Wednesday, January 18, 2017

Never Trump Travel Guide

Donald J. Trump will be sworn in as the 45th President of the United States on Friday.

Before the election a large number of celebrities vowed that they would leave the country if Trump won including Barbra Streisand, Samuel L. Jackson, Rosie O'Donnell, Whoopi Goldberg, Miley Cyrus and Barry Diller.

We are still waiting for this happen. Perhaps they are waiting until after the inauguration. It could also be that they were waiting for this Never Trump Travel Guide on the best places in the world to destroy any remaining brain cells that they possess.

I recently came across a Bloomberg article that may help them choose where to live once they leave the United States. It compares the cost of a basket of goods — tobacco, alcohol, amphetamine, cannabis, cocaine and opioids — in more than 100 countries relative to the U.S.

Let's call it a Vice Index.

If these celebs are so miserable and depressed about Trump perhaps they need something to take their minds off of their misery when they leave the country.

As a reference point, the basket of vice costs $400 in the United States.

This is what Bloomberg put in the vice basket.

a pack of cigarettes, most popular and premium brands; a bottle of alcoholic beverages, including beer, wine and spirits; a gram of amphetamine-type stimulants, including amphetamine, methamphetamine and/or ecstasy; a gram of cannabis, including marijuana herb, hashish resin and/or cannabis oil; a gram of cocaine, regardless of salts, paste or base forms; a gram of opioids, including heroin and/or opium.

If the celebs take their US dollars with them it will go the furthest in the Congo. What costs $400 for the vice basket in the U.S. will cost them less than $20 in that country in Africa. If they want to stay closer to home, they might want to check out Honduras where the vice basket goes for only about 10% of what it does in the States.

They need to stay away from Japan, Australia and New Zealand. The vice basket is real expensive in those countries--double to triple what it would cost in the States.

I know that these celebrities like to celebrate the socialist ideals of Venezuela. I can't understand why we don't see anyone saying that they want to live there instead of in the United States with Trump. Or in Cuba for that matter.

It must be the cost of the vice basket in Venezuela. I doubt it could be the lack of food, medical services or toilet paper in that socialist paradise.

The vice basket costs $3,645 in Venezuela---almost ten times what it does in the United States.

Life truly is not fair to the Venezuelans. They lack the most basic necessities thanks to their socialist leaders and they can't even do anything to try to ease the pain.

How bad is it?
Rampant inflation means locals would have to spend 17 times their weekly wages for a bottle of beer, a packet of smokes and a gram of cocaine.

That is bad. It is hard to imagine if it is that expensive to have a smoke, get drunk or get stoned how long will it be before political revolution comes to Venezuela?

After all, it was only an increase in the tax on tea that pushed American colonists over the edge.

If the celebrities find that it is not as easy to earn a buck in their new foreign home, and have to find a job in the local economy, this chart might be more instructive. It shows how much the vice basket costs as a percentage of the average weekly wage in the 40 most affordable countries to feed your vices.

Luxembourg and Switzerland are the most affordable countries for citizens with vices. The United States is #17 on the list. However, it still would consume 36% of the average worker's wages.  After you pay that, your Obamacare premiums and your taxes, there would not be much left to live on. Vices are not cheap.

Canada is #23. The Congo which has the lowest absolute cost gets expensive when you have to earn a living there---the vice basket would consume over 50% of the average weekly wage.

Safe travels to all the Never Trumpers. Please protect the brain cells that you have left.

Tuesday, January 17, 2017

Monumentally Misbegotten

I have written previously about the Obama administration using its last year in office to promulgate thousands of new regulations. All of this regulation ended up adding 97,110 pages to the Federal Register in 2016---the highest number in U.S. history.

A BeeLine reader pointed me to another area where President Obama is going out with a flourish. He is wielding his pen to designate millions of acres of land and sea under federal control as "national monuments" to place them beyond the reach of development and to secure his environmental legacy according to this article in The New York Times.

The latest "national monuments" established by Obama were 1.35 million acres of federal land surrounding the Bears Ears Buttes in southeastern Utah and about 300,000 acres around Gold Butte in Nevada, northeast of Las Vegas.

Prior to these designations, during his eight years in office, President Obama had proclaimed 553 million acres of land and sea within the jurisdiction of the United States to be considered as "national monuments" under authority he believes he has under "The Antiquities Act of 1906."

This is how Wikipedia describes the purpose of "The Antiquities Act"

The Act was intended to allow the President to set aside certain valuable public natural areas as park and conservation land. The 1906 act stated that it was intended for: "... the protection of objects of historic and scientific interest." These areas are given the title of "National Monuments." It also allows the President to reserve or accept private lands for that purpose. The aim is to protect all historic and prehistoric sites on United States federal lands and to prohibit excavation or destruction of these antiquities. With this act, this can be done much more quickly than going through the Congressional process of creating a National Park. The Act states that areas of the monuments are to be confined to the smallest area compatible with the proper care and management of the objects to be protected.  (my emphasis added).

What is particularly troubling about these actions of President Obama is whether, unlike executive actions and many regulations, it is possible for Donald Trump or another future President to reverse these designations under The Antiquities Act. The statute is silent on that point and no "national monument" designation has been reversed previously. Then again, there also has never been a President who has so monumentally abused his power under the statute.

I often write in BeeLine that context is everything when assessing anything. Let's assess President Obama's actions here in context.

I am a conservationist at heart. Most conservatives I know are. Conserving our history and natural resources is smart and prudent.

I understand the intention of the statute. There are times that Congress may act too slowly in providing protection of objects of historic or scientific interest. Executive action might be desirable in limited situations. However, it should be the exception rather than the norm.

Let's put 553 million acres in context. It is big number but do you realize how big it really is?

President Franklin Roosevelt also used the Antiquities Act to designate some "national monuments." He was in office over 12 years. The total acreage that he took under federal authority was 2.8 million acres. Obama's actions places 200 times more acreage as designated "national monuments" than FDR did. In addition, consider for a moment that those 550+ million acres had been in existence since 1906 and no prior President saw any urgency to act to protect them before.

What is more shocking is realizing how large an area 555 million acres is (the 553 million Obama had previously designated together with the 1.6 million in Utah and Nevada) when you compare it to the acreage in various states.

In fact, 555 million acres is more than the combined acreage of Alaska (375 million acres) and Texas (171 million acres) which are the two largest states we have in land mass.

Does it sound as if the monuments that President Obama has declared are "confined to the smallest area compatible with the proper care and management of the objects to be protected" as the statute requires?

Does it sound as if this President is faithfully executing the Office of President of the United States when Article II, Section 3 of the U.S. Constitution states that one of his key responsibilities is as follows?

"shall take Care that the Laws are faithfully executed."

This is yet another example of our 44th President who turned out to be "The Constitutional President Who Ignored the Constitution."

Another man is taking the oath of office this week. This is what he will recite with his right hand raised and his left hand on the Bible on Friday.

“I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States.”

He may not be a constitutional lawyer but I am confident he understands the oath and responsibilities of the Office of President of the United States a far sight better than his predecessor.

Sunday, January 15, 2017

Nature or Nurture?

I have long been interested in the question of whether nature or nurture is primarily responsible for athletic success.

Are great athletes born or made?

Some of my interest stems from my experiences as an athlete. My father was a very poor athlete. My mother was a good athlete and a physical education major in college.

I was a decent athlete in school. I would probably put myself in the top 5% in athletic ability when growing up against my peers. I played varsity soccer, varsity golf and jv basketball in high school and played on the freshman baseball team before I focused on golf. I was a solid starter in every sport I played except for basketball where I was the 6th or 7th man. However, I was never "the star" on any team I played on.

Did I fail to become a star because I did not have the right genes? Or did I simply not work hard and practice enough? After all, I was spreading myself over three sports my entire time in school. What kept me from getting to the next level? Not having the right parents or not practicing enough?

I recently finished reading the "The Sports Gene" by David Epstein which explores this issue and the current state of research on "how the relationship between biological endowments and a competitor's training affects athleticism".

The short answer is that elite athletes are 100 percent nature and 100 percent nurture. Without both genes and the right environment there are no elite outcomes.

One of the fascinating stories in the book is about a boy who tried out for the 9th grade track team. He had failed in previous years in middle school at the high jump, pole vault, hurdles and 50 yard dash but each time he did not have the ability to make the team. He decided to try the longest race offered---the 400 meters---as a last chance.

He started out fast and led the tryout run for the first half of the race but his legs soon turned to jelly and his lungs were burning like they were on fire in the homestretch. He once again failed to make the team.

Nevertheless, he ran a little bit over the summer before entering high school which started in 10th grade in his hometown and decided to go out for the cross country team in the Fall. He had never run five miles without stopping until his first cross country practice. In his first time trial on a mile run he was 14th on the team. In his first cross country meet he had the 21st best time on his team. He was not even good enough to be considered junior varsity after his first competitive race. He was placed on the "C" team.

However, as he trained each day identically alongside his fellow team members, he made massive improvement compared to the others. In six weeks, he was solidly on the jv team. Two months later, he led the varsity to the Kansas state championship.

Although he had massive improvement in a short time he still was not sure running was his thing. He didn't run over the winter and was reluctant to go out for track in the Spring. He ended up running the mile and ran a 4:26 time in March to defeat the defending state champion. That compared to the 5:38 time he ran 6 months before in his first time trial. He ended his sophomore season by running  a 4:08 mile.

In his junior year he became the first high school student in the world to run a sub-4 minute mile in only his second season of running track.

The runner's name was Jim Ryun who set the world record at age 19 in a time of 3:51.3

Jim Ryun in high school
Credit: Runner's World

Jim Ryun did not eventually set that world record without herculean training regimens. However, he clearly had what genetic scientists would refer to as a "high responder" body. He had some natural gifts but when he trained his lungs, hearts and body responded as if on a super charger. The nature was there but he needed to nurture it to reach full potential.

You see this theme over and over in the book.

Certain people have certain innate advantages. It is undeniable.

Africans who have descended from the Kalenjin tribe in Kenya are the world's best distance runners. For example, seventeen American men in history have run a marathon faster than 2:10. Thirty-two Kalenjin men did it in one month---October, 2011.

Why? Researchers point to their high VO2 max capacity living at 7500 feet altitude as well as their long legs that are particularly thin in the lower leg that allow for good running economy. Another factor is that most as young boys run miles to school and back each day. Again nature and nurture in play. It is interesting to note that none of the sons of the great Kenyan runners are following in their footsteps. They are not running to school and are more likely leading a softer life than their fathers. Nature can only take you so far.

A couple of other interesting facts in the book that show how important nature is in some athletic pursuits.

  • Major league position players have an average right eye acuity of 20/11 and left eye acuity of 20/12. You might only find this in a handful of people if you tested a population at large. You see it in very large numbers in major league hitters.

  • The average man generally has an arm span from finger tip to tip when the arms are extended outwards equal to his height--a ratio of 1.0. The average ratio for a white NBA player is 1.035. The average for African American players is 1.071. This works out to be an average height of 6'5-1/2" with a 6'11"wingspan. How important is wingspan in a basketball player. Only two NBA players had ratios below 1.0 when this survey was taken during the 2010-1 season. This may explain my mediocre basketball career. I was just over 6 feet tall but my wingspan is just over an inch short of that. On my best leap in high school I could barely touch the rim. Now I know it was not my leaping ability that was weak, I could not dunk the basketball because my arms were too short.

  • We see tall men in the NBA but we lose perspective on how rare that type of height is. In fact, of American men ages twenty to forty, it is amazing to consider that 17% of them are in the NBA right now. In other words, if you passed six seven-footers on the street, one would be in the NBA. Further, only 5% of American men are 6'3" or taller. Almost every player in the NBA is that height. 

  • The length and stiffness of the achilles tendon seems to help determine leaping ability. For example, kangaroos have very, very long achilles tendons. Length is innate but working out can stiffen the tendon to make it have more spring. Stefan Holm of Sweden who was only 5'11' claims to have done more high jumps than any man in history. The achilles tendon on his left leg (his take off leg) was 4 times stiffer than the average man. This explains why Holm was able to high jump 7'10.5" the highest differential ever between the jumper's height and jump.

I am a big believer in practice, hard work and training being essential building blocks of success. I have written about it before here and here. It is not as if I do not recognize the influence of nature in success. However, I believe we are too quick to use nature as an excuse in not reaching our potential. It is too easy to try something once or twice and say "I am not good at (fill in the blank).

What if Jim Ryun had said that after finishing 14th in his school on his first mile time trial? In fact, Ryun's parents urged him to quit in those early days when he would come home after practice exhausted and hurting. "It is too hard on you. Give it up." However, he persevered and the rest is history. It is interesting to note that nobody else in Ryun's family was a runner. His parents never were athletes and his younger sister never ran. Did they have similar talents that were never realized?

When I picked up this book I wondered how much it would challenge my core beliefs. This book does show there is variability in the potential all of us have in various athletic pursuits. A stocky kid with short legs is not going to be a world class distance runner. A skinny, short kid is not going to become an offensive tackle for the Patriots. A girl is never going to throw the football as far as Ben Roethlisberger. The book points out that the average 18-year old boy can throw a ball three times as far as the average girl. This is why there are separate men's and women's athletic events. It is nature.

However, the reality of the gene pool is that most of us have talents and potential that are little different than almost everyone else on the planet. What differentiates those that succeed versus those that do not is purpose, passion, perseverance...and practice.

As one scientist remarked in the book, when it comes to the gene pool the biggest gift that you can receive is the will to want do something.

I believed that before the book. I believe it more after reading the book.

However, I also realize that alone is not enough to take a 6 foot kid with a below average wingspan and make them an NBA player. Of course, that short wingspan did not prevent me from becoming an above average blogger.

May each of you find your purpose and passion...and persevere in reaching your full potential.

Wednesday, January 11, 2017

Farewell President Opposite

President Obama gave his farewell address to the nation last night.

I am not sure we have ever had a President where so many people were so happy...and others so see a Presidential term come to an end.

It might have been presented as a farewell address, but if Obama was hoping to be compared with Washington and Eisenhower, he missed the mark. From my perspective, it was emblematic of his entire eight years in office.

This is how Bloomberg political columnist Jonathan Bernstein summarized the speech in an article entitled, "What Went Wrong With Obama's Farewell Speech".

The basic problem was that the event, and the speech, couldn't make up their minds about what they were doing. The core of the speech, as far as I could tell, was a classic farewell address in the spirit of George Washington and Dwight Eisenhower -- serious advice to the nation, distilling something he had learned from the last eight years, meant to be taken seriously and remembered.
Unfortunately, that was mostly lost in the mess of a long, split personality speech. Obama ricocheted back and forth between a campaign rally, a recitation of the administration's greatest hits (bin Laden! jobs! Cuba! marriage!), a SOTU-type of laundry list of future policies he supports, an opportunity to personally give thanks to his family, staff, supporters, and voters, and then back around again. And the setting -- in Chicago, with a large cheering audience -- meant that even the serious parts felt more like a campaign rally than something to think about.
To be fair, President Obama tried to talk about the need in the future to work together and to unite our country in common cause. However, his actions over most of the eight years have been the exact opposite. You have to ask what has he been doing about it? The country is clearly more divided today than when he took office.

What happened to the "Hope and Change" and "Yes, We Can!" that we kept hearing about on the campaign trail eight years ago?

That is why I began to refer to President Obama as President Opposite four years ago.

I wrote the blog post below in September, 2012. I could update it with even more material today (Obamacare is even worse, the rise of ISIS, the Iran deal, the betrayal of Israel, cop killings, Black Lives Matter, the IRS scandal etc) but what point would it serve right now?

President Obama fully earned the title of President Opposite in his first four years and the next four only confirmed how accurate the description is.


President Opposite
(originally published September 30, 2012)

Take a minute and think back to four years ago.

Day after day and in speech after speech we heard about "Hope and Change".

I have come to the conclusion that to understand where we will end up with President Obama is to convert everything he says to the OPPOSITE of what he says he is going to do.

President Opposite

He was going to bring us together.  He has worked primarily at creating divisions with endless class warfare rhetoric.

We heard how we would experience a new tone in Washington that would see hands reaching across the political divide for the good of America. We have never been more divided.

We heard how the federal deficit would be cut in half and we would no longer burden our children's future with the enormous federal debt.  The federal debt has increased from $10.6 trillion to over $16 trillion.

We heard how the United States of America would be respected like never before.  Our enemies have gotten angrier and we have angered some of our closest allies.

We heard how we would extend health care to millions and at the same time the tens of millions who liked their health care could keep it and premiums would be reduced by $2,500 per family as a result of healthcare reform.  A 2,300 page health care reform bill was passed on a strict party line vote that will increase our deficit by $1 trillion over the next 10 years, cut Medicare by $716 billion, force religious organizations to violate the most basic tenets of their faith and turn over many medical decisions to a government bureaucracy.  Health care premiums have not decreased by $2,500=they have increased by $2,500 over the last four years.

We heard how green jobs would be created by the millions to spur a economic revival the likes of what we had not seen in decades.  Solyndra and many other "green" companies were given billions of dollars by the federal government and many went bankrupt without providing anything of value in jobs or economic growth.  At the same time, a project that would have increased our energy security and created thousands of jobs, the Keystone pipeline, was rejected.

We heard how we would lift more people out of poverty with a helping hand that would benefit the entire country at the same time.  More people are on food stamps, Medicaid and disability than at any time in history.

We heard how this would be the most open and transparent federal government in the history of the Republic.  The health care reform was drafted behind closed doors, we still don't know what happened with Fast and Furious and a U.S. Ambassador is dead and we hear a different story every day.

I could go on and on about the promises, propositions and predictions that were made as to how our lives were going to be made better by Barack Obama.  Consider just a few other examples of how we have gotten the OPPOSITE of what we were promised four years ago.

  • We have fewer people working than four years ago.
  • The net worth of American families is lower than it was four years ago.
  • Real incomes are lower than they were four years ago.
  • We have 47 million people on food stamps-a 50% increase from four years ago.
  • We have lost almost 600,000 manufacturing jobs to China and other foreign countries in the last four years.
  • Gas prices at the pump are almost double what they were four years ago.
  • The United States has fewer allies and more enemies than four years ago.
  • We have taken on $3 of federal debt for every $1 in economic growth over the last four years.
  • We lost our nation's AAA credit rating.
  • Most importantly, President Obama has gotten the formula that made America great exactly backward although he talks about going forward.  He seems to think that government creates prosperity.  If that was the case North Korea, Cuba and Greece would be economic giants.  The only way forward is with productivity gains in the private sector.

President Obama's 2012 campaign theme is FORWARD. However, I have not been able to discern one new idea or new policy that he is proposing that is any different than we have heard for the last four years. There is nothing to look FORWARD to as everything that he is proposing we have already seen how it will turn out... all we have to do is look BACKWARD.

The man in office is simply President Opposite.  He has us going in the wrong direction with every step he takes.  If you still have doubts go BACKWARD to the beginning of this post and read it again.

President Opposite leaves office at the end of next week. He will leave one big legacy going FORWARD. The people of the United States looked at the record of the last eight years and have decided they want to go in an OPPOSITE direction for the next four years.

Democrats and the liberal media are in full-fledged panic over that thought. However, Donald J. Trump would never have been elected but for the record of Barack Obama as President Opposite. If they want to blame someone, start with Mr. Obama. As for me, I bid him farewell and thank him for such a wonderful legacy.

Tuesday, January 10, 2017

The Risks of Rising Rates

We live in a world of historically low interest rates.

If you don't believe it, here is another relic of the past that I discovered as I was going through a pile of old books and materials in my basement this past weekend.

It is an "Equal Monthly Amortization Payment Book" showing the dollar amount of monthly payments required to amortize a loan at various interest rates. It was published in 1978.

Do you notice anything about the book?

It does not assume that anyone will be interested in the monthly cost of any loan with less than a 7% interest rate on a home mortgage.

How times have changed.

For some perspective, here is a graph of the average 30-year fixed mortgage rates in the United States since 1971. When the book above was published, average mortgage rates were over 10%. The last time they were over 7% was 15 years ago. After a recent spike, they are now at around 4.25%.

Credit: Federal Reserve Bank of St. Louis

Of course, just as things that are up can go down, things that are down can go up.

What are the potential effects of an increase in interest rates?

The low interest rates we have been experiencing are something akin to being on a drug. It makes you feel better but does it really make things better in the long run?

There is no question that the low interest rates have contributed to a general increase in the value of assets such as houses, stocks and bonds. Low interest rates let you buy more for the same amount of monthly payment. Consider these payments on a 30 year mortgage.

At a 4% interest rate, borrowing $300,000 results in a $1,432 per month payment.

At a 8% interest rate, borrowing $300,000 results in a $2,201 per month payment.

To get the monthly payment down to around $1,400 per month at 8% interest, the loan would have to be around $200,000. Since buyers generally can only buy houses based on the monthly mortgage payments their incomes will support, this house is no longer affordable to that buyer.

She will have to find a more affordable home, or more likely, that house will have to come down in price because many more buyers will find themselves in a similar situation. After all, a house (or any other asset) is only worth what someone else is willing and able to pay you for it.

Declining interest rates have been a great tonic for the housing market in recent years. The same is true to the stock market. As a general rule, stocks will rise as interest rates fall and stocks will struggle in the face of rising interest rates.

Of course, we see the greatest correlation between interest rates and values when we look at bond prices. Simply stated. bond yields and bond prices are something like a teeter-totter at the playground.


When interest rates decline, the price of the bond increases. This is the general secular trend we have been in the United States for over the last three decades. In many respects this has been the most favorable period in history to gain wealth from investing. Both stock and bond returns had a tailwind that made it relatively easy to compound wealth. All you had to make sure you did was save some dollars to get the compound returns to work for you.

However, when interest rates rise, the price of the bond declines.

Many people have the mistaken notion that investing in bonds is always "safer" than investing in stocks. That comes from the fact that holding a bond means that someone has promised to pay you an established amount at the end of the bond's term. If you can wait until that time to get your money and the borrower can make good on the promise, it is safer than the uncertain return on a stock where there is no promised return or repayment.

However, what happens in the interim? What if you are a 70 year retiree and are holding a treasury bond that will not mature until you are 100 years old? What if you need to sell the bond when you are 85?

This is where bonds become risky as you could become exposed to the sensitivity the bond has to changes in interest rates. Bond pros refer to this as the "duration" of the bond.

Jared Dillian writes for Mauldin Economics and he recently wrote about the risks to bond investors due to rising interest rates. He did an excellent job in explaining the risks in bond investing and how the concept of "duration" plays into it. Note that he wrote this piece in September when interest rates were near their all-time lows and before the recent upturn in rates.

If you own a bond, you are exposed (positively or negatively) to changes in interest rates. If interest rates go up a percent or two, you want to know what is going to happen to the price of your bond. 
Two things we need to know about duration:
  1. Longer-term bonds have more duration
  2. Lower-coupon bonds have more duration
There is a thumb rule in bond mathematics: 
If interest rates go up one percent, the price of the bond will decline approximately (duration) percent.
It’s a thumb rule, it’s not exact. So yes, if the duration of a 10-year note is 9, and interest rates rise from 1.6% to 2.6%, the bond will lose approximately 9% of its value.
So rates go up 1% and a bond goes down 9%. Is that risky?
You mean bonds lose value?
Actually, bonds can lose a lot of value. And my guess is that people have been lengthening their duration in order to get a little extra yield. By moving into long-dated bonds, people have massively increased their interest rate risk.
Dillian's guess that a lot people have moved into long-dated bonds in order to increase yield is right on the money. In fact, this graph from Goldman Sachs (that was in The Daily Shot newsletter) shows that the US Bond Market's sensitivity to rising interest rates is the highest on record.

Dillian points out how big the risk is if you are in a 30-year bond and interest rates rise just 1%.

Lots of people are in long-term government bond funds. Okay, so what is the duration of the on-the-run 30-year bond? 
About 21 and change. So if long-term rates rise from 2.4% to 3.4%, the value of the long bond will decline by…
About 21%.
Are bonds risky? You bet.
What happens if interest rates rise by two percent? Certainly not unheard of.
The price of the bond will decline by 35-40%.
My guess is that people don’t know that their government bond funds could decline by 35-40%
 Think about this: if people thought that there was a realistic chance that stocks could go down 35-40%, would they invest in stocks? No. 
Do rising interest rates pose a risk to bondholders? Yes.

To stocks? Yes.

To homeownership? Yes.

It also poses a risk to the federal budget. When you have $20 trillion in debt a small increase in interest rates can amount to billions of additional costs to the federal government.

The risks of rising interest rates are everywhere.

Be aware of the risks when considering your money.

Monday, January 9, 2017

Forecasting the Future?

Early January is the time for predictions. It is the time for every self-proclaimed prognosticator, prophet, psychic, political pundit, economist and futurist to tell us what to expect in the coming year.

I try to stay out of the prediction business if I can help it. Sometimes I can't help myself. Here is an example of something I wrote just before the November election about Hillary Clinton.

I also know that if Donald Trump defeats Hillary Clinton we will see unbounded anger and antagonism directed at the Clintons by liberal Democrats. They will be seething that Hillary could have allowed Donald Trump to keep the Democrats from winning The White House and controlling the Supreme Court. Hell hath no fury like a scorned liberal Democrat!

It still baffles me that Democrats are spending all of their time blaming the Russians for Trump's victory and not focusing any of their anger at Hillary and John Podesta. I still think that I might be proven right on this one in time. However, it looks like a very poor prediction right now. I should have considered my own advice in these pages before I wrote that.

Two years ago I wrote in these pages that "Predictions Are Perilous" on the 30th anniversary of the movie "Back to the Future" which depicted life 30 years into the future (2015). That movie actually got a few predictions right--flat screen tv displays, iChat, Google glass. However, we still don't have hoverboards and there was no consideration of smartphones, email or the internet in the film.

My view on the predictions business was reinforced this weekend as my wife forced me to go through several shelves of old books that I had stored in the basement. As I sorted through those volumes I came across this book that I had purchased and read back in 1980. I was curious to see how the predictions in that book looked several decades later. I blew some dust off the cover and leafed through the pages to see if anyone correctly predicted the future.

The Book of Predictions was actually a book that followed a best seller by the same three authors titled "The People's Almanac" that was published in the mid 1970's. That book had a chapter that dealt with future predictions which was very popular with readers. Therefore, the authors decided to devote an entire additional book to nothing but predictions. Famous predictions from the past that came true. Past predictions that never materialized. And, of course, future predictions. That is the most interesting part of the book now that we find ourselves almost 40 years after those predictions were made.

Predictions were made in the book by experts in various fields of science and technology, psychics, science fiction writers, Nobel Prize winners and even bookmakers.

How much did they get right?

For the most part, the book proves that predictions are perilous. That is especially true for the so-called psychics. It seems that psychics, like everyone else, find it difficult to break free from current thinking to really see the future. That is very apparent in a number of predictions from this era when inflation and interest rates were high, oil supply was a concern and space exploration was still a big topic. You see this bias in some of the predictions that never came to pass over the next 35 years.

  • Inflation will stabilize at 23% in 1983.
  • Henry Kissinger will be elected Senator from New York in 1984.
  • Nuclear weapons will be outlawed and the U.S and Soviet Union will disarm by 1989.
  • The first manned flight to Mars will occur in 1992.
  • Pollution will become a thing of the past because laws will force industry to use only clean energy( solar and electromagnetic) by 1992.
  • John F. Kennedy, Jr.. will become President of the U.S. one day.
  • The wastelands of Utah and other barren areas will be reclaimed through the discovery of heretofore unknown water sources for irrigation in 1999.
  • People will be living up to 150 years by the year 2000. By 2010, there will be a cure for every known illness of the 20th century.

The experts were better in their predictions than the psychics. However, they were also wildly optimistic on where we would be in space travel with predictions that the first child would be born in space by 2000, space cities and factories would be in operation by 2010 and space mining for minerals would be going on by 2020.

The best predictions by experts seemed to be in the technology field. For you younger readers who have no perspective of what life was like in 1980, these predictions may look like no-brainers in hindsight. I can assure you they were far removed with our experience in 1980.

For example, here is what Bell Laboratories predicted back in 1980 for the telephone services of tomorrow. Voice mail, call waiting, caller ID, a personal nationwide telephone number, cordless phones, plug-in phones with no need for a phone installer, the ability to call home and remotely control appliances and thermostats, and home information systems that would operate through the communication of computers over phone lines. Pretty darn good predictions of what came about over the next 35 years. No one in that Book of Predictions got it right better than the Bell Labs people.

Another expert in the book that seemed to be pretty good with their predictions was Joseph Martino of the University of Dayton who forecasted the penetration of different technologies into the home and office.

Remember that he made these predictions at a time when tv games, electronic funds transfers, cable tv, video discs and email were either non-existent or generally below 10% in penetration. These were his predictions of when the believed these various technologies would reach 90% penetration in the U.S.

Households with tv games                1992
% of retail sales using EFT               1995
Email replaces 90% of snail mail      2005
Households with cable tv                   2000
Households with video disc               2006

I did not check to see how accurate he was on these dates but he had to be pretty close on most of these. If anything, he was probably too conservative in his forecasts.

I especially liked what predictor G. Harry Stine had to say in the book.

I do not make predictions; if you want a prediction of the future, go see a fortune-teller. A prediction implies that an event will occur in the future with a better than 99.99% certainty.
I make forecasts, and there is a difference. A forecast implies there is a high probability but not a sure bet that something will occur.
A short-range forecast for less than 10 years is always over-optimistic; a long range forecast for more than 10 years is always conservative. 
Let this be a lesson for you... and me. Stick to forecasting and stay away from predictions.

By the way, how many forecasted these things back in 2006?

None of these existed 10 years ago.


What was that about 10-year and under forecasts always being over-optimistic?

That must be 1980 thinking.

Wednesday, January 4, 2017

Why Do Democrats Really Fear Trump?

Since election night we have heard a constant refrain from Democrats and those in the media (actually one in the same?) of all of the reasons they fear Donald Trump.

It started on election night when liberal economist Paul Krugman wrote this as the reality of a Trump presidency sunk in. (He actually posted this shortly after midnight at 12:42 am)

It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover?
Frankly, I find it hard to care much, even though this is my specialty. The disaster for America and the world has so many aspects that the economic ramifications are way down my list of things to fear.
Still, I guess people want an answer: If the question is when markets will recover, a first-pass answer is never.

Paul Krugman stated that the markets were plunging because of the Trump victory and that the markets would never recover.

For context, remember that Dow Jones futures fell by some 800 points as the reality of the Trump win became apparent. that night. After all, markets do not like surprises no matter what they are. However, by the opening bell the next morning the entire 800 point plunge was gone.

What has happened since then?

This chart shows the Dow Jones Industrial average from November 8, 2106 until today.

It closed on November 8, 2016 at 18,332. On January 4, 2017 it closed at 19,942---up over 1,600 points.

What is the basis for this market surge? Optimism and renewed confidence. It is as if a heavy burden has been lifted off of the United States economy overnight.

For example, the National Federation of Business surveys small business owners on their outlook and optimism on a monthly basis. Just before the election, small business owners were slightly negative  (-6) on whether business conditions would improve in the future. That measure went to +38 right after the election.

That is one of the reasons that Deutsche Bank recently revised its GDP forecast for the United States substantially upwards. Compare the post-election black columns to the pre-elections columns in gray.

That is an upwards revision of over 2 percentage points in GDP looking out some 12 months from now. Let's put that in context. Current projected GDP for 2017 by the Congressional Budget Office is approximately $20 trillion. An additional 2% in growth equates to $400 billion of additional money in the economy and in potential governmental revenues. That is not chump change.

Or course, this optimism and renewed confidence may not be realized. We may not see economic improvements in the end. However, Trump appears to be off to a good start. And he certainly has proven Krugman's prediction wrong that the markets would never  recover.

Of course, the economy is not the only fear Democrats have expressed about Trump.

They fear he will enforce immigration laws.

They fear he will repeal and replace Obamacare.

They fear he will appoint judges who believe in preserving, protecting and defending the United States Constitution.

They fear he will lift restrictions on energy production to provide a level playing field for all types of energy.

They fear he will bring tumult to the Middle East based on his foreign policy views.

They fear he will start a war with Russia. At the same time they also fear he will be too cozy with Russia.

I could go on and on about the fears the Democrats state they have about Donald J. Trump.

Of course, how rational is any of this fear?

They exhibited no fear whatsoever when Barack Obama was taking office despite the fact that he had absolutely no managerial experience, he had no foreign policy experience, he had served but four years in the United States Senate before taking office and he had been in the public eye for less than five years.

Compare that to Donald Trump's nearly 50 years of business experience and over 30 years where he has been consistently in the public eye.

I think the answer is very clear as to why Democrats really fear Trump.

It is the most awful fear imaginable for the Democrat party and the media elite.

However, you will never hear this fear spoken aloud.

Their greatest fear is that Trump will be successful.

That is something to truly fear if you are a Democrat.

Tuesday, January 3, 2017

Why Legislate When You Can Regulate?

The 115th United States Congress was sworn in today.

Although our Constitution was crafted to include three separate but co-equal branches of government, I don't think it was happenstance that our Founders specifically established the responsibilities of Congress in Article I of the Constitution. The Executive branch was discussed in Article II and the Judiciary in Article III.

The legislative branch was designed to be the body where most of the power of the United States government resided. In fact, Article I, Section 8 of the Constitution enumerates 18 specific powers for Congress including the power the tax, to borrow money, to coin money and to declare war. This list includes a final, all-inclusive authority given to Congress that reads as follows.

To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof. (emphasis added)

It seems pretty clear where all the power to makes rules and laws exists in our Constitution, doesn't it?

What are the defined responsibilities and powers of the President?

First, the President has the responsibility to "faithfully execute the Office of President of the United States" and "preserve, protect and defend the Constitution of the United States.” These words are in the Presidential oath.

Beyond that, there are only five enumerated powers for the President.

  • To serve as Commander-in-Chief of the Armed Services.
  • To grant pardons for offenses against the United States.
  • To makes treaties (with the advice and consent of the Senate).
  • To appoint ambassadors, judges and cabinet officers (with the advice and consent of the Senate)
  • To make appointments to fill vacancies for the offices above during recesses of the Senate. Those appointments must expire by the end of the next session of Congress (what are referred to today as "recess appointments")

With the above as context, let's look at a comparison of the number of regulations and rules that are being promulgated by the executive branch bureaucracy compared to the number of laws being passed by Congress.

Let's begin by looking at what has been happening with regard to additional regulations in the waning days of the Obama administration as recently reported by The Washington Examiner.

President Obama's lame duck administration poured on thousands more new regulations in 2016 at a rate of 18 for every new law passed, according to a Friday analysis of his team's expansion of federal authority. 
While Congress passed just 211 laws, Obama's team issued an accompanying 3,852 new federal regulations, some costing billions of dollars.

All of these rules and regulations end up in The Federal Register which saw a record-setting total of 97,110 pages for the year. That total is about 10,000 more pages than we have seen in recent years.

Here are the total annual printed pages in The Federal Register since 1936 to provide you with some historical perspective.

It is worth noting that 1980 (the last year of the Carter administration) held the previous record for the number of Federal Register pages. Coincidence?

You might think that 18 regulations issued for every one law passed is outrageous. I know our Founders would. However, President Obama's average during his eight years is over 29 regulations issued for every law passed. 2016 was actually a modest year on that score.

Regulating rather than legislating is not just something that Democrats do.

It has become emblematic of the way that Washington operates. Democrat or Republican. It does not matter.

The Bush Administration averaged over 20 regulations for every law passed. The Clinton
Administration  in the 1990's averaged over 25.

Clyde Wayne Crews of the Competitive Enterprise Institute calculates "The Unconstitutionality Index" that measures the extent to which the federal bureaucracy, rather than Congress, is making the rules that we are governed by. Crews has been calculating the index since 1993. You can go here
(page 82) for further historical perspective.

Crews prepares an annual snapshot of the regulatory state entitled "Ten Thousand Commandments" that details the size, scope and costs of federal regulations on the economy, on business and on individuals.

A few highlights from the 2016 edition.

  • The federal regulatory cost reached $1.885 trillion in 2015.
  • Many Americans complain about taxes, but regulatory compliance costs exceed the $1.82 trillion that the IRS is expected to collect in both individual and corporate income taxes from 2015.
  • Federal regulation is a hidden tax that amounts to nearly $15,000 per U.S. household each year. 

Donald Trump has stated that he wants to make regulatory reform a key part of his agenda. He has also stated that he "will formulate a rule which says that for every one new regulation, two old regulations must be eliminated.” Trump has also tapped his friend, billionaire investor Carl Icahn to be a special advisor on overhauling federal regulations.

Trump seems to be serious about the subject based on his words and actions thus far.

If he wants to "drain the swamp", there is no better place to start than the federal bureaucracy regulation machine.

Saturday, December 31, 2016

The Best of BeeLine-2016

When you publish almost 120 blog posts in a year, some are going to be more popular than others with readers, some are going to be remembered more fondly by the author and some should undoubtedly have never been written in the first place.

Here is a Top 10 List for the Best of BeeLine for 2016. The first 5 were the most popular posts I wrote during the year based on the number of views. The second 5 are those posts are a few of my personal favorites.

If you missed reading these "favorites" the first time around, here's another opportunity to get to "the shortest route to what you need to know" to start 2017 off right.

January 1, 2017 marks the sixth anniversary of BeeLine. In those six years I have written 719 blog posts. BeeLine also saw more readership in 2016 than ever before thanks in part to the interest in the election. The months of October-December, 2016 had the most views of any quarter in BeeLine history. However, the interest in BeeLine seems to extend beyond the election considering that December, 2016 was the third highest single month for readership in those six years!

If you enjoy BeeLine, please pass a recommendation on to your friends and family. I enjoy writing it but it is a lot easier to sit down, research and write when I know more are reading what I write.

If you want to make sure you don't miss a post, consider putting yourself on the BeeLine email list. You will receive an email the first thing in the morning when I post a new piece. You can sign up in the upper right hand corner on this page. You will receive a follow-up email (from FeedBurner) that you will need to confirm to begin delivery.

Thank you to all my loyal BeeLine readers and Happy New Year to each one of you!

The Best of BeeLine-2016

Most Views

Has The Fourth Turning Brought Us Trump?

Could a book written in 1997 predict the emergence and election of President-elect Donald Trump? I showed how Trump fit the Presidential profile that voters were looking for in a "Crisis" period we are in. It turns out I was right.

200 Years of History?

The Democrat party states on its website that "for more than 200 years, our party has led the fight for civil rights". That might be persuasive to a potential voter who has never opened a History textbook but it bears no resemblance to the truth.

Trump: Closing the Sale

My advice to Donald Trump on what he should do to "close the sale" with voters heading into the first of the three debates. He did not follow my script to the letter but he did what he had to do to win in the end.

How a Supermarket Visit Brought Down the Soviet Union

You might have heard that the Soviet Union collapsed because it could not compete with the defense spending of the United States. However, the real catalyst may have actually been a visit to a Houston supermarket by Boris Yeltsin in 1989.

Debt and Destiny

How much debt does the United States have and who is it owed to? A revealing look at the federal debt and what it means for our destiny.

My Personal Favorites

Context on Guns

Putting gun violence in the United States in context. Context is truly everything when assessing anything.

The Renter Generation

Millennials don't want to "own it", they would rather "rent it". Housing. Cars. Relationships. They like flexibility and are uncomfortable with commitment. They even seem willing to "rent" their vote for short term interests rather than their long term future.

Tax Times Two

You pay taxes but do you have any idea how many people are being supported by your tax dollars? In effect, every private sector American worker is working for themselves... and someone else.

Pointing to Change

If you are still having a tough time understanding how Donald Trump won the Presidential election, look at these 10 charts that highlight major indicators over the last 8 years. They all were pointing to change.

Who Wants A Used BlackBerry?

BlackBerry did not change and adapt to the new world it found itself in. In many respects, the story of BlackBerry is symbolic when compared to one of its most ardent devotees---Hillary Rodham Clinton. Nobody wants a used BlackBerry. This blog post asked the question of why would anyone vote for Clinton? It would be like buying a used BlackBerry.

Thursday, December 29, 2016

Hillbilly Heaven and Hell

Hillbilly Elegy has been riding near the top of the New York Times non-fiction bestseller list for 21 weeks.

It is the true life story of a young Yale law school graduate who grew up in a poor, white family with Appalachian roots in a Rust Belt town in southwestern Ohio. It is a story that is both sobering and inspiring at the same time.

The book was a thoughtful Christmas gift from close friends and it had special significance to me as I lived and worked in the same town that author J.D.Vance grew up in----Middletown, Ohio--- for 13 years.

When I picked up the book I must admit I did not know what an elegy was. For those who are similarly unaware of the difference between an elegy and a eulogy here is how it is explained at

It is common to see both of these words used during a funeral, but eulogy vs. elegy have different meanings. An Elegy is a mournful poem or song written about someone who has recently died. A Eulogy is a laudatory speech or written tribute praising someone who has recently died.

As I read the book I kept coming back to why Vance had chosen that title. An elegy is clearly considered to be more a work of art than a eulogy and therefore would seem to be more appropriate in the title of a book. The more important difference, however, is that Vance is mournful in the book. First of all, to his late grandmother who was the one steadying influence on his life. However, throughout the book you also see him mourning what has happened to the Rust Belt but also the fatal flaws in the Appalachian culture and lifestyle that has exacerbated their economic plight in America.

At the center of all of this is the Appalachian "culture of honor" that Malcolm Gladwell wrote about in his book, "Outliers". People from the Appalachian region have a reputation as hard workers who don't readily take hand-outs and are fiercely loyal to the people they are close to. However, it also means that they are also all too "willing to fight in response to even the slightest challenge to their reputation"  and "a world where a man's reputation is at the center of his livelihood and self-worth." This can and does often manifest itself with disastrous consequences in personal and work relationships.

Vance's life story began when his newly married teenage grandparents left the hollers of Jackson, Kentucky in search of a better life. His grandfather found work in Middletown, Ohio at the Armco Steel plant right after the war. Armco was the same company that I spent over 20 years of my life working for. His "Papaw" worked in the steel mill. I worked in the Corporate Tax department.

Middletown Works
Owned by AK Steel (formerly Armco Inc.)

As Vance points out in the book, there was a class divide in Middletown between white and blue collar workers. However, that divide was in no way as large as what he later found when he went to law school at Yale in New Haven or lived in Washington, DC or San Francisco. Middletown was a city of about 50,000 people and we all shopped in the same stores, we ate in the same restaurants and our kids played together in the same Little League and youth soccer leagues. You find far less class interaction in most coastal cities.

The big difference in the life of J.D. Vance and my kids (who were just slightly older) was what happened in the home. Vance was constantly uprooted as his mother went through a series of bad relationships. During his school years he had as many as eight "stepdads" of one form or another. He was shuttled from one home to another. His mother struggled with drug addiction and anger issues. The only steady influence was his "Mamaw" who was a consistent source of love and support to J.D. although she was not anything like the grandmothers that my children knew. Unlike Mamaw they did not carry a gun and say to their grandchildren, "You know I love you but I'm just a crazy bitch" or "I'm sorry I'm so damned mean."

All of this is summed up by the many contradictions that Vance lists in the Hillbilly culture. The family loyalty, the glorification of self reliance and the respect for their roots all make their world a little slice of heaven in some respects. However, the walk does not often match the talk according to Vance.

They know they should not spend to improve their status, but they do it anyway. They end up mired in debt and in bankruptcies.

They choose not to work when they should be looking for a job.

Sometimes they get a job but it will not last because of tardiness or laziness. When they lose their job they convince themselves it is due to some perceived unfairness.

They did not study in school and know that it is one of the reasons they cannot get ahead but they don't make their children study when they are parents.

They may have had to suffer abuse as a child with a parent who had an addiction problem but they also succumb to addictions as parents themselves. The cycle continues from generation to generation.

Of course, Vance says "we" rather than "they" when he writes about these problems. He is the first to admit that the demons of his life continue to chase him despite his new station.

Even after you read the story of J.D. Vance you have to marvel at how he succeeded where so many others failed.

You see the small signs here and there in the book of things that made a difference along the way as he was growing up. The consistent support from his grandmother. A protective older sister. Religion. An interest in reading. A curiosity about exploring new things. Several supportive teachers. A job as a cashier in a local supermarket. Work at a country club.

A huge factor was his decision to forego college right after high school to enlist with the United States Marine Corp for a four-year hitch. He realized that he was not ready for the challenge of college at that time nor to take on the necessary student debt. Therefore, he gained added maturity, discipline and perspectives before he entered college at Ohio State University in addition to GI Bill benefits.

Choices do make a difference in people's lives. Vance made good choices.

From there it was on to Yale Law School and a world far, far removed from anything he ever thought possible. It truly was the difference between heaven and hell for the self-described Hillbilly.

When reading Hillbilly Elegy I could not keep from thinking about the similarities in this book to those of Barack Obama when he wrote Dreams from My Father shortly after he graduated from Harvard Law School.

In both cases you have young men in their early 30's writing memoirs. Both graduated from elite law schools. Both were products of broken homes. Both had no father and a largely absent mother in their lives. Both had grandmothers who stepped in to provide needed stability and support in their lives.

Who knows whether J.D.Vance will accomplish anything as extraordinary as Barack Obama did in being elected President of the United States.

However, he has already accomplished far, far more than most would ever dream of. In that respect, this is a a great story that demonstrates that the American Dream is still alive. Unfortunately, this story also shows that too many are also living an American Nightmare.

Vance struggles to provide the answers to solving the problems that he identifies. I can't fault him for that. Millions of people with good intentions and billions of dollars have also failed.

In the end, Vance suggests it is probably not the big government programs that matter the most but the small interactions from people that care that can make a difference. He quotes a friend who worked in the White House for a time and cares deeply for the plight of the working class.

The best way to look at this might be to recognize that you probably can't fix these things. They'll always be around. But maybe you can put your thumb on the scale a little for the people at the margins.

Vance admits that there were many thumbs on his scale from a range of people.

Think about that in 2017. Lend a hand (or thumb) when you can for someone who could use some help. It might make all the difference in the world for someone.

Friday, December 23, 2016

Christmas Falling, Christians Rising

You have to wonder how much longer Christmas will be celebrated in Europe.

This week's terrorist attack on a Christmas market in Berlin killed 12 and injured 56.

Who would have thought a decade or two ago that a nativity scene would need armed guards?

Heavily-armed police guard the nativity scene at Canterbury Cathedral in Kent, England
Credit: David Parker, Daily Mail

There are now close to 50 million Muslims in Europe. About half of those are in the EU countries that include Germany, France, Sweden etc.

Paris is now the home to more than 2 million Muslims.

There are more than 1 million Muslims in London. The mayor of London is a Muslim and Mohammed is now the most popular name in the United Kingdom.

Muslims made up about 6% of the population of Germany even before it starting welcoming hordes of Muslim refugees. In 2015, an estimated 1 million Muslim refugees entered Germany. I could not find a reliable estimate for the total in 2016 but arrivals of refugees by sea alone has exceeded 300,000.

Let's put that number in context.

There are less than 1.5 million Jews in Europe. By comparison, there were almost 10 million Jews in Europe in 1939. Do you begin to get a better idea of why there is little support for Israel in Europe or the United Nations anymore?

There are an estimated 3.3 million Muslims living in the United States.

The other striking fact about the numbers of refugees in Europe is the proportion of them that are male. A UN report stated that 75% of the Muslim refugees last year were "young, fit, males." Only 12% were children and 13% were female.

As Mark Steyn observed in looking at those statistics,

"That's not the demographic distribution of fleeing refugees, but of an invading army."

Indeed, that is the problem in Europe. Demography is destiny. Europe's destiny is being determined right now. The Europe we have known in our lifetimes increasingly looks like it will be a distant memory in the not too distant future.

Based on current trends, it is only a matter of time before Europe will be subsumed by the Muslim invasion. How long it will take may depend on how long it takes to get more Muslim women to join the Muslim men in Europe.

On the other side of the world there is something just as startling occurring.

The rise of Christianity in China.

A church service in China
Credit: Jason Lee, Reuters

Religion was outlawed in Communist China during the ruling tenure of Mao Tse Tung. The People's Republic of China is still officially an atheist nation but the role of religion has been changing rapidly in that country since the death of Mao in 1976.

China only had 1 million Christian Protestants in 1949. By 2010, it had 58 million Protestants. Professor Fenggang Yang, a professor at Purdue University and an expert on religion in China, predicts that in less than ten years China will have more Protestants (160 million) than there will be in the United States.

Yang further predicts that by 2030 "China's total Christian population, including Catholics, would exceed 247 million, placing it above Mexico, Brazil and the United States as the largest Christian congregation in the world."

All of this has not gone unnoticed by the Communist Party in China where Christians are now said to outnumber members of the party. This is more than a little troubling to the Communist leaders.

This has led Chinese authorities to begin new crackdowns on the churchgoers by passing laws that criminalize Christians if they do not pledge allegiance to the state.  The government is also dictating that all religions have to become "Chinese" to try to bring them under state control. This seems directed at the astounding Protestant church growth. The Catholic Church long ago entered into a doctrine of appeasement with the Chinese government so it is not the thorn in the side that the Protestants are.

It will be interesting to see what the next couple of decades bring. Nobody knows for sure where it all leads. In Europe or in China.

However, it appears there will far fewer Christmas celebrations in Europe and far more in China than we have become accustomed to.

Merry Christmas to all...wherever you are!

Monday, December 19, 2016

Electoral College Elucidation

The electoral college meets today to cast its votes for President of the United States.

There seem to be many Americans who do not understand the logic behind the electoral college and the genius of our Founders in devising this system of electing our President.

I still recall my son coming home from school some 20 years ago with a homework assignment from his 6th grade teacher asking him to write a letter to Congress asking that body to vote for a constitutional amendment to abolish the electoral college and replace it with a popular election vote . She had taken it upon herself to have the entire class take this project on as a way to "teach" them about the U.S. Constitution.

Needless to say, this was not teaching. It was her attempt to indoctrinate her students with her point of view. I was not pleased and I sent a note back to her telling her that my son would not participate in the assignment. In my view, the electoral college was just fine. After all, our country is called "The United States of America" for a reason.

It might be time for a little electoral college elucidation for those not familiar with all the other reasons why we don't use the popular vote for President/Vice President.

Our founders had very good reasons to adopt the electoral system of electing our President/Vice President instead of by popular vote.

Article 2, Sec.1, Clause 2 of the U.S. Constitution establishes the method of choosing electors.

Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress: but no Senator or Representative, or Person holding an Office of Trust or Profit under the United States, shall be appointed an Elector.

Our founders were very distrustful of a full democracy. That is why they established the constitutional republic that we have.

The reason was simple. A democracy can be very susceptible to the whims and impulses of the general public. A democracy is also likely to run roughshod over minority rights. These concerns were at the heart of almost every decision made in writing our Constitution.

I have written about this previously, including one of my favorite blog posts of all time, "Improper and Wicked Projects". If you have not read it before, you should. It might actually shock you on how well our Founders understood human nature.  Power, politics, greed, fallibilities, bias, conflicting interests, oppression. There is nothing going on today that they did not anticipate.

Because of theses concerns it made sense to place an intermediary group of electors between the popular vote and the election of the President in order to protect against these risks. It was also important that this group of electors would be independent of any pre-established body like the legislature.

Alexander Hamilton wrote Federalist Paper #68 that explained the reasoning behind "The Mode of Electing the President".

It seems a little ironic today with all the outpouring of love for Alexander Hamilton by the liberal left (largely based on the popular Broadway play), and its criticism of the electoral college process, that Hamilton was the chief defender of the electoral college in the Federalist Papers.

It is also ironic that Hamilton stated that the electoral college method laid out in the constitution was probably the least criticized section in the entire document as ratification was being discussed by the various states. This is how he began Federalist Paper #68.

THE mode of appointment of the Chief Magistrate of the United States is almost the only part of the system, of any consequence, which has escaped without severe censure, or which has received the slightest mark of approbation from its opponents. 

This is how Hamilton went on to explain the key points of the electoral college system.

First, he explained why it was important for the people to have a vote in the process even though that role would only be to delegate the final choice to an independent body free of conflicts. Note also that no elected official may serve as an elector. The electors were also expected to apply discernment and reason to their choice. This is the argument that the anti-Trump people use in trying to get the Trump electors to vote for someone else and be so-called "Faithless Electors".
It was desirable that the sense of the people should operate in the choice of the person to whom so important a trust was to be confided. This end will be answered by committing the right of making it, not to any pre-established body, but to men chosen by the people for the special purpose, and at the particular conjuncture.

The electors would, as is the case in other aspects of our republican government, provide an additional level of discernment and investigation as well as insuring that the vote is not a pure popularity contest but one in which a majority of the union of states is supportive of. They wanted to insure that the President was elected by the United States, not just the people from several states with large populations.
It was equally desirable, that the immediate election should be made by men most capable of analyzing the qualities adapted to the station, and acting under circumstances favorable to deliberation, and to a judicious combination of all the reasons and inducements which were proper to govern their choice. 
Talents for low intrigue, and the little arts of popularity, may alone suffice to elevate a man to the first honors in a single State; but it will require other talents, and a different kind of merit, to establish him in the esteem and confidence of the whole Union, or of so considerable a portion of it as would be necessary to make him a successful candidate for the distinguished office of President of the United States.

Our founders were particularly concerned about the danger of the legislature being too beholden to one of their own and any possible corruption in the election of the President as well as possible influence in the election by foreign governments. This is another reason for the electoral college and the focus on the decentralization of the vote by each state's electors rather than by popular vote or by a vote in the legislative body as would be the case in a parliamentary system.
Nothing was more to be desired than that every practicable obstacle should be opposed to cabal, intrigue, and corruption. These most deadly adversaries of republican government might naturally have been expected to make their approaches from more than one quarter, but chiefly from the desire in foreign powers to gain an improper ascendant in our councils. How could they better gratify this, than by raising a creature of their own to the chief magistracy of the Union? But the convention have guarded against all danger of this sort, with the most provident and judicious attention. 
The business of corruption, when it is to embrace so considerable a number of men, requires time as well as means. Nor would it be found easy suddenly to embark them, dispersed as they would be over thirteen States, in any combinations founded upon motives, which though they could not properly be denominated corrupt, might yet be of a nature to mislead them from their duty.
The concern was so great about the centralization of power and the risk of pressure being brought to bear on the electoral body that the Constitution even requires that the electors meet in their respective states rather than in one central location. There is little doubt that the Founders would be horrified of the attention and abuse the electors are receiving from anti-Trump liberals leading up to the electoral vote. Everything they did was to prevent something like this as explained below.

Article 2, Sec. 1, Clause 3

The Electors shall meet in their respective States, and vote by Ballot...

Again, there was a rationale for this by the Founders as well. They believed that having the electors vote at one time and in one place for the President presented too much risk for turmoil.

And as the electors, chosen in each State, are to assemble and vote in the State in which they are chosen, this detached and divided situation will expose them much less to heats and ferments, which might be communicated from them to the people, than if they were all to be convened at one time, in one place.

It is clear that one of the reasons that the Founders preferred the electoral college was that they were concerned that the people of the 18th century would not have a good sense of the character and qualifications of the candidates for President. Most would never see or hear the candidates in person. They could not truly judge their suitability in an age with no radio, television or internet. That is why it made sense to have the added comfort of electors who might know the candidates better to insure that the President is up to the job.

The process of election affords a moral certainty, that the office of President will never fall to the lot of any man who is not in an eminent degree endowed with the requisite qualifications. 

Of course, in the media age of today this no longer is the issue it was in the 18th century. Candidates are in the public eye and are subject to constant media scrutiny. Voters do not have the same reason to not know who they are voting for. This is where the argument for the anti-Trump forces that want to cite Hamilton in encouraging "Faithless Electors" falls apart.

If this was the only reason for the electoral college there would be a good argument to disband it and move to a popular vote.

However, the bigger reason for the electoral college involves the issue of decentralization and the importance of state rights in our governance. After all, as I told my son's teacher 20 years ago, we are The United States of America for a reason.

We are hearing a lot today that the electoral college is unfair because it diminishes the large states like California and New York and provides advantages to smaller states. However, this was also the case in 1787 as it is today. In fact, small states actually had bigger advantages at the beginning of our nation than they do today.

For example, California and New York (per the 2010 census on which current electoral votes are determined by) have a population of about 57 million. That is 18.4% of the total population and provides 84 electoral votes out of 538 electors (15.6%). However, Wyoming and the District of Columbia barely have 1 million in population between them (3/10 of 1% of total U.S. population) but they each get 3 electoral votes (1.1% of the total for their combined 6 electoral votes out of the 538 total).

However, in the first U.S. census (1790) after the Constitution was ratified, the two largest states in the union, Virginia and Pennsylvania had about 33% of the population and had 36 of 132 electoral votes (27%) in the Presidential election of George Washington in 1792 . On the other hand, Rhode Island and Delaware similarly only had 3/10th of 1% of the total U.S population at that time but their electoral votes were equal to about 5% of total electoral votes.

It should be noted that one of the reasons that Virginia was hurt in its allocation of electoral votes was because the Founders penalized states that had slaves. States with a slave population (the only state with no slaves counted in the 1790 census was Massachusetts. New York had 21,000 slaves, almost as many as Georgia's 29,000) were only given credit for 3/5 of this population for purposes of seats in the House of Representatives and the electoral college.

You get a real sense of why the Founders designed Constitution the way they did when you see the 2016 election results presented this way.

Or this way in a county by county graphic. Trump won 2,626 counties. Clinton won 487.

They wanted a President of the United States of America. Not of two or three large states. Or a dozen big cities.

The electoral college makes sure that this is what happens.

In 2016 we are seeing what our Founders were thinking in 1787. Again, there was almost nothing they did not anticipate.