Wo Is Harrison Bergeron?

“The year was 2081, and everybody was finally equal. They weren’t only equal before God and the law. They were equal in every which way.” Sobering words by Kurt Vonnegut in 1961. We have been throwing words around like inequality, being equal, and on and on it goes. But Vonnegut describes a time where the government has forced everyone to be equal. Through the power of amending the Constitution, the government was able to create an equality to end all inequality, enforced by the “vigilance of agents of the United States Handicapper General.”

Vonnegut describes George and Hazel as they watch ballerinas on TV who are wearing masks. The masks are to ensure no one is prettier than the other. As the ballerinas dance they are wearing weights on their feet to ensure they all dance the same. No one can be better than anyone else.

Vonnegut describes how those that are smarter than others are forced to wear a mental handicap radio in their ear, and whenever they had a thought that was better than anyone else there would be a sharp sound in their brain discouraging thoughts that are different. Everyone needed to be equal.

However, George and Hazel had a son who was extra-ordinary. He was seven feet tall, which was a problem because everyone needed to be equal in height. Harrison was also smarter than others. He would not give in to the Handicapper General; therefore, at fourteen Harrison was arrested.

Everyone was to be “as good as everyone else.” Vonnegut, ever the storyteller, has Harrison breaking out of jail and storming the TV station. He chooses a ballerina to be his mate, and removes her mask to show the world that she is beautiful. She is above average. They dance without the weights, and prove that some people can dance better than others.

Eventually the Handicapper general enters the TV station and shoots and kills Harrison and his empress, she then caused the screen to blackout. George, who had missed the whole thing comes back from the kitchen, and sees that Hazel has been crying. She saw her son killed on TV. He asks, “have you been crying? She answers, “yup.” George asks, “What about?” Hazel answers, “I forget. Something real sad on television.” George says, “forget sad things.” Hazel responds, “I always do.”

Even though I had read many of Vonnegut’s books in the early 70’s, I had never heard of this short story. When I found out about it I had to read it. It is incredibly thought provoking.

I for one do not want to live in a world of forced equality, where all of us are the same. There is a sadness to Vonnegut’s story. I love the beauty of diversity and difference. And I think that those who can do certain things better than others should be rewarded for those exceptional skills.

So all of this discussion of inequality needs to be bracketed by the phrase “equality of opportunity, not equality of outcome.

And that is my thought for the day!

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Why Care About Inequality?

The last couple of days have produced a plethora of conversations about the rich and inequality. We have been discussing inequality for months, but this weekend provided fodder for a heated exchange over comments a billionaire made in a letter to the WSJ.

Tom Perkins, a founder of Kleiner, Perkins, Caufield and Byers, wrote in response to “Censors on Campus” that there is a parallel between the war on the 1% with Fascist Germany. He stated, “From the Occupy movement to the demonization of the rich embedded in virtually every word of our local paper, the San Francisco Chronicle, I perceive a rising tide of hatred of the successful one percent.” Kleiner has announced that Perkins is no longer active in their business.

Although I find his comments a reach when comparing Nazi Germany with our current situation, I do agree with his comment about his ex-wife Danielle Steele. She has spent millions on the homeless and mentally ill over the past decades. So the process of demonizing all rich as taking advantage of the poor is incorrect.

Just because someone has worked hard and earned a fortune doesn’t make them a bad person. However, I also agree with Mickey Kaus who stated this morning that the ‘pulling apart of this taffy,” the growing gap between the haves and have nots, has not just occurred, it has happened throughout several President’s reign, even President Obama. This growing divide is a part of our economic and political system, and has been for many years. So how do we turn the tide?

Kaus raises a good point. Would we care if everyone was getting stronger financially, but the rich were still getting 51% of the pie? I think this is an interesting question. On the other hand, this is not what is occurring. We have a changing work task reality, the type of work that we did in the past which was considered middle class has now changed. Our labor value is diminished due to cheaper labor in other countries, and many of our middle class jobs have been replaced by technology.

I think the dialog is a good one. It takes me back to a previous quote I presented in this blog. A billionaire was mentioned in a Peggy Noonan article, “Every time I hear the stock market went up I know the guillotines are coming closer.” The fact is we need to discuss this, and I think Kaus hits the nail on the head as to the reason. In the United States our culture demonstrates a narrow power distance. In other words, we believe that all of us put our pants on one leg at a time. Therefore, we have a problem when someone thinks they are better than someone else. Kaus stated, “ When we think honestly about why we hate growing inequality, I suspect it won’t boil down to economics but to sentiments. No, we don’t want to punish success. But we do want to make sure the rich don’t start feeling they’re better than the rest of us.”

President Reagan once said, “ Whether we come from poverty or wealth, we are all equal in the eyes of the Lord.” I would add to this that all of us have a responsibility to treat others better than we treat ourselves. If all of us practiced this then social equality would never be an issue, and maybe if we took better care of each other economic inequality would be reduced? This is probably too naïve.

The fact is work is a good thing. And compassion is a good thing. Many poor just want to work and make a livable wage, and many of those who have money do care about those who don’t. So how do we create a better social system based on respect? Reagan believed that “achieving a rough social equality in the United States in the midst of vivid economic contrast” is something “America has been historically good at” until now.

So, here is what I think. The working poor have now become the largest recipient of food stamps. Therefore, those companies that are not paying a livable wage, Walmart, or providing healthcare for their employees, Walmart, should pay a tax covering the $80 Billion bill that we as taxpayers are paying. Either way the employees of these companies will make enough money to live.

Second, those of us who have the skills to create small businesses will be a part of training workshops for communities that need help. We will no longer pretend the destitute do not exist. No longer will we be Simon Cowells who saw Susan Boyle and dismissed her because of how she looked, but had this beautiful voice. We will look for the potential in all people. Instead of ignoring we will pay attention.

I know I am taking a Pollyanna approach to this problem, but we continue to do the same thing while expecting a different result. We all know what that is the definition of.

And that is my thought for the day!

The M&M Boys, The Poor, And Good Business

There is so much running through my mind this morning. Yesterday I purchased a fun car. Back in 1998, because of certain things going on in my life, I decided to do something for myself. I bought a brand new Mustang. I always wanted one, and I loved the new body style. I thoroughly enjoyed driving that car, and drove it for twelve years. For the last fourteen years I have driven my wonderful Ford Ranger. It has been a great vehicle, and has been a joy to drive. However, after six years of saving I bought another fun car, a Lexus IS 250. I am in hog heaven. It is so good to drive, and it looks good too.

The reason I start today’s blog with this is the lesson I had yesterday about good business. I purchased the car from Kuni Lexus of Portland. I will say this it was the best purchasing experience I have ever had when buying a car. No pressure, great service, and did I say no pressure? We left there with a wonderful car, and a few gifts. When my wife and I are ready to buy our next car, I know where we are going. The lesson involves the importance of service. This dealership treats all of its customers with dignity and care. Good business means good relationships.

The next thing running through my brain this morning is the situation in Clark County with the M&M boys. Steve Stuart, the third County Commisioner, has announced he will not run for re-election. His reasons are similar to what many good politicians that are resigning (or have resigned) or not seeking re-election are saying. I can think of Brian Baird, among others, who said they were tired of the partisan bickering and the lack of service. Politics have become a cronyistic exercise in making sure one keeps their seat instead of serving the public good. The M&M boys, because of their willingness to appoint their buddy to a job that he had no business getting, have driven a good politician out of office. Good politics are like good business practices, serving your customer.

The last thing that has been rattling around in my noggin this morning was the result of an article I read yesterday. Our country has been fighting poverty for 50 years. With 40 plus million still considered in poverty the question is whether our actions are effective, or do we need to find other ways of lifting people out of the trap of poverty.

The article in question places Cory Booker and Paul Ryan in juxtaposition to try and capture meaningful actions needed to attack poverty. Booker rightly focuses on the lost opportunity associated with the partisan bickering in politics. He does this while emphasizing “In America, tragically, social mobility is flat or, in some measures, actually declining: If you are born poor, you are likely to stay poor.” There is one thing that I really agree with him about is the need to get past partisanship to deal with this issue.

Paul Ryan on the other hand wants to focus on growth and fighting poverty at the local level. Ryan gives a great example of  how Pulaski High School in Milwaukie is creating a violence free zone in order to ensure students get an education. This high school has five counselors who have credibility with the students to talk them through difficult situations. These counselors “don’t have education degrees or state certificates. They have something more important: credibility. The youth advisors understand what the students are going through because they had the same struggles.” After focusing on actions at the local level, Ryan then focuses on the need to change the assistance process.

When a person who is receiving assistance gets a job, their assistance is cut off. However, the job they have gotten usually does not pay enough to cover all their expenses. So, why should they go to work, the motivation is to stay on government assistance. Ryan talks about reducing assistance as wages climb, rather than eliminating them when one gets a job. I am all for that, but most of all, I am for having the dialog necessary to create positive solutions.

The lessons of Leadership in all three of areas are clear. First, the owner of Kuni is demonstrating leadership through how he treats his employees. In turn the employees then take care of the customer. This means the customers are willing to come back. It is easier to keep a customer than get a new one.

The second lesson of leadership is situational. Just because one is a good leader in the private business realm does not mean they will be a good leader in the public arena. The M&M boys may have been good in their businesses, but they are certainly making a mess of the county. Employees are afraid to say anything, and are fearful for their jobs. The Freeholders that are designing a new Clark County government are recommending the addition of two more commissioners. This will help mitigate the ability of two people to hijack a political process. I think this will be good.

The third lesson of leadership involves the ability to work together. The differences between Reagan, Clinton, and Obama are many. However, Reagan and Clinton were able to get the two parties to work together to accomplish things. Obama hasn’t demonstrated that skill yet. The leadership we need to deal with the issue of poverty will need to be creative and collaborative. Something that we may have seen glimpses of in the past, but have not experienced at the level needed to accomplish what LBJ had in mind when he initiated the war on poverty.

And that is my thought for the day!

The President And The Pope

The title of this blog entry seems like the start of a joke; probably one that would make us laugh, however it is not representative of an anecdote but a reality. President Obama is meeting with Pope Francis in March and economics will be a part of the agenda.

The reason I bring this up is a recent report that stated 85 people in the world hold as much wealth as 3.3 billion people who represent the lower ranks of the wealth pyramid. This seems a bit extreme to me. What can 85 people do with that much wealth? Interesting question!

I think we are all familiar with the names on the list. Gates appears to be number one again, while Carlos Sims has slipped to three. Mark Zuckerberg is number 26, and Sergey Brin is 17, and Warren Buffet is number 4. If we follow the news concerning these folks we know they are actively involved with altruism. It does appear that they are using their money for good.

But, is it right for 85 people to hold as much wealth as 3.3 billion poor people? It appears that is a question the Obama and Francis will take up in their discussion in March. According to reports today, we are 1000 days away from our next Presidential election. Obama haters are counting the minutes, while others are preparing. Republicans are working on a strategy. Democrats are getting Hillary ready. The next 1000 days are going to be a political battle for power in our country. But Obama is not going to go out quietly. In fact, William Glaston said in his article this morning that President Obama is not a lame duck. He has an agenda, and the central theme of his second term is income inequality.

With the recent words of Pope Francis we can see there is a kindred spirit regarding the issue of the gap between rich and poor. And the AP reported that Obama sees this as a moral validation of his agenda. Francis argued that trickle-down economics is not working because the poor is still waiting for the results. I would agree with the Pope that the trickle-down has not been as effective as one would hope.

What is the cause of this huge income gap? I think what we are observing are symptoms of a corrupt system. I think the fix is very complicated because the system has been forced to behave in a way it was not intended to behave. The system has been corrupted for many years, and thus it is comfortable, which is not a vale statement just reality, with the way it is operating. Therefore, changing the system will be difficult.

In third world countries Social Entrepreneurship is providing opportunities for small businesses to emerge. Micro-consignment actions are providing women with opportunities to start small businesses while improving social health. This is helping the poor to climb up the economic ladder, but what about here in the United States? How do we address the shrinking middle class and growing gap between those who have and those who don’t?

I am convinced that equal opportunity is critical. Therefore, equal access to good education, job training, and financial access is important. But I cannot agree with an equality of result. People need to take initiative. However, if the system is such that people see no hope of breaking out of poverty then they have no idea how to take the initiative. Any opportunity we may provide then will be wasted.

It is not as easy as saying that people need to pick themselves up by their bootstraps. The mental models must be changed, and that is a very different thing. So President Obama, as your moral outrage is reinforced with your meeting with the Pope, I encourage you to look at the big picture. It is not just about giving people more money, it is about giving people a greater opportunity. But even that is not enough! You must give them hope, hope that they can emerge out of a morass of economic despair. The system needs to be changed, with that change anchored in a new culture. Changed to one that celebrates hard work and initiative, instead of one that is focused on government handouts.

And that is my thought for the day!

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Inequality For All

Some would say that numbers don’t lie, while others recognize how to lie with statistics. Therefore, it is important that we pay attention to the story behind the numbers. Our unemployment rate is down to 6.7%, the lowest in five years. However, there were 74,000 jobs added to public and private payrolls. The question then is why did the unemployment rate go down? Economists expected 195,000 jobs to be created, but realized numbers were less than half of the expectation, and the unemployment rate fell by .3%. The Bureau of Labor Statistics reported in December that 347,000 fewer people were in the “civilian labor force” than in November. Even though only 74,000 new jobs were created in December, 143,000 more people said they were working. Thus the combination of a smaller labor force and a few more people working is why the rate went down.

The big number is the 347,000 people that were no longer measured because they were not actively seeking work. They are what is called discouraged workers, and this is not a a good sign. The economy may be getting better but not for everyone. Thus fewer good jobs means less opportunity, and less opportunity means greater inequality in our country.

I am beginning to identify several WSJ writers that are my favorites. Peggy Noonen, a solid journalist with centralist ideas, O’Grady, and lastly William A. Galston. They have a conservative leaning, but are very pragmatic in their solutions to our societal problems. Galston’s work this morning demonstrated this reality in the article “Where Right and Left Agree on Inequality.”

Generally his points are well developed. Using Paul Ryan as an example of conservative understanding of inequality, “the condition of your birth does not determine the outcome of your life.” Ryan was reflecting the philosophy of Abraham Lincoln who in 1861 stated, “the principle objective of American government was to afford to all an unfettered start and a fair chance in the race of life.” Galston builds on this by stating, “As always, President Lincoln chose his words with precision. An unfettered start – without legal impediments – is necessary but not sufficient. A fair chance takes more, which is why the man who freed the slaves also established our system of land grant colleges.”

This, in my opinion, is a recognition that a belief in equality of opportunity, not equality of a result, is not enough. The market cannot provide a natural setting for equality of opportunity. Therefore, “the government holds some responsibility for creating the ground for that equality of opportunity, which is not a natural condition.” What the government’s role is where the debate needs to occur!

The facts state, “Today, a boy born in the bottom 20% of our income scale has a 42% chance of staying there as an adult.” Also, the “United States is third from the bottom of advanced countries in terms of upward economic mobility.” Marc Rubio stated that, “70% of children born in poverty will never make it to middle class,” and it appears that there is more upward mobility in Canada then in the US.

Those with a more liberal bent, will agree with these numbers. Robert Reich is traveling the United States telling anyone who will listen that there in “Inequality for All,” but the question is what do we do about it?

It is easy to say something needs to happen, but actually realizing some sort of strategy is important. This needs to be attacked from several different levels. The education of our children in all localities is a must. This means not only the suburbs, but inner city schools need to improve. As a society, we need to recognize the power of the written word. Our adults need to return to the activity of reading. Telling our children that learning isn’t necessary will only be a detriment to our societal development.

We need to develop a stronger trade school system. Many trades have jobs that re not being filled because people cannot get the training they need to be masons, electricians, and plumbers. And we need to keep college affordable. You see this problem of inequality is not the result of one thing; it is a result of a system. This system needs to be explored to determine where the biggest bang for the buck can be gained. There are many variables associated with this system, and finding the solution can occur in many different ways.

It appears there may be a desire to debate what needs to happen. This debate appears to be moving in a positive direction instead of the usual dysfunctional zero sum argument, which is a good thing.

And that is my thought for the day,

Recent Thoughts After Travel

I have made it home in time to go back to work. I thought I would take a few moments to discuss some of my ideas while in Honduras and Maui. Honduras was work, and Maui was reflection. I loved being in both areas, and plan on going back to both, but for different reasons. Although Maui is very expensive, the climate is incredible, even when we were told the weather was icky. I loved the warmth and water.

Honduras, though, was an incredible cultural experience where we had an opportunity to help encourage people to start small businesses. We also found out that one of the attenders of our first business plan workshop four years ago started his own business, Calypso Salsa, and is now very successful. I heard he attended church New Years Eve, but I did not see him. I wish I would have, it would have been great to talk to him.

After my two weeks of traveling I am more convinced of the power of the free market to create positive change. I have read, thought, and did activities that reinforce my resolve in this area. Now is the time to write, talk, and encourage others to follow this path.

Before I continue to write about this subject though, I need to pontificate about the importance of good governance, which allows this to happen. I met a young woman in Honduras who after our second workshop a couple of years ago started a small business out of her home. She was a hair stylist and was fairly successful until the gangs began to extort protection money from her. She eventually went out of business. I talked to another businessman in town and he said the same thing. He has hired security guards to protect his business, but he also is very cautious when it comes to his family. He told me they know where you live, and he takes different routes home, etc. to take the necessary precaution to protect his wife and kids.

This also reinforced to me the importance of good governance, especially with security forces, police. Another example of how bad governance can affect people is in Argentina. With growing inflation, and the expanding inefficiency of kircherismo, there is a growing feeling of decay.

A recent example of this problem can be observed in Argentina’s decaying buildings, roads, and smelly streets. The police in the provincial capital of Cordoba walked off the job to protest low salaries, crime spiked, and the government relented by raising salaries. Now this is occurring in other provinces. The inefficiency of this government is increasing and inflation that is said to be 10.5% is actually much higher. As Mary O’Grady stated, “When riots, looting, blackouts and soaring inflation descend on a nation, free people look to their leaders to restore calm and order.” If government is part of the problem, then there is little hope.

In Argentina there is no transparency of government, thus they have very little ability to fix the corruptive and cronyistic nature of the economy. I am convinced that for the free market to flourish there needs to be a strong fair government. As much as I like to complain about our government I believe that the reason our economy is the largest in the world is because of the relative non-corruptive nature of our government. Noticed I said relative, others are just worse.

If the free market is going to make a difference, there needs to be good governance to ensure the market does what it can do. If the people can’t trust the government then free market success will be limited.

And that is my thought for the day!

The Boeing Machinists Settle

On my way back from Honduras I messaged a friend of mine who is still working for Boeing. I asked him if the contract was accepted. He said they were still voting. It wasn’t until the next day that I learned the contract had been accepted 51% to 49%. Some of the old-time IAM members I know were very upset. Some of the members cried. Some felt that the newer members had sold out the union, losing what the long-term members had fought for, the Pension. I have to admit I was a bit sad at the result, but I also saw the value of the result.

The membership felt like everyone in the state of Washington was against them, and they even felt their own National leadership was against them. Local Union leadership was urging the rank and file to vote against the contract, while the National leaders were encouraging the rank and file to vote for the contract. However, the pressure of lost jobs won out. After the last and final contract offer the Boeing Company began shopping around the 777X work. It will be a substantial amount of work over many years, and the State of Washington wanted the work. Thousands of jobs were at stake, and the Company was not hiding the fact that they wanted to be free of contract negotiations for many years. Therefore, the new eight-year contract will ensure that there will not be the threat of a strike between now and 2024. Plenty of time to develop the 777X, and get it delivered to customers.

The sticking point for local union leaders and 49% of the rank and file was the loss of pension accruals in 2016. However, the company will contribute to a current employee’s retirement account 10% of their gross pay in the first and second years of the new contract. Then the contribution with be 6%, and 4% per year after that. The employees with also continue their 401(k). And as a benefit they will receive an immediate $10,000 signing bonus now, and a $5,000 bonus n 2020. Not too bad, and the new employees will retain the six year advancement to full pay grade.

The region will receive a lot of work for the new airplane. Many thousands of jobs were won with the signing of this contract. This will include the new composite wing that will be built in Everett. The request for bids from states for the 777X work has been canceled and now there are plans to build a 1.1 million square-foot build in Everett to manufacture the new wing. This will infuse the state with up to $4 billion in investments and will create 3,000 new jobs.

The fact is the loss of a traditional pension was probably inevitable, and with the record-breaking sales in Dubai last November, the pressure on the company to deliver will be a reality. The launch of the 777X was secured with the $52 billion in sales after discounts.

Right or wrong, the vote difference was 600 employees, thus passing the contract. As I said earlier I am sad because something within Boeing that distinguished it from other companies has now died. But I am also happy, because there will be a sixth generation of Boeing employees in the state of Washington building the best airplanes in the world.

And that is my thought for the day!