What Trump Is Up To

U.S. President Donald Trump

Many people say they can’t figure out President Donald Trump’s motivations. Why is he acting so unlike previous presidents? Is he crazy or what?

Here are some of my own observations about this unprecedented president:

·         Donald Trump ran for president just to see if he could do it. Seeking the presidency is kind of like a hobby or pastime for a businessman of substance who is approaching seventy. (Ross Perot and others have tried the same thing, without success.) Trump didn’t expect to win. Now that he did, he is playing catch-up.

·         He decided to court the base that President Obama and Hillary Clinton neglected: the traditional (largely white) American working class, with an emphasis on blue collar.

·         He began talking about issues important to these voters, and started to gain traction. So he kept up the pitch. He did not expect to beat Hillary Clinton, but she gave up on key “Rust Belt” states and thereby lost her Electoral College advantage.

·         Donald Trump does not really want to “Make America Great Again.” He thinks it is already great. Today’s America made him rich. Trump believes there are too many government regulations, as most business people do. But he is not an isolationist and does not oppose globalization. In fact, globalization made him a success.

·         Trump has skillfully manipulated the mass media and the social media to promote his career. As a reality TV star, he knows the value of entertainment. He also knows the value of public confrontation and of “stirring the pot” of national emotions.

·         Trump’s Twitter account is primarily for the news media and for his political opponents. His political base does not care about Twitter and does not follow his tweets. Trump uses the Twitter feed to keep his opponents jabbering and keep the focus off his big problem: governance. It turns out that running a country is quite different from running a business.

·         Trump ran for president because it was a new challenge and he felt he was up to it. He does not have any grand strategy for America. He is really pretty much apolitical when it comes to Republicans and Democrats. He has not figured out how to gain the cooperation of Congress – including his own party. When his political efforts stall, as in the case of healthcare legislation, he turns to Twitter and stirs the pot again.

·         Because he has focused on his media image – the blunt-speaking street tough – he has failed to court and win the support of Congress and has been unable to negotiate the kinds of deals he thought he could make. The Great Deal Maker has been unable to forge any significant legislative compromises. The political atmosphere, which predated his presidency, is far too toxic.

·         Trump will keep goading the media and angering Democrats, because it has paid off in the past. It will divert attention from America’s serious issues, at least for as long as the media – and the Democrats – continue to play the game.

·         If the media stopped covering Donald Trump, and the Democrats stopped talking about him, Trump’s presidency would shrivel up and he would probably step down. But I’m afraid that ain’t gonna happen.

 

The Collapse of the American Middle Class

Earlier this year, George Friedman, founder and CEO of the Stratfor global intelligence and analysis firm, wrote an insightful article about the ongoing collapse of the American middle class. Given the attention the middle class is getting these days from President Obama, it's worthwhile looking back at the Stratfor article. For Friedman to write an essay like this suggests that America's socio-economic problems are a potential national security risk of the first order.

As Friedman puts it:

The United States was built on the assumption that a rising tide lifts all ships. That has not been the case for the past generation, and there is no indication that this socio-economic reality will change any time soon. That means that a core assumption is at risk. The problem is that social stability has been built around this assumption -- not on the assumption that everyone is owed a living, but the assumption that on the whole, all benefit from growing productivity and efficiency.
He points out that the United States of the post-World War II era -- from the late 1940s through the 1960s -- no longer exists. The economy has changed, as has the nation's social structure, to the point where the "American Dream" of our parents' (or grandparents') generation has dissipated like a morning mist burned off in the stark light of the midday sun. 

Friedman observes:

In the 1950s and 1960s, the median income allowed you to live with a single earner -- normally the husband, with the wife typically working as homemaker -- and roughly three children. It permitted the purchase of modest tract housing, one late model car and an older one. It allowed a driving vacation somewhere and, with care, some savings as well. I know this because my family was lower-middle class, and this is how we lived, and I know many others in my generation who had the same background. It was not an easy life and many luxuries were denied us, but it wasn't a bad life at all.Someone earning the median income today might just pull this off, but it wouldn't be easy. Assuming that he did not have college loans to pay off but did have two car loans to pay totaling $700 a month, and that he could buy food, clothing and cover his utilities for $1,200 a month, he would have $1,400 a month for mortgage, real estate taxes and insurance, plus some funds for fixing the air conditioner and dishwasher. At a 5 percent mortgage rate, that would allow him to buy a house in the $200,000 range. He would get a refund back on his taxes from deductions but that would go to pay credit card bills he had from Christmas presents and emergencies. It could be done, but not easily and with great difficulty in major metropolitan areas. And if his employer didn't cover health insurance, that $4,000-5,000 for three or four people would severely limit his expenses. And of course, he would have to have $20,000-40,000 for a down payment and closing costs on his home. There would be little else left over for a week at the seashore with the kids.

Of course, this is the case for the median wage-earner. What about those who earn less? Says Friedman:

Those below him -- half of all households -- would be shut out of what is considered middle-class life, with the house, the car and the other associated amenities. Those amenities shift upward on the scale for people with at least $70,000 in income. The basics might be available at the median level, given favorable individual circumstance, but below that life becomes surprisingly meager, even in the range of the middle class and certainly what used to be called the lower-middle class. 

This means the end of upward social mobility for that half of the population that lies below the median. In practice, these citizens become wards of the state. The government gives them what they need to survive, and they opt out of the "American Dream."

Then, Friedman says, there is the crisis of the American corporation, In the old days, people were accustomed to working for companies for an entire career, and retiring with a pension. Increased inefficiencies and other factors have made this impossible, and corporations have been forced to undergo re-engineering, in which many have lost their jobs and probably cannot regain them. Keep in mind that over the past half-decade or so, some 19 million people have dropped out of the work force and are unlikely to return to it.

So where are we now?

What we are facing now is a structural shift, in which the middle class' center, not because of laziness or stupidity, is shifting downward in terms of standard of living. It is a structural shift that is rooted in social change (the breakdown of the conventional family) and economic change (the decline of traditional corporations and the creation of corporate agility that places individual workers at a massive disadvantage).The inherent crisis rests in an increasingly efficient economy and a population that can't consume what is produced because it can't afford the products. This has happened numerous times in history, but the United States, excepting the Great Depression, was the counterexample.

Friedman doesn't offer us a solution to the American crisis, but he has helped elucidate some of the problems. It is now up to our leaders and future leaders to see if they can help America find a way out of this grave dilemma.

American Elites and the Presidential Election

Most news media don’t pay much attention to discussion of American elites, except for the politicized but poorly defined “millionaires and billionaires” of the 2012 presidential campaign. All societies are dominated by elites, regardless of how egalitarian the societies believe themselves to be. These elites direct the political process and steer the prevailing economic system.

Decades ago, in the Vietnam era, I recall a university professor warning his students that power rarely resides where you think it does, or where the news media tell you it does. This particular scholar believed it was naïve to think that the President, Congress or the Supreme Court was the seat of true power in the United States.

Some think that true power resides with the elites that support presidents and legislators. These elites change in size, nature and power as economies and societies change. They provide the money, manpower and other resources to advantage candidates and political stances in the national arena.

Just before the recent presidential election, geographer and futurist Joel Kotkin wrote a perceptive analysis about the changing American elites and their relationship to power that may help explain what happened in the Obama-Romney race.

Kotkin wrote in The Daily Beast:

The middle class, we’re frequently told, decides elections. But the 2012 race has in many ways been a contest between two elites, with the plutocratic corporate class lining up behind Mitt Romney to try and reclaim its position on top of the pile from an ascendant new group—made up of the leaders of social and traditional media, the upper bureaucracy and the academy—that’s bet big on Barack Obama. In the 2008 election, the “Wall Street plutocrats,” as Kotkin labels them, were divided and split their support between Obama and McCain. In the 2012 campaign, most of the “corporate ultra-rich” backed Romney, including the financial institutions that were the governor’s major donors: Goldman Sachs, Bank of America, Morgan Stanley, Credit Suisse and Wells Fargo.

Kotkin then observes:

But don’t mourn too much for Obama, who’s held his own in the cash race by assembling a new, competing coalition of wealthy backers, from the “new hierarchies of technical elites” that Daniel Bell predicted in 1976 in The Coming Of Post-Industrial Society. For that group, Bell wrote, nature and human nature ceased to be central, as “fewer now handle artifacts or things” so that “reality is primarily the social world”—which, he warned, “gives rise to a new Utopianism” that mistakenly treats human nature as something that can be engineered and corrected by instruction from their enlightened betters. This approach, although often grounded in good intention, can easily morph into a technocratic authoritarianism. Along with Hollywood, Obama’s big donors have come from the tech sector, government, and the academy—with his top five made up of the University of California, Microsoft, Google, the U.S. government, and Harvard. Tech heavyweights such as Craigslist founder Craig Newmark and Facebook COO Sheryl Sandberg have given maximum donations to the president, as have Eric Schmidt and four other top executives at Google. These idea wielders make fortunes not through tangible goods but instead by manipulating and packaging information, and so are generally not interested in the mundane economy of carbon-based energy, large-scale agriculture, housing, and manufacturing. They can afford to be green and progressive, since they rarely deal with physical infrastructure (particularly within America) or unions or the challenges of training lower-skilled workers.

Kotkin calls this new group of winners the “Clerisy,” a term first used by Samuel Coleridge in the 1830s for “an enlightened educated class, made up of the Anglican church along with intellectuals, artists, and educators, that would school the rest of society on values and standards.”

But the futurist warns:

[I]n many ways the New Clerisy most closely resembles the First Estate in pre-revolutionary France, serving as the key organs of enforced conformity, distilling truth for the masses, seeking to regulate speech and indoctrinate youth. Most of Obama’s group serves, as Bell predicted, a “priestly function” for large portions of the population. This post-industrial profile has shielded the post-industrial elite from the harsh criticism meted out to Wall Street grandees and energy executives by green activists, urban aesthetes, and progressive media outlets. Steve Jobs, by any definition a ruthless businessman, nevertheless was celebrated at Occupy Wall Street as a cultural icon worthy of veneration. There are of course libertarians and even traditional conservatives in academia, the media, the think-tank world, Silicon Valley, and even Hollywood. But they constitute a distinct minority. For the most part, the members of the groups that make up Obama’s Clerisy, like any successful priestly class, embrace shared dogmas: strongly secular views on social issues, fervent environmentalism, an embrace of the anti-suburban “smart growth” agenda, and the ideal of racial redress, of which Obama remains perhaps the most evident symbol.

This coalition of economic and social power, holding the reins of the great digitized information machine, made it possible for Barack Obama to win re-election despite a stagnant economy, a growing fiscal crisis and numbing unemployment. Democrats understand the New Clerisy, and thrive in its shadow. Republicans have yet to come to terms with the new power elites.

Feds to the Rescue

Only a handful of current affairs columnists bother to look at history for solutions to today’s problems. One of these rare analysts is Amity Shlaes, a senior fellow in economic history at the Council on Foreign Relations.

Shlaes this week examined the aftermath of Hurricane Sandy in the context of the historical record. Noting the President’s tour of devastated New Jersey coastal towns, she said:

Federal rescue is the American Way. Being there starts with helping to clear the flooded metropolitan-area tunnels between New Jersey and New York. But the concept extends to bridges, roads and all the other infrastructure challenges up and down the Atlantic coast after Hurricane Sandy. Such rescue seems like a no-brainer during crises. Yet the misty deification of Washington as exclusive rescuer isn’t necessarily warranted. In fact, the U.S. suffers from a collective and politically induced amnesia that obscures the reality: There are many American ways to build infrastructure and manage it in emergencies. In the past, state and regional governments often managed disasters. Even businesses ran big domestic rescues.

She cited the Holland Tunnel as an example. About a hundred years ago, New York City faced a “coal famine” caused by an ice jam in the lower Hudson River. The shortage gave an engineer named Clifford Milburn Holland the idea of building a ventilated tunnel under the river.

While the Holland Vehicular Tunnel project, begun in 1920 and completed in 1927, had its own share of emergencies, Shlaes noted that it was an endeavor undertaken by local authorities – specifically the states of New York and New Jersey – and not the federal government.

But all that took place early in the 20th century. Not many are still around who recall those days.

Shlaes observed:

It’s important, though, to remember that the only reason voters or politicians place so much faith in Washington is that they can scarcely remember a time when the federal government wasn’t the rescuer. And that doesn’t mean the past never happened, even in the Holland Tunnel.

Axioms for a Presidential Election Year

(1) The truth is an interpretation. Absolute truth can rarely be found in politics. 

(2) Statistics and other “facts” are routinely viewed through the prism of ideology, whether left or right. Any number can be made to look good or bad.

(3) All politicians (and all partisans) have convinced themselves that they are speaking the truth and doing the right thing, and nothing you can do will shake that conviction.

(4) All politics is PR; if that bothers you, steer clear of public service.

(5) History shows us that presidents under pressure often do things they would prefer not to do, or things contrary to their perceived image. Get used to it.

(6) If you become righteously indignant over some politician or political issue, your anger probably has another source. You know deep down that something else is ticking you off.

(7) Presidential elections really do reflect shifts in national thinking – though that thinking is rarely very deep. It has more to do with feelings than logic.

(8) Don’t believe those who think government is the answer.

(9) Don’t believe those who think we don’t need government.

(10) No matter who wins on Nov. 6, chances are we will survive. Then we can turn our attention to really serious matters, like the Mayan calendar countdown and the end of the world on Dec. 21.

The Politics of Small Business

At this week’s Republican National Convention, there was considerable focus on the importance of “small business” as a job-generator.

While there is suspicion among the national news media and general public about “big business,” particularly multinational corporations, often described as greedy and predatory, “small business” is considered a good thing by both national parties.

Small business is seen as the prime engine of entrepreneurial capitalism, and a job generator. At a time when the country’s economy appears stalled, small business is characterized by Republicans particularly as the solution to the American economic malaise.

Republicans say small business needs to be “unleashed” – i.e., freed from heavy tax burdens and excessive governmental regulation.

What exactly is small business? One description is found in Wikipedia: 

In the US, small business (less than 500 employees) accounts for more than half the nonfarm, private GDP and around half the private sector employment. Regarding small business, the top job provider is those with fewer than 10 employees, and those with 10 or more but fewer than 20 employees comes in as the second, and those with 20 or more but fewer than 100 employees comes in as the third (interpolation of data from the following references). The most recent data shows firms with less than 20 employees account for slightly more than 18% of the employment.
 According to “The Family Business Review,” “There are approximately 17 million sole-proprietorships in the US. It can be argued that a sole-proprietorship (an unincorporated business owned by a single person) is a type of family business” and “there are 22 million small businesses (less than 500 employees) in the US and approximately 14,000 big businesses.” Also, it has been found that small businesses created the most new jobs in communities, “In 1979, David Birch published the first empirical evidence that small firms (fewer than 100 employees) created the most new jobs” and Edmiston claimed that “perhaps the greatest generator of interest in entrepreneurship and small business is the widely held belief that small businesses in the United States create most new jobs. The evidence suggests that small businesses indeed create a substantial majority of net new jobs in an average year.” Local businesses provide competition to each other and also challenge corporate giants.
 Of the 5,369,068 employer firms in 1995, 78.8 percent had fewer than 10 employees, and 99.7 percent had fewer than 500 employees. 

Late last year, the National Small Business Association (NSBA) polled more than 650 small businesses (members and nonmembers) on a wide range of political matters, and the survey produced some interesting findings.

Most respondents were unhappy with how Congress and the Administration were handling the economic malaise, and most felt that neither the executive nor legislative branch understands small business.

Small business owners are very active politically, and expect to be heard in the November elections:

A key take-away from this survey is the fact that small-business owners are very active in politics with 97 percent saying they vote in national contests and 94 percent voting in state contests. Comparatively, voter turnout among the U.S. voting-age population for the 2008 presidential race was 57 percent. Additionally, 69 percent report they have contributed to a candidate’s campaign and 76 percent have contacted their lawmakers on small business issues.
 While the survey does show significant differences of opinion between Republican and Democratic respondents, there is broad agreement that politics have become more partisan in the last 10 years. Small-business owners expressed significant discontent with their elected officials and the overall U.S. political machine. Fifty-eight percent of small businesses think they are not well represented by nationally elected officials and 62 percent believe the U.S. political system does not serve their business well.

The NSBA concludes:

Despite the many challenges thrown their way in the last five years, the Great Recession and a sluggish economic recovery, small businesses are still here. In fact, there are 70 million small-business owners or employees in the U.S.—that’s one in three of the U.S. voting population. While the outcome of this survey shows a relatively strained relationship between lawmakers and small business, it is not too late. Lawmakers have a long, and growing, to-do list which includes many measures that could positively impact small business beyond a stump-speech here and there.

In the Middle Ages, small business owners were called the “bourgeoisie.” By the time of the Industrial Revolution, the term “bourgeois” was being applied by leftist theorists to those capitalists who owned the means of production – more like what we would today call big business. But the merchant class, the small business sector, remains. If today small business owns a significant chunk of the national economy, it has rarely acted like a cohesive force, driven by a single objective.

It will be interesting to see if that changes this year.