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.

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.

Happy anniversary, World Wide Web. Now, let’s go back to 1988

On 12 March 1989, Tim Berners-Lee publishes a proposal to link hypertext with transmission control protocol, the basis for the world wide web. On 6 August 1991, he launches the first web page. Prior to his proposal, the internet was pretty much a niche hideout for academics and military researchers. Berners-Lee’s proposal helped introduce ‘democracy’ to the original dark web of interconnected computers.

Democratizing digital information via open network architectures unleashed the digital demons that Mr Berners-Lee would like to see regulated today. We went from a relatively simpler system where Dr James Haywood Rolling Jr could send Dr Marshall Shepherd samples of research that could add artistic flavor to the otherwise drab depiction of weather patterns, to the current system where an 18-year old dressed in psychedelic garb can do the booty clap in front of a smartphone and send the images live from Accra. Using this information, the Digital Daemons, i.e. #Facebook#Google, and #Twitter, can create profiles based on every ‘like’ the booty clapper receives and market services and products to consumers.

Closer inspection of the history of the world wide web and Mr Berners-Lee’s criticism of today’s social media/social network companies exposes a downside of the premise that the Digital Daemons are negatively impacting global connectivity via the internet. Mr Berners-Lee is concerned that the one-half of the planet currently not connected to the internet may be at a disadvantage culturally and economically and that connecting to the Flying Spaghetti Monster that is the world wide web may be the developing world’s salvation.

Ironically, it is that arrogant premise that the world needs to be connected to a single standard that drove European colonial expansion across the globe and spawned a global financial system anchored by the Bank of International Settlements, the World Bank, and the International Monetary Fund to replace the colonizer when Europe entered its post-World War II decline. Whether he realizes it or not, Mr Berners-Lee’s liberal position on digital connectivity is steeped in the European DNA for conquest.

If Mr Berners-Lee and other progressives are so bloody concerned about the negative impact the Digital Daemons are having on access to and distribution of information, they should push for an internet that existed pre-1989 where communities of value-based information exchangers created their own databases, and protocols and criteria for membership in these groups. Ironically, under that type of scenario, application of net neutrality rules based on Title II of the Communications Act would be valid because the administrators and owners of the databases could more easily be defined as consumers of telecommunications in some type of corporate form.

Sometimes you have to go back to your past to find a solution to a current dilemma. Happy Anniversary, World Wide Web.

The Russian attack on democracy was ineffective because they don’t understand democracy.

American democracy is about the creation of a political marketplace where the taxpayer receives certain protective services in exchange for her vote. These services include police services, fire services, transportation services, commercial trade platforms, cultural services, legal and regulatory frameworks, and education services, to name a few. They are delivered by local, state, and federal governments and their costs are recovered by government in the form of property, sales, and income taxes and other fees.

Politicians squabble before, during, and after the election season on how best these services should be delivered, how much the government should pay to deliver them, and how much of the bill the taxpayer should foot for the government’s efforts. Classical liberal, progressive, and conservative philosophies collide during these debates and the clash of perspective is most apparent during election season when more people are paying attention. To secure the majority of voter approval for position and philosophy, politicians engage in the blood sport of electioneering, a blood sport that includes embellishments, character assassinations, and a lot of misinformation.

Reports abound of how a Russian firm, the Internet Research Agency, entered the political fray between 2014 and 2016 and used social media posts, tweets, and blogs to upset the elections. Their activity during an election year would have been business as usual were it not for their status as foreign agents conducting these activities. Whether or not they upset the political markets with their activity will be hard to determine.

For example, will investigators be able to say that the cost of the exchange of the vote for services increased due to Russian interference? I see no data that describes politicians seeking higher taxes for government spending as a result of any information provided by Russian trolls.

Did any information introduced into the political markets by the Internet Research Agency cause voters to leave the market? I have heard one argument that black voter participation fell because of Russian disinformation about Hillary Clinton. Hillary Clinton has drawn the ire of some blacks as a result of her description of black teenagers as “predators” and her Clinton Foundation taking financial advantage of earthquake relief efforts in Haiti. It is questionable whether any additional misinformation by the Russians could have created any further negative view of Mrs Clinton by blacks. She may have done enough on her own.

American democracy bases societal cohesion on the vote, the ability of the masses to elect its leaders. Leaders promise, as I laid out before, protective services. But what would happen to the democratically-based cohesion if the dependence of Americans on protective services were drastically reduced or eliminated? What if more Americans had 3-D printers and could manufacture their own tools or furniture? What if more Americans grew their own vegetables in their own apartments? What if more Americans were able to take advantage of devices that use unlicensed spectrum in order to form their own local communications networks and reduce their communications expenses? What if more Americans used solar or wind to energize their homes? What if engineers could design apartment buildings such that each unit could take advantage of solar energy?

A true attack on American democracy would be a demonstration of how to live independent of the political elites that thrive on the electorate’s unwillingness to be or ignorance of independence. Whether a democracy or an authoritarian regime, nation-states are about centralizing power. When they attack each other, destroying the core is all that is needed for the knockout punch. Given the Russian Federation’s history of allowing true freedom, an attack on democracy based on independent sovereignty would be thinking way outside the box.

No, American democracy was never really attacked by the Russians. It simply got poked by a player who didn’t have the legal credentials to enter the ring.

 

Social programs. Money laundered through the Great Unwashed

America needs poverty. Poverty eradication proposals are head fakes. America, especially the America that was created right after the Civil War, would not be where it is today without poor people.

Since the industrial revolution, and definitely as America entered the information age in the 1960s, the products designed and built by highly educated, highly paid labor had to be consumed by a large mass of “dependents.” These people are typically wage earners who do not have the capability to be self-sufficient and hold little to no capital. The greater the mass of consumers, the larger the network used to deliver goods. The larger the network to deliver goods means the higher educated, higher paid laborer and entrepreneur faced lower costs for delivering goods.

Emancipation, reconstruction, and the Jim Crow era coincided with the growth of consumerism. The American political economy, not knowing what to do with freed slaves was willing, in lieu of distributing productive capital to them, to turn them into a mass of consumers, with a willing cadre of banks and bond holders willing to launder money through “social welfare” programs.

The food stamp program? An opportunity for bond holders to launder money by financing a program whose clearinghouses are administered by banks.

Affordable housing programs? An opportunity for bond holders to finance the construction of low cost homes with principal and interest guaranteed by taxpayers, many of whom are not in the upper ten percent.

Medicaid and Medicare? Again, bond holders are offered a guarantee that taxpayers will provide a backstop for premium payments while insurance companies collect fees for administering them i.e. WellStar and Medicaid in Georgia.

There is a reason why the poor are referred to as the Great Unwashed. It is because dirty money is laundered through their misery.