Tuesday, May 24, 2016


Since Donald Trump became the presumptive Republican nominee for President he also has seen an impressive surge in head-to-head polling versus Hillary Clinton.

Here is a graph showing the Real Clear Politics polling average since the beginning of the year.

Of course, you can attribute some of this effect to the fact that Trump now has an uncontested path to the nomination while Hillary is still dealing with pesky Bernie Sanders. At the same time, Trump is now also taking aim at "Crooked" Hillary on a daily basis. Look no further than the precipitous drop in Clinton's poll numbers over the last couple of weeks to see the toll that all of this has had on her polling numbers.

The fact still remains that a Clinton-Trump matchup presents many voters with a choice they would rather not have.

A Fox News Poll that was done last week shows that 56% of registered voters view Trump unfavorably. Hillary is viewed unfavorably by 61% of voters. There has never been a Presidential contest in my memory where both candidates were viewed so unfavorably.

In fact, there is a general rule in political polling that if a candidate's unfavorable rating is greater than 40% it is very difficult for that candidate to win. We now have both candidates above that threshold by large margins.

If this is the eventual matchup (and I still think there is a 50/50 chance that Hillary may not be the nominee) I believe it presents some very interesting challenges for pollsters.

How many voters will decide to just sit it out rather than make a choice?

Will the election be decided more by votes for or votes against a candidate?

Will the 18-29 age group turnout to vote and who will they support?

I think the last question is particularly critical when you look at the results of the last several elections.

67% of this age group supported Barack Obama in 2008 and he retained 60% of the Millennials in 2012 against Mitt Romney.

However, while they were motivated to vote for Obama in the Presidential election years, they did not show up to vote in the mid-term elections in 2010 and 2014. This was a significant reason that the GOP made such historic gains in those elections.

Here is a graph of the 18-29 age vote in the last four national elections. Young voters were motivated to come to the polls to support Barack Obama in 2008 and 2012. However, they did little to support Democrats in the mid-term elections that followed.

You can see how big this effect is when you look at the actual vote totals from these elections. Compare the total votes cast by 18-29 year olds compared to voters who are 60+ over those four elections.

Voters aged 60+ have reliably showed up at the polls in each of the four national elections in consistent numbers. In fact, the number actually grew in 2014 as more Baby Boomer voters aged into this demographic. On the other hand, young voters have been hit or miss.

Why is this important?

Consider the fact that Mitt Romney won the age 65+ vote by 56%-44% in 2012 and still lost. He also won the 45-64 age group 51%-47%.

Or consider the fact that in the 2014 mid-term elections that the GOP dominated, 77% of the voters were age 45 or older.

Quite simply, Barack Obama would not be President without those younger voters. And the Democrats would never have lost control of Congress if those same young voters had voted in 2010 and 2014.

What will young voters do in 2016?

I cited a Fox News poll in March that outlined the significant problems that both Hillary and Trump have with young voters. In that poll, 67% of voters under age 35 had an unfavorable view of Hillary Clinton. Trump was even worse---75% of younger voters viewed Trump unfavorably.

By comparison, 56% of these younger voters currently view Obama favorably! There are still some things that are simply inexplicable. For perspective read my blog post, "Will History Be Kind To Millennials".

In last week's Fox News poll, Clinton is favored over Trump by under age 35 voters 46%-35%. However, Trump is ahead overall 45%-42% largely due to a enormous 55%-36% margin with voters ages 35-54. Interestingly, Trump is losing the 65+ age group 46%-41% that Romney won.

What is it going to take for Trumpmentum to continue?

Right now he is showing impressive strength with middle age voters. However, he is weak with both younger and older voters.

My guess is that older voters see his act and antics beneath the dignity of the Office of President. These voters lean GOP so if he is going to win he needs these votes. Can he find a way to be both disruptive and diplomatic at the same time? This is the needle I think he needs to thread with these older voters.

On the other hand, Trump does not have to carry the 18-29 vote to win. He just needs to keep the margins closer than Romney did. He also needs to make sure he does not energize this voting bloc to come out to vote against him. It is probably too much for Trump to activate this group for support, his goal is simply for them to be apathetic and say, "Why vote when these are our choices"?

At this point I put the odds at 33% that Trump will win the Presidency. I believe that it is 50/50 for him in a head-to-head match with Hillary. However, as I stated above, I also believe that there is a 50/50 chance that she will not be on the ballot in November. Her legal troubles combined with her clear weakness as a candidate could combine for her to be pushed from the race. Wayne Allyn Root puts together a plausible scenario on how this might unfold.

Trump's odds probably drop to 25% against Sanders, Biden, Warren or another Democrat with much lower unfavorables than Donald.

Who would have thought a month ago that the Democrats would have all the remaining drama in this race?

And who would have also thought that I would even be writing a blog titled "Trumpmentum"?

Stay tuned. Who knows what lies ahead. All I really know for sure is that the next six months promise to be very, very interesting.

Tuesday, May 10, 2016

Has The Fourth Turning Brought Us Trump?

I have referenced the book "The Fourth Turning" by Neil Howe and William Strauss several times over the years in BeeLine.

The Fourth Turning refers to the cycles of history. There is a pattern to history. There are four turns much as there are four seasons.  A new era -or turn- occurs about every two decades or so.

At the start of each turning, people change how they feel about themselves, the culture, the nation, and the future. Turnings come in cycles of four.  Each full cycle spans the length of a long human life, roughly 80 years.

There is a Spring which is a High where institutions are strengthening and individualism is weakening and a new civic order is implanting. This was the period beginning right after WW II to the late 1960's

There is a Summer which is the Awakening.  This is an era of spiritual upheaval when the new civic order comes under attack from a new values regime. This period began in the late 1960's with the flower children and Vietnam War protests and lasted until the late 1980's.

There is a Fall which is the Unraveling.  This is a period of strengthening individualism and weakening institutions.  The old civic order decays and the new values regime firmly implants.  This began in the late 1980's and the authors predicted that it would run for about 20 years.

The Fourth Turning is the Crisis which is the Winter.  It is a decisive era of secular upheaval according to Strauss and Howe. In 1997 (when they wrote the book), they predicted that "sometime around the year 2005, perhaps a few years before or after, America will enter the Fourth Turning."

The last Fourth Turning began in 1929 with the stock market crash. It ran until 1946 encompassing both the Great Depression and WWII. Previous Fourth Turnings culminated in the American Revolution and the Civil War. We are talking about events that literally put the entire society at risk.

The authors of The Fourth Turning originally projected 2005 as the target date for the turn stating that it could be several years before or after that date. 9/11 and Katrina could be the turning point but most likely the 2008 financial meltdown marked the catalyst that thrust us into The Fourth Turning. We will not know for sure until we see it all play out. The point of maximum crisis is usually about 3/4 of the way through the FourthTurning. If they are right, we will likely experience it within the next 10 years.

One of the important points that Howe and Strauss make in The Fourth Turning is that history does not necessarily repeat, but it rhymes. Why is that? Because with each succeeding generation the learnings of the past are forgotten or never learned. As a result, there is a tendency to ignore the past lessons of history as previous generations were not there and did not "live it". The same mistakes are made again and again over time.

When I read this book in 1998 it seemed an audacious prediction that we would be entering a period of Crisis. America was riding high. The stock market was booming.  The federal budget was in surplus. The defense budget was being trimmed every year as there seemed to be no real threats to peace. All seemed right in America. It was hard to see what they were talking about. Yet the book gave me an uneasy feeling and increased my sensitivity to observing the changes that were going on around me.

There seems to be little doubt that we are now living in the middle of The Fourth Turning. In fact, the emergence and success of Donald Trump in the political realm confirms it.  The same can be said for the the success of Bernie Sanders in the Democrat primary as well.

One of the key elements in a Fourth Turning is that a point is reached where the public realizes that their institutions are dysfunctional and they come to the conclusion that they are increasingly vulnerable with the current status quo. Such was the case as the colonists grew distrustful and frustrated with British rule, the deep divisions created within the country with slavery that led to the Civil War and the substantial financial hardships that everyone felt in the Great Depression.

A point is reached when the pubic coalesces or large blocs of voters support a strong leader to tear down the existing social, economic and social construct and replace it with something else. The result may be better, or far worse, but the public will nevertheless demand something different.

Barack Obama was perfectly positioned to be that leader as he entered office shortly after The Fourth Turning began. However, he squandered his opportunity. The people voted for hope and change and they got Obamacare and not much else.  He told the people what they wanted to hear. However, instead of being the uniter that people were looking for he just further divided what was already a divided nation.

You begin to see how important this is in political terms when you consider what Strauss and Howe said about where we are headed politically in The Fourth Turning.

"Soon after the catalyst, a national election will produce a sweeping political alignment, as one faction or coalition capitalizes on a new public demand for decisive action. Republicans, Democrats, or perhaps a new party will decisively win the long partisan tug-of-war, ending the era of split government that had lasted through four decades.  The winners will now have the power to pursue the more potent, less incrementalist agenda which their adversaries had darkly warned.  This new regime will enthrone itself for the duration of the Crisis.  Regardless of its ideology, that new leadership will assert public authority and demand private sacrifice. Where leaders had once been inclined to alleviate societal pressures, they will now aggravate them to command the nation's attention."

The big point here is that a point is reached where the public mood shifts from one that is less concerned with individual rights and more concerned with the collective good. People ultimately will seek this as a means for society to survive the Crisis. It has no other choice.

What will the winning trends from a political standpoint be according to Strauss and Howe as we move through the remainder of The Fourth Turning?

  • Calls to close the gap between rich and poor
  • Reverse the decline of the middle class
  • Expand children's programs relative to senior programs
  • Restore an ethic of personal responsibility
  • De-fund time-encrusted bureaucracies
  • Promote traditional values
  • America will become more isolationist than today in it unwillingness to coordinate with other countries 
  • America will be less globally dependent than it is today with smaller cross-border trade and capital flows
  • The economic role of government will shift toward far more spending on defense and public works than on elder care and debt service
I don't know about you, but a lot of this sounds a lot like Donald Trump. Or Bernie Sanders for that matter. It does not sound like Hillary Clinton.

Look at some of the words above and see if you don't agree that in some ways it seems as if Trump has a keen understanding of where we are and what people are looking for. It is as if he is looking ahead and the Republican establishment can only see what is behind them.

"Decisive action".  There is very little gray in Trump's outlook.

"Assert public authority."  Think about Trump's views on eminent domain.

"Aggravate rather than alleviate societal pressures." Trump's views and statements on immigration.

"Reverse the decline of the middle class."  His major voting target is forgotten working class voters.

"De-fund time-encrusted bureaucracies."  His call to consider the de-funding of NATO.

"Promote traditional values."  "Make America Great Again." 

"More isolationist."  Very consistent with his views of Middle East.

"Less globally dependent".  His attacks on NAFTA, China, Japan on trade.

"Defense and Infrastructure."  Two of Trump's favorite topics in every speech. 

If The Fourth Turning has brought us Trump, can he lead us out of the Crisis? We can only hope. There are no promises. History is not made by events but by the reaction of human beings to events. We are hurtling down the road for a rendezvous with history of our own making. The choices that have been made and those that remain to be made will have deep consequences. We can only trust that the American people will make the right choice.

"In recent years, many Americans have despaired that their nation no longer produces leaders who can galvanize and inspire. Yet it is the turning, not the nation, that elevates great people to the apex of power. Lincoln and FDR are both cases in point. Both had to wait for the Crisis to hit. An Unraveling (the Third Turning) is an era when most people of intelligence, vision and integrity do not seek (much less get elected to) high public offices.
 After the Fourth Turning arrives, however, a Lincoln-like leader will be more likely to seek office, and a Lincoln-like leader could be exactly what America needs, wants and gets."

Credit: History News Network

I know it is hard to imagine associating Donald Trump and Abraham Lincoln but that might be the bet we are making in 2016. We may need no less than a Lincoln with what lies ahead.

We are not only in The Fourth Turning we are also in the bottom of the ninth inning if you believe the predictions of where Strauss and Howe have us heading. We already have two outs and two strikes on us for putting Obama in the game. This is no time to swing and miss again. Trump's chatter has dumbfounded the chattering class. His chatter has put him one step away from The White House.  He better be able to hit one over the wall...and build a wall while he is doing it!

May God Bless America once again.

Sunday, May 8, 2016

Unseen on Mother's Day

I have always believed that a fundamental difference between a Democrat and Republican is how they view the world. Democrats see the world in much more theoretical and idealistic terms. Republicans tend to be more practical and pragmatic in their outlook.

Democrats want policy solutions based on how they think the world should work in theory. Republicans favor policies based on how the world really works in practice.

Democrats also generally confine themselves solely to visible effects. They seem to consider only first-level effects and ignore everything else that might flow from that.  All of their focus is on what they see in front on them. They ignore the unseen issues. Republicans, on the other hand, are generally considering both the immediate effects and second-level effects. The seen and the unseen. Especially the unseen effects which should be foreseen.

Credit: TheWildProject.com

There is no issue that you can "see" this difference more than on the issue of abortion.

A woman who is pregnant is seen and known. An unborn baby is unseen and unknown.  At least, that is how many liberal Democrats see it. They only see the life of the mother that is affected today. All of the value is given to that life. The life of the baby's future is unseen. And since it is unseen it is easy to forget and ignore.

There is no more contentious and emotional issue today than abortion. It literally places two lives and sets of rights in the balance. Which right is to be given precedence? The right of a woman to choose or the right of the baby to live?

We see the woman. She is seen.

In fact, a 2008 study indicated that 30% of all women in the United States would have an abortion by the time they were age 45. Many argue that this number is now overstated due to the fact that abortions have been declining over the years. However, new estimates will not be available until 2017 to confirm this. To give you an idea of the general decline, a 1992 study estimated that 43% of women of reproductive age in that year would have an abortion by age 45!

If you want to understand why abortion is a contentious, emotional political issue, consider those numbers. Those women are seen at the voting booths.

In addition, there is nothing more difficult in dealing with human beings than to try to take something away from someone. People do not lightly give up "rights" that they have. It is no different with 2nd Amendment rights. "Rights" are not easily relinquished by anyone. It is next to impossible to turn back the clock. That is why it is such a tough issue for Republicans no matter the merits of the cause.

Although abortion remains "legal" the Right To Life movement in the United States has made impressive strides over the last three decades in educating the public about the development of the unborn child and the emotional trauma that abortion has on the mother. In 1981, there were 29.3 abortions per 1,000 women between ages 15-44. By 2011 that number had dropped to 16.9 per 1,000. There has been real progress in changing many minds on this issue over the years. However, I see no path to reverse Roe v. Wade any time soon considering the numbers cited in this post.

Over 1 in 5 pregnancies in the United States still end with an abortion today. The U.S. ranks 30th out of 101 countries in the percent of abortions. In Russia, 45% of all pregnancies end with abortions. That ranks second in the world next to Greenland where more than half of all pregnancies are aborted.  Compare that to some of the countries that see almost no abortions--India 2.6%, Venezuela .8%, Mexico .09%, Panama .02%.

What about the unseen? The unborn child.

Since the 1973 Supreme Court decision in Roe v. Wade there have been an estimated 58 million abortions in the United States. Almost 18 million of that total were African American babies.

58 million is a big number.  To put that in context, that is roughly the combined population of New York, Florida, Illinois and New Jersey.

What potential existed in those 58 million? What would they have become? What might they have accomplished? We will never know. It is unseen.

However, we can look at others in history that might have not been given the chance. What did they become? The mothers of these babies chose life for their child even though they were ill-prepared to bring up the child themselves when they might have made another choice.

The talents, works and accomplishments of these recognizable names would forever be unseen but for the choice their mothers made. They chose life. And in that choice will all were all given something in our own lives.

Steve Jobs

President Gerald Ford

President Barack Obama

Oprah Winfrey

Faith Hill

Jack Nicholson

Marilyn Monroe

Eartha Kitt

Reverend Jesse Jackson

LeBron James

It is worth thinking about these mothers (and many more) on Mother's Day who made the right choice.

Sunday, May 1, 2016

Life Compounds

I have explained before that one of the principal reasons that I am a fiscal conservative is that I understand the power of compound interest. If it is working for you, it makes your life easy.  If it is working against you, it will ultimately bury you.

A wise friend of mine believes the power of compounding also applies to relationships. Developing friends, friendships and a network of relationships has tremendous compounding power. One friend leads to two. Two to four. Four to eight. Those relationships can add a lot to your life and your career. They can nourish and nurture you. They can inform, inspire and increase your sphere of influence. They can be a real force multiplier in your life.

As I have thought about it some more, the reality is that the power of compounding in life is even much bigger than that. Compounding effects actually explains a lot about success (or the lack of it) in life.

All things in our lives are subject to the effects of compounding. One thing most often leads to another---good or bad. And those compound effects add up as tremendous force multipliers over time in our lives.

I have written before of the Brookings Institution study that found if you simply finish high school, marry before having children and have a full time job, you only have a 2% chance of ending up in poverty in the United States. At the same time, your chances of living in the middle class are 74% if you do these three things. That is pretty compelling evidence of compounding effects.

If you drop out of high school you greatly limit your choice of jobs. You also are competing for those jobs with others who did graduate. Compounding effects. If you have a child out of wedlock your choices get even more limited. You may have to limit your job choices due to child care concerns. You may not be able to work full time or take a job that requires any overtime or travel. Compounding effects.

If you drop out of high school it also affects your friendships. Who are you most likely to hang with when most of your contemporaries are in school? It most likely will be with other drop-outs going nowhere. You end up at the same destination that they are heading to. Compounding effects.

And these effects compound over a lifetime. One bad thing leads to another and another and another. It is not easy to get out from under a series of poor decisions that compound. It is much like a debt load that gets too large. The interest on that debt will eventually bury you.

On the other hand, doing the right thing at the right time with the right people leads to success in life. Studying hard, working hard, hanging with friends who have purpose, values and goals will compound to great things. Compounding effects. Selecting the right spouse. Spending less than you earn. Saving for a rainy day and retirement. Staying away from drugs and the use of alcohol to excess. Compounding effects.

Several years ago I cited an American Enterprise Institute analysis that looked at the income characteristics of U.S. households based on various demographic factors such as education, married status, work status and age.

Looking at this data you can see the tremendous impact that demographic factors have on income.  I might add that most demographic factors are choices. You have no control over when you were born but choices are made about graduating from high school, going to college, marriage, children born out of wedlock and the like.  These choices are also not fixed over a lifetime and certainly are not fixed from generation to generation.  People have the opportunity in this country to change their situation.

The first thing you notice in looking at the chart is those that are in the highest fifth of U.S households have earned that status by working.  In fact, 2.03 is the mean numbers of earners per household in the top quintile. There are a lot of two earner households in that top quintile. The lowest quintile only has .44 earners per household. Compounding effects.

Only 2.9% of these well-off households have no earners.  The rich are not people clipping coupons, they are working and earning a living.  On the other hand, 61.7% of those in the lowest quintile had no one in the household with earnings.  No one is going to get rich on government programs. Compounding effects.

78.2% of the high income households are married compared to only 16.7% of the poor. Compounding effects.

It is no surprise that education stands out as a key demographic factor.  Only 1.8% of the highest earners failed to graduate from high school but 26.9% of the poor failed to get that basic educational attainment despite the fact that a free high school education is available to everyone in the country. On the other hand, 62.3% of the richest Americans have graduated from college. Compounding effects.

As you can see, in most of the selected characteristics there is a direct correlation that corresponds with moving up the income scale whether it is number of earners per household, marital status, work status or education. Compounding effects.

There is an old saying, "The rich get richer and the poor get poorer." I think this really describes the compounding effects of life.

However, it is too often the case that people are led to believe that they are victims of their circumstances rather than masters of their fate.

A good example is Donald Trump and his brother Fred, eight years his senior. Fred also carried his father's name into life. Fred, Jr. should have been the heir apparent to their father's real estate business but a series of poor life decisions destroyed any advantages he had by birth. Fred smoke, partied and eventually drank himself to death at the relatively young age of 43.

Donald Trump learned by watching his brother and saw how the compounding effects of bad life decisions could bring even those with talent and advantage down. Seeing his brother's downward spiral was the main reason that Trump has never smoked or drank in his life.

On the other hand, Dr. Ben Carson overcame an impoverished childhood while being raised by a single mother who could not even read. He was heading in the wrong direction but his mother pulled him back on track. She turned off the television and told him to read. The young Ben Carson studied. He worked hard. He got into Yale and that led to medical school and a residency in neurosurgery at Johns Hopkins where he eventually ended up as Director of Pediatric Neurosurgery with a worldwide reputation.

Compound effects.

They explain a lot about life.

Make sure they are compounding the right way in your life,

Monday, April 25, 2016

Tornado Tale +55

It is tornado season. It is a time to keep your eyes on the sky and be alert.

Tornado activity was on the decline for three straight years until the number of twisters increased to just over 1,000 last year. That is long way off from the 1,800 that we encountered in 2004.

Before you look at this graph and let it lead you to believe that tornado activity is trending up, bear in mind that tornado reporting is much better today than it was 60 or 70 years ago. Nothing occurs on the face of our earth today that is not reported and chronicled. It was not always that way. In years past, many smaller tornadoes were never recorded.

For a better perspective, consider this graph from USTornados.com that shows tornado activity for just those storms that were rated f3+ to f5+ on the Fujita scale. These are the tornadoes that cause the most severe damage. Wind speeds of over 158 mph. This indicates that tornado activity is actually less severe recently than it was previously in the United States.  I know that this is an inconvenient truth for global warming alarmists who have predicted more severe tornado activity. However, facts are facts.


I had my own up close and personal experience with a tornado exactly 55 years ago today with a powerful f4+ tornado (Wind speeds in excess of 207 mph. Only about 1% of tornados reach this level of devastating damage).

I first blogged about my experience five years ago on the 50th anniversary of my brush with that twist of fate.  2011 was a particularly bad year for tornados--the worst since the mid-1970's for f3+ twisters.

This post is still the second most read blog post in the 5+years I have been writing BeeLine.

Keep your eyes on the sky and seek shelter immediately if one of these terrible tornados is heading your way.

A Tornado Tale
(Originally published 4/25/11)

50 years ago today I came close to death.  I was in a house that took a direct hit from an EF4 Tornado in Eaton, Ohio.  It was shortly before 400pm on a late April afternoon and I was in my bedroom organizing baseball cards with my best friend.  My mother was visiting a neighbor with my younger brother.  I looked out the back window and looming straight ahead about a half mile away was the tornado dancing back and forth right in front of my eyes.  It appeared to be on a direct path to our home.

I remember seeing details that you normally don't pick up in photographs.  I clearly could see lumber, shingles and other debris swirling around near the top of the twister.  We made a quick call to my friend's home to warn them of the approaching tornado and headed for the basement.  We bounded down the stairs.  We heard the sound of a car's horn racing down the main road that was parallel to the tornado's path.  We later learned it was the family who operated the farm behind us who had decided to run for it rather than go to their basement.

A few seconds later the tornado hit.  It was a deafening roar.  It was as if you were standing right by the railroad tracks and a train was going by at enormous speed.  I remember covering my ears with my hands because of the roar.  I remember my friend and I shouting at each other at the top of our lungs but you could not hear a word over the sound.  Suddenly it got even louder and it sounded as if the entire house was caving in.  I remember looking up at the floor and joists above me and thinking that this was it.  I fully expected to be soon buried alive.  Time did slow down.  I remember thinking I had just turned eleven years old and this was the end of the road.  It then became deathly quiet.  The floor had held and my friend and I checked each other to be sure we were all right.

We cautiously started up the basement stairs.  The door would not open but we both put our shoulder to it and pushed hard. We got it about half way open and slithered out.  Staring at us through the adjoining door to the garage was a steel beam that had been thrown around like a tooth pick. It had penetrated almost a foot through the door into the house.  The windows on the back side of the house that faced the tornado were all broken.  The draperies hung in tatters and were now blowing in the wind.  The windows on the front of the house were intact but were caked with dirt and grass that looked like it had been sprayed on. The dirt was so thick you could not see through the windows at all.  All through the house lay debris. Drywall from the ceiling was laying all over. You could look up and see the sky.

I tried to make my way back to my bedroom but I couldn't navigate the debris that littered the hallway.  My friend and I went out the front door and we could see the tornado continuing on its way to more destruction down the road.  The tornado looked much better from the backside.

I did not have shoes on but I began running toward the house where my mother was.  It had been spared but for some minor damage.  It was a debris field of 2x4's, downed electric wires and protruding nails to get to her. I saw some hay straw blown straight in to some siding as if it was a nail.  I reached my mother and looked back at our house for the first time.  I almost could not believe the sight.  It looked as if our house had been bombed.  I had a hard time choking back tears as I saw our house.  I kept saying to my mother, "Look at our house".  She just kept repeating, "It is ok.  You are alive".  Even after 50 years, you do not forget a day like that.

Photographs and other background on the tornado of April 25, 1961

Photo taken of the tornado by a local photographer at close to the time it destroyed our house.

Photo of what was left of the Turner farmhouse that was directly behind our house.  Witnesses said that when the tornado hit the 2-story frame house it lifted it straight up and the house exploded and deposited almost all of the debris in the basement.  Fortunately, the Turner family did not go to the basement for shelter.  Mr. and Mrs. Turner started for the basement but their 20-year son did not feel the house could withstand the tornado.  They jumped in their car and made a run for it.  That decision undoubtedly saved their lives. It was their car horn I heard in the basement right before the tornado struck.

Our house was totally constructed out of stone.  I was in the basement on the left side of the house as you look at this picture.  The people are on top of debris that used to be the garage and a back porch that were on a slab.  It was the sound of the collapse of this part of the house that had me thinking the entire house was coming down on me.

The house as it looked shortly after construction in 1957 (4 years before the tornado).  I was in the bedroom looking out the window on the far right side of the house when I first saw the tornado approaching.

The house from the right front showing the collapsed garage.  I was in the basement near this corner of the house when the tornado struck.

Through April 24, according to the National Weather Service, there have been 438 confirmed tornadoes in the United States. Only one has been an EF4 similar to the Eaton tornado of 1961.  We have already seen 306 tornadoes in April, 2011. This is the highest April total ever.  The previous record was 267 in 1974. The average number of April tornadoes is 163.  Keep your eyes on the sky and take shelter immediately if one of these terrible twisters heads your way.

Thursday, April 21, 2016

Cutting the Pie

There is a lot of talk during this Presidential campaign about how the "rich" receive an inordinate amount of the income and wealth of the United States.

Bernie Sanders and his fellow Socialists lead this chorus but we hear that we need to "level the playing field" in the United States from any number of politicians.

What follows is usually a call to "tax the rich" and arguments that capitalism is "unfair" and lacks "morality" and that the federal government has an obligation to right this wrong through some type of redistributive scheme

From hearing all of this you would think that the United States is unique in the world for the share of income that the rich earn.

What are the facts? Where does the United States of America actually stand on that measure compared to other countries around the world?

You never see these statistics in the media as they relate to other countries.  I was curious how the U.S. compared to other nations.  After all, in any society ever known to mankind there have been rich and poor people.  It was true in Babylon, Athens and Rome as well as in Moscow and Havana today. A quick Google search supplied the answer.

The United States actually ranks 73rd in the world (out of 156 countries, right in the middle of the pack) on the income share that the top 10% earns as a percent of all national income according to the most recent world data. The top 10% earn 30.2% of all income in the U.S.

To put that in context, in Communist China the top 10% earn 30.0%---almost exactly the same as in the United States. In Venezuela's socialist economy the top 10% earn 34.1%. In Russia, the top 10% earn 32.2% of the total. In other words, the rich have a smaller piece of the income pie in the United States than in Venezuela and Russia. How does that fit the Bernie Sanders narrative?

In addition, all of these countries in the Western Hemisphere have higher concentrations of income in the top 10% than in the U.S.---Haiti (4th), Columbia (12th), Guatemala (13th), Brazil (14th), Honduras (15th), Chile (16th), Panama (19th), Mexico (20th), Paraguay (22nd),  Dominican Republic (24th), Costa Rica (25th), Ecuador (29th), Jamaica (30th), Bolivia (32nd), Nicaragua (33rd), El Salvador (40th), Venezuela (43rd), Peru (47th), Uruguay (66th) and Argentina (70th).

If you are keeping track, almost every country in the Western Hemisphere has the rich with a higher share of national income than is the case in the Unites States. The only exceptions are Trinidad and Tobago (78th) and Canada (118th).

Cuba did not even make the list of 156 countries. It likely does not have reliable data anyway. It is also clear they don't have much income to spread around and what they do have undoubtedly ends up in the pockets of the communist party elite.

Of course, there is another important fact to keep in mind in all of this. If you are considering the well-being and welfare of the masses, it is perhaps more important to consider how big the national economic pie is before you get carried away with how the pie is cut.

The United States generates almost 17% of the world's income for a population that represents only about 4% of the world's population. To put that in perspective, China is now about on par with the United State on gross national income. However, China has over four times the population as the United States.

The country with the greatest equality of income in the world is Azerbaijan. The GDP per capita in Azerbaijan is about $3,250 per capita. That is about 1/15 of what it is in the United States. The people of Azerbaijan are almost all equally poor. Is that fair?

The Democrats like to talk about how "unfair" our economic system is and why we need to "level the playing field."

However, if it is so "unfair" why do so many people around the world keep pouring over our borders?

The numbers above give you a pretty good idea of why that that is.

Monday, April 18, 2016

Sovereigns Slaughter Savers

We formerly lived in a world that, when someone borrowed money, they paid interest on their debt until the loan was paid back.

That world increasingly does not exist anymore among many of the sovereign nation borrowers around the world.

The borrower no longer pays interest on its borrowings---it collects interest.

It is unheard of in recorded (or unrecorded) history.

For context, here is a chart that Business Insider prepared on historical interest rates going back to 3000BC.  Back in Mesopotamia the going interest rate was 20% per year on loans.

I have followed the trend of negative interest rates with some interest but I had no idea it has reached the level it has globally until I read a recent report from Elliott Wave International.

Elliott Wave reports (citing Bianco Research) that negative interest rates now constitute an astounding 46.2% of the non-U.S. bond market worldwide!

Japan alone has 66% of the world's negative-yielding debt. However, there are a lot of other European countries joining the trend as this chart from Elliott Wave demonstrates.

The sub-zero interest rate environment also now appears to be leaking into the European corporate bond market according to Elliott.

Last week, bond yields on the debt of Royal Dutch Shell Plc and Siemens AG dropped below zero. According to Bloomberg, about 16 billion worth of euro-denominated corporate debt is trading with yields below zero, spurred on by the ECB's latest deflation-fighting scheme of starting to buy non-bank corporate notes.

All of this has actually helped the U.S. treasury bond market in the short term. Since there is no interest rate yield in much of the rest of the world, the meager U.S. interest rates look relatively attractive. In fact, in the first quarter of 2016, U.S treasuries produced a total return of 9.8%, the best first-quarter performance since 1986 (per Bianco Research).

How long does all this last?

I don't know.

However, it will not last.

It defies all laws of economics, not to mention, common sense.

I don't think 5,000 years of history are wrong.

Those that hold these negative-interest rate bonds risk extraordinary losses when interest rates rise.

The central bankers around the world that are penalizing and punishing savers are playing a dangerous game that could put all of us at risk.

Economic progress is not made without the investment capital provided by savers and investors.

Without savers there is no investment. And without investment there is no economic growth.

Without savings deposits, banks can't make loans.

The economy eventually grinds to a halt.

Insurance companies, pension funds and others that need attractive positive bond yields for their business models to work are also placed at great risk in this environment.

Without positive yields, they risk collapse and the cascading effects to the economy would be severe.

The slaughter of savers will eventually strangle us all.

It needs to stop...and soon.

Thursday, April 14, 2016

Who Is Going To Get Berned?

Who is going to be "berned" if Bernie Sanders becomes President?

You can see by the Democratic primary election results that there are a lot of people enamored with the 74 year old Socialist. (He will be 75 years old on Election Day in November.)

His proposals are a liberal socialist nirvana. Medicare for all. Free public university tuition. A 100% clean energy infrastructure. Expanded Social Security benefits. And the list goes on and on.

How is it going to be paid for?

The non-partisan Tax Policy Center did an analysis of the cost of Bernie's tax proposals recently. If you think you already are paying too much in taxes, you might gain some new perspective when you see what Bernie has in mind for you.

In total, Sanders is looking at tax increases of over $16 trillion over the next 10 years. That averages about $1.6 trillion per year.

Let's put that in context, the federal government will collect about $1.5 trillion in individual income tax this year. Bernie's plan proposes to raise more than that amount of revenue in additional taxes each year to pay for his socialist ideas.

It is effectively placing an additional burden the size of the individual income tax on the entire economy. And a fair amount of the amount is raised on those individuals who provide the capital and provide the jobs in this economy.

He talks about taxing billionaires and Wall Street barons. However, the reality is that everyone would be "berned" by Bernie to some degree. A few will be singed. Most in the middle class will be torched. Those that produce the most wealth (and jobs) will be immolated.

Let's look at the numbers.

For those in the bottom quintile of household income (below $23,000), the average taxpayer will pay $165 more per year and their after-tax income will be reduced by 1.3%. Singed.

For those in the middle quintile (the heart of the middle class (household income between $45,000 and $81,000) the average taxpayer will pay $4,692 more per year and their after-tax income will be reduced by 8.5%. Torched.

For those in the top quintile ($142,601 and above), the average taxpayer will pay $44,759 more per year and their after-tax income will be reduced by 17.2% per year. Immolated.

Here is the Tax Policy Center chart summarizing the effects. The Addendum data breaks down the specific effects on the top quintile groups. The top 1% is not just immolated, they are incinerated. The top 1% ($730,000) would see their after-tax income reduced by 33.5%.

How is all of this accomplished?

Let's look at some of the specific tax proposals of Sanders that could have a direct effect on individual taxpayers. Of course, in addition to this list there are also a number of business tax increases which total over $1 trillion between 2016-2026.

  • A 2.2% income tax surcharge would be levied on all taxable income. 
  • Increasing tax surcharges would also be levied on income over $200,000. Marginal rates would range from 39.2% to 54.2%.
  • Repeal lower dividend and capital gain tax rates. All of this income would be taxed as ordinary income along with the surcharge.
  • The surtax on net investment income (as a result of Obamacare) would be increased from 3.8% to 10%.
  • Repeal the deduction of all health care expenses as well as the exclusion from income for employer-paid health insurance. Repeal deductions for health savings accounts.
  • Gains on gifts and inherited property would be taxed except for a $250,000 lifetime exclusion.
  • A new 6.2% payroll tax would be levied on all employers to pay for his health care proposal.
  • Social Security tax would be collected on all earnings above $250,000.
  • All employee and employers would pay a new 0.2% payroll tax (on the current Social Security wage base) to pay for universal Family Medical Leave.
  • Reduce the estate tax exemption from $5 million to $3.5 million and increase the death tax rates substantially.
  • Sharply limit the annual exclusion for gift tax (currently $14,000).
  • Enact a new financial transaction tax (FTT) with rates of 0.500 percent on stock trades, 0.100 percent on bonds, and 0.005 percent on derivatives. (Raises a projected $600 billion over the next 10 years)
  • Enact a new tax on “carbon polluting substances,” starting at $15 per ton of carbon dioxide or of carbon dioxide–equivalent content, phasing up to $73 per ton in 2035 and then rising by 5 percent plus the inflation rate in subsequent years. (Raises a projected $900 billion over the next 10 years.)

You can see the full estimated effect of the Sanders Tax Plan on tax receipts in this chart from the Tax Policy Center. (click on chart to enlarge).

The total increase of all his tax increases is a staggering 7.5% of GDP.  To put that in context, total revenues of the federal government in 2015 were 17.7% of GDP. This means that Sanders is proposing to increase the total federal tax burden by almost 50% over what we are accustomed to.

You might think you got burned with the amount of taxes you paid this year.

I dare say most voters don't know what "berned" is.

Tuesday, April 12, 2016

Fair or Foul?

It is tax filing time and there is an interesting story circulating about the recent move of hedge fund manager David Tepper from high income tax New Jersey to no income tax Florida.

David Tepper
Photo Credit: Bloomberg TV

Tepper's change of residence caused Frank Haines, a budget and finance officer with the New Jersey Office of Legislative Services to tell a State Senate  committee, “We may be facing an unusual degree of income-tax forecast risk,” this year, citing Tepper’s move late last year as a prime cause for concern.

Tepper has been considered by many to be New Jersey's wealthiest resident. Forbes puts his wealth at $11.2 billion. One estimate I saw put his income over the last three years at over $5 billion.

New Jersey has a top income tax bracket of 8.97%. 40% of its total budget comes from the income tax. And 1/3 of income tax revenues come from the top 1% of income earners alone.

Needless to say, when a guy like Tepper leaves your state it can leave a pretty significant hole in your budget.

The situation is similar in California and many other states. The top 5% of income earners in California pay 70% of the income taxes and the top 1% pay half of the total tab. To make matters worse, California relies on the income tax for 67% of its total state revenues.

California has become dangerously dependent on those top income earners pulling in large capital gains and income from stock options. The reality in California is that the share of income of the top 1% is very volatile in that it is so dependent on stock options, the stock market, real estate investments and capital gains.

This chart shows the volatility in capital gains as reported by California taxpayers since 1986.

Thank you Google, Facebook, Amazon and many others who made it happen. Thank you also to Ben Bernanke and Janet Yellen and low interest rates.

However, can California keep the people in the state who made these ideas a success?  Can they attract new talent and capital to the state over the long term with the tax, regulatory and political climate they currently have in place?

And what happens to California if interest rates climb and tech stocks fall?

Of course, people can leave a state and move to another in the United States of America if they think their money will be treated a little more kindly in another locale.

It is a different story if you are thinking about leaving a country. However, as I wrote in my recent post, "Millionaire Migration", it is happening more and more around the world.

I think it is always instructive around tax time to see who is paying the income tax bill in the United States. We often hear that the rich are not paying their "fair share".

The facts are that the top 1% are paying 38% of all federal income taxes. This is double their share of income. The top 1% are those with over $500,000 of income.

The top 10% is paying 70% of the tax burden.

The top half is paying 97% of all income taxes.

The bottom half is paying 3% of all income taxes. That is those with adjusted gross incomes of $40,000 or less.

Is it fail or foul?

I will leave that to you.

However, if after filing your tax return you do not think that you have paid your fair share, you are free to make a contribution to the U.S. Treasury to reduce our nearly $19 trillion in debt.

The contribution is tax-deductible and considered as a charitable contribution if you itemize.

$5 million was donated for this purpose last year. I could find no information on the number of individuals that were so generous, but I can assume it was extraordinarily small. For comparison, U.S. income tax collections last year were $1.5 trillion.

If you are inclined to contribute here is the information from the U.S. Treasury website.

There are two ways for you to make a contribution to reduce the debt:

At Pay.gov, you can contribute online by credit card, debit card, PayPal, checking account, or savings account.

You can write a check payable to the Bureau of the Fiscal Service, and, in the memo section, notate that it's a gift to reduce the debt held by the public. Mail your check to: 

Attn Dept G
Bureau of the Fiscal Service
P. O. Box 2188
Parkersburg, WV 26106-2188

Sunday, April 10, 2016

Amended Without Amendment

A proposal to amend the United States Constitution passed the U.S. Senate on March 22, 1972 by a resounding vote of 84-8 with 7 not voting. This measure had similarly passed the U.S House of Representatives in October, 1971 by a vote of 354-24 with 51 not voting. In that two-thirds of both houses of Congress had approved the proposed amendment, it directly went to the various States for ratification. (The President has no role when it comes to amending the Constitution. However, President Richard Nixon endorsed the proposed amendment upon its passage by the Congress.)

Within the first month, 14 of the required 38 states (three-fourths of the states) had ratified the proposed amendment. One year after the proposal had been approved by Congress, 30 states had ratified the measure.

It looked like the proposed Constitutional Amendment would be swiftly ratified and become the 27th Amendment to the United States Constitution.

Despite the fast start, the ratification effort starting to lose momentum and stall.

It never gained the necessary 38 states by the 1979 deadline established by Congress. The deadline was even extended by Congress an additional three years (to 1982) when the amendment was three states short. However, it never gained the required 38 states. In fact, five states ended up rescinding their earlier ratification.

What was the proposed amendment?

It was popularly called "The Equal Rights Amendment" ("ERA") and was supposedly designed to assure equal rights for women.

It read as follows,

Section 1. Equality of rights under the law shall not be denied or abridged by the United States or by any State on account of sex.

Section 2. The Congress shall have the power to enforce, by appropriate legislation, the provisions of this article.

Section 3. This amendment shall take effect two years after the date of ratification.

There was one person who was considered the most important voice in stalling, and ultimately stopping, the ratification of the The Equal Rights Amendment. Her name was Phyllis Schlafly.

Schlafly and the opponents of the ERA were able to defeat the rush to approve the amendment after they made a number of arguments that showed that, rather than protecting women, the ERA could actually undermine rights and privileges that women already had. After all, the ERA was intended to assure equality of rights "on account of sex", not on account of the female gender.

Phyllis Schlafly
Credit: Library of Congress

Legitimate questions were raised as to what would occur to the traditional right of a woman to receive alimony, to receive social security benefits even though they never worked, or to be able to attend a women's only high school or college.

Three other significant arguments were also made by Schlafly and other opponents of the ERA. Of course, the supporters of the ERA brushed these opposing views away by villifying and ridiculing them. They were considered to be ridiculous red herrings that were nothing but a fanciful distraction from the important issue of women's rights.

What were these issues that the opponents warned about should the ERA be incorporated into the U.S. Constitution?

  • Gay couples would be allowed to marry.

  • People would be allowed to choose which gender restroom they wanted to use.

  • Women would be required to register for the draft and serve in combat.

All of this is happening before our very eyes today.

And all of it has occurred in this country without an amendment to the Constitution ever being passed.

Witness what is going on in North Carolina which recently enacted a law (NC House Bill 2) that was in response to a Charlotte city ordinance expanding the "rights" of transgender to use public restrooms based on their gender identity.

Witness the Supreme Court's 5-4 decision to allow gays to marry despite the fact that 30 states had specific provisions in their state constitutions limiting marriage to a man and a women and the "Defense of Marriage Act" which has been enacted by Congress (and signed into law by President Clinton) in 1996.

Witness the Defense Department's ruling that opens all combat roles to women that clearly would also require that all women be required to submit to the selective service draft.

Has any of this been done by amendment to the Constitution? No.

Has any of this even been done by consent of our elected representatives in the United States Congress? No.

It is all happening either through the unilateral action of our judiciary or by regulatory action of the executive branch.

The Constitution has been "Amended without Amendment."

This is not the constitutional form of government our Founding Fathers designed.

Isn't it time to return to those founding principles?

Saturday, April 9, 2016

Masters Moments

The Masters golf tournament is in full swing this weekend.

I have been fortunate to attend The Masters three times over the years. The first time was in 1973 when I ventured over from Atlanta with some law school classmates for the Wednesday practice round.

To provide some perspective, Tom Watson just played his last competitive round at The Masters yesterday. It was the 42nd consecutive year that Watson has played in the tournament. That string would not start until two years after my first visit to Augusta.

My last visit was three years ago. To provide some perspective on that, Jordan Spieth, the defending champion and the leader going into the 3rd round this year, did not even have his full time status on the PGA Tour and would not tee it up for the first time at Augusta National until the next year (2014).

The Masters is "a tradition unlike any other." Legends beget legends on those fairways. Consider the fact that Tom Watson played his first practice round at Augusta with Gene Sarazen who had won the second Masters in 1935. Sarazen was born in 1902.

On the other hand, Bryson DeChambeau, the U.S. Amateur who was paired with Spieth in the first two rounds and was tied for second going to the 18th hole yesterday before a disastrous triple bogey on the final hole, was born in 1993.

The following is a blog post from April 15, 2103 right after I had attended The Masters that provides a first hand report of the experience if you cannot be there yourself this year.

The Masters (first published April 15, 2013)

I had the privilege of attending The Masters golf tournament this year.

If you are a golf fan it is one event that is well worth attending.  It is a first-class experience in every respect. The course is both beautiful and immaculately maintained.  The spectators are treated as true patrons which is what Augusta National prefers to call the golf enthusiasts who attend.

Food and beverages are very, very reasonable.  A pimento cheese sandwich costs only $1.50.  A turkey sandwich is $2.50. A soft drink is $1.50.  A candy bar or moon pie goes for $1.00.  A domestic beer is $2.50.

The tournament is run like a well-oiled machine.  Every detail has been thought out and is run efficiently from the concession stands to the rest rooms to the golf shop.  Everyone must pass through metal detectors to gain entrance to the grounds and you must pass 25 security guards on your way in.  Every ticket is scanned.  Every bag searched. Cell phones and cameras are strictly prohibited.  The crowd is polite and knowledgeable.

The biggest problem is getting a ticket for the tournament.  The face value of a tournament pass is $250 but the going value is over $5,000 for the week. At present, there is not even a waiting list you can get on to get tickets.  It is clearly the toughest ticket to get in all of sports.  Your only choices are to know someone who has access to tickets, buy through a ticket broker or register for an online lottery that The Masters opened a couple of years ago for a limited number of daily tickets.  You can go here in a month or two to apply for tickets for the 2014 tournament.

One of the more interesting sites for me was the golf store.  I did not pass it one time when there was not a line to get in the store and it was packed like nothing I have ever seen.  I was told that they sell $1 million of merchandise per hour.  That doesn't seem too far off from what I could see.

For example, here are the famous Masters folding chairs that surround almost every green.  Masters etiquette is such that you can place your chair at your favorite venue early in the morning and tour the course and your chair will still be there for you.  No one will touch it, remove it or sit in it. These chairs go for $30 in the golf store.

Another example is this photo of Adam Scott on the 10th green right after he sank his winning putt in the playoff yesterday. Notice the large number of Masters umbrellas and the total absence of anything else. These all came from that on-site golf store.

Credit:  AP Photo/David J. Philip

The Masters understands the principles of scarcity and exclusivity very well and it is a marketing marvel as a result. The tournament committee really knows what it is doing and does it well.

If you are looking for an interesting summer book I suggest you consider "The Making of the Masters: Clifford Roberts, Augusta National, and Golf's Most Prestigious Tournament". I read the book over ten years ago and it is a fascinating story of the origins of the founding of Augusta National and its guiding force, Clifford Roberts, over the years. It will give you a keen understanding of how "touch and go" it was to even get the club built and financed in the midst of the Depression.

If you are a golfer you can only wish that someone in your family would have signed on the dotted line for Mr. Roberts when he was desperately trying to sell memberships in the club in the early 1930's. As I recall, a membership could have been purchased for a few hundred dollars. Oh, but to think of what might have been.

Congratulations to 2013 Masters Champion Adam Scott and the membership of Augusta National for providing me with a most memorable experience.  There is nothing else like it in the world of sports.

Friday, April 8, 2016

The Theory of Relativity

Albert Einstein introduced his "Theory of Relativity" in 1905.

I have my own theory of relativity.

Every choice in life is relative.

Choices are constrained based on availability, limits and reality. It does not matter what you may want. The only thing that matters is what you can have.

If a man is stranded on an island and discovers that there are only two women to choose from on the island, it does not matter that he believes that the ideal woman is Scarlett Johannson. It does not matter that he does not find either woman on the island is attractive. He has only the choice in front of him.

Likewise for the women. If the man is the only living, breathing male human on the island it does matter if their dream guy is Ryan Reynolds. Their choice is clear. Take him or leave him. If you don't take him, enjoy the beautiful sunsets on the island alone.

I am reminded of this as I view the polling data on the possible choices in this year's Presidential race.

It looks to be an interesting example of my Theory of Relativity.

We see it in the GOP nomination process.

In the exit polls conducted by NBC News for the Wisconsin primary just 61% of Republican voters said they would vote for Donald Trump in November. I remind you, these are Republican voters.

When asked if they will vote for Trump, nearly one in five (18%) GOP voters said they will vote for a third party candidate in November. 8% would not vote at all. 10% would vote for Hillary.

Ted Cruz does marginally better but there still are a lot of GOP voters who want another choice (and it is not John Kasich who was on the ballot and got 13% of the vote). 66% of GOP voters in Wisconsin will vote for Cruz in the fall. 18% say they will vote third party, 6% will vote for Hillary and 5% will stay home.

It is an even bigger issue in the general election if the choice is between Donald Trump and Hillary Clinton. We hear a lot about having to choose between the lesser of two evils, this may be the textbook case.

John Zogby wrote a recent column in Forbes on that possibility, "Mr. Unfavorable vs. Mrs. Favorable", that defines the choice that voters may face. Zogby sums it up this way,

America – and the world – knows Donald Trump and Hillary Clinton – and they do not like what they see. And this is even before the two start punching and counter-punching.

Trump is viewed unfavorably in Zogby's poll data by 59% of American voters. Hillary by 54%.

Hillary is viewed unfavorably by 56% of men. Trump is at 53%.

Trump is viewed negatively by 66% of women. Women are supposed to be Hillary's strength but 53% of women do not like her.

Trump is supposed to have great potential appeal to blue collar Democrats. However, his unfavorables are 83% with all Democrats and 54% with weekly Wal-Mart shoppers. One of the only groups that he has a slight favorability edge is with NASCAR fans where he is 48% favorable and 45% unfavorable.

Both Hillary and Donald are viewed very unfavorably by 18-29 year olds. Trump turns off 74% of this age demographic. Clinton has a 59% unfavorable rating with the same age group. In some respects this is worse for Hillary than Trump's number considering that Obama got two out of every three votes from this age demographic over the last two elections.

Interestingly, in a race between Trump and Clinton the election may not be decided by who the voters like more, but rather by who they loath more.

Who will be more motivated to vote? #NeverTrump or #NeverHillary voters.

The same is true in the stretch run to the Republican convention.

Are you going to vote for Trump?  Or are you going to vote against Trump?

That is the only choice left.

It does not matter what you want.

What you don't want sometimes matters even more.  It is the theory of relativity.

Sunday, April 3, 2016

Millionaire Migration

Money is mobile.

Money also tends to migrate to where it is treated best and/or is safer.

The people that have money follow the same rules.

This is an important lesson for politicians to remember.

I was reminded of these truths when I came across a report by New World Wealth on "Millionaire Migration in 2015" that tracked the migration patterns of millionaires last year around the globe.

What countries are millionaires leaving and where are they going?

France and Italy saw a large exodus of millionaires. last year. Cultural tensions in both countries appear to be causing concerns among the wealthy about their safety. In addition, the redistributive rhetoric of President Hollande's Socialist Party has clearly caused concerns among that nation's richest residents. Lack of economic opportunities in both those countries are also cited as a reason for the out-migration.

China's migration is not really a large issue as that country continues to produce many more millionaires annually relative to those migrating out of the country. That is not the case in France and Italy.

On the other hand, 8,000 millionaires migrated to Australia, the United States gained 7,000 and 5,000 more millionaires ended up in Canada.

The 8,000 new millionaires who migrated to Australia were enough to boost that country's millionaires by 3% in just one year. Canada boosted its total by 2%. 7,000 new millionaires to the United States almost had no effect percentage wise. 4,180,000 millionaires call the United States home---the most of anywhere in the world. It takes #2 Japan, #3 Germany and #4 China added together to equal the number of millionaires in the U.S.

What cities saw the largest loss of millionaires in 2015?

No real surprise that Paris and Rome lead this list considering the numbers we saw above on France and Italy. Athens is also not a surprise considering the financial turmoil Greece is under.

However, it is interesting to see Chicago on this list. What are the reasons? Rising racial tensions and rising crime levels are deemed to be driving millionaires to leave the Windy City. Is it a coincidence that President Obama is not moving home after his term ends in January?

Why does the fact that millionaires are leaving a country (or a city or state) matter?

From the report...

Bad sign - millionaires are often the first people to leave. They have the means to leave unlike
middle class citizens.

Money outflow – when millionaires leave a country, they take large amounts of money with them
which impacts negatively on the local currency, local stock market and local property market.

Lost jobs - millionaires employ large numbers of people. Around 30% to 40% of millionaires are
business owners.

Lost revenue and tax – millionaires spend a lot of money on local goods and services and pay a
large amount of income tax. 

Pensions & benefits - millionaires are not reliant on state pensions and benefits, which makes
them a relatively easy and cheap group to please.

Resilient – millionaires are resilient to economic downturns and can keep an economy going
during tough times.

Brain drain – millionaires are normally highly skilled and highly educated. Many are also

It is easy for politicians to complain about the rich not paying their "fair share".  However, they would be wise to consider this report...and the alternative.

What if the wealthy leave and take their money with them?

What do Paris, Rome or Chicago become without these people?

I assure you it is not something that anyone should care to see.

Thursday, March 31, 2016

A Cataclysmic Clash of Cultures

Why is it that over the last 40-50 years that Christianity has gotten more liberal and tolerant and Islam has gotten more conservative and less tolerant?

This is a question that I have asked myself a lot over the last few years.

It is a puzzling paradox as conventional thinking suggests that as societies age and mature they tend to become more progressive. For example, they advance from a primitive, barbaric system of justice to a system that recognizes individual rights and equal justice. They become less authoritarian and more flexible.

I have searched for answers on the internet to this question and found nothing that explains the dichotomy adequately as why we are seeing such vastly different arcs to the Muslim and Christian worlds today.

Here are a couple of examples that are in today's headlines.

From the Muslim world...
Saudi government demands death penalty to curb homosexuality
Saudi Arabia currently hands out fines, prison sentences and whippings for being openly gay. Due to an increase in public displays of homosexuality, especially on social media, Saudi lawmakers are considering imposing the death penalty on gay people who show their sexuality in public or on social media. This is currently reserved only for second offenses!

From the Christian world..
Marquette University moves to fire Professor who defended student's traditional marriage views
Marquette, a Jesuit Catholic institution of higher learning, has moved to suspend and fire a professor who supported a student who tried to defend traditional marriage in an ethics class after a teaching assistant for his class said the student's views were "homophobic", "racist" and "sexist".  He was told that he needed to drop the class if he did not change his views.

Professor John McAdams wrote a blog supporting the student and he was then brought before a faculty panel of the Catholic university and told to admit "guilt" and "apologize" or face dismissal for a "blog post that he wrote that was reckless and incompatible with the mission and values of Marquette University"

This is from a Catholic university?

Why is Islam returning to the 10th century and why are Christian institutions like Marquette "progressing" so far that it is hard to recognize the existence of any traditional or core values at all?

How different it was just 50 years ago. What has happened? I wish I knew but, if we cannot figure it out, the world is heading for much more conflict and bloodshed in what is becoming an even bigger cataclysmic clash of cultures.

I have written before of the stunning transformation of countries like Iran, Afghanistan and Egypt over my lifetime. In years past, we looked like we were living in the same world. That is certainly not the case today. And the gap is getting even larger when you compare the two headlines above.

For example, this is a picture of a female soldier in the Iranian Army in 1979.

Credit: Pakistan Defence

These are female soldiers in the Iranian Army in 2011.

Credit: Pakistan Defence

These are Afghanistan women in the 1950's compared to 2014.

These are Egyptian students at Cairo University.



A related question is what causes a young man to strap on a suicide vest or take an automatic weapon into an opera house or office building with the intent to kill or maim shouting "Allahu Akbar"?

I recently came across an interesting paper by Dr. Tawfik Hamid, "The Cause of Jihadist Terrorism and How to Combat It" in a publication by the Air Force Research Laboratory (credit to Viable Opposition for pointing me to this) that attempts to explain this question.

Dr. Hamid knows something about this subject because at one time he was a Islamic extremist himself in his native Egypt.

The radical Islam we see today has its roots in what is called the "Salafi Movement" within Islam. Its followers believe in taking a very fundamental approach to Islam. They believe that Islam has strayed from its roots and has become decadent over the years. They reject any religious innovation and support the implementation of sharia law. One of the key signs of spreading Salafism is for the women to wear the hijab, a key part in the imposition of sharia law.

Interestingly, Hamid sees the wearing of the hijab as an important indicator of increased radicalism in a Muslim community. This is how he describes how this takes hold.

The process begins with the propagation of Salafi jihadist ideology within a community. Increasing numbers of women begin to wear the hijab, which is both a symptom of Salafi proliferation and a catalyst for Islamism (see, e.g.,Mahmood, 2005). In turn, the proliferation of militant Salafism and the hijab contribute to the idea of passive terrorism, which occurs when moderate segments of the population decline to speak against or actively resist terrorism. 

The chart below shows the process of radicalization as well as the reinforcing cycle that continues to make the problem worse as times goes on. Hamid makes the point that while only a small percentage of Muslims become active terrorists, there are a very large number of what he calls "passive terrorists" who support the ideals of the cause but will never become violent.

However, it is a numbers game. The more adherents of Islam who follow the fundamentalist view of Salafism, the greater chance that a few more will become violent extremists. The first step in combating jihadist terrorism is to reduce the number of "passive terrorists" as Hamid calls them.

The solution to all of this is exceedingly complex. "No single, magical solution for defeating Islamism" exists according to Hamid.

However, Hamid sees a critical first step that can be taken is to weaken what he calls the "hijab phenomenon" .

Weakening the hijab phenomenon is pivotal to stopping the growth of Islamism at the ideological level. Wearing the hijab is discussed as a cultural phenomenon, rather than an individual choice, as many Muslim women are peaceful people (Hamid, 2007, pp.120-121). I have observed that, over the last few decades, terrorism was preceded by an increase in the prevalence of the hijab. In Sunni Muslim areas such as Kurdistan in Iraq, most women did not wear the hijab; these areas experienced fewer acts of terrorism than areas where the hijab was common, such as Al-Anbar Province.  
There you have it.

I still am looking for why Islam has become the retrograde force that it is today at the same time that Christianity has become so liberal and tolerant that calling it progressive is using a term that it much too mild.

However, I have a better understanding of why all of the hijabs have appeared over the last 50 years...and what it tells us.

If anyone can explain the more puzzling paradox of Islam and Christianity in the world today, please post a comment below.