Andy Kessler

WSJ: Tech CEOs Deserve an Apology

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https://www.wsj.com/articles/tech-ceos-deserve-an-apology-11595796522

It’s summer—must be time to grill a few CEOs. Amazon’s Jeff Bezos, Apple’s Tim Cook, Facebook’s Mark Zuckerberg and Google’s Sundar Pichai will appear Wednesday (virtually, how fitting!) before the House Judiciary Antitrust Subcommittee. It’s tech success vs. lawyers and career politicians who probably have an aide print out their emails. Broadway is closed, so this will be must-see theater.

The CEOs’ task is to disarm, dissuade and dissipate. No need to upstage congressmen, who are playing a weak hand. Antitrust is driven by consumer harm. Sure, there are screw-ups: Amazon favors its own products, Apple its own apps, Google its own YouTube videos; Facebook collects too much personal data. Yet none of these habits necessarily harm consumers and all could be easily fixed without decadeslong antitrust inquisitions. Lawyers are taught: “If you have facts on your side, hammer the facts. If you don’t, hammer the table.” Expect loud table banging.

Mr. Zuckerberg should play up consumer benefit: “Chairman [David] Cicilline, 85.7% of registered voters in your Rhode Island district use Facebook for over an hour every day.” Get him thinking: Would they vote for Facebook over me? Questions will fly about an advertiser boycott over “hate speech and divisive content”— Disney recently joined Starbucks, Ford, Unilever and Verizon. But branded advertising doesn’t really work on Facebook, hence brands are saving money by boycotting. Zuck must think: We don’t need these Mickey Mouse outfits.

Facebook is a small-business platform, and a critical one. Millions of companies rely on it to sell products locally and often nationally. Mr. Zuckerberg should ask: “Are you against small businesses? Is this an indictment of our entire American society? Well, you can do whatever you want to us, but I for one am not going to stand here and listen to you bad mouth the United States of America. Gentlemen!” That last part was Otter in “Animal House,” but you get the point.

On the other hand, Amazon should demand praise—like when you ask the annoying Parisian waiter, “Do you speak German?” and as he sputters “Non” you say, “You’re welcome.” Mr. Bezos’ job is simple: “Congressman, have you watched ‘House of Cards’?” (They all have.) “You’re welcome. Netflix uses Amazon servers. So does Zoom. Did you get your next-day delivery of that 6-quart Instant Pot? You’re welcome.” Lockdowns would have been undoable without Amazon Prime.

WSJ: Hail Mary Agenda

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https://www.wsj.com/articles/a-yuge-re-election-agenda-11595180915

Donald Trump’s presidency may have ended in front of St. John’s Episcopal Church on June 1. Of course, I also thought Barack Obama’s presidency was over when he accepted the Nobel Peace Prize—another futile gesture. President Trump is down big in the polls, but is it too late? Recall, behind 45-41 with time running out in November 1984, undersized Doug Flutie threw his famous Hail Mary pass to victory. Mr. Trump needs one. Populism and trade won’t work this time as Joe Biden has, Clinton-like, triangulated with his “Buy American” plan. My advice: Go big. Here’s a bold second term economy-rousing agenda:

• End the interest expense deduction. This would be a “Nixon goes to China” moment for President Trump, as only a real-estate guy who made his fortune writing off interest expenses could get away with it. The asymmetry—we pay taxes on interest earned but write off interest paid—has always hurt the economy, even caused many boom-busts. It helps mediocre businesses like real estate and levered-up companies bought by private equity, which often get whacked in recessions (Hertz hurts). The 2017 tax reform capped the interest expense deduction at 30% of taxable income for most filers, but there are loopholes a Mack truck could drive through. Get rid of it and watch capital flow toward productive uses.

• End subsidies. Start with corn and biofuels—Iowa has lost sway since it botched its caucuses. Actually, end all energy subsidies: oil, gas, solar and wind. Elon Musk became (briefly) the fifth-richest person in the world by selling unprofitable cars and profitable “regulatory” credits, $350 million worth last quarter. End them. While you’re at it, end inefficient labor subsidies by killing the Davis-Bacon Act of 1931 and sinking the Jones Act of 1920, shipbuilders’ gift. It’s time.
• Buy Cuba and make it a county of Florida. Having a failed communist state 90 miles from Florida should no longer stand. During the 1962 missile crisis, President Kennedy said he would “give assurances against an invasion of Cuba,” so we can’t send in the Marines. Mr. Trump got skunked on buying Greenland, so let’s get Cuba instead. Give $10,000 cash to each of its 11 million citizens: $110 billion well spent. Then give each Cuban a voucher or chit for a share of each of the country’s state-owned businesses, which is all of them except for a few restaurants and old ’57 Chevys. Like in Eastern Europe, these chits start to trade well before various companies or hotels are ready to be sold or go public. Cigars for all. And we don’t need a 51st star on Old Glory—just fold Cuba into Florida (no income tax!). And speaking of Florida . . .
  
  
• Time to fix Social Security. It’s the third rail of politics, but go for it. Set the retirement age to 70 for those born after 1980, 71 after 1990, 72 after 2000. And fix the cost of living adjustment, or COLA, which is 1.6% for 2020. The consumer-price index Social Security uses badly overstates inflation in the digital age. Set COLA at half of the consumer price index. Then, for the young folks:

WSJ: Your 2020 Econ Crash Course

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https://www.wsj.com/articles/your-2020-econ-crash-course-11594578813

Remember Econ 101? Bo-ring. Something about marginal utility, blah blah, and some Keynesian claptrap about wondrous government spending. “The Soviet economy is proof that,” you’ll learn from Paul Samuelson’s 1989 textbook, “a socialist command economy can function and even thrive.” It’s the “con” in economics. But we don’t need no stinkin’ textbooks—just look around. Amid this pandemic and protest perturbed period, Econ 2020 will teach you everything you need to know—no classroom required.

• Price signals. After nights of looting, Los Angeles announced curfews. I watched as protesters trying to make a point (not looters) quietly sat down in the street and were arrested one by one, zip-tied and taken away in modern-day paddy wagons. The next night, crowds dispersed right at curfew. Turns out the police issued $1,000 tickets for breaking curfew—a lot for protesters’ parents to pay. Now that’s a price signal. On the flip side, New York City’s recent restriction of cash bail meant many arrested looters were quickly released so they could loot again.
  
  Health care has the same problem, because so much is “free.” A study published last year in the Journal of the American Medical Association suggested 25% to 30% of health-care spending may be waste. This is especially true of notorious MRI and CT scans and heart angiograms. “Let’s just take a look to rule things out,” the thinking goes, “because insurance pays.” Then came the pandemic, which the American Hospital Association says caused hospitals to lose more than $200 billion. Why? Because frightened consumers skipped procedures, including unnecessary ones.

• Supply and demand. Bob Barker told us, “The price is right.” Well, except in the case of shortages of toilet paper, hand sanitizer, rice, sourdough ingredients and more. Stores wouldn’t raise prices lest they be accused of gouging. Customers tried Amazon, but it had its own antigouging rules and was selling out of many items, like kettlebell weights for home workouts. So savvy sellers began listing “classic,” “vintage” or even “collectible” kettlebells so they could set market-clearing prices. Voilà, no more shortages.

• Jobs. The most important role of an economy is job creation, for many reasons. Hong Kong’s pro-democracy protests last summer took place mostly on weekends, because so many people worked. In the U.S. this year, 40 million have lost work with many willing to be fired to collect the $600 a week unemployment add-on kicker. That meant lots of people sitting around being paid to do nothing—kindling for protest bonfires.

WSJ: Cancer Screening Leaps Forward

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https://www.wsj.com/articles/cancer-screening-leaps-forward-11593973586

So often the future shows up when you’re looking for something else. In 2013, DNA sequencing company Illumina bought Verinata Health and began offering noninvasive prenatal testing. Using a pregnant woman’s blood, a now-$500 DNA test can spot Down syndrome and other chromosomal conditions. Since then, the use of very invasive needle-to-the-womb amniocentesis testing has dropped.

But that’s not the story here. Of the first 100,000 women tested, 10 (or 0.01%) had unusual chromosome patterns. The fetus was fine, but in each case, the mother had cancer of differing types. That was worth investigating—600,000 die from cancer in the U.S. each year—but large expensive clinical trials would be required.

So Illumina spun out a new company named Grail in Menlo Park, Calif., to do what’s known as Circulating Cell-free Genome Atlas studies. Running DNA sequencing on regular blood samples, Grail generates hundreds of gigabytes of data per person—the well-known A-T-G-C nucleotides, but also the “methylation status,” or whether a particular DNA site’s function is turned on or off (technically, whether or not it represses gene transcription).

Most popular DNA screenings for cancer risk test only a single gene site, like BRCA1. But Grail’s chief medical officer Josh Ofman tells me, “cancer may show up as thousands of methylation changes, a much richer signal to teach machine learning algorithms to find cancer” vs. a single site. “There are 30 million methylation sites in the entire human genome on 100,000 DNA fragments. Grail looks at a million of them.” It takes industrial-grade artificial intelligence to find patterns in all this data, something a human eye would never see.

Mind you, this is not a consumer 23andMe test of your genome that says you might have, say, a 68% chance of getting cancer. Grail is detecting the signature of actual cancer cells in your blood. According to validation data published in the Annals of Oncology, the test can find 50 different types, more than half of all known cancers.

And it can find cancer well before symptoms show up, in Stage I or sooner, when therapies are cheap and effective.