Basic Psychology

July 16, 2017, Da Lat, Vietnam

Basic psychology has long provided fundamental sound advice for relationship differences. Don’t start out criticizing the other person. Don’t tell them they are wrong. Don’t try to prove you’re right. Don’t give instructions for what they should do better.

Instead, start by listening very carefully to the other person. Repeat back what they said in your own words, giving comfort that you heard correctly and understand. Ask questions only to clarify any points you may not fully understand. You might want to say you understand and respect the other person’s point of view.

Only after all this, you may ask if you could now respectfully present your different view. You may ask the other person to kindly listen as you did, without interrupting or challenging, until you have finished explaining your view.

This is basic psychology, understood by anyone who has been in therapy or has read a book on relationships. Why? Because without this kind of approach, a heated argument will almost certainly escalate in name calling and worse. Criticism will result in hardened positions, eliminating any possibilities for agreement or compromise.

Of course, no matter how courteously and respectfully one approaches the solving of a difference, there is always a chance the other party will infer criticism and react to that inference. But, if this kind of preface is observed, and if the process is repeated during the course of discussions, there is a far better chance of working together to solve the problem or finding a compromise.

Why wouldn’t this basic psychology be the right way for Congressmen and the Presidential administration to deal with their important relationships, relationships with  influential politicians of opposing parties?

Note this Trump statement in his address at Liberty University: “Nothing is easier or more pathetic than being a critic, because they’re people that can’t get the job done.”

Many of us are to blame for allowing the acrimonious situation to develop, but no one is more responsible than the person we elected as our President. Along the way to the White House, Donald Trump was demeaning, vicious, and humiliating to all his major opponents. Regrettably, he has either forgotten his promise to “become Presidential,” after the election, or he really just can’t do it.

His continuing targets include all liberal media, but also James Comey, Barack Obama, Chuck Schumer, Nancy Pelosi, the Mayor of London, Angela Merkel, China, Mexico, and pretty much anyone else who disagrees with him. Hasn’t it occurred to him that he needs votes from the other side of the aisle in order to pass critical legislation, and he needs foreign cooperation in foreign policy objectives? Bullying and demeaning those forces will not open their hearts and minds to compromise and solution.

If our President cannot conduct disagreements with courtesy, if he can’t set an example as the current leader of the free world, I suppose we shouldn’t be confused as to why we continue to degenerate into the deeper and deeper abyss of partisanship and acrimony.

Wouldn’t you agree this is near the top of the list of his failures in leadership at the six month mark? As he said at Liberty University, this may be one of the reasons he can’t seem to get the job done.

 

 

Distraction Costs

July 12, Da Lat, Vietnam

We should be focused on the best opportunity, the only realistic opportunity ahead for the US–driving our country forward to lead the knowledge economy of the future. Our underlying objective in this pursuit should be a good job for everyone.

A good job is one that provides enough income for adequate housing, food, and other necessities. A good job provides enough for health care for the family. There is sufficient income to allow a prudent family to save enough to be able to deal with most emergencies. It is adequate to send children to decent schools. We currently have a lot of workers who have jobs, but not “good jobs.” It doesn’t have to be this way.

The jobs problem is at the essence of what troubles our country, resulting in large swaths of voters retreating to populist fringes on the left and the right, and electing Donald Trump, who proved adept at channeling the anger to false targets, such as immigrants and foreign countries.

Instead of focusing on what is essential and critical, we are distracted by the Russian entanglements of the Trump administration. We are also knee deep in bitter acrimony and accusations between polarized political media sources and politicians. Our President wants to turn backward and make a futile attempt to recover the manufacturing economy. Basic manufacturing is now better served by lower cost countries. Our politicians are fighting over how much welfare we can justify.

The current administration seems more interested in increasing the lot of wealthy than in shared prosperity.

The media behaves like medieval warriors, catapulting fire bombs at each other. Sean Hannity and Fox News are the loudest extreme media voice for Trump and Conservative causes, finding nothing but praise for the Trump administration. Jake Tapper, Chris Cuomo, and others at CNN stir up liberals with all kinds of suspicions of the Trump inner circle. On the Liberal side of politics, we are daily treated to the concerns of Adam Schiff and Chuck Schumer, and on the other end, Mitch McConnell, Paul Ryan and cohorts amaze everyone with their loyalty and defense of some of the clearly ridiculous behaviors of our new President.

Thus, most of the attention of the public and politicians is focused on these matters, and not on what is certainly the essence of it all. We are all at fault for this. Donald Trump’s administration is at fault for not focusing on the right issues, but rather on such as highly flawed proposals in health care and taxes which are likely to only exacerbate inequality and reduce opportunity. The media is at fault for devoting too much attention to these matters. We the citizens are at fault for not rising up and demanding focus on what is critical.

In the end, much of the Russia hype may well simply boil down to no conspiracy with Russia, just a lot of collaboration, which is detestable, but not illegal. And while many of us would love for President Trump to behave like an adult, at the least, the reality that he seems a petulant child is not the real issue. There are enough other influencers and controls to proceed, even with a child at the helm.

There can be little question that the most critical issue facing the US is creating the pathway to a future economy in which workers can count on good jobs. If we were marching down this path, discontent would drop dramatically. If we focus on jobs of the future with shared prosperity as our goal, the amount of welfare needed will reduce substantially.

There is a huge cost to all the continuing distraction. We are losing ground in repairing infrastructure, in proving health care for all, in education, and most critically in addressing the creation of good jobs for everyone in the future knowledge economy.

 

A New Social Contract is Required

July 4, 2017, from Da Lat, Vietnam

It’s time for a new social contract for the United States of America.  If there is a “contract” of any sort now (implied), it has steadily gravitated over 30 years to the advantage of business and the wealthy. The working class has been abandoned in the pursuit of extreme capitalism.

Consider some of the evidence:

  • Inequality has risen since 1970 to the levels of the Robber Baron era of the 1920s.
  • Millions of manufacturing jobs have been eliminated by technology and globalization, and what work that remains is at much less pay and is less satisfying.
  • While stock market values have advanced to the benefit of those who own stock, corporations have not improved the  lives of their workers. Only precarious or “gig” jobs abound.
  • Poverty in America is about the same as it was in 1970, as a percentage of families. 40 million live in poverty.
  • While we never had health care for everyone, Republicans are threatening to make it unavailable to 22 million more people.
  • Millions of dissatisfied have moved to extremes of opposition to government, and we elected a Populist candidate with little agenda to address this problem.

Notwithstanding this evidence (and much more), Conservatives seem hell-bent on continuing to cater to the wealthy. The single focus is on growth and business, with the implication that if we attend to the best interests of business and economic growth, the rest will take care of itself: Magically, there will be an abundance of good jobs, regardless of our failure to address structural obstacles like globalization and technology. And, regardless of our failures in maintaining global educational excellence, much less advancing it to deal with the new challenges of the knowledge economy. It’s impossible to tell who really believes single focus on business and economic growth is adequate. Some who profess this are simply in deep denial, and don’t see the facts of the last 30 years. The rest know this doesn’t work, except for the wealthy, but they see it seems to sell well to the working class–for a while longer.

Conservatives place emphasis on an American myth–the mobility of “Horatio Alger” America. Here is Paul Ryan: ” A lot of people don’t believe in the American idea anymore. The condition of your birth doesn’t determine the outcome of your life. This is America. You can make it.” Paul, there’s a reason a lot of people don’t believe in that particular American idea anymore. It’s no longer true. Raj Chetty and associates have studied the likelihood of a child earning more than his father, and found that the chances were 90% for children from the 1940s, but have fallen to only 50% for children born in 1980s. It’s worse in low income communities.

We cannot simply continue to cross our fingers on the basis of hoped for growth and increased prosperity for business. Uncontrolled capitalism must be accepted as having little interest in the worker. Workers are only protected to the extent they are critical to production and sales. This is capitalism. Shareholders are the only real constituency.

We don’t seek to change the essence of capitalism. Fortunately, we have another party to help with the rest. Government. No one wants onerous controls or excessive regulation, but someone must assure that the long term benefit to the society of supporting businesses extends to the citizens, the workers, and and their communities. Is there any evidence across our centuries of capitalism that left completely on their own, corporations will undertake to assure that there is shared prosperity across our land? No criticism, they’re not designed for that. Government is the referee and must do its job. Can anyone imagine a football game without referees to limit excessive competition?

We need a new social contract–one in which there is a primary objective of shared prosperity. Government must work with businesses and communities to support efforts in which opportunities are spread and shared. Competition will continue, but there must be incentives for sharing technology, information, and even property rights, such that a groundswell of innovation and new business creation can occur. Businesses will be incented to make greater investments in education and in communities where they work and sell. If we prevail in this objective, growth will be strong and our country will recover its vitality and its character.

Only with this new social contract can we make America great again.

 

We Can Afford Health Care

July 1, 2017, from Da Lat, Vietnam

The Conservative arguments that we can’t afford health care for all is rubbish.

Conservatives use the debt and the deficit as their argument for cutting all kinds of programs which are critical to the working class and the poor. “This is unsustainable, we simply cannot afford it, we can’t do this to our grandchildren,” go the arguments. In other words, “We have no choice.” Heard that lately?

Please bear with me in looking at a few numbers: The US federal debt is about $20 Trillion, which is 105% of our GDP. Our 2016 deficit was $587 Billion, about 3.2% of GDP and in line with historical averages.

Five OECD nations have federal debt which is a higher percentage of GDP. None are as strong as the US or have the world’s reserve currency. The US federal government spending as a percentage of GDP is the 4th lowest among 28 OECD countries. It is not a given that our debt is unsustainable, or that it couldn’t safely increase–for the right reasons. Health care for all would strengthen our country.

But for this discussion, let’s stipulate that we can’t increase the deficit or debt. There are many other ways to preserve health care. The Congressional Budget Office originally estimated the Senate bill would reduce the US annual budget deficit by $321 Billion over 10 years. Later estimates reduced the savings to $119 Billion.  But let’s use the earlier CBO number. That’s $32 Billion per year.

Federal spending is about $4 Trillion and when states and municipalities are added in, the total is about $7 Trillion, per year.  $32 Billion is .5% (1/2 of one percent) of $7 Trillion. There are so many ways we can save $32 Billion annually, to continue health care for the 22 Million who will lose it (Congressional Budget Office forecast).

First, we could change to a “single payer” system, something Trump extolled only a few years ago. Economists estimate this could cut our spending on health care from 21% of GDP in 2016 ($3.7 Trillion), to a dramatically lower figure.  There is a clear and indisputable cost advantage to a single payer system. There are many countries demonstrating the cost effectiveness of single payer. California has been developing such a plan. Why can’t the US?

It is a tragedy of our culture that this optimal solution remains indefensible in the the US of today. We are addicted to private sector solutions.

Setting single payer aside for now, there are many other ways to justify retaining health care for all if the cost is only $32 Billion per year, and without increasing the deficit or the debt. We could start by not spending the extra $50 Billion annually that President Trump proposes for the military budget, which is already larger than the next seven nations combined.

Or, could set about to re-engineer the federal government, reduce redundant and out of date regulation, install better management, automate, etc. A 10% savings in the $3.7 Trillion federal budget would generate far more than the projected $32 Billion savings attributed to the Senate bill. Certainly states and cities have similar opportunity.

If only some of the cuts Trump proposes are justified, why not take those savings and keep the military budget at its present level? That’s a lot more than $32 Billion per year.

Finally, Conservatives keep avoiding the obvious–either raising taxes on people like me (a Patriotic Millionaires offer) or cut some of the “entitlements” for those of us who do not really need them. There’s a lot more than another $32 Billion there.

So, the Conservative arguments about our budget deficit and our federal debt do not hold water. There are many ways to save the money necessary to keep 22 Million people in health care, better still, provide health care for everyone, without increasing the deficit or the debt.

It aways seems to come down to who has influence, and who does not. Those 22 million do not have political influence.

It’s not fair. It’s not right.  It’s a shame.

 

Better World or Worse World?

June 26, 2017, from Da Lat, Vietnam

My brother and I often debate this. Are the people of this world better off today than before, or worse off? He’s on the positive side of this and I am on the negative side.

The answer is both, of course, depending on what segment of our global population, what factor of progress, and what two points in time are being compared.

In my brother’s defense, there is indeed a very long list of improvements the world has enjoyed, say over the last 50 years: All manner of health outcomes, literacy, transportation, access to technology, constantly reducing prices for physical products, even less conflict in many regions of the world. A very poor family in 1967 might not have had a TV, air conditioning, a decent refrigerator, and no mobile phone, of course, just to mention a few of the notable advancements almost everyone can enjoy.

My concern starts with economic inequality. Global poverty has declined dramatically but most of the reduction is in China and India. In the US, poverty has not declined measurably. In 1967, we had 11.4% of our US families in poverty, and in 2015, 10.4%, a negligible improvement. We have about 40 million Americans living under $25,000 for a family of 4, as an example. I’m sure all will agree it’s really tough to survive on that, no matter where you live in the US. Wages for the bottom 20% of our population have not increased in real terms since 1967.

Of course, I acknowledge that a family of four may have better health care, better 2nd hand car, and TV than the same family had in inflation adjusted equivalent wages in 1967.  They may have a mobile phone. You may hold that such a family is better off in eking out an existence.

But two major intangible elements swing the evaluation negative in my opinion: inequality and mobility. Please see previous posts in which I argue that relative status matters, inequality matters. Inequality has skyrocketed across this period. High levels of  inequality are tied to slower economic growth, impaired health results, more crime, and other negative outcomes.  Even those who continue in disbelief as to the negative impacts of inequality, all seem to believe mobility matters. But in tandem with the increase in inequality, mobility (ability to earn more than your father) has steadily declined across the last 50 years in the US.

While physical products cost less, the important costs have increased dramatically–housing and education.  That family of 4 cannot even consider college for their kids. Primary and secondary education is in starved public schools which have deteriorated. They can’t afford to even consider owning a home, and costs in the city have pushed them to slums or to distant suburbs far from good jobs. We’re about to make health care a lot more expensive.

My brother, my sisters, and I are clearly better off than in 1967. We had good public educations, went to college, landed good jobs, enjoyed improving health care, raised families, all of whom went to universities. We clearly enjoy a much better life than my parents’ family did in 1967. But I see how much harder it is for my children to find and land solid jobs, how much more in annual income equivalent is necessary to buy a home and to send my grandchildren to the best schools.

Will the future be better or worse? Climate change, terrorism, global conflict, inequality, mobility…?  At the end of this semester, I discussed my primary concern with a Harvard professor I respect. “Will inequality increase because of robotics, automation, self driving vehicles, artificial intelligence, machine learning, etc.?” He said he’s cautiously optimistic that will not happen. He referred to the way the abundance of agricultural workers no longer needed (when automation came to farming) were absorbed over a few decades into factory jobs. But as to how something like this could happen in the advancing digital age, he did not have a theory. I’m worried.

Whether you think we’re better off or worse off, whether the future will evolve beneficially or harmfully, without intervention, what difference does it make? The implications of taking a stance are probably significant. If you think we’re better off, perhaps you don’t see a need to invest heavily in fixing the problems. If you think the opposite, perhaps you are more motivated to influence change.

I want change. Hoping for a miracle is not satisfactory.

I don’t want my kids to do this!

June 26, 2017, from Da Lat, Vietnam

“To be honest, I steered my children as far away from manufacturing as I could.” This from Jeff Niebauer, age 60, who spent his career in manufacturing at about $30 per hour, reported by Heather Long of CNN.

I never worked in a factory as an adult. I managed to get a college education and get a good “white collar” job on graduation. However, as a teenager in High Point, North Carolina, I did all manner of menial work–mowing lawns, painting schools, filling stations, grocery stores, tobacco fields, and also in a textile factory. Using a Trumpism, “I will tell you, believe me..,” I quickly determined I had to do everything in my power to avoid the kind of factory life my parents had manufacturing stockings and socks at Adams Millis.

Does anyone have trouble understanding this? It’s the hard repetitive work, the low pay, and the limits on ability to use your mind. For parents in our early 20th century agricultural economy, the route upward for their kids was the factory, but now it must be from the factory to the services and knowledge economy.

Niebauer worked for GE on industrial engines at $30 per hour, work far better than my parents and I had, and pay at twice today’s proposed federal minimum wage. Yet, he doesn’t want his children to do this kind of work.

If parents understand that manufacturing is not the opportunity of the future, why doesn’t our new President understand that? How can he satisfy the distress which garnered him the votes, by proposing to reverse our course in jobs advancement, trying to “bring back” manufacturing? The ironic good news is that bringing manufacturing back is impossible. Manufacturing is pressed on one side by low wage countries and on the other side by automation. Trump’s touted Carrier deal has already evaporated, as Carrier announces 600 layoffs.

There is a clear avenue of opportunity.  We are among the few leading developed countries with a burgeoning service sector, required to meet our growing needs, some of which is highly exportable. Furthermore, the US is at the leading edge in technological development, and has a clear opportunity to grow in the knowledge economy. However, our administration has yet to offer even a recognition of this opportunity, much less a plan to  prepare us to realize it.

What would it take for us to realize the opportunity in services, technology, and the knowledge economy? I argue it would take three things: (1) a commitment to shared prosperity, which goes beyond redistribution to a commitment to “good jobs” for everyone; (2) a new approach to good education for all, in which everyone has a reasonable chance for developing new trade skills, technological skills, or other skills, each in accordance with her/his abilities and aspirations; and, (3) our government helping by investing in fundamental research and infrastructure, as well as capital to promote new business development.

I acknowledge this is a tall order. It would require revolutionary thinking not consistent with government policies of the last 30 years, and perhaps especially resisted by this government. Some will say it is utopian. It is lacking the abundance of details which would seem to be required to even start down this path. Here I must acknowledge Roberto Unger, my professor at Harvard this semester, who urges such an approach. Unger is often challenged by students who want a “roadmap” to this ideal society. Unger repeatedly advises the specifics can only be determined by experiment in communities, small and large. Certainly some experiments with institutions involving citizens, business, and government will fail, but we will learn and correct our mistakes. If the objectives cited above are kept in mind, a zig-zag path of advancement can lead to such a society.

The only reason voters rallied to the empty promise of restoring manufacturing jobs is that we have not laid out the path to the only real opportunity ahead. So, even if our new President was able to restore our manufacturing economy (which no one can do), it would not satisfy the needs of unhappy American factory working parents.

Manufacturing parents, you need to demand better answers for your kids.

The 2% Economy

Yes, that’s what Ellen Zentner, Chief US Economist for Morgan Stanley, says. Maybe 3% for 2nd quarter, only because of a rebound from 1.2% in the 1st quarter. But, on average, look for a very sluggish 2% growth rate for 2017 and for the entire Trump period of office. Or worse.

It could be worse. There could be a major negative shock, such as the sudden failure of our subprime mortgage derivatives in 2007, arguably due to Federal Reserve interest rate management in years prior. Many see this in retrospect as a failed government ploy to stimulate additional spending based on inflated home values. This is an example of how poor government and failed regulation can turn even 2% into a crisis. This kind of shock is very damaging, especially to the working class. During  the “Great Recession,” we were losing more than 500,000 jobs per month, and GDP growth was negative.

It’s much harder to imagine an event or a development which would result in a positive lift in growth rate. TheTrump administration projects 4%, but that’s impossible with a mature economy such as ours at this time, barring politically impossible major stimulants–such as a dramatic increase in immigration (millions more than the 1 million we currently take). Or something far worse and perhaps a bit more likely–the Trump administration stumbling into a major new war. A war might raise the GDP growth rate as we stock up weapons, but the overall consequences would be horrendous.

The Trump administration pins its 4% hopes mostly on tax cuts. It’s rather hard to believe they have succeeded to sell the belief that lowering taxes across the board, corporate and individual, will somehow stimulate the economy in a significant way. That won’t happen. The major impact of tax cuts will be further cuts in programs which benefit the working class, starting with health care, extending to education and other support programs.

The so called “Laffer curve” theory of tax cuts stimulating growth has long been discredited. This would only happen only in a situation where  there is demand to buy, but a constraint on supply of investment and where tax cuts are funneled into creating new businesses which need employees to satisfy the demand. Lately, tax cuts have not resulted in the wealthy investing in jobs creating businesses. And, why should they, when so many citizens have so little money to spend?

The major implication of a 2% economy is that there will not be enough economic growth to enable improved incomes and opportunity for the working class. Our major corporations may still find modest growth in profits and value by reducing expenses, by taking greater advantage of advancing technology, and from the lower tax rates Trump intends. That will benefit those who own stock, but not the working class.

The fact is that economic growth is necessary, but not sufficient to enable any reduction in inequality, any improved access to better jobs, or any reversal in the decline in upward mobility. These require not only strong economic growth, but also political will to enact legislation that favors the working class. We’ve been enacting the opposite type of legislation for more than 30 years now.

At this time, we should be laying the foundation of the next era of solid growth for the US. That growth can only be in the exciting knowledge economy, and not in trying to turn back the clock to restore the manufacturing economy, when so many others nations can do that so much better and cheaper now. We should set about preparing to lead the knowledge economy of the world, with the companion goal of making the future US a society of shared prosperity.

Donald Trump was elected on an agenda of restoring American jobs. He promised to do that largely by threatening foreign countries and large US corporations with jobs in manufacturing going abroad. That plus much stronger economic growth–4%.

Nothing this administration has promised or has done engenders confidence of respected economists to project anything more than a 2% economy.

One has to wonder how long it will take supporters to realize the promises are not going to be kept.