Wednesday, November 16, 2016

The Importance of Being Electoral

What??? Hillary Clinton had a majority but still lost? It may seem unbelievable and unfair, but's as fair as it's been for more than 200 years.

A Visit to Electoral Land

For those of you who need a quick US civics lesson I'll give you the long story short. In the US Electoral system, voters don't choose the President and Vice President directly. Instead, they vote for Electors who gather in each state (the first Monday after the second Wednesday in December) to cast their ballots for President and Vice President.

Each State is assigned a number of Electors equal to that State's number of Congressional representatives plus two, being the number of Senators. Presently there are 538 Electors nationwide. The number change every 10 years as the US Census measures the national population and demographic.
In the early days of the US electors were not chosen by popular vote. In most states the Electors were chosen by the state legislatures. Clearly this meant there could a wide gap between who the people wanted for President who was actually.

Over time this all changed and by 1870 all states had gone to a where the Electors are actually chosen by the people so that in practice, the Electors are really proxies for the people. What makes the Electoral college system unique is that instead of simply counting the nationwide totals, the state by state totals are counted. It's not enough for a candidate to win big in a handful of large states. Instead, a candidate must win across a wide spectrum of the electorate in several states.

Electoral Implications

A small swing in a handful of states seem to decide the elections. This may appear to be the case, but that's only when the elections are really really close. We've see the colors of the electoral map change dramatically in a short space of time. In 1964 the entire map was blue. In 1972 the entire map was red. Whenever an election is close, by definition a small percentage of the population decides the race.

The system forces candidates to address people across the country. If polling were nationwide a candidate could theoretically sweep regions with large populations and win the nation-wide vote. This would basically leave rural America at risk of being ignored.

The marginal balance shifts to smaller states. In a national wide system a candidate could win heavily in a few heavily populated states and in the process ignore voters in less populated states.

Population and demographic changes are taken into account over time. Look at California, for example. For many years the state accounted for less than 5% of the Electoral College. Over the last few decades the population has increased sharply and now California is more than 10% of the Electoral College. Similarly, Texas and Florida have become more important in recent years. New York, on the other hand is less important than it used to be.

Minority matters. The election we've just witnessed is a case in point. It rarely happens, but from time to time a candidate wins enough states to obtain a victory in the Electoral College. Democracy is not about 51 people getting their way all the time and 49 people always losing. If year after year 49 people lost while 51 won over time the 49 would lose faith in the system. They could become effectively disenfranchised and systematically abused. From time to time the minority needs a break! They need to get their turn at the helm for the good of the greater whole. Much as I don't like Donald Trump, maybe, just maybe, he'll really fight for the minority that elected him and America will really be better. Or maybe he'll turn out to be a disappointment and a disaster. If so, then so.  At least the minority can't argue they didn't have a chance.

States have rights. America is one nation, but one nation composed of 50 individual, sovereign states, each of whom can determine its own affairs. If the people of Maine want to divide their Electors proportionally instead of winner take all, that's their choice. If the people of Alaska want to legally bind their Electors to vote according the will the of the majority, that's there business and their right.

The College Provides A Safety Valve. There are 21 states at the moment where Electors can break from the popular will. Almost never do Electors vote as anything other than a proxy for the results of the electorate. But maybe, there will be a day when we will thank ourselves that possibility of Electors overriding the electorate exists.

At the end of the day, bizarre as it may seem, the Electoral College makes sense and serves America well. The Founders of America were deeply suspicious not only of central authority, but also of the madness of a crowd. The naive interpretation of democracy is majority rules. But majority rules can very easily mean majority dictates, majority is tyranny. Letting the minority win from time to time is maybe the price to pay for a stable democracy.

The other thing the Founders were afraid of was the possibility an election could be somehow manipulated so that the Presidency was not won but stolen. In those days the system was particularly vulnerable to the possibility that one or a few states could spoil the process and produced lopsided results on a national level.

Today the problem still exists, but the root cause is different. Make no mistake here the possibility of national elections being hijacked is just as real if not more in the 21st century as it was in the 18th century. We live in an age where sound bytes matter far more than serious reflection. We live in an age where masses of people can be swayed by an increasingly powerful media able to propagate ideas and spin them virally in a few clicks.

The crowd has a life of its own and the crowd is far more connected to each other than ever before. One day the crowd will turn into a stampede. When this happens, it will be really comforting to know there exists the possibility for one last bastion of sanity, a few souls, a few Electors in a few states who are brave enough and courageous enough to put forward their conscience and change the balance before it is too late.

On the back of Donald Trump's election there have been calls for a change in the system. Those calls emanate from the frustration that democracy didn't deliver the result they wanted. When that happens they are naive enough to believe the problem was that the majority didn't win, so therefore democracy lost. I submit differently. I submit democracy won.

We may not all like the result. But rest assured, our system and the checks and balances we put on executive power mean the as a nation we are far strong than any one person in any one office, even if that office is the Oval Office.

I'll be a conservative stick in the mud, habit driven toad and take my chance with the Electoral College.

Michael Sonenshine is CEO of Symfonie Capital LLC. He manages the Symfonie Lending Fund, Symfonie Angel Ventures and the SymCredit P2P Lending Platform.

Tuesday, November 15, 2016

Trump's First Appointment Stirs Controversy

 Photo courtesy Kirk Irwin / Getty Images
Donald Trump's appointment of Stephen Kevin ("Steve") Bannon as Chief Strategist and Senior Counsel has met widespread criticism. But it may also turn out to have been an incredibly savy and smart move. We shall see.

Donald Trump the candidate was at times deplorable, nasty and vindictive. His tune changed completely last week and many people had hoped that really the rhetoric was gone and Donald Trump had reconciliation in store. He insisted he would be the president for all the people, saying it was time to for America to bind its wounds.

All the good will he may have earned over the last few days has probably just gone out the window. His appointment of Steve Bannon brings someone into the White House who is the darling of the "alt-right", a loose collection of far right political groups. Mr. Bannon has earned a reputation not only for his extremist views, but also for brass knuckle, nasty politics, back stabbing, double dealing, dirty tricks that stoke fear and mistrust in Washington. If the President elect somehow feels he needs a person at his side who can threaten political opposition through the use of right wing media channels, he must feel awfully weak and vulnerable.

Delve into the detail. This can be an incredibly smart choice.

As worrisome as the appointment can be, it is possible this is a politically smart, sophisticated and savvy choice. Steve Bannon obviously has the tools at his finger tips to influence opinion among the significant portion of the electorate that voted Mr. Trump into office. Potentially in four years their support will be needed again. Also in just 12 months time mid-term congressional elections will loom on the horizon. The House of Representative and one-third of the Senate run for election every two years.

Yet if Donald Trump wants a successful presidency, and we must believe he does, he must address political and economic realities that may lead him to make very different decisions and adopt very different policies than he promised on the campaign trail. In fact, he might struggle to get much of his agenda through the current Congress and his Supreme Court appointments may have to be more moderate than his supporters would prefer.

Reality might be that Donald Trump needs Steve Bannon not to defend from the left, but to defend from the right. Steve Bannon built a career on his ability to sell ideas to the far right. The counterpart to Steve Bannon on the left is David Brock, founder of Media Matters for America. According to political columnist Joshua Green, Brock’s attitude toward Bannon "isn’t enmity toward an ideological opponent, as I'd expected, but rather a curiosity and professional respect for the tradecraft Bannon demonstrated in advancing the Clinton Cash narrative."

Who is Steve Bannon?

Since 2012 Mr. Bannon was the Executive Chairman of conservative news and media website He was named to that job following the sudden death of Breitbart's founder Andrew Breitbart.

Mr. Breitbart was an American journalist who was among a generation of writers developing internet based news media websites including The Huffington Post and The Drudge Report. Journalists such as Nick Gillespie and Conor Friedersdorf have credited Breitbart with bringing new voices to debates about politics and culture. Breitbart developed itself as a conservative, sometimes right-wing counterpoint to the mainstream media.

In October of 2015 political columnist Joshua Green posted a commentary on Bloomberg Businessweek calling Stephen Bannon one of the most dangerous political operatives in America. The article focused on Mr. Bannon's stewardship of Breitbart, Mr. Bannon's work as founder of the non-profit Government Accountability Institute (GAI), and the tactics Mr. Bannon uses to discredit his political opponents both on the left and on the right.

Ben Shapiro, who left Brietbart in March 2016 after nearly four years as editor-at-large of, wrote recently in the Daily Wire "Bannon....turned Breitbart into his personal domain, making himself a regularly bylined columnist (certainly rare for a major media company) and installing himself as a radio host on Breitbart Radio on Sirius XM....he used his role as Breitbart CEO to turn the outlet into Trump Pravda, creating a stepping stone to close connection with Trump."

According to writer Hada Gold as CEO of Breitbart, Bannon regularly ordered subordinates to write stories that supported his allies and tore down adversaries.

In various news media accounts former employees accused Breitbart executive chairman Stephen Bannon of having "turned a website founded on anti-authoritarian grounds into a de facto propaganda outlet for Mr. Trump."

Here are 8 things you should know about Steve Bannon:

1. He graduated from Virginia Tech in 1976 and holds a master's degree in National Security Studies from Georgetown University.

2. He was an officer in the United States Navy, serving on the USS Paul F. Foster (DD-964) as a Surface Warfare Officer in the Pacific Fleet.

3. He holds an MBA from Harvard Univeristy, having graduated withhonors (cum laude).

4. He built a career as an investment banker with Goldman Sachs and then founded his own boutique M&A firm, Bannon & Co, which specialised in the media and entertainment industry.

Through Bannon & Co., Mr. Bannon negotiated the sale of Castle Rock Entertainment to Ted Turner. As payment, Bannon & Co. accepted a stake in five television shows, including Seinfeld. Société Générale purchased Bannon & Co. in 1998.

5. He was an executive producer in Hollywood.

He has executive produced several feature films and worked with notable with actors such as Sean Penn, Anthony Hopkins, Val Kilmer and Ed Harris. He's also written, produced and directed several political documentaries. Notable among them are Fire from the Heartland: The Awakening of the Conservative Woman, The Undefeated (account of the career of Sarah Pallin), The Hope & the Change(about Democrats and Independents from across America who supported Obama in 2008 and were ultimately disappointed).

6. He was Chairman and CEO of right-wing conservative web-site

Under Mr. Bannon's leadership flourished and developed following among far-right conservative groups, also known as the "alt-right." Content and commentary were posted on the site that drew criticism as being white-supremecist, anti-semitic, and bigoted.

According to Ben Shapiro, former editor-at-large of "I quit Breitbart News when it became clear to me that they had decided that loyalty to Donald Trump outweighed loyalty to their own employees....he has shaped the company into Trump’s personal Pravda…Bannon turned Breitbart into his personal domain, making himself a regularly bylined columnist (certainly rare for a major media company) and installing himself as a radio host on Breitbart Radio on Sirius XM. Finally, he used his role as Breitbart CEO to turn the outlet into Trump Pravda, creating a stepping stone to close connection with Trump. "

7. He is the co-founder and executive chairman of the Government Accountability Institute (GAI)

GAI is a non-profit organisation that specialises in deep forensic analysis and inveIstigative journalism of public figures. According to GAI findings have been used in books written and sold commercially by GAI executives a network of media partners.

Writing about GAI for Bloomberg Businessweek Joshua Green says GAI "is set up more like a Hollywood movie studio than a think tank. The creative mind through which all its research flows and is disseminated belongs to a beaming young Floridian named Wynton Hall, a celebrity ghostwriter who’s penned 18 books, six of them New York Times best-sellers, including Trump’s Time to Get Tough. Hall’s job is to transform dry think-tank research into vivid, viral-ready political dramas that can be unleashed on a set schedule, like summer blockbusters. “We work very long and hard to build a narrative, storyboarding it out months in advance,” he says. “I’m big on this: We’re not going public until we have something so tantalizing that any editor at a serious publication would be an idiot to pass it up and give a competitor the scoop. ”

It's worth noting that Mr. Bannon is open about the purpose of GAI and its commercial uses. GAI is not so concerned about finding scandal or highlighting political hypocracy in any particular corner. Rather, it is concerned about providing the factual and investigate basis for journalists, and then finding the best (i.e. most profitable) way to put that story out to the public.

8. He targeted the political demise of House Speaker Paul Ryan and other Republicans

According the political news website in December 2015, weeks after Ryan became Speaker, Bannon wrote in an internal Breitbart email obtained by The Hill that the “long game” for his news site was for Ryan to be “gone” by the spring.

The curious thing about this is that in the same breath that President elect Trump announced Mr. Bannon's appointment, he appointed Reince Priebus to the Chief of Staff position. Mr. Priebus is the Chair of the Republican National Committee. Importantly, he is the former chairman of the Republican Party of Wisconsin, where he is credited with helping to bring nationally known figures such as Paul Ryan, Speaker of the House, and Scott Walker, Governor of Wisconsin, into power on the state level and prominence on the national stage.

So in the same breath Mr. Trump brought one of Paul Ryan's political opponents, he brought in one of Mr. Ryan's long time political allies.

We can expect one of two outcomes - either a political fight will get shelved and people will professionally focus on serious issues of government or the White House will be an place filled with mistrust animosity, and Machiavellian style politics.

The Bottom Line on Bannon

Steve Bannon is a controversial figure who caters to right wing groups that espouse racist, sexist views that many Americans find offensive and appalling. He's also been highly critical of the Republican party as well as the main stream media in general.

Critics also say the appointment of Mr. Bannon flies in the face of Mr. Trump's recent statements that he wants to heal the divide in America. They say that Mr. Bannon reflects the politcs of hatred that fueled Mr. Trump's campaign.

The even more sinister view is that Mr. Bannon will bring Nixon-style dirty trick's tactics back into the White House amounted to an abuse of presidential power. We shouldn't forget that Mr. Bannon is as much a business man as he is a political opinion maker. It's hard to imagine Mr. Bannon is not likely to find plenty of ways to use his new posting to his advantage, politically and economically.

On the other hand, there's something we can find reassuring in the appointment of Mr. Bannon. Mr. Trump can credit Steve Bannon in part for helping him win the election. Isn't it better to have the guy Mr. Trump is indebted to in plain view rather than lurking in some dark alley?

Having Mr. Bannon in the White House actually makes him less of a threat because he will clearly be under scrutiny and can be more easily publicly confronted.

It also possible that Steve Bannon's job is not to threaten President Trump's opponents either on the left or with the Republican party, but instead to sell President Trump's policies to the group of supporters most likely to be disappointed.

The appointment of Mr. Bannon highlights one of the beauties of an open society where there is freedom of speech and freedom the press. The alternative to free speech and free press is to drive opposing and hateful views underground and behind closed doors where they can fester and where they can haunt us where and when we least expect. I'd much rather know who my opponents are so I can confront them and defend myself than live in fear about what hides in places I can't see.

Breitbart senior editor and political author Peter Schweizer points out that political corruption and cronyism exists throughout the political spectrum. In 2016 he authored Clinton Cash: The Untold Story of How and Why Foreign Governments and Businesses Helped Make Bill and Hillary Rich,. Just a few months earlier in the fall of 2015 he authored an e-book Bush Bucks: How Public Service and Corporation Helped Make Jeb Rich.

“To me, Washington, D.C., is a little bit like professional wrestling,” he told Joshua Green. “When I was growing up in Seattle, I’d turn on Channel 13, the public-access station, and watch wrestling. At first I thought, ‘Man, these guys hate each other because they’re beating the crap out of each other.’ But I eventually realized they’re actually business partners.”

My father, may he rest in peace, always told me "the truth lies somewhere in the middle." One terrorist is another man's freedom fighter. What worries me most about Steve Bannon is that the White House of 2017 will begin to look like the White House of 1972 and that Capital Hill will see visit the days of the McCarthy hearings or that we are likely to see a repeat of the Clarence Thomas / Anita Hill saga brought little and cost much.

What gives me hope is the notion that Steve Bannon will find the language and tools to generate support for a President Trump who finds support on both sides of the aisle and negotiates compromises that take America forward.

For me the issue not that Hillary would have been better, but that even if his intentions are good, Donald Trump's White House will come to represent the worst of America. In these difficult days we can't afford politcal theatre and a media circus organised by people who profit not matter what the outcome. Sadly, I struggle to see anything redeeming or decent in this appointment.

Michael Sonenshine is CEO of Symfonie

Saturday, November 12, 2016

5 Take-Aways from Trump's Election

Like many political observers I was surprised by Donald Trump's victory. I didn't expect him to win the Republican primary to begin with. So in the coming weeks I'll be buying the first beer for a few of my friends who rated the Donald's prospects of winning higher than I did.

Not only was I wrong about Mr. Trump's victory, I was also wrong about the outcome of the Brexit referendum this past June. Being wrong twice on such big event leaves me wondering what I've misunderstood or underestimated.

As a credit analyst and investment manager I also have to wonder how this event will impact the global economy in the months and years ahead.

For the record, I didn't vote for the Donald. I voted for the Hillary. Growing up in New York I followed his career and grew to dislike his business style, how successful his business was.

I detested his campaign rhetoric. The words that come to mind are vulgar, sexist, racist and arrogant. Personality aside, I also believe he doesn't have the skill set I want in a President.

Having said this, I believe he is intelligent and practical. What he lacks in experience he can compensate for in his selection of staff and cabinet. He leans toward economic liberalism and less government intervention and regulation.

My guess is that his policies and his cabinet will reflect these general principles. If this happens America's economy will continue to improve and the lives of many Americans will be better.

I am optimistic he will bring smart, capable policy advisors and cabinet members into the administration, manage them well, listen with respect to Senate and House members on both sides of the aisle, he stands a good chance to take the country in a good direction.

Hopefully he will conduct himself differently, better, as a president than as real estate developer and as a political candidate. I'd love to see him succeed as a president and do great things for America.

My fear is that we'll have an embarrassment in the White House who represents the worst things America can be rather than the best and makes decisions that turn America into a country filled with hate, violence, racism, sexism and everything else I heard come out of his mouth on the campaign trail.

I'll be happy to settle for a neutral, boring, neither good nor bad, President Trump whose presidency goes down in history as unremarkable.

I've come to the view that neither of the victory of Brexit or the election of Trump reflects some fundamental paradigm shift in the way our world will function in the months and years ahead.

This is not to say we should ignore them. Rather, we should put them in perspective for what they are - clear signs that a rising proportion of the electorate rightly or wrongly fees disenfranchised, unheard, frightened and distrustful.

The victories of Donald Trump in the US and the Brexit campaign in the UK reflect the ability of politicians to tap into that sentiment and amplify its voice. In an open, democratic society these sort of victories are healthy. They encourage debate and they force policy makers to listen more closely to the needs of the population.

With this in mind, I highly 5 take-aways we can draw from Donald Trump's victory.

Take-Away Number 1 - Spending More Doesn't Win Elections

Recent campaign filings show spending on Hillary Clinton's campaign was nearly US$700 mn, nearly 2.5 times the $250 mn. Donald Trump spent. Consider the failed campaigns of Donald Trump's Republic rivals. Jeb Bush's campaign spending was nearly $150 mn and he was one of the first to drop off the campaign trail. Other big spenders were Florida senator Marco Rubio ($150 mn) Ted Cruz ($130 mn) and Dr. Ben Carson ($80 mn).

Candidates can plaster the walls with posters and flood the airwaves with commercials incessantly but the law of diminishing returns is immutable. Preaching to the converted offers little value. People grow tired of hearing the message and start tuning it out.

Take-Away Number 2 - There's a Big Gulf Between Rhetoric and Reality

Politicians compete not only by selling their view to the electorate, but also by saying things the electorate wants to hear. Campaigns are political theatre. After the election is over the winners face the very real task of governing and confronting realities.

During the campaign many politicians cast Donald Trump as a villain. He faced harsh criticism from within his own party and at times the exchanges became vituperative and personnel. It was a disgusting and vulgar chapter in America's political history.

Now we face a new world. The election is over. The Republicans who control the House and Senate have a legislative agenda. Whatever legislation they propose must be acceptable to the President and vice versa.

The Republicans have a majority of just 1 in the Senate. Whatever Mr. Trump said about Washington on the campaign trail, he will have to work with his fellow politicians, be they Republican or Democrat or his presidency will be weak and ineffective and he'll spend much of the next four years convincing the electorate to send different politicians to Washington.

Take-Away 3 - Trade Policy With a Big Stick

Trade and foreign policy are the areas where a president's influence and powers are greatest. Mr. Trump has been an outspoken critic of NAFTA and similar free trade agreements. He sees such deals as an attack on US jobs and one of the reasons for the decline of manufacturing in the US.

(image courtesy of

When President Trump sits down to seriously study the history of free trade agreements he will see that the North American Free Trade Agreement (NAFTA), signed by President Clinton was negotiated principally by the elder President George H.W. Bush and that when the deal passed in Congress it enjoyed wide spread bi-partisan support. Historically the Republican party has been the advocate of free trade.

He'll also find that since the passage of NAFTA nearly 25 years ago the US has entered into 20 other free trade agreements under the administrations of the younger President George W. Bush and the outgoing President Obama.

He'll be pleased to know that the Office of the Trade Representative has evolved over the years to the point where it works on trade issues in as cooperation with 19 other Federal Agencies. It has offices around the world with a staff of 200 and 28 advisory committees taking input from more than 700 private sector citizens. Depending on how you look at it OTR either provides the real serious infrastructure needed to implement and administer trade agreements or it is a beehive of lobbyists and special interest groups.

Most importantly, when President Trump sits down to think about America's trading policies he'll quickly realise that trade policy has winners and losers on both sides of the fence and in both camps. It's easy to point a finger and look at how many jobs left the US. But that's only part of the story.

Another part of the story is that many of those jobs might have left the US in any case, free trade agreement or not. Also, many of the goods that Americans purchase cost less than they would otherwise in the absence of a trade agreement. Finally, no discussion about the merits of trade agreements is complete without looking at the jobs that are created, the services that are exported and the earnings of the people that fill those jobs.
Conventional wisdom is that NAFTA's days are now numbered and that the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) will not go forward.

Nothing can further from the truth! More likely what will happen is that Mr. Trump will quickly come to understand who in America loses and who in America wins from each trade agreement. He'll look at how many jobs can be created, how many jobs are likely to be lost. He'll look at which industries are likely to suffer and which industries are likely to prosper. He'll look at which goods and services are likely to be more expensive and which are likely to be less expensive. He'll also understand that he will have to work with those winners and losers in the years to ahead and he'll calculate the impact all around including that cost or gain to his presidency.

He'll have some long, tough negotiations with his trade counterparts, which probably is a good thing. There will be political theatre and strong statements from abroad as well as from the President's domestic critics.
Behind the scenes there will be negotiating, more winners and losers. One of Donald Trumps greatest strengths is that he well understands negotiating processes, he understand how to posture and how to present the positions.

In the end, he'll probably win some concessions, not as many as he'd like, but some anyhow. Until we get closer to the reality how much the net gains will be and who in America will win and who will lose is difficult to say. In the end we may have the status quo.

The Donald we saw on the campaign trail painted with an incredibly broad brush. All those jobs left America for reasons for more complex and far more varied than NAFTA. Many of those jobs would have left with or without a trade deal. Even if they had stayed, the cost might have higher prices for those goods - transfers of wealth from consumers to businesses. Or the factories that stayed might not have been able to compete at all without tax breaks and government support - transfers of wealth from the public purse to to private business - the sort of stuff Republicans except when they are on the receiving end.

The key take-away from the election of Donald Trump is that we are likely to see more criticism of the raft of trade agreements, followed by tough, but firm negotiations aimed at actually getting to a deal Donald Trump can present as a winning deal.

NAFTA, TTIP, TPP and the others should not be presumed dead. Rather, they should be more appropriately thought of as patients waiting to see the doctor and opportunities for President Trump to succeed. Interestingly TTIP comes with a potentially interesting kettle of fish. The EU will want to find a way to get to yes on TTIP at the same time as the UK, on the verge of exiting the EU, potentially, will want to develop a trading agreement.

Take-Away 4 - Wave Goodbye to ObamaCare? Not so fast!

President Trump has promised to "repeal and replace" the Affordable Care Act (ACA), also known as ObamaCare. This act was passed at a time when the Democrats controlled the house and Senate and could pass the act without any Republican support. Since that day, whatever the merits and the good intentions of the act are, it has become a source of contention between both parties and a symbol of the divisiveness and lack of bipartisan initiative in America.

Here we are back to the rhetoric versus the reality. Donald Trump's rhetoric was to repeal and replace. Reality is that repeal without something at the ready to replace could create much bigger problems. A more likely outcome is that either the existing act will be amended or the repeal and then the replacement will happen practically the same day.

Millions of Americans now have healthcare access as a result of the Affordable Care Act (ACA). Repeal without replacement for sure imposes cost on those millions of now insured people, many of may be among his supporters. Repeal without replacement also means all the rest of the insureds will bear cost in terms of higher premiums. Repeal without replacement will force hospitals and insurance companies to bear the cost of treating the uninsureds. Repeal without replacement will be a mess!

What I hope is that Congress will change its ugly ways, find a bi-partisan solution to fix the ills of the ACA and make things better in America all around. Whether that is done an amendment or repeal and replace is irrelevant and unimportant.

America spends 17% of GDP on healthcare, nearly 2X what many other countries around the world spend. I don't know whether we should blame doctors, hospitals, insurance companies, pharmaceutical companies, lawyers, regulators or the fact that so many Americans are uninsured or underinsured. It's a collective and complex problem. Fixing the problem means there will be winners and losers, all whom have strong lobbying ability and influence in Washington.

Frankly speaking, I'm not a healthcare expert. What I can say with certainty is that my wife and I are insured in the Czech Republic. I've seen the kind of care we and our friends and my employees get in the Czech Republic and elsewhere in Europe. I've seen the value we get for our healthcare spend and I can honestly say I'd much rather get sick in Prague than in New York.

Even our dog gets state of the art medical care for a fraction of what it would cost in the United States!

Take-Away 5 - Nothing Really Changed on the American Political Landscape

Donald Trump's victory defied conventional wisdom. He ran as an outsider within the Republican Party and spent far less than his rivals. He is socially quite liberal compared to his rivals. His rhetoric was highly offensive to any reasonable person. And yet, the electorate clearly forgave him for all of that.

During the campaign he laid claim to having begun a political movement. It's hard to argue he really has changed anything in America. He rightly recognised that his best chance at getting elected was to present himself as an agent of change, a person who would challenge the status quo and restore something that seems have been lost in amid the complexities of a changing society. That message resounded loudly on the electorate.

It's important to realise the America of today is much different than the America we saw several decades ago. The population is increasingly rapidly. It's estimated that over the next 30 years population will grow by nearly 40% from present levels. Population growth is fastest in the cities and there is a consistent migration to the south and south west. Many towns twenty years ago were quiet villages where everyone knew each other. America today is far more culturally and ethnically diverse than it has been in the past and this trend looks set to continue.

Sheila Suess Kennedy, J.D., Professor of Law and Public Policy in the School of Public and Environmental Affairs at Indiana University Purdue University at Indianapolis, wrote eloquently about this issue in a post on She pointed to American inequality, the diminishing numbers of people who can be categorized as middle class, and the widening gap between wealthy Americans and everyone else and said that progressives (She blogs at

America is still the world's largest manufacturer, with output exceed that of China and India combined. Still, at least one in every six manufacturing jobs has left the country since 2000. Because population tends to concentrate around manufacturing facilities, this change has scarred many communities. Retraining is far easier said than done. The landscape of rural America is filled with people that have been left behind in world that changed around them.

The collapse of the financial sector in the wake of the sub-prime mortgage crises exacerbated the problems. Drive through many cities and towns in America and you'll see homes boarded up that were repossessed. You'll see urban decay. You'll see gang violence. You'll see a communities and police that don't trust each other. Add to this mix terrorism, and a global refugee crisis.

It's therefore no wonder a large portion of the electorate sits up and takes notice when a Donald Trump comes to town, speak to them in terms they understand, points to their fears and insecurities and offers them a solution. They feel Washington has abandoned them and they are probably not far from the truth. Getting things done in Washington for the good of the country is a tall order when Congress votes along party lines and it seems nothing gets done at all.

Irrespective of whether or not Donald Trump really can deliver, nearly half the electorate is ready to listen and desperate enough to give him the chance.

Looking at the electoral maps and the election results over the last few decades, there is little evidence than anything really changed in the American political landscape at least since 2000, other than the arrival of savy marketer adept at making his case in the media. Bill Clinton and Ronald Reagan changed the political map far more than many of their predecessors and certainly more than their successors. Note the following:
  • Donald Trump didn't have a majority of the popular vote. In fact, Hillary Clinton polled 48.5% to Donald Trump's 47.9%.
  • Nearly all the states that voted Democratic in the last several elections voted strongly for Hillary Clinton.
  • Donald Trump's victory came from very thin victories in 3 states he managed to swing - Michigan, Wisconsin and Pennsylvania.
  • It's arguable that Donald Trump's victory can be attributed to a strategic failure on the part of the Clinton camp. While Trump was wrapping up his campaign in Michigan, Wisconsin and Pennsylvania Hillary Clinton was holding rallies in Florida and North Carolina, both states that have large Republican populations and where she lost by wide margins.
  • Barrack Obama won with significantly strong majorities in both of his campaigns. The electoral map was similar to what it was this year, except that Mr. Obama captured Florida, Michigan and Wisconsin, Pennsylvania and Iowa.
  • George Bush defeated Al Gore in 2000. Like Donald Trump, Mr. Bush lost the popular vote by a slim margin. Unlike Mr. Trump George Bush won in Colorado and New Hampshire and lost in Michigan, Wisconsin and Pennsylvania.
2016 - Trump vs. Clinton
2012 - Obama vs. Romney

2008 - Obama vs. McCain

2000 - Bush vs. Gore

1992 - Clinton vs. Bush
(Clinton won states that no Democrat had won since Carter was elected  in 1976)

1984 - Ronald Reagan vs. Walter Mondale
1976 - Carter vs. Ford

Big Strategy Lesson!!!!!

  • Fight the battles you are likely to win rather than those you are likely to lose. If Hillary had focused on Michigan and Pennsylvania she might have been headed to the White House.

  • While you are off trying to capture new ground, you may find your opponent has breached your defenses and cost you the war.
A week before the election an article ran in the Atlantic Magazine addressing this very issue. Hillary Clinton's spending was highest in Ohio, North Carolina and Florida. These were states she either wanted to win or believed she could win. She couldn't have been more wrong! Donald Trump won those state with thin, but comfortable margins.

Her spending was lowest and her campaign stops fewest in the states she really needed to win - in particular, Wisconsin, Michigan, Pennsylvania. These three states gave Donald Trump 46 electoral votes and the presidency. Yet his margins in these states were in all cases less than 1%.

In a genuinely insightful and well written piece, Is Trump Outflanking Hillary Clinton, Ronald Brownstein pointed out the Hillary Clinton was spending time in states that were Republican leaning rather than in states that were traditionally Democratic but could be lost if Donald Trump managed to appeal to marginalised voters who believed the Democratic nominee was out of touch with them.

I'm not a political strategist by training. I'm a credit analyst and an investment manager. At the William E. Simon Graduate School of Business I read many case studies about corporate strategy that drew attention to these similar principles business. Hindsight is always 20/20. It's easy to play Monday morning quarterback and second guess the Clinton campaign strategy.

The Clinton camp underestimated the strength and appeal of Donald Trump's message, which above all played on people's economic and social fears. Some historians are may look back and say this was just the way the cookie crumbled and that her team miscalculated or was unlucky. Others will be more critical. They will look back and say that candidate herself was just too arrogant and too out of touch with her constituency in states that she really should not have lost.

Hillary Clinton's loss is especially ironic, considering that her husband, Bill Clinton, when running to oust incumbent George H.W. Bush in 1992 said the reason he will win the White House in 1992 is because his campaign was focused on the one thing that mattered most to the rank and file electorate in America - the economy.  

(Graphic courtesy,

Michael Sonenshine is CEO of Symfonie Capital LLC. He manages the Symfonie Lending Fund, Symfonie Angel Fund and the SymCredit P2P lending platform.