Sunday, July 31, 2016


It will be easy to criticize me for taking a serious matter and trivializing it.  The Russians are holding some Germans as prisoners.  They obviously don't care what Germany thinks.

Any further discussion of Crimea seems to be over and the Russians have walked off with many millions of people.  Europe has no military clout. It is obvious if Russia decides to reclaim Ukraine there won't be anybody to stop them.  We haven't been able to stop the Syrian situation, the Cuban situation, the Iranian situation, the Venezuelan situation and on and on.

The issue is not about Ukraine; it is does Russia have designs on further incursion into Europe?  If it does, no combination of forces in Europe can stop them.  Putin sees that underneath recovering economies and strong stock markets lies a broad undertone of socialist and populist voting positions.

Russia needs a bigger population and its clear they intend to get one, one way or another. Trade trumps threats.  We lose, they win and the long term is unknown.

Welcome to a Putin's Russia instead of a Gorbachev one.

Wednesday, July 27, 2016


Sixty years ago we bought our first house. It was $11,000.00. About ten years later we sold it for $30,000.00. Basically housing prices rose steadily for sixty years. Along the way home ownership became a cult idea. It started with Roosevelt and ended in a crescendo of speculation and absurd overpricing. No one really knew why a house was worth so much and why everybody should have one. There were lots of theories. Are we now faced with a cyclical downturn in housing demand? Or have we reached a tipping point where more and more people say “Hey I don’t need a 3,000 square foot house… I just need a 1,200 or 1,600 square foot home.” That would be a break in the mania, not just a typical cyclical decline. I don’t think too many people would argue with the idea that everyone should have all the “good things in life”, the only real difference of opinion would be how to accomplish that goal.

Abraham Lincoln once had a debate with Stephen A. Douglas. They were both running for Senator of Illinois. Douglas said the slaves of the south were better off than the northern immigrants. His rationale was that slaves were property and generally treated better than the northern laborers. This appeared to be true at the time. Lincoln’s response was that the difference between the northern laborers and the slaves was that northern laborers would eventually be upwardly mobile, one after the other. One would a start business, many would begin to hire their own employees and another would rise up in someone else’s business. Whereas he said that slaves, on the other hand, couldn’t go anywhere. They had their chains.

Unfortunately there are many kinds of chains. One can be chasing an impossible dream that housing prices will rise forever, or that internet prices will rise forever, or that people will stay pessimistic forever or that the government will provide for you forever. We are reaching the point where millions and millions of people are working for the government. We are increasingly restrained by an enlarging government which is viewed as beneficial but instead, in many ways, is becoming a new form of imposed chains.

Almost every significant unionized industry in America has failed. Now the largest unionized segment in America is government. I’m not against unions, anymore than I am pro-incompetent management. But they have both often caused more harm than good and been well compensated along the way.

People don’t leave what they believe to be secure environments. With unionized government jobs you’re unlikely to leave. You give up on opportunity. You generally vote for those in control that convince you that this is a good deal. You are mentally captured by what they seem to be providing and give up almost any chance for significant opportunity. Are we now on the road to the subtle enslavement state? You may be free to go, but how can you. Lincoln was right when he implied that “chains” come in many different varieties.

Government can only be paid for by taxes. If wages and salaries aren’t rising, and stocks aren’t rising, and houses aren’t rising, there isn’t going to be much to pay for future government. Freedom to succeed will ultimately create  a more economically equal society. Reducing that freedom, whether well meaning or not, will ultimately prolong the problem. Certainly taxation without representation, where a small percentage of the people pay almost all of the taxes, will not work. The ultra wealthy who attempt to shield their real tax reducing methods, while shouting for equality, don’t help solve our problems.

Tuesday, July 12, 2016


There is nothing new about this. It's old hat, it's sad, it's destructive but it's the real story.

On November 22nd we titled a blog "Stop worrying about Globalization...Start Worrying about Ourself". We can't reiterate the importance of that blog except maybe a bit through the following vignette.

We had to make a change in one of our computer programs. We asked the two young people at the American company's service office operating in the Philippines a number of questions. We knew the answers, but we wanted an update.

Some of the questions were: Did you go to college...yes. How old are you...27. Do you like your job...yes. Is there room for advancement...yes. Would you consider yourself upper, lower or middle class...middle.

These young people remotely scurried through our computers with the agility and talent of a computer PhD which they were not. They spent an hour assisting us on the phone, they were extremely polite and the overall experience, from our point of view, was top notch.

THESE PEOPLE WERE PAID THE EQUIVALENT OF $11,0000 USD PER YEAR. If an American college graduate wanted to do this job they would probably earn $50,000 plus per year. This would be an additional $40,000 paid for the same service. It is one of the main reasons why jobs available to Americans has struggled.

Furthermore, as we have stated over and over again, the largest blocks of the unemployed would have no ability to do these jobs. We can create all the technology jobs we want but the minorities unemployed in this country will not be helped for an awful long time. Not only have we lost our manufacturing ability but we have lost the labor cost differential and its not going to change for a long time.

Just remember if you are a foreign company, the probability of giving these types of jobs to Americans is an extremely low number.

We need a government who will support our people's call for the equalization of unfair cost and currency advantages.

Shepard Osherow. All Rights Reserved