Warren Buffett Shares The Secrets To Wealth In America

On January 4, 2018, Warren Buffett writes on Time:

I have good news. First, most American children are going to live far better than their parents did. Second, large gains in the living standards of Americans will continue for many generations to come.

Some years back, people generally agreed with my optimism. Today, however, pollsters find that most Americans are pessimistic about their children’s future. Politicians, business leaders and the press constantly tell us that our economic machine is sputtering. Their evidence: GDP growth of only 2% or so in recent years.

Before we shed tears over that figure, let’s do a little math, recognizing that GDP per capita is what counts. If, for example, the U.S. population were to grow 3% annually while GDP grew 2%, prospects would indeed be bleak for our children.

But that’s not the case. We can be confident that births minus deaths will add no more than 0.5% yearly to America’s population. Immigration is more difficult to predict. I believe 1 million people annually is a reasonable estimate, an influx that will add 0.3% annually to population growth.

In total, therefore, you can expect America’s population to increase about 0.8% a year. Under that assumption, gains of 2% in real GDP–that is, without nominal gains produced by inflation–will annually deliver 1.2% growth in per capita GDP.

This pace no doubt sounds paltry. But over time, it works wonders. In 25 years–a single generation–1.2% annual growth boosts our current $59,000 of GDP per capita to $79,000. This $20,000 increase guarantees a far better life for our children.

In America, it should be noted, there’s nothing unusual about that sort of gain, magnificent though it will be. Just look at what has happened in my lifetime.

I was born in 1930, when the symbol of American wealth was John D. Rockefeller Sr. Today my upper-middle-class neighbors enjoy options in travel, entertainment, medicine and education that were simply not available to Rockefeller and his family. With all of his riches, John D. couldn’t buy the pleasures and conveniences we now take for granted.

Two words explain this miracle: innovation and productivity. Conversely, were today’s Americans doing the same things in the same ways as they did in 1776, we would be leading the same sort of lives as our forebears.

Replicating those early days would require that 80% or so of today’s workers be employed on farms simply to provide the food and cotton we need. So why does it take only 2% of today’s workers to do this job? Give the credit to those who brought us tractors, planters, cotton gins, combines, fertilizer, irrigation and a host of other productivity improvements.

To all this good news there is, of course, an important offset: in our 241 years, the progress that I’ve described has disrupted and displaced almost all of our country’s labor force. If that level of upheaval had been foreseen–which it clearly wasn’t–strong worker opposition would surely have formed and possibly doomed innovation. How, Americans would have asked, could all these unemployed farmers find work?

We know today that the staggering productivity gains in farming were a blessing. They freed nearly 80% of the nation’s workforce to redeploy their efforts into new industries that have changed our way of life.

You can describe these develop-ments as productivity gains or disruptions. Whatever the label, they explain why we now have our amazing $59,000 of GDP per capita.

This game of economic miracles is in its early innings. Americans will benefit from far more and better “stuff” in the future. The challenge will be to have this bounty deliver a better life to the disrupted as well as to the disrupters. And on this matter, many Americans are justifiably worried.

Let’s think again about 1930. Imagine someone then predicting that real per capita GDP would increase sixfold during my lifetime. My parents would have immediately dismissed such a gain as impossible. If somehow, though, they could have imagined it actually transpiring, they would concurrently have predicted something close to universal prosperity.

Instead, another invention of the ensuing decades, the Forbes 400, paints a far different picture. Between the first computation in 1982 and today, the wealth of the 400 increased 29-fold–from $93 billion to $2.7 trillion–while many millions of hardworking citizens remained stuck on an economic treadmill. During this period, the tsunami of wealth didn’t trickle down. It surged upward.

In 1776, America set off to unleash human potential by combining market economics, the rule of law and equality of opportunity. This foundation was an act of genius that in only 241 years converted our original villages and prairies into $96 trillion of wealth.

The market system, however, has also left many people hopelessly behind, particularly as it has become ever more specialized. These devastating side effects can be ameliorated: a rich family takes care of all its children, not just those with talents valued by the marketplace.

In the years of growth that certainly lie ahead, I have no doubt that America can both deliver riches to many and a decent life to all. We must not settle for less.

http://time.com/5087360/warren-buffett-shares-the-secrets-to-wealth-in-america/

 

A Simple Fix For Our Massive Inequality Problem

On November 30, 2017, Matt Brunei writes an Opinion Piece in The New York Times:

Everyone knows that we are again living in a Gilded Age.

More controversial is the question of what should be done about it. We seem stuck in the same policy equilibrium we have been in for decades, with conservatives denying that there is a problem and pushing policies that would make it even worse, liberals emphasizing the need for education and skills development, and leftists pushing for a unionized labor market and social-democratic welfare state.

Some of these ideas are good ones, which would make life better for vulnerable people. But they’d do little to directly target inequality in our society or to capture all the benefits that economic fairness brings.

The solution is simpler than it seems. There’s a tried and tested way, within the system we have now, of giving everyone a share in the investment returns now hoarded by the wealthy. It’s called a social wealth fund, a pool of investment assets in some ways like the giant index or mutual funds already popular with retirement savings accounts or pension funds, but one owned collectively by society as a whole. One that paid dividends not to the few, or even just to the shrinking middle class lucky enough to have their savings invested, but to everyone.

It may be our best chance to stop a decades-long trend of rising wealth inequality that has only accelerated since the Great Recession. According to new data released by the Federal Reserve, the collapse of the housing bubble and the ensuing financial crisis caused the net worth of virtually all families, rich and poor, to drop sharply between 2007 and 2010. But during the post-2010 economic recovery, the fortunes of the wealthiest grew rapidly while nearly everyone else’s lagged behind.

The wealth of the top 1 percent increased by an average of $4.9 million over the past decade, while the average holdings of the bottom 99 percent declined by about $4,500. Wealth inequality is now the highest it has been since the Federal Reserve began collecting this kind of data in 1983. A full account of just how bad things have gotten is difficult to wrap one’s mind around. In 2016, according to my calculations, the top 1 percent had an average wealth of $26.6 million, while the net worth of everyone in the bottom third combined was less than zero (because of a mixture of low accumulated savings and high debt).

The stress this puts on our society is hard to overstate, and though recognition of our country’s grossly unequal condition has grown in recent years, few have proposed credible ways of turning things around. That’s where a social wealth fund comes in.

Here’s how it could work. The federal government would create and run a new investment fund, and issue every adult citizen one share of ownership. The fund would gradually come to own a substantial and diverse portfolio of stocks, bonds and real estate. The investment return that the fund generates would be paid out to each citizen in the form of a universal basic dividend, and the shares would be nontransferable to preserve the institution’s egalitarian purpose.

The net result of such a system would be to gradually transform private wealth, which is very unevenly distributed, into public wealth that every person in society owns an equal part of. If, over time, the social wealth fund came to own one-third of the country’s wealth, that would allow it to distribute an annual dividend equivalent to about a third of the total returns on invested capital each year, which represents about a tenth of net national income. In 2016, based on the latest available census population figures, that would have meant around $6,400 paid to all adults or $8,000 paid to every person between the ages of 18 and 64.

Over the past few decades, wealth funds like this have been successfully implemented in Alaska and Norway, quashing any doubt about their practical viability. Alaska’s fund was created in 1976 under the Republican Governor Jay Hammond and has grown in value to $62 billion. In a typical year, every Alaskan citizen, including children, receives a dividend from the fund of about $1,000 to $2,000. Norway’s similar fund recently topped $1 trillion in value and, in the last quarter alone, generated $23 billion of investment return, or about $4,500 per Norwegian. Unlike Alaska, Norway uses its fund not to directly pay out dividends but as a source of revenue for its famously generous welfare state.

The idea has a long history. Thomas Paine advocated the creation of a similar “national fund” in his 1797 pamphlet “Agrarian Justice.” Socialist economists have supported it as well. Oskar Lange wrote in favor of the concept in 1936, and Rudolf Hilferding described the socialization of financial assets as “the ultimate phase of the class struggle between bourgeoisie and proletariat” in 1910.

In more recent times, more and less robust versions of the idea have been endorsed by the Nobel Prize-winning economist James Meade, the former Greek Finance Minister Yanis Varoufakis and even Hillary Clinton in her 2016 campaign memoir. It would be hard to claim it’s some sort of utopian fantasy.

The key challenge in building a social wealth fund is not how to run it once it has been created, but how to bring assets into the fund in the first place. Alaska and Norway were able to dedicate the proceeds from natural resource exploitation to that purpose, but most governments seeking to duplicate their efforts would need to look elsewhere for the money.

Wouldn’t the enormous wealth that our increasingly productive society is generating, which now flows into just a few pockets, be a fair source? Some of the concrete ways this could happen are through the transfer of existing federal assets like land, buildings and portions of the wireless spectrum into the new fund. Other measures could include increases in taxes on capital that affect mostly the wealthy such as estate, dividend and financial transaction taxes and the creation of a new type of corporate tax that requires companies to directly issue new shares to the social wealth fund on an annual basis and during certain corporate moves such as initial public offerings, mergers and acquisitions.

Another way to bring assets into the fund would be to modify the way the Federal Reserve pumps money into the economy. Currently, the central bank does that by buying up Treasury bonds. If instead we used newly created money to buy up stocks that are then deposited into the social wealth fund, it would gradually socialize wealth ownership without the need to raise taxes on anyone. As Roger Farmer and Miles Kimball have argued, these kinds of asset purchases could also be ramped up during recessions, allowing the federal government to acquire significant portions of the national wealth relatively cheaply while also stabilizing financial markets and stimulating the economy.

Creating a social wealth fund in which we all own an equal part is certainly not the only way to tackle wealth inequality directly, but it is one of the few ways that we know works well and is able to work within the system we now have. If policymakers want to get serious about trimming wealth concentration, and not just use these shocking statistics to promote the same old half-measures, then this would be a fair, effective and practical way to start.

Gary Reber Comments:
From The New Times article: “The solution is simpler than it seems. There’s a tried and tested way, within the system we have now, of giving everyone a share in the investment returns now hoarded by the wealthy. It’s called a social wealth fund, a pool of investment assets in some ways like the giant index or mutual funds already popular with retirement savings accounts or pension funds, but one owned collectively by society as a whole. One that paid dividends not to the few, or even just to the shrinking middle class lucky enough to have their savings invested, but to everyone.”
 
Who pools the investment assets? Mutual funds require one to have savings (denial of consumption) to spare to assign to a mutual fund or, for that matter, any “investment” by buying that which is already owned (securities exchanges’ speculation that one will make a capital gain or dividend payout to cover the initial monies “invested” adjusted for inflation). This is yet another scheme to redistribute, without creating any new wealth-creating, income-producing owners. It’a “let’s let every living person collect from the earnings of the total pool of collective productive assets, no matter who owns those assets, with or without their consent. Of course there is always confiscation to achieve the desired result.
 
You know that is effectively communism in which the means (assets) of production are OWNED and CONTROLLED by the State (on behalf of the people) and the elite powers who CONTROL the State. I am not proposing this. On the contrary, I am proposing empowering EVERY child, woman, and man to acquire individual OWNERSHIP share participation in the wealth-creating, income-producing productive assets to be formed in the future by the viable and proven corporations growing the economy, using insured, interest-free “pure” capital credit, repayable exclusively from the earnings of the investments, without any requirement of past savings, collateral, or even a job.
 
This, I believe, is a far better to achieve inclusive prosperity, inclusive opportunity, and inclusive economic justice. The end result would be that citizens would become empowered as owners to meet their own consumption needs and government would become more dependent on economically independent citizens, thus reversing current global trends where all citizens will eventually become dependent for their economic well-being on the State and whatever elites control the coercive powers of government.

World’s Richest 500 See Their Wealth Increase By $1 Trillion This Year (2017)

Ultra-rich warned of ‘strike-back’ as global inequality hits a 100-year high and billions of poorer people see their earnings stagnate

Amazon founder Jeff Bezos

Amazon founder Jeff Bezos is the world’s richest person, by $8.3bn. Photograph: Paul Morigi/Getty Images

On December 27, 2017, Rupert Neate writes in The Guardian:

The world’s 500 richest people have increased their wealth by $1tn (£745bn) so far this year due to a huge increase in the value of global stock markets, which are likely to finish 2017 at record highs.

The big increase in the fortunes of the ultra-wealthy comes as billions of poorer people across the world have seen their wealth standstill or decline. The gap between the very rich and everyone else has widened to the biggest it has been in a century and advisers to the super-rich are warning them of a “strike back” from the squeezed majority.

The globe’s 500 richest people, as measured by the Bloomberg billionaires index,have seen the value of the wealth increase by 23% so far this year, taking their combined fortunes to $5.3tn. The increase is largely the result of booming stock markets. The MSCI World Index and the US Standard & Poor’s 500 are both up almost 20% so far this year. The UK’s FTSE 100 is up more than 6% – and hit a new closing high of 7,620.7 points on Wednesday.

Jeff Bezos, the founder of Amazon, is the world’s richest man. His fortune has increased by $34.2bn so far this year to take his “net worth” to $99.6bn. On just one day in October Bezos’s fortune increased by $10.3bn, when Amazon posted profits much higher than analysts had expected and the company’s shares spiked.

Bezos,53, who founded Amazon in his Seattle garage in 1994, owns 16% of the retailer. He also owns all of space exploration company Blue Origin and the Washington Post newspaper, which he bought for $250m in 2013.

The Amazon founder’s fortune is $8.3bn larger than that of Microsoft founder Bill Gates, the world’s second richest man. In August Gates donated $4.6bn worth of Microsoft shares to the Bill & Melinda Gates Foundation, the charity he set up with his wife to improve global healthcare and reduce extreme poverty.

Bill and Melinda Gates have donated $35bn since 1994. They donated $16bn worth of Microsoft shares in 1999 and followed it up with another $5.1bn a year later. The Gates Foundation has grown to become the world’s largest private charity.

In 2010 the Gates and Warren Buffett (the world’s third richest person with a $85bn fortune) created the Giving Pledge, a promise to give at least half of their wealth to charity, and called on other billionaires to join them. More than 170 of the world’s richest people, including Mark Zuckerberg, Michael Bloomberg and Lord Ashcroft, have so far signed up. Bezos is not a signatory.

In June Bezos tweeted a request for ideas for a “philanthropy strategy”, asking for suggestions on how he should approach philanthropy. He later tweeted to thank his 400,000 followers for their input and said there would be “more to come”.

Collectively, the world’s five richest people – Bezos, Gates, Buffett, Amancio Ortega, the owner of Zara, and Facebook’s Zuckerberg – hold $425bn of assets. That is equivalent to one-sixth of the UK’s GDP.

The world’s super-rich hold the greatest concentration of wealth since the US Gilded Age at the turn of the 20th century, when families like the Carnegies, Rockefellers and Vanderbilts controlled vast fortunes. There are now 1,542 dollar billionaires across the world, after 145 multimillionaires saw their wealth tick over into nine-zero fortunes last year, according to the UBS / PwC Billionaires report.

Josef Stadler, the lead author of the report and UBS’s head of global ultra-high net worth, said his billionaire clients were concerned that growing inequality between rich and poor could lead to a “strike back”.

A report by Credit Suisse found that the world’s richest 1% people have seen their share of the globe’s total wealth increase from 42.5% at the height of the 2008 financial crisis to 50.1% in 2017, or $140tn.

“The share of the top 1% has been on an upward path ever since [the financial crisis], passing the 2000 level in 2013 and achieving new peaks every year thereafter,” the Credit Suisse global wealth report said. The bank said “global wealth inequality has certainly been high and rising in the post-crisis period”.

The increase in wealth among the already very rich led to the creation of 2.3 million new dollar millionaires over the past year, taking the total to 36 million. “The number of millionaires, which fell in 2008, recovered fast after the financial crisis, and is now nearly three times the 2000 figure,” Credit Suisse said.

These millionaires – who account for 0.7% of the world’s adult population – control 46% of total global wealth that now stands at $280tn. At the other end of the spectrum, the world’s 3.5 billion poorest adults each have assets of less than $10,000 (£7,600). Collectively these people, who account for 70% of the world’s working age population, account for just 2.7% of global wealth.

https://www.theguardian.com/inequality/2017/dec/27/worlds-richest-500-see-increased-their-wealth-by-1tn-this-year?CMP=share_btn_fb

 

Unintended Consequences 101: Tax Scheme Ignites Global Tax War

On December 25, 2017, James S. Henry writes on DCReport.org:

The Bill Isn’t Signed Yet, But Other Countries Have Already Launched a ‘Race to the Bottom’ to Undermine New US Corporate Tax Cuts

Before Trump has signed the new tax law, there are already troubling signs that it is the first shot in a global tax war that threatens working people and the public pension plans that sustain them in old age.

The Trump bill, which reads like a wish list for Goldman Sachs and its clients, has already triggered an aggressive “race to the bottom” in international corporate tax rates, rules and regulations. It is the exact opposite of his campaign promise to help the middle class.

What the mainstream American news has failed to notice are the global responses, including:

South Korea, Mexico and Chile are also actively considering corporate tax cuts, in response to the U.S. measure, my interviews with key global tax analysts around the planet reveal.

The Argentinean corporate tax cuts are especially troubling because they may well turn out to be an ominous precursor for what may happen to Social Security in America.

Macri, channeling how the American tax cuts were drafted in secret and then rammed through without hearings, “Trumped” deep cuts in pensions through Argentina’s Congress this week.

In Washington, Congressional Republicans have tried for years to weaken Social Security and undermine its finances in the hopes they can kill the most popular social support program in the country. They are expected to step up their efforts to weaken Social Security, arguing that with the tax cut legislation there just isn’t enough money to sustain the social safety net.

An indication of this approach emerged with regard to CHIP, the popular Children’s Health Insurance Program. It finances often life-saving medical care for more than nine million children and 300,000 pregnant women.

CHIP was enacted in 1997. One of its co-sponsors was Senator Orrin Hatch, a Utah Republican.  On Dec. 17 Hatch indicated that America cannot afford to continue the program, which will begin cutting children off in January unless funding is restored.

The cost of CHIP is about $15 billion annually, roughly a tenth of what the Trump/Goldman Sachs tax bill will add each year to the federal debt.

The complex and hastily drafted Trump/Goldman Sachs tax bill makes at least 121 key changes that will impact more than $8 trillion of federal tax revenues over the next decade.

Trump and his sycophants claim that the corporate tax favors will more than pay for themselves. They assert that the big cuts in corporate tax rates and other favors for business will prompt much more U.S. economic growth, with many new jobs and higher wages. Wishful thinking is the response of numerous economists who are not on the Trump/Goldman Sachs payroll.

Unintended Consequences 101: Tax Scheme Ignites Global Tax War

 

We’re Witnessing The Wholesale Looting Of America

Photo by Kevin Dietsch-Pool/Getty Images

On December 19, 2017, Matthew Yglesias writes on  VOX:

Over the course of 2017, both in Congress and in the executive branch, we have watched the task of government devolve into the full-scale looting of America.

Politicians are making decisions to enrich their donors — and at times themselves personally — with a reckless disregard for any kind of objective policy analysis or consideration of public opinion.

A businessman president who promised — repeatedly — that he would not personally benefit from his own tax proposals is poised to sign into law a bill that’s full of provisions that benefit him and his family. Congressional Republicans who spent years insisting that “dynamic scoring” would capture the deficit-reducing power of tax cuts are now plowing ahead with a bill so fast that they don’t have time to get one done, because it turns out they can’t be bothered to meet their own targets.

Meanwhile, in the background an incredible flurry of regulatory activity is happening out of public view — much of it contrary to free market principles but all of it lucrative for big business and Trump cronies.

Throughout the 2016 campaign, the political class talked a lot about “norms” and how Donald Trump was violating them all. He brushed off fact-checkers, assailed the media, went on Twitter tirades against his critics, and dabbled in racism. Since taking office, his norm busting has spread. Members of Congress who under other circumstances might be constrained by shame, custom, or the will of their constituents have learned from Trump’s election that you can get away with more than we used to think.

Norm erosion is real, and it matters. Economists Daron Acemoglu and Matthew Jackson of MIT and Stanford have written about how rules are only effective when they are backed up by social norms “because detection relies, at least in part, on whistle-blowing.” Their Spanish colleague Patricia Funk emphasizes that in a variety of contexts, “the strength of the social norm of ‘not committing a crime’ is shaped by social interactions.”

These scholars are all considering deep, long-lasting differences in cultural norms, but we also know from experience that norms can sometimes shift dramatically in unusual circumstances. Sometimes a blackout or other disaster prompts a few people who would ordinarily be too cautious to break store windows in broad daylight to become more brazen. And the normal course of ordinary life flips into reverse, as those with some inclination toward bad acts recognize a moment of impunity and grab what they can, while those who would ordinarily be invested in upholding order are afraid and stay inside. The sheer quantityof bad acts makes it impossible for anyone to hold anyone accountable. Soon, a whole neighborhood can be in ruins.

Or a whole country.

Republicans love bank bailouts now

The tax bill pending in Congress this week is, naturally, front of mind and unquestionably represents the linchpin of the 2017 looting agenda. But in some ways, the clearest example of the difference between a regime of corporate looting and one of free market ideology came on the lower-profile topic of financial regulatory policy, where the Trump administration quietly signaled a major shift last month.

Back in 2009-’10, of course, the Obama administration responded to the financial crisis and the chaotic Bush-era bailouts by passing the Dodd-Frank law to overhaul America’s financial regulations. The goals of the law were twofold, on the one hand hoping to tighten the regulatory screws to make future bailouts less likely and on the other hand trying to bring some order to the question of what to do with large banks that do go bust in a way that risks a crisis.

Republicans opposed this approach, arguing that heavy-handed regulation was stifling the economy. But they said that they, too, deplored bailouts and that the real solution to the problem of banking crises was a need to tie the government’s hands to prevent any possibility of future bailouts.

The Trump administration has taken up the deregulatory baton with gusto, appointing Wall Street lawyers to run key agencies and turning what was intended to be an interagency working group on identifying financial risk into a forum for advancing deregulation.

But the free market fix for financial crisis has gone missing in action. In late November, the Trump Treasury Department quietly announced that it wants to keep the Dodd-Frank Orderly Liquidation Authority fund around after all. That’s an obscure little corner of the government, but it’s conceptually crucial — that’s the thing Republicans used to call a “permanent bailout fund.” They used to argue that eliminating it was the key to establishing a sound financial regulatory framework in which no bailouts would happen, and bankers would be disciplined by markets rather than bureaucrats.

Under Trump, the reality is that neither markets nor bureaucrats are going to be doing any disciplining.

In the short term, of course, lax banking regulation will almost certainly pay off in the form of higher bank profits and stock valuations. The problem is when the crisis hits down the road. But that’s exactly the triumph of short-term thinking that pervades everything Trump does, from debt-financed tax cuts for the rich to disinvestment in education, rollback of environment regulations, and approaches to the telecom sector that prioritize the profitability of today’s incumbent businesses over tomorrow’s regulators.

Across the board, it’s about letting whoever’s powerful now squeeze as much out as they can without worrying too much about the consequences — like enormous, deficit-financed tax cuts passed with no regard for budgetary or economic effects.

The strange death of tax reform

The tax bill is another case in point. It’s poised to pass Congress this week, and the swamp is overflowing with perks.

Somewhere in its murky origins, “tax reform,” as conceived by is Republican authors, was supposed to be a policy-driven bill aimed at creating a simpler and fairer tax code that would generate broadly superior economic outcomes for most people — a normal governing objective even if it was always the case that substantial disagreement would exist over the merits of marginal corporate tax rate cuts as a growth-boosting policy.

But along the way, virtually all of the high-minded aspirations were dropped and all of the normal aspects of congressional process broken — to the point where the bill’s leading architects won’t even mention the policy changes that are at the heart of the bill. In the end, instead of taking on the special interests as promised, it gives away the store to almost every lobby shop in town — with last-minute additions that personally enrich the Trump family and a decent chunk of the members of Congress voting for it.

Once upon a time, Republicans had a set of clear promises about what they called “tax reform.” The idea was to produce a simpler tax code, with fewer brackets and fewer deductions so that a typical individual could fill it out on a postcard.

The goal was to cut tax rates without reducing government revenue because loopholes would be closed. From the beginning, they were counting in part on economic growth to make up the difference, but they said they would rely on serious, third-party analysis of the impacts.

“Not economic growth judged by us,” Rep. Kevin Brady (R-TX), the Chair of the House’s tax-writing committee, told Vox in March, “but by the independent Joint Committee on Taxation.”

And of course it wasn’t going to be a bonanza for the rich. Trump went so far as to promise that the rich wouldn’t benefit “at all” from his plan, and he certainly swore repeatedly that he would not personally benefit.

Neither the House nor the Senate came within a trillion dollars of hitting Brady’s deficit target, so the conference committee charged with reconciling the bills didn’t bother to wait for a dynamic score at all, and both houses are expected to pass the bill before the JCT can finish its analysis. The House bill slashed the top tax rate a little and the Senate bill slashed it a little more, so the conference committee compromised on a bigger rate cut than either had proposed.

Meanwhile, after all the months of work, Republicans ultimately settled on not actually eliminating any significant deductions or loopholes after all.

https://www.vox.com/policy-and-politics/2017/12/19/16786006/looting-of-america

“Politicians are making decisions to enrich their donors — and at times themselves personally — with a reckless disregard for any kind of objective policy analysis or consideration of public opinion.”

Silicon Valley Is Turning Into Its Own Worst Fear

Justin Metz for BuzzFeed News

On December 18, 2017, Ted Chiang writes on Buzz Feed News:

This summer, Elon Musk spoke to the National Governors Association and told them that “AI is a fundamental risk to the existence of human civilization.” Doomsayers have been issuing similar warnings for some time, but never before have they commanded so much visibility. Musk isn’t necessarily worried about the rise of a malicious computer like Skynet from The Terminator. Speaking to Maureen Dowd for a Vanity Fair article published in April, Musk gave an example of an artificial intelligence that’s given the task of picking strawberries. It seems harmless enough, but as the AI redesigns itself to be more effective, it might decide that the best way to maximize its output would be to destroy civilization and convert the entire surface of the Earth into strawberry fields. Thus, in its pursuit of a seemingly innocuous goal, an AI could bring about the extinction of humanity purely as an unintended side effect.

 
When Silicon Valley tries to imagine superintelligence, what it comes up with is no-holds-barred capitalism.
 

 

This scenario sounds absurd to most people, yet there are a surprising number of technologists who think it illustrates a real danger. Why? Perhaps it’s because they’re already accustomed to entities that operate this way: Silicon Valley tech companies.

Consider: Who pursues their goals with monomaniacal focus, oblivious to the possibility of negative consequences? Who adopts a scorched-earth approach to increasing market share? This hypothetical strawberry-picking AI does what every tech startup wishes it could do — grows at an exponential rate and destroys its competitors until it’s achieved an absolute monopoly. The idea of superintelligence is such a poorly defined notion that one could envision it taking almost any form with equal justification: a benevolent genie that solves all the world’s problems, or a mathematician that spends all its time proving theorems so abstract that humans can’t even understand them. But when Silicon Valley tries to imagine superintelligence, what it comes up with is no-holds-barred capitalism.


 

In psychology, the term “insight” is used to describe a recognition of one’s own condition, such as when a person with mental illness is aware of their illness. More broadly, it describes the ability to recognize patterns in one’s own behavior. It’s an example of metacognition, or thinking about one’s own thinking, and it’s something most humans are capable of but animals are not. And I believe the best test of whether an AI is really engaging in human-level cognition would be for it to demonstrate insight of this kind.

Insight is precisely what Musk’s strawberry-picking AI lacks, as do all the other AIs that destroy humanity in similar doomsday scenarios. I used to find it odd that these hypothetical AIs were supposed to be smart enough to solve problems that no human could, yet they were incapable of doing something most every adult has done: taking a step back and asking whether their current course of action is really a good idea. Then I realized that we are already surrounded by machines that demonstrate a complete lack of insight, we just call them corporations. Corporations don’t operate autonomously, of course, and the humans in charge of them are presumably capable of insight, but capitalism doesn’t reward them for using it. On the contrary, capitalism actively erodes this capacity in people by demanding that they replace their own judgment of what “good” means with “whatever the market decides.”

 
It’s assumed that the AI’s approach will be “the question isn’t who is going to let me, it’s who is going to stop me,” i.e., the mantra of Ayn Randian libertarianism that is so popular in Silicon Valley.
 

 

Because corporations lack insight, we expect the government to provide oversight in the form of regulation, but the internet is almost entirely unregulated. Back in 1996, John Perry Barlow published a manifesto saying that the government had no jurisdiction over cyberspace, and in the intervening two decades that notion has served as an axiom to people working in technology. Which leads to another similarity between these civilization-destroying AIs and Silicon Valley tech companies: the lack of external controls. If you suggest to an AI prognosticator that humans would never grant an AI so much autonomy, the response will be that you fundamentally misunderstand the situation, that the idea of an ‘off’ button doesn’t even apply. It’s assumed that the AI’s approach will be “the question isn’t who is going to let me, it’s who is going to stop me,” i.e., the mantra of Ayn Randian libertarianism that is so popular in Silicon Valley.

The ethos of startup culture could serve as a blueprint for civilization-destroying AIs. “Move fast and break things” was once Facebook’s motto; they later changed it to “Move fast with stable infrastructure,” but they were talking about preserving what they had built, not what anyone else had. This attitude of treating the rest of the world as eggs to be broken for one’s own omelet could be the prime directive for an AI bringing about the apocalypse. When Uber wanted more drivers with new cars, its solution was to persuade people with bad credit to take out car loans and then deduct payments directly from their earnings. They positioned this as disrupting the auto loan industry, but everyone else recognized it as predatory lending. The whole idea that disruption is something positive instead of negative is a conceit of tech entrepreneurs. If a superintelligent AI were making a funding pitch to an angel investor, converting the surface of the Earth into strawberry fields would be nothing more than a long overdue disruption of global land use policy.

There are industry observers talking about the need for AIs to have a sense of ethics, and some have proposed that we ensure that any superintelligent AIs we create be “friendly,” meaning that their goals are aligned with human goals. I find these suggestions ironic given that we as a society have failed to teach corporations a sense of ethics, that we did nothing to ensure that Facebook’s and Amazon’s goals were aligned with the public good. But I shouldn’t be surprised; the question of how to create friendly AI is simply more fun to think about than the problem of industry regulation, just as imagining what you’d do during the zombie apocalypse is more fun than thinking about how to mitigate global warming.

There have been some impressive advances in AI recently, like AlphaGo Zero, which became the world’s best Go player in a matter of days purely by playing against itself. But this doesn’t make me worry about the possibility of a superintelligent AI “waking up.” (For one thing, the techniques underlying AlphaGo Zero aren’t useful for tasks in the physical world; we are still a long way from a robot that can walk into your kitchen and cook you some scrambled eggs.) What I’m far more concerned about is the concentration of power in Google, Facebook, and Amazon. They’ve achieved a level of market dominance that is profoundly anticompetitive, but because they operate in a way that doesn’t raise prices for consumers, they don’t meet the traditional criteria for monopolies and so they avoid antitrust scrutiny from the government. We don’t need to worry about Google’s DeepMind research division, we need to worry about the fact that it’s almost impossible to run a business online without using Google’s services.

 

It’d be tempting to say that fearmongering about superintelligent AI is a deliberate ploy by tech behemoths like Google and Facebook to distract us from what they themselves are doing, which is selling their users’ data to advertisers. If you doubt that’s their goal, ask yourself, why doesn’t Facebook offer a paid version that’s ad free and collects no private information? Most of the apps on your smartphone are available in premium versions that remove the ads; if those developers can manage it, why can’t Facebook? Because Facebook doesn’t want to. Its goal as a company is not to connect you to your friends, it’s to show you ads while making you believe that it’s doing you a favor because the ads are targeted.

So it would make sense if Mark Zuckerberg were issuing the loudest warnings about AI, because pointing to a monster on the horizon would be an effective red herring. But he’s not; he’s actually pretty complacent about AI. The fears of superintelligent AI are probably genuine on the part of the doomsayers. That doesn’t mean they reflect a real threat; what they reflect is the inability of technologists to conceive of moderation as a virtue. Billionaires like Bill Gates and Elon Musk assume that a superintelligent AI will stop at nothing to achieve its goals because that’s the attitude they adopted. (Of course, they saw nothing wrong with this strategy when they were the ones engaging in it; it’s only the possibility that someone else might be better at it than they were that gives them cause for concern.)

 
Silicon Valley has unconsciously created a devil in their own image, a boogeyman whose excesses are precisely their own.
 

There’s a saying, popularized by Fredric Jameson, that it’s easier to imagine the end of the world than to imagine the end of capitalism. It’s no surprise that Silicon Valley capitalists don’t want to think about capitalism ending. What’s unexpected is that the way they envision the world ending is through a form of unchecked capitalism, disguised as a superintelligent AI. They have unconsciously created a devil in their own image, a boogeyman whose excesses are precisely their own.

Which brings us back to the importance of insight. Sometimes insight arises spontaneously, but many times it doesn’t. People often get carried away in pursuit of some goal, and they may not realize it until it’s pointed out to them, either by their friends and family or by their therapists. Listening to wake-up calls of this sort is considered a sign of mental health.

We need for the machines to wake up, not in the sense of computers becoming self-aware, but in the sense of corporations recognizing the consequences of their behavior. Just as a superintelligent AI ought to realize that covering the planet in strawberry fields isn’t actually in its or anyone else’s best interests, companies in Silicon Valley need to realize that increasing market share isn’t a good reason to ignore all other considerations. Individuals often reevaluate their priorities after experiencing a personal wake-up call. What we need is for companies to do the same — not to abandon capitalism completely, just to rethink the way they practice it. We need them to behave better than the AIs they fear and demonstrate a capacity for insight. 

https://www.buzzfeed.com/tedchiang/the-real-danger-to-civilization-isnt-ai-its-runaway?utm_term=.df56AqYdD#.an44jnkGM

 

 

‘I hope I Can Quit Working In A few Years’: A Preview Of The U.S. Without Pensions


Tom Coomer, 79, outside of the Walmart where he works five days a week in Wagoner, Okla, on Nov. 16. Coomer used to work at the McDonnell Douglas plant in Tulsa before it closed in 1994. He and many of his co-workers could never replace their lost pension benefits and face financial struggles in their old age. (Nick Oxford for The Washington Post)

On December 23, 2017, Peter Whoriskey writes in The Washington Post:

Tom Coomer has retired twice: once when he was 65, and then several years ago. Each time he realized that with just a Social Security check, “You can hardly make it these days.”

So here he is at 79, working full-time at Walmart. During each eight-hour shift, he stands at the store entrance greeting customers, telling a joke and fetching a “buggy.” Or he is stationed at the exit, checking receipts and the shoppers that trip the theft alarm.

“As long as I sit down for about 10 minutes every hour or two, I’m fine,” he said during a break. Diagnosed with spinal stenosis in his back, he recently forwarded a doctor’s note to managers. “They got me a stool.”

The way major U.S. companies provide for retiring workers has been shifting for about three decades, with more dropping traditional pensions every year. The first full generation of workers to retire since this turn offers a sobering preview of a labor force more and more dependent on their own savings for retirement.

Years ago, Coomer and his co-workers at the Tulsa plant of McDonnell Douglas, the famed airplane maker, were enrolled in the company pension, but in 1994, with an eye toward cutting retirement costs, the company closed the plant. Now, The Washington Post found in a review of those 998 workers, that even though most of them found new jobs, they could never replace their lost pension benefits and many are facing financial struggles in their old age: 1 in 7 has in their retirement years filed for bankruptcy, faced liens for delinquent bills, or both, according to public records.

Those affected are buried by debts incurred for credit cards, used cars, health care and sometimes, the college educations of their children.

Some have lost their homes.

And for many of them, even as they reach beyond 70, real retirement is elusive. Although they worked for decades at McDonnell Douglas, many of the septuagenarians are still working, some full-time.

Lavern Combs, 73, works the midnight shift loading trucks for a company that delivers for Amazon. Ruby Oakley, 74, is a crossing guard. Charles Glover, 70, is a cashier at Dollar General. Willie Sells, 74, is a barber. Leon Ray, 76, buys and sells junk.

“I planned to retire years ago,” Sells says from behind his barber’s chair, where he works five days a week. He once had a job in quality control at the aircraft maker and was employed there 29 years. “I thought McDonnell Douglas was a blue-chip company — that’s what I used to tell people. ‘They’re a hip company and they’re not going to close.’ But then they left town — and here I am still working. Thank God I had a couple of clippers.”

Likewise, Oakley, a crossing guard at an elementary school, said she took the job to supplement her Social Security.

“It pays some chump change — $7 an hour,” Oakley said. She has told local officials they should pay better. “I use it for gas money. I like the people. But we have to get out there in the traffic, and the people at the city think they’re doing the senior citizens a favor by letting them work like this.”

Glover works the cash register and stocks goods at a Dollar General store outside Tulsa to make ends meet. After working 27 years at McDonnell Douglas, Glover found work at a Whirlpool factory, and then at another place that makes robots for inspecting welding, and also picked up some jobs doing computer-aided ­design.

“I hope I can quit working in a few years, but the way it looks right now, I can’t see being able to,” Glover said recently between customers. “I had to refinance my home after McDonnell Douglas closed. I still owe about 12 years of mortgage payments.”

For some, financial shortfalls have grown acute enough that they have precipitated liens for delinquent bills or led people to file for bankruptcy. None were inclined to talk about their debts.

“It’s a struggle, just say that,” said one woman, 72, who filed for bankruptcy in 2013. “You just try to get by.”


Charles Glover, 70, on Nov. 16 at the Dollar General in Catoosa, Okla. He works several shifts a week as a clerk. (Nick Oxford for The Washington Post)
A perk that became too costly

The notion of pensions — and the idea that companies should set aside money for retirees — didn’t last long. They really caught on in the mid-20th century, but today, except among government employers, the traditional pension seems destined to be an artifact of U.S. labor history.

The first ones offered by a private company were those handed out by American Express, back when it was a stagecoach delivery service. That was in 1875. The idea didn’t exactly spread like wildfire, but under union pressure in the middle of the last century, many companies adopted a plan. By the 1980s, the trend had profoundly reshaped retirement for Americans, with a large majority of full-time workers at medium and large companies getting traditional pension coverage, according to Bureau of Labor Statistics data.

Then corporate America changed: Union membership waned. Executive boards, under pressure from financial raiders, focused more intently on maximizing stock prices. And Americans lived longer, making a pension much more expensive to provide.

In 1950, a 65-year-old man could be expected to reach age 78, on average. Today, that ­65-year-old is expected to live beyond 84. The extended life expectancy means pension plans must pay out substantially longer than they once did.

Exactly what led corporate America away from pensions is a matter of debate among scholars, but there is little question that they seem destined for extinction, at least in the private sector.

Even as late as the early 1990s, about 60 percent of full-time workers at medium and large companies had pension coverage, according to the government figures. But today, only about 24 percent of workers at midsize and large companies have pension coverage, according to the data, and that number is expected to continue to fall as older workers exit the workforce.

In place of pensions, companies and investment advisers urge employees to open retirement accounts. The basic idea is workers will manage their own retirement funds, sometimes with a little help from their employers, sometimes not. Once they reach retirement age, those accounts are supposed to supplement whatever Social Security might pay. (Today, Social Security provides only enough for a bare-bones budget, about $14,000 a year on average.)

The trouble with expecting workers to save on their own is that almost half of U.S. families have no such retirement account, according the Federal Reserve’s 2016 Survey of Consumer ­Finances.

Of those who do have retirement accounts, moreover, their savings are far too scant to support a typical retirement. The median account, among workers at the median income level, is about $25,000.

“The U.S. retirement system, and the workers and retirees it was designed to help, face major challenges,” according to an October report by the Government Accountability Office. “Traditional pensions have become much less common, and individuals are increasingly responsible for planning and managing their own retirement savings accounts.”

The GAO further warned that “many households are ill-equipped for this task and have little or no retirement savings.”

The GAO recommended that Congress consider creating an independent commission to study the U.S. retirement system.

“If no action is taken, a retirement crisis could be looming,” it said.


Coomer makes a pot of coffee at his home in Wagoner after a day of work at Walmart. “As long as I sit down for about 10 minutes every hour or two, I’m fine,” he says of working eight-hour shifts with the condition spinal stenosis. (Nick Oxford for The Washington Post)
‘We were stunned’

Employees at McDonnell Douglas in the early ’90s enjoyed one of the more generous types of pensions, those known as “30 and out.” Employees with 30 years on the job could retire with a full pension once they reached age 55.

But, as the employees would later learn, the generosity of those pensions made them, in lean times, an appealing target for cost-cutters.

Those lean times for McDonnell Douglas began in earnest in the early ’90s. Some plants closed. But for the remaining employees, including those at the Tulsa plant, executives said, there was hope: If Congress allowed the multibillion-dollar sale of 72 F-15s to Saudi Arabia, the new business would rescue the company. In fact, the company said in its 1991 annual report, it would save 7,000 jobs.

To help win approval for the sale, Tulsa employees wrote letters to politicians. They held a rally with local politicians and the governor of Oklahoma. Eventually, in September 1992, President George H.W. Bush approved the sale. It seemed the Tulsa plant had weathered the storm.

The headline in the Oklahoman, one of the state’s largest newspapers, proclaimed: “F-15 Sale to Saudi Arabia Saves Jobs of Tulsa Workers.”

But it hadn’t. Within months, executives at the company again turned to cost-cutting. They considered closing a plant in Florida, another in Mesa, Ariz., or the Tulsa facility. Tulsa, it was noted, had the oldest hourly employees — the average employee was 51 and had worked there for about 20 years. Many were close to getting a full pension, and that meant closing it would yield bigger savings in retirement costs.

“One day in December ’93 they came on the loudspeaker and said, ‘Attention, employees,’ Coomer recalled. “We were going to close. We were stunned. Just ran around like a bunch of chickens.”

A few years later, McDonnell Douglas, which continued to struggle, merged with Boeing. But the employees had taken their case to court, and in 2001, a federal judge agreed McDonnell Douglas had illegally considered the pensions in its decision to close the plant. The employees’ case, presented by attorneys Joe Farris and Mike Mulder, showed the company had tracked pension savings in its plant closure decisions.

The judge found McDonnell Douglas, moreover, had offered misleading testimony in its defense of the plant closing. The judge, Sven Erik Holmes, blasted the company for a “corporate culture of mendacity.”

Employees eventually won settlements — about $30,000 was typical. It helped carry people over to find new jobs. But the amount was limited to cover the benefits of three years of employment — and it was far less than the loss in pension and retiree health benefits. Because their pension benefits accrued most quickly near retirement age, the pensions they receive are only a small fraction of what they would have had they worked until full eligibility.

“People went to work at these places thinking they’ll work there their whole lives,” Farris said, noting that the pensions held great appeal to the staff. “Their trust and loyalty, though, was not reciprocated.”


Ray walks through a collection of junk that he recycles at his home in Claremore. (Nick Oxford for The Washington Post)
Dreaming of work

The economic effects were, of course, immediate.

The workers, most of them over 50, had to find jobs.

Some enrolled in classes for new skills, but then struggled to find jobs in their new fields. They wondered, amid rejections, whether younger workers were favored.

Several found jobs at other industrial plants. One started a chicken farm for Tyson. Another took a job on a ranch breaking horses.

The Post acquired a list of the 998 employees, reviewed public records for them and interviewed more than 25.

Of those interviewed, all found work of one kind or another. Yet all but a handful said their new wages were only about half of what they had been making. Typically, their pay dropped in half, from about $20 per hour to $10 per hour.

The pay cut was tough, and it made saving for retirement close to impossible. In fact, it has made retirement itself near impossible for some — they must work to pay the bills.

A few said, though, they work because they detest idleness, and persist in jobs that would seem to require remarkable endurance.

Combs, for example, works the graveyard shift, beginning each workday at 1:30 a.m. His days off are Thursday and Sunday. He worked 25 years at McDonnell Douglas, and more than 20 loading trucks.

He shrugs off the difficulty.

“I don’t want to sit around and play checkers and get fat,” Combs says. “I used to pick cotton in 90-degree heat. This is easy.”


Coomer relaxes at home with his wife Ellen after working at Walmart. While he seems to enjoy working at Walmart, Cooomer says he really loved working at McDonnell Douglas and had his eye on his pension during his 29 years there. (Nick Oxford for The Washington Post)

Coomer, too, even if he would have preferred to retire, seems to genuinely enjoy his work. At Walmart, his natural cheerfulness is put to good use.

“Hi, Tom, how are you?” a customer on a motorized scooter, one of many who greet him by name, asks on her way out.

“Doing good . . . beautiful day,” he says, smiling warmly.

Later he explains his geniality.

“I like to talk to people. I like to visit with them. I can talk to anyone. I’ve always been like that, since I was a kid.”

When he sees someone looking glum, he tells them a joke.

Why does Santa Claus have three gardens?

So he can hoe, hoe, hoe.

“People really like that one,” he says.

Coomer grew up on a farm in Broken Arrow, got married when he was 17 — his wife was 15 — and says he’s always liked work.

“I really loved working at McDonnell Douglas,” he says. One time, he says, he worked 36 days straight: 11 hours on the weekdays and eight hours on Saturdays and Sundays. He joked the factory was his home address. All along, for his 29 years there, he had his eye on the pension. And then, for the most part, it was gone.

After the plant closed, Coomer worked as a security guard. Then he worked for a friend who had a pest-control company. When that slowed down, he picked up seasonal work at the city, doing some mowing and chipping.

Then came Walmart.

Soon, he said, he expects to cut back from full-time to about three days a week.

Along with his Walmart check, he gets $300 a month from the McDonnell Douglas pension. Had he been able to continue working at McDonnell Douglas, he calculates that he would have gotten about five times that amount.

“After they shut the plant down, I would dream that I was back at McDonnell Douglas and going to get my pension,” Coomer recalled. “In the dream, I would try to clock in but I couldn’t find my time card. And then I’d wake up.”

In the dream, he would have retired years ago.

https://www.washingtonpost.com/business/economy/i-hope-i-can-quit-working-in-a-few-years-a-preview-of-the-us-without-pensions/2017/12/22/5cc9fdf6-cf09-11e7-81bc-c55a220c8cbe_story.html?undefined&utm_term=.2729971b9914&wpisrc=nl_most&wpmm=1

 

 

Changes In Net Worth Of U.S. Senators And Representatives (Personal Gain Index)

On July 24, 2014, Sarah Rosier and the Congress team write on Ballot Pedia:

For the first time in history, the majority of America’s elected officials in Washington, D.C. are millionaires.[1][2] At the same time, 50 percent of Americans cannot afford to spend $5,000 in an emergency.[3]

The median American citizen[4] saw his or her household net worth decrease from 2004 to 2012 by an annual rate of -0.94 percent, while members of Congressexperienced a median annual increase of 1.55 percent. Congress saw a total increase of $316.5 million in assets held by all members in the study.[5]

This page is about changes in net worth of U.S. Senators and Representativesduring their time in office. The data goes from 2004 through 2012.

This is the first part of the Personal Gain Index. The Personal Gain Index is a two-part study that examines the extent to which members of the U.S. Congress have individually prospered during their tenure as public servants.


In this study, we look at changes in net worth during an incumbent’s time in office. This allows us to:

  • See which incumbents had the largest gains in net worth
  • Compare the gains in net worth experienced by congressional incumbents with what happened to the net worth of the people they represent.

For more detailed information on the actual net worth of members of Congress, rather than the growth of their net worth, please see: Net worth of United States Senators and Representatives.

Methodology and notes

See also: Personal Gain Index (U.S. Congress)

Researchers used data provided by OpenSecrets.org to calculate the change in net worth of each congressional incumbent from either 2004 or the year he or she was first elected, if that year was after 2004.[6]

The tables and graphs on this page show some of the highlights of the study. The change in net worth information has also been added to each of Ballotpedia’s profiles of the 535 congressional incumbents. The data also includes some former members, whose net worth would have been calculated at the end of their term in the 112th Congress. The data used to calculate changes in net worth may include changes resulting from assets gained through marriage, inheritance, changes in family estates and/or trusts, changes in family business ownership and many other variables unrelated to a member’s behavior in Congress. Because many members have been in office for longer than the eight years this study illustrates, the real change in net worth each member sees after initially taking office may be higher than the numbers in this data.

Some incumbents experienced a net loss in net worth. When this is the case, it is expressed with a negative percent.

For the full set of data, please visit our Google spreadsheet here.

Congressional net worth

See also: Household net worth (Member of Congress)

Members of the United States Congress and candidates for Congress are required to file an annual Personal Financial Disclosure (PFD) on or before May 15 of every year.[7]

This requirement also extends to candidates for federal office, senior congressional staff, nominees for executive branch positions, Cabinet members, the president and vice president and Supreme Court justices. This was set by the “Ethics in Government Act of 1978.” Additionally, anyone who manages political campaign funds for a U.S. Senator must file.[8]

This study includes figures for the 113th Congress’ freshman members because despite their terms beginning in 2012 they were required to filed the PFD during their candidacy in 2011.

As a starting point, congressional financial disclosure forms use value ranges, rather than precise amounts, when reporting assets and liabilities. OpenSecrets.org gathers this information to build a range of potential values. For instance, if three assets are listed at a value range of $1,001-$15,000, the total range of assets would be listed as a minimum of $3,003 (3 X $1,001) and a maximum value would be $45,000 (3 X $15,000). OpenSecrets combines all assets and liability to form a total potential range of values, and then provides an average value as the best guess of each individual’s net worth.[9] The earliest average was then adjusted for inflation. This data affords constituents the ability to see the real increase (or decrease) of each member’s net worth.

The disclosures required on the PFD include:

Exclusions in data

From OpenSecrets.org:

Note that the ethics law does not require filers to report property, including personal residences, that is not held for investment purposes and does not produce income. The STOCK Act requires that the terms of all mortgages, including those on non-income producing personal residences, be disclosed. Mortgages reported on properties that were not listed as assets were excluded from the wealth calculations, but are displayed on our profiles of the corresponding officials. Even though they weren’t required to do so, some filers did list the value of their personal residences; when they did, we included the information in our totals and detailed listings. Filers are required to report detailed listings and values of holdings that underlie an account. They occasionally also report the combined value of the account, in which case the combined value is omitted from calculations.[19][20]

American citizen net worth

See also: Personal Gain Index: Household net worth (American citizen)

An “American Citizen” figure was calculated in order to allow us to compare the change in household net worth of a member of Congress to the changes in net worth over the same period experienced by the average citizen.

The Census Bureau, the source of the average citizen data, breaks down net worth into wealth categories. One of these categories is “equity in own home,” but Ballotpedia did not factor the average citizen’s home equity into this figure because the Congressional net worth does not require members to report property (including personal residences) that is not used for investment purposes.[21]

Net worth increases

Top 100

This chart shows the average yearly percentage change in net worth of the 100 congressional incumbents whose calculated net worth[22] divided by the number of years studied was the highest.[23]

  • The average increase in net worth in the Top 100 was 114% per year.[24]
  • Of the “Top 100”, 56 are Republicans, 43 are Democrats and one is an Independent.
    • In total, the study looks at 320 Republicans, 296 Democrats and two Independents.

Rep. Chellie Pingree‘s dramatic net worth increase is due to her marriage. Because of this, Ballotpedia removed Pingree when calculating the averages for this study, while continuing to list her in the chart.

The study is able to have figures for freshman members of the 113th Congress from 2011, despite their terms beginning in 2012, because they were required to file Personal Finance Disclosure forms during their candidacies in 2011.

The Top 100 table includes a handful of politicians who left office during or after 2012.

Average percentage increases

Yearly average gains

As illustrated in the “Top 100” chart above, the average yearly percentage gain was found by dividing each member’s total net worth growth percentage by the number of years included in the calculation. For example, Sen. John McCain would have his net worth percentage divided by eight (2004-2012), since those are the years for which data is available for his net worth. For someone like Sen. Ted Cruz, however, his total net worth increase would be the same as his average yearly net worth increase, since the only available data is the increase between 2011 and 2012.

The average member saw his or her net worth increase by an average of 15.4 percent per year.

PGI percentage6.jpg

For the purpose of our comparison to the median American citizen data below, the median congressional increase was 1.55 percent per year.

Winner’s Circle

When the members who lost money during this time period are removed from the calculation,[35] the growth in wealth among the “wealth gainers” stands out. If a member gains, expect the gain to be large.
The average yearly percentage increase for those members who increased their net worth was 43.6 percent.

PGI percentage8.jpg

Millionaire’s Club

Those in Congress who held assets above the median net worth of $1 million in 2012 also saw a hefty annual percentage increase.
Congressional millionaires had an average yearly percentage increase of 23.9 percent.

PGI percentage9.jpg

Total average gains

As compared to the yearly average gains, the total average gains percentage change looks at the total change between the first year data is available for each member[36] and the 2012 data. Although this data is harder to compare member-to-member because the starting year may be different, it still provides insight as to who experienced the most drastic total increases. The average change in net worth for the members in this study was 72.6 percent.

PGI percentage.jpg

Ten greatest overall gains

The ten current senators and representatives listed below experienced the highest overall net worth gains (by percentage) from 2004-2012.[37]

Ten greatest overall losses

The ten current senators and representatives listed here experienced the greatest declines in net worth (by percentage) from 2004-2012.[37]

Congress compared to American citizens

See also: Personal Gain Index: Household net worth (American citizen)

This report compared average and median data, and in both cases the growth of congressional net worth significantly outpaced that of the American citizen.

Congressional net worth figures are a relatively small data set,[38] so Ballotpedia used average percentage changes throughout the study (adjusted as needed for outliers)[39] to best illustrate the average growth of wealth of members of Congress. The data for American citizens is a large sampling of the population that includes many households on either end of the distribution (high or low wealth), so median numbers were also included.

An average value is calculated by adding all the observations and dividing by the number of observations. A medianis the middle value of a list.[40] The median figure can be beneficial in circumstances, like this one, where the high net worth of the wealthiest Americans can skew the average. Both the average and median for congressional and American citizen net worth growth are provided below. For a direct comparison to each individual member’s figures (as shown on his or her Ballotpedia profile), the yearly median change will correspond with each member’s average yearly change.

Median figures

Between 2004-2012, the median American household[41] saw an inflation-adjusted decrease of assets from $18,990 in 2004[42] to $17,557 in 2012. This was an inflation-adjusted annual percentage change of -0.94 from 2004 to 2012. Note that in order to have an apples-to-apples comparison between the household net worth of U.S. Congressmen and that of the American citizen, the value of equity in the citizen’s personal residence was not taken into account in calculating the net worth of the average citizen, since the value of the personal residence of a Congressman is not included in their disclosure of their household net worth.

Average figures

Between 2004-2012, the average American household[41] saw an inflation-adjusted slight increase of assets from $204,957 in 2004[42] to $264,963 in 2012. This was an inflation-adjusted annual percentage change of 3.7 percent from 2004 to 2012.

  • As stated in the median section above, in order to have an apples-to-apples comparison between the household net worth of U.S. Congressmen and that of the American citizen, the value of equity in the citizen’s personal residence was not taken into account in calculating the net worth of the average citizen, since the value of the personal residence of a Congressman is not included in their disclosure of their household net worth.

Freshman increases

A limitation to the data set is that the whole picture of wealth growth while in Congress is unavailable for those members who entered office prior to 2004.

For example, Sen. John McCain, who has been in Congress since 1982, shows a total net worth decrease of -74.5 percent during the period of 2004-2012. However, what the study is missing is how much he was worth in 1982 compared to 2012.

For this reason, Ballotpedia studied the freshmen members of both the 113th Congress (which began in January 2012) and the 112th Congress (which began in January 2010). Although the 2012 freshmen only saw moderate growth after one year in office, the growth for the 112th freshmen was staggering. One could say that the new retirement plan is to get elected and then re-elected (that is the key) to Congress and you will be set for life.

113th Congress freshmen

From 2011 to 2012, the average net worth change of a freshman member of the 113th Congress in one year was:

PGI percentage2.jpg

The study is able to have figures for freshman members of the 113th Congress from 2011, despite their terms beginning in 2012, because they were required to file Personal Finance Disclosure forms during their candidacies in 2011.

The 2012 “Freshman 15”

The following 15 freshman senators and representatives of the 113th Congress saw their net worth increase the most out of their incoming class of new members:

112th Congress freshmen

From 2009 to 2012, the average net worth change of a freshman member of the 112th Congress in three years[55]was:

PGI percentage3.jpg

The 2010 “Freshman 15”

The following 15 freshman representatives of the 112th Congress (no senators made the top 15 list) saw their net worth increase the most out of their incoming class of new members:

Amount of increase

The amount of assets held by individual members increased by a total of $316.5 million between 2004 (or later, depending on when the member joined Congress) and 2012.[56]

PGI percentage10.jpg

See also

External links

Footnotes

  1. Jump up OpenSecrets, “Millionaires’ Club: For First Time, Most Lawmakers are Worth $1 Million-Plus,” January 9, 2014
  2. Jump up Open Secrets, “Personal Financial Disclosures”
  3. Jump up Edelman Financial, “Could You Come Up with $5,000 in an Emergency?” June 21, 2014
  4. Jump up As calculated by median net worth data.
  5. Jump up $316,491,032.00 to be precise.
  6. Jump up All data relating to the average net worth of individual members of congress from OpenSecrets.org and The Center for Responsive Politics is posted under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 United States License.
  7. Jump up Members of Congress are permitted to ask for a three-month extension.
  8. Jump up Legistorm, “About LegiStorm’s Financial Disclosures”
  9. Jump up OpenSecrets, “About the Personal Finances Data & CRP’s Methodology”
  10. Jump up Outside, earned income that exceeds $200 must be reported. (Note that elected officials and senior staff may only earn outside income up to $26,100 a year. Some exceptions apply; for example, in the case of previously approved income and some book royalties and advances.
  11. Jump up Elected officials and senior staff are prohibited from receiving honoraria for speeches, articles or appearances. In lieu of an honoraria, they may designate an amount to be donated to charity. Any such honoraria must be reported on the PFD by source and amount.
  12. Jump up Assets held for investment or the production of income that were worth more than $1,000 at the end of the calendar year, must be reported.
  13. Jump up Filers must disclose the purchase, sale or exchange of any assets that amount to more than $1,000 in the calendar year in question.
  14. Jump up Any liability or loan where the filer, his or her spouse or his or her dependent children owed more than $10,000 at any time during the calendar year.
  15. Jump up Filers must disclose positions they hold with non-governmental organizations, except for their membership in religious, social, fraternal or political organizations.
  16. Jump up Conditions for re-employment, severance payments, buyout agreements, profit-sharing plans.
  17. Jump up Travel and travel-related reimbursements from a single source, valued at more than $305 in aggregate for the year and connected to official business and the source, dates, and purpose of the travel and itinerary.
  18. Jump up Those from personal acquaintances, contributions to legal defense funds and commemorative items.
  19. Jump up http://www.opensecrets.org/pfds/methodology.php
  20. Jump up Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
  21. Jump up OpenSecrets.org, “About the Personal Finances Data & CRP’s Methodology,” accessed July 8, 2014
  22. Jump up This figure represents the total percentage growth from either 2004 (if the member entered office in 2004 or earlier) or his or her first year in office (as noted in the chart below).
  23. Jump up The period studied is 2004-2012, or from the year the incumbent took office, if it was after 2004.
  24. ↑ Jump up to:24.0 24.1 24.2 24.3 24.4 This calculation excludes Chellie Pingree.
  25. Jump up This number was found by dividing each member’s total net worth growth percentage by the number of years included in the calculation. For example, for Chellie Pingree, her total net worth increase was divided by four, since it was calculated for four years (2008-2012). If the incumbent had been in office earlier than 2004, it would still only be divided by eight (2004-2012), since those are the only years for which we have data.
  26. Jump up Pingree’s dramatic increase in net worth after her 2008 election was due to her 2010 marriage to billionaire Donald Sussman.
  27. Jump up Gov. Pence left Congress in 2012 to become the governor of Indiana.
  28. Jump up Rep. Young passed away on October 18, 2013.
  29. Jump up $3,403,112, to be precise.
  30. Jump up This number was found by dividing each member’s total net worth growth percentage by the number of years included in the calculation. For example, for Chellie Pingree, her total net worth increase was divided by four, since it was calculated for four years (2008-2012). If the incumbent had been in office earlier than 2004, it would still only be divided by eight (2004-2012), since those are the only years for which we have data.
  31. Jump up Pingree’s dramatic increase in net worth after her 2008 election was due to her 2010 marriage to billionaire Donald Sussman.
  32. Jump up Gov. Pence left Congress in 2012 to become the governor of Indiana.
  33. Jump up Rep. Young passed away on October 18, 2013.
  34. Jump up Percentage increase is not meaningful for this candidate as the initial average net worth is less than or equal to zero.
  35. Jump up I.e. had a negative percentage change.
  36. Jump up The data starts in 2004 for any member who started either in 2004 or prior, or at a later year for anyone who was elected after 2004.
  37. ↑ Jump up to:37.0 37.1 Or from the year the incumbent was first elected, if that year was after 2004.
  38. Jump up 618 members are included in the congressional data, compared to the millions sampled in the census data.
  39. Jump up Such as Chellie Pingree.
  40. Jump up “Medians are often used when data are skewed, meaning that the distribution is uneven. In that case, a few very high numbers could, for instance, change the average, but they would not change the median.” Bandolier, “Mean, Median, Mode,” accessed July 15, 2014
  41. ↑ Jump up to:41.0 41.1 The citizen net worth data was calculated from figures from the United States Census Bureau. In keeping with the method of calculating congressional net worth, home equity was withheld from the figure. The figures reflect the median household holdings.
  42. ↑ Jump up to:42.0 42.1 The 2004 figure was adjusted for inflation to 2012 dollars.
  43. Jump up This percentage reflects the median annual percentage growth of all members of Congress.
  44. Jump up As stated above, this is the total change in the amount of assets the median American household had from 2004 to 2012 divided by the eight year span.
  45. Jump up To ensure consistency among data sets, home equity was withheld in a similar fashion to primary residences not being counted as assets for congressional data.
  46. Jump up Because 2012 household net worth figures had not been released as of publication date, this figure represents the 2011 numbers adjusted for inflation. These estimates assume no change in net worth between 2011 and 2012. The 2012 figure will be updated when available.
  47. Jump up Census figures were unavailable for the raw, excluding home equity figure — this figure is an estimate calculated by applying the 2005 ratio of net worth excluding home equity to the net worth figure available for 2004 (which included home equity).
  48. Jump up For a direct comparison to each individual member’s figures (as shown on his or her Ballotpedia profile), the yearly change will correspond with each member’s average yearly change.
  49. Jump up This percentage reflects the average annual percentage growth of all members of Congress.
  50. Jump up As stated above, this is the total change in the amount of assets the average American household had from 2004 to 2012 divided by the eight year span.
  51. Jump up To ensure consistency among data sets, home equity was withheld in a similar fashion to primary residences not being counted as assets for congressional data.
  52. Jump up Because 2012 household net worth figures had not been released as of publication date, this figure represents the 2011 numbers adjusted for inflation. These estimates assume no change in net worth between 2011 and 2012. The 2012 figure will be updated when available.
  53. Jump up Census figures were unavailable for the raw, excluding home equity figure — this figure is an estimate calculated by applying the 2005 ratio of net worth excluding home equity to the net worth figure available for 2004 (which included home equity).
  54. Jump up For a direct comparison to each individual member’s figures (as shown on his or her Ballotpedia profile), the yearly change will correspond with each member’s average yearly change.
  55. Jump up From their 2009 required candidacy filing to 2012.
  56. Jump up Because many members went from a negative net worth to a positive net worth during the years calculated, this figure is an important figure because the total asset increase can figure in all members’ asset growth, including the members who did not have a meaningful percentage change due to increasing from a negative to a positive net worth.
Only the first few references on this page are shown above. Click to show more.

Gary Reber Comments: There increasingly seems to be very little belief that the greater good comes from creating policy that raises up the majority of people!

There seems to be virtually no discussion on social media of policy solutions, but instead just complaining about this action or that action, with no offerings as to what should be done in terms of policies and goals.

One is branded a socialist or communist if you offer up policies that build the middleclass and those in need by empowering them to become wealth-creating, income-producing capital owners ! Never mind the 1 percent has been buying our government to do the same for themselves and concentrate more capital ownership among themselves exclusively – not just hoping or expecting the political class does act responsibly! The political class is totally broken and bought…and thats dangerous! To ignore that is stupid as power always follows property!

One fact exists. As more people fall into the paycheck to paycheck survival mode our society will continue to unravel! We have seen throughout history what happens when social wellbeing is destroyed! We lack leaders of economic and social justice who can command national media attention. Instead, the  majority are bafoons in congress and the sooner everyone understands what is going on the better!

There Is No Such Thing As Trickle-Down Economics

On September 24, 2016, Steven Horwitz writes on Foundation for Economic Education:

Critics of liberalism and the market economy have made a long-standing habit of inventing terms we would never use to describe ourselves. The most common of these is “neo-liberal” or “neo-liberalism,” which appears to mean whatever the critics wish it to mean to describe ideas they don’t like. To the extent the terms have clear definitions, they certainly don’t align with the actual views of defenders of markets and liberal society.

Trickle Down

Economists have never used that term to describe their views.

Another related term is “trickle-down economics.” People who argue for tax cuts, less government spending, and more freedom for people to produce and trade what they think is valuable are often accused of supporting something called “trickle-down economics.” It’s hard to pin down exactly what that term means, but it seems to be something like the following: “those free market folks believe that if you give tax cuts or subsidies to rich people, the wealth they acquire will (somehow) ‘trickle down’ to the poor.”

The problem with this term is that, as far as I know, no economist has ever used that term to describe their own views. Critics of the market should take up the challenge of finding an economist who argues something like “giving things to group A is a good idea because they will then trickle down to group B.” I submit they will fail in finding one because such a person does not exist. Plus, as Thomas Sowell has pointed out, the whole argument is silly: why not just give whatever the things are to group B directly and eliminate the middleman?

There’s no economic argument that claims that policies that themselves only benefit the wealthy directly will somehow “trickle down” to the poor. Transferring wealth to the rich, or even tax cuts that only apply to them, are not policies that are going to benefit the poor, or certainly not in any notable way. Defenders of markets are certainly not going to support direct transfers or subsidies to the rich in any case. That’s precisely the sort of crony capitalism that true liberals reject.

General Prosperity

Government doesn’t “give” us tax refunds; it simply refrains from taking more of what we created.

What the critics will find, if they choose to look, is many economists who argue that allowing everyone to pursue all the opportunities they can in the marketplace, with the minimal level of taxation and regulation, will create generalized prosperity. The value of cutting taxes is not just cutting them for higher income groups, but for everyone. Letting everyone keep more of the value they create through exchange means that everyone has more incentive to create such value in the first place, whether it’s through the ownership of capital or finding new uses for one’s labor.

In addition, those of us who support such policies don’t want to “give” anything to anyone, whether rich or poor. When people talk about tax cuts as “giving” something to someone, they implicitly start from the premise that everything belongs to government and we are only able to keep some for ourselves by its indulgence of us.

Aside from the fact that rights are not what government gives to us but what we already have that it should, in theory, protect, the only reason government has any revenue in the first place is because it was taken through taxation from those in the private sector who created it. Government doesn’t “give” us tax refunds; it simply refrains from taking more of what we created through mutually beneficial exchange in the first place.

Grain of Truth

The key is not transferring funds to the currently rich, but ensuring the most competitive economic environment possible

However, there is one small grain of truth in the “trickle down” idea. One of the key reasons that modern Westerners, including poor ones, live so much better today than at any point in the past is because our ability to combine our labor with more and better capital has driven up our wages and driven down the cost of goods and services. The accumulation of capital by some does contribute to the enrichment of others as that capital makes workers’ labor more productive and thus more valuable.

That historical truth is not a justification for directly subsidizing the current owners of capital. Contrary to what thinkers like Thomas Piketty appear to believe, merely possessing capital does not ensure a flow of income. It is not ownership of capital per se that benefits others, but the ability to deploy capital in ways that create value for consumers. That is why reducing the tax and regulatory burden on everyone is so important: anyone can come with new ways to create value and potentially enrich themselves and others in the process.

The key is not transferring funds to the currently rich, but ensuring the most competitive economic environment possible so that those with the better ideas can put them into practice. The current owners of capital should not be able to lock in their position by using the political process to enrich themselves by legislation that specifically benefits themselves.

As Hayek observed in his defense of competition:

[I]t is by no means regularly the established entrepreneur, the man in charge of the existing plant, who will discover what is the best method [for efficient production]. The force which in a competitive society brings about the reduction of price to the lowest cost at which the quantity salable at that cost can be produced is the opportunity for anybody who knows a cheaper method to come in at his own risk, and to attract customers by underbidding the other producers.

Today’s owners of capital do not have all of the answers, and the way to ensure the best result for everyone, especially the least well off, is to give everyone the freedom to enter and exit the market and to have the maximum incentive to do so by enabling them to keep the fruits of their successful value creation.

Wealth Creation First

The way to help the poor is to maximize our freedom to create and keep value through the unhampered market economy.

No serious economist believes the lives of the poor are improved by wealth being transferred to the rich and then “trickling down” to the poor. What economics does tell us is that wealth has to be created first and foremost. You can’t transfer something that does not exist. Wealth creation is most likely to happen when people are able to innovate without permission and put their ideas to the market test.

This process of market-tested permissionless innovation will indeed make some people rich, and it will make some rich people poor. What it also does is to drive the creation of value across entire societies, raising the standard of living for all of their inhabitants.

The momentary snapshots of rich and poor are not the categories that matter for sound economic policy. Wealth does not “trickle down” from rich to poor. It is created by all of us when we develop new ideas, skills, and products as either workers or owners of capital.

The way to help the poor is to maximize our freedom to create and keep value through the unhampered market economy. The answer is not giving hand-outs to those who, momentarily, occupy the group we call “the rich.” And history tells us that the improving standard of living for everyone that results from more economic freedom will be more of a flood than a trickle.

https://fee.org/articles/there-is-no-such-thing-as-trickle-down-economics/

 

This Robot-Powered Restaurant Is One Step Closer To Putting Fast-Food Workers Out Of A Job

momentum machines real burgerMomentum Machines/The University of Pennsylvania

On June 12, 2017, Melia Robinson writes on Business Insider:

A secretive robotics startup has raised a new round of venture funding as part of its quest to replace humans with robots in the kitchens of fast-food restaurants.

Momentum Machines secured over $18 million in financing, according to a SEC filing in May. The startup has generated investments from top VC firms Google Ventures and Khosla Ventures in the past.

In 2012, Momentum Machines debuted a robot that could crank out 400 made-to-order hamburgers in an hour. It’s fully autonomous, meaning the machine can slice toppings, grill a patty, and assemble and bag a burger without any help from humans.

The company has been working on its first retail location since at least June of last year. There is still no scheduled opening date for the flagship, though it’s expected to be located in San Francisco’s South of Market neighborhood.

San Franciscans have been warming up to the idea of a restaurant experience with minimal human interactions for years. In 2015, futuristic food-chain Eatsa opened downtown. The vegetarian restaurant, which specializes in quinoa bowls, automates the ordering and pick-up process. It’s since expanded to New York and Washington, DC.

In San Francisco, robots also run food deliveries for Yelp’s Eat24 and pour coffee at Cafe X. These changes, along with other evidence that AI could displace huge swaths of workers, have even prompted a San Francisco politician to consider a “robot tax” to help offset the economic devastation a robotic workforce might bring.

Although Momentum Machines eliminates the need for line cooks, front-of-house and custodial staff will likely still be required. The company also told Business Insider in 2012 that letting robots fill in for humans in the kitchen may actually promote job growth because the automation would allow the company to hire new employees to continue developing their technology and to staff additional restaurant locations. The full impact of a robot-powered kitchen remains to be seen, however.

A Craigslist job posting from Momentum Machines last summer gave us our first glimpse into what the restaurant might be like.

“The burgers sold at 680 Folsom will be fresh-ground and grilled to order, served on toasted brioche, and accented by an infinitely personalizable variety of fresh produce, seasonings, and sauces,” the ad said.

Gary Reber Comments:

This story is about the march of technology and how the “iEverything” world technological invention and innovation is rapidly evolving. This story is about how automation is inevitable. It is the non-human means to produce abundance with little effort, And we better start thinking now about what to do when large sections of the population are not necessary for production through no fault of their own.

For a viable solution, we need implement to policies and financial mechanisms to simultaneously create broadly and universally new owners of the economy’s future non-human productive capabilities, so that EVERY child, woman and man can be productive and earn their income from the earnings of their individual ownership stakes in the future economy.

In this way, private property rights will be preserved by empowering EVERY child, woman and man to become new capital owners, without the requirement of past savings to invest and without taking from those who already are productive.

Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.

Support the Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/http://www.cesj.org/…/capital-homestead-act-a-plan-for…/http://www.cesj.org/…/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.