Money (Part 2)

(This is the second of two parts.)

When Trump and Harris talk about the “economy” at next Tuesday’s debate, they will be trying to articulate how they will alleviate the widespread anxiety about the cost of every day stuff like food, gas, health care and housing.

To economists these are known as microeconomic factors, and they are hard to make out from the 30,000-foot level of Air Force One, let alone fix.

One policy idea that periodically surfaces — price controls — was tried in the Nixon years and proved to be a disaster. They were a political success in the short term, but an economic catastrophe for bringing on the 1973–1975 recession, stagflation, and the instability of floating currencies.

Executive branch policy operates much more on the macroeconomic level, and here too their influence is debatable. Presidents can’t set interest rates — the Federal Reserve handles that. Presidents also cannot create jobs or boost productivity in the private sector. 

So what about inflation? That’s a big issue right now.

An excellent analysis is available from Kiplinger called, “Can a President Fix Inflation?” The short answer is “not really.”

They can do something, however, about government spending, which contributes to inflation, job growth, and innovation. But of course Congress has to go along with the White House, which can be a major problem as we’ve seen with repeated threats by Republicans since the Newt Gingrich era to precipitate government shutdowns in disputes over the size of the federal budget.

Of course, size matters when it comes to the federal budget. Government spending is an important factor in the overall economy. Sometimes it can even help pull the country out of a recession, as during the Obama administration. But that, in turn, may boost both the rate of inflation and the size of the federal deficit.

Another issue that Republicans and Democrats usually end up differing over is whether government regulation helps or hinders the economy, which is an exceedingly complicated matter best characterized by the phrase, “it does both.” 

Smart regulation improves economic performance in the long term by addressing some of the externalities, like damage to the environment, climate change, the mental health crisis, addiction, homelessness and gross inequities in personal wealth that result from unfettered free-market capitalism.

Only when these “social costs” are factored in can we accurately assess the full profit/loss balance that activities like mining, drilling and fracking have on our society. Suffice it to say the benefits go to the energy companies while the rest us pick up the tab.

Then again, our energy needs are growing so unless and until clean energy technologies become standard, that tab is unsustainable. 

Voters should especially beware of candidates who suggest “anti-regulation” proposals, because they inevitably seek to cut the budgets for the EPA, FDA, CPSC, OSHA, etc. — the very agencies that address the most critical externalities. (Check out Trump’s Project 2025.)

So finally, of course, we come to the main battleground between the parties — tax policy. I can’t get into in in detail here, other to say that it always seems to boil down to a debate between “trickle-down” economics vs. “tax the rich.” Take your pick. The former increases inequality, the latter tries to reduce it. A reasonable tax policy cuts taxes for the middle class, enforces higher tax on the very rich, and does both of these things while not stifling innovation. After all, small business is where job growth happens.

From a business perspective, trying to manage the U.S. government is like serving as CEO of the largest, most chaotic corporation in history, with 330 million people, half of whom work, that generates $27 trillion a year, by far the most of any nation on earth. And that corporation is in one hell of a complicated, inefficient mess by any impartial analysis. In this context, Trump’s idea for an “efficiency czar” or some such job is intriguing, but alas, his choice for the guy to do job — Elon Musk — is downright frightening.

Consider what Musk has done to Twitter (X).

I’ll close with a parting thought. If you feel yourself starting to fall asleep during the upcoming debate when the subject of the economy comes up, try to shake yourself back awake because James Carville was right.

It’s the economy, stupid! 

HEADLINES:

• Government Regulations: Do They Help Businesses? (Investopedia)

• Can a President Fix Inflation? (Kiplinger)

• Does the President Have Control Over Inflation? (New Yorker)

• What Are Externalities? (IMF)

• Project 2025 Explained (ACLU)

• Sluggish US jobs report clears the way for Federal Reserve to cut interest rates (AP)

• Elon Musk May Finally Face Consequences for Wrecking Twitter (TNR)

• IRS has collected $1.3 billion from wealthy taxpayers by ramping up enforcement (CNN)

• New poll shows Florida, Texas within margin of error in Harris-Trump race (The Hill)

• How the electorate has changed in key states and what it could mean this election (NPR)

• Dick Cheney says he’s voting for Harris in November and Trump ‘can never be trusted with power again’ (CNN)

• The decline of local news has become a campaign problem (CJR)

• U.S. news leaders sound alarm on press freedom (Axios)

• Harris team worried she’ll be ‘handcuffed’ by debate rules set by Biden (Politico)

• Trump hush money sentencing postponed past Election Day, judge rules (CNBC)

• Why economists and voters clash over immigration (Economist)

• For second year in a row, most U.S. cities see declines in homicides, violent crime (WP)

• Georgia high school shooting suspect referenced Parkland massacre in writings found in his bedroom, source says (CNN)

• JD Vance calls reality of school shootings a bleak ‘fact of life’ (WP)

• School shootings are a sad "fact of life," so the country should harden security to prevent more carnage, Republican vice presidential nominee JD Vance said Thursday. "If these psychos are going to go after our kids we’ve got to be prepared for it," he added. [AP]

• Texas Attorney General Ken Paxton (R) is using search warrants, undercover operations and more to target racial minorities and sideline political rivals, organizers said. [HuffPost]

• American-Turkish woman shot dead at anti-settler protest in West Bank (Guardian)

• Afghan women raise their voices in song in online protests against Taliban's bid to silence them (CBS)

• Berkeley Non-Profit Works To Counter AI Election Disinformation (Patch)

• Ilya Sutskever's AI startup raises more than $1 billion (Axios)

• Meet the new, most powerful open source AI model in the world: HyperWrite’s Reflection 70B (VentureBeat)

• Amazon’s Alexa favored Harris over Trump after AI upgrade (WP)

• How Machines Learned to Discover Drugs (New Yorker)

• OpenAI, Still Haunted by Its Chaotic Past, Is Trying to Grow Up (NYT)

• Aides Concerned Trump’s Mental Health Declining After President Admits He May Not Be Omnipotent Living God (The Onion)

Money

 Both candidates for President are unveiling their economic plans in advance of next week’s debate, which may be the only time they meet in person during this campaign.

They’ve never met before and very probably hope to never meet again.

Whenever any politician talks about “the economy” and how they are going to manage it, it’s instructive to check as to whether they have any qualifications to do so. For starters, as far as I have been able to determine, we’ve only had a handful of Presidents who studied economics in college and just three with degrees in the “dismal science.” 

Our best-educated President by far in these matters was George H.W. Bush who had a B.A. in economics from Yale, as well as an MBA from Harvard. 

He presided over the negotiation and signing of NAFTA, which Donald Trump calls the “worst trade deal ever.” During his Presidency, there was an economic downturn affecting much of the Western world. The impacts of that recession contributed directly to Bush’s loss in the 1992 election to Bill Clinton. 

This was the race when James Carville issued his famous strategic advice, “It’s the economy, stupid!” to Clinton’s campaign team, a message that was timely and oh so true.

Another President who held a B.A. in economics was Gerald Ford, who graduated from the University of Michigan, where he was primarily known as a football star. So how did Ford do? He presided over the worst economy in the four decades since the Great Depression, with growing inflation and negative growth.

The third President on this list was Donald Trump , who received his B.S. in economics from the University of Pennsylvania. Here’s a fairly neutral summary of his performance while President from our friends at Wikipedia: 

“Despite a campaign promise to eliminate the national debt in eight years, Trump approved large increases in government spending and the 2017 tax cut. As a result, the federal budget deficit increased by almost 50 percent, to nearly $1 trillion in 2019. Under Trump, the U.S. national debt increased by 39 percent, reaching $27.75 trillion by the end of his term, and the U.S. debt-to-GDP ratio hit a post-World War II high. Trump is the only modern U.S. president to leave office with a smaller workforce than when he took office, by 3 million people.”

In order to be fair to these three guys, we have to note that what happened in the economy under the Bush, Ford and Trump administrations was not entirely due to things they did that were “right” or “wrong.” Much more complex factors beyond their control were in play, particularly increasing globalization of our national economy and rapid technological advances, and in Trump’s case, Covid.

In addition, all Presidents are subject to the incessant rhythm of the business cycles, which go up and down as endlessly as the tides. The dirty secret here is Presidents do not and cannot control the economy. It controls them.

(Ed of part one. Part two tomorrow.)

HEADLINES: 

• Jobs Report Today: Economy Added 142,000 Jobs in August; Stocks Open Slightly Higher (WSJ)

• August jobs report set to be the 'pivotal' factor in the size of the Fed's coming interest rate cut (Yahoo) 

• U.S. Jobs Report Shows Hiring Has Shifted Into Lower Gear (NYT)

• Here’s what Harris’ plan to tax unrealized investment gains means for the wealthiest Americans (CNBC)

• Harris Tells the Business Community: I’m Friendlier Than Biden (NYT)

• Donald Trump again attacked ABC News and its veteran anchors ahead of next week's presidential debate, calling the network the "worst" and "meanest" on television. [HuffPost]

• Trump says Musk could head 'government efficiency' force (BBC)

• Economist Eugene Fama: ‘Efficient markets is a hypothesis. It’s not reality’ (Financial Times)

• Trump Bombs His Big Speech Debuting Elon Musk’s Commission (New York)

• Trump lawyers spar with judge over pace of D.C. election interference case (WP)

• Right-wing influencers were duped to work for covert Russian operation, US says (AP)

• US Treasury chief Yellen has no comment on U.S. Steel-Nippon review (Reuters)

• GOP lawsuits set the stage for state challenges if Trump loses the election (AP)

• How America’s Baby Bust Became an Election Issue (WSJ)

• The father of the Georgia school shooting suspect has been arrested and charged, authorities say (CNN)

• Bad information is a grave threat to China’s economy (Economist)

• Hunter Biden enters guilty plea in federal tax case, avoiding a trial (NBC)

• Parkinson’s may begin in the gut, study says, adding to growing evidence (WP)

• Heat wave intensifies from Phoenix to LA, north to Seattle (Axios)

• Desperate Bid to Save J.F.K. Shown in Resurfaced Film (NYT)

• US military draws up plans for collapse of Gaza ceasefire talks (Financial Times)

• Scientists use food dye found in Doritos to make see-through mice (WP)

• US, Britain, EU to sign first international AI treaty (Reuters)

• Google tests its ‘Ask Photos’ AI assistant that understands what’s in your pictures (Verge)

• Mushroom learns to crawl after being given robot body (Independent)

• AI's solution to the 'cocktail party problem' used in court (BBC)

• AI gadgets have been a bust so far. Apple aims to change that (CNBC)

• ‘He was in mystic delirium’: was this hermit mathematician a forgotten genius whose ideas could transform AI – or a lonely madman? (Guardian)

• Rabbit Who Got Caught By Hawk Honestly Relieved It Can Finally Relax Now (The Onion)

As Goes Omaha...So Goes The Nation

 While most of us would probably like to think that our country’s electoral map is vastly different from what it looked like in 1860 on the eve of the Civil War, the fact is that politically it really hasn’t changed much at all. 

It looks different (below) because the two major parties have exchanged places and philosophies such that now their colors have completely reversed positions on the map. But though what was red (Democrat) is now blue and what was blue (Republican) is now red, it’s still fundamentally a matter of North vs. South. 

The country is riven between the entrenched liberal majorities in the Democratic enclaves vs. the entrenched conservative majorities in the Republican enclaves.

On many levels, unfortunately, we have never stopped fighting the Civil War. It’s worth remembering that even in 1860, with the states so divided they were about to take up arms against each other, there were many in the North who did not oppose slavery or states rights — the two main issues precipitating the conflict.

Nor was everyone in the South pro-slavery or anti-Union. It’s just that when war breaks out, you have to choose sides lest you get caught in the crossfire. The point is that all of the states contained significant minority party populations, even if the majorities were firmly in charge of their state capitol — and therefore their electoral votes.

Of course, that is exactly what our imperfect democracy is designed to preserve — the rights of minorities — as well as providing a peaceful alternative to open warfare over our differences, no matter how deep. Theoretically, we should be able to solve these disagreements gracefully through fair and free elections. But that theory may be as much at risk now as at any time since the Civil War era.

Which brings us to this year’s election. The current electoral map is more or less locked in place with mostly deep blue or deep red majorities, just as in 1860, except for the seven swing states. Three of those — Pennsylvania, Michigan and Wisconsin — make up the “blue wall” states in the North. The other four —Georgia, Arizona, Nevada and North Carolina — are within what is broadly considered politically as the South.

Should Harris win the “blue wall” and Trump the other four, which is an entirely plausible outcome, the two candidates would end up in a deadlock of 269 electoral votes, each one short of the total needed for victory. 

But there is one more wrinkle and it probably has something to do with why Tim Walz is on the Democratic ticket.

In the case of an electoral tie, the decision of who wins would be tossed over to the House of Representatives, which is narrowly controlled by the Republicans. But that would only happen if Trump can claim all 5 of Nebraska’s electoral votes, including the state’s 2nd District (Omaha and its suburbs) which has one of those votes.

Unlike most states, which have a winner-take-all allocation system, Nebraska and Maine allocate their electoral votes by district. Tim Walz grew up in a small Nebraska town deep in Trump country. In a razor-close election, Democrats are hoping that might make a difference.

Should Harris and Walz win the so-called “blue dot” 2nd district, that would break the tie nationally and they would prevail by the slimmest of margins, 270-268, making them the nation’s next President and Vice-President. 

So how is the 2nd District leaning? According to the polling site 538, Harris currently holds a narrow five-point lead over Trump, among registered voters in the district, despite trailing Trump by 17 points statewide. Her lead is subject to change, of course, and is probably best therefore viewed as well within the poll’s current margin of error. 

A Harris victory in November would be in many ways similar to Lincoln’s in 1860, as the country seems almost as deeply divided now as it was back then. Alas, lest we forget, 164 years ago Lincoln’s victory did not prevent , but helped provoke, the outbreak of war..

***

Yesterday’s tragic school shooting in Georgia that claimed four lives and injured nine more, was the 45th already this year in the U.S. They are occurring at the rate of more than one per week. It is an outrage and we need to hold our leaders accountable for banning assault weapons entirely. This will require Congress and the President to take action. Kamala Harris has pledged to support that effort; Donald Trump opposes it.

Additional reading.

HEADLINES:

• How Trump and Harris differ on the economy (AP)

• Kamala Harris now leads in US polls but state-level data puts race on knife-edge (Guardian)

• Kamala Harris Pares Back Biden’s Capital-Gains Tax Proposal (WSJ)

• Georgia school shooting live updates: Two students, two teachers killed at Apalachee High School, 14-year-old in custody (NBC)

• As Israel’s Rifts Widen, Netanyahu Remains Defiant (NYT)

• As U.S. readies last cease-fire push, Netanyahu digs in on border demands (WP)

• The main United Nations agency for Palestinians said it was making good progress in rolling out a polio vaccine to children in Gaza, but called for a permanent ceasefire to ease humanitarian suffering.  (Reuters)

• US accuses Russia of election disinformation campaigns. What to know (Al Jazeera)

• Biden administration hits Russia with sanctions over efforts to manipulate U.S. opinion ahead of the election (NBC)

• Russia Unleashes New Strikes as Ukraine Prepares for Cabinet Shake-Up (NYT)

• Heat wave scorches Southwest, West as wildfire concerns increase (Axios)

• Elon Musk’s Starlink Agrees to Block the X Social Network in Brazil (NYT)

• An au pair, a husband’s affair and a double homicide (WP)

• How inflation fell without deep recessions (Economist)

• Titanic divers find long-sought statue, signs of accelerating decay (WP)

• China Services Expansion Cools in New Sign of Economic Weakness (Bloomberg)

• China’s Campaign to Infiltrate America Is Worse Than You Thought (TNR)

• China Needs More Factory Robots. Can It Build Its Own? (WSJ)

• Few have tried OpenAI’s Google killer. Here’s what they think. (WP)

• ‘No Way To Prevent This,’ Says Only Nation Where This Regularly Happens (The Onion)

A Hero Retires

When you’re my age, the news of peers retiring is part of the constant reminders of, well, your age, as well as how well we've all used our time on this planet. We’ve all reached that stage of life when if there are going to tributes, it’s time for that to happen.

And today I can link to a well-deserved profile of Michel Blecker in the San Francisco Chronicle. Michael, a veteran of the Vietnam War, has been the guiding light of the non-profit Sword to Plowshares for the past 42 years. This organization, which provides services to military veterans, has done enormous good to those who need our care once they come home survivors of war. 

Nancy Pelosi speaks for all of us who know him when she calls Michael “angelic” and “an All-American hero.”

He also happens to be a personal friend. Our kids grew up only blocks apart on Bernal Hill and attended the same schools. They became close friends, as did the four of us who are their parents. Michael and Carol were a steady source of emotional support during my topsy-turvy personal life, while each in their own ways were leaders in our community. 

Always modest and self-deprecating, Michael exemplifies how a person can quietly devote his or her life to the greater good. And we are all immeasurably better off as a result.

Michael will remain in an emeritus capacity at Swords.

• HEADLINES: 

  • New election poll shows low-income voters flocking to Kamala Harris over Donald Trump (USA Today)

  • Kamala Harris Takes Lead Against Donald Trump in Conservative Poll (Newsweek)

  • Harris has neutralized Trump's edge on the economy among Hispanic voters, and her 13 percentage point lead within that group reflects the fact they vastly prefer her approach to healthcare and climate change, Reuters/Ipsos polling shows. (Reuters)

  • How Elon Musk’s endorsement of Trump may have backfired (NBC)

  • John McCain’s son decries Trump appearance at Arlington as a ‘violation’ that turned cemetery into campaign backdrop (CNN)

  • Is US economy better or worse now than under Trump? (BBC)

  • America’s New Climate Delusion (Atlantic)

  • Former aide to New York governor charged with acting as an agent of the Chinese government (CNN)

  • How China extended its repression into an American city (WP)

  • Why It’s So Hard for China to Fix Its Ailing Economy (NYT)

  • America Is Losing Southeast Asia (Foreign Affairs)

  • India’s growing reliance on China poses challenge for U.S. trade strategy (WP)

  • Russian missile strike on Ukraine military college kills dozens, Kyiv says (ABC)

  • OpenAI, Still Haunted by Its Chaotic Past, Is Trying to Grow Up (NYT)

  • Robot waiters in Kenya create buzz, and concerns about what it means for human labor (VOA)

  • OpenAI weighs changes to corporate structure amid latest funding talks (Financial Times)

  • Apple Rally Fueled by AI Promises Approaches a Crucial Test (Bloomberg)

  • Will Automation Replace Jobs? Port Workers May Strike Over It. (NYT)

  • Woman Figures It Easier To Just Get New One After Forgetting Boyfriend In Uber (The Onion)

Tuesday Links

HEADLINES: 

• Dozens killed in Russian strike on military educational facility in central Ukraine (CNN)

• Israelis erupt in protest to demand a cease-fire (AP)

• Israel war on Gaza updates: No deal means captives in ‘coffins’, says Hamas (Al Jazeera)

• Netanyahu pushes back against new pressure over Gaza and hostages: ‘No one will preach to me’ (AP)

• US soldiers assaulted in western Turkey (Reuters)

• As the far right rises in eastern Germany, companies struggle to attract skilled foreign workers (AP)

• US seizes Venezuela President Nicolas Maduro’s airplane in the Dominican Republic (CNN)

• Telegram Turmoil Threatens Dominant Chronicle of the War in Ukraine (NYT)

• This week marks the start of the vital post-Labor Day sprint to the US election. Vice President Kamala Harris and former President Donald Trump are expected to ramp up outreach to voters. (Reuters)

• Harris puts her Biden balancing act on display in Pennsylvania (Politico)

• Harris opposes US Steel’s sale to a Japanese firm during joint Pennsylvania event with Biden (AP)

• With his 1776 Commission on patriotism, Trump helped spark a culture war (WP)

• The Power of Thinking Like a Poker Player (New Yorker)

• Musk relied on investors to buy Twitter, now X, in 2022. Since then, his and his partners’ stake has shed $24 billion in value— partly because advertisers have fled the platform. (WP)

• How a Leading Chain of Psychiatric Hospitals Traps Patients (NYT)

• Behind Matthew Perry’s Deadly Trade With L.A.’s ‘Ketamine Queen’ (WSJ)

• Migrant farm worker deaths show cost of the 'American Dream' (BBC)

• Humans caused climate change. Amid the suffering, now they must solve it
  (AP)

• Afghan women erased by the Taliban as the international community looks on (France24)

• Is OpenAI worth $100B? (TechCrunch)

• Why musicians are smart to embrace AI (WP)

• Realtor Trying To Pass Off Apartment’s Window Box Planter As Something Called ‘Romanian Balcony’ (The Onion)

 

As They Circle Warily

Labor Day, the beginning of summer, as we joke in Northern California, and the end of it for most everyone else. Also, this is traditionally when the political campaigns are expected to really kick into high gear.

But this year, those campaigns have been going at warp speed for some time now. And now that there are roughly two months until Election Day, the candidates for President are locked in essentially a dead heat.

Nationally, according to the polling site 538, Kamala Harris is 3.2 percentage points ahead of Donald Trump, close to where statisticians believe she needs to be to be able to squeeze by in enough of the six swing states to eke out a victory in the Electoral College.

As of today, Harris is ahead in all six of the battlegrounds, by 3.2 in Wisconsin, 2.4 in Michigan, 1.2 in Pennsylvania, 0.7 in Nevada, 0.5 in Georgia, and 0.2 in Arizona. She has also pulled within 0.4 of Trump in a seventh state, North Carolina.

In a week, the candidates are scheduled to meet face-to-face for the first time ever. It may well prove to be an awkward way to get to know one another, on the debate stage with millions of voters looking on via electronic media.

He’s painted her as a dangerous radical; she’s painted him as dangerously weird. Over the coming week, both will continue to circle each other warily, like boxers in the ring.

***

Back here, the days are sunny and hot. The chickens are laying tons of eggs. The goats are grazing. The tomatoes ripen on the vine. The nearby fruit stand has raspberries deep red in color.

The sky is a certain shade of blue this morning and it looks to be getting even bluer. 

How Things Work

I first published a version of this essay three years ago. 

One of the main problems with the news business in America starts with its definition. 

We believe that the news is only what is new. That is obvious and hardly worth comment until you think of the implications.

Naturally, we all want to know what's new. What's new in the world, what's new down at the corner, what's new with those we care about. 

But by focusing our journalistic talent almost exclusively on the latest developments, our media industry largely ignores the far bigger stories, which are mainly about what is old.

Poverty is old. Racism is old. Sexism is old. The awful and endless disparity in opportunity is old. Access to education, health care, safety, security, even access to food is an old, old story.

Human rights abuses are old stories.

In addition, much of our standard news coverage focuses on the way things do not work. Whenever there is a breakdown of one system or another, that becomes news. Fires, accidents, losses, disasters and any kind of other anomaly is considered to be news.

To counter this problem at the Center for Investigative Reporting we used to have a saying that we weren't so interested in how things don't work. Rather, we were more interested in how things do work.

What we meant by that was our focus on was how power is actually exercised in the world day to day -- politically, economically, socially, culturally.

Our mission largely rested on the idea that the worst forms of corruption are those so entrenched systemically as to be virtually impossible to root out.

These are problems like internalized racism or structural inequality, historical sexism or unconscious bias of any kind.

These are not anomalies, these are the norm.

So that is why we need investigative reporters -- people who not only think outside of the box, but who can remain far enough outside of the box to see it for what it is:

A system that enriches a relative few by impoverishing the many.