Dec 20

As I’ve been on somewhat of a writing hiatus while building my new financial modeling software company, ClearFactr, I recently came across this CNBC video featuring Cypress Semiconductor’s CEO, T.J. Rodgers.

It really doesn’t get any better than this, so, yeah… what he said.

Happy Holidays to all!

Jul 25

Like lamenting against your ongoing inability to levitate, as hard as you work at it, you’re going to be lamenting for a long time, Mr. President, if you think the lack of economic progress by the middle class is going to change under your policies.   Such will be the case when you fundamentally fail to understand where economic success comes from.

Cover of "The Fatal Conceit: The Errors of Socialism"Throughout yesterday’s self-proclaimed “important speech” on our economy, you decried the seeming injustice of a person who “works hard”, only to come up short.     But if hard work were all that was required for success, we could simply encourage people to repeatedly dig holes with hand shovels and then fill them back up.   Backbreaking work for sure, and a task that has a great track record of not making people rich.

Where you and your fellow policy-makers consistently miss the mark is in never realizing that hard work for hard work’s sake achieves nothing.   What really counts is pleasing people.

To please someone, you have to put that other person’s needs ahead of your own.  It’s an inherently giving act.    You have to know the wants of the other person, and then do something that they value.  It’s the very opposite of the “Me Generation”, the rise of which might just correlate with your noted middle-class stagnation.

If you want to achieve a lot of success, do something that a lot of people value.   And if you want extreme success, do something that a lot of people value, but in a way that very few other people can do.   This, and only this, explains why top entertainers, for example, make what they make – they make a lot of people very happy, and their skills are incredibly difficult to duplicate.

Continue reading at Forbes Opinions…

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May 03

They say the states are supposed to be the laboratories for legislative creativity.   We can watch what works and what doesn’t, emulate the best and avoid worst, and improve the lot of everyone.

But what happens when the mad scientist is the federal government, cramming an experiment down the throat of a particular state and county?  What if their process is textbook “arbitrary and capricious“, and yet they clearly aspire to go national with the results, regardless of efficacy?

Such is the saga going on in Westchester County New York, where County Executive Rob Astorino is embroiled in a nearly four-year-old legislative and financial nightmare brought on by his predecessor Andrew Spano.   Astorino, a Republican, defeated the three-term incumbent Democrat by an odds-crushing 16 points in November of 2009, and gained unprecedented voter support by vowing to challenge what became law very late in his campaign.   Astorino described the source of the problem, in his recent “State of the County” speech:

Rob Astorino SOTC 2013

Westchester County Executive Rob Astorino

“If you think Albany is bad, wait until I tell you about Washington and the housing settlement.  A quick history:  The County was sued in 2006 under the False Claims Act of 1863.  The charge was that the County accepted Federal dollars from the department of Housing and Urban Development, but failed to study whether race is a factor in housing opportunities.  In 2009, former County Executive Andrew Spano and the Board of Legislators settled the case, and critically important, there was never a finding of wrong-doing on the part of the County, or an admission of guilt in the settlement.  Instead of going to court, the County and the Federal government both agreed to settle under the following terms:  The County would spend at least $51 million dollars to build 750 units of housing for lower income people in 31 so-called eligible or mostly white communities by the end of 2016.”

Combating this “mostly white” designation, by any means necessary, is apparently the crux of HUD’s mission.   To HUD’s way of thinking, surely these communities are “mostly white” only because of racial discrimination, or as Astorino went on to describe, zoning practices that they think have the net effect of being racially discriminatory:

“The Federal government has a very different agenda and vision for Westchester.   In fact, HUD calls us, its ‘Grand Experiment.’  That means Washington bureaucrats, who you will never see or meet, want the power to determine who will live where, and how each neighborhood will look.  Now what’s at stake is the fundamental right of our cities, towns and villages to plan and zone for themselves.  This ‘home rule’ is guaranteed by the New York State Constitution.  HUD thinks it can trample on Westchester, because it has the misguided notion that zoning and discrimination are the same thing.  They are not.  Zoning restricts what can be built, not who lives there.”

States and localities around the country reacted with horror to the now famous2005 Kelo vs. City of New London Connecticut “takings” case.    How should they react to the virtual taking of an entire county’s property, knowing that theirs may very well be next?

Continue reading at Forbes Opinions…

Jan 01

What does it mean to be able to afford our own government?  Most (although apparently not all) people realize that if we are to ask government to provide us with an ever-increasing list of services, we need to be able to pay for them.  And what better measure of affordability than the rate of growth of personal income?   It is from personal income that we pay our taxes, that pays for government.    Using data retrieved via the St. Louis Federal Reserve Bank’s eminently useful “FRED” system, I calculated an index that measures the former against the latter.    Let’s call this the Government Affordability Index. I think it exactly quantifies why we collectively feel so financially strapped.   Bear with me for a little econometric tedium…

FRED’s Federal Government Total Expenditures data series goes back to 1960, while their Personal Income series goes back to 1947.   Using a starting index level of 100 in 1960, I grew each new series by the annual growth rate in the source series (total expenditures and personal income), with each annual growth rate reduced by the annual GDP inflation index.   The inflation adjustment serves only to remove a lot of the exponential growth effect that shows up otherwise.    Here’s the result:


Personal Income Index Vs. Government Expenditures Index 1960-2012

Personal Income Index Vs. Government Expenditures Index 1960-2012

To zero in on the relationship between the two, I then took the one index and divided it by other, using Personal Income as the numerator, as any value over 1.0 implies that our total income level is commensurate with what we’re asking from over government.   Sadly, the graph only visits 1.0 twice since 1960:

Government Affordability Index 1960-2012

Government Affordability Index 1960-2012

 I can already hear the howling from the Left about using Personal Income as a proxy for affordability.   But to do so, they need to perform class warfare and taxpayer slice-and-dice stunts worthy of Benihana’s.  And that’s the point.   Government needs to be affordable by everyone, in total, and not according to some ruling majority’s view as to what constitutes someone else’s “fair share.”   Furthermore, although interest rates are indeed at record lows (cue clip of Ben Bernanke’s helicopter), and too many people are saying we shouldn’t fear more debt, the annual interest on that debt still needs to be paid back from, guess what, Personal Income.

Continue reading at Forbes Opinions…

Aug 14

President Obama and I agree completely on exactly one thing, and it concerns the upcoming November election:

It’s not just a choice between two candidates or two political parties. More than any other election, this is a choice about two different visions for the country, for two different directions of where America should go. And the direction that we choose, the direction that you choose when you walk into that voting booth in November, is going to make a difference not just in your life, but in the lives of your children and in the lives of your grandchildren. It will make a difference for decades to come.

– President Barack Obama, August 12 2012, Chicago’s Bridgeport Art Center

NORFOLK, VA - AUGUST 11:  Newly announced Repu...

With Mitt Romney’s naming of Congressman Paul Ryan as his running mate, team Obama is apparently tickled pink that they can contrast their vision for America against that of a radical ideologue and the ugly capitalist that supported his budgetary plan.  Not missing a beat, Obama’s promoters are already running ads on Google saying “Fight back against Paul Ryan’s radical agenda” and variations thereof.

I say bring it on.

Paul Ryan will force a detailed, fact-based national conversation and referendum on what has to be the most spectacular failure of an “economic plan” ever witnessed by a developed nation.  And I should add, the most tragic, as the productive lives of millions of unemployed and under-employed people hang in the balance, not to mention the trillions of dollars of national wealth that stands to be made or wasted.

For three plus years, Obama and his lackeys have made the case that the path to national greatness starts with and runs back through government.  By any mean necessary, they have sought to do what they indeed promised, namely, to “fundamentally transform America.”   If Ryan is an “ideologue”, one would have to use that term with Obama as well.

Conceptually, I have no problem with the term “ideologue.”  In the political sphere, the word is typically used when talking about a person who operates from principles with which one vehemently disagrees with.  But what anyone should have a problem with, what is truly radical, is the promotion of an ideology whose historical record has never produced the goals one is supposedly trying to achieve.

Continue reading at Forbes Opinions…

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Aug 17

Did anyone really think that this Congress was capable of a real solution to the debt and deficit crisis?  Certainly Standard & Poors didn’t think so.  As the Cato Institute noted in a picture’s-worth-a-couple-trillion-dollars fashion, the long-term effect of this deal on the nation’s debt accumulation trajectory will be negligible.  And when ideological non-soulmates Keith Olbermann and Judge Andrew Napolitano both suspect that a key component of the bill, the so-called “Super Committee”, might be unconstitutional, you know we’re in uncharted waters.

Congress shoots... and misses

Maybe now the folks that were never politically involved, but have been suddenly active via the Tea Party, will wake up and realize it boils down to having the right elected officials in place when the votes are being cast and counted.   In the long term, that’s not a bad thing.

In the meantime, Congress has to find a couple hundred billion dollars a year to cut from the spending.   There’s a surefire way to do that in a single vote, and because it spreads “the pain” around to all factions, it’s a plan that could actually pass:  End all corporate welfare.

Continue reading at Forbes Opinions…

Jul 23

GreedGreedy, capitalistic corporations.   They caused the financial crisis and are destroying the American Dream.   They’re preventing the curing of diseases.  They’re endangering our environment and our national security. They’re even making our kids fat.

Or so too many people think, nearly enough for a voting majority that would fulfill de Tocqueville’s prophesy:

“The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” — Alexis de Tocqueville, Democracy in America

Fortunately, to back safely and permanently away from the edge of the cliff, we need only allow for true capitalism to thrive and to replace the crony capitalism that so many people confuse it with. Crony capitalism feeds on greed.   True capitalism and truly free markets, defeat it.

Continue reading at Forbes Opinions…

Jun 05

Official photo of Congressman Jeff Flake (R-AZ).

What’s it going to take for government to get serious about our financial condition and long-term economic health? New legislation, authored by politicians with a different view of what government can and can not do, and what it should and should not do.

Enter, Jeff Flake.     Continue reading at Forbes Opinions…

Apr 24

On April 13th, President Obama proposed his budget, one based on the progressive fallacy that our current level of government spending today is correct.  And because we have a deficit, we require more revenue to make up the difference.   So goes the thinking of a President who knows no boundaries as to what government can and should do.

Continue reading at Forbes Opinions…

Mar 11

Want a recipe for ruckus? Merely suggest that Social Security might be a “Ponzi scheme”. You might even end up on Drudge Report. Yet the facts bear out the thesis, as we shall see…

Continue reading, at Forbes Online

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