Straight Talk from Al Jacobs

 

 

A CRISIS IN THE OFFING

 

At the risk of sounding overly dramatic, I must report America appears to be on the road to a cataclysm, and nowhere is this more evident than in California. The cause of this is the rapid pace by which technology is automating many of the functions we humans traditionally performed, but which are no longer required of us. As automation becomes prevalent in a multitude of occupations, many of us will find ourselves without gainful employment … along with the income accompanying it.

 

The sorts of jobs most people engage in for a livelihood are routine, whether it requires the operation of a fork lift, the filing of documents in an office or the assembly of parts on an auto. We’re now at point where more and more of these occupations are relegated to machines. The benefit to the employer is no wage to be paid; the detriment to the employee is no wage to be received. Example: In the counties of Riverside and San Bernardino, known as the Inland Empire, many multinational firms operate massive warehouse facilities, some in excess of one million square feet. In an earlier time such structures required hundreds of employees. Today the functions can be performed with a small staff at an electronic console, remotely controlling all the operational equipment.

 

Another example: If the driverless automobile becomes a reality, when do driverless trucks fill the roads across the country? Take these facts into consideration: There are 3.5 million truck drivers in the U.S., with average annual salaries of $40,000. Add another 5.2 million employed in support of the industry who don’t drive trucks. When you consider the many businesses built around the trucking industry, such as motels and restaurants, you realize how dependent our economy is on the persons who operate these vehicles. Self-driving trucks will put millions of persons out of work. This is particularly crucial, for truck driving is one of the few remaining trades to provide middle class incomes to persons with no more than a high school education.

 

A final comment: There will naturally be jobs which a machine cannot perform, so the human hand and brain is still a necessity. However, it’s quite likely those tasks not automated by the computer or the robot will be shipped overseas to countries whose employees subsist on salaries of three or fewer dollars per day, for once again technology will facilitate job coordination at great distances. It seems clear an unemployment never before experienced may await us in the not too distant future.

 

 

Al Jacobs, a professional investor for nearly a half-

century, issues weekly financial articles in which he

shares his financial knowledge and experience.

You may view them on http://www.roadwaytoprosperity.com

 

Straight Talk from Al Jacobs

 

 

EDUCATIONAL FAILURE – WHO’S TO BLAME?

 

The editorial’s headline is certainly designed to attract attention: “California is failing to educate students.” The text that follows paints a depressing picture of schooling in our nation’s most populous state. If the statistics are accurate, the 3.2 million students who took the California Assessment of Student Performance tests scored dismally, with average proficiency in English at 48.56 percent and math 37.53 percent. These are, of course, failing grades.  As State Superintendent of Public Instruction Tom Torlakson declared, “We have much work to do.”

 

The editorial then goes on to philosophize about social justice as it states: “One of the great social injustices in California is the pitiful educational outcomes for low-income students.” As evidence of this, it further reports’ “For economically disadvantaged students, only 35.52 percent demonstrate proficiency in English and 24.57 percent in math.” The editorial concludes with “Our students deserve better. With such abysmal results, it’s no wonder majorities of Californians support the idea of school vouchers.”

 

Though I’m not the editor of a prestigious newspaper, I too have opinions concerning education. As I grew up during the Great Depression, my family was as low income as possible. I nonetheless performed reasonably well in my classes, but only because I studied my lessons and completed my assignments to the best of my ability. It’s my suspicion the students who are doing badly – economically disadvantaged or otherwise – are not doing much of anything to learn what is being presented to them. It’s quite likely the editor’s comment that “Our students deserve better” should be revised to read: “Those students who are failing to take advantage of our school system deserve the poor grades they receive.”

 

But most notably, I disagree with the editorial’s headline. I contend California is not failing to educate students. The vast majority are satisfactorily completing their studies, with many going on to college. The graduation rate, which has continued to climb in each of the past seven years, now stands at 83.2 percent. The many dedicated instructors are doing their jobs effectively. Those students who apply themselves are being well served. Only those who, for whatever reason, fail to take advantage of the schooling offered to them are receiving “pitiful educational outcomes.”

 

 

Al Jacobs, a professional investor for nearly a half-

century, issues weekly financial articles in which he

shares his financial knowledge and experience.

You may view them on http://www.roadwaytoprosperity.com

 

See why Tesla Motors has never generated a dime of actual profit. Visit Straight Talk from Al Jacobs. www.roadwaytoprosperity.com

Straight Talk from Al Jacobs

THE ECONOMICS OF SOLAR ENERGY

 

It appears another solar firm is being accused of defrauding its customers through deceptive sales practices.  This time it’s Vivant Solar, headquartered in Lehi, Utah, and operating in 21 states. The charges, filed by New Mexico Attorney General Hector Balderas, contend the company’s door-to-door sales tactics and agreements constitute unfair and unconscionable business practices. Prosecutors allege, among other things, that the staff systematically overstates possible cost savings to consumers.

 

Despite claims to the contrary, the concept of solar energy as a time-proven and clean source of power is valid. In particular, recent improvements in the manufacture of photovoltaic panels are making solar home installations ever more competitive. The reality, nonetheless, is that the industry is not yet economically competitive. It’s for this reason there are unscrupulous contractors and companies driven to compete through the practice of exaggerated claims and outright deception.

 

If there’s a fundamental problem, it’s that government has the ability to pass financial benefits on to selected parties, but cannot make an inherently uneconomical process profitable by decree. One clear example of this is, despite the granting of both federal and state tax credits, the electrically operated motor vehicle cannot compete in price with one propelled by an internal combustion engine. Without a doubt this explains why Tesla, Inc., the firm operated by a superb marketer, Elon Musk, who managed to manipulate the per share price to over $320, has never been able to generate one dime of actual profit for his shareholders.

 

It goes without saying there are fortunes to be made when government money flows. In the energy conservation business, which has gained the favor of the nation’s political hierarchy, the keys to its continuity are clearly tax credits, cleverly contrived initial public offerings and government grants. Whether or not faulty economics will eventually be its downfall – as will be the reason California’s high speed rail program, championed by outgoing Governor Jerry Brown, will be scuttled – is uncertain. If, somehow technological improvements make solar energy truly competitive, it may become viable. If not, it must go the way of the pterodactyl.

 

A final word: In the government subsidies business, being on the inside looking out , rather than on the outside looking in, is a distinct advantage … to which former Vice President Al Gore can attest.

 

Al Jacobs, a professional investor for nearly a half-

century, issues weekly financial articles in which he

shares his financial knowledge and experience.

You may view them on http://www.roadwaytoprosperity.com

Is capital punishment an absurdity? For a few views on the death penalty, visit Straight Talk by Al Jacobs. www.roadwaytoprosperity.com

Straight Talk from Al Jacobs

LESSONS IN ABSURDITY

A recent editorial in one of America’s politically progressive newspapers expresses its unfavorable opinion of capital punishment, emblazoned with the headline: “Death penalty absurdities.” It first describes a prison inmate awaiting execution for the 1985 murder of a police officer in Alabama, but who is now so old and infirm he’s unable to recall the crime. The question posed to the court: Does his inability to remember committing the offense make the decreed penalty unconstitutional?  A second appeal under consideration relates to an inability to insert a lethal-injection catheter into the arm of the condemned, with the defense’s contention an execution will constitute torture and is therefore impermissible.

I acknowledge both situations constitute absurdities. The fact endless appeals – rules enacted by death penalty opponents – extend the lives of those sentenced to death for decades insure they’ll eventually recall little or nothing of their offenses. As for lethal-injection malfunction – a ludicrous procedure also instigated by death penalty opponents – it allows no consideration for a simple death by hanging, which is certainly not historically regarded as torture.

As we’re discussing absurdities, let’s include one the editor failed to mention. Over the years I’ve encountered philosophical emoting as to why capital punishment is inherently evil, but never a rational justification why Charles Manson and his murderous cohorts were never executed. After their death penalties were voided by the California Supreme Count, headed by then California Chief Justice Rose Bird, an avowed death penalty opponent, they remained incarcerated even after capital punishment was reaffirmed by the voters of the state. Why is it 46 years of taxpayer-provided room and board for Manson, who died in 2017 at the age of 83, did not constitute an absurdity?

A final comment: As a Californian, I’m now a capital punishment opponent. Even if the death penalty remains on the books, it will never again be carried out, so those who receive the sentence will permanently reside on death row – which has become private residential quarters for deranged murderers pursuing continuous appeals. For society’s benefit, it’s far better to terminate the death penalty, insuring that these vipers become life sentence prisoners who must regularly mingle with other inmates. It will then be instructive to see how well they fend for themselves.

Al Jacobs, a professional investor for nearly a half-

century, issues weekly financial articles in which he

shares his financial knowledge and experience.

You may view them on http://www.roadwaytoprosperity.com

I just thought you should know my 7-year-old $6,500 Nissan Altima can do everything your new $48,000 BMW can do. www.roadwaytoprosperity.com

Straight Talk from Al Jacobs

 

WHAT WE BUY – AND WHY

 

Do you lease a fancy motor vehicle, wear the latest name brand clothing, and regularly eat meals in the more exquisite restaurants? If so, welcome to the world of the upwardly aspiring.  A person's possessions speak volumes on what that individual regards as important. The advertising industry, devoted to identifying what the citizen considers significant, manipulates the market to create those choices. With massive sums to be spent, the competition is as fierce as it is grotesque.

 

What brand of watch do you wear? Whether it’s a top-of-the-line Rolex, a fashionable Cartier, a respectable Bulova, or an economy Timex, recognize that all keep excellent time. The day of the mechanical Swiss movement is a thing of the past. The current battery operated models all do a better job than the "precision" pocket watch your Uncle Elmo carried as an engineer on the Lackawanna Railroad. The only justification for a high-priced model is self-image and –  let's face it – the illusion of prosperity.

 

What can be said about wristwatches is equally true about other highly promoted products. These include magazine offerings, timeshare projects, $300 per ounce bottles of perfume, Las Vegas weekend getaways, $1,800 ballpoint pens, and the purchase of lottery tickets, to name just a few. As a rule of thumb, the more overpriced the merchandise, the more innovative its promotion. Perhaps there’s a connection, if only because moderately priced items that reflect honest value incur less sales resistance, so need not be touted with such vigor. Reflect, for a moment, on the recognizable voices and faces that make the outrageous claims. If there’s a benefit to this, perhaps it’s that the association of certain marketing celebrities with a product of any sort saves you the effort of analyzing the offering; you may reject it out of hand.

 

In short, how you conduct your affairs as a consumer relates to what’s important in life. As a person with limited resources, but aspirations for the future, embrace thrift and discipline. As the years pass and your net worth increases, then modify your conduct accordingly, but keep in mind that these be deliberate choices. Don’t let advertising pressures or market manipulators preempt your decisions. And as a last word, remember this: If a vendor must buy a dozen pages of advertising to say how wonderful its product is, it can’t be.

  

Al Jacobs, a professional investor for nearly a half-

century, issues weekly financial articles in which he

shares his financial knowledge and experience.

You may view them on http://www.roadwaytoprosperity.com