The Face Of America

Posted April 21, 2018 by zukunftsaugen
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Yesterday I visited a Baltimore first grade classroom.  The purpose was to hear my granddaughter read a story she had written to her classmates.  Other moms and dads along with other grandfathers and grandmothers were there too to hear their loved ones read their stories.  

My granddaughter, at the last minute however, chose not to read her story because it was not entirely true.  She knew we knew the real facts and would know her story was fiction.  Apparently my granddaughter felt embarrassed and took a knee.  (Ironically, the writing assignment had nothing to do with accuracy but to my granddaughter it did).

First graders are a fun age.  Still innocent, learning new things all the time, and beginning that journey from childhood (where everything an adult says is true) to a teenager (where nothing an adult says is true).  Keeping the class on any task with any semblance of unison takes a special and dedicated teacher.  This class has one.

The school was Roland Park Elementary and Middle School, and is located near John Hopkins and several other Universities.  The catchment area could be described as diverse.  Normally one thinks in diversity terms of African American and white, but not for this class.  The happy smiling faces were of all shades and features.  Asia, Europe, South America, Africa, Latin America, and third or fourth generation white immigrants were represented.  

The first graders were clustered in groups of six around oblong tables, and following the teachers call, “ 1-2-3, eyes on me”, each of the multi-colored faces replied, “1-2, eyes on you”.

Across America there are many schools which do not have the wealth or richness of this level of diversity.  Even in Baltimore or Baltimore county, many schools are mostly one race or another. Mostly that results from where people live and which race their neighbors might be.  For Roland Park, diversity produces happy faced, wide eyed, and ready to learn young students who see the other person as their table mate, recess friend, or walking home pal.  

This is the true face of America where everyone is or was an immigrant, where what you did was more important than what you were, and giving an opportunity to others was to be expected.  Regrettably, there is plenty of time after first grade for children to learn older generation’s fears, prejudices, and unkindnesses.

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Starbuck’s Dilemma

Posted April 17, 2018 by zukunftsaugen
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Thanks to cell phone video capability, the arrest of two young black men for “loitering” at a Center City Philadelphia Starbucks was shared across the nation.  The two men apparently entered the coffee house planning to meet with a friend.  They asked to use the restroom but since they had not purchased anything, were denied the key.  The store manager subsequently asked the young men to leave and they refused (since their friend had not arrived).

The Starbuck’s manager called 911 and when the officers arrived told the police that these two men were trespassing.  The police responded to the manager’s complaint and proceeded to arrest the two men.  In the process of taking the men into custody, the previously mentioned “friend” arrived.  Too late in the eyes of the store manager and the police proceeded to take the two men into custody.  Later that day, charges were dropped and the men were released.

One can think of many other ways this confrontation could have gone.  For instance, the officers could have asked the men to call their friend and determine when the friend would arrive.  Starbucks is well known as a place to meet and talk, why treat these men differently?

Shortly thereafter, however, the video went viral and soon protesters were picketing the shop.  Social media had another hit on its hands.  This incident took on “Black Lives Matter” stature.

As in most black-white, or black-police confrontations, after the event one can see numerous ways a more sensible outcome could have been reached.  Most observers would have assumed two similarly dressed white men, doing the same as these two black men, would have been given a pass and allowed to wait for their friend.  Why weren’t these black men not afforded the same?

Protesters claim this was a blatant example of racial profiling and bias.  Maybe, but is that the only explanation? 

Philadelphia has experienced “flash mobs” where young men and women suddenly converge upon a store or shop, or even just an intersection in the city’s center.  Cell phones (texting) have clearly facilitated this phenomena.  Why younger people like this, I do not know.  And by the way, these groups are almost always 100% black.

Consequently, it is relatively easy to understand where the store manager might have been coming from.  Regrettably, however, the store manager should also have known that not all black customers act this way.  Certainly in a city like Philadelphia (45% African American), there were other options which could have been useful.  African Americans are customers too, and for sure not all white patrons order coffee or order enough coffee to justify the amount of time these customers take using Starbucks’ free WiFi.  

Starbuck’s CEO visited Philadelphia on Monday and met with protesters and the Mayor.  The CEO also apologized to the two victims and promised to increase “sensitivity” training.  In all, the CEO represented Starbucks well.  Today, Starbucks announced its 8000 nationwide locations would close one day in May for “bias awareness training”.

Looking back at this incident, a more experienced store manager could have handled the situation differently, like waiting 30-60 minutes for the friend to arrive.  The police could have assessed the situation differently since there was no evidence of theft or damage, or called for a supervisors opinion. 

On the good side, no one was roughed up or worse shot.  But the situation never needed to happen.  The two victims could have bought a coffee or waited outside until the third person arrived.  The Starbucks’ manager could have used judgement that these two black customers were telling the truth and invited them to relax, maybe even use the restrooms.

Would have, could have, should have.

Will The Deep State Be OK With Firings?

Posted April 10, 2018 by zukunftsaugen
Categories: Donald Trump, Uncategorized

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The question before the house, like the phrase “elephant in the room” is what will motivate President Trump to fire Special Council Robert Mueller.  Of course to fire Mueller, the President must first fire Attorney General Sessions or the AG must fire Deputy Attorney General Rod Rosenstein in order to appoint someone who will fire Mueller.  What a mess that will be.

Watching the videos of yesterdays national security council meeting over Syria, and hearing the President’s rants about an FBI raid on Michael Cohen’s offices was enlightening.  While a serious matter in its own right, the raid had nothing to do with Syria or national security.  The President’s appearance told a story of burning rage and an apparent absence of any idea how to deal with what the President sees as the source of the problem.  No Mueller, no investigation.

Changing subjects, the “deep State” allegedly is a cabal of long term, senior officials, scattered through out the Government and Military who see their meaning in life as keeping the United States from drifting to far either left or right.  They achieve their objectives by making sound decisions, bogging down other government initiatives which appear to be heading into dangerous territory, influencing public opinion through selective leaks, and stashing more like minded Americans into key positions just in case they might be needed in the future.  Is it time for the “Deep State” to act?

The 25th Amendment offers a mechanism for removing President Trump without the need for impeachment and conviction by the Senate.  Yet such a Constitutional crisis should worry anyone who might consider themselves as members of the “deep State”.  Done once, the 25th Amendment could become the preferred tool of far right populists in the future.  Our American history has been based upon replacing a President via the ballot box regardless of how much buyer’s remorse the electorate might have.

President Trump is proving each day that he is an exceptional leader… in the sense of pure determination to have things his way.  If your needs line up with President Trump’s, one will undoubtably overlook any short comings in the President’s character or judgement.  For the Deep State, however, the rule of law is a bed rock principle.  Firing Mueller will have consequences of far reaching proportions.

But here is the quandary. 

Special Council Mueller’s ultimate report to Congress could reveal why President Trump has not released his tax returns and most likely the report would critically wound the Trump business brand.  In this process there is a high probability that members of the Trump family and associates will be targets of criminal investigations.  Whether the President is criminally involved or part of any collusion with the Russians is just speculation.  How about more mundane crimes like money laundering, extortion, or simple graft and corruption, who knows.  How can the President escape the tightening noose?

The Trumpian answer is “hire him”.  The question the President needs to ask himself is whether firing is a step too far and if the Republican controlled Congress doesn’t react, the next Congress will almost certainly be Democrat controlled.

Smoot-Hawley Or Bust

Posted April 9, 2018 by zukunftsaugen
Categories: Donald Trump, Uncategorized

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Over the past several weeks, our “Trader-in-Chief”, President Trump has tried to out do “Smoot-Hawley” the infamous tariff builders.  The President’s tactics, while blunter, and possibly less reasoned, lack any substantial Congressional backing.  Are his efforts destine for the same infamy as Senator Smoot and Representative Hawley’s actions.  And,  should anyone be surprised?

To be clear, it is not that some of America’s trading partners have been conducting trade far more favorable to that country’s interest than what might otherwise be called fair and reciprocal.  China, South Korea, and some aspects of NAFTA (Mexico and Canada) offer examples.  So, is President Trump justified in imposing tariffs against these countries in order to redress these alleged trading infractions?

First, it is worthwhile to recall the impacts of Smoot-Hawley (passed in 1929).  Smoot-Hawley was passed to “save American jobs from foreign competition”.  Hmmm, sounds familiar?  Within a short period of time, however, the opposite impact was being felt.  Other countries immediately counter US tariffs with tariffs of their own.  Soon global trade shrunk for everyone and the world settled into a recession followed by a depression.  And, of course, unemployment surged.

President Trump has pontificated for decades about unfair trade and how he could fix it right away.  As President, Trump has seized the opportunity to use his classic bully style of negotiation still thinking other countries will simply fold like a cheap suitcase.  There can be no other outcome than reduced trade in any situation where the US chooses to use the tariff weapon. 

The more countries the US engages with tariffs the more likely the broader use of tariffs will be.  (Tariffs are politically seductive because workers see them only through a narrow self interest perspective.  A politicians who appears to be looking out for the workers’ best interest must be a friend.  Hmmm.)

Another aspect of Smoot-Hawley which must be remembered is that the increased use of tariffs many historians believe lead directly to the second World War.  As trade dropped, workers became unemployed, and as general prosperity plummeted, voters became very susceptible to extremist political rhetoric.  Regrettably, most people do not learn from history and consequently forget the consequences of past bad decisions.

History is not lost on President Trump, IMO.  Rather President Trump thinks he is the biggest kid on the block and he can bluff the US’s ways at the trade bargaining table into more favorable terms.  His objective is to gain voters’ immediate political points. 

With Canada or Mexico, or any other small country, the Presidents bluffs and bullying style might carry the day.  With more sophisticate countries like France, Germany, the UK or Japan, the President will have met his match.  And with China, tariffs are simply not going to work because the size of the China market is too enticing to walk away from for many parts of US exports.

One would hope that President Trump would recognize the futility of tariffs, especially on China and think through some other 21st century approaches.  Reciprocity ( that is equal and opposite tariffs) represents the high road because this leads to competition over productivity.  When protectionist subsidies or favorable local tax treatment are used, the world trade organization can provide a forum to arbitrate these differences.

President Trump, regrettably, sees every problem as a nail and selects his only tool, a hammer, and uses it with glee in attempting to solve each problem. 

Confused? Or Trying To Confuse?

Posted April 4, 2018 by zukunftsaugen
Categories: Donald Trump, Uncategorized

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President Trump has had quite a week for himself.  He has set off the first skirmish of a potentially harmful trade war.  He has changed his National Security Advisor to a George W Bush “let’s invade Iraq” chicken hawk whose previous positions have been to preemptively strike North Korea and scrap the Iran nuclear agreement.  And today, the President announced the movement of US troops to the Mexican boarder allegedly to keep Mexican immigrants (and drugs) out.  

With trade, the President begins with a reasonable thesis, China has been strong arming Americans companies in order to obtain intellectual property and have been exporting far too much steel on world markets.  This has not been a mystery to previous Administrations but how to curtail China’s behavior has been elusive. 

The President said he would be different and immediately announced large tariffs on imported steel and aluminum, which would include China.  Predictably (history is a good teacher), China retaliated with tariffs on a wide range of politically sensitive US exports and hinted that more could come if the US did not rethink its new tariffs.

Almost coincident with firing HR McMaster as National Security Advisor, President Trump received and accepted an invitation to summit with North Korean leader Kim Jong Un.  McMaster’s replacement, John Bolton is a hawk’s hawk.  Do you wonder what type of advice Bolton will give on how President Trump should deal with North Korea? 

Even more curious is what to do about Iran.  Again, President Trump sees Iran correctly in the sense of pursuing its own Middle East agenda.  The President has shaded his views about the Iran Nuclear Agreement from Iran violating the agreement (which Iran has not) to the agreement’s “spirit” (the agreement is about nuclear activity not other matters) claiming Iran is acting poorly and therefore the US should withdraw from the agreement. 

Has the President considered that (1) none of the other signatories to the Iran Nuclear Agreement will withdraw, and (2) simply walking away from the Iran Nuclear Agreement will not be lost on North Korea (or China) as to how much value one should put into any future US agreement.

With respect to Mexico, the President again is correct that some Mexicans and some amount of drugs pass through the US-Mexican boarder.  Most reports, however, indicate the flow of Mexican undocumented immigrants is at very low levels if at all.  And with respect to drugs, there is little indication a wall or a battalion of soldiers will make any difference

So why does the President say the things he does?

There are as many theories to explain the President’s behavior as there are pundits.  No one really knows, that is the President has not explained his motives directly to a confidant.  But one can safely begin by assuming the President is not confused.  President Trump is a 100% “ends justify the means” type of personality.  

For example, today the President jumped again onto Amazon linking Amazon’s use of US Postal Service local delivery as unfair to the Post Office and tax payers.  There is speculation President Trump’s real target is Jeff Bazos, CEO of Amazon and owner of the Washington Post. 

Maybe and in addition, just as possible an explanation for the President claiming a string of clearly untrue charges against Amazon is to distract voters who will soon be feeling the blowback from tariffs, will see the North Korean overtures going astray, will see the US isolated from other world allies over Iran, and see the wastefulness and inadequatecies of using highly trained instruments of war attempting to police the almost 2000 mile Mexican border.

The office of President of the United States has served as an example for all American children that hard work and honesty can serve their lives well and some day they might too become President.  President Trump seems set everyday to darken that image to the point where unlike George Washington who could not tell a lie, future generations might not be able to tell the truth if they follow the President’s habits.

What A Way To Go

Posted March 31, 2018 by zukunftsaugen
Categories: Donald Trump, Uncategorized

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This past week, David Shulkin, Secretary of the Veterans Administration, was fired.  For President Trump, dismissing a White House staff member including cabinet secretaries, is  business as usual.  Classless and with ill-defined rationale.  But as more and more news makers are commenting, it was never about Shulkin or VA needs, but all about the President.

So what are Americans to make of this undignified use of executive authority?

  • Lets begin with the most obvious. Cabinet leaders serve at the pleasure of the President and no justification is necessary.
  • Most Americans, however, would expect some sort of explanations.  For example, Under Secretary Shulkin leadership, the service provided to our veterans declined unacceptably.  But that was not the case and the opposite is far more likely.
  • Politics, of course, is always not far from the appointment or retainment of cabinet Secretaries.  The President could have said that Secretary Shulkin had performed very well and as a hold over from the Obama Administration, had provided valuable continuity.  Now it was time to appoint a qualified Republican. Not mentioned by this President.

The President’s choice for the next VA leader is White House physician Ronny Jackson, someone with no experience running an organization and certainly not one as large and sprawling as the VA.  So we must look for some other reason.

Shulkin has said that White House political appointees had wanted Shulkin to push for “privatization of most of the VA services.  This would represent a fundamental redesign of the VA with little or no debate.  Shulkin opposed this pressure and is now back in the private sector.

Why would President Trump do that?

For the time being, IMO, one must speculate.  The two most obvious reasons would be (1) to distract Americans from all the other balls President Trump is juggling.  (2) A second reason runs along the lines of “what’s good for supporters of President Trump is good for the President too”.  Privatizing the VA would open oodles of business opportunities where oodles of money could be made from government contracts.  Hmmm.

(White House political appointees left a digital trail by suggesting the White House use a “free spending excuse” justifying Shulkins dismissal.  Unfortunately Secretary Shulkin’s alleged offenses were no more egregious than other cabinet secretaries, like HUD’s Carson and EPA’s Pruitt, and probably less.  Hmmm.)

David Shukin will make out quite well when he returns to work in the private sector.  There is no need for Americans to be concerned.  On the other hand, Veterans might be in for some unpleasant surprises and tax payers almost certainly will pay more for “privatized” services if these services deliver the same level of care as Veterans currently receive.

Jugglers who put too many balls in the air reach a point where there are too many.  The President had far more balls in the air before he fired National Security Advisor, HR McMaster and Secretary of State, Rex Tillerson and now David Shulkin.  A juggler’s risk is not dropping the extra ball, but rather seeing many, if not all, the other balls already in the air crashing down.

China And Trade

Posted March 25, 2018 by zukunftsaugen
Categories: China, Donald Trump, Uncategorized

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President Trump, in his best populist demeanor, announced massive import barriers on China. The President pointed to the $300+ billion annual trade deficit as justification. The President demanded China decrease the deficit by $100 billion as a first step. Sounds straight forward. Why are so many economists worried?

China is a huge country with over a billion citizens. Reports indicate that of that one billion, 400 million Chinese possess US middle class buying power. This should be a ready made market for American made products but the trade deficit shows otherwise. Why?

First, lets look at the top 10 US imports from China.

1. Electronic equipment: $150 billion (think Best Buy, Home Depot, portable drills, saws, vacuums, etc)
2. Machinery: $112.4 billion
3. Furniture, lighting, signs: $34.8 billion (think Pottery Barn etc)
4. Toys, games: $26.7 billion (think Amazon, most Department Stores)
5. Plastics: $17.6 billion
6. Vehicles: $15.6 billion
7. Knit or crochet clothing: ($14.9 billion (sweaters at Macy’s etc)
8. Footwear: $14.8 billion (Shoes and Running shoes)
9. Clothing (not knit or crochet): $13.5 billion (shirts, pants, hoodies at Walmart, etc)
10. Iron or steel products: $12.4 billion

What is it that makes this list of over $400 billion so attractive to American consumers?

Can you tell me the band name of one Chinese TV, vehicle, piece of furniture, toy or shoe, or piece of clothing? Almost certainly you cannot because the importers are American businesses which have outsourced the production of these items to China. Why? Because Chinese production costs less than “made in America”. And as a result US inflation rates are still very low.

This is an odd situation where Chinese business are not selling their brands in the export market. Chinese exports carry global brand names like Izod, Black & Decker, or Pottery Barn, and are exported to fill direct orders by US companies. So attempting to punish Chinese business for what US businesses have requested does not seem a wise and begs for unintended consequences.

But there is another face to Chinese trade. Is the Chinese domestic market open to US exports on the same basis that the US market is open to Chinese imports?

Unfortunately, the answer is no. The standard Chinese rationale has been that China is a developing market and needs to protect some parts of its economy so China can “catch up” to the developed countries. Tariffs have been the “go to” technique to provide local business owners time to develop competitive counter offerings. But with China (and also Korea), the understanding of intellectual property is quite different than the view in the West.

For example, US automobile companies face stiff tariffs on imported US made cars and trucks. Chinese officials insist that these automakers establish a presence in China in order to sell in China. (This is similar to what the US asked of Japanese car makers.) But there is a twist with the Chinese.

Automobile companies found that they could not get a license to manufacture unless they form a joint venture with an approved Chinese company. China also limited the amount of sub-components that could be imported for the assembly and sale of an American brand automobile in China. This provision was intended to require the auto maker to build, for example, stamping (the frame and skin of an automobile) plants, or buy from an existing Chinese stamping plant. Auto makers soon found Chinese made cars (under a Chinese makers name) running around China that look an awful lot like western cars. These Chinese auto parts companies just made more fenders and hoods than were ordered and sold the extras to a different Chinese assembly company who in turn assembled his own car. This, in Western terms, represents intellectual property theft.

So what are the consequences of getting tough with China?

China is still developing its economy and unfortunately is not going to leave unprotected certain industries. Automobiles, computers, solar panels, etc will present constant threats to intellectual property theft and protectionism regulations. Negotiations, especial through the WTO are in the long term the wisest path. Some day other countries will impose trade restriction on Chinese firms and China will feel economically the dangers its current policies have upon the US.

The US has instead chosen to levy tariffs which will increase the cost of products the US imports from China, thereby increasing the cost to US customers. China does not pay the duties, the importer does.

Ironically, the approach President Trump is following could have the consequence of raising wholesale prices on a broad section of goods and services without any increase in US sales to China. And should China elect a “tit for tat” response, American sales to China could decrease.

A bully knows only one approach. Threaten to punch the other person in the nose and expect the other person to bend to the bully’s demands also carries risks. China is unlikely to roll over to this approach and in a trade war, both sides normally lose.  Why would the President continue this high risk approach?

President Trump has his legal problems (with Stormy et all), the continuing Mueller investigation, weakening international relations (after killing the TPP, Paris Climate Agreement, and continuing to insist upon the “Wall”), and now he seems set to take on North Korea and Iran (with his new NSA and State Department Secretary. For someone who loves chaos, trade with China could distract Americans from Trump’s other unforced errors.

For sure, President Trump will have plenty to tweet about. I wonder whether he will notice the rest of the world’s friendship melting down around him?