I received the following information in an email this morning.

I haven’t written much lately. I especially haven’t written much about politics lately. I am not very excited about this election. That said, I would prefer neither Hillary or Bernie be our next president (that’s not an endorsement for Trump).

So…

Back the email I mentioned. Here is what Oxford Economics has to say about Donald Trump’s tax plan:

If implemented fully, Mr. Trump’s tax proposal would reduce government revenues by just over $4 trillion over the next five years, writes Gregory Daco, Head of US Macroeconomics at Oxford Economics in a research note released today. Assuming 25% of the revenue loss would be offset by reductions in government outlays (and the remainder would be deficit financed) his plan would send the US economy into a recession by the end of 2017.

The report makes these additional points:

• Under Mr. Trump’s budget proposal, the unified budget deficit would widen to nearly 7% of GDP by the end of 2018, compared with 2.8% in our baseline, while the federal debt to GDP ratio would surge from 77% of GDP today to 95% by 2020. This would likely cause severe stress in bond markets.

• Higher interest rates would lead to substantial crowding out of private investment, consumer spending and housing activity.

• On the individual tax front, reducing marginal tax rates, collapsing income tax brackets, repealing the AMT, increasing deductions and taxing carried interest income as ordinary business income would likely stimulate spending and overall activity. However, the skewed distributional nature of the tax cuts – favouring higher income individuals – and higher interest rates would severely limit the boost to spending.

• On the corporate side, the prospect of lower tax rates would initially stimulate a desire for investment, but higher borrowing costs would rapidly deter business investment.

• Factoring in severe government spending cuts, the US economy would contract 2% in 2018 compared with a 2.4% expansion in the baseline. It would count 3 million fewer jobs by the end of Mr. Trump’s first term.

• Under a more realistic scenario where Mr. Trump’s plan is made deficit-neutral to pass Congress, the economy would avoid a recession, but still grow slower than in our baseline and count 1.1 million fewer jobs by the end of Mr. Trump’s first term.

I have no idea how accurate these numbers are and I haven’t read the full report. I would hope that government would be financed through tax revenues rather than deficit spending. That would mean cuts in spending, which I think are necessary. The government is bloated. It needs to be pared back and the focus should be on only what’s important. It’ll never happen, though. Politicians love spending money on their favorite projects in order to buy votes. Politicians think their job is to stay in office.

I searched Oxford Economics’ website but didn’t find any information on Hillary Clinton’s tax plan. Hopefully one will be forthcoming.

I don’t know what it is, but I love customer service. Sadly, it seems non-existent nearly everywhere I go. Employees don’t seem to care and their managers don’t seem to care that they don’t care. Anyhow, I have been reading “The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience Courtesy of The Ritz-Carlton Hotel Company.” It’s a great book, that EVERY manager and executive should read. In the book, I came across this excerpt regarding employee pride, which seems to be tied to their employee selection process (they don’t call it hiring):

“That pride in being selected also serves as a motivator to live up to the trust that has been placed in the individual upon being hired. Adam Hassan, boiler operator in the engineering department, explains, ‘When people take so much time to select you, you really want to prove that they made the right choice. So if I see anything unusual, I take care of it. I don’t have my boss telling me to go do it; I go do it on my own because I don’t want to let the guests or the other Ladies and Gentlemen down. If I turn my head on a broken lamp, I am not living up to the standard of a service professional. Everybody here does the same thing: They walk in the hallway and if they see a piece of paper, they bend down and pick it up. That comes from the heart; it comes freely, because they have chosen us as if we owned the place.’

“The hiring process not only serves as an opportunity to find people to perform necessary functions for a business but ultimately also sets the tone for the pride people take in their work. By creating layers of evaluation, new hires feel that leadership has invested in getting to know them. Further, they realize that leadership wants to ensure that those who join the company can meet or exceed the standards of those who have come before them. Ultimately, staff members feel a responsibility to live up to the trust placed in them through their offer of employment . . . and they even become recruiters themselves.”

I have often wondered why some people go above and beyond, while others tend to do as little as possible. I ALWAYS picked up trash and ALWAYS straightened displays. I couldn’t not do it. I took pride in my work. And that is what it all comes down to: personal pride. If a person doesn’t take pride in their work—no matter what that work is—they most likely are not going to do a good job. Companies can go a long way in helping their employees take pride in their work and one of those methods comes in the hiring process.

The good news in all of this is in a sea of mediocrity, it’s not hard to stand out.

NOTE: The image is an affiliate link.

If this is true, it’s sad:

“The younger workers are often off task, engaged on social media, on the internet, texting on phones and other unproductive activities.

“The Department of Labor must realize that if we are supposed to pay them overtime for work they should do during normal work this will make us have to focus on micromanaging employees and reducing compensation to reflect actual productivity of a mandated 40 hour or less workweek.”

I see it a lot when I go to the grocery store. The parking lot attendants are usually looking down on at their phones. That can’t be productive. If this behavior is carrying over into the professional jobs, we’re in trouble.

Thoughts?

Back in January, I received a small book from a financial advisor who uses an indexed universal insurance policy as the backbone for his financial plan. His strategy is very similar to the Bank on Yourself scheme, but with a different underlying product.

I wasn’t satisfied with some of his charts and graphs because he (like every other insurance person I know) left out dividends when discussing the performance of the S&P 500 Index. I emailed him and asked him about his methods. After a few exchanges over several weeks, he finally told me this:

“The reason I did not use dividends (and as you point out I do say this in the book) is just to not complicate the analysis. If I wanted to include dividends I would also include taxes and management fees in the S&P account and then I would want to include the cost of insurance in the life insurance policy.”

Wow.

Folks, financial planning isn’t all that complicated. It gets complicated when people invent all these different “strategies” to help sell commission-based products. Don’t misunderstand, I am not putting all the blame on the insurance industry. I worked for PaineWebber for awhile and saw just as much underhanded behavior as I see in the insurance business. Call it the flipside of a poopcicle.

This author says he didn’t include S&P 500 dividends because it would complicate the analysis, but I think he didn’t include them because it would make his strategy not look as good by comparison. I mean, who wants to write a book about your financial planning strategy and have the strategy look bad?

Bottom line: KNOW what you’re getting. If you read it and don’t understand it, TALK to someone else. Ask questions. And yes, I’m biased but I think it can’t hurt to talk to a fee-only financial planner before making any major decisions. There are times and circumstances when an insurance-based strategy might make sense, but the vast majority of people would be better off using index funds for investing and insurance for protection.

Dear College Kids

April 10, 2016 — 5 Comments

I read this piece in today’s Houston Chronicle about an incident that occurred during a talk that H-E-B’s president of the Houston region, Scott McClelland, gave to some business students at the University of Houston.

“About 20 minutes into his talk, he [Scott McClelland] spotted one student leaning back in his chair, sound asleep and ‘sawing logs.’

“‘I asked the student sitting behind the sleeping student to tap him on the shoulder. When he sat up, I told him that he looked tired and he needed to leave. He just sat there, so I told him again that he needed to go,’ McClelland recalled. ‘The whole class looked on (as the student left). I think they were surprised someone would actually address what probably is tolerated in other classes they attend.’

“McClelland said he didn’t plan on doing anything that dramatic, but in that moment he saw a teaching opportunity.

“‘When you are at work, or school, you need to bring your “A” game, because people are always watching,’ he said. ‘A year from now, the students in the class won’t remember the slide that I showed them on how we partnered with Whataburger to develop a retail package for ketchup, but they will remember that a kid fell asleep in class and the H-E-B guy didn’t tolerate it.’

“McClelland said doing nothing would have made him guilty of ‘the insidious acceptance of the B grade.'”

Well, one of the students who witnessed the exchange took to Twitter to call out McClelland. They said that McClelland was out of line and that he humiliated the student.

Wow. You cannot make this stuff up.

Here is a man who is probably earning $250K + per year, taking precious time out of his very busy schedule to impart his wisdom to a bunch of college kids who will be looking for jobs in the not so distant future. And here is a student sleeping during his lecture. So much for a good first impression.

The problem I have with today’s kids is that they don’t seem to understand that there are consequences for actions and those consequences may not be pleasant. You fall asleep in class, the lecturer calls you on it and asks you to leave. If you don’t want to be called on it, then don’t fall asleep during class. Instead, this person blames the problem on the lecturer. It doesn’t and shouldn’t work that way.

This is such a small issue that I feel silly even writing about it. Welcome to 2016.

I received an email yesterday that AFM’s webhost was purchased by another company and the new company would no longer be hosting blogs.

I need to find a new blog host.

Any suggestions?

I originally went with BlackLotus because they offered DDoS mitigation (or however you say it) because I was getting hammered while at Dreamhost and their solution to my problem was to simply shut my blog down.

Back to square one.

I read the following article in today’s Houston Chronicle:

Rice Among Schools Facing Questions Over Massive Endowments

I found this paragraph from the story interesting:

Tuition increases, school leaders have argued, are necessary to keep the quality of education up. Providing a Rice education costs about $80,000 per student per year and tuition only covers a fraction of that – the rest is covered with endowment money.

While I agree that the “massive endowments” seem ridiculous, I don’t think it is the government’s job to get involved. As a conservative, I’m disappointed that Republicans are even involved in this.

Oh, and for the record, public college tuition is going up too.