The People's Place

Thursday, August 6, 2015

America's Growing Financial Dilemma ... We the People Must Begin Talking About the Very Things That Our Politicians Won't Discuss

Our financial situation is really bad.

Individually and collectively, we need a wake up call.

And since we're not likely to hear much, if anything, about all this from the otherwise always open mouths of our political class, let's just tell it like it is among ourselves.

Seven problems that deserve investors' attention tells it like it is, and it's not a pretty sight to see. In fact it's downright ugly.

With that in mind, please consider the following seven ills that absolutely need to be addressed, and the sooner the better:

1 - "The national debt. It's well over $18 trillion, and that's only the current value and growing exponentially. The Congressional Budget Office has calculated the present value of our unfunded obligations — such as commitments to Social Security, Medicare, Medicaid, SNAP, CHIP, government pensions, etc. — total somewhere between $47 trillion and $205 trillion. These are patiently waiting their turn to show up in the national debt.

2 - State debts. States, like the Federal Government, have built in their own laws and commitments for the future which they cannot fund. Never mind that this will be a problem for future elected officials. State and local commitments for pensions are way out of line. . . . States, unlike the federal government can't print money to make the payments.

3 - Funding the interest on debt. The Feds are printing money in order to be able to pay the interest on the national debt and other increases in government spending. There is no Federal Reserve if China or Russia would elect not to roll over their U.S. bonds into more U.S. bonds when they mature....

4 - Personal debt. The average household has over $15,000 in credit card debt and a $150,000 mortgage. Graduating college kids have accumulated over $1 trillion student debts, and even bankruptcy won't erase these. . . . Over a quarter of 401(k)s have loans against them. And the government is encouraging . . . people to spend more, not save. . . .

5 - The national savings rate. Less than half of those working for employers with a 401(k) contribute to the plans — even though they offer free matching funds. We've come from saving 25% of disposable income (gross income less federal income tax) in World War II when taxes already took a big bite down to a more or less steady rate of 9% to 10% for decades until industry started to abandon pensions for its employees. Then . . . by 2005, personal savings virtually disappeared and have now grown to the grand sum of 5% — when personal savings should be about 10% for those who will get pensions or 15% for those without then. . . .

6 - We're not able to support our aged. The birthrate to support a steady population is 2.1 babies per woman. We've been below that now for decades with the result that we're well on our way to have 25% of the population over 60 — and they will vote for continued and increased welfare at the expense of the ever-diminishing supply of workers whose income taxes and FICA support much of this. When Social Security started, there were over 30 workers per Social Security recipient. Now it's down to about three workers. Demographers say we'll soon be down to two workers per beneficiary, the majority of which are living longer, requiring additional Social Security, Medicare, Medicaid, SNAP, etc. Already 52% of those over 55 have no savings. And sometime between 2020 and 2025, there will be more retired people than those working. . . .

7 - So someone get busy writing "Things that should matter." And maybe we'll find some politicians that will think about the future beyond the next election cycle. If we don't, we are going to have most elderly in poverty and the remaining working people paying much higher taxes."

Summing Up

Facts are facts.

The truth is the truth.

All problems created by We the People are capable of being solved by We the People.

But they won't solve themselves, and politicians won't even address them seriously without a 'nudge' by us commoners.

Political insanity reigns supreme over America's current fiscal debacle, and this must change.

That's my take.

Thanks. Bob.

Our Nation's Productivity Problem, the Lack of Economic Growth and Related Sustainable Income Gains ... Productivity Isn't a Dirty Word ... It's a Vital Necessity for an Improved Overall Standard of Living

We are hearing far too little these days from the media talking heads and politicians about the huge importance of productivity in achieving consistent 3% annualized real gains in our nation's economic output.

More than anything else, productivity affects economic output, overall compensation and advances in our standard of living.

Even though the pundits and politicians don't talk about it much, the truth is a simple one: productivity, or the lack thereof, is 'the real big deal.'

So with that as background, let's consider just how much it's holding back economic growth and income gains today.

Politicians Should Pay Heed to Productivity Problem is subtitled 'Boosting hourly worker output could resuscitate weak wage growth:'

"Judging by the presidential candidates’ early speeches, the central economic issue of the 2016 campaign is already clear: the dismal performance of workers’ wages.

Families “haven’t gotten a raise in 15 years,” former Florida Gov. Jeb Bush, a Republican, said recently. In her speech last week on the economy, Democrat Hillary Clinton mentioned wages eight times. Other candidates have lavished similar attention on the plight of middle-class workers.
Far less noted is one of the most important reasons wages have performed so poorly: the sluggish growth of productivity, which is the output each worker produces.

That neglect needs to end. Though it resonates less with politicians and the public than a higher minimum wage or tax cuts, raising productivity in the long run is the most effective way to elevate standards of living. It enables more goods and services to be produced with the same number of workers.

Many on the left, such as Vermont Sen. Bernie Sanders, note that the benefits of higher productivity have flowed disproportionately in recent decades to the wealthy. Their solution is to redistribute more of those gains to workers, through direct interventions such as a higher minimum wage, or higher taxes on the wealthy.

But this too quickly dismisses the contribution of productivity. . . .

President Barack Obama’s Council of Economic Advisers . . . noted the median family’s income, adjusted for inflation, did not grow at all between 1973 and 2013. If inequality, as measured by the share of aggregate income earned by the middle 20% of families, hadn’t widened after 1973, the median family’s income would have been 18%, or $9,000 higher, by 2013. On the other hand, if productivity, which grew 2.8% per year in the prior 25 years, had maintained that pace thereafter, median incomes would have been 58%, or $30,000, higher.

So lagging productivity growth had triple the impact of widening inequality. . . .

In the late 1990s, Bill Clinton enjoyed the best of both worlds during his second term: Unemployment was low and productivity grew briskly, and as a result wages enjoyed their best spell since the 1950s, growing 3% per year – even though a booming stock market was also widening the gap between the rich and the rest.

President Obama, by contrast, has suffered through the worst of both worlds: high unemployment until last year, and the worst productivity performance of any presidency since Jimmy Carter’s. That high unemployment and lackluster productivity are key explanations for the dismal performance of real compensation. . . .

Why the dearth of attention to productivity? Politically, it’s just not very sexy. . . . But that’s not an excuse to ignore it."

Summing Up

Productivity is absolutely vital to growth in our overall standard of living. Productivity is what makes a nation rich.

Focusing on income inequality, redistribution or 'other Robin Hood' programs, on the other hand, are merely different ways of rearranging the deck chairs on the Titanic.

(1) Generating more output for the same input or (2) generating the same output for less input yields real income gains and economic growth. Coupled with an increase in working Americans, the result is how much our economy grows.

Too often we are led to believe that greater productivity means fewer jobs for Americans, but nothing could be further from the truth.

Productivity gains, just like workforce additions, result in additional output.

And with additional output we have more real wealth to share --- and not just to redistribute.

If we ever get back to encouraging private sector risk taking in a free market, our wealth problems, employment problems and debt related issues will start to disappear.

Otherwise we'll just keep treading water while listening to the politicians blame greedy private sector chieftains and income inequality as the reasons for the economic stagnation we've already endured for far too long.

That's my take.

Thanks. Bob.

Wednesday, August 5, 2015

A Trip Down Memory Lane with Oscar Robertson and Bob Boozer ... Two of the Best Hoopsters to Ever Play the Game

Oscar Robertson was the greatest college basketball player that I ever saw perform, and Bob Boozer was another great player that I was privileged to watch in person. And then I would go home and try hard, albeit unsuccessfully, to emulate their many on-the-court moves. Oh, the memories.

Growing up near the basketball hotbed of Peoria, Illinois, and while a high school player, I watched in awe when the 'Big O' and the Cincinnati Bearcats came to town to play their arch rival Bradley Braves in Missouri Valley action. Bradley's then superstar 'Chet the Jet' Walker was right there to 'greet' them upon their arrival.

And I was able to witness then superstar Bob Boozer in action as well. Boozer came to Peoria for one year and competed for the nation's AAU champion Peoria Cats (to preserve his amateur status) after being selected as an All American and graduating from Kansas State in 1959. He died in 2012.

Boozer and Robertson played together for the U.S. Olympic gold medal team in 1960 and then later as teammates on the NBA Cincinnati Royals.

Oscar Robertson Jumped Through Hoops to Win Big is subtitled 'The NBA's 'Player of the Century' looks back on his family's Indianapolis shack:'

{NOTE: If you click on the article, there's a great photo of the 'Big O' in action in the 1959 NCAA regional game against Big 8 champion Kansas State. Although unidentified, also in the picture is Bob Boozer (#30), who starred at Kansas State before spending a year in Peoria playing for the Peoria Caterpillar AAU team.

Boozer and Robertson then teamed up both for the 1960 U.S. Olympic team and later for the NBA Cincinnati Royals. Thus, Boozer and Robertson were first NCAA opponents and then became Olympic and NBA teammates.}

But that's more than enough nostalgia from me. Now let's hear from the man himself, the 'Big O.'

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"Oscar Robertson, 76, is a former NBA player, voted “Player of the Century” in 2000 by the National Association of Basketball Coaches. He is author of “The Big O: My Life, My Times, My Game.”. . .

I was fortunate back in the 1940s. Though I grew up poor in Indianapolis, I learned to play basketball with the city’s best players in a park we called the Dust Bowl. I didn’t experience racism firsthand because I didn’t interact with many white people then. That would come later.

I was born in Charlotte, Tenn. My grandparents owned a farm and 14 acres. All of my relatives lived within a five-mile radius. We had a cow and hogs, and my grandfather sharecropped to raise hay and corn to feed the animals.

When I was 4, we moved to Indianapolis, about six hours north. We had relatives there, and we lived with my Aunt Inez for a few years. Finally, in 1946, my father was told there was a beat-up shack available on Colton Street. He rushed over and got it.

The house was a tar-paper shotgun shack built in the 1890s. There were two bedrooms. My older brothers, Henry and Bailey, and I slept in one, and my mother and father were in the other. Both my parents had to work—my mother worked two jobs and eventually became a beautician. . . . My father worked for a meatpacking plant.

The first time I held a basketball was in the eighth grade. I started playing in a Police Athletic League club on the Dust Bowl, the asphalt court next to the Lockefield Gardens housing project. Kids from all over the area played there. I stood 5 foot 8 inches tall then. That summer I went to visit my grandparents in Tennessee. When I came back, I was 6 foot 4. . . .

I practiced my moves and shots at the Dust Bowl, watching other players and reading basketball books. I learned from a lot of great players, particularly about the importance of working as a unit.

When I was a sophomore at Crispus Attucks, an all-black high school, I joined the team. We won the state championship my junior and senior years. . . .

High school was never a problem academically, and I had many exceptional teachers. School always came first. Coaches made sure you were in school and they posted your grades. I never had one teacher mention basketball.

College was a shock. I went from an all-black school to the predominantly all-white University of Cincinnati in 1957. I was there on a scholarship and was the only black player on the team. The prejudice was tough, from students and some professors. It shocked me at first, but I let it run off my back. I was there to earn a business degree. Once I got on the court, it was a different story. I was accepted. The team made it to the Final Four twice but we never won a championship. I was named Player of the Year in all three years I played. I also made the dean’s list.

After college, I was co-captain of the 1960 Olympic team that won the gold medal, and then I joined the Cincinnati Royals. The following season, I averaged a triple-double for the entire season—double-digit totals in points, rebounds and assists. When I was traded to the Milwaukee Bucks in 1970, I joined Kareem Abdul-Jabbar and we helped the team win its only NBA title in 1971.

Today my wife, Yvonne, and I live in Cincinnati, in the same house we bought in 1976."

Summing Up

Oscar Robertson unquestionably was the greatest college basketball player that I ever saw perform. And Bob Boozer was the top AAU player I had the pleasure of watching and 'studying.'

And the 'Big O' was a serious student as well.

To be eligible to play as an Olympian in 1960, Boozer postponed his NBA career by playing a season for the Peoria Caterpillar AAU champions, and I'm happy that he did.

For this oldster, the 'good old days' spent growing up in Chillicothe, Illinois (near Peoria) really were good days.

While there was plenty of time set aside for both playing and watching basketball, somehow we managed to squeeze in our academics as well.

We weren't anywhere close to perfect at any of this, for sure, but neither were we all bad.

It has been and still is a fun ride.

That's my take.

Thanks. Bob.

More on the Poverty Stricken but Charitable Clintons ... Charity Begins at Home

The Clinton Charity Case is subtitled 'A nearly $15 million tax write-off for donations to the family foundation:'

"Hillary Clinton’s presidential campaign staged another document dump on Friday . . . the tax filings show how Bill and Hillary define charity.

The first couple of American liberalism reported income of $139 million in their hardship years from 2007-2014. That’s a tad more than most of the “everyday Americans” whom Mrs. Clinton claims to speak for, which may explain why an accompanying press release stressed that she and Bill had given $14,959,450 to charity.

That’s wonderful, save for the small detail that her charity of choice was her own family. The couple donated all but $200,000 of their gifts since 2007 to the Clinton Family Foundation, which isn’t exactly the Little Sisters of the Poor.

While the foundation does contribute to charitable causes, it also doubles as a vehicle to promote the first family’s political ambitions and public profile. It spends an outsized portion of its money, for instance, picking up the travel and other expenses for the whole family.

The foundation has also functioned between campaigns and stints in public office as a jobs program and financier for various Clinton operatives. . . . Foreign governments, unions, wealthy Democrats and corporations donated to the foundation knowing its political importance to the woman who could be the next U.S. President.

The Clintons play by their own political rules, and taking a nearly $15 million tax write-off to assist their electoral ambitions is merely the latest."

Summing Up

Politics sucks.

Jonathan Gruber called the American people dumb suckers.

Hillary is now pitching.

But Joe Biden is warming up in the bullpen.

So here's my question.

Will we prove Gruber to be right -- once again?

Or will we instead choose none of the above?

Thanks. Bob.

Tuesday, August 4, 2015

Wal-Mart's Low Cost, Low Price Strategy Compared to Government 'Subsidies' for College Attendees ...The Productive Private Sector Waltons in Contrast to the Government 'Subsidized' Clintons ... Two Wealthy Families from Arkansas

Wal-Mart charges every day low prices for the goods and services it offers for sale. Otherwise customers would shop elsewhere. Competition reigns in the free market.

Government charges low prices for those attending college (and ObamaCare users too) by subsidizing the colleges, then offering affordable pricing to attendees (and ObamaCare users), and finally by sticking it to taxpayers in order to recover fully its costs. The taxpayers have no choice, and government has no real incentive or need to control costs or maximize the value of the offerings provided to 'customers.' Government providers don't have to concern themselves with such things as customer satisfaction, productivity, value for money, or controlling costs.

The competitive private sector concentrates on satisfying customers and controlling costs, and in the process of so doing, shareholders benefit. Otherwise shareholders exit and the company folds. Meanwhile, the monopolistic public sector neither concentrates on satisfying customers nor on controlling costs. In the process, taxpayers don't benefit. They just pay.

The Way of the Waltons --- Wal-Mart founder Sam Walton attributed much of his business success to a very simple formula for pricing and cost control. It can be summarized as follows: If the company's profit margin ever exceeded 4%, it was time to cut prices; but if the company's profit margin fell below 3%, it was time to cut costs. Wal-Mart grew and the Waltons became wealthy by offering very competitive low prices to their customers and earning big profits for shareholders

The Way of the Clintons ---The Clintons have made their millions by being 'public servants.' They are masters of working government levers to grant both access and favors to 'valued' clients seeking to soak the taxpayers.

Thus, one financially successful family from Arkansas served customers on the road to its riches, while the other got wealthy by 'serving' government favor seekers and soaking taxpayers.

In short, while Wal-Mart focused on serving customers and maintaining a low cost operation, the Clintons opened government doors and granted subsidies to the family's favored supporters. And this government emphasis on subsidies instead of productivity is the key to understanding why we have perhaps the very best government that money can buy.

Productivity and cost control aren't part of the formula for 'good' government as practiced in today's America. Instead taxpayer subsidies are used to pay for unaffordable government. The bills are eventually paid by the entire U.S. citizenry. Everybody pays at least a little, including the direct users, so that the government workers can be paid a lot.

And that's why such government goodies as 'free' education, 'subsidized' health care and even the U.S. postal service are so ridiculously expensive. It's really that simple.

Today we'll look at the current state of subsidized and unaffordable higher education in America.

Federal Aid's Role in Driving Up Tuitions Gains Credence has the story:

"Imagine a scenario in which the federal government helps households pursue the American dream with ultra-loose credit, only to see prices skyrocket and families take on loads of debt they can’t repay.

Yes, it sounds like the housing market of a decade ago, but some say it is also the challenge of today’s higher-education system.

The federal government has boosted aid to families in recent decades to make college more affordable. A new study from the New York Federal Reserve faults these policies for enabling college institutions to aggressively raise tuitions.

The implication is the federal government is fueling a vicious cycle of higher prices and government aid that ultimately could cost taxpayers and price some Americans out of higher education, similar to what some economists contend happened with the housing bubble.

Conservatives have long held that generous federal-aid policies inflate higher-education costs, a viewpoint famously articulated by then-Education Secretary William Bennett in a 1987 column that came to be dubbed the Bennett Hypothesis.

Now, more mainstream economists and academics are adopting that view, or at least some variation. And while college institutions reject the notion that they game the federal student-aid system to jack up prices, many higher-education officials concede there is a pricing problem, and changes are needed.

“There’s widespread concern among policy makers and college officials that it has become too easy for students to borrow large amounts of money without necessarily appreciating what they are getting into,” said Terry Hartle of the American Council on Education, a trade group representing college and university presidents.

The government’s student-credit spigot burst open in recent decades as Americans sought a leg up in an increasingly sophisticated economy, and accelerated during the last recession. Annual student-loan disbursements—which include some private loans but come mostly from the federal government—more than doubled between 2001 and 2012 to $120 billion . . . .

And it’s not just that more people went to college; the amounts borrowed also grew sharply. During that time, the average loan per recipient rose 58%, after inflation, to $5,777 a year.

Federal student loans allow Americans to borrow at below-market rates with scant scrutiny of their credit and no assessment of their ability to repay. Meanwhile, federal Pell grants, which help low-income college students and don’t need to be repaid, more than tripled to more than $30 billion a year between 2001 and 2012. Education tax credits roughly quadrupled to about $20 billion a year.

The cost of getting a degree similarly exploded. From 2000 to 2014, consumers’ out-of-pocket costs for college and graduate-school tuition rose 6% a year, on average, according to the Labor Department’s consumer-price index. By comparison, medical-care inflation looks meek at an average 3.8%. Overall consumer prices climbed 2.4% a year. . . .

The study found that, on average, for a $1 increase in the subsidized-loan cap, tuitions rose by as much as 65 cents. For Pell grants, it translated to 55 cents on the dollar. The study pinpoints private schools—both nonprofit and for-profit—as bigger offenders than public ones. . . .

One thing the latest research doesn’t address is the effect of student aid on graduate-school tuitions, which have disproportionately driven the surge in student borrowing. And grad school is perhaps where the market is most distorted by federal policies.

The federal government limits how much undergrads can borrow—up to $57,500 total—but doesn’t for grad students, who can borrow to cover any amount their schools charges through a decade-old program known as Grad PLUS. Economists say that has given institutions unprecedented pricing power. . . . In the seven years before Grad PLUS, college tuitions were rising faster than grad-school costs. In the seven years after, the reverse occurred."

Summing Up

Wal-Mart offers 'unsubsidized' low prices and competitive values for customers.

Government offers 'subsidized' low prices and great financial harm for both taxpayers and the 'sooner or later' paying customers.

Government's lack of focus on productivity and cost management is creating an increasingly out-of-control and unaffordable situation.

We the People need to recognize that the real Arkansas threats to our nation's well being and prosperity are people like the Clintons, and not the Waltons.

Both are rich, but only one got that way by competing fairly, taking care of customers and not by taking advantage of We the People.

Yet somehow the Waltons are deemed to be the greedy ones, and the Clintons are billed as the noble public servants.

Wake up, America.

That's my take.

Thanks. Bob.

Monday, August 3, 2015

Times are Tough for Today's Millennials (ages 25-34) ... Unfortunately, They are Likely to Stay That Way

We American oldsters and baby boomers all owe a huge debt of gratitude to prior generations for the land of opportunity that we inherited free of charge. We now have the chance to 'pay it forward' and do something similar for future generations.

Those of us who were fortunate to follow the 'Greatest Generation' that won the peace by defeating the Nazis and Japanese in World War II were handed, and at no cost, the blessings of freedom, prosperity, peace and a bountiful economy with plenty of high paying jobs.

And while things haven't always worked out for many of us, compared to today's millennials (ages 25-34) and other younger Americans, all things considered, we indeed are the 'luckiest generation.'

We're Making Life Too Hard for Millennials draws the appropriate generational comparisons and tells a story that needs to be shared:

"{Millennials (ages 25-34) should} be fretful over their economic well-being and fearful — oh so fearful — for their prospects. The most educated generation in history is on track to becoming less prosperous, at least financially, than its predecessors.

Earning Much Less, Despite More Education

Longer term, rising federal debt payments and increased spending on Social Security and Medicare will inflict a tremendous financial burden on them, threatening their own prospect of receiving promised retirement benefits.

To a considerable extent, that’s the fault of my generation, the baby boomers. We were the children of the Greatest Generation, but we may also be the most irresponsible generation....

Americans between 18 and 34 are earning less today (after adjustment for inflation) than the same age group did in the past. . . . Still more striking is that millennials have endured falling earnings even though they have attended college in record numbers.

Millennials who didn’t attend college have found their wages particularly squeezed, perhaps because of the decline of middle-skilled jobs in sectors like manufacturing, a clear consequence of globalization.

The wealth of millennials has been hit even harder than their incomes. Their median net worth was just $10,400 as of 2013, down 43 percent from the $18,200 that Gen Xers had in 1995 when they were under 35. With incomes squeezed, millennials are not only not saving much; they are dipping into whatever savings they do have.

That’s worrisome when combined with weak incomes and low net worths. Millennials also participate less frequently in 401(k) plans and, scarred by the recession, invest less and keep more than half their money in cash — not a great long-term strategy.

Another huge drag on the finances of younger Americans is the mountain of student debt that has been piled up in recent years. Members of this year’s graduating class left their campuses owing an average of $35,051, about twice the levels borne by their counterparts two decades earlier (after adjusting for inflation).

That’s in large part because college is becoming less affordable even as it has become increasingly necessary. Since 1993, average tuition has risen by 234 percent, far above the 63 percent overall inflation rate.

Saddled with debt and thin paychecks, millennials are delaying purchasing cars and new homes, low mortgage rates notwithstanding. By June of this year, homeownership among Americans under 35 fell to 34.8 percent, down from a high of 43.6 percent in 2004.

Some of this may be cultural — younger Americans seem less interested in major possessions like cars and homes. But they are also delaying marriage and having children, which I believe is an indicator of strapped finances.

Just to complete a dismal picture, millennials will also be the victims of the irresponsible fiscal policies pursued in large part by members of my generation. The massive budget deficits of recent years and projected needs to meet future obligations to retirees will result in a steady increase in federal debt . . . .

Rising national debt levels may threaten the ability of millennials to collect on promised Social Security and Medicare benefits. That’s not lost on millennials — only 45 percent expect to receive Social Security benefits during retirement (compared with 68 percent of baby boomers). . . .

We can’t completely undo the financial obstacles younger Americans face, such as their weak earnings. But we can start to put in place policies that will ease their burden. First and foremost would be to get the nation’s economy onto a stronger growth trajectory. . . .

As part of redressing this imbalance, we need to reform the entitlement programs, for example, by reducing Social Security benefits for the highest income Americans. And important steps could be taken to both ease the burden of student debt for those who have already graduated and provide less expensive college opportunities for the rising generation.

Let’s at least start with a greater acknowledgment of the plight of millennials and the role that we — in many cases, their parents — played in creating it."

Summing Up

My 'luckiest generation' entered adulthood as part of a strong, stable and vibrant growing economy. A rising tide lifted all boats.

Now it's our turn to deliver to the millennials and future generations the same kind of world leading and free market driven economy.

But for that to happen, We the People must get serious about bringing our financial situation under control.

And we must aid rather than hinder all reasonable private sector efforts to get the economy growing at a sustainable and rapid pace.

With today's sick politics and government centered culture, it won't be easy. Still, it must be done.

That's my take.

Thanks. Bob.

Sunday, August 2, 2015

Chris Christie Speaks About the Irreparable Harm Being Done by Teachers Unions to Our Children's Futures

More people are starting to talk openly and candidly about how much irreparable harm teachers unions are doing to our children's future prospects by saddling them with inferior educations.

{NOTE: Please see my post of August 1 titled 'School Vouchers and Free Choice ... A Simple Explanation and Example.'}

The lousy job teachers unions do with respect to our children's educations is very much a national conversation Americans need to have. So let's give credit where credit is due and thank Chris Christie for trying to make it part of the presidential campaign by bringing it up in a Sunday interview on CNN.

'Single Most Destructive Force' is subtitled 'Chris Christie identifies the main problem in U.S. public education:'

"You don’t have to be a “progressive” to conclude that once in a while America makes political progress, and not always toward the left. One sign of real progress in recent years is the growing consensus that teachers unions are the main obstacle to improvement in American public schools.

That was apparent Sunday during an interview on CNN. Host Jake Tapper played to the media stereotype of GOP presidential candidate Chris Christie by asking the New Jersey Governor a question about who “at the national level deserves a punch in the face?” Mr. Christie could have been forgiven for saying Mr. Tapper. But he had a better answer: “Oh, the national teachers union, who has already endorsed Hillary Clinton 16, 17 months before the election.”

Mr. Tapper: "Why?"
Mr. Christie: “Because they’re not for education for our children. They’re for greater membership, greater benefits, greater pay for their members. And they are the single most destructive force in public education in America. I have been saying that since 2009. I’ve got the scars to show it. But I’m never going to stop saying it, because they never change their stripes.”

Every word of that is true and important to say. The teachers unions have been punching poor children for decades, and someone has to punch back for those children."

Summing Up

Teachers unions are really, really bad for kids and taxpayers alike.

They're especially bad for poor and inner city kids and their families.

But they're good for Democrats and presidential candidates like Hillary Clinton.

And the parents of poor and inner city kids can be counted on to vote in huge majorities for Democrats and presidential candidates like Hillary Clinton.

That's a real head scratcher, but it's true.

That's my take.

Thanks. Bob.

Public Sector Unions Oppose the Best Interests of Both Taxpayers and the General Public

Before proceeding, let's make three statements of fact:

(1) The clear majority of individual public sector employees, including teachers, police and fire fighters, do good work and generally act in the best interests of We the People;

(2) Private sector unions do not necessarily act contrary to the best interests of employees or companies; and

(3) Public sector unions are bad for taxpayers and the general public. They should be eliminated.

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The best interests of public sector unions are unalterably opposed to the best interests and well being of the vast majority of American citizens and our overall American society.

The motivations and selfish interests of public sector union leaders are not remotely like those of their private sector union counterparts. Public sector officials are in it to win it only for themselves and frequently not even their members. They are absolutely unconcerned about doing what is in the best interests of the 'employer,' aka We the People.

They can and do take this 'taxpayer be damned' approach because taxpayers won't cease to exist and communities won't close their doors or relocate when the union's demands become too unreasonable. Accordingly, the union leadership isn't likely to act in the long term best interests of its members, members of the community, other citizens or taxpayers.

And it's even logical, albeit sickening at times, for them to act that way. Let me explain.

In the end, public sector union leaders are paid by taxpayers. The unions generate their revenues from the dues collected from the union's bargaining unit members.

This 'unlimited taxpayer support' in turn enables and emboldens the union leadership to sponsor and support (1) ever bigger government, (2) unproductive workplace inefficiencies and (3) higher taxes.

And they take this wasteful and anti-taxpayer stance for three very selfish reasons:

(1) The more public sector bargaining unit employees there are, the more dues the unions will collect from them;

(2) The more workplace inefficiencies there are, the more dues the union will collect due to a bloated and unproductive workforce; and

(3) The more taxes We the People pay, the more money there will be for public sector unions to access.

When a union negotiates its initial contract on behalf of bargaining unit employees, its most important demand is invariably a dues checkoff provision. From that point forward, a portion of what taxpayers intend to pay to employees is instead automatically 'siphoned off' to the union coffers. The taxpayer supplied funds become guaranteed union receipts, and no further effort to raise money is ever required of the union chieftains. All they have to do is get more and more bargaining unit employees on the payroll. That in turn results in higher union revenues and higher paychecks for union officials.

They can instead focus much of their time and membership dues lobbying on behalf of and supporting the Democratic Party's nominees. This in turn means that the Democratic politicians will support the union leadership with 'favorable' legislation. Thereafter the unions and Democrats play an ongoing effective and simple game of 'you scratch my back, and I'll scratch yours.' And it's all paid for by the taxpayers.

Doubt what I say? Then consider what Critics blast loophole that forces taxpayers to support public sector union work has to say:

"Bob Nicks has firefighting in his blood, but for the last four years, the Texas battalion chief has earned his six-figure salary sitting at a desk doing union work instead of running into burning buildings and saving lives.

As president of Austin Firefighters Association/IAFF Local 975, Nicks is office-bound by order of the chief, even though he believes he could handle union business with one weekly shift and spend the rest of his time on the job doing what he loves. He is paid for what is known as "release time," hours public sector union officials spend doing union business that are paid by their employers - taxpayers. . . .

Nicks, who calls himself a "different kind of union president," hates getting paid to ride a desk. His rank earns him more than $100,000, he acknowledged, but he spends none of his 40-hour work week in a firehouse. . . .

Release time costs local, state and federal governments hundreds of millions of dollars. . . .
“It’s an egregious waste of taxpayer dollars,” said Greg Mourad, vice president of the National Right to Work Committee. “There’s no reason for it and that is the problem with unionizing the public sector. They [unions] have become the most powerful lobby group in politics.". . .

Pending legislation in Michigan would curb release time and also end a practice known as “pension spiking.”. . . Michigan Education Association bargained for the Lansing school district to contribute $50,000 annually to the state pension system on behalf of state union President Steve Cook. The deal allowed him to collect a much larger pension despite not working for the school system."

Summing Up

Private sector employers either must satisfy customers and make a profit for shareholders, or they will go broke and out of business. Hence, customer focus and employee productivity are the hallmarks of successful private companies. Private sector unions know that and often are guided accordingly.

The public sector has no such existential need either to satisfy customers or act in the best interests of the 'sponsoring' taxpayers.

Public sector union leaders have internalized this 'sponsoring' feature of taxpayer supported public sector bargaining. So unlike their private sector counterparts, these union leaders don't concern themselves with the best interests of the 'sponsoring' shareholders, aka taxpayers.

It's time for We the People, aka the 'sponsoring' taxpayers, to make clear to public sector union leaders that we know who's really 'sponsoring' the union officials and paying all the union bills.

The long term best interests of our kids, our citizens, our money, our schools, our cities, our states and our nation are at stake. It's time for We the People to act accordingly.

That's my take.

Thanks. Bob.

Why Today's Working Americans and Tomorrow's Retirees Must Better Prepare for Their Retirement Years

More than half of Americans aren't saving and investing adequately to provide for their families' financial security during the retirement years.

When my generation began working in the late 1960s, guaranteed pension benefits were the norm.

Over time that all has changed, at least in the private sector. And change will be coming to public sector employees as well.

And when we entered the workforce, the now retired baby boomers were just starting to work. Of course, that is all changing now too.

And at that time our country's financial status was the envy of the world. That's no longer the case.

And back in the now gone 'good old days,' burdensome debt levels weren't a big issue for our nation, individuals and American families. Student loans weren't a problem, and neither were credit card balances nor underwater home mortgages. Regrettably, that's no longer the case.

And finally, when my age cohort began our working careers, we didn't have a clue that the years would go by 'faster than a speeding bullet' and how quickly retirement would come. Now we know.

Those are just a few of the many reasons why there's a critical need for today's young people to develop the necessary habit of saving and investing consistently and properly during the working years.

We're Living Longer, and Other Reasons to Worry About Americans' Retirement Outlook describes the current situation in the following way:

"Americans are increasingly unprepared for retirement.

That’s a key finding in a new paper . . . about contemporary retirement finances. . . . the key is this: Americans are living longer. The average American woman who reaches age 65 this year has a better than one-in-three chance of seeing her 90th birthday, up from a one-in-four chance 50 years ago. . . .

Below are a few highlights of the report.

Anxious Outlook

Only about half of adults who aren’t yet retired expect to have enough money to live comfortably once they stop working, While that’s an improvement over the outlook that prevailed in the aftermath of the recession, it’s still lower than early in the last decade.

Lower Net Worth for Many Households

According to the Hamilton researchers, that worry stems largely from the fact that the net worth of roughly half the income distribution of those ages 55 to 64 is lower than it was in 1989. The differences (amount) to gaps of several tens of thousands of dollars, with many of the households in this range in 2013 having between one-half to two-thirds the wealth of equivalent households in 1989. . . .

The End of Defined-Benefit Pensions

A few decades ago, when many employers still offered traditional pensions, a household’s savings were perhaps a less important indicator of its readiness for retirement. Today, however, with the slow demise of defined-benefit retirement plans guaranteeing a stream of income, Americans are more reliant on their own savings.

Since 1978 . . . the share of savings made up by defined-benefit plans and individual retirement accounts has changed dramatically. Last year, people relied on public and private defined-benefit pension plans for 34% of their savings, roughly half the level in 1978. By contrast, their reliance on individual retirement accounts or 401(k) plans soared from 20% to 58%, placing more of the investment risk on households.

Fewer Workers Supporting More Retirees

At the same time, Social Security is going to come under pressure as the baby-boomer generation retires with fewer working-age adults to take its place. . . . In 1960, there were nine workers supporting every retiree. In 2013, there were only 4.3 and the ratio is expected to fall even further in the decades ahead.

That decline will strain Social Security’s finances and put pressure on Congress.

“Because individuals are living longer but generally retire and start claiming benefits at a similar age as previous generations did, a greater share of federal resources has shifted toward supporting the elderly, with the share of the federal budget spent on Social Security rising from 13.4% in 1962 to 23.5% in 2014,” the authors write."

Summing Up

Facts are stubborn things.

But they must not be ignored.

So do the right thing for yourself and your family by taking the necessary steps to prepare for retirement while you're still young and have the opportunity and means to do so.

That's my take.

Thanks. Bob.

Saturday, August 1, 2015

School Vouchers and Free Choice ... A Simple Explanation and Example

The other day I was asked to explain how a free choice and voucher system for K-12 schools could work and why I believe it's the way forward for American education in a globally competitive environment.

The reasons vouchers make sense are twofold: (1) the overall costs to taxpayers and society would be much lower than they are currently; and (2) more importantly, vouchers would improve our educational results greatly.

Before how cost savings and improved educational outcomes would result from vouchers, however, let's first stipulate that the government run monopolistic educational system's current protectors and defenders will continue to fight vouchers and free choice to the bitter end. For them it's an existential thing.

So while many of the 'leaders' want the freedom to choose how their own kids and families are educated since they have the opportunity and means to do so, they want no part of vouchers or free parental and student choice for our poor and middle class kids. The system really isn't all the concerned about how well our future American leaders will be educated and prepared for global competition.

Accordingly, there is and will continue to be a very high degree of difficulty associated with making meaningful progress in improving the education experience and opportunity for many of our poor, middle class, inner city and rural American children of all races, religions and ethnic groups.

And that's in large part because the current 'system' is supported by the Democratic Party and its largest supporter and contributor to local elections, the teachers unions.

We'll begin our explanation and analysis with a conundrum.

THE QUESTION -- Can you guess who turns out to vote in overwhelming numbers for the political supporters of an inferior and non-free choice, government run voucherless system of public education?

THE ANSWER -- The poor and inner city families who would be helped the most by free choice and educational vouchers, of course.

Moving right along, here's a short overview of how being 'free to choose' could work everywhere in America if the game weren't rigged so heavily in favor of the government run status quo.

(1) First, we'll assume that the current K-12 education expenditures for each of 30 kids in the local public school classroom costs taxpayers ~$12,000.

(2) That represents a total cost to taxpayers of ~$360,000 annually (30 x 12 =360).

(3) Next we'll assume that we can hire a competent and dedicated teacher of those 30 children for ~$60,000 annually.

(4) That leaves us with ~$300,000 left to equip, feed and transport the 30 kids. We'll assume we can do that for a total of ~$90,000 or $3,000 per student. We'll also assume the local YMCA, library, Boys Club or other existing school or government facilities would allow some or all of our 30 kids to use them rent free.

(5) That leaves us with ~$210,000 which either can be used to incentivize the teacher, the students or their families to outperform their public school counterparts. {NOTE: For the sake of simplicity, we will use whatever standard test methodologies the public schools use.}

(6) Instead of using the ~$210,000 as specified in #5 hereinbove, we could instead choose to rebate all or part of the $210,000 to taxpayers.

(7) And the teacher, students and families could put their collective heads together and figure out a way to make the estimated ~$210,000 higher by reducing the above assumed cost outlays further. They could achieve this by getting adults to volunteer as teachers, using online learning tools instead of transporting the kids physically each day, packing a sack lunch or by adopting other creative and productive methods to reduce costs and improve educational outcomes.

(8) They could also choose to take the money saved, in whole or in part, and use it to send the kids to college or trade school. {NOTE: Paying for college is another story for another day, but you get the idea.}

(9) We the People will make sound choices for ourselves and our families when given the opportunity, incentive and means to do so. That's why vouchers make sense. Incentives work.

(10) And that's just one more example of why our current broken system of American politics sucks.

That's my take.

Thanks. Bob.