Posted by on November 1, 2015

Both are long-term residents of New York City.  Both attended Ivy League business schools.  Both had successful business careers.  Both are Republicans with an independent streak.  Both are billionaires.  Both have self-funded their campaigns, in part to be beholden to no one.  Michael Bloomberg and Donald Trump.  They could be twins. But like Julius and Vincent Benedict in the movie Twins, not identical ones.  And sadly for the Republican Party, and the country, we got the Danny DeVito sibling.

Michael Bloomberg doesn’t often write for his namesake news service, but when he does I am nearly always struck by his common sense, common decency and independence.  His latest piece, “Demand Better Schools, Not Fewer Tests,” is no exception.  In it, he makes several excellent points.  The first is the importance of improving education, both for America’s competitiveness in the world and in order to reduce inequality and improve lagging incomes, especially for the urban poor and minorities.

Following his favorite saying – “In God we trust.  Everyone else, bring data” – Bloomberg thinks that results from standardized tests can play a big role in helping governments and parents judge the quality of schools and teachers.  The latter is key because, to quote Bloomberg, “the single best reform we can implement is to put an excellent teacher in every class.”   But the teachers’ unions are dead set against testing and data because, fundamentally, they are opposed to merit and anything that helps to ascertain it.  By limiting testing, the Obama administration has just given them a helping hand in their quest to assure that protected mediocrity reigns.

The unions have consistently resisted changes that would make it easier to reward competence, such as merit-based pay and promotion. They have also resisted efforts to dismiss ineffective teachers, have sought to reinforce seniority rules and have vigorously fought competition and choice through such things as charter schools.  Finally, along with other public sector unions and with the full support of Democratic politicians, they have done their best to feather their own financial nests, often to the detriment of the resources available for schools and other public services.

This is an enormous vulnerability of the Democratic Party.   Quality education is one of the most effective ways to spread opportunity, particularly for members of minorities – in her speech to the 2012 Republican Convention, Condoleezza Rice rightfully called improving K-12 education “the civil rights issue of our day.”  Yet the Democrats consistently find themselves on the wrong side of this fight due to their unholy alliance with the unions.  The Republican Party should not miss a single opportunity to ram this point home.  The Democrats should not be allowed to masquerade as the party of the downtrodden while standing shoulder to shoulder with people wearing some of the biggest boots.

Finally, what a sad commentary it is on the American political scene that Bloomberg chooses not to run, in large part because he knows that he would not be nominated or elected.  Although I am sure that there are policy areas where I would disagree with Bloomberg, since he is insufficiently committed to small government in economic matters, he has much more judgment, competence and integrity than any of the ambitious mediocrities placed before us by both parties.  There is something very wrong with a political system where the Julius Benedicts abandon the field to their markedly less talented twins.

The Religion of Secular Stagnation

I have just finished reading a recent Financial Times.  It contained two articles describing recent scientific and technological advances.  The first was about a chemistry breakthrough at Cambridge University that could make lithium-air batteries commercially feasible within about 10 years.  Don’t ask me to explain the science, but apparently these batteries could have one-fifth the weight, size and cost of equivalent lithium-ion batteries, the current state of the art.  Imagine what this would mean for electronic vehicles and the storage of electricity from clean, but intermittent, power sources such as wind and solar, both of which are rapidly becoming cheaper and more efficient.

(And, most important of all, imagine what it could do for my short position in Tesla, which is busy spending $5 billion on a battery factory that could shortly be obsolete!)

And then there is this article about IBM’s acquisition of WeatherCo, a company that uses “big data” to provide continuously updated and highly localized weather forecasts.  These forecasts are useful for farmers, airlines and utilities, among others.  In addition to gathering weather information from public sources, WeatherCo collects it from a proprietary network of 40 million smart phones that use a downloaded app to report barometric pressure.  In other words, WeatherCo has turned 40 million people into miniature, mobile weather stations which continuously report conditions and locations.

When I read things like this, I am astonished that anyone can pay attention to Larry Summers when he revives the old canard about “secular stagnation.”  This is the supposed shortfall of investment opportunities versus savings that will consign the world to low growth for the foreseeable future.  Unless, of course, someone like Larry Summers is given control of monetary and fiscal policy.

US Navy’s $13 Billion Sitting Ducks

I am no military strategist, but when I read articles like this about a new Chinese submarine-launched anti-ship missile with a range of over 300 miles and the ability to skim the waves to avoid radar and then accelerate to over three times the speed of sound when it approaches its target, it is hard to avoid the conclusion contained in a BloombergView article that the US Navy aircraft carrier program is building “sitting ducks.”  Sitting ducks that cost $13 billion a pop and which the Navy hopes to replicate 10 times, even though there is good reason to believe they are highly vulnerable to “swarm” attacks by missiles or smaller vessels.

Even worse is why the Navy wants to do this.  These behemoths are primarily useful for the type of “shock and awe” projections of American power that have brought us Iraq, Afghanistan and Libya.  They are the physical manifestation of an interventionist American foreign policy that has proven to be a failure.  For this reason alone, they should be resisted.

The recent budget deal between the Republican-controlled Congress and Obama’s White House shows another reason why these military programs need to be curtailed.  With one side wanting more warfare, and the other side wanting more welfare, Washington went to the default solution of more of both, paid for largely by future asset sales and budget cuts that will probably never materialize.  (Although the Republicans did wrangle some reform of the Social Security disability rules out of Obama – not bad since the inflation-adjusted cost of this program has tripled in real terms since 1990 and claims for “back pain” and “mental illness” now comprise 55% of the program, compared to less than 15% in 1961.)

When the Republicans’ continuous demands for more guns meet the Democratic desire for more butter, the parties invariably reach across the aisle and courageously agree that future generations should pick up the bill.

Roger Barris

Weybridge, United Kingdom


I Wish That I Had Said That…

“Whether we like it or not, it is a fact that economics cannot remain an esoteric branch of knowledge accessible only to small groups of scholars and specialists.  Economics deals with society’s fundamental problems; it concerns everyone and belongs to all.  [Economics] is the main and proper study of every citizen,” by Ludwig Von Mises, who hopefully needs no introduction






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Posted in: Economics, Policy, Politics

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