Friday, February 23, 2018

The National Rifle Association, Wayne LaPierre and America's Elite

On February 22, 2018 at the Conservative Political Action Conference in National Harbor, Maryland, Wayne LaPierre, current CEO and Executive Vice President of the National Rifle Association, made the following comment regarding the gun control debate that has once again flared up after the Florida school shooting that left 17 dead ( 1 minute 58 second mark):

"They hate the NRA.  They hate the Second Amendment.  They hate individual freedom.  In the rush of calls for more government, they've revealed their true selves.   The elites don't care not one wit about America's school system and school children.   If they truly cared, what they would do is they would protect them.  For them, it's not a safety issue, it's a political issue." (my bold)

Here is his speech in its entirety:


In this posting, I'd like to focus on the highlighted section of Mr. LaPierre's speech in the excerpt that I have provided in the second paragraph, where he refers to the elites, a clear tactic to divide the United States into two contrasting parts, the haves and have nots as you will.  

While Mr. LaPierre and his viewpoints do make the news cycle on a fairly regular basis, what is rarely discussed, is how much he is paid to proffer his opinions by the National Rifle Association.  Given that he refers to "the elites", let's just look at some interesting data that will help us put Mr. Lapierre and his disgust with "the elites" into perspective.  From the United States Census Bureau, we find the following information on the median household income in the U.S.:

In 2016, the median income for American households was $57,617 but, as you can see, the median ranges widely wider as shown on this table:

In fact, median household income in 2016 ranged from a low of $44,344 in Arkansas to a high of $78,945 in Maryland

Let's look at the average hourly earnings of all private sector employees in the United States and how they have grown over the past decade:

On average, at the end of 2015, the average private sector employee was earning $25.95 per hour.

Now, thanks to the laws that apply to organizations that are exempt from paying income tax, we can get some inside information on the finances of these non-profits from their annual Form 990 filings.  In the case of the National Rifle Association, the entire filing for the 2015 tax year can be found here. Let's look at the first page of the NRA's 990:

At the bottom of this page, you will note that, on average, Wayne Lapierre spends 60 hours per week on NRA business:

Now, let's look at Mr. Lapierre's compensation for 2015 along with the compensation for the rest of the NRA's executive team:

In 2015, as the NRA's Chief Executive Officer and Executive Vice President, Mr. LaPierre's base compensation was $1,090,515.  In addition, he earned $15,000 in bonuses and incentive compensation, $3,810,734 in other reportable compensation, $19,605 in retirement and deferred compensation and $40,131 in nontaxable benefits for a grand total of $5,110,985.  This is up substantially from 2014 as shown here:

...and 2013 as shown here:

As I noted, according to the NRA's 990 filing, Mr. LaPierre worked an average of 60 hours per week on "company" business.  In 2015, his average hourly earnings worked out to $349.52 per hour if we use his base salary and $1638.14 per hour if we use his total compensation package.

Given that Mr. LaPierre's total compensation for 2015 was 89 times that of a median American family and that his hourly earnings were 63 times that of an average private sector worker, it begs the question, who are really the "elite" in Wayne LaPierre's world?  If it's not someone who is making seven figures in a year, then I don't know who it could possibly be. 

Wednesday, February 21, 2018

Playing the Election Meddling Blame Game

recent interview on Fox News with Laura Ingraham and former CIA director James Woolsey (1993 to 1995) provides us with an interesting glimpse into the mindset that seems to be pervasive in Washington today.

Here is the interview for your perusal:

Let's look in detail at some of the back and forth of the interview:

Ingraham:  It may not have changed the outcome of the election but the Russians were able to pull off a wide-ranging, aggressive and brazen attempt to interfere in the campaign.  So, can our intelligence agencies stop them from doing this again....This indictment today was wild (the Mueller iIndictment).  I mean they were  organizing all sorts of things.  They were working for that Jill Stein, trying to help her.  They were anti-Trump and pro-Trump on one day after the election.  What's that all about?

Woolsey: They want to be a force and they want to disrupt things.  They call their big overall program "Dezinformatsiya"/disinformation and they've been doing this since the 1920s, 1930s.  What's new is that they do it with cyber.  But they didn't have much luck disrupting American elections back in the 1930s or 1940s but they've been doing that to other countries all along.  Ion Mihai Pacepa, the head of Romanian intelligence who defected in '79, said there are more Russians involved in disinformation than there are in their armed forces.  

Now, let's look at how Ms. Ingraham drags the other potential superpower into the mix since having just a single target like Russia isn't enough:

Ingraham:  How about the Chinese, Jim?  What do they do to try to disrupt things?  They are disrupting a lot of things around the world for us, I know that.

Woolsey:  So far, not the same way the Russians do.  But the Russians photoshopped photographs of the Pope to make him look like he's saluting to a German Nazi officer...they just...

Ingraham:  You don't think the Chinese are involved in this type of activity?  I mean they have an economy that dwarfs Russia's, their standing army of 2.3 million people, they are militarizing space, stealing our technology.  I mean I think it's important that we stop this Russian stuff but every time someone says "Russia, Russia, Russia" I say "China, China, China".

Woolsey: Well, you should.  That's right.  They are strategically a lot smarter.  The Russians  basically are like the old fellow lived next the Lincolns and their farm when he was a little boy, Lincoln said the old boy use to say " I don't need much land, just what adjoins mine".  That's Russia.  I mean I got some Georgia, let's take some Ukraine and that's pretty much (unintelligible)...

Ingraham:  They have an economy that's smaller than the size of France.  Come on, compared to China, like China's eating our lunch on so many fronts.

Woolsey:  (unintelligible) gives us some leverage if we can work to get the price of oil down in the 30s well, 40s even, we will create a very, very unhappy Putin.

Ingraham:  But we don't want to push Russia to China though, that's the last thing you want is a Russo - Sino alliance.

Woolsey: We just want to weaken them because we can deal with them a lot better if they are weak.  I mean I was negotiating the conventional forces treaty in Europe in '89 when the Berlin wall went down and you've never seen such nice Russians.  Let me tell you, all you've got to do is destroy their strategy and they are sweethearts.

Let's move ahead to the 3 minute 45 second mark:  

When asked by Ingraham how we can prevent Russian interference in future elections, here's what Woolsey had to say:

"I think what we really want is to get them to start pulling in their horns and coming back out of Georgia, back out of Ukraine.  We need to turn them around because they are taking over even with their military and other inadequacies.  They are taking over a lot more of Eurasia than they should and it gives them heart as they take more and more under their wing."

Here's the key part of the entire exchange, found at the 4 minute and 35 second mark:

Ingraham:  Have we ever tried to meddle in other country's elections?

Woolsey:  Oh, probably.  But, it was for the good of the system in order to avoid the Communists from taking over.  For example, in Europe, in '47, '48, '49 the Greeks and the Italians we (unintelligible)....

Ingraham: We don't do that now though, we don't mess around in other people's elections Jim?

Woolsey:  Well, num, num, num, num....only for a very good cause.  Only for a very good cause in the interest of democracy.

That's democracy, Washington-style.  Exactly what every nation in the world should have and should want.

And it all ends with both interviewer and interviewee laughing.

In closing, let's look at some data on electoral interference by the two global superpowers from Dove Levin's excellent paper entitled "Partisan electoral interventions by the great powers".  Overall, between January 1, 1946 and December 31, 2000, there were 117 partisan electoral interventions made by the United States and the Soviet Union/Russia with 81 or 69 percent being conducted by the United States and 36 or 31 percent being conducted by the Soviet Union/Russia.  This means that, between 1946 and 2000, the United States and the Soviet Union/Russia politically interfered in one of every nine global national-level elections.

Num, num, num indeed.

Tuesday, February 20, 2018

United States Housing Affordability - Demographia's 2018 Edition

While news about the U.S. housing market has been relegated to the back pages of the business section of American online and print news services, there are still some interesting developments that are worth further examination, particularly in some markets.  While housing prices have recovered from the catastrophically low levels that were experienced during the Great Recession, some markets are showing signs of, once again, being severely overvalued, an issue that first occurred in the mid-2000s. 

As I have done for the past few years, this posting will take a look at the most recent version of Demographia's International Housing Affordability Survey for 2018, Demographia's 14th annual report on the state of the housing market in 10 key nations.  Demographia looks at housing markets in Australia, Canada, China (Hong Kong), Ireland, Japan, New Zealand, Singapore, the United Kingdom and the United States which, between them, have 92 major metropolitan markets with populations in excess of one million people.  Among the 92 major markets are five megacities with a population of more than ten million people; Tokyo-Yokohama, New York, Osaka-Kobe-Kyoto, Los Angeles and London.  Rather than just looking at raw housing prices, Demographia uses a rather unique measure to determine the affordability of housing, a key measure since declining affordability was the factor that set up the collapse of the housing market in the United States.  Demographia uses a unique measure of affordability called the Median Multiple which is defined as follows:

Median Multiple  =    Median House Price in a Given Market
                                 Median Household Income in that Market

The income used to assess housing affordability is gross, pre-tax, annual median household income.

Demographia goes on to use the Median Multiple to define housing affordability as follows:

Affordable - Median Multiple of 3.0 and less
Moderately Unaffordable - Median Multiple from 3.1 to 4.0
Seriously Unaffordable - Median Multiple from 4.1 to 5.0
Severely Unaffordable - Median Multiple 5.1 and more

Historically speaking, when looking back at decades of records, housing markets are considered to be affordable (and sustainable) when household income is roughly one-third of housing prices.

Here is a table showing housing affordability by nation for all 293 housing markets in the study:

As you can see, when all domestic real estate markets are taken into consideration, the United States had an overall Median Multiple of 3.7 which puts it in the moderately unaffordable category.  In the major housing markets, the Median Multiple was 3.8, again, in the moderately unaffordable category.   Only 49 or 28 percent of the 175 U.S. markets were considered affordable with 67 or 38 percent being classified as either seriously or severely unaffordable.  Despite that, the U.S. housing market still looks quite well valued compared to nations like Australia and New Zealand.

Here is a breakdown of the ten largest housing markets in the United States showing how affordability has deteriorated since the end of the Great Recession:

With that background, let's now look at the ten most affordable housing markets in the United States:

As you can see, many of these markets are located in the former industrial heartland of America.  It is interesting to note that many of America's most affordable housing markets have seen relatively little decline in house price affordability since the Great Recession, largely because the economies in these areas have remained stagnant over the past decade.

Here is a table showing the ten least affordable housing markets in the United States:

While the Median Multiple for eight of the least affordable markets has declined somewhat, the Median Multiples for all of the markets is still well in excess of the 5.1 hurdle that defines "severely unaffordable.  In fact, median housing prices have increased in all but one market (Santa Barbara) and, in the case of San Jose, median housing prices have increased by 16.5 percent on a year-over-year basis. 

The authors of the study note that California has the most "ominous housing market trends in the United States".  A great deal of this is due to decades of highly restrictive land use and environmental regulations that have distorted the state's housing market.  Since 2010, the Median Multiples in the six largest housing markets in California have increased at 7.6 times the rate of major U.S. markets where there are less regulated land use and environmental policies.  Not only are the major California markets suffering from severely unaffordable housing, even the smaller markets are experiencing extremely bleak housing affordability.

One interesting point to note is the median price and household income for both data sets.  In the case of the most affordable housing markets, the average median price is $124,000 and average median household income of $54,060.  In the case of the least affordable housing markets, the average median price is $736,830 and average median household income is $79,620.  When comparing the least and most affordable markets we find the following:

Average median housing prices - 494.2 percent higher

Average median household income - 47.3 percent higher 

I would suggest that this scenario is simply not sustainable, a fact that was learned by tens of millions of U.S. households in the later part of the first decade of the new millennium.

While the United States housing market is, in general, showing that it has recovered from the depths of the Great Recession disaster zone, some of the largest markets are showing the same type of non-sustainable price gains that appeared a decade and a half ago, largely because of this:

Thanks to the Federal Reserve's unfettered and ill-advised beneficence, parts of the United States housing market are once again living in a dream world, a dream that could come crashing down yet again.