Barack Obama... A man of our time

Writer John Naisbitt once said “Leadership involves finding a parade and getting in front of it.” I’m not sure that’s quite the right definition of leadership, but it certainly applies to Barack Obama. Just before his election in 2008 he said “We are five days away from fundamentally transforming the United States of America.” What he might have more accurately said was “America is fundamentally changing and I’m here to speed up the process…”

America is indeed changing, and not in a good way. How far has it changed? One need only look to the President’s response to last week’s CBO report about ObamaCare eliminating 2.5 million jobs, most of them being those of low skilled and low wage workers.  White House Press Secretary Jay Carney said: “Individuals will be empowered to make choices about their own lives and livelihoods,” and that they “would have the opportunity to pursue their dreams.”

Fantastic! So now, according to the President, because of Obamacare Americans are now free to follow their dreams without having to worry about the minor issue of financial consequences. Get ready for lots more rock bands and philosophers and actors and artists. Of course this is not exactly new. American college students have been moving away from STEM (Science, Technology, Engineering & Math) courses and into soft categories such as humanities, liberal arts and education for years. In those core areas, where American companies have tens of thousands of high paying jobs they cannot fill because American are simply not qualified, half the students receiving graduate degrees are international students. Add to that the 1/4 of the American students in STEM classes who are foreign born and you can see that Americans have been “pursuing their dreams” for decades. While following your dreams has its benefits – such as more time for partying and fewer late nights of studying – it has downsides too such as higher unemployment and or lower salaries that often come with humanities and social science degrees.

There is of course much more below the surface of the President’s new appreciation for pursuing dreams. Destroying another 2.5 million jobs (or full time equivalents) is exactly what the country needs with a Workforce Participation Rate that is at its lowest point since 1976, and which has been in a precipitous decline since he took office. Then there is the number of people who are claiming disability. It has skyrocketed in recent years – including under Obama. Since 1972 the number of Americans working has increased by 82% but the number of people claiming disability has increased by almost 500%. What’s worse is that America’s service economy of 2014 is a far safer place to work than our manufacturing economy was 40 years ago. And of course one can’t ignore the intersecting paths of food stamps and income tax. Today there are a record 47 Million Americans on food stamps while 47% of Americans pay no income taxes at all.

The parade Barack Obama has decided to jump in front of and lead is the shift from a society where the vast majority of people worked hard and supported themselves and their families to one where a significant number of Americans, if not quite yet a majority, are simply interested in what the government can take from others to give to them. At what point does the system become unsustainable? One doesn’t need a STEM degree to recognize that eventually the number of taxpayers paying into the system can’t support the rapidly growing number of people taking from it. An upside down pyramid can’t stand for long.

So Barack Obama hasn’t really transformed America. He’s simply made it chic to be a socialist. He's made redistribution cool. He's made paying taxes a fool’s errand. Like schools that award medals for participation or little leagues that ban keeping score, Barack Obama has sought to make Americans forget that success and prosperity are forged in the crucibles of hard work, investment and ingenuity and not in the halls of government. He has sought to make being on the dole just another form of pursuing one’s passion. He has sought to replace individual responsibility with government largesse as the symbol that defines our nation. Unfortunately Barack Obama is very much a man of our time. We can only hope that by the time he leaves office Americans will have recognized him for the pied piper he is, seeking to lead the nation over a cliff. 

Can A Nation Built By Giants Survive Nanny State Paternalism? The Numbers Don't Look Good...

While US Constitution and free market capitalism set the the foundations for American prosperity, it took a rugged, passionate, free people to build it. From George Washington to George Washington Carver to millions of other Americans, the United States was carved out a continent of forests that seemed to go on forever, fertile plains, vast mountain ranges and scorching hot deserts.  Over time American frontiersmen and settlers forged a country that seemed to have all of God’s blessings in abundance.

Conditions were rarely easy for most Americans throughout most of our history. Coal miners spent 12 – 16 hour shifts in dangerous coal mines in which they sometimes couldn’t even stand. Frontiersmen built a homestead and a farm out of a thick Appalachian forest while fighting brutal winters and a tenacious Indian population. Slaves toiled for years at backbreaking work during freezing winters and boiling summers. At the end of the 19th century over 50% of Americans still lived and worked as farmers, a far more dangerous job than most people understand. The industrial revolution brought sweatshops and drove a thirst for steel, trains and petroleum.

One sometimes has to marvel that America survived long enough to challenge the British for independence and then go on to grow and prosper (mostly) for over 200 years as it changed the world. Were the Americans who carved a nation out of a continent somehow so different than Americans today? Were the Americans who crisscrossed a continent with railroads, telephone lines and highways so different than Americans today? Were the Americans who won two world wars and sent a man to the moon so different than Americans today? Were the Americans who invented the mechanical reaper, air conditioning, vulcanized rubber and the microchip any different than Americans today? Not based on DNA they weren’t. But that doesn’t mean they were the same. While the DNA of the American people today is no different than that of the people who invented the elevator or the light bulb, the American people writ large certainly appear to be.

Go back a little more than one generation ago and it seems like Americans were something of another species. They appear to be relative supermen. In 1970 there were 78 million people working in the United States. At the same time there were 1.5 million people on Disability Insurance. That means that one person out of every 53 workers was on Disability. Fast forward 4 decades and it seems as if the world has turned on its side. By 2012 the number of Americans working had risen by 82% to 143 million people. During that same period however, workers receiving disability insurance skyrocketed up 491% to 8.8 million. Today, instead of one out of every 53 workers being on disability, it’s one in sixteen! That number is particularly interesting because the United States of 1970 was a far grittier place than the United States of 2013.

First off, the United States in 2012 is a much different workplace than the one that existed in 1970. In 1970 fully 25% of the American workforce worked in manufacturing while only 30% of employees worked in the service industry. Today, less than 10% of the American workforce works in manufacturing while over 50% of workers work in the service industry. Given that designing a website, taking an order at Red Lobster or greeting a guest at the front desk of a Marriott is generally less dangerous than welding together various pieces of a Lincoln Town Car or operating a blast furnace at a USX steel plant, America should be a safer place to work. And indeed it is. The death rate for American workers in 1970 was 18 per every 100,000 workers. By 2010 that rate had dropped to 3.6 deaths per every 100,000 workers, a decline of 80%.

But of course work is not the only place where one gets hurt. Today, virtually everywhere Americans go everything seems safer. Cars have seatbelts, antilock breaking systems and a plethora of airbag options. Houses have GFCI circuit breakers in bathrooms and kitchens and smoke detectors in almost every room. Lawn darts are but a distant memory and towns across the country require helmets for bicycle riding and virtually every appliance and medicine comes plastered with book length warning label. At the end of the day, America has become a far safer place to live and work than it has been at any time in its history.

Somehow, however, despite that much safer America, the number and percentage of people listed as disabled and receiving disability payments has skyrocketed.

“ Since the economy began its slow, slow recovery in late 2009, we’ve been averaging about 150,000 jobs created per month… In that same period every month, almost 250,000 people have been applying for disability.” So the world has changed so much that Americans are now seeking disability benefits at a 60% faster rate than they are getting new jobs! That is a staggering statistic.

How is that even possible? Have Americans become weaklings, unable to stay healthy. Has some unknown affliction made us incapable of working? No. There is an affliction, but it’s not biological. It’s called the nanny state. From judges who rubberstamp virtually every claim they ever see to 34% of applicants who have musculoskeletal injuries, which conveniently enough cannot be detected by doctors, to outright fraud (more)(more)(more) and states seeking to shift costs to the federal government, the program is a symbol of much of what is wrong in America in 2013. Indeed, in some places 1 out of 4 workers (or former as the case might be) is on disability.  The worst thing about this dysfunctional program is that the fraud keeps people who are in real need of help waiting in line, sometimes to die.

When government decides to play the role of caretaker and redistribute wealth from workers to everyone else, it should come as no surprise that many people will choose to jump from the working pool to the everyone else pool. For more proof just look at the food stamp program over the same 40 year period. While the population increased by about 30%, workers by 82% and disability by 491%, food stamp recipients grew by 1,000%!

The economics of the welfare state, including the “disability industrial complex” cannot be sustained. If the record of the last 40 years were to be repeated over the next 40, in 2050 the country would have 260 million workers supporting 43 million people on disability and 450 million people on food stamps. Those numbers are simply not sustainable, but you wouldn’t know it by the administration’s push to get more people to apply for benefits.

American workers and entrepreneurs have together created the greatest wealth and prosperity the world has ever seen. At some point the spirit that helped forge a nation out of a continent and dot it with jewels like the Empire State Building, the Hoover Dam and the Golden Gate Bridge will reemerge and shout “I’ve had it and I’m not going to take it anymore!” American shoulders may indeed be broad, but the head which sits above them is not suicidal. At some point Atlas will shrug, the question is will it be in time to save the country…

Barack Obama finally embraces Supply Side Economics - but adds just a wee hint of redistribution

Last week the Bureau of Labor Statistics released a report that said that the labor force participation rate (LFPR) dropped to 63.6%, the lowest rate since Jimmy Carter was in office. Essentially that means that of the population of 16 year and older, 37.4% of them decided not to work or not to seek work. That’s 88.8 million people! To put that in perspective, when George Bush took office the LFPR was 67.2% and eight years later it was 1.5% lower at 65.7%. It has dropped 2.1% in Barack Obama’s first four years, the most precipitous drop in workforce participation since they started keeping records in 1948. But percentages only tell you so much. Each of those percentage points represents approximately 2.5 million people. Since Barack Obama became president over 5 million people have simply stopped trying to find a job. If just half of those 5 million people were still looking for jobs, the unemployment rate would actually be 9.4% rather than the official 7.8%. Now some of those are students who chose to go to college because they couldn’t find a job and others are senior citizens who’ve retired from the workforce, but the overwhelming majority of those 5 million are people who have simply given up hope.

And that’s the point, and the problem… Not since the 1970’s have the American people felt so discouraged about the prospects for the nation in general and their individual economic circumstances in particular. For most of American history the notion of having a job, doing something productive for your family and your community was the norm. Barack Obama is seeking to rapidly change that, and he got a good head start during his first term. The President has doubled the number of people on food stamps and he gutted Bill Clinton’s (grudging) welfare reform. That’s his version of Supply Side Economics, he supplies the benefits and people will be happy to give him four more years. Add to this the regulatory nightmare he has unleashed on businesses and four years of demagoguing those who drive American productivity and you have an ever increasing number of Americans who believe they either can’t or don’t have to find jobs.

For much of the 20th century the United States was looked at as the place to come to seek your fortune, to make or do something with your life, basically where anything was possible. Although Hollywood and Coke and Levis brought the American Dream to the rest of the world, far more importantly, most Americans were pursuing it here at home, if not living it. Today something all together different is occurring. As the Gallop poll demonstrated, much diminished is that "Can do" feeling that most Americans had for most of our history, the feeling that prosperity and success were just around the corner and anyone could achieve it if they worked hard enough.  America has become a state of dependence, where half the population pays no income taxes and where 40% of the population suckles at the public tit, either in the form of government handouts or as employees of a bloated bureaucracy.

How long can a population survive when fewer and fewer people are supporting an ever increasing population of non producers? Not long. Frances Fox Piven and Richard Cloward posited in 1966 that you could overload the welfare system in an effort to bring about a redistribution of wealth. If you read their manifesto, you can’t help but recognize their methods in Barack Obama’s policies.

While it’s impossible to know what the future holds, it’s not difficult to wonder what the situation of the country might be in 4 years if the same policies that brought us to where we are today were implemented during the president’s second term.

If Food Stamp growth were to decline to 25% (vs. 50% over the President's first term) there will be 60 million Americans on the program. If Social Security Disability (which is at its highest level on record) increases by another 25% as it did in the last four years, a total of 13 million Americans will be on disability. (What’s most heart breaking about this programs is that the rampant fraud and bureaucratic incompetence are keeping benefits out of the hands of the truly needy.) Those measures alone would bring the total of people receiving government checks (i.e. money taken from taxpayers or borrowed that will have to be paid back by taxpayers) from 18% of our population today to almost 23%. Add in the 8 million or so people receiving unemployment benefits and the 4.4 million on welfare and you have over a quarter of the population on the receiving end of some wealth redistribution program. On the workforce side, if the LFPR declines another two percent it will sit at 61.6%, a level not seen since 1977. With a LFPR of 61.6% and an unemployment rate that stayed at today’s 7.9%, we would have only 141 million workers supporting a population of 323 million people verses today’s 144 million supporting a population of 313… That’s 3 million fewer workers supporting a population that would have grown by 10 million! Inverted pyramids like that don’t last for long.

At the end of the day, one has to wonder what exactly were those 65 million voters hoping for when they voted for Barack Obama? If it was more of the same they just might be in luck… at least in the short run. It appears that the President plans on doubling down on his policies. He appears to be executing the socialist Cloward Piven Strategy perfectly. While his devotees may be happy with his rhetoric today, they will likely not be happy when his grand strategy succeeds tomorrow. The problem with socialism in America is that it assumes a static nature of the citizenry, i.e. that government can impose whatever requirements on workers and producers and they will have no choice but to comply. Nothing could be farther from the truth. With countries from Australia to Canada to Singapore to Estonia to Denmark offering greater levels of economic freedom, those who fund what the government redistributes have many options available to them. Money, like water, flows to the areas of least resistance and the resistance is increasing in the United States. Eduardo Saverin, Tina Turner and a record number of other American citizens are making it clear that do indeed have options. Lots of companies do too. When all of the producers have finally left the country, all that will be left of Barack Obama’s redistributive state will be those who no longer know how to fend for themselves. Somehow I can’t imagine that being the Nirvana that Obama voters were thinking of.

President Obama's deleterious effect on America's work ethic.

The United States was built on the backs of hard working people. From pilgrims who survived an ocean’s journey and founded a colony at Plymouth to slaves who endured the blistering sun as they harvested cotton to settlers who braved temperatures, terrain and Indians to fulfill a Manifest Destiny, the United States was the product of people who worked like their lives depended on it. And in many cases, they did. In the 20th century however, other than a number of wars, and increasingly, simply living in intercity neighborhoods, most aspects of working in America don’t involve putting your life on the line in order to survive.

Today, America is still powered by work, in whatever form it takes, everything from building bridges to creating smartphone apps to finding investment opportunities. Work has created a foundation for the prosperity that has given the United States two centuries of greatness. Unfortunately, the very concept of work as something positive, something necessary, something that is part of a normal family’s existence, is slowly going away… and it’s no accident.

One wonders what someone could do to destroy the work ethic…

For starters, try two full years of unemployment benefits… although the longest period today has dropped to 83 weeks – a year and a half – President Obama had benefits up to an unprecedented 99 weeks in his first year in office. This, despite the fact that studies show that fully 1/3 of those receiving unemployment benefits find a job within one week of their benefits expiring, and a sizable number of the rest soon thereafter. This is not just an exercise in navel gazing… it has a real impact. In Fort Wayne, Indiana, despite offering between $9 and $20 per hour and a 7% unemployment rate, hundreds of employers cannot fill their open positions. Either they can’t find enough qualified applicants (thank you teachers’ unions) or the pay they are offering is simply not good enough to convince people to give up their unemployment benefits.

And unemployment benefits are not the only government program weighing on the work ethic. Then there is welfare. The GOP half of the Senate Budget Committee released a report last week that was astonishing: “Welfare spending per day per household in poverty is $168, which is higher than the $137 median US income per day.” To put that in perspective, those welfare benefits, including food stamps, housing, healthcare and child care amongst other programs, equal to $61,320 per year per household in poverty. That compares to the median US household income of $50,054 per year. And to add insult to injury, that $50,054 is taxable while the welfare benefits are not. A conservative 20% combined federal, state and local tax rate would bring that take home pay to approximately $40,000, fully 35% lower than the income from the household living in “poverty”.

Now of course liberals say that these numbers are skewed and that all those benefits don’t go to people living in poverty, but also go to people who are experiencing particular hardships. Perhaps, but isn’t that exactly what unemployment insurance is for? Should welfare benefits really be going to those who are not living in poverty? And of course, don’t forget, poverty in 2012 doesn’t mean what you might expect.

Then there is this nugget from the Bureau of Labor Statistics: While the economy has created 2.6 million jobs since June 2009, fully 3.1 million workers signed up for disability benefits. There is something staggering about the fact that for every one person who found a job in the last three years, there was another person who not only didn’t help grow the economy, but who sought support provided by people with jobs! It’s like you and a stranger going to apply for a job. You get the job and the stranger says he can’t actually work but wants to be paid out of your salary… You might not be surprised to learn that lax enforcement and fraud are part of the mix.

Finally there is this. It’s called the Labor Force Participation Rate. Essentially it’s the percentage of people 16 years of age and older who are either working or looking for work. (Those not in that number include students, retirees, those unable to work and those not looking for work.) For most of the last 20 years that number has been between 66% & 67%. Since President Obama took office that number has plummeted to 63.6%. That is the lowest level in over three decades. Fundamentally, what that means is that since President Obama was sworn in, fully 2.2% of the adult population of the United States has decided to exit the workforce. (Remember, that doesn’t include those who are looking for work…) That works out to be approximately 5 million people who have decided that they can get by one way or another without working… which means of course that someone else has to pay to support them.

Taken together these data are nothing less than catastrophic. A country that was built on sweat, ingenuity and perseverance is today foundering under the sheer weight of a segment of the population that sees either no need or no point in contributing to the prosperity of the nation. It’s no wonder that the economy is stagnating despite the infusion of over $5 trillion in debt over the last four years.

This is Margret Thatcher’s “The problem with socialism is that you eventually run out of other people's money” playing itself out in real life. Today we have fewer and fewer people getting jobs while we have skyrocketing numbers of people living off of government handouts. Unfortunately, a majority of voters just reelected a man who not only doesn’t see a problem with this, but who has been driving it. What’s worse, he’s using tax and regulatory policy to dissuade investors, entrepreneurs and businessmen from starting or growing the businesses whose jobs are supposed to support this lunacy in the first place. And of course forgotten in all of this is that work, in addition to providing a person with an income, also provides a feeling of dignity, independence and the pride in the fact that they are benefiting not only themselves but the society as a whole.  One has to wonder, when 2016 comes around will there be enough Americans left with jobs (or the memory of jobs) to derail this progressive train to oblivion?