All posts by Dr. ESP

Infallible

Politics

Papal infallibility is a dogma of the Catholic Church which states that, in virtue of the promise of Jesus to Peter, the Pope when he speaks ex cathedra is preserved from the possibility of error on doctrine “initially given to the apostolic Church and handed down in Scripture and tradition”.

~Wikipedia

The importance of this doctrine was never more evident than the recent conclave to pick Pope Francis’  successor.  Changes in the Church sometimes occur when a Pope’s thinking, not unlike all of us, evolves based on new experiences and new information.  However, more often, alterations in Catholic doctrine occur based on the priorities of the man who ascends to the papacy, perspectives developed prior to his election by the College of Cardinals.

The Cardinals sent a very strong message to the global Catholic community, and I believe especially to American Catholics, that authoritarianism is leading Catholics down a path farther away from Jesus’ teachings as laid out in the New Testament including the Beatitudes.  Anointing Robert Prevost as the Bishop of Rome was less about his American birth than his experience, similar to that of his predecessor, serving the people of Peru and his commitment to social justice and other New Testament teachings such as welcoming the stranger and caring for the poor or weak.  I have a feeling, Leo XIV’s rebuke of J.D. Vance’s claim that Americans should prioritize love to family before that of immigrants is not the last time this new Pope will begin a sentence, “J.D. Vance is wrong…”

But, as usual, that’s not what I came here to talk about.  There is another, equally important doctrine of infallibility, the one applied to the Supreme Court of the United States.  If put to paper, it might be defined as follows.

Supreme Court infallibility is a dogma of the founding fathers which states that, in virtue of their promise of justice for all, the Court when it speaks ex officio is preserved from the possibility of error on doctrine “initially given by virtue of ratification of the U.S. Constitution and and the tradition of legal precedence”.

As with the papacy, directives of the court may change via evolutionary thinking or, as more evident in the past decade, changes is membership. This phenomenon is not new and favors no ideology.   There has been movement to the left as evidenced by overriding Plessy v. Ferguson with Brown v. Board of Education.  And to the right, undercutting Roe v. Wade with Dobbs v. Jackson Women’s Health Organization.  As Americans we have a right to disagree with the Court and bring cases before it which might lead to future changes.  But until the re-election of Donald Trump, there was general agreement that federal, state and local governments and law enforcement agencies were bound by Supreme Court rulings.

Not so any more.  When asked by NBC correspondent Kristen Welker if he was duty-bound to uphold the Constitution, which in Article III delegates the authority to interpret law to SCOTUS, Trump replied, “I don’t know.” As pointed out by almost every legal expert, did Trump forget that just last January 20th, he raised his right hand and pledged “to defend and protect the Constitution of the United States?”  The interview seemed to create a permission structure for Trump’s underlings to jump on this “civic ignorance” bandwagon.  Just yesterday, senior advisor Steven Miller suggested that the administration might waive the right of individuals to a writ of habeas corpus, a principle dating back to the Magna Carta and explicitly authorized under Article I, Section 9, Clause 2 of the Constitution.  To make matters worse, Miller suggested the administration’s decision depended on whether “the courts do the right thing.”

Which is why the doctrine of SCOTUS infallibility may be more important than papal infallibility.  Sorry Steven, according the Constitution and the 1803 decision in Marbury v. Madison, the Supreme Court CANNOT DO THE WRONG THING.  It decides what is right and wrong.  How would Miller feel if a Maryland state trooper walked into the Oval Office and arrested the president for an alleged criminal act.  Miller would yell at the top of his lungs,  “BUT THE SUPREME COURT GRANTED IMMUNITY TO A SITTING PRESIDENT.”  Yes, it did.  But contrary to Miller’s authoritarian wet dreams, SCOTUS infallibility also applies if a majority of the justices denies you and Trump the right to suspend writs of habeas corpus to detained immigrants, even if you allege they are criminals.

Bottom line?  Failure to accept an edict of an infallible Pope may, as written in the Book of Revelations, land you in Hades for eternity, assuming such a place exists.  In contrast, Trump and Miller want you to believe there is no equivalent if they violate a ruling by an infallible Supreme Court.  Instead, they profess that the people who will end up in Hell are those denied a writ of habeas corpus.  And their Hell is real, concentration camp-like prisons in El Salvador and possibly Libya.

POSTSCRIPT

How ironic that the two challenges to SCOTUS infallibility in my lifetime were voiced by the two most corrupt occupants of the Oval Office who ran on law and order platforms.  In an interview with David Frost, Richard Nixon famously said, “When a president does it…it means it is not illegal.”  And now Trump suggests he is not bound by the Constitution or SCOTUS decisions.

For what it’s worth.
Dr. ESP

Know When to Fold ‘Em

Economics

I think it was a big mistake, this Chinese escalation, because they’re playing with a pair of twos.  What do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us, so that is a losing hand for them.

~Commerce Secretary Scott Bessent

If nothing else, everyone in the Trump administration from the top down is all in when it comes to poker analogies.  Just months after Donald suggested that Ukraine did not hold the cards needed to continue its resistance to the Russian invasion, we have a former hedge fund manager telling the Chinese they have a weak hand when it comes to Trump’s trade war.  The last time I sat around a card table, a pair of twos looked pretty good compared to $36 trillion worth of IOUs.  More importantly, Bessent once again proved that these supposed Wizards of Wall Street often do not know squat about business.  Let me explain with the following example.

Trade wars have a lot in common with price wars except in price wars the goal is to undercut the competition by offering similar goods and services for LESS money.  In a trade war, the prime directive is to INCREASE the cost to your consumers of the competition’s goods and services.  In both situations, the winner is always the entity that has the resources to take a short term hit to achieve its long term objectives.  This is exactly what happened during the 1980’s energy crisis.

I will start with a brief history of oil prices during this volatile period.  In December 1979, the price of a barrel of oil peaked at just under $40 ($158 in 2025 dollars) due to three primary factors: (a) increased demand driven in large part by economic growth in China and India; (b) OPEC’s restructuring of the global production and distribution system; and (c) uncertainty in the Middle East (Islamic Revolution in Iran).  The historic oligopoly of American and British firms (known as the “Seven Sisters”) responded in hopes of retaining their market share. First, the higher per barrel price made it profitable to invest in infrastructure to increase exploration, drilling and production.  Second, oil companies began investing in non-traditional means of extracting oil.

Perhaps the most infamous example was the Colony Shale Oil Project in the Piceance Basin of Colorado.  It began in 1964 as a pilot project between Standard Oil of Ohio and Tosco, which had developed technology to extract and refine the oil embedded in shale rock.  Atlantic Richfield joined the partnership in 1969, followed by Ashland Oil and Shell Oil in 1974.  In 1980, Exxon bought a majority share in the venture for $300 million and began construction of a commercial scale shale oil plant with a capacity to produce 46,000 barrels of shale oil per day.

In the mid 1980s, when I held the position of deputy director of the Texas Economic Development Commission, I was invited to attend a roundtable sponsored by the Hunt Oil and Petroleum Company, owned by the Hunt family then headed by the Lamar Hunt, son of the founder H. L. Hunt.  I wish I had a transcript of Lamar Hunt’s opening comments.  However, I never forgot three things he told us that day.

  • All the sheiks who oversaw oil operations in OPEC member nations were educated at the finest American universities including Harvard Business School, University of Chicago and Wharton.
  • OPEC members built huge cash reserves while the per barrel price between 1980 and 1986 doubled and even tripled the margin per barrel.
  • If and when OPEC believed substitution of alternative sources (e.g. shale oil) would threaten their market share, OPEC would drop the price per barrel of their oil to make any alternative economically unfeasible.

And that is EXACTLY what they did.  In July 1986, the price of oil fell to $9.25 a barrel when OPEC flooded the market.  Over the next four years, U.S. oil fields were abandoned, and the Colony Shale Oil Project was shuttered.  And the price of oil eventually returned to its pre-1980 levels, peaking at $30.86 in October 1990.  FOOTNOTE: In addition to the $5.5 billion dollars of sunk costs Exxon put into the Colony project, they also had to compensate Tosco to the tune of $380 million.

Exxon was not the only loser.  Interest rates, especially for mortgages, rose to 19 percent.  Inflation reached a high of 14 percent.  Unemployment averaged 11.1 precent in 1982 and 12 percent in 1983.  The housing market collapsed with many homeowners holding outstanding mortgages higher than the total value of their real property.

Surviving a trade war depends on the following:  sufficient resources to minimize the negative impact, patience and public support.  Already faced with massive debt, does the Trump administrative really think it can afford to write checks to farmers and companies to compensate them for lost markets?  Or juice the economy with tax cuts?  Both could have dramatic effects on inflation and interest rates.  Will the American public tolerate a new round of inflation and higher consumer prices before taking to the streets?  (Oh, they already have.)  And finally, even if there is a light at the end of this tunnel, business leaders and financial analysts agree it is years in the offing.  Will Americans wait that long for some uncertain payoff?

China’s retaliation is unhampered by any of these three concerns.  They have the reserves.  They can play the long game.  And they can suppress public opposition.  Which is why Secretary Bessent’s assessment in the opening quote is wrong.  China’s hand, at a minimum, holds THREE twos, not just a pair.  And the U.S. still has a stack of IOUs that is likely to grow dramatically in the near future.  Trump may think his on-again, off-again tariff chaos is akin to holding his cards close to the vest.  Does he not realize most of it is public information?  And what is not being reported by the media is probably available on a Signal chat or Gmail.

For what it’s worth.
Dr. ESP

Cheerleading the Apocalypse

Media

Where you stand depends on where you sit.

~Miles Law

Skeptics of the efficacy of Miles Law need look no farther than a six minute interview on this morning’s edition of CNBC’s “Squawk Box.”  Co-anchors Becky Quick’s and Joe Kernan’s guest was Michael Wieder, president of Lalo, a baby products company founded in 2019 by Wieder and partner Greg Davidson. 

The interview, as evidenced by the following transcript, is best described as a “tale of two careers.”  Quick’s education and professional pursuits are centered on the field of journalism.  While working towards a B.A. in political science at Rutgers University, she served as editor-in-chief of The Daily Targum, the school newspaper, and was awarded a Times-Mirror fellowship.  Before joining CNBC, Quick reported on retail and e-commerce for The Wall Street Journal.

Kernen is “a host of a different color.”  Despite a University of Colorado B.S. in cellular biology and an M.S. in molecular biology from MIT, he began his career as a stockbroker at Merrill Lynch before taking management positions at EF Hutton and Smith Barney.  He then joined the Financial News Network as a stock analyst moving to CNBC following the 1991 merger with FNN.

With this background information, no one should be surprised how the segment played out.  Quick introduced Wieder, during which she explained why he had been invited on the program.  Lalo is a small business that imports much of its inventory from foreign suppliers. 

QUICK:  He estimates he may need to pass on 10-20 percent increased costs from tariffs to consumers at this point.

WIEDER:  We import product from several foreign countries including China, Turkey, Taiwan, Vietnam and Thailand.  We anticipated this. We dropped prices on a lot of products.  We expected tariffs.  People may find that shocking, but the cost of child care has gone through the roof.  We didn’t want the price of essential products to go up, but this changes everything.

QUICK:  How did you do that?

WIEDER:  Deepening relationships with our partners.  Negotiating. Three week ago we launched in Target.  We are reaching way more consumers through that market.  We launched the company one year to the day of the COVID lockdown.  All of these challenges test the resiliency of a small business.

QUICK:  I would imagine you are also trying to figure out your own margins in the face of these tariffs which were higher and more extreme than anyone was expecting.

WIEDER: The number we should be focusing on is not even 34 percent. It’s 79 percent because it’s stacking.  This is not a supply chain that exists anywhere else in the world.  Most of our products are made in China and that’s because over decades there has been an industry focused on creating regulated, safe products for parents and children in China.  That doesn’t exist anywhere else.  We don’t want to jeopardize safety.  We don’t want parents to make decisions based on the cost of the goods.  What happens if you don’t put your child in a car seat because it’s too expensive or a high chair or a proper bath tub?

QUICK: What would it take to get you to manufacture back here in the United States?

WIEDER:  To be honest, it’s not even really possible.  There are decades of engineering talent, compliance talent understanding the safety and regulatory components that go into making the products that we make.  We looked into it.  China is making food grade silicone.  The United States is making dirty industrial products.  So it’s a massive shift.  It can’t happen overnight.

[At this point Kernen jumps in, dressed in a crop top, pleated skirt, waving pompoms to derail Wieder’s affirmation that the Trump assessment his tariff roll-out is “going really well,” is complete BS.]

KERNEN: Didn’t they have that terrible baby formula.  When was that?  [Several seconds of dead air] So there’s no way you can bring it home?

WIEDER:  Unfortunately not.  Not in a considerable amount of time…

KERNEN:  [again interrupts Wieder]  You’re not talking about labor over there.

WIEDER:  Labor does play a part because there is assembly over there.  But for us, we want to make the highest quality products and we want to make sure we’re delivering safe products.  And at the right price.

QUICK:  Do you hope there are exemptions?

WIEDER:  Yes, you look at Section 301.  List 4b included baby products for a reason.  The administration protected American families.  Our hope is that will continue.  [NOTE: This exemption was negotiated in December 2019 by Trump’s trade representative and remained in effect until Tuesday’s “Liberation Day” announcement.]

KERNEN:  [Again interrupts with a smirk on his face] Actually it was 17 years ago, [reading from a piece of paper] Chinese dairy company intentionally tainted baby products to increase profits and pass quality control tests.  Six infants died and 6,200 were sickened.  So you’re saying your main thing is silicone.  [Wieder starts to respond but Kernen interrupts] You can’t get clean silicone in the United States?  What do they put in breast implants?  No, seriously.

WIEDER: I’m not familiar with that industry.  But what silicone is made in the United States is mostly industrial products, car parts and things like that.  You don’t have that talent that understands the compliance and regulatory requirements.

QUICK:  Thank you for joining us this morning.

I will leave it to the reader to decide whether Kernen’s contributions to this discussion are (a) irrelevant, (b) offensive, (c) moronic or (d) all of the above.  But it might not surprise anyone this was not a one-off.  After all, Joe Kernen is the same guy who asked a guest during a discussion of bank notes in India:

[Imitating an Indian accent no less] Is the Indian rupee accepted as currency at 7-Eleven stores?

My guess is Kernen honed his faux Indian accent listening to South Asian classmates at MIT who actually became molecular biologists instead of chasing a fast buck on Wall Street.

For what it’s worth.
Dr. ESP

Ghost of April Fools Day Past

Random Thoughts

During last night’s edition of “A Closer Look,” Seth Meyers compared Donald Trump’s tariff announcement to Caligula’s appointing his horse to the Roman senate.  Although Meyers described the story as “apocryphal,” he wondered if such a presence in the United States Senate would result in the equine always voting “neigh” on legislation.  Or whether a Cory Booker-like speech in the Senate chamber by a female member of the “world’s greatest deliberative body” would be known as a “filly-buster.”

I am always amazed what triggers long-shelved memories.  In this case, I returned to my senior year (1966-67) at Thomas Jefferson High School (TJHS) in Richmond, Virginia during which I served as sports editor of our student newspaper The Jeffersonian.”  As I still try to do on this blog, I viewed that year as an opportunity to approach my responsibilities counter-intuitively, including stories outside the usual high school sports fodder. 

Emulating my then sports journalism idol George Plimpton, I finagled an interview with Meadowlark Lemon of the Harlem Globetrotters which included a brief game of one-on-one.  (I did not embarrass him.)  Or during pre-game warm-up, playing catch with future New York Yankee pitcher Ron Reed when he was still on the roster of our hometown Triple-A Yankee affiliate the Richmond Virginians.

But the most outrageous effort to push the envelope and the subsequent series of events occurred in April 1967.  In 1966, President Lyndon Johnson introduced what he called “The President’s Challenge” to promote physical fitness among the country’s youth.  Participants received points for various physical fitness activities or sports participation.  Based on the number of points amassed, students received a Presidential Champions Award ranging from bronze to platinum.

In the April 7, 1967 issue of The Jeffersonian (that year April Fools Day fell on a Saturday), we published a story describing how TJHS embraced Johnson’s fitness initiative by adding polo to the school’s sports programs.  The article include a picture of the president seated on a polo pony.  (For you youngsters out there, PhotoShop was decades away.  The picture was created by cutting and pasting printed pictures and then photographing the resulting montage.)  The caption read, “President Johnson on his favorite filly, Buster.”  You can imagine my delight when Meyers made a similar reference 58 years later, proving that some puns are timeless.

But the story does not end there.  We sent a copy of the newspaper to the president.  And much to our surprise, we received a letter on White House stationery thanking us for establishing a polo team at TJHS.  It was signed by “Lyndon B. Johnson” (or more likely by his autopen).  The text was included in “Letters to the Editor” in a subsequent issue though many students thought we had also manufactured the response.

POSTSCRIPT

While researching the history of The President’s Challenge, I came upon a reference to a story on the U.S. Department of Agriculture webpage “MyPlate.gov” which was summarized on Wikipedia as follows:

The Trump administration terminated the program on June 30, 2018. The reason stated was that the private sector created many other tools that have the same purpose, so it was discontinued to invest in newer ways to help Americans have a healthy lifestyle.

When I clicked on the Wikipedia link to the source material, it took me to “MyPlate” which now informs readers.

We’re sorry. The page you are looking for could not be found. You can try using the search box on the top of the page.

Thank you for visiting MyPlate.gov. Have a happy and healthy day! 🙂

One can only assume the private sector companies to which the Trump administration referred included KFC, McDonalds and E-Z-GO/Cushman golf carts.

For what it’s worth.
Dr. ESP

Liberation Day Math

Economics

Former Daily Show host Trevor Noah often reminded viewers, “Two things can be true at the same time.”  One of his most famous examples concerned the dichotomous responses to George Lloyd’s death in May 2020 at the hands of Minneapolis policeman Derek Chauvin.  As a Black man who grew up in South Africa during apartheid, Noah said he did not consider it an oxymoron to be supportive of Black Lives Matter and opposed to defunding the police.  Taking both sides of an issue is possible when we are focused on interpretation of the facts, not the facts themselves.

Which brings me to the topic du jour, Donald Trump’s designating April 2, 2025 “Liberation Day.” There has never been a better example of the difference between opinion and fact. At the heart of Trump’s performative White House celebration is a new round of global tariffs.  Commerce Secretary Howard Lutnick (the billionaire who wants us to believe his mother-in-law lives hand to month but would not complain if she did not get her monthly Social Security check) “… promised Americans that grocery prices would start coming down in early April but warned that there would be price increases on foreign goods as a result of the Trump administration’s anticipated reciprocal tariffs.”  (Source: NBC News)  In contrast, “One model constructed by the Federal Reserve Bank of Boston suggests that in an extreme scenario, heightened taxes on U.S. imports could result in a 1.4 percentage point to 2.2 percentage point increase to core inflation.”  (Source: CNBC)

Proponents say reciprocal tariffs will encourage America consumers to purchase goods and services produced by domestic manufacturers leading to sustained job growth and lower unemployment.  Critics suggest tariffs on raw materials and parts needed to produce those goods and services will result in a rash of business closures and/or downsizing leading to supply-chain disruptions, long-term inflation and higher unemployment.  Prior to implementation of the tariffs and analysis of the ensuing data, it is impossible to determine who is right and who is wrong.

Not so with one aspect of the tariff regime which Trump has touted on numerous occasions.  As reported by the non-partisan Tax Foundation:

Last week, former President Trump took his affinity for tariffs much further, floating the possibility of entirely replacing the federal income tax with new tariffs.  (June 18, 2024)

The Tax Foundation went on to put this proposal in historical perspective.  Using the most recent available date (FY2021) as a benchmark, they report Americans paid $2.2 trillion tax on $15 trillion of individual income.  That same year, tariffs on a total of $3.4 trillion in imports generated revenue of $80 billion (not quite tit for tat).  Extrapolating these figures to determine the tariffs required to achieve Trump’s policy objective, the Tax Foundation found, “To replace the roughly $2 trillion of revenue raised by the individual income tax with tariffs would require astronomically high tariff rates.”  They project fully replacing the individual income tax would require a 69.9 percent tariff on ALL imported goods and services. 

What does that mean for the average consumer?  A Hyundai Tucson which sells for $38,000 today, according to their model, would now cost $64,562.  Which explains why Trump’s proposal makes even less sense.  Trump claims the tariffs will encourage Americans to buy domestically produced automobiles.  Let’s assume he is correct.  In which case, the $3.4 trillion total value of imports would decline significantly, requiring an even higher tariff to reach the tariff/income tax break-even point.

In other words, two things can be true at the same time when it comes to opinions.  But not when it comes to facts. Just one more example how the stable genius sitting behind the Resolute Desk can turn an oxymoron into something just simply moronic.

For what it’s worth.
Dr. ESP