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PracticalDad and School:  Austerity Comes Home

Our present reality is simple:  too many promises and too few resources.  It’s been coming for years and is finally now rippling through the heart of our neighborhoods, only I doubt that everyone fully grasps what it means.  A case in point is the neighborhood bus stop.

I live in a geographically large school district, one of the biggest in our county, and like other districts, it’s responsible for providing bus transportation to the various schools.  Like other districts as well, it’s being pinched by declining tax revenues and state grants on one hand and the rise in fuel and other costs and the result is an ongoing search for ways to close the gap.  There have been numerous measures over the past two years but they’ve largely been unseen and now they’re becoming more obvious.  Several weeks before the start of school, the district transportation coordinator sent out the obligatory "bus stop" letters detailing where each child would be able to atch their respective bus; Youngest’s moved to a more distant corner.  However, it wasn’t until everybody showed up on the first day of school that the full extent of the change became clear. 

It helps to understand our neighborhood’s geography.  We live in a relatively new development with only one entry road within almost a full mile from an adjoining entry road.  When you enter the development, the road has a left turn within 150 yards of the entrance (we’ll call it road ‘A’) and if you continue to go straight, the entry road makes a giant loop of approximately one mile before terminating at road ‘A’, only about 100 yards from where it begins at the original entry road.  In simpler terms, envision a fish hook with a straight line running from the barbed end of the hook back to the hook itself, and that’s the neighborhood.  Previously, there were three separate bus stops on this loop.  With the new bus routes, our neighborhood’s stops have been slashed from five to two stops.  The loop road has been removed from the route and all of the kids now have to walk from their homes on the loop to the first bus stop at the beginning of the loop. 

On that first morning, Youngest and I walked to the assigned stop, the one furthest from our house – the one located at the hypothetical barbed end of the fishhook while all of the kids from the loop gathered at the stop at the entry road to the development; there were 17 children along with accompanying parents and siblings at this particular stop.  As I walked back after Youngest got onto the bus, I fell into conversation with some of the parents from that stop and again later in the day when the kids were to be dropped off.  Several had contacted the school district to complain and request that the loop stops be reinstated for multiple reasons:  distance from the house (less than a half mile); nowhere to stand in inclement weather (true) and danger of the intersection.  To his credit, the district superintendant actually drove by the stop this morning and spent a few minutes talking with the waiting parents.  Frankly, I said nothing since – as I told my wife later – we haven’t got a dog in that hunt and I let someone else carry the conversation.  In our view, if the school district moved the bus stop further away in an entirely different direction to save money, then we would’ve considered it as the cost of doing business.  The superintendant commiserated since he lives in the district as well and his own three kids are affected along with everyone else’s, but the point was made that cutting that mile loop saves two miles daily and with an entire fleet of buses, the cumulative savings are considerable. 

This is an open change that confronts parents directly, since many of them don’t see the other changes that confront the kids.  I neither know nor care what the response is going to be, but if this is some of the reaction from simply altering bus routes, then I can’t fathom what some of the reaction is going to be for the changes that are down the road as this ebbing tide of resources recedes further over time.

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Who Are You to Judge Them?

I believe in serendipity and after tonight’s dinner conversation about judging people, I was struck by Gonzalo Lira’s essay on our collective unwillingness to make judgments.  Mr. Lira makes his case about our unwillingness to pass judgment, especially in light of former Vice-President Cheney’s recent book being issued shortly.  His stance, eerily similar to mine, is that we have to be willing to make judgments as we go through life and that these judgments are best predicated upon some basis of morality.  If there’s no framework for making decisions based upon a common sense of right and wrong, then decisions are reduced to the more base calculations of economic, social and political self-interest.

I am a child of the 1970s and actually nodded my head as I read Lira’s spot-on commentary:

"Starting with the 1970’s, our society has marinated in the notion that no one has a right to judge how you live: You can do your own thing, to borrow the phrase from the time. Not only does society not have the right to judge the way you live as to its rightness or wrongness—society does not have the right to judge you. "

The dude’s got it right.  I recall conversations with my Red Forman-esque father, who passed judgments frequently and as I later came to recognize, with uncanny accuracy.  I had my own set of rules that I’d adopted – yes, I actually wrote up a series of basic rules for living my life – and foremost of which was that everybody had a story to tell and a right to be heard.  It didn’t sink in that listening and drawing someone out required an ability to not make judgments lest the person be offended and their story not be heard.  I was fed by the decade’s mantra also because making a judgment is an inherent criticism, for better or worse.  The person on the receiving end of the judgment will likely be upset and in the age of Mr. Rogers, Sesame Street and the Electric Company, we wouldn’t want to upset someone because that wouldn’t be nice and might hurt their feelings.  My father would listen to me and point out how things were and there were moments, like Eric and Red Forman, when he flat out called me a dumbass.  

What I realize thirty plus years later is that that was part of his job as a father.  First, kids and teens are acutely aware of the social order and the social interactions amongst them can be brutal and cruel; they simply haven’t had the time to grow the thick skin that comes with experience and many are consequently loathe to say anything that sounds critical or judgmental.  Parents have to worry about putting a roof over the head and food on the table and kids worry about whether or not they’re liked by their peers and anything that endangers that desire for love is anathema.  Second, morality is learned instead of instinctual and if someone isn’t willing to demonstrate that being moral sometimes requires a rather hardheaded attitude, then the kids simply won’t learn because they haven’t seen it.  Going along to get along isn’t always the best choice for handling a situation.

So who am I to make judgments? 

  • I’m the guy who’s been around long enough to recognize the potential for a train wreck.
  • I’m the guy who’s willing to incur both your wrath and the wrath of others when they discover that I really don’t trust them, and kids talk enough that they will learn precisely that.
  • I’m the guy who’s ultimately legally responsible for your actions until you reach the age of adulthood. 
  • I’m the guy that will talk to you even after there’s been a significant blow-up, which isn’t always certain with friends and peers.

Until you’re either willing to make value judgments or are old enough to entertain the legal and moral consequences of not making them, then I’ll make whatever judgments I believe need to be made.

 

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PracticalDad:  Knowin’ How to Do Stuff…

One of the better, truer commercials on television is actually for ED – and no, I don’t have a bathtub in the backyard.  In these ads, guys in their 40s are presented with different situations and simply handle them as the announcer comments, when you reach a certain age, you just know how to do stuff…Pulling a horse trailer and the pickup gets stuck in the mud?  Hitch the horses and let them pull you out.  Engine overheating and in the desert?  Just add water at some roadside cafe.

Simple.

That’s kind of the role of a father as the kids get older and begin to think that they know everything.  Something goes wrong and Dad gets the call and if he’s smart, he takes the opportunity to pass along the institutional knowledge that comes with age, if not with trace teams of horses. 

That’s the situation this morning as Eldest heads off to school in the old car.  Because her schedule actually requires some traveling, she drives an old car and lo and behold, she crawls behind the wheel and turns the ignition and is greeted by the sounds of silence.  The battery is officially dead and will have to be replaced.  Daddy, Mom’s gonna take me to school but can you have the battery fixed for when I get back?  Gotta run, bye!

Yes, but you’ve actually going to do it with me so that you can learn. 

The result was a quick trip to the auto supply store for a battery and then home to assure that I’ve got the sockets that fit the nuts on the battery.  And then…nothing.  When I finally pick up Eldest, it’s back home where she spends maybe 15 minutes replacing the battery – taking into account learning how to use a ratchet set – and then is off again. 

I could honestly have finished the job in less than 10 minutes but it’s more important that Eldest learn how to handle these things in preparation for a future out of the household.  These are the kinds of things that most teens don’t know and would wind up calling home about when they’re off in the real world.  It takes more time and effort, assuring that I’ve got things and that they’re right so that I don’t look like the village idiot, but teaching is ultimately one of the most important things that any father can do for their kids.

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View From the Ridge, Part 2

There are moments and evenings that help you see the forest for the trees, as I noted some time ago, and tonight was one of those instances.  While things are busy with kids coming in and out – many of those who aren’t ours referring to my wife and I as "Mom" and "Dad" – you get a sense of where you are in terms of life and parenting.

The kids tonight were friends of Eldest who are all leaving for college within the next three days, while she still has a year to go.  But the college visits are on the calendar and her own senior year is shaping up to be breathtaking in its rapidity.  Middle was upstairs hogging the phone and as the school year approaches, I tucked Youngest in earlier and curled up with him for a little while.  That’s now where we are – the eldest with only a year remaining before college and the youngest still asking to be tucked in, but those bedtime days are waning and soon, he’ll be big enough that he say goodnight and go up by himself and an almost two decade bedtime routine will be at an end. 

There were times in those years that I couldn’t wait for that routine to end.  Friends talked about this hilarious show called Everybody Loves Raymond and I could never quite get to the television before the final credits rolled and while there’s TiVo, it simply wasn’t the same thing.  I never actually saw one of Ray Romano’s episodes until it was in its seventh or eighth season.  Likewise, there were organizations that I didn’t join because of involvement with kid-related sports and scouting and geez, I couldn’t make a meeting because of X, Y or Z.  Now that there’s far, far fewer bedtimes than ever before, I find that I’m going to miss them with their opportunities to giggle or chat with the kids, listen to them breathe as they nod off, or even just awakening slightly refreshed after snoozing myself.

My father used to remark that that’s the way it’s supposed to be and the guy was correct.  Our job is to clothe, house, feed, teach and protect them until they’re able to begin to start taking on some responsibilities themselves; they’ll screw up – as we did – but they’ll improve and learn and eventually, we’ll be left once again to our own devices.  That’s the way it’s supposed to be.

In the press of things, remember to enjoy these days and keep some of them tucked away in your memory for later. 

For Ray Romano, there’s cable and boxed sets of DVDs.  For these days however, there are only the memories.

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The Bankers of Oz

The Lion thought it might be as well to frighten the wizard, so he gave a large, loud roar, which was so fierce and dreadful that Toto jumped away from him in alarm and tipped over the screen that stood in a corner.  As it fell with a crash they looked that way, and the next moment all of them were filled with wonder.  For they saw, standing in just the spot the screen had hidden, a little old man, with a bald head and a wrinkled face, who seemed to be as much surprised as they were.  The Tin Woodman, raising his axe, rushed toward the little man and cried out, "Who are you?"

"I am Oz, the Great and Terrible," said the little man in a trembling voice.

 – The Wizard of Oz, L. Frank Baum

Recently, Bloomberg News released an extensive online review of all of the various means of funneling funds to the financial sector by the Federal Reserve System.  They culled through almost 30000 pages of documents that the Federal Reserve fought to hide on various grounds, one of the principal rationales being that it would put those banks that used it at risk because of the perception that they were weak and would thus be unable to access the usual credit markets; they would then be prey to the circling vultures that hunted these poor creatures and as they dove on them, would destroy them in the market.  The report is eye-opening, and much has been made of the extent to which the Federal Reserve served up billions to support foreign banks. 

Understand something about the data in this report.  In late 2008, there was uproar over the $700 billion TARP bill, which passed despite massive public opposition; the funds in this report are entirely separate from TARP and are in addition to that funding.  How?  Financial problems were arising in 2007 as the housing market began to decline and the Federal Reserve began various funding mechanisms – ‘windows’ – through which different entities could obtain exceedingly low cost loans from the Fed.  These were supposed to be collateralized with assets pledged by the borrowing entities, but the process was dodgy since the collateral was questionable and at times, included common stock.  What’s the problem with common stock?  The point of collateral is that if the borrower fails, there’s something left of value to compensate the lender but if the borrower fails, then their common stock itself is worthless.  If these banks had at least pledged toasters kept in the backrooms for those of us who opened new accounts, the Fed would at least be able to furnish their lunchrooms with brand new toasters. 

But apart from the salaciousness of it all, so what?  What does it mean to some guy who’s trying to raise kids and write a website for families?  How does it affect my little portion of the world and more importantly, how does it affect my parenting?

  • First and foremost, we are now living in what one pundit referred to as a "corporate republic" in which vast amounts of money work to control society via the media.  Releasing this information could seriously damage banks and create even greater havoc than we endured when Lehman collapsed in late 2008.  And while this information dump doesn’t pertain to TARP, the Treasury Secretary’s comments to lawmakers certainly qualifies:  if we don’t pass this bill, then there will be huge civil disorder and we’ll have to declare martial law.  When you hear something, exercise your common sense and try to work through it to ascertain if it’s really that bad. 
  • On the heels of the corporate republic, it’s the lesson that you shouldn’t expect them to look out for you.  Ain’t nobody doing that but you, sport, so you need to watch your spending and not get into debt for stupid reasons.
  • When you read or hear something, understand that what you’re hearing isn’t the whole story and be ready to have to find the whole story.  When the Fed first opened these windows, the need was obvious but the entire mechanism was downplayed by the Fed as to how extensive the use would be.  As the movie version’s line goes, Pay no attention to the man behind the curtain.
  • Follow the money.  Businesses exist for one reason only and if the owner hasn’t got a clue of who you are when you’re talking to him, then they’re less likely to give a damn about your life.
  • Don’t believe everything that’s said to you, and this is one that I’ll be touching on in the next several days with the older kids.  Who’s saying it and how much would they really know?  Underlings are sometimes like mushrooms since it’s best to leave them in the dark and cover them with lots of dung.  When the TARP took effect, I had a conversation with the branch manager of our bank and according to that person, yes, we took a little bit of that money because we were advised to do so and we’ve since paid it back in entirety.  That was over two years ago and when I reviewed this Bloomsberg report the other night, I found that my bank had been tied to the Fed via one of the windows and were carrying a loan balance through this program for an average of 400 days.  So right about the time that I talked with the manager, my bank was tapped into the Fed window for survival money.

Ultimately, it goes back to a recurrent paternal theme with my children, and that’s to encourage a questioning and skeptical nature as they age.  It’s not something that I ever expected to do as I held them through the night, but events no longer leave any choice.

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The Little Things – Bathtime Songs

It’s sometimes the little things that truly stay with the kids as they age.  They might be drawings that you make for them or games that you play and my case, it’s the bathtub songs that helped me work with them through washing. 

Kids respond to music and tunes and simply having a small song for something that has to be done "makes the medicine go down" far easier.  In my case, I would mess with the kids from when they were babies and I had to wash them in the bathtub and soon developed a series of songs that I sang when a new phase of the job had to happen.  There was a ditty about cleaning the bottom, a knock-off of Figaro for the hair-washing, and a Doo-Wop tune for drying off with the towel; these were things that I sang to them each night as I bathed them and only stopped when they were old enough to clean themselves.  I haven’t sung them in years as Youngest has long since been able to handle cleaning himself.

Twice in the past week – once in the car and again at dinner tonight – I’ve chatted with the two older kids and found that they can recite and sing the doggerel bathtub songs that I sang to them when they were very young.  In the first instance, Middle actually sang harmony as I sang it for him again while driving the other evening.  The second occurred at dinner tonight as all three were present and each remembered all of the songs (although Youngest didn’t recall as well, a function of my not bathing him as often as my wife).  I was stunned at the laughter as they recounted the tunes and the verses and could only think that it’s the little things.

Kids don’t need all kinds of toys or things, but they do need you.  Find something – anything – that you can make your own with them and then do it again, and again, and again.  This is what the kids need, and want, more than anything else to connect with you, your time and attention.

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PracticalDad Primer on Interest Rates

Congratulations, interest rates are now as low as they’ve been since when Ike was President as the interest rate yield on the 10 year Treasury note blipped below 2% on August 18, 2011.  2%.  2%.  2%.  The most appropriate response can be genteelly texted as WTF?  But to get a flavor of what that actually means, you have to have a sense of what interest rates used to look like before the Federal Reserve System began altering the rate’s genetic code, such as just done by the scientist who gave an alligator snout to a chick in utero.

The interest rate was once the prime food source for those who were looking for a steady income stream, whether they were banks or the elderly who were no longer in the work force.  It’s true nutrition lay in the meaty, rich segment known as the real return and that in turn was protected by relatively thick layers that fended off the rate’s principal predators, risk and inflation.  Since the rate’s capture and subsequent alteration, the banks have been forced to find other ways to boost their income stream while the elderly have sometimes had to rely on their alternate food source, cat food.

There are even different breeds of interest rates and how they respond to the twin predators, risk and inflation.  All of them are wary of inflation and the longer-term bonds are not only more nervous, but also typically have much larger inflation layers to protect the real rate.  The government bonds are less concerned about risk than their corporate brethren, which have significantly larger risk layers as a result.  All of the rate breeds get more nervous when the economy is uncertain but the short term government breed responds like a St Bernard while the 30 year corporate and junk breeds are chihuahuas on a meth bender.

Snark and foolishness aside, there are some things to understand when you hear about interest rates and yields.  Understand this:  while everyone hears about the stock market and equities, the reality is that they’re a sideshow to the bond market’s main stage, upon which rests the various national debts and the supporting currencies.  James Carville once remarked that when he died, he wanted to come back as the bond market.

James Carville was right.

What is an Interest Rate?

Interest rates are nothing more than the cost of borrowing money, much as you’d pay Days Inn for the cost of using their room for a night or Hertz for the cost of that rental car during vacation.  Borrow from me and it will cost you perhaps 3 or 4 or 17 cents for every dollar that you use.  It could be 3, 4 or 17 cents depending upon any of the components that typically comprise interest rates.

Interest Rate Components

Historically, interest rates are composed of three segments. 

  • The first is the real return and this is generally what the lender would like to see as a true return for lending the money to a borrower for using his money.  It is a function of the lender’s preferences and also what other uses he might have for the money.  Hey, if I can’t get at least 4% real return on my money, then what’s the point of lending it?  I can use it for my own purposes. 
  • The second component is that which pays the lender for what she assesses as the risk of the return of the money and it’s here that the ubiquitous credit scores come into play.  If you’ve been bankrupt like Trump or planning to spend the money on a risky private space exploration company and you’re liable to find that the lenders are going to ask for a higher interest rate to compensate them and this will be tacked onto the real return that the lender wants.  Historically, interest rates are generally higher as you go further out since there’s greater uncertainty as to what’s going to happen and that’s why the 48 month CD rate pays you a generous 1.0% versus the .3% on the 6 month CD. 
  • The third component is the segment that compensates the lender for what they anticipate the rate of inflation is going to be.  Bonds pay at a constant rate and that is consequently eroded over time by inflation, which eats away at the purchasing power of the currency.  If you know that you’re going to be repaid $1000/month over the next ten years, then you certainly want to assure that there’s some extra sweetener since $1000/month won’t buy in ten years what it buys now.

So the interest rates that you knew in the past were comprised of each of the three elements together.  When rates spiked in the early 1980s, that was a function of the Federal Reserve driving rates up with a healthy inflation premium to combat the effects of inflation rippling through the country at that time.  If you miss a credit card payment and the rate is raised, that’s a function of the bank’s response to what they perceive as the increased risk that you’ll default and walk away; the amount of the rate increase is certainly debatable but the rationale behind it isn’t. 

Yield

When you hear about the yield on a particular type of bond, you’re hearing about the interest rate of the actual return on what was paid for the bond when it was actually purchased on the market.

Bonds all have coupon rates stating that they’ll pay $X per each month or year and the face value of the bond is the amount that will be paid off when the bond reaches maturity.  Consequently, a company issuing new debt might agree to pay $400/year for 15 years on a bond with a face value of $10000 so the stated rate of the bond is 4% annually ($400/10000).  But let’s say that the bond buyers believe that in the next 15 years, inflation is going to run at a rate of 5%/year so there’s actually a 1% loss of purchasing power to the holder of this 4% piece of dogfood.  The company needs the money and the sale goes through; where the adjustment occurs is in what folks are willing to pay for the loss of purchasing power and that’s the bond’s face value.  I’ll lose 1% annually over 15  years?  Meh, I’ll bid $8500 for it and if I can get the $10000 for $8500, then that’s good enough for me.  The actual interest rate yield on the bond is consequently 4.7% ($400/8500).  The annual bond payments are still $400 but the bondholder paid less for the bond and that’s the value on which the yield is calculated.

The takeaway from the bond market is this:  bond yields are inverse to bond prices and bond prices are a function of supply and demand.  Yields drop because prices paid for bonds rise and vice versa.  If the yield on a particular class of bonds drops, then that’s because folks are willing to pay something extra for that bond. 

How Are Interest Rates Set?

That’s a hard question because it’s an interplay between the Federal Reserve and the generalized market.  Understand one thing, first.  There’s constant, constant lending going on between banks and investment houses on any given day as these entities are all shifting liquidity back and forth to cover their needs and many of these are lending to one another on an extremely short term basis with what appears to be minisculely at low rates – until you understand that these rates are on amounts often in the millions and for that day alone.  But these have to be predicated upon some standard and for the United States, that standard is the Fed Funds rate, the base interest rate at which banks lend to one another or borrow from the Federal Reserve for their everyday needs.  Presently, the Fed Funds rate is a whopping .25%, which means that banks have an extraordinarily cheap source of funds and the idea is that as the Fed Funds rate is adjusted one direction or another by the Federal Reserve, this will provide some guidance on where rates are supposed to go in the rest of the credit markets.

Which is great unless you’ve got a credit card at 11%+  interest, but that’s not the purview of government regulation, which would be wrong. 

The Island of Doctor Bernanke (and his sidekick, Igor Geithner)

What’s written above is a short and simplistic view of how things are supposed to work.  Our situation however, is that there’s so much debt overhanging everything that Dr. Bernanke – he’s a Ph.D – has had to tinker with the interest rates in order to try to keep things afloat.  The hope now is that the easy money policy will somehow flush through the economy and create inflation so that the massive debts are covered by devalued dollars.  How has he done that?

  • First by removing the ability to assess risk.  When the financial sector understood that it wouldn’t suffer from it’s mistakes and also had access to historically cheap credit, there was no impetus to monitor their lending; this resulted in all manner of bad loans for which they accepted the fees but ultimately never the loss.  As low as mortgage rates were in the height of the housing bubble, you can argue that the lack of risk was passed along to the homebuyer with the compression of the risk segment of the interest rate.
  • Working with the Government, the inflation portion has been gamed with reporting of the CPI, particularly when decisions are based upon the core-CPI, which consists of apparently everything from xBoxes to sneakers – but not food and fuel.  When the Fed Funds rate is based upon inflationary expectations that are managed instead of actually reported, then those who depend upon interest for income suffers.  The elderly who live on their savings and Social Security will see their buying power eroded as the inflation segment of interest rates is eviscerated while inflation begins to rise for food and fuel, pretty much what they use instead of xBoxes and sneakers.

How badly has the interest rate system been screwed because of these factors?

The fact that yields on the 10 year government note pierced below 2% meant that buyers wanted the safety of government bonds in hard times and were willing to accept 2%;  the expectation is that we’re looking at a significant recession with deflation facing us as in the Great Depression.  That same day however, the yield on the 5 year TIPS note – which is adjusted for inflation so that the holder gets payments that adjust upwards for inflation – actually went negative.  In other words, people were actually willing to pay so much for the inflation adjusted bond that they bid the price up to the point that the yield was less than 0%.  And that is something that is rarely ever seen.

Congratulations, Dr Bernanke.  Your experiments on the poor interest rate have effectively made the bond market totally schizophrenic.  Welcome to the 21st century, where gene-splicing meets economics.

 

 

 

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Kids Clothing:  How Much is Enough?

With school – Dad, don’t say that word! – rapidly approaching, one of my tasks is to cull through the upcoming Autumn and Winter clothing to see what’s available and what is needed.  This no longer happens with Eldest, who’s through growing and whose female fashion is off-limits to Dad but it does happen with her younger brothers, who are far from finished with their growth.  The process will start with Youngest and after inventorying what’s there and making space, I’ll move on to Middle; what he’s outgrown will then shift downwards to the little brother.  But when I recently glanced at the closet and drawers of one of the boys, I wondered how much does this kid really need?  How much do any of us actually need?

I remember my own father tossing out that rhetorical question decades ago as he watched my mother bringing in the shopping bags with back-to-school clothing for my sister and I.  He was a Depression child and could probably count his items of clothing on two hands and nowadays, I myself don’t recall having so much clothing in my closet and dresser.  But he wanted his children to dress decently and wasn’t going to poach on his wife’s domain as domestic engineer.  Some years ago, I took the kids to the barber/stylist and he chatted about his own childhood in the 1950s with them.  What struck them, I learned afterwards, was that he lived in what he described as a decent neighborhood and shared his bedroom with his brothers and that each of them had a dresser drawer in which to keep all of their clothing.  A single dresser drawer?  They all shared the closet?  Huh?

So what happened between the 1950s, the 1980s and now?  If you think about it, it’s a reflection of what we did to our industrial sector and our fellow citizens as we pursued globalization.

Regardless of what else you might think of the 1950s and 1960s, it was a period of a strong American livable wage.  Families could afford decent housing, transportation and food with money left over for savings and the discretionary items – the items – that made life more enjoyable.  It was also during this period that the American appetite for discretionary items really began to take off, as spending for non-necessities, as a percentage of income rose from 32% in 1950 to 35% in 1960 enroute to 48% in 1985.  While spending was ginning up in the growth of the consumer culture, overseas manufacturing was also ginning up in places ranging from Japan to Indonesia, Korea and ultimately, China.  The push was on, with far lower labor costs, for greater consumption of fashion both in clothing and footwear and retailers provided all manner of sales and advertising.  It’s been in the past two decades that Walmart has become the king of cheap clothing as they’ve flooded the American market with inexpensive clothing.

Business news organs would periodically chronicle the departure of the American textile industry but this was largely unnoticed by most Americans except for the 1970s union commercials.  In these brief ads, women dressed as blue collar factory workers would slowly gather as they sang Look for the Union label…It was a sad and doomed effort to encourage Americans to support their fellow citizens, but against the constant barrage of sales advertising, was as effective as a squirt gun at a three-alarmer.  Now, my son’s closet and drawers are full of clothing and while it’s too late at night to check them, I guarantee that 99% of it is imported.  Yes, it’s cheap and there’s lots of it, we being good Americans, but all of that money has gone to a multinational corporation that pays pennies on the dollar to foreign laborers.  We have effectively gutted ourselves and sold out entire towns in the southern United States and I’ve been part and parcel of that tragedy.

So just how much does he need?  Where does it need to come from?

First, I won’t do to him what I won’t do to myself, so earlier this week, I gutted my own dresser as I downsized from five drawers to two and a half of both summer and winter shirts and short pants.  Tomorrow, I’ll do the same to my own closet as I cull out the weak and the lame, leaving only the survivors.

Second, I anticipate that he’ll be left with probably a half dozen solely-for-play summer shirts and a few more that can be worn for school.  The same will go for winter wear, including one or two sweaters and a pair of good khakis or navy blue dress slacks.

Third, I’ll start searching for clothing in the upcoming sizes that are made in the US and as he outgrows the existing and I have to replace them, I’ll purchase the domestically made.  While the cost per item is liable to be higher, the flip side is that having to purchase fewer items should mean a zero-net difference and the money will go to American labor.  This is provided that I can find it.

The final advantages of this approach will mean smaller loads of laundry and fewer piles of clothing waiting for dispersal to the various drawers.  Likewise, less money will wind up being wasted on clothing that simply takes up drawer or closet space as it loses out to the more favorite articles that are constantly being worn to the point of threadbare.

Our children learn from our own habits as they grow and observe us.  If we’re to make these kinds of changes in our economic habits, then it will be easier for them when they’re older and the reality is that we’re going to have to change. 

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Corporations are People.  Or Are They?

It’s frankly too early to pay much attention to the speeches of potential candidates, but I was taken aback by the recent comment of former Massachusetts Governor Mitt Romney:  Corporations are people.  After a mental double-take, I sat and considered his comment since he’s liable to be the next Republican candidate for 2012.  Technically, he’s correct on multiple counts since a corporation is a legal entity formed by people and employing people for the purpose of making money.  Additionally, the United States Supreme Court ruled as far back as 1886 that a corporation had legal standing as a person (Santa Clara County v Southern Pacific) and even recently ruled that campaign finance restrictions were actually a muzzling of Corporate America’s First Amendment rights, which so far as I’m concerned is proof that enough money can buy phenomenal legal representation.

But for all of the technical points, Mitt Romney is horrendously wrong.  Mitt sees a Hollywood ingenue while we see Gloria Swanson dripping in mascara and powder to hide the wrinkles and age.

His comments might be sincere and I can even understand why he might believe that given his family history. Mitt Romney is the son of a blue-blood republican and 1968 republican presidential candidate, George Romney, who was himself a former governor of Michigan.  But prior to that political post in the early-mid 1960s, he was the president of the now-defunct American Motors Corporation; in the 1950s, he brought that automobile company back against the GM and Ford behemoths on the back of the spunky little Rambler.  George Romney was a corporate man, through and through and was also a Mormon who spent time proselytizing in the British Isles, so there’s a particular solidity to his moral beliefs.  His son consequently grew up in an environment in which the American corporation was a beneficent and powerful entity which employed thousands of people, it’s effectiveness proven by the industrial might of the Second World War and its aftermath.

If you read Tom Brokaw’s The Greatest Generation or Studs Terkel’s The Good War, one of the recurrent themes is that the Second World War served as a great equalizer amongst American society so that the Wall Street executive’s son served in combat just as the son of the steelworker.  While there was certainly a difference between the pay of the American CEO and his typical employee, it was only 24 times the average worker’s wage in 1965 but by 1980 had grown to 42 times the average wage.  The most recent results show that this income differential has risen by 2010 to a stunning 343 times the average worker’s wage of $33,900 annually.  The large majority of this pay is via the stock options granted in the executive contracts instead of actual wages; there’s consequent incentive to focus on the stock price.  Through the ensuing decades, that sense of common cause faded as the generation retired and younger generations with increasingly shorter-term sensibilities took over the reins. 

If the American corporation is people, just how many actually prosper and share the wealth?  More importantly, how many have had their jobs sacrificed on the altar of globalization to maintain profits?  To say that the corporation is composed of people implies a certain common leveling, but how many of those who decided to outsource actually outsourced their own position?  Gee, Bob, we’ve got to cut costs so we’re moving your position to Indonesia and since we’re all in this together, I’m cutting my position as well.

The American corporation as a benign group of Joe Six-Packs?  Complete bullshit.  American corporate management bears some responsibility for the hollowing of American manufacturing and the difficulties facing the American middle class as they increasingly shortened the timeframe of their decisions and viewed people as commodities instead of assets.

As for me, I come by my anti-corporate stance honestly.  My father’s corporate job put food on my family’s table when I was a child and a roof over my head and my first real job was in a large insurance corporation.  My last job however, was in the corporate headquarters of the now defunct MCI.  On one afternoon, multiple senior staff were discussing the results of meetings amongst the senior financial executives and how they were looking for ways to help boost the share price of an already profitable company.  One of the plans being discussed was to show the market their seriousness by cutting costs, including the closure of several midwest call centers.  Understand something about how MCI kept their labor costs low; they would set up call centers in rural areas which had suffered some economic hardship, purchasing and renovating a warehouse or closed store in which to house the folks who were actually calling you to sell the "Friends and Family" and other telephone products.  Because I had to periodically fly to exotic locales like Sioux City, Iowa and Springfield, Missouri, I can tell you that these people were working to pay off student loans, get health insurance and put food on the table.  This appalling concept helped me to understand that I was nothing more than a cog that would be willingly sacrificed to the greater glory of Earnings Per Share.  When we found that my wife was pregnant, it was certainly one of my thoughts as I decided to resign and stay home with the baby. 

Not all corporations are evil and not all executives deserve castration, although that too is increasingly irrelevant in light of more women in management.  But America has become too beholden to the corporations that purchase votes and public image in the pursuit of short-term and pyrrhic profits and when it’s time to actually consider the political alternatives, I’m going to remember Mitt’s mistaken sentiment and ill-considered remarks.