Friday, November 29, 2024

This and That---November 29. 2024 Edition

A few random observations, charts and factoids to provide some context on what is going on in the world.

It Was A Very Good Year

1946 marked the year after the end of World World War II.

It also was the beginning of what became known as the Baby Boom era when births exploded as men returned home from the war and started families.


Credit: https://www.calculatedriskblog.com/2024/04/us-births-decreased-in-2023.html#google_vignette



1946 also ended up being the birth year of three U.S. Presidents.

Bill Clinton, George W. Bush and Donald Trump were all born in 1946.

These three were also all born within three months of each other that summer.

Trump in June, Bush in July and Clinton in August.

All of this also led to this interesting factoid involving Presidential history.




Barack Obama was also a Baby Boomer President (1961). Kamala Harris was also born in the last year of the Baby Boomer period in 1964.

Joe Biden was actually born before the Baby Boom period in 1942 and will be 82 years old tomorrow.



Times Are Changing

I remain astounded by the amount of support I am seeing for Donald Trump by 18-29 year old voters in surveys taken after the election.

This age group has traditionally supported Democrats by large margins.

In a recent blog post I cited a YouGov poll that showed that Trump had a net favorability score of +19 ( 57%-38%) with the 18-29 age group.

That was better than any other age group.

A recent CBS poll reinforces that finding by showing that 65% of U.S. adults under age 30 approve of the way Trump is handling the Presidential transition---a +30 net score.

This is even more interesting in that Trump lost the 18-29 age group in 2024 exit polls by 12 points.

Notice the stark difference in how Trump is viewed between young and older adults in the CBS poll.

Only 52% of adults age 65+ approve of Trump's transition plans (a +4 net score) compared to the +30 net score with young voters.


Source: https://www.scribd.com/document/796265728/cbsnews-20241124-SUN

How do you explain this?

One possible explanation is that older voters are forming opinions based on the reporting of legacy news media outlets like the networks, CNN, MSNBC, etc. and younger voters are seeing more balanced opinions on alternative media sites.

It is also interesting that Trump lost the 18-29 age group by 12 points to Kamala Harris but among first-time voters Trump prevailed by 55%-44%.

Source: https://www.cnn.com/election/2024/exit-polls/national-results/general/president/0



In Texas, Trump had a 56 point advantage with first-time voters in a state that he won by 13 points,.



In Pennsylvania, Trump had a 9 point margin where he won by less than 2 points.




Times will really change if these young voters who support Trump end up becoming Republican voters in the future.


Home Sales

The median age of all homebuyers has risen to 56!

That means that over half of all homebuyers are Baby Boomers.

The median age for all homebuyers was 31 in 1980---it is 25 years older today.

The median age of first-time buyers is now 38 years old..

Credit: https://x.com/Shabanomics/status/1860023882633400702


A big reason for the increasing ages of homebuyers is the fact that home prices have risen so dramatically in recent years.

However, the rise in home prices has been much higher with entry-level homes than it has with high-end homes.

In fact, entry-level home prices have risen at a rate that is 63% above the rate for high-end homes.

This has been devastating for younger, first-time buyers.


Credit: https://x.com/texasrunnerDFW/status/1859946746417168725

 
The observation below on X says where things now stand on home buying.

The ability to buy a house used to be determined by income.

A general rule of thumb was that you could afford to buy a home valued at 2 or 3 times your income.

West Virginia is the only state that seems possible today (2.9 home price to income ratio).

It is 9.1 in Hawaii and 8.4 in California.

It seems to now be determined by wealth.

Credit: https://x.com/texasrunnerDFW/status/1861212308640301263


How Safe Is A Tesla?

Tesla prides itself on having engineered "the safest cars in the world".

This excerpt is from the Tesla Safety Report section of the company's website.

Source: https://www.tesla.com/VehicleSafetyReport


All of the above may be true but a recent report by iSeeCars based on data from the Insurance Institute for Highway Safety (IIHS) found that Tesla actually had the highest fatal accident rate of all vehicle brands.

Source: https://www.iseecars.com/most-dangerous-cars-study#v=2024


This comment from the report speaks volumes.

"A vehicle’s size, weight, and height certainly play a part in its ability to protect passengers in a crash,” said Brauer. “But the biggest contributor to occupant safety is avoiding a crash, and the biggest factor in crash avoidance is driver behavior. A focused, alert driver, traveling at a legal or prudent speed, without being under the influence of drugs or alcohol, is the most likely to arrive safely regardless of the vehicle they’re driving.”

In other words, you can have the best engineering vehicle in the world but if you do not have a prudent driver behind the wheel it does not matter.

Over reliance on Tesla's self-driving capabilities may be a factor in all of this.


One Generation Away

Ronald Reagan used to say that freedom was never more than one generation away from extinction.


The same is often said about religion.

If you want to see a real life example that confirms the validity of that statement take a look at this map of Germany.

That yellow line down the middle shows the former boundaries of East and West Germany.

Decades after the country was reunited there is very little religion practiced in East Germany.

Of course, the Communists of East Germany subverted any religion for almost four decades after World War II before the country was reunified in 1990.

The opposite is true in what used to be West Germany. 



One generation away.


Wednesday, November 27, 2024

Much To Be Thankful For In 2024

We are just beyond an election in which the United States could have gone on wildly divergent paths.

A good number of Americans did not even understand how big the choice was because one candidate spent the entirety of the campaign hiding who she really was and what she truly believed.

There is little doubt that Kamala Harris holds many socialist principles close to her heart.

There is ample evidence of that on the record even though she avoided talking about it while attempting to be win the election.

It continues to befuddle me as to why so many Democrats want the United States to be like Europe where socialist progressive policies have taken root in society in such a way that most of the continent is being strangled by the insanity.

They are taxing their people to death.

They are arresting people for speaking out against wokeism.

They are letting their cultures be overrun by uncontrolled immigration from third world countries.

Their industries are dying due to masses of bureaucracy and red tape.

Their economies are struggling due to the pursuit of impractical Green energy policies.

The fertility rates are so low among their native populations that many countries will be unrecognizable even if they stopped all immigration right now.

They have turned away from God and their Judeo-Christian heritage such that the moral and ethical boundaries that governed these societies for centuries will inevitably be erased and replaced with Sharia law.

Many look at all of this and shrug it off by saying "It can't happen here."

Europe is living proof that it doesn't take much socialism and progressivism to start you down a very slippery slope.

The graphic below drives all of this home on this Thanksgiving week.

Mississippi is the poorest state in the United States.

However, did you realize that the inhabitants of that state are better off on average than most counties in Europe and in Japan?


Credit: https://x.com/PatrickRuffini/status/1859761074570133697

Europe as a whole ($35,030) has average GDP per capita that is 32% lower than Mississippi and 57% lower than the United States average.

There is one other disconcerting fact in that graphic.

Notice the GDP of Washington, D.C. in relation to the U.S. average.

It has over three times the wealth of the U.S average.

Washington, DC has no manufacturing base. It does not grow crops. It has no oil wells or coal mines. It does not produce computer chips or other high tech items. It produces almost nothing that creates value in a traditional economy. Yet, it has the highest average Gross Domestic Product per capita in the country?

 Does this suggest that something might be amiss in our country?

Washington is nothing but a gigantic redistribution machine. Money comes in one end from one group of people and it goes out the other end to another group of people. Requests from special interests come in from one end and favors and advantages go out the other end. 

Money and wealth have been created in Washington because of the bureaucracy to run that machine and all of the politicians, lobbyists, lawyers and special interest groups working to get "their share" of money and advantages coming out of the other end. 

Kamala Harris and the Democrats wanted to make Washington D.C. even bigger and more powerful by collecting and distributing even more money.

VP candidate Tim Walz called these progressive values as just being a good neighbor.

Of course, he failed to mention that it also means you have to take money from other neighbors to be a good neighbor to that special neighbor you really like.

In recognition of  Thanksgiving, I thought it was a good time to republish a blog post I first wrote over a decade ago about the history of the Pilgrims and their experiment with socialist ideals.

The Pilgrims came to America with an agreement that they would function as what we would refer to today as a "socialist commune". What they each produced individually was put into a common warehouse from which each family then took out their individual needs as determined by the Governor.

They were all going to be good neighbors to each other.

They landed in America in December, 1620 and the first Thanksgiving was held in 1621.

The Pilgrims had experienced an enormously challenging first year in the New World after landing at Plymouth Rock a year earlier.

In their first two months, half of the Pilgrims died during the harsh winter.

Their first year of farming (1621) was disappointing. Those that remained after that first year were just thankful to be alive at that first Thanksgiving.

The following year (1622) was not much better. There was stealing and hoarding among the ranks because the harvest was still meager.

As you might expect, while everyone took what they needed, many did not do their fair share of work.

Entering 1623, the leaders of the Pilgrims knew that the status quo would no longer suffice

It was clear entering 1623 that changes had to made if the Pilgrims were going to survive and prosper.

The full story of how they survived and prospered in the New World follows below.

SPOILER ALERT---They did not double down on socialism. They turned to a system based on private property rights, individual initiative and free enterprise---capitalism.

Why do we have to keep learning the same lessons over and over when history is so clear about what works and what doesn't for a society to prosper?


Pilgrims, Prosperity And Poverty

(originally published November 28, 2013)

I am thankful for many things.  My family. My friends. My job. I could go on and on. The list is very long.

I am most thankful I was born in the United States of America.  A country founded on the concept of individual rights and freedom.  A country that has embraced the idea of economic freedom, property rights, and capitalism.

Of course, I was born at a different time than where we seem to be today in our attitudes about some of these ideals. Will our young people be as thankful as I am about their country of birth?  I certainly hope so.  However, it amazes me how we fail to accept the reality of the failings and foibles of the human condition throughout history. As a result, the same mistakes and missteps plague us no matter how many times the history lesson is taught.

Look no further than Venezuela.  What was once the one of the most prosperous South American countries now languishes under a socialist regime despite rich natural resources.  Communist North Korea can't feed its own people while South Korea is giving a tablet computer to every school child. 

Taiwan flourished in freedom while Red China floundered for decades before it embraced capitalist-based economic reforms. The same was true for East and West Germany.  In all of these cases there was no difference in the people.  They were literally blood brothers and sisters.  It was the governmental system and philosophy that made the difference between prosperity and poverty for the nation's people.

Speaking of history, let's revisit the story of the Pilgrims and the origins of Thanksgiving Day. The story as I learned it in school was about a group of rugged individuals who set sail on The Mayflower in 1620 seeking religious freedom in America.  They encountered many hardships that first year but thanks to help from Indians and the Grace of God (I am sure this is no longer mentioned in the textbooks) they reaped a bountiful harvest in the following year and gave thanksgiving with a giant feast.

The First Thanksgiving At Plymouth, Jennie Augusta Brownscombe


The real story is much more enlightening.  It also shows that there is absolutely no question about which system works best to provide the most prosperity for the most people while limiting poverty.  There should be no debate. There is absolutely no question.  It has been shown to be true over and over again. However, over and over, we see those who think there is a better, more humane, way to best provide for people in a society.

The real story of the Pilgrims was written by William Bradford who was the leader of the Plymouth Colony from 1621-1657.  He wrote "Of Plymouth Plantation" to chronicle the story of the Pilgrims and it is recognized today as the most complete authoritative source on the subject.



One of the best summaries I have read about the Pilgrim story was written by Dr. Judd W. Patton, "The Pilgrim Story: Vital Insights And Lessons For Today".

Let's start at the beginning.  When the Pilgrims decided to go to America they had a problem not uncommon to many of us. They did not have enough money. They lacked the funds to sail to America, equip and establish their colony.  As a result, they got financial help from some investors who financed New World adventures in return for a share of what the colonists made through farming, fishing, trade and other working endeavors.

The contract between the Adventurers (Investors) and the Pilgrims consisted of ten points. The most critical of which stated, “That all such persons as are of this colony are to have their meat, drink, apparel, and all provisions out of the common stock and goods of the said colony.” 
Today we would call this a socialist commune. In other words, the Pilgrims accepted the socialist principle, “from each according to his ability, to each according to his need.” Each person was to place his production into the common warehouse and receive back, through the Governor, only what he needed for himself or his family. The surplus after seven years was to be divided equally, along with the houses, lands, and chattels, “betwixt the Adventurers and Planters.” 

The first year after they set sail for America was particularly difficult.  The voyage itself took sixty-six days. They landed first on Cape Cod even though they had intended to reach the mouth of the Hudson River.  They spent another month sailing the coast of Cape Cod until they finally decided to settle in Plymouth at the site of an old Indian village on December 21, 1620.

Within two months, half of their numbers died. Of the 24 families who had set sail, only four were untouched by death that first year.  Four other families were wiped out completely.  Those that made it to that first Thanksgiving were thankful.  However, it wasn't necessarily because of a bountiful harvest. They were just happy to have survived.

Contrary to legend the harvests were extremely poor in 1621 and 1622. It was normal to be hungry. Governor Bradford referred to 1621 as the “the small harvest” year.  Yet he notes that in “the summer there was no want.” Thankful for what God had given them, Governor Bradford declared a three-day feast for the purpose of prayer and celebration. We all know it as the first New England Thanksgiving – apparently observed in late summer.

Things were marginally better in 1622. The harvest was a little better but many Pilgrims held back and did not work as hard as others.  There was stealing and hoarding. Bradford and the other Pilgrim leaders recognized that this would continue unless they changed the system.  What could they do to prevent another poor harvest?

This is how Governor Bradford tells it in "Of Plymouth Plantation".

“So they began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still languish in misery. At length, after much debate of things, the Governor (with the advice of the chiefest amongst them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves; in all other things to go on in the general way as before. And so assigned to every family a parcel of land…This had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise…The women now went willingly into the field, and took the little ones with them to set corn; which before would allege weakness and inability; whom to have compelled would have been thought great tyranny and oppression.”

The socialist system was discarded and replaced with a system that was built on individual property rights and that put the trust in individual initiative to take care of the common good of the colony.

How did that work out?

In 1621, the Pilgrims planted only 26 acres. Sixty acres were planted in 1622.  But in 1623, spurred on by individual enterprise, 184 acres were planted!  Somehow those who alleged weakness and inability became healthy and strong. It’s amazing what incentive will do to improve bad attitudes!

However, the Pilgrims still had their challenges. The summer of 1623 was hot and dry. For almost two months there was no rain. Their crops were in jeopardy. Governor Bradford did not lose faith.

Governor Bradford then set a “solemn day of humiliation (fasting) to seek the Lord by humble and fervent prayer in this great distress.” Their prayers were answered. By evening it began to rain. It revived the corn and other fruits. Even the Indians were astonished. The soft showers continued along with beautiful fair weather. The result was a “fruitful and liberal harvest …for which mercy they also set apart a day of thanksgiving.”
By the fall of 1624, the colonists were able to export a full boat load of corn! And the Pilgrims settled with the Adventurers. They purchased the Adventurers stock in the colony and completed the transition to private property and free markets.


The rest is history.  The experience of the Pilgrims went a long way to forming the values and principles upon which our Founding Fathers created a new nation unlike anything the world had ever seen before. It came to be the most prosperous and powerful country ever known to mankind. For that I am forever thankful to the Pilgrims and the others who endured trials and tribulations to give me the life I have today.

As we celebrate Thanksgiving it is useful to remember the Pilgrims and what their experience can teach us.  I think Dr. Patton summarizes the lessons pretty well.

The Pilgrim experience dating from 1623 was and is yet a prototype for the United States of America.  They learned the hard way that: (1) Socialism does not work; it diminishes individual initiative and enterprise; (2) Socialism is not a Godly economic system; and (3) Famine and drought can be used by God to humble a people and set them on a proper course.  The Pilgrims responded.  The real question today is:  Can Americans learn these vital insights from the Pilgrims or must we too face famine and drought in the coming years?


Happy Thanksgiving!

Monday, November 25, 2024

Urbanization of the World

Urbanization is one of biggest trends in the world over the last century.

More and more people live in urban areas in dense population settings.

When the United States was founded, only 5% of the population lived in urban areas.

By the early 1900's, a majority of Americans lived in cities.

83% live in urban areas today.

By 2050 it is projected that almost 90% of the population of the United States will live in cities and urban areas.

The reality of urban living is that you are dependent on someone else for almost everything in your life--food, water, public transit, etc.

There is a theory that those who live in urban areas tend to vote for Democrats in that they feel more vulnerable and less secure due to this dependence. As a result, they are more prone to look to the government to solve any problems they have as they don't feel confident they can do it.

Conversely, those who live in rural areas are more independent, have a stronger belief they can fend for themselves and are more likely to see government as an obstacle in their life than an asset. As a result, they tend to vote Republican

Consider the numbers.

The most urban area in the United States is the District of Columbia---100% urban.

D.C. voted 92%-7% for Kamala Harris.

California is the most urban state. 94% of the state's population lives in urban areas.

California voted 59%-38% for Harris.

On the other hand, in West Virginia only 45% of the population lives in an urban area and in Mississippi it is 46%.

West Virginia voted 70%-28% for Trump and Mississippi supported Trump 62%-37% despite having the largest African-American population of any state (39%). (Note: D.C. is 46%).

These numbers suggest there is something to the theory stated above.

However, that theory blows up a little when you also consider that Vermont is even more rural than West Virginia (35% urban) and it voted left of urban California.  


Source: https://www.visualcapitalist.com/sp/mapping-us-urbanization-by-state/



Vermont was Kamala's best state, going for her by 64%-33%.

At the same time, Florida which is now 92% urban and not far behind California on that score, voted for Trump 56%-43%.

It all goes to show that attempting to understand the behaviors and motivations of American voters is not an easy task.

New York City continues to be the largest metropolitan urban area in the United States.

The most recent population estimates are that 19 million people live in the NYC area.

In 1950, the New York City metro area was the most populous in the world with 12.4 million people.

I recently came across an interesting video graphic on X that shows how the population's of the world's largest cities has changed from 1950 until 2023.

Here is what the list of largest cities looked like in 1950 with New York City on top.



By 1970, New York City had been overtaken by Tokyo with almost 23 million people.

Note that both Tokyo's and Osaka's population had doubled in 20 years.



By 1990, Tokyo had twice the population that New York City had and Mexico City was also on the verge of overtaking New York City.



New York City had fallen to 7th on the list of largest cities by 2010.

Delhi, which was not even large enough to make the list in 1970, was the world's second largest city in 2010 with almost 22 million inhabitants.




New York City is now close to falling completely off the list of the world's largest 15 cities. It looks inevitable by 2030.

Delhi will probably be the world's largest city by that that time.

Due to Japan's aging population and very low birth rate, it would not be surprising to see Tokyo's population actually decline by 2023 compared to 2023.

Note that Tokyo's population only grew by 1% between 2010 and 2023.



What does it all mean?

The world has become increasingly urbanized.

However, I doubt most Americans really know how large the population changes and shifts have been in other parts of the world during their lifetimes.

Urbanization provides the opportunity for more efficient living based on the economies of scale and the division of labor.  However, it also makes populations more dependent on our fellow man and the technologies that increasingly control our lives. It also makes populations much more vulnerable to wars, famines and pandemics.

All of this shows how interconnected and interdependent the world has become and how it is more important than ever for us all get along and focus on what unites us rather than what divides us.

Like it or not, we are all in it together.

Friday, November 22, 2024

The Halo Effect

BeeLine readers know that I like to analyze polling data in the lead up to elections.

I also like to look at polling data after the election.

You can often see a halo effect in the aftermath of an election in the polling data.

Winning candidates ften seem to be looked on more favorably after an election than they might have been before the election.

It is part of the human condition---people like to associate with winners and distance themselves from losers.

Joe Biden's was viewed favorably by about 49% of voters right before the 2020 election in the YouGov survey on that question..

His favorability increased to 54% by the time he was inaugurated.

Biden is 42% on that score today.

For the last three months of the Presidential race, Donald Trump was consistently viewed favorably by only 45% of registered voters.

In the wake of the election, Trump is now viewed favorably by 50% of registered voters in the YouGov survey. Trump actually has a + 1 net favorability score right now. He has never had a net positive favorability score since he first ran for President even after winning in 2016.

That is the halo effect.



You see the opposite effect with Kamala Harris. Her favorability started going south right after the election. Her net favorability is -7. That is eight points worse than Trump but is still six points better than Biden.



What I find most interesting in the favorability scores on Trump post-election are his numbers with young voters.

Young voters have been the most reliable Democrat voters imaginable since the Obama years.

They have routinely voted for the Democrats by 20-30 point margins. Biden beat Trump among 18-29 age voters 60%-36%. Hillary enjoyed a 30 point margin over Trump among this voting bloc in 2016.

Exit polls for 2024 indicate that Trump narrowed his loss among these 18-29 age voters to only 12 points (Harris 54%, Trump 42%). Most of this improvement resulted from Trump actually winning young male voters 49%-47% while losing among young females 37%-61%.

Considering all of that data as context, look at the favorability scores that young voters are giving Trump AFTER the election.

57% of age 18-29 voters in the YouGov poll say they have a favorable opinion of Trump after the election compared to only 38% who say they have an unfavorable opinion---a +19 net favorability score.


Source: https://d3nkl3psvxxpe9.cloudfront.net/documents/econTabReport_WloY87T.pdf#page=10

To recap, Trump lost this age group by 12 points on November 5 but two weeks later he has a +19 net favorability with the same age group

That is one heck of a HALO.


Credit: https://www.newamericanjournal.net/2020/08/dumb-is-the-new-smart-and-smart-is-the-new-dumb/

What is also interesting in looking at the survey data is that Trump's highest favorability across all ages is with the 18-29 age group.

His lowest favorability score is with those age 65+ (-3 score) which have traditionally been the most Republican-leaning demographic.

YouGov is not providing gender breakdowns on the favorability data by age but Trump could only be seeing these numbers post-election if younger women were not driving some of the result as well.

Is it possible that bigger shifts in the political makeup of the country are underway beyond what we have already seen with the Democrats losing votes among the working class, Hispanics and African American populations?

If Democrats lose the young female vote, it is entirely possible that the party as we know it today will no longer exist in the near future.

J.D, Vance is another person who has seen huge increases in his favorability scores as is reported on in this Newsweek article.


Source: https://www.newsweek.com/jd-vance-favorability-popularity-campaign-election-polls-1986449


In September, Vance had a new favorability of -14 in the YouGov polling as he had to deal with an onslaught of initial attacks by Democrats and Big Media.

He narrowed that to -4 as more people saw Vance for themselves in the VP debate and in other appearances.

J.D. Vance is now +2 in net favorability after the election. He is +12 with younger voters but that still trails Trump by 7 points.


Source: https://d3nkl3psvxxpe9.cloudfront.net/documents/econTabReport_WloY87T.pdf#page=10

The YouGov poll also shows that Trump is receiving favorable approval ratings on his handling of the Presidential transition thus far.

He has +15 approval with all adults and +12 with registered voters on that question.

Again, his highest approval is with the 18-29 age group (+28 net approval).

Source: https://d3nkl3psvxxpe9.cloudfront.net/documents/econTabReport_WloY87T.pdf#page=10

You have to wonder whether the recent spate of young athletes doing the "Trump Dance" in celebration of athletic success on the football field, soccer pitch, golf course or boxing ring is a function of this favorability with this younger demographic?


Source: https://www.newsweek.com/donald-trump-dance-full-list-us-athletes-1988047


Trump's major cabinet appointments that had been announced by the time that the YouGov poll was conducted have also generally been well received.

Only Matt Gaetz was modestly negative and this was in the face of overwhelming negative Big Media pushback on that selection.

Credit: https://x.com/IAPolls2022/status/1859278102062334151

Of course, Gaetz has now withdrawn from Attorney General consideration after key Republican Senators made it clear they would not support him. Four hard No's from Republicans made it clear Gaetz could not be confirmed.

Trump will make another pick for Attorney General that undoubtedly will also upset the D.C. establishment.

Trump, unlike a Democrat President like Biden or Obama, has to worry about getting the votes from his own party in support of his Cabinet selections. Biden did not have one Senate Democrat vote against his Cabinet picks. I cannot recall more than a handful of Democrat Senators ever voting against any of Obama's Cabinet appointments in either of his two terms. 

Democrats always seem to play by different rules than Republicans.

For example, 20 Republicans ( including Collins, Murkowski and McConnell---Curtis was just elected to succeed Mitt Romney) voted for the confirmation of Merrick Garland as Biden's AG. 

Every Democrat except Joe Manchin (who has now left the Democrat party) voted against confirming Trump's first AG Jeff Sessions in 2017. Only three Democrats voted to confirm Trump's second AG Bill Barr. This is despite the fact that Barr had already previously been AG in the George H.W Bush administration.

How exactly was Barr not qualified to serve?

We will see what the future holds on this score in the confirmation of Trump's Cabinet. However, it is unlikely that the Democrats have suddenly decided they are going to bring a bipartisan spirit to any proceedings involving Trump's picks.

It would seem far past the time that the Republicans recognize how the game is being played in D.C.

In the meantime, Trump does currently enjoy strong support for his signature issue of deporting illegal immigrants according to a poll from Echelon.



It remains to be seen whether Trump can maintain that popular support for deportations when the media starts playing images of the illegals (and their families) being loaded onto buses or airplanes and sent out of the country.

There is no doubt that Trump understands all of this.

Honeymoons don't last forever. After all, Trump has been married three times.

That is clearly shown in the U.K. after Keir Starmer of the Labour Party was elected Prime Minister last summer.

Keir Starmer enjoyed a very brief halo effect which quickly turned into one of the shortest honeymoon periods in history.



The Brits already want a divorce from the Labour Party's policies.

Those aligned against Trump have lost a little bit of their footing seeing the election results.

They are somewhat shell shocked right now.

How should they respond?

How will they respond?

You can be sure that the forces aligned against Trump will not quietly relinquish their power.

Take a minute and consider how big the forces are that are threatened by the Trump agenda.

You can be assured they will not go quietly into the night.


The only way for Trump to counteract these forces is with the continuing popular support of the American people.

Donald Trump is going to need to retain that halo effect for an extended period of time if he is going to be able to fulfill his promise to "Make American Great Again".

In the end, the American people get the government they are willing to stand up for and support.

Unfortunately, most of the time most people don't understand the power that they have.

For those who supported Trump's election, now is the time to stand up and remain standing tall.

The vote on November 5th alone will not be enough.

Wednesday, November 20, 2024

Can DOGE Make A Difference?

President Trump has appointed Elon Musk and Vivek Ramaswamy to lead a Department of Government Efficiency ("DOGE").




This is not an official cabinet department.

DOGE will operate outside of government with the objective of making the federal government less bureaucratic, more efficient and less wasteful in spending tax dollars.

Elon Musk provided a few tidbits on how DOGE will operate in a recent article on NewsNation.

Musk has provided some tidbits on what could be in store for DOGE since Trump’s announcement on the agency. 

“Incentives matter. There should be rewards for wise spending, but those who waste taxpayer funds cannot be allowed to keep doing so without consequences,” Musk posted on X of DOGE on Wednesday, hinting that cuts will be imminent under his guidance. 

He also said the department would provide “maximum transparency” and that all of DOGE’s actions will be posted online.

“Anytime the public thinks we are cutting something important or not cutting something wasteful, just let us know!” Musk posted. 

Musk also said that DOGE would create a “leaderboard for most insanely dumb spending” of tax dollars, which he said would be “extremely tragic and extremely entertaining.” 


Trump has asked that the work conclude no later than July 4, 2026---the 250th anniversary of American independence.

Elon Musk says that it will be done much faster.


That is something that Musk says quite often when he is told how long something should take with Tesla, SpaceX or one of his other ventures.

He has rarely been wrong.

Of course, the challenge that Elon and Vivek face in attempting to reform the federal government, its bureaucracy and its spending borders on the impossible.

For example, look at this comparison of the U.S, budget deficit as a % of GDP in comparison with other developed countries.


Credit: https://thebahnsengroup.com/dividend-cafe/a-comprehensive-post-election-commentary-november-15-2024/


For the just completed federal government fiscal year the U.S. had a primary budget deficit of 5.8% of GDP.

On the other hand, Greece (yes, Greece!) had a budget surplus of 1.1% of GDP.

Portugal had a budget surplus of 2.9% of GDP. Ireland had a 2.1% surplus.

For context, a 1% budget surplus as a % of GDP in the United States would amount to $290 billon

The U..S. had a reported deficit of over $1.8 trillion in fiscal 2024.

What more evidence does one need to see that the United States is on a road to fiscal disaster without significant reform in Washington, D.C.?

Can DOGE make a difference?

Elon Musk has stated that it is his goal to find $2 trillion in savings in the federal budget.

It is an admirable goal but color me skeptical that he can make many recommendations that Congress would approve that would come close to that number.

Let's look at the numbers.

The federal government spent $6.8 billion last year.

We are at the point that almost $1 trillion of that total is net interest on the federal debt.

Social Security payments are another $1.5 trillion.

Interest on the debt must be paid. It is hard to see where Social Security benefits are also not sacrosanct in any DOGE assessment other than small amounts of fraudulent payments that are made each year.

That leaves $4.3 trillion in spending to find efficiencies and savings of which the largest expenditures are Medicaid  & General Health ($912 billion ), Medicare ($874 billion) and Defense ($874 billion). That totals another $2.7 billion.

If those expenditures are excluded, the remaining federal government spending that is left is only $1.6 trillion.

It is going to be difficult to find $2.0 trillion in savings and efficiencies in $1.6 trillion in spending.

Reining any the federal government bureaucracy and its spending is a herculean task.

Speaking of herculean tasks, consider what Javier Milei faced when he took over as Argentina's President last December.

Argentina has been ruled by far left socialists for many years. Beset by economic malaise, bureacracy and hyperinflation, the voters finally revolted.

This is how Columbia University's Institute of Latin American Studies described the situation in Argentina that Milei inherited.

President Javier Milei was elected as President of Argentina last December with 53% of the popular vote. He inherited one of the worst economic situations ever, one that was undoubtedly heading towards hyperstagflation and economic collapse. In his political campaign, Milei proposed a radical libertarian plan to attempt a 180-degree turn in Argentina’s socio-economic organization which he had characterized as beset by rent-seeking and corruption. He presented to Congress a package of laws including an across-the-board elimination of all types of regulations to transform Argentina into a modern capitalist economy. However, he still has governed with a minority in both chambers of government and many of the proposed reforms have been blocked.If anybody has a chance to do it, Elon and Vivek are the people to do it.

How is Milei doing?

Inflation has decreased from 25.5% per month when he took office to 3.5% today.

Milei fulfilled a campaign pledge to take a chainsaw to the bureaucratic state by eliminating entire government departments and slashing government payrolls.

The government is showing a 0.3% of GDP surplus in the first eight months of the year compared to a 4.6% deficit at the end of 2023.

"One international financial official describes it as “the most drastic fiscal adjustment ever seen in a peacetime economy”.

Investors in the country's debt and those considering investing in business in the country are showing renewed confidence in the country

The "country risk" premium for Argentina's sovereign debt has fallen sharply but still needs to fall further to come close to its Latin American neighbors.


Source: https://www.reuters.com/world/americas/argentina-investors-bet-mileis-popularity-year-after-his-election-2024-11-18/

The Argentina stock market index has tripled in value over the last year.


Source: https://www.spglobal.com/spdji/en/indices/equity/sp-merval-index/#overview

The economy for everyday Argentinians has not yet taken hold. Milei is still the most popular politician in Argentina but the population is split on the new President.

Voters like the government spending cuts. However, they want to to see more from the economy that benefits them.

If Milei can make these types of changes in Argentina, why can't something similar be done in the United States?

Elon Musk likes to point out that the United States has 428 federal agencies. That is equivalent to creating more than one per year since the nation was founded. 

He thinks we should be able to get away with no more than 99 agencies.

Link to video


I have learned to never underestimate Donald Trump.

Or Elon Musk.

An interesting side note in all of this is that Trump's cabinet appointments may actually make it easier to trim some of the deep state bureaucracy without Elon and Vivek lifting a finger.

There are reports that a number of government bureaucrats may resign simply because they don't like the Trump cabinet appointments.

At the FBI.


At the DOJ.


At the Department of Defense.


At the FDA.


If these federal employees actually follow through ( I doubt many will), it will just make the work of DOGE easier.


It would seem a simple tactic for DOGE to reduce the current bureaucracy might also be to just require all federal employees to work in the office.

Well past any Covid concerns, close to half of the federal government workforce still works remotely.

A federal government report from last year found that 17 or 24 government agencies that were surveyed are using less than a quarter of their office space because of work from home employees.

Remote work has become so entrenched in some agencies that employees who are assigned to work in D.C. or New York City have moved to New Hampshire, Florida, Texas and other states for a lower cost of living.  However, they still get a pay differential that can be 30% or more that is tied to their official work location.

A bill was introduced in Congress earlier this year to get federal employees back in the office and remove the pay differential for those working from home.


Source: https://www.romney.senate.gov/romney-manchin-introduce-bill-to-get-federal-workers-back-into-the-office/


Of course, why would anyone think that you would need to pass a law to do this?

These employees work in the executive branch. It would seem to be a simple matter of their managers just ordering them to report to work at their assigned office location.

Can DOGE make a difference?

We may not get $2 trillion or even half of that in efficiencies and savings from DOGE.

However, I have no doubt we will get substantial savings that we never would have seen if the status quo was left in place.

Cutting the red tape and the bureaucracy on the American people carries enormous benefits beyond the government spending.

That in itself makes it all well worth the effort.

Let's get on with it.


Monday, November 18, 2024

Flawed and Foolish

There is not a better example of how the priorities of the United States are misaligned than what can be found in the chart below.

This chart details the higher education degrees that are receiving the highest and lowest subsidies based on the Income Driven Repayment Plan (IDR) for student loan forgiveness.

That program lowers monthly payments, waives excess interest, and allows for student loan forgiveness after 10 to 25 years in repayment, depending on the type of loans and the original balance.

Biden/Harris have attempted to liberalize this statutory plan further as part of the effort to cancel student debt but it has been challenged in court.


Source: https://x.com/cremieuxrecueil/status/1856512745287409933


Under the IDR program, required student loan repayments are capped at no more than 5% of income over 225% of the poverty level.

This effectively means that borrowers with low average earnings are required to pay very little each year on their student loan balances.

At the same time, interest is accruing each year.  In that such small amounts are required to be paid on the loans as the interest compounds, it is almost inevitable that the total amount owed on the loan after a decade or more can be more than the original loan balance.

After 10, 20 or 25 years, depending on different requirements, any remaining balance on the loan is forgiven if it has not been repaid under the IDR rules.

The chart above shows the effects of that policy on different higher education majors.

This program effectively provides students who major in low value, low paying courses of study the ability to not have to pay their student loans back. 

You can see from the chart that this policy provides almost no subsidy for degrees that are the most necessary and in demand in this day and age---engineering, computer science and nursing.

On the other hand, it heavily subsidizes degrees such as music, fine and studio arts and cosmetology to the extent that the federal government is effectively paying the entire cost of any student loans taken out for these degrees.

Misplaced priorities and government waste combined in one chart.

For example, what is the logic of the federal government effectively paying for over 100,000 Cosmetology degrees annually?

How is that a worthwhile use of taxpayer dollars for America's future?

While we are paying for over 100,000 Cosmetology degrees, we are barely assisting those who choose Registered Nursing for a career which are degrees we desperately need with the nation's aging population.

Over 100,000 Cosmetologists a year but less than 10,000 Computer Scientists or Electrical Engineers?

What do we need more when we look to the future with AI, Robotics and the industries of the future?

The chart above shows just how misaligned our national policies are as well as the fundamental flaws and foolishness in the entire student loan debt forgiveness program.

I wrote a blog post on the enormous problems with the student loan program in 2019 titled "Student Loan Distress".

In that blog post I cited the enormous amount of federal government money flowing to hair and beauty schools. 

The chart below shows the government money flowing to this sector in fiscal year 2017 as compiled by Openthe Books.com in an oversight report of the Department of Education. 

The amounts of government aid must be much, much higher today.

Credit: https://www.openthebooks.com/assets/1/6/department-of-education-report.pdf

This is what I wrote in that blog post over five years ago.

The largest school, Empire Beauty School, received $534 million in federal education subsidies between 2014 and 2017.

Empire charges students $14,000 in tuition per year to learn how to cut and style hair, apply makeup and give massages over a one to two year period required for graduation. Most students pay with federal student loans.

What is the average pay of their graduates? The New York Times did a study  regarding the economic outcomes of students from these types of schools. At age 34 the median income of Empire Beauty School graduates was $18,800 per year.

Does that sound like a good investment? Take on $14,000 in student debt to get a job that pays $19,000 per year?

None of this could occur but for the massive amount of federal government money made available to facilitate it.

That money is the root cause of why a college education (and beauty and barber schools) have become unaffordable.

The answer is not to throw even more money at it as liberal politicians so often want to do.

It is time to put more accountability on the educational institutions who reap the benefits by making them put more skin in the game.

That should be the first step to putting an end to the student debt crisis that is causing so much distress to so many.

 

The chart below shows how the amount of student debt has grown to where it is now almost $1.8 trillion.

Total student debt is $1 trillion more than it was 15 years ago.

Student loan debt only leveled off the last few years because interest did not accrue on loans for more than three years during Covid, and Biden/Harris were doing anything and everything to forgive student loan debt, including ignoring a Supreme Court ruling on the issue,


Source: https://fred.stlouisfed.org/series/SLOAS


How much is $1.8 trillion in student loan debt?

It is larger than the entire GDP of Australia, South Korea or Mexico.


GDP per country
Source: https://x.com/cremieuxrecueil/status/1856512745287409933


It is also interesting to look at the geographic areas where the highest average student loan balances are.

D.C. and Maryland.

This just so happens to be where thousands of recent college graduates work in Congressional staff offices and the federal government bureaucracy.

How much do you think they care about who is really paying the bill for all of this?

 

Source: https://www.lendingtree.com/student/student-loan-debt-statistics

Of course, the real beneficiary of the federal student loan program subsidies are the college, universities and beauty schools that would never be able to maintain the enrollments and tuitions they charge without the massive amount of federal money supporting them.

When you consider the endowments that schools like Harvard ($50+ billion)  and Yale ($40+ billion) have why should the federal government be providing any loans at all to its students?

Why does the university not loan the money from its endowment to fund any student loans necessary?

Why should these colleges and universities not be making that type of investment in their students if they have the funds to do so?

Empire Beauty and almost all of the cosmetology schools are "for profit" enterprises. Why should they not use some of their "profits" to fund loans for their students and bear the risk if the students do not make a decent return on their education investment?

When Elon Musk and Vivek Ramaswamy begin their work with the Department of Government Efficiency they might want to first take a look at the entire federal student loan program.

There seems to be a lot of low hanging fruit on the student loan tree to improve government efficiency.