I had a conversation with a medical doctor 2 days ago-we looked at the now infamous Inauguration comparison images and he stated that “he wasn’t quite sure which image had the largest crowd”. Wow. We are just in a brand new place where objective facts and evidence are meaningless to a large group of people. Psychology does provide justifications for this. Cognitive biases like the confirmation bias and the backfire effect can explain why people would reject evidence that does not conform to their worldview. It is just so amazing to engage with people who you think should know better resort to mental gymnastics to explain their unsubstantiated worldview.
Last night, Rachel Maddow discussed results from a PPP poll asking about the new Trump administration. Take a look at the chart below. There is a bubble alright…two bubbles. The Trump supporter bubble…and the everybody else bubble.
President Trump appears to have his own reality where he is sacrificing trust in the White House to claim that 3-5 million undocumented immigrants illegally voted in the election and that his Inauguration was the largest ever–both easily prove falsehoods (or lies). The good news is that a plurality of the people still believes in the objective truth.
Why discuss politics and psychology on a personal finance blog? Now, this is a matter of financial security for our customers and readers. White House policies from Obamacare repeal with no real plan for replacement, deregulating Wall Street and eliminating Dodd-Frank, weakening the Consumer Financial Protection Bureau, Infrastructure spending plan that is just tax breaks for Trump’s friends, and a tax reform plan that may raise taxes on the middle class are all affronts to the financial wellness of our customers. Trump’s Tax plan has been published and analyzed-it benefits top earners the most-as much as 7% and only 0.6% on the bottom quintile.
“A single parent who’s earning $75,000 and has two school-age children, they would face a tax increase of over $2,400,” Batchelder says. That’s if they had no child-care deductions; the increase in taxes comes partly because the Trump plan eliminates the $4,000 exemption for each person in a household.
Source: NPR, Who Benefits from Donald Trump’s Tax Plan
Facts matter. The truth matters. It matters that the Obamacare repeal and replace plan will leave more people without health insurance. President Trump may try to shower himself with praise after the Obamacare repeal and claim that the replacement is “terrific!” We the People, need to embrace the truth and recognize that the “shower of praise” isn’t rain-it’s something entirely different.
Each year we strive to find a way to improve our lives and experience something new and exciting. With the new year comes new goals. So many of these goals are experiential or behavioral, not involving the acquisition of goods. Losing weight gives us better health and more self confidence, kicking a habit lifts our spirit, improving our relationships helps us feel connected, learning a new skill empowers us. The non-material, intangible resolution list is endless and powerfully compelling.
These desires for a better human experience can not be denied. Companies who strive to provide the most value to their clients must take experience into account. Studies have shown our connection to physical goods has decreased. Since 1987 the share of consumer spending on live experiences and events relative to total U.S. consumer spending increased 70%. According to a Harris Study, 3 out of 4 millennials would rather spend money on an experience or an event than on a desirable consumer good, myself included!
As far as spending habits toward material goods, I can find plenty of reasons why the philosophy that less is more rings true-
-less goods to move equals more money saved on moving and/or storage costs.
-less goods equals more clutter free spaces.
-less goods equals more money to invest in our dreams
-less to have insured and keep track of means more peace of mind.
The boom in high performance devices and applications has played perfectly into the experience over goods philosophy. Our devices are smaller than ever which means less to store and we can interchange devices every few years. The new iphone 7 can replace the iphone 6. The Macbook 2017 can replace the Macbook 2013. When it comes to applications, they take up no physical space except the negligible space in the hardware or cloud.
With experience now playing a pivotal role in our society, applications have found their perfect space and role to assist us in meaningful ways toward the creation of experiences, but it goes one step further than that. Our new year’s resolutions, and our most ambitious goals, are a reflection of our dreams and the type of people that we dream to become. If an application can help us become the person we dream to become it is a valuable asset in overall life satisfaction and personal development.
The examples are numerous- if you dream of having a better business and an app helps you deliver on your objectives, products and services quicker and easier it becomes invaluable. If you want to lose weight, and an app helps motivate you and keep track of your fitness goals, it gives you the energy to continue. In the fields of technology and application development, it is our dream, our purpose and our reality to create applications that have this sort of effect. We continually strive to create a better me, a better you, a better we. So we can all go where no man has gone before.
⚡️ “Trump targets union boss who said he lied about Carrier jobs”https://t.co/IIcLVGvMw7
— K. Alexander Ashe (@ka_ashe) December 8, 2016
President-elect Donald Trump made a deal with the CEO of United Technologies to keep some US jobs from moving to Mexico. At stake were 2000 jobs moving from a Carrier plant in Indianapolis, Indiana that manufactures air conditioners down to Mexico where labor is 80% cheaper. The nuts and bolts of the deal where that Indiana Governor and Vice President-elect Mike Pence promised $7 million dollars in tax benefits to Carrier. Carrier promised to keep approximately 800 jobs in the US. Moreover, Carrier also plans to invest $16 million in automation which would eventually eviscerate the remaining jobs at the plant. Additionally, this deal left hundreds of workers at a nearby Carrier plant in Huntington out in the cold.
United Technologies CEO admitted in an interview with Jim Cramer that 10% of his company’s revenue comes from government contracts. Hence, President-elect Trump actually had huge leverage. Yet, this was a sweetheart deal for Carrier including tax breaks , positive press, and increased profits for shareholders..
What about the workers?
The union leader at the plant, Chuck Jones, was not even consulted or invited to the bargaining table. Moreover, Chuck Jones called Donald Trump out for “lying his ass off” regarding the number of jobs saved. President-elect Trump has taken to Twitter to call Chuck Jones out by name and criticize him. Mr. Jones is receiving death threats – for telling the truth about the deal and expressing concern for the workers who will still be laid off. I think that Mr. Trump has taken union-bashing to a presidential level. Trump’s next tweets went on to claim that unions are the reason why American jobs are being shipped overseas – a blatant lie.
This Deal Doesn’t Scale
Critics like (surprise, surprise) Sarah Palin have come out and said this deal is just “crony capitalism”. Will Trump starting picking up the phone and calling CEOs to offer more deals? Does this deal create a perverse incentive for CEOs to announce moves overseas in search of tax breaks and other government goodies? This deal simply doesn’t scale. Globalization encourages companies to seek out more favorable regulations and low-cost labor. Innovation, cost-cutting initiatives and automation exacerbate the job-crunch from globalization.
Moreover, Trump is promising more benefits to corporations including eliminating environmental regulations, allowing corporations to repatriate money overseas, and lowering the top marginal corporate tax rate from 35% to 15%. The funny thing is that the effective corporate tax rate was 19.4% between 2008 to 2012 and some corporations little or no tax at all.
Source: White House Historical Tables
The reality is that the burden of paying taxes has shifted dramatically from corporations to individuals. The Revenue Act of 1916 established annual income taxes in the United States. Between the inception of the annual tax to the 1960s, individuals and corporations contributed roughly the same amount in U.S. Federal taxes. The 1:1 ratio of individual and corporate tax burdens ran away in the 70s and 80s. The ratio as of 2014 is 6:1. Yes, individuals contribute 6 times the amount that corporations contribute in U.S. Federal taxes. This does not take into account Social Security, Medicare and Medicaid, state taxes, property taxes, or sales and use taxes. Moreover, this data does not account for the fact that some S Corporations, Limited Liability Companies, and Sole Proprietors allow profits and losses to flow through their personal income taxes. The raw deal for the American people is that we must engage in a race to the bottom with weakened environmental regulations, lower pay, reduced benefits and greater tax benefits to “enable” corporations to compete with globalization and automation. Americans must literally pay for the right to work.
Most UK millennials voted for to remain in the European Union and most US millennials voted for Hillary Clinton. Nationalism, economics, and passion against immigration and loss of traditional culture where a major part of the discussion in the UK referendum and the US election. Why do you think that more millennials voted against Brexit and Trump? What does this say about how millennials perceive the future?
Take A Closer Look
“If you can keep your head when all about you are losing theirs and blaming it on you”
Excerpt from IF by Rudyard Kipling
It would be an understatement to say that this has been an unpredictable, crazy and extremely negative election cycle. The good news is that we have only 5 days left! Additionally, America has been through tough election cycles in the past including hanging chads (Bush-Gore 2000), campaigns with divisive rhetoric (a la Game Change/2008), and even during a civil war (Lincoln 1860). Cooler heads shall prevail.
The media is pitching the story of a horse race and tightening polls. Yes, national polls are tightening. Yet, that’s not how the Electoral College works. A presidential candidate must win 270 of 538 electoral college votes that are granted based on popular vote by state. Organizations like FiveThirtyEight and the Princeton Election Consortium provide predictions derived from running simulations of state polls weighted by accuracy and sample size.
I am personally a registered Independent and not backing either the Democratic or Republican candidate ( I am personally no fan of either). Nonetheless, numbers are numbers. Hillary Clinton’s probability of success has decreased since FBI Director Comey’s no-investigation, investigation news. Yet, she is still greatly favored to win on November 8th. We can all breathe a sigh of relief on November 9 and enjoy at least 2 years of campaign-free life.
The US election cycle is 596 days long or approx. 2 years from the primaries to national election day. A good idea may be to follow the lead of countries like the United Kingdom (139 days), Canada (78 days) or Japan (12 days by law) to limit the election cycle. Check out Sheryl Crow’s Make It Short petition. At the end of the day, we have the democracy that we accept (or demand). It’s time that we demanded a lot more from politicians (and each other).