How to become a millionaire and why that does not qualify you for public office.

Back in May I published a review of an excellent book by Jane Meyer on Dark Money, the vast amounts of private wealth deployed my multi-billionaires to promote a libertarian agenda in the United States. Central to the book are the Koch Brothers, owners of the second largest private company in the US, Koch Industries, which has made both of them multi billionaires. Generally they don’t come out of the book well but there is one story which does indicate at least a glimmer of self awareness.

It relates to a speech given in 2003 to alumni of the Deerfield Academy when David Koch was pledging $25m to the prep school he had attended. He asked himself the question he thought they would all be thinking: How did David Koch become so wealthy as to be able to donate $25m to his former school? He explained thus.

It all started when I was a little boy and one day my father gave me an apple. I soon sold the apple for $5. With the five dollars I bought two apples and sold them for ten. Then bought 4 apples and sold them for twenty. This went on day after day, month after month year after year until my father died and left me $300m!

This story displays a degree of humility which does not seem to have been evident at any other time in the life of either Koch brother. Unwittingly however, I believe it goes to a profound truth. Immense wealth is a matter of immense good luck. That good luck might be being heir of a man who built his fortune in the run up to world war two building the third largest oil refinery in the Third Reich; it might be being a KGB operative in the years of marketisation of the Russian economy acquiring state assets at knock down prices; it might be being part of a landed gentry that had the foresight to acquire large tracts of land which became central London; it might be coming up with an operating system which gets adopted as a key component in an industry just as it experiences exponential growth.

For those multi-millionaires whose fortunes are not wholly good luck, simply arriving with birth, their effort is at least matched by good luck. Being in the right place at the right time. When a significant fortune is acquired a series of reinforcing processes start to kick in.

As Mr Piketty points out “…once a fortune passes a certain threshold, size effects due to economies of scale in the management of the portfolio and opportunities for risk are reinforced by the fact that nearly all the income on this capital can be ploughed back into investment.” You can diversify your investments to reduce risk, you can employ some very clever people to help you, you can also employ some other very clever people to ensure that you do not pay the level of tax on your earnings that lesser mortals do.

So for example the fortune of Liliane Bettecourt, heir to the L’Orael cosmetic fortune saw her wealth increase without doing a days work in her life between 1990 and 2010 from $2bn to $25bn. Bill Gates, the epitome of en entrepreneur saw his fortune increase over the same period from $4bn to $50bn. This provided a real return on capital for both of them of around 10% per annum. Interestingly that rate of growth has continued since Mr Gates stopped working.

Now the question arises as to whether any of this matters. These fortunes are built on industries that employ thousands of people, contribute millions in taxes, is this not simply the politics of envy? If we did not allow this concentration of wealth would not entrepreneurialism collapse? Would we be killing the goose that lays the golden eggs? These are all legitimate issues and they need to be addressed but there is an underlying risk which is threatening the very foundation of wealth creation in the modern world. A legitimate and effective state.

If we put aside any moral question about how people can “earn” $100m or $10bn or $50bn there is a fundamental problem about the way in which wealth and power interact. In multiple and complex ways wealth enables people to exercise much more power within a state than less wealthy citizens, not just in areas  like the business they own and know, but across a much wider range of matters.

Obviously, wealth can be deployed in very direct ways to buy media to shape opinions, it can support election campaigns to ensure the right people get into public office. These and a host of other practical things can be facilitated by those that have lots of cash

There is another, more insidious exercise of power however which we all collude in to some degree. We still have a tendency to see wealth through a secular version of the Protestant work ethic as a sign of being one of the elect. Perhaps they have not been chosen by God but the talent for getting rich is seen as a sign of generic skill. The skills and temperament that enable you to become very rich should enable you to be good at other things indeed at anything. Your views should be listened to on whatever is the question of the day.

A variation of this is the view that the “business” of government would be better managed by people who are good at making money.  Who is going to make government work better, a lowly paid Building Inspector or a a multi-billionaire property developer?

Fortunately, Donald Trump is working hard to dispel this myth. We will take as fact that he has increased the fortune left to him and he is a canny property developer. I appreciate these are both moot points, but put that to one side.  If we look at his period in office, not just from the wishy washy, Guardian reading viewpoint of someone that thinks misogyny,  Islamaphobia, racism and generally being uncouth is bad, but just in Trumps own terms. His performance as President has been an unmitigated disaster. Despite controlling both houses of Congress he has not managed to secure one significant piece of legislation. He has made the United States and the Presidency objects of pity and derision respectively.

His incompetence goes to the people he has surrounded himself with. People who can not even collude with a foreign nation effectively. Donald Jnr and Jared Kushnar run off to a meeting to secure adverse information about Hilary Clinton from someone who is presented as an emissary of the Russian government. Kushnar then reveals the meeting. Donald Jnr thinks that is not incriminating enough so sends out an email trail that clarifies the offence. Perhaps worst of all, if they are to be believed, they didn’t even get any dirt on Hilary. Collusion a la Johnny English.

As the heat of the multiple investigations has grown President Trump has now appointed a team of lawyers to defend him. His incompetence seems to know no bounds, even when his personal liberty might be at risk he seems to appoint people he is comfortable with rather than people that might be competent. Leading the his legal team is Mark Kasowitz, a lawyer who has worked for Mr Trump for some time on property and matrimonial issues.

Mr Kasowitz shares President Trumps forthright way of expressing himself. He has just had to make a public apology to someone that emailed him suggesting he might not be the best person to represent President Trump. This triggered a series of email responses containing threats and profanities in equal part. You might think this is not the measured temperament you would prefer in what is likely to be a high stakes legal defence. I think you would be right.

The challenge to his professional strength on constitutional and political matters may be more or less correct however of much greater significance for President Trump Mr Kasowitz has not applied for security clearance and given revelations about his personal life this might be because he assumes he wont get it.

Why is this important? Because much of what Donald Trump might be in legal jeopardy about is classified. Not only would Mr Kasowitz not be able to see the information, no one could tell him what it was about!

Mr Kasowitz and the rest of the legal team defending President Trump will cost a lot of money. It is fortunate for President Trump that his talents for making money in the private sector mean he can afford to pay such fees in order to defend his lack of talents for leading in the public sector.

It seems increasingly likely that Mr Trump’s Presidency will not end well. Bizarrely he seems to be doing everything he can to ensure it does not end well for himself. It is vital however that his boorish incompetence is not allowed to further undermine faith in politics and the state. If the experience of the Trump presidency confirms being a millionaire is largely a matter of luck and more importantly no indication of a more general competence embracing public office then President Trump will have done at least one good thing in his hopefully brief term as leader of the free world.

 

 

A Spectacle of Public Degredation

It is ironic that on both sides of the Atlantic conservative governments are trapped with leaders they would change in the blink of an eye if they could. Here Theresa May is in office but not power and only remains so because the Conservatives cannot identify a leader who would not result in the party tearing itself apart. In the States however the position is much, much worse.

This is a holiday weekend in America and it was preceded by an unprecedented attack by President Trump on MSNBC’s Morning Joe show hosts, Joe Scarborough and Mika Brzezinski. The twitter attack has broadened into a general attack on “fake news” and the “biased media” but the initial tweets did not just challenge the views of the two people involved, they were personally offensive.

There is a risk that familiarity breads indifference. This must not be allowed to happen. Another MSNBC  presenter, Rachel Maddow made two very good points about the attack. The point Ms Maddow’s makes is that it gives some insight into the political method of this President and also the contempt in which he holds the office he holds and the Nation he leads.

In terms of political method it is suggested the twitter storm was consciously created to take the eyes of the American people away from two bad news stories. One is the assessment by the Congressional Budget Office of  the latest Senate proposals for the repeal of Obama Care. As may have been anticipated the cuts are even worse than the Congressional proposals. They have to be in order to fund the tax cuts for the wealthy that the neo-liberal right want to get through.

The second was a story about a Republican supporter called Peter W Smith. In 2016, after it was confirmed the Democratic Party had been hacked by the Russians, Mr Smith pulled together a group to try to make contact with those that had done the hacking with the aim of asking for any emails of Hilary Clinton’s which could be used to undermine her credibility in the election. This would have been collusion with a foreign power who it was known was trying to undermine the US election. More significantly Peter Smith implied he was working with Mike Flynn, President Trumps first National Security advisor who had to be sacked after it was discovered he had lied about contacts with the Russians during the campaign and transition.

There are a number of links in this chain which need to be tested. However, if the Trump campaign was working with Mr Smith and he was trying to get hacked material from a source he knew to be acting on behalf of a foreign government to attack Hilary Clinton then this looks like collusion to undermine the electoral process in the US.

It is clearly true these are two bad stories for the President and provide motive for deflecting the public’s attention away. However, I think Ms Madders overestimates the guile of the President. This man does not think he tweets. He tweets about whatever comes into his head that he gets exercised about with no consideration of the consequences. There is a trap lots have fallen into which is trying to make sense of what this man says. Myself, I think inside of his head ideas roll around with all the logic of fridge magnet letters that have been dropped.

There is however one thing I suspect does provide a thread of consistency through his thoughts and actions. Follow the money. His actions to date in terms of avoiding conflicts of interest by handing over control of his business interests to… his two sons should have been branded outrageous. It is difficult to understand how he has got away with it. Partly it confirms Shakespeare’s line, “If money go before, all ways do lie open”. He uses his wealth as a testament to his ability and his avoidance of  tax as evidence he is smart.

Where I believe Ms Maddow’s is bang on the money is in relation to his disdain for his office and for the consequences of his actions on the standing of the United States of America. There are a number of ultra rich, ultra libertarian individuals in the States who will be happy Trump is in power as it goes to their agenda of undermining popular support for democracy. They need to be careful what they wish for.

Since he was elected Trump has bee driven by his narcissistic personality to confirm he gained the majority of the popular vote despite all evidence to the contrary. He has talked a lot about voter fraud  and indeed has set up the Presidential Election Integrity Commission the vice Chair of which is a man called Chris Kobach. He wrote to all the States Attorney Generals asking for a list of all the voters registered in their State, their address, the party they vote for, their voting history, their date of birth, their social security number, any convictions they have had.

The separation of powers is a testament to the wisdom of the founding fathers and never has it been a more positive benefit. To date the response of all the states has been… NO! In fact the State of Mississippi in its official response to the request said that the Commission could “go jump in the Gulf of Mexico”. This push back is important.

Mike Rogers, Head of the National Security Agency has complained to lawmakers he is frustrated at his inability to get the President to accept Security Agency information about the the Russian attack on the election. At the same time budget proposals put forward by the President propose to withdraw funding ($4m) from the Election Assistance Commission who’s role it is to protect the American voting system that the Russians have just attacked.

President Trump is an uncultured and loutish boor who is undermining the office of the President. That would be bad enough and is a matter for the American people. To the extent that his actions have repercussions around the world and undermine the foundations of democracy it is a matter for all of us. His behaviour is a public spectacle of degradation, worse it is a degradation of his public office.

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Whilst this might look like it is confirming what we guessed it is frightening confirmation. The issue now is whether Putin simply thought Trump would be such a buffoon in power that he only needed to get him elected to discredit democracy and the global power of the US or whether Trump or any of his supporters colluded in any way whatsoever. The first is bad the second is treason.

A Radical Political Manifesto for 2017

If you have not read the Labour manifesto I commend it to you. It is about tax and spend, just like all the other manifesto’s. That is what governments do, they collect taxes and pay for vital services such as defence, health and education, oh and filling the holes in the road. In relation to tax and spend the Labour manifesto differs from the Tory one in this respect only, that it is better costed!

The Labour manifesto is radical in that it has made the “hard choice” to raise taxes, what is more, it has made the “hard choice” about who is going to pay those higher taxes. Normally when you hear a government minister talking about “hard choices” you think someone is about to get a kicking. Often it is a group of citizens or workers distinguished by their weakness. But not always. The past decade has seen governments of all persuasions talking about the sacrifices that are needed by the majority in order to “balance the book”, “deal with the deficit”, “live within our means” and a range of other cliches raised to the status of policy. Certainly, the hard choices of the Cameron administration were very much about that.

The Labour manifesto addresses all the issues you might expect but critically in relation to care, education, health and industrial strategy it does not talk about how they will be improved by greater efficiency, more competition, delivering more with less or even moving the deck chairs in some complex restructuring exercise. There are some elements of this but bottom line is they say they need more money. And despite the automatic response of the government to any criticisms of its actions, that “Record amounts are being spent on [insert service of your choice]” the reality of most people’s experience is things are getting worse. Services are deteriorating. The “record amount” going into the National Health service is so effective the government does not want the figures for Health Trust deficit’s to be published before the election.

So the Labour Party manifesto is a radical document, it marks a real shift in thinking. It is not constrained by a mindless mantra that nationalisation is necessarily bad because experience seems to show that privatisation is certainly not necessarily good. What is more the risk of nationalised industries gong wrong and thus costing the tax payer a whole pile of cash is not such a powerful criticism when we discover that if private industries, say finance, go wrong they cost the taxpayer a whole pile of cash and more.

Having said all this I suspect in time the Tory manifesto will come to be seen as the most radical of all the current manifesto’s. For the past thirty to forty years there has been a growing consensus structured around a neoliberal economic model of the world which has been about lower taxes, a smaller state and weaker trade unions. The rationale for this is that such actions will lead to improved productivity and greater economic growth. The rising tide of wealth this will create will lift all boats.

Unfortunately, so many boats seem to be stuck in the mud of increasing debt, insecure employment, deteriorating services and, oh, ever more pot holes in the road. A growing sense of frustration with the mantra of jam tomorrow and ever increasing inequality today has permeated the political mantle. The pressure building in the electoral tectonics is palpable and making itself felt in what has become labelled as a popular revolt.

This popular discontent across the whole of the West cannot be dismissed as the irrational response of the “basket of deplorables”. Firstly, there is a growing academic literature raising concerns about inequality and the negative impact it is having on the economy. Whilst some of this is from academics with radical or left wing leanings, it is not all. There are voices from the right who are concerned that the market is rigged and the “invisible hand” is cuffed to the interests of the very wealthy.

To her credit it seems as if Mrs May senses all this and sees something needs to be done and the solution may not be “the market”. The manifesto talks about governing from the mainstream, and states, “We must reject the ideological templates of the socialist left and libertarian right and instead embrace the mainstream view that recognises the good that government can do.” (my emphasis)

The manifesto contains a number of straws which suggest the wind is changing. There is of course a huge difference between rhetoric and reality. The rhetoric could be dismissed as a cynical attempt to attract traditional Labour voters with empty promises. After all this is the government that has promised to get immigration down to tens of thousands, eliminate the deficit and indeed reduce the national debt. It was also Mr May who made very strong comments about workers representation on boards which is being diluted as we speak.

What’s more, excitement at some more progressive comments by the leader of the Tory Party needs to be set against the reality of a  lot of very powerful people whose interests will be directly damaged by a rejection of the neoliberal orthodoxy. They are not going to be persuaded because we have a politician who sees there are genuine issues in relation to inequality and opportunity and they will fight to maintain the common sense view of the world that suits, very well, their personal interests.

The common sense view of the world which has evolved over the past thirty years sees the market as an impersonal and efficient allocator of investment, goods and wealth. A view of the world which sees people as rational utility maximisers who have perfect knowledge of the market, and exchange goods, services and labour freely. The reality of most people’s lives is not like this. The twenty first century market bares no comparison to that of the eighteenth, nineteenth or indeed most of the twentieth century. Putting that aside, the bowdlerised version of this model, which is at the core of the libertarian neoliberal view, is even further from the reality.

The Conservative manifesto seems to recognise this. It is a breach in the orthodoxy. It is a chink in the armour that has defended an increasingly indefensible world view. Whatever the outcome of the election the framework of political common sense is starting to change. At the moment it is about opening up areas of debate that have been closed for decades. It will take time for this to crystalise into clearer manifesto’s of change and change itself. However, better there is an increasingly conscious and rational debate about the way in which opportunity and wealth is managed and ditributed in our societies than the alternative.

For the avoidance of doubt, whilst I think the Tory manifesto may prove to be the most radical of the 2017 election I will be voting Labour. The radicalism of the Tory manifesto lies in its implicit recognition that some of what Jeremy Corbyn says about wealth and power is true.

Strong and Stable Leadership

Clearly the Conservative Party’s target in the election is not policy but personality. They believe, with real justification that Jeremy Corbyn is a weakness for the Labour Party. Whether that is the product of a Tory press, internal treachery by Blarites or inherent failings in the man is beside the point there is a popular perception that he is not a good leader.

By contrast they portray Mrs May as a strong and stable leader, indeed very much as they portrayed David Cameron as a strong and stable leader. It is certainly true they look and sound the part. They always have mastery of their brief, they handle the media well, they sound authoritative and convincing.

If one steps back a bit however, and look at what they achieve, not what they say, things look rather different. David Cameron was clear about leading the country into bombing Syria, but did not manage to actually do it. He was clear about wanting to preserve the Union but came within a hair’s beadth of breaking it up. Worst of all he professed a commitment to Europe leading us into a ballot which took us out.

Mrs May lead from behind on the issue of Europe, claiming to be in favour but not so in favour as to alienate irrevocably the Brexit camp within her party. Whilst at the Home Office she led the Prison system to the point of collapse and has left the police demoralised and fractious.

She has always provided strong and stable leadership in relation to immigration.  When she says she is going to reduce the numbed to tens of thousands she sounds authoritative she sounds as if she is going to do it. The problem is reality does not conform to her strong and stable rhetoric.

On taking up her position she provided strong and clear leadership about the folly of an early election. Stability was what was needed. It is claimed, with some justification in my view that she has tried to lead the party in a new direction. Again her rhetoric is good and she genuinely seems to understand some of the issues that an increasingly weakly regulated free market create. Her attempts at real change however are struggling. What sounded like genuinely radical proposals on workers representation on board’s has been watered down dramatically in the green paper.

The strong and stable reason for not having an election seem to have evaporated in the heat of perceived electoral opportunity. So the fixed term parliaments set in law by her predecessor, no doubt to ensure strong and stable government, has been cast aside.

There is no doubt that recent Tory leaders have looked and sounded like strong and stable leaders, the issue is what have they delivered and where they have taken us. It does make one wonder if someone who does not look like a strong and stable leader might actually deliver more.

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I have no idea what the Rachel Maddow show reported prior to the advent of the Trump presidency but since his election, this highly respected show in the US has been devoted to nothing else. It is a testament to the incredible news machine Donald Trump has proved to be that they fill an  hour every weekday night from 9.00pm wholly focused on his Whitehouse.

If we take this past week. On Monday the Washington Post claims Trump revealed classified information to the Russian Foreign Secretary, Sergei Lavrov, in the Oval office.

On Tuesday the National Security Advisor HR McMasters desperately tried to limit the damage claiming the conversation had been “wholly appropriate”. His carefully worded rebuttal then undermined, in a way which is becoming quite familiar, by the President saying he had the “absolute right” to share information with the Russians.

Still on Tuesday, as this story is running, the New York Times reports about an alleged memo written by James Comey, Sacked head of the FBI about a meeting at which President Trump is claimed to have said “I hope you can see your way clear to letting this go,” referring to the investigation in to Mike Flynn, Trump’s first National Security Advisor, who was sacked purportedly for lying to the Vice President.

On Wednesday the Acting Attorney General, (Acting because his boss the Attorney General has had to recuse himself from all matters Trump and Russia because of a potential conflict of interest), appoints Robert Mueller as Special Prosecutor to take over the Justice Department’s Russia investigation. Shades of Archibald Cox, Special Prosecutor of the Watergate scandal. Whilst this is going on Vladimir Putin bizarrely offers to “help” the President by providing a transcript of his meeting with Lavrov.

These are only the headline stories. In parallel there are now a series of formal legal investigations into Mike Flynn and former Trump Campaign Chairman Paul Manafort about their long standing business and other connections with Russia.

For someone who professes to hate the media so much President Trump is proving to be a golden goose that can be relied on to lay an egg every day. Some have suggested his current trip out of the country, firstly to Saudi Arabia, will provide a period of respite and a chance for the White House to get onto the front foot. That is the triumph of hope over experience.

Sinclair Lewis’s book, It Can’t Happen Here, is about the election of a rogue populist president in the 1930’s who adopts increasingly authoritarian measures creating a totalitarian, fascist state. At the moment we have a frightening, fictional tragedy being echoed as a sadly, real farce which is making the US a global joke. If the Republicans do not wake up soon that farce may become a tragedy.

 

 

Trump says he thought about Russian probe when firing FBI chief

President Donald Trump conceded for the first time that he had been thinking about the Federal Bureau of Investigation’s probe into Russian interference in last year’s election when he fired its chief James Comey.Mr Trump’s comments run counter to the White House’s original account of why he decided to dismiss Mr Comey this week and are likely to fuel claims that he took the decision to stop the Russia probe.

Source: Trump says he thought about Russian probe when firing FBI chief

 

Usually when one is faced with a difficult decision, like sacking someone, there is a significant period of consideration. One weighs up the arguments for and against and in relation to such a serious issue you might think to sleep on it before making your final decision.

President Trump does this but, as Eric Morcambe might have said, not necessarily in the right order. First sack him, then set out your reasons, then sleep on it, and then set out a different set of reasons.

It has always been clear President Trumps attention span is short. It is now also clear that a good nights sleep clears the slate clean and we start each day afresh.

New members of staff always have a honeymoon period. For junior members of staff it is to allow them to get used to their new role, find their feet, build their confidence. With more senior leadership roles the honeymoon period is not about these things. It is about recognising the very reason they have been put in the post is to make changes and they have to be given license to bring these changes about in their own way. You thus have to avoid rushing to judgement if they are doing things you think seem strange.

There is also a natural assumption that if someone has achieved high office they must be capable. Whether via executive selection or public election those that secure very senior posts have an aura of competence projected on to them by all those around them. This aura is strongly reinforced by the patronage, and ability to “terminate”, that goes with top jobs.

With President Trump all these forces are operating on steroids. People around the world are trying their best to knit a comprehensible strategy to his actions.

Some, probably genuinely, think his high office must mean there is something coherent at the centre of what he does. That his pronouncements are opaque to lesser mortals but are cleverly taking forward a well thought through agenda that will become clear in the fullness of time. The number of these is probably reducing every day.

There will be those whose jobs depend on the man. They will apply their, often considerable, intellect to “explain” what the rational thread is to his erratic, and, on the face of it, contradictory tweets. Hats off, they have got one hell of a job. One suspects however, as more and more of the twists and turns of the Trump mind become public, this task will drive them mad.

There are probably many who recognise President Trump is not the sharpest knife in the draw. That much of what he says is irrelevant. He may genuinely believe what he says when he says it, but tomorrow is a whole new day. They cling however to some hope that he is not as bad as his actions would suggest. That when push comes to shove he will do the right thing or rather not do anything really, really stupid. He couldn’t could he? After all he is the President of the United States.

There are also those who think that he just needs to be given a chance. That he needs more time to find his feet. He is adjusting from the dynamic, deal focused world of the private sector to the log jam, pork barrel world of politics and bureaucracy.

Given the position he holds one would like to believe that one of these views is correct, that in the fullness of time his mercurial pronouncements will reveal themselves as part of a sophisticated programme which is going to change the whole of the political system for good. This genuinely is the triumph of hope over experience.

Mr Trump crashed through his first 100 days like a learner driver with no control of the clutch. The Whitehouse has lurched from crisis to crisis, from scandal to scandal so quickly it has devalued the currency of both.

The man is a serious threat to the stability of the United States and consequently to the world. He should be seen as such. Those that ally themselves with him, do so at their peril. The wheels will come off this wagon and it might be soon. God knows what kind of a mess will result.