Cruz’s Chutzpah And Trump’s Inadequacy

Between Christie and Cruz I always thought it was Christie who had the balls, Cruz being more of a Machiavellian calculating weasel. It’s amazing what a few days of GOP convention can do to my perceptions. I was totally wrong. Christie proved to have neither the balls nor the winning vision, selling his soul to Trump but getting nothing for it. Cruz, in addition to playing a smart, long game has also demonstrated an impressive chutzpah yesterday at the convention, in front of increasingly hostile crowd, when he refused to endorse Trump. He clearly positions himself for 2020 and I can’t say that he won’t have an advantage during the inevitable finger-pointing after Trump’s spectacular crash and burn.

Let me dwell a bit longer on the topic. Over the course of the last decades, that perhaps started with Bush II theatrical landing on an aircraft carrier in 2003, the displays of power, mostly on the right, have devolved into displays of unearned and misplaced masculinity. The less time a person has spent in or near the military or a physically dangerous situation, the more he will want to prove to a given audience his macho credentials. Thus modern day American understanding of toughness has two key elements, neither of which has anything to do with actual courage: it’s belligerence rooted in insecurity. To even further degrade the actual meaning of courage, that belligerence is not directed at someone who can respond in kind, but to a mere female political opponent, delivered to an already agreeable, and frenzy-whipped crowd. “Guilty or not guilty?” chanted Christie from RNC stage, in a mock (but in reality, real) witch trial of Hillary. “Guilty!” the crowd roared back, stroking Christie’s fantasy of being a righteous, brave warrior.

Indeed, even Trump, whose life quest seem to be about squashing people’s doubts about his fortune, victories – business or personal, his virility and his toughness, generally avoids situations, whether strategically or out of fear, where he can face an unfriendly audience. He wants to be friends with all the tough guys around the world and he veils it in the rhetoric of ‘making deals.’ The business world, and specifically the dog eat dog New York commercial real estate world, where Trump claims to have domineered, is a metaphorical war zone, littered with corpses of developers and builders. Trump has been killed there a long time ago and the only franchise that has kept his name in lights is, well, his name that he lent to new construction – a nice racket that, due to recent events, might soon come to an end. Trump is neither courageous, nor good at making deals, unless filing for a strategic bankruptcy or stiffing his contractors counts, in his world, as a ‘good deal.’ I imagine him negotiating the status of the Baltic States with Putin – itself an unimaginable scenario just a few months ago, before the American politics has been so distorted by his candidacy. The fact that, in his mind, this is even up to a negotiation, speaks of his inability to perceive of a situation that has no ground for deal-making, like, for example, when your daughter is harassed by a bully. In that scenario, that is becoming less and less hypothetical, the poor Baltic States will be a mere token for Trump’s thoughtless personal brand posturing. Trump’s tactic has never been to put himself on the spot, to risk his own money; it is Trump’s partners, the others, that traditionally have the exposure. Should he, God forbid, become President, his bag of tricks that worked so well for him in reality TV – a squint in the eye, a catch phrase, a limited roster of over-recycled adjectives (Amazing! Unbelievable! Tremendous!) – will fail to impress the more serious, less gullible counterparties. And the way out of the mess will be paid, like always, by someone else, a third party.

Kant vs The Hedge Funds

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This is the quote by Anthony Scaramucci, a hedge fund manager who supports Trump, at a recent Romney retreat, cheering on the anti-Trump crowd to join him in defeating Hillary Clinton. (Hillary=White Walkers, get it?)

The problem with the hedge fund guys is that, in their mythology, they are all brave, valiant, noble warriors fighting against some dark forces. I understand the urge and underlying mental dynamics: It is difficult for a man to do his job while recognizing that the very nature of that job is predatory. A man is not made this way. At the end of the day he wants to feel good about himself.

Thus we often witness the construction of elaborate mental schemes by those with power and leverage, aimed at the public, but also, in a way, at themselves, because getting validation of their goodness through public channels – such as charity – mitigates their furtive feeling of worthlessness. Still, a public praise is a weak consolation to such a smart group of people, simply because they know more than that adoring crowd of know-nothings. That’s why, receiving public accolades at a charity gala is always met with self-deprecating modesty: that self-deprecation is hardly faked. Deep down they know that it is undeserved; they know how they made their money. Such inadequacy is manifested by their public admiration of the truly noble, mostly fictional characters: Jon Snow, Obi Wan Kenobi, Batman. They wish they were like that. For example, I’m willing to bet that Trump, who avoided service in Vietnam, wishes that he would have avoided that service in a manner of Muhammad Ali – by being a conscientious objector and spending time in jail for his noble beliefs – rather than being a soft-ass run-of-the-mill son of a rich man.

Often, the argument in the defense of such guys goes along the lines that they are smart and risk taking. Intelligence, awareness and risk-taking are important qualities in a person, as I, too, hold those in high-esteem. But the argument usually stops right there as if smarts and risk-taking are good qualities in themselves. For some reason, we as a society, don’t demand that those qualities were channeled to the public good or just simply good. For us, smarts in the service of self-enrichment is admirable enough.

This is a problem. Even worse so, as philosopher Immanuel Kant says in his ‘Fundamental Principles of the Metaphysics of Morals’, “without the principles of a good will those qualities may become extremely bad, and the coolness of a villain not only makes him far more dangerous, but also directly makes him more abominable in our eyes than he would have been without it.”

We only wish that our villains would be stupid and inept, but more often than not, they are not.

Kant, who spent decades pondering on the issue, makes a point separating goodness stemming from inclination from goodness stemming from duty. That is an important, illuminating distinction that renders the entire ‘hedge fund good guys’ argument impotent. Charity, a favorite public display of goodness, is an inclination, not a duty, and therefore, according to Kant’s logic is disqualified from an absolute good. He gives an example of a philanthropist clouded by sorrow of his own, that (the sorrow) extinguishes all sympathy for the lot of others. While he still has the power to benefit others in distress, he is not touched by their troubles because he is absorbed with his own.

This is an inclination, not a duty. But notion of duty is absent from our public conversation. We often argue that if an agent charges you a fare fee because otherwise the market forces would put him out of business, then such a dynamic should be celebrated as beneficial to both. Kant disagrees. Or rather, he’s unsatisfied with such motivations. If the market forces were not there to inhibit the unscrupulous agent, he then would be free to charge you whatever fee he wanted. For Kant the absolute good, or good will, is for an agent to do the right thing even when the restricting or triggering forces are absent. This is the kind of level of thinking that is out of reach to our valiant hedgies, and sadly, to the public as well. We still can allow a standard economic argument to end with a simple: “but it makes money” cudgel and go on our way.

Sad!

Screenplay

I entered my screenplay, The Greatest Trade of All, into a few contests, the biggest and most important of which announce their winners in July-September. In the meantime, I placed well in a smaller contest, making it through the Finals and receiving ‘honorable mention”, whatever that means. That places my screenplay in the top 25 (of the 1527 total submissions). Holding my fingers crossed for Nicholl (that’s the biggest one), PAGE and Austin Film Festival.

Plato’s Republic

I’m in the process of reading Plato’s Republic, and, incidentally, this 2500-year old text is also at the center of a recent Andrew Sullivan treatise about how a democracy can be susceptible to tyrannical forces.

Plato’s political sentiment might not play well in our modern-day uber-democratic approach to politics. He devotes chapter after chapter to building a case for a caste of Philosopher Kings – a group of people, selected through rigorous mental and physical training, to rule the Republic. They are required to forgo the pursuit of material accumulation and fame and only concern themselves with the wellbeing of the state. They would subsist on a modest public allowance. In popular culture this kind of selfless servants of the Republic can be found in Star Wars mythology – the Jedi Knights.

Plato is aware of the many pitfalls where during the training, or later, during the actual governing, one might veer off the intended path. There are just too many temptations along the way – fame, riches, vanity, military glory. He acknowledges this risk, and while his solution – more rigorous selection and cultivation of the needed qualities (which include wisdom, courage and moderation) – might seem weak and susceptible to various impostors, he believes it is still our duty to proceed on this path. Just because something is difficult and has not been done before it doesn’t mean it shouldn’t be tried. Or, as Tyrion Lannister would say: ‘It’s easy to confuse what is with what ought to be.’

Further, in a beautiful allegory about how we perceive the world, Plato employs a thought experiment that came to be known as Plato’s Cave. Imagine there’s an underground den, a cave, where people are chained to a wall from their birth. They can’t go outside and they can’t even move their heads, as the heads are too constrained by a vise-like device. During the day a sunlight comes through the hole and those cave dwellers can see images on the wall, shadows of objects that live and move outside the cave – people and animals. But the prisoners have no concept of life outside the cave, so for them the reality is represented by those shadows projected on the cave’s wall. That’s all their eyes can see. And, of course, they believe their eyes and thus think of the shadows as ultimate reality.

This is a metaphor for our own epistemology, a way of learning about the world. We believe our eyes and what we’re able to perceive with our senses, and describe the world around us according to those findings. This method involves, of course, more than just our vision; our sense of touch and smell and hearing are also a part of that big illusion.

Plato argues that in order to come closer to the truth – a universal truth – one has to abandon such method of inquiry and employ a purely dialectic method, that of reasoning alone.

The cave metaphor carries greater implications. Imagine someone from that cave somehow made it outside. It would take him a while for his eyes to adjust to the light. (Btw, I love it how Plato recognizes that enlightenment is both the sunlight illuminating objects so that we can see and learn about and describe them and also that light, in this case, is a facilitator of knowledge that is outside of our immediate surroundings, an allegory of pure knowledge.) As soon as the prisoner is able to see in the light he would be perplexed to see strange things that have no definition in his old underground world. Plato believes that there are a lot of perplexed people out there – whether by stepping from darkness into the light or vice-versa – and it is for us to determine the reason for a person’s confusion and to help him along the way. Plato takes it even further to posit that it is the duty of those residing in the light world above to descent into the cave and help those still chained to the wall, even at risk of being ridiculed and/or executed.

But modern-day elites forgot what their position of power should be all about. Such amnesia is thoroughly examined by Thomas Frank in his recent book about elite liberals who, in their pursuit of meritocracy, forgot the very people (the working class) they were supposed to represent. Instead of going into the cave and helping the prisoners out, the modern-day liberals ridicule those unfortunate for their ignorance, while sipping champagne at Davos and TED talks, wallowing in their superiority.

There’s someone who went into the cave though. Trump.

Odd Alliance Between Evangelicals and Supply-Siders Comes To An End

A curious observation about Evangelicals that were supposed to stop Trump in the South. What kind of evangelicals are they if they prefer Trump to a Bible-thumper Cruz? Is it some kind of special, American strain of Christianity that’s all about ego and winning and bombast? I’m glad Trump exposing it as a total fraud, even though that’s not necessarily his intent. He’s doing a job no one except him could’ve done. On the other hand that also explains why this alliance between Evangelicals and supply-siders lasted so long: they are Christians in name only. They got their guidance from prosperity preachers (which is, I hope how Cruz will end up) and WSJ editorials, not the good book. (I haven’t read it but I saw Jesus Christ Superstar and I clearly remember Jesus smashing the trading terminals in the temple.)

The bottom line is you can pray and you can trade but you can not do both.

Equality in Plunder

Today is International Women’s Day and predictably we’re seeing articles on a dearth of women in management positions. On Bloomberg today there’s an article about how activist investors – guys like Carl Icahn and Dan Loeb – don’t appoint women board members when they take over the companies. Naturally, the article laments the situation while the corporate raiders, those who bother with a comment, give us platitudes about seeing a ‘bigger picture.’

Bloomberg writers, whether by lack of curiosity or adherence to the party line, refused to looked at the issue from another perspective. They never question is it right for women, or anyone, to possess that kind of capacity for destruction. All they care about is equality, even if that equality means access to the tools that sow that destruction. Activist investing, if you’re not familiar with the term, refers to a practice of taking over the management of an existing company, stripping it of any value, firing its employees and then bragging to shareholders about ‘efficiency’. Complaining about the lack of women in that kind of position is like complaining about Jeffrey Dahmer (the serial killer) not hiring female assistants.

This article reminded me of another short-sighted lament in business circles about the lack of women at World Economic Forum at Davos. Cathy O’Neil (mathbabe) made a good point about it earlier this year. Why, instead of pointing out the corruption on modern-day business elites, one encourages women and minorities to join them? Is it because the task of defending the indefensible becomes easier when it is done by a few strategically placed blacks, women and gays? Does it absolve the old white rich guys who are pulling the strings behind the scenes, when they can point at ‘diversity’ at their control panel?

No one questions the price of that kind of ‘equality’. I once heard an adage about the difference between white and black women. It said that white women seek equality; black women seek justice. Indeed, white women strive to get into that corner office so that they, too, can plunder the world like the guys did for centuries. Black women, on the other hand, can smell a rat here, and thus reject the entire system that only perpetuates the injustice. Like planets or a light beam that are at a safe distance from a massive gravitational object, they are uncorrupted by its gravitational force. White women, on the other hand, usually are. Thus black women, unlike white women, are under no illusion about this whole corrupt scheme. Just some food for thought.

Thoughts on Hillary, Bernie and Trump

It’s been awhile since I wrote about US politics. The thing is I was torn between Bernie and Hillary, and I wanted to analyze this juxtaposition of Bernie’s idealism vs. Hillary’s practicality. I don’t think it’s an either/or proposition.

Many on the left see the problem with Hillary is that she oozes Establishment. We are usually presented with a list of ‘crimes’ that her husband and, by association, she have committed in the 1990s. Bill Clinton passed a series of bills that made an emphasis on personal responsibility while at the same time weakened the call of duty to the larger, more socially and economically influential entities, like business and government. But the thing is we were all neoliberals in the 1990s. We all thought that we have arrived at the ‘end of history’ where liberal democracy and the invisible hand of free markets will guide the humanity till the end of times. This is what we were taught in the universities and business schools. I haven’t heard of Noam Chomsky and Howard Zinn until I was about two years into my financial industry career. (I don’t remember how I came across those.) And even then I thought that things couldn’t be as bad as they describe it. How the hell was I supposed to discern that what I was taught was an economic fairy-tale concocted by Reagan voodoo whisperers with a self-serving ends? If the world’s leading intellectuals are wrong, what’s to expect from the little guy? I, too, like Clinton and Fukuyama and a horde of neoliberal intellectuals, from Larry Summers to Art Laffer, thought that this is it. This is where we end up. I, too, thought that all you have to do to succeed in life is work hard and then expect everything else to magically fall into place, like they said. I was sincere in my belief. The reason I’m describing my neoliberal background is to demonstrate that it is possible to acknowledge your past mistakes when you are presented with the new evidence. I’ve done it, therefore it would be disingenuous of me to deny the same benefit of the doubt to the Clintons. I think today Bill regrets signing the Crime Bill and Welfare Reform and the loosening of financial regulations. But let’s remember that back in the 1990s all those laws seemed like a good policy in line with the prevailing economic dogma. I think Hillary understands all of that, which is why she shifted left on many issues. But she can’t do a full Bernie without being accused of being an opportunist. Is there even a room, in our current political process, to allow a politician to change his or her mind?

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Growth and Efficiency Argument, Deconstructed.

I am suspicious of the word ‘efficiency’ when it comes to business – big business to be more specific. There’s a level of honesty in small business that is absent in most of the big business models. Where new restaurants pop left and right, elbowing each other to deliver good food at reasonable prices, I don’t see this kind of eagerness to please a customer from an electric or a cable company or big pharma. What is their interest in going an extra mile for me? And why would they do that? Pleasing a consumer is no longer a goal of a modern day big business. These days, when I hear the word ‘efficiency’, usually from consultants and business majors, I don’t expect to hear about how they are going to devise new ways to deliver cheap and useful goods to a consumer. I usually expect to hear about a strategy of maximizing shareholders value – somehow a more sacred endeavor than merely serving their customers. The consultants never disappoint. In fact, customers of a monopoly have become merely means to an end, a stepping stone to the real endgame – profit at all costs. Peter Thiel, the founder of PayPal, knows this when he constantly encourages businesses to strive to become a monopoly, rather than wither under constant competition. In his view competition is bad. Nonetheless, we get fed endless stories about heroic entrepreneurs who risk their capital to deliver the goods to consumers, leaving aside the fact that those who are really risking their capital are idealistic mom-and-pops who have internalized this beautiful but obsolete narrative. The real entrepreneurs, the financial innovators in C-suites don’t take risks, because they know 1001 ways of unlocking the already existing value.

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An Investment Idea

You know how when a private equity/hedge fund buys a company (say a pharmaceutical) they then immediately drive the prices of drugs up X times? Why can’t the same trick be done with a gun manufacturer and the price of guns/bullets? To take a cue from Chris Rock’s $5000 a bullet routine, imagine the kind of margins the new owners would get. Sure, those margins would be borne on the backs of rednecks, but hey, if you can rip off sick people, why can’t you apply the same distilled capitalism and freedom to the very people who love to defend it?

It’s a beautiful proposition on many levels. First, it will be massively profitable – as there seem to be a never-ending demand for guns and ammo in this country. Second, if guns and ammo are more expensive than it is now, the users will be more mindful about shooting rounds. Third, and I think this is the most beautiful part, a lot of hedge funders, because they consider themselves civilized and live in big cities and have children in schools, support gun control. If that support is combined with a financial incentive they will thus represent a formidable countering force to a gun lobby. Not to mention the ensuing dynamic that will further complicate the relationship with the GOP donor base (hedge funds) and grassroots (rednecks).

Where is Martin Shkreli when you need him?