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What Happened? Why Hillary Lost..My Take

 By Shlomo Maital

Hillary Clinton has now published her account of why she lost the presidential election: What Happened?   She admits to blame, but also blames many others, including the Russians and Comey.

     She also notes how she was unnerved at a crucial debate, when Trump lurked behind her, scowling. And a headline even praises her for ignoring Trump (see above).

   I disagree. Her is my take on an alternative scenario.

       Hillary:   turning and pointing at Trump.   “Is that the person the American people want to lead them?   Come out here, Mr. Trump, come out into the light where we can see you for what you are – a bully. You bully everyone, you bully women in particular – but Mr. Trump, you can’t bully me. I’m not afraid of you. A man who bullies, who hides in the shadows as you do in your shady business dealings, in your shady bankruptcies, in your hiding your income tax returns…   you are not worthy of the trust of the American people. We don’t like bullies. We don’t like liars. And we don’t like men who threaten women.   We are going to thump Trump on November 8! Thump Trump!”

     Hillary was the first female U.S. Presidential candidate. I recall that Israel had a woman Prime Minister, Golda Meir, who was widely believed to be a lot tougher than her male counterparts. Many criticized Hillary for her emails, her lack of human warmth, etc.   I think she would have won Ohio (and hence the election) if she had shown another quality – toughness. The irony is, Hillary is indeed tough. But the toughness was shown only in private, and rather hidden in public.   Alas!  

 

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The Future Is Definitely Not What It Used to Be:

How Distraction Becomes Destruction

By Shlomo Maital

 

Productivity Growth in the US has Been Abysmal Since 2008

   “Americans aren’t saving money the way they used to. U.S. households scaled back their pace of savings to the lowest level in nine years at the end of 2016. At the same time, wage growth slowed, according to updated government figures. The personal savings rate was 3.6 percent in the fourth quarter of 2016, the lowest reading since a 2.8 percent rate in the final three months of 2007, just as the U.S. was entering a recession.”

             – Bloomberg Business Week

       What a week. TrumpCare goes down to defeat. Trump’s new communications director nicknamed “Mooch” spews profanity. The White House Chief of Staff is fired.   LGBT’s are banned from the US armed forces.

         These are all distractions. None have any real relation to core issues troubling America’s society and economy.   When distractions take center stage, distraction becomes destruction.   Replace just two letters in ‘distraction’, and you get destruction!

         So what ARE the core issues?   Americans’ consumer confidence is at a 16-year high! So Americans are spending and borrowing. Saving has fallen. That leaves fewer resources for capital formation. But America needs more saving, not more spending and more personal debt.

       According to Neil Irwin, writing in the New York Times, productivity growth has fallen from a long-term average of 3% to less than 1%. (see graph). That is because wages haven’t risen, so it no longer pays to invest in labor-saving technology, which raises productivity.

       America’s infrastructure is crumbling, it has been for years, but there is no money to pay for rebuilding it. Trump’s plan is to have the private sector rebuild it. How likely is that?    

         No Administration has been this dystopic, dysfunctional, perhaps in history. And it’s a doom loop. The more dysfunctional it is, the less good capable people are willing to join it. Who wants to board a sinking ship?

         Suppose America was a company whose shares were listed on the stock exchange. Would you sell them short?   Many people would.   The major worry is not the economy. It is this — in the coming year, it is highly likely that there will be a major, unanticipated Black Swan crisis. Could be North Korea, Iran….Mideast… who knows?  

     What are the chances that the Trump Administration will handle it coolly, professionally, with good judgment and wisdom, in a way that benefits not only America but the whole world?

       Read Barbara Tuchman’s March of Folly (1985). Here is the definition of folly: “Government decisions that are against its own interests”.   Can you see folly in the distractions of the Trump administration?   Can you see destruction?   And can we interpret the boom in consumer spending as a no-confidence vote in the future?

How to Explain Global Warming to Donald Trump

By Shlomo Maital

                              Ocean Temperature 1880-2017

Dear President Donald Trump,

       Donald, sir, I have a problem. How do I explain global warming and climate change to someone like yourself, with the attention span just a bit less than a goldfish ?   Who does not read anything, and gets information from Fox News? To someone with untreated attention deficit disorder from childhood ?

     Hmmm.

     Here is my best shot.

     Suppose this next sentence is a Tweet, Donald. Read it as such. I mean no disrespect.

         93 per cent of the added heat generated by global warming is absorbed by the oceans; only 7 per cent, by the air.

         That’s only 23 words.   Well within 140 characters.

         Don’t believe it? Please, look at the graph. OK?

         Why is warmer ocean temperature a problem?   Why do we care that up to 30% of the Great Barrier Reef has already disappeared, because the coral can’t stand the warmer temperatures?

         Well, Donald, let’s take your own body. Uh, rephrase that. YOU take your own body. Suppose you are running a temperature. Say, two degrees. Instead of 98.6 F., 100.6 F.?   Would you go to a doctor? Feel ill? Take medicine?

         Well, the ocean is like our human bodies. It is feeling unwell. And it has been running a fever for quite a while. And it is getting worse. Your decision to leave the Paris Agreement made the oceans feel sicker.

         So while we think global warming is about, say, heat waves, it is really about destroying the ecology of our oceans and melting the ice caps.   The oceans are huge heat sinks. And they just don’t like it all, nor do the creatures who live there.

     Oops.     286 words. Too long. I’ve lost your interest.

     Can anyone help? Maybe – the Russian spooks you seem to love?

 

Marshall Plan: 70 Years

By Shlomo Maital

   Almost 70 years ago, Gen. (retired) Herbert Marshall gave the commencement address at Harvard University, on June 5, 1947. No such address then or now has had a greater impact. In his talk Marshall, a retired five-star general, offered war-torn war-destroyed Europe generous financial aid, $11-$13 b. (in today’s dollars, about $130 b., or 1.5% of the US GDP then). It was offered to Russia and Eastern Europe, too.

     There was only one condition, Marshall said. Europe has to decide how to divide the money among the member countries. If America decides, there will endless bickering.

     Marshall’s talk was broadcast on the BBC.   British foreign secretary Ernest Bevan heard it, and at once called his French counterpart. A meeting was quickly convened in Paris, a committee was launched, and the wheels were set in motion. The aid soon flowed. The rest is history. Without those resources, European recovery would have taken far far longer, and the German economic miracle would not have happened.   Never in history has a winning nation paid money to the losing nation in war (compare with the Treaty of Versailles, when Britain and France stripped Germany bare, in war reparations for World War I, and directly led to World War II and the rise of the Nazis).

     There is a key lesson in the Marshall Plan, which stands in stark contrast to modern Trumpism.   Marshall Plan indeed put “America First” – but how? By perceiving that only if Europe achieved strong economic recovery, built on market economics but with a strong social component, would Europe remain friends with America. And that was America’s vital interest.   Do you help yourself, by screwing your friends, or by helping them? It’s that simple.

     Today, economists call the Marshall Plan “incentive compatible”. That is, it is a plan that built-in encourages those it intends to help, to engage in constructive appropriate behavior. In the case of Europe: Stop squabbling, and start cooperating. This led directly or indirectly to the European Union.

       We need more plans that are incentive-compatible. Sometimes, what seems like altruism – helping others – is actually exceedingly self-serving. That was the secret of the Marshall Plan.

       And Marshall? He was a five-star general, a genius at organization, deeply bitter and frustrated because President Roosevelt would not send him over to Europe to fight, but instead kept him home to organize the 8 million US troops sent to fight. I need you here, said FDR.   As Secretary of State, Marshall brought great wisdom and skill to the job. The Plan he initiated is his immense legacy, one that changed the world forever.

 

Understanding Trump: Dunning-Kruger Cognitive Bias

By Shlomo Maital

     Having trouble understanding President Trump?   Read thousands of words and columns, blasting Trump, but you still (like me) do not understand who IS this guy?

     Read David Brooks (Op Ed, New York Times, May 15)….   He has figured it out. Trump has a syndrome. Dunning Kruger Cognitive Bias.

       What is it?   Here is the definition: *

     Across 4 studies, the authors found that participants scoring in the bottom quartile on tests of humor, grammar, and logic grossly overestimated their test performance and ability. Although their test scores put them in the 12th percentile, they estimated themselves to be in the 62nd. Several analyses linked this miscalibration to deficits in metacognitive skill, or the capacity to distinguish accuracy from error.

     Meaning?   Incompetent people think they are more competent than they are, precisely because…they are incompetent. Trump highly overestimates his abilities (“best speech ever to Congress on healthcare”,   “how to fix America’s aircraft carriers”, etc.).

       People with Dunning-Kruger, who lead nations, are very very dangerous. Not knowing is one thing. Not knowing you don’t know is quite another. And when you lead the world’s most powerful, wealthy nation?   Disaster. Moreover, people around Trump cannot control him, and are fired abruptly when they oppose him, a corollary of Dunning-Kruger.  Trump is at the summit of Mount Stupid (see diagram), and since January 20, has proven to be there with blunders almost daily.

       What will happen?   Let’s see if America’s constitution and political institutions are capable and resilient enough to deal with this disastrous cognitive bias.

 

* Kruger, Justin; Dunning, David “Unskilled and unaware of it: How difficulties in recognizing one’s own incompetence lead to inflated self-assessments.” Journal of Personality and Social Psychology, Vol 77(6), Dec 1999, 1121-1134.

 

 

The World Economy: Upbeat

By Shlomo Maital

 “Ifo” is a German research institute that sends out regular questionnaires to experts, with two parts: the first, about global conditions, and the second, about local (country) conditions. I respond to the questionnaire regularly.

   Here is Ifo’s latest assessment:

       Munich, 11 May 2017 – The ifo World Economic Climate improved markedly in the second quarter, with the indicator rising from 2.6 points to 13.0 points. Experts’ assessments of the current economic situation were considerably more positive, making their sharpest increase since January 2013.

       Not only did the global economy improve, but so did expectations about the future:

   Economic expectations also improved. A further recovery was seen in the world economy in the second quarter. The ifo World Economic Climate improved in nearly all regions of the world. The main drivers remained the advanced economies, and especially the European Union. Both assessments of the current economic situation and expectations continued to follow an upwards trend in most countries.

   As usually happens, the upbeat outlook is not uniform. Latin America and Africa and the Mideast lag:

In Latin America assessments of the economic situation remained largely poor, but expectations brightened markedly. There was also a significant improvement in the developments and outlook for emerging and developing economies. Africa and the MiddleEast were the only regions in which the economic climate deteriorated. The outlook for Turkey also remained overcast.

     The common denominator? Politics. Politics in Turkey, the Mideast and Latin America are rather chaotic (checked out Venezuela lately?)   Politics in Europe seem more positive, with the voters rejecting the far right. In America, politics are chaotic but this is not new…

   So, despite Trump, and an anti-globalization anti-trade sentiment sweeping the world, the world economy seems resilient. A new China-US trade deal is in the offing.     One dark cloud on the horizon – Brexit. The EU seems in a vengeful mood, and some there want to teach Britain a lesson. This would be a huge mistake. Hopefully wiser heads will prevail.

The Age of Wonkery

By Shlomo Maital

   In his New York Times Op-Ed piece, April 11, David Brooks supplies a crucial insight.

     Once the thinkers of the world were intellectual foxes. In Isaiah Berlin’s metaphor, they had many many ideas and challenged all of them.

     Today? We have wonks.   They are hedgehogs. They have one BIG idea. And they sell it ferociously, regardless of the facts.  In truth — they have given up thinking. 

     As Goethe observed, thinking is better than knowing (i.e. foxes are better than hedgehogs),   but …looking is best of all. And wonks do not look (at the facts).   Nor think about their Pablum ideologies.

       So – we are doomed to live in the Age of Wonkery. Not too good for humanity.

       Here is how Brooks frames it:

“People today seem less likely to give themselves intellectual labels or join self-conscious philosophical movements. Young people today seem more likely to have their worldviews shaped by trips they have taken, or causes they have been involved in, or the racial or ethnic or gender identity group they identify with. That’s changed the nature of the American intellectual scene, the way people approach the world and the lives they live.   In his book, “The Ideas Industry,” Daniel W. Drezner says we’ve shifted from a landscape dominated by public intellectuals to a world dominated by thought leaders. A public intellectual is someone like Isaiah Berlin, who is trained to comment on a wide array of public concerns from a specific moral stance. A thought leader champions one big idea to improve the world — think Al Gore’s work on global warming.”

Brooks does not say this but —   not only is President Trump a super-wonk but – he has peppered his so-called administration with similar super-wonks, who are not troubled by facts.   And in upcoming elections in France, Germany and elsewhere, we see rising political parties featuring wonkery at its extreme (e.g. get rid of foreigners, anyone not like us, that will solve our problems).

     What does this mean for thinking people? Continue to fight. Challenge unsupported ideas. Build on facts. Dig up the facts. Think through issues. And above all embrace complexity.   Wonks simplify…violating Einstein’s rule, simplify as much as possible – but not more so.   Life is complex. Truth is complex. It cannot be reduced to a single variable, a single formula.    

   Wonks succeed because people are confused by complexity and want simple formulae.   Don’t give in.   Embrace complexity as a way of embracing truth – and fight back.

How Trump Used Psychometrics to Win

By Shlomo Maital

 

   My friend Einar Tangen drew my attention to this article:

https://motherboard.vice.com/en_us/article/how-our-likes-helped-trump-win

     Here is the jist of it.

  • A psychologist named Michael Kosinski developed a method to analyze people in minute detail, based on their Facebook activity. The technique is known in general as psychometrics: Measuring psychological characteristics from available data.
  • The company behind Trump’s online campaign (a key part of his win) was Cambridge Analytica, a Big Data company, which also worked on the LeaveEU campaign for the pro-Brexit group.   Cambridge Analytica apparently used Kosinski’s findings…
  • How does it work?       Cambridge Analytica “buys personal data from a range of sources”… aggregates it with the electoral rolls of the Republican party, and calculates a Big Five personality profile… digital footprints “suddenly become real people with fears, needs, interests and residential addresses.” Motherboard was told: “We (Cambridge Analytica) have profiled the personality of every adult in the U.S. – 220 million people!”.  
  • An example:   Design an ad based on gun rights.   An image on the left: an intruder smashing a window.       On the right: a man and a child standing in a field, at sunset, both holding guns, clearly shooting ducks.       Tradition, habits, security, family.
  •    “Pretty much every message that Trump put out was data-driven”.         E.g., on the day of the 3rd presidential debate (the one Trump did well at),   Trump’s team tested 175,000 different ad variations for his arguments, to find the right versions above all, via Facebook.       They found what resonated most.       “We can address villages or apartment blocks in a targeted way. Even individuals”.
  • One goal was to “suppress” Hillary voters. How?       Keep left winters, blacks, etc. away from the polls, by (in Miami’s Little Haiti) stressing how the Clinton Foundation failed in its efforts to help, after the Haiti earthquake. These dark posts “can only be seen by users with specific profiles…”.  

 

   Amazing that Trump, who lacks even a computer on his desk, was elected by some very very advanced Big Data methods. Thank Steve Bannon, who is not to be underestimated…ever!

Why U.S. Dams (and Society) Are Crumbling

By Shlomo Maital

dam

      Two newspaper items (one in New York Times, the other, Financial Times) reveal why America is crumbling.

         California’s Oroville Dam, America’s tallest, has a crumbling spillway that forces evacuation of 200,000 nearby residents. (A dam collapse in California in 1928 killed 400, as a wave of water swept over them). As early as 2005, experts spotted a design flaw in the dam – never corrected. Heavy rains filled the reservoir to capacity, and severe weather because of global warming reveals that this dam, and many others, are not up to the changing weather patterns, for which they were not designed.

         There are 1,585 dams in California, notes the NYT, and 90,000 dams across the U.S. Many are in poor shape. Why? “Government is more inclined to invest money in building new projects, than in less visible and glamorous maintenance”.

         America is a consumption-driven society that under-saves. A $500 b. trade deficit (imports minus exports) for nearly 3 decades is a symptom. China is not to blame. The U.S. itself is. It is comfortable to borrow money from China to buy consumer goods. Some 23 years ago, my wife Dr. Sharona Maital and I published an article, in the Journal of Socioeconomics, in which we warned about a drastic fall in savings behavior in the US and    Western countries. *   Nothing has changed since.

           The Financial Times notes today:

     “China ended a six-month streak disposing of its US Treasury holdings in December, adding to its position for the first time since last May as the country’s central bank seeks to manage capital flight. The country, which ceded its status as the world’s largest owner of haven Treasuries in October to Japan, added $9.1bn of US sovereign debt to its reserves in the final month of 2016, new data from the Treasury and Federal Reserve showed on Wednesday.”

         So, in the post-Trump era, America has gone back to borrowing, to buy consumer goods rather than maintain its dams, its roads, schools and infrastructure.

       And President Trump? He is rapidly running down his checklist of promises, issuing so far 11 Executive orders.   But what about that trillion-dollar infrastructure plan? Dead silence. Why? Because it will take a vast plan to design and implement it. In the current chaos of the new Administration, it is unclear whether the Trump presidency is up to the challenge – or even whether it is aware of the problem.  

         So America – at least, its dams and roads – are crumbling. I don’t see a solution in the near term.

 

* Shlomo Maital and Sharone L. Maital. “Is the Future What It Used To Be? A Behavioral Theory of the Decline of Saving in the West”. Journal of Socio-Economics, vol. 23, 1,2.   1994.

Ashley vs. Ivanka: Choose Your Role Model

By Shlomo Maital

  biden

Ashley Biden & Father Joe

   President Trump recently tweeted his recommendation, that people buy his daughter Ivanka’s upscale fashion designs, after retail chain Nordstrom took her clothes off its shelves. (“They don’t sell,” Nordstrom claimed).

   Another famous politician has a designer-daughter – former Vice President Joe Biden and his social worker daughter Ashley.   Her story, and product, are a bit different.

   According to Elle Magazine: “Ashley’s new ethically produced, American-made clothing company, is a project any dad would be proud to get behind. It kicks off with a range of supersoft organic cotton hoodies on sale for just a few weeks, starting February 8, in partnership with the flash-sale behemoth Gilt: The entirety of the proceeds from the debut collection will be channeled to programs that work to alleviate poverty through education, training, and job placement.

     “Ashley, 35, who is also the executive director of the Delaware Center for Justice, a nonprofit that serves children and adults impacted by the criminal justice system, had toyed with the potential nature and mission of Livelihood for years. One thing that never wavered was the idea of the hoodie. This is partly because Ashley herself—who has a stealth charisma and a fondness for phrases like “heavens to Betsy”—describes herself as a “jeans-and-T-shirt kinda gal.” It’s also because she appreciates the symbolism of an item long connected to American laborers and more recently to Black Lives Matter. “Livelihood is specifically about income inequality,” she says. “And racial inequality and income inequality are directly related.”

     “By the time her parents moved into the VP’s mansion in 2009, Ashley—who did her undergrad at Tulane, then earned a master’s in social work from the University of Pennsylvania—had a job serving kids in the foster-care system. It was disorienting, to put it mildly, to travel from a juvenile detention center to, say, Air Force 2. What did become increasingly clear was how little privileged Americans understood about life below the poverty line, where 13.5 percent of the U.S. resides. “I’d hear about five siblings sharing one burger,” she says. “How does a kid do homework when there’s no desk or lamp? One of the biggest things I’ve seen in my work is that a lot of social ills directly result from poverty.”

   Does it take a privileged daughter of the U.S. Vice-President, to explain to us how little we the privileged understand about the life and hardships of the one in seven who live in poverty? And will we opt for the role model of Ivanka Trump, who sells to the wealthy, or Ashley Biden, who works for the poor, and has done so for her whole career?

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
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