Nowhere To Hide

I came across this interesting perspective on the camera industry last week.

This is a chart showing the number of cameras produced worldwide between 1947 and 2014. The data was put together by Heino Hilbig of Mayflower Concepts who for many years headed up marketing for camera giants Canon and Olympus.

In 1,000 of Units
Credit: Mayflower Concepts

Note that in 1975 camera production was approximately 5 million units. These would have been traditional cameras that required film (and developing).

By 1998, traditional camera production was approaching 40 million units. By 2005, cameras that required film were completely gone

Digital cameras were introduced to consumers in 1999 and this new technology led to millions of new cameras in the market. By 2010 there were 120 million digital cameras being produced.

This change in technology and the effects it had on the film market were devastating to Kodak. It was even more painful when it is considered that Eastman Kodak had invented the first digital camera in 1975.

However, the company shelved the idea because of concerns that it would hurt their lucrative film business.

Credit:TechNewsMedia.com

That decision did not work out very well for Kodak's shareholders or employees.

This graph shows the growth in Eastman Kodak's stock price from 1962 until it peaked in 1997. And its precipitous fall with the introduction of digital cameras leading to its bankruptcy in 2012.

The $28 billion in stockholder value and the 140,000 jobs that Kodak had at its peak were completely wiped out.

However, the digital camera wave that surged so quickly has also fallen just as fast.

Production of digital cameras dropped from 120 million units to 40 million in just four years with the introduction of smartphones that came with a built-in camera (not to mention a digital video camera as well).

If you take the prior chart on cameras and merge it with the number of smartphones that have been produced with a camera, the graph now looks like this thanks to the efforts of Sven Skafisk.

Credit: Sven Skafisk and PetaPixel.com

That's 40 million cameras and about 1.25 billion smartphones (with a camera) that were produced just in 2014.

There is nowhere to hide.

From advances in technology. As Kodak found out

Or to escape the lens of camera that is out there looking for you.

Appomattox + 150

150 years ago today General Ulysses Grant of the Union Army accepted the surrender of the Confederate Army by General Robert E. Lee at Appomattox Court House, Virginia.

I visited Appomattox a few years ago and toured the grounds and the house where the formal surrender document was signed. What struck me was how small the parlor was where Grant met Lee.

Here is the McLean farmhouse as it looked in April, 1865.

Credit:Wikipedia

This is what it looks like today.

Most students learn how important Washington and Lincoln were to American history. However, Grant's contributions are not as well known. They should be.

That day 150 years ago in Appomattox revealed a lot about the man Grant was in the dignity and respect in which he dealt with General Lee and the Confederate Army.

It is worth revisiting this blog post I wrote from a couple of years ago to get to know Grant better.

Where are the leaders like Grant today?

They are no where near Washington, D.C. that I can see.




Where is our U.S. Grant? (originally published 12/26/2012)


I just finished reading Jean Edward Smith's biography of Ulysses S. Grant.  He was a remarkable man. There is little doubt that if it were not for Grant and Lincoln we most likely would not have saved the Union. Grant was also a very underrated President.

What struck me most in reading the book were the vast differences in life experiences when comparing Barack Obama to U.S. Grant before they were elected President of the United States.  Grant was actually one year younger (age 46) than Obama when he took office.  However, Grant seemed to have had three lifetimes of experiences before he ever set foot in the White House.

Born in Point Pleasant, Ohio in 1822, from an early age Grant had an enduring affinity for horses. He had an uncanny ability to train horses and his riding skills were unsurpassed.  When he was at West Point he was considered one of the greatest riders ever at the Academy. It was about the only area in which he excelled at the U.S Military Academy.  He finished 21st among 39 who graduated in 1843.  He ranked 28th in infantry tactics.

He saw combat in the Mexican-American War in which he was away from home (and his fiance, Julia) for almost three years. He married Julia in 1848 and stayed in the Army only to be ordered to California in 1852. Julia was 8 months pregnant with their second child and could not make the long trip to San Francisco which entailed a steamship voyage from New York to Panama, an overland trek across Panama and another steamer to San Francisco.

700 soldiers and their dependents embarked on the journey but only about half made it to San Francisco two months after they left New York.  A cholera epidemic ravaged the group as it transgressed Panama. All twenty children younger than three died on the journey. While most of the orderlies refused to care for the sick because of their fear of contracting the disease themselves, it was Grant who undertook the nursing of the ill himself.

Grant spent another two years in California without his wife and family. In his spare time he dabbled in numerous side business ventures attempting to make enough money to bring his young family to live with him. The California Gold Rush was in full swing and everyone seemed to be cashing in on the action in some way. Everyone but Grant.

Grant lost money on almost every venture he attempted. His loneliness and bad luck eventually led him to rely too much on the bottle.  He resigned his officer's commission (many speculate he was forced to resign because he was drinking on duty) and headed home without enough money in his pocket to make the entire trip home to St. Louis which entailed retracing his previous path across Panama and by ship to New York.

He arrived in New York City with no money, and not even sure that his wife would want him to return to her parent's home in St. Louis.  He borrowed money from an old friend to pay his hotel bill in New York and waited to hear from Julia.  He eventually had to ask his father for the train fare home and a letter arrived from his wife welcoming him home with open arms.

Grant was 32 years of age when he left the Army. He spent the next four years working a 60 acre farm near St. Louis on land that his wife had received from her father as a wedding present. He never succeeded at farming.  Most of the money he made was selling cords of wood he would cart into St. Louis. He eventually had to look for work in St. Louis. He tried real estate and other jobs but he was not successful in any endeavor in the world of commerce.  He could not afford to have his family with him in the city and lived in a boarding house during the week. He walked twelve miles on Saturdays to see his wife and children and walked twelve miles back to St. Louis each Sunday.

In 1860, at age 38, he eventually faced the inevitable, swallowed his pride, and asked his father for a job. His father had a leather business that had prospered over the years and he operated a half dozen retail outlets in the upper Mississippi River valley.  He gave Ulysses a job as a billing clerk and collection agent in his Galena, Illinois store.  Grant moved to Galena about one year before the start of the Civil War.

With this background you begin to see how incredible the story of Ulysses S. Grant is. Within four years of his move to Galena to take a job as a billing clerk, he was General of the Union Army. Within eight years he was President of the United States.

What made Grant successful?  First, he was not afraid to engage.  Except for Grant, most of the Union's field commanders were unwilling or unable to take the fight to the enemy. Grant knew that to win you had to be on the offensive.  Second, he led from the front and was cool under fire.  He took reversals in stride and often looked to take a disadvantage and turn it into an advantage.  Third, he was unassuming, honest and considerate.  Grant always put his country and men first.  He was as honest as they come and he always treated his enemies with the utmost of respect.

It is indeed sobering to read about the life and times of Grant and compare that life and experience to Barack Obama and other political leaders of today.  Men like Grant were tested in ways and manners so far removed than what we have in our leaders today that it is no wonder we find us where we are today.  We can't maneuver around a fiscal cliff?   What is that compared to the Battle of Shiloh or Vicksburg?

I found it particularly interesting how Grant responded to the Panic of 1873 in his second term as President.  By the way, when Grant was nominated by the Republicans for President in 1868 he gave but one speech-his acceptance of the nomination-of which he principally just focused on one theme, "Let us have peace".  He conducted no campaign as such.  Similarly, in his reelection bid in 1872 he also never campaigned.  How times have changed!

The Panic of 1873 was caused by "an insatiable desire for money that spawned a speculative boom that skyrocketed out of control.  Banks had lent money recklessly and brokerage houses had marketed securities that were often worthless", according to Smith in the Grant biography.  Does that sound familiar?

In 1873 Wall Street financial institutions started to fall like dominoes.  Grant soon came under pressure from Washington politicians to inflate the currency.  People were hurting as bankruptcies and unemployment soon followed as businesses, farms and factories were lost.  Congress felt that pumping more paper money into the system would solve the problems.  Again, does that sound familiar?

Grant was torn.  Having suffered in the Panic of 1857-that was the Christmas the president had pawned his gold watch to buy presents for his family-he sympathized with the nation's farmers and small businessmen.  Grant knew what it meant to be poor, to try to make a crop, to have a business fail, to be out of a job, and as a last resort to peddle firewood on a St. Louis street corner.  His heart was responsive to those who wanted to pump more money into the economy, yet as president he felt his responsibility was to the nation's future.  Cheap paper money might look like a panacea, but inflation was never a friend to stable government.  The United States would be driven from the world standard, the return to specie-backed currency would be set back, property values would be unsettled, and speculation rekindled.  If Congress could simply print unredeemable paper money to appease popular demand, the nation was in peril.

Congress passed a bill to greatly increase the nation's money supply (this was before the creation of the Federal Reserve). Grant then had to decide whether to sign the bill into law or use his veto power.  He initially decided to approve the measure bending to the political pressures but as he wrote down his rationale he determined that his reasoning was fallacious.  He vetoed the bill much to the shock and anger of his Cabinet and the Congress.  His veto was upheld and the nation soon moved solidly behind Grant's call for sound money and a stable currency.  The gold standard was resumed shortly thereafter that paved the way for the enormous growth of the U.S. economy in the last quarter of the 19th Century.  By 1900, the U.S. dollar had replaced all other currencies as the international symbol of financial stability.

Where is our U.S. Grant today?

BLSBS

The employment numbers for March were released last week by the Bureau of Labor Statistics (BLS).

Total nonfarm payroll employment increased by +126,000 in March, and the unemployment
rate was unchanged at 5.5 percent according to the BLS. Employment gains were less that half of the average increase of +269,000 in net new jobs over the last year. This is troubling news for the economy if this trend continues.

The labor participation rate also set a 37-year low of 62.7%. This represents the percentage of working age Americans (those 16 years and older excluding those physically unable to work and those who are imprisoned) who are actually working. You would have to go back to February, 1978 to find a time when a smaller percentage of working age Americans were employed.

There are also a record 93.2 million people working age Americans who are not in the workforce. Ten years ago that number was 76.8 million.

Credit:ZeroHedge.com

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

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

The BLS points to the wave of Baby Boomers who are reaching their retirement years as being the most significant factor in the declining labor force participation rate.

“The baby boomers’ exit from the prime-aged workforce and their movement into older age groups will lower the overall labor force participation rate, leading to a slowdown in the growth of the labor force.” 

However, this seems to be an oversimplification of what is occurring and largely ignores the fact that Baby Boomers are working in much greater numbers at older ages than their parents did.

In addition, if a young person entering the workforce took the place of the old person leaving it, there would be no net change in the overall labor participation rate.

In 1992, only 30% of those over age 55 were working. Today it is 40%. 19% of 65+ people are working today compared to 12% in 1992.

On the other hand, 51% of age 16-19 were working in 1992 and only 34% are working now. 77% of those 20-24 were working in 1992 and only 71% are working now.

The chart below shows the decline in labor force participation in the prime age working cohort of ages 25-54 which includes well over 100 million able-bodied Americans. As you can see, the drop in the percentage of those working in this age group amounts to a reduction of 3-4 million workers over what we have traditionally expected from workers from this age cohort.

Credit:dshort.com

The young are not working at anywhere near the levels they have historically since women entered the workforce in significant numbers in the 1970's. However, the old are working at levels not seen in many, many, decades.

Credit: ZeroHedge

In fact, since the beginning of the "Great Recession" in December, 2007, there are over 5 million more Americans working who are age 55 or over but there is a decrease of some 2 million working between the ages of 25-54. This has to be unheard of in the annals of American history!

Credit: ZeroHedge

Does all of this look like aging Baby Boomers are the principal cause of the dropping labor participation rate as the BLS suggests?

I would hate to see what the numbers would look like if those Boomers really were retiring to the degree that the BLS narrative would lead us to believe.

Tattoos Trending Down?

When I was growing up, and all the way through the 1970's and 1980's, the only tattoos I normally would see would be on a WWII or Korean War Navy or Marine Corps veteran.

I assumed most of them got their tattoos at some faraway port or after a night on the town in a seedy tattoo parlor just off the base.

This hula girl seems to have been popular with sailors passing through Pearl Harbor.

Of course, Marine Corps vets would often favor a tattoo that looked something like this.

A 30 or 40 year tattoo on a 50 or 60 year old man lounging around the pool was enough for me to decide that tattoos were not for me.

However, I have found it very interesting to see tattoos became more popular and accepted over the last 20 years or so.

Tattoos went from the subculture in my youth to popular culture today where it is now estimated that among those age 26-40, 40% have at least one tattoo and 36% of those 18-25 also have inked at least once.

I trace the beginnings of the tattoo trend among the younger generation to the increasing number of college basketball players that started sporting tattoos around 20 years ago. Instead of tattoos adorning old sailors, motorcycle gang members and ex-cons they were seen on student athletes where they were very visible while wearing their basketball uniforms.

This seemed to make the tats socially acceptable and the human condition of imitation took care of the rest.

It got to the point over the last few years that I rarely would watch any college basketball game in which a significant number of players did not have tattoos. I am not sure that I have seen any game in the last few years where both teams were tattoo-free.

Until last night.

Wisconsin did not have anyone with a tattoo from what I can see. I am talking visible tattoos among the starting five and first rotation subs.

If there were any tattoos on anyone else on the team, I could not see it.

The same for Duke.

Credit:SimplyDukeBasketball

It was even true for the two twin stars of Kentucky basketball, Aaron and Andrew Harrison.

Credit:RantSports.com

Is all this evidence that the trend has turned?

It started on the basketball court. Was last night the beginning of the end of that trend?

It looks like that to me.

Births and Birthdays

I have an interest in demographics and have written about it from time to time in BeeLine.

It is a window to the future that is too often overlooked or ignored.  The long-term trends are often the most difficult to see in the 24 hour news cycle world we live in today.  In this day and age when there is so much focus on the trees (even the leaves at times!), demographics forces you to look at the forest.

I have been tracking U.S. birth rates for a number of years. The birth rate data for 2013 was recently released by the National Vital Statistics System section of the U.S. Department of Health and Human Services.

A few factoids from the report.

• There were 3,932,181 reported births in the U.S. last year
• That is 1% lower than in 2012

• 40.6% of the births were to unmarried women
• In 1960, only 5.3% of birth were to unwed mothers as shown in the chart below.
• 71.5% of black babies are born to unwed mothers.

• There are more babies born to mothers in the age 25-29 age group than any other age cohort
• However, the birth rate per 1,000 for women 25-29 and 20-24 is the lowest it has ever been in the history of the U.S.
• The total fertility rate for all women over their lifetimes is 1.85 children. This is below the 2.1 replacement rate necessary to maintain a stable population.

• Teen births continue to decline.
• Births to teens are about 1/3 of what they were in 1960.

• Births of twins are at an all-time high---33.7 per 1,000 births 

• Six women of age 19 had their 8th child during 2013! (Are you kidding me?)
• Four white women, two black women

• 677 women age 50-54 gave birth to a child during the year
• 221 were first births (Congratulations! However, these mothers will be eligible for Social Security and Medicare when their kids are teenagers. Good luck as well!)

The chart below shows births from 1950 through 2013 in order to give you some better perspective on historical birth rates.  This is a chart that I have been tracking since the early 1990's.  I actually consider the 1965-1986 period to represent the entire "Baby Dearth" period. On either side of the "Baby Dearth" we have the "Baby Boom" (1946-1964) and the "Baby Boomlet" (1987-2010?).  

I have always looked at the birth cohort of 1965-1986 to be particularly well positioned for career prospects in that they are in a great position to be able to serve both a large group of individuals older than themselves (health care, investments, etc) as well as a large population of younger individuals behind them (education, consumer goods etc).  It is a position that is literally in the middle of two giant demographic waves unlike anything we have ever seen before.

Writing about all of this birth info reminded me of one of my favorite charts.

It is this heat map chart that shows how common certain birth dates are that Matt Stiles of The DailyViz put together based on a data on birthdays that was in The New York Times.

A few observations on birth dates based on this data.

• September has the most birth dates.  September 16 is the most common birthday.  Look at the heavy number of births in September starting with September 8.  Of the top 16 birth dates, 14 of those dates are bunched between September 8 and September 25.

• December 25 has the fewest births (excluding February 29).  December 24 ranks #363 and December 26 ranks #360.  January 1 is #364.

• Looking at these numbers you might think not much is going on 9 months before December. However, December 30 is #26, December 29 is #42 and December 28 is #62.  December 31 is #220.

• January does not have any birth date higher than #260.  In fact, between January 1 and January 11 the rankings are (in order from 1/1)---#364, #362, #356, #350, #338, #301, #324, #347, #351, #349, #341.  Not a good time to be selling birthday cakes.

• The week around Thanksgiving also has very few birth dates.  From November 22 to November 29 the highest ranking is #340.

• The low number of birth dates around the Thanksgiving and Christmas holidays suggest that something besides nature is involved.  It would be interesting to look at the C-section rates right before these holidays.  C-sections make up about a third of all births. If it is Friday it is much higher than that suggesting a high number of "elective" C-sections for convenience.  

• The heaviest birth date months-July, August and September-are nine months after October, November and December proving that the onset of cold weather warms things up in other places.  

By the way, today (April 2) is the most popular birthday in the month of April.

Fasten Your Seat Belts

A 2013 study by Carl Frey and Michael Osborne of Oxford University estimates that 47% of current jobs in the U.S. economy are at risk of being eliminated by automation and/or computerization over the next 20 years.

The study analyzed 702 occupations in the United States and used a probability analysis to determine how susceptible each is to future computerization. As you might imagine, many of the occupations at the most risk of being disrupted involve low educational levels and low skill levels. However, that is not always the case.

Here are the ten occupations that were considered to have the lowest probability of being disrupted by technology over the next 20 years. The number represents the probability (expressed as a percentage of 100) that the job will be computerized in some fashion.

1.   0.0028   Recreational Therapists
2.   0.003     First-Line Supervisors of Mechanics, Installers, and Repairers
3.   0.003     Emergency Management Directors
4.   0.0031   Mental Health and Substance Abuse Social Workers
5.   0.0033   Audiologists
6.   0.0035   Occupational Therapists
7.   0.0035   Orthotists and Prosthetists
8.   0.0035   Healthcare Social Workers
9.   0.0036   Oral and Maxillofacial Surgeons
10. 0.0036   First-Line Supervisors of Fire Fighting and Prevention Workers

Here are the ten occupations that were considered to have the highest probability of being affected by automation over the next two decades. Note that the study assessed that there is a 99% chance that these occupations will see some dislocations due to technology.

693. 0.99  New Accounts Clerks
694. 0.99  Photographic Process Workers/Processing Machine Operators
695. 0.99  Tax Preparers
696. 0.99  Cargo and Freight Agents
697. 0.99  Watch Repairers
698. 0.99  Insurance Underwriters
699. 0.99  Mathematical Technicians
700. 0.99  Sewers, Hand
701. 0.99  Title Examiners, Abstractors, and Searchers
702. 0.99  Telemarketers

Note in particular that tax preparers and insurance underwriters would normally not be considered low education or low skill jobs today. Watch repairers are skilled workers but where will the watches be to be repaired 20 years from now?

It is a pretty sobering list to review.

Here are a few more occupations that all have a better than 50/50 chance of seeing major disruptions.

.98  Umpires, referees and other sports officials

.98  Models 

.96  Cooks, restaurants

.94  Waiters and waitresses

.92  Retail salespersons

.90  Roofers

.89  Taxi drivers and chauffeurs

.89  School bus drivers

.87  Parking lot attendants

.80  Barbers

.77  Carpenters

.58  Personal Financial Advisors

.55  Commercial Pilots

Umpires? Strikes and balls will no longer involve judgment. Nor will the close call at first base.

Models? Are we headed to a world in which we can create our own holograms of the perfect man or woman?

Cooks? That robot will really know how to flip those pancakes at exactly the right time.

I was particularly interested in how the Oxford study viewed potential disruption in the transportation sector as I had the privilege of attending a speech by Peter Diamandis several weeks ago where he gave his perspectives on the future.

Credit:Diamandis.com

If you are not familiar with Diamandis, he is the founder of the X PRIZE Foundation and was named by Fortune magazine as one of the world's 50 greatest leaders.

His basic thesis is that we are entering a bold, new era of exponential growth fueled by technology, automation, computerization and a democratization process that allows anyone in the world into the room of ideas and innovation due to cloud computing.

The new world we are in is increasingly disruptive that can quickly lead to the demonetization of established industries.

For example, look at what Craig's List did to classified ads in the newspapers, Skype did to long distance calls, Amazon did to book stores or what Uber is doing to taxi fleets.

Diamandis is particularly excited about the potential of Google's "autonomous" car. That would be understood to be a "driverless" car for most of us. He sees it as a real game-changer and he made some rather startling comments around what he saw in the future as a result of this innovation

First off, Diamandis stated that he had two 3-1/2 year old twins. He said they will never learn to drive. In his view we are going to see profound changes in autonomous cars in the next 10-15 years with massive disruptive effects..

He expects the auto insurance business to basically wither away. There will be very few auto accidents once the human element is removed. I guess the same goes for auto body shops.

He believes that automakers and auto dealerships are threatened as people will see no need to buy their own cars as it is incredibly inefficient economically. How often are you using your car?  Most people are not using it more than 5% in a day.

Diamandis seems to foresee something akin to a SuperUber where you just get a car to take you where you need to go when you need to go. Of course, all those Uber drivers will need to find something else to do (as well as the school bus driver, chauffeurs and truck drivers).

With fewer owned cars we also might not need as many parking lots. If you don't own a car you don't need to park it or garage it. The average suburban shopping mall uses up about three times the real estate for parking as it does for the retail shopping. What is the impact on real estate if this could be cut in half?

This is just one limited example of the cascading effects of one piece of automation and how it might affect the world we live in.

These are the technological areas that Diamandis sees as having the most potential for exponential growth in the near future.

1. Infinite Computing
2. Sensors & Networks
3. Robotics
4. 3D Printing
5. Synthetic Biology
6. Digital Medicine
7. Nanomaterials
8. Artificial Intelligence

The world has seen major economic and technological changes many times before and made the necessary adjustments. It has always resulted in a better standard of living and an improved way of life despite the inevitable individual economic dislocations. However, the changes have never been this rapid. Could it be different this time because of the exponential speed of new developments such that there is not enough time for the potential mass of humans that might be affected in so many sectors of the economy?

This entire subject is the theme of a recent article in The Economist which cites the Oxford study.

This is what Michael Rendle in The Huffington Post had to say about The Economist article.

Almost half of all jobs could be automated by computers within two decades and "no government is prepared" for the tsunami of social change that will follow, according to The Economist.

The magazine's 2014 analysis of the impact of technology paints a pretty bleak picture of the future.

It says that while innovation (aka "the elixir of progress") has always resulted in job losses, usually economies have eventually been able to develop new roles for those workers to compensate, such as in the industrial revolution of the 19th century, or the food production revolution of the 20th century.

But the pace of change this time around appears to be unprecedented, its leader column claims. And the result is a huge amount of uncertainty for both developed and under-developed economies about where the next 'lost generation' is going to find work.

In order to adjust and compensate for what is coming workers will need much greater technological, cognitive, creative and social skills.

However, with that in mind, consider these facts about educational attainment in the United States which I wrote about several years ago in my blog post, Arts and Sciences, Supply and Demand.

• 25% of students who begin high school in the United States do not finish.  Fewer students who start high school today graduate than they did 40 years ago.  79% finished in 1971 but only 75% are graduating today despite the fact that the world and the economy is far more complex and education and skills are far more important in securing a good paying job. 

• In fact, the United States is the only developed country in the world where a higher percentage of  55 to 64 year olds has a high school degree than do 25 to 34 year olds.

• The percentage of college graduates for American citizens aged 25-34 is no higher than the percentage for those aged 55-64 - 41% of both age groups have a degree.  30 years ago that was good enough to lead the world.  We now rank 16th!

We may be seeing exponential growth in technology and automation but humans are not even evolving at linear levels. In fact, our education levels in the United States may actually be regressing.

This is a slide that Diamandis used to show the disruptive stress (or potential of opportunity) between an exponential trend and a linear trend.

Credit: Peter Diamandis

I see the opportunity.

However, you can expect a whole lot of disruptive stress along the way if you consider the educational stats cited above.

The road ahead in our autonomous cars promises to be exciting but there will be more than a few people run over in the process. That looks like a dead man's curve for those who don't adapt.

Is it time to fasten our seat belts? Or do I even need to in an autonomous car?

Follow the lead. of these modern Millennials. It is always better to be safe rather than to be sorry.

Put your feet up (and buckle up) in your autonomous car 
Credit: zedie.wordpress.com

47%

What is it about 47%?

This percentage keeps coming up in the news.

Of course, 47% first received a lot of attention during the 2012 Presidential campaign when Mitt Romney made this statement to a group of wealthy supporters.

"There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it -- that that's an entitlement. And the government should give it to them. And they will vote for this president no matter what. ... These are people who pay no income tax. ... [M]y job is not to worry about those people. I'll never convince them they should take personal responsibility and care for their lives."

The 47% that Romney referred to in his remarks came from the fact that in the 2009 tax year, 47% of tax returns filed owed no federal income taxes. As of 2013, the most recent year for which data is available, that number is now 43%.

However, 47% is not disappearing from the headlines.

There really seems to be something about that number.

A few examples from recent headlines.

47% of American households save nothing

47% Of All Jobs Will Be Automated By 2034, And 'No Government Is Prepared' Says Economist

Almost half of all jobs could be automated by computers within two decades and "no government is prepared" for the tsunami of social change that will follow, according to the Economist.

The magazine's 2014 analysis of the impact of technology paints a pretty bleak picture of the future.

It says that while innovation (aka "the elixir of progress") has always resulted in job losses, usually economies have eventually been able to develop new roles for those workers to compensate, such as in the industrial revolution of the 19th century, or the food production revolution of the 20th century.

But the pace of change this time around appears to be unprecedented, its leader column claims. And the result is a huge amount of uncertainty for both developed and under-developed economies about where the next 'lost generation' is going to find work.

Poll: 47% of Unemployed Have 'Completely Given Up' Looking for a Job

“This survey shows that millions of Americans are at risk of falling into the trap of prolonged unemployment, and it should give policymakers a greater sense of urgency to focus on the singular goal of creating jobs," said Bob Funk, CEO of Express and a former Chairman of the Federal Reserve Bank of Kansas City, in a release. "We can take heart that in these difficult times the American spirit of confident hopefulness endures, but we can’t accept this status quo—not for our country, not for our unemployed neighbors.”

Some of the key findings:
47 percent agree with the statement, “I’ve completely given up on looking for a job.” (7 percent said they “agree completely,” 7 percent “agree a lot,” 15 percent “agree somewhat,” and 18 percent “agree a little.”)  

Obama Approval Rating At 47% 

Poll: Only 47 % Think Obama Loves America

A new poll shows that a substantial number of Americans doubt President Barack Obama loves the United States. According to YouGov, fewer than half — 47 percent — say that the president loves America. However, one third — 35 percent — say the president does not.   

The poll also asked respondents whether they loved the country. For Americans over the age of 45, upward of 90 percent expressed love for the U.S. and virtually none reported they do not love America.

However, younger Americans are less certain.

“Only 71 percent of under-30s also say that they love America. Fifteen percent of under-30s say that they do not love America, while 14 percent aren’t sure,” YouGov reports. 

47% believe the country is less safe than it was before the Sept. 11, 2001, terrorist attacks

ISIS on people's minds.


Would You Believe That 47% of the U.S. Has No Residents

47% of Americans Say The New England Patriots Are Cheaters

They still won the Super Bowl.


47% of adults couldn't last a day without smartphone

Nearly half of U.S. adults -- or 47% -- said they wouldn't last a full 24 hours without their smartphone, a survey by Bank of America found.

Smartphones fall below only the Internet and hygiene when ranked by level of importance to people's daily lives, according to the survey. Ninety-one percent said their phone is as important as their car and deodorant.

Perhaps more concerning is that most Millennials deem mobile phones more important than deodorant and a toothbrush, the survey says.

Report: 47% of Meals Are Eaten Alone at Restaurants

They don't eat alone. They are with their smartphone.


I don't know about you, but if someone asks me the odds on something today, I am going to answer 47%.

Rolling on a River of Debt

We live in a world awash in debt.

There is over $100 trillion in outstanding debt in the world today.

$30 trillion in global debt was added in just the six years between mid-2007 and mid-2013 according to this Bloomberg Business article.

Over the same period, the value of global equities fell by $4 trillion to $54 trillion.

Looking at it in financial accounting terms, the world's debt equity ratio has soared from 1.2 in 2007 to 1.85 in 2013 ( a 50% increase).

It is not much different anywhere you look.

For example, look at the debt that has been taken on by Ohio's public universities over the last ten years as reported in a recent article in The Dayton Daily News.

Total debt outstanding at Ohio public universities
Borrowing at Ohio's 14 public universities more than doubled over the last decade. Most spending was for building construction and renovations.
University	2004	2014
The Ohio State University	$814,606,000	$2,605,528,000
Miami University	$93,151,622	$641,065,000
Wright State University	$16,484,121	$101,957,190
University of Cincinnati	$894,596,000	$1,236,000,000
Central State University	$2,535,821	$17,781,501
Youngstown State University	$13,680,000	$70,710,037
Northeast Ohio Medical University	$0	$40,649,167
The University of Akron	$204,729,516	$487,101,792
Bowling Green State University	$84,400,000	$147,100,000
Ohio University	$171,300,000	$332,900,000
The University of Toledo	176,097,000	$332,549,000
Kent State University	$279,351,000	$506,455,000
Cleveland State University	$54,487,124	$205,581,517
TOTAL	$2,805,418,204	$6,725,378,204
SOURCES: Provided on request by universities to The Dayton Daily News

Ohio State University's  debt outstanding has more than tripled to more than $2.6 billion.

Miami University's debt is up almost seven-fold from a measly $93 billion to where it now ranks third in total debt outstanding in the state at $641 billion.

The University of Cincinnati has over $1.2 billion of debt and Kent State and Akron each have approximately $500 million.

Bowling Green is the only major Ohio state university that seems to have been conservative with its debt load---it only has $147 million of IOU's.

The trend is the same across the nation.  Most public universities have at least doubled their debt load over the last decade according to Moody's Debt Service.

Where has the money gone from all of this borrowing?

Some went for new classroom buildings and technology upgrades. However, a lot of the debt has been taken on to pay for student amenities such as rec centers, student centers, food courts, hip residence halls, climbing walls and lazy rivers.

In recent years, colleges have embarked on a massive facilities binge in a competition to attract students that is reminiscent of the old-fashioned defense arms race between the U.S and the U.S.S.R. Dorms that resemble the TajMahal, recreation centers that look like they could be an Olympics venue and dining halls that are fit to serve meals straight from The Food Channel.

It all costs money and tuition and fees need to go up to pay for the luxuries and the added debt. Bucking the trend is career suicide to the college administrators should they fail to enroll the necessary numbers to fill their incoming classes.  After all, nobody wants to lose a good student and the tuition money that comes with her because they did not have a rock climbing wall in the rec center.

However, the reality is that the university borrows the money for the facility upgrade, it passes the cost on to the student, who has to take out a federal student loan to pay the tuition and fees, and the federal student loan program is, in turn, funded by additional federal government borrowings (or Federal Reserve QE)!

It is debt, on top of debt, on top of more debt, when all is said and done. Of course, all backed up by the full faith and credit of the U.S. government (translated " the American taxpayer".)

What is especially troubling about all of this additional debt is that we are entering a demographic period when we will be seeing declining numbers of high school graduates across most of the nation. This is particularly the case in Ohio which, along with most other Midwestern states, will experience some of the biggest declines in prospective college students over the next few years.

This chart depicts the changes in high school graduates between 2008-2009 and 2019-2020.

         Credit:Western Interstate Commission for Higher Education

Of course, that is also why all of this money is being borrowed and spent. Faced with declining numbers of potential students, no university wants to fall behind. They can't afford to not borrow and spend even if they can't afford it.  So they borrow and spend to protect their turf and their jobs.

And the big wheel of borrowing and spending keeps turning.

And we keep rolling, rolling, rolling, down the river of debt.

Potential Pension Pain

I came across some interesting data on retirement assets lately provided by the Investment Company Institute.

As of the end of the third quarter, 2014, total U.S. retirement assets were $24.2 trillion. To put that in context, U.S. GDP for 2014 was an estimated $17.7 trillion.

U.S Total Retirement Market

(trillions of dollars)

Credit: Investment Company Institute

Retirement assets have increased by $10 trillion (+71%) since 2008. GDP in 2008 was $14.7 trillion. Therefore, U.S. retirement assets have increased by $10 trillion in six years while the total economy has only increased by $3 trillion. This is a clear indication of the Federal Reserve QE program that has inflated the value of financial assets.

Another way to look at it is that retirement assets equal about 1.4x GDP today.

In 2008, these assets only represented .7x of GDP.

For perspective, in 1985 retirement assets were .5x of GDP, in 1995, .9x of GDP and in 2005, 1.1 of GDP. Some of this increase is due to the aging of the population but a large amount of the increase is the result of the inflated value of financial assets due to QE.

Since the financial assets in retirement plans are largely a claim on future income and earnings of the economy, you have to wonder how reliable those asset values are right now looking to the future.

Anyone saving for retirement should not be too comfortable with their account balances right now. I would expect rougher waters ahead.

What I also found interesting is that IRA's (Individual Retirement Accounts) have more assets than company-sponsored defined contribution plans today. IRA's are now also approaching the same amount of combined assets as are in government and private sector defined-benefit pension plans.

By comparison, in 2000 defined benefit plans had nearly double the assets ($5T to $2.6T) that IRA's had. That is a pretty significant change in the space of fourteen years.

All of this is remarkable when it is considered that IRA's were first introduced in 1975 and Roth IRA's were not enacted until 1997.

Another interesting chart from the ICI data compares retirement assets with unfunded liabilities. This chart is downright scary and should serve to be a cautionary tale as to why politicians and the governments "they manage" should not be allowed to offer defined benefit plans. Politicians make the promises and the taxpayers have to write the checks for the inevitable shortfalls.

U.S. Total Retirement Entitlements

(trillions of dollars)

Credit: Investment Company Institute

Please note the unfunded liabilities as a % of retirement assets for the various defined benefit plan sponsors.

Private Sector        2%

State and Local     24%

Federal                 57%

Of course, defined contribution plans and IRA's are always fully funded. They will only pay out what the assets are worth in the long term. The participants takes all the risk of market declines.

Unfortunately, most of the participants in DC plans and IRA's are also assuming the risks for market declines in the assets of governmental DB plans as well. Any underfunded amounts will be made up in increased taxes on the private sector in the future in order to make the pension promises to government workers. And these plans are already significantly underfunded right now.

If retirement asset values drop, expect a lot of pain and pent-up anger. It will not be pretty.

Federal Reserve Charts on Historical Levels of Underfunding of DB plans.

Private DB Pension Funds

Unfunded Ratio

State and Local Government DB Pension Funds

Unfunded Ratio

Federal Government DB Pension Funds

Unfunded Ratio

Notes on this chart from The Federal Reserve: Federal government DB pension plans were largely unfunded for several decades, as illustrated above by an unfunded ratio of close to 90 percent of total liabilities of the sector in the 1970s. In the 1980s, the FERS--which was designed to be essentially fully funded--was introduced to gradually replace the CSRS, leading to a decrease in the unfunded component of federal DB pension liabilities. Additionally, in recent decades, the Treasury Department has been required to make "catch-up" payments to the federal DB pension funds from its general fund in order to gradually close the funding gap in federal DB pensions. As a result, the unfunded component has decreased from about 90 percent to about 58 percent of total DB liabilities of the sector.

One important difference between federal and S&L (or private) DB pensions, however, is that federal DB pension funds are invested almost exclusively in special-issue, nonmarketable Treasury securities. As a result, unlike private and S&L pension funds, the "asset holdings" of federal DB pension funds are not assets that can be sold in private markets in order to fund future benefits. Instead, they represent claims on the Treasury, and therefore the balances of the federal pension funds are available for future benefit payments only in a bookkeeping sense.

Time Lost, Time Gained

I am traveling this week so I thought I would republish a post from two years ago on Daylight Saving Time. All you ever wanted to know on the subject as you try to recover from the hour of sleep you lost last night.

Originally published Saturday, March 9, 2013


Daylight Saving Time is upon on and I thought I would provide a little perspective on the subject. My first memory of DST is when I about 5 years old.  We lived just outside of Akron, Ohio and my grandparents lived in Cleveland.  Cleveland was on DST but Akron was not so there was always a lot of discussion about what time is was whenever we planned a visit.  Even to a 5 year old that was very confusing.

This confusion reigned across the United States in the 1950's and 1960's because each locality could adopt, start and end DST as it wanted to.  In fact, on one bus route between West Virginia and Ohio, passengers had to change their watches seven times in 35 miles.  In Iowa, 23 different pairs of DST start and end dates were in effect in one year.

All of this chaos finally led Congress to pass a law in 1966 establishing set rules for observing DST nationally.  This law established DST as the national standard beginning on the last Sunday of April and ending on the last Sunday in October-exactly six months in duration.  However, it permitted any state to exempt itself from DST by passing a state law.  This was later amended to allow any state to make this distinction based on time zones in the state.  This resulted in Indiana (part Eastern and Central time) to split between standard and daylight time until the state finally went to DST uniformly in 2005. Right now Arizona and Hawaii are the only states that do not observe DST.

The main purpose of DST is to make better use of daylight.  DST allows for an hour of daylight to be moved from the morning to the evening.  Since people are generally more active and are doing more outdoors in the evening it has proven popular in many societies around the world.

Today I Found Out provides some of the background on how the idea for DST came about.
Ben Franklin often gets credit for being the “genius” who came up with daylight saving time.  Interestingly though, the letter he proposed something like what we now call daylight saving time and which was eventually published in 1784 under the title, An Economical Project, was actually a witty satire meant to entertain some of his friends, not to be taken seriously on any account.

The modern day version of DST was first proposed by the New Zealand entomologist George Vernon Hudson in 1895.

The credit though for the modern day DST system is often incorrectly given to William Willett who independently thought up and lobbied for DST in 1905.  He was riding through London one day in the early morning and noticed that a good portion of London’s population slept through several hours of the sunlit summer days.  Willet lobbied for DST until his death in 1915.  Ironically, it was one year later in 1916 that certain European countries began adopting DST.

It has been argued that energy conservation is another benefit of DST since there is more energy consumed in homes with lighting, televisions, computers and appliances in the evening compared to the morning.  After all, if you are able to be outside enjoying the daylight you are not using power inside the home.  In fact, during the Arab Oil Embargo in the early 1970's, Congress moved up the effective date of DST to early March to conserve energy.

A recent study has called into question whether DST actually results in any energy savings today. The increased use of home air conditioning in the warmer evening hours compared to the cooler morning hours may be the reason.

Scientists from the University of California, Santa Barbara, compared energy usage over the course of three years in Indiana counties that switched from year-round Standard Time to DST. They found that Indianans actually spent $8.6 million more each year because of Daylight Saving Time, and increased emissions came with a social cost of between $1.6 million and $5.3 million per year.

Commentators have theorized that the energy jump is due to the increased prevalence of home air conditioning over the past 40 years, in that more daylight toward the end of a summer’s day means that people are more likely to use their air conditioners when they come home from work.

Daylight Saving Time is not really necessary as you get closer to the equator as the days and nights are 12 hours each throughout the year.  It is only as you get further away from the equator that you get variations in the amount of daylight during the year.  In summer, daylight hours exceed darkness and the opposite is true in the winter with extremes being experienced the further you get from the equator.

You can see this graphically in this world map that shows which countries have adopted DST at some point compared to those that have never done so.  You can see that very few countries near the equator are using DST currently.

Credit:WebExhibits.Org

By the way, the way I found in researching this post that it is "Saving Time" not "Savings  Time". Daylight saving time uses the present participle "saving"as an adjective, as in "labor saving device". I had been saying it wrong for all these years. You learn something new everyday.

I still am confused about one thing.  Since we now have adopted Daylight Saving Time beginning the second Sunday in March through the first Sunday in November each year, it is actually more standard than our Standard Time.  We are using it the majority of the year. Doesn't it than make sense to make Daylight Saving Time the standard and rename Standard Time to Daylight Lost Time?

Enjoy the extra hour of daylight and don't forget to take a nap to make up for the lost hour of sleep.

Credits for the DST facts in this blog post:

http://www.webexhibits.org/daylightsaving/g.html

http://www.todayifoundout.com/index.php/2010/03/its-daylight-saving-time-not-daylight-savings-time/

Minimum Wage, Maximum Leverage

The issue of illegal immigration continues to divide Washington, DC. We saw it again last week when Congress could not agree on a bill that would fund Homeland Security and also prevent funding President Obama's "executive action' to legalize 4 million illegal immigrants.

We will see more headlines this week as Congress kicked the issue down the road for another seven days.

The argument we have heard most often for immigration reform in the past is that the United States does not have enough workers.

In fact, when President Obama announced his "executive action" in December he said the following.

"Part of staying competitive in a global economy is making sure that we have an immigration system that doesn’t send away top talent, but attracts it.” 

President Obama has supplemented this argument with a "humanitarian" view in his latest action in that generally those illegals that would be allowed to gain "legal" status through his use of his "executive authority" are the parents of U.S. citizens. In other words, if you came to this country illegally and had children that were born here, that then becomes your ticket to stay in this country. President Obama would call it keeping families together.

It would seem logical to me that if this is the case why wouldn't a minimum requirement also be that the parents should produce evidence that they also fully paid for the hospital costs involved with the birth?  If they did not pay or the costs were paid by Medicaid, why would we not require the newly legalized workers to be required to pay these costs back as a condition of their work permit status?

As an example, a vast majority of births in a number of hospitals in Texas are to illegal immigrants. At Parkland Hospital in Dallas (yes, the hospital in which John F. Kennedy died in) births to illegal immigrants have made up almost 75% of total births in recent years. Over half of the births at LBJ Hospital in Houston have been to illegal immigrants in recent years. Nationally, it is estimated that almost 1 in 10 births in this country today are to an illegal immigrant. A large portion of the costs for these births are paid by Emergency Medicaid or the costs are just absorbed as a loss by the hospital as these illegal immigrants do not pay anything for the birth.

Under Obama's "executive action", if an illegal immigrant has to produce a birth certificate to prove they are the parent of a U.S. citizen, shouldn't they also have to produce evidence the birth was not paid by U.S. taxpayers or was a bad debt of the hospital?

And shouldn't they be obligated to pay this money back since the birth is, in effect, their ticket to access the U.S. jobs market? The amount owed could be withheld from their future wages on an installment basis. The money could also be allocated specifically to fund Obamacare costs. This would be the logical way to handle this issue if President Obama's "executive action" is allowed to stand. Or does that make too much common sense?

Let's also examine the argument that we need the workers.

Hotels, restaurants, construction and a number of service industries argue that there are not enough Americans willing to work at lower paid jobs. They argue we need to provide opportunity to low-skilled foreign-born workers to enter the United States to do these jobs that will result in an overall benefit to the economy

On the other end of the education spectrum, high tech computer companies in Silicon Valley and other industries that covet STEM college graduates (Science, Technology, Engineering and Math) are big supporters of opening the borders for these graduates arguing we are developing enough native-born citizens with these skills.

What are the facts?

I thought this chart from The Washington Post that shows unemployment rates by college major was particularly interesting on that score.

Note that the current unemployment rate of recent high school graduates in the U.S. is almost 18%. The unemployment rate for experienced high school diploma holders is 9.9%. The unemployment rates for high school drop-outs is traditionally even higher. Where is the need to bring in more unskilled labor? There are already millions of Americans without jobs.

Notice also that the unemployment rate for recent college graduates is higher for Computers, Statistics and Mathematics majors (8.3%) than for Communications and Journalism majors (8.2%). If we can't employ nearly 1 out of 10 recent college graduates in Computers, Statistics and Mathematics, why do we think there is a need to bring thousands of additional foreign workers here. Why don't we get these young Americans employed first before bringing in additional immigrants?

The truth is that many of our political leaders and business interests keep calling for "immigration reform" when they really just want to increase the numbers of "legal" immigrants despite the fact that our economy can't provide enough good paying jobs to native born citizens as it is.

We are already providing legal "Green Card" status to over 1 million immigrants per year. No other country in the world provides more legal immigration each year than the United States already does.

The reality is that immigration reform is not so much an economic issue as it is a political issue. Democrats need the votes. That is all they seem to care about.

Corporate interests want to keep wage costs down. The labor unions should be anti-immigration but are more concerned with the success of the Democrat party than their own members.

Republicans in Congress are caught between the monied interests who want the cheap labor supply and their rank and file voters who fervently oppose illegal immigration. It is all about political interests and has very little to do with the best interests of this country, the American people, or especially, the American worker.

For the average American worker, the higher the immigration levels are, the lower their wages will be. That is basic economics. It is simple supply and demand.

That is why I would like to see the Republicans turn the tables on President Obama and the Democrats and combine an increase in the federal minimum wage with defunding of Obama's "executive action".

Pass the Homeland Security funding bill as a clean bill. Immediately thereafter, have the House of Representatives pass a bill increasing the federal minimum wage from $7.25 to $7.50 and defund Obama's executive action on immigration in the same bill and send it to the Senate

Failure to pass this bill requires Democrats in Congress and the President (if it passes and he vetoes it) to admit that 4 million illegal immigrants take priority over American workers.  And it also puts Democrats on the spot in that they have consistently been calling for an increase in the minimum wage for years. They suddenly don't want it if it means we can't legalize more illegal immigrants. That is a tough position to defend in anyone's home district or state.

Bear in mind that 29 states already have minimum wage laws in place that are in excess of the federal law. That should lay to rest fears that the GOP would be selling out on a major adverse economic issue.

Such a move could also be used by the Republicans to show that they are "working for the American worker" and are also "willing to compromise" on issues.

Sure, the Democrats would argue that GOP is just playing politics. However, I would much rather be on the Republican side of that political issue than be accused of trying to shut down the government or holding Homeland Security hostage to get the illegal action of the President de-funded.

What about you?

(Note: It goes without saying that the strategy I propose would have those on the Hill arguing it could not be done because it would violate some aspect of the Budget and Appropriations process. In other words, it would be illegal. However, when did that stop President Obama?  My advice to Speaker Boehner and Majority Leader McConnell? It is time to start playing the game the way the other side plays the game.