Category Archives: Everyone

This American Fought ISIS. Now He’s Trying to Get Washington to Untangle Its Syria Policy

by DanteDunckley79 Posted on December 26, 2016

Mother Jones

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“This reminds me of when I was fighting ISIS,” Robert Amos told me, improbably, one sunny September day as we rode in a white Jeep through the streets of downtown Washington, DC. The vehicle was packed with four elderly Kurdish passengers in sweaters and suit jackets, members of the American Kurdish Information Network, a non-profit organization. They complained in their native Kurmanji dialect about the broken A/C, and Amos occasionally chimed in with phrases that he learned during six months he spent as a soldier with the People’s Protection Units, or YPG, the predominately Kurdish militia that controls a 200-mile stretch of territory in northern Syria known as Rojava.

Amos, who is 30, Jewish, and grew up in West Virginia, has hair the hue of desert sand, and he wore big black granny sunglasses. “We’d always be driving through the desert in cars like this,” he said. “One time, during a battle, ISIS guys came streaming out of a tunnel at the bottom of a hill and I thought we were going to die. My friend kissed me on the cheek and said ‘goodbye.’ I survived, but he didn’t.”

Today Amos is fighting a new war. Since returning home in late 2015, he’s formed the American Veterans of the Kurdish Armed Forces, a group that aims to increase visibility and support for the YPG as well as the approximately 200 Americans who have joined them. The Pentagon has provided Special Forces troops to advise the YPG and air strikes to assist them on the battlefield. But Amos believes this isn’t enough, and his group has lobbied the Obama administration to provide more military assistance. It now plans to do the same with the incoming Trump administration, whose policy toward the Syrian Kurds remains—like most things Trump-related—wildly unpredictable. “Obama, Trump, none of them know what’s going on over there,” Amos said.

Amos’s inspiration for the group was an incident on August 24, 2016, when Vice President Joe Biden flew to Istanbul, where he and Turkish President Recep Erdogen reprimanded Kurdish fighters for being too effective against ISIS. “Move back across the Euphrates River,” Biden said at a joint press conference, referring to the YPG’s recent capture of Manbij, a strategic city north of Aleppo, from ISIS. (Three Americans died in combat during the two-month battle.) Soon after the meeting, 20 Turkish tanks, accompanied by 1,500 Syrian Islamists and aerial support from the US Air Force, rolled into Rojava. When they clashed with the YPG, the dizzying contradiction of the mission became clear: One US-sponsored force (Turkey and the Syrian rebels) was killing another US-sponsored force (the YPG).

A video, later posted on YouTube, showed a group of Syrian jihadists who’d participated in the Turkish invasion chasing 25 US Army soldiers out of the village of Al-Rai, where the Americans had gone to offer assistance to the pro-Turkey troops. On the tape, the Syrian rebels call the troops who’ve come to help them “dogs and pigs.” “Christians and Americans,” another man shouts, as the Americans flee, “have no place among us!”

Some Middle East experts have expressed outrage at the August invasion and the Obama administration’s support for it. Turkey’s attack on the YPG, said US Army Special Envoy Brett McGurk, was “unacceptable and a source of deep concern.” The incursion would be the beginning of “Erdogen’s Waterloo,” wrote David L. Phillips, a former advisor to President Obama and director of Columbia University’s Institute for the Study of Human Rights, in the Huffington Post. By backing Turkey’s invasion, he believes, the United States wasn’t just facilitating attacks on its own soldiers and allies, but inadvertently enabling jihadists to carry out those attacks. “Slipping into Syria’s quagmire is not in America’s interest,” Phillips wrote. “Nor is being played by Turkey.”

In response, on September 1st, Amos put on the olive fatigues he’d worn in Syria and drove six hours from Indiana, where he was living, to Parma, Ohio, to confront Biden. “Why did you tell the YPG to go back?” Amos shouted, as the vice president gave a speech to Hillary Clinton supporters at a union hall. An MSNBC segment called Amos “Biden’s heckler.” In the clip, his voice cracks as he cries out, “My friends died! My American friends!”

“If you’re serious,” Biden says, interrupting his speech, “come back after and talk to me about this. You have my permission.”

“Biden slipped out the back door,” Amos told me as our driver, Jay Kheirabadi, an Iranian Kurd who lives in Maryland, weaved erratically between lanes of traffic, as if dodging landmines. He honked and shouted out the window. “I think I have a perspective the vice president could learn from,” Amos said. “I just want to talk.”

The Jeep parked in front of Biden’s house at Number One Observatory Circle, near Massachusetts Avenue. Separated from the white Queen Anne-style mansion by stands of poplar trees, a steel fence, and a police checkpoint, the five men set up two large signs facing the road. One read, using a somewhat inscrutable reference to Turkey’s support for jihadist groups in Syria, “Joe Biden supports Diet ISIS.” The other read, “Kurds are fighting ISIS tooth and nail. America will you help them?”

Two other YPG veterans had promised to come but never arrived, and the lackluster turnout put Amos in a melancholy mood. Still, the protest’s modesty underscored its message: U.S. support of both Turkish and Kurdish groups who are killing each other in Syria is a danger to American interests, but no one is paying much attention. This point was made dramatically on November 24, when Turkish air strikes killed the first American YPG volunteer in Syria, an anarchist from California named Michael Israel. Turkish Prime Minister Binali Yildirim said that Americans fighting alongside the YPG would be treated as “terrorists…regardless of whether they are members of allied countries”.

A passing car honked. A man gave the middle finger out the top of his convertible. An Italian woman whizzed by on a mountain bike and shouted “Bongiorno!“

When I asked Azad Kobani, a former Syrian parliament member who now lives in Virginia, if American volunteers like Amos were crazy for risking their lives fighting in his home country, he said, “Fighting for democracy is never crazy. Not realizing Turkey doesn’t represent the US’s best interests is what’s crazy.”

Two Secret Service members crossed the street, playing Frogger against traffic. They rubbed their chins and stared down Amos, who is six-foot-two, a little plump, and who, in his sunglasses and YPG fatigues, appeared a bit deranged. “I fought ISIS,” Amos told the agents. “Biden promised he’d speak with me. He lied.”

“He does that,” one agent said, sarcastically.

“We went over there and fought and died,” Amos said after the agents had left, “and it’s like nobody cares.” Moments later a woman in a black SUV drove by, rolled down her window, and yelled an expletive at Amos. “Well,” he said, sighing, “I guess I need to keep fighting.”

Support for this article was provided by the Pulitzer Center on Crisis Reporting.

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This American Fought ISIS. Now He’s Trying to Get Washington to Untangle Its Syria Policy

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How to Dress Well—Without Ever Buying a Single Piece of Clothing

by AlfredNarvaez28 Posted on December 26, 2016

Mother Jones

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Last year, a friend of mine hosted a clothing swap. There were about 10 women and just a few rules: Bring clothes you want to get rid of. Take the items from your friends’ closets that you like, and the rest goes to the local thrift shop. The setup was an easy way to recycle the ridiculous number of garments in our millennial closets—we ditched items we hadn’t worn in months or even years and came away with some fresh, if worn-in, items, like the pair of American Apparel high-waisted cutoff jean shorts I left wearing.

I’m not as wardrobe-obsessed as the average American, who bought 64 articles of clothing and spent more than $1,100 on clothes and shoes in 2013. The average woman had just nine outfits in 1930. Today, her drawers are so stuffed she can wear a different getup every day of the month. Women only use about 20 percent of their wardrobes and typically wear an item just seven times before pushing it to the back of the closet. After that comes the landfill: Each of us discards about 80 pounds of textiles every year.

Fast-fashion stores like H&M and Forever 21 have made it easy to buy and dump outfits at record speed. In fact, between the time I wrote this story and when it hit the newsstands, the industry took women through upward of 10 new trends. This endless march of cheap off-the-shoulder blouses and oversize T-shirt dresses can also be bad for workers, as manufacturers have cut costs by outsourcing production to sweatshops abroad. Ninety-seven percent of our clothes are made abroad, sometimes in exploitative or even deadly conditions, points out Elizabeth L. Cline in her book, Overdressed. “If we’re going to shop in this way that’s so obsessed with novelty,” she says, “how can we do that in a way that’s not so destructive?”

So my friends and I were clearly on to something. And as it turns out, so is a small but growing corner of the fashion world. The best-known example may be Rent the Runway, a New York-based subscription company that lets you choose clothes you like online and ships them to your house. When you’re over an outfit, you mail it back, and it’s shipped out to the next person who’s had her eye on it.

Since it was founded in 2009, Rent the Runway—which started as a service just for formal wear but has since expanded to include office and casual outfits—has raised $126 million from venture capitalists. It recently moved into a 160,000-square-foot warehouse and now has more than 6 million members. It’s no surprise that a handful of competing companies have cropped up. Le Tote, an online shop that offers a similar clothing rental service, recently raised $27.5 million. An app called Curtsy lets you rent from your neighbor or classmate. These new clothiers are “asking customers to put their closets into the cloud,” says Jennifer Hyman, ceo and co-founder of Rent the Runway.

The so-called “Netflix for clothing” model clearly cuts down on waste—instead of 20 women buying identical shift dresses from Zara, they can all share one. And when Rent the Runway retires an outfit from rotation, the company sells it or donates it to charity instead of throwing it out.

But there are downsides, too: Fashion subscription services require repeated cleaning and shipping. Many companies dry-clean items between wearers; no one wants a shirt with the lingering smell of someone else’s BO or cigarettes. That process typically involves chemical solvents like perchloroethylene, which can leach into groundwater and has been linked to neurological problems, acute loss of coordination, and liver tumors in mice. The Environmental Protection Agency classifies this chemical solvent as a “likely” carcinogen. Rent the Runway claims its dry cleaning facility is the largest in the country, and that instead of perchloroethylene it uses a nonhazardous alternative. Brett Northart, the co-founder of Le Tote, told me that his company employs a cleaning technique somewhere between dry cleaning and laundry to reduce the volume of chemicals used, though he declined to divulge details.

The jury is still out on whether online shopping creates more carbon emissions than brick-and-mortar retailers, and fashion subscription services require double the shipping, since customers send their boxes back when they’re done. There’s also packaging to consider: When you buy a shirt online, more than half the carbon footprint is from the cardboard, tissue paper, or plastic used to ship it.

Rent the Runway sends its clothes in a reusable garment bag, which it says saves an estimated 287 tons of shipping waste each year. But the bigger win of the clothes-sharing model, says Cline, is how it changes the way we think about our closets. “It’s hard to imagine us getting back to a place where people only buy things they plan to wear for the rest of their lives,” she told me. But if we can kick the habit of wearing an outfit once and then tossing it, that’s major progress. “People are starting to use rental sites as a substitute for buying new, and that’s really huge.”

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How to Dress Well—Without Ever Buying a Single Piece of Clothing

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A Brief History of the Idea That Everyone Should Get Free Cash for Life

by DedraFreee Posted on December 26, 2016

Mother Jones

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From the window of his university office in Louvain-la-Neuve, Belgium, philosophy professor Philippe Van Parijs—considered by many to be Europe’s most prominent advocate for the idea that the state should provide a regular income to every citizen—can see the mailbox where he sent off invitations to the first “basic income” conference more than 30 years ago. “I’m quite amazed by the seed we threw on the ground now,” he says.

After decades of obscurity, the idea is suddenly in fashion. Politicians around the world are interested and a handful of governments, such as Finland and the Canadian province of Ontario, are planning or considering basic-income pilot projects.

But the idea of basic income has been around for more than 200 years, rising on waves of political and economic turmoil only to disappear in calmer times. Here are some of the highlights of its long, turbulent history:

Thomas Paine Wikicommons

1795-97: As the Industrial Revolution widened the gap between rich and poor, land reform was seen by some as an answer to social inequity. Thomas Paine, who two decades earlier had written Common Sense, drafted Agrarian Justice in the winter of 1795 and 1796. The earth by right belongs to all people, Paine argued, but the private ownership of land has stripped us of this “natural inheritance”; at 21 years old, citizens should be compensated for their loss with a sum of 15 pounds. A year later, fellow British-born radical Thomas Spence responded with a pamphlet titled The Rights of Infants. Writing in the character of a woman (“because the men are not to be depended on”), Spence said society should be organized into parishes that would lease out all houses and lands and then, after the community’s expenses had been paid, distribute their remaining funds equally among members.

1848: Revolutions erupted across Europe, Karl Marx penned The Communist Manifesto, and Joseph Charlier, a Belgian variously identified as a “writer, an “accountant,” or a “merchant,” wrote The Solution of the Social Problem, now considered the first fully fledged proposal for basic income. His book received little attention and disappeared until two European academics stumbled upon it 150 years later and wrote an article that established Charlier’s place in history.

Late 1910s and 1920s: Social movements demanded a radical redistribution of resources after the devastation of World War I. In England, two young Quakers published a pamphlet calling for a weekly “state bonus” for all citizens of the United Kingdom. The idea gained a following and was considered by the Labor Party in 1920 but ultimately rejected.

Sen. Huey Long Wikimedia Commons

1930s: The Great Depression swept across the industrialized world, wiping out jobs and sending poverty soaring. In 1934, populist (and famously corrupt) Louisiana Sen. Huey Long addressed the country on the radio and called for the confiscation of wealth from the richest and guaranteed annual incomes for all families, a program he called “Share Our Wealth.” The movement was cut short by Long’s assassination in 1935. That same year, President Franklin D. Roosevelt signed the landmark Social Security Act, creating the anti-poverty program known as Aid to Families with Dependent Children—or “welfare.”

1940s: Conservative economists Milton Friedman and George Stigler, both future Nobel laureates, developed the idea of a “negative income tax” (NIT), essentially a guaranteed income administered through the tax system. Low-income filers would receive checks from the government rather than pay taxes; as their earnings increased, so would their tax burden, but also the total amount the filer took home. Friedman’s plan may come as a surprise to his small-government acolytes, but the economist firmly believed an NIT would address poverty without adding to the state bureaucracy he reviled.

1962-63: Basic income went mainstream as attention turned to poverty, unemployment, and the massive northern migration of African Americans. In 1963, critic Dwight Macdonald argued for the necessity of a guaranteed income for all families in an influential review of Michael Harrington’s The Other America in The New Yorker. Friedman made the case for an NIT in his book Capitalism and Freedom, while on the left, economist Robert Theobald outlined his “Basic Economic Security plan”—a proposal strikingly similar to modern basic-income schemes. Economists in the Kennedy administration embarked on a federal anti-poverty campaign, which, after Kennedy’s assassination, became Lyndon Johnson’s War on Poverty.

1964-68: Racially charged riots, with demands for economic justice, erupted in cities across the country. In a 1967 speech, Martin Luther King Jr. called for a guaranteed minimum income for all people. Protests organized by welfare rights groups raised the pressure on government to address poverty and guaranteed income gained popularity within the administration. In a 1966 report, Johnson’s Council of Economic Advisers said a negative income tax “would be the most direct approach to reducing poverty” and “deserve(s) further exploration.” By 1968, a surprising cast of characters, including heads of major companies, had lent support to the idea. John Kenneth Galbraith and Paul Samuelson joined more than 1,200 economists in signing a statement advocating a “national system of income guarantees and supplements.”

1969-71: Richard Nixon repudiated guaranteed income on the campaign trail, but after his election, he was persuaded that it might be the best solution to the so-called “welfare mess.” In a televised address in August, Nixon presented his Family Assistance Plan (FAP). While Nixon insisted that it was “not a guaranteed income” because it included work requirements, the plan owed its central tenets to the guaranteed-income debate and would have made a radical break with past poverty policy. Families headed by both working and unemployed adults were eligible, erasing a historic line between the “deserving” poor (the old, disabled, and mothers with young children) and “undeserving” (people who are physically able to work).

Daniel Patrick Moynihan Marion S. Trikosko / Library of Congress

In 1970, Nixon’s bill easily passed the House but stalled in the Senate Finance Committee, which was chaired by Huey Long’s son, Sen. Russell Long of Louisiana. Daniel Patrick Moynihan, a proponent of the plan within the administration, wrote in a memo to Nixon that for Southern committee members “it would very likely mean the end of those political dynasties built on poverty and racial division.” Nixon’s plan died in committee. A revised version met the same fate the following year.

Late 1960s to the early 1980s: Beginning in 1968, the US government ran four groundbreaking negative income tax trials involving nearly 9,000 families. In Canada, between 1974 and 1979, the government turned the tiny, isolated town of Dauphin into a living laboratory where qualified residents received a guaranteed annual income equivalent to about $15,000 for a family of four. (The Canadian data was never analyzed; a determined academic discovered the documents in the early 2000s, packed away in 1,800 dusty boxes in a Winnipeg warehouse.) The US experiments, which were primarily intended to study an NIT’s impact on labor, found only small reductions in work effort. But researchers reported that the trials in Seattle and Denver appeared to increase the rate of marriage dissolution by 40 percent to 60 percent. Although the results were later disputed, the damage was done. Moynihan, now a senator and once an avid supporter in Congress, renounced guaranteed income. But Nixon’s welfare reform efforts did have a lasting impact: Supplementary Security Income (income support for the aged, blind, and disabled) and the Earned Income Tax Credit (an NIT applied solely to the working poor) were enacted in 1972 and 1974.

Jay Hammond Wikicommons

1982: In 1976, as the Trans-Alaska Pipeline neared completion, Jay Hammond, a professional hunter turned governor, proposed a system of dividends to be paid to all Alaskans from a state oil fund established in 1976. The program dispensed its first dividends in 1982, in effect becoming the first basic-income system in the United States. Last year, the state sent checks of $2,072 to nearly 650,000 residents. In June, current Gov. Bill Walker capped payments at $1,000 per person this year to help cover Alaska’s budget deficit.

Early 1980s to 1990s: In 1982, Philippe Van Parijs, then a young Belgian academic losing sleep to fears of unfettered capitalism, landed on the idea of a basic income. He found like-minded thinkers across Europe, and in 1986 they scraped together enough money for the first basic-income conference. At that meeting, the Basic Income Europe Network (“BIEN,” or “good” in French) was born. In 2004, at the insistence of a growing international contingent, the organization was renamed the Basic Income Earth Network.

1997: Mexico launched a large-scale conditional cash transfer program (CCT), or a system of direct cash payments to poor households, followed in 2001 by Brazil and Colombia. While CCTs are not identical to basic income—the grants come with requirements, such as sending children to school, and are only given to the poor—they also operate on the assumption that people can be trusted to spend cash grants wisely. CCT programs spread rapidly across Latin America in the early 2000s and on to parts of Asia and Africa. Tens of millions of impoverished people worldwide now receive financial assistance through CCTs funded by governments, international aid organizations, and nonprofits.

Zephania Kameeta Wikicommons

2006-11: At a BIEN conference in Cape Town, South Africa, Zephania Kameeta, then head of the Namibian Evangelical Lutheran Church, shouted in frustration: “Words! Words! Words!” Kameeta was fed up with the endless scholarly discussions and lack of progress, so after the conference he set about organizing a real-life basic-income trial. By early 2008, a basic-income coalition assembled by the bishop had launched a pilot project in an impoverished settlement. Two years later, a group of researchers began a series of basic-income experiments in rural India involving more than 6,000 individuals.

2015-Present: The Canadian province of Ontario pledged to roll out a basic income trial in 2017, with the Dutch city of Utrecht to follow in 2017. The Finnish government mulled a pilot project with up to 10,000 participants. In the United States, where Silicon Valley bigwigs were among basic income’s most vocal supporters, the startup incubator Y Combinator in June announced plans to start a pilot project this year in Oakland, California, that will distribute up to $2,000 a month to a few dozen people. Another private enterprise, the US-based nonprofit GiveDirectly, is planning an extended trial in Kenya that will span 10 to 15 years and involve at least 6,000 participants.

2016: On June 5, Switzerland became the first country to vote on, and roundly defeat, a national basic income. Opponents argued that the policy would have discouraged work and undermined the Swiss economy. But for basic-income advocates, the referendum was remarkable. Just a few decades ago, Van Parijs remembers, it was “difficult to find 30 people who had heard of the idea.”

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A Brief History of the Idea That Everyone Should Get Free Cash for Life

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A Trump Tariff Wall Would Help a Little, But Hurt a Lot

by MarguerU84 Posted on December 24, 2016

Mother Jones

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So let’s suppose that Donald Trump really does impose a 10 or 15 percent tariff on all goods entering the United States. Or maybe only Chinese and Mexican goods.1 What would happen? Who would be the winners and losers?

The simplest way to think about this is to remember what happens when tariffs are reduced. Textbook economics says that overall GDP will grow, prices will go down, but certain groups of people will be disproportionately harmed. So if tariffs are increased, the opposite should happen. Economic growth would suffer, prices would go up for most people, but certain groups would benefit. It’s not always clear what those groups are, but generally speaking workers in the sectors most vulnerable to foreign competition would probably benefit: textiles, clothes, shoes, rubber products, computer assembly, and so forth.

That’s the theory, anyway. The reality is sometimes different. Free traders, for example, often point to the example of automobile tires. In 2009, President Obama slapped a huge tariff on Chinese tires in order to protect the US tire industry. The chart on the right shows what happened: other countries rushed to fill the void and tire imports skyrocketed. The usual estimate is that about 1,200 jobs were saved at a cost to US consumers of $1.1 billion. That’s $900,000 per job, which is obviously a bad deal, but it’s also a diffuse deal. Unions and tire workers were happy regardless of how things turned out, while consumers probably barely noticed that they were paying an extra dollar per tire.

If Trump enacted a tariff only on China, this is roughly what would happen: some of China’s business would move to other countries, and net US imports would stay about the same. China would lose, other countries would gain, and in America it would be a wash.

But what if Trump enacted a 10-15 percent tariff across the board on every country? Economically, that would act like a sales tax on foreign goods. Prices would go up, which would allow American companies to increase production in sectors where a 10-15 percent advantage was enough to make them competitive.2 The exact way this would shake out depends on the elasticity of demand for various goods, but in the end American workers in certain sectors would almost certainly make gains, while all American consumers would pay higher prices. Is this tradeoff worth it? I’d say no, but plenty of people would disagree.

That’s the 100-thousand-foot view, anyway. In real life, other countries would almost certainly retaliate—maybe via tariffs of their own, maybe in other ways. Boeing, for example, usually suffers when the Chinese get annoyed with us, because Chinese airlines develop a sudden fondness for Airbus planes. Or the authorities in Beijing could make life harder for American companies doing business in China. Or they could get nasty in any of a dozen other ways. Ditto for the rest of the world, which would appeal to the WTO at best and retaliate with their own trade barriers at worst.

And no matter what the rest of the world did, American companies would face headaches for years as they tried to rework their supply chains, which are global for nearly every product you can think of. American products use lots of parts made overseas, and lots of overseas products use parts (and services) from America. For example, a San Francisco Fed paper estimates that 55 percent of the value of Chinese goods is actually US content. To make this concrete, think about iPhones: If China ends up making fewer iPhones, that also means fewer jobs for the Apple sales force and lower sales for the plant in Texas that makes iPhone processors. The whole thing is a mess—and it’s especially a mess if companies have no assurance about how long the tariffs will stay around or what’s around the corner from the rest of the world as they figure out ways to get back at us.

The bottom line is this:

The impact on workers in certain sectors would be anything from negative (in the case of a big trade war) to fairly positive (if the tariffs worked and the rest of the world decided to ride it out).
Prices would go up for everyone. And since low-income workers buy more goods as a share of their income, higher prices would hit them the hardest.
Economic growth would almost certainly slow down.

Most likely, Trump’s tariffs would be a bad deal for nearly everyone, and maybe—maybe—a good deal for a few workers and CEOs in the sectors that have been hardest hit by foreign competition.

More generally, you can’t really talk about “trade” in the abstract. Basically, there’s China and there’s everyone else. China is our big problem, but the trouble with retaliating against China is that it’s too late. We have lost a lot of jobs to them, but the damage was mostly done years ago. By the time Obama took office there was little he could do, and there’s even less that Trump can do now. It’s also true that China was a bad actor on the world economic stage for a long time. But again, their worst practices are mostly in the past. Their export subsidies are fairly low these days, and their currency manipulation is mostly to push the yuan up, not down. This benefits America, not China.

There is one best-case scenario, though: Trump threatens the Chinese and ends up getting some concessions from them without ever enacting any tariffs. Is that likely? I guess that depends on how good a negotiator you think Trump is. Unfortunately, his record in the business world doesn’t give much cause for optimism on that front.

1Yes, he could do it. Details here.

2For example, if China makes clocks for $2 and America makes clocks for $3, a 15 percent tariff wouldn’t do anything for American clockmakers. Even at a Chinese price of $2.30, Americans still couldn’t compete. However, consumers would end up paying $2.30 for clocks instead of $2.

On the other hand, if China makes cars for $9,000 and America makes cars for $10,000, a tariff could have a big effect. Chinese cars would now cost $10,350, and that means consumers would buy a lot more American cars. Unless, of course, they really prefer the Chinese cars even at a higher price. It all depends, you see.

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A Trump Tariff Wall Would Help a Little, But Hurt a Lot

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Meet Mike Pence, America’s New Prime Minister

by HildaYcrekr Posted on December 23, 2016

Mother Jones

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The front page of my morning LA Times happened to feature the headlines on the right. The headline on women reminds me of this Slate piece about how a lot of women who voted for Trump are now worried that he might defund Planned Parenthood. And of course, there’s yesterday’s news about all the business titans who are suddenly concerned that Trump might raise tariffs. Even on the right, it seems like everybody’s worried or alarmed or concerned these days.

We’ve seen dozens and dozens of headlines like this over the past few weeks. An awful lot of Trump backers seem sort of shocked by what’s going on. I mean, he wasn’t serious about all that stuff on the campaign trail, was he?

Who knows? But it looks to me like America has finally adopted a constitutional monarchy. The nice thing about this arrangement is that you have one person, the king or queen, who handles all the ribbon cuttings and so forth, and another person, the prime minister, who can then focus almost entirely on actual governing. In our case, Donald Trump is the new king of America, tweeting out nonsense, going on victory tours, and hobnobbing with famous people at Mar-a-Lago.

And then we have our new prime minister, Mike Pence. Freed from the demands of public appearances, he spends all his time behind closed doors running the country. He wants to kill Planned Parenthood. He wants to privatize the VA. He wants to immiserate millions of people on Obamacare.

Maybe Trump wants some of this stuff too. There’s no telling, really. As near as I can tell, he’s basically the guy tasked with distracting everyone while Pence fills the cabinet and chats with Paul Ryan about how to run the country. Among other things, this probably means that the business community doesn’t need to worry. Pence and Ryan will talk Trump out of the wall and the tariffs and the replacement for Obamacare. If he starts to balk, they’ll get Jared Kushner to whisper soothingly in his ear and then turn on the TV.

Welcome to the Mike Pence administration.

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Meet Mike Pence, America’s New Prime Minister

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These Professors Make More Than a Thousand Bucks an Hour Peddling Mega-Mergers

by BrianAlmeida Posted on December 23, 2016

Mother Jones

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This story originally appeared on ProPublica.

If the government ends up approving the $85 billion AT&T-Time Warner merger, credit won’t necessarily belong to the executives, bankers, lawyers, and lobbyists pushing for the deal. More likely, it will be due to the professors.

A serial acquirer, AT&T must persuade the government to allow every major deal. Again and again, the company has relied on economists from America’s top universities to make its case before the Justice Department or the Federal Trade Commission. Moonlighting for a consulting firm named Compass Lexecon, they represented AT&T when it bought Centennial, DirecTV, and Leap Wireless; and when it tried unsuccessfully to absorb T-Mobile. And now AT&T and Time Warner have hired three top Compass Lexecon economists to counter criticism that the giant deal would harm consumers and concentrate too much media power in one company.

Today, “in front of the government, in many cases the most important advocate is the economist and lawyers come second,” said James Denvir, an antitrust lawyer at Boies, Schiller.

Economists who specialize in antitrust—affiliated with Chicago, Harvard, Princeton, the University of California, Berkeley, and other prestigious universities—reshaped their field through scholarly work showing that mergers create efficiencies of scale that benefit consumers. But they reap their most lucrative paydays by lending their academic authority to mergers their corporate clients propose. Corporate lawyers hire them from Compass Lexecon and half a dozen other firms to sway the government by documenting that a merger won’t be “anti-competitive”: in other words, that it won’t raise retail prices, stifle innovation, or restrict product offerings. Their optimistic forecasts, though, often turn out to be wrong, and the mergers they champion may be hurting the economy.

Some of the professors earn more than top partners at major law firms. Dennis Carlton, a self-effacing economist at the University of Chicago’s Booth School of Business and one of Compass Lexecon’s experts on the AT&T-Time Warner merger, charges at least $1,350 an hour. In his career, he has made about $100 million, including equity stakes and non-compete payments, ProPublica estimates. Carlton has written reports or testified in favor of dozens of mergers, including those between AT&T-SBC Communications and Comcast-Time Warner, and three airline deals: United-Continental, Southwest-Airtran, and American-US Airways.

American industry is more highly concentrated than at any time since the gilded age. Need a pharmacy? Americans have two main choices. A plane ticket? Four major airlines. They have four choices to buy cell phone service. Soon one company will sell more than a quarter of the quaffs of beer around the world.

Mergers peaked last year at $2 trillion in the US The top 50 companies in a majority of American industries gained share between 1997 and 2012, and “competition may be decreasing in many economic sectors,” President Obama’s Council of Economic Advisers warned in April.

While the impact of this wave of mergers is much debated, prominent economists such as Lawrence Summers and Joseph Stiglitz suggest that it is one important reason why, even as corporate profits hit records, economic growth is slow, wages are stagnant, business formation is halting, and productivity is lagging. “Only the monopoly-power story can convincingly account” for high business profits and low corporate investment, Summers wrote earlier this year.

In addition, politicians such as US Senator Elizabeth Warren have criticized big mergers for giving a handful of companies too much clout. President-elect Trump said in October that his administration would not approve the AT&T-Time Warner merger “because it’s too much concentration of power in the hands of too few.”

During the campaign, Trump didn’t signal what his broader approach to mergers would be. But the early signs are that his administration will weaken antitrust enforcement and strengthen the hand of economists. He selected Joshua Wright, an economist and professor at George Mason’s Antonin Scalia Law School, to lead his transition on antitrust matters. Wright, himself a former consultant for Boston-based Charles River Associates, regularly celebrates mergers in speeches and articles and has supported increasing the influence of economists in assessing monopoly power. “Mergers between competitors do not often lead to market power but do often generate significant benefits for consumers,” he wrote in The New York Times this week.

A late Obama administration push to scrutinize major deals notwithstanding, the government over the past several decades has pulled back on merger enforcement. In part, this shift reflects the influence of Carlton and other economists. Today, lawyers still write the briefs, make the arguments and conduct the trials, but the core arguments are over economists’ models of what will happen if the merger goes ahead.

These complex mathematical formulations carry weight with the government because they purport to be objective. But a ProPublica examination of several marquee deals found that economists sometimes salt away inconvenient data in footnotes and suppress negative findings, stretching the standards of intellectual honesty to promote their clients’ interests.

Earlier this year, a top Justice Department official criticized Compass Lexecon for using “junk science.” ProPublica sent a detailed series of questions to Compass Lexecon for this story. The firm declined to comment on the record.

Even some academic specialists worry that the research companies buy is slanted. “This is not the scientific method,” said Orley Ashenfelter, a Princeton economist known for analyzing the effects of mergers. Referring to one Compass study of an appliance industry deal, he said, “The answer is known in advance, either because you created what the client wanted or the client selected you as the most favorable from whatever group was considered.”

In contrast to their scholarship, the economists’ paid work for corporations rests almost entirely out of the public eye. Even other academics cannot see what they produce on behalf of clients. Their algorithms are shared only with government economists, many of whom have backgrounds in academia and private consulting, and hope to return there. At least seven professors on Compass’s payroll, including Carlton, have served as the top antitrust economist at the Department of Justice. Charles River Associates boasts at least three.

“There are few government functions outside the CIA that are so secretive as the merger review process,” said Seth Bloom, the former general counsel of the Senate Antitrust Subcommittee.

One evening in 1977, University of Chicago law professor Richard Posner hosted a colleague from the economics department and a young law student named Andrew Rosenfield at his apartment in Hyde Park. The leading scholar of the “Law and Economics” movement, Posner wanted to apply rigorous math and economics concepts to the real world. “Why not see if there are some consulting opportunities?” he mused. The three of them agreed to form a firm, throwing in $700 for a third each. They called it “Lexecon,” combining the Latin for law with “econ.”

The trio then shopped their services to a dozen law firms, which all turned them down. “If you had to value the firm at the end of the tour, you’d have to say it was zero,” said Rosenfield.

They went back to their academic work. Not too long after, AT&T called Posner to ask if he could consult on its antitrust defense. The government was trying to break up Ma Bell. Posner agreed. So began a long and mutually beneficial relationship between AT&T and Lexecon.

Soon after its founding, Lexecon hired one of Chicago’s most promising young economists: Dennis Carlton. He had grown up in Brighton, Mass., earning degrees from a trifecta of elite local institutions: Boston Latin High School, Harvard, and MIT, where he would later endow a chair. He played basketball in his spare time. “Backaches have temporarily sidelined me from embarking on my second career as a basketball player in the NBA,” he joked in a 40th reunion report to his Harvard classmates in 2012. (After a short interview with ProPublica, Carlton subsequently declined comment, citing client confidentiality.)

Ronald Reagan appointed Posner to the federal bench in 1981. Posner left Lexecon. “Andy and I were young,” Carlton said. “Gee, we wondered: Is the firm going to survive? Not only did it survive, but it did very well.”

Lexecon capitalized on the Eighties merger explosion. M&A was rising to cultural prominence as the domain of swashbucklers. Corporate raiders enlisted renegade lawyers and brash investment bankers to take on stalwart names of American industry.

Behind the scenes, the less-flamboyant economists gained influence. From the time antitrust laws began to be passed, in the late 19th century, until the 1970s, courts and the government had presumed a merger was bad for customers if it resulted in high concentration, measured at thresholds much lower than the market shares for the dominant companies in many sectors today.

Led by University of Chicago theorists, a new group of scholars argued that this approach was overly simplistic. Even if a company dominated its industry, it might lower prices or create offsetting efficiencies, allowing customers more choice or higher quality products. In 1982, William Baxter, Reagan’s first head of the Justice Department antitrust division, codified the requirement that the government use economic models and principles to forecast the effect of mergers.

Lexecon seized the opportunity. “We were not just going to talk about economic theory but show with data that what we were saying could be justified,” Carlton said. By the late 1980s, the top four Lexecon officers were each making $1.5 million a year, according to a Wall Street Journal article.

Any merger over a certain dollar size—currently, $78 million—requires government approval. The government passes most mergers without question. On rare occasions, it requests more data from the merging parties. Then the companies often hire consulting firms to produce economic analyses supporting the deal. (Sometimes the government hires its own outside academic.) Even less frequently, the government concludes it can’t approve the merger as proposed. In such cases, the government typically settles with the two companies, requiring some concession, such as sale of a division or product line. Just a handful of times a year, the government will sue to block a merger. Recently, the Obama administration has filed several major suits to block mergers, as companies in already concentrated industries propose bigger and bigger deals. According to a tally from the law firm Dechert, the government challenged a record seven mergers last year out of a total of 10,250.

Recent research supports the classic view that large mergers, by reducing competition, hurt consumers. The 2008 merger between Miller and Coors spurred “an abrupt increase” in beer prices, an academic analysis found this year. In the most comprehensive review of the academic literature, Northeastern economist John Kwoka studied the effects of thousands of mergers. Prices on average increased by more than 4 percent. Prices rose on more than 60 percent of the products and those increases averaged almost 9 percent. “Enforcers clear too many harmful mergers,” American University’s Jonathan Baker, a Compass economist who has consulted for both corporations and the government, wrote in 2015.

Once a merger is approved, nobody studies whether the consultants’ predictions were on the mark. The Department of Justice and the Federal Trade Commission do not make available the reports that justify mergers, and those documents cannot be obtained through public records requests. Sometimes the companies file the expert reports with the courts, but judges usually agree to companies’ requests to seal the documents. After a merger is cleared, the government no longer has access to the companies’ proprietary data on their pricing.

The expert reports “are not public so only the government can check,” said Ashenfelter, the Princeton economist who has consulted for both government and private industry. “And the government no longer has the data so they can’t check.” How accurate are the experts? “The answer is no one knows and no one wants to find out.”

Compass Lexecon itself is the product of serial M&A. A Michael Milken-backed company bought Lexecon for $60 million in 1999. Then it sold Lexecon to FTI Consulting, an umbrella group of professional consulting service firms, in 2003 for $130 million. In the deal, Carlton received $15 million through 2008 in non-compete payments, according to a Chicago Crain’s Business story. He also has held an equity stake in the firm. In 2006, FTI bought Competition Policy Associates, another consulting firm that had also built itself through combination, merging it with Lexecon to form Compass Lexecon. FTI Consulting had $1.8 billion in revenue in 2015, of which $447 million came from economic consulting. The economic consulting division has 600 “revenue-producing” professionals who bill at an average hourly rate of $512 an hour, the highest of all the company’s segments. Charles River Associates brought in about $300 million in revenue last year, led by antitrust consulting.

So few top consulting firms and leading experts dominate the sector today that economists wonder mordantly whether excess concentration plagues their own industry. In 2013, the government granted a waiver to Joshua Wright, the law professor and economist who was a consultant for Charles River. The waiver permitted him to serve as an FTC commissioner and review deals his former consulting firm advised on, as long as he didn’t deliberate on matters that he had directly worked on. Otherwise, the commission’s business might have ground to a halt because Charles River was involved in a third of all merger cases that came before the agency. Wright declined to comment.

Jonathan Orszag, senior managing director of Compass Lexecon, came up with a solution to allow Compass experts to work on more mergers. He is a well-known figure in Washington circles, and the brother of Peter Orszag, the vice chairman of investment bank Lazard and former high level Obama administration official. Jonathan’s social media teems with his globetrotting adventures. Brides magazine featured his destination wedding in the Bahamas. In August 2015, he celebrated on Twitter that he had played on all of the top 100 golf courses in the world. Although he does not have a Ph.D. in economics, he serves as an expert himself and is respected particularly for his expertise on global deals. He declined to comment on the record to ProPublica.

At Orszag’s urging, the firm relaxed its conflict of interest rules, according to multiple people who have worked with or for Compass. Now, Compass Lexecon experts can, and do, advise both sides in disputes. (Under Compass policy, the parties need to consent to such arrangements.) Separate teams of staffers, who cannot communicate with the opposing side, run the cases. The arrangements require on occasion that experts with adjacent offices must stop talking to each other during cases.

Compass economists can reach very different answers to the same question, depending on who is paying them. In 2012, the federal government and a group of states sued Apple for conspiring with several major publishers to fix prices on e-books.

The states hired American University’s Jonathan Baker, the Compass economist, as one of its experts. Baker’s report concluded that e-book prices cost 19 percent more than they should, as a result of the price-fixing. Another government expert arrived at the same 19 percent estimate, and calculated that consumers had been overcharged by $300 million.

Apple later hired Orszag, also of Compass, to do the same calculation. Orszag first came to the conclusion that the effect on prices was lower than the government side’s estimate, around 15 percent. Then he argued there were offsetting benefits to consumers that knocked the number all the way down to 1.9 percent, or just $28 million.

“The actual harms suffered by consumers … are modest,” Orszag concluded.

A federal judge slapped Orszag down for that work. Denise Cote, of the Southern District of New York, threw out part of Orszag’s report in the Apple case. The judge assailed Orszag’s study as “unmoored” from facts and “unsupported by any rigorous analysis,” criticizing a calculation of his as “jerry-rigged.”

Lawyers for the states found out Orszag was working for Apple only when he filed his expert report in the case. The news shocked them, two of the lawyers said, because they felt Orszag had been privy to their legal strategy. Orszag had personally negotiated and signed the contract when the states retained Compass and Baker to do the expert work attacking Apple, now Orszag’s client. The contract prohibited Compass from working on both sides of the case without permission, which had not been obtained.

The states, which had paid Compass and Baker $1.2 million for their work, later sued Compass for breach of contract. They found out that two of its staffers, an administrative assistant and an entry level researcher, had worked for both of the opposing economists. In a deposition, Orszag defended his firm, saying that he believed the Compass contract with the state governments “had been suspended” when he signed on to work for Apple.

Compass settled with the states, paying back some of the money. A person familiar with Compass’ position says that its conflict-of-interest rules didn’t apply to the low-level employees who helped both economists.

The premier economists in the field move back and forth from consulting firms to the top positions at the Justice Department and the Federal Trade Commission. In 2006, Carlton joined the Bush Department of Justice for a 17-month stint as the highest-ranking department economist, before returning to the firm.

Carlton and the other luminaries in the field keep busy. From 2010 to 2014, Carlton consulted on 35 cases, according to his declaration in one case. That total includes his help for companies not only in front of the government but also in private litigation. Mostly he works on the defense side, fending off accusations of price-fixing or anti-competitive behavior. His clients have included Verizon, Honeywell, Fresh Del Monte, and Philip Morris. Because top experts get bonuses based on what the firm generates in billings, their annual incomes can run up to $10 million in a very good year.

Like other top consultants, Carlton devotes hundreds of words in his expert reports to describing his academic credentials, scholarly publications, and journal affiliations. Corporate clients value him not just for his prestige and point of view but for his skill as a witness. Unlike some of his colleagues, he is never bombastic or arrogant. With small eyes, puffy cheeks crowding his soft, wide nose, and hair that sweeps above his brow, Carlton looks as intimidating as a high school guidance counselor. But his calm, unassuming demeanor, even under intense cross-examination, makes him the perfect champion for his corporate clients.

“If you needed one guy for one deal and price didn’t matter, I’d take Dennis,” said a partner at one top New York corporate law firm. “He is the best.”

Carlton also knows just how far he can go. When he speaks, he proceeds deliberately, in a nasal accent, displaying a wariness that comes from decades of being questioned in court. Economists often argue that a merger will produce efficiencies, allowing companies to make more widgets for less money, an overall boon for society. But for an efficiency to count as an argument in a merger’s favor, it must be a result of the merger itself. Carlton sometimes says the cost-savings are “merger related,” according to a former Justice Department economist. “He is very careful about language. He won’t say ‘merger specific.'”

An off-the-cuff comment at a recent conclave illustrated Carlton’s prominence in the hidden world of antitrust proceedings. One evening in April, lawyers, government officials, and economists gathered in Washington for the spring meeting of the American Bar Association’s Antitrust Section. Held at the JW Marriott on Pennsylvania Avenue, the gathering is the prime marketing event of the year for the economic consulting industry.

After a mind-numbing day of panels on issues like “Clarifying Liability in Hub-and-Spoke Conspiracies,” the consultancies hosted competing cocktail receptions. The Charles River Associates event featured a generous spread of Peking Duck. Berkeley Research Group hired a live jazz band. Justice Department staffers sipped drinks with once-and-future colleagues now at white-shoe law firms, and Ivy League economists.

Earlier in the day, during a discussion of new theories about the damage caused by concentration in the airline industry and the overall economy, antitrust attorney John Harkrider shrugged at his fellow panelists. “I’m sure if you paid Dennis Carlton a million bucks, he’d blow up all these things,” he remarked.

Carlton’s rosy forecasts about the impact of proposed mergers haven’t always proven accurate. In the summer of 2005, Whirlpool, the appliance giant, decided to take over Maytag, a storied name that had gradually faded. The combination would leave three companies—the other two being GE and Electrolux—in control of more than 85 percent of the market for clothes washers and dryers. They would have 88 percent of the dishwasher market and 86 percent for refrigerators. In addition to the namesake brands, the newly enlarged Whirlpool would own Amana, KitchenAid and Jenn-Air, and manufacture many Kenmore appliances. The companies hired top law firms to persuade the Bush administration Justice Department to allow the deal. And the firms brought in Carlton.

Despite the combined entity’s powerful position, Carlton argued in his report that it still faced a threat from foreign competition. The possibility that a big box retailer might switch to LG or Samsung would prevent the newly combined company from raising prices, he asserted.

The companies did not persuade Justice Department officials, who proposed blocking the merger. An outside economic expert of their own, University of California at Berkeley’s Carl Shapiro, backed the staff’s analysis. The Bush appointee who headed the antitrust division, Assistant Attorney General Tom Barnett, resisted the staff’s conclusions. Right after Shapiro provided his analysis, Barnett wrote to the companies’ law firms, outlining the arguments that Shapiro and the staff made against the merger. Barnett, who declined comment, provided a roadmap to how to respond to the government’s claims, a person familiar with the letter said.

After months of deliberation, in March 2006, Barnett overruled the staff recommendation, allowing the merger to go through with no conditions. Shapiro and American University’s Baker later called it a “highly visible instance of under enforcement.”

Carlton’s predictions did not pan out. Whirlpool raised prices. Five years after the deal, Princeton’s Ashenfelter and an economist with the Federal Trade Commission found that, contrary to the Compass Lexecon pre-merger forecasts, the takeover resulted in “large price increases for clothes dryers” and price increases for dishwashers. In addition, the companies reduced their offerings, giving consumers fewer choices. By 2012, LG and Samsung had grabbed some market share mostly from second-tier players. Whirlpool and Maytag’s combined shares dropped just over two percentage points in washers and dryers, according to Traqline. But the competition had not brought down prices. Antitrust experts say that a scenario in which companies raise prices despite losing market share to competitors can be evidence that a merger hurt consumers.

The Whirlpool-Maytag merger was revisited in 2014 when GE tried to sell its appliance division to Electrolux, a Swedish manufacturer. Electrolux hired Jonathan Orszag. In December 2015, government officials questioned Orszag’s expert report on the possible effects of the GE-Electrolux merger. Contradicting Ashenfelter, Orszag had submitted a study asserting that the Whirlpool-Maytag merger had not raised prices, conclusions he based mainly on the washer and dryer market.

Justice Department staff economists studied backup material to his analysis and they found something troubling. Buried there was an acknowledgment that the Whirlpool-Maytag merger had resulted in price increases in cooking appliances, the very sector of the market that government officials worried might be affected by the GE-Electrolux combination. The Justice Department filed suit to stop the deal and GE pulled out during the trial.

In a speech in June, outgoing deputy attorney general David Gelfand warned about gamesmanship by economic consultants. While much economic work is good, “we do see junk science from time to time,” he said. As an example, Gelfand pointed to the GE-Electrolux case, though he did not name the company or Orszag. He said the inconvenient data “should have been disclosed and presented with candor” in the expert report supporting the merger.

Orszag did allude in a footnote to the other data, and provided backup materials that disclosed the higher prices in cooking appliances. He contended in his testimony that these price increases were due not to the merger itself but to other factors such as rising costs of raw materials. He said that Ashenfelter’s conclusions were wrong because, unlike Orszag, the Princeton economist did not have access to Whirlpool’s costs for making appliances.

Ashenfelter stands by his study. “My concern with Orszag’s deposition as evidence is that all this is done behind a curtain of secrecy. None of us know just what he did, how the cost data were constructed,” he wrote in an email to ProPublica. “Orszag’s results would only have been presented if they favored his client. Our paper had no clients and we would have been happy to find no price effect.”

In a bright conference room at Fordham Law School on a warm day this past September, an economist realized she had made a mistake in a deposition.

A WilmerHale partner seized on the error. A group of people, seated at blond wood tables in sleek, ergonomic black chairs, took notes as light streamed into the room, reflecting off the columns of Lincoln Center across the street. The economist, Michelle Burtis of Charles River Associates, turned to the audience and, letting out a laugh, broke character.

“And at this point, I would definitely start obfuscating,” she said, smiling.

Burtis was presenting a mock deposition to train lawyers and economists on the pivotal role economists can play in antitrust matters. Charles River and another consulting firm, Cornerstone Research, sponsored the conference.

Burtis, who has short, chin-length brown hair, oversized glasses, a friendly demeanor, and a doctorate in economics from the University of Texas at Austin, continued to guide the attendees toward “what is helpful in a situation like this,” where the economists had erred but still needed to push the client’s line. “You’re never going to get me to admit this is a mistake,” she explained.

The government’s reliance on economic models rests on the notion that they’re more scientific than human judgment. Yet merger economics has little objectivity. Like many areas of social science, it is dependent on assumptions, some explicit and some unseen and unexamined. That leaves room for economists to follow their preconceptions, and their wallets.

Economists have an “incentive to get a reputation as someone who will make a certain type of argument. People will hire you because they know what testimony you will give,” said Robert Porter, an economist from Northwestern who has never testified on behalf of a corporation in an antitrust matter.

In a 2007 interview, Carlton maintained an expert witness shouldn’t be biased. “It is the job of the economic consultant to reach an expert opinion in light of all the evidence, both the good and bad. I think it destroys an expert’s credibility to present only the supportive evidence,” he said.

Economists who do a lot of consulting on antitrust cases say it is not in their long-term interest to shill for a corporate client. Carlton says consulting is tougher than writing for peer-reviewed journals. For scholarship, “it’s not required for the editor to re-run your numbers. In litigation, the expert on the other side has reviewed to make sure I haven’t made errors. The scrutiny is good and leads to a higher quality of report,” he told Global Competition Review, an antitrust trade publication in 2014.

While the data is hidden from outsiders, what matters to Carlton is that there are no secrets between the companies and the government. “When economists are speaking to each other, it’s transparent. They are discussing the economics. The data is turned over to the other side. It’s your model vs. theirs,” Carlton told ProPublica.

Several former employees of consulting firms describe their jobs differently. They say they understood that clients wanted them to reach favorable conclusions. The job was “to go through analyses of market data and try to suggest that this merger doesn’t raise antitrust concerns,” said David Foster, who left Compass Lexecon in 2014, after working as a young analyst there for a year and a half.

The companies and lawyers that rely on economists as witnesses aren’t looking for neutrality. At the Fordham conference, a panel moderator asked Katrina Robson, a lawyer at O’Melveny & Myers, what she sought in an expert. “To be able to be an advocate without seeming to be an advocate,” she replied.

Companies and their lawyers shop around for amenable economists, looking for the reports that provide the answers they are looking for. Karen Kazmerzak, a partner at Sidley Austin, told attendees that she likes to hire two economists if the client can afford it. “It often comes out that one economist is not prepared to deliver the conclusions you need them to deliver,” she said. In those cases, the law firm can fire one economist and go forward with the other, more malleable consultant.

When an expert concludes that a merger won’t pass muster with the government, the corporate client typically either backs out of the proposed deal, figures out concessions to offer the government, finds a more supportive economist at the same consulting firm, or switches firms. Sometimes, according to a prominent antitrust lawyer, unwelcome predictions are locked in a drawer, protected by attorney-client privilege, never to be seen by the government or the public.

On occasion, Carlton has told companies that their deals are unlikely to be approved. He’s walked away from at least one merger: H&R Block’s 2011 takeover of TaxAct, a software firm. The government challenged it, and Carlton pulled out a few months before the trial. The companies hired a new expert from a competing firm, who defended the merger in court. The Justice Department used Carlton’s departure to cast doubt on the credibility of the new consultant and won the case.

In 2011, when AT&T sought to take over the cell phone company T-Mobile, the government balked. T-Mobile, a smaller and scrappier rival, often tried out new and innovative offerings to keep cell service costs low. Carlton represented AT&T. Based on data the company provided, he predicted that the cost of cell phone service would explode if AT&T couldn’t take over T-Mobile and use its network to meet rising demand. Without the acquisition, Carlton and his Compass colleagues concluded, AT&T would be forced to charge higher prices.

When government officials looked closely at Carlton’s model, they realized that it was implying that prices would rise so high without the merger, the cell phone market would shrink by 90% within a few years. Justice Department officials viewed this as wildly implausible. “We find that the applicants’ economic model is deficient,” the government wrote of the work by Carlton and other Compass Lexecon consultants. Soon after the companies announced their deal, the Department of Justice sued to block the transaction and after several months of wrangling, the companies dropped the transaction in late 2011.

Even though AT&T was not able to complete its takeover, cell phone usage in the US has not collapsed by 90%.

Shortly after AT&T withdrew its offer for T-Mobile, the top economist at the Justice Department, Fiona Scott Morton, held a dinner at the Caucus Room, a Washington eatery, for several economists who worked on the deal. The restaurant provided an intimate and comfortable setting for a post-mortem. “Everyone is friends,” recalls one attendee. “It was fun.”

They debated who had the better case. Carlton conceded that AT&T and T-Mobile would have found it hard to win at trial, according to an attendee. But he wished it had gone to court. He was eager to try out a new and provocative argument for mergers: That even though prices would have risen for customers, the companies would have achieved large cost savings. The gain for AT&T shareholders, he contended, would have justified the merger, even if cell phone customers lost out.

Carlton’s expert report predicted that T-Mobile was doomed to failure without the merger. “Our review indicates that T-Mobile USA’s competitive significance is likely to decline in the absence of the proposed transaction,” he and two other Compass Lexecon economists wrote.

Five years later, T-Mobile’s stock price and market share are up and its colorful CEO, John Legere, has been credited by the business press for “singlehandedly dragging the industry into a new era” with innovations such as abolishing cellular contracts. In 2014, Bill Baer, then the head of the antitrust division at the Justice Department, claimed victory: “T-Mobile went back to competing to win your business,” he said in a speech. “And T-Mobile’s competitors were compelled to respond.”

Today, AT&T’s much grander takeover of Time Warner will be an early test case for president-elect Trump, who feuded during the campaign with CNN, a Time Warner property. It will also be a boon for Compass and the small army of academic economists mobilizing for the multi-front battle waged by the government, competitors and the merging companies.

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These Professors Make More Than a Thousand Bucks an Hour Peddling Mega-Mergers

Posted in Accent, ALPHA, Amana, Anker, Casio, Electrolux, Everyone, FF, GE, Honeywell, KitchenAid, LAI, LG, Northeastern, ONA, Oster, oven, ProPublica, PUR, Radius, Uncategorized, Venta, Whirlpool | Tagged , , , , , , , , , , | Comments Off on These Professors Make More Than a Thousand Bucks an Hour Peddling Mega-Mergers

The F-18 vs. the F-35: ¿Quien Es Mas Macho?

by RoyJ3760379041 Posted on December 23, 2016

Mother Jones

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More brilliance from Donald Trump:

There is nothing that military buffs love more than nerding out about the F-18 vs. the F-35. The F-18 is cheaper! The F-35 is stealthier! The F-18 makes tighter turns! The F-35 is a one-seater! The F-18 is better in a dogfight! The F-35 has better avionics! The F-18 can be fitted with external fuel tanks for longer range! Denmark says the F-35 was a clear winner in its flight tests! Canada says it wants the F-18! This is the kind of argument that Trump fans adore.

But on a substantive level, Trump’s tweet is junior high school stuff. Boeing has been building new variants of the F-18 ever since it was introduced. They’ve already demonstrated upgraded Block III Super Hornets designed (they claim) to perform most of the missions envisioned for the F-35. In other words, they don’t need to “price-out” a “comparable” F-18. They’ve already done it, and everyone in the military is well aware of what Boeing has to offer. Besides, the F-18 will never be as stealthy as the F-35 and it will never have the same avionics, so there’s no way to ever make it truly comparable anyway.

As near as I can tell, once the F-35 is fully tested, the software constraints are tuned, and its pilots get enough flight hours behind them, the F-35 will be indisputably superior to the F-18 at nearly the same per-unit cost as the latest and greatest Super Hornet. Considering that the F-18 is forty years old, it sure ought to be. The program as a whole may have been an epic disaster, but now that it’s done the F-35 is going to be America’s primary multirole fighter for the next few decades. There’s no going back.

So what’s up? Is Trump just trying to make nice with Boeing after dissing the cost of the new Air Force Ones? Does he think this is a clever tactic to scare Lockheed Martin into offering the F-35 at a lower price? Did some admiral get his attention and gripe about the F-35 being a single-engine airframe? Is he just blowing hot air? As usual, no one knows.

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The F-18 vs. the F-35: ¿Quien Es Mas Macho?

Posted in Everyone, FF, GE, LAI, LG, ONA, Uncategorized, Venta | Tagged , , , , , , , , , , | Comments Off on The F-18 vs. the F-35: ¿Quien Es Mas Macho?

Donald Trump Has a Brilliant Media Strategy

by BrigetteAhMouy Posted on December 22, 2016

Mother Jones

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Like everyone, I’m often snarky about Donald Trump’s social media addiction, but I have to admit it works wonders. Today’s two tiny tidbits about Israel and our nuclear arsenal produced these top-of-the-site headlines from the New York Times (left) and the Washington Post (right):

Trump’s press strategy since the election has had two parts. Part one: refuse to talk to the press, so they’re starved for news. Part two: dribble out tiny, often ambiguous tweets once or twice a day on subjects of his choosing. This guarantees that he gets precisely the headlines he wants.

If he announced these things at a press conference, he’d have to take questions, and there’s no telling where that would lead. If he gave a speech, the press would highlight whichever parts it felt like. But by tweeting, he leaves reporters no choice. It’s the only presidential news they’ve got, and it’s on one specific subject, so that’s what they have to write about.

Pretty smart, isn’t it?

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Donald Trump Has a Brilliant Media Strategy

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Peter Navarro: Genius or Idiot? Or Neither?

by AdolfoLipinski Posted on December 21, 2016

Mother Jones

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Tyler Cowen says that UCI professor Peter Navarro is “one of the most versatile and productive American economists of the last few decades.” Matt Yglesias says Navarro is an idiot. Who’s right?

I think there’s a category error here. Back in September, Navarro co-authored a paper about Donald Trump’s trade policy. Roughly speaking, Navarro relied on the following accounting identity:

GDP = Consumption + Investment + Government Spending + Trade Balance

So if our trade balance goes up from -$500 billion to $0, Navarro said, GDP will go up $500 billion and the government will collect a lot of extra taxes. Hooray! But as Yglesias points out, this is comic-book-level nonsense.1 Let me offer an analogy:

Corporate profits = Revenue + Investment Income – Labor Costs – Other Costs

So if I cut labor costs in half, corporate profits will go up. Right? I think you can see that this is unlikely. If you fired half your workers, you probably could no longer produce anything and your company would go bust. If you cut everyone’s wages in half, you’d suffer a steady exodus of your best people and probably end up far less profitable. If you replaced half your workers with machines, profits might indeed go up, but not by the amount of payroll you save. You’d have to account for the capital cost of the machines—which would probably reduce investment income—and the cost of maintenance—which would increase other costs. Bottom line: depending on how you do this, lots of different things could happen.

In the case of GDP, it’s true that everything in the formula has to add up, since this formula defines what GDP is. But if the trade balance goes up, there are several obvious possibilities. Consumption might go down. Investment might go down. Government spending might go down. In fact, once all the dust has settled, overall GDP might ultimately go down, stay the same, or go up. The real answer is that you’d need to model out an actual plan and figure out where it reaches equilibrium. Navarro knows this perfectly well.

So what is Navarro? Brilliant economist or idiot? Neither one. He’s someone who used to be a versatile and productive economist and is now a China-obsessed fanatic2 willing to say anything for the chance of a job in the Trump administration. He hasn’t lost 50 IQ points, he’s merely become so fixated on the dangers of Chinese trade that he no longer cares about economics. He cares only about saying things that might build support for his preferred policies, regardless of whether they’re true.

In other words, he’s now just another dime-a-dozen political hack. Trump will keep him around as long as his PhD is useful and then toss him aside.

1No offense meant to comic books.

2Three of his five most recent books are: The Coming China Wars, Death by China: Confronting the Dragon, and Crouching Tiger: What China’s Militarism Means for the World.

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Peter Navarro: Genius or Idiot? Or Neither?

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Republicans Are Afraid to Stand Up to Trump for Fear of Nasty Tweets

by SherriD48gt Posted on December 21, 2016

Mother Jones

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Over at National Review, Tim Alberta ponders “Conservatism in the Era of Trump.” It’s not a pretty picture. There’s no one more conservative than the House Freedom Caucus, but they’ve already started to cave in to Trumpism:

Consider Trump’s stated intention to seek a $1 trillion dollar infrastructure package soon after taking office. At a conservative forum one week after the election, Raul Labrador told reporters that any such bill “has to be paid for” with spending cuts or revenues from elsewhere…But their thinking has shifted in the weeks since. According to several members, there has been informal talk of accepting a bill that’s only 50 percent paid for, with the rest of the borrowing being offset down the road by “economic growth.” It’s an arrangement Republicans would never have endorsed under a President Hillary Clinton, and a slippery slope to go down with Trump.

This is in addition to the tax cuts for the rich, which won’t be paid for at all. But why is the HFC already bending its adamantine principles against increasing the deficit? What are they afraid of? Rachael Bade tells us:

Since the election, numerous congressional Republicans have refused to publicly weigh in on any Trump proposal at odds with Republican orthodoxy, from his border wall to his massive infrastructure package. The most common reason, stated repeatedly but always privately: They’re afraid of being attacked by Breitbart or other big-name Trump supporters.

“Nobody wants to go first,” said Rep. Mark Sanford (R-S.C.), who received nasty phone calls, letters and tweets after he penned an August op-ed in The New York Times, calling on Trump to release his tax returns. “People are naturally reticent to be the first out of the block for fear of Sean Hannity, for fear of Breitbart, for fear of local folks.”

ZOMG! Phone calls, letters, and tweets, oh my! Who would have guessed that militant conservatives were so spineless? Here’s some news: I don’t get many phone calls, but I get lots of nasty emails and tweets too. So does everyone who comments on or practices politics. That’s America these days.

People often comment about how easily groups like Nazis and fascists came to power. This is how. But hell, at least in Germany and Italy people were cowed by real threats of real violence. It’s not especially heroic, but it’s understandable. In America, we’re heading down that path because people are afraid of unpleasant tweets.

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Republicans Are Afraid to Stand Up to Trump for Fear of Nasty Tweets

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