Saturday, February 28, 2015

March Madness ... Truth Telling Time

It's playoff time, aka March Madness, for college and high school basketball teams. Excitement is everywhere, and the fans will be glued to their TV screens to follow the action.

So what's not to like about this made for TV extravaganza? Well, almost everything, at least in my opinion.

Big time college athletics has largely become a money making farce which 'cheats' its participants. It doesn't even pay them to play and certainly doesn't insist that they work hard in the classroom to secure that coveted college degree. And far too many high school coaches, players, fans and parents share in this disgraceful charade as well. The kids are indeed being 'cheated.'

Meanwhile, the coaches, administrators and institutions either prosper or send taxpayers, sponsors and advertisers the bill. Either way it sucks.

Dark Days in Chapel Hill reviews the new book "Cheated" and offers a hard hitting explanation about the way things really work in the land of college hoops. So before turning on that TV and admiring the 'student athletes,' their coaches and schools, please consider what all this has to do with education and our nation's young people:

"The most recent college champions are Ohio State and Florida State on the gridiron, Connecticut and Louisville on the men’s hardwood. Of these only one, Ohio State, graduated more than 50% of scholarship athletes in the relevant sport in the title year. . . .

If you ran a college and knew there was substantial money to be had from sports but no requirement to educate athletes, you might cut corners. The University of North Carolina at Chapel Hill did....

A report commissioned by the university and issued last year found that, over nearly two decades, 3,100 Chapel Hill students, about half of them athletes, took fake classes that required no work. The average grade in the fake classes was an A. No-show grades pulled up the GPAs of sports stars who otherwise would not have met the NCAA’s modest eligibility standard of a C-minus average.

Cheated By Jay M. Smith and Mary Willingham
Potomac, 280 pages, $26.95 . . . .

The authors accuse their state’s prestige public campus of “broad dishonesty” and of stocking its teams in football and men’s basketball—the “revenue sports”—with athletes to generate profit, then breaking its promise to educate them. . . . “Cheated” sounds an important call for reform.

Details of the scheme confirm the worst fears about “student athletes,” at least as regards football and men’s basketball. (Other men’s and all women’s collegiate sports generally have good academic reputations.) . . .

Across the big-college landscape, around $3 billion annually flows from networks to schools in rights fees for national TV broadcasts of football and men’s basketball. Ticket sales and local marketing add to the total. Meanwhile, the NCAA almost never sanctions colleges that don’t educate scholarship athletes. . . .

Perhaps the reader is thinking: Why this worry about diplomas? Don’t big-college athletes go on to wealth in the pros? . . .

Yet most scholarship players never receive a pro paycheck. . . . Broadly across NCAA football and men’s basketball, only about 2% of athletic-scholarship recipients are drafted. Because a bachelor’s degree adds about $1 million to lifetime earnings, the diploma is the potential economic reward for the overwhelming majority of college athletes.

Of course, athletes have only themselves to blame for not taking their studies seriously. But many are encouraged by coaches to believe pipe dreams about the pros, to focus all their effort on winning so the coach gets his victory bonus. By the time NCAA athletes realize they’ve been duped, their scholarships are exhausted. Used up and thrown away, they are easily replaced by the next batch of starry-eyed teens who believe their names will be called on draft day. . . .

Cheating may have gone over the top at Chapel Hill, but in collegiate sports, institutional corruption is a norm. The NCAA works assiduously to change the subject from football and men’s basketball graduation rates, a straightforward measure that anyone can understand. Instead it offers Academic Progress Rate, a hocus-pocus metric seemingly designed to be incomprehensible.

Currently the overall APR of big-college sports is 976 out of 1000. That sounds as if everyone’s nearly perfect. But on this scale, perfection is achieved if all players have at least a 2.0 GPA. Since the average GPA at public universities is 3.0, what the NCAA touts as “academic progress” may equate to significantly below-average outcomes in the classroom.

But the APR shifts the spotlight from actual grades. Last fall, Louisville announced to fanfare that football coach Bobby Petrino will receive a $500,000 bonus for his players’ academic performance. Sound enlightened? The bonus is triggered by the team hitting a 935 APR. Since the average for NCAA football programs is 951, academic excellence at Louisville is now defined down to below average.

Cynicism regarding athletics and education pervades the big-college system. The networks that are “broadcast partners” (their term) with the NCAA—ABC, CBS, ESPN, Fox, NBC and Turner—have a financial stake in college sports income and so steer clear of issues like grades and graduation rates."

Summing Up

In the world of college basketball and football, everybody chooses to look the other way and ignore reality.

What happened and is happening at North Carolina is the norm, and it also happens at schools who don't ever play on TV.

It's simply institutional crap that's being sold to the masses in an effort to 'help' us not see what is easily 'seeable.'

So enjoy the games as March Madness begins --- TV stations and advertisers, as well as countless college (and high school) coaches, school officials and 'athletic supporters' are counting on our continuing unwillingness to see the truth.

That's my take.

Thanks. Bob.

Thursday, February 26, 2015

The Estimated $15 Trillion Cost of Our Inferior Education Outcomes in the U.S.

How much does it cost America to be dumb about education? $15 trillion, according to one source.

The cost of America's classroom failure: $15 trillion has this sobering story to tell:

"We all know there’s a price for being dumb. The problem is quantifying it.

But now some researchers have an estimate of the cost of America’s failure to make the grade in the classroom. It will cost the U.S. economy close to $15 trillion through the year 2050.
That’s trillion, with a T. It’s enough money to wipe out nearly all of America’s debt.

It’s not me saying that. It’s the Washington Center for Equitable Growth, an economics think-tank, which studied how the economy might grow if U.S. students hit the books. The report, published in January, makes for some sobering reading. It notes that the average U.S. student’s achievement at math and sciences has failed to keep up with that of our major competitors. In turn, that lack of knowledge has had a depressing effect on the dollar value of economic output by as much as $420 billion a year for the next 35 years, the report says....

The problem is that U.S. students are subpar when compared with major competitors in terms of mathematics and science. It ranks 24th out of the 34 countries of the OECD (Organization for Economic Cooperation and Development), the so-called rich-countries club. So what, you may ask....

The issue at hand is how education fits in to the global economy. Money that’s spent to build factories and for other investments gets allocated to where expected return is the highest. Cost of labor is one factor in that rate of return. But the skills of workers is another. Within the developed, stable first-world countries of the OECD, worker productivity — which correlates with how educated your workforce is — is a major factor. . . .

In the simplest terms, better educated workers are more attractive to employers. Or put another way, a larger number of smarter Americans will attract and nurture more and better businesses. That’s where closing the education gap with competitors comes in. . . .

There’s reason to believe it’s possible. The study cites data from Massachusetts, where even the lowest performing three quarters of children do better than the average in the OECD. The same cross section in Florida fall woefully short of our competitors.

When something is being done right, as education seems to be in Massachusetts, it makes sense to follow suit.

Not doing so, now that’s dumber-er."

Summing Up

Education, productivity and prosperity go together.

In a free society, there is no excuse for having a system of government run public education that does not compare favorably to other countries. --- especially when the fix isn't more money but instead individual focus and free choice.

In fact, there's no excuse for Americans to be anything other than #1 when it comes to education or anything else. We're still the most prosperous and free country on earth, so getting back to #1 is a simple matter of establishing the proper priorities and truth telling.

There's absolutely no good reason for further delay with respect to allowing personal vouchers and removing the current stranglehold by teachers unions and their political allies.

We've tried the government run monopoly way of educating our young for far too long. It's time to give We the People and individual families the reins.

That's my take.

Thanks. Bob.

What Would Charles Barkley Say? ... A Much Needed Message for Our Overly Indebted Fellow Americans ... It's Time to Clean Up Our Act

"Just because everybody else does it is no reason for you to do it too" was some much needed and all too often unheeded advice my parents (and other well intentioned adults) gave me throughout childhood and my 'growing up' years, including early adulthood.

Like most young people, I didn't always (or even often) take it to heart at the time, but eventually came to understand and appreciate the wisdom and life lessons contained in that simple phrase.

And here's another simple admonition that applies equally -- better late than never -- and so it is.

I thought about all this while reading an article about famed hoopster and the outspoken ESPN sports commentator Charles Barkley. The lengthy article tells the lessons he learned during his 'growing up' years and why he regrets that he hasn't been successful in helping enough people learn those valuable life lessons. See Up From Leeds.

Americans struggle to keep up with new borrowings relates another important story about too many of our fellow Americans and their current struggles with indebtedness:

"Household debt--including mortgages, credit cards, auto loans and student loans--rose $117 billion between October and December to $11.8 trillion . . . .

The ramp-up in borrowing was broad-based: Mortgage balances--the bulk of U.S. household debt--edged up $39 billion to $8.2 trillion. Auto-loan balances grew $21 billion to $955 billion, and credit-card balances increased $20 billion to $700 billion. Student-loan debt--the fastest-growing category--rose $31 billion to $1.2 trillion.

Despite encouraging signals Americans are becoming more comfortable using credit again, there are warnings signs that some consumers are now struggling to stay current on two types of debt--auto loans and student loans--whose dramatic rises have worried economists lately....
And a windfall from lower gasoline prices has allowed more Americans to save and pay off debt.

All told, American households' overall borrowing tab of $11.8 trillion remains 7% below its 2008 peak of $12.7 trillion, even before adjusting for inflation.

Still, the . . . data fuel concerns that the recent boom in issuance of auto loans, especially to Americans with weaker credit histories, is resulting in more so-called subprime borrowers struggling to repay. . . . (and) education loans are hard to discharge in bankruptcy--making them more of a potential drag on a borrower's future consumer behavior."

Summing Up

With the price of gasoline down and interest rates low, highly indebted Americans have a great opportunity to begin to reduce onerous debt levels.

Let's hope that We the People take full advantage of that clear and present opportunity.

And that we thereafter don't go off the deep end again by taking on unnecessary and burdensome debt.

That's my take --- and my sincere hope as well.

Thanks. Bob.

Tuesday, February 24, 2015

Keystone XL Pipeline Veto ... Another Example of Why American Politics Sucks ... Obama Says to Hell with Safety ... Just Move the Oil By Rail

Politics Sucks. That much we all know, or at least should know by now. And just how much it sucks was evident by our master politician President Obama and his veto of the Keystone XL Pipeline legislation.

Obama's Oil-by Rail Boom is subtitled 'Activists get their jollies blocking pipeline construction, but the crude still flows through your neighborhood:'       

"It’s better to be lucky than good. President Obama, who arrived promising to heal the planet and halt the rising seas, instead presided over a fossil-fuel renaissance in America. If you were unemployed and found a decent job in Obama’s economy, there’s a good chance it was a fracking job. If things are finally looking up for the middle class, cheap gas is a major contributor.

He was lucky again on July 6, 2013. Thanks to various competing news stories (a plane crash in San Francisco, the Trayvon Martin shooting trial), Americans did not dwell on a fiery oil-train accident in Canada that killed 47. For if there’s one boom Mr. Obama can claim authorship of, it’s the oil-by-rail boom.

A business that barely existed when he took office now moves an impressive million barrels a day. The oil pouring forth from America’s resurgent fields, after all, has to reach market somehow....

The publication Energy Monitor Worldwide elaborated in September: “Environmentalists and governments are making it more and more difficult to get approval to build pipelines, so producers are increasingly using rail to get their oil to refineries for processing into products that the American public needs. . . . If all the railcars carrying crude oil on a single day were hitched together to a single locomotive, that train would be about 17 miles long.”

Yes, oil can move by ship, but America’s 94-year-old Jones Act, a law cherished by Democrats and labor unions, makes it prohibitively expensive. If the goal is to move U.S.-produced oil to U.S. markets without some gimmicky side-trip through the European refining industry, that leaves rail.

All the more newsy, then, is Mr. Obama’s unsurprising veto of bipartisan legislation that would have authorized the Keystone XL pipeline. Opposing Keystone, it goes without saying, will not make the slightest difference to things opponents claim to care about. It will not alter by an infinitesimal fraction of a degree mankind’s reliance on fossil fuels or the continued development of hydrocarbon resources.

It will, however, give fresh impetus to America’s oil-by-rail boom. . . .

The International Energy Agency forecasts that North America will invest $2.5 trillion in oil infrastructure over the next 20 years, of which Keystone would have represented just 0.3%. More of those dollars now will be spent to build oil-by-rail infrastructure, less to build pipeline infrastructure, although most experts consider pipeline a safer way to transport oil.

Not to worry, however. In all likelihood, a tragedy like the accident that wiped out the Canadian town of Lac-M├ęgantic 20 months ago won’t recur. Railroads have steadily gained experience to handle their explosive windfall without major disaster. But, as we are reminded every few weeks, trains will still derail, oil will spill, and messes will have to be cleaned up.

Which raises a question: What are Mr. Obama’s true policy convictions, if any? . . .

We . . . would have expected him finally to wave through the Keystone pipeline, if only out of irritation with green allies for tormenting him over a phony symbolic issue.

Wrong . . . . Polls show the public supports the pipeline; labor wants the jobs. But for Mr. Obama, the balancing factor is clearly the criticism he would receive from the Sierra Club . . . .

What seems absent from his calculations are any practical considerations outside the political bubble, such as the millions of barrels of flammable liquid that will be rumbling through America’s residential neighborhoods aboard mile-long oil trains."

Summing Up

President Obama is a devoted politician, first, last and always.

And politics sucks. It really does.

As does his veto of the Keystone XL Pipeline.

That's my take.

Thanks. Bob.

Indebtedness Threatens Millions of Americans .. Managing Our Personal Financial Lives

We have too much debt as a nation and as individuals, and it's having a large impact on our ability to manage our personal financial lives in a common sense unthreatened manner.

Unlike the government's borrowings, however, the negative effects of individuals' excessive indebtedness are much worse due to several factors: (1) individuals can't legally print money; (2) individuals can't tax other individuals; (3) individuals don't have unencumbered assets (government lands and buildings, as examples) that can be sold to raise money; and (4) when individuals default on debt obligations, bankruptcy awaits.

Yes, government has too much debt and spends too much money, but it's an entirely different and much more dangerous game when played by individual citizens. For a current look at how bad it is today, let's look at some cold hard facts.

1 in 3 Americans on verge of financial ruin has this to say about the financial plight of too many Americans:

" . . . 37% of Americans have credit card debt that equals or exceeds their emergency savings. “These numbers mean that three out of every eight Americans are teetering on the edge of financial disaster” — thanks to the fact that many of these folks might be hard-pressed to pay for an emergency should one arise, says Greg McBride,’s chief financial analyst. “Not only do most of them not have enough savings, they’ve all used up some portion of their available credit — they are running out of options.”

That’s particularly problematic considering that emergencies happen more often than you might think. A 2014 survey by American Express found that half of all Americans had experienced an unforeseen expense in the past year — some of which could be considered an emergency. Indeed, 44% of those who had an unforeseen expense(s) had one for health care and 46% for car trouble — two items that for many Americans are must-pay items, as you need a car to get to work and your health expenses are usually not optional.

Also see: 5 expenses you don’t plan for but should

Age % who say credit card debt is greater than emergency savings

For consumers, the ideal situation is to have no credit card debt and at least six months of savings in an emergency fund (more if you have dependents), experts say. But the reality is that most of us don’t have even close to that (just 58% of Americans have more emergency savings than credit card debt, the Bankrate survey revealed).

The good news: If you have no emergency savings, or more debt than savings, experts say you can remedy that situation. Some recommend paying off your credit card debt first (focus on paying as much as you can on the highest-interest-rate debt and the minimums on all others) and then building up savings, but others say you should try to do both at once."

Summing Up

When in a hole, the first thing to do is stop digging.

And when our credit card balances exceed our savings balances, we're in a financial hole --- and then the little hole often ends up being a big one as bad habits become entrenched.

So let's do the common sense thing and stop following the crowd by ceasing all efforts to keep up with the excessively indebted Joneses.

Let's stop digging and start saving.

That's my take, and I hope it's yours, too.

Thanks. Bob.

Monday, February 23, 2015

Student Loans are Harmful to Home Sales, the Financial Health of Young Americans and the Rest of Us Too

People often treat student loans as if they are 'free money.' Nothing could be further from the truth.

In fact, people often treat loans of any kind as if the principal amount will never need to be repaid. That too is non-thinking of a harmful kind.

High student debt equals fewer home buyers tells of the connection between high student loans and the lack of a robust housing market today and probably down the road as well:

"Going to college usually leads to better jobs and better pay, but it’s also left many people dangerously in debt and unable to buy a house years after they leave school. . . .

The percentage of student loans at least 90 days overdue rose to 11.3% from 11.1% in the final three months of 2014 . . . .

While delinquencies have fallen from a record 11.8% in 2013, they are still almost twice as high as they were 10 years earlier.

Then . . . the government reported that construction of new homes fell slightly to a 1.06 million annual pace in January. While sales have been rising gradually, they still aren’t increasing nearly as fast as expected almost six years into an recovery. And the percentage of buyers purchasing their first home is still unusually low.

In a fully functioning economy, housing starts should be running around 1.4 million to 1.8 million a year, analysts estimate.

Clearly the weight of student loans is too heavy for many young people to buy a single-family home. Many can’t qualify for a loan in an era of tougher lending standards or afford the monthly cost of a mortgage. . . .

What’s worse, a higher percentage of students failed to graduate from college, so they are not earning the kind of money that a degree typically brings. They’ll have an even tougher time paying off debt.

Then there’s the so-called boomerangers. Far more 25- to 30-year-olds live with their parents compared with the years before the Great Recession. Read: Fed study shows boomerang generation no myth.

Now, a college degree is still a very good investment. People with degrees do earn more money and lose their jobs far less. But the ever-rising cost of college also has a downside that harms not only people saddled with large loans but the broader U.S. economy.

Again, look no further than the housing market. The New York Fed recently found that 30-year-olds without a college degree are now more likely to have a mortgage than people the same age who still have student loans to pay off. That didn’t used to be the case.

For most people stuck with college debt, there are few ways out. Student loans cannot be eliminated by filing for personal bankruptcy except under unusual circumstances. The government can also confiscate part of a person’s salary for nonpayment of college debt.

If the situation persists it could have depressing consequences for the economy for years to come .... People in the 30s and 40s entering their prime earning years are typically big spenders on everything from cars to homes to dining out.

Instead some college-educated Americans may find themselves unable to entirely pay off their student loans until their children are ready to enter college."

Summing Up

As a nation, as families and as individuals, too many of us are poor financial managers and too deeply in debt.

The facts are straightforward and simple --- debt isn't free and saving for a rainy day is essential. But net savings can't occur until they exceed outstanding debt.

And without net savings, it's impossible to save and invest properly for our oldster years unless we are going to be satisfied to leave it to the government to do it for us.

America's financial situation is not a pretty picture, and now with student loans freely available to any and all comers, we're drawing too many young Americans into the mess as well.

So here's what I have to say to young people -- beware of burdensome student loans and all others. Keep your eye on savings as well.

That's my take.

Thanks. Bob.

Sunday, February 22, 2015

Happy Birthday to George Washington

Today is George Washington's birthday. Now there's a new book out which has lots of interesting things to say about his leadership, his early life, his military career, and his continuing contribution to our great nation.

The Making of the (First) President says this in part:

" “Washington’s Revolution,” by Robert Middlekauff, ... recounts the American Revolution as it was experienced by Washington himself. . . .

What interests him is how Washington’s formative years molded the later man, how this conservative planter became a revolutionary leader, and how the war itself brought out innate qualities of character, resilience and fortitude in a provincial landowner that made him, in the historian James Thomas Flexner’s words, “the indispensable man” in the struggle for American independence....

Washington was a military prodigy. He became adjutant of the Virginia militia with the rank of major at the age of 20. Shortly after, he confronted the French in the Ohio Valley in support of Virginia’s claims to that territory. By the outbreak of the French and Indian War in 1754, Washington was a lieutenant colonel of militia. He was all of 22. This conflict served as Washington’s training for the proving ground of the Revolution.

Three seminal events occurred at this time that were to anticipate his tenure as commander of the Continental Army. He was defeated by the French in an ill-considered clash at Fort Necessity in Pennsylvania, but he was resolute in defeat and learned from his mistakes. A year later, he fought bravely under Gen. Edward Braddock in the British debacle against a force of French and Indians near Fort Duquesne but saw that British regulars could be beaten. He had won Braddock’s respect, but, given the innate British disdain for colonials, Washington could not gain a commission in the Royal Army, a rebuff that instilled a lifelong resentment against the British. Their failure to make Washington an officer in their military would cost England an empire. . . .

As Mr. Middlekauff reminds us, the odds against Washington were overwhelming. . . . His crossing of the Delaware in December 1776 was as much a political stroke as a military one, since it heartened a dispirited patriot cause and marred British hopes for a quick victory.

His men adored him; they also respected him and feared his wrath. . . .

The American Revolution took more than eight years . . . . Washington was there for the duration. It was only by sheer will that he outlasted the formidable power of the British Empire. To be sure, he was fortunate in his foes: dilatory British generals who won battles but failed to forcefully pursue and crush a wounded enemy. And he was lucky in battle, appearing almost invincible to the bullets whizzing around him.

Imposing in stature, Washington faced down mutinies of sergeants in Pennsylvania and officers in Newburgh, N.Y., both over the lack of pay and pensions. It was at Newburgh in March 1783, as the war wound down, where his mastery of the grand gesture was manifested to dramatic effect. Mr. Middlekauff’s rendition is compelling: Washington “feared that if the army moved against the Congress, the Revolution and the new nation might be lost.” In assuring his officers that they would receive just compensation, Washington presented a letter from a congressman. But he had difficulty reading the text, causing him to stumble over the words. “He then stopped and pulled his spectacles from his pocket, saying as he did so, ‘Gentleman, you will permit me to put on my spectacles, for I have not only grown gray but almost blind in the service of my country.’ ” He left his men in tears.

The mutiny was over. . . . His triumph over the British was a feat that probably no one else could have achieved.

Without his inspired leadership, the Declaration of Independence might have been little more than a piece of paper. Mr. Middlekauff concludes by reminding us that the greatest thing Washington accomplished was what he didn’t do. At war’s end in 1783, he handed his commission back to Congress and went home. . . . His insistence on civil supremacy over the military during the war carried through to the peace, providing the cornerstone for the future democratic republic, the glorious cause for which he had fought."

Summing Up

The Father of our country and our nation's First President was also a great military leader.

We are indeed fortunate for his devoted, long and unselfish leadership and service to help make our country what it is today --- the world's leading democracy.

We aren't turning out men like Washington these days, and that's to the disadvantage of all of us.

Happy Birthday, Mr. President.

Thanks. Bob.

Saturday, February 21, 2015

The Lessons to Be Learned from Knowing and Applying the Rule of 72 ... 1% Saved and Invested Today Makes A Huge Difference Down the Road

The lessons to be learned from knowing and applying the Rule of 72 should be taught in schools, but they aren't.

So let's do it here as part of an ongoing effort to spread the word about a lifetime of better managing our personal debt levels, savings and investments in a responsible and highly profitable manner. The earlier we let the power of compound interest and its relationship to time go to work for us, the greater the likelihood we will avoid personal financial problems later in life. So here goes.

Learning the Rule of 72 is a simple yet profound way of internalizing and understanding how time and compound interest work to the benefit of the individual saver and investor. And if adopted and then followed consistently over a long period of time, the impossible becomes the inevitable for individuals who are not generally knowledgeable about financial matters.

How a 1% savings boost could sweeten your retirement has the story about the 'magic' of compound interest:

"When it comes to saving for retirement, what difference can another 1% of your pay make?

Thanks to the magic of compounding, “a little bit (of extra savings) today can go a long way tomorrow” in terms of the retirement income it’ll generate, says Fidelity Investments, which crunched the numbers for a report released this week.

According to Fidelity’s calculations, a 25-year-old with a $40,000 salary must set aside an additional $33 a month to save an extra 1% annually. But that little bit of extra savings will translate into an additional $320 of monthly income (in today’s dollars) over a 25-year retirement. (This assumes our 25-year-old earns a 1.5% annual raise, net of inflation, works until he is 67, and earns a 7% annual return.)

Of course, the benefits are less dramatic for those with shorter time horizons. But that doesn’t mean the strategy isn’t worthwhile.
According to Fidelity:
  • A 35-year-old with a $60,000 salary who saves an extra 1% annually must save $50 more a month now, but will receive an additional $270 of monthly retirement income in today’s dollars.
  • A 45-year-old with a $70,000 salary who saves an extra 1% annually must save $58 more a month now, but will receive an additional $160 of monthly retirement income in today’s dollars.
  • A 55-year-old with an $80,000 salary who saves an extra 1% annually must save $67 more a month now, but will receive an additional $70 of monthly retirement income in today’s dollars.
The message: Small steps can have big consequences when it comes to retirement.

“When you ask people, ‘Can you save more?’ many people think, ‘I can’t,’” says Jeanne Thompson, a vice president at Fidelity. That’s because they “assume that they have to save so much more and a little bit isn’t going to make a difference.” But the key insight, she adds, is that “little incremental differences can make a huge difference over time.”

According to Fidelity, many people underestimate the impact saving 1% more can make. When asked how much an extra $50 a month would amount to over a 25-year period, the median response was $17,000—or less than half the $44,000 value Fidelity projects.

Fidelity recommends putting away 10% to 15% of annual pretax pay for retirement, including matching contributions from an employer. “But if you don’t save this much from the get-go,” don’t despair, the company says. “Start by saving up to the company match,” says Thompson and then increase your savings rate by 1% every year until you hit the 10% to 15% target.

More potentially good news: When told the benefit of saving 1% more, almost 90% of the 1,039 people who responded to a poll Fidelity conducted said it would either be an “extremely easy” or “easy” thing to accomplish."

Summing Up

Spread the word.

Better yet, save another few percentage points each pay period, invest in stocks and watch the power of the Rule of 72 deliver its 'magic' for you.

Long term it's a no brainer.

That's my take.

Thanks. Bob.

Friday, February 20, 2015

Caution to Individual Investors Using 'Professional' Advisors for 401(k) and IRA Accounts ... Beware of Both Hidden and Not-So-Hidden Fees and Commissions Charged by Stock Brokers and Money Managers

Someday soon our 'friendly' federal government may actually do something which, if implemented, will in fact help individual investors and the middle class. It pertains to stock brokers working for their clients with respect to individual retirement accounts and not simply trying to get individual investors to pay high fees and commissions for inferior service.

In other words, the idea is that stock brokers and other money managers will have to put the interests of their customers ahead of their own when pricing and advising clients about what financial products they should buy, including mutual funds. So while most people probably believe that's already the case, it simply isn't true -- at least not yet.

Retirement-Account Standards May Tighten is subtitled 'Brokers Would Have to Put Client's Interests First' and tells the story:

"Brokers who recommend retirement-account investments would have to put their clients’ interests ahead of personal gain under rules expected to be endorsed by the Obama administration as soon as next week.

At present, the brokers’ recommendations for 401(k) plans and other retirement accounts generally have to be “suitable,” a weaker standard that critics say permits high fees that eat into investors’ returns. . . .

The White House memo argues that investors lose as much as $17 billion annually in retirement dollars—or “at least” 5% to 10% of their retirement savings over 30 years—because of “excessive fees” and “conflicted” advice—amounts disputed by the industry. . . .

The standards, if finalized, could end up cutting into payments brokers and others collect from mutual-fund and insurance companies when they sell plans to retiree clients. Brokers have pushed back against stricter rules, warning they will drive up costs and reduce retirement choices. . . .

They won’t bar commissions for those who sell retirement investments but would ensure brokers and other financial professionals have an overriding responsibility to keep their clients’ best interests when giving financial advice. . . .

Labor Department officials declined to spell out details of the proposal. But the measure is expected to soon advance to the White House Office of Management and Budget for review, after which it would be subject to public comment."

Summing Up

Caveat emptor, aka 'Let the buyer beware,' applies to everything we purchase, including stocks.

The more we know about the 'why' of somebody being willing and anxious to sell us something, the better able we are to make sure we get what we pay for.

That's the cold cruel world we inhabit, and the sooner young people understand that, the better decisions they will make about the colleges they attend, the loans they take out to attend those colleges, the credits cards, cars and homes they buy on onerous credit terms, and so forth.

Then they will have time to reflect on how to save and invest their hard earned money over the long haul instead of needlessly paying off loans at high rates on interest --- and eventually the principal too, of course.

That's my take.

Thanks. Bob.

Thursday, February 19, 2015

Americans Face Daunting Long Term Economic Growth Challenges ... The Math is Simple ... Potential Output = Number of Workers + Productivity of Those Workers

In several recent posts, I've been trying to make the point that an aging workforce (retiring baby boomers) combined with a growing number of government workers (at all levels of government, including local, state, federal, K-12 and higher education) and quasi-government workers (such as health care), will make it extremely challenging for Americans to continue to improve our standard of living along the lines we've experienced the past several decades.

Throw in the effects of global competition, technological changes, an inadequate educational system and excessive current debt levels and the problem becomes even more pronounced.

A solid explanation of our long term challenges with economic growth is summarized in Economy's Supply Side Sputters:

"Demand finally looks healthy again. Business is hiring at the fastest pace since 2000, consumer confidence is at prerecession levels and government austerity has come to an end.

Yet as demand heals, there are growing signs that the economy has a problem with supply, or the ability of the economy to produce goods and services using all available labor, capital and know-how.

Supply determines how fast the economy grows over the long term, and it largely depends on two things: the number of workers, and how productive they are.

The evidence is mounting that those two key drivers of the economy’s supply side, the labor force and productivity, are seriously impaired. This isn’t holding the economy back at present, but before long it will. An economy with a sickly supply side will struggle to generate higher standards of living. . . .

Consider these two factors—the labor force, and productivity—in turn. The share of the population that is either working or looking for work, the labor-force participation rate, has fallen sharply. Between 2007 and 2014, the participation rate shrank to 62.9% from 66%. Initially, the drop in participation was blamed on the severity of the recession and feebleness of the recovery. Workers who had gone months unable to find a job gave up looking and were thus no longer counted as part of the labor force. When demand for workers picked up, so would participation, this theory went.

That explanation looks less convincing with each passing year. Participation has stabilized over the past year but hasn’t risen. . . . The Congressional Budget Office attributes more than half the drop to demographics. In 2008, the same year that Lehman Brothers failed, the first baby boomers qualified for Social Security. Since then, Social Security has added 2.7 million new retirees per year, compared with 1.8 million in the prior decade.

A stronger economy will draw some workers back into the labor force, but the CBO reckons that any increase in entrants will be overwhelmed by retirements, pushing the participation rate down to 62% by 2019. It estimates the labor force will grow just 0.5% a year in coming decades, compared with 1.5% from 1950 to 2014.

Also, there’s no guarantee employers will snap up any workers on the sidelines as the economy strengthens. In December, 3.6% of jobs went unfilled, the highest vacancy rate since 2001. That’s higher than in 2007, when there were far fewer unemployed, which suggests available workers aren’t well matched to available jobs . . . . To be sure, qualified workers can’t be that scarce or employers would be paying more to find them, so wage growth wouldn’t be so weak. On the other hand, at least part of that weakness is due to supply-side factors, and this is where productivity comes in.

Over time, what workers earn, adjusted for inflation, should track their productivity—how much they produce per hour. Productivity has grown just 1.3% a year since the end of the last expansion in 2007, the weakest performance since the 1970s. Productivity didn’t grow at all last year. . . . Productivity is notoriously hard to predict, but a big rebound looks unlikely.

Diminished supply poses big challenges to policy makers. . . . For Mr. Obama (and his successors), the choices are harder. His latest budget projects an economy that by 2018 is 3% smaller than last year’s budget envisioned. A smaller economy generates less revenue, and that’s one reason he promises little progress reducing the debt as a share of economic output. . . .

Neither the president nor, it appears, many Republicans any longer support a higher retirement age for Medicare and Social Security, which would encourage longer work lives. As the constraints of a diminished supply side bite, more of these ideas will have to be on the table."

Summing Up

The foregoing explanation of the issues facing future Americans points out the challenges ahead which will only be successfully addressed by gains in productivity levels throughout our  economy, including but not limited to government and quasi-government workers.

The issues confronting an aging and highly indebted society aren't hype and they aren't partisan in nature.

My bet and sincere hope is that over time We the People will rise to the challenge and deal with our many growth related economic and systemic educational problems before they become 'unfixable.'

To be forewarned is to be forearmed, so let's consider ourselves duly and appropriately forewarned.

That's my take.

Thanks. Bob.

Wednesday, February 18, 2015

Common Core ... Testing Isn't the Solution to Our Education Woes ... Good Teachers Plus Hard Working, Curious and Productive Students Are Required

We hear lots of commentary about the effectiveness, or lack thereof, of the Common Core educational standards with respect to improving our students' academic performance compared to the rest of the world's students. That's missing the point.

Although knowledge gained through education and experience is the key to acquiring and maintaining our nation's competitive advantage and world leading standard of living for our citizens, Common Core won't make that happen. It's really that simple. In fact, the productivity of our teachers and students and the strength of our overall educational system are the keys to a successful result --- not a test or set of national standards.

Common Core Has a Central Problem is subtitled 'There is no evidence that raising standards produces better academic outcomes. What does Work? Having a good teacher:'

"Russ Whitehurst has a question for the Obama administration and other proponents of the Common Core education reforms: Where is your evidence that national standards in reading and math will produce better academic outcomes?

Mr. Whitehurst, an education scholar at the Brookings Institution, has been asking this question for some time. “The lack of evidence that better content standards enhance student achievement is remarkable given the level of investment in this policy and high hopes attached to it . . . . There is a rational argument to be made for good standards being a precondition for other desirable reforms, but it is currently just that—an argument. . . . The evidence is really quite strong that there is no correlation between the quality of standards that have been implemented in the past and student achievement,” he said. “You’ve got states like Massachusetts with high-quality standards and high achievement and states like California with high-quality standards and low achievement. The correlation is zero.”

In 2012 another Brookings scholar, Tom Loveless, compared state standards and standardized-test scores across the country and reached a similar conclusion. “The finding is clear,” he wrote in Education Week. “The quality of standards has not mattered. From 2003 to 2009, states with terrific standards raised their National Assessment of Education Progress scores by roughly the same margin as states with awful ones."

The federal government is prohibited by law from endorsing or sanctioning curricula. Still, 44 states and the District of Columbia have signed on to Common Core. What the Obama administration lacked in hard data to back its scheme was made up for with hard cash. States were offered millions of dollars through federal grants to implement the initiative. Never mind that even federal studies have concluded that merely setting higher standards doesn’t lift student performance. At least three reports from the Education Department, including a 2008 study by the National Center for Education Statistics, have found no relationship between the difficulty of a state’s test and the level or change in student achievement. . . .

Mr. Whitehurst argues that policy makers would do better to focus on teacher quality and other reforms with a track record of improving student outcomes. “We know that teacher effectiveness is one thing that can make a huge difference,” he said. . . .

But the best argument against national standards may be the absence of evidence that they do any good. To that end, Common Core could join a long list of education fads and obsessions—class size, multiculturalism, per-pupil spending—that have little or no impact on learning.

Mr. Obama thinks the Common Core standards will be a boon for America’s children, though apparently not enough of a boon to subject his own children to them. The president and first lady send their daughters to private schools that will not be affected by Common Core. Better to experiment with other people’s children."

Summing Up

If I can't add, giving me a test to prove the point won't help me do any better in math -- same thing with reading.

Testing reveals what we know about what's being tested. That's all.

Good teaching helps us develop a curiosity to learn about the subject matter at hand and life in general.

And the best learning necessarily results from the individual student's decision to spend lots of time working hard doing so.

Time on task, curiosity and the habit of improvement combine to determine how much we will learn. That's another way to describe productivity, and that's something we need to emphasize very much.

Not the test.

That's my take.

Thanks. Bob.

Tuesday, February 17, 2015

Private vs. Public Sector Productivity ... Working On vs. In the System

There are profound differences between private and public sector productivity.

Private sector leadership requires constant efforts to improve the system of satisfying customers and shareholders by offering better values in the marketplace. That's often referred to in the competitive private sector as working 'on the system' and it stands in stark contrast to the working 'in the system' status quo maintenance methodology that currently exists in the public sector.

Working on the system requires satisfying customers and working in the system means doing the same thing over and over again and expecting a different result. Some call that insanity.

Finally, one requires satisfying both customers and shareholders, and the other ignores the overall needs of its 'customer' and 'shareholder' base, aka citizens and taxpayers.

This is all covered succinctly in the following brief commentary about the ongoing demise of electronic stores in the competitive marketplace of customer and shareholder satisfaction. Contrast this with the same old butts in the seats system of public education that has existed essentially without much change for the past hundred years.

Goodbye to the Electronics Store tells the story:

"I was assembling a home audio system recently and needed speaker wires. A friend recommended RadioShack. I went to two . . . but, to my surprise, neither carried any. How could RadioShack, the place Americans go to for cables, connectors, circuits and all kinds of other electronic doodads, not have speaker wires?

I ended up getting speaker wire on Amazon. Later, after failing to find stands for my speakers at my neighborhood Guitar Center — an employee said they were out of stock — I ended up buying those on Amazon, too. Come to think of it, I went online for almost all of the components of my new audio system ....

So I wasn’t surprised to read that RadioShack filed for bankruptcy this month and was planning to sell or shut down all of its 4,000 stores. It is no secret that Internet-based retailers, especially Amazon, have disrupted many brick-and-mortar stores. But they have had a particularly devastating impact on electronics retailers . . . .

RadioShack is hardly alone. In 2009, Circuit City went out of business. And the once popular New York retailer J & R Music and Computer World closed last year.

A big problem for physical stores is that they cannot match the inventory available online....

I’m not nostalgic for the old days when shopping for electronics meant dealing with the hassle of driving to a mall, finding parking and studying inserts in the weekend newspaper for deals. Still, there was a certain excitement about hauling a stereo or computer home. Receiving a brown cardboard box with the Amazon smile logo emblazoned on it is more efficient but feels just a little less satisfying."

Summing Up

Creative destruction is alive and well in the private sector. Customers are either satisfied or absent. So it is with shareholders as well.

Not so in the public sector.

Productivity is essential to progress. Productivity results from competition for the customers' business and shareholders' investment.

Productivity isn't even an afterthought in the public sector.

That needs to change, and that's my take.

Thanks. Bob.

Monday, February 16, 2015

More on Productivity ... More Than Ever, Future Economic Growth Depends on It as Our Population Ages

(1) We're getting older as a society. (2) We're also the wealthiest nation the world has ever known. (3) Those two facts aren't secrets.

And because it's not as widely known that productivity is what makes a society sustainably rich, let's look closely at the challenges ahead with respect to that key issue and its relationship to the future economic health of Americans.

How to Reverse the Looming Economic Slide is subtitled 'The next half-century will be rough without an all-hands-on-deck effort to boost U.S. productivity:'

"As presidential candidates ponder their economic platforms for 2016, they would do well to add a new report from the McKinsey Global Institute (MGI) to their reading list. The report focuses on the dramatic slowdown already under way in the growth of the labor force throughout the advanced economies and in many developing countries as well. Without a sustained surge in productivity, we face a slow-growth future.

Since 1964, MGI finds in the report, gross domestic product in the (developed countries increased) at a compound annual rate of 3.6%. About half that growth is attributable to expanding employment, the other half to rising productivity. But during the next 50 years, employment growth will slow dramatically, to only 0.3% a year from 1.7%. Even if productivity continues to grow at 1.8%, as it did between 1964 and 2014, overall growth would slow by 40%, to only 2.1% annually (a bit less than during the past five years), and the growth rate of GDP per capita would shrink by about 20%.

The U.S. is no exception to the trends. Between 1960 and 2000, according to the Bureau of Labor Statistics, our labor force grew by an average of 1.8% annually. By the first decade of the 21st century, annual labor-force growth had fallen to 0.8%. Between 2020 and 2030, it will average only 0.5%.

In addition, the U.S. is facing an unprecedented change in the age structure of its population. In 1964, there were 15 Americans age 65 years and older for every 100 of working age. By 2014, that ratio had risen only modestly, to 19 per 100. But in the next half-century, it will double, to 38 per 100.

Without rapid growth, it will be hard to finance the social costs of an aging population. But MGI projects that the annual economic growth rate for the U.S. between now and 2064 will be only 1.9%, one-third lower than during the preceding half-century, and that per capita growth will average only 1.3%.

Better public policy could boost the labor-force participation of young adults, women and older Americans. But MGI finds that this would make at most a modest difference. If slow economic growth is not to become the persisting “new normal,” the U.S. will have to increase the rate of productivity growth well beyond the average of the past half-century.

Can this be done? MGI thinks we have a shot—but only with relentless focus and an all-hands-on-deck effort to accelerate innovation, better train and mobilize the labor force, and promote a more intelligently integrated world economy. . . .

The road to higher productivity and faster growth will be challenging. But in key respects, the U.S. is better off than most of its competitors.

Over the next half-century, despite slower growth, the working-age American population is projected to increase by 26%. By contrast, labor forces in Germany, Japan, Italy and Russia have already peaked and are now declining. During the 2020s, China and South Korea will follow suit.

The U.S. can remain the world’s predominant economic power in the 21st century—if our political system can get the basics right."

Summing Up

Simply put, productivity is what makes a nation rich and its people prosper.

And productivity results from getting more output from the same or less input, or the same output for less input --- it's really that simple.

From the agricultural to the industrial revolutions, our entrepreneurial risk taking nation has led the way and our people have prospered.

Now the technological revolution is occurring, and a new question must be answered -- In this new and highly competitive age of globalization and technology, will Americans enjoy similar increases in overall prosperity as we have in the past?

Today our government not only doesn't encourage private sector productivity; it actively stifles it.

But as our society continues to age, future Americans are in for a slow growth weakened economic future unless we get really serious about curtailing government control and unleashing the entrepreneurial risk taking private sector.

It's our choice, and right now it's hard to be optimistic about which one we'll make.

That's my take, and I hope I'm wrong -- for the sake of our kids and grandkids.

Thanks. Bob.

Sunday, February 15, 2015

Productivity and Professors ... What the Teachers Don't Know They Can't Teach

A friend of mine passed along an editorial from the Peoria, Illinois newspaper written by an economics professor at Bradley University. My reaction is a negative one. See what you think.

Now here's what the good professor had to say about the relationship between pay and productivity.

"Right- to- work zones: The problem with one- sided thinking
Gov. Bruce Rauner has proposed the establishment of “right-to-work zones” in Illinois in order to improve Illinois’ competitiveness in attracting and retaining businesses. The underlying basis for this recommendation is that Illinois is not competitive due to high labor costs and the restrictions on working conditions resulting from union-management negotiated contracts. There are two approaches to improving the competitiveness of Illinois for business location. One is to lower the cost of operating in the state through strategies such as the governor’s proposed right-to-work zones. The other is to focus on improving the productivity of the state’s workforce, making the state a more profitable place to conduct business. Let’s consider the implications of each approach.
The right-to-work zones strategy will lead to declining wage rates. While this will attract businesses that are looking for low-cost workers, this strategy will also encourage more productive workers to leave the state in search of better opportunities elsewhere. As a result, average productivity levels in Illinois will decline, reducing the state’s attractiveness for business location.
As an alternative, programs could be enhanced to increase the productivity of Illinois’ workforce. This approach not only will result in increased profitability for businesses, it also will attract more productive workers to Illinois, increasing the attractiveness of the state for business location.
The governor’s strategy only considers the supply side of the labor market. Instead, by considering the demand side of the labor market, we can see that the optimum long-term strategy is not to lower wage rates to attract business. Focusing on lower labor costs will lead to a downward spiral in the state’s standard of living. By focusing on increasing the productivity of Illinois workers instead, the demand for labor will be increased, resulting in not only more business location within the state but also higher standards of living for Illinois workers.
I am in no way ignoring the need for labor unions to recognize that increases in labor wages must be matched by improvements in worker productivity in today’s globally competitive environment. U.S. firms must be able to produce products that are price competitive. This requires unions to adopt strategies that do not degrade our competitiveness by increasing wages without compensatory improvements in worker productivity.
U.S. firms and organized labor need to work together to ensure that our products and services are of the highest quality and priced to compete on a global basis.
BOB WEINSTEIN, Ph. D., is a professor of economics at Bradley University, specializing in regional economic development and labor economics. He lives in Peoria."
Now here's my take.
Summing Up
Professor Weinstein misses the point. In fact, productivity is what makes a nation, a company and an individual prosper.
When we were kids, coaches taught that it wasn't the hours we put in that mattered most; it was what we put in to the hours. They had it half right. In fact, it's both.
The time we spend mastering any task matters, and so does how productive we are during the time we spend on mastering that task. In a society, the number of people working and the amount of work they get done in a given amount of time determine that society's overall prosperity. And so it is with individuals and the organizations that employ them as well.
Public sector productivity is lousy in America. And right up there near the top of 'lousiness' must be our college professors. Productivity isn't even an afterthought in public education.
And by the way, labor unions rely on growing memberships for dues. Thus, they generally oppose productivity enhancements which would limit workforce growth. And if it's a public sector employer, it's the taxpayers and individual citizens who must foot the public union's bill.
The plain fact is that wage levels aren't the issue; the real and only issue is value received for money spent, aka productivity.

It's as simple as 1-2-3. (1) Getting more output for any given level of input, (2) getting the same output for less input, and (3) hitting the bonanza and getting more output for less input are the only legitimate answers to our economic woes.
If we're productive enough, the pay and benefits will be there. If not, it's game over. That's how competition works to give us the biggest bang for the bucks we earn.
That's my take.
Thanks. Bob.

Friday, February 13, 2015

Lots of Americans Have Debt Related Financial Problems --- Unfortunately,They Didn't Learn About the 'Magical' Mathematical Rule of 72 Soon Enough, If At All

The 'magical' mathematical Rule of 72 demonstrates that any number of years multiplied by the average annual percentage rate of return will double the initial investment when the result is 72. For example, 9 years times 8% will equal a double, as will 6 years multiplied by 12%, and so forth.

Thus, it's as simple as 1-2-3. (1) Time invested is one of the three important factors in determining how much we have 'socked away' when our earning days are over. (2) And how we invest our savings during those earning years is of critical importance as well. That's why I have long invested in a portfolio of blue chip dividend paying stocks. (3) And having a habit of spending less than we earn is the final crucial piece. Otherwise we won't have savings that we can invest for the long haul.

Today gas prices are low, and Americans are enjoying these savings at the pump. In addition, many consumers aren't spending all of that 'windfall' but instead are wisely paying down debt and increasing savings. In the end, that's a good thing, even though it will cause our economy to perform at a lower than historically normal pace for now. See U.S. Retail Sales Fell 0.8% in January which is subtitled 'Shoppers Show Restraint in Spending Gas Savings.'

Meanwhile, 70% of American families walk a 'financial tightrope' has this to say about the unfortunate plight of far too many heavily indebted American families:

"The Great Recession may be officially over, but American families’ finances have not recovered.

The majority of American households (70%) face “financial strains” on income, expenditure and/or wealth, while 55% of families are “savings-limited,” meaning they can replace less than one month of their income through liquid savings, according to The Precarious State of Family Finances ....

And while employment earnings grew 22% for the typical worker between 1979 and 1999, it’s changed little in the past decade, and between 2010 and 2013 stock ownership fell for all but the top 10% of earners. . . .

Despite household spending falling back to levels not seen since 1990, fewer than half of American families still report being “income-constrained,” which means they reported household spending greater than or equal to their monthly income.

Debt is also a growing problem. Some 8% of households are “debt-challenged,” facing monthly payments equal to 41% or more of their gross monthly income . . . . And the percentage of households with problematic debt levels — typically measured as greater than 40% of their gross monthly income — hit 9.2% in 2013 for households headed by people 55 or older, up from 8.5% in 2010 . . . . Their debt levels reached 65.4% of gross monthly income in 2013, up from 63% in 2010 and 54% two decades ago.

And many baby boomers are feeling the pressure of large mortgage repayments. . . . The debt levels among those with housing debt have obvious and serious implications for the future retirement security of these Americans . . . . Debt levels drop significantly for senior citizens who bought their homes before the housing boom.

Summing Up

Too many adult Americans of various ages have too much debt.

This is true for both young people with burdensome student loans and old people who still carry burdensome home mortgages.

And it's true for the 'in-betweeners' as well, in the form of still outstanding student loans, heavy credit card balances, underwater auto loans, home equity loans and underwater home mortgages.

This will take a few years to work itself out. In the meantime, our economy will be slower than otherwise and employment levels will be lower as well.

It's a good thing energy prices are relatively low. Why our 'Dear Leader' won't approve the Keystone pipeline and wholeheartedly support a domestic 'Drill, Baby, Drill' policy leading to energy independence and a stronger economy is simply beyond my ability to comprehend -- except for politics, of course.

That's my take.

Thanks. Bob.

Thursday, February 12, 2015

Today Is Honest Abe's Birthday ... Equal Opportunity for All ... Ever Wonder What He Would Say About The Way Things Are Today? ... Morality Can't Be Legislated ... It's the Culture, Stupid!

Abraham Lincoln was born February 12, 1809, and today is his birthday.

On April 11, 1865, at age 56 then President Lincoln spoke about endorsing citizenship and voting rights for blacks. He was assassinated because of, and shortly after, delivering those comments as When Black Americans Lost Their Moses makes clear:

"On April 11, 1865, Abraham Lincoln addressed a crowd gathered outside the White House. Speaking only days after Robert E. Lee’s surrender, he not only discussed the thorny issue of Reconstruction but publicly endorsed black suffrage for the first time. Upon hearing Lincoln’s words, John Wilkes Booth turned to a companion and declared: “That means nigger citizenship. Now by God I’ll put him through!” He added: “That is the last speech he will ever make.” Thus Lincoln was killed because he dared to speak out for black suffrage, becoming a martyr to African-American equal rights, an important point that is widely underappreciated."
Approval of the 1965 Voting Rights Act took another 100 years until becoming an essential part of President Lyndon Johnson's various 'Great Society' civil rights legislative initiatives.

Now another half century has passed since those 'Great Society' programs were legislated, so it's at least timely to review what difference LBJ's legislative achievements have brought to Americans in general and black Americans specifically. Still Right on the Black Family After All These Years provides an update:

"Will liberals ever forgive Daniel Patrick Moynihan for being right?

Next month marks the 50th anniversary of the future senator’s report on the black family, the controversial document issued while he served as an assistant secretary in President Lyndon Johnson’s Labor Department. Moynihan highlighted troubling cultural trends among inner-city blacks, with a special focus on the increasing number of fatherless homes.

“The fundamental problem is that of family structure,” wrote Moynihan, who had a doctorate in sociology. “The evidence—not final but powerfully persuasive—is that the Negro family in the urban ghettos is crumbling.”

For his troubles, Moynihan was denounced as a victim-blaming racist bent on undermining the civil-rights movement. Even worse, writes Harvard’s Paul Peterson in the current issue of the journal Education Next, Moynihan’s “findings were totally ignored by those who designed public policies at the time.” The Great Society architects would go on to expand old programs or formulate new ones that exacerbated the problems Moynihan identified. Marriage was penalized and single parenting was subsidized. In effect, the government paid mothers to keep fathers out of the home—and paid them well.

“Economists and policy analysts of the day worried about the negative incentives that had been created,” writes Mr. Peterson. “Analysts estimated that in 1975 a household head would have to earn $20,000”—or an inflation-adjusted $88,000 today—“to have more resources than what could be obtained from Great Society programs.”

History has proved that Moynihan was onto something. When the report was released, about 25% of black children and 5% of white children lived in a household headed by a single mother. During the next 20 years the black percentage would double and the racial gap would widen. Today more than 70% of all black births are to unmarried women, twice the white percentage.

For decades research has shown that the likelihood of teen pregnancy, drug abuse, dropping out of school and many other social problems grew dramatically when fathers were absent. One of the most comprehensive studies ever done on juvenile delinquency . . . concluded that “the most critical factor affecting the prospect that a male youth will encounter the criminal justice system is the presence of his father in the home.”

Ultimately, the Moynihan report was an attempt to have an honest conversation about family breakdown and black pathology, one that most liberals still refuse to join. Faulting ghetto culture for ghetto outcomes remains largely taboo among those who have turned bad behavior into a symbol of racial authenticity. . . .

Later this year the nation also will mark the 50th anniversary of the 1965 Voting Rights Act, which some consider the most significant achievement of the modern-day civil-rights movement. With a twice-elected black man now occupying the White House, it might be difficult for younger Americans to appreciate this milestone. However, in 1964, three years after Barack Obama was born, black voter registration in Mississippi was less than 7%, the lowest in the South. By 1966 it had grown to 60%, the highest in the South.

Today black voter-registration rates in the South, where most blacks still live, are higher than in other regions of the country, and for the first time on record the black voter-turnout rate in 2012 exceeded white turnout.

Rarely does a government action achieve its objective with such speed and precision. Racial restrictions to ballot access were removed and black political power increased dramatically. Since 1970 the number of black elected officials in the U.S. has grown to more than 9,000 from fewer than 1,500 and has included big-city mayors, governors, senators and of course a president.

But even as we note this progress, the political gains have not redounded to the black underclass, which by several important measures—including income, academic achievement and employment—has stagnated or lost ground over the past half-century. And while the civil-rights establishment and black political leaders continue to deny it, family structure offers a much more plausible explanation of these outcomes than does residual white racism.

In 2012 the poverty rate for all blacks was more than 28%, but for married black couples it was 8.4% and has been in the single digits for two decades. Just 8% of children raised by married couples live in poverty, compared with 40% of children raised by single mothers.

One important lesson of the past half-century is that counterproductive cultural traits can hurt a group more than political clout can help it. Moynihan was right about that, too."

Summing Up

Government can't legislate morality among its citizens. Nor can it do for us what we need to do for ourselves -- row our own boats.

We the People must simply adhere to and abide by the rules of fair play, simple human decency and equal opportunity for one and all. In the end, it's up to us, and that's as it should be.

Honest Abe was born 206 years ago today.

And long before our 16th President Abraham Lincoln was born, Founding Father John Adams in 1770 had this to say about facts and evidence: "Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence."

And in his first Inaugural Address on January 20, 1981, President Ronald Reagan had this to say about government, "Government is not the solution to our problem; government is the problem." How right he was.

And were he still alive today, my guess is that Honest Abe would agree with both Adams and Reagan.

So let's wish each other good luck with getting to a better reality with all this, my fellow Americans. It's about time.

At least that's my take.

Happy Birthday, Mr. Lincoln.

Thanks. Bob.

Wednesday, February 11, 2015

The Corrupt Bargain Between Public Sector Unions and Politicians ... The Illinois Example ... Let's All Get a Job with the Government and Join a Public Sector Union

The union membership's ranks are growing in the public sector while shrinking in the private sector. Ever wonder why?

Well, one practices fairy tale government funded and totally taxpayer subsidized economics whereas the other faces government interference and real world cutthroat global competition. Guess which is easier?

Rauner's Illinois Revival Project is subtitled 'The new Governor targets the corrupt union-political bargain' and says this in pertinent part:

"According to the Bureau of Labor Statistics, from 2003 to 2014 Illinois had 0.2% employment growth, compared to 3.8% in Indiana, 8% in Iowa and 7.3% nationwide. Net Illinois job growth was 10,300 compared to 109,000 in Indiana and 115,900 in Iowa. . . . Illinois (ranks) 48th for doing business . . . .

Central to the mess is the rising bill for state pensions and salaries, and the constant union demands for higher taxes to pay for them. Compensation costs for state employees make up about one third of the state budget, with an astonishing 25% of current state tax dollars going to fund retiree benefits and an $111 billion unfunded pension liability.

Mr. Rauner campaigned on a plan to reform pensions by keeping current retirees in the old system while moving current workers into a 401(k)-type model. . . .

The current system is unsustainable, but so far it has been unreformable thanks to the ties between legislators and public unions. According to the Illinois Policy Institute based on data from the state Board of Elections, between 2002 and 2014 86% of state lawmakers received campaign cash from government unions. House Speaker Michael Madigan received more than $1 million."

Now let's take a look at what's been going on with public and private sector union membership in the nation as a whole during the past several decades.

The Shrinking American Labor Union has the story:

"24.2%: private sector union membership rate, 1973
6.6%: private sector union membership rate, 2014
A generation ago labor unions were often a familiar feature of the American workplace, but in private businesses across the country, unions have been shrinking. Today fewer than one in 15 private sector workers belongs to a union, compared with almost one in four back in 1973.
But dwindling union participation in the private sector stands in stark contrast with union membership among public sector workers, which rose sharply in the 1970s and has been relatively steady since 1980 at around 35 percent. Overall union membership has fallen by about a half since 1983, according to the Bureau of Labor Statistics, driven entirely by the decline in the private sector.
The causes of falling union participation are hard to pinpoint but may be attributed to several factors, including the pressures of global trade, technological change, the shift away from domestic manufacturing and a tougher stance against unions from government and corporate leaders."
Summing Up

The corrupt combination of Illinois politics and public sector union leadership has long been a sick and anti-taxpayer story. Unfortunately, it's not the only one in America these days.
Maybe the rest of us should forget about working to achieve nationwide prosperity and simply all go to work for the government. If we were all on the government payroll, that would solve the income inequality problem and the political problems as well.
Besides, government jobs provide good pay, lots of time off, guaranteed pensions, a minimal risk of layoffs and other taxpayer provided goodies, albeit generally underfunded. It all makes for a compellingly interesting situation.
There's just one problem with this idea of all working for the government --- who would pay for all this government if we all ceased working in the productive, risk taking, 401(k) private sector part of the U.S. economy and joined the government payroll? Beats me.
That's my take.
Thanks. Bob.