2015- Year in Review

2015 was an unusual year.  It saw the rise of nonestablishment politicians vying for the Republican nomination, and, as of this writing, businessman Donald Trump had a commanding lead.  The Democrats appear to have settled on Hillary Clinton, despite her email server problems and the hangover from Benghazi.  It was the year of radical Islamic terror.  Charlie Hebdo, the Russian airliner, the Paris attacks and the attacks in San Bernardino showed us that while radical Islam has not yet been able to replicate an attack of the magnitude of 9/11, the movement can still be quite lethal, albeit on a smaller scale thus far.   The U.S. economy continues to lumber along and, despite muted growth, the Fed decided to lift interest rates for the first time since the Great Recession.    

Here are my some of my standouts in 2015.

Favorite Film -  Far From the Madding Crowd.   Ok, it was not a blockbuster, but I am a sucker for a good love story where the lovers come together after a long trail of adversity, and I am doubly a sucker for one that is a classic.  This film version of the Thomas Hardy novel was well acted and Carey Mulligan was outstanding as Bathsheba Everdene.  Close behind it was the Cold War thriller, Bridge of Spies with Tom Hanks.  Ex Machina was a very interesting film that will be seen in retrospect as prescient--raising numerous issues about artificial intelligence.

In literature, among the novels I read were three that could serve as doorstops--Seveneves by Neal Stephenson (which would have been better and half its size), A Little Life by Hanya Yanagihara (too depressing, too long and too in-your-face with its gay themes) and Purity by Jonathan Franzen. 

My favorite work of fiction--Purity.   Like many modern novels, Purity needed to be better edited, but I liked the flawed, authentic characters.  And I am always intrigued by novels that deal with the themes of secrets--of what we disclose to whom.  Purity contained several passages that made you stop, put the book down, and ponder for awhile.  As a runner up, I liked The Door by Hungarian writer Magda Szabdo.  The Door explores the complex relationship between a woman and her enigmatic housekeeper.   

My favorite work of nonfiction--Dead Wake by Erik Larson.  Yes, I know it was overpromoted.  And the WSJ Book Club annointed Erik Larson as its unofficial spokesperson, so I suffered a slight case of Erik Larson overexposure.  But Dead Wake is to the Lusitania what A Night to Remember was to the Titanic.   H is for Hawk by Helen Macdonald was my runner up.  To deal with the loss of her father, Macdonald turns to nature and falconry to process her grief.

Music was a little thinner this year than last.  Adele again did well and came up with a blockbuster album.  But my favorite album was by Australian Courtney Barnett, whose album Sometimes I Sit and Think, and Sometimes I Just Sit really resonated with me.  I loved the song Dead Fox and you can hear the unmistakable influence of Lou Reed in that song.

Biggest falls from grace-- Bill Cosby and Chipotle.   Bill Cosby was the father figure of a generation and now faces sexual assault charges.  Chipotle was a high flyer in the fast food industry--brought to its knees by multiple E. Coli outbreaks.  Both will keep PR staffs busy for a long, long time.

Worst prediction ever-- Peak oil.  Many predicted that we would run out of the stuff.  We are now drowning in it.  The price has collapsed and is now below $37 a barrel.  We are now playing Petroleum Limbo---how low can it go?

Most interesting development--- Activities that were heretofore the purview of government taken over by the private sector.  While the DHS as policy did not check the social media postings of the San Bernardino terrorists, the hacker group Anonymous began to successfully hack into the accounts of ISIS members and "out" them.  

Space flight is another area where the private sector has taken the lead.  There is healthy competition between Jeff Bezos (Blue Origin) and Elon Musk (SpaceX).  Apollo was the last government program to reach an announced a goal within the timetable that was established and it captured the imagination of the nation.  Since then, NASA is a shell of its former self.  Under the Obama administration, manned space flight has ceased and the agency has been converted into a climate change measuring agency and recognition of Islamic contributions to science has been incorporated into its charter.  That slack has been taken up by the private sector and I expect to see more of it in the future as NASA continues to ossify.

Most intriguing developments-- Virtual reality, robotics, and artificial intelligence.  These areas are making great leaps but also will create difficult dilemmas for humanity.  Virtual reality will bring the news closer to home, and will make certain experiences more accessible.  But what of their authenticity?   Robotics presents complex questions---especially in love and in war.  Drones now do some of our fighting. But what happens when we let drones make the decisions on when and whom to attack?  Stephen Hawking believes that artificial intelligence could threaten mankind.  The films The Terminator (1984) and 2001: A Space Odyssey (1968) correctly envisioned the fear that technology might overrun humans.  In the field of love, sexbots are being developed to attend to our carnal desires.  Although they are a decade or more from being usable, there is already a debate raging on whether they should be banned.  Some say women have had vibrators for years, so what's the big deal.  Others believe they could have a detrimental effect on human relationships and society.

2016 will be an interesting year.  The Democrats are putting all their chips on a candidate that remains under F.B.I. investigation and has more baggage than could be accommodated on any domestic airline flight.  With the economy in stall mode and our foreign policy in collapse, the Republicans should have a layup.  But their own dysfunctions have propelled a loose-lipped populist nonpolitician to the lead.  And we are going to see the results of raising  interest rates in a sub-3% growth economy with collapsing commodity prices.

Stay tuned.  It will get interesting.

The Response

"We shall go on to the end, we shall fight them in France, we shall fight them on the seas and oceans, we shall fight with growing strength and confidence in the air,
we shall defend our island, whatever the cost may be,
we shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets, we shall fight in the hills; we shall never surrender, and even if, which I do not for a moment believe, this Island or a large part of it were subjugated and starving, then our Empire beyond the seas, armed and guarded by the British Fleet, would carry on the struggle, until, in God's good time, the New World, with all its power and might, steps forth to the rescue, and liberation of the old."

Winston Churchill- 1940

2009-  Barack Obama, in one of his first acts as President, removes the bust of Winston Churchill from the White House and returns it to Great Britain.

"Paris was a setback."

"Let me now say a word about what we should not do. We should not be drawn once more into a long and costly ground war in Iraq or Syria.  That's what groups like ISIL want.

Barack Obama 2015

Barack Obama was elected, in part, because of his superior rhetorical skills.  Ironically, at a time when the Western world is crying out for leadership from the leading Western power, that voice has grown hesitant, tepid and equivocal.   His speech in Turkey following the massacre in Paris fell flat.  His address to the U.S.  following the terrorist attack in San Bernardino likewise contained no new strategic initiatives to counter radical Islam's terrorist attacks on the West.

But it's even worse.  If you consider the responses of various Obama administration officials to radical, violent jihad, you see a disturbing pattern of denial and truth distortions, and even a hint that we had it coming to us.   Just the day before the Paris attack, Obama was insisting that ISIS was contained.  Immediately before the San Bernardino attacks, he was assuring us that the U.S. was safe.  His statements seemed as out of synch and ludicrous as those of the Black Knight in Monty Python and the Holy Grail.  In some quarters, commentators were comparing him to the infamous Baghdad Bob, the Iraqi spokesman who continued to insist that the Iraqi army was prevailing as U.S. forces were dismantling the Republican Guard.

But wait, there's more.  After the Paris attacks, John Kerry stated that there was a "rationale" (blame the victim) behind the Charlie Hebdo attack.  And after San Bernardino, AG Loretta Lynch warned against an anti-Muslim backlash and vowed to "aggressively prosecute" individuals that said anti-Muslim things.  The only new initiative that Obama proposed was more gun control (aimed at those on the secret government no-fly list.  In sum, there were no new measures aimed at ISIS, but rather measures aimed at curtailing our rights of free speech, gun ownership and due process.  President Obama could not find the time to visit either Paris or San Bernardino following the attacks.

The most frightening aspect of the administration's approach to radical Islam is the blatant denial of facts throughout the course of its tenure.  From the assertion that Benghazi was the result of a spontaneous riot caused by a film (again, a justifiable response to exercise of free speech), to Susan Rice's assertion that Bowe Bergdahl "served with honor and distinction" (the coward deserted), to ISIS is contained, to "only a handful of Gitmo" releasees return to jihad (200 is a big handful), Team Obama has consistently put forward falsehoods hoping we won't notice.  His assertion that Syrian refugees can be properly vetted has been completely discredited by the F.B.I.  The fact that DHS did not even check social media of the San Bernardino woman jihadist before allowing her into the U.S. tells us that the "vetting" process is a pretty flimsy net.

But people are noticing.   And they are fearful.   They know when a leader is not being forthcoming. Will it take another event of the magnitude of 9/11 or worse?    The rise of Donald Trump is a direct reaction to the culture of denial and fecklessness of the Obama administration.  His proposal to stop Muslim immigration temporarily has gotten traction and attention.  That is not the right answer, but Trump is not afraid to ask the right questions.  

Radical Islam is a very difficult problem to solve and defend against.  It transcends borders and it is a political order that is cloaked in religion, which acts as a force field around it.  Its soldiers don't wear uniforms and have the capacity to blend in and await in ambush for a long time.  While rejecting most of modernity, it uses modern tools like the internet and social media to its advantage.  They don't wear identifying marks and we do not know with certainty how much of Muslim society either participates or is sympathetic to its cause.   And it has several different and sometimes competing strains of virulence--- from ISIS to Boko Haram to Al Qaeda.

Yes, Trump is simplistic, overreactive, and overly inclusive.  But Trump is a reaction to the dangerous culture of obfuscation and denial of the core issue that the Obama administration refuses to face squarely.  Until we do, we will have more San Bernardinos, and maybe worse ones.

W's idea of fighting them there so we won't have to fight them here suddenly doesn't seem so trite anymore, does it?

Show Me the Data

I've not hidden the fact that I am not Barack Obama's biggest fan.  Many of my blog posts have had his policies at the center of my criticism, from his contempt of the free market, to his penchant for growing government and high levels of regulation and taxes, to his abdication of American leadership in foreign affairs.

But while reasonable people can disagree on policy solutions for societal problems, what bothers me most about Obama is his inability to support his case with data and make a case for his position.  Instead, his typical tactic is to create a straw man and then mock his critics.  He did it throughout the 2012 campaign, and it actually worked to some degree (e.g."the 80's are now calling and want their foreign policy back" to address Romney's assertion that Russia is a serious threat).  However, his derisive dismissal of ISIS as the "JV" and his assertion the day before the Paris attack that ISIS was "contained" shined a spotlight on Obama's inability to correctly analyze risk based on facts and data, or at least engage in an open and fair debate about them.  And, I would assert, that his political opponents are not much better.

On domestic policy, Obama leaped to the conclusion that white cops are systematically using excessive force in policing African Americans.   His supporters cite the bare number of deaths of black youths at the hands of white cops as sole evidence for that proposition. Worse, Obama used a few isolated cases--- the Michael Brown incident  being the most egregious as poster children for that proposition (and we know that the officer in that case was completely exonerated).  But real world analysis is much more complicated.   Since any interaction involves two or more people, we would have to control for a number of factors to understand the nature of that interaction, and the be able to ascertain whether there is actual racism at issue or whether there is something else going on.   Is the behavior of African Americans more aggressive, more threatening than that of whites?  Do they involve more serious alleged crimes?  Do they more often involve more than one person so officers feel more threatened? Those are the kinds of questions and analysis that must be done to determine the correct course of action and whether better training, screening and monitoring will make a difference.  We might even find after careful analysis, that police are, in fact, generally exercising tremendous restraint already.  Instead, the Obama administration jumped to the conclusion that cops need to be restrained and that military style weapons needed to be taken from them.  The result of the Obama/Holder policies after Ferguson has been a huge spike in urban crime--the Ferguson Effect. Even Obama's former Chief of Staff, Rahm Emanuel has complained that police officers are now taking a very passive approach to police work.   There are some 20 million arrests each year in the U.S. and many more stops.  Without good data, one can just as easily argue now that Obama policies are the proximate cause of more deaths of black youths than overzealous law enforcement officers.


Similarly in foreign policy, the overarching goal needs to be the reduction in the risk of a mass casualty event like 9/11 or the Paris attacks earlier this month.   Especially given the explicit statements of ISIS, it is perfectly reasonable and sensible to raise the issue of whether the government is taking sufficient steps (or whether it has the ability to do so) to minimize the risk that Islamist attackers may be among the people that Obama is proposing to take in as refugees.  Instead of making his case, Obama simply derided the opposition as "being afraid of widows and orphans" and flatly stated that the refugees posed no greater risk than tourists (which begs the question of whether we need to tighten up policies on tourists) and then compared the refugees to tourists.  These rhetorical assertions flew in the face of the fact that 80% of the refugees were draft age males and the head of the FBI stated that the government does not have the ability to properly vet these people.  While Obama is mocking conservatives for being afraid of widows and orphans (never mind that they represent a tiny fraction of the influx), I, and many others are asking how the vetting is being done and what is the integrity of the data that is being used to vet these people.  We can safely assume that Damascus is not going to provide the U.S. with meticulous records on these folks.

In both domestic police work and vetting immigrants, it is impossible to have a system that has 100% effectiveness (as Rubio is demanding for the refugees).    It is not possible to produce a police force that will always use precisely the amount of necessary force to deter a criminal.  Likewise, it is simply not possible to provide 100% assurance that no ISIS sympathizer will tag along and embed himself among these refugees.  But before we jump to conclusions in either case, we need to enlist the assistance of statisticians and talk in language of acceptable risks before we leap to conclusions and implement policy solutions.  Neither President Obama nor his political opponents seem to be willing to do so.   An open and honest debate on the data would be refreshing and helpful progress in lieu of demanding perfection or demonizing the other party.

Stop doing it!

The New York Times has been wringing its hands about the expansion of market power of companies in certain industries as they have grown through mergers and acquisitions (of course, the NYT applauds the growth of government power wherever it occurs). 

Mergers to gain scale are especially bothersome to the editors at the Times since Jason Furman and  Peter Orzag’s research seems to show that firm size is a factor that exacerbates income inequality (big firms pay better). 

(http://www.nytimes.com/2015/11/01/opinion/sunday/how-mergers-damage-the-economy.html?_r=0)

The NYT caterwauling about consolidation reminds me of the story of the charity concert at which Bono was performing.   Bono stood up and began clapping his hands over his head and said, “Every time I do this, a child in Africa dies.”

From the back row, someone stood up and yelled, “Well stop f—ng doing that then!!”

The NYT, ever the supporter of larger, more intrusive government spending and regulation, cheered the Obama administration on when it bulldozed its way into the finance and health care industries.  In these two major industries, the Affordable Care Act and Dodd Frank have themselves ignited industry consolidation. 

Christopher Pope, in his article, “How the Affordable Care Act Fuels Health Care Market Consolidation,” he noted:

The shackling of competition is an essential feature of Obamacare, not a bug.  The health care system it establishes relies on unfunded mandates to raise revenue, seeks to cross-subsidize care with regulations, and views genuine competition as a threat it its funding structure.  As a result, it is obliged to standardize insurance options and eliminate cheaper alternatives that threaten to undercut its preferred plan designs.  By inhibiting competition between insurers and encouraging their integration with providers, Obamacare further erodes competitive checks on monopoly power of hospitals.  It strengthens incentives for hospital systems to buy up independent medical practices and surgery centers, weakens the competitive discipline on prices, and reduces the array of options available for patients.

It is no surprise then, that consumers have been harmed with higher costs and higher premiums that resulted from enactment of the ACA and that government policy is creating incentives for entities to consolidate.

Likewise, Dodd-Frank, which was enacted in response to the financial crisis of '08 had much the same results.  As Eugen Fama noted in his comments a few weeks ago, Dodd-Frank did not do away with "Too Big to Fail" as a policy.  Rather, it enshrined it.  And by raising compliance costs dramatically, the law is wiping out an essential aspect of the finance industry that in no way was responsible for the meltdown--community banks.  Community banks now cannot afford the hugely burdensome compliance requirements demanded by the government.  As a result, no new banks have been chartered and there has been a precipitous drop off in numbers of community banks and assets that are held by them.  The large banks have grown even larger and more powerful--precisely the opposite of what policymakers thought would be the correct prescription for the finance industry following the crash.

In a recent Harvard study by Marshall Lux and Robert Greene, the authors noted:

Consolidation is likely driven by regulatory economies of scale--larger banks are better suited to handle heightened regulatory burdens than are smaller banks, causing the average costs of community banks to be higher.

With the regulators of the Obama administration merrily and prolifically spinning out hundreds of pages of new rules as we speak, small businesses cannot hope to keep up, nor can they afford the huge compliance staff necessary to satisfy the army of regulators decending upon them.

Anecdotally, I can attest to conversations with several business owners of small companies that told me the same tale of woe.  One small meat processor told me, “I have to sell.  I simply cannot afford a 20 person compliance department.”

Government interference in markets had a substantial role to play in the housing crisis, just as its policies were responsible for gas lines in the 70’s.   Similarly, look behind the inflation in college tuition and what do we find?  Again, you guessed it--Big Government. 

(http://www.cnsnews.com/commentary/hans-bader/federal-financial-aid-drives-tuition-and-college-costs-study-finds)

Proponents of Big Government are decrying the widening of income inequality.  If Furman and Orzag are correct and firm size is a large factor in income inequality, then we are really seeing is that Big Government policies are actually driving consolidation in several different industries.

If the NYT really wants mergers, and by implication, the growth in income disparity to slow down, it should call upon Big Government to “stop f---ng doing it then.”

Conversations

Some time ago, I wrote about how much Facebook had added to my life.   It has permitted me to reconnect with old friends,classmates, and coworkers and stay abreast of family members (especially those with whom it is best for all concerned to stay connected from afar).  Yes, there are downsides to it--oversharing among them--but that is easily remedied by deleting someone from your feed.

Twitter is even better.  I now get much of my news through Twitter and it permits you to quickly flip through to articles and essays that may be of interest to you.   Even better, it allows you to join conversations with some really wonderful minds from your smartphone.  Its 140 character limit (which, sadly, Twitter is planning on relaxing) forces concision and pithiness.  I count it as a small victory if I am retweeted, favorited, or even answered by a public intellectual.

Last week, I was answered by Garry Kasparov, former world chess champion, writer, and anti-Putin activist, author of the new book, "Winter is Coming:  Why Vladimir Putin and the Enemies of the Free World Must Be Stopped."  

Kasparov tweeted:
Uh-oh, Kerry is talking to Lavrov again. Already Assad stays & Iran is at the table. By tomorrow he'll have given Alaska back to Russia.

I answered:
We're also working on giving back part of Arizona and California back to Mexico. Big downsizing plan. 

Kasparov responded:
Well, smaller borders are easier to protect! Very clever plan. 

Then someone else chimed in:
Crap, I live in Wyoming; better learn to speak French.

It's a brief, punchy exchange, laced with humor, but highlights in four little tweets, two matters of grave global concern:  Obama's decision to withdraw the United States from its traditional post-WWII role as a global power wherever and whenever he can, second, the simultaneous opportunity that Vladimir Putin is seizing to move into that vacated space.  

This is the genius of Twitter.  In a few sentences, three people were able to establish that we are all on the same page.  Without a long diatribe from any of us, it is a safe bet that we see the world vision of Obama and of Putin as unsettling and disturbing.    Twitter enabled me to connect with an important voice and share the fear that the simultaneous retreat by the U.S. and resurgence of  Russia may be the most dangerous threat to freedom and democracy since the 1930's.

Father of Finance

The University of Chicago is simply an amazing place.  Its economics department has spawned an astonishing 28 Nobel Prize winners.  So far this year, I have been able to hear presentations by four of them.  Last week was a special treat.  I was able to attend a Q & A presentation by Eugene Fama, 2013 winner of the Nobel Prize.   Known as the "Father of Modern Finance," Fama's work has been integral to modern portfolio theory and asset prices.  Fama's research is was the underpinning of the development of index funds.  He is churlish and a bit laconic but attending a presentation by Fama was like going to the oracle, especially since I missed his class when I was in business school (to be more precise, I ducked it as his reputation as a brutal teacher intimidated me).  He was known as someone that could bring math majors from top notch schools to their knees.

Here is a summary of Fama's quotes by topic:

"Too big to fail doctrine" -- an abomination.  Since the Continental Bank bailout, it has taken on a life of its own.  Banks now have a put option on us.   It makes their debt riskless.  Banks kick and scream like crazy if they are required to maintain more equity.

"Dodd-Frank" -- supposedly did away with To Big To Fail and prescribed and orderly wind down of large institutions.  Except that the Treasury Secretary has to approve it.  Good luck on that one.  No Secretary of the Treasury will approve such a wind down.

China --  Chinese data are basically junk.  We can't even produce good data.  We simply do not know how they are doing.  All signs point to a significant slowdown.  I don't know if it [the slowdown] is such a big deal for us.  The real question is when will a blowup happen? If you give people capitalism, they will want freedom.

Interest rates and the economy-  We need a much stronger economy to raise rates.  The economy is not strong.  New business formation is in the tank--- off 30% from the norm.  We have had eight years of regulation and more regulation.  Now firms need a big compliance group. Technology has been relatively unregulated and more students are finding employment there, but now government wants to regulate the internet.

Performance of other asset classes--  There is no real good data on real estate. With private equity, data is skewed.  Only the ones that have done well want to giver you data.

Behavioral economics-- Behavior is what economics is all about.  Does it mean that it is irrational behavior?  You need to show me a way to document it in behavior.  It's very expensive to collect data.  

On Richard Thaler-- If he would give me things in testable form, I would collaborate with him.  I always challenge him, "Do you want to document that?"

On Big Data--I don't know what the fuss is.  I've been doing Big Data all along.

On where his research is going--If I knew where it was going to go, I would have gone there already.

It is one of my great regrets that I did not take his course.  I would have had to work like a dog and stress and strain to get a "C" but it would have been a C I would wear like a badge of honor.

Pawn Sacrifice

The Bobby Fischer/Boris Spassky world chess championship in the summer of 1972 was one of the most followed sports dramas of the Cold War era.   The film Pawn Sacrifice by director Edward Zwick (Glory, The Last Samurai) recounts this epic battle that pitted the best of the Soviet system against an enigmatic and mercurial young prodigy from Brooklyn.  Taking on the enormously difficult task of dramatizing the best of 24 game series and profiling the tempestuous and eccentric Fischer, Zwick largely succeeds in making a film that is at one time a Cold War drama, a character study and a time piece.  Tobey Maguire clearly spent a great deal of time studying Fischer, and nailed his mannerisms, gait, and irascibility and Liev Schreiber portrays the confident, more dashing Boris Spassky with real panache.

Bobby Fischer was one of the most interesting figures in American popular culture of the 1970’s.  Raised by a single mom (who was under investigation by the F.B.I. for her subversive activities), Fischer turned to chess at an early age (likely in part as a distraction from his broken home) and learned to play on his own and through hanging around his local chess club in Brooklyn.

Chess in the Soviet Union is its national pastime and Boris Spassky was a product of the Soviet chess system, which identified, culled and trained chess players, and consequently, the Russians dominated the chess world for decades.  The matchup was a classic battle between an American maverick and a representative of the collectivist system.  The Soviets played chess as a team sport and Fischer accused the Soviets of colluding at tournaments.

Fischer’s obsession with the game propelled him to become the youngest grandmaster at age 15 and the youngest U.S. Chess Champion at age 20, propelling him into the national media spotlight in the late 60’s and early 70’s.  Seemingly overnight, the socially awkward Fischer became a national sensation.  His stardom spawned a boom in chess, as chess clubs flourished across the country and chess sets flew off the shelves.

The East and West could not fight a hot war without destroying themselves, so they fought proxy wars in other countries, competed for dominance in space, and in 1972, their representatives battled in Reykjavik on a chess board.  Pawn Sacrifice captures this high drama and the vaulting of an unlikely temperamental nerd from Brooklyn to media star.  After losing the initial game, and forfeiting the second because of one of his recurring tantrums over playing conditions, Fischer went on to beat Spassky.  While there was no blood, bullets or guns on the screen, Zwick makes this confrontation every bit as riveting as his other war films- The Last Samurai and Glory.  Interestingly, a couple of months later, Team Canada beat the Soviet Team in the other source of Soviet pride –hockey--in a come from behind effort in their Summit Series. I can’t help but wonder if those two events were a foreshadowing of the collapse of the Soviet Union.

Pawn Sacrifice ends as abruptly as Fischer’s stardom and spends only a few moments on the end game—Fischer’s disappearance from competitive chess and the entire national spotlight (and re-emergence in 1992 to take on Spassky in a rematch), his vagabond existence and his deteriorating mental health.   If you are interested in filling in the missing parts, read “Bobby Fischer Goes to War: How the Soviets Lost the Most Extraordinary Chess Match of All Time,” by David Edmonds and John Eidinow.

The puzzling, contradictory figure of Fischer is perhaps best captured by my two favorite quotes by Fischer.  His steely, cold competitiveness was revealed by Dick Cavett (Cavett himself suffered from bipolar disorder) when Cavett what gave him the most pleasure in chess, Fischer responded, “The moment when I break my opponent’s ego.”  Yet this same solitary and reclusive Bobby Fischer’s last words on his deathbed were, “Nothing is as healing as the human touch.” 

Fischer belongs in that pantheon of genius talents such as John Nash, Vincent van Gough, and Jack Kerouac that were simultaneously given a remarkable gift and a curse to a high degree and Pawn Sacrifice excellently portrays Fischer as a troubled front line soldier in the Cold War that defeated the Soviets on a bloodless battlefield.

Summer of Disappointment

As summer winds down and transitions into autumn, I was thinking of an adequate summary of the summer of 2015, as each summer has its own hallmarks and events that make it special and memorable.

But candidly, there is no other way to appropriately label the summer of 2015 other than as the Summer of Disappointment.

Early, in the summer, I joined a group of old friends at Ravinia Park, the local summer outdoor music venue to see The Doobie Brothers (who was at the height of their popularity during my teen and preteen years), to enjoy friendship, a little wine, music and nostalgia.  The weather was more suitable to a November football game at Soldier Field, as we were huddled under jackets and blankets.   The band was late at an already late start time,  and they sounded old, tired, and flat, sounding more like a bad local band playing China Grove at a wedding than the actual Doobie Brothers.  I left after about four songs.  That set the tone for the summer.

Baseball also disappointed.  My beloved White Sox were a flop.  Several off season acquisitions were made to complement starts Chris Sale and Jose Abreau and most baseball writers had predicted this team to contend for a division title.  I was looking forward to several nice summer nights at the ballpark with my son, cheering the team on during the 10th anniversary year of their World Series victory.  The team came out of the gate losing four straight and never really gained any traction.  Adam LaRoche decided to challenge quarterback Jay Cutler for the title of "Biggest Waste of Money in Chicago Sports History." A team that should be in the playoffs is now practically giving away tickets through its app just so there is not a resounding echo in the ballpark every time a player gets a hit.

The other big sports disappointment was, of course, Patrick Kane.  He seemed like he had matured and there were no reported incidents of his drunken frat-boy-like behavior over the last few years until this summer when Kane got himself tangled in a whopper of a problem, being accused of rape at his Buffalo home by a woman that he picked up in a bar.  No charges have been filed yet, and these cases are very difficult.  At worst, he is a violent criminal and may go to jail.  At best, he showed terrible judgment, a penchant for recidivism, and he put himself, his team, and the sport in a terrible position.   It may very well be that Kane has played his last game for the Hawks.

In politics, despite a horde of candidates that threw their hats in the ring, I was certain that Scott Walker would quickly emerge as a front runner.  Nonpoliticians like Donald Trump typically make noise but inevitably sink as things get more serious.  Walker was conservative, tough, survived difficult campaigns and a recall and took on and defeated a rabid public union that threatened to turn Wisconsin into a mobocracy.   He restored fiscal sanity to his state and stood in stark contrast to Illinois, which can't even pay its lottery winners and is bleeding jobs and population.  But as the summer wore on, Trump's brash style continued to dominate the press.  Walker's adjustments made him look more like the Republican establishment of Boehner and McConnell and his support in Iowa plummeted to 3%.  Most ridiculous was his assertion that building a wall at the Canadian border was a legitimate issue.  Of all the serious issues facing the U.S., keeping those crazy Canucks out is not an issue that keeps most Americans awake at night.

In the literary world, the long-awaited, much ballyhooed sequel to To Kill A Mockingbird was set for release this summer.  TKAM is on the list of many readers' top ten most beloved novels.  The reclusive Harper Lee refrained from any other publications for decades, and there was much mystery surrounding her and the true authorship of TKAM remained subject of some speculation, given her relationship with Truman Capote.  Social media was abuzz all summer prior to the release.  At release, it was the fastest selling book in HarperCollins history as fans of TKAM gobbled it up.  But as readers dug in, the reviews came back with such descriptions as, "money grab," and "fraud" as some booksellers offered no-questions-asked refunds and others labelled it an "academic curiosity."  Go Set A Watchman landed with the biggest thud in literary history.

Even nature disappointed this summer.  The Chicago Botanic Garden splashed news about the blooming of the famous corpse plant (famous to botanists, anyway).   Spike, the corpse plant evidently infrequently blooms and when it does, it emits a strong and foul smell designed to attract insects.  The CBG attracted 57,000 visitors for the event, had news updates, planned to keep the garden open until 2 a.m. and had a live cam set up for people to watch over the internet.  But Spike never bloomed and horticulturalists deemed it to be "past its prime."   Despite Spike's failure to perform, there were no calls for research into a botanic Viagra.

Lest you think I only indict others in this list, I am not exempt.  Summer whizzed by without accomplishing many of the things that were on my list on Memorial Day.  The Wright Brothers by David McCullough and Misbehaving by Richard Thaler still rest upright on my shelf, unread.  The long list of cultural events and institutions that I wished to see only have two checkmarks next to them.   And although I made a mad dash at the end, I barely dented the catalog of house projects that needed to be done--the basement is still full of useless junk.  Oh, and a few pounds of the 15 that I vowed to make disappear are still here, ready for the holiday add-ons.

Life is Short--Beware

A friend of mine called me the other day with the assertion that the Ashley Madison (AM) hack and the disclosure that 37 million people were on the hunt for extramarital relationships was yet further evidence of the decay in our moral structure and decline of our civilization.  He is convinced that we have descended into a modern Sodom and Gomorrah and, as a result, the end is just around the corner.  This rampant frolicking was so widespread, he believes, that either the 2nd coming is imminent or that a large proportion of Western Civilization and some parts of the non-Western world will surely be turned into pillars of salt.

My response? Nah.  The AM hack and disclosure evidences nothing really new, and my view is being borne out by the data.  Certainly, the website and technology purporting to facilitate tawdry meetings caused a stir, but not much actually seems to have happened.  Here is why I am not particularly surprised or shocked by any of this.

• Infidelity is not new.  It has been around a long time.  While good data is hard to come by (yes, people are untruthful about it), there is not much evidence that unsavory behavior is increasing.  In fact, if infidelity did not exist, the entire country music industry would crumble (My personal favorite: "My Wife Ran Off With My Best Friend, and I Sure Do Miss Him").
• The disproportionate incidence of men engaging in this is also not new. Men, by nature, are more prone to wandering than women (or at least they are much less surreptitious about it).  Cher cleverly once observed, "Husbands are like fires--they go out when they're left unattended." The preliminary data summary I read showed that 83% of the 37 million registered on AM were men and of the women registered, between 2,000 and 12,000 actually read emails.   In fact, the hackers themselves complained about the number of fake female profiles (as a side note, it's always amusing to see criminals whine about someone else's fraudulent behavior).  But given those tiny numbers of women that answered emails, one can logically infer that the numbers of actual meetings and physical encounters were infinitesimally small.  
• Men being stupid about sex and having out-of-the-mainstream sexual predilections and affairs is certainly not new.  You don't need to look any farther than Bill Clinton, Anthony Weiner (you can't make up a more perfect match between his name and his habits), Gen. David Petraeus and Dennis Hastert in more recent times to Alexander Hamilton in days of yore (who had an affair with a married woman), to know that prurient behavior outside marriage was not invented with the dawn of the internet.

Sexuality is at the core of our human existence yet good data and serious scholarship on human sexuality are relatively rare, mostly because most people are remarkably secretive about this fundamental aspect of their lives.   Edward O. Laumann at the University of Chicago has done some good work (Sex, Love, and Health in America and The Social Organization of Sexuality) and his work is the most comprehensive since McKinsey.  Daniel Berger wrote an interesting book, What Do Women Want? a few years ago that contains some interesting findings on women's sexuality. And for some scientific insight of sexuality on the neurological level, David Linden published a fascinating book, The Compass of Pleasure.  But there is little of substance outside these works that tell us of our habits and norms.   We keep most of the details of this part of our lives out of the sunlight.  

The AM hack spilled some of these details out.  The hackers disseminated lurid thoughts and preferences and identified individuals attached to them in a format that is accessible to the public.  W. Somerset Maugham once somewhat famously observed, "My own belief is that there is hardly anyone whose sexual life, if it were broadcast, would not fill the world at large with surprise and horror."   Similarly, the themes of Nobel Prize winning novelist Mario Vargas Llosa's novels often dealt with a person's "public self," "private self, and "secret self."  The AM hack simply exposed what some great writers have known all along.

None of this is to signal my approbation of AM as a business model or to condone the behavior of those that registered, but I believe that the potential consequences will be largely overblown.  The AM hacking reveals nothing new about human nature.  It should shock no one that many, many people have messy, complicated, and often unfulfilled lives and often behave badly. But the AM hack, along with those of the Office of Personnel Management, Defense Department and other commercial hacks show us how vulnerable and lasting information is once it is put in electronic form. Addressing security in this part of our new infrastructure is an initiative in which this current administration has shown little interest.  Our government, power grid, and financial infrastructure remain highly vulnerable to hackers.

Yes, the hack has caused a lot of red faces and anxiety among those who were registered on AM, and smug jokes from people who weren't.  Ironically, the AM data dump occurred on the same week that the FDA approved a drug to enhance women's libido.  So at a time when women have the potential to have their interest elevated, many will be supremely furious at their husbands.

In the end,  my prediction is that the fallout is likely to be fairly small and contained to a handful of incidents.  I hope there will even be some positive outgrowths from this.  People will be much more careful about their online interactions (including financial ones) and hopefully it will spur institutions and businesses to radically beef up their cyber security. The AM situation does not portend the end of Western Civilization.  It is not likely to bring fire and brimstone down upon us.  It merely highlighted two immutable constants of the human condition: human frailty and an overly optimistic confidence in technology.

We should have learned those lessons from the sinking of the Titanic.

In The Game - the more things change...

I had an opportunity to attend the premier of In the Game, a film produced by the same company that produced Hoop Dreams.  This film held special significance for me, however.  It focused on the girls' soccer team at Kelly High School, a  Chicago public high school I attended nearly 40 years ago.  At the premier, I was also able to meet and speak with the producer, the principal of the school, and the coach and players that were featured in the film.  A large part of the experience was a nostalgia trip. While the ethnicity, sport, and gender were different, the struggles of trying to be an student athlete, in an underfunded school with few resources in blue collar, immigrant neighborhood resonated with me.  The film centered on these beautiful, spirited young women, trying to make something of themselves, using soccer to build the life skills needed to succeed in life and transcend this tough, poor, gritty (and now gang infested) neighborhood.  The movie struck a chord of both empathy for the girls and a deep sense of nostalgia.

The film did a great job of depicting the Brighton Park neighborhood and highlighted it as an immigrant gateway, showing the transition from a primarily Polish and Lithuanian enclave to a Mexican one.  The houses and parks still looked very familiar to me decades later, although most of the stores have changed and the red, green and white colors of the Mexican flag adorn many of them and many houses have symbols of Catholicism both inside and outside their homes.  The neighborhood is appreciably poorer (the head of the Brighton Park neighborhood council asserted an 86% poverty rate).  Many of the manufacturing companies that supported families in the 50's, 60's and 70's have moved out.  It appears that many people support themselves with little micro businesses and retail shops.  Of course, the other significant change since I grew up is the infiltration of gangs and gang violence.  Just last week, there was a gang related killing at 47th and Western, just a few blocks from my home.  And the film noted that the soccer team was forced to change practice fields because of the threat of gang violence.

Still, I couldn't help feeling a connection with these athletes.  One girl noted, "When I am on the field, everything else disappears."  It was inspiring to see these girls battle through family difficulties, poverty, and lack of infrastructure and resources to work hard and play hard every day.   In the suburbs, similar girls start with travel soccer, have personal trainers, and sometimes tutors.   These girls have to do it largely on their own grit and determination and a very devoted and dedicated coach.   Most of the girls at Kelly do not have money to go to college and have to rely on aid, loans and part time jobs.  It's very difficult for any to go straight through to a 4 year college.  It appears most start and stop through community college.   You can't help but cheer for these girls, any one of which you would be proud to have as your daughter.  The coach, a Kelly graduate of Polish heritage is a both a beacon of hope for these girls and a bridge between generations and waves of immigrants. His unyielding optimism and can-do spirit clearly infects his players.

Of course, as Orwell put it, "all art is propaganda," and this film has a political message to it, both in terms of immigration policy and school funding.  Some of the girls are undocumented and Kelly was subject to pretty draconian budget cuts.  Ironically, the very next day, the Chicago Tribune ran a long piece on the financial condition of the Chicago Public School system and the gross financial mismanagement of it and its pension system.

These girls deserve so much more.  It is heartbreaking to see them caught in a system that was largely constructed and run for the benefit of the unions and politicians and not for the kids.  But simply giving more money to a broken system will not solve the problem.  Twenty percent of funding now goes to pay pension costs and service debt.  That leaves precious little for aspiring student athletes like these girls.

The film underscored for me that the system needs radical reform, not just meddling at the edges and taking holidays from payment into the pension system.  The system needs to go into bankruptcy, with material adjustments to the union contract (so bad teachers can be fired more easily), the pension system, "sweetheart" contracts, and the like and the system needs to be rebuilt under court supervision.  That is the only way I see these kids getting a fair shake.

The filmmakers did a good job of evoking an emotional reaction--it is what good films do.  But the solution that has a chance at fixing the problem may be different than the one they intended.

Best of Enemies

I was seriously misled by the title of this movie. 

There are several progressive friends of mine with whom I engage in verbal and email debates, and while these engagements can be quite spirited and heated and occasionally devolve into mostly good natured potshots at each others’ arguments and selective treatment of factual information to support arguments, we remain friends.  This is kind of relationship between William F. Buckley and Gore Vidal that the title of the film about the debates between them during the 1968 conventions suggested.

It couldn’t have been farther from the truth.  I expected to see a film about two antagonists that ultimately respected each others’ intellect and liked each other personally.  While the former may have been true to some extent, Buckley and Vidal really did despise each other.  The true enmity between them dripped throughout the film.  Each man saw each other as dangerous and the embodiment of evil, and the antipathy that reached a crescendo  with Buckley threatening Vidal with physical assault on air, calling him a “queer” for calling Buckley a “crypto-Nazi.”  Later, Buckley sued Vidal for publishing an article that challenged Buckley’s sexuality.  This battle between titanic intellects got mean and personal.

The film contained three themes that made it a must see for those interested in public discourse:  the stark contrast and deep antagonism between these two men that has carried over into our divided politics today, the debates were a timepiece of history and media (there were only 3 major networks), the explosive Democratic National Convention was going on, and the Vietnam War and perceived breakdown of law, order and social mores was occurring.  But the last, and in my mind, not least important,  theme enveloped me in sadness—to see these two powerful intellects wane in terms of influence and sink into old age and death.  In particular, I was taken by Buckley’s statement near the end of his life that, if given an opportunity to take a magic pill that would make him 25 years younger, he would decline, and that he was “tired of living.”  Likewise, you could feel the pain that Vidal felt toward the end when he realized that “no one reads his books anymore,”  after toiling for a lifetime and pouring his soul into them. 

This film was significant for me.  Bill Buckley had a strong influence on my thinking when I was a young man and inspired my intellect.   Best of Enemies gave me an opportunity to see a side of him that I had not seen before.   While I had lionized Buckley, the movie showed a human side of WFB that I had not seen before and  suggests strongly  that Vidal ultimately prevailed in this contest, primarily because Vidal had gotten under Buckley’s skin so badly that the usually controlled and affable Buckley threatened him.  Buckley himself  recognized  that this incident was not a shining moment in his career. 

But I have a different view.  While Vidal certainly left behind a larger body of written work, Buckley’s intellectual and political influence was much wider.  He was certainly a factor in the election of the most significant political figure in my lifetime-Ronald Reagan, a president even Barack Obama tries to compare himself to.  Reagan’s conservative core has spawned a new generation of politicians that carry his banner—Scott Walker, Marco Rubio, Ted Cruz and Mike Pence, all hoping to emulate him.  Vidal did not carry that much influence.

Unfortunately, conservatives have not yet found a person that is capable of serving as the intellectual standard bearer.  Laura Ingraham and Mark Levin have some following.  Neither has the intellectual depth.  Perhaps the nearest to Buckley’s intellectual level is Charles Krauthammer, but Krauthammer does not have Buckley’s charm or wonderfully biting sense of humor.

Perhaps there will never be another.

The Eastland and Government Regulation

Today marks the 100th anniversary of the capsizing of the S.S. Eastland in the Chicago River, trapping and drowning 844 passengers, most of whom were Western Electric employees on a family picnic.  Of the 844, most were women and children and over 250 were teenagers or young children.  This disaster has a place along with the Chicago Fire and the Iroquois Theater fire as the deadliest and most scarring in Chicago history.  The photos found on the internet of bodies being recovered still haunt today, and recently actual film footage was recently discovered in Europe (www.eastlanddisaster.org).

For years, many theories and myths surrounded the causes of the disaster.  A common tale passed down was that the passengers all moved to one side of the boat to witness a commotion on land.  That theory turned out to be a myth.  In 2005, George Hinton published a well researched book, Eastland: Legacy of the Titanic.  Hinton documented the construction and history of the ship and consulted with maritime engineers.   The Eastland had a history of stability issues from the start.  But the government regulation that required a place in a lifeboat for every passenger turned out to be a major contributor to this catastrophe [although that conclusion has been disputed by Michael McCarthy in his recent book : Ashes Under Water: The SS Eastland and the Shipwreck that Shook America].  The Eastland was not designed to carry the lifeboats and could not handle the additional bulk and weight.   As a result, in a matter of minutes, on that fateful July day, hundreds of lives were cruelly snuffed out.

We should never forget that tragedy.  But we should also never forget the real consequences when government regulation is blindly applied.  As Nassim Taleb so wisely noted in his book Antifragile, government often inadvertently and tragically increases risks when trying to control them.

If You Like Your Centrifuges, You Can Keep Your Centrifuges... Really

There are lots of happy faces in Tehran this week.   Not since the U.S.S.R. invaded Afghanistan and deployed intermediate range missiles in Eastern Europe have I so feared for the survival of the West.   Fortunately, we had Reagan and Thatcher (and Helmut Kohl) to pull our chestnuts out of the fire that time.   Despite the howling of the nuclear freeze crowd and the overt mocking of Ronald Reagan as the "amiable dunce" and the "simpleton warmonger,"  Reagan knew when to compromise and when to walk from a deal, as he wisely did in Reykjavik when he refused to commit not to deploy the strategic defense initiative (derided by Ted Kennedy and others as "Star Wars."

Well, the nuclear freeze, medal tossing folks are in charge of our national security now and it shows.  Less than 90 days after the Chinese launch a major cyberattack on a pitifully exposed OPM database protected by a washed up school administrator, the Iranians, starting from a position of complete weakness, and on their knees economically, ran the table on Team Obama.   Others have written more fulsome analyses of this catastrophic "deal" so I will just highlight the few points that I find most repugnant.

• $140 billion signing bonus.  Money is fungible.  Tehran has extended a line of credit to Bashar al-Assad.   Therefore, the United States is a large financier of terrorism in the Middle East.  For the sake of full transparency, I propose that all Hamas missiles now bear, "Financed by U.S.A. and E.U." labels on them.
• We left 4 Americans hostage in Iran that were not part of the deal.  Perhaps we should be thankful that the mullahs did not demand more.  But we released 5 Gitmo jihadis for deserter Bergdahl because of our commitment to "do everything we can to bring him home."  To facilitate this "deal," however, the 4 Americans can rot.  
• The U.S. has committed to cooperate with Iran to thwart Israeli sabotage to their nuclear program.  Evidently, Stuxnet really pissed off the mullahs.  So, now we have to turn our friends, the Israelis in to the authorities if they try that again.  The mullahs now want us to take on the role of Capos, which we have agreed to do.
• After the Chairman of the Joint Chiefs of Staff Martin Dempsey exclaimed, "Under no circumstances should we relieve pressure on Iran relative to ballistic missile capabilities and arms trafficking," we promptly agree to the military embargo in 5 years and ballistic missile technology in 8.  So, Obama is willing to sunset restrictions on a terror state and give an explicit timetable for that expiration.  For the Canadians that want to build an oil pipeline in the U.S., however, Obama grants no such timetable for relief.

Of course, Team Obama framed this up as a take this deal or war choice, which was a false choice, and always was.  There were plenty of options other than total war that were available to us.   

This "deal" confers legitimacy and power on a tyrannical and authoritarian regime that remains committed to destroying Israel AND the United States.  It all but ensures that Iran will become a nuclear power and sooner rather than later and cements the hold of the regime on that country.  

Eventually, Israel will have to take matter into its own hands.   If we learned one thing from the Third Reich, it's that evil people most often mean what they say.

Neville Chamberlain, you've been one upped.

Words and Symbols

I was taken aback by the Pope Francis's full throated attack on capitalism a couple of weeks ago and wrote a spirited response to His Holiness.  His views were not simply an appeal for people to do more to help the poor, but an assault on capitalism itself.  This assault came within weeks after I attended a panel discussion of three Nobel Laureates who showed that capitalist reforms were responsible for lifting hundreds of millions out of abject poverty in China, India and elsewhere and that it is starting to do the same in Africa.

The Pontiff ratcheted up the rhetoric on his trip to South America, deriding the pursuit of money as "the dung of the devil." His words harkened to Hugo Chavez's attack on George Bush at the U.N. in '06,"The devil came here yesterday.  And it smells of sulphur still today."  Chavez further skewered Bush, "As the spokesman for imperialism, he came to....preserve the current pattern of domination, exploitation, and pillage of peoples of the world."  The Pontiff echoed these thoughts almost precisely, "Once capital becomes an idol and and guides people's decisions, once greed for money presides over the entire socioeconomic system, it ruins society, it condemns and enslaves men and women, it destroys human fraternity, it sets people against one another and, as we clearly see, it even puts at risk our common home."  The Pope went on to call for "overthrowing an empire of money," and denounced "the new colonialism."   His themes and even his choice words were virtually indistinguishable from those of Chavez;  the former Venezuelan president has evidently been reincarnated with a miter.  

But it gets even worse.  Over the last few weeks we were caught up in the symbolism of the Confederate flag because many found that it symbolized slavery and bigotry.  I understand the power of symbols. When Evo Morales, president of Brazil  offered a gift of a crucifix shaped like a hammer and sickle to the Pope, while initially surprised, accepted it and later affirmed that he was not offended by it.

By heritage, I am part Lithuanian and Polish and grew up in a neighborhood with others from the former Eastern bloc.  I heard the stories of the murder, torture and starvation perpetrated by the Stalin regime under the symbol of the hammer and sickle.  My best friend's father witnessed his buddy shot in the head on a road in the Ukraine by the KGB.  The parents of another childhood friend of mine escaped one of Stalin's concentration camps in Siberia, and were chased by dogs through the woods before it to America.  Because they were schoolteachers, they were deemed part of the intelligentsia and would certainly have been killed.  There were millions like them that suffered under the boot of Communism (for an excellent novelization of the Lithuanian deportations, read Between Shades of Grey by Ruta Sepetys).

The hammer and sickle represent death, torture, and tyranny to me and nearly everyone I grew up with.  It is no less offensive to me than the swastika is to a Jew.  That the Pope chooses words that are nearly identical to those of Hugo Chavez and chooses to accept a symbol of death to my people tells me that I may not have a place in this Church while he is its leader.  His recent exhortations are antithetical to all the values I hold dear.  Indeed, freedom, democracy and capitalism have provided a decent, dignified life and have liberated more people across the globe than any other system.  It is the brutal, corrupt regimes that fly under the banner of the hammer and sickle that crush the human spirit, brutalize and impoverish.  As a result, I am taking a sabbatical, a trial separation from the Catholic Church and I do not know if I will be back.  I cannot be part of an organization that would so willingly embrace the symbols of totalitarianism and reject the things I hold most dear. 

Getting It So Wrong!

It's been a tough few weeks for advocates of individual liberty, capitalism, and the rule of law.   The competency and fiscal responsibility of the State has been on full display over the past few weeks.  Yes, government tried to make us feel better by bathing the White House in multicolored lights to celebrate the Supreme Court decision on gay marriage and there was lots of self righteousness on display as South Carolina was pressured to pack up its Confederate battle flag (has anyone even thought about that flag over the past 20 years?) in the wake of the tragic killing of 9 black churchgoers by a lone sick white supremacist.

But instead of all the hoopla over 150 year old flag, perhaps a better discussion should be around risk assessment and the competency of the state to deal with those risks.

And this administration's batting average in its priorities and actual actions in this area have been atrocious and, indeed, frightening.

• Yesterday, Katherine Archuleta, director of OPM resigned after it was discovered that the Chinese had hacked into the OPM system and swiped the records of 21 million federal employees, which records included sensitive information and social security numbers.  Many have called this intrusion the equivalent of Pearl Harbor, yet we get no statement or strategy from the President.  This fiasco comes on the heels of the botched rollout of the Obamacare website.  Perhaps Archuleta and Sebelius should start an IT consulting firm that develops websites that are too clunky to be hacked.
• After mocking Romney mercilessly for asserting that Russia is our largest geopolitical threat, Obama's nominee to the head the Joint Chiefs now says that Russia poses an existential threat to the U.S. and that it's recent geopolitical actions are, "nothing short of alarming."
• Of course, Obama's derision of ISIS as the J.V. stands as one of the largest blunders in assessment of all time as ISIS continues to ravage whole swaths of the Middle East and North Africa, murdering and destroying antiquities in the greatest display of genocide since Srebrenica.  After months of admitting he had no strategy, Obama last week said that "Ideologies are not defeated with guns.  They are defeated by better ideas and more attractive and more compelling vision."  That was it.  After months of not having a strategy, our strategy appears to rely on Obama's powers of persuasion.  Good luck with that.
• Now we learn that the South Carolina shooter, Dylan Roof's background should not have permitted him to have a firearm but that the FBI did not log him properly into its system.  So we can pass laws and take down flags if that makes us feel better, but again, lack of execution on the part of the government has turned out to be the real culprit.
• Undeterred by the consequences of the last time government meddled in housing markets, the Obama administration launched new rules attempting once again to discover "patterns of segregation".  It is a heavy handed way to force upper crust communities to house the poor in their midst.   Evidently current fair housing laws aren't enough, so the federal government has to meddle even more into people's local communities. What could possibly go wrong?
• Kate Steinle, a beautiful young woman, dies in her father's arms, crying, "Daddy, help me" after an illegal immigrant shoots her in the back.  The perpetrator was deported multiple times but was protected by San Francisco under its "sanctuary (read: defy federal law) laws."   There is no comment from President Obama (Maybe, "she was a beautiful young woman just like my daughter").   Why is it not OK for a state to defy federal law on gay marriage but it is fine for local governments to defy federal law on immigration?
• After Ferguson, the Obama justice department descends on local police departments to ensure that police aren't unfairly singling out black youths for heavy handed treatment (while offering no evidence that this was epidemic).  The result-- murder rates and violent crimes have spiked. Obama policies have actually caused more deaths in the black community.
• The Iranian negotiations drag on despite the ridiculous demands of the mullahs and our constant retreats.  No anytime anywhere verifications.  No divulging history of its past nuclear activities.  No "snap back sanctions."  A $150 billion signing bonus.  All while the Iranians affirm their commitment to wipe Israel off the face of the map and their parliament and citizens are chanting "Death to America."  The esteemed Henry Kissinger and George Shultz have warned Obama not to do this deal.  Yet he plows ahead anyway.

This is just a depressing sample of the horrendous judgment (and misjudgment) of this administration.  I can't remember a president that was so consistent in making bad calls, and then either having no strategy, or a strategy that is certain to result in the opposite of what is intended.

No Hope for the Pope

 When Pope Francis was elevated to lead the Catholic Church, I had high hopes for him.  He eschewed the regal trappings of the role, opting for more modest dress and living quarters.  He immediately began to signal that he wished to de-emphasize sexuality as a centerpiece of church doctrine.  He halted the hostile takeover of the Leadership Conference by Women Religious (organization of American nuns) by bishops from the Vatican.  He took steps to clean up the Vatican bank.  These steps were even noted at the Booth School of Business at the University of Chicago in an article by Italian Catholic professor Luigi Zingales, praising his management skills (http://www.chicagobooth.edu/capideas/magazine/winter-2014/is-the-pope-a-good-manager).  As a fairly recent returning Catholic, I viewed a Pope that could turn the Church into a modern institution that understood the realities of the real world as a welcome development that could steer the Church away from the rigid, imperious, hierarchical, doctrinaire church I left so long ago.

The Pope's encyclical on climate change and economics smashed all that.  The Pope could have and should have said we need to be good stewards of the environment and that the wealthy have a moral obligation to find ways to help those less fortunate.  That's it.  But that is NOT what he said.  Instead, he launched into a diatribe against a "perverted economic system" and condemned the "short-term consumerist patterns" and that people allowed technological and economic paradigms to tell us what our values ought to be."  Richer nations should hand over "superfluous wealth" to poorer ones. "Those who possess more resources and economic or political power seem mostly to be concerned with masking the problems or concealing their symptoms,"  he asserts.   As a result of the consumer oriented West, the poor of the world are being exploited and the environment is being turned into "an immense pile of filth".  This view, in essence, is pure Obamunism--the notion that the West has exploited the poorer nations for their labor and resources.  Not content with making statements on helping the poor or taking care of the environment, he launches a frontal attack on capitalism.

The Pope inveighs against our "perverted economic system." What system does the Pope think will be an improvement?  Communism?  Feudalism?  Monarchy?  Military juntas?   We have tried all those.   It is only when capitalism begins to take hold that we see poverty lifted.  One need only look at poverty levels in all of Asia to see what liberalization has done.  All other systems in which the State controlled production have ended in disaster, misery and, often, mass murder.  Is that what the Pope wants?  Does he want to replicate his homeland?  Argentina should be a wealthy country.  Instead, it is a basket case, in constant turmoil and economic crisis caused by its redistributive policies.

Moreover, how are we supposed to transfer "superfluous wealth" to poorer countries?  Who seizes the wealth?  Who decides what is superfluous?  Why is that a better use that using that wealth to invest in companies, people and technologies that have promise?  Are we, in the West, supposed to hand it over to corrupt and authoritarian regimes that have impoverished these people?  Or distribute it directly?  Isn't it better that these people rise up and rid themselves of the thugs that rule them?  Has he not seen that these very regimes are much more devastating to the environment than liberal democracies?

The Pope also took issue with technology and progress.  What part doesn't he like?  The amazing medical breakthroughs that have eased the suffering of so many?  The drugs that have conquered devastating illnesses?  Does he not like the technology that has revolutionized agriculture, permitting us to feed millions more cheaply and on less land and control pests?  Or the advances in methods of distribution that permit us to deliver more and better food to more people more efficiently?  Or does he not like the technology that permits me to respond to my daughter instantaneously even when she is half a continent away?  Or, perhaps it is the technology that developed fracking and permitted the U.S. to move away from coal as an energy source?

He asserts that, "some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world.  This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and sacralized workings of the  prevailing economic system." As a counterfactual, I offer Robert Lucas's observation that, "the poor in China, i.e., those subsisting on less than $1 a day, look very different today than they did 35 years ago."  Are we to exclude these millions, along with the millions in India and elsewhere in the Far East and now, increasingly in Africa, from the Pope's calculations?   

The Pope's encyclical echoes of Paul Ehrlich's work of 45 years ago (which I have read) and whose predictions were wildly wrong.   The advocates of "limits to growth" rely on extrapolation of data, i.e., "if present trends continue," blah, blah, blah.  But present trends never continue.  Things change. Technologies emerge.  This is the same crowd that talked about a new ice age 40 years ago, "peak oil" (we are now drowning in the stuff), and Ehrlich predicted worldwide mass starvation by the 1980's (actually, we have an obesity problem).

Finally, does he not see that his "limits to growth" position directly contradicts the Church's position on abortion and birth control?  More people, less innovation,  elimination of economic incentives will lead inexorably to something that looks more much more like North Korea or Cuba than the relatively prosperous, educated, healthy, and happy societies we have in the West.

Yes, I am skeptical of the climate change hysteria.  The Pope's encyclical, like Al Gore's book, is riddled with errors and massive errors in logic.  But most insidiously, it is a condemnation of a form of government and economic system that has alleviated more poverty, brought more justice and respect for individuals and individual rights, eased more suffering and has evidenced more respect for the environment than any other.  The Pope has joined in the chorus of people that wish to use climate change to advance their own agenda for a much larger role of government that will ultimately dictate how we should live.

There are many (and I among them) give as much credit Pope John Paul II as Ronald Reagan for the collapse of Communism.  He saw the devastation that system wrought on the human condition, and he rejected it entirely and helped to hasten its downfall.  Francis, in contrast, is using the climate change boogeyman to embrace and promote the redistributive policies of HIS native land, which have sent that country into a tailspin (http://www.economist.com/news/briefing/21596582-one-hundred-years-ago-argentina-was-future-what-went-wrong-century-decline).

The Pope has strayed far afield from his span of knowledge and waded directly into science and economics and has mixed them in a way that has proven itself time and time again to be toxic and deadly to the human condition and has pitched rocks at the system that has by far the best track record of elevating humanity.  I am shocked and dismayed by his hubris and overreach.  I can't help but conclude that he is not much better than the left wing populist politicians that have so ruined the economies of Latin America and South America and is merely pandering to his constituency.

For the second time in my life, I am in a crisis over my religion and am contemplating leaving the Catholic Church.  Several years ago, I answered the "Catholics Come Home" initiative, which attempted to bring back Catholics that had fallen away and attempted earnestly to practice my faith again.  After a promising start, Pope Francis has shaken my relationship with the Catholicism in a significant way.  I will have to think hard about whether I remain with this institution.  If I do, it will certainly be with much less enthusiasm.

No Strategy

It's  now clear to me that President Obama likes to think about the things he likes to think about--mostly redistributive and identity politics and golf, and hopes everything else would just go away.

Ten months after he made the stunning announcement that "we don't have a strategy yet" to deal with ISIS, President Obama this week announced that we STILL don't have a strategy for ISIS.  He carefully laid blame on the Pentagon and on the Iraqi government (whatever that is) for the vacuum, but it is clear that after the fall of Mosul, Ramadi and Palmyra, this administration is completely and frighteningly at sea when it comes to assessing and dealing with foreign threats.  Moreover, we are now sending more men and women into harm's way without a strategy.  Worse, Obama appears not to have any ability to identify the threat or develop a coherent strategy or lead an effort to appropriately confront it.  Our enemies now know this and are acting accordingly.

We are seeing patterns emerge.  Obama consistently refuses to either acknowledge the threat or to correctly identify the enemy or its aims.

Every high school football coach in America knows that you NEVER underestimate your opponent.  In sports and war, upsets happen.  Look at our own Revolutionary War.  Obama consistently downplays our adversaries.  In the '08 election, he sneered that "Iran is just a tiny country and doesn't represent a threat to us the way the Soviet Union did (he has evidently never heard of the EMP (electromagnetic pulse from a single nuclear detonation).  In the 2012 election, he mocked Mitt Romney when Romney raised Russia as a threat, "The 1980's are now calling to ask for their foreign policy back because ...the Cold War's been over for 20 years." Less than two years later, Putin took Crimea and now asserts that he considered using nuclear weapons over it.  And, of course he famously stated that, "If a JV team puts on a Lakers uniform, that doesn't make them Kobe Bryant."
The JV team has been rolling up victories through Iraq, Syria and now has a point of entry into Western Europe through Libya (created by Obama's "leading from behind" initiative).  Reports are now that ISIS has stolen enough nuclear materials to make a dirty bomb.  The JV has evidently made it varsity.

Obama has also misidentified the threat. He has continued, in a cartoonish way, to assert that ISIS is not Islamic.  ISIS begs to differ.  Graeme Wood wrote a masterful article in The Atlantic, "What ISIS Really Wants." (http://www.theatlantic.com/features/archive/2015/02/what-isis-really-wants/384980/).  The punchline is that ISIS IS Islamic.  Failure to comprehend that and ignoring that has had devastating consequences.  Obama's failure to talk about and condemn their atrocities against Christians....BECAUSE THEY ARE CHRISTIANS is both appalling and puzzling because his handpicked UN ambassador Samantha Power's signature work centers around the prevention of genocide, and in her book, The Problem from Hell, the savagery of ISIS falls squarely within the definition and demands forceful action.  Have we even heard a peep from Power?  No.  She has been completely MIA during the rise of ISIS.   Ironically, Obamas rationale for deposing Gaddafi was to prevent genocide.  All he accomplished was to pave the way for ISIS the perpetrate its own and open a conduit to Europe.  We left the Libyan people completely stranded.  The "you break it, you own it" principle has evidently gone the way of the dial phone.  The reality is that Obama's policies are now responsible for more deaths in Libya than the lunatic regime of Muammar Gaddafi.

In the same week that Obama admitted that he had no strategy for ISIS, he unveiled a strategy to diversify wealthy neighborhoods through HUD.  He simply cannot stand the fact that some people live in nicer places than others.  Beheadings of Christians don't really get his blood boiling.  But a gated community?  Intolerable.  THAT he has thought about a lot and has a clear strategy for.

The frightening reality is that Obama has no strategy for ISIS.  But ISIS has a strategy for the West.

Trifecta!

The University of Chicago is a phenomenal place.  I had a once in a lifetime opportunity to attend a presentation of three- count them- three Nobel Laureates in economics this weekend:  Robert Lucas, Jr., Lars Peter Hansen, and James Heckman.  Moreover, I had the opportunity to spend some one-on-one time with Mr. Hansen at the cocktail reception that followed.  It was an amazing experience to have so much real intellectual heft in one room at one time...and an even more marvelous experience to be able to spend some time with Mr. Hansen.

Lucas spoke about the tremendous progress that the world has made since the industrial revolution (chart below), and pointed out that in Adam Smith's time, sustainable economic growth simply did not exist. And over the past 35 years, the per capita GDP of Asia has shifted completely over to the right.  He chided the Left's claim that income equality is THE MAJOR issue of our time.  "If Jeff Bezos has more money than I do, so what?"  The overall progress has been astounding. "We live in a lucky time," he said, "and it's going to get better.  If you really like equality, 1750 was your year," he joked, referring to the universally low per capita GDP.  

Heckman spent most of his presentation debunking the commonly held notion that Europe has more social mobility than the U.S. and showed that the U.S. pays a greater premium for education than European countries.  Denmark, in particular, provides free tuition because it has to.  There is no great economic incentive to pursue higher education.   Absent government transfer payments, there really isn't much difference.  Heckman also argued that the one place that government should spend money is in basic research.  "There is a huge return on that.  There is no return on police pensions."

Lars Peter Hansen talked about his work in risk and uncertainty and the limitation of models.  His slide of Mark Twain's quote that, "Education is the path from cocky ignorance to miserable uncertainty," was a succinct summary of his comments.  "Models are often very wrong," he asserted, and this notion has applicability in the current debate on climate change.

In my private conversation with him, I asked, "You said in your presentation that you had your own thoughts on the macro-economy, but then didn't elaborate.  What are they?"

"We are going to get back to historical growth levels.  Larry Summers is trying to argue that our economic performance is permanently altered and that we are in an era of secular stagnation.  He is trying to make the case for permanent stimulus [i.e. permanently bigger government].  I do not believe that."

After 6 1/2 years of a tepid, halting recovery, I came away with some optimism for the future.  And in any event, it was a tremendous experience to get the thoughts of three truly brilliant, world class minds.

I couldn't help but make the observations that Mr. Hansen won a Nobel Prize for what Yogi Berra recognized a long time ago, "It's hard to make predictions, especially about the future."