The American Dilemma and How We Can Fix It

Archive for the ‘business’ Category

HOW LOWERING THE MINIMUM WAGE COULD SAVE AMERICA

We’ve been inundated with the events of Ferguson, MO.  It’s gotten more attention than the earlier death of Trayvon Martin.  For whatever reason, apparently Michael Brown’s death evoked more emotion than Martin’s.  There were no riots that accompanied George Zimmerman’s “Not Guilty” verdict.  But we’re more than making up for that, not only in Missouri but nationwide.  There have been “riots” which in some cases have turned violent and in all cases disruptive.

Both of these cases are portrayed in the media as murders resulting from racism.  The facts are that both of the deceased were black males.  In the Zimmerman case, his ethnicity was mixed.  The police officer who killed Brown was white.  In both cases, the behavior and events which led the deceased to their demise has been mostly glossed over by the press.  The liberal media are exceptionally selective in what facts they choose to report – and then only after applying a fair amount of spin to their curve ball reporting.

In Martin’s case, as you may recall, the reason that he was out was that he was on his second or third suspension from school.  I’ve forgotten the exact number.  And he was out getting the ingredients for one of today’s more popular do-it-yourself drugs.  Had he not been suspended and was home cracking the books instead of looking forward to cracking the pipe, he would never have been shot and we would never have heard his name.

In Brown’s case there appears to be ample evidence that he had just strong armed a store clerk and stolen some cigarillos so that he could roll a nice tight joint.  He had a significant quantity of marijuana on him and his toxicology report indicated that he had the same substance in his system.  He also ignored the orders of Officer Wilson and then assaulted him while he was in his police car.  After that skirmish which Brown initiated, he subsequently again ignored the officer’s order to stop.  Though there is conflicting testimony as to what happened, at least three witnesses confirmed completely Wilson’s statement that Brown charged him and four additional witnesses confirmed the portions of Wilson’s testimony that they saw.  All of these witnesses were black – and if they were concerned about racist police officers and attitudes as has been alleged, it seems strange that they would be so supportive of the officer’s version of events – unless that is what they saw actually happen.

Facts can sometimes be inconvenient things.  Particularly if they don’t blend with a narrative that is woven for self-serving reasons.  No amount of evidence, testimony or anything else will convince those who in the Brown case decided long before the Grand Jury concluded its investigation that he was a victim of the ultimate in police brutality.  If somehow a video recording of the incident suddenly surfaced, confirming Wilson’s testimony it would do little or nothing to change those peoples’ minds.  We would suddenly start hearing that the video was manufactured or edited to exculpate the cop.

The liberal camp takes great pains to point out that only “deniers” reject the “facts” of “climate change.”  They regard people who inveigh against their position as being ignorant.  And, if the “facts” were seen by everyone as being that, I suggest that they would be correct.  While that same theory ought to apply to these two cases as well, they do not.  It is fair to wonder why that is.

Certainly a part of that can be attributed to emotion.  We are all held hostage to our feelings and if we make decisions based solely on them we often not only misinterpret the evidence but draw faulty conclusions based on those rather than empirical evidence.  The other part is ignorance.  An uneducated person is far more likely to rely on his or her emotions than facts because we all are born with emotions but we have to acquire facts whether through schooling, good parenting or personal observation.  And if everyone around is similarly poorly educated, it is likely that the reliance on emotion is further entrenched through the observations of how others around us act and conduct their lives.  This is the fundamental problem with living in a ghetto – of whatever description.

If you live in a community where a high percentage of your fellow residents don’t work and are receiving a monthly stipend and other government benefits, it becomes socially acceptable, perhaps even desirable, to fit in with what everyone else considers a normal way to go through life.  That is particularly true if you have limited skills and would at best be able to find a minimum wage job which offers little hope of advancement or upward social mobility.  And that is further underscored if you realize that the government benefits you are currently receiving are greater in value than that job and require no effort to receive.  The only American dream that you have to hold on to is that the benefits don’t go away and, in fact, increase.

There are fewer jobs that the undereducated can hope to hold.  Technology and automation have left little opportunity for work for residents of our inner cities.  Retail, fast food and cleaning are about the only venues that require unskilled labor.  The ditch diggers of old have been replaced by hydraulic equipment and the family farm with its labor intensive requirements have been replaced with corporate farming and robotics.  That there is little opportunity for those who do not attain at least a high school diploma can be seen in the extremely high unemployment rates among inner city black males – well more than twice the national average.

The riots in Ferguson are not about justice for Michael Brown or anyone else.  They are expressions of frustration over the realization that the participants’ future is bleak.  They are right in that perception.  In an economy in which college graduates are living at home in large numbers for lack of jobs, what hope does the high school dropout have?  Sadly, the answer is none.  Unfortunately, those they blame for their plight are not the responsible parties for it.

With fifty years of trying to socially engineer poverty out of existence under our belt, we are in worse shape as a nation than when we initiated the “War on Poverty.”  There is significantly more evidence to support that statement than there is to support the theory of global “Climate Change.”  Yet those who enthusiastically support the idea that our planet is in grave environmental danger are exactly the people who ignore a half century’s evidence and double down on failed policies by further escalating them.  Among those policies is increasing the minimum wage.

Adding further pressure to this equation is Obama’s recent granting five million illegal aliens the right to stay here, and more importantly, the right to work in the country legally.  These are people who come from countries where there are no social welfare programs and where the residents will take any job, no matter how difficult or physically dangerous at whatever wage is offered.  They have a work ethic which is lacking among those in our inner cities and find no job “beneath them.”

If there is any possibility of breaking the cycle of welfare dependency which is now generational in nature it is by getting those who are trapped in that system the opportunity to find work.  It is far more important to encourage the unemployed in Ferguson and throughout the country to find that first job than it is what that job will pay.  Sadly, the way our “welfare programs” are structured, finding employment translates into losing benefits.  This obviously discourages recipients from seeking any form of legal employment.  We perhaps could partially solve this by lowering the minimum wage for people who are in the marketplace for five years or less, during which time their welfare benefits would be unaffected by their earnings.

I remember receiving my first paycheck for a summer job.  When I came home with it and opened the envelope with my family at dinner I clearly recall the sense of pride I had looking at that nearly fifty dollar check (after a deduction for Social Security) which covered one week’s worth of work.  (The minimum wage was $1.25 per hour).  And I took a great deal of satisfaction in the fact  that the company had chosen me over the fifteen other kids who had applied for the job.  Perhaps it was the naiveté of adolescence but it helped me feel as though I had some worth as a person – and that was acknowledged both by my employer in hiring me and then further validated by their paying me for my effort.  That paycheck did great things for my self-esteem and it was with some sadness that I let go of it and deposited it in my savings account.

That is an experience that sadly I fear many kids in our inner cities will never share.  And the higher we generically increase the minimum wage, however well intentioned, the more likely we are  permanently to deny them the dignity of working for a living and perpetuate the cycle of hopelessness into which far too many in this country now have fallen  – and is the root cause of why Ferguson happened in the first place – and why the reaction to Michael Brown’s death was completely predictable.

Ferguson is a symptom of a disease – one which has been decades in the making.  Sadly, following our present path of providing “benefits” rather than real opportunity will only worsen the problem.  And one day the right mixture of ingredients will combine to spark an explosion that will make what happened in Missouri look like a Sunday School picnic.

That day may not be far off in coming.

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DOUBLE DOWN OBAMA

Although it is unlikely that this post contains enough controversial information to make its way through the dark halls of the NSA and to the White House, it would be of value to the president should he have the opportunity to read it.  It would require him to put on his “Big Boy” pants and evaluate a view that is radical – in its divergence from the one which forms his ideology.  That, in itself, is probably too much to ask.

In life we all make choices.  Some of those we make have good consequences – others not so much.  It is only the stubborn and arrogant who, having made a poor choice, continue to insist that theirs was the correct one, the evidence notwithstanding.  Sadly, Obama has, to this point, followed that path – not only to the detriment of his approval rating but, far more importantly, to the detriment of the country.

Let’s take a lesson from the real world of stock trading – a galaxy away from the not so real world of Washington, D. C.

There are a number of rules of trading which have become rules because those  who are engaged in the activity realize that they are correct and work far more often than they fail.  Successful traders observe those rules because they realize that doing so helps them achieve their goal – which is to earn a living.  Failure to observe these rules has its consequences – usually involving finding a new line of endeavor.

The first rule of trading is quite simple.  “Never add to a losing trade.”   Here’s a simple example.

A trader buys XYZ stock at $50 a share.  Within minutes the stock declines to $49.50.  At this point that trader has only three options.  He may do nothing and maintain the position hoping the stock will recover; he may sell it and accept the loss; or he may add to the position and double down on his position.  Although most non-professionals would adopt either options one or three, the professional would most likely take the second option, accept the loss and move on, looking for a better trade.  Here’s the rationale behind all three choices.

Doing nothing is essentially a denial of having entered into a bad trade.  Clearly, when the trader bought XYZ stock at $50 he did so for one reason.  He thought the stock price would increase from his purchase price – otherwise there would be no reason to initiate the trade.  Doing nothing is simply ignoring the reality that he was wrong in his assessment.

Selling the stock at a loss, while painful, is the correct choice because it recognizes some very basic facts.  The trader bought the stock with the expectation of a rise in its price – but he was wrong.  Admitting that you’re wrong – and limiting the amount of that mistake is the correct response.  We all make mistakes.  It is acknowledging that we have made a mistake and learning from that so we don’t repeat it, that makes the trader successful.

The third option, purchasing additional stock is the worst of the three because it not only ignores the reality that the trader was wrong in his initial decision but that pure hubris causes him to deny that fact.  Unfortunately, ego has caused the demise of more traders than bad decisions.

Now this simple example from the real world will undoubtedly be lost on the president for the simple reason that he has never held a job in the real world.  Despite the repudiation of Obama’s policies which was a message by those of us who took the trouble to voice our opinion on November 4th delivered, the president prefers to focus on those non-voters who didn’t bother to show up as a “silent” endorsement of his six years in office.  That’s like saying that because no one mentions anything to the person with a dreadful case of bad breath because they don’t want to offend him, that halitosis is a condition to which we all should aspire.

This president has seldom shown an interest in how the American people feel about any issue.  Obamacare has never enjoyed a majority positive view and is now at its lowest level of support since the law was passed; Americans in a vast majority view the country as moving in the wrong direction;  the president’s own approval rating hovers at the lowest levels of his presidency.  To these fact the president, like the six year old who is determined to have his own way despite his parents’ admonishment, turns a deaf ear to these facts.  Hubris reigns supreme in the White House.

If it were simply a small man’s refusal to see the light it would be one thing.  Sadly, this president, by virtue of his office, is the most powerful man on earth.  And while he doubles down on his own failed policies and refusal to find common ground with those whose responsibility is to provide an alternate view, it is not only those in America but people and nations around the world who will be his victims.

I guess if I really wanted the president to read this I should just print it out, pack my bags and plan a trip to Washington to deliver it in person.  I understand that getting into the White House isn’t all that difficult.

OLD FOLKS

Perhaps it was the fact that I was so devoted to my maternal grandmother but I have always preferred the company of people older than myself rather than those my own age.  After all, two sixteen year olds have only the perspective of life that they have gleaned in perhaps ten truly cognitive years – and that might be a stretch.  But a thirty year old to my then teen age mind, well that was someone who had really lived.  And a sixty year old.  A sixty year old to my thinking was a venerable shrine of living history.   I viewed elderly people as true treasures.

When I purchased my condo in Chicago I was in my mid-twenties and by far the youngest owner in the building.  Before I could complete the transaction, I had to appear before the condo board and get their approval.  The board had the reasonable responsibility of trying to make sure that new owners would observe the condo’s rules and would be an asset to the building and its owners.  Naturally, I approached this meeting with a great deal of gravity and seriousness and received the required imprimatur.  (While I chalked this up to my professional presentation and polite manner, as I learned later, this was a mere formality as a rejection meant that the association would have had to purchase the unit itself – and there was at that time no reserve fund to accomplish that).  Nevertheless, I took my approval as a reminder to be a good, polite and caring neighbor.

Several years went by and a few of my new neighbors urged me to run for election to the board.  I really didn’t have an inclination to do so as I was putting in eighty hour weeks at my business and didn’t want the distraction.  But after a considerable amount of arm twisting by one of them in particular I agreed to throw my name in the hat for one of the openings.  I prepared a brief resume so that the owners could have a more in depth look at my background and that was included with the bios of the other candidates.

The night of the annual meeting and election finally arrived.  There were three vacancies and six candidates for those positions.  And when the votes were finally tallied, I had come in dead last.  I must admit that while I was ambivalent about serving on the board, losing was rather irksome.  I thought to myself, “What have I done to offend people?”  My ego was bruised,  so when the friend who had pushed me into running came over to console me with the words, “Don’t feel bad – everyone loses the first time they run,” I didn’t accept that as graciously as I might.

Well, things have a way of working out.  I did not choose to participate as a candidate in the elections the following two years but thereafter, as a matter of self-interest, (I wasn’t happy about the way our funds were being spent), I decided on my own to seek office.  This resulted in my serving on the board for eighteen years, six of those as president.  One of my fellow board members was a man then in his late seventies.  I had gotten to know Harold and his wife Viola because of my work getting out the Republican vote in the precinct.  They were two of the very few registered Republicans to be found in the neighborhood.

The bio I had submitted had included the fact that I was one of the principals in an executive search business.  I had no idea what Harold had done for a living since he had summed up his life experience with the word, “Retired.”  But after our first board meeting, he approached me and said that he had devoted his life and his career to being the owner of an employment agency – so we definitely had something in common.  He offered to share some of the stories about his and his wife’s experiences running what, as it turned out, was the very first employment agency that received a license from the State of Illinois in Chicago – back in the 1940’s.

Originally, the employment agency business was dominated by companies that charged the applicant if they found him or her a position.  Later, as labor became more scarce and business expanded, employers began paying those fees.  But in the old days, it was customary for the employee to pay the agency that secured his employment – an amount that was dictated by the Bureau of Employment Agencies at 84% of the first month’s salary, payable in three monthly installments.  That was how Harold and Viola had built their business.  They had a specialty.  They placed domestic help.

Several months later I ran into Viola as I was leaving for work one morning.  She invited me to join Harold and her for dinner the following Saturday.  I gratefully accepted their invitation and rang their doorbell promptly at six thirty that night. We had a delightful dinner and although I offered to help clean up, Viola said that wouldn’t be necessary – she would take care of it.  Harold invited me to join him in the living room for a brandy.

As we sat on their comfortable sofa, I noticed that there were large volumes, at least thirty of them, on their library shelves.  Two of these volumes were on the coffee table.  Harold reached for one of these and said, “You might find this interesting.  I took pictures of all the people who Viola and I put to work.”

He reached for the first book and opened the cover.  There was a picture of a large black woman with a young, smiling Harold and Viola, their arms around her and a caption that read, “Jewel Samson – March 8, 1941 – Cook – Mr. and Mrs. Aaron Feingold, 538 North Dearborn Street.”  Page after page, book after book contained these pictures with the titles Washer Woman, Assistant Cook, Housekeeping, Driver and the names and addresses of their employers.  The pictures had one thing in common.  Every one of the new employees was black.

I was impressed at the sheer number of people for whom this couple had found employment.  And perhaps I was even more impressed that Harold had the presence of mind to document his many years in business in this manner.  I told him as much.

He said to me, “You know it was a struggle.  There were a lot of times that I wasn’t sure we would make it or be able to keep the doors open.  But somehow, something always happened and we got over the hump.  But you know what the biggest challenge was?  In those days, a lot of black folks didn’t trust “’ol Whitey’ as they used to phrase it.  So let me show you the pictures that saved our business.”

Harold got up from the couch and reached for a much smaller photo album.  He sat down next to me and opened the book.  On the first page was a picture of Harold as a child with his parents and on the second a picture of Viola and her family.  Despite their extremely light skin, both Harold and Viola were black.  I would never have guessed that, despite knowing them for quite a few years.

So Harold hung blown up copies of these two photos in his office and pointed them out to all new applicants who came by for job interviews.  That gained the trust of those who might have had qualms about working with a white-owned business.  And that business grew and prospered for more than thirty years until the couple retired.

Old folks.  You can learn a few things from them if you take the time.  They’ve been around.

LESSONS FROM A CELEBRITY

“I’ve been rich and I’ve been poor.  Rich is better.”

– Sophie Tucker

 

Sophie Tucker had a tough life.  Born to a Ukrainian Jewish immigrant family she began singing in her parents’ restaurant in Connecticut for tips.  She appeared in The Ziegfeld Follies but her talent threatened some of her co-performers and they got her fired.  She went on to overcome these obstacles and became successful and famous.  And she earned the title, “The Last of the Red Hot Mamas.”

In 1927 when this recording of “Some of These Days” was made, there was no such thing as the minimum wage.  It would be eleven years until Franklin Delano Roosevelt pushed that proposal through Congress and it became illegal for any employer to pay an employee less than the magnanimous amount of twenty-five cents per hour.  A person working a full forty hour work week, fifty-two weeks a year could earn $512 per year.  Even by 1938 standards those were wages that insured a life of poverty or at the very best meager subsistence.

In 1964, two years before Tucker’s death, the Congress passed ‘The Civil Rights Act which officially prohibited discrimination based on race, color, religion, sex, or national origin.  Fortunately, Tucker had found a career in the one industry which had, at least, marginally, followed those principles before they became the law of the land – entertainment.  As prevalent and blatant as discrimination against blacks was in varying states and jurisdictions, Jews were frequently the subject of anti-Semitism – although it might have been more subtle than the hatred preached by the KKK and other groups.

This discrimination took the form of having “unofficial policies” in which Jews were regularly excluded from membership in private clubs and prevented them from living in certain areas which preferred an all-Gentile population, not unlike the redlining phenomenon that precluded blacks from home ownership in many communities.  And as with black Americans, there were any number of pejorative words and phrases coined to describe and demean Jews – although our more sensitive citizens usually waited until the person being so described left the room and then whispered it to his listener “sotto voce.”

Sonya Kalish which was Sophie Tucker’s birth name had obstacles to overcome.  So did everyone else in early 20th century America.  There were no governmentally inspired “safety nets” to which a person could look should they get in financial difficulty.  All that a person had was family, friends and their own drive, ability and ambition.  Fortunately, Tucker had a desire to succeed – and she did – enough to make her a national icon and a person who was well off financially.

I doubt that at any time, Sophie Tucker aspired to do just enough to make it through and get by.  She was someone who saw herself as a person whose aspirations were only as great as she believed them to be.  And perhaps it was exactly because we had no safety nets that she was impelled to succeed.  How much inspiration to do better do we have if we are given a minimal level which is assured if we do little or nothing?

Which brings us to the question of the minimum wage – an invitation to a life filled with need and poverty.

“If you’re against raising the minimum wage you’re a Tea Party Republican who hates people, wants them to starve, abhors the middle class and is only concerned about corporate profits.”  Perhaps you’ve heard that meme.  If not you don’t own a television or a computer which has access to current events.  If you believe that statement, you need to enroll in a remedial class in basic math.

We’ve had a Federal minimum wage law on the books for seventy-six years.  During that time, the percentage of Americans who are officially classified as living in poverty has increased as a percentage of the overall population.  Why should this be if a guaranteed minimum wage is intended to combat this phenomenon effectively and has been raised periodically during that time span?  Is there even the most ardent among those pushing for a forty percent increase who truly believes that should that be enacted it will lift those minimum wage earners out of their dire financial circumstances and suddenly move them into the middle class?  If you accept the government’s definition of what a middle class person earns you will find that the math simply doesn’t work.

Well let’s turn to the issue of greedy corporations looking to maximize their profits, all on the backs of their underpaid workers.  Most business owners would agree with the statement that the reason for going into business is to earn profits and to grow the business in order to increase the size of the profits.  The real disagreement with those on the left who would agree with that statement is that they then add on the final clause, “without regard to the working conditions or financial well-being of their employees.”   That statement can only be made by someone who is inexperienced in running their own business.

We all know that there are costs associated with hiring employees.  Those that are obvious include various taxes which are imposed and include FICA, FUTA, state unemployment contributions, paying state worker’s compensation premiums and providing health insurance.  Those are the legal, mandated additional costs that every employer incurs.  But there are indirect, less obvious costs that also impact an employer’s profitability.  One of the most important of those is productivity.

Most of us would agree that if two mechanics who were equally competent were available to repair our car and one charged twice the amount of the other, we would probably select the less expensive mechanic to do the job.  If we had two employees on our payroll and one was able to produce fifty widgets an hour and the other consistently only made twenty-five in an hour, wouldn’t that second employee only have half the value of his co-worker to our company and wouldn’t he be contributing only fifty percent the amount to our profitability?

This leads us to a simple question.  Is it fair to pay the more productive employee the same amount as his less efficient counterpart?  Or, more to the argument of those who believe everyone should get a guaranteed wage, would it be unfair to the less productive employee to pay him less than our second, more productive worker – even if that lesser amount conformed to the then prevalent minimum wage?

I suspect those with a “fairness” mindset would object to rewarding our more valuable employee because somehow they view that as an employer “demeaning” the other worker by paying him less, irrespective of the fact that he actually is less valuable to the company.  Unfortunately, the mantra, “Equal pay for equal work” disregards the fact that not all workers offer an equivalent amount of productivity for the time they spend in our offices or factories.

Those lobbying for an increased minimum wage believe that paying “less than a livable wage” is barbaric.  I would suggest that probably is true – and the individual who is willing to accept that wage and live under those conditions is not exhibiting the best judgment or acting in his own best self-interest.  Why then do people accept those sorts of positions?

The possible answers are that they are lazy and unwilling to work at a better paying, more demanding position; do not have the skills to qualify for a better paying position; or find that the particular minimum wage job satisfies their personal goals.  What other answer can there be to that question?  Despite the acrimonious debate over this subject, I have yet to hear that minimum wage-paying employers go out with shotguns, round up people and force them to work in their businesses, threatening them and their families with bodily harm if they fail to comply.

“Don’t let anybody tell you that it’s corporations and businesses that create jobs.”  That statement from no one other than non-Nobel prize winning economist, Hillary Clinton.  If we accept that statement, then it is government which is solely responsible for job creation – or lack of it.  In part I would agree with that concept – particularly the latter part because while insightful regulation is a positive thing, overregulation is a burden and a job destroyer.  If there is a dearth of jobs in this country and it is government who is the job creator, then obviously government is not doing very well in this regard.  Or are they?

We now have more people than in the country’s existence on some form of Federal dole, ranging from food stamps to telephones.  These are people whom the government has created and endowed with a job – to continue to vote for those who concocted these programs with promises that even better, more lucrative programs are in the works.  And people who are naïve and uneducated solidly endorse their own enslavement in election day after election day.  This Tuesday is unlikely to suggest that many of them have yet seen the light.

In 2008, half the country voted for “Hope and Change.”  We’ve gotten more than our fair share of the second part of the slogan.  I’m still optimistic that we will get a peek at the first part.  At least, I hope so.

 

HILLARY CLINTON AND THE MOB

It would be dishonest if I didn’t admit that I’ve never been a fan of Hillary Clinton’s.  In fact, I wrote a piece elsewhere about twenty years ago in which I spoke of her as “The most dangerous woman in America.”  If my feelings on that have softened over the years it is for several reasons.  The first is that Mrs. Clinton seems to be embarked on a course of self-destruction which may well minimize her ability to attain a position of serious power.  The second is that a substantial number of challengers to that title have emerged, Sen. Elizabeth Warren being in the vanguard of those.

Despite the fact that I’ve never signed on to the Hillary Fan Club, I wish her nor anyone else any harm.  And I fear for her safety because of some statements that she recently made, specifically her remarks this week that, “Trickle down economics doesn’t work – we’ve seen that fail rather spectacularly.”

The economic theory to which Mrs. Clinton referred in that speech suggests that by lowering tax rates on those who are the wealthiest, that saves them money which they will in turn invest in creating jobs and that those jobs will create more jobs and that everyone in the economy will benefit because there will be more people employed and the taxes that they pay on their earnings will more than overcome the amount of the tax reduction which was originally given.

Of course, those like Mrs. Clinton on the left will naturally acknowledge a corollary that is the reverse of the trickle down theory.  If you believe that cutting tax rates on the wealthiest does nothing to stimulate job creation, then you naturally must believe that increasing them will have no negative impact on job creation, the consumer or the economy overall – other than to raise additional tax revenues which can then funnel into the national Treasury to be misspent by those in positions of power in Washington.

That is a statement that might involve some personal peril for the former First Lady.

In Nevada we have three propositions on the ballot.  The third of these, (cleverly named Proposition 3), wants the voters to decide whether to allow Nevada to collect a 2% tax on the revenues of companies if those companies’ revenues exceed $1 million per year.  Incidentally, it doesn’t matter whether the company is profitable or if it loses money.  That’s Govthink at it’s finest.  The purported beneficiary of these funds to be collected will be our schools.  As one might expect, the NEA has endorsed this proposal.  And the AFL-CIO which initially supported the idea has, perhaps because of their experience in sponsoring Obamacare, have now changed their view and opposes its passage.

Without discussing the arguments pro and con, (I voted “NO”), this is yet another tax which purportedly will benefit a specific cause – and which will, almost as soon as it is passed, wind up being something that goes into the General Fund and will be used for whatever purposes those in Carson City choose.  I saw this same scenario when Illinois authorized the creation of the state lottery – which was to benefit education.  I gave it three years before those proceeds were swept into the General Fund – and, as I recall, it only took two.

Among the plethora of political ads that one would expect the week before an election, there have been a substantial number which have urged Nevadans to vote “NO” on Prop 3.  I have yet to see one that advocates its passage – which suggests to me that the “NO” side has a lot of money backing it.  Considering the fact that casinos are the principal source of revenue to the state and that they clearly would be subject to this proposed tax, it doesn’t require an Einstein to guess that they are among the funders for these ads.  And if you questioned that, one of the spokespeople advocating the defeat of the measure is none other than His Honor, the much beloved former Mayor of Las Vegas, Oscar Goodman.

Before becoming Las Vegas’ mayor, Goodman spent most of his career as an attorney – more specifically as a defense attorney.  He handled many high profile clients and represented them with vigor and very positive results.  Among those he defended were people associated with “the Mob” including Meyer Lansky, Frank “Lefty” Rosenthal, “Fat Herbie” Blitzstein (whose grandson owns a maintenance company that services my pool), Nicky Scarfo and Anthony “Tony the Ant” Spilotro.  It would be fair that many in the underworld viewed Mayor Goodman as their “go to” guy when it came to defending them from prosecution.  And it’s hardly a secret that before Nevada’s casinos became corporate entities, they were controlled and run by “The Mob.”

As I write this, one of Mayor Goodman’s ads appeared on FOX News.  The text of the ad (slightly paraphrased because I don’t type as fast as he can speak) is:

“If Prop 3 passes it will have an impact on everyone in Nevada.  Do you know what happens when a corporation gets a tax increase?  They pass it on to all of us.  They fire their own employees.  This will cost us more in what we pay at the grocery store, what we pay for health care, it’s going to smack all of us right in the jaw.”

Wait a minute.  That’s trickle down economics.  The only difference is that in this case the former mayor discusses the impact of an increase in tax rates rather than a decrease.

While I don’t recall reading any stories that Hillary Clinton plays polo or enjoys horseback riding, I would suggest that before she snuggles up for a good night’s rest, it might behoove her to check for any equine body parts that might have unexpectedly been placed under the covers.

CHIPOTLE MEXICAN GRILL

Perhaps I’m one of the few people in America who hasn’t eaten there but I haven’t.  My friends who frequent Chipotle regularly tell me it provides a far better dining experience than its competitors.  And while I enjoy Mexican food, I don’t go out of my way to get it.  Now open a great dim sum restaurant and we’re talking a whole other story.

The genesis for this story has nothing to do with the quality of food or the dining experience at Chipotle.  It has to do with the compensation of the company’s CEO, Steve Ells.  In an advisory vote, the majority of shareholders recommended that the Board not increase Mr. Ells annual compensation to approximately $25 Million.  Apparently, several unions and others who hold the stock in pension plans were responsible for the overwhelming “No” vote.  As shareholders, that is their right and that they exercised their voice is their responsibility.

This story, which has received more coverage on the Huffington Post than the scandal at the VA which apparently has now spread to include eleven separate facilities, also generated far more comments than the second story.  Most of those comments applauded the vote and went on to comment about how CEO’s are overpaid to the detriment of the poor schlub counting out twenties at your local bank or slinging guacamole at your local Chipotle.  I engaged in a conversation with one person who left such a comment.

In response to this individual, I asked, “If $25 million is too high, is $1 a year too low?  If so, what would you consider to be equitable and how would you determine what is fair?”  While I was waiting for him to get back to me, and I still am, I decided to try to look at this situation in as objective manner as I could.

The first thing that occurred to me is that many who have not been in the situation personally can only theorize, if they take the trouble, to understand what it is like first to conceive of a business and then to make that vision turn into a reality.  If they had done this themselves, they might have more respect for those CEO’s whom they denounce.

What if Mr. Ells had never had either the moxie or the good fortune or the work ethic to start this company which now employs 45,000 people?  Where would these individuals be going to work on a daily basis?  In this Obamaconomy where new business start ups are few and established companies are laying off and trimming the fat, would they even have a job or just join the ranks of the gainfully unemployed?

But then I thought, not that it’s my business since I’m not a Chipotle shareholder, what if the company reduced Mr. Ells’ compensation by 90% to $2.5 million a year and the $22.5 million difference was passed along to Chipotle workers in the way of pay increases.  How might that impact their lives?

Well, it would result in a $500 a year annual increase for each of the company’s other employees.  Of course, after they paid Federal income tax, FICA, Medicare Tax and in many cases state income tax, that pay increase would shrink to about $350 per year.  That works out to a little less than $7.00 per week or, based on a forty hour work week, seventeen cents per hour.

Now the people who man those fast food lines at their outlets earn more per hour than the typical fast food restaurant worker who makes minimum wage.  But if we were to apply their percentage increase in earnings attributable to stripping Mr. Ells of 90% of his income, we would not be talking about raising the $7.25 minimum Federal wage to $10.10 per hour but to $7.34 per hour.

There are two other points we should consider.

The first is that should the Board enact the hypothetical pay plan I created and Mr. Ells agreed to work for a 90% smaller salary, it might occur to him to put forth only 10% of the effort that he previously expended in his job.

Instead of opening 100 new outlets this year, he might decide only to go ahead with 10 of those – if any at all.  After all, the company is doing very well so why rock the boat?  Why go through all the trouble of doing site surveys, negotiating leases, overseeing construction, purchasing equipment, interviewing and hiring and training employees and management, negotiating contracts with new wholesale grocers, conducting on-site audits to make sure that these new facilities were meeting high corporate standards?  Why indeed?  That would leave approximately 2700 prospective employees who might have been hired for jobs in the 90 restaurants that were never opened sitting home collecting unemployment – if it hasn’t run out.

The second point is that no one is forced to work at any job they don’t like or want.  In our current Obamaconomy that is more theoretical than real since this administration has not only not encouraged the creation of new businesses, but has done everything possible to make starting a new venture difficult if not impossible.  If we had a vibrant economy, a worker who was dissatisfied with his job could find another one – or even accept a second job if he were so motivated

So if we want to have a debate over the minimum wage, we should focus our attention not on “greedy CEO’s that want their employees to suffer” but to a government which has made sure that they will.  This may be one of the few times that I agree with the president when he said, “You didn’t do that.  Someone else was responsible.”  He’s right – it’s him.

HOBBY LOBBY

The Supreme Court heard arguments recently with regard to a privately owned company by the name of Hobby Lobby which had requested that they be exempted from certain provisions of Obamacare because of the owners’ religious beliefs.  Specifically, they wanted to be exempted from the requirement that they carry insurance which would pay for abortifacients for their covered employees.

I read the arguments made to the Supremes and their questions to attorneys representing both Hobby Lobby and the government.  Despite what has been referred to by liberal activists as another in the continuing “assault on women’s health,” the facts are rather clear.  Here they are.

There are twenty different prophylactics and abortifacients which the government mandates be available under Obamacare.  The company has no objection to providing coverage for sixteen of these.  Those include birth control pills and prophylactics.  Their objection relates specifically to the four which might terminate a pregnancy if one occurred – otherwise known as abortifacients.  We might be familiar with at least one of those, known as “the morning after pill.”

In light of the court case, an article appeared in the “Huffington Post” on April 1, 2014, written by liberal writer and commentator, Rick Ungar.  Of those on the left I have to say that I consider Mr. Ungar to be one of the most reasonable and rational who interpret and spin our news.  It was, therefore, with some dismay that I read his article which was entitled, “Hobby Lobby Invested In Numerous Abortion And Contraception Products While Claiming Religious Objection.”  The source of Mr. Ungar’s information was “Mother Jones.”  I have attached the link to the full article below.

http://www.forbes.com/sites/rickungar/2014/04/01/hobby-lobby-401k-discovered-to-be-investor-in-numerous-abortion-and-contraception-products-while-claiming-religious-objection/

If you were to read only the title of this piece, you might be led to believe that Hobby Lobby actively invests in pharmaceutical companies which manufacture abortifacients because they are trying to maximize their personal profits.  As you go into the article, what the company is actually doing is providing a variety of mutual funds in their corporately sponsored 401(k) from which their employees may select.

There are currently approximately 4,600 equity mutual funds which are offered to investors.  Any retirement plan administrator – an outside entity that has no connection to Hobby Lobby or any other company that offers this retirement benefit – determines which funds it will include in the plans that it administers.  But of the funds which focus on growth of principal, over 86% have some investment in pharmaceutical companies.  And of the growth funds that Morningstar rates with their highest five star evaluation, investment in pharmaceutical companies can be found in 99.3% of their portfolios.

There is an adjunct to Mr. Ungar’s accusations about morality in investing which he might not have considered.  The number of growth funds that invest in energy companies such as Exxon Mobil and BP approximate the percentage of funds that invest in pharmaceuticals.  If he takes his argument to its logical conclusion, there are a lot of his associates who support green energy who would need to opt out of their own retirement accounts to maintain their own purity of principle.

There is one realistic way that Hobby Lobby could avoid this possible conflict of conscience.  It could abolish offering a retirement plan for its 18,000 employees.  Would that be a workable alternative for Mr. Ungar, who does acknowledge that the company pays “above the minimum wage” – actually more than twice the minimum wage that is currently in effect.  But we should always remember that the left seldom lets facts stand in the way of ideology.

As a result of the Supreme Court hearing I thought that I would show some support for the company by patronizing them.  I had never before been in one of their stores.  As it happened, a friend had invited several of us to dinner and I wanted to buy a thank you present for him for his kindness.  He happens to be an aficionado of jig saw puzzles and I was able to find one that I thought he would enjoy on Hobby Lobby’s website.

I called their closest location to see if they had one of these in stock.  A very pleasant young woman cheerfully answered my call and directed me to the correct department where another cheerful young woman asked me to hold on while she checked to see if the puzzle were available.  After a very brief wait she returned to say that they did have several and she would be happy to reserve one for me.  I thanked her and said that I would be by later that afternoon to pick it up.

I had several errands to run that day which would culminate in taking Gracie for her afternoon visit to the dog park.  I wasn’t sure what Hobby Lobby’s policy was regarding allowing dogs within their store, so I called back and asked if I might take Gracie in with me while I picked up the puzzle I had reserved.  The young lady said that they would be happy to see both of us.  Naturally, this disposed me favorably to the company.

When we arrived, a freshly scrubbed, courteous young man asked if he could help me.  I told him that I had reserved a puzzle.  He immediately found it and offered to ring my purchase up at a register which was closed.  While I waited for my total, I asked him if he liked working at the store.  His comment was, “I can’t imagine a better company to work for or nicer people to work with.”

I wonder if Mr. Ungar or other Hobby Lobby critics have ever visited one of their stores.  My guess is, probably not.  After all, they wouldn’t want the facts to get in the way of their opinions.

 

 

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