Thoughts from the Frontline

I think many of my readers are in the same boat I’m in: we are still sorting out the implications of last Tuesday’s election. My style is generally not to shoot from the hip but to think about things before I start to write. When I have adopted the “ready–fire–aim” style of writing, I have usually found myself going back and asking, “What was I thinking?” And the answer is that I wasn’t doing enough thinking.

I have a letter halfway done on economic/investment themes, but I’m putting it aside. For over 16 years I have written each week about what has interested me and what I have thought important. And frankly, what is really on my mind is the same thing that is likely on your mind, and that is Tuesday’s election results. So I am going to write a shorter letter on my thoughts on the election, trying to put an economic spin on the political process (since economics is the beat of this letter, not politics) and give you a heads up on what may possibly be the big story on Tuesday night. One congressional district in a state that nobody pays attention to could find itself at the center of American politics. That district’s single electoral vote could spell the difference between a razor-thin win and a tie. Seriously. And since I have a special connection with that congressional district, I will offer some thoughts on how it may go.

“Formula for success: rise early, work hard, strike oil.” – J. Paul Getty “Any jerk can have short-term earnings.” – Jack Welch

“I reject the insurance model. I think we should have a free-market approach to healthcare.” – Gary Johnson “The goal of real healthcare reform must be universal coverage in a cost-effective way.” – Bernie Sanders “The fault, dear Brutus, is not in our stars, but in ourselves….” – Julius Caesar (I.ii.140–141) “The numbers [referring to the growth in the aging population and its relationship to Alzheimer’s] point to a disaster that will be the real zombie apocalypse. Western societies simply won’t be able to bear the costs of Alzheimer’s as the incidence continues to rise. Faced with impossible financial, emotional and psychological costs, we would have to funnel so much of our resources into the care of Alzheimer’s patients that the quality of life for everyone would plummet. “Escape from the zombie apocalypse, on the other hand, is entirely simple: cure aging itself. To be more precise, the solution to Alzheimer’s is to stop accelerated aging. We need to slow the degeneration that leads to Alzheimer’s and other age-related disease.” – Patrick Cox, from his new book, The Methuselah Effect

“The US has the most dysfunctional healthcare system in the world.” – Elizabeth Holmes “Healthcare is the cornerstone of the socialist state.” – Monica Crowley “You’ve got this crazy system where all of a sudden, 25 million more people have health care and then the people that are out there busting it – sometimes 60 hours a week – wind up with their premiums doubled and their coverage cut in half.” – Former President Bill Clinton last week in Flint, Michigan Cassius: “The fault, dear Brutus, is not in our stars, but in ourselves…” – Julius Caesar (I, ii, 140-141)

“However beautiful the strategy, you should occasionally look at the results.” – Winston Churchill And from “To a Mouse, on Turning Her Up in Her Nest with the Plough”: Scottish version: But Mousie, thou art no thy-lane, In proving foresight may be vain: The best-laid schemes o' Mice an' Men Gang aft agley, An' lea'e us nought but grief an' pain, For promis'd joy! English translation: But little Mouse, you are not alone, In proving foresight may be vain: The best laid schemes of Mice and Men Go often askew, And leave us nothing but grief and pain, For promised joy! – Robert Burns, 1785

“Economic stimulants produce Bridges to Nowhere. Strategic investment in infrastructure produces a foundation for long-term growth.” – Roger McNamee “Our American ancestors prioritized growth and investment in our nation’s infrastructure.” – Cory Booker “There are two Americas – separate, unequal, and no longer even acknowledging each other except on the barest cultural terms.” – David Simon

“You shall not crucify mankind upon a cross of gold.” – William Jennings Bryan, July 9, 1896 “You shall not crucify the retiree and saver on a cross of negative rates.” – John Mauldin, September 14, 2016

Dear Friends, Now is the time I would normally be sending you Thoughts from the Frontline, but this week I’m calling an audible. Rather than leave you wondering, I’m sending this short note to explain the new game plan.

“Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.” – John Maynard Keynes

“Positive anything is better than negative nothing.” – Elbert Hubbard “Once you replace negative thoughts with positive ones, you’ll start having positive results.” – Willie Nelson

“Measurement theory shows that strong assumptions are required for certain statistics to provide meaningful information about reality. Measurement theory encourages people to think about the meaning of their data. It encourages critical assessment of the assumptions behind the analysis. “In ‘pure’ science, we can form a better, more coherent, and objective picture of the world, based on the information measurement provides. The information allows us to create models of (parts of) the world and formulate laws and theorems. We must then determine (again) by measuring whether these models, hypotheses, theorems, and laws are a valid representation of the world.” – Gauri Shankar Shrestha “In science, the term observer effect refers to changes that the act of observation will make on a phenomenon being observed. This is often the result of instruments that, by necessity, alter the state of what they measure in some manner. “It was, perhaps, the most unusual episode in the long running duel between the two giants of twentieth century economic thought. During World War Two, John Maynard Keynes and Friedrich Hayek spent all night together, alone, on the roof of the chapel of King’s College, Cambridge. Their task was to gaze at the skies and watch for German bombers aiming to pour incendiary bombs upon the picturesque small cities of England…. “Night after night the faculty and students of King’s, armed with shovels, took it in turns to man the roof of the ornate Gothic chapel, whose foundation stone was laid by Henry VI in 1441. The fire watchmen of St. Paul’s Cathedral in London had discovered that there was no recourse against an exploding bomb, but if an incendiary could be tipped over the edge of the parapet before it set fire to the roof, damage could be kept to a minimum. And so Keynes, just short of sixty years old, and Hayek, aged forty-one, sat and waited for the impending German onslaught, their shovels propped against the limestone balustrade. They were joined by a common fear that they would not emerge brave nor nimble enough to save their venerable stone charge.” – Nicholas Wapshot in Keynes Hayek: The Clash That Defined Modern Economics