Published in the Roanoke Times

0n October 27, 2018


October 19, 2018

Letter to the Editor

Republicans have a problem this November: Healthcare is the hot issue in the midterm elections, but their stance on it is wildly unpopular. So, they’re trying a bold political tactic: Covering up and making up new facts.

Large portions of American voters want to keep the Affordable Care Act’s protections for people with pre-existing medical conditions. President Trump and Mitch McConnell have both recently claimed that all Republicans feel the same way – even as they fight in court to vaporize those protections and vow to take yet another stab at killing the ACA entirely.

There are 36 anti-ACA Republicans running in unfriendly congressional districts in November – more than enough to flip the House to the Democrats. The GOP could overcome this with an ACA alternative that did everything they claim they want to do: lowering regulations and costs while protecting patients. But this is a fantasy, thanks to another, even more difficult math problem.  This stuff involves trade-offs the Republicans are unwilling to make.

Congressional Republicans don’t say what they would do about much of anything, save “Cut taxes more” or “Try to kill Obamacare again.” This reflects a Trump-era party that has no idea what it stands for anymore, aside from nurturing cultural grievances. In Southwest Virginia, voters cling to these cultural things even when it means their families get less health care, jobs are not available and educational opportunities are second-rate or non-existent. My friends and neighbors, in this election vote for things that will make a DIRECT difference for you and your children. Health care, jobs, and education for our part of Virginia—vote for Jennifer Lewis.

T. Michael Smith




Why don’t we in the USA talk about politics in the language of the heart? If we cannot be heartbroken, for example, that the wealthiest nation on earth is unable to summon the political will to end childhood hunger here and now—how can we create a politics worthy of the human spirit, one that has a chance to serve the common good? It is sad to think that the answer may be NO!

Hungry Child

Christianity, Judaism, and Islam are viewed as proponents of war by some because a few of their alleged adherents engage in hateful and violent behavior that distorts and defies the values they claim to represent. All the major religions of the world at their core, including Christianity, Islam, Judaism, are committed to compassion, hospitality, and love.  In this fact lies the hope that we might reclaim their power to help reweave our tattered civic tapestry. When we (citizens of the USA) forget that politics is about weaving a tapestry of compassion and justice on which everyone can depend, the first to suffer are the most vulnerable among us—our children, our elderly, our mentally ill, our poor, and our homeless. As they suffer, so does the integrity of our democracy. Reweave our tapestry.


As Americans, we should all be opposed to autocratic political leadership and authoritarian rule.  But this seems to be the direction for the USA.  Our leaders are disrespecting the rule of law.  Personal recognition and gain seem to be the focus and this political idolatry accompanies a false and unconstitutional notion of authority. Our elected officials are called to serve our citizens not engage in tyranny.  Let’s rid ourselves of leaders who put ideology ahead of governance.  At least throw out the crooks and thieves in Congress. And there are many!

REVOLUTION by Community and Love

Community is the missing link for our United States of America.  The first word of our name is UNITED. Is that smell the rising scent of our common humanity or is it just another political organization doing its thing? Before we scatter to the winds, why not consciously join hearts across this nation, abandoning the antiquated boundaries of our localities that have for too long defined our identities and political will.  Why not abandon hatred and divisiveness to replace them with love and compassion?  This sort of radical change would be a demonstration of strength.


The NRA (Hate Group # 1) is not necessary for Americans to keep their guns. Why should they have so much sway in the policies of our nation? Why is the Ku Klux Klan (Hate Group # 12) back in our conversations? Why do OUR representatives favor the wealthy over the poor?  Why do these same folks provoke racial tensions or divert our attention with moral and social issues to cover up their destruction of the middle-class economy?  Why do we even listen to the vitriol of a White Supremacist? (Hate Group #2).


When ordinary Americans can’t buy food, find health care and enjoy their lives, transgender restrooms won’t matter. I hate the fact that women have faced sexual harassment. I have two daughters and two granddaughters. I don’t want then harassed. But this issue is being used as a diversion to hide the truth about the tax bill and budget, which are designed for the wealthy and corporations.  The deficit is going to balloon!


My life has been built on a positive belief in the wonderful prospects for America. But the current prospects for the average American are bleak. Change is needed and fast.  I believe without a single doubt that a revolution in the economic construct of our nation is necessary to solve this disaster in the making.  Why should the top 1 % or even the top 10% of wealth holders have all the advantages? The only way this happens is if ordinary folks come together in communities to force the change. When the bubble bursts for the stock market and the economy tanks, it will be dismal for a very long time.  We have an example to learn from if we will.


In mid-2016, a poll conducted by the Harvard Institute of Politics found something startling: only 19% of Americans ages 18 to 29 identified themselves as “capitalists.” In the richest and most market-oriented country in the world, only 42% of that group said they “supported capitalism.” The numbers were higher among older people; still, only 26% considered themselves capitalists. A little over half supported our capitalist system. This represents more than just millennials not minding the label “socialist” or disaffected middle-aged Americans tiring of an anemic recovery. It shows that most of our citizens are uncomfortable with the country’s economic foundation—a system that over two hundred years ago turned a fledgling society of farmers and prospectors into the most prosperous nation in human history.


Why the change in attitude? It’s the realization that capitalism is not a fair system as practiced in the USA.  It creates suffering.  It continues to create pockets of poverty and does not include those pockets in any recovery. Resources are directed elsewhere. The early days of American capitalism—the nineteenth century after the Civil War, the “Gilded Age,” the era of the “robber barons”—were always beset by a cycle of boom and bust. The great runs of expansion and opportunity that arose, were always coupled with a cataclysmic depression right around the corner. Boom and bust, boom and bust—this was the necessary pattern of the American economy in its primitive state.



But now the U. S. economy is dominated by our government sector, which is managed by people who have no clue how our economy works. Just look at the current tax reform legislation in Congress.  And an assessment of how the Great Recession of 2007-2008 was handled shows how close we came to disaster.

The U.S. Financial Inquiry Commission produced its findings in January 2011. It concluded that “the crisis was avoidable” and was caused by: widespread failures in financial regulation, including the Federal Reserve’s failure to stem the tide of toxic mortgages; dramatic breakdowns in corporate governance including too many financial firms acting recklessly and taking on too much risk; an explosive mix of excessive borrowing and risk by households and Wall Street that put the financial system on a collision course with crisis; key policy makers ill prepared for the crisis, lacking a full understanding of the financial system they oversaw; and systemic breaches in accountability and ethics at all levels.

Amazingly, not a single executive of any bank or brokerage firm went to jail.  The CEO of Merrill Lynch gave himself a large bonus, even though he had to sell his bankrupt business to Bank of America.  The CEO of B of A finally was forced to resign based on his purchase of both Countrywide and Merrill Lynch.  Many executives faced clawbacks of bonuses and pension contributions.

But the stock market—–OH MY!

On December 10, 2007, the Dow Jones Industrial Average (DJIA) reached 13,727.03.  On March 6, 2009, the DJIA fell to a low of 6626.94, a 51.7% drop from the high.  Since that low, the DJIA has steadily risen to a high of 23,557.23, or 3.5X.

What happened to drive prices so dramatically higher? The simple answer is that there were more buyers than sellers. But there were other factors.   TARP was passed by Congress in 2008 and created a group of programs to stabilize the country’s financial system, restore economic growth and prevent foreclosures in the wake of the 2008 financial crisis through purchasing troubled companies’ assets and equity. Congress approved the $787 billion American Recovery and Reinvestment Act. The economic stimulus package ended the Great Recession by spurring consumer spending. Its goal was to save between 900,000 to 2.3 million jobs. Most important, it instilled the confidence needed to boost growth.   It also aimed to restore trust in the finance industry by limiting bonuses for senior executives in companies that received TARP funds. These two actions saved the financial system and spurred employment.

During this period, the Fed drove interest rates to very low levels and they have remained low.  Bonds did not offer an attractive alternative to stocks. The economy has grown at an average rate of 2.1% which is not sufficient to create inflation and a robust demand for goods. But corporate earnings have been strong as companies have cut costs and improved productivity on a large scale.   Corporations have also used cheap borrowed money to buy their own stock, which decreases the shares outstanding and raises earning per share, leading to higher stock prices. This has a major impact on the stock market.

And NOW?

Without question, the rise in stock prices has been gigantic and it is not all that easy to explain with traditional measures.

The proposed tax cut for corporations should help some in 2018 and may lead to the repatriation of funds held offshore.  The difficulty is that many companies have shifted strategies regarding growth opportunities. They no longer desire to grow organically but are much more likely to buy market share and look for new opportunities through acquisition.  Productivity improvements which are reflected in stock prices and shareholder value are derived from employment reductions for the most part.  Do not expect a huge bump in economic growth.

The elimination of deductions and the bracket changes are going to be a wash for the middle class.  People with incomes between $500,000 and $1 million are likely to be the big beneficiaries.

In 2018, the economy is likely to grow by 2% and inflation is likely to remain subdued.  There do not appear to be any pricing pressures: employment has been strong, but wage gains have been modest; capacity is available in manufacturing; commodity prices have shown only modest gains.  Look for a relatively flat yield curve with long rates coming down ¼-1/2 point to 2½% or so on the long treasury.   The stock bubble is going to burst in advance of a recession in 2019 which is likely as productivity gains and stock repurchases run their course and the yield curve stays flat. Look out below!

What Next?

Our country has experienced a self-righteous upsurge in political loyalty and ideology that blots out conscience and absolves every criminal action in the name of wealth and class, race, patriotism, and party.  The citizens of America must demand a government based on trust, loyalty and the greater good.  This will require a major change in our government.

A community-based nation would have to acknowledge certain basic rights.

The right to life is the most fundamental right, of which all other rights are corollaries.  No one may force you to do anything, no one may injure you in any way, and above all, no one may take your life.

The right to liberty is a part of the right to life., specifically referring to your freedom of action. You may do what you want, when you want, provided you don’t trample on the rights of anyone else.

Property rights are an extension to the right to life, to own and use the product of your labor. If the tools of your survival are subject to random confiscation, then your life is subject to random destruction.

The right to the pursuit of happiness is freedom of action. The right to the pursuit of happiness means a man is free to do anything he pleases if it doesn’t conflict with the rights of others.

The right to free speech is a recognition that speech if devoid of physical threats is not an initiation of force and does not warrant any retaliatory force. Freedom of speech is required for liberty because without the freedom of speech, you cannot persuade others of what is right and what is wrong. Without the freedom to persuade others, only force can make people act in a certain way. Freedom of Speech is an important check on government because it allows transgressions to be identified and fixed rather than hidden and perpetuated.

The right to defend yourself is a corollary to the right to life. You must be able to protect what is yours when it is threatened.

Taxation is a form of force which is immoral, destructive, and unacceptable whether perpetrated by an individual or government. Specifically, taxation negates the concept of property rights by claiming that the government has first right to the income or money of its citizens.  The view that every man’s work is the property of the state, and he can keep only what the state feels appropriate, is contrary to the view that man has a right to exist for his own sake. Taxation is inconsistent with DEMOCRACY.  Only when individuals deal with each other as having equal rights and no one is sacrificed to anyone and nothing is extorted to “common” or “individual good” — only then can people truly see each other as a benefit and an asset rather than another competitor for the same stuff. A community based on love and equality will thrive.

A moral government with a narrowly defined role of preventing the initiation of force is a great good to all citizens.  The vision would be that our Federal Government would have only the responsibility for providing a military force for the protection of the citizens.

State governments would have responsibility for maintaining basic laws concerning safety and equality of its citizens.  They would manage the police force, manage airports and roadways, and ensure property rights are observed.  Airports and roadways would be financed by user fees.

Less government intrusion and spending.

Let’s call a CONSTITUTIONAL CONVENTION to repeal Amendment 16; to repeal Amendment 12; to amend Amendment 22 to include term limits for Congressmen and Senators; to amend Amendment 27 to make the cost of living formula for raises for Congress to the same used for Social Security. Revise Amendment 12 such that federal powers do not supersede state powers.

If you want more information on how history is repeating itself, email me at and I will send you a longer a longer commentary.

T. Michael Smith, COQ

(Chief of Quirkiness)


2017 and THE PARADOX

By constantly destroying the status quo, capitalism provides a powerful force for making societies wealthier. It does so by making scarce resources more productive. But some are always harmed in this process.

Companies that fail, industries that vanish, and jobs that disappear are inherent parts of our growth system. The economy in the U.S. has been experiencing these negative aspects of the evolutionary nature of capitalism since 2007. The saving grace comes from recognizing the good that comes from the turmoil, which is difficult if you have lost your job and house. Over time, societies that allow capitalism to operate grow more productive and richer; their citizens see the benefits of new and better products, shorter work weeks, better jobs, and higher living standards.

Herein lies the paradox of progress. A society cannot reap the rewards of the evolutionary nature of capitalism without accepting that some individuals might be worse off, not just in the short term, but forever. At the same time, attempts to soften the harsher aspects of free markets by trying to preserve jobs or protect industries will lead to stagnation and decline, short-circuiting the march of progress. Capitalism’s mantra of no pain, no gain is not easily absorbed when a family needs to be fed. The process of creating new industries does not go forward without sweeping away the old way of doing things. This where we are in 2017.

Entrepreneurs introduce new products and technologies with an eye toward making themselves better off—the profit motive. New goods and services, new firms, and new industries compete with existing ones in the marketplace, taking customers by offering lower prices, better performance, new features, catchier styling, faster service, more convenient locations, higher status, more aggressive marketing, or more attractive packaging. In another seemingly contradictory aspect of free markets, the pursuit of self-interest ignites the progress that makes others better off.

Producers survive by streamlining production with newer and better tools that make workers more productive or eliminate jobs. Companies that no longer deliver what consumers want at competitive prices lose customers, and eventually wither and die. The market’s “invisible hand”—a phrase made famous by Adam Smith in the Wealth of Nations–shifts resources from declining sectors to more valuable uses as workers, inputs, and financial capital seek their highest returns.

Through this constant threat to the status quo, capitalism provides a powerful force for making societies wealthier.  Are we willing to allow this to happen?

There is nothing necessarily bad about this. Big firms can be more innovative than startups if given the right incentives. But today’s (2017) incentives favor a static balance. Many big firms thrive because of government and regulation. The cost per employee of red tape—endless form-filling and dealing with health-and-safety rules—is significantly higher for companies that have a few dozen staff than for those with hundreds or thousands. In theory, a capitalist economy depends upon owner-entrepreneurs to lend the dynamism to fuel growth. Today capitalism exists without capitalists—companies are “owned” by millions of shareholders who act through institutions that employ professional managers whose chief aim is to search for safe returns, not risky opportunities.

What has grown from this toxic brew is a wave of populism that is rapidly destroying the foundations of international and domestic order, thereby producing a far more unstable world. One of its many dangers is that it is self-reinforcing. It contains just enough truth to be plausible. It may be nonsense that “the people” are infallible repositories of common sense, but there is no doubt that liberal elites have been smug and self-serving. And populism feeds on its own failures. The more that business copes with uncertainty by delaying investment or moving money abroad, the more politicians (i.e. Donald Trump) will bully or bribe them into doing “the right thing”. As economic stagnation breeds populism, so excessive regard for the popular will of the people reinforces stagnation. Sounds familiar.

High-tech companies are overhauling a larger slice of the economy, including shopping and transport, which should be good for growth (though it also means power is being concentrated in the hands of a few big firms). Is Amazon a mere flash in the advancing darkness or is it developing the new normal? The only new businesses they seem to spawn are small retailers who want to use AMZN’s distribution system which leads to even lower job growth. The US Post Office may ultimately be saved by FEDex and UPS as the latter use the former more in the delivery of small packages.

The rate of productivity growth across the rich world has been disappointing since the early 1970s, with only a brief respite in 1996-2004 in the case of the United States. Here our population is ageing fast and growing slowly. Meanwhile, the fruits of what growth there is, gets captured by a miniscule section of society. And those who succeed based on merit are marrying other winners and hoarding the best educational opportunities.

At the same time democracy is becoming more dysfunctional. Our form in the USA has overspent to give citizens what they want in the short run (whether tax cuts or enhanced entitlements) and has neglected long-term investments. On top of that, lobbyists and other vested interests have by now made a science of gaming the system to produce private benefits.

The first act of our new Congress was to render by rule the ETHICS watchdog useless by having it report to those it was watching.   Thank heavens for twitter.  Donald Trump tweeted that this was a bad idea.  (Our new President may prove very good for the Twitter stock price).  Government can spend to improve infrastructure which is badly needed and this will help the economy.  But then it needs to back away.  It will be hard for those of us who want a better environment, want equality in the work force, are appalled by racism and want better health care.  Regulations are killing economic growth.  Concern for little known creatures must be put aside for pipelines needed to fuel growth. Water and air quality standards should remain because that involves health.  Populism won’t lead us to a better America, but compromise and free markets will.





In the 1976 movie entitled NETWORK, fictional news anchor Howard Beale exhorts his viewers: “I want you to get up right now. Go to your windows. Open them and stick your head out and yell – I’m mad as hell and I’m not gonna take this anymore.” That is clearly the sentiment behind the Brexit vote and is probably behind the sentiment in our country to “throw all of the career politicians out!” At least 70% of voters think the country is headed in the wrong direction and that the two most important concerns are: 1) our safety; and 2) the need for our economy to grow (job creation).  In recent years, voters have been distracted by abortion and gay rights, but today our safety and our ability to support our families have become paramount.

In 2008, Democrats numbered 49% of our electorate, but now that number stands at 29%.  But the Republicans did not gain more voters. Independents have risen to 42% of the electorate and these are the people who are “mad as hell” and they are going to determine the outcome of this election.  ANGER IS THE NEW HOPE.

Besides being a three ring circus, this election cycle is of paramount importance. First, it determines who controls the House of Representatives. Second, it will decide who controls the Senate. And third, it likely sets the direction of the Supreme Court for a generation considering three of the justices are 77 years of age, or older.

People are “mad as hell” for a variety of reasons:

  • Middle class workers are losing ground in this economy. Jobs are being created, but 49% are in the lowest wage category.  Working 2 or 3 jobs has become necessary, which diminishes the quality of life.
  • Wages have returned to the level of the 1970s. Prices are not being rolled back.  It takes more to support a family, but real wages have moved below sustenance levels.
  • Many believe that illegal immigrants are taking jobs away from local workers. The belief is that these folks will accept a lower wage.
  • The middle class has a declining share of the wealth. Among major industrialized countries, the USA has the lowest middle class share of wealth at 19.4%.
  • Health care has become prohibitively expensive. Drug companies are engaging in unfettered “price gouging.”
  • Education has become prohibitively expensive. UVA has a $2.3 billion slush fund, but raises tuition.  Most likely, the fund is to provide a means to “go private” so that it can be a member of the “IVY LEAGUE.”

I will leave the safety issues to the experts, but I do not feel as safe as I used to and to say it can never happen here seems to be an invitation.

The economy is problematic.  The US economy is growing just slightly above a “recession” pace. As the following chart shows, our GDP (Gross Domestic Product) is growing somewhere in the neighborhood of 1%.  The norm for high levels of employment is about 3%.  Despite the availability of money at low rates, consumers are paying down debt not increasing it.

We have a similar problem that the Japanese have had for 15 years, a declining and aging population.


The baby boomers are retiring, spending less and are not supporting growth.  Consumer spending is by far the largest segment of our GDP at about 70%.  With real wages declining, it is difficult to see large increases in in spending. But the millennials are another story. Among adults ages 21 to 45, 35% receive financial support from their parents. Of those, more than two-thirds could not get by without their parents’ help.  This is the way boomers are now spending their money.

It appears that economic activity and wage growth are going to remain disappointing for a while. ANGER IS THE NEW HOPE.

Monsanto, Bees and Politics




I was thrilled to see the recent article in the Roanoke Times on the declining bee population. This is a major problem for agriculture because bees pollinate plants. Well, you say, there are genetically modified seeds produced by Monsanto that don’t require pollination. But these seeds contain the pesticide dioxin, a deadly chemical agent. That’s the same chemical agent Monsanto used in Agent Orange. the killer agent from Vietnam. Dioxin is so toxic that it wipes out non-GMO crops, bees, other insects, animals and human health. I personally do not want any food produced by a Monsanto seed. Remember this company gave us saccharin and aspartame. The world’s center of PCB manufacturing was Monsanto’s plant on the outskirts of East St. Louis, Illinois, which has the highest rate of fetal death and immature births in Illinois.
It’s not so much that this company has produced toxic substances for years, but they fight so hard to defend these products with money when they come under attack. Our government is so susceptible to money. The big fight right now is the proper labeling of GMO foods. You have a right to know that you are eating a product of pesticide laced seeds. A bill (S. 2609) was defeated two months ago in the Senate that would prevent states from requiring labels. But Monsanto is already back lobbying for a watered down federal law on labeling. Our legislators are so weak. Mark Warner and Tim Kaine voted against the earlier bill (S .2609, but what about now.  They both think a federal solution may be needed.

And then there is Bob Goodlatte. He is on the Agriculture committee. He is essential to Monsanto. Bob takes money from Monsanto for his campaign. Do Bob Goodlatte, Mark Warner and Tim Kaine understand this issue? I am biased by my belief that Monsanto is an evil company. Because these seeds are engineered to be toxic pesticides masquerading as food, the EU(Europe) has banned their use. This is a matter of life and death. Stop killing bees and properly label genetically altered food.

T. Michael Smith

mon 2

Social Security Mythology

Social Security generates more unintended confusion and deliberate misinformation than any other issue.  Political candidates of both parties accuse their opponents of “raiding” the trust.  Some writers disparage the trust funds as “funny money,” “IOUs,” or a “fiction.”  All these claims are nonsense.  The Trust fund reserves stand at $2.73 trillion.  The reserves are expected to grow each year until 2020 according to actuaries.


Social Security’s financial operations are handled through two federal trust funds — the Old-Age and Survivors Insurance (OASI)(monthly income for seniors) trust fund and the Disability Insurance (DI) trust fund.  They are legally distinct, although commonly referred to collectively as Social Security.  All of Social Security’s payroll taxes and other earmarked income are deposited in the trust funds, and all of Social Security’s benefits and administrative expenses are paid from the trust funds.


In years when Social Security collects more in payroll taxes and other income than it pays in benefits and other expenses — as it has each year since 1984 — the Treasury invests the surplus in interest-bearing Treasury bonds and other Treasury securities.  Social Security can redeem these bonds whenever needed to pay benefits.  The balances in the trust funds thus provide legal authority to pay Social Security benefits when the Social Security program’s current income is insufficient by itself.


Social Security has run a surplus in every year since 1984, as was anticipated when Congress enacted and President Reagan signed new legislation based on the recommendations of the Greenspan Commission in 1983.


Under current projections, the combined Social Security trust funds will continue to run annual surpluses until 2020.   Actually, the DI trust fund faces exhaustion in 2016, and the much larger OASI fund is projected to last until 2034.  Congress must therefore take action before late 2016 to replenish the DI trust fund.  Increasing the share of the payroll tax that is allocated to DI (and reducing the OASI share) would assure that both the OASI and DI programs pay full benefits through 2033.  Congress has reallocated payroll tax revenues many times in the past, and doing so has not been controversial.


At that point, if nothing else is done, Social Security could still pay more than three-quarters of its scheduled benefits using its annual Social Security tax income.  Contrary to a common misunderstanding, benefits would not stop.  Of course, paying three quarters of promised benefits is not an acceptable way to run the program, and Congress should take action well before 2033 to restore long-term solvency to this vital program.

Source:  Annual Report of Board of Trustees of Social Security to Congress           Michael Smith

The Loss of My Country

Americans have become so conscious of “national security” that Patrick Henry of Virginia would likely be branded a terrorist today instead of a patriot.  That is, if there are any Americans who know of Patrick Henry or his famous speech before the House of Burgesses in Saint John’s Church in Richmond, Virginia on March 23, 1775.

“Is life so dear, or peace so sweet as to be purchased at the price of chains and slavery? Forbid it, Almighty God!  I know not what course other may take, but as for me, give me liberty oo give me death!”

In today’s climate of ultra sensitivity and concern for the “national interest,” is this free speech or a terrorist statement?