Sunday, July 31, 2016

The Economics of Inequality

There continues to be a lot of talk about income inequality in the United States and around the world. The rich have gotten richer and are receiving a higher share of the country's income and wealth than they did 30 years ago. For example, the share of income of the top 1% went from 8.3% of total income in 1981 to 21.2% in 2014.

This fact is now having a significant impact on our political landscape. It drove many Democrats to Bernie Sanders and it also seems to be driving many working class voters to Donald Trump who has struck a chord with many who believe they have been forgotten in the 21st century economy.

In my view the largest drivers in this economic trend have been the impacts of technology and international competition. Technology has put a premium on education and those with the right skills and education have been able to drive their incomes upwards. Technological advances and increased economic freedom have also affected income equality. People like Bill Gates and Steve Jobs created fantastic new products that increased both productivity and our quality of life. However, the information age spreads money around much differently than the manufacturing age we were in 30 years ago.

Manufacturing spreads income in a much broader swath in an economy. You need to pay a lot of workers to build an automobile. You only need a couple of computer programmers to develop a video game that might sell millions. For example, the Call of Duty: Modern Warfare 3 game that was released in 2011 grossed $1 billion in the first 16 days it was for sale. Instagram's entire company had only 13 employees when it was sold to Facebook for $1 billion.

International competition has also put enormous downward pressure on the incomes of those with fewer skills and lower education levels as this labor pool is now competing with China, India, Mexico and other emerging economies.

Therefore, in relative terms, the demand for unskilled labor has fallen while the demand for skilled and educated workers has increased.  These both have contributed to income inequality.

You can really see the relationship between earnings, education and unemployment rates from this chart from John Mauldin's "Thoughts from the Frontline" newsletter this week.

Another chart that puts the income inequality issue into great context is the one below that was developed by the American Enterprise Institute from U.S.Census Bureau data. Looking at this chart you can see the tremendous impact that demographic factors have on income.

I might add that most demographic factors are choices. You have no control over when, where or to whom you were born but everyone has a lot of life choices along the way such as deciding to graduate from high school, going to college, marriage, children born out of wedlock and the like. These choices are also not fixed over a lifetime and certainly are not fixed from generation to generation.  People have the opportunity in this country to change their situation and station in life.


The first thing you notice in looking at the chart above is those that are in the highest fifth of U.S. households by income have earned that status by working.  In fact, 2.00 is the mean numbers of earners per household in the top quintile. There are a lot of two earner households in that top quintile. By contrast, the lowest quintile only has .42 earners per household.

In addition, only 4.1% of those well-off households have no earners. These are very few people doing nothing but clipping coupons and collecting dividend checks in the top income households.
Top quintile income households are working for it everyday. On the other hand, 62.6% of those in the lowest quintile had no one in the household with any earnings at all. No one is going to get rich on government programs.

78.1% of the high income households are married compared to only 16.9% of the poor. The highest income households usually have two married people working together for shared goals. This also means that there are few single parent families in the top income groups (21.9%) while 83.1% of poor households are headed by a single parent.

It is also no surprise that education stands out as a key demographic factor.  Only 2.1% of the highest earners failed to graduate from high school but 25.1% of the poor failed to get that basic educational attainment despite the fact that a free high school education is available to everyone in the country. On the other hand, 62.2% of the richest Americans have graduated from college.

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

In order to address the issue of income inequality in this country we need to spend more time on trying to pull people up from the bottom than by trying to penalize and push people down from the top.  After all, if you look at the data, it appears that most people at the top got there by doing the right things---getting a good education, working hard, getting married, and avoiding out of wedlock births.

The Brookings Institution has studied this issue and it states that if you want to avoid poverty and join the middle class in the United States, you really need to do just three things.

Complete high school
Work full time
Marry before you have children

If you do all three, your chances of being poor fall from 12% to 2% and your chances of joining the middle class or above rise from 56% to 74%.

We hear a lot about income inequality and income redistribution from the President and other liberals. How often do we hear them talk about these three things? It seems that we should be hearing about individual responsibility in equal measure to income inequality if we are to have any chance to do anything about it.

Sunday, July 24, 2016

Debt and Destiny

The debt of the U.S. federal government debt currently is $19.4 trillion and it continues to rise by the minute.

Debt has doubled in the last eight years as this graph from the Federal Reserve of St. Louis shows.

Who holds all of this debt?

$5.4 trillion of the debt is referred to as intragovernmental debt. These debt holdings result when various government trust funds, revolving funds and special funds lend money to the federal treasury to fund current operations. The remaining $14 trillion is referred to as public debt and is held by individuals, corporations, mutual funds, the Federal Reserve, state and local and foreign governments.

The largest holder of intragovernmental debt holdings is the Social Security Trust Fund which accounts for about half of the total amount. In effect, over the past 30 years Social Security has collected $2.8 trillion of additional taxes over and beyond what it has paid in benefits. These amounts were "lent" to the federal government which used it to pay for everything from food stamps to B-1 bombers. In turn, the Federal Treasury gave a paper IOU to Social Security. The money is gone but the federal government still owes the money and it is time to pay the piper.

Social Security will now need to begin "calling their loans" to the federal government to be able to balance the emerging shortfall between FICA tax collections and benefit payments to retirees. It is expected that the entire $2.8 trillion in "loans" will need be collected between now and 2034.

The chart below shows how quickly those "reserves" are projected to be spent. Of course, the federal government does not have anything to pay the Social Security Trust Fund off with. This money has to come from additional federal taxes or additional borrowings from public holders of the debt.

If this is not sobering enough, another $1.5 trillion is owed to the federal employee and military retiree systems. There are a lot of tax increases in our future! Millennials take note. You will bear the brunt of these taxes during the remainder of your working years. Choose your elected officials wisely.

Source: 2016 OASDI Trustees Report 

Who holds the $14 trillion of public debt?

Here is the breakdown as of 12/31/15.

Foreign interests- $6.2 trillion. Almost half of the total. China is the biggest holder followed by Japan

Federal Reserve- $2.5 trillion

Mutual funds-  $1.2 trillion

State and local govt- $.8 trillion (includes public sector pension plans)

Banks- $.5 billion

Private pension plans- $.4 billion

Insurance companies- $.3 billion

U.S. Savings Bonds- $.2 billion

It is both interesting and troubling to me that $8.7 trillion of $14 trillion of our debt (62%) is in the hands of foreign interests and the Federal Reserve.

Almost all of the Federal Reserve's holdings of debt have occurred in the last eight years as part of its quantitative easing program. Foreign buyers of our debt have been ready buyers of our debt in recent years as the central banks of many countries have resorted to negative interest rates (who thought that I would ever be uttering that phrase) in an attempt to create economic growth.

To provide some perspective on how pervasive negative interest rates have become around the globe, consider this graphic.  In fact, more than one-third of all sovereign debt in the world pays negative interest. Switzerland's 50 year bond recently fell below ZERO! It is incredible and defies all rules of economic logic.

However, the United States is currently benefitting from what is going on in the rest of the world. Even though the yield on the Treasury's 10-year bond is hovering around 1.6% right now, it still is a lot more than zero. Combined with our reputation as a safe haven for money it makes it easy for the United States to find investors that will extend credit to us.

However, what happens when all of this turns? And it will turn at some point.

6,000 years of economic history prove that. Borrowers are being paid less for the risk they take in loaning their money than at any period in human history. It is truly unprecedented. For perspective, look at this graph showing long-bond yields in the U.K. from 1750 to 2014. By the way, the current 10 year yield on the UK government bond is .8% which would put it below the horizontal base line (@1%) on the graph below.

The United States also has an average debt maturity that is shorter than all the major European countries. That means that the United States could find itself facing significant refinancing risk if the current environment changes in addition to the risk it faces of having to bear higher interest costs on the debt.

Our destiny is inextricably tied to our country's debt. And that debt load is inextricably dependent on foreign interests and funny money from the Federal Reserve to keep the economic system working. It all continues to work... until it doesn't.

I don't know when or how it will turn or end. However, we will all be in deep do-do when it does.

Thursday, July 21, 2016

Heading to the End Zone or The End?

Last month I wrote about the risk in being a Republican politician this year in the wake of Donald Trump's triumph as the party's Presidential nominee.

There is no riskier occupation in America today than Republican politician.
Donald Trump has made it "Risky Business" to be a Republican officeholder.
Every Republican politician has to make a high risk decision whether they are on or off the Trump Train. It is a decision fraught with risk to those in office.
The people are sovereign in our system. Their power is absolute  Unfortunately, too many people don't believe it. The simple fact is that politicians have no power unless the people provide it.
Laws that do not have public backing do not survive over the long term. Lawmakers who make laws that people do not support do not stay in office very long. Politicians who do not do the will of the people soon need to find other employment.

Ted Cruz met his moment on Wednesday night at the Republican National Convention. In my opinion, he messed up the moment when the stakes were the highest for him. I don't say this lightly as Ted Cruz was my preferred candidate during the Republican primary season.  Time will only tell if he made the right decision. However, sitting here today I think he will regret what he did.

Woody Hayes, the famous football coach from my alma mater Miami University (yes, he also later coached at another school in Ohio) used to defend his allegiance to the running game over an offensive passing attack by saying,

"When you pass, only three things can happen, and two of them bad."

Woody Hayes
Head Football Coach, Miami University, Oxford, Ohio
"The Cradle of Coaches"

It seems to me that the same kind of thinking could be applied to the decision on whether Cruz should support Trump. There are three possible outcomes and two are bad for Cruz.

If Trump wins, Cruz is going to be a persona non grata with the President of the United States.  In addition, the Republican party he thought he represented will not be the same anymore.

If Trump loses in a close race, Cruz is going to shoulder blame for the loss. GOP voters will very likely point to his failure to support Trump as a contributing factor in a close loss.

Cruz only comes out looking good if Trump gets trounced. That may happen but it does not look like it right now looking at the polls.

Considering all of the above, it seems to me that Cruz "passed" on supporting Trump and he (like Woody Hayes) is looking at two bad scenarios balanced against one positive. I don't like those odds.

What is baffling to me is why Cruz would take the stage and not provide some words of support to Trump's candidacy. I can understand why he might not want to support Trump given the merciless personal attacks on his wife and father. However, why not just stay home like Rubio, Kasich and Bush?

The other problem for Cruz in taking the stage last night and not voicing support for Trump is the fact that Cruz (as did the other 16 candidates) signed a pledge that he would support the Republican nominee. Cruz has tried to build his political brand on being "a man of his word". How does he reconcile the pledge he made at the beginning of the process and what he did last night?

What I don't understand is how easy it would have been for Cruz to navigate between the great speech he gave on constitutional principles and freedom and tying it with Trump.

I would have suggested he say something like this..

You all know that Donald Trump and I had a spirited primary campaign. Wounds from that type of campaign do not heal easily. I think you can understand that it is not easy to get beyond that on a personal level.

However, I have spoken to you tonight how important that our constitutional principles and freedoms are honored and protected.  These are much more important than me or any other person. And the one thing I know for certain is that Hillary Clinton is not the person I want to entrust our Constitution and freedoms to.

I also made a pledge at the beginning of the primary campaign that I would support the Republican nominee. I am a man of my word. Donald Trump is our nominee and he has my support in this election against Hillary Clinton for he is our best hope right now to insure that our constitutional principles and freedoms are protected and preserved.

At the same time, while Donald Trump has my support, and I urge you to support and vote for him as well, I am going to continue to defend freedom and continue to be faithful to our constitution in all that I do. In doing so I also intend to hold anyone to account, including Mr. Trump, should they veer from that path.

If you love our country, and love our children as much as you do, stand, and speak, vote for candidates up and down the ticket who you trust to defend our freedom, and to be faithful to the constitution. More importantly, after you elect those candidates be prepared to stand with me to insure that our constitution is more than an election year prop and it actually stands for something.

In doing so we will unite the party; we will unite the country by standing together for shared values by standing for liberty. God bless each and every one of you, and God bless the United States of America.

Ted Cruz may survive his disastrous GOP convention speech. It may actually be considered a Churchillian moment if Trump proves to be a disaster.

However, if he had framed his message as something closer to what I outlined above, I would feel more confident about his political future.

Woody Hayes won a lot of football games with plays designed to give the Buckeyes "three yards and a cloud of dust." It wasn't flashy but they didn't turnover the ball very often and they were always moving towards the end zone.

It is not clear to me that Ted Cruz had a play last night that will get him to the end zone in politics (the White House). To me, he got sacked and lost a lot of yards in that quest. At worst, last night could prove to be the beginning of the end for Cruz. It would be a pity... but he called the play.

Tuesday, July 19, 2016

Tech Trends

Over the years there have been many enormous advances in technology that have changed the world and the way we live.

The printing press, railroads, the internal combustion engine, automobiles, electricity and the telephone are just a few examples.

We are still in the midst of the technological revolution that defines us today---the internet.

Mary Meeker and Liang Wu of Kleiner, Perkins, Caufield and Byers recently released their 2016 report on Internet Trends.  This has become an annual must-read for me over the last few years. The current report contains 213 PowerPoint slides that provides an overview of what the internet is today and where it is going tomorrow. I suggest viewing the entire slide pack if you have the time.

A few of the more interesting slides in the report with a few comments from yours truly.

52% of smartphone users in the world are in the Asia-Pacific market. North America and Europe (combined) only make up about 20% of the global market.

Google has a 50% share of all internet advertising ($30 billion of a $60 billion market.) Google plus Facebook have a combined 76% share of the internet advertising market.

There still is a major disconnect where consumers are spending their time in media and where advertisers are spending their dollars. Print is still taking a disproportionate share of ad dollars (only 4% of time is now spent by consumers with print media but 16% of ad dollars are still going to this media. There is enormous upside potential for mobile ads which Meeker indicates is a $22 billion opportunity in the U.S. alone.

E-Commerce has grown rapidly but is still only represents 10% of all retail sales. However, that equals over $340 billion in spending over the internet.

Internet retailers are able to grow much faster than has been historically feasible for other brands. Successful internet retailers are achieving $100 million in sales in less than 5 years. By comparsion, it took Nike 14 years, Lululemon 9 years and Under Armour 8 years to reach this level in the pre-internet world.

Facebook is still the digital pathway if you want to reach Millennials. Almost 100% reach with an average monthly usage of over 1,000 minutes! That is over 30 minutes per day on average. No one else is even close.

Photos, visuals and videos are the source of most social platform growth. For example, there are 2 billion photos shared per day just on Facebook properties (Facebook, WhatsApp, Instagram, Facebook Messenger). Snapchat by itself sees about 1.25 billion photos shared per day.

Meeker also looks at what technology is going to do to the auto industry. As GM CEO Mary Barra stated recently,

"We believe the traditional ownership model is being disrupted...we are going to see more change in the next five to ten years than we have seen in the last 50."

To put that statement in perspective consider what has transpired in the global auto industry over the last 50 years or so.

The United States has gone from a 76% global production market share in 1950 to 13% today. The big story for me in this slide is China auto production. China is producing about 3x the number of cars that the United States is today.

However, Meeker sees an opening for the United States to again become the global hub of the auto industry in the future due to its leadership in autonomous driving systems as well as the innovations in ride sharing services such as Uber and Lyft.

Car ownership costs are very high relative to the amount of time they are actually used. Cars are only used about 4% of the average day for most households but the average cost of ownership is $8,500 per year per auto and there are 2.2 cars per household in the U.S.

At the same time, drivers license usage has been declining over time. In 1982, 92% of all those aged 16-44 had a drivers license. Today only 77% of that age group has a license.

Automobiles also require a massive amount of real estate just for parking them when they are not in use. Consider these amazing numbers on parking spaces in Los Angeles County, Californian.

  • 19 million parking spaces in LA County in 2010 (that is an increase of $12MM since 1950).
  • 14% of incorporated land in LA County is dedicated to parking 
  • LA County has about 2 parking spaces for every resident. However, this is actually lower than the total U.S. average where it is estimated there are 4 parking spaces for every person!

If you want to get an idea of where this is going read my blog post from March, 2015, "Fasten Your Seat Belt" where I wrote about where technology (with special emphasis on autos) is taking us.

If you doubt the popularity of ride sharing services like Uber, look at the chart below. There is a reason that Uber has attained the market value it has. The reality is that Uber, or something like it, may end up owning most of the autos in the world. The rest of us will just order one to our door when we need one. That also means a lot of parking lots and garages can be put to other uses.

One last slide shows the dislocations in wealth that the internet has created.

 Look at Netflix compared to Viacom.

You might also have believed that Wal-Mart was a great stock to own as its market cap has tripled in the last 19 years. However, what about Amazon? And remember that online retail is still only 10% of all sales.

Truly incredible.

Wednesday, July 13, 2016

The Trump Ticket?

Who is Trump going to pick for his VP running mate?

That is the question that I have been asked more than any over the last month.

I have delayed writing about it because I have no earthly idea. Donald Trump plays to the beat of his own drummer. It is hard to predict what he will do.

A little over a year ago, just before Trump officially got in the race, I was sitting with a group of friends talking politics and the question arose as to who would be a good running mate for Trump if he won the nomination. (Yes, there were some of us that did not dismiss that idea as completely out of hand).

My answer at that time---Mitt Romney.

I knew that Trump would be a bombastic, bomb thrower and figured the most important thing he would need as a running mate would be someone with stability and stature with voters. I figured Trump would benefit from having a responsible "designated driver" at his right hand to reassure voters.

Trump as CEO and Romney as COO. Trump as Mr. Outside and Romney as Mr. Inside. Two successful business executives who love their country and want to get it back on track by putting their nation ahead of their personal wealth and egos (at least with Romney).

It looked good on paper. That is the only place it looked good. It shows you why I am reluctant to even write about this subject right now.

My other dream running mate for Trump would be Condoleeza Rice. It would not get much better than having a smart, articulate, black woman on the ticket with Trump running against Hillary. She also would bring that "designated driver" credibility in addition to providing much needed foreign policy support for Trump. If Trump were able to convince her to join him on the ticket it would also show that this guy really can put some big deals together when he needs to.

There were reports today that Trump did reach out to Condi for her to consider the VP slot. This is encouraging as it shows that he is really thinking this through. Reports are that she rejected the overtures as I imagine a great deal of others of similar stature have done.

That brings us to the names that we are hearing the most speculation about in the press---Newt Gingrich, Chris Christie, Mike Pence and General Michael Flynn.

Newt would bring a lot to the Trump ticket. He knows Washington. He know how Congress works. He is smart and he has some similar traits with Trump. I think he would be a significant asset to Trump. His downsides are his age--Newt is 73, three years older than Trump---and the considerable amount of political baggage he carries. He also would be much more difficult to manage and control which has to concern the political pros.

Christie jumped on the Trump train right after he got out of the race and was probably Trump's most loyal supporter along the way.  However, I have never sensed there is a particularly close chemistry between the two. I would be surprised if he is the pick but you also have to factor in that Trump has probably known Christie the longest of the four. Another interesting factor with Christie is that he was the prosecutor on the case that put the father of Trump's son-in-law, Jared Kushner, in federal prison a decade ago. Kushner supposedly has a lot of influence with Trump. We may see how far that influence extends here.

Mike Pence is probably the best pick of the four on paper of those that are most prominently mentioned. He has good Washington experience, has Congressional leadership experience, is well-respected in Conservative circles and also has executive experience as Indiana's governor. He clearly is on the list because Paul Manafort (the Washington political operative) must be pushing him. I am not sure that Pence has the media presence or experience to play in the big leagues right now with Trump. I would be nervous about him if I were Trump.  However, if he is selected it will say a lot about the influence of Manafort on the campaign. Pence would be someone that the pros would be confident they could handle and direct. Is Trump listening to the pros?

General Michael Flynn came out of left field as a possible VP candidate last week with a lot of fanfare. He is the type of guy I think Trump would like to align with. First of all, he is a registered Democrat which I think plays to the type of image that Trump is trying to create in the General Election. He does not want to be typecast. He is running on the Republican ticket but he wants to make it feel to the voters that he is running as an Independent. I quite frankly don't think Flynn is ready for prime time based on what I have seen on the Sunday shows. Politics is an art and those who have not been schooled in the art have difficulty on the big stage. The obvious exception is Trump but he has had years on the media stage to refine his craft.

Of these four, I would select Newt. He is smart, tested and knows how the game is played. Like Trump, he is not easily scripted or typecast. However, he is a potential nightmare for someone like Paul Manafort who will try to run a disciplined campaign and will have to spend all of his time just trying to keep Trump on message.

However, my sense is that if Trump is truly running the show he is going to select someone who we have not heard a lot about in all the speculation. Trump loves theatrics and we could very find that all of the names that have been floated are decoys. Trump would undoubtedly like to pull a surprise of sorts. I think it is in his DNA. It also makes for more sustained press coverage when a new face emerges that has not already been profiled on the cable shows and the Sunday paper.

One choice would be Rick Santorum. He has a lot going for him if you were thinking about it from Trump's perspective.

He is only 58 but served two terms as a U.S. Senator and two terms as a U.S. Congressman in addition to running for the Republican nomination for President twice.

He is an economic populist much like Trump. He has long argued for bringing manufacturing back to the U.S. and being a champion for working class voters. He was also one of the few GOP members of Congress in 1993 to vote against NAFTA.

He has solid Conservative credentials as well as a good grasp of foreign policy issues as well as consistently arguing about the need to confront radical Islamic terrorism.

Santorum, although he was opposing Trump for the nomination in 2016, never was on the same debate stage with Trump as he never made it off the undercard debate due to low poll numbers. Therefore, there are no bad video clips of Trump-Santorum exchanges but Rick did endorse Rubio after he dropped out (Bad move, Rick!).

The interesting thing about Trump's pick is not so much the name but what it tells us about Trump's thinking and decision making.

My sense of Trump from all that I have seen and read is that he thinks things through pretty strategically but he trusts his instincts and his gut when the final decision is made.

What will he do here?

Will he follow the advice of his political handlers and select Pence?

Is he willing to roll the dice with Newt who would probably be the favorite with the GOP base voters but would be a harder sell with general election voters?

Does he rely on the familiarity and loyalty of Chris Christie if he doesn't feel good about the other choices?

Will he surprise us all with someone like General Flynn or someone whose name has not been leaked at all?

The Trump Ticket?

Mark me down as stumped.

Tuesday, July 12, 2016

Discouraged After Dallas

"Do not be discouraged..."

 Those were the words of Attorney General Loretta Lynch in the wake of the horrific assassinations of five Dallas police officers.

Attorney General Loretta Lynch
Credit: By United States Department of Justice - Public Domain,

Was she encouraging the peace officers of our nation as they try to deal with the fact that they have become hated pariah and hunted prey from a segment of our society?

After all, she is the chief law enforcement officer in the country.


Her encouragement was for the Black Lives Movement protestors across the county.

“To those who seek to improve our country, through peaceful protest and protected speech, I want you to know that your voice is important. Do not be discouraged by those who would use your lawful actions as a cover for their heinous violence.” 

We have been here before. I have written about it before. The George Zimmerman case. Ferguson, Missouri. I guess I need to write about it again.

We continue to hear that there is an inherent bias by the police and justice system against African-Americans. I agree with that general conclusion.  I have no doubt there is bias if you want to use that word.  If you are black in America there is undoubtedly a greater chance that you will be pulled over in a car.  You will be looked at with greater suspicion in a convenience store.  You will find it harder to get a fair shake in a court room.

It is not right.  However, profiling and stereotyping are fundamental to the way the human brain operates.  It is not fair but that is the way the brain is wired.  We are too quick to jump to conclusions based on past experiences, emotions, events, associations and their consequences.

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. In fact, 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 suddenly 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.

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.

It is more than ironic that the Black Lives Matter crowd is participating in exactly the same kind of bias that they accuse the police of. They are profiling and stereotyping all police officers based on the actions of a few. You could call it Blue Racism.

What is the experience that causes African-Americans to distrust the police? Without question, they clearly get scrutinized more and hassled more by the police.

Why is that?

Look at homicide statistics (all of this data is from most recent Department of Justice Study on "Homicide Trends in the United States"(2011) and you can better understand why the police might take a longer look at a young black male wearing a hoodie than an Asian carrying a physics textbook. This data covers a 30 year period.

  • Blacks are 8x more likely to commit murder than a white person.
  • 90% of homicides are committed by males.
  • 93% of black homicide victims are killed by other blacks.
  • Young black males are 1% of the population but commit 27% of the homicides.

I found one other piece of data in that report was also very troubling if you are a woman.  45% of women are killed by an intimate. For men that number is only 5%. White females are slightly more likely to be killed by an intimate than black females.

If you want to look at the broader context involving all crime statistics here is a comparison of black vs. white crime rates based on normalized population rates.

U.S. Census Bureau and FBI data (2010)

If you are a police officer on patrol what would your experience tell you about when to be extra cautious and when you might be more inclined to use your weapon if you felt endangered? That is only a chart of statistics above. Bear in mind that a police officer is dealing with the reality of those statistics day in and day out on the street. They live it everyday. And hope to live another day.

And this most assuredly is not a white/black issue.  In fact, the DOJ statistics cited above reveal that 2/3 of police killings actually involve an offender and police office of the same race! (p.33)

Why do we keep hearing about a police and a justice system that is unfair to African-Americans?

What no one wants to talk about is why does this bias exist?

These statements are particularly interesting when you look at who is overseeing these systems today at the federal level.

The President of the United States is an African-American. He was also elected on what many believed to be the promise of racial healing. All we seem to have gotten is racial hell. Our President seems to be more interested in dividing us than uniting us.

The Attorney General of the United States is an African-American. Her predecessor  (Eric Holder) was also African-American.

African Americans have been overseeing our nation's law enforcement system for almost eight years. Why all of this talk of institutional bias when you look at who is on top of our governing and justice system today? The same is true in many of the major U.S. cities where African-Americans run city government and/or the police department. Witness Dallas whose police chief is African American. However, it did not prevent five peace officers being murdered.

We are hearing plenty about what the police needs to do to improve the situation.

We are hearing plenty about what whites need to do to improve the situation. For example, here is what Hillary Clinton said in the aftermath of the Dallas police shootings.

"I'm going to be talking to white people -- I think we're the ones who have to have to start listening to the legitimate cries that are coming from our African-American fellow citizens." 

These are both substantive steps that can improve the situation.

However, we hear almost nothing from anyone suggesting that the most substantive thing than can be done can only come from within the African-American community. Real change in bias is only going to come about if the experiences and interactions with and within the community change for the better. To be successful, this only can be done with leaders of that community speaking out, changing the narrative and changing the culture from the inside-out.

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, gangs 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 (or anyone else) 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.

That is why it is so discouraging to see our President and Attorney General (and Hillary Clinton), who could do so much on this issue, choose to play to their political base rather than pointing out all the necessary steps to get us beyond that which divides us.

Attorney General Lynch says, "Do not be discouraged."

I have to tell you,  I am discouraged. I have to think most clear thinking Americans are feeling the same way today.

Sunday, July 10, 2016

Half-Staff Nation

Have you noticed the American flag lately?


It seems that it is increasingly flying at half-staff.

Here are all of the times that President Obama has ordered the flag flown at half-staff over the last 12 months.

Chattanooga attack

Roseburg, Oregon attack

Paris attack

San Bernardino attack

Justice Scalia death

Nancy Reagan death

Belgium attacks

Orlando attack

Dallas attack

That is nine instances in the last year in addition to the half-staff commemorations held each year for Memorial Day and Peace Officers Memorial Day (May 15 each year--It seems that we should have two this year).

Seven or the nine were related to some kind of attack.

Five of the seven attacks were directly caused by some form of Islamic Radical Terrorism.

When you look at this don't you almost have to say to yourself,

"There's something going on."

Of course, that is the same thing that Donald Trump has said more than once for which he has been roundly criticized including in this Washington Post article, "The Four Cryptic Words That Donald Trump Can't Stop Saying".

Look at the flags flying at half-staff, seemingly day in and day out and ask yourself, is Trump saying anything you are not thinking?

There is something going on.

Just look at our flag. It says something.

Note: Many incorrectly refer to the flag as flying at "half-mast". Half-mast is reserved for flags flying aboard a ship. Half-staff is the correct usage for flags ashore.

You can go to to get all official American flag notifications.

Thursday, July 7, 2016

What's Intent Got To Do With It?

"What's Love Got To Do With It?" was Tina Turner's best selling single in her career and her first and only #1 chart song.


The lyrics in the third verse of the song seem especially in tune with Hillary Clinton and the FBI investigation of her use of a personal email server in her role as Secretary of State.

It may seem to you that I'm acting confused
When you're close to me
If I tend to look dazed I've read it someplace
I've got cause to be
There's a name for it
There's a phrase that fits ...

The phrase that stood out to me in FBI Director James Comey's statement on the case was this one,

Although we did not find clear evidence that Secretary Clinton or her colleagues intended to violate laws governing the handling of classified information, there is evidence that they were extremely careless in their handling of very sensitive, highly classified information.

What's intent got to do with Hillary's handling of her email while at State?

It has nothing to do with it and everything to do with at the same time.

Let me explain.

First of all, if you look at the relevant statute that Secretary Clinton was being investigated under, intent has nothing to do with the question of whether there is a violation of the law. 18 U.S.C., Section 793-F states,
"Whoever, being entrusted with...national security documents... through gross negligence permits the same to be removed from its proper place of custody... shall be fined under this title or imprisoned not more than ten years, or both."

There is nothing in the law that says anything about intent. The mere removal of national security documents from their proper place of custody through gross negligence is enough in and by itself to be in violation of the law.

At the same time, FBI Director Comey stated that while they did not find clear evidence Secretary Clinton and her colleagues intended to violate the law they were "extremely careless" in their handling of very sensitive, highly classified information.

How is "gross negligence" defined?

You probably can't find a better way to describe it than being "extremely careless."

If you set up a private server for work emails, send and receive classified information on that system and use the system even when you are traveling in hostile countries, I don't think there is any question that you have been "grossly negligent."

It becomes even more "gross" with her explanation that she set up the personal email server because she did not want to be inconvenienced. She said she did not want to carry two devices. Therefore, based on her own statement, she put her personal convenience ahead of the security of the United States and your family. However, as it turns out, the FBI found that Clinton had multiple devices so her rationale for the whole private email server was a fabrication to begin with.

You also begin to see that "intent" is everything and everywhere you look in this case as far as Hillary Clinton was concerned.

Her specific intent was to shield as much of her communications from the Freedom of Information Act, the press and public scrutiny as she could. That is clearly why she set up the private email server.

Her clear intent was not to turn over all of her work related emails and other documents as required by law. She only did so more than two years after she left office when the private email server was discovered and she was required to do so by subpoena. She did not voluntarily do so.

Even then, she only turned over 30,490 work-related emails to the State Department for the period 2009-2013.  However, she did not turn over 31,830 emails that she deemed "private and personal."
We now know that a number of these were work-related by looking at other sources. However, these "personal emails" were deleted by Hillary with a clear intent to avoid any scrutiny that might result.

We are told that the "private and personal" emails were supposedly limited to matters such as "yoga routines," "family vacations," and "planning Chelsea's wedding." according to Hillary.

Does this seem as strange to you as it does to me?

My personal email volume is a fraction of what my business email volume is.

How is it that when Hillary Clinton was serving as our Secretary of State that she was receiving and sending more personal emails about vacations, yoga routines and weddings than business emails in the course of a normal day?

Who was she working for? What was her first priority?  Her country or herself?

It sounds like her Secretary of State duties were a part-time job if she had that volume of personal emails to send and answer every day compared to work emails.

What is also interesting are the gaps in Hillary's work email traffic that Peter Schweizer reports on in Politico Magazine. For example, one of the important issues that Clinton signed off as Secretary of State (along with several other cabinet secretaries) was the sale of what amounted to 20% of our nation's uranium reserves to the Russian state-owned company Rosatom.

During the same time this transaction was ongoing, millions of dollars of donations were made to the Clinton Foundation by those involved in the transaction. Here is what Schweizer finds curious about Hillary's work emails that she supposedly turned over.

Clinton and senior officials at the State Department received dozens of cables on the subject of Rosatom’s activities around the world, including a hair-raising cable about Russian efforts to dominate the uranium market. As secretary of state, Clinton was a central player in a variety of diplomatic initiatives involving Rosatom officials. But strangely, there is only one email that mentions Rosatom in Clinton’s entire collection, an innocuous email about Rosatom’s activities in Ecuador. To put that into perspective, there are more mentions of LeBron James, yoga and NBC’s Saturday Night Live than the Russian Nuclear Agency in Clinton’s emails deemed “official.”

What was in those 31,830 emails that Hillary intentionally deleted? And why would she be so intent on deleting emails about yoga routines or wedding planning?

It seems clear that Hillary Clinton had all the intent in the world to do one thing and that was to protect herself and her future Presidential prospects to the exclusion of the law, our national security and the rule of law.

What's intent got to do with it?

Nothing and everything.

Intent was not necessary to indict Hillary Clinton. It means nothing under the Espionage Act.

However, if you are looking for intent, it is everywhere you look in this case. Everything that Hillary did in this case was intentional.

And the phrase that fits Hillary?

Not confused.

Not dazed.

Intentionally, willfully, criminally guilty.

She wouldn't be able to hold a security clearance if she was any other person.

This is the next President of the United States?

Tuesday, July 5, 2016

Bigger in the USA

It is seems to be common for those from other countries that visit our country to notice that almost everything is bigger in the United States of America.

For example, consider this article from the website which caters to young foreigners who wish to study, work and intern in the United States.

As an international intern or trainee, you have probably noticed many differences between American culture and that of your home country. One of the biggest differences is that things in the U.S. tend to be a bit larger than in the rest of the world!

The article goes on to document some of the size differences between the United States and the rest of the world.

Soft drink sizes that have increased by 52% over the last 20 years.

U.S. stores are, on average, twice the size of their European counterparts.

The average U.S. grocery store stocks 40,000 unique items, more than twice the 18,000 that European groceries maintain.

The size of American cars compared to foreign models and the higher proportion of trucks and SUV's on the road.

The size of American homes which has seen the average size increase from 1,500 sf to 2,500 sf since 1970.

The United States is also bigger in one other area that is not mentioned in the article that I had not considered until I ran across a research study in The Journal of Female Health Sciences (the breadth of depth of the reading and research that BeeLine does is truly without bounds!).

The size of women's breasts.

The headline of the study is "Scientific Analysis Reveals Major Differences In The Breast Sizes Of Women In Different Countries".  

What really caught my attention was the sub-title, "U.S. women have a significantly larger mean breast volume than women born in other countries."

It is a most revealing and well-researched article encompassed 342,000 individual breast size measurements from 108 different countries. For consistency, only women between the ages of 28-30 were included in the final analysis. The measurement data was supplemented with 3D breast size scanning technology. The place of birth was determinative as to the country which each woman was assigned in the study.

For a numbers guy like me there was a lot of data to discern in the research.

These were the countries with the largest breast sizes based on volumes in milliliters.

Credit: using The Journal of Female Health Sciences data

 These were the countries with the smallest breast sizes.

Credit: using The Journal of Female Health Sciences data

You can view the data for all countries here.

It is quite interesting data when you consider the variation in the mean breast volumes between countries. It is even more stunning when you look at the United States compared to everyone else.

For example, breast size in the U.S. is 15 times that of The Phillipines. In fact, U.S. (Caucasian) breast size is a full 40% larger than 2nd place Canada. U.S. women's breasts are also more than 2.5 times larger than those of women from Germany, Norway or Sweden.

I guess Georg and Yortuk Festrunk the "wild and crazy" Czech brothers on Saturday Night Live in the 1970's (played by Steve Martin and Dan Akyroyd) really knew what they were talking about when wishing to date American girls. (Link to video)

"Two wild and crazy guys."
Saturday Night Live-1978

Lest you believe that breast size in the United States is somehow related to the size of our soft drinks or fast food options, obesity rates do not seem to factor into the numbers based on the research study.

This is the relevant commentary from the report on the correlation between weight and breast size.

A typical woman born in the U.S.A. or Canada has a very large breast volume regardless of her body weight. In many other countries a large cup size is closely associated with a higher than average body weight. 
This association was particularly evident in the United Kingdom and Spain. In the U.S.A. and Canada also sporty and fit women have very large breasts compared to women born in the other countries.
52 % of the U.S. born Caucasian women with BMI 21 – 24 had the factual breast cup size “F” or larger (EU standard). Among the women born in the other countries the largest breast size was very uncommon in this BMI category (<4%).

Left unstated in the research study is any complete answer as to why the United States outstrips the rest of the world in breast sizes.

One reason for the difference is the fact that North American women tend to have different shaped breasts than are seen in the rest of the world. This greatly affects breast volume as the study explains.

In the most countries of the world the average woman has “pear-shaped” breasts. From the practical point of view this means that the breasts rest on the bottom of the bra cup and the breast tissue fills mainly the lower part of the cup. As a direct consequence of this the aperture area and the bra top do not contain breast tissue to any significant extent.
In contrast, a typical U.S. woman has hemisphere-shaped i.e., “round” breasts that fill also the upper part of the bra cup. Consequently, also the aperture area and the bra top are filled with breast tissue.
Read the entire 25 pages of the research study if you are interested in all breast shape categories, nipple position, angle and other breast worthy topics, including why this research is important for the global lingerie industry.

I guess everything really is bigger in the USA.

Well...almost everything.