Wednesday, June 29, 2016

The Most Important Book You Can Read This Summer

Besides the Bible or whichever religious scriptural text you choose to follow, that is.

It occurred to us recently that if you were born in any year after 1980, believe it or not, you have a very limited appreciation or even knowledge of a time in America when things were moving along at a fairly robust economic clip where people were joining the workforce, not dropping out of it, because there were so many jobs been created everywhere.

Think about it. If you were born in 1980, you were turning just 20 years old when President George W. Bush 43 was sworn into office in 2001. Unless you were a very unusual child prodigy interested in economics or business, you probably did not pay as much attention to the Dow Jones Industrial Average and economic growth data from the US Department of Treasury, OMB and the President's Council of Economic Advisors as you did to video games, sports, dating or any other diversion pertaining to youth.

You did not see or fully understand the economic recovery explosion America experienced under President Ronald Reagan from 1982-1988. You did not see or fully understand the economic explosion under President Bill Clinton from 1995-2000, fueled mostly by the rise of the internet but also because of sound fiscal and economic policies from the Clinton Administration which mercifully brought in businessmen such as North Carolina's own Erskine Bowles to run things at the White House.

As soon as you were sentient about what was going on in the world around you, 9/11 hit and the Dawn of the Age of Global Terrorism was upon us. The economy weakened under President Bush and never really got going very well before the financial house of cards crashed in 2008 and we experienced the worst recession/depression since the Great Depression from 1929 until we entered World War II after Pearl Harbor in December, 1941.

The 1.76% annual rate of growth under President Barack Obama is quite simply, the worst economic record of any modern American President.

If that had been for just one term, that would have been bad enough. But for two full terms or 8 straight years???

Normally, that would have been labeled as 'catastrophic!' by the national media. Had that been the record of any Republican President, of course. However, since the mainstream news media has long since forgotten how to be impartial, fair and balanced, they defend the economic record of President Obama as 'terrific!' which redounds only to the detriment of all the young people who can't find a good job now or have to work 3 jobs just to make ends meet.

What can change all of that?

We have started to re-read 'Free to Choose', a magnificently easy-to-read primer on market economics by Nobel Prize winning economist Milton Friedman, formerly of the Chicago School of Economics.

We remember reading this book in 1980 and feeling like a massive neon light went off in our brains. We had been indoctrinated in high school and college with the advantages of the welfare state and how great 'top-down' management of the economy supposedly was.

But we were watching the US economy melt down all around us as we graduated from college. Inflation hit 12%; interest rates were approaching 21%, President Jimmy Carter instituted gas-rationing where you had to figure out if you could go fill up the gas tank in your car on odd-or-even days (don't ask); Iran held 52 American hostages for 444 days in Tehran and things just generally felt like they were going to hell in a hand-basket.

Things were not going as splendidly as the people who loved more government and bureaucratic control of everything wanted you to believe in 1980. In fact, almost everything run by the federal government was falling apart at the time. Deficits were running about 35% each year and the national debt was 'spiraling out of control'. (It was 'only' $908 billion but the economy was only $2.8 trillion in GDP at the time as well)

Which is the prime reason why the American people voted Ronald Reagan in as President and kicked Jimmy Carter to the curb in what is still the largest landslide vote to turn out an incumbent president in American history, 489-49 electoral votes.

Here's why we think it is so important for everyone, especially every young person, to read Mr. Friedman's book this summer:

'It will give you hope for the future'

'Free to Choose' gives you a roadmap for the proper role of government in American economic life. Mr. Friedman says the role of the federal government, or government anywhere, should be as a 'referee', not as a 'participant' in any economic endeavor.

The amazing part of American history is the extent to which we have always aimed for the idealism embodied in Adam Smith's 'Wealth of Nations' that free men and free women, acting on their own initiative and hard work, can produce a society where goods and services are freely transacted on a daily basis to the benefit of everyone involved.

The more government interferes with those decisions, the less efficient and productive the economy becomes, almost as if the fuel injection systems of your high-tech automobile are gummed up with residue, muck and carbon build-up.

'Clean out the carburetors and let the engine run smooth as silk' was Mr. Friedman's basic message, to date this book back to a time when there were carburetors to clean out in a car's engine in the first place.

We have reached another hinge point in American history very similar to the one we faced in 1980. The economy is dragging along as if it has a $20 trillion debt burden on its back (it does) in addition to a wet blanket of regulations, rules and taxes as deep as the volcanic ash that covered Pompeii from President Obama's 7.5 years in office.
The Crushing Effects of President Obama's Taxes,
Laws and Promulgated Regulations on the
American Economy

This is by no means an argument for 'no government' as detractors of free market economics say whenever faced with arguments advocating more economic freedom and less government control.

As Mr. Friedman said, the government should be a 'referee', not a participant in economic transactions made between free people. One of the worst things that happened during the Crash of 2008-2009 was that young people saw hundreds, if not thousands of Wall Street bankers and money-changers essentially get bailed out of their own freely-made economic decisions that turned out to be disastrous, and hardly any of them were forced into bankruptcy or, if crimes were committed, tried and sent to prison.

Most, if not all, were restored to full economic health and massive wealth by you, the individual taxpayer with help from the Federal Reserve 'expanding their balance sheet'.

It had the same detrimental impact to young people observing it all as watching a wealthy guy cheat on the golf course. Any other golfer would be disqualified from the tournament if he so much as started to putt the ball and it moved. The Wall Street bankers basically took 10 mulligans on each hole; kicked the ball out of the rough like Judge Smails in 'Caddyshack' and laughed about it all the way to the bank after taking your money in a $1 trillion Nassau.

(click through title link of this post to see video)

We have to restore confidence in the private sector. We can not have a healthy economy if we continue on the Obama pathway towards more government, more socialism and more bureaucratic control of our economy.

Mr. Friedman opens his book with this pithy observation:
'We have not yet reached the point of no return. We are still free as a people to choose whether we shall continue speeding down the 'road to serfdom' as Friedrich Hayek (said) or whether we shall set tighter limits on government and rely more heavily on voluntary cooperation among free individuals to achieve our several objectives.
Will our golden age come to an end in a relapse into the tyranny and misery that has always been, and remains today, the state of most of mankind? Or shall we have the wisdom, the foresight, and the courage to change our course, to learn from experience, and to benefit from a 'rebirth of freedom'?
Read 'Free to Choose' this summer at the beach. Buy copies and give one to each member of your family, your extended family, your neighbors, co-workers and church congregation. Give one to every person you meet in the street.

It is that important of a book.

And far more important to the future our our country than, say, reading 'Bay of Sighs' or 'End of Watch', two books on the New York Times best-seller list this summer.

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Wednesday, June 22, 2016

'We Have Never Seen Such Negativity In American Politics Before!'

Lee Atwater
Said no one ever who has worked in any national or statewide or congressional or senatorial campaign.

There's been a lot of hand-wringing about the negativity we have seen so far in this presidential campaign that started really, in essence, the day after President Barack Obama was re-elected in 2012.

It just 'seems' like an eternity, doesn't it?

If there was one thing we could or should do to restore some tiny sliver of sanity to our presidential politics, it would be to return to the days of when the intensity of a presidential campaign didn't start up until after Labor Day, took a brief hiatus during the World Series at the end of October and mercifully ended the first Tuesday after the first Monday in November every 4 years.

Don't really know how to do it since campaigning and spending money to get elected are part of everyone's protected right to free speech and all that. So get ready for the next presidential campaign for 2020 to start, well, it has already started for the ones who were vanquished in the primaries this year plus others who want to be President because they 'just know' they are better suited than either of the 2 nominees this year, Hillary Clinton and Donald Trump.

Two things seem to be going on nowadays:

  1. Not many younger people seem to have read much history
  2. The faux 'indignation!' of the major news channels, cable and radios talk show hosts is a ruse to keep you, the political news consumer, coming back for more so the more titillating the news story, the higher their ratings which drives their ad revenues to ever higher levels which leads to more profits for all the 'bad' corporations which includes liberal outlets such as NBC, ABC, CBS and MSNBC.
If you read any history about presidential politics in America, you will quickly discover that negative campaigning has been with us from the beginning and Founding of our Republic. George Washington was the only person to ever run unopposed and elected unanimously by the Electoral College.

It has all been downhill since.

John Adams, or one of the political operatives behind John Adams, is attributed as saying the following about Thomas Jefferson, the Writer of Our Declaration of Independence, for goodness sakes!:
"(Mr. Jefferson) was nothing but a mean-spirited, low-lived fellow, the son of a half-breed Indian squaw, sired by a Virginia mulatto father, as was well known in the neighborhood where he was raised, wholly on hoe-cake (made of course-ground Southern corn), bacon, and hominy, with an occasional change of fricasseed bullfrog, for which abominable reptiles he had acquired a taste during his residence among the French in Paris, to whom there could be no question he would sell his country at the first offer made to him cash down, should he be elected to fill the Presidential chair"
In response, Mr. Jefferson, who was a Governor of Virginia in addition to many other important positions, or those in his political camp such as James Callender, called Mr. Adams, the sitting Vice-President of the United States! at the time:
"(A) hideous hermaphroditical character, which has neither the force and firmness of a man, nor the gentleness and sensibility of a woman."

(click through title link of this post if you want to see video content of Adams/Jefferson feud. And really, who doesn't enjoy seeing political fights even from the early 19th century?)

We worked with Lee Atwater on our re-election campaign in 1986, who, if nothing else, was one of the latest in the direct line of campaign operatives that originated with James Callender and which includes James Carville and David Axelrod and Paul Manafort who is now running the Trump campaign.

Lee was part of the Republican campaign consulting firm, Black, Manafort, Stone and Atwater in the 1980s which didn't lose many campaigns. One of Lee's guiding principles was to find ways that would drive up the 'negatives' or unfavorable ratings of his candidate client's opponents over 40%.

'If you can do that, you candidate will not lose!' he would say with the thought being that voters will vote against a candidate who is viewed as being more detrimental than the other with more emotion and certitude than they vote 'for' all the the favorable ratings of your candidate could ever imagine.

The psychological and emotional effects of a negative impression of a person you may know is far more impactful on your decision to spend time with them in any way than any multitude of favorable attributes that person might have.

We learned from the 'Positive Coaching Alliance' that it takes between 7-10 positive comments from a coach to rebuild the attitude of any young player for every 1 negative comment.

The same can be said about voting for a presidential candidate. And if you hear 10,000 absolutely outlandish, and in the case of Mitt Romney's character assassination by the Obama campaign, untrue and unfounded ads about his business career and integrity, there is not enough time to run 100,000 positive ads that you will see to unwind the damage of those negative ads.

Former Massachusetts Governor Michael Dukakis was on the receiving end of one of Lee's more famous attacks ads, the 'Willie Horton' ads in 1988. He pointed out that his campaign thought they could run a totally positive campaign, despite having hammered former Missouri Dick Gephardt as being a 'flip-flopper' to win the Democratic primary in the first place.

He was proven wrong.

'Negative ads are the crack cocaine of politics' former Democratic Senator Majority Leader Tom Daschle often said in public. *

GOP campaign consultant Mike Murphy, who despite having $150 million this year to help Jeb!(Bush) (sic) win the Republican nomination, which didn't happen, is credited with saying: “(T)he only difference between negative and positive ads is that negative ads have facts in them.”**

President Obama used negative ads in 2012 to bludgeon the formerly sterling reputation of Mitt Romney into an unrecognizable pulp to win re-election to the White House.

Former Republican Bill Clinton destroyed long-term Republican Senate Majority Leader Bob Dole long before the general election was held in November, 1996 with a series of negative attacks, many of which were unanswered which is the absolute worst thing any candidate can allow happen in politics.

So get ready for a barrage of negative ads from both the Hillary Clinton and Donald Trump campaigns.

You ain't seen nothing yet. Trust us.

Apparently the threshold for Lee Atwater's negative ratings is now 70% since both candidates seem to be heading that way on their own.

Imagine what will happen when each side helps them get there.

quotes * and ** from great article 'Nuke 'Em' by Frank Rich. Read this if you want a more full summary of negative ads in American politics from the beginning through Andrew Jackson, Harry Truman to LBJ on Goldwater to today. You will notice not too much is different

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Sunday, June 12, 2016

What Happened To Lower Tuition Rates In North Carolina?

(first printed in North State Journal, June 12, 2016)

For years, advocates for low in-state tuition at North Carolina’s public universities have screamed at the General Assembly for allowing in-state tuition to ‘skyrocket’.

Even though they still are at least 40 percent lower than in-state tuition at public universities in our neighboring states, Virginia to the north and South Carolina to the south.

The state Senate recently tried to help college students and their families at five state-supported universities with a proposal that would help them save close to $10,000 in college tuition costs over the next four years.

Many of these families would have had to have received a $1000 tax credit for the next 10 years to equal $10,000 in savings.

The five universities were Western Carolina, Pembroke State, and three historically black schools (HBCUs): Winston-Salem State; Fayetteville State and Elizabeth City State.

However, HBCU supporters thought they saw this as a backdoor way to weaken the three HBCU institutions and successfully got them removed from the list. Western Carolina and Pembroke State students are now the only ones left who will benefit from this $10,000 price cut if it makes its way into the final bill signed into law at the end of this legislative session.

What in the world is going on here?

Did opponents of this proposal ask any current HBCU student or family supporting those students at these three universities if that was okay with them? Was there any kind of poll taken or survey asking these 12,000 students and their families if they were ‘happy’ that they were going to have to cough up $2,500 more per year for the next four years to go to one of these three universities than they would have had to if the Senate proposal been accepted and passed into law?

Whatever happened to the state constitution’s free in-state tuition ‘as far as is practicable’ argument? Isn’t $1,000 annual tuition better for the student and the family than paying $3,500-$4,000 annually for the same university?

Isn’t a lower tuition closer to being free as far as practicable far better than paying a higher in-state tuition fee by anyone?

The argument has been made that the ‘trust level’ is not what it should be between member institutions and the General Assembly. The expressed fear was that the roughly $70 million in additional funding the Senate proposal was going to provide for these five state universities to make up for the lower tuition might be removed in future years.

State funding for anything can be removed at any time for any reason, political or economic. The $70 million could be replaced by higher in-state tuition next year if there was a ‘revolt’ of some sort from the students and families at these three HBCUs because they did not like paying such a low in-state tuition this year — which would be highly unlikely, if you really think about it.

To put this in context, consider what state tax cuts would have had to have been for these 12,000 students and families to be equal to the lower tuition that was proposed:

• Many of these families would have had to have received a targeted 100 percent state income tax cut for the next 10 years to equal $10,000 in savings.

• Many of these families would have had to have received a $1,000 tax credit for the next 10 years to equal $10,000 in savings.

As it is, the students at Western Carolina and Pembroke State now stand to gain close to $10,000 in more disposable cash available or savings kept vis-à-vis their HBCU counterparts at these three universities starting August 2016.

One father of an incoming freshman at Western Carolina told me that he felt like he 'had just hit the lottery!' He is a minister so every dollar he and his wife can save from in-state tuition is helpful to say the least.

Modern Math must be more complicated than previously thought.

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