There’s a Storm Coming

I tried to write an entry on reverse seniority last night.  I couldn’t do it.  I’m bugging out.

No cannabis.  That’s probably part of it.

I have a brain that doesn’t turn off, a large appetite for information, and an obsession for understanding things.  Something I’ve been doing since high school is recognizing patterns and using them to predict what comes next.  Nothing is concrete, just possibilities and probabilities.  Too many variables to keep track of, but sometimes you can see part of the picture and filling in the rest isn’t so tough.

Coming from an investment background, it’s difficult to ignore what I see in the markets.  Bonds are paying next to nothing.  The equity market hasn’t had a major correction in about 10 years.  The housing market is on tilt.  Even crypto is now detached from reality.  Besides my private equity investments, I’m now in 100% cash for the first time in my life.  It’s like being at a poker table with a bunch of drunk rookies.  I have chips, I know how to play, but when everyone else at the table is throwing money at shitty hands… you have to be patient.  Some days are easier than others.

My friends and I used to battle it out for who could be more generous.  We’d always enjoy trying to pay for one another.  Now we’re too poor to hang out with each other.  Half of them still live with their parents to avoid paying rent.  I look at my generation and I see an epidemic of drugs used to treat an epidemic of depression.  If it wasn’t for my drive and my lack of emotions, I’d probably be in the same boat.  Considering how much weed I was smoking, maybe I was in the same boat.  I’m surrounded by a generation of kids who were told that if they stayed in school and worked hard, they’d be able to land themselves a good career and that a good career would lead to a comfortable life.  I’m surrounded by a generation of the most educated kids we’ve ever produced, entering into a rapidly deteriorating job market, with the highest cost of living we’ve experienced in modern history.  We’re barely treading water.  Something’s gotta give.

Maybe it’s the birth rate.  Maybe this is how we cull the population.  I literally broke up with the first girl I thought I’d marry because she was fixated on having children in the immediate future.  I wasn’t willing to bring a family into this world without building a foundation first.  The biological clock is real.  And my heart goes out to the women struggling to understand what they should be doing at a time like this.

I saw Paul Ryan on TV the other night saying that the Republican tax reform was going to give the middle class the boost it needed to get back to having kids.  What a bold faced lie.  But that’s become the status quo for American politics.  Only a few of us will actually put the effort into understanding what’s going on.  The rest of us will just pick a team.  Red or Blue.  By picking a team, we think we’re taking a stand for what we believe in.  But we’re not.  Red or Blue, it’s the same song and dance.  The value of a politician isn’t a function of policies, their ability to inspire, or their ability to govern – it’s their ability to raise funds for their campaign.  Why?  Because the best campaign wins the seat.  But in the age of billion dollar campaigns, where is this funding coming from?  Big business and the top 1%.  So is an elected official’s loyalty to the people who voted for them?  Or to the people who paid for them?  If you’re not sure, I suggest you ask net neutrality.

With problems this obvious though, how are we not motivated towards change?  I’d argue that we are.  Trump was elected for exactly that reason.  As much as I liked Obama, he didn’t do enough to stop what was coming.  People were left behind.  All the pain and disillusion that we’re seeing in major cities today, the rural towns were ahead of the curve.  But they were team red.  They were loyal.  And someone on team red came along and said I have all the answers, here’s who you should blame, and if they ever say otherwise, they’re lying.  MAGA.  And half the country became complicit.

But maybe this is just what we needed.  When Trump was elected, I knew he didn’t have the character, integrity, or intelligence to be a great president, but I was open to the possibility of him being a good president.  As things started to play out, I knew that ship had sailed.  What did occur to me though is that he might still be valuable.  He might be so crooked, so corrupt, and so incompetent that the world couldn’t help but see that he had reached the most powerful seat in the world – not by merit – but through the abuse of American ignorance and a system which has been compromised beyond repair.  And maybe that would be our motivation.

You know what I wanted for Christmas this year?  Mueller.  I check my newsfeeds at least a dozen times a day.  Every time I do, I hope to see another piece of the puzzle.  Eventually, I hope to see justice.  And perhaps justice means that Trump is exonerated from crimes which he didn’t commit.  But I doubt it.  And I’m good at predicting these things.

So what happens when one of the most respected law enforcement officials of all time lifts the veil on the real Donald Trump?  What do those tax returns actually look like?  How much is he actually worth?  Who does he actually owe money to?  And what happens if there was collusion?  Will it be enough to shatter the image and faith placed in Trump?  I hope so.

I see the clouds on the horizon, and I can hear rumbles of thunder, but the storm is still too far away.  And I wanna dance in the rain.

I don’t know what that first crack of lightning will be.  Maybe it will be Trump going to jail.  Maybe it’ll be the Republicans refusing to impeach him.  Maybe it’ll be a loss of consumer confidence that triggers an overdue recession.  Maybe it’ll be the bond bubble that’s been growing since the last recession.  Maybe it’ll be China’s house of cards that finally topples.  Or maybe it’s on us.  Maybe we finally realize that you and I aren’t so different.  Maybe we realize that we aren’t the enemy.  Maybe we realize that we’re in this together…. and maybe we march together, up those stairs, and tell them that this does not belong to you.

And tear the whole. god. damn. thing. down.

A Quick Fix to Wealth Inequality?

I was having a chat with a friend yesterday about the incoming Canadian tax reform and he managed to inspire what I think is a rather interesting idea.

When it comes to modern finance, it’s a mess.  For the last few years, I’ve been trying to figure out a system of finance to account for the deflationary nature of technology and best practices while increasing productivity.  I think I’m close but it requires a complete overhaul of the system, and well as a cultural paradigm shift.  I’ll be patient.  Until then, I thought I’d mention an idea which works within the current system: Adjusting the local minimum wage to reflect the local cost of living.

If you’re working 40 hours a week, you should be able to earn a living.  That’s not to say that we should all be making the same, that’s to say that the floor should be set at what it costs to lead of modest lifestyle in that area.

Consider this, if someone is working 40 hours a week and living in poverty, they’re likely relying on social assistance programs.  Those social assistance programs are ultimately tax-payer funded.  That tax burden falls primarily on those who aren’t in poverty.  When someone grows up in a low-income neighborhood, falls in with the wrong crowd and ends up in prison, it’s the tax payers who pay for that too.  No matter how we look at it, we’re all in this together.  We either keep picking up the tab, or make an investment in the future.

For starters, imagine the impact this would have on the country’s collective anxiety – Knowing that if you work full time, you’ll be alright.  Now imagine the positive cultural impact of an entire generation of kids growing up with parents who aren’t barely getting by.  Now think about the reduction of people needing social assistance programs and the reduced government spending.  Now think about the reduced taxes for all tax brackets.  I guess we would call that trickle-up economics?  Just like trickle-down economics except rather than starting with helping those with the most and letting the residual benefits trickle down to those with the least, we start by helping those who need it the most and letting those residual benefits trickle up to those who need it the least.

The definitive test that trickle-up is better than trickle-down?  Trickle-up helps more people.

That all sounds pretty fantastic for people who are struggling to get by but that’s a rather large stone to toss in the water and it’s important to understand how this will affect everyone else in the pond, especially employers.

First off, businesses that haven’t embraced automation but probably should will likely need to.  The jobs which require the least amount of skill are often the ones which are easiest to automate so businesses will no longer need to rely on cheap labor to sustain their operations.  Fast food is already testing out automated ordering systems and burger flipping robots.

As the automation sector booms, the robotics and AI industries will boom and while not on a 1:1 basis, low-skill jobs will be replaced with high-skill jobs.

While measures like these will dramatically reduce low-skill jobs, I think they’ll also have the opportunity to redefine what we think of as an entry-level job.  If the objective is to have people perform at the best of their abilities, it’s about time we stopped putting young people in roles where they’re underutilized and calling it paying your dues.

The real victim in all of these is the entrepreneur who has to pay those increased wages though right?  Well if your business model relies on paying people a wage below what it costs for them to sustain, then yes – expect to be steamrolled.  If you can’t run a profitable business without the use of government subsidized labor, there’s a good chance you’re not fit to be running a business.

What about the businesses who do adapt, but still have to pay higher personnel costs because the average wage is now higher?  Because that’s real.  Well, it’s going to raise the bar for what we consider to be a well-run business.  Ultimately though, it means more money in the hands of the workers and less money in the hands of the owners.  Considering how the best entrepreneurs are motivated by the opportunity to create change, I don’t see the smaller paycheck making a difference – especially when you know that you’re putting extra food on the table of the team you built.

From an economic standpoint, if you systematically shift income from the wealthy to the working class then you’re looking at a far more robust economy.  More money in more hands makes for a much freer market as more people are inclined to make more decisions with their money.  Culturally, fewer wealthy people will mean mean a smaller market for luxury items and materialism may take on a more utilitarian feel.  From a philosophical standpoint, this is about equality in how we distribute the value we collectively create.

So set the local minimum income to be equal to the local cost of a minimum standard of living – seems reasonable.  Now set the minimum standard of living at a point which allows for a focus on personal development, providing them with the opportunity to become the most productive version of themselves.  Also seems reasonable.