How is the country organized? How should it be organized who should be included? In all societies there develops an elite or people who families seem to be closer to making power on a very regular basis. These families tend not to have to worry about paying the bills for they have income streams which give them a higher standard of living. There is another group which has grown up which we all like to believe is the higher group which is based on merit. In every generation, those with higher education or higher street smarts or the ability to start companies which go public and the owners take their share of rewards. For a long time we as a society have either been told this or believe it and it is the subject of a book by Christopher Hayes titled Twilight of the Elites published by Crown Publishers, NY, 2012. This believe in meritocracy or the best and brightest will rise to the top is beginning to die.

If you go to an Opera, the deaths scenes take a long time, so will this dream because although society in general tends to believe it and there are many examples, President Obama from a child of a single mother eventually going to Harvard Law and becoming President is the best example. However there were many hurdles, an educational institution such as Harvard allows for 20% of its students to come from families of graduates (who have savings and can make donations to the school). Are these the best and brightest? One can then move institutions that the salary structure is higher than average? What do people do to make the money?  In the service economy, most of do not make things, it is strictly judgement and breaking the law can be more profitable for the company. The penalties for what is known as white collar crime are not as harsh as they are for street level crime. Cheating will always be present in any competitive environment to some degree, but systemic corruption comes about when it moves from anomaly to norm. An old law from Queen Elizabeth of Tudor times – Thomas Gresham said bad money drives out good.

Those two disconnects the morality and the penalty not to the bad, is why when we look around we see disconnects in many industries: in baseball and steroids; the church bishops and a priests who are pedophiles (the bishops worried about the priests rather than the boys of the church); when government’s call for evacuation in New Orleans and other places which is a good thing for the protection of its citizens it forgets many of them have nowhere to go and no money to pay; when the financial crisis of 2008 came because companies which ended up being bought by the largest financial institutions were selling mortgages on no income, no problem (Countrywide Financial was bought by Bank of America). What was the consequence of non payment? it turns out the financial sector almost collapsed and then moved on.

To solve the problem the inequity must be narrowed. However some of the solutions must start with the government. For example: in 2013 the top 400 people were paying taxes of 16.6%; the average middle income was 22%. The system was become a tool for maintaining and expanding wealth, not paying.

For estate taxes, there was a law you can give away $ 5 million tax free to your kids, but the rest is taxable at high rates. Every year the rate falls so the rich remain rich, are they the best and brightest or was it their grandfather? or some other family member?

Linking to dividend paying stocks, as you invest in companies more and more of them are in the service sector and you have to look at the morality of the senior people on top of the company. How did they get to the position? and why are they? In the broader aspect of the taxes and estate taxes, President Trump was promised tax reform what will change?

There are more questions than answers, till the next time – to raising questions.