Sunday, January 20, 2013

"We Have Met The Enemy, And He Is Us"

Walt Kelly's famous "We have met the enemy" quote dates back to the 1950’s. The line was first uttered by "Pogo", a 50's and 60's cartoon creation of Kelly's. Pogo was before my time, but as best as I can tell it seems to me he could have been Bloom County's "Opus" the Penguin's forefather. The brilliant quote was revisited again in 1970, as it became the poster tag line for the first “Earth Day”. A few thinkers have borrowed the clever thought since then, including Kurt Vonnegut Jr. and Woody Allen. But I think it is strange that we don’t hear the sentiment often enough. We have to admit, we spend a lot of time and energy hunting down culprits for problems we categorically blame others for, or at best, we partially “soft-blame” ourselves (“I was too nice and let them take advantage of me”, or “I voted for him, what a mistake.”)

Accountability is most certainly not an easy thing. And yet, great men and women believe it is the key to happiness. So why the resistance? I’m sure psychologists and sociologists have a few good theories on the subject. To keep my point short I won’t dig those up, but my bet is that it all has something to do with a vicious circle. Since we’re wired to frequently be on a blame witch-hunt, putting ourselves on the wrong side of the hunt is unacceptable.

Mainstream religions tend to teach some level of humility and repentance. That is great – if it weren’t for the fact that most faithful approach religion like they might approach spectator sports: it stirs up empathetic passions every Sunday, but less than 24 hours later our weekly descent into the dark side of the force is complete. Which makes you wonder: was it some kind of miracle that 39 men once signed a document that began with “We the people”, and it became one of the greatest documents in the history of mankind? I may be reading too much into it, but I always thought what was intended by “We the people” was fairly self-evident. Surely if the founding fathers had meant “They the people”, they would have written so.

Yet every couple of years, aspiring young American politicians find a stump, rally up a small crowd by engaging in an “us vs. them” rhetoric, and offer up a speech that invariably ends in something like this: “Let’s send a clear message to Washington, we will not tolerate their (whine, bitch, or moan of the day.)” Poor George, if the old expression “turning in his grave” were literally true, he would have drilled his way from coast to coast several times by now.

So it turns out that besides sending a politician or two from every state to Washington every couple of years, a group of guys in business suits and dark glasses board the same DC-bound flight. No, they are not security: they are the lobbyists that funded the politicians’ campaigns.

The reported expenditure in 2012 by Washington DC lobbyists was $2.5 billion, according to the Center for Responsive politics ( That figure also happens to be slightly under the ten-year average. On a simple, linear math: during the official two-year term of congress representatives, that amounts to $5.3 billion; during the four-year term of a president, the expenditure reaches $11.3 billion; during the six-year term of senators lobbying adds up to $16.9 billion, and during a two-term president it reaches $22.6 billion. Senators are favored targets of lobbyists, given their significant influence, lesser spotlight than the president, longer terms, and more predictable reelection. Six years is also the threshold of pain for Wall Street, in terms of how long it is willing to wait for results. For perspective, using the six year total of $16.9 billion, lobbying represents 1.9% of the healthcare spending in 2011, and for the same year: 2.5% of defense, 20% of transportation, 37% of energy, 44% of justice, and 150% of interior, or commerce, or the EPA (source OMB – Office of Management and Budget.)

So here’s the trillion dollar question: is there anything about lobbying that is adding value to our quest to build a more perfect union? My answer is fairly uncomplicated (for a change): no. There are only two official reasons for lobbying in Washington: access to taxpayer funds, or access to special rights. Both of those accesses should not be unduly influenced by unelected interests. With all due respect to my senator, when $150 out of every $1,000 I make goes to Washington, his mandate on how to best spend that money should not come from the lobbyists who financed his election. The conflicts of interests are so blatant, I am left wondering how long are we going to simply stand there with a tear running down our cheek.

For every year that goes by and I do nothing about this, I certainly only have myself to blame. I am, it seems, my own worst enemy.

Sunday, January 13, 2013

Why Republicans Are Half-Right About The American Entitlement Problem

The fateful remarks made by Mitt Romney at a private fundraiser during his 2012 presidential bid stirred up quite a controversy, as many of us recall. The one word that most people remember from that hidden camera video is “entitled” – which sums up the intention of his remarks: too many Americans feel entitled to something that they have not fairly earned. The 47% figure may have been over the top, but to be fair, who hasn’t exaggerated in private when frustrated by the dysfunctional behavior of too many people? Yes, I know. Just like Facebook’s amusing “Privacy Notice”, presidential campaigns come with the same disclaimer: if it’s private, don’t open your mouth.

I can’t cast stones in the exaggeration department. It has taken me many years to realize that exaggeration is a display of intellectual laziness. Meaning, you are trying to make a point that is not as valid as you say it is, so you stretch the truth beyond distortion to suit your agenda. Surely, “6.5%” of Americans that feel they are entitled to your money without contributing a cent does not stir up rage as much as “47%”. But we have to admit, the pre-exaggeration issue does raise an important question: who are the entitled ones, and how much value are they destroying?

The Heritage Foundation is a conservative think tank, with the majority of its members coming from Republican administrations. On a recent testimony before the U.S. House of Representatives (Committee on the Budget), Robert Rector, Senior Research Fellow from the foundation, shared a total welfare figure for FY 2011: $927 billion -- proportionally almost one trillion dollars. 

Dissecting the trillion-dollar figure we find that only $717 billion is at the federal level, since $210 billion are state programs. That translates to an allocation of $1,400 per federal taxpayer last year going towards federal welfare programs -- which further translates to $117 per month. Mr. Rector breaks down welfare into three general sub-categories: health (50%), cash, food, housing related (38%), and training related (12%). Let’s set aside the training impact, which even the Heritage Foundation considers an enabling program -- the opposite of entitlement. That brings our monthly, average taxpayer welfare impact to $105.

So who is sucking just around $100 per month from the average taxpayer, and feeling entitled to it? Well, the Census Bureau reports there are 40 million Americans that live in poverty -- meaning, they do not contribute to revenue.  Out of those 40 million, the Heritage Foundation recognizes about a quarter of them as being disabled adults, and another quarter as being children living in poverty. That would mean that there are roughly 20 million adult and able Americans that have become entitled to taxpayers’ funds, without any economic contribution from their part. That is in essence the entitled poor, at 6.5% of the American population.

Six-and-a-half percent of the American population is not a small amount of non-contributing, entitled citizens, compounding into a three-quarters of a trillion dollar burden. But at 5% of total GDP, that might still be a manageable number -- IF only that were the only source of entitlement.

Every time the board of directors of a major corporation lobbies Washington for entitled privileges that too easily enable job destruction, predatory competition, and regulatory manipulation, it inevitably results in the destruction of billions and ultimately trillions of dollars -- in favor of a few entitled rich. In terms of population, they are a relatively insignificant number, even less than the so-called 1%. But it’s not the population number that is of concern when it comes to the entitled rich: it is the impact and drain they have on the economy when they destroy more than they create. As an obvious example: between 2007 and 2009, U.S. homeowners lost a total of $7.3 trillion dollars in value. A few but deadly entitled rich created the bubble, enabled by Washington, and cashed-in before the bubble burst -- the oldest trick in the book.

Thankfully for the U.S., the vast majority of individuals, AND corporations, are value creators. Between the two, the U.S. is producing over $15 trillion dollars in value per year. When one of the entitled segments takes away 6.5% of the value, it hurts – no doubt. But when the other entitled segment takes at least another 6.5% chunk, on average, we are now at 13% destruction of value – and rising. Like unemployment or inflation, we may be able to handle a 6.5% bleed. But we cannot go on indefinitely with a double-digit destruction of value. It is too disruptive, and inconsistent with our claims to a first-world nation.

Mother Should I Run for President? (A Video Blog)

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