July 26, 2018--Wow Factor!

My favorite economists are those who are behavioral economists. 

They take on the still widespread efficient-market theorists who contend that in markets asset prices (such as stocks and bonds and real estate) reflect and are based on all available information. That people make economic decisions--they buy this or that stock, buy this or that house--by drawing upon all the information that is openly available from billions of transactions. And thus they are behaving rationally. They want their assets to appreciate as much as possible and if the Market is free--free of misinformation and regulations--people will act after careful thought. They will pursue their best interest and thus over time will be rewarded.

In contrast, behavioral economists cite evidence that people do not make financial decisions all that rationally. Emotion, beliefs not based on evidence, play a larger role in people's choices than efficient-market theorists allow.

My favorite example is how people make decisions about which house to buy.

If they were operating in an efficient-market environment they would take into consideration such things as the asking price (does it conform to the value of nearby, comparable houses); what about taxes and the cost of a mortgage (are they affordable); are the infrastructural systems such as the roof and heating system in good shape; are the schools in the area, based on evidence, of high quality; if it will be necessary to commute what are the traffic and public transportation options; what is the local crime rate.

These are among the issues one would expect those seeking to buy a house would have at the top of their list.

One would think so except that behavioral economists cite evidence that the so-called "wow factor" is more important than anything else when people decide which house to buy. 

Though a house for most is the largest deployment of assets they will ever make, how the house "feels" when they enter it for the first time is more important in shaping which house to purchase than if the seller has priced the house fairly.

I confess, when buying real estate, to having been influenced many times by the wow factor. In each case though we did well when we moved to sell the places a few years later, it was more because of good luck than careful investing.

There was very little that was rational or efficient when we chose to buy these properties.

I was reminded of this earlier in the week after reading in the Times about how owners and workers at Banner Metals in Columbus, Ohio are reacting to Trump's tariffs on steel since they are affecting the bottom line at Banner. They are experiencing delays in the delivery of the materials they need to fulfill orders and because of the increase in the cost of steel and aluminum their bottom line and paychecks for both workers and managers are already feeling the pinch. One would thus think there would be widespread discontent, much of it focused on Donald Trump.

Quite the contrary. Part-owner Bronson Jones was quoted as saying--"I'm not looking at what's best for Banner right now. I'm looking at what's best for the national economy. The United States has been taken advantage of for too long."

Line workers are saying versions of the same thing. Acknowledging that they expect to see less in their paychecks beginning this summer. If their "sacrifice" contributes to the creation of new jobs they say they are willing to pay the price.

The rational or efficient market would predict that Banner employees would care only about their own take home money. But something else is at work here. The behavioral economy.

Also in regard to the Trump tariffs we are already seeing their dampening effect on American agriculture. Especially the multi-billion soybean sector. In politically-crucial Iowa, for example, where Trump will hold a rally in a few days, a large portion of their economy is connected to the global market in soybeans. Most of what they produce winds up in Asia, in China where we are engaged in a widening trade war.

To alleviate the effect on farmers, Trump two days ago announced that he directed the Department of Agriculture to spread $12 billion in subsidies around among soybean farmers to help alleviate their pain. And, politically, to see if he can buy their complicity.

Forgetting for the moment how this exposes Trump as anything but a free-marketeer (about how "creative destruction" is necessary to a thriving capitalist economy), farmers and politicians from red farm states are outraged by what they see to be meddling in the free market. As it turns out, what many of them are saying sounds very much like classic behavioral economics.

Take Nebraska Republican senator Ben Sasse--

This trade war is cutting the legs out of farmers and the White House "plan" is to spend $12 billion on gold crutches. This administration's tariffs aren't going to make America great again, they're just going to make it 1929 again.

Sasse, who has thus far been pretty much a down-the-line Trumpian may be sensing something. It could be that Trump's reckless economic moves are beginning to hit close to home and he's beginning to back off.

Wishful thinking? Probably.

February 1, 2016--The Emotional Culture of America

The day before the evening caucuses in Iowa--the first time in 2016 that actual votes will be counted--it feels timely to pause, reflect, and predict.

I'm being advised by some friends, including one of my best friends who is wicked smart and well informed, to stop paying so much attention to Donald TRUMP. The implication loud and clear is that by doing so--even with a critical or satiric edge to my writing--I am aiding and abetting his candidacy. That it's obvious he's dangerous and needs to be defeated.

Perhaps my friends are right. I should step back and think about what they are counseling. Not necessarily come to agree with them, but take seriously what they are saying.

We go back and forth for a few rounds and then someone claims that TRUMP is dangerous because of what they see to be his fascistic inclinations.

If TRUMP is a fascist, what else is there to say? Except that hopefully the America of 2016 is not the Italy of 1922.

All of this aside, as I pause to think about the current state of the presidential race, to wonder if I have been showing too much favor to TRUMP and his candidacy, I should ask myself how I think he and others are doing, what can be learned from that, and who am I inclined in November to support.

I have been arguing here that TRUMP has tapped deep chords in current American consciousness and has exploited or resonated with them (take your pick) with astonishing effect.

As a candidate he was initially thought of to be a "clown," an impostor, someone only interested in enhancing his "brand" and, once he accomplished that, he would drift away and return to his literally gilded tower.

But, unlike other Republican political comets, from Michele Bachmann to Herman Cain to Sarah Palin, he has not flamed out but has lingered at the top of the polls now for more than seven months. No other first-term candidate in 100 years has done so so consistently for this long. Not even ultimately popular candidates such as Franklin Roosevelt in 1932, Dwight Eisenhower in 1952, or John F. Kennedy in 1960.

In the face of friends' criticisms I have tried to insist it's important to understand as fully as possible TRUMP's success, and successful he has been, so we can better root it out, defeat him, and--most important to me--learn as much as we can about what it means about today's America. To continue to mock him, write him off, assume he will implode will not get that job done. So, it has been my view that we had better be sure we do not continue to ignore the forces undergirding his appeal and energizing his candidacy and in that passive way be of unintended help to him..

As examples of these views, here are excerpts from a few of the emails I have sent to friends in an attempt to explain my posture--

TRUMP and the other spawn of reality TV, talk radio, and Fox News have seized control of the process. Maybe of reality.

And, they are no longer beholden to the forces that launched them or the people who bankrolled them . Interesting, isn't it, that we haven't heard much lately from the Koch Brothers or Sheldon from Las Vegas. 

What I mean to say is that politics is now operating in a parallel universe of its own. 

I am eager to see if (1) TRUMP maintains his refusal to participate in Fox's debate Thursday night and (2) if he doesn't show up what, if anything, will be the consequences. 

We can already hear the whiners saying that he's afraid of someone wearing a skirt (Megyn Kelly). How can someone who fears a WOMAN be trusted to stand up to really bad guys such as Putin, the Ayatollahs, or ISIS. (Roger Ailes of Fox News already said literally that.) 

It may be that Donald is a political Frankenstein, more powerful than his creators. And, to them, more dangerous. If so, they deserve him.

*  *  *

The case for TRUMP is that more conventional, better prepared and experienced candidates and presidents have been dangerous disasters. Herbert Hoover, Jimmy Carter, and George W. Bush come to mind. 

But it may be that he has just the right temperament for the job that now needs to be done. In my view, he is so threatening to the status quo that the array of forces, worried about their prerogatives, are lining up against him. From Bill O'Reilly and Sean Hannity at Fox News, to the Rush Limbaughs, to the Republican establishment Koch Brothers, to the Wall Streeters, to the professional bureaucrats, and of course all the liberals and movement conservatives. For me, this is an attractive list of opponents and enemies.

*  *  *

I'm concentrating now on both the process and on what what is happening reveals about the political and emotional culture of America. For that, for me, the TRUMP phenomenon is as important as it gets. I think there is a great deal to study and I'm trying to see and learn as much as I can. 

Next stage--after some dust settles (I think Hillary and TRUMP will win in Iowa, Bernie and TRUMP in NH, and then Hillary and TRUMP in SC, with Hillary and TRUMP then on inexorable paths to the nominations) for me then it will be time to try to understand what kind of presidents they might make.  

It may be true that TRUMP could be dangerous, but I do not until there is more actual evidence join in that feeling. And to me also, because Hillary is so full of personal ambition and inner demons, she also frightens me. 

My fantasy since I can't see myself voting for either TRUMP or Clinton-- 

Hillary gets indicted or censured for the email mess and Joe Biden and/or John Kerry enter the race. The Bernie people would go crazy, of course. But Biden and Kerry are the only two people I feel good about. To me either of them would be good presidents.

Otherwise, Hillary wins it all in a walk.

August 18, 2015--TRUMP: "He's Cooked"

"He's cooked," Joey said.

"What do you mean? I thought you believe he's going all the way."

"I thought so too until Sunday."

"Go on."

"Everything was cool at that stupid Iowa State Fair where all the candidates have to turn out and have their pictures taken hugging the butter pig."

"Butter pig?" This was new to me. But Joey is following the GOP campaign closely and I learn things from him every day. Especially about Donald TRUMP.

"Yeah, they have a pig there made out of butter. Sort of a butter sculpture. And all sorts of horrible food to eat that the candidates are forced to pretend to enjoy in order to appeal to Iowans or whoever.  Apple pie on-a-stick and Kernal Klusters and deep fried cherry pie. Can you believe it? Not that I'm a gourmet," Joey said, rubbing his considerable stomach.

"And your boy TRUMP? He hugged the pig?"

"I think he was intending too but the crowds around him were so big he couldn't get there. In the meantime, though, he arrived in a TRUMP helicopter, which was a big sensation. I mean, hasn't anyone who lives there ever seen a helicopter?'

"Probably not," I said, "And?"

"After TRUMP got off he had the pilot give kids rides. Without even asking their parents to sign consent forms. That tells me he's serious about running. Not just doing it out of ego or wanting all the attention he's getting. Don't get me wrong, he loves that."

"That's obvious."

"Did you listen to what he said to the press? How big money people buy candidates? How Jeb Bush is a 'puppet'--he called him that--because when the people who give him millions want something from him they just pull the strings. There's not much new with that. Every day he takes on another one of his opponents with zingers. Like Carly Fiorina a few days ago, pointing out that she was a failure when she was the CEO of Hewlett-Packard. Which, by the way, is true.

"But what was new was how he talked about himself. He casually confessed he does the same thing. He gives money to politicians and they answer his calls and do what he asked them to do. That that's the way the system works. He's giving voters a perspective from inside the system of the rich and powerful. How it really works and how he knows since he's been a part of it."

"It's like he's being a 'traitor to his class,' as people accused Franklin Roosevelt of being."

"Exactly. That's TRUMP's appeal. He is ripping the veil back to reveal how things are rigged against average people. This is potent political stuff.

 "So then, why is he cooked?"

"Because on Sunday, after hitting a home run at the Iowa Fair, on his Internet page he issued a position paper on immigration. He actually called it that. A three-part plan that calls for building a fence along the border (getting Mexico to pay for it); a commitment to assuring that any immigration plan 'must improve jobs, wages, and security for all Americans'; and, in the words of the New York Times, the plan includes 'strengthening the enforcement arm of the Immigration and Customs Enforcement office to be paid for by eliminating tax credit payments to illegal immigrants.' Whatever that means."

"What's so wrong with that? He's trying to sound presidential."

"Does any of this sound like Donald TRUMP?"

"Not really, but doesn't he have to--"

"Doing this sort of thing turns him into an ordinary politician. All the others have dozens of position papers and three- or ten-part plans for everything from education to cutting taxes. The kinds of things consultants write after looking at the poll numbers and, which TRUMP says, the candidates don't believe and abandon right after getting elected. They come up with three-part programs to get elected, not to guide them if they do get elected."

"I think I'm getting your point."

"He has to be careful not to be drawn into their game. If he does, he loses. His game is to be his bigger-than-life self and expose their game. Not play it."

"I think I agree with your analysis, including . . ."

"Or he'll be cooked?"

I nodded.

July 16, 2013--Irresistible Attraction

There have been many law suits brought by female reporters and anchorwomen contesting that they lost their jobs because station managers discriminated against them because they had gained weight or simply aged and no longer looked cute and perky.

Now there is a related case with an unusual twist.

This one was brought by a male dentist's female assistant who claimed her boss fired her because she is a woman. So far familiar ground. Nothing new about that.

But last Friday, the Iowa Supreme Court upheld a lower court's ruling that the firing was not sex discrimination because it was motivated by feeling and not gender.

From the New York Times, here is some background--

The dentist's defense was that he let her go not because he discriminates against women but rather because she was too attractive.

Dr. James Knight (no age reported) said that because of her charms he was becoming smitten by her and worried he would start an affair. There is, however, nothing in the court record that would suggest the assistant, 33-year-old Melissa Nelson, would consent to an affair with him.

The court found that it is permissible for employers to fire someone "that they and their spouses see as threats to their marriages."

During the appeal, Nelson's lawyer asked the court to reconsider a December decision of the lower court in which the justices said that the issue was "whether an employee who has not engaged in flirtatious conduct may be lawfully terminated simply because the boss views the employee as an irresistible attraction." The answer clearly is yes.

And this was affirmed by the state's highest court, though the irresistible attraction language was struck from the ruling. It now reads that Ms. Nelson was fired "because of the activities of her consensual personal relationship." Which from what I have been able to determine was nonexistent.

So, if this case gets to the Supreme Court, perhaps Justice Scalia will help us figure out whatever all of this means.

In the meantime, from Yelp, not reported in the New York Times, here is a sampling of typical comments from patients of Dr. Knight's:

I was visiting here [Fort Dodge] while on winter break. One of my molars had broken so I made an appointment. I figured I would need a crown or something. Instead I felt like I was in that movie "The Dentist." Glad I didn't get the procedure under "twilight." Creepy, rude and a bit handsy.

                                                         *    *    *

Awful, horrible service. The dentist is a bit of a creep too. Don't go there unless you want inappropriate, misogynistic comments about women. Likes to present himself as Christian and moral, but is actually the complete opposite.

                                                        *    *    *

Yikes, this guy seriously has urges he can barely control. I am married, a mother of 3, honestly not very attractive, and he kept telling me how he could barely stand being in the same room as me, that I could not be his patient even though I desperately need my root canal, because I was "making" him sin in his mind.