Sunday, March 03, 2024

The Secret of Directional Investing


To know the trend, spot the trend, or shape the trend is to make money.

The trend is your friend—investors know that. But the biggest money comes from the biggest events. The more delta, the more alpha.

In that spirit, 
The Secret of Directional Investing offers a new way of thinking about investing, steeped in culture and history. Focusing on megatrends--most obviously. the Red-Blue rumble--this book points out ways to profit from an understanding of two kinds of trends: those that can be spotted, and those that can be shaped. There’s money in both. The Romans weren’t kidding when they said, Audentes Fortuna luvat—Fortune favors the bold. The Secret of Directional Investing is a bold look at investments and potential investments.

Amazon link here.

Sunday, January 07, 2024

Pledges for Good Action: The Arizona Case Study

 Tenth in a series 



Having outlined the theory of our case—politicians should make specific pledges on policy issues, and like-minded voters should reward them for it, making the whole transaction as tight as possible—let’s apply it to a specific policy issue: water desalination.  And let’s go to a specific state where abundant water is desperately needed: Arizona.  


The Grand Canyon state, having seen its population grow ten-fold in the last 70 years, should have more fresh water.  Given the generally arid nature of the Southwest, that almost certainly requires mass desalination—perhaps desalinated seawater being piped in from Mexico, as has been suggested (the assumption being that California, which has been reluctant to desalinate water from the Pacific, would for sure never permit a trans-state pipeline). Arizona is hot and dry and growing--so of course it should have  more fresh water.  And lots of it.  


One company that agrees is the Howard Hughes Corporation (HHC), which is now mostly in the real estate development biz.  In 2021, HHC announced that it had spent $600 million to purchased 37,000 acres of land west of Phoenix to build a “city of the future.”  However, in November 2022, something at least somewhat unexpected happened: the Democrat won the gubernatorial election, and, in addition, a Democrat won the attorney general post.  So a long spell, more than a decade, of Republican control of both offices was broken.  This partisan switch changed the dynamic of policymaking in the state.  Suddenly, the Arizona’s Groundwater Management Act of 1980 came back into prominence.  


As a result, real estate developers, including HHC, were suddenly on the backfoot.  As The Wall Street Journal reported in December 2022, “The Arizona Department of Water Resources is currently conducting a study of an underground basin to determine whether the groundwater supply is adequate to support the planned population for 100 years.”  Yes, that’s how the law reads, but we can immediately see the problem: What’s foreseeable in a hundred years?  Answer: maybe death and taxes.   But virtually everything changes, especially if technology is involved.  


Arizona state senate president Warren Peterson was both arch and incisive in his commentary on the groundwater bill: “Why is it 100 years? Why isn’t it 105 years — why isn’t it 95 years? California’s (rule) is 25 years … You don’t go to the gas station and buy 100 years of gas.”  And in the future, will cars run on gasoline?  Or perhaps hydrogen?  Or perhaps batteries?  Or something different altogether?  It’s hard to answer such questions looking 10 years ahead, let alone 100. 


Yet here we are: a law written decades ago by trendy limits-to-growth-types—the governor back in 1980, was the late Bruce Babbitt, a Jimmy Carter-ish green—is now being invoked for the same purpose: to limit growth.  Many things have changed, technologically, and yet attitudinally, the Malthusian dead hand still has its grip on Arizona's throat.  


We should all be assured HHC is not without political resources, and so, in fact, at least some of the project is going forward.  But what’s needed for the sake of HHC and all the people of Arizona, including future residents—is a clear-cut vision of more water.  The abundance that comes from the ocean as well as, of course, the fertile human mind. 


So how to secure such abundance?  For starters, Arizona needs a better political framework for growth.  And that means a rethinking of repressive, growth-inhibiting laws.  Notably, the pro-abundance forces need a mandate.  A mandate, of course, from the voters.  And if the voters grant it, then they, in turn, have a right to insist that the mandate—which could be rendered as a pledge—be fulfilled.  That’s the essence of the idea advanced in the previous nine installments: politicians should take pledges on specific policies, and if the voters agree to support the policies, then a contract, of a moral kind, is established.  The contract might not be binding in a legal sense, but it can be binding in a political sense.  So woe to him who breaks it, as was the case with George H.W. Bush, who famously broke his “read my lips” contract in 1990, and was defeated, badly, in 1992. 


Beyond the bad faith of political promisers, there’s the further complexity of the parties as they are constituted.  That is, they are so large, and so old that they have become “barnacled” with myriad interests and positions.   There are historical and perhaps legitimate reasons for every position, and yet the cumulative effect is that the parties are hardly “pure plays.”  That is, if one votes for the Democrat, or the Republican, chances are that the party will be so “bundled” on so many issues that it will be difficult, perhaps even impossible, to suss out a clear position on a single issue.  Once again, this is the nature of pluralism—people have different positions and priorities.  Yet our purpose in this series, Securing Elections and Good Governance, is to seek to “hack,” in a good way, the parties so that they can get better at identifying, making, and keeping promises.  That's the way to improve politics: Tighten the connection between a politician's pledge and the actual follow-through: Make one follow the other, automatically.  So the parties will be less messy bundles and more clean pledge machines, for the sake of making a best offer to the voters. If the voters accept the offer, then the party follows through.  


In our time, Arizona’s new Democratic governor, Katie Hobbs, has sought to avoid the water issue: on the one hand, she doesn’t want to get in a fight with the greens who are so powerful in the Democratic Party, on the other hand, she doesn’t want to get in the way of growth.  So she says that the state “plenty of water,” and leaves it at that.  Plainly, Arizona does not. 


So now, looking ahead, what are the chances that such a contract on water desalination can be executed in Arizona?  We can start with a look at the recent context.  Where was the desalination issue in the past?  Answer: It simply wasn’t prominent.  In Arizona, Republicans were somewhat in favor of desal, and yet it was hardly a top issue for them in 2022.  And in any case, as we have seen, the Democrat, Hobbs, won won the governorship that year. 


To actually get the Arizona desal project built will enormous amounts of what physicists call activation energy.  And energy comes from elections. 


Most likely, we need another election--and probably more than one--to break the legal logjam on desalination, as with so many other growth issues.  But let’s start with the election in front of us: the Arizona senatorial election, to be held this November.  The incumbent senator, Kyrsten Sinema, a Democrat-turned-independent, has supported desalination as an option, but it seems fair to say that she hasn’t made a big deal of it; one scans the news in vain for signs of recent action.  In the meantime, the likely Democratic nominee, Rep. Ruben Gallego, is more of a progressive green; he wants to tax water usage, revoke well-drilling permits, and generally figure out ways to ration the scarcity—ideas very much out of the Babbitt-Carter playbook.  


To be blunt about it, Democrats just don’t seem to be that in to desalination.  Instead, green ideology predominates.  


So now what of the likely Republican nominee this year, Kari Lake?  Lake, of course, lost to Hobbs in the high-profile 2022 gubernatorial election.  In that election, she supported desalination, but it was hardly front-and-center for her campaign.  However, this time around, she is emphasizing the issue: 


Kari Lake will make the development and construction of a system to deliver a new source of fresh water to Arizona and the West one of her major priorities. Kari knows there are multiple options that need to be explored, and the time to do so is now. 


Lake continues, diving into specifics:


First, we need to form an engineering working group in partnership with the states, U.S. Army Corp of Engineers, Bureau of Reclamation, Bureau of Land Management, and other appropriate agencies to examine engineering possibilities and challenges for each of the various options, to include desalination, river pipelining, and any other viable options to increase fresh water supply and availability throughout the Mountain West and Southwest.


This is good clear thinking, offering real hope that Lake will make a difference on the desalination issue if she wins.  And that's good news for Arizonans who worry about jobs and incomes and well-being.  To be sure, even if she is elected, Lake will be one of just two senators from Arizona, and one of 100 in the Senate, and yet if she seeks a strong mandate on desal and wins, that will send a message: the voters care about this issue.  And that could echo far beyond Arizona.  Which, in turn, would make it likely that Arizona could achieve the larger consensus for action that any single state needs.   


We could help this process along.  How so?  For starters, by offering Lake opportunities, including venues, to amplify her desalination message.  Any blue-collar worker, for example, should support desal for the jobs it will create.  And homeowners should support it because it would allow for the amenities--including lawn sprinklers and swimming pools--that make life better.   And HHC should love it.  


But the larger argument of this series is this: This process should be formalized. And further boosted by technology.  That's where real strength comes from: Building a structure.  


It's great that Kari Lake has taken a strong pro-desal position in Arizona.  But history tells us that we need more than one individual, however victorious and sincere.  You need a movement.  That's why political parties, and political machines, were created in the first place, and it should come as no surprise that every so often they need to be reinvented.  That's what this whole series is about: reinventing electoral politics, mindful of the granular potential of CRM, AI, and all the rest.


So in Arizona and in other states, there could be a clear Desalination Faction that is so committed to desal that it becomes a force on its own to be dealt with: issuing reports and report cards, interviewing candidates, making endorsements.  And then, crucially, delivering its votes to the chosen candidates and parties.  That's the secret sauce of this whole idea: Our group can deliver votes. You can see them, meet them, and count them, in advance of the balloting, during the balloting, and after the balloting.  This is how power is wielded and measured, and this is also how vote fraud is defeated. 


It's possible to see this Desalination Faction as a constituent within the Republican Party, as is mostly the case with Grover Norquist's Americans for Tax Reform.  But it's also possible to see it as an element within both parties, as was the case with pro-Israel voters, at least until very recently.  Or it could be some sort of free-floating entity.  The main point, again, is that it's entirely devoted to desal as an issue: doing it, protecting it, expanding it, and so on.  


So this could be the template for new issues-based constituencies on a wide spectrum of issues. The parties could thus be composed of single-issue activists, always fighting (peacefully, legally) to make sure they get what they want, while forming coalitions to make sure they get a majority.  That's how you not only win an election for your candidate, but win elections, plural, for your cause. 






Saturday, January 06, 2024

Want to Restore Election Integrity? End the Secret Ballot

 

Ninth in a series

Vote fraud is an issue that will never go away, and for good reason--there's plenty of vote fraud: from both parties, in virtually any year, in virtually any election.  The Heritage Foundation provides a good resource here.  So what to do?  Make a tight linkage between the voter and the vote.  That might seem controversial, in light of the general sense that the ballot should be secret.  But let's ask ourselves: Do most people wish to let you know for whom they voted?  Sure.  And can big data companies (Silicon Valley, credit card cos, cell phone providers) already pretty much intuit how you voted?  Sure.  And what of the NSA?  Ditto.   So anybody who really wants to know, already knows.   So the secret ballot provides the space for fraud, more than it provides the sanctity of privacy.   And of course, Republicans, notably, are generally eager to see some sort of mandatory ID check for voting.  We can observe: the more the verification, the more the likelihood that voting intention will be known. 

With these realities in mind, I published this for The Daily Caller in January 2023. 

There's no need to mandatorily end the secret ballot.  We can leave the question to the discretion of each voter. However, it must be said that if the ballot is anonymous, then it can't be audited.   In the final analysis--or in any sort of recount--there needs to be a firm linkage: the voter and the vote.  If there isn't, then anything can happen. 

Still, as for your voting intention, you might expect to have a right to privacy.  In theory.  But here’s the thing: If you’re online, you don’t in practice.   Back in 1999, Scott McNealy, then-CEO of Sun Microsystems, told reporters that concerns over privacy were a “red herring”—that is, a fake thing to worry about. “You have zero privacy,”  McNealy advised, “Get over it.” McNealy’s words caused a storm, but let’s ask ourselves: Has the situation gotten better in the past quarter-century?  Have the algorithms gotten smarter?  Does Google know what you’re looking for as soon as you start typing?  Does Siri or Amazon Echo seem to be listening, even when you haven’t asked it to?  Are you relying on GPS and a mapping app to guide you places?  If so, then you’re an open book. 


To be sure, there are plenty of apps that help with privacy.   And millions of Americans use these, often with good success.  But here’s the thing: They still know all about you.  Between the government—those 87,000 new IRS agents will be put to good use—the banks, credit card companies, social media companies, and the app makers themselves, They (with a capital “T”) keep close tabs on all of us.  So if we vote, They can probably figure out who we voted for.  


And of course, with mail-in ballots, it’s not hard to know who voted for whom—the authorities can just look at the return address, even if they might have to peek a bit to see the “X.” 


So it’s a paradoxical situation: They know who we voted for, but we can’t prove who we voted for, because the balloting itself is officially anonymous.  So maybe They are cheating, but unless we can catch them in the act, we can’t prove it.  It’s in that gap—when the cat’s away—that the vote-fraud mice can play.  To put the matter even more bluntly, if the voter doesn’t stand by his or her vote, someone else might wish to stand there, in his or her stead.  


Wednesday, January 03, 2024

Securitization and Elections

 Eighth in a Series 


Securitization and Elections 


In installment three of this series, "Securing Elections and Good Governance," we considered the intellectual revolution that occurred in another game of numbers: baseball.  That is, the influence of Allan Roth, Bill James, Billy Beane, and all the other Sabremetricians, summed up in the popular culture by the book-turned-movie Moneyball. 


Now let’s look at another instance of numbers rethinking that can be applied to politics: Wall Street-style securitization.  Investopedia defines it thusly: “Securitization pools or groups debt into portfolios.”  The site adds, “Issuers create marketable financial instruments by merging various financial assets into tranches.” 

 

Okay, so securitization pools dollars (or other currency or asset-class) with an eye toward making the product as liquid and nimble as possible.   And so how might votes be analogous?  Here’s how. 


Yet first, of course, a preface: Nothing here is speaking of buying, or selling, or otherwise illegally transacting over votes.  Nobody here is talking about paying people to vote, or not to vote.  Instead, what’s being described here is a way of thinking about how voters vote, and how their votes can be most influential.  All this at the legal and transparent behest of the voters themselves, with whatever legitimate assist--and importuning--from other political players, including activists and parties.  All with the goal of a more honest and responsive system.  


For instance, in installment four we considered how the voters could choose to hold themselves accountable, and in installment six we looked at specific pledges on policy.  Nothing crooked or corrupt here, just honest thinking about how voters can organize themselves to achieve maximum individual and collective influence.    


So now we can add the Wall Street element, because Wall Street, going back four decades, pioneered the idea of securitizing (also known as collateralizing) mortgages and other instruments.  (Yes, this was a topic treated upon by the same Michael Lewis; long before Moneyball, he published Liar’s Poker.)


Once we know we have a bloc of votes, we know we have something consequential.  And yes, it’s valuable to someone, most obviously, the candidate(s) in the race who wish to win.  But also, of course, interest groups and factions of various kinds.  


Suppose we have identified a bloc, or a tranche, of 10,000 people in a district (or other constituency, including a state or a nation), who feel really strongly about an issue.   They are, to use a familiar phrase, single-issue voters. That issue (taxes, a la Grover Norquist, is one such issue, another issue is abortion, pro or con, and there are myriad others) is likely not the only issue the bloc cares about, but it is pre-eminent.  So if the political candidate is on the right side of that issue as the voting bloc defines it, it’s reasonable that the bloc will go with that candidate.  It’s simple politicking: We agree: vote for me.


What’s evolved are the mechanisms by which that voting bloc can be identified, and tended, and mobilized.  And that mobilization can take on forms both old and new.  For instance, if voters were to agree to vote as a bloc, that would greatly enhance their power, in the same way that the electoral college enhances the power of a given state.  If, say, Georgia votes 51:49 in a presidential election, that narrow margin is exaggerated by the electoral college to be 16 electoral votes for the winner, and zero for the loser.  This all-or-nothing voting is a well recognized phenomenon in political science; it's the sort of power that team play--even among a team of rivals--can exert. 


As we have discussed, and will discuss, vote blocs can be identified using all manner of digital tools, from social media (which is always happy to sell data on its users) to customer relationship management (CRM) software to, perhaps blockchain-y smart contracts.  Plus, of course, whatever emerges from AI.  


Once again, no technological development should obviate the basic constitutional principles of free, fair, and uncorrupt elections, and yet the voters may choose to avail themselves of new technology.  And so, for example, CRM could be used to manage a pledge--such that voters having taken the pledge might feel a psychic obligation to vote with their freely chosen fellows.   This is teamwork in action.  Nothing coercive or crooked, but there's nothing wrong with camaraderie and cohesion.   So this is the sort of power-bloc-ing that could be extended from the electoral college to more common elections, including primaries: the winning candidate gets the benefit of the bloc.  


These days, a good campaign has a good handle on its base voters; the challenge is then two-fold: making sure they all vote, and making sure that the total is enough to win.  Enter the new tech and the sense of the larger political market.  


Here’s where thinking of blocs, or tranches, comes to mind: What does it take to make a bloc really good, or not so good, or bad?  How does one “grade” it?  By voting reliability or propensity?  By ease of being able to pivot, from one issue, or one personality, to another?   Sophisticated analysis will soon enough come up with a rating system that covers all these variables (already has, in fact, in many ways, albeit mostly hidden behind proprietary siloed).   And when that happens, the market for advertisers and other interested parties will become fully liquid.  As in, an interested party—say, again, a group interested in taxes, or abortion, or just about anything—will see that there’s an “AAA” bloc of votes in X district.  That bloc might be big enough to affect a party primary, or perhaps even a general election.  Because, as we saw in the previous installment, there is a lot of money in politics. 


So because of all these millions, billions, and trillions, a marketplace will emerge.   Once again, it’s all transparent, not just to “investors,” but to stakeholders and scrutinizers.  All federal and other regulations would still apply.  It’s just now that we’ve created a new way of thinking about trading money and votes, based on the honest and ethical interest and self-interest of the voters, as individuals and as a group.  

Monday, November 13, 2023

Money in Politics, the Economy of America--and Wealth For the Future

 Seventh in a series


There’s money in politics, and there’s money in America—and there’s a lot more of the latter.  And then there’s all the money in the future, of which there’s really a lot more.  So politicians—and those who wish to invest according to political trends—should pay most attention to those political changes that will vector out to big gains in the future.   And that means getting the voters, too, to think about what’s best for them, with longer time horizons.  Let’s dive in.  


Money in Politics 


According to Open Secrets, Americans spent $14.4 billion on the 2020 elections.   That’s for sure a lot of money, and yet to this election participant and observer of more than four decades, the dollar total seems low.  In fact, Open Secrets only counts direct expenditures by Presidential and Congressional candidates.  So what of all the governors and state legislators?  What of all the “soft money” and “dark money”?  And what of the in-kind value of campaign efforts, be it handing out leaflets, calling in to a talk radio station, or posting on Facebook?   Obviously to assign values to all those undertakings would be maddeningly difficult, and the numbers still would be, at best, guesstimates.   But if we had to, let’s come up with a dollar total: let’s double that $14.4 billion and then round it off, upward, to $30 billion.  


Okay, so $30 billion is a big number, and yet here’s something interesting: relative to the economy, it’s still a tiny number.  Consider: The GDP of the U.S. in 2020 totaled about $21 trillion, and so $30 billion is 0.14 percent.  For clarity, that’s one-seventh of one percent.  To put the money-in-politics number a different way, there are more than 250 publicly traded companies in the U.S. boasting a market capitalization greater than $30 billion.   


Once again we can see: while the amount of “money in politics” might seem big, in the scheme of things, it’s rather small.  And that’s a wee bit strange, as the political system exerts much leverage on the U.S. economy—$21 trillion in 2020, and $26 trillion today—as well as the world economy, which, in total, is roughly quadruple the U.S.  Moreover, the world’s total wealth is all the grander; McKinsey & Co. estimates the planetary total to be as high as $1.53 quadrillion.  


Yet if we focus on the nearer term, we might ask ourselves: How much effect has Joe Biden’s victory had on various sectors within the U.S. economy.   For instance, the green sector of the economy, including its ultra-capitalist cutting edge.  How much more is that sector worth—all those solar panels and windmills, all those EV makers, all those software designers rejiggering the power grid, all those consultants and advisers?  We might also venture to ask: What would the sector be worth if Donald Trump had been re-elected?  Biden’s “Inflation Reduction Act” was a sort of Green New Deal; Trump would never have touched that.  We could go on and on, itemizing the economic impact of every choice Biden made that Trump wouldn’t have made—from abortion to education policy to defense spending—and see sectors that have won, or lost. 


So if the economic impact of politics is so big, why are campaign donations so (relatively) small?  Why haven’t investors upped the ante of campaign spending for the sake of their investments?  We can cite five possible answers: 


First, there are restrictions on campaign donations, in terms of direct contributions to candidates, although, of course, soft money and dark money are pretty much designed to get around those limits.


Second, there’s a certain reticence, even disinterest, about bidding up politico-economic outcomes (not total reticence or disinterest, that’s for sure, but some).


Third, the investor class doesn’t see a pure play on campaign donations.  That is, it’s fine to say that giving to Democrats will boost green energy, but Democratic victories will also bring all the other Democratic policies, from tax increases to more spending to wokeness.  Does every investor/donor want all of that?  Of course not.  A similar critique could be made of the Republicans.   Especially these days, they’re hardly a pure play investor party.  If the GOP wins, you may see tax cuts—we saw a big one in 2017, thanks to party-line votes in the House and Senate—and yet you’ll also see Trump & MAGA, gun de-control, and abortion restrictions.  On a lot of social issues, investors and big donors tend to be more secular, “country club,” or even outright liberal or left, and so they don’t want to fund conservative and right-wing social action that could even extend to the richest sector of the U.S. economy: Big Tech. 


Fourth, we can elaborate on this point about the parties, recalling the previous installment on the unaccountability of politics.  Today the two major parties, Democratic and Republican, have become so barnacled and baroque that they are incapable of delivering a “pure play” on an investment agenda.  (And the other parties are probably no better; they’re just minor.)  In homage to investment legend Peter Lynch, who critiqued corporate “diworseification,” as a play on “diversification,” in his 1989 book One Up on Wall Street, we can apply that concept to politics.  We can say that the parties suffer from revealed diworseification; that is, we’ve discovered that they have their fingers in so many pies that they no longer act coherently or predictably on key polices.  In some sense, this is at should be; the American people are, after all, diverse—which means they are deeply divided. Reflecting that status quo, the parties are simply not configured to get big things done.  That’s the reality today, but it doesn’t mean we have to accept it for the future. 


Fifth, regardless of party, the national political system is organized to thwart any “special interest,” no matter how valuable, from getting its way.  That is, votes are filtered through not only the two parties and their diverse candidates, but also through offices at the federal, state, and local level.  In addition, there’s the bureaucracy, which doesn’t always move quickly—and oftentimes doesn’t move at all.  So even the most determined donor could be completely flummoxed, just by our distributed political system. 


For all these reasons, plenty of deep-pocketed individuals and entities have either sat it out, or have canceled each other out.  It’s hard to say that they’ve made a mistake—everything is opportunity cost—and yet at the same time we can insist that they’ve missed an opportunity.  An opportunity that could be huge.  That’s what this whole 13-part series is about: providing a new organizing principle for politics, based on efficiency and effectiveness.  Those are good businesslike virtues, and there’s no reason they can’t be harnessed to the cause of economic and business development, as well as political victory.  


Money in America 


As we have seen the GDP of the U.S. in 2020 was $21 trillion. In November of 2020, about 159 million people voted for president, including 81 million for Joe Biden, and 74 million for Donald Trump.  (For our purposes here, we’re not going to get into allegations about vote fraud.)  So if we were to take a holistic view of money in politics, and money in America, and the potential for political leverage on the economy, we could start by divide that $21 trillion GDP by the 159 million people who voted.   If so, we get a sum of $132,000 per vote.  Once again, we are not saying that each vote is monetizable like that, nor should it be.  And certainly nothing we’re describing here concerns buying or selling votes, or non-votes.  Instead, all we’re doing is illustrating the potential leverage.  


Yet if we’re assigning a dollar number to votes, it can be argued that we need more nuance.  Specifically, we might confine ourselves to “swing” voters, on the theory that “base” voters are fixed.  So if we were to think of swing voters as marginal voters, then we could run our numbers in different ways: first, those who might swing between Democrat and Republican; and second, those who might swing between voting and non-voting.  So now, if we look back at the last dozen presidential elections, 1976 to 2020, we see, first, that the widest “spread” in partisan presidential voting is 21.3 points, that being the difference between the 58.8 percent of the vote gained by Ronald Reagan in 1984, and the 37.5 percent of the vote gained by George H.W. Bush in 1992. (The range of Democratic percentages during this period was narrower.)  And then, second, if we consider the change voter turnout over those same dozen presidential elections, we see that the range was between 51.7 percent of the voting eligible population in 1996 to 66.8 percent in 2020.  With these numbers in mind, we might conclude that the swing vote, defined two ways, is perhaps a quarter of the population, which is around 240 million.  So 60 million voters to think about.  Still a huge number, but more manageable than the total number of voters.  And $21 trillion divided by 60 million is on the order of $350,000 a vote.  Again, that’s not directly monetizable, nor should it be. 


Yet if we think this way, we are reminded that elections have consequences, including for investors.  Moreover, as we get down to 60 million, we start to see numbers that might seem more comprehensible, manageable—and maybe even leverageable.   


Money in the Future 


As we saw earlier, McKinsey & Co. estimates the planetary total of wealth today to be as high as $1.53 quadrillion. And that ginormous “q”number is just wealth at the moment:  Speaking of the near term, if our $26 trillion economy grows at two percent for 20 years, it will be worth $39 trillion in 2043; if it grows by three percent, it will be worth $47 trillion; if it grows by four percent, it will be worth $57 trillion.   So yes, obviously: better policies mean bigger bucks. 


We can add: What’s the future potential of wealth creation, with AI and space exploration and all the other wonders to come, just in the remainder of the 21st century?  Open AI’s Sam Altman suggests that AI could yields a 100-fold increase in wealth.  This is the real money in politics: the money in the future, as it vectors out over the years, decades, even centuries.   If the current political class fails to grasp these potentialities, well, maybe that’s why some new thinking is needed to encourage and bolster sound pro-growth thinking. Indeed, these possible numbers are so huge, potentially, as to defy any sort of quantification; about the only thing we know is that politics—including the politics-by-other-means known as war, could affect those numbers drastically; a bad enough war could reduce the economy, and the human population, to zero.  So we are reminded: investing in sound politics is a good way to encourage the upside, and to fend off the downside.  As the song says, accentuate the positive, eliminate the negative.  


In various writings, this author has considered some big-delta, big-alpha ideas, including desalinated water, carbon capture, medical cures, and accelerated space exploration.  Each is a good idea, each would poll well enough by itself, and yet none of them are anywhere near the top of the national agenda.   To be sure, there are plenty of competing issues, and yet it’s the American Way to politick, legally and peacefully, to move an issue up.  So that’s what we should do, bringing new thinking, and new resources, into the equation.   


In fact, it takes an enormous commitment to building a favorable framework for good goals—and we should do that, too.  So there’s a mission right there: get politicians to think about using their power to galvanize economic activity.  There’re whole books to be written about that topic, of course, and this author has one forthcoming, and yet for now let’s focus on voters, as part of this series on improving the political process. 


Blast from the Past 


Back in 1980, Republican presidential candidate John Connally had an interesting proposal: convert corporate tax payments into a dividend program for voters.  The idea was that if taxable corporate profits went up, so would the dividend to the voters, thus giving the voters a direct  stake in the well-being of corporate America—and, by extension the American economy.  (To some extent this is the idea of the Alaska Permanent Fund, which distributes oil profits to Alaskans, to the tune of several thousand dollars, per resident, each year.) 


Connally’s idea was attacked as "corporatism," and in a literal sense, it was just that.  One of those attackers was the more libertarian Ronald Reagan (for whom this author was proud to work), who defeated Connally, handily, to win the 1980 GOP nomination.  So that was pretty much the beginning and end of the corporate-dividend plan.  


Yet even if the dividend idea has a poor political track record--to my knowledge, nobody at the national level has proposed it since--this Reaganite always thought it was an interesting idea, and thinks even better of it now.  Why?  Because corporatism, freed from sneer quotes, is actually the way of the non-communist world (that is, every country but maybe North Korea and Cuba).  The economy consists of big corporations (which aren't going anywhere) and big government (which also isn't going anywhere).  With those two realities in mind, it's appropriate to think of new ways for corporations and government work together, to form an updated social contract, mindful of new needs.  Such a symbiosis need not come at the expense of individualism or personal freedom.  Instead, it's a simple acknowledgement that free people often prefer to organize themselves as corporate leaders, employees, and shareholders.  Corporatism, seen as the existence and prevalence of large companies (and small- and medium-sized companies) is a proven mechanism for producing wealth.  


So with that in mind, let's always be looking for new ways of bringing people together while not jeopardizing personal freedom.  Is it a bad idea to find new ways to encourage the citizenry to think in terms of the commonweal?  And is it wrong to think that the citizens themselves should benefit when the economy's corporations are doing well?   Is this not the makings of a new kind of stakeholder civics?  No doubt there are other ways to cut people in on the action--the overall economy is, after all, the best and really only guarantor of well-being--and yet it can only help to offer people something immediately tangible (like a check) as well as other things more generally desirable.   One of the strengths of Social Security, for example, is that there'a an actual "account" with one's own name on it.  And while economists might insist that it's all an accounting fiction, Social Security is pretty darn popular.  In that spirit, one can imagine that neo-Connally-esque profit sharing would be similarly popular. 


We’ve been thinking hard about money in plitics, as well as economic growth and politics, and also the future wealth-effect of politics.   In this spirit, let's examine all legal ways to include people in the wealth-generating impact of good policy.  As a way of encouraging them to vote for politicians who advance said positive policies. 


We will be spending the rest of this series pondering this question: How to align votes with good policies?   In fact, in installment six we’ve already considered one mechanism, which is pledges.  That is, if a politicians pledges a good policy, that’s good, and if the voter pledges ti support the politician who commits to good policy, that’s even better.   Because now we’re starting to see the basis of a contract. Not necessarily a legal contract, but rather, a moral and political contract.  


A harmonic convergence of people and politicians, for the sake of the overall economic pie.  There’s big money here.