Irregular

 

A January ritual was for my mom to drag my brother and I down to Bloomingdale’s to hit the annual white sales (now a woke police non-compliant name). The only obstacle between us and a great deal was my dad’s one, immovable rule—the sheets on the bed at home could be any color, as long as it was white. This ran into the other immovable truth—white sheets never went on sale. Mom would politely ask the sales clerk about what white sheets might be on sale, and the clerk would politely shake their head that none were on sale, but “are you familiar with irregulars?”

Irregular sheets weren’t from some oddball company but ever so slightly not perfect—some finished stitching might not be exact or a hem was not quite at the right angle. Whatever the case, the manufacturer chose to sell them at a substantial discount rather than trash it and eat the entire cost. And so like your friendly bartender who remembers that they have a secret stash of your favorite whiskey, the sales clerk would reach to the back of the top shelf and produce these “irregulars.” Nobody was the wiser, the store made money, and my dad slept just fine. With tomorrow’s inauguration, I have that same feeling—I want to think that everything is right, but I need an expert to show me that what went wrong isn’t ruining the whole thing.

I’m no stolen election ranter, but there’s plenty out there that needs a better explanation, not just for the facts but to help put the nation at ease. This is a distinctly different time from 2000 where we were entertained by the site of a couple of civil servants with magnifying glasses trying to determine the veracity of a hanging chad. It was focused, out in the open, and at least somebody could come to a consensus. And while the Democrats could never seem to shake off the fact that George W. Bush won (weren’t all those polls saying Gore would dominate?), Congress got legislation passed to fund modernization of voting infrastructure. Of course Congress never seemed to get around to updating the Post Office so that they could get the ballots on time to that updated voting infrastructure, but change in Washington is not a rapid thing.

Unlike Joe Biden writing his own speeches, I’m happy to give appropriate credit to Scott Johnston of The Naked Dollar column for laying out the idea of a national election investigative commission. We’ve used this kind of vehicle before, and I think the 9/11 Commission serves as great standard. We all knew that, before the terrorist attacks, the CIA and FBI were legally prohibited from sharing intelligence. It was only after open hearings and a comprehensive report that we all found out the utter dysfunction between the intelligence agencies. More troubling was the utter lack of creative thinking going on throughout the government, that somehow 20 men with penknives and a few hours of flight school training killed more people than at Pearl Harbor. The upshot was a complete rethinking of internal and external security as well as refocusing how we view threats across the world.

Of course there are plenty of 9/11 conspiracists out there who will never be satisfied. So be it—they probably find puppy pictures and warm spring days a sign of mind control. But there is too much video out there of poll watchers being denied rightful access, ballots procured from under desks, at least one confirmed case of results flipped, and other questionable activities to be ignored. Add to that a mix of administrative fiats married with judicial ascension to change otherwise infallible state voter laws and you have the recipe for years of voter dissatisfaction. After the election the courts dismissed most of Trump’s lawsuits for lack of standing, which I leave to the lawyers to sort out. But it gives Congress a chance to put evidence under the brightest TV lights their hearing rooms can shine, to dig deep, and to call witnesses and make them squirm to justify their actions.

Most of the action would focus on states that Democrats run or in areas of their local control. The mistake for the Democrats would be to call this a partisan witch hunt as their excuse not to have hearings. In the end much of what we will find out will probably be that inept government employees chose the exactly wrong time to be inept—during a close election (wait, wasn’t Biden supposed to win by 11 points?) under the watch of grainy security cameras. Unless there was some 1960 Kennedy-in-Illinois action going on, the Democrats would have the upper hand every time the Republicans cry foul in the future. It’s my firm belief that the naked truth will clear the air and restore some, if not most, of the faith in our voting system. But takeover power has a way of clouding long-term judgement, and thin majorities find a way to slip into the minority in the oddest of ways, leaving only vengeance and more mistrust.

So tonight I’ll go to sleep more annoyed that we are in perpetual and inexplicable lock down than with Biden’s inauguration tomorrow. And while my wife and I have a comfortable bed with high-quality sheets, something tells me my rest will be a little bit…irregular.

© 2021 Alexander W. Stephens, All Rights Reserved.

The Untweeting

 

Well The Donald is now “permanently” banned from Twitter, and Apple and Google have quickly followed suit in banning some alternate social media apps from their respective stores. Many see this as some great moral victory, although for what greater good is unstated. I see it as a dangerous, short-sighted move that is going to backfire, but not in the ways many people think.

While I spend (too much) time on Facebook, I don’t have a Twitter account as anything worthwhile on Twitter finds its way into mainstream media, which is more an indictment on lazy reporting. But it wasn’t until two Christmases ago that I really understood the power of Twitter. At our neighbors’ holiday party, an investment banker admitted that he had no social media account and didn’t really pay attention to any of it.

Except for Twitter. This, he admitted, was the first thing he read getting out of bed.

Why, of all things, Twitter? As he explained, “I need to know what the President said first thing in the morning. It’s what the markets are following.” And there, in all its naked power, was why Twitter mattered, and how it had gotten completely out of control. It was also a story I had heard nearly 30 years ago when many of Big Tech’s employees were infants or not even born.

The story was in Michael Lewis’ Liar’s Poker, his book about Wall Street powerhouse Salomon Brothers. One particular hazing ritual was to ask the trainee class to quote the morning’s LIBOR rate. New to the industry, there was silence primarily because nobody knew what LIBOR was, and the few who did had no inkling as to why it was so critical first thing in the morning. Yelling and ranting at Marine drill sergeant levels ensued, and suffice it to say the mistake was never made again. And while the method may have been extreme, the message was clear: LIBOR was what the markets were following, and so you need to follow LIBOR.

Twitter, then, has reached the level where it is LIBOR of communication, and the problem is that those who run the company are in way over their heads. While “permanent” in the digital world is almost an oxymoron, banning Trump is the great public step in social media’s taking sides in the political debate. This won’t end well for the tech companies, primarily because they are utterly unable to take responsibility for any of their actions. In the case of Mark Zuckerberg, big tech is literally unblinking when they say their business is for the public good. To which I remind everyone that there are two options in life: clean up your act or the government will do it for you, and the latter is never the better choice.

Somewhere in Silicon Valley there’s a happy place where if the Democrats run everything, their businesses will be protected. By the paper width of a few ballots, some of questionable veracity, they got their way for now. And I wouldn’t bank on now lasting that long, and when it ends, the loss of Section 230 protections, among others, will be devastating. The bigger loss will be in talent and vision. At what point will the best and the brightest in engineering start looking elsewhere for unicorn paychecks? The point when it stops being engineering and starts to be a social movement, like banning a prominent public official. It’s the point where you are no longer what the employment market follows first thing in the morning.

What happens next? If I had to guess the finance folks at Twitter will take a long look at how banning Trump, and the loss of his followers, will affect the bottom line. You’ll know how that analysis went if Trump is reinstated because he “has agreed to reform his behavior” or some such nicety in the press release. But don’t look to Salomon Brothers or LIBOR for answers either. A few years after Liar’s Poker came out Salomon became embroiled in a scandal where they fixed the price of government bonds. The government does not look kindly at that, and Salomon was swiftly absorbed into another bank. And the paramount LIBOR? The banks colluded to fix that rate for years and it had to move to another exchange before it will be decommissioned in the next few years. Nothing may be forever, but for Jack Dorsey he might remember that Myspace was the dominant, unbreakable leader with money pouring in and talent beating down its doors. That is until it was gone in less time than it takes to type 280 characters.

© 2021 Alexander W. Stephens, All Rights Reserved.

Against The Odds

 

The New Year gavels in another session of New York’s legislature, and one thing is clear: the search for money to plug the state’s gaping deficit is first, second, and third on the agenda. Once again a Cuomo is looking to gambling to raise significant amounts of money, and once again it looks like a Cuomo will botch the whole affair.

Gambling (in the form of table games and slot machines) had long been forbidden by the State’s constitution, with then-Governor Mario Cuomo managing to push the envelope a bit by working with upstate Indian tribes to build casinos on reservation land. Never heard much about them? Not really surprising—the gaming offered tepid rewards, the locations were hard to get to, and there were no arenas for concerts.

Son Andrew managed to get through changes in the state’s constitution (an impressive feat) to legalize, in limited quantities, real casino gaming. The result? The highest grossing tables in the country lie not off the glitz of the Vegas strip but off the ass end of Aqueduct Raceway, home to an otherwise despondent horse track and even more despondent bettors. Before Covid, the only thing limiting growth there was the physical footprint of casino’s walls.

But then the sports book took everything over.

In what might be the only contribution from former New Jersey Governor Chris Christie, his administration sued, and won, for the right to operate sports books outside of Nevada. Long the sole domain of Vegas, the most successful sports book in the country is now at the ass end of Meadowlands race track, home to the most despondent form of horse racing, the trotters, and across from Met Life stadium, home of the even more despondent Jets and Giants. But in all of this there is one great lesson: the tri-state area has money to bet and has shown an unbridled willingness to put its money on the table. Could there be one more, great leap?

Absolutely—your phone.

Online sports betting is now the last great gambling frontier in New York, and the Governor is enthusiastic about it. Almost. His position about the current proposal is, “That makes a lot of money for casinos, but it makes minimal money for the state. I’m not here to make casinos a lot of money, I’m here to raise funds for the state. So, we have a different model for sports betting.” This was the same model that drove the local Off Track Betting (where even I would go to put down the occasion wager on a Belmont Stakes race) out of business because the state taxed it so much that it was the only bookie that couldn’t make a profit. Even in blue New York City there was no political appetite to subsidize this government fiasco.

Some might see this as a great metaphor for Democrats vs. Republicans, that corporate profits are such a bad thing that they have to be taxed into the ground until the very business ceases to exist. Others might see the socialized medicine analogy that only government knows what is right for its people. What everyone sees, and the numbers bear it out, is some $500 million a year in tax revenue for New York State. How Cuomo thinks he is going to rake in this kind of money without the private sector working hard to make the very money he is going to tax is unclear. There’s no over/under on whether it would work given that it flies in the face of any viable business model.

Nobody should be under the illusion that New York’s economic salvation will come from DraftKings ringing on their phones. And let me be very clear that I recognize gambling, particularly the sports book, and especially a phone app, can destroy a person’s life with a few swipes. But there is a way for casinos to make money, the state to gain robust revenue, and, not incidentally, decimate the illegal bookmaking market. I’m just not betting the Governor will know how to do it.

© 2021 Alexander W. Stephens, All Rights Reserved.