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Are Electric Cars Really Green?

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The 77% Myth

Equal Pay

For 30 years I have been a supporter of equal pay for women. My reasoning is very selfish and I have shared it with everyone who has asked. As I was married to a working woman, I benefitted as she made more money. It’s a simple and straight forward as that.

It’s also rather obvious and it’s quite similar to clean air and clean water. Do you hear anyone arguing the other side. Are there presidential candidates who argue in the debates that we have to lower woman’s pay. Of course not. And yet in every speech that Hilary and Bernie give they bring up ensuring that women receive equal pay for equal work.

But where are the companies that aren’t doing this? If either of them can name just one company that does not pay women the same as men then a lawsuit should be filed immediately under the two laws that are currently on the books.

Equal Pay Act of 1963

http://www.eeoc.gov/laws/statutes/epa.cfm

https://en.wikipedia.org/wiki/Equal_Pay_Act_of_1963

Lilly Ledbetter Fair Pay Act

http://www.eeoc.gov/eeoc/publications/brochure-equal_pay_and_ledbetter_act.cfm

https://en.wikipedia.org/wiki/Lilly_Ledbetter_Fair_Pay_Act_of_2009

But they can’t do that because there is no such example.   So why do they keep up this pretense?

Of course it’s about politics. If they can keep up the narrative that there is a war on women it will only help them in the general election. (And if they can get a new law passed that uses the same shoddy standards of evidence that the 77% claim uses than the trial lawyers will be happy to file lots of lawsuits).

To fight this narrative, there needs to be more focus on the facts. Not the shoddy analysis done by the Obama Administration.

A very good analysis was discussed by the folks at Freakonomics. Although Steven Levitt, one of the founders, is a professor at the University of Chicago and therefore you might say leans right, However, Stephen Dubner really runs the place and if you have read his stuff or listened to his podcast you know that he leans more left. This is the link to their podcast on the subject.

http://freakonomics.com/podcast/the-true-story-of-the-gender-pay-gap-a-new-freakonomics-radio-podcast/

The analysis that he discusses was done by Harvard University Professor of Economics, Claudia Goldin. She was the first woman to get tenure in the Harvard Economics department and a former President of the American Economics Association. In other words, pretty credible.

What she found was that when you control for factors such as education, profession, experience and hours worked the gap virtually disappears. Additionally, there is another factor that could be called flexibility selection that can explain any remaining delta. Flexibility selection is employees “selecting” jobs that give them more flexibility for their personal lives. Some factors of flexibility could be to work from home occasionally, set their own hours, less travel amongst other things. This may be to take care of kids or parents or just because the person doesn’t want to have their life consumed by their work. One example of this is the lawyer who leaves the high pressure law firm to become a corporate council. Lower paying but giving the person more flexibility with their schedule. Yet both positions show up on census data as the same job. These elections are made by women more often than men and although they show up in the data as the same job, one is paid less. Should this be illegal.

A major problem in continuing this narrative is that by constantly repeating it we are creating an entire generation of victims. I don’t want my daughters thinking that they are being taking advantage of by “the man”. To quote President Obama “that’s not who we are”. I want them to believe that they are in control of their future and with hard work can achieve whatever their goals are. That is the American Dream. That is who we are and it applies equally to men and women.

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Separation of Powers

 

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What is a Conservative?

leftright_EU_1416

We have all heard of the Buckley Rule – that you should vote for the most conservative candidate who can win. (And yes I am paraphrasing what he actually said). But what defines being a conservative? Is it about a balanced budget? Is it abortion? What about foreign aide or Afghanistan?

I tend to think of three policy areas: Social Issues, Spending and Foreign Policy. But even within these areas there are many complications and even contradictions.

Social Issues can be particularly vexing.   Sure we all know that a conservative is against abortion, but what about those who are more libertarian and say that the government should regulate as little as possible. Does this apply to abortion? This same conflict could come up around gay marriage. Is a true conservative for traditional family values or staying out of people’s lives. If we are for devolving power from the federal level to the state and even lower when possible what happens when a community wants Single Payer?

Democrats try to paint conservatives as being supportive of big business but many conservatives would reject that notion as crony capitalism and be more supportive of entrepreneurial ventures. How does this play out in the tax code and spending?   Is a conservative for exemptions and credits because they reduce taxes? Does this apply to an expanded dependent exemption as proposed by Marco Rubio? What about to credits for solar panels as proposed by virtually every democrat? Why are they different? Is it because one is about family and the other about green energy?

Is a conservative supportive of boots on the ground in Syria? What about in Ukraine? What is the difference? Do we support dictators who keep the pot from boiling over because they are our guys as Ted Cruz said on Tuesday or do we support democracy everywhere as President Bush advocated? What about data collection under the patriot act? Should we allow that? Should Apple and Google be able to sell phones that allow for encryption?

These are complex and nuanced issues and I am sure that if we surveyed top Republicans we would get lots of different answers. That is what makes this idea of the most conservative, electable person hard to wrap your head around.

As we saw in Tuesday’s debate there are many flavors of conservative. And we saw specifics from every candidate which helps each of us decide who to support. Unfortunately the two who have been leading lacked many specifics. Can anyone tell me where Trump stands on any of these very specific issues?   Other than things being a disaster and that he would bomb the hell out of everybody and build a really good wall do we know specifically where he stands on a complicated issue?

The one thing that I always admired about Reagan and why I believe he was an effective president is that he had a foundation of what being a conservative meant to him. It didn’t always match up with mine but when something came up in the Oval Office he was able to go back to his core beliefs and use that lens to make a decision.

I am curious, if you could summarize your core principals in one sentence what would it be? I would love to hear what your sentence is.

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Look in the Mirror

Pork

This column will be published on the eve of the annual Update Banquet, a weekend of education and camaraderie.  A chance to reconnect with old and new friends and to discuss the issues that are near and dear to our hearts.  Once again family obligations keep me from coming to my second favorite city to join in the festivities.  But that doesn’t mean I can’t join in the conversation.

As many of you gather to discuss the big issues there is an ongoing debate within the Republican Party as to whether it is the party of business or the party of free enterprise.  To a Democrat they are the same thing.  To those who think at all about the issues they are very different. 

The debate today centers around the reauthorization of the Export Import Bank.  It has become a litmus test of whether you are for or against crony capitalism and now many members of congress (even some Democrats) are wrapping themselves in that vote to show how pure they are.  How they are for the little guy.  Well unless you work for Boeing it’s not that difficult to be against the Ex Im Bank.

But after taking that easy position the hard questions start.  It’s important to look in the mirror and ask if we really are the party of free enterprise or the party of big business.  It’s easy to be against the things that don’t effect you, but where do you stand when you or someone close to you gets a direct or indirect benefit from a government program.  And let’s be honest, with a government that spends and regulates as much as ours does we are all touched by it one way or another.  So are you willing to gore your own ox?  This is a list that I crafted in a few short minutes but with a little effort I could go much broader and deeper.  I will only comment on a few of the items.  We each need to be asking ourselves, what are we willing to give up?

Direct Spending

Education Funding – 12 % of all direct education spending is funneled through the Department of Education.  They don’t create the wealth, they just take if from us, take a cut and send it back and yet we feel good about this.

Farm Bill – The farm bill is $956 Billion over 10 years.   $756 Billion goes to food stamps, $90 Billion to Crop Insurance, $56 Billion to Conservation, $44 Billion to Commodity Programs (price supports) and $8 Billion to everything else.

College Aid and Loans

Green Energy Investments

Transportation Bill – It’s not that I am opposed to roads but does the money need to flow through Washington and back to the states.  Should someone in Arizona really have helped pay for the “Big Dig” here in Boston?

BRAND USA – $100 mm annual direct spending to support tourism in the United States.

Tax Deductions

Home Mortgage Interest – One of the most controversial items on this list.  We have all been brought up that owning a house is important to society and that home interest should be deductible.  How much of the real estate crash was because of this mindset.  Canada has an equal percentage of home ownership without the subsidy.

Charitable Contributions

Tax Free Muni Bonds

Special treatment of Carried Interest – When an investment firm (PE or Hedge typically) receives a payment of carried interest it is taxed at the lower capital gains rate.  This isn’t typical capital gains because there is no money at risk.  It is more of a bonus payment based on performance.

Special Treatment of Oil and Gas Depletion Allowance – Oil and Gas companies get to take a depletion allowance (think depreciation) based on how much oil or gas they initially believe is in the well.   Then can then continue to take this allowance well past 100% as more oil or gas is discovered in the well.

Regulations or Administrative Actions

Anti Online Casinos Legislation – Shelly Adelson, a big donor to Republican candidates and causes is also the biggest proponent of keeping online gambling illegal.  Not because he is against gambling but he doesn’t want competition for all of his casinos.

Ethanol Blending requirements

Zero Interest Rates from the Fed – The fed allowing banks and other financial services firms to borrow at close to zero interest rates is essentially providing a subsidy to them while discouraging saving in society.

Insurance Mandates – Insurance mandates provide demand for things like contraception, chiropractic and other services because someone else is paying for them.  If you lobby enough you can get on the list.

ObamaCare

Licensing Requirements – Licensing for hair stylists and taxi cabs and nail salons only limits competition and benefits the owners of the businesses.

USDA and FDA Regulations –

So have I pissed everyone at the banquet off a little or am I being burned in effigy?  If so, I have done my job. 

Many of these we could all agree on, but can we all agree that a simpler tax and regulatory environment is better for the country even if it means that our personal ox is gored?  What are you willing to give up?

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Farm Bill

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/28/the-950-billion-farm-bill-in-one-chart/

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Crisis in Education…?

Education

Many have said that there is a crisis in higher education.  In fact, if you Google that phrase you get over 65,000,000 results.  I tend to agree, but what is the crisis and how should we as a nation respond to it?

The tuition cost (adjusted for inflation) for a 4 year private college has gone up from $15,306 in 1982 to $33,716 in 2012.  For a public college the percentage increase is even worse from $6,942 to $16,789.  Remember this is adjusted for inflation.

What is going on here?  Has the education gotten that much better?  I tend to doubt it.  College is a very labor intensive endeavor with the biggest cost being professors salaries.  During this time the average student to faculty ratio (often a proxy for quality of education) has stayed steady at about 15 students per faculty member.  While the number of faculty didn’t increase, the cost of instruction (faculty salaries) went up by 22%.  This is in spite of the rise of lower cost alternatives to tenure tract professors like adjuncts and teachers assistants.  Additionally the administrative costs at colleges and universities went up by 36%.

Does tuition go up because costs are rising or do colleges spend more because they have more revenue?  I don’t know which causes the other but according to everyone it has led to a crisis.

7 out of 10 students graduate with an average of $29,400 in debt, with the total amount of outstanding student loans being $1.2 trillion.  To put the $29,400 into perspective, someone repaying that amount over a 10 year period would have a monthly payment of about $345.  Thinking about my daughter who graduated last month, I am thankful that she doesn’t have any loans because I don’t know where that payment would fit into her budget.

So, there is a crisis in Higher Education.  But what is the response?  Are fewer people going because it’s too expensive?  Applications and enrollments are at or near historical highs.  So the crisis has not affected demand.   And if there is a crisis, what should we do about it?  Whose responsibility is it?  The student?  The parents?  The college?  The government?

As expected, there has been a response from our leaders.

Many on the left have said that the crisis is not in the cost of college but in how we pay for it.  And naturally that requires the federal government to play a bigger role.

Elizabeth Warren, the Senior Senator from the Commonwealth of Massachusetts (I am so sorry about that) has called for the refinancing of all student loan holders.   Basically a give away to twenty somethings.   They have already selected their major, consumed their education, and are now trying to pay it back without the ability to get a well paying job.  Frankly, they made bad choices and are unhappy with the outcome.  They should be saying “Why didn’t someone tell us!” and they should be warning today’s high school graduate.  But instead, we can’t influence their choices in the past, so we just throw money at them to get them to shut up.

On the other hand, even though college is so expensive, Obama thinks that more people should go to 4 year residential colleges and be able to study whatever they want.  It doesn’t matter that they can’t get a job.  They have the right to smoke a little weed and skip classes just like he did.  So he is out across the country promoting the traditional 4 year education.

And to make matters worse he is also trying to tear down those institutions that are trying to find new and better ways to deliver an education… the for profit institutions.  For him it seems like a knee jerk reaction.  He hears “For Profit” and knows in his heart that it has to be bad.

So what should our leaders do.

As an Adjunct Professor of Entrepreneurship at Bentley University and a member of Union College’s President’s Council, I have a vested interest in the state of higher education.  I have studied it and I have participated in it for many years.

The best thing that our leaders could do is to unleash the free enterprise system.  Support and encourage those with ideas about how to deliver a valuable education.  Let them test their ideas in the marketplace and see which work.

If President Obama spoke at Grand Canyon University or if Secretary Duncan showed up at the University of Phoenix’s graduation it would send a powerful message.

They also need to change their messaging to the students.  College is not appropriate for everyone (and it is not racist to say that).  It also isn’t always appropriate for an 18 year old.  And a full time residential experience is not always the answer.    There are many paths to getting the education a person needs.

Additionally, you can’t just study whatever you want without consequences.  Studying 18th Century Asian Art might be interesting to you, and it might be following your passion but spending $120,000 on it is probably not the best investment.  And if you are doing it via loans you might think about doing something else.  Responsible adults, from the President to Parents to college administrators should be delivering that message.

The other part of that message is that education should be a lifelong pursuit.  In fact you can follow your passion for 18th Century Asian Art online through Massive Open Online Courses (MOOCs) all for free.  And you should do that if that is your passion.  Education is fundamentally not just about the diploma it’s about the journey and increasing your understanding and gaining new insights.

Additionally, the free market should be injected back into the marketplace.   Only in the college loan market can you borrow money without a plan on how you are going to use it or how you are going to pay it back.  A disciplined underwriter would gladly loan money to an engineering student at MIT while leaving the Philosophy Major at Florida State scrambling to pay tuition.  That actually is a good thing.  It will force us to make “Education Investments” in the right places.  And force high school graduates to take a more realistic approach to planning their future.

The last thing for the government to do is to encourage things like what Starbucks just announced.  They are going to provide tuition reimbursement for online courses at Arizona State University.  Online education is not appropriate for every student and every class but as someone who has both taken and taught online courses, it is a great solution for many situations.

Yes there may be a crisis in Higher Education just like the crisis in Health Care.  But the answer isn’t more government action it is less.  The answer is more personal responsibility and freedom.  Personal responsibility to allow individuals to decide what education investments are right for them to build their lives and the personal freedom to make those decisions.

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Tesla vs Christie

Tesla

Bloomberg reports that onMarch 6, at the Conservative Political Action Conference (CPAC), NJ Governor Chris Christie had this to say: “We need to talk about the fact that we are for a free-market society that allows your effort and ingenuity to determine your success, not the cold, hard hand of the government.”   Your effort and ingenuity determine your success, not the government.  Sounds great, if only it were so.

In 2008, Tesla Motors began selling all electric cars to the public.  Elon Musk, an early investor and current Chairman and CEO of the company dared to enter a market with a product that experienced senior car executives said was not possible.  Through tenacity and perseverance (and a lot of government help – but I won’t go into that) he and his team created a new type of car and a new type of car company.  Because the company was developed in the 21st century they realized that they didn’t need to be shackled by old ways of doing business andcould take advantage of how consumers are doing business today. 

This clean sheet of paper would allow Tesla to sell cars directly to consumers, something that the incumbent auto companies would love to do.  A Goldman Sachs report in 2000 estimated that such direct sales would save consumers $2,225 on a $26,000 car.  One can only wonder what the savings on a $75,000 Tesla S would be.

But just like Charter Schools dramatically show the flaws in the public school system, this new distribution model shows the flaws in the existing dealer networks.  In this case the dealer lobby has played the role of the NEA and fought this new system tooth in nail state by state.

We aren’t talking about putting existing dealers out of business (like Obama did with the Chrysler and GM restructurings).  No we are just talking about competing with them side by side with a different model.  It’s as ridiculous as if HP fought Apple Stores because computers are complicated and all computers should only be purchased at a Best Buy where the consumer can get the assistance that they need.

The dealers have won in Texas and Virginia, and last week they won in NJ when the NJ Motor Vehicle Commission declared that all cars needed to be purchasedthrough franchisees.

To be clear, I do not have a dog in this hunt.  I am not anti Christie and I am not a Tesla fan boy.  (Although, I had the privilege of driving a Model S once and it was the most amazing ride I have ever had.)  I am opposed to all of the subsidies that Tesla and it’s buyers have gotten and as a NJ native I respect what Christie has been able to do as Governor.  But once again, I am disappointed in Christie.  He claims to be a new kind of Republican and then shows that he is just another politician.

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