BALTIMORE, MARYLAND – Yesterday, we connected a couple of dots…
Who pays them?
The people who have the resources to bend public policies in their direction.
Who are those people?
The elite. The insiders. The foxes. The Establishment. The Deep State.
They are the ones who own Today. And what they most fear is Tomorrow.
Fortunately for them, the feds are here to try to stop it from coming.
We also looked at how military spending is a poor way to create jobs.
Win-lose deals never create good jobs. Instead, they draw people out of good jobs and put them into bad ones – jobs that add nothing to our wealth or satisfaction.
That describes almost all the jobs in the greater Washington, D.C., area… and most of the work done by every public employee above the lower ranks.
Teachers, firemen, policemen, and sanitation workers earn their money honestly and fruitfully. The suits are mostly time wasters.
Think tanks think of reasons why it all makes sense. The president claims he’s added “jobs, jobs, jobs.” The newspapers report it as though it were true.
Later, we discover that it was all “fake news.”
Here’s Bruce Riedel at the Brookings Institution:
Last month, President Trump visited Saudi Arabia and his administration announced that he had concluded a $110 billion arms deal with the kingdom. Only problem is that there is no deal. It’s fake news.
I’ve spoken to contacts in the defense business and on the Hill, and all of them say the same thing: There is no $110 billion deal.
Fake news? We hope so.
Because the “jobs” created by the weapons industry are little more than nuts on a barroom table: They encourage the clients to waste more time and money.
The real business of the arms dealers is moving more wealth and power from the people who earn it to themselves. And the real business of the government is helping them get away with it.
But let’s connect a couple more dots.
Last week, amid the hundreds of items about the POTUS were two reports concerning the ex-POTUS.
First, it was noted that Mr. Obama had bought an $8 million house in Washington, D.C.
“Where did the former community organizer/lawyer/federal employee get the money for that kind of pad?” we wondered.
Then this from The Wall Street Journal:
As if taxes haven’t been high enough, the U.S. Government also forced Americans to spend an eye-watering $1.9 trillion in 2016 just to comply with federal regulations. That’s according to the latest annual “10,000 Commandments” report released today by Wayne Crews of the Competitive Enterprise Institute. “If it were a country, U.S. regulation would be the world’s seventh-largest economy, ranking behind India and ahead of Italy,” notes Mr. Crews. He adds that our regulatory tab is nearly as large as the total pretax profits of corporations.
Mr. Crews has become one of the most hated men in Washington by tabulating the hidden costs – those not counted in the roughly $4 trillion of direct federal spending – that politicians and bureaucrats impose on the American economy. And nobody imposed more than Barack Obama. According to the Crews annual scorecards, the yearly cost of federal regulation soared by more than $700 billion in nominal dollars from 2008, the last full year of the Bush Administration, through Mr. Obama’s final full year of 2016. Adjusting for inflation, you can call Mr. Obama the $600 Billion Man…
This is real money, and to put it in context this column looked at the most recent Consumer Expenditure Survey from the federal Bureau of Labor Statistics. Based on these data, the hidden Obama tax is more than twice what American consumers spend each year on gasoline and motor oil ($249 billion) and more than three times what we spend on electricity ($186 billion). It’s more than we spend on food while dining in ($529 billion) or dining out ($400 billion). It’s also roughly nine times the $66 billion that American consumers spend on alcoholic beverages, and your humble correspondent suspects there may be a connection here.
Here at the Diary, we, too, suspect that the feds’ red tape has slowed down growth.
Remember, there are only two kinds of transactions: win-lose and win-win. You don’t have to know how every deal will turn out. You only have to know what kind of deal it is, at the beginning.
Win-win deals frequently lead to wealth and progress. Win-lose deals – forced onto people, usually by the feds – almost never do. Instead, they reduce wealth and slow growth.
From Adam Smith’s The Wealth of Nations:
Though the profusion of government must, undoubtedly, have retarded the natural progress of England towards wealth and improvement, it has not been able to stop it.
How do you know if a deal is win-win or win-lose?
Simple: A win-win deal is voluntary. Win-lose deals are not. Regulations are win-lose. Someone wins – usually the protected industry or the regulators themselves (and Mr. Obama, of course). And someone loses: almost everyone else.
And economic growth slows.
But we are more cynical than Mr. Crews. We’ve been watching this show for a long time. Slowing growth was not, we believe, an accident. It was not unfortunate collateral damage.
It was intentional.
Lobbyists, think tanks, big business, bureaucrats, cronies, and insiders – all the people who add to the regulatory claptrap – share the same basic motivation.
All of them are on top of the world now. And they are willing to pay Mr. Clinton, Mr. Obama, Mr. Bush, and Mr. Trump to help keep them there.
Bill Clinton is believed to be worth $80 million – not bad for a life of “public service.” Barack Obama’s fortune is “only” $40 million. But he’s just beginning to collect his debts.
Word on the street is that he’ll collect $400,000 for a single speech on medical care, for example.
Pocket change you can believe in.
BY CHRIS LOWE, EDITOR AT LARGE, Bonner & partners
More bad news for brick-and-mortar retailers…
Today’s chart tracks department stores versus non-store retailers as a percentage of all U.S. retail sales going back to 1997.
That’s when Amazon.com floated on the U.S. stock market as an online bookseller.
As you can see, in 1997, department stores accounted for 9% of all retail sales. That compares to just 3% today.
Conversely, non-store retailer sales – which include telephone sales and TV shopping channels in addition to online sales – have surged from 5% to 12% of all retail sales.
– Chris Lowe
Analysts Are Wrong About the Jobs Report
The U.S. jobs report published last Friday shows declining job creation in the country. But some analysts are actually viewing this as a good sign. Here’s what they’re not seeing.
The Vanishing Teen Worker
The official unemployment rate of 4.3% is a 16-year low. But one age group is leaving the workforce in droves: teenagers. Here’s why the summer job may be a thing of the past.
How to “Teleport” Your Life Savings
If you were forced to flee your home, how would you take your money with you? As cash? As gold? Colleague Greg Wilson knows a better way.
In today’s mailbag, readers weigh in on yesterday’s Diary, “What Do ‘Think Tanks’ Think About?”
Think tanks seem to be filling the void that used to be the purview of some universities. Portions of those formerly august institutions used to think about whatever it was some outsider would pay them to think about. Now, it seems, they mostly want to “emotionalize.”
– Pat I.
Why do you assume the information about the Trump relationship to Russia was obtained illegally or inappropriately? Have you no support for an effort by our government to find out what Russia is up to by listening to their conversations?
Apparently, in the process, they could hear what the Trump team was saying to the Russians, which apparently was close to treason. Is this possibility of no interest to you? Trump is no longer a representative of the conservative ideals or values. Why treat him like an honest person who is trying to help his supporters? We are no longer witnessing normal politics. When are you going to acknowledge that we have a very serious and unusual problem beyond politics?
– Edmund S.
Regarding the general idea that military spending is wasteful: I think, maybe not. Independent of politics and wars, military spending gives lots of people lots of jobs. I think of the military-industrial complex as a kind of giant holding tank for people with advanced job skills, who would, in today’s economy, otherwise be homeless and on food stamps. The same goes for the large number of soldiers deployed worldwide.
– Craig M.
The Saudi arms deal will create wealth. Saudi Arabia is purchasing a panoply of weapons from US firms. The weapons are made by American taxpayers. When the US firms and their employees remit their respective taxes to the Federal government, even the US Treasury will financially benefit from this deal. It’s a win-win-win transaction.
– Jim R.
This may very well be the best Diary that Bill has ever written. Much more valuable than investment or economic advice or musings. Thank you!
– Mark M.
Meanwhile, readers reflect on Bill’s eulogy for his mother.
Wonderful eulogy to your mother. My condolences to you and your family on your loss. When I lost my mom, I realized that there were so many things I needed to ask her that I never got around to asking. Our lives become complicated with jobs, career, raising a family that simply absorb our time and thoughts. It was after she was gone that I realized how much I truly missed her. Your fond memories will help sustain you going forward.
– Fred L.
What the world needs now is more people like your mother. I have come to love her by reading your columns which made her bigger than life.
– Mike Q.
Dear Bill and Elizabeth, my heartfelt condolences for the loss of your mother. What a legacy she has left you as expressed in your eulogy. Thank you for sharing it with your readers as we have been enriched by your sentiments. I was particularly touched when you said “my mother did the hard work of loving people one by one.”
– Jan M.
Bill, the eulogy for your dear mother was one of the finest I’ve ever read. So intimate, so plain spoken, so poignant. I wish we knew each other well enough that you could write mine one day when my spirit takes its leave from my earthly body. However, you’d have your work cut out for you because I’m not nearly as nice as your mother!
– Ken C.
Thank you for sharing the eulogy for your mother. It was moving, yet not without a touch of humor. Most of us lose a parent, often both parents, in our lifetime and it’s never easy. I like to think I will see my parents again someday, somewhere. I feel for you and your family.
– Robert T.
Thank you and your family for sharing the memory of your mom. Mamianne, as described by you in the eulogy, was indeed a saint. I know she inspires me with how she prioritized her life.
– Chris P.
Barron’s recently released a report on a study going back to 1996. The study found that one-third of all stock market returns happen on just four days.
Colleague Jeff Clark has found a way to take advantage of these “profit windows” to make triple-digit gains in a matter of days. Jeff released a new presentation to explain how.
Watch it right here.