“Free” stuff just isn’t free, and we need to stop using that term

“Free” stuff just isn’t free, and we need to stop using that term

Over the last several years, with increasing abandon, the term providing “free” things has been a central theme of American political discourse.  For instance Bernie Sanders maintained (and is still maintaining a) pledge to “Make Public Colleges, Universities, and Trade Schools Free for All”.[i]  There’s been calls to make health care “free” and universal.  Even the US government provided COVID-19 vaccines are said to be “… free and available to anyone who wants one.”.[ii]  Here is the thing, however, they are absolutely NOT free.  Higher education, for instance, costs tens of thousands of dollars per student annually.[iii]  Health care represents approximately 20% of the US GDP, which represents over $4 trillion of the US economy.[iv]  Simply put, these things cost something and have enormous value.  Last I checked, money doesn’t grow on trees and there is a severe limitation for how long we can just print money before it has larger economic implications (e.g. becomes worthless).

 

Front cover of the seminal text on the issues with “Free” Parking[v]

Besides those realities, the whole mentality of making something “free”, that really isn’t, is massively detrimental.  The quintessential example of this is the affliction that “free parking” has had on the US in particular, but broadly across the globe.  In his over seven hundred page text (cover pictured here), Donald Shoup, PhD., lays out in excruciating detail how, despite the moniker, “free parking” is exceptionally expensive.  He puts into specific relief the costs to society and to the individual that is a part of a place and system that employs the paradigm that is “free parking”.  And he makes the case, strongly, that part of the “high cost of free parking” is that it has created perverse and spiraling incentives that only create more costs and more damage.  He lays out how the mere fact that people believe it ought to be free, as if it was a right, is massively damaging in two distinct ways:  1) that the ones paying for it are not even often aware how much or how imbalanced it is for what they get and 2) it creates the illusion that there is not an incredible amount of value (sunk or otherwise) in the provisioning of said capacity.  In other words people take it for granted and people don’t have a clue about the bill they are actually being forced to pay for it.  He lays out, as a set of prescriptions, that we make it transparent how much it is costing and reform the systems in place to align usage to who pays for it, equitably, in the marketplace.  In this sense, what is “free parking” would be an ever more appropriately called “taxpayer subsidized” or “taxpayer provided” parking.

 

This exact analysis translates to any government provided service or provision of goods.  They are not “free”.  Someone is (or someones are) paying for it.  Even if you don’t have to pay directly for it at the point of service, its still not “free at the point of service”, its “provided to you by the taxpayer” or “provided to you on account of your being a taxpayer”.  We simply need to expunge this notion of things being “free”, because the only real things that are free are those natural and inalienable rights that simply are a part of being.  And to that, this incessant need, especially on the political left, to make things free, or assert a “right” that is anything but, really diminishes the value of what it is that they are advocating for.

 

I am all for the idea that we have a social compact that is managed and facilitated through the government as the final arbiter.  I further believe that it could be a good thing, for instance, to support a drive to fully taxpayer provided post-secondary education (tied to a national service requirement, military or otherwise) as a potential model.  It cannot nor should not, however, be considered “free”.  We need to get our heads around the fact that there are things that are common goods that necessitate contributions through mandatory efforts (we did NOT fight a revolution against paying taxes; we did fight the revolution to end paying taxes we did not have a say in imposing on ourselves[vi]).  It is a necessary thing, for instance, to promote and ensure that the demos in a democratic republic, are educated sufficiently to self-govern themselves.  Relying on secondary education as the only requirement in a lifetime to achieve that need, as the majority proportion in society, is no longer sufficient.  Trade schools, higher education, and other certification or education pathways are needed.  It is everyone’s responsibility to ensure this happens, not just those that choose those pathways.  And we ought to be clairvoyant enough to call it like it is: taxpayer subsidized, taxpayer supported, and/or taxpayer provided (depending on the level of fiscal support provided to the program).  Likewise, if we choose for universal pre-K or healthcare or what ever other program we enact or service that is provided.  Its not free.  It costs something, it has value, and it is a part of what we pay for as citizens.

 

So, stop it with the “free” mantra.  It’s a falsehood.  Get on with meeting our responsibilities as taxpayers and being clairvoyant about what government can and does for us.  After all, that is what we are paying for, whether we know it, like it, or not.

 

[i] https://berniesanders.com/issues/free-college-cancel-debt/, accessed on 2 September 2022

[ii] https://www.vaccines.gov/, accessed on 2 September 2022

[iii] https://files.eric.ed.gov/fulltext/ED498601.pdf,

[iv] https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical#:~:text=U.S.%20health%20care%20spending%20grew,For%20additional%20information%2C%20see%20below., accessed on 2 September 2022

[v] For short synopsis of this 700+ page text, you can read it at this link:  https://www.researchgate.net/publication/235359727_The_High_Cost_of_Free_Parking

[vi] Further, despite what the talking heads and politicians keep professing, we live in a democratic republic, which we, as citizens, are the ones going in the voting booth to have a say about.  It is only because, “we the people” have let them get away with it, that we have the results that we have and the obfuscations are so thick.

Economics and Data – Real Unemployment and Labor Force Participation

 

Economics and Data – Real Unemployment and Labor Force Participation

 

On June 6^th, as part of his regular segment called “data download” Chuck Todd of NBC News and Host of “Meet the Press” highlighted a stark reality as it relates to our current labor situation, that our Labor Participation Rate in June 2021 is no different than it was in June 1977.

 

Take a watch and listen to this video:

I have been saying for some time that I strongly believe that our (the USA’s) economic fundamentals are really off kilter (“screwed up” as I put in in some posts).  To me there are several measures that I look at to see what the overall health of the economy is, and they aren’t’ what typically get rolled out in the general media coverage of how things are going.  You know the measures put out there:  GDP growth, unemployment, stock market growth, size of the federal annual budget deficit, overall trade deficit, quarterly earnings, and so forth.  These are “ok”, but they really are too gross to get a real picture of the economy and its health across sectors and effecting most of us.  I won’t go over many of these now, and what a good analysis says about them, but some of the time based trends I carefully watch are:

• Real GDP per capita (production on a per person basis), its growth/decline, and in comparison with the EU, China, and other major competitors; https://fred.stlouisfed.org/series/A939RX0Q048SBEA)
• Gini Index (https://fred.stlouisfed.org/series/SIPOVGINIUSA)
• Inflation rate (https://fred.stlouisfed.org/series/T30YIEM)
• Trade balance (https://fred.stlouisfed.org/series/BOPGSTB)
• Housing and household statistics (https://www.pewtrusts.org/en/research-and-analysis/issue-briefs/2016/03/household-expenditures-and-income)
• Real wages (https://fred.stlouisfed.org/series/LES1252881600Q)
• Business debt (https://www2.deloitte.com/us/en/insights/economy/issues-by-the-numbers/rising-corporate-debt-levels.html)
• Business Investment (https://fred.stlouisfed.org/series/W790RC1Q027SBEA)
• Federal debt as a percentage of GDP (https://fred.stlouisfed.org/series/GFDEGDQ188S)
• GDP by industry over time (https://www2.deloitte.com/us/en/insights/economy/spotlight/economics-insights-analysis-07-2019.html)
• Federal spending as a percent of GDP (https://fred.stlouisfed.org/series/FYFRGDA188S) 

I look at them not only in terms of their own meanings (which can be significant), but also in comparison with one another.  And if you look at all of these, you will start to see a picture that isn’t healthy for the long-term, and we really need to have a plan to address many of the problems therein.

The one I want to focus on here, however, is specific to employment.  For some time now it has become too fashionable to determine how “normal folks” are doing by looking at the unemployment rate.  If the rate is in low single digits, the media, politicians, and seemingly everyone believes that the economy is doing great!  If it creeps above 8% or more, especially if it goes double digits, the reports are that the economy is in the toilet and that folks are suffering massively.  Here is a chart tracking the unemployment rate over that last couple decades in the US (2001 to 2021):

[i]

Here is the thing though; the unemployment rate is a very short-term measure of things.  This is because the term “unemployed” is a very loaded term.  Here is that definition according to the Bureau of Labor Statistics:

“In the Current Population Survey, people are classified as unemployed if they meet all of the following criteria:

• They were not employed during the survey reference week.

• They were available for work during the survey reference week, except for temporary illness.

• They made at least one specific, active effort to find a job during the 4-week period ending with the survey reference week (see active job search methods) OR they were temporarily laid off and expecting to be recalled to their job.

People waiting to start a new job must have actively looked for a job within the last 4 weeks in order to be classified as unemployed.  Otherwise, they are classified as not in the labor force.”[ii]  And, the “unemployment rate represents the number of unemployed people as a percentage of the labor force (the labor force is the sum of the employed and unemployed).  The unemployment rate is calculated as: (Unemployed ÷ Labor Force) x 100”[iii]

Long and short, if you’re reading carefully, the term “unemployed” does not mean the sum total of all those that are “out of work”.  No, it is a very limited sub-category of those that are “out of work”, given that it omits anyone that has been determined to no longer be in the “labor force”.  So while “unemployment” may have a low percentage, there could still be a large percentage of folks not working, aka “out of work”.  So, how then do we figure out what the reality is in terms of who is really “out of work”?  To get at that, we need to get at the Labor Force Participation Rate.

The labor force participation rate (or participation rate) “represents the number of people in the labor force as a percentage of the civilian non-institutional population. In other words, the participation rate is the percentage of the population that is either working or actively looking for work.  The labor force participation rate is calculated as: (Labor Force ÷ Civilian Non-institutional Population) x 100.”[iv]  Imbedded in this is the idea of the civilian non-institutional population, which is the “population age 16 and older… published by BLS … [excluding] the following:

• active duty members of the U.S. Armed Forces
• people confined to, or living in, institutions or facilities such as
• prisons, jails, and other correctional institutions and detention centers
• residential care facilities such as skilled nursing homes

Included in the civilian non-institutional population are citizens of foreign countries who reside in the United States but do not live on the premises of an embassy.”[v]  So, basically, this rate is the percentage of civilian people in the country that could, potentially, work.  It will never be 100%, as it still includes folks that are not likely to be working anyhow, namely (and these are just some examples):

• retirees

• students still in school, including those finishing high school (typically through age 18) and in college

• those on long-term disability but not in a residential care facility

• those undergoing temporary medical treatments, that may last a long period of time

• those that just don’t want to work by choice

So what does that rate look like over time?  The following is a chart of the Labor Force Participation Rate since the end of World War II:

 

[vi]

 

As can be seen in this chart, prior to the mid-1970s, the rate was somewhere between 58 to 60%.  Another way to look at this is that roughly 40% of the civilian population was not in the labor pool.  Social mores up until that time, often precluded women from pursuing careers and often were not working, yet were certainly part of the “civilian non-institutional population”.  Given that women make up 50.8% of the population[vii], this means that a large part of that 40% was likely to be women.  Women taking on a more vigorous role in the labor force should have seen a significant rise in the participation rate.  The rate, however, by the mid-1990s, more or less stayed in the 66 to 67% range; a nominal 10% rise to prior to the widespread of women entering the workforce.  This means we still had about a third of the potential labor pool not working.

Since 2000, this rate has been in decline; the point being that the percentage of the labor pool that is working is shrinking.  People have simply moved from “unemployed” to “not in the labor pool” at a seriously concerning rate.  Yes, when we see a spike in unemployment rate, which is bad.  However, even if the unemployment rate is low (as we saw from 2002 to 2007) it does not mean that the labor participation rate is increasing or recovering (as we saw from 2002 to 2007, where it, basically, continued to drop and settled at a new lower rate).  Moreover, even when there is an economic expansion (defined as a growth in GDP), does not mean “average folks” are seeing the benefit of it.  If you look at this, then you should be getting a clearer picture why there is increasing dissatisfaction both in the political and economic arenas, especially for those that have heretofore taken it for granted that the American dream provided for a good paying job, in their hometown, doing something that their parents, grandparents, and generations before had done.  This just is not the reality, and instead of unleashing the power and potential of the fullness of women in the workforce, we have missed a huge opportunity.

One might say that the economy does not exist to create jobs for people.  I’d say that an economy that isn’t taking advantage of its human capital to the maximum justifiable extent (we shouldn’t be forcing 80 year olds to work), is truncating the opportunities not only for those out of work, but for the potential of the collective economy to strive.  Having never broken the 70%, mark in the participation rate, given the widespread entry of women in the US workforce, is telling of some significant problems long term.  And, when brought into the context of the rest of the statistics I mention above, it is certainly a clear reason we need to rethink our economic approach in the not too distant future.

 

 

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[i] Source:  https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm

[ii] Source:  https://www.bls.gov/cps/definitions.htm#unemployed

[iii] Source:  https://www.bls.gov/cps/definitions.htm#ur

[iv] Source:  https://www.bls.gov/cps/definitions.htm#lfpr

[v] Source:  https://www.bls.gov/cps/definitions.htm#population

[vi] Source:  https://fred.stlouisfed.org/series/CIVPART

[vii] Source, 2010 Census, https://www.census.gov/programs-surveys/decennial-census/decade.2010.html

Stop! Please stop with the information fiefdoms!

Stop! Please stop with the information fiefdoms!

This will just be a short post to express something that continues to befuddle me:  information fiefdoms.  What do I mean by “information fiefdoms”?  This is the kind of organizational and individual behavior wherein a group or person withholds information from others for reasons that amount to self-protection or an ill-conceived notion of propriety.

Now in offering this, I want to be clear I completely get the need for secrecy in communication.  I understand the need for justifiable discretion in relaying personal matters.  I’ve held a fairly high level security clearance, so I understand the need to keep tight lipped about security related issues.  I even get the need to be careful about industrial espionage especially as I relates to intellectual property.  These are not creations of information fiefdoms, they are necessary protections within society.

What I am referring to here is the kind of organization or persons that simply hold information as a means to stifle others, to accumulate miss-gotten power, and to trade it as if it were currency.  Look, I am an open communicator; meaning that I have long learned that if I am the only one that knows a thing, it’s likely that is a bad situation.  Thus I pass along information as a norm unless I’m told otherwise and there is a good reason to withhold it.  I also believe that sharing more information aids in team building, empowers rather than stifles, and results in better outcomes over and against potential failures.  Yet I continue to encounter people and organizations that are much more interested in “protecting their [information] turf” than they are in helping to make themselves and others successful.

You’ve encountered them I am sure.  The folks that don’t want to share slides from a presentation, or those that don’t include you in a CC on an email, or places that have cultures where being seen chatting with someone in another department might lead to a probing interrogation when you get back to the office about what was being discussed as if you were off the reservation to have even talked with them.  Its places where you routinely are told about things way too late to contribute meaningfully and the rumor mill is so maligned that it causes your head to spin.  Its places where “blow-ups” happen in frequent enough cycle that you can feel another one about to strike well ahead of its inevitable eruption and where morale is low and seeming on a path to go lower.  It’s places and people that rather solve one-on-one rather than engage teams or flee from public meetings and scrutiny in favor of the backroom deal.  Further, it is a place where leaders as quashed not made and its people that are self-engrossed or focused on self-enrichment (in power, prestige, or treasure) rather than selflessly serving.  It’s about creating a fiefdom out of what you know and what you hold as information, not a community where we being open and honest and sharing enables everyone to grow and learn and accomplish much more than the sum of their parts.

So I just have to say it, stop it with the information fiefdom creating.  Tear down the information hogging pens and let things get out of the barn.  Sure, occasionally things can get a bit haywire and run a bit wild, but you can rein that in by demonstrating the value of the group and the need to share appropriately so as to fulfill a vision everyone can buy into.  Leaders share information, they aren’t afraid of it.  Leaders are the ones that aren’t afraid of bad news, and are instead the first to relay it.  Leaders communicate first, and listen always.  Being the holder of an information fief is the opposite of that, it hurts you and it hurts those organizations that trade in such methods.  Don’t be afraid of information, be the one that enables it to flourish around you.

So stop, stop building information fiefdoms.  Instead, build networks of sharing.  You’ll be glad you did.