2:00PM Water Cooler 8/18/2017

By Lambert Strether of Corrente

Readers, this too is a travel day for me, as my bus from Burlington to Montreal comes smack dab in the middle of the time I would usually write Water Cooler (and I collapsed into my bed after the Burlington meetup, which was really fun (report to come)).

So I’m going to do a quick post now, so as to meet the 2:00PM deadline and then, when I get to Montréal, sit down in a nice café somewhere and post some more (by which time the days statistics and business stories will have come out).

On the bus yesterday, I did a modest, seated happy dance when I read this article by Nate Cohn: “The Obama-Trump Voters Are Real. Here’s What They Think,” because the focus on voters in key states who flipped from Obama to Trump supports the thesis I expressed in “Political Misfortune: Anatomy of Democratic Party Failure in Clinton’s Campaign 2016 (Part II)”; one difference being that Cohn wrote his story on August 15, and I wrote mine on March 7. (Voters who voted for Trump and flipped to Obama are especially interesting, since if racism were their main driver, they presumably would not have voted for Obama in the first place, no matter how much Democrat strategists and pollsters tap dance on this.)

Cohn’s lead:

But postelection surveys, pre-election surveys, voter file data and the actual results all support the main story: The voters who switched from President Obama to Mr. Trump were decisive.

Yep. (I don’t have time to lay what I wrote against what Cohn wrote, so please take “yep” as a signal that I agree, because that’s what I wrote, although my argument is more complex and, though I say it, rigorous; see the matrix of failure.)

Cohn calls out reliance on the national polls by pundits like Dana Milbank:
Mr. Milbank’s choice to use nationwide figures obscures the degree of the defection of white working-class voters from the Democrats to Mr. Trump. … But the national vote doesn’t count, and Mrs. Clinton is not the president. She lost primarily because of the narrow but deep swing among white working-class voters who were overrepresented in decisive battleground states.

Yep. (I’d argue that “black working class voters” — oddly, or not, a category that is simply not visible to the press or identity politics-driven liberal Democrats — stayed home.)

And then there’s this:

Just 74 percent of white Obama voters with a high school diploma or less backed Mrs. Clinton in the voter study group cited by Mr. Milbank.

Similarly, the Cooperative Congressional Election Study found that Mrs. Clinton won just 78 percent of white Obama voters without a bachelor’s degree. The figure was even lower in the key Rust Belt battlegrounds.

(I would venture to predict that whichever candidate is the change candidate in 2020 — “Hope and change” and “Make America Great Again” both promised change, and neither candidate delivered* — will “lure” these voters. But that candidate will have to put some serious “skin in the game.” After all, “Fool me once, shame on you. Fool me twice, shame on me.”) More:

The Obama-Trump voters generally support Mr. Trump’s key campaign pledges on immigration, police, infrastructure spending, trade and the environment.

Taken together, the data indicates that Mr. Trump had considerable and possibly unique appeal to an important slice of Democratic-leaning voters. Mr. Trump adopted a platform tailored to white working-class Democrats. In doing so, he neutralized many traditional Democratic lines of attack against typical Republicans like Mitt Romney. Many of these voters backed him in the primary and seemed to prefer his brand of populism, suggesting they probably would have backed Mr. Trump no matter which Democrat he faced.

(“Unique” seems like an odd word; platforms are, to some extend, fungible. Not completely, of course; it’s hard to imagine Cuomo running on Sanders’ platform.)

Cohn’s conclusion:

All considered, it does seem likely that at least a portion of the Obama-Trump vote can be lured back to the Democrats — especially against traditional Republican candidates who emphasize small government, free markets and social conservatism.

Whether that means it should be the crux of the Democrats’ path to power is another question. But it will most likely be a part of it, and will probably need to be for Democrats to secure parts of the Rust Belt that continue to play an outsize role in American elections.

In other words, racking up votes in California and ignoring the Rust Belt won’t work for Democrats in 2020 either, though that won’t prevent Democrats from trying it, if they’re allowed to. I also doubt very much that the weak tea the Better Dealers are pushing will win these voters over. I mean, tax credits and job training? They’ve seen all that before.

Of course, another approach Democrats could take would be to make expanding the electorate a core party function. Do it everywhere! In all 50 states! In the voter ID states, take ’em to the polls and buy ’em an ID! That would certainly cost less than the billion-and-a-half dollars the Clinton campaign stuffed down the toilet and flushed.** Of course, if that were going to happen, it would already have happened. You can get that whatever the Democrats comes up with on that front won’t be universal, but narrowly tailored.

* But Lilly Ledbetter! But ObamaCare!! Please.

** To be fair, that money paid the college tuition for the kids of a lot of Democrat strategists. So there is a bright side.

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And here is the promised, although abbreviated, Water Cooler:


“Officials from Mexico, Canada and the United States have yet to wrap up their opening round of talks to renegotiate NAFTA, but the next two are already on the books: Negotiators are expected to head to Mexico City for the second round from Sept. 1-5, and to Canada for the third round from Sept. 23-27, two sources close to the talks told Morning Trade” [Politico]. “The quick turnarounds — just 11 days will pass between the close of the first round and the start of the second — reflect the aggressive pace that all three countries have expressed interest in pursuing.”


Readers, I collected a great deal of material today, but my method of gathering links from Twitter is to mail them to myself, from my iPad, to my laptop.Yahoo’s (AABA) miserably inadequate iOS app has been unable to grant me the power to do this from Canada despite repeated Captchas, repeated verifications, repeated resetting of passwords, etc., and so their engineers and managers have cost me several hours of research that I am immodest enough to presume would have been of interest to you. I hereby curse Yahoo (AABA), and hope they lose a very great deal of money. May the God(ess)(e)(s) Of Your Choice, If Any, hear this imprecatory prayer. –lambert

Trump Transition

“Trump dumps Bannon, but White House wounds fester with little cure in sight” [MarketWatch]. That won’t help Trump. Exactly as with the Flynn defenestration, it won’t appease his enemies, and makes Trump look weak. Because it is weak. Exactly as defenestrating Bert Lance made Jimmy Carter look weak. Because it was weak. (For those who came in late, more detail.) Now we have to hope that Trump doesn’t try to look strong by attacking somebody — though remember the universal applause that greeted Trump’s strike on Syria? The Blob is perfectly happy with a Trump attack, so long as he attacks the right enemy in the right way.

“Icahn steps down as Trump’s special adviser on regulation” [MarketWatch]. As above. It looks like the contradictions in the Republican Party between The Party of Business and The Party of A Big Tent That Includes Neo-Nazis are sharpening. It’s worth remembering that George W. Bush governed with popularity figures comparable to Trump’s. However, Bush never lost the support of The Party of Business. Trump is losing it. That suggests to me that Trump may not be long for this world. If he does, let’s remember that the contradiction was sharpened on the ground in Charlottesville (see below) and not anywhere else. In particular, the contradiction was not sharpened at places like Neera Tanden’s Center for American progress. In fact, I’m sure CAP, and many other liberals, would welcome it if Pence took over, since at last they’d have a rational interlocutor, someone they can do business with. It is, after all, important for the neoliberals to concentrate their forces and deal with the left…

Realignment and Legitimacy

Comment on Charlottesville:

One insufficiently appreciated universal material benefit, it has recently occurred to me, is “the right not to be killed,” as the Clash put it. Clearly, the “Nazi Re-enactors” in Charlottesville don’t believe that right is a universal one. So, let’s ask ourselves who was present, in Charlottesville, defending that right. The local membership of #BlackLivesMatter. Antifa. DSA. Sanders supporters, including Heather Heyer. And now let’s ask ourselves who was not there. Was Indivisible there? No. Were the pink pussy hats there? No. Were the co-opted bourgies of the national BLM there? No. That will not, of course, prevent liberal Democrats from rewriting history — in particular, erasing Heyer’s Sanders support — and claiming credit — after all, we do what we’re good at — but let’s be clear on who put their bodies on the line, and who didn’t.

“Cities Nationwide Brace for More Alt-Right Protests This Weekend” [Governing] “The Boston free speech rally is part of a coordinated nine-city protest against tech giant Google’s decision to fire a software engineer after he circulated a controversial 3,300-word memo against diversity. Other protests are planned for this Saturday in Atlanta, Austin, Los Angeles, New York, Pittsburgh, Seattle, Washington, D.C., and Mountain View, Calif.” Not sure why guys marching in uniforms with guns is “free speech,” as opposed to “incitement to riot.” I guess we’ll see. In some ways, this is a test: Does the “Google memo” have the iconic power that Confederate monuments do? Or “Nazi re-enactor” torchlight parades? “At least two of the speakers originally booked for the Boston rally, Gavin McInnes and Augustus Invictus, also spoke in Charlottesville and are regulars at white nationalist events around the country. McInnes was a co-founder of Vice Media and founder of the Proud Boys, an alt-right fraternity. McInnes backed out of the Boston rally, and Invictus was uninvited. However, Joe Biggs, who once worked for Alex Jones’ alt-right website InfoWars and promoted the ‘Pizzagate’ conspiracy, is reportedly planning to attend.” Perhaps they’ll be smart enough to stick to polo shirts and khaki pants…

“A Psychological Profile of the Alt-Right” [A Psychological Profile of the Alt-Right]. Not peer-reviewed. (Counter-poising some anecdotal data on dehumanization, here….)

“DSA died so that DSA could live” [Peter Frase]. “Yes, the name and the organizational structure continue on, but what DSA is–and who it is–has been radically transformed in a matter of months. Of the 800 delegates in Chicago, the vast majority are newcomers to the organization. At the convention banquet, the MC asked us to stand sequentially according to the period when we had become involved in DSA or its predecessors: the 1970s, the 1980s, the 1990s, the 2000s, the early 2010s, or since the beginning of 2016. Until that very last call, almost everyone was seated….” Note the following on a protest from the floor:

[T]he short version is this: after attempting, and failing, to add language about disability to our national priorities document, a protest broke out. Comrades scattered through the room began chanting “nothing about us without us.” At that point the chair, Chris Riddiough–who, I want to emphasize, did a heroic and indispensable job presiding throughout the rest of the convention–made the unfortunate decision to call for the removal of the protesters.

This was an extremely fraught moment. The protest immediately divided the room, with some delegates furious at the chair, and others furious at the protesters. I confess that I myself wavered for a moment, and I was afraid that the entire proceeding was about to devolve into chaos. But I soon realized that what was at stake, at that moment, was far more politically significant than keeping to a schedule or voting on a few remaining resolutions. This was about whether we, as the assembled delegates of DSA, were going to show some flexibility in order to affirm our solidarity with our comrades with disabilities, and by extension with all those who may find themselves marginalized or excluded in DSA.

And I’m proud to say that we passed this test. Our Robert’s Rules acumen had been sharpened by days of parliamentary procedure, and someone quickly realized that we had the authority to vote to overturn the chair’s ruling, which we thankfully did before there could be any question of carrying out the disastrous option of forcefully removing protesters from the hall. After that, the original motion on disability language was affirmed by huge margins, order returned, and we proceeded with the agenda. That one moment isn’t sufficient to address the larger issues raised by the protesting comrades, of course. But I’m hopeful that it was a sufficient display of solidarity to avoid permanently alienating some of our most committed members.

I remember vividly the dysfunction of Occupy’s General Assemblies. The key point is this: Prefigurative though they may have been, the rules for GA did not respect people’s time. That meant that if you had to go to work, you were discouraged from participating in the first place, and might have to leave the meeting prematurely even if you did participate. TL;dr: The GA did not put working class people first. Roberts Rules, because they are structured to respect people’s time, can be made to do so.

Stats Watch

Industrial Production. July 2017: The Federal Reserve inadvertently released what is a weak July industrial production report about a 1/2 hour early this morning” [Econoday]. “A 3rd straight decline in motor vehicles, down 3.6 percent in July, held down the month’s production. Excluding vehicles, manufacturing rose 0.2 percent. But also not helping were business equipment, down 0.5 percent in the month, and construction supplies, down 0.4 percent. On the plus side with small gains are consumer goods, materials, and non-industrial supplies. Outside of manufacturing, mining posted a 4th straight solid gain, at 0.4 percent, with utilities swinging higher with a 1.6 percent July increase. This report, which is the first definitive look at July’s factory sector, is unexpectedly flat and puts an end to the run of recently strong economic data. Strength in sentiment surveys like this morning’s Philly Fed do not always match the real world.” Granted, for some definition of “real world,” but I take the point. And but: “Worse than expected, but modest growth from depressed levels” [Mosler Economics]. Importantly: “Capacity utilization at 76.7% is 3.2% below the average from 1972 to 2015 and below the pre-recession level of 80.8% in December 2007” [Calculated Risk].

Consumer Sentiment, August 2017 (preliminary): “Consumer sentiment unexpectedly burst higher in the preliminary estimate for August but the results, warns the report, do not fully reflect the impact of the weekend’s violence in Virginia” (!) [Econoday]. In a crisis, things correllate… More: “The index… is well over Econoday’s high estimate and the strongest reading since the post-election surge in January. But the report said ‘too few’ interviews were conducted after the violence and that related fallout may reverse expectations especially for Republicans…. [A] step back for current conditions is not a favorable indication for consumer activity in the month of August. And: “The preliminary August University of Michigan consumer confidence index reading increased to 97.6 from the previous reading of 93.4. The figure was well above consensus forecasts of 94.0 and the highest reading since January” [Economic Calendar], whose coverage, interestingly, does not include the political angle. On the other hand: “The sharp rise in expectations in this preliminary version of the survey could be dashed if the turmoil in the Trump administration continues. The White House has promised a tax reform proposal that many businesses and individuals are still counting on, but the increasing alienation between the president and the Senate threatens to derail the proposal. The hope is that the long-standing unifying principle of lower taxes that animates the Republican Party will patch up the current rancor between the president and the Senate: [MarketWatch]. If one wishes to call it a “principle”…

Philadelphia Fed Business Outlook Survey, August 2017 (yesterday): “Factory sentiment has nowhere been stronger this year than in the Mid-Atlantic where the Philly Fed report has drained the dictionary of superlatives” [Econinterect]. “Shipments are strong, the workweek is up, hiring is brisk, deliveries times are getting delayed, and inventories are being drained. At least they are among this report’s respondents who number may number no more than 200 in any month. This report has been on fire all year in contrast to definitive factory data from the government which has also been moving higher but to a much more limited degree.” C’est un scandale! Except not…

Employment Situation: From the BLS state survey: “Ten states have reached new all time lows since the end of the 2007 recession. These ten states are: Arkansas, California, Colorado, Maine, Mississippi, North Dakota, Oregon, Tennessee, Washington, and Wisconsin” [Calculated Risk]. One swing/Rust Belt state: Wisconsin.

Jobless Claims, week of August 12, 2017 (yesterday): “Seasonal layoffs from auto retooling have yet to skew jobless claims data this summer which remain comfortably at historic lows” [Econoday].

Housing Starts (Wednesday): “Lower than expected, and, as always starts are ultimately determined by permits, which have been slowing as per the chart, which also reflects the deceleration in mortgage lending over the last 6 months” [Mosler Economics].

Bloomberg Consumer Comfort Index, week of August 13, 2017: “The consumer comfort index held onto the bulk of its early August rebound” [Econoday].

E-Commerce Retail Sales. week of August 17, 2017: “Online shopping has been strong this year, rising a quarter-to-quarter 4.8 percent in the second quarter vs 4.1 percent in the first quarter. As a percentage of total retail sales, e-commerce continues to gain ground, up 4 tenths to 8.9 percent” [Econoday].

Real Estate: “‘There are a little over 700,000[hotel] rooms under construction right now, most of which are in (Asia/Pacific) and the United States,’ [Bobby Bowers, SVP of operations at STR, Hotel News Now’s parent company] said. “You talk about the top 10 countries …. (it’s) not surprising that the U.S. and China lead there” [Hotel News Notes]. “‘The Federal Reserve conducts a quarterly survey of their lending institutions, and this (chart) is showing that a lot of folks out there at the banks say that the standards for construction and land development loans have been tightened a bit,’ he said, ‘and if you talk with some of the developers I’ve talked with over the last few days, … it’s getting a little bit harder to get money to construct.”

Commodities: “Copper price surges to 32-month high as hedge funds place $20 billion bet” [Mining.com].

Shipping: “Russia’s largest air cargo terminal will start operations next month” [Lloyd’s Loading List].

Leading Indicators, July 2017: “Low short-term interest rates and high consumer expectations continue to underpin the index of leading economic indicators which rose 0.3 percent in July following June’s very strong 0.6 percent gain” [Econoday]. “Strength in the ISM’s private survey of manufacturers [Oh, a survey! –lambert] also continues to be a major plus. Holding down the LEI in July was a move backward for building permits.”

Political Risk: “After 10 years, policy makers still haven’t learned the right lessons from the financial crisis” [Mohamed A. El-Erian, MarketWatch]. “Anyone who has experienced or studied developing-country financial crises will be painfully aware of their defining features. For starters, as the late Rüdiger Dornbusch argued, financial crises can take a long time to develop, but once they erupt, they tend to spread rapidly, widely, violently, and (seemingly) indiscriminately. In this process of cascading failures, overall financial conditions quickly flip from feast to famine.” But the United States is not some kinda “developing” Third World– Oh, who am I kidding?

Five Horsemen (yesterday): “Is mighty Amazon losing its mojo?” [Hat tip, Jim Haygood].

Five Horsemen Aug 17

Today’s Fear & Greed Index: 17 Extreme Fear (previous close: 17, Extreme Fear) [CNN]. One week ago: 25 (Extreme Fear). (0 is Extreme Fear; 100 is Extreme Greed). Last updated Aug 18 at 4:21pm. I would attribute this to Bannon’s defenestration, but yesterday was extreme fear too, and since I’ve been on the road I’ve been out of touch with Mr. Market, to the extent I ever am in touch.

Class Warfare

“41,000 former for-profit college students could be eligible for student loan forgiveness” [MarketWatch]. Good. Great! So why not a Debt Jubilee for everyone? It’s every biblically sanctioned! See, e..g, Deut 15.1.

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Readers, feel free to contact me at lambert [UNDERSCORE] strether [DOT] corrente [AT] yahoo [DOT] com, with (a) links, and even better (b) sources I should curate regularly, (c) how to send me a check if you are allegic to PayPal, and (d) to find out how to send me images of plants. Vegetables are fine! Fungi are deemed to be honorary plants! If you want your handle to appear as a credit, please put it in the subject line. Otherwise, I will anonymize by using your initials. See the previous Water Cooler (with plant) here. Today’s plant (RW):


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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.