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The Hamas-Israel Conflict

This is a supplement to my regular weekly blog. I am publishing it separately because I know that the interest level of readers varies – from mild to intense – depending on the topic. So when I am especially interested in a particular topic, such as the Hamas-Israel conflict or COVID vaccines or global warming, etc., I will occasionally publish special issues that go into the subject at some length. By doing that, I’ll be able to devote more of my weekly issues to business, investing, entrepreneurship, and other topics that are traditionally in my bailiwick. 

Why I’m Studying Boxes Full of Research Papers and Rereading Exodus

The United States has always been a country of competing political parties and correspondingly different views about everything from taxation and trade to foreign policy to domestic policing to education and welfare and just about every other important issue.

But in my life – which includes the Cold War with Russia, the Civil Rights Movement, the Equal Rights Movement, the Vietnam War, the War on Poverty, the War on Drugs, the Gay Rights Movement, 9/11, and the wars on Iraq and Afghanistan – beneath the disagreements, which were sometimes very hateful, there were always a few ideas and principles, or at least rules of engagement, that both sides could agree on. That is, after all, how we managed to move through and beyond those disagreements. At least, that’s how it has always seemed to me.

It changed when Donald Trump was elected in 2016. The shock among most moderates, liberals, and leftists – and even many conservatives – ignited a pandemic of fear that was much less about the merits of Trump’s ideas or promises than it was about his character. And as Trump assumed the presidency, his evident enjoyment in belittling and name-calling those who opposed him only stoked the fires of fear into a chronic distrust and then into disgust and finally into an unmitigated and unapologetic loathing for the man and everything he said and did.

The Democrats in Congress, armed with a phony document ordered and paid for by the Hillary Clinton Election Committee, began a three-year campaign to impeach Trump for “Russian collusion.” At the same time, the liberal and left-wing media began its own campaign of supporting the Russian Collusion hoax, hiding the Hunter Biden scandal, and criticizing every Trump initiative, even those they had long argued for.

These unfounded and since-disproven political narratives, spread and amplified by mainstream media bias, were enormously successful in solidifying and raising the animosity of anti-Trump voters. But they also, unexpectedly, set off an equally strong surge of loyalty to Trump by his base, as well as by hundreds of thousands of new supporters, including old-school liberals and undecided voters.

Since then, we have become a country broken in two, heatedly arguing about everything from COVID-19 to the CRT and White Privilege and gender fluidity theories being taught in our schools.

It got to the point where friends and families couldn’t talk to one another anymore, for fear of triggering a fight. And I’d bet that most everyone was wishing we could just lower the emotional temperature and get back to normal standards of disagreement.

Then, on October 7, 2023, Hamas terrorists invaded Israel and brutally murdered more than 1,200 Israelis, almost all civilians. Their “acts of resistance” included raping and knife-killing women, burning children to death, shooting and hacking teenagers to death, and beheading infants. 

And the reason we know those things happened – despite claims by some Hamas supporters – is because a number of Hamas soldiers decided to videotape the slaughter. (One, for example, recorded a murder on his victim’s phone and then sent the clip to her family. Another called his parents in Gaza, bragging that he’d “just killed 10 Jews” with his “bare hands.”)

It was an act of the kind of barbarity that is relatively rare in human history. So I woke up the next day expecting to see the world united in horror and outrage. Instead, even while the bodies were lying there, butchered, thousands of Muslims all over the world were dancing in the streets. A day or two after that, I was astonished to see thousands of Americans in major cities and hundreds of students at prestigious universities marching in support of the horror Hamas had inflicted, some shouting “Kill the Jews!”

But what was, perhaps, most disturbing to me was the fact that I never heard a single word of criticism and/ or condemnation against Hamas or what its soldiers did that day from any of my highly educated, highly intelligent, highly successful, and proudly liberal and leftist friends. If I didn’t initiate a conversation about the atrocity, it did not come up. It was as if it didn’t happen.

I never considered myself to be a student of Middle Eastern history. Nor was I particularly knowledgeable about the conflagrations that have occurred between the Palestinian Arabs and Jews during my lifetime.

But I certainly did know, and I assumed everyone knew, that the Jews had been under siege for most of their history. Can you think of another ethnic, racial, or religious group that has been more oppressed, ostracized, exiled, unjustly incarcerated, attacked, and murdered en masse?

So there I was, stuck in the middle of a new and fast-growing global culture enraged and engaged over Institutional Racism, Colonialization, White Supremacy, Homophobia, Transphobia, and other ideological versions of oppressor-victim theology. And yet this primitive, tribal slaughter had just occurred… and there was no outpouring of rage from anyone.

On the contrary, as the days went by and Israel began its war against Hamas, I could see that the sentiment of Americans and citizens of other countries of the “civilized” world was rapidly moving against Israel.

Israel – the only inclusive, equitable, diverse, and democratic country in the Mideast – was being described as a “colonialist, repressive, and apartheid state” that was engaging in “genocide” against the poor, noble, and defenseless Arabs living in Gaza.

At the end of October, I attended the monthly meeting of The Mules (my book club), where we, as usual, discussed our book of the month with considerable enthusiasm. Our membership includes men whose political views range from moderately liberal to modestly conservative. And I was sure that the Hamas-Israel war would be brought up at some point. But not a word was mentioned.

After the meeting, three of us stayed to talk about what none of the other Mules seemed to want to talk about. We were flummoxed by the seeming lack of interest in this major piece of news. And we were confused and fearful of what that might mean.

We talked about it for more than an hour. And in the end, we decided that what we should do was educate ourselves about Israel and the Arab people that lived in Palestine. We needed to make sense of the world’s reaction to what had happened, and we hoped that if we knew the history of the conflict, we would arrive at some sort of understanding.

So we formed an informal little group. And the other night, we met for the first time to share what we had learned from the research we had done so far.

Based on that, the following essay is my current thinking.

The Hamas-Israel War: Let’s Get the Facts Straight 

On November 29, 1947, in an effort to resolve the continuing conflict between the Jews and the Arabs living in Palestine, the UN General Assembly adopted Resolution 181, calling for the partition of Palestine into two states – one for the Arabs and one for the Jews.

Prior to that, there had been many – more than a half-dozen – formal and informal proposals for the Arabs and the Jews to have their own sovereign states. Every single time, the Jews were willing to talk about it. And, on at least three occasions, they accepted the plan offered. But the Arabs never once even considered a “two-state solution.”

The UN’s 1947 Partition Plan gave the Arabs the lion’s share of Palestine (including all of its fertile land). The Jews were given a much smaller section that consisted mostly of swampland and desert.

Did the Jews object? Did they insist on negotiating a better deal? No. Depleted and exhausted by the Holocaust and WWII, they accepted the offer.

The Arabs, however, rejected it immediately and out of hand. They didn’t even suggest a counteroffer.

So the Jews took possession of the modest parcel of swamp and desert they had been offered, leaving two sections of Palestine – the city of Gaza and the West Bank – to the Arabs. And on May 14, 1948, they founded the State of Israel. They then went on to turn it into one of the richest and most productive economies in the Mideast.

And they did it without oil!

They also developed a democracy. A genuine democracy. Where the Arabs that lived within Israel’s borders had full and equal rights.

This did not, however, bring peace to the region.

Palestine‘s Arab population was always comprised of distinct tribes. They had been fighting with one another for hundreds of years, as well as occasionally attacking Palestine’s small Jewish communities.

With the formation of Israel in 1948, the Palestinian Arabs focused their attention – and most of the billions of dollars in aid they were getting not only from rich Arab states but also from Western democracies (including the US, England, and France) – on purchasing weapons, including missiles and missile launchers, to bomb the new state.

In response, the Israelis developed perhaps the most sophisticated defense system in history.

Over the next five decades, efforts continued to be made to resolve the conflict – each one summarily rejected by whatever group was representing the Arabs in Palestine.

Then, in 2005, with an increasing percentage of Israelis hoping that a more generous concession might finally bring peace, Israel unilaterally agreed to remove all of the Jews that were still living in Gaza – by force, if necessary – and bring them to Israel.

It was an astonishing offer at the time. And there were many that believed it would work. But it was, like every prior offer, immediately and totally rejected by the Arabs. To add insult to injury, in 2006, the Palestinian Arabs elected (by a huge margin) Hamas, a known anti-Israel terrorist group, to govern Gaza.

Israel took actions to protect itself by putting a wall between itself and Gaza and blockading the ports.

I’ve been trying to understand why the Arabs have rejected every offer of a two-state solution and have continued to attack Israel by land and sea, even though they are fully aware that Israel’s military and defense systems are infinitely superior to their own.

I have found only one answer that makes sense: Hamas, Hezbollah, the PLO, and the Palestine Authority don’t want a compromise. Their position, from the beginning, was that they should occupy all of Palestine, “from the river to the sea.”

This is not an abstract conclusion that I came to by reading between the lines. It is the written policy of Hamas and Hezbollah (in their charters), and it has been the stated policies of the leaders of the PLO and the Palestine Authority for most of the last 70 years.

The actual text of the Hamas charter, which I’ve read in translation, states, in no uncertain terms, that its goal is to conquer the State of Israel – and then not only kill all its Jewish citizens, but kill every Jew on the face of the Earth. And after this Jewish genocide is completed, their next goal will be to convert or kill every infidel (non-Muslim) in the entire world, including Christians, Hindus, et al.

I swear. I’m not making this up!

Note: I’m not saying that all Muslims share this mission. What I am saying is that it is the mission of the terrorist Muslim/ Arab groups that occupy Palestine now – a mission that they have confirmed time and time again in their published charters and in their public statements.

It’s still early in my research. I’ve got plenty more work to do on this. Nevertheless, those are the facts.

So why is it that, even after the horrifying October 7 slaughter of Israeli civilians by Hamas, so many intelligent people in civilized countries around the world consider Israel to be the villain in this story?

How is it possible that they’ve bought into so many ideas that are not just wrong, but completely wrong?

Here are some of the charges the Pro-Hamas side has been making:
 
“Israel is an apartheid state.” 

Prior to October 7, I’d never heard anyone accuse Israel of being an “apartheid” state. Apartheid, to me, was South Africa prior to 1988 – where Black Africans were systematically and brutally kept in second-class citizenship. So, what do the anti-Israel protesters mean?

When I asked people who are sympathetic to “the cause,” here is a sampling of what I was told:

* In Israel, Arabs live in poor, walled-off neighborhoods.

* They are paid poverty wages to do menial and degrading work.

* They can’t vote. They don’t have free speech.

* They are victims of racism at every level of government, including the courts.

Essentially, they say, the Israeli Arabs have been relegated to second-class citizenship by depriving them of many or most of the human rights that the Jews in Israel enjoy.

When I looked into it, though, this is what I found:

* Arabs are free to live wherever they want in Israel.

* They earn the same pay as Jews earn for the same jobs.

* They can vote. They have free speech.

* They have every right that Israeli Jews have, and are represented at every level of business and government. They are CEOs, members of Parliament, and Supreme Court justices.

So, no. Israel is not an apartheid state.

“Israel is a colonialist occupier of Palestine.” 

Israel became a state in 1948 when it took up the UN on its “Partition Plan.” The Arabs didn’t. The Arab population that lived within Israel’s new borders was allowed to stay there, but it was a relatively small group.

In subsequent years, hundreds of thousands of Jews settled in Palestine.

During the same period, Arabs were moving to Palestine from Jordan and other neighboring Arab nations. Their primary motivation was financial – just as it was for the millions of Latin Americans that have crossed into the US via our southern border.

As I said, the land that was given to the Jews as part of the UN’s 1947 Partition Plan consisted mostly of patches of desert and swamp. Which, in the ensuing decades, they miraculously turned into highly productive farms and cities and industries. The Israelis were growing their economy by double-digits for many years and creating thousands of jobs. There weren’t enough Jews to fill those jobs, so they opened them up to Arabs living nearby in Gaza.

Israel now has hundreds of thousands of Arabs living and prospering within its borders. It also allows more than a hundred thousand Arabs to commute to Israel daily for work.

So, no. Israel is not occupying Arab lands. That is nonsense.

But there is another argument – one that has more merit, at least superficially – about Israel occupying Arab land that it seized after each of two wars it fought against its neighbors: the 1967 Six-Day War and the 1973 Yom-Kippur War.

Seizing land is what countries often do after winning wars. And it is usually accepted as fair and reasonable. Israel did win vast stretches of land because of those two wars, including most of what is now called Jordan. But this is a complicated subject, one that I’m just getting into. So I’m going to come back to this “occupier” issue another time.

As for being “colonialist…” 

Colonialism is essentially when one country takes over the land of another country by force. But the Jews that emigrated to Palestine after 1948 and bought land in Gaza paid for every acre they settled on. They did not take it by force. If a bunch of Methodists from Minnesota moved into Brooklyn and bought up half of Brooklyn Heights, you couldn’t call them colonialists.

Well, you could, but you would be wrong. And anti-Methodist!

One of the problems with the colonialist argument is that different people point to different historical eras to establish their case.

“Israel is conducting “genocide” on the Palestinians.” 

One can only make this statement if (1) one doesn’t know what genocide means, or (2) one knows nothing about the history of this conflict.

In fact, the idea that Israel is engaged in genocide is so absurd that I won’t bother to say anything more than this: Since Israel was established in 1948, the Arab population in Palestine has grown six-fold.

The Civilian Deaths 

This is the trickiest issue to discuss.

Retaliating to the October 7 invasion and attack, Israel declared war on Hamas. And the IDF (Israel Defense Force) carried out a mission to destroy Hamas by, for starters, bombing the hell out of Gaza. Which has resulted in, if you trust Hamas’s numbers, something like 10,000 civilian deaths.

Israel has taken measures to reduce this sort of “collateral damage,” as it is called, with, among other things, phone and leaflet campaigns sent into Gaza, letting civilians know, ahead of time, that their neighborhoods are targets and they should take refuge elsewhere.

It would obviously be to Israel’s advantage, from a public perception point of view, for all of those civilians to evacuate the target zones. But that has been difficult. Not only for practical reasons (e.g., being able to pack up and travel and survive what came next), but also because, according to the IDF, Hamas was threatening to execute any civilians that did leave.

All civilian deaths in war are tragic. The number of Israeli civilians that were killed on October 7 – 1,200+ – seemed enormous when I first heard it. But now it feels, to some people, “small” compared to the thousands of Palestinian civilians that have been killed by the bombings.

One thousand. Ten thousand. As the death toll mounts, it seems inevitable that the anti-Israel sentiments expressed by the thousands of protesters will become hardened, while the political posturing by the Biden administration and other Israel allies will weaken.

One thing that needs to be understood in considering this tragedy: The Hamas-Israeli conflict is a war. A war that was started by Hamas. Wars are terrible. They always and inevitably result in massive economic destruction and the killing of countless civilians. But we do not judge the morality of a war by the number of citizens killed.

Did you know, for example, how many German and other Axis country civilians were killed by Allied bombings in WWII? More than 800,000.

And what about civilian Iraqis killed by US forces during the war against Iraq? It was somewhere between 280,000 and 320,000.

This War Can End Tomorrow 

Given the way the Hamas-Israeli conflict has been being reported on by the mainstream media, we should be forgiven for thinking that what happened on October 7 was a terrorist attack, like the blowing up of a café, and should, therefore, be treated by the Israelis as a one-off, domestic crime. A police matter.

But that is not how Israel sees it. And neither does Hamas.

The invasion and massacre of 1,200+ Jewish civilians on October 7 was a declaration of war. And Israel’s response was an acknowledgement of that.

Hamas started this war and Hamas can end it – and all the terrible killing that is taking place – in 24 hours… by surrendering to Israel.

But they won’t. They have said so repeatedly. So, the war goes on.

Additional Resources 

Recommended Books 

For insights into American attitudes toward Israel, you might want to read Leon Uris’s 1958 novel, Exodus (or watch the movie). Click here and here for some recent reviews.

I haven’t yet read any of the following. They were either recommended to me by friends or selected from dozens I found on Google whose capsule summaries sounded intriguing. Many are supportive of Israel, but not all of them.

My Promised Land: The Triumph and Tragedy of Israel, by Ari Shavit – recommended by SL, a friend and fellow student of this subject. Ari Shavit is an Israeli journalist who was part of the peace movement in Israel and writes a lot about it.

Rethinking the Holocaust, by Yehuda Bauer – a balanced perspective on the 1947 vote in the United Nations that approved the partition of British Mandate Palestine and the creation of separate Jewish and Arab states.

Start Up Nation: The Story of Israel’s Economic Miracle, by Dan Señor and Saul Singer – explores the themes of persistence, order, chaos, immigration, and opportunity, giving a well-rounded view of the way Israel pulled itself upward into the high-tech stratosphere.

Chances for Peace: Missed Opportunities in the Arab-Israeli Conflict, by Elie Podeh – lengthy, academic yet readable research on Israel’s potential to reach peace with its neighbors over the past century. Podeh explores episodes ranging from Arab-Zionist negotiations at the end of WWI and the Six-Day War up to the 2007 Annapolis Conference and the Abu Mazen-Olmert talks in 2008, giving a wide, comprehensive analysis of Israel’s relations with the region.

Year Zero of the Arab-Israeli Conflict: 1929, by Hillel Cohen – investigates the 1929 violent riots during which Arabs killed 133 Jews in mandatory Palestine. Almost a century later, Cohen sifted through never-accessed documents and uniquely uncovered a trove of insights, interviewing elderly Israelis and Palestinians, descendants of those who were alive at that time.

Israel: A History, by Anita Shapiro – examines the emergence of political Zionism in the late 19th century, immigration to Israel, and the wars, political events, and cultural shifts that brought the country to where it is today.

No Room for Small Dreams: Courage, Imagination and the Making of Israel, by Shimon Peres – a detailed account of the decisions and events that shaped the country. An insider’s view of the way Israel became what it is, discussing topics such the country’s nuclear power, the famous Operation Entebbe, and the establishment of Start-Up Nation.

The Israeli-Palestinian Conflict: What Everyone Needs to Know, by Dov Waxman – explains key events, examines core issues, and presents competing claims and narratives of both sides. Waxman also offers a range of Israeli and Palestinian perspectives, showing readers that there is no one Israeli or Palestinian view of the conflict, and that this very diversity of views is one of the reasons this conflict has proven so intractable.

Enemies and Neighbors: Arabs and Jews in Palestine: 1917 to 2017, by Ian Black – a lengthy review of the complex, hundred-year-long conflict between Israel and the Palestinians, based on archival research, oral testimonies, and Black’s own experience as a reporter and editor.

Recommended Videos 

To get an idea of what people all over the world are thinking/ saying about the Hamas-Israel conflict, check out the following videos.

* This first one is a good introductory video about the current conflict that touches on the issues I made in the above essay. I like the way the speaker, an Israeli, makes a case for Israel with facts and logic. He’s also got a relaxed approach to the subject that I like. And I like how, at the end of all his videos on the subject (he’s done at least a dozen), he says, “If you disagree with anything I’ve said, please prove me wrong by sending facts.” Click here.

* Two more videos from him. Click here and here.

* A brief history of the conflict from Ben Shapiro.

* And here’s something specifically on why the Jews are indigenous to Palestine.

* What does the average Israeli think about all this? Click here.

This is from four years ago. An interview with Robert Spencer, who explains why every Middle East peace plan has failed, why a two-state solution won’t work, and what must be done instead.

* A good example of the ignorance of college kids.

* A surprisingly rational conversation between a Zionist and a Palestinian about the history of Palestine.

* Conservative intellectual Douglas Murray is a strong supporter of Israel. Here is a video that captures some of what he’s been saying about the war.

* Douglas Murray vs. Norman Finkelstein, a Jew that is anti-Israel and bizarrely antisemitic, although his parents were victims of the Holocaust. Click here.

* Why do some Muslims hate Jews? An Arab scholar explains.

* Israel rejects charges of genocide at the UN. Click here.

* The UN is a joke. Apartheid? One man speaks the truth. Click here.

* Hillel Neuer testifies before the US Congress on UN Antisemitism. Click here.

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“Any clod can have the facts; having opinions is an art.” – Charles McCabe

What I Believe 

A compilation – in no particular order – of some of my longstanding theories and many of my current ideas and opinions… 

* Conventional thinking is not thinking.

* Social Science, as practiced today, is an oxymoron. It would be much better to call it Social Dogma.

* Economics is a valid field of knowledge, one that sometimes employs the scientific method, but it is not a science.

* Most of economic and investment theory is based on incomplete data and faulty premises.

* The currently popular academic philosophies of intersectionality and structuralism are intellectually dishonest and pragmatically destructive.

* Charity is dangerous to both the giver and the receiver. It creates a false sense of accomplishment in the one, and dependency and entitlement in the other.

* Of the many kinds of charitable actions, giving away things (including one’s time, one’s wisdom, one’s knowledge, one’s things, and one’s money) is the worst kind.

* Businesses that put their employees or shareholders ahead of their customers are morally bankrupt and will eventually be financially bankrupt.

* The currently popular theories of institutional racism, inherent bias, white privilege, and reparations are intellectually dishonest and harmful to people of color.

* Police violence is not the number one issue facing African-Americans today. It is not even on the top 10 list.

* Social workers are not necessarily saints. Nor is social work necessarily saintly. But social workers can be good and social work can be helpful if it is done carefully.

* The four-hour work week was once a dream. Now it’s becoming a possible nightmare.

* Of all the professions that contribute to the wealth of nations, entrepreneurs and small business owners provide the greatest good for the greatest number of people.

* The primary job of government is to establish law and order so that its citizens can be free to go about their business.

* Governments are not structured to create wealth and they do not. What they do is redeploy wealth towards political and military objectives.

* Politicians, government workers, and military personnel take part in the business of redistributing wealth. It is always in their interest to do so.

* Zen thinking is the equivalent of sub-atomic theory.

* Culture – including micro-culture – is the single most important factor in social and financial advancement.

* The most important component of a success culture is the belief in hard work, continuous education, and saving.

* Slavery was and is a commercial activity whose objective was to create profits for slaveholders. But the system of slavery was never profitable as a whole.

* All businesses pass through at least 4 distinct levels of growth, each with distinct challenges and opportunities. Any founder or CEO that doesn’t know them is doomed to failure.

* Capitalism is not an intellectual ideology like Socialism and Communism, but the most natural and fairest form of human commerce.

* Every young person entering the workforce comes to the job with immutable tendencies, prejudices, psychological preferences, and habits that are nearly impossible to change.

* Business management efforts to motivate employees are completely ass-backward.

* 90% of psychological counseling and marriage counseling doesn’t work – for good reason.

* Much of mainstream medicine is scientifically dishonest and harmful and expensive to patients.

* Serial killers are 98% like the rest of us.

* Liberals are less generous with their personal charity than Conservatives.

* The mainstream media can’t be trusted.

* Any economic philosophy that does not account for the work of the Austrian economists (Hazlitt and Hayek) is sure to develop ideas that are so profoundly idiotic that they are not worth a moment’s attention.

* Being thoughtful is more useful than being intelligent.

* Adherence to any political party is always and necessarily intellectually bankrupt.

* Political partisans are not to be trusted.

* Men and women are fundamentally different but not always in ways people commonly think.

* All wars, regardless of cause or justification, are destructive.

* Of the many wars the US has been involved in over the last hundred years, the most costly of them, in terms of dollars and lives, were the war on drugs and the war on poverty.

* The new wars will be against institutional racism and social injustice. They, too, will be extremely costly in terms of dollars and lives, and they, too, will fail.

* The search for freedom is a more important humanitarian objective than the search for equality.

* Equality of opportunity is a legitimate goal of a just society. Equality of outcome is a recipe for injustice.

* Nature itself abhors equality. Everything within and without the human animal strives constantly and continuously towards the unequal.

* Every social and political effort in history that has made equal outcomes a goal has failed.

* You don’t need an education in art and music to become an expert at it.

* 90% of what Americans spend their money on is based on wants, not needs.

* Trying to “be number one” is a childish and self-destructive goal, whether employed by an individual, a group of individuals, or a country.

* Working-class and poor people fight and die in wars that do them no good but profit the elites that send them to war.

* Soldiers fight for ideals and ideas that are sold to them by people that don’t believe them.

* We are all morally obliged to take responsibility for and fix our problems, even if they are caused by someone or something else.

* Happiness is only marginally related to wealth.

* By understanding the relationship between money and happiness, we can make better decisions about how we make money, how much money we need to make, and how we can enjoy the money we make.

* Income is an important factor in the acquisition of wealth, but it is not a measure of it.

* Most people want to have a higher income and net worth, and many people work hard and long to increase their wealth. But few achieve the financial goals – conscious or unconscious – that they set for themselves. There are reason for that, which the wealth seeker should understand.

* Sharing wealth is more rewarding than growing it.

* Getting up early really is superior to getting up late.

* Organizational growth in any form – business, non-profits, social programs, etc. – is created by a very tiny fraction of the community involved.

* Growth creators are entitled to the lion’s share of the wealth, prestige, or acclaim that comes from that growth.

* It is not possible to motivate 80% of a workforce to work harder unless you ignore them and demand that the 20%, who are already working overtime and on weekends, work more.

* The military-industrial complex is real.

* The medical-industrial complex is real.

* As much as 30% of what are considered established and proven medical practices, including surgeries and medication, have no scientific support.

* Over the last 20 years, there has been a huge transfer of wealth from the working class to Wall Street.

* In bad economies, the debt created by the government/corporation cabal is paid for not by either of them but by entrepreneurs and the working class.

* Racism, ageism, sexism, classism, and elitism exist in most cultures and can retard and, in some cases, restrict individual economic advancement. But the negative effects are rarely absolute. Extraordinary individuals can and do overcome them.

* Wealth and income inequality are realities that exist in every economy – even those committed in principle to the distribution of wealth.

* Two words normally used interchangeably – saving and investing – should not be considered synonymous. The primary concern of saving is safety. The primary concern of investing is growth.

* Wall Street promotes the idea that investing in stocks and bonds is the sensible way to grow rich. But any strategy that focuses solely or even primarily on stocks and bonds is flawed.

* Every asset class and financial strategy has its own inherent characteristics, investment advantages and disadvantages, profit and growth potentialities, and risk profiles. The smart investor understands this and balances his portfolio accordingly.

* There are proven ways to safely achieve a higher-than-average ROI for certain asset classes under certain conditions. One can, for example, safely double the ROIs on income-producing real estate by using bank financing wisely. The same is true for many business transactions, some stock strategies, and a handful of other asset classes.

* The financial industry promotes the idea that life insurance is something every sensible person should have. In fact, life insurance makes sense only in certain circumstances.

* Most people fear entrepreneurship because they believe it takes genius, courage, and luck. In fact, these factors are rare contributors to success in start-up business ventures. The factors that matter most are common sense. humility, cautiousness, a relentless work ethic, and perseverance.

* With respect to building wealth, there are two kinds of skills: financially valued skills and financially valuable skills. Developing skills in either category is a big advantage in building wealth – but the financially valuable skills are more important.

* The purported benefits of great wealth – financial security, choices, and prestige – are more valued in their absence than when they are present.

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“We in America do not have government by the majority. We have government by the majority who participate.” Thomas Jefferson

 

Are You Qualified to Vote?

“Voting is the most important responsibility we have as citizens.” Or so I’ve been told.
“If you don’t vote, you don’t have a right to complain.”

I understand the logic. But the argument is wrong. There are dozens of things we can do that are more likely to result in a better world – all of which require discipline and commitment. It’s easier to cast a vote for someone that seems to share your values and count on him or her to do the work you could be doing yourself.

It’s a moral cop-out. But that’s not the main problem I have with voting. What bothers me the most is that, with few exceptions, most people don’t have any idea about how to solve our common problems. And neither do our politicians.

In any given election, candidates may align themselves with one or another view. They might argue – as Trump has done in explaining his tariffs on Chinese goods – that they are aiming to achieve some common good. But if and when the policy is implemented, it doesn’t always achieve its advertised purpose. The result is often very different.

Take Lyndon Johnson’s “war on poverty,” which he announced in his 1964 State of the Union Address. “Our aim,” he said, “is not only to relieve the symptoms of poverty, but to cure it and, above all, prevent it.” What followed was the implementation of initiatives that to date have cost the country $23 trillion and produced only a marginal drop in the poverty rate.

And what about prohibition? Despite the good intentions of its supporters, the 18th amendment (the only one that’s been repealed in its entirety) led to the rise of alcohol smuggling and the violent criminal underworld known as the mafia.

Or more recently, the war on drugs – an abject failure that has cost the US about $1 trillion over the past 40 years. With an overall disregard for the underlying issues of substance abuse, policies were established that created an increase in corruption, violence, and tension between minorities and the police.

The fact is, human society is immensely diverse and infinitely complex. The US is an imaginary construct applied to 330 million individual people with different ideas, habits, and preferences – interacting with one another countless billions of times every day.

We understand, at best, only a small fraction of how our country works. And yet, when it comes to politics, we act as if we can fix our social, legal, and economic problems by voting for politicians that generally have no more knowledge of or experience in solving complex problems than we have.

Not to mention the problem of presidential political power dynamics: Because of the division of power between the president, the House, and the Senate, the most significant accomplishments of presidents often contradict what we would have expected when we voted for them.

For example…

Who was it that liberalized US relations with Communist China?

Answer: It was Richard Nixon, a staunch anti-communist.

And…

Who was it that passed the toughest law on crime, the law that turned the US into the country with the highest percentage of its citizens in prison?

Answer: It was Bill Clinton, an outspoken advocate for liberal policies.

And…

Who was it that ordered 542 drone strikes that killed 3797 people, 324 of which were civilians?

Answer: It was Barack Obama, winner of the Nobel Peace Prize for “extraordinary efforts to strengthen international diplomacy and cooperation between peoples.”

It’s for these reasons that I’ve felt that voting was a citizen’s #1 civic duty. I see the process today as a once great idea (including the electoral college) that has degenerated into a great, sad sham.

But the issues are real. And the problems need to be fixed. As we move towards our next election, we are being asked to choose candidates on the basis of our belief in their ability to make good decisions on such issues as:

* Black lives matter vs. all lives matter

* Gun rights vs. gun restrictions

* Equality of opportunity vs. equality of outcome

* Individual liberty vs. social justice

In a recent blog about why he rarely votes, James Altucher touched on the above with a sarcastic suggestion:

“Most people shouldn’t vote. Most people vote for the candidate their friends or colleagues are voting for. And many people are swayed by cognitive biases triggered by campaign materials and media. People follow the personalities of the candidates. I hear things like, ‘I just don’t like XYZ as a person,’ etc. So? Does anyone follow issues?”

He then gave his readers a six-question quiz on some of the issues that are being talked about in the current presidential election. We liked that idea, and came up with 20 questions of our own.

Take the following quiz and see how you do.

 

Are You Qualified to Vote?

20 Questions to Help You Decide 

 

  1. What is a tariff?

___ The amount by which the cost of a country’s imports exceeds the cost of its exports

___ The amount by which the value of a country’s exports exceeds the cost of its imports

___ A ban on trade or other commercial activity with a country

___ A tax or duty to be paid on a particular class of imports or exports

 

  1. Which statement is true of the US balance of trade with China?

___ It is positive.

___ It is negative.

___ It is about equal.

 

  1. How do free-market economists generally view tariffs?

___They are necessary to protect against unfair trade practices by foreign countries.

___They result in higher overall consumer and material costs and are bad for the economy.

___ They are political in nature and have a net neutral economic effect.

 

  1. Factoring in all other variables, including experience, hours worked, and using precise job descriptions, what is the gender wage gap in the US?

___ 17%

___ 7%

___ 2 %

 

  1. US senators are elected to serve a term of office that lasts how long?

___ 6 years

___ 4 years

___ 2 years

___ indefinitely

 

  1. Trump often claims that the employment rate for African-Americans rose to a historical high before COVID-19 and the shutdown. True or false?

___ True

___ False

 

  1. Trump’s handling of the COVID pandemic has been criticized harshly by the Democrats and the media. He denies this and proffers, in his defense, his early decision to ban most travel from China. Putting that aside, how did he respond to the WHO and CDC guidelines and to Fauci’s directives in the first three months of the pandemic?

___ He ignored them completely.

___ He was resistant and slow.

___ He followed them as they were announced.

 

  1. Which one of the following is NOT a member of Trump’s cabinet?

___ Benjamin Carson

___ Elaine L. Chao

___ Kayleigh McEnany

___ Alex Azar

 

  1. During the Democratic primary debates, Kamala Harris attacked Joe Biden for his past opposition to school busing. How does she explain running as his vice president?

___ She changed her mind after he sent her a note apologizing for his former opinion.

___ She said that her comments were taken out of context.

___ She said she didn’t really mean it. She attributed the accusations to debate tactics.

 

  1. Kamala Harris and Joe Biden received their law degrees from _________ and _________, respectively.

___ Howard University, University of Delaware

___ Syracuse University, University of Delaware

___ University of California, Syracuse University

___ Howard University, Syracuse University

 

  1. What is the name of the governor of New York?

___ Andrew Cuomo

___ Chris Cuomo

___ Bill de Blasio

___ Rudy Giuliani

 

  1. Which of the following acts did Trump NOT sign into law?

___ Preventing Animal Cruelty and Torture Act

___ Allow States and Victims to Fight Online Sex Trafficking Act

___ Tested Ability to Leverage Exceptional National Talent Act

___ Save Our Seas Act

 

  1. Trump issued 137 executive orders in the first three years of his presidency. Some in the media have criticized him for that, suggesting that he is using his authority to override Congress. Which of the following statements is true?

___ 137 is more than twice the number of executive orders that Obama issued during his first three years.

___ 137 is roughly equal to the number of executive orders that Obama issued during his first three years.

___ 137 is 29 more than the number of executive orders that Obama issued during his first three years.

 

  1. What do NYC, Baltimore, Portland, and LA have in common?

___ As a group, they reported 90% of the country’s COVID-19 cases.

___ They were devastated by damages following looting and rioting.

___ They cut funding to their police departments.

___ None of them imposed mask regulations.

 

  1. As a state attorney in California, what was Kamala Harris known for?

___ Going easy on marijuana offenders

___ Being tough on marijuana offenders

___ Going easy on cocaine users

___ Being tough on cocaine users

 

  1. Which of the following is NOT a policy position held by Kamala Harris?

___ Supports the right of transgender females to compete in women’s athletic competitions

___ Supports raising teacher salaries and expanding early childhood education programs

___ Supports ending Trump’s tariffs on steel and aluminum imports from the EU

___ Opposes pro-choice legislation, supporting a bill banning abortion after 20 weeks of pregnancy

 

  1. Which of the following is true about the US Electoral College?

___ It was created by Republicans to favor Republican candidates.

___ It was created by Democrats to favor Democrat candidates.

___ It was created to reduce voter fraud.

___ It was created to give states with smaller populations more of a say in Congress.

 

  1. Presidents Barack Obama, Theodore Roosevelt, and Jimmy Carter were all nominated for the Nobel Peace Prize. Which of the following statements is true for Trump?

___ He has never been nominated.

___ He was nominated once.

___ He was nominated three times.

 

  1. When asked, in an interview, about the humanitarian crisis at the border, who said, “Our message absolutely is: Don’t send your children… on trains or through a bunch of smugglers”?

___ Donald Trump

___ Joe Biden

___ Mike Pence

___ Barack Obama

 

  1. What was Supreme Court Justice Ruth Bader Ginsburg’s position on “packing” the court?

___ She was in favor of it.

___ She was opposed to it.

 

Answers 

  1. A tax or duty to be paid on a particular class of imports or exports

 

  1. It is negative. The trade deficit increased by 5.9% ($67.1 billion) when measured in August – the highest deficit since August 2006, when it was $68.2 billion.

 

  1. They result in higher overall consumer and material costs and are bad for the economy. Free-market economists obviously prefer a free market, an unregulated system of economic exchange that limits or excludes interventions such as quotas, tariffs, quality controls, etc. Check out my essay on this very topic HERE.

 

  1. 2% – According to a PayScale analysis, when adjusted for men and women with the same job and qualifications, women earn approximately 98¢ for every $1 earned by men. Review the info HERE. And HERE is a pretty informative video on the subject. Plus, HERE is a podcast interview (with transcript) between journalist Steven Dubner and Claudia Goldin, a Harvard economist, about the wage gap.

 

  1. 6 years

 

  1. True – The data showed that black unemployment was at a record low 5.8% in February before the virus hit. It rose to 16.8% in May, according to the Labor Department.

 

  1. He followed them as they were announced. Fauci himself stated that Trump followed his recommendations. Additionally, in a January 30 press release, CDC director Dr. Robert Redfield wrote, “We understand that this may be concerning, but based on what we know now, we still believe the immediate risk to the American public is low.” And before Redfield’s statement went out, Trump had announced the formation of his coronavirus task force with Alex Azar, Fauci, and Redfield, among others.

 

  1. Kayleigh McEnany – Kayleigh is the White House Press Secretary, a non-cabinet position.

 

  1. She said she didn’t mean it. She attributed the accusations to debate tactics. In an interview with Stephen Colbert, Harris laughingly said, “It was a debate!… Literally, it was a debate!” Watch the video HERE.

 

  1. University of California, Syracuse University – Harris received her JD from the UC Hastings College of the Law in 1989. Biden received his law degree from SU’s College of Law in 1968.

 

  1. Andrew Cuomo – Chris Cuomo, Andrew’s brother, is a CNN television journalist. Bill De Blasio is the mayor of New York. Rudy Giuliani is the former mayor of New York (1994 – 2001).

 

  1. Tested Ability to Leverage Exceptional National Talent (TALENT) Act – This was the last bill passed by Barack Obama. The other 3 are acts all signed into law by Trump.

 

  1. 137 is 29 more than the number of executive orders that Obama issued during his first three years. According to the National Archives’ Federal Register, in their first three years as president, Obama and Trump signed 108 and 137 executive orders, respectively.

 

  1. They cut funding to their police departments. NYC (with 477,000 cases), Baltimore (with 18,000), Portland (34,000), and LA (281,000) account for only about 10.5% of the total cases in the US. Note: All of these cities have imposed mask mandates.

 

  1. Being tough on marijuana offenders – Harris is on record for having jailed nearly 2000 people for marijuana offenses.

 

  1. Opposes pro-choice legislation, supporting a bill banning abortion after 20 weeks of pregnancy. Harris is generally considered extremely pro-choice. She actually fought against the bill that would ban 20-week pregnancies, which caused some backlash.

 

  1. It was created to give states with smaller populations more of a say in Congress.

 

  1. He was nominated three times – by (1) Christian Tybring-Gjedde of the Norwegian Parliament for “trying to create peace between nations”; (2) Magnus Jacobsson of the Swedish Parliament for leadership in the accord between Kosovo, Serbia, and Israel; and (3)

David Flint and other law professors in Australia on the basis of Trump’s “Doctrine Against Endless Wars.”

 

  1. Barack Obama – He said this in an interview with ABC in 2014.

 

  1. She was opposed to it. Watch the video HERE.

 

Primary Sources

Difference Between Joe Biden and Donald Trump

https://www.thebalance.com/u-s-trade-deficit-causes-effects-trade-partners-3306276

https://www.investopedia.com/news/what-are-tariffs-and-how-do-they-affect-you/

https://hbr.org/2019/01/research-gender-pay-gaps-shrink-when-companies-are-required-to-disclose-them

https://www.marketscreener.com/news/latest/Coronavirus-Obliterated-Best-African-American-Job-Market-on-Record–30746362/

https://people.com/politics/dr-fauci-says-trump-listened-his-recommendations-not-being-forced-to-say/

https://www.cdc.gov/media/releases/2020/p0130-coronavirus-spread.html

https://www.realclearpolitics.com/video/2020/08/17/kamala_harris_dismisses_past_biden_criticism_it_was_a_debate.html

https://www.usatoday.com/story/news/factcheck/2020/09/28/fact-check-false-claim-biden-harris-during-race-dem-nod/3506180001/

https://2020election.procon.org/view.source-summary-chart.php

https://www.whitehouse.gov/the-trump-administration/the-cabinet/

https://www.federalregister.gov/presidential-documents/executive-orders/barack-obama/2011

https://www.govtrack.us/congress/bills/115/hr39/summary

https://www.nytimes.com/2020/09/11/opinion/fact-check-trump.html

https://www.forbes.com/sites/jemimamcevoy/2020/08/13/at-least-13-cities-are-defunding-their-police-departments/#6c01eebf29e3

https://www.businessinsider.com/who-is-kamala-harris-bio-age-family-key-positions-2019-3

https://townhall.com/tipsheet/cortneyobrien/2020/09/28/trump-nominated-for-nobel-peace-prize-for-third-time-n2577092

 

 

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“Tradition has it that whenever a group of people has tasted the lovely fruits of wealth, security, and prestige, it begins to find it more comfortable to believe in the obvious lie   and accept that it alone is entitled to privilege.” –Steven Biko

 

Are You “Privileged”? Yes? No? So What?

“Privilege” is a hot topic today – around the dining room table as well as in the mainstream media. One thing that I’ve noticed is that the people that have the strongest feelings about it seem to have the most trouble defining it.

Merriam-Webster defines privilege as “a right granted as a peculiar benefit, advantage, or favor.” As in, “Driving, my reckless son, is a privilege, not a right.”

This, of course, is not what privilege means to those in academia and the media that have made it an integral concept in social commentary. Privilege in that sense is the idea that in America there are certain groups (i.e., white men and to a lesser degree white women) that are entitled to social, economic, academic, and health advantages that (a) they did not earn and (b) are denied to other groups (people of color, women, and the LGBTQ community).

If you listen exclusively to Fox News, you might think this is a novel form of radical lunacy. It may have become wacky in recent years, but it’s hardly a new idea.

In The Souls of Black Folk (1903), W.E.B. Du Bois wrote that while African-Americans were very aware of white Americans and conscious of racial discrimination, white Americans hardly thought of African-Americans at all. Nor did they think much about the effects of racial discrimination. The social privileges white Americans enjoyed, he contended, included courtesy and deference, unimpeded admittance to all public functions, lenient treatment in court, and access to the best schools.

There is no question that white Americans did indeed enjoy all sorts of privileges denied to black Americans at the turn of the 20th century, when Du Bois published his famous book. The wackiness emerged in 1988, when Peggy McIntosh published an essay titled “White Privilege and Male Privilege.” In the essay, she listed 46 privileges that she believed she enjoyed as a white woman in the US. Among them: “If I need legal or medical help, my race will not work against me,” and “I do not have to educate my children to be aware of systemic racism.”

Her essay has since been credited with getting academics interested in the study of “privilege theory,” which includes the concept of intersectionality – i.e., that every individual has a mix of privileges and disadvantages depending on his gender, color, and sexual preference. Thus, a black woman has less privilege than a black man, and a black homosexual man has less privilege than a black heterosexual man.  And a white man… well, he sits on top of a stack of every social privilege there is.

One of the criticisms of intersectionality (advanced by the moral philosopher Lawrence Blum) is that its categories are too broad. It does not distinguish between Chinese, Japanese, Indians, and Vietnamese, for example. They are all grouped together as Asian-Americans, even though their relative economic, social, and academic success in America varies widely by group. (The same case is made with respect to black Americans by social philosopher Coleman Hughes, who notes the differences in advantages – i.e., achievement – by Caribbean blacks compared to African-Americans.)

Another criticism of intersectionality is that it is too narrowly focused. It does not include the obvious advantages of being good looking, for example, despite overwhelming evidence that physical beauty plays a major role in social, economic, and even academic achievement. Proponents of privilege theory also give a surprisingly low intersectionality “rating” to personal wealth, arguing that a wealthy black man or woman has less privilege than a poor white man or woman.

Also rarely discussed is being able-bodied and healthy – which anyone that lives a life so compromised recognizes as a huge privilege. And nowhere in the discussion is the recognition of perhaps the greatest privilege of all: having extraordinary intelligence.

It’s a messy area of inquiry, to be sure. And although it’s an easy concept to sell to college students, it’s much harder to get those on the higher end of the privilege scale to accept. (Especially if they are not particularly smart and well spoken, or if they are not, or were not, wealthy.)

Privilege theorists dislike having conversations about these sorts of privilege. They often argue that the mere mention of other privileges or disadvantages is invalid as it comes from people that are in some ways privileged themselves.

What they prefer to talk about is their views on a solution for social inequality – a solution that is usually a demand for advantages that are above and beyond what the privileged enjoy (e.g., preferential treatment in education, job placement, and social welfare assistance).

These are difficult conversations because there are all sorts of social inequities. And despite decades of legislation and trillions of dollars in funding, programs designed to fix the problem have failed to achieve their goals. In fact, the result has been greater inequality.

Still, one wants to believe that we can move towards a social environment where there is more equity in terms of such privileges. Or at least eliminate any actual institutional hindrances to people based on color, gender, or sexual preference.

So what can be done?

In a future essay, I’ll attempt to answer that question on a larger scale.

But on an individual basis, I think it’s fairly obvious that progress can be made, because it has been made. Virtually every proponent of privilege theory that is not a white man is proof of that.

What can you do? What can I do?

I think it starts with making an honest effort to recognize whatever privileges we have, as well as the ways – consciously and unconsciously – that we take advantage of them.

Here are 14 questions that might give you some insight into your own sense of privilege, regardless of your gender, race, sexual preference, income, etc.

 

  1. What goes through your head when you see a police car behind you?
  2. Do you feel underpaid and underappreciated at work – even though you are doing as well as your peers?
  3. If you’re a Liberal, do you believe that your views on political issues are morally superior to those of Conservatives?
  4. If you’re a Conservative, do you believe that your views on political issues are morally superior to those of Liberals?
  5. Do you think a really interesting book could be written about the stories your grandparents/ great grandparents told about coming to this country and pursuing the “American Dream”?
  6. Do you feel slighted when someone doesn’t remember your name?
  7. Do you think it’s okay to cut in line because you are in a rush… as long as you smile and apologize?
  8. Are you insulted when someone cuts in front of you… even if they smile and apologize?
  9. In terms of your lifestyle, would you describe the coronavirus shutdown as (a) annoying, (b) devastating, (c) Shutdown? What shutdown?
  10. In terms of your finances, would you describe the coronavirus shutdown as (a) annoying, (b) devastating, (c) Shutdown? What shutdown?
  11. Do you believe that your children are gifted?
  12. When someone who makes more money than you is paying the bill, do you feel justified in ordering a more expensive meal than you normally would?
  13. Do you believe that your lack of success in life has been caused by circumstances beyond your control?
  14. Do you believe that only a smugly privileged white male could have come up with these questions?

 

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“Taxes are not paid on profits not made on sales of products never produced by workers not working, truckers not trucking, and buyers not buying. And we are just at the beginning.” – Bill Bonner

The Stock Market Collapse, and What We Can Learn About Economics

I have been thinking positively.

Maybe, when all of this is over, we will all have a better understanding of how economies work. Perhaps, after we get through all the naming and blaming, we will realize that the cause of the collapse was not the coronavirus but the overspending, the speculation and the accumulation of mountainous debt that which have been at the root of just about every economic collapse in history.

If, as is likely, the government’s current bail-out package doesn’t help, and all the follow-up bail-out bills don’t work either, perhaps we will realize that our government cannot solve financial problems, large or small, unless it can tap into the only source of wealth available: the profits of private enterprise.

We are on the verge of what could be a recession as great as that of the Great Depression. If the virus subsides quickly and businesses are allowed to reopen quickly, our economy may survive. Not in months, but perhaps in a year or two or five.

But if we continue to have our businesses shut down for months into the future, what we will likely see is a collapse of the economy followed by a collapse of the tax base followed by a collapse of the government’s ability to do much of anything.

Let’s hope not. Right now, governments all over the world are passing relief programs costing trillions of dollars.

Let’s hope things get back on track before we run out of money.

The ABCs of Economics 

The cause of the current financial crisis is the same as every financial crisis we’ve ever had. What’s different is this widespread government shutdown of businesses. This didn’t happen in any of the other virus outbreaks. It didn’t happen in 1987 or 2000-2002 or 2008. It didn’t even happen in 1929.

What happens when you have a widespread shutdown of private enterprise?

The answer is pretty obvious: You have a widespread shutdown of revenues and profits, which causes a domino effect that spreads throughout the economy with alarming speed. Just like a virus can.

A local restaurant shuts down. The owner can’t pay the bills and lets his staff go. All those companies that the owner is no longer paying – the cleaning company, the maintenance company, the suppliers of not just food and beverages but everything from paper towels to light bulbs – go without their revenues.

This is now happening with thousands of small private businesses all over America (and the rest of the world).

And many large businesses, too.

US unemployment rates a month ago were at all-time lows. Today, they are skyrocketing. It’s quite possible that they will soon be at 20%.

Yes, this is a real economic meltdown. And things are likely to get worse before they get better. But one day, things will get better and the economy will recover.  The question I’m asking is: Will we have learned anything from all of this? Will this help us understand the basic fundamentals about economics – i.e., how an economy works?

Government Intervention 

The current remedy in the USA – the $1.5 trillion bailout that is being argued about as I write this – will soon be passed. Will it help?

Certainly, government checks for $400, $800 ,and $1200 will give short-term relief to millions of unemployed tax payers. But unless the virus subsides very soon (possible, but not likely) and the economy revives quickly (unlikely), the future value of this relief to individuals will be naught.

One could argue that the proposed bailouts to businesses will have a longer-term positive effect. If these subsidies allow businesses to stay profitable during the duration – and if these companies use the aid to continue production and employment going –there would be a longer-term benefit.

But that won’t be the case with most companies that are bailed out. Many of them will use the relief to protect their shareholders. And many of them, even doing the right things, will fail.

But the bottom line is that our government – no government – can solve large and extended financial crises, because governments themselves do not create wealth. The wealth they acquire comes to them in the form of taxes. And tax revenues come from personal and corporate earnings. And all of those earnings are dependent on business profits.

This is Lesson One in the Economics of Business: All wealth ultimately comes from private enterprise – the profits generated by private businesses. Governments are not designed to create profits. They are designed to tax profits and distribute them to social enterprises like fighting wars and policing crimes and social welfare. Whenever governments have tried to run businesses, those industries have failed.

But when governments allow businesses to grow their profits, their economies expand and so does the tax base. With a growing tax base, governments can provide more of those services. This is what happened with the US and other Western economies in the Industrial Revolution, in the post-WWII expansion, in the Information Revolution in the late 1990s. And it is how Denmark and other Scandinavian countries were able to pay for their lauded social welfare nets.

But this can only happen if there is a tax base that is growing. When a tax base shrinks (as happens during recessions), the ability of a government to do its basic work shrinks too.

And if you have a situation where a large portion of an economy’s businesses become unprofitable – either because of the nationalization of industries or because of forced shutdowns like we are having now –  the government’s revenues dry up very quickly.

What options do governments have, then?

There are only two: They can borrow money (from their citizens or from businesses or from other countries) or – if they are not on a gold standard – they can print paper money and spend that. But the second rule of the ABCs of Economics is that every dollar of fake money decreases the value of the currency by the same one dollar. Quantitative easing and its economic siblings is just another form of borrowing – i.e., borrowing today that will be paid back later by inflation or recessions. But the debt will always be paid. And the payment must be made by real losses in the real income and real net worth of the entire population. Except those people and those businesses that refused to overspend and speculate and saved their profits for a rainy day.

The USA has more debt than any country in the world. The same is true for American consumers. Right now, the stock and bond markets are crashing, oil prices are falling, and even gold is moving down. (Though this will eventually reverse.)

You cannot increase your debt forever. Sooner or later, lenders will stop lending. The Chinese have been the USA’s largest lenders in recent decades. Will they come to our rescue? Can they?

As for the current bailout, it will, at best, be temporary relief. And temporary relief can work if the recession is temporary. But when businesses are not making profits for an extended period of time, the dominoes will start falling.

So if businesses can’t get back into profits in the next month or two, we will likely see a second bailout in weeks or months, and perhaps a third later on this year. But none of that will fix the real problem – that our credit system is collapsing on its foundation. Sooner or later, the twin towers of federal and consumer debt will collapse on themselves.

I’m hoping this doesn’t happen. I’m hoping the virus will soon slow down and our businesses will be allowed to operate again. Recovery won’t be immediate. It may take a year or five or 10. In the meantime, I’m hoping that the nature of this crisis – accelerated by the closing of so many thousands of businesses – will make it clear to every Americans this simple truth: All real wealth comes from the profits of private enterprise –  and without those profits, our government cannot be of any help.

This is such a simple fact that you’d think everyone with a high school education would understand it. (Ironically, it seems that the more education one gets, the less likely he is to comprehend.)

Another way to grasp this fundamental truth of economics is to understand that no government can forever provide what nature is not willing to guarantee. And nature guarantees nothing.

So that’s what I am hoping – that we will all come to understand this simple truth.

But I’m not holding my breath.

Most of my liberal friends have decided that the crisis we are living through is the fault of Donald Trump. And when they lose their jobs, they will blame that on him, too.

My conservative friends will point out that the delay in testing kits was the fault of regulation. That instead of using the kits that were available, the CDC decided we needed to use FDA-approved kits, so they tried and failed to create one of their own.

All of that is beside the point. The fact is that Black Swan events do happen. And when they create recessions, thousands of businesses go belly-up and millions of workers lose their jobs. The only survivors are those people and businesses that have not allowed themselves to overspend, speculate, and get into debt.

If we do move into a major and extended recession, I’m hoping that we will come out of it with the recognition that no government can guarantee its citizens anything that nature itself doesn’t guarantee. And nature guarantees nothing.

The silver lining would be a general recognition of the reality that we – each country, each company, and each person – are responsible for our own financial well being. And that to achieve financial security, we must work hard at jobs that create profits and save those profits for a rainy day.

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He wanted to know: Did he need to get an MBA?

At my niece’s college graduation last week, one of her friends asked me whether I thought getting an MBA was worth it.

I have no problem articulating my opinions when I’m writing or speaking to the many. But when an individual asks for my thoughts, I’m reluctant to provide a definitive answer. Because results, as they say, do vary.

I don’t want to bump into the same person in 10 years and discover that I ruined his life by giving him bad advice.

My answer, therefore, was a moderated version of what I’ve been saying for many years: You definitely do not need an MBA to succeed in business. You may need an MBA to be accepted for certain jobs – to work for a large bank, accounting firm, business consulting firm, and so on. But for the most part, those are safe jobs for ambitious plodders. Not the kind of jobs I’d normally encourage anyone to pursue.

Many would not agree with me. I know parents that have encouraged if not begged their kids to get MBAs. And many of them, millennials, listened. MBA programs are proliferating, and the number of MBA graduates in the US has doubled to almost 200,000 in just a few years.

If you want to be a doctor and save lives, I find that admirable. If you want to be a lawyer and fight injustice, I admire that too. Anyone that dares to be a teacher deserves not just admiration but awe.

But I have a feeling that most people who pursue an MBA do it because they see it as a safe and predictable way to make a good income. That’s not a wise way to move into a career.

Let’s face it, most of the fun and the profit in a career comes from getting involved with an up-and-coming business and then rising to the top as it grows. To do that, you don’t need an MBA. In fact, as I have argued many times, you would probably be much better off with a much less expensive liberal arts degree.

Why?

Here’s how I explained it in an article titled “The Case for a Liberal Arts Education”:

A liberal arts education teaches you three skills: to think well, to write well, and to speak well. And in the corporate world – and in the entrepreneurial world as well – wealth is created by analyzing problems, figuring out solutions, and selling those solutions. In other words, a liberal arts education is tailor-made to give you the skills you need to succeed in business. And not just to do well. I’m talking about going all the way to the top.

 Businesses have one fundamental problem that presents itself endlessly in different disguises: how to sell products/services profitably. There are many, many solutions to this problem. Even in a specific situation on a specific day, there is always more than one. And the person who can regularly come up with solutions – and convince others that his solutions should be implemented – is the person who is going to get the rewards. The money. The power. The prestige.

 Yes, you can improve your thinking, writing, and speaking skills while enrolled in [an MBA program]. But it will happen indirectly and additionally. It won’t be what you are mainly concerned with. With a liberal arts education, you ensure that you will spend most of your time learning and practicing the very skills you will use later to get your ideas and solutions sold.

Of my three sons, only the third one got an MBA. He told me that it was valuable at the beginning of his career. (He became a copywriter for an investment publishing business.) But now, after less than five years, he uses very little of what he learned about business in his master’s program at the University of Denver.

Think of it this way: What skills and knowledge are you likely to acquire by spending two or three years on an MBA?

You will spend a fair amount of that time studying business management. But IMHO, business management cannot be taught. It can only be learned by experience.

You will also almost certainly take a few classes in business ethics. These are popular to the point of being requisites in many MBA programs today. But business ethics is a vacuous idea. There is only ethics. And that is something your parents either taught you or they didn’t. You can’t learn it in school.

What about accounting? The only accounting you need in business (if you are not an actual accountant – a dreadful occupation) you can learn on your own. Ditto how to read a P&L and a balance sheet. And basic statistics (which has helped me avoid all sorts of mistakes).

The bottom line: If you are mildly ambitious, moderately intelligent, and risk averse… by all means, get an MBA.

But if you want to work for a growing business, doing interesting projects, taking on exciting challenges, and eventually conquering some portion of the business world, skip the MBA path and devote those years to learning on the job.

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“The Future of Higher Education: Apprenticeships vs. Business School” by Peter Diamandis

The university system in the USA is a huge business. It thrives on higher-than-inflation tuition increases and big donations from successful alumni.

Some of the smartest people I know believe that college education is outdated. They argue that a motivated person would do better learning on his own, for free.

I’ve argued with them over the years. My view, in a nutshell, is that the value of an intellectual environment and mentorship on the core skills of success – thinking, writing, and speaking – cannot be overestimated.

But it’s becoming more difficult to make that case today. First, because liberal arts programs are increasingly devoted to leftist ideological positions. (The “diversity” provost at the University of Michigan earns $400,00 a year.) But also because technical education, in today’s interconnected world, moves way too fast for academics to keep up.

In this recent essay, Peter Diamandis compares the value of getting an MBA from Harvard or Yale to joining an apprenticeship program where future entrepreneurs get to work on current business challenges in real time. LINK

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The Exposure Explosion

You Think Sexual Harassment Is News? Really?

Men – mostly powerful white men – are being exposed as sexual predators. They are being punished by losing their jobs, their reputations, and, in some cases, their families and friends.

Like the presidential election, it is freaking people out and polarizing the population.

First it was Harvey Weinstein. Then it was Louis C. K., Kevin Spacey, Al Franken, John Conyers, and (gasp!) Matt Lauer.

Hardly a day passes without another well-known name being added to the list. And it’s not just celebrities and politicians. Gavin Delahunty, chief curator at the Dallas Museum of Art, resigned after allegations of inappropriate sexual behavior. James Levine, the world-famous conductor, was suspended by the Met Opera after three men accused him of abusing them when they were teenagers.

The liberal press was the first to jump on the “news.” Conservative commentators were initially quiet on the subject, but began speaking when a significant number of the accused turned out to be liberals.

So we are all talking about it now.

It was never really acceptable. But some of it sort of was.

For the first 30 years of my life, sexual harassment was not something people talked about. I doubt if the phrase was even used until the 1980s when workforce regulations and laws were put into place.

As for “inappropriate behavior” creating a “hostile work environment” – I don’t remember that being an issue until around 2000.

But for what we might call “hard core” sexual harassment – trying to exchange workplace rewards for sexual favors – that was always considered repulsive. It was also, however, regarded as somehow “to be expected,” at least in Hollywood and on Wall Street.

How many cartoons have been published over the decades – even in dignified liberal-leaning publications such as The New Yorker – depicting the Hollywood powerhouse and the starlet on “the casting couch”? Or the boss chasing the typist around the room?

A young person today might well wonder why this sort of behavior was considered a laughing matter.

One reason, I think, is that there was, until relatively recently, a very different view of male and female roles when it came to sex.

The man’s role was to pursue the woman. The woman’s role was to be pursued.

The man was expected to want to have sex whenever he could get it. The woman was expected to refuse a man’s sexual advances, and to make only small and gradual allowances depending on her assessment of his attractiveness and worthiness. (Not necessarily in that order.)

Women who initiated sex or said yes too easily were considered whorish. Men who were persistent in asking for sex were considered normal – “red-blooded” at the worst.

And now, as the exposures and admissions and expulsions continue, it is pretty much impossible for anyone to pretend that this double standard has not been a real and serious problem since… well, certainly since the Mad Men days. Arguably since 1492.

So why does it feel like sexual harassment in the workplace is something new?

Until recently, the behavior that men are now being punished for was accepted… or at least ignored. And as long as it was ignored, some men felt that it was somehow okay.

I can think of several contributing factors:

  • Although it has always been illegal as well as reprehensible to rape, fondle, or act out sexually in front of one’s colleagues and employees, there was always some allowance given for the lesser of these offenses when the victims were single women – i.e., not some other man’s wife.
  • And when it came to Hollywood and Wall Street, the idea that a powerful man might persuade a single (i.e., available) woman to grant him some sort of sexual pleasure by offering career benefits was considered a form of mutual consent. (After all, the woman could always say no.)
  • Casual sex – i.e., sex outside of marriage – has gradually become thought of as ordinary. And the idea of a woman having such sex has evolved from something to be ashamed of to something she has a perfect right to.

So how far can a man go?

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