In a post on LinkedIn the other day, Ray Dalio, one of the world’s richest and most successful hedge-fund managers, offered some thoughts on the incoming Trump Administration. If “you haven’t read Ayn Rand lately, I suggest that you do as her books pretty well capture the mindset,” Dalio, the founder and chief executive of Bridgewater Associates, wrote. “This new administration hates weak, unproductive, socialist people and policies, and it admires strong, can-do, profit makers. It wants to, and probably will, shift the environment from one that makes profit makers villains with limited power to one that makes them heroes with significant power.”
.. his unvarnished post reflects the reality that Donald Trump, after running as an economic populist and tribune of the working stiff, has stuffed his Cabinet with billionaires, bankers, and conservative political ideologues. “This will not just be a shift in government policy, but also a shift in how government policy is pursued,” Dalio wrote. “Trump is a deal maker who negotiates hard, and doesn’t mind getting banged around or banging others around. Similarly, the people he chose are bold and hell-bent on playing hardball to make big changes happen in economics and in foreign policy (as well as other areas such as education, environmental policies, etc.).”
.. “Animal spirits” is a term from Keynes, not Rand. In his 1936 book, “The General Theory of Employment, Interest and Money,” the English economist used it to describe “a spontaneous urge to action” on the part of business people, one based on a general outlook of optimism rather than an individual cost-benefit analysis. One reason the U.S. economy has grown relatively slowly over the past eight years is that corporations have been sitting on their cash rather than investing it in things like factories, offices, and new equipment—a failure widely attributed to depressed animal spirits. Once Trump takes office, the mood may change dramatically, Dalio argued.
.. It is the sort of Randian analysis long favored by many people on Wall Street, and recently promoted by some of Trump’s closest economic advisers: if you want capitalism to work more effectively, offer greater rewards to the capitalists. Cut taxes, rein in regulation, and create an environment that incentivizes financial risk-taking. The free market—or, rather, the John Galts who inhabit the free market—will do the rest.
.. Because the U.S. tax code is riddled with loopholes, the tax rate that big businesses actually pay isn’t anything like thirty-five per cent. Between 2008 and 2012, according to a recent study by the nonpartisan Government Accountability Office, they paid a tax rate of about fourteen per cent, on average.
.. Surveys by the Federal Reserve Board and other organizations indicate that the main factor depressing corporate investment has been weak demand.
.. In many cases, companies’ overriding goal is to raise the prices of their stocks, which feature heavily in the remuneration packages of senior executives. Making costly long-term investments can depress earnings and stock prices in the short term.
.. In the twelve-month period that ended in October, companies in the S. & P. 500 spent $556.6 billion on buybacks, according to the research firm FactSet.
.. “the 2004 repatriation tax provision was followed by an increase in dollars spent on stock repurchases and executive compensation.”
.. Goldman predicted that three-quarters of the money that big corporations bring back to the United States next year under the Trump tax plan will end up being spent on stock buybacks.
Superintelligence: The Idea That Eats Smart People
Mental Disorders as Networks
But all psychiatric disorders are hopelessly comorbid with each other. If someone meets criteria for one DSM disorder, there’s a 50% chance they’ll have another one too. 60% of people with major depression also have an anxiety disorder.
The Economy’s Hidden Problem: We’re Out of Big Ideas
while directing a growing share of innovative effort toward goals with benefits, such as cleaner air, that don’t translate into gross domestic product.
.. What’s left, he says, are diseases such as Alzheimer’s for which scientists lack a useful theory of treatment
.. 40% are for “orphan” drugs which address diseases that afflict fewer than 200,000 people.
.. In 1960, 7% of U.S. R&D was devoted to health care. By 2007, it was 25%
.. Thus, health research is displacing R&D that could have gone toward more mundane consumer products. Indeed, Mr. Jones predicts the rising value of human life virtually dictates slower growth in regular consumer goods and services—and they constitute the bulk of measured GDP.
.. Electric cars don’t yet offer a “value proposition that resonates with the mainstream customer,” says John Viera, head of sustainability at Ford Motor Co. He contrasts that with EcoBoost, a Ford-developed gasoline injection technology that achieves the same power with fewer cylinders. “The beauty is you get the fuel economy improvement with no loss in performance,” he says. “It does add cost, but the customer is willing to pay for that technology unlike with the electrified vehicle.”
.. in the past decade the cost of one critical component, the gyroscope that keeps the vehicle level, plunged as the devices were developed for smartphones. Yet commercial drone operation was illegal, with some exemptions, because it required Federal Aviation Administration approval.. the average internet retailer generates $1.3 million in sales per employee, compared with the average brick-and-mortar retailer’s $279,000. As Amazon’s market share has grown, that has lifted the entire industry’s productivity performance. Retail output per hour rose 3%.. productivity growth has accelerated at “frontier” companies, which use the most efficient processes and technology, while slowing at the remainder of firms... new technologies are in fact amalgams of technologies and business processes that are difficult to replicate and often patent protected. Many digital companies are “platforms” that invest heavily in proprietary algorithms to more efficiently match customers to what they need.. So long as the frontier firm continues to innovate, that doesn’t hold back productivity. The risk is that once a firm becomes dominant, no competitor can match its network and innovation is less necessary to retain customers... Then last May, Joshua Brown, a 40-year-old Ohio resident, was killed when his Tesla hit a tractor trailer while operating under Tesla’s “autopilot” mode. The incident could have triggered a regulatory crackdown that brought deployment of the technology to a halt. Instead, the National Highway Traffic Safety Administration in September announced nonbinding guidance on how manufacturers should ensure their systems are as safe as possible.