Draft Articles of Impeachment

Draft Articles of Impeachment
Against Donald John Trump, President of the United States

Donald Trump Jan 28 2017

1. DIGNITY. Mr. Donald John Trump, unmindful of the high duties of his high office and the dignity and proprieties thereof, and of the harmony and courtesies which ought to exist and be maintained, has, in speeches to gatherings of citizenry, in messages to the general public (especially with the electronic media of Facebook and Twitter), denounced his political opposition, and especially members of the Democratic Party, individually and as a group, with utterances, declarations, threats and harangues, which utterances, declarations, threats and harangues, highly censurable in any, are particularly indecent and unbecoming in the Chief Magistrate of the United States, by means whereof the said Mr. Trump has brought the high office of the President of the United States into contempt, ridicule and disgrace, to the great scandal of all good citizens, whereby said Mr. Trump did commit, and was then and there guilty of a high misdemeanor in office.

2. DISCRIMINATION. Mr. Trump has excited and incited discrimination against persons according to their race, national origin, ancestry, religion especially the religion of Islam, and sex and sexual preferences, thereby intentionally impairing justice and mitigating the right of these persons to equal treatment under the laws.

3. MISTREATMENT OF PRISONERS. Mr. Trump has urged mistreatment and harm to prisoners and detainees. He has urged police and military officers to treat persons in custody “rough” and to torture them, and to punish them without lawful authority, in violation of the Constitution and several treaties to which the United States is party, including the Geneva Conventions and the Universal Declaration of Human Rights.

4. GLOBAL WARMING PERIL. Mr. Trump has refused to acknowledge the human causes of the globally warming climate, including the release of carbon dioxide and other gases into the atmosphere and oceans, despite nearly universal scientific findings affirming these gases trap heat, imperiling the United States and all human life. He has withdrawn the United States from participation in the Paris Climate Agreement and other international agreements to act to remedy the warming. He has declined to heed the severe national security implications of global warming identified by the Defense Department. He has curtailed scientific investigation into climate by United States government agencies.

Trial of Andrew Johnson in the Senate, Mar 13, 1868. Senate Collection.

5. NUCLEAR WEAPONS PERIL. Mr. Trump has withdrawn or evidenced intention to withdraw from agreements with Russia and Iran to regulate the development and use of nuclear weapons, imperiling the United States and all human life.

6. NATO ALLIANCE. Mr. Trump has threatened to refuse to defend allies in NATO, North American Treaty Organization, should they come under attack, disrupting the most powerful alliance that defends the United States, thus weakening the defense of the United States.

7. FREEDOM OF THE PRESS. Mr. Trump has repeatedly denounced journalists, individually and as a group, even declaring them enemies, in direct retaliation against them for publishing articles unflattering to him. Thus has Mr. Trump endangered journalists and acted with animosity to the Constitutional protection of the press.

8. EMOLUMENTS. Mr. Trump has used the office of the President, exchanging changes in public policy for personal financial enrichment. Cloaked as commercial transactions, Mr Trump has received emoluments from the governments of Saudi Arabia, Russia and other countries, either directly, or via family members or compromised commercial organizations. Mr. Trump privately negotiated a business deal in Moscow for his personal profit. At the same time, he advocated relieving Russia of economic sanctions that were intended to impress upon the government of Russia the policy of the government of the United States.

9. TRADE WITH CLOSE ALLIES. Mr. Trump has used the powers granted to him by the Congress to disrupt Trade agreements with our most trusted, peaceful and democratic friendly governments, imposing harsh tariffs on imports from those regions, arousing unnecessary concern among them, with adverse effects on the strategic defense and economic vitality of the United States.

10. TRADE WITH CHINA. Mr. Trump has imposed tariffs on goods imported from China. The tariffs interfere with private commercial transactions, and increase the effective cost of goods to Americans. The cost of steel, for example, is higher under the tariff, but products of American steel producers are favored, which protects employment and profitability in United States steel companies. Predictably, the higher cost of steel increases the cost of producing automobiles, reducing the profitability and employment of automobile production. The government of China, predictably, retaliated with tariffs on agricultural and other products from the United States, effectively reducing the market and the profitability for American farmers. Thus the tariffs on imports from China have been predictably detrimental to the people of the United States.

Nixon presents transcripts of taped conversations. Apr 29, 1974.

11. WALL ON THE BORDER WITH MEXICO. Mr. Trump advocates for the United States government to build a large wall to block the passage of civilians from Mexico to the United States, despite the United States having proudly opposed the presence of a large wall in Berlin to block the passage of civilians from East Berlin to West Berlin. He has separated children from their parents at the border, harming those children and families, to provide a disincentive to potential migrants hither, in violation of the United Nations Declaration of Human Rights. Defending individual liberty and justice as fundamental elements of democracy, and defending the Constitution as the method of democracy in the United States, requires the President to oppose such walls.

12. ABUNDANT FALSE STATEMENTS. Throughout his presidency, Mr. Trump has nearly every day made false statements to the public and the news media. Often, he has not bothered to check the truthfulness of statements before he asserted them as facts. Often, he has contradicted his own statements made not long previously. Often, he has spoken words he knew were false when he spoke them. Often, he has negotiated agreements with members of Congress, cabinet members and other government officials, then violated those agreements within days. His betrays no intention to tell the truth.

13. RELIGION. Mr. Trump proclaimed executive orders to deprive Muslims of equal treatment under law, especially with regard to their entry to the United States from other countries, without any authority granted to him by Congress, and without Congress having any authority to grant him that authority, due to the First Amendment to the Constitution prohibiting recognition of establishment of religion, and without significant hostile threat to national security.

14. DECLARATION OF DEMOCRATIC PARTY AS ENEMY. Mr. Trump, in his public statements, has declared the Democratic Party as enemy of the nation, a direct threat to the right of the people to representation by persons they elect, a direct threat to democracy and republican form of government, a direct violation of Article 4, Section 4 of the Constitution.

15. THREATS TO POLITICAL OPPONENTS. Mr. Trump has multiple times threatened to imprison Ms. Hillary Clinton, his political opponent, a direct threat to democracy and republican form of government, a direct violation of Article 4, Section 4 of the Constitution.

Bill Clinton by Bob McNeely
16. OBSTRUCTION OF JUSTICE - FLYNN. Mr. Trump sought to obstruct justice by asking the FBI, Federal Bureau of Investigation, to abandon its investigation of Mr. Michael Flynn’s activities with persons associated with the government of Russia.

17. OBSTRUCTION OF JUSTICE - COMEY. Mr. Trump sought to obstruct justice when he fired the director of the FBI, Mr. James Comey, when Mr. Comey did not cease investigation of persons, including Mr. Flynn, associated with Mr. Trump’s political campaign for President.

18. OBSTRUCTION OF JUSTICE - SESSIONS. Mr. Trump sought to obstruct justice when he harassed the Attorney General Mr. Jeff Sessions for recusing himself from the FBI investigation of illicit interaction of Mr. Trump’s political campaign organization with agents of the government of Russia, though Mr. Sessions was part of Mr. Trump’s campaign organization.

19. SLANDER. Mr. Trump has often charged Mexicans, Guatemalans & Hondurans with murder, rape and other grave crimes without evidence, a grave slander on the character of innocent people.

20. REFUGEES. Mr. Trump has refused to grant refugees safe haven, and failed to expeditiously administer their applications for refuge and asylum. He has imprisoned many of them for long periods of time, pending administrative processing of their applications, and without probable cause or threat to national security, denying them rightful liberty and simple justice.

21. IMMIGRANTS. Mr. Trump has imprisoned immigrants without trial, including children, without probable cause or threat to national security, denying them rightful liberty and simple justice.

22. PUTIN OF RUSSIA. Mr. Trump has, on several occasions, shown deference to Mr. Putin, the autocrat of Russia. Mr. Putin is known to the Congress and should be known to Mr. Trump as antagonistic to the interests of the United States, antagonistic to NATO, antagonistic to the European democracies, vital defender of the autocrat of Syria, and rivalrous contender for dominance in Syria. Mr. Trump proposed a joint investigation by Russian and United States government agencies to investigate Russian efforts to influence the outcome of the United States presidential election in 2016. Mr. Trump revealed United States national secrets to the ambassador and the foreign minister of Russia. In withdrawing United States forces from Syria, Mr. Trump yields strategic advantage to Mr. Putin. Mr. Trump has astonished his friends and his critics by his persistent accommodation and generosity toward Mr. Putin.
23. GRATUITOUS ABRIDGEMENTS OF LIBERTY. Mr. Trump gratuitously used his office to criticize and discourage NFL, National Football League, players from exercising their rights of free expression by urging their employers to terminate their employment and discharge those who declined to stand during the national anthem, despite the employers’ protections from their property, their businesses, being taken for public use without just compensation, in violation of Amendment 5 of the Constitution, and despite the players’ protection of free speech and expression, in violation of Amendment 1 of the Constitution.

Andrew Johnson
24. FAILED EXECUTION OF OFFICE. Mr. Trump, as described in others of these articles of impeachment, has failed to faithfully execute the Office of President, in apparent lack of understanding of the Constitution, in violation of the President’s oath to preserve, protect and defend the Constitution of the United States, as specified in Article 2, Section 1 of the Constitution.

25. SYRIA. Mr. Trump, has misused the Constitutional power of the President as Commander in Chief of the armed forces by ordering United States forces to withdraw from Syria, on the ostensible but false pretext that United States forces have defeated the Islamic State. In withdrawing forces, he abandons our allies in the region. He renders doubts in the reliability of the United States among allies. He leaves the fierce religious autocracy, Islamic State, capable of recovering significant power in the region, thus giving Islamic State the opportunity to establish a base of operations from which they can threaten our allies and the United States. He surrenders the territory to the autocrats with whom United States forces have contended there, including Islamic State, Mr. Assad of Syria, Mr. Putin of Russia, Hezbollah of Lebanon, the high imams of Iran, and he leaves the ultimate outcome to their decisions. He fails to protect the population of Syria and leaves them at the mercy of autocrats. He has failed to establish democracy in those parts of Syria controlled by United States forces and allies. Snatching defeat from the jaws of victory, he has failed to reap the benefit of the military gains achieved by United States forces, rendering futile that expenditure of treasure and blood.


I intend by the above draft to provide a checklist against which the members of the House of Representatives may compare the Articles of Impeachment that I hope they will write.

I have omitted lists of descriptions of specific acts of the president, which were part of the articles for presidents Johnson, Nixon and Clinton. I’m hopeful the Congress has well-qualified staff who will supply those essential elements.

Also, I trust those staff will combine the Articles I’ve written with proposed Articles written by others, and to edit the combined Articles, correcting my errors and omissions, and assuring understandability, accuracy, effectiveness, and legality.

Finally, I’ll explicitly state my opinion. Mr. Trump’s High Crimes and Misdemeanors are abundant and obvious. He is, by far, the most impeachable president in the history of the US. Let ours be an example to all the world of the workings of a great democracy. Through the fundamental document they left to us, with the checks and balances, the founders of the republic charge the Senate to perform its role and remove this president.

Donald Trump on 150th Anniversary of Trial of Andrew Johnson Mar 13, 2018


Constitution. https://www.law.cornell.edu/constitution
Declaration. https://www.archives.gov/founding-docs/declaration-transcript

Articles of Impeachment:

Green’s Articles. https://algreen.house.gov/press-release/articles-impeachment-against-donald-j-trump-president-united-states


Joyce N. Boghosian, Donald Trump on 150th Anniversary of Trial of Andrew Johnson (March 13, 2018, Official White House Photo, https://www.whitehouse.gov/briefings-statements/photos-of-the-week-2/. Public Domain.)

Trial of Andrew Johnson, President of the United States, in the Senate, 1868 (Frank Leslie's Illustrated Newspaper, 1868. Collection of the United States Senate. Copyright expired. https://www.senate.gov/artandhistory/art/common/image/Ga_chamber_38_00290.htm)

Nixon presents transcripts of taped conversations. Apr 29, 1974. (Wikipedia. Public Domain. https://en.wikipedia.org/wiki/File:Nixon_edited_transcripts.jpg)

Bill Clinton by Bob McNeely (Official White House Photo. Public Domain. Wikipedia. https://commons.wikimedia.org/wiki/File:Bill_Clinton.jpg)

Donald Trump Jan 28 2017, (White House. Wikimedia. Public Domain. https://commons.wikimedia.org/wiki/File:Trump_first_weekly_address_(cropped).jpg)


The Fairy Tale of Capitalism: The Old Ones and the 50 Percent

Each person judges for themselves the truth and meaning of FTC.

FTC Ring: <Previous | Next>

David Ricardo
by Thomas Phillips (1821)
The grandest characters of FTC, the Fairy Tale of Capitalism, are the four Old Ones Adam Smith, David Ricardo, Karl Marx, and Friedrich Engels, Marx’s collaborator. The Old Ones wrote the most significant early Tales, in immense volumes of unintelligible prose.

The capitalists of political view often call Smith the originator of capitalism, but they exaggerate. Smith sketched out profound economic components and dynamics. Ricardo, Marx and Engels cited Smith’s works, disputed some minor points, refined and elaborated others, and used Smith’s terms, and all four agreed on the nature of the economic system, which Marx and Engels named "capitalism" in their book “Capital” in 1867. Marx and Engels articulated the political ideology of “Communism” in their book “Manifesto of the Communist Party” in 1858.

Smith describes how the wages of Labor merely suffice for the Worker to subsist. Under stable conditions, he writes, a man and his wife, both employed, have just enough income to maintain themselves and four children, two of whom die before adulthood. Employers choose among Workers bidding against one another for employment, and competition among Workers keeps their wages to a “scanty subsistence”, he wrote.

Friedrich Engels
by William Hall (1879)
Adam Smith
by John Kay (1790)

When employers expand production rapidly, their need for Workers increases, writes Smith. Wages may rise a little, a comfort encouraging some Workers to marry and have children. If Labor becomes abundant, due to expanded population, introduction of improved machines or a decline in production, then employers dismiss Workers, and wages decline. Smith describes prevalent beggary, crime, starvation, and death among the unemployed until the population declines sufficiently that revenue from production can maintain it.

Smith writes “The liberal reward of labour, therefore, as it is the necessary effect, ... is the natural symptom of increasing national wealth. The scanty maintenance of the labouring poor, on the other hand, is the natural symptom that things are at a stand, and their starving condition, that they are going fast backwards.” 

Ricardo echoes Smith. “The natural price of labour is that price which is necessary to enable the labourers, one with another, to subsist and to perpetuate their race, without either increase or diminution.” The prices of food and necessities determine the natural wage level. And “When the market price of labour is below its natural price, the condition of the labourers is most wretched: then poverty deprives them of those comforts which custom renders absolute necessaries.”

Marx and Engels echo Smith. “The value of labour-power is determined by the value of the necessaries of life habitually required by the average labourer.”

The Tales of Marx and Engels are consistent with the concepts articulated by Smith and Ricardo. The capitalist advances Capital (which Smith calls “stock”) for equipment, for materials and for employment of Labor, they write. Labor transforms the means of production into product sold in the market. The product fetches a price sufficient to reimburse expenditures on Labor and equipment and materials, plus a little more, because otherwise production stops. For Marx and Engels the “plus a little more” is “surplus value”, the residuum, after replacing production expenditures. The capitalist claims the surplus value, increasing the Capital. Smith and Ricardo would have agreed fully and called surplus value the capitalist’s profit. Marx and Engels say the capitalist should share surplus value, which is Capital and Labor transformed, with the Worker. Marx and Engels write that capitalism requires many Workers to live in conditions so desperate that some of them die, while the capitalist lives in comfort.

Karl Marx
by John Jabez Edwin Mayall (1870)
Marx and Engels fully agreed with Ricardo and Smith on the functioning of the existing general economic system, which they described in great detail and named "capitalism" in their book "Capital". In their book "Manifesto", they called for abolition of private property. That call immediately aroused a political movement opposing communism, Engels, Marx, and everything associated with them, including, alas, people who wrote about them. Engels and Marx became the high villains of FTC. The political movement opposed to communism adopted the name "capitalism", instantly conflating the movement with the economic system, and the members called themselves "capitalists", whether they personally owned significant capital or not.

In their Tale of the Yeoman, Marx and Engels write that the Crown granted nobles authority to clear their domains of families that had cultivated small inherited plots since antiquity. The Land clearing coincided with invention of new machines, such as automated looms, centralized in urban factories where the displaced country people sought employment. Marx and Engels suggest there was no poverty in England before capitalism introduced modern employment in the factories.

Marx and Engels romanticize the good old days. Poverty long predated capitalism. In Seville, at the time Christopher Columbus landed in America, the predawn of capitalism, about 50 Percent of the people weren’t wealthy enough to tax. In our enlightened era, the 50 Percent are the least wealthy half of Society. In 2012, Mitt Romney, the unsuccessful Republican candidate for U.S. President, said 47 percent of the people don’t pay income taxes. Most of the 50 Percent don’t have enough income to tax, because taxing the 50 Percent could raise political problems by starving many constituents and their children. Indeed, some are starving without taxation. In the United States, 1/8th (12%) of households were food-insecure in 2016. 1/20th (5%) had “very low food security”, meaning they didn’t have enough food at times during the year for lack of money or other resources.

A fair trade, as between a buyer and a seller, produces benefits for both parties. Smith and Ricardo saw the deaths of some Workers as the natural, necessary and useful result of a complex system of production and distribution which benefits the entire Society by increasing the wealth of the nation. Marx and Engels wrote, with outrage, that the customary trade of Labor for wages was unfair to the Worker; systematically unfair, because no trade could be fair when the death of one of the parties so frequently results.

Note: In 2016, the U.S. Census Bureau poverty level for a household of 4 people was about $24k, which is, coincidentally, approximately the highest household income in the 20th percentile of incomes, and also, $24K is about the 2018 level of the U.S. Department of Health & Human Services poverty guideline (determining eligibility for various government programs) for a 4-person household. The U.S. Department of Agriculture estimates, based on census data, state proportions of people in poverty, ranging from 8% in New Hampshire to 21% in Mississippi, and of children in poverty, from 9% in New Hampshire to 30% in Mississippi, as of 2016.

My gratitude goes to my friends who encouraged me and helped me clarify the text to better convey the meaning.

FTC Ring: <Previous | Next>


William Hall, “Friedrich Engels” (1879, Brighton, Public Domain, Wikimedia, https://commons.wikimedia.org/wiki/File:Friedrich_Engels_portrait_(cropped).jpg)

John Kay, “Adam Smith” (1790, Library of Congress, Public Domain, Wikimedia, https://commons.wikimedia.org/wiki/File:AdamSmith1790b.jpg)

John Jabez Edwin Mayall, “Karl Marx” (circa 1870, UK National Portrait Gallery, http://www.npg.org.uk/collections/search/portrait/mw75680/Karl-Marx, Public Domain in USA, https://commons.wikimedia.org/wiki/File:Karl_Marx_by_Mayall_c1870.jpg)

Thomas Phillips, “David Ricardo” (1821, National Portrait Gallery, Public Domain, Wikipedia, https://en.wikipedia.org/wiki/David_Ricardo#/media/File:Portrait_of_David_Ricardo_by_Thomas_Phillips.jpg)

United States Census Bureau, Current Population Survey (2016 and 2017 Annual Social and Economic Supplements, https://www2.census.gov/programs-surveys/demo/tables/p60/259/table2.xls

U.S. Department of Agriculture, “U.S. households by food security status, 2016” (https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-us/key-statistics-graphics.aspx)


Gerald Auten & Geoffrey Gee, “Income Mobility in the United States: New Evidence from Income Tax Data” (June 2009, National Tax Journal, https://www.ntanet.org/NTJ/62/2/ntj-v62n02p301-28-income-mobility-united-states.pdf)

Gerald Auten & David Splinter, “Income Inequality in the United States: Using Tax Data to Measure Long-term Trends” (2018, New York University, http://www.law.nyu.edu/sites/default/files/upload_documents/Income%20Inequality%20in%20the%20United%20States%20-%20Auten_1.pdf)

Daniel Brockman, “Demonstrating Disparity” (April 2018, https://daniel-brockman.blogspot.com/2018/04/demonstrating-disparity.html)

Daniel Brockman, “The Fairy Tale of Capitalism: The 90 Percent" (November 2016, https://daniel-brockman.blogspot.com/2016/11/the-fairy-tale-of-capitalism-90-percent.html)

Daniel Brockman, “The Fairy Tale of Capitalism: The Buyer of Labor and the Nine Percent” (March 2017, https://daniel-brockman.blogspot.com/2017/03/the-fairy-tale-of-capitalism-buyer-of.html)

Daniel Brockman, “The Fairy Tale of Capitalism: Land and Ricardo” (April 2017, https://daniel-brockman.blogspot.com/2017/04/FTC-Land-and-Ricardo.html)

Daniel Brockman, “The Fairy Tale of Capitalism: Managers, Professors and Engels” (June 2017, https://daniel-brockman.blogspot.com/2017/06/ftc-managers-professors-engels.html)

Daniel Brockman, “The Fairy Tale of Capitalism: Rand, Marx and the Downward Trickle” (November 2017, https://daniel-brockman.blogspot.com/2017/11/FTC-rand-marx-downward-trickle.html)

Friedrich Engels, “The Condition of the Working Class in England” (1845, Penguin, http://a.co/6DAD9JW)

Robert Farley, “Dependency and Romney’s 47 Percenters” (September 2012, FactCheck.org, https://www.factcheck.org/2012/09/dependency-and-romneys-47-percenters/)

Felipe Fernandez-Armesto, “Amerigo: The Man Who Gave His Name to America” (2007, Random House, http://a.co/cI3Q6mw

Jacob Goldstein & Lam Thuy Vo, “The 47 Percent, In One Graphic” (September 2012, National Public Radio, https://www.npr.org/sections/money/2012/09/18/161337343/the-47-percent-in-one-graphic)

Thomas Piketty, Emmanuel Saez, Gabriel Zucman, "Distributional National Accounts: Methods and Estimates for the United States" (May 2018, Quarterly Journal of Economics, https://eml.berkeley.edu/~saez/PSZ2018QJE.pdf)

Karl Marx & Friedrich Engels, “Capital” (1867, http://a.co/fdu68Kb)

Karl Marx and Friedrich Engels, "Manifesto of the Communist Party" (1858, 1908 New York Labor News Edition, http://amzn.to/2hl0LCS)

Molly Moorhead, “Mitt Romney says 47 percent of Americans pay no income tax” (September 2012, Politifact, http://www.politifact.com/truth-o-meter/statements/2012/sep/18/mitt-romney/romney-says-47-percent-americans-pay-no-income-tax/)

David Ricardo, “On the Principles of Political Economy and Taxation” (1823, http://a.co/9BOWay8)

Adam Smith, “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776, http://a.co/e3KmVXG

Adam Smith, “The Theory of Moral Sentiments” (1759, 2010 republication by Digireads, http://amzn.to/2ADCAYL)

U.S. Census Bureau, “Number in Poverty and Poverty Rate: 1959 to 2016” (1960 to 2017, Current Population Survey, https://census.gov/content/dam/Census/library/visualizations/2017/demo/p60-259/figure4.pdf)

United States Department of Agriculture, Economic Research Service, “Key Statistics & Graphics, Food Security Status of U.S. Households in 2016” (https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-us/key-statistics-graphics.aspx)

United States Department of Agriculture, Economic Research Service, “Poverty, Percent of total population in poverty, 2016” (retrieved Jun 11, 2018,

United States Department of Health & Human Services, “U.S. FEDERAL POVERTY GUIDELINES USED TO DETERMINE FINANCIAL ELIGIBILITY FOR CERTAIN FEDERAL PROGRAMS” (retrieved Jun 11, 2018, https://aspe.hhs.gov/poverty-guidelines)


Demonstrating Disparity

Increasing disparity of incomes has occurred in the United States during the last 50 years, and we can show it.

Some of us suffer little from the gain of national income share by the One Percent. We feel that our income is good and stable. We may see our own fortunes and comfort increasing, which we attribute to our own efforts, talents and deserved rewards.

But some of us do suffer. Our fortunes are crushed. We go to bed hungry. We suppose we made serious mistakes, or didn’t have the knowledge, or the necessary personal connections, or the lucky breaks.

While you might not feel the One Percent absorbing the income, it does happen. You can’t observe it by looking at one person or one example, such as yourself, because idiosyncratic events with multiple explanations interweave with less obvious societal evolutions to shape individual circumstances. And each of us imagines most of the people live much as we do. We have little natural awareness of people who live in economic circumstances different from our own.

One must consider people in groups. One must take a macro view. For this purpose, consider three graphs. They come from different researchers. Let's look at the period 1970-2014, which appears on all 3 graphs on the horizontal axis. For all 3 graphs, the vertical scale shows percent-points of aggregate national income.

In the first graph, we see the aggregate income of the less wealthy 50 Percent of incomes, as a share of national income, declined by about 9 percent-points pretax and 6 percent-points posttax from 1970 to 2014. Share given up by the less wealthy 50 Percent is share gained by the wealthier 50 Percent.

The second graph shows, on the the line studded with black triangles, the share of the One Percent (incomes in the 100th percentile) increased about 13 percent-points of national income between 1970 and 2014. The Nine Percent (incomes in the 91st through 99th percentiles) gained about 4 percent-points pretax. So, these Ten Percent gained about 17 percent-points. Percent-points gained by the Ten Percent are percent-points given up by the 90 Percent (1st through 90th percentiles).

Now, the first graph showed us the less wealthy 50 Percent gave up 9 percent-points, and the second graph shows the Ten Percent gained 17 percent-points.

Since the total of all income shares is always 100 percent, a increase in share by one subgroup compensates for the net decreases in share by other groups, and the increases and decreases must add to zero. 9 percent-points given up by the less wealthy 50 Percent and 17 percent-points acquired by the Ten Percent means the remaining 40 Percent (51st through 90th percentiles) gave up 8 percent-points of national income share (-9 + 17 - 8 = 0).

The 3rd graph shows the top Ten Percent acquired 13 Percent-Points, and the Next Ten percent (81st to 90th percentiles) gave up 4 percent-points.

Though prepared by different researchers, if we allow a percent-point or two of minor and technical differences, the three graphs don't conflict with each other or contradict each other. We can understand a consistent story.

From 1970 to 2014...
1st to 50th percentiles of income: ​gave up 6 percent points of aggregate national income share.
51st to 80th percentiles of income: gave up 7 percent points of aggregate national income share.
81st to 90th percentiles of income: gave up 4 percent points of aggregate national income share.
91st to 99th Percentiles of income: gained 4 percent points of aggregate national income share.
One Percent: gained 13 percent points of aggregate national income share.
(Figures approximate.)

The Ten Percent took what the 90 Percent gave up.
The One Percent took what the 80 Percent gave up.

This analysis doesn’t imply that the One Percent are malevolent, generally speaking. There are a few criminals among them, as with any group of thousands of people. If their behavior is legal and conventional, that doesn’t contradict this analysis. If they seek to increase their personal incomes and wealth, as any humans might do in similar circumstances, then they behave as humans do. This analysis doesn’t explain why the shifting of income shares has occurred among societal subgroups, but it shows the shifting has occurred.

I'm grateful to Dr. Stetson for his communications that inspired this article, and to other friends for their helpful comments in preparation of this article.

Images and Sources

Images may be freely used in reproduction of this article. They are used here in compliance with fair use doctrines of copyright law.

Alisha Coleman-Jensen, Matthew P. Rabbitt, Christian A. Gregory and Anita Singh, "Household Food Security in the United States in 2015" (Sep 2016, United States Department of Agriculture, https://www.ers.usda.gov/webdocs/publications/79761/err-215.pdf?v=42636)


Pay Ratio

Michael Milken (image: US Congress, 2006)
Having thought it over for seven years, government took a step. On September 21, 2017, the SEC Securities and Exchange Commission announced that, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed into law in 2010, publicly traded corporations must disclose publicly the “median employee” compensation along with the pay of the “principal executive officer”, and the ratio of the highly paid officer’s pay to the median employee pay, every year beginning with the company’s fiscal year that began in 2017.

Economist Piketty wrote in 2014 the supercompensation of senior corporate executives, exacerbated by rent seeking, contributed importantly to the disparity of incomes in advanced economies, especially in the United States. The Occupy Wall Street movement, chanting “We are the 99 Percent!” protested the disparity in 2011. Nobel economists Akerlof and Shiller in 2015 attributed to Michael Milken the beginning of supercompensation in the 1980s as the indirect effect of his pioneering corporate acquisitions financed by junk bonds. Nobel economist Stiglitz in 2013 wrote of corporate CEOs Chief Executive Officers taking a disproportionately large share of the wealth of the companies over which they presided. And now, the US government has acted to measure supercompensation.

Early reports are in. I’ve looked at 24 of them. (You can find them yourself by searching up the company website, finding the link to “Investor Relations” or “Investors”, then the link to “SEC Filings”, and then the link to the 2018 “DEF 14A” or “Proxy”. (Or you can just apply your search engine to all those keywords plus the name of the company.) Here I present some highlights of what I found.

The regulation requires companies to report the CEO’s total compensation, the median employee compensation, and the ratio. For example, for AXP American Express, in 2017, the CEO got $19m, the median employee got $57k, and the reported ratio was 327.

We suppose a company would prefer to report a low ratio, because the executives wouldn’t want to appear overly avaricious. A company can report a lower ratio than you might expect if the CEO isn’t the most highly paid employee. The most highly paid employee must be disclosed in what most companies call the “Summary Compensation Table” in the proxy statement. For WHR Whirlpool, the CEO Marc Bitzer’s pay was $7m, but the most highly paid employee was Jeff Fettig who got $16m. The SEC regulation calls for calculating the ratio of the CEO’s pay to the median employee pay, so WHR calculated a ratio of 356 ($7m/$20k), not 800 ($16m/$20k). Another example was OSTK Overstock.com, where CEO Patrick Byrne got $445k, and the most highly paid employee was Saum Noursalehi who got $968k.

Companies need not consider contractors, leased workers and similar “gig economy” workers to be employees. Thus it’s possible for a company to obtain a lower ratio by hiring a contracting firm which then hires all the employees paid less than, say, $150k. I found no clear evidence of an occurrence. Companies can also decline to count some workers outside the US, up to 5% of the employees. Some companies have done so.

The company with the highest ratio was LEA Lear, which makes car seats. The highly paid employee got $15m in 2017, and the median employee got $10k, and the reported ratio was 1,452.

The company with the lowest ratio was perennial startup OSTK Overstock.com. The highly paid employee got $1m, and the median employee got $52k, and the reported ratio was 8.

I found no significant correlation between pay ratio and market capitalization (size), but there was significant positive correlation between highest pay and market capitalization.

Graph: Daniel Brockman, 2018
I found very mild negative correlation between highest employee pay and the increase in stock price during the last 10 years. I found mild positive correlation between ratio and 10 year price increase, but with the small sample size, the extraordinary case of LEA Lear, with a ratio of 1,500 and a price increase of 16 times, strongly influences the correlation measure. Remove LEA and the data are uncorrelated.

Why does this matter? In the US, we have a narrative that if a person works diligently and loyally and energetically, works pleasantly with others, does work of highest quality, and deals honestly and fairly with others, then she or he can expect to prosper and to rise to even the highest office. But the disclosed pay ratios tell us a different story. What kind of annual raise in pay could such a good worker expect, with consistent performance year after year? 10%? 15%? With that kind of annual raise, after how many years will the good worker have pay equal to the most highly paid executive? This formula gives us the answer, assuming the good worker starts at the median employee pay:

Years = log( pay ratio ) / log( 1 + annual raise fraction )

At ALGN Align, for example, we calculate using an annual raise of 10%:

72 years = log(923) / log(1 + .10)

At OSTK Overstock.com, the good worker could attain the high pay after 22 years, a lifetime of work. At no other company in my set of 24 is such a short time possible. At INTC Intel, the figure is 56 years. At T AT&T, it’s 62 years. This exceeds what a person can do in a lifetime, meaning a person must do something more than or different from good work to reach the highest levels of monetary reward. Put differently, the CEOs get paid for something other than good work.

Disclosing the median employee pay alongside the highest employee pay is an important development. Some European governments require disclosure of corporate officers’ pay, though none publish typical employee pay to my knowledge. Asian companies don’t disclose these numbers. The US SEC requires the most detail and provides an example to other regulators. It will be interesting to see what diligent future researchers find in the pay ratios.

My data set of 24 companies is available at https://docs.google.com/spreadsheets/d/1M9OYJuBHkVdnFKAXq8oDDd0Neqq0-DvPE-VwoIRlr6c/edit?usp=sharing


U.S. Congress, "Michael Milken" (2006, Public Domain, Wikipedia)

Daniel Brockman, Graph (2018, freely use with attribution)


From the SEC Securities and Exchange Commission …

“Press Release: SEC Adopts Interpretive Guidance on Pay Ratio Rule” (Sep 21, 2017, https://www.sec.gov/news/press-release/2017-172)

“Commission Guidance on Pay Ratio Disclosure” (https://www.sec.gov/rules/interp/2017/33-10415.pdf, retrieved Apr 12, 2018)

“Inflation Adjustments and Other Technical Amendments” (https://www.sec.gov/rules/final/2017/33-10332.pdf, retrieved Apr 12, 2017)

“Division of Corporation Finance Guidance on Calculation of Pay Ratio Disclosure” (Sep 21, 2017 https://www.sec.gov/corpfin/announcement/guidance-calculation-pay-ratio-disclosure)

“Code of Federal Regulations, Title 17 - Commodity and Security Exchanges, Section 229.402 (Item 402) Executive compensation” (Apr 1, 2017,

“Commission Guidance on Pay Ratio Disclosure” (Sep 27, 2017,

“Regulation S-K, Questions and Answers of General Applicability” (Sep 21, 2017,

“Public Statement, Additional Dissenting Comments on Pay Ratio Disclosure” (Aug 7, 2015,

“Item 402 of Regulation S-K -- Executive Compensation, Questions and Answers of General Applicability” (Aug 8, 2007,

Other sources ...

George A. Akerlof and Robert J. Shiller, “Phishing for Phools” (2015, Princeton University Press, http://a.co/6uww373)

Carola Frydman and Raven E. Saks, “Executive Compensation: A New View from a
Long-Term Perspective, 1936–2005” (2010, Oxford University Press, http://web.mit.edu/frydman/www/trends_rfs2010.pdf)

Thomas Piketty, “Capital in the Twenty-first Century” (2014, Harvard University Press, http://a.co/fdt8GiZ)

Joseph E. Stiglitz, “The Price of Inequality” (2013, W.W. Norton, https://amazon.com/dp/0393345068)

Wikipedia, "Michael Milken" (retrieved Apr 13, 2018, https://en.wikipedia.org/wiki/Michael_Milken)


Investing for Growth and Value

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Last week, two good friends with whom I discuss investing more or less every week wanted to know: “What is the difference between growth stocks and value stocks?”

With American parochialism, I turned to the products of three grand investment firms that have managed growth and value mutual funds and ETFs for decades:

BlackRock, www.blackrock.com, manager of iShares ETFs.
State Street Global Advisors, us.spdrs.com, manager of SPDR ETFs (pronounced like “spider”).
Vanguard, www.vanguard.com, manager of Vanguard ETFs.

Here are the ticker symbols of 18 ETFs I considered:

Large Cap
Mid Cap
Small Cap

Searching the websites of the three firms, one immediately encounters disappointing non-definitions of Growth and Value, such as, in the case of IVW, “INVESTMENT OBJECTIVE. The iShares S&P 500 Growth ETF seeks to track the investment results of an index composed of large-capitalization U.S. equities that exhibit growth characteristics.”

Growth and Value are “style” characteristics of investment strategies. By perusing the prospectuses of the funds, I find that each of the 18 ETFs defers the question of the definition to the index the ETF tracks. All 6 large cap ETFs use the S&P 500 Growth and Value Indexes (us.spindices.com). These indexes don’t define Growth and Value, but they use a process to determine whether a stock is a Growth stock or a Value stock. The Index Construction section of the Methodology document describes giving each company a Growth score and a Value score.

The Growth score summarizes three measurements:
Three-year change in earnings per share, excluding extraordinary items, divided by price per share.
Three-year sales per share growth rate.
Momentum, 12-month percent price change.
The 500 companies in the S&P 500 are ranked from 1 to 500, the company with the highest score having a rank of 500.

The Value score summarizes three measurements:
Book value to price ratio.
Earnings to price ratio.
Sales to price ratio.
The 500 companies are ranked with the company having the highest Value score having a rank of 500.

The 500 companies are then sorted in ascending order of the ratio of the Growth rank to the Value rank (G/V). The companies in the top third of the list will have the highest G/V values. These are the “pure” Growth companies. Similarly, the companies with the lowest G/V value are the “pure” Value companies near the bottom of the list. And the companies in the middle of the list are hybrids.

The S&P indexes put portions of a hybrid’s market capitalization in both the Growth and Value indexes, which is why you can find some companies among the holdings in both ETFs. This bothers some of us, so the three firms offer “pure” Growth and Value ETFs as well, but I digress from the question of definition, and I want to get back to that.

The iShares mid cap Growth ETF IWP uses the Russell Midcap Growth Index (www.ftse.com/products/downloads/Russell-US-indexes.pdf). Russell combines one ranked Value variable, book to price ratio, and two ranked Growth variables, the I/B/E/S Institutional Broker’s Estimate System (financial.tr.com/ibes) 2-year earnings growth estimate, and 5-year sales per share historical growth, to produce a composite value score (CVS). A stock with high CVS is a Value stock, and a stock with low CVS is a Growth stock. Both the Growth and Value indexes contain proportions of the same stock, weighted according to its CVS.

For VOE and VOT, Vanguard uses the CRSP U.S. Mid Cap Value Index and Growth Index (www.crsp.com/products/investment-products/crsp-us-mid-cap-value-index) which builds a Growth metric from long and short term future earnings growth, 3-year historical earnings growth current investment-to-assets ratio, and return on assets, and a Value metric from ratios of book to price, future earnings to price, historic earnings to price, dividend to price and sales to price.

Each definition of Value seems to include some form of high book value to price ratio. Each definition of Growth seems to include earnings growth (historical or forecast) and historical sales growth. The differing definitions implicit in methodologies continue as one looks at additional ETFs and their indexes.

So there are no standard definitions of Growth and Value stocks. I think that, historically, the terms were invented to appeal to investors’ emotional hopes for their investments. Dr. Dennis Martin points out the term “value stock” was seldom used before World War I, after which people used it most frequently in the 1930s. “Growth stock” emerged in frequent use only after World War II. Marketers, quantitative analysts and lawyers have tortured the definitions ever since.

Take caution, dear reader, of the numerous and diverse hazards of investing.

Disclosure: I own some shares of SLYG.

My thanks to friends who inspired and critiqued early drafts of this article.


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