How does this question asked of Donald Trump about H-1B visas make sense?

John Dickerson asked this to Donald Trump on Face the Nation yesterday:

TRUMP: At the debate, you talked about H-1B visas. You said: "It's something I, frankly, use, and I shouldn't be allowed to use it." When you have talked about the bankruptcy laws, you talk about how you took advantage of them. When you and I talked about your taxes, you say you try and pay as little as possible. If you are president, why would anybody follow the laws that you put in place if they knew you were taking advantage of those laws when you were in the private sector?

(That's from the transcript. You can see it in the middle of this video, starting at 5:18 — click the slider at the bottom of the video, a little more than half of the way through the interview.)

I asked John Dickerson about this on Facebook (he hasn't responded to me) (UPDATE: see the end of this post for his response):

Trump claims that he followed the laws, and used them to his business advantage; he hasn't said he violated any laws. How is that inconsistent with the assumption that people will "follow the laws that [he] put[s] in place" when he's president? Presumably he'd to try to improve the laws, leading to better results when businesspeople followed them in a way that worked to their advantage (as businesspeople can always be expected to do).

My mom, Ann Althouse, made the same point (and we hadn't discussed this with each other or seen each other's comments when we separately pointed this out):

What's Dickerson trying to say, that taxpayers should pay more than they owe? That businesspersons shouldn't understand the law, see what's to their advantage, and structure their transactions efficiently? Why wouldn't voters trust a businessperson who followed the law and figured out how to use it? Don't we want someone knowledgeable and competent? We're supposed to prefer someone who's so intimidated by law that he wastes money? Is Dickerson a fool or is he just trying to manipulate viewers into thinking ill of Trump?

Here was Trump's response, with an odd interjection from Dickerson:

TRUMP: Because I know the game better than anybody, because I have been on the other side. I have built one of the greatest companies. I did a filing which shows one of the great companies, great assets, very little debt, tremendous cash flow, some of the greatest assets in the world. But let me just tell you, I use the bankruptcy laws just like other very successful people. I don't [want] to use their names, but I could name 10 people right now, the biggest people in all of business. We do it. It's the game we play. We use the laws of the land.

DICKERSON: But why wouldn't people keep playing . . .

TRUMP: We use it. And that's the way we play the game. Wait a minute. As far as the visas are concerned, I'm not doing anything wrong. I think the -- those visas shouldn't be allowed. But they are allowed. They are part of the fabric of what you do. So, I'll use it. I mean, I'm a businessman. Now that I have turned politician -- I hate to say that, almost, about myself -- but now that I'm running for office, I know the game better than anybody. I'm the one that can fix all of this stuff. But when you start talking about -- I never went bankrupt. I never went bankrupt. You understand I never went bankrupt. But you take a look at the business leaders. Every once in a while -- I have 500 companies. I have so many different companies. And a very few, I will take advantage of -- frankly, by using the laws of the land, as every other major businessperson does.

My mom points out that Dickerson's follow-up was "weirdly obtuse":

"But why wouldn't people keep playing?" There's nothing wrong with "playing." The key is to put the right rules and regulations in place and then to enforce them. If you don't like what people are doing when they are following the law, then something's wrong with the law, not with the people who are finding effective ways to compete.

I don't see Trump as fomenting disrespect for the law. It's more the opposite. The law matters. Get it right. People using the law to their selfish advantage may reveal what's wrong with the law, and Trump is offering his services, as an expert player, in seeing and fixing the flaws so that the game produces a result that is in the general interest of the American people. There may be reasons not to trust him (and there are surely reasons to mistrust those who've played the law game from positions in government), but his use of the law isn't a good reason.

My mom notes that she's in the legal field and she found Dickerson's question "very weird." I'm also in the legal field and had the same reaction. If a journalist as prominent as Dickerson, the host of one of the Sunday morning political shows, saw fit to ask this on the air, how much similar confusion about law, policy, and business is out there among the general public?

UPDATE: John Dickerson has responded to my question on Facebook:

Good question. What I was trying to get at is where is he on the question of gaming the laws and abiding by them. Does he think laws exist to be maneuvered around and taken advantage of? In the case of companies like Apple and others he makes a moral objection to their taking advantage of tax and trade laws. But in his own business he says he plays every game he can even when he acknowledges (as he did with H1B visas) that it's a bad thing to do. (He's under investigation both for his use H1B visas and his tax filings) So what I was trying to get at is whether he expects everyone to game the system when he's trying to make the system better or whether he expected a different standard than the one he uses once he's on the other side-- since his view of standards is a moving target. (For example, he campaigns against foreign workers taking jobs but hires them; campaigns against foreign made goods but makes them). So where's' the line? How does he draw it? How will he draw those lines when he's president. He offered a lot of that in his answer. The point is to excavate his reasoning. The reason I asked about his event with Dr. Carson is that it's part of the same inquiry: what guides your behavior? Is politics a system to be gamed? Seems like a lot of people are upset about politics being turned into a game this election cycle. As the candidate who has achieved a special status because voters think he tells unique truths, how can he say something seemingly true one minute and then say oh that wasn't true it was just politics the next minute. There's no law against doing that. He's just playing the game. But I keep hearing that people are tired of the game playing. Also, it seems like a pretty shifting set of standards-- and campaigns are about whether what you're saying will still be true once you're elected. So why, if his standards are shifting now, should people not think he'll shift his standards when he gets into office. Nothing will be there to bind him in many cases but his personal set of standards. Thanks for asking!

As I said in reply to Dickerson on Facebook: He keeps referring to Trump "gaming the laws," "maneuver[ing]," "tak[ing] advantage of" the laws, etc. Those terms might sound vaguely nefarious, but the bottom line is that they all seem to refer to a businessperson following the law. If the consequences of businesspeople following the law are bad, then the law should be changed. So I fail to see a contradiction, or even a tension, between what Trump says about what he's done as a businessperson and his stance that he'd improve the laws and the economy as president. After all, his argument is not that he expects businesses to suddenly act in the country's best interests out of the goodness of their hearts. His argument is that he knows firsthand, from decades of experience, what it's like to do business under a lot of laws and regulations, and he has ideas for improving those laws to get better economic results. That's all under the assumption that people who run successful businesses, who are advised by lawyers and financial advisors, will always work hard to do whatever they think will advantage themselves under the existing law.

Matthew Yglesias explains how excessive regulatory obstacles to starting a business ...

... give an unfair advantage to people like him.

The "acting alone" fallacy

President Obama said this in his 2nd inaugural address:

For the American people can no more meet the demands of today's world by acting alone than American soldiers could have met the forces of fascism or communism with muskets and militias. No single person can train all the math and science teachers we'll need to equip our children for the future, or build the roads and networks and research labs that will bring new jobs and businesses to our shores. Now, more than ever, we must do these things together.

I object to this move, which seems to have become popular with Democrats in the past couple years, of equating "doing things together" with government. To suggest that anyone who'd like to see less heavy-handed government regulation thinks one person can do everything alone is a straw-man argument. It indicates a lack of understanding of how the private-sector economy works and how libertarians or conservatives actually think about economics.

As Matt Welch pointed out in his critique of the speech, making and selling an object as basic as a pencil is so complex that it takes many specialists. No one person has the knowledge to accomplish that seemingly simple task; that's how decentralized information is in our society. With a truly complex product, like a computer or a movie or a building, the need for people to work together is even greater still.

The private sector isn't about everyone being secluded and isolated from each other; it involves many people working together. And government regulation often rules out the options people would otherwise want to pursue that would let them work together more.

The idea that you're "acting alone" unless you're being directed by the government strikes me as dehumanizing and almost abusive. So I resist the scare tactic of presenting government as the alternative to being "alone."

Who supports a carbon tax?

A piece in the New Yorker makes the case for a tax on carbon emissions.

That's not very surprising. What's more surprising is that, as the article points out, over 100 big corporations — including ExxonMobil and Shell — have expressed support it. In contrast, the White House spokesperson, Jay Carney, recently said: "We would never propose a carbon tax, and have no intention of proposing one."

Businesses help people

The Sandy experience has reminded me of this Thomas Sowell column.

People keep talking about the role of government in helping people. (On the day the cyclone hit New York City, the New York Times ran an editorial with the headline: "A Big Storm Requires Big Government.") That's a valid point, but a lot of the credit for helping people recover from the storm should go to businesses. It's all too easy to implicitly exclude businesses from our mental category of those who help people. (Why? Because they're driven by profits? Is that worse than being driven by votes?)

I can think of many ways that businesses helped me get through the past 5 days, when the power was out in my apartment and my workplace. (It came back in my apartment earlier today.) I just had breakfast at a diner in Manhattan, which seems like an amazing experience now even though the menu was limited. I also went shopping at Whole Foods to replace some of the food I had to throw away when my power went out. During the blackout, I bought much-needed food and supplies at stores around town; some of these stores struggled to open as soon as possible after the storm even though their power was still out. My credit-card companies emailed me to offer various kinds of assistance. Cafes, stores, and banks let people linger to charge their phones and computers, allowing them to stay in touch with friends and family who could offer further help.

Government has been helpful too — the police being the main visible example. Government may have also helped me in unseen ways, and the same could be said of businesses.





(Photos were taken by me yesterday. The first is La Lanterna Caffe; the second is Mamoun's Falafel in Greenwich Village.)

3 responses to Obama's "You didn't build that"

Charles Krauthammer:

The ultimate Obama fallacy . . . is the conceit that belief in the value of infrastructure — and willingness to invest in its creation and maintenance — is what divides liberals from conservatives.

. . . Infrastructure is not a liberal idea, nor is it particularly new. The Via Appia was built 2,300 years ago. The Romans built aqueducts, too. And sewers. Since forever, infrastructure has been consensually understood to be a core function of government.

The argument between left and right is about what you do beyond infrastructure.

Will Wilkinson:

Mr Obama's observation that it takes a village to make a fortune is in one respect irrelevant and in another offensive. It is irrelevant because the class of people Mr Obama wants to "give back" has already paid most of the tab, and continues to pay most of the tab, for the tax-financed public goods upon which they, and the rest of us, so crucially depend. At the federal level, the top 10% percent of the distribution paid over 70% of income taxes in 2009 . . . . Mr Obama's in-it-together point is mildly offensive in context because it is used to imply that top-earners who resist paying an even larger portion of America's tab do so only because they are in the grip of an absurd myth of self-reliance.

Together with a bit of simple democratic mathematics, the facts about the portion of tax revenue contributed by the rich plausibly suggest that they pay more than their fair share for the infrastructure of capitalism. The rich have money, which can buy political influence. But the middle class have votes, which in a democracy is influence. So it's not surprising that the public goods upon which the middle class equally depends are financed disproportionately by the wealthy. Of course, no one ever got elected by identifying middle-income voters as the free-riding class. Asking the minority who already finances rather more than most government expenditure to "give something back", as if it were currently skating by unfairly on the more open-handed spirit of the less privileged, is plain, old-fashioned demagoguery. . . .

Anyway, it's not the infrastructure of American capitalism that's busting the budget, is it? Our fiscal strain is largely a matter of buying health-care for old people. The health and longevity of America's elderly is an admirable and humane goal, but it's not part of the vital infrastructure of business.

None of this is to say that the top tax rate should not rise. There may be other, better, reasons to stick it to the rich. . . . But Mr Obama's notion that the rich get more out of our common institutions than they put in is questionable, to say the least. And his suggestion that opposition to higher top income-tax rates could only be based on by-the-bootstraps social atomism is a silly bit of bad faith.

(I made a similar point in response to Elizabeth Warren.)

Ann Althouse (my mom):

You could say if you listen sympathetically to Obama saying the quote, you could understand the quote in a way that's not ridiculous and disturbingly left-wing. And if you get that far, then Romney's use of it could be understood as "a false attack." . . . But why would Romney not use that quote for all it's worth? Since when does decency/integrity/honesty require that a politician interpret his opponent's words in a sympathetic light and give him the benefit of the doubt? The quote is a gift to Romney and he's accepted it.

It's like Romney saying "Corporations are people." That's a gift to Obama's people and they are using it. They don't feel any ethical compulsion to stop and say we understand what he really meant. I mean, I love the way the new Obama ad — trying to get us to understand — includes this additional part of the context: "We succeed because of our individual initiative, but also because we do things together."

When I heard that the first time, I said: Yeah, corporations are people. We do things together. Sometimes when people succeed doing things together, they form a corporation as a way of working together. But you'll never hear Obama say that. He will use the "Corporations are people" line for full mockery effect, never admitting that he knows why it makes sense and why it really isn't anything we disagree about.

"Are we to believe that if Mitt Romney had simply been a nicer guy, it would have worked out differently?"

Rich Lowry deflates the attacks on Romney's tenure at the investment firm Bain Capital. He says:

This wasn’t so much “vulture capitalism,” in the words of the always-subtle Rick Perry, as “turnaround capitalism.”

Lowry notes that when Newt Gingrich makes these attacks, he's "speaking with the purity of someone whose own business model depended on being a peculiarly well-compensated historian."

"Stop Telling Women To Do Startups"

That's the headline of this piece, in which Penelope Trunk (who's founded three startups) argues:

If you are worried that women don’t feel capable of doing whatever they want, you can stop worrying. Women outperform men in school at such a huge rate that it’s easier to get into college as a male than a female. And women take that to the bank by earning more than men in their 20s. Women would probably continue out-earning men except that when men and women have kids, women choose to downshift way more often than men do.

Clearly, women have a choice. There are plenty of opportunities out there for women if the women would just continue working in their 30s the same way they did in their 20s. So clearly, women don’t want to. Women are choosing children over startups.

So it seems that women are making decisions for themselves just fine. It’s just that they are not the decisions that men make. This should not surprise anyone. Men and women are different. So what?

On top of that there is evidence that the members of the VC community go out of their way to attract women. Of course, this makes sense. VCs look for underserved markets. Women are likely to address different markets than men, and since there are so few women founders compared to men founders, it’s likely that women are addressing an underserved market. So VCs want to talk to women.

So VCs are definitely giving women a fair shake, it’s just that women don’t pitch. And women are definitely feeling that they can do whatever they want, it’s just that women aren’t choosing to create tech startups. . . .

I have an idea: How about giving some respect to women who grew up in the 1970s, with feminist revolution baby boomer moms, and are still brave enough to say “I don’t want to work full time. I can work full time. But I don’t want to.“

The whole thing is worth reading. Of course, the real point is much broader than just startups and venture capital.

Mickey Kaus picks apart President Obama's call for "American business leaders to understand that their obligations don’t just end with their shareholders."

Here's what Obama said in his recent speech in Kansas:

[R]ebuilding this economy based on fair play, a fair shot, and a fair share will require all of us to see the stake we have in each other’s success. And it will require all of us to take some responsibility to that success. . . .

[I]t will require American business leaders to understand that their obligations don’t just end with their shareholders. Andy Grove, the former CEO of Intel put it best: “There’s another obligation I feel personally,” he said, “given that everything I’ve achieved in my career and a lot of what Intel has achieved…were made possible by a climate of democracy, an economic climate and investment climate provided by…the United States.”

This broader obligation can take different forms. At a time when the cost of hiring workers in China is rising rapidly, it should mean more CEOs deciding that it’s time to bring jobs back to the United States – not just because it’s good for business, but because it’s good for the country that made their business and their personal success possible.

Kaus's whole post on that section of Obama's speech is worth reading. He makes several points, but here's the main one:

How likely is this to happen on the scale that is necessary? Something close to zero. It’s one thing to rely on the generosity of rich people when it comes to funding new hospital wings and small magazines. It’s another when it comes to the basic success of the American economy—which (reminder) has been reliably achieved over the centuries because we have relied on sturdy, universal drive of self interest.

Kaus's "(reminder)" is a devastating rebuttal to Obama's economic worldview. Obama doesn't seem to understand how markets can do good through lots of people acting in their self interest, so he feels it must be the obligation either of charitable individuals or benevolent government to make sure the system is "fair." Of course, as Kaus says, charity can be very effective. But the president isn't going to inspire people to be more charitable than they already are. The only way any president can increase the level of charity is through economic policies that cause people to have more money to give away.

A template for the mental-health industry

Alex Knepper writes (on Facebook):

You can't be a self-actualized human being while afflicted with crippling boredom. It's affecting millions -- you are not alone. And we know that there are chemicals in the brain that relate to boredom, so, since it's chemically-caused, you can't be held responsible for it. If you want to reverse this disorder, you may benefit from our very expensive drug. Make sure to see an expensive Mental Health Advocate to see how you can pay to get this drug and correct your disease of boredom.

(Previously.)

Why it's better to fund solar energy with venture capital than with government loans

A compelling argument by Megan McArdle.

The whole post is worth reading, but here's a sample:

A number of people have claimed that the government had to make these loans because they're "too risky" or "too big" for the private sector, forcing the government to act as a VC firm. That riskiness means that yes, a non-insubstantial number of the loans will fail.

But this doesn't really make any sense. The private sector doesn't have any trouble dealing with risky ventures; it simply prices the capital accordingly, demanding high interest rates, or a larger equity chunk, in exchange for money. . . .

[A]t the company level, there's no difference between an optimal market outcome, and an optimal social outcome (from the DOE's point of view); both investors and society benefit if more solar cells are sold. If the solar cells are unlikely to be sold to many people, than the loan guarantee is not a good idea — it will not foster much environmental benefit. If the solar cells are likely to be sold to many people, than the loan guarantee should not be needed; private investors should be easily found to back the manufacturing.

"How Did Solyndra Spend All That Money?"

Megan McArdle asks the question, and she gives some answers from a financially savvy friend of hers and also from a Solyndra insider.

McArdle concludes:

I don't think this is going to end up being a story about corruption. I think it's going to end up being a story about bad decision making: at Solyndra, among its investors, and in the Obama administration. People took large bets with low expected values, because the alternative was admitting that the money they'd already spent was gone, and not coming back. They doubled down, just like some chump who lost his stake at the Vegas blackjack tables.

This does happen in the private market, of course. The difference is, when Argonaut Ventures takes a flyer on a longshot, they're not doing so with my money. The administration was supposed to have the economic dream team. Couldn't they have spared a moment to sit down with the folks at DOE and explain the concept of sunk costs?

Solyndra probed

The Wall Street Journal reports:

The political scandal over the failure of Solyndra, the politically connected solar-panel maker, just got a lot more interesting. The FBI raided the company's Fremont, California offices yesterday and executed a search warrant.

Congress has been investigating the company, which received a $535 million government loan guarantee in March 2009 and announced August 31 that it is filing for bankruptcy. Yesterday's FBI raid is the first hint of a larger government probe, which is being conducted in cooperation with the Department of Energy's Inspector General. . . .

Solyndra was once a leading light, if you will, of the Obama Administration's signature "green jobs" dreams. The Energy Department signed off on the loan guarantee under a George W. Bush-era law, and the Federal Financing Bank, a unit of the Treasury Department, also provided a loan with a 1.025% quarterly interest rate. A parade of Administration officials praised the investment, including President Obama, who said in a speech last year at the company's Fremont headquarters that "companies like Solyndra are leading the way toward a brighter and more prosperous future."

Solyndra never did turn a profit and laid off employees in November. But in February the company renegotiated its loan guarantee—with a hitch. Under the new agreement, Solyndra's investors would loan the company $75 million but be first in line on repayment in the event of bankruptcy, in front of taxpayers.

WSJ gives the Obama administration's spin:

Speaking about the bankruptcy earlier this week, White House spokesman Jay Carney said: "There are no guarantees in the business world about success and failure. That is just the way business works, and everyone recognizes that." He added that "you cannot measure the success based on one company or the other."

WSJ responds:

That is all true enough, but then most businesses don't stick taxpayers with hundreds of millions of dollars in potential losses when they fail. The problem with politically directed investment isn't merely that bureaucrats are betting with someone else's money on industries they may not understand. Such investment also invites political favoritism for the powerful few at the expense of millions of middle-class taxpayers. Americans need to know the full story of who made or influenced the decision to give Solyndra its loan guarantee, and if political pressure was brought to bear.

My mom comments on the raid:

Political connections can come back to bite you, when the politicians you were connected to need to gnaw through that connection and run like hell.

Walgreens price-gouging bottled water in anticipation of Hurricane Irene

This afternoon, a Walgreens in Manhattan was selling small bottles of water for $5.49 each:



(Photo by me.)

IN THE COMMENTS: We discuss whether price-gouging is good or bad.