no longer inexplicable.

The (Short) Road Ahead

As I noted earlier, Trump's withdrawal of the US from the Paris Accord is largely symbolic, designed to placate his base to distract them from that fact that nothing else is getting done. I also suggested it will have little impact on carbon emissions in the short term. While much of the left is up in arms, there are other reasons for less apocalyptic speculation.

China and India are committed to the Accord, in part because they are trying to get to grips with terrible, choking pollution caused in part by their At which point we may get back on track.coal fired power stations. China has also established a world-leading solar panel industry, and is unlikely to adopt domestic policies that would undermine it; that suggests an ongoing commitment to the regulatory scheme that led to its rise. China will also want to encourage other countries to move forward with green energy policies in order to guarantee a market for its solar industry.

Three US states, California, Washington and New York, which together make up about 25% of the entire US economy, have said that they will implement policies to promote renewable energy. That will have a profound impact on any industry involved in fossil fuels or carbon emission more generally.  It will keep the auto makers on course to develop electric vehicles, and it will spur those extractive industries that are low carbon (gas and oil) over coal. It will also create lots of new well paid jobs.        

Even where market forces are weaker, large companies like Exxon and Shell that are global in scope will be responsive to international pressure as well as to the US domestic environment, and the rest of the world is heading green-ward while the US, at least temporarily, is moving the other direction. Time matters here; companies don't turn on a dime, and strategic plans are developed for the long term. Companies may be hesitant to make major course changes if the apparent chaos in the White House causes the GOP to lose the House or the Senate in 2018, or the Presidency itself in 2020. At which point we may get back on track. 

From Russia With...

Putin all but admitted yesterday that Russia was behind the leaked DNC emails and by implication the social media infiltration with bots and trolls. Whether the Trump campaign new this before taking office we may find out in due course as Robert Muller's investigation moves forward. If they did and indeed if they collaborated with the Russians that would be damaging and potentially criminal. Suppose however they did not. What then explains the administration's extraordinary defensiveness?

One possibility is that when Muller starts "pulling on the thread" other things that have nothing to do with Russia's rigging of the election might come to light. These may be illegal or simply unethical, from pay for play to financial conflicts of interest. But coming from a background where sailing as lose to the wind as possible without getting caught, Trump and his advisors may be worried that they have somewhere, and they may not know where, stepped over the line. They may also fear, perhaps rightly, that if they are in a grey area, neither on one side or the other, in the current toxic political climate (for which they have in large part only themselves to blame) they may find themselves being judged to have crossed the line. The investigation is likely to run on long after the circus has ceased to be entertaining. Time will tell.    

Getting out of Paris

Yesterday I suggested that markets might do as much for climate change mitigation as a non-binding accord. Fracking has reduced the price of natural gas which has (and is) replacing coal for power generation in in the US. Improvements in wind and solar technology have brought the price to renewables down to a competitive level. Going forward this trend is only like to accelerate.

But it's worth reflecting on how we got here. Markets didn't do this on their own. Two non-market forces were critical; first, direct investment by governments in tax incentives and loans (and yes some when bad like Solindra, but many bore fruit, and this was not picking winners and losers unless you think that betting on an entire industry sector is "picking" in which case it is). The second factor was setting expectations. Here the US government did three important things. It talked about climate change and made the issue and solving it salient. It made investments (walking the walk); and it signed the Paris Accord. Together these created a climate that drove research and development in the sector which is bearing fruit today. So before the neocons trumpet the triumph of market forces, remember that they didn't get here without a big helping hand from an enlightened government.  

We Will Always Have Paris

Yesterday, Donald Trump announced that the US would be pulling out the Paris Climate Accord, and agreement signed by all but two countries, Nicaragua and Syria.  The decision was widely expected. It was also predictable.  First, it fulfilled  a commitment he had made to his base at a time when he is widely unpopular elsewhere. Second, at least in the short term, the damage is more symbolic than substantive. The federal regulations introduced to meet the Accord's goals had already been dismantled months ago. Renewable energy has gotten cheap enough that coal is never coming back as a source of power generation.  Auto makers may well to follow California's stricter emission standards and push ahead with electric vehicle development given the size of the California and world markets. Clean energy jobs will continue to grow as the sector gains traction, both internationally, helped by regulation, and domestically, where market forces are driving adoption. While the decision only further isolates America from the rest of the world, withdrawing, per-se, may have little direct impact on US carbon emissions.

It is also worth noting that nowhere in his speech did Trump repeat his misbegotten claim that man-made climate change is a hoax. That suggests either that he has changed his mind or that he is paying attention to his ex-military advisors, McMaster and Mattis. The US military has been concerned about climate change for over a decade and has been planning accordingly, for example investigating the use of biofuel for its aircraft. And in saying that he'd be open to renegotiating the terms of US participation in the accord, he seems to be implicitly acknowledging that it is a threat to US interests, and that action might be taken to mitigate it.

Trump appears to be very carefully navigating a course between the clamouring his of electorate and the more widely held consensus.

Kushner and Kislyak

Jared Kushner's alleged attempts to set up a back-channel communications with the Kremlin is probably not, as far as I can tell from listening to the pundits, in and of itself criminal. However, there are a number of points to be made.

1) It is quite different from Obama's comment to Medvedev in 2012 which was a communication between two heads of state in public, not between an advisor and a spy in private.

2) As John Brennan pointed out in has riveting testimony before the House Permanent Select Committee on Intelligence last week, there are very well developed protocols for setting up such communications, including bringing into the loop senior civil servants who can ensure that no compromising information is divulged. These protocols were ignored.

3) Until more information emerges, there seem to be two possible explanations for this very odd request to Kislyak (and these could be two ends of a continuous spectrum of nefariousness). The first and most benign is that this was a genuine if naive attempt to improve relations with Russia, but that the relatively young and inexperienced Kushner was in over his head. It was arrogant and foolish of him to think he could pull this off, but given his father-in-law's world-view, not completely surprising. At the other end of the scale we have the possibility that influence was being sold, literally, or that a means of 'repayment' in favors for handing Trump the election was being established.

It it's either of these last two, well that's not good.

Trump's Middle East Strategy

Donald Trump's middle east strategy seems to have two strands; real-politik and the building of a Sunni Arab coalition.  First, in his words, Trump will not be constrained by "rigid ideology". In other words, US foreign policy will be abandoning a commitment to the promotion of democracy and human rights in favor of real-politik. Trump has already signalled his lack of concern for civil rights abuses by authoritarial and illiberal regimes in Egypt (not to mention Indonesia and Russia, whose leaders he has praised).  In continuing to supply armaments to the Saudi's but without the moral concerns, for example, concerning the use of banned cluster munitions in Yemen, he is pursuing a transactional approach, consistent with a real-politik doctrine. He hopes to make gains in security and stability through the exercise and projection of power, both directly and by supporting authoritarian leaders and illiberal regimes, eve if that means ditching the "rigid ideology" of concerns over human rights and a commitment to democracy.

The second plank is bringing to together the Sunni Arab states in a security partnership to constrain Iran, the dominant Shia power in the region. However, creating and supporting a Sunni regional coalition risks undoing the improvement in relations with Iran which could lead to the collapse of the Iran nuclear deal (the Joint Comprehensive Plan of Action) and emboldening Sunni resistance in Iraq which will complicate the US-Iraqi relationship.

Leaving aside the question of human rights and concerns about democracy, there are reasons to worry that any short term gains in regional stability and security will be outweighed in the medium and long term. If Iran decides that it is no longer on a path to re-integration in trade and diplomacy, it may chose to abandon the nuclear deal signed with the US, China, France, Russia, United Kingdom, Germany and The EU in 2015. That would put it back on track to a nuclear weapon in about two years, completely reordering the balance of power in the region. The focus would then turn to the regions two nuclear powers, Iran and Israel.

In the longer term, the abandoning of American ideals will not play well in the region, at least in the 'Arab street'. The reason America was so reviled in Iran was because it was propping up an authoritarian regime; the revolution that followed installed an virulently anti-American theocratic regime which, despite the efforts of pragmatic Iranian reformers, remains so to this day. The failure of the Arab Spring to deliver meaningful democratic reform in Egypt has left much of the population angry not only at Abdel Fattah el-Sisi's autocratic regime but, to the extent that he is propped up by the US, at America too. The same disconnect between the rulers and the street applies to Saudi Arabia, and to some degree in Jordan. As Iran shows, those feelings of antipathy and resentment for past failures last for generations.  Trump's policy may deliver gains while he is in office, but will make things considerably harder for his successors.

If you see something...

Dr. Mary Papazian was inaugurated on Thursday as San Jose State's 30th president. In her inaugural address, she made repeated reference to the Armenian Genocide [1] [2].  A colleague noted that the whole week of inaugural activities was about Armenia - including two movies about the genocide. Then she asked "Do you think she should not have made such references"? 

It's a tough call and raises a number of issues. First, where to draw the line between the re-assertion of history and the making of political points. University leaders probably should not be overtly political since that may impede free speech; but they should stand up for truth over the re-interpretation of history. Another similar case would be countering holocaust deniers. Then there is the question of timing. Should it be driven only a rise in history revisionists, or at any major public event that will have some press coverage regardless of the external environment, or at any opportunity where the message might make a difference (such as the introduction of a speaker to a campus event or at graduation).

My sense is that it was appropriate. Turkey is becoming more authoritarian, the freedom of the press is being curtailed, the regime would much prefer the Armenian Genocide to disappear and will no doubt be trying to make sure that happens in all domestic media and as much of the international media as it can intimidate. So against that background, given my earlier argument about revisionism, I’d say she did the right thing.

The Costs and Consequences of a Crisis of Trust

Transaction Cost Economics posits that a lack of trust causes a drag on market exchange that creates the conditions for firms, with lower cost internal transaction monitoring and enforcement, to arise.

The theory is elegant but has been limited in its application to financial exchange. Economic sociologists however, construe exchange more broadly, and see financial transactions as a subset of barter, and barter as a subset of social exchange more generally. The ideas in TCE apply equally to social exchange as financial exchange.

For example, there is a cost to acquiring accurate information and the more accuracy one insists on (i.e. the lower the potential for future unanticipated costs) the higher the price on must pay to ensure the information is accurate. And since we often don't have time to do all the research ourselves, we create and pay for organizations to do it for us. That's institutions like the 'press', government agencies, academic institutions and NGOs.

But when efforts to devalue the effectiveness of this 'outsourcing' of information gathering and checking, we are pushed back to doing more of the legwork ourselves, imposing a considerable cost in time and energy. Without the belief that the entities to which we outsource information gathering are providing reliable data, those who need or want accurate information must redirect energy from other tasks to gather and check it themselves.    

In some domains this is completely unrealistic, paralleling the TCE notion of market failure. Particle physics would be one example. None of us has the money (and few the training to) build a super collider like the LHC in our back yards. So once science is no longer trusted, no one can verify claims and counter claims. This appears to be what has happened to climate science.

The problem is however more pervasive. There is a steadily growing lack of trust in government and in the data produced by its agencies. Intelligence reports are summarily dismissed or ignored. Economic data are pulled from a hat rather than from the Bureau of Labor Statistics or the Census Bureau. The Federal Reserve is reviled as part of an evil conspiracy. Law enforcement are assumed by some to be corrupt, biased and self-serving.

The lack of trust goes further still. Immigrants are assumed to be terrorists. Members of the other party as seen as malign and duplicitous.

In this environment, one in which alt-facts and real facts are given equal credence, the ability of those with the greatest reach in terms of messaging, control the narrative, the minds, and ultimately the actions, individual and collective, of society. Franz Kafka wrote about this from the perspective of the individual in "The Prisoner". George Orwell described this at the societal level in 1984. We have seen where this can lead in the Iron Curtain countries. And we see it today in China, Russia and North Korea. People fed a diet of information comprising a carefully crafted mix of facts and alt-facts can be convinced of, and to do pretty much anything. As Milgrom and Zimbardo have shown, people can be easily manipulated.

And when there is resistance from a minority, the majority can be persuaded that authoritarian measures are necessary. Major changes to what we have cone to take for granted as individual and collective rights may well follow. If that's not what we want, we need to pay careful attention.