When I read this jeremiad from the editors of the Wall Street Journal on the relatively small number of initial public offerings offered in the United States last year, it moved me to do a little quick investigation of the 2016’s IPOs and how much was raised by them. You can see the results of those investigations here and here.

114 IPOs were made last year and they raised about $24 billion. In 2006 there were 198 IPOs in the United States raising about $40 billion (in nominal dollars). That’s a big difference.

I found the nature of the companies making IPOs concerning as well. The response to an IPO is a statement about where investors expect money to be made in the future. One third of all of the IPOs were in the healthcare sector, a number wildly out of proportion with healthcare’s present role in the economy. Healthcare presently constitutes about 17% of the economy, employing about 8% of workers.

The second greatest number of IPOs was in the financial sector. The financial sector is about 8% of the U. S. economy and employs about 4% of workers. IPOs in these two sectors also raised a lot more money than those in other sectors.

The foregoing supports a point I’ve made repeatedly here. We’re subsidizing both the healthcare and the financial sectors. If you subsidize something, you expect to get more of it. Capital is limited and two sectors, neither of which employ a large number relative to their earnings, are attracting a disproportionate amount of the investment.

It’s the subsidies, stupid. People are always willing to bet on a sure thing.

I want to endorse the goals outlined in Alana Semuels’s piece at Atlantic:

There was a time, half a century ago, when what was good for many American corporations tended to also be good for America. Companies invested in their workers and new technologies, and as a result, they prospered and their employees did too.

Now, a growing group of business leaders is worried that companies are too concerned with short-term profits, focused only on making money for shareholders. As a result, they’re not investing in their workers, in research, or in technology—short-term costs that would reduce profits temporarily. And this, the business leaders say, may be creating long-term problems for the nation.

“Too many CEOs play the quarterly game and manage their businesses accordingly,” Paul Polman, the CEO of the British-Dutch conglomerate Unilever, told me. “But many of the world’s challenges can not be addressed with a quarterly mindset.”

despite any reservations about the specific policy changes she outlines. We need to align the incentives we put in place with national objectives. This conclusion, however, worries me a bit:

Perhaps most compelling of the American Prosperity Project recommendations are those that companies can undertake on their own. After all, Congress has been and will likely be locked in gridlock going forward, and it’s doubtful it will take up bills that address corporate taxation or tax incentives in the new session. So instead there are recommendations in the report that individual companies can implement, if they truly want to put an end to short-termism. They include giving enhanced shareholder voting rights to investors who hang onto stocks for the long term, and voting on executive pay in a longer time frame so that executives’ incentives aren’t aligned with the need to post big quarterly gains. They also include discouraging short-term earnings guidance so that companies can focus more on the long term. Companies can, after all, refuse to issue earnings guidance, and only share financial information when they issue quarterly reports and other financial statements.

Years ago when I was working for a Fortune 500 company, my boss said something to me that has stayed with me to the effect that if he looked beyond the next quarter the quarter after that there would be another guy sitting at his desk who was focusing on the next quarter rather than the longer term.

Off-hand some of the reforms we need to consider include:

• Reverse the Clinton era reforms to the treatment of stock options as executive compensation that incentivized short term thinking and put the gap between top management pay and ordinary worker pay on steroids.
• Stop incentivizing companies to invest overseas.
• Provide greater incentives for companies to invest here at home.
• Change the H-1B and L-1 visa programs so that businesses can bring in the workers they need without using importing workers as leverage to reduce wages.

The economic story of the last fifteen or so years hasn’t been a shortfall in consumer spending or government spending but not enough business investment and importing too much. We need policies beyond cuts in the top marginal rates of the personal income tax.

At Forbes Adam Andrzewski proposes ten ways that the incoming Trump Administration can cut waste in the federal government:

Donald J. Trump won the presidency by giving real hope to millions of voters that their situation could improve. Now he and Congress have a chance to take action and deliver real results. One way to encourage economic growth is to stop wasting taxpayer dollars on activities that do nothing to create wealth.

At OpenTheBooks.com we believe that in order to make America great again we need to hold government accountable again. Here are ten steps the president elect can take to eliminate wasteful spending and rein in an out-of-control federal government…

The ten ways are:

1. Disarm federal regulatory agencies
2. Fire EPA lawyers
3. Blockade federal funds for sanctuary cities
4. Cut funding for agency self-promotion
5. Direct small business funds … to small business
6. Eliminate the Export-Import Bank
7. Reduce Federal Funding for the Ivy League
8. Finish the task of VA reform
9. Open the books on federal employee pensions
10. Cut federal funding to municipalities paying lavish salaries to public employees.

I agree with all ten of them but, sadly, if all ten were done tomorrow it would barely be a rounding error in federal spending. The overwhelming preponderance of federal spending goes to a bare handful of line items: healthcare, Social Security, military spending, interest on the debt. Federal healthcare spending is right around $1 trillion per year. If just 2% of that is waste and/or fraud, that’s $20 billion.

All of the measures listed are on the expenditure side of the ledger but there’s a tremendous amount of waste on the revenue side as well. Just look up “tax expenditures”, what to you and me are loopholes. GE doesn’t have 1,000 employees in its tax department through benevolence.

Don’t be surprised if, when the dust has settled, little or nothing is done by the Trump Administration to curb waste in the federal government. Each and every spending item or tax deduction has a constituency for whom its a matter of life and death. If this stuff were easy it would already have been done.

As we enter a new year we find ourselves, as we do at least every eight years, with one presidency ending and another presidency beginning.

Is it possible to evaluate presidencies objectively? How do you do it? How do you evaluate a presidency objectively as it begins or while on an ongoing basis?

In the past I’ve suggested that the best way to do that is be comparing what the president accomplished to what he said he’d accomplish. There’s a phrase describing any other yardstick: bait and switch.

Is that fair? Is it adequate?

If there’s one thing that we know about Donald Trump it’s that he’s rich. I thought it might be interesting to highlight the richest and poorest presidents. In today’s dollars after Trump the richest were (based on highest net worth):

while the poorest were:

At the time of his death Grant was broke. My great-grandfather remembered him selling firewood on the streets of St. Louis.

It’s hard to make a true generalization about U. S. presidents based solely on their highest net worth. Some of the richest and poorest were assassinated. Some of the most beloved were also the richest. Some were among the poorest.

The most populist was also among the richest.

At Brookings Jonathan Rothwell has an interesting post which repeats many of the things I’ve been saying around here for a long time. Real spending is much higher:

College tuition, net of subsidies, is 11.1 times higher in 2015 than in 1980, dramatically higher than the 2.5 increase in overall personal consumption over the period. For private education, from pre-K through secondary, prices are 8.5 times higher now than in 1980. For public schools, the rise is lower—4.7 from 1980 to 2013—but still far above general inflation.

I think he’s actually underestimating the increases a bit. In real terms we’re spending three times as much on education as we did 20 years ago. Outcomes have plateaued:

For the nation’s 17-year-olds, there have been no gains in literacy since the National Assessment of Educational Progress began in 1971. Performance is somewhat better on math, but there has still been no progress since 1990. The long-term stagnation cannot be attributed to racial or ethnic differences in the U.S. population. Literacy scores for white students peaked in 1975; in math, scores peaked in the early 1990s.

The explanation is largely higher spending on administators:

For higher education, a major factor driving up costs has been a growth in the number of highly-paid non-teaching professionals. In 1988, for every 100 full-time equivalent students, there were on average 23 college employees. By 2012, that number had increased to 31 employees, with a shift toward the highest paying non-teaching occupations. Managers and professionals now outnumber faculty, who comprise just a third of the higher education workforce.

If there’s a better example of Gammon’s Law in action than the educational system I don’t know what it is.

There’s an entertaining article at Nautilus speculating on why we haven’t seen signs of intelligent alien life so far. Maybe they’re all dead:

The aliens may have found their grave. As we sweep the radio frequencies, we hear only noise; as we slew our telescopes, we see barren pixel after pixel. Is that because our fellow inhabitants of the galaxy have done themselves in, reducing their home planets to cinders? Is the night sky a charnel house hidden under a veil of tranquility?

Last year Jack O’Malley-James, an astrobiologist at Cornell University, and his colleagues Adam Stevens and Duncan Forgan published their analysis of this macabre possibility. Just as astrobiologists have started to look for possible biosignatures—evidence of life, such as water or oxygen in planetary atmospheres—they might also look for necrosignatures, the remains of annihilated civilizations. And if we ever do find them, it would not augur well for our own prospects, because what makes us think we could avoid the fate that befalls all other intelligent beings in the galaxy?

Another possibility, not original to me but in some ways even more disquieting than the idea that we’re the last survivors, is that we are the Ancient Ones—the most highly developed intelligent life in our part of the universe.

This is troubling. The New York Times reports on problems with the New York State Teamsters Conference Pension and Retirement Fund:

Like many pension plans, the Teamsters fund was hurt badly by the steep market decline of 2008. Those overseeing the fund also tie its troubles to the decline of unionized employment in the trucking industry, which has translated into fewer contributions to the plan.

Both of those factors are real. But an examination of the fund identified other pernicious forces: most notably, illiquid, opaque and high-cost investments. At least 40 percent of the fund is in so-called alternative investments, including expensive private equity deals, hedge funds and real estate.

Although pension benefits may be somewhat less than they were expecting, the teamsters won’t be flung into penury even if the fund collapses—the U. S. taxpayer is on the hook for a good chunk of their pensions through the Pension Benefit Guarantee Program. The irony of people who are eligible for no pensions paying the pensions of people who are never seems to occur to anyone.

The question that should be asked is who has been benefiting from the NYSTCPRF’s mismanagement? I know it isn’t me.

Since 2015 capital outflows from China have averaged about $700 billion per year. A lot of that money is going into U. S. and Canadian real estate.

There’s no danger of a lack of liquidity—the PBoC can just issue more credit.