Intellectual Property and The King of Denmark’s Rule




The King of Denmark’s Rule

Image: Oresund map,
Public Domain,
The tax on the cargo is 1% of value, as assessed by the master of the vessel. The King’s agent may choose either to accept the tax payment or to buy the cargo at the assessed value.

If we disregard the possible collusions between the master and the agent to cheat the King, the master has incentive to assess the value fairly. If the master assesses a low value, then the agent may refuse the tax and buy the cargo. If the master assesses a high value, then he pays more tax than the law requires. (See Appendix)

Incomes Disparity, or Income Inequality

To the extent that politically knowledgeable people vote their pocketbooks, one can imagine without difficulty that a wealthy person in the United States would have different opinion from a poor person on nearly every significant political issue.

Senator Bernie Sanders was one of the two most significant contenders for the 2016 nomination for President of the United States by the Democratic Party. He focused on income and wealth inequality as the most important political problem in the United States. Seeking to persuade some of Bernie’s enthusiastic following, other candidates echoed Bernie in advocating for their own policies.

IPRs Intellectual Property Rights

Economist Joseph Stiglitz wrote in “Rewriting the Rules” that some persons seek IPR monopolies to secure market power. (Some have criticized use of the word “monopoly” as pejorative in discussing the privilege granted by an IPR. But we note that IPR does grant the owner the exclusive right to sell or license or use the products embedding the IP patent or copyright. The condition in which only one seller can sell a product in a market is a monopoly, by definition. We regard IPRs as grants of monopoly by governments.) Stiglitz calls for revising IP laws for better balance of the rewards of innovation with the societal usefulness of innovation.

Economists Michele Boldrin and David Levine wrote of IPRs that “this cancer is attacking the most vital centers of our economy: metastasis is near and so it is time to face the intellectual monopoly threat squarely, and to take action.”

The first laws governing IPRs in the United States were copyright and patent acts of Congress that became law in 1790. Each act granted 14 years of IPR protection to writers and authors. In our age, IP consists of four categories: patent, copyright, trademark, and trade secrets.


With large amounts of money at stake in some IPRs, the governing laws have spirited advocates and opponents.

WIPO World IP Organization, part of the United Nations organization, generally advocates for the positive value of IPRs. Advocates often claim that increasing counts of numbers of patents granted and growth of GDP show that IPRs stimulate imagination and GDP growth, much as does Kamil Idris in his “Intellectual Property: A Power Tool”, and that IPRs attract investment.

Alan Greenspan, former chairman of the Federal Reserve Board advocated for IPRs. In 2003, he attributed only a small part of US GDP growth in the last decades of the twentieth century to physical materials, with the accelerating large part of the growth coming from IP.

James Madison argued for IPRs. Discussing the powers accorded to Congress by the US Constitution, and the right to grant IPRs, specifically, he wrote “The utility of this power will scarcely be questioned.“

Idris also argues that IPRs attract capital investment. Clearly, they do so in a world in which IPRs exist. Idris doesn’t show that capital investment in ideas wouldn’t occur in a world without IPRs. Nor does he answer whether IPRs distort capital allocation from superior ideas and projects.

International payments for the use of IPRs were $350b worldwide in 2015, per the World Bank, using data from the International Monetary Fund.
International payments for use of IPRs. Source: World Bank.

Source: Emmanuel Saez (2014)

While coincident graphs don’t imply causation, we can’t but notice a resemblance in the growth of IPR payments with the growth of the highest 1% of US incomes, per Emmanuel Saez.

I’ve not found criticisms of IPRs in his writings, but Stiglitz does identify IPRs as a rule that contributes to deep US disparities of incomes.

Opponents of IPRs often claim that IPRs stifle invention, discovery and manifestation of creativity. For example, Michael W. Carroll, in his “Intellectual Property and Related Rights in Climate Data”, describes how IPRs can interfere with climate change research, which requires fairly open access to diverse data sources.

Thomas Jefferson, often quoted by IPR opponents, wrote “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.” Jefferson did note the rush of inventors and writers to apply for copyrights and patents. And ultimately, he was persuaded (allegedly by Madison) that IPRs strictly limited in duration would have some value.

In the development of computer networks, two comparable and competitive ideas, token ring and ethernet, competed in the 1970s and 1980s. Ethernet was not protected, but Olof Soderblom required a royalty of 2 percent for each node of his patented token ring. Ethernet flourished with rapid innovations increasing speeds and reducing costs. People also invented enhancements for token ring, but the patent impaired development and distribution. Eventually, ethernet deployments dominated. It became the ubiquitous protocol underlying the Internet. Token ring survives in isolated specialized applications. (See Appendix)

After Lysippos, Public Domain,
James Watt spent the latter part of his life actively defending his steam engine patents and suppressing even some superior designs offered by potential competitors. Boldrin and Levine describe James Watt’s career as an exemplary case, along with numerous others. They conclude IPRs aren’t needed for innovation, and more likely hurt, more than help, innovation and growth. IPRs promote socially costly rent seeking.

Benjamin Franklin, Jonas Salk, Aristotle, Luther Burbank, Rene Descartes, Charles Dickens and Alexander Fleming, among many others, either had no access to IPRs, or they declined to use them.  Further, each of us has creative thoughts and ideas, for which we never have IPRs. Arguably, people have good ideas because it’s fun to discover and create things. Clearly, IPRs aren’t required for people to have good ideas.


IPRs, by their existence, attract capital to finance development of ideas and production of useful products and works of art. At the same time, they create monopolies that encourage rent seeking and diminish innovation and the availability of useful ideas. Further, the existing legal structure of IPRs facilitates intense concentration of immense wealth and disparities of incomes. We propose a new US tax on IPRs, modeled after the King of Denmark’s Rule, and some minor modifications of existing law. Further, we propose uses of the tax revenue to encourage inventions, authorship, fine and useful arts and science.

The IPR tax

First, the IPR tax law will overlay, not replace, existing law, except in cases of direct conflict. No existing or new IPR will continue in effect beyond 100 years under any circumstances. New IPRs, coming into existence after enactment of the enabling IPR tax, will have a maximum term of 14 years.

The tax will apply to both new and existing IPRs. Upon enactment, the tax will apply to existing IPRs 3 years after enactment of the law. The tax will apply to each new IPR 3 years after the IPR comes into existence. The tax will apply to any IPR having a value of more than $500,000, adjusted for future inflation. The tax will not apply to any IPR of lesser value.

Annually, within 60 days of the anniversary date, the holder of each IPR will file a statement of value with the IPR Tax Office. If the holder doesn’t file the statement on the 3rd anniversary of the IPR and thereafter, then the IPR passes permanently into the public domain. The statement will explicitly state the value in dollars of the IPR, with appropriate documentation, and a payment of the tax due. The Tax Officer may ask for clarification of the statement, and the holder will answer within 30 days. The Tax Officer may accept the payment rendered, allowing the holder continued ownership of the IPR. If the Tax Officer acts within 60 days of receiving the statement, then the Tax Officer may return the payment rendered, and pay the holder’s stated value (but not less than $400,000) to the holder as compensation, and take possession of the IPR, and the IPR will pass permanently and immediately into the public domain. If the Tax Officer doesn’t act within 60 days, then the holder continues to own the IPR.

The tax won’t be due before the end of the 3rd year of the term of the IPR. The following table provides the tax rates applying.

Anniversary of creation of the IPR
Tax as a percent of holder’s stated value

We suggest the revenues from the tax will be distributed by the Department of Commerce as grants to qualifying scientists, inventors, artists, writers and similar persons who apply for project funding and to arts and research organizations such as the National Institutes of Health, the National Gallery, the Smithsonian Institution, the National Aeronautics and Space Agency, and others.


Coat of Arms of Erik de Pomeranie. Image by
A.T. [CC BY-SA 3.0
via Wikimedia Commons
In 1857, the US treated with Denmark to pay a small sum to the King of Denmark to relinquish all rights to the “Sound Dues”, a source of revenue for the Crown for centuries. The major governments of Europe had similarly concluded the tax on passage through the Oresund, the strait between Denmark and Sweden, in 1855 and earlier in some cases.

The tax and its predecessors had existed for centuries, with some evidentiary documents dating from the 14th century. The Sound Dues were regularized and made permanent by Eric of Pomerania, King of Denmark, Norway and Sweden, in 1429.

The Sound Dues had applied to merchant cargoes (and sometimes to hulls) passing through the straits. Masters of the vessels were required to stop at Helsingor (a.k.a. Elsinore) or suffer cannon fire from shore. The master would provide a manifest and valuation, and pay a tax of about one percent of the value, varying somewhat from year to year, and depending somewhat on the type of cargo, ownership, the flag of the ship, origin, destination, and the particular royal agent collecting. Or the agent would pay the master’s valuation to the master, and take possession for the crown.


According to Iljitsch van Beijnum http://arstechnica.com/gadgets/2011/07/ethernet-how-does-it-work/, ethernet was conceived and standardized as a body of standards with a clever, minimalist design that required only cheap, relatively simple components. Token ring remains in use in a very few special cases. Ethernet users sought ever faster networks, which led to the ubiquity of ethernet.

Reasons for ethernet's dominance:

1, Ethernet had a messiah, Bob Metcalf. -  Geoff Thompson
2. ArcNet (early network resembling token ring) didn’t make it into specification IEEE 802 -  Geoff Thompson
3. Ethernet tolerated failure. - Dan Pitt
4. Token ring patent, owned by Olof Soderblom, required the user to pay a royalty of 2 percent of the cost of the machine which was the node connected to the network. Competition was managed and never allowed to flourish. - Joe Skorupa

Oral history video discussions by networking pioneers of ethernet and token ring:


BBC, “When Charles Dickens fell out with America” (Feb 14 2012 http://www.bbc.com/news/magazine-17017791 )

Luther Burbank Home & Gardens, Santa Rosa, California (http://www.lutherburbank.org/, retrieved Oct 7 2016)

Michele Boldrin & David Levine, “2003 Lawrence R Klein Lecture: The Case Against Intellectual Monopoly”, International Economic Review, Vol 45, No 2 (May 2004) https://www.researchgate.net/profile/Michele_Boldrin/publication/5110522_2003_Lawrence_R_Klein_Lecture_The_Case_Against_Intellectual_Monopoly/links/0fcfd50db5dff388c4000000.pdf

Michele Boldrin & David Levine, “Against Intellectual Property” (2007) http://levine.sscnet.ucla.edu/papers/ip.ch.10.m1004.pdf
Detailed review of “Against Intellectual Property”, Syracuse Science & Technology Law Reporter (Fall 2009), p.130 http://jost.syr.edu/wp-content/uploads/6_Azzarelli-SSTLR-Vol.-21-Fall-2009-FINAL.pdf

Michael W. Carroll, “Intellectual Property and Related Rights in Climate Data”, American University Washington College of Law Research Paper No. 2016-17 (2016 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2763709) .

We are grateful for additional ideas and information provided openly in some prepublication research by Dr. Carroll.

Cisco DocWiki, “Token Ring/IEEE 802.5”, http://docwiki.cisco.com/wiki/Token_Ring/IEEE_802.5 (Cisco, retrieved Oct 6 2016)

Cornell University Law School, “Intellectual property” (https://www.law.cornell.edu/wex/intellectual_property, retrieved Oct 6 2016)

Jonathan Follows, “Token Ring Solutions” (IBM http://www.redbooks.ibm.com/redpapers/pdfs/redp0031.pdf 2000 )

Benjamin Franklin, “Autobiography of Benjamin Franklin”, Project Gutenberg edition (2006, https://www.gutenberg.org/files/20203/20203-h/20203-h.htm)

Alan Greenspan, “Remarks by Chairman Alan Greenspan a Sea Island, Georgia” (Federal Reserve Board, April 2003 https://www.federalreserve.gov/boarddocs/speeches/2003/20030404/default.htm)

Lucinda Hawksley, “Charles Dickens, Copyright Pioneer”, ACLS News (Jun 24 2015 http://www.alcs.co.uk/ALCS-News/2015/June-2015/Lucinda-Hawksley-feature)

F. Hessenland, “The Sound Dues of Denmark, and their Relations with the Commerce of the World” (Translated in Hunt’s Merchant’s Magazine, October 1855, http://www.jstor.org/stable/25104806)

Lewis Hyde, “Ben Franklin and Intellectual Property”, Jul 10 2006 (https://cyber.harvard.edu/node/93339, retrieved Sep 28 2016).

Lewis Hyde, “Frames from the Framers: How America's Revolutionaries Imagined Intellectual Property” (December 13, 2005), Berkman Center Research Publication No. 2005-08, (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=870073 retrieved Sep 28 2016).

Kamil Idris, “Intellectual Property: A Power Tool for Economic Growth (Overview)”, WIPO (June 2003 http://www.wipo.int/edocs/pubdocs/en/intproperty/888/wipo_pub_888_1.pdf)

Jules Janick, “Luther Burbank”, Department of Horticulture & Landscape Architecture, Purdue University (Feb 2015, https://hort.purdue.edu/newcrop/pdfs/burbank-ashs-2015.pdf)

Thomas Jefferson, “Thomas Jefferson to Isaac McPherson”, (Aug 13 1813, http://press-pubs.uchicago.edu/founders/documents/a1_8_8s12.html )

Knowledge Systems Institute Graduate School, “CIS370” (http://pluto.ksi.edu/~cyh/cis370/ebook/ch03e.htm retrieved Oct 6 2016)

James Madison, “The Same Subject Continued: The Powers Conferred by the Constitution Further Considered”, Federalist No. 43, published in the Independent Journal (https://www.congress.gov/resources/display/content/The+Federalist+Papers#TheFederalistPapers-43)

Bob Metcalfe, “The History of Ethernet” ( https://www.youtube.com/watch?v=g5MezxMcRmk)

Samantha Payne, “Inventing in Congress: Patent Law since 1790”, (Mar 11 2015,

“The Public Statutes at Large”, Little & Brown, Boston (1845,
https://www.loc.gov/law/help/statutes-at-large/1st-congress/c1.pdf )

Emmanuel Saez, “Income and Wealth Inequality” (Oct 2014 http://eml.berkeley.edu/~saez/lecture_saez_chicago14.pdf)

Jonas Salk, “Could you patent the sun?” https://youtu.be/erHXKP386Nk

Salk Institute, “History of Jonas Salk: About Jonas Salk” (http://www.salk.edu/about/history-of-salk/jonas-salk/)

Joseph Stiglitz, “Rewriting the Rules of the American Economy” (2015 http://amzn.to/2dhdo3i)

Geoff Thompson, et al, “Ethernet vs ArcNet and Token Ring” (YouTube  https://www.youtube.com/watch?v=3J-pK7oiRP0 )
Geoff Thompson, et al, “FDDI & Token Ring Patents” (YouTube
https://www.youtube.com/watch?v=g2RlRRXZprY )

U.S. Department of Justice and the Federal Trade Commission, “Antitrust Guidelines for the Licensing of Intellectual Property” (Apr 6 1995,  https://www.justice.gov/atr/antitrust-guidelines-licensing-intellectual-property )

U.S. Patent and Trademark Office, “Luther Burbank” (https://www.uspto.gov/custom-page/burbank, retrieved Oct 7 2016)

Iljitsch van Beijnum, “Speed matters: how Ethernet went from 3Mbps to 100Gbps… and beyond”, Ars Technica ( http://arstechnica.com/gadgets/2011/07/ethernet-how-does-it-work/, Jul 14 2011)

Wikipedia, “Sound Dues” (https://en.wikipedia.org/wiki/Sound_Dues retrieved Oct 11 2016)

Wikipedia, “Eric of Pomerania” (https://en.wikipedia.org/wiki/Eric_of_Pomerania retrieved Oct 11 2016)

World Bank, “Charges for the use of intellectual property, payments” ( http://data.worldbank.org/indicator/BM.GSR.ROYL.CD, retrieved Oct 11 2016)


Reviewing Crippled America

Book Review. “Crippled America - How to Make America Great Again” by Donald J. Trump

March 20, 2016

Note at August 31, 2016: The book was renamed, apparently in July 2015, and is now available as "Great Again: How to Fix Our Crippled America."

Full disclosure: Of the candidates still in the race at March 20, 2016, I prefer Bernie Sanders. After reading this book, my opinion of Donald Trump has changed little, and for me, he remains the worst choice.

In summary, Mr. Trump presents illogical and non-factual arguments for his policies in a sophisticated rhetorical style, and for some policies, such as his health care plan, he entirely omits any substantial presentation.

Here’s the basic pattern from “Crippled America”. Trump is consistent in his book with his speeches and debates. In his discussion of each issue, Trump starts with the emotion-stirring motive, “ is a mess.” Sometimes he substitutes “broken” or “is terrible” for “a mess”, or “doesn’t work” for “is a mess.”  Next, he elaborates on this a little with some unverifiable statements, such as “ is out of control.” He may give us an unverifiable anecdote or two. Sometimes he cites facts that aren’t facts, such as that the Great Wall of China was never breached. To assure us we should take him seriously, he often reminds us he is rich, employs many people, has built many properties, has negotiated many deals, and has great audience approval ratings. He may cite some proverb, such as “When you’re digging yourself deeper and deeper into a hole, stop digging.” But with rare exceptions, he doesn’t bother to substantiate his initial assertion “X is a mess.” Asserting it establishes its truth only if you are satisfied that “X is a mess” suffices for truth. Next, he says what he’s going to do about it. Since he hasn’t bothered to establish that the “mess” actually is a mess, and he hasn’t told us its history or dynamic in any verifiable way, the policy he offers doesn’t have any traceable logical relation to the “mess”. Nor is the dynamic of the policy for fixing the “mess” obvious. Nor, generally, do examples readily come to mind of similar policies having been beneficial elsewhere. By rhetorical questions and omissions, Trump invites his audience to make up the missing parts of the story.

A fundamental logical deficiency cuts through Trump’s advocacies. Professors of logic,  mathematics and the sciences teach their students an essential principle of critical thinking, because it underlies all scientific theory. Students of other disciplines such as engineering and business and law often learn it as a valid method that promotes clearer understanding of cause and effect relationships. The principle is this: Any conclusion is possible from a false premise.

Trump starts every discussion of an issue with a statement that we can’t recognize as true or verifiable. “X is a mess,” is his statement about the world or some aspect of it. “X is a mess,” is more or less equivalent to “I felt grumpy when I woke up this morning.” We can’t deny that Trump utters the pessimist’s subjective expression, and that tells us something about Trump, but nothing about X. “X is a mess” is an unverified and unverifiable premise. It might be false, and we have no way of knowing otherwise. However, if we woke up grumpy today, too, we might be willing to believe “X is a mess” is true, without evidence.

But Trump skillfully exercises Aristotelian rhetoric. Having used “X is a mess” to incite our emotions, he assures us we can trust his judgement because he speaks with the authority of a rich, successful businessman with great public opinion polls. We can’t seriously quibble with this self-description, but what does that tell us about the premise, “X is a mess”? Does his authority give him sufficient knowledge of X that we can believe “X is a mess”?

Trump provides the final rhetorical element, the proposed policy, with an urgency, “we need to fix this problem now.” He doesn’t tell us why this fix works or how it derives from “X is a mess”. He may again invoke his authoritative knowledge. The policy he proposes may have crippling internal inconsistencies or violations of natural law or tyrannical abuses of government power or other flaws. It may even work, but we have no compelling explanation. “X is a mess” remains the unverified premise, and Trump can logically draw any conclusion whatever from his unverified premise.

In other words, Trump’s arguments are vapid, told with a most skillful sales style.

Trump does make some exceptions and provides some substance here and there. He does provide some evidence that he has managment savvy and knows how to negotiate complex agreements.

Trump shows familiarity with negotiations when he writes

Yet every party to a decision needs to feel his position is understood. The hardest part of putting up a building is getting the city officials, the city council, the environmentalists, local zoning boards, and the ever-critical media to agree that this was an acceptable project. Then we have to bring in the banks, the contractors, and the unions to make sure the project is financially feasible. If I’d said at the beginning, “This is exactly the way we’re going to construct this building,” the headlines would have announced: MAJOR OPPOSITION TO NEW TRUMP PROJECT! Nothing would get done.

He advocates reviewing the reports of each government agency’s Inspector General to identify waste, and he cites Walter Hickey’s report in 2013 in Business Insider that easily identified $15 billion in budget cuts. That’s verifiable, though not yet verified, and though but a tiny portion of the national budget.

In the chapter on infrastructure, he cites several sources and knowledgeable people.

But those exceptions stand out like isolated trees in a vast, empty plain.

Sometimes he makes a statement I think is right, although he presents them as unsubstantiated assertions. For example, Trump says that for each situation, he would get the best people for the job and put them on the job. On this topic, he channels Peter Drucker. For another example, he writes “... middle-class incomes are stagnant and more than 40 million citizens are living at poverty levels,” facts he could have attributed to Emmanuel Saez and the US Census. That he and I agree is merely coincidence, I must suppose. Trump hasn’t much concern for whether assertions rest on fact or not, so citations don’t matter for him. He says he differs from the other candidates in that he tells the truth. I think he says what he thinks. He speaks candidly, which is commendable. However, he gives no indication that he can recognize truth.

The policies Trump advocates include numerous fallacies, appeals to abuses of Constitutional and human rights, and incomprehensible notions.

For example, he writes “Our leaders must … engage with foreign governments to stop illegal immigration...” That is, he wants foreign governments to prevent their citizenry from traveling, much like East Germany did. Further, on immigration, he writes “The countries south of us are not sending us their best people.” The distortion here is in the framing. The “countries”, by which I suppose he means “governments”, aren’t “sending” anyone. The governments don’t have programs for rounding up people and shipping them to the US. The migrants arrive at the US by their own volition, except for a few refugees who are coerced.

Trump calls for curtailing “birthright citizenship”, the constitutional provision (14th Amendment) that a person born in the United States is a citizen of the United States. Trump intends to change it in court and in the Congress. But change requires a constitutional amendment.

In foreign policy, Trump advocates gunboat diplomacy by enlarging the US military forces and billing the governments of Saudi Arabia, Germany, South Korea, Japan and Britain for it. This resembles 19th-century imperialism in some respects. He asserts that in the first Iraq war, when Kuwait was overrun by the military of Saddam Hussein, Kuwait gave the US nothing for repelling Saddam Hussein. This is false, because the government of Kuwait paid the US defense department several tens of billions of dollars in compensation. Trump further asserts that some Kuwaiti investors chose, after the war, not to invest part of their fortunes in the US. Then Trump asks “How stupid are we?!” But he doesn’t address why he thinks it would be appropriate for the US government to commandeer the investments of any investor, nor does he address whether the US government went into this war for the purpose of obtaining investments by foreigners in the US.

On global warming, which, along with nuclear weapons, is one of the two things that could end the human race, Trump considers it less important than ISIS, and less important than millions of residences encumbered by debt greater than the property value. He claims climate change isn’t anthropogenic. He misrepresents cap and trade programs as taxes.

Trump calls Obamacare a “disaster” and a “catastrophe”. He makes several unsupported assertions and says he will replace Obamacare. But he says he does favor universal health care. He calls for permitting and requiring health insurance companies to compete across state lines and privatizing all health care insurance. The role of government will be to assure the companies are financially sound. He advocates a free private insurance market under federal, not state, regulation. The pre-Obamacare private insurance market left millions uninsured, with steeply rising premiums on the insured.

Finally, Trump says he did file a financial disclosure of 92 pages with his declarations of candidacy for President. I did find a copy of “Executive Branch Personnel Public Financial Disclosure Report (OGE Form 278e)” at https://assets.documentcloud.org/documents/2175187/trump.pdf, but not on his campaign website. Form 278e is dated July 15, 2015 and contains a detailed list of investments. I did take a quick look, and I found what appear to be a variety of unsurprising investments, and I found none of the opaque offshore investments that figured so prominently in Mitt Romney’s tax return. There is some information on income, but no summarizations of anything, so the 92-pager is difficult to comprehend. The Wall Street Journal provided an analysis: http://blogs.wsj.com/washwire/2015/07/22/what-we-learned-in-donald-trumps-financial-disclosure/ . In the book, Trump shows a one-page summary balance sheet showing liabilities of $502m and net worth of $8,736m. The opaque part is captioned “Other Assets (net of debt)”, valued at $317m with the amounts of pertinent assets and liabilities impossible to determine. At this writing, Trump has not yet disclosed his income tax returns.

In conclusion, his book is consistent with, though not quite so fiery as, his public appearances. The proposals to persecute muslims and to arrest and deport all illegal aliens aren’t mentioned in the book. Trump appears to think an issue is worth considering if he thinks it is a “mess”. He advocates a variety of costly and democratically infeasible policies to deal with the “messes”. His demands on other governments, his insults of Latin Americans, his demands for “winning” some kind of competition with China, Japan and Korea would bring him into office with multiple foreign crises of his own making. The bizarre, counterproductive and dangerous nature of the policies he describes leads one to suspect that the unknown future will bring challenges that the hypothetically future president Trump would mishandle, as he mishandles the current issues of which we know. And in his financial disclosures, he leaves much undisclosed.

-- end --


Comparing Trump and Mussolini

Hitler and Mussolini 
Photo credit: http://benitomussoliniitaly.weebly.com/relationships-with-foreign-leaders.html
If you visit YouTube, you can type “Mussolini” in the search bar, then in the Filters menu, choose Playlist. Or click here. (Ignore Alessandra Mussolini, Benito's granddaughter who made a living taking her clothes off before running for public office.) You will find dozens of old biographies of Benito Mussolini, Il Duce, the authoritarian head of state in Italy in World War 2.

Some friends had said things like “Donald Trump is like Mussolini,” and “Donald Trump is like Hitler”. If there is some politician you don’t like, you can say he is “just like Hitler” or some such, and it’s probably somewhat true. Everybody has at least something in common with Hitler. Because such phrases are ad hominem slurs on the subject, I like to think I don’t give them much credence.

We see in these historical extraordinary figures (and some others such as Napoleon, Stalin, Mao, Leopold II of Belgium) a close association with events we don’t want our society to repeat. We shiver a bit and think “What if [contemporary politician] is just like Mussolini?” We answer our own question with the implication that, by agreeing with [contemporary politician], we would advocate dictatorship.

I spent a Sunday afternoon watching Mussolini biographies on YouTube. Some characteristics shared by Benito Mussolini and Donald Trump are these:

Charm. Mussolini began his career as an editor for socialist newspapers. His readership loved his work, and with time, he was highly regarded. In later life as a political leader, he gave stirring speeches that excited the crowds. Trump gives a speech, and the crowd goes wild.

Loose with the Truth. The professional fact-checkers catalog the numerous major inaccuracies of Trump’s public statements. He isn’t the first politician to tell a lie, but he tells whoppers, and relatively many of them. Mussolini said that he could often easily convince people of falsehoods. With the general public’s quickly forgetting what happened not long ago, he could even contradict his earlier statements.

Cultivation of Personal Story. Both Mussolini and Trump worked public relations to portray themselves in the grandest and most flattering light.

Ambiguity in Political Affiliation. Although he had made his mark as a widely respected socialist, when Mussolini seized totalitarian power, communists and socialists in the national parliament opposed him, so he arrested many of them, and he remains suspected of killing some. Trump changed his allegiance among political parties several times.

Ethnic Cleansing. Trump has advocated expelling millions of Mexicans from the USA for their alleged criminality, and creating special conditions on the travels of Muslims due to their alleged terrorism. Mussolini asserted a “natural law” requiring Italians to dominate the Slavs of the Balkans.

Human Rights. Mussolini removed constitutional provisions protecting free speech, multiple political parties, and removed various constraints on government power. Trump advocates for violations of the Geneva Conventions  such as torture and collective punishments. He also advocates for “opening” libel laws, making libel suits easier when a publication has been “unfair” or “incorrect” or “false”.
The Only One. Trump said in his speech accepting the nomination of the Republican Party for President that he is “Nobody knows the system better than me. Which is why I alone can fix it.” Mussolini said that he was the only one who could make Italy great again.

For us, one important difference is that Donald Trump has not yet ascended to executive power, whereas Mussolini did have and use executive power to express his will. Just because Trump shares some traits with Mussolini, we can’t logically infer Trump’s election will have outcomes similar to Mussolini’s rule in Italy.

Full Disclosure: I find most objectionable Donald Trump’s promises to abridge the laws of war, and to practice religious and ethnic discrimination. I also object to other policies he has advocated, such as nuclear proliferation, hesitant response to a call from NATO, high tariffs, expanded military spending with reduced taxes, reduced taxation relatively beneficial to the wealthy, and ending universal health care with a return to private health insurance plans. He doesn’t attempt to explain himself logically, but by ad hominem comments and inexcusable discourtesy. I find Donald Trump categorically unsuitable for President. Despite her faults, I will vote for Hillary Clinton.


Does ETF Dividend Growth Predict Market Price Performance?

An investor may profit by buying an index ETF with a high rate of growth in payout of dividends.

I’m interested to know of other studies that may confirm or deny these findings.

We took a casual sample of 31 index-based ETFs at March 31, 2016. We measured the annual rate of growth in dividends by an exponential least-squares fitting of the dividends over the latest 20 calendar quarters. We found a relatively high positive correlation (R^2=0.20, P=0.01) for the dividend growth rate with subsequent price performance for the three months from March 31 to June 30, 2016.

An earlier sample of 11 index-based ETFs at December 31, 2015 showed similar results over the six months from December 31 to June 30, 2016.

Both samples contained real estate ETFs and broad-market ETFs. When we separated out the real estate ETFs, we found the correlations much stronger for both subsets, as might be expected.

Weaknesses of this little study include little care taken to construct randomized samples, samples of small size, short time spans for price performance measurement, and cursory prior search of the literature.


Finding the Cure - Thought Experiment - Part 3 of 3

Part 3

The two situations, as described in Parts 1 & 2, are identical.

Were your choices consistent? If you chose A in part 1 and A' in part 2, then your choices were consistent. The Part 1 decision and the Part 2 decision are identical, just worded differently.

Most of the human race would choose inconsistently. Don't be surprised if you are among them.

The expected number of survivors in A and A', B and B' is also the same: 200, and the expected number of deaths is 400 in each case.

A and A' have one possible outcome: 200 live and 400 die. B and B' present two probabilistic outcomes: there is some chance that all of them will live, and a larger chance that all of them will die.

If you chose A and A', then, in effect, you chose for 200 people to live and 400 to die, with certainty.

According to Kahneman "Thinking Fast and Slow" , this is an example of the effect of "framing". Presented with Part 1, which presents in the frame of surviving (surviving is "good"), most people will choose A. The same people, then presented with Part 2, which presents in the frame of dying (dying is "bad"), will choose B' and take the long odds of saving everybody. This tendency holds true for public-health officers, MBA students, cab drivers, everybody. (The response also holds true when separate samples of respondents are asked to decide on Parts 1 and 2.)

Kahneman's explanation is that our minds resolve decisions "between gambles and sure things differently, depending on whether the outcomes are good or bad. Decision makers tend to prefer the sure thing over the gamble (they are risk averse) when the outcomes are good. They tend to reject the sure thing and accept the gamble (they are risk seeking) when both outcomes are negative.

This dismays us. How could people who make even the most important decisions be swayed by such a superficial manipulation? But this is how human minds work. 

Our best strategy: remain aware of and accept and cope with this human inconsistency.


Looking for Part 2? Click Here.
Looking for Part 1? Click Here.

Daniel Kahneman presented this thought experiment in his book "Thinking, Fast and Slow" http://smile.amazon.com/dp/0374533555
Photo: San Francisco Department of Public Health http://www.sfcdcp.org


Finding the Cure - Thought Experiment - Part 2 of 3

Part 2

A different situation...
Imagine that the United States is preparing for the outbreak of an unusual disease which has already claimed many victims in Asia, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume the the exact scientific estimates of the consequences of the programs are as follows:

If program A' is adopted, 400 people will die. If program B' is adopted, there is a one-third probability that nobody will die and a two-thirds probability that 600 people will die.

You are the surgeon general, and the decision is yours. Do you choose program A' or program B'?


Looking for Part 1? Click Here.
Looking for Part 3? Click Here.

Daniel Kahneman presented this thought experiment in his book "Thinking, Fast and Slow" http://smile.amazon.com/dp/0374533555
Photo: San Francisco Department of Public Health http://www.sfcdcp.org