Thursday, September 24, 2015

Buy American

Fall is upon us and with it some more temperate weather. As I pull out the sweaters to replace the polo’s in the dresser I’m reminded of the stories behind each garment. One I got as a student in Scotland two decades ago that no longer quite fits but I just can’t let it go. Another brings a smile as it was a gift. Other than these types of remembrances I’m not much for seeing where something is made. When I bought my first Honda there was a national discussion about the decline of Detroit and the uprising of Japan taking American jobs. The car came with a certification that 83% of the vehicle had been built in North America under NAFTA and nearly 70% was made in America…higher than most ‘American’ brands. So I certainly keep an eye on who owns what, but my purchase decisions aren’t driven by patriotism. The U.S. Government doesn’t have the same luxury, and they just proved it again.

During the last week of September 2015 the United Nations General Assembly is in full swing in New York and leaders from virtually every country in the world descend upon the city. The U.S. State Department virtually relocates to the Waldorf Astoria in New York. Not this year. By tradition U.S. Presidents have stayed at the luxury hotel which is run by the Hilton Hotel chain. A Chinese company with close ties to the government have bought the building and granted Hilton a 100-year lease to run the hotel. The company is investing tens of millions into a renovation. President Obama has announced that he’s not going to stay there – nor any of the U.S. delegation “due to costs and space needs of the U.S. government as well as security concerns.” China is the #1 suspect in a series of cyber thefts of U.S. government data and there are fears that the "renovation" is more about putting listening devices into the rooms. The renovation is not currently scheduled. (The U.S. Ambassador who also has an apartment in the building will likely be relocating when the lease expires as well.) Ahh, patriotism! 

Remember the ad campaign in the 1970’s “Look for the UnionLabel?”  It not only explained the benefits of the union but also had a snappy tune to encourage consumers to think about and make choices that benefited American workers.

In the mid 1980’s Wal-Mart launched their own campaign: “Made in America” to encourage consumers to go to Wal-Mart and make their purchases. Buying at Wal-Mart made you a better American. (This was pre-smiley faces.) In 2013 the company launched a $50 billion refreshed version of the campaign. It represents 1.5% of the company’s inventory purchases.

In 1990 the U.S. Government jumped on board with their own ad campaignIn the 15 years since, American exceptionalism has manifested itself further – especially in the political realm. Presidential candidates of all types must wear the stars and stripes. Rhetoric must frame the U.S.A. in a position of superiority in all instances. Any true observation and recognition that the country is askew runs the risk of being labeled a traitor.

The move from the Waldorf Astoria to the New York Palace Hotel is the latest example of misplaced priorities on the part of the Obama Administration. If the U.S. believes that China hacked and stole data: there’s an entire international justice system at their disposal. Instead they are making a symbolic statement. Not unlike “Buy American.”

Thursday, September 17, 2015

Slowing Down The End

I’m not much for the apocalyptic and post-apocalyptic entertainment that makes up a portion of popular culture. It’s not that I’m looking for stuff that's all sunshine and gooey, rather something in between: good entertainment. It’s the dark and largely negative expectation that is the world vision of a post-apocalyptic world  that puts me off. I suppose it makes sense given that the premise is some sort of cataclysmic event occurring. As we move towards the end of another September the rhetoric, gamesmanship and predictions of the End are upon us. You guessed it…It’s time for Government Shutdown! (Cue music.)

Like a bad penny certain legislators are using the budget process as a way to demand their way on a particular issue. This time it seems to be around the funding of Planned Parenthood. Last time it was Obamacare. The time before…does it matter? Partisans get their dander up and cable TV gets to run an end of the world clock to when the government will run out of money and close its doors causing mayhem throughout the land. Nonsense. (This is a family blog – but you can imagine a better expression synonymous to bovine excrement.)

The White House and some Democrats are hawking a Government Shutdown like it’s a mini-series coming to television on Halloween. All that’s missing is rhythmic drumming underneath the warnings of dire consequences.

The 2013 “shutdown” lasted 16-days. Approximately 800,000 federal employees were indefinitely furloughed, and another 1.3 million were required to report to work without known payment dates. There are 2.1 million government workers. That’s 28% of the workforce. Put another way: 72% of the workers were unaffected. And, like furloughs before it, every worker was paid for the missed work days retroactively. They didn’t have to use any of the massive time off afforded them as government employees.

72% of the workers are reporting to work in a shutdown. It can’t therefore actually be a shutdown. At best it’s a slowdown. More likely an inconvenience. This happens because the U.S. government hasn’t actually had a fully passed legislative budget approved by all branches since Bill Clinton’s in 1997 for FY98.

There are 12 Appropriations bills that must be passed for money to be spent. When all of the bills have been passed then the budget is considered law. In the event that something is not agreed to funding continues through a Continuing Resolution. In this century (2000 to 2015) the Government did not rely on a CR only once: 2012.

Whether it is a Continuing Resolution or the actual Appropriations Bill - funding is voted on and approved the three branches of government. The budget hasn’t been balanced in 18 years. So there’s a shortfall in that Congress votes to spend and what Congress votes to tax and collect from businesses, merchandise and individuals. It’s the deficit – now accumulated to over $18 trillion (with a t). The shortfall each year makes up the debt. In order to actually pay for what’s been approved – since there’s not enough income coming in to cover it – then money has to be borrowed. There is a limit to what the government can borrow – just like a credit card. Congress must then approve a raising of the debt limit in order to pay for all of the things it’s approved.

Many use the increasing of the debt limit as the most evil part of the process. As a deficit hawk I can agree in concept. The point, however, is that the ceiling is simply a reflection of the spending that is voted on in the appropriations and continuing resolution phases. By making it a separate issue (and timing its vote separately from the spending votes) many legislators are able to both rail against the deficit while voting to spend more than is being brought in. That’s voting out of both sides of your mouth.

The End of the World is not a slowdown in government services. Notice the airport, food inspectors, military maneuvers aren’t what gets's White House tours and courts. Voting to spend more than you bring in and then railing against the need to borrow to pay for those same purchases is the ultimate in political games and hypocrisy. As we come up to this year’s version of Government Showdown it’d be nice if we could get some different casting and plot points. I know how this one’s gonna end. (Hint: government expands.) Now that’s something worth slowing down.

Thursday, September 10, 2015

Rich Irony

I just reviewed my Social Security statement so I know what I can expect to receive in benefits if I retire in a dozen years or if I stop working in twenty years. The agency sends me a reminder each August to log in and see the information – and it includes a total of wages earned by year from the first time I got a paycheck.  The century old program takes funds directly from each paycheck (both from workers and their employers). Then at a certain age (62, 65, 70, etc.) when retirement kicks in then there’s a monthly benefit that flows back to each person who kicked into the program. Looking at my wage totals was a quick trip down memory lane – I can see when I was an union worker making $3.10 an hour to being part of the top 5% of earners for a short time. I’ve never worked directly in the government sector, but the significant range of earnings available in the private sector doesn’t exist in the public sector with its more steady salaries and benefits. Or that was the prevailing belief.

The Huffington Post reports on an analysis by Glassdoor:  “The average pay ratio of CEO to median worker was 204-to-1, the report found. At the top of the list, four CEOs earn more than 1,000 times the salary of their median worker.”

Outrage and hyperbole from all sides on the disparity has been part of the political lexicon for several Presidential campaign cycles. Beyond the brouhaha, this time it’s different. The Securities and Exchange Commission starting in January 2017 will require companies to reveal that gap.  

Companies that sell shares to the public should have as much about their operations disclosed as is reasonable so that a shareholder can properly evaluate their stake in the business. Is the wage differential data interesting? Yes. Will it change an investor’s likelihood of buying a share in a company? Possibly, but unlikely. This rule is designed more to embarrass large companies (as it doesn’t apply to non-public companies) who are going to have a disproportionate share of large gaps.

The government is catching up. In late June 2015 it was announced that the CEO’s of the mortgage giants Freddie Mac and Fannie Mae are getting a pay increase. Per The Huffington Post: “Fannie and Freddie own or guarantee about half of all U.S. mortgages, worth about $5 trillion. Along with other federal agencies, they back roughly 90 percent of new home loans. The companies don't directly make loans to borrowers. Instead they buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors.” Compensation for the positions at the firm that the U.S. Government runs was limited in 2012 after the financial crash of 2008 to $600,000 per year. The pay increase granted this summer raises the total compensation to $4 million per year.  The justification: “The Federal Housing Finance Agency, which oversees the companies, said the new plans take CEO performance into account and the executives will be paid less than most CEOs at similar companies.”

It feels like a similar argument to what boards of large public companies say about their executive compensation packages. Everybody is competing to match each other, so it ultimately becomes a circular process. Wages for workers have stagnated for over a decade. Should there be more parity between CEO pay and worker pay? The market should determine that, not a government agency and certainly not the government itself.

As one arm of the government tries to shame companies that have huge gaps between pay in the executive ranks to their workers, another arm of the government is doing the exact same thing itself. Rich irony.

Thursday, September 3, 2015

Boomer to Boomlet

I’m a Baby-Boomer living in a Millennium and Boomlet world. Translation of the generational lingo: I’m 50 years old and most of how today’s world operates has been dictated by those 18-40.  Superficially that means that we’re all navigating a connected world where information is available at the touch of a finger or a query to Siri. I wouldn’t have it any other way. My life is demonstrably better with the device I walk around with day in and day out. It also means that there’s more of an openness about our lives thanks to the Internet. There’s a huge benefit to that – and some consequences as well. Millions of people discovered that the hard way.

In mid-July 2015 “a group calling itself ‘The Impact Team’ stole the user data of Ashley Madison, a commercial website billed as enabling extramarital affairs” according to Wikipedia. A few weeks later they “dumped” millions of records onto the internet for all to see. The media went crazy – as did the public. There’s a website where you can have an extramarital affair? OMG – there’s a website where you can have an extramarital affair! And there’s nearly 40 million subscribers! Reports breathlessly hypothesized about a “tsunami” of divorce cases heading to the courts. Meme’s were created.

AP reports that a lot of those accounts are fictitious. Patheos reported that 400 Christian church leaders were expected to resign after their names were discovered on the company’s roster. The company’s CEO resigned in part because of the discrepancy between promising to delete user data for an additional fee and having the data preserved, hacked and distributed. The BBC reported August 31st that in spite of all of the problems hundreds of thousands of women are joining the platform and that week sent 2.8 million messages.

For the likes of Christian and reality TV bully Josh Duggar, the discovery of his account feels appropriate given the massive level of hypocrisy involved. For others, less so.

As Libertarians, we seek a world of liberty; a world in which all individuals are sovereign over their own lives and no one is forced to sacrifice his or her values for the benefit of others.

We believe that respect for individual rights is the essential precondition for a free and prosperous world, that force and fraud must be banished from human relationships, and that only through freedom can peace and prosperity be realized.
Consequently, we defend each person's right to engage in any activity that is peaceful and honest, and welcome the diversity that freedom brings. The world we seek to build is one where individuals are free to follow their own dreams in their own ways, without interference from government or any authoritarian power.

I’m a person of faith and believe in the Ten Commandments. Number seven states unequivocally: “You shall not commit adultery.” Not a lot of wiggle room there.
This is not the first example where there’s a conflict between my religious beliefs and my political / societal beliefs.

In this case there’s even an additional conflict. Transparency is vital for a democracy. Edward Snowden may have broken the law, but he nearly single handedly kept the constitution relevant in these times of terror-phobia. The Wikileaks of various issues have been vital to people around the world being informed of how their rights are systematically ignored.

There is a difference in leaking data that has been classified in order to hide illegal/immoral activity and the release of records of people who considered and maybe explored  having sex with somebody other than their spouse.

It’s too Pollyanna to hope that leakers and hackers would differentiate between information that educates and enlightens and information that exposes and embarrasses. Aside from the fact that technology just doesn’t work that day – what I might distinguish as educational somebody else might swear is embarrassing. It’s a rabbit hole.

Generation Z – also known as the Boomlets are coming of age. Born after 2001 they have never known a world without computers or being connected – and and at age 3 are leaving behind traditional toys and gravitating towards computers and devices. If what I’ve seen in my 50 years is anywhere near what they will – it’s going to be an extraordinary century. Let’s hope that they can figure how to protect democracy, shun secrecy and keep a modicum of their privacy intact. My generation has failed.