3 Things 10-10

Thing One Debt and Freedom I recently watched an interviewer ask a wealthy man questions about all the money he had accumulated. Of course he said he enjoyed all the thing his money could buy but he also said something that struck me. Although I wasn’t recording him, I’ll still try to paraphrase what he said below. But before I do that, I’d like to share some statistics on US debt: America’s gross national debt exceeded $31 trillion or ~125% of GDP for the first time on Tuesday, October 4, 2022. This doesn’t count the unfunded liabilities (Social Security, pensions, etc) that are just like debt but aren’t counted as such which add another $100 trillion or so. It would take the combined GDPs of China, Japan, Germany, UK, France, and Italy to equal the US debt. As of Q2 2022, total US household debt was $16.5 trillion As Q2 2022, the average American household had $96,460 in debt (up ~$6000 from just a year earlier). Now back to the interviewee’s response: ‘Yes, I suppose I am what you’d call a rich man. But one need not amass as much money as I have to buy the thing that is most valuable – at least in a free society – and that’s freedom itself. One need only avoid debt to be free. Of course, you might not be able to buy the luxury items most people associate with the rich and famous, but those things are not synonymous with freedom and they’re bought by many a person who is heavily indebted. It’s better to live well below your means and avoid debt as much as possible. There is freedom in that. If I wake up in the morning and I don’t owe anybody anything – assuming I didn’t wake up in prison – I am free to do what I want. That is as true or the debt-free man who has millions in the bank as it is for the man of more modest means who has conducted his financial affairs accordingly.’ That interview reminded me of the wisdom of a longtime friend on the subject and I went looking for one of his many quotes on the subject: “Today as a country we have more debt than we have plans to repay during the next several decades at least. In fact, we have exactly zero plans to repay any debt, and plan to spend more than we take in for the indefinite future. That’s an untenable situation…That has serious implications for all of us, and especially for savers and investors, as well as for borrowers…In the final analysis, this will come down to sustainable economic growth. Sustainable economic growth comes from free people participating in a market based economy. The bigger the role of government, the less freedom for both the people and the economy.” Very powerful observations from very wise men. My takeaway is this: While there may not be a formula for becoming financially rich, there is a formula for being free and maybe rich and free are the same thing in the final analysis.

Thing Two Non Political Take On A Political Topic Last week there was an article in the Wall Street Journal with some appalling statistics on Illinois K-12 education. Here are a few excerpts: “…Statewide, in 2019, 36% of all third grade students could read at grade level. That’s an F, and that’s the good news. That number drops to 27% for Hispanic students and 22% for black students statewide. In certain public school systems, the numbers plummet to single digits. In Decatur, 2% of black third-graders are reading at grade level and only 1% are doing math at grade level. Third grade children are eight years old, full of potential with minds like sponges to absorb what they are taught. Third grade is the year that children need to achieve a level of reading fluency that will prepare them to tackle more complex tasks in upper elementary grades that require comprehension. A child who can’t read in third grade can’t do word problems in fourth or science experiments in fifth. Promoting Decatur children to the fourth grade when 99% are below grade level in math condemns them to future failure. By 11th grade, 5% of Decatur’s students are reading at grade level and 4% are on par in math…in 2019 7% of black third-graders in Rockford were reading at grade level, 11% of Hispanic third-graders in Elgin and 8% of black third-graders in Peoria. Chicago’s 30% of black third-graders reading at grade level almost seems a triumph by comparison. Statewide, the system records a 30 percentage-point achievement gap between black students and white students. If you want to discuss “systemic racism,” start here, yet black Illinois politicians protect this indefensible system.” This story was written about Illinois, but it’s going on all over the country. In pointing it out, the authors aren’t indicting individual teachers (though some would most certainly be better suited to other work) but rather pointing out how badly a system, which is being vigorously promoted and defended, has failed. There was another story that ran on the same day about discrimination against Asian students in the admissions process at elite colleges. Below are two sentences from that article dispassionately got at the heart of the problem: “…In a brief for the plaintiffs, Duke economics professor Peter Arcidiacono demonstrates that an applicant to Harvard with typical credentials has a 25% chance of admission if he’s Asian. But if you leave the credentials the same and change his race to black, the chance of admission climbs to 95%…” Finally, there was another article published that day about how bad crime has gotten in (and even outside of) the big cites. One reader of the article succinctly commented the following: “Poverty causes crime.” So here are a few questions. What causes poverty? Is it, in the year 2022 (in America), bigotry? If so, what kind of bigotry is it? Is it the hard bigotry that denies people with brown skin opportunities in education and the job market solely on the basis of their skin color? Or is it the “soft bigotry of lowered expectations” that excuses poor performance and accepts less from groups of people who are manifestly capable of doing much more and thereby leaves them ill-equipped to perform education-wise and compete job-wise? If it’s the first kind of bigotry, what are we waiting for? If it’s the second kind of bigotry, what are we waiting for?

Thing Three Just A Thought "Be curious, not judgemental" - Walt Whitman