The John Batchelor Show

Tuesday 5 November 2019

Air Date: 
November 05, 2019

JOHN BATCHELOR SHOW
 
Hour One
Tuesday 5 November 2019 / Hour 1, Block A: Elizabeth Peek, TheHill and Fox News; in re:   The economy is genuinely booming; the Democrats speak of ”the hollowing-out of the economy.” Just politics? Are we talking past ach other? Yes.  Trump did well in the Midwest because of functional successes: 4.8 mil more jobs than the CBO predicted, the job market has probably never been tighter. The data come in better than expected —because of the constant downplaying of good news. GDP 1.9$; earnings flattish; jobs number at 128,000, ’way better than expected, with revisions upward. There are 1.26 million more jobs than there are potential employees in America. Mrs Pelosi is very smart: lecturing her own Democratic candidates not to go down a hard-left road because they have to win the Electoral College; but then she says odd things like, “hollowing out of the economy,” which is demonstrably inaccurate.  She sees that the Green New Deal and Medicare for All are nonstarters. Sen Warren is picking up strongly in New Hampshire and Iowa; however, the release of her Medicare policy has got a lot of Democrats horribly worried. Who’s their moderate candidate? Joe Biden, who sometimes can't recall what state he’s in? The only other such is Pete Buttagieg.  He’s so young and untested.
Tuesday 5 November 2019 / Hour 1, Block B:  Elizabeth Peek, TheHill and Fox News; in re: The China trade deal tariffs roll-back. What business managers and the stock mkt are looking for is certainty.  We need a game board, to plan supply chains. This has taken a toll on US mfrg. Consumers are buying things so things have to be made.  This isn’t just about tariffs; there’s a chapter on IP and other matters.   Trump Adm has alerted the world to TikTok – it has been playing ball with Beijing; that’s grave. I think Trump has done a good thing by exposing these matters We want to coordinate with China ion antiterrorism, but we haven't been.  What’s emerging will probably be very helpful to the markets and the economy.
Are the major media who participated in Ukrainegate — are they also unwilling to speak of the American economy? The liberal economy hate, hate, Donald Trump.  Now, 2.1 million people have come off the sidelines and entered the workforce. House prices are up. Everything economic is remarkably sunny.
Tuesday 5 November 2019 / Hour 1, Block C:  Professor Niall Ferguson, historian and senior Fellow at the Hoover Institution, in re: Globalization, the fate of the EU and Brexit, China’s current and future roles in the world economy and military, and the onset of Cold War II.
Boris Johnson – “If he wins the election, he’ll take Britain out of the EU by January”  Slow deterioration of the EU, like Romaes slow disintegration.  Trail signs
The key question is concerns British high politics: behind the debate, a struggle to see which Etonian would be PM. Now, Boris’s job is to remain PM.  If 12 Nov election doesn't produce a majority: only way to avoid a Corbyn-led coalition from Hell is for the Liberal Democrats to make a coalition. What would they ask in order to keep Boris in power? Hard to think, because they're the arch remainers. 
Future historians will say Brexit was a footnote to the slow disintegration of the EU. Europe has got as far toward federalism as it will go. It's no more secure against a financial crisis now than it was in 2001, because it hasn't reformed financial institutions. It’ll gently fade into [inutility]. This is much more like de Gaulle’s [vision] than the German one.
Is the slow unwinding a part of deglobalization, a phase of nation-states being prominent again? Yes, but not all the way to the disintegration of the 1930s.  Peak globalization has passed. Voters in most democracies have decided they’ve had enough free trade, immigration, and capital movement.
Look at the US and China, still deeply intertwined – coupled.  “Chimerica” is over, but it’s hard to get to complete decoupling when so much connects the two, including the enormous number of Chinese students who come to the US. 
From the end of WWII to the beginning of the Cold War: the US started as an ally of the USSR; then it realized that Stalin was still committed to Marxism-Leninism, and had stolen the IP of the atomic bomb.  We’ve gradually wakened up to China’s expansion. In the South China Sea, China is building islands for military use.  Xi strives for equality if not dominance in the Pacific; and has been mounting a systematic campaign of IP theft while the US has acted as though it was only bending them — until Pres Trump [took the bull by the horns].  The one bipartisan issue in Washington is being anti-China. This is very like the early Cold War – we’re now thoroughly in Cold War II.
Tuesday 5 November 2019 / Hour 1, Block D:   Professor Niall Ferguson, historian and senior Fellow at the Hoover Institution, in re: Globalization, the fate of the EU and Brexit, China’s current and future roles in the world economy and military, and the onset of Cold War II.
Donald Trump has come along in a period of deglobalization.  Is antagonism with China a definite predicate to [a hot war]?   See Graham Allison’s Destined for War – when a rising power confronts an established power, war is likely. Germany opposed Britain [that way]. There’s a risk that the US and China could end up in the same place; or, could create a parallel to the decades when the US and USSR avoided a war.
Concerning China, need to have an effective deterrence if the rising power is breathing down your neck, or it’ll have overconfidence and attack.
We must set out a series of steps to meet the confrontation. The US is currently limiting China’s ability to invest in the US; perhaps it’d be [wise] to stop its purchase of sophisticated microprocessors, which it cannot manufacture.
We’re in Cold War II. Why are Chinese so insouciant when I say that?? Because they agree, and it serves Xi well.
The far position is hot war, where perhaps China invades Taiwan.  The middle position is to contain China, allow it to work out the [problems] of communism and its decay.  [Chinese communism] cannot survive in the 21st Century economic environment.  Let’s learn the lessons of the 1940s to the 1980s, and contain.
 
Hour Two
Tuesday 5 November 2019 / Hour 2, Block A:  Stephen F. Cohen, NYU & Princeton professor Emeritus; American Committee for East-West Accord; author: War with Russia?; Soviet Fates and Lost Alternatives: From Stalinism to the New Cold War, & The Victims Return: Survivors of the Gulag after Stalin;  in re:  Russia
Tuesday 5 November 2019 / Hour 2, Block B:  Stephen F. Cohen, NYU & Princeton professor Emeritus; American Committee for East-West Accord; author: War with Russia?; Soviet Fates and Lost Alternatives: From Stalinism to the New Cold War, & The Victims Return: Survivors of the Gulag after Stalin;  in re:  Russia
Tuesday 5 November 2019 / Hour 2, Block C:  Stephen F. Cohen, NYU & Princeton professor Emeritus; American Committee for East-West Accord; author: War with Russia?; Soviet Fates and Lost Alternatives: From Stalinism to the New Cold War, & The Victims Return: Survivors of the Gulag after Stalin;  in re:  Russia
Tuesday 5 November 2019 / Hour 2, Block D:  Stephen F. Cohen, NYU & Princeton professor Emeritus; American Committee for East-West Accord; author: War with Russia?; Soviet Fates and Lost Alternatives: From Stalinism to the New Cold War, & The Victims Return: Survivors of the Gulag after Stalin; in re:  Russia
 
Hour Three
Tuesday 5 November 2019 / Hour 3, Block A:  Professor John Taylor, Stanford University, senior Fellow in Economics at the Hoover Institution; in re: The American and global economies; of the boom after deregulation and tax cuts; of unemployment and income inequality. Also negative interest rates, central bankers and monetary policy, and of course of the Taylor rule.
The search for the great recession is over, with no result.  Even with the General Motors strike, the economy is strong, Positive around 2%; perhaps a kick-the-can moment for trade policy. Is it your measure that the economy is strong? More than it was during most of he recovery, picked up a lot in 2017-18, much to do with policy changes.  Also changes in monetary policy; to turn around what was a very slow recovery.  Not enough workers in the US for the available jobs. Convicts and people with disabilities are welcomed.  The unemployment rate for African-Americans is historically small.  Reflects a better labor mkt.  The labor force participation rate is lower than it might be, but it’s leveled out in the past couple of years. A regulatory [environment] that’s changing, allowing business expansion. It takes time to see the results.  No reason we can’t go from 2% to 3%.
Income inequality: “This is evidence of the hollowing-out of the middle class” – Speaker Pelosi.  Does current policy create conditions, or were they established earlier?  I think the [employment problem] and poverty rates are largely caused by regulatory policies, [poor] land-use, and especially [inadequate] education. Need to learn basic mathematics and how to manipulate numbers.   This is a global thing, not just in Sacramento, Palo Alto, Louisiana; it's global.
The tax cut reduces the tax rate from 35% to 21%. Higher productivity eventually leads to _____. “Sugar high” doesn't make any sense.
Tuesday 5 November 2019 / Hour 3, Block B:  Professor John Taylor, Stanford University, senior Fellow in Economics at the Hoover Institution; in re: The American and global economies; of the boom after deregulation and tax cuts; of unemployment and income inequality. Also negative interest rates, central bankers and monetary policy, and of course of the Taylor rule.
The Taylor Rule.  People understand the moves of the Fed. Rules-based policy. In much of 2017 and 2017, the Fed has moved back toward a rules-based policy, which I think is a good thing. Metrics?  I rather like the Taylor Rule, a guide; it's an example.  The current Fed chair and the previous one agree that rules are helpful. The world changes, so adjustments need to be made to the Taylor Rule — the normal interest rate needs to be a little lower.  Are other central banker s fallowing rules, In part, you pay banks to hold your cash — Switzerland, Japan, et al.  Negative interest rates are to some extent a global matter. Exchange rates are an issue; the Fed has higher interest rates.
Stronger policy from the Trump Adm?  . . .  Monetary policy is getting back to normal; but a growing deficit.
Tuesday 5 November 2019 / Hour 3, Block C:  Michael Boskin, T. M. Friedman Professor of Economics and senior Fellow at Stanford University's Hoover Institution; also CEO and president of Boskin & Co., an economic consulting company; in re: The American economy and the global economy.
Tuesday 5 November 2019 / Hour 3, Block D:  Michael Boskin, T. M. Friedman Professor of Economics and senior Fellow at Stanford University's Hoover Institution; also CEO and president of Boskin & Co., an economic consulting company; in re: The American economy and the global economy.
 
Hour Four
Tuesday 5 November 2019 / Hour 4, Block A:  Professor Lanhee Chen, public policy at Stanford University and Fellow at the Hoover Institution, in re:  President Warren and health care
Professor Lanhee Chen, public policy at Stanford University and Fellow at the Hoover Institution, in re: President Warren in 2021: break up banks (esp money-center banks), big tech, big pharma, and the Internet; end big farming and mandate who sits on boards of directors.
There’s an agreed-upon definition of socialism among political philosophers; the govt controls means of production and over economic resources.
Among civilians, the definition is closer to: give more and more power to the govt, thus changing the way Americans understand their economy.
Ms Warren holds that corporate boards are not to be trusted; that they need to have workers, public-policy and goodwill people, and special federal government nominees. A board is tasked with oversight and setting large, big-picture corporate policies. 
Imagine that a company no longer can choose who’ll be on the board that formulates policy; that government bureaucrats control policy. This is fundamentally different from our understanding of the capitalist, free-enterprise system.
Banks: Wells and Deutsche have been beaten up pretty badly. 
A recent joke: “I’m a Deutsche Bank customer.” “They still have customers?”
Too-big-to-fail banks – systemically important – are an outgrowth of the Obama Administration in 2008 (2012?).
Of course, corporations sometimes act not in the best interests of the public and the nation. Is the best resolution to hand it over to the govt? I don’t believe that having the government substitute for the free-enterprise system is a [wise way to proceed]. Consider China: SOEs (State-owned enterprises) keep getting more public funds, since the state doesn’t know how to end them when they fail.
Decisions of private-sector actors will be replaced by crony socialism.
Breaking up big tech: would that lead to a better world? These megacorporations called Big Tech are around only till somebody comes along with better, faster, cheaper software.  The regulatory framework we have now . . .   Amazon is successful because it’s more efficient and cheaper. 
Tuesday 5 November 2019 / Hour 4, Block B:   Professor Lanhee Chen, public policy at Stanford University and Fellow at the Hoover Institution, in re: Health care. I personally am a miracle of health care. President Warren subscribes to Medicare for All — extremely  expensive — it dwarfs my understanding of the word “trillion.”
Contrary to her claims, she cannot pay for it.  Her proposal will, in reality, lead to the actual destruction of the American health care system (this is not hyperbole).  First, as it grows cheaper, it’ll lead to a spike in demand. How to deal with that, when the already are to few physicians and nurses and medical staff? Single-payer systems specialize in rationing. Second, it’ll cost $50 trillion.  Third: How can it be paid for? 
She says administrative costs will be much lower. Let’s hypothesize that’s true.  Around 12% of billing is current admin cost; under Warren’s plan, it might might be 6%. She claims 2% — infeasible.
Tuesday 5 November 2019 / Hour 4, Block C:  Professor Lee Ohanian, Economics, UCLA, senior Fellow, Hoover Institution, in re: Seattle mathematics. Dooming children from lower-income households, the most vulnerable, so they won't have a satisfactory mathematics background.
Tuesday 5 November 2019 / Hour 4, Block D:  Dr. Herb Lin, Hank J. Holland Fellow in Cyber Policy and Security at the Hoover Institution and senior research scholar for cyber policy and security at the Center for International Security and Cooperation, both at Stanford University; in re:  CSIA, the US government’s cybersecurity. The federal Department of Homeland Security now endeavors to gain a profound level of control: Hydroelectric dams & other infrastructure are to report to the government – DHS – “to centralize the department’s activities.”
ISPs know if a computer user — you —is doing bad things or perhaps if you’re a victim of a wicked botnet.  DHS wants authority to go directly to you, perhaps knock at your door, to demand to see what you’re doing. As of today, DHS still legally has to go to the carrier (e.g., Verizon) and beg, and get a subpoena. 
Under CSIA, will DHS try to coerce me in some way?  With no subpoena and 24-hour access to your living room, Big Brother could enter the room at any moment.
..