Category Archives: Gov’t Policy

#443 Why Are US Gas Prices Linked to Spot Prices?

20 Sunday Mar 2022

Posted by in Common Sense Policies, Economics, Gov't Policy, Uncategorized

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Welcome to a discussion about the upcoming 5th Revolution in the US, which I’ve titled the “Revenge Revolution.” For more about the Revenge Revolution and the author, Entry #1.  Periodically I write a “sense check” to assess whether a revolution in the US is possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US. Entry #430 was the most recent “sense check.”

ENTRY #443 BEGINS: With the rise in gasoline prices, many politicians and their supporters are blaming the Biden administration for the price increases and also demanding that the Biden administration expand the number of leases on Federal land, including allowing drilling in the Artic National Wildlife preserve.  The rhetoric makes for good campaign soundbites, but who or what really determines the price of gasoline in the US? And, is there a more effective way to manage gas prices?

Crude oil is a commodity.  Like virtually every commodity, there is an exchange where contracts are negotiated and traded.  The price for a barrel of oil on the exchanges, aka “spot price, can fluctuate wildly based on how oil traders view the potential impact of world events on crude-oil supply and/or demand. The benchmark quality for these contracts is based on oil produced in West Texas (West Texas Intermediate) or the North Sea area (Brent crude).

In the US, pump prices for gasoline generally track changes in the spot price.  The spot price, however, bears almost no relation to the cost of production.

As the US has produced a larger share of domestic consumption, the rationale for linking the price of crude-oil as feeder stock to pump prices has been minimized, if not eliminated.  According to data from the US Energy Information Administration, for CY2021 the US exported more petroleum (crude oil and related products) than it imported – exports of 8.63 mmb/d vs. imports of 8.47 mmb/d. 

in CY2021 more than 50% of the imports were from Canada.  Some of the exports may be linked to trade agreements with other countries and/or to ensure that certain countries friendly to the US have a constant supply of oil and/or refined petroleum-based products.

Given the widespread concern within the US about fluctuating gasoline prices, why does the US continue to link gasoline prices at the pump to spot prices? Aside from the link benefiting the oil companies, either no one in Congress understands the issue or the oil lobby is in the pockets of many members of Congress, or possibly both.

Even if the US imported say 50% of daily consumption, one needs to ask whether it is necessary to link pump prices to spot prices. If the cost of 50% of gasoline is stable, then why does the pump price fluctuate solely based on the other 50%?

A solution to more stable pump prices would be to set a national price for gasoline (and diesel).  For discussion set the price without any taxes at $3.00/gallon.  Over time, the $3.00 price would be adjusted for inflation.  As is done now, the state and the Federal governments could add a tax to the $3.00/gallon price.

Would a fixed national price reduce supply of crude and gasoline? Businesses do not like uncertainty. The greater the uncertainty, the higher the required profit margin to compensate for the risk. The premium for uncertainty applies at each stage of the supply chain. The more stable or known the raw material cost for a product, the lower the premium for the finished product.

In the oil-and-gas business, most of the cost is incurred up front – exploration, leasing the land, drilling and installing equipment to operate the well. Improvements in processes and technology have reduced significantly the likelihood of a dry hole. Further, 3D imaging has increased the accuracy of the estimated size of the reservoir and the expected production rate.  Once in operation, the cost of extracting oil is minimal in most fields.

The Biden administration might be well served to conduct a comprehensive analysis of anticipated crude-oil supply based on different fixed prices.  Given the effectiveness of applying technology in exploration and drilling techniques, a safe bet would be US production could be maintained for many years extracting oil from existing fields and reopening abandoned fields. Further, with a known, or certain price for gasoline and possibly other refined oil products, US production likely would increase, not decrease.

With such a large domestic supply and production base, why does the US continue to allow the world spot price to have such an enormous impact on the pump price?  A fixed national price for gasoline and diesel (before tax) might be an example how the political parties can work together to solve real problems. The solution to managing gasoline pump prices might also eliminate some of the political divisions that seem to be making a 5th US Revolution more likely. ENTRY #443 ENDS

Other Topics. Interested in more info about climate change, what’s required to electrify a fleet of cars/trucks, what it was like to work day-to-day with Lee Iacocca and an array of other topics? Visit another page of this website, https://usrevolution5.com/jrd-thought-comments/  

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#427 Excuse Me Senator. Is Your Name Manchin or Manson?

20 Wednesday Oct 2021

Posted by in Back Asswards Thinking, Gov't Policy, Uncategorized

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Welcome to a discussion about the upcoming 5th Revolution in the US, which I’ve titled the “Revenge Revolution.” For more about the Revenge Revolution and the author, Entry #1.  Periodically I write a “sense check” to assess whether a revolution in the US is possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Entry #400 was the most recent “sense check.” 

ENTRY #427:Senator Manchin has been in the news a lot the past couple of weeks. Late the week of 10/11/2021 he publicly stated he would not support taxpayer funding for the development of zero-carbon electricity generation. OK, Joe, what about billions and billions of taxpayer subsidies for coal extraction and oil-and-gas drilling? Tell me what’s the difference?

Not all readers believe that if CO2 emissions continue unchecked, the earth could begin to begin to become uninhabitable by 2100. There’s lots of science and data to support such a statement but some don’t believe in science.

Clean electricity had been a key element in president Biden’s Build Back Better program and a major step toward the US dramatically slowing the growth of CO2 emissions. The Biden administration’s plan would have given the US a good chance of doing its part to limit global warming to 2oC by 2100. Given the unfathomable level of denial of science by Republicans, Joe Manchin might be able to take credit for singularly causing the world to speed up the path to catastrophe.

For you climate-change deniers, remember how Trump claimed COVID-19 was under control? “We’re very, very ready for this,” Trump said, adding that only 15 people had contracted the virus in the U.S. and that all were expected to recover. A mere 700,000 deaths later and COVID-19 is still not under control. Deniers – who ya gonna blame?

Given the severity of the potential consequences of doing nothing to address climate change, I thought an open letter to Senator Manchin might be appropriate. Yes, the letter is sarcastic and a bit edgy but I think Senator Manchin deserves this type letter.

The salutation evolved from a comment made during a recent call about climate change. One person on the call accidentially referred to Senator Manchin as “Manson.” That led to a few chuckles. However morbid the circumstances that made Charles Manson famous, Senator Manchin’s decision to refuse to recognize the need to address global warming will have far worse consequences.

Dear Senator Charles Manson:

Thank you for taking a strong stand against generating clean electricity, thereby intensifying the effects of global warming. All the children in the neighborhood and in the family appreciate your efforts to make the earth uninhabitable and shorten their lives.

The children asked if you could share some of the payoff money you received from the fossil-fuel industry. They want to buy some candy before it’s too late.

We also appreciate your efforts to make the US look like a third-world country that has a non-functioning government. President Biden especially appreciates your efforts to diminish his credibility with other countries at the upcoming conference to address global warming.

Rarely in US history has a single senator had such a widespread negative impact on mankind. You should be proud of your accomplishments. (End of letter)

Where the negotiations in Congress go to try and save the provision to fund generation of clean electricity, I don’t know, although I do understand some progress has been made. When thinking about how to solve the problem with the holdout Senators, I was reminded of a scene from the movie, “Patton.” In the scene Patton’s troops are marching through Sicily toward Palermo. The terrain is hilly, the road narrow and the troops are strung out for probably a mile.

The journey is high risk because enemy aircraft can easily strafe the column and there is little protection along the road. Then the column stops. Patton drives to the front and finds a cart with two donkeys blocking a critical bridge. The farmer tries to get the donkeys to move but no luck. The solution was a bit inelegant but effective.

Patton shoots the donkeys, dumps them off the bridge and the march proceeds. When trying to persuade Senators Manchin and Sinema, president Biden might do well to take a lesson from General Patton. Too much is at stake for the US and the world to let a couple of people get in the way.

Other Topics. Interested in more info about climate change, what’s required to electrify a fleet of cars/trucks, what it was like to work day-to-day with Lee Iacocca and an array of other topics? Visit another page of this website, https://usrevolution5.com/jrd-thought-comments/

#411: “You Can Lead a Whore to Culture but You Can’t Make Her Think.”

11 Sunday Apr 2021

Posted by in Back Asswards Thinking, Gov't Policy, Societal Issues, Stupid Is as Stupid Does, Uncategorized

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Readers: The entries in this blog are built around the assumption there will be a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1. 

Periodically I write a “sense check” to assess whether a revolution in the US is possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Entry #400 was the most recent “sense check.” 

ENTRY #411 BEGINS: The title is the response from the writer Dorothy Parker when asked to use the word “horticulture” in a sentence.  Parker‘s famous reply seems to appropriate to describe most elected Republicans inside the Washington Beltway.

I promised in Entry #410 to quit addressing how the Republican Party was imploding.  I also promised to quit offering suggestions how Democrats could help Republicans rebuild, or start a new, more principled Republican Party.

Those promises certainly have not stopped inane actions by members of the Republican Party.  This past week we experienced another reason why behavior of elected Republicans is consistent with Parker‘s description of a whore. Republicans have quit thinking.  Senate Minority leader Mitch McConnell promised yet again to fight every aspect of the Biden administration‘s infrastructure proposal, even though the proposal has strong support among Republican voters.

McConnell must have said to himself, “Why should we rich Republicans listen to our constituents?  Our constituents are little people who really don’t matter.  They should be treated like we treat Democrats.  Let them eat old, stale fruitcake.”

Let’s discuss what infrastructure is and why infrastructure is important. First the definition of infrastructure has always included more than roads and bridges, despite the claims by Republicans. Some examples.  In the mid-19th Century, the US government was involved in making it possible for railroads to expand in all regions and traverse the country.  Along with railroads came support for that new-fangled communication medium called the telegraph.

Early in the 20th Century, the federal government was involved in building roads and bridges for autos as well as helping build the infrastructure to support another new communications medium called the telephone and another communications medium called radio. Yes, and the government was instrumental in developing places for those things that fly, called airplanes.

Mid-20th Century the Federal government funded the development of the interstate highway system and managed yet another communications medium, television. By the end of the 20th Century, the government was helping promote a communications medium it had funded directly, the Internet.

In addition to all the hardware, the government help fund software. Back to the 19th Century, early 20th century. What software infrastructure did the government fund? Free primary and secondary education for everyone, regardless of income. The government also funded higher education, providing land grants to help start many colleges and universities.

So the idea that infrastructure includes only roads and bridges and a few airports, and that infrastructure does not include education or communications it’s not only hogwash but inconsistent with two centuries of actions by the Federal government.  I guess McConnell and gang hope that no one remembers one iota of US history.

Another resistance point to infrastructure by Republicans is supposed cost.  Is the Biden administration infrastructure proposal expensive? Yes, but all major infrastructure programs supported by the Federal government have been expensive.  Have these infrastructure programs resulted in some tax increases?  Yes.  (We’ll save for another entry any discussion about the hypocrisy of the Republicans’ support for tax cuts and a higher deficit but then claim how Biden’s proposal will increase taxes and add to the deficit.) 

What seems baffling to me, and many others, is why in the past decade or so, Republicans have refused to support expansion and/or even repair of critical infrastructure?  Infrastructure is a necessary component of national security and economic expansion, both of which Republicans claim to be basic tenets of their Party.  Yet, during the four years of the Trump administration and during the eight years of the Obama administration, Republicans offered no support for addressing infrastructure issues.

Maintaining infrastructure in many ways is like maintaining a house or car. The longer one waits to repair an issue, the higher the cost.

With their repeated refusal to support the Biden administration’s widely popular infrastructure proposal, combined with their continued support for state legislators suppressing voter rights, Republicans have made it nearly impossible to govern the country for the people. The behavior of Republican leadership, and apparently virtually all Republicans in Congress, focuses on placating the hard-core right.  Focusing on this narrow segment of the population and refusing the consider ideas that benefit the majority, including most Republican voters, increases the likelihood of a more severe 5th revolution in the US, aka the Revenge Revolution.

Unless you’ve been in a cave the last few years, the Revenge Revolution appears to have started, in retrospect a bit earlier than I expected. The election of Trump could be considered the first major event of the Revenge Revolution.  Another major event was the storming of the US Capitol.

The third major event will be more intense and more violent than storming the Capitol. When and where that event occurs is TBD, but it is coming.

Back to the title of this entry. “You can lead a whore to culture, but you can’t make her think.”  Let’s change Parker’s quote slightly to read, “You can lead Republicans to culture but you can’t make them think.”  Stay tuned.

Booklets you might find interesting: 

#410: Republicans Accelerating the Revenge Revolution

04 Sunday Apr 2021

Posted by in Back Asswards Thinking, Gov't Policy, Societal Issues, Stupid Is as Stupid Does, Uncategorized

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Readers: The entries in this blog are built around the assumption there will be a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1. 

Periodically I write a “sense check” to assess whether a revolution in the US is possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Entry #400 was the most recent “sense check.” 

ENTRY #410 BEGINS: Entries #407-#409 focused on the need for and how to begin rebuilding the Republican Party. Legislation proposed or enacted by several states has left little doubt about the need for a new Republican Party.

After losing the 2020 presidential election, did Republicans throughout the US focus on offering new ideas to attract voters?  No!  Instead of expanding the appeal of the Party, Republicans made being a Republican even more illogical for all but the hard right.  Since the election, Republicans have focused on making voting more difficult.  Well, making it more difficult only if you’re not white.  As if restricting voting weren’t enough for Jim Crow, the Georgia legislature passed and the Governor signed a bill that allows the legislature to discard election results in Georgia counties that the legislators don’t like.

Oh, that county voted for a Democrat?  Well, there must be fraud in that county so let’s throw out the results and declare the Republican the winner.  Henceforth, we Republican legislators think it is our right to decide who wins and who loses elections in Georgia. You voters, especially “those people,” are not worthy of deciding.

And while we’re at it, why don’t we make it a crime in Georgia for you to share some water with one of “those people” who is standing in line to vote.  Gee, we almost forgot.  Want an absentee ballot?  Let’s make getting an absentee ballot more difficult, especially if you live in the wrong neighborhood.  And then let’s restrict the number of drop-off locations. 

If you decide to protest, even the most mild of protests, we’ll arrest you.  You know, we legislators had to arrest that Black state representative who knocked on the door while the esteemed Georgia governor was signing this necessary legislation.  You know, don’t you, she’s a terrorist!  She’s more dangerous than any of the patriots who tried to save the country by invading the US Capitol January 6.  I, mean, she wasn’t armed but she had that look of evil in her eye.  She could have killed everyone in the room with a single swipe of her hand.  She deserved to be arrested, handcuffed and booked.

Like many citizens, I was frustrated, but not surprised by these actions in Georgia.  I also was prompted to ask myself, “Who was the last Republican president that had some ideas to improve the country for everyone?“  Trump? No. Bush 43? No. Remember Bush 43 try to privatize Social Security. Bush 41? Maybe but nothing stands out.

Reagan? No. Reagan was all about tax cuts for the wealthy and trashing those mythical welfare queens. Remember, according to Reagan, government is not the solution; government is the problem. Gerald Ford? OK guy but he was really in cleanup mode as president. Most of his accomplishments were as Speaker of the House.

Whoa Bubba, Now, we’re back to Nixon.  Yes Nixon, the Republican president who resigned in disgrace and was pardoned by his successor.  As bad as Nixon was for lots of reasons, he also signed legislation creating the Environmental Protection Agency. He proposed affirmative action in the Federal government and began diplomatic relations with China.  Much of the US population benefitted from those actions. 

One has to go back to Eisenhower for a legislation by a Republican that benefitted the vast majority of Americans and fundamentally changed society – creation of the Interstate Highway system. 

Given the nearly 50-year lack of Republican presidents shepherding meaningful legislation that benefitted the populous, why should anyone be surprised about the behavior of today’s Republicans? The problem for Republicans is the core of the Party is old white guys who spend the day watching Fox.  These guys are dying and the younger generations aren’t buying the same line of BS.

Given the obvious outcome of this approach, has the attitude of Republican leadership been to try and change the message of the Republican Party? Try and make the message more consistent with Eisenhower and Nixon? No, let'[s not change. Let’s just double down on voter suppression of anyone who doesn’t watch Fox or isn’t white.

A good timely example is Republican’s opposition to the Biden administration proposal to radically upgrade travel and communications infrastructure in the US.  The proposal has widespread approval ratings among the voters, with some polls indicating 50% support among Republican voters.  So, what does Mitch McConnell, ranking Republican in the Senate proclaim?  The hell with what voters want. I, Mitch McConnell, king proclaim no Republican will support this proposal.   Mitch, here’s a piece of advice, go see a proctologist and have your head relocated to the proper spot on your body.

The strategy of McConnell and the Republican Party on the infrastructure proposal, climate change and many other proposals that could benefit a wide swath of the US population is like trying to bail out a leaky boat with a coffee cup. The problem is the leak continues to get bigger. You might stave off the inevitable for a while, but the boat is going to sing sink. 

Republican actions are also likely to increase the likelihood and even intensify the Revenge Revolution. People who are suppressed are not going to stand by idly by, especially if they’ve experienced not being suppressed.  Just in case you Republicans haven’t heard, Jim Crow left town.

You Republicans also are starting to lose the business community. Major League baseball announced the 2021 All-Star game will be relocating outside Georgia.  Companies with HQ in Georgia and Texas, which is in the process of passing Georgia-like legislation, have publicly stated strong opposition the vote-suppression measures.  Among a long list of companies are Coca-Cola, Delta Airlines, American Airlines, Southwest Airlines, Dell Computer and a growing list of others.

As far as members of the working class who supported Trump and Republicans, Biden has done more for the working class in less than 3 months in office than Trump did in four years. At some point, and I thought it would be a long time ago, the working class is going to wake up and realize how little the Republican Party has done for them. An egregious example of how Trump and the Republican Party screwed the little guy is detailed in a NYT article titled “How Trump Steered Supporters into Unwitting Donations.”

So, who’s going to be left in the Republican Party?  Some old white guys and the younger white supremacists.  Principled Republicans have no place to go and Republican leadership in Congress is unwilling to recognize reality.  Democrats need to reach out to the more principled Republicans. Most Republicans in Congress are likely to resist the offer, but at some point the Romney‘s, Murkowski‘s and Collins’ of the world will begin to acknowledge and accept their responsibility to form a new principled Republicans Party and that Democrats can help, even if behind the scenes.

Booklets you might find interesting: 

#409: “She’s Real Fine My 409”

21 Sunday Mar 2021

Posted by in Gov't Policy, Possible Solutions, Societal Issues, Uncategorized

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Readers: The entries in this blog are built around the assumption there will be a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1. 

Periodically I write a “sense check” to assess whether a revolution in the US is possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Entry #400 was the most recent “sense check.” 

ENTRY #409 BEGINS: OK so you have to be well on the other side of age 50 to remember the opening lyrics of the song “409” by the Beach Boys. But the lyrics have such a ring that I couldn’t pass it up for this entry.  Now, what to write about that’s consistent with the lyrics.

The two most recent blog entries, #407-#408, addressed: (i) why the Republicans need to create a new credible conservative party and, (ii) how the Democrats could help Republicans form such a party.  The idea of Democrats helping Republicans might seem crazy at first blush but I think the idea is worth pursuing.  Why?

Let’s start with the assumption that for a democracy to function properly, there must be at least two credible, functioning parties. Right now we have one functioning party, the Democrats.  And we have at least two splinter groups claiming to represent Republicans in some way.

The splinter groups do not function at the national level, other than trying to block anything proposed by Democrats, no matter how rational the idea. At some state levels, Republicans are more of a force. Most recent efforts by Republicans in a number of states have been aimed at suppressing voting rights.  The need to suppress rights has been justified using made-up evidence that “proves” voter fraud, mostly from mail-in ballots, and only mail-in ballots from Democrats, of course. 

Republicans seem to forget the only case of voter fraud in the last couple of decades, and maybe longer, involved mail-in ballots in the NC 9th district.  And which party was guilty of voter fraud?  Oops, it was Republicans rather than Democrats.  The fraud was so extensive the courts forced another election.  But Republicans never let facts get in the way.

So how do Democrats make the crazy idea of helping Republicans actually work? How do Democrats get Republicans to consider the list of 10 ideas described in Entry #408 that should help rebuild or create a credible Republican Party? 

During services Friday night, the rabbi discussed an event that occurred in the south in the early 1970’s. The storyline was about how the former head of a local KKK chapter and a black female activist ended up working together.  The lesson was that while both parties were obviously outside their comfort zone, to make the relationship work, each one had to trust the other and each had to give up something the other side viewed as valuable.

We have the ingredients for a similar situation in Congress. Some far-right Republicans could be mistaken for the head of the local KKK.  And we have as president of the Senate, a black woman. Seems like a close enough match.

Maybe our congressional black activist, VP Kamala Harris, could reach out to the likes of Mitch McConnell, and Rand Paul in the Senate and Jim Jordan and others in the House. What’s really the risk of Democrats reaching out? The Republican groups oppose almost everything proposed by Democrats, even proposals that have widespread support among registered Republicans. 

VP Harris seems like she could be a good listener. She’s also probably a tough negotiator, having been both a District Attorney and Attorney General in California.

Harris could offer to cut a deal with the Republicans.  But the deal should be based on terms that are more like a plea bargain. Yes, we Democrats will work with you Republicans.  But you Republicans must keep your word, unlike your behavior during the Obama administration.  If a key Republican agrees to a deal and then reneges, the Biden administration should use any number of non-public ways of inflicting pain on the traitor.

I don’t know exactly what Democrats could offer that Republicans might really want and stimulate their interest. Doubtless, Democratic members of Congress and/or the administration have some ideas. Whatever is offered, make sure it is meaningful.

If the Republicans are interested and willing to give up something and then Democrats give up something they think is important, the discussion might work and we could begin to see the rebuilding of some of the Republican Party. If the discussions don’t work, so what? No harm, no foul.

Now back to the title, “She’s Real Fine My 409.”  I think VP Harris, a California girl no less, fits that title and would be an ideal person to begin helping the Republicans get back on track.  Use the 10 ideas in Entry #408 as a start.  What a great move that would be for the country.

Booklets you might find interesting: 

#408 Ideas How Democrats Can Help Principled Republicans Find a Home

14 Sunday Mar 2021

Posted by in Gov't Policy, Possible Solutions, Societal Issues, Uncategorized

≈ Leave a comment

Readers: The entries in this blog are built around the assumption there will be a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1. 

Periodically I write a “sense check” to assess whether a revolution in the US is possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Entry #400 was the most recent “sense check.” 

ENTRY #408 BEGINS: Entry #407 suggested Democrats should work with principled Republicans to form a new political party. #407 also noted this entry would present ideas to help form such a party.

Maybe the best way to start is to refer to an old adage, “keep your friends close and your enemies closer.” For this discussion, let’s label principled Republicans as “enemies.”

However, the real enemies to the US democracy are not principled Republicans but the far-right Republican fringe groups. These groups have demonstrated a number of times, the most recent of which was the 01/06/2021 attack on the US Capitol, they do not support democratic elections, but support violence and/or threats of violence to ensure far-right ideas are implemented.

How do Democrats help principled Republicans form a new party?  For certain one needs to “think outside the box.”  One needs to put away the notion that politics must be a zero-sum game.

The vast majority the US population wants government to function. The recent Covid relief legislation is an excellent example.  According to a Pew Research poll, 70% of the US population supported the bill, including ~40% of Republicans.  

Despite widespread support among constituents, did any, even one, Republican vote for the relief bill? No, nada, none.  Why?  For many House members, apparently it was fear of losing the next primary to a far-right candidate.

But what was the excuse for voting “no” among moderate Republican Senators, especially those elected in late 2020 to six-year terms?  Senators are elected by everyone in the state, not just voters from smaller districts.  So, why not vote for the Covid relief bill?  

Many of those same Senators who voted “no” to help the America people with the Covid relief bill, voted “yes” to confirm Merrick Garland as US Attorney General.  In fact, 20 Republicans supported Garland’s confirmation, including none other than Mr. Hypocrisy himself, Mitch McConnell. 

Why the disconnect in voting between the Covid relief bill and the Garland nomination? Put aside the idea of Covid relief bill was too expensive.  The same group of Republican Senators voted to support the Trump tax cut which was far more expensive.  If you have a reasonable answer for the illogical behavior by these Republicans, please let me know because it makes no sense to me.

Since Republicans, or seemingly principled Republicans, don’t have a home and keep wandering about aimlessly, Democrats need to help them. Far-right Republicans despise those Republicans with principles and want to get rid of any moderates.

What can Democrats do to help these aimless principled Republicans?  Following are proposals intended to: (i) provide some cover for these pour souls and (ii) make democracy function more in line with people’s needs. The ideas are not to suggest that the will of the majority should always prevail.  Such an approach is contrary to basic tenets of the US Constitution.

The proposals are geared to allow candidates with different views to be elected and to diminish the influence of groups whose interests seem contrary to the best interest of the country. Yes, I understand the definition of “best interests” can be murky and can change over time but reasonable people can agree on many proposed actions.  The proposals listed should also be considered as “work in progress,” since some tweaks are likely needed.

#1.  Create a legitimate umbrella party for independents, moderate Republicans and even some moderate Democrats. The umbrella could be called the “Independent Party.”   The action to create the umbrella party would include a federal mandate requiring all states to allow candidates to register as members of the Independent Party.

#2.  Primaries would consist of a single ballot that includes all candidates from the various parties. The candidate’s political party affiliation would be designated on the ballot.

#3.  Primaries would allow voters to select at least two, and possibly three candidates. The three candidates with the most votes, regardless of party affiliation, would be on the ballot for the general election.

#4. Early voting and mail-in voting would be expanded. Online voting would be tested and implemented as quickly as possible after security concerns are addressed by a third party.

#5. House and Senate rules would allow Independent Party members to become leaders of each body. The Independent Party would be considered separate, but equal to the Republican and Democratic Parties.

#6. The Federal oversight provision of the Voting Rights Act of 1965 would be reinstated fully to help ensure fair voting procedures in all states.

#7.  Even without the Independent Party, Democrats would work with principled Republicans to develop legislation that both could support. In addition, Democrats would let principled Republicans take the lead on shepherding some legislation through Congress and take credit publically for initiating many of the proposals.

#8.  The US Attorney General, as Merrick Garland stated within hours of taking office, would ensure to the extent possible that all prosecutions are based on facts and blind to party affiliation.  To the extent possible evidence in high-profile cases would be made public, with the purpose of reducing doubt about the legitimacy of the case.

#9.  USAG would encourage the Attorney General in each state to take the same approach to evidence-based prosecution as done by the DOJ.

#10.  Democrats and principal Republicans should agree to approve only moderate nominees for the Supreme Court. In addition, the vote for any Supreme Court nominee should return to previous requirement of 60 votes in the Senate.

In less than two months in office, the Biden Administration seems to have made considerable progress in beginning to restore some confidence in the Federal government. These proposals are designed to help build on those early steps. 

Will these changes work? I don’t know. But, for sure we need to do something.  More to come.

Booklets you might find interesting: 

#404.  Error Message 404: True Republicans Not Found.

10 Wednesday Feb 2021

Posted by in Causes of the Revolution, Gov't Policy, Societal Issues, Uncategorized

≈ Leave a comment

Readers: The entries in this blog are built around the assumption there will be a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether a revolution in the US is possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Entry #400 was the most recent “sense check.” 

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download.  See list at end of this entry.

START ENTRY: An occasional error message on the computer reads, “Error #404.  Not Found.”  This being Entry #404, a “404 Error Message” theme seems appropriate. 

But like the error message, who has not been found?  Inside the Beltway, one can find error messages on both sides of the aisle.  Lately, however, Republicans seem to be racing far ahead in making errors of significant consequence for the country.

During the past week or so, Republicans in the House of Representatives refused to strip committee assignments from a member who supported rioters breaking into the Capitol, who stated that someone should put a bullet in the head of Nancy Pelosi and other Democrats, and who continued to spread lies about a host of other issues affecting democracy.  The vote in the House wasn’t to expel or even to censure Representative Greene (R-GA).  The vote was merely to strip committee assignments.  For Republicans in the House, anyone who supported Trump should not be punished, no matter how egregious the behavior.  

What about the fate of Republicans who didn’t support Trump’s attempted takeover of the government?  Different story.  Some of the same members who supported Greene’s behavior forced a vote among Republicans to remove Liz Cheney from the #3 ranking Republican in the House.  Why?  Because Cheney had voted for the impeachment of Donald Trump for inciting an insurrection.  The temerity of Cheney to uphold the Constitution and vote against Trump.  

Somehow Cheney survived.  Could it have been because the vote re Cheney was secret and “Only the Shadow Knows” how members voted?  The vote for Representative Greene was on the record.  Apparently, when Republicans must stand up and have their votes counted in public, they act like scared dogs. Who or what are the Republicans in the House – and Senate – afraid of?  

At the beginning of Trump’s second impeachment trial, 44 Republican Senators voted that the trial was unconstitutional.  Why was the trial unconstitutional?  Because Trump was out of office.  Forget precedent from a series of impeachment trials.  Forget that the House impeached Trump while he was still in office.  Forget that the Senate refused to take up the trial while Trump was in office.  Forget all those facts and pretend that once someone leaves, all is forgiven.

What 44 Republican Senators are supporting is that future presidents can be as corrupt as they want with no essentially consequences.  For example, the morning of the inauguration of a new president, an outgoing president can accept as much cash as he or she wants from someone, whatever the quid pro quo.  By noon that day, when the new president is sworn in, if the House doesn’t impeach the outgoing president and the Senate doesn’t convict, then there is no consequence.  And, oh, yes, using the logic of the 44 Senators, the outgoing president can pardon himself and avoid prosecution for any federal crimes.   Error 404: Credible Republicans Missing.  

The infighting within the Republican Party is a problem for the US.  The US needs two functioning parties and now one political party is being taken over by fascists, who are more than willing to throw out the US Constitution and manage by fiat.

While some people point to Trump as the cause of the infighting and the deterioration of the Party, the Republican Party started a downward slide under Ronald Reagan.  Reagan did three things that began to erode the credibility of the Republican Party as a true conservative party and erode the democracy.

#1 was the campaign mantra, “Government is the problem, not the solution.“ Reagan repeated the mantra during his campaign and even repeated it during his eight years in office. When he was president, if he wasn’t the government, then who was?

If “government” was really the problem and not the solution, then how did the US put a man on the moon in less than a decade? How did the US change the course of World War II in Europe and the Far East? How did the government help the US economy recover from the Great Depression?  Reagan lived through all those events, yet still claimed government was the problem, not the solution.

#2, Reagan was anything but a fiscal conservative. Reagan as a fiscal conservative is a myth.  Reagan was a spendthrift. During the Reagan administration, debt as a percent of GDP increased about the same proportion as under FDR’s New Deal Programs prior to World War II.  But was Reagan trying to turn around the economy from the Great Depression?  No, the economy wasn’t in great shape when Reagan took office but nothing as bad as the early 1930’s.

So what was all the deficit spending for? Was spending for infrastructure expansion and improvement like under Eisenhower? No. Was spending for technology advancement like under Kennedy/Johnson with the space program? No.

Reagan spent money on the military.  Why?  Unlike under Trump when the president kowtowed to Russia, Reagan actually believed, or seemed to believe Russia was a threat.  Therefore, the US must outspend the Russians.

The military spending did stimulate the economy.  Republicans, starting with Reagan adopted an unusual economic theory to justify excessive military spending and implement tax cuts.  The unusual theory was a combination of Keynesian economics and trickle-down economics. Keynesian economic theory, which states that deficit government spending will help stimulate the economy, was redefined under Reagan to apply only to military spending and not to any other government spending.

Why the narrow and bizarre definition? Because Republican voters like the idea of a strong military.  Therefore, government spending for the military was OK but deficit spending for non-military spending.  Only spending for the military would stimulate the economy.  As a result, all non-military government spending should be based not on Keynesian economics but on trickle-down economics.

The short version for trickle-down economics starts with the assumption there is an ideal maximum marginal tax rate that will generate the most tax revenue for the government.  The idea was proposed by Arthur Laffer and known as the Laffer Curve.  A marginal rate above the ideal would result in lower government revenue.  What the Laffer Curve also indicates, but Republicans refuse to acknowledge, is a maximum marginal rate less than the ideal rate would lower tax revenue.

Since Reagan, Republicans have insisted that cutting maximum marginal income tax rates will stimulate the economy.  And because the economy then will grow faster, overall tax revenue will more than make up the amount lost by the lower rate.  Why does trickle-down economics work?  According to Republican logic, those who have the most wealth already will use the extra money from the tax cut to invest in new plant and equipment.  The new plants will then hire new workers and everyone will be better off since income will trickle down to all economic levels.

If you’re a bit confused by this claim, you’re thinking clearly.  The rationale for trickle-down economics is so absurd that an eight-year old can see the flaws. Who is going to buy all the additional production from these new plants if regular consumers don’t have more money?

Trickle-down economics is more like “Field of Dreams,“ build it and they will come.  Trickle-down was described by George HW Bush as “voodoo economics.“  And he’s been proven correct repeatedly.  There is no empirical evidence from any economy that trickle-down economics works.  None, nada, zero.  Yet to this day, Republican tout voodoo economics as the solution – the 2017 Trump tax cut, the most recent example.  What happened after the 2017 tax cut?  Huge amounts of money were transferred to the wealthy, and oh, yes, the deficit ballooned to record levels rather than shrinking.

#3, Republicans trashing rather than conserving the environment. Republicans need to look up the definition of “conserve,” the root of “conservative.”  I’ll save them the trouble, “protect (something, especially an environmentally or culturally important place or thing) from harm or destruction.”

Republicans appeal to the religious right. I guess fundamentalist Christians have forgotten what it says in the Bible about conservation. There are innumerable references to conservation, beginning in Genesis, about leaving the earth a better place.

Who signed legislation forming the EPA?  A Republican.  Yet Trump and Republicans have made every effort to dismantle the EPA.  According to Republicans, “Why make any effort to clean the air and water when we have mining dollars supporting our campaigns?  Mining means jobs.  You environmental socialists, go back and hug your trees!”

Under Trump, and to extent all Republican presidents back to Reagan, if members of Congress or some of the states wouldn’t support reducing air-quality and water-quality standards, then the president would try to limit any enforcement by EPA.  While Trump was the most extreme in trashing EPA, his behavior fit a pattern of Republicans beginning with Reagan.

What’s happening to the Republican Party now?  The Party is splitting in two. One faction wants to ratchet up the 40 years of anti-government actions started by Reagan and magnified by Trump. The other faction wants to regroup and begin to act like grown-up, principled conservatives.

What does the current bi-furcation of the Republican Party mean for the 5th US Revolution, the Revenge Revolution?  For one, the Trump crazies feel emboldened after the January 6 attack on the Capitol and other than a few participants too stupid to think social media posts couldn’t be viewed by the FBI and other agencies, have suffered no consequences.  And, many Republicans in Congress have aligned with the crazies.

As noted earlier in earlier entries, increased enforcement of laws by Justice under Biden may encourage the crazies to form small cells. The small cells could operate a guerrilla war against high-profile Democrats, judges and Republicans who appear to counter Trump’s wishes.

The part of the Republican Party trying to return to some conservative principles also faces a risk.  To the Trump crazies, the principled Republicans are more like Democrats, which the crazies now view as synonymous with socialists.

The threat of the crazies is not going away.  While Trump already has faded and may end up in prison, the crazies will rally around a new leader.  It may take some time for the leader to emerge.  However, the US must take strong action now to eliminate as many cells of crazies as possible.

The principled Republicans need to form another political party, call it the Lincoln Party.  And Democrats need to work with the “Lincoln Party” to thwart actions by scared-dog, Error-404 Republicans in Congress.

If there is not a new party for principled Republicans that can work with Democrats, what the US faces is not only a cultural revolution but one where democracy is eroded and replaced by the fascist right.  The clock is ticking and not much time is left.

Booklets you might find interesting: 

#402. Plop, Plop, Fizz, Fizz. Oh What a Relief He is.

25 Monday Jan 2021

Posted by in Gov't Policy, Post Trump Presidency, Uncategorized

≈ Leave a comment

Readers: The entries in this blog are built around the assumption there will be a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether a revolution in the US is possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Entry #400 was the most recent “sense check.”

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download.  See list at end of this entry.

Beginning #378 the entries began focusing on a post-Trump administration.  We’ve started a post-Trump presidency and working toward a post-COVID world, even if post-virus is a ways away.  Comments and suggestions welcome.

ENTRY #402: The inauguration of Joe Biden reminds me, and apparently many others, of a long-ago Alka-Seltzer commercial, “Plop, plop, fizz, fizz, oh what a relief it (he) is.”  Within hours of Biden/Harris being sworn in, there was a noticeable change in the attitude of the White House and a change in the attitude of government agencies.

Adults were back in charge. Rational policies were being outlined and some implemented.  Biden issued a series of Executive Orders restoring many policies of previous administrations – from Obama to Bush to Clinton and even some policies as far back as Nixon – that had been overturned by Trump.

The Biden administration also began talking honestly about the problems trying to get everyone vaccinated against COVID-19.  A solution to every problem was not forthcoming but most adults started feeling more at ease.  The anxiety level in the US and worldwide dropped precipitously.  Biden may become known as the Alka-Seltzer president.

Will the Alka-Seltzer reduce the likelihood of the Revenge Revolution?  The Revenge Revolution began with raid on the US Capitol.  What remains unclear is the next step for the raiders.  Interestingly, very shortly after the inauguration, some on the far right – Proud Boys, for example – began distancing themselves from Donald Trump, calling him weak.  Soon after the Proud Boys declaration other far-right groups began distancing themselves from Trump.

With Trump out of favor, and out of power, some in the Republican Party have started auditioning to replace Trump – Senators Cruz and Hawley, e.g.   But so far no high-profile individual has emerged as the clear leader.

Does the lack of a leader reduce the danger of the far right militia groups?  I would characterize the lack of a leader, especially one inside the Beltway, more as a temporary pause in activity rather than any change in attitude by these organizations.  Only the most naïve would assume the groups will become true patriots rather than wanna be fascists.

The religious right is also searching for a leader.  Even though president Biden has a long history of commitment to Christianity – a commitment orders of magnitude more than Trump – some on the right, most visibly Franklin Graham, cannot allow themselves to support the Biden administration.  Franklin Graham went so far as to support the attack on the US Capitol.

Give the remarks of Graham et al, one has to ask, “What does the religious right want in a president?”  Apparently, even though Biden represents well over 90% of what the religious right believes, the religious right seems to demand the president support them 100% or be defeated. How the religious right reconciled supporting Trump I still don’t understand since his behavior was antithetical to virtually every tenet of Christianity.

Fringe groups and wackos are not new to the United States. Most of the time the fringe groups received little support and/or little publicity. That is until Donald Trump encouraged far-right groups, militant and religious to overturn the will of the populous and enshrine him as dictator.

With the Alka-Seltzer president calming nerves and seeking unity rather than division, some Trumpsters sympathetic to the fringe groups are likely to migrate toward the center.   This migration may push the fringe groups farther right.

Another push right could come from reaction to many of Biden’s Executive Orders, which were aimed at immigration and/or disadvantaged groups.  Examples of EO’s include lifting the ban on Muslims from various countries from entering the US; extending protection for DACA entrants and a number of other programs. In addition, the Biden administration has discussed and/or proposed legislation addressing a number of other cultural and economic equity issues.

How will the fringe groups react to Biden’s EO’s and a more centrist approach?  The fringe groups are not going to disappear.  Unfortunately, if the groups do not find a leader inside the Beltway, they could become more reactionary and more dangerous.  Without a charismatic leader, the groups could begin to operate locally.

The invasion of the Michigan Capitol then the US Capitol demonstrated how hard it is for law enforcement to prevent gorilla skirmishes. Given the number of people with military backgrounds who have been arrested for participating in the raid on the Capitol in Washington, many of the smaller cells are likely well trained in military tactics.  As a result, it will be nearly impossible for law enforcement to prevent groups from carrying out targeted raids.

One of the most difficult tactics to prevent, and one of the most devastating, would be snipers trying to assassinate key Congressional leaders and/or key state officials.  Even a few such attacks over a number of months would create nationwide chaos.

The Biden administration has made a great start toward bringing the country back together.  One example is the boyfriend of the woman who stole Nancy Pelosi’s laptop.  She was found not because of the FBI investigation but because he turned her in.

Is the action of the boyfriend a single data point or maybe a change in attitude by many people?  Numerous people who participated in the raid on the Capitol were turned in by family and friends.  Maybe, just maybe there is enough change there would be significant backlash by family and friends to actions by or even participation in far-right groups.

Hate is not going to disappear but can be managed more effectively with a concerted effort by participants in all levels of government, the media and the general population.  With such an effort the Revenge Revolution will be more of a cultural revolution and less of a fighting revolution.  Without a concerted effort, the US could slip into another civil war.  We’ve already witnessed the danger to democracy during the Trump presidency and with the attack on the Capitol.      [End of #402.]

Booklets you might find interesting:

#395 Post COVID-19 — How Do We Repurpose Human Capital? (Part 2)

28 Wednesday Oct 2020

Posted by in Economics, Education Issues, Gov't Policy, Societal Issues, Tech Tsunami, Uncategorized

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Readers: some of the dialogue in this blog is set in the future (sometime after the year 2020). Entries addressing events in the the future assume there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether in the next few years, a revolution in the US is still possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Most recent sense check, ENTRY #387.  

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download:

Prelude to the current series of entries: I’ve concluded Trump is a lunatic and the administration filled with lapdogs save a couple of people at CDC.  Instead of wasting time commenting on actions by Trump, I thought it more productive to begin discussing what happens in the US once the coronavirus is more under control.  #378 began the series. At this point not sure how many entries.  Comments and suggestions welcome.

ENTRY #395: What has happened to unemployment during the Coronavirus? How severe is unemployment?

Counting the number of people who have filed unemployment claims paints a grim picture. Beginning March 2020, claims per week jumped dramatically.  Toward the end of March, new claims for unemployment for just one week  totaled nearly 7 million.  New claims per week have fallen since but seven months after the peak in March new claims are on average more than 3x higher than earlier on 2020.

Keep in mind these numbers are new claims. The numbers represent new people who are now unemployed. Obviously, some people who filed claims will be called back to work or find another job, but the net amount of those unemployed keeps increasing.  Further, throughout the 2020/2021 winter, the number of weekly new claims for unemployment is likely to remain extraordinarily high by historic standards.

What about the people who are self-employed?  You know, 1099 contract workers, consultants, musicians, even undocumented workers?  What’s happened to their workload?  They all pay taxes.

Contract, or gig workers, have seen jobs dry up as well. There is a provision in the CARES Act (Coronavirus Aid, Relief and Economic Security) that enables gig workers to file for a limited amount of economic relief.  The program is administered by states, which makes tracking claims nearly impossible. 

Nevertheless, if we add the number of gig workers seeking  CARES-based income supplement to those filing unemployment claims, the total likely exceeds 1,000,000 every week since early March 2020.  Like those employed by companies, the number of gig workers working fewer hours will increase during the winter.

Some may comment, “Is unemployment really that bad? I mean, the unemployment rate lately has been less than 10.0%. And it bounced back fast following the spike in the Spring.  Early in the Obama Administration, unemployment reached 10.0% and it took years to decline. What’s the big deal?  Trump’s done much better than Obama ever did.”

How Is the Unemployment Rate Calculated?  The unemployment rate is the ratio of those unemployed and looking for work to those in the workforce – those employed and unemployed.  Let’s say there are a thousand people in the workforce. 100 are unemployed and actively looking for a job and 900 are working. The unemployment rate would be 10.0%, or 100/1,000.

Now let’s assume that 50 of the 100 unemployed get discouraged and quit looking for a job. The new unemployment rate would be 50 actively looking for work / 950 (900 employed + 50 actively working), or 5.3%.

What happened to the unemployment rate?  The rate dropped from 10.0% to 5.3%, even though the only change was 50 people became discouraged and quit looking for work.  

What Else Does the Unemployment Rate Not Count? Let’s say that of the 900 people working, 200 are being forced to work part-time because their employer reduced their hours.  Even though working part time, the 200 are counted as “fully employed” when calculating the unemployment rate.   

So what’s the real unemployment/underemployment rate when one considers those who are only working part time and those who are so discouraged about finding another job they quit looking for work?  We know the rate is not 5.3%, which would be the official government number. 

The real rate is more like 30.0% — 200 underemployed, 50 unemployed and looking and 50 unemployed but who’ve quit looking.  In our example, there are 300 out of 1,000 who are either unemployed or underemployed and looking for more work.

If the numbers in this simple example seem ridiculously high, the 30.0% rate probably understates the true underemployment rate the US experiencing in Fall 2020.  Even for professional economists, calculating a reasonable estimate of unemployment/underemployment is nearly impossible because the Trump Administration refuses to disclose what most of us would consider any credible information about many parts of the economy.

As stated in Entry #394, the unemployment problem will not go away post COVID-19. During the initial lockdown to control the virus, organizations began to understand how to conduct operations with far fewer people than in the past. Consumers also began to think differently.

The change in thinking will affect some sectors of the post-COVID-19 economy more than others.  Portions of the service sector will be particularly hard hit.  Even with a vaccine, how many people will be willing to attend sporting events if there are thousands of other people jammed next to one another? How many people will be willing to eat in crowded restaurants, travel on crowded airplanes, ride jam-packed trains/buses, stay in unfamiliar hotels, go to amusement parks, etc.?  While we won’t know the extent for a number of years, assuming a 25-30% loss of pre-COVID-19 travel-and-entertainment-related jobs would be a reasonable estimate. 

Manufacturing output should rise post-virus but the number of jobs in manufacturing will continue to erode relative to output.  The trend will continue to replace workers with more automation, use of sophisticated software and robotics.

What’s the Solution? After mulling over this problem for a number of months, my conclusion is a two-pronged solution is necessary.

  1. WPA-like programs that focus on building/rebuilding critical infrastructure throughout the United States. Yes, such programs require lots of manual labor.  And no, such programs are not a long-term solution.  However, WPA-like programs will employ a portion of the workforce that will have an extremely difficult time transitioning to a digital-based economy. Plus, WPA-like programs will address much of the US infrastructure that needs repairing and upgrading.
  2. Repurposing many existing jobs.  Initial repurposing training for some jobs could be completed in 10-12 weeks.  The basic training would be followed by a job using the skills learned and additional on-the-job training (OJT). 

Will some of the jobs after basic training be considered “make work”? Yes, but any kind of training includes time to practice and expand basic skills.

When I joined General Motors following undergrad (many moons ago), I worked at Cadillac HQ in Detroit.  At the time the Clark Street Cadillac facility was huge, including two assembly line, paint shop, welding, full engine machining and a bunch of other stuff.  The campus totaled nearly 50 acres and included many buildings with 3-4 stories. Who knows how many million square feet of floor space.  For someone who likes cars and manufacturing, the facility was like one giant candy store.

My initial assignment was in a department called “Project Control.”  The department’s primary function was to evaluate various proposed expenditures – new equipment in Engine Machining Department, e.g.

Truth be known, most of my early assignments really were “make work,” since the guys in the department who’d been around awhile already knew the answer. But I’d be given an assignment and off I go to find some department located in this huge complex. 

The purposes of these assignments were: (i) can he find the way out to the department and back without getting lost too many times; (ii) help me begin to understand the breadth and depth of the complexity involved in manufacturing a car/truck; (iii) can he understand the scope and purpose of the proposed project and write a coherent recommendation?

What do I remember from those early days on the job? Frankly I do not remember any specific project. What I do remember is beginning to understand that manufacturing components for a vehicle and then assembling that vehicle is an incredibly complicated task, but also one that fascinates me to this day.

I also remember discovering all kinds of places in the plant to eat. One cafeteria, for example, had great pastrami sandwiches every Thursday. I also remember finding vending machines that dispensed ice cream bars. The bars would just fit inside the canister for the plant-wide pneumatic tube system.  While on these assignments one of my tasks might be to send ice cream bars back to the office via the tube system.

While some of those assignments were make-work, I think the learning from those assignments served me and GM well for my entire career. I’ve also applied many of the lessons learned to situations post GM.

Now back to the problem at hand.  How do we, societal we, train people to transition to a more digital economy?  First, we need to understand and appreciate that the training will not be completed overnight. We also need to understand that some of the projects, especially those early in the training cycle, will seem like make work. And, we also need to understand that some people will not be able to make the transition as effectively.

However, if we don’t start transitioning now, then the US will continue to fall behind countries with more advanced or more disciplined education systems and/or fall behind countries that have fully committed to a digital economy.  How do we truly make America great again?  To be continued, including some discussion about changes in approach to education, from K through grad school.

#394 Post COVID-19 — How Do We Repurpose Fixed Assets and Human Capital? (Part 1)

21 Wednesday Oct 2020

Posted by in Economics, Education Issues, Gov't Policy, Societal Issues, Tech Tsunami, Uncategorized

≈ Leave a comment

Readers: some of the dialogue in this blog is set in the future (sometime after the year 2020). Entries addressing events in the the future assume there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution, a list of earlier revolutions and the author, Entry #1.

Periodically I write a “sense check” to assess whether in the next few years, a revolution in the US is still possible or whether the entire exercise is based on a statistical aberration — i.e., a roughly 50-year cycle between major upheavals in the US.  Most recent sense check, ENTRY #387.  

Some of the entries are part of a series.  Several series are available as easy-to-read booklets for download:

Prelude to the current series of entries: I’ve concluded Trump is a lunatic and the administration filled with lapdogs save a couple of people at CDC.  Instead of wasting time commenting on actions by Trump, I thought it more productive to begin discussing what happens in the US once the coronavirus is more under control.  #378 began the series. At this point not sure how many entries.  Comments and suggestions welcome.

ENTRY #394: Note: Yikes, the craziness of the Trump administration has continued the last couple of weeks. Trump and a substantial portion at his staff contracted the COVID-19.  After a few days hospitalization at Walter Reed Army Medical Center, and after taking a host of unapproved drug cocktails plus some steroids, Trump claimed that he was feeling better than any time in the last 20 years.  Must have been a rough 20 years.

Then, in only Trump fashion, he claimed getting COVID-19 was a blessing from G_d. Of course, who else would G_d choose to save the world from this scourge? Mother Teresa? An epidemiologist? No, the Harvard/MIT grad, Trump. Well, maybe Trump didn’t go to Harvard or MIT but just ask and he’ll tell you he’s a stable genius and one of G_d’s favorites.

A bit of irony was part of Trump’s treatment at Walter Reed included cells obtained from an abortion. Where was the outrage from Trump and the far-right about stem cells from an abortion? Cat apparently got their tongue.

More seriously, and the focus of this entry is the major restructuring of the US economy that’s going to occur whether or not there is a vaccine or even cure for COVID-19. The US is faced with an economic upheaval that may rival what occurred during the first and second phases of the Industrial Revolution.

Industrial Revolution Phase I started in earnest around 1800 with the introduction of machines and devices that replaced handcrafting. These machines could complete a task in a fraction of the time and with higher precision than the work done by hand.  Phase I also benefited from the refinement of the steam engine, which allowed the engine to power such mobile devices as a locomotive.  The locomotive enabled the creation of a railroad network to deliver goods to more locations.  Steam-powered tractors used in agriculture resulted in significantly higher output per man-hour of labor.

What I’ve labeled as Phase II of the Industrial Revolution started about 1900.  Two major breakthroughs: (i) introduction of the internal-combustion engine, which was smaller and lighter than a comparable output steam engine, and (ii) standardization of parts. Standardizing parts, originally developed by the rifle manufacturing industry for easy replacement in the field, was later adopted by manufacturers of transportation – automobiles, locomotives and aircraft.  Standardization enabled the use of assembly lines, which lowered labor cost per unit and increased quality.

Phase II also resulted in workers shifting from agriculture to manufacturing jobs.  The shift required workers to have a different set of skills, although for most workers skills required for jobs in manufacturing were limited and could be learned on the job. 

The vast majority of manufacturing companies, especially automotive, were based in the Northeast and Midwest, both of which experienced a major influx of immigrants and southern blacks leaving the farm.  While the manufacturing companies made enormous profits, hourly workers were not well paid until the companies faced work stoppages as the UAW and other unions gained membership.  Following WWII the economy steadily improved and wages for factory workers increased to the point that many enjoyed what could be called a “middle-class lifestyle.”

The plethora of well-paying manufacturing jobs began to erode in the 1980’s with the introduction of: (i) companies shifting production of goods to plants outside the US; (ii) robotics and somewhat later, artificial intelligence-based programs.

Rather than the disruption being caused by a change in required job skills, as seen in Phases I and Phase II of the Industrial Revolution, jobs were shifted outside the US due, in part, to: (i) US tax laws on corporations, which ended up favoring job shifts rather than penalizing job shifts; (ii) erroneous analysis of costs by the employer.  Shifting jobs outside the US accelerated further in the 1990s and by the early 2000s, a substantial number of manufacturing jobs had been shifted outside the US.

The analysis of costs justifying the shift to plants outside the US often focused primarily on labor costs per unit rather than a more holistic approach that accounted for all costs associated with manufacturing.  High labor costs were blamed on union contracts and therefore the only way to keep costs down was to move jobs to a different location.  But were labor costs really too high? 

Following is an example I experienced personally.  While the story is a data point of one, my experience is the thinking of the Board was fairly typical among many companies, large and small. 

One of my jobs post GM was running a company in northern California that assembled electric scooters.  When I took the job the Board said to shift assembly out of northern California (Sonoma County) to China, where labor costs were much lower.  I resisted and within seven months we had increased productivity (with virtually no capital expenditures) to a level where we could double the labor costs in California and pay the Chinese workers zero and it would have been cheaper to continue to produce in California.  Why?  When all related costs were considered, producing in Northern California – in the middle of wine country, no less – was cheaper.  Such a holistic approach to calculating costs apparently was not considered by many companies. 

In addition to being affected by jobs shifting elsewhere, many assembly and other semi-skilled workers in the US are facing another growing threat — robots. The increased use of robotics and AI represents a fundamental shift in how goods are designed, manufactured, assembled and processed for shipment.  The shipment of these goods to the buyer’s location is going to be disrupted as autonomous vehicles migrate from testbed demonstrations to daily use.    

As if implementation of technology were not enough of a formidable threat, these workers face yet another threat caused by COVID-19. To control the spread of the virus, many employers mandated that staff work from home. COVID-19 restrictions also forced many businesses to close, at least temporarily, although more and more businesses are closing permanently.

Within the service sector, the great unknown is to what degree travel and entertainment and supporting businesses will be changed post-COVID-19.  By the time the threat of the virus subsides, will a substantial portion of the population have become less interested in traveling on crowded airplanes, sailing on petri-dish-like cruise ships with hundreds of others, eating in crowded restaurants, or attending sporting events with tens of thousands of others? 

If so, then many assets supporting travel and entertainment will become obsolete – airplanes, hotels, restaurants, theme parks, cruise ships, large athletic stadia, etc.  Some of the buildings can be repurposed but what does one do with a surplus jet liner, cruise ship or football stadium? 

In the retail sector, the shift toward on-line shopping in not new.  For several decades, the brick-and-mortar retail sector has been facing disruption.  The shift toward internet sales, both personal and business, started to take hold in the late 1990s, early 2000s. While some of the shift to internet sales replaced transactions previously completed using 800#’s, most of the shift has been new.    

Restrictions associated with COVID-19 have been like a rocket ship propelling the shift forward.  In a manner of months, forced isolation may have accelerated on-line shopping patterns an amount that otherwise would have taken 10-20 years to achieve.  The shift to the internet and the number of store closings generate the question, “What to do with all the empty retail space?” 

Thus, any plan to stimulate the economy post-COVID-19 needs to address job creation as well as how to repurpose many assets associated with the service sector.  One assumption seems certain – the mix of output in US economy will be different post-COVID-19 than pre-COVID-19.  Making America great again will not be looking in the rear-view mirror and trying to recapture what once was.  The Pre-COVID economy and valuation of assets is as long gone as Wally and the Beaver.    

The US, and many countries worldwide, will have a blob of dislocated assets that have little or no value in their current configuration. Repurposing some of the fixed assets could be fairly straightforward.  Office buildings, shopping centers, many factories could be converted into housing, assisted living facilities and schools.  Converting shopping centers to housing seems ideal to help address the shortage of affordable housing in many cities. 

What do we do with surplus airplanes and cruise ships?  Beyond scrap metal, there’s not much use.  What about surplus infrastructure supporting the air-travel industry?  Some surplus airfields could become ideal recreation centers.  Or, the airfield could be reforested to support wildlife and help address global warming. 

The more difficult problem is how to repurpose human capital.  Without significant training, how do you take someone who was in a semi-skilled job – say an assembly plant or sewing clothing – and have the person perform in a job requiring a more advanced skill set?  How does society repurpose service workers, especially those in travel-related Industries? 

Even many semi-skilled, white-collar workers will be displaced post-COVID-19.  As organizations adjust to more remote working, some middle management jobs likely will be eliminated.

Repurposing the human assets is a daunting task for government and organizations.  In terms of required job skills, Phase III of the Industrial Revolution will be the opposite of Phases I and Phase II.  In Phases I/II new jobs often required less skill, or a skill that was relatively easy to learn on the job. 

Phase III job skills will be more advanced.  Robots and AI-based machines can replace many existing lower-skilled jobs.  OJT will be very difficult.  An example.  There is a company in Fort Wayne, IN that makes exhaust systems for many auto OEM’s.  The plant runs 24×7.  Despite the high output, the plant has few employees.

At first glance, bending pipe a few ways for an exhaust system seems simple enough.  However, the exhaust system might be different for the same model car/truck with a different engine.  Plus there are at least three different auto OEM’s serviced by this plant, which complicates production schedules. 

Bending pipe is a bit more complicated than it seems.  When pipe is bent, one side becomes thinner and the other side of the bend tends to crinkle. 

The Fort Wayne company’s solution to pipe bending and complicated production schedules is a highly automated process to bend the pipe and to change configurations automatically.  Most workers at the plant are skilled in computer programming.  There are no manual “pipe benders.”  The only non-skilled jobs are the lift-truck operators moving raw material to the beginning of and off the end of the line.  In a few years, the lift-truck operators could be replaced by autonomous lift trucks. 

For the US, post-COVID-19 the training of unemployed workers for new skills will be more difficult than repurposing fixed assets.  How do we approach solving this problem? More thoughts in the next entry.  For some guidance, see the existing write-up titled “Technology Tsunami.” (https://usrevolution5.files.wordpress.com/2020/01/tech-tsunami-booklet-with-supplement-1.pdf)