HIRE AN ECLECTIC MIX (TRUE DIVERSITY)

     The incessant talk of diversity and identity politics on college campuses, in corporations, and on Sunday news shows always misses the mark.  Diversity, I prefer "eclectic mix," instead of diluting standards and redistributing merit-based slots, can add tremendous value to an organization for all the right reasons.
     But, we must shift our perceptions in business to understand what truly makes people different.  In a free-market capitalistic organization we are not focusing on your feelings, who wronged you in the past, or even how terrible was your childhood.  We are focusing on "what have you done for me lately" and "what can you possibly do for me in the future."
     True free-marketers are the most color-blind, non-discriminating, accepting citizens in our free society.  Check out all of the successful companies, not just the loud activist corporations which get all the headlines.  To paraphrase Edmund Burke, we don't see the thousands of great cattle in the field because we are listening to the half a dozen loud grasshoppers under a fern.
     When I hire my strong, eclectic mixes, I first hire strong individuals, the parts, in order to ensure the whole is greater than the sum of its parts.  I focus on coalescing a group of strong individual overachievers with diversity of ideas, upbringings, experiences, personalities, and educations:

1.  First, I hire "Chips."  Chips come from modest means, they earned scholarships based on merit, they worked for spending money throughout school, they have strong drives to succeed and achieve independence, they have a mature attitude towards work and responsibility, and they understand that hard work will achieve rewards.  They have a "chip" on their shoulder against all the others who had things handed to them.

2.  Next, I sprinkle in a couple "Silver Spoons."  Silver Spoons come from good pedigree, they have experiences and exposure many of us were not fortunate to enjoy, they have expanded though somewhat irrelevant knowledge and skill sets, they come from good schools (hopefully with test scores not inflated by Laurie), and they expect to make high incomes.  Only sprinkle in a couple of Silver Spoons.

3.  Third, I add the "Hairdressers."  The genesis of this term was the hiring of my great executive assistant, Wendy, who was previously the receptionist at Style By Design.  Her great example later prompted me to advise others that "I hire from Harvard and the hairdressers, and the hairdressers are more successful!"  Hairdressers do not arrive with the formal education or curriculum vitaes, but they possess superior drives and acknowledgments of their opportunities.  They are intelligent and learn new skills quickly, they are clean slates open to learn, and they will overachieve in whatever role you select as long as you provide good mentorship.

4.  "Dreamers" and "Realists."  We must always balance our organization with Dreamers and Realists.  I, as the Dreamer CEO, had my incredible COO, Kevin, to reel me back in and to roll up his sleeves to handle the "blocking and tackling."  Dreamers drive the organization forward and achieve success that others thought was not possible, but are bored with the details (Musk).  Realists ensure the numbers work out correctly and operations keep up with sales (Buffet).  Dreamers climb after Big Hairy Audacious Goals (BHAG's), while Realists make sure we also dot our "i's" and cross our "t's."

5.  Finally, all overachieving organizations need "Sporters."  Sporters, obviously, have competitive college or professional sports backgrounds.  They understand the incredible amount of hard work and preparation required to be #1.  The great Hoosiers Basketball Coach Bobby Knight always notes that lots of people have the determination to win, but that a very rare few have the determination day in and day out to put in the preparation necessary to win.  Sporters understand this.  They have also experienced a great deal of failure, been in the arena, so they know how to shake it off and find another path to victory.

     These are the elements necessary for the overachieving, A-Player culture of success.  You need to learn how to spot them, recruit them to your mission, and coalesce their diversity into an unstoppable machine.  Throw away the personality tests, the Myers-Briggs and all the rest, as this is an industry built to sustain itself.  It's an incredible waste of time, and terribly ineffective when compared to the skills of a wise, perceptive leader. (Client surveys are also a wasteful industry unto itself, but we'll cover that another day).
     This is the diversity on which you should focus, not the noise in the media every day.  For a great summation of what all is wrong about this topic, I recommend you read "The Diversity Delusion: How Race and Gender Pandering Corrupt the University and Undermine Our Culture" by Heather Mac Donald, a fellow at the Manhattan Institute.  From this book I wanted to include some notes about the monstrous "diversity bureaucracy" in place at Yale University today, to include the outrageous number of devoted diversity personnel, but it is so bizarre that I thought you'd never believe me.  Please don't let your children go to Yale.
     Today, think about how you can maximize true diversity and start recruiting your Chips, Silver Spoons, Hairdressers, Dreamers, Realists, and Sporters.  Your organizations will be stronger than you had ever imagined.  Have a great week!

"For the strength of the pack is the wolf, and the strength of the wolf is the pack."  -  Rudyard Kipling, The Jungle Book

** This Post contains excerpts from Jeff's upcoming book "Building Special Companies"  Ash Press, 2020 Release.

** For more information on Jeff's Books, Blog, and Legal Challenge, please visit www.jeffmartinovich.com.

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GROWTH & LOWER TAXES SAVE THE WORLD

     Throughout our relatively short American economic history, just when we were about ready to go over the cliff, new policies promoting lower taxes, less regulation, and rugged individualism have sparked strong economic growth, and we, and the world which depends on us, have lived to see another hopeful future.
     This week we must again step back to objectively review the state of our economy as compared to the previous decade.  We must periodically stop, analyze, and employ rational thought to gain understanding, lest we find ourselves amongst the non-thinking masses which morph into the current rhetoric and ideology of the media and whomever is shouting the loudest.
     This week our economic statistics against showed the strongest economy in half a century.  We have unemployment rates which you had been told were not possible ever again, with record-low unemployment rates for African-American and Latino citizens.  We have strong wage growth for middle-class workers, servers, and hotel staff.  We have high labor participation rates, which means that the people who had given up looking for work, or had decided that a government check was a better alternative, have now instead decided to take one of these new jobs.
     This does not happen by accident.  This is not the result of "cycles."  This is not lucky timing.  This is clear cause and effect which us JAM VIEWS members must understand, lest we are later swayed by the economically-uneducated masses. "He who stands for nothing will fall for anything."
     According to Stephen Moore, a senior fellow with the Heritage Foundation, the previous Administration's government stimulus "went for food stamps, unemployment benefits, ObamaCare subsidies, 'cash for clunkers' and failed green energy handouts (see Solyndra or EPV Solar)."  This was when our then-President proclaimed that if you owned a business "you didn't build that."  This focus merely re-distributed the slices of a finite and decreasing pie.  This strategy always guarantees defeat for everyone.
     We must be educated on abundance instead of scarcity.  Growth brings abundance and an ever-increasing pie, which brings more slices for everyone.  Today, with the tremendous jolt to our economy from tax cuts, reduced regulations, and other efforts to get the government out of your pocket and off your back (and some would say their heel off your throat), the Congressional Budget Office (CBO) has grudgingly determined that "higher-than-expected growth will add an extra $1.2 trillion to federal revenue in the coming decade, covering about 80% of the Treasury's original projected cost of the tax cuts.  If 3% growth is sustained for another year, the growth surge will have (already) paid for the tax cuts," according to Senator Phil Gramm.  And after that, all of the extra government revenue is whipped cream on top of the ice cream of an incredible boost for the nation's citizens, themselves.  The current President would assert, "Get the government out of the way, so you can build that."
     And, certainly more grudgingly, even the New York Times this week acknowledged that "Joe Six-Pack" received a nice tax break this year in order to better care for his middle-class family.  It wasn't all to support the rich.
     We have to stay diligent with our rational and mathematical logic, or we will always go with the flow of current thinking, which is almost always wrong, as JAM VIEWS continually highlights.  When the heated debate of the current tax reform was in full force, Larry Summers, a top Obama advisor, wrote in the Washington Post that tax reform would make no difference unless "you believe in tooth fairies and ludicrous supply-side economics."  Mr. Summers followed up about the specific cuts, "I am proudly guilty of asserting that it is some combination of dishonest, incompetent and absurd."
     One of the Friends of JAM (FOJ) sent me the current Wikipedia definition for the Laffer Curve.  This Curve, which illustrates the relationship between taxation and the resulting levels of government revenue, was originally sketched on a napkin in a meeting of Dick Cheney, Donald Rumsfeld, and Arthur Laffer.  The economy has consistently proven that the lower the tax rate, the more wealth for the citizens and the more wealth for the government.  Yet, the Wikipedia listing states, "The New Palgrave Dictionary of Economics reports that estimates of revenue-maximizing tax rates have varied widely, with a mid-range of around 70%.  There is a consensus among leading economists that a reduction in the US federal income tax rate would not raise annual total tax revenue."  What?  Consensus of whom?  Ridiculous!  This is what our children are being fed in college.  This is why JAM VIEWS attempts to stop us from blindly following the TV show, your professor, the government, your boss, that guy on the corner.  They are almost always wrong.
     Don't be mentally lazy.  Think.  Have a great week!

"Victory smiles upon those who anticipate the changes in the character of war, not upon those who wait to adapt themselves after the changes occur."  -  Italian Air Marshall Giulio Douhet

Many thanks to the WSJ, Forbes, & Fortune for the above statistics and quotations.

** For more information on Jeff's Books, Blog, and Legal Challenge, please visit www.jeffmartinovich.com.

** To access JAM Views directly please visit jeffreyamartinovich.blogspot.com 

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CAPITALISM NEEDS STRONG PUBLIC EDUCATION

     JAM Views periodically stresses the paramount importance of strong public education, and specifically economic education, for building and protecting capitalistic-democratic societies.  Without strong education systems, the elites and the entrenched government authoritarians always rule the bourgeoisie.  Throughout history, control of education and the money supply have been the two essential components for ensuring the haves remain the haves and the have nots do not get an opportunity to rise through the caste system.
     In the United States we are fortunate to live in one of the most free societies on Earth, but we still allow entrenched socialistic norms to control our pursuit of education.  Let's address a few recent events:

1.  Jason Riley, who writes the Upward Mobility column, frets that all of the public school's recent progress and reforms have lost much of their steam because "the same progressives who obsess over inequality and statistical disparities also fume at education reforms that have helped narrow learning gaps and thus led to better life outcomes for underprivileged groups in general."  New York City's Mayor, Commissar Bill de Blasio, wants the NYC top-ranked public schools to now replace their merit-based entrance exams with a racial quota system.  Why?  Two simple answers:

   a) Black and Hispanic students from the city's charter schools are admitted to the top high schools at twice the rate as their counterparts from other city public schools, and

   b) Asian-American students are awarded more than 50% of the slots even though they comprise only 16% of the city's public school students.

     Charter schools are wildly successful.  Don't let the legacy self-interests try to convince you otherwise.  Yet, the Commissar rabidly opposes them, because his top political campaign funders, teachers unions, oppose them. (How come all of the JAM Views Posts expose that everything is always, only, about the money?).  It's as simple as that, and it is a crime beyond all crimes.  We allow the country to keep the poor and mass of the middle class virtually uneducated in order to protect the aristocracy, with it all disguised as helping the underprivileged.  There is no greater crime in America.
     I have personally lived closely for nearly six years with men of little to no education.  There is no chance for them to rise and compete with the elites.  All programs, speeches, and billons of dollars in funding mean nothing for them now, because there was no strong education at the beginning.  Instead of stopping charter schools and merit-based testing, we need to multiply these schools and ideologies onto every street corner in America.  Seth Andrew, founder of Democracy Prep, stated it best.  "If the city had more high-performing charter schools, the specialized schools would be dramatically more diverse."  Sadly, just in NYC the charter-school wait list now exceeds 50,000 children.  The consumer always knows the truth.  Econ 101.
   
2.  A JAM Views reader from California commented earlier on our Post about the Asian-American discrimination suit against Harvard University, questioning, "Why do you support the Asian-Americans so much?"  I found that to be quite an interesting observation, as I actually don't know many Asian-Americans.  But, I certainly would like to know more, because I believe our reader simply mislabeled what I am attempting to promote.  What JAM Views "supports so much" is merit-based systems, equality of opportunities instead of outcomes, and outsized rewards for those who give outsized efforts.
     Kay Hymowitz reported in the City Journal that the great majority of these NYC Asian students come from a low-income neighborhood in Brooklyn where Chinese immigrant parents "have crammed themselves into dorm-like quarters, working brutally long hours waiting tables, washing dishes, and cleaning hotel rooms."  Instead of using this life as an excuse, "Asian kids read more books, watch less television, and study longer.  In poorer families, money goes toward test-prep, instead of $200 sneakers."  This is the true American Dream.  The Commissar has it all backwards.

3.  Finally, I want to highlight a significant, positive step forward in balancing the scales of opportunity.  Anne Tergesen has written, "States are now turning to financial-literacy programs to educate teens before they form bad spending and payment habits, hoping to save taxpayers money over the long term by reducing public assistance, including Medicaid.  Nineteen states have now implemented financial literacy requirements before students receive their high school diploma.  They must be JAM Views members!
     Of course, many academics are protesting these requirements for taking away time from other studies.  Don't they understand that this is the most important study?  Without it, most of the rest will be meaningless!  If you have no job, nor home, nor savings, you will not likely be attending Madame Butterfly at the Met.  Owen Cole, a high school senior in Kentucky who also brings home $600 a month from Chick-fil-A, decided after taking the courses to attend a local community college for two years before transferring to a four-year state university in order to avoid a heavy load of student loans.  He said, "After finding out the costs, I knew the extra spending might hurt me later in life."  We should all listen more to Owen.
   
     Education is everything.  Financial education is the most important.  Anyone who doesn't believe this is merely supported directly, or indirectly, by someone who does.

"War is an ugly thing, but not the ugliest of things.  The decayed and degraded state of moral and patriotic feeling which thinks that nothing is worth war is much worse.  The person who has nothing for which he is willing to fight, nothing which is more important than his own personal safety, is a miserable creature and has no chance of being free unless made and kept so by the exertions of better men than himself."  -  John Stuart Mill

* Many thanks to the WSJ, Forbes, & Fortune for the above statistics and quotations.

** For more information on Jeff's Books, Blog, and Legal Challenge, please visit www.jeffmartinovich.com.

** To access JAM Views directly please visit jeffreyamartinovich.blogspot.com 

* SUBSCRIBE TO JAM VIEWS

WINTER IS COMING

     Too much debt eventually gets us all: personally, corporately, and nationally.  I have made this mistake many, many times.  For example, in 2010, amidst the regulator backlash following the Financial Crisis, I spent our cash and debt on acquiring financial practices from Merrill Lynch, UBS, and Morgan Stanley.  Taking advantage of the market dislocation, I was able to provide our MICG shareholders a $4 increase in equity value for every $1 spent on acquisitions.
     But, I didn't keep enough "powder dry" for our own Black Swan, which by definition I never saw coming.  If I had saved $10 million in the war chest, I could have written a large "settlement" check to the government regulators and had them move onto the next target.  Instead, I demanded arbitration to defend our people, and a terrible spiral, cyclone, ensued.  I should have saved the money.
     The United States is finally bumping up against the wall of too much debt, and extreme consequences are on the way unless radical changes to entitlement spending are enacted quickly (which isn't going to happen in this environment where everyone has lost their minds).  So, let's first clarify for our JAM Views members the difference between debt and deficit.  The talking heads interchange these terms all day long, and this confuses most observers and obfuscates the dire station we are in.
     The DEFICIT is the yearly amount we are dipping into our credit line (we have no savings) to pay our current bills.  This is your Wells Fargo overdraft for small items, or credit line secured by the house for the big items (the country's credit line is secured by your future life wages and the anticipated taxes on those wages = "the full faith and credit of the United States").  The last balanced budget was under Bill Clinton, so we have been dipping into the line ever since, up to the tune of $900 billion just this year!
     The NATIONAL DEBT is the total mortgage, to which the annual deficits keep increasing the balance, or which is also increased in large chunks by the Federal Reserve printing more money to fund the Iraq Wars, or when the Obama Administration bailed out the banks with trillions of newly printed dollars. (All of this printing eventually, always, creates significant inflation, but we will cover that another day).  The U.S. now owes $22 Trillion in Treasury debt (the country's mortgage), with the majority of principal due to bondholders over the next 8 years, and with $6.5 trillion owned by China, Japan, and Saudi Arabia.  Also, don't forget that the true national debt is over $70 trillion once we include our unfunded liabilities (the commitments we have made without saving the money to cover).
     Now, debt is only a problem in relation to revenue; with our household, our company or our country.  Unfortunately, our national debt has ballooned to 80% of GDP (revenue) and in the next few years will equal 100%.  Very, very soon, with this tenuous balance sheet, America's creditors (buyers of U.S. Government bonds - home and abroad) are going to demand much higher interest rates due to risk of default, "cram down" or other political options. (Don't believe it will never happen, as we have done it multiple times before, and President Trump has mentioned these options more than once).
     The Perfect Storm current possibility, or probability, comes from the fact that after the 2008 Financial Crisis, the Obama Administration decided to use monetary stimulus (lower interest rates and printing money) instead of fiscal stimulus (lower taxes and reduced regulations).  Therefore, instead of reducing the mortgage-bank debt, we greatly increased and redistributed the debt to the U.S. Treasury, corporations, and personal consumers.  We piled on more and more debt to solve a debt crisis; and the world followed us.
     Over the past 10 years, total global debt (sovereign, corporate, household) has risen 75%.  Countries owe $60 trillion, and corporations owe $66 trillion, with McKinsey reporting that 40% of U.S. companies are rated only one notch above "junk bond" rating or lower!  Pause for effect.  The Bank for International Settlements estimates that 10% of long-term companies in the developed world are now "Zombie Companies," meaning earnings before interest and taxes don't even cover the interest expenses.  They are just sucking in more capital to survive. (Lyft IPO?).
     Why do you think everyone in Washington calls for a public execution of the Federal Reserve Chairman whenever he now mentions raising interest rates?  A 1% increase in rates will be disastrous on this huge debt load.  These higher interest payments will crowd out business investments and the nation's growth rate will stall; which in turn will mean less tax revenue, lower household incomes and a higher debt to GDP ratio, and the cycle, or cyclone, will feed upon itself.
     The only two answers, again, are to increase growth (pro business) and to actually reduce entitlement spending (Medicare, Medicaid, & Social Security).  Don't follow the talking head's misdirection about defense and discretionary spending.  Those numbers are down in the noise and at historical lows.  At current defense budgets of only 3.1%, we have already given up the world to the Chinese.
     So, which politician on TV lately has the guts, or the brains, to raise the social security full benefits age to 70, and then index it to increasing life expectancies?  Stopping the growth of entitlements is the only answer, only answer; even strong growth cannot eclipse this tidal wave.  As educated JAM Views members, we would be extremely naive to believe a politician could pull this off in today's environment, so the prudent decision would be to plan for the more likely scenario.
     Remember, in investing, always do opposite what feels good at the time, and always do opposite what everyone else at the cocktail party is doing.

"The race to zero fees and zero advice is the next scheme to gather and control capital, and people, and is the unfortunate result of an industry which forgot that 'price is only a concern when value is in question.'" -  Bob Vukovich, Just One More

* Many thanks to the WSJ, Forbes, & Fortune for the above statistics and quotations.

** For more information on Jeff's Books, Blog, and Legal Challenge, please visit www.jeffmartinovich.com.

** To access JAM Views directly please visit jeffreyamartinovich.blogspot.com 

* SUBSCRIBE TO JAM VIEWS

* PLEASE USE THE BELOW SHARE BUTTONS TO SPREAD THE WORD!