Category: ECONOMICS

American Leadership

Without a competent Chief of Staff, democracies are subject to authoritarian tyranny.

Books of Interest
 Website: chetyarbrough.blog

The Gatekeepers (How the White House Chiefs of Staff Define Every Presidency)

Author: Chris Whipple

Narration by: Mark Bramhall

Chris Whipple (Author, political analyst, documentary film maker, journalist.)

Democratic government is complicated and messy, but decisions are made based on an understanding of the interests of many as opposed to the dictate and judgement of one.

“The Gatekeepers” may be viewed by most as an historical account of White House Chiefs of Staff based on many interviews of former government officials. However, one is inclined to see this history as a chronical of American government effectiveness. The facts and incidents reported give reader/listeners a view of America’s government function. Whipple details a series of relatively prudent and sometimes bad decisions made by late twentieth and twenty-first century presidents. Whipple’s history suggests the decision-maker for pursuit of government policy is America’s elected President. However, the road to policy approval or rejection is paved by White House’ Chiefs of Staff.

Whipple covers Nixon’s, Ford’s, Carter’s, Reagan’s, both Bush’s, Clinton’s, Obama’s, and Trump’s first administration. It does not address Biden’s Presidency or the Chief of Staff for Trump’s second term. The many interviews Whipple bases his history on offer a credible and enlightening history of American government. It is H. R. Haldeman, Cheney, Rumsfeld, Baker, Panetta, Card, and Rahm Emanuel that are the most prominent examples of effective and consequential Chiefs of Staff in Nixon’s, Ford’s, Reagan’s, Clinton’s, first and second Bush’s, and Obama’s administrations. The definition of effective is their ability to achieve a desired result whether good or bad for America. This is where one’s personal political beliefs come into question. It is always easy to see the errors of the past retrospectively. Whipple is careful to report facts and results without much judgement about their consequences.

H.R. Halderman (1926-1993, former Chief of Staff for President Nixon.)

Haldeman was Nixon’s Chief of Staff. There is no evidence that he had anything to do with the planned or ordered Watergate break-in, but Whipple shows he participated in a Watergate cover-up. Though Haldeman’s actions after the Watergate scandal are reprehensible, the point made by Whipple is that Haldeman set the table for what an effective Chief of Staff should be for a President. Haldeman acts as a consummate gatekeeper. One can criticize Haldeman’s bad decision to try and coverup Watergate, but he defined the role of a President’s Chief of Staff. Whipple shows Haldeman manages access to the President, understands where the power of government lies, has a good understanding of staff members surrounding the President, protects the President’s time, and balances a President’s policies with the politics of his party.

Donald Rumsfeld (1932-2021, Secretary of Defense and former Chief of Staff for President Ford.)

President Ford’s Chief of Staff is Donald Rumsfeld with Dick Cheney as Deputy Chief of Staff. Rumsfeld is characterized as a mentor to Cheney. They had a close relationship according to Whipple. Ford’s political decision to give a full pardon to Nixon and clemency for Vietnam draft dodgers were hot potato issues that were abetted (if not endorsed) by Rumsfeld and Cheney. Most significantly Ford ended America’s war in Vietnam. Ford endorses tax increases to reduce inflation while supporting tax cuts to stimulate the economy. Ford increases congress’s role in foreign policy.

Dick Cheney (1921-2025, second Chief of Staff for President Ford.)

In a cabinet reorganization Cheney becomes the Chief of Staff and Rumsfeld switches to Secretary of Defense. Rumsfeld and Cheney, in their roles as Chiefs of Staff, control access to President Ford, coordinate policy actions, shape internal decision-making, and advise Ford on strategy to influence people who accomplish these acts. The two Chiefs influenced Ford to replace Kissinger as National Security Advisor, promote George Bush as CIA Director, and prepare Ford for the next election which is ultimately lost to Jimmy Carter.

Hamilton Jordan (1944-2008, Chief of Staff of President Carter.)

When elected, President Carter felt he did not need a Chief of Staff. However, he relented in 1979, when he found the job was needed. Carter hired Hamilton Jordan who had been his campaign strategist when he ran for President. Whipple notes that appointment became a mistake because of Jordan’s lack of discipline. Though the Ford administration fought the idea of promoting Reagan for President, the public felt otherwise.

James Baker (1930-, Chief of Staff for President George H.W. Bush.)

After Carter, when Reagan is elected, he chooses James Baker as his Chief of Staff. Whipple suggests Baker is the quintessential model of a great Chief of Staff which all could be measured against. Baker is characterized by Whipple as an expert at managing the White House, the press, and Capitol Hill. Baker understood the process, the politics, communication, and presidential management requirements of the job. He never confused himself with the power of the President. He became manager of what is called the Reagan Revolution. The political and social movement revolves around ideas of smaller government, deregulation, cutting taxes, and endorsement of free enterprise. Whipple infers the success of the Reagan Revolution is largely due to the skill of James Baker.

Leon Panetta (1938-, Chief of Staff for President Clinton.)

One may argue Reagan caused America’s 1990-91 recession. Unemployment had risen to 7.8%. This set the table for a Democratic President named Bill Clinton. The initial Chief of Staff for Clinton is John Podesta who served from 1998-2001 and is replaced by Leon Panetta who, in the author’s opinion, rivals James Baker as a great Chief of Staff. Whipple infers that, without Panetta, Clinton would not have been reelected after the Monica Lewinsky affair. Panetta brought discipline and structure to the Clinton White House. Panetta could say “no” to the President, at least, in private. Panetta gained a reputation for being an honest broker as a negotiator for the President.

Andrew Card on the left. Joshua Bolten on the right.

George W. Bush, the next President, is noted to have two Chief’s of Staff during his two terms as President. It appears both Andrew Card and Joshua Bolten were more soldiers than Chiefs of Staff for George W. Bush. The policy decider is certainly George W. Bush but the influence of Dick Cheney as Bush’s V.P. seem a major influence on George W.’s decisions. Bush’s two Chief’s of Staff may have been effective as screeners but not as Chiefs of Staff that could say no to a President influenced by his cabinet and personal opinions. The entry to the wars in Afghanistan and Iraq suggests Card and Bolten were unduly influenced by others in the administration.

No one seems inclined to say no to President Bush in private. In retrospect, President Bush seems let down by his Chief’s of Staff and the research and judgement of his Department Heads. Both Afghanistan’s and Iraq’s invasions by the American military are retrospectively shown by most (if not all) histories as American mistakes, if not tragedies.

Rahm Emanuel (1959-, Chief of Staff for President Obama.)

The final chapters address Chief’s of Staff for Obama and Trump. Obama became President when the American economy is in an economic crisis that threatens the financial industry, the general economy, and the mortgage market for many American homeowners. He asks Rahm Emanuel to become his Chief of Staff. Emanuel is a tough Chicago politician who recognizes the pressure of the office and has some level of fear about the future of the American economy. He understood the gravity of the job he is being asked to take. However, his reputation as a tart tongued fighter for what he believed as right made him the best Chief of Staff that could be found. His role as gatekeeper gave Obama the support needed to pass the Obama Health Care plan and work through the economic crisis that nearly bankrupted America.

Reince Priebus (1972-, Chief of Staff for President Trump.)

Trump’s choice of Reince Priebus as his first Chief of Staff is short lived and lasts for less than 8 months. His short tenure is not evaluated, and history shows he is replaced three times in the remaining years of Trump’s first term. A pro-Trump person will have one opinion about those facts while an anti-Trump person will have another.

Whipple convinces reader/listeners that a competent Chief of Staff is critically important for any organization that approaches the complexity of a nation-state government. Without a competent Chief of Staff, democracies are subject to authoritarian tyranny.

ECONOMIC CRISES

Sorkin’s “1929” makes one think about 20th and 21st century American Presidents who may have set a table for a second economic crisis. As the Turkish proverb says “…fish stinks first at the head.”

Books of Interest
 Website: chetyarbrough.blog

1929 (Inside the Greatest Crash in Wall Street History–and How It Shattered a Nation)

Author: Andrew Ross Sorkin

Narration by: Andrew Ross Sorkin

Andrew Sorkin (American author, journalist, and columnist for The New York Times.)

“1929” is a history of the build-up to the stock market crash and the advent of the depression with opinions about how today’s economy compares and what should be done to keep it from happening again. Though Sorkin is not an economist, he has written an interesting history of the build-up to the 1929 depression.

Faltering economies.

There is a sense of danger being felt by some today when reading/listening to Sorkin’s history of the 1920s. Few seem to have a clear understanding of world market forces and whether we are heading for an economic catastrophe or a mere hiccup in the growth of the economy. Neither bankers, regulators, nor politicians in the 1920s (or for that matter now) seem to have a clue about the economy’s trouble and what can be done to ameliorate risks. Like 1929, today’s insiders, power brokers, and rich have more options to protect themselves than most of the world’s population.

Increasing homelessness in America.

In America, it seems those in power have no concern about the rising gap between rich and poor or the immense increase in homelessness. Without a plan by those in power, there seems little concern about reducing inequality, the common denominator for the wealth gap and homelessness. Sorkin’s book outlines the reality of 1929 that gives reader/listeners a feel of history that may repeat itself.

Sorkin’s history seems credible as he notes human nature does not change.

Today’s leaders are like yesterday’s leaders. Not because they are venal but, like most if not all human beings, leaders in power are concerned about themselves and what there is in life that serves their personal needs and wants. Of course, the difference is that leaders that are power brokers affect others that do not have the same influence or options to protect themselves. We all have blinders that keep us from seeing the world as it is because human nature is to ask what is in it for me, i.e., whatever “it” is. The 1920s had a merger bubble in manufacturing and communication that is fed by the industrial revolution. Today, we have a merger bubble with mega-corporations like Tesla, Apple, Amazon and others that are mega-corporations capitalizing on a new revolution coming with A.I., the equivalent of the Industrial Revolution. Some critics argue mega-corporations, like what happened with the oil industry could be broken up to increase competition which is the hallmark of improved production, cost reduction, and lower consumer prices.

Charles E. Mitchell (American banker, led the First Nation City Bank which became Citibank.)

What makes this history interesting is Sorkin’s identification of the most responsible power brokers who bore responsibility for the stock market crash. Charles Mitchell of Nation City Bank is identified as the central driver of the stock market bubble. Mitchell denied the reality of the financial systems fragility. His ambition and unfounded optimism magnified the systemic risk of the financial crises. He openly defied the Federal Reserve’s warning to curb margin lending that risked other people’s money and their financial stability. He continued to promote purchase of stocks on credit that were fueling the stock market bubble. Mitchell appears to have misled the public in order to increase his power and protect his personal wealth by creating the illusion of market stability and his bank’s profitability. Though Mitchell is not the sole villain, he became the most powerful banker in the nation while breaking the financial backs of many Americans. In general, it is the self-interest of those who listened to him that have responsibility for their financial collapse, but it is always hard to know who is lying to you. Part of the blame is the hesitation of the Federal Reserve Board to act because the people in charge could not agree but that was more a matter of omission than commission which Mitchell was charged with but not convicted. Of course, the political leaders of that time also failed but hindsight is a lot easier than foresight.

Artificial Intelligence is today’s equivalent of the Industrial Revolution of the twentieth century.

Similar to the corporate mergers and investment from growing industrialization of the 1920s, today’s mania is mega corporation’ investment in Artificial Intelligence. Sorkin notes the ease of trading stocks, expectations of crypto investments, and A.I. hype may well move the market beyond its value. He argues for stronger guardrails on speculative investments, more limits on margin lending, and transparency on high-risk investments. He cautions easier credit as seen this Christmas season with buying based on delayed payment incentives and increasing credit card availability, card balance increases, and more liberal repayment terms. In general, Sorkin wants to see more, and better government oversight and regulation of credit offers. He believes too many lenders are overly optimistic about the future with the gap between rich and poor widening and trending to get worse. That inequality threatens the success of capitalism as a driver for shared prosperity, and economic growth.

Herbert Hoover (President 1929-1933, though characterized as the primary villain for the depression, Sorkin identifies his role as one of omission rather than commission.)

The Presidents shown below carry some responsibility for where the American economy is today but that would be another book.

Clinton, the first Bush, the second Bush, Obama, Biden, Trump.

Sorkin’s “1929” makes one think about 20th and 21st century American Presidents who may have set a table for a second economic crisis. As the Turkish proverb says “…fish stinks first at the head.”

BOYS TO MEN

The most judgmental part of Szalay’s story is that a boy raised in wealth can be spoiled by drug addiction while a poor “go along to get along” boy may end up just as dissolute from sexual addiction.

Books of Interest
 Website: chetyarbrough.blog

FLESH (A Novel)

Author: David Szalay

Narration by: Daniel Weyman

David Szalay (Canadian Author, winner of the Booker Prize in 2025 for “Flesh”.)

Every child is raised in different circumstances. The variables are legion ranging from genetics to economic environment to parenting and the experiences of life. David Szalay tells of a young boy growing to manhood. Every male will have some experience that relates to his primary character’s life. That explains the popularity and literary acclaim that “Flesh” achieves.

Szalay captures different pathways for “every boy’s” journey through the physical and mental anxieties of life.

The specific circumstances of the life for boys (and undoubtedly girls) show how complicated growth to adulthood can become. The father of one boy is a very wealthy businessman who has married a woman many years younger than him. They have a son named Thomas who has been raised in wealth and privilege. The second boy is, István, a poor Hungarian who lives a “go along to get along” life. This poor Hungarian grows to be a handsome man who is attractive to women because of his life experience and attitude about life and relationships.

Effects of inherited wealth.

István and a wealthy husband meet as a result of an attack by street thugs who beat the wealthy husband and nearly kill him. István happens to be passing by when the thugs are scared away by his sudden appearance. István calls 911 or its equivalent to get an ambulance. The wealthy husband is taken to a hospital and is grateful to István which he feels has saved his life. He offers István a job in his security firm as a protector of wealthy clients. István shows himself to be a very competent bodyguard. The wealthy husband decides to have him become his personal family guard and driver.

The wealthy husband’s much younger wife falls in love with the bodyguard and they become lovers.

The wealthy husband dies, and István marries the wife of her former wealthy husband. The son of the wealthy husband is destined for college when István marries the deceased husband’s wife. This college bound son will inherit all of the family wealth when he reaches the age of 25 based on a Trust that allows his mother and her new husband to use the Trust to make investments for the future until the son reaches 25. István becomes a land investor and developer with the wealth of the trust.

Human differences.

The table is set for comparison of two sons who are different with one raised in great wealth and another in the lower middleclass. A crisis occurs when an 80-million-dollar investment by István is needed from the trust that requires disclosure to the son who is to inherit the trust. This son raises enough public objection to the investment that it is not made, and the investment deal falls apart. To this reviewer, the dynamics of the genetic influence of two boys from different economic classes is the most insightful value of the novel.

The influence of genetics, wealth, and poverty.

One can judge from the life of István what influence genetics, wealth, and poverty may have had on the life of a boy growing to become a man. The author seems to have an opinion about boys raised by a family of wealth versus those raised by a family with a “go along to get along” belief in life. At the books end, one wonders if being born in wealth is as likely to make an adult male better or worse. István seems sympathetically written into life by the author. He is true to his character throughout the story, but his sexual life is a mess. Though he appears to be a resourceful, hardworking, and decent human being, he is led through life by his libido.

The most judgmental part of Szalay’s story is that a boy raised in wealth can be spoiled by drug addiction while a poor “go along to get along” boy may end up just as dissolute from sexual addiction.

SUICIDE

“We Are the Nerds” is a story about “Nerdom” and the tragic loss of Aaron Swartz to his loving family and the world of coding.

Books of Interest
 Website: chetyarbrough.blog

WE ARE THE NERDS (The Birth and Tumultuous Life of Reddit, the Internet’s Culture Laboratory)

Author: Christine Lagorio-Chafkin

Narration by: Chloe Cannon

Christine Lagorio-Chafkin (Author, reporter, podcaster based in New York.)

Relistening to “We are the Nerds” may be reviewed from a perspective of the future of newspapers but that diminishes the tragedy of Aaron Schwarz’s suicide.

The original founders of what became known as Reddit were Steve Huffman and Alexis Ohanian, graduates from the University of Virginia. A third partner, Aaron Swartz, is invited into the company because of his tech experience in creating a company called Infogami which merged with Reddit. With the addition of Infogami, the original founders of Reddit created a parent organization called “Not a Bug, Inc”. Schwartz insists on being called a co-founder because of his contribution to Reddit as a programmer. That insistence rankled Huffman and Ohanian which grew into a resentment that fills the pages of the author’s story.

Steve Huffman on the left with Alexis Ohanian and his wife, Serena Williams, and their daughter on the right.

The author seems to minimize Schwartz’s contribution to Reddit despite the framework he created that made Reddit scale more quickly because of its open access and community-driven cultural impact. Swartz’s contributed code appears to have been an important step in the useability of Reddit by the public. However, in fairness to the original founders, the author infers that contribution pales in respect to the extensive coding and work done by Huffman. The point is that this conflict becomes an irritant that leads to the departure of Swartz from Reddit in 2007, after it was acquired by Condé Nast in 2006. That acquisition made all three original coders millionaires.

Swartz’s life and premature death is a tragic encomium to the story of Reddit’s success as a public forum.

By some measure, Swartz is a brilliant human being, but his intelligence is accompanied by what might be characterized as a self-destructive personality. His ability as a computer nerd is evident in his High School days in Highland Park, Illinois. He goes on to Stanford, but its educational regimen leads him to leave after his first year. He preferred independent learning. Schwartz’s remarkable ability led him to become a research fellow at Harvard University in 2010. He became a self-taught intellectual with an activist belief in academic freedom that eventually led him to rebel against authority. He was arrested in 2011 for allegedly breaking into MIT’s computer network without authorization. He was charged for computer fraud and faced 34 years in prison and a million-dollar fine. At the age of 26, Swartz hung himself and died on January 11th, 2013.

An American mass media company founded in 1909.

Huffman and Ohanian believed Swartz’s contributions to Reddit were less than theirs in creating the company they sold to Condé Nast that made them millionaires. Swartz’s idealism and independence conflicted with the original founders of Reddit who seemed more interested in building a public platform that could make them rich. Though Ohanian believed they sold too soon, all three agreed to Condé Nast’s final offer that made them millionaires.

In retrospect, Ohanian may have been right about the future value of Reddit. Condé Nast spun Reddit out to an independent subsidiary under Advance Publications where it became a 42-billion-dollar success by 2025. Today, Huffman’s net worth is estimated at $1.2 billion as a result of his Reddit shares. Though Ohanian may not have held on to his shares, his net worth is estimated at $150-$170 million. Not bad for two University of Virginia graduates. However, as Plato observed, “The greatest wealth is to live content with little”. Swartz’s life seems to have had little to do with desire for wealth.

“We Are the Nerds” is a story about “Nerdom” and the tragic loss of Aaron Swartz to his loving family and the world of coding.

CAPITALISM’S REFORM

Like abolition, women’s suffrage, labor, civil rights, LGBTQ, and MeToo movements of the distant and near past, capitalism’s reform is due.

Books of Interest
 Website: chetyarbrough.blog

SAVING CAPITALISM (For the Many, Not the Few)

Author: Robert B. Reich

Narration by: Robert B. Reich

Robert Reich (Author, American professor, lawyer and political commentator that worked in the Geral Ford and Jimmy Carter administrations, and served as th secretary of labor in Bill Clinton’s administration.)

Robert Reich, as an advisor to Presidents of the United States is recognized by Time Magazine as one of the Ten Best Cabinet Members of the 21st Century and by the Wall Street Journal as one of the most influential business thinkers in 2008. In “Saving Capitalism” Reich criticizes corporate America for unethical and unfair capitalist practices that make a mockery of capitalist equality.

U.S. Rising Income Disparity.

Economic class warfare in America is a time worn argument by many economists in the 20th and 21st century. Reich’s topical analysis has some truth, but his analysis of wealth and markets oversimplifies the complexity of American capitalism. One cannot deny the harm that capitalist greed has done to increase wealth of the rich and decrease wealth of the poor in America. The political system is rigged by the influence of wealth over political policy and economic equality.

American capitalism’s rigging begins at birth, carries through public education, and ends in low-income opportunities for the poor.

The power of wealth feeds American capitalist Democracy’s circle of life. Money of the wealthy is spent to birth and educate their children with the best medical care and schools in America. The corporations and super rich of America hire and fund lobbyists who promote corporate agendas to support government representatives’ campaigns for office. The aspiring representatives are people who owe their allegiance to corporations and the rich who helped get them elected. That circle is biased toward making the rich richer.

Equality of opportunity is rigged in ever-larger corporations that reap super profits and pay CEO’s millions of dollars per year while low wage earners are left to fend for themselves. Mega corporations should be broken up like the oil industry dismantling in 1911. Like Standard Oil, today’s conglomerates have too much power over consumer purchasing, advertising, social media, medical industries, and (most importantly) the election process of America. The rigging begins with healthy birthing of children of the rich, extending to less qualified schooling for the poor, and ending with low-wage family’s children having unequal economic opportunity.

One cannot deny that Reich’s book and this biased review are an ideological belief that distorts and oversimplifies reality, but it carries an element of truth that cannot be denied. How can one person be worth a potential trillion-dollar net worth for service as CEO of one company that makes electric cars. Corporations like Amazon, Google, Facebook, UnitedHealth Group, and Cencora control markets through their size to capture disproportionate shares of advertising, social media, retail sales, and medication industries without competition to moderate their power, and influence. Add billionaires like Elon Musk, Larry Ellison, Mark Zukerberg, Larry Page, Steve Ballmer, Warren Buffett, and Michael Dell and others of great wealth–one is inclined to believe American capitalism is rigged.

As brilliant as Musk shows himself to be, his fragile ego diminishes his genius.

There is an unfairness in criticizing the wealthy for their success in America. They are not wealthy because of luck but because of their innate abilities, risk taking, and hard work but influence should not come from the power of their wealth to change government policies that focus on enriching themselves. Just as the robber barons had their influence curbed by antitrust legislation, the same should be done today. The influence of lobbyists and their support should be more publicly disclosed. The federal government should play more of a financial role in improving public education. Cries of inequality should be exposed, critiqued, and adjudicated fairly.

Survival of global capitalism seems dependent on reducing the gap between billionaire/millionaire capitalists and the wage-earning public.

Capitalism remains the best economic system in the world, but it has its weaknesses. The best prescription for that weakness is equality of opportunity in the arena of employment competition. It begins with fair and equal access to medical care and access to a good education.

Like abolition, women’s suffrage, labor, civil rights, LGBTQ, and MeToo movements of the distant and near past, capitalism’s reform is due.

U.S. WEALTH GAP

Capitalism should be designed to ameliorate the wealth gap, not exaggerate it to the point of people going hungry in one of the richest countries in the world. Capitalism is the greatest economic system in the world, but equality of opportunity remains a work in progress that is made worse by poor government policies and the inherent faults of human nature.

Books of Interest
 Website: chetyarbrough.blog

This Time is Different (Eight Centuries of Financial Folly)

Author: Carmen Reinhart, Kenneth Rogoff

Narration by: Sean Pratt

Carmen Reinhart (on the left) is a Cuban American economist and Professor of the International Financial System at Harvard Kennedy School of Business. She has a Ph.D. from Columbia University. Kenneth Rogoff is an American economist and chess Grandmaster who received a B.A. and M.A. from Yale and a PhD in Economics from MIT.

Two well educated academics try to explain why world economies are not unique by arguing the patterns of financial crises are similar, if not identical.

They argue heavy borrowing, inflated optimism, bank collapses, high inflation and currency devaluations are common characteristics of nation-state financial crises. These nation-state government actions and reactions are a result of innate human behaviors. They argue recurrent financial crises feed off of each other to spread economic chaos that creates panic among economic movers and shakers of national economies.

Our American government.

The importance of Reinhart’s and Rogoff’s observation is particularly interesting in light of the economic disruptions of the current American government. History shows America is not exempt from economic crises. In 2008’s economic crises America carries a large responsibility for itself and other nations near collapse. The 2008 economic crisis shows how domestic debt can threaten the world, let alone one country.

Maybe American government is not above the law, but a President shows he is capable of bending it.

In light of Donald Trump’s directed tariff war and his “…Big Beautiful Bill Act” that eliminates federal income taxes on Social Security, tips, and overtime pay, America’s national debt is likely to balloon. He is gambling American citizens’ future on belief that tax reductions will be offset by economic gains from improved industrial development. This is at a time when industrial development is being impacted by arbitrary firing of government employees, AI innovations that reduce employment, and industry employees retiring or transitioning to a service economy that pays less livable wages.

Trump’s tax policy will continue its top tax rate at 37% despite the government’s earlier intent to have it revert to 39.6%.

The effect of these tax policy changes is expected to reduce tax revenues by 4 to 5 trillion dollars at a time when America’s debt has never been higher. It is estimated at $38 Trillion dollars today. America’s interest rate on that debt is 3.393%, more than double the rate of five years ago. The increasing rate is related to the believed risk of U.S. default which will most likely rise with Trump’s tax breaks. U.S. debt has never been higher. Interest at its present rate will consume 14% of the federal government’s outlay in 2028. That 14% could help pay for the Affordable Care Act that is opposed by the Republican majority. The Trump tax policy implies continued heavy borrowing, an inflated optimism that threatens bank collapses, high inflation, and currency devaluations. Though the authors are not writing that America is on the verge of economic collapse, their observations infer a crisis is nearing, if not inevitable.

The gap between rich and poor in America is unconscionable.

Capitalism should be designed to ameliorate the wealth gap, not exaggerate it to the point of people going hungry in one of the richest countries in the world. Capitalism is the greatest economic system in the world, but equality of opportunity remains a work in progress that is made worse by poor government policies and the inherent faults of human nature.

MEDIA PLATFORMS

Cory Doctorow shows how the American public is being taken advantage of by today’s major private media owners and manipulators.

Books of Interest
 Website: chetyarbrough.blog

Enshittification

Author: Cory Doctorow

Narrated By: Martin Sheen

Cory Doctorow (Author, Canadian-British blogger, journalist)

Despite the poor choice of titles for Cory Doctorow’s book, his theme of internet corruption is inevitable because of the nature of human beings. The corruption of which Doctorow writes is evident in most mega-corporations and governments. The only difference is in their motivation, i.e. whether it is money, power, or both in world organizations.

Elon Musk (Businessman, billionaire, entrepreneur, leader of Tesla, SpaceX, Twitter, and xAI.)

The first part of Doctorow’s book is an evisceration of the famous Elon Musk. Not surprisingly, Doctorow is not a fan of Elon Musk. Musk is an example of the theme of Doctorow’s book. Musk’s acquisition and decimation of a widely used communication platform known as Twitter exemplifies “Enshittification”. Doctorow infers Musk’s desire to have a free speech forum is actually a betrayal of the principle of free speech. The reality is that Musk has only created a Megaphone for his personal biased beliefs. Musk’s first action in the Twitter acquisition is to fire essential employees to reduce costs of operation. One presumes from Doctorow’s theme that Musk’s first step results in “Enshittification” of Twitter. Twitter’s new name is “X”. “X”s value has plummeted just as the American government’s service to the poor has fallen. With Musk’s singular focus on reducing cost, without consideration of effectiveness, enshittification is virtually guaranteed by Musk’s actions.

(Though not mentioned by Doctorow, it seems to this critic, that Musk’s firing of government employees under Trump, is similar to the dismantling of Twitter. The firing of government employees results in citizen-service’ losses equivalent to Twitter’s loss of advertisers.)

Traditional media is a one-way broadcast of information whereas the Internet is two-way interactive communication. Anyone can publish on the internet while singular corporations or institutions that own traditional media have only a one-way form of communication. The internet is global, instant, and decentralized while traditional media is scheduled for delivery and centralized. Access with on-demand, 24/7 internet are not time-bound like traditional media. The cost of using the internet is low and often free while traditional media entails infrastructure costs.

Trouble arises with the internet because of its ubiquitous availability while traditional media is singularly targeted.

The internet is immediate while publications are period based. It is possible to precisely and instantaneously measure internet responses based on clicks, views, and engagement while traditional media relies on third party analysis by publishers or by hired companies like Nielsen. Doctorow shows how differences between internet and traditional media exacerbate loss of privacy and increase potential for massive societal disruption. The internet can immediately influence and potentially control social beliefs. In less capitalist and more authoritarian governments the danger of the internet is direct influence and control of its citizens.

In American capitalism, the danger lies more in the drive for profitability than the control of social and political belief.

Doctorow argues America’s social norms are being corrupted by disparate industries that are creating tech platforms to monopolize product consumption only for economic gain, not service to its users. The consequence erodes trust of the public, distorts accountability, and thwarts free choice. The ruling classes of American society can evade traditional checks and balances. The utility of the internet can be used to distort the truth. Corporate objective is to make more money, not to benefit public discourse, improve product, reduce product cost, or improve service, but to monopolize consumption.

On the one hand, Doctorow acknowledges social media platforms optimize engagement. However, these platforms become forums for outrage, and misinformation that tribalizes society.

Rather than improving connections between people, algorithms are created by users of a media platform to exacerbate outrage, foster conspiracy theories, stir up and ultimately exhaust the public. The objective is increase clicks to make buyers of advertising to purchase time on their platform. As a free society, Doctorow suggests Democracy can mitigate the “Enshittification” by regulating the internet. He argues that one’s use of a platform should not monopolize personal information by restricting one’s right to take their information with them if they become unhappy. Platforms should not be prisons that restrict users legal right to their personal information if they choose to change platform providers. He argues for a breakup of major providers like Amazon, Facebook, Google, X, and Adobe.

Doctorow argues for more transparency in the algorithms being used by media platforms.

The public should be informed about how a platform’s algorithms are being used to steer the public. Individuals should be given the opportunity to opt out of algorithmic categories if they wish. Regulatory agencies should be created with the right to enforce consumer protections. He notes the EU’s move to require platform accountability. In general, Doctorow argues that the internet should return to its roots as a space for mutual aid, free expression, and innovation.

Internet Moguls: CEO Google Pichai, CEO Meta Zuckerberg, CEO Apple Cook, Executive Chairman of Amazon Bezos

Doctorow is not the first to propose reform of the internet.

Some time back, Tim Wu, a Columbia law professor, notes that Amazon, Apple, Facebook, and Google had shifted from serving users to extracting value from them. He argued for antitrust enforcement, regulation, and restrictions on content and infrastructure. American Democracy is a safer environment for public media than what is being experienced in countries like China and Russia where all media is tightly controlled by the government. However, Doctorow shows how the American public is being taken advantage of by today’s major private media owners and manipulators.

Doctorow argues for the breakup of internet companies that have become too big. He believes returning the internet to the service of society requires a more level playing field to equitably serve the public.

BALANCE

It is ironic that Trump has suffered so much from America’s legal system and is unable to see NIMBY mentality and a return to the past will not “Make America Great”.

Books of Interest
 Website: chetyarbrough.blog

Breakneck (China’s Quest to Engineer the Future)

Author: Dan Wang

Narrated By:  Jonathan Yen

Feng Chen Wang aka Dan Wang (Author, Canadian technology analyst and writer, visiting scholar at Yale Law School.)

Dan Wang is a highly credible author of the 21st century economies of China and the United States. Mr. Wang’s mother and father were born in China when the one child policy was the law of the land. Mr. Wang was born in Canada in either 1991 or 1992. Though Mr. Wang may be an only child, his parents advised him that living in China was challenging because of its state control and family planning that restricted their human rights.

Dan Wang has lived in Canada, America, and China.

From 2017 to 2023 he worked as a technology analyst in Hong Kong, Beijing, and Shanghai. As a young man, Wang bicycled across China with young friends. Having been educated in Canada and the United States, growing up in Toronto and Ottawa and going to high school in Philadelphia, he has a broad understanding of the economies of all three nations. Of course, his specialty is technology which gives him a unique understanding of what is happening in America and China today. He graduated from the University of Rochester in 2014, studying philosophy and economics.

Trump’s apparent view of Xi.

After listening to Wang’s book, one begins to understand why President Trump’s perspective is that the world, with emphasis on China, has taken advantage of America’s economic wealth by eviscerating its industrial industries with less expensive product made in other countries. Wang presumes as a person who has an economics education that Adam Smith (the Father of Economics) and Donald Trump are right when they argue tariffs are justified in areas of national defense, or for retaliation. On the other hand, Adam Smith, noted “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.”

Adam Smith (Father of Economic Theory)

Smith argued if another nation can provide the same product for less cost, a prudent buyer should buy the cheaper product and use money saved to produce a different product. Wang and Trump disagree with Smith because the revenue producer that America turns to is the service industry rather than product development. What is missed by Wang and Trump is that America is the third largest agricultural producer in the world with China and India being the largest. Of course, the difference is that America has 1/3rd the population of China and India, respectively. Lower population and high agricultural production in the United States hugely benefits its economy. More significantly, food, like water, is an essential need of life. The point is that non-food product production is not necessary for living life.

Loss of industrial production to China.

Wang’s and Trump’s argument is that America’s loss of industrial production has made it too dependent on other countries. They either infer or say Americans are forgetting how to manufacture product. They argue American industries are closing because of America’s inability to compete with other nations because of labor and material cost differences. History shows America fails to expand its industries because production of things is provided by other nations at a lower cost. And as Adam Smith noted, “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.”

Wang decries America’s movement toward a service industry as the basis for economic growth.

America is the richest country in the world, but America has failed to eliminate poverty, house the homeless, feed the malnourished, and provide for the infrastructure needed to improve America lives. One may ask oneself-what is wrong with becoming a service industry nation? Why does America have to return to its past. As Adam Smith noted: “It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.” The future is about being healthy, being housed, fed, and clothed. It should not be about being the richest and fattest minority in the world, particularly when there is an inordinate gap between the rich and poor.

Wang argues America’s economy is diminished, not by reduced industrialization, but by its growth of legalism that reinforces nimby (not in my backyard) litigation.

Delays in public improvements in America are restrained by lawsuits that protect the rich and victimize the poor. An example is the long delays in mass transportation improvements which become more costly with every year that passes before completion. The delays are caused by litigation. When China can build rapid transit in 3 years while it takes 15 or more years in America, one wonders why. The huge investments China has made in massive infrastructure improvements have vastly improved their economy. In contrast, America wastes investment resources litigating mass transportation improvements in California, Washington, and other states by increasing costs from delays caused by litigation. It is like throwing the baby out with the bath water because the number of people who benefit from infrastructure improvement are largely discounted or ignored. Equally appalling is homelessness in America because of NIMBY’ objection to low-cost multifamily housing that could get the homeless off the street. Cost benefit analysis should prevail, not litigation based on interest group objection. In Wang’s terms, American infrastructure decisions should be based on science and engineering like, what he argues, China bases their infrastructure decisions upon.

President Eisenhower.

The fundamental point is that America has lost sight of the importance of a balance between benefit to the public and individual rights. Equality of opportunity is split between the rich and poor with the middle class being too complacent while the rich reap unconscionable reward. Where are the Eisenhower-like Presidents who promoted an Interstate Highway System that created a 421,000-mile interstate highway system?

Trump is no Eisenhower because he wishes to return America to a past rather than look to its future. It is ironic that Trump has suffered so much from America’s legal system and is unable to see NIMBY mentality and a return to the past will not “Make America Great”. Wang’s book explains how China has succeeded in improving their economy while America’s economy is failing.

FARMLAND

Historically, collectivization of land has failed even when those who are part of the collective are better off than they were when they had no land.

Books of Interest
 Website: chetyarbrough.blog

Land Power (Who Has It, Who Doesn’t, and How that Determines the Fate of Societies)

Author: Michael Albertus

Narrated By: Braden Wright

Michael Albertus (Author, professor at the University of Chicago in the Department of Political Science.)

Michael Albertus develops a powerful argument for “Land Power”. Much of history and current events in relatively undeveloped countries are identified as proof of Albertus’s belief that “Land Power” is key not only to economic growth but to social improvement. He reflects on the history of Great Britain, France, and the United States while noting current affairs in developing countries like Peru, Columbia, and Bolivia support his argument.

The unfortunate truth of history is that indigenous populations, particularly in America and Great Britain, were displaced in order for “Land Power” to be the engine for economic prosperity and social change. In the case of America of course, it is the displacement of North American natives by English settlers who became Americans. In contrast Great Britain’s “Land Power” comes from a landed aristocracy and their subjugation of foreign cultures with autocratic control and rule of Asian and European countries. In France, Kings and an aristocratic government’s rejection by commoners in 1789 seem the motive force behind “Land Power” ascension.

For Peru, Columbia, and Bolivia Albertus infers examples of Britain, America, and France set a table for “Land Power” change by their governments. In my opinion, the age of technology has diminished “Land Power” importance in America, Great Britain, and France.

“Land Power” still carries weight in America, Great Britain, and France but in the tech age it seems the power of accumulated wealth has become more powerful than land. However, Albertus’s “Land Power” argument in regard to South American countries like Peru, Colombia, and Bolivia are compelling in regard to their economic and social improvement. Albertus notes private land ownership and recognition of women’s rights to own property, show that “Land Power” is a source of economic and social improvement in South America. He suggests countries like Mexico are being challenged by their failure to reform land ownership policies but today’s leaders in Peru, Columbia, and Bolivia have made significant land reform changes.

Albertus explains the major reform movement between 1969-1980 made by General Alvarado in Peru.

General Alvarado ordered nearly half of all private agricultural land be redistributed among Peruvian citizens. He dismantled large estates to empower peasant cooperatives. It has not been a perfect solution because it created an insurgent group called the Shining Path that pressed for a Maoist collective land reform for the redistributed Peruvian estates. Just as collective farms failed in China, they failed in Peru because common gains in collectives did not fairly reward performance. Collective farms distort the needs and results when a collective rather than a singular leader is responsible for performance of the collective. Nevertheless, the steps taken to dismantle half of private agricultural land, is considered by Albertus a step in the right direction because it incentivized many Peruvians who were living in poverty.

In Colombia, in 1966 through 1970 President Restrepo redistributed agricultural land to former agricultural laborers.

FARC (Revolutionary Armed Forces of Colombia) is organized in 1964 to offer peasant self-defense for actions soon to be taken by President Restrepo to reduce land ownership inequality. Between 2010 and 2018, President Santos negotiated with FARC to settle disputes between former landowners, and new farmers that benefited from land redistribution. There is still conflict because of FARC’s false belief in collective farming which has been proven a failure in other countries, but President Santos and his successors have created a path, though no solution, for reform through the hope for understanding and compromise. Albertus infers land reform is a work in progress, not a perfect solution.

Land reform in Bolivia spans 1953 and the early 2000s.

Presidents Estenssoro (1952-1956) and Evo Morales (2006-2019) worked on land reform along the same lines as Peru and Colombia. Large estates were broken up in 1953 and redistributed to peasants. Morales clarifies indigenous land rights but formalized communal ownership of redistributed land. This is another example of a work in progress because collectivization may be a step in redistributed land, but it has not proven to be a long-range benefit to a country’s citizens. It becomes too divisive and unrewarding for optimum performance and fair rewards for those who excel.

Collective farming.

One who read/listens to Albertus’s insight to land reform believes his story has merit but his history is too optimistic when a little additional research shows land reform is a losing proposition when not fully supported by institutions that had implemented change.

History shows land collectivization when large landowners lose their land is a fool’s errand because it fails to reward those who excel as part owners of redistributed land. Human nature gets in the way. Those who work harder than others expect to have proportionate reward. Collective farming disincentivizes personal high performance. Historically, collectivization of land has failed even when those who are part of the collective are better off than they were when they had no land.

WEALTH

What is wrong about Housel’s investment recommendations is that his life experience sets a table that is not the same table as those who have much less to eat.

Books of Interest
 Website: chetyarbrough.blog

The Psychology of Money (Timeless Lessons on Wealth, Greed, and Happiness)

Author: Morgan Housel

Narrated By: Chris Hill

Morgan Housel (Author, two-time winner of the Best in Business Award from the Society of American Business Editors and Writers.)

“The Psychology of Money” is a plain-spoken examination of the value of wealth, how it is attained, retained or lost, and why its’ real value is independence. A superior perception of reality would certainly be ideal, but Housel implies no such thing exists, and that the presumption is too theoretical to be useful. Every human being becomes a product of their life experience. Unquestionably, all human beings have genetic inheritance, but Housel suggests personal life experience molds that genetic inheritance. All true, but it helps if your parents are upper middleclass and have a mindset for saving rather than spending their income.

Housel argues high intelligence is no guarantee of success in achieving wealth.

To achieve wealth, Housel argues one needs to be a consistent saver, a long-term thinker, an index fund investor in the stock market, and one who resists impulsive decisions to sell investments or use savings during financial instability. These guidelines are based on a wealth-seeker’s “margin of error” calculation of financial need during market weakness. One’s objective is to maintain one’s independence and freedom to live as they wish without risking that freedom by buying luxuries from short-term gains to only appear wealthier than others.

Cutting through the lessons that are listed by Housel’s suggestions is the ancient Greek recognition of the importance of “knowing thyself”.

Are you a crazy risk taker, do you think about the value of wealth, are you more interested in what others think of you than who you are to yourself, are you goal oriented or a “go along to get along” kind of person? These are clues to who you are and whether you should change to assure a life of freedom to live as you wish.

Janitor Ronald Read Leaves Behind $8,000,000 Fortune at his death

Housel gives the example of the janitor millionaire from Vermont who had no formal financial education. Ronald Read worked as a janitor and gas station attendant during his working life. He lived frugally while investing in blue-chip stocks that he held until his death. He amasses a fortune because of small savings and investments while never having high income but investing unneeded cash based on the way he chose to live. By being patient and disciplined over the course of his life, Read died in 2014 at the age of 92, donating $4.8 million to Brattleboro Memorial Hospital, $1.2 million to Brooks Memorial Library, and $2 million to his stepchildren, caregivers, and friends. Like Ben Franklin, Read lived a long life, accumulated great wealth while living the life he wanted. Just like Franklin, Read lived his life as he wanted and contributed his savings to eleemosynary institutions and people who were important to him during his lifetime.

Warren Buffett (The Oracle of Omaha.)

Warren Buffett is another example offered by Housel to explain that time and compounded returns on investment are key to one’s independence and success for living as one chooses. Buffet’s genius is not in just choosing the right stocks, but in staying with investments over the long term. Housel notes 96% of Buffett’s immense wealth came after his 65th birthday.

The discipline outlined by Housel is difficult for a young person to accept because of the tendency of human nature to impress others with their success.

When young, image is important for reasons ranging from attracting desirable partners to impressing others with one’s success by driving expensive cars, wearing elegant clothes, and living in luxurious homes. Many people believe image is as important as substance and fail to realize its folly when they are too old to do much about it. Freedom to live as we choose is a mixed blessing. Being disciplined about money and investment when one is young is an important lesson but hard to follow, particularly in a free society.

Piketty argues that the income gap widens after World War II.  He estimates 60% of 2010’s wealth is held by less than 1% of the population.

Housel comes from a family of savers who appear to have followed the path he recommends in his book. Though what he recommends makes sense, his starting point seems better than most middleclass or poor families in America. He chooses a very conservative investment strategy because of his life experience. He only invests in index funds and lives in a house without a mortgage. His story is not a typical American middleclass family story. What works for him is based on his personal life experience. What is wrong about Housel’s investment recommendations is that his life experience sets a table that is not the same table as those who have much less to eat. This is not to say Housel’s advice is wrong in recommending living within one’s means, investing for the long term, and letting wealth accumulate over time. It is good advice but where one starts in life makes a difference because your life experiences mold a large part of who you become and how you choose to save or spend your money.