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Thursday, January 30, 2014


Is there a proper response to President Obama's State of the Union address this past Tuesday night?

I felt sorry for those who out together the Republican response following it.  I sit here two days later attempting in vain to find a proper response.  My purest response is a dreadful bout of nausea that has overtaken my body.

But the correct response is simply one little word.


Go west young man!  Or more accurately, go north or south or east or somewhere. Just go...

This speech purported to be about income inequality and income mobility in America, but the truth is that it was about the stagnation of mobility among the poor in America. 

Once upon a time, there were many southerners who were very unhappy with their lot in life in the 50 or so years following the Civil War.  Jobs were scarce, work was hard and often paid little.  But then Henry Ford's invention began to pick up steam, new automobile companies were started and soon Ohio/Pennsylvania steel was going gangbusters to supply the booming Detroit auto manufacturing plants. Just as quick, many of these southerners began to migrate northward to supply their labor and make a better life. 

Today, many in America are in a similar situation.  Jobs are scarce, work is hard and often pays too little. And today a similar boom is taking place in North Dakota as the extraction of oil from the Bakken formation is rapidly expanding.  As my friend Travis Brown wrote in Forbes yesterday, 
According to the most current figures (November 2013) from the Bureau of Labor Statistics, North Dakota had a labor force of 402,398 with an unemployment rate of 2.6 percent. Allow me to reiterate that fact: North Dakota has the lowest unemployment rate in the nation, at 2.6 percent. That’s incredible given that pro-growth states such as Florida, Texas, and Georgia, which also saw business, individual, and wealth gains, had unemployment rates of 6.4 percent, 6.1 percent, and 7.7 percent, respectively


North Dakota can expect continued migration into the state as companies continue to grow and expand. One company, Power Fuels, put out a call for 300 new employees before the start of the holidays. These new hires for oil companies are going to require places to live, tools, food, entertainment, and transportation upon relocation, thus providing the perfect opportunity for entrepreneurs and native North Dakotans not involved in the oil business to open stores and provide these necessary services. In doing so, North Dakota opens the doors for larger businesses and corporations to invest within the state.

While the President spent so much time and so many words about paying people more and increasing the minimum wage, what he didn't discuss was how to truly help people make a better life for themselves. Rather than inspire our citizens to action to go (see, there's that word again) and make it happen, he asked them to sit and wait for it to happen. Rather than ask them to expand their horizons and see that we are a large nation with opportunity for those who are willing to go (I sense a trend here...) and find them, he coddled the masses while asking for those who did seek opportunity to offer more to those who didn't.

The truth is that income mobility hasn't changed in America.  Recent studies have once again shown that the odds of a person born into a family in the bottom 20% has the same chance of making it to the top 20% as always.  As Glenn Kessler of the Washington Post fact checks the President and said,
Close readers of the president’s speeches might have noticed an interesting shift in the president’s rhetoric. Just in December the president gave a speech on economic mobilityin which he three times asserted that it was “declining” in the United States. But earlier this month, renowned economists Raj Chetty, Emmanuel Saez and colleagues published a paper based on tens of millions of tax records showing that upward mobility had not changed significantly over time. The rate essentially is the same now as it was 20 years ago.
The AP further reports on the study,
Looking at children born between 1971 and 1993, the economists found that the odds of a child born in the poorest 20 percent of families making it into the top 20 percent hasn't changed. 
"We find that children entering the labor market today have the same chances of moving up in the income distribution (relative to their parents) as children born in the 1970s," the authors said.
So the notion that income mobility is declining is fiction, a figment of our imagination.  So why does it often feel true today?

Look at your family tree.  How far back does your family go in the town where you live? Some like my maternal grandmother's family have been in my town city it was established over 250 years.  Others are like my paternal grandfather's family who arrived within the past 100 years.  Still others are only the second generation in town, because your parent's moved there from somewhere else.

Whichever the case, your progenitors arrived there from somewhere.  At some point in time, they had a reason to get up and go (GO...).  Some left from a foreign nation, some from a neighboring state and some simply from another local community, but they all came and often for the same reason - an opportunity.  Whether it was to find a job, a job transfer, to start a business or they were part of the original Homesteader's Act, they came seeking to make a better life.  And they used their feet, wheels, rails, possibly horses to make their way here.  And for each of them, there was probably risk involved as well.

How many came across on diseased filled boats on a weeks long journey across the Atlantic to arrive here with no family, no friends, no money - nothing - but a heart filled with hope and an eye searching for opportunity?

But today, we look at the descendants of those who sought opportunity in the Detroit auto plants, where today the city core crumbles and opportunities are hard to find and we ask, "Why are they still there?  Why don't they go?"

I checked and you can book a flight to Bismarck, ND for $225, a train for $150 and a bus for $75.  I can honestly tell you, that if I was unemployed, underemployed or working for less than $10 per hour, I would not be here in Missouri  hoping for someone to come in and create a job for me or decide to pay me more.  My wife and I already had this discussion and we both know that in the event I lost my job, it would be time to go.

But today, the discussion in our crumbling cities is not how do we get from here to there, but how do we get someone to come here.  Its like a man who is drowning with land in sight because he decided to wait for help rather swim toward shore.

And the truth is, its our fault.  We caused the problem.  In fact, rather than encourage the poor to seek the very opportunity that could save them, we pay them to stay and die. Thanks to our "assistance", our fellow citizens are given just enough subsistence to remain in their crime ridden neighborhoods and the President's solution is to offer to pay some of them a little more, but still less than what some fast food joints in Bismarck are paying the immigrants they are forced to bring in on work visas because there are not enough workers to go around.  And the kicker is that a new higher wage in Detroit or St. Louis will only further enrich the middle class youth in the suburbs while causing job losses in the few factories that remain open in the urban core.

Too many Americans are tired from treading water and are waiting for the tide to bring them in to shore.  But unfortunately, there is an undertow.  As President Obama gives hope that his actions will create a wave of opportunity, the undertow grows stronger.  Even now, manufacturing growth is stagnating.  Without the current oil boom fueling job growth, the employment numbers would be much worse.  Even as they wonder if there's a better opportunity somewhere and their better sense says maybe its time to go, the President's voice says to stay, help is on the way.

Only there is no help coming.  Raising the minimum wage on Federal Contracts helps no one today.  Raising the minimum wage would cause job losses.  Raise it too much and it might cause some factories to close and move production overseas.  The strength of the undertow grows.

We cannot help the poor of America by taking care of them.  We cannot help the poor by harming those who gave them a job.  We cannot help the poor by pretending that the government has all the answers and can magically grow flowers in the sand.

No.  Rather than continue to plant flowers in the sand, its time to dig deeper. Just as oil powered North Dakota's economic boom and 2.6 unemployment rate, oil rich lands in California and New York could do the same in those states whose unemployment rates stand at 8.3 and 7.1 respectively.

But just as importantly, we need a president in office who is not afraid to level with the American people; who can look in the camera and say to the American people, 

"The government of the United States of America has always done its best to offer those who need it, a hand up and today we still do.  But under today's budgetary strain, we can do no more than what we are currently doing.  And I will admit, for many, its not enough.  
Yet I also know, that what the government provides offers no real long term plan for success. It is only through our free enterprise system that real opportunities exist.  And in America, there are plenty of opportunities available.  But to be successful, we must all be prepared to face our fears and go off to find opportunity. 
To that end, I propose the GO ACT of 2014.  Under this act, the Federal government will designate Opportunity Zones. Opportunity Zones will be areas where robust economic conditions have created a shortage of available workers.  Under this act, anyone living in a state or municipality with an unemployment rate above 7% will be allowed to use any type of existing government assistance that holds a cash value toward a one time purchase of transportation to one of the designated Opportunity Zones. 
It is my expectation that new and streamlined transportation lines will develop into these Opportunity Zones and that employers will also be more comfortable expending time and effort to recruit employees from our urban core areas following passage of this act. 
It is also my expectation that states will do their part to help create new and exciting Opportunity Zones and promote growth. It is time for the United States of America to stop standing still. 
It's go time, America."

For America, it is go time.  Now,if we can just get out of our own way. 


  1. Great thoughts with real ideas. I am convinced the speech was little more than posturing to make the GOP look like big meanies going into the mid-term. No substance. Sam 2016.

  2. Great thoughts with real ideas. I am convinced the speech was little more than posturing to make the GOP look like big meanies going into the mid-term. No substance. Sam 2016.

  3. As if on cue, yahoo finance put this piece out today:

    Here are the two key points that echo what I have said:

    “The U.S. is better described as a collection of societies, some of which are lands of opportunity with high rates of mobility across generations, and others in which few children escape poverty,”

    "Even reports that use different data and measure economic mobility in different ways, a consistent picture is emerging that should help policy makers: place matters in mobility."

    St. Louis is, of course, among the bottom 10 cities for income mobility as I would expect.

    The only question now is, who from yahoo finance is reading the Chaos?