I have a confession. I was once a democrat.
I have a confession. I was once a democrat. The first presidential election I was eligible to vote in, I voted for Jimmy Carter. I never told anyone this before because frankly, I was embarrassed. But, today, 30 years later, I have learned much, and I have many intelligent, successful friends who are democrats and I have come to realize that political ideology is in fact, similar to religion – you take it on faith.
Nonetheless, I think it is useful to describe my conversion to a more conservative position (incidentally, I consider myself a fiscal conservative but a social liberal). I grew up in solidly blue collar, lower-middle class Garden City. My father was a laborer – a talented metal bender who built advanced automobile prototypes for American Motors and then Chrysler. He fixed cars on the side to earn extra money. He was not afraid of hard, physical work.
Most of the neighborhood breadwinners belonged to a union. The family across the street, whom my parents befriended, were immigrants of Albanian descent. They owned a host of rental properties in Detroit and the surrounding areas. Through chance (a long story), my father came across their bank statements during one of their family crises and was shocked to learn that they had amassed a then princely sum of $250,000 from their rentals. He and my mother thought they were quite generous to offer to share their government provided milk and cheese and other foodstuffs. When I learned of their government assistance, I was troubled.
When the neighbors would congregate on porches to share a beverage, as was the custom of years ago, talk would frequently turn to chicanery that took place at work, such as absences from the factory that were unreported because someone would cover (and this was usually always part of the humor banter – look what I got away with). The mindset was that “the man was getting rich” on their labor, so this was fair game. When the inevitable layoffs took place, working “for pay under the table” was the norm. I found this troubling – collecting unemployment compensation, but also “working for pay”.
I entered the University of Michigan around this time, and majored in economics. U of M teaches a liberal brand of economics – mostly Keynesian. It was at this time that Art Laffer and supply side economics made its way on the economic scene and of course, Ronald Reagan embraced supply side theory as part of his administration’s economic policy. The thrust of supply side economics rested on the impact of incentives. I knew incentives, because that was the way of my world. My parents were not wealthy and if we wanted something, we had to work to get the money to buy it (except for my college education). I could also see what the Japanese were doing to the US auto companies, and the stories of employment abuse was fresh in my mind, particularly the worker that put a coke bottle in the door of a new car that he was helping to assemble.
My conversion was nearly complete. The ensuing boom that followed the Reagan revolution cemented it.
My father would say often that the democrats were the party of the working man while the republicans were for the rich. It was a haunting indictment – and I did not want to betray my roots, but I could not connect the dots that he was apparently able to. In time, I concluded that he may not have been thinking as critically as he should – he was merely repeating dogma he had heard from like-minded individuals.
In fact, over the years, I observed firsthand many gestures of overwhelming financial generosity by my clients. They were giving away at one time multiples of what I earned in a year. One thing that is a certainty about our firm’s clients is that they are, by any global standard, wealthy. Some may call them rich. They are democrats, republicans and independents. No matter the affiliation, they are exceedingly generous. In fact, several studies show that the US is the wealthiest nation in the world and that Americans are the most generous peoples in the world. This is not in dispute.
Hence, I can more easily connect the dots of rich people financially assisting others. Not all rich people are generous, that I realize. But, looking at high profile donors giving away billions (Gates, Soros, Buffet) and looking around local communities and seeing similar smaller scale donations, I know that said actions are prevalent.
Hence, I have more faith in this eco-system of giving than I do of politicians making promises to the needy that they cannot keep (think underfunded Medicaid, social security, Medicare, public pensions, etc.).
So, this blog is not directly tied to investments. But, the US is at a cross roads, and depending upon the direction we take, it will impact long term economic trends and therefore, investments. I long for a Bill Clinton/Ronald Reagan like leader – individuals that embraced a vision of the US that was consistent with long held values and principles with our country’s founders and that made this country great, men who believed in opportunity for all and disdained class warfare and petty politics.
Your comments are welcome.
Robert M. Bilkie Jr., CFA