Aspects of Inflation that We Just Do Not Control

Apparently, the PhD economists within the Federal Reserve believe that with their limited tools – controlling money supply, setting government lending interest rates, quantitative easing, etc. – they can control US inflation, as if that global economic malaise can be controlled within a single nation. Unfortunately, as academically rigorous as they believe themselves to be, they continue to falter in the turmoil of the post-pandemic world. They have focused on the unleashing of pent-up consumer demand, rising wages, and a continuing low unemployment rate. Notwithstanding fuller employment and higher wages, cost increases have continued to outpace income increases. But there are so many unrelated aspects of inflationary accelerants over which the Fed tools can only have marginal and indirect impact.

An avian flu raked US poultry farms in January sending prices for eggs and chicken soaring. Supply chain problems settled down for a bit, but as I will point out, we are about to see a big change in that reality this year. While home prices are contracting, the offsetting increase in mortgage rates, now the highest in decades, have more than dimmed the number new home starts and sales of exiting housing. The pull back on home buying has pushed more people back into the rental market, with an obvious slam to renters as rents skyrocket.

Fossil fuel costs in Europe, from gasoline to natural gas for heating, have increased – sometimes by double or triple – as the result of sanctions against Russia (a fossil fuel producer on the order of magnitude of Saudi Arabia). While those price rises impacted the US inflation rates, they were hardly as horrific as those seen in Europe, eventually moderating across the US. But there are so many aspects of inflation over which Fed interest rate setting will have little or no material impact on resetting inflationary costs… but the Fed to continue rate hikes does promise one severe outcome if not slowed, stopped or even reversed: recession replete with a significantly higher unemployment and homelessness.

To follow recent related posts with more detail, see my January 6th Trade Wars, Pain and the "Pass-Through Rate" blog (showing how business pretty much passed almost all the inflationary pain from US sanctions on to American consumers), my December 20th Stacking the Deck - A Pox on Younger Homebuyers blog (discussing how younger demographics are bearing the brunt of most of the price increases, from housing to consumer [including student] debt and supply chain increased costs) and my October 29th Home, Hearth and Mortgage Payments Adjustable, Unaffordable or Lucky blog (where the rise in interest rates has forced the greatest cost increases on those younger homeowners or renters).

As the ad man often says, “but wait there’s more…” And the more we are waiting on is antithetical to every major US international policy: as my recent blog calls it, The Giant Petri Dish with Territorial Ambitions: China. China is focused on making up for its recent productivity losses from excessive lockdowns from it imposed during its “zero-COVID” policy days, and while in the short term, China is indeed dealing with a new outbreak of the virus, the same pent-up demand that defined our post-pandemic recovery is about to explode in China… but perhaps bigger.

If you want a preliminary metric on exactly how big that demand is likely to be, just look at the skyrocketing demand from PRC nationals for vacation travel (some call it “revenge travel”), now that Beijing has lifted most of the COVID-related restrictions. Restrictions at traditional Chinese border crossings (including semiautonomous districts) have been lifted, and travelers are now crossing in droves. The January 9th Associated Press reports: "Hong Kong media reports said about 300,000 travel bookings from the city to mainland China have been made, with a daily quota of 60,000.

“Limited ferry service also was restored from China’s Fujian province to the Taiwanese-controlled island of Kinmen just off the Chinese coast… The border crossing with Russia at Suifenhe in the far northern province of Heilongjiang also resumed normal operations, just in time for the opening of the ice festival in the capital of Harbin, a major tourism draw.

“And at Ruili, on the border with Myanmar, normal operations resumed after 1,012 days of full or partial closure in response to outbreaks blamed partly on visitors from China’s neighbor, also known as Burma.

“So far, only a fraction of the previous number of international flights are arriving at major Chinese airports… Beijing’s main Capital International Airport was expecting eight flights from overseas Sunday. Shanghai, China’s largest city, received its first international flight under the new policy at 6:30 a.m., with only a trickle of others to follow.” Bookings for overseas flights are rising fast, even as overseas destinations are still requiring passenger COVID testing.

But once China settles down, likely to occur this year, her GDP will rise significantly, factory output will increase and sustain. Internal consumer demand is on a parallel course for more, more, more. Prior to the pandemic, China was the largest importer of fossil fuel on earth, a status likely to be repeated as her economy speeds forward. That increase in demand, particularly over fossil fuel, will send a massive inflationary spike that could increase prices at the pump by 20% or more… with a concomitant ripple across the global economy where shipping remains a major cost component. China’s increase demand for food stuffs and natural resources, as well as sophisticated technology (which the US is fighting) will only add to that inflationary pressure.

Yet somehow, the Fed seems hell-bent on continuing US rate hikes that cannot possibly influence such international realities, will not stop the Russian invasion of Ukraine, cannot stem rising Chinese demand and will not repair our supply chain disruptors. It can increase homelessness, raise unemployment numbers and continue to slam the youngest and other vulnerable demographics least equipped with deal with inflation or the ravages on their lives imposed by Fed rate hikes. It’s time for the Fed to wake up and recognize that it lacks the tools to deal with the kinds of cost increases we have all around us today. It’s not just about US policies and US demand anymore.

I’m Peter Dekom, and the all-powerful Federal Reserve needs to understand that it really isn’t all-powerful and cannot make up for its earlier missteps by insisting on radical solutions that fly in the face of global issues over which they have no control.

Copywrong?

 

“The term of copyright for a particular work depends on several factors, including whether it has been published, and, if so, the date of first publication. As a general rule, for works created after January 1, 1978, copyright protection lasts for the life of the author plus an additional 70 years. For an anonymous work, a pseudonymous work, or a work made for hire, the copyright endures for a term of 95 years from the year of its first publication or a term of 120 years from the year of its creation, whichever expires first. For works first published prior to 1978, the term will vary depending on several factors. To determine the length of copyright protection for a particular work, consult chapter 3 of the Copyright Act (title 17 of the United States Code). More information on the term of copyright can be found in Circular 15a, Duration of Copyright, and Circular 1, Copyright Basics.” 

From FAQs at Copyright.gov/help

The notion that the term of copyright “depends” should tell you that “it’s complicated.” The enabling section of the Constitution, Article I Section 8 | Clause 8 – Patent and Copyright Clause of the Constitution, was created in a different era. Recording, printing and copying were beyond basic. Over the years, the copyright statutes have passed, been amended, extended and excepted. In 1790, Congress passed its first copyright statute, granting copyright holders exclusivity for a whopping 14 years. By 1831, it doubled, with the possibility of a further 14-year extension. Effectively, like the much shorter “patent,” copyright gives the copyright owner a monopoly in their work... and very importantly, the exclusive right to create “derivative” (spin-off) works based on the original.

We forced the losers in WWII to accept a longer duration of US copyrights (a money-wrench in the exploitation of international rights), and the United States has entered into a number of international treaties that pushed and shoved our duration into compliance with international standards. We spent decades with differing durations of international vs domestic terms of copyright. The term of copyright is unjustifiably long, as you an see from the summary above. Since just about every creation on this planet is somewhat derivative, dealing with copyrights (not “copywrites”) that last about a century seems to be excessive by any standard. That Congress constantly changed the duration rules only added to the confusion.

Copyrights are today a huge business. From film, television, digital media, music, software, fashion, gaming, etc. are mega-tech-huge. Including patents, intellectual property businesses/values are well over 40% of our nation’s economy. This is truly important, because the entirety of the Patent and Copyright Clause of our Constitution was directed “To promote the Progress of Science and useful Arts…” Patents generally do not extend beyond 20 years, but copyrights, well the absurdity of the length has resulted in all kinds of machinations to temper that extreme: from introducing limited exception for “fair use” to giving individual US copyright creators a right to terminate grants of their copyrights after 35 years (which many foreign jurisdictions refuse to enforce other that as the US itself). But the long duration of copyright has one clear beneficiary: corporate America.

Patents represented a pragmatic reality for corporate America. Technological change was occurring so rapidly that even a 20-year patent seemed long. Businesses wanted to build on older patents, so having a shorter term was essential. But the commercial value of a creative copyright usually did not have the same “life or death” consequences of, say, a pharmaceutical patent, so a longer term of copyright did not seem to be a socially critical. And besides, for a copyright to have real value almost always required mass exploitation which almost inevitably required a corporate investment in production, marketing and distribution.

For creative conglomerates, like major studios and networks, they had a little “for hire” clause in their agreements with individual creatives they employed. The employer, not the creative employee, owned the copyright. And the fact that almost every form of creative intellectual property was effectively a cultural derivative gave these mega-owners (referred to in the statute as “authors” even though they were almost always companies) amazing power to curtail spin-offs and other derivative works. In short, the longer the term of copyright, the less “promotion” of creativity.

Yet when Congress acts to extend copyright, it almost always speaks in terms of benefits for those individual creators. As Michael Hiltzik, writing for the January 1st Los Angeles Times notes: “The argument for extending copyright terms has always been that the extensions give creators or their heirs that much more time to collect income and therefore incentive to keep their creative juices flowing, and who could object to that?

“As [Jennifer Jenkins, director of the Center for the Study of the Public Domain at Duke University] and other copyright experts point out, however, only a minuscule fraction of published creative works generate income for more than a few short years. The impetus for extending copyright duration comes almost entirely from corporate enterprises intent on squeezing the maximum income from creative franchises.

“In 1998, Walt Disney Co. pushed for enactment of the 1998 federal law known as the Sonny Bono Act after its chief promoter in Congress. The act set copyright duration at the author’s life plus 70 years, or 95 years after publication for works done for hire.

“But it’s vanishingly unlikely that a posthumous 95-year term would be an incentive to any living artist or writer. It was, however, a bounty for Disney, which at the time was facing the expiration of rights to the earliest films featuring Mickey Mouse and the looming cutoff of the royalty spigot.

“Thanks to the extension, the rights to the first Mickey Mouse cartoon, ‘Steamboat Willie,’ won’t expire until Jan. 1, 2024 — assuming Congress doesn’t extend copyright duration again.

“Whether the rules as they stand today serve the public interest is open to question. Consider the stringent control exercised by the estate of the Rev. Martin Luther King Jr. — mostly his children — over his speeches and writings such as the ‘I Have a Dream’ speech he delivered at the Lincoln Memorial on Aug. 28, 1963.”

A few years ago, I delivered a keynote address to gathering of patent, trademark and copyright lawyers. I excoriated the excessive duration of copyright as dramatically antithetical to promoting true creativity. All forms of art are, after all, culturally derivative. I noted that the original term of copyright – 14 years – was more inline with reality than the excessive current terms. I was expecting to be assaulted with boos and perhaps pelted with eggs mixed with tomatoes. Instead, I was greeted by a standing ovation. What does that tell you?! How about the first film to win the Academy Award, the 1927 production of the silent film “Wings" just entered the public domain on January 1st?

I’m Peter Dekom, and given a bottomless pit of global corporate campaign contributions and lobbying, the notion of individual creativity has fallen prey to corporate greed.

My Brand Only or Preferred Charging Stations

 

Fossil fuel-centric states with GOP leadership are taking aim at “woke” ESG companies, particularly financial institutions, doing business with their state agencies. See my recent Trendy Ideologies blog for more details. The running theme in these efforts is somewhere between climate change marginalization (“we can’t afford the cost” or “technology will solve it”) to out-and-out denial (“it’s only seasonal” or “God promised no more global natural disasters”). Still, warming polar air continues to send frigid air south, wildfires and tropical storms are only intensifying, water supplies in some regions are literally vaporizing while heavier rainfall in others is flooding with increasing damage, searing summer temperatures have become killers and coastal erosion claims more land while destabilizing more coastal properties. That most of this damage is occurring in GOP-dominated regions seems to escape material focus.

As we become more vulnerable to shifting global geopolitical winds, conservative solutions focus on amping up US oil production as a permanent solution. We almost “ran out of oil” once in this country, but production was increased (making the United States, once again, a net oil exporter) due to the pervasive use of “fracking” (pumping chemical-laced water, at high pressure, into former productive oil fields) to extract pockets of petroleum left behind as previously inaccessible. For reasons unknown to me, there is a new assumption – most certainly incorrect – that our oil supply is “once again inexhaustible.” Groundwater contamination and increasing seismic activity near fracking sites have become “acceptable collateral damage.”

The resurgence in reliance on American oil production allows many regions to relax and accept oil as the long-term energy source for America. A moment of global fossil fuel cost surge – the great force behind massive inflationary increases globally – has been replaced in too many states by petroleum supply complacency as prices at the pump subsided. Many are content to look the other way as the resiliency of autocratic states the world over, particularly Russia (which produces approximately the same oil and gas output as Saudi Arabia), as the price of oil has literally “fueled” both their geopolitical power and, in the case of Russia and Iran, their ability to manufacture and deploy massive military weapon systems. Russia would have been forced to end its Ukraine invasion a while ago if its oil exports were truly curtailed as unneeded.

As much as the United States has made the single greatest governmental commitment to fund climate change mitigation – a very large part of Bidens 2022 Inflation Reduction Act – the increase in greenhouse gasses trapping heat in out atmosphere is nowhere near contained. There is one commercial practice that seems out-of-step with fundamental national priorities, but one that remains semi-sacrosanct in a nation that often prioritizes business desires over pressing social necessities: limiting access to charging stations to specific brands. This is not about depriving those brand-directed businesses from revenues. No one is even suggesting that brands building the charging stations give their customers free electricity. But at a time when ubiquitous access to these level three charging stations is one of the primary ways to wean Americans off gasoline and diesel fuel, limiting access flies in the face of an existential threat to life itself.

Make no mistake, level three charging (particularly high-capacity level three chargers) is expensive. Between $100-$150 thousand each, not including the land and the construction of the surrounding facility. But cutting off usage of such stations, even at a fair fueling price, seems to pander to the higher end of EV ownership. If working class Americans might be able to afford a Nissan Leaf or a Chevy Volt, they are likely to find that outside their residence, finding reasonably available charging stations to be a real challenge, particularly in the case of a road trip of any distance whatsoever.

So much of the EV market, particularly in snooty sections of California, New York, Washington State, etc., has been built on upscale brands like Tesla, BMW, Mercedes, Audi and Porsche. Catering to folks with money. But brands involved in building charging stations, notably Tesla, have clearly made availability very limited. “Tesla’s network [approximately 40,000 charging ports worldwide but primarily US-based] is mostly for the exclusive use of Tesla owners, although Chief Executive Elon Musk has said there are plans to open it to other brands. The network gives Tesla an advantage over other EV makers, which have to rely on a patchwork network of privately owned charging stations.” Associated Press, January 7th. You can buy an adaptor to convert a standard EV cord to Tesla-plug standard for between $100 and $150; you just may not be able to use it.

Now, another upscale carmaker, Mercedes Benz, has announced its own program of building charging stations, one that would allow greater access to off-brand consumers… but with a priority given Mercedes owners to reserve access. “Mercedes-Benz says it will build its own worldwide electric vehicle-charging network starting in North America in a bid to compete with EV sales leader Tesla.

“The German luxury automaker said at the CES gadget show in Las Vegas on Thursday that it will start building the North American network this year at a total cost of more than $1 billion. When completed in six or seven years, the network will have 400 charging stations with more than 2,500 high-power plugs, the company said.

“Networks in Europe and China and other markets will follow, with completion of the full network by the end of the decade, when the company intends to sell all-electric vehicles depending on market conditions. The full network will have more than 2,000 charging stations and over 10,000 plugs worldwide, Ola Källenius, chairman of Mercedes-Benz’s management board, told reporters… Each Mercedes station will have four to 12 ports with up to 350 kilowatts of charging power. Mercedes will share the cost of the North American network equally with MN8 Energy, a large solar energy and battery storage operator. EV charging network provider ChargePoint also is a partner.

“The network will address customer concerns about not having enough range to get to their destination, and finding a charging station, said Markus Schäfer, Mercedes’ chief technology officer.” AP. The notion priority or exclusive access is consistent with encouraging the building out new EV charging capacity… but take a good look at the economic class that is the primary beneficiary of Tesla and Mercedes “largesse.” Not the vast majority of Americans, for sure. Sooner or later, we just may have to mandate universal access to such charging stations, at arm’s length, as long as customers pay their fair share. It’s a question of timing… a race against range increases and battery capacity. A race we must win.

I’m Peter Dekom, and the subtle tilt in American policies across the board seems to continue to favor those with money.

The Giant Petri Dish with Territorial Ambitions: China

 

                      From the Financial Times

"The U.S. must take seriously China’s legitimate concerns, stop containing and suppressing China’s development, and particularly stop using salami tactics to constantly challenge China’s red line." 

PRC Foreign Ministry statement.

According to the Cambridge Dictionary, “Salami-slicing means a series of actions to remove or reduce something by small amounts over a period of time so that people are less likely to notice any changes.” Shortly after the above-quoted warning, “China’s military sent 71 planes and seven ships toward in a 24-hour display of force directed at the self-ruled island, which China regards at its own territory. The move came after China expressed anger at Taiwan-related provisions in a U.S. annual defense spending bill.” Yahoo!News, January 4th.

Drawing closer to Moscow and notwithstanding a recent positive conversation between Presidents Joe Biden and Xi Jinping, Beijing seemed to up its saber-rattling, reinforcing its claim to Taiwan. Those so-called “salami tactics” include a willingness to fly US military aircraft increasingly closer to those PRC incursions, leading Beijing to suggest a head-on collision could easily occur (between aircraft and perhaps nations). Despite its territorial claims, the PRC has never directly governed Taiwan; the island nation’s link to the mainland is historical. Further, the United States has never recognized China’s claims over vast portions of the South China Sea. While supporting a voluntary merger of Taiwan and the PRC into “one China,” the United States has repeatedly stated that it will maintain its right of free passage over and through international waters and airspace.

China is experiencing its own new set of problems, ranging from restarting its economy after a series of disastrous “zero COVID” lockdown policies to the unexpected military failures of its ally, Russia. As noted in my recent Yuan to go Digital? blog, China’s frustration with domination by the United States of the global financial markets and systems is pushing them to new roads to circumvent those seeming implacable controls. But meanwhile, Xi’s rapid reversal of his nation’s near 3-year “zero COVID” policy, almost overnight, has led to businesses opening, requiring even sick employees to show up. Way too fast. While there are signs of improving COVID treatment option in China, those efforts are still nascent; the currently deployed vaccine there is woefully inadequate and ineffective. COVID is exploding in the PRC, and we know accurate numbers are being suppressed.

The January 5th The Economists suggest the following reality: “Inside China, the virus is raging. Tens of millions of people are catching it every day. Hospitals are overwhelmed. Although the zero-covid policy saved many lives when it was introduced (at great cost to individual liberties), the government failed to prepare properly for its relaxation by stockpiling drugs, vaccinating more of the elderly and adopting robust protocols to decide which patients to treat where. Our modelling suggests that, if the virus spreads unchecked, some 1.5m Chinese will die in the coming months.

“There is not much outsiders can do to help. For fear of looking weak, the Chinese government spurns even offers of free, effective vaccines from Europe. But the rest of the world can prepare for the economic effects of the Communist Party’s great u-turn. These will not be smooth. China’s economy could contract in the first quarter, especially if local officials reverse course and seal off towns to keep cases down. But eventually economic activity will rebound sharply, along with Chinese demand for goods, services and commodities. The impact will be felt on the beaches of Thailand, across firms such as Apple and Tesla, and at the world’s central banks. China’s reopening will be the biggest economic event of 2023.

“As the year progresses and the worst of the covid wave passes, many of the sick will return to work. Shoppers and travellers will spend more freely. Some economists reckon that gdp in the first three months of 2024 could be a tenth higher than in the troubled first quarter of 2023. Such a sharp rebound in such a huge economy means that China alone could power much of global growth over the period.

“The party is banking on it. It hopes to be judged not on the tragedy its incompetence is compounding, but on the economic recovery to follow. In Xi Jinping’s year-end address, the party chief thanked pandemic workers for bravely sticking to their posts and, while nodding to ‘tough challenges’ ahead, promised that ‘The light of hope is right in front of us.’ He sounded eager to look past the pandemic, emphasising the chances of a swift economic revival in 2023 and offering reasons to be proud of living in a rising China under party rule.

“The ending of China’s self-imposed isolation will be good news for places that depended on Chinese spending. Hotels in Phuket and malls in Hong Kong suffered as Chinese were locked up at home. Now would-be travellers are flocking to travel websites. Bookings on Trip.com rose by 250% on December 27th compared with the previous day. Economists are pencilling in a gdp boost for Hong Kong of as much as 8% over time. Exporters of the commodities that China consumes will also benefit. The country buys a fifth of the world’s oil, over half of its refined copper, nickel and zinc, and more than three-fifths of its iron ore.

“Elsewhere, though, China’s recovery will have painful side-effects. In much of the world it could show up not in higher growth, but in higher inflation or interest rates. Central banks are already raising rates at a frenetic pace to fight inflation. If China’s reopening increases price pressure to an uncomfortable degree, they will have to keep monetary policy tighter for longer. Countries that import commodities, including much of the West, are at the greatest risk of such disruption.”

But there is a bigger and more immediate risk, as pointed out in the December 28th MSN.com:

“With the virus now able to circulate among nearly one-fifth of the world's population -- almost all of whom lack immunity from previous infection and many of whom remain unvaccinated -- other nations and experts fear China will become fertile ground for new variants.

“Antoine Flahault, director of the Institute of Global Health at the University of Geneva, told AFP that each new infection increased the chance the virus would mutate… ‘The fact that 1.4 billion people are suddenly exposed to SARS-CoV-2 obviously creates conditions prone to emerging variants,’ Flahault said, referring to the virus that causes the Covid-19 disease.” And there is always a question as to the effectiveness of even our most up-to-date vaccines when confronting a litany of variants hell-bent on replicating. We’re testing travelers from China and some other Asian venues upon their arrival at US airports, but that will not obviate the obvious threat. We just may need more than just a GDP-booster.

I’m Peter Dekom, and our best efforts at protecting the United States from the realities, threats and vagaries of the rest of the world will never be sufficient in a planet based on massive interdependence.

Is Ron DeSantis the New Emperor of White Christian Nationalism?

MAGA without Trump. A powerful gubernatorial victory without any whiny “stolen election” whimpers. A younger, articulate charismatic, well-educated spokesperson who skirts the hardline antiabortion issue, does not use the direct terminology of White Christian Nationalists – who believe that America needs to adhere to and be run by White Christians who believe that their right-wing values should be imposed on every American – but is thoroughly versed in using their right-wing dog-whistle verbiage.

Indeed, the Florida governor, who currently outpolls Donald Trump among the GOP base, has found a path to champion White supremacy and evangelical values – pretty much denigrating almost anyone else – with one word: “woke.” He no longer has to use words like “Christian values” or “White traditional leadership.” “Woke” is the buzzword that short circuits using words that just might otherwise turn off “voters in the middle.”

DeSantis has numerous advantages with Florida demographics. His hardcore “older voter” core is getting stronger in a state which, according to The Daily Upside (10/29/21), leads the nation incoming Baby Boomer migration, an inherently conservative constituency. The oldest segment of the Boomer generation, over 65, is particularly concentrated in Florida, where 20% of the population meets that criterion (vs 16% for the nation as a whole). “Florida is home to so many older residents because of its abundance of retirement communities in walkable cities, warm weather and lack of estate taxes. A study from the University of Florida estimates that by 2040, more than 25% of Florida’s population will be over 65.” Consumer Affairs (2/17/22). Indeed, by sheer numbers, Florida has one of the largest concentrations of those elderly voters.

Adding to this mix is the obvious fact that the northern part of DeSantis’ bailiwick is solidly in the Southern Bible Belt, the hard core evangelical heartland. Notwithstanding the more liberal and younger mix we typically associate with Miami and environs, the legislature is solidly GOP (a little gerrymandering helps), and its almost 23 million people makes the state one of the largest in the land. According to WorldPopulationReview.com, “In religious terms, the Florida population is recorded as 70% Christian based faiths, 24% no particular faith, and 6% non-Christian faith-based.”

But does that make Ron DeSantis a serious national threat, assuming he can usurp Donald Trump’s rather dramatic continuing hold on the GOP, despite the ex-President’s obvious drag on that party’s recent election challenges? Using the Stop Woke Act, a Florida statute enacted in early 2022, as his calling card, DeSantis embodies the rising GOP reliance on a “culture war” to reinstate conservative control over the entire nation. This law was DeSantis’ baby from start to finish. “The law prohibits teaching or business practices that contend members of one ethnic group are inherently racist and should feel guilt for past actions committed by others. It also bars the notion that a person’s status as privileged or oppressed is necessarily determined by their race or gender, or that discrimination is acceptable to achieve diversity.” Associated Press (January 12th). Justification? Giving parents control over what their children are taught.

With the help of the most conservative 6-3 majority Supreme Count in recent memory, despite the GOP setbacks embracing anti-critical race (and gender) theory and anti-abortion rights policies, those elements remain at the core of current Republican values. The thin GOP majority in the House just passed what they describe as a “pro-life” bill with nary a single dissenting Republican vote, a bill that has zero chance of passage in the Senate. “Woke” is now the standard derisive GOP platform, but it clearly embraces White supremacy, Christian nationalism and places climate change on a marginalized back burner.

As DeSantis has paralyzed Florida public schools and libraries with the severe penalties imposed on teachers who are deemed to violate the above-cited statute, including allowing parents to file suits against schools, school districts and teachers, he has now moved to higher education. “The Republican governor in late December requested that state colleges submit spending data and other information on programs related to diversity, equity and inclusion and critical race theory, which examines systemic racism. The schools were asked to submit the data by Friday [1/13]…

“A group of Florida college professors on Wednesday [1/11] asked a federal judge to block Gov. Ron DeSantis from requesting spending data on diversity, equity and inclusion and critical race theory programs in state universities… The filing comes as part of a lawsuit against the so-called “Stop WOKE” Act, which restricts certain race-based conversations and analysis in colleges. Tallahassee U.S. District Judge Mark Walker [has earlier] blocked the law, though DeSantis' office is appealing the decision.”

With a significant Jewish constituency mostly in South Florida, an important source of political contribution to the massive DeSantis campaign reserve, DeSantis is able to sidestep the obvious antisemitism inherent in White Christian nationalism by substituting the word “woke” for specifics. But overt antisemitism is rising fast. According to Bloomberg reporting in the January 12th Los Angeles Times, “Across American culture, politics, and even business, expressions of antisemitism have grown louder in recent years. It’s not just high-profile statements made by the rapper Ye and basketball star Kyrie Irving or politicians increasingly cozying up to white supremacist groups. Incidents of antisemitic harassment, vandalism and assault reached a 42-year high in 2021, the most recent year with available data, according to the Anti-Defamation League. And there’s evidence that discrimination is seeping into the workplace too.

“A 2022 study published in the academic journal Socius surveying 11,356 workers of all faiths found that more than half of the Jewish respondents experienced discrimination at work — a higher percentage than any other religious group, besides Muslims. A smaller survey from November of 1,131 hiring managers and recruiters commissioned by ResumeBuilder.com had even starker findings: Nearly a quarter said they wanted fewer Jewish people in their industry and a similar share admitted they’re less likely to advance Jewish applicants. Among the top reasons cited for those discriminatory behaviors: perceptions that Jewish people have too much power and wealth.”

As DeSantis continues to ship undocumented immigrants to blue cities, in a cabal with Texas Governor Greg Abbott, while still part of that Republican constituency that has opposed any major immigration reform since Ronald Reagan, his core platform combines anti-immigrant rhetoric with his anti-“woke” agenda. He’s challenged anti-COVID vaccines and pandemic containment policies and aligned himself with a cadre of extreme conspiracy theorists. In so many ways, DeSantis represents MAGA Trumpism on steroids, minus the destructive personality of Trump himself. But DeSantis has one huge playing card in his hand: Biden is viewed as too old to govern, being well into his 80s in the 2024 election period. Lots of baggage too. That just might be the Dems’ Achilles Heel, even though Biden’s policies and achievements have in fact avoided the blame game and solved big problems.

I’m Peter Dekom, and finding a new younger face for the Democratic leadership just might become critical in preventing a small right-wing DeSantis-led evangelical minority from taking over the country.

Thou Shall Not Speak of It!

 

The above-left chart is used in formal Florida governmental guidelines to teachers as to what is permitted to be discussed in classrooms following new anti-CRT statutes imposing liabilities on public school teachers who violate its precepts. The presentation notes that “only 4%” of the above slave traffic carried into the United States or its predecessor colonies, emphasizing that most slaves were born here. Under half a million slaves were ripped from Africa and “settled” in the thirteen colonies. The second chart shows the distribution of slaves in the 13 colonies just before the Revolutionary War. Some call the import of slaves “immigration.” So that makes it OK? By 1790, an estimated 18% of the population of the United States were slaves. An early US Census, conducted in 1860, found that there were 4 million slaves here.

The years that followed the Civil War produced Reconstruction, the Jim Crow Era, the KKK, “separate but equal,” hangings and lynchings, poll taxes and literacy “tests” imposed only on Blacks, real estate racial covenants and restrictions, redlining and massive discrimination against people of color that continues into to the present day… er, not recognized by most states with anti-CRT laws. The justification: don’t make our children feel guilty over “past” racial sins. The notion of Black “them and not us” expands to include recognizing racial discrimination of any sort. Fuel that also justifies the rising tide of White supremacy. These laws are typically touted as how “patriotic” American parents want their children to be taught, effectively reinforcing “parental rights” in controlling public education. Yet over 70% of parents with actual students in public schools want educators to set the curricula, not politicians or people without children.

In the world of gender identity, anti-CRT statutes generally incorporate the evangelical perception that anything other than our bio-identity at birth is false. Books and lessons of gender identity tolerance, the confusion faced by children with different biological tendencies and features, any suggestions of normalcy in LGBTQ identity or books with homosexual parenting are subject to censorship and removal from school and public libraries. Anything that provides otherwise is often described as part of a non-existent but increasingly acceptable notion that LGBTQ teachers are “grooming” children into their world of “sexual deviance and depravity,” one of the core beliefs of QAnon conspiracy theorists.

While not rising to the notorious Nazi book burning, mostly an attempt to purge all things Jewish in the 1930s/40s, America’s own Puritan heritage has led to past governmental censorship, particularly associated with Boston, Massachusetts. “‘Banned in Boston’ is a phrase that was employed from the late 19th century through the mid-20th century, to describe a literary work, song, motion picture, or play which had been prohibited from distribution or exhibition in Boston, Massachusetts. During this period, Boston officials had wide authority to ban works featuring ‘objectionable’ content, and often banned works with sexual content or foul language. This even extended to the $5 bill from the 1896 ‘Educational’ series of banknotes featuring allegorical figures that were partially nude.” Unfortunately for the censors, “Banned in Boston” became a marketing tool use to sell offending materials elsewhere across the nation. Simply, it backfired. The books even carried “banned in Boston” labels!

Today’s Republican-declared “culture war” – pitting religious extremists and White nationalists against public schools’ efforts to deal with real world racial, ethnic, religious and gender strife all around them – is pretty much a dangerous, highly divisive and fabricated issue. It’s a solution for a problem that does not exist. Using direct censorship (often implemented by public school districts under state direction), books and lesson plans that address such issues are simply banned from public schools and often public libraries in states with anti-CRT (“critical race theory”) laws. To care and teach tolerance is now “woke,” a derisive term generally used to describe Democrats against discrimination.

Thus, these red state schools cannot legally support and teach tolerance, address discrimination, or aid children in gender crises, as teachers fear very real recriminations and adhere to the plan. To make matters worse, PAGA enforcement (“private attorney general acts” allowing individual parents to sue individual schools and teachers for what is a built-in bounty-reward) sends shivers of fear down the back of underpaid teachers trying to rebuild a failing educational system after the COVID lockdowns.

As of this writing, 36 states have had serious efforts to ban or reduce the teaching of real world racial, gender, religious and ethnic discrimination – often including a severe restriction on teaching the historical origins… like slavery or the Holocaust. 17 states have actually expanded teaching against discrimination (and yes, there is some contradictory overlap). 15 states – including Texas and Florida – have passed anti-CRT laws… all GOP-dominated, with bills pending in several more, and all under the fabricated notion of protecting parental rights to control what is taught to their children.

The United States joins countries like Japan that have erased substantial ugly incidents from their past, at least in textbooks and lesson plans. Modern Japan: No Nanking massacre, no forced prostitution of Korean women and no other major WWII atrocities. But then there’s “never again” Germany. A child cannot graduate from a public high school there without a very graphic visit to a concentration camp… and the textbooks do not hide or justify the Holocaust. There is no wave of “never again” sentiments here in the United States. What exactly do we want our children to believe, to value and to practice? Should the right to be free from discrimination depend on which state you live in?

I’m Peter Dekom, and right-wing autocracy cannot exist in a society the values each and every member of that society as they really are and really wish to be.

The Burn Convention

 

Our land is blanketed in snow and ice. Airline schedules are disrupted. Thousands of flights cancelled. Blizzards abound. Way beyond normal freezing parameters. People have been stuck in their cars. Dozens of weather-related deaths plague the nation. Where it isn’t snowing, cold and freezing rain deposit their load. Wildfires seem a distant memory. Climate change-deniers feel that chill and wonder what idiot scientists could possibly have conjured the notion of global warming.

Ah, but there’s the catch; it is indeed “warmer” that is causing this freezing flow. Those polar bears adrift on solitary ice flows must know. It is that warmer Arctic air that is melting their world, leaving them to fatal homelessness, that is pushing colder air southward across Canada into the United States, shivering below. But that increased wetness is a harbinger of the kind of warming that simply becomes too hot to handle in summer and autumn months ahead. The Western states are watching as the worst wildfire zone expands.

It's hard to believe the approaching “water wars,” the immediate need to address reallocating the Colorado River, to address the massive reduction in aquifers and ground waters from over consumption and overuse, mostly from agricultural needs. There’s just so much snow. How could that be? But like it or not, that seemingly never-ending drought in Western and now Midwestern states – really aridification or desertification – is also a continuing reality for fragile Western (and some Eastern) grasslands and desiccated forests.

What is particularly startling is that it’s not just the forests that are at risk… but, as this new reality suggests for California alone, “For the first time, more than half of California’s rural and unincorporated communities could soon be classified as ‘very high’ fire hazard severity zones, according to a proposed map from the California Department of Forestry and Fire Protection.

“Officials unveiled the new map [above] — which ranks the likelihood of certain areas to experience wildfire as ‘very high,’ ‘high’ or ‘moderate’ — this month [December] and are taking public comments through February. If approved, nearly 17 million acres will fall under the worst ranking from the Office of the State Fire Marshal, a 14.6% increase since the map was last updated in 2007.

“The change is largely a reflection of the state’s worsening fire activity, said Daniel Berlant, Cal Fire’s deputy director of community wildfire preparedness and mitigation. That includes larger, faster and more frequent blazes, many of which are being fueled by a buildup of vegetation and California’s warming, drying climate.

“‘That increase really is reflective of what our firefighters have been experiencing over the last several years — more severe wildfires in areas that maybe historically, or decades ago, didn’t have the same susceptibility to wildfires as they do today,’ Berlant said. ‘While the results of the map aren’t necessarily surprising, they really are reflective of a changing climate and an increasing severity of wildfires.’

“The proposed map covers about 31 million acres that are categorized as the ‘state responsibility area,’ or the area for which the state is responsible for preventing and suppressing wildfires. The SRA is composed primarily of rural and unincorporated areas and represents about a third of California’s land, Berlant said. It does not include federally managed areas, such as those overseen by the U.S. Forest Service, or cities and large urban areas managed by local governments. Such urban areas will be folded into a second round of map updates next year…

“Cal Fire said the map could help guide residents’ decisions about where to live and local governments’ decisions about where to build. It will not have direct implications for homeowners insurance, the agency said, although many residents in recent years have reported skyrocketing rates related to worsening fires.

“‘While insurance companies use similar methodologies to calculate risk as they price their insurance offerings to consumers, insurance risk models also incorporate many factors beyond this process, and many of these factors can change more frequently than those that Cal Fire includes in its hazard mapping,’ the agency said in a news release.

“Insurance Department spokesman Michael Soller said that California this year became the first state in the nation to require insurance premium discounts for owners of homes and businesses that are made safer from wildfires. The new rules mandate that insurance companies reward consumers who take mitigation actions under the state’s Safer From Wildfires framework, which includes a list of actions that home and businesses owners can take to better protect themselves from fires…

“‘Really one of the biggest uses is to give people information, whether they’re deciding where to move, or where to build, or where to put local resources into fire breaks and things like that,’ he said. ‘We’re on record in terms of continuing to support update mapping. It’s a benefit for the public.’” Hayley Smith and Sean Greene writing for the December 27th Los Angeles Times. The story tracks from Washington State to New Mexico, from Colorado to Idaho… and beyond. Do we let people rebuild in fire zones? Do we deploy firefighters to save homes that should never have been built where they stand? And why can’t Americans understand or accept that direct relationship between climate change and natural disasters that are both inevitable and intensifying? Farther east, hurricanes, coastal flooding, flooding, fierce tornadoes and searing heat… are equally terrifying and accelerating. Why are we so willing to pay for disasters but so loath to prevent them?

I’m Peter Dekom, and what do those Americans facing devastating losses say to their fellow citizens who continue to refuse to accept the obvious and immutable root cause?

Sorry GOP, You Can’t Get There from Here_

“Politics is downstream from culture.”

Right-Wing Blogger, Andrew Breitbart

A guest January 11th NY Times OpEd by Peter Beinart, professor of journalism and political science at the Newmark School of Journalism at the City University of New York, lays out the fundamental barriers to the ability of the Republican Party to implement is current identity given the demographic changes sweeping the United States. Indeed the battle against “wokeness” is a losing struggle to prevent that tsunami of changing demographics and morphing values from redefining American culture:

“Conservatives often quote an aphorism by the right-wing blogger Andrew Breitbart: “Politics is downstream from culture.” The point is that passing laws and winning elections don’t ultimately matter if your opponents control the entertainment Americans consume and the values they learn in school. And for many conservatives, it’s self-evident that the big shifts in American culture — fewer Americans identifying as Christian, more Americans seeing gender as fluid, a growing focus in universities and corporations on diversity, equity and inclusion — are creating a society hostile to the values that conservatives prize.

“Despite Republican power in Washington, these shifts have produced a deep gloom among the party’s base. A 2021 poll by the American Enterprise Institute’s Survey Center on American Life found that white evangelical Protestants — the heart and soul of the modern Republican Party — hold a bleaker view of America’s future than any other major racial or religious group. They’re more than 30 points less optimistic than Black Americans, the Democratic Party’s most reliable voting bloc. As the conservative writer David French noted in 2019, ‘one of the most striking aspects of modern Evangelical political thinking is its projection of inevitable decline.’

“This pessimism is inextricably bound up with demographic change. A poll last year by the University of Maryland found that more than 60 percent of Republicans want to declare the United States a Christian nation. But according to the Pew Research Center, the share of Americans who identify as Christian has dropped to 64 percent as of 2020 from 90 percent in the 1970s. Almost 60 percent of Republicans believe that ‘American customs and values’ will grow weaker if white people lose their demographic majority. But non-Hispanic white people now constitute only about 60 percent of the population, down from around 80 percent in 1980, and already make up a minority of Americans under the age of 16.”

Yes, America, it is about those aspects of bias and hate we love to deny. It is racism. Antisemitism. Gender bias. Ethic belittlement. It is a powerful undercurrent, shared with many of the right-wing populist movements in Europe, in a belief that White Christians are simply superior. Harkening back to eras where missionaries of old went on global missions to “civilize” “heathens” and “darkies”… with an undercurrent of “they were meant to serve us” mixed with that awful “noblesse oblige.” It justified slavery, the exploitation of indigenous peoples by Spaniards and plantation owners alike. It allowed entire towns of successful post-Civil War descendants of slaves in Florida and Oklahoma to be slaughtered without consequence by Whites asserting their control over “uppity upstarts,” who did not know “their place.”

In the modern era, that White air of superiority posits an unwinnable goal… but still, it represents the backbone of the currently configured GOP. What’s worse, the majority of diehard Republicans know that… and realize that their elected leaders, no matter how right-wing they might be, simply cannot deliver that “White Christian” rule that underlies their entire platform.

“If last week’s 15 rounds of balloting for House speaker proved anything, it’s that Democrats like their congressional leaders a lot more than Republicans do… While Democrats again and again voted unanimously for Hakeem Jeffries, Kevin McCarthy endured insult after insult from his side of the aisle. Matt Gaetz, Republican of Florida, mocked Mr. McCarthy for having ‘sold shares of himself’ to win the speaker’s job. Tucker Carlson said Mr. McCarthy’s ‘real constituency is the lobbying community in Washington.’ A [December poll] by Monmouth University found that Mr. McCarthy had a net approval rating of only 9 percent among Republicans. By contrast, his predecessor Nancy Pelosi had a net approval rating of 59 percent among Democrats.

“It’s not just Mr. McCarthy. According to that same poll, the Senate minority leader, Mitch McConnell, has a net approval rating of negative 23 percent among his fellow Republicans, while the majority leader, Chuck Schumer, has a net rating of positive 33 among his fellow Democrats. The Republican disdain for the people who lead them on Capitol Hill is nothing new: At the 2016 Republican National Convention, Mr. McConnell was booed. When John Boehner, Republican of Ohio, left the speakership in 2015, his approval rating was underwater in his party, too. Eric Cantor, the former House majority leader once considered the leading candidate to replace Mr. Boehner, was defeated for re-election in 2014 by a right-wing insurgent who spent only about $200,000 on his campaign.

“Why are Republicans so much more dissatisfied than Democrats with their congressional leaders? It’s not as if those leaders have been markedly less effective. Sure, Democrats have passed big spending and environmental bills during Joe Biden’s presidency. But while Donald Trump was president, congressional Republicans enacted a huge tax cut. They also engineered a transformation of the Supreme Court that is likely to tilt federal policy to the right for decades. No one can credibly claim that Mr. McConnell is a lousy legislative strategist.

“The problem isn’t that Republicans don’t win legislative victories. It’s that legislative victories can’t answer the party’s underlying discontent, which is less about government policy than about American culture. Democrats worry about voting rights, gun control, climate change and abortion — enormous challenges, but ones that congressional leaders can at least try to address. What Republicans fear, above all, is social and demographic changes that leave white Christian men feeling disempowered, a complex set of forces that Republicans often lump together as wokeness.

“Representative Paul Gosar of Arizona, who had voted against the last two Republican speakers before initially opposing Mr. McCarthy as well, claimed last year that the United States was imperiled by Democrats who ‘hate America, they hate people who love America, and they hate the religion and the descendants of the people who built America.’ That’s not the kind of problem a Republican speaker can fix.” Beinart. All the statistics, the demographic vectors, popular entertainment and even the clothing choices made by young people today are going opposite to this White Christian vector. Sure there will continue to be diehard adherents of this judgmental edict in all age groups. But they are increasingly on the wrong side of history… and hate that!

I’m Peter Dekom, and we cannot be surprised at the violence and gun-worshipping among this lagging rightwing unwillingness to face the inevitable… and we just may have to experience another explosion of civil bloodshed before the necessary change becomes our, and their, reality.

The Risk of Shopping for Groceries

“Two days after a gunman killed 10 people at a Colorado grocery store, leaving many Americans on high alert, Rico Marley was arrested as he emerged from the bathroom at a Publix supermarket in Atlanta. He was wearing body armor and carrying six loaded weapons — four handguns in his jacket pockets, and in a guitar bag, a semiautomatic rifle and a 12-gauge shotgun.” NY Times, January 2nd. His entire arsenal is pictured above (from an Atlanta PD photo). He didn’t threaten anyone, there were no overt signs of mental illness, and Georgia is one of many states that permits open carry of all sorts of guns. There are no statutory limits to the number of guns one can carry or against publicly wearing body armor under Georgia law. The weapons were legally purchased. Marley might not have violated any law at all.

How would you feel, shopping at your local supermarket, witnessing a man with a pistol strapped to his hip and an AR-15 slung over his shoulder? Safe? Comfortable? Intimidated? Terrified? Marley may have had more than this scenario, but what’s the difference? Except for nations embroiled in civil war or facing an out-and-out invasion… or those those in crazy states like Afghanistan where ununiformed Taliban wander through the civilian population with intimidation as the goal… civilians flaunting guns in ordinary public places just does not make sense. Doesn’t sound particularly civilized, and in truth, it isn’t. Most of the planet is both fascinated and repelled by the American love affair with guns, particularly military-grade assault rifles.

“The question of how to handle such [overly weaponized, open carry] situations has been raised most often in recent years in the context of political protests, where the open display of weapons has led to concerns about intimidation, the squelching of free speech or worse. But it may become a more frequent subject of debate in the wake of a landmark Supreme Court decision in June, which expanded Americans’ right to arm themselves in public while limiting states’ ability to set their own regulations.

“The ruling also affirmed the principle of allowing states and local governments to ban guns in ‘sensitive places’; as examples, it cited legislative assemblies, polling places and courthouses. But the high court left much open for interpretation. ‘A wave of litigation is going to confront the courts with questions about what, for example, makes a restriction on guns in schools and government buildings different than in museums or on public transit,’ Jacob D. Charles, a professor and gun law expert at Pepperdine Caruso School of Law, wrote in a recent blog post.”

“For much of the nation’s history, disease was the No. 1 killer of children. Then America became the land of the automobile, and by the 1960s, motor-vehicle crashes were the most common way for children to die. Twenty years ago, well after the advent of the seatbelt, an American child was still three times as likely to die in a car accident as to be killed by a firearm. We’re now living in the era of the gun.” NYT, December 18th. Indeed, 18% of childhood deaths today are from motor vehicle accidents. But 19% are the result of gunfire. Cancer (8%) and drug overdoses (7%) lag far behind. It is a shameful statistic.

Mass shootings, often occurring on school and college campuses, are inexcusably horrific. Thru mid-December, “The Gun Violence Archive has counted at least 635 mass shootings … Of those shootings, 21 involved five or more fatalities, including the attack at a Walmart in Chesapeake, Va., on Nov. 22 and the shooting at an L.G.B.T.Q. nightclub in Colorado Springs on Nov. 19 that left five people dead… The group recorded 692 mass shootings last year, with 28 involving four or more fatalities.” NY Times, December 26th. And instead of contracting the use of such weapons, red states are tripping all over themselves to make gun possession easier with fewer restrictions.

Effective January 1st, Alabama residents do not need a permit to carry concealed weapons. Indeed, as of now, “half of the states in the nation, from Maine to Arizona, will not require a license to carry a handgun… The state-by-state legislative push has coincided with a federal judiciary that has increasingly ruled in favor of carrying guns and against state efforts to regulate them.” NYTimes. The focus of GOP minimal acceptance of gun control, as reflected in recent federal legislation, is an assumption that if we can filter out the mentally ill and convicted felons, gun violence will simply fade into irrelevance. That’s pretty much it.

For Supreme Court “originalists,” they have incorrectly cited historical precedent (Heller vs DC, 2008) from the era of musket and flintlocks to define modern gunowner rights. As the NRA justifies assault weapon ownership as a protection against an oppressive government (which right-wing zealots define as any political system that opposes their views), the Court skips over the intimidation and chilling effect over free assembly and speech arising from armed protestors confronting unarmed protestors.

If the Court believed, incorrectly in the eyes of the vast majority of Americans, that Roe vs Wade was wrongfully decided, they should have no problem overturning Heller vs DC, the first case in American history to hold that the Second Amendment created a ubiquitous right of gun ownership… a case decided 232 years after the founding of our nation. But the Supreme Court has become a highly-partisan, right-wing rubber stamp to the minority views reflected in the MAGA movement.

I’m Peter Dekom, and as academic standards of our educational system slides lower, as we fail to address the climate change burden that will be carried most by our youngest citizens and as guns kill more children than any other cause… it is clear that American politicians have dramatically deprioritized the well-being of our nation’s young in favor of... just about anything else.

US Business Accounting – Built of Fraudulent Bricks & Mythological Assumptions

 

US Business Accounting – Built of Fraudulent Bricks & Mythological Assumptions

It’s Not Just Legal, It’s Mandated!

Corporate accounting is predicated on an owner/management desire to overstate positive news and understate negative news, and the government’s desire to take advantage of that perpetual trend. For publicly traded companies, the primary metrics of success and failure are balance sheets, earnings/income and cash flow statements. The time metrics are the “quarter” and the “year.” And the mega-tool of financial manipulation is the required “accrual basis” accounting required of all but the smallest corporations.

When it is first explained in any accounting class, “accrual basis” accounting is an effort to align the cost of manufacturing a product against the income generated from the sale of that product. Economists love to call those items “widgets,” a term with an expanded definition in the Internet era. Since manufacturing usually takes place before a sale, and since the government does not want a company to postpone paying taxes (mild conflict of interest), accrual accounting will bring the expected income from the future sale of that item into the year of manufacture. It was usually a reasonably accurate guestimate, subject to ultimate adjustment based on actuals in the future.

Sounds just fine… sort of… until you factor in the rise in the complexity of modern manufacturing, the requirement of multiple vendor/sub-manufacturers, joint ventures, off-balance-sheet financing, globalization, off-shore partners and planning, outsourcing, the value and allocation of underlying intellectual property (patents, trademarks, copyrights, etc.), the use of subsidiaries and third party aggregators, venue shopping for tax advantages… and the required evolution of rules for capitalizing some costs, expensing others, amortization/depreciation (including special rules available to targeted industries like oil and gas), deferring or accelerating expected income, interest deductions, etc., etc., etc. Loopholes to some. Sensible incentivizing to others. All distortions of actual money flow… subject to the impact of mega-moments of unexpected crises.

For corporate planners of public companies, they generally target a slow, steady annualized growth percentage (20%+ in good times and 10%+ otherwise), measured quarter-by-quarter. Expecting too much now and not so much later, shift income forward. Subject to rules aimed at over-forecasting upside, accrue “future” money into relevant current quarters to show Wall Street how valuable your shares should be – pay the damned income tax to the government that is effectively your co-conspirator in this financial hyperbole – and worry about possible future issues… oh, in the future.

For some industries, average performance metrics from similarly situated competitors may force managers to adopt policies that may ultimately appear totally foolhardy in a year or two. Cut costs no matter the longer-term consequences. Don’t keep on-site inventory; use “just in time” supply-chain systems. Pay shareholders a dividend regardless of the capital needs of the company. For recent acquisitions of other corporations, lay-off, cost-cut and load that acquisition with tons of debt, debt used to pay the acquiring parent a pile of cash, with the debt still sitting in the acquired entity… and spin that acquired entity off… woo hoo! The avarice and short-term mindset of Wall Street does not seem to care about long-term strategies and values. The professional investment groups, hedge funds, private equity, merchant banks and infamous billionaire predators will be long gone by the time those feeble chickens come home to roost.

Why this blog now? Because the fact that over 85% of the December “bomb cyclone” related flight cancelations came from one airline – Southwest – which is the poster-company for what’s wrong with corporate accounting. Simply put, while other airlines worked it out, Southwest’s years of cost-cutting left it with operational systems and software that were incapable of facing any level of significant stress. It’s not as if Southwest is unique; there’s a bigger pattern here. As Michael Hiltzik tells us in his December 29th editorial for the Los Angeles Times, it was simply Southwest’s turn at failure:

“For decades, Big Business has been squandering its resources on handouts to shareholders instead of spending on workers and infrastructure. There’s not enough give in the system, so when crisis comes, it doesn’t bend, but breaks… What drives this tendency is economics. Business managements have become hostages to cost-cutting, squeezing expenses out of their systems in every way possible, trusting to luck that what works under normal conditions will continue to work when the outside world goes haywire. They’re betting their companies on a bad strategy.

“There are numerous manifestations of this cheeseparing habit. One is just-in-time production, which spread like wildfire from Toyota, where it originated in the 1980s, to the rest of the automobile industry and eventually to the manufacturing sector generally… The idea was to slash waste by coordinating inventories of parts, the supply of workers and the time for production so that everything was in place when needed and not a minute before or after… The pace of work sped up, workers were squeezed on wages and hours, parts suppliers operated on ever-narrower margins. It all worked fine, until it didn’t.

“The dream of a production line ‘inherently flexible, inventoryless, even computerless, replenished by infinitely responsive suppliers’ was too simple, Uday Karmarkar, an expert in manufacturing strategy and technology at UCLA’s Anderson School of Management, observed as long ago as 1989. ‘Just-in-time manufacturing is producing revolutionaries who don’t know when to stop.’… Beginning in the summer of 2021, logjams in the global supply chain, compounded by a surge in post-pandemic goods orders from consumers returning to shops, left manufacturers without needed parts and retailers without merchandise… Only since that crisis erupted have manufacturers recognized that they need to move away from just-in-time to just-in-case — that is, keeping more parts inventory on site and more workers, with better training, on call.

“Another manifestation is outsourcing. Boeing could have learned the lesson that outsourcing can increase costs and place a heavy burden on management from its experience with its 787 Dreamliner… The next-generation aircraft came in billions of dollars over budget and years behind schedule when it finally began to fly commercially in 2011, in part because Boeing farmed out more of the work to foreign contractors…. Some of the pieces manufactured by far-flung suppliers didn’t fit together. Some subcontractors couldn’t meet their output quotas, creating huge production logjams when crucial parts weren’t available in the necessary sequence.

“‘We gave work to people that had never really done this kind of technology before, and then we didn’t provide the oversight that was necessary,’ Jim Albaugh, then the company’s commercial aviation chief, acknowledged. ‘The pendulum swung too far.’… Yet Boeing pursued an outsourcing strategy for crucial systems in its 737 Max. After the plane suffered two fatal crashes in 2018 and 2019 because of malfunctioning software, leading to a years-long grounding by aeronautics regulators around the world, Bloomberg reported that Boeing had outsourced its software development to overseas firms employing engineers for as little as $9 an hour.” Hope and luck are no substitute for solid business planning based on reality.

I’m Peter Dekom, and American businesses are not engines that operate on a quarterly basis; they’re just measured that way… with rules that compound complexity and distort genuine business planning.

Red or Blue, Gas or Electric?

 

“It’s gonna wreck the economy… The ideology is [failing], when you mandate electric cars

but don’t have the power to run them.”

Indiana AG, Todd Rokita, 1 of 17 GOP state AGs suing the Biden Administration to stop California from setting its own emissions standards.

I was part of a recent group email discussion that compared local gasoline prices across the US. $2-3/gallon in lots of the country, high $3 and $4+ out here in California, was the rough consensus. Those low-price red states enjoyed the difference, mocking that woke California pricing. California’s vehicular emission requirements, stringent realities for the state that seemed to invent “smog,” were seen as a dictatorial mandate from a freedom hating state… that simply imposed its requirements on everyone else.

California’s eventual ban on purely gasoline-powered vehicles after 2035 seemed to fall under a “it’s none of your business” notion. It matters because California is such a huge car market that manufacturers wind up having to accept California rules unless they want to spend a fortune on different cars for different states… knowing that their non-compliant vehicles just might never be sold, approved or resold in the nation’s largest car market. Some red state residents even bragged about the EVs they had locally. They call ‘em “golf carts.”

I’ve owned a hybrid for several years, and I do enjoy the resulting cost-savings plus a touch of “at least I am doing something about it” California smugness. EV cars cost more too and have a range issue. But as I read of the damage from climate change, which seems to decimate rural communities the most, I have to wonder what’s in it for red state politicians to marginalize what is eventually going to cost them the most? Pride? Wanting to fit into that local sense of belonging… in diametric opposition to all things blue? Just because? "We cannot afford the cost of fixing a problem that Democrats love to exaggerate.” “Makes no difference unless China, Russia and India play ball.” “Technology will eventually fix it.” “It just part of a natural cycle that will come back to normal soon.” “God promised never again.”

So, on December 23rd, a gathering of Los Angeles Times writers asked the question whether the red/blue divide could build a near term market for EVs in red America. After all, right-wing darling Elon Musk has moved to Texas and is about to go fully online with a huge Tesla plant in Austin. The Times writers started in Kokomo, Indiana, where EVs are as rare as hens’ teeth: “Almost everyone you meet here either works in a factory, is retired from one or has a relative in a plant that makes parts for gasoline-powered cars — which have ruled Kokomo for nearly 130 years, since a brash inventor named Elwood Haynes chugged down Pumpkinvine Pike at 7 mph in one of America’s first horseless carriages.

“‘We haven’t developed a workforce towards anything else yet,’ said Warren Sims, a 41-year-old worker in the same casting plant that employs his father, working on gas transmission engines. ‘We don’t make a fuel-efficient vehicle. Everything’s big and everything costs [a lot to] fuel and people buy it.’… Yet change is coming. Bulldozers are clearing Kokomo’s cornfields to build a $2.5-billion government-subsidized electric vehicle battery factory, with the aim of retaining jobs tied to auto production at a time California is leading the nation in phasing out gas-powered engines…

“Indiana can feel like a tough place to own an electric car… Major cities are located far apart, with few charging stations in between. The vehicles that dominate the landscape — American-branded pickup trucks — are just beginning to be offered in electric versions. And the most popular EVs remain out of reach for many consumers in places where incomes tend to be lower. The charging stations at the Meijer grocery store parking lot in Kokomo sit empty for hours… The state is also deep red. And Republicans are much less likely than Democrats to consider buying an EV, according to a poll conducted for The Times by Leger, a Canadian-based polling firm with extensive experience in U.S. surveys…

“Environmentalists, along with industry and government leaders, see a transformation afoot after decades of false starts. They have acknowledged, however, that they can’t complete the shift if electric cars are viewed as something only for rich liberals in California and New York. They need everyone… The uneasy reception to EVs in Indiana — in a national climate that includes Republican lawsuits against California’s new emissions rules and televised warnings that they represent an attack on freedom — suggests that the country remains divided over embracing a technology that environmentalists say is essential to combating climate change.”

That EV are cheaper to build and use many more robots in ground-up new plants are concerning to autoworkers. Rural highways demand more range and are often less traveled. Still, the handwriting is on the wall. And the key to win over red state drivers may still be jobs: “Many of the states that stand to get the biggest boost from the Biden administration’s investment in batteries lean Republican. In October, the administration announced $2.8 billion in industry grants in 12 states from the bipartisan infrastructure law. Among them: Tennessee, Alabama, Missouri, Georgia, Louisiana. Car and battery companies are spending billions more to build or expand plants in North Carolina, Ohio and Kansas.

“Kentucky, the home state of Senate Republican leader Mitch McConnell, is poised to employ about twice as many people in EV jobs as coal mines… Republican states fought for a decade against President Obama’s expansion of Medicaid. But all 50 states — even the GOP ones — have already submitted plans to be part of the national EV charging network Biden announced this year. There is little evidence so far that conservative politicians would stake their political futures on the issue, even if they nod to anti-Biden talking points…Brad Chambers, Indiana Gov. Holcomb’s economic development chief, doesn’t think campaign attack ads targeting electric vehicles would have much of a shelf life.” It’s battle we have to win, a showcase of American knowhow. But the clock is ticking.

I’m Peter Dekom, and “jobs” may just be the grand uniter on climate change… let’s hope so!