Thursday, January 22, 2015

Large and Long Chunks Required

How do you know if someone is really smart?

The kind of person who is really exceptional and can make a true difference in this world.

The half of one percent of the human race- the very smartest- who have the ability to create real wealth through productivity enhancements that improve livings standards and our way of life.

I just finished reading Andy Kessler's book, "Eat People and Other Unapologetic Rules for Game-Changing Entrepreneurs", and he argues that finding exceptional people who can both see and lead the way to great things is absolutely critical to advance our economy and society.





I wrote about Kessler and his ideas almost four years ago when his book first came out.  I read a review and summary of the book and was intrigued with his thinking. Let's just say that I am little behind in my reading.

Kessler's basic thesis is pretty simple.  Technology eats the jobs of people.  However, the economy is incredibly dynamic. History shows that labor-saving machines do not decrease overall jobs even when they make some jobs obsolete.  The new economic growth creates new jobs, raises the standard of living for everyone and the lost jobs ultimately are quickly forgotten-if the policy makers let it happen.

This is how he describes it in the introduction to his book.
There is only one definition of an economy I’ve ever been comfortable with: a system that increases the standard of living of its participants. Period. Everything else from credit to money supply to quarterly earnings releases to minimum wages is just a tool or else a meaningless characteristic of an economy.
Increasing standards of living doesn’t happen automatically. It’s not a gift from heaven. Someone has to invent the future. 
I call them Free Radicals. We’ve seen them throughout history.
Charles Curtis’s 1903 steam turbine generator electricity to the masses. Using that electricity, in 1907, James Spangler, a janitor with asthma, invented an electric suction-sweeper, today’s vacuum cleaner. William David Coolidge’s thermionic X-ray tube of 1913 changed medicine. That same year, the Walker brothers in Philadelphia invented the first electric dishwasher. In 1916, Clarence Birdseye perfected the flash-freezing process (and Birds Eye potato puffs). In 1928, Thomas Midgley, Albert Henne, and Robert McNary synthesized the first chlorofluorocarbons (trademarked as Freon in 1930), ushering in safe refrigerators and air conditioning (other coolants eventually replaced Freon). Paul M. Zoll created the cardiac pacemaker in 1952. And Percy L. Spencer in 1945 watched a magnetron melt candy, leading to the invention of microwave ovens.

To invent the future you have to have someone who can understand, see and conceptualize things better than everyone else. Without that, we never break out of the status quo. We need the smart people who can see what others don't see and do what others can't do.

Kessler turned to Bill Raduchel, who has a Harvard PhD and was also on the faculty there, for his thoughts on the subject of "smart". After his stint in academia Raduchel was the CFO and CTO of Sun Microsystems in the 1990's and was also with America Online before its merger with Time Warner. Kessler observes that Raduchel has seen a fair share of smart people in his days between Cambridge and Silicon Valley so he asked for his perspective on what it means to be really smart.

Raduchel breaks down intelligence into four main parameters. Each of these characteristics are in each of us and they vary in degrees. There is a variability in all of them with all of us.

First, how fast do our brains work. How quick is someone on their feet? How quickly do they process information? Some people are brilliant but they don't reach conclusions quickly. Others are lightning fast. The comedian Dennis Miller comes to mind when I think fast thinkers. Most studies find a relatively narrow range on its clock speed---about three to one. This is called the Stroud number after a psychologist who focused his academic work on the processing rate of the brain.

Second, is the chunk recall factor. Human memory in the brain appears to be organized as linked lists of chunks of information. When we open these chunks or containers we seem to know everything in them. However, there seems to be a limit on how many chunks we can keep open at one time and recall the information. For most people that number is seven. That is why U.S. phone numbers were set at seven digits. Again, these is variability in the chunk recall factor that is fairly limited---between three on the low end and twelve on the high side.

Third, is the number of thought generators a person has in their brains. The human brain is great at evaluating but it generally needs to compare it to something it already knows. It is not good at evaluating in a vacuum. Therefore, the brain uses templates (prior thoughts) as anchors to compare new input. It then sends the new thought off to be evaluated as yes or no. The more thought generators in place and active, the better to evaluate properly. Again, we are talking a narrow range of two to ten with an average of five in the general population.

You can also see there is variability in brain power but it is not enormous from one person to the next in the first three characteristics. That is not the case with the fourth parameter.

The final factor, the size of the memory chunk, what is called the "Halstead length", is the biggest determinant in a smart person. This is how much is crammed into one of those chunks or containers that is open. As you get into complex issues and problems the only way to comprehend something effectively is for it to be all stored in a couple chunks--the fewer the better--because there are limits on our chunk recall (as discussed above).

"The longer the Halstead length, the greater the problem you can comprehend, the richer the data structure you can employ", observed Raduchel.

The average chunk size is a Halstead length of 250. In Silicon Valley terms, that is about fifty lines of software code. However, when this was studied by Maurice Halstead for which the "Halstead length" is named, he found that the very best programmers had lengths of over 60,000! There is a big difference between 250 and 60,000.

That variability is also immense when you consider that the other characteristics of intelligence between each of us only varies by a factor of three to five. The "Halstead length" can vary by a factor in the hundreds.

The fact is that some people have the ability to comprehend something incredibly complex because it is a 50,000 Halstead length problem and they have the brain power to handle up to 60,000. The average person has no chance at all to do the same if their "Halstead length" is a mere 250.

Those of us who are mere mortals can be invaluable in supporting the big ideas created by the very smart by working on the pieces of the big concept or idea. However, the productivity of the top one-half of one percent is critical as they are needed to develop the big thought--the design or concept--that can be implemented by others in smaller chunks. It is the only way it works.

The reality that everyone has different attributes and assets. We need different contributions from different people to be successful in our society.

Kessler puts it this way.
You see, we are not equal. Forget this way of thinking. Forget the politically correct tropes about the dangers of IQ tests and aptitude measuring. Some are smarter than others. If you went to high school, you know this. If you work at a company you know this. So quit trying to say we are all equal. 
Equal opportunity, yes. Equal, well, no.

Now you have a better idea of what makes someone smart.

It is about chunks and lengths.

And you thought that size didn't matter?

Think again.

Sunday, January 18, 2015

Duke Derangement Disorder

I have always had a special affection for Duke University. I have a number of close friends who are graduates of the university. I have visited the campus often and love the feel of the place. I also have great respect for the basketball program that Coach K has developed there over the years. There is no better venue to watch a basketball game than in Cameron Indoor Arena.

However, when it comes to the Duke University administration, I am at a total loss of what is going through their heads. It is as if they have something called Duke Derangement Disorder with their liberal, politically correct ideas.

The latest example was Duke's announcement early last week that it was going to allow the Muslim call to prayers to be piped out of the university's iconic chapel.

Duke University Chapel

This is the same university which kicked Chick-fil-A out of its campus food court. I wonder why?

It is the same university that would not allow a pro-life group to hold a meeting in its women's center.

It is the same university that hosted a pro-Palestinian Solidarity Movement Conference on campus.

It is also the same university that threw its entire men's lacrosse team under the bus choosing to believe the claims of an African-American stripper over those of their own student athletes. Taking sides in the case against their own students (who were later totally exonerated), cost Duke what has been estimated to be over $100 million in legal settlements to the families of the three lacrosse players who were falsely charged and other members of the 2005-2006 team, legal and public relations fees.

By the end of the week, Duke's administration reversed its decision of the Muslim call to prayer citing, among other factors, safety concerns. My guess is that a bigger factor was that Duke found out quickly that alumni giving might suffer substantially if they proceeded with their political correctness plan gone mad.

All of this is even more difficult to fathom when you consider the original by-laws of Duke University in which the first paragraph reads as follows.

The aims of Duke University are to assert a faith in the eternal union of knowledge and religion set forth in the teachings and character of Jesus Christ, the Son of God; to advance learning in all lines of truth; to defend scholarship against all false notions and ideals; to develop a Christian love of freedom and truth; to promote a sincere spirit of tolerance; to discourage all partisan and sectarian strife; and to render the largest permanent service to the individual, the state, the nation, and the church. Unto these ends shall the affairs of this University always be administered. (emphasis added).

In fact, you can see these words inscribed on a plaque that is near the Duke Chapel by going here. They were still the first paragraph of Duke's by-laws until last May.

The Duke Board of Trustees amended these "aims of Duke University" on May 9, 2014 so that it no longer was centered on "the teachings and character of Jesus Christ, Son of God" and the aims of the university were no longer "to develop a Christian love of freedom and truth".

That was quite convenient don't you think?

It almost appears that someone within Duke's administration had the foresight to remove that little obstacle in the university's by-laws before they felt comfortable blasting the Muslim call to prayers all over the campus.

The new Duke University "aims" are as follows. Note that it takes a lot more words when you don't truly believe in anything and are trying not to offend anyone at the same time.

The aims of Duke University (the "University") were originally set forth in a statement that President John C. Kilgo wrote for Trinity College in 1903. Kilgo's statement, which grounded the University's purposes in the Christian tradition of intellectual inquiry and service to the world, was adapted for Duke University upon its establishment in 1924. Recognizing its origin in this tradition, its continuing relationship to The United Methodist Church, and the diverse constituency that has developed since its founding, the University is committed to creating a rigorous scholarly community characterized by generous hospitality towards diverse religious and cultural traditions.  The University therefore pursues the following aims: to foster a lively relationship between knowledge and faith; to advance learning in all lines of truth; to defend scholarship against all false notions and ideals; to develop a love of freedom and truth; to promote a respectful spirit of dialogue and understanding; to discourage all partisan and sectarian strife; and to further the advancement of knowledge in service to society. The affairs of the university will always be guided by these ends.

Jesus Christ and the Christian love of freedom and truth have been replaced by the following .

... "the University is committed to creating a rigorous scholarly community characterized by generous hospitality towards diverse religious and cultural traditions";  (Of course they are!)

... "to foster a lively relationship between knowledge and faith"; (The eternal union of knowledge and religion set forth in the teachings and character of Jesus Christ has been replaced by a lively relationship between knowledge and faith? I especially like the fact that it is a "lively" relationship.)

..."to develop a love of freedom and truth"; (Forget that Christian love stuff. Love is all that matters.)

Of course, it concludes with "the affairs of the university will always be guided by these ends".

Didn't the original by-laws state the same thing?

We now know that at Duke "always" doesn't mean forever. It just means as long as it is politically correct. Or until rich alums quit writing checks. After all, dollar bills can quickly cure most anything on today's college campuses. Even Duke Derangement Disorder.

Wednesday, January 14, 2015

Fog. Dog. Cog.

If there is anything that gets the average American riled up it is seeing Congress pass legislation while exempting themselves from the law the rest of us have to live under.

A few examples of legislation passed over the years that Congress exempted itself from have included Social Security, the Fair Labor Standards Act, the Civil Rights Act, insider trading statutes and many laws regulating the American workplace. This article provides some background on how Congress has put itself above the law over the years.

As the Obamacare statute was being drafted, Congress did want to open itself to similar criticism regarding this statute, so a provision was inserted into the law that reads as follows:

The only health plans that the Federal Government may make available to Members of Congress and congressional staff with respect to their service as a Member of Congress or congressional staff shall be health plans that are — (I) created under this Act (or an amendment made by this Act); or (II) offered through an Exchange established under this Act (or an amendment made by this Act).

That is pretty clear and simple. Congress members and their staff should receive their healthcare through the Obamacare exchanges. The problem arises because the exchanges do not have any procedures for handling premium contributions from large employers.Therefore, the implication is that those in the exchanges must pay the full cost of their health care cost coverage individually. Oops!

When all of this dawned on our elected legislators they were in full panic mode as they realized that they would have to use the Obamacare healthcare exchanges to access their healthcare coverage in 2014 as well as pay the full cost of the coverage.  There was talk behind the scenes of a bipartisan effort to repeal this part of Obamacare until howls on both the right and left caused both John Boehner and Harry Reid to distance themselves from the idea.

Being required to get their health care in the Obamacare exchanges presents two problems for Congress.  First, it puts individuals who have been getting their coverage on a group basis into what is essentially an individual marketplace.  It takes what have been group community rates for that coverage and makes it individually-rated coverage based on age.

The bigger problem is that the legislation as passed does not allow the healthcare exchanges to accept any employer subsidy money to purchase healthcare coverage.  Government employees generally pay 25% of the cost of their health care coverage currently. The remaining 75% is paid (tax-free) by the federal government as employer-provided health coverage.  Therefore,Congress and their staffers would have to pay for the entire cost of their health care coverage with their own after-tax dollars under Obamacare  Ouch!

In order to get around this, Congressional leaders went to the Federal Office of Personnel Management and got a ruling that Congress was a "small business" that allowed more than 12,000 congressional employees, their spouses and dependents to purchase health insurance from the District of Columbia's small business exchange.

An accommodative D.C. government allowed Congress to come into their small business exchange.

There was only one big problem with this. Under the Obamacare law a small business is defined as a business with less than 50 employees. 12,000 seems to be a little more than 50, don't you think?

Why was it so important for Congress to be defined as a small business and use the D.C. small business exchange?  That allowed it to provide the tax-free subsidy and to also continue to use community rating for the employee rates rather than age specific rates. It was the only way to keep members of Congress and their staffs out of the individual Obamacare exchanges.

Judicial Watch filed a lawsuit last October to stop this clear violation of the law.

Judicial Watch announced last week that in response to this legal action the District of Columbia has conceded that Congress is not an eligible "small business" for purposes of purchasing health insurance through the Small Business Exchange.  However, the District went on to argue that "the Office of Personnel Management (OPM) could override the District’s laws (and, implicitly the Affordable Care Act)."

All of this is pretty amazing when you think for the federal government to prevail in this case you have to believe that a federal bureaucrat  has the power to not only override D.C law but also a law passed by Congress and signed by the President.

The case is even more shocking when you find out that someone in both the House and the Senate knowingly filed fraudulent documents claiming that both had fewer than 50 employees in claiming they were eligible for the small business exchange. Tom Fitton of Judicial Watch explains.

Our lawsuit cites applications filed by the U.S. House of Representatives and Senate with the D.C. Exchange Authority.  The applications, which were obtained through a Freedom of Information Act (FOIA) request, show that the House and Senate claimed to have only 45 employees each.  They also show that the House and Senate attested to having “50 or fewer full-time equivalent employees.”  Congress employs upwards of 20,000 people.  D.C. law limits participation in the exchange to small businesses having fewer than 50 full-time employees.  The applications also falsely state that the House and Senate are “local/state governments.”  The “electronic signature” section of the application includes the following language: “I’ve provided true and correct information to all the questions on this form to the best of my knowledge.  I know that if I’m not truthful, there may be a penalty.”

At the same time all of this is going on we are also getting close to oral arguments in King v. Burwell
which will be argued before the U.S. Supreme Court on March 4. The King case challenges the federal government's right to provide subsidies to individuals who enroll in Obamacare in the exchange managed by the federal government.

The reasoning is simple--the literal words of the statute state that subsidies are only available to Americans who enrolled in Obamacare "through an exchange established by the state".

Out of the 50 states and D.C., only 14 states are totally running their own insurance exchange. Therefore, if subsidies are only legal in those states, Obamacare is fatally flawed (as if we did not already know that).

What is incredible is that a statute that potentially could affect 1/6 of the U.S. economy could have been so sloppily written and that is causing so many people in Washington to spend so much time in trying to ignore the law that they wrote.

It truly does seem that Rep. Nancy Pelosi was right when she said right before the bill was voted on.


Unfortunately, we are still in a fog. The fog is not caused by controversy but because everybody is bogged down by a dog of a bill that makes the American people feel like cogs in a gigantic machine.

And every time the fog lifts we see the people in control of the machine are shysters playing shenanigans with the rule of law.

Justice Scalia, where are you?

(See "How Scalia Could Kill Obamacare" using his "textualism" approach that argues for a literal legal interpretation of statutes)

Sunday, January 11, 2015

Predictions Are Perilous

One of my favorites movies of all-time is Back to the Future. The 1985 film starred Michael J. Fox and Christopher Lloyd in which Marty McFly (played by Fox) accidentally is sent back in time to 1955 and must get back to 1985 before damaging his own future while he is in the past.




A sequel, Back to the Future II, was released in 1989 and picks up where the original film left off with the main plot involving Marty McFly travelling forward in time to the distant year 2015.

That distant year is now upon us and I thought this article comparing 2015 as Director Robert Zemeckis envisioned it to how things have turned out was interesting.

Did the film get it right? Not exactly. 
While it predicted Skype calls and virtual-reality headsets, the film got plenty wrong — including hoverboards.

Other misses were self-lacing sneakers, robotic gas stations and hologram ads.

However, it came close to a number of items we see today.

This scene shows something pretty close to a big flat screen display with multiple channels.





Pretty close on Skype or iChat as well.




And Google Glass.




However, nowhere to be seen in the movie is the internet, emails or mobile phones.

Of course, predicting the future is hazardous duty.

Even Zemeckis was not comfortable having to depict the future in the movie as he explained in this Business Insider article.

"I never really ever wanted to go to the future in the 'Back to the Future' movie because I don't like seeing the future in any movie," said Zemeckis. "The only kind of future that the audience ever actually accepts is a Orwellian dark future."
"The problem with doing movies in the future is that you always are wrong," he continued. "You underestimate it. You can't be right. Even Stanley Kubrick has always mispredicted the future in his movies."
Zemeckis said they found a workaround for the movie by making light of what they thought the future would be like.

He knew his limitations a little better than these folks that Robert J. Szczerba recently profiled in Forbes magazine as being responsible for what he considers the "15 Worst Tech Predictions Of All Time".


1876: “The Americans have need of the telephone, but we do not. We have plenty of messenger boys.” — William Preece, British Post Office.

1876: “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication.” — William Orton, President of Western Union.

1889: “Fooling around with alternating current (AC) is just a waste of time. Nobody will use it, ever.” — Thomas Edison

1903: “The horse is here to stay but the automobile is only a novelty – a fad.” — President of the Michigan Savings Bank advising Henry Ford’s lawyer, Horace Rackham, not to invest in the Ford Motor Company.

1921: "The wireless music box has no imaginable commercial value. Who would pay for a message sent to no one in particular?” — Associates of David Sarnoff responding to the latter’s call for investment in the radio.

1946: “Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.” — Darryl Zanuck, 20th Century Fox.

1955: “Nuclear powered vacuum cleaners will probably be a reality within 10 years.” — Alex Lewyt, President of the Lewyt Vacuum Cleaner Company.

1959: “Before man reaches the moon, your mail will be delivered within hours from New York to Australia by guided missiles. We stand on the threshold of rocket mail.” — Arthur Summerfield, U.S. Postmaster General.

1961:There is practically no chance communications space satellites will be used to provide better telephone, telegraph, television or radio service inside the United States.” — T.A.M. Craven, Federal Communications Commission (FCC) commissioner.

1966: “Remote shopping, while entirely feasible, will flop.” — Time Magazine.

1981: “Cellular phones will absolutely not replace local wire systems.” — Marty Cooper, inventor.

1995: I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse.” — Robert Metcalfe, founder of 3Com.

2005: “There’s just not that many videos I want to watch.” — Steve Chen, CTO and co-founder of YouTube expressing concerns about his company’s long term viability.

2006: “Everyone’s always asking me when Apple will come out with a cell phone. My answer is, ‘Probably never.’” — David Pogue, The New York Times.

2007: “There’s no chance that the iPhone is going to get any significant market share.” — Steve Ballmer, Microsoft CEO.

Predictions are perilous. Something to remember as we begin the new year and the "experts" are making their 2015 prognostications of what to expect in the future.

Thursday, January 8, 2015

Charting the Course of Oil

Oil prices have been on a downward march. This week they went below $50 per barrel, which is a 5-1/2 year low.


Credit:Nasdaq.com



It is less clear to me why the price of oil has dropped so far and so fast.

If you applied normal economics principles, you would attribute it to greatly increased supply or rapidly falling demand.

However, look at this chart that shows world supply and demand for oil from Yardeni Research, Inc. over the last couple of decades.

*Supply and demand data are not strictly comparable since they are based on different sources and on estimates.
Source: Oil Market Intelligence and Department of Energy

Both supply and demand are in relative balance as they have been for quite some time.

You see this as well through a chart showing the Oil Supply/Demand Ratio. There has been a small decrease in the ratio but nothing dramatic to suggest the price of oil should have dropped 50% in six months.




This led me to take a little deeper look at some of the charts that Yardeni Research put together in "Energy Briefing:Global Crude Oil Demand and Supply" that was released on January 7, 2015. These charts provide some great perspective and context on the changes that are occurring in the crude oil markets around the world.

For example, consider the significant change in where the demand for oil is occurring around the world. Did you realize that the United States, Western Europe and Japan are consuming almost 20 million fewer barrels of oil than the rest of world each day? 10 years ago these "old world" economies made up half of global crude oil demand.

And that oil demand from these so-called "old world" is actually over 10% lower than it was six years ago.

At the same time, oil demand in the 'new world' has increased by almost 40% (15 million barrels per day) compared to a decade ago.

Seeing this I am even further confused how carbon taxes on the United States and Europe would have any meaningful impact on global carbon emissions when the vast majority of carbon consumption is being done elsewhere. The global carbon footprint has changed dramatically in the last ten years. Has Al Gore, Barack Obama or any other carbon tax campaigner noticed it?




How about the supply side?  Where is the oil coming from? That has also changed dramatically.

Look at this comparison of U.S/Canada crude oil output compared to Saudi Arabia.




Or this comparison of North American crude oil output compared to Russia.




The amount of oil being produced in North American over the last five years has been a game changer. However, this increased oil supply appears to merely keeping pace with increased global demand (especially in the "new world').

It appears to me that something else is going on outside of free market economics to drive the price of oil down so far in just six months. It would seem that the Saudis have to be deeply involved in some way. Is it to drive the shale oil producers in North America and other higher cost areas out of business? Is it to harm Iran, ISIS and others that might threaten the kingdom? Can the Saudis simply not afford to cut back production to push the price higher as they need the cash flow to maintain their lifestyle and keep their population from getting restless? Or a combination of these and more?

I am not smart enough to know the real reason but it just does not seem to be simply a case of a supply/demand imbalance that is driving this price action. At the same time, it appears that the increased drilling, exploration and production in North American oil fields has forced the hands of the Saudis in some form or fashion. As a result, they have intervened in a big way to protect themselves.

Via Chris Mayer at The Daily Reckoning I came across this explanation from economist Warren Mosler who writes a blog (The Center of the Universe) and is a pioneer in the school of macroeconomic thought called Modern Monetary Theory (MMT).  Mosler points the finger at the Saudis, not excess supply.

First, you have to understand that the Saudis are the world's swing producer and price setter. They supply the last 9-10 million barrels of crude oil consumed every day. "The Saudis don't sell at spot price in the marketplace, but instead simply post prices for their customers/refiners and let them buy all they want at those prices," Mosler wrote. "And most recently, the prices they have posted have been fixed spreads from various benchmarks, like Brent."
So if they decide, as they have done, to sell at a discount and let refiners buy all they want, this drops the price for everyone, as buyers key off of Saudi pricing. These demands require suppliers to meet that price or leave oil unsold as long as the Saudis can meet the demand. Either way, the Saudi action creates a downward spiral in price as they continue to offer a discount.
Meanwhile, the demand for oil has been steady, Mosler shows, indicating no "supply glut" but instead a reaction to Saudi pricing. Thus, oil prices won't go higher, until:
1) The Saudis raise their price or
2) Physical demand goes up beyond the Saudis' capacity to increase production.
"The Saudis never 'cut production,'" Mosler notes. "They just set price and let the world buy what it wants at their price. No one seems to know that. As no one ever asks if they are going to raise the price."
The Saudis have the world's oil markets by the tail. Unless one (or both) of those two things noted above happens, it is hard to imagine a scenario where oil prices get back anywhere near $100 a barrel, or even $80.

You understand all of this better when you see the comments of Saudi Arabia's Oil Minister, Ali al-Naimi,who recently said this in response to whether OPEC production would be cut in the face of falling prices.

“It is not in the interest of Opec producers to cut their production, whatever the price is,” he told the Middle East Economic Survey.
“Whether it goes down to $20, $40, $50, $60, it is irrelevant.”
In the MEES interview, Mr Naimi said Saudi Arabia and other Gulf oil producers would be able to withstand a long period of low crude prices, largely because their production costs were so low — at only about $4-$5 a barrel.
But he said the pain will be much greater for other oil regions, such as offshore Brazil, west Africa and the Arctic, whose costs are much higher.
“So sooner or later, however much they hold out, in the end, their financial affairs will limit their production,” he said.
“We want to tell the world that high efficiency producing countries are the ones that deserve market share,” said Mr Naimi . “If the price falls, it falls . . . Others will be harmed greatly before we feel any pain.”

Who will be harmed?

It certainly will not be the American consumer in the short term. It remains to be seen what the effects may be in the longer term.

In closing, I thought it might be fun to take a retrospective look at what a couple of politicians said about increased drilling and exploration in the United States a few years ago and the prospects it might have for lower gasoline prices.

The media considers one of these politicians to be brilliant and the other to be a buffoon.

I report. You decide.


 "You will see gasoline come down below $2 a gallon again," "That will happen." " Drill, baby, drill!"     
-Michele Bachmann explaining in 2011 that if she is President increased drilling and exploration will bring down the price of gas.



"We can't just drill our way to lower gas prices".
  -Barack Obama, 2012



Yes we can, Mr. President.

And it was all accomplished in spite of your actions and views.


 
  

Michele Bachmann enjoying the moment.


    
        

Tuesday, January 6, 2015

What About All Of This Student Debt?

I attended an expensive law school 40 years ago.

The annual tuition? $2,250 per year.

When I graduated my initial starting salary was $14,000.

Coming right out of undergraduate school I had several offers at around $8,000 per year. The additional education I invested in over those three years produced a decent increase in annual income for my education investment. Within five years I had more than doubled my starting income as a young attorney and CPA. Between contributions from  my parents, income from summer jobs and support from my working wife, I left law school with no debt. My law school education has produced a great return on investment over the years.

Contrast that with where we are today.

Annual tuition at my law school today is around $50,000.

According to this article, the entry level pay for the top firms in Atlanta (where I had my first job out of law school) is $135,000 today.  That is almost 10 times what I first earned. However, tuition is over 20 times what I paid to get my law degree.

The return on investment on education is declining.

However, despite this fact, more and more money is being borrowed to pay for higher education. It is simply not supported by the underlying fundamentals.

How have we allowed the cost of higher education to increase at multiples of the return on that investment in education?

I came across this interesting article in The American Spectator by Bill McMorris that traces a big part of the student loan problem to a Supreme Court case in 1971 that remains largely unknown. In that case, Griggs v. Duke Power Co., the Supreme Court ruled that jobs-based aptitude tests were potentially discriminatory as it could cause "disparate impact" when used by employers to assess and predict the performance of workers for promotion and advancement.

After World War II aptitude tests gained favor after their wide use in processing hundreds of thousands of recruits into the right roles in the War effort. For example, my father was only a high school graduate at the beginning of World War II but he was assessed with high intelligence and trained as a cryptographer. He told me that he was one of the cryptographers who passed the top secret message to drop the atomic bomb.

Industry used the tests after the War to determine who would rise through the ranks based on whether someone had the aptitude to succeed rather than simply focusing on a college degree.  After all, only about one in eight returning people from the War went on to college anyway.

McMorris explains the impact of that decision on our society and, ultimately, on student loan debt.

The Griggs decision has made that organic rise through the ranks impossible, as disparate impact left businesses liable for those who failed to pass hiring tests.
“Most legitimate job selection practices, including those that predict productivity better than alternatives, will routinely trigger liability under the current rule,” Wax wrote in a 2011 paper titled “Disparate Impact Realism.”
The solution for businesses post-Griggs was obvious: outsource screening to colleges, which are allowed to weed out poor candidates based on test scores. The bachelor’s degree, previously reserved for academics, doctors, and lawyers, became the de facto credential required for any white-collar job. 

After the Griggs decision, the colleges effectively had a nice gig as the golden ticket to the "good life". They were effectively the route you had to travel to get ahead.

Colleges, aware of their newfound utility and the easy money pouring in from student loans and Pell grants, jacked up prices. Education costs, as George F. Will has noted, grew 440 percent in the post-Griggs era. That trend continues today. The Project on Student Debt found that total college loans increased 6 percent annually between 2008 and 2012. The average student today takes out nearly $30,000 in debt to buy a ticket to the good life. They’d be better off taking that money and buying a new Mercedes CLA and faking the good life.

How bad is it?

Cnsnews.com reports that the aggregate balance in the federal direct student loan program rose by $119.4 billion in the last year. The balance on all student loans, including those from private sources, is now over $1.2 trillion. Here is a debt clock that gives you an up to the minute total of student loan debt.

This chart shows the growth in student loans held by the federal government. This is the money that young Americans (and their parents who may have co-signed the loans) owe the U.S. Treasury.




This is money that is also not dischargeable in bankruptcy. That is the reason that a staggering 156,000 people who are receiving Social Security benefits are now having these benefits garnished to pay for student loan debt.

Do you think the federal government has more than a little leverage on these Americans going forward?

College costs could not go up without a supply of money to pay for it. Just as is the case with health care costs, college costs have become heavily dependent on the flow of federal money into the system.

Health care costs generally tracked overall inflation in the economy until Medicare and Medicaid were introduced and normal market forces were disrupted beginning in the mid-1960's.  The same has been true with student loan money.  As more student loan funds became available, the easier it became for colleges to raise tuition costs.  Ironically, a program that was designed to assist students to afford college seems to be making it more unaffordable with each passing year.

Such is what occurs over and over when a well-intentioned "liberal" idea meets the real world.  A desire to do good by government ends up being the undoing of the very people it was intended to help.

The President's 2015 budget estimates that approximately 20% of all student loans will go into default over their lifetime. Most lenders would go bankrupt with that type of default rate.

However, Jason Delisle of The Wall Street Journal points out in "The Hidden Student Debt Bomb" the increasing number of loans in forebearance (where borrowers are allowed an extension of time to begin making payments) is a ticking time bomb warning that long term defaults may end up much, much larger over time than is currently estimated.

It is time to re-evaluate how we measure the performance of student-loan programs—particularly whether borrowers are or are not meeting their obligations. The traditional measures of nonrepayment—delinquencies and defaults—might be fine for most types of loans, but not for outstanding student loans, nearly all of which are held or backed by the federal government. Lawmakers have provided students with options that let them punt on repayment without triggering delinquency or default. Lately, students have been availing themselves of those options at rising levels.
Loan balances in forbearance were about 12.5% of those in repayment in 2006. In 2013, they were 13.3%. Today they are 16%, or $125 billion of the $778 billion in repayment.
If student-loan defaults exhibited that kind of growth it would make national headlines. Forbearance growth goes unmentioned, yet it looks a lot like a default given that the borrower isn’t making payments. 

What about all of this student loan debt?

Who is going to pay it all?

We can only hope all those young adults living in their parents' basement are saving their money!

Source:The Wall Street Journal


Sunday, January 4, 2015

The Best of BeeLine-2014

When you publish almost 90 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 14 List for BeeLine for 2014 that factors in both those posts that had a lot of views and/or were a personal favorite of your author.

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 2015 off right.


Toil, Training and Talent

What is the surer path to success? Possessing great talent or having a great work ethic?


You Don't Build Up The Poor by Pulling Down The Rich

"You can't expect to build up the weak by pulling down the strong." "No person was ever honored for what he received but what he gave." Calvin Coolidge had a way with words.


Seen and Unseen

It is easy to see what is right in front of you. It is harder to see the unseen issues and effects which should be foreseen. See how Democrats and Republicans see issues in different ways.


Ron Clark

Personal observations on my visit to the Ron Clark Academy in Atlanta to see how innovative teaching is getting results in the classroom.


Blocking and Taxing

It is time to go broad, flat and simple with our tax system.


Is Hillary Too Old To Win?

If Hillary Clinton is elected President of the United States she would become the 2nd oldest President who ever took the oath of office. History says that it is not going to happen. Will she make history in more ways than one?


California Dreamin'

I love to visit California. I just could not live there.  Unfortunately, that could become a bigger and bigger problem for the state if they continue their liberal, tax policies. Is California the next France?


Interest In Immigration

All the facts you ever wanted to know about immigration in the United States of America. For example, did you know that despite having less than 5% of the world's population, 20% of all international migrants reside in the U.S.?


It's About The Children

In politics it always pays for it to be "about the children." See how the Obama administration used the influx of children over our southern border for crass political purposes.


Songs and Goldfish

See Google's amazing interactive tool that shows the rise and fall of different musical genres since 1950.


A Government That Is Not Spending Any Money On Government, Is Not A Government

77% of federal government expenditures are for payments to individuals and interest on the federal debt. Only 23% is being spent on traditional government functions like defense, roads, education, parks, public health, the post office and the like. Do we even have a government any more or is it just a redistribution system?


Why ISIL, Not ISIS?

Why does President Obama refer to it as ISIL and not ISIS like most everyone else? You will not like the answer.


Everything Is Fine Until It Isn't

We are heading for a date with destiny that is most predictable but which will nonetheless shock the populace and pundits who will marvel at how unpredictable it all was once it actually occurs.


The Shores Of Tripoli

You may think that our country's challenges from the radical Islamists is a rather recent development. You would be wrong.  See how Thomas Jefferson dealt the the problem over 200 years ago.

Tuesday, December 30, 2014

Bias Is Built Into Your Brain

There has been a lot of talk about racial bias in the media lately in the wake of the unfortunate events involving the police in Ferguson, MO and in New York City.  We continue to hear that the police have a racial bias and the "system" is stacked against African-Americans.

Of course, President Obama and the First Lady weighed in recently with their own experiences of racial discrimination bias. President Obama told the story of how he had been mistaken as a car valet while waiting for his own car outside a restaurant. Mrs. Obama told us how, when she was shopping incognito at a Target in Virginia in 2011, a lady asked for her help in taking something down from a high shelf. (By the way, Michelle Obama is 5'11"tall. Was she asked this question because she was black? Or just because she was tall?)

I don't want to diminish any of the feelings of the President or First Lady in these situations. There is no doubt in my mind that they have both had to deal with racial bias in their life. To argue anything else from my perspective as a white male would be ludicrous. I simply have not walked a mile (or a single step) in their shoes.

Bias exists all around us. Bias is built into your brain. We stereotype. We profile. We discriminate. What troubles me is that we seem to be incapable of accepting this fact of life. We can't change the bias in the brain. You can only affect the experience that creates the bias that gets built into your brain.

In fact, let me recount an experience that I had that was not much different than President Obama's valet experience. In the early 1990's I moved to New Jersey from Ohio and I had to get a new driver's license. I left work early one day and found the DMV office near Paramus, NJ. There was a mass of people standing in a variety of lines. As I tried to figure out which line to stand in on ( I quickly found out that in New Jersey that you stand "on line" rather than "in line" as I did in Ohio) I must have looked rather bewildered. As I was looking around trying to get my bearings in the chaos of that state agency office, another rather nervous looking young man came up to me and asked "if I was there for the chauffeur's exam?"

Why would this guy think I was at the DMV for the chauffeur's exam? After I politely told him I was not, I took a closer look at the crowd. Out of the hundred or so people in the DMV that day, he and I were the only two wearing a suit! It didn't matter that I was an attorney, CPA or anything else. He saw a suit and in his experience the most logical conclusion was that if you were wearing a suit I the DMV you wanted to drive someone around for hire. I was a victim of bias at the DMV!

The fact is that we all stereotype because all of our brains use shortcuts to make decisions. It is the way the brain is wired. These shortcut pathways make decision making easier. Our brain is a wondrous thing. A good portion of the calories we burn in a day go to fuel this enormous power plant. Therefore, the brain always tries to make decisions that use the least amount of effort and energy it can. These shortcuts are called heuristics.

It does not mean that the decisions based on these shortcuts are always right. But they have generally served the human species well for the most part because it helped us adapt and survive. We could make quicker and more efficient decisions even if we weren't right all the time.

For example, we learned early on that it was dangerous to go outside the cave at night because a higher percentage did not return as compared to when others left in daylight. We learned to avoid the plant with the funny looking berries. Uncle Abner made that mistake, may he rest in peace. Once we found a "safe" place we tended to stay there despite the fact that had we ventured over the hill we very well may have discovered an even better place.

If you are human you use heuristics, bias and stereotypes every day. If you don't know better you are going to start with a default position as you assess things. For example, if you are looking at a product you are not familiar with and you have two items to choose from, you are going to assume the expensive option is better. If you move to a new city and need to open a bank account, you are going to assume that the bank with 50 branches and the skyscraper downtown is better than the bank with one office. After all, if they got that big they must have done something right.

In both cases, a closer and detailed look may show you are totally wrong, but you will undoubtedly have an initial bias based on prior experience.  Your brain is not going to start from ground zero when there are already paths established previously to rely on. There is bias built into your brain based on your experiences since you were a baby.

Prior to the 1950's, Asians who lived in the United States were stereotyped as cheap, poor, uneducated laborers.  Products from Asia were derided as nothing more than cheap junk. That stereotype no longer exists. It literally has been turned on its head. Our actual experience has shown the prior generalization was wrong. It has been replaced with another stereotype that is also an overly broad generalization.

Today, students in high school and college cringe when they see Asian-Americans entering their classrooms on the first day of class. American businesses have learned some hard lessons from their Asian counterparts.  The old stereotype is gone.  That change did not occur because people just started to think differently one day.  It changed because people were forced to change their thinking because of what they experienced and the behaviors and results they saw from greater and greater numbers of Asians they came in contact with.

Any bias that the police may have in dealing with young, black men is rooted in their brains. It is based on their experiences in their field of duty.  Look no further than the crime statistics if you have any doubts why a police officer might be quicker to draw a gun against a young black man compared to a White or Asian man.

The incidence of arrests for Blacks is over twice what it is for Whites on per capita basis.

Blacks commit almost 5 times as many violent crimes (murder, manslaughter, rape, robbery and aggravated assault) per 1,000 population as Whites according to FBI data based on arrests for violent crimes.

Blacks commit eight times more crimes against Whites than Whites do on Blacks.

Consider what President Obama said about the very grandmother who supported and raised him.

"...my white grandmother – a woman who helped raise me, a woman who sacrificed again and again for me, a woman who loves me as much as she loves anything in this world, but a woman who once confessed her fear of black men who passed by her on the street, and who on more than one occasion has uttered racial or ethnic stereotypes that made me cringe."

Was Madelyn Dunham a racist?  Of course not.  She loved for and cared for Barack Obama when his own mother could not or would not as she pursued her own life. His race did not matter to her, she loved his soul.

Would Madelyn Dunham or Officer Darren Wilson in Ferguson act the same way if most of the young black men they had prior experience with were more like Barack Obama, Eric Holder, Ben Carson, Clarence Thomas, Colin Powell or Col. Alan West?  Of course not.

Discrimination and bias exists against Blacks in the criminal justice system and in their daily lives. It is disingenuous for anyone to deny this. However, when you look at the facts it should also be understandable of why that bias can occur. It is not right, but it is reality.

However, all of the energy of the African American community about this problem seems to be only directed outwards. It seems that it is the fault of everyone else in society. I don't see much energy devoted to looking inward for solutions to the problem.

There will be no change in bias in the system until the systemic problems in the Black community are addressed. Poverty is at the root of the problem but that is largely driven by too many children born out of wedlock, too many high school dropouts and too many drugs and gangbangers on the streets.

Where are the voices talking about the nearly three out of four African American children born out of wedlock? Where are the voices decrying the culture among black youths that seems to glorify drugs and violence? Where are the voices speaking out about the fact that only 54 percent of African Americans are graduating from high school?

Crime is largely a function of poverty and poor home environments.  The absence of a father in the home is a significant factor in this equation.  That is why I think it is especially ironic that there is so much energy being devoted to enabling gay marriages in this country but you hear almost nothing about encouraging African Americans to marry before having a child.

Failure to complete high school is almost a certain path to poverty in this day and age.  We are spending massive amounts of money on welfare and other programs to help the poor but you hear little about the massive failure of young African Americans to graduate from high school.  We are spending enormous sums of money on the symptoms but pay little attention to the underlying disease.

African Americans need to look to the lessons of Asian Americans in this country. Asians in this country have taken a negative bias and turned it into a positive bias within my lifetime. They got the chance and they proved over and over that they were nothing like the stereotype they were being portrayed as.

At one time we were also told that Black athletes could not compete with White athletes. Jesse Owens, Oscar Robertson, Jackie Robinson and Marion Motley were among those who broke the bias. Black athletes got the opportunity, worked hard, excelled on the playing field and all the old stereotypes were gone. .

Unfortunately, too many African Americans protestors are playing righting into the stereotyping that exists when they are chanting "Burn this b##ch down" and "Death to cops".  Rather than improve their situation, they are just burning more bias into more brains.

It is not going to happen by shouting "Burn, Baby, Burn."

It will happen by changing the bias that gets burned into the brain with positive, reinforcing experiences every day and in every way.  I doubt Al Sharpton or Jesse Jackson are the leaders who we need to change the paradigm. Let's hope we find the leader that can do it. Barack Obama, you still have the greatest opportunity to be that person. We can only hope that you will change.

Monday, December 15, 2014

The Shores of Tripoli

You have probably heard the Marine Corps Hymn sung many times. Its first verse is...

From the Halls of Montezuma,To the Shores of Tripoli;
We fight our country's battles In the air, on land and sea;

First to fight for right and freedom And to keep our honor clean;

We are proud to claim the title of United States Marine.

Montezuma refers to the Marines storming into the castle at Chapultepec during the Mexican-American War. This was the same battle that a young Army officer named Ulysses S. Grant distinguished himself in war not long after he graduated from the United States Military Academy.

What about the Shores of Tripoli? What is that about?

Most Americans are unaware that over two hundred years ago we were also dealing with a threat from radical Islam. In fact, President Thomas Jefferson refused to sit back and let the Islamists threaten our interests. He sent our Navy and Marines to confront them and teach then a lesson they would not soon forget. These days it appears that we are not the only ones who have forgotten the history lesson.

Let's go back in time to learn a little history of the United States of America and our previous interactions with Muslim terrorists.

At the end of the eighteenth century, Muslim pirates were terrorizing large swaths of the Mediterranean Sea.

These Barbary Pirates (so named because they hailed from the Muslim nations of Tripoli, Tunis, Morocco and Algiers along the Barbary Coast) attacked every ship in sight and held the crews for exorbitant ransoms. The captured crews were held in barbaric conditions and sent letters home pleading that payments be sent for their release.

Before the United States won its independence Great Britain, and later France, provided protection to the American merchant ships sailing in the Mediterranean. Beginning in 1784 the United States was on its own as France stopped protecting U.S. ships from the Muslim pirates.

The initial strategy of the United States in dealing with the Muslim pirates was one of appeasement similar to what many European countries were doing at the time. It was deemed prudent to pay bribes to the Islamists rather than engaging them in war. After all, we had just finished a long war with the British and no one had much appetite to go to war again.

In July of 1785 two U.S schooners off the Barbary Coast were captured and the crews held for ransom. Other ships were soon also captured and Thomas Jefferson (the U.S. Minister to France) and John Adams (the U.S Minister to Great Britain) were dispatched in an attempt to negotiate with the Muslims.

Jefferson and Adams argued that the United States was not at war with Tripoli, or the other Barbary Coast nations, so in what way had the U.S provoked the Muslims?

This is how Jefferson explained the position of the Muslims in a letter to John Jay shortly after a meeting he had with the Ambassador of Tripoli.

"The Ambassador answered us that it was founded on the Laws of their Prophet, that it was written in their Koran, that all nations who should not have acknowledged their authority were sinners, that it was their right and duty to make war upon them wherever they could be found, and to make slaves of all they could take as Prisoners, and that every Musselman [Muslim] who should be slain in battle was sure to go to Paradise."

Despite this stunning statement about pre-meditated violence against non-Muslim nations, and against the counsel of both George Washington and Jefferson who believed that paying extortion would merely provoke demands for more money, the U.S. Congress agreed to pay "tribute" to the Muslim nations in order to keep the peace.

Over the next 15 years the United States paid the Muslims millions of dollars in bribes to secure safe passage for American ships or the release of American crews that had been captured.

By 1800, when Jefferson was elected President, the total amount of bribes and ransom being paid to the Muslim nations was as high as 20% of the U.S. budget according to some reports I have seen.

In 1801 President Thomas Jefferson was in no mood to continue with the status quo. Shortly after he was sworn in he had received a demand from Tripoli for an immediate payment of $225,000 and a continuing payment of $25,000 per year in perpetuity to keep U.S. ships safe. He refused the demand and made plans to "effect peace through the medium of war". His actions as President seemed to be consistent with what he wrote in a letter in 1786 to the President of Yale College on the best way to deal with the Muslim extortion.

"From what I learn from the temper of my countrymen and their tenaciousness of their money, it will be more easy to raise ships and men to fight these pirates into reason, than money to bribe them."

Tripoli, Tunis, Morocco and Algiers soon declared war on the United States and Jefferson convinced Congress to fund a naval force to confront the Muslims.

The war against the Muslim nations (referred to today as the First Barbary War) lasted four years. The turning point of the war occurred in the Battle of Derna in April-May, 1805. This is how the battle is described in Wikipedia.

Ex-consul William Eaton, a former Army captain who used the title of "general", and US Marine Corps First Lieutenant Presley O'Bannon led a force of eight U.S. Marines, 500 mercenaries—Greeks from Crete, Arabs, and Berbers—on a march across the desert from Alexandria, Egypt to assault and to capture the Tripolitan city of Derna. This was the first time in history the United States flag was raised in victory on foreign soil. The action is memorialized in a line of the Marines' Hymn—"the shores of Tripoli"

Soon after that victory, Tripoli signed a peace treaty but the Barbary pirates once again resumed their attacks when the United States was preoccupied with the War of 1812. At the conclusion of that conflict the United States embarked on a Second Barbary War in 1815 that ended the threat for good for almost two hundred years.

You might also be interested to know that the Barbary Wars against the Muslims also gave rise to the Marines being called "Leathernecks." This is because Marines of that day fighting the Islamists wore a leather neck collar that improved their military bearing by forcing the chin high which also had the added benefit of protecting one's neck from sword blows by Muslim pirates.

As we see reports of ISIS beheadings, attacks on Canada's parliament, hostages behind held in a Sydney cafe and a man running down a NYC street with a hatchet in hand attacking a policeman, we ask what is going on?

We ask why are we seeing these barbaric actions?

We ask what has happened to civilized society?

We are asking the same questions that Thomas Jefferson asked.

Nothing much seems to have changed in 200 years.

"Those that don't know history are doomed to repeat it".
                                                                 -Edmund Burke

You now know history you may not have known before about the Shores of Tripoli.



If you have any doubts about the accuracy of these facts please refer to:

http://en.wikipedia.org/wiki/First_Barbary_War

http://en.wikipedia.org/wiki/Second_Barbary_War

http://www.truthorfiction.com/rumors/j/Jefferson-vs-Muslims.htm#.VJAZUmTF9Q0

http://freedomoutpost.com/2013/05/barbary-wars-how-thomas-jefferson-led-americas-first-war-on-terror/




Tuesday, December 9, 2014

Perception Misconceptions

I used to do some tax lobbying work in Washington, D.C.. Early in my exposure to the world of Washington the head of Government Relations for a Fortune 500 company, who previously had been a top House staffer, told me, "Facts don't matter. Logic doesn't matter. Perception is reality. You always need to remember that in this town".

Perception is reality. It is true in politics. It is true in almost everything else as well.

If the perception is based on real facts, this is not a problem. However, perceptions are often based on misconceptions. This is a problem as studies have shown that 90% of errors in thinking are due to errors in perceptions. The facts are far different than the perception.

Look no further than the events surrounding the shooting of Michael Brown in Ferguson, MO. The perception that the protestors have of that event are far, far different than the facts that came out of the grand jury proceedings. Facts and logic cannot compete with perception and emotion. That is simply the way the human brain operates.

Misalignment between facts and perceptions is also a recipe for bad public policy decisions. If people have the wrong perception they will often gravitate to the wrong policy prescription.

For example, I have little doubt that the increased momentum for gay marriage is driven by a perception that homosexuality is much more common than it is.  I have written about this before in my blog post, Where Is The Bias?

When asked what percentage of the United States population is homosexual, most people estimate 25%.

The actual number is 1%-2% according to most studies.

How can the perception be so far from the facts?  As I wrote before,

I think it derives from the heavy influence of Hollywood and the news. Consider the number of movies and television shows that have gay characters and the disproportionate number of news stories that focus on gay rights, gay marriage or other gay issues.  It is truly a situation where the loudest single person in a room of 50 gets all the attention.  You never even get to hear from the other 49.
It also derives from the inability of most people to use the analytical portion of their brain.  I call it the reflective side of the brain.  On this and many other issues the reflexive side of the brain simply overwhelms logic.  For example, if you really stop and think, do you really think that 1 in every 4 or 5 people you see in a day are gay?  The people you work with?  Your family members?  Your friends? Walk down the street.  1 in every 5?  No way. 
People reach the conclusion they do because of what is called "availability" bias.  In simple terms, we estimate frequencies or numbers based on the ease with which instances come to mind.  If retrieval from the brain is easy and straightforward we tend to judge the numbers in the category to be large. People see and hear a lot of stories about gays and gay rights, therefore, when asked to guess a percentage it is high.

I recently came across an international study involving 14 countries (including the U.S) in which people were asked to estimate basic facts about their population or social issues. This results of this study clearly shows the huge gap we often find between perception and reality.

A few examples from that study about the perceptions that Americans have compared to actual reality. The numbers below are the average guess to the question (perception) compared to the actual fact (reality).

What percentage of girls aged between 15 and 19 give birth each year?

Perception  24%        Reality  3%

What percentage of the population do you think are immigrants in your country?

Perception  32%        Reality  13%

What is the percentage of Muslims in your country?

Perception  15%        Reality  1%

What is the percentage of Christians in your country?

Perception  56%         Reality  78%

What percentage of people are over age 65?

Perception  36%         Reality  14%

What percentage of working people are unemployed and looking for work?

Perception  32%         Reality  6%


As an educated reader of BeeLine you are probably looking at these answers with the same disbelief than I did. How could people be so ignorant and so wrong? How could they be so far off base?

It becomes even more troubling when you consider that all of these people have a vote, just like you and I do. And these perceptions are their reality.

However, the reality is that you really can't blame people for having these perceptions. A lot of these perceptions (as is the same with the percent of gays) are driven by the media, movies and availability bias. How often do we hear about teen births? Immigration reform is constantly in the news. We seem to hear much more about the Koran than the Bible in the media. Social Security. Medicare. Unemployment. We hear about these things often. It is very available and it creates perceptions in people that are not based on facts.

People are not stupid despite what Dr. Jonathan Gruber may think. However, their perceptions and emotions can be manipulated when they get distorted information, biased media reports or facts that lack context.

You also begin to understand some of the misplaced priorities we see in our public policy that are based on false perceptions when you think about it.

Out of the 14 countries surveyed, the United States placed 2nd in the study's "Index of Ignorance". This means that our perceptions are the 2nd furthest from reality. The Italians are the only ones who are further removed from reality than we are. Thank goodness for that!




We cannot begin to solve our problems in this country until we can do a better job of matching perceptions with reality.

That is a big reason that I write BeeLine. The Shortest Route To What You Need To Know.

Keep passing it on.

We need fewer perception misconceptions in this country.


Wednesday, December 3, 2014

The Constitutional Lawyer Who Ignores The Constitution

“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.”

That is the oath of office of the President of the United States.

Article II, Section 3 of the U.S. Constitution states that the President,

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

It is also of note that the powers and duties of Congress are enumerated in Article I of the Constitution before those of the President in Article II.

It seems hard to believe that Barack Obama has even read the Constitution let alone taken an oath to "preserve, protect and defend it" when you view his actions as President. He is also considered by some to be a "Constitutional scholar" if you can believe that.

Consider the "Patient Protection and Affordable Care Act" which he considers his most significant accomplishment as President.

Despite being given a period of time to implement the law that was longer than the time it took the United States to win World War II (from Pearl Harbor to VJ Day), the Obama administration was totally ill-prepared to implement the law. Chaos ensued and one statutory provision after another was ignored, delayed or manipulated to limit public outcry and political blowback.

The Galen Institute counts 24 significant changes have been made to the Obamacare statute by way of administrative action including delaying the individual mandate, the employer-mandate and the small business exchange. Obama also exempted unions from the reinsurance fee (which cost my employer almost $1 million) and provided subsidies to members of Congress and their staffs that the law does not provide.

The President's actions in failing to enforce the immigration laws are well known over the last six years. He has now gone even further in his lawlessness and is attempting to create laws on his own.

The President's rationale is that since the House of Representatives had not acted on the Senate-passed immigration reform bill that he was free to implement his own immigration fix. He further stated that if the House Republicans did not like his executive order they could pass legislation to rescind it.

Where is it in the Constitution that the President passes the law and the Congress has veto power? The President has it exactly backwards.

He later said to a crowd in Chicago, that included some immigration protestors who were heckling him because he hadn't gone even further in his "executive action",

“Now, you’re absolutely right that there have been significant numbers of deportations. That’s true. But what you are not paying attention to is the fact that I just took an action to change the law.”

Unfortunately for President Obama, he does not have any such authority to do these kinds of things under the Constitution.

The constitutional lawyer himself admitted 22 times that he did not have the authority, before he did it anyway.

If you want to review the legal issues underpinning all of this I recommend you read this article by Jan Ting who teaches immigration and tax law at Temple University and was Assistant Commissioner of the U.S. Immigration and Naturalization Service from 1990-1993. He knows something about what the Executive brand can and cannot do on immigration under the Constitution.

President Obama's "Deferred Action" Program for Illegal Aliens is Plainly Unconstitutional

Another troubling aspect of our President is his propensity to take sides on issues in the legal system, such as the Trayvon Martin case ("he could have been my son") or Ferguson, MO, when he should be a neutral party with no interest beyond seeking truth and justice for all.

Where does all of this lead us?

A very dangerous place.

Victor Davis Hanson writes what happens "When the Law Is a Drag".

Regarding Ferguson...

In the Ferguson disaster, the law was the greatest casualty. Civilization cannot long work if youths strong-arm shop owners and take what they want. Or walk down the middle of highways high on illicit drugs. Or attack police officers and seek to grab their weapons. Or fail to obey an officer’s command to halt. Or deliberately give false testimonies to authorities. Or riot, burn, and loot. Or, in the more abstract sense, simply ignore the legal findings of a grand jury; or, in critical legal theory fashion, seek to dismiss the authority of the law because it is not deemed useful to some preconceived theory of social justice. Do that and society crumbles.

Regarding executive actions on illegal immigration...

Nor can a government maintain legitimacy when it presides over lawlessness. The president of the United States on over 20 occasions insisted that it would be illegal, dictatorial, and unconstitutional to contravene federal immigration law — at least when to do so was politically inexpedient. When it was not, he did just that. Now we enter the Orwellian world of a videotaped president repeatedly warning that what he would soon do would be in fact illegal. Has a U.S. president ever so frequently and fervently warned the country about the likes of himself?
What is forgotten about amnesty is that entering the U.S. illegally is not the end, but often the beginning of lawlessness. Out here in rural central California we accept a world where thousands drive without insurance, licenses, and registration. Fleeing the scenes of traffic accidents earns snoozes. There is no such thing as the felony of providing false information on government affidavits or creating made-up Social Security numbers. Selling things without paying taxes and working off the books while on assistance are no longer illegal. The normative culture is lawlessness.

Regarding President Obama...

The fuel of lawlessness is untruth. What amazes about President Obama is not that he occasionally misstates facts — every president has done that — but that he so serially says things that are untrue and yet he must know are so easily exposed as untrue. When the president on over 20 occasions swears he cannot legally grant amnesty and then does so, or when he swears he cannot comment on an ongoing criminal case when he habitually has done just that, or when he insists that Obamacare will not result in higher premiums and deductibles or loss of doctors and health plans when it does precisely that, or when he asserts to the world that a mere demonstration over a video caused an attack on our consulate in Benghazi when he knew that it did not, or when he utters iron-clad red lines, deadlines, and step-over-lines that he knows are mythical or denies he has done just that — when he does all this, then almost everything he asserts must be doubted.


Regarding the "Redistribution of the Law"...

More disturbingly, we have engendered a strange culture of justifiable lawlessness: those who are deemed exploited in some ways are exempt from following the law; those without such victim status are subject even more to it. Executive authorities compensate for their impotence in not enforcing statutes for some by excessively enforcing them on others. 

What it all means...

For this administration, the law is a drag.
Indeed, the problem with the Obama administration is that the government’s own bureaucracies — the IRS, VA, Secret Service, GSA, EPA, Justice and State Departments — have so serially broken their own statutes and lied about their misconduct, that it is now almost impossible to reassure Americans that they, too, cannot do what their own government sees as some sort of birthright.
What separated the United States from a Peru or Nigeria or Mexico or Laos or Russia was the sanctity of the law, or the idea that from the highest elected officials to the least influential citizen, all were obligated to follow, according to their stations, the law. Under Obama, that sacred idea has been eroded. We live in a world of illegal immigration and amnesties, Ferguson mythologies, and alphabet government scandals, presided over by a president who not only does not tell the truth, but also seems to be saying to the public, “I say whatever I want, so get over it.”

All of this from a "Constitutional Lawyer"?

James Madison he is not.