Presidential Bull vs. Chicago Bulls: A Lesson in Income Inequality

In the March 12, 2009, Wall Street Journal, Daniel Henninger suggests in his article, “The Obama Rosetta Stone,” that if you want to understand the presidential mind of Barack Obama, you only have to memorize figure 9 of his 2009 budget summary, entitled "A New Era Of Responsibility: Renewing America's Promise." Figure 9 – page 11 of the document – is a graph entitled “Top 1% of Earners Have Been Increasing Their Share,” and is attributed to “Piketty and Saez (2003).” According to this graph, over the period 1980 through 2006, the percentage of total income held by the top 1% has increased from 10% to 22%.  Page five of the report, in the section entitled “Inheriting a Legacy of Misplaced Priorities,” the President summarizes this trend toward greater inequality as follows: “while middle-class families have been playing by the rules, living up to their responsibilities as neighbors and citizens, those at the commanding heights of our economy have not … There is nothing wrong with making money, but there is something wrong when we allow the playing field to be so tilted so far in favor of so few … It’s a legacy of irresponsibility, and it is our duty to change it?”

But is the income inequality trend inherently “bad” or does it in fact produce a more prosperous civil society for everyone?  The facts tell a different story, and perhaps it is the President’s errant economic ideology that has given us the worst economy since the Great Depression.

First, who are "Piketty and Saez," the thought leaders behind our President’s economic ideology and the harbingers of this disturbing trend? Thomas Piketty and Emmanuel Saez are French economists. They are “rock stars” of the intellectual left.  Their specialty is “earnings inequality” and “wealth concentration.”  The President’s assumption, based on their theory, is clear: income inequality and concentration of wealth are bad, and its government’s job to see that it is properly allocated.

So let’s see if this theory is supported by actual historical fact.

In the July 10, 2012Wall Street Journal article entitled "Air Jordan and the 1%," by Matt Schoenfeld, the author states "Critics today often point to the 1950s as the last years before American society became so divided between haves and have-nots. At the end of the 1950s, America's "Gini coefficient" – the most common measure of income inequality, running from zero (least unequal) to 1 (most unequal) – was 0.37. Since then, the coefficient has risen to 0.45.  Even though income inequality has increased, in 1959, more than 20% of families fell below the poverty line. By 2010, this number had fallen to just over 13%.   Mr. Schoenfeld states, “Real per capita GDP today is 270% higher than it was in 1959. A family in the bottom fifth [20^th percentile] of the income distribution today makes the same amount in real terms as a family earning the median income in 1950 [50^th percentile]. So inequality might have increased, but so too – dramatically – has the quality of life." In 1992 only 20% of American families below the poverty line had a dishwasher, 50% had air-conditioning, and 60% owned a microwave. By 2005, these figures were 37%, 79%, and 91% respectively.  Apparently, income inequality does not translate directly into economic prosperity inequality.

To illustrate his point in terms even the most economically unsophisticated American can understand, Mr. Schoenfeld then makes his point by demonstrating how Michael Jordan’s so-called “income inequality” on the Chicago Bulls raised the overall wealth for all players. In 1986, the Bulls median player salary was $300,000. The team's lowest paid player made $135,000. Its highest-paid player made $806,000. The team’s “Gini coefficient” was 0.36 — about the same as it was for American families in 1950. After Michael Jordan joined the team in 1984, the team's popularity and revenues soared. By 1998, the year that Jordan retired, the median income was $2.3 million. The lowest paid player made $500,000. The highest-paid player (Michael Jordan) made $33 million. The “Gini coefficient” had nearly doubled to 0.67 –  50% greater than America’s current Gini coefficient. Jordan’s salary – $33 million – consumed over half the payroll. Even so, everyone else was better off. The median player in 1998 made seven times more than the median player made in 1986. The lowest paid player in 1998 had a salary quadruple that of his 1986 peer.

Detractors are quick to point out that Mr. Schoenfeld’s analogy is a poor one. They state that today's wealthy inherited their money or acquired it without any commensurate value to society. This is simply false. According to 10 Secrets that Millionaires Keep, by Daren Fonda of Smart Money, the financially successful – whom he defines as persons having a net worth of $1 million or more – are 90% more wealthy than other US households. They have annual incomes of $366,000 per year.  They are in the top 1% of taxpayers. Half of them earn their wealth from small business, one third from large corporations, and less than 3% through inheritance.  Most come from families, which would not be classified as wealthy, and have enjoyed their financial success for less than 15 years. Fifty-nine percent attended a state college or university.  They entered college with an average SAT score of 1,190. Their median grade point average in college was 2.9.  In their own words, their secrets to success were: hard work, discipline, education, and treating others with respect. They are just like everyone else, except they translated their opportunity into exceptional performance.

So here is the question.  Do you believe the Chicago Bulls or the President’s bull?  

Open Letter to Senator Warner re: Arms Trading Treaty

Dear Senator Warner:

I am in receipt of your correspondence by e-mail.  Thank you for responding.

 I have included at the end of this letter a copy of your response to my original correspondence so that you can refer to it. 

You make the point that Treaties do not trump the Constitution.  Let’s assume that is correct, in theory.  In practice they are viewed as Contracts whose termination provisions vary, and they are enforceable in International Courts of Law.  As obligations in international law are traditionally viewed as arising only from the consent of states, many treaties expressly allow a state to withdraw as long as it follows certain procedures of notification. Many treaties expressly forbid withdrawal. For example, human rights treaties, for example, are generally interpreted to exclude the possibility of withdrawal, because of the importance and permanence of the obligations.  Other treaties are silent on the issue, and so if a state attempts withdrawal through its own unilateral denunciation of the treaty, a determination must be made regarding whether permitting withdrawal is contrary to the original intent of the parties or to the nature of the treaty.

 So, let’s make this discussion practical.  First, the Secretary of State, Ms. Clinton, is not just negotiating the Arms Trading Treaty which was the subject of my original letter to you, she is currently negotiating five UN treaties:  Rights of the Child Treaty, Arms Trading Treaty, Law of the Sea Treaty, International Criminal Court, and Code of Conduct in Outer Space.  So, let’s assume we become a signatory to The Rights of the Child Treaty.  When Prime Minister Cameron of Great Britain, a signatory to that treaty, cut welfare benefits as part of his austerity program, he was sued by the Child’s High Commissioner in Britain under the Treaty of the Child. In effect, he had to defend his action, which was permitted by his constitution, against the provisions of this Treaty. Translation: if the United States were under this treaty and we decided to cut entitlements to balance our budget, would we be sued?

So the question is this.  If you, like I, believe in United States national sovereignty, God-given rights, and individual self-determination, as expressed in the Constitution of the United States, why would one wish to place our Country into any Contract – much less five of them – with others who do not hold our values, only to have to defend those values when they are questioned, through International Court of Law whose judgment is binding upon us?

The answer is pretty straightforward: Ms. Clinton, like the President, stands in opposition to our Constitution and the limitations it places upon government in order to protect individual rights.  Instead of following the Constitution and amending it, this Administration sees a path forward to “transform it” by subjugating our courts of law to an international body.

 Bottom line:  one or more of these treaties may be brought before the Senate in the lame duck session of Congress and passed like health care and other measures, on Christmas eve.  Hopefully, you will consider your Constitutional oath before you cast that vote.

Sincerely,

 //Kristin L. Allen//

---------------  ORIGINAL LETTER ------------------------

Dear Mr. Allen,

 

Thank you for contacting me to share your views regarding a potential United Nations (U.N.) arms trade treaty, which is currently being negotiated at the U.N. Conference on the Arms Trade Treaty in New York City.

The U.N. regularly drafts and proposes treaties on a variety of issues that the United States has the ability to consider as a member of the organization. The dialogue surrounding whether to establish an arms trade treaty is ongoing. Any U.N. treaty must be ratified by two-thirds of the Senate to be applicable to the United States. However, U.N. treaties do not trump the United States Constitution.

Regarding Second Amendment rights generally, I realize that there are very strong opinions on both sides of the debate. I support public policies that ensure the responsible and appropriate use of guns, as well as efforts to reduce gun-related crimes through increased enforcement and background checks. I do not, however, support laws or regulations that infringe on the Second Amendment Constitutional right of law-abiding citizens to keep and bear arms.

Please be assured that I value the thoughts that you have shared with me on this important issue. I will keep your views in mind should any legislation on this matter come before the full Senate in the future.

Again, thank you for contacting me. For further information or to sign up for my newsletter please visit my website at http://warner.senate.gov. 

 
Sincerely,
MARK R. WARNER
United States Senator

How Obama Wins Even If He Loses: Going Short Against the “Ballot” Box

On January 25, 2010, President Obama told ABC News he remained determined to tackle health care and other big problems despite the political dangers to his presidency: "I'd rather be a really good one-term president than a mediocre two-term president."  It appears he may get his wish, at least on serving one term. How does he achieve his goal of being “a really good one-term president,” at least in his own eyes?  The answer is that he sets in place political mechanisms that ensure that America is “fundamentally transformed” even if he is not re-elected: in financial jargon, he “goes short against the box.”

“Going short against the box” is taking a leveraged financial position that ensures that a portfolio’s value is preserved, independent of market movement.   It works like this.  Suppose you own 100 shares of stock at $10 per share ($1,000) and believe it may either appreciate or depreciate 30% in value within the next month.   To protect financial value, you borrow from your broker an additional 100 shares of your existing stock for a period of one-month and pay the broker 5% of the value ($50) for the right to hold the stock and exercise its rights. You then sell the borrowed shares in the market for their current value ($1,000).  If you are correct, and the market falls 30% within one month, you simply buy back the 100 borrowed shares from the market at $700 and return them to the broker within one month.  You net $250 on a $50 investment.  If you are incorrect and the market goes up 30%, you can sell your portfolio shares at $1,300 less the $50 insurance, and return the shares to the broker. It’s a win-win: for $50, you protected your portfolio’s value. 

So what has this to do with politics and President Obama’s strategy?  Actually, it’s quite simple.  While America is “betting” that our Country’s prospects are going to improve, the President is “betting” that they will not.  To hedge his bet, he is putting in place a strategy that will “fundamentally transform” America’s form of government and economy while ensuring that it is constitutionally difficult for any future Congress to undo the damage that has been done.  He is not motivated by his oath to uphold the Constitution, which he views as an antiquated document that places limits on what government can do instead of what it “should do” for its citizens, especially with respect to wealth redistribution. Instead, he is motivated by his progressive / socialist ideology that our constitutional republic and capitalist economy is a direct impediment to implementing global governance and social justice. I leave it to the reader to obtain and read Dinesh D’Souza’s book The Roots of Obama’s Rage, which is the best psychological / motivational study of the President that has been published to date.

What is the evidence that the President is “going short against the ballot box?”  There are three key components to his strategy that must be completed before the end of 2012.  If implemented, they will effectively allow him to circumvent Congress and make it irrelevant as a decision making body:

·        Marginalization of the Constitution through ratification of five UN-sanctioned international treaties.

·        Centralizing government power in the executive branch through implementation of selected executive orders and regulatory overreach.

·        Financial collapse of the economy through continued deficit spending.

The remainder of this article presents evidence that this strategy is in play.

UN Treaties.  Currently, Secretary of State Hillary Clinton is actively negotiating five United Nations treaties, which if ratified by the Senate in a lame duck session of Congress and signed by the President prior to his departure in January 2013, will bind the United States to international laws that are antithetical to Constitutional principles. Further, if ratified and signed, they may only be set aside by having the signatories to the Treaty release us or by passing Constitutional amendments.   Their provisions will be legally enforceable in a United States Court of Law.  These treaties also have one other thing in common: on the surface each addresses a moral concern for which people have empathy. However, the price associated with adjudicating these concerns through the UN is nothing short of tendering our personal liberties.  These five treaties are briefly described below.

Rights of The Child Treaty.  This treaty will create a legal requirement that the United States contribute foreign aid to ensure that other less fortunate nations have enough money to feed and clothe their children.  This Treaty was originally entertained by the G.H.W. Bush and W. Clinton administrations because it addresses international child prostitution and human trafficking – issues that are addressed in other places – but was rejected because of its implications to United States sovereignty.  It was signed by other nations, including Great Britain.  When Prime Minister Cameron cut welfare benefits as part of his austerity program, he was sued by the Child’s High Commissioner in Britain under the Treaty of the Child.  Think President Obama will not sign it?  Think again.  Senate Bill S. 2433, The Global Poverty Act, was introduced on the Senate Floor by then-Senator Barack Obama on December 7, 2007.  It ultimately failed, but would have required the U.S. President to develop and implement a comprehensive strategy to further the United States foreign policy objective of promoting the reduction of global poverty, the elimination of extreme global poverty, and the achievement of the United Nations Millennium Development Goal of reducing by one-half the proportion of people worldwide, between 1990 and 2015, who live on less than $1 per day. This would have required the United States to add 0.7 percent of the U.S. gross national product ($23 billion to $98 billion a year) to its overall spending on Humanitarian Aid. The bill was endorsed by The Borgen Project, Habitat for Humanity, Bread for the World, RESULTS, and CARE.

UN Small Arms Treaty.  This Treaty is intended to prevent private citizens from selling arms overseas.  The fact is that 90% of all arms sold overseas are sold by governments.  The real intent is to require all signatories to institute a method for registering and controlling arms within their borders and enforcing these laws through the UN.  United States citizens would be denied their Second Amendment rights.

The Law of the Sea Treaty.  The Law of the Sea Treaty gives the UN veto power over the use of the United States territorial waters and would require that the US cede half of its offshore oil revenue to the UN.  Like the Kyoto Protocol, which pretended to be an effort to save the earth from the effects of the industrial revolution, LOST pretends to be an effort to protect the world's oceans from environmental damage and remove its natural resources as a cause of potential conflicts between nations. Like the Kyoto Protocol, LOST is an attempt at the global redistribution of power and wealth, by giving veto over all of mankind's activities to a global body — in this case something called the International Seabed Authority, located in Kingston, Jamaica. The ISA will have the power to regulate 70% of the earth's surface, placing seabed mining, fishing rights, deep-sea oil exploration, and the activities of the U.S. Navy under control of a global bureaucracy. It provides for a global tax that will be paid directly to the ISA by countries seeking to develop the resources in and under the world's oceans.

International Criminal Court.  In 1994, the UN’s International Law Commission presented its final draft statute for an International Criminal Court to the UN General Assembly.  In May 2002, before ratification by the United States Senate, the Bush administration notified the UN that the United States was withdrawing from the International Criminal Court Treaty. As written, U.S. service members and officials would have been put at risk of politicized prosecution and charged with war crimes as a political move by other nations, especially in this age of terrorism.  This in turn would have discouraged U.S. military engagement in the world: a recipe for isolationism. 

Code of Conduct in Outer Space.  In a press statement on January 17, 2012, Hillary Clinton expressed concern about space debris and declared the need to join with the international community in addressing the “problem.” “A Code of Conduct,” she stated, “will help maintain the long-term sustainability, safety, stability, and security of space by establishing guidelines for the responsible use of space.”  Hiding behind this idea of making outer space “green,” is the proposal of an “outer space military” governed by a UN body, which will include many bad actors. This treaty, if ratified, will make Congress irrelevant in matters of space, including missiles, satellites, and any other object propelled into space. This is a very dangerous treaty.

Implementation of Executive Orders and Use of Regulatory Power.  Beyond his pursuit of international treaties, President Obama has signed 130 Executive Orders since entering office. Many of these of these orders are routine; however, the scope and timing of a number of these are circumspect.  When combined with his penchant to by-pass Congress through regulatory fiat, his motivations become clear:  his goal is to expand regulatory power and centralize control in the executive branch, while marginalizing Congressional authority. During his tenure, executive orders and regulatory overreach provide him with the authority and power to “transform America.”  Even if he is not re-elected, in the longer term, it results in policies that achieve the Administrations overarching goal of weakening individual rights, emphasizing collective rights, and redistributing wealth in society. Once set in motion, it will take years if not decades to reverse the damage inflicted on our Constitutional Republic, if it can be reversed at all.  Evidence that this strategy is in play follows:

·        When Congress refused to pass the Dream Act, which would provide a path to citizenship for illegal immigrants, Mr. Obama issued an executive order that directed law enforcement officers to no longer deport certain illegal immigrants.

·        When Congress refused to pass Cap-and-Trade legislation, Mr. Obama directed his Environmental Protection Agency to implement it via a broad reading of the Clean Air Act. As a result the cost of energy will increase and up to eight percent of the country’s energy capacity will no longer be economically viable.

·        When Congress did not pass the Net-Neutrality Act, he directed his Federal Communications Commission to do it unilaterally.  When SOPA and PIPA were rejected by the Congress, he threatened to unilaterally take action – without Senate confirmation – to implement through executive order the UN’s Anti-Counterfeiting Trade Agreement (ACTA).  ACTA is nothing more than an international version of SOPA and PIPA.

·        Mr. Obama instructed his justice department not to prosecute persons using medical marijuana, even though Congress refused to repeal the law that makes it a criminal act.

·        When Congress decided not to repeal the Defense of Marriage Act, he directed his Attorney General to stop defending it in a court.

·        Mr. Obama has demonstrated the same behavior with the states.  Attempts to address illegal immigration at the state level have been blocked by law suits, all while the Federal government refuses to address the border crisis even though they are required to do so under the Constitution.  Drilling on private land for oil and natural gas have been blocked using imagined federal authority to regulate “fracking,” a practice that has historically been the purview of the states.

This list is could be much longer, but it does illustrate the point: the Obama Administration is circumventing Congress to ensure that the command and control structure is in place that allows the President to act with impunity.

The Economy.  The last part of the President’s strategy is to weaken America economically.  One is truly not a slave until he or she is destitute and owns no property or even worse is in debt to his or her enemies.  In this regard, the Obama administration has single-handedly increased our Country’s debt to $15.2-trillion dollars – a  $5-trillion increase in less than four years.    For the first time in the history of our Country, our debt ($15.2T) is greater than our gross domestic product ($14.95T), and our gross domestic product is flattening out. In 2000, the United States’ GDP represented 22% of the World’s GDP.  In 2011 it was 19%, a decline of almost 14%. 

To put our Country’s spending and debt into simple terms, one only has to contrast 2011 tax receipts and expenditures to those in 2000:

·        In 2011, expenditures were $3.6T.  In 2000, expenditures were $1.8T.  This is a 100% increase.

·        In 2011, tax receipts were $2.3T.  In 2011, tax receipts were $2.0T.  This is 13% increase.

·        In 2011, tax receipts ($2.3T) were just sufficient to cover government Entitlements (Social Security, Medicare, Medicaid and other fixed obligations) AND interest on the debt.  Expenditures for Defense AND ALL OTHER FUNCTIONS OF GOVERNMENT ($1.3T) – including your own personal favorite program, whatever that might be – were covered by DEFICIT spending and had to be borrowed.

So what is the bottom line?  Our debt exceeds our GDP.  The interest rate on the debt (4.7% per year based on the 2000 to 2011 average) exceeds our projected growth rate in GDP (4.1% per year according to the CBO). Even if we were operate a balanced budget at the 2011 level of tax receipts ($2.3T) – which was only sufficient to cover entitlements and interest on the debt – the projected GDP growth would be insufficient to cover the cost of servicing the debt.   Our deficits and debt would continue to grow. At some point, these debts will have to be paid.

So what is the President’s plan?  Do nothing. Continue to “invest” (viz., spend).  His plan has been rejected in the House by a vote of 414 to 0 and the Democrat controlled Senate refuses to entertain the House’s budget or put forward one of their own.

Summary. In summary, the President has decided to go “short against the box.”  As he recently commented to outgoing Russian President Medvedev, during a meeting on missile defense, "This is my last election ... After my election I have more flexibility," Obama said, expressing confidence that he will win a second term. Medvedev’s response: "I will transmit this information to Vladimir." But even if he does not win, he has set up a framework – using treaties, executive orders, and regulations – to effect an economic suicide pact that will force America toward take its “proper” place in the global governance framework.

The last chapter in this story will be written by the American people.  My responsibility is to “transmit this information to the American people.”  It is my prayer that they take the advice of Benjamin Franklin who said:

“I agree to this Constitution with all its faults, if they are such: because I think a General Government necessary for us, and there is no Form of Government but what may be a Blessing to the People if well-administered; and I believe further that this is likely to be well administered for a Course of Years and can only end in Despotism as other Forms have done before it, when the People shall become so corrupted as to need Despotic Government, being incapable of any other.” – Benjamin Franklin

Imminent Shame for Norfolk's Use of Eminent Domain!

I am privileged and honored to support Bob Wilson and Central Radio Corporation (CRC) in their effort to prevent the City of Norfolk from taking their business under the City’s exercise of the “right of eminent domain,” ostensibly for “public purpose” not for “public use.” 

Apparently, Old Dominion University wants the property and instead of negotiating with CRC to buy it for a mutually agreed price, they approached the Norfolk Housing Redevelopment Authority (NHRA), to have it condemned as a “blighted property.”  The property has been at the current location for 50 years, has been a Norfolk business for 78 years, and is a thriving defense contractor that employs 100 well paid engineers and technicians.

What makes this story even more disconcerting is that the NHRA has not specified the exact “public purpose” for which it is being taken.  A restaurant or mall has been discussed as “a possibility.”   This is no different than the Kelo decision in New London, CT, in which New London took a private residence for the purpose of conveying it to a third party that they thought would generate more tax revenue to the city.  The property was never conveyed or developed.

The implications are clear: if we let this stand, then the City can take YOUR property for “public purpose,” not just Bob Wilson’s property.

I urge you to take three actions: (1) tell everyone you know about this unconstitutional taking of private property; (2) support the Virginia Constitutional Amendment on the November ballot that limits the exercise of “eminent domain” to “public use” not “public purpose;” and (3) consider supporting Bob Wilson’s suit against the city of Norfolk by making a donation to the Institute for Justice,  the firm that is defending this case (https://www.ij.org/donate).