An Inefficient Graduated Tax Program will hurt Illinois

Illinois is facing a constitutional amendment to change the way its citizens are charged taxes. Historically, Illinois has had a flat tax system where everyone pays the same rate. This does not imply that everyone pays the same taxes. A 4% flat tax equates to $40,000 on earned income of $1 million, but only $2,000 on earned income of $50,000.

But Illinois is in bad fiscal condition right now, and our Governor, apparently having forgotten his Econ101, thinks that a change to Illinois’ tax program which allows him to increase the rate of high earners is the ticket he needs to buy the state out of trouble.

Economists across the state and country know this is a bad idea. A flat tax which we have currently is the most efficient form of tax because it creates the smallest amount of social waste. Social waste is an economic term for the inefficiency caused by behavior changes that reduce productivity in an effort to maximize how much income folks get to keep.

All taxes create an incentive for people to change their behavior so that they keep more money. But flat taxes, create the smallest incentives. They are the most efficient.

Understand, I am not referring to fraud, hiding assets, or anything illegal. I am talking about the calculated decision to reduce professional productivity or to position assets in less productive places to offset the higher tax burden.

A common example of reducing productivity to maximize kept income comes about when a worker turns down a promotion that puts him or her in a higher tax bracket. A 5% increase in salary corresponding to relocation in the higher tax bracket, would nearly wipe out the monetary raise without affecting the greater work and pressure of the promotion. We will see wealthy Illinoisans repositioning assets into nontaxable and retirement accounts and deferring compensation through stock sharing and vested option.

Another concern is the flight of taxpayers to lower tax states. New York and New Jersey have been suffering at the hands of Florida for years, while Illinois has been largely immune, but this could all change now.

These behavior changes involve personal sacrifice and put downward pressure on collected tax revenue. Downward pressure is another economic term that means kind of what it sounds like. These changes will work toward reducing overall tax efficiency in the long run even if the amendment causes an uptick immediately.

The best way to increase tax revenue is with a low tax rate that taxpayers feel is fair – one for which they do not feel a need to change behavior and do have enough to invest and spend which expands the tax base.

You might ask what history has to say about this. Well, Reagan cut taxes in the 80s and tax revenue doubled in five years. Not a fan of Reagan? How about JFK? He dropped the tax rate from over 90% to 50%. The tax base soared, unemployment fell, and the economy took off.

Flat taxes work because everyone pays the same rate. It is understood, there are no (or very few) exemptions or loopholes. People continue to maximize their income, and the government maximizes tax revenue.

Graduated tax rates, like our Governor is requesting, incent those at the top – the biggest payers – to change their behavior. They might write big checks next year, but in time they will change their behavior to keep the largest amount of earned income even if that means making personal sacrifices. In the long run, a graduated tax system in Illinois will not increase the state’s ability to pay off its debt, but will reduce the State’s ability to collect tax revenue.

So why do it? Tune in tomorrow.

A Judgy Nun Walks into a Bar…

I want to have a drink with these two!

Sister Florence has a problem with her nephew. She has sworn a vow of poverty, and her nephew is a banker who makes north of a million dollars a year. He helps some companies buy and sell other companies while his company takes a slice of the proceeds in return. Sister Florence sees little if any social good coming from her nephew’s efforts and all those wasted profits..

What Sister Florence misunderstands, is that her nephew doesn’t make profit for his employer, he makes revenue. There is a huge difference. Revenue is the fuel that allows a company to run. It is the fuel that is put into the tank, powers the organization, and pays the employees, rent, and taxes. It is what pays for the airline tickets as well as the staples.

Profit on the other hand, is what is left after all those costs and bills have been paid. Many companies do not make any profit some years. Those that do find that number is often very small – typically less than 10% of revenue. So for every revenue dollar that comes in, maybe one nickel or dime ends up being what  the company makes – the profit.

Corporate profits are used to help a company grow – through acquisition or paid in bonuses and perks to the employees who help increase the revenue. Most companies also donate a proceed of their profits to civic causes that make better places to live and work.

Should be post be renamed, “Sister Florence Goes to UofC and gets an ECON Degree“?
Nah. I really like that image up there.

Sister Florence may have mixed emotions about what the company does with its profit, but she should understand that its revenue is almost completely directed at the public good. That revenue allows the Company to employ people. And not just high paid bankers like her nephew, but also the executive assistants, the financial analysts fresh out of college, and the fellow in the mailroom.

These people pay taxes, support their local schools, and tithe their churches. The Company pays rent to the building owners who support her community. All of these people buy things from the local stores which employ local people. Every penny the Company spends – even that which some may considered wasted – benefits a person somewhere who has the capacity to use it for good.

Meanwhile, the Company pays taxes which allow for the existence of the social programs that Sister Florence supports. 

Still, Sister Florence may question why the bank needs to pay her nephew so much. But certainly she would prefer that he receive it rather than have his employee keep it. It was already noted that she is ambivalent with what the company does with its profit, but she certainly cares what her nephew does with his earnings.

Rather than being critical of her nephew for making so much money, she should be gracious of a system that allows him to do so well. Rather than passive-aggressively shunning him, her energies would be better spent cheerfully pressing him to increase his annual giving.

Before AGILE there was, well, agile

November 2019 marked the publication of a memoir by Ameritrade CEO and Founder, Joe Ricketts, The Harder You Work, The Luckier You Get. I led the internet initiative at Ameritrade to the internet and spent many hours being interviewed for this book. Chapter 10 (page 245) highlights some of that story. Following is some more detail.

Like many software development teams in the 90s, we were struggling to keep up, as the internet – rather than floppy disks – became the data delivery method of choice and previously successful development models began to break down. This new paradigm was powerful because we could just update all our clients’ software at the flip of a switch. But it was also fraught with danger as it became very inexpensive and easy to launch new code without appropriate quality control. 

The Egyptians were not Agile

 In the olden days, almost all projects were delivered following a waterfall project management process. Even the pyramids likely started with some sort of primitive blueprint which included every thought and idea that the hoping-to-be-immortalized king might have in his head. As challenges to designing crept-up during construction, they were dealt with via design compromises. As a result, end projects were almost always something less than they were initially intended – even if nonetheless cool.

As people got better at building skyscrapers, ships, and bridges, they got better at estimating the time a project would take. Estimates were created based on the average of past projects scaled up or down to match the one at hand. We can imagine the thinking of an engineer in 1890:

That last bridge took 2 years and was a mile long. This new one is 20% longer so it should take about 29 months.

As our society of builders approached the middle of the 20th century, waterfall project management was very nearly perfected for capital projects. Engineers were aware of the details, pitfalls, and requirements of their projects. They were good enough that we were able to put a man on the moon!

Old practices didn’t fit new products

But around the time of Apollo 11, a new generation was coming of age who would challenge the time-tested results of waterfall concerning software development. Capital projects had been physical-resource-based. Metal, factory space, rivets, steel, and labor had gone into building the monuments of the previous two millennia. The new monuments were to be made of information, communication protocol, mental horsepower, and electricity. They deserved a new method of project management that matched their intangible materials.

Taking cues from Japanese manufacturing, their own experiences, and the changing relationship between programmers and users, computer engineers began to advocate for smaller production cycles that were more flexible. They sought to replace the heavy process of waterfall with something lighter. They promised to increase their accountability and transparency in return for a seat at the planning table and the opportunity to honestly manage executive expectations. Enter Agile.

There is a romantic notion within the software development community that in 2001, a group of 17 computer scientists got together in Utah and invented Agile software development. But that is really not what happened. In truth, engineers all over the world had been wrestling with the problems of building software in executive-driven environments and by the 1990s were coming up with similar solutions. The birth of the internet, and the explosion of users demands, really kicked the discussion into high gear.

Ameritrade

I was in Omaha Nebraska in the 1990s. Omaha might not have much of a silicon reputation, but due to its central proximity and favorable demographics, it was an early hub for military, communications, and technology providers. My company was Ameritrade even though it was called TransTerra at the time. Our technology team was part of the greater Omaha tech community. We knew each other, met regularly to discuss issues and share a beer and traveled to the same conferences. You can always spot a traveler from Nebraska because invariably they will be wearing red or have the state name emblazoned across their chest. It helps when they get lost.

 As TransTerra changed its name to Ameritrade and its number of clients grew from thousands to millions, we were under unprecedented pressure to revamp the way we built software. At the time Amazon first bragged about $1 million days, we were already seeing $100 million days. Our development cycles were built around exploding demand, for which our capacity increasing releases were regularly inadequate. And every day we were learning how better to present our interfaces. Clearly, long, waterfall development cycles were not going to work anymore.

In the spring of 1998, following the crush of a few 80-hour/week development cycles, we put a stop to the treadmill and took a step backward. For nearly three weeks, the development team and I locked the doors, sat together, and wrote what was to be Ameritrade’s new software development process. We called it the Cooperative Software Design Process.

I wish I still had a copy of that original document, but it is long gone. What I do have is a PowerPoint simplification, dated a year later (1999), that was presented to executives and new management as part of an initiative I worked on with my buddy, Ronny Gal from Boston Consulting Group (BCG). It is interesting to review and note how many similarities there are to what we now all know as Agile.

I have attached one particularly interesting slide from that deck. Much of it will feel familiar.

• Cooperative acknowledges that the stakeholders were part of the process.
• Concurrent iterations allowed us to deliver features more quickly.
• The overlapping snail-shell arrow that has come to define Agile diagrams
• That spinning idea generator up front was our version of ongoing backlog tasks
• The little note in the bottom of the call-out box “smaller is better”

We missed a lot of important Agile components too. We didn’t think of time boxing, completed software instead of status reports, or daily stand-ups, but those things probably weren’t appropriate to Ameritrade at the time. We were creating a process that allowed our business units – and subsequently the end-users – to understand that they were in control of what we were doing. In retrospect, it was quite appropriate.

The emergence of the internet changed a lot of things in the mid-90s. Companies that didn’t embrace it went away and those that did were forced to re-evaluate the way they did business. Few companies were as shaken and shaped as much as Ameritrade. Every element of the company was put into flux – but nowhere greater than what became the internet development team. We were pioneers out of necessity and lucky that the pre-Agile discussion was one of which we could be a part. These concepts helped our team progress to maturity and paved the road for Ameritrade’s growth and eventual position as one of the largest brokerages in the country.

Additional posts in this series:

• Agile Without a Learning Curve
• Story Points, Agile Estimating, and Today’s Puzzle
• Better Estimating through Fibonacci
• Winning-over Executives with Agile
• Selling Agile, and The Cost of Uncertainty (coming soon)
• Agile and Waterfall: Comparing Unknowns (coming soon)

Perspective.

The S&P has been rocked over the last week with value off nearly 20% as of this morning. But how far has this put the market back? The answer may surprise you.

August 26th last year.

That’s it. We have only given up the gains of the last six months. How much better or worse off were you at the end of August? I’m guessing that your answer is “pretty much the same.” Keep that in mind.

The Corona Virus is very dangerous, but not because dozens of people will die from it. Thousands of people die from the regular old flu each year. The danger is that fear of the Corona Virus will make people stay home from work, provide an excuse to skip that conference they kind of didn’t want to go to anyway, postpone starting a new deal, etc. All these seemingly one-off, innocuous, changes in behavior will add up until people start losing their jobs, their retirement savings, and their homes.

So if you want to protect yourself and your community from the real dangers of the Corona Virus, do your job, pursue opportunities, walk to Starbucks – do everything exactly like you were doing last August.

#coronavirus #markets #perspective #fear #flu 

The harder you work, the luckier you get!

Click for more info

Today marks the drop of Joe Ricketts’ memoir, The Harder You Work, The Luckier You Get, a book to which I contributed and within which I am portrayed.

Joe Ricketts is the founder of Ameritrade, and he was my boss. I was initially hired to run marketing but was quickly moved to the more historically interesting job of leading the company to the Internet (with a capital I, because back then it was spelled that way). During the creation of this book, I was interviewed several times and it’s hard to remember everything I said, but I do think the following story will be new.

In the fall of 1995, we launched the world’s first internet trading site under the brand, Aufhauser. Aufhauser was a scrappy New York based brokerage which we had recently purchased – I think largely to provide us some NY street cred which as Omaha “bumpkins”, we were in desperate need. Aufhauser had been uniquely using the internet as a platform for messaging between clients and brokers.

Understand that at this time, no one had ever traded stocks on the internet. In fact, No one had ever paid a bill on the internet, transferred money on the internet, or even viewed a statement on the internet. We were the absolute first financial services company to have a functioning website! We may have been the first to have any website, but I am not certain of that.

From a technical perspective, it wasn’t that difficult. We already had a call-and-response system (an API) created for our touch-tone phone application so we could get the information to the client’s web page. The real challenge was navigating the unexpected objections of just about everyone!

One of my favorite brouhahas from the period involved the exchanges (The New York Stock Exchange and NASDAQ), the regulators, and our compliance team. They all hated me, and I like to think Arthur Levitt, Chairman of the SEC at the time, may have even known my name (but he probably did not). The issue, which has been thoroughly eliminated since, was real-time verses delayed stock quotes.

Randolph and Mortimer Duke. Old-timey Brokers.

You see, the exchanges did not want regular-guy investors to have access to real-time stock quotes. Old-timey stockbrokers (think: Randolph and Mortimer Duke, left) were big clients of the exchanges and access to real-time quotes was one of the reasons people had brokers. Every time that phone rang, the broker had a chance to push another transaction and trade commissions were hundreds or even thousands of dollars per trade. As a result, financial service companies who wanted to share stock prices electronically did so by delaying the quotes by 20 minutes.

But the regulators – the people from the executive branch of the government who enforce laws – required that every trade be preceded by the presentation of a real-time quote. Even if an investor wanted to buy a stock and hold it for 20 years, he had to see the actual price at the time of purchase.

Previous electronic systems such as Ameritrade’s touch-tone trading and clunky Accutrade for Windows had located a compromise wherein real-time prices would be delivered at trade-time and delayed prices would be used everywhere else. This was the model we were following when we launched. Business was slow at first, but within a few months people started to take notice, and I got a call from compliance.

Um, yeah…

I don’t remember who worked in compliance or who called me, but over the years I have inserted Bill Lumbergh into my recounting of the story. “Um, yeah”, drawing out that second word as long as possible, “we are going to need you to stop using real-time quotes on the internet.”

Compliance was the organization in our company – any company – that ensures that laws are being followed down to the letter but also that contracts are being adhered to. They watched our every move and scrutinized every application we built. The internet was untested territory and, although I am speculating, our recent success had been noted by brokers who were pressuring the exchanges to keep professional tools out of the hands of retail investors. The exchanges were very clear that this violation put our service with them in jeopardy. In no uncertain terms: to continue would risk our access to real-time quotes altogether and threatened our ability to stay in business.

Adhering to their request required choosing between two untenable options. We could provide delayed quotes at trade time – and be in violation of the law, or we could stop allowing trades over the internet all together. I thought hard about this before going to Joe Ricketts with my thoughts. Joe and I had a great relationship at the time. I had shown him I was capable, I had made a positive impact, and he gave me more than enough rope to hang myself and the whole company.

I returned to my team with the news. “Fuck it, we are moving forward as is.” I expect that, at the same time, Joe was on the phone warning compliance to buckle up because the next week was a bull ride worthy of a rodeo. Compliance was fighting with exchanges, exchanges were fighting with regulators, and regulators were trying to figure out how they had gotten stuck in the middle of this. I took calls from all sides, received an earful, and was called an upstart (maybe more than once). But at my core I knew that efficiency always prevails over the objections of those profiting from that efficiency. Our business depended on exactly one outcome, and I was confident it would come.

And it did. The law won out, and the exchanges agreed to allow real-time quotes in certain situations and in return for a hefty sum every time one was presented.

I remember a year following this event, Amazon announced that for the first time, they had surpassed $1 million dollars in a single day. No one called us for that story, but we had been doing 100 times that for months. According to a recent story on NBC, TD Ameritrade now processes nearly 1 million trades (and an estimated total value of $1 billion) per day.

This story started off as a classical example of the exchanges’ channel conflict – one company profiting from two clients who had competing business models. In retrospect, the resolution was the moment when the new disrupted the old, the tipping point was reached, and the paradigm shifted. When that happened, every obstacle to internet trading had been eliminated, the industry was allowed to rush forward, and it did. I am proud to have been there.

Yup, I’m entitled.

I am a white male who was raised in a middle-class subdivision and a nice house. We had a sledding hill in our front yard with a wide oak tree at the bottom that – as legend has it – was standing there when Ulysses S. Grant traveled the Stagecoach Trail on his way to Galena in the 1860s. The town was Rockford Illinois, a place where no one visits, and no one leaves. We had a train station there once, but it closed. Then we lost our bus station too. Rockford in the seventies was a town where residents grew up thinking that the big city – even one as close as Chicago – wasn’t for us. Where people thought airplanes were for fancier types, and international travel was, well, not even invited into our imagination.

I was entitled to be raised by a single mother. My father had never been one long for employment, and so when he left, my mother was left with no prospects, no alimony, and no child support. Still, she was entitled to the “American Dream” and she vowed to keep that house. It was the foundation of what was left of our small family. Towards that goal she worked multiple jobs while going to school in pursuit of a teaching certificate.

My mother and I. The early days.

I was entitled to have a mother who turned out to be a great public-school teacher. She was loved by her students and her parents. Yet, every fall she suffered through strikes or pink slips. Once at the end of a RPS strike, she inadvertently crossed a picket line to get her classroom ready for her returning students. That afternoon she found her tires slashed in the school parking-lot. The cruelties and challenges she suffered on my behalf are almost too much to consider.

In junior high school I was entitled to receive free lunches from taxpayers. Free-lunch kids had a special line that snaked through the lunchroom at the busiest time of the day. Those better off heckled from their seats and threw uneaten food at us – alms that not even the poor wanted. Cheers went up for face shots and extra points were given for making one of us cry. I stopped eating lunches and was entitled to have a school library where I could pass that 45 minutes for the next two years.

When I was in high school, I was entitled to become a hoodlum like my peers or get a job. My mother helped me with that decision. Now, this was Rockford Illinois, the most depressed city in the country. Minimum wage was $3.35 but with unemployment over 20%, minimum wage was a king’s salary. I took a job washing dishes for $2 an hour working weekend nights from 8:00pm until 4:00am. I was 14. I would go home at the end of the shift with $16-cash in my pocket. On school nights I could go home at midnight.

I am grateful to have been entitled to leave Rockford – alive. My first friend to die was my childhood best friend, Paul Ogilvy, who died of cancer at age 21. Jim Roberts who lived across the street from him followed soon after with a shotgun in his mouth.  My dear friend Debby Warden was a drunk driving casualty as was Renee Ring and Glen Nichols.  There were a couple others too. Oh, and we should not forget poor Tammy Tracy, sister to my first-grade bestie, Darren. Her teenage body was found in a cornfield. All this before I was 21.

I was accepted to the University of Chicago where I was entitled to get my ass kicked and make the best friends a fella can make. My mother couldn’t pay for it, so I got through by “beg, borrow, or steal” – which really means borrowing and working hard. School was difficult, and I joked, I was fired from more restaurants than my classmates had eaten in. It took me an extra year, but I made it through.

After college. I was entitled to find a job, quit, and find a better one. Then I was fired from that job and found a better one anyways. But then, I quit that one and finally found an opportunity in which I believed. I was offered the opportunity to invest, and I was entitled to risk everything I had (and everything I could borrow). I took a speculator leap knowing that if it failed, that burden was no one’s but mine.

But it didn’t fail. And with financial success came a generous life with my wife, my family, and my community. I was entitled to enter semi-retirement, get involved with charities, help in a meaningful way, and make gifts larger than I ever would have thought possible. I take great pride in knowing that I have made a positive difference in the people’s lives.

As my children aged and needed me less, I found myself desiring to return to the corporate world. I missed the camaraderie and shared goals of working as part of a team. But finding a job did not come easily, and I readily saw how dispassionate hiring managers can be. As a male in my late 40s who had not worked in more than a decade, I suffered intentional bias, unintentional bias, ageism, and sexism – all the while reminding myself that every obstacle was surmountable. After many years of learning how to get around those people, I finally landed a great job where I am using all my entitlement to make a positive impact on culture, efficiency, and revenue. It is from there that I write this post today.

Like many who succeed, I have been entitled my whole life. I have been entitled keep a positive attitude. I have been entitled to show compassion learned from hardship. And most importantly I have been entitled to believe we are entitled to something better than the lot we were given.

So yup, I’m entitled. And even if I’m not, that’s my story and I’m sticking to it.

Truman’s Cleans windows and Reduces Environmental Guilt (but not much else yet)

Also: The Simpsons!

I really love this concept but question its potential without some toothy legislation to support it. Truman’s sends cleaning supplies via Fedex or UPS in a cardboard box which you refill with concentrates that they also send you – via similar albeit smaller chipping containers. I heard the product described as “only slightly more expensive than the better cleaning products you get in the store.” I will add that they are also significantly less convenient.

If the question is feeling good about our personal footprint, these green (ish) but inconvenient products may allow us, affluent societally-conscious city-dwellers, to do something and send the right message to our children, but most Americans cannot afford to pay many times more than dollar-store prices, and jump through a bunch of hoops, to attain one-percenter benefits.

On the other hand, if the question is reducing the amount of waste society creates, the right answer is to support reusability with meaningful garbage collection fees calculated by usage – in other words, charge people for what they throw away. This would require an entirely new model for waste management. Garbage cans or trucks might need scales and geometric volume scanners for calculating each house’s waste. If you throw away a lot of stuff, you are going to pay a lot of money. If you reuse and repurpose everything (don’t get me started on recycling), you could pay close to nothing. Sounds like a fun home-ec game to play with the family, and it offers real cash prizes!

Of course there are the political obstacles. The exact same politicians who would hop all over the green elements of this concept would oppose its regressive taxation appearance. Regressive taxation is one that hurts poor people and is insignificant to rich people. But that too is manageable if collection rates vary by neighborhoods with lower rates in poor neighborhoods and exorbitant rates in rich neighborhoods (similar to property taxes). The program only works if everyone feels it when they don’t comply, so it would need to feel relatively expensive to everyone across the spectrum.

I am a firm believer that government should stay out of the way of self-interest. But where government is effective and needed is in preventing people from pursuing self-interest that harms others (that’s why we have police and courts for example). I think garbage creation – as necessary as it is – can fit this category. And who knew there were so many great Simpson’s GIFs about garbage!

Government Dysfunction: The Profitable Goal of One Candidate in Cook County

A stumper just came to my door from an organization called Working America. He informed me that Working America is funded by the AFL-CIO and does not support any candidates. In spite of this, it became apparent that he was here to offer reasons to vote for Bridget Degnen over John Fritchey in the race for Commissioner of Cook County. I asked him, why his organization would prefer one over another – especially given that they do not “support candidates”.

Bridget Degnen has some very creative ideas for raising revenue, he explained. She wants to create a new revenue generating office for expediting city services for a fee. Businesses regularly seek licenses and other government assistance and often find themselves waiting for weeks or even months for their requests to be fulfilled.

My friendly stumper told me that Miss Degnen’s new office would charge businesses, say, $300 to get those services and licenses in a couple days. That revenue could then go toward additional government services, higher government wages, or pensions. You know how you can get a passport in eight weeks or pay 500 bucks and get it tomorrow? Yeah, like that! Good idea?

In fact, it’s a terrible idea and suggests that Ms. Degnen is seeking to be the problem. It is well understood that Government in Cook County is inefficient and common sense suggests that the goal of local politicians is to improve it. Yet, Ms. Degnen doesn’t want to eliminate the problem, she wants to exploit it! By favoring those willing to pay more for efficiency, and building a costly infrastructure to support them, her plan introduces additional friction – and costs – into government, while her promise of future revenue insures that those not able to cough-up the additional dough will continue to wait longer and longer.

The right objective of the Commissioner is to reduce the friction between businesses and the County. Improved efficiency lowers the cost of government. Saved funds can be directed at pensions or reducing our already ridiculously high taxes. But more importantly, when government makes it easier for companies to do business they also make it easier for businesses to create jobs.

Ms. Degnen’s plan increases the cost of government, decreases the incentive to improve, and increases the cost of doing business with the county, hurts job creation, and is just another tax on already overly taxed constituents. She fails to understand that the job of Commissioner is to improve operations, not blackmail the people and companies in Cook County who are all equally entitled to its services.

I explained this to the friendly fellow standing at my door who listened intently as I had to him. “Well,” he said, “you seem to know more about this than I do. Can I have your email address for our mailing list?” I declined and wished him a good day.

#JohnFritchey #BridgetDegnen #CommonsenseGovernment #acommonsenseconservative #cookcounty

Transgenders, the military, and the folly of the liberal intellectuals

Much has been said today about President Trump’s ban on transgenders in the military. I have been listening to NPR and it seems to be the only story worthy of coverage.  I want to call in and suggest that, in their own best interest, they just stop.

In the six months leading up to the last election, it seemed that the top story that liberal politicians or the left-leaning media wanted to cover was which bathroom transgenders can use. While the Republicans were acknowledging the loss of opportunity, shrinking family buying power, and fears of national security, the Democrats were myopically focused on bathrooms for less than 0.3% of the population.

Before I continue let me say that I believe that transgenders deserve the exact same rights as all Americans, and if they are competent and wish to serve their country, they should be allowed to do so. But my point isn’t one of rights, but rather how political parties accomplish their objectives.

The simple fact is that issues around transgenders hurt Democrats. The press has been quick to point out that the amount the military spends on healthcare for transgenders – Trump’s reason for banning them – is really small. Yet they fail to acknowledge that part of the reason it is small is that there just aren’t many of them in the military. In fact, there aren’t many of them anywhere. This group isn’t getting anyone elected. Meanwhile, the really really big group that the Democratic party counts upon, middle-America union workers, lower-middle-class families, and veterans, simply isn’t supportive of this issue.

Dr. Jennifer Conti, a surgeon and expert on transgender issues discussed the ban on NPR’s The Takeaway today.

But the intellectual liberal protectors of the Democrat party see this as an attack on their interpretation of the Democrat ideal. Equal rights are not negotiable, and when given the opportunity to stand self-righteous, they will rise to the call even if it puts them at odds with the majority of their party.

Trump didn’t put a ban on transgenders in the military because he thinks it makes the military better. He did it because he knows that it further fractures the Democrat party and distracts American voters away from the things they care about – like the President’s own failed promises on health care and immigration.

It’s bait, people. Don’t be stupid.

Is the NEA really necessary?

The National Endowment for the Arts works for a few institutions and artists, but the amount of ill-will it creates offsets the good. The art world – and country – would be better off without it.

The NEA has lost its relevance. There was a time when the art world revolved around Europe. The creators of The NEA sought to ensure that the post-war America was as competitive in the arts as we had proven to be in manufacturing and commerce. Within a generation, they had accomplished their mission. By the mid-1980s, New York had overtaken Paris as the center of the art world. Today, the US has more galleries, art professionals, and museums than any other nation. We also have the most artists. In fact, there are too many artists and too much art being made.

Yikes, what? The art world hates to see this written but knows it to be true. Regularly, conversations between members of the community often try to quantify the problem. It seems that for every institutionally recognized artist, there are ten unheralded artists making a living through gallery sales. For every shown artist, there are another ten selling out of their garage. And for every one of those, there are another ten that will never sell any work at all. That is a lot – and an almost uncalculatable number – of artists working in the US.

The NEA isn’t needed. The private sector is very good – even better than the public sector – at supporting the arts. Every city has their benefactors and it is because of them (not the government) that we have public art and museums. In most cities, every new building must allocate a percentage of building costs to public art. And many organizations (US Artists, Bemis, Artadia to name a few) have demonstrated that they are better at giving out NEA styled grants than the government was. Of course, the community wants government money and more of it, but what community doesn’t want more free stuff? The arts in the US are thriving and would continue to do well without the coins tossed at it by the NEA.

Anish Kapoor’s Cloud Gate known unofficially as the Bean. A $23 million dollar sculpture funded completely through private donations.

Accessible – easy to grasp and like – art doesn’t need the NEA to fund it. There are lots of ways to get this made and displayed. Benefactors put it up in parks, buildings hang it in their lobbies, and decorative galleries and design shops sell it out of their storefronts.

Really good art is inaccessible to a vast majority of the population and shouldn’t be paid for with tax dollars. It is often head-scratching and not pretty to look at. People may not care, or don’t want to invest the time and understanding. In some cases, they may even find it offensive. These folks would rather see that money go to something they care about – even if it’s only enough to fix a few potholes. Some argue, that this is precisely the reason the government should fund the arts, but again, there are plenty of better sources of financing available and far too much art already.

Too much of what passes for good art today will not be remembered by history. Popular artists often make art that appeals to their contemporaries but lacks political balance. Most work in a political echo chamber where their fellow artists, curators, gallerists, and collectors all have very similar views. As a result, preaching to the choir – and doing so with hyperbole! – tends to get an artist noticed and may be required for public grants.

Yet, as I have argued for years, this does not make for good art! Good art – like good thought – recognizes that solutions are hard, people’s opinions are diverse (even those of educated ones), and that gray is more interesting than black or white.

The NEA provides little benefit relative to the other sources of financing available to the art community. Meanwhile, it creates significantly more negative controversy than other possible uses for the same funds. To repeat my favorite Penn Jillette quote,

You get no moral credit for forcing other people to do what you think is right. There is great joy in helping people, but no joy in [being forced to do it].

I put my money where my mouth is. I care about art and I support it. I buy it, I view it, and I give money to organizations that allow good artists to make more of it. I do not feel I have a right to force regular taxpayers to share in my passion.

[Featured Image. Honey Grid #2 by Karen Finley, an American artist who notoriously directed her 1980s NEA grant toward a shocking performance piece. This author was fortunate to see her at Metro (then Cabaret Metro) in 1991.]