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Category: Common Good (Page 1 of 5)

Saving Democracy: In the Next Recession Government Stimulus Will Not Be Enough to Help the Middle Class – Innovative Initiatives Are Needed

A recession is emerging with interest rate curves inverted, the end of the business cycle at hand, world trade falling and consumers and businesses beginning to pull back spending.  The question is: will monetary or fiscal stimulus turn around a recession?  In this post, we find both stimulus alternatives likely to be too weak to have the necessary economic impact to lift the economy out of a recession and will not help the middle class out of a stagnant financial position. Finally, we identify a new approach to government intervention based on an innovative ‘seed’ and multi-partner program to lift the middle class out of economic decline.

Our economy is at the nexus of several major economic trends formed over decades that are limiting monetary and fiscal options. The monetary policy of central banks has caused world economies to be immersed in liquidity yet resulting in limited growth. Central bankers in Japan and Europe have been trying to revive growth with $17 trillion injections using negative interest rates.  Japan can barely keep its economy growing with an estimate of GDP at .5 % thru 2019. The Japanese central bank, holds 200 % of GDP in government debt.  The European Central Bank holds, 85 % of GDP in debt and uses negative interest rates as well. Germany is in a manufacturing recession with the most recent PMI in manufacturing activity at 47.3 and other European economies contracting toward near zero GDP growth.  

Lance Roberts notes that world economy is not running on a solid economic foundation if there is $17 trillion in negative yielding debt in his blog, Powell Fails, Trump Rails, The Failure of Negative Rates . He questions the ability of negative interest policies to stabilize world economies,

You don’t have $17 Trillion in negative-yielding sovereign debt if there is economic and fiscal stability.”

Negative interest rates and extreme monetary stimulus policies have distorted financial relationships between debt and risk assets. This financial distortion has created a significantly wider gap between the 90 % and the top 1 % in wealth.

Roberts outlines in the 6 panel chart below how personal income, employment, industrial production, real consumer spending, real wages and real GDP are all weakening in the U.S.:

Sources: Real Investment Advice – 8/23/19

Trillions of dollars of monetary stimulus has not created prosperity for all. The chart below shows how liquidity fueled a dramatic increase in asset prices while world GDP declined by about 25 %:

Sources:World Inequality Lab, Thomas Piketty, Gabriel Zucman et al – 2018

There are a number of reasons monetary stimulus by itself has not lifted the incomes of the middle class. One of the major reasons is stimulus money has not translated into wage increases for most workers.  U.S. real earnings for men have essentially been flat since 1975, while earnings for women have increased though basically flat since 2000:

Source: U.S Census Bureau – 9/10/19

If monetary policy is not working, then fiscal investment from private and public sectors is necessary to drive an economic reversal.  But, will private and public sector sectors have the necessary tools to bring new life to an economy in decline?

Wealth Creation Has Gone to the Private Sector

The last 40 years has seen the rise of private capital worldwide while public capital has declined. In 2015, the value of net public wealth (or public capital) in the US was negative -17% of net national income while the value of net private wealth (or private capital) was 500% of national income. In comparison to 1970, net public wealth amounted to 36% of national income while the for net private wealth was at 326 %.

Source: Wealth Inequality Lab, Thomas Picketty, Garbriel Zucman et al – 2018

Essentially, world banks and governments have built monetary and fiscal economic systems that increased private wealth at the expense of public wealthThe lack of public capital makes the creation of public goods and services nearly impossible. The development of public goods and services like basic research and development, education and health services are necessary for an economic rebound. The economy will need a huge stimulus ‘lifting’  program and yet the capital necessary to do the job is in the private sector where private individuals make investment allocation decisions.  

Why is building high levels of private capital a problem?  Because as we have discussed private wealth is now concentrated in the top 1 %, while 70 % of U.S GDP is dependent on consumer spending.  The 90 % have been working for stagnant wages for decades, right along with diminishing GDP growth.  There is a direct correlation between wealth creation for all the people and GDP growth.

Corporations Are Not In A Position to Invest

Some corporations certainly have invested in their businesses, people and technology.  The issue is the majority of corporations are financially strapped.  Many corporate executives have made profit allocation decisions to pay themselves and their stockholders well at the expense of workers, their communities and the economy. 

S & P 500 corporations are paying out more cash than they are taking in, creating a cash flow crunch at a – 15 % rate (that’s right they are burning cash) to maintain stock buyback and dividend levels:

Sources: Compustat, Factset, Goldman Sachs – 7/25/19

In 2018 stock buy backs were over $1.01 trillion are at the highest level they have ever been since buybacks were allowed under the 1982 SEC safe harbor provision decision. It is interesting to consider where our economy would be today, if corporations spent the money they were wasting on boosting stock prices and instead invested in long term value creation.  One trillion dollars invested in raising wages, research and development, cutting prices, employee education, and reducing health care premiums would have made a significant impact lifting the financial position of millions. This year stock buybacks have fallen back slightly as debt loads increase and sales fall:

Source: Dow Jones – 7/2019

Many corporations with tight cash flows have borrowed to keep their stock price elevated causing corporate debt to hit new highs as a percentage of GDP (note recessions followed three peaks):

Source: Federal Reserve Bank of Dallas – 3/6/19

Corporate debt has ballooned to 46 % of GDP totaling $5.7 trillion in 2018 versus $2.2 trillion in 2008.  While the bulk of these nonfinancial corporate bonds have been investment grade, many bond covenants have become lighter as corporations seek more funding. Some bond holders may find their investment not as secure as they thought resulting in less than 100 % return of principal at maturity.

In a recession corporate sales fall, cash flow goes negative, high debt payments become hard to make, employees are laid off and management is trying to hold on.  Only a select set of major corporations have cash hoards to ride out a recession, others may be able obtain loans at steep interest rates, if at all.  Other companies may try going to the stock market which will be problematic with low valuations.  Plus, investors will be reluctant to buy stock in negative cash flow companies.

Thus, most corporations will be hard pressed to invest the billions of dollars necessary to turnaround a recession. Instead, they will be just trying to keep the doors open, the lights on, and maintain staffing levels to hold on until the day sales stop falling and finally turn up.

Public Sector is Tapped Out Too

In past recessions, federal policy makers have turned to fiscal policy – public spending on infrastructure projects, research development, training, corporate partnerships and public services to revive the economy.  When the 2008 financial crisis was at its peak the Bush administration, followed by the Obama government pumped fiscal stimulus of $983 billion in spending over four years on roads, bridges, airports, and other projects. The Fed funds interest rate was at 5.25 % at the peak, so interest rate reductions had a significant impact versus today at 2.25 %. It was the combined monetary and fiscal stimulus that created a V-shaped recession with the economy back on a path to recovery in 18 months. It was not monetary policy alone that moved the economy forward.  However, the recession caused lasting financial damage to wealth of millions. Many retirement portfolios lost 40 – 60 % of their value, millions of home owners lost their homes, thousands of workers were laid off late in their careers and unable to find comparable jobs.  The Great Recession changed many people’s lives permanently, yet it was relatively short lived compared to the Great Depression.

As noted in the chart above, public sector wealth has actually moved to negative levels in the U.S. at – 17 % of national income.  Our federal government is running a $1 trillion deficit per year.  In 2007, the federal government debt level was at 39 % of GDP. The Congressional Budget Office projects that by 2028 the Federal deficit will be at 100 % of GDP.

Source: Congressional Budget Office – 4/9/19

We are at a different time economically than 2008. Today with 80 % of GDP public debt, a Fed balance sheet with $4 trillion while the federal debt level is projected to grow to 100 % of GDP by 2028. In a recession federal policymakers will likely make spending cuts to keep the deficit from going logarithmic. Policy makers will be limited by the twin deficits of $22.0 trillion national debt and ongoing deficits of $1 trillion a year eroding investor confidence in U.S. bonds. The problem is the political consensus for fiscal stimulus in 2008 – 2009 does not exist today, or probably even after the 2020 election. Our cultural, social and political fabric is so frayed as a result of decades of divisive politics it is likely to take years to sort out during a recession. Our political leaders will be fixing the politics of our country while searching for intelligent stimulus solutions to be developed, agreed upon and implemented.

What Will the Next Recession Look Like?

We don’t know when the next recession will come. Yet, present trends do tell us what the structure of a recession might look like, as a deep U- shaped slow period over years, hurting the poor and working class the hardest:

  1. Corporations Short of Cash – Corporations already strapped are short on cash, lay off workers, pull back spending, are stuck paying off huge debts.
  • Federal Government Spending Cuts – The federal government caught with falling revenues from corporations and individuals, is forced to make deep cuts first in discretionary spending then social services and transfer funding programs. The reduction transfer programs will drive slower consumer spending.
  • Consumers Pull Back Spending – Consumers will be forced to tighten budgets, pay off expensive car loans and student debt, and for those laid off seeking work anywhere they can find a job.
  • World Trade Declines – World trade will not be a source of rebuilding sales growth as a result of the China – US trade war, and tariffs with Europe.  We expect no trade deal or a small deal with the majority of tariffs to stay in place. In other words, just reversing some tariffs will not be enough to restart sales. New buyer – seller relationships are already set closing sales channels to US companies. New country alliances are already in place leaving the US closed out of emerging high growth markets.  A successor Trans Pacific Partnership (TPP)  agreement with Japan and eleven other countries was signed in March, 2018 without the US, China is negotiating a new agreement with the EU. EU and China trade totals 365 billion euros per year. China is working with a federation of African countries to gain favorable trade access to their markets.
  • ­Pension Payments in Jeopardy – Workers dependent on corporate and public pensions may see their benefits cut from pensions which are poorly funded today. GE announced freezing pensions for 20,000 employees, the harbinger of a possible trend that will  reduce consumer spending
  • Investment Environment Uncertain – Uncertainty in investments will be extremely high, ‘get rich quick’ schemes will flourish as they did in 2008 – 2009 and 2000.
  • Fed Implements Low Rates & QE – The Fed is likely to implement very low interest rates (though not negative rates), and QE with liquidity in abundance but the economy will have low inflation, and declining GDP feeling like the Japanese economic stasis – ‘locked in irons’.
  • Unemployment Soars – workers in low wage jobs, support, non-core (HR, IT, Admin) jobs will be laid off first. Industries already weak in the economy feel the downward spiral the most: retail, materials, manufacturing, and energy. As the recession deepens, small businesses that can not get loans to get through the rough times so they close. Even medium businesses are hit hard, as they do not have the access to worldwide markets to offset declining US sales. The rate of multiple job holders is at an all time high now, it will continue to soar as workers try to sustain their standard of living in a contractor economy with no safety net for workers.

Next Steps:

A recession of the magnitude we expect will hit the middle class hard as they are the most vulnerable.  Their wages have been flat for most of the decade while the top 10 % have enjoyed the majority of income and wealth increases. Due to the private sector holding most of the positive wealth in the U.S. a new approach to simulating the economy will be necessary.

1.Corporate Stimulus

While most corporations will be cash poor, some companies will be cash rich.  Firms like Apple, Alphabet (Google), Microsoft all hold over $100 billion in cash.  Cisco and Oracle both have over $50 billion cash on hand.  These tech giants hold most of their cash overseas.  To spur spending in the right places for the economy, tax laws could be passed to reduce taxes when repatriated funds are spent on employee development, research and development, productivity and wage increases.  Google, Facebook, and Apple have taken a good first step on housing, with all three donating about $4 billion to housing programs. While housing may not seem like a ‘public good’ it has become a major issue in the San Francisco Bay Area from high growth businesses and long commutes to inexpensive housing 2 hours away. We would like to see the emergence of the ‘servant’ CEO from these companies and others in sectors of the economy with cash like banking, pharma, and health insurance.  Over 180 Business Roundtable executives released a declaration that corporations need to take responsibility for their communities, not just seeking profits. The introduction to their statement notes

“Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity. We believe the free-market system is the best means of generating good jobs, a strong and sustainable economy, innovation, a healthy environment and economic opportunity for all.”

Ensuring economic opportunity for all means corporate executives make investments in the future financial health of their communities.  Business leaders can take the lead by ending stock buybacks which totaled $1.01 trillion last year and investment those funds in employee development, pension plans, price reductions, productivity enhancements, maintain staffing levels and innovative research.  Otherwise the safe harbor policy the SEC approved in 1982 can be revoked to prod executives to make investment decisions to ensure the future of both their businesses and communities.

2. Transfer of Private Wealth and Income to Public Sector

Wealthy business people and individuals can take the lead in driving the passage of legislation transferring some wealth back to the public sector. In November, 2017 over 400 millionaires and billionaires sent a letter to Congress to strongly recommend against the passage of the Tax Cut bill which created a $1.5 trillion additional federal deficit while 80 % of the benefits went to the top 5%.  We will need more of this kind of active leadership across the political spectrum to make the necessary shift to finance the creation of public goods and services necessary to turnaround a recession.  Other wealthy individuals have called for increased taxes on income and wealth of the top 5 to 10 %.  Just changing the present tax laws back to 2016 levels would help to boost funding to fund fiscal stimulus programs in innovative ways. There is backing by some wealthy leaders to end the carry tax exclusion that hedge fund managers and others in the financial industry use to reduce taxes. 

Taxes as a percentage of profits has continued to fall from 1960 at 45 % to 15 % in the last year.  Corporate lobbying of Congress worked to reduce company tax rates, create loopholes and subsidies for some industries.

Sources: The Wall Street Journal, The Daily Shot – 6/29/19

Corporate taxes can be evaluated as a percentage of GDP as well where it is clear corporations were able to lower their federal tax burden from a peak of 6% in 1955 to a low of 2 % in 2012 a 66 % reduction, and is estimated to be lower with the Tax Cut Bill of 2017 lowering the standard tax rate from 35 % to 22 %.  The GAO in 2012 evaluated all the tax law benefits and deductions corporations enjoyed and found the effective tax rate was really 12.9 %.  Today, the effective tax rates is even lower as corporate federal tax receipts fell to an all-time low of $204 billion for fiscal 2018 a 31 percent decline from 2017. Some corporations are paying no federal tax at all. Amazon declared $11 billion in income for 2018 and paid no taxes.

Source: GAO – 5/13

One way corporations evade US taxes is by depositing billions in profits in offshore tax havens to shelter their profits from taxes.

Sources: Zucman – UC Berkelty, Torslov & Wier – University of Copenhagen, The Wall Street Journal, The Daily Shot – 11/13/17

Clearly the use of tax havens needs to end, as our federal government is losing billions of dollars of receipts to invest in the public goods this country so desperately needs.. Corporate taxes raised and loopholes plugged make sense to begin shifting the necessary funds over to the federal government.

The tax legislation process is critical for long term success and support.  Bringing corporate taxes back to levels seen over a decade ago would go a long way toward reducing the federal deficit and fund public services at necessary levels to create more economic opportunities for all. Multiple points of view across the political spectrum need to be sought out and brought together in a special congressional committee focused on writing a fair tax bill to get the federal budget on a firm foundation and fund Medicare and Social Security programs.

3, Deploy Innovative Multi Partner Economic Innovation Programs to Solve Economic Challenges – Heartland Region Development

At the heart of political divisions in our country today is the decline of a strong middle class and economic inequality at the highest level since 1929.  Building a strong middle class that enjoys the economic benefits of a secure home, job, health care and safe community will result in people seeing a common good emerging for everyone. Monetary policy has failed to provide economic benefits to the middle class, while boosting the values of financial assets largely held by the top 1%.  If a recession comes, what will happen to the middle class, and vulnerable people in our economy?

It is unlikely given the present financial structure of our economy that monetary policy alone which has failed the middle class with stagnant wages will somehow turn the economic status around for the middle class.  The decline of the middle class is happening in parallel with a fall in  GDP to 1.9 % forecast for the 3rd quarter of 2019.  Part of the decline in GDP is associated with a declining labor participation rate. There were 7.6 million job openings, last January with more than 8.6 million unemployed for a gap of 1 million jobs.  This gap started in the spring of 2018 for the first time in 18 years.  Part of the reason for the gap between job openings and job seekers is the imbalance in our labor force by skills and regional limitations. Millions are not working due to lack of education, skills, health, lack of child care or limited work opportunities in their area.  For the core workforce between ages 25 – 54 the participation rate recently has been declining since the peak in 2000.

Sources: Federal Reserve – St. Louis, The Wall Street Journal, The Daily Shot – 6/10/19
Sources: Bureau of Labor Statistics, CBO, NBER, Morgan Stanley – 8/9/19

The most vulnerable regions are in non-metro areas of our country where the economic boom on the coasts and big cities has passed them by. Research indicates a key contributing factor to the decline in participation of 18 – 24 years old group is the lack of young workers in non-metro regions.

Source: USDA – 2017

Poverty remains a major issue in rural areas of the country, Midwest and South.  These areas have lost millions of manufacturing jobs due to automation and moving factories offshore.  Lack of economic health, forces supporting businesses to leave, closing of hospitals and support services.  The opioid epidemic is highest in rural regions of the country.

Sources: US Census Bureau, The Economist, The Wall Street Journal, The Daily Shot – 10/18/19

Many of these rural, Midwest and Southern counties have been left out of the economic mainstream for decades as noted by the darkest purple areas of the chart. While, there single factor programs like enterprise zones with reduced taxes, or innovation institutes at major land grant universities we have not seen multi-factor programs that give a ‘focused force’ of economic impact necessary to turnaround these regions.  The Heartland was chosen for the first implementation in addition to the reasons above, there are additional cultural, health and education issues that need to be addressed. 

The Heartland is where: (1) mobility to take new jobs is the lowest in rural and small cities in the Midwest and South (2) there is the highest concentration of young people without a 4-year degree (3)  the lowest concentration of entrepreneurs is holding back business formation and development to create new higher paying jobs with a future (4) the largest number of people without health insurance are found in the South and rural areas of the Southwest and West  (5) slow speed Internet connections are the norm leaving many heartland regions way behind in the digital revolution where new jobs, opportunities for education and quality health are being developed and accessed (6) accounting for births, deaths and migration rural population has declined for five consecutive years.  It is deplorable that a complete socio-economic region of the country has so many factors that have not been addressed to extent necessary to transform people’s lives toward good health and fair share of prosperity.

Rural and small town America enjoyed a renaissance of increasing jobs and prosperity into the mid 1990s. During this time rural counties were home to more than one-third of all net new businesses establishments fueling the job creation engine. Yet, in the past ten years the economic conditions have changed dramatically, leaving these regions out of robust growth in coastal areas since the Great Recession.  For more details and research please read our blog: The Hallowing Out of Heartland America.

We think that the multi-partner program outlined below besides working in rural regions will work as well in economically depressed neighborhoods of our inner cities on the coasts or major cities of the Midwest with local modifications to take into account cultural, ethnic and societal differences. 

The Multi-Partner Economic Innovation Initiative

The Silicon Valley innovation process is a multi-organization model used as a base for the Multi-Partner Economic Innovation Initiative (MPEII).  Universities working as incubators, with investors, local and state government support, investors, highly educated workforce, and immigrants all contributed to making the Silicon Valley model successful in giving birth to Google, Facebook, Apple, LinkedIn, Twitter, and hundreds of other companies. We have added other necessary elements to jump start a slow growth economic regions like non-government organizations  providing training or recovery services, health providers to take on major issues like opioid addiction, faith-based organizations for counseling and financial assistance. Finally, federal government agencies will need to play a key role in turning around a slow growth region vulnerable in a recession to a spiraling down turn. We introduce the idea of a Federal Reserve Labor Bank, organized much like the present Federal Reserve for monetary policy yet with a charter to constantly build and renew our labor force for unimagined new jobs.

The MPEII would be structured as a non-profit corporation with representatives from all the organizations necessary to drive the coalition to success in meeting the economic objectives of the region.  The federal government rather than building a large bureaucracy would seed the development of the MPEII entities called Development Centers with $25 – 50 million, joined by corporate foundations, local and state government and social entrepreneurs. In our first imitative The Heartland Development Center (HDC) is the central innovative entity bringing all the partners together and taking leadership to drive solutions in rural regions. The HDC is formed as an investment organization, putting out a call for business plans from local social entrepreneurs to solve a local regional problem with the help of the MPEII organizations. The economic goals could be achieved by profit making companies or non-profit organizations where making a profit is not appropriate or not fitting within the development goals.

The People – At the center of this economic imitative are the people. The voter participation level during the 2018 – mid-term election hit a 50 year high at 47.5 % with 110 million Americans voting in congressional races. This engagement in the political process at the local, state and federal is crucial if we are to develop the consensus moving forward to solve our economic problems.  Voters need to demand that corporate, private investors, government and related organizations needs to change polices to focus on building the middle class, protecting our environment, cutting the costs of education and ensuring equal opportunities and a level playing field for all that participate in our economy. In our Heartland example implementation to bring our rural and southern regions into the economic mainstream, local communities, and leaders from multiple institutions need to be involved in making the changes necessary to bring a lasting economic boost to the Heartland.

Universities – The HDCs in selected rural and southern regions would be located in nearby universities for support to be forward looking with local students and professors – consultants as core staff along with local leaders to solve major challenges. The Heartland Development Center acts as a catalyst creating an innovation ecosystem to jumpstart local economics and social structures. HDCs would focus on all the key issues that a region needs to address to rebuild their economy and people’s lives: business formation, education and training, digital infrastructure, affordable housing, engaged local innovation media and health care. There already is an imitative by Congressman Ro Khanna, to fund a modern version of the Morrill Act, that funded the development of land grant universities to support agricultural development in the U.S in 1862. Fifty universities would receive grants of $50 – 100 million to fund technology centers to focus on training and development programs for 21st century jobs. This bill is a good start, the HDC is extension of this imitative to provide a ‘focused force’ on solving regional economic problems and create an innovation ecosystem that is self-renewing.

Federal, State, Local Government – Federal government funding is necessary for a cross regional program with multiple components along the scale of the Marshall Plan after WWII for re construction of Europe.  State and Local governments have the local knowledge, leadership and links to local universities, health providers and non-government organizations that will be helpful in forming the consensus required to focus people and resources on the key problems with workable solutions. The Federal Reserve has analysts who have completed research and continue to monitor the economic health of the 12 Federal Reserve districts that will be helpful to base programs on patterns in the facts.  We propose that a pilot ‘Federal Labor Reserve Bank’  (FLRB) be created in the 12 districts to focus on the labor issues, composed of governors in the 12 areas with labor expertise in corporations, universities or labor leaders.  The FLRB would set minimum wages for key regions conduct studies like the Fed beige report, called a ‘lavender’ report on the health of the workforce in each region.  The report would identify key labor trends, wage issues, and obstacles to creating a thriving workforce. The FLRB would offer loans to key entities with assistance from the Federal Reserve to providing of key training and development initiatives, in a timely manner. The FLRB’s mission is to build a thriving labor force and take on major challenges like identifying why the labor participation rate is so low compared to pre – 2008 levels and implement programs accordingly to increase the rate. Every month the FLRB would review how well it is doing in achieving goals of increased labor participation rate, increasing wages for the middle class and other goals as established by the Governors.

Corporations & Investors – Companies in these slow growth regions need support in multiple areas that are unique to the economics of each area.  Major employers should be included in the steering councils of the HDCs to provide valuable local guidance to HDC leaders on where to focus resources, training for job candidates and the product and sales direction of their businesses. Many corporations have investment groups and can be invited to participate in the HDC program, to achieve results for their business that they are willing to share with the community. Venture capitalists, angels and private equity firms will be encouraged to participate and may be invited to be on the HDC steering council. Telecom firms need to be invited to bid on digital infrastructure projects which may be funded by government grants. It is likely that some of these Internet projects may not be profitable for telecom companies or they would have already laid the fiber optic cables and setup the links to homes in these areas. Like the Rural Electrification program in the 1930s, the digital infrastructure must be in place for rural areas to gain fast access to the Internet.  Plus, high speed Internet access is a requirement to build innovation centers and create businesses with 21st century high technology jobs.

Non-Government Organizations, Foundations & Health Providers – Health services in many rural regions has deteriorated along with companies leaving the loss of jobs.  Unemployment rates are often twice the national average.  The lack of health service providers and hopelessness of not having a job is driving disease and death rates higher.  The CDC reports deaths due to cancer, heart disease and respiratory illness are 15 – 35 % higher in rural areas since the Great Recession. A number of communities have no hospital closer than 2 – 3 hours away.  Doctors setup a practice based on government rural doctor incentive programs, then leave after they have put in their required tenure.  Opioid overdoses are concentrated in rural states and Midwest region.

Source: CDC – 2017

A health services revitalization plan needs to be developed by region which includes hospitals, clinics and incentives for doctors to come, stay and build a practice in reach region. Often, the lack of high speed Internet limits the opportunities for health providers to shift to electronic records, services and even use of tele-medicine which would be helpful to reach out over long distances. Health and job candidate support are related as one research organization found that for many manufacturing employers in Indiana that for factory floor jobs as many as 45 % of the workers tested positive for drugs.

Training, career development, and apprenticeship working closely with universities can make a major contribution in a coordinated effort to put unemployed workers to work. NGO groups like the Opportunity@Work program are one approach to attack the job training challenge.  The training group started in the Obama White House focuses on providing Internet economy job training to workers in the heartland to gain digital skills for jobs in fields like programming and information technology.

Colorado has invested in its CareerWiseto bring businesses, colleges and vocational training groups into partnerships providing all Colorado high school juniors and seniors with a dual career path leading to a community college associates degree plus key skills.  Students can begin working on the factory floor as juniors learning key company job skills, and are guaranteed full time employment at the end of their apprenticeship along with financial support to earn a community college degree. 

Faith Based Organizations – many faith based organizations provide counseling services, welfare, foods services and other resources to those in need.  Working closely in the HDCs with their steering councils programs can be coordinated and focused in areas where churches, synagogues or mosques are located.  FBO groups often have been in neighborhoods for many years, with a deep understanding of the needs, trends and social issues that are unique to their area.  Leaders and staff in the HDC would do well to establish good connections with these groups to gain insights into which programs, services and resources are needed to turnaround the economic situation in their community.

In the end, Americans have always pulled together, solved problems and moved ahead toward an even better future. After a reversion to the mean in our capital markets and an economic recession things will get better.  A reversion in social and culture values is likely to happen in parallel to the financial reversion. The complacency, greed and selfishness that drove the present economic extremes will give way to a new appreciation of values like self-sacrifice, service, fairness, fair wages and benefits for workers, and creation of a renewed economy that creates financial opportunities for all not just the few.

Saving Democracy: Technology – Does the Internet Serve or Undermine Our Democracy?

Technology is constantly pervasive in our lives.  Let’s think for a moment about how one incredibly pervasive technology has changed the way we live twenty four hours a day.  The Internet was built by the Defense Advanced Research Projects Agency (DARPA) contracting with universities and research centers to build a powerful internetworking protocol and network for the military research and communications beginning in 1969.  The network evolved with more research centers and government organizations using the system for communication and joint projects.  By the mid 1990s the Internet was opened to the public primarily for email, though soon websites and messaging systems were established.  Commercial common carriers were offered government contracts to provide more communication network support and services.  In 1993 the Internet provided 1 % of all two way communications, by 2000 51 % of all communications were over the Internet, then growth exploded to 97 % of all telecommunications information in 2007.  As recently as 25 years ago there were no companies like Facebook, Netflix, Google, Twitter, eHarmony, LinkedIn, Instagram, Amazon, et al. Yet, these companies were allowed to grow into behemoths largely unregulated with young entrepreneurs maximizing profits not focused on the public trust.

Just twenty-five years later just about everything in our daily life is changed, from task assistants like Siri, dating with eHarmony, finding a job via Linked In, searching for answers on Google, watching on demand movies in our homes via Netflix, sharing photos via Instagram and taking a picture on our smartphones and sharing it with our friends via Facebook.  Corporations embraced the Internet for new applications, channels of distribution, low cost communications, outsourcing of work remotely and low cost entry to new markets.

Along with all these applications, democracy pundits had visions of a more engaged electorate, citizen forums, exchanges of ideas, more facts based discussion, online referendums on key issues and more responsive government. It certainly has not worked out that way, corporations give hundreds of millions of dollars to congressmen and senators, there is certainly more dialog via blogs and websites in the millions – but do we see more heat than light? Plus, with technology gone wild; more fake videos (not the authentic video but edited words and pictures), more hate stories and posts from adversaries like Russia to influence our elections.  The lowest common denominator has certainly been hit with the present POTUS and Congress in place largely not responding to the people’s opinions due to corporate and special interest group lobbying and influence from campaign financing. For instance Pew Research completed a recent poll on climate change, the existential issue of our time, where 56% of all voters view protecting our environment as a top priority for the President and Congress.

Source: Pew Research Center – 4/19/19

Instead, we have an administration loosening targets for auto emissions to static levels, EPA rolling back fossil fuel emission standards and wilderness preserves being opened up to oil drilling.

We ask a fundamental question: is technology in the instance of the Internet serving the needs of democracy or undermining its very foundation?  We will also look in this series of Saving Democracy chapters on other technologies; automation and robots, AI and content platforms.  First, we look at the backbone of the Internet, its vast network built by the federal government, universities and research agencies and now being subverted by corporations.

Net Neutrality – Corporations Undermine the Common Good

Built by taxpayer money by DARPA  for military communications,  next universities and research centers, then open to the public and commercial enterprises. So, why do companies like AT & T, Verizon, and Comcast think they should control how Internet is offered to our people?  We paid for it, as it evolved the Internet was envisioned is new way to engage citizens in the political process and to level the playing field for new companies.

We certainly, have seen how innovation with a plethora of new services has emerged in the last 20 years, yet now a few giants run the content side: Google, Facebook, Netflix, Disney and the network side run by AT &T, Verizon, and Comcast.  As the content companies merge with networking companies we have huge companies deciding how to make more money from a network entity that is actually a public trust built by taxpayer money.

One way we see inequality growing is access to the Internet for many in poor, or rural  regions of the country is limited in speed and services.  Without Internet speedy Internet access or innovative services for universities, hospitals, and companies in these regions it is difficult for the working class to gain the skills to get a better job, or companies to compete with their high speed competitors.  Investment is declining in some regions of the Midwest and South due to poor Internet infrastructure which means fewer jobs for people living in the area.

Source: ISSR – 12/20/17

An analysis in December, 2017 by the ISSR shows that over 177 million Americans would be left without protection if the net neutrality policy were reversed.  Note all the light yellow regions of the country that have no broadband provider at all.  Orange and red regions have providers who have violated net neutrality rules. Without high speed Internet access these mostly rural regions are left to declining investment, fewer jobs and poorer health care.

Next Step:

The Internet backbone network is really a Common Good. It is a utility, not a platform for companies to make profits and take control of access, speed and content which was the original purpose in designing the Internet as a peer to peer protocol rather than hierarchical.

The present GOP administration installed a company lobbyist as chair of the FCC who immediately decided that the network neutrality doctrine of the Obama administration should be overturned, giving control to for profit entities to charge whatever they wanted for speedy access or content. It is as if we turned the interstate system of freeways over to GM, so GM could give special lanes to GM cars and the others would have to go in slower lanes.

No, we don’t see the Common Good being protected by a for profit doctrine, the profit policy just can’t do the job.  In July, 2018 when firefighters in the California Mendocino fire went over their mobile data plan limit, Verizon throttled their data transmission to 1/200 of the speed.  After the outrage over such predatory practices Verizon relented and will now offer all western state first responders standard data plans without throttling.  Why should they even be able to throttle?  If a user needs more data then just charge more over a certain limit – but throttling their network speed is coercive.

Network neutrality for all content, all websites, all messaging is the just doctrine for a Common Good like the Internet built with public funds.  An equal access Internet provides a critical column foundation for democracy to serve all the people not just the rich. The fact that corporations think they should be able to do whatever they want shows once again that corporations have control and power over the public interest.  Their position needs to shift to supporting the public interest as priority one, not profits. We need to have the common carriers see they have a public trust, and social responsibility in operating a public Internet utility.

Saving Democracy: The US Needs to Lead in Building Global Bridges Not Walls

(Saving Democracy Series:  this post focuses on how our POTUS has agreement by agreement ripped up the post WWII integrated global world that provided most of the people in the world with peace and prosperity that is unparalleled in history.  He has replaced peace with random acts of impulsiveness, doubt, uncertainty and threats which have caused major economic, cultural and societal damage to both emerging and developing countries.  A more dangerous world of nationalism along the lines of the 1930s is now emerging with all its possible horrible results.  First economic loss, then war. It is time to establish a new global order fair to labor and capital in a world order of respect, freedom of thought and speech with economic opportunities for all to establish global stability and peace.)

On July 2nd, the US Trade Representative announced possible $4b in new tariffs on the EU for subsidizing of Airbus, responding to Boeing concerns. Another episode of impulsive threats happened last May when POTUS threatened Mexico with a 10 % tariff on all imported goods if the flow of immigrants across the border did not stop by June 10th.  The action against Mexico threatened support for the just recently announced new trade treaty with Mexico – why sign a treaty when the US is just going to do whatever it wants. He backed down on the threat after the Mexican government made a commitment to redouble efforts at stopping the wave of immigrants from Central America. We can add these trade attacks to a long list of treaties, agreements or international organizations that our POTUS has taken the US out of (or renegotiated):

  1. Nuclear Arms Treaty – Russia
  2. Iran Nuclear Treaty – EU joint signators  
  3. Trans Pacific Partnership – TPP – with 10 emerging countries, Mexico, Canada and Japan
  4. NAFTA – replaced by two bilateral agreements under consideration by Congress
  5. UNESCO – UN cultural program
  6. UNHRC – UN Human Rights Council
  7. UNRWA – UN Refugee and Works Agency – supports 5M Palestinian refugees, when the US pulled out riots broke out for a week
  8. Paris Climate Treaty
  9. Global Arms Treaty
  10. G7 – developed countries council – POTUS wants Russia added back in, they were barred after annexing the Crimea
  11. Brexit – US has been cheering the UK leaving the EU, offering a ‘big agreement’ if the UK leaves the EU

POTUS has continued to bash NATO, a long standing military organization uniting Europe and the US against an aggressor. The constant undermining of the group opens a divide that adversaries may see as a crack to drive division and move ahead with probes or territorial gains.

The president has also focused on economic agreements – taking a unilateral approach around the provisions of the World Trade Organization and standing economic agreements on tariffs. He calls himself the ‘Tariff Man’ and has implemented with the acquiesce of Congress tariffs on allies like Canada & Mexico (new separate agreements under Congressional review), competitors like China, and cancelled a favorable import agreement for India.  Businesses are worried:

Source: Moody Analytics, The Wall Street Journal, The Daily Shot – 5/28/2019

Consumers have been hurt already in nine different product classes with increases in prices of over 10 %, as consumers or the importer pay the increase tariff on an imported goods including appliances (washer and dryer tariffs 12 months ago), furniture, bedding, floor coverings, auto parts, motorcycles, sport vehicles, housekeeping supplies and sewing equipment:

Sources: Department of Labor, Department of Commerce, Goldman Sachs, The Wall Street Journal, The Daily Shot – 5/13/19

The United States and China have been sparing since July 2018 in an escalating trade war, which seemed to be coming to a conclusion as recently as last April.  Then, the President announced in a tweet that China a reneged on commitments it had made and was ending negotiations.  The Chinese sent a delegation to try and restart negotiations but it was fruitless. For two months tensions escalated until a truce with a restart in negotiations was called as a result of a summit between President Trump and Chairman Xi at Osaka on June 29th.  The US relented on planned additional tariffs on all China imports up to $325b, and eased restrictions on Huawei sales by American companies in return for a vague promise by the Chinese to purchase more farm goods and to negotiate.

Sources: The Peterson Institute, for International Economics, BBC, The Wall Street Journal, The Daily Shot – 5/15/19

The Chinese have dug in for a long haul, threatening to cut rare earth shipments to the US and curtail further purchase of US Treasury bonds, with additional $60 B in tariffs at 25 %. We must remember the Chinese form of capitalism is really not ‘state based capitalism’ as the financial media likes to label in a benign way. The China economy is really ‘authoritarianism cloaked in capitalism’.  This is a mixed economy of state based industries subsidized with some free capital sectors kept in place by central planning. A key aspect of the this cloaking activity is the lack of transparency about who actually owns a Chinese company. In addition, the China Central Bank (PBOC) and sovereign wealth fund own about $200 B in US stocks providing insights and investment control. The Chinese government has deployed Orwellian digital surveillance to keep the people loyal to the state and not thinking or speaking freely. Internet news and social media sties are heavily censored by the state. That’s not democratic based capitalism. Another twist in the relationship with China, is Wall Street leaders have been instrumental in assisting the Chinese government in gaining approval to join the WTO years ago, and still make billions of dollars from fees and investments. The recent Chinese overture to open financial markets maybe a way for the Chinese to win over Wall Street and blunt the trade war of the GOP administration. The Trump Trade war with China is a failure, because it misses the true character of authoritarian government and economics how it uses the economy and capitalism to placate the masses to increase state control. Central government loyalty is the prime directive. Trust is missing between the people and the state – yet the people give up freedom for money when we here the Hong Kong protesters who vandalized the legislature building in late June criticized by mainlanders with comments like ‘they need to quit protesting and get a good job and buy things’. This is a bargain with manipulative leaders resulting in an unhappy ending, as people’s hearts and minds are imprisoned for money, the benefits with be fleeting and the costs dear.

Farmers in the Midwest, growing soybeans have seen their market collapse, other crops like corn, sorghum, wheat have seen huge price drops as China stopped buying from US suppliers. As soybean prices have fallen farm income has dropped almost 20 % and Midwest bankruptcies of farmers have risen above levels seen in the Great Recession.

Sources: Bloomberg, The Wall Street Journal, The Daily Shot – 7/15/18
Sources: The Federal Reserve Bank – Minneapolis, US Courts – 11/28/18

Since last fall when this Federal Reserve report was filed, bankruptcies have continued to increase at an accelerated rate, as farmers cannot get loans from banks to buy seed when prices are so low. The Administration has promised subsidies to farmers totaling $16bn yet the president of Soybean Farmers Association says he has not been able to see Agriculture Secretary Perdue or any of the subsidy money nor farmers in his group. Many farmers believe that when the money does come from the government it will not be enough and not replace the contracts for farm goos lost to Brazil, Russia and other countries.

Next Steps:

World War II was catastrophe for the world, millions of people killed, whole societies wiped out, along with an aftermath of starvation and depressed economies.  World leaders did not want to see a repeat of the WWII disaster.  They knew if they built a set of world-wide agreements and regional organizations to sustain and enforce those agreements there might be a better chance to prevent war from happening again.  The United Nations was founded in October of 1945 in San Francisco to provide a forum for discussion and implementation of world community building programs. The NATO alliance was founded by 29 countries who were WWII allies by approving the North Atlantic Treaty in Washington in April, 1949.  Economic disputes were to be settled by adhering to the General Agreement on Trade and Tariffs approved by over 100 countries in 1948. The World Trade Organization charted in 1994 succeeded GATT, headquartered in Geneva, Switzerland. Thus, many treaties and organizations were founded by most developed countries and many emerging countries to give economic, cultural and governmental support toward building a world community.  Presidents from both parties through the years since WWII have supported the uniting of diverse people around the globe so they all have a piece of the economic pie and security.

Now, our POTUS seems to think that ripping up global treaties and organizations, undermining them, and going it alone will somehow be better for the US.  Maybe things will get better for a few companies or sectors for a little while. However the trade deficit continues to trend worse since the January 2017 term of POTUS to the highest deficit ever with $55 bn last May,

Source: Department of Commerce,, Federal Reserve of St.Louis, Marketwatch – 7/2/19

Some soybean contracts have returned, yet the US still imports more from Europe, Mexico and Canada than we export, the tariff war is just making the deficit worse.   Already, we have seen with retaliatory tariffs from China, threats of reunification to take Taiwan – as a national publication likened to Lincoln unifying the United States. Today countries are going after their own goals spiraling downward into economic wars and eventually military action.  The lessons of the Great Depression, the Smoot-Hawley Tariff Act, harsh reparations on Germany and nationalism (rising today in a hideous way) led to WWII. When other countries see the US leader of the free world embrace ‘America First’ ambitions, why should they sit back and let America get ahead, the fight is on.  We should work with the capitalism elements and businesses in the China that are largely free of state control, building bridges to them, empowering them so country leaders see that the only path to lasting prosperity is when the people’s minds are free to innovate and create.

Yes, it is true, there were unbalanced agreements, the US did lose jobs to overseas countries, and maybe a few emerging countries took advantage the US.  But, we need to be thinking about helping people build their economies, or they will want a piece of the economic pie by force from the US. Job safeguards for American workers should be in place in all agreements, and fair levees and access to markets, protection of intellectual property, yet we need to work within the world order to make structural changes supported by all countries.

Saving Democracy: Elect the President by Popular Vote

(Saving Democracy Series:  this post focuses on how unfair, and undemocratic the minority vote of a President can be. Two ideas are summarized on how to reform the Electoral College which are most often proposed by scholars and political leaders, electors allocated by congressional districts or, The National Popular Vote Interstate Compact)

With the kickoff of 2020 presidential campaigns by 23 democratic candidates and one GOP president, we are reminded of how our democracy failed to elect the popularly voted candidate, Hillary Clinton in the last presidency contest.   The 2016 presidential election results were: Donald Trump receiving 290 electoral votes to Hillary Clinton’s 228, yet she won the popular vote by almost 3 million votes.  That event continues to cause protests, fear, anxiety and sense of injustice across the country.  The Electoral College was developed by the foundering fathers as a way to make the Office of the President a powerful branch of government, not beholding to the majority of representatives in Congress. They developed a state based election system where presidential electors were allocated by state for each senator and congressional representative.  Including the 2016 election, there has been 6 times in U.S. history that a president was elected who did not receive the most popular votes.  A minority elected president is viewed by many people as illegitimate. While the minority candidate has been constitutionally elected, the candidate does not have the majority mandate necessary to execute the responsibilities of the office outlined in the Constitution.

This author asked his mother when he turned 18 years old, ‘how do you vote for President?’ she replied, ‘I think of the President like a child with a hammer, how much damage can he do, so I vote for the least damage.”  Our POTUS 45 must have listened to her as he is hammering away at a variety of democratic institutions, alliances and principles.

Why do we have the Electoral College anyway? The founding fathers had just come from a monarchy based government, so they did not want to repeat a system of a proclaimed leader (everyone wanted George Washington to be President at the time) with the leader appointing the next in succession.  Another approach under consideration was to have a national leader based on representational majority in Parliament.  Yet, they believed in balancing the powers of Congress and the Executive branch.  Plus, the founders were looking for a way to motivate the President for good behavior by allowing a second term.  If the President were elected by Congress it would have to be for one term, or he would become a tool of the majority in Congress. They did not want a direct popular vote because they were concerned that a national constituency could not be developed with so many regions and states likely to have favorite son candidates. James Madison, Constitution Convention recorder and leader, was looking for a compromise because southern states felt they would lose out in a national constituency with blacks being 3/5 of a citizen to vote.  So, a compromise was established to have a set of electors voted on by the people in each state based on popular vote. These electors that would then vote in a separate Electoral College vote in December with ballots read in a session of Congress.  If there was a tie 269 – 269 of electors between candidates, then Congress would vote on who would become President.  In our history there have been 5 Presidents who have not won the popular vote but have won by electors. 

Why is this a problem?  The popular will of the people is thwarted.   A major issue is that the Electoral College is not one person – one vote as identified in our Constitution for a representative democracy.  A vote in California with 55 electoral votes and 8,458,000 citizen votes means that one electoral vote represents 153,781 citizens.  In Wyoming, with 3 electoral votes and 230,197 citizen votes means that one electoral vote equals 76,732 citizen votes. A voter in Wyoming enjoys twice as powerful citizen/electoral vote than a citizen in California. The balance of power in the Electoral College swings to mostly sparsely populated inland states deciding who our president will be.  In the 2016 election inequitable voting power certainly is evident looking at an electoral map (right click on image to enlarge):

Source: Wikipedia – December – 2016

Voting power inequity creates great frustration and anger. In the days after the November 2016 election, there were protests in 37 cities across the country against the president elect due to the injustice of the non-popular vote. All our representative government functions are based on majority vote from local city councils to state legislatures and the US Congress.  It only makes sense to have a popular vote for president in the modern era. With growing economic inequality and divisive politics particularly between inland and coastal people a fair vote for president would go a long way toward building a united country.

Next steps:

Why not just have a direct popular vote?  This would be a good solution except that the Constitution needs to be changed in a two-step process by creating an amendment followed by ratification. The US Congress can create an amendment by a two-thirds vote of the House and Senate or two thirds of the state legislatures.  The proposed amendment then must be ratified by three-fourths of the state legislatures in a time frame approved by Congress.  This is a long and difficult process as 11,539 amendments have been introduced in Congress since 1789 and 27 have become part of the US Constitution.

How about apportioning electors by congressional district?  We already portion congressional districts by population which is updated each decade by the Census Bureau.  The congressional district approach provides some equity for citizen to elector representation – though it will not fix the inequality completely due to the two senate electors. Maine and Nebraska apportion their electors by congressional districts today, with their two senatorial electors representing a statewide vote.  The congressional districting approach would be fair and take care of 80 % of the vote inequity issue. Plus, candidates would need to focus their campaigning on congressional districts not the whole state for a winner take all result. For example, California rarely sees presidential candidates from either party for the presidential race because it has gone for the Democratic candidate in the last 6 elections.  Candidates would benefit by campaigning in key congressional districts in even majority states to gain support of electors by congressional districts which may not vote with the majority of the voters on many issues or candidates.

The best approach would be to have congressional districts mapped by an independent commission as California does to ensure that the district is open to diverse political viewpoints. By establishing congressional districts as the key representative unit with fair boundaries for inclusion of multiple points of view we might see more dialog at the local level.  The increased dialog will induce more consensus building and possibly break the grasp of incumbents who are re-elected 93 % of the time.  State legislatures can decide on their manner of apportioning electors – so we could build a national census to have the states enact changes by the 2024 election.

Professors Akhil and Vikram Amar propose a National Popular Vote Interstate Compact.  Whereby, states legislatures would agree to vote their electors for the winner of the popular vote.  This compact would take effect when at least 270 electoral votes would be in the Compact.  To date fifteen state legislatures have ratified this Compact, swing and inland statues are reluctant to make the switch because they may lose some of their power in electing the next president. Yet, an analysis of advantages to either party are even when viewed over elections back to 1880. Both major parties back the Compact with former senators and congressman on a steering committee supporting the legislation in state houses. Both approaches: congressional district electors or the Popular Vote Interstate Compact are fair to both major parties and third party candidates.

Source: Wikipedia – April – 2019

A way to get the reform of the Electoral College off of dead inertia would be to file a suit in federal court seeking a finding that the present system violates one man – one vote provision of the Constitution, thereby forcing the states to redistribute their electors by another method preferably by congressional district with independent commission mapping or Compact.  Persuading additional states to pass the Compact law where legislation is pending like New Mexico, Arizona, Oregon, Minnesota, Wisconsin, Kansas, Georgia, South Carolina, North Carolina, New Hampshire and Maine would gain the necessary 270 electoral votes for the Compact to take legal effect.

Saving Democracy: Renewing Our Government Infrastructure v2.0P

Source: editorials.voa.gov

“We can’t have an economy that works for all if we don’t have a democracy that works for all.” TPE, Editor, Patrick Hill

By returning political power to the people then economic opportunities can be once again be made available to all.   Why is this reform and rebuilding effort important? Because the people don’t trust their government.  If citizens don’t trust their democratic institutions to do the right things for them, they will turn to demagogues who use hate, fear, divisiveness, pride, and power to weld control over the people to gain wealth and power for themselves. Here is a poll from NPR/Marist on the trust people have in various forms of U.S. government:

Sources: NPR, Marist – 1/17/18

Congress comes in dead last of all the major institutions, with the Military first and the Supreme Court second (though as the court becomes more politicized this level of trust may change). The Presidency under our present POTUS has not helped in terms of trust, since he was not elected by the majority of people falling almost 3 million votes short and then proceeded with policies that only appeal to his minority base. People inherently believe the majority person or policy should win. In our 2016 presidency election the majority candidate did not win, so the majority opinions are not represented in the Executive branch. The Executive branch starts out with a lack of support, trust or mandate to govern. Our government by the people for the people and of the people can only survive if people have trust in their government. What is even worse is the level of confidence Americans have in their government to handle international or domestic problems has dropped significantly:

Source: Gallup – 1/31/19

One month after the 9/11 tragedy the American public rallied around their government and leaders to provide protection and bring the perpetrators to justice.  Since 2001, the confidence the public has in their government to handle problems has declined to a 18 year low.

One reason trust is so low is the government actually does not represent the people when it comes to passing laws in accordance with citizen opinions, needs and condition.  Professors Martin Gilens, at Princeton, and Benjamin Page, at Northwestern examined thousands of opinion poll surveys from 1981 to 2002, and grouped them based on the top 10 % in income versus the bottom 90 %.  Then, they reviewed 1779 policy proposals versus the opinion surveys and found the elite saw 76 % of their opinions reflected while the general public only 3%.  Special interest groups gained 56 % of their positions reflected in policies. It is little wonder that the general public is frustrated with their federal government.

Democrats, Republicans, and Independents need to step back a moment, or a year and think about our democracy first and their policies second.  The most salient aspect of politics since the 1980s is the ascendency of corporations, the wealthy and special interest groups gaining and sustaining power in Washington supported by both major parties. At the same time wages for the working class and 80 % in income have basically stagnated on a real wage basis. Our government needs to work for everyone: conservative, liberal, immigrant, native born, poor or wealthy.  We need more government processes focused on building consensus rather than the predominant government, Internet and media processes fanning the flames of division. Division is freezing our ability to move ahead and even look ahead 10, 20 or 30 years to solve problems before they become too immense to solve without great loss of life or economic damage. The fact that we cannot seem to make the right legislative, corporate decisions or encourage environmental sound citizen behaviors to save our planet is evidence enough of the breakdown of our democracy to solve real problems. Are these problems solvable? Yes, but only if we work together bringing the genius of our diverse people to focus in effective ways to solve those existential issues we face. There are so many narratives that are disconnected, people talking past each other. We need to connect the narratives and arrive a one narrative that the majority of Americans can support on each major issue.

Our next post: will focus on voting, the heart of our democracy.

Trust in the Federal Government at 20 Year Low

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Photo: promarket.org

To build the common good, we need to have our citizens feel that their government is functioning well enough to handle domestic and international problems. A trust peak of 83 % was made in 2001 right before the 9/11 event where the public trusted the government a ‘fair amount’ to handle international problems slightly less for domestic.  Gallup reports that in January 2019, the figure for trust to handle international problems had sunk to 35 %, with domestic slightly higher at 41 %.

Sources: Gallup, The Wall Street Journal, The Daily Shot – 2/

This is a crisis in public trust for sure.  Government took a big hit in trust with the Nixon Watergate scandal, the Bill Clinton impeachment and finally the 9/11 terrorist attack.  Do we feel our government can handle a fast moving international world that is increasingly dangerous to U.S. interests and people?  Domestically, the civic dialog has sunk to a new low in lack of civility and respect, largely due to the example of our President.

How do we restore the trust so our government can function the way it needs to in protecting our freedoms, ensuring domestic tranquility and equal opportunities?  Trust can be strengthened by government becoming more responsive and transparent in its functioning.  We need sunshine laws that require Congress disclose all appointments during the day, who they meet with and the interests or corporations they represent.  All senators and representatives need to hold regular Town Hall meetings to listen and understand the needs of their constituents while respecting differences.  On a national level we need a President who will show through his example how to listen to others, use inclusive processes, research and science in making policies.

For groups feeling left out of the economic mainstream; in our core inner cities, Midwest and rural areas of the South, government needs to be engaged in actively solving their problems. Government falls short by implementing band-aid programs that do not go to the heart of issues: like the opioid epidemic which strikes rural communities twice as hard as coastal areas. We have proposed a Heartland Venture Marshal Plan to invest in a variety of infrastructure needs in the Midwest including: healthcare, upgraded digital Internet access, job training, improved college access, apprenticeships and self-renewing economic systems similar to Silicon Valley’s innovative infrastructure. Internationally, our country needs to rejoin the democracies of the world by supporting the Paris Climate Accord, strengthening NATO, supporting the U.N., treaties with Russia on nuclear missiles and the Iran nuclear agreement. We need to overall treat our allies as partners and our adversaries warily. It is time to make the changes before a major crisis domestically or internationally forces our government processes to change possible in ways that a poorly designed and thought through.

Corporations Need To See Themselves As A Member of the Community

Photo: target.com

Amazon announced last Wednesday that they were pulling out of the deal to locate a second corporate headquarters in Queens, New York City.  The company pledged thousands of jobs, hiring of local contractors and to develop state of the art technology campus to revitalize the neighborhood.  To lure the huge firm to New York, Gov. Cuomo and New York Mayor de Blasio offered over $3 billion in tax and other incentives.  Local politicians were blindsided by the incentive package triggering grassroots opposition.  Amazon only allocated one person to work with local groups, who did not move into the area until the last few weeks.  Too little local focus too late.

Let’s look at the real issue, the company coming in from Seattle is an outsider.  To become a member of the community it needs to start with local leaders, interest groups and those possibly displaced by the move in.  Plus, the company executives had to realize there would be blow back about the incentives in a community that is concerned with affordable housing, healthcare and jobs for all levels of income not just high paid tech workers. The neighborhood leaders are going to be suspicious of an outsider to begin with, then add the huge corporate power of Amazon and the fight was on.  Local politicians saw this move in as an example of big corporations taking advantage of local communities to make more profits for itself at the cost of taxpayers.   The $3 billion dollars will not be spent on local programs, healthcare, job training, or affordable housing the community needs.

Executives should have realized they are joining a community, and needed to win over local leaders just as a resident might move into a new neighborhood and make friends with the neighbors first before building a monster home (changing the design to be acceptable).  Companies are used to being able to get their way, make profits at the cost of local communities and not worry about the politics.  Those days are over, the political tide has shifted from worshipping corporations to seeing them as having all the laws, rules of markets and labor go their way for the last 20 years.  Including, millions of dollars corporations spend on lobbyists in Washington to ensure they maintain their advantage over citizens in the halls of power.

Companies have to see that they must design their corporate policies, programs, and worker relationships to build the common good.  The common good can support companies taking initiative, innovating, and sharing their wealth, while still providing a good return to shareholders.  Executives that balance the needs of the community with their requirements to make reasonable profits will be the most successful, others will find arrogance will lead to fights, lawsuits and new laws eventually hitting the bottom line.

Hundreds of Thousands Of Lives Disrupted Needlessly Because of Lack of Evidence Based Government

Image: civilserviceworld.com

Thirty five days ago the GOP held control of both houses of Congress and the Presidency and yet an ill-advised policy based on ignorance was allowed to hold 800,000 federal works hostage.  How did this happen?  Majority Leader McConnell, Leader Schumer,  Speaker Ryan and Minority Leader Pelosi all agreed just before Christmas to extend a spending bill for a few weeks enabling the federal government to keep running while discussions were pursued on a Border Wall. POTUS went along with this plan and told Majority Leader McConnell he would sign the extension bill.  Yet, that evening POTUS started listening to commentators from his far right base – changed his mind and demanded funding of $5.7 billion for a wall or he would as he said a week earlier ‘take pride in shutting down the government’.  The Border Wall idea has no solid evidence to support that it would work to stem the tide of drugs of which 90 % come through ports of entry, drug leaders and gangs who fly over the border.  PBS sent a reporter to the border near Nogales, Arizona to gather real data on what was actually happening at the border.  He found that people on the border did not want a huge wall except for sections of see-through barriers in cities, yet wanted more border police, more access roads and surveillance technology. Speaker Pelosi made an excellent point in her press conference today, after POTUS caved when it was obvious the shutdown was causing real harm to many Americans, plus federal workers and their families.  She declared, ‘we support more border security measures, that are evidence based,’

Her focus on evidence based policy was music to our ears.  When was the last time during this GOP administration have we heard that policy would be ‘evidence based’ (with real facts not made up ‘alternative facts’)? The EPA has moved quickly to shift policy making processes to not use scientific based reports or data in making policy decisions. Immigration policy is based on scapegoating of Muslims, Mexicans, and Central Americans instead of the facts.  The facts are that new businesses are twice as likely to be started by immigrants, that when the Mexican economy thrived cross border immigration fell dramatically and that majority of immigrants fill jobs that most American workers don’t want to do.  Canada has looked at their trend of an aging population and declining workforce.  To build the size and skills of their labor force for the future they are welcoming immigrants – we should be doing the same thing. Our population is aging quickly, so without an immigrant influx of entrepreneurs and workforce we will be faced with a stagnant economy looking much like Japan’s.

The effectiveness of modern medicine was revolutionized when evidenced based medical practices and research was implemented as a standard clinical practice in the 1960s.  Businesses today use Big Data analysis, models, forecasting and innovate new products based on data, research and analysis before making investments. The dramatic increase in our standard of living is based on innovative processes in universities, businesses and financial services all insisting on ‘getting the data’ first before making proposals or investments.

We should accept nothing less than evidence based government. We are behind by 20 years on combating the effects of scientifically proven climate change. Our future will depend on making intelligent decisions based on evidence to implement sound policies and investments to ensure the existence of humanity.

Where Is the Common Good? Our Families is a Good Place to Start

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Image: takemyhandcoaching.com

Everyone has a mother and father (even if they are not living with them now).  Many of us have brothers, sisters, aunts, uncles, grandfathers and grandmothers.  How about looking at local, state and federal government policies and laws through the eyes of our families. Does this healthcare insurance make sense for families?  Does it provide for services, drugs and care from birth to death?  How can we build families as a unit of government services?

Families are really the basic unit of our communities.   A household is in an apartment, or home with a set of family members – as those members define their household.  For many there are multiple generations in a household, aunts, uncles, grandpa and grandma.  Can we start with family as an economic unit too.  How do we support those who have jobs in the household?  Can we support multiple family members having jobs? For example with child care so that Moms can work if they want to.  Can we have more women friendly corporate policies such that a women can move from home to the work world and back without losing pay or career opportunities.  Why not have paid parental leave like most developed countries of the world?

Children in the household need an education in the household to survive in this world.  Why not make pre kinder programs available for all families not just wealthy ones.  Why not offer public education that is equal across communities not just rich ones getting the good teachers and supplies?  Why not offer a college education or high quality apprenticeship programs to all children regardless of community at no cost to the family or limited cost. When are we going to invest in our children to the level that we did in the 1970s when states spent 3 or 4 times what they spend now secondary and higher education. 

When a household job holder is out of work what happens?  How can we support that person get another job, offer health insurance when they need it between jobs as no additional cost. When will we make companies that layoff workers do so in an equitable way along with manager and executive layoffs?  How do we get equitable pay for employees that is at a livable wage instead of 300 % less than executive pay.  In the 1950s executive pay was 50 % higher than the average worker, it worked then why not now.  Instead of allowing corporations to take the money they make off the hard work of employees, and funded by customers to throw stock buyback money down the drain – take those funds and fund equal education for all or healthcare for all.

Family time together needs to be supported, in Europe they have the full month of August off to be together with their families or friends.  Instead, US workers work the most number of hours in a year of all workers in the world.  Germany does fine with an economy that provides a good standard of living for all workers and they have 5 weeks off each year.

Today we have the highest level of wealth concentration since 1929, we know what happened after that year, the stock market crashed, companies went of business, unemployment was over 20 %, many people starved.  Unless, we take dramatic steps to share the benefits of our economy for all, it will crash again, causing great pain and suffering to many for 5 to 10 years as the economy rebalances wealth and reverts to the mean of wealth for the past 88 years. Throughout history, societies become prosperous, the rich take control of government and resources and eventually those that are left out revolt or the economic model becomes too top heavy to work and deflation, depression and decline takes place.  Then, as wealth rebalances the industrious are rewarded again and the society begins to grow again on a solid foundation.  That foundation is the family. There is another benefit to putting families first. We are actually all part of the same family of humanity, maybe when we put the focus on families we will treat each other with respect, understanding and civility.

What Ever Happened to Integrity and Service In Our Leaders?

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Photo: wikipedia

Our 41st President, George Herbert Walker Bush passed away quietly at his home in Houston this past evening. He was 94 years old. His legacy is multifaceted yet in contrast to today’s political discourse his integrity stands out. House Speaker Paul D. Ryan’s described Bush as “great in his character, leading with decency and integrity.”  Integrity defined by linguists focus on two character elements: adhering to a set of moral principles and character definition.  Integrity is seen in leaders who are humble enough to continuously learn from their mistakes, listen to others and are honest to themselves and others.

Former President Barack Obama noted about President Bush’s life that he was:

a patriot and humble servant with a legacy of service that may never be matched, even though he’d want all of us to try.”

“While our hearts are heavy today, they are also filled with gratitude. Not merely for the years he spent as our forty-first President, but for the more than 70 years he spent in devoted service to the country he loved.”

Bush demonstrated a level of dedicated service to his country that few have matched. He was the youngest Navy aviator to fly in WWII.  Shot down over the Pacific he was rescued. Later he continued a career of public service in the House of Representatives, Ambassador to the U.N., U.S. Envoy to China, Director of the CIA and Vice – President among many positions he held in 70 years of public service.

His service did not stop at his one term presidency.  One unusual partnership developed 20 years after his presidency with the man who pushed him out of office, Bill Clinton.  In 2004, Bush’s son George W. Bush asked his father and Clinton to tour the devastation after a huge tsunami hit Sri Lanka, Indonesia and Thailand.  They discovered during the two week tour how much they had in common including an unlikely support of several education programs. After Hurricane Katrina in 2008 they two joined together in raising over $130 million in relief.  When the program eventually was not needed, the funds were distributed evenly to the two men who then gave them to charities in the U.S. Gulf coast region. Bush observed on his relationship with Clinton that “politics does not have to be mean and ugly”.  Seems like light years ago from our perspective today.

Reflecting on the recent death of another great Navy flyer, Senator John McCain, it seems impossible to miss that with the passing of these two men our country is losing not just the people but the values of service and integrity they exemplified.  We hope during this coming week of memorials and remembrances that George H.W. Bush’s character traits of selfless service, integrity, honor and a humble love of all people is reborn, not lost on this generation.

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