Andy Kessler

WSj: Why Do the Young Vote Left?

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https://www.wsj.com/opinion/why-do-the-young-vote-left-progressive-democrats-socialism-e2397290

Fifty-seven percent of 18- to 34-year-olds surveyed prefer Kamala Harris for president vs. 26% for Donald Trump, according to the Pell Center. Why do our youth gravitate toward progressive idealism and a nanny state? Is it sloganeering like “new way forward” or “opportunity economy”?

Nah. It’s the gifts. The progressive vibe is that big government will take care of you. It knows what’s best for you. It will redistribute money how it pleases. You need to put a smile on your face while it takes away your laurels, guns and money. “We believe in the collective,” Ms. Harris declared, much like Hillary Clinton’s “it takes a village.” Equity in Schenectady. Handouts for all.

You want proof? Ms. Harris’s Senate voting record is leftward of socialist Bernie Sanders. Vice-presidential candidate Tim Walz fawns over China, saying “everyone is the same and everyone shares.” Viva la revolución and Che Guevara T-shirts for all.

This is antifreedom. Too many of today’s youth fall in line with progressives because they’re undereducated and overindoctrinated with someone else’s agenda. I watched in horror as local high-school biology classes spent weeks on the science of recycling centers and only a short afternoon on mitochondria and mitosis. Profit is a bad word. It’s gimme, gimme, whether it’s student loan forgiveness, free healthcare or tax credits.

Who’s to blame? Misguided capitalism-hating social-studies teachers to start, with Tim Walzian thinking: “One person’s socialism is another person’s neighborliness.” Who is he, Mr. Rogers? Add like-minded college professors. Work ethic and ambition are evaporating.

Worse, Pew Research notes almost a third of currently childless 18- to 34-year-olds aren’t sure if they ever want children. Why?

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WSJ: What Happened to Free Speech?

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https://www.wsj.com/opinion/what-happened-to-free-speech-campus-universities-tech-platforms-media-policy-1be5be20

Sixty years ago this month, the Free Speech Movement was born at the University of California, Berkeley. How is that working out?

In mid-September 1964, Berkeley’s dean of students banned tables and political activity along the Bancroft strip, a 26-foot stretch of university-owned sidewalk near Telegraph Avenue down from Sproul Plaza. I walked around the area last week and found, almost paradoxically, a capitalist BMO Bank, a Marxist-glorifying César Chávez Student Center and a techno-optimist Open Computing Facility.

Berkeley’s 1964 students protested the table ban. On Sept. 30, five students were cited. More than 400 insisted that they were also responsible and should all be cited too. They then staged their first sit-in inside Sproul Hall, Berkeley’s administration building. The next day, tables were set up outside Sproul Hall. The police were called and arrested Jack Weinberg. Some 200 students surrounded the police car. Speeches began as thousands assembled. Mario Savio emerged as a Free Speech Movement leader.

With the cop car still surrounded by late afternoon on Oct. 2, 500 police officers were on hand at the university. A six-point agreement was reached with the university president, and the protests ended. As is typical of universities, committees were formed. A six-week ban on tables was instituted and Mario Savio and others were suspended. But by mid-November, the tables were back, and 3,000 students marched around campus.

On Nov. 23, 300 students staged another sit-in inside Sproul Hall. By Dec. 2, 1,000 students were inside the building. Sit-ins aren’t free speech—they are unlawful and can lead to violence. Mario Savio gave his famous “Put your bodies upon the gears” speech on the steps of Sproul Hall. Gov. Edmund Brown then sent 635 police officers, who arrested 814 students. More committees, a five-point proposal, and a convocation tried to calm things down. In January, and three months too late, an acting chancellor designated Sproul Hall’s steps an open-discussion area that allowed political tables.

Sadly, campus free speech has been lost since 1964. Savio’s speech has been an inspiration for civil disobedience, most recently at Columbia and elsewhere this spring.

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WSJ: Section 230 Catches Up to AI

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https://www.wsj.com/opinion/section-230-catches-up-to-ai-technology-artificial-intelligence-policy-5bee3ceb

Is TikTok toast? Fearing Chinese spying, the U.S. decided to ban TikTok last April if it wasn’t sold by January 2025. TikTok owner ByteDance refuses to sell and sued. At a U.S. Circuit Court of Appeals for the District of Columbia hearing last week, Judge Douglas Ginsburg, asked, “Why is this any different, from a constitutional point of view, than the statute precluding foreign ownership of a broadcasting license?”

Why indeed. Broadcasters are publishers. Is TikTok?

Social-media companies flourished under the protection of Section 230 of the Communications Decency Act of 1996, which states: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” In other words, anyone hosting content on a server or platform can’t be sued by others for that content.

But we’re a long way from 1996. Online service Prodigy—remember it?—lost a 1995 fraud suit against bucket-shop brokerage Stratton Oakmont, which sparked passage of Section 230. Remember, no one even had a BlackBerry back then. Now, algorithms and artificial intelligence, not humans, decide what’s on our feeds. TikTok’s FYP or “For You Page” algorithm uses AI to serve up videos. The $200 billion question is: Does using AI or algorithms make you a publisher? I think so.

And so does the Third Circuit. On her TikTok “For You Page,” 10-year-old Nylah Anderson was shown a “Blackout Challenge” video encouraging the recording of self-asphyxiation. She hanged herself. Her mother sued and the case wound its way to the appeals court, which noted that TikTok’s FYP algorithm “is not immunized by Section 230 because the algorithm is TikTok’s own expressive activity.” The court did suggest a person searching for videos would fall under Section 230. Humans post, AI publishes.

Social-media companies are allowed to moderate content, removing or leaving up anything they want. The U.S. Supreme Court further established this as a First Amendment right in Moody v. NetChoice (2024). But because these algorithms are now an “expressive activity,” the companies are publishers and not protected from liability from third-party content under Section 230.

This changes everything.

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WSJ: When Harris Defied Democracy

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https://www.wsj.com/opinion/when-kamala-defied-democracy-election-proposition-8-california-c4df8008

To hear Democrats tell it, Donald Trump is a threat to democracy. Maybe so. But as California attorney general, Kamala Harris purposely ignored voters and blatantly refused to defend the state constitution. The issue was same-sex marriage. While I believe anything involving love and commitment between adults should be encouraged, her methods defied democracy and established a dangerous precedent.

I worry that as president, Ms. Harris may similarly disregard voters, the law and her presidential oath to implement price controls, confiscate guns, impose Medicare for all or ban fracking and—please, no—red meat.

In February and March 2004, during what became known as the “Winter of Love,” San Francisco Mayor Gavin Newsom issued several thousand marriage licenses for same-sex couples. The California Supreme Court soon determined the city had no authority to do so. Four years later, the same court ruled that California’s statutes limiting marriage to opposite-sex couples violated the California Constitution.

Proponents of traditional marriage soon sponsored Proposition 8, a November 2008 ballot measure to amend the constitution, stating that “only marriage between a man and a woman is valid or recognized in California.” It passed 52.2% to 47.8%. In 2009 the California Supreme Court ruled that Proposition 8 was permissible and “carves out a narrow and limited exception to these state constitutional rights, reserving the official designation of the term ‘marriage’ for the union of opposite-sex couples as a matter of state constitutional law.”

That didn’t settle things. In August 2010, the U.S. District Court for the Northern District of California declared Proposition 8 unconstitutional under the Due Process and Equal Protection clauses of the 14th Amendment. The Ninth U.S. Circuit Court of Appeals immediately stayed the decision pending appeal.

Ms. Harris was elected attorney general in November 2010. At her victory party, she declared that she “will not defend Proposition 8”…

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WSJ: Is the Google Breakup Coming?

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https://www.wsj.com/opinion/is-the-google-breakup-coming-dc-district-court-antitrust-company-efficiency-d0403d4d

Should the government break up Google? Judge Amit Mehta of the U.S. District Court for the District of Columbia ruled last month that “Google is a monopolist, and it has acted as one to maintain its monopoly.” Remedies could include breaking up Google. That would be a big mistake.

We can disagree on the merits of the case—whether Google paying Apple $18 billion a year to be the iPhone’s default search engine is monopolistic. Google says it will appeal. Kent Walker, Google’s president of global affairs, told me, “Our basic argument is that people use Google Search because they choose to, not because they have to.” Judge Mehta even admitted, “Apple and Mozilla occasionally assess Google’s search quality relative to its rivals and find Google’s to be superior.”

So where is the consumer harm? Governments shouldn’t penalize companies for success. “Big is bad” isn’t sound policy, and government-driven breakups often fail. I worked at Bell Labs inside AT&T during its 1982 breakup—ending up with the same desk, same job, under three different company names. The breakup separated long distance from seven local Baby Bells. Did it matter? Probably not. The market, over time and like Humpty Dumpty, put the increasingly obsolete regulated Bells back together again, just as cellular was disrupting telecom.

On the same day in 1982, the government decided not to break up mainframe-computer giant IBM. Competition from servers and PCs ended up neutering IBM—thank you, Mr. Market—and the company had 22 consecutive quarters of down sales ending in 2018. The stock is where it was in 2013.

So no, unless there is consumer harm, I’m strongly against government breaking up companies. But I am very much in favor of companies breaking themselves up.

Years ago I wrote about monkey traps: Put a banana inside a coconut, and the monkey reaches in to grab it, but then it can’t escape because it’s too stupid to let go of the banana. Long distance was the banana for AT&T…

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WSJ: Foot in Mouth

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https://www.wsj.com/opinion/stop-think-then-speak-lifestyle-advice-politics-fumble-gaffe-f0cba0dc

We all say things we soon regret. Joe Biden’s “I’m staying in the race.” Donald Trump’s “No, other than day one. . . . After that, I’m not a dictator.” Kamala Harris’s “I will snatch their patent, so that we will take over. Yes, we can do that!” I’ve put my foot in my mouth so often I’ve considered edible socks.

Worse is when someone corrects you right away, as in the 1977 movie “Annie Hall” when Woody Allen, annoyed with a blowhard pontificating about movies, pulls media expert Marshall McLuhan from the shadows, who says to the know-it-all, “I heard what you were saying! You know nothing of my work!” Mr. Allen sighs and addresses the camera: “Boy, if life were only like this!”

Sometimes it is. Last month, Rep. Ro Khanna asked Secret Service Director Kimberly Cheatle about former Director Stuart Knight, “Do you know what he did” after the assassination attempt of Ronald Reagan. Ms. Cheatle answered, “He remained on duty.” Rep. Khanna corrected her: “He resigned.” Ms. Cheatle did too, a few days later.

I’m also guilty of misspeaking. On a plane to Las Vegas, my seatmate, Jim, said he went to Georgetown. I launched: “Oh, I’ve got a great story. I saw Patrick Ewing’s first game at Madison Square Garden against St. Johns and Chris Mullins. Early 1982, I think?” Jim nodded. “Right away, Ewing was blocking every shot—he must’ve had 20—after maybe 14 minutes it was 41-9.” Jim was vigorously nodding and smiling. “Oh, were you at the game too?” I asked. “Yeah,” Jim said sheepishly, “I was on Georgetown’s bench. I was a walk-on. Didn’t play much.” He added, “Ewing had five blocked shots.” I nervously chuckled and mumbled, “I wish you had stopped me sooner.”

Before browsers and Netscape, I was raising a venture fund based on interactive media and online commerce. I had a line about how if you clicked on Michael Jordan highlights, a video of Michael might pop up to sell you Nike sneakers. At a gathering in Philadelphia around 1993, I noticed Julius Erving—Dr. J. himself—in the audience. As a kid, I used to watch him put on a show at the end of blowout American Basketball Association games. So I ad-libbed, “Dr. J. himself would pop up in a video to sell you Nike sneakers.” He said, loud enough for everyone to hear, “I only wear Converse.”

It’s not just sports. I can put my foot in my mouth anytime, anywhere. Learning my wife and I were about to stay at a vegetarian organic farm in Nepal, I feared I would die of starvation. At dinner, my wife and I sat next to two women from the Netherlands. I jokingly asked, “How could anyone be a vegetarian?” and noted that I was hoping all vegetarian stuff would “taste like chicken.” One piped in, “I’m a vegetarian.”

I’m sure I turned the color of a ripe tomato. A plate arrived...

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WSJ: The Convention Games

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https://www.wsj.com/opinion/the-convention-games-make-the-dnc-more-like-the-olympics-486eab1b

The circus known as the Democratic National Convention rolls past the Michael Jordan statue and into Chicago’s United Center on Monday. The Windy City will be filled with enough hot air to change the climate. Conventions long ago stopped being about selecting a presidential candidate, especially this year. Instead, they are finely scripted, slick Hollywood-style productions of preening, posturing, peacocking, pomposity and propaganda. More coronation than deliberation. Hence, boring as all get out. You might as well watch reruns of “The Golden Girls.”

It’s time for a change. Over the years, new technology has driven political influence. Newspapers drove convention coverage until radio and television could broadcast messages in real time. Social media bypassed editors and producers and turned the snark volume up to 11. Artificial intelligence is now sneaking into politics with made-up crowd sizes and authentic voice (and soon video) fakes.

Speaking of peacocking, I spent way too much time watching the Olympics using NBC’s Peacock streaming app. It was terrific. In addition to the highly produced prime-time coverage with silky-voiced Mike Tirico running us through the major events and up-close-and-personal profiles of athletes, streaming allowed viewers to watch anything and everything. Every sport, all 329 medal events, was available live. Peacock’s Gold Zone, patterned after the NFL’s RedZone channel, offered bite-size pieces of the games. Octoboxes let you watch eight sports at a time. I devoured chunks of water polo (do the horses hold their breath?) and archery and canoe slaloms that I might not have ever watched.

Political conventions could do the same. Coverage is too much like syrupy Olympic prime time, with TV producers cutting away for often meaningless interviews. Give us an octobox. Even better, tap every iPhone in the United Center as a TV camera. I want to know what the Pennsylvania delegation thinks about fracking bans, or what Minnesota thinks about tampons in boys’ school bathrooms. I’d watch. As always, when technology exists, it will eventually be used.

And stop making conventions a foregone conclusion. People love a little mystery. Allow delegates to vote after every speech on candidates and issues and post the tallies. Bring back the smoke-filled rooms, where power brokers livestream their arguments. Have the Ohio delegation debate the Michigan delegation about football. Ratings gold! The Democrats introduced superdelegates in 1982 so that party insiders would have more of a say. Get rid of superdelegates so that the best candidate, not the chosen one, can rise to the top.

And during the painfully dull Tuesday night slot, mix it up. Have Tim Walz, perhaps in full National Guard uniform, belay into the United Center…

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WSJ: Is Silicon Valley Turning Right?

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https://www.wsj.com/opinion/is-silicon-valley-turning-right-elon-musk-vcs-for-kamala-2024-presidential-race-0c422573

Minutes after the assassination attempt on Donald Trump, Elon Musk tweeted, “I fully endorse President Trump and hope for his rapid recovery.” Venture capitalist David Sacks spoke at the Republican National Convention last month, echoing investor Peter Thiel’s 2020 convention speech. Netscape co-founder turned venture capitalist Marc Andreessen said he’ll support Mr. Trump. Even Facebook CEO Mark Zuckerberg said Mr. Trump’s reaction to his assassination attempt was “one of the most badass things” and told him in a phone call that he won’t support a Democrat.

What’s going on? Has deep-blue Silicon Valley turned conservative? Last week, J.D. Vance was shaking the money tree at a fundraiser in Palo Alto, Calif. It was reported that Mr. Musk, snubbed by President Biden over electric vehicles, would donate $45 million to a political action committee to elect Mr. Trump, although Mr. Musk later responded to this report by tweeting a meme of “Fake Gnus.”

Conservative? It’s a high climb. Silicon Valley keeps re-electing congressman Ro Khanna, who was co-chairman of “democratic socialist” Bernie Sanders’ 2020 presidential campaign. Gov. Gavin Newsom and Democrats rule California with a progressive fist. Mr. Biden won the Golden State by more than five million votes over Mr. Trump in 2020, 63.5% to 34.3%.

That might seem strange, given that so much wealth has emerged from big tech and venture-capital investing, which relies on low capital-gains rates and anyone-can-take-on-anyone-else free-market capitalism. Why vote Democrat?

Silicon Valley leanings are beyond left and right. Forbes’s then-publisher Rich Karlgaard explained to me years ago, “In Silicon Valley, everyone is a libertarian whether they know it or not. Democrat libertarians and Republican libertarians.” By libertarian he means the “don’t tell me what to do” kind. The “get government off my back while I invent the future” mentality.

So many wealthy young techies have been minted by free markets in the past decade, yet they fall for big-government idealism to protect “victims” and those run over by technology’s disruptions.

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WSJ: Kamala Harris Has a Brat Summer

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https://www.wsj.com/articles/kamala-harris-has-a-brat-summer-charli-xcx-vote-young-leftwing-populist-0edacdc1

Since British singer Charli XCX (not her real name) tweeted “kamala IS brat,” the world has been trying to figure out what that means. Wanting a young-voter vibe, the vice president’s campaign changed its Twitter page background to “kamala hq” in the same font and dirty swamp-green hue as the new Charli XCX album, “Brat.” Was that smart? As your dedicated columnist, I have spent the past week listening to the latest Charli XCX album (so you don’t have to) and going down a rabbit hole of music, culture and politics. I may need some time off to recover.

Politics and music have a long history. George M. Cohan wrote “Over There” in 1917. Neil Young’s “Ohio” was released in 1970 with the lyrics “Tin soldiers and Nixon coming.” Joan Baez was a protest-song factory between her 1967 “Saigon Bride” and 2017’s Trump-bashing “Nasty Man.” Bruce Springsteen performed at Obama campaign rallies. Lady Gaga and Jon Bon Jovi played his song “Living on a Prayer” before introducing Hillary Clinton days before Election Day in 2016. In retrospect, they were rather prophetic.

Still, music is influential. Charli XCX’s work is considered electroclash and hyperpop, veins of electronic dance music popular at drug-fueled raves. The Rolling Stones this ain’t. The lyrics on “Brat” are influenced by what is known as the Dimes Square subculture, from young Gen Z folk who live on the Lower East Side of Manhattan. (Dimes is a local restaurant.)

As with rapper Megan Thee Stallion, who performed last week at a Kamala Harris campaign event in Atlanta, I can’t print many of Charli XCX’s lyrics, but here are some of her cleaner lines: “Yeah, it’s 4 a.m. and she’s out there / With the razor-sharp tongue stuck to skinny cigarettes” is from the song “Mean Girls.” “Yeah, she’s in her mid-20s, real intelligent / And we hate the fact she’s New York City’s darling / You say she’s problematic and the way you say it, so fanatic / Think she already knows that you’re obsessed.” I’m pretty sure Bob Dylan just canceled his Spotify account with malice.

Dimes Square was hot in 2022 with a fawning media. Steven Phillips-Horst, who says he coined the term, told the Daily Beast: “The media sort of holds it up as a bogeyman, because it feels like a club they’re not invited to.” A too-cool-for-you vibe. Dimes Square culture is often associated with a podcast known as “Red Scare,” hosted by self-described “bohemian layabouts” originally from Belarus and Moscow. That’s on brand for progressives as well.

This culture is hard to define. It’s both antifeminist and anticapitalist…

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WSJ: The New Right Looks Left

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https://www.wsj.com/articles/the-new-right-looks-left-jd-vance-trump-populism-protectionism-gop-166e9686

I like J.D. Vance’s background. Humble beginning, Marine, Big Ten and Ivy League graduate, author, venture capitalist. He even headbanged to Kid Rock in Milwaukee. As politics work, he’s the heir apparent to conservatism and the Republican Party. But in his bid for populism’s golden scepter, he’s abandoned any free-market bona fides he ever had. The vice-presidential candidate is considered part of the “postliberal” new right. I suppose that’s close to being a conservative, but as is often attributed to the baseball great Frank Robinson, “close only counts in horseshoes and hand grenades.”

Politics isn’t a straight line. At the extremes, the far left and far right often bend around and almost touch, it’s been said, like a horseshoe. We’re seeing this play out in real time. Check out this rhetoric: “Organize the dispossessed in community movements for economic gains.” “Movements of welfare mothers, the unemployed, tenants, and others have been organized around their particular grievances.” Compare that with: “We’re done, ladies and gentlemen, catering to Wall Street. We’ll commit to the working man.” “We will protect the wages of American workers.”

The first quote is from the 1962 Port Huron Statement written by liberal activist Tom Hayden and the Students for a Democratic Society. The second is from Mr. Vance’s nomination speech. Similar, no? Close enough for horseshoes and hand grenades. Politics these days isn’t at the center. It’s at the extremes, with socialism and populism almost linked. Dogs and cats living together. That doesn’t seem stable to me.

Both sides are protectionist: President Biden never rescinded Donald Trump’s foolish tariffs. Now Mr. Trump wants 10% tariffs on all imports and at least 60% on Chinese goods. This is bad industrial policy and a growth-killing closet tax hike on the rich and poor. Mr. Vance told CBS’s “Face the Nation,” “We need to protect American industries from all of the competition.” Reed Smoot, is that you? Also watch for a weak dollar to “stimulate” exports. Dangerous moves.

Both are anti-free-market: Think of the Biden administration’s green subsidies and heavy regulatory hand. Now we’re hearing calls for big-government intervention from Republicans, including deficits all the way down. Mr. Vance proposed $7,500 tax credits for U.S.-made gasoline-powered vehicles after years of $7,500 electric-vehicle credits. Like Oprah: Everybody gets a car subsidy! A better plan is to let markets price vehicles, and may the best car win.

Both are pro-union:

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WSJ: Hollywood’s Paramount Rule

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https://www.wsj.com/articles/hollywoods-paramount-rule-david-ellison-deal-film-investing-a9e04791

The first rule of Hollywood: Never spend your own money. Ask David Ellison, who learned the hard way with his mostly self-financed 2006 film “Flyboys” starring James Franco and, yes, David Ellison. It cost $60 million to make and did under $18 million at the box office. He told me he’d never do that again.

Now 41, an avid pilot and son of $172 billion net worth Oracle founder Larry Ellison, Mr. Ellison is set to take over the storied Paramount studio (maker of films from “The Ten Commandments” to “The Godfather”).

After the 2008 financial crisis, studio financing dried up. Mr. Ellison, then in his late 20s, figured he’d raise several hundred million from outside investors for a film fund. He could have written a check himself, but he understood Hollywood’s first rule. I was in the room in those early days. A mutual friend, Andrew McKenna, who flies P-51 Mustangs and is now a Wall Street hotshot, helped negotiate a film-financing deal with Paramount Pictures—no easy task—and asked me to get involved.

David Ellison was smart and focused. His company, Skydance Media, was based in a hangar at Santa Monica Airport. I’d often see Harrison Ford stroll by. I contemplated becoming chairman and was even the first investor in the fund. I also was the first to get thrown out.

Mr. Ellison’s idea for Skydance was to fund only action and sci-fi films—movies with explosions! He swore to me: No rom-coms. No touchy-feely emotional Oscar bait. He’d only fund surefire box-office winning categories, including animation.

Hollywood is all about capital efficiency. Yes, studios also know that first rule and try to limit investing their own money.

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WSJ: Is the Stock Market Near Its Top?

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https://www.wsj.com/articles/is-the-stock-market-near-its-top-c0b09e3b

The third season of the terrific show “The Bear” blends family dysfunction with the ups and downs of high-end restaurants. With markets chasing new highs—get out those Dow 40000 hats—this column is about a different kind of dysfunctional beast. Is the market bear dead, or is it about to sneak up on us?

A U.S. equity strategist told me the story of a Japanese portfolio manager who sat in his office in July 1987 asking for stock ideas. The strategist’s model was based on a proprietary survey of investor sentiment, though it never really worked. Nonetheless, he read off a list of dozens of stocks. The portfolio manager then asked if he would kindly put in an order for 20,000 shares of each. The Dow Jones Industrial Average peaked at 2722 in late August and crashed 22.6% on Oct. 19.

A friend was a portfolio manager of a massive growth-stock fund in 1999. He told me he bought shares of Yahoo, Cisco, F5 Networks, Infosys and others every day because money flowed into his fund every day. The tech-heavy Nasdaq index peaked on March 10, 2000. As money began to flow out, he had to sell every day. By year’s end, Nasdaq had fallen by more than half.

I met Cathie Wood as she was filing papers for her “disruptive innovation” funds—to “change the way the world works.” Her ARK Innovation exchange-traded fund, ARKK, launched in October 2014 and charges 0.75% management fees. In 2020 it was up 153% as stimulus money flew in, driving more buying. ARKK peaked in February 2021 with $28 billion in assets. Since then, its net asset value is down 70%, even amid a roaring bull market, especially in tech. Morningstar recently calculated that Ms. Wood’s Ark Invest funds have destroyed more than $14 billion in wealth. One of my favorite Wall Street sayings is, “Don’t mistake a bull market for brains.”

In almost every bull run, stock momentum lures in investors at the worst moment, I call them momos, ensuring they get burned when the buying stops. Since 2009, excepting a few brief sell-offs, cash has been trash. That made some sense during the era of zero interest rates. But now with higher inflation and short rates above 5%? Confusing. Maybe investors are already anticipating another Donald Trump antiregulation pro-growth presidency, forgetting that he is married to a growth-killing pro-tariff agenda. Is the bear dead, or does it have a long fuse?

Predicting stock markets is a fool’s errand.

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WSJ: Beating American Defeatism

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https://www.wsj.com/articles/beating-american-defeatism-innovation-world-statism-6e5152a3

After the Fourth of July fireworks, someone always pipes up, “Not as good as last year.” Defeatists say the same thing about the U.S. Yes, I mean those protesters bleating about U.S. complicity in genocide, racist highways, colonizing oppression and a pending climate Armageddon—our Omnicause flaws.

American exceptionalism, the thinking goes, is over. China controls the key ingredients of our antibiotics and penicillin while it’s dumping U.S. dollars and buying gold. Russia is rebuilding its Soviet footprint. Meanwhile, 51 million of us watched a debate between two cranky old men arguing over their golf handicaps. The New York Times style guide seemingly requires “the end of democracy” for every Trump mention.

Should you buy property in Costa Rica? If you like bananas, sure. Otherwise, no way. Fuhgeddaboudit. Despite—or perhaps because of—our political dysfunction, the U.S. still rules.

Technology is the driver of global growth. Six U.S.-based technology companies are worth more than $1 trillion. Actually, U.S. stocks make up almost 70% of the MSCI World Index, a proxy for global equities. That’s no accident. The U.S. enables innovation, while the rest of the world, with a few exceptions such as TSMC, ASML and Novo Nordisk, is mired in statism. Japan was an exception until industrial policy misdirected its economy.

Despite China’s juggling, the dollar is, and will remain, the reserve currency. Try visiting Costa Rica with Chinese renminbi. Or bitcoin. China is our factory floor, though it’s now contracting. I’m convinced manufacturing will eventually move to India, once they sort out the socialist mess the British left them. I would hurry that up.

The U.S. is oil independent. Thank you, horizontal fracking.

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WSJ: The Tyranny of Today’s Tipping

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https://www.wsj.com/articles/the-tyranny-of-todays-tipping-foodservice-hospitality-jobs-6c8d2502

The screen reads: “Add a tip: 18%. 20%. 25%.” For a takeout sack of burgers and soggy fries? C’mon. It takes extra taps to change it to 10% or zero. Instead, we sheepishly tip and feel resentful. Using Internal Revenue Service data, I extrapolate that tipping has almost doubled since 2013, when San Francisco-based Square turned iPads into cash registers with suggested tips.

It’s the American way to show gratitude for a job well done, but tipping has gotten out of hand. It’s become expected. Even required. A Mountain View, Calif., restaurant had a line on its bills: “For parties of 1 or larger, a 18% gratuity is applied automatically.”

Now tips have turned political. Donald Trump recently declared in Nevada: “When I get to office, we are going to not charge taxes on tips.” In 2018 the IRS noted $38 billion in reported tips. Will insurance agents now insist on their pay in tips? Lawyers? Doctors? I’d certainly like my pay as tax-free gratuities.

Nearly five million Americans work for tips. Almost 70% of them are women. But according to a 2023 Bankrate survey, two-thirds of Americans have a negative view of tipping, probably because we’ve been inundated.

Why do we tip? London taverns in the 17th century suggested tipping “To Insure Promptitude.” Now it’s the cheeky “To insure prompt service.” Tipping spread to the U.S. in the 19th century. In 1899 the New York Times called it the “vilest of imported vices.” Probably so. The Pullman Company hired former slaves as porters at low wages. They mainly worked for tips. Wealthy Americans obliged.

One study reveals that we tip because it’s a “social norm,” to “show gratitude,” and to “avoid feeling guilty.” Those answers ring true, but reasons also include

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WSJ: The ‘Omnicause’ Is Collapsing

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https://www.wsj.com/articles/the-omnicause-is-collapsing-protests-radicals-intersectionality-e4249f52

Did I see climate warrior Greta Thunberg wearing a kaffiyeh? Sure enough, there she was last month in a mob screaming “Shame on you!” outside the Eurovision Song Contest, where an Israeli performer competed. Welcome to the Omnicause. If you protest one thing, you protest everything—intersectional inanity. Like Queers for Palestine, which makes as much sense as “Chickens for KFC.” Fortunately, the Omnicause is beginning to collapse under the weight of its logical fallacies. 

Viewed through the lens of oppression, every cause is linked, summing up the stupidity of all the Kaffiyeh Karens and Activist Aidans at campus protests. Protesters spraypainted “F— Amerikkka” at Stanford University this month. The oppression-studies majors can’t even spell.

Antiwar is one thing, but the colonizer claptrap is unbearable. Segments of the Omnicause are usually anticapitalism, antigrowth or pro-world-government. Climate hysteria scores a perfect trifecta. Using twisted logic, socialism is apparently the cure for racism. But the backlash is enabling a political move to the right in Europe, South America and, if polls are to be believed, the U.S. 

So why the Omnicause? My theory is that society is afflicted with a bad case of affluenza. Life has become too easy. We google and use artificial intelligence instead of thinking, shoot up Ozempic instead of exercising, and rely on ObamaCare instead of working. Even the well-off need to complain about something, so they complain about everything.

Many of these protester layabouts are entitled—dare I say spoiled—and don’t bother to understand what they are protesting. They demand student-loan forgiveness and a universal basic income, which many already receive from their parents. You see it everywhere: Johnny not working, Janie in a daddy-funded apartment trying to become an influencer. Plenty of time for protests.

And really, why work and improve the world by delivering goods and services people want? Protests are much more fun. 

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WSJ: The Dial-Toning of AI

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https://www.wsj.com/articles/the-dial-toning-of-ai-b160be07

Artificial intelligence is a feature, not a product, and like every other technology, it’s starting to fade into the background. Apple last week announced that it is embedding generative AI technology into Siri and other applications in iPhones, including a deal with OpenAI. Most Google searches now include an AI Overview. Microsoft has branded Copilot+ PCs for new Windows hardware. It sure looks to me like AI is on its way to being dial-toned.

What do I mean? It was a Boston telephone operator strike in 1919 that ushered in the era of dial tones to replace humans. A pleasing tone delivered simplicity, musically asking callers “number, please,” hiding all the complexity of relay switches, tubes and amplifiers. AT&T was a hot stock in the 1920s as phones proliferated. Same for companies deploying other advanced technologies, such as radio. Eventually, investors stopped caring. Technology almost always vanishes from sight on its way to becoming productive and ubiquitous. Does that mean the end of the current AI hype cycle? Soon enough.

We live in a dial-tone world—extraordinary complexity made so simple that it disappears. Push a button and your car starts. Fill it with gas and vroom vroom, you’re off, ignorant of drilling, refining and pipelines. Or charge your electric vehicle by plugging it in, not knowing or caring about transmission lines, generators or emissions. They’ve all been dial-toned; complexity disappears. Same for cellphones: no dial tones but coverage bars similarly dissolve the complexity. Most users think 5G service arrives via immaculate reception rather than comprehending orthogonal frequency division multiplexing and millimeter waves and optic backhauls.

Compaq was once a hot stock selling PCs, which included a magnetic disk spinning at 7200 rpm with a read-write head floating nanometers above the disk. Amazing. Did you care? Me neither. Automakers used to be hot stocks. Same for electric utilities. Heck, airlines were once hot stocks. Even software-as-a-service stocks have cooled. Investors marginally care but have mostly moved on.

“Everything is amazing right now, and nobody’s happy,” explained the on-again-off-again canceled comedian Louis C.K. in 2008. He’s right. Emails and texts magically arrive, but if the service goes down, we throw hissy fits. About a guy on a flight who complains when the internet stops working, the comedian noted, “How quickly the world owes him something he knew existed only 10 seconds ago.” That’s a clue: When complaints start and everyone stops looking at the miraculous good in things, it’s been dial-toned.

To understand where we’ve come from, he suggests, “Maybe we need some time where we’re walking around with a donkey with pots clanging on the sides.”

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WSJ: Your Government at Work

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https://www.wsj.com/articles/your-government-at-work-a93c4fb3

After the $320 million floating fiasco ran aground, Ohio Sen. J.D. Vance tweeted: “The Gaza pier is a symbol of the Biden administration. A horrible idea executed terribly.” True—for almost all government projects. The November election may be about old vs. paroled, but underneath it could mark an overdue transition from heavy-handed government ineptitude back to relying on the private sector. Busybodies vs. market ninjas. It’s time.

Remember the $7.5 billion of pork spending set aside for electric-vehicle chargers in the 2021 Infrastructure bill? The administration promised 500,000 of them by 2030, overseen by Transportation Secretary Pete Buttigieg. As of May, only eight had been installed. As they say, “close enough for government work.” Only 150,000 years to go.

In 2008 Californians voted for about $10 billion in bonds for high-speed rail connecting San Francisco and Los Angeles—the first payment of a then-estimated $33 billion budget for the 800-mile stretch. So far, only a 1,600-foot Fresno River Viaduct has been built, along with a hodgepodge of guideways and structures. (Alright, why a duck?) Only 42,000 years to go. Oh, and the estimated cost has risen to around $130 billion. California has also spent $24 billion over the past five years to solve the homeless problem. Meanwhile, the homeless population is up 30%. Why let government do anything?

Jimmy Carter—Joe Biden’s role model—set the pace. In 1979, after six years of oil embargoes and gasoline shortages, Mr. Carter wanted $88 billion ($365 billion today) for, among other things, a Synthetic Fuel Corp. “Synfuels” would enable U.S. energy independence. He got $20 billion.

Fracking went horizontal in the 1980s, thanks largely to private investment. Now the U.S. is the largest oil- and gas-producing country. Yet oil and gas are now considered sin fuels, and the Biden administration paused liquefied natural gas exports in January.

We’re still (over)paying for ObamaCare.

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WSJ: Our Nostalgia Doom Loop

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https://www.wsj.com/articles/our-nostalgia-doom-loop-loneliness-technology-a2c93094

“It isn’t necessary to imagine the world ending in fire or ice—there are two other possibilities: one is paperwork, and the other is nostalgia.” So wrote musician Frank Zappa (1940-93) in his 1989 memoir, “The Real Frank Zappa Book.” I was never sure what he meant, but I thought about it in the past few weeks as friends kept sending me videos of Dead & Company—former Grateful Dead band members along with John Mayer—playing at the Sphere in Las Vegas. During one song, the visuals looked as if they were playing inside Barton Hall at Cornell University and at Red Rocks in Colorado. Very nostalgic. 

Nostalgia used to be considered a mental illness. The word was coined by Swiss physician Johannes Hofer in the 17th century from nostos (homecoming) and algos (pain). Research now shows that nostalgia lowers cortisol levels associated with stress. It’s healthy!

Maybe that explains our fascination with old homes, Barbie, vinyl records, James Bond, candy corn, pinball, amateur college athletics and—gulp—newspapers. Technology helps nostalgic comic books like Batman and Spider-Man come to life. Plus, not one but two Godzilla movies in the past six months, and the 10th “Planet of the Apes” film.

Meanwhile, live events are big business. Whitney Houston died in 2012 but 10 years later played at Harrah’s Las Vegas—at least her hologram avatar did. In 2019, Roy Orbison’s hologram went on tour, a new meaning of “Only the Lonely.” If you’re in London, for roughly $150 you can see the band ABBA perform—actually, their “ABBAtars.” Twice on weekends. Mamma mia! A virtual “Elvis Evolution” is coming to Vegas. Finally. We’re all tired of Carrot Top.

Over the years, legions of dorm-room detectives studying hiss-filled cassette tapes on seemingly infinite loop have considered the May 8, 1977, Grateful Dead show at Barton Hall the band’s greatest. I worked at that show. Was it their peak? Or mine? Has it all been nostalgia since? Even on my iPhone, the virtual Barton Hall effect at the Sphere brought me back. And I’m not a Deadhead. Tickets to that 1977 show cost $7.50, or $39 in today’s dollars. Now you can spend $950 on a VIP package at the Sphere. Wanna bet Vegas dispensaries are doing well? Nostalgia can be lucrative.

Inside the Sphere is a 160,000-square-foot wraparound LED display, enabling a 16K-by-16K resolution, 168,000 speakers and 10,000 subwoofer-like systems in seats—blowing away your 4K television...

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WSJ: An NBA Veteran Helps Stutterers

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https://www.wsj.com/articles/an-nba-veteran-helps-stutterers-a1898856

After I wrote a column on my son and stuttering, I got a call from William Wesley, an executive with the New York Knicks. “Do you know my friend Michael Kidd-Gilchrist? He wants to talk to you.”

I certainly knew of him, having watched Kentucky win the 2012 National Collegiate Athletic Association’s basketball championship and seen him picked No. 2 in the NBA draft, behind his teammate Anthony Davis. What I didn’t know was that MKG, as announcers and fans liked to call him, stutters. I soon met MKG on a Zoom call, and we talked about his life experiences. Then he said, “It’s nice to talk to you, but I really want to talk to your son.” That was three years ago.

MKG, now 30, has stuttered since he was young. After retiring from professional basketball in 2020, he decided to help others who stuttered, including those who were bullied or wrongly considered slow because of speech disfluency. MKG is a one-man advocate for stutterers. I encouraged him, but how was he going to help?

Children who stutter often avoid speaking, so half the battle to help is screening early in schools. It should be mandated. Mr. Kidd-Gilchrist’s idea is to get insurance companies to pay for screening and speech therapy. Why is this important? John Hendrickson, author of “Life on Delay: Making Peace with a Stutter,” told me: “Many studies suggest that identifying stuttering and starting speech therapy as early as possible will yield the best results. Some kids may find fluency, others will continue to stutter into adulthood. The goal is to help a stutterer manage their relationship to the disorder.”

As he was during his NBA days, MKG is certainly hardworking. He told me that since 2021, he has met with 18 U.S. senators—including Mitch McConnell, Cory Booker, Mitt Romney, Sherrod Brown, Bill Cassidy and Ted Cruz. He has also met with 25 U.S. representatives, 137 state representatives, aides to President Biden, various interested parties at 62 universities and 12 children’s hospitals. He has appeared at 26 special events. That’s commitment.

I had a courtside seat watching Mr. Kidd-Gilchrist’s journey unfold. Every week or so since our first call, I get a morning text from him that starts “What up my man?”

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WSJ: Musk and Trump: Eerie Parallels

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https://www.wsj.com/articles/musk-and-trump-eerie-parallels-president-tesla-personality-2024-a67a578c

Were Elon Musk and Donald Trump separated at birth? Strip away Mr. Musk’s self-cut hair and Mr. Trump’s comb-over and you’re left with similar Gerber Baby faces. Both were outsiders, often rejected by the status quo: Mr. Musk coming from South Africa to Silicon Valley and Mr. Trump “movin’ on up” from Jamaica Estates in Queens to Midtown Manhattan. Both had something to prove.

Neither really outgrew his adolescence. Candidate Trump got in trouble for “locker room” talk on old “Access Hollywood” tapes. And it isn’t hard to notice Tesla’s naming convention: Models S, 3, X, Y. Giggle, giggle.

They’re both entrepreneurs. OK, ha, ha. The Donald hawks $60 Bibles, Trump Cabernet, $399 gold sneakers, Trump Steaks, Trump Vodka, Success by Trump eau de toilette, and a university, not succeeding at much outside real estate and reality TV. Elon has done a little better: His flame throwers sold out quickly, oh, and he built the most valued car company ever.

They both got stuff done that government couldn’t. Mr. Trump rebuilt Wollman Rink in Manhattan’s Central Park in 3½ months for $2.25 million, after the city wasted six years and $12 million. “See this railing? Same railing Onassis had on his boat,” Mr. Trump bragged at the time. Mr. Musk’s SpaceX successfully landed reusable Falcon 9 rockets, well beyond NASA’s capabilities.

Then they both built empires with government pork. Tesla sold carbon credits and received low-cost environmental loans, while buyers of its cars receive up to $7,500 tax credits. Mr. Trump built the Grand Hyatt Hotel on 42nd Street with roughly $360 million in tax breaks. Oink.

Both nearly lost it all.

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WSJ: A Plan for Palestinian Prosperity

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https://www.wsj.com/articles/a-plan-for-palestinian-prosperity-weapons-manufacturing-mideast-35d82010

The April 13 Israeli skeet shoot—knocking out 99% of the approximately 170 drones, 120 ballistic missiles and 30 cruise missiles Iran launched toward the Jewish state—was a technological tour de force. It combined difficult math, real-time sensors, sophisticated software and no small amount of artificial intelligence to guide advanced hardware, propulsion systems, explosives and lasers. That one night probably cost more than $1 billion. “We intercepted. We thwarted. Together we will win,” Prime Minister Benjamin Netanyahu tweeted.

Now make it profitable—and use it to promote Palestinian prosperity. These defenses against incoming threats are a marvel. Israel’s Iron Dome, like Raytheon’s Patriot air-defense system, was designed mainly to take out short-range rockets. Patriot missiles can cost $4 million each, while Iron Dome missiles are $40,000 to $50,000, helpful given the sheer number of cheap Israel-bound rockets. In an asymmetric-warfare world, defense is still expensive.

But Iran’s long-range attacks required more: David’s Sling intercepts cruise missiles. Spyder finds and destroys aircraft and drones. Arrow can pick off ballistic missiles coming from outside the earth’s atmosphere. The U.S. Navy also provided help. Three ballistic missiles were taken out by our Aegis missile-defense systems, and 70 of the drones were shot down by U.S. ships and aircraft.

Josh Wolfe—whose venture firm, Lux Capital, invests a third of its funds in defense and aerospace—told me last week: “Every country watching that show is now thinking ‘I want that!’ An export version of these systems could be Israel’s next big product.”

Israel should eventually build factories in Gaza and the West Bank to manufacture these systems. There’s no better way to turn an enemy into an ally than to give him a job. That may sound far-fetched, but history is on my side. After Germany’s surrender in 1945, amid a landscape of destroyed cities, the Marshall Plan helped rebuild Germany into a peaceful ally. The reconstruction of Japan started during occupation under Gen. Douglas MacArthur. We did a pretty good job because—wouldn’t you know it—behind China and the U.S., Japan is third in the world in global manufacturing output. Germany is fourth, Italy seventh.

“Made in Japan” was a joke at first, indicating substandard quality.

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WSJ: The Other Kind of Marxism

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https://www.wsj.com/articles/the-other-kind-of-marxism-principle-flip-flopping-5ea278ba

Today’s politicians are steeped in Marxism. Not Karl, but Groucho, who is supposed to have said: “Those are my principles, and if you don’t like them . . . well, I have others.”

On Jan. 22, 2021, Senate Majority Leader Chuck Schumer said of Donald Trump’s second impeachment: “Make no mistake, a trial will be held in the United States Senate and there will be a vote whether to convict the president.” Fast forward to a week ago, when articles of impeachment were delivered to the Senate against Homeland Security Secretary Alejandro Mayorkas. Mr. Schumer said: “Impeachment Article 1 does not allege conduct that rises to the level of high crime or misdemeanor . . . and is therefore unconstitutional.” No trial. No vote.

This tossing of principles can be found everywhere. In 2020 President Trump tried to ban social-media app TikTok over national-security concerns. Now Mr. Trump is against a ban, writing last month on Truth Social: “If you get rid of TikTok, Facebook and Zuckerschmuck will double their business. I don’t want Facebook, who cheated in the last Election, doing better.”

In August 2020, Joe Biden told ABC’s David Muir, referring to Covid: “I would shut it down. I would listen to the scientists.” By October 2020, Mr. Biden insisted, “I’m not going to shut down the country, I’m going to shut down the virus.” Lockdowns continued.

Science! Sadly, some scientists have prancing principles. Anthony Fauci, then director of the National Institute of Allergy and Infectious Diseases, said in March 2020, “There’s no reason to be walking around with a mask.” In October 2020, when CNBC’s Shepard Smith asked if we need a national mask mandate, Dr. Fauci quickly answered, “Yes, we do.” The Washington Post and BuzzFeed, via a Freedom of Information Act request, found this February 2020 Dr. Fauci email: “The typical mask you buy in the drug store is not really effective in keeping out virus, which is small enough to pass through material.” In January 2023, the respected Cochrane Review agreed: “Wearing masks in the community probably makes little or no difference.”

These are all reminiscent of the master flip-flopper John Kerry…

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WSJ: Do Interest Rates Matter Anymore?

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https://www.wsj.com/articles/do-interest-rates-matter-anymore-united-states-economy-224795be

The Federal Reserve hiked interest rates 11 times between March 2022 and January 2024. Short rates have gone from zero to 5.5%. Meanwhile, the economy is growing at close to 3%. Unemployment hasn’t surged. Commodities are booming. Stocks hit an all-time high at the end of March. To borrow from “When Harry Met Sally” (1989), if that’s the outcome of higher rates, “I’ll have what she’s having.”

As late as December, futures markets were expecting six rate cuts in 2024, according to Barron’s. After three monthly readings of more than 3% of “hot” inflation, Goldman Sachs now expects only two cuts. Fed Chairman Jerome Powell said it is “likely to take longer than expected” to have confidence that inflation is slain and cut rates. Former Treasury Secretary Lawrence Summers even thinks there’s a chance for a rate hike this year.

For almost 18 months, the yield curve has been inverted, which usually means a recession is coming. Still, the economy goes chug, chug, puff, puff like the little engine that could. Sadly, it’s the same for federal spending.

Thirty-year mortgage rates are more than 7%, up from roughly 3% at the start of 2022, so surely home prices are down, right? Wrong. The median home price was $384,500 in March, up from $350,000 at the start of 2022. Supply is limited because those with 3% mortgages are staying put with low payments.

Retail sales were up big again in March. Credit-card debt is a record $1.3 trillion, but note the Philadelphia Fed reported that late last year, credit-card delinquency rates (30, 60 and 90 days past due) were over 3%, numbers not seen since 2012. Keep an eye on that.

Global energy demand remains strong. Oil is pushing $85; I recently paid $6.39 a gallon for premium gasoline.

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WSJ: America’s New Regulation Busters

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https://www.wsj.com/articles/americas-new-regulation-busters-trust-ventures-invests-overcome-government-block-4ec19822

We have too many regulations. The Code of Federal Regulations is almost 200,000 pages long. In 2017 President Trump signed Executive Order 13771, which held that “for every one new regulation, at least two prior regulations be identified for elimination.” It didn’t work. Can anyone cut through the red tape mummifying America?

Another “Ghostbusters” movie is in theaters, but what we need are regulation busters. I spoke with Salen Churi and Brooke Fallon from Trust Ventures, a $500 million Texas-based venture-capital firm. It’s almost as if they are wearing plasma proton packs.

The two originally worked together to legalize street vending in Chicago. Mr. Churi explained the problem: “Restaurants got together with the city to prevent competition. We got this food-cart license passed. It didn’t scale though,” as it was Chicago specific, but it was the start of a plan.

Trust Ventures came together, Mr. Churi said, because no one thinks “ ‘I hate innovation,’ except perhaps for incumbents. We have crises in the most human of industries—energy, healthcare, housing. Everyone thought I was nuts. They’re like, ‘Why would you invest in companies with regulatory problems?’ ” Good question.

Most venture capitalists invest and help startups with new strategies and hiring a team. Mr. Churi describes what he does as “trench warfare,” fighting with regulators and incumbents deal by deal. He notes that “we have built houses the same way for 1,000 years—with sticks and bricks.” A startup, ICON, hoped to create homes for the homeless in Texas using a giant 3-D printing machine that deposits layers of concrete. It can “print” a 500-square-foot home in 24 hours. For $4,000. Game changing.

Then came the regulators.

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WSJ: The Presidency, I’m Against It

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https://www.wsj.com/articles/the-presidency-im-against-it-trump-biden-administrative-state-regulation-chevron-4e95e4bd

Years ago, I met an author finishing a book about limiting the power of the executive branch. His catch phrase was: “The presidency. I’m against it.” I told him it would make a great title.

If you haven’t come to grips with Donald Trump pulling a Grover Cleveland to become our 45th and 47th president, know that denial ain’t just a river in Egypt. Last I checked, Mr. Trump is ahead in most polls, and leads in all battleground states except Wisconsin. Between the border and Hamas flops, President Biden seems to be doing everything he can to get Mr. Trump elected. If so, Mr. Trump has the opportunity of cementing a lasting presidential legacy for himself—by limiting presidential legacies.

Ignoring campaign rhetoric, the question is, what kind of president will Mr. Trump be this time? I don’t think there is a single way voters define the former president. I liken it to the Hindu parable of the blind men feeling an elephant.

Some see Mr. Trump as the leader of cosplaying Capitol stormers. Or of closing borders or crushing the woke movement. As xenophobic, even racist. As isolationist: America First. Protectionist: Tariff man. Comedic genius: His nicknames are “gold, Jerry, gold!” Some Trump supporters hint at libertarianism in the form of “leave me alone.” And to many, he is about driving the Trump train and running over smug East and West coast elite wannabes. To a tiny faction, he was a steward of low inflation, 3% economic growth and 3.5% unemployment, and they want those times back.

Maybe the most reported line is that Mr. Trump is a democracy-killing authoritarian. Check out this Washington Post opinion headline: “A Trump dictatorship is increasingly inevitable. We should stop pretending.” But don’t we already have that with the Biden administration? Roughly $144 billion student loan forgiveness. Open borders. Net zero declarations. Phasing out gasoline-powered cars for EVs no one wants. All without a vote from Congress.

Expectations for a second Trump term include mass deportations, threats against allies, and huge tariffs on Chinese products. But what will be Mr. Trump’s legacy?

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WSJ: Donald Trump, Come On Down

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https://www.wsj.com/articles/donald-trump-come-on-down-letitia-james-courts-tech-2ec9424b

Bob Barker hosted “The Price Is Right” for 35 years. Contestants—come on down!—would bid on featured items, trying to guess their retail prices without going over. The show’s conceit for vendors promoting appliances and cars was to focus viewers on the manufacturer’s suggested retail price, not the actual price in stores. The winning strategy for a final “Showcase” round, Jon Hartley noted in the Journal, involved “people behaving ‘irrationally’ by not following optimal decision rules.” Viewers were being trained that the MSRP was right, even though it was wrong, and to be irrational shoppers. It was brilliant, actually.

Capitalism is based on free markets and price discovery. It doesn’t always work. New York Attorney General Letitia James won a civil fraud case against Donald Trump for his overvaluing properties on financial statements to secure bank loans. Ms. James accused Mr. Trump of overstating the value of Trump Tower by up to $250 million. Never mind that bankers took these numbers with a grain of salt and did their own due diligence. Judge Arthur Engoron hit Mr. Trump with a $454 million penalty, including interest, for “ill-gotten gains.” This case is dripping in politics. Randomly select any real-estate developer or homeowner in the country, and you’ll find he overstates—or, to save taxes, understates—the value of his properties.

Mr. Trump is appealing, saying his prices were right, but he still needs to pay the penalty or come up with a bond backed by his properties. At the original $454 million, Mr. Trump said he had “insurmountable difficulties” coming up with a bond backed by his real-estate empire, and 30 different underwriters passed before an appeals court reduced the bond to $175 million last week. Either Mr. Trump is toxic or—hmmm, the value of his properties really isn’t high enough to justify the risk of providing a bond.

Truth Social and Mr. Trump’s $5 billion stake to the rescue, right? Not so fast. Mr. Trump owns 80 million shares, or 60%, of the hardly used social network formed via a merger with the special-purpose acquisition company Digital World Acquisition Corp. Truth Social’s current value is almost $8.4 billion. But the price isn’t real.

First, Truth Social has generated some $5 million since its inception, and it’s losing millions. The stock closed last week at $61.96 a share, but a sober analysis would probably have a tough time justifying a $5 price. And like initial public offerings, SPAC insiders aren’t allowed, with a few exceptions, to sell shares for a 180-day lockup period after listing. Short sellers have been kept on the sidelines by limited shares to borrow, and borrowing costs are 200 times normal, according to S3 Partners. It’s a one-way, buy-only market, for now.

When insiders can sell, unless the company’s business booms, look out below.

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WSJ: The Lost Era of Reliability

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https://www.wsj.com/articles/the-lost-era-of-reliability-media-politicians-technology-0384b4e6

Photoshopping the then-missing princess of Wales. The press twisting Donald Trump’s “bloodbath” comment out of context. AT&T Wireless down for hours. And (gasp!) Instagram offline. Is anything reliable anymore?

Reliability is a lost art. Our electricity used to be so steady that plugged-in wall clocks rarely needed adjusting. That’s funny now because power outages are so commonplace. Heck, we now schedule rolling blackouts in California—forced failure.

Back then, the electric grid and phone system were designed for “five 9s” or 99.999% reliability—five minutes of unscheduled downtime a year. Last month, AT&T’s cellular network went down for around 11 hours. No TikTok? The horror. AT&T provided $5 credits to customers. Thanks for nothing. Today’s reality is that we’re preconditioned to accept failure.

When did things change? My guess is after the July 13-14, 1977, New York City blackout, which happened during a heat wave. The result was fires, looting and fear that the “Son of Sam” serial killer would kill again. After that, we became thankful for outages lasting only an hour.

Folks used to repair toasters. Now they’re disposable. For many items, when a piece of cheap plastic breaks, we chuck it and buy another one, including televisions and many appliances cheap enough to replace. Sadly, our trust in everyday things is now disposable as well.

Early Windows PCs would seemingly crash daily, with the infamous “blue screen of death.” My business partner would immediately yell, “Curse you, Bill Gates.”

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WSJ: See You on Zoom—or Not

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https://www.wsj.com/articles/see-you-on-zoom-or-not-ai-avatars-replacing-you-in-meetings-068fe5d3

I still hate meetings. Almost 10 years ago I wrote that “meetings are supposed to be about discovery and buy-in” but instead “end up being about preening and politicking, and devolve into productivity-robbing, mind-numbing monotony.” Since then, a poll by University of North Carolina researchers found that nearly two-thirds of managers agreed that meetings kept them from getting real work done, 71% thought meetings were “unproductive and inefficient,” and 64% said meetings blocked deep thinking. There has to be a better way.

Sadly, when lockdowns came along and the word “Zoom” joined the vernacular—along with the phrase “you’re on mute”—meetings got way worse. Sure, no one knows if you are wearing pants, but Zoom meetings lack social clues and such real-time feedback as glaring or grunting. I’m good at both. Worse, meetings multiplied. Zoom meetings peaked at 300 million a day in mid-2020. Yikes.

This included lots of online classrooms, where hints of the future were revealed. Bored-to-tears grade-schoolers, who are smarter than we think, figured out they could fake paying attention by changing their background to a video loop, maybe with a couple of head nods—a rudimentary avatar. All that was missing were class notes from the nerdy kid and, in case you’re called on, a realistic Ferris Bueller-like recorded answer, similar to when the principal, Ed Rooney, checked on him at home.

In related news, earlier this month at South by Southwest, a company appropriately named Soul Machines introduced Digital Marilyn: a pretty realistic artificial-intelligence-driven talking Marilyn Monroe avatar. Suddenly, all the pieces are in place. Can someone please adapt this for meetings?

Help is on the way. I use an app called Otter.ai to record interviews, and it quickly generates a Word document with almost perfect transcription. Otter can join Zoom calls and produce not only transcripts but pretty good meeting summaries. I spoke with the company’s CEO, Sam Liang, who told me, “I have eight to 10 meetings every day. So you see, this is a huge pain point.”

Mr. Liang says when he’s double-booked, he watches “live meeting notes for multiple meetings going on at the same time. So I can multitask.”

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WSJ: Beware the Frothy AI Frenzy

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https://www.wsj.com/articles/beware-the-frothy-ai-frenzy-artificial-intelligence-tech-business-dce9b093

Artificial intelligence continues both to astound and confound. Google’s recent launch of its new Gemini AI tools was a mess, producing images of Founding Fathers and Nazi soldiers as people of color. When asked if Elon Musk or Adolf Hitler had a more negative effect on society, Gemini responded that it was “difficult to say.” Google pulled the product over “inaccuracies.” AI is the next wave of computing and human interface but it’s definitely out over its skis.

But Gemini’s problems say more about Google than they do about AI. A Google “AI Ethics & Compliance Advisor” is on video talking about “deliberate steps to ensure that the advanced technologies we develop and deploy lead to a positive impact on individuals and society.” This is DEI-speak. No wonder Gemini’s output is screwy.

AI finds patterns of patterns in data and then uses a technique called “reinforcement learning from human feedback.” Humans help train and fine-tune large language models. Some humans, like “ethics & compliance” folks, have a heavier hand than others in tuning models to their liking. Google, with 190,000 employees, controls 90% of search. So how did this flaw make it into the marketplace? A bloated bureaucracy. Alex Kantrowitz at the Wrap quotes a member of Google’s Trust and Safety Team: “Organizationally at this place, it’s impossible to navigate and understand who’s in rooms and who owns things. Maybe that’s by design so that nobody can ever get in trouble for failure.” Business 101: Hiding failure limits success.

There’s a long history of dominant players missing the next big market because of bloat and hubris. Xerox, IBM, Digital Equipment, Compaq, AT&T, AOL, Netscape, Yahoo. I can go on. The Federal Trade Commission should Sharpie this on employee foreheads: There’s no need to break up technology companies, as they will diminish or fail all by themselves.

In the 1990s, Cisco owned most of the router market. During the dot-com explosion, investors believed a long-run rebuild of telecom infrastructure was imminent to build out the internet. In 2000 the company’s stock peaked at a $555 billion value. The internet got built all right, but Cisco shares crashed almost 90%. It has taken the company 24 years to crawl back to its $200 billion value today.

Change takes a toll. Microsoft is now a data-center company, more utility than innovator.

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WSJ: Profit Can Be Your Purpose

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https://www.wsj.com/articles/profit-can-be-your-purpose-millenials-gen-zers-life-purpose-careers-29906eff

More than half of recent college graduates are in jobs that don’t require their degrees, the Journal reported recently. I think that’s on “purpose.” It isn’t about work anymore—work now requires meaning, purpose. Many under 35 seem to need their careers to provide psychic rewards for them to get out of bed every morning. Give me a break.

A McKinsey study shows that 70% of employees said “their sense of purpose is defined by their work” and that “employers need to help meet this need.” Really? Don’t employers provide paychecks? A McKinsey partner noted that “millennials, even more so, are likely to see their work as their life calling.” PwC even has a chief purpose and inclusion officer. We need a generational intervention.

Looking for work now is about finding your passion. My true passion was to bat cleanup for the St. Louis Cardinals. Oh well. Instead I found a job where I could learn something and eventually contribute. I know, so old-fashioned.

Companies today need to be “mission oriented.” That mission could be at cross-purposes with reality, no matter how good it sounds. Watch the Netflix docuseries “Big Vape: The Rise and Fall of Juul.” Employees were gleeful to work for a company whose mission is to “improve the lives of the world’s one billion adult smokers by eliminating cigarettes.” Spoiler: It didn’t end well. Juul ended up introducing youngsters to nicotine and addicting many who never smoked. After the company blew up, an employee wrote, “Looking for new opportunities out there with companies that actually care about their employees and are truly mission focused. The work environment here is truly toxic.” Truly!

Then there’s the “authentic self” and “bring your whole self to work” thing. As opposed to half? Or someone else’s self? Mike Robbins, who wrote the book “Bring Your Whole Self to Work,” suggests we “allow ourselves to be truly seen.” Truly! In December 2021, Roz Brewer, CEO of Walgreens Boots Alliance, told Harvard Business Review that bringing her whole self to work was a key to her success. In August 2023, she stepped down as CEO of the debt-laden, overstretched firm.

Motivational speaker Tony Robbins suggests you develop “a life vision statement.” In a hurry? Copy someone else’s Pinterest vision board.

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WSJ: America’s ‘Chinatown’ Politics

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https://www.wsj.com/articles/the-chinatown-agenda-as-in-the-1974-movie-chaos-reigns-absent-common-sense-a92589be

“Forget it, Jake. It’s Chinatown” is the signature line that follows a senseless killing in the 1974 film “Chinatown,” starring Jack Nicholson and Faye Dunaway. It’s not so much about the Chinese, though a few of the film’s lines don’t stand the test of time. Instead, it’s about corruption. Chaos. Things don’t make sense because someone with an agenda doesn’t want them to make sense. Sound familiar?

There’s been a lot of chaos lately, starting with the Biden administration’s rushed exit from Afghanistan. No one has explained why it was so rushed—part of someone else’s agenda. Then there’s the border. According to U.S. Customs and Border Protection, agents have had more than eight million “encounters” with illegal aliens—sorry, “undocumented migrants”—since the start of the Biden administration. This includes 20,000 Chinese nationals since Oct. 1. Many find their way to “sanctuary cities,” which refuse to enforce federal immigration laws. In 2019 candidate Biden told an ABC News forum that migrants should “immediately surge to the border.” That was a willful act of chaos. Why? Forget it, Jake.

Two of the illegal immigrants who attacked police officers in Times Square in January were members of the Venezuelan gang Tren de Aragua. Four others were arrested and released without bail by Manhattan District Attorney Alvin Bragg; one was rearrested for robbery. Another few weeks and the attackers might have received a $10,000 debit card from the mayor. Crazy. That’s a chaos-agenda hat trick: Sneak across the border, head to a sanctuary city, then get released by a left-wing district attorney after committing a crime. This goes beyond leniency and bleeding hearts.

Crime is rampant. Pamela Price won the election for district attorney of Alameda County, Calif., on an anti-incarceration platform and with George Soros’s backing. Crime got so bad in Oakland that Gov. Gavin Newsom sent in 120 state troopers. In-N-Out Burger, which has never closed a location, will shutter one near the Oakland Airport in March because of crime. I drove by a gas station down the block and heard a recorded voice over loudspeakers warning motorists not to leave their cars unattended because of theft. Why not arrest and prosecute criminals instead?

Great American cities like San Francisco are in doom loops. KFC is closing locations in Chicago. Chaos often leads to less freedom—ushering in a more authoritarian regime to clean up the mess and make the trains run on time. What I fear is a “burn the Reichstag” moment of change toward authoritarian rule. Is that the agenda? Both sides have tried to spark such a moment: on May 29, 2020, outside the White House and on Jan. 6, 2021, at the Capitol.

For the 40th anniversary of Apple’s 1984 Super Bowl ad, which introduced the Macintosh personal computer, Steve Hayden, who worked for the ad firm Chiat/Day, told the New York Times, “We’re realizing Goebbels’s idea, getting people so confused they have no idea what to believe other than an authority figure.”

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WSJ: The Uber of Foster Care

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https://www.wsj.com/articles/the-uber-of-foster-care-593866cd

Technology often gets bad-mouthed for ruining our youth or potentially causing the extinction of humanity. But more often than not, it’s a force for good. This is one of those stories.

Every year in the U.S., seven million children are referred to child protective services. On any given day close to 400,000 children are in the foster system. Roughly 80% of children in foster care have mental-health issues vs. 18% to 22% for other children. This is a problem worth solving.

The origin story: Healthcare executive Adrien Lewis and his wife began fostering children in 2011 and spent two years trying to get churches in the Kansas City area to recruit foster parents—no easy task. Then, “out of nowhere,” Mr. Lewis says, “I get a vision for CarePortal, to leverage technology to connect. In crisis, those touched by the child-welfare system could connect with churches and people who care in proximity that would want to help if they knew. What would happen if you could expose people to the reality that a bed or crib or car seat, or paying a bill, things that were small, like 6-inch barriers, would actually make a difference to keep kids out of foster care and reunify biological families?” Heck of a vision.

So “with shoestring and duct tape, we pulled together different software platforms and kind of jimmied them together. A pilot of CarePortal hit the market in Austin, Texas, in late 2014. People went nuts over it. The very first request was for a family with a bedbug problem who was trying to adopt a cousin who had been in foster care. Supplies and volunteers solved their bedding problem.”

Here are some stats: 50% of children in the foster system are concentrated in 5% of counties in 31 states. That’s 160 counties and 96 markets. CarePortal is now in 64 markets and growing and says it has helped more than 250,000 children avoid foster care.

CarePortal CEO Joe Knittig told me that “Uber is to ride-sharing what CarePortal is to care sharing—community-based care sharing.”

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WSJ: More Soup for the Mona Lisa

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https://www.wsj.com/articles/more-soup-for-the-mona-lisa-food-regulation-europe-farmers-environmentalists-ed7cf0e1

Protesters threw soup on the “Mona Lisa” at the Louvre, which fortunately was covered with bulletproof glass. Delicious bouillabaisse? Sadly no, it was pumpkin.

The episode reminded me of great investing advice I received years ago from an art major, of all people. He said investing was all about the negative space—the unseen. We all know the Mona Lisa’s inscrutable smile and eyes that follow you as you walk past, but few notice the background of the painting, the negative space. Look again: There is a winding river through a valley and a bridge, perhaps Etruscan-Roman, a connection between ancient times and the Renaissance. Britannica says the background suggests a “cosmic link connecting humanity and nature.” Cool.

Her face is what we see, an example of consensus thinking vs. the negative space. But that mysterious unknown is a gold mine for those who look, and it offers a way to outthink the crowd in investing, careers, sports and more.

The soup splashers were part of the group Riposte Alimentaire, which translates roughly as “Food Retaliation.” They shouted, “What is more important: art or the right to sustainable food?” Wealthy countries can have both, but never mind.

The group’s website demands “the integration of food into the general social security system” and worries about the “deterioration of our biodiversity and the impoverishment of soils.” It also insists every French resident get a €150 food card each month to buy “democratically selected” meals. Wanna bet that means crickets and plant-based foie gras?

What’s in the negative space? While the soup sprayed, French farmers in tractors were blocking roads. Was this in solidarity with the foo-foos in the Louvre? Hardly.

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WSJ: Power Corrupts, Absolutely

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https://www.wsj.com/articles/power-corrupts-absolutely-artificial-intelligence-government-overreach-d9a8c021

On a recent podcast with Microsoft founder Bill Gates, two-time OpenAI CEO Sam Altman suggested that a “global regulatory body” was needed to monitor artificial intelligence. This is a colossally dumb idea. But Mr. Gates doubled down: “If the key is to stop the entire world from doing something dangerous, you’d almost want global government.” Wait, global what? Mr. Altman responded, “That feels possible to me.” Oh no. In fact, of his 2023 world tour meeting heads of state, Mr. Altman noted, “there was almost universal support for it.” Well of course there was. Demand for power is insatiable. (Microsoft is a major investor in OpenAI.)

Governments don’t like to govern, but they like to control. Human freedom always takes a back seat. I’m reminded of something P.J. O’Rourke told me in 2009: “Think about the kid-has-to-put-a-hockey-helmet-on-to-answer-the-phone society we live in now. Government is filled with people who come and tell you that everything you do is bad for you, bad for other people, insensitive, divisive, harms the climate, unsustainable, leaves too large a carbon footprint, tangles things in the tuna nets that shouldn’t be tangled in them. Whatever. They’ve always got some reason to tell you what to do.”

Why? “Government is just a form of bullying for weaklings,” O’Rourke said. “Politics is the art of achieving power and prestige without merit.” Bingo.

Adam Smith wrote in “The Theory of Moral Sentiments” (1759) that government bureaucrats think they “can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chessboard.” But Smith notes on “the great chessboard of human society, every single piece has a principle of motion of its own.” Freedom.

The more you look, the less government can be trusted. Anthony Fauci foisted the 6-foot social-distancing requirement on all of us during the pandemic. How did he come up with 6 feet? Science? Dr. Fauci now admits it “sort of just appeared.” What else has been pulled out of thin air?

The problem with government is that the people in power, especially presidents, become the single point of failure.

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WSJ: Lay Down Your Weaponization

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https://www.wsj.com/articles/lay-down-your-weaponization-bad-word-use-media-misinformation-claudine-gay-7a1bfbe5

If I had a nickel for every time I read that something is “weaponized,” I could buy my own bazooka. We may have reached “peak DEI,” but we’re not even close to “peak weaponization.”

Last week President Biden accused Republicans discussing the open border of “weaponizing an issue to score political points.” Donald Trump posted on Truth Social: “By weaponizing the DOJ against his Political Opponent, ME, Joe has opened a giant Pandora’s Box.” The Chronicle of Higher Education, along with many other publications, suggested that the “weaponization of plagiarism” led to Harvard President Claudine Gay’s resignation. The New York Times says that by attacking Ukraine’s power grid, Russia weaponized the cold. Really?

“Weaponized information” is all the rage: fake news, disinformation, propaganda. The University of North Carolina at Charlotte defines it as “an attack to create harm, change beliefs or behavior and support the goals of the attacker.” We used to call it lying, but oh well, this new term sounds like something that could receive massive research grants. The RAND Corp., a think tank with annual spending exceeding $350 million, published a paper titled “The Weaponization of Information: The Need for Cognitive Security.” See what I mean?

In 1939 the scholar Max Lerner wrote the book “Ideas Are Weapons,” by which he hoped to inspire exiled writers—he was a refugee from Russia—to use their writing against fascism. Never mind that Sherman tanks and howitzer artillery actually defeated fascism, Lerner opened the door to nonweapon weaponization. The rush through that door has become a thundering herd.

A headline blares: “Weaponized Narrative Is the New Battlespace.” Author Clifford Bob complains of “weaponized rights.” By blaming addiction for your bad behavior, you can “weaponize your mental health.”

I’ve seen people accused of both “weaponizing the climate crisis” and “weaponizing the vulnerability to climate change,” though I run a little hot and cold on which is dumber.

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WSJ: Pop Goes the DEI Bubble

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https://www.wsj.com/articles/pop-goes-the-dei-bubble-affirmative-action-claudine-gay-harvard-esg-blackrock-39c77d13

Have we reached peak DEI? The unraveling of “diversity, equity and inclusion” initiatives had already begun—five states banning DEI programs; Google, Facebook and others cutting DEI staff; Students for Fair Admissions v. Harvard—well before Harvard President Claudine Gay was demoted.

Author Christopher Rufo, echoing 1960s student activists, called the rise of DEI a “long march through the institutions”—a 50-plus-year ideology infiltration into universities, K-12 schools, government, media and corporations with the goal of telling us all how to live. That’s why I enjoy that the word “rot” is back in style to describe what is happening inside the walls of academia.

Like everything based on the writings of Karl Marx—seeing oppressors and colonial struggles everywhere—DEI was doomed to fail. The uniformity of thought known as intersectionality, fostered by DEI, meant all oppressed people must support all others who are oppressed. But that idea burst on Oct. 7 when Hamas raped, murdered and kidnapped Israelis. Many liberals, especially Jewish ones, couldn’t support genocidal “colonized” terrorists. Pop! The long march is in retreat.

By the way, ESG, or investing based on “environmental, social and governance” principles, peaked last June, when BlackRock CEO Larry Fink said he would stop using “the word ESG anymore, because it’s been entirely weaponized.” Never mind that performance of ESG funds has been sketchy and that BlackRock had been adding the label “sustainable” or “ESG” to funds and charging up to five times as much. Then a study published in December by Boston University’s Andrew King found “no reliable evidence for the proposed link between sustainability and financial performance.” Pop!

Most offensive to me was DEI’s devious underlying agenda: societal design. Blinded by fanatical devotion, activists were pawns for the cause of reshaping the world into a collective utopia to be run, of course, by progressive, self-identifying elites. That was the “my truth” that Ms. Gay invoked on her exit. Critical theories and Marxist techniques would take power from you and me, using big government as the enforcer.

The new societal design, embedded in DEI and ESG, envisioned idyllic communal progress. History shows this never works because power corrupts.

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WSJ: SBF Faces Prison, but ‘Effective Altruism’ Lives On

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https://www.wsj.com/articles/sbf-faces-prison-but-effective-altruism-lives-on-philanthropy-biden-administration-827d03f2

While you were distracted preparing for the frolic and fun of New Year’s weekend, the Justice Department on Dec. 29 mysteriously announced it would no longer pursue campaign-finance charges against FTX founder Sam Bankman-Fried. Too bad. I was looking forward to the March trial and seeing the politicians who accepted the convicted fraudster’s donations squirm like worms.

What influence was SBF seeking to buy? Beyond trying to stave off crypto regulations, he was shoveling millions to the effective-altruism movement, which continues to infiltrate governments more than most people realize. With SBF facing a long term in the big house, has effective altruism landed on the ash heap of history? Sadly, not yet. Did you know proponents of the movement basically wrote the Biden administration’s recent executive order on artificial intelligence?

What drives these folks? Humans have an almost infinite capacity for self-inflicted dread, distress and dismay. We simply must have something to worry about: global cooling, global warming, a zombie apocalypse, eternal damnation. The end is always near. We are Chicken Littles running around with our heads cut off.

Effective altruists thrive off such fear-mongering. Their roots are in the rationalism movement, whose followers say actions should be based on truth, not on beliefs or emotion. That sounds fine in principle, but effective altruists take this a step further. They try to apply a probability number to everything. In his book “Going Infinite,” Michael Lewis explained that SBF applied “expected values” to everything: Should he attend a meeting? Should he continue dating co-conspirator Caroline Ellison? He even calculated he had a 5% chance of becoming president. Sounds more like emotion than truth, like hedging your bets by building an underground apocalypse shelter.

Rather than becoming monks to await the end of time, effective altruists practice “earning to give,” meaning they are willing to work within the capitalist system to earn as much as possible so they can give most of their earnings away to solve the future problems that they estimate will have the highest expected values, the largest probability of happening. Mr. Bankman-Fried obviously took the “maximize earnings” thing too far by venturing into fraud. You can imagine him thinking: But it was for a good cause. With the help of his family, an increasing chunk of his giving was to politicians to influence policy.

Effective altruists have also talked themselves into “long termism”—giving money away today to save distressed people 100 years from now.

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WSJ: No, AI Machines Can’t Think

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https://www.wsj.com/articles/no-ai-machines-cant-think-and-arent-going-to-kill-us-all-c6942878

Be ready for it. Sometime soon, the digirati will declare that artificial-intelligence machines have passed the Turing test and thus the era of superintelligence and sentient computers has arrived. The promised land is artificial general intelligence: AGI. Don’t fall for it. Your cranial cavity’s inner voice and self-awareness explain why.

In 1950 computing pioneer Alan Turing proposed a simple “Imitation Game” test to answer the question, “Can machines think?” If an interrogator blindly connected to a machine and a human can’t tell the difference based on their answers, then the machine can think. Turing thought that by 2000 machines would be able to imitate humans 70% of the time after five minutes of discussion. He then brushed off his own analysis by saying, “The original question ‘Can machines think?’ I believe to be too meaningless to deserve discussion.” Instead, the Turing test simply measured if machines could fool humans. Look up the verb “ape.”

Nonetheless, fear-mongers are out in force. In Silicon Valley, what goes for cocktail-party conversation now includes the question, “What’s your p(doom)?” This is a geek-class measure of the probability that AI will existentially wipe out mankind. Many answer over 30. Mine is zero.

There are so many flaws in a simple Turing test. You think AI hallucinates or makes stuff up? Many real-life thinking machines, (you know, the ones with skin) also sound unreal: Men can get pregnant, Bored Ape NFTs are valuable, man buns, peaceful protests.

Mustafa Suleyman, chief executive of Inflection AI and a co-founder of DeepMind, which Google bought, recently proposed a new Turing test. Provide a machine $100,000 and see if it can turn it into $1 million, perhaps using Alibaba and an e-commerce site. It’s silly because by this measure a decent spambot is intelligent!

Ada Lovelace, the 19th-century mathematician, was ahead of her time. Of Charles Babbage’s early computer, invented in 1837, she wrote a few years later: “The Analytical Engine has no pretensions to originate anything. It can do whatever we know how to order it to perform.” A Lovelace test might be, “Can AI generate something truly original?” And enjoyable, not the proverbial novel typed by a thousand monkeys. Same for movies, music and art. Rensselaer Polytechnic Institute professor Selmer Bringsjord proposed a “(Better) Lovelace” test in 2001 to detect creativity.

What’s really needed is solid definitions of thinking, intelligence and sentience. Computers are already better than humans at many tasks.

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WSJ: The Lesson of 1975 for Today’s Pessimists

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https://www.wsj.com/articles/the-lesson-of-1975-for-todays-pessimists-new-year-3349098e

On Dec. 31, 1975, I drove into Manhattan with a few friends to see the New York Rangers play at Madison Square Garden—“The World’s Most Famous Arena.” We sat in the blue nosebleed seats and a cigar smoker a few rows down—yes, this was before they banned smoking indoors—would sometimes block our view with smoke rings. There were more fights in the stands than on the ice. Anyone remember the Atlanta Flames? They won 8-1.

Afterward, we walked to Times Square. I remember it well because it was nasty cold and fogged in. We could have used some flames. We went into the Playland arcade with its cling-clang of pinball machines and early blocky video games to try to warm up. We walked some more and visited one of those touristy stores selling cameras, watches and T-shirts until they threw us out for not buying anything.

There were, at most, a few thousand folks in socked-in Times Square that night—certainly not the million who show up these days. It was way too cold. Even Guy Lombardo, playing “Auld Lang Syne” at the Waldorf-Astoria, wasn’t dumb enough to be out in that weather. Back in 1972, the first “New Year’s Rockin’ Eve” on ABC was hosted by the band Three Dog Night with Dick Clark anchoring from Times Square. If he was there that cold evening, I didn’t notice. The ball dropped at midnight and few paid attention.

Maybe it’s because of that experience that whenever I think of the ’70s, I shiver. The Dow Jones Industrial Average closed that afternoon at 852.41. Four years later it was basically the same. The skies were always gray and smoggy. Beyond air pollution there was destitution in 1975: 8% unemployment. And while inflation was dropping, it was still running hot at 7%. Garbage piled up on the streets. New York City was bankrupt. In October, the Daily News ran the headline: “FORD TO CITY: DROP DEAD.” Punk bands would soon be singing “No Future.” They were desolate times. In vitro fertilization, stents and recombinant DNA human insulin were still years away.

Oh, and I forgot to mention, on the way into New York we took the Pulaski Skyway over the industrial wastelands of Jersey City to avoid paying tolls on the New Jersey Turnpike. Back then, the skyway was often enveloped in smog and always smelled. No one knew why. It turns out that from the late ’60s until 1985, underground fires burned in the PJP Landfill on the south side of the bridge. If ever there was a metaphor for the ’70s, there it was: a smoldering garbage-dump fire.

Back in Times Square, it was definitely a three-dog night. Did you know the band’s name comes from how many dogs need to climb into your bed to keep you warm? Forget Jeremiah, at the start of the ’70s, Three Dog Night sang in “Good Time Living”: “Air pollution, revolution, you know I’ve had my fill. Advertisin’, computerizin’, don’t understand it and I never will.” If you squinted hard enough through the smog and cigar smoke you could see the computerizin’ digital future. But no one wanted to believe it.

Intel had invented microprocessors only four years earlier.

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WSJ: Small Talk, Big Revelations

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https://www.wsj.com/articles/small-talk-big-revelations-holiday-parties-b096e355

Ring a ding ding. Hot toddies. Ugly sweaters. It’s that time of year, when you will find yourself stuck at a family gathering with your cosmic second cousin. Or chatting with randos at a cocktail party where you know only the host. You’re forced to converse. But there’s good news. Everyone has a unique story—success, tragedy, oddity. It just takes effort to extract it.

I wish I were better at conversations. Unlike writing, there’s no backspace key. I often chat with folks who babble away about how important they are, until I eventually pick a spot on their forehead to stare at and plot my exit. Or worse, they don’t talk much and leave uncomfortable silent gaps, making my exit even harder.

Some people jump right in with conversation starters like, “How ’bout those Niners?” Others accumulate trivia to lubricate their cocktail-party conversation. “Did you know that there are more rabbits than rabbis in Israel?” Good, though not my style.

Still, interactions with others are the spice of life. Stuck? Try the FORD method: Ask about family, occupation, recreation and dreams. Questions about kids, jobs, travel or hobbies usually can get people talking until you can eventually ask, “But what do you really want to do?” If they’re under 35, the answer is often “save the world.” OK, save away. At least they’re talking.

We’re always told to avoid getting blinded by the light of MPR: money, politics and religion. But mama, that’s where the fun is! There’s nothing better than conversations with strangers or folks you’ve known your whole life that flow, with back and forth, give and take, volleys and countervolleys, even if it gets a little spicy, until you’ve learned something new about them and maybe about the world.

But FORD goes only so far—something is always missing. Conversations can be shallow. I don’t care that you’re just back from Florence or that your kid works in private equity.

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WSJ: Tariffs Are for Losers

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https://www.wsj.com/articles/tariffs-are-for-losers-global-economy-protectionism-trade-jake-sullivan-hawley-585c4175

Who said this? “To really rebuild the industrial heartland of America, you need a committed national policy of tariffs, of protecting American industries.” It was J.D. Vance during his successful 2022 campaign for U.S. Senate. This thinking is dangerous and pervasive—bipartisan battiness. In reality, tariffs impose costs on all Americans to subsidize a few jobs.

Missouri Sen. Josh Hawley, also a Republican, has proposed the Raising Tariffs on Imports from China Act. All he’s missing is a colleague named Smoot to reprise the Smoot-Hawley Tariff Act and cause a market crash and depression. Mr. Hawley said in June that “in the last 20 years in the state of Missouri, we have lost 60,000 jobs to the People’s Republic of China—that number nationwide is almost four million.” No mention of the better jobs that were created. There were 130 million nonfarm payroll jobs in 2003 vs. 156 million today.

You’re going to hear a lot about tariffs this election cycle. President Trump’s tariff triplets—Steven Mnuchin, Peter Navarro and Robert Lighthizer—whispered populist gobbledygook in his ear that he was Tariff Man. Now Mr. Trump has proposed 10% tariffs on all imports. That sounds strong but it’s actually a weakling move, especially with U.S. industrial capacity already near an all-time high.

In October, the Journal ran an article by Oren Cass of American Compass titled, “Why Trump Is Right About Tariffs.” It’s filled with dime-store economic thinking, claiming that tariffs are for raising government revenue and that our service economy is about “cutting hair” and “serving fast food.” Mr. Cass completely ignores that phones, medical equipment and other imports are often designed in the U.S. Sure, they are assembled overseas, but their value, usually software, is created here. Should we put tariffs on search engines and social networks? Of course not. China blocks ours to force its citizens to use inferior products. Tariffs denote weakness, not strength.

With tariffs, you get false price signals and less innovation. They misallocate capital and human resources by having entrepreneurs chase fake opportunities. Domestic manufacturers love tariffs, which allow them to raise prices, but the rest of us have to overpay for goods while manufacturers become lazy. The largest and lowest-cost electric-vehicle manufacturer in the world, China’s BYD, is effectively kept out of the U.S. by Trump and Biden tariffs, and we now have a glut of unprofitable and expensive domestic EVs.

If all the chips in an iPhone were made in the U.S., I calculate we would be paying close to $2,000 for one and unit sales would decline 50%. Would you upgrade at that price?

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WSJ: Spinning in Circles in 2023

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https://www.wsj.com/articles/spinning-in-circles-in-2023-covid-openai-altman-corn-subsidies-china-dc0ac4ad

My head is spinning from all of 2023’s confusing circular circumstances.

OpenAI’s Sam Altman has often said that artificial intelligence will take jobs away. He was right. It took his job away—if only for 100 hours until he circled back. He is no fan of capitalism, famously saying, “The incentives of capitalism to create and capture unlimited value I’m a little afraid of.” OpenAI, given worries about AI’s “existential risk,” was created as a nonprofit that “benefits all of humanity.” But generative AI requires oodles of capital to run. So, as a born-again capitalist, Mr. Altman had the nonprofit OpenAI create a “capped profit” OpenAI that raised $13 billion from Microsoft and now, lo and behold, actually benefits humanity.

The U.S. doesn’t have diplomatic relations with Taiwan, so as not to upset mainland China, but it will defend Taiwan if China attacks so such companies as OpenAI can get the advanced chips for generative AI that will allegedly “existentially” end humanity.

The U.S. funded “gain of function” research in Wuhan, which led to the pandemic and caused politicians, three years on, to restructure supply chains completely and move away from free trade so that the U.S. could make masks to respond to a pandemic we essentially paid for.

To have any chance at getting elected, presidential candidates must fly to Iowa and promise corn subsidies—almost $100 an acre. This leads to an overabundance of cheap high-fructose corn syrup that’s used in processed foods and sodas. This causes higher rates of diabetes and obesity. The Biden administration had to cap insulin prices, which caused shortages. Also, Medicare has to pay for Ozempic to treat diabetes and obesity.

Thanks to the Obama administration, the U.S. has released billions of dollars to Iran, which funds terrorist groups like Hamas and Hezbollah, forcing the U.S. to provide Israel with Iron Dome missiles and send aircraft carriers to the Mediterranean.

After the Soviet Union fell, the U.S. brokered a deal that took nuclear weapons away from the newly independent Ukraine, and now we have to send Javelins and Himars and tanks and F-16s so the country can defend itself against Russia.

Read the rest here.

WSJ: Magic Pills Are Coming

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https://www.wsj.com/articles/magic-pills-are-coming-healthcare-cost-parkinsons-cancer-addiction-depression-e3c392fa

At healthcare conferences, someone always asks, “What if there was a magic pill?” One that could cure major diseases. What would the healthcare industry look like? Some emergency rooms and hospitals but less doctors and spending? Inevitably, the discussion ends with, “But, of course, there is no magic pill.” So we spend, spend, spend on healthcare, from $1.4 trillion in 2000 in the U.S. to more than $4.3 trillion—18% of the economy—in 2021.

Could there be magic cures? History shows plenty of wonder drugs and treatments. Aspirin reduces inflammation. Penicillin and other antibiotics fight infections. Insulin treats diabetes. Stents unblock arteries. These treat but don’t cure diseases. Plus, two-thirds of American adults are overweight or obese, which puts them at greater risk for many chronic diseases such as heart disease and stroke. According to the National Institutes of Health, “86% of health care costs are attributable to chronic disease.”

By now you’ve heard about glucagon-like peptides (GLP-1). Drugs that mimic these hormones, like Novo Nordisk’s Ozempic and Wegovy and Eli Lilly’s Mounjaro, seem to treat diabetes by lowering blood-sugar levels. They also promote weight loss and lower the risk of heart disease. What can’t GLP-1s do?

A friend of mine with diabetes started taking Mounjaro and now, because of shortages, takes Ozempic. He lost 70 pounds, got his A1C levels back to normal and told me, “I’m simply not hungry anymore. It’s not even like I’m full. I used to throw back a whole pizza and a gallon of milk. Now a slice and a bottle of water is more than enough. The food I used to crave has no interest for me.” Amazing. Goldman Sachs Research expects this to be a $100 billion market by 2030. It could save multiples of that in healthcare costs. Patients take these drugs via injectable pens. Pills are coming—dare I say magic pills?

Here’s another magic cure: Israeli company Insightec, backed by Koch Industries, has made a helmet with 1,020 acoustic sources that when placed on a shaved head can focus ultrasound signals to specific spots in the brain. For patients with tremors, including some with Parkinson’s disease, the system uses magnetic resonance, similar to an MRI, to guide “focused ultrasound” to a specific spot in the brain, which it heats to 113 degrees Fahrenheit. This creates a lesion, which miraculously eliminates tremors with a less than 1% chance of side effects.

Insightec CEO Dr. Maurice R. Ferré tells me the company’s “incisionless brain surgery” is in 200 medical centers. Its devices have been used to perform 20,000 procedures that cost $18,000 to $20,000, replacing $60,000 electrode-implanting brain surgery. He adds that the company has 35 ongoing trials investigating focused ultrasound for things like depression, obsessive-compulsive disorder, Alzheimer’s, and even neurodegenerative diseases like ALS.

One trial caught my eye.

Read the rest here.

WSJ: Is the U.S. Ready for War?

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https://www.wsj.com/articles/is-the-u-s-ready-for-war-military-weapons-warfare-ukraine-middle-east-asia-tom-cotton-5c9032e8

Ukraine’s troops are using both old-fashioned heavy artillery and commercial products such as drones with grenades attached to them, directed via Starlink’s satellite internet service. Hamas terrorists used motorcycles and paragliders. Israeli soldiers use sophisticated Iron Dome antimissile systems and, to close off tunnels, “sponge bombs” that work like spray foam sealant from Home Depot.

Is the U.S. ready for that kind of war? To find out, I met with Arkansas Sen. Tom Cotton—a former platoon leader with the 101st Airborne Division in Iraq who now sits on the Armed Services Committee. “I still don’t think the Defense Department is doing enough to adapt quickly,” he said. Current wars have exposed the Pentagon’s “brittleness and lack of resiliency, and that’s in part going back to the drawdown during the Clinton era.”

“Different wars require different kinds of weapons,” he said. “You just look at three conflicts or potential conflicts. In Ukraine, you have heavy mechanized land warfare, and Hamas, you have intense urban combat. And in Taiwan, if it came to that, you would have a largely maritime conflict. Hamas doesn’t have tanks. So Israel doesn’t need Javelins.”

“Necessity is the mother of invention. And Ukrainians are very resourceful,” he continued. “The problem with the Soviet Union was not only that it was communist, but also that it was Russian. Ukraine exposes the fanciful thinking of many political leaders here and in Europe who believed that threats from Russia ended with the Cold War.”

But are we buying the right stuff? F-35 Lightning II fighter jets do amazing things, but don’t we need more adaptable weapons? “Machine guns can do a pretty effective job against paragliders,” Mr. Cotton says. “In Congress, when people think about technology as it applies to security, they think too much about whiz-bang keystroke warriors, that somehow you’re going to win wars just with cyber attacks or with hashtags.” He shakes his head. “It always gets down to men under arms in the mud on the ground killing their enemies until their enemies submit to their will.”

“The department needs to do a better job of that kind of thing. There’s still going to be a significant need for traditional battlefield technology…”

Read the rest here.

WSJ: Autonomous Cars Beat EVs

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https://www.wsj.com/articles/autonomous-cars-beat-evs-electric-vehicles-battery-charged-9a1a1bcf

Subsidies for electric vehicles are a huge mistake. These cars are conceptually the same battery and motor as a fourth-grade science project—not a great innovation. And given high prices for EVs, subsidies are mainly a giveaway to the already well-off. If you add up carbon emissions from manufacturing, daily use and end of life, EVs have total life-cycle emissions 30% lower than gasoline-powered autos. In Silicon Valley, something is considered truly transformational if it’s 10 times better, not a third.

And now there’s a glut of them. Ford is losing billions, and Honda and General Motors have scrapped plans to build affordable EVs. Instead of throwing taxpayer money at EVs, President Biden could have been a hero and helped bring autonomous vehicles to the market faster.

Why? Start with the 42,795 traffic fatalities last year. Cost-benefit analysis involves something called the Value of Statistical Life, and the Transportation Department uses $12.5 million per traffic death. Lowering annual crash fatalities to 10,000 would be worth $400 billion to the U.S. economy every year. Technology seriously reduces driver error, a cause of many accidents.

Another reason? With fully autonomous vehicles, the U.S. would need only half of its nearly 300 million cars. Most sit around doing nothing. Transportation as a service would become reality—no need to own cars; simply click and a driverless one shows up when you need it. That would mean way less emissions and no parking hassle or road rage.

So what’s the problem? Tesla’s Full Self-Driving capability, priced at up to $300 a month, still runs stop signs. The company uses simple CMOS image sensors, like those in an iPhone, instead of more-expensive Lidar pulsed lasers. Teslas get confused and sometimes run into emergency vehicles with flashing lights. I recently rode in a Model 3 in self-driving mode that botched a simple yield.

It has been a bad few weeks for autonomous driving.

Read the rest here.

WSJ: Is AI a Painkiller or a Vitamin?

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https://www.wsj.com/articles/is-ai-a-painkiller-or-a-vitamin-artificial-intelligence-tech-jobs-workers-economy-f17ca7bf

Last week, the White House issued an executive order for command and control of artificial intelligence, strangely invoking the Defense Production Act. President Biden apparently got nervous after watching the latest “Mission: Impossible” movie. Really. Added to the order were a mishmash of unhelpful notions like “advancing equity” and collective bargaining.

It’s been only 11 months since OpenAI’s ChatGPT was released into the wild. It feels longer, with so many new players and capabilities beyond text, including open-source large language models that run on PCs and maybe on phones. Will generative AI take our jobs? Cause human extinction? Create massive wealth? Get regulated out of existence?

If you’re confused, you aren’t alone. Sam Altman, who runs OpenAI, thinks AI “will do more and more of the work that people now do.” Oh, and he says that by 2031 AI profits will allow $13,500 a year in universal basic income for every American, for doing nothing. On the other hand, he said, “We face serious risk. We face existential risk.”

Venture capitalist Vinod Khosla told the crowd at WSJ Tech Live last month, “AI will be able to do, within 10 years, 80% of 80% of the jobs that we know of today.” That was probably true for the plow, phone and Slack, but Mr. Khosla neglects to mention the 80% more and better jobs AI will create.

How do you get your arms around this thing? Sometimes analogies help. In Silicon Valley, venture capitalists often look at software or cloud-computing opportunities and put them in two buckets: painkillers or vitamins. I’ll add a bucket for psychedelics—more on that later.

Painkillers lower a company’s costs by axing lower-end jobs.

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WSJ: Three Ideas to End Tent Cities

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https://www.wsj.com/articles/three-ideas-to-end-tent-cities-california-san-francisco-homelessness-theft-crime-poverty-5c0a8e29

San Francisco

Why are FBI agents raiding homeless tents in San Francisco? Despite the city’s spending billions on homelessness, the number of “unhoused”—as progressives say—has continued to soar alongside crime and opioid deaths. The tent encampments littering its streets have made the city a laughingstock. Los Angeles, San Jose, San Diego, Seattle, Portland, Ore., and others also have tent cities. How can this be in the world’s wealthiest country? Does the U.S. not have the will to even try to fix this anymore?

Money won’t solve homelessness, but changing or clarifying three laws and issuing an executive order would put a serious dent in it.

Start with Martin v. Boise (2018) and Grants Pass v. Johnson (2023), Ninth U.S. Circuit Court of Appeals cases that say “anticamping” ordinances and arrests are unconstitutional—cruel and unusual punishment—if the homeless lack “access to adequate temporary shelter.” That sounds humane but has serious unintended consequences. The homeless flock to cities that allow them to sleep in tents on public property. Residents suffer, cruelly and unusually.

Perhaps a small tweak could allow tent sweeps if shelters were available within 60 miles. If Florida Gov. Ron DeSantis and Texas Gov. Greg Abbott can bus illegal immigrants thousands of miles to Nantucket and Manhattan, why can’t mayors bus the homeless to shelters an hour away? Twenty-plus cities, including San Francisco, want the Supreme Court to reverse Martin and Grants Pass for “the overall well-being of the community.” It should.

Here’s another bad law: In 2014, California voters passed Proposition 47, also known by its ballot title: “Criminal Sentences. Misdemeanor Penalties. Initiative Statute.” Under Proposition 47, California Penal Code 459.5 defines shoplifting as a misdemeanor that involves stealing items valued at under $950 from an open business during its regular hours. So stupid.

This is why San Francisco criminals casually stroll through stores filling trash bags with goods, careful to stay under $950.

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WSJ: War Destroys Leftist Orthodoxies

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https://www.wsj.com/articles/war-destroys-leftist-orthodoxies-6947fb06

Wars are times of transition, when old ideologies are discredited: slavery, isolationism, appeasement, socialism. Now, like the 1,200 health professionals who claimed during 2020’s protests and riots that racism was a bigger health concern than Covid, another set of progressives touting tired orthodoxies are being discredited before our eyes.

After Hamas’s attacks on Israeli civilians, a director of diversity and inclusion at Cornell’s business school glorified terrorism, writing about “the resistance being launched by Palestinians.” Remind me why we have DEI departments? At Harvard more than 30 students groups signed a letter claiming Israel was “the only one to blame.” Rep. Alexandria Ocasio-Cortez is worried about “the ethnic cleansing of Palestinians.” Twitter is littered with tweets saying “this is decolonization in action.” All these support an oppression narrative.

Where did these people get such ideas? The universities. Here’s an introductory-level EMR (Ethnicity, Migration, Rights) class at Harvard: “Global Rebellion: Race, Solidarity, and Decolonization.” The course discusses how “to rebel against global white supremacy.” I found similar courses at Yale, Princeton, Stanford, Duke and other top schools. Another Harvard colonialism course studies “decoloniality”—which sounds like a made-up academic term that turns out to involve “anti-oppression” and “de-Westernizing.” Notice how so many grievances mimic Marxist class struggles. Why does radicalizing and dividing students over identity take precedence over, well, real inclusion?

The attacks were “in light of the orgy of occupation.” Those are the words of Mohammed Deif, military commander of Hamas. Iran’s (drone-stricken) Gen. Qassem Soleimani included Hamas in the “Axis of Resistance.” The United Nations has a Special Committee on Decolonization. Sound familiar? Occupation, resistance, decolonization—progressive talking points all.

The economist Ludwig von Mises wrote in 1947 that the Soviet’s agenda was aided by korisne budale—useful fools, which has since morphed into “useful idiots.” While an overused expression, it fits this time. Those speaking of occupation, resistance and decolonizing are pure and simple useful idiots for terrorism, running interference and providing a rationale for depraved behavior. These witless nitwits have also aided Iran’s attempt to stop Saudi Arabia from joining the Abraham Accords. While many university presidents have since come out against the barbaric attacks, the damage has been done. A Great Discrediting has begun.

Jon Huntsman Jr., a former ambassador to China, emailed the University of Pennsylvania’s president saying his family foundation will “close its checkbook” based on Penn’s “moral relativism” and “race to the bottom.” I’ve heard of alumni of Harvard and elsewhere mailing $1 bills to their alma maters—as in, “That is all you’re going to get.”

Read the rest here.

WJ: Beware Market Complacency

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https://www.wsj.com/articles/beware-market-complacency-as-war-brings-uncertainty-bfbf75d4

Wars bring uncertainty. Smart investors take a snapshot in time and then position their portfolios for what they think will change. The terrorist attacks by Hamas in Israel were horrific, barbaric. The Israeli reaction may bring long-term peace by rooting out Hamas and, if the Biden administration has any fortitude, neutralizing their Iranian backers.

Right after the attacks, oil prices rose 4%. That’s it? Oil is still down almost 6% from its $93.68 Sept. 27 peak. All this with Saudi production cuts and 17 days left in the U.S. Strategic Petroleum Reserve. An oil shock may still happen—oil prices rose from $3 in October 1973 to $12 in January 1974—but something else is amiss. Inflation might be cooling, but global energy demand is clearly no longer strong. Dreams of a soft landing for the economy may turn into nightmares of hard thumps.

The Federal Reserve cranked up short-term interest rates, now between 5.25% and 5.5%, to fight Bidenflation. But the carnage in the long end of the bond market is nasty. With yields going from 0.51% in August 2020 to 4.63% today, 10-year U.S. Treasury prices are down almost 23% from August 2020. This is the worst bond rout in U.S. history. Don’t be fooled by last week’s bond rally. Wars drive global capital to “safe” U.S. bonds.

Global bond losses are approaching $4 trillion since July. The biggest risk? Banks stuck with deteriorating bonds. At the end of June, there were $500 billion of unrealized bond losses at 289 U.S. banks. More than $100 billion of that may be at Bank of America. Yikes. In March, Silicon Valley Bank lost a measly $1.8 billion selling $21 billion in bonds, which caused a run and SVB’s implosion.

Then add commercial real-estate loans. About $500 billion a year needs to be refinanced at much higher interest rates. New 30-year home mortgages are dancing around 8%. Corporate bankruptcies are accelerating. China real estate feels like a black hole. Last week Sam Bankman-Fried’s lawyer asked former FTX chief techie Gary Wang, “Are you aware of the difference between solvency and liquidity?” Mr. Wang replied, “Now I am.” We may all be soon.

Still, the latest jobs report showed 336,000 new hires in September. The economy must be booming! Digging down finds…

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WSJ: Estonia’s Lessons for Ukraine

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https://www.wsj.com/articles/lessons-for-ukraine-from-estonia-corruption-economy-taxes-education-business-investment-483f974b

“You can’t bribe a computer,” Estonian Prime Minister Kaja Kallas told me. When it’s time to rebuild, Ukrainian President Volodymyr Zelensky should heed these words. Estonia—a member of the European Union and the North Atlantic Treaty Organization—is No. 1 in providing government services digitally, according to the United Nations; first in democratic development among 29 postcommunist countries, according to Freedom House; first in international tax competitiveness, according to the Tax Foundation (the U.S. is 22nd); and sixth in the 2023 Index of Economic Freedom, according to the Heritage Foundation (the U.S. is 25th). It has the most startups per capita in Europe, and its 15-year-olds top the Continent in reading, science and mathematics.

Last week I sat down with Ms. Kallas, 46, in the cabinet room of Stenbock House, seat of Estonia’s government, and couldn’t help asking, “How did you accomplish all this since regaining independence?” I had been politely warned not to say “since Soviet occupation.”

“To attract investments, investors must trust your economy,” Ms. Kallas said. “Under the Soviets, we normalized corruption. When we restored our independence and freedom, suddenly it required a whole new mind-set from all people—it was not OK to steal from the state.”

“We have become this tech-savvy country”—Skype was created in Estonia —“because we had to do everything from scratch, so we sort of leapfrogged and went directly into e-governance.”

“Ninety-nine percent of our government services are digital, and we are more and more using AI.” Plus, “98% of people file taxes online because it’s all pre-filled. We are probably the only country in the world where people actually compete over how fast they file taxes because it’s so simple.”

Ms. Kallas noted her government uses these digital tools “to decrease, diminish bureaucracy.” That’s how to create small government.

Read the rest here.