Monthly Archives: May 2021

The Gospel According to Warren


The Invisible Back of the Hand

Invisible hand, metaphor, introduced by the 18th-century Scottish philosopher and economist Adam Smith, that characterizes the mechanisms through which beneficial social and economic outcomes may arise from the accumulated self-interested actions of individuals, none of whom intends to bring about such outcomes.

~F. Eugene Heath/Encyclopedia Britannica

Elizabeth Warren Slams JPMorgan Chase's Jamie Dimon on Overdraft Fees - Rolling StoneYesterday, a verbal sparring match between Senator Elizabeth Warren (D-MA) and JP Morgan CEO Jamie Dimon dominated the business news cycle.  At the center of the exchange (excerpted below) was Warren’s contention that JP Morgan’s excessive overdraft fees took advantage of customers at a time of high financial distress among their clientele.

WarrenSo Mr. Dimon, how much did JP Morgan collect in overdraft fees from their consumers in 2020?
Dimon: Well, I think your numbers are totally inaccurate, but we’ll have to sit down privately and go through that.
Warren: These are public numbers.  Can you just answer my question?  How much did JP Morgan collect?
Dimon I don’t know the number in front of me. Upon request we waived the fees.
WarrenWell, I actually have it in front of me. $1.463 billion. 

Sadly, this was the least of the moral lapses exhibited by large banks in 2020.  To counter the risk associated with loans to struggling business, the Coronavirus Aid, Relief and Economic Security Act (CARES), signed into law on March 31, 2020, included $349 billion for banks to lend to their small business customers.  To further support riskier lending, the act included certain regulatory relief.

There was one caveat.  Banks were prohibited from using the newly available funds for stock buybacks.  The following chart displays the difference in actual lending during 2020 by independently owned community banks (orange line) and large national banks (blue line).  Note that smaller banks used these resources to increase their year-to-year loan generation by more than 40 percent for an extended period of time.  In contrast, corporate banking giants showed an initial 25 percent increase which quickly fell to pre-COVID levels.  Why?  Anticipation the stock buyback exclusion would eventually be lifted, which it was in December 2020.  And right on cue, these corporate entities used their cash reserves for buybacks, enriching stockholders and corporate officers.


In response Warren has proposed the The Accountability Capitalism Act, best characterized as a return to classic Adam Smith economics based on his belief giant corporations should look out for American interests.  It is not socialism or Marxism.  It does not involve nationalization of ANY industry.  It relies on the “benefit corporation” model, which according to Warren, “gives businesses fiduciary responsibilities beyond their shareholders.”  In other words, Senator Warren is suggesting America is better served by an open invisible hand than a slap in the face with the back side of one.

From the People Who Brought You Trickle Down Economics

Where could the practices of exploiting a pandemic by imposing outrageous overdraft fees or using public assistance for stock buybacks possibly have originated?  That is a tough question to pin down.  What we do know is the timeline.  In 1981, the Business Roundtable, comprised of CEOs of the nation’s largest and most profitable institutions recognized their broader social and community obligations, issuing the following statement.

Corporations have a responsibility, first of all, to make available to the public quality goods and services at fair prices, thereby earning a profit that attracts investment to continue and enhance the enterprise, provide jobs, and build the economy.

However, by 1997, their tune had morphed into a different prime directive orchestrated by conservative economists such as Milton Friedman, who espoused the theory corporate directors had ONLY one obligation; to maximize shareholder returns.  What was the impact of the Roundtable’s adoption of this “us first” approach, “The principal objective of a business enterprise is to generate economic returns to its owners?”  In an August 2018 Wall Street Journal op-ed, Senator Warren provides the following clues.

  • In the 1980s, large U.S. companies returned less than half their earnings to shareholders.  Between 2007 and 2016, those same companies “dedicated 93 percent of their earnings to stockholders.”
  • Pre-1991, wages and productivity grew at about the same rate.  Over the past three decades, wages have stagnated while productivity continues to grow.
  • Shareholder maximization translated into an explosion in CEO compensation.  In the 1980s, executive compensation rarely included equity in the company.  “Today, it accounts for 62 percent of their pay.”
  • In 1980, the average CEO compensation was 42 times that of an average worker.  Today that ratio is 361:1.

So, to all of her critics who ask, “When and why did Elizabeth Warren abandon capitalism,” the better question might be, “When and why did the modern day barons of industry abandon Adam Smith’s vision of capitalism?”

How Dare Workers Act in Their Own Self-Interests

So corporate America loves to justify their business model as the consequence of a free market.  However, when these same forces produce an outcome inconsistent with the desired goals of conservative economists, they cry foul.  The best example is right wing media’s uproar over extended unemployment benefits.

Instead of accusing the labor force of laziness by choosing unemployment over a job, consider the following.  If you had a choice of staying home for $15/hour without the cost of transportation and day care versus $7.25/hour further eroded by associated expenses, what would you do?  Imagine the following policy statement from a hypothetical Work Force Roundtable.  “The principle objective of heads of households is to maximize return to one’s family.”

Where are the proponents of free market, invisible hand economics now?  Is this not an opportunity to test how elastic or inelastic the price of labor is?  If higher wages or better benefits bring workers back into the labor force, there is your answer.  Workers are merely stating the obvious.  Our time and well-being has a value.  And there is a price point where your demand for my value intersects with my willingness to supply it.

In other words, when the laws of supply and demand, elasticity, et. al. explain economic and social inequality and injustice, corporate America and conservative economists turn a blind eye, they claim the system is out of balance, that the “LEFT hand” is overly dominant.  But when those economic principles justify their greed, these same financial experts argue the “RIGHT hand” should not only be dominant, it should be adorned with gold plated brass knuckles.

Corporate Accountability, Not Marxist

When progressives like Elizabeth Warren raise these issues, they are not, as GOP talking points suggest, promoting Marxism or communism.  They are only preaching a reverse variation of St. Augustine’s declaration cum dilectione hominum et odio vitiorum (With love of mankind and hatred of sins), which evolved into the present day adage “Love the sinner; hate the sin.”  In pursuit of economic and social justice, they are merely stating, “Love Adam Smith’s theory of capitalism, but abhor false prophets who misuse it.”

For what it’s worth.




Those who cannot remember the past are condemned to repeat it.

George Santayana/The Life of Reason (1905)

Talk about your go-to phrase.  I have lost count how many times over the last five and a half years I have introduced a topic with this quote.  That is because it does not matter how many times individuals who should know better ignore Santanaya’s advice, when given the next opportunity to benefit from his wisdom.

On how many occasions have people in positions of power  learned a simple truth about transparency in response to a crisis?  History tells us, “the cover-up is always worse than the crime.”  As evidence, consider the following Top 10 cover-ups going back 130 years.

  • Dreyfus Affair (1894)
  • Teapot Dome (1922)
  • Tuskegee Syphilis Experiment (1932-72)
  • Tobacco Industry Denial of the Health Risks of Smoking (1950)
  • Thalidomide (1957-61)
  • CIA Efforts to Assassinate Fidel Castro (1960s)
  • Watergate (1972)
  • Ford Pinto (1970s)
  • Chernobyl (1985)
  • Pedophile Priests Exposed by the Boston Globe (1992)

PhotographEach of these cover-ups would have succeeded except for one or more brave individuals pulling back the curtain on these scandals.  Or as Nixon aide and Watergate mastermind G. Gordon Liddy once said, “The big problem with conspiracies is that people can’t keep their mouths shut.”  With the exception of White House legal counsel John Dean and FBI deputy director Mark “Deep Throat” Felt, few of these “whistle blowers” are household names.  More recently, Soviet scientist Valery Legasov’s (pictured) role as someone willing to speak truth to power was highlighted in the HBO mini-series Chernobyl.

However, each of the above scandals have their own lesser-known Dean, Felt or Legasov.  Take the Tuskegee experiment as an example.  In 1965, government social worker Pete Buxton found internal U.S. Public Health Service reports which documented mistreatment of test participants and raised questions about violations of professional ethics with superiors.  After years of inaction, Buxton gave copies of the reports to the Associated Press which finally led to termination of the program in 1972.

Perhaps you are asking, “Dr. ESP, why did you choose this morning to bring this to our attention?  Wouldn’t it have been equally relevant during the first Trump impeachment and the administration’s obstruction of justice to prevent public knowledge of the Ukraine quid pro quo?”  The answer to your question appears on this week’s front pages of the Washington Post, laying out what can only be a called “a trifecta of cover-ups.”  Here are the headlines.

  • Key impeachment witness Gordon Sondland sues Mike Pompeo and U.S. for $1.8 million in legal fees (5/24/21)
  • Justice Department releases part of internal memo on not charging Trump in Russia probe (5/25/21)
  • Timeline: How the Wuhan lab-leak theory suddenly became credible (2/25/21)

It is hard to equate Sondland with Mark Felt or Pete Buxton as his actions are based more on personal self-interest.  But the filing does include new details which would not have emerged without Sondland’s input.  Sondland alleges Pompeo told him the Department of Justice (DOJ) would cover his attorney fees if he stuck to the party line Ukraine involved no quid pro quo and he resigned as ambassador to the European Union.  According to the filing:

Ambassador Sondland confirmed he would not resign because he did not do anything improper. After that, everything changed. Ambassador Sondland did not receive his attorneys’ fees, notwithstanding the promises from the State Department that the attorneys’ fees would be paid.

As has been the case too many times during the past five years when the White House and Congress ignored their constitutional responsibilities, the “hero” in the second story is a U.S. District Judge, in this instance Amy Berman Jackson.  Jackson did not hesitate to suggest Attorney General Bill Barr acted improperly by misrepresenting the the Mueller report consistent with internal memo prepared by DOJ political appointees, one of whom was supervising the Mueller investigation.  She also found Barr went beyond the long-held constitutional position that a sitting president could not be charged with a crime when he claimed, were there no constitutional barrier, he would not have prosecuted Trump.

I do not want to downplay the first two stories, but the consequences are limited.  Sondland may or may not get reimbursed.  Trump is out of office.  And most importantly, he and several members of his administration will face their day in court without the advantage of a potential White House pardon. Yet, it is the third headline which triggered today’s blog.  Why?  Because the pandemic impacted the health of billions of people, the global economy and perhaps the geopolitical future of democracy.

At a time when the line between democracy and autocracy is more blurred than ever, citizens across the globe go to the polls and wonder, “Does it really matter?”  I believe, the answer depends whether there is a simple, defining principle which separates the two.  And if we ever needed evidence to make a case for liberal democracy, the past year and a half is Exhibit A.

There are myriad possibilities about the origins of COVID-19, and in time, the truth will come out.  But I find it hard it hard to believe the Chinese would intentionally want to start a worldwide pandemic.  Why?  Because it flies in the face of Beijing’s efforts to convince developing nations democracy is an inferior form of government, plagued by chaos, dishonesty, greed and corruption.  That argument is harder to make when a lack of transparency which contributed to three million deaths is a prerequisite for survival of the alternative.  After all, Chernobyl and the associated deaths of 4,000 to 16,000 Soviet citizens (depending on the source) was one more nail in the coffin of the USSR.

If the Chernobyl cover-up was a black eye on Soviet communism, could COVID-19 and the unwillingness of Xi Jinping’s government to provide real-time, accurate information be China’s “CherGlobyl,” a metaphorical nuclear meltdown from which it may not recover?

For what it’s worth.



Dueling Crucibles


While teaching at Miami University, I was once asked to be part of a visioning exercise at a Cincinnati architecture firm.  The purpose?  To discuss the mindset of recent college graduates and how that might affect their recruiting and business model in the future.

William Strauss - WikipediaMy invitation was based on an article in Miami Magazine about the creativity class I developed as part of the entrepreneurship curriculum.  A second panelist was William Strauss, co-author of the book Generations: The History of America’s Future, 1584 to 2069.  As I entered the large conference room and went over to introduce myself to Strauss, something about him looked strangely familiar.  Had I watched a televised interview about the book or seen his portrait on the back cover in some bookstore?  It was only when he said “hello” I made the connection.  This was the same Bill Strauss, who, in 1981, co-founded the satirical music ensemble The Capitol Steps, a project which began as Senate staff entertainment at a Christmas party and, until the pandemic, performed weekends at the their own theater in the Ronald Reagan International Trade Center in Washington, D.C.  NOTE:  Sadly, Strauss died in 2007, after an eight year battle against pancreatic cancer.

As we start to emerge from the combined health and economic crisis precipitated by the spread of the coronavirus, I think about Strauss and the lasting effect of the past 15 months.  In Generations, Strauss and co-author Neil Howe establish the “Strauss-Howe generational theory,” described as follows on Wikipedia.

According to the theory, historical events are associated with recurring generational personas (archetypes). Each generational persona unleashes a new era (called a turning) lasting around 20–25 years, in which a new social, political, and economic climate (mood) exists. They are part of a larger cyclical “saeculum” (a long human life, which usually spans between 80 and 100 years, although some saecula have lasted longer). The theory states that a crisis recurs in American history after every saeculum, which is followed by a recovery (high). During this recovery, institutions and communitarian values are strong. Ultimately, succeeding generational archetypes attack and weaken institutions in the name of autonomy and individualism, which eventually creates a tumultuous political environment that ripens conditions for another crisis.

These critical events are labelled “crucibles.”  While Strauss and Howe document 500 years of such crucibles, I will focus on the last century of generation-shaping experiences from the Great Depression to World War II to John Kennedy’s assassination to 9/11 to the COVID-19 pandemic.  The first four fit the Strauss-Howe theory.  Each brought on a period of national unity eventually eroded by another crisis, the best example being the era of social and economic progress immediately following Kennedy’s death which disappeared with each increase in engagement in the Vietnam war.

The last six months raise a different question.  What happens if there are two or more competing crucibles?  Take January 2021.  During the first month of the new year, the death count from COVID-19 in the United States reached a high point of 102,014.  According to Strauss and Howe, such a traumatic shock to the populace should have triggered a recovery characterized by national unity and strong community values.  However, at the same time, America experienced an equally shocking moment on January 6th when a sitting president incited an armed insurrection designed to prevent Congress from carrying out its constitutional mandate of certifying a presidential election.

Why does it matter?  Twenty years ago, our daughter was a freshman in college on 9/11.  In response to an attack on the homeland, she enrolled in ROTC and now serves as a major in the U.S. Air Force, something no one could have predicted based on her pre-9/11 behavior. Generations contains many similar individual examples how a half millennium of historical events changed the course of people’s lives. If I could share our daughter’s story with Bill Strauss, I imagine he would say, “See, that’s exactly what Neil and I are talking about.”

But what about current freshmen in college?  What will be their personal crucible?  The fact that their transformation from adolescence to adulthood, being on your own for the first time, was interrupted?  Or for the first time in 200 years, the U.S. Capitol was breached, not by a foreign adversary, but by domestic terrorists?  How many young men and women will join the medical profession or become first responders?  And how many will join armed militias or conspiracy-based organizations such as Q-Anon?

What did Strauss and Howe miss that would help us understand “dueling crucibles?”  Maybe it was their belief that the cycle of crisis and recovery was the natural order of things.  However, in hindsight it appears a necessary variable is a leader who understands what Rahm Emanuel once stated, “Never let a crisis go to waste.”  Think FDR after the depression, LBJ after the assassination, George W. Bush after 9/11.  In contrast, Trump will forever claim he would have been re-elected by a landslide but for the pandemic.  FDR, LBJ and W, based on their experience would tell him otherwise.  “When you take control of a crisis, regardless how bad, you win.  When you let it control you, you lose.”

AllPolitics - Capitol Steps: Elaina Newport InterviewOf one thing I am sure.  If Bill Strauss were still around on January 6th, he too would never think of “The Capitol Steps” in the same way.  In 1981, he and troupe co-founder Elaina Newport chose the name based on a rumor which became a widely repeated joke in D.C. political circles.  Rita Jenrette gave an interview in which she claimed she once made love to her then husband Congressman John Jenrette (R-LA) on the stairs to the east entrance of the building.  That meme (I know, an anachronism in 1981) led to a Rita Jennette Playboy cover and photo spread.  What happened on those steps in 2021 was neither a rumor nor funny.

For what it’s worth.



Everything Old Is New Again (Again)

1979 – All That Jazz – Academy Award Best Picture Winners

The title of today’s post is also the name of a Peter Allen song featured in Bob Fosse’s semi-autobiographical film “All That Jazz,” starring Roy Scheider and Ann Reinking.  This week, I had a sense of déjà vu when MSNBC, the Washington Post and New York Times admitted they erred when each reported the FBI and CIA had informed Rudy Giuliani and One American News Network (OAN) they had been targeted by Russia to spread disinformation about Joe Biden and Ukraine interference in the 2016 election.

Why?  The song and accompanying dance sequence are a visual representation of how knowledge is passed down from one generation to the next.  Reinking wants to show Fosse’s cinematic alter-ego Joe Dideon how she taught his daughter dance steps she had originally learned from Dideon.  It must have been a moment of great pride and satisfaction when Fosse watched how he ensured, through Reinking and his on-screen daughter (Erzebet Foldi), the Fosse-style of dance would continue long after he was gone.

Some things should not be passed from generation to generation.  Avoiding the mistakes of our predecessors, regardless of the profession or situation, is the advantage of learning from the past experiences of others.  The three media outlets that blew the Giuliani/OAN story should have known better.  It has been less than 50 years since two reporters made the same blunder which almost negated their otherwise stellar example of investigative journalism.

The year was 1973.  The reporters were Carl Bernstein and Bob Woodward.  The story was Watergate.  Their mistake involved misrepresenting information from a source about H. R. Haldeman’s role in crimes committed during the 1972 presidential election.  This one error could have derailed the paper’s Watergate investigation and all the solid reporting the two neophyte reporters had done.

Hugh W. Sloan Jr.Using anonymous sources is risky business.  Not only because you can never be sure of their motivation or to whom they may be loyal.  The process of vetting sources is more an art than a science.  The potentially fatal error by Woodstein (as Post editor Ben Bradlee referred to them) involved confirmation by a second source that Hugh Sloan, Jr., treasurer of the Committee to Re-elect the President, had fingered Haldeman, Richard Nixon’s chief of staff, as overseeing the direct tricks campaign which included the Watergate break-in and controlling the slush fund that financed the operation.

As well documented in their book All the President’s Men, that second source did not meet in person with either of the reporters and insisted the information be passed in a way it could never be traced back to him or he could be charged with a violation of the law which prohibits leaking grand jury testimony.  Think of it as the James Bond equivalent of the childhood game “Telephone.”  Anyone who has every participated in the game knows the original message seldom, if ever, remains intact as it moves down the chain of players.

The lesson from this episode in the downfall of a president is that two things can be true at the same time.  To prove this point, I will draw on the script from the film version of Woodstein’s book.  After the Post runs a story with the headline “Testimony Ties Top Nixon Aide to Secret Fund,” the White House pounces on Bradlee and his paper with evidence the story is flawed.  Bradlee demands Woodstein find out exactly how this could have happened.  When they meet Bradlee at his home, Bernstein explains:

I finally got through to Sloan–it was all a misunderstanding that we had: he would have told the Grand Jury about Haldeman, he was ready to, only nobody on the Grand Jury asked him the goddamn question.

To which Woodward adds, “So I guess you could say that we screwed up, but we weren’t wrong.”

Which brings us back to Giuliani and OAN.  We know the three news outlets screwed up as they have publicly admitted as much.  But were they wrong.  The formal retraction reads as follows.

Correction: An earlier version of this story, published Thursday, incorrectly reported that One America News was warned by the FBI that it was the target of a Russian influence operation. That version also said the FBI had provided a similar warning to Rudolph W. Giuliani, which he has since disputed. This version has been corrected to remove assertions that OAN and Giuliani received the warnings.

Let’s be clear.  The only “correction” is that OAN and Giuliani did not receive the warnings.  The factual distortion during this real game of “Telephone” was that the subjects of an investigation had been warned.  Like Woodstein, Post reporters Ellen Nakashima, Shane Harris and Tom Hamberger (Nakaharberger?) screwed up, but the story could still largely be true.  The FBI may have had evidence that Giuliani and OAN were “the target of a Russian influence operation.”  There must be some truth in the story or the FBI could not convince a federal judge to approve a search warrant for Giuliani’s home and office.  Furthermore, it begs the question, “If the FBI was prepared to share this information with Giuliani and OAN, who stopped them and why?”  One hopes Nakashima, et. al., will stay on the story as did Woodstein.

Being half-right when it comes to journalism is not good enough.  In fact, being 99 percent right is too low a standard. I suggest the managing editors of the Post put up the following sign in the “bullpen,” where row upon row of reporters do their research and draft their stories.

You’ve done worse than let Haldeman slip away, you’ve got people feeling sorry for him.  I didn’t think that was possible.

~Deep Throat/All the President’s Men

Remind each reporter to substitute the name of the subject of their own investigations for Haldeman’s.

And if they order it from Amazon in the next 9 hours and 24 minutes, it will be there by Wednesday. Right, Jeff?

For what it’s worth.