We Did Not See You

One of the greatest mind expanding events of my life came when some of my in-laws moved to a small little town in Texas called Cleburne.  This town of somewhere around 30,000 in population is about thirty minutes south of Fort Worth.  It is a very different place than my surroundings in Southern California.  Experiencing Cleburne changed my worldview.

Like many small towns in America, Cleburne has a main street.  I traveled down its Highway 67 and marveled.  Store after store was vacant.  The streets had so many potholes that it made Los Angeles look pristine.  Real estate prices are minuscule compared to Southern California prices.  One can buy a large home for less than one can buy a condo in California.

During one of my visits, I visited a donut shop.  I walked in and was amazed that the inventory was extremely low and the selection very narrow.  I noticed that the heating and air conditioning was off.  The lights were off as well.  I was helped by the owner.  No employees appeared on the premises.  This shop was barely making it.  I made my purchase and walked out of the shop and looked at vacant store shop after vacant store shop and wondered where did everyone go?   The stories that I did not know about those who left concerned me.  Where did they go?

Cleburne’s stories are not isolated to Cleburne.  My wife and I once traveled from Cleburne to Waco along the back roads and went through small town after small town, all with lots of vacant storefronts.    

My experience with California is not the same.  The closet situation existed twenty years ago with a town called East Palo Alto.  The main highway in the Bay Area Peninsula is Hwy 101.  On the west side is Palo Alto, the homes of Stanford University and Silicone Valley.  But on the east at the time was East Palo Alto, a depressed area with a high crime rate.  It had small shops similar to those of Cleburne.  Then a number of large box stores, such as Ikea, came in and the area changed.  People who avoided the area started to shop in East Palo Alto.  New homes were built there and Silicone Valley employees began to buy there.  The area was reborn and the question became where did everyone who lived there before go?

In California suburban areas when storefronts go bust, some developer comes in and reconstructs a strip mall.  The new investors tend to be corporations and wealthy investors.   

Fiat Chrysler has announced that the Dodge Viper will be discontinued.  That has great meaning for Detroit.  The home of the automobile will loose its last manufacturing assembly plant within Detroit proper within the next year.  That raises a key question for all the auto assembly workers from Detroit.  Where did they go?

I shared these experiences with my sister-in-law from Cleburne.  She told me the story of a machinist she met.  He works two jobs and supports a family and has barely enough.  He has not voted in many a presidential election, but this November he made sure he voted, and he voted for Trump.

The people who are the subject of the many dislocations that our economy has experienced over the last twenty to thirty years are still there.  An analysis of the voting patterns of rust belt and other mid-western states indicate that those who we may wonder where they went are still there.  It also appears from the voting data that they came out from wherever they went and voted for Trump.

RealClearPolitics tracked sixteen battleground states.  Hillary Clinton won six of them.  The average percentage difference or spread from the last polls and her actual results among all six was a negative 0.2%.  In essence, she underperformed her predicted wins in these six states by 0.2 percentage points.  Though she bettered her predicted performance in Nevada by 3.2% and Colorado by 2.0%, she barely won the Democratic stronghold of Minnesota by 1.5% when she was supposed to win it by 6.2%, a swing of 4.7% in Trump’s favor and a swing larger than the margin of error of most polls.

This swing towards Trump was replicated in other battleground states.  He won the remaining ten by an average swing of 3.65%.  In essence, the pollsters predicted that his margin would be 3.65% less than it turned out to be.  Trump was predicted to win Missouri by 11.0% and he won it by 19.1%, a difference of 8.1%.  Wisconsin had a 7.3% difference and Iowa had a 6.5% difference.  Again, many of these results were greater than the margin of errors in the underlying polls.  Therefore, the probability that the polls reflected late deciders may not adequately explain why the polls fell short on election eve.  The real explanation is that people came out to vote for Trump who normally would not vote in a Presidential election. 

Understand that this voter is not in the voting models of contemporary pollsters.  Current voting models start with a base from the last election and project off this base.  If a major voting block failed to vote in the last election, pollsters assume that they won’t vote in the coming one.  But this election had a major voting block that did not register with the pollsters.

Trump appealed to this voter by talking about the American blue-collar worker.  He blamed their troubles on bad trade deals, automation, and a host of other things.  They came out from wherever they are to vote for him.  He is now their hero. 

Jennifer Rubin of the Washington Post called this voter the “angry white voter.”   There is a problem with the term “white” since Trump got more Blacks and Hispanics than Romney and some of these groups share the “angry” characteristic.  But if this is true then the question to ask is why?  There is one significant difference between this voting group with others.  This voter lost and lost a lot.  This voter is not wealthy or part of a corporation.  These are individuals with not a lot to support a family.   Other emerging voting blocks have unmet aspirations such as college for kids and some semblance of economic promise, much of which has now been delayed.  But the angry voter lost much of that and disappeared waiting for someone to speak to them directly, and that person turned out to be Trump.  They hurt, and he reminded them that they are in pain.  Whether you like him or not, Trump knew they were there and what to say to them. 

This voter is from the old economies of the Midwest and rustbelt states.  Without the electoral college we may never have known about this voter, and Trump would have returned to his penthouse in Trump Towers.  Our future would be in the new economies of the coasts, and the last hope for the angry voter would have been lost.  But it was not to be, and now Trump has to mend two economies, one new and one old into a single national economy.   

In the final analysis, this election was about economics and not about character.  Clinton appealed to her voters on the basis of race and gender politics, and Trump handed her the evidence that supported her argument on a silver platter.  It was a strong argument.  And a great many people bought into it with all of their emotions and hopes, and these people are crushed.   They do not see the wisdom of the Electoral College and believe that the plurality of four million votes in California and its high-tech economics should overcome Trump’s two million vote plurality in the other forty-nine states, many with an old rust-belt economy.   One person I met distinguished it as the United Peoples of American versus the United States of America. 

In the end Clinton failed to see the economic pain of what should have been her constituency.  These are Democrats with a large “D”.   Her staff advised her to go to these people and reassure them that they were being heard, and she did not.

This country is divided and each side feels extraordinary pain.  And each side should respect the pain of the other.

Here is the rub.  If Trump fails to give this lost and hurting voter that is still there the economic promise that he promised, they will come out from wherever they came from and vote again.  Only this time, they will vote against him out of lost hope and even greater anger.    

The Possible Return of Jason Bourne

This blog has become very dusty as of late due to its author being absent from its pages.  I have been deeply engaged in a graduate program in economics as well as keeping up with the demands of life.  Regrettably, I have not been able to contribute to this ongoing commentary.  Yet, what would draw me out and away from my studies?  Would it be the growing war on ISIS?  The Fed's moves on tapering QE and possible increases in interest rates?  The midterm elections and the Republicans efforts to once-again snatch defeat from the jaws of victory?   No.  None of these are so important.  But the possible return of Jason Bourne to the silver screen is.

I am a major fan of the Bourne movies and in the past week it was announced that Matt Damon and Paul Greengrass are in discussions to return to the franchise.  I wish I had time to read the Bourne novels by Robert Ludlum.  However, at the end of the day when my brain is fried and I need something to pass the time, I will watch any Bourne movie when opportunity affords me the chance to watch.  I cannot count the dozens of times I have seen each one. 

When the Bourne 4 movie with Jeremy Renner debuted, my wife and I had to see it in one of the new luxury movie theaters that have been trending in the last few years.   In a small room with 20 other people, I sat in a luxury recliner and had food brought to me as I watched this new character in the Bourne genre try to capture my imagination.  The only problem is that it did not.   If fact, it made me angry at the studio who made the movie. 

I felt manipulated and resentful as I watched The Bourne Legacy, the latest in the series.  The studio did a number of things that were bound to put the audience on edge.  Mostly, the plot was contrived.  There wasn’t a natural story that caused the audience to feel connected to the main character, Aaron Cross, who is genetically modified to have the skills of a Jason Bourne, someone who came by his skills naturally.  The science of genetics is only on the verge of curing cancer, and it is not plausible that science would be producing super human people at this stage of genetic development.  Further, it is not plausible for one of its key scientists, namely the Rachel Weisz character Marta Shearing, to be ignorant of the unethical application of her science.  

But the contrivances did not stop there.  As the movie was drawing to a close, I remember sitting in the theater thinking “this film is rather formulaic.  We are close to the end and there has been no chase scene.”  Sure enough, as soon as I thought that a chase scene appeared.  Every Bourne film has a chase scene and this one showed some invention with motorcycles.   Regardless, it was still a formulaic contrivance that echoes the days when action films were about Cowboys and Indians. 

The most blatant contrived plot twist was really bait for Jason Bourne to re-enter the series.   The Tony Gilroy story includes scenes from Capital Hill that potentially flips the intended outcome of the first three movies in the series.  Jason Bourne spent the screen time in these films chasing down bad guys and exposing the Treadstone and Blackbrier CIA programs that concentrated on assassinating world leaders.  His main ally in this was a CIA Deputy Director Pamela Landy, played by Joan Allen, who brought the assassination plots to the attention of the Senate’s Intelligence Committee.   Now, with Bourne 4, all that work is potentially up in the air to where the tables have turned and Pamela Landy is viewed by the public as the potential villain.  The implication is that Jason Bourne needs to return and set things straight in the next Bourne film or the heroin Pamela Landy will go to jail.    Oh come on Universal Pictures!  Give me a break!   Are you saying that the six hours of movie running time in the first three Bourne films was for naught?    That we, the audience, wasted our time?   Do you think we are really that dumb?????

Well, you are a movie studio, so I guess the answer to all the above is yes.

So, what does the movie studio do now?  The problem is that once you have a contrivance in a story line, you need another contrivance to correct it.  The only problem is that one more contrivance is too much and the audience will not believe it.  Or to put it in terms that studios understand, ticket sales will go down – a lot!  

Years ago, the producer of the James Bond films, Albert Broccoli, transferred control of the Bond franchise to his daughter, Barbara Broccoli, and advised her to go back to the Ian Fleming novels whenever the franchise got into trouble.  After four movies with Pierce Brosnan in the title role the producers did not know where they wanted to go next.  This led to a revisit to Casino Royale, a new Bond lead in Daniel Craig, and a more revealed Bond character.  We found out where he came from, something we did not know before. 

The writer of the screenplay for Star Trek II: The Wrath of Khan, Jack Sowards, said that films are about people.  When you write a film you start by completing the sentence “this film is about a guy who”, or “a gal who”.  A film is not about bad people chasing good people.  Such chases are tools that should expose the character of good people in an action film.  Films are not about chases per se.   

The Bourne Legacy film had a strong element upon which to build a sequel and that is the relationship between the main characters of Aaron Cross and Marta Shearing.  The next film should develop that relationship, and the bad people who threaten that relationship should be believable.  Further, genetic science behind the Aaron Cross should be downplayed.  The Legacy film was a little too reminiscent of Blade Runner.  The authors need to remember that Bourne is not a Sci-Fi picture, at least, not as Robert Ludlum envisioned it.

I and anyone else who ever saw the first three films will applaud the return of Jason Bourne to the series.  Matt Damon has declined up to now to return.  He wants a good script and Paul Greengrass to direct it.  Greengrass was director of the second and third films of the franchise.  One or both of these demands have been absent up until this point.  There is a lot of potential material for the new Jason Bourne film to explore.  When we last left Bourne we had learned that his real name is David Webb.  Shouldn’t we see him finding out who that is?   What about the Nicky Parsons character played by Julia Stiles?  She helped Bourne fight the CIA and was declared an enemy.  Bourne put her on a bus and helped her run.  Will Bourne get together with her and if yes, why?   There could be an immense story line here too.  But with the CIA exposed, the reason why the CIA will continue to chase him needs to be plausible.  Simply because the CIA is bad and Jason Bourne is good is not enough of a reason.  Matt Damon and Paul Greengrass spent years exploring plot alternatives and they failed to come up with something that solved all the problems that have been discussed here.    I want to see the next film, but I also want to see a good film.

As a final thought I think a good film might be made in about ten years about the mess surrounding the Bourne film franchise.  It would be a docudrama that explores the promise of the original Bourne series and how it came to be, and all the moves and machinations engaged by the studio to persuade principled and highly creative people to compromise by making the Legacy sequels and trashing the original series and the Ludlum tradition.  Hopefully, both the forthcoming Cross and Bourne films will come to us uncompromised negating the need for any such docudrama.

   

Obamacare and Star Trek

I am in the midst of a conversation with someone over my last posting.  The issue involves the tradeoffs in Obamacare.  A program such as Obamacare will involve a number of tradeoffs within society.  Some of us will pay more for our health services to enable others who do not have such services to finally access them.  Most of us would go further by supporting some types of tradeoffs in general to achieve the purposes of Obamacare.  Whether we accept the specific tradeoffs in the new law is another question and it is the subject of our current national debate.

Well, I don’t want to go into Obamacare as a whole.   Though I have my own opinions about the program, my concern was for one particular tradeoff that to me was unfair.  To support my side of the argument I call upon the wisdom of Star Trek.

In my last blog I noted the situation where an individual with cancer was loosing her insurance and there was no affordable replacement in the exchange.  Was this a fair tradeoff considering how Obamacare was now providing health insurance for other Americans who could not afford it in the past?   My position is no, but more on this at the end of this post.

Jeremy Bentham was a philosopher and social reformer who lived in England from 1748 to 1832.  He is credited as being the first to articulate the philosophy of utilitarianism.   We know this philosophy because most of us have watched Star Trek.  In the movie “Star Trek II: The Wrath of Kahn” Spock justifies his death to Kirk by saying that the needs of the many outweigh the needs of the one.  The plot continued into “Star Trek III: In Search of Spock” when Kirk found Spock’s body for the purpose of restoring to it Spock’s mind and soul.   Spock’s father pointed out to Kirk at the end of movie that the effort to save Spock cost Kirk his ship and his crew.  To this question Kirk responded that the needs of the one outweighed the needs of the many.  This was a true Jeremy Bentham debate.  (For more contemporary Star Trek fans, the debate is included with some interesting character twists in the most recent Star Trek movie “Star Trek Into Darkness.”)

And so we have the same debate here.  When does the need of the one outweigh the needs of the many?    I would say that no one who has a life threatening disease or condition should be put in a position of risk simply because this nation is changing its health care system.    I don’t think any American would want this. 

My previous post was about how the politics of the last two months are playing out.  It was not on the costs and benefits of Obamacare, or how such tradeoffs can be improved.  But if that is the subject, whatever modifications we make to the system should include carve outs for people who are now caught in terrifying circumstances such as the cancer survivor from my previous post.  Within the overall global tradeoffs of Obamacare there can and should be exceptions for cases like hers.   There should also be set asides and ombudsmen to help people in these situations.   Since the media has not mentioned such mechanisms, I can only conclude that someone forgot to put such protections into the law.   If they are not in the law, at a minimum, they should be in the law.

What I am trying to point out in these two posts on Obamacare is that our political debate both for and against the new law is not consistent with our national character.  Both actions of shutting down the Government, which was discussed in the previous post, and constructing a program that threatens the lives of even a few people run against some of the most fundamental principles of fairness that we were taught as children.

Obamacare, Politics, and Horace Greeley

The nation has seen some incredibly dysfunctional politics on the left and the right over the last two months.  First there was the Republican shutdown and now we have a mess with the rollout of Obamacare.   Today’s RealClearPolitics website offers articles authored by William Saletan and Todd Purdum that discuss how President Obama can still win the Obamacare debate.  The idea is that because of the Republicans counter intelligent effort to shutdown the Government has put the Democrats in a better position to win the 2014 mid-term elections.  Well, let’s take a look at that.

First, let’s look at the Shutdown.  If you are a Democrat you should herald this as one of the most, oh, I can’t quite find a good term that captures the essence of that political action.  Words like bonehead, moronic, insane come to mind and they are just inadequate.  The Shutdown was never a good idea for three reasons.  First, it was never possible for the Shutdown to achieve its aims of dismantling Obamacare.  Since the first definition of politics is that it is the art of the possible, why engage in the impossible?  Second, we live in a democracy, and if you are a minority in a democracy, you have to compromise.  To tell your constituents that you don’t have to compromise to achieve your ends is, well, like leading lambs to slaughter.  All during the Shutdown I was reflecting on Alfred Lord Tennyson’s Charge of the Light Brigade, a poem about 600 soldiers who loyally gave up their lives in battle on the orders of misinformed superiors who foolishly did not know the battlefield.  The far right Republican leadership misspent the trust of their constituents and lost political capital in the process.  Finally, the Shutdown violated some of the most basic rules we learned in kindergarten about how to live in a sandbox.  Americans don’t like bullies in their sandbox.  Here was Ted Cruz acting like a bully trying to take over the sandbox, and Harry Reid threw him out: the duly elected bigger bully of the sandbox.  The great American center that believes in fair play doesn't appreciate these types of spectacles.   So, one would think that Democrats would be masters of the universe right about now due to the Republican implosion.  Yet, they are not.

The Obamacare rollout fiasco has hurt Democrats, and it is likely that it will hurt them more and more all the way up to the 2014 elections.  Where the Shutdown was a one-time thing, Obamacare will bring healthcare issue after healthcare issue into our political debate for the next year.   It will be a drip-drip-drip that politicians need to avoid in order to look competent and win re-election.  The real issue will not be the botched programming of a governmental website.  That will get fixed, eventually.  It will get fixed late, but it will get fixed.  Rather, the issue will be how Obamacare violates another basic tenet of American culture.

Within the American psyche is a fundamental belief that we can always have more.  The basic quote attributed to Horace Greely from the 1800’s “go west young man!” signifies that we, both individually and as a people, can go out and make more of ourselves for ourselves.  We can have more land or wealth, or whatever by going out and making more of ourselves to get it.  The idea that any resource is finite is against this cultural experience. 

I am old enough to remember the theme of the Kennedy administration, which charged us to explore “New Frontiers.”  And in accordance with that direction, President Kennedy challenged this nation to expand upward and put a man on the moon, a challenge that was fulfilled after his passing.  That was the last great expansionary effort by an American President.  After that came the Vietnam War, terrorism, and the Great Recession and the pathetic recovery following it.  Nationally, it now seems that we cannot expand and grow our way out of problems.  Rather, we have to settle and cope with them. 

Obamacare is a marker in our cultural experience.  It is a formal program that officially recognizes that a critical resource is finite and that some people have too much of it and others have too little.  Whereas our tax policies reallocate a growing resource, namely our income, Obamacare reallocates a finite resource, which is our healthcare.  As an impact of this reallocation, some people who are very sick will get seriously hurt when they loose their healthcare. 

In the last week there have been many stories about Americans who rely on their current health insurance to stay alive.  They usually have cancer and are affiliated with a PPO or other such health provider association.  Many of these PPO’s are based around a university medical center that is normally too expensive to be sponsored by any insurance plan on the new exchanges.  These PPOs and other similar plans are being cancelled because they do not meet the new criteria laid down by Obamacare.  I saw a story about a 52-year-old cancer survivor who needs maintenance treatments from a university hospital.  Her existing PPO plan is being cancelled and she cannot afford a new plan from the exchange.  Not only is the premium higher, but also the $12,000 deductible makes it impossible for her to afford the new plan.  Providing healthcare for her family and herself is now the major challenge in her life as she tries to figure out how to manage her life into a future that is suddenly very threatening. 

From a social programming standpoint, one can say that the healthcare of the cancer survivor is being reallocated to the poor who are now being admitted into Medicaid under the new law.  From an economic perspective, one can discuss the pools of the young insured healthy people paying for sick older people.  However these analyses breakdown because each of these people who have been critically hurt by the new law now have a face.  Each has a very personal story. 

All the Republicans have to do is put these people on television from time to time and remind us how we “reallocated” their healthcare instead of growing the healthcare resource for more of us to enjoy.  Then they will tie each of these stories to a Democratic Senator or Congressman who voted against the Shutdown and for Obamacare and the play will have come full circle.  The Democrats will say that using these people for political purposes is cynical, and to a degree they will be right.  But it is politics and the stories are personal.  They will sway the American voter.  At this moment, I would bet on the Republicans, but that bet assumes that the Republicans are smart, which, by itself, is a big assumption.

What the Heck is Going On?

If you are like most Americans you are probably wondering what the Republicans are doing by shutting down the Government.  I know I am.  There are a number of possible explanations. 

The most popular explanation that the media seems to offer is that the Tea Party demanded that their representatives force a shutdown on the Party.   Senators Cruz and Lee have been raising money on TV for months.  They have inflamed the base and the money has been coming in, and to complete the promise of stopping Obamacare Senator Marco Rubio joined these Senators in a Senate filibuster.  But the message has gotten away from these Senators and the Party as a whole.  They spent so much time focusing on defunding Obamacare, a goal that was impossible to achieve, that they sacrificed other goals that may have been attainable.  Had the Republicans focused the public on delaying the individual mandate for a year, or on ending the Congressional Staffer subsidy, then there might have been a victory by now.  Unfortunately, all the public knows is that the Republicans hate Obamacare.

I have a different take on these events, but to explain it requires some detail and some history.  It involves the overall budget process between the House and Senate.

When President Obama was elected the Democrats took control of both the House and the Senate.  They passed large budgets in 2009 and 2010.  They then lost control of the House of Representatives.  We have not had a formal budget in place since then.  The Government has been operating under a mechanism called a Continuing Resolution.  The technique continues funding the Government at the level of the last completed budget, which means that the Democratic budget is still the baseline budget.  The Republicans have been in control of the House for almost four years and they have not had much impact on the budget.  This is except to say that the use these CR’s has been the only opportunity for the Republicans to make their impact felt.  For the past four years the Republican House has passed budgets without the Senate passing theirs, except until this current year.  Previously the Senate did not pass a budget and has been subject to Republican ridicule.  This year the Senate did pass a budget, and they demanded a Conference Committee to resolve differences with the House budget.  The Republicans have yet to name their members. 

What does all of this mean?  The Democrats gain more by forcing the Republicans to the Conference Committee and they have more to lose if they work within a Continuing Resolution.  Democrats want to raise taxes and restore the budget cuts from the sequester cuts that were adopted in the last CR.   They cannot achieve these ends in the CR process.  Therefore, they won’t negotiate a CR in any form.   So, underneath all the shameful rhetoric is a simple game of wins and losses, and due to some Republican mismanagement, the Democrats are in control of this game.  When something like this shutdown comes along, it is good to look for the larger chess match that is going on.

Now, there are some people who deserve special mention for inflaming this situation.  The first is Senator Ted Cruz and his colleague Senator Mike Lee.  They promised their base that Obamacare could be defunded and we now know that it can’t.  In fact, many good conservatives with credentials that cannot be challenged told them so.  Just saying no does not work in this situation.  They led their base down the wrong path, and the rest of the Party is paying for it.  They played small ball and they lost. 

The next group that deserves mention is our national media.  The American public has been against Obamacare ever since it was first proposed.  A review of the RealClearPolitics.net average of polls on this subject shows that the American public has always been against Obamacare from anywhere from a 10 to 20 point margin.  This is a basic fact.  Our Government has forced a program on the American people that they never wanted and definitively do not want now.  Something is wrong when the will of the American people is repeatedly denied year after year.  The media is responsible because they do not report this fact.

The next person that deserves dishonorable mention is the Senate Majority Leader Harry Reid.  The Tea Party people are not anarchists and terrorists as he claims.  The Tea Party started when the Democratic controlled House members went back to their districts and found protest after protest, which they all ignored.  These protests were covered night after night on the Government’s very own C-SPAN television.  After being rebuffed as Obamacare was passed, a groundswell of people with no leadership from any party formed the Tea Party.  The result was the House was lost to the Republicans and has stayed in their control ever since.  The Tea Party is a product of Obamacare and they are a thorn in the side of Democrats.  They played by the rules in this situation, and they are not anarchists.  However, Harry Reid, who has thwarted the will of the American people year after year by forcing Obamacare on them in 2009 and defending it with procedural tactics ever since could be viewed as anti-democratic. 

Finally, some credit has to go to the President.  Now that he has the Republicans exactly where he wants them, he should weigh the continued effects of keeping the Government shut down against the political capital he gains as the shutdown continues.  I think he would find that the national interest should prevail.  It is time to throw the Republicans a bone and end this thing.  Give them a graceful way out.  President Kennedy did this with the Soviet Union Premier Khrushchev in the 1962 Cuban Missile Crisis.  But I fear that this is where President Kennedy and our current President differ. 

And people wonder why our Government is dysfunctional.