Saturday, July 19, 2025
Cola Wars
I saw a post today written by a friend who apparently hopes that Coca-Cola will go back to using cane sweetener vice corn sweetener in their flagship soft drink. According to today's paper, even though Donald Trump has stated categorically that Coke will go back to using cane sugar, Coca-Cola has said there are no plans to do that.
On the surface this seems like a trivial matter and one might wonder, “Well, if people really like cane sugar better, then why doesn't coke simply go back to cane sweetener?” There's a lot more to this story than simply a choice of one over the other. The cost of sugar in the United States started to rise in the late 1970s and into the 1980s as a result of government-imposed tariffs, prompting soft drink manufacturers to switch to high-fructose corn syrup (HFCS) as a cheaper alternative to sugar. By the mid-1980s, all of the major soft drink brands had switched to HFCS for their North American products, with the original formula of Coca-Cola being one of the last holdouts. In most countries, sugar is still used rather than HFCS.
First of all, Coca-Cola played one of the best bait and switch games ever foisted on American consumers when, in 1985, the company unveiled “New Coke.” New Coke was sweeter and had a somewhat different flavor than what Coca-Cola fans were used to. While the new Coke did not grab the old Coke’s market share and in fact was not particularly loved, we would later see lots of possible reasons why that happened.
One that was frequently cited was simply nostalgic brand loyalty to the old product. Another was that the new flavor simply wasn't as good or the same as the old Coke. What snuck by many people was that New Coke was sweetened with corn sweetener vice cane sugar. Just 79 days after the introduction of New Coke, when it had become obvious to Coca-Cola inc. that the new product was not loved like the old product, they came out with “Coca-Cola Classic”, which they were happy to have all consumers believe was simply the old Coke reborn. But, in reality the “new” old Coke had one significant difference. It retained the corn sweetener of the “New Coke.”
The vast majority of Coca-Cola fans happily greeted the return of Coca-Cola classic without understanding that what the Coca-Cola corporation had done was to switch sweeteners for economic considerations and, rather than simply change the classic coke recipe to substitute corn sweetener for cane sugar, actually first issued the New Coke so that the break in continuity when the Coca-Cola classic was restored would be less noticeable. By and large it worked.
What were the economic considerations? Simple really. Consider the current SecState’s statement, made while he was a Florida Senator, that “Sugar is a national security issue!” Yeah, he said that. He and his predecessors were cheerleaders for price supports on US cane sugar production, especially since the area of Florida below Lake Okeechobee has become US Cane Sugar central, beginning when the Fanjul family of Cuban sugar barons fled Castro’s Cuba and bought up thousands of acres of that land and began cane production on a grand scale. Marco Rubio and other Florida state level politicos have received and continue to receive massive campaign financial support in exchange for pushing for ludicrous federal price supports on US produced cane sugar. Considering the vast range of products retailed in the US which depend on cane sugar, we as a nation are paying a lot into the pockets of a relatively small market segment
The result? US consumers, commercia and private, pay more than twice the average world market price for cane sugar. Coke simply made an economic decision which has saved them multi millions, approaching billions, over the years since the shift to corn sweetener. Even without US price supports, cane sugar is more costly than corn sweetener. As one example, Mexican Coke is still made with cane sweetener. It is about 32 % more expensive.
Coke did what they did largely in the name of retaining brand loyalty while making an economic decision forced upon them by a government policy which favored the few at the expense of many, one of which is the nation’s largest soft drink purveyor.
Finally, one wonders why the hell an American President who drinks Diet Coke, sweetened with aspartame, gives a shit about which real organic vegetable sweetener is used in a beverage he doesn’t drink.
Saturday, May 17, 2025
Lies of the Right the President and Others Told Me
We all know, or certainly should
know, that Donald Trump has a truth problem. Rather than dissect the spate of
recent miserable policy outrages, I’ve taken the easy way out and am simply addressing
some of the flood of lies coming from GOP talking heads, primarily but not
exclusively the Grand Cheeto himself.
Fact: Armed services recruitment
rose from 200,000 in fiscal year 2023 to 225,000 in fiscal year 2024, a
12.5% increase, under the Biden administration.
The Truth: Under the Biden administration full-time jobs
increased through that tenure. Part-time jobs also increased, driven by people
who wanted to work part-time. Bureau of Labor Statistics data shows that the
number of jobs rose from 125.2 million in January 2021, to 133.5 million in
December 2024 an increase of 8.3 million jobs, or about 6.6%, over four years.
The Lie: Donald Trump stated on January 20, 2025, that: “The
United States is the only country with unrestricted birthright citizenship.”
The Truth: There are about three dozen
countries that have unrestricted birthright citizenship, also known as
"jus soli," or "right of the soil." In this group, The
U.S. is joined by neighbors Canada and Mexico, along with nearly every
country in Central and South America.
The Lie: Trump: “Tariffs are about making America rich again
and making America great again. And it’s happening. And it will happen rather
quickly. There’ll be a little disturbance, but we’re OK with that. It won’t be
much.”
The Truth: Most economists say Trump’s tariffs would hurt
the country, as they are, in essence, tax increases that could raise the costs
of goods in ways that could also harm economic growth. We are only beginning to
see the effects of these ill-chosen tariff actions and it will likely only get
worse. When the Yale University Budget Lab looked at the tariffs that Trump
imposed on Canada, Mexico, and China, it found that inflation would increase a
full percentage point, growth would fall by half a percentage point and the
average household would lose about $1,600 in disposable income.
The Lie: Trump said: “We ended the last administration’s
insane electric vehicle mandate, saving our auto workers and companies from
economic destruction.”
The Truth: The was no “mandate,” simply a stated goal. No legislation.
Period.
The Lie: In his State of the Union message Trump said:
“We’re going to have growth in the auto industry like nobody’s ever seen.
Plants are opening up all over the place. Deals are being made, never seen. (sic)”
The Truth: No US
automaker has announced a new plant since Trump took office and began
instituting new tariffs. What is far more likely to spur US auto sales is the
fact that Trump’s move to impose a 25% tariff on all imports coming into the
United States from Canada and Mexico could add thousands of dollars to the cost
of each new imported vehicle. (That said, Honda, Hyundai, Toyota. Subaru and
Nissan already manufacture in the USA.
The Lie: Same SOU address: Trump said: “As an example, not
long ago, and you can’t even believe these numbers, 1 in 10,000 children had
autism. One in 10,000, and now it’s 1 in 36. There’s something wrong. One in
36, think of that, so we’re going to find out what it is.” (Of course, his
moronic HHS appointee thinks he already knows)
The Truth: the
science is clear that vaccines don’t cause autism. Period. Actual research, on
the other hand suggests that much of the increase is due to increasing
awareness and screening for the condition. Also There have been
changing definitions widening the scope of autism to include milder conditions
now “on the spectrum” that weren’t recognized in previous years, coupled with advances
in diagnostic technology.
The Lie: Trump press secretary, Karoline Leavitt to an
Associated Press questioner: “He's (Trump) actually not implementing tax hikes.
Tariffs are a tax hike on foreign countries that, again, have been ripping us
off. Tariffs are a tax cut for the American people (????), and the president is
a staunch advocate for tax cuts.' The AP questioner fought back against
Leavitt's claim by asking if she has ever paid a tariff, saying that 'They
don't get charged on foreign companies they get charged on importers.' Leavitt
responded: 'I think it's insulting that you're trying to test my knowledge of
economics, and the decision that this president has made. I now regret giving a
question to The Associated Press.'
And that’s about all I can stomach for today!
Saturday, April 19, 2025
More Trumpian Blithering B.S.
An actual Donald Trump quote Friday, April
17th: President Trump weighed in on the cost of eggs around the
country, claiming Friday at the White House that the prices are “getting too
low.” Trump then praised Agriculture Secretary Brooke Rollins for doing a
“great” job and then asserted that egg prices are “down 87 percent, but nobody
talks about that.” And: “You can have
all the eggs. You watch, we have too many eggs. In fact, if anything, the
prices are getting too low. So I just want to let you know that the prices are
down,”
Fact: The highest recorded price for a dozen
large Grade A eggs in the US was $8.15, according to the USDA, which was
reached on March 4, 2025. This price was significantly higher than the average
price of $4.95 per dozen in January 2025. Make no mistake about this; avian flu
is the culprit, resulting in the following statistic: In December 2024 and
January 2025, over 41.4 million domesticated birds were culled due to the
H5N1 avian influenza outbreak. This brings the total number of birds
affected to over 166 million, as of February 2025. The record number of chicken deaths,
including those from culling, led to a surge in egg prices. Period. Trump
claiming that his airhead SecAg had anything to do with egg prices is typical
Trumpian rambling bloviation. If he’s speaking, he’s lying.
In truth, if egg prices were really down 87%, a dozen grade
A large would cost $1.05 per dozen at retail. In truth, egg prices in the first
three Trump months, are 64% higher than when he took
office. Is that his fault? Of course not. Eggs are a market commodity and supply
and demand drive prices. Fewer chickens means fewer eggs, fewer eggs means higher prices.
Period.
Adam Smith understood
that in 1776, when he published “On The Wealth of Nations.” Donald Trump is an inveterate liar and an economic
dunce.
Tuesday, March 25, 2025
Financial Shenanigans in the Age of Trump
In the “They
snuck it in while we weren’t watching” category, the big winner is….US
Commercial banks. The one paragraph item in question was relegated to the last
page of the world and national news section of the local rag, right beside the
notice that Chuck E, Cheese has declared bankruptcy. Of course, Mr. Cheese has
been bankrupt in numerous other ways, primarily having to do with good taste,
for decades.
The issue at
hand was what has been called the “Volker rule.” For those not intimately familiar with
commercial banking regulations (which once included the kid) the news rang no
bells …that is until I reflected upon recent history, like, say, the great
recession of 2009-13 and the words “commercial banks” rang a bell. First, the
sobriquet “Volker rule,” named for former “Fed Head” Paul Volker refers to
section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act,
which sets forth rules for implementing section 13 of the Bank Holding Company
Act of 1956..
The Dodd–Frank
Wall Street Reform and Consumer Protection Act (commonly referred to as
Dodd–Frank) is a United States federal law and an Obama initiative that was
enacted on July 21, 2010, primarily as an attempt to stave off, by legislative
fiat, further financial sector bleeding from risky use of clients’ money by
large commercial banks. The law’s intent was to overhaul and increase financial
regulation in the aftermath of the Great Recession. You remember, TARP, bailouts,
mortgage foreclosures, unemployment, all that “stuff?” It made changes affecting all federal
financial regulatory agencies and darned near every part of the nation's
financial services industry. Much of the act was consumer protection oriented.
This act was a
direct result of proposals by President Obama aimed at helping to prevent
another epic economic tanking based on malfeasance at high levels of the US
banking industry. Responding to widespread calls for changes to the financial
regulatory system, in June 2009 Obama introduced a proposal for a
"sweeping overhaul of the United States financial regulatory system, a
transformation on a scale not seen since the reforms that followed the Great
Depression". That pretty much sums up Dodd-Frank. The bill, based on his
proposal, was introduced in the US House by Congressman Barney Frank, and in
the Senate by Senator Chris Dodd. As one might expect, Most Congressional
support for Dodd-Frank came from members of the Democratic Party, but three
Senate Republicans voted for the bill, allowing it to overcome the Senate
filibuster.
One provision,
the afore-mentioned Volker rule, restricted banks from making certain kinds of
speculative investments. The act also repealed the exemption from regulation
for security-based swaps, requiring credit-default swaps and other transactions
to be cleared through either exchanges or clearinghouses.
Understand, these were provisions to protect
investors, borrowers, and financial product purveyors and their clients from the no holds barred banking practices
which had crept back in to the rodeo
which was the commercial banking industry after Depression era regulations had
been eased by Congress. The first Trump
administration eliminated most of the Volker Rule’s regulatory prohibitions and
provisions. Of course, lax supervision and little restraint is fine with the
big guys in banking but hazardous to most of the rest of us who have IRAs and
other retirement vehicles and accounts.
For the
uninformed, market manipulation, intentional or not resulted from the sheer
size of funds involved in questionable securities, chief among them being high
risk mortgages, bundled as viable and sound instruments. Proffered by agents
for the big commercial banking houses which bundled and sold these dogs, there
were easy customers aplenty, such as union pension funds, state employee
pension funds, or simply large fund managers, seeking safe (hopefully) and
profitable (primarily) places to put their money.
Added to the mix were credit default swaps.
This is bordering on a Grad school economics course, so I’ll just try to describe
credit default swaps (CDS) as “I’m buying insurance to pay me if your
investment tanks.” Think of it like this: Tom buys a racehorse with money
borrowed from Bob. He plans to pay for the horse with its winnings. I don’t
know either Tom or Bob, who lent him the money. Bob, the original lender might
buy insurance (a CDS) that pays off the loan if Tom defaults. Bob can then,
since he feels sure the horse is a winner, sell me that CDS. If the horse wins
the triple crown and Tom pays off the loan as promised, the lender, and I, whoever
bought the swap, is out the premium we paid the underwriter as well as I’m out
the money I paid the Bob, the original lender, to buy the swap.
However, should
the horse break a leg and never run, the owner of the credit default swap (me) will
(usually) collect the full value of the loan. Bob, however, gets the asset (the
horse), now worth only its glue value. This little gem of an idea is one of
many concepts to use money to make money which have no real product or service
whatsoever in the mix (derivatives). What it did do, was to entice such
insurance giants as AIG to insure these bets against the system with large
premiums involved, and investors to buy them.
When the
bundled mortgage housing bubble imploded, and the “tranches” of groups of
unsound mortgages were just paper, and worth nowhere close to the literally
trillions of dollars pinned on the illusion of their value, everyone lost.
Insurers lost, because the amount of massive defaulted credit they had insured
via CDS would have bankrupted several of them, so, the buyers of the CDS also
lost because the Insurer couldn’t pay (and they had paid the CDS sellers for
the swaps) and the sellers of CDS were left with almost worthless bundles of
impending foreclosures. By the end of
2007, the outstanding CDS amount was $62.2 trillion. For a bit of perspective,
that figure was over ten times the national debt!
Commercial
banks, like Bear, Stearns, Lehman Brothers and Merrill Lynch were in trouble. Lehman
Bros, with $600 billion in bonds outstanding went bankrupt. AIG, having insured
individuals world-wide against such defaults via by CDS was saddled with far
more claims than the dollars to pay them. As we know, the recovery was long and
painful, and many have pointed fingers, each at another, but one salient fact
remains uncontested: CDSs are not traded
on an exchange and there is no required reporting of these transactions to a
government agency. This has been called a “shadow banking system” by
economists. (Think “dark web,” if that helps) This situation is a direct result
of unregulated market capitalism. The 2010 financial crisis demonstrated the
lack of transparency in this huge “shadow market” which became a concern to
regulators as it could pose a systemic risk to the US economy if allowed to
function unchecked. This and other issues were prime concerns of the framers of
Dodd-Frank.
Oddly enough, as
a candidate, Donald Trump was the most self proclaimed anti–Wall Street
presidential candidate since FDR in the 1930s. He attacked Wall Street
relentlessly, directly, and explicitly throughout the 2016 campaign and
attacked his opponent, Hillary Clinton, nonstop as being “In the pocket of Wall
Street.” He even put the then-CEO of Goldman Sachs, Lloyd Blankfein, in his
last campaign ad as “one of the biggest threats to the people of the United
States!” So, the Donald must have been a fan of Dodd-Frank, huh? Not so much.
C’mon, we all know he’s a lying sack of shit, why should this be different?
Predictably, critics
of financial reform have claimed that the law and rules would kill banks'
revenue and profits, which would prevent them from lending and would in turn
kill economic growth and jobs. They did the same thing when FDR signed the
Glass-Steagall banking act 1933. Glass-Steagall was different in that its
principal regulatory function was to separate investment banking from retail
banking. Repealed in 1999 by another banking act, the Gramm‐Leach‐Bliley Act,
much of Glass -Steagall survives (separation of commercial and investment banking,
FDIC, etc.). Neither would have stopped greedy lenders like Wells - Fargo,
Washington Mutual or Indy Mac from making bad adjustable-rate mortgage (ARM) loans
to persons willing to borrow today without regard to the inevitable adjustable
rate increase next year. Republicans tend to push the blame onto Federal
initiatives urging the cessation of red-lining and other discriminatory
practices. Likewise, private mortgage brokers in (too) many cases simply threw
rational thought and responsibility to the winds, realizing that, the more
mortgages sold, the more commission and that the vast bulk of them would be
resold to banks before the ARM kicked in triggering, in a lot of such
instances, default.
Understand,
once a mortgage broker okays and finalizes a mortgage, they are on the hook for
that loan, but in today’s home loan world, most of these loans are then quickly
sold to a bank or other professional money lender who is now the recipient of
the buyer’s payments or the loser if the mortgage defaults. The mortgage broker
then has no further fiduciary responsibility (or risk!)
So, did Dodd-Frank and the Volker rule damage or stifle the
vitality of the commercial banking industry as some have predicted? Hardly. In
fact, in virtually every quarter since 2009, including throughout 2018 and the
first quarter of 2019, the biggest banks recorded or eclipsed record revenues,
profits, and bonuses while at the same time increasing lending.
Even so, at least 115 Dodd-Frank rules remained to be
completed when the Obama administration ended, including executive compensation
rules, securities-based swap rules, credit rating agency reform, and commodity
speculation rules.
Despite his constant
excoriation of Wall as a candidate, after taking office, the Trump
administration promptly set about dismantling the core pillars of financial
reform by a number of regulatory reductions or eliminations, some of them were:
Lowering capital requirements (easier, riskier commercial
loans, important to Trump, himself heavily leveraged)
Enabling more unregulated derivatives dealing (you know,
like the CDS that triggered the bubble damage)
Rolling back consumer and investor protections by reducing
prudential regulation of systemically significant banks (this is critical
because it takes Federal eyes off those banks not considered critical, which
now is almost every major “non-bank” as these commercial entities are sometimes
called.
Both GE capital
and AIG are examples of “too big to fails” which are now off the list. One,
AIG, not only failed spectacularly and engaged in egregiously irresponsible
conduct, but also required an unlimited bailout, which ultimately amounted to
$182 billion. The other was General Electric (GE), which, although with fewer
headlines and less egregiousness, would have gone bankrupt without being bailed
out as well. removing all of the “non-banks” from scrutiny is insane and even
bankers outside that unique arena have said so.
Neutering the
regulation of systemically significant nonbanks and the shadow banking system,
stopping enforcing the laws, is actually almost siding with the predators. Goodbye
Volker rule.
From 1929
through 2010 the US experienced a number of recessions. Some have been cyclic
adjustments with no singular or specific cause; several were adjustments from
wartime to peacetime employment. Three however, and two of these are 21st
century phenomena, were the result of a specific sector of the nation indulging
in irresponsible market operations based on that most base of motives - greed,
leading to runaway speculation. All three, the great Depression, the Dot-com
crash and the great recession are the result of individuals who rarely if ever
get their hands dirty, playing fast and loose with other people’s money or
betting other’s money on “what ifs.”
Trump favors
loosening responsible observation and regulation of these entities. His
sycophants echo that claim. History says he and they are wrong. History is
powerful proof that regulation and financial stability don’t stifle growth and
prosperity. That is why Dodd-Frank re-regulated the financial industry and why
the first Trump administration's deregulation is so reckless and dangerous. The
assault on the Volker rule was simply the latest insult.
As discussed, Trump did succeed in
weakening Dodd-Frank, especially the regulation and oversight of commercial
banks. As a result, in March 2023, Silicon Valley Bank was allowed to become
sufficiently mired in poor decisions regarding the spending of investors’ funds
that they ended up with low interest investments that left them unable to meet
depositor’s demands. This deregulation, specifically due to
Dodd-Frank’s emasculation, especially in the area of the Volker rule,
exempted banks with assets below $250 billion such as SVB, from “stress tests
and tougher capital and liquidity requirements, and in 2019 the regulatory
burden was further reduced for all but the largest banks. These decreases in
accountability and oversight allowed SVB to take the risks it did with other
peoples’ money.
Since Biden was now in office, the
predictable and ludicrous Republican response was to blame “Woke banking
practices” whatever that might even mean, for the results of Donald Trump’s
assault on reasonable and necessary government regulation. While commercial
banks and huge debtors such as the Trump Organization whine about it
(regulation), the real victims are powerless in many cases.
The housing bubble collapse between
2007 and 2012 resulted in more than twelve million foreclosures in the United
States. The crisis was caused by a number of factors, but the main contributor
was the substantial number of predatory and unaffordable subprime mortgage
loans given out in the early 2000s. This was escalated by lax banking rules
allowing high risk mortgages to be graded like currency. RIP Dodd Frank, we
hardly knew ye.
One wonders what further financial
shenanigans Trump might espouse and abet after he’s done gutting regulations in
other areas. One can only hope desperately for a blue tide in the 2026 House
and Senate elections.
Wednesday, February 5, 2025
The Speech No One
Wants to Give
“To attain any success, it is quite clear that the
Federal government cannot avoid or escape responsibilities which the mass of
the people firmly believe should be undertaken by it. The political
processes of our country are such that if a rule of reason is not applied in
this effort, we will lose everything — even to a possible and drastic change in
the Constitution. This is what I mean by my constant insistence upon
“moderation” in government.
Should
any political party attempt to abolish social security, unemployment insurance,
and eliminate labor laws and farm programs, you would not hear of that party
again in our political history. There is a tiny splinter group, of
course, that believes you can do these things…. a few other Texas oil
millionaires, and an occasional politician or businessman from other areas.
Their number is negligible, and they are stupid.”
Sound a bit like
AOC speaking? Perhaps a Socialist
candidate? Hardly. This is an excerpt from a letter written by Republican Dwight
D. Eisenhower, then POTUS, to his brother Edgar. The gap is where he named
several names of those he considered “stupid.” The second paragraph reveals how
far the modern Republican party has strayed from Ike’s precepts, having become
markedly anti-union, and progressive labor legislation, and threatening Social
Security. Of course, since many modern Republicans reap the windfall from farm
subsidies, they have actually increased (read RED states).
However, the
title of this essay reflects my belief that we should consider and honor the
scientific process, by which I mean mathematics, statistics, and demographics.
One of the aspects of science which some political conservatives and an even
greater percentage of conservative religionists deny, is that as conditions
change (read climate change, here, as one example) so should our expectations
and actions.
One such
Conservative objection to some change is the fear that doing the right thing
isn’t the “right thing’ if it affects business’s bottom line or electability of
partisan hacks. Another thread is voiced by those who are stuck with a creation
“story” which is increasingly revealed as creation “myth” by science. The
tragedy here is that as we are seeing as I write, the right salesman with the
proper snake oil can, seemingly against all odds, unite these seemingly
disparate forces.
First off we have the claims that
Congress is “pilfering the Social Security Trust Fund. Social Security sometimes collects more money
than what is paid out. Between 1937-2009 the Social Security Administration
(SSA) received $13.8 trillion in income, but expended $11.3 trillion in
benefits, according to the agency. However, for the past 13 years, the
retirement program hasn’t taken in enough FICA taxes to pay current year
benefits and that's where the Trust Fund, comes into play.
Every year, excess money, if any, is held in the
"Social Security Trust Fund" which get invested into Treasury bonds
and securities that make a lot of interest. In the Fiscal Year 2018 those
investments racked up $3 billion alone, adding to a total of $2.895 trillion then
`````currently in the fund. So any money taken in from Social Security isn't
being divvied up among Congress, that money is being invested in the most
secure way--with U.S. bonds.
"No, [Congress] did not take
any funds from SS," Dean Baker, senior economist at Center for Economic
and Policy Research, said. "SS funds are credited to its trust fund.
Unless Congress changes the law (and it hasn't), any money dedicated to the
trust fund is in the trust fund.”
Having said
that, it must be noted that one consistent bugaboo, addressed with varying
amounts of arm waving and hot air, to some degree by both parties, has been the
continually burgeoning federal budget cost share of social welfare programs,
especially Medicare, Medicaid and Social Security programs. Much has been
written, some of it mine, regarding health care costs and the significant responsibility
for their escalation borne (or which should be borne) by outlandish and
extortionary drug pricing by Major Pharma corporations. This isn’t a “fix”, but
it would be a hell of a start if Congress had the guts to put lobbyist
influence aside and repeal Medicare part D’s prohibition on negotiating drug
prices like every private health insurer can and does. That simple action would
reduce government drug spending by about $133 billion annually! For comparison,
that savings would defray about 30% of the 2020 interest on the national debt.
(prior to whatever effects we saw from Covid-19)
On the other
hand, and more directly related to my topic is a set of demographics which
requires nothing more than literacy and common sense to interpret. The
implications are plain and the “fix” apparent, if unpopular.
Obviously, we live longer, and not just a little longer, but almost 15 years longer. Actually, in 1935 when Social Security was incepted, the average life span was 60.7 years of age. This meant that, as the creators of the concept enacted it, the odds were that the average worker wouldn’t live to collect a dime!
Looking at the
table yields some fairly simple conclusions, but the “big” one is harder to
see. First: in 1940, Ida May Fuller,
became Social Security's first beneficiary. She was exceptional because she had
lived longer than the average of her peers.
By 1945, at full wartime productivity, for each SS beneficiary, there
were 41.9 workers paying into the system (actually building for a while, an
excess, the illusory “trust fund”.) Today’s workers, on the other hand, are
paying today’s recipients. Yes, they are.
Since this point, the Social
Security Board of Trustees has released an annual report detailing the
financial health of the program. This includes taking a closer look at the
income and outlays for Social Security each year, as well as forecasting the future
solvency of America's leading retirement program. In each of the last 40
reports, the Trustees have warned of a long-term funding obligation shortfall.
In other words, the Trustees forecast cumulative income received in the 75
years following the release of a report and determined that, inclusive of
cost-of-living adjustments (COLAs), outlays would handily outpace income. In
the 2024 Trustees Report, Social Security's long-term cash shortfall was
estimated at $23.2 trillion through 2098. This was up $800 billion from the
projected 75-year funding obligation shortfall listed in the 2023 Trustees
Report.
By 1975, because of the increase in recipients
and a 7-year increase in longevity, the “workers to recipients” ratio was down
to less than 1/3 of the 1945 figure. Meanwhile, the birth rate in the USA had
decreased by about a third. The number of retirees reaching eligibility age was
still increasing, primarily due to longer life expectancy. As seen in the
table, the Social Security share of the federal budget was blossoming as well.
At this point, another factor came into play, that being the numbers of persons
receiving disability or survivor’s benefits from the same pot of cash.
Surviving spouse with minor children coverage was part of the 1935 law, but
disability wasn’t covered until 1956. This may seem cynical, but it
seems to me that the availability of SS disability has in many cases created a
cottage industry for lawyers willing to “arrange” it for a slight fee.
The monster
lurking under the bed, however, was the post war “Baby Boom”. From 1945 to
1961, the birth rate in the USA was higher than ever before or since, creating
a “bubble” in the progression of population growth. The effects of this bubble
have been felt by every industry in America from home building to children’s clothing
to insurance to health care, and the list is practically endless. Take a child
born to Mr. and Mrs. Howard Cunningham in 1948, after Howard returned from his
army duties and they settled down. Their son, call him Richie, born in 1948,
hit Social Security full retirement age of 67 in 2015, and he’ll draw Social
security, assuming he’s got good genes, for at least another 11 or 12
years.
Because the baby
boom continued into the early 1960s, and because the birth rate dropped to
about half of that of the boom’s peak years, there are now even fewer workers
contributing to the payments made to the steadily increasing numbers of boomer
retirees planning, like me, to live a lot longer than average. I’m barely a “pre-boomer, born in 1942. The
boomer class of 1955 -1960, when the birth rate per 100 thousand was still over
20, is yet to come. The ‘55s hit in 2022, more to follow.
So, what? The
first observation, admittedly in hindsight, is that this issue was completely
predictable and avoidable. It was obvious by the numbers between 1945 and 1955.
Disability compounded the issue, accounting. now, for about 20% of the
Social Security payout. What to do? Let’s first reflect on what could have been
done. This demographic trend was obvious at least 70 years ago (1950) and at
that time, considering the increased lifespan, a forward-thinking Congress (yeah,
I’m aware that’s an oxymoron) might have passed legislation raising the full
retirement eligibility age by a year each of the following three or four
decades. At most, that would now have full retirement at age 69. An
accompanying increase for the early retirement age would have also been
appropriate. Passing this legislation in 1950 to go into effect in 1960 would
have “grandfathered” every worker within ten years of retirement. Had this been
done, recognizing that the changes occurring were predictable and irreversible,
Social Security would be well and good. As it stands, more than a third of
retirees take early Social Security benefits, in many cases because they have
prepared for retirement in other ways. In other words, foresight could have
“fixed” the problem by 1990. Unfortunately, only a smattering of that philosophy
was applied, and that was too late.
What might be done now? This is the part that
no politician wishes to address, because any real fix will be unpopular with some.
First, recognize that any change that doesn’t grandfather persons with current
retirement plans is blatantly unfair, so: pick a time certain, say, at least 5
years from the enacting of legislation, which raises the full eligibility age
to 68. Also, raise the early retirement age to 63 in, perhaps, just three or 4
years. Additionally, decrease the initial amount of early retirement to
encourage individuals to wait. In another five years plan for another bump to
age 69 for full retirement, while leaving early retirement at 63. Increase the
reward for waiting. In a “worst-case” scenario, also require employers to
include disability insurance equivalent to Social Security disability as a
perk. Also enact realistic legislation defining “disability” in meaningful
terms. I’m reminded of the Louisiana mother of four sons, all supposedly
mentally unable to hold jobs, yet all of whom had cars, but when their
disability status was questioned, her rationale was that “Every young man needs
a car.” The literature is rife with tens of thousands of well documented cases of
SS disability and Medicare/Medicaid fraud as well as simple benefit fraud, such
as cashing checks of long dead parents.
Explain, in simple English, that by probably
2035 the problem will begin to moderate on its own, as the “Bulge” of the baby
boomers pass through the system and on to whatever cosmic Karma waits for them.
The birthrate began to decrease after a plateau at 1955-57. The class of 1957 would
be 81 by that time and total numbers of beneficiaries would be decreasing
steadily.
Do not, however, like former Senator Alan
Simpson or ex-Congressman Paul Ryan (himself the beneficiary of Social Security
survivor’s benefits), address this issue as if the people who depend on it are “greedy”
and are the ones at fault. “Recipient shaming”, when the current issues are the
fault of decades of Congressional heads in the sand (or up their keisters), is
a sleazy cop-out by those who had the data to see this demographic shift coming
sixty years ago yet took no action.
Yeah, it would have been the speech
no one, presidents included, wanted to give but had that happened, with
appropriate “grandfathering,” this essay wouldn’t have been written. Too often this one- dimensional approach,
usually including the use of the word “entitlement” somewhere, seems to blame currently
eligible recipients rather than address the issue of Congressional
unwillingness to tackle unpopular issues squarely.
Tuesday, January 28, 2025
He’s Dumb, But Not Alone
The Orange Dunce
of Mar a Lago once told his then media bitch, Sean Hannity, that “Wind energy
won’t work because the wind only blows sometimes.” More recently he raved about the "fumes" associated with wind power. As a science nerd, I could
go into some detail about why this is bat shit crazy, but I’d rather have a
frank discussion about why the “Green New Dealers” also need to do more
homework. I’m reminded of the stoner, interviewed at Woodstock who opined that
Woodstock was a “model for the world, man.” It was a great concert, but hardly
a model for urban planning, living or (definitely not) sanitation.
Idealism,
untempered by a grasp on the possible, rather than the Utopian. is a lousy
framework for getting meaningful things done. This is certainly true in the
case of exclusively wind power as part of a nationwide electrical grid. In
furtherance of the goal of “all wind all the time,” Green New Dealers almost
always (I only add “almost” because someone, somewhere, may have stated factual
data but we have yet to see it) grossly understate the true cost of wind in
several ways. Understand this before I
begin: I loathe fossil fuel’s negative effects on the environment and public
health. What I am referring to here is the amazingly lo-ball numbers we are
being fed re: wind as opposed to other possibilities.
To begin with,
energy storage in a “situational” power source situation (Solar, Wind) is
critical to maintaining unbroken power supplies to consumers. “Peak” energy
consumption across the nation is after dark much of the year. Clearly, solar
must overproduce during the day and store energy for the dark hours. This
battery technology, while burgeoning is grossly expensive and in its
infancy and will cost far more than the solar panels which produce the energy they would have to store. Solar has the advantage of no
moving parts, ergo lesser maintenance, however, it also is easy to damage
(hail, normal wear and tear) It also wears out and is carbon intensive in both
manufacture and disposal.
Wind, of which
the dunce in chief demonstrably knew little, has more and more expensive
concerns, generally glossed over by the naïfs who tout the GND as a panacea.
The two major disadvantages of wind power include initial cost and technology immaturity. First: constructing turbines and wind facilities is extremely expensive for the amount of power generated by each unit- an average about 2.5 to 3 KW per, with 5 KW as a probable maximum. Secondarily, at the current state of technology, maintenance, such as changing oil in rotor bearings at the top of the tower weekly, is periodic, essential, frequent, and expensive. (Ask the Danes!) It is even costlier in offshore installations. We, too frequently, see cost per kwh listed as production cost, not cost to consumer, which is extremely equivocal. As an example, most cost per kwh numbers we see are misleading because they frequently omit the initial cost of hardware. This “total” cost, which is passed along to consumers is known as levelized cost.
What GND’ers cite (in the vicinity of 3.1 cents per kwh) is
like citing the cost of a car wash considering only the water, soap and minimum
wage imbecile who reminds you to “put the window up!” without adding the cost
of the machines, the building, the electricity, etc. This is about like
bragging about how many miles per gallon your hybrid gets without considering
the initial cost of the vehicle (still a good investment by the way!) Here is a
sobering real-world number: Danes pay about 40 cents per kwh, which is 13 times
as high as the GND’ers hype states!
Moreover, it
almost always fails to consider energy storage costs for the periods when
demand exceeds supply. This seems minor, but in a nationwide grid it is
critical. Just to power New York City alone (this is just households, not the
far more energy hungry hotels and businesses) would require the installation
and constant operation of about 5,700 wind turbines, not to mention energy
storage capacity. The cost of the turbines alone, at an average $3.5 million
apiece, would run to well over $20 billion.
At an average annual maintenance cost per turbine, add another $270 million
annually!
That cost,
passed on to consumers, would be almost punitive. This does not include the
far, far higher energy demands of industrial operations.
In the real
world, the cost to non-industrial consumers of electricity fluctuates over the
entire nation, from a low of 8 cents per kwh in Idaho, to 18.1 cents per kwh in
NY and CT, to a whopping 33.2 cents per kwh in Hawaii. Idaho is relatively cheap
because most of the electricity produced and consumed there is generated by the
cleanest source on the planet – hydro-electric plants. Idaho also has some
geo-thermal (hot underground water) sources and uses the free heat to heat some
buildings. According to the Federal Energy Information Administration, the
"levelized cost" of new wind power (including capital and operating
costs) is 8.2 cents per kwh, essentially in a dead heat with Nuclear. Advanced “clean-coal”
(bullshit!) plants cost about 11 cents per kwh but advanced natural gas-burning
plants come in at just 6.3 cents per kwh. Without regard to the environment, this makes
gas even cheaper than wind and solar. Of course, there’s that nasty little
carbon footprint thingy which remains relatively high. Coal is filthy in all
ways and constitutes a well-documented public health hazard.
None of the above
should be construed as indicating a dislike for wind power, but rather as a factual prequel
to a discussion of an even better option.
What is being
overlooked is that there is another “zero carbon footprint” technology, its
reputation damaged by a movie and a “no harm/no foul” accident within weeks of
each other in 1979. Three Mile Island and “The China Syndrome” scared the hell
out of many Americans, the more ignorant, the more scared. The nuclear power
industry in the US has still never really recovered, despite the fact that
perhaps the most rigorous public health data collection effort ever, concluded
in the US after 40 years, announced the total casualties either direct or
indirect from the TMI incident as “zero.”
Nuclear power emits no exhausts, discharges no pollutants into streams,
has a zero-fatality record over about 70 years of US operation, land based and
seaborne, yet some shun it because we fail to understand it.
Want to be
“Green?” China and India obviously do.
They are pioneering liquid salt reactor technology which the US gave up in the
late 1960s. Why did we do so? Even though the prototype had a record of over
6000 effective full power hours of incident free operation at the Oak Ridge,
TN, facility, it was not capable of producing weapons grade Plutonium, ergo it
was scrapped in favor of high-pressure fast breeders (like Chernobyl).
Liquid salt reactors can use
Thorium, of which we have literally thousands of years’ worth, and are inherently
stable and safe. They even produce fewer waste products to be handled than
current pressurized water designs, of which, by the way, I have more than a
passing operational knowledge of, at sea, submerged. Interestingly, molten salt
fuel comes with an inherent safety feature. If the salt overheats, it naturally
expands and makes the fission reaction less effective, which shuts down the
reactor. Tech innovators such as Bezos with Amazon, Gates with Microsoft and
Altman with OpenAI are united in betting on nuclear energy. And they're not
alone. The nuclear sector is experiencing a renaissance, bolstered by climate
goals and energy demands, A wind farm would need 235 square miles to produce
the same amount of electricity as a 1,000-megawatt nuclear power plant. The
nuclear power plant can operate at constant power day/ night, wind or calm,
freezing or scorching requiring no massive (and, as yet, non-existent battery)
banks.
We love to cite
Denmark when we discuss Utopian social models which we have been conned into
believing. One such is the fact that the Danes are wind powered for all
electricity, much of it sea-borne (off shore). So, they must get really cheap
electricity, right? Not so much. They pay more (40.5 cents per kwh) than even
Hawaii! apparently the “green” in Green
New Deal doesn’t refer to the color of money! I failed to mention the estimated
half-million birds of all sorts killed annually in the US with existing wind
turbines. Finally, what would all these new turbines cost? Assuming all current
non-wind energy production became “wind based” and at today’s prices, merely
(roughly) about 15% of the current total national debt! This
of course excludes land costs (astronomical) and, yet to be invented storage
capabilities. National bankruptcy, anyone?
Bottom line?
Nuclear power is safe, reliable and can be sited anywhere, no matter how
remote. Both China and India are already building next generation liquid salt reactors
for electric power production. Although China leads the world in terms of total
wind generation capacity, they also would seem to realize the advantages nuclear
offers, since, this year (2025) they are building a pilot liquid salt electric
power station in the Gobi desert which, while only about 9 feet by 7 feet in
size, will produce enough power for about 45,000 homes. This is equivalent to
54 wind turbines operating at constant maximum output. Future liquid salt plants
will produce far more, in the area of 1100 mw. This would be sufficient to
power more than half a million homes. It would require more than 400 wind
turbines operating at full capacity, 24 hours per day, to provide the same output.
Do the homework,
be informed, unlike the current occupant of 1600 Pennsylvania Avenue.
Monday, January 27, 2025
Fascism, a History and a Warning
“Fascism: A form
of far-right, authoritarian ultranationalism characterized by dictatorial
power, forcible suppression of opposition and strong regimentation of society
and of the economy which came to prominence in early 20th-century Europe.”
“Antifa: a
political protest movement comprising autonomous groups affiliated by their
militant opposition to fascism and other forms of extreme right-wing ideology.”
Trump’s first term
continued reference to Antifa was primarily aimed at shifting attention from
his continued and increasing cult of personality/oligarchy/isolationism.
America’s relationship to and with fascism is not, I think, generally very well
understood, if at all, by the majority of our population.
On the simplest
level, it is noteworthy that most multigenerational US families have, or have
had, family members whose military service they venerate. If this service was
in either of the two World Wars, the opposition was Fascist in both. In WWI,
Germany was, although a nominal monarchy, in essence fascist in some of the
areas as listed in the definition.
However, the
aftermath of that war was, almost predictably, the breeding ground for a far
more vicious version: Sven Reichard, in a 2009 book, summed it up thus: “The
experience of World War I was the most decisive immediate precondition for
fascism.” In other words, without that
war there might well have been neither fascism in Italy nor National Socialism
in Germany. “Without the First World War and its consequences, but also without
the October revolution and the symbolic strength of Leninism, fascism would
have remained a sectarian movement.”
Although
peripheral, it cannot be overlooked that the Versailles treaty, while
endeavoring to make things better for colonial subjects, also condemned Germany
to post war economic struggle, always a fertile field for a rabble rouser, and
Germany certainly spawned one. Additionally, Hitler availed himself of a sort
of “reverse” religious zealotry, not the usual muscular support of a specific
faith, but the brutal condemnation and demonization of one. Blaming Jews was
nothing new to Germans, as German Knights had slaughtered Indigenous Jews
before going to the Crusades and even reformer, Martin Luther, had, in his last
years become a rabid anti-Semite.
Hitler took it to the next level,
blaming Jews, not just for the “denial of Christianity” but for essentially
every ill Germany endured in the late 1920 and early thirties, having been
devastated by the great depression. Into this misery, Hitler revived every
Germanic heroic legend, even some Scandinavian ones, implying that they had
been part of a Germanic “golden age” (they hadn’t) and, as Benito Mussolini
would in Italy, called for a return to a largely manufactured “heroic age.” Hitler’s speech, the infamous “prophecy”
of 30 January, 1939, is significant: “Today I will once more be a prophet: If
the international Jewish financiers in and outside Europe should succeed in
plunging the nations once more into a world war, then the result will not be
the Bolshevizing of the Earth and thus the victory of Jewry, but the
annihilation of the Jewish race in Europe.” I find it noteworthy that Hitler intentionally
conflated Judaism with Bolshevism (Communism) even though Marx was baptized
Lutheran and Lenin Catholic.
Subsequent
events are well known, as both Germans and Italians succumbed to propaganda and
“manufactured histories” to become text-book fascist states. What is less
emphasized (by some) in the US is that, while we fittingly venerate those who landed
at Normandy and fought and died valiantly in Italy, North Africa, and Western
Europe, we hear far less about how long many Americans stridently opposed US
entry into the war.
The America
First movement was amalgam of groups from liberal to conservative, united under
the banner of “Stay the hell out of the ‘European war’.” Underlying this however, and under
emphasized, in this writer’s opinion, was the sense of some Americans that the
Germans and to a lesser extent the Italians were “Christian folks like us”
added to this was the undercurrent of American anti-Semitism, reflected by the
refusal of US authorities to allow the 900 passengers on the MS Saint Louis,
all Jewish refugees from Nazi Germany seeking sanctuary, to land in America.
The vessel was forced to return to Europe where, eventually, about a third of
the passengers were executed.
Even earlier,
such prominent Americans as Henry Ford had stoked the fires of anti-Semitism. One
business acquaintance recalled that, on a 1919 camping trip, Ford had lectured
a group around the campfire. He "attributed all evil to Jews or to the
Jewish capitalists," the friend wrote in his diary. "The Jews caused
the war, the Jews caused the outbreak of thieving and robbery all over the
country, the Jews caused the inefficiency of the navy.” (??) In 1918, Henry
Ford acquired a newspaper, The Dearborn Independent. A year and a half later,
he began publishing a series of articles that claimed a vast Jewish conspiracy
was infecting America. The series ran in the following ninety-one issues. Ford
bound the articles into four volumes titled "The International Jew,"
and distributed half a million copies to his vast network of dealerships and
subscribers. "I regard Henry Ford as my inspiration,"(!!!!) Hitler
told a Detroit News reporter two years before becoming the German chancellor in
1933, explaining why he kept a life-size portrait of the American automaker
next to his desk. Actually, both Ford and GM had readily retooled German plants
to build the military machines which were used to invade Poland in 1939.
In July 1938, four months after the German
annexation of Austria, Henry Ford was awarded and accepted the highest medal
that Nazi Germany could bestow on a foreigner, the Grand Cross of the German
Eagle. The following month, a senior executive for General Motors, James
Mooney, received a similar medal for his "distinguished service to the
Reich." As one of the most famous (yet markedly undereducated) men in
America, Henry Ford legitimized ideas that otherwise may have been given little
authority. In Trump world, immigrants and LGBT persons are the new “Jews.”
Franklin D. Roosevelt
realized that the fortunes of the US were tied to a free Europe and tried in
several ways (not going into details here for brevity’s sake) to ease the
nation farther toward open alliance (and armed participation with) Britain and
France. We’ll never know how long that might have taken, because another
Fascist/Monarchist state halfway around the world attacked the US Naval base at
Pearl Harbor, Hawaii. It was easy to get an almost unanimous declaration of war
against Japan since pre-existent anti-Asian racism and religious intolerance
fueled the fire. When we declared war on Japan, Germany, and Italy (the Axis
Powers) actually honored their treaty with Japan and declared war on the USA.
I know, “That’s
fine Mike, but why the history lesson?” It’s simple really, because as
Santayana (a philosopher, not a guitarist) famously said, “Those who forget the
past are condemned to repeat it.”
It could well
be argued that a sizable portion of Trump policy and rhetoric reads and sounds
like precursors of fascism. Look at those he admires, beginning with Vladimir
Putin, who rules Russia with the collusion of a handful of oligarchs,
responsible to no elected body, willing to sanction the poisoning of political
rivals, controlling all media and glorifying the state above all else. Continue
with the Elon Musk bromance. Recall Musk mourned the end of Apartheid in his birthplace,
South Africa.
Then consider Mohammad
Bin Salman, Absolutist ruler of Saudi Arabia, whose $1.3 trillions make Trump
salivate, while ignoring the brutal dismemberment of a journalist at his
(MBS’s) order, (yes the CIA told Trump so, but he chose to disbelieve, because “Hey,
he’s rich?”)
Trump has described both of these individuals as “very nice,
very fine people.” His closeness to Musk is beyond weird and scary.
In conclusion,
nothing I can write will change the xenophobic, racist, religiously intolerant,
economic elitist attitude of Trump’s many supporters, but I would hope they
would at some point acknowledge that, by condemning minorities and inclusionary
policies at Trump’s bidding, they are
supporting a political philosophy against which some of their relatives almost
certainly fought and died in Europe and the Pacific, less than a century ago.