If you were standing in the smoldering ashes of 9/11 trying to peer into the future, you might have been overjoyed to discover this happy snapshot of 2018: There has been no subsequent major terrorist attack on America from Al Qaeda or its heirs. American troops are not committed en masse to any ground war. American workers are enjoying a blissful 4 percent unemployment rate. The investment class and humble 401(k) holders alike are beneficiaries of a rising GDP and booming stock market that, as measured by the Dow, is up some 250 percent since its September 10, 2001, close. The most admired person in America, according to Gallup, is the nation’s first African-American president, a man no one had heard of and a phenomenon no one could have imagined at the century’s dawn. Comedy, the one art whose currency is laughter, is the culture’s greatest growth industry. What’s not to like?
Plenty, as it turns out. The mood in America is arguably as dark as it has ever been in the modern era. The birthrate is at a record low, and the suicide rate is at a 30-year high; mass shootings and opioid overdoses are ubiquitous. . . . Today’s America is . . . marked by fear and despair . . . akin to what followed the crash of 1929, when unprecedented millions of Americans lost their jobs and homes after the implosion of businesses ranging in scale from big banks to family farms.
It’s not hard to pinpoint the dawn of this deep gloom: . . .
Frank pinpoints the financial crisis.
Which makes sense.
(And it’s definitely worth reading the whole piece. “Trump’s nationalistic right-wing populism, which scapegoats immigrants and minorities to deflect rage . . . is nothing new.” “That hastening concentration of American economic power wasn’t fully understood by most Americans then, and neither was Gatsby, which was published to disappointing sales and reviews in 1925. It’s almost too exquisite an irony that just two years later, the budding real-estate developer Fred Trump would be arrested at a Ku Klux Klan riot in Queens, not far from Tom Buchanan’s home in Fitzgerald’s fictional Long Island enclave of East Egg. The rest is history inexorably leading America to this dark place . . .”)
But to find the dawn of our deep gloom, I would go back further, to the widening inequality that Ronald Reagan kicked off with his massive tax cuts for the rich, his union busting, and his demonization of government. All three began the slow decline of the American middle class.
It’s not that Reagan was entirely wrong —
> The 70% top federal tax bracket was too high. It’s just that Reagan (and then Bush 43 and now Trump) overshot the mark in lowering it.
> Union abuses were widespread (just as are abuses throughout the business world). It’s just that Republicans have tilted the balance too far in favor of management.
> Government did suffer from inefficiencies and fraud (as did and do the private and nonprofit sectors). But Republican politicians never rail against businesses that pollute and defraud . . . or non-profits that spend barely half your contribution on their mission (or that buy $20,000 buying portraits of themselves, half going to the artist for six minutes “work,” at a dinner the namesake of the foundation was paid to hold at his golf club). No, Republican politicians focus only on government fraud and abuse. Public servants are the bad guys; capitalists like Wilbur Ross — a $120 million grifter — and his ilk are the good guys.
But I digress. Read Frank’s piece.
And note that this “booming” economy is simply the continuation of the truly remarkable Obama economy, whence 90% of the gains of the last 8 years arise — and that Obama and his administration rescued the world from an imminent global depression even as he left Trump a National Debt back to shrinking relative to the economy as a whole. A positive trend that Trump’s Republicans have now reversed.
As an SPRT shareholder, I was pleased to see that cash remains at about $2.60 a share (so you get the rest of the business for about a dime), and sales are up and marginally profitable. Who knows what will happen; but if the business itself were ever valued at 1 times sales plus that $2.60 in cash, we’d have (roughly, vaguely) a $6 stock, up from the $2.85 and $2.16 we paid. So I hold on.
Quote of the Day
In 1992, more was spent on legal fees in California [$16.3 billion] than on auto repairs, funerals, tanning salons, one-hour photo finishing, videotape rentals, detectives and armored car guards, bug exterminators, laundry, haircuts, day care, shoe repairs and septic tank cleaning combined.~Census Bureau survey, as reported in the LA Times
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