Category Archives: Economics

A Fool and Your Money

Every year, about this time, we are treated to images of three wise men on camels following a star to Bethlehem. This year is no different. However, this December there is a different triad of not so wise men, and the only star they are pursuing is their own. Instead of Magi, I prefer to call them “The Unholy Trinity.” Or “The Axis of Weasel.” Or “The Three Jackasses of the Apocalypse.” You may know them better by their real names: Elon Musk, Sam Bankman-Fried and, of course, Donald J. Trump.

The stimulus for today’s blog was an encounter with an elderly man leaving “Kendall’s Bagels and More” in Palm Coast, Florida. He appeared somewhat disgruntled so I asked him, “How are you?” He replied, “Fair to middling, but the day is still young.” Not wanting to assume what he meant, I continued, “Young in a good sense or bad sense?” His cryptic answer, “I read the newspaper this morning.”

Sadly, many of today’s headlines are not likely to be the harbinger of good feelings. What might he be referring to? I thought I would share my reasons for being less than forlorn. “You know, any day you do not hold Tesla stock or invest in cryptocurrency is a good day.” He chuckled and we departed, still not knowing whether he shared my relief at not having spent $800 for a share of Tesla stock or $64,000 for one Bitcoin. Or whether he rued having made the same mistake so many others have in search of a quick return on investment.

Which brings me to the three perpetrators. Compared to Bankman-Fried, Bernie Madoff was a piker. Madoff’s mere $64.8 billion in fraudulent transactions on behalf of 4,800 clients is sofa change when stacked up against the 1.2 million registered users of Bankman-Fried’s cryptocurrency exchange. Two participants, Silicon Valley venture capital fund Sequoia and Singapore based investment company Temasek, stand to lose more than $200 million each following FTX’s bankruptcy filing. To promote his Ponzi scheme, Bankman-Fried recruited celebrities including “Seinfeld” co-creator Larry David and sports figures Tom Brady (is he now an actual goat in lower-case letters), Steph Curry, Shaquille O’Neal and Naomi Osaka.

Talk about karma, when Joseph Bankman and Barbara Fried gave birth to a son in 1992 who chose to take both his parents’ surnames, the die was cast. I anxiously await the banner headline in the Wall Street Journal upon this scammer’s conviction on 1.2 million counts of financial fraud. “BANKMAN FRIED!”

On the other hand, Elon Musk would do well to heed the advice of Major Charles Emerson Winchester III, the M*A*S*H character portrayed by the late David Ogden Stiers. When asked to hurry up with a patient to assist with another, Winchester replies, “I do one thing at a time. I do it well. Then I move on.” We now know TWO things at a time (Tesla and SpaceX) were Musk’s limit. Forays into social media, cryptocurrency and high-speed transportation (the Hyperloop) took his attention away from the enterprises that were paying the bills.

Musk, Tesla owners and Tesla stockholders have all suffered. Tesla recalls have increased ten-fold in the past two years. And brand loyalty has suffered from more competition in the EV car market as well as Musk’s success in offending demographics who were the most likely purchasers of his pro-environmental poster child. Note to Musk’s secret Santa: Give him a copy of King Midas and the Golden Touch.

I have saved the Donald for last for one simple reason. Adding the NFT Trump Superhero trading cards to all the other grifts associated with the Mar-a-Lago Prosperity Church is clearly one more act of a desperate, modern-day P. T. Barnum. I would not be surprised if the plaque on his desk reads, “A sucker is born every minute.” And while sane people may consider Trumpism an on-going threat to democracy, Trump loyalists’ more pressing concern should be Barnumism, a clear and present danger to their wallets.

There is one more thing these three incorrigibles have in common, an affinity for using the internet and social media as an instrument to promote their various hustles. Musk now has Twitter and StarLink. Trump created Truth Social. And before his arrest, Bankman-Fried talked about partnering with Solana Breakpoint, the blockchain provider for FTX, to extend use of the same technology to gaming and other on-line activities.

Maybe they could pool their declining resources and establish a single website where gullible investors could be recruited. Except for the fact it is already registered to a major sporting goods retailer, the obvious domain name for their site would DICKS.COM. NOTE: Dick’s Sporting Goods purchased the domain from its original owner (you don’t want to know), and it immediately redirects the user to

For what it’s worth and Happy Holidays,

The Next Gig

These companies are making profits and revenue and I’m not (going to) begrudge anyone for that because that’s what we are about in America. But we also want to make sure that success trickles down to the worker.

Labor Secretary Marty Walsh, April 21, 2021

Walsh’s comments accompanied a recommendation gig workers, especially those who represent the front line for companies like Uber or GrubHub, should be treated more like employees. A recommendation about which I find myself conflicted.

Based on traditional standards for differenting between employees and independent contractors, I understand why corporations which rely on gig workers oppose Walsh’s position. After all, those business do not set working hours. If Uber drivers want to take a week off, they do not need anyone’s permission. Their workplace is their own choice. GrubHub does not set specifications for delivery vehicles. If I want to use my bike, moped, Harley or 1964 Mustang, that is my choice. And if I don’t like the compensation, I simply stop providing the company’s service. No notice required. No exit interview. No NDA.

The gig economy is sometimes glorified as a low-investment entrance into entrepreneurship. Theoretically, if you want to make more money you choose to work longer hours. And you can innovate. Uber drivers can increase demand for their services by offering a bottle of water or granola bar to a customer. Or decorate their car so potential riders choose the guy/gal with the VW Beetle that looks like a tortoise.

But many gig workers are not subject to the risk/reward equation which is central to entrepreneurship. They do not have to worry about collecting revenue. They are not concerned with merchant accounts or being stiffed by a customer. Uber drivers’ shares of rider fees are deposited weekly in their bank accounts. If they decide to shut down their business they are unlikely saddled with sunk costs or outstanding business loans. And they spend little, if anything, on customer acquistion.

Of course, there are down sides. No health benefits. No company contribution toward retirement. No paid holidays or sick leave. But those are the same issues every start-up entrepreneur faces. That is the cost of being independent and having personal control over your life and work.

My sympathy for corporate America is tempered by the history of companies blurring the lines between employees and independent contractors to save costs. Substituting independent contractors for salaried workers eliminates employers’ share of Social Security and Medicare contributions, health benefits, unemployment insurance, retirement contributions and paid time off. Furthermore, it can reduce liability exposure.

Corporate reliance on independent contractors has increased in inverse proportion to a decline in union membership. In 2021, only 10.3 percent of U.S. workers belonged to unions compared to 20.1 percent in 1983. Some scholars argue that decline began with President Ronald Reagan’s appointment of John Van de Water as chair of the National Labor Relations Board. At an October 1984 labor law conference in Columbus, Ohio, Van de Water offered the following as the legacy for his time in office.

I would like to think that my term as Chairman will be perceived as the beginning of the period in which the Board changed from being viewed as pro-labor to a time of being strictly nonpartisan, as indeed it was meant to be.

I do not know whether the relationship between Van de Water’s being at the helm of the NLRB and union decline is causal or merely correlative. Either way, lack of protection for union workers contributed to the utilization of independent contractors in several major industries.

This is not a one size fits all situation. I foresee a time when gig-worker dependent industries respond to an employees’ market and begin treating some like salaried labor in return for mandated hours and schedules. Others may want to retain their independent status. We know it already varies depending on the job description. An executive at InstaCart is compensated differently than the person who delivers your groceries.

In the future, it may also differ by industry. Let me give you an example of one industry which represented the worse abuse of “independent contracts.” I know this because I was subject to that abuse. While in middle school, I delivered the Richmond News-Leader, the afternooon newspaper, to houses in my neighborhood. Consider the following.

  • My work hours were mandated by the company. Pick up the papers after school and deliver them by dinner time.
  • I was assigned a specific route which I could not expand without corporate approval.
  • If I wanted to take time off, I had to find someone to take my route.
  • In bad weather, the papers had to be placed in plastic bags which often were not provided by the company.
  • I was responsible for collecting the subscription fees, often having to return to a house multiple times to find someone home.
  • I was also expected to do the marketing, personally reaching out to non-subscribers.

For all intents and purpose, I was an employee of the News Leader, told when, where and how to do my job. Still I was considered what we now call a gig worker. Compensation in the mid-1960s averaged around $10/week for 10 to 12 hours worked (approximaely $95 in 2022 dollars).

What bothers me the most about the approach by both Walsh and Van de Water is the either/or nature of their respective positions. Instead, policymakers need a more flexible roadmap based on a reexamination of what constitutes employment and what qualifies for legitimate contracting. It should also include policies which encourage independence for those who seek it.

One example is the requirement that independent contractors pay both the employee and employer share of Social Security and Medicare. That assumes the business’ contribution and employee’s come from two different revenue sources. Sales revenue for the company, income in the form of wages for the employee. For many independent contractors, sales revenue is their income. Gig workers may need to pay a premium but it should not be twice that of a salaried employer.

Nicholas Negroponte, founder of the MIT Media Lab, once said, “Technology should not be used simply to automate business, it should be an opportunity to rethink business.” Maybe, the same philosophy should apply to the gig economy.

For what it’s worth.

Tried and Untrue

British Prime Minister Liz Truss announced her resignation Thursday after six turbulent weeks in office, making her the shortest-serving prime minister in British history.

Washington Post/October 20, 2022

Within hours of the announcement two Washington Post columnists added their two cents. The first was conservative and Trump apologist Henry Olsen in a piece titled, “Liz Truss’ Resignation Is a Warning for Republicans.” And what was that warning?

Failing to prepare public opinion for her proposals meant there was no widespread support for them in any segment of British society.

Henry Olsen/October 20, 2022

As Shakespeare might say, “Ah, there’s the rub!” Not that deep tax cuts for the rich under the guise of trickle-down economics has never been the growth engine Arthur Laffer and his lemmings claimed. Truss’ sin was not spending enough time and energy spinning the web of BS needed to once again con the middle class to vote against their own self interests.

The counter-argument by former Republican and never-Trumper Jennifer Rubin immediately cleared the air. In a piece titled, “Republicans’ Inflation Plan: Tax Cuts That’d Make Liz Truss Blush,” Rubin warns a GOP Congress has already promised Truss-like policies including extending key provision’s of the Trump tax cuts.

This should end any talk that the election is a choice between addressing inflation or protecting democracy. In reality, it’s about whether Republicans will be granted power to make inflation worse and to threaten democracy.

At a moment when Republicans are hollering about fiscal irresponsibility, it is bewildering that they are doubling down on the same tax cuts.

Jennifer Rubin, October 20, 2022

Once again the United States and its neighbor across the pond affirm Churchill’s variation of the George Bernard Shaw adage, “Americans and the British are one people separated by a common language.” Today’s events in London suggest, however, our English counterparts no longer have a common belief in “voodoo economics.” It took Tories and Laborites just 44 days to tell the powers that be, “You cannot fool us again.”

Americans of all political persuasions have 26 days to send the same message to the leadership of the political party formerly known as the Republicans. If not, Brits and Yankees may again be united under a common form of government. Except one will have a constitutional monarchy in which the “crown” is only head of state. The other will have a monarchy in which the “crown” is both head of state and autocrat-in-chief.

Inflation is temporary. Gas prices will always fluctuate. In contrast, democracy, once gone, is lost for generations if not forever. More tax cuts and trickle down economics is the epitomy of Einstein’s definition of insanity, doing the same thing over and over expecting a different result.

There remain only two questions. How long will it take for American voters to have British-like buyer’s remorse? And will it be too late?

For what it’s worth.

The Case for Inflation

If you’re wondering whether I am going to argue the current rate of inflation is not an issue, do not worry. Temperatures here in the Great White North have run 10 to 15 degrees above normal, so brain freeze is not at fault. Inflation, especially excessive inflation, affects the economy and the general population. Unless you’re Barre Seid, the Chicago businessman who just gave $1.6 billion to a GOP PAC to prop up the flailing campaigns of Dr. Oz, J.D. Vance, Hershel Walker and Ron Johnson. Inflation needs to be alot higher than seven or eight percent before Mr. Seid misses a meal or has to sell one of his many multi-million dollar homes.

This post is about the parable of a frog in a pot of boiling water. As long as the water temperature rises incrementally, the frog does not notice until it is too late. But turn up the heat all at once and you’re looking at a reptile revolt. Such is the case with inflation over the past quarter century.

For the 12 years (1997-2008) the average annual rate of inflation was 2.67 percent. Eight of those twelve years, the GOP controlled the White House and the Senate. I do not recall any Republican complaining about inflation when they were in power. Because that was normal. An inflation rate between two and three percent is considered acceptable.

In contrast, the average annual inflation rate for the next 12 years (2009-2020) was 1.42 percent. Which means, for a dozen years, inflation was on average 1.25 percent less than accepted or normal. Much of that decline resulted from two global phenomena, first the Great Recession followed by a worldwide pandemic. Think of it as a volcano where the magma is heating up below the surface with no place to go. Eventually there is a crack in the magma dome and the volcano erupts.

If prices had increased at a typical inflation rate for the past 12 years, prices would be where they are today, maybe even higher. Like the frog in hot water we would not have panicked. But when that burner is turned up to high all at once, it shocks us.

When I worked at the National Governors Association we were in the middle of what was called the “new economy,” based on technology and information. Then Colorado Governor Roy Romer was the chair and invited his son Paul, a future Nobel Prize winning economist, to address his colleagues at the NGA annual meeting. Paul’s message. “The new economy still operates under old economy rules.” There will still be business cycles with alternating periods of economic growth and recessions. Despite gains in productivity there will still be inflation.

In 2018 Paul Romer and William Nordhaus won the Nobel Prize in economics for their work on long term growth and its relationship to climate change. That day back in 1993, he earned one for speaking the simple truth. We should have listened better.

And While I’m At It…

A similar principle applies to the cost of a college education and why the Biden student debt forgiveness program not only makes sense, it is a necessary realignment in public education resulting from state abdication of its past commitment. According to The Chronicle of Higher Education, 25 years ago aggregate state funding for public colleges and universities was 140 percent above federal spending for the same purpose. Little by little that commitment fell to 12 percent today. Not because federal spending rose which it has not, but due to state budget reductions during the great recesssion followed by attacks on higher education by the leader of the political party who openly admitted, “I love the uneducated.”

In other words, public colleges and universities have gone from state-funded to state-supported to barely state subsidized. To stay in business, there was only one choice. RAISE TUITION. And that is where the frog in boiling water comes in. Incremental increases in tuition over 25 years spread out the pain until students got the bill in the form of their student loan principal when they graduated.

Public support of higher education is “pay it forward” at its best. General tax revenue appropriated for this purpose was the price we all used to pay to keep tuition affordable for future generations. As states cut higher education budgets, we shifted that burden onto the backs of individual students.

I’ll use my own experience to demonstrate the impact. In 1971, my in-state annual tuiton at the University of Virgina was $1,600. Today, it is $18,900. “Isn’t that the cost of inflation?” you ask. My $1,600 annual tuition would cost $11,705 today. In other words, each new in-state student pays $7,195 above inflation. That’s almost $30,000 over four years. And the numbers increase exponentially if you include graduate or professional school.

Is it totally fair to those who already paid off their student loans or to those with a taxable annual income exceeding $125,000? Probably not, but nothing is ever totally fair when it comes to funding formulas. But it is significantly more equitable than asking matriculating students to make up the entire shortfall for the decline in public support for higher education.

For what it’s worth.

The Invisible Brand


Italian artist Salvatore Garau recently auctioned an invisible sculpture for 15,000 euros ($18,300). According to, the sculpture’s initial price was set between 6,000 and 9,000 euros; however, the price was raised after several bids were placed.

~Newsweek/June 1, 2021

Was there a typo in the dateline?  Did the story actually come from the April 1, 2021 issue of Newsweek?  Or more likely, is Salvatore Garau an Italian descendent of P. T. Barnum or Mark Twain?

Artist sells invisible sculpture for over $18KOnce the story was verified, my interest shifted from Signore Garau to those who had bid on his non-sculpture sculpture.  And what would the unidentified owner do with his/her newly obtained “masterpiece?”  Would he/she loan it to the Galleria dell’Accademia in Florence, Italy where it would occupy its own alcove next to that of Michelangelo’s David?   Would it find a permanent home among the statuary in the gardens behind the owner’s villa, overlooking a pond filled with equally invisible fish?

As is so often the case, it was a totally unrelated story that caused me to break out in a cover of Johnny Nash’s 1972 hit, “I Can See Clearly Now.”  The headline?  “In a world first, El Salvador makes bitcoin legal tender.” (Reuters/June 9, 2021)  Salvatore Garau had brilliantly demonstrated art’s ability, if not responsibility, to help us better understand and appreciate the human experience through imaginative representations.  The purchase of an invisible statue was a creative, yet logical, extension of cryptocurrency.  Garau ‘s statue “I Am” was nothing more than a metaphor for invisible money being pursued by millions of investors and now a sovereign nation.

The only remaining question is whether other art forms will follow suit.  If Johnny Nash were still with us (he died on October 6, 2020) would he, ala Harry Chapin’s sequel to his hit “Taxi” titled (drum roll) “Sequel,” produce an updated version of his 1972 recording and call it, “I Cannot See It Clearly Now?”  Or will some modern-day satirist publish The NEW Adventures of Tom Sawyer with the following revised text in Chapter II in which young Tom practices what he learned as a finance major at a prestigious American university, how to create wealth without creating value.

CHAPTER II–Tom and the Magic Piggy Bank

One Saturday morning, Tom appeared on the steps of his home holding a piggy bank when his friend Jim came skipping by humming “Buffalo Gals.”  Jim stopped for a moment and saw what appeared to be Tom dropping coins into the slot.  However, there was no sound, and on closer examination, Jim realized there was nothing between Tom’s thumb and forefinger each time he positioned his hand over the porcine vessel.

“What are you doin’ Tom?” Jim asked.

“Getting rich,” Tom replied.  “I put these invisible coins in my bank, and magically, they are worth more every day.  Do you want in on it?”

“What do I have to do?  Can I just pretend to drop money in the bank like you do?”

“No, of course not.  Someone has to manage the process.  You buy the invisible coins from me with regular money and I drop them in the bank.”

“How do I get my money back?”

“You don’t actually get it back.  You wait until someone else thinks the invisible coins will be worth more than you paid for them and buys them from you.  They never actually leave the piggy bank.  And the more people who want to buy your coins the more you make.”

And sure ‘nough, another friend Ben stopped on his way to the swimming hole. “Wanna join me?” Ben asked.

“Nah, Tom and me is getting rich,” Jim replied.

By sundown, everyone in St. Petersburg, Missouri had gathered in front of Aunt Polly’s house, clamoring to get a share of the invisible coinage.  None noticed how there was no limit to the number of imperceptible discs the bank could hold.  And each left dreaming about how they would buy a new car, boat or villa in El Salvador with their new-found wealth.

CHAPTER III–Tom Relocates to the Cayman Islands

For what it’s worth.