Academics Versus the Normals
The Difference Can Be Seen Sometimes
There are a few academics that I love to read.
is one of them. Glenn is a law professor at Tennessee and has an elite Ivy education. But, somehow, he connects with “the little people”. If one academic saw the Trump wave coming, it was Glenn. I have read Glenn’s Instapundit blog for years.I also love to read
. I have read his blog for years and saw him eviscerate the head of the Chicago Fed on the Federal Reserve's response to the banking crisis of 2008.I find him to be the most elegant and plain-spoken writer in economics and finance. He makes complicated concepts easier to understand. That’s a very hard thing to do. If you want to think about other economists who were able to do that, Milton Friedman and Thomas Sowell come to mind. When they say things you don’t have to think very hard, they just make sense.
What I further love about Cochrane is he fully understands and explains what he is competing against. If he is in a theoretical debate with a Keynesian economist, he will lay out both perspectives so you can decide for yourself.
The level of decorum on John’s blog is high. He comes from a background at the University of Chicago where rigorous and rancorous debate happens, but respectfully. Glenn’s blog is a little bit more down and dirty.
There are a couple of instances I want to point to your attention to show where academics who are brilliant get very uncomfortable, or even condescending. This is true even though they are “free market” and in the parlance of the tribes today, “on our side”.
First is Donald Trump. I know very few academics that like Trump at all. Most detest him, even if they are free-market people. It has to do with a few things.
Trump’s demeanor. He is brusque. He is an attack dog. He will say anything to persuade someone and he never ever admits that he is incorrect on anything.
Trump is from the private sector. He didn’t come from think tanks, policy groups, non-government organizations or any of the elite places many politicians go to get a stamp of approval.
Trump doesn’t go by the book. He goes by feel. His instincts are mostly right even if the words he uses aren’t. He was an autocratic entrepreneur who built an international business. He got a lot of practice politicking with all kinds of people from all kinds of places when he built that business. It is under appreciated by everyone who is a detractor.
Trump attracts a lot of conspiracy theories and the derangement syndrome on the other side of the line is so strong Trump could say that 2+2=4 and they would disagree with him. The problem is many if not all of the charges against Trump have been proven wrong, and were made up from nothing. When it comes to Covid, it looks like Trump was rolled by the Deep State.
The Academics like to sit in their Ivory Towers and pass judgment. They want to do research, and then put their theories to the test. They don’t want a situation to be “it works in practice but does it work in theory.” Trump blows that up since most of the Academics in the US today do not fall in the free market camp. Just look at political donations.
The second is Elon Musk. I am seeing a lot of academics demean him, especially over his remark that you should never incorporate in Delaware. Musk thinks, maybe correctly, that the judge who ruled on his case was not engaged in objective weighing of facts but on a mission to carry out a political judgment. Connect all the dots and it is easy to see why.
What if it gets proven that the decision was politically motivated? If you run a corporation, do you want to be beholden to a court that can be politically influenced? If you are setting up a new company, do you want to take that chance?
For what it is worth, Delaware has been the #1 state to set up a corporation forever. There is precedent, and reams of intellectual knowledge inside their chancery court that is hard to replicate. Is it worth it for a state to compete with Delaware? An Academic would tell you it isn’t. But, I think we are going to find out as Texas mobilizes. Hint to Nevada politicians, this might be a good time to compete as well.
Some of the same demeaning statements directed toward Musk were directed toward people like Steve Jobs of Apple. He wasn’t corporate like Bill Gates but when you look at Gates today versus what we know about Jobs, who would you rather hang out with?
Why do they demean people like Musk and Jobs?
They don’t go by the book. They are entrepreneurs who go by feel. Sure, data guides them but what sort of data did Jobs have when he created the iPod? What was Musk going on with SpaceX? Tesla?
Their management styles also are uneven. Entrepreneurs are like that. Jobs put up a pirate flag when he developed a renegade computer that competed with his own existing internal Apple platform. If you read Walter Isaacson’s book, Jobs would have been murder to work for.
He got results and he took what was a bankrupt company to one of the most valuable in the world. The current CEO might be more by the book when it comes to management style, but Apple doesn’t exhibit the groundbreaking innovative quality it had from Jobs leadership.
If you aren’t on X, or boycotting it because that’s what the people in your bubble do, you are missing a massive transformation since Musk bought it. It’s much better. Not marginally better. Significantly better.
The Chicago Tribune writers went on a one-day strike this past week. They might as well pack it in because Twitter is the place to find out news. There is no reason to read a newspaper anymore for current events. With long-form messaging, it is able to go in depth. It can host video podcasts. Bill Ackman couldn’t have done what he did to bring the hypocrisy at Harvard to light with the old Twitter.
The debate on Twitter is not polite. It’s not respectful. In many many cases, it is also not nuanced. It’s laced with insults. It is a decidedly non-Academic space. More like Bug House Square.
People who truly break out aren’t normal. They are swashbucklers. Henry Ford wasn’t normal. Einstein wasn’t normal. Thomas Edison wasn’t normal. Sam Zell was anything but normal. The swashbucklers think differently. My friend Bryan Johnson is getting all kinds of grief for what he is doing with Blueprint, and it is truly weird stuff. I wouldn’t do it but I love watching it and support his effort to try. There is no academic in the world that would endorse him, and many will try to poke holes in what he is doing. However, Bryan doesn’t care. He’s a pirate.
It’s not about wearing a tie-dye shirt to work either. It truly is about seeing the same things that everyone else sees but reorganizing them and implementing them a lot differently.
After that, it’s about incredible stubbornness and sticktoitiveness to motivate people to see what you see come to fruition. I can, I will, I must. While you are doing that, you lose friends and people objectify you, until it works.
In the rearview mirror, innovation looks easy.
Academics can be extremely bright and intelligent people. They can illuminate things that you never saw before. They can give you a mathematical grounding for feelings you had or loose theories you had. At the same time, they can be condescending and dismissive. They are not operating at the point Peter Thiel highlighted.
But that’s where innovation and groundbreaking happens.
Where does innovation usually happen in academic institutions? The engineering labs. That is where they break stuff. It’s not in the business schools and it certainly isn’t in the humanities departments. Business schools teach how to implement and manage innovation for profit. Humanities don’t teach you anything anymore.
The other thing I will say about Trump is it is my opinion he is an experiential learner. He needs to experience it, and then learn from it, and on his next go-round he does better.
On his first trip to Washington, he had a hypothesis about how things would work. He was the most powerful man in the world. But, he found out the system could buck him and buck him hard. Not only that, many of what he thought would be loyal appointments, like Elaine Chou, bucked him too.
He won’t make that mistake the second time around.
At the same time, I would agree with anyone that he has many foibles that I don’t desire in a leader. He is thin-skinned and demands loyalty, but doesn’t give it in return. He’s not a team player. But, I don’t think he is corrupt and I do think he has the best interest of all American citizens at heart-not the establishment or bureaucracy. Biden is corrupt as hell and a bought man. So are many other elected leaders you see daily on television.
I think the bureaucracy knows it, which is why they are fighting him so hard and so unfairly in the court system. It’s their last battleground. The media is trying desperately to change public opinion to stop him. But, they have lost all credibility, and there is Elon Musk’s free speech network on Twitter that can cut through all the crap.
If Trump wins, I expect to see a lot of chaos similar to the fake BLM riots. I also think it will be the last straw for traditional media. They will go under and have to reformulate what they are doing.
Great observations Mr Carter! Sadly I think we need a game changing asshole like Trump to change the sad dynamic of this country. If he did nothing else his exposure of the entrenched bureaucracy known as the Deep State is worthy of praise. I don't care about his style but substantively he's been one of the better presidents we've ever had. Give me an asshole like Trump over any one of the corrupt mo-fo's in Washington any day! On both sides of the aisle!
I do not like the courts standing in for the shareholders and, by extension, the theoretical representatives of the shareholders, but Delaware Corporate law is designed to provide efficiency for the companies and fairness for minority shareholders.
That is a feature and not a bug of the Delaware Chancery Court.
In the Musk case the allegation -- proven at trial and in depositions -- was that Musk's employment agreement was not negotiated at arms length, was not properly disclosed to the shareholders before they voted for it, and was excessive.
1. Musk proposed the agreement rather than the compensation committee of the board.
2. The board of directors was composed of persons with a very close personal relationship with Musk -- his brother was on the board for goodness sake -- and those who reported to Musk and those who were beholding to Musk for having created once in a lifetime wealth.
There was essentially no board member who was solely an advocate for the shareholders and there was a majority of toadies including the guy's brother.
3. There was no real negotiation and the negotiation that did happen was simply wordsmithing. No push back at all. The board's role was reduced to scrivenering, rather than negotiating.
One of the critical reasons why the Chancellor voided the agreement was simply because of its formation and the lack of rigor in its negotiation.
The compensation committee of the board of directors did not play its appropriate role in the negotiation.
Once one gets over the manner in which the employment agreement came to life, there is the issue of its sheer magnitude. It was the largest CEO comp deal in the history of the US.
Musk's 2012 employment agreement, at its time, was also the biggest CEO comp deal in US history.
The guy has delivered tons of value to the shareholders, so I personally am not particularly fixated on the size, but it was bloody gargantuan. In fairness, Musk takes no salary.
All of this brings us to the issue of how the deal was communicated to the shareholders before they approved the deal.
The Chancellor found that the disclosures prior to the vote were inadequate and failed to describe the manner in which it, the employment agreement, was drawn and negotiated and the magnitude of shareholder dilution it created.
The Chancellor found that the shareholders did not have adequate information -- purposely -- to make an informed decision on the largest CEO comp deal in US history.
For those reasons, the Chancellor voided the agreement. Now, the board directors has two issues:
1. The board has to re-make itself so it isn't a bunch of Musk toadies.
2. The board has to make a new deal with Musk.
This is going to be hard task for the obvious reasons, but Musk has made it harder as he has recently demanded at least a 25% voting control (he currently has 13% because he sold a bunch of Tesla stock to fund his Twitter/X adventure).
As hard core a capitalist as I am, I would have to agree with the Chancellor in voiding the Musk agreement.
None of this trivia about Musk in any way impacts the nature of your commentary.
JLM
www.themusingsofthebigredcar.com