Why America’s good fortune won’t last

All we seem to hear lately is how the bottom rung of the employment ladder is stuck at dreadfully low conditions. Part of that of course is the low minimum wage level. Historically, mainly due to GOP gridlock, it has not been increased nearly enough to keep up with the times.

But it is nice to see that significant gains have taken place in recent years.

The 2015 Census data on income and poverty is out — and for the first time since the Great Recession, it’s unambiguously great news.

Median household income was up 5.2 percent compared to 2014 — the largest one-year gain since 1967 at least. Income gains were strong up and down the income ladder, with the biggest percentage gains coming from the bottom income brackets. Poverty fell by 1.3 percentage points….

Second, this huge gain in median income is actually the first statistically significant increase since the recession struck — and despite its size, did not recover the lost ground since 2007. Median household income is still down 4.6 percent from 2007, and 5.2 percent from the all-time 2000 peak.

Source: Why America’s good fortune won’t last

While this report is good news, we still haven’t recovered from the meltdown that  was caused by poor regulation during the Bush administration and the way the GOP still stalling budgeting enough to fully carry out Dodd-Frank there will likely be another meltdown in the not too distant future.

I am going to make a “47%” comment here that might not be acceptable to some but I kind of think that many “trapped” in low wages are there because of their unwillingness to take personal responsibility for their circumstances.  The unemployment rate is now at historically low levels. The median income is rising but still there are those who are not benefitting from these statistics.

Yes, the employment opportunities are different than they were when I joined the job market some fifty years ago. For whatever reasons we have allowed large corporations to shed their pension plans, kill labor unions, and even the idea of a full-time employment.  I worked for thirty years at the same company while it is said that those entering the job market today will change jobs seven times during their working lives.

When a business is making something that is no longer in demand they often recover by retooling for a more modern version. It seems that is what job seekers need to do also. Retool by doing what is necessary to get skills that are in demand. One of the hindrances to doing that is the high cost of education right now. In order to get a good job you need a good education. In order to get a good education you need a lot of money.  Kind of a catch-22.

That is where government should step in. There is no reason why schooling has to be as expensive as it is today anymore than why healthcare needs to be so expensive.  Many European, and especially Scandinavian countries, provide free education and healthcare for all it’s citizens. That seems like a no-brainer to me but stubbornly we in the U.S. refuse to follow their example.

 

Managing Our Money…

If I am known for anything here at RJsCorner is it my contrarian view of many things. Managing my money is one of them.  I know there are many blogs out their that strongly advise us to seek out financial planners to manage our money.  Supposedly they take a percentage of our assets each year in order to invest our money where it will get the highest earnings. But the quotes above and many other places paint a different picture.

Very quietly, the way that many Americans invest their money is changing. And it’s changing in a way that could upend the way Wall Street does business….

Why is passive management increasingly popular? Because research has largely confirmed Bogle’s argument that the average investor is better off just riding the market. Most active managers don’t make more money for their clients compared to index funds once fees are accounted for. And a January report from S&P pointed out that even the managers who do beat the market can’t sustain the success for long.

Source: Why are Americans suddenly so passive when managing money?

I admit that for the seventeenth year of my retirement from the corporate world I have yet to use a financial planner.  One of the reasons is cited in the quote above. In the end none of them have been able to beat the market.  Index funds don’t even try and that is where a significant portion of my assets are. But a good portion of them also reside in Treasury bonds and other less risky things.  This strategy has paid off for me in that my 401k has increased in value year after year.  It is considerably higher than it was when I first left corporate America.

I don’t have any heirs so I don’t plan on leaving any of my estate to someone else, even if I believed in such a thing which I don’t.  I think all of us should make our own way in the world instead of depending on someone else to do it for us.  I would love to be able to spend my last dime on my deathbed but since that is not possible I will leave what I have left to an organization that will use it to promote the common good in our country.

To me depending on a financial planner for my future is not where I want to go.  If they know so much about it how come they are still going to a 9-5 job?🙂

But that is just my way of thinking…

Innovation…

The main crux of this post is about whether a company can remain innovative as it ages. I want to use Sears and Amazon as study points. Being a U.S. history buff I can’t help but draw a parallel between Sears in the early 20th century and Amazon a hundred years later.  Here with the help of Wiki here is a little history of Sears:

2016-07-17_15-51-55.png Farmers did business in small rural towns. Before the Sears catalog, farmers typically bought supplies (often at high prices and on credit) from local general stores with narrow selections of goods.   Prices were negotiated, and depended on the storekeeper’s estimate of a customer’s creditworthiness. Sears took advantage of this by publishing catalogs offering customers a wider selection of products at clearly stated prices. The business grew quickly. The first Sears catalog was published in 1888.   By 1895, the company was producing a 532-page catalog. Sales were greater than $400,000 in 1893 and more than $750,000 two years later. …

In 1993, Sears terminated its famous general merchandise catalog because of sinking sales and profits…

Source: Sears – Wikipedia, the free encyclopedia

The parallels between Amazon and Sears startups are quite striking.  Jeff Bezos started the company in 1995 with the idea to sell books on-line. It quickly grew in both sales and product offerings so that today it is by far the number one retailer on-line.

2016-07-17_15-53-10.pngAccording to recent industry figures, Amazon is the leading e-retailer in the United States with more than 107 billion U.S. dollars in 2015 net sales. The majority of the company’s revenues are generated through the sale of electronics and other products, followed by media and other activities. As of the fourth quarter of 2015, the e-retailer reported more than 304 million active customer accounts worldwide. Due to Amazon’s global scope and reach, it is also considered one of the most valuable brands worldwide.

Source: Amazon – Statistics & Facts | Statista

One of the striking things about Amazon beside their explosive product line is the speed at which they deliver their products. For $79/year you can get unlimited 2 day delivery at no cost.  I must admit I am a major customer who places orders probably 30+ times a year for the last several years.

Because it wasn’t available on-line I recently ordered a drawer unit for my micro-RV remodel from Sears.  I was told that it would take 2 – 3 weeks for delivery. In Amazon time which is now the norm for me that is an outrageously long. Somewhere along the line Sears just lost their innovative edge. The Sears store in Bloomington just closed down so now I have to travel about 50 miles to pick up my cabinet.  It is either that or pay $70 to have it delivered!

I find it ironic that just as Sears was terminating their catalog sales a young Jeff Bezos was planning on starting one on-line.  For 2015 Sears revenue decreased by $6.1 billion to $25 billion while Amazon revenues were $107 billion.   I wonder what would have happened in 1993 if Sears had decided to aggressively take their catalog on-line instead of abandoning it?  I am personally convinced that on-line sales is the wave of the future.  Why do I need to get in the car, drive to a store, and lug my purchases home when all I have to do instead is just click a few buttons and in two days it appears on my doorstep.

The Real Republican Party..

2016-05-05_09-30-12.pngNow that Donald Trump is on the verge of being official face of the Republican party there are many saying that he does not represent the “real” party. I kind of think he does, or at least what is left of the party.  Over the years the GOP has gone about alienating one group after another in order to maintain party “purity”. During that time more and more people have been shedding themselves of the Republican label such that their is not much left.

The Evangelical vote, or maybe more appropriately the anti-abortion vote, has been splintering away for years now.  What is left are mainly those who willing to strip away the core foundations of their faith in order to concentrate on that one sub-agenda.  Even the term Evangelical is an easily attachable tag that doesn’t come with many qualifying conditions. Anyone can call themselves Evangelical and many now do.  The real Christians have quietly migrated into the Independent category of American politics.

Those of us who used to call ourselves Republicans because of our fiscally conservative views have watched the old GOP actually do worse than the Democrats when it comes to deficit spending and reducing the size of government.  We have watched one Republican president after another get us into wars and the resulting vast increase in military spending and want to make up the difference on the backs of the poor in our society. While we may be fiscally conservative we still maintain our firm belief in the necessity of a societal safety net.  So we have quietly migrated into the Independent category of American politics.

Those of us who believe in limited government who used to call ourselves Republicans have seen the GOP make every effort to strip the power of government beyond what is safe in order to maintain some form of civility and governance. We have watched the current GOP majority in congress strip away safeguards that keep the totally greedy among us from gobbling up the wealth of our country.  We have seen them viciously trying to take away affordable healthcare from millions of our citizens in the name of limited government.  We who believe in limited government know that there are many places that can be reigned in to reduce our deficits but the current crop of GOP have an agenda that is not compatible with finding these real savings.  So we have quietly migrated to the Independent category of American politics.

What is left after all these migrations are two fundamentally different groups. One are the people who have been left behind in the 21st century economy due to one reason or another.  They look back and see where opportunity was much easier to grab on to than it is today. They lament that it now takes more effort to join the middle class than they have been able, or maybe willing to give.  They have a mentality that if they are not doing good then they want to push everyone else down to their level. They want to basically destroy America of opportunity because they did not get their expected share.

The second group are those at the other end of the spectrum who seek power primarily at the expense of the rest of us. They don’t like rules that get in the way of accomplishing their personal agendas. For the most part they are self serving narcissists who don’t have any concern for others. They are concentrated total on themselves and their accumulation of wealth.

So here we are today with an extreme narcissist in control of a bitterly divided GOP. Given the past few decades it is hard to imagine it otherwise.