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The business lobby’s chance to do what’s right for the country

The Business Roundtable, which represents the chief executives of the largest American companies, has always fancied itself as the business lobby that rises above the grubby pursuit of narrow self-interest, that eschews partisanship and hard-edge ideology, that understands that what is good for America is good for business. Its new motto, “More than Leaders. Leadership,” is meant to reflect that high purpose.

It is also worth noting that no organization has been more responsible for getting tax reform to the top of the congressional agenda than the Business Roundtable. That’s not because its CEO members want to cut tax rates for themselves and their rich friends — actually, they have been clear they don’t favor cuts in individual taxes. Rather, it is because they believe the corporate tax code, with its high statutory rate of 35 percent, its taxation of foreign profits and its endless list of arcane loopholes and preferences, makes their companies less competitive and less profitable and encourages them to move jobs, technology and investment overseas. And they are right about a lot of that.

Now, with recent passage of the tax bill in the House and approval by the Senate’s Finance Committee on the strength of only Republican votes, the Roundtable stands on the verge of getting the corporate tax reform that it has lobbied for for nearly two decades — and, with it, roughly speaking, a $50 billion cut in corporate taxes each year. But their provisions come as part of an unsavory package that would:

• Eventually add more than $200 billion a year to a federal budget deficit that the Roundtable itself has warned is reaching dangerous levels.

• Further expand the current tax giveaway enjoyed by owners of law and accounting firms, real estate partnerships, private investment funds and large family-owned firms that masquerade as “small businesses.”

• Deliver significant income tax cuts to most high-income households while raising taxes for a sizable number of middle- and working-class families and failing to expand the earned income tax credit for the poor, as long advocated by the Roundtable.

• Reduce or eliminate the federal tax on inherited wealth, including billions of dollars in unrealized capital gains that have never been taxed.

• And, most significantly, sabotage Obamacare in a way that will lead to dramatic increases in premiums on health insurance exchanges and add millions of Americans to the rolls of the uninsured.

The question Roundtable and other business leaders must now ask themselves: What price is worth paying to achieve corporate tax reform?

The economic cost will come in the form of runaway federal debt that, at some point, will drive up interest rates to higher levels that will offset any economic growth that results from increased investment in research, product development and new equipment.

Or perhaps, instead, some future Republican Congress decides to pay for this massive tax cut by reducing spending on education, infrastructure, basic research and public health. Investment in such public goods boosts economic growth no less than private investment, so cutting it would also significantly offset the growth-inducing effects of corporate tax reform.

In other words, the Roundtable and other proponents have oversold the economic benefits from corporate tax reform, which Democrats have acknowledged is needed. In the short term, it is more likely that corporations will use their tax cuts to buy back shares and increase dividends than to make productivity-enhancing investments. If there were good investments to be made, companies would have already made them, using the record amounts of profits they are already earning or with money borrowed at today’s record-low rates.

Under the existing tax code, with its tax credit for research and development, accelerated depreciation and full interest deduction, the effective tax on new investment is already at or below zero for most corporations. Additional cuts in taxes on capital will wind up mostly rewarding old investments rather than inducing new ones. The major economic boost from the Republican bills is that new investment is more likely to be made at home rather than abroad.

In the end, any boost to wages and incomes for most households that comes from cutting business taxes is almost sure to be less than promised. Note that most of the rosy scenarios put forward by the Roundtable and the White House talk about “average” incomes, as if the gains from economic growth will be evenly divided. In reality, we know that gains from growth in recent years have been badly skewed to those at the top. If there are any wage gains trickling down to the typical household, they are likely to be in the hundreds, not thousands, of dollars a year.

But the bigger question facing the Roundtable is the political price it will pay for its unqualified support for a tax bill that violates its ethos that what’s good for the country is good for business.

By offering its full-throated endorsement to a tax bill that worsens already troublesome income inequality, robs the Treasury of funds badly needed for public investment, shifts the tax burden from Republican states to Democratic ones and knocks the foundation out from under Obamacare, the Roundtable would be giving a big middle finger to Democrats. Democrats will surely return the favor if and when they return to power in two or four years — an outcome even more likely with passage of this unpopular legislation.

It will further poison the political atmosphere in Washington, polarize voters along partisan lines and strengthen the hand of ideological hard-liners in both parties. Government will become even more dysfunctional, which in the long run will surely be a greater threat to corporate profits and economic growth than the current corporate tax code.

Earlier this year, the chairman and several members of the Roundtable, at considerable political risk, resigned from a pair of White House advisory boards in the wake of President Trump’s comments about racial violence in Charlottesville. By doing so, they reinforced social and political norms that are essential to democratic capitalism and were rightly praised for it.

This tax legislation represents a similar threat and a similar opportunity. By withdrawing their support until significant changes are made to provisions unrelated to the corporate tax, corporate leaders are in a unique position to help the economy, help the country and help themselves.

More than leaders. Leadership.

Read more:

No, the economy wouldn’t be better off if everyone moved to San Francisco

It took the worst of Trump to bring out the best in Corporate America Source:

The Trump administration says we have to kill elephants to help save them. The data says otherwise.

Supporters of trophy hunting say that permit fees from the practice, which can run into the tens of thousands of dollars in the case of large game like elephants, can be put toward conservation efforts that help bolster the populations of endangered animals.

In part, that’s the logic behind the Trump administration’s reversal of an Obama-era ban on importing African elephant trophies from Zimbabwe.

“The U.S. Fish and Wildlife Service (Service) has made a finding that the killing of African elephant trophy animals in Zimbabwe, on or after January 21, 2016, and on or before December 31, 2018, will enhance the survival of the African elephant,” according to a notice posted Friday in the federal register.

But if the logic of killing elephants to save them strikes you as questionable, you’re not alone.

As of 2014 the African elephant population stood at an estimated 374,000, according the Global Elephant Census, a massive and costly effort to measure the continent’s remaining savanna elephant population. That’s down from an estimated 10 million elephants at the turn of the 20th century, and from 600,000 of the animals as recently as 1989.

The more detailed population trend data from the census showed that populations had been on a rebound from 1995 to about 2007. But since then, elephant populations have been declining by a rate of about eight percent annually, or 30,000 elephants each year.

“These dramatic declines in elephant populations are almost certainly due to poaching for ivory,” according to the census. "Elephant poaching has increased substantially over the past 5–10 years, especially in eastern and western Africa."

It’s theoretically possible, of course, that population declines would be even worse without the legally sanctioned killings of hundreds of elephants a year. But there are also a number of very good reasons to suspect that trophy hunting does not bring any great benefit to Africa’s elephant populations.

For starters, the hunting of elephants brings in very little revenue. A 2017 report by Economists at Large, an economic analysis firm based in Australia, found that in eight African countries trophy hunting amounted to less than 1 percent of total tourism revenue and 0.03 percent of the countries’ total GDP. A 2015 National Geographic report found that only minimal amounts of revenue from game hunting actually trickled down to the communities managing elephant populations. Government corruption is a big factor in this, with authorities keeping hunting fees for themselves and seizing wildlife lands to profit from hunting and poaching.

Zimbabwe, in particular, has been rife with bad wildlife management practices, which is why the Obama administration banned elephant trophy imports from the country in the first place.

“For decades, Zimbabwe has been run by a dictator who has targeted and killed his political opponents, and operated the country’s wildlife management program as something of a live auction,” said Wayne Pacelle of the Humane Society of the United States in a blog post. “Government officials allegedly have been involved in both poaching of elephants and illegal export of ivory tusks. Zimbabwean President Robert Mugabe even celebrated his birthday last year by feasting on an elephant.”

Before the Obama administration’s ban, animals hunted in Zimbabwe accounted for nearly half of all elephant trophy imports to the United States, according to Fish and Wildlife Service data analyzed by the Humane Society. After the ban was put in place, elephant trophy imports fell dramatically.

In Zimbabwe alone, from 2005 to 2014, American hunters imported an average of nearly 200 elephant trophies each year. As of 2016, that number had fallen to just three. If the number returns to historic averages after the Trump administration’s rule change, roughly 200 additional elephants would potentially be killed each year by American hunters in Zimbabwe.

The ban’s reversal comes at a particularly inauspicious time for Zimbabwe, just two days after the military took control of the country, accusing the government of corruption. “This fact in and of itself highlights the absurdity and illegal nature of the FWS decision to find that Zimbabwe is capable of ensuring that elephant conservation and trophy hunting are properly managed,” wrote the Humane Society’s Pacelle. Source:

Productivity still matters for worker paychecks

Median pay growth has been abysmal over recent decades: It rose only 12 percent between 1973 and 2015 while productivity rose by 73 percent. This stark fact highlighted in Figure 1 has led some to ask the question: Does productivity growth still benefit typical American workers?

Harold Meyerson, for example, wrote in American Prospect in 2014 that “for the vast majority of American workers, the link between their productivity and their compensation no longer exists.” The Economist wrote in 2013 that “unless you are rich, GDP growth isn’t doing much to raise your income anymore.” Jared Bernstein wrote in 2015 that “Faster productivity growth would be great. I’m just not at all sure we can count on it to lift middle-class incomes.”

It’s clear that over the last 40 years, the productivity growth we experienced was not enough on its own to generate substantial pay growth for typical Americans. But this does not necessarily mean that productivity no longer affects pay, and the distinction matters for policy. It could indeed be the case that typical workers’ pay is not much affected by productivity growth and instead determined by other factors. This would imply that policy seeking to raise living standards should focus primarily on equity issues rather than productivity, at least in the short term. On the other hand it could be the case that productivity growth acts to lift typical workers’ pay even as other factors — like declining worker bargaining power, technological change or globalization — are acting to suppress it. Under this view, even in the presence of these other factors contributing to inequality, typical workers would be better off with higher productivity growth than without it.

Our recent research addresses the question of whether incremental increases in productivity translate into pay increases, recognizing that many other things affect pay.  We rely on the natural experiment provided by the fact that productivity growth fluctuates through time. If productivity growth translates into pay, then we should see periods of higher productivity growth coinciding with periods of higher pay growth. If not, the two should be unrelated.

The data supports the first conclusion: Increases in productivity largely translate into increases in pay, holding all else equal. In times of higher productivity growth the typical American worker has seen higher pay growth, as shown in Figure 2 (for both the median worker and the average production/nonsupervisory worker). The relationship holds strongly across a number of empirical tests: There is a large and statistically significant link between productivity growth and growth in median and production/nonsupervisory compensation. Our estimates suggest that a one percent increase in productivity growth is associated with two-thirds to one percent higher median pay growth and half to two-thirds of a percent higher pay growth for production/nonsupervisory workers. (For more details on these results, see our paper “Productivity and Pay: Is the link broken?” presented last week at the Peterson Institute for International Economics’ conference on Policy Implications of Sustained Low Productivity Growth).

This may seem counterintuitive: If productivity growth largely translates into a rise in typical workers’ pay, then why is it that productivity has grown so much more than pay over the last four decades? Our finding implies that even as productivity growth has been acting to push workers’ pay up, other factors have acted to push workers’ pay down. On net, the overall pay growth for median workers has been close to zero. If productivity growth had been lower over the last 40 years, typical workers are likely to have done even worse.

Understanding what has caused this divergence between productivity and the typical worker’s pay is of central importance. One explanation for this divergence and the concomitant rise in inequality is technological progress. Yet since more rapid technological progress should cause faster productivity growth, if technological progress has indeed caused rising inequality we should see periods of faster productivity growth coincide with faster growth in inequality. We don’t see this; in fact, inequality tended to rise faster during the productivity slowdowns of 1973-1996 and 2003-2015 than during the productivity booms of 1948-1973 and 1996-2003. This should give us pause before accepting explanations of the divergence between pay and productivity based purely on technology.

Our research on this issue was partly inspired by the influential work of Larry Mishel and Josh Bivens at the Economic Policy Institute, who have highlighted the divergent trends in productivity and pay. They have responded to our paper in a blog, discussing points of agreement and disagreement. We and they agree that productivity growth is necessary to raise typical workers’ pay. Similarly, we and they agree on the importance of policies directed at reducing inequality.  The productivity growth we saw in the last 40 years was not in itself enough to raise living standards substantially for the median worker. And we tend to agree more than we disagree about the probable causes of the productivity-pay divergence.

Bivens and Mishel argue that we overstate the impact of productivity on pay because of the way we carry out our analysis. First they propose that we include the level of unemployment in our analysis (not just the change in unemployment). We are inclined to agree with their criticism here. There is a strong case for using the level of unemployment as a key indicator of labor market tightness. However, redoing our analysis in this way has only a small impact on our results.

Second, they argue that our results are not robust on the removal of the period of booming pay and productivity growth in the late 1990s and early 2000s. We have confirmed their statistical conclusion. It is true that removing this period meaningfully attenuates but far from eliminates the relation between pay and productivity growth.  However, this finding seems to us unsurprising and does not cause us to doubt our conclusions. The late 1990s/early 2000s represented the only period of persistently high productivity growth in the post 1973 period. So removing it diminishes the power of our natural experiment by limiting the variation in productivity growth.

Martin Sandbu at the Financial Times has also highlighted our work in a recent column. He raises two critiques of our analysis. First, he notes that we find a weaker relationship between productivity and pay before 1973 than since 1973. We agree with him that this is something of a puzzle. As we discuss in our paper, the extremely low variation in rates of productivity and pay growth during the late 1950s and early 1960s goes some way to explaining it, as it would tend to exacerbate the impact of noise and bias our estimates downward. In addition, including the level of unemployment in our regressions substantially raises the pre-1973 estimates and thus reduces the puzzle.

Second, Sandbu notes that our estimated relationships are often below one-for-one. This is correct. For the median worker our estimates are close to one and not statistically significantly different from one, while for production and nonsupervisory workers, our estimates are consistently between half and two-thirds, and often significantly different from both one and zero. As we note in our paper, this apparent difference bears further investigation. At the same time, given measurement error in productivity growth, one would expect the strength of the estimated relationship to be biased downward. The fact that our estimates for the median worker are close to one and for production and nonsupervisory workers are large, positive and significantly different from zero implies to us that productivity growth is doing much more to raise typical pay than an initial look at the productivity-pay divergence in Figure 1 would suggest.

Overall, the slow growth in typical workers’ pay over the last four decades and the large and persistent rise in inequality are extremely concerning on grounds of both welfare and equity. As policymakers and analysts seek to understand and reverse these trends, our analysis demonstrates that productivity growth still matters.

If productivity accelerates for reasons relating to technology or policy, the likely impact will be greater pay growth for the typical worker. This does not mean that policy should ignore questions of redistribution or labor market intervention: The evidence of the past four decades demonstrates that productivity growth alone is not necessarily enough to raise living standards. However, it does mean that policy should not focus on these issues to the exclusion of productivity growth. Strategies that focus both on productivity growth and labor market or redistributive policies are likely to have the greatest impact on the living standards of middle-income Americans. Source:

All about tactical asset allocation

Last week, I wrote about strategic asset allocation.

That’s when you maintain a fixed allocation percentage for your asset classes and rebalance those assets every year. It’s the set-it-and-forget-it approach to your portfolio.

Today, I want to talk to you about its more rebellious sibling: tactical asset allocation.

Tactical asset allocation is the practice of actively managing your portfolio and changing the amount you hold in each asset class based on how the market is performing.

To get a better understanding, let’s take a deeper look at how exactly asset allocation works and why tactical asset allocation might be a good fit for you.

What is asset allocation?

You can allocate these investments into “asset classes.” The major ones are:

  • Stocks. Otherwise known as equities. When you own a company’s stock, you own part of that company.
  • Bonds. These are like IOUs that you get from banks. You’re lending them money in exchange for interest over a fixed amount of time.
  • Cash. This includes physical money and the money that you have in your checking and savings accounts.

In short, asset allocation is just a fancy way of describing where you put your money. When you set up a strategic asset allocation plan, you decide on a goal of how much money you want to have in each asset class.

Confused? Don’t be. It’s a seemingly complex term. Sometimes I use the phrase “asset allocation” at cocktail parties to sound smart. The host, whose party I am crashing, usually looks at me, surprised, and asks me one question: “How did you get in here?” But is soon so charmed by my weirdness that I’m allowed to stay.

Aside from a phrase I use to alienate people, asset allocation is also an investing method based on a 1991 study by researchers Gary P. Brinson, Brian D. Singer, and Gilbert L. Beebower. They discovered that 91.5% of the results from long-term portfolio performance in pension plans came from the investments that were allocated.

How tactical asset allocation works

Tactical asset allocation also requires you to set up a fixed goal percentage for each of your asset classes (e.g., stocks, bonds, cash) and keep those asset classes within that goal over many years. And if you stopped there, it would be “strategic asset allocation.”

But tactical asset allocation requires you to constantly adjust your holdings in the short term.

Let’s take a look at an example:

Imagine you’re a 30-year-old who has her portfolio set up as such:

  • Stocks: 70%
  • Bonds: 20%
  • Cash: 10%

This is your base strategic asset allocation, or the ratio you want to keep your portfolio balanced for many years.

However, you recently found evidence that suggests that your stocks might see even more returns in the next year. So you rebalance your portfolio to take advantage of it:

  • Stocks: 80%
  • Bonds: 15%
  • Cash: 5%

If your research is correct, you’ll see even more returns since you’re investing more in your stocks.

Eventually, you’re going to want to rebalance the portfolio when the market reverts back to its original performance to keep in line with your goals. This is a short-term strategy used to complement your strategic asset allocation.

So that’s how tactical asset allocation works…but is it right for you?

Who is tactical asset allocation good for?

Tactical asset allocation might be appealing if you:

  • Don’t mind the risk. By responding to the market in the short term, you might find that your investments don’t perform well at all. If that happens, you’ll lose money.
  • Are disciplined. Tactical asset allocation is building off of your long-term goals. That means once your short-term investments have or haven’t paid off, you need to revert back to your original strategic asset allocation.
  • Want a more active role in your investments. Maybe you just want to be more hands-on with your investments. Maybe long-term investing is a little too boring for you (pro tip: It can never be “too boring”). In that case, tactical asset allocation gives you some of both worlds.

However, long-time IWT readers know that I don’t suggest you try and time the market.

Why? Simple: You’re probably going to get it wrong.

A 2017 study by the Center for Retirement Research at Boston College found that people who diverged from their target date fund investments in order to try to time the market underperformed those who just left their funds alone.

And here’s another one: The CXO Advisory Group, a firm of financial consultants with over 20 years’ experience, collected data from 2005 to 2012 and discovered that pundits and other market forecasters were only right roughly 48% of the time.

What does this all mean? You can’t predict market — at least in the short term.

The long term is another story.

Check out my favorite graph in the whole world.

S&P 500 (1950-2016)
Only the coolest people have favorite graphs.

Though there might be changes in the short term, the market trends up over a long period of time.

This fact should drive your investment decisions. Not the pundits telling you that XYZ stock is performing really well or your hunch that a certain industry is going to explode.

That’s why I suggest you invest a diversified portfolio of low-cost index funds and leave your assets alone.

However, even with strategic asset allocation, you’re going to have to rebalance once a year or so to prevent one asset from getting too large or small. (This protects you from being vulnerable to the ups and downs of a specific asset class.)

Often times though, people simply don’t rebalance their portfolios. The reason is twofold:

  1. People want more $$$. Why the heck would you take money out of one asset class that is performing really well and put it in one that isn’t performing nearly as well?
  2. People are lazy. Rebalancing portfolios isn’t exactly on top of everyone’s list of things they really want to do. So we put it off or just forget to do it altogether.

So how can you get the benefit of asset allocation without the constant maintenance? Choose funds that do the rebalancing for you.

Automate your portfolio with target date funds

I wrote about this in my article on strategic asset allocation, but it’s worth mentioning again: Target date funds (or lifecycle funds) are great funds for people who don’t want to worry about rebalancing their portfolio every year.

They work by diversifying your investments for you based on your age. And as you get older, target date funds automatically adjust your asset allocation for you.

Let’s look at an example:

If you plan to retire in about 30 years, a good target date fund for you might be the Vanguard Target Retirement 2050 Fund (VFIFX). The 2050 represents the year in which you’ll likely retire.

Since 2050 is still a ways away, this fund will contain more risky investment such as stocks. However, as it gets closer and closer to 2050 the fund will automatically adjust to contain safer investments such as bonds because you’re getting closer to retirement age.

These funds aren’t for everyone though. You might have a different level of risk or different goals.  

However, they are designed for people who don’t want to mess around with rebalancing their portfolio at all. For you, the ease of use that comes with lifecycle funds might outweigh the loss of returns.

One thing you should note: Most lifecycle funds need between $1,000 to $3,000 to buy into them. If you don’t have that kind of money, don’t worry. I have something for you at the end that can help you get there.

To recap: No matter how motivated you are about investing right now, you will find other things more urgent and important later. We are all cognitive misers with limited cognition and willpower. Investing in a target date fund lets you compensate for your natural weaknesses and biases by automating complex asset allocation decisions.

For a more in-depth explanation, check out my video all about lifecycle funds.

Master your personal finances

Asset allocation isn’t hard.  

What IS hard is getting started — which is why I’m happy you’re here.

If you’re interested in tactical asset allocation, chances are you already have a good idea of how you want to approach your investments.

However, if you want to earn MORE money so you can invest even more, I have something for you:

The Ultimate Guide to Making Money

I’ve included my best strategies to:

  • Create multiple income streams so you always have a consistent source of revenue.
  • Start your own business and escape the 9-to-5 for good.
  • Increase your income by thousands of dollars a year through side hustles like freelancing.

Download a FREE copy of the Ultimate Guide today by entering your name and email below and start earning more for your investments today.

All about tactical asset allocation is a post from: I Will Teach You To Be Rich. Source:

The Internal Branding Mandate

The Internal Branding Mandate

It seems obvious that developing successful relationships with customers requires strong and successful relationships with those inside the company. Strikingly, though, many companies ignore employees in their branding efforts.

Indeed, brands that focus on creating brand admiration from the inside are often the exception, not the rule. Yet if the people who represent the brand and deliver its promise to the outside world don’t themselves admire the brand, how can they credibly and authentically convince customers to do the same? Customers and other stakeholders often see employees and employees’ actions as synonymous with the brand. As such, it’s essential that companies build brand admiration among employees.

Employees As Brand Champions

It’s easy to see how enhancing brand admiration among employees helps a company to realize its value. Employee brand admiration activates pro-brand employee behaviors, including employee brand-loyalty.

Employees who admire the brand (1) want to work for the brand and are loathe to leave it. (2) They have a sense of ownership in the brand, taking personal responsibility for its achievement and success. (3) They are more forgiving of organizational mistakes. When employees admire the brand, (4) it plays a role in their lives even outside of work (e.g, at home), and (5) they are vigilant about competitor actions deemed threatening to the brand.

Employees who admire the brand are also brand advocates, (1) They are strong and authentic brand champions. (2) They go beyond their prescribed roles for the well-being of customers and the brand. (3) They participate in various brand community-related events. (4) They recommend the brand to friends. (5) They defend the brand from criticism. (6) They also encourage other employees to focus on the brand (versus focusing on internal politics or other negative company behaviors). (7) They also publically display their association with the brand (e.g., on T-shirts, branded gear, tattoos, etc.). Beyond contributing to employee morale, these outcomes should also reduce employee acquisition and retention costs and enhance employee and knowledge retention.

Recognizing the power of internal customers, Herb Kelleher, founder of Southwest Airlines (pictured), once noted the importance of treating employees like customers. He apparently succeeded at this effort.

When Kelleher retired after 37 years at Southwest Airlines, the company’s pilots and flight attendants took out a full-page ad in the USA Today newspaper to thank him for his service to the company. By way of contrast, the very same day American Airlines pilots and flight attendants went on strike and picketed during American Airlines’ annual meeting.

As with customers, marketers can create brand admiration and its drivers by finding ways to enable, entice, and enrich employees. This process is referred to as internal branding or brand culture.

The mission statement plays an important role here as it serves as the guidepost for employees’ feelings, thoughts, and pro brand actions. Hence, we define internal branding as a set of processes that enable, entice, and enrich employees so they can deliver on the brand’s mission in a consistent and credible way.

Cultivating brand admiration starts with the mission statement and its features. Specifically, building trust, love, and respect among employees is possible only when a brand’s mission statement has enabling, enticing, and enriching features, and when the company offers enabling, enticing, and enriching benefits to employees. These combined outcomes boost employee brand admiration, enhancing employees’ brand loyalty and advocacy behaviors. What’s important to realize here is that by creating these effects, the company develops internal brand admirers who consistently deliver on the brand promise and help to set it apart from competitors.

Key to this discussion is the company’s mission statement.

Creating A Meaningful Mission Statement

The company’s mission statement plays an important role in creating employee brand admiration. When the company is new and it has a single brand, the mission is closely aligned with the brand’s positioning in the marketplace. When companies become larger and have a portfolio of distinct brands, die company’s mission can become more abstract so as to accommodate the various brands that it makes. Each brand’s positioning may well be somewhat different. But the mission statement is important because it represents a global perspective on what the company (and each of its brands) stands for. It provides a broader description of the company’s identity, based on the brands it markets. Thus, the company’s mission and brand positioning statements should be aligned (or at least not inconsistent) with each other.

When thinking about the mission, consider the following quote from Starbucks’ CEO Howard Schultz: “ People want to be part of something larger than themselves. They want to be part of something they’re really proud of, that they’ll fight for, sacrifice for, that they trust.” As human beings, we want to have a sense of belonging and distinctiveness, and we take pride in what we do. Employees are no different. The mission statement can encapsulate this belief, such that employees are inspired to have faith in it and make it happen. But if a mission is to contribute to employees’ behavior, it must be meaningful.

A meaningful mission statement should describe the brand’s purpose and goals and answer the following questions: (1) what benefits should be offered, (2) to whom, and (3) how should they be delivered.

The decision about what benefits to offer gets at what core customer needs have yet to be addressed in the marketplace. Employees are frustrated when they lack clarity on what the brand is supposed to do for customers. Employees must understand what the brand (and by extension, they themselves) is expected to deliver to customers. A clear promise (i.e., an articulation of what benefits the brand offers) makes it easier for employees to deliver on that promise.

The for whom question asks which target customers are most likely to appreciate the brand’s benefits. If employees know what benefits to deliver but they lack knowledge about who the real target customer is, they are less capable and effective in communicating these benefits. Without clarity on the core target market, employees end up using their resources inefficiently— by targeting the wrong customer group(s)— or even worse, inadvertently damaging the brand.

Finally, the how question describes the means or strategies by which a brand plans to respond to target customers’ needs. Answering the how question gives employees guidance and clarity on what needs to be done to satisfy customers’ needs, particularly as it pertains to employees’ roles and responsibilities. A mission statement that addresses these questions acts as a compass for employees. It gives them a sense of direction and it reassures them of the path taken to get there.

Consider, for example, Google’s mission “ to organize the world’s information (the what) and make it universally (the whom) accessible and useful (the how)”. Such a sense of purpose and direction helps to build employee brand trust, love, and respect. Whereas it’s helpful for a company to have a mission statement, employees must also accept and embody it to make it meaningful.

Unfortunately, some internal branding experts suggest that over 50 percent of employees don’t believe in their company’s mission statement, or don’t think they have the knowledge, skills, and training to deliver on it. Thus, beyond stating a mission statement, internal branding needs to focus on making that mission come to life for employees.

Contributed to Branding Strategy Insider by: C. Whan Park, Deborah MacInnis and Andreas Eisingerich, excerpted from their book, Brand Admiration with permission from Wiley Publishing.

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There are pros and cons to everywhere

Kim and I moved to our new home in West Linn on July 1st. Although we’re only 8.5 miles (and about twenty minutes) from the condo we owned in Portland, I haven’t been back to our former neighborhood since we moved. Yesterday, I decided to spend a few hours hanging out at some of my old haunts.

I stopped at the “pot shop” to pick up some sleeping aids. I bought Tally new chew sticks from the pet store. I spent half an hour browsing at the used book store for sci-fi classics. And I stopped to drink a glass of wine at the bottle shop. It was fun to be back in Sellwood once again, if only for a few hours.

While I was sipping my pinot noir, a friend came in. “It’s good to see you,” she said. “How’s life in the new house? Do you miss Sellwood?”

“We do and we don’t,” I said.

“What do you mean?” she asked.

“Well, there are pros and cons to every location, right? I don’t think there’s any one perfect place to live. I miss this wine bar, for instance, and being able to walk to all of the different restaurants. But I don’t miss the traffic and the crowding and the high cost of living.”

“Yeah, I can see that,” my friend said. “But I couldn’t live where you do. I don’t like to drive. I gave up my license three years ago, and I never want to get it back. I like being able to walk for everything.” She has a perfectly valid point.

Driving home, I thought more about our conversation, about the differences between where we live now and where we lived six months ago.

Our new home

Pros and Cons to Everywhere

As an adult, I’ve had six different homes in 25 years: the small house in the small town, where Kris and I moved after we got married; the big house in Portland that she and I bought in 2004; the apartment in downtown Portland that I rented after our divorce; the riverfront condo I bought in 2013; the condo that Kim and I rented in Savannah, Georgia; and now this cottage on an acre of land outside West Linn.

I’ve loved aspects of each of these places — but there have also been things I’ve disliked about each location.

Here, for example, are the pros and cons of living in the condo:

  • Advantages of the condo. Extremely walkable neighborhood. Extensive parks nearby. Great view of river and city. Direct access to city-wide bike path. Close to public transit. Lots of people to hang out with. Condo maintenance was generally hassle-free.
  • Disadvantages of the condo. Dense vehicle traffic — even on weekends. Large vagrant population, including chronic drug use and increasing property crime. Expensive grocery stores. High fixed costs (HOA, property taxes) even though condo was owned free and clear. No place for pets to roam. Way too easy to opt for restaurants instead of eating in. At 1560 square feet, the condo felt too large. Too many people all around.

Looking at that list of pros, it’s clear that the best part of living in Sellwood was its proximity to everything. The two biggest downsides were the high cost of living and the population density.

I made a similar list of pros and cons for our current house:

  • Advantages of the country cottage. Beautiful park-like setting just 25 minutes from Portland. Quiet yard and neighborhood. No issues from population density (traffic, homelessness). Fixed costs are much lower; so are discretionary costs. Room for animals to roam. At 1235 square feet, the house is smaller than the condo and feels more “livable”. Nearby multi-use trail. Kim and I both love the vibe of the home and property; this place feels like home to us.
  • Disadvantages of the country cottage. Relatively isolated so little interaction with other people. Neighborhood isn’t walkable for errands. (It’s plenty walkable for pleasure and exercise.) No quick access to public transportation. House has required extensive renovation, and there’s still more that needs to be done. Severe rodent infestation.

The two biggest advantages of living in West Linn are the lower costs and the increased connection with nature. The trade-off, however, is that we’re farther from conveniences like grocery stores, gyms, and restaurants. We drive more often.

Everything Is a Trade-Off

The older I get, the more I believe that the ideal home doesn’t exist. Not for me, anyhow. And not for Kim.

“You know what I wish?” Kim said a couple of weeks ago. “I wish that we had this house and this property but that it was located in our old neighborhood. That’d be perfect. We could still walk everywhere and do everything, but then we’d have an oasis to come home to.”

Right. That would be awesome — but I’m still not sure it would be perfect. And it doesn’t exist. If it did exist, it would cost a fortune.

Everything is a trade-off. If you want land, you have to look outside of the city, which means you’re not going to be in a walkable neighborhood. If you want a place with low maintenance, you’re probably going to be in an HOA (for both better and worse). If you want someplace inexpensive, you’ll likely be located farther from amenities.

When choosing a place to live — or making any big life decision, really — it’s important to ask yourself two questions:

  • What am I giving up by making this choice? What am I sacrificing? What am I gaining? Are the compromises worth it?
  • What else could I do with the same time and money? Are there options that appeal to me more?

Kim and I decided that at this stage in our lives, we didn’t need the easy access to bars and restaurants. We wanted a place where the animals could explore the outdoors, and a place where we could save money. We’re happy with our country cottage despite the constant construction and the ongoing rodent infestation.

What kinds of compromises have you made to live where you live? What did you give up? What did you gain? If you could design a perfect home and neighborhood, what would it look like?

The post There are pros and cons to everywhere appeared first on Get Rich Slowly. Source:

What It’s Like Living In a Tent, Car, and Now Sailboat!

living on sailboat

[Remember last week when we asked how far you’d go to pay off your debt? Well, our guest today, Kristin from The Wayward Home, chose tiny space living as her poison, and has been living quite the adventure because of it! Here’s her story on what it’s like to live in tents and cars, and now on sailboats. Gotta admire the $hit out of people for having the courage to go after such things! Hope you enjoy!]


I looked around my apartment in plush Mill Valley, a suburb of San Francisco, and wondered what the hell I was doing. I’d given up most of my stuff, put the rest in storage, and was about to move out of my $1,650 per month studio and go intentionally homeless.

My boyfriend and I had calculated we could save upwards of $20,000 if we could live in his Toyota Prius and in a tent on campgrounds for a year.

So, I decided to throw all common sense to the wind and live in a tiny space with a man I’d known for only six months. Luckily, we got along well.

living in tent

At first, we camped in the campgrounds of Mt. Tamalpais, which is about 45 minutes north of San Francisco, where we both worked at full-time jobs – me as a news reporter at KGO radio, him as an electrical contractor. We spent our evenings roasting potatoes and salmon over the fire, playing guitar, drinking beer, enjoying the sounds of the wind in the trees and the owls hooting in the inky night. We spent the mornings getting ready for work at our gym, and on weekends we’d oftentimes play music in a shipping container that served as our jam space.

Camping was fun and felt like a great adventure, until hooligans destroyed our peace one night at the campground. It was just us and them, and when we asked them to quiet down, they began circling our tent and threatening us. Finally, we had to call the cops. An officer came out, forced the crew to dump their booze, and then left. The threats on us became worse, and we sat in our tent, afraid and tense. We again called the cops, and as we waited for them to arrive, we made a run for it down a nearby trail in our pajamas and sneakers at 1 in the morning. It was one of the scariest moments of my life. Finally, a few police officers came and kicked that awful crew out for good, but after that, we started sleeping only in the back of the Prius, feeling that metal and glass were safer than fabric and mesh.

We slept in marinas, in rest stops, in campgrounds, and out near our shipping container. Amazingly, we both fit in the back of the car with the seats folded down, and enjoyed the fresh scent of night air wafting through our cracked windows.

At 34-years-old, I quickly paid off debt that had been lingering for years, and started to build my emergency fund. My boyfriend, who is now 47, and I often discussed the merits of living below one’s means and how it can kick the crap out of debt while also paving the way for financial freedom. I learned that I can live without most things in life, and still be happy.

After four months living in the back of a Prius, I was done, ready to once again have the luxuries of what most of us call “home.” So, I rented out a room in a floating home (houseboat) in Sausalito for $1,450 per month.

But seven months after living in a real house, I was laid-off from my full-time job as a news reporter in San Francisco. Refusing to go into debt again or burn up my emergency fund, I decided to move onto my boyfriend’s sailboat which he’d recently bought and was fixing up for world travel. I got rid of even more stuff and put my childhood mementos in my mom’s garage.

Now, all I own in San Francisco is my car and my clothes packed into the trunk.

sailboat living quarters

The sailboat was undergoing a complete restoration when I first moved aboard, so we had to live without any comforts of home. We had no toilet, no stove, no internet, no running water. I’d be lying if I said it wasn’t hard. But as the months ticked past, more amenities were installed, and now the sailboat is full of beautiful appliances, like a sparkling stainless steel stove that I’ll never take for granted.

The plus size of living on a sailboat is that we only pay about $400 per month for rent, a steal in one of the most expensive housing market in the United States, where the average one-bedroom apartment is around $3,500.

Our plan now is to live aboard until the boat is 100% ready to go in the open ocean, and then we’re going to live a life of travel while I work remotely as a freelance writer and blogger. First, we’ll head to the Baja Peninsula in Mexico and explore the Sea of Cortez, then we’ll head to the Pacific Northwest and Vancouver Island. After that, who knows. The world will be our oyster.

I’m completely in love with the sailboat now. I love feeling the wind buffet the boat in the marina, and the tinkle of rain on top of the cabin house. I love how connected I feel to nature; that I can smell the salt air while cooking dinner on the stove. I love that when we’re bored of the marina, we can sail somewhere else in the Bay and anchor out for the night. There is a sense of peace and wonder associated with a sailboat, and right now, I can’t picture myself ever living in the confines of a house again.

sailboat deck

The sailboat also forces us to save money in other ways, not just on price of rent. We don’t have cable TV or any other subscription services; we get all shows and movies from the library. Our utility bill runs about $5 per month. We try to cook dinner in rather than dining out, which saves hundreds per month. I buy clothes only second-hand.

Both of us are now incredibly frugal, which will allow us to live a traveling, nomadic life. We estimate that when we’re sailing around the world, we’ll only need to spend $15,000-$20,000 per year. That means working less and living more.

If you asked me a few years ago, I never thought I’d be living tiny. I never thought I’d be obsessed with living below my means and living with less. But now, I can’t imagine it any other way.

Kristin Hanes is a journalist, freelance writer and blogger who lives on a sailboat in the San Francisco Bay. When she’s not sailing, she’s exploring nature on foot, and has hiked 230-miles in the Sierra Nevada. She’s also obsessed with saving money. You can follow her adventures on her blog: The Wayward Home.

EDITOR’S NOTE: Here’s another post you may like along these lines that we featured a few years back: Making money as a virtual assistant while living on a sailboat! Source:

Brand Transparency Must Be Strategic

Brand Transparency Must Be Strategic

In times or situations where there are low levels of trust, transparency becomes very important. Indeed, transparency was one of Geoff Colon’s top 10 disruptive marketing trends in 2016 for Branding Strategy Insider. He predicted transparency will be part of all successful business-customer relationships and offered, “Companies locked into a conventional broadcast model are failing. By 2020, customers will have an even greater expectation of transparency.”

In the last few years, we’ve seen that customers are often interested in more than just the products or services a brand offers. They want to know if a brand is environmentally responsible, if the brand treats their workers fairly, and as issues like workplace diversity and sexual harassment are top of mind in society, we should expect some customers to be interested in even deeper workings about a brand’s culture and operations. With the rise of digital networks and social platforms, many brands can have real-time, unfiltered, immediate dialogue with their customers.

But sometimes, brands share more than is needed.

When Angelo Carusone of Media Matters tweeted to Keurig to pull their advertising from FOX news’ Sean Hannity Show (regarding his handling of sensitive social issues), Keurig responded by tweeting they would pull the ads. Fans of the conservative news program immediately took to social networks with calls to boycott Keurig, some even posted videos of themselves smashing coffee machines. (With more than a few prominent advertisers withdrawing from other conservative news outlets in the past year, some feel that the conservative point of view is being forcibly silenced by progressive-leaning groups).

This dramatic reaction is of the sort we’ve seen many times in 2017 that quickly can escalate to the point that it impacts the stock price. It’s no surprise Keurig’s CEO Bob Gagamort wasted no time in issuing a statement and apology for their handling of the issue. Gagmort explains, “In most situations such as this one, we would “pause” our advertising on that particular program and reevaluate our go-forward strategy at a later date. That represents a prudent “business as usual” decision for us, as the protection of our brand is our foremost concern. However, the decision to publicly communicate our programming decision via our Twitter account was highly unusual. This gave the appearance of ‘taking sides’ in an emotionally charged debate that escalated on Twitter and beyond over the weekend, which was not our intent.”

One of the most important things every brand must realize is that story is now porous. An individual’s opinions, interpretations and perceptions about a brand’s story that were personal and private in the broadcast era, can now be amplified and promoted at surprising scale thanks to networks and platforms. It doesn’t matter if the perception is accurate or real. Truth is not a requirement.

When the reactions and sentiments amplified by people are positive and in alignment with what brand leaders intend, there’s great potential for these porous stories to invigorate and activate communities of fans united by the brand. But at the same time, when the perception is negative or out of alignment, things can go downhill fast.

Keurig’s error was responding on Twitter. In a hyper-polarized climate like we have in the US (and with several other countries are in similar situations) it is all too easy to act before considering how information will be received. Brands can continue to increase levels of transparency. When it comes to sensitive and polarizing issues, choose wisely the channel and timing for that information to be shared.

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Build A Human Centric Brand. Join us for The Un-Conference: 360 Degrees of Brand Strategy for a Changing World, April 2-4, 2018 in San Diego, California. A fun, competitive-learning experience reserved for 50 marketing oriented leaders and professionals.

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FREE Publications And Resources For Marketers Source:

The Republican tax plan looks a lot like the Republican health-care plan

(Alex Wong/Getty Images)

There’s an easy way to tell the Republican tax plan from the Republican health-care plan.

The first one would cut the corporate tax rate to help mostly wealthy investors, and pay for some of that by cutting health-care spending for the poor and the middle class. The second one, on the other hand, would cut health-care spending for the poor and the middle class to pay for the capital-gains tax cuts it would give to mostly wealthy investors. See the difference?

Now, there are a lot of ways to think about the GOP’s latest tax bill, but the simplest one is this: It would temporarily cut taxes for the middle class the next 10 years (while actually raising them on a number of the working class), before turning into a permanent tax hike on them to help pay for its permanent cuts to corporate taxes. In all, the budget scorekeepers at the nonpartisan Joint Committee on Taxation (JCT) estimate that the Republican plan would, on average, force households making $75,000 to start paying higher taxes by 2027 at the latest. Households making between $10,000 and $30,000 would actually face higher tax bills beginning in 2021.

Even that, though, wouldn’t be enough to eventually offset the full cost of its big business tax cuts — which, to comply with Senate rules, it’d have to for Republicans to be able to pass it on a party-line vote — so they’d also get rid of Obamacare’s penalty for people who don’t buy health insurance. This, according to the nonpartisan Congressional Budget Office (CBO), would counterintuitively save the government $338 billion over the next 10 years for the reason that fewer people would be pushed to find out that they qualify for subsidized, or even free, health-care coverage. The result is that 13 million fewer people would have insurance, and, because the remaining pool of customers would be somewhat sicker, policies would cost 10 percent more.

This is a strange type of populism. The working class and the middle class might, just might, get lower taxes for a little while but would definitely get higher insurance premiums, to the point, as even Sen. Susan Collins (R-Maine) admits, that some of them would be worse off than they are now. Corporations, though, would get to keep their big tax cuts now and forever.

This is a bet on two things. The first is that whoever’s in charge of the government in 2026 won’t actually let these middle-class tax cuts expire. That, after all, was the case in 2013, when Democrats agreed to renew the George W. Bush tax cuts for everybody but the top 1 percent. And it very well might happen again. The Republican plan, you see, would sunset almost all of its individual tax changes, both cuts and revenue raisers, in 10 year’s time. The only exception is it would still have tax brackets increase slower than they do now, so that people would more easily get pushed into higher ones. Regardless, it isn’t hard to imagine a future Democratic president extending the twice-as-big standard deduction and child tax credit but letting all the various tax breaks for the rich — the lower top individual rate, the lower pass-through rate and higher estate tax threshold — turn into legislative pumpkins.

The second is the belief that permanent corporate tax cuts, and only permanent corporate tax cuts, would cause such an explosion of growth that they would, as President Trump’s top economic adviser Gary Cohn put it, “trickle down” to workers. It’s a theory Republicans have taken to such an extreme that former Clinton treasury secretary and Obama economic adviser Lawrence H. Summers says he would be “hard pressed to give it a passing grade” if a “PhD student submitted” it.

There’s a real question, you see, about how much of the benefits of a corporate tax cut goes to capital vs. how much goes to labor. That’s because it isn’t entirely clear to what degree the tax falls on profits from old investments (which hurts shareholders) or on profits that would have gone into new investments (which, by lowering the stock of capital, and, as a result, productivity, hurts worker wages).

There is a mainstream consensus, though: Corporate tax cuts don’t help workers that much. The CBO thinks about 25 percent of the benefits go to labor; the JCT says the same; the nonpartisan Tax Policy Center estimates that 20 percent do; and the Treasury Department’s Office of Tax Analysis thinks that 18.5 percent do. The Trump administration, meanwhile, claims that somewhere between 300 percent and 675 percent do. This estimate is worth about as much as a degree from Trump University.

It’s based on an idea that isn’t true, and one that wouldn’t even matter if it was. What do I mean by that? Well, the Trump team thinks that the United States is just like Ireland. That cutting the corporate tax rate would cause a flood of foreign money to pour into the country to pay for the type of factories and machines that would make workers better off. This is believable only as long as you don’t listen to anything CEOs have to say. Indeed, just the other day, only a handful of them raised their hands at the Wall Street Journal’s CEO Council when asked whether the Trump tax cuts would make them increase their capital expenditures. “Why aren’t the other hands up?” Cohn asked. The answer, of course, is that U.S. companies, with their record-setting profits, are not capital-constrained right now. If they see a good investment opportunity, they’re already making it. They’d just use a tax cut, then, to pay out more money to shareholders. That, at least, is what they’ve been publicly saying the past few months.

But even if a corporate tax cut really did cause an investment boom of unprecedented proportions, it would cause one funded by foreign money — and that matters. As Paul Krugman points out, we’d have to pay those overseas investors back, so we wouldn’t get the full benefit of whatever extra growth there was. We might not even get most of it. In other words, it would help our GDP stats a lot more than our workers. That’s certainly been the case in Ireland.

Republicans have left no doubt what their priorities are. Because of the Senate rules, they had to decide between making their middle-class tax cuts permanent or their corporate ones, and they chose the latter. They have some obviously overstated theories about why this makes economic sense, which they may have truly convinced themselves of, but the more cynical motive is at least as important: Their donors are demanding this. Republicans have gone so far as to openly admit this. “The financial contributions will stop,” Sen. Lindsey O. Graham (R-S.C.) said, if they don’t cut corporate taxes. “My donors are basically saying, ‘Get this done or don’t ever call me again,’" concurred Rep. Chris Collins (R-N.Y.). This is the real reason Republicans think the word “reform” means cutting health care for the poor to pay for tax cuts for the rich.

It is difficult to get a politician to help anyone other than the top 1 percent when his salary depends on him not doing so. Source:

Black men sentenced to more time for committing the exact same crime as a white person, study finds

A man wears a “Black Lives Matter” T-shirt as he demonstrates outside the Capitol in April 2015.

Black men who commit the same crimes as white men receive federal prison sentences that are, on average, nearly 20 percent longer, according to a new report on sentencing disparities from the United States Sentencing Commission (USSC).

These disparities were observed “after controlling for a wide variety of sentencing factors,” including age, education, citizenship, weapon possession and prior criminal history.

The black/white sentencing disparities have been increasing in recent years, the report found, particularly following the Supreme Court’s decision in United States v. Booker in 2005. Booker gave federal judges significantly more discretion on sentencing by making it easier to impose harsher or more lenient sentences than the USSC’s sentencing guidelines called for.

Before that decision, federal judges were generally required to abide by those sentencing guidelines.

According to the Sentencing Commission’s report, the black/white sentencing disparities are being driven in large part by “non-government sponsored departures and variances” — in plain English, sentencing choices made by judges at their own discretion.

Judges are less likely to voluntarily revise sentences downward for black offenders than for white ones, in other words. And even when judges do reduce black offenders’ sentences, they do so by smaller amounts than for white offenders.

That finding suggests that giving judges more discretion in sentencing, as the Booker decision did in 2005, allows more racial bias to seep into the process. But Marc Mauer, executive director of the Sentencing Project, a group working to reduce bias in the criminal justice system, says there’s more to it than that. He says that decisions by federal prosecutors — whether to seek a charge carrying a mandatory minimum sentence, for instance — are also driving the disparities.

“What we see is that the charging decisions of prosecutors are key,” he said via email. “Whether done consciously or not, prosecutors are more likely to charge African Americans with such charges than whites.”

A 2014 University of Michigan Law School study, for instance, found that all other factors being equal, black offenders were 75 percent more likely to face a charge carrying a mandatory minimum sentence than a white offender who committed the same crime.

“It’s possible that if a prosecutor now recognizes that a judge is not constrained by the [pre-Booker] guidelines,” Mauer said, “he or she may charge a case as a mandatory sentence to ensure that a certain amount of prison time is imposed, with no possible override by the judge.”

The United States currently houses the world’s largest prison population, with an incarceration rate of roughly 666 inmates per 100,000 people. Among whites, the rate is 450 inmates per 100,000 people. The incarceration rate for blacks is over five times higher, at 2,306 inmates per 100,000 people.

The USSC report indicates that sentencing decisions are a big driver of those numbers. And according to the University of Michigan study, at the federal level alone simply eliminating the sentencing disparity would reduce the number of black men in federal prisons by about 9 percent and save taxpayers at least $230 million a year. Source: