Words are the most powerful force known to mankind. A word can either build or destroy in an instant. Entire nations can rise or fall on a few words. And friendships can be lost in a moment with a few choice words. The United States constitution provides protection and freedom for us to say whatever we want. However just because we’re free to say something doesn’t mean it’s free to say it. Yes, free used with two different meanings. To make it clear what I mean would be to say: Just because we have liberty to say something doesn’t mean it’s without a cost to say it.

While we have a great liberty as US citizens I believe it has led to undisciplined behavior and responsibility for the words spoken. If I can understand the cost, and value, of what I say then it will be a good tool to measure what I say. Two thoughts come to mind:

” Let your speech always be with grace, as though seasoned with salt, so that you will know how you should respond to each person.” Colossians 4:6

and one that recently caught my attention and really made me think was a statement made about an angel of God:

“But even the archangel Michael, when he was disputing with the devil about the body of Moses, did not himself dare to condemn him for slander but said, “The Lord rebuke you!” Jude 9

If Michael has boundaries in what he says to the devil then how much more should I be diligent and wise in talking to ordinary folks? The answer is self evident.

Current economic debate: a secret decoder ring

Politics now days is the era of sound bites and so these are attempts to reduce complex subjects into something that is can be recognized but yet contrasted to a candidate’s opponent. If you’re like many you’re wondering about the frenzy and debate around two phrases:

  • Trickle down economics (really supply side economics)
  • Middle class out economics (really behavioral economics)

What are the core ideas behind each concept, you might ask? These are not just phrases invented on a whim and each have some depth that I hope to share with you in as unbiased a fashion as I possibly can. I specialized in Finance as part of my MBA, not that fact should impress you but that I have formed my own conclusion after considerable study, albeit mandatory study lol!

Trickle down economics was used widely during Reagan’s run as President but is attributed as a theory much earlier than that. Today it is used as a pejorative (negative comment) and summarized as the “failed economic policy of the previous 8 years”. Ironically looking at history, Reagan nor Bush ever used the phrase to describe their own policy. A more accurate phrasing of the Reagan’s core economic policy is what’s called Supply Side economics but that’s not as catchy so rarely used. It’s core concept is around the idea that tax breaks lead to an increase in capital formation which then leads to job creation and hence top to bottom trickle of economic activity. One of the central changes was the reduction of long term Capital Gains tax from then 35% to 20% (today it is 15%). The following 10 years after this change saw an enormous level of job creation and economic expansion. The reduction of capital gains resulted in an increase of tax receipts through an effect called expanding the base. In other words more people participated because of lower rates creating a net positive even though a single individual would pay less in tax.

Middle class out economics is a new phrase adopted by the Obama campaign but is nothing new. He’s been using this approach since his first days in office back in January 2009. The policy is more accurately referred to as Behavioral Economics which sounds ominous so they have to call it something else. The economic theory does mean actually what it says with the core concept that people act irrationally and motivated by emotion and so it is the policy to entice behavior. If you’d like to get a survey of the concepts check out the book “Nudge” by Cass Sunstein and Richard Thaler. Yes, that’s right the same Cass Sunstein on Obama’s Regulatory Czar until just recently. The NY Times did a piece on this policy theory in an article back in 2010: http://www.nytimes.com/2010/05/16/magazine/16Sunstein-t.html?pagewanted=all

A quote from the article that summarizes this economic approach is this: “But in the real world, Sunstein and Thaler argue, people are subject to all sorts of biases and quirks. They also argue that this human quality, which some would call irrationality, can be predicted and — this is the controversial part — that if the social environment can be changed, people might be nudged into more rational behavior.” (emphasis mine). And if you’re a bit scared by that statement it’s because you should be. I am moved to who’s definition of “more rational behavior”? Theirs? That feels very uncomfortable for me on MANY levels.

There is one major problem with “Middle class out” theory, for a person to follow the incentives they must have money. If you don’t have a job, you don’t have money….unless the government gives it to you. Who is it that employs the middle class? If you want jobs you have to form capital, very simple concept. But the nasty double dose of behavioral economics is that if you don’t have a job, the government can create economic activity through handouts. Did you catch the headline recently about ads and promotion of Food stamps? No coincidence, the policy wonks think they can stimulate the economy leading into the election by putting people on Food stamps. There is no altruistic motive in the policy of “serving the poor”. That’s a line they tell people while doing something else.

Behavioral economics is new stuff and never been proved before on a real economic scale….except for the last 4 years as the policy theorists have been running the store called the US economy. If you draw a basic head to head comparison of 1981 to 1984 vs 2009 to 2012 (similar periods of crisis and recovery), I think you have a fair contrast of economic policy effectiveness that lets you draw your own conclusion. But the real question that you must answer is this as we all decide to cast our votes:

  • Do you want to continue an experiment (Behavioral economics) that has so far not delivered improvement?
  • Do you want a track record (Supply side economics) that brought back prosperity to the US in a similar period of economic distress?

That choice won’t come without tradeoffs. We can’t afford to write checks the politicians mouths can’t cash (which is you and me by the way). People need jobs, and we need owners of businesses to want to create jobs. Tune out the pundits and click on the brain.

Simple is difficult

Wait, what? How is “simple” and “difficult” equivalent at all? Culture generally makes things complicated because in the complexity it’s easy to deceive and be deceived. I think of complexity like a web spun and weaved with many intricacies and threads. Try tracing one down and you quickly get lost and then “caught” in the web of complexity. My experience is that complexity is easy and if you want to get philosophical for a moment I believe related to the Law of Entropy that all things decay into randomness including our system of thought.

To reach simplicity requires real work…a lot of work in most cases because the web of complexity must be untangled and set aside. As I have been reflecting recently on an old admonition “LEARN to do good”, followed by a list of SIMPLE things that are good:

  • seek justice
  • Defend the oppressed
  • Take up the cause of the fatherless
  • plead the case of the widow

I have been asking myself the question: why do those things largely go undone? And I return to the statement in the beginning, I must LEARN to do them. It’s going to take real work to make them part of my thinking and practice. In the process I’m also going to have to set aside the cultural definition of “good” as some complex set of things achievable by only a few or those that are ultra smart, or ultra diligent, or ultra whatever. I can do that list of simple things any day and every day.

So then why do those things go undone? Bear in mind any answer that justifies why they are NOT done is complexity speaking and the deception that so easily ensnares our thinking.

Make me believe in America again

Lately as I have been asking myself what I want to hear that would motivate me about this November’s election cycle, I realized it was the wrong question. The real question is: what do we all need to believe in again? There was a time when I can recall being proud to be an American, a time when I would talk to my friends abroad and they wanted to be an American or at least be as closely associated with America as they could possibly be. Is it just me or does it seem that feeling is totally absent for the past few years? This is not a political statement because if I had to put a finger on it, the absence of this feeling goes back farther than the current administration.

What marks our current cultural climate that disturbs me most is the blame and ridicule that dominates almost all public remarks from any side. It may not be direct words but the undertones are obvious and palatable. What do I mean? These are just a few that come to mind:

  • Personal sacrifice – when was the last time you heard a GOOD story about the men and women in our military from some action or mission?
  • Hard work – there used to be a time when the fruits of one’s labor was something to be admired and enjoyed instead of ridiculed and chastised.
  • Personal accountability – when was the last time you heard a story about someone that took responsibility for a mess regardless if they created it or not, and did something about it?
  • Self sufficiency – when did you last hear about someone that was in financial trouble and worked through it without a handout, subsidy, or modification?

If I had to name one major underlying problem in today’s cultural DNA is that a person can live without consequence. Our national policies are built on the concept that all it takes is a Federal program to take away the consequence of one thing or another; pick the subject and I think you’ll find it at the root. A life without consequence is a pernicious lie that eats away at the heart and soul of our nation. We are so defined by the struggles in life and the many lessons it can teach that to remove consequence is to mean that we no longer learn how to improve. Our spirit gets sapped away slowly but surely to the point where we no longer have any identity at all.

I think it’s time to go back to the basics because it’s what got America there in the past. The Declaration of Independence stated it eloquently when said:

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their creator with certain inalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

It’s the combination of these powerful ideas that has drawn people from all over the globe to America in generations past. From it a nation was forged that worked under hardship, endured numerous perils, and built an identity that was a model for many.

Dear Mr Candidate, Make me believe again that this is what America stands for.

When progress is not progress

I was reading through some reflections by an old friend on his day. He was watching old TV shows and thinking of past good times. At times I do this too and it reminds me that not all progress is a good thing. Our culture would have us believe that if you don’t embrace progress and change that you’re restrictive, “old fashioned”, inflexible, or unwilling to listen. But look around us today and how much of the “progressive” social policies of the past 50 years have actually achieved something positive? People demand their “rights” but at what cost to others around them; that’s not positive to me. Rights exercised over the interests of others is nothing more than self obsession to satisfy myself.

My resistance to some changes and “progress” is simply because I know better. It reminds me of a statement made by God to a people that had “progressed” over decades to the point they no longer even resembled what they should have been in standing for right:

“Stand at the crossroads and look;
ask for the ancient paths,
ask where the good way is, and walk in it,
and you will find rest for your souls.
But you said, ‘We will not walk in it.’” — Jeremiah 16:6

Truth is simple

I have come to a basic conclusion in life that one of the critical tests of truth and wisdom is how simple it is to express or explain. Which is very different from how I started as a young engineer years ago where my very livelihood was built on fixing complex things. But even in engineering I have come to appreciate that the ingredients of a truly successful engineering solution are simple things, not complex ones.

Steve Jobs is quoted as saying:

Simple can be harder than complex. You have to work hard to get your thinking clean to make it simple.

I didn’t know he said this until after his death recently but you can see this embodied in Apple products. I am often chided by my engineering colleagues for using so many Apple products since from their perspective they are “dumbed down” or inflexible. And then I take my iPhone out and do a basic test case side by side with their “better” phone, and most of the time I am done with the task much faster than my friends with their “better” phone. As I tell people, I use Apple products because they are simple to use……they just work.

My experience is that this principle extends to many other subject areas: life, relationships, politics, and religion. Looked at from the negative point of view, many deceptions are built on complexity for the simple reason to confuse and distract from the real story and truth. Some deceptions are not intentional or willful. The complexity vs simplicity principle remains the same but in those cases we use a different word: fallacy, something generally accepted but is not true.

A caution in this is that simple does not mean easy whether taken from the perspective of sharing truth to others or accepting simple truth ourselves. Why? From the perspective of the truth sharer, reaching the simplest form in order to express truth is hard work with a lot of cutting away to reach that point. Alternately, from the perspective of the truth receiver, it may be simple to understand but very difficult to accept the intuitive and natural conclusions that a truth requires.

This reminds me of an old consulting story I heard years ago. An older, retired businessman is asked to give a lecture at a conference and asked his fee for the service. He responded with 3 options:

Option 1 – a 60 min lecture for $5000

Option 2 – a 30 min lecture for $15000

Option 3 – a 15 min lecture for $25000

As any writer or spokesperson will tell you, the shorter the time you have to deliver a message, the more time it takes to hone and sharpen it to the ideas and concepts that truly matter. Truth is simple!

The Great Transfer State

One of the blogs I track is Econompic. Today he had a post that shows the sheer fiscal insanity that has taken hold in the USA in recent years. This is the key graph in his article:

There is a component of personal outlays called Transfer Payments. What is a Transfer Payment and why should you care? Here is the simple definition:

In economics, a transfer payment (or government transfer or simply transfer) is a redistribution of income in the market system. These payments are considered to be nonexhaustive because they do not directly absorb resources or create output. Examples of certain transfer payments include welfare (financial aid)social security, and government subsidies for certain businesses (firms). (Source wikipedia.com)

Basically Transfer Payment is code word for government sponsored welfare.

Why should you care? The data indicates that from 2001 to 2007, the rate of government sponsored welfare tracked the growth of wages. That’s not a bad problem but I would expect better considering over this period of time the USA had a boom in employment. The root of that problem is: DECREASING taxes. This may shock you the reader since I am a fiscal conservative, but in my humble opinion, the broad tax reductions over the past 10 years were very unwise.

Second reason to care about this data, as if you need another? In the economic train wreck of 2008, wages fell through the floor due to unemployment, no surprise. But, transfer payments (aka government welfare) shot through the roof filling a huge gap between wages and personal outlay. Hence why the USA is racking up so much debt over the same period.

The problem is that both policies, tax reductions and massive handouts, are fiscally insane taken to their extremes as is the case over the past 10 years. Put them together and the nation is at a level of insanity that is going to destroy this country. This is the simple truth of our situation:

  • There will always be taxes, it is what funds the government that provides our liberties and secures our safety. Be thankful for it.
  • There is an inherent need for personal responsibility. By providing for yourself, you get the natural satisfaction from working with your hands that a welfare payment can NEVER provide.
Folks, the current dialog in the media and the country is a death spiral. To restore fiscal sanity is to say that some taxes are necessary at a level we need to operate as a free people. AND we need people to contribute productively and get off welfare. Both major political parties are to blame; there is currently no right side of this debate IMHO. If we don’t the sign at the border will read:

Welcome to the Great Transfer State of the United States of America, population YOU!