Republicans Divided by Trump Are Toast

Astoundingly, the triumph of Donald Trump is accentuating rather than healing the rifts in the Republican Party.

Instead of millions of Republicans setting aside their differences to unite behind a standard-bearer who they believe represents a healthy alternative to a despised Democrat, the party’s various tribes are increasingly saying that if this is what it means to be a Republican, they don’t want it.

For the past 40 years, the Party has been an awkward amalgamation of anti-abortion, socially conservative evangelicals, low-tax, limited-regulation businessmen and patriotic, pro-gun, tough-on-crime white men. Trump highlighted the concerns of middle and low-income men who blame immigration, international trade and big business for 30 years of job insecurity and dwindling wages.  Some of them are traditionally Republican, patriotic, men who liked the way Trump gave voice to politically incorrect feelings they had about Muslims and Hispanics. Others are converted blue-collar Democrats and independents.

Some of those Trump voters may be evangelicals, but social issues don’t drive them the way economic angst does. Their issues are primarily economic and they want to go to war with the businessmen who have bankrolled the party and tolerated social conservatism and closet racism in return for support for the low-tax, low regulation agenda.

They blame Wall Street for the economic troubles they have and they think Trump has a solution. Indeed, his solutions address their concerns. It is plausible that throwing illegal immigrants out of the country would cause massive disruption in many industries and force businesses that wanted to survive to raise wages to hire and train unskilled Americans. It is plausible that a tariff wall would lead some industries to bring work back to the U.S. (although it would probably be performed largely by robots).

The problem is that Trump has very little chance of appealing to the rest of the Republican coalition. As a thrice-married, sometimes bankrupt casino mogul who barely acknowledges the pro-Life movement, he seems unlikely to draw the sometimes insular religious right out to the polls on voting day. He certainly isn’t going to lead a crusade against gay rights or same sex bathrooms. Social-issue voters are likely to stay home in droves.

Except for lower taxes, Trump’s economic nostrums hold little appeal for businessmen. They may prefer his low-key acceptance of gender differences to the position of most other Republican candidates. But they want more international trade so they have cheap products to sell.  They want to be able to bring in lots of low-cost programmers from India, because it’s a lot cheaper than retraining American workers whose skills have become outmoded. They want low-skilled immigrants to stay here because they keep a lid on demand for higher wages. And they want predictable economic policies.

Trump has probably gotten some of the tough-on-crime electorate with his tough-on-terror rhetoric. But those who reflexively associate the Republican Party nominee with patriotism will have to recalibrate their beliefs. The draft-dodging Trump has disparaged heroes like John McCain. He has, with justification, pilloried George W. Bush’s Iraq policy. He has pandered to Putin while disparaging traditional allies. He appears to be trying to appeal to those voters by promising to improve the shabby treatment of veterans while pulling back from overseas engagement.

Among elected officials, Republicans have many pragmatic politicians who manage to paper over the differences among  the three legs of the Republican electoral triad -- evangelicals, businessmen and patriots. But Trump has managed to accentuate the points of division. .

Forget gun control -- control bullets

The very thought of gun control makes liberals salivate and conservatives hyperventilate.
But bullet control might attract broader support.
It's pretty clear that implementing gun control is impossible in the U.S.  There are already an estimated 150 million guns in civilian hands in America. Even a generous buyback program like Australia's would leave tens of millions of guns in public hands. Arguing about gun control  makes dealing with America's terrorist-gun-death problem difficult.
But bullet control could provide gun lovers the benefits they want and prevent the most terrifying aspects of gun terrorism. If terrorists can't arm themselves with hundreds of bullets, they can't kill hundreds of people.
The first question is: what do we want to stop by regulating guns?
Many liberals would like to lower any gun deaths.  Conservatives might argue that gun deaths can be beneficial in some cases: self defense or preventing home invasions or protecting others from violence. Those gun deaths are good things, they would say.  Some libertarians might argue that allowing people to use guns to commit suicide (about half of U.S. gun deaths) is a valuable freedom.
But almost no one outside of ISIS would argue that mass killings of uninvolved civilians are a good thing. And mass killings are becoming the terrorists' weapons of choice. Civilians are  justifiably terrified by the idea of people with automatic rifles coming into a school or a concert hall or a workplace Christmas party and shooting the people gathered there. There are anti-government survivalists who want thousands of rounds of ammunition  to protect themselves from potential attacks by the federal government. But that's not a Constitutionally sanctioned purpose or one that many regular citizens would support.
Many of the standard gun control proposals don't really address mass killings. Handguns are not used to kill large numbers of people. Shotguns don't kill large numbers. Many rifles can be altered to fire a series of rounds.
But it's very difficult to use guns to commit mass murder if the owners can't get bullets.
Gun buyers have a variety of ways to get guns -- retail stores, gun shows, private sales, theft, black market.
But buying ammunition is a traditional retail activity, in stores or over the Internet. Ammunition is made by a handful of companies compared to several thousand who make gun.  That makes it much more amenable to regulation.
People don't need much ammunition in  their homes. A magazine with six or eight shots is ample to prevent any home invasion -- more than enough for suicide or threatening a neighbor. Even a hunting trip rarely involves pulling the trigger more than four or five times. So the government could simply prohibit sales of more than 10 bullets at a time by any retailer.
Target shooters use a lot more ammunition at shooting ranges. But it would be possible to license ranges to sell bullets and keep track of their usage so shooters couldn't walk off with large stockpiles.
Controlling bullets would be a way to greatly reduce the risk of a few terrorists killing masses of people with firearms. It could be done at the federal level, eliminating the problem of patchwork laws and guns moving across state lines. And it wouldn't need to impinge on the legitimate self-defense and hunting needs of gun owners.

When a President wastes a decade

Attended a dinner at Winsor School with old friend David Sanger, now NYT chief national correspondent (I met him 30 years ago when he was an intern in WSJ Boston Bureau). Have to buy his book, "The Inheritance." He says that it argues that whether Iraq was the right or wrong war, we need to understand how significant it was in consuming national time and treasure. He estimates cost at $3.3 trillion and the establishment of a national strategy that distracts us from both domestic planning and other international interests.
New anecdote: he recently met with a Chinese general who said that ten years ago the Chinese despaired of ever catching up to U.S. power, but "we never dreamed you'd spend a decade in Iraq and Afghanistan."
It's a reminder that the most powerful weapons are those you don't use. Saber rattling can often have much more impact than actually using the saber. The Cold War, the most successful U.S. war since WWII, was all about unused weapons.
It's also a reminder that when a president picks one big battle it will prevent him from waging other battles. They have to spend some of their political capital as they go along, but it's not an infinite resource. Obama has won most of the political battles he fought -- health care, financial rescue, financial regulation, Supreme Court picks -- but he doesn't have any political capital left. Because the fight for economic recovery turned out to be the most important battle, and he can't wage it any more, most voters think he's been a failure.

Perry's job "creationism" like religious creationism

The Wall Street Journal has a very interesting front-page piece on Texas Gov. Rick Perry's job "creation" programs today. http://on.wsj.com/o2vjUd It makes it clear that Perry's "job creationism" is as scientifically rigorous as religious creationism.
Written by my former colleague and Pulitzer Prize winner, Mark Maremont, the story notes that Texas committed $440 million to new jobs programs starting in 2005 and says they claim to have created 59,000 jobs. It notes that at least 12,000 of those jobs were claimed as a result of a Texas A&M genomics project that actually hired only 12 people. The rest come from adding up a plethora of unrelated jobs, most of which would have happened anyway.
Sadly, it is predictable that when a politician starts counting "jobs created" the number claimed will greatly exceed the reality. It was especially interesting that the best example of jobs created -- Citgo's new U.S. HQ with 820 jobs -- didn't really "create" jobs. It caused the jobs to be placed in Texas rather than some other state. Venezuela created the jobs because it needed a U.S. base for Citgo. Texas just offered a larger bribe to get them there than any other state was willing to provide.
To be sure, these state bribes to business are an important part of plant location decisions. But they aren't job creation in the sense of a venture capitalist providing money that creates a new industry. And it isn't a useful precedent for a U.S. president.
I am familiar with the recent plant placement efforts of a large food manufacturer. It ran rigorous analytical models to try and decide what state should get a new manufacturing and distribution facility it planned. It concluded that the only measurable financial criterion that mattered was the size of the state subsidy. So states are basically in a position of having to tax their existing businesses to bring in a new business. It's an unfortunate game of beggar-thy-neighbor, and governors have to play it. But it isn't job creation.
Perry, of course, criticizes Obama for his job creation efforts. So it's rich seeing him caught playing the same games.

Jobs place in business history? No. 3

Steve Jobs' death is a tragic instance of genius interrupted. I only met and interviewed him once, but my life repeatedly has been changed by his vision and the products it created. I live on my Mac and iPhone and I probably have a more intimate relationship with them than with any other devices I've ever owned except my sea kayak, which periodically saves my life.
After 40 years of following American businesses, I've developed an interest in business journalism and business history. I believe that business and economic history probably plays a bigger role in the way the world works than most historians recognize.
It's too early to tell, but I'm a journalist, so I have to ask: How significant was Steve Jobs in business history?
After some consideration, I think he was probably one of the three most significant business people in American history. I'd rank him with Thomas Edison and Cornelius Vanderbilt -- probably in third place. Jobs (with Steve Wozniak who created the cheap disk drive) invented the personal computer. The second Apple (with VisiCalc from Dan Bricklin and Bob Frankston) was the PC that made Ben Rosen start proselytizing PCs as tools rather than toys. Bill Gates was a better business person at that point, but Jobs created the hardware. The one time I interviewed them both involved an argument over whether hardware or software should be free. That argument continues.
So what did Steve create? It's somewhat tough to say, because in corporate America, success is a team effort. But repeatedly, companies headed by Jobs created revolutionary products. That's really rare.
Giving him credit for team efforts, he created the usable PC; he created the graphical user interface, which is the way all people deal with machines today; he stole and popularized the mouse; he made desktop publishing possible; and that's just in PCs.
Then he changed movies with Pixar, demonstrating that creativity was a successful business strategy in high tech.
When he came back to Apple, his genius was really astounding. He used his vision to create products and services that remade the music industry, the PC industry, the newspaper, magazine and book publishing businesses.
And he created the smart phone -- the most important product in the world today. Nokia had led the way into smart phones but Apple took advantage of increased bandwidth, and it completely changed people's expectations. Remember reading the early reviews of iPhone? The raves were so over the top that you wondered how the Mossbergs and Pogues had been drugged. But when you got your own iPhone you wondered how any company had managed to create a product that so perfectly fit your needs. Screen gestures that did what you expected were an incredible example of a company understanding people.
The iPhone was the perfect expression of merging technology with imagination. It may never be equalled.
Still, I think there are other business people who have had a huge role in changing America. First, I would list Thomas Edison. Electricity generation was a big deal, and he invented technology to make it work and a corporate model to sell it. And inventing a market for electricity by inventing light bulbs was definitely world-changing. Edison also invented moving pictures and he created musical recordings. Think of the leap he made from a world where the impact of the spoken world was limited to shouting distance,
Last year I read a biography of Cornelius Vanderbilt that makes me think he should be in the small Pantheon of business leaders as well. He controlled sea transportation around New York, through great service (he pioneered ferries that left on a schedule rather than when they had a full load of passengers) and steely will. Then he moved on to control rail transporation. He was the first to demonstrate how to use the stock company, with many investors, to accrete the capital needed to build railroads.
There aren't many other business leaders in that league. The Wright Bros. invented the airplane, but they didn't create airlines. Bell started the phone company, but it was just one business. Saenoff didn't really invent radio the way Jobs invented the PC. JPO Morgan saved the financial system, but he didn't innovate anything.
I think Henry Ford might be in Jobs' league, mostly because the car remains the most important life changer of any technology. And Ford, unintentionally, created the middle class industrial worker. So I think I'd rank Ford and Jobs together, just behind Edison and Vanderbilt.
These kinds of rankings are completely bogus, of course.
But doing them provides some context for the events of our times.
Thoughts?

US Studying Google for Antitrust? Really?

The Wall Street Journal broke the news that the FTC is ready to subpoena Google for information on its trade practices.
This is likely to help Google's competitors. But it's hard to see how it's going to help consumers. And antitrust law in America is fundamentally designed to give consumers a fair shake.
(I'm an enthusiastic user of many Google services, but I don't own any stock in the company).
It's hard to imagine a company that treats consumers more fairly than Google does. It figured out a way to let people find almost any information free. It did it by giving them ads for products and services that they were likely to want rather than bombarding them with irrelevant ads. That has worked so well for businesses that they have halved their advertising in newspapers and generally reduced ad budgets because they get more effective returns for less money online.
Google has used its incredible profitability to expand its footprint on the Internet through more free services, most of which have only indirect financial returns, if any. It stores much of the world's video information free on YouTube. It runs a great free e-mail service that prevents spam better than any costly corporate e-mail services I'm aware of. It runs free Google office apps in the cloud, so you can access them from any computer. It introduced a really good, credible alternative to the iPhone at a time when Blackberry couldn't figure out how and Microsoft was fiddling and diddling with shrinking a bloated operating system into a pocket-sized package.
Google even stood up to the Chinese and moved out of that country -- an incredible example of corporate morality. Much of the criticism of Google comes from competitors and advertisers who want to game its system and bother innocent consumers with unwanted sales pitches rather than the products they actually want.
The FTC better not mess up the Google system to the point that consumers get less.
As Dan Lyons points out at Daily Beast this is certainly bad for Google. Even though the Feds may not succeed in getting the courts to find Google's actions illegal or force many operating changes, Google will have to think about something besides the customer benefit of any new service it provides. Everything it does from now on will be constrained by the need to consider what the government thinks.
The government's unsuccessful antitrust prosecution of IBM marked the beginning of the end for Big Blue's long run of dominance. Similarly for Microsoft. Those cases hinged on the giants' abilities to bundle software with existing mainframes or operating systems in a way that prevented competition from getting a toehold. Locking out competition is bad for consumers, and those actions arguably led to a better marketplace.
From a competitor's point of view Google undoubtedly looks like a voracious monopoly. But there are serious, cash rich competitors in the same space that can take care of themselves. Apple has a market cap substantially higher than Google's, a lock on the most lucrative smart phone and tablet users and control of the music industry. Microsoft has revenue and cash flow that would make most national treasuries weep, and a lock on the CIOs of the world. Facebook gets a lot more time everyday with Internet users than Google does and it knows a lot more about them.

Google provides a greater consumer service, for less money, than any other company in high tech (although Facebook is coming close). It will be tragic if that is lost due to antitrust action.

Brain-free law-making

The NY Times has an interesting story on state legislators proposing bans on listening to music players or texting while bicycling or walking. http://www.nytimes.com/2011/01/26/us/26runners.html?_r=1&src=fbmain
It seems to be a classic example of legislation by anecdote, unimpeded by actual knowledge.
In fact, pedestrian fatalities declined 16% over the time that Americans presumably increased their walking while distracted. Fatalities dropped to 4,091 in 2009 from 4,892 in 2005. The story says there was a slight upturn in 2010, but that doesn't seem to have been the reason legislators decided to act.
Among the states, Arizona and Florida had the largest increases in pedestrian fatalities, followed by North Carolina, Oregon and Oklahoma. The study doesn't say whether those states had the largest increase in sales of iPods or Blackberrys -- facts that might have provided a rationale for the proposed laws.
New York State Sen. Carl Kruger of Brooklyn, proposed a bill that would apply to pedestrians in cities of one million or more. “This is not government interference,” he said. “This is more like saying, ‘You’re doing something that could be detrimental to yourself and others around you.’ ”
Kruger has a funny way of defining "not government interference."
Examples like this of legislating for the sake of legislating are enough to turn me into a full-fledged libertarian.

New Job site threatens monster.com

I just read a story in the Washington Post about a new domain, "jobs" that looks like a big threat to Monster.com and CareerBuilder.com. It could do to those job sites what CraigsList did to newspapers' classified ads.
The jobs domain was authorized by the Internet registry, ICANN. It was opposed by newspapers and long-term nemesis Monster alike. The jobs domain lets companies post help wanted ads for free. You go there by typing something like http://ma.usa.jobs/writing, and see a list of postings. Companies love it because they can put up ads for free. Monster.com charges up to $395 for an add, or $230 a piece for ten or more. For a big company with a lot of openings, it's a significant saving.
If you're job hunting -- or hiring -- its worth checking out.

Official Google Blog: An update from the Chairman

Official Google Blog: An update from the Chairman

http://billbulkeley.blogspot.com/2011/01/silicon-valley-boardroom-shakeups.html

Silicon Valley Boardroom Shakeups

Two of the biggest companies in Silicon Valley underwent big boardroom shakeups yesterday. At Google, Eric Schmidt, the professional manager who has headed the company since 2001 relinquished the CEO title to co-founder, Larry Page. At Hewlett-Packard, the world's biggest technology company by revenue, four board members departed with five new ones coming on.
The Google change is a big deal. I'd argue that Google is the most important company on the planet -- more so than Facebook, IBM, Apple or News Corp. The Google triumvirate has created an amazing business model. And it is also a cultural and political force with its own foreign policy. Google's stance against Chinese censorship (allegedly pushed by co-founders Larry and Sergey) was an important development in world affairs last year. Its stewardship of many individual's documents, e-mail, photos, videos, phone calls and blogs is a bedrock of Internet existence.
Eric Schmidt, who I met a few times while covering Sun and Novell, has an amazing ability to foresee how technology will impact business and the economy. Google has made a series of smart moves through acquisition and invention during the decade he has been there. I'm not a shareholder, so I don't have that perspective. But as a citizen of the globe, I hope the change won't derail Google.
The good news is that the co-founders presumably are more attuned to the company motto -- Don't Be Evil. The risk is that Schmidt's acute sense of how Google fits into the wider world will be subsumed to a Google-centric view.
Hewlett-Packard, on the other hand, doesn't really matter. It's a collection of unrelated commodity businesses that don't lead in anything but cutting prices. If the whole company blew up, someone else would license Canon's printer engine technology. The same Chinese factories would make the same PCs and laptops. Another Indian body shop would take over the offshored services. The Intel-based enterprise servers would be made by some other Microsoft spawn. And only the legacy enterprise equipment would retain an H-P identity. Mark Hurd managed to make H-P profitable, but the decision to slash R&D has made it largely irrelevant.

Chinese mothers

There was a fascinating piece in Saturday's Wall Street Journal by a Chinese-American mother who is a law professor at Yale. She contrasted her parenting style with that of typical American moms (and dads, including her husband). The message was that while her demands for perfection from her daughters sound autocratic and unreasonable, they produce superior children. The implication was that her methods are typical not only of Chinese-American mothers but of mothers in China as well, raising some interesting questions about the future competitiveness of our two societies.
I certainly haven't raised my children the way she did, and I suspect some of the reason is laziness and lack of self-discipline.
While her methods sound draconian, they are also incredibly time consuming. I don't think many American mothers or fathers have the discipline and determination to spend the hours working with their kids that being a Chinese mother seems to require. We all try to spend quality time with children, but not many spend the amount of time that Amy Chua seems to. I suspect her kids benefit from the amount of time and attention they get, even if they sometimes rebel at the content. She may sometimes tell them they're "garbage" but the amount of time she spends must tell them that she thinks they're incredibly important.
In one painful anecdote about forcing her daughter to learn to play a difficult piano piece, she describes spending at least four hours of yelling, screaming and listening to badly played piano. Not many parents have the energy or make the time for the sort of effort.
In the U.S., you sometimes hear about football or baseball players who are coaches' kids who spent that sort of time with their Dads. And then there's Tiger Woods. But very few parents will spend that kind of time practicing math or language or a musical instrument with a child. It's so much easier to put the kid in front of a video screen or a computer game.

Is Groupon really more valuable than Twitter?

I was surprised by the values placed on two of the hottest closely held companies -- Groupon and Twitter -- both for their sheer size and the fact that Groupon is worth more.

Groupon, a gimmicky coupon site, was valued at 50% more than Twitter, which has become core to the lives and marketing strategies of millions of people.

All Things Digital, the Wall Street Journal-affiliated Web site, is reporting that Google will pay up to $6 billion for Groupon.

And TechCrunch reports that VC giant Kleiner Perkins wants to invest in Twitter at a valuation of $4 billion.

Those are eye-popping numbers -- reportedly ten times Groupon's anticipated revenue this year, and nearly 30 times the Twitter revenue for 2010 that was projected in some stolen documents a year ago.

Groupon has a lot of revenue for a two year old company. But it only has 12 million users, and it already has a lot of competitors. As a happy user of Groupon, I can't differentiate it from the other coupon sites I use like EverSave. Setting up a local couponing site would seem to be easy to do for anyone who can inspire a sales force. Yellow Book salespeople, whose jobs would seem to be in jeopardy now, would seem like obvious competitors.

Twitter has 175 million users and it has a huge role in the social-media zeitgeist. In terms of mindshare it's already the equivalent of Facebook and YouTube. It's going to be very hard for anyone to compete for its niche. Even better micro-blogging technology wouldn't give many people a reason to shift away or add another service.

Obviously, the Groupon valuation is based on real money. Twitter's value is much more conceptual. Still, if I had the opportunity to own 1% of either company, I'd opt for Twitter.

O'Reily shouldn't Joke about beheading reporters

I'm horrified by Fox host Bill O'Reilly's "joke" about beheading Washington Post columnist Dana Milbank. Dana's alleged sin was failing to acknowledge that Fox had more than one Democrat on air on election eve as it celebrated the Republican victory.
Dana is a good friend and former colleague in the WSJ Boston bureau. Because he's hilariously funny and understated, he's a perfect foil for the overheated, angry Fox commentators. Dana writes about his feelings about O'Reilly's attack on him in the Washington Post today. http://www.washingtonpost.com/wp-dyn/content/article/2010/11/09/AR2010110906643.html
He notes that jokes about beheading reporters are especially painful for those of us who worked for the Wall Street Journal when our colleague Danny Pearl was beheaded by militant Islamists in Pakistan. It's ironic that WSJ reporters and Fox commentators are all part of the News Corp. family.
O'Reilly is probably also miffed about Dana's terrific new book on his Fox stable mate, Glenn Beck: "Tears of a Clown." In the book, Dana describes the histrionic Beck, whose weepy monologues are enhanced by smearing mentholatum gel under his eyes, with devastating accuracy. Using Beck's own excuse Dana says he can't be misrepresenting Beck if he quotes his own words.
The book will tell most people far more than they want to know about what Beck says without ever really answering the question of whether he believes all of it. It struck me as a brilliant examination of how a propagandist can use innuendo and subtle misstatements to create a world that is very different from the one most of us live in.
Dana has succeeded in writing an exhaustive case study of how the paranoid mind can spin and spread conspiracy theories. Some 9 million people listen to him every week on TV and radio, so in a country of 300 million, he's only reaching a tiny fringe. But those folks scare Congressmen in conservative districts, and many of them go to tea party rallies. Unfortunately, Beck's technique and his world view matter.

Google suit over Microsoft contract hurts U.S. Gov operations

Google is stepping up its game in office software with a lawsuit against the Interior Dept. for picking Microsoft Office for a $59 million upgrade. http://online.wsj.com/article/SB10001424052748704141104575588641430182832.html?mod=WSJ_hps_sections_business
I'm not sure of the merits of Google's case. But I know the resulting delay won't be good for governement operations.
The endless litigation over government IT contracts is a big reason the government IT systems are so antiquated. Every effort to upgrade IT in government agencies requires months or years of writing RFPs followed by public comments, followed by amendments, followed by bids, followed by selections, followed by litigation. This is further complicated by quadrennial turnover of agency heads and deputy under-secretaries requiring the new leader to be updated on everything that went into the contract RFP and its aftermath.
The goal, of course, is fair competition for government procurement that will result in the best systems and the lowest price. The alternative would probably be companies lobbying congressmen with campaign contributions which isn't good either. But the game for bidders now is to get into the RFP process and put in criteria that make your company's product the only one that can fulfill the RFP. That's what Google says happened at Interior.
There's also a game of pulling together many competitors into consortia with different ones taking the lead on different contracts.
Maybe the Google lawsuit will result in a better system in 2012 or 2013. But Interior will lose a couple of years of enhanced productivity, and Microsoft may end up winning anyway.

How Google Avoids U.S. Taxes and How to Prevent It

My old colleague Jesse Drucker had a fascinating Washington Post article last weekend on corporate taxes. http://www.washingtonpost.com/wp-dyn/content/article/2010/10/30/AR2010103004613.html
It explains how one of the world's most profitable companies, Google, managed to virtually eliminate international taxes and minimize taxes paid anywhere by transferring its intellectual property to an Irish subsidiary. It then turned the profits of that subsidiary over to a Bermuda unit, via a Netherlands subsidiary.
You can get mad at Google for doing evil by ducking taxes. But that's unrealistic. Every company will do the most it can to cut its taxes. The U.S. 38% corporate tax rate is the highest corporate tax rate in the world, next to Japan. There will always be countries that see a benefit by having low corporate taxes. Ireland's tax-friendly laws resulted in the gainful employment of 2,000 Google workers in a shiny building in Dublin.
To me, the worst consequence of this is that the profits Google shelters from taxes have to stay overseas or be subject to the U.S. tax rate when they're brought back to the U.S. That gives Google an incentive to invest the money overseas either by buying foreign companies or building its business in Ireland and elsewhere. The Obama administration wants to force U.S. companies to pay taxes on some of their foreign profits. But that will put them at a big disadvantage against European and Asian companies that have lower tax rates. That, in turn, will hurt U.S. exports.
It seems to me that we'd bolster the U.S. export economy and the competitiveness of U.S. business a lot if we lowered the corporate tax rate to 15%. Then many companies will bring their profits back to the U.S. and invest where it makes the most economic sense rather than the most tax sense.

I just saw that Megan McArdle at Atlantic blogged on this issue advocating a zero-corporate-tax rate. http://www.theatlantic.com/business/archive/2010/10/why-we-should-eliminate-the-corporate-income-tax/65351/

Admire Greg Mankiw's sense of humor

Check out Mankiw's blog. http://gregmankiw.blogspot.com/

At the top is a parody by Harvard Econ students complaining about Stephen Colbert's mocking of Mankiw. About four posts down is Colbert's takedown of Mankiw. I suggest you watch the Colbert Report first (which Mankiw was classy enough to post on his blog) and then the econ students' parody in which Greg participated.

Rich people have hormone to live longer?

Check this out: ">http://www.myfoxdc.com/dpp/health/hormone-found-in-rich-people-linked-to-longer-life-ncx-102110

It seems to me that long life by itself leads to wealth accumulation -- at least in a stable society where compounding of interest comes into play. A wealthy widow dying at age 75, would leave an estate to children in their 40s who would likely spend it on education for their children and perhaps a summer cottage. But if she lives to 94, surviving through the 1980s and 1990's with a bunch of pharmaceutical stocks, a thrifty, Depression-bred attitude and small financial needs she has accumulated a significant estate, even while helping fund grandchildrens' educations.

The theoretical wonders of compounding have been available for a long time. But very few societies have been stable enough ( until 1930, I suspect that bank failures affected most rich people in the world at some point in their lives) for people to realize them. Today, long life is likely to fuel financial accumulation.

Obama blows an environmental issue

I'm disappointed that Obama sold out African children, U.S. auto owners and the world environment to placate Archer Daniels Midland and the corn lobby. http://bit.ly/a9er5i
Boosting ethanol demand when corn supplies are tight will force up food costs in poor countries. Growing corn requires more carbon emissions than it saves. And car makers say it will shorten engine life. I'd hoped that Obama's EPA would be better than this.

How paper ads still drive the newspaper business

When I read David Carr's piece in the NY Times yesterday, I thought he made some smart points about Howard Kurtz, media brands and his core question: "if news is wherever the public finds it, what really is the value of creating a complicated, labor-intensive print product? " Carr's answer was that it made the writer of a fine piece (like his story revealing the crassness of Tribune management) feel good. I know how he feels. Having a story run on the front page of the WSJ was even better than being "most e-mailed".
But I was surprised to note that his entire story did not include the "A" word -- advertising. Carr is terrific reporter and fine writer. But it's pretty clear he never spent a moment working as a business reporter. If he had, he would have followed the money.
The answer to his question is this: the value of creating a print product is that advertisers will pay for it. Newspapers could probably get all their valuable readers -- the ones with money, smarts and willingness to switch brands -- to read on line. But they can't make a credible argument that those readers will buy as a result of seeing banner ads or pop-ups on line. So advertisers won't spend anywhere near as much for a banner on NYTimes.com as they will for a full page ad in the paper NY Times front section.
Nobody in charge of the Times -- or my old employer, the Wall Street Journal-- really wants to produce news on newsprint. It's environmentally offensive (which bothers the Times). It gives unions representing people like truck drivers and typographers control (which bothers the Journal). But the only way they can persuade advertisers to spend $200,000 on a full page color ad is by letting them do it in print. The paper Times or Journal is perceived by advertisers to have value while the digital version isn't.

Historically, advertising has paid up to 80% of the bills at most newspapers. That's fallen because classified advertising is dying, but ads still account for well over half of newspaper revenue. Until that changes, there's value in creating a complicated, labor-intensive product. Moreover, those complications are a huge barrier to entry. The Times, like most newspapers, has a monopoly on daily access to readers through its print edition. That means it can charge monopoly prices for ad pages. Online, readers surf numerous places for news, making banner ads on any of them a commodity that is priced competitively.

If you don't look into the continuing reliance on revenue from print advertising, you can't understand the new newspaper business.

Milbank's new book on Glenn Beck

I know what book I'm buying next -- Washington Post columnist Dana Milbank's book "Tears of a Clown" -- a bio of Glenn Beck. I just read an excerpt at Daily Beast.
Dana is one of the funniest writers in the press, and a former colleague of mine in the WSJ's Boston bureau. Beck doesn't deserve treatment by such a talent, but this book looks like a lighthearted romp across Beck's bizarre body of opinion.

Wonderful money quote from Dana: "Beck can do this because he is not constrained by the fact/fiction divide that governs the rest of the news business. "

Dana goes on: "Beck calls his unique hybrid of fact and fiction “faction.” “Faction,” Beck explained, is a “completely fictional” account that somehow still has a plot “rooted in fact.” That is what Beck wrote in the foreword to his thriller, The Overton Window, which came out in mid-June. After providing a “fictional” account of world government taking over America, he offered a 30-page afterword full of citations of “factual” events that supposedly support the fictional story."
"Tears of a Clown" be a good read, but I suspect it won't become a best-seller on the strength of a Glenn Beck plug.