Monday, October 24, 2016

"Change - It's Blowing in the Wind"

Sydney M. Williams

Thought of the Day
“Change – It’s Blowing In The Wind”
October 24, 2016

“Yes, how many times can a man turn his head
Pretending he just doesn’t see?
The answer my friend is blowin’ in the wind;
The answer is blowin’ in the wind.”
                                                                                                Bob Dylan (1941-)
                                                                                                “Blowin’ in the Wind” 1962
                                                                                                2016 Nobel Prize winner for literature

Whether Donald Trump wins or loses in November, one thing seems certain – change is in the air. There are many reasons for this: Wars in the Middle East have forced millions to flee their homelands. Globalization, technology, and the creative destruction they have brought has caused tens of thousands to lose their jobs. Change can be both good and bad, but change is inevitable. It was the Greek philosopher Heraclitus who allegedly said that “change is the only constant in life.” There is no time when change is not present, but there are distinct times when it is pivotal. At the risk of sounding like the boy who cried wolf, I believe this is one of those times.

Other factors are also at work. Government has become larger, less accountable and less representative. (In 1800, 32 Senators and 105 Representatives represented 5.3 million people. Today, 535 Congressional members of Congress represent 320 million people.) Have we become too large for representative government? I hope not and I don’t believe we have. The Executive branch – via multiple agencies run by unaccountable bureaucrats – has increased its power over the purse. Corruption has become rampant, suggesting term limits for Congress may be one answer. The Supreme Court has become politicized, as ideologies have replaced adherence to the Constitution, at least from the perspective of those making appointments. The absence of a military draft has rendered less meaningful universal concepts of public service, self-sacrifice and patriotism. Universities have become sanctuaries where students are provided “safe places” to protect them from “uncomfortable” words and phrases. School choice is denied to all but the wealthy. Political correctness has become the God before whom we genuflect. We apologize for past sins rather than celebrate the benefits democracy and free-markets have wrought.

Globally, liberalism and capitalism are under attack, as are institutions that have defined Western civilization for years – family; values; religious organizations; community groups; the free flow of ideas in colleges and universities. Our public schools no longer teach discipline, mutual respect and the virtues of citizenship. White Americans are told to acknowledge their “privilege” and are condemned for deeds done by previous generations, in very different times. We are pompously instructed by “our betters” to allow into the country, without proper vetting, those who would destroy the culture that permitted our society to blossom. Political elites live segregated lives, in gated communities, with children in exclusive schools. They live lives unaffected from the consequences of their policies. As Admiral Boom warns Bert in “Mary Poppins,” “heavy weather brewing there!”

Amidst this turbulence, we should be careful for what we wish. We should recognize how Western thought has served as ballast to our nation states, and we should understand the unchanging nature of moral values. In his 1993 book The Moral Sense, James Q. Wilson noted that it was in the West, and only in the West, that freedom for all men became a fundamental moral principle. It didn’t happen all at once, and it didn’t spread evenly. But the West is where it began. He wrote: “The kind of culture that can maintain reasonable human commitments takes centuries to create, but only a few generations to destroy.” We now see freedom slipping away bit-by-bit, as the state strengthens its hand, using the tax code to benefit special interests and federal agencies to promote favored businesses. We see odd bedfellows working together – academia, mainstream media, Hollywood, elitist politicians, union and business leaders, and bankers who freely migrate between Wall Street and K Street – to maintain power and generate personal wealth.

The possibility that their comfortable place could be disrupted by the election of Donald Trump, terrifies these elites.  Mainstream media has decided that impartiality in reporting news is less important than denying Trump the election. Universities claim to be bastions for the free exchange of ideas, yet are overwhelmingly liberal, with registered Democrats outnumbering Republicans twelve to one. We see civil rights leaders whose self-interest supersedes any concern for those they purport to represent.

But things are changing, and with it a backlash, in which the cure may be worse than the disease. In 1995, Harvard political scientist Robert Putnam published Bowling Alone, in which he made the case that Americans were no longer the energetic joiners they had been in the 1950s – that they had become detached from civic life and deprived of person-to-person social networks. In Coming Apart (2012), Charles Murray described the economic divide and moral decline of white Americans, contrasting the poor, white neighborhood of Fishtown in Philadelphia to the fictional upscale town of Belmont. In Hillbilly Elegy (2016), J.D. Vance tells his story of growing up in the small, rust-belt town of Middletown, Ohio in the late 1990s and early 2000s. He writes of poor, white people who have developed mistrust of government institutions, those who now form the base of Donald Trump’s supporters. These are Hillary’s “deplorables” and “unredeemables.” Politicians have segregated the electorate into easily identifiable groups, but have left out white middleclass and poor, men and women who once held private sector union jobs – jobs that have been shipped offshore. They see liberal politicians cater to blacks, Hispanics, gays and transgenders, yet ignore what was once the backbone of the American workforce. They see Washington require the Catholic Church provide contraception to female employees, yet the same government discourage Catholic schools from offering school choice to middle class and low-income families. They see a President unwilling to call Islamic terrorists by name. They live in a country they no longer understand.

Across the globe, men and women have begun to stand up against elites who control government, unions, banks and large businesses. People have grown weary of the lies, the corruption and the self-dealing. A few years ago we saw the spontaneous rise of the Tea Party, which reflected a simmering discontent with the establishment. We see African-American moms clamor to get their children into union-free Charter schools, knowing that a good education is fundamental to future success; and then watch NAACP leaders endorse teachers’ unions that have done so much to suppress school choice. Demographics play a role. High birthrates in wealthy countries reflect optimism. Yet, birthrates are declining in the West, indicating pessimism and magnifying future entitlements, with too few workers paying for too many retirees. In Europe and the U.S., people see higher Muslim birthrates and rebel against liberal, unthinking immigration policies, which portend a cultural shift in the decades and generations ahead – a change that will cause societies to be less liberal, less equitable than the Christian-Judeo ones we have known.

Brexit in England was manifestation of this unrest, as was the Republican nomination of Donald Trump in the United States. (In contrast, the coronation of Hillary Clinton by Democrats, despite her lies and corruption, evidenced a desire to maintain the status quo.) No matter who wins or loses in November, these events suggest an irreversible force moving across the West – a blowing in the wind – that is questioning the assumed wisdom of elites who have led us to this angry and dissonant place.




Monday, October 17, 2016

"Public Pensions: Promises Promises"

Sydney M. Williams

Thought of the Day
“Public Pensions: Promises Promises”
October 17, 2016

“You made me promises promises
Knowing I’d believe
Promises promises
You knew you’d never keep.”
                                                                                             From the Neil Simon musical “Promises Promises” – 1968
                                                                                             Lyrics by Hal David
                                                                                             Score by Burt Bacharach

The end of liberalism is not an original thought, but it is a possibility. In 1969 (revised in 1979), Theodore J. Lowi, professor of government at Cornell, published The End of Liberalism: The Second Republic of the United States. He argued that government had become too big and that interest groups had caused Congress to cede responsibilities to unelected (and, in some cases, unaccountable) agencies. These agencies, including the Environmental Protection Agency (EPA) and the Consumer Financial Protection Bureau (CFPB), control more than a trillion dollars in annual expenditures – almost 25% of all federal spending. Ironically for Democrats, special interest groups have created another problem – they compete with unionized government, and the demands public-sector retirees exact from American taxpayers.

Today, global progressives see the end of liberalism in the rise of nativism, xenophobia and populism – manifested in decisions such as Brexit, the Republican nomination of Trump and the Colombia-FARC Accord. It is seen in the failure of the Arab Spring and the resurgence of Putin’s Russia and Xi’s China. Conservatives bemoan the unraveling of liberal values, which date to the age of enlightenment – the acceptance of anti-Western ideologies, cultural and moral relativism, and political correctness. The latter denies language from being used as it was intended – to accurately describe people, their actions and events.

I do not pretend to know if “liberalism” is at an end. What I believe is that big, activist government is being hoisted with its own petard. Promises have been made that will prove impossible to keep. Activist government was conceived in the belief that equality of outcomes supersedes that of opportunity. In the United States, “big” government was born during the New Deal, reached maturity in LBJ’s Great Society, and has come into senescence with ObamaCare and the CFPB; it is seen in the Administration’s videos: “Life of Julia” and “Pajama Boy.” The factors progressives cite allow them to ignore what seems an inevitability – that promises politicians made to those who elected them will not be possible to keep.

This is a world-wide problem, moving in slow-motion toward crisis. Citigroup recently identified nine countries where public sector pension liabilities (not included in debt figures) exceed more than 300% of their respective GDP – Austria, Britain, Denmark, France, Germany, Italy, Poland, Portugal and Spain. 

Progressives talk of “fairness,” when the conversation should be about saving a foundering ship. They talk of the one-percent not paying their “fair share,” when, in fact, they pay half of all federal income taxes. They say government is the answer, when what is needed is faster economic growth – requiring less regulation and flatter, lower tax rates, less government. They want to protect young people from “harmful words,” to grow up without the challenges and hardships that are part of everyday life. They find “victimization” everywhere, and then wonder why civility has receded.

The consequence of Goldilocks-like promises are most prominent in the public pension arena. Last Monday, the New York Times ran the story of tiny (700 people) Loyalton, California, a small town with four retired public employees. In 2012, the town opted out of CalPERS (California Public Employees Retirement System), because the annual cost of $30,000 was crimping their budget. CalPERS then sent the town a bill for $1,600,000 to fully fund the pensions of the four retirees, else annual pension payments would be reduced by about 60 percent. CalPERS only fully funds pension plans when a participant chooses to leave. They assume (probably correctly) that if an exception is made to Loyalton, the rest of the 3,007 participating governments will want similar treatment. Four people and the forgiveness of $1,600,000 doesn’t seem like much for a fund with total assets of $290 billion. But, could CalPERS afford to treat the other 560,000 retired public pensioners as liberally? Should contract law be abrogated so dismissively?

In August, Pensions & Investments wrote of a Pension Finance Task Force (PFTF), a joint effort created by the American Academy of Actuaries (AAA) and the Society of Actuaries (SoA).  The task force was not allowed to publish their findings. They had concluded that, since public pension plans are purported to be default-free obligations, they should use default-free interest rates when determining the discount rate to estimate returns and calculate future obligations. For example, the risk-free yield on the 30-Year Treasury is 2.5 percent. Yet the current actuarial practice is to use 7.5 percent. The more conservative number would add significantly to liabilities.  The Economist recently suggested that using a discount rate of 4% would mean that the average public pension fund would have a funding ratio of 45%, not the 72% used by the Center for Retirement Research. Using the higher rate makes funding look less of a problem than it is. It is delusional, at a time when $12 trillion in global debt has been issued at negative interest rates.

This is a big problem. Five states – Connecticut, Massachusetts, New Jersey, Illinois and Kentucky – have the largest unfunded liabilities. New Jersey has the highest pension debt per resident: $15,000. The underfunded portion of Illinois pensions has increased 500% since 1995, and 75% in the past five years! Scranton (PA) city auditors calculated that police and fire pension funds will be depleted in three to five years. If the discount rate used was actually the Thirty-year Treasury, estimates suggest the shortfall would exceed $3 trillion, instead of the $968 billion reported for fiscal 2013. Stephen Moore, writing in Investors’ Business Daily two years ago, put the unfunded number between one and five trillion dollars.

There are no easy solutions for a country with generous public retirement benefits and an aging population, apart from simply expunging the elderly, an unappealing suggestion to me. The best option – grow the economy. Other measures include: an increase in tax rates, which would hamper economic growth; raise retirement ages, which would further worsen youth employment; reduce contractually agreed-to pension payments, which may be illegal; convert existing and future plans from defined benefit to defined contribution plans, which will have to be done. It will probably take some combination. It is not unionization per se that is the problem. It is the willingness of politicians to make promises they cannot keep. Unions, though, are not innocent. In 2014, four public sector unions (NEA, AFT, SEIU and the AFSC&ME) contributed $85.6 million to political campaigns, with all but $210,000 going to profligate Democrats.

ObamaCare has made entitlements costlier. Debt, will increase should Hillary Clinton’s plan to provide free public college education be adopted. Debt and pension obligations have hampered infrastructure rebuild and military preparedness. They are a reason the Fed has kept interest rates so low. God help us, should we again face a crisis as we did in 1941, 2001 and 2008. Politicians should address these concerns. Thus far they have chosen a broom and a carpet.

Promises promises you knew you’d never keep.” But at some point the piper must be paid.




Monday, October 10, 2016

"The Election - What In Hell Have We Done?"

Sydney M. Williams

Thought of the Day
“The Election – What In Hell Have We Done?”
October 10, 2016

“I hold it that a little rebellion now and then is a good thing,
 and as necessary in the political world as storms in the physical.”
                                                                                                Thomas Jefferson (1743-1826)
                                                                                                Letter to James Madison, January 30, 1787

For a 10th grader, my fifteen-year-old grandson follows politics closely. His concern about the upcoming election is palpable: “Pop Pop, it isn’t fair. When you were 15 Eisenhower was President; when my dad (my son) was 15, Reagan was President. Now that I’m 15 it will be either Clinton or Trump! It isn’t fair.” I acknowledged his complaint, and its reality.

A fatalist would say our lives are pre-ordained, that this election was inevitable. A cynic could argue we get what we deserve. A sociologist might claim that democracy is incompatible with human nature – that power corrupts. Benjamin Franklin famously replied, when asked what had been created in Philadelphia: “A Republic, if you can keep it.” In 1787, Alexander Tyler, a Scottish professor at the University of Edinburg, wrote: A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.”  Not being an historian, I cannot vouch for the validity of his observation. Perhaps America will prove the exception? But now we, a country of 330 million people, must choose between a serial liar who is both corrupt and mendacious, and a narcissistic, foul-mouthed braggart who appears clueless about affairs of state. While a full explanation is beyond my scope, some societal changes may have served as causation. Here are a few:

·        Moral Relativism: We have substituted moral relativism for the proven virtues of family, civility and our Christian/Judeo heritage. It has been a cultural shift that lacks moral and common sense.

·       Public Service: Public service, as a means of giving back, has been replaced by public service as a venue to personal wealth. The “pay-to-play” Clinton Foundation is exhibit ‘A.’

·       Education and Political Correctness: Many public high schools have given up trying to teach students discipline, civility, mutual-respect, and knowledge of the uniqueness of our history, its institutions and the advantages of free-market capitalism. In universities, diversity is applauded, except in ideas, while complaints of victimization have meant “safe places” and “trigger warnings.” PDAs have resulted in more time “on line” and less reading and thinking.

·       Short term gratification: In the political arena, we have “kicked the pail down the road” – to put off today what might be done tomorrow. “Short-termism” has become common among many of our banking and business leaders. The latter play to Wall Street whose biggest concern is the next quarter. Politicians find it is easy to make promises, but difficult to fulfill them. When we hear the promise of free public college tuition, we should be wary. While the nation’s debt, at more than 100% of GDP is worrisome, the bigger problems are promised but unfunded entitlements.

·       Media Bias: All news is slanted – NY Times, Washington Post, LA Times, NY Post, Wall Street Journal, for a few; NBC, CBS, CNN, MSNBC, Fox News, etc.; and internet pundits, like Huffington Post and Breitbart. So we read, watch and hear what we want to read, watch and hear.

The road we are on leads to a place we cannot financially or morally afford. The established elite are comfortable as to where we are, which is why they are so “anti-Trump.” They don’t want to change what works for them. However, their contentment is not universal. Globalization has declined and populism has increased. Too many people have been left out – not just “deplorables” and “irredeemables,” but millions who have been unable to participate in the last decade’s economy. The principal reason has been lackluster GDP growth. Mr. Obama will be the first post-War President never to have seen 3% growth in any one year. If the economy had grown at 3%, rather than 2% since recession ended, GDP would be $1.5 trillion bigger than it is – that’s a lot of jobs! While infrastructure spending is important (and perhaps critical), it is no substitute for encouraging entrepreneurship. Keep in mind, for the first time in post-War history more small businesses are closing than opening. It is fiscal, not monetary, policies that are needed.

Our position in the world has diminished, while threats from Russia, China and Islamists have increased. Lawrence Haas’ new book about the collaboration between Harry Truman and Arthur Vandenberg, “Harry & Arthur,” ends on a sobering note – “Today, however, no great nation sits in the wings, ready to defend freedom if we bow out for the long run. No single European power can do so, and Europe as a whole has shown no capacity to act robustly in the face of threats both near and far. The same goes for Asia, where Japan struggles economically while it seeks help to contain an increasingly aggressive China. If, then, the United States will not defend freedom and secure global order in the face of rising threats, who will?”

Personalities play a big role in this election, and the press makes cartoon characters of those they see as enemies to their progressive agenda. Much has been made of Donald Trump’s comments about women, Hispanics and Muslims – none of which are defensible. Much less, though, has been written about Hillary Clinton’s misanthropic outbursts. Like Tammy Wynette, Mrs. Clinton stood by her errant husband, and skewered those women who had affairs with him. She and Bill Clinton trashed the White House before leaving it in January 2001. Her e-mail scandals are legion and posed threats to our security. She destroyed the life of Nakoula Basseley Nakoula, after falsely blaming his video for the murders of Ambassador Stevens and three other men. She lies continuously, and by all accounts, treats her subordinates derisively.

When entering the polling booth and opting which lever to pull, we might consider words Jane Austen wrote in her posthumously published novel, “Persuasion.” The heroine Anne Elliot has doubts (correct ones) about her cousin who she believes will ask her hand in marriage: “She prized the frank, the open-hearted, the eager character beyond all others. Warmth and enthusiasm did captivate her still. She felt she could so much more depend on the sincerity of those who sometimes looked or said a careless or a hasty thing, than of those whose presence of mind never varied, whose tongue never slipped.” That puts to mind our two candidates: One is programmed, robot-like, at least in public; the other has never allowed himself to be harnessed, at least in public. But it is the private person that should concern us. Is Hillary Clinton as psychotic as some of those who have worked with her claim her to be? Is Donald Trump the misogynist mainstream media would have us believe him to be? Jane Austen’s words should warn us about the unnaturalness of politicians in front of cameras. To discover the real person, we must dig deep.

Regardless, we are in this mess and we must accept it. Washington’s establishment has brought us to this point. They are unlikely to get us out. Will Trump prove to be Themistocles at Salamis, Horatius at the bridge, or Don John of Austria at Lepanto? Probably not, but he does represent change. Perhaps my grandson’s fears will prove wrong? Perhaps not? In any event, citizens should make their decisions based on a thoughtful, not emotional, analysis of all pertinent information.