Recep Tayyip Erdogan, president of Turkey, whose success in getting away with obvious corruption by politicizing law offers a disturbing preview of how Trump may become the authoritarian ruler he clearly wants to be. Not surprisingly, Trump, who basically seems to like dictators in general, has expressed admiration for Erdogan and his regime.
.. Both also have contempt for expertise... Erdogan has presided over an actual economic boom. Investors and markets don’t seem to mind the craziness at the top... The fact that economic policymakers have no idea what they’re talking about doesn’t seem to make any difference... run-of-the-mill policies like changes in tax law, even if they’re pretty big and clearly irresponsible, rarely have dramatic effects.
.. aside from fueling an unprecedented wave of stock buybacks, the tax cut is having little discernible effect, good or bad. There’s no sign of the investment boom advocates promised, but there’s also no sign that investors are losing faith in U.S. solvency.
.. Someone looking at U.S. growth in G.D.P. or employment over the past few years who didn’t know we’d had an election in 2016 would have no reason to suspect that anything important had changed.
.. Even if the quality of economic leadership matters a lot only during crises, you might expect markets to think ahead and incorporate the risk of badly handled future crises into stock and bond prices. Somehow, though, that almost never happens.
.. What we get instead are long stretches of complacency followed by sudden panic.
.. Rudiger Dornbusch): “Crises take longer to arrive than you can possibly imagine, but when they do come, they happen faster than you can possibly imagine.”
.. Although America borrows a lot abroad, it borrows in its own currency, which means that it isn’t vulnerable to a classic emerging-markets crisis.
The Rise of Woke Capital
In the other story, corporate America just performed another bait and switch at the common good’s expense — making a show of paying bonuses and raising wages after the passage of the corporate-friendly Republican tax bill, but actually reserving most of the tax savings for big stock buybacks
.. Corporate activism on social issues isn’t in tension with corporate self-interest on tax policy and corporate stinginess in paychecks. Rather, the activism increasingly exists to protect the self-interest and the stinginess — to justify the ways of C.E.O.s to cultural power brokers, so that those same power brokers will leave them alone
.. In every era and every political dispensation, businessmen ask themselves: What am I required to do to make money unmolested by the government?
.. But there are other ways to compromise besides on wages
.. a certain kind of virtue-signaling on progressive social causes, a certain degree of performative wokeness, is offered to liberalism and the activist left pre-emptively, in the hopes that having corporate America take their side in the culture wars will blunt efforts to tax or regulate our new monopolies too heavily.
.. It’s worth noting, for instance, how Tim Cook’s willingness to play the social justice warrior when the target is a few random Indiana restaurants that might not want to host hypothetical same-sex weddings does not extend to reconsidering Apple’s relationship with the many countries around the world where human rights are rather more in jeopardy than they are in the American Midwest.
.. the Peace of Palo Alto won’t be fully tested until the next time the Democrats hold real power
.. “As much as we fear corporations gone wild,” Poulos concludes, “we love corporations that love us.” And in a rich society people may prefer that their #brands prove this love by identifying with favored social causes rather than through the old-fashioned expedient of paying their workers a little bit more money.
.. For others, though, the Peace of Palo Alto has rather less to offer. It confirms the blue-collar suspicion that liberalism is no longer organized around working-class economic interests, and it encourages cultural conservatives in their feeling of general besiegement
.. the Republican Party even as it lurches deeper into demagogy and paranoia — by making a vote for the G.O.P. the only way to protest a corporate-backed liberal politics that seems indifferent to the working man and an ascendant cultural liberalism
.. Their wokeness buys them cover when liberalism is in power, and any backlash only helps prop up a G.O.P. that has their back when it comes time to write our tax laws.
The win-win scenario for woke capitalism can’t last forever. But it might be quite the racket while it lasts.
Shocker: Democrats’ predictions about the GOP tax cut are coming true
its centerpiece was a gigantic corporate tax cut, lowering the statutory corporate rate from 35 percent down to 21 percent. This cut accounted for about $1 trillion of the bill’s total $1.5 trillion cost, but Republicans said it really wasn’t about helping corporations at all.
.. No, the real target was the workers: Corporations would take the money and use it to create new jobs and raise the wages of those working for them, as trickle-down economics did its magical work.
Democrats, on the other hand, said it was a scam. They charged that workers would see only a fraction of the benefits, and instead corporations would use most of their windfall for things like stock buybacks, which increase share prices and benefit the wealthy people who own the vast majority of stocks.
.. even before the tax cut, corporations were making near-record profits and sitting on mountains of cash; if they wanted to invest, create jobs and raise wages, they already had the means to do it.
.. even before the tax cut passed, corporations were saying publicly that they intended to use the money for stock buybacks.
.. It’s true that some companies did give workers one-time bonuses. But it was essentially a PR move.
.. Walmart, for instance. It made a splashy announcement that it would be giving bonuses of up to $1,000 to workers, which sounded great. But then it turned out that you’d only get that much if you’d been working there for 20 years, and the average worker would get around $190.
.. the total value of Walmart’s bonuses was $400 million, which seems like a lot until you learn that over 10 years the value of the tax cut to the corporation will be $18 billion. In other words, about 2 percent of its tax cut is going to workers
.. Republicans make absurd claims in the knowledge that even if they get debunked in the occasional “news analysis” piece, on the whole they’ll be treated with complete seriousness, no matter how ridiculous they are.
.. lies about the future — and that’s what they are when you know that what you’re saying is utterly bogus — will not be policed with nearly the same vigor as lies about the past.
.. When Republicans said that their tax cut wouldn’t increase the deficit because it would create so much economic growth that revenue would actually increase, it was treated as a questionable claim, not an assertion on par with “If I flap my arms, I can fly to the moon”
.. Sure, Democrats will squawk, and all their criticisms and predictions will turn out to be right. But it hasn’t stopped you in the past, and it won’t in the future.
How Jeffrey Immelt’s ‘Success Theater’ Masked the Rot at GE
A culture that disdained bad news contributed to overoptimistic forecasts and botched strategies
Jeffrey Immelt, the longtime boss at General Electric Co. , was a polished presenter who held court each year at a waterfront resort off Sarasota, Fla., where industrial executives and Wall Street listened for his outlook on the conglomerate.
“This is a strong, very strong company,” Mr. Immelt said at the event last May.
.. GE’s precipitous fall, following years of treading water while the overall economy grew, was exacerbated, some insiders say, by what they call “success theater.”
Immelt and his top deputies projected an optimism about GE’s business and its future that didn’t always match the reality of its operations or its markets
.. “The history of GE is to selectively only provide positive information,” said Deutsche Bank analyst John Inch, who has a “sell” rating on the stock. “There is a credibility gap between what they say and the reality of what is to come.”
.. “GE itself has never been a culture where people can say, ‘I can’t.’ ”
.. GE once had the highest market value of any U.S. corporation. Its alumni have gone on to run companies such as Boeing and Chrysler.
.. Few knew just how badly ailing the American icon was. Even GE’s board didn’t realize the depth of problems in the biggest division, GE Power, until months after directors had replaced Mr. Immelt
.. A spokesman for the former CEO pointed to his decision to purchase $8 million worth of GE shares in 2016 and 2017. That included 100,000 shares in mid-May at a price roughly twice today’s.
.. But Mr. Immelt didn’t like hearing bad news, said several executives who worked with him, and didn’t like delivering bad news, either. He wanted people to make their sales and financial targets and thought he could make the numbers, too, they said.
.. Over the past three years, GE spent more than $29 billion on share repurchases, at an average price of almost $30, twice the current level. That included billions of dollars spent less than a year before GE suddenly found itself strapped for cash last fall.
.. Trian Fund Management LP, which invested $2.5 billion in GE in 2015, wanted it to buy back even more stock. The activist investor urged the company to borrow $20 billion for repurchases (which it didn’t do), based on a belief that the profits Mr. Immelt was promising would send the stock soaring when they arrived.
.. Instead, at Mr. Immelt’s retirement in August the stock was below its level when he took over 16 years earlier. Including dividends, GE gained 8% with Mr. Immelt at the helm, while the S&P 500 rose 214%. Since he stepped down, the stock has lost about 43%, erasing almost $94 billion in market value
.. Instead of $2 a share GE now projects $1 to $1.07.
.. Several directors discussed in November whether the entire board should be fired
.. Jack Welch, delivered steady profit growth and sent shares soaring in the 1980s and ’90s by striking deals and aggressively slashing costs and jobs. Mr. Welch also built up a huge lending business called GE Capital that for years generated outsize profits—but nearly sank the company during the financial crisis on Mr. Immelt’s watch.
.. Results were strong at two of GE’s big units, aviation and health care (medical equipment).
.. Acquiring companies that help drillers pump and transport fuel, he had GE spend more than $14 billion over 10 years, most of it based on higher oil prices than today’s.
.. Mr. Immelt’s optimism was part of the problem, according to some people close to the situation. They said he told the board that management had identified risks in the power business, yet downplayed them. The probability and risk were way off, one said.
.. Lisa Davis, the U.S. chief of Siemens, said the German company’s executives “have seen this decline coming for the last several years.” So Siemens had reduced its capacity in its power business, she said, while GE bought more.
.. According to former executives, the upgrades meant lower service fees for customers, in exchange for one-time upgrade costs, meaning that future sales were being pulled forward.