Thursday, August 25, 2016

The stuff we really need is getting more expensive. Other stuff is getting cheaper. by Christopher Ingraham (with commentary)

The stuff we really need is getting more expensive. Other stuff is getting cheaper.

 August 17, 2017  The Washington Post

Sociologist Joseph Cohen of Queens University is fond of saying that “America is a place where luxuries are cheap and necessities costly.”
recent chart from economist Mark Perry of the American Enterprise Institute, using data from the Bureau of Labor Statistics, illustrates this well. Since 1996, the prices of food and housing have increased by close to 60 percent, faster than the pace of inflation. Costs of health care and child care have more than doubled. The prices of textbooks and higher education nearly tripled.
On the other hand, the prices of things like mobile phone service, toys, software and televisions have plummeted over the same period.
For many Americans, in other words, that shiny new flat-screen TV is now more within reach financially than it’s ever been. But it has become harder to afford the house to put it in, food to eat in front of it, or the medical care to ensure you’ll outlive its extended warranty.
What’s going on here? Perry points out that most of the things falling in price are manufactured goods, and that prices of those goods have been falling for decades as a result of technological improvements and productivity gains.
“The ‘miracle of manufacturing’ delivers lower prices all the time, and would explain why those prices have decreased significantly over time, relative to overall price increases,” he said in an email.
Perry also pointed to trade as a factor. Many manufactured goods — like TVs and appliances — come from overseas, where labor costs are cheaper. “International, global competition lowers prices directly from lower-cost imported goods, and indirectly by forcing U.S. manufacturers to behave more competitively, with lower prices, higher quality, better service, et cetera,” Perry said.
On the flip side, things like education and medical care can’t be produced in a factory, so those pressures do not apply. Compounding it, many Americans are insulated from the full costs of these services. Private and public insurance companies pay most medical costs, so there tends to be little incentive for individuals to shop around for cheaper medical care.
In the case of higher education, the nation’s massive student loan industry bears much of the upfront burden of rising prices. To the typical 18-year-old, a $120,000 tuition bill may seem like an abstraction when you don’t have to start paying it off until your mid-20s or later. As a result, the nation’s college students and graduates now collectively owe upward of $1.3 trillion in student loan debt.
“Prices rise when [health care and college] markets are not competitive and not exposed to global competition,” Perry said, “and prices rise when easy credit is available.”
Hence, our current predicament. We can afford the things we don’t need, but we need the things we can’t afford. Whether the 20-year trajectory in the chart above is sustainable is another question entirely.

Allen Laudenslager: This is a trend I have been trying to get people to recognize for 10 years now. This is the way the government calculates how the economy fails!

Todd Neva: Exactly. This is why the consumer price index (CPI) is a bogus measure. The government says there's no inflation, but people are being stretched thin on their daily expenses.  And the lower your income, the more you'll have to spend on the basic essentials.

Bryan Neva: I totally agree. This is analogous to the way the government miscalculates the unemployment rate: they discount discouraged workers who have given up on finding a job. Currently we have the lowest labor participation rate in our history. I don't put much credence in the CPI or the unemployment rate.

Saturday, August 13, 2016

Do Your Friends Actually Like You? by Kate Murphy (with my comments)

Do Your Friends Actually Like You?

New York Times

THINK of all the people with whom you interact during the course of a day, week, month and year. The many souls with whom you might exchange a greeting or give a warm embrace; engage in chitchat or have a deeper conversation. All those who, by some accident of fate, inhabit your world. And then ask yourself who among them are your friends — your true friends. Recent research indicates that only about half of perceived friendships are mutual. That is, someone you think is your friend might not be so keen on you. Or, vice versa, as when someone you feel you hardly know claims you as a bestie.
It’s a startling finding that has prompted much discussion among psychologists, neuroscientists, organizational behavior experts, sociologists and philosophers. Some blame human beings’ basic optimism, if not egocentrism, for the disconnect between perceived and actual friendships. Others point to a misunderstanding of the very notion of friendship in an age when “friend” is used as a verb, and social inclusion and exclusion are as easy as a swipe or a tap on a smartphone screen. It’s a concern because the authenticity of one’s relationships has an enormous impact on one’s health and well-being.
“People don’t like to hear that the people they think of as friends don’t name them as friends,” said Alex Pentland, a computational social science researcher at M.I.T. and co-author of a recent study published in the journal PLOS One titled “Are You Your Friends’ Friend? Poor Perception of Friendship Ties Limits the Ability to Promote Behavioral Change.”
The study analyzed friendship ties among 84 subjects (ages 23 to 38) in a business management class by asking them to rank one another on a five-point continuum of closeness from “I don’t know this person” to “One of my best friends.” The feelings were mutual 53 percent of the time while the expectation of reciprocity was pegged at 94 percent. This is consistent with data from several other friendship studies conducted over the past decade, encompassing more than 92,000 subjects, in which the reciprocity rates ranged from 34 percent to 53 percent.
Mr. Pentland said it could be that “the possibility of nonreciprocal friendship challenges one’s self-image.” But the problem may have more to do with confusion over what friendship is. Ask people to define friendship — even researchers like Mr. Pentland who study it — and you’ll get an uncomfortable silence followed by “er” or “um.”
“Friendship is difficult to describe,” said Alexander Nehamas, a professor of philosophy at Princeton, who in his latest book, “On Friendship,” spends almost 300 pages trying to do just that. “It’s easier to say what friendship is not and, foremost, it is not instrumental.”
It is not a means to obtain higher status, wangle an invitation to someone’s vacation home or simply escape your own boredom. Rather, Mr. Nehamas said, friendship is more like beauty or art, which kindles something deep within us and is “appreciated for its own sake.”
Yet one of the most recognized treatises on friendship is Dale Carnegie’s decidedly instrumental “How to Win Friends and Influence People.” Pop stars like Taylor Swift and Drake are admired for their strategic, if not propagandist, friendships. And, of course, social media sites are platforms for showcasing friendships to enhance personal image.
“Treating friends like investments or commodities is anathema to the whole idea of friendship,” said Ronald Sharp, a professor of English at Vassar College, who teaches a course on the literature of friendship. “It’s not about what someone can do for you, it’s who and what the two of you become in each other’s presence.”
He recalled the many hours he spent in engrossing conversation with his friend Eudora Welty, who was known not only for her Pulitzer Prize-winning fiction but also for her capacity for friendship. Together they edited “The Norton Book of Friendship,” an anthology of works on the topic. “The notion of doing nothing but spending time in each other’s company has, in a way, become a lost art,” replaced by volleys of texts and tweets, Mr. Sharp said. “People are so eager to maximize efficiency of relationships that they have lost touch with what it is to be a friend.”
By his definition, friends are people you take the time to understand and allow to understand you.
Because time is limited, so, too, is the number of friends you can have, according to the work of the British evolutionary psychologist Robin I.M. Dunbar. He describes layers of friendship, where the topmost layer consists of only one or two people, say a spouse and best friend with whom you are most intimate and interact daily. The next layer can accommodate at most four people for whom you have great affinity, affection and concern and who require weekly attention to maintain. Out from there, the tiers contain more casual friends with whom you invest less time and tend to have a less profound and more tenuous connection. Without consistent contact, they easily fall into the realm of acquaintance. You may be friendly with them but they aren’t friends.
“There is a limited amount of time and emotional capital we can distribute, so we only have five slots for the most intense type of relationship,” Mr. Dunbar said. “People may say they have more than five but you can be pretty sure they are not high-quality friendships.”
Such boasting implies they have soul mates to spare in a culture where we are taught that leaning on someone is a sign of weakness and power is not letting others affect you. But friendship requires the vulnerability of caring as well as revealing things about yourself that don’t match the polished image in your Facebook profile or Instagram feed, said Mr. Nehamas at Princeton. Trusting that your bond will continue, and might even be strengthened, despite your shortcomings and inevitable misfortunes, he said, is a risk many aren’t willing to take.
According to medical experts, playing it safe by engaging in shallow, unfulfilling or nonreciprocal relationships has physical repercussions. Not only do the resulting feelings of loneliness and isolation increase the risk of death as much as smoking, alcoholism and obesity; you may also lose tone, or function, in the so-called smart vagus nerve, which brain researchers think allows us to be in intimate, supportive and reciprocal relationships in the first place.
It’s huge to have good vagal tone, because it modulates our instinctive fight, flight or freeze response,” said Amy Banks, a psychiatrist at the Wellesley Centers for Women who specializes in the growing field of interpersonal neurobiology and is the author of “Wired to Connect: The Surprising Link Between Brain Science and Strong, Healthy Relationships.”
In the presence of a true friend, Dr. Banks said, the smart or modulating aspect of the vagus nerve is what makes us feel at ease rather than on guard as when we are with a stranger or someone judgmental. It’s what enables us to feel O.K. about exposing the soft underbelly of our psyche and helps us stay engaged and present in times of conflict. Lacking authentic friendships, the smart vagus nerve is not exercised. It loses tone and one’s anxiety remains high, making abiding, deep connections difficult.
So it’s worth identifying who among the many people you encounter in your life are truly friends. Who makes time for you? Whose company enlivens, enriches and maybe even humbles you? Whom would you miss? Who would miss you? While there is no easy or agreed upon definition, what friendships have in common is that they shape us and create other dimensions through which to see the world. This can be for better or worse depending on whom we choose as friends. As the saying goes, “Show me your friends and I will show you who you are.”

Kate Murphy is a journalist in Houston who writes frequently for The New York Times.
My Comments:

As a practicing Christian, the way I live my life is to put God first, others second, and myself third.  I try to firmly cling to God, my one true friend, and not worry if others "like" me or not. People are fickle. One day they're your friend, and the next day they're not. So don't put your trust in people but rather put your trust completely in God!

God brings people in and out of our lives all the time; some for our good, and others (quite frankly) to build our character. It's quite rare to find a true and devoted friend who'll stick by you through thick and thin. 

Jesus himself experienced this in his darkest hour in the Garden of Gethsemane. While suffering mental and emotional agony before his passion, rather than trying to comfort and pray for him, all his friends fell asleep (it was like they didn't care); next one of his friends, Judas Iscariot, betrayed him; then all his other friends abandoned him to save themselves; after this, one of his closest friends, St. Peter, denied him three times! Ultimately, only three proved to be his true friends: his own mother Mary, St. Mary Magdalene (a reformed prostitute), and the young teenager, St. John, who all stood by him at the foot of his cross just being there for him while he suffered and died. The good news is that Jesus forgave all his other friends and they went on to be great witnesses for him. So don't worry about whether or not others "like" you, but rely completely on the unconditional love and friendship God has for you regardless of what you're going through in your life.

Try as much as you are able to be patient and stay humble of heart with others, trust in God completely and not in yourself or others. It's not possible to please everybody, but it is possible to please God. St. Paul tried to please everyone in the Lord and became all thing to all people in order to evangelize them, but he didn't worry about whether or not people "liked" him or not, but he put his faith and trust completely in God, his one true and faithful friend.

The important thing to remember is that it doesn't matter whether or not others "like" you or how they treat you, but how you treat others! If your friends betray you, abandon you, or mistreat you, don't treat them the same way, but rather be like Jesus and forgive them and continue to love them. "Loving" someone is quite different from "liking" someone. You're not going to "like" everyone and not everyone is going to "like" you. If others are unfriendly, rude, hateful, or disrespectful to you, then return love, kindness, and blessings instead. And pray for them that God will work in their lives so they can become better people.

When our lives are over, it really won't matter how many friends you had, but whether you were a friend to others by sharing the love God has for them and introducing them to your best friend, God, who also wants to be their best friend too.

Sunday, August 7, 2016

How America Turned Into a Country of Makers and Takers (It’s Not How You Think) by Jeremy Repanic

How America Turned Into a Country of Makers and Takers (It’s Not How You Think)

Interview with Rana Foroohar by Jeremy Repanic, Playboy July 12, 2016

Back in 2012, Mitt Romney and his running mate Paul Ryan divided America into two classes: makers and takers. In that more genteel era of Republican politics, the GOP candidates for the White House argued that a growing portion of America had become dependent on the hard work of others through government assistance. Romney pegged the number at 47 percent while Ryan said the mooching class was much bigger. If this kept up, they intoned, the American economy would go to shit.
Rana Foroohar has flipped this argument on its head. The Time magazine business columnist and CNN global economic analyst contends in her new book Makers and Takers: The Rise of Finance and the Fall of American Business that the “Takers” in the U.S. economy are actually the ones who believe they are the “Makers”. These Americans have amassed their wealth through financial tricks and short-term thinking at the expense of investment in sustainable growth. Instead of creating new wealth, they are skimming off the top of the rest of the economy, which does, in fact, make things. Wall Street culture has swallowed up Main Street.
To what extent has finance come to dominate our economy? Foroohar cites two statistics. The first is, “Only about 15 percent of all the money in our market system actually ends up in the real economy—the rest stays within the closed loop of finance itself.” And the second is that “The financial sector takes a quarter of all corporate profits in this country while creating only 4 percent of American jobs.” But this isn’t just JP Morgan or Goldman Sachs hoovering up the country’s economic gains that hurts the U.S.; companies like Apple are focused increasingly on making money by moving money around instead of focusing on research and development that can make them viable for years to come.
We sat down with Foroohar to discuss her book, how our economic system came to be so broken, the unrest it has caused—and if she sees any hope for fixing the problem.
How did you sense that something had gone awry with the American economy?
I have been a business and economic journalist for 23 years. I would constantly be talking to CEOs that I knew were smart guys and not bad guys. They would be doing what they were incentivized to do. But they’d be making really short term decisions. A lot of it had to do with outsourcing, a lot of it had to do with cost cutting. It was always about marshalling your capital and making sure you were controlling the capital, but not thinking at all about people; not thinking at all about what does this mean for 5 years, 10 years.
But I noticed a really marked contrast there with family-owned firms compared to public companies. I grew up in the rural Midwest where you have a lot of family-owned businesses. So there were a lot of kids from big farm families or local community banking families that I went to school with. They had a totally different perspective. They still invested back in their companies.
It made me start thinking about all these arguments that you hear Fortune 500 companies putting forward about “If only there wasn’t as much red tape. If only taxes were lower. If only there wasn’t so much bureaucracy in Washington. We would be able to invest and be more magnanimous.”
But the private companies were already doing those things. What was the difference? I came to believe—and the research shows—that the difference is pressure from Wall Street causing business owners to make really bad decisions.
You use Apple to illustrate your argument, which is that American companies invest more and more in financial tricks instead of product development. What are examples of Apple doing this?
The first chapter of my book details this whole bizarre phenomenon where Apple, the richest company in the world, has $200 billion dollars in cash sitting in offshore bank accounts. It doesn’t want to bring it back to the U.S. to pay the corporate tax rate here so they’re borrowing money instead. They’ve made promises to borrow almost the exact same amount, close to $200 billion, to do share buybacks. To give you a little background, share buybacks are when companies go and buy up their shares on the open market and it artificially jacks up the share price because you decrease the number of shares. It’s like a numbers game. It’s a shell game.
Investors like Carl Icahn love it. He’s been tweeting for years telling Apple to pay back more money to shareholders in the form of share buybacks. Every time they do they get a kick up in the stock price, but they’re not putting that money into new products or factories or worker training. In fact, I would argue that they haven’t had a real game changer since Steve Jobs passed away in 2011 in terms of their underlying technology.
The whole thing—not to sound too Marxist or anything—is compounded by the fact that they’re hoarding these profits overseas to avoid paying U.S. tax rates but government research, pentagon research, basically invented all the smart parts of the smart phone: GPS, internet, touch screen, all that. It’s a strange hoarding of wealth that doesn’t increase prosperity at a broader level and is eventually going to, I believe, undermine the company. Carl Icahn just dumped all the stock a few months ago because they got some bad news in China. Then their stock price tanked. It just shows you how volatile that kind of growth is.
Steve Jobs was—almost ruthlessly—devoted to product and wouldn’t listen to people like Icahn in the way Cook does. Jobs built the company’s value on that. Cook gets to trade on the reputation for years until people realize the emperor has no clothes.
Exactly. There have been so many companies in the Valley that have gone this way. HP is a great example: Once a great company, now just really sort of a lame, has-been conglomerate. You think about what Steve Jobs did and you can’t imagine Tim Cook going to Wall Street and going hey, we’re going to build a bunch of giant glass boxes and put three products in them. It’ll be super cool. And we’re just going do it. He would never give that message. The analysts would laugh him out of the room and that would be the end of it. But Jobs did things like that. That’s why the brand became such a hot commodity.
Our economy wasn’t led astray overnight, how did we get to this point?
Two things. A lot of people associate the rise of Wall Street with the 1980s, but I actually think it goes back further. In the late ‘60s and early ‘70s—around the time of the Vietnam War—growth was slowing. There was a guns and butter debate about whether we’re going to spend on the war or spend on social programs at home. There were really hard questions being asked in society and in the economy, and Washington didn’t want to deal with it. They didn’t want to have to choose between voting blocs, basically. So they threw the ball to the markets. By 1980 you had deregulation of industries under Jimmy Carter. The Reagan administration continued it, so did Bill Clinton’s administration. Each time it was like politicians didn’t want to do the hard work of reforming education or building new bridges or rethinking manufacturing because that’s hard, and not easy to sell to the public.
So they said to Wall Street, “You create the growth.” And they did. But it was a fake growth, it was a saccharine growth, and I think what the markets are telling us now, and in particular the divide between the markets and Main Street is saying that we’re at the end of that. That division is about to break.
I actually think we’re going to be in for a market correction when that happens.
So, you believe the market bouncing back so strongly since the Great Recession is saccharine growth?
It’s a sugar high. The Fed—God bless them, they were the only organization that could do anything after the crisis, because Washington was so gridlocked—but they threw $4 trillion into the economy. And it has barely got us to 2 percent growth. But it has jacked the markets way up because that’s what easy money does.
So it gives everybody a false sense of optimism. But the smartest investors on Wall Street know the market doesn’t actually reflect the fundamentals on Main Street right now. There’s a widespread feeling that at some point those two things will correct and will rejoin.
That undermines the Efficient-Markets theory, that stocks trade at fair value. But the larger implication is of the theory is “markets know best; better than individuals or the government.”
The Efficient Markets theory is amazing. If there’s anything that 2008 showed us, it’s that markets aren’t always efficient. But this is still what’s being taught in business schools. It’s a really hard slog to get people to think about things differently. The killer stat in my book is that if you think about what banks are supposed to do, they’re supposed to take all of our money and hold it in the form of deposits and then lend it out to businesses that create jobs and growth.
Today only 15 percent of all the money in financial institutions goes to business. The rest of it essentially goes to trade up assets and bubbles in stocks and housing and bonds. What’s amazing is that figure did not exist until a couple of years ago because nobody actually looked at what the financial system did. The efficient markets theory just kind of assumes that finance is going to be efficient, and nobody really looked too much at what it’s doing. It’s just this huge blind spot in the economy.
Even if they are efficient, that doesn’t mean they help make society better.
All the metrics that the financial industry can produce, there’s one metric they haven’t come up with since the crisis. That is a number showing a clear measurable benefit in terms of lending and the type of deals they’re doing for society.
How have you seen attitudes change in your two decades of covering business? Before the crash you could have seemed like a radical for writing this book.
It’s funny, one of the things I remember is that right after the fall of Lehman Brothers, Marxism started trending on Google. And it has remained high ever since, interestingly.
One of the telling things to that point is that many of the top sources in the book that came from finance are older guys. They’re guys like in their 70s and 80s—people like Warren Buffet or Jack Bogle—they came of age at a time when financiers really saw themselves as stewards of people’s money and stewards for business. Helpmates to business. And they totally agree with everything in the book. They see these young trader guys straight out of the cast of Billions or something and they just see them as foreign species. It’s a different kind of business than it used to be.
Through my own experience, and I see echoes of it in your book, there’s an anxiety about overreliance on letting “The Market” drive all our decisions, because it lacks humanity—and the consequences of that make us feel even worse.
I think that’s absolutely right. The way I had thought about it is, to me, the idea that you can be in an economy like America’s that is 70 percent consumer spending and have nobody have gotten a raise since the early 1990s in real terms, at some point that stops working.
Starbucks CEO Howard Schultz said to me one time that we’ve become a nation of latte makers and latte buyers and you’d better make sure you have enough buyers, because otherwise you’re not going to be making any lattes anymore.
You’re going deeper and saying something important. At the end of the day you’ve got to have an economic system that supports more than just the 1 percent. Otherwise you become pre-revolutionary France.

Laura Rose

Rana Foroohar

Maybe you are a radical!
[Laughs] I guess maybe I am a stealth radical. I mean, the truth is that I really respect business people. I’ve covered business for over two decades. I actually worked in venture capital briefly myself. I know how hard it is to make anything well, and to make things happen in business. It’s so much easier to write about it than to make it happen.
But I also see how selfish and transactional the system can be sometimes. And conversely, I see how when people do things that are not explicitly transactional and take even just a moderately longer-term approach, that you can come out in a much much better place.
We’ve all lived that experience. I think that’s why the book is resonating; it kind of chimes with people’s felt experience. It’s like we’ve all been in one of these companies where the CFO is making some incredibly dumb decision—like to outsource all of the technology to Bangalore and pay people 50 cents—and then suddenly when your laptop breaks it takes three weeks to fix it.
Do you sense a growing discontent with our financial system?
One thing that’s been super fascinating to me: I thought I was going get tons of Fortune 500 CEOs calling me saying, “This is such a great book, thank you for standing up for us.” Not at all. Interestingly, a bunch of financiers have been calling. Hedge fund guys, you know, big deal sort of traders, saying, “We’re really interested in this thesis. Tell us more about this.” Because they know that it’s a growth problem. They know the fact that finance has gotten too big is actually starting to erode Main Street and that will eventually hit their portfolios. So to the extent of Wall Street itself has become nervous about this problem, in a Machiavellian way it might be a good thing, that they’re starting to pay attention.
Is there a generational difference between Boomers and Millennials that could foster change?
Definitely. I think that Millennials, for starters, are questioning capitalism. Harvard did a study and it basically asked “Are you a capitalist and do you support capitalism?” Only 18 percent of Millennials considered themselves capitalists. Only 30 percent supported the capitalist system as a whole. Which is kind of amazing.
But you could even look at that and say, well, they’re young, that’s what they’re supposed to do. But then they asked people over 30. Among that group about half supported the system. So you have 30 percent of people over 30 saying I’m a capitalist and only half saying they support the system. To me, that’s no longer an “I’m feeling the Bern” fringy thing. That’s a majority of people questioning the status quo economic system in the country. So I think that’s a tipping point.
I think also Millennials are very interested in purpose-oriented companies. They’re willing to go for less pay if they sense that there’s a mission. I actually just spoke to the CEO today of Ocean Spray, which is the big cranberry drink company, they’re a cooperative. They’re worker owned. So they have the 750 farms that they harvest from own the company. The CEO was telling me he had seen a real uptick in high quality CVs coming in from Millennials who want to work there because they think it’s a cool model, a cool thing to be part of.
It will take a long time to solve this problem. We will have to change whole institutions and cultures, right?
Yes, but technology shifts are happening that are empowering individuals. The fact that you and I as journalists—we might not be successful—but we could go out and start a website. We could start a publication in a way we could not have 10 or 20 years ago. I think that we’re just at the beginning of what that change is going to evolve to.
I don’t know if it’s going happen. We could all just be Uberized to death. But it’s something hopeful I think. It’s also important to remember it took 40 years to get here so it’s not like there’s just one silver bullet. There’s lots of things we can do and I have a whole solutions chapter about that. But there isn’t just one thing. It’s a big ecosystem.
You have take hope from the fact that if you plant the seeds now, they’ll take a long time to germinate and change this system. Just look at how the conservatives planting the intellectual seeds of a conservative judiciary with the Federalist Society led them to take the Supreme Court decades later.
Conservatives have always been much better at doing this than liberals. In fact, there is a group called INET, the Institute for New Economic Thinking, which is funded by George Soros, and they were one of the big supporters of my book. They are doing this in the economic profession right now. They’re basically seeding funding chairs at universities, they’re supporting journalists like me—not monetarily but with sources and backup—that are doing more questioning of current paradigms, and they have a 20-year plan. The idea is we start now and then hopefully things are better later.
Do you think kind of the left was playing just defense for too long and not putting forth a proactive agenda?
I’ll say something which may rub certain liberals the wrong way, but I think it’s true. The left dropped the ball around the time of the Vietnam War and afterwards, and got very focused on identity politics and racial politics and not on the economic changes that were coming. Maybe that made sense at the time, but this is a battle that’s just starting to be fought with Bernie Sanders coming to the fore, we’re now seeing what minorities and working class whites have been struggling with since the ‘70s, everybody is now struggling with. Millennial women aren’t worried about electing a woman, they’re worried about electing someone that will get them a job. Black Millennials are not so much worried about racial issues as overall economic issues. So suddenly there’s this larger banner that the left can kind of rally under that has to do with the 1 percent versus the 99 percent and I think that conversation and that shift is starting to take place in politics.

Friday, August 5, 2016

The Golden Hammer Rule

Dr. Abraham Maslow, Ph.D., the famous American psychologist, once said, “I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.”  

This concept is known as the Golden Hammer Rule, and it’s simply an over-reliance on a familiar tool. For example, physicians, chiropractors, physical therapists, acupuncturist and many other healthcare professionals, epitomize the Golden Hammer Rule with all their various healthcare treatments. If you go to a physician, they'll want to prescribe medication; if you go to a surgeon, they'll want to operate; if you go to a chiropractor, they'll want to adjust your back; if you go to a physical therapist, they'll want to stretch your muscles and have you do exercises; if you go to an acupuncturist, they'll want to stick needles in your body. The list of examples could go on and on.

But most of us realize that it takes a holistic approach to solve many health problems. There's no one healthcare solution or Golden Hammer that'll fix everything. It's a combination of various treatments.

In the case of Economists, their Golden Hammer is the economic theories that have been in vogue for the past forty years, namely The Chicago School of Economics and their devotion to laissez faire capitalism. The definition of insanity is doing the same thing the same way and expecting different results! We’ve gotten where we are today by following these same economic theories and not looking at other causes to our economic problems. And the only ways to reverse our current economic morass is by reexamining our beliefs and chart a new course for a better economic future.

Rana Foroohar, who is an assistant managing editor at TIME and the magazine’s economics columnist, in her recently published best-selling book Makers and Takers: The Rise of Finance and the Fall of American Business, makes a compelling argument that Finance and not just poor economic theory is mostly to blame for our current economic problems. She makes the point that most economist (who were asleep at the switch during the 2008 financial meltdown) have very little academic training in finance, and haven't spent much time researching the economic impact the finance sector has on our economy.  Starting with Presidents Carter through Obama, most Presidents have slowly deregulated the finance sector of our economy. She also argues that the Dodd-Frank law enacted after the 2008 financial meltdown made everyone feel a bit better, but didn't really change the way Wall Street or the Big Banks operate due to so many loop-holes written into the law (mostly by Wall Street lobbyist).  This is a prime example of crony capitalism at work!  Only by enacting new, stricter laws and regulations can America break the stranglehold Wall Street and the Big Banks have over our economy. Ms. Foroohar in the final chapter of her book gives a laundry list of suggestions to change things for the better. A similar argument was made during the Democratic primaries by Senator Bernie Sanders, and during the recent convention managed to get many of his ideas put into the Democratic platform, namely Wall Street reform. (We'll see if any of his ideas come to fruition?)

Over a year before Rana Foroohar published her new book, she wrote this in a February 13, 2015 TIME article entitled, “What’s Really to Blame for our Weak Economic Growth.”

After years of hardship, America’s middle class has gotten some positive news in the last few months. The country’s economic recovery is gaining steam, consumer spending is starting to tick up (it grew at more than 4% last quarter), and even wages have started to improve slightly. This has understandably led some economists and analysts to conclude that the shrinking middle phenomenon is over. 

At the risk of being a Cassandra, I’d argue that the factors that are pushing the recovery and working in the favor of the middle class right now—lower oil prices, a stronger dollar, and the end of quantitative easing—are cyclical rather than structural. (QE, Ruchir Sharma rightly points out in The Wall Street Journal, actually increased inequality by boosting the share-owning class more than anyone else.) That means the slight positive trends can change—and eventually, they will. 
A new report from Wallace Turbeville, a former Goldman Sachs banker and a senior fellow at think tank Demos, which looks at the effect of financialization on economic growth and the fate of the working and middle class. Financialization, is the way in which the markets have come to dominate the economy, rather than serving them.
This includes everything from the size of the financial sector (still at record highs, even after the financial crisis and bailouts), to the way in which the financial markets dictate the moves of non-financial businesses (think “activist” investors and the pressure around quarterly results). The rise of finance since the 1980s has coincided with both the shrinking paycheck of most workers and a lower number of business start-ups and growth-creating innovation.
This topic has been buzzing in academic circles for years, but Turberville, who is aces at distilling complex economic data in a way that the general public can understand, goes some way toward illustrating how the economic and political strength of the financial sector, and financially driven capitalism, has created a weaker than normal recovery. (Indeed, it’s the weakest of the post war era.) His work explains how financialization is the chief underlying force that is keeping growth and wages disproportionately low–offsetting much of the effects of monetary policy as well as any of the temporary boosts to the economy like lower oil or a stronger dollar.
I think this research and what it implies—that finance is a cause, not a symptom of weaker economic growth—is going to have a big impact on the 2016 election discussion. For starters, if you believe that the financial sector and non-productive financial activities on the part of regular businesses—like the $2 trillion overseas cash hoarding we’ve heard so much about—is a cause of economic stagnation, rather than a symptom, that has profound implications for policy.
For example, as Turberville points out, banks and policy makers dealt with the financial crisis by tightening standards on average borrowers (people like you and me, who may still find it tough to get mortgages or refinance). While there were certainly some folks who shouldn’t have been getting loans for houses, keeping the spigots tight on average borrowers, which most economists agree was and is a key reason that the middle class suffered disproportionately in the crisis and Great Recession, doesn’t address the larger issue of the financial sector using capital mainly to enrich itself, via trading and other financial maneuvers, rather than lending to the real economy.
Former British policy maker and banking regular Adair Turner famously said once that he believed only about 15 % of the money that followed through the financial sector went back into the real economy to enrich average people. The rest of it merely stayed at the top, making the rich richer, and slowing economic growth. This Demos paper provides some strong evidence that despite the cyclical improvements in the economy, we’ve still got some serious underlying dysfunction in our economy that is creating an hourglass shaped world in which the fruits of the recovery aren’t being shared equally, and that inequality itself stymies growth.

Sunday, July 24, 2016

Technology has Rocked the Publishing Industry: The Case for Self-Publishing by Todd Neva

Technology has Rocked the Publishing Industry: The Case for Self-Publishing by Todd F. Neva

At some point, the publishing industry ceased to be curators of good literature and instead became evaluators of marketing plans.

The secret to getting published today is to have a platform of thousands of followers on Facebook, a congregation of over five thousand, a famous last name, or prior moderate success at a small publisher.

Small publishers still evaluate the work of first-time authors, but a marketing plan is as important as the writing. Large publishers are mostly concerned that you can sell at least 10,000 books.

And now, after years playing gatekeepers for what ends up on bookstore shelves, major technology changes have rocked the industry.

1) Online sales: In 2015, about 570 million paper book were sold of which about 60% were sold online. Amazon alone sold about 40% of paper books.

2) E-books: It literally takes only hours to format a book for sale for Kindle or Nook readers. E-books make up 30% of all book sales, and Amazon has 65% share of that format.

So all told, online sales make up over 70% of the market, and I suspect well over 95% of book sales from small publishers.

3) Direct print: It takes mere days to format a book for sale as a print on demand paperback, and the quality is outstanding. And no inventory is required.

Publishers used to make metal plates for offset printing, and they had to run thousands of copies to gain economies of scale. But a huge upfront investment is no longer required. With digital print on demand, a reader orders a book, and Amazon literally prints one copy, collating the pages in a massive machine, binding it with a freshly printed cover, and mailing it minutes later.

If self-publishing is so easy given e-books and print on demand, and if the driving factor for getting a publishing contract is your marketing plan, and if you can get virtually the same distribution, why not cut out the middleman and self-publish?

I would say two reasons. First, going through a small publisher forces you to get your book to a standard that at least one other person would accept, and second, you can say you've been published. There's no chance of getting in with the big publishing houses without paying your dues. And once with a big publisher, you'll have access to a large public relations and marketing machine that can sell books.

But interestingly, several well-established authors are leaving the big houses for self-publishing. Why give the publishing houses three-fourths of the royalties when you can sell just as many books without them. Even if self-published authors sell half as many books, they can make twice as much money.

Additionally, self-publishing gives the author more artistic control. Publishing houses, particularly Christian publishers, impose standards on their authors. One literary agent wrote in a blog, "Write by the most conservative standards. . . . Imagine writing for your very strict grandmother or an aunt who's easily shocked."1

If that is indeed your narrow market, then that particular agent and the publishers she represents would be a good fit. Otherwise, you would face different restrictions with another agent or publisher.

Here is the strongest case for self-publishing, if you really think your book is something special, then you should be the first to take a chance on it and reap all of the benefits.

1., accessed July 22, 2016.

TODD F. NEVA grew up on the Iron Range of Northern Minnesota. He earned a BS in Business Marketing and an MBA from the University of Minnesota's Carlson School of Management. He worked in marketing research, finance, and manufacturing for over 16 years with large, consumer goods companies in the Midwest before becoming permanently disabled with ALS. He co-authored with his wife Kristin Heavy, available in print on demand and e-book through Amazon, and he blogs at to give hope to those who suffer from ALS as well as all of us who struggle with life's burdens. Todd is a six year survivor of ALS and lives in the Upper Peninsula of Michigan with his wife and two children. He speaks occasionally at Evangel Baptist Church in Houghton, Michigan. You can find his sermons by following this link.

Sunday, July 17, 2016



Note: This article is a long, overdue follow-up to some previous articles I've written on changing the world. (Read my article entitled, “Change Yourself and You’ll Change the World”; and my article entitled, “How Can You Become A BetterPerson?”)

It’s obvious we live in a broken world. Just listen to the nightly news or read your favorite Internet news site, and you’ll learn about another horrific, terrorist attack on innocent people; you’ll learn about the unspeakable crimes people commit; and you’ll learn about ongoing wars, violence, oppression, injustice, hunger, starvation, disease, poverty, prejudice, government and corporate corruption—and many others.

Politicians campaign to win elected office promising to help change our society and world for the better in order to solve the pressing problems we all face; some are more successful than others, but it’s a thankless job, and people spend more time criticizing them than in trying to help improve things.

Each of us needs to do our part to help change our world for the better.

When I first started working as a field engineer, I was told by management and sales, “Perception is reality!” In other words, a customer’s perception of the truth is what they believe to be true; every customer has their own truth or beliefs (right or wrong) in which they view the world (everything is relative). Consequently, you as a field engineer have to accept, conform, and cater to your customer’s perception of reality. 

As an engineer, I was taught to always seek the truth through research and science so this statement was anathema to me. I’d always push back when a manager or salesman told me this by replying, “Reality is reality!” And I spent my entire eighteen-year career in field service trying to convince my customers, managers, and salesmen of the truth.

Simply put, the truth is the way the world really is! It’s not any more complicated that that. People make it more complicated than it really is, but it’s really not. In other words, a statement is true if it accurately corresponds to the reality of the world; otherwise it’s simply not true. Scientist, engineers, physicians, and other scholars spend their entire careers looking for the truth because we believe that the truth will set us free and help us solve the pressing problems we face today. If someone does not want to accept the truth, they’re deluding themselves and choosing to believe a lie.

Moreover, the truth can be discovered. This was the main conflict Socrates and his protégé Plato had with the other Greek philosophers of their day, the Sophists (read about it my article, “Change Yourself and You’ll Change the World.” Also, read my article, “What is Truth?”). The Sophists did not believe that the truth was knowable, while Socrates rightfully argued that the truth could be known with certainty. We all live in the same world, so there can’t be different truths for different people. There’s only one truth, and the truth is the same for everyone. 

One way we can help change the world for the better is to have the courage to stand up for the truth. Standing up for the truth takes real moral courage and intestinal fortitude, and it may mean being ostracized from others. It’s not easy. Oftentimes it’s far easier to go along to get along than to stand for the truth. But if you stand up for the truth in an honest, respectful way, I believe that in the long-term you’ll be vindicated.

So why are there so many different perceptions of the truth?  I think what it really means is that most fair-minded people agree on the reality of a situation—or the truth—but they have different views and beliefs about what the truth means, the importance of the truth, and how best to solve the problems we all face.  Once we can all agree on what is in fact true, then we can debate on solutions to solve the problems we have. 

Take for example the different political parties: most fair minded politicians agree on what is true, what they disagree on is how best to solve the problems, and that is what they debate over. Some politicians will purposely lie about something, so it's important to check the facts before you believe them. Some political pundits will make a mountain out of a molehill or vice versa. Once again check the facts and decide for yourself. Moral issues are another area of debate as moral relativism is quite rampant in our world today. All you can really do in these cases is to have the courage to stand for what you believe in as you cannot force someone else to believe as you do. But I think if you stand for what you believe, in the long-term, you'll be proven right.     

The truth can be a demanding taskmaster.  Living a life of truth can be a hard, rocky, and difficult path to follow. Falsehood is easy. Committing yourself to the truth can cost you a lot; it can mean the difference between worldly success or failure, fame or obscurity, fortune or poverty, pleasure or pain, reward or sacrifice, life or death, etcetera.

So why live by the truth if living by lies and falsehood is so much easier and rewarding? That is a question each one of us must answer for ourselves; but it’s probably why so few of us actively pursue and live by the truth. Personally, I believe that being committed to the truth is its own reward, and being a follower of Jesus Christ demands that one live according to the truth and not lies. Being truthful in all that we say and do, being discrete and not divulging secrets, and being careful not to be duplicitous or hypocritical are virtues worth striving for. St. Thomas Aquinas once said, “Men could not live with one another if there were not mutual confidence that they were being truthful to one another.”

When I was a child one of my favorite books was: Pierre: A Cautionary Tale in Five Chapters and a Prologue by Maurice Sendak published on Jan 1st 1962. (Follow this link to listen to the story on youtube.) Pierre was indifferent and always said, “I don’t care!” And it took something really bad to happen to him before he finally learned to care.

Most of the people in the world today are indifferent to the problems we face in our world today. They’re just looking out for themselves rather than for others, their neighbors. Standing up to indifference takes real courage in a world that tells you to just worry about yourself and not make waves.

Martin Niemöller (1892–1984) was a prominent Protestant pastor who emerged as an outspoken public foe of Adolf Hitler and spent the last seven years of Nazi rule in concentration camps. Niemöller is perhaps best remembered for this quotation:

First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.
Then they came for the Trade Unionists, and I did not speak out— 
Because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out— 
Because I was not a Jew.
Then they came for me—and there was no one left to speak for me.

The quotation stems from Niemöller's lectures during the early postwar period. Different versions of the quotation exist because Niemöller often spoke extemporaneously and in a number of different settings. Other variations of the quote refer to other diverse groups such as Catholics, Jehovah's Witnesses, Communists, and Gypsies.

Nonetheless his point was that Germans—in particular, he believed, the leaders of the Protestant churches—had been complicit through their silence in the Nazi imprisonment, persecution, and murder of millions of people.

Another way we can help change the world for the better is to have the courage to stand up to indifference.  We have to keep our priorities straight in life. We should put God first, others second, and ourselves third—everything else, especially money, material possessions, or our careers—should be way down on our priority list. We should have the courage to fight for social justice and fairness for everyone.

Finally, one of the ways we can help change the world for the better is by performing works of mercy, or charitable actions by which we come to the aid of our neighbors in their physical and spiritual necessities.  Here’s a list:

Corporal Works of Mercy
1.    Feed the hungry
2.   Give drink to the thirsty
3.   Clothe the naked
4.   Shelter the homeless
5.   Visit the sick
6.   Visit the imprisoned and ransom the captives
7.   Bury the dead

Spiritual Works of Mercy
1.    Instruct the ignorant
2.   Counsel the doubtful
3.   Admonish sinners
4.   Bear wrongs patiently
5.   Forgive offences willingly
6.   Comfort the afflicted
7.   Pray for the living and the dead

It doesn’t matter who you are or where you live, whether or not you’re rich or poor, young or old, educated or uneducated, male or female etcetera. None of that matters, we’re all God’s children called to do our part to help change the world for the better. We may do great things or small things, but we should all try our best to use the talents God has given each of us to help make our world a better place to live in.