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Here we are, another day with another piece of evidence that President Trump is a… sub-par President.

I could point to any number of things, but today I’m going to pick on his response to the allegations of child molestation of Alabama Senate candidate Roy Moore. Or rather, his lack of response.

The background to the latest example

In case you’ve been living under a rock, or not following US politics, Roy Moore is the former judge in Alabama who had a monument of the Ten Commandments placed outside his courthouse. He was eventually told to take it down (you can’t put a symbol establishing preferences for one religion over another in the United States federal building, it is unconstitutional because the the US constitution prohibits favoritism on the basis of religion). He eventually lost his position as a judge and got kicked off the bench.

But that wasn’t the end of his career. For you see, after Alabama’s Senator Jeff Sessions left his seat to become the Attorney General of the United States under President Trump, the governor of Alabama appointed someone else (Luthor Strange) to fill the vacant Senate seat until the next election which would be held on Dec 12. Luthor Strange was the incumbent, but he had to win a Republican primary first, and then win in the general election to officially take the Senate Seat. And that’s where Roy Moore comes in. Moore ran against Strange in the primary and won. So, he’s now the Republican candidate to become the senator of Alabama in a special election on Dec 12, squaring off against a former prosecutor running for the Democrats, Doug Jones.

Roy Moore was all positioned to win the election because Alabama elects Republicans. However, a couple of weeks ago, numerous reports of Moore committing sexual assault 35-40 years ago against underage girls began to surface. This happened while he was in his 30’s and was the District Attorney. Allegedly, he was well-known for dating teenage girls, was banned from a shopping mall for hanging out around there (as well as high-schools), and allegedly groped not just one girl, but so far six (!) have come forward. One was as young as 14 years old when the incident occurred. Moore has tried hard to deny the allegations as fake news, except that one of the women has his signature in her high school yearbook.

My view of Roy Moore is that he is an extremist (his political views are to the far right) and he is endorsed by far right publications. I never wanted him to win anything. Yet now I am disgusted by the reports of child molestation. That should disqualify him from office; and while I understand that these allegations are unproven, there are six different women and this shows a consistent pattern of abuse. It’s not fake news, it’s sexual abuse.

The background to the background of the latest example

That’s what gives these allegations authenticity, these types of abuse are never just an isolated pattern, instead they come up over and over again. I can think of countless examples of this over the years:

What’s in common here is that this behavior (unsurprisingly) was going down for decades and was overlooked, but now that it’s come to light, the perpetrators are paying the price. Not necessarily with legal trouble, but at least with career trouble and massive hits to their reputation.

It’s a big problem in politics, too

Hollywood is not the only place where this has gone down. But at least in Hollywood, actors are paying for their sins.

When it comes to politics, many powerful men have almost managed to squelch allegations of sexual assault. Fortunately, they failed:

  • Just this past year, the popular mayor of Seattle Ed Murray, who is openly gay, was positioned to be easily re-elected. However, reports started surfacing this year that back in the 1980’s when he was a youth worker (also in his 30’s, the same as Roy Moore), he committed sexual assault against troubled youth. Murray denied the allegations and that they were politically motivated, but more and more reports kept coming forward. Eventually the political pressure was too heavy and Murray stepped down, and did he did not run for re-election.
    .
  • For me, the coup-de-grace is Dominique Strauss-Kahn. You won’t remember this, but I sure do. Strauss-Kahn is the former head of the International Monetary Fund (IMF), and he was based in New York City. A few years ago, the state of New York was trying to prosecute him for the rape of a maid (an immigrant) in a hotel. They were set to take him to court when a couple of days before the trial began, it fell apart and never proceeded. I never found out what happened, but my guess is that he did it and paid off the woman so she would drop her claims and refuse to testify.That wasn’t the end of his career, though. He started to move up in the circles but a year or two later, he was busted again for taking part in a prostitution ring, and was known for having wild sex parties. He never was convicted of anything (he admitted he had a strong sex drive) but that seems to be the end of his career. For now, I guess.
    .
  • Where this hits closer to home for me is that way back in 1993, while I was still living in Canada, my parents were involved in the Reform Party. The Reform Party was a right-wing party based in western Canada that was effectively a protest party. The local candidate was Terry Lewis, and he was a Christian. My parents supported him. He ran (and lost) in 1993, and ran again (and lost again) in 1997.Several years later, he was convicted of sexual assault which he committed against a teen boy in the 1970’s, again while he was a youth worker (in his 30’s, just like Roy Moore). He was convicted of a second case a few years ago.When my parents found out about this the first time, they were angry and disgusted that he did these acts. I give my parents credit, they never would have supported Lewis had they known that this was in his background.

So you see, sexual assault by men in positions of power, whether it is in Hollywood or in politics, is common. And it’s also serial, they rarely do it only one time. That’s what I think gives reports against Roy Moore credibility – that there’s so many.

The famous counter-example

But serially abusing men don’t always get their comeuppance, and the most obvious example is Donald Trump. In 2016, at least eight different women came forward and alleged that he sexually assaulted or groped them. At the time, candidate Trump said all eight of them were lying, a claim he still makes today. He was also caught on audiotape making “locker room talk” about women, but dismissed it as nothing more than men making off-the-cuff remarks about their sexual prowess (and that it was not at all a reflection of his character and his views towards women, relative to his own position of power).

President Trump got away with it; and unlike my parents who turned on Lewis even though they agreed with his politics, Trump’s supporters did not turn on him because they agreed with his politics, and they still haven’t. Likewise, Roy Moore’s supporters have not turned on him because they agree with his politics. Apparently, to Moore’s supporters, you can be a child molester so long as you espouse the right political and religious beliefs. If you do that, you get a free pass and anything wrong you do is dismissed as fake news.

When I was on a jury earlier this year, the case was about sexual assault. During the jury selection process, the lawyers are allowed to ask the potential jurors questions in order to kick them out of the jury pool in order for their client to get a fair trial (or the prosecutor get rid of any lunatics). I forget which lawyer asked it, but he asked the women in the audience how many of them had ever been a victim of sexual assault. Many raised their hands, and I tried to do a quick count. I estimated that somewhere between 20-25% of the women in the room had raised their hands. Some even spoke about their experiences.

So as you can see, this country has a problem with sexual assault committed by men, and many women don’t bring their stories forward out of fear, shame, and the feeling of powerlessness. Being accused of lying, and of participating in fake news, doesn’t help and makes the problem worse because it scares victims into staying silent. Furthermore, seeing the perpetrators (like then-candidate Trump) get away with it is even worse because it sends a social signal that it’s possible to get away with it under certain circumstances. People watch for these social signals, and if Roy Moore gets away with it, then others will figure out that you can get away with anything if you subscribe to extreme politics but indicate you’re on the side of a certain group.

Thought Bubble

Before, I continue, let me go to the thought bubble. I’ve listened to the radio about why Moore’s supporters haven’t abandoned him. Some think the accusations are fake news, others will vote for him even if the allegations are true because they won’t vote for a Democrat, but the one that makes me roll my eyes the most are because Christians have the concept of forgiveness. You may have committed some evil acts, but forgiveness is available to you. Redemption is a common biblical theme.

I get that, and it’s a great concept. However, it’s entirely dependent upon your coming clean, confessing, and repenting. In other words, you must admit your guilt and promise to turn around, and actually turn around.

Roy Moore has not gotten past that first step – he hasn’t admitted what he has done, so I can’t see how forgiveness should be extended to him. Indeed, by refusing to admit what he has done (allegedly), he is making the situation even worse by indicating to future victims that their stories will not be believed.

Thanks Thought Bubble.

Finally getting back to the hypocrisy

With all that in mind, let’s turn our attention back to President Trump. When the news broke about Moore’s allegations, President Trump was silent. He didn’t say anything. No urges about showing caution, no threats that these better not be true, just a simple “I haven’t studied it, we’ll have to see what happens.” He was exercising caution, a character trait President Trump doesn’t actually have.

Yet in the past week, Senator Al Franken, a Democrat out of Minnesota (the same Al Franken known for playing Stuart Smalley on Saturday Night Live) had his own sexual assault allegations makes the news. During a USO comedy tour back in 2006 before he was a Senator, he took a picture with his hands on the boobs of a female colleague while she was asleep (she was wearing body armor underneath military fatigue). Franken apologized for an unfunny joke and called for an Ethics Panel investigation into his own behavior.

While Franken is not the biggest thorn in Trump’s side, he’s been very vocal about sexual assault. And now this image has been circulating on social media. Like clockwork, President Trump rage-tweeted about Franken, calling his behavior inappropriate. “And what about the (non-existent) even worse images in photos 2, 3, 4, 5, 6, and 7!?!?”

Seriously?

The sheer size and scope of the hypocrisy of this tweet floors me. This is a man who committed sexual assault against numerous women, calls them all liars, and propagates the problem forward by sending signals to others they will not be believed even if they do come forward. He said nothing to the allegations of sexual assault allegations against Roy Moore, even though other Republican leaders have condemned the behavior (for their own political reasons, of course) [2].

But the reason that President Trump condemns Franken is not because he is actually disgusted by Franken. Instead, it’s because he knows where his bread is buttered. Donald Trump always courts the extreme right-wing base of the Republican party. He eggs them on all the time, and exploits their support. That’s why he wouldn’t condemn David Duke (the alleged leader of the KKK), why he wouldn’t condemn neo-Nazis, and why he wouldn’t say anything about gun control even after the Las Vegas, Texas, and California mass shootings which have occurred in the past few weeks. It’s because there are too many far-right extremists that are part of that voting bloc, and he needs to shore them up regardless of whether or not they are harming the country.

I know that not everyone who supports Trump is far-right, or an extremist. But many, many do and President Trump is pandering to them.

So, the President condemns Franken because Franken is a Democrat; he doesn’t condemn Moore because Moore’s politics are extreme but align with Trump’s base.

That is the reason why President Trump does what he does.

He is not showing any type of moral leadership, but instead is exploiting divisions in the country to firm up his support [2].

And I predict he’ll do this over and over. When a white male commits a mass shooting, President Trump will be silent because gun control is a pet issue for many in his base and he won’t risk alienating them. But if a Muslim rents a truck and drives over people in New York, he’ll be tweeting about it within minutes, about how we need extreme vetting, because many in his base don’t like or trust Muslims anyhow [3].

And on and on it goes. And will continue to go until he either loses the next election, or is impeached (probably because of his dealings with Russia, although I think that is a long shot, perhaps 20% chance of success). The hypocrisy of calling out one set of behaviors when it is politically advantageous, and not calling out another – even when the other he is not calling out causes more harm – is not going to stop.

And I think that is damaging the country.


 

Update three days after I wrote this post

And just like that, we’re seeing the behavior of how politics overrides personal ethic.

1. The most disappointing example is Franklin Graham, the son of American evangelist Billy Graham and the person in charge of Samaritan’s Purse, a Christian charitable organization that runs Operation Christmas child. My wife and I have donated to this organization in the past, so it’s such a depressing example of how leaders in the church should know better, but don’t.

Franklin Graham posted this on Twitter in response to the coverage of Roy Moore:

Did you notice the “What about-ism?” This happens when you say “This guy is bad, but what about this other person who is bad?” This is a diversion tactic that you engage in when you can’t defend something or someone, so you try to shift the discussion over to something else which you can personally attack. It is a tacit admission that you lost that battle, so you try to engage in something you can win.

What-about-ism is used by the Trump administration all the time, and the media falls for it. They get into a discussion about other things, chasing the rabbit trail. But it’s a ruse, a canard. Regardless of whether or not that other thing is bad, we are discussing this thing right now.

Franklin Graham ought to know better. Yes, other politicians in Washington are bad, but right now we’re discussing Roy Moore and his sexual assaulting of underage girls. Don’t try to change the discussion just because you’re a conservative Republican and you think Roy Moore will support the policies you want him to support. I thought Franklin Graham ought to show some leadership by showing he has some skin in the game, and would denounce someone who has shown immoral behavior. I guess I was wrong about that.

2. Unsurprisingly, President Trump has endorsed Roy Moore. From The Hill:

President Trump on Tuesday appeared to throw his support behind Roy Moore (R) despite the allegations of sexual misconduct against the Alabama Senate candidate.

We don’t need a liberal person in there, a Democrat,” Trump told reporters on the South Lawn of the White House.

The president slammed the record of Moore’s Democratic opponent, Doug Jones, saying “it’s terrible on crime, it’s terrible on the border, it’s terrible on the military.”

Trump declined to say whether he believes the accusations against Moore, but stressed that the former judge has denied them. “He denies it. He totally denies it,” Trump said, noting the alleged incidents took place about 40 years ago. “Roy Moore denies it — that’s all I can say.”

As I explained above, it’s not surprising that President Trump would employ this tactic, he only speaks to his base and pushes policies for his extreme base. Roy Moore is part of it, and there’s no way Trump will abandon him no matter how bad Moore is, because…

3. The Hill also reports that Moore and his Democratic opponent are in a statistical dead heat, with Moore still slight ahead:

According to the Raycom News Network poll, 45 percent of respondents believe some or all of the allegations against Moore, while 34 percent said they don’t believe any of the accusations.

Twenty-one percent said they believe some or all of the allegations, but that it won’t change their vote.

Did you see that? 1 out of 5 voters believe the allegations of sexual assault are true, but still will vote for Moore anyway (I haven’t checked to see if those are all Moore voters, or split, or all Jones voters). This underscores my disgust that all you have to do is subscribe to extreme beliefs and signal to your extreme base that you’re on their side, and they’ll give you carte blanche to do anything you want so long as you vote their way when in power. Your moral character means nothing (and that’s what irks me about Franklin Graham, he should know better).

This sends a bad signal to everyone else who might be so inclined to abandon politicians who do grossly immoral things. If Side A (Republicans) won’t do it, or won’t do it in enough numbers to matter, than what motivation do Democrats have to abandon, say, Al Franken? It amounts to a unilateral disarmament. Votes can do the game theory, and abandoning their guy but knowing the other side won’t abandon theirs means that you either accept the other guy, or you stick by your own no matter how bad he is.

I know national politics is a blood sport, but this is starting to feel really slimy.


Addendum

[1] Some leaders in the Republican party have said they believe the women, and that Moore should drop out. I think they are saying this because it’s politically expedient. The Republicans are establishment Republicans, and Moore is an extremist outside that. They want Moore to drop out because they don’t want the problem that Moore would have brought to the party in power, even outside of these allegations.

Yet, because of my disgust of Moore, I have to align myself with Republican Congressional leadership, even if I understand that they’re only doing it because it aligns with their own best interests, and not because they are showing any moral leadership.

[2] This goes to what Nassim Taleb describes as having skin-in-the-game. If you don’t have skin-in-the-game, your opinion shouldn’t be taken seriously. For example, during the financial crisis, maybe Wall Street managers were criticized for taking on excessive risk and destabilizing the system, yet still profiting handsomely. They had no downside, only upside. They had no skin-in-the-game.

When President Trump refuses to criticize Ray Moore, it’s because he knows he might alienate his base if he does, even though charges of child molestation are serious. When he does criticize Al Franken (even though he himself has done far worse things), it’s because his base is fully on-board with him criticizing Democrats and there’s no downside for him. Democrats won’t vote for him, and he can shore up support within his base.

Thus, President Trump has demonstrated he has no skin-in-the-game when it comes to showing moral leadership, he only panders to his base.

It’s when you do things for which you might suffer adverse consequences that you should be taken seriously.

[3] The message coming out of the White House is that the reason the President has criticized Franken is because he admitted it, whereas neither President Trump nor Roy Moore admitted to these allegations.

Moore hasn’t admitted it because it would probably be political suicide. President Trump… probably can’t remember that he did it, or does remember but has convinced himself that it was perfectly okay.

But in either case, it sends a bad signal: rather than admitting when you’ve done wrong, deny it forever. Even if it results in long-term damage to real victims of sexual assault.

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For the first 30-some-odd years of my life, I never drank alcohol. I didn’t care for the taste, and found it repulsive. I sympathize with those who don’t drink.

That started to change in 2012 when the wife and I went to Argentina. We started to have a little bit of red wine when we went out to eat, but for the most part I stuck to water. I never really found myself enjoying wine that much.

My aversion to alcohol went away after we went to the Czech Republic in 2013 and I started drinking beer. It was there that I realized that I liked beer. I figured out that there are only certain types of beer styles that I like. I’ve kept a list of all the different types I like, and over the next four years I figured I was primarily a liker of beer, and not wine. If I was going to drink wine, I didn’t want to sacrifice a beer for it (my body has a limited budget for alcohol consumption, so I have to be selective).

But last year, we went to France and that started to change. I found some wine that I liked. And then this past year we went to Sonoma in California, which is wine country. I learned that I liked some wines from that region, too.

Since going to Sonoma, I have increased my consumption of wine while decreasing my consumption of beer. I haven’t been keeping track, but I estimate that since June of this past year, I’ve probably had more wine than beer. I’m still a noob when it comes to different styles of wine and estimating what they will taste like, but I think part of the reason that I never liked wine in the past was that I wasn’t drinking good wine. It has to cost at least $10/bottle otherwise it leaves a sticky, cotton-mouth feeling in my mouth.

I’ve told people that one of the best things about wine is that it isn’t mass-produced. It’s made by small-to-medium size wineries by families or small businesses that care about their product.

Big business that mass produces things are in it for the money. And when you scale up, the quality of your product goes down. That’s just the way it is. But when you do things on a small scale, of course you are in it for the money (you have to be, otherwise you’ll go bankrupt) but you’re absolutely in it because you love the product and want to make something people will enjoy. You take pride in your work.

Wineries are like that. If you get too big and the wine gets too corporate, the product quality suffers. I don’t think you can make a quality bottle of wine for less than $3/bottle, because the bottle itself costs $2.

So yes – wine has not yet suffered the same fate as beer where a few large corporations dominate the beer market with an inferior product. When I was younger, I didn’t care as much about supporting small business because I was a strong believer in capitalism, and the market would sort out the winners and losers according to whoever had the best product.

But now, I’ve gained some skepticism about the market. Big business can sort out winners and losers not because they necessarily have a better product, but because they have a better business and distribution channel. They can scale up and get their product out to more people. Quality is a concern, but it’s not the concern.

That’s something that is not the case in wine.

Not yet, anyhow. And hopefully never.

This past summer, in August, the wife and I headed down to Hood River for a special event. In case you don’t know, Hood River is in Oregon and is one of the beer capitals of the state. There are five breweries in a town of something like 7700.

Seattle-to-MtHood.PNG

But that’s not what I am here to talk about. We didn’t just hang around Hood River, but instead did a hike around Mt. Hood. The wife and I have hiked around Mt. Rainier, Mt. Baker, and Mt. St Helen’s, all in Washington. This is the first (or second) time we’ve hiked around Mt. Hood.

I’m not sure how many trails there are around Mt. Hood, it doesn’t seem to have as many as Mt. Rainier or Mt. Baker. The one we went on started around 5800 ft elevation, and went up 3000 feet (to 8800), and was around 3.5 miles one way. I also forgot my boots, so I had to hike in my runners.

MtHood_4

But the part I thought was pretty cool is where the hike ended. Mt Hood is only around 11,250 feet. When we got to the end of where we were going, I looked to the end and realized that we only had another 2450 feet up to go if we wanted to get to the summit.  From where I was standing, it didn’t look too far of.

The below is a photo looking up to the top of the mountain:

MtHood_2

The next picture is me looking down from the mountain, back the way we came. On the way up, it seemed like it kept going up and up and up…

MtHood_3

But to put all of that in perspective, when coming down the mountain I looked back and snapped a picture just to see how far I really was from the top. As it turns out, I was a long way off:

MtHood_4a

So while was there at the end of the trail, I was thinking “It wouldn’t be too bad to keep going” even though I intellectually knew it would be.

But taking a step back and getting some perspective, it would be a difficult climb to go the rest of the way.

You win, Mt. Hood.

I don’t know what it is, but I really like fancy doors.

A couple of years ago when the wife and I were visiting Budapest, we had the chance to walk through one section of town where I took a photo of a fancy door and said “That’s the type of door I want on our house.” Of course, I’m never going to get a fancy door since they cost more than I am willing to spend on one.

Be that as it may, I like looking at fancy doors.

Last month (in September 2017) we were visiting the New York Metropolitan Museum of Art. I was there on a work trip and the wife came along. We really seem like visiting art museums, having visited the Orsay Museum in Paris last October (the wife also went to the Louvre), the British Museum this past May, and a copper museum in central Arizona this past April.

Anyhow, we were in the Metropolitan Museum when I came across a door I really liked, so I pulled out my phone and snapped a selfie:

Me_with_a_door_in_NY_Met

You can’t really see the entire door, but you can see the intricate carvings on it. I like the fine attention to detail doors like this. I don’t know why but I think part of the reason is that it’s non-utilitarian. Doors are for getting into and out of buildings, so you make something that’s secure and attach it to the frame of the house.

A fancy door is about so much more than utility; in fact, it’s non-utilitarian. That is, it doesn’t add any functionality whatsoever, it’s just there to look nice. You’ve now put in time and effort into decorating a door beyond it’s original function.

And this door fit that description.

I’ve been fortunate this year to have traveled for work to a number of different cities – Cologne, Germany; Toronto, Canada; New York City, New York; Sonoma, California; and San Francisco, California.

Because I’m reasonably well-known in the antispam filtering space, and because I work for a big company, I’m often taken out for lunch or dinner (along with many other people). This past week, I was in San Francisco and got to go dinner to Gary Danko, one of San Fran’s premier restaurants.

I had never heard of the place before. Of course, why would I? I don’t know that many restaurants in any city other than Seattle (and maybe Winnipeg). But Gary Danko is close to the waterfront, just across the street from the Ghiradelli chocolate factory.

I’m not a food connoisseur, but I do enjoy fine dining. The portion sizes are smaller but they are cooked with more spices and less salt/sugar/fat meaning that it’s not as bad for you as, say, McDonald’s. McDonald’s makes food you like only because it has so much salt and fat. Without it, it simply doesn’t compete with fine dining.

My meal was three courses. It started with appetizers and while there were several things on the menu I could have selected, I went with the bisque.

GaryDanko-Bisque

I don’t often get soup with my dinner. I will eat it if it comes with it, but I usually don’t select it over other things. I decided that since I had a salad for lunch, and I was getting meat for my main course, I would go with the bisque. I was glad I did, because it was really good.

For my main course, there were many different selections. Duck, lamb, steak, quail (I think… I can’t actually remember now) but I decided to go with bison. Why? Well, I never have bison in real life so I figured I would give it a shot now.

GaryDanko-Bison

I didn’t have the option of picking how I would like it. If I did, I would have picked medium-rare. But the way they cooked it was between rare and medium-rare, so it was rarer than what I would have selected.

That’s a good thing, because it turns out that bison is a tougher meat than regular steak.

On my plate, the thing on the right is a portobello mushroom, while the green things underneath the bison are not vegetables but instead a type of soft egg noodle called spätzle. I had never had it before, it was kind of chewy.

For dessert, there were a lot of different sweet things on the menu, and from what I know about fancy restaurants and dessert, they can go all-out. I opted instead to go with the cheese-tasting menu. I like cheese, and I knew it wouldn’t be too sugary.

My plate came with some grapes, four different types of cheeses, and then some raisin bread (yuck!). I strongly dislike raisins, but I finished most of the cheese and the grapes.

GaryDanko-Cheese

There was an extra bonus dessert plate afterwards, so I snagged myself a chocolate treat.

GaryDanko-BonusDessert

My group was pressed for time so we were in-and-out in 1 hour and 45 minutes. But I enjoyed my time there. If I had to do it again, I’d probably get the lamb instead of the bison. But nevertheless, no regrets. Any time I can go for fine dining, I jump at the chance.

The allure of economic growth

I was listening to NPR on the way home from work, and they were talking about tax reform. Now that Trump and the Democrats have cut a deal on protecting DACA people (those people who were illegally brought to the United States by their parents), the president is moving on to tax reform.

Oh, boy, here we go again.

President Trump is trying to drop the corporate tax rate from 35% to 15%. The idea is that because big corporations are holding so much overseas because of the high tax rate, they’ll be incentivized to bring it back if they only lose 15% instead of 35%. And when they bring all that money back, they’ll invest it into the economy and create more jobs, or at least increase the wages of their workers.

Tax cuts for corporations aren’t that popular among Democrats, but I guess the idea is that since Trump gave the Democrats protection for DACA recipients (including no building or funding of a giant [idiotic] wall on the border), they’ll reciprocate and give him some tax cuts which are always popular with Democrats.


But will it even work?

I wrote about how tax cuts don’t deliver the intended returns people think they do compared to a tax cut. TL;DR: they don’t expand the consumer class. Yet in the interviews with various officials in government leadership, people have asked how a drop in revenue in taxes from corporations and also people (you don’t get tax cuts from Republicans unless they go to wealthy people) will not increase the federal budget deficit.

And once again, the myth of economic growth comes into play. “We can afford tax cuts because it’ll grow the economy, from 2% to 3%. The tax cuts will pay for themselves; growth covers a multitude of sins. And if we can grow from 2% to 4%, wow! It’ll cover every sin!”

The problem, of course, is tax cuts don’t deliver the economic growth promised. To get that kind of growth, productivity would have to increase by 50%. Furthermore, in the past, when the corporate tax rate was temporarily lowered, companies didn’t bring back the money and use it to expand their businesses (thereby boosting productivity), they use it to pay dividends to their investors, or buy back stock (which decreases supply of the stock in the market, thereby boosting demand and increasing its price). In neither case are they increasing production, but instead giving money back to the shareholders.

 
How it affects me, and how it can affect others

As someone who has a good chunk of money in stocks and receives money in dividends, this is good for me. But I am under no illusion that this will increase the economy. Instead, it will increase the deficit and in order to maintain services, the government will have to borrow more money, which will cause the Federal Reserve to print more money, which will lead to inflation. Inflation helps the wealthy, particularly those owning real estate, but it degrades the buying power of the working and middle class if wages don’t keep pace with inflation.

The counter-argument is “Lots of Americans own homes! Inflation will help drive up their personal wealth!”

To which I say “Poppycock!”

Your home going up in value only helps you if want to sell it, otherwise it just increases your property taxes. And if you sell, it only helps you if you move to someplace cheaper and pocket the money. Most adults have to move into bigger places as their family expands, and it just costs more to maintain a bigger place. It only helps you if you want to downsize, and most people only downsize as they get older and their family moves out. But by that time they are spending more on healthcare costs.

Furthermore, growth in real estate isn’t that big a deal for most people. Unless you live in a city that has high rates of property appreciation like Seattle, Los Angeles, San Francisco, New York, Boston, and a handful of other urban areas, real estate as an investment is a pretty lousy one. It returns perhaps 0.2% per year after inflation. But inflation does erode your buying power if wages aren’t keeping up.

But wait! Wages will go up thanks to inflation!

This is also incorrect. Wages go up when there is a shortage of workers. And where is there a shortage of workers? In places where companies need them, and that’s in cities. And it’s mostly in cities that have high real estate costs like Seattle, Los Angeles, San Francisco, New York, Boston, and a handful of other urban areas. These are the places where wages are keeping place with inflation, or even exceeding them. But it’s also what’s driving up the price of real estate.

What compounds this problem is that the working and lower middle classes cannot afford the price of real estate so they have to move out from the cities – the ones where all the growth is taking place – to more rural or smaller urban areas. They then start overwhelming those markets with additional labor. Yet there isn’t enough demand for these additional workers. The result of more supply (labor) than demand (open job vacancies) is downward pressure on wages. That is, people leaving the high-cost cities can’t make as much in lower cost areas either, because there’s not enough demand for their skills and employers don’t need to pay as much because there’s so much to choose from.

So, growth doesn’t cover a multitude of sins. It goes towards those who are already doing pretty well, and leaves out the ones who weren’t. And the ones that weren’t are the very ones that voted for Trump, and his tax cut policy will hurt them more than it will help them. The whole point behind tax cuts is that it motivates wealthy people to save and invest more, but they’re already saving a large chunk of their income – around 30%. If they aren’t investing now, a few more percentage points won’t increase that. And if companies simply return their overseas money back to investors in the way of dividends and stock buybacks, this doesn’t increase productivity either. While companies can certainly choose to do this, as an economic policy it doesn’t make sense.


Now what?

Growth covers a multitude of sins if it is spread out evenly throughout the economy and expands the consumer class. Tax cuts don’t do this. Instead, it makes far more sense for the government to invest in education and job training for workers to boost their productivity in order to do more with less.

This is doubly impacted by the United States’s current administration is on the warpath to reduce immigration. The US’s population growth rate isn’t enough to sustain constant economic expansion. Even if you did boost productivity, you need someone to buy the products you produce. Without enough domestic consumption, you need to export to the rest of the world with economies where the consumer base is expanding. This is primarily China and other emerging economies.

I’m going to cut this blog post short because it gets more complicated from here. The pursuing of growth is a noble goal, but it’s inefficient and won’t deliver the results that the Trump administration and the rest of the Republican leadership is hoping for.

The wife and I have done a ton of renovations to real estate this year:

  • The wife replaced the bathtub walls and counter in her rental condo
  • I replaced the tub and tub-walls in my rental condo
  • We replaced the master bedroom’s bathroom in the house where we are living
  • The wife’s parents sold a house and the wife is acting as the power of attorney, and had to oversee a whole bunch of required upgrades before we could sell
  • I am on the Board of my condo association, so not only do I manage my own property but help manage the entire complex
  • We are looking to do some more renovation work of the main bathroom in the house where are living, not mention fixing up some drainage issues (and not to mention taking care of another drainage problem earlier this year, as well as adding insulation to the undercarriage of the house)

Whew. That’s a lot of work.

However, what I’ve found is that I’ve gotten good at noticing when something is done well and when it’s done cheaply, and not been impressed with expensive housing.

Across the street from Microsoft, there’s a $1.7 million house for sale. It sold last year, and the wife and I went to look at it. At the time, we were like “Wow! This is a nice place! We’ll never afford it of course, it’s way too much money.”

But this year it was up for sale again. The previous owner who bought the year before had to move back to the east coast, and put it on the market for $100k above last year’s price. The wife and I went to check it out again.

We were not impressed.

While some parts of the house were nice, the walls had been drawn on by kids and it wasn’t totally cleaned up. The master bathroom was nice, but it gigantic. It was the size of a large bedroom, and the walk-in closet the size of a small bedroom. I said to myself “What a waste of space.”

But it’s not just that, the other bathrooms had cheap plastic tubs installed. The counters were okay, but just… okay. Indeed, most of the house was adequate, but for $1.7 million I expected way more. We remodeled our own bathroom this year and were trying to keep costs down, and all bathrooms in this $1.7 million house – except the main one – were no nicer than our new one.

Even now when the wife and I go snooping in open houses during the summer or fall, we’ve started getting pretty good at seeing if something is well-built or not. And there’s a lot of overpriced junk out there. It’s pretty clear that real estate prices are driven primarily by location, and not by quality. This is doubly true in Seattle where houses go for even more than they do on the east side of the lake.

I feel like if I wanted to go into real estate development, I could be pretty good at it since I have some experience at it now. For sure, I’d need to get a lot more training under my belt, but if I’ve gotten this far just doing it haphazardly, I could become a real expert if I did it full time.

Of course, if I get a degree in diplomacy, when exactly when I have time for that?