THE BALTICS: FROM TOURISM TO TRAGEDY

In August of 2019, my spouse and I took a cruise that encircled the Baltic Sea. We were given the opportunity to meet citizens from seven different countries, with each nation speaking a different language. Everyone we met was enjoying life to its fullest (except, perhaps, the dour Russians of St. Petersburg) and happy to have American travelers visiting their shores.

No one could have predicted that two years of worldwide pandemic followed by the most destructive land war in Europe since WWII were on the horizon. The Baltics we witnessed in 2019 will never be the same politically or economically. It will be difficult for its citizens ever again to experience the same carefree quality of life.

This commentary will not focus on Ukraine, where the daily battle reports and Russian atrocities are well documented by the media. Instead, the emphasis will be on the Baltic countries that are geographically proximate to Ukraine. While none of these nations is directly involved in the hostilities, many lives have been impacted.  Moreover, the Baltic region is destined to be an area of instability and uncertainty for decades to come.

The countries surrounding the Baltic Sea include Sweden, Finland, Russia, Estonia, Latvia, Lithuania, Poland, Germany and Denmark. Finland, Estonia and Latvia share long borders with Russia. Lithuania and Poland are bordered by Belarus, a committed Russian ally.

The Eastern Baltic countries situate between Germany and Russia have been labeled the “killing fields” because of events both before and during the Second World War. There remains a strong memory of territories first divided by treaty and later trampled by conquest and re-conquest at the hands of Germany and the Soviet Union. Within the killing fields, during the 1930s and 1940s, Moscow and Berlin deported and jailed hundreds of thousands and killed hundreds of thousands more.  Following the breakup of the Soviet Union, each country in the eastern Baltics developed democratic norms and sought closer ties with Western Europe. Recent events have rekindled old nightmares.    

Such was not the case when we visited the Baltics in 2019. The tourism industry in the region had exploded into an economic powerhouse that brought prosperity to many. In 2016, there were 88 million international arrivals, 54 million overnight stays by international visitors and almost 650,000 people employed directly in tourism-related industries.

Tourism was by far the most important service industry in the Baltic Sea community.  The allure of Viking history, picture book Baltic towns and the museums of St. Petersburg were impossible for travelers to resisit. Of course, COVID-19 changed everything. For two tourist seasons, all forms of travel came to a grinding halt.  Disappointed travelers were forced to binge watch Viking shows on Netflix.

2022 was heralded as the year that travel would regain its importance to the Baltic economies. However, in February, Russia announced its “special military operation” in Ukraine, and suddenly the Baltics had more to worry about than a virus. History and the words of Vladimir Putin convinced Baltic leaders that nothing less than a new Iron Curtain would be grinding into place in the event that Ukraine was dominated by Russia. To understand the concern, pull up a map of the old Soviet Union and compare it to the modern landscape.

In recent history, Sweden and Finland have managed to maintain neutrality in the shadow of the Russian bear. In return for Russian oil and to avoid conflict, both countries have joined the European Union, but not requested NATO membership. Following the invasion, which fundamentally altered  the security situation, US officials expect these Nordic neighbors to submit applications to join the NATO alliance, potentially as early as June.  Russia has warned of “severe military and political consequences” if both countries join the bloc. Already, both Nordic countries have increased their military budgets to all-time highs.

The small Baltic states of Estonia, Latvia, and Lithuania are in a more vulnerable position. Although all three joined NATO in the 1990s, their small size and shared border with Russia pose a serious threat to independence.

Time magazine recently examined events in Estonia since the Ukraine invasion. This micro-nation of 1.3 million people has the third highest defense budget of any NATO participant. The Estonian Defense League has recruited 15,000 ordinary citizens to spend weekends training in guerrilla warfare. More are signing up every day to learn basic skills and then train with the regular army. According to Time: “This serves as reassurance in a country where many believe that should Ukraine fall, they will be next.”

Time sat down with Estonia’s young Prime Minister, Kaja Kallas, to discuss the threat that Putin poses to the Baltic States. Asked about how Estonians view the war in Ukraine, she replied, “When we hear about deportations from Mariupol, the painful memories tell us we have to do everything we can do to help Ukraine. For us war means utter destruction.”

Resources once dedicated to making money from western tourists are now being utilized to house, clothe and feed Ukrainian refugees. Over five million have fled to countries which neighbor on the Ukrainian border. As the conflict goes on, the homeless have spread out throughout the Baltics, searching for arrangements that are more permanent.

I am sure that travelers will someday return to the Baltics to enjoy its many pleasures.  Unfortunately, the former carefree environment will be lost to the realities of a region recovering from war.

 

 

NEWSPAPERS CAN HELP SAVE OUR DEMOCRACY

 

In our information age of Facebook “likes,” Twitter “microblogging,” social media negativity and cable news political extremism, it is not an exaggeration to point to newspapers as one of the final bastions of support for American democracy. This commentary will explore the impact of the information age on newspapers and why it is important that they continue to be a vital vehicle for information delivery now and in our future.

It is not “news” that newspaper circulation has been steadily declining for the last decade. The estimated total U.S. daily newspaper circulation (print and digital combined) in 2020 was 24.3 million for weekday and 25.8 million for Sunday, each down 6% from the previous year.

Not only are information seekers ignoring newspapers as their primary source, those that do spend less time reading. Average minutes per visit for the top 50 U.S. daily newspapers, based on circulation, is a little less than two minutes in 2020. This is down about 45 seconds from when this measure was first tracked in 2014.

While publishing newspapers online initially increased viewership, the pandemic influenced a number of core newspaper advertisers, such as retail, theaters and those that promote community events. These categories cut back on marketing budgets, accelerating newspaper decline of the all-important ad revenue.

The downturn of newspaper publication has various adverse consequences, in particular at the local level. Research has linked closures of newspapers to declines in civic engagement of citizens, increases in local crime, increases in government corruption/waste, and increases in political polarization. The decline of local news has also been linked to the increased "nationalization" of local elections, as candidates are not evaluated in terms of local issues.

Why should we care that newspapers are declining? After all, the information age assures us that more knowledge is available from more sources than at any time in our history.  Newspapers take time to be read, and the subscriptions are expensive.  Why should someone support a newspaper that writes editorials or publishes opinion pieces against their core beliefs? Social media is free and offers information that takes little time to digest and is in-line with the viewer’s mindset. (66% of Facebook users get news through its site.)

A recent essay in the Atlantic Magazine helped me understand the causes of the information crisis we are going through and how newspapers can help return us to sanity. The well-known author, Jonathan Haidt is a social psychologist who specializes in morality and ethical leadership.  In the April 11, 2022 issue, he published an essay titled: Why The Past 10 Years Of American Life Have Been Uniquely Stupid.

Haidt’s premise is that three major forces bind together large diverse democracies like the United States.  These are extensive social networks with high levels of trust, strong institutions and shared stories. He points to James Madison who wanted to address this Achilles heel of democracy, “the turbulence and weakness of unruly passions,” in adopting a constitutional republic form of government.

Madison was also concerned about our vulnerability to triviality when he wrote: “where no substantial occasion presents itself, the most frivolous and fanciful distinctions have been sufficient to kindle their unfriendly passions and excite their most violent conflicts.”  According to Haidt: “The framers wrote the constitution, in part, to guard against these weaknesses by building a mechanism to slow things down, cool passions, require compromise and give leaders some insulation from the mania of the moment, while still holding them accountable on Election Day.”

Haidt believes that the algorithms developed to improve social media (the “like” and “share” choices in Facebook or retweets in Twitter) trigger the negative emotions that worried Madison. These “improved” social media options guide users based on past social media experience. No newspaper can compete with the sophisticated targeting of social media sites that feed viewers what they want to read and hear.

These social media tools continually chip away at trust in the government, the election process, the courts, our schools and our neighbors. Social media “dumbs down” the purpose of these institutions and the democratic stories behind the development of each.  Our information gathering brains are rewired to question everything, to never fraternize with the enemy and to attack the enemy with vigor.

When social media monopolized how we receive the news, it destabilized democracy in three respects. First, social media gave more power and voice to the political extremes who have no qualms about using the new tools to spread misinformation and outright lies. Second, the “improved” social media can control what we read. Third, social media has negatively affected the influence of traditional newspapers.

Why do we need newspapers, and what can be done to save them? Unlike social media, journalists who work for newspapers are held to an ethical standard that demands fact checking and retractions when mistakes are made. The editorial and opinion portion of each paper may adopt a certain political philosophy, but is committed to run commentary with differing views. Letters to the editor give each reader the opportunity to disagree with published opinions so that all sides of a controversy are aired in public.

The price and availability of national newspapers have never been more attractive. For a dollar a week, online subscriptions to the New York Times, Washington Post and Wall Street Journal are available. It is time for more Americans to stop getting their news from questionable sources to help save democracy.

 

 

 

 

   

THE ELECTION BEFORE THE ELECTION

Almost all domestic political commentary is focused on the November 8, 2022 midterm elections. The threshold question is whether Democrats will lose control of both chambers of Congress.  For the midterms, Pennsylvania offers up its own critical Senate race to replace retiring Senator Pat Toomey. The election of a new governor to replace Democrat Tom Wolf is also on the ballot in November.

The “election before the election”, better known as the Pennsylvania Primary, will be held on May 17. If the past turnout is prologue, few registered voters will take the time to disclose their preferences in the May primary. While an important general election often brings out 65% of registered voters, an average primary is lucky to achieve a 25% participation rate.

What is the political history of the election before the election?  There are no provisions in either the Federal or Pennsylvania Constitutions that govern primary elections. The United States is one of a handful of countries to select general election candidates through popular vote in a primary election system. Other democratic countries rely on party leaders or in some cases, party members to select candidates. 

Primary elections are often characterized as a more progressive, democratic vehicle for determining candidates. However, formal party organizations have adopted strict voting rules and continue to retain significant influence over primary nomination outcomes.

Primary elections can take several different forms. The terms of voter participation can vary by jurisdiction, political party, and the office or offices up for election. Pennsylvania is a closed primary state for the upcoming Senate and Governor contests.  Accordingly, voters may only cast ballots for the political party in which they are affiliated.

Why bother to vote in a primary when the focus is on the November election? First, primary elections, by design, attract those obsessive partisan voters and political operatives that are more likely to support candidates on the fringes. This trend makes it difficult for “big tent” moderate candidates who could attract a broader range of voters in a general election to win in a primary. Improved participation of moderate party voters in primary elections will often reverse this trend and result in more moderate general election candidates.

Second, when there is a larger and broader turnout of primary voters, the polling data for these voters can influence the strategy in the general election. The winning candidates will be compelled to rethink the general election and redirect resources to the demographics and issues important to all the primary voters.

Lastly, moderate candidates that garner widespread support can still influence the platform of the winning candidate if they perform better than expected in the primary contest. To demonstrate how the upcoming May “election before the election” can affect the general election, I will focus on two primaries: the Republican Senate and Democratic Governor contests.

In the Republican primary for the Senate seat two flamboyant candidates with few ties to Pennsylvania, have waged a vicious media campaign against each other. Both are seeking the support of politically active far right voters who support Donald Trump and tend to show up in primaries. First on the scene was television celebrity and former heart surgeon, Mehmet Oz, trading on his popularity and huckster demeanor. Not to be outdone, former hedge fund manager, David McCormick, entered the fray as a folksy farmer who can defeat the Democratic “socialists” and “woke” mob. On April 8, Mr. Trump announced his endorsement of Dr. Oz, which will determine to what degree the former president continues to influence his base of supporters.

Many observers are curious to see how a third candidate, Jeff Bartos, will fare in the primary. Unlike his other two opponents, he is a lifelong Pennsylvania resident, less flamboyant and without the deep pockets of his opponents. None of these candidates have been previously elected to office. The winner will face a Democratic candidate (either Conor Lamb or John Fetterman) with strong credentials serving in elected office.

In the Democratic Gubernatorial contest there is only one candidate, Josh Schapiro, the present state attorney general. He previously served in the Pennsylvania House of Representatives and as chairman of the Montgomery County Board of Commissioners. Shapiro’s reputation has been enhanced by gaining national attention in his efforts to protect voting rights, fight crime and defeat the opiate crisis. As a result, no other Pennsylvania Democrat could find a pathway to challenge him.

I have observed in person Mr. Shapiro’s stump speech for governor and watched a televised debate of the Republican senate primary candidates. The difference could not have been be more striking. The Republicans attacked each other and phantom socialists with mean-spirited vigor. Each tried to outmatch the other in repeating screeds made famous by Trump at his political rallies. It was clear that their positions were intended to sway a partisan audience dedicated to retuning Trump to the White House.

Our Democratic attorney general took the opposite approach in his campaign for governor. His comments explained who he was, what he has accomplished and the moderate programs he attends to implement as governor. His focus will be on education, crime and opioid-related deaths.

Keep an eye on the winner of the Republican Senate primary to see if more substantive policy positions are adopted prior to the November election. If not, Republican voters will be casting a ballot for a Trump “Parrot” rather than a thoughtful conservative.

 

 

THE BARBELL STRATEGY

“I will never get to know the unknown since, by definition, it is unknown. However, I can always guess how it might affect me, and I should base my decisions around that.” Nassim Taleb

The “barbell strategy” has gained popularity in recent years as a financial tool used by many investors to minimize risk and maximize gain in the types of investments they choose for their portfolios. The term “barbell” refers to two very different “weights” of assets attached by a thin bar. The strategy calls for unsophisticated, or older investors, to divide their assets into low-risk and high-risk investment buckets at each end of the barbell. This strategy is designed to provide protection against sudden downturns (low-risk) and to catch sudden market breakouts (high-risk).

More sophisticated investors, or fund managers, that are required to be “all-in” with stocks often describe the strategy as investing in both more conservative value stocks at one end of the barbell and more risky growth stocks at the other. Whatever the description of the barbell, or the percentage of assets placed in the low-risk and high-risk buckets, one rule remains constant. It is a fool’s game to place all of the investment assets in the middle of the risk spectrum. This “middle-of-the-road” approach guarantees a portfolio that remains stagnant and has little chance of benefiting from a market breakout that may occur once or twice a year.

Many observers believe that the barbell strategy developed after Nassim Taleb wrote his famous best seller The Black Swan in 2001. A Black Swan event is one that is highly improbable with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random and more predictable than it was.

As applied to investing, the thesis is that investors spend too much time on minutiae they already know. In fact, it is the unknown events that matter and which require protection from catastrophic losses. As we have seen in recent months, even if we correctly predict some things that impact the financial markets such as election results and the price of oil, other events like a global pandemic or war can override the predictable factors and throw our projections into the trash heap. Because it is impossible to time the market, the best strategy is the barbell approach.

Underlying the barbell strategy in investing is the fact that it will never maximize possible profits in a market upturn because a portion of the assets are being utilized to hedge against a downturn. Those of us that are investors and not gamblers are willing to accept this lower profit result.

I have been thinking about ways to incorporate a barbell strategy into aspects of my life other than investing. I have had to modify the terminology from low risk/high risk to include things I love to do at one end of the barbell to things I would rather keep in the box and never open on the other. The opportunities to utilize a barbell strategy were in unexpected places. Moreover, many of the activities I was hesitant to consider would improve my health or give me a more well-rounded view of the world.

First, I have applied the barbell strategy to exercise. While I go to the Cameron Wellness Center every other day, I was not losing weight. My work-out routine involved stretching and lifting weights (which I enjoy) with little aerobic exercise (which I find tedious). I have slowly shifted a portion of my workout into aerobic walking and biking as I listen to music or sports/talk radio. Now if I am confronted with a Black Swan medical event, my improved heart health, endurance, and lower weight may help me survive.

Second, I have used the barbell strategy to examine my daily schedule. Since I am retired with fewer responsibilities, it was easier to slip into a house-bound, isolated existence.  The pandemic accelerated this trend. Recently, I have sought activities outside my comfort zone and placed them on my agenda.

Lastly, I have employed a barbell strategy to compel myself to seek a wider range of political thought and views of the world. It is convenient and emotionally satisfying to only read and watch news sources that agree with my progressive views. To counter this one-sided perspective, a portion of my cable news intake now involves Fox News. I read the conservative opinion page of the Wall Street Journal every day. For the British point of view, I read the Economist and the Guardian. Taking in such diverse views while considering different causes and outcomes may better prepare me for a possible Black Swan event.

As a close friend never fails to tell me when we debate current events, “Nobody knows anything.” The older I get the more inclined I am to agree with him. In the end, the best strategy for improving mind, body and spirit is to avoid being boxed into a narrow point of view.

The world is complex and does not follow the precepts of a singular ideology, religion or school of thought. Our best protection is to take positions (some of which may be uncomfortable or against the grain) that guard against the unpredictable downside and which provide an opportunity to exploit the elusive upside.

IT IS TIME FOR A WASHINGTON COUNTY CULTURAL CENTER

 

“The arts can enrich all of our communities and the country. And the arts can connect us to each other like nothing else can.” Michelle Obama

Washington County is blessed with a diverse creative community that excels in all of the performing and fine arts, including music, drama, painting, dance and sculpture. Over the years, talented volunteers and underfunded non-profit organizations have given us Wash Arts, the Washington Symphony, the Washington Jazz Society, Community Theater, Little Lake Theater, choirs, dance ensembles and many others.

A cultural center is a community building or complex dedicated to cultural activities and the arts. The effort to provide a permanent campus for Washington County’s arts and culture organizations has never materialized for a variety of reasons. First, the well-established governmental concerns like the Washington County Development Authority, Chamber of Commerce, Community Foundation and Tourism all have their own mission statements that obligate them to fund and develop other projects. While each of the above would encourage and support a cultural center in Washington County, none is prepared to spearhead the enterprise.

Second, each cultural activity in Washington County is left to its own limited devices to raise money, find space to perform or hold classes for students and to advertise scheduled offerings to the public. Some organizations like Wash Arts were forced to dissolve for lack of funds. Others, like the Washington Symphony, scramble to find performance space before each concert, confusing its patrons and making the staging of presentations a challenge. Each organization is using its time and energy simply to survive, and none has the resources to build and maintain a cultural center.

Cultural centers are common in counties throughout Pennsylvania. In Pittsburgh, the Cultural Trust helps support Heinz Hall, The Benedum Theater, Pittsburgh Public Theater at the O’Reilly and the August Wilson Center. At the other end of the spectrum, smaller counties have often renovated and rededicated an aging, empty theater house to serve as a cultural center. Because Washington is one of the few counties to have its own volunteer symphony, which requires a sizeable auditorium, our specifications for a cultural center lie in between these two extremes.

After taking inventory of what other Pennsylvania counties have done to support cultural development, my attention was drawn to Lackawanna County, where Scranton is the county seat. I believe that this community has the ideal template for Washington County to follow.  Both are medium size counties with similar size populations. Lackawanna has made a major commitment to provide cultural opportunities for its citizens. The results are exemplary and not difficult to duplicate.

First, the Lackawanna commissioners created a “Performing Arts Center Authority” to have a dedicated body with a single-focused goal to develop and preserve a community cultural center. A semi-independent authority reviews all options for development, apart from county government but with the full support of the commissioners who would appoint experienced and enthusiastic citizens to the authority. 

Second, Lackawanna County has created “The Office of Arts and Culture” within county government. The stated mission of this county office is to “advocate and support high quality arts opportunities and programs for people of all ages throughout Lackawanna County.” From reading the available literature, it is clear that Lackawanna’s commitment to the arts has made it easy for them to collaborate with the Pennsylvania Council on the Arts and to receive advice for its programs and state grants. (In FY 2020, the state allocated $10,474,000 to the Pennsylvania Council on the Arts).

Washington County government is in a position to act now. It is well past time to provide a dedicated campus for citizens to learn new creative skills, revisit old skills and interact with others in the arts from alternative disciplines. Once our numerous performing arts and related programs have a home base, each will be able to concentrate on improving their craft to better serve the citizens of Washington County.

Following the creation of a purpose-driven governmental authority and the Office of Arts and Culture, the real work can begin. An appropriate site for the center must be identified and renovated. While I am not well-versed in commercial real estate or architecture, there appear to be several potential locations. For example, a movie theater and office spaces at the Crown Center Mall are empty. The Washington Mall is vacant and waiting for a buyer. The Court House Square building will need to be repurposed once the relocation of county offices is complete. Southpointe, Peters Township or the Mon Valley may have suitable locations.

As in all projects of this size, funds for development and ongoing maintenance are an issue. Coming out of the pandemic, both Washington County and Pennsylvania have healthy treasury surpluses. Both state and local budgets could do no better than to earmark funds for a Washington County Cultural Center. Moreover, once local corporations and regional charitable organizations determine that Washington County is making a commitment to a cultural center and to the arts, sponsorships and grants will become available.

A dedicated cultural center will provide leadership, advocacy, connections and space to grow. It will drive the political, financial and professional support for this important part of a well-rounded community. A thriving, innovative and creative populace will be the result.