Ask and you shall receive

I was contacted a while ago by someone trying to plug their blog. I admire that, so here it is:www.newpolity.com

Household Economics

Let's conduct a thought experiment. Say your house has monthly expenses of $100 and a monthly income of $200. Every month you save $100. Years go by and that savings grows and grows and eventually you have quite a sum, say $1000. You decide that since your monthly income exceeds your monthly expenses that you can spend that money and replenish your savings later. In essence, you are borrowing from yourself. So you take that money saved and write a little note, "will pay back later" and then proceed to spend the money.

Here's the tough question: after spending the saved money, how much money do you have? If you answered $0, go to the head of the class. It's not complicated. If I spend all the money I have saved, I don't have any money. What about those pieces of paper that say "will pay back later". Well, those are pieces of paper, not money. And until you actually pay them back, you've got nothing.

Here's another way to think about it. Imagine we have the same household income of $200 and instead of spending only $100 and saving $100, we spend the whole $200 every month and write ourselves little notes, "will save $100 later". Every month we have no money saved, only little notes we wrote to ourselves. Eventually we have quite a lot of notes. But if you're really astute, you'll realize that we still have no money.

Folks, Social Security is broke today. We are currently taking in less income than we are paying out in benefits. And there is no "trust fund". All that's in there are little notes.

I am always amazed at the duplicity of politicians. How anyone can say with a straight face that there is a trust fund, and that social security is not broke is beyond reproach. The reality is that if your household, our government, spends every cent it takes in as income, it doesn't have any savings. That's common sense.

Vocabulary

I suck at interviewing. It's about the most frustrating thing in the world to be bad at something so instrumental in getting a job. I'd say that being good at interviewing is at least twice as important as being good at your job. After all, getting a job is a prerequisite for doing a good job. Anyway, I am sure there are a multitude of reasons for my poor interviewing skills, but my concern is how to get better.

All my life, I have been very good at math, and like any genuine math person, I scoffed at English skills. Every standardized test, math lifted me over the top, while my English scores brought me back to earth.

As a kid, I didn't read a lot unless I was forced to. TV was my thing and the boob tube had me transfixed. I was too lazy and impatient to exercise my imagination with a book.

When I got older, I started to read more. Opinion pieces on economics and politics were a drug. As I read, I started to notice something strange happening. Through no fault of my own, I would catch myself using words that I had never used before. Out of the blue, I would say something that I couldn't believe came out of my mouth. That used to happen before, but this time, it wasn't my foot that was the problem. Gradually, my vocabulary improved. And the more I read, the more it improved. It improved so much that on the last standardized test I took, my math skills were the weak link.

I don't think change is made in one fell swoop. Eloquent people do not wake up one day and decide to be eloquent. They evolve into eloquence. All changes are a consequence of small steps repeated over and over until they become second nature. We are wired for routine, change the routine and you change the wiring.

Risk

My girlfriend was offered a pretty good job in New York City. One of the factors weighing in on the decision of whether to go was her condo. Could she sell it? Rent it out? Walk away? It's no trivial decision and even less so because the value of the condo has plummeted since she purchased it. Even with a very large initial equity position, she's currently underwater on her mortgage.

Then I read a Wall Street Journal article chronicling some other people in similar (actually far worse) situations. One had "strategically" defaulted, basically making the economic calculation that his loss was irrecoverable. From a business standpoint it makes perfect sense, but what about from a moral standpoint?

At first blush I am one to always rail that it's wrong, just plain wrong, to welch on your debts. But, after some thought, I don't believe that's the case. We don't have debtor's prisons and that means that the calculus for giving out loans needs to adjust.

No one gives a loan out of the kindness of their heart. Banks give people money for one simple reason, to make money. And in their decision to lend is a calculation of potential risks; one of those being that they might not get paid back. That risk, along with all others, is embedded in the price of the loan (the interest rate). Banks which severely misjudge risk ought to pay the consequences.

Think about it this way, if you as an investor lend money (buy a bond) to a corporation, you are essentially a bank. When you purchase that bond, you assume certain risks reflected in the price. The bank loaning money to individuals is no different.

Our free market system consists of profits and losses which incentivize certain behavior. Losses punish uneconomical behavior by removing resources from those that can't manage them. An immoral borrower is far less of a concern to society, than the irresponsible lender who enables them.

It's a start

I'll admit that I am genuinely surprised that Obama has agreed to extend the current tax rates rather than raise taxes. Our economy will do better because of this. Now if government could learn the lesson and realize that the best thing they can do for the economy is absolutely nothing we'd all be better off.

Time for your feeding

When are the poor going to be outraged? I ask because government, in the name of helping, treats them as substandard. Personally, I can't stand being treated as less than someone else and I cannot understand why the poor tolerate it.

Helping is noble, whether through government or private charity. But how you help indicates how you perceive those helped. Take food stamps for example. A food stamp is basically money that can only be used for food (a government gift card). Why does government give people gift cards instead of money? If you said because it doesn't trust them, go to the head of the class.

The implicit assumption is that poor people are so stupid or irresponsible that they will not spend the money on food. That's insulting. Yes, there are irresponsible people, but do you seriously think they would starve to death if you gave them money rather than food stamps?

Give people money to buy food and let them save their dignity. If they screw up, let them suffer the consequences and learn from their mistakes. If you treat them like adults, you might be surprised to learn that they are not much different than you.

Wealth is Right

Just to give an idea of tax revenues over the years, look at the chart. While recently things haven't been so good, the overall trend is up. In fact, revenues have tripled since 1965. If we assume that past trends will continue, then the government will take in about $6.5 trillion 45 years from now. To put that into perspective, our population is only expected to be about 438 million in 2050. This means that the federal government can spend twice as much on every single one of us than they do today.

What's even more striking is the implication for the welfare of the average American. In order to take in that amount of tax revenue, actual productive output must increase correspondingly. This means that in aggregate, there will be a ton of money in the hands of private individuals, about 2.5 times the amount today.

What this implies is that the fiscal future is bright regardless of today's rhetoric. A good conservative strategy should be to wait it out by delaying the left's agenda for as long as possible. Liberalism's greatest argument has always been about helping those in need while it's agenda has always been one of control. One day, we will be rich enough to lift up the needy and cut down the legs of liberalism.

How much is enough?

With all the talk about extending the Bush tax cuts, all I hear about is how the rich aren't paying their fair share. Let's disregard the fact that the rich pay more in taxes than they collect in benefits. Let's disregard that they earned their money through hard work and thrift. And let's assume that the rich are dirty rotten scoundrels. What I want to know is how much is enough, how much is fair, and at what point does it get ridiculous?

Here's my point, even if we concede that government's role is to redistribute wealth, most would agree that raising taxes on the very wealthy so that everyone has at least $100,000 is absurd. On some level, the argument for redistribution is to prevent poverty, not to enable every dead beat American to live an upper middle class life. In addition, most don't make $100,000 working, so why would anybody work?

You might say that that's an extreme example, no one is advocating giving everyone $100,000 for being alive. Well, no, but at some point if our economy continues to grow and government revenues continue to increase and our birthrate continues to decrease, government will be flush with money. And the question that ought to be on everyone's mind is what will government do with that money?

When we get to that point, and we will, one has to ask the question, how much is enough?

House is burning down

Doctor Gregory House is a super genius who always knows what's in the patients best interest. On the latest episode, House has to hire a new addition to his team. It must be a woman because... Anyway, they hire a woman who's also a super genius except, unlike House, has a conscience.

The story continues with House's henchmen breaking and entering in order to figure out the secrets the patient won't reveal. It's ok because "everybody lies" and it's for the patients own good. The new goody two shoes doctor (a med student actually) refuses to break the law and with that act is cast by House as a moral midget, not suitable to her gigantic brain.

The moral dilemma continues throughout the episode and comes to a boil when the two super geniuses argue over whether the patient should be informed of his two treatment options. Treatment 1, the inferior treatment and treatment 2, the "right" treatment.

House doesn't want to present treatment option number 1, because A. It's not as effective, and B. the patient is stupid and will choose it (which the patient promptly does). House is interested in saving lives, not letting idiotic patients (read: not super geniuses) decide their own fate.

In the end, all is well because the conscientious super genius is able to reason with the patient that House is right and convinces him to choose the "right" treatment. Hooray to super geniuses, what would us ordinary folks do without them?

House is a TV show, but it unintentionally reveals the left wing view of the world of its writers. It's a view which flips morality upside down and debates the immorality of "incorrect" decisions. In this world, the sin is not in doing harm, but not doing good. Doctor House is the manifestation of the Lefts technical bureaucrats who know what's good for you. On the show, and in life, we ignore it because medicine is far out of our realm of expertise. But the premise holds for everything There is a right answer out there and the experts know it. It is foolish and wrong to reject it. The repugnance of this view is that imposing your genius on an unwilling person is not deemed morally wrong, only questionable.

Perhaps super geniuses will lead our lives better than we would. Perhaps they will make no mistakes, it's assumed they would make less than us. Nonetheless, why ought it be up to someone else to make my life mistake free? Choice only matters when you can choose the "wrong" thing.

Incentives Matter

If you believe as I do that people respond to incentives, then here's an interesting thought experiment. Imagine a world where the poor pay zero taxes. In such a world, would government be more or less likely to create jobs for poor people? I'd say they'd be less likely because what the government really cares about are revenues, and if more people working doesn't generate any additional revenue, then why would government care if they worked or not?

Year of the shark

I remember a few years back the national news in a tizzy about shark attacks. Every week another victim was shark meat and there were no safe harbors anywhere. Turns out that that year, there were about the same number of shark attacks as any other year, and the hullabaloo was self inflicted.

Seems every year, heck, every month a new biggest thing is born. This year, it's the Tea Parties. While the Tea Parties are significant, let's not get ahead of ourselves. The economy sucks, democrats have progressed to being visibly nuts, and Obama-We're-the-ones-we've-been-waiting-for-mania has gone away. Tea Party or no Tea Party, the democrats were going to get crushed.

The Tea Party is not symbolic of liberal woes, but of conservative ones. The tea party is first and foremost a conservative movement, a movement resurrected from the ashes of actual fiscal conservatism. The Tea Party arose to send a message to the Republican party: stick to your principles. We'll see what lasting effect the Tea Parties have in a year...if any of us remember.

They are evil

On some level, most of us feel like we are being screwed. It's not true of course, but this feeling serves a very important psychological purpose: self delusion. Our ego cannot allow us to feel inferior, so instead of looking within ourselves, we look outward for scapegoats and bogeymen to blame. We think our boss exploits us, that mega-companies charge too much, and that luck is not on our side.

I think most of us intuitively know we are not being shafted left and right. You go to class and see the smart kid in the room. You see her talent and you know she’s special. Every day she works her butt off and eventually it pays off. And even the most cynical among us can’t help but admit, she's earned everything she's got.

Nonetheless, the need for bogeymen persists, and we don't personally know every smart girl in the room. To assuage our egos, we simmer illicit stories of how she became rich. What wrongs she must have committed to rise above us, or how it was just plain luck.

Politics essentially divides itself along two lines. The first takes as its premise that what people have, they earned. The second believes that what you have is not earned, or at least not earned rightly.

Liberalism, the politics of entitlement, is manna to your ego. When you see successful people, liberalism sells the idea that you have been shafted; that they don't deserve their success; that if you give liberals power, they will get you what you are entitled. It's a dangerous philosophy as it pits man against man, and feeds on our innate animal desires.

This is not an extreme view of liberalism. At its heart, liberalism is based on the presumption that your fellow man profits at your expense and this causes conflict by definition.

It's the frailty of our ego that wants to transform smart, successful women into our personal scapegoats. It's the tragedy of liberalism to encourage it.

Elevator Manners

I think you can tell a lot about people from little things. Recently I moved to Seattle from Minneapolis and I originally hail from Michigan. I work in an eleven story office building and every day I ride the elevator up to the sixth floor. And every day not one person ever asks me which floor I am heading to, not one person volunteers to push the button for me, and not one person ever asks me to press the button for them.

It's freakin weird. In most places people routinely ask other people which floor they are going to, and they routinely hit the button because it's a nice and friendly thing to do. But here, they are not nice and they are not friendly and it's noticeable.

And I wonder why and I blame liberalism. It might be a stretch, but the way I see it, the reason people are so disconnected, the reason they don't acknowledge your existence inside and outside the elevator, is that it's not their responsibility. It's the responsibility of the state. They pay taxes not because they care, but so they don't have to.

It's not in anyones genes to ignore other people. It's a learned behavior. Liberalism teaches that society, not individuals, are responsible for others. Individuals gradually learn that it's not their job to engage, and it becomes the norm. Every day I ride six floors silently with people who have been taught to shut the world out because it's not their responsibility. Maybe not, but small acts of kindness make the world such a nice place. Let's not teach people to avoid them.

Artists wanted

If there are any artists out there interested in having their work posted here, please get in touch.

Food stamps, the road to recovery

Economic illiteracy is rampant and I heard a gem today listening to the Randy Rhodes show. In between lambasting Newt Gingrich for who knows what, she gave the audience a weapon to throw at those deranged conservatives. Apparently, some conservative wants to limit food stamp payments (the evil cold hearted bastard) and this is wrong not only morally, but economically. For you see it turns out that for every 5 dollars spent, 9 dollar in economic activity is generated. It's nonsense, but in case it isn't obvious here's a simple thought experiment to convince you.

Giving 1 person 5 dollars worth of food stamps and generating 9 dollars is a great deal. If I were a businessman I would do it all day, every day. Therefore it makes perfect sense that we should give everyone 5 dollars worth of food stamps! Just think of all the money generated for the economy! Brilliant liberal thinking.

P.S. Remember this when you hear how much each dollar of unemployment contributes to the economy. And when that time comes let your inner inquisitor ask, if 1 dollar of unemployment is good, shouldn't more dollars be better? How about a million dollars?