Dana Blankenhorn

Another View of the Carter Administration

It has been clear to me for years that the 2010s are, in many ways, a bizarre recapitulation of the 1970s.

I just didn’t know how much.

While the 1970s represented the rise of oil, the 2010s represent its twilight.

The 70s were marked by two key crises, in 1973 and 1979, during which supplies were cut and prices skyrocketed.

The 2010s have already seen one price collapse, in 2014. It is going to see another before the decade is out.

It is against this backdrop that I would like to revisit the administration of Jimmy Carter. This time, especially if you’re a liberal, try to imagine yourself in opposition.

This isn’t difficult for me, because I began the 1970s as a genuine conservative activist. My politics shifted left, slowly, during the decade, but I still voted for Gerald Ford in 1976, and still refused to support Carter in 1980. (Sorry, Jimmy.)

What conservatives saw during that decade was just what liberals see today, in reverse. In the 1970s conservatives saw a natural majority growing, with power tantalizingly out of reach. Democrats in 1977 held all branches of government, as Republicans do now, and were very optimistic about putting their program into motion.

Going on Offense

The best years of this century for Democrats were 2005 and 2006, when DNC chair Howard Dean initiated his “50-state strategy.”

The idea was simple. Democrats would fight everywhere, not just in blue states but in red ones as well. They would fight on every level, on local and state issues, even if they had no chance. But they would fight.

Dean, plus Katrina, combined to make 2006 the only mid-term election of this century where Democrats enjoyed an unalloyed triumph. This holds important lessons for today’s Democrats, and for their technology overlords.

First, it makes little sense to just complain, as they did during Trump’s Inauguration. You need to go on offense.

Bizarro Carter

What happened last night makes no sense unless you believe, as I do, in the life cycles of history. The only way to accept it and to fight it is through an understanding of economic determinism.

First, life cycles. People believe what they believe for a lifetime. It’s why a set of political assumptions, what I have called a Political Thesis, can hold people even after it no longer works. The Nixon Thesis of Conflict stopped working under George W. Bush, so Barack Obama was elected.

Obama was a Reaganesque figure at a time that called for someone who was more like Nixon. We needed someone who knew their enemies and would be ruthless against them. We should have nominated Hillary Clinton in 2008. Obama was too passive in the face of obstruction, too complex as people came to demand simple answers. He will be judged a failure until someone else makes him a success.

Where Tesla is Wrong

Let’s step away from politics for a week, maybe a year.

Let’s talk, again, about business, about technology and about the future.

Let’s talk about Tesla.

I like Tesla. Most business analysts don’t. But I admire Elon Musk. I even think he’s right to buy SolarCity.

But I think the namesake product has a limited runway. Here is why.

The story of the Tesla car is a three-legged stool.

• There’s the electric angle. Don’t just save the planet, but recycle energy from the Sun, through the battery. Just as important, deliver a car with far fewer moving parts, so it won’t wear out. An electric motor has very few moving parts. A Tesla car is basically a drivetrain. If you replace the batteries, keep the drivetrain maintained, and change things like tires and wiper blades you’re good.
• There’s the performance angle. The Tesla’s electric motor can deliver enormous power to the drivetrain quickly. Its “ludicrous speed” goes from zero to 60 in nothing flat. The sleek design screams sports car. This is a car that has always been compared to high-end luxury vehicles, or sport vehicles, and has won in that niche. It’s had to compete there to justify its price.
• There’s the self-driving angle. Musk promises that you can ignore the car in a few years, and for now just keep an eye on it as you go down the road under the control of your GPS. It will avoid collisions and go where you want it to go.

Hope in Transformations

While a lot of attention is being focused right now on self-driving cars, and what that might do to the millions of people (mostly men) who now make a middle-class living driving things and people around, there are two other transformations coming in the next decade that are just as important.

Education

I first began covering education technology 25 years ago, when I put my new daughter on my lap and let her play what was originally an MS-DOS game. She’s 28 now and her education turned out to be a lot like my own, with rote learning, boring teachers, anxious tests, and a complete failure by the education system to recognize what made her unique.

The reason, as I wrote over a decade ago, was the nature of PC technology. By the time a system was installed and the teachers trained to use it, it was obsolete. Multimedia, Windows, the Internet, more Windows, Macs. It worked fine if you were willing to put $1,000 per year into new equipment, but you can’t do that in most schools.

The cloud is really a game changer here. With cloud, software and updates are all done centrally, all at once, and propagate to all client devices at the same time. Even an iPad can last a kid several years, and the $250/year cost can replace textbooks, making it highly affordable. Most kids can now bring their own devices to “work” anyway, and now schoolwork can follow them home.

The battered education software industry, and the education establishment, have barely begun to come to grips with what this means. For one thing, it truly turns the process of education on its head. Now, it’s the computers that can present the information, and the computers that can test mastery, while it’s the teachers who need to be doing the drills, the homework. It’s summarized by a saying from back in the 1990s – out with the sage on the stage, in with the guide at the side.

Let’s face it. Teachers are different. Some are great at presenting stuff. Others aren’t so great. And the difference between the two can be dramatic, in terms of results. But now every kid can get the best presentation of the material, then rely on the teacher for things they don’t understand, like understanding exercises and mastering homework in the classroom, treating the material itself as something more akin to entertainment.

This is how you make science into play. Make the presentation a TV show, make the experiments into Mythbusters.

This part of the revolution is harder to bring to colleges. The curriculum isn’t as set there. But what’s going to happen, because of economic changes already mentioned, is that undergraduate education is going to become more akin to K-12 over time. Call it K-16. Most undergraduate courses are fairly standard. They can be taught just as K-12 classes can be. Which means colleges, in order to survive, will focus even more on research and graduate education, which is where the money is anyway.

By standardizing curricula, by using cloud to present it, by adding software to help teachers with drill, we really can deliver our grandkids the kind of educational service I once thought my kids were going to get. There is some political irony here, in that Democratic teachers’ unions are going to be a problem. But so are Republican school boards and parents’ groups, which are constantly seeking to dumb-down curricula so kids never hear anything the parents believe might make them think.

So the revolution will be messy, it will be sloppy, it will move faster in some places than in others, and it will be intensely political. But the education revolution will happen. The need dictates it, the technology allows it, and those that pursue the path will get better results for a lot less money.

Health

A recent family health scare made me very angry at the health care establishment. The resistance by doctors to technology has been total, and effective. Despite cloud, and despite tens of billions of dollars in sweet, sweet stimulus cash, doctors and hospitals still waste incredible amounts of money.

Every doctor we visited, over several months, had an enormous staff of clerks sitting behind terminals, telling computers to do things the computers could really do themselves, or that we could do if given a chance. Setting up appointments, handling referrals, moving test results back-and-forth, billing for insurance. Health care is run by angry clerks. But HL7 is a set of computer codes that doctors should be able to use themselves to tell insurers what they have done, and what they want to do. Insurance practices are increasingly standardized, and best practices are as well.  

Medicine represents 17% of U.S. GDP, and most of that money is wasted on routine office work, or on arguments between doctors and insurers, with the doctors’ resisting best practices or trying to pull some procedure, test, or fancy drug over the insurers’ eyes, and the insurers resisting, with patients in the middle, paying both sides’ lawyers.

Enough.

We have the tools, we have the standards, and we have the billing codes. It’s time to get all doctors onto hand-held pads, connected to clouds, through which they can deliver diagnoses, get test results, and deal with insurers directly. Those who don’t want to be part of the future should retire.

We know how this works.

One of the great fights of the last decade has been over primary care. Doctors fiercely resisted the Affordable Care Act, threatening to leave the field, telling all who would listen that patients would suffer, that there would not be enough primary care. They lied. There’s plenty of primary care, thanks to automation. Primary care doctors have been hauled down from their office towers and into storefronts, where they have become employees, supervisors of nurse-practitioners and physician assistants who do an increasing amount of the day-to-day patient interaction. Good.

The struggle now is to bring this new attitude up the chain, into the professions. The same companies that have achieved success on the Obamacare exchanges, and in Medicare and Medicaid contracting, are going to lead the way here. Increasingly facilities will be owned by those whose incentive is to save money, not spend it. That means better care of chronic conditions, more patient interaction with lower-skilled (but more humane) professionals, and more control over what procedures, tests and drugs are prescribed.

Insurers can either get with the program or go out of business. All the threats by United Healthcare and others to leave the Obamacare exchanges are so much hot air. All the big insurers are, in fact, creating new subsidiaries around the new business models, and those are going to dominate.

What does this mean?

For politicians and businesspeople this means there will be increasing pressure to find new things for people to do that make money. There need to be new business models for the environment, for infrastructure, and for personal services that make sense for both the people working and the people getting the help.

During the last half decade, we’ve seen a host of progress in the creation of careers in wellness, in food service, in pet care, and in mass customization. It does take more education to pursue these opportunities – unemployment among those with “just” a high school education remains at peak recession levels.

That’s what Trumpistan is all about. It’s about people without the skills of the future telling the world they want to get off. When they talk about wanting things to be like they were before, they’re talking about wanting economic friction, about economic waste, and about the opportunity to screw their fellow man (or woman) because they can.

This is a challenge. It’s also an opportunity. We need more educated people. We need breakthroughs in medicine, in renewable energy, in a host of things that require business models to make work.

The next decade is going to be a decade of business models, both public and private, aimed at solving big problems and giving our kids meaningful, rewarding careers that last a lifetime.

Donald Trump Dies for Your Sins

Over the last decade I have learned that America has four different types of elections:

• Crisis elections, where the assumptions of a generation are proven to be past their sell-by date and are overthrown.
• Validation elections, in which the new assumptions are overwhelmingly ratified.
• Anti-Thesis elections, in which a new coalition arises to challenge the assumptions and eventually breaks through.
• Excess elections, in which the anti-thesis is defeated, narrowly, by the knees jerking on the old assumptions.

America works on a generational cycle, tied to economic trends, so there are some elections that wind up fitting midway between these assumptions. Sometimes events do overturn the apple cart, like Watergate, which delivered Jimmy Carter (narrowly). These are the exceptions that keep people guessing, although I really do think Watergate itself drew extensive press coverage.

The point is that 2016 is a Validation Election. It has a lot in common with 1980, or 1948, or 1908, or 1868. In all those cases, the leader who led the nation through the crisis is off the stage, and the political movement they birthed – its assumptions or ideology, its media, its industry – must find a way forward without him.

What Was Lost, and What Can Be

The whole Trump phenomenon is misunderstood.

We talk about the Tea Party. We talk about racism. We talk about everything but what we should be talking about.

What we should be talking about is economics and the world technology has led us toward.

When I went to college in 1973, I left suburban living behind. It seemed like a bad idea. The suburbs were the “Sun Belt” (cities were the Rust Belt). It was the era of White Flight, but what did people do for a living in those suburbs?

A lot of them commuted back into town, to work in middle management. Some worked as travel agents. Others sold insurance. Or they stayed back in the suburbs and did things like my dad did, as small businesses. He ran a TV repair shop and, later, a lock shop.

Solving The Problem of Abundance

Everyone is vulnerable to fighting the last war, and ignoring the conditions of this one.

For investors and policymakers, the great fears remain the currency and the money supply. I read it in every Seeking Alpha discussion thread, a pervasive fear that we’re about to be crushed because no one is going to believe the promises of the dollar, or that we’re running out of something essential whose lack is going to make our dollars worthless.

What this decade has shown, already, just halfway through it, is that those fears are baseless. The problems of scarcity have been replaced by the problems of abundance. There’s too much oil, too many commodities, too many cheaply manufactured goods on the market. There are too many devices, there is too much cloud, there are too many good movies and shows out there and not enough time to see them all.

Wishful Economic Thinking

Since I began covering markets in 2011, I have been constantly amused at how political views play into them.

When Republicans are in power, Democrats may actually want the market to go down. They will predict it, and they will be ignored by the Republicans. When the market does crash, as it did in 2008, Republicans will quickly ascribe it to something nefarious done by Democrats. Most Republicans now blame what happened on Bill Clinton and federal mortgage insurance. That was the first step in a process leading to the crash, because it created a system that was open to abuse and manipulation. But it was not, in and of itself, abuse and manipulation. That’s a process that was ignored by the Bush people.

The same is very much true in reverse. Republican investors refuse to accept that the 2009 stimulus worked to jump-start the economy and that the GM bailout worked. They even deny that Republican efforts during that period were useful, including the bailout of Wall Street. They pretend that Ben Bernanke and Hank Paulson were Democrats in disguise. (Bernanke has since said he is no longer a Republican, but does not say he is a Democrat.)

The Internet at War

I think a lot of historians mistake the point of our periodic political crises.

To me, it’s the point where directions turn that are key. To others, it’s the point at which that turn seeks validation, when it’s challenged, that matters.

So to me 1968 matters more than 1976, and 1932 more than 1940. I think 1896 was a key year for America, and that 1860 was probably the key moment in our entire history.

But others just see directions set in those years. The real crisis, in their view, comes after, when the new assumptions are challenged and things turn really violent. World War II is on The History Channel a lot more than the Great Depression is.