About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.

Political intelligence that matters to markets

A business or an investment fund is simply a betting pool for people who have coin or credit. The bet represents all the information that the investor has acquired over some period and the dollar amount of her bet represents the minimum cost of the information acquired. This means that the actual cost of creating the investment fund, asset, or business means nothing to the investor.

All that matters is an outcome that recovers her cost for accumulating information that helps her determine whether her preferred outcome-a return of and on her capital-will be realized. Information on sunk costs mean nothing to her (much to the chagrin of the run-of-the-mill economist).

For information traders entering information markets what should matter is providing information that addresses existential threats to profits and revenues. The information trader must have awareness of the outcome the investor is interested in.

Investors watching political markets are interested in whether a decision poses an existential threat to a firm or a firm’s profits or revenues. Existential threats posed by government come in the form of a revocation of a license, denial of access to natural resources, or denial of access to financial capital. The investor wants to know the likelihood of the occurrence of these events.

In hind sight this is why the Trump Effect became vacuous. The expectations surrounding the Trump administration’s impact on investment never took into account government’s prime operational mandate which is to exploit the natural environment of a physical area. It does this by managing the extraction of resources from that physical area. In the case of American government, it has determined that extraction would best be carried out by a private sector driven by a profit motive.

Businesses provide efficient methods for extracting resources and converting the resources into “taxable events” i.e. goods and services for sale. Businesses convert human resources into taxable events by employing labor thus making humans available for taxation by government.

The subsequent uncertainty experienced by the financial markets post Mr Trump’s inauguration was the result of investors listening to the “emotional marketing” of the 2016 campaign. Rhetoric regarding bringing back manufacturing jobs into a political economy that favors information as its primary resource or building more bridges to nowhere via infrastructure knowing that the multiplier effect is limited by a project’s termination date was baseless but pulled on enough heartstrings of investors that they forgot or were forced to overlook even further government’s prime mission.

Also, the financial markets can’t risk forgetting that the U.S. is a federal system and states have to be considered when assessing the American economy. States have to be on board with any policies that address contraction or expansion of licensing or access to natural resources. For example, it is one thing for the federal government to increase access to radio frequencies by mobile telephone companies. But if the states do not put in place rights-of-way policies that allow mobile phone companies to deploy tower facilities, then having a license to transmit wireless signals is meaningless and the firm faces a scenario of less revenues.

When discerning what information matters, the focus should be on political information that threatens the continued existence of a firm or threats to its revenues and profits. Investors need to discern between the emotional or campaign marketing noise and substantive political intelligence that addresses a firm’s existence.

Donald Trump and James Comey: Does uncouth equate to bad morals and impeachment?

In my best Heath Ledger/Joker voice, “Batman has no jurisdiction.” I think of this line today after reading a report in Reuters about former Federal Bureau of Investigations director James Comey’s assessment of the morality of current president Donald Trump. The book, set for release tomorrow, will detail Mr Comey’s four month tenure in the Trump administration. Mr Comey asserts that Mr Trump is morally unfit to sit in the Oval Office.

The assertion is likely to lift the spirits of many anti-Trump voters who have been hoping that the President’s alleged links to the Russian government will turn into a political noose and lead to an early exit from the White House. Mr Trump has been relatively out of the media spotlight for the past week given the Congressional hearings that were held regarding Facebook’s privacy shenanigans. He has managed to reassert himself quickly into the headlines with last Friday’s missile attack on Syria’s chemical weapon facilities. I suspect that attention will be diverted away from Syria long enough for Democrats to push their talking points and roil up their base.

So far the most tawdry event noted in Mr Comey’s assessment of Mr Trump is an alleged incident involving Mr Trump’s presence in a Moscow hotel room where two prostitutes were allegedly urinating on themselves. Being in the presence of this type of behavior would be off-putting to most Americans. Mr Trump has denied witnessing the event and Mr Comey admits he has no firm evidence the event happened or that Mr Trump was even present if the event happened at all.

One question that comes to mind is, assuming that the event occurred, should the event give buoyancy to arguments from the left that Mr Trump be impeached? My answer is no. Article II, Section 4 of the United States Constitution reads:

“The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.”

The event is alleged to have happened in 2013, almost four years before Mr Trump took office. In addition, if watching prostitutes pee on themselves in Moscow is legal, I see a very weak argument for convicting him of a crime. “Batman” has no jurisdiction in Moscow.

Another question I have is, what is immoral behavior and does such behavior disqualify a president? Morals are defined as standards of behavior or beliefs concerning what is and what is not acceptable for a person to do. Morals are personal codes until society expresses its disagreement with them and codifies that dissatisfaction in law or statute. As head of a democratic nation-state, Mr Trump is expected by many Americans to manage his personal code within the parameters of community expectations. For a man who reportedly has no problem expressing a tough guy Queens personality, being a boar may not go over well with a progressive socialite from San Francisco. Such behavior, whether it occurred prior to or during the presidency may considered disqualification as head of state, if not head of government.

Going forward, the allegations will not mean much for capital markets. They do not speak to Mr Trump’s management of public capital or the institutions that manage or influence the allocation or distribution of capital. The allegations do put a further dent in Mr Trump’s ability to persuade, probably the most important power a president has. And in the political marketplace, bad optics drives down a political actor’s brand and market value.

Facebook’s challenges demonstrate it is time to level the regulatory playing field

This week’s joint senate hearing on Facebook’s privacy and transparency policies raised the question, does the public expect Facebook to act like a information utility? Reactions on Facebook to Mark Zuckerberg’s testimony before the U.S. Senate’s commerce and judiciary committees ranged from calling the 33-year old CEO a “shitbag” to praising him for confidently addressing questions from a 44 senators, a significant number of whom gave the impression that they had no clue as to what Facebook’s model is.

Consumers have been bitching and moaning about Facebook for years, expressing displeasure whenever the company changed the configuration of its pages, added or subtracted icons, or changed its algorithms in order to present what it thinks is more pertinent information to its users. Most users access Facebook’s content at no out-of-pocket cost to them and I personally know of no one who clicks on the ad links that pop up along the right hand side of our timelines. Yet, a significant number of users have expectations about how Facebook treats them, especially when they get put in “Facebook jail” for stating positions that may not be in keeping with the Facebook’s “righteousness police squad.”

If any senator yesterday came close to summarizing my personal sentiments on Facebook it was Orrin Hatch, Republican of Utah. The 42-year senate veteran, in the five minutes allotted to each senator, was able to get across that Facebook was not a utility; that if people were not satisfied with the product that they could go elsewhere on the internet. I don’t view Facebook as a necessity although I admit I probably spend too much time posting there albeit not as much eleven years ago when I was invited to join the Facebook community.  It can see where it can be addicting, but in the end it is not a utility.

With a utility there is an understanding that in exchange for a service generated with the use of natural resources purchased by the utility, you the consumer will compensate the utility for the generation and distribution of said service. And if that utility is regulated, the regulator is following a mandate to balance the consumer’s interest in fair and reasonable rates and consumer protection with the utility’s interest in maximizing its shareholders’ wealth. The senators that seemed adamant about Facebook not being considerate of its user community seemed to come very close to wanting to treat Facebook like a utility, but were very far from considering Facebook’s investor needs.

If Congress wants to regulate Facebook like a utility, it will have to come to terms with the fact that Facebook has only one set of consumers; the firms that purchase its advertising services. The users that Congress is so concerned about are the fuel for Facebook’s advertising platform, specifically the information attached to each user. The user is extracted, organized, and packaged as a fuel cell for advertisers, creating the eyeballs to which company advertising is targeted.

Unlike coal, oil, or natural gas, the fuel for Facebook delivers itself voluntarily over broadband access infrastructure. Whether by wired or wireless access, these transmission pipes are a necessary part of Facebook’s “information utility” business. No fuel, no eyeballs for advertisers. As former Federal Communications Commission chairman Tom Wheeler argued, the consumer experience on the internet should be seamless. Consumers should be able to access websites like Facebook without broadband access providers throttling speeds or otherwise determining which websites would get access to the consumer at certain speeds and vice versa. Also, to create the seamless experience, broadband access providers had to exercise a great degree of transparency regarding their management practices while protecting the privacy of data used to fuel the information utilities, such as Facebook, that deliver services on the edge.

The problem with the Wheeler approach is that the framework balkanized regulation of the internet. Wheeler and other progressives favored archaic transparency and privacy of information rules based on the Communications Act of 1934 applied to broadband access providers. Edge providers, like Facebook, Google, and Twitter, were to remain outside of this regulatory framework where they would be allowed to innovate and not have their information utility business model threatened by AT&T, Comcast, or Verizon. But Facebook’s current dilemma, Russian use of its platform and the trade in its user private data by unauthorized third-parties, demonstrates that if policy makers and elected officials want a seamless internet that projects transparency, all stakeholders will have to be placed on a level regulatory playing field.

Transparency can’t end at a broadband access provider’s point of presence and then enter an edge provider’s black hole.  If consumers want their data to stay private and advocate for policies that keep that data private along and throughout the internet, policymakers will have to ensure that privacy policies extend from the modem in the consumer’s home to the servers that store the data that social media collects on its users. If Congress cannot deliver seamless regulation, then yesterday and today’s hearings will equate to the mindless twerking we see on Instagram.

When local government meets high tech sovereigns

Sometimes I think city government is sleeping at the wheel when it comes to technology and capital flows. During its lucid moments, government will fall back on its 1960s playbook of economic development by announcing plans to bring back manufacturing jobs that pay better wages than the service sector jobs that replaced factory work and eviscerated wages. This narrative may have worked in a locality that was created to take advantage of proximity to a local natural resource where factories could then convert the resources into goods for local and other markets, but for a city like a 21st century Atlanta, that narrative is disingenuous.

Atlanta’s “natural resource” today is information. Workers who know how to find, extract, organize, and distribute information are going to be the one’s who obtain employment and the higher wages that come along with work in the information sector. This demand for an information-centric political economy, I believe, is being driven by the changing tastes of capital. Capital wants its goods and services delivered conveniently and its production customized.

Information technology allows capital to target funds directly to high-value driven information entrepreneurs that can deliver a product that was designed, manufactured, packaged in, and delivered from multiple jurisdictions. Capital has no love for mass appeal. Why deal with crowded banks, malls, car dealerships, or grocery stores when extra minutes of leisure can be carved out by the manufacturing and service delivery efficiencies provided by Tesla, Uber, Grubhub, and Insta-cart.

Along with these efficiencies in product manufacturing and delivery come smaller work forces or work forces outside of the jurisdiction of local governments. Local governments have been the front line defense of investor capital from disgruntled labor. They regulate labor union speech during strikes. Where there is violence they arrest the rowdy. However, in an information age where there are a greater number of tech shops employing smaller numbers of non-unionized information workers versus a handful of large factories employing thousands of unionized lower-skilled workers, there is less demand for the police powers of local government. Disgruntled employees at today’s tech shops simply take their information knowledge somewhere else or create their own firm.

Eventually government starts tossing and turning in its sleep. It sees its “labor clamp down” requests severely diminished. Higher incomes start translating into reduced need for government services from garbage removal to security. Higher income earning citizens may consider pooling resources to support campaigns of candidates who agree to reducing tax burdens are, too the extreme, support carving out or “leasing sovereignty” to higher income communities.

Question is, how will those with no capital react to the erection of this wall of individual sovereignty?

When local government meets high tech sovereigns

Sometimes I think city government is sleeping at the wheel when it comes to technology and capital flows. During its lucid moments, government will fall back on its 1960s playbook of economic development by announcing plans to bring back manufacturing jobs that pay better wages than the service sector jobs that replaced factory work and eviscerated wages. This narrative may have worked in a locality that was created to take advantage of proximity to a local natural resource where factories could then convert the resources into goods for local and other markets, but for a city like a 21st century Atlanta, that narrative is disingenuous.

Atlanta’s “natural resource” today is information. Workers who know how to find, extract, organize, and distribute information are going to be the one’s who obtain employment and the higher wages that come along with work in the information sector. This demand for an information-centric political economy, I believe, is being driven by the changing tastes of capital. Capital wants its goods and services delivered conveniently and its production customized.

Information technology allows capital to target funds directly to high-value driven information entrepreneurs that can deliver a product that was designed, manufactured, packaged in, and delivered from multiple jurisdictions. Capital has no love for mass appeal. Why deal with crowded banks, malls, car dealerships, or grocery stores when extra minutes of leisure can be carved out by the manufacturing and service delivery efficiencies provided by Tesla, Uber, Grubhub, and Insta-cart.

Along with these efficiencies in product manufacturing and delivery come smaller work forces or work forces outside of the jurisdiction of local governments. Local governments have been the front line defense of investor capital from disgruntled labor. They regulate labor union speech during strikes. Where there is violence they arrest the rowdy. However, in an information age where there are a greater number of tech shops employing smaller numbers of non-unionized information workers versus a handful of large factories employing thousands of unionized lower-skilled workers, there is less demand for the police powers of local government. Disgruntled employees at today’s tech shops simply take their information knowledge somewhere else or create their own firm.

Eventually government starts tossing and turning in its sleep. It sees its “labor clamp down” requests severely diminished. Higher incomes start translating into reduced need for government services from garbage removal to security. Higher income earning citizens may consider pooling resources to support campaigns of candidates who agree to reducing tax burdens are, too the extreme, support carving out or “leasing sovereignty” to higher income communities.

Question is, how will those with no capital react to the erection of this wall of individual sovereignty?

The Earth is a frickin’ pancake and space is disease and death wrapped in darkness and silence, damn it.

The Earth is a flat, round, spinning pancake with the continents centered in the middle. Many argue that there is evidence that the Earth is round and that flat Earth theorists are wrong in their assessment. Since I am taking no sides in the debate, I will make these observations and move on from the subject.

First, for those vociferously arguing that the Earth is “round”, you should excuse yourself from the argument immediately. None of the broad categories of scientists you cite argue that the Earth is round, implying it to be a circle.

The Earth is more of an oblate sphere. If you keep arguing that it is round, then you open up yourself to an easy rebuttal by flat Earthers, one that would have them concede that the Earth, as I described earlier, is a flat, round, spinning pancake.

So, in short, shut the fuck up, because if you are going to accuse Flat Earth theorists of not understanding science, you are simply a kettle calling another black because you haven’t addressed a primary question of definition.

This leads to the second and most important point. Ninety-nine percent of those arguing that the Earth is round have no direct evidence of the Earth’s shape. They make the crucial error of relying on the value judgments of scientists that, for the most part, have only mathematical proofs supporting their arguments. The value judgments that spawned their arguments have never been directly challenged by you. You simply accept them because they speak a near incomprehensible language to describe an apparently complex subject and they have dazzled you with a long list of alphabet soup following their names.

Humans, especially Westerners who are significantly detached from nature, have not equipped themselves with the tools of analysis where they can draw their own conclusions. Most, especially within the atheist community, rely on the mathematical scriptures written by the high priests in the Church of Science. They are just as bad as your run-of-the-mill religious schlemiel.

The takeaway: stay in your fucking lane. Stop criticizing other people’s arguments unless you are thoroughly equipped with and appreciate the proper use of the tools of individual analysis. This includes each individual’s ability to see, smell, touch, hear…to perceive. You should be able to extract, study, organize, and package information for yourself and only pay an expert when you simply don’t have the time to do so. Most of you can cook but because of time constraints, you eat out. That still doesn’t excuse you from putting together the basics of a meal, including the use of appliances, utensils, and ingredients.

Learn to measure and understand what is right in front of you, and then you can expand.

A reining in of the political media should be expected under a nation-state model

Forbes reported today about a statement of work issued by the U.S. Department of Homeland Security on 3 April 2018.  The statement of work seeks prospective vendors capable of providing the Department’s National Protection and Programs Acquisition Division with the capabilities to monitor traditional and social media. The specific objective of the services is:

“Services shall enable NPPD/OUS to monitor traditional news sources as well as social media, identify any and all media coverage related to the Department of Homeland Security or a particular event. Services shall provide media comparison tools, design and rebranding tools, communication tools, and the ability to identify top media influencers.”

The statement of work does not get into any specifics as to why the Department would need such a program. It could be one of three reasons. One reason could be a push back by the Trump Administration on what it calls “fake news.” Mr Trump has shown a disdain for what he terms as unfair reporting typically from media perceived to be left leaning. He has no love for CNN, a lack of love expressed with so much disdain that he came out against the Time Warner-AT&T merger, one that is now being challenged by the Trump Justice Department.

The second reason for the proposed statement of work may be to create another tool for dealing with the media attacks a Russian troll service has been accused of. By monitoring media influencers, the United States could make a preemptive strike against journalists, bloggers, broadcasters, etc., that spread fake news and set the stage for divisiveness in American politics.

The third reason I see is that the political media has to be reined in by the nation-state. Part of the nation-state’s political ordering of and for society should include keeping the collective in order by controlling the messaging. While some spin is allowed in order for news organizations to establish some type of brand differentiation, i.e., MSNBC leans liberally forward while FOX is conservatively fair and questionably balanced, the general messages issued by the nation-state via the political media must be uniform enough to keep the masses in line or distracted. Too much spin to the left or to the right creates chaos in the collective, a disturbance in the force that the nation-state cannot afford.

I believe reason three is the purpose for the Department’s statement of work. Some Americans may see the proposal as an attack on a free press, but has the press ever really been free? Except for the occasional “breaking news” (which amounts to a press secretary given their favorite reporter or a reporter they can use the first shot at a story), most political news is initiated by a state actor with the media being tasked for commercial and political reasons for distributing it.

Probably over the weekend we may see some discussion on the meaning of a “free press.” Given that this story is not even trending on Twitter anymore has me wondering how seriously the media is taking the Department’s action.