The final myth we must reject.

When I was a little kid, my entire world was turned upside down the day I realized my parents had once been children like me.  From a child’s point of view, how could I have thought any differently?   The world didn’t work the way I thought it did and it was upsetting for me to recognize reality.  

As both children and adults, we naturally interpret the world from our own limited set of experiences and our personal points of view.  For thousands of years we humans all thought the sun and stars revolved around the earth - a logical conclusion given our point of view.  Imagine how upset people must have been when Copernicus discovered the earth isn’t the center of the universe.

As we get older, more experienced, more educated, and wiser, most of us overcome these errors in our understanding of how the world works.  However, there’s one very big error in our understanding that the majority of people still have to overcome.  And I know many people will be very upset when they recognize this reality.  

Imagine you’re a kid playing on a hot summer day on a flat, wet beach, just above the water line.  You have your shovel and your bucket and your mom says, “give me a bucket of sand”.  So you dig a hole and fill your bucket with the sand from that hole.  Hold that image in your mind - a hole in the sand and a bucket filled with the sand from the hole.  Got it?  

THAT is double-entry bookkeeping.  You start with a flat beach, dig sand out of the beach to create a hole and put the sand you dug into a bucket sitting on the beach.  The left side of the bookkeeping entry is negative - a debit - the hole in the sand.  The right side of the entry is positive - a credit - the bucket of sand that made the hole.  In double entry bookkeeping, the ledger must always be balanced with a debit and a credit - a hole and a bucket.  

Double-entry bookkeeping is how all financial transactions occur.  When you earn a paycheck, your employer credits your bank account and debits theirs.  When your company’s customer’s pay, they debit their bank account and credit your company’s bank account.  When you buy a mocha latte, you debit your bank account and credit the coffee shop’s.  All financial transactions dig a hole and fill a bucket - debits and credits.  

Banks do the same process to loan you dollars.  But banks don’t actually loan you dollars that someone else has deposited into the bank.  Instead they simply credit your account with your brand new, freshly created loan dollars (which are simply keystroke-created digits in an account), while creating a loan account and debiting it by the same amount of dollars you were credited.  As long as the ledger balances - as long as your “positive” dollars equal the “negative dollars” you owe - the US Federal Reserve, which is the clearinghouse for all banking transactions, is OK with it.  

That’s right. Banks create “new” dollars every time they create a loan.  Imagine you took out a $20,000 loan (at zero percent interest).  Your bank account is suddenly credited with $20,000.  You write checks from that bank account, distributing those dollars to whoever you spend the money on, with all those dollars eventually ending up in other people’s bank accounts.   Eventually, $20,000 dollars are circulated into the economy from your loan and your account is down to zero.  

At any moment in time during the life of the loan, the size of the hole and the amount of sand remaining in the bucket are equal in size.  If you still owe $10,000 on the principle of the loan, the loan account at the bank is still negative $10,000.  As long as the debit and the credit are the same amount and add up to zero, everything works out fine.  As you repay the loan, you gradually take $20,000 back out of the economy, giving it all to the bank which essentially destroys those dollars - they fill the hole with the sand - leaving the same amount of dollars in the economy that were there before you got the loan - no new dollars in the economy - the hole in the beach is filled and the beach is flat again.  

You might ask “how does the bank make money off this deal”?  The answer is “Interest on the loan”.  The example above was considering a loan with no interest paid.  If you’ve ever had a mortgage, car loan, or any other type of loan, you know that over the life of the loan, depending on the interest rate and how long you have to pay it back, you could pay the bank close to twice the amount of the original loan.

You might ask, where do the dollars to pay the interest come from?  Good point.  The macro-economic perspective on this is covered below.  The micro-economic perspective is suitable for another entire essay.   

Banks dig a hole in the beach, give you the sand and keep the hole, which you will then gradually fill to the level of the beach, and then provide what might be a whole-nother bucket full of sand over the next decade.  That promise to fill the hole and the new bucket is valuable to the bank because they can sell that hole and your promise to fill it back up, and your addition of more sand (the interest).  

Did you catch that?  The holes in the sand, the debits that will gradually be filled over time - the “DEBT” - is offered for sale as “BONDS”.   

Bonds are attractive for banks because instead of waiting twenty years for you to repay your mortgage, they get other people to refill that hole immediately and they might even get out of the entire loan transaction.  Anyone can “invest in” bonds and when they do, they essentially repay the bank for the new dollars the bank created to credit the loan.  Investors “buy” bonds by giving the bank the dollars to refill the hole.  In exchange for those dollars to fill the hole, the investor then gets the interest payments on the loan.  When the entire loan is paid off, the investor gets his original investment dollars back plus the interest payments - the additional bucket of sand plus the extra sand provided to fill the hole.  Bonds are time-deposits.  You put your dollars into an account and collect them back at a specific date in the future, plus interest.

To review: US Banks create new US dollars every time they create a loan.  They do this as agents for the US Treasury.  The catch is that every dollar created by a bank as a loan requires many more dollars than originally created to pay that loan back.  From the macro-economic perspective, the roughly fourteen TRILLION dollars in US credit - new dollars created by banks as loans for  business loans, mortgages, car loans, student loans, credit cards, etc. - will require something closer to twenty eight trillion dollars to repay.

If you’re following along here, you might ask at this point, “where will the additional fourteen trillion dollars to repay those bank-created and loaned fourteen trillion in credit going to come from”?  If all new dollars created by banks as loans require interest payments, must we continually take out new loans to pay the interest on old loans?  Sounds like a pyramid scheme doesn’t it?  Did you ever wonder why economists and politicians are always so concerned about “growth”?

If you happen to be a European Union member country, this problem of always needing to pay back more dollars (Euros in their case) than were originally loaned, has become very apparent.  The European Central Bank (ECB) loans Euros (the European currency) to member countries at some interest rate.  When the European Union was started a few years ago, member countries gave up their individual sovereign currencies and switched to the Euro.  At that point, an exchange rate was determined, and in exchange for every Greek Drachma, or Italian Lira, or Spanish Peso, or French Franc, or German Deutsche Mark, etc., some finite number of Euros were provided to those countries.  New Euros are now available only from the ECB as loans.

Think about that.  Let’s say the population of Italy grows.  With a given amount of Euros for a given number of people, when the population grows, either everyone will have equally fewer Euros, or some people will have many fewer Euros while others will have many more Euros.  Remember, new Euros only come from the European Central Bank (ECB).  If the population of Italy grows, the result will be either a decrease in the standard of living for all Italians, or inequality and increasing poverty within just a section of the Italian population.  That is exactly what Italy and Spain are both facing now with 40% unemployment rates among their young people.

If the Italian government wants to stem that inequality and/or poverty, it must borrow more Euros from the ECB and find some way to evenly distribute those new Euros to their population. Yet every Euro borrowed requires more than one Euro to repay.  Where do those additional Euros to pay for the interest on the loans come from?   Remember Italy, like every other Eurozone country, started their Euro experiment with a fixed number of Euros.  Every new Euro the Italians borrow from the ECB requires additional Euros to repay.  Where do those additional Euros to pay for the interest on borrowed Euros come from?  Is it any wonder that Europeans are questioning this entire Eurozone experiment?  

You might ask, why, until recently, has Germany thought the Eurozone experiment is working well?  Because of all the Eurozone countries, Germany is the largest exporter.  (I personally know this because I’m trucking containers from Germany all over the southeast every week.)  While most Eurozone countries trade only with other Eurozone countries, Germany manufactures many products that are purchased by countries outside of the Eurozone. That means they are paid in US Dollars for those products.  US dollars are the currency of international trade.  German companies being paid in US dollars will exchange those dollars at the ECB for new Euros which are then distributed to their employees and suppliers and then circulate throughout the German economy.  As long as dollars are coming in, Germany never has to borrow Euros from the ECB to keep up with their population growth.  Other Eurozone countries aren’t so fortunate because they are not net exporters.

The United States also has a central bank.  We call it the “Federal Reserve”.  The “Fed” loans US dollars not to states, but to the US banks under their auspices.  While banks can simply create dollars via loans, as described above, the Federal Reserve is the watchdog for all banks using US dollars.  The Fed has standards about how many “actual” US dollars a bank must have in “reserve” (just sitting there), in case a large number of depositors demand their money back, or too many lendees default on their loans.  The Fed is also the clearinghouse for all financial transactions between banks.  That’s why checks take overnight to “clear” - all inter-bank transactions run through the Fed.  In fact, all banking transactions in US dollars, everywhere in the world, run through the Fed every night.  That’s how we can “freeze” the accounts of Vladimir Putin and his friends, if those accounts are holding US dollars.  The Fed also manages the world’s savings account for US dollars - treasury bills - the hole in the sand created when new dollars are created.  

Unlike countries in the Eurozone, individual states in the US don’t have to “borrow” dollars from the Fed.  Instead, US states get US dollars from federal spending, not from the central bank.  Instead of having to repay those new dollars with interest, US states like South Carolina are simply GIVEN dollars from various federal government departments - transportation, education, agriculture, defense, etc. - ALL INTEREST FREE !   Greece, Italy and Spain can only dream about such a bonanza.  All Euros those countries receive must be paid back with interest. THAT is what is causing all the financial problems in the Eurozone.  Where do the additional Euros to pay the interest come from if all new Euros only come from the ECB?  No one yet knows.

So you might ask, “where does the US Federal Government get THEIR dollars from”? Most people think the IRS simply collects OUR dollars which the federal government then spends.  Remember that from a little kid’s perspective, our parents were never children.  And for thousands of years we thought the earth was the center of the cosmos.  From our perspective, we think the federal government operates a budget just like we do.  It seems obvious that the federal government gets their “income” as taxes from us.  When they don’t get enough income from taxes (when they have a “deficit”), they must “borrow” dollars just like we do if they want to “spend”.  And the total of that borrowing is the federal “debt”, just like we have debt for our houses, cars and credit cards.  

We are not children anymore.  Let’s abandon this final myth.   

Recall the hole in the sand and the bucket holding the sand.  The federal government uses double-entry bookkeeping, just like banks.  And just like banks, the federal government via the treasury department, can “credit” as many dollars as they need as long as they also create a debit for those dollars - they dig a hole in the sand creating the debit, and fill the bucket with the credit - new dollars.  That process is called “federal spending”.  New dollars are created when the federal government deposits dollars into a bank account - pay checks for federal employees, grants to federally funded research (which was my situation in 2012 which was when I first got curious about where that $100k grant came from), paying for new cruise missiles, social security checks, payroll for the Army, keeping national parks open, etc. Every new payment is new dollars put into the economy, which also creates an equal and opposite “debit” because of double-entry bookkeeping.  The hole in the sand must equal the sand in the bucket.

Any issuer of a sovereign currency can create as much of their currency as they want.  People generally say “print money” to describe this process.  But actual cash dollars are a very tiny fraction of the total number of US dollars in existence.  The vast majority of new US dollars are created as keystrokes crediting someone’s bank account - not cash.  How many US dollars has the federal government created?  Simply measure the size of the hole they came out of.  We call that hole the “US debt”.  Today the hole in the sand is nearly $18 Trillion dollars.  So there are $18 Trillion dollars in the world economy which don’t require repayment plus interest. There are about $14 Trillion that have been created by banks that will require interest payments to clear the debt.  Which dollars would you rather have, interest free dollars from federal spending or debt-created dollars which require even more dollars to pay back?  

Over the past few months the federal government has substantially reduced the “deficit” - they’ve collected enough federal taxes to nearly pay for the ongoing federal spending.  What does that mean for the average American?  Every month fewer dollars remain in the economy.  If we actually “balance the budget”, no new dollars will be put into the economy - by the end of the year the sand in the bucket will be poured back into the hole in the sand.  If our population decreased, if our productivity increased, if everyone was fully employed, and everyone was living a more simple life, that might not be a problem, in fact it might be required to keep price inflation in control.  

But our real unemployment level is something above 10%, perhaps 40% of our population is “underemployed”, our productivity increases have just about topped out, our population continues to grow, and a consumer-driven lifestyle seems to have obsessed the majority of Americans.  If more dollars aren’t put into the economy every year, either we will all equally have fewer dollars at the end of the year, or some of us will have a lot fewer dollars at the end of the year while some people are still doing well or even doing better.  

If we were to actually try to “pay down the debt” - the $18 Trillion total of all the holes in the sand from the previous two hundred years of federal spending, that would mean we would have to pull more dollars out of the economy - reduce the sand in the bucket and use it to fill all the holes in the beach.  If we suffered a cataclysmic disaster that wiped out half our population, that would probably be required to keep price inflation from getting out of hand.  But if our population continues to grow, we will have to continue feeding more dollars into that population via federal spending or suffer from worsening income and wealth inequality.  

The federal debt isn’t a problem.  It is simply the measure of how many cumulative dollars the federal government has put into the economy.  As long as we want dollars in the economy that don’t require us to “pay back” those dollars with interest, the debt isn’t a problem.  As long as we want the federal government to provide critical services like defense, a social safety net and last-ditch medical care, the debt isn’t a problem.  And as long as the federal government continues to use double-entry bookkeeping, we will have a federal “debt” equal in size to the number of dollars the federal government has spent into the economy over the previous two hundred years.  The US federal debt isn’t a problem.  Just ask a Eurozone country.

The federal deficit also isn’t a problem.  The federal deficit is simply the measure of how many new dollars created through federal spending are left in the economy every year.  If our population is growing, our unemployment is dropping, our savings are growing, and people want to increase their quality of life, more dollars must be put into the economy every year or there won’t be enough dollars to fund all that growth.  

The only problem we have with debt and the deficit is how we’ve interpreted the world from our own limited set of experiences and our personal points of view.  As we’ve become wiser we’ve come to understand that our parents were once children with parents of their own.  We all now agree that the earth is NOT the center of the universe.  It’s time we all recognized that our federal monetary system doesn’t work like our household budgets.  Federal taxes are not like our personal incomes.  Federal taxes do NOT fund federal spending.  And the US federal “debt” is not like our personal “debts”.  Those negative dollars are simply the hole in the sand that is circulating throughout the world economy.

The world doesn’t work the way we think it does and it is upsetting to recognize reality.  But if we all embrace this reality we can stop nearly all the deadlock in Washington, and end the decades of needless suffering and wasted lives that our misunderstanding has been forcing on many millions of Americans.   

Riding the bus and drinking with Republicans

I’ve known Charleston attorney and outspoken public transportation advocate William Hamilton on a personal basis for only a few months.  But I’d seen him around town at one bleeding-heart event or another for the past few years and frankly I was a bit frightened of the man.  Even after getting to know him better over the summer, it seemed to me that he was one of those wild people living on the edges of society, barely holding onto his sanity.  So I looked forward to spending a few hours riding the Charleston bus system with him last Saturday with a considerable bit of trepidation.  

I used to be a “drive-thru” progressive.  I supported all the progressive causes of making the world a better place for EVERYONE but never got out of my car to do anything about it.  For years I lived an upper-middle-class life working in the high-tech industry, flying first-class every couple of weeks all over the developed world, staying in the finest hotels and eating at the finest restaurants. When I came home it was to a custom house in an exclusive neighborhood only a stone’s throw from the high tide line.  

If there was poverty in the world, I didn’t see it in my usual travels.  If there were people struggling to get by in my little suburban town, I never ran into them.  Most of my friends were upper-middle class devoted Republicans who were more or less also drive-thru progressives (a common occurrence in New England).  It seemed to me and my friends that the world was humming along just fine for everyone.

Until the great recession.  Within five years of vacationing in the most remote and exotic inhabited place in the world - Easter Island - I was homeless and living out of my car.  The details aren’t as important as my conclusion - if this could happen to me, it could happen to anyone.  Perhaps the world was NOT humming along just fine for everyone.  I was no longer a drive-thru progressive.  I became a boots-on-the-ground progressive.  

William Hamilton has had his boots on the ground his entire life primarily because he was born legally blind.  He has always had to rely on the public transportation system to get around on his own because he can’t drive a car.  Consequently, he’s been associating with those struggling and poverty-stricken people I never saw when I was living in an exclusive neighborhood.  Interestingly, William lives in the exclusive neighborhood of Ion in Mount Pleasant, where after spending a few hours on the bus with him, I also happened to run into him at an outdoor concert the evening of the Saturday we rode the bus together.

On our bus ride earlier in the day William told me all about how Mark Sanford has voted against any money for public transportation and how the resulting federal public transportation budget cuts were applied around the country.  Funding for operations were maintained, but funding for improvements and replacements were eliminated.  Which means as the buses fail, funds to replace them are not available.  For most of us with cars living a suburban lifestyle, the bus system, indeed any sort of public transportation seems like a waste of public dollars.  Everyone has a car, right?  Unfortunately, that’s not true.  Everyone I met on the bus last week is working some minimum or low-wage job and uses the bus system to get to and from those jobs, and none of them has a car.  

For those of us relying on our cars, William also said that he’s learned from traffic engineers that city-wide traffic stoppages - “gridlock” - is not a linear process - it’s a step function.  One minute traffic is heavy but moving smoothly.  The next minute it’s completely stopped throughout the entire Charleston area.  Apparently it is now happening every month for at least an hour.  I get to witness this many mornings as I’m driving out of Charleston and pity the fools driving into town from Summerville and Goose Creek, stuck in a three mile long, four lane wide parking lot.  Fixing I-26 first will not help.  I’ve been in Los Angeles on sixteen lane highways that were all locked up.  

William says that with the monthly increase in cars here, it will happen more and more frequently.  He says NOW is the time to get people out of their cars and onto public transportation.  Unfortunately, any light rail project from the burbs will be years out.  I don’t know about you, but once I’m off the truck, I’m going to set up my life so I can bicycle everywhere I need to go.

I understand very well how the people I met on the bus are living.  If my sister hadn’t given me her old car, I would never be able to save up enough to buy a car.  And if my car should happen to breakdown any time soon, I won’t be able to afford either repairs or replacement.  The 70% of Americans living paycheck to paycheck - 223 million of us - are in exactly this same situation - one minor disaster away from complete financial ruin.  Without a way to get to work, you lose the job and you lose any chance of finding another job.  And of course without the job, you can’t eat.

The public transportation system is critical not just to get our fellow Americans to and from work, but to keep them from quickly starving to death when they can’t get to work.  Perhaps more importantly from a macro-economic point-of-view, if the Americans at the bottom end of the economy aren’t throwing dollars into the economy, very soon manufacturing outputs will be dialed down, shops will close down, and before you know it we’re back into another recession or worse.

In the last few years I’ve heard billionaire conspiracy ideas from a number of people and don’t know if the dystopian books and movies like “Hunger Games” were driven by these ideas or whether the movies drove the idea into the general public.  William subscribes to some of these ideas and told me very convincingly that he thinks there is a conspiracy of the billionaires and their representatives (Mark Sanford being one of them) to systematically crush the poor and the middle class, destroy the cities, and make a suburban enclave of rich people living very well until the few remaining natural resources are all gone.  Sort of a enclave strategy in expectation of the collapse of society.  Frankly, his scenario explains an awful lot of the lunatic actions of the Republican party lately.  

However, looking back on my own history, I don’t think there’s any conspiracy at all.  I don’t think there is a group of evil billionaires planning their moves for world domination in a smoke-filled room.  (Yes, there are some idealogically twisted billionaires who could definitely benefit from sleeping under a highway overpass for a few nights.)  Instead I think what is happening in America - why people like Mark Sanford and his supporters are more concerned about their personal tax bill than the suffering and lack of opportunity for millions of their fellow citizens - is first because they don’t understand how our monetary system works.  And second because our game of capitalism is all-consuming for the winners of the game who focus on nothing but their own score in the game.  

Ironically they focus on their bank accounts to their own detriment.  If the mass of America has no disposable income, capitalism will grind to a halt, no one will be left in a position to buy the assets of the rich when they’re ready to sell, and they will suddenly realize that stocks and bonds are the original pyramid scheme and they came in at the bottom of the pyramid.

After that outdoor concert Saturday night, I happened to run into an old friend attending a little porch party with other Ion residents, and they invited me to join them.  It was exactly like the evening parties I regularly attended and hosted in the exclusive seacoast neighborhood in which I lived in the 2000’s.  Since my personal ejection from the capitalism game in 2010, I haven’t been back in that kind of situation before last night. It was nice and relaxed and familiar.  But I was struck by how the conversation topics were different from those of the boots-on-the-ground progressives I’ve met over the past couple years.  Nobody at this party was talking about social problems and solutions, or even politics, other than one joke about Nancy Pelosi.  

Instead the talk was all about first-world problems - lack of cell signals, slow laptops, good and bad restaurants, good and bad places to vacation, what jobs their kids were in and how they enjoyed their grandkids - the exact same things I used to discuss a few years ago with my wealthy friends.  These people are winning at the capitalism game and it’s working great for them.  Consequently all they think about is the game and what it has enabled them to do.  In their daily lives they don’t see anyone struggling to survive.  They don’t see anyone stuck in poverty.  They think everyone lives like them.  Exactly the way I’d thought just a few years ago.  

I worked at IBM the last seven years of my high-tech career and had the opportunity to be a regional salesman for a couple of years where I could earn “unlimited” income.  If you ever want to see where the “rubber” of the capitalist system of incentives and compensation plans “hits the road”, hang out with some sales people working on commission.  We were all “coin operated”.  Our compensation plans - which changed a few times a year - determined exactly where we focused our sales efforts.  Our total compensation truly was “unlimited”.  If we could exceed our sales quotas, the compensation got crazy-big pretty quickly.  

When I was with IBM those years, compensation plans with increasingly large bonus components increased in size the higher you were in the organization.  Why do CEOs of the largest corporations seem heartless and callous, able to suddenly cut entire divisions of the company?  Because their compensation plans incent them to focus on nothing but increasing profits and/or the stock price, not the people behind those numbers.  Hit your “targets” as a division president at IBM and you could earn millions of dollars.  It’s not that the “executive class” doesn’t care about anyone or anything else, it’s that they spend all their time with people just like them.  Everyone they know is doing great and playing the same game they are - chasing their targets and measuring their personal success by the size of their bank accounts.  As I was.

So I don’t think there is a conspiracy of rich people systematically trying to crush the poor and middle classes.  It’s just that the winners of the capitalism game are distracted by the game they’re playing - eventually to their own demise.  The problem with America today is not from evil rich people making decisions about the poor.  The problem with America is from rich people who are too insulated in their own worlds and too distracted by their own game of capitalism to even notice what is happening to the rest of us.

The people I met on the bus yesterday are in the same economic strata I’ve been living in the past few years so it wasn’t a shock for me to hear their stories of homelessness, disability, job-loss, living paycheck-to-paycheck, and the struggle to survive. I spoke with one guy who clearly needed some anti-psychotic meds.  Another guy with no teeth.  Numerous people who didn’t vote because they didn’t understand how their votes for the right candidates could keep the buses running.  William is doing good work out here.  He really is a saint hoping for miracles.  For political candidates and office-holders who haven’t slept in their cars for a couple of months, riding the bus with William could be a big eye-opener.

Personally, I’m looking for the root-causes of America’s dysfunction.  How can we change the incentive program for the highest earning Americans so they become aware of and care about the lowest earning Americans?  After giving that question an awful lot of thought for the past few years,I think we need to link the financial success of all Americans together.  If a decade ago my maximum take-home pay was tied to the take-home pay of the lowest-paid Americans, I would have paid attention to their plight and tried to make their lives better if for no reason other than to make my own life better.  It all comes down to the incentives and the compensation plans.  Especially for the rich.

To that end, I’m proposing a legislative action I call 100:1.  No one in America can take home more than one hundred times the pay that anyone else in America is taking home.  Conversely, no American will ever take home less than one hundredth of the pay that the highest paid Americans are taking home.  Suddenly, Wall Street hedge-fund managers will be concerned about the struggle of single moms working three jobs to survive.  If you improve the plight of those struggling moms, you improve your own.  Combine that with my other four legislative actions and we can make America the “land of opportunity” that it used to be for ALL of US.  And maybe, we can even save the entire planet from becoming uninhabitable for our great grandchildren.    

Can ideologies be defeated with rifles?

John Kerry recently wrote a much needed piece in the New York Times about how all countries must come together to fight ISIS - the Islamic State in Iraq and Syria (who changes their name every few months - previously ISIL, now just IS).  

I say this piece is “much needed” because these bad-boys DO need to be crushed.  But crushing them today is just part of the fix. ISIS is just the most recent physical incarnation of an ideology that has existed for a few hundred years. An ideology that continues to rise from the dead as this article explains.

Our military is really good at killing thousands of people, as our adventures in Iraq and Afghanistan over the last decades have shown.  We’re even really good at destroying governments.  But we really suck at defeating ideologies.

To someone with a hammer, every problem looks like it needs hammering.  To the country with the most advanced military in history, everything looks like it needs a military solution.  Yes, bullets and bombs are very effective at killing today’s “enemies”.  But bullets and bombs will also create tomorrow’s enemies.  It’s time we recognized that until we offer a more attractive alternative for the bad-boys who are drawn to these extremist ideologies, new bad-boys will always take-up arms against us.

Think about it.  Osama Bin Laden would have been unable to get anything accomplished if he couldn’t find foot-soldiers to join his movement.  The leaders of ISIS would still be a bunch of angry men looking for jobs if they couldn’t find foot-soldiers to join their movement.  The majority of people who join these movements, whose participation will mostly likely end in their deaths, are young men seeking meaning in their lives.  These are young men who have no more life-fulfilling options available to them than dying for a cause.  

The New York Times also published a very good opinion article a couple weeks ago by Ross Douthat.

He says, “We may crush them militarily, kill and scatter their adherents, but variations on Al Qaeda and ISIS will probably persist as long as liberalism does.”  While I agree with his overall argument that Islamic extremists will exist for a very long time, the point Ross is missing is that it’s not “liberalism” that continues to feed these ideologies with willing adherents.  It’s the fact that the foot-soldiers drawn to these ideologies have no better alternatives for living a meaningful life.  

However fucked-up ISIS may be in other ways, at least it is doing exactly what it says it will do, and doing it very quickly with no bureaucracy involved. To young men, that clarity of message and clear action shines through the fog of testosterone like a laser.  And it’s young men who join these movements and bring down civilizations.

Every action in the world boils down to convincing enough individuals to do something they hadn’t previously considered doing.  Jihadists are not a homogenous group of people born ready to die for their cause.  They are populated with a fringe group of young men with too much testosterone, dissatisfied with their current lives and future prospects, and willing to make the necessary life changes to be part of something that makes them feel like their lives matter in an historical perspective.  They are willing to die for something they think is right.  These are boys who could change the world for the better if someone showed them how.  But western civilization is only showing them how they don’t want to live.

Another recent article in the New York Times discusses the social media marketing ISIS is performing, aimed at recruiting westerners to their cause.

“A British fighter identified as Brother Abu Bara al-Hindi poses the call to jihad as a test for comfortable Westerners. “Are you willing to sacrifice the fat job you’ve got, the big car, the family?” he asks. Despite such luxuries, he says, “Living in the West, I know how you feel — in the heart you feel depressed.” The Prophet Muhammad, he declares, said, “The cure for depression is jihad.””

For many of us, the western consumer-focused materialistic way of life doesn’t exactly provide for a fulfilling life - in our hearts we feel depressed.  We’re all just trying to live a comfortable life - collecting a paycheck, getting married, making some kids, getting some stuff to fill our homes, staying entertained with whatever Hollywood comes up with, making a weekly visit to the Olive Garden, hoping no one gets cancer and we don't lose our jobs.  With enough alcohol, weed, or prescription drugs most of us are able to suppress the underlying frustration that we’re wasting our lives, just long-enough to make it to the grave without going postal.  

ISIS has a point.  Wouldn’t it be nice to be part of something larger than yourself?   To feel that your life mattered beyond just procreating?

I contend that American society, and to a lesser degree all “western” society has helped create Islamic extremism by instead of being the guiding light of freedom and justice that people everywhere seek, we have become the guiding light of wealth inequality, and duplicity.  All our formative documents talk about “liberty and justice for ALL”, but everyone in our society knows that with enough money and influence, liberty and justice can be bought (and taken away from others).  Consequently, with no society on earth shining the light, disaffected young men find the clarity, simplicity, and promise of an Islamist caliphate as the most attractive alternative.

This American experiment of ours started out so hopefully 238 years ago.  And after World War II it truly was the guiding light of the world (at least for white people).  Unfortunately, the greed inherent in all humans has redirected America from being “by the people, for the people” to “by the people, for the winners of capitalism with the most money.”

I’m willing to bet that if we aligned our walk with our talk - if we made “liberty and justice for all” a reality for ALL of us, instead of just words - fewer disaffected young men around the world would be so eager to die for radical Islamism.

Aligning our talk with our walk is exactly what my five legislative actions are intended to do.  It wouldn't happen right away, but within a generation America could become that guiding light of liberty and justice for ALL of us.  Maybe then, bad-boys all over the planet will use America as the example for the type of country their revolutions should become.  

 

Tire blow-outs and the Job Guarantee program

I had a blow-out on Monday.  I was near Spartanburg pulling the heaviest load I’ve ever had - 54,000 pounds.  I’m rarely over 40,000 pounds (the legal limit without a special permit) and usually much less than that.  I think my previous high was just 45,000 pounds.  If a typical car weighs 3,000 pounds, imagine that I was carrying a load of eighteen cars, in much less space.  All together, my rig weighed more than 90,000 pounds - the weight of 30 cars.  Ya, pretty scary.  And believe me, that rig handles much more sloppily at that weight than it does at a normal weight.  No room for mistakes.

Blow-outs are like their name - loud - like a shotgun blast ten feet behind me followed by shaking and pieces of tire flying all over the road (as viewed from my two mirrors).   I was hoping it was a problematic tire that lost a bit of tread a couple months ago and has since become unbalanced and vibrates the entire truck.  Unfortunately, it was one of a set of two new tires I bought just a month ago.  Shit happens.  

On Google maps I found a truck repair shop about ten miles up “the 85” (For reasons I don’t understand, truckers always call every road “THE” and then the road number.  Instead of saying “north on I-26” they’ll say “up the 26”.  I’ve spoken with enough professional truckers - I’m just a tourist here - that I can do a pretty good impersonation and could probably pull-off a very entertaining ten minute stand-up routine about truckers.)  

I called the shop.  He asked what size tires.  I have no clue.  A detail I don’t care to learn.  Tourist, remember?  He says “we probably have some.  Come on by."  

If you ever wondered why trucks have tires in sets of two, this is why.  One of my set of two tires blew out, but the one next to it was still OK.  So I could easily drive a couple dozen miles at relatively slow speed - 45 or so - to the shop to have it repaired.  

I got to the exit at Cowpens, South Carolina.  (There’s an historic revolutionary war battlefield in this town.  It’s very pretty rolling farm country up here, but I can’t imagine giving my life to defend it.)  I spotted the shop - the typical country truck repair shop with a steel building behind a big yard filled with a dozen or more trucks in various states of (dis)repair.  

I met the owner, a well-worn but fit-looking man of about 60.  He said his dad worked in the motor pool in the Army and then at the local Freightliner dealer while he was growing up.  He’d been around trucks since he could walk so it was natural for him to get into the truck repair business.  He’s had this little company for forty years.  

While he fixes the occasional highway breakdown on The 85 (like me), his bread and butter is the maintenance and repair of about two hundred trucks from a couple dozen local businesses.  Including mine, there were four trucks in the shop being worked on.  Mine was the only tire repair.  I saw a wide variety of diesel engines in various stages of disassembly.  He said the business grew from just him and a helper to the seven guys he now employs.  

After about an hour, and four hundred dollars later, I had two new (used) tires (the other of the set was delaminating and none of us trusted it), and was on my way. But I couldn’t help but think about how my five legislative actions might impact this guy’s truck repair business.

I didn’t ask, but I’m pretty sure the owner of that truck repair shop is probably not paying all of his seven guys $15/hour or more and paying for their health insurance.   If the Federal Job Guarantee program were implemented, anyone in Cowpens, South Carolina who wanted a job, and could keep the job, could have a job in a local non-profit which would probably pay them $15 an hour, and pay for their health insurance.  So the owner of this truck repair shop might have to increase the lowest wages he’s paying to match that, AND provide health insurance for all his employees.  Maybe not.  Maybe some guys like working on trucks enough that they’d accept lower pay.  Maybe.

Would having to possibly increase the pay for all his employees and pay for their health insurance break his business?  I don’t think so.  Worst case he’d raise the prices on his labor charges a little bit.  Instead of paying $400 I would have paid $450.  

Could the businesses of the trucks he’s maintaining afford to pay more?  Probably.  Worst case THEY would raise their prices a little bit to compensate for their increased truck repair costs.  

So worst case, every business in Cowpens, South Carolina raises the prices of their products and services a few percentage points to compensate for the added costs of attracting people away from the Job Guarantee program (when they need them) and paying for health insurance for their employees.  Within a year of implementation of the Job Guarantee program, prices and employee pay will probably have settled at a new higher level, and life will continue.  

But consider that at that new higher level of prices and pay, more people will be participating in the economy.  If Cowpens is like most towns in South Carolina, the official unemployment rate is something below 10%.  But the number of people who have dropped out of the formal economy might be closer to 20%.  With a population of 2,162, would 400 people suddenly seek employment with the job guarantee program?  If so, and if enough non-profits could be formed and funded, imagine what an extra $12.5 million into the economy every year would do for little Cowpens.  (That’s $15/hour times 40 hours a week times 52 weeks a year times 400 people).

That much more money in the local economy would require local businesses servicing those people to hire more employees to handle the increase in sales - more rent being paid, more cars being bought, more car insurance being paid, more fuel being purchased, more groceries being bought, more housewares being bought, etc.  That additional $12M into Cowpens every year could trigger an economic boom. 

With the Job Guarantee program, everyone who wants to work, and can keep a job, will have a job.  So if businesses are looking for new people to hire to handle an increase in sales, those new employees will have to be hired OUT-OF the Job Guarantee program, and probably at a wage higher than what is paid within the Job Guarantee program - exactly what the program is designed to do.  Fortunately for the businesses looking for new employees, people in the program, instead of being “stale” long-term unemployed people, will be “fresh” and updated and ready to work in private industry.  In fact private industry will seek out the best people in the Job Guarantee program for exactly those reasons.  

The Job Guarantee program will become the “buffer stock” of new employees for private industry.  When the economy is running hot, there may be very few people in the Job Guaranteed program, instead everyone will be employed by private industry.  When the economy is running cold, there may be lots of people in the program as private companies lay people off.  With the Job Guarantee program, getting laid-off won’t be the life and wealth destroying experience it can be today.  In fact, if people manage their finances well, cycling through the Job Guarantee program every few years might be a nice change and an opportunity to make career and life changes without risking everything you’d previously worked for.  Also because of the Job Guarantee program, businesses facing normal business-cycle downturns, finding themselves needing to reduce their payroll, won't have to feel so bad about laying people off, knowing they'll still be making a decent wage in the program.

I don’t know what the crime rate is in Cowpens, but I’d be willing to bet that if everyone who wanted a job had a job, there would be a lot less crime.  Fewer domestic disputes.  Fewer robberies.  Less vandalism.  When everyone has enough dollars to pay for a decent living, and doesn’t have to be concerned about losing everything they have from a job loss or a medical emergency, America will be a much more relaxed place.

The creation of the Federal Job Guarantee program will definitely have a long-term positive impact on our society.  For previously unemployed people it will have an immediate positive impact.  For small business owners in marginally profitable businesses, it might have an immediate short-term negative impact by requiring the owners to improve their employee compensation packages.  But for America as a whole, the Job Guarantee program will increase the quality of life for people who need it the most, it will increase the number of customers with money to spend, and it will provide a social safety-net for everyone who wants to work.  If implemented in combination with the other four of my other five legislative actions, America could be a much better place to live a decade from now.  

Are the rich different? I was.

I saw a video recently of a small social experiment.  A young man with a British accent is in a pizza restaurant asking people if they will give him a piece of their pizza, “I’m hungry”, he says, but no one gives him any pizza.  In the next scene, a homeless old man on the street is given an entire pizza in a box.  Minutes later, the same hungry young Brit asks the old man for a piece of pizza and the homeless guy says “help yourself”.  The conclusion the creators of the experiment are implying is that “rich” people aren’t as generous as poor people. 

A friend of mine suggested this was a sort-of apples and oranges comparison – people in a restaurant buying their pizza compared to a guy on the street given a pizza.  Certainly the test would have been better if wealthy people sitting in a park or on a beach had been given a pizza and then the hungry young Brit approached them. Perhaps the homeless guy was willing to give pizza away because he didn’t pay for it, or earn it, or maybe he’s just not hungry.  Yes, scientifically, a better experiment could be concocted. 

However, numerous other social experiments have been performed comparing the empathy and compassion of rich people versus poor people.  The most interesting are those from Paul Piff of Berkeley college.  Piff had dozens of people play a rigged game of Monopoly, that all the players knew was rigged to give a chosen player an unfair advantage of more money, more winnings, more turns, etc.  Despite the fact that the one chosen player knew they had an unfair advantage, after playing just minutes, the designated winners “felt” privileged and entitled. It was evident in their body language and mannerisms and they all reported the feelings afterwards.  It seems we humans are hard-wired to rationalize good-fortune not as simply good-fortune or a game rigged in our favor, but as something earned and deserved

My good fortune over the past decade was to experience a long string of bad fortune.  At the pinnacle of a twenty five year career in a variety of high-tech industries, in 2006 I earned $180,000.  That year capped almost a decade of six-figure incomes, with dozens of weeks of international travel in Europe, Asia, and South America every year, and the completion of a custom-designed and built home on the seacoast of New Hampshire.  Four years later, by the end of 2010, I was living out of my car, homeless, jobless and soon to be divorced.  In a few years I’d gone from the top few percent of American earners to the bottom few percent of American earners.  Since 2010 I’ve earned less than $25,000 a year primarily driving trucks around the country. While I’ve usually had a safe place to sleep every night, most often thanks to friends and lovers, I’ve essentially been “homeless” these past four years.  I just moved onto a tiny houseboat I’ve built which is starting to feel like a home.

While $25,000 a year is double the official US poverty level for a single person, I challenge anyone to live comfortably in America on less than $500 a week.  I’m living in poverty.  100 million of our fellow Americans are also living in poverty – meager paycheck to meager paycheck.  We’re all just one minor catastrophe – a broken-down car, a sick kid, a lost job, an eviction notice, God-forbid a serious illness – away from complete financial collapse.

I say I’ve been fortunate to have gone through that range of incomes and living situations because of what I’ve learned here on my tour through poverty in America.  I’ve learned how a third of Americans must every week decide between paying the bills or eating.  I’ve learned what it’s like to buy the ten ounce jug of laundry detergent for three bucks instead of the 20 ounce jug for just a buck more, simply because I don’t have the buck more.  I’ve learned what it’s like to eat peanut butter and jelly sandwiches for the main course of my meals for the last two days of the week until my next paycheck.  Many weeks when I buy groceries in the last few days of the week, I’m down to spare change, enough for some lettuce, a single tomato, an onion and a cheap loaf of bread.  Thankfully I’ve become “mostly” a vegetarian which makes food purchases a lot less expensive (and easier to prepare). 

After living like this for the past few years, now when my bank account approaches zero and often goes negative, I no longer freak out.  Instead I often laugh, confident knowing that at least in a couple days it will have a few hundred bucks in it again.  In the meanwhile I have enough peanut butter, and enough gas in the car to get me back and forth from work.  I just wish that big bottle of cheap wine I bought last week hadn’t already run out.

For me, this is an education and a bit of an adventure.  I “think” I’ll eventually get back into some enterprise (maybe Congress?) that will provide me with more than a few hundred bucks a week. I “think” I’m a tourist to poverty.  But for most of the people I’ve met here in poverty, a few hundred bucks a week is all they will ever see unless they win the lottery.  I can’t imagine the stress people with kids must feel going through this same life.

Lots of people who have never been in poverty and some who climbed out, helpfully suggest that a good education would lift all those people (and me) out of poverty.  While that certainly would have been true for me – had I earned an MBA fifteen years ago, I’d probably still be employed and pulling in well over $200k a year in some (stupid but comfortable) high-tech job.  But for a large segment of the population – a mostly forgotten and ignored segment of the population – getting a good education is not a possibility, even if they could pay for it.  I’ll give you an example of why.

In the first week of 2011, while sleeping on my nephew’s couch, I attended truck driving school in Salt Lake City.  The school starts every week, all year round and continues for four weeks before the graduating students become “apprentice drivers” and head out on the road with a (slightly) more experienced driver for three months.  Nearly every week, all year long, each class starts with more than sixty students.  Mine started with ninety three students.  By the end of the four weeks, less than twenty people in my class graduated with their commercial truck driving license (CDL) – a more than 75% attrition rate!  75% was the average attrition rate all year round.

Truck driving requires good hand-eye coordination, patience, cool-headedness, spatial-reasoning, forethought and planning, and concentration.  After three weeks of daily driving practice, about a quarter of the students were not able to pass the driving tests that require the use or development of all those abilities.  I suppose that’s understandable – many of those abilities are native or would take a lot of practice to acquire.  What surprised me more was that about half the students didn’t pass the written tests. 

Truck driving school is not academically difficult but there are about two hundred new facts, rules, and laws to learn and remember and be tested on.  In my class, about fifty people ranging in age from twenty three (the minimum age to get a CDL) to mid-sixties, simply couldn’t do that academic part well enough to pass the tests. Some of the guys who flunked out were nearly illiterate.  Many others were just plain not able to understand and remember two hundred new pieces of data in just a few weeks.  

Back in 1979 I went to Vermont Technical College and recall sitting in a classroom the first day of school while a professor told us to look at the people sitting around us.  “Half the people in this room won’t be here next semester.” Sure enough, we had about a 50% attrition rate in the Electrical Engineering program.  Some of those people switched to easier subjects (I should have switched to mechanical engineering), but most of them just couldn’t handle the academic part of college. Which means they simply couldn’t learn enough facts and concepts in the required time.

It’s something we don’t talk about in polite company, but after attending trucking school I thought about it a lot – intelligence.  Today “we” (the people with enough focus to have gotten all the way through the 1400 previous words) tend to use the term “education level” in place of “intelligence”.  But my experience at Vermont Tech and in trucking school introduced me to a lot of people who just plain aren’t that bright – at least not in reading and writing and ‘rithmetic – the usual ways we consider intelligence. 

While somewhat controversial, the “Intelligence Quotient – IQ” – is a measure of problem-solving skills and learning abilities across the breadth of a population. Yes, there are many types of “intelligence”, as I will argue below, beyond what the IQ test can measure.  But the standard IQ test is a pretty good test of learning ability via language and symbols.  As with any sample of any characteristic of any population, IQs across a population graph-out as a bell curve.  By definition, an IQ of 100 is at the top of the bell curve – the median intelligence in the population.  So by definition, half the people in any population have an IQ below 100 and half above 100.  I don’t know the IQs of the people who started in my classes at Vermont Tech and at trucking school, but I know the breadth of IQs in the classroom was broader at the beginning of the class than it was at the end.  Some of the people I really liked flunked out of both those schools.  Nice people. Fun people.  But people who were not able to learn the required amount of data in the required time. 

Hmmm.  Have we determined that intelligence has a time component?  Is quick-thinking more highly valued than correct-thinking? Hmmm.  Is this a fundamental problem of our society?

Most of us (who’ve been able to focus long enough to get through the previous 1700 words), just don’t associate with people with IQs on the left side of the bell curve – below 100.  If you’ve made it through college, chances are very good you’re on the right side of the bell curve.  If you’re a “professional” of some sort, you’re probably well down the right side of the bell curve, well above an IQ of 100.  My experience is that people from opposite sides of the bell-curve rarely interact - which is why it’s been so enlightening for me to spend so much time with people on the left-side of the IQ bell-curve over the past few years. 

In the last decade the concept of “multiple intelligences” has arisen and I have to agree that while many people are not good at “readin’ and writin’ and ‘rithmetic”  (or is it that they just weren’t given enough time to excel at those skills before being labeled “dumb” and got so frustrated that they gave up?) they can still be geniuses at other things.  Nearly everybody I’ve ever met has their specific area of specialization – whether they can graduate from trucking school, or college, or neither.  

Yes, some percentage of people have “learning disabilities” – dyslexia, etc. – but I suspect most of the people who didn’t make it through the first semester of college or the first month of trucking school didn’t have “disabilities”.  They simply couldn’t learn new materials quickly enough to stay in the program.   Given an extra month of effort, would the trucking school be able to graduate half the class instead of just a quarter?

When I was in college I would hitchhike nearly every week the sixty miles from my parent’s house to the college, and back.  Being in the car with a stranger for an hour teaches you pretty quickly how to ask lots of questions and get pretty deep into the conversation pretty quickly. I’d get rides with some very unusual people, some of them a little scary.  But I discovered that no matter what their intelligence level, or how weird or scary they were, I could eventually find their area of expertise and their passion.

When I was driving big-rigs across the country in 2011, my hobby was visiting micro-breweries which I would try to find and visit every night.  I had hundreds of conversations with people in micro-breweries, pubs, park benches, and truck stops and found the same thing.  No matter their intelligence level, everyone had some area of expertise well outside of mine.  More importantly, they had something they were passionate about.  

In my tour through American poverty I’ve met plenty of . . .  what’s a kind term for not-so-bright people?  My experience is that most people I’ve met all over the world are “nice”, helpful, and friendly, regardless of intelligence level.  So I don’t want to disrespect anyone for an accident of birth – which is what I think native intelligence is.   I’ve also met plenty of “successful” not-so-bright people.  Successful either financially, or in the expertise required for their careers, or in their collection of a large social circle.  Many not-so-bright people I’ve met have had multiple types of success, despite not being able to carry on a discussion about anything more than last-night’s football game.  Which leads me to think that anyone can learn how to get along in society and be “successful” one way or another – given enough time to learn.

Hmmm.  I seem to be working into a stance against standardized testing in our public schools. Good topic for another exploration.  

Fifteen years ago I was a more typical rich-guy, blaming not-so-bright people for not being able to get a decent job and looking down on them as inferior to me. Today I don’t blame people for their accidents of birth and I don’t de-value anyone.  Today I don’t blame the victims of an educational system that doesn’t give everyone enough time to learn.  Today I don’t blame people for being discarded from their chosen industries after twenty years of increasing income. 

What I do blame is this “system” we’ve developed over the past fifty years that increasingly has favored the natively intelligent, the people of European descent, and the already wealthy.  Today I blame the rules by which our current game of capitalism is being played. Rules that in the name of “fiscal responsibility” don’t provide enough dollars to circulate all the way down to the bottom of our economy, while allowing obscene numbers of dollars to concentrate at the top of our economy.

A visit to "the prettiest town in Dixie".

I was in Cheraw, South Carolina on Monday.  Cheraw is up near the North Carolina border, on the edge of the Great Pee Dee river.  There’s a fabric weaving company up there to which I brought a big thirty-foot long machine shipped from Germany.  Two of my fellow drivers brought the other parts of the machine earlier in the day.  Unfortunately for all three of us, the biggest part of the machine was so heavy that in transport it ended up breaking through the floor of the container it was loaded into.  I arrived at 1pm and they’d been struggling to get that heavy thirty-foot-long piece out of the container all day. 

Coincidentally, a couple of the guys waiting for the machine to get off the truck were the same guys I met a few months ago in Anderson, South Carolina, near Greenville, who were waiting for a similar machine I was delivering for a company that was going to start weaving carbon fiber fabric.  It turns out these two guys work for the German company that makes the weaving machines.  Their job is to reassemble the machines after they come off the truck.  One of the guys is from Germany.  The other is a young American kid.  They told me it was going to be at least another two hours before they’d get to my truck.  So I headed off to have lunch, and write most of this. 

I walked through downtown Cheraw looking for an open restaurant and finally found one.  Cute town, named “the prettiest town in Dixie” by some PR genius a few decades ago.  It seems like Cheraw’s heyday was back in the 50’s, as is true for so many towns in America.  It’s the classic one and two-story brick-building store-front downtown, lined with shops.  Looks like they had some money for downtown revitalization in the last twenty years as all the curbs are new and wheelchair accessible.  Unfortunately, as I’ve seen all over America in the hundreds of little towns I’ve visited over the past few years, the majority of the shops are vacant and for rent or sale.  The few shops still in business are always advertising sales – “Christmas in July Sale” I saw here – trying anything to get people to come back in.  It’s so sad. 

Surrounding the downtown section of town is a collection of Craftsman, Colonial, and Georgian-style houses, mostly well maintained with nice landscaping.  Old houses always make me a little nostalgic for small-town American life.  But I’ve been there, I’ve done that, and I don’t see how I’d ever go back.  But it’s still such a comforting dream.  Further out from the downtown residential area are the strip malls from the seventies, now also mostly vacant except for a bunch of paycheck advance, and “Financial Services” companies milking money out of the poor.  And further out from them are the blight of generic American consumerism – McDonalds, Burger King, Subway, Pizza Hut, KFC, AutoZone, CVS, Walgreens, Exxon,  BP, Kangaroo, Dollar General, and WalMart. 

Robert Reich, labor secretary in the Clinton administration and creator of the movie “Inequality for All”,  would say it’s no wonder that the heyday of these small American towns was those twenty-something years after World War II, when America was more “equal” than any other time before or since.  (Well, more “equal” if you were white.  America certainly had other problems, but a stagnant economy wasn’t one of them.)  Personal income tax levels as high as 90% during those years ensured that wealth could not concentrate in the hands of a few people.  The American middle-class truly was leading the world, when the modest salary of a high-school janitor, or the meager income from running a small radio and TV repair shop was enough to provide for a comfortable life – as my great uncle and my grandfather were both able to do. 

But I’m not convinced that what made America such a comfortable place to live in those decades after WWII was solely a tax policy keeping people from becoming obscenely wealthy.  Especially since the federal government had no way to spread those collected tax dollars out to little communities like Cheraw.   I think the key to the economic boom of those post war years was where people invested the dollars they saved.  In those twenty years, thousands of individual local banks collected saved dollars and loaned dollars out to local businesses and individuals – people they personally knew in the community.  Few people owned stocks or bonds so most dollars “invested” stayed within the local community in which they were earned, to then be redistributed to other members of the community for other business opportunities. 

Knowing my interest in economics and federal monetary policy, a few months ago a friend sent me what was supposed to be a joke about our monetary system, but that I think is an excellent demonstration of what dollars are – just an exchange mechanism for credits and debits.  Here’s the joke.

 A West Texas town suffering from climate change induced drought, (I just added the climate change stuff for fun.  I’ve been in West Texas plenty the last few years and it IS suffering from climate change. Those poor people are running out of water and there’s no way around it.), is visited one evening by a city-slicker from Dallas on his way west.  He slaps a hundred dollar bill down on the front desk of the only hotel still operating in town and says to the manager – “I’m gonna go check a few of your rooms and see if they’re up to my standards”.  As the city slicker heads up the elevator, the manager grabs the hundred dollar bill and runs next door to the only remaining bar in town and pays a hundred dollars off his tab.  The bar manager grabs the hundred dollar bill and runs down the street to the liquor distributor and pays part of HIS tab.  The liquor distributor hands the hundred dollar bill to his truck driver to make up for some of his back pay.  The truck driver runs over to the grocery store to pay for last week’s groceries. The grocery store owner runs over to the local prostitute and gives her the hundred dollars for services rendered.  And the prostitute calmly walks across the street to the hotel and places the hundred dollar bill on the counter to pay for the room rentals she’s accrued.  Just then, the elevator dings and the Dallas city-slicker steps out, grabs his hundred dollar bill and walks out of the hotel saying “these rooms don’t meet my standards.”

An economy is simply the exchange of services and goods.  Dollars are simply the mechanism for keeping track of those exchanges.  Towns like Cheraw have similar financial relationships to that West Texas town. Unfortunately, most people and businesses today won’t extend “credit” – instead requiring dollars in payment at the time of purchase.  Cheraw isn’t suffering from a lack of opportunity for commerce.  I’m sure plenty of people in Cheraw are willing to buy and sell things.  Unfortunately a large percentage of Cheraw residents, and all of America is suffering from a lack of dollars in their local communities – the dollars required to make the buying and selling of things possible.

Unlike during the post-war economic boom, today, people with money to invest are presented with investment opportunities that don’t even include a “local” option.  Our saved dollars in banks, IRAs, 401ks, etc., are most likely invested in stocks and bonds and mutual funds from companies and municipalities nowhere near where we physically reside - eventually ending up in Wall Street banks and financial institutions.  In our quest for greater and greater investment returns, Wall Street has come up with riskier and crazier financial securities we can invest in. Where those dollars actually go, we don’t care as long as the returns are good.  That quest for maximum returns while ignoring our own communities is a serious problem and it’s destroying our country - especially our small towns.  

Is it any wonder that towns like Cheraw, or other American small towns are slowly dying from a lack of access to dollars when the vast bulk of investment dollars are locked up in the accounts of Wall Street banks and investment companies, and multi-national corporations?  What’s killing our small towns is not a lack of investment opportunities but a lack of dollars to fund those opportunities. 

I have the benefit of many hours of quiet thinking time every day as I drive the highways of the Southeast.  (In fact I think the lack of quiet thinking time for most Americans may be the most serious problem facing our society. Good topic for another essay.)  Lately I’ve been using those hours to test my five legislative actions against the realities I face as I visit companies and towns in the Southeast.  Visiting Cheraw confirms my thoughts that Local Community Mutual Funds (LCMFs) could enable towns like Cheraw to thrive once again.  The wealth in the Cheraw community was evident in the well-kept historic homes.  Unfortunately, most of that wealth is probably invested outside the community.  Probably most of that wealth is invested in Wall Street.  And more and more of those dollars are being sucked out of Cheraw every day. 

Think about it. With WalMart being the only big retail store in town, most of the dollars Cheraw residents are spending at WalMart to purchase necessities for their increasingly desperate lives are leaving Cheraw and finding their way into the billion-dollar bank accounts of the Walton family.  The same for necessities purchased at Walgreens, CVS, Dollar General, Exxon, KFC, McDonalds, etc.  All those companies pay debt-slave wages to their local workers and ship the profits back up to the corporate headquarters, most likely putting their earnings into – you guessed it – Wall Street financial institutions.  With so many dollars of Cheraw residents leaving town, how do dollars come INTO Cheraw?  Only through companies like the one I delivered to, able to produce something in Cheraw that is sold somewhere else, giving those “foreign” dollars earned to the local employees.  And Cheraw is fortunate to have a small state-funded college in town, a local Department of Transportation crew, and other state of South Carolina funded agencies. 

And yet, collectively, the wealthiest of the fifty five hundred Cheraw residents likely have a few hundred million dollars invested in stocks, bonds and mutual funds all based on Wall Street.  If the residents of Cheraw were incented to withdraw those funds and instead pool their investment in a Local Community Mutual Fund to be distributed as equity investments, loans and grants to local entrepreneurs, established businesses, non-profits and individuals, it’s quite possible that Cheraw could see a renaissance of entrepreneurialism and creativity.  Additionally, Cheraw could experience an increase in property values, a decrease in unemployment and poverty, and an increased quality of life for all Cheraw residents.  A hundred million dollar Local Community Mutual Fund, coupled with a “buy-local” campaign to keep more dollars from leaving the town, could make the difference between Cheraw continuing to die a slow death from dollar-drain, or Cheraw reviving into “the prettiest town in Dixie”.   I’d love to see that.   All across America.   

What’s the point of having a few million dollars in your retirement account if the town you’ve spent most of your life in, the town in which all your friends live, has become somewhere you no longer want to live?  Let’s invest our dollars where we live.  Buy local. Invest local.  A good quality of life involves more than just lots of money in the bank.    

Walking while black, then dying.

A few weeks ago, a young African-American man wearing a hoodie on a warm night, was stopped by a suspicious off-duty African-American Charleston police officer.  A few minutes later, that young man was dead. The police investigation ruled the death a suicide, saying he shot himself in the head with his own gun.

Yesterday I attended a “town meeting” hosted by the Charleston chapter of the NAACP inviting public comments about racial profiling. Numerous people stood up and told us about the ongoing and frequent stops and frisks they are subjected to by the Charleston police for nothing more suspicious than not being white.

I’m a fifty four year old blond and graying white guy and I've been stopped by the police just three times in my life. All three stops were for speeding in my car and they all happened within two months back in the late 90s when I lived in Salt Lake City.

I heard from a few young black guys last night and spoke with them afterwards who said they get stopped by the police three times EVERY WEEK!  I apologized to one guy and he said “don’t worry about it. It’s so common that we just don’t even think about it anymore.”  Yet this guy finally got "Veteran" license plates on his car (he'd done a tour through Iraq), in an effort to stop getting pulled over for "driving while black".  No charges have ever been filed.

Another guy said he made an illegal left turn into a gas station and got stopped, frisked, and cuffed by the cop from his neighborhood who he knows by name. He then had his life threatened by the police sergeant who was called to assist with the harassment.  No charges were filed.

My immediate thought is that this must be some southern racist hold-over from the past. I thought that police procedures and policies up north must be better. I spoke with a minister who’s lived in many places around the country, both north and south. He says it’s the same everywhere he’s lived but up north it’s not so much white against black, as rich against poor.

As an experienced “business-guy”, I immediately think this policy of stopping people for not being white MUST be effective at reducing crime or it couldn't possibly be sustained. Why would the police purposely disenfranchise and antagonize a large percentage of the population if they were not seeing a significant benefit from it? The question is, what's the benefit they’re seeing and who is receiving that benefit?

So what ARE the possible benefits of stopping and frisking and harassing numerous non-white people?

Is the benefit reduced crime rates? Are people who are about to commit crimes, or people who are about to sell illegal drugs, or people with unlicensed weapons, or people with stolen property regularly found through this policy? Is stopping and frisking actually catching criminals and taking them off the streets?  Serendipitously, the New York Times had an article about exactly this subject today.   

Have you seen the movie “Minority Report” starring Tom Cruise? It takes place sometime in the future when a number of “gifted” people are discovered who can foresee violent crimes which will occur in the near future. Perpetrators of the crimes are arrested before committing the crime. Is this where our society is hoping to end-up? Is that the kind of society we want to live in, where people are arrested for their thoughts, not their actions?  

Or is the benefit realized in keeping a large segment of our population in constant-enough fear so that they never even think of committing crimes? If so, has the crime rate gone down with this policy? Again, is it worth purposely disenfranchising and antagonizing a large percentage of the population for this reduced crime rate, if it is actually occurring?

Or is the benefit realized from having more bodies filling more for-profit prisons? America has the highest incarceration of any country in the world, any country in history. Almost one percent of our population is in prison or jail.  Almost ten percent of non-whites are locked-up. Is locking-up people for minor infractions actually a benefit to our society? Or is locking people up a detriment to our society - a waste of creativity and talent from which we will never recover?

I like to follow problems to their root-cause. If crime from non-whites really is such a problem that it IS effective to stop random non-whites on the streets and search them, perhaps it would be better if we discovered why those people are committing crimes. Given the choice between living a comfortable “normal” life, or a life of crime, why would anyone choose to put up with the stress of criminal activity?

I met a guy a couple years ago who has since become a very good friend. He’s funny, honest, open, thoughtful, loving and loyal. He told me that in the late 90’s he gradually found himself at the top of a large cocaine distribution business in Charleston. He had dozens of people working for him. He told me that one Tuesday night while his wife and kids were sleeping upstairs, he and his lieutenants were sitting around his kitchen table counting the weekly revenues – all cash – it totaled more than a million dollars. That’s when he got really nervous and realized he needed to find a way out of that life. Unfortunately, he was discovered and arrested before that happened. He said his arrest was a HUGE relief. He hadn't realized just how stressful his life as "drug lord" had been until it finally ended. He saw his eight years in prison as an opportunity to start his life over. I met him two weeks out of prison and he was more joyful than almost anyone I've ever met.

This is a guy with many talents – clearly management of small organizations being one of them. Yet as a poor black kid growing up in Charleston, he didn't have a lot of opportunities to earn the kind of living he wanted. Cocaine sales offered that opportunity.

What if we, our American society, offered every kid an opportunity to get a good start in our economy? What if every kid coming out of high school and college was guaranteed a good job whenever they wanted it? (If they could be professional enough to keep it). A good fulfilling job making a difference in the lives of people in their community. A job paying a living wage, and providing full health insurance. That’s exactly what the Job Guarantee program I’m proposing would do.

Would employing disenfranchised youth reduce crime more effectively than stopping and frisking every non-white once every few days?   I think it would.

Would guaranteeing a job to anyone who wants one be less expensive and more beneficial to our society than incarcerating almost one percent of our population?  I think so.  

Would having the federal government provide grants to local non-profit organizations employing otherwise unemployable people provide a net-benefit to our economy by giving more people more dollars to circulate to more businesses - helping improve the economy for ALL of us?   My study of economics tells me that is exactly what would happen.

Or are non-whites being harassed and incarcerated solely because some people - probably rich white people - are getting very rich off this policy? If so, I have a way to fix that too – let’s implement the 100:1 take-home pay range.

Let’s start the job guarantee program and see ALL our youth for what they really are – productive, creative Americans eager to have a fulfilling life by making a contribution to our society and advancing our civilization.

I met the singing man.

One night last week, on my way back home, I stopped at a local gas station to fill up two water jugs I keep in the car.  (A habit I acquired while living in the desert for two decades.)  A thin young black man in tattered clothing was leaning against the front of the gas station building. Once he saw my water jugs, he directed me to a short hose connected to a faucet on the side of the building which worked perfectly for filling the jugs.  He said he was the night clean-up guy at the gas station.  He looked to me like he was living on the streets. Since I had been so close to doing the same a few years ago, I’m always interested in the stories of people who are at that extreme end of the American economy.  If my car hadn’t been big enough to sleep in, and if my nephew hadn’t let me surf his couch for a few months, I could have been this guy. 

This guy says he ran away from an abusive career military father and has been a local in this neighborhood ever since.  He’s been sleeping under the I-26 overpass bridge, literally a stone’s throw away from this gas station, since 1996 when he was eighteen years old.  He was born the year I graduated from high school.  He’s two years older than my son. 

I asked where he bathed. With a wry smile he said “what’s that?” “When I occasionally get a shower, the water comes off me black. I’ve learned to wash my arm-pits and other parts so I don’t smell, and I use deodorant, and I wash my clothes every week. I don’t want to offend anyone.”  And he didn’t smell, even when I gave him a hug before I left.

He wanted me to know he is not like some of those other “ignorant niggas” from South Carolina because unlike them, he has lived many different places around the world while growing up and “knows how to work and talk with white people”.  (I’ve been getting hints over the last year that the cultural divide between South Carolina blacks and whites is wider than I can imagine.  This is another one of those hints.)  He said he got third place in a singing contest a couple years ago and some people call him “the singing man”.  He sometimes sings at weddings and parties.  Unfortunately he didn’t demonstrate his singing voice.  I would have sung harmony with him. 

From what I saw, here is a bright, articulate guy, hustling a few under-the-table, very part-time jobs, all paying well less than minimum wage.  And he’s being exploited.  Yes, he is certainly missing a few components that would allow him to be a “normal” employee, which is probably why he hasn’t been able to get a full-time job his entire adult life.  But honestly, which of us isn’t missing a few components?  Some of us are just better than others at covering those holes up, allowing us to win the job offers, and leaving poor bastards like the singing man living under highway overpasses.

I told him I’m running for Congress specifically to help people like him and all of us who aren’t multi-millionaires but are at the mercy of their whims. He asked what Congress does. “What’s their purpose?”  Hmmm.  Yes, he clearly wasn’t paying attention in high school civics class, but the child-like honesty of the question caught my attention.  How do I sum up what Congress is supposed to do in just a sentence?  I finally said, “Congress makes law to help people like you and me.  But lately they’ve been helping only rich people.”  He said he’d be happy to hand things out for me, or take surveys or collect signatures because he meets lots of people, so I gave him a stack of my Cherny-for-Congress business cards.

I couldn’t stop thinking about the singing man.  Why should some bright guy, though not well educated, who grew up with the handicap of being born into an abusive family, be cut out of the workforce, be cut out of achieving what he can dream, simply because of the situation he was born into?  Accidents of birth shouldn’t determine what people can achieve.  That isn’t the American dream.  No one should find that sleeping in a hole in the dirt under a highway overpass is their best option in life. 

My American dream is that the singing man, or anyone, regardless of their specific accidents of birth, regardless of what personality components they’re missing, can find their purpose in life and with some luck and plenty of effort, they can earn a decent living focusing on that purpose.  Unfortunately, the bar to cross to get a job in private industry is a bit too high for some people with too many missing components – too many handicaps from their accidents of birth. 

And frankly, there are more people than jobs – as a matter of federal policy based on faulty economic theories. So with our current game of capitalism, some people will always be unemployed. The headlines on July 4th said we now have only 6.1% unemployment. Yippee! That’s only twelve million people with no source of income.  As many people as the entire population of the New York City tri-state area, wondering how they’re going to make next month’s rent, afford gas to get to any possible job interviews, get food next week.  

The sad truth is that most of those people will struggle to reduce their living expenses, and scrape by with under-the-table exploitative jobs like the guy I met last night, never finding a full-time job providing a living wage.  They will live week to week, from one hustle to the next, and slowly die a miserable life.  With the current rules of this game of capitalism we’ve been playing, that’s just how it’s set-up. 

A guy I worked with at IBM in the early 2000’s got laid off just a few months ago.  He’s now in his late forties.  He’d been making over $100k annually for the past twenty years, has four kids, one in college, a big house in a nice neighborhood on the coast of Florida, and he can’t find any job anywhere in the country that will give him that kind of income again.  That’s the same situation I found myself in by the end of 2008.  I’m sad it’s still happening six years later, even with just a 6.1% unemployment rate. 

Past labor secretary and creator of the movie “Inequality For All”, Robert Reich says the majority of new jobs added to the economy since the great recession have been part-time jobs.  Employers simply aren’t hiring people for full-time work anymore, finding that keeping a collection of part-time workers lowers their costs (they don’t have to provide insurance), and keeps their workers eager for more hours, whenever they can get them. Exploitation. Our economic recovery since the great recession has been great for the one percent.  Not so great for the rest of us. 

How can we stop the exploitation?  How can we give people with too many missing components to ever work in private industry a chance to participate, to find their purpose and work at it, earning enough that they don’t have to live under a highway overpass?

That’s what the Job Guarantee program I’m proposing would do.  Anyone who wants a job, and can be professional enough to keep it, can get a job – guaranteed.  A job providing a minimum living wage, probably $15/hour plus full health care coverage, working at one of a number of local non-profit organizations doing good work in local communities.  While this program wouldn’t help my old IBM friend keep his house and six-figure lifestyle, it would keep future generations of IBM’ers from losing their houses.

Think about it.  If the kids currently getting out of college and facing dismal job prospects knew they could get a decent job at a published wage, no matter what, they might just limit their future expenses to little more than the wage provided by the guaranteed job program. So when they get thrown out of their career tracks in their late forties as I did, as my friend did, as millions of Americans have been, they would not be relying on their six-figure incomes to survive. Yes, it might take a couple generations before the majority of Americans stop living beyond their means, but eventually, job losses and career exits won’t be the financial losses and life destroying events they now are.  Instead our kids and their kids will see job changes as just another mild transition in life and as opportunities for new beginnings. 

Perhaps more importantly, the job guarantee program would set the bottom end of the salary range in America.  Who would flip burgers for eight bucks an hour of part-time work when they could do meaningful work helping other people for fifteen an hour, forty hours a week, with healthcare coverage?  Employers would have to step-up their game to entice and keep employees. 

Of course the first objection people have to this idea is, “won’t that increase the prices of hamburgers at McDonalds?” If the Job Guarantee program were implemented by itself, yes, most likely management and investors would require the same level of profits and would raise prices to get those profits.  However, coupled with the 100:1 take-home pay range, the executives and primary investors of McDonalds would no longer be able to take-home multi-million dollar salaries.  Add in the additional tax enticement for businesses that become sustainable and socially responsible by becoming B-Corps, and it’s likely more profits would remain inside the company, spent on the business, the facilities, the products, research and development, and most importantly on employees.  If every business found themselves with more operating cash, more happy and dedicated employees, improved facilities and better products, hamburger prices may well go down! 

Most importantly, the job guarantee program would ensure that the singing man could earn enough dollars to sleep somewhere other than under the highway overpass, and discover which of his many talents might be his purpose in life.  Multiply that by twelve million and America really would be the land of opportunity.  That's why I'm running for Congress.  

What if George W. had said this instead?

I read about Israeli Prime Minister Netanyahu’s vow to punish Hamas for the murder of those three Israeli teens found in the West Bank.  We know where this story leads.  Israel and the Palestinians have been playing this game of revenge for lifetimes, with no end in sight.  No end in sight that is, as long as they both continue to respond in the same ways. 

America is fortunate that we are rarely faced with situations calling for national vengeance.  But that got me thinking about the last big vengeance-provoking event we faced and how we might have brought about a much better future for everyone by responding in an unexpected way.  A response that I think would have been more appropriate for what many people claim is our “Christian Society”.

What if President George W. Bush had responded to the September 11th attacks with a speech like this?

In trying times, when faced with difficult decisions, I always first ask myself “what would Jesus do”?  We have been attacked on our own soil by angry people from the other side of the planet.  As I think Jesus would, I must ask – what have we done to make these people so angry that they would sacrifice their own lives in order to kill random Americans?  I ask myself, what would make me so angry at someone that I would sacrifice my life to kill other people?

Fortunately we have a clear list of complaints from the man who claims to have masterminded this terrible loss of life and immense destruction – Osama Bin Laden.  I must say that his complaints have some merit when viewed through the lens of someone who grew-up in an Arab Muslim culture, especially for a fundamentalist believer in Islam.  I can respect a man’s deeply held religious convictions – I have my own – but religious faith only begins to explain how he could recruit a dozen people to give their lives to perform this horrible action. 

I could only contemplate killing myself along with the people who limited my future options if I felt that my future looked so bleak that the uncertainty of heaven or hell seemed like a better option than the life laid out before me.  Those men who flew those planes must have felt so oppressed by American actions that they thought death was their best option. 

Whether real or imagined, such strong feelings require a response from America.  First, an apology to all the people in the Arab lands – I’m sorry for the oppression you feel from the American actions and inactions of the past.  We have behaved selfishly with little concern for you.  That will now change.

Starting today, we will begin a gradual withdrawal of all our military forces from all Arab countries so that within five years, no American soldier will be stationed on Middle East soil. 

I wish we could withdraw faster but it will take at least five years for us to no longer have any national interest in the Middle East – that is to say when we no longer care about Middle East oil.  Until America reduces its dependency on fossil-fuels, we must protect the flow of Middle East oil.  That is why today I am announcing a broad federal plan to invest heavily in renewable and carbon-neutral energy sources instead of fossil fuels, so we will no longer have any reliance on Middle East oil.  I have set 2011, ten years from today, as the last year America imports any oil from the Middle East.  In 2011 we will have also reduced by one-third the quantity of petroleum we use from ALL parts of the world and our own territories.  That number will grow to 50% by 2021, and grow again in another ten years – 2031 – to a 100% reduction – no petroleum oil will be used in America by 2031.

Thank you Mister Bin Laden for the wake-up call.  I’m very sorry we didn’t previously take seriously your concerns about American involvement in the Arab lands. However, you claimed responsibility for killing thousands of our people, and if we find your claim valid, you will be held responsible for those deaths. I hope you will turn yourself in peacefully and face trial for your actions.  If not, we will find you and bring you to trial.

Just imagine how the man on the street in the Middle East would have felt about this.  How instead of providing a focal point for the anger of millions of young Arab men with no better options for their lives, we would have turned their attention away from America and back onto their own oppressive governments.  Perhaps that awakening would have brought about an earlier or more effective Arab Spring.  Instead we put a generation of young Afghanis and Iraqis in a war zone, raising them on a violence-filled life ensuring that violence is all they know. If instead, America had responded to 9-11 “as Jesus would”, those millions of young people in the Arab world would now have little experience with war or violence, leaving the minority of angry fundamentalists with fewer and less interested recruits for violence and suicide.  If thirteen years of war in Iraq and Afghanistan have shown us one thing, it is that violence only brings about more violence. Responding to 9-11 with peace would have made the world a much better and safer place today for billions of people around the world.  Instead of being the target of anger for millions of disaffected youth in the Arab countries, America would now be a shining example of how a country should behave.  

The "Cherny Plan" to solve income inequality

In 2013, former secretary of labor Robert Reich released his movie “Inequality for All” which started the conversation of income and wealth inequality in America.  In early 2014 French economist Thomas Piketty published his book “Capital in the 21st century” which describes the culmination of many years of research into income and wealth inequality and his conclusion that capitalism inevitably and increasingly concentrates wealth in the hands of the already rich to the increasing detriment of the rest of us.  At the end of May 2014, the Nobel prize winning economist Joseph Stiglitz published a white paper describing his concerns about income and wealth inequality and providing recommendations for decreasing it.  Consensus in academic and intellectual circles is gathering around the idea that the game of capitalism we’ve been playing is working very well for the rich, but failing miserably for the rest of us.  

Does income and wealth inequality matter?  In early 2014 a team of researchers at the University of Maryland, partly funded by NASA, reported how they used a computer model to analyze a number of collapsed societies to determine the set of critical factors that lead to societal collapse.  What was most surprising about the paper was the identification of not just environmental or climactic destruction leading to societal collapse – factors described nearly a decade before in Jared Diamond’s book “Collapse” – but also that high levels of social inequality lead to societal collapse.  The paper states that most societal collapses were presaged by the splitting of society into primarily two societal divisions – rich people – the elite, and the rest of us – the commoners.

Today we live in an America in which just 1% of us own 40% of all the wealth of America.
The poorest 80% of us own just 7% of the nation’s wealth.  
Just 20% of us own 93% of the nation’s wealth.
The richest 1% of Americans take-home 24% of the national income.
In 1976 the richest 1% took home just 9% of the national income.
Since 2009, 95% of the economic recovery dollars have gone to that same 1%. 
Since 2009, the median real household income of Americans has declined by 4.4%. 

The historical data from the last few decades shows that while the rich get richer, the rest of us get poorer.  How much longer until America becomes the world depicted in “The Hunger Games” books and movies?  If we want American society to continue functioning for centuries into the future, so our grandchildren and their grandchildren have lives as good as or better than ours, income and wealth inequality matters more than any other threat we face. 

Unfortunately, none of the solutions offered by Piketty or Stiglitz seem to address the root-cause of our problem - how do we stop humans from dedicating their lives toward the accumulation of obscene amounts of money?  People living with fifty cats are considered mentally ill.  People with houses filled with decades of collected junk are considered mentally ill.  But people who own numerous houses, with bank accounts filled with millions or billions of dollars are considered not mentally-ill but “successful” mostly regardless of how those dollars were collected.  Our society helps people with mental illness and tries to keep them from hurting themselves and the rest of us.  Numerous studies have shown that a majority of people who collect and hoard millions and billions of dollars have highly sociopathic and psychopathic tendencies (think of Donald Trump). Clearly, their single-minded pursuit of dollars has hurt others (think of Wall Street’s recent bail-out).  Should our society continue to revere the obscenely rich, or should we help these poor sociopaths by controlling what they can do to the rest of us?

We are all born into a world ready-made for us. Unless history is examined, people think the way things are today is the way things have always been.  The historic record shows something much different.  Piketty’s work especially shows that for America, the best time to be either a business owner or an employee was when the American economy was growing faster than ever before or since, in the two decades after World War II.  In those years, American society was more financially equal than at any other time before or since.  Yes, America certainly had other social and racial inequality problems in the 40s, 50s, and 60s, but being able to join the middle class and provide a very comfortable life for a small family on a single salary, even as a high-school custodian – as my great uncle did – was entirely possible.  As Piketty’s work shows, in the ensuing sixty years until today, dollars have highly concentrated in the hands of the few with the most dollars – the inevitable result of running the game of capitalism undisturbed for a few generations. The same dollar concentration happened in America in the decades leading to the Great Depression.  It happened in France in the decades leading to the French Revolution. Extreme levels of income and wealth inequality will happen again and societies will collapse again, perhaps American society; as long as the majority of voters allow and encourage a minority of individuals to gather obscene numbers of dollars.   

How can we stop this psychotic quest for dollars?  By simply limiting the amount of dollars anyone can take home after taxes.  More importantly, by tying that maximum take-home pay limit to the minimum take-home pay limit.  We must implement not just a minimum wage, but essentially a maximum wage and clearly define the range between those two points.  I suggest 100:1 as the starting point for the conversation.    

100:1 take-home pay range.
Let’s link the financial success of the richest Americans to the financial success of the poorest Americans.  No American working full-time should take home less than 1% of what the richest Americans are taking home.  Conversely, no American should take home more than 100 times what the poorest Americans working full-time will take home. 

In practice, with today’s minimum wage of $7.25 an hour, the CEO of the Bank of America, or Morgan-Chase, or General Motors, or Google would take home just $1.5 million a year.  Raise the minimum wage to $15/hour and the maximum income level would rise to $3,120,000 per year.  Basketball star LeBron James, with an NBA income of $19M/year, would take home $3.12M/year.  So would Donald Trump.  And Bill Gates. And Warren Buffet.  Regardless of how much they had been paid or earned any other way.  Think about how people and employers would react to that limitation.

If at his current salary level of $19 million, LeBron James would pay $16M in federal taxes every year, both he and his team would probably decide that he should be paid considerably less than that, while still taking home the same amount of dollars, $3.12M every year. The end result for LeBron's team would be a considerably smaller payroll for both their players AND their owners and managers and investors.  Would that lead to lower ticket prices for NBA games?  Would it lead to more basketball teams forming in smaller cities?  Would it lead to smaller stadiums and arenas being built in more cities?  The bottom line, reducing the take-home pay of the people at the top of our capitalism pyramid would most likely lead to more innovation, more invention, a greater distribution of higher incomes across a wider swath of society (think of all the other kids who could now become NBA players with that many more teams) and much more investment at lower levels of the economy, helping ALL of us via a boom in capitalism.

I hear three objections to this plan – two from people who have never started or run their own business; the other from established business owners.  Some segment of American society has bought the myth that people only start businesses because of the possibility of unlimited riches. These people say that by creating a maximum take-home pay limit, entrepreneurs would no longer bother to start those businesses.  To this argument I say balderdash!  I’ve been in private industry for more than thirty years and started three of my own companies.  I’ve met dozens of entrepreneurs who have been much more financially successful than I’ve been, and I can assure you that the majority of those “job-creators” weren’t doing what they did solely for the potential riches.  Yes, earning a comfortable living is high on our list of priorities, but mostly we entrepreneurs are in it for the excitement of the game.  Win or lose, we’d still play.  A big pay-day is just a bonus, not the reason for the effort.

The other argument from the average American is that if we limit their take-home pay, the richest Americans will simply move overseas, taking their money with them.  A recent study showed that national tax rates have little to do with where the wealthy actually live and invest.  Instead they seek countries with the best standards of living – something America is falling behind on. 

Might these wealthy people then just cheat the system and hide their money?  I say let them show us exactly how little they care about the success of ALL Americans and become criminals in the eyes of the IRS. Instead of hiding in plain sight as the leaders of industry, sociopaths should be locked-up and kept from harming the rest of us.  

Local Community Mutual Funds
Established business owners are more concerned about the day twenty years from now when they sell their business.  What if the majority of that pay-day they’ve worked twenty years to achieve is all taken away in taxes?  For that reason, we would start a new type of investment security called a “Local Community Mutual Fund” (LCMF).  The LCMF would accept investment from people residing within a local community – city, county, region, or state – and distribute those funds to local businesses, organizations and individuals as equity investments, loans, and grants. 

LCMFs would have two goals – earn a return on their investor’s money, and improve the local community and economy. While LCMFs may only rarely earn double-digit returns, they would be tax-free, just as 401Ks and IRAs are.  So if LeBron James wanted to put a chunk of the rest of his $19million in one of his LCMFs, he could, without paying taxes on those earned dollars.

Much like the local banks of the early 20th century, LCMFs would exist solely to recycle the wealth from a community back into the same community. Unlike the local banks of the last century, LCMFs would be non-profit organizations and would never be subject to consolidation into larger national or international organizations with no interest in the local community.  Unlike investments in the stock market, LCMFs would not just enrich Wall Street banks or help some company halfway around the world, but would actually help local communities.  LCMFs would provide hundreds of millions of dollars previously locked up in Wall Street to local businesses, organizations and individuals all over the country from local investors with a personal interest in helping the local economy thrive.  LCMFs have the potential to start a renaissance of capitalism, innovation, creativity and invention in America. But a few more pieces of the puzzle must be in place before all that could start.

The Job Guarantee program.
First, Americans must not be afraid to risk everything on an entrepreneurial, inventive or creative venture. To eliminate that fear of failure and encourage people to take more risks with their educations, their careers and their lives, we must implement the job guarantee (JG) program.  The JG would provide a good job with a living wage and full health benefits to anyone who wants (and is able to keep) a job.

Federal job-guarantee funding in the form of grants for local community non-profit organizations would expand or contract as required to provide local jobs for local unemployed people. Anyone who wants a job paying what will essentially become the national minimum wage, would apply at their local unemployment office.  They would then be offered one of a number of jobs at one of a number of local non-profit organizations performing good and meaningful work in the local community. Think about how people and employers would react to this addition to the American social safety net.

First, recent high-school and college graduates would know that no matter what else happens, they could always get a good job at a nationally published wage. It may not be the kind of work one would prefer, nor in an area of anyone’s particular expertise (we can’t make these jobs TOO attractive), but it IS a fulfilling job nonetheless, providing needed services in the local community, and with full health benefits. In fact, many young people, or anybody of any age, may come up with ideas for new non-profit organizations and win job-guarantee grants from the program and begin putting other people to work. Any non-profit organization could apply for JG grants, but like any other grant-receiving organization, they must all show clear benefits to their community and progress toward their goal to continue receiving grants.

Young people who couldn’t find other jobs would likely see the job guarantee as the baseline income they could always rely upon. Hence when they finally do get a better paying job, they may likely keep their expenses at the level they know the job guarantee program could provide and no higher. That’s what I would have done. And knowing they could always fallback to the job guarantee program, they might be willing to take risks they wouldn’t have without that safety-net – risks such as moving across the country, or starting their own businesses, or joining small start-ups with little chance of eventual financial success but plenty of educational opportunities. 

Not just young people would benefit from the Job Guarantee program. Anyone at any age who loses their job could immediately jump into the job-guarantee program and continue getting health benefits and a minimum income while keeping their job skills fresh while continuing to look for other work, or perhaps developing their own entrepreneurial ideas. If every American kept their personal monthly expenses to a level no higher than the job guarantee program could provide, unemployment would no longer be a life and wealth destroying experience – as it was for me – but just another transition point in people’s lives. The Job Guarantee program would be the employee-buffer for the entire nation, providing a fresh and ready group of employees eager to move back into the private economy whenever it is ready to re-hire them.

Think about how this addition to the American social safety-net would affect the attitudes of both employees and employers.  First, business problems that employees are often too afraid to mention to their management today for fear of losing their jobs, would probably be talked about openly. If you knew you could always get a job in the job-guarantee program, would you speak-up about both injustices and potential business errors you see on the job?  Absolutely! The result would be better businesses, making both better employee-focused decisions AND business decisions.  How many businesses have failed because management had lost touch with their customers, while the regular employee could easily identify the problems about to bring the company down, months or years before it happened?  But no one dared speak-up for fear of reprisal. When every American knows that being fired doesn’t mean losing your house or going hungry, I can’t wait to see how employers will respond.

First, employers would have to respond by treating their employees better and paying them more than the job-guarantee program, just to keep them interested.  Also, employers would be much more likely to engage their employees more fully, expecting more than just mindless work from them and using them as actual business partners. When the inevitable business failures DO occur, company owners would likely be quicker to pull-the-plug knowing their employees would have the job-guarantee program to fallback upon – contributing to the creative destruction of capitalism at its best – fail-fast, fail-often.  And possibly, if management was simply incompetent, the employees, with investment from their Local Community Mutual Fund, could buy out management and make a go of the business themselves.  The end result for all of America would be better businesses with more engaged and involved employees and managers, all earning more money, and likely making more profits for the business. Additionally, employers would be happier to hire “fresh” workers directly out of the job-guarantee program, who may have just learned new skills or at least stayed up to date on their existing skills, rather than hiring “stale” workers who may have been unemployed for months or years.   

The national target income - $52k/year.
Businesses that focus more on their employees and pay them well should be rewarded for doing so with decreased taxes.  First, any employee making less than some amount a week – I suggest a thousand a week, $52,000 a year as the starting point for the conversation – should pay no federal tax – no income tax, no medicare, no social security – and their employer should also pay none of those taxes on their behalf.  Why are we penalizing both employers and employees for just barely making a comfortable living? Fifty-two thousand a year in earnings should become the national target income. Couples, both working, could take-home as much as $104,000 a year before they pay any taxes. Let’s set the target for America’s new and expanded middle-class at $1,000 per week.

Promote Benefits-Corporations.
Second, businesses that help their local communities and are certified as “sustainable” should pay reduced or no taxes.  Benefit-Corporations are a type of corporation that state in their formation documents that they will focus not just on profits, but on their people, their local communities, and the entire planet. Benefit-Corporations (B-Corps) are rated by an independent rating agency on their attainment of those statements and their overall sustainability.  The highest rating of 200 is given only to B-Corps that have, and maintain, completely sustainable business models and treat their employees very well.  B-Corps rated 200 should pay no federal income taxes.  Lower rated B-Corpos should pay higher corporate tax rates.  Non B-Corps would pay still higher taxes. 

Why should a company who is doing everything right for their employees, their communities, the environment, and the planet pay ANY taxes? That is behavior that should be rewarded, not penalized. Conversely, why do we not penalize with much higher taxes, any company which shortchanges their employees, screws their local communities, pollutes their environment, and helps to destroy the planet? Taxes are the best “stick” we have to discourage “bad” behavior, and encourage “good” behavior. Let’s use them.

Real-world evaluation.
So would this five-point action plan work in the real world?  Would all the companies that have provided us with the best technologies over the past few decades – Apple, Microsoft, Google, FaceBook – still exist if their founders and investors could have never taken home more than three million a year?  Absolutely.  None of the founders of those companies expected to make millions or billions of dollars and they would have done exactly the same thing if their maximum annual take-home pay had been limited.  In fact, they and their investors might have made some better, longer-term decisions given that limitation – decisions that would have brought in more profits more gradually.

Would General Electric, Boeing, Walmart, or Exxon/Mobil still have the same business models if they had to pay considerably higher taxes for their mistreatment of employees (Walmart), or their destruction of the planet (Exxon/Mobil)? Or would their investors demand these companies become 200-rated B-Corps to eliminate federal income taxes?

General Electric, like IBM, or Monsanto, has reached its current size primarily through acquisition of smaller companies in an effort to continue increasing revenues year over year to increase their stock price.  Without the need to continually show significantly increasing revenues, why acquire little companies that are more profitable on their own?  Investors and business owners both will probably be more satisfied with the continuing small but steady profits provided by smaller companies instead of the big pay-days involved in mergers and acquisitions. General Electric would probably spin-out numerous corporate divisions as individual and more innovative companies, dividing their stock and likely increasing the value of that combined stock for their investors.  Boeing would probably change their business model just a little as their options for spin-outs are limited and their need for consolidation is great.  However, they may show lower corporate profits as they find paying their employees better will provide higher returns to their investors when they become a B-Corp.  Walmart would clearly have to increase their employ compensation plans and decrease their owner’s profits.  It would be very interesting to see what the investors of Exxon/Mobil would demand. At this point, there is little reason other than inertia for Exxon/Mobil to continue mining fossil fuels and we might just see their investors demand they go completely sustainable and carbon-neutral with algae-based oil instead. 

In all companies, these five actions will likely initiate some changes – the 100:1 take-home pay range that links the financial success of the richest Americans with the poorest Americans; the Local Community Mutual Funds that shift dollars from Wall Street back into local communities around the country; the Job Guarantee program that reduces fear of failure or disaster by providing a job to anyone who wants a job; the national target wage of $52,000 per year which eliminates all federal taxes on the first $52,000 earned by any American;  and the support of B-Corps which use the power of capitalism to make America the best it can be.  Those changes will mostly reduce the concentration of corporate profits from the hands of a few people – the executives and investors – and leave more of those dollars within the company.  That increase in dollars within the company would probably be put back into research and development, higher employee wages, improved working conditions, and paying for the economic “externalities” which are currently passed-off on the rest of us, like employee healthcare and childcare, and production waste streams. 

In short, if we implement all five actions described above, all American businesses would be stronger and healthier, though probably smaller.  Companies would invest more of their income into long-term survival instead of short-term profits – into their people, their customers, their suppliers, their distribution networks, their communities, all their physical assets – and less into raw profits passing through to investors. With that transformation, companies would be internally stronger than they’d ever been, making them a better long-term investment, increasing the trading value of their shares on the market, but likely reducing their free cash available at the end of the year for investor dividends.  With most of their profits invested locally in their physical assets, and no one demanding short-term profit growth, local communities would no longer live in fear of the company picking up and leaving for overseas.  Because of that, fewer if any tax incentives would have to be granted to lure expanding companies to new locations.  Instead, an educated and skilled work force, in a town with good distribution channels and a high quality of life for their employees, would be the main criteria for relocation.

Implementation of these five actions, what I’m calling “The Cherny-Plan” until someone comes up with a better name, would lead to an America which would be a free-market capitalist’s dream come true.  That is, for everyone except the handful of people currently taking home more than a few million a year.  But many of those multi-millionaires also support cutting their maximum take-home pay with the argument “how much money do I need to live a comfortable life”?  For all those reasons, it’s time for America to implement the Cherny-Plan that together strengthens local communities and uses the power of capitalism and markets to improve the lives of EVERY American.  Let’s take our American democracy back from Wall Street and create an economy that works for ALL of us by implementing the Cherny-Plan. 

 

 

Is this a futile attempt?

Last week I spent a night in Beaufort, South Carolina.  It’s a lovely town on a bluff overlooking the marshes and estuary rivers which almost completely surround the downtown area.  Much like a smaller and slower, and undiscovered Charleston.  And it happens to be in the 1st Congressional District – my district.  I had a good conversation with a new friend, and as I’ve heard from so many people who support both what I’m saying and my run for congress, she was very skeptical that we can actually change anything in Washington or America.  “The arrogant bastards just have too much power.” 

I get so frustrated with that sort of statement.  And I hear it a lot.  In fact I’ve yet to meet anyone who thinks we CAN make our economy work for all of us.  So here’s my counter-argument in short - we outnumber the arrogant bastards three-to-one.  This is still a democracy.  Let’s make the changes we need before it’s too late. 

I hate to pit this argument as an “us versus them” situation, but elections really do boil down to just that.  So let me take a stab at who “them” may be.

Many people are uncomfortable with me specifically calling out “Wall Street”, primarily because most people are unsure of exactly what “Wall Street” is.  Of course I’m not referring to the actual street itself in lower Manhattan. I’m referring to the handful of ginormous banks, investment companies, insurance companies, and other private financial institutions which control the flow of the majority of US dollars – more than $30 trillion dollars – more than eight times the annual federal budget and almost twice as large as the federal “debt”.

Wall Street exists by collecting interest on loaned dollars and collecting transaction fees on stocks and bonds and other securities traded for dollars. You give them dollars, they give you a piece of paper which you hope sometime in the future some greater fool will buy from you for more than you paid for it.  Fifty seven percent of the 115 million American households have some money invested in Wall Street – 65 million households.  Of those, about a third have a considerable amount invested – only 23% of Americans or 26 million households have their savings and retirement tied up in the stocks and bonds offered by Wall Street. 

So let’s assume those 26 million American households – perhaps 52 million voting age Americans, will never agree with anything I’m saying for fear that their retirement savings will be negatively impacted - (which they won't, in fact the opposite is likely to happen).  That still leaves 77% of American households, perhaps 178 million of us of voting age who DON’T have much, if any money invested in Wall Street.  And because we 178 million are relying almost exclusively on our weekly wages to live, as a group, every year we are doing worse and worse as more money is raked in by Wall Street in the quest for more and more profits.  And every year more and more of that top 23% are forced to drop out of Wall Street and join the rest of us when they lose their jobs, drain their savings (taking all their money out of Wall Street), and end up living paycheck-to-paycheck like most Americans – again all in the quest for profits. 

As far as I know, we still live in a democracy where each person of voting age gets one vote.  Despite the now hundreds of millions spent by candidates to get elected, those dollars don’t buy votes in the general elections.  Just yesterday that point was proven by a Tea Party candidate in Virginia who with just $150,000 beat incumbent congressional majority leader Eric Cantor who’d spent more than $4 million to stay in office.

So let’s just vote the bums out.  We outnumber our wealthier fellow Americans three-to-one – 178 million of us to their 52 million.  So what’s the problem?  Why can’t we make the changes we need?

As I see it, there are two problems involved with making the changes our economy requires to make it work for all of us.

1.       The only people running for office are probably going to be just as bad as the ones we vote out of office.  If every candidate is no better than any other, I’ll agree that we may as well quit right now.  However, I offer myself as an example of a candidate who is nothing like any other candidate.  I’m not a career politician.  I have no interest in going to Washington to make lots of money.  I want to get in, get shit done, and get out.  I have better things to do with the rest of my life than argue with politicians.  Surely there are other people who feel as strongly as I do about our current economic situation and they too are willing to run for Congress in the coming years. Which is also why I decided to run for Congress.  Sometimes, even in failure, our actions inspire other people to take action.  If I get elected this year – great.  If not, perhaps my attempt will inspire other people like me who aren’t politicians, who don’t care about getting rich in Washington, and who can pick up my ideas and carry them forward at the next election in two years.  Even if none of those people get elected, just the fact that we’ve started the conversation may eventually move enough of the career politicians to make changes.  Every previous movement in America has required less than ten percent of the population to bring about sweeping legislative change.  We potentially have 178 million voting age Americans – 77% of us who could force the changes we need to make.  What are we waiting for?

2.       Up until yesterday, when just $150k beat $4M in Virginia, I was going to suggest that the 178 million of us voting age Americans who struggle to earn a living are too easily swayed by the very convincing political ads run on TV. Today I have hope that all Americans are not fooled by slick television commercials and can see past the hype to the candidates who really want to help make our economy work for all of us.

So is my run for Congress a Quixotic and ultimately futile attempt?  Am I asking people to support me in a ridiculous quest with no hope of making our society better for all of us?  I don’t think so, only because as long as we still have a democracy with one vote per person, we who are struggling in our economy outnumber by three-to-one those who are thriving in our economy.  Let’s vote in people who actually care about making a difference for ALL of us, not just the rich. 

Accidents of birth. The strength of America.

I recently watched a very good interview with Michael Lewis, author and former Wall Street trader, regarding the unusual message he neatly tucked within the Princeton commencement address he gave a few weeks ago.   Click here to watch it.  His point is something that's at the core of all the social justice work I've been doing and the reason I'm running for congress - luck and random chance have a lot to do with success and failure – as I’ve learned the hard way over the past few years. 

Luck and chance all start with what family, what race, what culture, what location, what genetic advantages and disadvantages we're all born with - accidents of birth.  This democratic experiment we call the United States, was started with the idea that all men are created equal. The truth is that more than half of us are born disadvantaged in either native intelligence; physical abilities; or the position in society that the families we are born into hold either socially, culturally, geographically, or financially.  It's just plain ignorant to say that some kid born to a teenage mother, as the tenth generation of ongoing poverty in the backwoods of South Carolina, is "created equal" to some kid born as the tenth generation of a family living “South of Broad” in Charleston.  

The Founding Father’s vision was of a class-less society where people were valued for their abilities, not their starting point in life.  As one of my heroes, Martin Luther King Jr. said “…a nation where they will not be judged by the color of their skin, but by the content of their character.”  I want to replace the words “color of their skin” with “accidents of birth” to broaden the American dream to capture EVERYONE regardless of their family, their race, their culture, their gender, their sexual orientation, where they grew up, or what genetic advantages and disadvantages they were born with. 

As any biologist will state, diversity only makes an ecosystem stronger, more resilient, more adaptable.  A decade ago I spent a lot of time in a number of Asian countries.  After spending weeks with people of mostly a single race, arriving back in the US would bring tears to my eyes. It’s a beautiful experience I wish every American could have. No other country has the diversity of race, cultures, and ideas that we have in America.  That diversity IS our strength. The variety of accidents-of-birth – our diversity - is what makes America great. Unfortunately, the inability of all of our people to become all they can, regardless of their accidents-of-birth, will destroy America, as it has many societies before us. 

We MUST make changes to our society and our current game of capitalism to ensure our country will never divide into a relative handful of “elites” and 300 million of the rest of us “commoners”.  I think my five legislative actions will ensure that we WILL become a nation where no one will be judged by the accidents of their birth, but only by the content of their character.

Why ARE we putting up with this?

I'd been working for the last few days on the speech I gave today at the rally, March Against Monsanto.  Every time I'm forced to clarify my thoughts, they're tightening up.  But today, while driving to the rally, the thought occurred to me that might be the core of all my concerns for our future. If you think about all the "bad" things in our civilization - poverty, hunger, violence, war, homelessness, joblessness, pollution, poisonous food, anything you can come up with - at the other end of the economic spectrum, someone is getting obscenely rich off those actions.  Think about it. 

Why have the people at the top of the Ag business denied any problems with GMOs?  Because they're getting rich off them, to hell with the long-term consequences. 

Why have the people at the top of GM denied any problems with their ignition modules?  Because they're getting rich off them, too bad if some people are being killed.

Why have the bankers on Wall Street denied any responsibility for the millions of families  who've lost their homes?  Because they got rich off those people.

Why do the coal and oil companies spend hundreds of millions of dollars every year to create and disseminate disinformation - just like the tobacco industry did - instead of investing those dollars to switch to from fossil-fuels to bio-fuels?  Because they're getting rich off fossil-fuels and they wouldn't get AS rich off bio-fuels. 

Why do we put up with this?  Capitalism is just another human-designed game.  WE, the people who vote for our elected representatives are in control of the boundaries and rules of this capitalism game.  The rules of capitalism change all the time.  Two hundred years ago buying and selling humans was acceptable.  Then we changed the rules.  A hundred years ago child labor was acceptable. Then we changed the rules. Sixty years ago, dumping raw sewage and industrial waste into rivers, lakes, oceans and the atmosphere was standard practice.  Then we changed the rules.

It's time we changed the rules so psychopaths and sociopaths are not incented and glorified for raking obscene numbers of dollars from the rest of us to the detriment of our entire society.