Race is almost a national psychosis for Americans, distorting our perceptions and inhibiting rational debate. Sowell places our obsession in context both historically and internationally.
Progressive (i.e. early 20th century) intellectuals, some with the very best pedigrees, espoused views on race that make our skin crawl today. Madison Grant, influenced by the popularity of eugenics among intellectuals, published "The Passing of the Great Race," a warning that "superior" races (whites and particularly "Nordics") were losing ground to the "lower races." A believer in "genetic determinism," he disdained immigration as the "sweepings" from European "jails and asylums" and worried that "the man of the old stock is being crowded out ... by these foreigners just as he is today being literally driven off the streets of New York City by the swarms of Polish Jews."
His book was recommended by the Saturday Evening Post and reviewed in Science. It was translated into French, Norwegian and German. Hitler called it his "Bible."
There's nothing easier than to condemn such ignorance and bigotry today -- though few note, as Sowell (and Jonah Goldberg) do, that liberals/progressives, including Richard T. Ely, Edward A. Ross and Francis A. Walker, were among it chief propagators.
More challenging is to recognize the follies of your own time and to examine critically the assumptions that underlie our current racial theories. As he has in some of his other work (for example, in the absorbing "Ethnic America"), Sowell challenges what he calls the "moral melodrama" -- the belief that observed differences in outcomes for racial and ethnic groups are the result of discrimination. This unsupported assumption underlies our whole scheme of "disparate impact" and "affirmative action" programs.
Ethnic groups have different histories, cultures, traditions, median ages and abilities. Geography, disease, conquest and other factors affect the way cultures and peoples develop. Into our own time, economic disparities between the peoples of Eastern Europe and Western Europe were more pronounced than those between American blacks and whites. During the First World War, black Army recruits from Ohio, Illinois, New York and Pennsylvania scored higher on mental tests than whites from Georgia, Arkansas, Kentucky and Mississippi.
People of Japanese ancestry produced 90 percent of the tomatoes and 66 percent of the potatoes sold in Brazil's Sao Paulo province in 1908. "In 1948, members of the Indian minority owned roughly nine-tenths of all the cotton gins in Uganda. In colonial Ceylon, the textile, retailing, wholesaling, and import businesses were all largely" in Indian hands "rather than in the hands of the Sinhalese majority."
Sowell is particularly fond of quoting the economic statistics documenting minority groups who outperform the majorities in many nations. It includes the Italians in Argentina, the Chinese in Malaysia, the Lebanese in Sierra Leone, Greeks and Armenians in the Ottoman Empire and, he might easily have added, Asians in the U.S. today. The urge to attribute all disparities to discrimination, Sowell argues, a) doesn't withstand scrutiny -- black unemployment, for example, was lower than white in 1930 when there was far more anti-black discrimination than today; and b) encourages damaging and divisive "solutions" like affirmative action that harm both the intended beneficiaries and deserving members of the majority group, and encourages sometimes violent conflict as in Sri Lanka, Canada, Hungary, Nigeria and many other nations.
In his survey of damaging thinking about race, Sowell makes extended stops at IQ, multiculturalism, crime and other matters. He brings to every subject the depth of understanding, copious research and impatience with cant that have made him one of America's most trenchant thinkers
----------------------------------------------------------------------------------------------------------------------------------------------------------------
5).
This Is a Sign That a Stock Market Boom Is Headed Our Way
By Dr. David Eifrig, editor, Retirement Millionaire
Last week, I showed you a handful of charts that dispel a common misconception… one that is keeping thousands of retirees up at night.

I dispelled the idea that the U.S. economy is running off the rails… that we are in a recession, or worse, a depression.

Despite the facts I showed you… and despite the fact that stocks are still a good value (read more here), the stock market still hasn't boomed like I believe it will.

But that's about to change. Here's why…

Investors spent much of 2012 "stampeding" into bond funds. Bonds are seen as "super safe" investment vehicles… much safer than stocks. A stampede into bonds is a classic sign that people are scared of a volatile and uncertain stock market.

And even with interest rates near all-time lows, people were still moving gobs of money into bonds and bond funds.

As the chart below shows, they're still putting money into bond funds… but they're finally starting to put money back into stocks as well.

This chart displays the amount of money flowing into bond funds (the gray line) and the amount of money flowing into stock funds (the black line). As you can see on the right side of the chart, the money flow into stocks just spiked higher… It's now equal to the money flowing into bonds.

Please Enable Images to See this

This spike higher in equity flows tells us that "Mom and Pop" investors are finally getting interested in stocks again.

Yes, stocks have enjoyed big returns in the past few years… but it usually takes several years of great performance to draw in the public after it has been burned like it was in 2008.

The charts in last week's essay show that the economy is growing slowly. And despite what some folks tell you, inflation is still not a major concern right now. This is a good environment for stocks and – under normal times – bonds.

But after the "stampede" into bonds, I think the risk here is too high. Plus, the dividend yields on stable (and even growing) blue-chip companies like Automatic Data Processing, Wal-Mart, and Wells Fargo make stocks a better choice for your portfolio in 2013.

We've had low interest rates, muted inflation, and relatively cheap stock market valuations for a while. And no surprise, the market has responded by approaching all-time highs.

Now, shifting investor sentiment could kick the rally into a higher gear. The recent spike in money flow is a clue that this is happening. That's why it's best to stay long stocks right now. They've had a great first quarter (up 10%)… but they're going to go up even more in 2013.

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig

5a)
A Rare Find: Two Bargain Sectors That Pay Big
 Dividends
By Frank Curzio, editor, Small Stock Specialist

Please Enable Images to See this If you are looking for safe, high-yielding stocks, you should turn to small-caps.

Most investors never consider small-cap stocks for income… or safety. Most associate this
 sector with speculation and risk. But I found a list of over 100 elite small-cap dividend-
paying stocks that Wall Street has largely ignored.


Right now, the Wall Street darlings are big, dividend-paying blue chips. Take Procter & 
Gamble, for example. It's up 32% in nine months. Or Coca-Cola. It's up 26% in less than
 two years. After their big runs higher, they're not as cheap as they once were. 

But there are elite small-cap dividend-payers that also have great brand names. Many of
these names have been around for more than 30 years. They're cheaper than many of the
high-flying companies. And their earnings are growing much faster.

More important, many of these names have been raising their annual dividends longer than
McDonald's and Johnson & Johnson.

Take RPM International (RPM), for example. This specialty chemical-maker is printing money
 right now. That's because natural gas prices (its largest input cost) are trading near historic
 lows. The company also receives a bulk of its revenue from housing, a market that's clearly
 rebounding.

RPM pays a 3% yield, about 50% higher than the average S&P 500 company. It's raised its
annual dividend for more than 30 years. And RPM is growing almost three times faster than
 these industry leaders. It's also trading at a much cheaper valuation.

RPM is just one example of the many excellent small-cap dividend-payers out there you can
buy for safe, high yields and compound your wealth with over the long term.

I devoted the December issue of my Small Stock Specialistnewsletter to this idea –
compounding wealth with the world's best small dividend-payers. As I mentioned, many of
 these companies are currently trading at bargain levels. This means you can safely buy
them now… and eventually collect giant yields as the companies grow. You can access this
issue with a 100% risk-free trial subscription. Learn how to come onboard here (without
watching a long video).

Please Enable Images to See this The defense sector is another overlooked area that provides investors with huge yields and strong growth potential.

I know what you're thinking… Our government is about to make huge cuts to our defense
program. In fact, the president just announced new military cuts of $487 billion over the
 next 10 years. That could hurt earnings for defense companies going forward.

However, a closer look at the numbers shows that defense spending will not be cut at all. In
 fact, the Office of Management and Budget is budgeting for $517 billion in spending in 2013. That's much less than previously forecast. But it's still higher than the defense budget from 2008, which was
 $509 billion.

And despite all this talk of massive budget cuts, most defense companies are trading at
 52-week highs.

Please Enable Images to See this

There's still much more upside left in this sector. Companies like Lockheed Martin (LMT),
Northrop Grumman (NOC), and General Dynamics (GD) are trading at only 10 times earnings. That's a huge discount to the average S&P 500 company, which is trading at 15 times earnings.

These companies also pay an average yield of 3.7%. That's much higher than the 2% the
 S&P 500 is yielding.

Defense companies are cheap and offer huge dividends. Plus, the whole world knows that
budget cuts in the defense sector are coming. That means this risk is already priced in to
these names.

I suggest buying into this sector while stocks are still cheap.

Good investing,

Frank Curzio
-------------------------------------------------------------------------------------------------------------------------------------
6)I To (All) the Colleges That Rejected Me

If only I had a tiger mom or started a fake charity.

By SUZY LEE WEISS

Like me, millions of high-school seniors with sour grapes are asking themselves this week how they failed to get into the colleges of their dreams. It's simple: For years, they—we—were lied to.

Colleges tell you, "Just be yourself." That is great advice, as long as yourself has nine extracurriculars, six leadership positions, three varsity sports, killer SAT scores and two moms. Then by all means, be yourself! If you work at a local pizza shop and are the slowest person on the cross-country team, consider taking your business elsewhere.
What could I have done differently over the past years?

For starters, had I known two years ago what I know now, I would have gladly worn a headdress to school. Show me to any closet, and I would've happily come out of it. "Diversity!" I offer about as much diversity as a saltine cracker. If it were up to me, I would've been any of the diversities: Navajo, Pacific Islander, anything. Sen. Elizabeth Warren, I salute you and your 1/32 Cherokee heritage

I also probably should have started a fake charity. Providing veterinary services for homeless people's pets. Collecting donations for the underprivileged chimpanzees of the Congo. Raising awareness for Chapped-Lips-in-the-Winter Syndrome. Fun-runs, dance-a-thons, bake sales—as long as you're using someone else's misfortunes to try to propel yourself into the Ivy League, you're golden.
Having a tiger mom helps, too. As the youngest of four daughters, I noticed long ago that my parents gave up on parenting me. It has been great in certain ways: Instead of "Be home by 11," it's "Don't wake us up when you come through the door, we're trying to sleep." But my parents also left me with a dearth of hobbies that make admissions committees salivate. I've never sat down at a piano, never plucked a violin. Karate lasted about a week and the swim team didn't last past the first lap. Why couldn't Amy Chua have adopted me as one of her cubs?
Then there was summer camp. I should've done what I knew was best—go to Africa, scoop up some suffering child, take a few pictures, and write my essays about how spending that afternoon with Kinto changed my life. Because everyone knows that if you don't have anything difficult going on in your own life, you should just hop on a plane so you're able to talk about what other people have to deal with.
Or at least hop to an internship. Get a precocious-sounding title to put on your resume. "Assistant Director of Mail Services." "Chairwoman of Coffee Logistics." I could have been a gopher in the office of someone I was related to. Work experience!

To those kids who by age 14 got their doctorate, cured a disease, or discovered a guilt-free brownie recipe: My parents make me watch your "60 Minutes" segments, and they've clipped your newspaper articles for me to read before bed. You make us mere mortals look bad. (Also, I am desperately jealous and willing to pay a lot to learn your secrets.)
To those claiming that I am bitter—you bet I am! An underachieving selfish teenager making excuses for her own failures? That too! To those of you disgusted by this, shocked that I take for granted the wonderful gifts I have been afforded, I sayshhhh—"The Real Housewives" is on.
Ms. Weiss is a senior at Taylor Allderdice High School in Pittsburgh.
--------------------------------------------------------------------------------------------------------------------------------
7)The Grand Illusion

The Obama administration is more inclined to 

public relations than hard-headed pragmatism in dealing with unemployment

By 


Which way are we going? The stock market has revived, though it still is off a high in real terms. There's suddenly good news about housing demand, which is showing signs of life after six years of stagnation. Yet Federal Reserve Chairman Ben Bernanke warns that the package of fiscal cutbacks – the fiscal cliff, sequester, and other cuts – is set to reduce growth by 1.5 percentage points. He calls that "very significant" and adds that "job creation is slower than it would be otherwise." This is the key to where we are. New research from the Brookings Institution concludes that rising inequality in the United States is not something that will vanish with a real recovery. It is here to stay, a reflection of an increasingly calcified society and a whole crisis in itself.

The present phase of our Great Recession might be called the Grand Illusion, because all the happy talk and statistics that go with it, especially on the key indicator of jobs, give a rosier picture than the facts justify. We are not really advancing. We are, by comparison with earlier recessions, going backward. We have a $1.3 trillion budget deficit. And despite the most stimulative fiscal policy in our history and the most stimulative monetary policy, with a trillion-dollar expansion to our money supply, our economy over the last three years has been
declining or stagnant. From growth in annual GDP of 2.4 percent 2010, we bumped down to
only 1.8 percent in 2011 and were still down at 2.2 percent in 2012. The cumulative growth for the last 12 quarters was just 6.2 percent, less than half the 15.2 percent average after
previous recessions over a similar period of time. It is the slowest growth rate of all the 11 post-World War II recessions.
What has gone wrong? There seems to be a weakness in the investment of private capital. Today, corporate spending on investments is the weakest it has been in six decades. The billions invested in the Internet, spreading its application and comingling the technology with labor, boosted multifactor productivity but, as David Rosenberg of wealth-management firm Gluskin Sheff points out, most of that occurred several years ago. As he has written, a capex-led business recovery that breeds sustained productivity growth and decent job creation is what underscores the best and longest economic expansions since the end of WWII.

Anemic growth looks likely to continue because of various downers implicit in Bernanke's caution. Sequestration will take $600 billion of government expenditures out of the economy over the next 10 years. Payroll taxes up 2 percent hit about 160 million workers and will drain $110 billion in aggregate demand. The Obama health care tax will be a $30 billion-plus drag. The surge in gasoline prices by some 50 cents recently may be temporary, as Bernanke suggests, but meanwhile represents another $65 billion of consumer cash flow. Conservatively, these nasties add up to roughly a 2 percent hit to baseline GDP growth when we are barely able to muster 2 percent growth.
Then there's housing. Yes, it is nice to see a surge in some areas. But millions of homes are owned by banks or are in the foreclosure process. The New York Times noted last week that
the home where Bernanke was raised, in a small town in South Carolina whose unemployment rate was recently 15 percent, had just been foreclosed upon the last time he visited, and one
of his relatives was unemployed. Talk about symbolism. Single-family home sales and starts
are barely off their depressed levels, and have only recouped 17 percent of recession losses. The housing market is mostly driven by investor-based, rental-related, multifamily buying activity, reflected in the fact that multiple housing units have reversed more than 70 percent
 of the damage they sustained from the recession.
Our economy's most important player, the consumer, offers no relief from this cascade of downers. About 70 percent of national expenditures come from consumers, but their confidence level has dropped to only 58.6 percent. Restaurant traffic, one of the most reliable trend indicators, has slipped to a three-year low. In fact, the only reason that real consumer spending is not shown as contracting is because personal savings rates since November 2007 have declined from 6.4 percent to around 2.5 percent of incomes.
Still, can't we take comfort in headlines celebrating the decline in unemployment to 7.7 percent? Not really. If you add in all the unique categories of people not included in that number, such as "discouraged workers" no longer looking for 
a job, involuntary part-time workers, and others who are "marginally attached" to the labor force, the real unemployment rate is somewhere between 14 and 15 percent. No wonder it has been harder to find word
during this recession than in previous downturns.

Though last month we theoretically added 236,000 jobs, these numbers are misleading, too, because so many of the jobs are in the part-time, low-wage category. So the backdrop to the most recent job numbers is the fact that multiple job-holders are up by 340,000 to 7.26 million. In essence then, all of the "new" positions are going to people who already are working, 
mostly part time. It is clearly more important to create jobs for people who aren't. Other aspects of the jobs picture deteriorated, too. The pool of people unemployed for six months or longer went up by 89,000 to a total of 4.8 million, and the average duration of unemployment rose to 36.9 weeks, up from 35.3 weeks.
Moreover, the decline in the unemployment rate to 7.7 percent is shaky. It reflects the departure from the workforce of some 130,000 individuals. A change in the denominator makes the unemployment numbers look better than they are. The labor force participation rate, which measures the number of people in the workforce, also dropped to around 63.5 percent, the lowest in more than 30 years. The workweek remains short at 34.5 hours. Quite simply, employers are shortening the workweek or asking employees to take unpaid leave in unprecedented numbers, and these people are not included in the unemployment numbers.

Clearly, the rate of job recovery has slowed drastically. Typically it takes 25 months to reach a new post-recession peak in employment, but today we are over 60 months away from that previous high, and we are still down 3.2 million jobs. We need between 1.8 million and 3
million new jobs every year just to absorb the labor force's new entrants. At the current rate,
we will have to wait seven years to restore the jobs lost in the Great Recession, and we will need 300,000 or more hires every month to recover substantially above the 
current levels. The prospects for that are gloomy, since employers now feel they can do with fewer workers. Over 20 percent of companies say that employment in their firms will not return to pre-recession levels.
In the face of these figures, the government is just whistling in the dark. The programs it has announced are sensible, but don't do anywhere near enough to plug the gap in workers needed with skills in science, technology, engineering and mathematics – the best way to deal with
the threat of a big permanent underclass. Nor is there any sense of a vigorous follow-through
 on multiple well-intentioned programs. We are told we live in an accelerated world, and so we do in communications. But when will we see reform of a patent system that imposes long
delays on innovators and inventors and entrepreneurs seeking approvals? It often takes two years to obtain the environmental health and safety permits to build a modern electronic
plant, a lifetime in the tech world.
A dramatic consequence of the inertia is that our trade in high-tech products has gone from a $29 billion surplus to a $60 billion-plus deficit.

When employers can't expand or develop new lines because of the shortage of certain skills,
the employment opportunities for the less skilled are restricted. Government must restore and multiply funds for training programs, especially vocational training and postsecondary education. And it must support every program to strengthen science, technology, engineering and math in high schools and at the university level, as well as broadening access to computer science.
Until we get such programs properly underway, we should increase the number of annual visas for foreigners skilled in science and technology. They are not job destroyers, as nativist sentiment suggests. They are job creators, and not only that. They are job multipliers. Barring their entry or residence means they will compete against us in the industries that are both growing and competitive. It is astounding that we attract the brightest and the best brains to our universities, the world's best, and then send them packing. We must re-conceptualize immigration as a recruiting tool and open the door to the skilled and the educated. It is disappointing that so soon in a new administration, decisively elected, both party leaderships seem still stuck in a campaigning mode. It isn't just that agricultural companies lack the labor to pick crops of citrus fruits and onions, but that we are stupidly cutting off one of the great sources of innovation. About half the companies in the Fortune 500 owe their origins to the ideas and enterprise of immigrants. Diversity breeds ideas. Look at the history of America.

What we get from the administration instead of pragmatism is politics; instead of constructive strategies shed of ideology, we get steady attacks demonizing the wealth creators and discrediting the private sector, along with rhetoric that seeks to exploit divisions by blaming
the rich and positioning them against the rest, as if government is not part of the problem.
No wonder Fox News found earlier this year that 48 percent of us believe America is weaker than it was five years ago, while just 24 percent think the nation is stronger. Have we really so lost our mojo? Have we lost our way? As 18th-century economist and writer Adam Smith once observed, "there is a great deal of ruin in a nation." Indeed there is. One serious recession
does not mean the beginning of the end of a great power. But the risks will multiply so long
as we remain locked in a rancorous political culture, and have a leadership more inclined to public relations than hard-headed pragmatic recognition of what must be done to restore America's classic vitality.
------------------------------------------------------------------------------------