Dear David Brooks

A dear, very liberal friend shared a recent NYT opinion article by David Brooks, The Republican Fausts. This is my response to it: 

This paragraph in Brooks's opinion sums up my "Trump" thoughts nicely:

Trump exceeded expectations with his cabinet picks, but his first 10 days in office have made clear this is not a normal administration. It is a problem that demands a response. It is a callous, bumbling group that demands either personal loyalty or the ax.

Cabinet Picks

Many of his leadership posts, I think, have been meaningless/harmless (e.g. Carlson, Perry, Puzder, DeVos) while others I don't have enough good data to say one way or the other, yet (Mnuchin, Kelly, Chao).  But then there are the ones I think of as the grownups in the room, Mattis, Tillerson, Pompeo and possibly Hayley, especially Mattis, Tillerson and Pompeo.

Demands a Response

I keep waiting for the grownups to stand up, although I am a little buoyed by the fact that Trump accepted Mattis's clear rejection of torture--perhaps he will learn and listen. Sadly, though I fear this is an early exception and I predict that we will see revolving doors in many of the most senior positions. I don't think that Mattis, etc. are likely to take kindly to being overruled or excluded from major decisions (e.g. General Kelly) too often.

It is a Callous [Group]

I think of callous as more like arrogance. I don't think that Trump is unsympathetic, only that he is so sure of his own correctness that he brooks little argument and seeks little input. Were there more humility in Trump (and to a lesser extent, his entourage) I think he would seem much less threatening, he would get more latitude in his plans, and we would be willing to forgive more of what he is doing/has done (he also might not do it!). 

You may not believe this is true, but I see a lot of similarities between Trump and his predecessor. They both came in believing they had a mandate, both embarked of very aggressive policy changes/course corrections, both dispatched a record-breaking number of executive actions (Obama:18, Trump 20) in their first 10 days in office, both had oppositions who felt the incoming plans were anathema to the very fabric of the republic.

The biggest difference that I see is that Obama spoke in moderated, measured tones, carefully calibrated to an intended mood--is there any surprise his code name was "the Professor"? Trump, by contrast has a very limited range, bounded by anger, bombast, fear, and sarcasm. Though I strongly objected to nearly all of Obama's policies, I did not feel the dread that I think I see in folks around me. They're just ideas, but even bad ideas can be digestible if they are presented in a way that suits the audience.

I keep hoping that Trump will learn some humility, some moderation, and very, very soon, but I'm not optimistic. I think that this is his greatest curse, because it sets up:

[It is a ...] Bumbling Group

When acting out of anger/arrogance/bombast/sarcasm, there really isn't room for second-guessing yourself, let alone getting buy-in from your advisers. Even for ideas that might be defensible (e.g. the moratorium on immigration) when you're going that fast you cause huge waves.  General Kelly and the Dept of Homeland Security couldn't execute the plan well because Trump didn't involve them. Furthermore, no one understood the scope and impact of the decision because of its speed and force, resulting in all kinds of problems and protests. Maybe it is a good idea (I personally think not), and maybe it's a terrible idea but it was clearly executed poorly--and that leads to lots of fear and uncertainty.

There are the things he's done that I believe are bad policy decisions, but also recognize that I might be wrong (e.g. TPP, immigration moratorium, etc.), and there the things that I can't even believe that the media is letting Trump bait them on (e.g. crowd size--who cares!? Don't let him even talk about it). But there are other things that I think are dangerous and could lead to much more suffering, both in the US and out (e.g. the wall with Mexico, ambivalence re: NATO...).

I also have to admit that there are some things that, at first look, made my eyes pop, but in further consideration made me think that questioning the status quo is not always bad, e.g. talking to Taiwan. 

The fact that these actions are coming as though shot from a firehose seriously undermines his credibility. At the same time, I learned today that when he imposed the new sanctions on Iran, he did a good job involving the other signatories to the treaty. A sign of growth? Let us hope so.

[It is a ...] group that demands ... personal loyalty

It is clear from how he ran his business that he is very keen on keeping things close to the chest: his closest advisers are his family. I really wonder about Kushner, Conway and Bannon, who seem to either be insane, or craven. Sadly, this is a man who has huge (yuge?) trust (i.e. fear) issues, and is willing to surround himself with the people who don't challenge him too much.

I have been agog by Conway's blithe dismissals of meaningful objections, questions or concerns. I think of Breitbart news as the political equivalent of the National Enquirer, and Bannon's leadership of that group as brilliantly tactical, if transactional and short-term. 

My Response

While it is tempting to resist, protest, etc. I think those actions only fuel his bad behavior. When he feels threatened, he doubles-down on the things he knows, i.e. the people who elected him despite his many, many sins. Instead, I think we need to do a better job engaging with him--distasteful, disgusting and stomach-churning as it might feel. I see a 70-year-old teenager in the White House, one who has learned who his friends are: the angry, scared, unemployed people who feel betrayed by the people who don't listen to Trump.

If we're honest, we (the progressives, the free-traders, the  intellectuals) have never taken him seriously. He has been a punchline from day 1. Even when reporting on him, it wasn't because we thought him a good man, a good candidate. No, the Trump reporting was more about trying to be the first one to call his flame out, and to document the massive, 37-car pileup that his campaign should have been. 

Trump may never trust the progressives or free-traders enough to listen to them as anything more than adversaries, but continuing to treat him as a dangerous demagogue only confirms what he already knows--that he alone is right and the world is out to get him and America. 

My question is, how do we engage productively, without causing more carnage?

What's Wrong With This Picture

So I just found this graph on Fast Company's Exist Blog.

And here's my challenge to you, dear reader, what's wrong with it? Obviously, the authors want us to conclude that productivity has increased substantially while hourly compensation has remained (relatively) flat.

The first thing is told to us in the first note:"Data are for average hourly compensation of production/nonsupervisory in the private sector and net productivity of the total economy." In other words, these are hand-picked data to tell a hand-picked story. They are not a typical worker's compensation. Furthermore, they are comparing apples and oranges: "...compensation of production/nonsupervisory..." (i.e. the proletariat) compared to the "...net productivity of the total economy." Which is to say, the net productivity of everyone's efforts.

Why didn't they compare the average hourly wage of the production/nonsupervisory to the productivity of the production/nonsupervisory? I imagine that would have told a different story.

The next thing is a geometry question: What defines a line?   Answer: any two points.  In this case, the first point is the period of time between 1948 and 1973, and the is the period of time from 1973 to 2014. If you want to draw a line to point anywhere, all you need to do is find two points that line up that way. Similarly, if you want to make a point about political economy, all you need to do is define two periods of time that in comparison tell the story you want. I would be far more convinced that there is something going on here if the Economic Policy Institute looked at a scale of time far larger than just 66 years. I realize there are limitations to data, but that limitation does not mean that we get to place greater credence on the only two known data sets. In fact, it means the exact opposite.

The third problem is that this graph is remarkably spare in its description of who the production/nonsupervisory people are. What are they doing? Let us take the proverbial ditch digger. Is he more creating more value today than he was in 1965? Are ditches all that more important today than they were in 1965? Should this ditch digger get compensated more tomorrow for doing the exact same work he did yesterday? We have a belief that a worker's wages should increase with time. I will concede that wages should keep pace with inflation, but beyond that the worker's wages should be commensurate with the value he is creating. Are the workers in this graph creating more value? Perhaps.

This brings us to the fourth and final issue with this graph: the compensation is not truly compensation, it is wages. So what? The difference is very important, because compensation includes lots of other things, including health care, Social Security and other things.  Look at the chart below, shamelessly lifted from the National Bureau of Economic Research:

You'll see a significant growth in the supplements to wages and salaries of nearly 9 percent.  Add to that the fact that compensation in vacation terms increased by another 2 percent. These are not insignificant sums! In fact, in a recent paper by Mark Warshawsky, "Earnings Inequality: The Implications of the Rapidly Rising Cost of Employer-Provided Health Insurance", we learn that if all forms of compensation are included--especially health care expenditures by the corporation on behalf of the employee--wages would have risen by 41% between 1999 and 2006. For the economy as a whole to grow that fast, it would have taken 15 years.

Well there are other arguments one could make, including the fact that the post war period was incredibly profitable for the US, as it took its turn as the world's manufacturing center. It was only in the 1970's that other countries--notably Japan--began to catch up and surpass some of the US's dominance.

Charts like these are very much a single line formed from only the two points that the author wanted us to connect. Despite my nearly pathological aversion and dislike for regulation, I'm almost tempted to ask for a regulation to control the publication of charts in public places, but then, I would only deprive myself of righteous indignation.

Statistics and My Daughter

My Daughter came to me tonight and told me that she had uncovered some very disturbing statistics about our state. "Are you sure you want show me?" I said, "I'm probably going to ask you some weird questions about them."

She had me look anyway, and with my fair warning, I looked over her shoulder at the statistics she was so concerned about.  It turns out that there is a deficit between the amount of energy we consume and the amount of energy that is produced from WWS, Wind, Water, and Sun.

"It's so much," she complained. "And other states are doing so much better than we are." All very interesting. And this, dear reader gets us to the core of statistic and why they can be so deceptive. We really have no idea whether they are good or bad. How has the energy mix changed in the last 3, 5, or 10 years? What are the costs of generating that energy? Who pays for it? What has been happening to the costs.

The huge problem with statistics is that they are a point in time. Take a snapshot of a busy street and you can tell any story you want about what you see in it. You can use it to "prove" just about any pet theory you want (more or less). A statistic is just a snapshot of a moment in time, a certain configuration of variables that will change before you can even write them down, let alone perform a regression analysis.

When someone tells you how many rich people there are, or the average height of chihuahuas in Los Angeles, ask yourself, are the people (or chihuahuas) in that statistic the same people (chihuahuas) that would be represented by it today?

The answer is probably no.

Statistics are a fine way to begin an investigation, but they are a terrible way to end one.

And on that note, I am going to end this one.

Inequality

This, I think, is just a first pass on some of the crazy things I hear about inequality. I hear lots of complaints about its rise, about how it's so wrong that some people are making a gazillion times more than the lowest-paid employee.

I was thinking about it a little differently, recently:

First, I have to acknowledge that it exists. And yes, it does.

Next I've made the assumption that inequality really is something we want to reduce.

From there it seems that there are two ways of tackling it: 1. Reduce the wealth of the top, 2. Increase the wealth of those at the bottom. How we choose between them depends on how we answer the question "why do we want to reduce inequality?"

I'm reasonably sure that no one is (at least consciously) interested in reducing inequality because they just want to hurt the wealthy. I believe that even the most ardent redistributionists believe that it is to help the poorest thrive.

So now, we look at our possible solutions:

Regarding #1 - Isn't that just sour grapes? I mean really, there was no inequality when we were all living in caves, drawing on pictures of bison with finger paints, but I seriously doubt that anyone would want to live there/then (were Neanderthals impoverished?). So clearly reducing the top's wealth doesn't do anything to helping the bottom.

Regarding #2 - This is really what we want to do, isn't it? We want to ensure that everyone is getting ahead. Everyone can buy more and better food, more and better medicine, entertainment, shelter, and all the other great things the world offers.

Now, I know that you're all thinking that the top doesn't need all that money, why don't we take some and give it to the bottom? It seems reasonable, doesn't it? I mean, does one really need more than three or four Ferraris?

The problem with this argument is that it is a zero-sum argument, by which I mean that there is a fixed amount of wealth in this world and we must ensure it is evenly and fairly distributed. This is patently, obviously, and demonstrably false. Remember our insolvent Neanderthals? How much wealth was in the world then? How about a thousand years later? Or at the Birth of Christ?

What about the difference in wealth between the years just before the start of the industrial revolution and the few years after it?

Our wealth is not a fixed pie, it is an ever growing pie. We need to do all the things we can to help ensure that it continues to grow.  We can do this best by enabling people to belly up to the table, pick up a fork and start eating. Keeping our diners away from the table and promising to throw them scraps (no matter how big or choice) will never increase anyone's ability to participate.

Then what can we do to increase wealth at the bottom? Well, I have a few ideas:

1) Scrap the minimum wage - A minimum wage prevents people from getting to the table, it limits my ability--if I'm an unskilled worker--to get my first skills. And it encourages jobs to move overseas!
2) Minimize the number of professional licenses necessary. I mean really does the state really need to license hair-braiding? Casket selling? Interpreting sign language for the hearing impaired? There are dozens upon dozens of others, these are just some of the most egregious.

Ultimately, these are all just about getting a centralized government out of business, and allowing business to grow and prosper, and the people with it.

Trust a Trekkie not Trump

I’m a Trekkie. 

OK, there, I've said it. I have watched all of Star Trek: Enterprise, all of Voyager, and I just finished watching all of The Next Generation (seven seasons!).

Before jumping into Star Trek: Deep Space 9, I wanted to shift gears for a while. Flipping through Netflix, I came across The Magicians, a series described as part Harry Potter, part Narnia, where the protagonist and his friends discover that “the magical world they read about as children is not only real, but poses dangers to humanity.” 

Sounds great, sign me up.

Except, after about four and a half episodes, I couldn’t watch it anymore. It was just too much like a soap opera. But what did that mean, I wondered. After a little thought, it came to me: there is a distinct lack of trust among and for the characters. They're all behaving as though everyone else is out to get them. That betrayal is just around the corner, any corner, every corner. 

I get why the writers do it, that builds suspense, storylines practically write themselves. It captures the very best (and by "best" I really mean "worst") of reality TV: do unto others first because they're about to do unto you. The other person isn't going to help you, they don't really care about you. Think Survivor, or maybe, The Apprentice.

Contrast this with Star Trek, all of them. Whatever you might think of the genre, all the characters had each others' backs. Even when one or another of them was acting crazy, making improbable, impossible claims, they stopped and listened from a presumption that he or she was not crazy, that he or she was not trying to sabotage the crew/mission/career. They were a team, they had strength and were able to overcome challenge after challenge, often and only because they were able to work together.

Contrast that with the discourse coming from the US President Elect. Is he more Jean Luc Picard or more Donald Trump? Oh wait...never mind.

The sad thing is that I don't think that Star Trek is all that far-fetched (OK, the replicators,  transporters, and holodecks are a bit out there). This is what I understand is taught in the military; trust your squadmate, trust your brothers- and sisters-in-arms. And it's what makes the New England Patriots so successful, year after year: they trust each other. Each person does his job and trusts his teammates to do theirs.

What's possible when we trust each other? Nothing short of excellence. Nothing less than the stars. Think about some of the most uplifting stories; they're all about how trust in your friends wins out. They are not about the virtues of distrusting anyone, only about trusting each other.

With every attack on one group or another, Trump slices off another piece of this marvellous American experiment. 

I want excellence, I want the stars. I want to trust more.

Good Leadership

Our President Elect has taken aim at the good men and women of our intelligence community. Perhaps he is right that they got it all wrong.  But I am reminded of something I was taught as a brand new manager: good leaders praise in public, criticize in private.

Looking back over the campaign, Mr. Trump's tweets, comments, etc., it seems that he was absent the day that lesson was taught. What might be the outcome of such behavior? A dissolving base of support. First you undermine this party, then another and another. Soon you have no one supporting you but a very small group of sycophants. How long will the strongest minds in Trump's cabinet last? I worry for General Mattis, Rex Tillerson, and others. Will Trump hesitate to undermine them if he disagrees with something they say? We already saw his inability to hide his displeasure with Pence during one of the debates, so I doubt it.

Based on just these few data points, prepare for a revolving door in the White House, at the very highest levels.

May my prediction be wrong, and that Trump demonstrates the graces and soft skills of leadership and statecraft.

Disqualifying the Quantification of the American Dream

Well, the New York Times has done it again. In a recent article, "The American Dream, Quantified at Last", author David Leonhardt makes some truly horrendous generalizations about the American Dream, then uses some highly cherry-picked data and very little context to back them up.

The article describes the statistical work done by Stanford professor of economics, Raj Chetty, and his team. Not satisfied with the original definition of "the American Dream" ("that dream of a land in which life should be better and richer and fuller for everyone."  Adams, JT; The Epic of America; 1931) Leonhardt goes on to tell us that the American Dream is, in reality, the likelihood of earning more than your parents at any given stage in life. Leonhardt calls it an index--and what is an index but a way of defining a thing?

But let's grant this definition, even though it could easily be debunked (e.g. why measure income? what about ability to consume? Or measurements of life expectancy? Ability to travel, get medical care, avoid back-breaking labor, etc.). Starting with people born in 1940, Leonhardt says that the chance of earning more than your parents has decreased with each subsequent generation. (See the NYT chart on the above link, about half-way down. See also Chetty's graph.) It shows that so long as your family was not in the richest 15% of the 1940 cohort, you had a better than 90% chance of earning more than your dad. (Note that I specify "dad".) And the probabilities decrease from there:

• 1950 babies had an 80-something percent chance
• 1960 babies had a mid-60's percent chance
• 1970 babies had a low-60's percent chance
• 1980 babies had a 50% chance

Pretty damning of our (pick one: government, politicians, elites, industry, corporate bosses, etc.), isn't it?

Or is it? I wonder what it would look like if we ran the model in the other way? Would a 1930 baby have the same chance as a 1940 baby? What about 1920? 1910? 1840? 1820?

1776?

I'll stop with 1776 because there was no America before then, hence no "American Dream".

I suspect, however, that  we might see that the 1940's was the high water mark of the American Dream. Why? Let's look at what else was going on: Oh, yes there's a lot of things going on, including the baby boom, the massive industrialization of the US, the fact that we were the preeminent industrial country in the world (the USSR was militarily powerful, yes, but not industrially), and the then-equivalent of China today: the world's factory. In 1960, was there a single country even partially able to compete with the US? Not even close. It wasn't until the 1970's that Japan began to catch up.

Remember I specified "dad" above? Well it's the 1960's when the women's rights movement started getting into high gear, increasing our stock of labor. There's some basic supply and demand stuff there: the supply of labor has been increasing and just as predicted, the price of labor has been decreasing.

But wait, as the infomercials say, there's more! This data looks only at income, not at compensation. A recent paper by Mark Warshawsky shows that total compensation continues to rise much faster than we commonly expect.  Does it make up for the difference in compensation we see in the data? I don't know if it does completely, but I'm sure it plays a significant part.

We must also look at other countries. What do their likelihoods of surpassing their parents' earnings? Take China, for example. Today's Chinese children make far, far more than their parents. I imagine that this is a trend that has been going on since the 1970's, following the death of Mao Tse Tung.  Of course, the decades prior were a massive crater, thanks to Chairman Mao and his abhorrent policies, but the effect is still there. Can we get some research on this?

It is also sensible to ask is it possible for "the American Dream" to continue forever? Much as one might sensibly ask, "are all the children of Lake Wobegon truly above average?" At some point, all things fall back to the mean. There are periods of extended growth, then there are periods of slower growth. Can we be grateful for the period of extraordinary growth that existed in the 40's and 50's?

And while we're at it, perhaps we need to re-examine the definition of "the American Dream". Somehow, I think people were coming to the United States far before there was the common understanding that Generation n will earn more than Generation (n-1).  The American Dream was that you could arrive on our shores, without a penny in your pocket and create a life. That is an index I'd like to see: how easy is it to get a job, start a family, do the things that give a soul meaning.

Sadly, I suspect that those numbers would slope in the same direction as Leonhardt's.