Dana Blankenhorn

Trump-ism and the Overton Window

Here’s something I never wanted to write, and something it will pain you to read.

Donald Trump is the most consequential President of our lifetime.

He has done far more than Hillary Clinton ever could, ever would, or ever thought of.

Yes, it’s all terrible stuff. Consequential doesn’t mean good. It means significant. Adolf Hitler “won” Time Magazine’s “Man of the Year” multiple times. That doesn’t mean he was good, or that Time liked him. But when it comes to the history of the 20^th century, he was consequential.

Like Hitler, Trump is doing truly terrible things. Constantly. There’s not enough time to list it all.

Public Goods and Private Goods

Democrats re-made Woodrow Wilson into a liberal to win the peace of WWII.

The myth was that the peace of the Civil War, and that of WWI, were punitive. This hurt economies and led to new war.

Determined not to make those mistakes again Roosevelt called his alliance against Hitler the “United Nations.” His wife, the forever-underestimated Eleanor Roosevelt, was a key actor in creating today’s UN. FDR’s top general, George Marshall, became even more important after FDR’s death because of the Marshall Plan.

The Marshall Plan did more than just pour money into Europe’s economies. It created a new economic model. It assumed that, while private goods are important, there should also be growing demand for public goods. These include education, health care, infrastructure, defense, civil law, and the environment.

Putting Our 20th Century into Perspective

As much as we’re (rightly) reviling Woodrow Wilson for his racism, he’s still an important figure in liberal history.

Wilson named Louis Brandeis to the Supreme Court. He initiated the income tax and the Federal Reserve. During Wilson’s term, the 19^th Amendment was passed, giving women the right to vote.

But it’s what was done with Wilson’s memory that we should focus on. Wilson was one of only two Democrats elected to the White House between Lincoln and FDR. In building a history for his own ideas, Franklin Roosevelt didn’t have much to choose from. He had also served Wilson’s Administration as assistant secretary for the Navy and tried to succeed him as James Cox’s VP candidate in 1920, running on a Wilsonian platform.

Thus, Roosevelt used Wilson’s memory as a gloss to pass New Deal programs like the Tennessee Valley Authority, which transformed the South. Even more important was how Roosevelt used Wilson’s last crusade, on behalf of a League of Nations. You can see this laid out in the propaganda Hollywood produced about Wilson in 1944.

“Wilson” is garbage as history or biography. It starts in 1912. It ignores Wilson’s racism entirely. But as hagiography it’s first-rate. In it he’s an academic and reluctant politician, incorruptible, a relentless reformer. In life he was nothing of the sort.  

Why Jay Powell is Worse Than Trump

The COVID-19 pandemic was the greatest transfer of wealth, from the poor and middle class to the very rich, in the history of the world.

But the transfer wasn’t done by Donald Trump.

It was done by Federal Reserve chair Jay Powell.

The $2.3 trillion the Federal Reserve created out of whole cloth in March  went almost entirely to people who already had money.

Powell bailed out every bad and stupid bet the market had made. He bailed out the airlines. He bailed out the cruise lines. He bailed out the casinos and the oil companies.

Capitalism is supposed to be about private risks that can go bad, and risks that work fueling the greater good. At a stroke, Powell turned that truth on its head, removing the risk markets are built to protect, and socializing it. The vast majority of people were told to pay their rent and buy food while tens of millions were losing their jobs.

Carnival Cruise Lines should be out of business.  They bought back stock and handed out big dividends when times were good. Technically they’re not even an American company. While they have offices in Miami, they’re legally run out of tax havens. But if you bought Carnival when I said sell, on May 15, you’re up 50%. That’s because, after Powell’s actions, Carnival was able to borrow $6 billion from investors desperate for yield, something that was only possible because of the Fed’s money creation efforts.

Why Black Lives Matter to Me

You’re looking at the face of an old white guy and wondering about the headline.

Here’s the story.

I was brought up racist, on Long Island. I didn’t think that was the case, but I know now it was. I knew people like Roger Stone, Eugene Delgaudio and David Keane when they were kids. That’s because during the height of the Vietnam era I was part of a group called Young Americans for Freedom, a right-wing agitprop created by William F. Buckley when the SDS was getting started.

I’m not proud of it. I got falling-down drunk at age 16, and the hangover lasted until the day after school started. I told my parents I was sick.

We weren’t rich, but we had a lot of white privilege. It helped me get off Long Island and into Rice University, even though my parents had saved nothing for college. It got my dad a small business loan when he fell through a false roof and became disabled. The parents of the girl I married turned out to be well-off too. Most Rice parents are.

I was blind to my own good fortune. I saw myself as an idealist. I went to Northwestern, got a job at a business newspaper, and covered the end of the Houston oil boom.

The Cost of Free Money

With the Federal Reserve having thrown trillions of dollars into the economy, many people ask where inflation went?

Look at your portfolio.

What should have happened in March was that helicopter money would go into spenders’ pockets. That money would have then gone into rent, into food, and into other necessities, increasing the value of companies that made and sell those goods, keeping the economy going.

Instead, the money went to investors who, with bonds priced near zero, bought stocks. Meanwhile the economy collapsed.

Anything that works now carries a ridiculous price. Amazon.com (AMZN) is a great company, but is it worth 110 times earnings? Apple (AAPL) faces huge supply chain problems, so is it worth 27.5 times earnings? Microsoft (MSFT) is at 35 times earnings, and slow-growth Walmart (WMT) is at 25 times.

Money is also flowing into things that should be worthless. AMC Entertainment (AMC) admits its movie theater chain may have to go out of business. Yet the stock is worth $5.50 per share, the market cap is still $575 million. Luckin Coffee (LK) is practically Enron. It lied about its revenues and is facing delisting. But it still trades, at $2.61 per share, a market cap of $650 million.

There’s your inflation. It’s hiding in asset prices.

Trump vs. Tech is The Story of 2020

In his effort to maintain power through the pandemic, Trump deliberately divided America.

He got the smaller piece of it, and figures that’s OK, because Wall Street is behind him.

But that’s not where the money is. It’s why he’s going to lose.

Trump’s economic policies favor investors, Wall Street, and those who can work from home while paying our bills. By pushing out trillions of new dollars, mainly to people who didn’t need it, Trump brought the stock market back. He thinks the stock market is the economy.

It isn’t.

The Fire This Time

Over Memorial Day weekend, my wife drove my son back to his home.

What none of us knew was that she was driving right into the fire of our time.

My son is now a biochemistry Ph.D candidate at the University of Minnesota in Minneapolis. He wants to work on COVID-19, the virus that wrecked the global economy earlier this year, and that is putting America into its second Great Depression.

As she headed home Tuesday morning, the match was lit a few miles from my son’s apartment. George Floyd was murdered by cops using what had become a standard Minneapolis police practice, but which officer Derek Chauvin took to extremes. As most people know now, Chauvin kept his knee on the back of Floyd’s neck for 9 minutes, asphyxiating him. Killing him. Murdering him. Other officers stood by and did nothing.

False Dawn

Because the government (once again) threw money at people who didn’t need it, Wall Street is great again.

Anything that works, the growth stocks and the big retailers, is overpriced. People are even throwing money at things that don’t work, like airlines, cruise lines and casinos.

But this is a false dawn.

Opening too early puts us on track for what the underwriters at Willis, Towers & Watson call their “limited success” scenario.  In this case, deaths continue through the summer, but the fall brings a new, even more-severe outbreak than before.

This is precisely what happened in the 1918 flu pandemic. There were three outbreaks. It was the second one, in the fall of that year, that was the killer.

People think this thing is licked because, as restaurants open and idiots demand haircuts now, there has been no spike in cases. That’s only because most people aren’t going to those restaurants or running out for haircuts. If no one around you has the virus, you’re safe. If one does, and you’re around them for about an hour, then you and dozens of other people get sick at once.

On top of that, we have outright lying about how many people are sick and dying. Georgia, where I live, transposed dates so it seemed case loads were declining. Florida fired a woman who refused to fudge the numbers.

The virus doesn’t care about any of this.

1918 vs. 2020

There are too many differences between the COVID-19 pandemic and the 1918 flu pandemic to count. Here are just a few.

First, the viruses have almost nothing in common except that they’re viruses. No one even knew the 1918 pandemic was even caused by a virus until years later. Over time, virology evolved. We now produce semi-reliable vaccines against mutations in the H1N1 virus that caused the 2018 flu every year.

With COVID-19 we have a lot more tools. But it's a completely different type of virus, as different from H1N1 as you and I are from whales. Still, we had a model of it available within weeks of the outbreak. We understand about messenger RNA and have hundreds of vaccine candidates now going through testing.

But knowledge has yet to bring power. Until science delivers an answer, we’re mainly doing palliative care, just as we did then. That goes for everyone, making this a true global event. But, as it was in 1918, our willingness to listen to what science DOES know makes a big difference.

This time, unlike 1918, many Americans aren’t listening.