Friday, September 30, 2011

Obama losing in 2012? I just don't buy it.

Charles Krauthammer--last night on FoxNews--suggested that Obama might lose the 2012 elections by a landslide, mostly because of the independent vote:
But I think even worse for Obama than the decline in the intensity of support among Democrats--because after all, where they are going to go--on election day they'll be out there for him--is the number on independents. The number on independents is staggeringly bad. 31% approval of independents...And I think if Obama cannot rise from the 31% approval he has among independents he is going to suffer a landslide.
And he's hardly alone on such prognostications. It's all the rage now to detail Obama's declining approval numbers and supposed declining chances to win in 2012.

How the worm turns. Just a few short weeks ago, the scuttlebutt was how the GOP would lose 2012 because of its awful field of likely candidates.

At the same time, Sean Trende at RealClearPolitics has a lengthy analysis on the likelihood of the GOP regaining control of the Senate, or rather on the likelihood of the Democrats losing it. I'll save you the read: he argues that it's likely.

Now, I love me some Krauthammer, anytime, all the time. And I can't think of the last time I disagreed with him. But I do on this. Not that I necessarily want Obama to win in 2012 (I really don't), but I think it's still very likely that he wins, again. In fact, I think it's likely, regardless of who the GOP fields as their nominee. Yet, I agree with Trende: the Democrats are set to lose control of the Senate...and the GOP margin in the House will increase, as well. Why? Well, I'll tell you:

1) Think 1996. I know every election is unique, but 1996 provides some insight into the realities of party-line voting versus issue-driven voting. As much as Clinton is hailed for his brilliant "it's the economy, stupid" observation, when it comes to Presidential politics the idea is continually overstated. Populism trumps the economy, when done right. Look at 1936 for more evidence of this. And populism--class warfare--is Obama's bread and butter issue.

2) The tea-party movement, while still very powerful, remains regional in its orientation and effects. In 2010, it was incredibly effective for local/state races, very effective for House races, and only somewhat effective for Senate races. It won't have the sort of impact on the Presidential race many are hoping for. But I think it will have a greater impact on Senate races, especially given the "where" of many of those races, thus supporting Trende's analysis.

3) At the end of the day, Obama's base will support him, above all else. Never underestimate the politics of fear. And make no mistake, fear will be the core issue for the Obama campaign, no matter who the GOP nominee is.

4) Money. Obama is gonna have more of it--a lot more--for the campaign. There's no way around this. And that's interesting on another level, since the SCOTUS ruling on campaign finance reform was supposed to be a boon for the right.

These factors suggest an Obama victory. At the very least, they rule out a landslide type of loss for the President in 2012.

Cheers, all.

Thursday, September 29, 2011

Capitalism seeds: just add water!

Capitalism--as a concept--is tossed around constantly by people in the public eye, by people in cyberspace, and by people just going about their day to day lives. And when used, it's almost always with regard to a contentious issue of some sort. Unfortunately, most people using the term really don't have a a full grasp of what it actually means, what it actually is.

Capitalism is not an ideology, it's is not the opposite of socialism, or communism, or Marxism. It's not a descriptor for a government and calling one self a "capitalist" is usually a meaningless statement. Simply put, capitalism is using wealth as capital to create more wealth.

But to understand what something is is to understand how it works, a postulate that is universally true, in my opinion. And this is even more true of capitalism, proper, because capitalism is a process, above all else. In a way, it is very much like evolution. Both occur--as processes--naturally with no need of someone dictating what must be done or what must happen (Adam Smith's "invisible hand") . Yet, both need a basic framework, a reality, in which to occur.

Evolution, of course, has the ecosystem of the Earth and it has the fundamental laws governing matter and energy. Setting aside the potential involvement of any deity in establishing this reality, evolution occurs on its own.

Capitalism has the economy of mankind's society at large, something that is impacted constantly by changes in the nature of various subsets of this society. And, in fact, historically we know that capitalism began to occur in its most significant scale in the societies of Nothern Europe--England and Holland in particular--and in North America, following the migration of such Europeans to the New World.

And capitalism also has the rules--the laws--governing the economies of the many subsets of society at large. Some of these rules are more conducive to capitalism and thus the genesis of the process in specific places at specific times.

Capitalism has consequences, the biggest one being a necessary unequal distribution of wealth and resources. As capitalism became more and more prevalent, this did not go unnoticed (never mind the habitual inequality in wealth and resources that has characterized all of history). And many thinkers sought to explain how this problem could be fixed. Marx, for one, was very much opposed to capitalism and its results. These days, many are quick to dismiss Marx and Marxism, but make no mistake, he very much understood the "how" of the process. And that's something that cannot be said of most, today.

All that said, why capitalism? Where did it come from? There is a great--in my opinion--book on capitalism's roots by Michael Perelman: The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation. It's those last two words in the title that most concern us, here.

Primitive accumulation--Marx's term (Smith identified a similar concept: original accumulation)--refers to the process through which workers are separated from their own means of production and wedded to the means of production of others (capitalists) as wage-earners. It is--in effect--the fundamental event that ushers in capitalism.

Perelman, in his book, actually traces this process in England, as the localized, sedentary, self-provisioning population have their options methodically limited--via legal mechanisms like Game Laws--until they cannot help but seek employment from others, until they must participate more and more in the burgeoning consumer economy.

Now, I think Marx and Perelman are very much on target, here. But two things need to be understood: 1) there was no secret cabal orchestrating these changes; they were a natural by-product of development and a very novel view of property rights and 2) the end result is not great tragedy; people idealize the past, but the standards of living enjoyed today--because of capitalism--make the past pale in comparison.

Of course, there is a great deal of speculation in all of this: no one alive today actually witnessed all of this unfolding. And of those that did, none could really grasp the totality of the situation.

However, we may have available--right now--a real-world example of primitive accumulation occurring with an actual limiting of self-provisioning accompanying it: India.

Currently, there is a major dispute in India over the practices of Monsanto, with regard to genetically modified eggplant. Monsanto's attempt to introduce GM seeds into India--if successful--will ultimately force local farmers to go to an outside source for their seeds. Over time, this will surely turn into an advantage for the larger farms, ultimately reducing--by far--the number of independent farmers. That's primitive accumulation, as theorized by Marx. And it appears to happening right now.

Can I get a grant for a case study?

Cheers, all.

Wednesday, September 28, 2011

Begun, the Primary Wars have

Flashback to the 2008 Primary season: the Florida legislature--in early 2007--votes to hold the State Primary on January 29th, 2008. This move violates rules adopted by both the DNC and the RNC, ultimately resulting in   penalties from both parties. The RNC stripped Florida of half its delegates at the National Convention; the DNC initially stripped Florida of all of its delegates, then decided to give each delegate one-half of a vote (essentially cutting them in half, too).

Fast forward to today: once again, the Florida legislature is prepared to set a primary date--January 31st--that is in direct violation of DNC and RNC rules.

The reasoning behind this move is to make the Florida Primary more relevant in the nominating process. But if Florida goes through with this, other States--like Iowa and New Hampshire--will likely jump to earlier dates to stay in front.

Is Florida being an intentional pain in the ass about this? Yes, it is.

Should Florida stop rocking the boat and just stick with tradition? Probably.

But here's the thing: the DNC and the RNC are not in charge of State-sponsored primaries. They'd like to think they are, but they're not. If they decide to penalize their membership from States that violate party rules, good enough. But don't mistake their rules as some sort of real authority. The two parties utilize the resources of the States for their primaries; the States are under no obligation to allow them to do so. And other voting initiatives--actual, meaningful votes--are often on the calendar and need to take place.

And State legislatures are supposed to be serving the needs of their constituencies, of the citizens of their state, not the needs of their own political parties.

We seem to take the primary system as a given, as something that is akin to a fixed, constitutional process, like the national election day. It's not. And maybe, just maybe, it's a good thing to remind the national parties that they're not actually in charge, that the government need not bend to their will.

Cheers, all.

Well, that's depressing...

In Libya, stockpiles of Russian-made surface to air missiles are being rapidly looted:
Peter Bouckaert of Human Rights Watch first warned about the problem after a trip to Libya six months ago. He took pictures of pickup truckloads of the missiles being carted off during another trip just a few weeks ago. 
"I myself could have removed several hundred if I wanted to, and people can literally drive up with pickup trucks or even 18 wheelers and take away whatever they want," said Bouckaert, HRW's emergencies director. "Every time I arrive at one of these weapons facilities, the first thing we notice going missing is the surface-to-air missiles." 
The ease with which rebels and other unknown parties have snatched thousands of the missiles has raised alarms that the weapons could end up in the hands of al Qaeda, which is active in Libya.
Already, leaders in the US and the other parts of the world are warning of the possible dangers to airline flights. These missiles are mostly the kind we see in movies, where someone rests the launcher on their shoulder, then quickly destroys a tank, helicopter, or plane in the distance.

I guess there's some hope that different elements of the divergent rebel alliance in Libya has taken possession of many of these missiles, but I don't think there much reason to believe a full accounting will be possible anytime in the near future. Moreover--given the needs of people that will need to reassemble a country--the possibility of black market sales remains.

Keep your heads down.

Cheers, all.

Tuesday, September 27, 2011

The Great Society reborn?

Jesse Jackson offers a rather unique--in my opinion--take on the current state of America in this piece from the Chicago Sun-Times.

Essentially, Jackson argues that government can be good, can solve problems--and did so under LBJ--but has been derailed since the time of Reagan by conservative forces largely opposed to government, in general. In light of the release of Gallup's annual Governance Survey, his timing is impeccable.

Jackson argues for a return to the ideas of LBJ, to an era of true hope and change:
He accompanied his soaring words with action. Medicare and Medicaid are his legacy. A dramatic boost of Social Security and increase in the minimum wage lifted millions out of poverty. Head Start, summer youth programs, college work-study and scholarship programs enlisted the young. The Job Corps, Vista, Community Action Agencies, Upward Bound hit pockets of poverty. Food stamps and the school breakfast program dramatically reduced hunger. Johnson was the great education president and the greatest conservationist. He ushered the Civil Rights and Voting Rights acts into law.
 Jackson, of course, lived through that period and walked the walk, something that should always garner him praise and respect from American citizens. And looking over the list of supposed accomplishments by the Johnson administration, how could anyone question the logic of arguing a return to those times?

But here's the thing: most all of those programs and policies are still with us. Many of them have grown substantially, in cost and/or extent. Despite eight years of Reagan, they represent a far larger stake in the Federal budget than they did at the end of LBJ's reign. So what is Jackson actually recommending? Another period of massive growth of federal power, bureaucracy, and programs? An expansion of such, until "gains" similar to those of LBJ are reached? And fifty years from now, as the business cycle turns and we're enveloped in another period of economic turmoil, double down again?

Americans are becoming increasingly unhappy with government growth for a very simple reason: government keeps growing, no matter what. There are no tests for expansion. In fact, the typical solution for a failing policy/program is not the dismantling of such, but the expansion of it, the idea that simply adding dollars will make it work. And this is a pipe dream. It doesn't even work in the private sector, as we can see from the Solyndra debacle.

But perhaps Jesse Jackson just desires a return to the spirit of the age, an effort to--as he puts it--"recapture the enthusiasm and the moral courage that Johnson once summoned from a young generation." Sounds good.

But what was the real "spirit" of LBJ? Reportedly, LBJ said--in reference to the passage of the Voting Rights Act--the following:
I'll have those niggers voting Democrat for the next two hundred years.
Nice spirit.

Cheers, all.

Food Stamps

An article in the WSJ yesterday notes that--in 2010--over 70% of households using the food stamp program (more correctly, SNAP) had no earned income, whatsoever. Given the state of the economy, this may not seem very surprising, particularly when the numbers of people receiving Social Security benefits in some form are figured into the mix:
Nearly 21% of households on food stamps also received Supplemental Security Income, assistance for the aged and blind. Some 21.4% received Social Security benefits. Just 8% of households also received Temporary Assistance for Needy Families, the cash welfare program.
The article also provides a handy interactive map, which allows us to see the total number of residents on food stamps and the percentage with no earned income, by state:

From the map, we find that the six states with the highest percentage of food stamp recipients with no earned income are: Massachusetts (80.5%), Kentucky (78.1%), New Jersey (77%), Connecticut (76.6%), Florida (76.2%), and New York (75.1%). The most obvious correlation here is the number of Northeastern states in the top-tier group: four of six. What does that mean?

But what about unemployment numbers, in comparison to these? We might think that where unemployment is particularly high, these numbers would also tend to be high. A map of unemployment by State from August, 2010 (seems as good a month as any), courtesy of the Kaiser Foundation:

Notice anything? Sure enough, Kentucky and Florida are in the group of States with high unemployment. But so are States like California, Michigan, Georgia, and Illinois. And our Northeast bloc of States is in the middle group, when it comes to unemployment. The expected correlation is not there, at all.


Cheers, all.

Monday, September 26, 2011

Herman Cain: who is his base?

Herman Cain's surprising win at the Florida straw poll begs the question: who are the people in his base?

Straw polls are often discounted in their meaningfulness, when it comes to the general election, since candidates can easily "stack the deck" by successfully lobbying a relatively small group of people. Looking at the results from Republican straw polls in 2011, this should be pretty obvious. Cumulatively, Ron Paul is out in front, followed by Romney, Bachmann, and Cain.

That said, the Florida straw poll has some history, when it comes to the eventual nominee:
...Florida's Republican Party had noted that since 1979 every winner of the Florida straw poll has gone on to become the party's nominee. Senator John McCain won it in the 2008 cycle and defeated Romney to become the nominee.
Common sense--as employed by political pundits--suggests that this streak is coming to an end, since Herman Cain has no chance of winning the nomination. Right?

Or maybe he does have a chance. Byron York argues that Cain's win in Florida was a consequence of enough people saying "I like Cain, but he can't win," to the point that they began to believe maybe he could win:
What had happened?  In the days before the vote, nearly all the delegates who voted for Cain either said or heard someone else say this: "I love Herman Cain, but he can't get elected."  The assumption that Cain can't win the Republican nomination was a serious obstacle in their minds.  But at some point late Friday and early Saturday, the delegates overcame that obstacle.  Some concluded that since they had heard so many people speak well of Cain, he could indeed win, if everyone who liked him would actually vote for him.  Others remained skeptical of Cain's ultimate chances but decided to send the message that they would choose candidates based on conservative principles, and not on perceived electability.
But who are these people? Establishment Republicans, the former water-carriers for McCain and Bush? Reaganites, dreaming of a return to a mythical Golden Age? Tea party activists that somehow have set aside their collective racism?

Again, the "common sense" of the pundits suggests that the first group is all-in for Romney, the second group is split on Gingrich and Bachmann, and the third group is split--due to social issues--on Perry and Paul. And again, that "common sense" holds that the establishment will win out, eventually.

I'd like to submit that this is all tragically wrong, that the prism being used to view the Republican Party--at this point in time--is deeply flawed.

There's a group out there--mostly on the right and in the middle--being left out. Turn the clock back to 1992 and 1996. Who sucked up nearly 19% of the vote in 1992 and over 8% in 1996 (even after looking like a loon)? Who actually led the polls--over Clinton and Bush--at one point during the run-up to the 1992 contest. Yes, good old Ross Perot, he of the black helicopters.

But what was Perot's central message, what stirred people to support him? It was twofold: 1) DC is full of people that talk a lot, but don't do anything and 2) he was a successful businessman that knew how to run things, to get things done.

Those ideas resonated strongly with a good chunk of the populace. Going into the 1992 election, there were many that liked Perot, but still did not believe he could win. Perhaps if they had believed, that 19% would have been much, much higher. And let's not kid ourselves: Bush (the first) had everything going for him in 1992. Perot hurt him, far more than Perot hurt Clinton.

Now, some of that crowd--Perot supporters--have reinvented themselves as tea partiers. But I think the same sort of message that worked for Perot will work--and is working--again. And of the GOP crop of candidates, it's Herman Cain that truly embodies that message. And given the current economic climate, I think the possibility exists for an expansion of support. Cain is actually in this race. And if he makes it--somehow--to the Presidential Debates, I think his chances of winning the General Election are pretty damn good.

Cheers, all.

Sunday, September 25, 2011

The Real Problem in Education

A few days ago, it was Open House Night at the middle school (6th-8th grade) of my two older children. Essentially, it's a "meet the teachers" night, wherein parents follow their child's schedule and go from class to class for ten minutes or so. Teachers outline what they're doing, share other info, and answer some questions. One of my kids is in 6th grade and the other is in 8th, which means I--personally--could only follow one of their schedules. Since my wife had a work "thing," I enlisted my mother to go to the classes of the older one, while I took the younger one's schedule.

My older child is very comfortable in school, gets good grades, and really has no issues to speak of. My middle one--the 6th grader--gets good grades, too. But this being his first year in middle school--a big change in structure from elementary school--I felt it was important to meet his teachers and make sure there were no issues that I needed to be aware of. Plus, teachers do this on their own time and it's only common courtesy to meet them when they go out of the way to meet me. Right?

Really, these back to school-type nights are old hat. Schools were doing them when I was a kid and before. And it seems to me that it's just basic good parenting to know who and what your kids are being exposed to in school. Yet--amazingly--the majority of parents don't show up. Each class has around 22 kids--per state mandate--and thus, I'd expect to see at least 22 adults in each class (allowing that some parents just couldn't make it, while--in other cases--both parents of some children would be there.

In the four academic classes (my son is in a drama magnet program and has two periods of drama, same teacher) I attended, the most that was in any one class was...ready?...12. And that included both parents of two children, meaning that 10--out of 22--children were represented. Less than half.

But wait, there's more. In the last class there were eight parents. And one of the eight was yapping on a cell phone while the teacher was talking. Another one brought her dog--a chihuahua--and was busy the entire time trying to keep it calm and quiet.

I did see a lot of parents I knew from elementary school, though. They're the same ones that I'd usually see at school events like honor roll assemblies...

There's no question that we have some problems with our education system, from teachers, to facilites, to the administration, to curriculum, to federal involvement. But we can work through all of that, I think. The biggest problem is the one no one likes to talk about: parents. Most of them just don't care. Oh, I'm sure every one that didn't show up has an excuse. But come on. Less than 50%? Ten will get you twenty, the people that showed up are--by and large--the same people that actually vote in elections. That would be a really interesting thing to explore, I think...

Cheers, all.

Saturday, September 24, 2011

Obama is clueless on the economy...

...but at least he's not a moron.

Peggy Noonan at the WSJ addressed Suskind's portrayal of the admin in his recent book--Confidence Men--and as she notes, it's not a very flattering one. The President comes across as simply out of his depth, when it comes to the economy and the entire admin is painted as a group of children. But setting that aside, Noonan also notes Obama's remark's on Palestine's bid for statehood at the UN:
On the Mideast conflict: "The people of Palestine deserve a state of their own." But the proposed U.N. statehood resolution is a "shortcut" that won't work: "If it were that easy, it would have been accomplished by now." Peace can be realized only when both parties acknowledge each other's legitimate needs: "Israelis must know that any agreement provides assurances for their security. Palestinians deserve to know the territorial basis of their state." Friends of the Palestinians "do them no favors by ignoring this truth, just as friends of Israel must recognize the need to pursue a two-state solution with a secure Israel next to an independent Palestine." 
"I know that many are frustrated by the lack of progress," the president said. "So am I." All in all, it was a measured statement at a tense moment. It was meant to defuse tensions, to cool things down.
She contrasts his words with those of Presidential hopeful, Rick Perry:
The Obama administration's policy, the Texas governor said, amounts to "appeasement." It has encouraged "an ominous act of bad faith." We are "at the precipice of such a dangerous move" because the Obama administration is "arrogant, misguided and dangerous." "Moral equivalency" is "a dangerous insult."
In my view, Perry's statement is moronic, asinine, dangerous, exploitative, and--quite frankly--dangerous. And that's being generous. Someone running for the office of President really needs to know when to STFU. This was one of those times. If the admin had come out in favor of the bid for statehood, he might have been okay. But it didn't and he isn't.

Go back to Texas, Governor. DC isn't for you.

Cheers, all.

Friday, September 23, 2011

A word about the Social Contract

On the heels of Elizabeth Warren's viral video--wherein she hammers the "rich" for profiting on the backs of everyone else and ignoring the social contract--the erstwhile Paul Krugman has entered the fray with a cleverly titled op-ed, "The Social Contract."

Apparently, both believe that the Social Contract is essentially an obligation all have to pay as much taxes as the government decides they can afford. Really, I can glean no other meaning from the use of the term by Warren. What she said:
There is nobody in this country who got rich on his own. Nobody. You built a factory out there — good for you! 
But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that maurauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea — God bless. Keep a big hunk of it. 
But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.
There's no question that taxes need to be paid, that the government needs to be funded in order to do the things it is empowered to do. But the Social Contract--the basis of of our republic and concept of citizenry--is not "pay it forward." The concept is being abused, terribly abused, and it's really a shameful thing that supposedly intelligent people like Warren and Krugman have such a flimsy grasp of what it actually means, how it actually works.

The source of the theory is Thomas Hobbes, who Hannah Arendt termed "the first philosopher the bourgeoisie could rightly call their own," and for very good reason. Hobbes argued that in the state of nature, life was solitary, nasty, brutish, and short for man. To overcome that, to gain security, men form a society by willingly ceding their own power to a sovereign authority. The Founders utilized this idea in the creation of the American Republic--influenced somewhat by John Locke's related thinking--but rather than empowering a person or persons as the sovereign, they empowered a document: the Constitution.

And that is the Social Contract: the agreement of people--now citizens--to abide by that document, via the government established therein. But the Constitution is a limiting document; while it is the sovereign authority, the powers of government are clearly spelled out and just as clearly limited. The government has the authority to spend, to build highways and the like. And citizens are obligated to pay their share for such, via the taxes the government is allowed to collect.

But there is no obligation from citizen to citizen in the Social Contract, aside from following the law. None. Zero. To be clear, I owe you none of my income, my property, whatsoever. Locke established this element and it was restated clearly in the Declaration of Independence: an inalienable right to life, liberty, and the pursuit of happiness.

It is true that the factory owner uses the public goods paid for by taxes from all (well, most all). But the factory owner paid those taxes to. And continues to pay them. The factory owner is not in debt to the rest of the public because he/she was willingly to assume the risk of building a factory. Nor is the rest of the public in debt to the factory owner (too big to fail), even though the factory provides jobs, creates wealth, and sustains other businesses. Both viewpoints are wrong-headed in the extreme.

The Social Contract provides security and a basic structure of society to allow citizens to live their lives, to take the risks they want to take, to earn a living, to accumulate or not accumulate wealth as they see fit, within the rules established and enforced by government. It's nothing more than that. It's not a mandate to level society, to redistribute wealth, or the like. Exactly the opposite. It's an agreement that--per the Constitution--this won't happen, that property is the individual's and cannot be arbitrarily confiscated.

Should everyone pay into the system? Absolutely. But insisting that one group can be targeted to pay more, whenever it suits the government's needs, is not consistent with the Social Contract. It's simple class warfare, nothing more.

Cheers, all.

Thursday, September 22, 2011

Copper no longer turning green...

The Dow closed today at 10733.83, down almost 400 points from its close yesterday. Needless to say, that's not good. Of course, with such a drop there will bill bargain hunters a-plenty out tomorrow, especially with the week-end coming, so perhaps we'll see a bit of a bounce back.

But I fear that may be short-lived (God knows, I hope I'm wrong).

Aside from stocks taking a dive, commodities and precious metals did the same. Copper fell off a cliff, finishing down 7% to a one year low.

So what does that mean? Well for one thing, it means that people went looking for safety nets today. And--as usual--they went back to US Treasuries, thanks in part to the Fed's move to exchange short-term debt for long-term debt.

But there's something else. The sharp drop in copper indicates a drop in demand. And that may mean a drop--or expected drop--in manufacturing. To put it another way, the drop in copper is an indicator of a potential severe economic downturn in the near future.

Over at Seeking Alpha, Bob Johnson lays all of this out quite nicely. As he says:
Dr. Copper indicated, I believe, a downturn in the economy in May and it materialized as reflected by the Dow in August. Now, Dr. Copper is signaling another decline. This is evidence that the US and Europe are headed for another dip in the recession.
Doesn't bode well for a merry Christmas this year...

Cheers, all.

Crime, Punishment, and Kant

Given the recent execution of Troy Davis, capital punishment is once again a hot topic of conversation. For my part, I cannot say I am happy about the event, nor can I say that I believe Troy Davis was innocent of the crime. Having not taken part in the proceedings and not being privy to all of the material in the case, it's difficult to pass judgment from afar. Consequently, I question the arguments of some of those protesting his execution, since they can know little more.

Of course, many are opposed to the execution on the grounds that capital punishment is simply wrong. That is a different can of worms.

For those that believe this to be the case, their arguments boil down to a simple standard: the state lacks the right to kill, to deprive a citizen of their life. It's a simple and pure argument and supported by many great thinkers and jurists, as well as by the sense of the founding documents of the United States of America. After all, the Declaration of Independence declares "that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness." And the Constitution is clear (or is it?) when it specifically forbids "cruel and unusual punishment" in the Eighth Amendment. What could be crueler than killing someone?

But how does capital punishment stack up to the morality of someone like Immanuel Kant? Remember, it was Kant that developed the Categorical Imperative, a means of assessing moral duty in every situation. Its three formulations:
1) Act only according to that maxim whereby you can at the same time will that it should become a universal law. 
2) Act in such a way that you treat humanity, whether in your own person or in the person of any other, never merely as a means to an end, but always at the same time as an end. 
3) Therefore, every rational being must so act as if he were through his maxim always a legislating member in the universal kingdom of ends.
Very clearly, from Kant's point of view, the justification for any punishment cannot be about serving the greater good, be it keeping criminals off the streets, deterring crime, or even rehabilitating law-breakers. Because all of these justifications would require us to treat people as a means to an end, rather than an end in their own right.

So how can we determine punishment? Should we even actually have punishments? What would the basis be for varying punishments in the law?

For Kant, this is all very easy to answer, despite the depth of much of his thinking. Of course there must be punishment, because that is--to Kant (and me)--the means through which security is provided by the sovereign authority of a society. Law and Justice determine crime and punishment: to ignore (break) the law is crime, and punishment for that transgression is Justice.

And the specifics of Justice are likewise easily understood: the only justification for punishment is guilt (again, deterrence, public safety, rehabilitation, etc. are immaterial) and the only standard for the pinishment is--therefore--the crime, itself.

Now, many would see this as "an eye for an eye" kind if structure, and indeed Kant's thinking on this is held up as an example of what is called a "retributivist theory of punishment." But note that there is nothing in Kant about revenge. That is not the basis, at all. For Kant, the state acts to punish, and it does not do so to serve the needs of those wronged by a criminal's actions. It punishes because that is the only means of establishing Justice.

Yet, it works out in practice to be very much an "eye for an eye" type of thing. For Justice requires the punishment to fit the crime, since the crime is the only legitimate basis for the punishment.

In the specific case of capital punishment, Kant was very much in favor of its application because he could not imagine a worse crime or a worse punishment. For Kant, the individual who takes the life of another for personal gain, pleasure, or the like (1st degree murderers) sets their own standard here. And returning to the Categorical Imperative, we can ask ourselves what we would deserve in such a situation, if we murdered another in this manner. Can the honorable person really claim that they deserve to live? I think not.

Thus, the execution of the guilty is the only rational choice, the only means of treating that individual as an end in their own right. It is the compassionate and Just--if difficult and unpleasant--choice for Kant. And for those who agree with his thinking on this.

Cheers, all.

Wednesday, September 21, 2011

Well ain't that a kick in the pants...

With all the hoopla currently surrounding Warren Buffet's tax rate (which is lower than his secretary's, supposedly) and Obama's continued calls for millionaires to pay their fair share, it might be a good idea for some actual fact-checking. Luckily, Stephen Ohlemacher at the AP has obliged:
This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes, payroll taxes and other taxes, according to the Tax Policy Center, a Washington think tank.  
Households making between $50,000 and $75,000 will pay an average of 15 percent of their income in federal taxes.  
Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making beween $20,000 and $30,000 will pay 5.7 percent.
But that data is from some think tank--probably conservative-leaning--so it's not trustworthy, right? But look, data from the IRS says pretty much same thing:
The latest IRS figures are a few years older — and limited to federal income taxes — but show much the same thing. In 2009, taxpayers who made $1 million or more paid on average 24.4 percent of their income in federal income taxes, according to the IRS. 
Those making $100,000 to $125,000 paid on average 9.9 percent in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3 percent.
So, where are all of these millionaires, billionaires, and hedge fund managers that are getting away with paying lower rates than members of the middle class? Aside from Warren Buffet, I mean...

Cheers, all.

Tuesday, September 20, 2011


Every policy and bill that emerges from DC is almost also characterized as being something that will do X. New programs and laws will improve education, will save lives, will protect us from terrorism, will raise revenues, will lower unemployment, will make healthcare more affordable, will cause economic growth, and on and on and on.

I guess part of that can be chocked up to salesmanship: if you buy this Porsche, you will get more dates. And in most cases, "we hope" can be appended to the claim: we hope this bill will save lives. But the reality--the hard, cold reality--is that most of these claims are patently false, from the get-go.

Consider taxation bills (now making news) that purport to raise government revenues. Surely, if the income tax rate is increased, revenue goes up. Right? While it seems like common sense, this is not necessarily the case, since the basic events--income being earned and taxes being collected--do not occur in a vacuum. There are too many other factors that impact both of these things. But we need not consider those factors here, because even if there were no other factors, the initial claim--if income tax rates are increased, revenue from those taxes will increase--is still wrong. And this--in a nutshell--is the fatal flaw of traditional economics and the theories thereof.

The relationship between tax rates and revenues is not functional. That is to say, you can't write a mathematical equation that will spit out revenues, based on tax rates and incomes. Seem counter-intuitive? It's not. Changing something in the economic system--the complex and open economic system--has a ripple effect throughout. Because we are given to a systematic view of things and a cause-effect view of reality, the expectation is that simply changing a single parameter within a system will have entirely predictable results, like turning the volume knob to the right on a car stereo will result in a corresponding increase in the noise coming from the speakers.

But the car audio system is fully integrates and closed. It's designed to behave exactly that way. If it doesn't, it can be fixed. In contrast, a free-market system is not designed at all (aside from those markets where the government interjects itself to a very high degree). It's systematic nature is a consequence of development over time, of an aggregate of individual choices and actions. And while these things can be studied and understood, predicting the consequences of changing some aspect of the system is not that simple. Again, it's not a functional system, it can't be modeled using formulas designed to produce simple outputs from some number of initial values.

In the moment--after the data has been collected--we can of course make a formula to show total income taxes collected: (total reported income)x(income tax rate)=(income taxes collected). But what we can't do is correctly predict the income taxes that will be collected next year if we change the tax rate. What we can't do is claim that increasing the tax rate by 10% will increase income taxes collected by 10%. Many people--economists and politicians, alike--very much want to do this, but they can't (and I think that ultimately most economists know this, but not most politicians).

What needs to be understood is that the only way to model an open, complex system like this is with algorithms. And that is no small task. Likely, the required computing power is still beyond us, not to mention the need to determine all the algorithms in the system.

However, not all hope is lost. Because--since we know that the decision-making process of the individual (an algorithm too, by the way) plays a role here--changing parameters of the system impact decision-making in an easily understood manner. Changes create incentives for the individual--and for groups of individuals like corporations--that are readily apparent, more often than not.

Consider, for instance, the simple scenario of a waiter/waitress that is paid a salary and also receives tips. Now, we know that the tips should be reported as income. And we know that the voluntary nature of the reporting means that not every waiter/waitress will report all or any of their tips, since the mechanism for verifying their truthfulness in this regard is weak, to say the least (the IRS is simply not going to waste the resources to pursue every waiter/waitress whose returns "smell funny"). Thus, the reporting mechanism for tips creates an incentive to not fully report the total received.

Now suppose the government decides to increase taxes on income group our waiter/waitress was last a member of. Does this mean the government will therefore collect more revenue from the waiter/waitress as a matter of course? No, it doesn't. It might, but it's not a given. Why? Because upping the tax rates means the waiter/waitress--who presumably needs income from the job to live--faces a potential shortfall. To overcome this, he/she might decide to report fewer tips (yes, that's not quite honest, but it's reality). And in fact, it might turn out that reporting a sufficiently lower income from tips moves them into a lower tax bracket, thereby nullifying the tax increase's effect.

So, increasing the tax rate creates incentives--two that we have explicitly identified, but there are more--for the individual. This doesn't mean the individual will take a specific action--we can know that, one way or the other--but it does suggest that the incentivized action is now more likely to occur.

How can we effectively predict every individual response to just one set of incentives created by a change in the system? It's truly a Herculean task.

And yet, we can confidently say what incentive has been created by a specific policy, if we have the needed knowledge base and put in the needed time to think through potential ramifications.

Supposing that incentives can simply be ignored--in favor of flawed theories and formulas--is the fatal hubris of policy-makers in the current world. If a politician--or an economist--isn't talking about incentives, when it comes to the consequences of a given policy--they're not worth listening to. In my opinion. And of course, out recent, real world example of this hubris is the previous economic team of the current admin that promised unemployment rates well below 9% if the Stimulus Bill was passed. They didn't have a clue, did they?

2009 John Galt Proprietary Red

As promised, here is my review of Bounty Hunter's 2009 John Galt red wine:

It was darn good.

I'm not much of a wine-reviewer, as my palate is not sophisticated enough to pick up all of the flavors, but I do know what I like and--on average--I can identify a good wine by taste, rather than by price. The 2009 John Galt had a good nose, decent legs, and a rather tame finish. It was a nice shade of red, not too dark, but quite deep. The taste was fruity--but not overly so--with a hint of spice;overall it was a very pleasant experience, well worth the $25 per bottle.

For those unfamiliar with some of those terms, "nose" refers to the aroma of the wine, ascertained by smelling deeply of the wine in the glass, "legs" refers to how much of the wine clings to the glass when swirled, and "finish" refers to the aftertaste.

The John Galt is called a "proprietary red" because it's a blend of other wines and cannot be correctly called a Cabernet, Merlot, Pinot noir, or the like since it does not come from a single kind of grape, or at least the winemaker is not willing to say that such is the case.

Cheers, all.

Do-Nothing Congress...

...or know-nothing President?

As Obama continues to pump his Jobs Act with speeches across the country, perhaps it's time to consider what the actual expectations were for this legislation. Fred Barnes offers up the theory that it's 1948, all over again:
In 1948, an unpopular President Truman called a phony joint session and offered up legislation he knew Republicans would block. Then he campaigned against them as the “do-nothing Congress.” And won.
I think there's a great deal of merit to this idea. Obama has to know--he really does--that his Jobs Act has zero chance of getting through even the Senate, as written. And he has to know--doesn't he?--that it will be painted as nothing more than another Stimulus measure, thus allowing the lack of results from the first Stimulus bill to enter the discussion.

And we already know that--despite his urgent pleas to pass this a bill now--he's put off addressing unemployment for nearly a year, more concerned with his healthcare mandate and getting in a round of golf now and again.

So, the idea that he's really got this great package and he really wants to get it through Congress seems far-fetched, at the very least. Barnes' explanation fits pretty well: it's all about the reelection campaign, nothing more.

On the other hand, it is a near-200 page bill. Reading through the mess, it's clear a great deal of effort went in to crafting it, to imagining--through a flawed vision of reality--how it might actually help create jobs. In Obama's perfect world, the legislation is exactly what he might want to happen. Ditto for the tax increases. In that regard, there's no political game-playing.

Maybe it's a combination of the two, a political calculation: it's what he wants, but he knows it won't pass and the fallout can work in his favor in 2012.

But it's a tragic miscalculation, I'm afraid. The history of the first Stimulus Bill still looms large; there's no avoiding the wrong-headed predictions by the admin that accompanied its passing. And there's Obama's own rhetoric from the months after that, about how things were picking up, improving, and the like. Now, the admin is knee-deep in a near-recession that it claimed would never happen. And it's apparent to all that the only solution it has on the table is more of the same nonsense that has already failed to work. The Republicans were right to not respond to his joint-session speech. Obama is digging a hole for himself, day after day, speech after speech. The Truman gambit won't work for him because he really doesn't understand that his goals are part of the problem, not the solution.

Cheers, all.

Monday, September 19, 2011

The Buffett Rule

When I was in college--oh so many moons ago--in Miami, listening to Jimmy Buffet music was a pretty common thing, especially at the beach and during trips to the Keys. I say "listening," but that's not really accurate, since pretty much everyone was singing along with one Buffet song after another. "Margaritaville" was easily the most popular. Everyone knew every word. And if they didn't, they damn well had to fake it. That was the Buffet Rule: sing along or else. 'Course, there really wasn't an "or else," just a few playful jeers or the like. Good memories.

Today, the President is unveiling his plan to cut the deficit. Supposedly, it will be composed mostly of tax increases and changes to the tax codes, along with savings from the draw down of troops in Iraq and Afghanistan. But included in the tax increase portion of the plan is a new Buffet Rule: a provision to make sure people with over $1 million in income pay a "fair" tax rate. Kind of like an AMT for millionaires, it would seem. And obviously, it's not named after Jimmy Buffet, but rather Warren Buffet.

According to Micheal Falcone at ABC, the Rule is a simple principle: stipulates that Americans earning more $1 million a year pay at least the same share of their income in taxes as middle-class families.
That sounds pretty reasonable, no? There's no reason that--given an income tax system based on  percentage of income--some should get away with paying a lower rate (sound familiar?). But wait, that's not really the justification here. It's little more nuanced than that. A lower rate is actually okay for some, but not for others. The some? Lower incomes. The others? The rich. Class warfare, once again.

But in the spirit of true fairness, I'd like to offer my own version of the Buffet Rule: Warren Buffet--alone--shall not pay a lower tax rate than any other American, period. That's fair, right?

Cheers, all.

Saturday, September 17, 2011

Coming soon, another government agency: the AIFA

The President wants Americans to read his Jobs bill and decide if it's a good plan, but how many of them will actually understand the near-200 pages of legal jargon?

Seriously. During his weekly radio address, Obama asked citizens to go to the White House website and read the bill for themselves.

That said, I do suggest reading Subtitle F, Sec. 242 to sec. 260. That's the part that deals with the creation of a new Federal Authority, the AIFA (American Infrastructure Financing Authority). What is the AIFA? Essentially, it's a government-owned bank that would provide loans for infrastructure creation and improvement. The plan calls for the AIFA to be given ten billion dollars, as capital for loans and for administrative costs. Officers of the AIFA will be appointed by the President, subject to approval of the board of directors (appointed by the President for four year terms, upon consent of the Senate).

In short, the AIFA will be another kind of GSE, like Fannie and Freddie. Its board of directors will be yet another place for elected officials to pay off their supporters, with cushy high paying jobs. This pattern was grossly evident in Fannie and Freddie and the dishonesty, greed, and incompetence of appointments to those boards contributed mightily to the mortgage industry meltdown.

Reading the entire section, it's clear--to me--that there's intent to "balance" the AIFA, to insure it can't be controlled absolutely by one party, but that's not the problem. It's not made up of elected officials, its actions won't be common knowledge, and it has access to way too much capital. Oversight will still be politically driven and there is just no reason to suppose this entity will be effective or free from corruption and waste. And it's funding and powers will--once it begins to operate--only increase, in my opinion.

This portion of the Jobs bill is enough reason to toss the whole thing in the garbage.

Cheers, all.

Friday, September 16, 2011

Popularity vs. Political Will

Which one is more important, when it comes to our political leaders? Do we want someone that can maintain a level of popularity, or do we want someone that will do what they believe needs doing, popularity be damned?

I'm guessing that most people would say they prefer the latter. Of course, I'm sure that's predicated on the very common conceit that the "what needs doing" of the honest politician can't help but be identical with their own "what needs doing." Because in reality, I think people like having popular leaders, even as they yearn for political scandal.

Enter President Obama. When he took office, he was riding a true wave of popularity, he was for all intents and purposes a political savior, sent to deliver the nation from the horrors of the George W. Bush Presidency. But that is no longer the case, and really hasn't been the case for quite some time. Consider this piece by Jay Cost at The Weekly Standard. Cost charts the President's approval and disapproval ratings and compares Obama's approval numbers to the last eight Presidents (excluding those that assumed office without election, LBJ and Ford). Cost concludes (rightly):
Clearly, Obama is in the bottom half of presidents ranked by early-term popularity. He’s tied with Ronald Reagan, and only Bill Clinton outstrips him in terms of unpopularity by quarter.
Of course, Reagan and Clinton bounced back hard to win second terms. So maybe all hope is not yet lost for Obama. But as Cost points out, Obama is far more divisive than either of these two. But the gist of Cost's argument is that Obama acts like he is still very popular, that he seems to truly believe most of the country is on his side. And this might turn out to be a fatal conceit for the President.

But even worse--in my opinion--is that Obama simultaneously lacks the political will to really do anything, other than attempt to out fox his opponents. Let's face it, the President can't get a handle on the economy. He doesn't  really know what to do and the people he's relied on to show him keep looking ridiculously incompetent. Even James Carville knows this, as his advice to the President is to:
Fire somebody. No -- fire a lot of people. This may be news to you but this is not going well. For precedent, see Russian Army 64th division at Stalingrad. There were enough deaths at Stalingrad to make the entire tea party collectively orgasm. 
Furthermore, it's not going to work with the same team, the same strategy and the same excuses. I know economic analysts are smart -- some work 17-hour days. It's time to show them the exit. Wake up -- show us you are doing something.
Aside from his--what will turn out to be ill-fated--healthcare bill, Obama lacks true direction. He's got plenty of ideology and is quick to pull out the standard tricks and pseudo-fixes in that regard, but that's not the same thing as having a goal and actually knowing how to get there.

And maybe--just maybe--this all stems from his lack of experience, from his lack of executive experience. If Obama was sitting on a Senate committee right now, he'd probably be far more popular...

Cheers, all.

It's the Ponz! Heeeyyyyyyyyy...

Previously, I noted the brouhaha (man, I like that word) surrounding Perry's use of the phrase "Ponzi scheme," in reference to Social Security. Despite the very obvious similarity between a classic Ponzi scheme and the Social Security program, many journalists and talking heads (and Democrats) insisted that Perry was all wet, that of course the two were not that similar. In my previous bit, I even note an article that sought "expert opinion" to refute Perry's claim, even as past expert opinions are roundly ignored.

Those so insistent to prove Perry wrong have, however, likely succeeded in doing exactly the opposite: forcing others to prove him right. Heavyweights at Cato have already weighed in:
Of course, Social Security and Ponzi schemes are not perfectly analogous. Ponzi, after all, had to rely on what people were willing to voluntarily invest with him. Once he couldn't convince enough new investors to join his scheme, it collapsed. Social Security, on the other hand, can rely on the power of the government to tax. As the shrinking number of workers paying into the system makes it harder to continue to sustain benefits, the government can just force young people to pay even more into the system. 
In fact, Social Security taxes have been raised some 40 times since the program began. The initial Social Security tax was 2 percent (split between the employer and employee), capped at $3,000 of earnings. That made for a maximum tax of $60. Today, the tax is 12.4 percent, capped at $106,800, for a maximum tax of $13,234. Even adjusting for inflation, that represents more than an 800 percent increase.
Now, Charles Krauthammer has joined the fray as well:
The Great Social Security Debate, Proposition 1: Of course it’s a Ponzi scheme. 
In a Ponzi scheme, the people who invest early get their money out with dividends. But these dividends don’t come from any profitable or productive activity — they consist entirely of money paid in by later participants.
And like Michael Tanner from Cato, Krauthammer hits the crucial point of real departure in the comparison:
Proposition 2:The crucial distinction between a Ponzi scheme and Social Security is that Social Security is mandatory. 
That’s why Ponzi schemes always collapse and Social Security has not. When it’s mandatory, you’ve ensured an endless supply of new participants. Indeed, if Charles Ponzi had had the benefit of the law forcing people into his scheme, he’d still be going strong — and a perfect candidate for commissioner of the Social Security Administration.
The wrong-headed attack on Perry for saying something "controversial" has backfired completely. To those with functioning powers of reason, it's crystal clear that Perry said nothing outlandish, merely noted a reality that has been noted many times before. And now that simple reality has a spotlight on it, forcing those that would have us believe Social Security is something other than what it is to backpedal, obfuscate, and offer weaselly explanations to justify not accepting the comparison. Funny stuff.

Cheers, all.

Thursday, September 15, 2011

"Jew or not Jew" app

I know there are a lot of stupid apps out there for iPhone, Android, and Blackberry, but this one really takes the cake, in my view. Actually called "Jew or not Jew," the app lets users submit names of celebrities and politicians in order to see if they are Jewish. The creator of the app, Johann Levy, is Jewish himself but is apparently totally oblivious to why the app is not a good idea. What's next, "gay or not gay"?

But amazingly, the app is still available in the US through iTunes. And hey, with the app you can tell your friends who the Jews are through Facebook and Twitter interfaces!

Sure, there's a harmless aspect to the app, but only for those with a very naive view of the world, in my opinion.

Cheers, all.

Solyndra, Part Deux

The Solyndra story that I mentioned several weeks ago is still going. Amazingly, the investigation by Congress has proved to be quite fruitful:
GOP lawmakers said the White House had scheduled a groundbreaking for Solyndra Inc. even before the Department of Energy had submitted its final paperwork on the terms of the loan to the OMB. 
"We would prefer to have sufficient time to do our due diligence reviews and have the approval set the date for the announcement rather than the other way around," said one of the emails from an unnamed OMB aide to the office of Vice President Joe Biden.
 Apparently, the White House was pressing for the approval because Joe Biden had already committed to attend the ground-breaking ceremony. And Jay Carney, spokesperson extraordinaire, pretty much confirms this to be the case in his "defense" of the admin:
White House spokesman Jay Carney attributed the rush to scheduling decisions. 
"What the emails make clear is there was urgency to make a decision on a scheduling matter. It is a big proposition to move the president or to put on an event and that sort of thing so people were simply looking for answers about whether or not people could move forward," Carney told reporters at the White House.
In other words, according to Carney, the scheduling issue trumps everything else. Due diligence has to take a back seat to "scheduling," never mind the half-billion of U.S. taxpayer dollars at stake. Beautiful.

And again, I think this less about crony capitalism and political payoffs and more about an admin so gung-ho
to be seen as leading the charge in developing "green" energy that common sense--and everything else--has to take a back seat.

Cheers, all.

Wednesday, September 14, 2011


The morning offering from The Hill's Ballot Box blog: "Obama's 2012 Reelection Stimulus."

Youngman argues that Obama's new Jobs bill--and the fight over it that will ensue--is actually a boon to his reelection campaign. His thinking goes like this: Obama purposefully loaded the bill with tax increases that he knows the Republicans will not support, ensuring that--despite his own pleas--there was no chance of this bill being passed right away. Ultimately--according to Youngman--this fight will end with Republicans being forced to somehow vote against tax cuts for the middle class and more jobs for America. And the admin is lauded by Youngman for its political savvy in this regard.

Part of Youngman's fantasy-version of reality appears to stem from his belief that Obama somehow "won" the debt ceiling fight, that it allowed him to go on the offensive. I guess this is--to me--one of the most troubling things about the current crop of political journalists and talking heads: they see everything as a sign, as an indicator for the future (really, they share this conceit with many economists).

It is true that the tea party crowd--and by association, the Republicans--lost some momentum in the debt ceiling battle. But if this were so significant, how could it be that Anthony Weiner's vacated seat ended up in Republican hands for the first time since 1920? How is this a sign that support for Obama and the Democrats is  improving, as Mr. Youngman would have us believe?

The gameplan on this Jobs bill for the Republicans is glaringly obvious: paint it as another Stimulus Bill and ask the admin why this one will succeed when the previous one failed so miserably (if we go buy what the admin promised the bill would accomplish). At the same time, they (the Republicans) can introduce separate bills to address those elements of the Jobs bill that they can support. What can the admin say in response? "This time, it's different."  Right. Sure it is.

Tuesday, September 13, 2011

Weird Scenes Inside the Gold Mine

Gold prices continue to trend up. Strongly. EU problems--especially with regard to Greece--resulted in a good day for gold.

Looking at the big picture, gold is way up over the past years, even allowing for inflation. So, it's a sure bet, right? Go load up on gold. Hell, every right-leaning talk show on the radio has a sponsor pumping gold. Talk to your neighborhood libertarian and they'll probably tell you it's the best hedge against the collapse of civilization as we know it.

Of course, if civilization does collapse, I'm thinking the guys with the food and guns will have it all over the guys with gold. Though I guess there are numbers of people stockpiling all three.

Me, I'm not ready to cash out on civilization just yet, the empty suit in the Oval Office not withstanding. And I have to admit--being a talk-radio junkie--I'm sick to death of all the gold-pumping sponsors and infomercials.

But you know, those spots really work. Seriously. Evidence? Why, just look at the price of gold...

Cheers, all.

To Ponzi or not to Ponzi

Since Rick Perry openly called Social Security a Ponzi Scheme during the September 7th debates, there's been a flurry of commentary with regard to the validity of that statement.

By and large, the current judgment seems to be that it is NOT a Ponzi scheme. From the CNN article:
As for Perry's characterization of Social Security as a "Ponzi scheme," the Securities and Exchange Commission defines such a scheme as "an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors." It is true that benefits to current Social Security recipients are paid for in part by new members of the workforce. But Social Security is not a fraudulent criminal enterprise designed only to benefit current participants in the program. It is a legitimate government program meant to serve both current and future generations of retirees.
From Politifact:

Mitchell Zuckoff, a Boston University journalism professor who has written a book on Ponzi, noted three critical dissimilarities between Social Security and a Ponzi scheme, which by definition is both fraudulent and unsustainable.
"First, in the case of Social Security, no one is being misled," Zuckoff wrote in a January 2009 article in Fortune. "...Social Security is exactly what it claims to be: A mandatory transfer payment system under which current workers are taxed on their incomes to pay benefits, with no promises of huge returns." 
Second, he wrote, "A Ponzi scheme is unsustainable because the number of potential investors is eventually exhausted. That's when the last people to participate are out of luck; the music stops and there's nowhere to sit. It's true that Social Security faces a huge burden — and a significant, long-term financing problem — in light of retiring Baby Boomers. … But Social Security can be, and has been, tweaked and modified to reflect changes in the size of the taxpaying workforce and the number of beneficiaries. It would take great political will, but the government could change benefit formulas or take other steps, like increasing taxes, to keep the system from failing." 
Third, Zuckoff wrote, "Social Security is morally the polar opposite of a Ponzi scheme... At the height of the Great Depression, our society (see "Social") resolved to create a safety net (see "Security") in the form of a social insurance policy that would pay modest benefits to retirees, the disabled and the survivors of deceased workers. By design, that means a certain amount of wealth transfer, with richer workers subsidizing poorer ones.That might rankle, but it's not fraud... None of this is to suggest that Social Security is a perfect system or that there aren't sizeable problems facing the incoming administration and Congress. But it's not a Ponzi scheme. And Ponzi himself, who died in a hospital charity ward with only enough money for his burial, would never have recognized it as his own." 
We agree with Zuckoff’s interpretation. We rated Perry's November 2010 comparison of Social Security and Ponzi schemes False, and we stand by that ruling. The comparison still deserves a rating of False. 
Seems pretty clear, no? Yet, when someone calls Social Security a "Ponzi Scheme," we all know what is being implied: the central functional aspect of a Ponzi Scheme is identical with that of Social Security. Take money from new investors to pay off previous investors. I don't see a way around that and thus think the brouhaha surrounding Perry's comments is largely manufactured.

Of course, many years ago it would seem that the "Ponzi nature" of Social Security was accepted fare. From a 1967 article in Newsweek by Paul Samuelson (Nobel Laureate and neo-Keynesian economist) :

The beauty of social insurance is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in -- exceed his payments by more than ten times (or five times counting employer payments)! 
How is it possible? It stems from the fact that the national product is growing at a compound interest rate and can be expected to do so for as far ahead as the eye cannot see. Always there are more youths than old folks in a growing population. 
More important, with real income going up at 3% per year, the taxable base on which benefits rest is always much greater than the taxes paid historically by the generation now retired. 
Social Security is squarely based on what has been called the eight wonder of the world -- compound interest. A growing nation is the greatest Ponzi game ever contrived.
"Actuarially unsound." Pretty much says it all. Yet now, somehow, the opinions of a bonafide expert on the matter should be ignored? Social Security--as it currently exists--is very much a Ponzi scheme. Whether or not it is a workable one is another question.

Cheers, all.

Monday, September 12, 2011

Walter Benjamin Revisited

In 1940, Walter Benjamin penned the essay "On the Concept of History" (also called "Theses on the Philosophy of History"). It was the same year as his attempt to escape Vichy France and his subsequent death. We have it today because Benjamin mailed a copy of it to Hannah Arendt.

The essay is, itself, both difficult and beautiful. Benjamin moves freely from the real to the abstract, from science to theology, from cultural norms to grand historical designs. It is both a wilting critique of pure historicism and a chiding of the failings of historical materialists, in particular. But Benjamin, an enemy of fascism, ultimately succumbs to a neo-fascist view of history, not wholly unlike the views of Martin Heidegger.

Of course, the heavy literary and philosophical content of Benjamin's works lends itself to similarly heavy and theory-rich critiques, the value of which is somewhat debatable. Yet, the timelessness of Benjamin's observations are still accessible. Consider this passage from the essay:
The tradition of the oppressed teaches us that the ‘state of emergency’ in which we live is not the exception but the rule. We must attain to a conception of history that is in keeping with this insight. Then we shall clearly realize that it is our task to bring about a real state of emergency, and this will improve our position in the struggle against Fascism. One reason why Fascism has a chance is that in the name of progress its opponents treat it as a historical norm. The current amazement that the things we are experiencing are ‘still’ possible in the twentieth century is not philosophical. This amazement is not the beginning of knowledge—unless it is the knowledge that the view of history which gives rise to it is untenable.
 Note the clarity here: the proclivity of mankind to engage in acts of cruelty, callousness, and barbarity is eternal.  What we think has been "left behind" is with us still. And apparent "states of emergency"--crises one might say--are no less eternal and are the actual framework in which those in power or those seeking power--fascists for Benjamin--operate.

Set aside ideology and consider the truth of this. How many crises have there been in just the last five years? And how many times have some used such crises to further their political ambitions?

Now, consider Benjamin's time and place--1940 and the years before in Continental Europe--and what he was living through. And for him this was not a real state of emergency, a true crisis? In that respect, what true crisis have we experienced?

Cheers, all.

Sunday, September 11, 2011


A response to the  AbsoluteWrite September Blog Chain prompt, the painting "Nighthawks" by Edward Hopper.

What is it about all-night diners in the American conscious? True, Seinfeld made the diner into the hub of the universe, for several self-absorbed, obnoxious New Yorkers. And true, diners were the original refuge for the travelling family, off to see the country. But the all-night diner, that's something else. It's a place of solitude for the downtrodden, the defeated, the lonely, the deeply flawed.

Hopper's inspired canvas captures that identity boldly, with nothing more than a diner, an empty street, three patrons, and a soda jerk. We look at the simplicity of the scene and we know that the man whose back is to us is a loser, that he has nowhere to go, nothing to do, and no one to do it with. And we know the couple seated across from him are something more than that, or something much less. The clerk, for his part, is either one of those types who never shuts up, or one those who takes a perverse pride in keeping his counter clean...and usually annoyingly wet.

Hopper's painting likely was inspired by cinema, and in turn has now--itself--inspired the same. But whether or not it inspired the movie or scene I'm about to mention, I cannot rightly say. Still, when I see the painting, these are the first things that come to mind. The movie? LA Confidential. The scene? Why the Night Owl killings, of course (for those unfamiliar with the movie, the Night Owl is a diner that is the scene of a late-night bloodbath).

The movie, of course, is classic film noir. It oozes sex and corruption, no one is clean, no one is exactly what they seem to be (and James Ellroy--the author of the book the movie was based on--deserves much credit for this, despite not participating in the production). Made in 1997, it could just as well have come from the 40's or 50's.

I see Hopper's painting and I absolutely know what's coming: they're all dead, the hooker and her married john, the dirty ex-cop with too many secrets, and the hapless clerk. Look, they're all there, and a couple of friends as well...

The Blog Chain (check 'em out):

orion_mk3 - (link to this month's post)
BigWords - (link to this month's post)
robeiae - (link to this month's post)
pezie - (link to this month's post)
Ralph Pines - (link to this month's post)
Cath - (link to this month's post)
AbielleRose - (link to this month's post)
Darkshore - (link to this month's post)
dolores haze - (link to this month's post)
Alynza - (link to this month's post)
pyrosama - (link to this month's post)
xcomplex - (link to this month's post)
lufftocraft - (link to this month's post)

Saturday, September 10, 2011

The Palm Zire 71

While cleaning out my garage, I stumbled upon my old PDA, a Palm Zire 71. I set it up--in its cradle--and what do you know, it still works!

All of its functions seem fine, it has a contacts phile, calendar, to-do list, and the like. And it allows note-taking using a stylus and the Palm Graffiti 2 handwriting system.

Of course, everything the Zire can do, today's smart phones can do...faster. And the Zire is not a phone, nor does it have access to thousands of apps. But maybe that's not such a bad thing. After all, how many of us waste  time playing Angry Birds or the like? No such time-wasting opportunities on the Zire.

Here's a pic:
Looks good!

But what about memory? It comes with a generous 16 mb...

Yes, that's right, 16 mb. Okay, that's pretty small, but then it doesn't need that much for what it does. I'm wondering if I should dump my iPhone, get a cheapo non-smart phone, and start using my Zire again.

Nah, but it's fun to think about.

Cheers, all.

Friday, September 9, 2011

Zeno's Paradoxes

I had an extended discussion today with two Starbucks barristas. The topic? Zeno's Paradoxes, the Heisenberg Uncertainty Principle, and Burning Man.

The last two are old hat, but the first is something that doesn't come up that often, these days. Let's look at my favorite one: the impossibility of motion, as shown by the flight of an arrow (from the Stanford Encyclopedia of Philosophy):
The third is … that the flying arrow is at rest, which result follows from the assumption that time is composed of moments … . he says that if everything when it occupies an equal space is at rest, and if that which is in locomotion is always in a now, the flying arrow is therefore motionless. (Aristotle Physics, 239b.30)

Zeno abolishes motion, saying “What is in motion moves neither in the place it is nor in one in which it is not”. (Diogenes Laertius Lives of Famous Philosophers, ix.72)
Essentially, Zeno is arguing that as the arrow apparently moves through the air, it must occupy a series of positions at various moments in time. And in each moment, the arrow is at rest, since it is in that place and no other.

Note that this argument means that the arrow cannot travel any distance, despite whatever velocity it might have. But we know that d=vt, so what happening for Zeno is that t (the amount of time)=0. And that's the answer, in a nutshell. Zeno assumes that such a thing as a "moment" of time exists, a very small, yet indivisible period of time during which the arrow occupies exactly one area of space. And of course, that's wrong. Any period of time is always divisible, no matter how small it is.

Nonetheless, the paradox touches on the human experience, since we cannot perceive such tiny moments of time, constrained as we are by our own physiology. In Godel, Escher, Bach, Douglas Hofstadter offered up a Zen koan that captures this experience:
Two monks were arguing about a flag. One said: "The flag is moving."
The other said: "The wind is moving."
The sixth patriarch happened to be passing by. He told them: "Not the wind, not the flag; mind is moving."
Movement is movement because we perceive it to be so, would be the conclusion. And at a sub-atomic level, there may be some truth to this. But the Hume in me cries out in protest...

Cheers, all.

Obama's Grand Unveiling

The big jobs plan turned out to be exactly what most thought it would be: the same old stuff, dressed up in the hopes of getting a dance from across the aisle. Here's the transcript, for those that missed the speech.

Move along, nothing to see here...

To be fair, it wasn't a total crock. Slashing payroll taxes for companies is a much smarter move than just slashing them for workers, if economic growth is the goal. Of course, at the same time, the plan involves other ideas that won't do jack for growth and will only help increase the unemployment rate, like extending unemployment benefits again. As to tax cuts for companies that raise wages, that's just stupid. Sometimes--per a previous blog post--it's simply mind-boggling what so-called experts in the economy come up with.

Aside from that, the speech was full of straw, so much so that I feared a repeat of the Great Chicago Fire.

Dan Mitchell's (from Cato) take on the speech:
My reaction yesterday was mixed. In some sense, I was almost embarrassed for the President. He demanded a speech to a joint session of Congress and then produced a list of recycled (regurgitated might be a better word) Keynesian gimmicks.

But I was also angry. Tens of millions of Americans are suffering, but Obama is unwilling to admit big government isn’t working. I don’t know whether it’s because of ideological blindness or short-term politics, but it’s a tragedy that ordinary people are hurting because of his mistakes.
And as the WSJ notes:

We'd like to support a plan to spur the economy, which is certainly struggling. Had Mr. Obama proposed a permanent cut in tax rates, or a major tax reform, or a moratorium on all new regulations for three years, he'd have our support. But you have to really, really believe in hope and change to think that another $300-$400 billion in new deficit spending and temporary tax cuts will do any better than the $4 trillion in debt that the Obama years have already piled up.

We've had the biggest Keynesian stimulus in decades. The new argument that the 2009 stimulus wasn't big enough isn't what we heard then. Americans were told it would create 3.5 million new jobs and unemployment would stay below 8% and be falling by 2011. It is now 9.1%. But this stimulus we are told will make all the difference.
Of course, one might say that these opinions--like mine--are a product of ideology, and they most certainly are. But in this case, it's ideology backed up by empirical evidence. We know the first Stimulus did none of the things that its supporters promised it would do. And we know--per an earlier blog post--that the multiplier effect is all theory, no fact.

At the same time, the admin's sycophants see the speech as a monumental achievement, as laying out a real plan that can't help but work. From Eleanor Clift:
Obama finally laid out a clear and compelling case for government that he sounds prepared to fight for. He urged Congress to think what life would be like if their predecessors had succeeded in voting down Social Security or Medicare or funding for the Internet. If Obama watched the Republican debate the previous evening, one of his opponents, Mitt Romney, had the best line of the evening. The president, he said, is “not a bad guy, he just doesn’t have a clue what to do about the economy.”

Obama showed Thursday night he has a way forward, and when Republicans stayed glued to their seats when he talked about rebuilding schools, they were the ones who looked clueless.
I'd wonder if we heard the same speech, but I know we did.

Cheers, all.