Tag Archives: Business

It’s not just banks anymore. Democrats want to break up all kinds of big business.

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Sen. Charles E. Schumer (D-N.Y.) speaks on Capitol Hill on March 2, 2015. (Joshua Roberts/Reuters)

Democrats have a new message for American workers: Giant corporations are holding back the economy by cutting back on investment and hiring, and the party is going to put a stop to it.

The pitch for stricter enforcement of antitrust laws — preventing firms from getting too big and penalizing or dissolving those that are using their size to shut out rivals  — is full of lines that will come naturally to Democratic candidates on the stump. Free competition is a basic principle of American capitalism that could appeal to small business and independent voters, while a forceful attack on corporations, a familiar villain, might animate the party’s base.

And the message is part of a broader economic agenda Democrats are announcing Monday as they lay out a campaign platform for next year’s midterm elections.

But while U.S. corporations are undoubtedly getting bigger and more powerful, there is no consensus among economists about how this trend is affecting ordinary households, and no clear answer to whether breaking them up would relieve the economic frustration that contributed to President Trump’s victory in November.

For about a century, federal regulators have worked to prevent large firms from gaining too much power. When only a few firms control one industry, they can behave like monopolies, which cut down production to drive up prices. Not only do consumers pay more, but as the pace slows down in offices and factories, workers have more trouble finding jobs.

This strategy does not succeed when firms have more competition, because their rivals will simply offer more of the same product at a reduced price.

Recently, though, more corporations have been consolidating their control over more sectors of the economy, and critics have argued that regulators have been looking the other way. Under the Democratic proposal, regulators would enforce broader and stricter standards for companies seeking mergers that could reduce competition in their industry.

For the biggest deals, the merging corporations’ lawyers would have to persuade a judge that merging would be beneficial. Democrats also propose establishing a new federal watchdog to report on large firms that are using their size to keep competitors out of the market.

Those reports would be referred to regulators at the Federal Trade Commission and the Department of Justice. The white paper identifies beer, food, cable, airlines and eyeglasses as products that might have become more expensive for ordinary consumers because the industries are controlled by a few big firms.

Economists have assembled compelling evidence that mergers in particular industries have caused prices to rise. In 2008, for example, the companies that brew Miller Lite and Coors Lite in the United States merged, and prices promptly soared from around $9.75 to around $10.40 for a 12-pack, economists found. Meanwhile, other popular beers, such as Corona Extra and Heineken, became cheaper.

Other studies have reached similar conclusions in sectors outside of beer — gasolinedishwashers and more. Reviewing the evidence overall, John Kwoka, an economist at Northeastern University, has argued that regulators have been too lenient, failing to protect consumers from exploitation by major firms.

Based on these case-by-case studies of particular firms, industries and products, it is difficult to say whether a lack of competition is a serious issue for the economy overall, and there is not much research yet on how corporate consolidation has affected consumers and workers in general.

Dean Baker, an economist and a founder of the liberal Center for Economic and Policy Research, pointed out that preventing monopolies from forming — that is, antitrust enforcement — is a “classic populist theme,” one that animated the American left a century ago. Yet he argued that today, the economy has different problems, such as the inequality created by the financial sector.

“I think antitrust is part of the story, but not the major part,” Baker said in an interview with The Washington Post earlier this year.

For decades, the consensus among economists has favored a laissez-faire approach to corporate concentration. In the past few years, however, consolidation has reached historically high levels, and some researchers have begun to worry.

Just last week, the National Bureau of Economic Research published a study by a pair of economists at New York University who argued that declining competition had allowed corporations to invest less in plants, equipment and research. When corporations have fewer competitors, looking for ways to operate more efficiently or producing goods and services of better quality might not be worth the effort.

And when corporations have less competition, they can make more money by selling fewer products at higher prices. They can invest less in their facilities as a result.

Lackluster corporate investment is an important reason that economic expansion has been frustratingly slow for years. When corporations spend less, their suppliers can hire fewer people as well. A lack of competition “explains a big chunk of why investment is low in the U.S. today,” Thomas Philippon, one of the authors of the new paper, told The Washington Post.

“It’s not just investment in plant and equipment. It hangs over all forms of expansion in businesses,” said Robert Hall, an economist at Stanford University. “Hiring workers is subject to the same drag.”

The issue is still under investigation, but Hall pointed out that with fewer and fewer firms in charge of American industries, the models that experts have long relied on for understanding and making predictions about the U.S. economy need another look. “The formulas we used to rely on that basically assumed competition are more and more suspect,” he said.

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How Over-Commitment Builds Brand Leaders

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How Over-Commitment Builds Brand Leaders

Every day, brand owners are pitched opportunities to take their brand in a ‘new’ direction or to stay the course—by colleagues, by their agencies, because of the actions of competitors or by delegations of customers or suppliers. It can be, as many a marketing manager has told me, bewildering. And many struggle to balance the strategic need to move the brand forward over the longer term with the plethora of more immediate demands for response or action.

At a time when the role of running a brand is beset with challenges, how should brand teams make decisive moves? Perhaps by choosing to always think of themselves as challengers, regardless of their position in the market. And by acting in that manner to actively address what is challenging them.

There are many wonderful ideas in Adam Morgan’s classic book about being a successful challenger brand, Eating the Big Fish—but one of my favorites is the concept of over-commitment; of being willing to see past what others simply accept and choosing instead to throw an uncommon level of resource at an idea that will allow your brand to stand out.

That, as Morgan points out, comes down to being able to boldly and insightfully translate strategic intent into behaviors; behaviors that separate those who say they do from those who seriously seek the prize.

Marketers talk (a lot) about the ideas they are committed to—storytelling, experiences, digital transformation, relationships, purpose … And they are quick to tell themselves and each other that they are doing a good job of bringing these things to market. But the numbers tell a different story. One piece of research I saw recently said that while 85% of brands think they are delivering great experiences, only 15% of customers think they are receiving them.

So there’s a significant gap between what brands believe they have committed to and what customers feel they have committed to. I’ve seen similar discrepancies around other things that brands hold down.

(Before you say it, I know we all see stats every day and that, to put it politely, interpretations vary. But I’m not talking about the numbers themselves so much as situations where brands see themselves achieving one thing and customers don’t, because that’s where the opportunities lie to apply Morgan’s thinking.)

It’s easy to somehow blame the customer when things like this are pointed out; to say that one group of consumers or another are difficult to please or that they are disloyal or disinterested. But I suspect the key reason lies elsewhere. Marketers are distracted. They are so busy wanting to be good marketers that they are trying to juggle all the different colored balls as well as everyone around them, instead of doing what Morgan has suggested: doing one thing to an extraordinary degree.

Two of the biggest obstacles to success, in my opinion, are group-think and, in Hilton Barbour’s words, ‘shiny bright object hunting’. Companies are so busy trying to stay ‘current’ in these times of endless change and so determined to do so in a risk-averse way that they have devolved to what I refer to ‘frantic compliance’: working faster and faster to be more like, sound more like, work more like and brand more like the companies around them.

But thinking like a challenger requires rethinking not just what your brand does, but why. It takes discipline to step back and reflect on two disturbingly simple thoughts: what short-fall do we want to be famous for addressing; and what will it take for us to succeed at that (when so many others haven’t)? It’s never going to be easy to put all the other juggling balls down and just focus on one. That level of clarity and reductionism is going to make everyone nervous because it looks so risky; it feels like an “all-in” strategy.

Over-commitment is much more calculated than that of course. It stems from seeing—really seeing—what is missing in a market and choosing to back yourself to deliver that in ways that no-one else has. To go back to that research earlier about the experience gap, while every marketer today may be talking about experiences (in fact, I suggested recently this particular concept was quickly becoming the new sugar), one brand could challenge itself to close that gap in ways others wouldn’t dare. Same goes for storytelling, relationships, purpose … the opportunities are there for brands to over-index in a particular competitive aspect if they are prepared to focus on that and ask themselves the hard questions needed to make that happen.

But how? How does a brand go about deciding to over-commit? Camelia Ghiurca makes some great suggestions in a piece on winning strategies.

1. Go Binary – simplify the choice set for your brand and for consumers by making the market about ‘them’ and ‘us’. As Ghiurca points out, “most brand leaders normally operate with a “just enough” strategy. In order to have a chance, [challenger] brands must overcommit and, of course, over-perform.” To do that, they must first over-simplify everything around them. So they must reduce everything that’s being presented to them (particularly internally) to the resolution of a singular issue in a way that everyone else won’t or can’t.

She then quotes Stephen King to define what it takes for a brand to succeed:

2. Be Coherent (Not Compliant). In other words, make sure that everything you do reports to an idea (but not necessarily a creative expression) that customers come to rely on you to deliver in exceptional ways. And, by implication, commit to making that a reality as a business.

3. Remain Unique—by staying ahead of others as they seek to close the gap. Over-commitment requires over-planning. It’s about knowing not just what you have committed to, but what you will need to commit to going forward in order to stay ahead of the pack. Too many brands that instigate something interesting don’t follow up on it fast enough or dramatically enough to continue taking the rest of the market by surprise.

4. Be Immediate And Salient For Your Customers. Judge the success of what you have over-committed to by how deeply they choose to commit to it.

Some will say this idea is reminiscent of the once-fashionable “one big idea”. It is—to a point. Except that in order to work, over-commitment is less about beating a single brand message drum and much more focused on solving a problem that consumers care about. It plays out less in what customers see and much more in what they receive and why that appeals to what’s important to them.

Think about everything you’re trying to be as a business right now; everything you’ve committed to doing, all the ways that your budget is pulled. What would happen if you put most of that to one side and focused instead on doing one thing, better, faster, stronger, more inspiringly and more profitably than anyone else? How good could you be if you wanted that to happen badly enough? It’s not the answer for everyone of course, because then it just becomes the latest fashionable behavior. But for some—wrestling to find a position and a voice for themselves today—it’s an option well worth considering.

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The IMF cuts its U.S. growth forecast, citing Trump’s unfulfilled promises

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(AP Photo/Andy Wong, File)

The International Monetary Fund has decreased its estimate of how fast the U.S. economy will grow in coming years, a change the organization said reflects doubts on President Trump’s ability to deliver on his planned agenda of tax cuts and new infrastructure spending.

The IMF now projects the U.S. economy will grow at a rate of 2.1 percent in both 2017 and 2018, it said in its July update to the World Economic Outlook. In its previous estimate issued in April, the organization predicted the U.S. economy would grow at 2.3. percent in 2017 and 2.5 percent in 2018.

“Over the next two years, U.S. growth should remain above its longer-run potential growth rate. But we have reduced our forecasts for both 2017 and 2018 to 2.1 percent because near-term U.S. fiscal policy looks less likely to be expansionary than we believed in April,” wrote Maurice Obstfeld, the IMF’s chief economist, in an accompanying blog.

The Trump administration came into office six months ago with an ambitious plan to use tax cuts and other measures to boost economic growth to 3 percent or 4 percent, rates not seen in years. But while the administration has moved quickly to slash regulations on businesses, its plans for tax cuts have been bogged down by clashes in Congress and the administration over healthcare and other issues.

The IMF said U.S. economic growth could pick up if the administration implements measures like tax reform — yet it could also fall if Trump’s budget, which consolidates many parts of the government as part of an overall spending reduction, is approved.

The fund also cautioned that government measures in the United States and Britain’s post-Brexit negotiations could end up worsening the current environment of policy uncertainty, harming private investment and weakening growth. It warned that the failure to make growth inclusive could lead to the further spread of protectionism, which could disrupt global supply chains and lower growth.

Even so, the fund’s report gave a positive picture of a strengthening global economy, buoyed by lower oil prices and a rebound in trade.

The International Monetary Fund, an organization charged with ensuring global financial stability, provides some of the most detailed and closely watched estimates of the progress of economies around the world.

Globally, the IMF raised its forecasts for 2016 slightly from 3.1 percent to 3.2 percent, reflecting stronger growth in Iran and India.

It did not alter its forecasts for global growth in the next few years, which remain at 3.5 percent in 2017 and 3.6 percent in 2018. But it said that the unchanged projections masked “somewhat different contributions at the country level” – including lower growth forecasts for the United States and United Kingdom, and higher growth expectations for France, Germany, Italy, Spain, Japan and Canada.

The IMF also revised up China’s growth projections, saying that it expected banks to continue to lend to support activity so that authorities could meet a highly publicized target of doubling China’s economy by 2020. Yet it said that such lending could increase the risks to China’s economy in the medium term, as debt continues to build up.

The fund also said that steady interest rate hikes in the United States could post a risk to growth by making lending more difficult. Higher interest rates, which mean investors get a better return on their investment, could also trigger a flow of capital out of emerging economies into the United States, which could push up the U.S. dollar and strain emerging economies.

The U.S. Federal Reserve is in the process of gradually raising U.S. interest rates to a more normal level after cutting them to stimulate the economy after the recession. In June, the Fed raised its benchmark interest rate by a quarter-point, the third such increase in six months.

Fed officials will meet again this week to discuss further rate hikes, but most market observers expect the Fed to delay any further rate increases until the end of this year.

The IMF said that, while a welcome change from the financial crisis, global growth rates are still lower than those in years past, due to persistent economic challenges like aging populations, low productivity growth and weak investment in many countries.

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Adults Can Do Whatever They Want

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Here’s a convo my 5 y/o son and I had the other day:

5 y/o: “What are you eating over there???”

Me: “A chocolate bar – mmm mmm it’s tasty.”

5 y/o: “How come you can have a chocolate bar right now and I can’t?”

Me: “Because I’m an adult – and adults can do whatever they want.”

I probably should have said “Because you’re still eating your dinner” or “you can have one later” or “here’s a little piece of it if you pay attention to the lesson I’m about to teach you,” but instead I played the adult card. And I ain’t gonna lie – it felt good 🙂

Also, scary.

Think about just how FREE all of us really are right now? And how much damage/trouble/awesomeness we can get into at any point of our lives now that we’re on our own? Don’t want to do the dishes? Forgettabout it! Want to sit on your ass and gorge yourself of ice cream and Netflix? Go for it. Want to call in sick and play video games all day long? I get controller #1!

Sure we still have bosses and spouses and police officers keeping us all in check (“I swear officer, I thought it was Halloween! I wasn’t trying to take all the bank’s cash, I was trick-or-treating!”), but at the end of the day we really do get to do whatever the hell we please.

And that’s exactly where the scary part comes in. Because unfortunately, there’s also this thing called “consequences.”

Webster Dictionary defines it as…. Pshh. Y’all now what consequences are! (Why do writers always go down that route btw? As if we’re all so dumb we literally need to go back a couple decades and bring out the dictionary??)

Here was the rest of the convo w/ my 5 y/o:

5 y/o: “But daaaaaaad, that’s not fair!”

Me: “Well, there’s also these things called “consequences” when you do things as an adult. For example, if I eat this chocolate bar I may get fat or get a toothache or upset your mother for taking the last one from the box (psst – don’t tell her!). So while it is cool we get to do whatever we want, we also have to make sure we’re okay with any bad stuff it can bring, especially if it affects someone around us.”

5 y/o:”What does affect mean?”

Me: “Look it up in the dictionary.”

(Just kidding… although this is the right way to bring up a dictionary ;))

Me: “It means everything you do can change something else. If you go and hit your brother right now, he’s going to cry and then you’re going to your room for a time out. Just like if I were to hit our neighbor I’d probably be hauled off somewhere too – called jail. So even if you want to do something sometimes, it’s good to think twice about it unless you really like getting into trouble.”

5 y/o: “Ahh… I can’t wait until I become an adult.”

Me: “So you can eat chocolate bars?”

5 y/o: “No, so I can punch my brother!”


I started reading this new book called 10% Entrepreneur by Patrick McGinnis, and it reminds me a lot of this adult stuff. Simply for the fact that it helps contain us more, despite our brains thinking other avenues could be better for us.

For example, everyone thinks self-employment is all rainbows and freedom and full of cash money millionaires. And while that’s partially true, there’s also a whole other dark side to the game when things are anything but. I can’t tell you the times I’ve considered shutting it all down or getting a new job or not knowing if I’ll be able to support my entire family from this crazy thing called “a blog.” Yes it’s fun and yes there are advantages up the ying-yang, and technically you don’t ever have to work if you don’t want to and just take off traipsing around the world, but at the end of the day it all rides on your shoulders and your shoulders only because you’re The Boss. It’s a roller coaster of emotions, and you’re not wearing any seat belts.

Without self – and emotional – control, you’re doomed.

Which is the basis of the 10% entrepreneur idea… I’ve only read the first handful of pages so far, but the notion is that it allows you to still dabble in making money on the side and starting your own hustle, but with only 10% of the effects. You’re still tied to your day job and the structure, but you also get to reap the rewards of putting yourself out there. And I’m going out on a limb and will say that the amount of *positive* return on that effort will likely be much greater than 10% too – making the deal even sweeter.

As the tagline of the book goes: live your startup dream without quitting your day job. Check it out if you’ve always wanted to dip your toes into business – it could be a good solution for ya!

10 percent entrepreneur

The 10% Entrepreneur: Live Your Startup Dream Without Quitting Your Day Job

With everything in life, there’s things we WANT or THINK we want to do, and then there’s the realities of what could happen if we act on them. Eating a chocolate bar won’t cause much of problem alone, but if you’ve already eaten 87 of them or have high sugar levels or they cost $7.00 a pop, then yeah – you’re probably going to have issues.

Just like if we sit on our asses watching TV all day or quit our jobs on a whim to start a new venture or anything else we desire in our lives. Moderation: good. Extremity: usually not so much.

We all need some structure in our lives, or at least a set of rules to follow – even if we make them ourselves. This is the basis of personal finance, after all.

  • Spend less than you make – RULE
  • Save/invest the difference – RULE (and an important one!)
  • Pay off your credit cards at the end of every month – RULE (this counts even if you’re a hacker gobbling up all the free points and miles and cash back, btw. The second you leave balances on those cards the benefits start diminishing!)
  • Protect your wealth/stuff/family with insurance – RULE. A boring rule, but a rule nonetheless
  • Always be learning and reading Budgets Are Sexy – RULE. The best rule 😉

Our lives are riddled with rules and for good measure. But that’s another benefit of being an adult – WE GET TO MAKE THE RULES NOW!! How sweet is that?? We may not enjoy following them all, but if you want the life of your dreams – both now and in the future – the rules are a necessary part of making it happen.

My son now goes around the house telling people whether they can, or cannot, do things based upon their adultness – even visitors. The lesson’s sunk in, but only if he knew how good he really has it. Free food, toys, and shelter, without any care or responsibility in the world?

I don’t know about you, but I’d gladly trade my chocolate bar for that!

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The Senate Health Care Bill Plays a Sinister Joke on the Poor

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Here is the most generous way I can explain the policy goal that Senate Republicans are trying to accomplish with their health care bill, some version of which may finally get a vote next week. By deeply cutting Medicaid while offering adults who live below or just above the poverty line subsidies to buy inexpensive, catastrophic insurance coverage, they are looking to move people off of a government program they see as financially unsustainable, while ensuring poorer households still have some financial protection in case of a medical calamity.

My guess is that this has to be the story most Republicans are telling themselves to justify getting behind $756 billion of Medicaid cuts over a decade. They’re not leaving needy adults out in the cold; they’re transitioning them into the private market.

Even if you believe that narrative, however, in practice it plays a bit like a practical joke on the poor. We were all reminded of that much this week when the Congressional Budget Office released its latest assessment of the GOP’s legislation. It found that by 2026, a single policyholder buying a benchmark plan—those are the insurance options intended to be affordable using one of the law’s tax credits—would face an astronomical $13,000 deductible, versus just $5,000 under Obamacare. “For plans providing some benefits before the deductible was met, such as a limited number of primary care visits or generic drug purchases, the deductible would be higher,” the CBO notes.

In fact, for many Americans who stand to lose Medicaid coverage under the Republican bill, these deductibles would be higher than their total annual income. In 2026, the CBO expects that someone living at 75 percent of the federal poverty line would earn $11,400, $1,600 short of the threshold they’d have to hit before their insurer started paying any medical bills. Keep in mind, they would also be expected to pay 2 percent of their income toward this insurance, which, unless they’re were involved in a car wreck or got cancer, they’d likely never use.

Some people might be comfy with that idea. There are conservative intellectuals who believe that insurance should only be used in true emergencies, and we’d be better off paying for most medical care out of pocket. But insurance that doesn’t kick in before you spend a year’s wages barely even qualifies as catastrophic coverage, given that it still leaves your finances an utter wreck.

Unfortunately, the CBO analysis only covers an incomplete version of the Senate bill. The office did not have enough time to score the effects of the Cruz amendment, which would allow insurers to sell unregulated insurance priced based on a customer’s health as long as they also offer coverage that abides by all of Obamacare’s rules. That proposal won’t do the poor any favors, though. If anything, it should drive the deductiles on regulated insurance even higher, since that market would largely consist of sicker individuals. However, lower-income customers would likely have to purchase those ACA-compliant plans whether they were healthy or not, because only Obamacare-style insurance would be eligible for subsidies.

It should also be said that, technically, the GOP bill bans the sort of insanely high-deductible plans the CBO thinks are required to make its numbers work. That’s because it caps out-of-pocket spending at just $10,900 in 2026. That mostly reflects the bill’s shoddy, incoherent craftsmanship, and fixing the internal contradiction will either require spending more money on insurance subsidies or upping the out-of-pocket limit.

But stay focused on the big picture: The GOP’s bill is only really designed to help families afford cheap coverage with high deductibles, which will be all but useless to adults on Medicaid today. The tax credits it offers families to buy private insurance are geared toward purchasing policies slightly less generous than the low-level bronze plans now available on Obamacare’s exchanges (today, subsidies are keyed to more comprehensive silver plans). As the health consultants at Manatt noted Thursday, the out-of-pocket costs attached to those plans are already wildly unaffordable for low-income families; a household of two currently on Medicaid would have to spend at least 60 percent on their income before their bronze coverage kicked in.

The GOP health plan would boot people off of Medicaid onto insurance they couldn’t afford to use. And again, that’s the nicest thing I can say about it.

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Anthony Scaramucci Might Be Trump’s Trumpiest Hire Yet

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AFP/Getty Images

Of course Anthony Scaramucci is joining the White House. If you look at his career on Wall Street, in media, and in public life, he checks just about every box that Trump would want for a communications director—in part because there’s a remarkable level of Trumpiness to him. He’s like Trump’s younger, shorter double, except he’s a bit of a globalist and he can speak in complete sentences.

But just how similar are they?

Two-word nickname beginning with the word “The”? Check. Everybody calls Scaramucci “The Mooch.”

Ivy League background married to a streetwise persona? Check. Scaramucci, a 1986 graduate of Tufts University, attended Harvard Law but trades on his blue-collar roots in Port Washington, Long Island.

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Ideological fluidity and willingness to switch loyalties on a dime? Check. He supported Obama in 2008, only to switch to Romney in 2012. Then he loudly opposed Trump in highly personal terms in 2015—“anti-American”—before jumping aboard the Trump train.

Eagerness to be accepted by the great and good? Check. Scaramucci became a fixture at Davos, where he was a genial presence, known for throwing parties and back-slapping. (Would that I had the foresight to shoot video of his dancing.)

Good at producing shows? Check. His annual SALT conference in Las Vegas became one of the events in the financial industry. Each year, a truly impressive list of major hedge fund investors, politicos, and celebrities would flock to the Bellagio for the conference, which was covered by CNBC and Bloomberg TV.

Clubby hospitality business catering to carnivorous rich men? Check. Scaramucci is an owner of the Hunt & Fish Club, an overpriced Midtown restaurant popular with the finance set.

Media hound? Oh yes. Loved appearing on financial television so much that he revived the classic PBS show Wall Street Week in Review and hosted it on Fox.

Vindictive and somewhat litigious streak? Yup. When a CNN report erroneously said that Scaramucci had met with a Russian investment bank that had government ties, he quickly got up in the network’s business, arguing that the report was defamatory and reminding CNN that he’s a lawyer. (The New York Post reported that he threatened a $100 million lawsuit.) The three senior journalists involved in the story resigned and CNN retracted the story.

Heads-I-win-tails-you-lose business model? Check. Scaramucci’s Skybridge Capital was a fund of funds, a business model that is dying because it serves its clients so poorly. Essentially, funds of funds sell access to hedge funds, affording ordinary rich people and institutions the ability to get into investment vehicles that they can’t get into on their own. But they then charge significant fees—percentage of the assets invested plus a chunk of the returns—which tends to lead to returns that lag the market. For example, since its 2003 inception Skybridge’s Series G fund has returned 6.17 percent annually. In that same time period, an investment in the S&P 500 would have returned 9.46 percent annually. That is to say, a cheap, simple passive investment would have done 50 percent better.

Profitable dealings with investors from nondemocratic country? Check. Earlier this year, Scaramucci sold Skybridge’s hedge-fund business. The buyers were an entity called RON Transatlantic Advisors and HNA Capital, a subsidiary of China’s sprawling HNA Group.

Oh, and leering objectifier of women? Check.

In other words, Trump and his new communications head are perfect for each other. Which is either poetic—or just terrible.

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New York Goes to the Mattresses Against the Eviction Machine

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As the Trump era drags on, the hope that cities would be bastions of resistance has melted into air. In some cases, cities don’t have the authority to serve as an effective bulwark against Republican control of statehouses and Washington, and against federal agencies like ICE. In others, they don’t have the capacity to preserve or increase protections for the poor and vulnerable.

But there is still room for big, simple victories, like the idea Mark Levine, a city councilman from upper Manhattan, has been working on since 2014: Hire lawyers for tenants in housing court. On Thursday, the New York City Council passed a bill that will guarantee, within five years, legal representation for all low-income tenants facing eviction. Mayor Bill de Blasio has indicated he will sign it. An independent study commissioned by the New York City Bar Association estimated the law could keep more than 5,000 families from homelessness every year.

Of all the ways that the American financial and legal system leaves renters at a disadvantage, you’d be hard-pressed to find a more unequal terrain than housing court. Nationwide, 90 percent of landlords have attorneys, but 90 percent of tenants do not. Tenants don’t show up to defend themselves or don’t know how. In a randomized experiment performed by the Legal Aid Society, eviction warrants declined 77 percent when the tenant had counsel.

Here are the numbers in New York: There are more than 150,000 housing court cases a year. More than 120,000 tenants would qualify for representation under New York’s new law, which offers counsel for households under 200 percent of the federal poverty line (about $50,000 for a family of four). Currently, fewer than 3 in 10 low-income households go to court with a lawyer. There are more than 20,000 evictions each year, and nearly half of all families in homeless shelters are thought to wind up there after eviction.

No complex legal reasoning is required here. Policymakers think lawyers can throw a wrench in the eviction machine simply because tenants often have a good case for not paying rent. In Baltimore, research by the Public Justice Center showed that 80 percent of renters facing eviction lived in units with serious defects “like vermin infestation, toxic mold, or broken appliances.” Just 8 percent of tenants had their claims heard by a judge; most either didn’t show up, or didn’t defend themselves.

In a rapacious housing market like New York’s, the profit motive behind evictions can be enormous—especially when the tenant occupies a rent-stabilized apartment that can be deregulated through vacancy. That means evictions eat away the rent-stabilized stock, which is by far the city’s cheapest way to preserve affordable housing. Meanwhile, rising rents make it harder and harder for the homeless to get back into apartments. The average length of shelter stay for families with children is over a year. The city’s shelter population is more than 60,000—the size of Palo Alto, California.

It will cost a lot to provide lawyers for 120,000 housing court cases a year: More than $200 million, by some estimates. (Then again, the progressive prince of Albany wants to spend more than that on a light show.) Under Mayor Bill de Blasio, the city has already allocated $64 million a year to tenant legal services, up from $6 million in 2013—a move correlated with an 18 percent drop in evictions.

The independent analysis, prepared by the consulting firm Stout Risius Ross, projects the policy will save New York money on balance: more than $100 million a year. Each case might cost an average of $2,500, Levine says, but each shelter stay costs the city nearly $45,000 a year. “You don’t have to avoid to many homeless cases before you recoup what you’re spending up front,” he explains.

And none of those balance sheets account for the social benefits that accrue from residential stability when a family can maintain access to the same schools, social network, and jobs. Studies suggest that eviction leads to job loss more than job loss leads to eviction.

This is not just a high-cost city problem. In Milwaukee, where Matthew Desmond set his Pulitzer Prize–winning book Evicted, there were 16,000 evictions a year in a city of just over 100,000 renter households. The numbers were similar in Kansas City, Cleveland, Chicago, and elsewhere, he wrote.

The basic right to counsel, affirmed by the Supreme Court in Gideon v. Wainwright for felony charges, has since been expanded to include a variety of cases. Housing court isn’t one of them. Organizations that provide lawyers to tenants have to turn away most cases, though just the presence of a lawyer can stop an eviction. (There’s even an app that helps New York City tenants turn their complaints into properly formatted documents, an indication of how even the most basic preparation can tip the scales in their favor.)

Not surprisingly, other cities are working on similar policies. In May, Washington, D.C. approved a $4.5 million pilot to defend low-income tenants. Kenyan McDuffie, the councilmember who sponsored the legislation, told WAMU, “I’d love to get where it’s a full civil Gideon where we are guaranteeing a right to counsel in areas where the stakes are extremely high for people in civil court.”

Philadelphia, where counted 20,000 annual evictions between 2014 and 2015, allocated a $500,000 grant to defend tenants earlier this month. Baltimore spent twice as much helping landlords evict tenants ($2.7 million on sheriff’s deputies to oversee 6,500 evictions) than it did helping tenants stay in their homes ($1.3 million). On Monday, Baltimore City Councilman Robert Stokes proposed an anti-eviction fund.

But New York’s program remains an outlier in both its scale and expense. Housing court functions as a weapon, Levine likes to say. After we spoke on Thursday, he called back with one more thought: “We’ve had a flood of inquiries in cities who are excited about it. This really proves that even in the Trump era we can still score wins at the local level. This proves that we still have the power.”

Not much power. But if you know how to use it, maybe you can get something done.

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