May 14, 2019

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

– A quote attributed (in the movie “The Big Short”) to Mark Twain

The folksy “Mark Twain” quote (above) seemed like a perfect lead-in to the great film of Michael Lewis’s great book, “The Big Short,” which centered on the kinky derivatives that led to the worst financial crisis since the 1930s. The problem is, the quote itself is spurious. It does not appear in any of Mark Twain’s books, essays, letters or speeches. Apparently, Mark Twain never wrote it or said it, or anything like it.

By contrast, The Big Short (book) opened with a real quote by Leo Tolstoy (from an 1894 religious tract):

“The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of a doubt, what is laid before him.”

Here are a few examples:

Examples of “Alternative Facts” (or Alternative Explanations)

We’re at “full employment.” With the unemployment rate at a near-50-year low of 3.6%, we are in the traditional “full employment” area (generally, below 4%), since some unemployment is always inevitable due to job-changing and other technical reasons. However, 1 in 9 able-bodied men in their peak working years have dropped out of the labor market. That has turned around, slowly, in the Trump era, but 11% of prime-age males are not working or looking for work (“in the labor force”). This is not full employment.

Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.

Capitalism is dead (or dying): The fact that a majority of young people say they favor socialism over capitalism may be attributable to a lack of education about what each term means. Perhaps “socialism” sounds like “social media,” which they like. Capitalism isn’t dead when the vast majority of humans on earth are struggling daily to make their lives better and billions are escaping poverty in the process. Our innate drive toward creating wealth is part of our human nature. It cannot be legislated out of existence.

The wealth gap is increasing. This is true, but all groups are rising in income – poor to rich. The rich are growing wealthier faster. That’s a sign of hope, not despair. Most billionaires earned their wealth through innovation rather than inheritance, and we need these rich taxpayers to get even richer, since many major capitalist icons (starting with prompts from Warren Buffett and Bill Gates) are giving away the bulk of their multi-billions to charities in life or at death. We should hope they earn more, so they can give more.

The middle class is shrinking. Political candidates endlessly play the misery card, saying “the middle class is dying” (or shrinking). It’s shrinking because the middle class has gotten richer. The upper-middle class has grown from 12.9% of Americans in 1979 to 29.4% as of 2014. There are more rich, fewer poor:

Racial divisions are worse than ever. This is a relatively new myth. From 2001 to 2013, race relations were good by any measure. In 2013, 66% of black Americans and 72% of white Americans thought race relations were “good.” By 2016, those numbers were 20% lower, yet this pessimism is unjustified by the facts. In 1958, for instance, only 4% of Americans approved of black-white intermarriage, while 87% approved of such marriages in 2013. As we become more aware of past injustices, we do more to alter our views. Ironically, we think the situation is “worse” when our growing awareness reduces racist behavior.

The Economist this week (“Everyone’s a little less racist,” May 11-17, 2019) showed how measures of “implicit bias” have declined markedly since 2012, even as polls reflected rising racial tension. The Economist quoted a Harvard study of 4.4 million Americans, which showed that implicit bias based on race fell by 17% in the last decade, while “explicit biases have declined by an even-larger 37%.”

America is more divided than ever. Almost 80% of Americans polled last November said America was “more divided than ever.”  May I suggest that we’re not close to being the “most divided” America ever. For the top three spots in the “divided America” derby, I would nominate (1) a Civil War that killed over 600,000 in the 1860s, (2) crippling Jim Crow laws for nearly a century thereafter in the South (and parts of the north) and (3) hundreds of bombings per year by anti-war domestic terrorists in the early 1970s.

“Alternative facts” are important – they provide a different camera angle and an alternative explanation.

About The Author

Gary Alexander

Gary Alexander has been Senior Writer at Navellier since 2009.  He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks.  For the previous 20 years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.

Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s.  He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division.  Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander


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