In my last post, I shared that I was not feeling very well. Unfortunately, that not feeling well ended up in a five day hospitalization with a Hickman Line infection. Sepsis is not fun, and I am still in the recovery mode with IV antibiotics daily and plenty of sleep. But, I am definitely feeling better than I was due to high quality care.
In case you are counting, I have been hospitalized three times since April 2020 due to multiple Hickman Catheter infections. During these 20 plus days in the hospital, I spent significant amounts of time with nurses, technicians, and phlebotomists as well as security, transportation, housekeeping, and food service staff.
Through and through, I always share with friends and colleagues that the West Michigan hospital systems have the best front-line patient staff I have experienced in my healthcare odyssey which has taken me from West Michigan to the University of Chicago; the University of Pittsburgh (UPMC), and Northwestern Medicine. Patient care in West Michigan has been and is exceptional.
Yet at the same time, I have concerns in some of our regional healthcare systems related to cultural inclusivity.
During my recent hospitalizations, I stayed in three different parts of one hospital system. As customary, I walked the floors and spent time studying the artwork on the walls, and the stories they represent. Unfortunately, I noticed that there is not one person of color featured in the art. They were beautiful scenes of a State Park with people fishing, walking the pier, etc, but the scenes were not inclusive of who West Michigan is today. There were no Latinx families picnicking or admiring low-rider cars. There were no African American or southeast Asian families relaxing, having fun. It is like these people are washed off the canvas of life, and not existent in our region.
It struck me that if I were Latinx, Black, Indian, and/or from southeast Asia I would not feel as welcome in the hospital or have the same healing experiences as I do as a white person with a Dutch last name.
Similarly, I found that in another part of the hospital, my room had a large print hanging on the wall that said:
Patience with others is love.
Patience with self is hope.
Patience with God is faith.
- Adel Bestravos
And to the right of the words, was a colorful abstract with white hands in a praying position. And I thought: What would I think if I were not a person of faith?
Most recently, in a third part of the hospital, I found large pieces of artwork with wooden shoes and tulips, and no artwork that included people of color.
Because of this, I started paying closer attention to other symbols. And I recognized that the food choices offered were not culturally diverse. Food choices centered around ‘meats’ like baked chicken, meatloaf, or turkey with potato-based starches, and a salad/soup. While I am sure it is healthy, and meets dietary guidelines, it was institutional and did not feature culturally relevant foods for Latinx or Asian community members. It made me remember that at UChicago and UPMC there were menus that included all sorts of options from ‘stir-fry’, rice, and Asian vegetables to different types of tacos, as well as Italian and Polish food (pierogis).
And then more importantly, I thought about the staff diversity I was experiencing, especially in entry level positions like housekeeping and phlebotomy, but also in security and nursing care.
Again, I went back to my experiences at UChicago and UPMC where cleaning staff were often first or second-generation Americans from Africa, Eastern Europe or Latin America. And phlebotomists were recruited from hospital neighborhoods because they could be trained with a skill that provided higher wages than other local service industries. Security staff represented those that live within the surrounding neighborhoods. And for me, it was great fun to talk with big, burly Pittsburgh steel men who were retrained as x-ray technicians, but still had their beards and large arms. We talked football and other things while setting up for tests and for me, that was a healing experience.
When I asked local entry level staff about their journey to working at the hospital, I did not hear similar stories about how one became employed at the hospital. What I heard was good networking. People – many times family – letting people know about needs for cleaning staff and/or phlebotomists, and they applied. At its face, there is nothing wrong in that. But one of the great things about healthcare is that there are all sorts of jobs that can improve one’s quality of life with technical training and knowledge. But many times, people do not know about these jobs until they see them firsthand. Therefore, access to entry level jobs can lead to opportunities in healthcare like few other places. Changing recruiting practices is essential to providing access.
National research shows that growing and prospering communities are diverse communities. One of the best reads related to this subject is Just Growth by Drs. Chris Brenner and Manuel Pastor.
So, my Idea to Consider is this: How are our local hospital systems working to continue its journey toward increased diversity, equity, and inclusion. I have pointed out a few issues like art purchases, culinary choices, and entry level hiring practices. But I know there are knottier ones too like:
Creating pipelines for African-American, Latinx and southeast Asian nurses so that they can be prepared to move into nurse management;
Recruiting and hiring minority doctors to West Michigan;
Diversifying the Board of Directors.
I am confident that different healthcare systems in West Michigan are further along in this journey than others. But it is essential that each one thinks strategically how they will continue the journey forward toward more inclusion. For the care of people in our region, and our long-term economic vitality.
I have not felt very well this week, so writing has taken a back seat to rest. But I did start reading a new book: How to Lead, Wisdom from the World’s Greatest CEOs, Founders, and Game Changers by David M. Rubenstein. The book is a composite of interviews with a variety of international leaders.
In it, Rubenstein has a conversation with Warren Buffett from Berkshire Hathaway. Below is a passage I found insightful:
David Rubenstein (DR): In recent years, presidents of the United States have called upon you for advice. Whoever the next president is will likely call upon you for advice. What would you tell the next president about how we might jump-start or get our growth to be slightly better than it is now? Is there something you would recommend?
Warrant Buffett (WB): It would depend on circumstances at the time I’m called, and I probably wouldn’t get the call. But I would tell them two things.
I would tell them that we’ve got the greatest golden goose the world’s ever seen. We have a system that unleashes human potential in a way that allows people in my neighborhood to live better than John D. Rockefeller Sr., the richest man in the world when I was born. Something is working. And we don’t want to mess that up, to start with.
The second part of it is that, in a country this rich, anybody willing to work forty hours a week should have a decent life. I would say that doesn’t mean they have to equalize everything. We want to keep the golden goose producing more and more eggs, and we want to make sure that they get distributed in such a manner than anybody willing to work forty hours a week has a decent life for themselves and their family.
DR: Your secretary has become one of the most famous secretaries in the world. I suspect, because you have said your secretary pays a higher tax rate than you do.
WB: Counting payroll taxes, yes. Still does.
DR: So you’re in favor of changing that.
WB: Yes. Some years ago, somebody from the White House – not the President – called and said they’d read my views on taxation. They said, “Would you mind having a tax named after you?” I said, “Well, if all the diseases have been taken, I’ll take a tax.”
But I really do feel that anybody that’s making millions of dollars a year should have a combined payroll-and-income tax that is at least 30 percent. In my office, everybody in the office does have that except me. (page 79-80).
In my view, there is a lot of wisdom in what Mr. Buffett shares in this passage. And from one of the most wealthy men in the world.
I have been doing quite a bit of research regarding the business of higher education. You know, exciting things like admission policies, financial aid packages, retention rates, student life and study abroad options, maintaining and creating academic majors, supporting alumni networks, et cetera. I have always enjoyed learning and since this is one of the next steps in our life with teen-aged children I thought it would be helpful to learn more about this ‘business.’
The most interesting part so far has been learning about college endowments and their size. Some schools, like the University of Michigan have a very large endowment estimated at $12.4 billion in 2019. When spread over U of M’s student population of 47,000 at its Ann Arbor campus it yields about $264,000 per student. At an annual return of 6% that’s about $15,800 of benefit per student. Williams, a liberal arts college in western Massachusetts, has an endowment of approximately $2.9 billion with a student population of 2,100. That yields roughly $1.38 million per student. Again, with an annual return of 6% that is about $82,800 per student.
Pretty amazing isn’t it? I could continue sharing what I have learned about endowments and their benefits, but what it really made me do was pause for a moment, and think about income and wealth. As in, how did some people earn enough in their lifetime to give that much wealth to colleges and universities? (As well as keep enough for themselves and families too, plus set up private foundations, give money to non-profit and religious organizations, et cetera.) The other thought I had was how can the stock market continue its historic rise in the midst of the COVID-19 pandemic, with so many people losing their jobs especially in the hospitality industry.
So I did some more thinking, and kept peeling the onion back. When that happens, it can get a bit overwhelming because I have a habit of thinking too much. But bear with me – I hope you find it interesting.
My mind ended up at the Gilded Age which was the period between during the late 1800s thru the beginning of World War I. The industrial revolution was well underway and new technologies such as railroads and steel were leading significant growth and opportunity. The western United States was opening and productivity was increasing rapidly due to new machines. New immigrants were coming to our country from Europe for the opportunity to own land and break free from hierarchies of the church, royal blood, and rigid castes. Large amounts of wealth were created and concentrated. Names we know today like JP Morgan, Jacob Astor, James Duke, John D. Rockefeller, William Randolph Hearst, Leland Stanford, Andrew Carnegie, Andrew Mellon, and Cornelius Vanderbilt all made their fortunes during this time.
Much of the excesses in the Gilded Age led to the rise of the labor movement. There was violence due to the inequality of wages being paid to workers and the wealth being made by company owners. There was discrimination against newly arriving immigrants by those that were already in the United States believing that immigrants would take their jobs and/or drive down wages. And yes, our nation’s original sin of slavery had been eradicated, but Reconstruction had failed with former slaves losing land and voting rights due to political horsetrading with gains lost to white southern power.
For some time now, I have wondered if there is a fair comparison between the Gilded Age and now. And learning about these college endowments has only increased my curiosity about that time period and today.
Take a moment and think about the past twenty years. Just like trains and steel then, new technologies and businesses have erupted in the past two decades due to the emergence of the Internet. Facebook, Google, Apple, Twitter, Netflix and Amazon are all household names now, with billionaire founders, and equity rich workers. But there are other major software companies like EPIC in healthcare; Salesforce in customer service; and ESRI in geographic information systems that have made hundreds of millions for original investors. Or what about Tesla in the electronification of cars? Or Comcast in the entertainment industry owning the distribution system system via xfinity cable and/or xfinity mobile as well as the entertainment producer in NBCUniversal.
All of these companies and the ideas behind them are changing the way we live. Further, behind this growth and development are the financial systems, the plumbing that makes it work. Server farms. Mining rare earth minerals. Venture capital firms in Silicon Valley. Private equity firms, pension funds, and bankers like Goldman Sachs on Wall Street. Ideas, technology and capital all producing incredible fortunes with business leaders exercising amazing power and influence throughout our democracy.
Similar to the Gilded Age, we also see today’s workers feeling left behind or left out. For the past forty years, the labor movement has lost thousands of members with new laws passing that make it more difficult to organize and/or retain union members. Immigration tensions have risen to new heights again with concerns over losing jobs to newcomers. And last, we have seen renewed energy in organizations like the Proud Boys and white nationalist fringe groups that target Black Americans.
While this comparison may not be perfect, it feels like there is a tension in the air today perhaps similar to the Gilded Age between those that had incredible wealth and those that labor for their income. This has become clearer to me due to the COVID pandemic and seeing the stock market continue its surging growth, while small business owners and service workers in hotels, restaurants, bowling alleys, and tourism industries all struggling mightily.
To see if my hunch was correct, I wanted to check some data. What type of change has there been in income distribution during the past forty years? Are the wealthy, wealthier? Below is some information you may find interesting.
There are a few ways to look at income distribution to get a sense of what is happening. First is looking at the median vs the mean. The median tells us where the half-way line falls. 50% more. 50% less. The mean is the average. The sum / divided by the number. If the mean is more than the median, the overall distribution skews higher. If the mean is lower than the median, the overall distribution skews lower.
The Median vs Mean for Income and Wealth from 2017 shows the following:
Median Household Income
Mean Household Income
Median Wealth per Adult
Mean Wealth per Adult
Table A. Median vs Mean
The mean income is more than the median showing that the tilt skews higher. Those that earn more, earn enough to skew the median/mean by roughly $25,000 per household. But the wealth data is really fascinating. It too skews higher, but the amount is much higher than $25,000 per household. It is roughly $340,000 per adult. Granted wealth is built over a lifetime, and can be transferred generation to generation. But the size difference is stark. Thinking about it as a ratio, Mean Household Income to Median is 1.4. Mean Wealth per Adult to Median is 6.6.
Another way to look at income distribution is by quintile. Think about it as if a pie were cut into five pieces, each would have 20%. So when we look at income distribution by quintile, anything more than 20% skews higher than it would if it were an even distribution.
In this case, the Income Distribution by Quintile as a Percentage Share of Total Income shows that during my lifetime (I was born in 1974), the distribution has skewed toward the top quintile. Looking at the chart below, we see in 1970, the top quintile earned 23.3% more than what one would expect if the split were even. But in 2017, it was 31.5% more than if it were an even split. Additionally, this represents an 8% shift higher during the past 47 years.
Top Quintile (80 – 100)
Lowest Quintile (0 – 20)
Table B. Quintile Distribution
What also strikes me is that the middle quintiles (second, middle, fourth) have seen a decrease in the 47 years. Combined in 2017 these quintiles made up 45.5% of the total; while in 1970 they made up 52.8% of the total. Moreover, each quintile including the lowest decreased with all of the increase moving to the top quintile. Clearly, income distribution has been skewing higher.
One last way to look at income distribution is something called the Gini Coefficient Index. It is a complicated formula that an Italian statistician created to measure the distribution of income across a population. It is often used to compare income inequality between nations. But it also allows researchers to measure changes within a nation over time. The lower the Gini Coeffecient number, the more equal the distribution of income. The higher the Gini Coeffecient number means that wealth is concentrating.
Looking at the United States, we find that Gini Coeffecient has increased over time. My understanding is that 1968 represents the lowest Gini Coeffecient measured for the United States at 0.386. In 2017, it was 0.482.
So trying to explain this in layman’s terms, I think it is fair to state the following:
Since 1968, income distribution in the United States has tilted toward the wealthy and become less equal as demonstrated by the Median/Mean test; the Quintile Test; and the Gini Coeffecient Index Test.
As I have in many of these essays, I wonder what this means for our society? Our human condition? Is the change good, bad or indifferent? Does it show that one can really ‘make it’ in America still? Or is it a reflection of changes in tax policy and union laws? Which demographic groups have the changes in income distribution benefitted? Minorities? Whites? Urban, suburban or rural families? Those that are highly educated or high school graduates? Those that live on the coasts or in the Midwest? Those that work with their hands vs those that work with ideas? Et cetera, et cetera.
As of now, I would suggest these changes have financially benefited white America, those with higher education, and those that work with ideas. But I honestly don’t know how much. I have not dug into the data deep enough.
What I do believe is that because income distribution has tilted further toward the wealthy during my lifetime, and no matter how it occurred, we may have seemingly entered into a new Gilded Age. Maybe we call it GA2.0 – like software: Gilded Age 2.0.
My remembrance of the Gilded Age from history included a rocky time for the worker which ultimately led to the Progressive Era, and the trust busting of President Theodore Roosevelt. The establishment of child labor law, and creation of juvenile courts. The establishment of the 40 hour work week, food inspections, as well as water and sewer systems. There were leaders like Jane Addams with the Settlement House movement along with social reforms like creating orphanages. There was Women’s Suffrage and the passage of a constitutional amendment to allow an Income Tax. President Wilson pushed through significant banking reforms. And the conservation of the environment became important with the establishment of National Parks.
What’s described above is a lot of change over a short period of time. But today, much of it is part of our social fabric, and we don’t think twice about it.
If we are in GA2.0, what social and political reforms will we see in the next 20 years? How much wealth will be transferred to college endowments and private foundations to ensure important institutions grow and are supported over time? How much wealth will be passed on to heirs or captured by estate taxes? And if it is captured by estate taxes, what will it be used for? Investments in infrastructure – maybe nationwide broadband like rural electrification in the 1920s?
There is much uncertainty in the world today. A new President. New technologies. A mutating virus. An uneven vaccine rollout. Who knows what is next? I certainly don’t know, but it sure feels like the precipice of something significant. Let’s commit to considering new ideas, and figuring out how we can create a brighter future together.
The data I used in this essay was from a sociology textbook called Soc 2020, 6th Edition by Dr. Jon Witt and published by McGraw Hill. Jon was one of my college professors and frankly someone I would call a mentor. He cites the data from:
Fontenot, Kayla, Jessica Semega, and Melissa Kollar. 2018. “Income and Poverty in the United States: 2017.” Current Population Reports. P60-263. Washington, DC. U.S. Government Printing Office. Accessed November 2018 (www.census.gov/content/dam/Census/library/publications/2018/demo/p60-263.pdf).
Also, I did not complete any type of Literature Review to learn if someone has already compared the circumstances of the past 10 to 20 years to the ‘Gilded Age.’ If so, my deepest regrets for not providing proper credit.
At the end of last week’s post, I wrote that the GOP should “Create a federal policy platform that focuses on social stability. As a start…
Update the minimum wage and index it to inflation.
Expand the Earned Income Tax Credit.
Ensure affordable healthcare by improving the Affordable Care Act.
Promote family stability by investing in early childhood development and education.
Expand community college access for retraining adults who are losing jobs to automation.”
One of the lessons I learned in life comes from high school. During my freshman year, I was one of the von Trapp children in the Sound of Music. When Maria comes to the family and introduces them to music, she starts with teaching them scales and the lyric goes:
Let’s start at the very beginning, a very good place to start. When we read we begin with A, B, C; when we sing we begin with Do, Re, Mi.
The lesson I took from this as I continued in life was that to help explain ideas, one needs to start at the beginning to help explain the ‘why’. Some may call it providing context.
As I think about it, part of the appeal of conservatism for many is that it places responsibility on the individual for one’s decisions and life outcomes. And at the absolute end of the day, I think it is true that people need to be held responsible for their choices. But what many who subscribe to conservatism miss is ‘the beginning.’ And the beginning is a hierarchy of needs we all have, which Maslov describes as:
Air, Food & Water
Shelter & Warmth
Safety & Security
Physical & Mental Health
Employment & Financial Security
Love & Friendship
As we progress through life’s stages (infant, toddler, Pre-K, elementary, middle, and high school, young adult, adult), we receive more opportunities to create our future and make our dreams reality. But each stage builds upon one another. As a result, to create our dreams and have ultimate responsibility for our life, we need to go back to the beginning, and ask:
How do we create the type of social stability necessary to support healthy growth and development so individuals have agency for their life’s outcomes?
For me, that is the basis of the policy recommendations I put forth last week. The policies help provide stability for families (however defined) which are the basic building block of human development and society. Moreover, these policies are designed to help ensure that an individual’s hierarchy of needs are met no matter where one is in the spectrum of life.
Conservatism should be about ideas that ensure people have freedom to pursue their dreams and are responsible for life’s outcomes. Unfortunately, during the past decade if not longer, policy has taken a back seat to the quest for power. It is time to place policy in the forefront again.
I had a great plan for yesterday. Make a big pot of chicken rice soup. Make homemade apple dumplings as a thank you for neighbors that helped us recently. Watch the beginning of the joint Congress session to see how that works. Get my new glasses and pick Ezra up from school. And then watch Manchester United vs Manchester City at 3 p.m. Ah…a great day.
Well that went to hell at 2:40 pm when I picked up Ezra, turned on NPR, and heard about the raiding of the Capitol. We got home and we turned on CNN.
I could not believe what I was watching. It reminded me of two previous life events. Tiananmen Square in 1989 when the government turned on its citizens and mowed them down. And Red Square in 1990 following the Soviet coup against Gorbachev when Boris Yelstin stood up, the tanks were rolling, and a peaceful, yet troubling, transition ensued.
Frankly, I did not know how it would end yesterday. Would there be massive death? A peaceful end? Something else? Thankfully, there was limited death and the insurrection fizzled out. (While we know that if this was a Black Live Matters protest, the conflict would have been great and people of color would have been attacked by law enforcement. We saw it this summer in DC. And for those who wonder why there was not a National Guard presence, President Trump did not call them up like he did during the BLM summer protests. Hmmm. Wonder why?)
So what’s next? Some thoughts to consider.
We need to define who Trump has been, is currently, and will forever be.
Merriam Webster defines narcissist as a) an extremely self-centered person who has an exaggerated sense of self-importance; and b) a person who is overly concerned with his or her physical appearance. Yep, he is that. Check.
Merriam Webster defines facist as someone who subscribes to a) a political philosophy, movement, or regime that exalts nation and often race above the individual and that stands for a centralized autocratic government headed by a dictatorial leader, severe economic and social regimentation, and forcible suppression of opposition; and b) a tendency toward or actual exercise of strong autocratic or dictatorial control. Yep, he is that. Check.
So for those that continue to fly Trump flags, wear MAGA hats, or sport other Trump paraphernalia, please decide: Are you willing to continue following a narcissistic fascist? Do you believe in facism? Something our country defeated in WWII? Time to decide.
We need to define what conservatism is as a political philosophy.
Conservatism is not Trumpism. Conservatism is not facism. People who support Trump and call themselves conservative are kidding themselves. They follow a fascist.
Merriam Webster defines conservatism as: a political philosophy based on tradition and social stability, stressing established institutions, and preferring gradual development to abrupt change.
When I think about this, what I have always found important is the idea of social stability and preferring gradual development to abrupt change.
It’s my belief we need social stability so we can constructively create our dreams. Whether that is creating, having, and/or maintaining a wonderful family. Creating art. Designing a new product. Building a business. Traveling the world. Doing research. Farming. Selling a product. Playing a game. Practicing medicine. Protecting and advocating for the needs of people, including those who have been marginalized or ignored in our society. Without stability, it is hard to take the necessary risks to pursue dreams.
A second part of this definition is about the preference for gradual development to abrupt change. In my mind, many that call themselves conservative are not really conservative. They are reactionary. They want to go back to a world that does not exist anymore. I’m sorry, but we have color tv now. (Watch the movie Pleasantville starring Reese Witherspoon and Tobey Maguire. It will help you understand the metaphor.)
It is important that we continue to work toward tearing down Jim Crow laws and their sinful legacy of systemic racism. We need to celebrate that LGBTQ people do not need to live in closets like they did 20 years ago. My Lord, we won the Cold War and eastern Europe is free. More work needs to be done for sure, but these are good things and I am glad that we now have color tv. People are better able to pursue their dreams.
Today, it is countries like China, Iran, Syria and North Korea as well as non-state actors like ISIS and al-Qaeda that are the institutions trying to suppress freedom. Let’s not have Trumpism and its facism philosophy suppress freedom and continue to use a word like conservatism as cover for their abhorrent behavior.
Where does the GOP go from here?
Stand up and lead.
Disown, expel and cleanse the party of Trump extremists. Let them go and start their own political party, and try to raise the money needed to have a viable voice.
Create a federal policy platform that focuses on social stability. As a start…
Update the minimum wage and index it to inflation.
Expand the Earned Income Tax Credit.
Ensure affordable healthcare by improving the Affordable Care Act.
Promote family stability by investing in early childhood development and education.
Expand community college access for retraining adults who are losing jobs to automation.
Stop being obstructionists. Negotiate in good faith to address the real problems that Americans are facing in their daily lives.
There are many of us who are moderate and perhaps used to identify as Republicans. We have quietly watched the destruction of a political party that represented us over the course of the last 20 plus years. If the GOP cannot expel the Trump supporters, there needs to be a new center right party in this country that addresses social stability and acknowledges that life moves forward, change is inevitable, and freedom calls on us to include more people in decision making, not fewer.
After his historic inauguration, President Obama turned his attention to the nation’s economy. In February 2009, Congress passed its stimulus – American Recovery and Reinvestment Act or ARRA – for an estimated cost of $785 billion. Amazingly, with the Dow dropping precipitously and the auto industry collapsing, there were only three Republican votes for ARRA – all in the Senate. The largest component of ARRA included tax incentives for individuals and businesses – $285 billion – including the GOP hated Alternative Minimum Tax that primarily benefits wealthy investors.
Following ARRA, Obama turned his attention to the auto industry. Ford had already leveraged its assets to obtain a line of credit in 2008. And in December 2008, President Bush provided an initial line of roughly $17.5 billion in credit from TARP funds to ensure that GM and Chrysler could make it through the presidential transition to when President Obama could make a decision about whether to extend additional funds to GM and Chrysler. This was after Congress led by the GOP Senate rejected a straight auto bailout.
What was at stake if GM and Chrysler went bankrupt? Initial projections suggested a total loss of 3 million jobs and 151 billion in personal income within 12 months, and 450 billion in personal income within 36 months. Additionally it was suggested that an additional 1 million cars would be imported annually.
Honestly, I have no idea if these projections would have come true. What did ultimately happen though is that the US Treasury led a planned bankruptcy filing where:
GM shed 47,000 jobs, reduced the number of plants it operated, sold or eliminated several car models or brands
Chrysler shed 3,000 jobs, reduced its capacity by one shift, and sold or eliminated several car models. It also shed 25% of its dealerships.
The US and Canadian governments became the primary shareholders in the post bankruptcy GM and FCA (Fiat joined Chrysler) by providing between 80 and 130 billion in cash to save the companies.
Ultimately, the US and Canadian governments were paid back when new GM and FCA stock was issued after having these two companies nationalized.
What was the impact of this time period? In my mind, two lessons can be learned. First, it showed a clear difference between governing and legislating.
Regarding ARRA and the auto rescue, President Bush and President Obama had to make tough, executive level decisions that would forever be associated with their legacy. They needed to propose plans to achieve outcomes. Therefore, they worked toward making a deal.
Legislators though were able to pick through and critique details, stay aligned with ‘philosophy’ and say ‘no’ because the decision would not harm their legacy. No one would say that Senator ‘X’ killed the automotive industry. Or the Great Recession became the Great Depression #2 in the Obama presidency. History would conclude that President Bush or President Obama decided to kill the auto industry by…or President Obama oversaw the nation’s second Depression. Legislators would be off the hook in the annals of history.
The second lesson was President Obama decided he would lead ‘from behind,’ by not proposing a specific healthcare plan in the upcoming debate because no matter what he proposed it would be knit-picked and killed as evidenced by the universal GOP no votes on ARRA and auto rescue packages. He would let Congressional Committees lead the discussion on healthcare reform.
Ultimately, it’s my belief that the American people saw that the federal government was not working for them. There was a financial crisis and ‘perfect became the enemy of the good’. The American people were forgotten. Bi-partisanship vanished. The drive for power and ability to blame/shame became prominent.
One of President Obama’s big election commitments was healthcare reform so it led the non-crisis domestic policy agenda. Two overarching thoughts:
Ultimately the Democrats jammed it through the House and Senate using the reconciliation process due to the death of Senator Kennedy and Senator Scott Brown, a Republican replacing him which permitted the GOP filibuster legislation in the Senate. This caused lasting damage to the Congressional institution and relationships..
The reason why it was jammed through was because the Republicans refused to participate in the legislative process let alone actually identify or offer solutions for healthcare problems. This caused lasting damage to the Congressional institution and relationships, especially because what emerged in the Affordable Care Act was essentially the Heritage Foundation plan from the 1994 Clinton Healthcare debate.
In 1994, Hillary Clinton led a healthcare committee to recommend legislation. Afraid that a universal payer system would emerge, the conservative Heritage Foundation proposed using the marketplace and competition to drive down costs.
In general terms the theory went that if healthcare plans were the same and people had to buy a plan, transparency would emerge and costs would be driven down because insurers need to acquire members in order to benefit from economies of scale and population level health benefits. The marketplace could innovate how they provided services, use data to drive improvements, and be rewarded when they reduced costs and improved care.
That is in a nutshell what the ACA is along with policies that:
Require coverage until age 26 for children on a parents healthcare plan
Require private business to offer plans for full-time workers
Provide subsidies to help individuals and families buy plans for those who cannot afford the company plan
Allow individuals to purchase healthcare on an open market without penalty or denial due to preexisting conditions.
Allow states to expand Medicaid coverage for low income families
Pay a penalty if one decides not to purchase healthcare via the IRS code. (this has since been removed.)
Without bi-partisan support, the ACA became known as Obamacare, and was panned in conservative circles even though the ACA is based on the plan put forth by the Heritage Foundation.
Again, what was the impact of this? The entire idea of not supporting the development of the ACA was made clear when Senator McConnell said: “The single most important thing we want to achieve is for President Obama to be a one-term president.”
Obtaining power became the clear objective of the national GOP. And we have continued to see this behavior since 2010 when Senator McConnell stated these words. My question regarding all of this is: To what end is obtaining power worth it if you don’t use it?
Obama won a second term, and between 2010 when the GOP took control of the US House of Representatives until the end of President Obama’s term, there was not a major bi-partisan policy enacted. Speaker John Boehner could not (or would not) pull the strings on tax reform or immigration to risk upsetting certain parts of his caucus. Contrast that with Speaker Gingrich and President Clinton. They negotiated and moved the country forward even achieving a budget surplus by 2000.
Policy became pointless under Boehner and McConnell, even if it was a Heritage Foundation idea. Heck, the Heritage Foundation even disowned its previous healthcare policy recommendation. Moreover, the GOP never created a comprehensive policy recommendation to contrast what the ACA proposed. And lest we forget that Representative Joe Wilson yelled ‘You Lie’ during a joint address to Congress by President Obama breaking every level of decorum possible. Plus we had an entire fake conspiracy grow within the GOP regarding whether President Obama was really an American and born in Hawaii…even after his birth certificate was produced. (My point to bring this up is not to place blame, but describe what happened to create the current circumstances.)
The GOP continued its march of making the federal government dysfunctional when Justice Scalia died in February 2016, and McConnell refused to permit a vote on the confirmation of Judge Myrick Garland to the Supreme Court. Granted, McConnell used his power in this instance and Justice Gorsech was confirmed to the Supreme Court after President Trump’s 2016 win. In contrast, McConnell pushed through Justice Comey’s nomination after Justice Ginsberg passed away this fall.
In my mind, this Supreme Court nomination fight is just another example of power being the ultimate goal instead of good governance.
Again, what damage did all of this cause? It created an environment of partisanship that we continue to live through today. Everything on the right and left is an argument about perfection and purity. The needs of the American people are lost in an ever arching quest for power.
Three other major issues contributed to this partisanship and overall frustration about government. The development of Fox News and then MSNBC allowed Americans to find news that suited their preferences, and then shaped them further to the right or left. In my mind, Rupert Murdoch followed the Rush Limabaugh financial model, and wanted a part of the financial windfall. So he created Fox News and found Roger Ailes to bring in the money. NBC saw an opportunity to counter that and make money by creating MSNBC as a left of center counter to Fox News. Consequently, Americans cannot agree on facts because it ruins the financial model of these two major power players.
The second issue we often sweep under the rug, but is real was President Obama’s race. Would a birther argument ever have been brought up if the president targeted was white? Would the tea party emerged in 2010 if a white president would have won in 2008? To pretend that America’s greatest sin of racism did not effect the political environment within the past 12 years is not realistic. It created strong emotions within people that were brought to the surface by some in their search for power.
The other issue that we don’t talk about enough is that decentralized democracy moves slowly even when it works well, and the technology growth in the past 20 years across the world has increased the pace of change in every part of our life. Our government cannot keep up with the natural disruption of our capitalist economy and meet the needs of people who are having their worlds economically disrupted.
It is my thought that this reality led to the growth of Trumpism because Trump played on all of the grievances technology, globalism, and power created. No longer can Americans have middle class jobs unless their technology skills or critical thinking skills are exceptional. That is a 180 degree shift from the 1970s and 80s, and has displaced thousands of Americans into the lower-middle class.
When I think about what has occurred in the past 20 years, the one person who I think is loving this the most is Osama bin Laden. His disgusting 9/11 attack on the American homeland created a cascade of events that is tearing our society apart. We cannot agree on facts. Our political parties cannot work together effectively. We do not trust one another. Heck, we cannot agree on who won an election.
Of course this is an overview of the past 20 years and there is more to say. Some people have suggested I try to turn this into a book to dig into details and really create a comprehensive argument. I don’t know if I am up to that, but when I think back over the past 20 years we are in a more dangerous place now in comparison to 2000. Getting out of it will be a challenge our nation will face for the upcoming future. And solving it will take systemic changes and creative thinking.
See you in the new year. I’m taking off writing until then. If you could let me know if you are appreciating these essays I would love to hear from you. Thanks for reading!
First, I hope you had a wonderful Thanksgiving last week – COVID-19 style of course. I took the week off from writing and had a minivacation at home cooking, baking, binging tv shows, and playing a new trivia game designed for multi-generation play (Boomers, Gen X, Millennials, and GenZ). All in all, it was a good week.
The other task I hoped to work on last week was my infographic for this post. That did not happen though as I struggle to create the picture I have in my head. So I am hoping that if I write it out, the picture will come. This hypothesis calls for an infographic!
So back to my post about the election, and my hypothesis that we, Americans, have lost having each other’s best interests at heart. The first question probably to ask is ‘Did we ever have each other’s best interest at heart?’
Depending on where one sits in America’s hierarchy that’s a good question. I can acknowledge that Native Americans and African-Americans could have absolutely different feelings about this than I do as a white male. Europeans came to North America and totally changed the culture, land use, and direction of how this continent developed. Likewise, humans were ripped away from their homes in western Africa and enslaved; brought to this country and sold for the purpose of working farms for free and creating wealth for plantation owners. Therefore, I can understand that Native Americans and African Americans question the premise of this question. Because frankly, their history suggests we did not.
At the same time, many of our families immigrated to this country out of free will to seek economic opportunity, to worship freely, and/or to run away from something in the ‘old world.’ I know that my great grandfather left the Netherlands by himself, and left his family behind to deal with his mess(es). My great grandmother somehow chased him to Canada, and then Iowa with my grandfather and his siblings in tow. It was hard scrabble and messy. But somehow my grandfather worked with his fellow immigrants and built a business, a church, a town. They created a community, had families, defeated the Nazis and Axis powers, and moved forward together.
Of course, the 1960s and 1970s came, and America started to address its original sins by passing Civil Rights legislation. It also lost a war in Vietnam, felt the first wave of global competition via Japanese industry, and struggled with the malaise of the Carter Administration all while the Cold War was waged with the Soviet Union. But in the 1980s and 1990s, the United States found its footing, saw its economy grow, its place on the world stage renewed through the fall of the Soviet Union and clearly winning the Persian Gulf War. An optimism was generally restored.
By the end of the 1999, through the hard negotiating of the GOP and President Clinton, the federal government had a budget surplus, a peace dividend if you will. And the 2000 election saw the two candidates – George W. Bush and Al Gore – fighting primarily over what to do with the surplus. Candidate Bush wanted to provide Americans with a tax refund while Candidate Gore wanted to put it in a ‘lock box’ to pay back the Social Security trust the money it was owed.
Take a step back and think about the 2000 campaign compared to the one we just lived through. The major argument was about what to do with a surplus of money. Of course there were other issues too and how the candidates would address education, global warming, foreign affairs, et cetera. But the primary difference articulated was what to do with the surplus.
Today our country is in a much different financial situation. Consider that in the past 20 years we have lived through the Great Recession of 2008 when the capital markets seized and millions of Americans lost their homes through foreclosure and evictions. The Great Recession recovery was slow as one might expect since there was a significant hole to dig out of financially. And only when we started to see wage growth for lower income workers we were hit with COVID-19. This pandemic has eroded the food service, tourism, and hospitality industry like something never seen before. Following the initial CARES Act stimulus, our government has been unable to put the needs of working Americans in the forefront. Enhanced unemployment benefits and small business loans have stalled while arguments ensue about the size of the next stimulus. In the meantime, people are scared about losing their homes again, utility shut off notices, and food insecurity.
But that is getting ahead of ourselves when we think about the events of the past 20 years and how they have eroded our belief that we have each other’s best interest at heart.
As we all remember, the 2000 Presidential Election ended in the Supreme Court with the Bush v. Gore decision followed by Candidate Gore’s concession speech. Even though Candidate Gore had won the popular vote, he knew the rules of the Electoral College and acknowledged his defeat. Many on the left were upset following the Bush v. Gore decision, and in my mind this began the disintegration of our body politic.
As expected, President Bush followed through on his tax refund promise in 2001. And then the terrible events of 9/11 happened. From my view, patriotism was at an all-time high and there was an American consensus that a response was necessary. But what happened next did not keep the country together united. Instead we splintered into a variety of factions due to several events that have one thing in common – there was never a shared sacrifice.
Let me try to explain. Unlike in WWII or the Vietnam War, the 9/11 military response did not include conscription (i.e. a Military Draft). Our nation continued with its voluntary military force, which depends on first generation Americans, African Americans and Latinx citizens to maintain the preferred force size. Therefore, the sacrifice of life, disability, and extended family leave was borne on a disparate group of people. It was rare for community leaders – lawyers, bankers, small business owners, senior level executives, doctors, elected officials to have sons or daughters serve in the Armed Forces. Likewise, there was no requirement for community service work like consciousness objectors performed during the Vietnam War. Further, after an initial surge of patriotism enrollments following 9/11,the Pentagon resorted to mandated extensions and increased enlistment bonuses to maintain force size. Especially after our leaders decided to expand the 9/11 response into Iraq. In sum, the military response to 9/11 did not require a shared American sacrifice. Instead, it primarily harmed lower income and minority Americans.
The second choice after 9/11 that did not require a shared sacrifice was in 2003. The American economy had slowed and we were in the middle of the Afghanistan and Iraq conflicts. Unlike in WWII when Americans were asked to purchase War Bonds, grow Victory gardens, and pay more in taxes to fund the War, the Congress and President cut taxes which led to a large increase in the deficit and a reduction in safety net/social service programs. Again, the burden of this choice fell on lower income and minority Americans that used social service programs and did not see their taxes decrease in a meaningful way since payroll taxes (Social Security/Medicare) were not reduced.
As the Iraq War continued into 2006, there was growing frustration in the country over the loss of life, injuries, and the perception that we were losing like in Vietnam. Yet, for many there was a belief that returning veterans should not be stigmatized like those that came up from Vietnam. So, we wrapped ourselves in the flag, and patriotism – championing our veterans and their sacrifices all while public support for the Iraq War was falling dramatically. So much so that in the 2006 midterm elections the Democrats regained control of the House of Representatives.
Clearly, there was frustration in the air, but rather than our political leaders bringing the country together toward a collective vision/direction as was done in 1994 when President Clinton and the Republican Congress negotiated a package that led to a budget surplus, gridlock ruled the day as a presidential election was coming in two years. Additionally, the direction of the Iraq War created a true divide among our elected leaders. It was a difficult moment that called for sacrificial leadership. Unfortunately it did not surface.
The next two years were full of economic challenges. Below is a chart of the Dow Jones monthly averages from 2000 – 2020. Between February 2001 and July 2006, the Dow fluctuated down, but recovered its losses, and by October 2007 it was up 1800 points from when President Bush’s term began. However, between October 2007 and the November 2008 election, the Dow had decreased over 6500 points. And by the time President Obama was sworn in January 2008, the Dow lost another 1000 points. Think about this, in October 2007 the Dow was at 17,356. In January 2008, the Dow was at 9,865 and it bottomed out in February 2008 at 8,666.
Our nation was facing a true crisis. We were in the middle of two unending wars that cost billions of dollars annually. Credit lines were seizing causing small businesses challenges. Banks were failing. Collateral debt obligations created millions of foreclosures and short-sales of housing stock throughout the nation. A new President had just been sworn in who just so happened to be the nation’s first minority President. And what happens?
Last week, I said I was going to share a hypothesis on how Americans seemingly have lost faith in believing we have each other’s best interests at heart. Well, 2020 struck again and the need to pivot occurred with full-time remote learning beginning for two high school students. My office got taken over, along with my thinking space, documents, and time. So – my thoughts on why we have lost faith are not fully formulated yet. But if 2020 has taught us anything, it is the need to be flexible and adapt. Therefore, I won’t be sharing my hypothesis this week. Yet, I wanted to write something to keep my commitment of one post a week. After thinking a bit about what to write on my morning walk, I decided to write about Thanksgiving.
In case you do not know, Thanksgiving is my favorite holiday. I have said this for years because:
Family Fun without presents. I enjoy getting together with extended relatives and hearing stories. That often happens at Christmas time, but I dislike Christmas because of gift giving. It’s stressful to pick gifts out because (I’m sure you have heard this before): It doesn’t quite fit right. The color is wrong. I wanted this Lego set, not that one. Or the face gives the disappointment away with a ‘Oh thanks…just what I wanted.’ Yeah right. I saw your face. Personally, I like to make people happy and well – the disappointment of not giving the perfect gift stresses me out. Plus, people spend so much money on stuff it drives me nuts. Americans have too much stuff and Christmas exasperates this phenomena. More is not always better. But Thanksgiving…family without gifts. Wonderful.
For many of us, it is a Four-day weekend. Memorial Day and Labor Day are great because many of us have a three day weekend. But a four day weekend is awesome! Thursday is tied up with family and food. Friday is recovery and fun. And you still have a full weekend to get chores done. I liked feeling rested going back to work on Monday.
Football. Lots of football games to watch and no guilt in doing so because it is a holiday weekend.
Food. I like the food – Turkey, stuffing, cranberry/orange relish. Potatoes and gravy. Apple and pumpkin pie. Homemade whipped cream. Maybe I wouldn’t like it if we ate it often, but we didn’t in our family. Once a year. A full stomach. And then a nice nap. Ahhhh.
But how do we celebrate Thanksgiving in 2020? What are we thankful for in the midst of this year filled with millions of deaths across the globe due to COVID-19; the constant political noise of the American election; the pain and hurt, but needed reckoning, of race relations; and for me an early retirement due to chronic health issues?
First, this may sound silly but I am thankful that we actually have Thanksgiving. I have seen the memes/cartoons online about Thanks-colonization with pictures of Native Americans and the Pilgrims. And there is some honesty in that which was not really taught to my generation in school. But there is also something positive about taking time to reflect on what we are thankful for annually.
I listen to the Happiness Lab podcast with Laurie Santos, a psychology professor from Yale, regularly. One of the constant reminders from science that her guests share is that reflecting on the things one is grateful for leads to happiness. For us to do that as a national practice seems wise to me.
Also, for the past 15 years, one of my colleagues from India and I talked about how her family celebrates Thanksgiving. When she, her son and husband arrived in the United States they thought this holiday was peculiar because they had nothing like it in India. The food was different. The art/symbols that her son brought home from school were different. The story of the Pilgrims/Indians was new and unusual. At first, they didn’t make a deal of it. But then her son started asking for the traditional fixings. So she along with many other Indian mothers started making the food together and the families would have a feast of American Thanksgiving along with Indian specialties. And it became one of her favorite times of the year. A time of reflection along with food and fun.
So I am thankful for the holiday itself.
The other major thing I am thankful for this year may sound silly as well, but it is food itself. Somehow in the middle of this pandemic farmers, migrants, immigrants, laborers, brokers, commodity traders, grocers, truck drivers, cashiers, all the people in the food chain have been able to keep food in the grocery stores. It reminds me of the invisible, magic hand that Adam Smith talks about regarding capitalism. Somehow capitalism and the market figures it out. Of course, capitalism creates pain and disruption for many. But our stores are still full of food and that is amazing.
Last night I finished reading Trevor Noah’s book, Born a Crime, about his life growing up in South Africa during apartheid and the transition to democracy. One of the most amazing things he discusses is the food that black and colored people ate regularly. The need to suck marrow out of bones for protein. Eating caterpillars that explode with feces in your mouth when you bite down in the wrong spot. Regularly eating goat heads, and what parts taste good and what parts don’t. It really humbled me to read this and understand more about the day to day lives of black and colored people in South Africa under that evil system.
Finally, I can eat this year on Thanksgiving. You see, there was one year when I could not. I had something called fistulas which are holes in my intestines that leaked waste into my abdominal cavity. In fact, some fistulas actually made their way to my skin and would leak out of my stomach area. The ultimate fix to this problem was surgery, but I was too weak and my abdominal area was such a mess that I needed to wait for there to be healing before the surgeons would undertake the operation. As a result, I was on TPN – total perinatal nutrition – IV food. Hook yourself up at 6 pm for 12 hours to a bag of food. Go to work. Come home and hook yourself up again. And then keep doing it for eight months. During that time, I learned that food is not only for subsistence, but it is also how we organize our social lives. We gather around food to share about our lives, celebrate, and have fun. For eight months people did not want to socialize with my family because they didn’t want to eat around us thinking that it would be rude to eat in front of me. It was just the opposite, it was isolating and hard socially more than physically.
This year, our public health officials are encouraging us NOT to gather around food for Thanksgiving. Be with our immediate family, and do zoom visits instead. My Idea to Consider this week is Listen to Them. I know it is going to be hard to miss the large family meal, the social time, the fun of watching football in a large group. But we can do this for one year. Vaccines are on the way. We can have HUGE celebrations in 2021. But let’s help slow the spread of the virus so kids can get back to in-person school and play high school sports. Elective surgeries can happen again. Restaurants, movie theaters, and bowling alleys can open. Tourism can start. People can go back to work in these hospitality industries.
Thanksgiving 2020. It will be one to remember and tell stories about to future generations. But it’s here. There is food in the stores. There are ways to visit remotely like never before. I can eat…no fistulas. I have an incredible wife, daughter, son and family. I live in America with all of its faults. I am full of gratitude. Have a wonderful Thanksgiving.
This wouldn’t be a true personal website related to the social sector and ideas if I did not write something about the election. Would it? So here are some initial observations…
What did I do during election week? I spent my evenings –
Watching Wolf and John at the Magic Board
Hearing Jake, Dana and Abby discuss what the CNN reporters said from the field
Enjoying the give and take between Axe, Van, Gloria, and Rick (in his outstanding black, old-school high top Chuck Taylors and fancy trousers…love it Senator Santorum!) moderated by none other than a descendant from a robber baron who is a journalist working to expose truth, Anderson Cooper (that paradox always makes me smile).
In some ways, I was a news junkie. But in other ways, I was pondering and thinking about the world we live in today, and what it means for moving forward, especially as it relates to Michigan, my adopted home state.
First thing. Senator Peters squeaked by John James in Michigan’s United States Senate race. I have met Senator Peters several times discussing Grand River Whitewater and Kent County’s legislative goals. I heard him acknowledge and speak about a flawed, but necessary Iran nuclear deal (his view). I have watched him work in a bi-partisan manner with Representative Huizenga (R) to pass legislation (and ride motorcycles with Republican Kent County Commissioners on the way to the Gerald R. Ford Airport.) I am glad he won because he has the ability to work across the aisle and promote policies that support people. He supported and advocated for the Ford Airport to ensure it received funding for a new control tower. He labored intensely to ensure the federal government provided PFAS remediation funding. He worked and continues to work tirelessly on the Great Lakes Restoration Initiative which protects the world’s largest fresh surface water reserve. His temperament is needed in DC and Michigan as we emerge from this contentious election period.
Second thing. The election of a new President that believes climate change is real, but who is also a pragmatist, will help Michigan make necessary transitions. Because we live on a peninsula, surrounded by the Great Lakes, we are at risk for significant climate change impacts. For a moment, think about ice caps melting north of Canada near the North Pole. This ice has been floating, but acting as a land mass for generations. But in essence it is frozen saltwater currently changing form from a solid to a liquid and spreading out. In the case of melting polar ice caps, the water either enters the Hudson Bay (Canada), spreads out along the coasts of the eastern seaboard of the United States, and/or enters into the St. Lawrence Seaway on its way into the Great Lakes Basin.
As many of us witnessed during 2020, there was significant erosion along the Lake Michigan coast, and homeowners worked feverishly to preserve their homes and keep them from falling into the Lake. We also watched Fishtown in Leland trying to address the flooding of its historic stores. Water levels along Lake Huron are rising too. And one cannot miss the waters pushing into the parks along Alpena’s Lake Huron shoreline.
My point is the water has to go somewhere when it melts, and while the impact of climate change may be ultimately unknown, my view is that we are better off addressing climate issues now and plan resiliency into our development patterns to prevent further damage than taking a ‘wait and see’ attitude. We are more likely to see this policy with a Biden Administration, and that should assist Michigan.
Similarly, the Obama-Biden Administration proved it is not out to get the auto industry as evidenced in the 2008 Financial Crisis and the auto rescue package it supported. At the same time, Obama-Biden forced needed change on the auto industry by increasing mile per gallon fuel standards as well as restructuring pensions and healthcare obligations within the industry. I imagine the same will happen with the transition to electric cars, and the build up of green energy. The Biden-Harris Administration will work to ensure Michigan remains the mobility leader in the world. Biden knows the auto industry players and will hopefully incentivize change so that Michigan is the home of a green automobile and that technology can be leveraged to become the home of the green bus, green plane, green boat, and green power technology.
Third thing. My last thought…how will Thanksgiving go with several aunts, uncles, brothers and sister-in-laws voting for President Trump, some vociferously supporting him on social media. (I also have several siblings, aunts/uncles, and cousins that voted for Biden who are loudly supporting him too.) I will be vulnerable and share that I struggle with the reality that many of my loved ones were so loudly supportive of President Trump for one reason that I would like to convey through a story.
Several years ago I was on an executive search committee filled with community members. We were tasked with hiring a CEO of a $150+ million organization that serves vulnerable children, families and adults. We worked with a search firm that made us go through a laborious process to define the leadership characteristics we wanted in the next CEO. Options included, but were not limited to: visionary, strong financial acumen, creative, collaborative, strong communication skills, strategic thinker, risk-taker, innovative, steady, honest, ethical, moral, truthful, et cetera, et cetera. We had to rank these characteristics from 1 (most important) to 10 (least important).
I placed characteristics such as…. honest, ethical, moral, truthful…toward the bottom, while many community members had them at the top of their list. I argued that those should be a prerequisite for even being considered, and that we cannot consider for a moment people that do not meet that as a minimum standard. Therefore, ‘other characteristics’ are more important for me.
As the process continued, I really struggled because other committee members continued going back to these foundational values whenever we discussed a candidate. I did not understand it at all because in my mind, leadership by its very nature requires those attributes.
Unfortunately, I understand it more now after living through the past four years with the tweets and constant clanging of symbols to debunk, out maneuver, and amplify its ‘truth’ over the other sides ‘truth.’ While leadership may require foundational attributes, making sure those that think they are leaders have these attributes is absolutely necessary. Yet, I am perplexed because so many people (72 million plus Americans at last count) think that some of these basic leadership skills like telling the truth, being honest, moral and ethical are not essential. They value other leadership attributes as more important.
Back to the upcoming Thanksgiving conversation, and how will that go in divided homes. I think the election taught me that somehow we, as Americans, are speaking past each other, and have lost faith in believing that we have each other’s best interests at heart. We need to turn on our listening ears and let each other share our struggles and fears that we may have without incessant commentary that challenges these beliefs, opinions and/or assumptions. Being vulnerable is hard (i.e. see Brene’ Brown), and we need to respect that as we give each other some space to grieve or celebrate. (Challenges can happen at a later date….maybe the next holiday gathering whether that’s Christmas or New Year’s Eve.) But for those of us in divided homes and communities, we need to feel heard and listened to without judgment right now. And then ponder what we heard.
So my Idea to Consider this week is: Let’s help our local, state, and national leaders lower the rhetorical temperature, while we remember that we have things to be thankful for in the midst of this pandemic, and so much uncertainty about what the future will hold.
If my hypothesis is right – that we have lost faith in believing that we have each other’s best interests at heart – how did that happen? I’m hoping to discuss this in my next post using a timeline of the past 20 years: 2000 thru 2020. I’m sure it will not take everything into account, but I have been pondering this for a long time, and am looking forward to sharing it to receive some constructive feedback.
A constant complaint elected officials hear about is taxes. Some constituents say they are too high. Some constituents argue taxes are too low. In this piece, I want to discuss Michigan’s taxation system as it relates to local government and suggest some systemic changes to address local government revenue for today’s needs.
But first, a little bit of education. Local governments (cities, villages, townships, counties) receive funding from a variety of resources. In general, though there are four types of resources:
State funding which includes a variety of sources including, but not limited to: Constitutional and Statutory Revenue Sharing; Local Stabilization Funding (i.e. Personal Property Tax replacement); Liquor Taxes; Fuel Taxes for Road Repairs; and General Fund/General Purpose (GFGP).
Local Property Taxes which are governed by state law.
Local Income Taxes which are governed by state law and been passed by voters in certain cities.
Fees that governments charge for things like recreation programs, permits, and health services to name a few. Often these service fees are subsidized through tax revenues.
State funding usually comes with significant restrictions on how a local government can spend it. The funds themselves are determined by the tax rates set by the Legislature and Governor. And how much a local government receives is determined either the legislative process (revenue sharing as an example) or formula (fuel taxes as an example).
Local governments can spend property and income taxes on needs determined by the local elected body. (One major exception is a dedicated property tax millage. Common examples include: transit, parks, trails, veteran services, and/or senior service millage). However, the amount of revenue that property taxes generate is limited by the State Constitution through the Headlee Amendment and Proposal A.
Headlee & Proposal A
In the late 1970s, inflation was rampant causing all kinds of problems including rapidly increasing property taxes. In response, voters approved the Headlee Amendment in 1978 which includes principles such as:
Requires a vote of the people for any local tax increase or new tax established after the Headlee Amendment was approved.
Requires a local unit of government to reduce its millage rate when annual growth on existing property tax value is greater than the rate of inflation. This, in essence, limits the total property tax revenue collected across a taxing district.
Requires the State Legislature to fund programs and services it creates or expands rather than passing them on to local governments via unfunded mandates.
In the early 1990s, school funding in the State of Michigan was paid for by local property taxes, and the amount of school funding available across Michigan varied widely based on a community’s property value, and how much it was willing to tax itself. Proposal A was approved in 1994 in response to this, and did the following:
Shifted the primary responsibility for school funding from local property taxes to the State by increasing the State Sales Tax from 4% to 6%. This increase created a statewide minimum per pupil funding amount (i.e. a floor) that every school district would receive, thereby narrowing funding differences between the ‘have’ and ‘have not’ districts.
Limits local property tax increases to the amount of inflation up to a maximum of 5% per year.
Created a two-part property tax system: The State Equalized Value (SEV) and State Taxable Value (STV). The SEV assesses what the property is worth in the marketplace (i.e. – SEV amount x 2 = property value). The STV sets the amount the property owner is taxed upon in a given year based upon the previous year’s STV (i.e. the amount of inflation up to 5%).
Allowed that when a property is sold, the difference between the taxable value (STV) and equalized value (SEV) would ‘pop up’ to the SEV amount, which then serves as the new base for future property taxation (i.e. the SEV and STV are equal).
For the most part, the changes dictated by the Headlee Amendment and Proposal A worked well. Property taxes were lowered and held relatively stable. School funding across Michigan became more equitable. Taxation was predictable for local governments and taxpayers. But then, came the Great Recession of 2008.
Great Recession Issues
It was during the Great Recession of 2008 that a situation arose which was not envisioned in 1978 or 1994: Property values started decreasing significantly. In many cases, decades of property value growth were lost within two and three years. Housing values crashed, and when the properties sold, often due to foreclosure or a short-sale, the anticipated ‘pop up’ actually became a ‘drop’ which created a lower base. This reduced property tax receipts for local government. Likewise, development curtailed during the Great Recession and, in many places, stopped altogether. This limited or eliminated the ‘new growth’ property tax revenue for local governments.
As an example, between 2008 and 2012, one of Michigan’s most prosperous counties, Kent County (home of Grand Rapids and its suburbs), saw its population increase by just over 25,000 while its SEV decreased annually, losing $3.349 billion in value during this same time. And at its low point, Kent County’s STV lost $1.299 billion from its 2009 high. (Chart 4-A identifies year by year between 2008 and 2013 the increases/decreases in population, SEV, STV, and General Fund Property Taxes. For complete information, see https://www.accesskent.com/Departments/Equalization/pdfs/EqualizationReports/2020.pdf)
Kent County Population
SEV Increase/ (Decrease)
STV Increase/ (Decrease)
General Fund Property Tax Revenue
General Fund Increase/ (Decrease) from 2008 Base
Kent County’s lost SEV and STV did not fully recover its lost value until 2017. Because of the natural development occurring to meet the growing population in Kent County, along with a low inflation rate, there was a required Headlee Amendment maximum tax rate rollback beginning in 2017. In 2019, the maximum allowable tax rate for Kent County is 4.2571 mills instead of the historic rate of 4.3200 (See Chart 4-B). All in all, it means limited property tax revenue with a growing population, aging infrastructure, and a need for more services (like additional judges and judicial staff, environmental health staff, animal control, law enforcement, et cetera).
Authorized General Fund Tax Rate
Maximum General Fund Allowable Rate
During the Great Recession, certain government services remained in demand, infrastructure continued to age, and health care costs grew at a rate that outpaced inflation. Additionally, many local governments faced large increases in pension contributions due to mismanaged pension programs and stock markets drops during 2008. Last, the Accounting Boards correctly required that governments start placing their ‘Other Post-Employment Benefits’ (OPEB) liability on their financial statements. And imagine this…that caused governments to either fund these OPEB benefits or acknowledge that they had not been funding their OPEB liabilities for years…a very needed reform.
Counties were uniquely disadvantaged during the Great Recession when the Michigan Legislature and Governor eliminated state revenue sharing for counties by requiring the collection of three years of property taxes in two calendar years. This created a local Revenue Reserve Sharing Fund (RRSF) where counties could draw down their revenue sharing amounts until the RRSF zeroed out, and then ask the State to receive revenue sharing checks again. A classic case of Paying Peter while Robbing Paul. (Fortunately, the State provided reintroduced revenue sharing to counties, but at a rate that did not include inflation and/or population growth.)
This Great Recession crazy cocktail caused significant problems for local government budgets. Property tax revenue stagnated and dropped while costs increased, and more services were needed. Revenue sharing became unpredictable. Ultimately, many local governments responded with significant personnel reductions via layoffs and/or not replacing staff, closing pension programs, and reducing capital investment in aging infrastructure.
So what is the problem almost a decade later?
For the past 10 years, these moves – reducing personnel, closing pension programs for 401k type programs, and delaying capital investment – worked. Budgets stabilized, and the cost of government decreased. Further, the economy started to grow again until COVID-19. So what is the problem? Let me try to explain.
If government were a business (and I would argue it is not….a bias I recognize, but stay with me for a minute), a decade of stagnant revenue would cause the owners to evaluate the business model. Questions they may ask include: Is our profit margin holding firm? Can we increase our rates? Do we need to invest money in technology to lower costs? Do we have the right talent? Can we reduce long-term costs by purchasing new equipment? Is our organizational structure correct?
If we were to do that with government in Michigan, I would argue that our current government business model does not meet the reality of the 21st Century. Examples include:
Our taxation system is primarily based on sales (6%), individual income (4.25%), and property value while we leave out the fastest growing part of the economy: services.
We do not have the revenue needed to pay for decaying, aging infrastructure like roads, dams, water/sewer systems and closed dumps/landfills. (Just look at what happened this year in Midland when a dam failed. Michiganders know roads need attention. Lead pipes across the state need replacement. PFAS remediation is necessary throughout the state. We could continue about the needed investment in wastewater systems, landfills, recycling, et cetera.)
We have structurally limited property tax revenue increases when we are required to pay for legacy personnel costs promised by previously elected officials.
We cannot create operating efficiencies due to the historic creation of township, city, and village governments. Therefore, we duplicate functions often and rarely able to optimize staffing levels or expertise.
Our Information Technology (IT) programs are outdated and limp along because we do not have the capital necessary to replace them. And when we do replace them, somehow, they do not deliver the value promised and/or cost more than they should due to lack of qualified personnel.
We struggle to recruit executive talent due to wage restrictions combined with heightened public scrutiny.
During the next year, I intend to write a bit about each of these subjects. But my Idea to Consider for today is taxation rates as they relate to Sales, Income and Services.
As you can imagine, the infographic is incredibly complex. Interestingly though, Income Taxes at 4.25% provided $10,143 million in revenue with most of that dedicated to GFGP. State Sales Taxes at 6% provided $8,309 million in revenue with most of that dedicated to the School Aid Fund (SAF). But nowhere in the infographic is there revenue related to a ‘Service Tax’ because we do not have one.
What is a service tax? In my mind, it is a tax on a service and/or entertainment to the end user, not businesses to businesses. It would tax services like skiing, golfing, bowling, tax preparation, lawn care, dry cleaning, hiring a plumber, an electrician, a home builder, etc. Think about it for a second. Why do we tax the purchase of a bike or car at 6%, but we do not pay a tax on when we choose to hire a lawn service? We don’t need to hire a lawn service, we can do it ourselves if we buy a lawn mower (and pay 6% for the privilege of owning it), but we need transportation for the economy to function. A family needs to buy their children shoes (6% tax please), but we do not need to golf (no tax for the privilege of that activity).
Our tax code picks winners and losers all the time, and I am positive that service-related businesses do not want to be taxed. Who would?! Previously, Governor Granholm proposed a service tax at 2%, but she included business to business taxes in her proposal as well (i.e. a Value Added Tax or VAT like in Europe) My hunch is that the State could lower tax rates across the board and raise more revenue for education and local governments if we thoughtfully considered a rewrite of the State Constitution as it relates to the Headlee Amendment, Proposal A/Sales Tax Rates, Income Tax Rates, and creating a new Service Tax.
There are real demands on Michigan’s local governments that need to be addressed. Most will take courageous leaders to find real solutions that demand systemic changes to how we function now. Taxes need to be part of that conversation.