Thursday, January 30, 2014

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

"No person was ever honored for what he received. 
Honor has been the reward for what he gave."
                                                                                                     -Calvin Coolidge

I was reminded of this quote by Calvin Coolidge as President Obama has attempted to make something of income equality.  Of course, I don't hear anything said about effort inequality, work inequality or capability inequality.

The fact is that different people put different effort and work into different things.  People also have diverse capabilities and talents.  I can barely hammer a nail in straight.  My father-in-law can build anything.  He builds and fixes things at our house and I do his taxes.  We both end up in a better position than we would on our own.

Thomas Sowell wrote about "The Inequality Bogeyman" in his column recently.

If we all had the same capabilities and the same limitations, one individual's limitations would be the same as the limitations of the entire human species.
We are lucky that we are so different, so that the capabilities of many other people can cover our limitations.

Sowell points out that the obsession of the liberal intelligentsia is on the money people receive and almost no attention is paid as to what causes other people to give them that money.  In other words, let's focus more on what people give to society than what they receive. As Coolidge suggested, this is what really matters.

When the intelligentsia discuss such things as the historic fortunes of people like John D. Rockefeller, they usually pay little — if any — attention to what it was that caused so many millions of people to voluntarily turn their individually modest sums of money over to Rockefeller, adding up to his vast fortune.
What Rockefeller did first to earn their money was find ways to bring down the cost of producing and distributing kerosene to a fraction of what it had been before his innovations. This profoundly changed the lives of millions of working people.
Too many discussions of large fortunes attribute them to "greed" — as if wanting a lot of money is enough to cause other people to hand it over to you. It is a childish idea, when you stop and think about it — but who stops and thinks these days?
The transfer of money was a zero-sum process. What increased the wealth of society was Rockefeller's cheap kerosene that added hundreds of hours of light to people's lives annually. 
Edison, Ford, the Wright brothers , and innumerable others also created unprecedented expansions of the lives of ordinary people. The individual fortunes represented a fraction of the wealth created.

Is it any different today?  Are we supposed to begrudge Steve Jobs or Bill Gates and say that they were greedy when they founded Apple and Microsoft? What about Jeff Bezos and Amazon? 
The reality is that each of these men has given much, much more to all of us through their effort and innovation than they ever received. 
No one is forced to buy an iPhone or use PowerPoint or buy a book on Amazon.  The only thing you are forced to buy right now is an Obamacare healthcare policy :).  Therefore, Obama might have a point with regard to the CEO of Anthem or Aetna.
The money and wealth that is in the hands of the rich came from you and me and many others because we saw value in the trade for our own benefit.  
The money itself is not wealth. Otherwise the government could make us all rich just by printing more of it. From the standpoint of a society as a whole, money is just an artificial device to give us incentives to produce real things — goods and services.
Those goods and services are the real "wealth of nations," as Adam Smith titled his treatise on economics in the 18th century.
Even those of us who create goods and services in more mundane ways receive income that may be very important to us, but it is what we create for others, with our widely varying capabilities, that is the real wealth of nations.
This is an important principle to remember as President Obama takes to the airways to try to create division and dissension among us.

It also seems appropriate to close with another quote from Calvin Coolidge that is worth remembering.

"Don't expect to build up the weak by pulling down the strong."

That has been the undoing of many, many economies over the years.

I know it hard to for many young people to believe but we once had an even cooler President than Barack Obama!

Tuesday, January 28, 2014

The State of the Union is Simply and Utterly Depressing

I am not watching President Obama's State of the Union speech tonight.

According to Barack Obama all is well but it could be a whole lot better if 1) Congress would just leave all the decisions to him, 2) have the rich give all their money to him so he can redistribute it and 3) people just need to get with the program and just love Obamacare even if they lost the plan they liked and the doctor they loved.

I thought I would invest the time saved in not watching that fairy tale and present a more realistic (and factual) view of the State of the Union in January, 2014.

  • The labor participation rate is the lowest it has been in 35 years at 62.8%.  

  • There are currently 92 million Americans of working age who are not working.  To put this in perspective, there are just 145 million Americans working in the civilian labor force.

  • Despite the fact that the population of working age Americans has increased by 15 million since 2007, 2 million fewer people are working today than 6 years ago.

  • The unemployment rate for those age 16-24 (of those not in school) is over 16%. 

  • The unemployment rate for black teenagers 16-19 (who are not in school) is 36%.

  • The unemployment rate for black Americans (11.9%) is more than double the white unemployment rate (5.9%) and it is almost triple the Asian rate (4.1%). 

  • Over 3 million students dropped out of high school last year. 

  • An average of only 59% of students in the 50 largest U.S. cities graduate from high school.  

  • There are more than 47 million people on food stamps.  There were 27 million on food stamps in 2008.

  • The hospital and doctor bills of almost 50% of all babies born in the United States last year were paid for by Medicaid.

  • 41% of all babies born in the United States are born out of wedlock.  73% of black children are born out of wedlock.

  • Obamacare was enacted based on the statement that there were 47 million people living in the United States with no health insurance coverage.  The best estimate today is that less than 1/3 of the 2 million (as of 12/31/13) who have enrolled for health coverage on the public exchanges were previously uninsured.  In the meantime, almost 5 million people lost previous private coverage they had in the individual market.  

  • The current U.S federal debt is $17.3 trillion.  This equals over $54,000 for every man, woman and child in the United States.  It is about $120,000 for every working man and woman in the country.

  • Federal debt as a percent of GDP has grown from around 60% of GDP when President Obama took office to 100% of GDP today.

  • A great deal of the debt that has been taken on has been through actions of the Federal Reserve where it has essentially "printed the money".  The Federal Reserve now over $2 trillion of federal debt.  To put this in perspective, all U.S. Savings Bonds only amount to less than $200 billion. Private pension plans hold less than $500 billion.  All mutual funds hold less than $1 trillion.

  • The United States is more unpopular in the Muslim world today than under President Bush according to numerous polls.  For example, 54% of Pakistanis disapproved of U.S. leadership in 2008.  Today that number is 92%.

  • Only 14% of Americans approve of the job Congress is doing.

  • 53% of Americans say that the Obama administration is not competent running the government.

How can I not end my State of the Union blog without a laugh?

This is one of my favorites from Gary Larson's The Far Side.

Any resemblance to events occurring last night is purely coincidental.

Credit: Gary Larson, The Far Side

Monday, January 27, 2014

Mitt, Marcus and the Myth

Climate change chased me indoors this weekend.  I ended up watching two movies-Mitt (the documentary about Mitt Romney's Presidential runs) and Lone Survivor (the Peter Berg movie about Navy Marcus Luttrell and his fellow Navy Seals in combat in Afghanistan).

Watching "Mitt" reinforced my belief once again what a grave error the country made in the 2012 Presidential election.  It is just too bad this documentary did not play before the election.

Mitt Romney is the real deal.  I did not agree with everything he did in the campaign but there is no way you cannot respect the man that he is. Watching the movie you cannot come away without understanding that this is a man who has great self-awareness, intelligence and humility.

A couple things that I found particularly interesting in the film that tell you something about the man.

*Minutes before he is to leave for the first debate with President Obama he is picking up litter he spots on the hotel balcony that his grandchildren had left behind.  There is Romney in his suit and tie cleaning up the place to insure the litter does not blow away when is just about ready to walk out the door to debate "the most powerful man in the world."

*Romney fully understood that a caricature had been developed that he was a "flipping Mormon" and he also understood that there was very little he could do about it.  That is just the way the game is played.  It might not be fair but Romney understood that you just have to deal with what is, not what you want it to be.

*There was very little in the movie that suggested that Romney was "handled" by his handlers.  A lot of that could have been the result of the editing of the film. However, in all of the scenes right before he went on stage for one of the debates there was no last second coaching from anyone but his family.  That tells me something in itself.  Mitt Romney is his own man.

*I thought it was particularly interesting seeing the scene in his hotel room as he came to the conclusion that he had lost to Barack Obama.  He talked about what his concession speech should say.  Should he be completely gracious or should he talk about his concern about the path the country is on?

Romney mentioned in that moment that he believed (as I do) that the country was living on borrowed time.  He stated he thought that there was a very real chance that within the next five years the country would reach a tipping point and go over a cliff because of our tax, spend and borrowing policies.  He was not that blunt on the stage that night in his concession speech nor was he during the campaign (perhaps he should have been).  He was gracious as always but he also left no doubt about his concerns for the future of out country. This is what he said that night in November, 2012.

... I ran for office because I’m concerned about America. This election is over, but our principles endure. I believe that the principles upon which this nation was founded are the only sure guide to a resurgent economy and to renewed greatness.
"Mitt" is worth 90 minutes of your time.  It is on NetFlix.

The second film I saw was Lone Survivor.

It is a hard movie to watch. However, it is also inspiring to know that we have men like Marcus Luttrell, Michael Murphy, Matthew Axelson and Danny Dietz who are willing to commit themselves in such a way for their country and their brothers in arms.

Marcus and these men were all the real deal.

What is most troubling in watching Lone Survivor is seeing the effects of the Rules of Engagement that our soldiers have to observe in this war zone.  I doubt that any nation has ever put so many restrictions and rules on its soldiers in a war zone as we have on our own in Afghanistan.

I understand the delicate balance we are trying to achieve in winning the hearts and minds of the Afghan people while also fighting the Taliban and Al Qaeda.  However, if in doing so we have to continually put our service men and women in excess danger, perhaps we should not be there to begin with.

The Lone Survivor incident occurred under the Bush Administration so don't think this is just a post criticizing President Obama.  There is plenty of blame to go around when it comes to how we have constrained and restrained our combat troops from engaging the enemy to prosecute the war on terror while defending our men and women.

Just as troubling is the tragedy of August, 2011 when 30 American special forces were lost (including 22 Navy Seals of which 20 were from Navy Seal Team VI) when the Chinook helicopter they were being transported in to support other troops under attack, was shot out of the sky by a Taliban RPG.

Restrictive rules of engagement are also at the center of questions about why we lost some much blood and treasure at one time in that incident.  An after-action report by CENTCOM command on the loss of these men is very troubling as reported by

The CENTCOM report indicates that the Task Force Commander declined to strike the Taliban targets with the Apaches or the AC-130 gunship because they couldn’t confirm whether the group of Taliban they were following were carrying weapons. That shows the counterproductive nature of the rules of engagement, Karen Vaughn says:
When the families from the crash were meeting with the Army’s Investigation Team and Naval Officers, a father asked why they didn’t use a drone strike to take out the Taliban. A 3-star Admiral responded, “We are trying to win their hearts and minds.”

Of course, while we are worried about losing the hearts and minds of the Afghans we are literally losing the hearts and minds, and arms and limbs, of our troops. It certainly doesn't seem to be fair trade to me.

The Breitbart story also raises questions about the expectations on the special forces in Afghanistan and the operational tempo these men and women were expected to sustain in the war effort under the Obama Administration.

The CENTCOM report itself notes that in August 2009 the number of monthly objectives was 54. But in August 2011 – the month that the helicopter, "Extortion 17," was shot down – that number had grown to 334 objectives, more than a 600 percent increase in just two years.
The other problem was the increasing use of Afghan locals in these operations in another attempt to win their "hearts and minds."
Another outstanding issue is that Afghan military and police forces are involved in planning every special operations mission, creating a possible problem with operational security.

All of this is interesting in light of the fact that Barack Obama came to office supposedly as a "man of peace".  In fact, he was awarded the Nobel Peace Prize barely nine months after taking office. ( If you want a good laugh go back and read the press release announcing Obama's selection).

This leads me to ask a question.

Were more Americans killed in Afghanistan under the Presidential administration of George W. Bush or Barack Obama?

The answer to this question says a lot about a lot of things.

I doubt that fewer than one in a hundred people on the street could answer this question correctly.

The fact is that nearly three times as many American soldiers have been killed in Afghanistan under Barack Obama as under George W. Bush.

630 men and women lost their lives on the battlefield in Afghanistan under President Bush in eight years.  That is about 79 per year.

1,671 Americans have lost their lives in the last five years under President Obama.  That is an average of over 334 per year.

On a per year basis, more than four times as many have lost their lives in the last five years as they did in the previous eight years.  These numbers do not include another eight Americans who have already been killed in Afghanistan in 2014 so far in January.

In addition, an increasing number of these casualties is the result of Afghan forces who have turned on American soldiers and killed them in inside jobs.

Have you heard much about any of this on the evening news?

Where are the anti-war protestors today that kept calling President Bush a warmonger?

What happened to all the film footage of those caskets being airlifted to Dover (DE) Air Force Base during the Bush Administration?  It seems to have mysteriously disappeared now that President Obama is in office.

Obama may have run for office as a man of peace but his record in office is far removed from his rhetoric.  What is worse is that the gains made during the Bush administration brought relative peace and stability in Iraq.  The American deaths we suffered actually produced something tangible.  We now see those gains have been reversed in Iraq under Obama and in Afghanistan it is difficult to see that we are getting anything for our casualties on the battlefield.

Thankfully we still have men like Mitt and Marcus.  Unfortunately, Barack Obama is more myth than man.  I was reminded of that when viewing "Mitt" when I once again saw the famous exchange between President Obama, Romney and debate moderator Candy Crowley on the subject of Benghazi.  You may recall this was barely a month after the events of that fateful night.

It is now almost a year and a half after those events.  We know for certain that the White House knew Benghazi was a terrorist act almost immediately and yet (obviously for political purposes) they concocted a story that the killing of Ambassador Stevens and the others was a spontaneous act due to a video.  To this day, we still do not know what or where President Obama as the events unfolded that was more important than an attack on a U.S diplomatic mission.  We also know that not one person has been brought to justice for the killings.

Here is what President Obama said in the debate that night about Benghazi along with my comments on what we know today.

Decide for yourself.  Man or myth?

OBAMA: Secretary Clinton has done an extraordinary job. But she works for me. I'm the president and I'm always responsible (Secretary Gates has stated that Obama was no where to be found in the White House that night even though Obama had been informed of the attack), and that's why nobody's more interested in finding out exactly what happened than I do (We still don't know much more today about the true facts of that night than at that time.)
The day after the attack, governor, I stood in the Rose Garden and I told the American people in the world that we are going to find out exactly what happened. That this was an act of terror  (He sent his team out in force over the next ten days to blame a video rather than an act of terror) I also said that we're going to hunt down those who committed this crime ( A year and a half later no one has been brought to justice for the killings).
And then a few days later, I was there greeting the caskets coming into Andrews Air Force Base and grieving with the families (He told the families that it was all the fault of a video rather than an act of terror).
And the suggestion that anybody in my team, whether the Secretary of State, our U.N. Ambassador, anybody on my team would play politics or mislead when we've lost four of our own, governor, is offensive. That's not what we do. That's not what I do as president, that's not what I do as Commander in Chief. (Patently false based on the facts)

Thursday, January 23, 2014

Does Hot and Humid Beat Cold and Hungry?

It seems that a lot of things that I was writing about a year or so ago have gotten the attention of other writers recently.

Women in combat, the labor participation rate and the secrets of the rich are all topics that I covered  a while back that have been picked up by other writers in recent weeks.

I had another deja vu moment last week when I saw this column by Michael Barone in the Washington Examiner asking the question, "Do we face a disastrous century due to global cooling?".

That reminded me of a blog post I wrote almost three years ago, "I'll Take Hot Rather Than Cold Any Day".

Of course, even without seeing Barone's column I probably would have been reminded of my own words about "climate change" as I woke up yesterday to -5F on the thermometer outside on my deck.  If that was not enough, I also heard on the radio yesterday that my hometown of Cincinnati is a mere 6 inches of snow away from breaking the historical annual snowfall record for the city.

It sure doesn't feel like I should be worried about global warming.

Here is what I wrote three years ago on the subject of climate change.

I am not a climatologist or meteorologist. However, I consider myself a practical thinker who makes decision by looking at facts. I have also learned that it is always important to look beyond the "facts".  How are the facts packaged and what is the motivation of the messenger.

Over the years, I have listened to the claims about human created global warming.  Without even spending a lot of time on the science, these claims never seemed to make sense to me.  The planet is known to have warmed and cooled over the years.  Even if the data shows it is warming, how do we know it is caused by man when you look at past history?  We know there was an ice age.  We also know the ice melted.  How did it ice up? How did the ice melt?

I can't help but be a little skeptical when I also see the changing explanations about the climate.  In fact, it does not even seem to be global warming we are worried about any more, it is climate change.  We also heard a few years ago that we would see far less snow because of global warming.  When we got more snow, we were then told this was caused by the warming. 

It is all very confusing for something that is supposed to be so settled in science. I also remember in the late 1970's and 1980's all of the talk from scientists was concern that the planet was cooling.  What happened?  That was only a few short years ago- a speck of time in the history of the earth.

When you consider past history you also quickly realize that God dwarfs anything that man can do.  For example, the year 1816 was considered "The Year Without a Summer" after Mount Tambora erupted and the ash seemed to veil the sky across large swaths of earth.  Crops failed around the world and famine followed.  Riots and political unrest were not far behind.  People tend to get really angry when they are hungry.  How much did the average global temperature fall that year? - only about 1 degree! 

That story has always made me much more concerned about global cooling than warming.  A rise in temperatures is actually beneficial for food production.  It can extend the growing season further north. Cooler temperatures do the exact opposite.  Given a choice there is little doubt where I come down.

That is a nice lead-in to Barone's column where he posits the question of whether we are facing a period of global cooling? What is of interest are recent reports about sharp reductions in sunspot activity.

Is this something to be concerned with?

Historian Geoffrey Parker thinks so. In his book Global Crisis: War, Climate Change & Catstrophe in the Seventeenth Century, Parker recounts the political and demographic disasters that plagued the world in that global cooling century. 

What caused all of this? Climate change. However, it was not global warming, it was global cooling that caused longer and harsher winters and cooler and wetter summers. This resulted in disrupted growing seasons that caused famine, malnutrition, death, disease and fewer births.

What seemed to cause the cooler climate according to scientists?  Lack of sunspot activity.

“The development of telescopes as astronomical instruments after 1609 enabled observers to track the number of sunspots with unprecedented accuracy. They noted a ‘maximum’ between 1612 and 1614, followed by a ‘minimum’ with virtually no spots in 1617 and 1618, and markedly weaker maxima in 1625-26 and 1637-9. And then, although astronomers around the world made observations on over 8,000 days between 1645 and 1715, they saw virtually no sunspots: The grand total of sunspots observed in those 70 years scarcely reached 100, fewer than currently [the book was published in 2013] appear in a single year. This striking evidence of absence suggests a reduction in solar energy received on earth.”

The sun's recent sunspot activity is at its lowest level in 100 years. In fact, some scientists see eerie similarities in the sun's activity to the period right around 1645 when the so-called mini ice age hit.

Again, I am not a climatologist or meterologist.  However, I do know that people like to eat.  Having enough to eat is pretty important for survival.  The simple fact is that a warmer world climate would tend to increase the food supply with longer growing seasons.  A cooler climate will generally shrink the growing seasons and the food supply.

Of course, there are other factors connected to climate change such as water levels, water supplies and the like.  However, on balance, history tells us that colder is generally worse than warmer for life on earth.  

Therefore, still count me as saying that I'll take hot rather than cold any day.

Especially as I gaze at my thermometer outside reading 4F at the moment.

Try me again in August to see if I have changed my mind.  You never know.  I do respond to facts.

Monday, January 20, 2014

Time and Money

Do you want to be rich?

I am going to let you in on a secret on how the richest Americans became wealthy.

You might think that inheritance was the secret formula for most people.

However, the vast majority of rich people became wealthy simply by their work effort.

You have an even better chance of becoming wealthy if you marry someone else that is working full-time and can stay married and avoid divorce.  That way you leverage your resources while also limiting your individual living expenses by sharing household expenses.  However, that is still not the ultimate secret.

I wrote about some of these "secrets" last March in my post, "Income Inequality and Individual Responsibility" where I pointed out that if you simply graduate from high school, work full time and marry before having children your chances of being poor are infinitesimal.

Kevin D. Williamson of National Review Online looks at the issue of rich versus poor and comes to a similar conclusion. Despite the popular narrative, the wealthiest Americans are not living on trust funds that were handed to them along with a silver spoon when they were born.   They got rich by simply working hard for it.  In fact, wealthy households contain on average more than four times as many full-time workers as do poor households.  The fact is that there are not many "idle rich" folks in this country.  There are, however, a lot of "idle poor".

There is a reason that money earned from work accounts for a relatively large share of the holdings of rich Americans: They work more — a lot more. While Census Bureau data document a very large gap in the prevalence of college degrees among the top 20 percent vs. the bottom 20 percent, there is an even larger and more significant gap — 60 percentage points — between full-time employment for householders in the top income group vs. the bottom income group. There is, to be sure, such a thing as the working poor, but the most salient characteristic of poor households is the lack of full-time workers in them. For the bottom income group, there is an average of 0.42 earners per household, with 68.2 percent of householders not working at all, as opposed to 1.97 earners per household and only 13.3 percent not working for the highest income group. 

The highest-income families also got there by being married.

Family matters. Not surprisingly, 78.4 percent of those highest-income families were married couples, as opposed to 17 percent for the lowest-income group. What this all means in brief is that the highest-income families are composed almost exclusively of two-earner households, the overwhelming majority of them married couples. Those who are inclined to see public policy mainly through green eyeshades may sniff at the social conservatives and their quaint worries about marriage, but there is a very strong connection between how we conduct our family lives and our economic outcomes — the very word “economy” derives from the Greek term for household administration, οἰκονομία.

Williamson also found that in rich households inherited wealth constituted a smaller share of their total assets than in middle income and poor households.

Wealth transfers — inheritances and gifts combined — constitute a small part of the holdings of the rich, whether you define “rich” in terms of income or net worth. For the top income quintile, gifts and inheritances amount to 13 percent of household wealth, according to research published by the Bureau of Labor Statistics. For the top wealth quintile, they amount to 16 percent. For the hated “1 percent,” inherited wealth accounts for about 15 percent of holdings. 

And the percentage of wealth passed on from generation to generation among the rich has actually been decreasing for a number of decades.

Contrary to the story the Left likes to tell about economic inequality in the United States, those numbers have gone down over recent decades — by almost half for the wealthiest Americans. Meanwhile, inherited money makes up 43 percent of the wealth of the lowest income group and 31 percent for the second-lowest. In case our would-be class warriors are having trouble running the numbers here, that means that inherited money on net reduces wealth inequality in the United States (measured as a ratio) rather than exacerbating it; eliminating inherited wealth would have approximately twice as much of a negative effect on modest households as on wealthy ones. (emphasis added).

Along with Williamson's article I also came across this interesting infographic on the "Habits of the World's Wealthiest People" that was put together by Nowsourcing.  This work was based on Thomas C. Corley's study of the daily habits of 233 wealthy and 128 poor people.

If you don't believe it takes work to get to the top of the economic ladder just consider the differences in the traits between those that were wealthy and those that were poor.  Almost every one of these traits requires some work or effort on the part of the individual.  It does not necessarily occur naturally in the human condition.

                                                                    Wealthy                    Poor

Maintain a to-do-list                                         81%                        9%
Wake up 3+ hours before work                        44%                        3%
Listen to audio books during commute            63%                        5%
Network 5+ hours or more each month           79%                       16%
Read 30+ minutes or more each day                88%                        2%
Love to read                                                        86%                        26%
Watch 1 hour of less of TV everyday                 63%                         23%
Believe good habits create opportunity             84%                         4%

The reality is that the real secret of the rich is that they make better use of their time if you look at the data above.

A loyal BeeLine reader recently sent me a link to a short book written in 1910 by Arnold Bennett entitled, "How to Live on Twenty-Four Hours a Day" that really drove this point home to me.

It takes about 30 minutes to read the piece but it is a good reminder that time is the most valuable of all commodities.  And nothing has changed with regard to time in the last 100 years.  A lot has changed in the world since then but we still have the same amount of time available to us each day.

Philosophers have explained space. They have not explained time. It is the inexplicable raw material of everything. With it, all is possible; without it, nothing. The supply of time is truly a daily miracle, an affair genuinely astonishing when one examines it. You wake up in the morning, and lo! your purse is magically filled with twenty-four hours of the unmanufactured tissue of the universe of your life! It is yours. It is the most precious of possessions. A highly singular commodity, showered upon you in a manner as singular as the commodity itself!
For remark! No one can take it from you. It is unstealable. And no one receives either more or less than you receive.
Talk about an ideal democracy! In the realm of time there is no aristocracy of wealth, and no aristocracy of intellect. Genius is never rewarded by even an extra hour a day. And there is no punishment. Waste your infinitely precious commodity as much as you will, and the supply will never be withheld from you. No mysterious power will say:—”This man is a fool, if not a knave. He does not deserve time; he shall be cut off at the meter.” It is more certain than consols, and payment of income is not affected by Sundays. Moreover, you cannot draw on the future. Impossible to get into debt! You can only waste the passing moment. You cannot waste to-morrow; it is kept for you. You cannot waste the next hour; it is kept for you.
We never shall have any more time. We have, and we have always had, all the time there is. 

How did the rich get what they have?  The secret really is how they used their time.

They continued going to school instead of standing on a street corner.

They planned a to-do list instead of doing nothing.

They got out of bed and starting doing something rather hitting the snooze button.

They believed that success came from good habits rather than waiting for good luck.

They waited to get married before they had children with someone.

They worked and saved rather than borrowed and spent.

They made conscious choices on how they spent their time and lived their life.

No one gets more or less time than anyone else on this earth.  To be successful you have to use that time wisely.  That is the ultimate secret of success.

It is a lesson that everyone should consider more fully.  And with time, it is never too late for anyone.

The chief beauty about the constant supply of time is that you cannot waste it in advance. The next year, the next day, the next hour are lying ready for you, as perfect, as unspoilt, as if you had never wasted or misapplied a single moment in all your career. Which fact is very gratifying and reassuring. You can turn over a new leaf every hour if you choose. Therefore no object is served in waiting till next week, or even until to-morrow. 

Thursday, January 16, 2014

Myths and Math

I have written a number of times about the labor participation rate over the last three years.  That is the % of Americans working compared to the total working age population (ages 16-64).  The unemployment rate just considers those who are currently seeking work .  

As I have written previously, I am more focused on the labor participation rate than the unemployment rate as a gauge on our economy. The unemployment rate calculation has become too subjective. It only counts those as unemployed if they are actually looking for work. It does not count those who become discouraged and have simply quit looking. It does not count the young slacker who has dropped out of school and is living in his parent's basement playing video games. It does not count the older worker who got laid off at age 59 and "retires" because of no decent job prospects.

In the end, every American is a mouth to feed, clothe and shelter. If there are fewer people pulling the wagon and more people in the wagon, we have a fundamental problem. The money gets spread around in thinner and thinner increments. That is just basic economics.

The labor participation rate in December slumped to a 35-year low of 62.8% last month. The last time we had a lower percentage of working age Americans employed was in 1978. Of course, in 1978 there were many fewer women working outside the home.  

Credit: Zero Hedge

To put the overall labor participation rate in perspective, there are now 92 million Americans of working age who are not working!  In December alone, almost 1 million Americans disappeared from the labor force.  

Credit: ZeroHedge

A number of commentators seem to suggest that the precipitous drop in the labor participation rate is no big deal.  They are quick to offer a number of explanations rather than confront the ugly facts in the charts above.  For example, they cite the aging population, more students in school and fewer men in the workforce compared to years past.

Diane Furchtgott-Roth of the Manhattan Institute debunks all of these myths and more in a column in The Washington Examiner.

Myth 1: The population is aging, so people are retiring earlier

You often hear that labor force participation is declining because older people are retiring. No harm in that, right? But since 2000, the labor force participation rates of workers 55 and older have been rising steadily, and the labor force participation rates of workers between 16 and 54 have been declining. The labor force participation rate of Americans 55 and older has increased by 5 percentage points from 2003 to 2013, and by 2 percentage points since the beginning of the recession in 2007. These men and women have seen increases in labor force participation rates and employment levels.
In fact, unemployment rates for the 55+ age group are lower than any other age group and they have also had the smallest percentage point unemployment rate increase of any age group since 2007.

Myth 2: Kids are in school, so it doesn’t matter

In 2013, 55 percent of 16- to 24-year-olds were participating in the labor force, compared to 62 percent in 2003, a decline of 7 percentage points.
Although this is a substantial decline, a common myth is that since these young people are in school, the change does not matter — because they are getting an education that will get them better jobs in the future. But the percentage of 16- to 24-year olds enrolled in high school, college, or university has risen by only 0.3 percent over the past decade, from 56 percent to 56.3 percent, an insignificant amount. These people are not in school, nor are they working.

Myth 3: It’s just men, part of a long-term trend

Male labor force participation has been declining for decades as they retire earlier and move from heavy manufacturing, with its hours of overtime, to higher-paying 9-to-5 service-sector jobs. But the shrinkage of the labor force over the past 10 years, especially since the recession, has hit both men and women — except for those older than 55.
Since 2007, the labor force participation rate of men 25-54 has gone down by more than two percentage points. For women it is one percentage point. For 16- to 24-year-olds, the rate has declined by five percentage points for men and four percentage points for women.
Here is the bottom line math on all of this since the beginning of the recession in 2007.

6 million more workers 55+ are working today than in 2007. Very few baby boomers are retiring if they have a job.

6 million fewer 25-54 year olds are working today than in 2007. Therefore, canceling out the job growth of the age 55+ group.

2 million fewer 16-24 year olds are working than in 2007.

This all adds up to 2 million fewer working age people working today than in 2007 despite the fact that the population of those of working age has increased by approximately 15 million.

Credit: Tim Wallace via Mike Shedlock

The chart above is from last October but it provides a good picture of what has happened. The red bars are population changes and the blue bars are job changes. This pretty clearly shows that it didn't really matter what age you were over the last six years. There have just not been enough jobs to go around.

The unemployment rate may be down but the number of employed today is much worse than it was over six years ago.  That is the only math that counts.

Monday, January 13, 2014

Hospital Pains and Payers

I came across a report today on the costs of inpatient hospital costs in the United States from the Agency for Healthcare Research and Quality.

This Statistical Brief entitled, "National Inpatient Hospital Costs: The Most Expensive Conditions by Payer, 2011" provides the distribution of inpatient costs by primary payer as well as illustrating which conditions accounted for the largest percentage of each payer's hospital costs.

Who are the payers?  The primary payers are Medicare, Medicaid, private insurance and the uninsured.

What about the costs to provide the care?  The hospital costs represent the hospital's cost to provide the service-not what the hospital is paid for the service.  It also does not include physician fees associated with the hospitalization.

Here are some of the interesting factoids I found in the report.

  • In 2011, inpatient hospital costs totaled $387 billion for nearly 39 million hospital stays.
  • Nearly 2/3 of inpatient hospital costs were for individuals on Medicare ($183 billion) and Medicaid ($60 billion). Private insurance only accounted for 29 percent of hospital costs and only 4 percent for those who were uninsured.

  • The most expensive condition treated in U.S hospitals is septicemia that consumes over $20 billion in hospital costs and in which over 1 million hospitalizations result.  Osteoarthritis is the second most expensive condition followed by complication of devices, implants and grafts.  It is interesting that conditions #1 and #3 often result from previous interventions in the hospital to begin with.
  • Costs relating to liveborn babies is fourth on the list of conditions.  However, this involves almost 4 million discharges compared to 1 million cases of septicemia.
  • The high number of cases and costs for septicemia, osteoarthritis and complication of devices, implants, the result of a huge number of the cases being Medicare-related. These conditions represent three of the top four high cost conditions for Medicare. Congestive heart failure is the fourth.  
  • Liveborn births is ranked #1 in Medicaid costs accounting for 10% of total hospital costs on 1.7 million hospital discharges.  This is almost 50% of total costs for births nationally!!
  • Mood disorders is the fourth-ranked condition in terms of costs for Medicaid.
  • Liveborn costs are also the highest total hospitalization cost for private insurance but it represents only 5% of total private insurance costs.
  • Osteoarthritis and back disorders ranks #2 and #3 in expensive conditions for private insurance. Interestingly, neither of these conditions show up in the Top 20 for Medicaid.  
  • The #1 high cost condition billed to the uninsured are heart attacks and strokes at #3.  This suggests that due to lack of insurance coverage the uninsured neglected preventive care to a greater extent than others with coverage.  At the same time, it is interesting that liveborn costs were #20 on the list of the uninsured.  Could it be that the lack of health insurance is very effective birth control?

What I found interesting in looking at the report was that total inpatient costs billed to uninsured patients totaled only $17 billion for 2011 representing only 4% of total inpatient costs.  And to think that the country went through Obamacare principally because of these "high" hospitals costs that were being transferred to the rest of us?  It truly boggles the mind when you look at the data.

In addition, there are many liberals that believe that the country needs "Medicare for All".  Again, looking at the data, almost 2/3 of inpatient healthcare costs are for individuals on Medicare and Medicaid.  Only 29% of costs are incurred for private insurance.  It almost seems that we are not too far from "Medicare for All" anyway.

Tuesday, January 7, 2014

If You Can't Pull Up, Postpone!

Late in 2012 the United States Marine Corps announced that it was changing the physical fitness test (PFT) requirements for women with an eye to breaking down longstanding barrierd against females for more combat roles.

Over the last several years officials have opened up artillery and tank positions in the Corps that were previously limited for men only.

All of this seems to stem from pressure from the Obama administration and liberal groups to "open up" the military to women in all forms of combat roles.

The PFT entails doing sit ups, a timed 3-mile run as well as pull-ups.  In the past women did not have to do the pull-ups but were required to do what is called a flexed-arm hang.  However, as of January 1, 2014 (in light of the fact that more women were eligible for combat-type role) it was determined that females would also have to do at least 3 pull-ups to meet the minimum requirements.

Over the last year the Marines spent a lot of money on training to get its women in a position to pass this test. For example, it had one of its top female body builders do a training video on how to do the perfect pull up.

Photo Credit: U.S. Marine Corps

How did things "work out"?  More than 50 per cent of women at the Marine Corps' boot camp Parris Island, SC could not do the minimum three pull-ups.

What is the Marine Corps doing about it?

That's easy.  The requirement is being postponed indefinitely.

I have written about the issue of women in combat roles before and this latest announcement by the Marine Corps seems to be a good time to revisit what I had to say about that subject once again. This is from a post I originally authored last year entitled Combat Correctness?

Combat Correctness?
(originally published January 28, 2013)

Has political correctness led us to combat correctness?

That is the question on my mind as I consider the announcement by outgoing Secretary of Defense Leon Panetta to allow women to assume combat roles in the U.S military.

I fully understand the desire to open up more opportunities for women in the military.  It is a fact that serving in combat roles in the military is often necessary in order to advance to the highest ranks.  Therefore, opening up combat roles for women would be very beneficial for the women seeking those promotions.

Credit: Clay Bennett,

However, is it the right decision looking at the military and our country at large? Are we putting the advantages for a few over the effects on the many? Let's consider this question from several perspectives.

From a physical perspective, there are women that are stronger, faster and more athletic than many men.    I don't think many men would want to challenge Brittney Griner to a game of one-on-one basketball, Serena William to a game of tennis or Allyson Felix to a 100-meter dash.  There are overlapping bell curves with respect to the physical abilities of men and women.  Some women will always have better physical abilities than some men. However, most men will enjoy physical advantages over most women.

Physical differences between men and women have been extensively tested by the U.S. military as reported by Joshua Goldstein in his book, War and Gender:  How Gender Shapes the War System and Vice Versa.. A 1982 report of 18-year olds found that men had 72% more upper-body strength, 33% more lean body mass and 28% more aerobic capacity.  Perhaps women might score better today with greater participation in high school sports but men, on average, clearly have superior physical abilities for performance in combat.

The Air Force has tested lifting capacity using 110 pounds for both men and women recruits as this was considered a critical threshold where strength might be required to assist a fallen comrade off the battlefield. 68% of men passed this test compared to only 1% of women.

If there were not significant physcial differences between men and women why are there men's and women's events at the Olympics?  Why is there a WNBA?  Why is there a LPGA in golf?  It is because there is a difference.  What if it is your son who was left on the battlefield because his female comrade could not drag him to safety? Are we going to just ignore these facts in order to push some type of "equal rights" agenda?

There is also a mental perspective.  I think it goes without saying that women are generally constitutionally stronger than men in many respects.  Women live longer, are more resilient and are much more mature in their late teens and early 20's than men, which are the prime ages for military service.  We also have the whole issue of child bearing.  It is not called labor by accident.

As I have written before, women now make up 60% of all recent college graduates.  They have the smarts and discipline to do anything.  They have the courage and dedication to back it up. However, if it was your wife or daughter, how would their mental state deal with the following example posed by Ryan Smith in an op-ed in The Wall Street Journal.  Smith was a Marine infantryman in Iraq.

I served in the 2003 invasion of Iraq as a Marine infantry squad leader. We rode into war crammed in the back of amphibious assault vehicles. They are designed to hold roughly 15 Marines snugly; due to maintenance issues, by the end of the invasion we had as many as 25 men stuffed into the back. Marines were forced to sit, in full gear, on each other's laps and in contorted positions for hours on end. That was the least of our problems.

The invasion was a blitzkrieg. The goal was to move as fast to Baghdad as possible. The column would not stop for a lance corporal, sergeant, lieutenant, or even a company commander to go to the restroom. Sometimes we spent over 48 hours on the move without exiting the vehicles. We were forced to urinate in empty water bottles inches from our comrades.

Many Marines developed dysentery from the complete lack of sanitary conditions. When an uncontrollable urge hit a Marine, he would be forced to stand, as best he could, hold an MRE bag up to his rear, and defecate inches from his seated comrade's face.

During the invasion, we wore chemical protective suits because of the fear of chemical or biological weapon attack. These are equivalent to a ski jumpsuit and hold in the heat. We also had to wear black rubber boots over our desert boots. On the occasions the column did stop, we would quickly peel off our rubber boots, desert boots and socks to let our feet air out.

Due to the heat and sweat, layers of our skin would peel off our feet. However, we rarely had time to remove our suits or perform even the most basic hygiene. We quickly developed sores on our bodies.
When we did reach Baghdad, we were in shambles. We had not showered in well over a month and our chemical protective suits were covered in a mixture of filth and dried blood. We were told to strip and place our suits in pits to be burned immediately. My unit stood there in a walled-in compound in Baghdad, naked, sores dotted all over our bodies, feet peeling, watching our suits burn. Later, they lined us up naked and washed us off with pressure washers.
Yes, a woman is as capable as a man of pulling a trigger. But the goal of our nation's military is to fight and win wars. Before taking the drastic step of allowing women to serve in combat units, has the government considered whether introducing women into the above-described situation would have made my unit more or less combat effective?

Finally, there is the emotional perspective.  We have a culture that has traditionally given women and children special status in our society.  Sure, we can pretend it doesn't exist and ignore thousands of years of history and tradition.  We could even start now and train our soldiers to ignore how they were raised.  Tell them that is doesn't matter whether Jessica or Jeff is captured.  They are both soldiers.  Forget everything you learned growing up.  Jessica will be able to handle herself with her male captors just as well as Jeff.  Forget those old stories of soldiers raping and pillaging. 

Oh, maybe there are other things that we need to worry about with Jessica that we don't have to with Jeff?

There is also the basic biology involved between young men and women.  It is already a huge problem in the military but one that you don't hear a lot about.  When you put men and women together stuff happens.  And it already is happening a lot in the military as it is. For example, just over ten percent of women in the military said in 2008 that they'd had an unintended pregnancy in the last year according to this Reuters story..  That number is significantly higher than in the general public.

The U.S. Navy seems to have had an ongoing problem with pregnancies in maintaining their force readiness.  As much as 34% of the billets of shore commands are "manned" by pregnant sailors who are not available for sea duty.  This causes problems both at sea and on the shore as the Navy must adjust assignments and staffing to deal with pregnancies of which almost 3/4 are unplanned.

Finally, where does all of this lead us if at some point the draft is reinstituted?  It is easy to look at all of this in the context of the all-volunteer military today and say that if a woman wants to volunteer, and is qualified for combat duty, why should she be denied that opportunity?

However, are we comfortable with drafting women for these roles?  I don't know when or why but we will undoubtedly come to a point at some time in the future that a military service draft will become necessary. What then?  If anyone is arguing that women are fit for combat they better be prepared to subject them to the draft as well.  Decisions like this need to be thought through to their logical conclusion.  Are we prepared for this?  If we are not, we have no business even considering women in combat roles.

I can already see the lawsuits in our future when the young man is drafted for combat duty but the young woman is not.  I can also see a lot of pregnancies to avoid the draft or service.  Think not?  I saw it all during the Vietnam War.  There were marriage deferments.  Then there were student deferments.  Finally, when they could not raise the forces that were needed, we had a lottery and the deferments ended.  That led to a lot of young men volunteering for the Reserves in order to stay stateside.

I know I have posed more questions than answers.  They are tough questions that require even tougher answers.

What I do know is that this type of policy change should not be instituted by the President of the United States, the Department of Defense or the Joint Chiefs of Staff by fiat.  If we are going to change the rules on women in combat we need a real conversation in the country on this subject and that debate needs to extend to our duly elected representatives who should vote on this policy.  

It is one thing to say that women can do these roles effectively.  It is another question altogether whether we as a country want this for our wives, daughters and girlfriends. 

Gallup survey last week found that 74% of adults stated that they would "vote for a law allowing women to serve in combat".  It is probably not surprising that the number is that high when almost anyone's first reaction should be for equality of opportunity in this country.  However, let's put all of the questions I have posed out there and have a national conversation and debate before we decide.

If you need further perspective, I suggest that you read these commentaries from women who have served on or near the frontlines in Iraq and Afghanistan here and here.  They have been there and done that and do not think it is the right thing to do.

As for me, count me in the 26% for now that thinks this is a bad idea.  I am open-minded but I am going to have to be convinced that this change is not being driven by political or combat correctness, but is in the best interests of the United States of America.  

This cannot be about individuals, this needs to be about the common defense and common good.  Will women in combat roles upgrade our overall capabilities and culture or will it degrade it?  Let the debate inform us all.

Thursday, January 2, 2014

Toil, Training and Talent

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

Matthew Syed, the author of Bounce, believes he has the answer to the science of success.

I read Bounce over the holidays and it is worthwhile to consider Syed's conclusions as we each look to the New Year and consider our resolutions for the next 12 months.

Syed knows something about success. He was the top-ranked table tennis player in the UK and is a two-time Olympian as well as a graduate of Oxford University.  You might say that he is a talented young man.  Syed would say to you that talent is not what you think it is.

What most people call talent is really just hard work.  It is about toiling and training for long hours. Practice, practice, practice. Nothing more.

Extensive studies have shown that the difference between an expert and you is nothing more than a life-long persistence of deliberate effort and purposeful practice to improve performance. Specifically, about 10,000 hours of practice.

Hogwash, is what you are probably saying. You are saying that you know you are not a natural athlete or a natural musician. Perhaps that was true the first time you tried something.  However, most of those observations are based on a few weeks of half-hearted effort.  The only thing you have proven is that you lack the desire and motivation to be good and to undertake the effort and purposeful practice that would bring you success.

What the research says is that the only talent difference between you and that person on the stage or on the court today is that they persevered and you did not. You too easily accepted the fact that you did not have the talent. Those that find success have an entirely different mindset that fosters growth in their "talents" that eventually is realized if they work at it long enough.

One of the landmark studies on the causes of outstanding performance was conducted by Anders Ericsson, a psychologist at Florida State University.  Ericsson studied young violinists at the renowned Music Academy of West Berlin in Germany.  He looked at three groups-the truly outstanding students who were expected to be world class international soloists, a second group of those who were considered extremely good and were expected to one day be in members of the world's top orchestras, and a final group of the least able students who would most likely end up as music teachers.

Ericsson found that the biographical similarities of the three groups was almost identical. They had all started playing at about the same time, had been taught by similar teachers and had similar musical backgrounds with other instruments beyond the violin.

There was only one real distinct difference-the number of hours they devoted to serious practice. The best violinists had practiced an average of 10,000 hours by the time they reached age 20.  That was 2,000 hours more than the next group and 6,000 hours more than the group destined to be music teachers.

What's more, Ericsson found no exceptions to this pattern.  Nobody in the top group got to the elite level without hours and hours of practice and nobody who had worked their tails off failed to excel.

I found the story of Laszlo Polgar even more compelling in Syed's book. Polgar is a Hungarian educational psychologist and was one the earliest advocates of the practice theory of expertise.  He believes that children have extraordinary potential and it is society's role to unlock it. In his younger years he spent an enormous amount of time trying to convince government and educational officials about his theories and urging them to adopt his ideas to little success.

He finally decided the only way he could prove his ideas was to get married and use his own children in an audacious experiment.  He set out to find a wife while also explaining to his potential mates about his plan to produce children with world-class abilities.  As you would expect, most females ran the other way. However, a young woman named Klara found his arguments and his charm irresistible. They married in 1967 and exactly two years later Klara gave birth to their first daughter, Susan.

Polgar spent long hours thinking about the specific area in which Susan would be directed to achieve world-class success.  After much thought and contemplation he decided that chess made the most sense due to its objective rating system.  Polgar did not want to take a chance on something like art or music where Susan's abilities might be judged in more subjective ways.

Polgar was only a hobby player and Klara did not play chess at all. However, he introduced Susan to the game at home and schooled her in the basics of play taking care to never force it on her and making sure it was always fun.  Susan quickly became enamored with the game and by her fifth birthday, she had spent hours of dedicated practice at the chessboard. She soon was winning local competitions against girls twice her age.

About the same time Laszlo and Klara had a second daughter, Sofia, and a third daughter, Judit, was born two years later.  Seeing their older sister playing chess so studiously only made the two younger sisters even more eager to play chess themselves.  However, Laszlo did not start the younger sisters playing the game until they were five.

Each of the girls enjoyed playing and practicing chess.  By their teen years they had all accumulated well over ten thousand hours of specialized practice.

Did they become world-class experts?

Susan won the world chess title for girls sixteen and under at age 12. By age 14 she was the top-rated female player in the world. At age 22 she became the first woman player in history to become a grandmaster and she won four World Championships before she retired from competition.

Sofia won the world girl's chess championship for girls 14 and under at age 12.  In one tournament in Rome at the height of her career she defeated eight of the greatest male players in one week in a performance that has been rated as the fifth greatest, by man or woman, in history.

Judit ended up being the best of the three sisters.  She became the younger grandmaster-male of female- in history at age 15.  Over the course of her career she has victories over every top player in the world and has been the top-rated female for well over a decade.  She is considered the greatest female chess player of all time.

The Polgar Sisters
Photo Credit: Susan Polgar

Despite the fact that Polgar publicly stated that he would have children who were world-beaters (before they were even born) due to his practice theory of expertise, many still think that all of their success had something to do with their genes or was just pure luck.  Polgar states his children were not prodigies, they were merely the products of purposeful practice.

This is a good lesson to keep in mind as we begin the new year.

We all have extraordinary abilities and gifts. Innate talent is very highly overrated.  Hard work and training are very highly underrated.

Success is within reach for almost everyone if you are willing to put forth the dedication and effort and are willing to stretch yourself, and even fail, in the quest to better yourself.

It really comes down to this quote by Henry Ford who knew something about success and hard work.

"Whether you think you can, or think you can't---you're right".  

What all this says to me is that aptitude is really a function of attitude first and foremost.

I am going to remember this lesson even more because of Syed's book in the new year.  Oh, what a world we would have if everyone did the same.  How is that for an audacious wish for 2014?