Profit Motive

 

                                             

Despite the fact that business ranks as one of the top college majors, it is true that many college graduates today would prefer to work for a non-profit organization than a profit making one.  There would appear to be a stigma attached to working for personal gain.  To many working for profit is ignoble, even crass. 

This attitude is not just found in the young but in all levels of our society.  It helps to explain the contempt we see directed today at words like Capitalism and Capitalist, both of which are terms of opprobrium in progressive and Democratic Socialist circles. Indeed, popular fiction and movies have ingrained in us a cardboard stereotype of the money-grubbing, overweight, usually lecherous business tycoon.

Nevertheless, because of the bad connotation of the word Capitalist, I prefer to think of myself as an advocate of a free-market economy based on private property rights. By law and tradition in America, we all have the right to profit from our education, our knowledge, our experience, and our labor. It is the key to our success.

Countless examples could be provided to demonstrate the success of a free market economy versus a government controlled socialist model. Here is one example that shows that modern China’s economic success is due more to the profit motive than Socialist ideology. 

A few years ago, I read an op-ed in the Wall Street journal by Michael Meyer in which he noted a truly revolutionary development in a Chinese village over 40 years ago.  After taking power in China in 1949 Chairman Mao and the Communist party had effectively abolished private land ownership. Villages were organized into communes “crippled by production quotas that seized most of what they grew for redistribution.” 

The result was a disaster just as it had been in Communist Russia decades earlier. Meyer tells the story of the village of Xiaogang where by 1978 the villagers could no longer meet their quota because they were starving. They were eating roots, leaves, and tree bark. Driven to desperation the farmers decided to defy the authorities.

They signed a pledge to divide the village land into family plots whose produce could be kept by each family once it had paid the required quota or tax. The results were revolutionary. Next year saw a record harvest that led the local political boss to complain that the farmers “had dug up the cornerstone of socialism.” 

Inevitably, the news and the practice spread until the popular land reform that defied communist orthodoxy became officially adopted after Mao’s death. Deng Xiaoping, his successor, urged the Chinese to ignore political dogma and instead “seek truth from facts.”

Interestingly, this same revolution had an antecedent in early American history. After two years of near starvation, the Pilgrim fathers at Plymouth colony abandoned their experiment with communal farming and divided the land into family plots worked by all members of the family. The colony never starved again. 

Why should it be so hard for people today to understand the value of the profit motive? Not only do the companies in my investment portfolio turn a decent profit, but also they provide invaluable goods and services for millions of people. They light and heat our homes as well as enable us to communicate easily with one another. 

The little revolution in Xiaogang not only fed the people of that village but it also has enabled China’s population to eat and prosper as never before. Democratic Socialists may think that Communism succeeded in China but it was really private property and free enterprise that made China an industrial giant. 

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Medicare for All

 

 

One of the planks in the Democratic Socialist platform is Medicare for All. Senator Bernie Sanders of Vermont and other leading Democratic Socialists never fail to include it in their demands.The influence of the DSA is growing within the Progressive wing of the Democratic party, and it looks like Medicare for All will be a big issue in the upcoming mid-term elections.

 

However, we already have Medicare for all. Most of us are enrolled in Medicare in the same way we are enrolled in Social Security. Anyone with taxable income must contribute to Medicare in the same way they contribute to Social Security. All employees must contribute 1.45% of each paycheck to their Medicare account. Employers are required to match that contribution so that the total amount comes to 2.9% of pay. For most workers the Medicare tax goes largely unnoticed since it is a payroll deduction.

 

The tax is more visible to self-employed individuals since they must pay the whole 2.9% themselves and actually cut a check for the amount on a quarterly basis.

 

Unlike the Social Security tax which only applies to the first $185,000 of income, there is no limit on the amount of income subject to the Medicare tax. Let’s take a look at some examples.

 

Someone working at the minimum wage of $15.00 per hour for 2000 hours a year would have an annual income of $30,000. To make it easy let’s round off the Medicare tax rate of 2.9% to 3%. The worker’s Medicare tax would be $900 a year. We can call it the annual premium for Medicare insurance which will begin to pay off at age 65.

 

In our next example, the worker’s annual income is $200,000. That number is significant because over that amount, the employer is no longer required to match, and the employee must pay the whole 2.9%. In fact, on income over $200,000, there is a surcharge of 1% bringing the total to 3.9%. To keep it simple for now, this worker’s Medicare tax would be 3% of $200,000 or about $6,000 per year. In other words, his Medicare insurance premium is $6000 per year for the same plan that costs the minimum wage employee $900 per year. 

 

Finally, let’s look at really high earners like movie and rock stars, professional athletes, and even CEOs who have incomes of $20 Million per year. Since there is no limit on the amount of income subject to the Medicare tax, and since there is a 1% surcharge, their effective tax rate of 4% means that their Medicare tax would be 4% of $20,000,000 or $800,000 per year. That's right, $800,000! Remember, even though their Medicare insurance premium is huge, they still get the same coverage as anyone else. Actually, these wealthy people don't even need Medicare. It’s really amazing that Democratic Socialists want to eliminate the billionaires who fund Medicare.

 

Of course, people with little or no taxable income would currently be eligible for Medicaid but Progressives and Democratic Socialists really want free Medicare for all at any age. But do they?

 

Does Medicare for All mean that Senator Sanders and other politicians would give up their current gold-plated government plans for Medicare or Medicaid? I don’t think so. When Obamacare was passed, members of Congress were supposed to join that plan and give up their Federal medical insurance but that never happened. I doubt that any federal, state, or municipal employee would want to give up their current medical insurance for Medicare.

 

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Quote of the day: All animals are equal, but some are more equal than others. George Orwell, Animal Farm.

 

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War in Iran

  

                                           

 

Since first hearing the news of the joint US and Israeli bombing of military targets in Iran, I have been seeking out news of what is actually happening. It has not been easy. News sites that I watch or read provide very little information of what is going on.

Talking heads on cable stations usually focus on what they think or fear will happen and not what has actually happened. Often their opinions are accompanied by continually repeated videos of sites being blown to bits but with no indication of what sites are being destroyed. 

 

Here are some bits and pieces of what I have discovered so far. 

 

President Trump has declared that the attack on Iran has four objectives. He claims that the success of the initial attacks, especially the destruction of the Iranian high command, have put us far ahead of achieving these goals.

Ensure that Iran will never have a nuclear bomb. Iran’s refusal to accept this demand led to the breakdown of the most recent diplomatic efforts.*

Destroy Iran’s ballistic missile capability. The response to our attack showed how extensive the Iranian missile and drone system was. Even though most were intercepted, some did get through and cause death and destruction. Many seemed to have been aimed at non-military targets in nearby Arab states. 

Destroy the Iranian navy and its threat to shipping lanes in the Gulf of Hormuz. So far, it appears that we have sunk 17 Iranian naval vessels in the Gulf of Oman.

Ensure that the Iranian regime will no longer be able to arm terrorist proxies in the area. 

 

Rather than shooting from the hip, the President seems to have been very careful in making his decision. One former aide described the President’s decision-making process in some detail. He claimed that Trump listens to and encourage different opinions before coming to a significant decision. Contrary to popular opinion, he does not shoot from the hip in matters of such importance.

Nevertheless, the President took an incredible risk in this venture. Anything can go wrong in war, and one misstep could wreck his Presidency. So far, even military commentators on left-leaning cable shows have had to admit that the military operation has been extraordinarily well planned and executed. 

He also took a great political risk. Democrats who want the President to fail on anything he does were quick to distance themselves from the Iranian operation. Very striking were the remarks of Hakeem Jeffries, the House Minority leader, who opined that the military attack would fail. How could he know that at this point? What he really meant was that he hoped it would fail. 

My own representatives here in Connecticut are apparently of the same mind. Both Senators Murphy and Blumenthal, as well as Representative Himes, have decried the Iran attack, and argued that Congress should have been consulted. Commentators have pointed out that when President Obama bombed Libya for 7 months, Congressional Democrats like Chuck Schumer and Nancy Pelosi did not insist on Congressional approval. 

It does appear that the President has acted within his authority, and early this week high ranking members of the Administration appeared before Congress in closed session, and answered questions for two hours. Even so, the Democrats could not offer any support. 

It used to be the custom of the party in Opposition to support the President when it came to foreign policy, especially when it came to war. But no more. When American service men and women are in harm’s way, no politician should dare to hope that they might fail.

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*Note: Steve Witcoff, the President's chief Iran negotiator claimed that the  Iranian negotiators were intransigent, and bragged that they would soon have enough processed uranium to make 11 nuclear bombs. Is it too much to speculate that they might have been more reasonable if they felt that the USA was united behind President Trump in these negotiations? 

State of the Union 2026

I stayed up late last night to watch President Trump's State of the Union Speech. In curiosity, I even stayed tuned for the rebuttal by Democratic Governor Abigail Spanberger of Virginia. I would have to say that rather than giving a speech, Trump put on a performance, a performance that unlike most State of the Union addresses was hard not to watch despite its length. 

Thinking about it this morning, I looked back on old Weekly Bystander posts and found that I had forgotten that Trump had given a spectacular performance in his first State of the Union address back in 2017. Then, even liberal opponents had to give him credit. I wrote,

Donald Trump and his political advisors put together a brilliant speech Tuesday night in his address to the Congress. David Brooks on PBS gave him an “A”, and even liberal commentator Mark Shields had to grudgingly give him a  “C+”. Trump touched all the high points of his familiar message but did it in such a fashion as to make even liberal commentators say that he appeared “Presidential.” 

He also used with great effect the touching stories of some ordinary Americans who had been invited to attend, a practice used by many previous Presidents in State of the Union messages. Their stories were heart-warming and even heart wrenching.

 If anything, the stories in 2026 were even more heart wrenching. Who will ever forget the Marine standing at attention despite his wounded legs, and receiving the Congressional Medal of Honor for his role in leading the Maduro raid.

Today, I do worry, just as I did in 2017, that Trump’s promises may have set the bar too high. If he can deliver on his promises and fulfill his lofty vision for America, he will be one of the greatest Presidents in history. I know it is good to set goals and aim high but now President Trump will have to deliver. I do not think it will be an easy task given the state of the Union today.

There will be vicious battles in many of our states as the mid-term elections approach. Governor Spanberger's speech was practically a declaration of war. We have a fleet prepared to attack Iran if negotiations fail, but it seems that the Democratic opposition rather than supporting the President's foreign policies  would like them to fail. 

I think my conclusion in 2017 is still appropriate today. I wrote,

I have to admit that when I hear a brilliant speech delivered by a real pro like Trump, I have mixed feelings. It was hard not to be inspired by his message but at the same time, I had to wonder. Could Trump just be, as some suspect, a con man? I don’t think so. It is more likely that he could be a con man who has been converted by his own message or cause in the manner of film characters such as  Professor Harold Hill in “The Music Man," or Gary Cooper in Frank Capra’s masterpiece, “Meet John Doe." However, both these fictional characters were down and out drifters before they rose to prominence. Trump was a billionaire businessman as well as a celebrity already.

I like to think that Trump is more in the line of a wealthy Renaissance merchant who realizes that he must attain political power not only to preserve and protect what he and his family have gained over a lifetime, but also to preserve and protect the city or country that have done so much for him and his family.

The true test of the Trump administration will be on how much it can deliver. If President Trump can just deliver on a third of his promises, it will be a successful Presidency. Batting .333 is good in any league. I hope commentators will begin to focus on what the Trump administration is actually doing, and not on what they fear he will do.*

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*Note: I do think the President could have done a better job last night in his discussion of fraud in Minnesota. Instead of blaming the whole Somali community in Minneapolis, he could have explained that the fraudsters did not just defraud taxpayers, but they kept aid from reaching people in need. Money intended for hungry children, for education, and for those suffering from autism was diverted and often sent abroad. Their Governor, their Attorney General, their representatives in Congress all failed to protect the needy in Minnesota. 

Epstein Files

Epstein Files

I have not been willing or able to go through even one page of the 3 million pages of the Epstein files recently released by the Justice Department. Nor have I been interested enough or informed enough to write about the story on The Weekly Bystander. However, in last week’s Wall Street Journal Barton Swaim, a regular columnist on the op-ed pages, gave an excellent summary of the evidence. Here are some highlights. 

In the first place, he noted that the latest release included an earlier assessment of the case by the FBI that “found no evidence in Epstein’s residence and bank accounts of a trafficking ring or of “sex videos” supposedly used for blackmail.” In short, to the dismay of conspiracy seekers on both sides, 

There was in the end, no sex-slave ring, no blackmail operation, no cameras recording dalliances for later use, no client list, just a deeply sick and rich predator with a few enablers.

Secondly, the new documents seem to contain no evidence that Donald Trump “cavorted with Epstein and his harem.” Indeed, Swaim noted the presence of a document from 2006 detailing a phone call from Trump to the Palm Beach Chief of Police where Trump indicated he knew about Epstein’s behavior and “thought it vile.”  Trump told the Chief that on one occasion he was with Epstein, but when some teenage girls appeared, “he got the hell out of there.” Swaim also believes that there is nothing in the files that really can harm ex-President Bill Clinton.  

However, there seems to be a whole group of lesser fry that are exposed by the Epstein files. Swaim notes that there was “a circle of well-connected, wealthy and politically liberal men who looked past Epstein’s taste in girls and remained on friendly terms with this charming, lavishly generous and intellectually conversant epicure.” These men, “liberal VIPs in media, tech, and politics… all held conventional liberal opinions and gave lavishly to liberal causes and Democratic candidates.” Practically every day since the release of the files, headlines tell of resignations from prominent positions by member of this liberal elite. 

I have wondered why the Epstein files were never released during the Biden administration. Could it be because Democrats in the Justice Department knew there was nothing in them to implicate Domald Trump, but that there was plenty to implicate liberal Democrats. Only Trump hatred could have led them to demand the release of the files once the President was back in office. They hoped to find something that would disgrace the President, but so far, no luck.

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Note: It is amazing that our government somehow amassed 3 million pages of documents on this one individual. Even more amazing is the fact that people in and out of the government have spent, and continue to spend countless hours going through these files. This looks like a job for AI.

Election Day 2025

 

 

 

I have voted in every election, national and local, since I turned 21 back in 1960. I have always regarded it as a civic duty. Yesterday in my hometown of Fairfield CT was no exception even though only local positions and issues were on the ballot.

I must confess that I knew practically nothing about any of the candidates or town charter revision issues on the ballot. So, I fell back on identity politics. I have been a Republican for over 50 years and so tend to vote straight Republican even in local elections. This year was no exception especially when insider information alerted me to some nefarious goings on in Town Hall by the new Democratic administration.

I did make two exceptions. I voted for a Democratic friend who was running for a minor office, and I voted for a Democrat who was running for the zoning commission who spent some time discussing zoning issues with me and a friend while canvassing our neighborhood. He seemed affable, and well-meaning. Of course, my vote is usually meaningless since my district has been gerrymandered to normally vote Democratic.

Anyway, I offer the above as a preamble to my thoughts on the elections that made headlines yesterday. Elections are not always decided on issues or substance but on perceptions. These elections seemed to be examples of identity politics. Answer this question. If you only looked at images of the three candidates in this year’s New York mayoral election, who would you have voted for?

Zohran Mamdani, the eventual winner, looked youthful, energetic and self-confident. Andrew Cuomo had the appearance of an aging bloodhound. He appeared to be a relic of a failed past that even Democrats would like to forget. Curtis Sliwa, the Republican candidate, was another relic of the past. The young Guardian Angel of the Giuliani era is now an old man. 

New York has always been a city of the young, with waves and waves of immigrants replacing the older generations and taking their place in politics. I believe young people supported Mamdani because he looked like them, not because of his radical views. What else would explain why nearly half the voters identified as Jews in polls supported him despite his apparent antisemitism? Of course, he also had the almost unanimous support of New York’s large Moslem community.  

I know little about the issues in the New Jersey and Virginia, but I suspect that identify politics were also at work in those states. Pollsters had predicted tight races, but two attractive Democrat women won going away despite obvious problems during their campaigns. 

The Democrats have learned their lesson and are abandoning the old timers in favor of the new. It looks to me now that Chick Schumer is toast and that AOC, if not Mamdani, will take over. 

Republicans must take heed. Trump is Trump and no one can duplicate him. He is old but still appears young, energetic, and charismatic. Moreover, he has a great sense of humor and can even joke about himself. Republicans must also abandon the old guard and come up with new faces. They may not be Trump, but they can at least try to be as authentic and genuine as he appears.

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Government Shutdown

 

The current government shutdown is in its fourth week. What is the issue? It is not Medicaid, or SNAP (food stamps). These are covered in the Continuing Resolution (CR) passed by the House of Representatives. The House resolution is called a "clean"one because it does not change anything. All current programs would be continued. The Democrat minority in the Senate, however, has used the filibuster to block the CR and demand the continuation of Federal subsidies for participants in the Affordable Care Act (Obamacare). Apparently, Obamacare enrollment has never reached expectations, while claims have skyrocketed to the extent that large premium increases are expected next year.  

 One of the first things I learned when I went into the insurance business over 50 years ago was that insurance was simply the prepayment of claims. It is paying in advance to cover some future bill or expense. It does not matter if it is life insurance, automobile insurance, or medical insurance. The same basic principle must apply. A policyholder pays monthly or annual premiums and these premiums are pooled with others to pay eventual claims. 

 

Medical insurance is no different. It only had its origins in the 1930s during the Great Depression. At that time hospitals and physicians were finding it increasingly difficult to collect from their patients, many of whom were out of work. As a result we had the birth of the “Blues.” Both Blue Cross and Blue Shield were products of the Depression. In short, people would enroll in these plans and pay a monthly or quarterly premium that over time would build up enough of a reserve to cover their future claims. This idea seemed to benefit everyone. Doctors and other health care providers would no longer have to go after their patients like collection agencies; and the patients would not have to come up with a large amount of cash to handle large, unexpected medical bills. 

 

However, to avoid excessive or frivolous claims that raise the cost for everyone, most medical insurance policies included deductibles or co-insurance to reduce or eliminate small claims. This was right out of Insurance 101 since actuaries were well aware that the most cost effective strategy was to make the patient bear part of the cost out of pocket.

 

However, the use of medical insurance to cover future health care costs only took off after World War II. The war had finally taken the country out of the Depression and the economy was booming. In a major change the Federal Government allowed corporations to purchase group medical insurance plans for their employees. Employers were not required to provide health insurance but the government altered the tax code to provide a great incentive. 

 

Unlike other forms of compensation the cost of the medical insurance would not be considered taxable income to the employee. This was important especially to high salaried employees at a time when the highest tax rate was 70%. In other words, employees covered under such a group insurance plan could now have most of their medical expenses paid with tax-free income. It was a no-brainer. Instead of giving all employees a taxable salary increase, the employer could give them a tax-free benefit that would cover future health related costs.

 

The employer sponsored plans were incredibly attractive to all concerned and sparked a veritable revolution in health care in this country. Employers could deduct the cost of their plans as an ordinary business expense while employees could rely on their pre-tax medical insurance plan to cover major medical expenses. Since these were group insurance plans all employees had to be covered even if they had pre-existing medical conditions. Increasingly these group insurance plans came to dominate the market.

Nevertheless, the basic principle of insurance still governed these group plans. They all involved a pre-payment of claims most often through automatic payroll deductions.

 

This system of corporate sponsored insurance worked remarkably well for the great majority of Americans for many years. There were obvious problems, however, that needed to be fixed. People would lose their coverage when they lost or changed their jobs. Self-employed people did not ordinarily have access to these plans. Unemployed workers would eventually lose their coverage. People with pre-existing medical problems would find it almost impossible to get coverage on their own.

 

Attempts had been made to deal with these problems but critics of the system still insisted that over 30 million people were without medical insurance. Even if that number was accurate it would be wrong to say that all those people lacked access to medical care. One of the problems with the system was that so many people refused to purchase medical insurance and just went to the local hospital ER for even ordinary care.

 

Instead of trying to fix the problems in the old system, proponents of the Affordable Care Act sought to overhaul the entire health care system in this country. Now instead of getting a tax break as an incentive for providing employees with medical insurance, employers would be forced to provide such insurance or pay a penalty. Even though the Obama administration had arbitrarily extended the corporate mandate for a year, some employers still chose to drop their plans.

 

More importantly, at the time the Affordable Care Act was passed in 2014, President Obama indicated that it would not be so affordable, and that Federal subsidies would be needed for a couple of years to help participants pay their premiums. As it turned out, the subsidies did not go away. Because of these subsidies many enrollees in Obamacare did not have to pay the full premium for their medical insurance. No matter what you call it, it was no longer insurance but welfare.

Even with subsidies it would appear that most of the un-insured did not find the plans attractive, or were not able to navigate the red tape necessary to enroll. The expected number of plan participants never materialized.   

 

When Obamacare was passed the Federal government was over 17 Trillion dollars in debt. Now the debt is over $37 Trillion. How is the government going to pay these subsidies?  Will it just print more money and add to inflation, or will it have to raise the taxes on everyone. It is a problem that deserves careful study and cooperation, not drastic measures like shutting down the government, and shutting down the benefits of the needy. 

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Peace Deal News

  

I have been a regular reader of the Wall Street Journal (WSJ) for over fifty years. Even though I worked in the financial services industry, I liked the Journal more for its editorial content than its business news. A few years ago the Journal was acquired by media giant News Corp. It was an unprecedented deal since it was agreed that the traditionally conservative editorial pages would be independent of the new owner. 

Sure enough, the Journal’s editorial pages have remained largely conservative and pro-business. However, since 2016 the WSJ editors and commentators have never been able to swallow Donald Trump to the point where it is hard for them to say one good word about him, his actions, or his policies. They don’t appear to hate him in the manner of left-wing commentators, but they seem to regard him as a rogue relative whose presence they would prefer to ignore. 

So far this year I do not recall the editors of the Journal writing anything good about the President. No one can blame them for consistently opposing his tariff policies but where is the applause as he brokers one peace deal or cease fire after another. They have even been strangely reticent about this weekend’s peace deal that included the release of the Israeli hostages.

Last Saturday, they did bury the following at the end of an editorial that praised the awarding of the Nobel Peace Prize to a courageous female opponent of the Venezuelan dictatorship. 

“If Mr. Trump helps Ms. Machado and the Venezuelan people restore democracy, and help free Mr. Lai from prison, the President will deserve the Nobel next year.”

In their opinion, the unprecedented Peace deal in the Middle East as well as the others negotiated over the globe in the past nine months are not good enough.

Journal political columnists have been equally reluctant to praise the President. Karl Rove, a regular columnist every Thursday since he left the Bush administration, has never forgiven Trump for his criticism of the Bushes. Despite his political astuteness, he finds it almost impossible to give the President any credit. 

Holman Jenkins, usually an acute political observer, has to almost tie himself in knots rather than give any praise to obvious achievements of the Trump administration. After all these years, he still cannot understand the President’s popularity and insists that James Comey won the election for him back in 2016.

Peggy Noonan has been the lead political columnist in the Weekend edition for years. She has never liked Trump as a person or politician. I recall that in 2016 she admitted that she voted for Edmund Burke, a long dead British political scientist, rather than cast a ballot for either Trump or Hillary Clinton. She must feel that she would become a pariah among her political friends if she ever said a good word about President Trump.

Finally, last Saturday she had to break down and give President Trump a grudging hand for brokering the Gaza peace deal. She wrote,

"Give it to him. Give him your applause. Sometimes pessimism reaches a point of moral error. Sometimes hope is the only realistic approach.

So give it to President Trump, whose White House has produced the first progress in the Mideast since the grave crisis of Oc. 7 began. He announced Wednesday with typically Trumpian words. He called it, “a big, big day, a beautiful day, potentially one of the great days ever in civilization.”

Finally, the release of the hostages on Monday led to an editorial, albeit not the lead editorial, with this headline:

“Trump’s Hostage Triumph in Jerusalem.”

Despite the headline the editorial was full of caveats and warnings. It was left to global affairs columnist Walter Russell Mead to finally give credit where credit was due.

“Only Mr. Trump could have made this happen. No other living politician could have reassured Israel, threatened Hamas, and patched together a broad coalition the way he has done. Mr. Trump has his shortcomings… but he is a leader who bestrides the world scene like no other.”

Apparently, the news dam has started to leak.

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The Industrial Revolution and Socialism

Climate Change activists date the current warming trend to the onset of the Industrial Revolution. It seems obvious to me that their alarmism about Climate has more to do with an animus against the Industrial Revolution and its effects than concern for the environment. Capitalism and free enterprise are associated with the Industrial Revolution. A recent study showed that today 50% of college students consider themselves to be Socialists. The percentage of their professors must be even higher. 

Over fifty years ago when I taught a unit on the Industrial Revolution as part of a basic course in Western Civilization, I thought then and still believe today that the Industrial Revolution was one of the most significant developments in the history of the world. If you do an image search for Industrial Revolution, you will see countless images of smoke-belching factories of 150 years ago, but you will not see an image of the ubiquitous latest mobile phone pictured above. Before the Industrial Revolution life was indeed "nasty, brutish, and short."

Try to imagine a world today without the following:

Electricity

Clean water delivered by pipeline to your home

Modern sewers and waste removal systems

Automobiles

Home heating without firewood

Computers

Televisions

Air Conditioning in homes and cars

Trains, Planes, and Buses

Indoor Plumbing—before the IR there was no such thing.

Elevators

Washing Machines for clothes and dishes

Hospitals with their incredible technology

Cell Phones—most important of all!

It is hard to believe but our ancestors before the Industrial Revolution had none of these essential elements of modern life. Actually, many parts of the world today still live in the pre-industrial age without many of the items listed above. 

Industrial Revolution is the term given to the transformation of manufacturing from homes and shops to factories employing hundreds or even thousands. The transformation began in Great Britain in the late eighteenth and early nineteenth centuries, and eventually spread all over the world. However, before there could be an industrial revolution, there had to be three other revolutionary developments. 

First, there was a Demographic Revolution involving a substantial increase in population. This increase happened not so much because of a rise in the birth rate but because of a decline in the death or mortality rate due to a dramatic drop in infant mortality, a drop caused by advances in diet and sanitation. For example, in Italy in 1860, 232 of every 1000 infants died in the first two years of life but 60 years later only 127 of 1000 infants died during the same period. 

An Agricultural Revolution accompanied the Demographic Revolution. Human ingenuity devised new methods of farming, land management, and animal husbandry to feed the growing population. While doomsayers like the British clergyman Thomas Malthus were predicting mass starvation, they could not predict that the profit motive and human resourcefulness would provide for the needs of an ever increasing population. 

A Transportation Revolution also accompanied the Industrial Revolution. The nineteenth century was the great age of canal and railroad building. At the same time, steam power replaced wind power as a safer and more reliable source of energy. The revolution in means of transportation allowed mass migrations of people from rural areas to the urban centers of manufacturing and commerce. It also allowed goods and services to be delivered faster and at less cost. Lower costs meant that not only rich people could afford them.

From the beginning the tremendous social, economic, and political changes caused by these revolutions had both good and bad consequences. Rural areas lost population and industrial cities became overcrowded. Writers and social commentators were quick to point out the terrible working conditions in the factories, and the deplorable living conditions in the slums surrounding the factories. 

Moreover, critics objected, as they do today, to the incredible disparities in wealth and income between the factory owners and financiers (capitalists) who profited and the workers who toiled. The misery of the urban poor could not be overlooked. Nevertheless, in countries that did not industrialize, like Ireland or southern Italy, the poor were even worse off and literally starved to death either from actual food shortages or malnutrition. Why else would millions from Ireland and Italy leave their beautiful countries to live in the overcrowded cities of the New World?

I suspect that the Industrial Revolution still has a bad name today. Capitalist is a term of opprobrium and even capitalists shun to describe themselves as such. Even union members whose pensions are invested throughout the American industrial sector do not realize that they are capitalists. Of course, Progressives are outspoken in decrying the terrible effects of corporate greed and inequality.

It’s true that few of us will have the income or assets of CEOs, politicians, Rock stars, TV personalities, or professional athletes. But more than anywhere else in the world, we do have the opportunity to acquire and keep property. We can even buy and sell shares in the companies we work for. You may call it Capitalism but I prefer to call it a free-enterprise system. Whatever you call it, it has worked to raise the standard of living in this country to the highest level that has ever been seen in the world. 

Students today are asked to evaluate the relative merits of Capitalism, Socialism, and Communism. All three systems were responses to the Industrial Revolution. You can judge for yourself which of the three systems did the best job of providing the necessities of life listed at the beginning of this essay. Why are people still fleeing today from Socialist "paradises" like Cuba, Nicuagua, and Venezuela? 

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Sending Messages

The video image of the recent destruction by an American rocket of a speed boat carrying suspected drug traffickers in the Caribbean sea provided laughter on a late night TV show as if the participants were watching a Road Runner cartoon. But even if the men on the boat were participating in a deadly trade, it was not funny. Eleven human beings were obliterated in an instant.

I don’t know how the military knew the boat was carrying drugs, and I don’t know if it was legal for our military to attack it in international waters, but the destruction of the speedboat sent a clear message to all drug traffickers and their backers. The waterways are no longer safe for their traffic. To fully understand the strength of this message click on this link to a 13 minute account of modern weaponry, or see the video below on the US naval presence off the coast of Venezuela. The video is a must see even if you only watch the first half.

The news last week carried another message of a different kind. A local court (I don't remember where) convicted a man of using a knife to repel a home invader. The message of the court decision was clear. In the opinion of that court, it is not ok to defend yourself from a home invader. If you attempt to do so, you, not he, will go to jail. To drive home the message, a local policeman advised people to leave their car keys at the front door so that potential car jackers will not have to enter your house. Who could fail to understand or take advantage of such a message?

That case reminded me of the situation in California where a law specifies that thefts of less than $950 will not be prosecuted. People were quick to get that message. New businesses appeared that organized small crime. Other businesses went out of business. A few years ago on our annual trips to Alameda we would observe a huge Walgreen’s going up on its main street. On our last visit it was gone along with many other Walgreen’s throughout the state because of rampant shop lifting.

Some powerful messages often go unspoken. Many years ago, a co-worker told me he owned a 44 Magnum of the type used by Clint Eastwood in the Dirty Harry movies. Other than a childhood BB gun, I have never owned a gun. When I asked him why he owned such a powerful weapon, he replied, “Better to be carrying a coffin, than to be carried in one.” That sounded creepy to me and I never thought to purchase a gun myself, especially with a house full of small children. 

Nevertheless, from that time on I always felt a little safer in the realization that a potential home invader might think that instead of an unarmed wimp like me, there might be a Magnum toting guy like my co-worker inside waiting for someone to make his day. 

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The Killers in Washington D.C.

President Trump's decision to take over the policing of our Nations's Capitol, and deploy a National Guard contingent to patrol its streets in response to rampant criminal activity by young black men, often teenagers, has attracted national attention. Opponents call it racist although others argue that  Washington D.C.'s black residents will benefit the most if the streets are secure. Some cite declining crime statistics, but I believe that most residents of the Capitol know that parts of the city are not safe, especially at night.

The President's action reminded me of a post I had written two years ago on the "root causes" of urban crime. See below.

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An article in the Wall Street Journal this week about young black men caught my eye. Barry Latzer, an emeritus Professor of criminal justice at New York’s John Jay college, traced the alarming increase in murder rates in the United States to a combination of “big cities, guns, and young black men.” 

Latzer noted new statistics that showed that while violent crimes like rape, robbery, and assault declined somewhat during the pandemic, the murder rate skyrocketed especially among young black men. Black males were victims of homicide at a rate five times that of white or Hispanic men, and the great majority of these murders were committed by other young black men. Often, the killings seemed to be over trivial matters, or affronts to “honor.”

 

Latzer attributed this type of killing to a holdover from Southern culture of 150 years ago, that blacks have carried into Northern cities. I trained as a historian many years ago, and one of the things I learned was to look for proximate causes of events, that is, causes closest in time to the event. I don’t think there is a need to go back a hundred years or more to find an explanation of why young black men are killing each other at alarming rates today. I think we have only to look at the education these young men received in their own brief lifetimes.

 

I am not referring to the formal education they have received in school. In my opinion, the low scores and poor results black young men achieve in school are not due to a lack of brain power but to a lack of motivation. Outside of school they have been educated to distrust and despise school. Their real education takes place on the street or on their phones. What do they learn there?

 

In a recent news story in my local newspaper, a Bridgeport gang member pleaded guilty to racketeering charges. He was a member of a notorious gang that “robbed drug dealers, customers and others, sold narcotics, and stole cars from inside and outside Connecticut, often using the cars to commit crimes.” In addition, they “frequently used social media to promote and coordinate their criminal activities.” Social media posts and text messages revealed that he “possessed firearms, including firearms with extended magazines, and that he sold a variety of drugs. … he also participated in the theft and possession of stolen vehicles, some of which were used to commit shootings.”

 

Over his 20 years this young man had obviously acquired the considerable education and skills necessary to compete in his chosen profession. He was part of a skilled band with their own code of ethics. His formal education in school must have seemed like mere child’s play, totally irrelevant to life in the real world. In other words, he and others like him are uncivilized. They are ruthless barbarians. 

 

 I do not say this is so because they are black. I think the color of their skin, or their race has little to do with it. After all, there is only one race, the human race, and we all have the same human nature. We can find examples of uncivilized young men all over the world today. Just look at images of members of Mexican drug cartels wielding AK-47s while ferrying migrants over our southern border. Remember the young men of ISIS cutting off the heads of captive victims. Are the Taliban in Afghanistan any different? Looking back on our own history, every wave of immigrants brought with it young, uncivilized young men who formed gangs and thought nothing of killing to avenge the slightest insult.

 

For thousands of years it has been parents, family, religion, customs and traditions that have civilized young men. The breakdown of these institutions in the past 50 years has been catastrophic in America. Coincidentally, this year marks the fiftieth anniversary of hip hop music. In the same week that Professor Latzer bemoaned the high murder rate among young black men, Jason Riley, a black man who is a regular columnist for the Wall Street Journal, bemoaned the effects of the musical genre that has been the most powerful educational tool among young black men.

 

“A-list hip-hop artists… became fabulously wealthy trafficking in racist gutter lyrics and ugly stereotypes about black people. For decades, black parents have devoted an inordinate amount of time—with mixed success—to shielding their children from the materialism, drugs, promiscuous sex and thuggery behavior that pervades the songs of some of hip-hops most popular artists. ... decades of glorifying the gangsta-rap lifestyle and, worse, presenting it as the only authentic black experience, have come at a cost.”

 

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CEOs and Income Inequality

      

Income Inequality 2025

 

This week the Connecticut Mirror, an online news source, reported on a study by the AFL/CIO that indicated there was a growing disparity between the income of corporate CEOs and ordinary workers. The Connecticut Mirror likes to run such stories since they seem to provide hard statistical evidence for its pet issue of inequality in Connecticut, whether it be racial, gender or economic. 

Considering that the source of this story is a large labor union, one should be careful about evaluating its results and conclusions. Actually, one only has to read a couple of paragraphs of the Mirror article to see that the AFL/CIO study is a classic, self serving case of comparing apples to oranges. 

In the first place, the study compares the average compensation of CEOs in large corporations to the median compensation of all other employees of these companies. I don’t want to bore readers with a discussion of the difference between “average” and “median” but using one or the other can be statistically significant. The “median” batting average of the NY Yankees would be the number that half the team is over, and the other half is below. Outliers like Aaron Judge with his .350 average would have little impact on the median figure, but a large impact on the team average. 

Not only does the AFL/CIO study compare the “average” compensation of CEOs to the “median” compensation of all other employees, but also, it includes the total compensation of CEOs, including stock options and bonuses, but excludes the value of benefits like health insurance and retirement contributions received by ordinary corporate employees.

Moreover, the AFL/CIO study includes part-time employees in its calculations, something that obviously drives down the median income figure.  On the other hand, it does not factor in the huge amount of income tax that would effectively reduce average CEO compensation. *

Nevertheless, the study concludes that the disparity between CEO compensation and ordinary corporate employees reached an all-time high of 285-1 in 2024, up from 268-1 in 2023. One union executive claimed that the numbers in the study “only begin to scratch the surface of how runaway executive pay is fueling economic inequality.”

The Connecticut Mirror headline agreed, “Report: Gap between CEO and worker pay is widening in US, CT.” It makes you wonder if reporters and editors read their own stuff. The article did report that median income in Connecticut is about $60,000 per year, 50% higher than the national median income of about $40,000. Apparently, half the people in Blue State Connecticut make more than $60,000 per year. 

Ironically, the AFL/CIO reported alarming income inequality in 2024, the last year of the Democratic Biden Administration. In Connecticut, Democrats have also ruled for decades.

 

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* Note: For those interested in a more professional examination of these figures, here is a Weekly Bystander post originally written during the first Trump administration.

I have long suspected that the statistics used by progressive advocates to complain about income inequality in America were either flawed or misrepresented. In the June 25 edition of the Wall Street Journal an opinion piece co-authored by Phil Gramm, a former chairman of the Senate banking committee, and Robert B. Ekelund, Jr., a professor emeritus in economics at Auburn University, bore out my suspicions.

The authors cite a new study prepared by the Cato Institute’s John F. Early, a former assistant commissioner of the Bureau of Labor Statistics that provides the “most comprehensive accounting to date of how taxes and government payments affect income distribution in the U.S. Apparently, the traditional statistics used by the Census Bureau do not take into consideration about $1 Trillion dollars in annual government spending.

The value of Medicaid, food stamps, the earned income tax credit and about 85 other Federal government programs is not included. Also, state and local income supplements are not included in calculations of income. On the other hand, reductions in income due to all sorts of taxes are not factored into income distribution statistics.

Here is the authors' conclusion. 

“The most surprising finding is the astonishing degree of equality among the bottom 60% of American earners, generated in part by the explosion of social-welfare spending and the economic and wage stagnation during the Obama era.”

In 2013 the income of the bottom 20% in this country amounted to only 2.2% of total earned income but when other forms of income and taxes are factored in, its share jumped to 12.9%, a six-fold jump in earnings. Similarly, the next 20% saw its share of the nation’s income jump from 7% to 13.9%. 

When we get to the middle class in the next 20% or third quintile, their total income was not far from their earned income. Primarily wage earners, this group took home only 15.4 % of the national income, not much more than those in the two quintiles at the bottom. 

The real inequality, however, is in the fact that this group had to work for most of its income while those in the lower quintiles did not. In fact, many of these middle income families had to work two or more jobs to just stay even with those in the lower quintiles. 

Not surprisingly, when taxes are taken into consideration, even the well to do in the top 20% saw their share drop from “57.7% of earnings to 39.3% of consumable income.” I suspect that a society in which the top 20% make only 40% of the consumable income is unprecedented in American or even world history. Even in Communist countries like the former Soviet Union, China, and Cuba, the disparity between rich and poor was much greater.

Based on these new statistics it would appear that income inequality is not the great problem that progressives make it out to be. According to the authors, a much greater problem is the discontent in people who have to work hard to have the same spendable, after tax income of people who do not work at all.

Rather than Russian collusion or Hillary Clinton’s lackluster campaign, Senator Gramm and Professor Ekelund believe that it was this discontent in the middle class that led to Donald Trump’s victory in 2016. The headline above their article was "How Income Equality Helped Trump." The Gramm/Ekelund article was adapted from their forthcoming book, “Freedom and Inequality.” Progressives will never stop complaining about income inequality, but it was income equality that did them in in 2016. 

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