JULY 2019

Takeaways from the Aspen Ideas Festival: American Renewal, Part I

Category: Portfolio Management

By Doug Cohen, Managing Director, Portfolio Management

I had the privilege of attending the 2019 Aspen Ideas Festival in late June, a gathering place for scientists, artists, politicians, historians, educators, activists, and other deep thinkers to present, debate, and discuss some of the most important and fascinating ideas and issues of our time. The sessions generally touched on two broad topics: American Renewal and the Next World Order and Economic Progress.

As we noted after last year’s festival, a former professor of mine at Harvard Business School used to say that you will almost always be well ahead of the pack if you can distill any given class or presentation into three key takeaways—as well as one important issue that went unaddressed. Along those lines, here is Part I of my key observations from the speakers of the most interesting sessions that I attended on the themes of American Renewal. Part II can be read here and Part III here.

My observations and takeaways from sessions on the topics of the Next New World Order and Economic Progress can be found here.

Can Political Innovation Break Partisan Gridlock and Save Our Democracy?

Michael PorterThe Bishop William Lawrence University Professor at Harvard Business School

Katherine GehlCo-chair of the National Association of Non-Partisan Reformers, a board member of Unite America

1) In one of the more captivating presentations of the conference, Gehl and Porter argued that everyone knows the political system in Washington is badly broken—but that the deficiencies are because the system is doing exactly what it was designed to do. Specifically, the system was designed by the two major political parties to sustain their hold on power as part of the Political Industrial Complex. Acting in the public interest is not as important to most politicians as getting re-elected. Using the same competitive and industry analysis techniques that Porter has used for decades (e.g., substitution, suppliers, customers, threat of new entrants, rivalry), the two argued that there are relatively simple nonpartisan steps that can be implemented to reduce gridlock and promote accountability.

2) The duo reviewed the extent to which the US has fallen relative to other advanced economies over the last several decades on measures such as the competitiveness of the tax code, workforce participation rates, K-12 education and health care. The failures extend to many social policy choices executed by the government and have exacerbated inequality. The poor outcomes are not policy problems per se—rather they reflect the way our political system is designed to cement two party control and discourage new entrants/competition. For example, forty-four states have laws designed to make it extremely difficult to run as a third-party candidate. There are also draconian laws that limit the potential for Independents to raise money. Our primary system encourages candidates to veer far to the right and left to cater to the polarized extremes that dominate primary voting. This is exacerbated by gerrymandering on both sides and by the campaign finance system. This provides a tremendous dis-incentive to participate in bipartisan compromise and has contributed to the reduction of moderates on both sides. The political duopoly has implemented techniques such as the so-called Hastert Rule that greatly limits the power of the minority party to bring up bills in the House. This and similar rules are not proscribed in the Constitution but have been created over the years by the two parties to sustain their power. The parties have used their power to create a system where regulatory and judicial appointments are based largely on party loyalty. As a result, even though 43% of Americans identify as Independent, the two parties rarely cater to this largest constituency. The political parties, by design, rarely target the “average voter”—usually just the extremes. The parties typically emphasize ideologies that are absolute in nature, rarely acknowledging the nuances that are inherent to almost every issue from free trade to tax reform to climate change.

3) Gehl and Porter set out to identify powerful and achievable opportunities to change the system. While they have proposals to re-engineer the legislative machinery and to create more competition in the system, their presentation focused on ways to change the current election process by changing the partisan nature of primaries and tweaking the prevailing plurality of the voting system. They view the latter as the foremost election impediment as voters often vote not for whom they truly like but against someone they may strongly dislike. For example, why vote for Jill Stein and risk electing Trump—or a Libertarian candidate and risk electing Clinton? They highlighted the recent outrage that Howard Schultz consider running as an Independent. Their proposal would eliminate Republican and Democratic primaries. Rather, only the top four candidates in one overall primary would advance to the general election. In the general election, voters would rank-order their preferences 1 through 4. If a true majority emerges, the election is over. If not, all the 4’s are dropped (and then the threes and twos, if necessary) until someone has a majority. This would provide an entirely different set of incentives for candidates to veer back toward the middle and appeal to the general electorate, reducing the power of special interests. This approach has previously been embraced by, among others, both Obama and McCain. It has also recently been instituted in Maine and would require fairly small amounts of money/lobbying to implement across the country.

--A key question that was not addressed: “How would the so-called Political Industrial Complex fight back against any organized threat to diminish its hold on power?”

Finding My Voice

Valerie JarrettSenior advisor to the Obama Foundation and media company ATTN

1) Jarrett focused heavily on her life story, as portrayed in her recently published memoir. There was an overriding sense of being an outsider, from growing up as a young girl in Iran to having a British accent to having light skin. Other than having the courage to leave a “failed marriage”, Jarrett highlighted her decision to move from a law firm to public service as the most impactful decision of her life. Meeting and ultimately hiring Michelle Robinson (soon to be Obama) to make the same transition ultimately proved just as consequential.

2) On the political front, Jarrett highlighted her view that we are a great country but that there are certainly things we can learn from beyond our shores. She strongly criticized President Trump for leading the “birther” conspiracy that she viewed as putting President Obama and his family in harm’s way in the most irresponsible of manners. She is inclined to defer to Speaker Pelosi when it comes to deciding whether Trump should be impeached, noting that she has an extremely strong sense of what her caucus would support. She also praised Pelosi as the most instrumental player in passing the Affordable Care Act, one of President Obama’s most significant legacies.

3) In terms of 2020, Jarrett is devoting most of her energies to increasing turnout after bemoaning the fact that 43% of eligible voters failed to vote in 2016—essentially preventing the country from behaving as a true democracy, in her view. While her voter turnout efforts are meant to be non-partisan, Jarrett left little doubt as to her preferences for 2020 nothing that she would be “1000% behind” any of the 25 Democratic candidates as any would be “better than what we have now.” As for her own political future, she acknowledged that she thought carefully about running for Mayor of Chicago, but ultimately decided that she wasn’t prepared for the “24/7” commitment that such a position requires. She prefers to focus her energies on advocating for the positions she feels most strongly about, as well as spending time with her daughter and eventual grandchildren.

--A key question that was not addressed: “Would she favor Vice President Biden as the Democratic nominee?” Not surprisingly, this question was actually asked. Just as unsurprisingly, she did not offer a specific endorsement, as per the sentiment expressed above regarding any of the candidates being better suited for office than President Trump. She did express her view that it is important that the Democratic candidates not “beat each other up” and stay focused on attacking Trump instead.

The Republican Party in the Age of Trump

Chris ChristieSenior legal and political commentator for ABC News, managing member of Christie Law Firm and Christie 55 Solutions

1) Amid aggressive questioning from Jeffrey Goldberg, editor in chief of the left-leaning The Atlantic, Christie clearly conveyed that he still believes President Trump was a far better choice than Hillary Clinton. He believes that Trump’s policies, including deregulation and tax reform, are far more consistent with his own views. While he acknowledges that Trump’s personality has not changed in office, he has grown into the position in some ways. For example, Christie doesn’t believe that Trump would have had the courage to hold back on attacking Iran 18-24 months ago. When asked (repeatedly) how he can support Trump and what he sees in him that others don’t, Christie highlighted that Trump was the one candidate who could run on the notion of “breaking all the china” in a dysfunctional Washington. “He has no loyalty to the DC culture. It’s as simple as that. He’s not loyal to Democrats or Republicans. He has followed that anti-DC path and no one else saw it coming.” There were many times he thought Trump was absolutely done during the campaign (e.g., his comments on late Senator McCain, the infamous Access Hollywood tape) but that his outsider status makes him unique. The Mueller investigation resulted in exactly what Christie expected—no collusion, but ultimately an excellent example of the system working the way it should. Rod Rosenstein made a very courageous and correct decision to appoint the special prosecutor and appointed a “stone cold killer” (Mueller) to do what had to be done. Our democracy is stronger than ever because of it.

2) When asked if he was afraid Trump would get us in a war, Christie said “just the opposite” is true. Trump is largely an isolationist at heart. In terms of 2020, Christie believes that the Democrats need to make up the 77K votes that determined the collective outcome in rust belt states Pennsylvania, Wisconsin and Michigan. Much as Paul Ryan highlighted at Aspen, Christie believes Joe Biden has, by far, the best chance of accomplishing that because he’s from there and speaks their language. That said, “Joe may kill himself (by making unwise statements), he has the capacity to do that.” He noted that of the 25 Democratic candidates, only Biden and Sanders have ever been on a national stage and that several of the others will likely “melt” under the pressure of the bright lights. He said one should “short Buttigieg (“not ready for prime time, will look very young, awful performance and leadership after the recent shooting in South Bend). He believes fellow New Jersian Cory Booker has a “puncher’s chance…and charisma he hasn’t shown yet.”

3) Christie believes the biggest challenge the country faces is absolutism. Whether it is abortion, fossil fuels, guns, MSNBC or Fox News, everyone is in a corner and that very few politicians have the courage to be honest. They won’t go against the orthodoxy of their party and the sources of funding that come with that. Paraphrasing Ronald Regan, he said that the person who agrees with me 80% of the time should be seen as my 80% friend, not my 20% enemy. Along those lines, there are paths for moderate Republicans and Democrats, but few are willing to try. Immigration is a perfect example. There should be a clear path to become legal, although citizenship is a more difficult question. It’s unfair to the people who want to come to this country legally to simply allow others to come across the border illegally with impunity. Policies such as family separation are “stupid”. This was a country built by immigrants and we need to find a way to encourage that going forward…legally. There is plenty of room for compromise.

3) While we have tried to limit each summary to three bullet points, Christie’s larger than life personality and bluntness probably justify some extra space. Christie believes Trump would win re-election by a landslide were it now for “the tweets…and the awful people he’s had around him.” As a reminder, Christie was fired by Trump as transition chairman in early 2017 —a decision executed by Steve Bannon on orders from Jared Kushner, according to Christie. He claims that 30 volumes of work he and his transition team had compiled prior to his firing were all thrown into a dumpster, forcing Trump to essentially start from scratch. Here are a few of the folks that Christie called out by name: Former National Security Advisor Michael Flynn (“the worst”, “a train wreck”, “awful”—someone Christie claims to have begged Trump not to hire), Jared Kushner (Christie described Kushner as smart, but clearly not in his current role based on merit). Christie claims to have warned Trump about the dangers of nepotism. It should be noted that Christie’s relationship with the Kushner family goes back to his successful prosecution of Kushner’s father when Christie was a US Attorney. Former Attorney General Jeff Session (“incompetent”), former Secretary of Health and Human services Tom Price, former FDA head Scott Pruitt, former Chief of Staff Reince Priebus (“in the wrong role”) and Omarosa (“what the hell was she doing in the White House?”) were among the others highlighted. He praised former Secretary of State Rex Tillerson and Defense Chief James Mattis but noted that they never enjoyed strong personal relationships with the President.

--A key question that was not addressed: “At some point, such as a bona fide economic or geopolitical crisis, won’t President Trump’s inability to surround himself with talented people present a major challenge?”

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