I'm Back....
Welcome to the Locally Grown podcast, where we talk about how to make a stronger, more sustainable, more equitable America. Some of you may have noticed that I haven’t published anything in more than a month. Over the past 18 months of doing podcasts and blogs, I’ve learned that it takes a fair amount of effort to research and produce one piece of quality content each week. I have a new-found respect for journalists, authors and those who write for a living. It’s real work. Luckily for me, Locally Grown is a labor of love and not a job. I have the flexibility of waiting until I have something to say rather than just forcing topics to meet deadlines. I’ve also had to deal aging parents, raising kids, starting a new company and the tragic death of a young man that is very close to our family through our work with Crossover Mission. In other words, Life. I’m not complaining. I am thankful for every day on this earth and the blessings I have received. I can really say that I am happy to be back writing and podcasting and even writing some new songs. We’ve got some really cool interviews coming up including another round on Bitcoin and Crypto next week, and an interview with the author of a timely new book.
With that in mind, I am trying a new format here that covers multiple topics rather than just one theme. Kind of a newsletter format because there is so much important stuff going on that needs to be addressed, that compels me to explore. If this works, maybe every third or fourth piece I do will be in this format. So, here goes.
The Stock Market
We are see increasing similarities to the incredible period of the dot-com bubble in the late 1990s. I remember it well. I was working in Silicon Valley at a venture-backed tech start-up in 1998. It mystified me how young companies with no revenue or profit could go public and see their stock prices soar. Like then, the current climate looks familiar: long periods of economic expansion, steady and stable economic growth, easy monetary policy, and several exciting new technologies emerging. I remember hearing economist and investors telling us back then that the rules of the game had changed. It’s all about the “eyeballs.” Make money later. The rules had changed… or so we thought.
Lots of people feel like we are at the precipice of another market crash. Blowout government budgets, epic money printing by the Feds driving significant inflation, historic tax hikes on the horizon, the ruling Democrat Party making a bold attempt to consolidate their power by any means necessary, government-supported racial division, saber rattling by the Chinese and Russians. Maybe the pent-up demand from relaxing COVID lockdowns will make all these risks a footnote for the stock market to drive higher from already record levels. Maybe. But the data is clear that we are in a bubble despite what many economists and financial talking heads might wish for. American citizens see what’s going on.
As concerning as that is, there may still be room for this market to run for at least the rest of 2021. Take it from George Soros, whose politics I despise but whose investing experience I respect: "When I see a bubble forming, I rush in to buy – adding fuel to the fire. That is not irrational." Soros understands that some of the most massive returns in the market happen during bubbles. In no other market would you see stocks going up 100%, 200%, or even 500% in a month. But the key is how to participate... and how to avoid the inevitable – and extremely painful – downturn.
Right now, it seems we are in the midst of a rotation where investors are moving away from the FAANG tech darlings into brick and mortar that will benefit from the post-COVID reopening. President Biden’s planned historic tax hikes will likely put a lid on how far this market can go from here since many people will want to take their gains and sell before the historic tax hikes kick in next year. It feels like a “tread carefully” market right now.
The Real Economy - Employment
Since COVID emerged 18 months ago, we have heard much about the “K-shaped” recovery. This is where folks with jobs that can be done from anywhere with an internet connection, do well and those in jobs that require in person service, like restaurant workers get crushed. This is what happened because government policy made it so. Government-mandated lockdowns that prevent small businesses like restaurants, clubs and gyms from opening are responsible for the downward leg of the K-shape. According to script, government came to the rescue for a crisis of its own making, by extending supplemental unemployment benefits that pay millions of Americans more money for not working, than they made in their previous job.
Predictably, this has created a labor shortage at exactly the wrong time when small businesses that are re-opening and need workers. The US April payroll report came in lighter this past Friday than economist expectations. In fact, it was the biggest negative gap between consensus expectations for the numbers and the actual numbers in over twenty years. The report showed 266,000 in net new jobs created between March and April, compared to the 1 million net new jobs that consensus economist expectations were set for. Economists also expected the official unemployment rate to tick down from 6.0% to 5.8%, but instead it ticked up to 6.1%. Ouch.
However, in yet another classic example of the unintended negative consequences of bad public policy, our the COVID unemployment benefits exceed the income people made prior to the pandemic. The result is millions of able-bodied people are choosing to take the government check and stay home. Small businesses are re-opening but cannot find adequate staff. I think most people see the obvious problem here, so it’s a mystery why allegedly smart policy makers don’t see it also. Is it because the bad policy serves a larger strategic purpose? What could some of those be? Well, the stated policy of the Fed is to cause inflation, and this would drive wages higher. The Fed is encouraging the federal government to spend, and it will print more dollars to pay for the spending. That causes inflation which we are seeing in real estate, commodities, gas and food. Inflation is good for the government because it effectively monetizes their debt. But inflation is horrible for we citizens. Look at Venezuela for evidence of where this policy ends up.
Inflation
A couple weeks ago, Warren Buffett had an interesting observation at Berkshire Hathaway’s annual investor conference. Something that the Fed and US Treasury are terrified to admit: that a tidal wave of inflation has been unleashed upon the US and it's only getting worse. Speaking to Berkshire's millions of shareholders on Saturday, Buffett said that he was surprised by the “red hot” US economic rebound and warned the company was being hit by inflationary pressures. "We’re seeing very substantial inflation," the 90-year-old billionaire who apparently does not have a Fed charge card, said in his nearly 6-hour long address to investors. But it's what he said that was especially ominous: “It’s very interesting. We’re raising prices. People are raising prices to us and it’s being accepted.”
Why does this matter? Because the ability to pass on price increases and have them stick, means the surge in prices will not be transitory, no matter how many times the Biden administration, the Fed or the Treasury lie and vow the opposite. Buffett's comments came one day after the US revealed that household incomes rose by the most in recorded history in March as the latest round of Biden stimulus checks hit bank accounts. Buffett's comments came one day after the US revealed that household incomes rose by the most in recorded history in March as the latest round of Biden stimulus checks hit bank accounts.
This has also pushed the total amount of government transfer payments to a record 34%. That's right: a third of all US household income is now from the state. Smells like an experiment in Universal Basic Income. Karl Marx would be proud. The surge in income, which for now has resulted in record excess savings of roughly $2 trillion, has sent reverberations throughout financial markets, with investors’ inflation expectations over the next decade rising to an eight-year high. “It just won’t stop,” Buffett added. “People have money in their pocket and they’ll pay the higher prices.... There's more inflation going on that people would have anticipated six months ago or thereabouts" he added. Inflation is here so you better have a plan.
COVID
COVID infections and deaths have decreased dramatically in the United States, although there are regions in the world such India which are experiencing spikes. The decline in the U.S. is owing to the proliferation of multiple vaccines and the immunity that getting COVID provides. My house had its bout of COVID about a month ago with my son getting infected after visiting a cousin who was infected. Despite quarantining and being in close quarters, nobody else in our house contracted the virus. This speaks to the nature of the virus whose major symptom is no symptoms at all. According to a University College London study last October, over 80% of people testing positive for the virus were asymptomatic on the day they took a test. The vast majority of the remaining 20% have symptoms similar to the flu, such as headache, fever and fatigue.
While most of the media is still obsessed with its daily reports of COVID “cases” and waiting for the emergence of the dreaded variants, the fact remains that the average American is extremely unlikely to die from COVID. According to the CDC, kids (0-17) have nearly 0% chance of dying from COVID and have a low risk of spread to others. Mortality rates increase with age but if you are younger than 65, the mortality rate is 0.12%, or about the same rate as the common flu. Only for citizens 65 or older does the virus pose a significant risk with a mortality rate of .637%, about five times more deadly than the common flu. This over 65 age group represent over 81% of all COVID-19 deaths. So let’s focus on protecting them while the rest of can continue as normally as possible. That’s what we did in Florida. So glad not to live Massachusetts, New York and California anymore.
So, there is your data. As I have said for more than a year COVID is much less about the actual health hazard than it is about public policy to address that hazard. While most of the media still obsessed with its daily reports of COVID “cases”, our political leaders feed into the fear with public policy decision that infringe our rights as citizens. Our President still wears a mask when he is surrounded by people who have all been vaccinated as he has been. If the vaccines are so great, then why does Uncle Joe still wear a mask? Same with all the leaders in his party. Of course, we know the real answer is that it is a form of virtue signaling. If you’re wearing a mask while exercising outside, you are showing off your moral superiority of supporting “the common good.” Or maybe you are that frightened of COVID, which is certainly your choice. But don’t force your choice on the rest of society. The data is clear.
Then there is Dr. Anthony Fauci of the CDC saying last week on TV that masks might never go away. He strikes me as a guy more interested in protecting his power and celebrity status, then he is about a common-sense cost-benefit analyses of the tremendous downside risks to our society of continued lockdowns and masking. But maybe there is another reason why Fauci tries so hard to keep COVID as the most important issue our country. Maybe it it’s a diversion from an issue he’d prefer to not share with the public?
Wait for it… Here comes the conspiracy theory.
Well, it so happens that there is evidence that Fauci signed off on $7.4 million in research grants that ended up at the Wuhan Virology Lab to study how SARS, MERS and CORONA viruses make the jump from animals to humans. While this research has been ongoing for years, state department and health officials warned repeatedly about the poor safety standards at the Wuhan lab. The science on the origin of the virus is definitely not settled. Scientists have weighed in on both sides of a debate whether SARS-CoV-2 is natural or manmade. Here’s a great article in the Wall Street Journal if you’re interested in reading more.
Which side of the debate Is correct? It’s impossible to know yet because the debate has morphed beyond science into politics. People like Dr. Fauci are at the intersection of science and politics. And in times like these where only 20% of citizens trust their federal government, transparency should be more important than ever.
Politics of COVID
Politics these days are driven by COVID, racial grievance and power consolidation on the Left, and immigration, COVID, free speech, and limited government on the Right. Those are the main ingredients to the political stew. Because COVID is something both sides of the aisle view as important, I will focus on that a bit because it is a potential area for middle ground. I give government COVID policy mixed reviews. Our multi-state-local laboratory infrastructure is where all these policies are tested and, there is a lot of variability on how governments have responded to the pandemic. On one hand, you have New York Governor Andrew Cuomo mandating in early 2020, that all COVID patients from nursing homes that are in hospitals, be returned to those nursing homes. The effect was death sentence for over 8,000 elder citizens and something Cuomo lied about that has turned into a bi-partisan scandal. On the other hand, you have Governor Ron DeSantis whose policies protected nursing home patients. Cuomo gave a televised press conference each day pontificating about the rules of his various lockdown policies. DeSantis studied the science and came to a different conclusion on what was in the best interest of Floridians. Florida was the first state to lift the lockdowns so small businesses getting crushed, could get back to business. My read of the data shows DeSantis’ approach was by far the best. Florida COVID stats are better than the national average and way better than New York.
Many states observed and followed the FL example and have similar growing economies with no more marginal COVID risk then states with a stricter lockdown policies. Interestingly, it’s Red Republican-led states that got it right, not the Blue Democrat-led states. People are moving in record numbers from Blue states to Red states because they want more freedom, not less.
Politics of Woke
The so-called “Woke” movement dominates society now from education, the media and our military to large corporations. The narrative co-opted by Democrat leadership is that America has been a systemically racist nation from its founding right through today. They preach that white people created this racist infrastructure and now must be made to pay for its undoing. Critical race theory teaches that economic outcomes are determined more by one’s race than by how hard they worked or risks they took. This means all public and private activity must first pass through the racial lens. This directly contradicts MLK who talked about wishing for the day when people “are judged not by the color of their skin, but by the content of their character.” For King, color-blindness was the goal. Now it is the enemy. Critical race theory is being taught right now in many of our public schools, the military and other public institutions.
There is so much to unpack here which I will certainly do in future podcasts and blogs, but just let me say that putting race at the forefront of every decision, is a horrible idea. It’s corrosive to society. How President Biden can call for unity while supporting racial politics, is just another example of double-standards and hypocrisies that are tolerated in the name of political power. The sadder part is that half the country is OK with it. As long as it serves “the cause!” The better news is that the other half is not OK with it and is beginning to resist. This conflict will only grow as a flashpoint in our culture until it is resolved one way or another. We definitely need to pay attention to this over the coming months and years because it is one of the biggest risks we face as nation.
Teachers Unions are Too Powerful
By “teachers unions” I mean, the American Federation of Teachers (AFT) and the National Education Association (NEA) which together represent about 75% of all teachers in primary and secondary schools in the U.S. By “too powerful” I mean that they are one of the strongest financial supporters and policy enforcers for the Democrat party. They have donated overwhelmingly for Democrats for decades and in the 2020 elections, they gave $43 million. They are enforcers of Democrat COVID policy. In fact, they helped write the policy. According to a recent report,
“AFT affiliates gave to Democratic federal congressional candidates over Republicans more than 99% of the time in the 2020 cycle, filings show.
The AFT has come under fire recently for its role in shaping CDC guidance around school re-openings. The New York Post reported last weekend on emails between top White House, CDC, and AFT officials that show the AFT crafting language and overall working closely with the CDC. The communication intensified ahead of the CDC’s planned Feb. 12 announcement to recommend whether schools should reopen.
In that February announcement, the CDC ultimately sided with the teacher’s union and delayed issuing guidance that schools should resume fully in-person classes.
After the emails emerged, Republicans on the House Energy and Commerce Committee sent a letter Wednesday to CDC Director Rochelle Walensky alleging that political influence from the teacher’s unions and White House influenced the federal agency’s official guidance. The Republicans argue the agency put “politics over science and Biden-Harris campaign donors over children.”
“Despite prior questions on the matter, recently released emails show that the AFT and NEA were able to weigh in on and lobby for changes made in the CDC’s Operational Strategy for Reopening Schools, the agency’s guidance for reopening schools around the country,” the Energy and Commerce Committee said in a statement.
The AFT defended its lobbying Thursday, saying the CDC should welcome input from other stakeholders and that it is simply representing the interests of their members.
The last seven words of this new story are the most important. “Representing the interests of their members.” Those would be dues paying members NOT children. What about the parents who pay their local property taxes which pay for teacher salaries and benefits? What’s best for kids and their parents, the most important stakeholders, is kids getting back to live school. But according to the unions, the most important thing is that their members collect full pay for less work.
The unions’ complete control over public education seriously harms our children. We’ve known from the earliest days of COVID that kids are the least likely to catch it or spread it. We also know that many low-income parents struggle with home schooling and need to go back to work. Distance learning exacerbates racial and economic achievement gaps and takes a heavy psychological toll on kids. Union leaders don’t give a crap. They care about their members.
California, which is the most populous state and currently has the lowest per capita COVID rate in the country, also has the highest percentage of school districts that remain entirely virtual. Teacher’s unions have used the pandemic to demand more money and more-generous benefits. They know that millions of Americans can’t return to work if kids can’t return to schools. For parents it’s a dilemma, but unions see it as leverage. The United Teachers of Los Angeles requested free child-care for its members as a condition for returning to the classroom. Union clout is the main reason that California’s percentage of all-virtual school districts is more than three times the national average.
What Americans have learned from the lockdowns is the degree to which unions control not only the public-school systems but by extension the everyday lives of tens of millions of parents with school-age children. Education always ranks high among the concerns of voters and the virus exposed the catastrophic consequences of having so few school alternatives for families of modest means. Private schools, religious schools and charter schools have all outperformed traditional public schools during the pandemic, and yet teacher’s unions work to limit access to better alternatives. Voters cannot forget this lesson in 2022 and beyond.
If we could do just one thing to fix the direction of this country, it would be eliminate teacher’s and all public employee unions because there is an inherent conflict of interest between the unions and the public interest. President Franklin Roosevelt said it best when he wrote that the process of collective bargaining had “insurmountable limitations when applied to public personnel management.” He believed that the employer of government workers was the people and Congress represented the people in determining government employee pay. In practice, the insurmountable problem with government unions is that there is no effective representative of the people in negotiations. The cost of public employee’s unions retirement programs is what is bankrupting several big blue states. Democrats depend on union support and rarely defy public-sector unions on pay, benefits or work rules. It’s that simple.
We have seen how effective street protesters were this summer when a small but very loud minority was instrumental in changing the direction of our country. Parents need to mobilize and vote for school committee members with the courage to tear up collective bargaining agreements and withstand the media and legal war that will be waged against them. This task is not for the faint of heart, but I expect to see more courageous leaders emerge in this fight. Let’s hire great teachers motivated to serve young people, not indoctrinate them with evil ideas like critical race theory. Let’s pay them well and value them for the critical role they play in our society. Let’s allow plenty of competition and experimentation with successful charter school, vouchers and other models that empower parental choice to get the best outcomes for their children. The teacher’s unions stand in the way of that, and it can no longer be tolerated.
Summary
I started my writing journey several years ago as I tried to explore the concept of sustainability in societies. In my book, Locally Grown: The Art of Sustainable Government, the key truths that emerge are,
1. Decentralization is a more scalable architecture for sustainability, whether it be nature, computer networks or government.
2. And Strong middle ground is a must-have for the long-term stability of society.
President Biden sold himself as a practical moderate Democrat who could “unify” the country. We needed to move beyond the darkness of Donald Trump. Can’t get any worse than that, right?
Wrong. Joe Biden may have been a moderate Democrat unifier many years ago, but he ain’t one now. Again, this is obvious for all to see. He passed a record number of executive orders in his first 30 days that were a wish list of the radical left wing of his party. And the policy momentum has continued ever since. In my Sept 9th blog post last year, I talked at length about how this agenda was planned well in advance of the November elections by the Transition Integrity Project (TIP), a group created by attorney and former Obama administration executive Rosa Brooks. Brooks also serves as senior fellow at New America Foundation whose funders include billionaires George Soros, Bill Gates (Microsoft), Reid Hoffman (LinkedIn/Netflix), Eric Schmidt (Google) and Pierre Omidyar (Ebay). By its own admission, TIP believes that the American Electoral College is, in their words “profoundly anti-democratic, and that numerous long-standing practices also function to create structural biases in our voting system.”
The fact is that middle ground in America is to the Right of where we are now, not further Left. The pendulum swings back and forth in politics but a razor thin Democrat majority in the House and an equally divided Senate, is NOT a mandate to discard the Constitution and re-do America as a socialist utopia. At best this is going to continue to alienate a least half the country and that is not unity by any definition. Doing what I say, or else, is not a negotiation. I pray that Joe Biden shakes off his obvious cognitive decline long enough to resist his party’s worst impulses.
Unfortunately, the GOP is not yet up to the task of countering this radical leftward march. They just ousted Rep. Liz Cheney from party House leadership because she has been a vocal critic of Donald Trump and voted to impeach him. They look disorganized and scrambling to decide if Donald Trump remains the face of the Republican Party, or someone else. My advice is to find someone else if they want to win. Not an easy task because Donald Trump won’t go quietly. That said, Florida Governor Ron DeSantis strikes me as a great choice, not because he was a supporter of many Trump policies. But rather because DeSantis’ COVID policies turned out to be right while so many others were wrong. And because he has a successful track record in leading a huge, growing state. And because he has relatively strong support from black and brown voters, especially for his education policy. South Carolina Tim Scott is also a good choice because he can talk with authority against the evil of racial politics which is the primary driver of Democrat strategy. In any case, the GOP will have to figure it out fast because the 2022 midterms are just around the corner.
It will be a recurring theme in my future podcasts and blogs to point out obvious facts and truths that don’t require self-styled experts or smug politicians to explain to us. Another recurring theme will be to point out obvious double-standards and hypocrisies that are plain to see. And finally, I will challenge claims of “settled science” and “settled law” by those who wish to shut down free speech and inquiry. Having civil open debate is the essence of true “small l” liberalism that has underpinned western civilization for more than two thousand years. It is at the core of science, is foundational to our Constitution and our traditions as a self-governing democratic republic.
Well, that’s it for now. Hope you have enjoyed this episode of Locally Grown. I’m happy to be back to further explore some of these and other topics. I’ll leave with a proverb that some attribute to an ancient Chinese curse. It somehow feels appropriate for this moment.
“May you live in interesting times.”
We sure do.
Remember. United We Stand, Divided We Fall, Each one for the Other, and All for All.