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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.

 

 

 

Dark Money

Dark Money by Jane Mayer covers a period from the early 1970’s to the run up to the Trump election. It documents in meticulous detail the amount of money spent over the period by super rich Americans, not just to secure the election of politicians  supportive of their radical libertarian views but more insidiously to shift the terms of political debate to the right.

DMThe process begins in the late 1960’s early 70’s when a number of very wealthy Americans began to fear the US was about to succumb to socialism. It may seem unbelievable now but looking back it was a time of radical foment, the rights of black Americans were being fought for, a nascent women’s rights movement was emerging, young people’s opposition to the Vietnam war resulted in 4 students being shot and killed in a protest at Kent State University.

Whilst all this protest were real worries to many on the right there were other issues about the role of the state that were of perhaps of more profound concern. The Democratic President Lyndon Baines Johnson had initiated a War on Poverty. Worse however was a proposal by Republican President Richard Milhous Nixon to create a modest basic income, an idea about which there is currently renewed interest.

In 1970 the Family Assistance Plan passed through Congress with a healthy majority but was lost in the Senate to Democratic opposition that it was not radical enough. At the time it was said “This bill represents the most extensive, expensive and expansive welfare legislation ever handled.” Not only was their bipartisan support for this proposed legislation, but it was supported by 90% of the press and popular in the country.

For some, all of this represented an unwarranted intervention by the state in the operation of the market economy. An intervention that would expand the role of the state, require increased taxation and thus impact directly on the fortunes of the very wealthy. Some decided it was time time to act.

Ms Mayer’s book focuses primarily on the brothers Charles and David Koch. The brothers engaged in active politics in the 1970’s providing financial support to the Libertarian Party. In 1980 David Koch ran as the running mate to the party’s Presidential candidate, Ed Clark who was challenging Ronald Reagan, from the right. They got 1% of the vote. From this point on the Koch’s receded from public view and over the next three decades according to Ms Mayer gave well in excess of $100m “…to dozens of seemingly independent organisations aimed at advancing their radical ideas.”

The book charts how the brothers “weaponised philanthropy”, maximising the tax benefits of establishing charitable trusts, thus avoiding inheritance tax, and then using the money from the trusts to support a series of educational and social welfare groups to promote their libertarian viewpoint. Over the years a variety of think tanks were established or supported all with the aim of ensuring that conservative ideas were made respectable.

Over time the thinking evolved and there was a recognition that in order to change opinions the elite educational institutions of the US had to be “penetrated”. This led to the “beach head” theory which was about establishing conservative beach heads at “…the most influential schools in order to gain maximum leverage.” By 2015 the Charles Koch Foundation was “subsidising pro-business, anti-regulatory and anti-tax programmes in 307 different institutions of higher education in America.” Interestingly the book reports a comment about the Golden Rule of philanthropic giving – those with the gold, rule. This was taken to a higher level when a donation of $965,000 to West Virginia University by the Charles Koch foundation came with strings. The foundation was to have a say over the professors it funded, fundamentally undermining academic independence.

The Koch’s were not alone in this enterprise but they did, and continue, to play a major co-ordinating role such that at one point the sprawling breadth of their influence in right wing political promotion was described as Kochtopussy. Ms Mayer’s book makes clear that this was not the outcome of a series of more or less random individual initiatives. Rather it was an evolving, but very conscious, political strategy to move the political goal posts. It responded to a very clear cri de coeur set out in a memo by Lewis Powell in the late 1970’s urging American capitalists to wage “guerrilla warfare” against those he saw as trying to insidiously undermine them. Ms Mayer claims his call to arms inspired some of the super rich, “to weaponise their philanthropic giving in order to fight a multi-front war of influence over American political thought.”

You may wonder whether these people were driven by a bizarre but genuine belief in radical libertarianism, where the state, taxes and regulation were perceived as demeaning constraints on the freedom of the individual. In truth their idealism was always tempered by a strong regard for their personal advantage. When congress was considering the Troubled Assets Relief Progamme (TARP) the Koch’s and their radical caucus were opposed to the massive package of  state support. This changed however when the stock market started to tank. Suddenly their wealth was at risk and opposition to the TARP was dropped.

Another fascinating insight into the motivation of the Koch brothers comes from a post mortem conducted into the right’s failure to prevent a second Obama term at one of their annual seminars. Arthur Brooks, President of the American Enterprise Institute funded generously by the Koch brothers, made the point that if the 1% want to win control of America, “… they needed to rebrand themselves as champions of the other 99%”. This theme was built on in 2014 in a paper that Richard Fink, Charles Koch’s “grand strategist”, gave to a meeting of one of their annual seminars of the libertarian super rich. The paper was entitled “The Long Term Strategy: Engaging the Middle Third”. In a perfectly candid way Fink asked the question, “We want to decrease regulations. Why?” he then answered his own question, “It’s because we can make more profit, okay?.”

One third of the electorate who were perceived as solidly on the side of the libertarians, another third never would be. This mean the battleground was about gaining the trust of the middle third. To do this it would be necessary to convince the them that libertarian intent was virtuous. “We’ve got to convince these people we mean well and that we are good people.”

Following a Supreme Court decision in 2010 known as Citizens United it was found that corporations had the same rights to freedom of speech as individuals. This overturned a century of restrictions banning corporations and unions from spending all they wanted on the election of candidates. This opened the floodgates to political spending to support congressmen and senators and the Koch Brothers took maximum advantage building a real power base which was in but not of the Republican Party.

In 2014 the Koch network invested $100m into House and Senate races for the GOP plus almost twice as much into other kinds of activism. The result was they won full control of both. Their aim was to spend $889m in the 2016 presidential race. Whilst they could not legislate for the Trump wildcard the first attempt to replace Obamacare was such a shambles because of the intransigence of the right wing caucus within the Republican Party largely made up of Koch supported Congressmen and Senators who thought the Trump proposal was too generous!

Dark Money is a sobering work which casts an unflinching light on the very private world of the super rich in America and specifically on the brothers David and Charles Koch estimated to be worth $41.6bn each. It raises all kinds of issue about the role of multi-billionaires in undermining democracy in America and reinforcing a process which is concentrating ever more power and wealth in the hands of a smaller and smaller group of super rich plutocrats.

The influence of the Koch brothers, and many others of the same ilk, is not confined to the States however. They have played a part in shifting the terms of political debate across the whole of the developed world, dragging the centre of politics so far to the right that people like Richard Nixon look like lefty softies. If one thinks about how a proposal to increase taxes on the rich in Britain today would be greeted it is a testament to how far the super rich have captured common sense and shaped it to their benefit.

This is a book that should be read widely. It’s scale will probably prevent this which is a real shame. It is a tremendous summary of a long and sustained process of the exercise of soft power through the expenditure of vast amounts of private money. If the process is not stopped it will ultimately undermine democracy.

Dark Money. Jane Mayer. Scribe Publications 2016

 

 

 

Taxing Growth

Mrs May has reserved her position on the triple lock, responding to questions by saying with some pride how the Tory’s are the party of low tax as if this were axiomatically good. I am with Oliver Wendell Holmes Jnr on taxes, they are what we pay for a civilised society. Taxes are used to defend the country from external aggression, prevent and punish crime, maintain its transport infrastructure, educate its people and care for them in times of need whether caused by ill health or economic necessity. These are all good things and worth paying for. At the moment all of these services are subject to major challenge following almost a decade of Austerity and cuts to their budgets.

The government is constantly making “difficult choices” which involve cutting services to the bulk of the population. We need to do this, we are told, as the national debt means we simply cannot afford the services we once had. It is a very brave politician that suggests we might increase taxes to ease the problem of funding our public services, as Jeremy Corbyn has done. Even if it is proposed that those with the broadest shoulders might take the largest share of any increase. We are warned such a naive move would kill enterprise. Those who earn vast amounts of money would stop working so hard if they were taxed at too high a rate. This would undermine growth, GDP would go down and everyone would be worse off.

At first glance this might seem to all make sense. By not overtaxing the rich we get a more dynamic economy providing more jobs. Some even suggest that by doing this you will actually generate more tax receipts because a bigger and more productive economy means more jobs and more taxes. This is what supply side economics was all about. This last step in the argument might be thought to be manifestly  untrue as you would think we would not have the problem that we have in paying for the services of a civilised society if it were, given that we have indeed been lowering tax rates for the past half century or more.

However, if we consider the first part of the argument, that it is counter productive to tax the rich. Is it true? There seems to be growing evidence that low taxes and high growth are not very well correlated.

 

Graph 1

Graph 1 looks at evidence from the United States of America. It compares the GDP growth rate since 1947 with the highest income tax rates in the same years. It is a bit of a shock to look back at tax rates in the 1950’s. For more than a decade from 1951 the top rate of income tax was 91% or more. Through the 1970’s the rate had declined to 70% but in the 1980’s it fell from 70% to a low of 28% and then never got above 40% even after the crash of 2007/08.

Was this huge reduction in tax rate accompanied by an increase in the rate of GDP growth as the better rewarded entrepreneurs worked all the hours they could to increase their wealth even more? Seemingly not. In fact the growth rate roughly speaking halved as the tax rate more than halved.

Over the past half century the taxes on the very rich have reduced significantly. What is more the effective rate has probably reduced even more as ever more sophisticated means of avoiding taxes have been adopted by individuals and corporations. It may seem self evident that if you collect less tax it will be more difficult to fund the services of a modern state. There are of course a lot of very wealthy individuals who have a vested interest in making the majority of the electorate think that lower taxes will benefit everybody despite the growing evidence to the contrary.

Whether Mr Corbyn has what it takes to be a leader he is raising some interesting questions. They deserve to be taken seriously.

Paul Krugman, David Hendry & Martin Wolf: economic possibilities for the new government – YouTube

The following is an excellent challenges to the orthodox “there is no alternative” view about austerity Britain. Whilst aimed at the new 2015 government the arguments and views remain just as relevant. It is difficult to see how the orthodox position is going to deal with the growing crises in every area of our public service.

Koch-up and Conspiracy

If there was ever a test of the thesis that businessmen are better at sorting things out than politicians the repeal of Obamacare is it, and so far businessmen are not looking good. From over here it seems bizarre that a President who controls both houses of Congress cannot get through one of his key campaign pledges.

The Democrats are standing on the sidelines of this debate and whilst I guess there are many who feel real concern at the proposal to take healthcare away from millions and increase its costs to millions of others. Mixed in with the elation of victory there must be some feeling of schadenfreude.

President Trump tried to pull together a coalition of right wing Republicans with very, very right wing Republicans. Despite being one of the most conservative Congresses in living memory, there is a core of libertarian speaking Congressmen who are almost off the spectrum, the Freedom Caucus. They don’t want Obamacare “fixing” they want it repealing.

The Koch brothers, David and Charles, have publicly promised millions of dollars to congressmen, who vote against the current proposals, to help them get re-elected. Why this is not simply illegal is beyond understanding. That is unless you read @JaneMayerNyer  book “Dark Money”… This charts how the once reclusive heirs to the Koch empire used their considerable fortune to support a range of not for profit organisations promoting a range of extreme libertarian views and, in passing, their own business interests.

Ms Mayer’s book reviews almost 50 years of giving by the Koch family whose fortune is based largely on extractive industries and which over the years has had a number of significant brushes with the Environmental Protection Agency (EPA).  Oddly enough they think climate change is a conspiracy by those wanting to expand the role of government and have funded much work to attempt to undermine the science of global warming and are keen to limit or even abolish the EPA.

The groups they support always have names like Americans for Jobs Security and Centre to Protect Patient Right . The only thing the name tells you is that they almost certainly aim to do the reverse of what the words mean.

Money speaks in America and loudly, however currently 54% of the population are in favour of Obamacare. What is more, a lot of them are low income republicans. Some elected officials seem to have find that attack adds don’t cut it if they are held responsible for taking away health care for a large swath of their supporters.

The failure to repeal Obamacare is a fantastic result for ordinary Americans, many of whom will have voted for President Trump. However, progressives need to wake up. This was not a triumph of the opposition it was a Koch-up of the extreme right. They will regroup and return and they have hundreds of millions of dollars to throw at getting it right. The Democrats deserve a day of celebration but no more.

President as C E Ohhh!

Many of those that elected President Trump voted for him because he was a business man. They thought if he could run a successful business empire, 4 bankruptcies notwithstanding, he should have transferable skills to run the country efficiently. The case is often made that people successful in business will almost certainly be better at running government than career politicians and it is clear President Trump believes this also.

Whilst there may be superficial similarities and some overlapping skill sets, such as managing people and negotiating there are profound differences which in truth mean the two jobs are not just quantitively different they are qualitatively different as well.

Firstly, there is a level of accountability in government that is far in excess of that of both public and private companies. It is one thing to give a motivational speech at the staff conference to a group of people who’s careers depend in large part on your view of them. It is a wholly different issue to have your every utterance picked over by your peers who have a career interest in demonstrating that what you are doing is wrong.

The relative power and ability to challenge of, on the one hand, staff, customers and shareholders and on the other Congress, pressure groups and the media is immense. In the former case the executive has an information resource which translates into a real power advantage. In the latter it may often be the case that citizens, think tanks and pressure groups are much more informed about an issue than the President. Worse they can demonstrate in public his ignorance.

There is also an important difference in the relationship between means and ends. In most businesses there is a fairly well defined objective in terms of growth and profit. There may be debates about how this is achieved but those debates are largely within a relative well defined area. In politics the ends are often in question and the means so diverse and contested as to reignite challenge as to the nature of the ends.

Another huge difference lies in relation to the transparency of the processes of government and business. Even where there is not out and out secrecy there is much within business which remains behind the corporate veil. Intellectual property law, commercially sensitive data, compromise agreements for staff leaving organisations all provide more (or less) legitimate protections of corporate information. In liberal democratic governments the presumption is of the peoples’ right to know and only in clearly specified areas, such as national security, is there an ability for the state to limit transparency. Even then there is often oversight by independent individuals to ensure policies are not being breached.

Leading a country is about persuasion, consensus building and the ability to compromise. Running a private business you are the principal owner of is unlikely to be a good learning environment for those skills. Indeed it is very unlikely that direct challenge of any kind is going to flourish. From his behaviour in the course of the campaign and his month in office no one is going to describe President Trump’s management style as collegiate.

He clearly cannot tolerate anyone questioning his view of the world. His behaviour in the recent press conference confirmed this. He is hectoring and plain rude when he deals with people who do not simply say “Yes, Mr President”. His style betrays a lack of real confidence. He seems to need approbation and confirmation of his brilliance.

His continued attacks on Hilary Clinton are instructive, they are those of someone who, despite having won the election, is not convinced he has beaten her. At one point in the press conference he felt compelled to state. “I won the election.” Who was he trying to convince? Himself?

It looks very unlikely that President Trump will learn from his mistakes. Difficult when you do not think you have made any. He will plough on as he has started. As time goes by more and more people will say no to Mr Trump, eventually even those within his “team” will start to abandon him. He will become ever more beleaguered. The outcome is unlikely to be good. There is a chance he may resign in a fit of pique and speak to “his people” about how he has been undermined by the Washington establishment.

Alternatively he may start to manufacture reasons for dismantling the bulwarks of liberal democracy. He has already started undermining the legitimacy of the courts, the press and the opposition in Congress. With a divided America the opportunity for authoritarian action should not be underestimated. The idea that “it can’t happen here” was challenged by Sinclair Lewis in the 1930’s when populist right wing parties were growing across Europe. His warning has a new currency which should not be ignored.

Many see President Trump as an outrageous clown, a gift to the satire industry, a reason to open Twitter to see what latest irrational rant he has supplied for our entertainment. This is a mistake. President Trump is a dangerous liability.

He has identified a genuine and difficult problem. The existing political elite of Republicans and Democrats have failed to protect the interests of many millions of ordinary Americans. That issue will remain after President Trump has gone. Once he has gone if the narrative of “elite conspiracy” gets hold there are a lot of very angry and very well armed Americans who’s remaining faith in democratic change might be destroyed. If he does not go he may well become a genuine threat to American democracy.