Friday, February 28, 2014

"The World's Policeman"

     Sydney M. Williams


Thought of the Day
“The World’s Policeman”
February 28, 2014

“I hate you!” is an epithet that has been uttered by virtually every child, at some point, toward their parent, especially towards those who are rigorous when it comes to discipline. Parents who enforce rules do not do so because they want to punish their child; they do so to teach him or her right from wrong, and to point out that such rules allow households to operate more smoothly. Teachers do not discipline students because it makes them feel good, but for the betterment of the student. Rules are to be obeyed. Police in New York did not “stop and frisk” because they were targeting specific groups; they did so because they were trying to lower incidences of crime. Obviously, at all levels there are exceptions – bad parents, bad teachers and bad police – but the majority has the interests of their charges in mind. The role of a disciplinarian is not to be popular, but to allow society to function. If they do their job well, they will be respected.

We establish governments so that civilized people can live in harmony, to bring order to what otherwise would be chaos. It is why free people choose to live under a code of laws. When rules are known, understood to be fair and unbiased and enforced we feel safe, and freedom can flourish. While we don’t always like to admit it, dishonesty and corruption are common characteristics, perhaps not of most people, but certainly of a sizable minority. Why else lock our offices and stores at night, our homes when we are away and our cars when we leave them even for a few minutes? As disillusioning as it might be, there is no Eden beyond the garden gate.

The world is like the family, the school, the village or the nation only on a larger scale. Our mutual interests are global. Commerce requires that ship lines be secured, that airspace be protected, that truck load-factors be adhered, that cyberspace be secure, and that international laws be obeyed.  The desire to do harm is omnipresent. Someone, or some entity, must assure that goods and people can move freely. For forty-five years following World War II, that role fell to two nations, the United States and the Soviet Union – in an unwritten “balance” of power. Threats of mutual destruction kept the fingers of leaders of both nations off the button that would have led to total annihilation. However, one country represented totalitarianism and darkness; the other, democracy and freedom. When the Soviet Union collapsed, some, like Francis Fukuama, predicted “the end of history.” While Professor Fukuama was wrong and history did not end, the world was fortunate that the United States won.

“If wishes were horses, beggars would ride” is an old English proverb that it is useless to wish for something impossible. Man has never lived in peace. All men are not good. Many are evil. The world has changed from the Cold War days when we knew who the enemy was. Threats now come from smaller rogue nations, governed by heartless dictators whose only desire is power, and from stateless terrorists aided by rogue nations. Some of the former now have nuclear weapons. The assuredness of mutual destruction is not meaningful to them as their stake in the current global economy is small. The latter have no stake in the world as it is, so the death of a suicide bomber is considered an honor. They believe that the giving of their life to their cause is noble – that forty virgins await them. Thus threats are more difficult to discover and stop, making them more lethal, and more probable.

There are many on both sides of the political aisle, including President Obama, who do not feel that policing the world should be our responsibility. There appear to be five principal arguments against such a role for our country. Added are my responses:

1)      There is no political will. It is too tough politically. We have been through twelve years of war with little discernable success. Americans want the troops home. Anti-Americanism is rampant through much of the world, especially where we have deployed forces. Exiting Iraq and Afghanistan, as we did (or are doing), has left them more dangerous than they were a dozen years ago. A nuclear Pakistan is in free fall. Iran is more dangerous than ever. Syria is attracting al Qaeda and other terrorists. Egypt has become a hotbed of anti-Christian sentiment. The will must be found.
2)      It is too expensive. Our infrastructure is crumbling and we have more people on food stamps than ever before. How will it be paid for? We need the money here. Certainly there is fraud and waste in Pentagon spending, but all that talk begs the far more serious question of entitlement spending, which threatens to bankrupt the nation in a generation or two. A key responsibility of government is to keep its people safe. So, what are the costs of doing nothing? We may find out with this week’s decision to reduce troop-strength to pre-World War II levels.
3)      Are we capable? What size army would be needed? Can we adapt to myriad cultures and languages that would be necessary to be successful? No one knows for certain, but we are a nation of immigrants from around the world. Collectively, we should have comprehensive understanding of foreign cultures.
4)      Nobody asked us. This is silly and irrelevant, in my opinion. Who would ask us? The Russians, Chinese, or Iran? Members of al Qaeda? The UN, with its General Assembly dominated by Muslim nations and a Security Council with morally bankrupt nations like Russia and China having a veto? One doesn’t get asked for this type a role. It devolves upon one. There is no other nation that can do so.
5)      We shouldn’t have to bear the responsibility and costs alone. Ideally, we should not have to. But, if we accept funding from other nations, might that not restrict our ability to respond quickly and effectively? To those that see the United States as evil, I understand the reluctance. But has there ever been a nation – with all of its faults – that has put the greater good above its selfish interests?

The arguments against have populism and sentiment on their side. It is easier to justify retaliation against an aggressor, than to explain the need for preventive forces. But even those who do not see us as the world’s policeman do not deny the need. The world is dangerous. I was taken with Niall Ferguson’s recent observation, which I remarked upon earlier this week, that the number of killings due to armed conflict in the Middle East was greater in 2013 than in any year since the Strategic Studies Armed Conflict database began in 1998. That means more people died last year in the Middle East because of armed conflict than in any of the years we were fighting in Iraq and Afghanistan. Just because casualty lists don’t get printed in the American press doesn’t mean people aren’t dying. That fact alone should send a chill up the spine of any doubters. President Obama, in 2009 in Cairo, said he would bring a new understanding of and respect for the Muslim world. Instead he has witnessed more death and destruction in the region than happened under President Bush.

Given the current environment, and President Obama’s objection to the U.S. being the world’s policeman, it seems likely we will walk away from that responsibility. It is a decision, I believe, we will come to regret. Nations can no more function without a global police force than can families, schools, or villages without disciplinarians or cops. The bad guys, over time, will gain the upper hand. We will then respond, but it will be late, violent, quick and discombobulated. It will do little to prevent future violence, and our costs will be higher. A police force does not have to be loved, but good ones are respected, as are their equivalents in homes and schools.


At some point a political leader will emerge with the moral courage to do what may be unpopular, but what would be right for the world. Until then terrorism will proliferate and people –Americans included – will die. The world does need a policeman. It would be pleasant if we could all live in harmony, and it would be nice if it were a police force comprised of many nations, but that seems unlikely and unworkable. So, until another country becomes more powerful than ours – which will happen at some point – the only nation capable is the United States. It is our responsibility. Avoiding it will help give rise to a reinvigorated Russia and a resurgent China. Would you prefer that Russia or China assume the role? Shunning responsibility now will not make the world a safer place. 

Wednesday, February 26, 2014

"Whither Markets?"

     Sydney M. Williams


Thought of the Day
“Whither Markets?”
February 26, 2014

The S&P 500 Index closed at 805.22 the day Barack Obama was inaugurated as President. On Friday the Index closed at 1836.25, for a gain of 128% over the past five years, reflecting an annual compounded gain of 18%. Why, then, do so many, including me, feel his policies are bad for the economic well-being of the country?

Over the same time frame – the five years of the Obama Administration – the prices of other asset classes rose as well. Gold (a harbinger of concern) is up 55%, crude oil (which we have in abundance) has risen 164% and copper has doubled. The CBOE Index has more than doubled. Corporate bonds have done exceptionally well, with the yield on High Yield bonds being roughly one third what they were on January 20, 2009. Somewhat contradictorily, the yields on Treasury Bills are half of what they were when Mr. Obama took the oath of office in January 2008. The principal culprit for the rise in asset prices has been interest rates that have been kept exceptionally low by an accommodative Federal Reserve. The consequence is a schizophrenic market, with a mixture of worry and speculation manifested in the rise in the prices of stocks, high yield bonds, gold and oil, while risk aversion is also very much alive, reflected in the exceptionally low yields on short term Treasury Bills. 

We all know, of course, that the economic recovery has been feeble and that federal debt is considerably higher than it was five years ago – $5 trillion (or 30%) more today than it was at the end of fiscal 2009. The biggest problem for the economy has been a lack of jobs. While the stated unemployment rate has declined, the more meaningful number, as it actually reflects people working, is the labor participation rate, which has declined from 65.7% in January 2009 to 63% in January 2014, according to the BLS. Each one percent reflects about 1.5 million workers. Average incomes are lower than they were before the recession began. Total employment, as mentioned above, has declined, and income and wealth gaps have widened.

Despite a plethora of Fed-drive quantitative easing programs, the yield on longer term Treasuries has risen, indicating that prices have fallen. For example the yield on the 30-Year Treasury has risen from 2.97% on January 20, 2009 to 3.71% today. At the same time, the dollar has declined 5.5% against a basket of currencies, meaning owners of bonds will be receiving less valuable dollars on maturity.

As for debt, low rates have encouraged borrowing. Individuals borrow so that they may enjoy today something they are willing to pay for over time, such as cars or a home. They also borrow for education on the expectation that such an investment will yield higher returns over time. Total student loan debt, at over $1 trillion, has now reached frightening levels. Credit card debt is also again becoming a concern. According to a study by the Corporation for Enterprise Development, 30% of Americans have more credit card debt than emergency savings. And the U.S. Department of Commerce said that the savings rate fell to 4.2% in November of last year. The assumption of more debt doesn’t square with Gallup’s Economic Confidence Index which is negative in all fifty states, suggesting concerns about the future. Unsurprisingly, the poll is only positive in the District of Columbia – home to a bloated federal government bureaucracy and the thousands of lobbyists that serve it.

Businesses traditionally borrowed to invest in capital projects that are expected to produce higher returns. However, in recent years, as corporate management became more focused on option-based compensation than the longer term requirements of the business, companies have borrowed or used cash flow to repurchase stock, rather than investing in the business. According to LPL Financial, fifteen years ago companies spent more than 40% of available cash flow on capital investments. That had fallen to 25% by 2007, suggesting little confidence because of myriad regulations and high corporate taxes. Corporate debt during this time has been modest.

Government debt has been the biggest problem, though it has the advantage of being able to repay its obligations in a depreciated currency, which in fact it has done for decades. Historically, governments borrowed for capital projects – military equipment, highways, dams, etc. – and other opportunities like the acquisition of open-space, and to fund wars. The advent of entitlements has meant that government must carry on their books obligations for future services, limiting its ability to fund necessary infrastructure projects. Taking a page from the Keynesian playbook, the Obama Administration initiated and signed a $787 billion stimulus bill (the American Recovery and Reinvestment Act of 2009) in February 2009.

Regardless of its uses, debt represents an obligation that must be repaid; though rules, which protect debtors at the expense of creditors in the case of bankruptcy, have made borrowers less respectful toward their obligations. For example, the ill-treatment of General Motors creditors in 2009 indicated a violation of contract law.

Corporate earnings, as measured by the S&P 500, rebounded from their cyclical lows of $49.51 at the end of 2008 to $107.45 at the end of 2013. In part, that can be attributed to stock buybacks, but the more important component was a natural rebound. Earnings in 2008 had come down sharply from the $82.54 registered in 2007. Between 2007 and 2013, corporate earnings compounded annually at 4.49%, while stock valuations grew at 3.9%. The rise in earnings has not been accompanied by a concomitant rise in sales. Greater efficiencies, including cuts in employment, have helped drive earnings growth. “Ultra-low interest rates,” as James Grant wrote in his most recent publication, “constitute a standing invitation to substitute capital for labor…” Despite the rise in earnings, companies have been notably reluctant to invest; so that now about $1.5 trillion sits on corporate balance sheets, and another estimated $2 trillion sits overseas waiting to be repatriated should tax laws be remedied.

The rise in stock prices and the policies both proposed and undertaken by the Administration are unrelated. Timing is critical. Stocks had peaked in October 2007. A confluence of events: a recession that began in December 2007 that lasted until May 2009; a burgeoning credit crisis that began in 2007 and that risked becoming a full-fledged financial crisis in the fall of 2008, and stretched valuations. These factors caused the stock market to fall by 58% between October of ’07 and March of ‘09. By the time Mr. Obama took office, stocks, as measured by the S&P 500, were already down 49% from their peak. In fact, stocks were then 25% below where they had been ten years earlier.

Mr. Obama’s defenders give him credit for the economy exiting recession in the spring of 2009. But it is hard to argue that a stimulus package that passed Congress in mid-February would be responsible for a recovery than began three months later. Very little of the money – if any – had been spent by the time the recession ended. Likewise, the worst of the credit crisis occurred in September-November 2008. The TED spread, the difference between Three-month Treasury Bills and Three-month LIBOR and considered a measurement of banks’ willingness to lend, had reached an all-time high of 465 basis points in mid-November. By the end of December, the spread had declined to a still-high 131 basis points. The credit crisis was largely resolved by the time Mr. Obama took the oath of office.

No one knows how much longer equity prices will move higher without a meaningful correction. While fundamentals, over time, determine prices, we have become an ADHD nation. Fifty years ago, when I entered the business, stocks were held an average of eight years. By 2010, the average stock was owned for five days. With High-Frequency trading platforms accounting for 70% of total trading volume, average holding periods have no doubt shrunk in the past four years. The worrying unknown is that with so many shares being traded by those who look only at symbols and price movements the possibility of much more volatile price movements has increased, as can be seen by looking at daily charts of stocks like BBBY and BBY. Nevertheless, market volatility, whether measured by the VIX or by days in which the market moves up or down by more than 1.5%, has receded. But markets can change quickly.

Mr. Obama sees government as an instrument for good, which in itself may be okay, but when taken to an extreme distorts equilibrium. Instead of relying on legislation, he chooses to issue executive orders. He has added virtual dictatorial powers to the Environmental Protection Agency; he has used the IRS for purposes of political intimidation; he lied about events in Benghazi because they did not accord with his campaign statements, and he has had his Attorney General urge state’s attorney generals to defy laws they personally feel are discriminatory. Where will such an aggrandizement of power stop?

What is missing in all that Mr. Obama has done is the provision of confidence. In increasing dependency, the Administration has destroyed the concept of personal responsibility, and responsibility and confidence are linked. We see a lack of confidence in consumer poll numbers. We see it in the unwillingness of businesses to invest and hire. We see it in the way in which other nations view us. We see it in investors who forsake the long term for the short. Without confidence, it is difficult for a nation, a company or an individual to prepare and build for the future. Confidence does not come from giving things to people, it comes from a belief that one can provide for oneself.


Whither markets? In 1994 Jeremy Siegel, in his 1994 classic Stocks for the Long Run, looked at 200 years of investing history and determined that stocks had gained between 6.5-7.0% per annum, after inflation. Not having so many years to look back upon, I only went back 46.5 years, to September, 1967 when I came into the brokerage business. The DJIA have compounded annually at 6.3% since then, providing no clear message as to whether stocks may be under or over valued – not that anyone should pay much attention to such simplistic analysis. Whither markets? I have no idea, but until we rebuild ours and our nation’s confidence, it is difficult to assume that the years ahead will be better than the ones behind.

Monday, February 24, 2014

"Ukraine, Russia and the West"

     Sydney M. Williams

Thought of the Day
Ukraine, Russia and the West”
February 24, 2014

Just over 200 years ago, Immanuel Kant noted that a republic was best situated for perpetual peace. The reasons were simple: a republic requires the consent of the governed to enter war; the people must pay all costs, and are required to repair any devastation left in its aftermath. On the other hand, when a country is governed by autocrats, “a declaration of war is the easiest thing in the world to decide upon.” Princeton PhD candidate, Raymond Kuo made the same observation three years ago. “…the leaders of two democracies tend not to attack each other, as they are both constrained by publics which would prefer not to bear the costs of war. Autocracies lack these constraining effects, and so go to war more often.”

That concept is why it is in the world’s interest that Ukraine becomes a free and democratic state, in actuality, not just in name. In contrast, from Vladimir Putin’s perspective it is important that Ukraine be a malleable vassal-state in the empire he is attempting to rebuild.

But peace in a world as unstable as ours is not possible without a global enforcer, a responsibility that lies with the United States. For most of the post-war years, the world lived with a balance of power, but that ended in 1991. In Saturday’s Wall Street Journal, Niall Ferguson quoted Henry Kissinger. “The balance of power is the classic expression of the lesson of history that no order is safe without physical safeguards against aggression.” As the default “balancer,” the United States has an awesome responsibility. It must maintain a strong military presence and must exhibit the moral courage to enforce its stands. When we walk away from such responsibilities violence erupts. In 2013, as Professor Ferguson noted in his column, 75,000 people died in the Greater Middle East as a result of armed conflict. That was the highest number since the International Institute of Strategic Studies Armed Conflict database began in 1998 – higher than during the Iraq and Afghanistan wars. Walking away from Iraq and Afghanistan has not reduced violence. Ignoring the self-imposed “red line” has not reduced casualties in Syria. Shrinking the U.S. army to the smallest force since before World War II, as Defense Secretary Chuck Hagel has proposed, seems a foolish and risky proposition.

Wherever and whenever political leaders have assumed excessive power (whether democratically elected or not), violence and revolution are the consequence. The people in Ukraine caught a rare glimpse of freedom with the collapse of the Soviet Union in 1991 – Russia had essentially been their master for the previous 350 years. But it proved ephemeral when Viktor Yanukovych, a disciple of Russian president Vladimir Putin, was elected president in 2010. Shortly thereafter, he had his political nemesis Yulia Tymoshenko jailed on drummed-up charges. While eastern Ukrainians, which includes the Crimean Peninsula, have much closer ties to Russia than those in the western regions, most Ukrainians are anxious to get out from under the boot of Russia. Putin, on the other hand, wants to restore Russia to its Tsarist and/or Soviet past.

But to understand why so many Ukrainians are willing to die that freedom might live requires a quick review of Russia’s historical relationship with Ukraine. That history also helps explain why Putin is so determined to keep Ukraine within the Russian orbit. The eastern part of Ukraine – east of the Dnieper River – has been in Russian hands since the mid-17th Century and Russian, as well as Ukrainian, is still spoken. The western part of the country spent many years as part of Poland and, later, part of the Austria-Hungarian Empire. Galicia, a western province of Ukraine, only became part of the USSR after World War II. The Crimean Peninsula, like the eastern regions, has long been populated with Russian ex-pats. In 1920, after a brutal civil war, Ukraine became a Soviet Republic. In 1932, Stalin forced a famine on the Ukrainian people. Between 5 and 7 million people died, or 15-20% of the nation’s population.  Stalin’s purges in the late 1930s murdered more. Balaklava, now part of the Crimean city of Sevastopol and where Yanukovych was last seen, is the scene of the famous Charge of the Light Brigade against the Russian guns in 1854. And, of course, Yalta, a Crimean resort town on the Black Sea that for three years had been occupied by the Germans, was where Stalin met Roosevelt and Churchill in February 1945.

Sevastopol is Russia’s one warm-water port and is home to their navy’s Black Sea Fleet.  That naval base has a great meaning to Russia, as it was established in 1783 by Catherine the Great. It became part of Ukraine in 1991. A “Treaty of Friendship and Cooperation between Russia and Ukraine” was signed in May 1997, which allowed both countries to maintain fleets at Sevastopol. However, the Ukrainians in 2008 made it clear that the Russians must leave when the treaty concludes in May 2017. There is no question that Mr. Putin does not want to be held responsible for the loss of Sevastopol.

The breakup of the Soviet Union in 1991 set the stage for former Soviet satellites to remove the yoke of Soviet Communist domination. Many nations have made the transition, including Poland, the Czech Republic, Romania, Estonia, Latvia, Lithuania, Hungary and East Germany, but others like Georgia and Ukraine have felt the heavy foot of Mr. Putin. In 2008, at his last NATO summit as President, George W. Bush urged that Georgia and Ukraine be welcomed into a Membership Action Plan (MAP) that prepares countries for NATO membership. However, Western European nations objected, for fear of upsetting Russia and Mr. Putin. Newer members of NATO – including those bordering Ukraine, like Poland, Belarus, Slovakia, and Romania, who understood what it meant to live under Soviet domination – supported Mr. Bush. It may have been a case of historical amnesia that allowed the West to ignore people struggling for democracy, but I suspect it had more to do with an absence of strong Western leaders, those with the moral compass of a Margaret Thatcher and Ronald Reagan.

When trade agreements were offered by the EU last November, Ukraine president Viktor Yanukovych, under pressure from a strengthened Mr. Putin and an offer of $15 billion, refused, setting off demonstrations. Six years after that NATO meeting where European leaders weaseled out of doing the right thing for the Ukrainian people, the European Union, the Obama Administration, and mainstream media are finally coming to understand that there is a crisis – that Putin’s Russia means to establish hegemony over the southern regions of the former Soviet Union and that a timorous West will not stop him. Mr. Obama’s response was that there would be “consequences” if Ukraine’s president did not back off, though his remarks were diluted by requesting that the protestors act “responsibly,” either ignoring or confusing Barry Goldwater’s maxim that “moderation in the pursuit of justice is no virtue.”

It could be that the Friday meeting with three EU foreign ministers and a Russian envoy may have averted the crisis from getting worse. The disappearance of Mr. Yanukovych and the releasing from prison of Ms. Tymoshenko are certainly favorable developments. But I suspect the Russians will not retreat so quickly. No one can predict what will happen. Mr. Yanukovych, before he fled, promised to form a coalition government and to hold general elections at the end of 2014, rather than 2015. But, he is a puppet of Mr. Putin and cannot be trusted. Even Ms. Tymoshenko cannot divorce herself from Russia. Mr. Putin sees himself sitting in a position of strength, facing Western ambivalence and leaders who have lost their moral sense.


The consequence of Western ambivalence toward despotic leaders, whether they be in Syria, Venezuela, Iran or Ukraine, is not helpful for people struggling to be free, nor is it propitious for world peace. Such hesitation makes the world less safe. 

Thursday, February 20, 2014

"The Inflexible Left on Climate Change"


 

     Sydney M. Williams

 

Thought of the Day

“The Inflexible Left on Climate Change”

February 20, 2014

 

Walking across the marsh and down to the river in a driving snowstorm a week ago, I marveled at the power of nature. There is nothing that man has devised that can head off a meteor, hurricane, tornado, typhoon or snow storm. We have split the atom, placed a man on the moon and can send messages from one computer to another in milliseconds, yet we can’t divert rain from where it falls in abundance to where it is needed. Despite the bleatings to the contrary from those like Secretary of State John Kerry in Indonesia three days ago, man, as powerful as he is, has been no more successful at trapping nature than was King Canute 1000 years ago. As Professor Mat Collins, a senior scientist associated with the UN’s Intergovernmental Panel on Climate Change, said this past weekend about the storms and flooding in the UK: they were driven by the Jet Stream moving south “for reasons that are simply unknown…If this is due to climate change, it is outside our knowledge.”

 

President Obama recently blamed the droughts in California on global warming – placing blame on fossil fuels. He responds by unilaterally ordering the development of higher standards for truck manufacturing, rather than re-routing water his EPA had earlier diverted from California farms so that the Delta smelt might live. We may want all species to survive, but food should come first.

 

Ironically, much of the East Coast has experienced snowier and colder winters than normal. Apart from winter sports enthusiasts, most people are getting tired of the ice and snow; they long for spring. Depending on the town, Connecticut schools have been closed 6 or 8 days so far this school year, meaning that summer vacation will be shortened by a like number of days. USA Today reported last week that since December 1st, 75,000 domestic airline flights had been cancelled. Yet John Kerry, Al Gore and Barack Obama have the arrogance to believe that man is more powerful than nature – that responsibility lies with a small number of Republicans and a few evil oil and gas producers. It is not enough for them to acknowledge that, yes, man does leave his imprint on the natural world, which is the opinion of every sensible person. But they insist that if man would simply adhere to policy recommendations of elitist Washington bureaucrats the world would remain as it is – the oceans would recede, storms would subside, temperatures cool and polar bears would no longer be seen riding ice floes into the sunny regions of Michael Moore’s camera. Tempus cessat.

 

Of course, it is not just arrogance; there is the pragmatic side. Perpetrating the idea that global warming is solely the responsibility of man has made millions for Al Gore; though he wasn’t above selling one business (Current TV) to fossil-fueled Al Jazeera. President Obama has lifted cronyism to heights never imagined by his predecessors, in having taxpayers send billions of dollars to his supporters at businesses like Solyndra and Fisker Automotive (both of which went down the rat hole). The President refuses to approve the Keystone XL Pipeline, despite recent rail accidents suggesting that not only would the pipeline be environmentally sounder, but would save lives and property as well. And John Kerry sounds like a delusional member of the “know nothing party,” a companion organization to the “flat-earth society,” the latter being a group which includes as members all who question any of his pronouncements.  Forsooth! Damn the costs! Let them drive hybrids, as a composite of Shakespeare, David Farragut and Marie Antoinette might have said!

 

As predictable as spring following winter, Democrats, when the going looks rough, trot out climate change as an issue to divert attention from myriad foreign policy failures, a feeble economic recovery and the troublesome aspects of ObamaCare. Democrats sense such a diversion from the real world will “gin up” support for troubled candidates, especially from their base of academics and elitist members of the gentry. ObamaCare has not been the roaring success we were told it would be. We did wait, as Nancy Pelosi so astutely warned us we must, until it was passed to see what was in it. And we found it was different from what had been promised. Someone lied about doctors and insurance policies we could keep. It was not easy to enroll. It was not cheaper or better than other healthcare plans. It will, according to the CBO, cost somewhere between 2.0 and 2.5 million full-time jobs. Its annoying rollout has put Democrats at risk; so they needed the conversation to change. What could be better than sending Mr. Kerry to Indonesia? There he stated, incredulously, that climate change was possibly “the world’s most fearsome weapon of mass destruction.” He then added, for good measure, that “the science [man being responsible] was unequivocal” and that opponents were simply “burying their heads in the sand.” He might more accurately have said he was immersing his listeners in piles of orally produced bovine excrement.

 

Like much of Democrat blathering, there is a kernel of truth in what they say, though – man certainly has had an impact on the environment, as all plants and animals do. Admittedly, man has probably had a greater effect than even – let’s say, for example – the coyotes in my neck of the Connecticut shore have had on the deer population. But the religious-like fervor that feeds those like Obama, Kerry and Gore fail to acknowledge that the planet, over its 4.5 billion years of existence, has warmed and cooled on thousands of occasions, and did so long before man arrived. Their stubborn adamancy toward politically-motivated policy responses deflect from the far more urgent need to prepare for (or at least be alert to) natural catastrophes for which one cannot assign blame.

 

The earth’s climate is in constant flux; some changes could be cataclysmic. No one can predict exactly how the environment will change, only that it will. There is much in nature we do not know and for which we cannot plan. For example, on Monday an asteroid the size of three football fields and almost 900 feet in diameter had a “close brush” with earth, passing within 2 million miles, at 27,000 miles per hour. Two million miles sounds like a long distance, but at the speed it was traveling the asteroid would have hit earth in a little over three days. To determine the damage that an impact from an asteroid of that size could have caused, we can look back a year at the asteroid that exploded 18 miles above Siberia. The size of that one was less than one tenth of this, yet scientists estimate its explosion was equivalent to 20 atomic bombs.

 

None of this means we should not act in our best interests, to live as much in harmony with nature as is reasonable. It is far more pleasant to do so. But we must keep in mind that an estimated 800 million people live without knowledge of where their next meal will come, and that almost 1.5 billion people live on less than $1.25 per day. Saving the environment is not of importance to these people. Food and shelter is. When we take steps that sound good in theory, but which raise the price of food, fuel and shelter, we do more harm than good.

 

Again, I would suggest that the next time a storm comes by – a hurricane, tornado, typhoon, thunder storm, or even a good old nor’easter – walk outdoors (if you can) and consider: has man ever produced anything so powerful? Democrats have spent years convincing themselves that, like Snow White, they are the fairest in the land. They consider themselves smart and highly educated; so they assume, as the ruling class, they know what is best for the proletariat. Many dwell on the coasts where the problems of Middle America are something to be seen in movies (made, of course, by Lefties), or which they pass over at 35,000 feet. Knowing that we don’t know everything is the first part of wisdom. J.R.R. Tolkien, in The Fellowship of the Ring, has Tom Bombadil, “the Master of wood, water and hill,” explain, “I am no weather-master, nor is aught that goes on two legs.”  So true, but sadly, those like Obama, Kerry and Gore lack such humility and wisdom.

 

It is jobs that people care about, or rather the lack of jobs that characterizes this recovery, now five years old – the same length as Mr. Obama’s Presidency. It is a sense of dignity and self respect that comes from having a regular paycheck that is missing in America. We have lost our confidence and our belief in ourselves and in the future. It is not that our forbearers had an easier life. They did not. But they were not shackled by a growing dependency that destroys self reliance and self esteem. And they, too, lived in a volatile world.  When we hear John Kerry call us “deniers,” we can accept that, but with the understanding that we do not deny that climate changes; we are deniers of his wisdom, of his conceit that he and those like him have the answers.

Tuesday, February 18, 2014

"Lessons from Caracas"


 

     Sydney M. Williams

 

Thought of the Day

“Lessons from Caracas”

February 18, 2014

 

Three people died in riots in Caracas last Thursday. Venezuelan President Nicolás Maduro predictably blamed the deaths on “neofascists financed by the United States.” Nothing was said about empty shelves in stores, food shortages, or an inability to buy a car, gasoline or toilet paper. The accusation was apparently made without irony and absent any appreciation for the fact that Maduro’s (and Hugo Chavez’s) political party, the United Socialist Party, exhibits many of the characteristics of “old-fashioned fascism,” including the National Socialist Party of 1930s Germany. While Maduro doesn’t have Hitler’s “brown shirts” (or at least not visibly) and, apart from Americans, has not yet singled out a particular group for blame, the economic consequence of his policies have been to deprive the people of the basic necessities of life.

 

It is unsurprising that a man who surrounds himself with Communist allies like Cuba, China and Russia, as does Senor Maduro, should invoke Fascism as evil, while inferring that Communism is good. In truth, they are not at polar ends of a linear political spectrum. The spectrum is circular, not horizontal, with the two political beliefs intersecting on the side directly opposite democracy.

 

Communists are more subtle than Fascists, in that they use words like “reform” and they claim to address inequality; thus are more widely accepted in the West. Yet, both communists and fascist are murderously indiscriminate toward those considered enemies. The number of civilians killed by Stalin is estimated to be north of 20 million, probably more than were killed by Hitler. Both men suspended the rule of law and they eliminated dissenters. Both thrived on hatred and divided their people, isolating a segment of their citizens on whom to pin blame. For Hitler, it was Jews; for Lenin and Stalin, it was the aristocracy; for Castro, it was plantation owners. In Venezuela, an informal militia roams cities and towns on motorcycles intimidating political opponents. They may not wear brown shirts, but they derive from comparable ideologies.

 

The consequence of Venezuela’s Socialism has been a decline in economic well-being. In the fourteen years that Hugo Chavez ruled, the Venezuelan bolivar shrank 87% against a weak U.S. Dollar. (During those years, the U.S. dollar declined about 20% versus a basket of currencies.) In the ten months that Nicolás Maduro has been president, prices have risen 56.3%. And that includes a few weeks of forced price cuts ahead of local elections last November. The discrepancy between official exchange rates and black market rates has widened. A U.S. dollar costs 70 bolivars on the black market, while the official rate is 6.3. The experience in Venezuela provides a lesson in the consequences of unrestricted state intervention. Mary Anastasia O’Grady wrote last December about Venezuela in the Wall Street Journal: “Heavy state intervention was supposed to produce justice for the poor in the breadbasket of South America… [Venezuela] is an instruction manual on how to increase human misery.” The bottom line is that the Country has produced riches for the governing classes, poverty for the middle classes and even greater poverty for the already poor.

 

Venezuela’s collapse did not come about because of an absence of natural resources, but in spite of them. By most counts, Venezuela has the largest proven oil reserves in the world. Forty years ago they had the highest standard of living in Latin America and the 4th highest GDP per capita in the world. Today, the country is virtually bankrupt. A professor from John Hopkins recently put the implied rate of inflation for 2013 at 297%. In terms of property rights, the Heritage Foundation gives Venezuela a five on a scale of one to a hundred, and ranks the country 175th – between Eritrea and Zimbabwe – on a basis of economic freedom. Last week, Toyota and General Motors announced they were shuttering plants, putting 12,000 people out of work. Air Canada, American Airlines and United Airlines, among others, have suspended operations in the Country. The Heritage Foundation’s report said about Venezuela: “After more than 14 years of ‘21st-century socialism,’ economic and political freedom is nonexistent.” In my opinion, Venezuela’s United Socials Party is proof of Adam Smith’s somewhat cryptic remark, “…that there is a great deal of ruin in a nation.” In Venezuela that ‘ruin’ has been unmasked.

 

The message from Venezuela is the speed and the perfidious nature with which nations can go to ruin. Hugo Chavez, a “champion of the poor,” campaigned on a platform of redistribution to combat inequality. However, under his leadership inflation rose, the nation’s living standards declined, and poverty increased. Chavez muffled dissension, abandoned civil rights and the rule of law. In doing so, he destroyed his nation’s culture while generating a personal net worth of about $1 billion.

 

A nation’s culture reflects all aspects of its being. It should not be forced. It changes naturally, almost imperceptibly, over many years. The culture of the United States is one of individual personal responsibility and self-reliance. It is manifested in our concept of limited government and in our individual rights embedded in the Constitution’s Bill of Rights. It can be seen in our religious freedom, in our schools, in the belief that every person should have an equal opportunity to succeed and that no one is above the law, that legal contracts be honored and that property rights are inviolable. We are a nation of immigrants who have come to this country largely to improve our lives and to live freely, not to substitute one paternalistic dictator for another. Our culture is a compaction of our predecessors and their ideas. It is us. The destruction of a nation’s culture destroys that nation.

 

We are a caring and generous people, who give more to charity than any other. But, insidiously and almost invisibly, our government has been assuming responsibilities men and women harbored for decades, so that participation in community service organizations has declined for years, a development well described by Robert Putnam, in his 2000 classic, “Bowling Alone.” The stated intent of those who would expand the reach of government is benevolence and equality, to make life easier for those who are the most unfortunate. The effect has been greater dependency and less community involvement, along with reduced economic growth and declining middle class incomes.

 

In his State of the Union, President Obama was not bashful about governing unilaterally, when he felt the need. Executive orders and administrative rules are permitted under our Constitution, but they are not supposed to substitute for legislation, the exclusive purview of the Congress. (In similar manner, the Left would have the Supreme Court assume a more activist role; for example defining marriage, rather than allowing the people to decide through their state legislatures. Is the opinion of nine individuals more sagacious than the collective wisdom of 200 million voters?) The Environmental Protection Agency’s attack on the coal industry was a politically motivated act to advance an agenda that it is doubtful that Congress would have approved. What legislator would have voted to impose mandates on an industry, the consequences of which, by the Administration’s own calculations, will be to raise coal prices 70-80%?

That usurpation of power was silently acquiesced to by most in mainstream media, because it was for a cause they support. But in doing so, they set a precedent that will return to haunt them. The question should always be asked of those who allow such power grabs – does the end justify the means?

 

Freedom is not elastic. It is finite. We are all willing to give up some element of freedom to live secure from enemies, eat foods that are deemed safe, drink water that is pure and take medicines that do what they are supposed to do. The debate, as it has always been, is about how much freedom are we willing to forego for how much security and safety we expect to obtain. Whenever the EPA issues a new mandate, some element of freedom is lost, but its loss is never explained or quantified. It is why laws should be enacted by Congress, so they can be openly debated and resolved in a manner that satisfies the majority. The Left is willing to give up more freedoms than the Right, and they are more likely to further their interests by imposing their will through executive actions and court decisions.

 

The path toward more government in our lives and the greater dependency that implies does not necessarily mean we will become a nation of Eloi, or that we are on a road to serfdom, to borrow the title of Friedrich Hayek’s book, or that we will become a Socialist state like France. But it does mean we are traveling in that direction, a fact that should be acknowledged by everyone, regardless of political bent. A benevolent dictatorship, a wag once stated, is the best form of government there is. But whose definition of benevolent should we use, yours or mine?

 

These are the lessons from the events unfolding in Venezuela. “It Can’t Happen Here” was the title of Sinclair Lewis’ 1935 novel based on the rise of National Socialism in Europe at that time. It may be unlikely and it certainly would be unexpected, but it can happen here. Freedom, which is fragile, and opportunity, which should be robust, begin with education. It is ironic that many Democrats who favor choice for women deny choice for the poor when it comes to public school education. Obeisance to teacher’s unions trumps opportunity for inner-city children. Disallowing charter schools and vouchers is a way of removing choice – of bending to self-interest, rather than in doing what is right for the people.

 

A power-hungry, populist President, one who divides the people into categories like the 1% and the 99%, is a politician to fear, as is a man capable of subverting lies into truths. Using the IRS to silence opponents should send a chill up the spine of every freedom loving person. These are the things which we must guard against, as the omnipotence of the state becomes more ubiquitous. These are the lessons from Caracas.

Friday, February 14, 2014

"Boehner & McConnell Take One for the Team"


 

     Sydney M. Williams

 

Thought of the Day

“Boehner and McConnell Take One for the Team”

February 14, 2014

 

Speaker of the House John Boehner decided to go against many of his Republican compatriots by having the House vote to increase the nation’s debt ceiling, without any conditions. The tally was 221 to 201, with only 28 Republicans voting with the majority. The move was necessary, however, because Republicans had lost the tactical campaign of using the threat of a government shutdown in their war against the nation’s rising tide of debt. The quid pro quo was that this should allow Republicans to focus on the disastrous rollout of ObamaCare, a law which has thus far seen at least 27 “administrative” changes since passed by a Democrat Congress and signed by a Democrat President in March 2010. Mr. Obama’s unprecedented use of executive actions will be rued by Democrats when Republicans retake the White House, as is inevitable.

 
Senator Ted Cruz came close to de-railing what John Boehner had achieved. In demanding that the debt ceiling bill in the Senate be passed with a super majority, he forced ten Republican Senators to vote with the Democrats.  Had they not, Harry Reid would have declared a recess and the next two weeks would have been filled with reports of how Republicans were intent on shutting down government yet again. There was a time, perhaps, when the debt ceiling symbolized unsustainable government spending, but it has become symbolic – perhaps not fairly – of Republican recalcitrance. It is the elections in November that are important, not the smug satisfaction Mr. Cruz may get from pushing Harry Reid to the wall.

 
This is not to suggest that debt is not a serious matter. It is. The campaign over the debt ceiling and the ensuing government shutdown last fall was lost in part because of a media that has little understanding of the financial stakes involved if we continue on this path of profligacy, but most importantly because politicians of both Parties can only see as far as the next election. They live in a make-believe world, where they spend what they want and the Treasury makes up any difference between what they spend and what they take in by borrowing, courtesy of nations like China and thanks to a Federal Reserve that has kept interest rates at exceptionally low levels. The consequences of recklessly layering on debt will have, at some point, a sad ending, most likely in the form of drastically higher interest rates and inflation.

 
It must be remembered that there is no intrinsic value behind the dollar, apart from the faith and credit of the U.S. government. Neither gold, nor silver, nor copper nor real estate backs a single dollar that is printed. No members of Congress or members of the Executive branch have pledged their personal assets for the money they keep borrowing. We recognize that no economy in the world is stronger than ours and no people as free. But the world doesn’t stand still, and our economy has lost some of its “mojo.” Further, studies indicate that economically we have become less free. What has been and what is will not necessarily be. Democracy is fragile and relies on faith and trust, while the economy depends on confidence that laws will be enforced and contracts honored. Too many in Washington, in both Parties, assume the game will always go on. But, like a juggler, balls must be kept in the air. Gravity, at some point, is likely to win.

 
For years, Americans have fed at the trough of deficit spending, aided by prodigal politicians whose concerns for the nation entrusted to their hands are secondary to their interests in the next election. With half of American citizens receiving benefits while not paying Federal income taxes, a number of canny Democrats have effectively enabled their next re-election. It is a vicious cycle that once starts spinning is almost impossible to stop.

 
The debt ceiling should be eliminated. It has become a political football. One’s attitude towards it depends on where one stands. When George Bush was in the White House, Nancy Pelosi and Barack Obama voted against raising the debt ceiling. Now they claim Republicans are being willful. Bickering over it detracts from the basic problem that we persist in spending more than we take in.

 
While some debt does no harm and the ability to borrow is critical to any operation, the growth in Federal debt is sobering, particularly when contrasted to the growth in income – the nation’s GDP. From the bottom of the recession five years ago, the annual compounded growth in GDP has been about 2.2%, while the nation’s debt (since October 1, 2009) has compounded at 8%. These n umbers actually understate the magnitude of the problem. Keep in mind, the starting point for calculating the growth in debt was at an abnormally high level, as the credit crisis and the Obama stimulus had ballooned the nation’s debt in fiscal 2009 by $1.7 trillion, or 17%. At the same time, the starting point for calculating the growth in GDP was at an abnormally low point – one quarter off the bottom of the recession. Regardless, this is not a new problem. Since 1981, U.S. federal debt has compounded at 9%, while GDP has expanded at an annual compounded rate of 5.3%.  The difference this time is that borrowing has not produced comparable economic growth.

 
For individuals and businesses there are only two options regarding debt: pay it off or default. The Federal government has two other options, the second of which is not available to states or local governments: make the debt perpetual, or inflate. In recent times, the Federal government has never paid off debt, and they have never defaulted. But they have taken advantage of the third and fourth option. Not only has debt been perpetual, it keeps growing, and the Dollar has depreciated. Inflation, at least as calculated by the Bureau of Labor Statistics, has been modest, but for those who food shop, pump their own gas and pay for a college education, inflation has not been so benign. The cost of the run-up in Federal and state debt has not been really felt, because the Federal Reserve has been purchasing T-Bills, T-Bonds and mortgages, keeping interest rates at exceptionally low levels. At some point, though, tapering will morph into total cessation of purchases.

 
It is not the debt ceiling that is the problem, it is the spending. If the Administration truly believes that people want a government that provides cradle-to-grave subsistence, they should be honest about it and explain that doing so will mean across-the-board tax increases on the order of 30-50%. Entitlement spending is already limiting our ability to maintain our infrastructure as Vice President Biden so vividly noted last week at LaGuardia. Entitlement spending is crowding out military spending, with potentially frightening consequences. Europe, the model Mr. Obama seems desirous of emulating, has had the advantage for the past seventy years of a muscular friend in the United States, to help provide for their defense (as well as a market for their exports.) We have no such friend. And, of course, our debt does not include unfunded liabilities for programs like Social Security, Medicare, Medicaid, welfare assistance and now ObamaCare.

 
While sympathetic to the fiscal goals of those like Senator Cruz, I disagree with his tactics. Neither Mr. Boehner nor Mr. McConnell were happy to vote to raise the debt ceiling, but they did what they had to do; so that the November Congressional battles can focus on the lies and disingenuous statements that have come to characterize this Administration, the poor planning and execution of ObamaCare and the dismal economic recovery that Mr. Obama and his cohorts in the Congress have presided over, and not on truculent Republicans tilting at windmills. They did what they did for the good of the Party.

Wednesday, February 12, 2014

"Politics in the Age of Twitter"


 

     Sydney M. Williams

 

Thought of the Day

“Politics in the Age of Twitter”

February 12, 2014

 

Having just finished Willa Cather’s evocative novel, Death Comes to the Archbishop, I have been thinking of how much the world has changed, not just in the past ten years, but over the past two hundred years, since the start of the industrial revolution.

 

Cather’s principal character Jean Marie Latour is loosely based on Jean Lamy who was sent by the Catholic Church to Santa Fe in 1850 from France to establish an episcopacy in what was U.S. territory acquired from Mexico following the Mexican War of 1846-48. Lamy served as Bishop and then Archbishop for 32 years, from 1853 to 1885. In reading Cather’s novel, I was struck by the great distances Latour had to travel – 60 miles to Albuquerque, 135 miles to Taos, 500 miles to Tucson and 700 miles to San Antonio. He traveled the 1400 miles to Mexico City to assume his responsibilities. And he traveled by mule, at least during his first two decades. By the time he died, railroads had arrived.

 

Traveling great distances, either alone or with one or two companions, provided a lot of time for thinking, something our current world rarely allows. Very few people would want to return to a time when it took two or three days to travel by mule between Santa Fe and Albuquerque, but the condensing of distances, which reduces the opportunity for reflection, may lead to ill-considered, spontaneous comments, the consequences of which may prove embarrassing.

 

A Twitter account fits neatly into a world suffering from attention deficit hyperactivity disorder (ADHD). An article a year ago in the New York Times noted that there had been a 41% increase in the diagnosis of ADHD over the past decade. It is unclear, from what I have read, as to why the increase. Some suggest that a greater awareness of the symptom has increased the number of diagnoses. A few cynics blame it on the drug companies who sell chemicals designed to combat ADHD. Others argue that parents bear responsibility. They have become so focused on getting their children into the right college that they keep them involved in continuous activities. And some say that a proliferation of instant communication devices and apps are responsible. Whether Twitter, Facebook, YouTube, Gmail and Flickr are causes or consequences of ADHD, tweeting provides a perfect outlet.

 

A Kansas State University study referenced by Lucy Kellaway in Tuesday’s Financial Times noted that that the average U.S. employee spends 60-80% of his or her work time online doing things unrelated to their job. We cyberloaf. We have become, according to one pundit, “mentally obese.”

 

As a marketing tool, tweets make sense. For anyone who relies on fame for their livelihood, such as entertainers, authors, artists and bloggers, self-promotion is easier because of tweeting. It is understandable that Twitter accounts are used by retailers to send ads directly to consumers – much like instant-messaging or e-mail, but faster and more focused. Most Twitter accounts – and there are 241 million of them according to Twitter’s recent results – are used to pass on what I would call drivel, mindless information, like what kind of café latté one is drinking at Starbucks, or what one is preparing for dinner. There is a sense of paranoia among many of the young, of being isolated from friends and acquaintances. Being constantly connected drives these people.

 

It is understandable why Ellen DeGeneres uses Twitter, but I find it odd and disconcerting that politicians like President Obama do. People don’t take seriously tweets from Ms. DeGeneres, but they do from Mr. Obama. In fact pundits and columnists will dissect all 140 characters each time he tweets. They look for hidden meanings in the words. If there is a slip, like “…you can keep your doctor…” or “…not a smidgeon of corruption…,” it will be around the internet before he can put his i-Phone back in his pocket.

 

It is revealing of our culture to look at who has the most Twitter followers. Pop singer Katy Perry tops the list with just over 50 million. Just behind her is Justin Bieber with 49 million. Virtually tied for third are President Obama and Lady Gaga. Mr. Obama stands alone amidst this group of singer-entertainers. The rest of the top ten include Taylor Swift, Britney Spears, Rihanna, Justin Timberlake and the like. Mr. Obama’s Twitter account is actually handled by his principal political action committee, Organization for Action. Indicative as to how well they have played this game, the only other politicians with more than a million followers are Arnold Schwarzenegger with 2.9 million and Sarah Palin with just over a million. Fidel Castro, with 430 thousand followers, has almost twice as many as Vice President Joe Biden.

 

In thinking of the celebrity status provided Barack Obama, the George W. Bush years – less than six years in the past – seem as dated as the Eisenhower era. One of my sons recently signed on as a follower of President Obama and then tried to do the same with former President Bush, but no such person was found.

 

One of the more telling contrasts that speaks volumes about the age in which we live is seeing a video tweet from Britain’s Prime Minister David Cameron. It shows him posed in a butcher shop, picking up lamb chops, as he will, he says, “be cooking dinner for my mum tonight.” Compare that attempt by an Oxbridge toff to appear normal, to ex-Prime Minister Margaret Thatcher’s refusal to jump for a Swedish interviewer in 1995. Jumping, according to interviewer Stina Dabrowski, makes one appear normal. Mrs. Thatcher says there is no reason to “appear” normal, when she already is. Mrs. Thatcher said she does not want to lose the respect of the people who have respected her for years. (The interview can be seen by Googling Thatcher and “don’t want to jump.” It is worth viewing, if nothing more than to understand why a woman of her character, integrity and intelligence is so sorely missed in this era of celebrities.) Margaret Thatcher retains her dignity, while David Cameron comes across looking exactly like a toff pretending to be something he is not. He looks like an idiot. She looks like a Prime Minister.

 

Like selfies, tweets encompass a strong narcissistic streak, something understandable when used for commercial purposes, but unseemly when substituted for political discourse. When asked about her posing for selfies with Barack Obama and David Cameron, Danish Prime Minister Helle Thorning-Schmidt remarked she was a serious person, but enjoyed having fun. That’s fair, but public figures largely lose their right to privacy when they assume official positions. The repercussions of actions that would be deemed harmless for private citizens can have unintended consequences when taken by public figures.

 

We will never return to the age of sail, long train rides, or the riding of mules across vast and empty deserts, but politicians (and all of us) need time for reflection. Tweets are more than a distraction; they convey, when used by politicians, an absence of seriousness regarding a world that requires thoughtful and serious leaders.

Monday, February 10, 2014

"We Are All Kin"


 

     Sydney M. Williams

 

Thought of the Day

“We Are All Kin”

February 10, 2014

 

We spend hours in trivial pursuit and too little time on meaningful issues. At a time when 47 million Americans are on food stamps, 10.4 million people are unemployed, our nation’s debt has been growing exponentially and stateless terrorists are stalking people around the globe, we are fixated on ensuring that the Little Sisters of the Poor can receive morning after pills, folks in Colorado can smoke marijuana and those in New York cannot sip 20 ounce soft drinks. We worry about issues over which we have little control, like spotted owls and polar icecaps, while ignoring complex issues like understanding what it means, in a civil society, to live freely, under the rule of law. We want to please everyone and, consequently, too often please no one. Leaders in politics and the media concentrate on issues that divide us, rather than on those that unite us.

 

At the same time, we forget how insignificant we are and how large the world is. And we pay too little attention to the remarkable chain of events that had to occur in order that we might be here. The mathematical odds against any one of us being born are overwhelming. We are lucky to live in this age and even more fortunate to live in a free country.

 

Every person is unique, yet we all come from the same place – out of Africa. While no one knows how many left Africa and over what time periods, the consensus believes our ancestors left in waves, beginning more than 60,000 years ago. From those common ancestors was born the human race, as we know it. Given an average life span of eighty or so years, 60,000 years is a long time, but for an earth that is 4.5 billion years old, 60,000 years barely registers.

 

Ancestry is fascinating and history is more meaningful when we associate it with a parent, grandparent or great-grandparent. For example, President William Howard Taft is not widely remembered, but was President when my father was born in 1910. Ulysses Grant was President in 1873 when my paternal grandfather was born and Martin Van Buren was President at his father’s birth, in 1837, just over a hundred years before my own birth.

 

When we look at our lineage through the lens of compounded returns we reach the inevitable conclusion that we are all related. In a recent “Sunday Review” section of the New York Times, A.J. Jacobs wrote of his estimated 75 million cousins, a group for which he admits not buying birthday gifts! While his numbers sound far-fetched, they are not. We each have two parents, four grandparents and eight great-grandparents. The number from whom we descend doubles each generation, stretching back to the beginning of time. If we assume three generations per century and go back to the time of the Norman Conquest, or just under 1000 years ago, (and using the same mathematical exercise we associate with Warren Buffett) each of us descends from 536,870,912 27-great grandparents. The problem is that there are 7 billion of us today and there were only 300 million in the year 1000AD, according to estimates by the UN Department of Economic and Social Affairs. If we all descended from unique ancestors the earth’s population would have been 3.5 quintillion in 1066. Obviously, we are all related.

 

In my family, we have been able to trace some of our ancestors. For example, my siblings and I have at least one set of five-great grandparents common with both my mother’s and father’s side. William Greenleaf was appointed Sheriff of Suffolk County (Boston) in 1776 by the Provincial Congress. He and his wife, Mary Brown, had fifteen children, two of whom died as infants with a third dying at the age of 18. (The one who died at 18, Stephen, was a student of medicine and surgery at Harvard and died of a fever contracted when working aboard a prison ship in Boston harbor.) One daughter Priscilla married John Appleton, from whom my father descended. A younger daughter Rebecca married Noah Webster, my mother’s three-great grandfather. In all, the Greenleaf’s 12 surviving children produced 85 grandchildren.

 

One of my high school friends, Tom Korson, is also descended from the Greenleaf’s; so he is my 6th cousin, something we never knew when at school. Sorry Tom, but being a descendant of William Greenleaf is no big deal. A quick calculation would estimate that his descendants, in the succeeding ten generations, would number somewhere between half a million and five million – and very possibly more. Intermarriages, childhood diseases and the Civil War may have reduced those numbers, while larger families than I assumed would have increased them. Whatever the number, great, great, great, great great-grandpa Greenleaf would not be able to pick me out of a line-up, and he is only marginally important in my life, as he was simply one of 128 five-great grandparents I have.

 

As an indication of the power of compounded returns when it comes to families and descendants, I was asked about 25 years ago by a friend who was involved with the Mayflower Society of New York if I might hazard how many people living in New York State could trace their heritage to the Mayflower. Taking what I assumed was a wildly bullish guess, I said about 100,000. He told me that the Society’s estimate was seven million, or a third of the population of the State. I was flabbergasted until I started doing the math. There were 102 passengers plus a crew of 20 on the Mayflower. About half died the first winter. The remaining crew sailed for England in the spring. The rest stayed. Because of the laws of compounding, the numbers become very big when we go back 14 or so generations. Assume that 35 of the survivors had children. Further assume that for the first four generations each had four surviving children, the next five generations had three and the last four had two children. Those calculations would produce 34,836,480 in 14 generations – a lower estimate than that produced by the Mayflower Society in the 1980s. If one assumed that my grandparents’ and my parents’ generation had three surviving children, there would be 78,383,080 Mayflower descendants, or more than 20% of the U.S. population. Conclusion: Despite pretensions to the contrary, there is nothing very exclusive about the Mayflower Society.

 

Regardless of our mixed heritage, politicians like to place us in discrete compartments: Hispanic-Americans, Asian-Americans or African Americans, for example. But that is misleading. We are not Blacks, Caucasians, Asians or Latinos. We are Americans. We are segregated for political purposes. And politicians do it not just by race, but by creed, gender, age, sexual orientation and now by wealth and income. Doing so is divisive and serves no purpose, other than political expediency.

 

Pride in one’s nominal heritage is understandable and should be celebrated. Parades and festivities like St. Patrick’s Day, Puerto Rican, Jewish and Greek heritage days are an important part of our culture. Nevertheless, we should never forget we are all members of the human race and we Americans are citizens of a great nation whose melting pot reflects the commonality of our ancestry.

 

In the late 1950s and early 1960s, during the Civil Rights movement, my paternal grandmother – a woman who spent six years at MIT – told me that at some future time all humans would be of one color. Racial differences, she believed, would disappear. She is right, but “eventually” is a long a time. Politics should be color-blind today. Politicians (and much of the media) divide us because they find it more convenient to address the specific needs of a discrete group. Doing so makes for expedient political advantage. It avoids having to discuss the broader issues of what it would mean to live in a society where freedom is suppressed. Ideas are far more important than physical characteristics or personal preferences. It is the ability to think and to reason that differentiates us from other animals. The concept of liberty, the rule of law, the role of religion in society and the meaning of justice are the issues we should be debating. And, we should never stop doing so.

 

While unanimity in what we have in common as member of the human race is good, unanimity in ideas suggests a population that has stopped thinking for itself – the Eloi of H.G. Wells’ Time Machine. A gridlocked Congress encourages blame. And blame substitutes for debate. There is a tendency among the media, and with many politicians, to look upon failure to enact legislation as a negative manifestation of our political system. It is not. People operating in free markets do things. Governments set the boundaries and act as referee.

 

The critical element of a democracy is the ability to express one’s opinions. A society that freely debates issues is open. A society that condemns specific groups, or vilifies others is closed. It is on the differences in political philosophies that our discourse should be focused, not on the color of our skin, our gender, religion or the country from which our ancestors hailed. After all, we are kin.