Category Archives: economics

Chinese billionaires keep disappearing with facebook twitter’s help. Alibaba’s Jack Ma is the latest.

Jack Ma, disappeared billionaire owner of Alibaba.

Every 25 years or so, for the past 1500 years China gets a new dictator who rounds up the rich and famous for loyalty trials, imprisonment. and worse. This was true of Li Ping following Tianamin Square, and Mao Zedong who killed some 75 million as part of his 10,000 flowers, great leap purges. The current dictator, Jenping Xi. Like, has been rounding up anyone he worries about, and that’s basically anyone he might worry about. The latest is Jack Ma, the founder of Alibaba, China’s version of e-bay and Amazon. Until his disappearance, he was the richest person in China.

Ma had not been seen in public since October 2020, when he and two top lieutenants of Alibaba were called to meet with regulators. He reappeared months later in a 40 second video (some say a hostage video) to say he is more rested now, and that he is positive that China’s regulators do not stifle innovation. As typical for China, there is no information about his whereabouts. What’s novel is that US media companies are involved helping Xi to trace potential opposition and keep questions out of the press. This includes Google, Twitter, and Facebook, as well as US media outlets.

71st Cannes Film Festival - Screening of the film "Ash Is Purest White" (Jiang hu er nv) in competition - Red Carpet Arrivals - Cannes, France, May 11, 2018. Fan Bingbing poses. — China’s biggest starlet, Fan Bingbing, vanished from sight and the internet for months. She may have said something critical, but has reappeared and recanted it.

In the past the news and social media would have been full of negative comments about China, and Ma’s detention , both from within and without. Now there is hardly anything and what little there is, is mildly positive about Xi. For three months there have been no e-mail or published tweets or Facebook posts from Ma or his lieutenants. Similarly, there is no room for negative speculation within China, and little within the US. The company’s planned IPO was cancelled, one that could have been the richest in history, but this fact got virtually no press, not in China, not in the US. Regulators cancelled it just two days before the start of trading. You’d expect screams from inside and outside China; instead, the story has been covered only briefly by CNN and the Financial Times, generally putting a pro-China spin on it. They stress the importance of regulations and avoiding monopolies, and don’t mention that Alibaba competes with Amazon, e-bay and Walmart. The expectation is that Ma and his higher-ups will be found guilty of monopoly trading and abuse of power. Under Xi, these crimes that have sent corporate leaders to prison for 12 to 20 years.

Ren Zhiqiang, missing billionaire, sentenced to 18 years.

Consider the fate of Ren Zhiqiang, the 69 year old chairman of Huayuan property conglomerate. It was one of the largest property groups in China, but Ren vanished in March 2020 after being heard to have complained about how the government was handling COVID-19. He was expelled from the communist party, and in September 2020 sentenced to 18 years in jail for “taking bribes and abuses of power.” There was hardly a trial, and as with Jack Ma, Facebook and Twitter helped the party silence Ren and his supporters. The result is that he had no recourse to the court of public opinion. About a month later, Facebook and Twitter did the same to Donald Trump, banning him for life from Facebook, Twitter. All other platforms joined, these included Snap and Reddit. As in China they also banned his main lieutenants and his main supporters, including the my-pillow man. The internet services also closed (deplatformed) Parler, the only competing web-service that allowed Trump and his supporters to post.

It can help to have public outcry, as Xi found after he disappeared China’s most popular movie starlet, Fan Bingbing in July 2018. Fan is a star of Chinese TV and movies and appears in Iron Man II and X-Men. As with Ma and Ren, Facebook and Twitter removed all posts, comments, questions, and complaints about Fan, releasing only the official statement that she was under investigation and taking a break. Unlike Ren, Fan reappeared a year later, April 2019 with no official charges filed. Nor has there been any official report. She has apologized for misdoings. and is supposed to have paid some $150 million, but she’s free. My guess is that the pressure of 100 million Chinese fans is what helped Ms Fan to un-vanish.

Chairman of Anbang Insurance Group Wu Xiaohui attends the China Development Forum in Beijing, China — Had Wu Xiaohui, former chairman of Anbang Insurance Group, and owner to the Waldorf Astoria.

A less positive outcome is when there is no outcry. When Wu Xiaohui, chairman of the Anbang Insurance Group, and the owner of New York’s Waldorf Astoria hotel vanished for two years. When he reappeared, he faced a quiet trial that sentenced him to 18 years in prison. The usual charges: fraud and abuse of power. Wu’s mother claimed she had no access to her son for those two years. Anbang, once one of the largest insurers in China, was taken over by its insurance regulator who has applied to liquidate the company. Why liquidate? Probably because it’s the easiest way to remove potential Wu loyalists.

In the US, there are some claims that Facebook, Twitter, Reditt and a few other companies have too much control of public discourse. Others claim that these companies exercise too little control. These companies claim the right to silence opinion they consider untrue, or inflammatory, and they have been allowed to deplatform their competition. Congress is moving to be in charge of who they silence. I’ve found they don’t like pro-Israel sentiments. While they don’t put words in my mouth, I don’t like it that they take words out of my mouth. As a result, I’ve cut back on my use of these platforms.

Jack Ma reappeared after 3 months in this 40 second video, shot from an unknown location. To me, it looks like a hostage video, “I’m well and being well treated …” Biden has argued that now is the time to move closer to China.

As I write this, Trump is impeached for the second time. The charge is inflammatory speech. Like with abuse of power, there is no way to prove you didn’t do it, especially after the internet giants silence you and anyone stupid enough to support you. Among Biden’s first acts is to undo Trump dictates that kept China from providing the technology underlying the US power and water system. Clearly Biden feels it is important that China should have a hand in this. I surely am not going to suggest that the bribes Biden is supposed to have received from China played any role. I will say that, when I ran for water commission, one of my goals was to help make the water system more resistant to cyber attack.

Dr. Robert E. Buxbaum. February 8, 2021. As an update, I see that Jimmy Li was arrested. He’s the founder of Hong-Kong’s most popular newspaper, Apple daily. No comment in the US, or from the Vatican. Li is Catholic, and the Vatican used to chime in when prominent Catholics were arrested.

New York and San Francisco rents fall, Detroit rises for now.

1500 people shot in Detroit, 4/5 survive; some thoughts.

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There are two remarkable things about shootings in Detroit. One is how many there are. About 1500 Detroiters last year, about 0.2% of the city’s population. The other remarkable tidbit is that only about 1/5 of them died. More specifically, there were 1173 non fatal shootings. There were also 327 criminal homicides, but many shooting deaths in Detroit are non-criminal, as in self-defense, or police interventions, and there are also many criminal homicides that are done with knives or poison. Put this together and it seems that only about 1/5 or those shot, perhaps 327 out of 1500 total. The headline from June 21, 2020 reads: 1 fatal, 11 non-fatal shootings in Detroit overnight. You almost feel like getting these guys marksmanship lessons, but there seems to be more at play.

Even in photography, a fair percentage of shooters miss simple head shots.

The number of shootings are way up this year, and drugs – alcohol is to blame, here and in other cities. People have lost their jobs to COVID and globalization, more in Detroit than in most cities, but the government has offered checks that are used for alcohol and drugs. Most Detroit shootings begin as arguments that turn violent. There is also some gang shooting, enhanced by a bout of prison releases, because of COVID.

Drugs and alcohol help explain the low death rate. It’s hard to shoot straight when you’re drunk or stoned, and hard even if you’re not, as Alexander Hamilton found. In Detroit, many of these hit were hit in non-vital areas (I tell folks to avoid those areas :). But another part of the low death rate is lower caliber bullets. Military caliber bullets were in short supply this year, and as best as I was able to tell, a fair number of shootings were with 22 and 25 instead of the military cartridges, 9mm and bigger that were popular years ago. A 9mm cartridge is shown as the center picture below, between a 22lr and a 45. Big bullets make for big holes and high death rates.

Per capita, the Detroit shooting rate is about 15 times that of New York City. New York saw roughly the same number of shootings as Detroit, 1,531 in a city 15 times bigger, and 462 criminal homicides The cause does not appear economic. but social. When Detroit’s unemployment rate fell, the murder rate did not. Thanks to COVID, Detroit’s unemployment rate is lower than New York’s. My only thought is that the culture is the difference, that the culture in New York is such that arguments do not turn violent as regularly.

Size comparison; 22, 9mm, 45. Big bullets leave big holes.

Stricter gun laws will not help, I think. Michigan’s gun laws make it hard to own pistols with barrels less than 16″ long. The net result is that most crime in the city is done with illegal guns. In general, countries with strict gun laws have more violent crime, not less. I would like to encourage private citizens to choose smaller bullets for self defense though, 22 or 32, and not military grade, 9mm. As a private citizen, you have to bring in the criminal, or storm a building. Your only goal is to get the criminal to stop without harming yourself. A 22 will get the criminal to stop. It will killl too, just less often. A 22 caliber bullet killed Bobby Kennedy, and Reagan was nearly killed with one. A small caliber bullet is less likely to kill you in an accident, or to kill people standing behind the target. This year, some 11 police forces came to a consensus report on use of the minimum of force necessary; read it here. For a private citizen, that’s a 22. Besides, speaking from my own limited experience, I find it easier to aim a small bullet.

Robert Buxbaum, January 10, 2021

China keeps building coal-fired plants so we can close ours.

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Part of the mandate to the 2020 election was to join with Europe and the rest of the western world in agreeing to stop the use of coal. It’s a low cost way to generate energy. Of course we still like to buy things, and we’ve largely turned to China, a country that still burns coal, and thus makes things cheap. The net result of this shift to Chinese goods is that China keeps building coal-fired plants while we shut ours. As it happens, China is worse than the US in terms of CO2 per output, but at least when China pollutes, we don’t see the smoke directly, and we don’t see their new coal plants at all. So we feel better buying things from China than from the US. Besides, slave labor is cheap.

Buying Chinese goods is good for the importers, and for the non-manufacturing consumer, at least in the short term. It has the effect of exporting jobs though, and eventually we have to support the displaced workers. It also means we don’t keep up our manufacturing technology. Long term, that affects innovation, and that starts to displace other industries. Antibiotic production has already left the US and along with it semiconductors. Still, we feel good about it since the Chinese don’t let us see the slave labor camps. We do get to see the haze of the pollution.

The Chinese expect this pattern to continue. China is building new coal-fired plants at a furious rate. Presently China has most of the world’s coal-fired power plants. Mostly these are only 4 to 12 years old, far younger than our forty year old plants China plans to build more, and keeps encouraging us to shut down ours. Even 10 years ago, China lead the world in CO2 output. And their fraction of the CO2 keeps climbing.

China is popular with the press. In part, I expect, that’s because they pay the international experts. lAlso, writers and editors are consumers industrial products, but not manufacturers. Consumers benefit from slave labor, or maybe not, but displaced American workers certainly suffer. Also, of course, the news requires pictures and personal stories to keep viewer interest. If you can’t get pictures of young protesters, like Grey Thunberg, you can get an interesting story. Our Chinese pollution is out of sight, and not in the press.

Robert Buxbaum, January 6, 2021. BTW, if we wanted preserve jobs and stop CO2 pollution, we’d go nuclear.

MI hunting: You can arm bears; you just can’t buy bullets.

Hamilton and his slave-trading father in law.

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Philip Schuyler as a Major General in the Revolution. His statue was removed.

What most folks know about Alexander Hamilton’s father in law, Philip Schuyler, is that he was “loaded”, that he had three daughters, and that he quickly took to young Alexander. But an important fact varnished over is that Schuyler made his money in the slave trade, a trade that Hamilton was likely in when he met the young Schuyler daughters. Schuyler was also a slave owner, owning 13 slaves, by his record, and perhaps another 17 indentured servants working at two mansions. So far, only the Philip Schyler statue has been taken down. It seems possible that many monuments to Hamilton may follow.

Statue of Alexander Hamilton, proudly stands in front of Columbia University. The ten dollar founding father.

The play “Hamilton” proclaims Hamilton’s genius and exceptional work ethic, mentioning that, at the young age of 14 (more likely 16) he was left in charge of a trading company. This was for 5 months in 1771, while the owner was over seas doing business. Hamilton knew the business well; he’d been hired as a clerk at 11 at Beekman and Cruger, a similar import-export trading firm. What items did these firms trade — cotton, sugar, rum, and most profitable slaves. This likely was the business that kept the owner overseas for 5 months while Alexander ran the shop. There are at least two notifications of slave ships entering the harbor with human good for sale. Among Hamilton’s likely jobs would have been fattening and oiling the goods for sale. Hamilton himself seems to have owned a slave-boy named Ajax who he inherited (briefly) from his mother, Rachel. His mother is listed on the tax records as white. She owned five saves at one time, suggesting she was not entirely impoverished. Hamilton’s father, though a failed businessman, was a Scottish Laird (a Lord). As for the court-mandated transfer of Ajax from Alexander, it was to his half-brother James because James was “Legitimate.”

I base Hamilton’s age on the Nevis-St Kitts record of his birth, January 11, 1755.”^[1] The play takes as a fact Hamilton’s claim to have been born two years later, January 11, 1757. I trust the written records here, and imagine Hamilton wanted to present himself as a young genius, rather than as a bright, but older fellow. In 1772, at at age 17, Hamilton wrote a “fire and brimstone” description of a deadly hurricane, describing it as “divine rebuke to human vanity and pomposity.”^[2] Between this, and his skill at trading, the community leaders collected money to send him to New York, but unlike the play’s description, it was not only for further education. The deal was that he continue trading for the firm,^[3] and this is likely how he met his future father in law. “^[4]

Hercules Mulligan, a revolutionary tailor: He was a spy. According to the CIA, much of the work was through his black slave, Cato.

In New York, Hamilton met Schuyler and his daughters. It seems likely that he met the father first, likely as possible customer for the slave trade from the Caribbean, or perhaps as a customer for rum and sugar. A 1772 letter in Hamilton’s handwriting ^[4] asks for the purchase of “two or three poor boys” for plantation work, “bound in the most reasonable manner you can.” As in the play, Hamilton was friends with John Laurens, an abolitionist, and among his first lodgings was with Hercules Mulligan, a tailor’s apprentice. Hercules is presented as black in the play, but he was quite white (see picture) with a black slave, Cato. Cato ran most of the messages. According to the play, “I’m joining the rebellion cuz I know it’s my chance
To socially advance, Instead of sewin’ some pants, I’m taking my shot. No, Hercules was socially advanced ,married into the British Admiralty, even. He was a true believer in freedom and a slave-holder. His older brother, Hugh Mulligan, was one of the traders that Hamilton was supposed to work with.^[5] As for Laurens and his anti-slavery organization, most of those in the organization owned slaves, and though they opposed slavery, they could never decide on when or how to end it. There is no evidence that Cato was ever set free.

The appointment to Washingtons staff was not likely a coincidence. The elder Schuyler was one of the four top generals appointed in 1775 to serve directly under Washington. Phillip oversaw, at a distance, the disastrous attack on Quebec and the victory at Saratoga– both, Burr served admirably. Phillip’s main role was as a quartermaster/supplier, and this is not a small role. Phillip Schuyler had been a quarter-master in the French and Indian war. It’s likely that it was Schuyler who got Hamilton his appointment to Washington’s staff.

Once on Washington’s staff, Hamilton served admirably. Originally serving as a secretary, Hamilton wrote many of Washington’s dispatches. Then, according to tradition, as a cannon commander, he took particular pleasure in the attack on Princeton University. He then served well as secretary of the Treasury, and as head of the Bank of The United States, the only major US bank until Burr opened the Bank of the Manhattan company. Despite his aversion to slavery, Hamilton also continued to deal in slaves. A 1796 cash book entry records Hamilton’s payment of $250 to his father-in-law for “2 Negro servants purchased by him for me.” This is only 3 years before 1799, when New York began to end slavery in the state with the Act for the Gradual Abolition of Slavery. Children of slaves born after July 4, 1799, were to be legally free, but required indentured servitude: to age 28 for males and 25 for females. Those born before July 4, 1799 became free in 1817. There is no evidence that Hamilton was a leader in any of this, but Burr, another slave-owning abolitionist, was a leader in the NY legislature at the time.

I’m with Burr.He was flawed, a slave-owning abolitionist, but vehimently against the Alien and Sedition Acts, a Hamiltonian horror.

It seems that Robert Morris introduced Hamilton to the importance of tariffs, and to the idea of using debt service as a backing to currency. It’s brilliant idea, but Hamilton understood it and took to it. Hamilton also understood the need for a coast guard to enforce the tariffs. As for Hamilton’s character, or Burr’s. Both, in my understanding, were imperfect people who did great deeds. I’ve already written that Hamilton was likely setting up Burr for murder, perhaps because of Burr’s vehement opposition to the Alien and Sedition Acts — That’s why Hamilton wore his glasses and fiddled with the gun so much. Burr was also gaining power through his Manhattan corporation and Tammany organization. both of which got his support among the immigrants.

My intent here is not to knock the image of Hamilton, Schuyler, Laurens and Mulligan, nor to raise that of Burr, but to correct some current fictions in the play “Hamilton”, and to fight a disease of our age, the cancel culture. The cancel culture elevates their heroes (Hamilton, Mulligan) to god-status. They will lie to cover the flaws of their heroes, and will lie also to claim a drop of black blood in them; neither Hamilton nor Mulligan were black and both owned slaves, as did Burr. The other side of the cancel culture is to cancel — to eliminate the validity — of the reactionaries, the non-revolutionary. In the play, these include Samuel Seebury and Aaron Burr. Great building is almost always the work of contradictory people. They need some talent, and a willingness to act, and because building requires a group, they have to work in a group, tolerating flaws of the others in the group. It is just these flawed, contradictory builders that are being cancelled, and I don’t think that’s right or healthy.

Robert Buxbaum, August 4, 2020.

Package postage from China: 70¢ for 2 oz.

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The minimum US postage rate to send a 1 oz to 8 oz package across the street is $8.30. This is the price for any size package going in “zone 1”. That is, to a nearby, instate address. It costs more to send a package to nearby states or across the country, zones 2,3,4,5,6,7, 8 You don’t get shipping updates or delivery confirmation unless you pay more. By comparison the US post office charges no more than $1.50 to Chinese companies to deliver packages of up to 4.4 lbs (2 kg) and they get shipping and delivery confirmation thrown in free. The high US rates are, in part, because the post office is losing money to subsidize postage from China.

On the internet folks are amazed at how cheap things are shipped from China (I copied this post from this Forbes article)

US producers can not compete on the sale of small items, in part, because we subsidize the shipping costs. Go to Amazon or e-Bay and you can buy from China packaged items shipped by air for a total price of $1 or so. That includes the price of the item, the shipping cost, and some profit for Amazon or eBay. A US supplier could not sell this cheap even if it were a box of air. The low shipping costs result from a poorly negotiated postage deal of 2011 between us (Obama’s negotiator) and the Chinese. Until 2021, we are committed to deliver a package of 50g or less, (2 oz) for 5 Chinese Yuan, or 70¢ at the current exchange rate of 14¢/NCY. Additional ounces are billed at 35¢ up to 4.4 lbs; use the following table of prices and apply the dollar to CNY conversion. We threw in tracking services and an e-mail confirmation for free, in part because China was poor, and we were rich. Also, the deal was pushed by e-Bay and Amazon, two big supporters of Obama’s presidency.

Adding insult to injury, Obama raised the de minimis amount for billing tariffs from the normal $100 to $800 making almost all purchases from China duty free. Obama made some complaints about unfair trade, and about the counterfeits and knockoffs but no major enforcement. In 2012 and 2014, the Obama administration signed similar postage deals with Korea, Hong Kong, and the EU. The Germans applauded as it allows them to ship goods to the US for far less than the cost of us shipping to Germany. The US post office loses money on this and makes up for it by charging us more for domestic mail.

The Washington Post praised Obama on these deals claiming that they benefitted US customer and promoted democracy. Of course, the Washington Post is owned by Amazon’s main stock holder, Jeff Bezos– someone who benefits very much by the deal. He is among the relatively few people and organizations that own the media outlets. The Post loses money on newspaper sales but benefits the owners by the propaganda value of the stories, a situation also found with Al Jazeera and the emir of Qatar.

Trump has informed China that these special rates will end when the treaty runs out in January 1, 2021. A per-package ship fee will be $3.00 for a one ounce package, with 11¢ per additional once. This is less than the domestic rate, but far higher than the current 35¢ for 1 oz. I’d probably have raised their postage even more, but this is an election year, and Biden may well reverse any deal Trump signs.

Robert Buxbaum, July 14, 2020. Though I’m appalled by this postage deal, I just bought a 50 lb kayak from China, $99.99 including shipping. The prices are too low to pass up.

When prostitution was legal in America, 1863-65.

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Readers of this blog know that I am not a fan of very harsh punishments for crime, in particular for crimes that have no direct victim, e.g. drug possession and sales. Prostitution is another crime with no direct victim. One could argue that society as a whole is the victim, but my sense is that punishments should be minimal and targeted, e.g. to prevent involuntary human trafficking and disease. Our current laws, depicted here, are clearly not designed for this, but there was a brief period where prostitution laws did make more sense. During the civil war, civil war, prostitution was legal and regulated to prevent disease.

In 1862, Union forces captured the southern cities of Nashville and Memphis, Tenn. Major Gen. William Rosecrans set up headquarters in Nashville. Before the war, Nashville was home to 198 white prostitutes and nine “mulatto,” operating in a two-block area known as “Smoky Row.”

By the end of 1862, Smokey row had grown and these numbers swelled to 1,500 “public women”. White southern women turned to prostitution out of poverty, largely. Their husbands were dead, or ill paid, and they were joined by recently freed slaves. Benton E. Dubbs, a Union private, reported a saying that “no man culd [sic] be a soldier unless he had gone through Smokey Row,” … “The street was about three-fourths of a mile long and every house or shanty on both sides was a house of ill fame. Women had no thought of dress or decency. They say Smokey Row killed more soldiers than the war.”

By 1863, venerial disease was becoming a major problem. The Surgeon General would document 183,000 cases of venereal disease in the Union Army alone, “…the Pocks and the Clap. The cases of this complaint is numerous, especially among the officers.”

Permit for Legal prostitution signed by Col George Spaulding.

At first General Rosecrans directed his assistant, Colonel Spaulding, to remove the women by sending them to other states, first by train, and then by boat commandeering the ship, Idaho for the purpose. The effect was horrible, not only was the ship turned back by every city, but the departure of these ladies just resulted in the appearance of a new cohort of sex-workers. By the time the Idaho had returned, Rosecrans had been relieved of command following embarrassing defeats at Chickamauga and Chattanooga . Col. Spaulding now tried a new technique to stop the plague of VD: legalized prostitution. It worked.

Women’s hospital during the war, Nashville.

For a $5/month fee a “public woman” could become a legal prostitute, or “Public Woman” so long as she submitted to monthly health inspections for a certificate of her soundness. If found infected, she was to report to a hospital dedicated to this treatment, was subject to imprisonment if she operated without the license and certificate. The effect was a major decline in sexually-transmitted disease, and an improvement (so it is claimed) in the quality of the services. The fees collected were sufficient to cover the cost of the operation and hospital, nearly.

At the end of the war, Col Spaulding and the union soldiers left Nashville, and prostitution returned to being illegal, if tolerated. One assumes that the VD rates went up as well.

Colonel Spaulding and Maj. General Rosecrans are interesting characters beyond the above. Spaulding had entered the war as a private and rose through the ranks by merit. The rise didn’t stop at colonel. After the war, he became postmaster of Monroe Michigan, 1866 to 1870, US Treasury agent, 1871 to 1875, Mayor of Monroe, 1876 to ?, President of the board of education, a lawyer in 1878, and congressman for the MI 2nd district (Republican) 1894 -1898. He also served as board member of the Home for Girls 1885 to 1897, and postmaster of Monroe, 1899 to 1907.

William Rosecrans was a Catholic, engineer-inventor from West Point. Before the war, in 1853, he designed St. Mary’s Roman Catholic Church, one of the largest US churches at the time, site of the wedding of John Kennedy and Jacqueline Bouvier. He also designed and installed one of the first lock systems in Western Virginia. He and two partners built an early oil refinery. He patented a method of soap making and the first kerosene lamp to burn a round wick, and was one of the eleven incorporators of the Southern Pacific Railroad. After the war, he served as Ambassador to Mexico, 1868-69 and was congressman from California, 1st district (Democrat) 1880 – 1884. A true Democrat, Rosecrans could not stand either Grant or Garfield, and fought against Grant getting a retirement package.

Robert Buxbaum, June 5, 2020. There are other ways to stop the spread of sexual diseases. During the AIDS epidemic, condoms were the preferred method, and during the current COVID crisis, face masks are being touted. My preference is iodine hand wash. All methods work if they can reduce the transmission rate, Ro below 1.

The Brexit, Trump, Johnson anti-crash

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Before Brexit, I opined, against all respectable economists, that a vote for Bexit would not sink the British economy. Switzerland, I argued, was outside the EU, and their economy was doing fine. Similarly, Norway, Iceland, and Israel — all were outside the EU and showed no obvious signs of riots, food shortages, or any of the other disasters predicted for an exited Britain. Pollsters were sure that Britain would vote “No” but, as it happened, they voted yes. The experts despaired, but the London stock market surged. It’s up 250% since the Brexit vote.

Lodon stock market prices from January 2016 through the Brexit vote, August 2016, to the Boris Johnson election, August 2019. The price has risen by more than 250%.

A very similar thing happened with the election of Trump and of Boris Johnson. In 2016 virtually every news paper supported Ms Clinton, and every respectable economic expert predicted financial disaster if he should, somehow win. As with Brexit, the experts were calmed by polls showing that Trump would, almost certainly lose. He won, and as with Brexit, the stock market took off. Today, after a correction that I over-worried about, the S+P index remains up 35% from when Trump was elected. As of today, it’s 2872, not far from the historic high of 3049. Better yet, unemployment is down to record levels, especially for black and hispanic workers, and employment is way up, We’ve added about 1% of adult workers to the US workforce, since 2017, see Federal Reserve chart below.

Returning to Britain, the economic establishment have been predicting food shortages, job losses and a strong stock market correction unless Brexit was re-voted and rejected. Instead, the ruling Conservative party elected Boris Johnson to prime-minister, “no deal” Brexiter. The stock market responded with a tremendous single day leap. See above

Ratio of Civilian Employment to US Population. Since Trump’s election, we’ve added about 1% of the working age US population to the ranks of the employed.

You’d think the experts would show embarrassment for their string of errors. Perhaps they would save some face by saying they were blinded by prejudice, or that their models had a minor flaw that they’ve now corrected, but they have not said anything of the sort. Paul Krugman of the New York Times, for example, had predicted a recession that would last as long as Trump did, and has kept up his predictions. He’s claimed a bone rattling stock crash continuously for nearly three years now, predicting historic unemployment. He has been rewarded with being wrong every week, but he’s also increased the readership of the New York Times. So perhaps he’s doing his job.

I credit our low un-employment rate to Trump’s tariffs and to immigration control. When you make imports expensive, folks tend to make more at home. Similarly, with immigration, when you keep out illegal workers, folks hire more legal ones. I suspect the same forces are working in Britain. Immigration is a good thing, but I think you want to bring in hard-working, skilled, honest folks to the extent possible. I’m happy to have fruit pickers, but would like to avoid drug runners and revolutionaries, even if they have problems at home.

I still see no immediate stock collapse, by the way. One reason is P/E analysis, in particular Schiller’s P/E analysis (he won a Nobel prize for this). Normal P/E analysis compares the profitability of companies to their price and to the bond rate. The inverse of the P/E is called the earnings yield. As of today, it’s 4.7%. This is to say, every dollar worth of the average S+P 500 stock generates 4.7¢ in profits. Not great, but it’s a lot better than the 10-year bond return, today about 1.5%.

The Schiller P/E is an improved version of this classic analysis. It compares stock prices to each company’s historic profitability, inflation adjusted for 10 years. Schiller showed that this historic data is a better measure of profitability than this year’s profitability. As of today, the Schiller P/E is 29.5, suggesting an average corporate profitability of 3.5%. This is still higher than the ten-year bond rate. The difference between them is 2%, and that is about the historic norm. Meanwhile, in the EU, interest rates are negative. The ten year in Germany is -0.7%. This suggests to me that folks are desperate to avoid German bank vaults, and German stocks. From my perspective, Trump, Johnson, and the Fed seem to be doing much better jobs than the EU bankers and pendents.

Robert E. Buxbaum, August 16, 2019.

The free press isn’t

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Newspapers remain the primary source for verified news. Facts presumed to be sifted to avoid bias, while opinions and context is presumed to be that of the reporter whose name appears as the byline. We may look to other media sources for confirmation and fact-checking: news magazines, Snopes, and Facebook. Since 2016 these sources have been unanimous in their agreement about the dangers of biassed news. Republicans, including the president have claimed that the left-media spreads “fake news”, against him, while Democrats claim that Trump and the Russians have been spreading pro-Trump, fake news, While Trump and the Republicans claim that the left-media spreads fake news. In an environment like this, it’s worthwhile to point out that the left-wing and right-wing press is owned by a very few rich people, and none of it is free of their influence. An example of this is the following compilation of many stations praising their news independence: CBS, ABC, NBC, and FOX, praising their independence in exactly the same words.

It costs quite a lot to buy a newspaper or television station, and a lot more to keep it running. Often these are money-losing ventures, and as a result, the major newspapers tend to be owned by a few mega-rich individuals who have social or political axes to grind. As the video above shows, one main axe they have is convincing you of their own independence and reliability. The Sinclair news service, owned by the Smith news family came up with the text, and all the independent journalists read it in as convincing a voice as they could muster. This is not to say. that all the news is this bad or that the mega rich don’t provide a service by providing us the news, but it’s worth noting that they extract a fee by controlling what is said, and making sure that the news you see fits their agendas – agendas that are often obvious and open to the general view.

Perhaps the most prominent voice on the right is Rupert Murdoch who owns The New York Post, and The Wall Street Journal. He used to own Fox too, and is still the majority controller and guiding voice, but Fox is now owned by Disney who also owns ABC. Murdoch uses his many media outlets to make money and promote conservative and Republican causes. You might expect him to support Trump, but he has a person feud with him that boils up in the Post’s cover pages. Disney’s ABC tends to present news on the left, but as in the compilation above, left and right journalists have no problem parroting the same words. Here is another, older compilation, more journalistl saying the same thing in the same words, e.g. playing up the Conan O’Brian show.

Another media master is Ted Turner. He tends to own media outlets on the left including CNN. Turner manages to make CNN, and his other properties profitable, in part by courting controversy. His wife for a time was Jane Fonda, otherwise known as Hanoi Jane.

Another left-leaning media empire (whatever that means) is MSNBC. It is owned by Time-Warner, also owner of The Huffington Post. Both are anti-israel, and both promote zero-tariff, Pacific-rim trade, but as seen above, MSNBC anchors will read whatever trash they are told to read, and often it’s the same stuff you’d find on Fox.

Rounding out the list of those with a complete US media empires, I include the Emir of Qatar, perhaps the richest man in the world. He operates Al Jazeera, “the most respected news site for Middle east reporting” as an influence-buying vehicle. Al Jazeera is strongly anti-fracking, anti nuclear, and anti oil (Qatar is Asia’s latest supplier of natural gas). It is strongly anti-Israel, and anti Saudi. Qatar propagandist, Jamal Khashoggi worked for AlJazeera, and was likely killed for it. They’re also reliably pro-Shia, with positive stories about Hamas, The Muslim Brotherhood, and Iran, but negative stories about Sunni Egypt and Turkey. They present news, but not unbiassed.

But you don’t have to buy a complete media empire to present your politics as unbiassed news. Jeff Bezos, founder Amazon, bought The Washington Post for $250 million (chump change to hm). For most of the past two years, the paper mostly promoted anti-tariff views, and liberal causes, like high tax rates on the rich. Amazon thrives on cheep Chinese imports, and high tax rates don’t hurt because Amazon manages to not pay any taxes on $11 billion/year profits (by clever accounting they actually get a rebate). Recently Joe Biden made the mistake of calling out Amazon for not paying on $11 billion in profits, and The Washington Post has returned the favor by bashing Biden. As for why Bezos bought the money-losing Post, he said: “It is the newspaper in the Capital City of the most important country in the world… [As such] … “it has an incredibly important role to play in this democracy.”

Moving on to The New Your Times, its editorial slant is controlled by another contestant for world’s richest man: telecom mogul, Carlos “Slim” Helú. Carlos’s views are very similar to Bezos’s, with more of an emphasis on free trade with Mexico. Steve Jobs’s widow runs “The Atlantic” for the same reasons. It’s free on line, well written and money losing. Like with the above, it seems to be a vanity project to promote her views. It’s a hobby, but sh can afford it.

Like her, Chris Hughes, Facebook’s Co-founder and Zuckerberg room-mate, bought and runs the money losing “The New Republic“. He was Facebook’s director of marketing and communications before joining the Obama campaign as it internet marketing head. The New Republic’s had a stellar reputation, back in the day. Zuckerberg himself runs a media empire, but it’s different from the above: it’s social media where people pay for placement, and where those whose views he doesn’t like get censored: put in Facebook jail. He’s gotten into trouble over it, but as a media giant, there seem to have been no consequences.

H.L. Menken on the fake news of the early – mid 20th century.

And it’s not only rich individuals who turn trusted news sources into propaganda outlets. The US CIA did this for years, and likely still do. Then there are the Russians, the Chinese, the Israelis, the British (BBC) and our very own NPRt. These sources present news that benefits them in the most positive light and scream about dangers to democracy and the world if their position is touched or their veracity is questioned. As these sources are all government funded, there is a they are unanimous supporters big governments as a cure to all ills. Closer to home, I’d like to mention that Detroit has two major papers, but only one owner. The left leaning Detroit Free Press, and the right-leaning Detroit News are owned by the same people, share a considerable staff, and generally agree on important issues. There are a dozen smaller papers in Metro Detroit; all but one is owned by one media group.

I’d like to end with a positive note. Not every reporter is in this sad grab-bag. In Detroit, Setve Neveling, “the motor-city muckraker” manages to present is independent, active news. Then there is Los Angeles’s Biotech billionaire, Patrick Soon-Shiong. He bought the LA Times in June 2018, claiming he will use it to fight fake news, “the cancer of our time.” I wish him luck. So far, I’d say, he’s made the LA Times is the best Newspaper in the US with The NY Post a close second ( love the snarky headlines).

Robert Buxbaum, July 15, 2019.

REB Research Blog

Random thoughts about hydrogen, engineering, business and life by Dr. Robert E. Buxbaum

Category Archives: economics

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