Oh yeah, I must have forgot

This past week, Senators Tom Cotton (R-AR) and David Perdue (R-GA) introduced their immigration bill in a press conference with President Trump. They called it the RAISE (Reforming American Immigration for Strong Employment) Act. The stated purpose is to shift away from the current system that allows for individuals who arrive and become permanent residents or citizens to then petition for non-nuclear family members to join them (“chain”-immigration). Refugees will also be capped at 50,000 a year. The system would instead put in place a strong preference for highly-skilled (by their definition) immigrants. The details of the bill matter, and I may cover this or link to articles analyzing its potential impact elsewhere. Here I want to cover something else that should be obvious. Yet it seems we consistently forget who we are.

Donald Trump’s paternal grandfather was born in Germany and arrived in the United States at the age of 16 and initially worked as a barber. His mother was born in Scotland and came to America at the age of 18 and worked as a domestic servant. Donald Trump’s current wife was born in what is now Slovenia, and she may have initially worked in the United States prior to obtaining a legal work visa. It is not clear if any of these individuals would have qualified to legally immigrate to the United States under the proposed RAISE Act.

Many think tanks, commentators and other elected representatives have also praised the bill. Representative Lou Barletta, a Trump loyalist from the state of Pennsylvania and likely challenger of Democratic Senator Casey in 2018 said: “This influx of low-skilled immigrant labor has decreased wages for those without college degrees [. . .] and threatens to place the American Dream out of reach for far too many workers and their families.” Obvious from Rep. Barletta’s name is that he is of Italian descent. His paternal grandmother was an immigrant at an early age. His mother was also the daughter of Italian immigrants. Prior to the maternal grandfather’s passing, his occupation title was “laborer”. It is likely that none of Barletta’s immigrant ancestors would have been allowed into the country legally under the proposed legislation.

Here is an example of some of the attacks that Barletta’s ancestors likely faced when they entered the country in the late 19th and early 20th century.

mckinleyitalian

According to the White House press release, some other notable people who praised the proposed legislation include Secretary of Labor Alexander Acosta and House Judiciary Committee Chairman Rep. Bob Goodlatte. Secretary Acosta is a son of Cuban immigrants who fled Castro (refugees or asylum-seekers). Rep. Goodlatte’s maternal grandfather was German and born in Russia, and worked as a merchant, having immigrated to the United States at the age of 24-25.  It is unlikely that a merchant would qualify as a skilled immigrant.

It is important to note that the bill attempts to do two things. First, change what the make-up of the immigrant population is. This could be defensible, if we exclude the immoral cap on the number of refugees. Second, cut the number of legal immigrants in half. Criticisms of the second task have so far resulted in defenses that simply point out that Australia and Canada have merit-based systems. To the extent that they actually defend the immigration number cut, they point to limited research from George Borjas showing a slight negative wage impact on low-skill native workers based on the Mariel Boatlift and Miami. They also neglect to mention that Canada currently has 250,000 immigrants per year. The proposed bill would allow a maximum of 500,000 immigrants into the United States, which has a population roughly 9 times that of Canada.

For all of the supposed concern about low-skill native workers in this country, who have been consistently shafted by Republicans for the last 40 years along with everyone else who isn’t born wealthy, none of the people who have praised and introduced this legislation have supported stronger unions, or higher minimum wages, or expansions of health insurance, or expansions of the safety net, or free college or vocational schooling. In many cases the elected officials who support the RAISE Act have advocated and passed legislation doing the precise opposite. Their solution is now to “reform” the system with the larger goal of cutting the number of immigrants to the United States of America, a country of immigrants, and make further scapegoats out of refugees.

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Coalition Building, Before Election Day

My previous criticism of those deciding to absolve themselves of responsibility by opting for a third party (at least in competitive states) has within it the underlying hypothesis about how presidential (and most Congressional) politics work in the United States.

In countries like the United Kingdom, a “third” or minor party can dominate in certain locations, like the Scottish National Party in Scotland. That happens to work, because after the election, if a single party in parliament does not have an outright majority, the elected MPs from different parties can work to form a coalition to get to a majority, and they decide on a prime minister to represent this coalition, usually selected from the dominant party in the coalition. Think of the Conservatives and Liberal Democrats in the 2010 election (although this happened to be a disastrous choice for Lib Dems). Crucially, the Scottish voter doesn’t need to concern himself with throwing his vote away, although he is certainly aware his elected representative will join a coalition (possibly for getting some substantive policy in return).

In the United States, coalitions are built before election day, with the understanding that the elected will govern in such a way as to represent the voter groups involved in that process, or they will be pressured to do so over the course of their term. The process of electing a president is distinct from selecting Senators or House representatives. It’s possible that a third party (or independents, as it has happened more often) wins a particular local election. But in the first place, no Democrat or Republican is particularly bound to vote a particular way. And the centrist to leftist independent members of Congress tend to ‘caucus’ with Democrats so that they have some influence in the processes that develop policy.

My thinking, then, is that we have these supremely long campaign seasons because the process is about first building support among the base (for Democrats, a center-left base, for Republicans, an increasingly far-right base), and then building some support outside of the base once the primary season is over in order to win the election. It’s a process of building coalitions analogous to MPs from different parties joining together to get a majority.

And then the election will decide who is president, whether they have 51% of the vote or a plurality of the vote (e.g. Bill Clinton with 43% in 1992). Voting for a third party, then, is nice in that it lets you say, “I don’t like either major candidate, they suck,” but it seems less clear what it actually does: no one gets points for coming in 2nd or 3rd. The most plausible argument seems to be if you really are a Libertarian, and you want the Libertarian party to get above the 5% threshold to get some public financing in the next election (and automatic ballot access in all 50 states), and they happen to be close to that threshold this election. But this means you are less interested in the immediate outcome that will impact the next 4, or 8, or 12 years.

And how many of the people who are against Clinton and Trump are actually Libertarian? The Republican party already wants to gut the safety net, Medicaid and Medicare: the Libertarian party follows this path while also cutting defense, which I guess is kind of honest according to its own internal logic. But do people really want all income taxes replaced by consumption taxes (this is highly regressive)?

And with the Green Party, are they worthy of the attention they clamor for? Fighting for a leftist agenda is great, but lazy thinking is decidedly not fine.

An interviewer asked Jill Stein about the possibility of playing the role of spoiler like Nader in Florida in 2000, and helping Trump win in the process. Her response:

What we know from history, and what we know from the current situation, we are seeing a rise in right-wing extremism, not just in the United States, and it’s not just Donald Trump, it’s also throughout countries in Europe [. . .] The answer to neofascism is stopping neoliberalism. Putting another Clinton in the White House will fan the flames of this right-wing extremism. We have known that for a long time ever since Nazi Germany. We are going to stand up to Donald Trump and to stand up to Hillary Clinton!

To be fair, I was never going to be convinced of her reasoning, regardless of her response, although I acknowledge anyone’s right to run for office (and anyone’s right to vote for them). But this answer is garbage and nonsensical. If you’re running as a third-party in a post-2000 election world, you should have a better response than this. You should have thought about this.

Jonathan Chait responds brutally (and correctly):

In fact, the one time in American history a Clinton held the White House, it did not lead to fascism. True, it did lead to a Republican administration, but it wouldn’t have if it weren’t for, among many factors, a Green Party candidate who siphoned off enough votes in Florida to tilt the outcome.

[. . .]

This, however, is also a strange conclusion to draw. The crisis in Weimar Germany had many causes, but one of them was the Communist Party’s insistence on destroying the Social Democrats. Because the Communists would not support any center-left government coalition, it was impossible to form a parliamentary majority without the Nazis. So whatever lessons about left-wing political strategy we should draw from the Nazi era, “withhold votes from the mainstream party that is the only viable alternative to the far right” is definitely not one of them.

What’s most fascinating is that Stein does not try to downplay the danger of a Trump presidency. Instead, she likens it to fascism and Nazism (a comparison that I actually think, for all of Trump’s authoritarian tendencies, goes too far). And yet, proceeding from her premise that Clintonism will lead to fascism, she concludes that she must “stand up to” both Donald Trump and the only candidate who can prevent Donald Trump from winning the presidency, in equal measure. “Neoliberalism” — the left-wing term of abuse for liberalism — leads to fascism, so we might as well skip the neoliberalism step and go straight to the fascism.

The assertion is that the Democratic party is fundamentally corrupt, and is no better than the Republican party, basically. This despite that the way our elections work, someone can win a presidency with a plurality of the vote: a least-preferred candidate (Trump) can win by enough people voting for their most-preferred candidate (Stein) rather than the second-least preferred candidate (Clinton) who is the only viable opposition. This is the reality of our election system, regardless of our internal moral quandary about picking. And the point is, there is no regrouping after the election. The regrouping is going on now. Whether people vote in a way that lets them sleep at night or not, the outcome is what matters.

Bernie Sanders mounted a challenge against Clinton from within the Democratic party, and he pushed the conversation towards his end, and got changes in the platform. It’s not clear he would have done this had he skipped the Democratic primary process altogether and joined the Green Party. The Democratic Party is probably better for it, though a minority of his supporters have not yet come to the same conclusions he has.

The Libertarian party would also not likely withstand scrutiny, although they have actual governing experience in diverse settings, so perhaps there’s less concern there. William Weld, the vice presidential nominee for the party, was a moderate Republican governor of Massachusetts. It seems, though, that actual libertarian and conservative commentators don’t like his views on how to govern.

On the supreme court:

JOHNSON: Really, there are going to be no litmus test. You’re going to appoint good people, and you’re going appoint people that look at the Constitution of original intent.

WELD: Well, I don’t think you have to panic and say it has to be a way lefty or way righty. Steve Breyer has been a good justice. He was appointed by Democrats.

GILLESPIE: A Massachusetts guy, right?

WELD: A Massachusetts guy. Merrick Garland, I think, would have been a very good pick, and he’s nominated by Obama.

Weld’s answer is a reasonable answer; but it’s not an answer that can satisfy the Libertarian or conservative die-hards, and it seems his running mate doesn’t agree either.

Leon Wolf writes:

Johnson’s answer is pretty good. Weld’s is awful, and if Johnson disagrees with him he should tell him to shut up about it. Breyer has been a “good justice” in the sense that he hasn’t been openly corrupt and he’s reasonably intelligent, but he’s also a doctrinaire liberal who has stood blithely by and endorsed the massive expansion of the Federal government and the administrative state in particular. His jurisprudence shows no respect for any even theoretical limit of the commerce clause. His philosophy isn’t conservative, and it sure as hell isn’t Libertarian. What is Weld even driving at? This country doesn’t need two Democrat parties.

[. . .]

Leave it to the Libertarians. They have a once-in-a-lifetime opportunity to remove their party from the fringes and they blow it by putting this buffoon Weld on the ticket.

It’s telling that Wolf thinks being more libertarian and more idealogical would be the tactic that would remove the party from the fringes. That seems counter-intuitive to me.

It seems that the third parties want the attention but maybe not the scrutiny that comes with it: maybe we’ll find out that they’re as human and impure as the rest of us.


Lots of fences

For whatever reason, today I was reminded of the poem Mending Wall by Robert Frost.

The narrator in the poem writes about his interactions with his neighbor:

My apple trees will never get across
And eat the cones under his pines, I tell him.
He only says, “Good fences make good neighbours.”
Spring is the mischief in me, and I wonder
If I could put a notion in his head:
“Why do they make good neighbours? Isn’t it
Where there are cows? But here there are no cows.
Before I built a wall I’d ask to know
What I was walling in or walling out,
And to whom I was like to give offence.

I don’t know much about Robert Frost, but this poem was published in 1914, and it strikes me that Frost was alive through much of the Gilded Age, that period of time where the rich and powerful few controlled American politics, and inequality was reaching its dramatic local maximum in the 1920s, even as incremental progress had been made under Roosevelt and Wilson. He was not writing about any of those things in this poem. But I think of his poem because of how we collectively interact with each other, and how this matters in a discussion about inequality that is sometimes missed.

Paul Krugman writes in The Conscience of a Liberal (2007):

[H]igh levels of inequality strain the bonds that hold us together as a society. There has been a long-term downward trend in the extent to which Americans trust either the government or one another. In the sixties, most Americans agreed with the proposition that ‘most people can be trusted’; today most disagree.

In 2012, this number was just 32.4%, as compared to 46% in 1972.

He also notes a bizarrely wrong op-ed by Irving Kristol in 1997 defending high levels of inequality: “in all of our major cities, there is not a single restaurant where a CEO can lunch or dine with the absolute assurance that he will not run into his secretary.”

This was a strange argument to make in 1997: it’s even stranger in 2016.

A recent New York Times investigation by Nelson D. Schwartz looked at the world of the rich and the companies that cater to them. The lede says it all: “Companies are becoming adept at identifying wealthy customers and marketing to them, creating a money-based caste system.”

The world it describes is one we all know exists: the rich are being catered to, and importantly, separated from the rest of us because they can pay to do so. In some ways it is also to the detriment of everyone else. Disturbingly, it seems that the big data that is collected on every single one of us (thanks to modern technologies) is used so that companies can just target those who matter (the rich) with greater accuracy than ever before.

Along with the rich being able to purchase and isolate themselves from everyone else, there is a set of drawbacks for everyone else. In an exchange with a reader, Schwartz writes:

If 20 percent of people end up going to the front of the line – and there’s only one or two lines at the airport or to board the ship, for example – the rest of us have to wait longer. Similarly, seats in coach are getting squeezed ever closer together to make more space in the front of the plane for first, business class and premium economy.

My point here is not that inequalities in income are leading to inequalities in services that did not previously exist, although that is certainly happening. My point is more that we are increasingly being separated from each other on the basis of class even outside of where we work and where we live (which had already increasingly become the case over the last several decades). A benefit of having a relatively compressed income distribution in the 1950s is that people of different economic classes were not separated from interacting from each other in the same way (ignoring the major issue of racial segregation). Unions and moral outrage ensured that workers, blue-collar or white-collar, made incomes that were not exorbitantly different, and further more individuals also occupied similar spaces in the world outside of work. Luxury items existed, of course, but fundamentally, whether someone drove a Chevy or Cadillac did not hinder or stop people from interacting with each other and understanding each others’ concerns. How can we trust or empathize with anyone as we pay money to separate ourselves from each other? How can the very rich, who separate themselves from the rest of society while having a disproportionate voice in the political process, possibly understand the problems of most people?

I think that the the modern conservative response, without irony, might simply be: “Good fences make good neighbors.”


Pay for no performance

How can CEOs, management and boards of directors have their interests aligned with the long-term health of the companies they run? How can their interests be aligned with the interests of their employees?

I’m grappling these questions as I look to a few glaring cases of capitalism gone wrong, and I am wondering why boards of directors ultimately do what they do. In my mind, a board should provide diverse expertise and guidance for a company, choose its CEO, and stay vigilant in making sure the chosen CEO has taken an appropriate course. Part of choosing the CEO also requires setting contract terms and compensation. And on this, I have a hard time understanding how boards in America can agree to such large compensation terms with so little downside risk for the executives involved.

It has recently come to light that in the event of a merger, Marissa Mayer, CEO of Yahoo, would receive $55 million in severance if she were ousted. Just as ridiculous is her compensation across 5 years: at minimum, it was projected to be worth $117 million across 5 years. It will likely end up being closer to $365 million, depending on the share price. Not only are these amounts ridiculous, but they are in part determined based on share price, an imperfect indicator of company health. If you happen to enter as CEO during a recession, and you stay on just as the economy and the technology sector expand, then you see the gains flow to your pay. All you had to do was nothing. This is almost precisely what happened with Yahoo: their share price increased entirely due to a large stake in Ali Baba (an investment made prior to Mayer’s tenure), which had its IPO in 2014 and currently has a market cap of nearly $200 bn.

People who defend CEO compensation in America try to draw comparisons with everyday workers and their own motivation to show up and do a good job based on the pay they receive. Money rewards good work, so their fable goes. But there is no parallel here. When most people do a poor job, they can be let go. Most don’t receive severance, and most immediately worry about how they will make ends meet, or get another job. The psychological and financial impact is often severe.

There is no similar downside for Marissa Mayer. She never has to worry about money, and she gets paid tens of millions of dollars even if she screws up and leaves. And so, I wonder: what are boards of directors thinking? This kind of thing doesn’t even seem to align with shareholder interests.

Yahoo recently laid off 1,600 people. Make the rosy assumption that Yahoo did not lose any revenue from cutting all of these workers, and that the move only cut costs. Suppose Marissa Mayer gets her severance this year of $55 million: assuming (conservatively) that employees receive a total of $200,000 in compensation on average (including health insurance and other benefits), $55 million would pay 275 workers for a year. If we consider her $365 million potential pay across 5 years, that money would pay for 365 workers for 5 years. In reality, Yahoo arguably lost some revenue from laying off these workers.

The same would not be said for the CEO. Is it at all possible to make the argument that she, or some other CEO, would have done a worse job with just $36.5 million instead of $365 million? This discussion leads easily to questions of taxing the rich. Many arguments against raising rates on the very rich seem nonsensical when put in this perspective.

There are other examples of  boards of directors making poor decisions: Men’s Warehouse tried a disastrous acquisition of Joseph A. Bank and ousted its famous founder George Zimmer in the process. In this case, the board went against the CEO, and gave him no severance. Why? Men’s Warehouse’s largest shareholder was the hedgefund Eminence, which also owned a stake in Joseph A. Bank. They had pushed for a merger of sorts (and overpaid, to their simultaneous detriment and benefit). Among the members of the board of directors was Deepak Chopra, bullshit artist and new age spiritualist. What expertise could he have brought to Men’s Warehouse’s business dealings? Zimmer deserves some of the blame, as he handpicked many of the directors.

Mr. Zimmer, who lives in the Bay Area, says he feels bad for Men’s Wearhouse employees, but not for Eminence. “I don’t have a high regard for hedge funds,” he said. “Nothing personal — I’ve never met the Eminence people — but I love the idea they might lose a fortune. Hedge funds may force companies to be more efficient, but that’s not always the best thing for every stakeholder group, like employees. It’s curious we’ve allowed capitalism to become all about shareholders.”

At least in this case, you could argue that the decision was based on large stakeholder in the company. But it sucks that the employees will ultimately pay the price. Should boards be prescient rather than short-sighted? Shouldn’t they be actual experts on business matters, representing both shareholders and the many employees that work for the company? Was Deepak Chopra qualified to be a part of that decision?

Freeport is another example where a board of directors failed to do its job properly, sitting idly by (and getting rich) while letting an overcompensated CEO take the company down. The mining company decided to get into oil at the height of the commodity boom by taking on massive amounts of debt to the tune of $20 billion. The chairman, James Moffett, argued for the purchase of two companies: Plains Exploration and Production and McMoRan Exploration, where he was also the CEO. The conflicts of interest are staggering, as he stood to get rich from buying a company he had a large stake in. Where was the board to voice these concerns?

Freeport’s chief executive, Richard Adkerson, was McMoRan’s co-chairman. Nine Freeport directors owned stock in McMoRan totaling about 6 percent of the shares. Freeport agreed to buy McMoRan for $2.1 billion — a 74 percent premium over its market price before the deal was struck. Mr. Moffett himself was paid $73 million.

Moreover, Plains owned 31 percent of McMoRan, enough to block any deal. Freeport eliminated that possibility when it bought Plains. And James Flores, Plains’s chief executive, who now runs Freeport’s oil and gas operations, was also a director of McMoRan. He made $200 million on the deal.

In addition to the $73 million, after Moffett was “let go”, he received another $79.4 million in severance. The company’s market capitalization had fallen to as low as $4bn and is now $13.08B, far below its debt obligations.

Not all companies face such dramatic ends. But the questions remain: how can boards of directors do a better job for the company and the employees, and how can CEO compensation be drastically changed?

 


Remembering that People are People

It is sometimes too easy to be jaded and cynical, and to write people off as merely a product of their affiliations and past lives. This especially applies to public figures and how we think about them. When I say easy, I mean cognitively easy: we think of a person and what they stand for in a way that challenges our world view the least and fits neatly into a narrative we had already started writing. Rewriting, or adding digressions and nuance to the story, is too time-consuming. I am as guilty of this as anyone. In many cases, the judgement is actually correct, and more often than not it is borne out by an abundance of evidence.

But every so often, I need to be reminded that people are people, and that they can be complex and difficult to label. Their motives are not so simple, and not so impure as we might have first thought. This realization doesn’t automatically render individuals great, nor does it wipe the slate clean. But it is an antidote to thinking of the world as a static and stark chess board, where everyone plays a single role for a single side, never changing.

The first example is Neel Kashkari, the Goldman Sachs banker picked by Treasury secretary Hank Paulson (and former Goldman Sachs banker himself) to “administer” the Troubled Asset Relief Program (more commonly known as TARP). It was never clear to me what his job was precisely, or whether he was particularly good or bad at it: but members of Congress were not happy with it or the turn TARP had taken after being passed under the spectre of a harsh financial collapse. Recall the famous hearings, where Kashkari was asked by Rep. Cummings: “Is Kashkari a chump?”


After going back to the world of finance and working for Pimco, he then ran for governor against Jerry Brown in California (we know the outcome there). His ads made him sound like any other ostensibly fiscally conservative Republican. Low taxes, less government, etc. Nothing remarkable, interesting, or particularly thoughtful.

Then, surprisingly, he was picked as the next head of the Federal Reserve Bank of Minneapolis. I don’t think he was qualified or should have been picked for that position, in which he will occasionally be asked to vote on monetary policy that impacts the entire economy, but I’ll leave that for others: Brad DeLong and others summarize the issues and his views well.

But then, in February, he gave his first major speech. It was all about ending Too Big To Fail (TBTF). Here are his policy prescriptions:

  • Breaking up large banks into smaller, less connected, less important entities.
  • Turning large banks into public utilities by forcing them to hold so much capital that they virtually can’t fail (with regulation akin to that of a nuclear power plant).
  • Taxing leverage throughout the financial system to reduce systemic risks wherever they lie.

Sounds like the Bernie Sanders plan. It’s not clear that breaking up large banks into smaller banks is a good solution (nor do I understand how one enforces them to be less connected than if they were part of a big entity with a large capital base). Nor do I think TBTF is something you can regulate away. The tax on leverage is probably a good idea (a financial transaction tax), and large banks have been forced, thanks to Basel III and Dodd-Frank, to hold significantly more capital. Stress tests carried out by the Treasury have also pushed towards this.

But all of this is a long way of saying I was surprised by the speech. Probably it went into territory that’s not really standard (and maybe not appropriate) of a newly-appointed Federal Reserve Bank president, at a time when there’s unprecedented scrutiny by outsiders to politicize the Fed. And the usual caveats apply, especially when dealing with an aspiring politician: this could simply be an attempt to change his public perception rather than a sincere belief in the kind of financial regulation he talks about. Only time will tell. But it certainly did not sound like a Wall Street banker.

The second example is Tom Wheeler, FCC chairman since 2013. Ars Technica had an in-depth interview entitled “How a former lobbyist became the broadband industry’s worst nightmare.” Tom Wheeler had served as a chief lobbyist for the cable and telecommunications industries prior to his appointment. Few had expected him to be anything but a friend to those industries, and progressive were unhappy with his nomination.

Fast forward to 2016, and he has largely acted as an opponent to the telecommunications and cable industries in their ambitions to consolidate and monopolize. Famously, he led the charge to destroy the proposed merger between Time Warner and Comcast. Most recently, he has pushed for rules requiring cable companies to conform to a single standard in cable boxes, thus allowing customers to purchase rather than lease the boxes at extraordinary rates (to the tune of $20 billion annually, or $231 for the average customer). The entire interview is worth reading. There is even a reference to The Master Switch by Tim Wu, a definitive text on monopolies in the information industries of past and present from the man who coined the term net neutrality.

Wheeler’s tenure has been consequential. But looking at his resume, you might have thought he would reach different decisions on a number of important issues. Sometimes people can surprise you. It’s worth remembering that.


The billionaire’s dangerous ego

Below, I’ll list 4 political positions. Maybe you can give me the person behind the positions:

  • Pro-choice
  • Believes in man-made climate change
  • Supports gun control
  • Supports path to citizenship for law-abiding illegal immigrants

“Hey,” you’re thinking. “That sounds a lot like Obama. Or Hillary Clinton. Or Bernie Sanders.” You’d be right. It also sounds a lot like former New York City mayor Michael Bloomberg. But this is admittedly an incomplete list.

Suppose you’re a voter who agrees with those 4 positions. But somehow, Bernie Sanders and Hillary Clinton just aren’t cutting it as candidates on all the issues. In particular, you wish that they’d take it easier on Wall Street banks and that they’d try to cut Social Security benefits.

Oh? Such a voter doesn’t exist? Are you sure? Because I just read that Michael Bloomberg is considering a White House run.

The billionaire former mayor believes that he is the answer to the country’s problems, “sensing an opening.” Despite largely having liberal positions and thus making himself unpalatable to any conservative voter, he believes that he, through his “pragmatic” and “results-oriented” approach (terms to be investigated later), is the right man for the job. The few areas of disagreement with liberals, like the regulation of Wall Street and the future of Social Security, show him as out of touch and beholden to bad ideas endorsed by Washington insiders.

Speaking at a financial industry trade group conference in 2014, Bloomberg claimed that the harsh regulations on Wall Street were detrimental to Main Street. He noted, however, that: “But they keep creating new products and you know the earnings of these big banks…they’re still making a lot of money.” Typical of Bloomberg, he did not actually debate the necessity of Dodd-Frank, but he argued that that it should have been drafted by “experts” rather than allow Congress to write it. He applied the same logic to Obamacare. It seems he is free to live in a world where a president introduces a piece of legislation and gets it passed without any substantial changes, when virtually every Republican was opposed to both Dodd-Frank and the Affordable Care Act. Furthermore, Obamacare and Dodd-Frank did incorporate ideas of experts. For any healthcare legislation to expand insurance without changing the system to single-payer, it requires exactly what Obamacare put into law: a requirement that people purchase insurance, a subsidy so that they may purchase the insurance, and denying insurance companies the right to deny coverage based on pre-existing conditions. It was based on another model, which again was designed by experts in healthcare: see Jonathan Gruber and Mitt Romney in Massachusetts.

It’s also not clear what Bloomberg would change with Dodd-Frank. There is no doubt that it is an imperfect bill, but like Obamacare, it is a product of realistic constraints: no Republican (save for Scott Brown for Dodd-Frank, helping the bill pass 60-39 after watering it down) would support it, and even many moderate Democrats were intent on watering down the bill.

Bloomberg’s criticisms are short on substance, but implicit in them is the dangerous idea he has fully bought into: I could do it better, because I’m me. There’s ignorance of constraints and a willingness to believe that if he just was able to talk to Congress unlike that dastardly Obama, he would get things done.

This is similar to the “Obama should play golf with Boehner more in order to pass legislation despite serious ideological differences” theory espoused by many “centrists”: in Bloomberg’s mind, there’s no serious disagreement on the big issues of the day, but instead the polarization is just a result of leaders not being “pragmatic” and “results-oriented”. This could not be further from the truth.

Michael Bloomberg’s entire third term is a testament to his belief in himself and no one else. Amidst the financial crisis and the economic downturn, he did not feel the city could be governed by anyone else, and he used the extraordinary circumstances to push the New York City Council to change its term limits without a public referendum.

For whatever reason, some people buy into the “centrist” line of thinking. Krugman writes in his recent blog post, How To Make Donald Trump President:

Step 2: Michael Bloomberg decides to save the country by entering the race as a supposed alternative to the two extremes [. . .] Step 3: Some Democrats defect to Bloomberg, because they actually listen to those centrist pundits. Hardly any Republicans do

In other words, a presidential run would not be enough to get anywhere close to winning, but it would be enough to deprive the Democratic candidate of a victory, thus giving Trump or Cruz (or whoever) the presidency.

The party system may have its flaws, but it does give voters the chance to debate for over a year the merits of individual candidates before nominating them and then voting for them in the general election. The problem with a rich independent candidate is he has none of those constraints: he runs much later than everyone else, because he can afford to. Credit to Trump: he went through the process, whereas Bloomberg seems intent on skipping it.

There are many reasons to dislike Bloomberg and oppose his idea of a White House run based purely on his mayoral record: his response to Occupy Wall Street, his catering to big banks, and his catering to rich foreigners buying up empty properties in NYC as essentially money-laundering schemes (quote: “If we could get every billionaire around the world to move here, it would be a godsend.”). There’s his company, Bloomberg  L.P., which pulled negative stories on China’s government in order to continue selling profitable terminal subscriptions there (recently, there were rumors that the Financial Times would not be sold to Bloomberg for fear of losing editorial independence).

There’s also the fact that the same guy thinking about running for president in the United States was also thinking about running for mayor of London just last year. And, in floating the idea of a presidential bid, he doesn’t even have the courage to do it himself. He’s letting his aides and insiders test the waters instead. He probably thought the response would be positive.

But more than anything, the reason to dislike Bloomberg and oppose his potential bid is his ego, which is fundamentally similar to Trump’s. Trump is a self-proclaimed dealmaker (synonyms: “results-oriented”, “pragmatic”). Details aren’t so important, but he’ll get it done, whatever “it” is. The issues are almost of a secondary order. Bloomberg doesn’t even realize his run would hand the White House to another billionaire with opposing views on many of the issues he claims to care about, like gun control.

The lack of self-awareness amongst billionaires like Bloomberg is scary. I imagine one begins to think he has a magic touch, and there are few in the inner circle willing to contradict this belief. Hopefully the negative response to Bloomberg’s possible run pierces his bubble.


41: What does a former president owe?

A month or two ago, Jon Meacham released his biography of George HW Bush (41). Accompanying that book was a fascinating New York Times article, which detailed some of the most newsworthy aspects of the biography. The most prominent bit was 41’s criticism of George W. Bush’s (43) cabinet, targeting Dick Cheney and Don Rumsfeld in particular. Here is an excerpt:

Mr. Bush said that Mr. Cheney had built “his own empire” and asserted too much “hard-line” influence within George W. Bush’s White House in pushing for the use of force around the world. Mr. Rumsfeld, the elder Mr. Bush said, was an “arrogant fellow” who could not see how others thought and “served the president badly.”

I got angry when I read the article. But not because I disagreed with the assessment. Anyone who was paying attention during the lead-up to the Iraq War and its aftermath was probably aware of these things. No, 41 is spot-on in his criticism, even as he shies away from directly criticizing his son. I got angry because of this:

The younger Mr. Bush was also shown a transcript of his father’s remarks. “He certainly never expressed that opinion to me, either during the presidency or after,” Mr. Bush told Mr. Meacham. “I valued Dick’s advice, but he was one of a number of my advisers I consulted, depending on the issue.”

His father, he added, “would never say to me: ‘Hey, you need to rein in Cheney. He’s ruining your administration.’ It would be out of character for him to do that. And in any event, I disagree with his characterization of what was going on. I made the decisions. This was my philosophy.”

As for his “hot rhetoric,” the younger Mr. Bush said: “It is true that my rhetoric could get pretty strong and that may have bothered some people — obviously it did, including Dad, though he never mentioned it.”

Quote: “He never mentioned it.

These criticisms are largely worthless now. They are largely part of a battle for history and how it judges the men who served in office. 41 has decided it’s time to let his true feelings be known about people who he felt served the country badly, knowing the level of damage done to the country in the aftermath of the Iraq War. And his true feelings might have actually meant something in 2002, or 2003, or even in the few years after while the targets of his criticism were still in positions of power. Perhaps it’s with an eye for history that 41 “has seen his reputation rise again with the passage of time” and has now decided to speak up more bluntly.

I can’t help but feel angry that these criticisms were not at least spoken directly to his son, who would conceivably be open to getting advice from his father, a former president with significant foreign policy expertise as president, vice president and CIA director. But he never tried. “He never mentioned it.” It was his son’s administration, in the end, and 41 was going to leave it at that. Still, the thought keeps coming back to me: there are issues of family, and I can understand publicly supporting your son in his presidency. But as a former president, and someone who had offered up his life to his country in World War II, it’s difficult to fathom that 41 would not have even broached the topic privately.

I worry about “Meacham’s largely admiring biography,” in this context and in others, as I fear it will appreciate public service in a cloud of nostalgia without holding it fully accountable. Another recent article details 41’s reactions to the current battle for the Republican presidential nomination:

No one, it seems, is more perplexed than the family patriarch by the race, and by what the Republican Party has become in its embrace of anti-establishment outsiders, especially the sometimes rude Mr. Trump.

Yet his son George W. Bush, and to a lesser extent he himself (both as presidential candidate and vice president to Ronald Reagan), benefited from tactics that are now being used openly by the current crop of anti-establishment candidates. Paul Krugman writes in a recent column that “this ugliness has been empowered by the very establishments that now act so horrified at the seemingly sudden turn of events [. . .] [I]n the U.S. it’s the cynicism of Republicans who summoned up prejudice to support their electoral prospects.”

Quoting the NYT article: 

the elder Mr. Bush was fuming at the news of the day: Mr. Trump had belittled Sen. John McCain of Arizona for being taken prisoner in Vietnam.

“I can’t understand how somebody could say that and still be taken seriously,” said Mr. Bush

Was it not his own son who stood by silently as outside groups assaulted John Kerry’s record as a war hero in his 2004 re-election campaign? And it was George W. Bush and his advisor Karl Rove who had mastered the tactic of race-baiting (or letting others do the race-baiting for you) in the nomination battle against John McCain in 2000. There appears to be no direct proof of their involvement, but in South Carolina there was an orchestrated campaign to tell primary voters that John McCain had fathered a black baby out of wedlock. 

There are fewer differences between Trump and the other Republican candidates than one might expect based on the elder Bush’s outrage. His son Jeb, after all, is proposing massive tax cuts (which as a corollary would require massive cuts to the safety net), just like Trump’s tax plan. The party isn’t what it used to be, but that’s thanks to George W. Bush and the Republicans that came before him. George HW Bush is not so innocent in this regard either.
Sources:

PETER BAKER. New York Times, Nov. 4, 2015, “Elder Bush Says His Son Was Served Badly by Aides.”

JONATHAN MARTIN and MATT FLEGENHEIMER. New York Times, Oct. 24, 2015, “Bush at 91: Irritated and Invigorated by ’16 Race.”

PAUL KRUGMAN. New York Times, Dec. 11, 2015, “Empowering the Ugliness.”