Tidbits Political Quotations
To Accompany the September 12, 2019 edition of Tidbits
Bob Jensen at
Trinity University

My Latest Web Document
Over 400 Examples of Critical Thinking and Illustrations of How to Mislead With Statistics --

Animated  Visualization of the United States’ Exploding Population Growth Over 200 Years (1790 – 2010) ---
A Visualization of the United States’ Exploding Population Growth Over 200 Years (1790 – 2010)

USA Debt Clock --- http://www.usdebtclock.org/
The published debt is a lie
Here's the real booked debt ---

In September 2017 the USA National Debt exceeded $22 trillion for the first time ---

Human Population Over Time on Earth ---


While a move is underway to destroy the American Dream of rags to riches (by taxing away the riches) the Chinese dream is on the rise.
The Chinese Dream
How a Chinese billionaire went from making $16 a month in a factory to being one of the world's richest self-made women with an $8.3 billion real-estate empire


Top 50 Billionaires in China ---

Jensen Comment
The question for students to debate is why a supposed communist country allows so many billionaires to rise up from poverty.
That's supposed to happen in the USA where a child growing up in deep poverty (think Oprah Winfrey or Howard Shultz) became a multi-billionaires.
But is it also supposed to happen under communism? If so, why?


One reason is that many billionaires can afford to pour lots of money into high risk ventures. When's the last time you heard about a high risk (think Silicon Valley) venture in Europe?


Wikiquote from Wikipedia --- https://www.wikiquote.org/


Gauss wrote Wolfgang Bolyai: "It is not knowledge, but the act of learning, not possession but the act of getting there, which grants the greatest enjoyment." ---


History will prove former President Donald Trump was correct about Mexico one day funding an impenetrable wall --- to keep out over 2 billion starving green immigrants seeking to enter Mexico from the north.
Bob Jensen


Some Fatherly Words of Wisdom from Jack Bogle, Founder of Vanguard Investments, to My Sons ---


Milton Friedman:  The Lesson of the Spoons ---
Chopsticks would be even better


The Young Left’s Anti-Capitalist Manifesto: Its goal is to remake our economic system — and the Democratic Party ---


I have a complaint about America today, and it is simple: we don’t love business enough ---
Tyler Cowen


"In Praise of Cheap Labor," by Paul Krugman, Slate, March 21, 1997 ---


Corruption in general has a deleterious effect on the readiness of economic agents to invest. In the long run, it leads to a paralysis of economic life. But very often it is not that economic agents themselves have had the bad experience of being cheated and ruined, they just know that in this country, or in this part of the economy, or this building scene, there is a high likelihood that you will get cheated and that free riders can get away with it. Here again, reputation is absolutely essential, which is why transparency is so important. Trust can only be engendered by transparency. It's no coincidence that the name of the most influential non-governmental organization dealing with corruption is Transparency International.
A Conversation with Karl Sigmund:  When Rule of Law is Not Working

Mortgage Backed Securities are like boxes of chocolates. Criminals on Wall Street and one particular U.S. Congressional Committee stole a few chocolates from the boxes and replaced them with turds. Their criminal buddies at Standard & Poors rated these boxes AAA Investment Grade chocolates. These boxes were then sold all over the world to investors. Eventually somebody bites into a turd and discovers the crime. Suddenly nobody trusts American chocolates anymore worldwide. Hank Paulson now wants the American taxpayers to buy up and hold all these boxes of turd-infested chocolates for $700 billion dollars until the market for turds returns to normal. Meanwhile, Hank's buddies, the Wall Street criminals who stole all the good chocolates are not being investigated, arrested, or indicted. Momma always said: '"Sniff the chocolates first Forrest." Things generally don't pass the smell test if they came from Wall Street or from Washington DC.
Forrest Gump as quoted at http://newsgroups.derkeiler.com/Archive/Rec/rec.sport.tennis/2008-10/msg02206.html

It is not that machines are going to replace chemists. It’s that the chemists who use machines will replace those that don’t ---
Derek Lowe

Gallup: Americans Say No. 1 Problem is 'Government,' No. 2 is 'Immigration' ---


"If you open the borders, my God, there's a lot of poverty in this world, and you're going to have people from all over the world. And I don't think that's something that we can do at this point."
Bernie Sanders


Great fleas have little fleas upon their backs to bite 'em, And little fleas have lesser fleas, and so on ad infinitum ---

Augustus De Morgan

Prior to 1980 what was unique about the year of his birth in 1871?



12 inspiring quotes from Martin Luther King Jr.---


21 outstanding Warren Buffet quotations ---
Also see


The Atlantic:  The Swiftly Closing Borders of Europe ---

Italian Minister tells NGO Italy doesn’t want migrants: “Our ports are closed!” ---

The enemy is fear
We think it's hate
But, it's fear



13 of the (alleged) most famous last words in history ---

21 of Michelle Obama's most inspiring quotes on work, success, and relationships ---


19 unforgettable quotes from legendary Marine Gen. Jim 'Mad Dog' Mattis, who quit as Trump's defense secretary ---


Here are the Ten Best Pieces of Advice from 2018 Commencement Speakers ---
Click Here

Sometimes the grass is greener on the other side because it's been fertilized with more bullshit.


The Lucretius Problem is a mental defect where we assume the worst case event that has happened is the worst case event that can happen ---


The worst form of inequality is to try to make unequal things equal.


The Economic Ignorance of Bernie Sanders ---


Bernie Sanders’ New Campaign Advisor David Sirota Once Touted Hugo Chavez’s ‘Economic Miracle’ in Venezuela ---


How many times have we heard ‘free tuition,’ ‘free health care,’ and free you-name-it? If a particular good or service is truly free, we can have as much of it as we want without the sacrifice of other goods or services. Take a ‘free’ library; is it really free? The answer is no. Had the library not been built, that $50 million could have purchased something else. That something else sacrificed is the cost of the library. While users of the library might pay a zero price, zero price and free are not one and the same. So when politicians talk about providing something free, ask them to identify the beneficent Santa Claus or tooth fairy.
Walter Williams


Every great cause begins as a movement, becomes a business, and eventually degenerates into a racket.
Eric Hoffer.


The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.
Winston Churchill


Shoot for the space in between, because that's where the real mystery lies.
Vera Rubin


Only those who will risk going too far can possibly find out how far one can go.
T.S. Eliot

There is a crack in everything, that’s how the light gets in.
Leonard Cohen

In honor of his centennial, the Top 10 Feynman quotations ---

Thomas Sowell (controversial conservative black economist) --- https://en.wikipedia.org/wiki/Thomas_Sowell
The 30 Best Thomas Sowell Quotes ---

Be brave enough to start a conversation that matters.
Margaret Wheatley
Even conversations that are not politically correct.

That government is best which governs the least, because its people discipline themselves.
Thomas Jefferson

Why, we grow rusty and you catch us at the very point of decadence --- by this time tomorrow we may have forgotten everything we ever knew. That's a thought isn't it? We'd be back to where we started --- improvising.
Tom Stoppard, Rosencrantz and Guildenstern are Dead (Act I)

It's hard to beat a person who never gives up.

Babe Ruth, Historic Home Run Hitter
What's sad is to witness what Syria has become because nobody gave up earlier.

And "because they're nonstate actors, it's hard for us to get the satisfaction of [Gen.] MacArthur and the [Japanese] Emperor [Hirohito] meeting and the war officially being over," Obama observed, referencing the end of World War II. 
President Barack Obama when asked if the USA of the future will be perpetually engaged in war.

We must be willing to get rid of the life we've planned, so as to have the life that is waiting for us. 
Joseph Campbell

If everyone is thinking alike, then somebody isn't thinking. 
George S. Patton

And many writers have imagined for themselves republics and principalities that have never been seen or known to exist in reality; for there is such a gap between how one lives and how one ought to live that anyone who abandons what is done for what ought to be done learns his ruin rather than his preservation: for a man who wishes to profess goodness at all times will come to ruin among so many who are not good.
Niccolo Machiavelli

If you don't know where you're going, you might not get there.
Yogi Berra

Happiness is like a butterfly: the more you chase it, the more it will elude you, but if you turn your attention to other things, it will come and sit softly on your shoulder.
Henry David Thoreau

Today, humanity fabricates 1,000 times more transistors annually than the entire world grows grains of wheat and rice combined  ---

I learned long ago never to wrestle with a pig. ... You get dirty and besides the pig likes it ---
George Bernard Shaw

You can get a lot farther with a smile and a gun than you can with just a smile.
Al Capone

From John F. Kennedy to Oprah and Steve Jobs, here are 20 of the best commencement speeches of all time ---

21 quotes from self-made billionaires that will change your outlook on money ---


The Best Advice from 2018's Celebrity Commencement Speakers ---


If the end brings me out all right, what is said against me won’t amount to anything. If the end brings me out wrong, ten angels swearing I was right would make no difference.
Lincoln on How to Handle Criticism ---



The Economist:  A new kind of left-wing doctrine is emerging. It is not the answer to capitalism’s problems ---


4Chan User Claims to Be Behind MSNBC’s Lawrence O’Donnell Hoax ---


How Your State Funds Welfare and Where it Goes ---


MIT:  How a US cyber attack on Iran helped stop attacks on oil tankers ---


Jensen Comment
I think the problem was not so much with Obama as with the major media's neglect in reporting this genocide and other genocides against Christians currently taking place around the world.  Similarly since slave trading is still taking place in Islamic nations like Israel the major media avoids reporting it while focusing on the historical slave trade.


David Byrne Launches Reasons to Be Cheerful, an Online Magazine Featuring Articles by Byrne, Brian Eno & More ---


How hard is it to limit airline carbon emissions? ---
Jensen Comment
It's much better to build more passenger train coverage. In this respect Europe is ahead of the USA. One risk, however, is that trains, especially in very rural areas, are subject to terrorist disruptions (think of blowing up bridges). I often wonder why ISIS does not have more imagination when it comes to disrupting entire economies relative to killing Christians.


THE GREAT CHRISTIAN GENOCIDE: Mosul Goes from 15,000 Christians to 40 ---


American Economic Review:  Using a 1994 law change, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants and landlords. Leveraging new data tracking individuals' migration, we find rent control limits renters' mobility by 20 percent and lowers displacement from San Francisco. Landlords treated by rent control reduce rental housing supplies by 15 percent by selling to owner-occupants and redeveloping buildings. Thus, while rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law. ---

Jensen Comment
In general price controls are a long-term disaster. Please send this link to West Coast legislators --- especially the conclusion about lost rental housing supply. And we know how tenants nurture, and care for their government-owned public housing funded by taxpayers.



There Are More Fires Burning in Africa Than Anywhere on Earth ----


Brad DeLong's Take on Joe Stiglitz's Theory of the Sources of Secular Stagnation ---


High School Girls Admitted to Making False Sexual Assault Accusations Against a Male Student Because They 'Just Don't Like Him' ---


Sorry Bernie, workers’ wages have lately been rising faster than their bosses’ wages ---

NYT:  Four Things That Are Not White Nationalism ---


Do biological factors drive homosexuality?

This will probably be a nature versus nurture controversy for years to come


The countries where economists exhibit the highest (economics) ideological bias are Ireland, Japan, Australia, and Scandinavia, where for Austria, Brazil, and Italy the ideological bias is smallest. South Africa, France, and Italy are most conformist to mainstream opinion ---

Jensen Comment
The first thing I would examine in terms limitations of the survey is that small samples within each nation may lead to misleading outcomes, especially since economists are so widely different even within a given nation. Keep in mind that economists are often educated outside their own nations such as when Japanese economists do their graduate studies in the USA and South Africans study in the United Kingdom. Keep in mind that Scandinavian countries are proudly capitalist while French academics are often socialist. My point is that the "ideologies" are often misconstrued by nation.


Google will pay big to settle a YouTube lawsuit. The tech giant has agreed to pay $170 million following allegations by the Federal Trade Commission and New York state that YouTube illegally collected user information from children to sell for targeted advertisements. ---


Kamala Harris Blatantly Lied When She Said She Had Sued Exxon=Mobile ---

Jensen Comment
Democrats love to make us think they will tax big companies to pay for climate change, medical care, free college, guaranteed annual income, etc. But they don't mention that big companies like Exxon-Mobile don't pay taxes. The taxes are passed on to customers --- like you and me. For example who pays for the huge tax levies on cigarette companies? Gasp! Those taxes are paid by people who smoke. Who will pay for the taxes levied on big oil companies? Gasp! It's the people who heat their homes with oil and gas plus those of us who by fuel for the 270 million cars in America. Lower income people will finally get the brunt of a corporate tax and court-fine increase ---


NYT:  A Recession Isn’t Inevitable: The Case for Economic Optimism ---

Some 2020 presidential candidates are so hoping for economic collapse


Pro-Sanctuary Maryland Officials Throw A Tantrum After State Becomes A Den Of Illegal Alien Rape ---


The Atlantic:  Tomorrow’s wars will be faster, more high-tech, and less human than ever before. Welcome to a new era of machine-driven warfare ---


An Unprecedented Cyberattack Hit US Power Utilities ---


Chicago reaps revenue bonanza with cloud computing tax ---


New report on the Financial State of Chicago finds that the city's financial condition worsened by $2 billion compared to the previous year ---


Fall River mayor Jasiel Correia was arrested on Friday by the FBI. He was accused of extorting legal marijuana vendors in exchange for his support ---


Washington Post Argues NRA Isn’t A ‘Terrorist Organization’---

The Economist:  Why America’s real-estate brokers are such a rip-off ---


The Current State of Sales Tax on Digital Products


Why Democrats Don't Like to Talk Trade
Soros calls Trump’s China stance his ‘greatest’ foreign policy achievement, warns on Huawei ---


Intellectual property and the trade deficit ---



Yahoo Finance:  Did the Obama administration commit the ‘biggest accounting fraud in history' with student loans? Experts weigh in ---

The Wall Street Journal’s editorial board (WSJ) recently suggested that the Obama administration pulled off “the biggest accounting fraud in history” with student loans when eliminating the role of private lenders in the federal student lending market.

Experts who spoke with Yahoo Finance acknowledged the issue with the general policy in hindsight, though they disagreed on who exactly is to blame.

In 2010, Democrats “nationalized the market to help pay for Obama Care,” WSJ asserted. “The Congressional Budget Office at the time forecast that eliminating private lenders would save taxpayers $58 billion over 10 years. This estimate was pure fantasy, and now we’re seeing how much.”

The WSJ op-ed also highlighted the rising number of severely delinquent student loans since then and blamed the Obama administration for expanding plans in 2012 for new borrowers “to reduce defaults, buy off millennial voters and disguise the cost of its student-loan takeover.”

The editorial board then added: “This may be the biggest accounting fraud in history.”


‘There’s no way around that’

WSJ argued that eliminating private lenders from the student loan market severely hurt Americans and that by using fair-market accounting, it becomes clear that student loans will actually cost taxpayers nearly $307 billion over the next 10 years.

Douglas Holtz-Eakin, former director of the Congressional Budget Office (CBO) during the George W. Bush administration and currently president of the center-right American Action Forum, agreed that the accounting discrepancy manifested because of the “technique” used by the CBO to evaluate the cost of these loan programs.

“A widely known deficiency of the Federal Credit and Reform Act is that it does not allow the CBO to incorporate [market risk] into assessments," Holtz-Eakin told Yahoo Finance. “So the loans, when they're evaluated are evaluated as safer than they truly are, and thus, the losses are smaller than they may truly be. And there's no way around that — the techniques force you to do that.”

He added that “that's why when you when they switched from the private loans to the government loans, it appeared to save money... that is misleading. I don't disagree, but it's not the CBO's fault — those are the rules.”

Sheila Bair, the chair of the U.S. Federal Deposit Insurance Corporation (FDIC) from 2006 to 2011, agreed that the WSJ was “right to call out the government” on the accounting issue and stressed that it is “a huge problem with federal budgeting and transparency generally.”

Income-based repayment plans were ‘poorly designed’

The WSJ argued that the key catalyst for the student debt crisis today — $1.48 trillion student loans outstanding, with 35% of the consumer loans in the “severely derogatory” category — was a result of the Obama administration’s policies regarding income-driven repayment (IDR) plans.

IDR plans allow borrowers to cap monthly student loan payments based on how much money they are making at a given time. As of September 2018, “almost half of the $898 billion in outstanding federal Direct Loans [were] being repaid by borrowers using IDR plans,” according to the Government Accountability Office.

Continued in article

The US is burying young people and the unborn under a mountain of government debt ---


Bob Jensen's threads on debt and entitlements ---

City Combined Taxpayer Burden Report 2019 ---

City Combined Taxpayer Burden Report 2019

May 14, 2019


Truth in Accounting has released a new report on the 10 largest U.S. cities. The City Combined Taxpayer Burden report analyzes the finances of each city, its county, state, and underlying government units.

This report was necessary because most cities do not include several underlying government units, such as school districts, transit agencies, housing authorities, etc., in their annual financial reports. New York City’s accounting practice is an exception. 

The City Combined Taxpayer Burden report takes into account these underlying government entities and provides residents and taxpayers in these cities with a more accurate and holistic view of their respective city’s finances. When the unfunded debt of these local government units is combined with both the municipal and state debt, city taxpayers are the hook for much more than they think.

The report also breaks down each government's debt to a per-Taxpayer Burden, which is each taxpayer's share of the government's bills after assets have been tapped. Here are the ten largest cities ranked from worst to best based on their Taxpayer Burden: 

·         Chicago’s combined Taxpayer Burden: -$119,110

·         New York City’s combined Taxpayer Burden: -$85,600

·         Los Angeles’ combined Taxpayer Burden: -$56,390

·         Philadelphia’s combined Taxpayer Burden: -$50,120

·         San Jose’s combined Taxpayer Burden: -$43,120

·         San Diego’s combined Taxpayer Burden: -$35,410

·         Dallas’ combined Taxpayer Burden: -$33,490

·         Houston’s combined Taxpayer Burden: -$22,940

·         San Antonio’s combined Taxpayer Burden: -$16,660

·         Phoenix’s combined Taxpayer Burden: -$13,290

Click on the city name to see its two-page report or view the full report here. This report was based on the latest available information for all of the government entities (FY 2017). 

Is this a good deal or a bad deal for PG&E?

From the CFO Journal's Morning Ledger on September 9, 2019

San Francisco offered $2.5 billion to acquire PG&E Corp.’s electrical lines serving the city, a first step toward separating from the troubled utility that is facing billions of dollars in liabilities for starting a series of deadly wildfires ---

Jensen Comment
Questions include how to raise the expensive annual money needed to maintain those lines and poles, including the cost of replacing them after a disaster such as another San Francisco earthquake. PG&E can now spread the cost of local disasters across all of its California market. San Francisco cannot charge the rest of California to pay for replacement power lines.

Other questions include how to get enough electricity to feed into those lines day-to-day. Ironically, San Francisco may have to by power on the grid that is supplied at higher prices by PG&E.

There's also a question about long-term investment in electric lines. New technologies such as much cheaper hydrogen fuel cells can eliminate the need for such lines all over the city. Walmart and some other companies are now experimenting with fuel cells that would allow stores to generate their own power. Some homes with battery backup are now able to generate power without connecting to outside power sources.

At the right price it could be a good deal for PG&E to sell the power lines to all the cities in California. This reduces its technology-change risk. In the meantime it could continue to sell power to the grid.

Charitable Donation Deductions Plummet After Tax Reform ---

According to the most recent data  available from the Internal Revenue Service (IRS), just 12,177,779 taxpayers claimed the charitable donation deduction for the 2018 tax year, totaling $102.7 billion. That compares to 33,629,985 taxpayers who claimed the charitable donation deduction for the 2017 tax year, totaling $160 billion. That’s a difference of 21,452,206 taxpayers claiming nearly $37 billion less in donations.

This data reflects forms 1040 processed by the IRS on or before week 30 of each calendar year. It's worth noting that while the total taxpayer returns processed from year too year are similar (141,156,150 for the tax year 2018 versus 140,456,686 for the tax year 2019), the kinds of returns may be different. Specifically, the returns which have not been processed include taxpayers who may have filed for extension. Typically, taxpayers who file for extension are those with more complicated returns. For this year, that likely includes those who might have been waiting for state and local tax (SALT) or other Schedule A related guidance; that could translate into a slight uptick in taxpayers who also claim a charitable deduction.

(You can read more about the changes to Schedule A here.)

Still, it's telling that the numbers have declined. Initially, the change in the standard deduction amounts was meant to simplify the deduction scheme. Analysts predicted that the number of taxpayers who would itemize their deductions would drop from one-in-three taxpayers to one-in-ten. That’s pretty close to what happened. For the 2017 tax year, 42,156,751 taxpayers itemized their deductions - about 30%. In contrast, for the 2018 tax year, only 14,662,008 taxpayers itemized their deductions - about 10%.

. . .

The more concerning question is whether taxpayers who did itemize for the 2018 tax year may choose to scale back their giving. The irony of lower tax rates is that they also make deductions less valuable. Remember, deductions are reductions in your taxable income (unlike credits which are dollar-for-dollar reductions to your total tax bill). So, when tax rates dipped, your home mortgage deduction was not subsidized as much as before; the deduction is smaller meaning that the after-tax cost of your home is higher. The same is true for other Schedule A deductions; for some taxpayers, a decrease in rates actually boosted the after-tax price of charitable donations. In fact, the Tax Policy Center had predicted that “the TCJA will reduce the marginal tax benefit of giving to charity by more than 30 percent in 2018, raising the after-tax cost of donating by about 7 percent.”

While it’s true that not all donors make their decisions based solely on tax, it’s clear that tax incentives do play a role in the decision to give as well as how much and how often to give. For donors looking to maximize the tax benefits of being charitable, it’s a good idea to check with your tax professional. You can also find some charitable giving tips here.

Jensen Comment
It needs to be stressed that in tens of millions if instances loss of the tax deduction does not mean entire loss of charitable giving. Those who donated to to their churches or to their other favorite charities often continued giving without getting a tax break for such gifts.

It's also true that in the first year of tax reform many taxpayers weren't certain whether they would be itemizing their deductions --- at least not until they actually filed their tax returns for 2018 in the first few months of 2019. The telling year with be the full 2019 for those that discovered in early 2019 that they did not get a charitable-giving  tax break on their 2018 returns after tax reform. Many who now do not anticipate a tax break for charitable giving may reduce their charitable giving for 2019 and beyond. This is the big worry for organizations dependent upon charitable giving. Alumni checks to universities, for example, may not be reduced to zero, but they might be reduced somewhat due to loss of a tax break on those donations. We should not beat down on fund managers for losses that were out of their control.

Probably the biggest damage tax reform will do to charities is make taxpayers reluctant to increase their annual donations that they no longer anticipate will give them a tax break.

Keep in mind that 45% the taxpayers who file tax returns pay little or no income taxes due mostly to the extremely progressive nature of USA income taxes that provides almost total relief for income taxation to lower income tax payers. Those folks who pay nearly zero in income taxes are pretty much not impacted by tax reform and will continue to give their little bits to their churches and other charities. The problem lies more with higher income taxpayers who now no longer get a tax break for their usual gifts to charities.
Those who pay little or no income taxes pay other taxes (payroll deductions, sales taxes, property taxes, etc.), but those taxes were not impacted by loss of charitable-giving  tax breaks in income tax reforms.

Actually the number of Americans who do not pay any income taxes is much higher than 45% due to the enormous underground cash economy where incomes are not reported on any tax returns. There are no reliable estimates on how much income goes unreported in the underground economy, but I once saw a guestimate in USA Today of $2 trillion dollars in unreported income of the underground economy. Incidentally, authorities often look the other way when it comes to the underground economy. Millions of children would lose their family income support if law enforcement shut off the only jobs available to their poor parents. In the case of higher income participants in the underground economy (think robbers and drug dealers and fraudulent professionals) it's very hard to detect those black market cash dealings. When these criminals are caught the money to pay back taxes is usually gone. One of the best ways to hinder the underground economy is to move to a cashless economy. Crooked legislators will never allow that in the USA.

Case Studies in Gaming the Income Tax Laws

Do the Rich Get Richer in the Stock Market? Evidence from India ---

We have studied wealth held in equity accounts in India, a large developing country that is important for the evolution of global wealth inequality. We have shown that heterogeneous risky log investment returns have important e⁄ects on the cross-sectional distribution of account size: large accounts result not only from large contributions, but also from high log returns. The e⁄ect of log return heterogeneity accounts for 84% of the increase in the cross-sectional variance of log account size during our sample period from March 2002 to May 2011. Return heterogeneity increases the inequality of account size through two main channels, both of which are related to the prevalence of undiversied accounts that own relatively few stocks. The rst is that some undiversied portfolios randomly do well, while others do poorly. The second is that larger accounts tend to earn higher average log returns. They do so not by earning higher average simple returns, but by limiting uncompensated idiosyncratic risk which lowers the average log return for any given average simple return.

Our paper partially supports Pikettys (2014) concern that the rich get richer by earning high investment returnssubject to the distinction, central in nance theory, between simple and log returns. Our results also highlight the importance for developing countries of investment vehicles, such as mutual funds and exchange traded funds, that are already common in developed countries and that give small investors an a⁄ordable way to diversify r

Jensen Comment
I might speculate that India has less effective regulation for enforcing stock market efficiencies ---


WSJ: Companies Say They Can Ignore Cost Of U.S. Tax Rules For Financial Reporting Purposes ---

Jensen Comment
What should their auditors be doing?
Will investors and the government also sue the auditors?

Marginal Tax Rates For Pass-through Businesses Vary By State: 32.7% In TX, FL; 46.1% In CA ---

Sorry Bernie, workers’ wages have lately been rising faster than their bosses’ wages ---

Nobel Laureate In Economics: Property Tax = Income Tax On Housing ---

“In China, bad research can be worth gold.” Neue Zürcher Zeitung explored misconduct in China ---
Jensen Comment
I could not read this article, but I think the conclusion is not good for China after scouring the Retraction Watch database of published paper retractions

Myths and Legends --- www.mythpodcast.com

When Corporations Changed Their Social Role—and Upended Our Politics
By Nicholas Lemann
The Wall Street Journal
September 6, 2019


Presidential elections in the U.S. are traditionally about economics. Next year’s vote, and others around the world, have the feeling, however, of being not just about how the economy is performing in the moment but about something more fundamental: the economic system. What drove the rise of Donald Trump and politicians like him elsewhere was the promise that a new government with new policies could restore a fondly remembered (by some) economic and social order from the past. Those politicians’ opponents on the left have a similar interest, though with completely different specifics, in remaking the political economy. It seems like centuries ago, though it was actually only four or five election cycles, when immediate economic conditions were a political issue but not the basic design of the economy.

What brought about this dramatic shift? To understand that, it’s necessary first to recall what the American economic order used to be and what made it come apart.

A good place to begin is at Bennington College in Vermont during the worst years of World War II. Two émigré Viennese intellectuals, Peter Drucker and Karl Polanyi, had holed up there to teach. Drucker, who went on to become probably the world’s most famous management consultant, was then in his early 30s, orderly and ambitious; Polanyi, more than a decade older, was messy and voluble and considerably to the left of Drucker politically. Each of them was working on a book proposing a large social vision for the second half of the 20th century.

Through the long Vermont winters, Drucker and Polanyi would trudge between each other’s houses in the snow so they could argue about their books. Polanyi’s “The Great Transformation” treated the rise of unimpeded modern capitalism as a vast, long-running social disaster. “At the heart of the Industrial Revolution of the 18th century,” he wrote, “there was an almost miraculous improvement in the tools of production, which was accompanied by a catastrophic dislocation of the lives of the common people.” The only possible lasting solution to the problem of capitalism, he believed, was for government to make itself such a forceful presence that the economy would be made the servant of society instead of society being the servant of the economy.

Drucker’s book was called “The Future of Industrial Man: A Conservative Approach.” The subtitle was apt. He saw the end product of the Industrial Revolution as the modern corporation, which was an institution he very much admired. Drucker thought government control of the economy would lead to “centralized bureaucratic despotism.” Instead, the corporation, on its own rather than under the government’s direction, must invent something heretofore unknown: “a functioning industrial society.”

Not long after “The Future of Industrial Man” was published, Drucker was surprised to get a call from an executive at General Motors —at that point, the ne plus ultra of corporations. How would he like to come to Detroit for a couple of years and find out how GM actually worked? Drucker eagerly accepted the offer, and in 1946 he published a book about what he had found, called “Concept of the Corporation.” There he reprised his theory in much more florid terms. “The large industrial unit has become our representative social actuality,” he declared, “and its social organization, the large corporation in this country, is our representative social institution.”

During his research, Drucker became friendly with GM’s president, Charles E. Wilson. (He’s the man remembered for saying, “For years I thought what was good for our country was good for General Motors, and vice versa.”) The two of them, according to Drucker, had conversations about GM’s social role that helped nudge Wilson toward negotiating, in 1950, the Treaty of Detroit, a five-year contract with the United Auto Workers that established annual raises, company-provided health insurance and pensions, and a measure of job security for workers as norms of American corporate life.

It was during this period that President Harry Truman was failing to achieve most of his Fair Deal, a proposed ramping up of the welfare state that included a prototype version of what liberal politicians would now call “Medicare for all.” That failure left government playing a role inconsistent with Karl Polanyi’s ideas and the corporation playing a role consistent with Drucker’s. Corporate employment was an American exceptionalist version of the welfare state.

It is stating the obvious to point out that this system no longer exists. One often hears calls for big corporations to be socially responsible—last month, the Business Roundtable added its voice in a statement signed by 181 corporate chief executives—but not for them to serve collectively as the major American social (rather than economic) institution. For a quarter-century or so during the mid-20th century, however, this was lived reality for millions of Americans who dutifully served the corporations where they worked until they retired at 65 on generous defined-benefit pensions, suppressing whatever independent or entrepreneurial impulses they may have had in exchange for the company’s loyalty to them. And a coterie of establishment-oriented liberal intellectuals trumpeted the arrangement as a not-half-bad social and political order, since a Western European welfare state seemed unachievable in the U.S.

So what happened? Besides being vulnerable because it was a product more of custom than of law, the corporation-based welfare state, in retrospect, had two major weaknesses. It mainly excluded large groups with rising aspirations, like racial and ethnic minorities and women, so they felt little stake in preserving the system. Even more consequentially, it depended on the corporation’s economic invulnerability and the quiescence of its shareholders.

Continued in article

From a Chronicle of Higher Education Newsletter on September 7, 2019
Arizona State University Becomes a Role Model on How to Ignore Sustainability Goals

Arizona State walked away from most of its sustainability goals.

Eight years ago, Arizona State University made big plans to go green. Today, those plans have largely been abandoned. How did that happen? Mick Dalrymple, director of the university’s sustainability practices, told The State Press that the goals outlined in the 2011 plan were not realistic. The plan described 266 steps the university needed to take to meet those goals, but the newspaper’s investigation found that Arizona State had taken only a few of them. The story is a compelling investigation of how a university can fail to meet its goals in spite of a detailed plan. \

Jensen Comment
Some colleges set sustainability goals and then met them in questionable ways. For example, Middlebury College is ever so proud of reducing oil and gas dependency by putting in biomass replacements. Read that as reducing dependency on relatively clean fuels with burning air polluting wood chips. What kind of green solution is that?

What's hilarious is the naive author of a Chronicle of Higher Education article that calls biomass burning of wood chips "carbon0neutral."

 9-Year Quest for Carbon Neutrality Took Middlebury to Forests and a Dairy Farm ---

Jensen Comment
Generating electricity from wood and bark chips is not exactly "carbon neutral." It would be more carbon neutral to use natural gas. Middlebury probably did not choose wind farms because Vermont became much less friendly toward wind farms.

Our regional hospital put in a wood chip power plant. Now when I sit in the cafeteria I can watch the plums of smoke coming out of the tall stacks.

Do you wonder why the Chronicle of Higher Education stopped accepting commentaries on most of its articles, especially those dealing with environment and diversity?


Health Insurance


Walmart is launching its first standalone primary care clinic ---


Jensen Comment
It's not yet clear to me whether Walmart is going to provide primary care doctors who will also make hospital rounds when you're hospitalized.


There are considerable advantages to having doctor offices attached to hospitals. One is the convenience for doctors to make hospital rounds. Two is the convenience for patients to have medical lab, X-ray, and other hospital services in the same building and on the same computer networks as the hospital itself --- that's what happens with my primary care doctor. It's also convenient to have other primary care clinics in the same hospital cover for my doctor's partnership when they're out of town for one reason or another. Our local hospital has more than one primary care clinic apart from Critical Care and Emergency Room divisions of the hospital. Conveniently under one roof there are other offices for specialists in ophthalmology, obstetrics, dermatology, orthopedics, cardiology, etc.


The rents provided by doctor offices in the hospital also help our hospital cover losses from charity medicine and limited insurance that does not cover full costs (think Medicaid). I think medical clinics in Walmart, CVS, etc. in some ways make it more difficult for local hospitals to avoid red ink --- especially when Walmart and CVS pass along all their charity patients to the local hospital. Walmart's standalone primary care clinics will skim off the easy profits at the expense of our local hospitals who serve the charity patients.


Hospital funding is complicated and variable. None of my property tax is currently diverted to our local hospital. However, when I lived in San Antonio a goodly share of my property tax was diverted to the Bexar County Hospital to cover some of that hospital's enormous losses from charity medicine.


New Drug Patents by Country ---

Over the past half century, the United States has been the birthplace of the majority of the world’s biomedical innovations.1 Despite a global slowdown in the development of new medical interventions, due to the scientific shift towards more complex biologic treatments, innovation in the U.S. has remained relatively steady thanks to strong financial incentives to invest in research and development (R&D). In fact, the below chart may underrepresent American contributions to pharmacological breakthroughs in the past two decades as a result of U.S. corporations relocating their headquarters to Switzerland and the U.K. to take advantage of those countries’ lower corporate tax rates.

Jensen Comment
This does not justify some of the evil pricing schemes of big pharma in the USA, especially pricing by patent trolls. But it does illustrate how complicated the invention of biomedical innovations (that includes more than drugs) becomes, especially when comparing the USA with the more highly populated European Union. Why doesn't the EU lead in discovery of biomedical innovations? Why aren't Russia and China inventing new biomedical innovations as fast as they are inventing technology innovations?


Fraud:  The Collapse Of A Hospital Empire — And Towns Left In The Wreckage -


Bob Jensen's Tidbits Archives ---

Bob Jensen's Pictures and Stories

Summary of Major Accounting Scandals --- http://en.wikipedia.org/wiki/Accounting_scandals

Bob Jensen's threads on such scandals:

Bob Jensen's threads on audit firm litigation and negligence ---

Current and past editions of my newsletter called Fraud Updates ---

Enron --- http://faculty.trinity.edu/rjensen/FraudEnron.htm

Rotten to the Core --- http://faculty.trinity.edu/rjensen/FraudRotten.htm

American History of Fraud --- http://faculty.trinity.edu/rjensen/FraudAmericanHistory.htm

Bob Jensen's fraud conclusions ---

Bob Jensen's threads on auditor professionalism and independence are at

Bob Jensen's threads on corporate governance are at


Shielding Against Validity Challenges in Plato's Cave ---

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://faculty.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

What went wrong in accounting/accountics research?  ---

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


Bob Jensen's threads on accounting theory ---

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

Bob Jensen's economic crisis messaging http://faculty.trinity.edu/rjensen/2008Bailout.htm

Bob Jensen's threads --- http://faculty.trinity.edu/rjensen/threads.htm

Bob Jensen's Home Page --- http://faculty.trinity.edu/rjensen/