Democracy and Political Ignorance

I’m in the process of reading a fascinating book on the political process, and the lack of rationality in democracies. The book is Democracy and Political Ignorance: Why Smaller Government Is Smarter, by Ilya Somin. While the American experiment in democratic government has always recognized the dangers of mob rule and populist manipulation, our understanding of these issues has sharpened in recent years as political scientists dissect the issues of education, influence, class, gender, and race on voting – the core act of creating a government.

For many Americans, there is no more apt time than now to be thinking about these issues. Well, perhaps two years ago would have been more apt.

I can tell you in advance that I find the subtitle provocative. I don’t ‘believe’ in small government or big government, I want a right-sized government for its expected function. “Smaller” government can be like “thinner” for an anorexic – you can always be thinner.

Nor is smaller government fully compatible with limited or decentralized government, other qualities that the book (and its author) advocates. The experience of the capital market is that there really is such a thing as ‘economies of scale.’ If you want make organizations smaller for the same set of functions, merge them and fire the middle management, that is the lesson of corporate raiders, outsourcers, and shared service centers.

It’s great to read a well-written book on an important topic, and even better if you don’t agree with the author 100%. I’m looking forward to sharing more of those disagreements here.

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Putin’s Inaugural gift

Aleppo.  Put a big red bow on a burning city.

It would be better (for Putin) that Donald Trump not be asked to do anything about Syria. It would be better (for Putin) if images of human suffering and massacre had safely moved off the front pages by Inauguration Day.

Of course, Donald Trump is not (yet) in the same category as Bashar Assad or Viktor Yanukovych, the deposed Ukrainian puppet that Paul Manafort used to work for. That will come after the Russian Navy has docking rights in Newport News.

It was threats to the Russian Navy’s bases in Crimea and Syria that moved Putin to action. Aleppo might not be burning if Latakia and Tartus had not been threatened. But now that the Russians have been forced to move, it is better (for Putin) if this act of the play be finished quickly.

Don’t Share This

Here are two posts I saw yesterday from Facebook friends that I know from past experience are willing to repost stuff. Read these and note the similarities. The use of emotional, but vague, pulls at the heart. The very specific request to copy and paste, not share.
This is someone test-marketing how to get around Facebook’s control of the ‘share’ button. If you know your A-B marketing theory you can see the different things being tested in these messages. Cancer/addiction, defiant/helpful, “Y’all”/Amen, computer/smartphone – getting someone to do something ‘hard’ like copy and paste requires a different stimulus in different people.

Whoever is doing this already knows the networks of people that might comply. Reading public posts they can see how fast the message spreads, and though whom. This is a new network of high-compliance people.

The next message might use addiction as the metaphor instead of the subject (We need to end our addiction to foreign intervention/government debt/Amazon Prime.) in messages targeted at those people who complied with the ‘addiction’ version. Trump’s digital team said they were testing messages in this way on Facebook in hundreds of thousands of variants.

Who might be responsible? Yes, it could be the Russians. It could be American political influencers. It could even be, if this were a movie, Facebook itself, testing how likely it was that their control of message dissemination was working. We will probably never know.

Bottom line – all memes are mental viruses. They spread because you give them mental space and they take over your voice. These messages ask you to copy and paste, under no circumstance should you comply. It makes you a rat in someone’s experiment. Don’t “like and share if you agree” either.

Whether it is fake news or just marketing spam, what you share on Facebook is like sex with thousands of people. Get those mental condoms ready.

The examples

Done. Well y’all, I’m gonna say bye-bye to some of you.. Now I’m watching the ones who will have the time to read this post until the end. This is a little test, just to see who reads and who shares without reading! If you have read everything, select “like” so i can put a thank u on ur profile! I know that 97% of you won’t broadcast this, but my friends will be the 3% that do.
Please, in honor of someone who died, or is fighting cancer, or even had cancer, copy an paste
Everyone says: ” If you need anything, don’t hesitate, I’ll be there for you “… so I’m going to make a bet, without being pessimistic, I wish ” my friends ” put this on your wall. You just have to copy (not share)!!! I want to know who I can count on… and I’m sure it will be less than 25. Write “done” in comments when you do!
In honor of too many Cancer patients, survivors, and those I love that didn’t.
I’m not saying bye-bye, just honoring cancer fighters!

And…

Today more than ever, I want the healing of addiction!! There’s a personal reason for asking everyone to put this message on their status for at least 1 hour. I know who’ll do it! Think of someone you love who has had an addiction or who is trying to fight this evil. I hope to see this on the status of all my friends. Don’t share, but copy and paste!! Hold your finger text and it will highlight, select copy, then paste it on to your own wall.
The pain hurts more than just the addict, we hate the disease not the person!!
Amen ♡

Unexpected

A former boss of mine once said that the worst word to find in the Management’s Discussion and Analysis section of a financial report is ‘unexpected’.

It appears that Donald Trump’s victory is the result of peeling off a longstanding part of the Democratic Party coalition and adding it to the existing Republican Party coalition. The Midwestern white working class has shifted into the GOP column.It will probably stay here for quite some time.

Very much will depend on how Trump governs. In business terms, Trump has done so-so with ‘going concerns’ – existing companies on a solid footing, such as the apartment empire he inherited from his father. His hubristic expansions have been the source of his multiple bankruptcies. In this sense, the US is a going concern, and what happens to it depends on what Trump decides to change.

Trump will need to staff his administration and it is not clear today whether the burn-it-down crowd will triumph over the manifest opportunities for self-aggrandizement. Why kill a cabinet position when you can put your friend in charge? Much of the fear on the right has been that Trump has no roots in conservatism, and will be willing to go with the status quo in DC.

For example, will Trump repeal Obamacare? The GOP-controlled Congress has not been able to put even symbolic bills on the President’s desk for veto, so can they do better now? I expect Trump wants something that can be called Trumpcare, and what that will be is anyone’s guess.

Globally, the burden of Trump will fall on the poor if the US retreats from any meaningful action on climate change. It will fall on the already miserable Middle East if Trump tries Bush-era aggression or plays into the culture-war rhetoric of ISIS. It will fall on the people of the former Soviet Union and Warsaw Pact as Putin is given a free hand to reassemble an empire.

Don’t worry is does get worse. The mid-term election is usually a reaction against the President, but 2018 is going to be a hard year for Democrats in the Senate, and no particular hope for swinging a lot of gerrymandered House districts. Trump will have a full four years of a Republican Congress. The only bright spot there is the coming civil war in the House.

Supreme Court? McConnell’s bet pays off. Trump gets at least one pick, Obama’s last one. I expect Harriet Miers quality choices from a man that has reveled in manipulating the legal system his entire life.

Machinists in Waukegan, no soup for you. Your job is not coming back. But is was a convenient thing for a billionaire to say, wasn’t it?

 

Trump and the next conservatism

In a recent Vox interview and American Conservative book review, conservative intellectual Samuel Goldwyn shares a bleak view of where American conservatism is going – trying to run up the down escalator of demography. The basic claims of Reaganite conservatism to care about small government, robust international intervention to spread American ideals, and preserving traditional moral schemas have failed to deliver. The last Bush administration delivered America into a profound financial crisis and two terrible wars.

What will replace “movement conservatism”? What is conservatism? While Goldman prefers a negative definition (the greatest political good is not liberty), he does refer to another conservative intellectual, Paul Gottfried. Gottfried has wrestled hard with this question and has a better, more positive answer. If the Left is all about equality, then the Right is all about the affirmation of authority, tradition, and identity.

Three affirmations

Affirmation of identity does line up well with the new Trumpian voice given to white nationalism. So let’s check that off as a clear part of the next conservatism.

Affirmation of tradition certainly lines up with supporting any kind of Christian viewpoint of America, whether shining city on a hill or Puritan Salem. So let’s expect conservatism to stick close to the core cultural center of Western tradition, the Church.

Affirmation of authority is trickier, but I expect that it will mean accepting the place of the state in life. In the days of kings, affirmation of authority meant affirming the royal right to rule. The ideal of small government is really irrelevant to this core conservative concept. In this sense, buying into  the use of government previously called ‘big’ or ‘interventionist’ can be welcomed into the next conservative platform.

So that is the next conservatism. American exceptionalism, Christian exceptionalism and friendly to government intervention. If the messaging could drop the racism and anti-urbanism of current conservatism, it could be very successful.

It never will, of course. This is basically the GOP Autopsy Report after Romney’s loss in 2012 plus throwing Grover Norquist under the bus. Nuanced acceptance of diversity and government are “can’t get there from here” positions. Sad!

 

The French way

Sorry, this article is not free to read. Basically, it says French banks are taking advantage of a difference in regulation to become dominant players in the US Treasury repo market. (The data behind the article was sourced from the OFR, my employer.) Dominant, that is, until quarter-end window dressing forces them out.
US banks have to report balance sheets every day, while the French banks only report quarterly. So the French banks play big in the repo market until the last day of the quarter, when they close out all the trades and pretend everything is fine and no, there is no gambling in this establishment.
Not that repo is gambling, it is the exact opposite – about the safest thing you could do with money. Safe, that is, until your counterparty evaporates every 90 days, or has come to rely on repo and then very inconveniently can’t access the repo market because it is quarter-end. Liquidity squeezes can take many forms.
Aligning regulatory regimes across the globe is absolutely necessary in a global capital market. Post-crisis regulatory reform still has far to go, even as people start to forget what all the shouting was about in 2008 (so long ago!) and why can’t I gamble with other people’s retirement funds?

A near-fatal case of polarization

The U.S. is suffering from a near-fatal case of polarization,

That’s the opinion of Sam Wang, over at Princeton Election Consortium.

I think he’s overstating the case but I agree its bad. How bad? This bad.

A chart showing which Congressional districts are not contested.
Polarization as lack of choice

One cause of this lack of choice is the use of gerrymandering to create safe seats for a party. If a district is drawn to contain 60% voters from one party and 40% from the other, it is pretty much a given that the 60% party will win all the time. This leads the 40% to stop running candidates it knows will lose, and that disenfranchises the 40% vote share.

The argument that gerrymandering is disenfranchisement has just moved forward in the courts.

A map of Maryland showing gerrymandered districts.
Gerrymandering – bad no matter who does it

A Federal court has ruled that these districts were drawn to favor Democratic candidates, and that should not be allowed. This is a good thing, because we are now closer to the Supreme Court deciding to ban political gerrymandering.

Our democracy is undermined by threats to the one person, one vote principle. Threats such as gerrymandering, voter suppression, and corporate influence are systemic threats and have to be opposed whether they offer a momentary advantage or not.

Single party districts are a symptom of these threats. That they have grown to 15% of all Congressional districts is shocking.

Hidden in the map of CDs is another issue – the use of ‘top 2’ primaries. In this system, the top 2 vote-getters of a single combined primary appear on the final ballot. This can lead to two candidates of the same party, as it has in Washington, California, and Louisiana.

The top 2 system, like open primaries, diminishes the importance of political parties in our electoral system. This is bad for the country. Individuals running without strong party support, but within the party-based ecosystem, are much more open to corporate influence and their policy positions are much harder to ascertain.

Returning to Sam Wang’s point, polarization has paralyzed Congress. This is mostly seen in the House, where the majority party is more concerned with a faction of bomb-throwers than with legislating. The Senate has also slowed to a glacial pace, and refused to advance appointments for votes. Rather than being a successful exercise in power, these tactics have shifted power away from Congress and towards the President.

The short term effect of the coming election will be to further polarize the Republican Party, as moderates are swept out and conservative politicians in safe seats remain in place. In contrast, the Democratic Party will have become more moderate, in order to win those same seats. In 2018, the Dems will have to become more moderate still, as they have to defend these gains and face a tough group of seats up for election in the Senate.

Polarization and one-party politics does not benefit America. It opens the political process further to corruption. We should support all efforts to create a healthy two party system.