All news is local.
We hear a lot about ocean-borne debris fouling the beaches of Hawaii and America's West Coast as a result of the earthquake and tsunami in Japan.
Will we hear as much about debris from storm damage on America's East Coast fouling beaches in Europe?
Don't mess with Mother Nature. She'll get you in the end.
For those who deny global warming, ask them when they last saw ice skating on Central Park Lake in Manhattan, or on any local pond. Or ask the Flexible Flyer company about sled sales. Or ask why some bird species no longer migrate. Or ask why mockingbirds are no longer limited to the American South.
The issue is not whether the climate is changing, but how much people contribute to it, and how we can change our ways so we don't self-destruct.
Justice is blind. And sometimes more than that.
The Shooda Stood in Bed Award goes to the Italian weather forecasters who faced criminal charges for not predicting the extent of earthquake damage.
The Why Bother Award goes to those in Europe who require folks to purchase travelers insurance. Unless you're over 65, in which case you are rejected because of age and you can't get it even if you do want it.
Thursday, November 29, 2012
Wednesday, November 28, 2012
Allegedly Troublesome
Don't get heartburn in the first place. -- Larry the Cable Guy
Ample use of the word "allegedly" doesn't get you off the hook and can get you in trouble.
The standards of usage are upheld by copy editors at newspapers, magazines and online publications in America and other English-speaking countries around the world.
They are unknown and unsung. They get no bylines, yet they save those who do from looking foolish every day. It is serious work, with serious consequences.
This is not to say that copy editors are humorless and always take themselves seriously. Some of the best one-liners ever perpetrated have come from copy editors -- many are unprintable and understandable only in the context of the moment.
A rule learned early by every good writer and copy editor is this: If you don't want to see it in print, don't put it in the computer. And don't rely on the next guy to invoke the CYA rule and take it out or otherwise fix it. Do it yourself. (CYA = "cover your a...")
If you must make jokes with the copy, keep it verbal.
This rule was forgotten by the copy editor who inserted "allegedly born in Hawaii" into a story about the President, and expected the next editor to catch the joke and delete the word "allegedly." He didn't.
Ample use of the word "allegedly" doesn't get you off the hook and can get you in trouble.
The standards of usage are upheld by copy editors at newspapers, magazines and online publications in America and other English-speaking countries around the world.
They are unknown and unsung. They get no bylines, yet they save those who do from looking foolish every day. It is serious work, with serious consequences.
This is not to say that copy editors are humorless and always take themselves seriously. Some of the best one-liners ever perpetrated have come from copy editors -- many are unprintable and understandable only in the context of the moment.
A rule learned early by every good writer and copy editor is this: If you don't want to see it in print, don't put it in the computer. And don't rely on the next guy to invoke the CYA rule and take it out or otherwise fix it. Do it yourself. (CYA = "cover your a...")
If you must make jokes with the copy, keep it verbal.
This rule was forgotten by the copy editor who inserted "allegedly born in Hawaii" into a story about the President, and expected the next editor to catch the joke and delete the word "allegedly." He didn't.
Multiplier
If common sense is so common, how come no one thought of it before?
A genius is one who sees where others do not look.
The concept of the multiplier effect only took hold in the 1930s -- some 80 years ago -- in the lifetime of many now living. Yet it's now accepted in economics as "common sense."
Here's an example: The Haynes Kayak Co. gets an order for 100 additional boats. This requires that the company hire one more worker, who in turn spends his wages on food, clothing, shelter, etc. To get to work, he buys a car, which means more gasoline sales. More auto sales in turn generate additional income for the car sales representative, support staff including secretary, bookkeeper and mechanic, as well as gas station employes, truckers who deliver the fuel, drillers, refinery workers, engineers who operate the oil wells, and those who benefit from their additional income.
It matters not whether the additional first order came from government or from the private sector. The effect of multiplying benefits through the entire economy is the same.
A genius is one who sees where others do not look.
The concept of the multiplier effect only took hold in the 1930s -- some 80 years ago -- in the lifetime of many now living. Yet it's now accepted in economics as "common sense."
Here's an example: The Haynes Kayak Co. gets an order for 100 additional boats. This requires that the company hire one more worker, who in turn spends his wages on food, clothing, shelter, etc. To get to work, he buys a car, which means more gasoline sales. More auto sales in turn generate additional income for the car sales representative, support staff including secretary, bookkeeper and mechanic, as well as gas station employes, truckers who deliver the fuel, drillers, refinery workers, engineers who operate the oil wells, and those who benefit from their additional income.
It matters not whether the additional first order came from government or from the private sector. The effect of multiplying benefits through the entire economy is the same.
Tuesday, November 27, 2012
Idle Thoughts
Q/ What do you think of open borders?
A/ Close the borders. There are too many Canadians clamoring to come here to take advantage of our health care system.
Kudos to Jon Stewart of The Daily Show for taking aim at a Fox News host and guest who lamented the changing demographics of America, with the rush of new immigrants endangering the traditional American way of life.
The host and guest were named O'Reilly and Goldberg.
A commentator noted the reluctance of the conservative wing of the GOP to see what might be happening to their party. "It's one thing to be on the Titanic. It's another not to know an iceberg has struck."
There's a need for people who can't hear "no."
There's a thin line between confidence and arrogance.
Education is never wasted.
Religionists discovered marketing as a way to spread their influence. When that didn't work, they turned to violence.
Religion begets politics, but not the reverse.
What if he got in touch with his inner Thurston Howell, but no one was home?
The TV graphic noted that the electric company replaced more than 2500 polls.
(So who needs Gallup?)
A/ Close the borders. There are too many Canadians clamoring to come here to take advantage of our health care system.
Kudos to Jon Stewart of The Daily Show for taking aim at a Fox News host and guest who lamented the changing demographics of America, with the rush of new immigrants endangering the traditional American way of life.
The host and guest were named O'Reilly and Goldberg.
A commentator noted the reluctance of the conservative wing of the GOP to see what might be happening to their party. "It's one thing to be on the Titanic. It's another not to know an iceberg has struck."
There's a need for people who can't hear "no."
There's a thin line between confidence and arrogance.
Education is never wasted.
Religionists discovered marketing as a way to spread their influence. When that didn't work, they turned to violence.
Religion begets politics, but not the reverse.
What if he got in touch with his inner Thurston Howell, but no one was home?
The TV graphic noted that the electric company replaced more than 2500 polls.
(So who needs Gallup?)
Monday, November 26, 2012
Media and Bias
I disagree with what you say, but I defend your right to say it.
Truth takes a back seat to favoritism
News items:
TV journalists in Maine lose their jobs for not covering news as management prefers.
TV journalists in Gaza lose their lives for not covering news as government prefers.
In Maine, the TV anchors resigned on the air without giving reasons, but history shows a pattern of the general manager pressuring the news director regarding which stories to cover and how.
In Gaza, members of a TV crew affiliated with a Hamas-owned station were blown up by a missile fired by the Israeli military. A spokeswoman for the military defended the attack because of what she called "relevance to terrorist activities."
Read: Do things our way or else.
It may well be that the Gaza crew and Hamas television endorsed the Palestinian cause, even to the level of being propagandists. But that does not mean that propagandists for one side are to be supported, while those who report the news and views of the other side are to be killed.
It also may well be that terrorists sometimes deploy in the guise of journalists to get better access to their targets. If so, they are indeed legitimate targets, and they are to be treated as terrorists, not as journalists. But in the Gaza case, where is the evidence? The Israeli government has an obligation to present it.
One could make the case that in America, many news outlets slant their coverage to one side or another. Conservatives are fond of blasting what they call "media elite liberals" for their alleged favoritism toward Democrats. Favoritism toward Republican conservatives is, of course, admirable and to be encouraged.
However, the right of free speech and a free press is a universal right, and the opposition deserves to be heard. And the right of reporters to present the news and views without interference must be respected, whether in Maine or in Gaza.
Truth takes a back seat to favoritism
News items:
TV journalists in Maine lose their jobs for not covering news as management prefers.
TV journalists in Gaza lose their lives for not covering news as government prefers.
In Maine, the TV anchors resigned on the air without giving reasons, but history shows a pattern of the general manager pressuring the news director regarding which stories to cover and how.
In Gaza, members of a TV crew affiliated with a Hamas-owned station were blown up by a missile fired by the Israeli military. A spokeswoman for the military defended the attack because of what she called "relevance to terrorist activities."
Read: Do things our way or else.
It may well be that the Gaza crew and Hamas television endorsed the Palestinian cause, even to the level of being propagandists. But that does not mean that propagandists for one side are to be supported, while those who report the news and views of the other side are to be killed.
It also may well be that terrorists sometimes deploy in the guise of journalists to get better access to their targets. If so, they are indeed legitimate targets, and they are to be treated as terrorists, not as journalists. But in the Gaza case, where is the evidence? The Israeli government has an obligation to present it.
One could make the case that in America, many news outlets slant their coverage to one side or another. Conservatives are fond of blasting what they call "media elite liberals" for their alleged favoritism toward Democrats. Favoritism toward Republican conservatives is, of course, admirable and to be encouraged.
However, the right of free speech and a free press is a universal right, and the opposition deserves to be heard. And the right of reporters to present the news and views without interference must be respected, whether in Maine or in Gaza.
The Undoubtful
Supply creates its own demand
Classical, or 19th Century economics, emphasized the study of individual personal and business behavior based on, among other assumptions, that an economy would reach an equilibrium, where all factors balance and there is "full employment" of all inputs and all things are equal. The problem with that assumption, known as the ceteris paribus assumption, is that other things are never equal -- except in theory. In the real world, all things are always moving. You can't step into the same river twice.
So while Adam Smith, Alfred Marshall and others built an excellent theoretical foundation for the study of economic behavior of people and business, when these concepts are applied to the larger, real world of trends and behaviors, their assumptions do not always apply.
Prime among these assumptions is that supply creates its own demand. And modern followers of these principles are so convinced of their rightness that they "know" they are right and everyone else is wrong, so there is no time or room for discussion. "Maybe" is not in their lexicon.
Current devotees of classical economics adhere to faith in supply-side economics, and to a top-down recovery plan. When the theoretical precepts and assumptions fail to work or adequately describe behavior of people and business, the conclusion is that people are misbehaving. It was a given that "supply creates its own demand."
Except that during the 1930s, there was an excess supply of labor, but no demand for workers. In America, the unemployment rate was estimated at 25 percent -- more, if agricultural workers were included in the count. And the economy, by the technical definitions of 19th Century economics, was in equilibrium.
The reality, however, was that the economy was static. It had stopped growing. It was no longer a vibrant economy. It was, in many ways, dying.
Even so, all the factors of economic production had reached equilibrium, and the theory held that things were fine.
Despite the efforts of many, the outdated beliefs of 19th Century economists are still held, and those who hold them still believe in the top-down, supply-side economics that predicts recovery if wealthy managers are given enough incentive to hire idle workers. The true believers have no doubt of the rightness of their position.
And they cite 19th Century experts in support.
Classical, or 19th Century economics, emphasized the study of individual personal and business behavior based on, among other assumptions, that an economy would reach an equilibrium, where all factors balance and there is "full employment" of all inputs and all things are equal. The problem with that assumption, known as the ceteris paribus assumption, is that other things are never equal -- except in theory. In the real world, all things are always moving. You can't step into the same river twice.
So while Adam Smith, Alfred Marshall and others built an excellent theoretical foundation for the study of economic behavior of people and business, when these concepts are applied to the larger, real world of trends and behaviors, their assumptions do not always apply.
Prime among these assumptions is that supply creates its own demand. And modern followers of these principles are so convinced of their rightness that they "know" they are right and everyone else is wrong, so there is no time or room for discussion. "Maybe" is not in their lexicon.
Current devotees of classical economics adhere to faith in supply-side economics, and to a top-down recovery plan. When the theoretical precepts and assumptions fail to work or adequately describe behavior of people and business, the conclusion is that people are misbehaving. It was a given that "supply creates its own demand."
Except that during the 1930s, there was an excess supply of labor, but no demand for workers. In America, the unemployment rate was estimated at 25 percent -- more, if agricultural workers were included in the count. And the economy, by the technical definitions of 19th Century economics, was in equilibrium.
The reality, however, was that the economy was static. It had stopped growing. It was no longer a vibrant economy. It was, in many ways, dying.
Even so, all the factors of economic production had reached equilibrium, and the theory held that things were fine.
Despite the efforts of many, the outdated beliefs of 19th Century economists are still held, and those who hold them still believe in the top-down, supply-side economics that predicts recovery if wealthy managers are given enough incentive to hire idle workers. The true believers have no doubt of the rightness of their position.
And they cite 19th Century experts in support.
Saturday, November 24, 2012
The Undeserving Poor
Whenever I'm up against Middle Class morality, they say, 'You're part of the undeserving poor, so you can't have it.' -- Alfred P. Doolittle
Health care insurance is too important to be left to the private sector.
Secession talk is in the wind again, fanned by fear of excess federal involvement -- control, in the minds of secessionists -- and prime among the federal fear factors is health care.
Now that the election is over, however, some conservatives are already changing their views on health care insurance.
Even Fareed Zakaria, prominent conservative editor and TV host, and an admitted devotee of the free market, has said that health care should not be left to free market principles.
You can choose to buy an expensive car, he noted, "but you can't choose to have a heart attack." When you need health care, you need it today, he said. In a free market, Zakaria pointed out, those who can afford health care insurance will buy it, while those who cannot afford it will do without.
Moreover, the reality is that insurance companies will provide coverage only to healthy people -- who don't need health care. Those who are sick, are likely to become sick, or have pre-existing conditions, are routinely rejected. Result: They go to hospital emergency rooms, as suggested by recent candidates. But that's the most expensive form of health care, and the cost is picked up by the hospital, which passes it on to other clients in the form of higher rates. In turn, these costs result in higher insurance premiums, and eventually higher rates to taxpayers, who help to support hospitals.
Thus, many of the uninsured poor get their health care through ER visits, but contribute little or nothing and do not get the benefit of appropriate care.
As Zakaria has pointed out, insurance only works if everyone is part of the program.
Meanwhile, if a state secedes it will be a localized responsibility to provide health care insurance-- or not -- for its citizens.
If they can afford health care, they will get it. If not, they will die.
America then becomes a nation divisible by wealth, with liberty, justice and health care for those who can afford it.
Not for all.
Health care insurance is too important to be left to the private sector.
Secession talk is in the wind again, fanned by fear of excess federal involvement -- control, in the minds of secessionists -- and prime among the federal fear factors is health care.
Now that the election is over, however, some conservatives are already changing their views on health care insurance.
Even Fareed Zakaria, prominent conservative editor and TV host, and an admitted devotee of the free market, has said that health care should not be left to free market principles.
You can choose to buy an expensive car, he noted, "but you can't choose to have a heart attack." When you need health care, you need it today, he said. In a free market, Zakaria pointed out, those who can afford health care insurance will buy it, while those who cannot afford it will do without.
Moreover, the reality is that insurance companies will provide coverage only to healthy people -- who don't need health care. Those who are sick, are likely to become sick, or have pre-existing conditions, are routinely rejected. Result: They go to hospital emergency rooms, as suggested by recent candidates. But that's the most expensive form of health care, and the cost is picked up by the hospital, which passes it on to other clients in the form of higher rates. In turn, these costs result in higher insurance premiums, and eventually higher rates to taxpayers, who help to support hospitals.
Thus, many of the uninsured poor get their health care through ER visits, but contribute little or nothing and do not get the benefit of appropriate care.
As Zakaria has pointed out, insurance only works if everyone is part of the program.
Meanwhile, if a state secedes it will be a localized responsibility to provide health care insurance-- or not -- for its citizens.
If they can afford health care, they will get it. If not, they will die.
America then becomes a nation divisible by wealth, with liberty, justice and health care for those who can afford it.
Not for all.
Friday, November 23, 2012
Pug Dog Economics
"They'll bill us for the suit." -- Mr. Day
"Don't you let them." -- Mrs. Day
In the movie, "Life With Father," Mrs. Day buys a pug dog statue on the family department store account. Father objects, so she returns it and acquires a suit for Clarence Junior.
But when the bill comes in, Mrs. Day cautions Father, he is not to pay for the pug dog, since she returned it. He notes that the suit must still be paid for, but she counters that no money is due since the pug dog credit was applied to the suit purchase.
Father, a mere male, is stunned by the complexity of it, but it makes perfect sense to her.
Similarly, some today argue that government spending cuts will be offset by tax relief, and both will help to reduce the federal debt and deficit.
Since no money is involved, the transaction is self-canceling.
My thanks to Sandra for explaining pug dog economics.
"Don't you let them." -- Mrs. Day
In the movie, "Life With Father," Mrs. Day buys a pug dog statue on the family department store account. Father objects, so she returns it and acquires a suit for Clarence Junior.
But when the bill comes in, Mrs. Day cautions Father, he is not to pay for the pug dog, since she returned it. He notes that the suit must still be paid for, but she counters that no money is due since the pug dog credit was applied to the suit purchase.
Father, a mere male, is stunned by the complexity of it, but it makes perfect sense to her.
Similarly, some today argue that government spending cuts will be offset by tax relief, and both will help to reduce the federal debt and deficit.
Since no money is involved, the transaction is self-canceling.
My thanks to Sandra for explaining pug dog economics.
Thursday, November 22, 2012
Policasting
Long range forecasts belong in the Farmers Almanac, not in journals.
Time was, as John Nance Garner famously said, the vice presidency "ain't worth a bucket of warm ..." More recently, however, vice presidents have been more in the loop around the Oval Office, and have had more knowledge and responsibility for daily and longer range operations.
One problem for any hope of moving up to the Big Chair is to overcome the tradition against three-term dominance in the White House.
Presidents, of course, cannot serve three terms (or a total of ten years if they move in to a vacated presidency). So the question now is, will Joe Biden seek the presidency in 2016? And if he does, what are his chances?
Consider the background.
Before Franklin D. Roosevelt, only tradition prevented one man's election to a third term. A constitutional amendment changed that, with the proviso that one could serve up to two years of an unexpired term, plus two terms on their own. (This did not apply to the incumbent at the time, Harry S. Truman. The point was moot, however, since he choose not to seek re-election.)
Since then, the only three-term occupancy of the Oval Office was the GOP Reagan-Bush era.
Barring conditions that would warrant electorate confidence in a third-term occupancy, any Democrat will face an uphill struggle for election in 2016. Consider also the short-term memory of the American electorate.
A thriving economy could be attributed to successful Democratic programs. Or, that same thriving economy could convince voters that Democratic policies are no longer needed. Or the opposition party could come up with a candidate who was considered impossible to defeat. This may have contributed to Truman's decision not to take up Dwight D. Eisenhower's challenge.
Conclusion: It's a toss-up.
Only once since 1860 have Democrats managed to win the Oval Office in more than two consecutive presidential elections, and that was the Depression and wartime era of FDR and Truman.
The GOP, on the other hand, has turned that trick four times. First, with Lincoln, Grant, Hayes and Garfield for a string of six victories. Second, with McKinley, Theodore Roosevelt and Taft for four consecutive wins. Third, with Harding, Coolidge and Hoover for three GOP terms in a row. And fourth, with the Reagan-Bush succession, yielding three presidential terms.
But note that in only one of these -- the Reagan-Bush string -- has the vice president moved up to the Big Chair after scoring a double win with the President.
So the odds of a vice president picking up a third term for his party after serving two with the same President are slim. It's only been done once since 1860.
Will Biden break the pattern? Will he even try? We'll know in four years.
Politicklers
Q/ How many opinions can a politician have at one time?
A/ As many as there are voters.
Q/ How many does he actually believe?
A/ One, if that.
Q/ Who benefits from playing politics with storm damage?
A/ The ones who act swiftly to help, and know how to alert the media that they are.
Monday, November 19, 2012
Skill sets
High-volume, low-wage jobs no longer attract as many newcomers to America as they did years ago. And while it's true that people follow jobs, it's also true that jobs follow people. To some extent, people do migrate to where the jobs are, but one reinforces the other.
When highways were built in the 1950s, city workers bought homes in the suburbs and commuted. Later, firms followed workers to the suburbs as land for updated factories became more available and truck transportation enabled them to use the road network to reach customers.
This interchange of urban and rural is not a new phenomenon. The Industrial Revolution was preceded by an Agricultural Revolution that needed fewer farm workers to work the fields and harvest crops. These excess farm hands moved to cities, where factories took advantage of the larger labor supply.
Social conditions also play a major role in determining where and when people move, but that's part of the economic equation.
Why do people come to America? They come for the same reason they have always come; this is where the jobs -- fewer though they may be -- still are. If job opportunities existed where they were at home, there would be no reason to move.
Today, as technology advances and location is less of a factor, especially in the computer networking industry, jobs and workers can be time zones or even continents apart.
That said, skills still play a major role. America may no longer be the high-volume, low-skill, low-cost, low-wage haven for manufacturers it once was -- many of those opportunities have gone to other regions that are now lower in cost and hence lower in wages.
But the low volume, high cost, high skill and therefore high wage opportunities remain. And these workers in turn provide more opportunities for service industries, which hire lower skill, lower wage workers.
Adam Smith was right 250 years ago, and he's right today. America has a comparative advantage in low volume, high tech industries, and other nations have a comparative advantage in high volume, low skill and hence low wage operations.
So everybody benefits.
When highways were built in the 1950s, city workers bought homes in the suburbs and commuted. Later, firms followed workers to the suburbs as land for updated factories became more available and truck transportation enabled them to use the road network to reach customers.
This interchange of urban and rural is not a new phenomenon. The Industrial Revolution was preceded by an Agricultural Revolution that needed fewer farm workers to work the fields and harvest crops. These excess farm hands moved to cities, where factories took advantage of the larger labor supply.
Social conditions also play a major role in determining where and when people move, but that's part of the economic equation.
Why do people come to America? They come for the same reason they have always come; this is where the jobs -- fewer though they may be -- still are. If job opportunities existed where they were at home, there would be no reason to move.
Today, as technology advances and location is less of a factor, especially in the computer networking industry, jobs and workers can be time zones or even continents apart.
That said, skills still play a major role. America may no longer be the high-volume, low-skill, low-cost, low-wage haven for manufacturers it once was -- many of those opportunities have gone to other regions that are now lower in cost and hence lower in wages.
But the low volume, high cost, high skill and therefore high wage opportunities remain. And these workers in turn provide more opportunities for service industries, which hire lower skill, lower wage workers.
Adam Smith was right 250 years ago, and he's right today. America has a comparative advantage in low volume, high tech industries, and other nations have a comparative advantage in high volume, low skill and hence low wage operations.
So everybody benefits.
Sunday, November 18, 2012
Whither the Dems?
Everybody wants more cash, right? -- Current TV ad
Without enough votes in the House of Representatives to push through their programs, and with an opposition determined to stall or undermine President Obama at every opportunity, can we expect any progress at all?
Here's some background. The nation may be facing an economic showdown between followers of John Maynard Keynes and Friedrich von Hayek; between those Keynesians who believe that government intervention is sometimes necessary to prevent a complete breakdown and those Hayekians at the extreme end who believe that government should never intervene in the economy at any time in any way under any circumstances, ever.
Both economists lived through major crises in the first half of the 20th Century. Hayek as a young man in Austria saw the collapse of the economy in the aftermath of World War I. Keynes, a few years older, saw the dangers of punitive "peace" talks as the war ended, and later the need for government help to rescue a faltering economy during the Great Depression.
Who was right? Each has valid points. Hayek and his followers, including Milton Friedman of the University of Chicago, warn of excess money supply. As Friedman put it, "Inflation is always and everywhere a monetary phenomenon." They warn that pumping extra money into circulation is self-defeating, in that it raises prices beyond the reach of those who need help most. This is the catastrophe that fell on Europe after World War I, and they blame government intervention for ruining things by printing extra money and causing hyperinflation.
Keynes, on the other hand, noted that at a time of crisis, something -- anything -- must be done to get the money -- and thus the economy -- moving again. If the private sector cannot or will not, government must. If extra cash helps, even at the risk of some rise in price, so be it. Later, when the economy recovers, government can pull back and deal with debt and deficits.
Kayek and his followers insist, however, that no government intervention is ever warranted. Left alone, the economic body will heal itself, and the long-term price of high inflation is too much to pay for short-term benefit.
So one part of the solution is for the GOP to listen to what they may -- or may not -- perceive as a mandate from the electorate for cooperation. Another part is for the Administration to stand ready for compromise but not to lose sight of the long-term need for a balanced budget and debt reduction.
Without enough votes in the House of Representatives to push through their programs, and with an opposition determined to stall or undermine President Obama at every opportunity, can we expect any progress at all?
Here's some background. The nation may be facing an economic showdown between followers of John Maynard Keynes and Friedrich von Hayek; between those Keynesians who believe that government intervention is sometimes necessary to prevent a complete breakdown and those Hayekians at the extreme end who believe that government should never intervene in the economy at any time in any way under any circumstances, ever.
Both economists lived through major crises in the first half of the 20th Century. Hayek as a young man in Austria saw the collapse of the economy in the aftermath of World War I. Keynes, a few years older, saw the dangers of punitive "peace" talks as the war ended, and later the need for government help to rescue a faltering economy during the Great Depression.
Who was right? Each has valid points. Hayek and his followers, including Milton Friedman of the University of Chicago, warn of excess money supply. As Friedman put it, "Inflation is always and everywhere a monetary phenomenon." They warn that pumping extra money into circulation is self-defeating, in that it raises prices beyond the reach of those who need help most. This is the catastrophe that fell on Europe after World War I, and they blame government intervention for ruining things by printing extra money and causing hyperinflation.
Keynes, on the other hand, noted that at a time of crisis, something -- anything -- must be done to get the money -- and thus the economy -- moving again. If the private sector cannot or will not, government must. If extra cash helps, even at the risk of some rise in price, so be it. Later, when the economy recovers, government can pull back and deal with debt and deficits.
Kayek and his followers insist, however, that no government intervention is ever warranted. Left alone, the economic body will heal itself, and the long-term price of high inflation is too much to pay for short-term benefit.
So one part of the solution is for the GOP to listen to what they may -- or may not -- perceive as a mandate from the electorate for cooperation. Another part is for the Administration to stand ready for compromise but not to lose sight of the long-term need for a balanced budget and debt reduction.
Soundalikes
Hear is a grate idea, a simple of reasons wye spill cheque is a bid idea. Awl words in this paragraphs are spilt correctly, and the spill cheque program will a proof.
Last weak, whee could nit decide weather to reed the story a bout the eclectic company replacing sum 2,500 polls after the storm, or two take a plain too make my whey their to help.
I took my tern on the beech and found piece, joust a few feat from the water. After a paws to refresh my self because my voice was horse, I took a won weigh trip home. It only took an our while the bar tinder pored a drink.
Message: Spell check is a useful tool. Use it regularly. Remember, however, that it does not catch misspellings, but only flags words it does not recognize. The word you type may be spelled correctly, but is the wrong word.
By the way, the program flagged "cheque" in this piece, but did not offer the correct version, "check."
Grammar reminder -- The old saying goes, "i before e except after c," or when you have a weird neighbor named Leigh who feinted a left hook on a foreign trip to weigh his options.
Last weak, whee could nit decide weather to reed the story a bout the eclectic company replacing sum 2,500 polls after the storm, or two take a plain too make my whey their to help.
I took my tern on the beech and found piece, joust a few feat from the water. After a paws to refresh my self because my voice was horse, I took a won weigh trip home. It only took an our while the bar tinder pored a drink.
Message: Spell check is a useful tool. Use it regularly. Remember, however, that it does not catch misspellings, but only flags words it does not recognize. The word you type may be spelled correctly, but is the wrong word.
By the way, the program flagged "cheque" in this piece, but did not offer the correct version, "check."
Grammar reminder -- The old saying goes, "i before e except after c," or when you have a weird neighbor named Leigh who feinted a left hook on a foreign trip to weigh his options.
Thursday, November 15, 2012
Whither the GOP?
The times, they are a-changin' -- Bob Dylan
Bob Dylan was right. The times are, indeed, changing. They did then, they are now, and they will again. 'Twas ever thus, and ever shall be.
The pundits have weighed in, and many -- including Republican commentators -- point out that the white male bastion of the GOP base is becoming a minority. Some even claim that Obama's victory was due to a rush of strength in urban liberal areas, with their large populations of Hispanic and other minority voters. In their world, Romney won in the rest of the country. These few commentators, however, ignore the reality of GOP defeat in rural conservative regions, as well as a more active role among women.
But then, they're good at ignoring reality. However, when reality reaches up and smacks you upside the head, you tend to listen up.
We'll leave the number-crunching to the punditocracy and to the political junkies who wallow in the daily flood of cross-comments that fill air, time and space.
Meanwhile, let's watch things change and hope for some good times. As we do that, here are some thoughts to consider.
Whither the Christie Critter? Too early to tell, but New Jersey Governor Chris Christie certainly has an opportunity. He's been criticized in the past for aggressiveness that borders on bullying and sometimes he has crossed the line, but his behavior in the aftermath of storm damage, where he demanded that something be done NOW was the kind of aggressive leadership his state needed at the time.
Near term outlook: Christie faces re-election next year in a state that has always favored moderates over radicals. As another New Jersey Republican Governor Christie (Whitman) put it, "It's my party, too." Others have noted that they didn't leave the Republican Party. The party left them.
So the current Republican governor of New Jersey has at least two years to contemplate his next move, and consider the advantages of moderation.
The other leading candidate at the moment to follow Obama is his one-time rival and current Secretary of State, Hillary Clinton.
She has the experience and background to move back to the White House, but she may not want to. Been there before, and may not be anxious to do it again, even to sit in the Big Chair.
Meanwhile, Clinton has a couple of years to mull over options.
Bob Dylan was right. The times are, indeed, changing. They did then, they are now, and they will again. 'Twas ever thus, and ever shall be.
The pundits have weighed in, and many -- including Republican commentators -- point out that the white male bastion of the GOP base is becoming a minority. Some even claim that Obama's victory was due to a rush of strength in urban liberal areas, with their large populations of Hispanic and other minority voters. In their world, Romney won in the rest of the country. These few commentators, however, ignore the reality of GOP defeat in rural conservative regions, as well as a more active role among women.
But then, they're good at ignoring reality. However, when reality reaches up and smacks you upside the head, you tend to listen up.
We'll leave the number-crunching to the punditocracy and to the political junkies who wallow in the daily flood of cross-comments that fill air, time and space.
Meanwhile, let's watch things change and hope for some good times. As we do that, here are some thoughts to consider.
Whither the Christie Critter? Too early to tell, but New Jersey Governor Chris Christie certainly has an opportunity. He's been criticized in the past for aggressiveness that borders on bullying and sometimes he has crossed the line, but his behavior in the aftermath of storm damage, where he demanded that something be done NOW was the kind of aggressive leadership his state needed at the time.
Near term outlook: Christie faces re-election next year in a state that has always favored moderates over radicals. As another New Jersey Republican Governor Christie (Whitman) put it, "It's my party, too." Others have noted that they didn't leave the Republican Party. The party left them.
So the current Republican governor of New Jersey has at least two years to contemplate his next move, and consider the advantages of moderation.
The other leading candidate at the moment to follow Obama is his one-time rival and current Secretary of State, Hillary Clinton.
She has the experience and background to move back to the White House, but she may not want to. Been there before, and may not be anxious to do it again, even to sit in the Big Chair.
Meanwhile, Clinton has a couple of years to mull over options.
Wednesday, November 14, 2012
The Paradox of Thrift
Money is made round to go 'round
All things in balance
Saving is a good thing, right? But if everyone is thrifty and stops spending, the economy stalls.
Somewhere there is a balance, where people set aside some of their earnings, but keep spending.
Meanwhile, central banks walk a fine line between supplying enough cash to keep the economy moving, but not so much that an inflated money supply brings overheated pricing. If there's lots of cash available, interest rates are low, so that should encourage producers to borrow and expand their output.
At the same time, if there's lots of cash available, prices leap and consumers don't buy. If they don't buy, they have to put the cash somewhere. But interest rates are low, so there's no point in saving. However, prices are so high that there's no point in spending. And if no one is spending, there's no point in expanding production.
Is a puzzlement, said the king.
All things in balance
Saving is a good thing, right? But if everyone is thrifty and stops spending, the economy stalls.
Somewhere there is a balance, where people set aside some of their earnings, but keep spending.
Meanwhile, central banks walk a fine line between supplying enough cash to keep the economy moving, but not so much that an inflated money supply brings overheated pricing. If there's lots of cash available, interest rates are low, so that should encourage producers to borrow and expand their output.
At the same time, if there's lots of cash available, prices leap and consumers don't buy. If they don't buy, they have to put the cash somewhere. But interest rates are low, so there's no point in saving. However, prices are so high that there's no point in spending. And if no one is spending, there's no point in expanding production.
Is a puzzlement, said the king.
Thoughts for a Day
The problem with having a mentor is that you emulate the mentor; that is, you tend to think and act like the mentor.
This can stifle, or at least interfere with, independent thought. Emulation nears adulation.
Myth is an attempt to explain the unexplainable.
You're only young once, but you can be immature forever.
I'm becoming mature, and I hate it.
I don't know him well enough to dislike him.
Meanwhile, I have more important things to be angry about.
We're all in the same boat; let's hope it doesn't sink.
There is no privacy on the Internet. Ask General Petraeus.
If you don't want the world to know, don't put it in the computer.
This can stifle, or at least interfere with, independent thought. Emulation nears adulation.
Myth is an attempt to explain the unexplainable.
You're only young once, but you can be immature forever.
I'm becoming mature, and I hate it.
I don't know him well enough to dislike him.
Meanwhile, I have more important things to be angry about.
We're all in the same boat; let's hope it doesn't sink.
There is no privacy on the Internet. Ask General Petraeus.
If you don't want the world to know, don't put it in the computer.
Carlinomics
"It's all about stuff." -- George Carlin
The chief principle of the George Carlin School of Economics is that it's all about stuff. "'I've got stuff, you've got stuff, everybody's got stuff," goes the refrain. "I've got too much of some stuff I don't need, and you've got extra stuff I want, so let's trade."
That's called barter.
But when the needs and wants of the two sides don't match, people invent other stuff to trade with that they keep to use later, so they can buy other stuff.
That's called money.
And such a system works whether those involved are two people, two corporations or two nations. Money is the stuff that keeps all the other stuff moving.
Meanwhile, as people gather stuff, they need a stuff-place to put it. For personal stuff, it's called a house; for grain, it's called a silo; for manufactured stuff, it's a warehouse; and for money-stuff, it's called a bank.
The chief principle of the George Carlin School of Economics is that it's all about stuff. "'I've got stuff, you've got stuff, everybody's got stuff," goes the refrain. "I've got too much of some stuff I don't need, and you've got extra stuff I want, so let's trade."
That's called barter.
But when the needs and wants of the two sides don't match, people invent other stuff to trade with that they keep to use later, so they can buy other stuff.
That's called money.
And such a system works whether those involved are two people, two corporations or two nations. Money is the stuff that keeps all the other stuff moving.
Meanwhile, as people gather stuff, they need a stuff-place to put it. For personal stuff, it's called a house; for grain, it's called a silo; for manufactured stuff, it's a warehouse; and for money-stuff, it's called a bank.
Specialties
All things are related, and all topics are one.
It's useful for an academic to take a special interest in one subject and become expert in it. But getting too deep among the trees means the "expert" can lose sight of the relationship of the forest to the mountains and the plains, the rivers and the oceans.
Economics is a valuable field, as is sociology, anthropology, psychiatry, history and politics. They are, however, all related.
Economics deals with what people do with what's available. Sociology examines how various social groups do it. Anthropology studies who and where mankind generally does it. Psychology wonders why they do it. History looks at when people did it. And politics looks at those in charge of programs that deal with economic issues.
There are also subfields. Journalism, for example, reports on who does what, where, when and how, and wonders why.
These are all social sciences. In addition, there are the physical sciences, such as chemistry, physics, geometry and astrology, with mathematics to link them.
Those in the social studies, however, make a mistake when they try to reduce their topics to mathematical exactitude. People are not numbers, and are too fickle to behave in the same way.
Some generalizations can be made, however, even as we remember that people are too variable to be jammed into a single box.
Keep in mind that the most well educated are those who know that all things are related, and all topics are one.
It's useful for an academic to take a special interest in one subject and become expert in it. But getting too deep among the trees means the "expert" can lose sight of the relationship of the forest to the mountains and the plains, the rivers and the oceans.
Economics is a valuable field, as is sociology, anthropology, psychiatry, history and politics. They are, however, all related.
Economics deals with what people do with what's available. Sociology examines how various social groups do it. Anthropology studies who and where mankind generally does it. Psychology wonders why they do it. History looks at when people did it. And politics looks at those in charge of programs that deal with economic issues.
There are also subfields. Journalism, for example, reports on who does what, where, when and how, and wonders why.
These are all social sciences. In addition, there are the physical sciences, such as chemistry, physics, geometry and astrology, with mathematics to link them.
Those in the social studies, however, make a mistake when they try to reduce their topics to mathematical exactitude. People are not numbers, and are too fickle to behave in the same way.
Some generalizations can be made, however, even as we remember that people are too variable to be jammed into a single box.
Keep in mind that the most well educated are those who know that all things are related, and all topics are one.
Tuesday, November 13, 2012
Green Business
The following essay appeared in the Summer 2011 edition of Phi Kappa Phi Forum, the member magazine of the National Honor Society of Phi Kappa Phi, under the headline "The Greening of Business."
Going green can be profitable if society controls the expense involved in the process. Although some might wonder whether the benefits outweigh the costs, the larger issue is this: Can we afford not to go green?
By John T. Harding
Going green can be profitable if society controls the expense involved in the process. Although some might wonder whether the benefits outweigh the costs, the larger issue is this: Can we afford not to go green?
Numerous sources confirm the importance of green business. In just one recent example, the United Nations Environment Programme’s Green Economy Report from February declares:
Moving towards a green economy has the potential to achieve sustainable development and eradicate poverty on an unprecedented scale, with speed and effectiveness. This potential derives from two concurrent changes. First, there is a changed playing field in which our world and the risks we face have materially changed. These changes require a fundamental rethinking of our approach to the economy. Second, there is a growing recognition that the natural environment forms the basis of our physical assets and must be managed as a source of growth, prosperity, and well-being.
Historically, society ignored environmental issues. Industries believed, for instance, that pollution was something people simply had to live with and wasn’t important enough to deal with. Industries dumped byproducts of production into rivers and streams (or buried them in landfills or clogged the air with them) and didn’t know or care about what happened downstream, literally or figuratively. Native peoples often relocated when this became a problem. Today, this is not an option; society cannot walk away from the damage.
As environmental activists raised awareness of the dangers brought on by pollution and global warming, and as lawsuits and government regulations began to cost corporations money, prevention and control became the less expensive alternatives. If a business or utility can reduce such costs, it can increase profits.
Eco-friendly corporate initiatives
Multinational health care manufacturer Johnson & Johnson serves as a prime example. It cut greenhouse gas emissions by 7 percent and grew its overall business by 300 percent in eight years, said Matthew Banks of the World Wildlife Fund’s Climate Savers program in a report by Margo Kelly of CBC/Radio-Canada, the country’s national public broadcaster, on March 10, 2008. “They’re saving on average about $40 million a year,” Banks said. “So, the rhetoric that this is going to hurt economies, that it’s going to bankrupt companies, is simply not the case.”
Also, the Philadelphia Eagles of the National Football League are adding wind turbines and solar panels to the top of their stadium, the team announced last November, for an estimated savings of $60 million in energy costs over 20 years. “Team officials say the combination of energy sources will make the stadium self-sufficient and even allow the Eagles to sell some of its power back to the electric grid,” reported The Associated Press. The project is expected to be finished in September. Plus, a village in Italy built four wind turbines on a nearby hillside, and by 2010 was generating 30 percent more electricity than it used. Sale of the excess capacity earned the village more than $200,000, which was spent on school renovation, earthquake protection and additional street cleaning, Elisabeth Rosenthal of The New York Times wrote on Sept. 28, 2010.
What’s more, T-Mobile, a wireless telecommunications provider, is building cellular towers in Bucks County, Pa., with solar panels as a power source; the new towers will consume 8 kilowatts of power, less than half the 20 kilowatts for a conventional tower. Further, Siemens, a German engineering conglomerate, reported a 48 percent sales increase and an 85 percent boost in new orders for renewable energy equipment during the 2010 third quarter.
The basic economic formula of capitalism is Profit equals Revenue minus Cost. Profitability rises by increasing revenue and/or decreasing costs. Industrial ecology — a concern for the environment — can increase profit not only by raising revenue, but also by cutting costs. Preventing pollution eliminates the later cost of cleaning it up, so it is more profitable not to pollute. The result can also generate more revenue from more efficient operation. And industrial ecology fosters the creation and growth of renewable and alternative energies.
It’s still a new field, however. Yale University has a Center for Industrial Ecology but it focuses more on ecology as an industry rather than on the interplay of industry and the environment.
Monday, November 12, 2012
Trickling
Trickle-down economics, which urges tax breaks for the wealthy hoping their saved money will trickle down through the economy, thus encouraging investment and more jobs, amounts to just that -- a trickle.
When banks that receive the unspent proceeds of the tax breaks do not approve additional loans to help the tricklees, the only ones who really benefit from the tax breaks are the bankers and the tricklers.
In short, it's an economic and financial trick.
But why wait? Better to pump money directly into the lower reaches of the economy, making more money available faster so firms can increase their hiring and productivity. And those who get the needed jobs also acquire wages to spend on what they need.
It's called the multiplier effect.
When banks that receive the unspent proceeds of the tax breaks do not approve additional loans to help the tricklees, the only ones who really benefit from the tax breaks are the bankers and the tricklers.
In short, it's an economic and financial trick.
But why wait? Better to pump money directly into the lower reaches of the economy, making more money available faster so firms can increase their hiring and productivity. And those who get the needed jobs also acquire wages to spend on what they need.
It's called the multiplier effect.
Golden Rulers
Be careful what you wish for. You may get it.
The Law of Supply and Demand has not been repealed.
Self-interest trumps altruism
Some call for using the gold standard to manage the economy. But this attitude conflicts with their claim that they are advocates of freedom and free market principles. Adhering to the gold standard limits a nation's freedom to control and manage its own economy. Why? Because nations lose the ability to control the money supply. Any attempt to return to the gold standard is doomed to failure, either in the attempt or in stifling economic growth.
An economy grows when enough money circulates to satisfy demand for it. To increase growth, it is necessary to increase the money supply. If, however, the value and supply of money is tied to an international standard -- gold, for instance -- a nation loses the ability to control the supply of money, and in turn the ability to encourage economic growth.
Put another way, a gold standard prevents national central banks from adjusting the money supply as needed, because it must instead keep its currency at a level that holds it to a specified internationally agreed value and volume. That is, the Federal Reserve could only arrange enough money to ensure that the dollar be able to buy X amount of gold. In turn, this limits the number of dollars in circulation, and fails to provide enough dollars to fuel economic growth.
Money is the lifeblood of a modern economy. If it stops flowing, the economic heart stalls, and the body politic suffers.
Some agency, then, must ensure that the economy has not only enough money, but that it keeps flowing.
Conservatives and free-market economists maintain that this is the function and duty of bankers and financial institutions to keep money circulating. But for bankers, the prime directive is profit. If they feel a project will not succeed and the borrower will fail to repay, the loan will not be made.
Multiply that by enough loan rejections and the money flow stalls, causing or aggravating a recession.
So the combination of a return to the gold standard and bankers' reluctance to keep money flowing can only endanger an economy in precarious health. And with bankers also slowing the flow of money, the economy and consumers take a double hit.
The Law of Supply and Demand has not been repealed.
Self-interest trumps altruism
Some call for using the gold standard to manage the economy. But this attitude conflicts with their claim that they are advocates of freedom and free market principles. Adhering to the gold standard limits a nation's freedom to control and manage its own economy. Why? Because nations lose the ability to control the money supply. Any attempt to return to the gold standard is doomed to failure, either in the attempt or in stifling economic growth.
An economy grows when enough money circulates to satisfy demand for it. To increase growth, it is necessary to increase the money supply. If, however, the value and supply of money is tied to an international standard -- gold, for instance -- a nation loses the ability to control the supply of money, and in turn the ability to encourage economic growth.
Put another way, a gold standard prevents national central banks from adjusting the money supply as needed, because it must instead keep its currency at a level that holds it to a specified internationally agreed value and volume. That is, the Federal Reserve could only arrange enough money to ensure that the dollar be able to buy X amount of gold. In turn, this limits the number of dollars in circulation, and fails to provide enough dollars to fuel economic growth.
Money is the lifeblood of a modern economy. If it stops flowing, the economic heart stalls, and the body politic suffers.
Some agency, then, must ensure that the economy has not only enough money, but that it keeps flowing.
Conservatives and free-market economists maintain that this is the function and duty of bankers and financial institutions to keep money circulating. But for bankers, the prime directive is profit. If they feel a project will not succeed and the borrower will fail to repay, the loan will not be made.
Multiply that by enough loan rejections and the money flow stalls, causing or aggravating a recession.
So the combination of a return to the gold standard and bankers' reluctance to keep money flowing can only endanger an economy in precarious health. And with bankers also slowing the flow of money, the economy and consumers take a double hit.
Friday, November 9, 2012
Tale of the Un-Debt
"Warning! Danger, Dr. Smith! -- Robby the Robot
"Why don't you tell the truth for a change!"
"We have met the enemy, and he is us." -- Pogo Possum
"There you go again." -- Ronald Reagan
Here we go again, with more political talk of the national debt endangering American society. But mostly, it's just that -- talk. The bottom line reality is that we owe this money to ourselves. Why? Because government debt is in the form of U.S. savings bonds, as well as bonds and securities issued by the U.S. Treasury, most of which are held by American investors or U.S. financial institutions.
Even if all investors, including those based overseas, tried to cash in the securities at the same time -- so unlikely as to be virtually impossible -- the result would be runaway inflation as trillions of dollars flooded the economy. Who would suffer? Not investors, because they would have the cash. Those without bonds to sell and few other assets to liquidate would be impoverished by soaring prices.
A crisis would come if a major portion of these savings bonds and Treasury certificates were all presented at the same time to the U.S. government for payment. The government must then use available cash to redeem them. But the kicker is that the bonds, notes, etc., are negotiable, which means they don't have to go back to the government, but can be sold to someone else. If you hold Treasuries, you can sell them to your local banker or broker who can then resell them to another investor. Thus, the government is not involved and its cash reserve is not threatened.
Moreover, many of the bonds and notes are held by Americans, who trade them with each other. Foreign investors are not necessarily involved, and even if they were, there is no threat to sovereignty. Why destroy those who owe you money?
Meanwhile, here are some numbers to consider. The total U.S. debt is above $16 trillion, roughly the same as GDP (Gross Domestic Product, the total value of all goods and services produced in the U.S., and used as a measure of the economy). So the government is in debt to roughly the same value amount that its citizens produce.
The federal spending plan is in the region of $4 trillion, and the federal deficit -- the amount by which spending exceeds revenue -- is about $1 trillion.
Setting aside for the moment the deficit, since the talk is about the debt, not the deficit, and there should be a balance where revenue matches or exceeds spending, let's consider how important the debt is.
Answer: Not very, since we owe it to ourselves.
Conservatives are fond of comparing the country to a corporation or a family, but firms regularly go into debt, issuing bonds and borrowing to fund their operations. And families go into debt whenever they take out a mortgage to buy a house, or whenever they use a credit card. Often, corporate borrowing exceeds sales revenue, but the plan is that revenue will increase and, in any case, the bonds must be paid off. Families, moreover, rely on future income.
Bonds, then, are as safe as the entity that issues them. And some companies do go bankrupt when they have little or no chance of raising enough revenue to survive. Even so, bonds must be redeemed. Common stock, on the other hand, represents part ownership in the firm, and if the firm fails, the stockholder is out of pocket. In fact, some investors use bankruptcy as a tool to get out from under debt and move on to other investments. (You know who they are.)
So, on the national level, will the debt come back to haunt? That depends on whether the ghostly debt is perceived as a menace. If so, then the ghost is an independent entity out to destroy. If not, then the ghost is part of us, and there is no reason to think we would destroy ourselves.
More numbers. Total federal debt, as of June 2012, was $15.85 trillion, according to the U.S. Treasury. Of that, $6.47 trillion, or 40 percent, was held by Federal Reserve Banks and other governmental agencies. The balance, $9.38 trillion, or 60 percent, was held by private investors.
Who are these private investors? Scarifying TV ads would have you believe they are all Chinese, but how likely is that, since many Americans as well as investors around the world also buy U.S. government securities. Why? Because they're safe, and they pay higher interest rates. A two-year Treasury, for example, has a coupon (interest) of 0.25 percent, according to Bloomberg.com. A two-year UK government bond carries a 5 percent coupon, Australia, 4.5 percent, and Germany zero. Compare that with your local bank's CD rates.
It is true that national bonds can become unpopular when a government topples or is in danger of toppling, sending the value of their bonds down and interest rates up. Thus, a government cannot issue new securities because the interest rates become prohibitive. This has happened in the past, and some countries are facing that possibility today.
In general, however, government savings bonds and Treasury securities are as safe as the government itself. One sure marker of that is when the negotiated price of a government bond goes up. That means the bond is safe. It also means low risk, which in turn means low interest.
Even so, your local bank can sell you a CD earning 0.01 percent, use the proceeds to buy a government security that earns 0.25 percent, and pocket the difference in complete safety.
If you fear the U.S. government is in danger of toppling, then you have reason to liquidate your bonds and stash your cash elsewhere.
Where? Try a mattress. Or a casino.
"Why don't you tell the truth for a change!"
-- James Stewart in Mr. Smith Goes to Washington
"There you go again." -- Ronald Reagan
Here we go again, with more political talk of the national debt endangering American society. But mostly, it's just that -- talk. The bottom line reality is that we owe this money to ourselves. Why? Because government debt is in the form of U.S. savings bonds, as well as bonds and securities issued by the U.S. Treasury, most of which are held by American investors or U.S. financial institutions.
Even if all investors, including those based overseas, tried to cash in the securities at the same time -- so unlikely as to be virtually impossible -- the result would be runaway inflation as trillions of dollars flooded the economy. Who would suffer? Not investors, because they would have the cash. Those without bonds to sell and few other assets to liquidate would be impoverished by soaring prices.
A crisis would come if a major portion of these savings bonds and Treasury certificates were all presented at the same time to the U.S. government for payment. The government must then use available cash to redeem them. But the kicker is that the bonds, notes, etc., are negotiable, which means they don't have to go back to the government, but can be sold to someone else. If you hold Treasuries, you can sell them to your local banker or broker who can then resell them to another investor. Thus, the government is not involved and its cash reserve is not threatened.
Moreover, many of the bonds and notes are held by Americans, who trade them with each other. Foreign investors are not necessarily involved, and even if they were, there is no threat to sovereignty. Why destroy those who owe you money?
Meanwhile, here are some numbers to consider. The total U.S. debt is above $16 trillion, roughly the same as GDP (Gross Domestic Product, the total value of all goods and services produced in the U.S., and used as a measure of the economy). So the government is in debt to roughly the same value amount that its citizens produce.
The federal spending plan is in the region of $4 trillion, and the federal deficit -- the amount by which spending exceeds revenue -- is about $1 trillion.
Setting aside for the moment the deficit, since the talk is about the debt, not the deficit, and there should be a balance where revenue matches or exceeds spending, let's consider how important the debt is.
Answer: Not very, since we owe it to ourselves.
Conservatives are fond of comparing the country to a corporation or a family, but firms regularly go into debt, issuing bonds and borrowing to fund their operations. And families go into debt whenever they take out a mortgage to buy a house, or whenever they use a credit card. Often, corporate borrowing exceeds sales revenue, but the plan is that revenue will increase and, in any case, the bonds must be paid off. Families, moreover, rely on future income.
Bonds, then, are as safe as the entity that issues them. And some companies do go bankrupt when they have little or no chance of raising enough revenue to survive. Even so, bonds must be redeemed. Common stock, on the other hand, represents part ownership in the firm, and if the firm fails, the stockholder is out of pocket. In fact, some investors use bankruptcy as a tool to get out from under debt and move on to other investments. (You know who they are.)
So, on the national level, will the debt come back to haunt? That depends on whether the ghostly debt is perceived as a menace. If so, then the ghost is an independent entity out to destroy. If not, then the ghost is part of us, and there is no reason to think we would destroy ourselves.
More numbers. Total federal debt, as of June 2012, was $15.85 trillion, according to the U.S. Treasury. Of that, $6.47 trillion, or 40 percent, was held by Federal Reserve Banks and other governmental agencies. The balance, $9.38 trillion, or 60 percent, was held by private investors.
Who are these private investors? Scarifying TV ads would have you believe they are all Chinese, but how likely is that, since many Americans as well as investors around the world also buy U.S. government securities. Why? Because they're safe, and they pay higher interest rates. A two-year Treasury, for example, has a coupon (interest) of 0.25 percent, according to Bloomberg.com. A two-year UK government bond carries a 5 percent coupon, Australia, 4.5 percent, and Germany zero. Compare that with your local bank's CD rates.
It is true that national bonds can become unpopular when a government topples or is in danger of toppling, sending the value of their bonds down and interest rates up. Thus, a government cannot issue new securities because the interest rates become prohibitive. This has happened in the past, and some countries are facing that possibility today.
In general, however, government savings bonds and Treasury securities are as safe as the government itself. One sure marker of that is when the negotiated price of a government bond goes up. That means the bond is safe. It also means low risk, which in turn means low interest.
Even so, your local bank can sell you a CD earning 0.01 percent, use the proceeds to buy a government security that earns 0.25 percent, and pocket the difference in complete safety.
If you fear the U.S. government is in danger of toppling, then you have reason to liquidate your bonds and stash your cash elsewhere.
Where? Try a mattress. Or a casino.
Gleanings
GLEANINGS of an Itinerant Speller. "Tow the line." To pull on a rope means nothing in the context of "behave yourself." What's wanted is "toe the line."
SPELLCHECK WON'T HELP. "Staunch the loss" doesn't do it because "staunch" means "strong" or "upstanding." The writer wanted "stanch," which means "to stop."
NOT HERE, EITHER -- "Lose" is a verb. "Loose" can also be a verb, but it's not the same as "lose." You can lose (misplace) your money, and loose (release) the dogs to hunt down a miscreant. Meanwhile, "loose" can be a descriptor, meaning "not tight."
THINK ABOUT IT. "Perish forbid" also means nothing. Try "heaven forbid" or "perish the thought."
RULE NUMBER ONE: Get the name right. It's Wynton, not Winton Marsalis, the jazz trumpeter.
You say you want logic in language?
In the New York dialect, "Fuhgedaboudit!"
SPELLCHECK WON'T HELP. "Staunch the loss" doesn't do it because "staunch" means "strong" or "upstanding." The writer wanted "stanch," which means "to stop."
NOT HERE, EITHER -- "Lose" is a verb. "Loose" can also be a verb, but it's not the same as "lose." You can lose (misplace) your money, and loose (release) the dogs to hunt down a miscreant. Meanwhile, "loose" can be a descriptor, meaning "not tight."
THINK ABOUT IT. "Perish forbid" also means nothing. Try "heaven forbid" or "perish the thought."
RULE NUMBER ONE: Get the name right. It's Wynton, not Winton Marsalis, the jazz trumpeter.
You say you want logic in language?
In the New York dialect, "Fuhgedaboudit!"
Wednesday, November 7, 2012
Questions
Beware of absolutes and factoids supplied by partisans.
To limit the factoid to one side enhances its truthiness at the expense of the other side.
"Barack Obama became the fourth Democrat to win re-election in a hundred years," according to Brian Williams of NBC. (Did he say "only"?)
Question: How many Republicans in the same time frame won their bids to stay in office? Answer: Four.
Question: How many Democrats in the past hundred years lost a re-election bid? Answer: One (Jimmy Carter, 1980).
Question: How many Republicans in the past hundred years lost bids to stay in office? Answer: Four (William Howard Taft, 1912, Herbert Hoover, 1932, Gerald Ford, 1976, and George H.W. Bush, 1992).
Who were the others? Woodrow Wilson turned out Taft in 1912, and was re-elected in 1916. Franklin W. Roosevelt turned out Hoover in 1932 and was re-elected in 1936. Incumbent Gerald Ford lost in 1976, and incumbent George H.W. Bush lost in 1992.
Republicans who were re-elected to a second term were Dwight D. Eisenhower in 1956, Richard Nixon in 1972, Ronald Reagan in 1984, and George W. Bush in 2004.
Democrats who won their bids to stay in office were Woodrow Wilson in 1916, FDR in 1936, 1940 and 1944, Harry Truman in 1948, and Bill Clinton in 1996.
Conclusion: Incumbents usually win.
Question: Will Romney try again? Odds are against it. Only three major party candidates have made more than one attempt in more than a hundred years: Adlai Stevenson, Thomas E. Dewey and William Jennings Bryan.
Source: The World Almanac and Book of Facts, 2011 print edition.
Comment: Sometimes print is faster than the web.
To limit the factoid to one side enhances its truthiness at the expense of the other side.
"Barack Obama became the fourth Democrat to win re-election in a hundred years," according to Brian Williams of NBC. (Did he say "only"?)
Question: How many Republicans in the same time frame won their bids to stay in office? Answer: Four.
Question: How many Democrats in the past hundred years lost a re-election bid? Answer: One (Jimmy Carter, 1980).
Question: How many Republicans in the past hundred years lost bids to stay in office? Answer: Four (William Howard Taft, 1912, Herbert Hoover, 1932, Gerald Ford, 1976, and George H.W. Bush, 1992).
Who were the others? Woodrow Wilson turned out Taft in 1912, and was re-elected in 1916. Franklin W. Roosevelt turned out Hoover in 1932 and was re-elected in 1936. Incumbent Gerald Ford lost in 1976, and incumbent George H.W. Bush lost in 1992.
Republicans who were re-elected to a second term were Dwight D. Eisenhower in 1956, Richard Nixon in 1972, Ronald Reagan in 1984, and George W. Bush in 2004.
Democrats who won their bids to stay in office were Woodrow Wilson in 1916, FDR in 1936, 1940 and 1944, Harry Truman in 1948, and Bill Clinton in 1996.
Conclusion: Incumbents usually win.
Question: Will Romney try again? Odds are against it. Only three major party candidates have made more than one attempt in more than a hundred years: Adlai Stevenson, Thomas E. Dewey and William Jennings Bryan.
Source: The World Almanac and Book of Facts, 2011 print edition.
Comment: Sometimes print is faster than the web.
Tuesday, November 6, 2012
Factoids and Truthiness
When will they ever learn?
Sounds good as far as it goes, but it doesn't go very far.
FAMOUS LAST WORDS -- "This time is different." Some quickly forget or deliberately ignore their own vague memories (if any) of why and how their policies did not work. To them, history teaches nothing, and never repeats.
The optimist says, "It doesn't get any better than this."
The pessimist says, "Yes, I know. That's what worries me."
MORE LAST WORDS: Calvin Coolidge said, "I do not choose to run." Oddly, no one asked him.
BEWARE OF ABSOLUTES -- The TV ad claimed that "only one senator in the race voted to cut $716 billion from Medicare." Only one? True. But there was only one senator in the race. Each state has two senators, elected at different times. The challenger was not in office, so could not vote, and the other senator did vote but was not in the race.
We have two definitions of "factoid." Across the pond, it means something of little value, and probably not true. In America, a factoid is a very small bit of information -- true, but not important. And we have Stephen Colbert's coin, "truthiness," meaning something that sounds true but may not be.
GLEANINGS -- "The river is full of flotsam and jetsam." Colorful, but if the river were full, no water would flow. And "flotsam" is that which floats and can be seen. "Jetsam" is carried along beneath the surface.
SMITH-SMITHY -- The smith is a person who works at the smithy, the place where iron work is done.
GRISLY-GRISTLY -- Pronounced almost the same, but the first, with a "z" sound, involves something gory and bloody. The second, with more of an "s" sound, refers to tendons (gristle) left in your burger or chicken salad.
KEEP IN MIND -- Stories go on Page One because they're important.
Stories become important when they go on Page One.
Sounds good as far as it goes, but it doesn't go very far.
FAMOUS LAST WORDS -- "This time is different." Some quickly forget or deliberately ignore their own vague memories (if any) of why and how their policies did not work. To them, history teaches nothing, and never repeats.
The optimist says, "It doesn't get any better than this."
The pessimist says, "Yes, I know. That's what worries me."
MORE LAST WORDS: Calvin Coolidge said, "I do not choose to run." Oddly, no one asked him.
BEWARE OF ABSOLUTES -- The TV ad claimed that "only one senator in the race voted to cut $716 billion from Medicare." Only one? True. But there was only one senator in the race. Each state has two senators, elected at different times. The challenger was not in office, so could not vote, and the other senator did vote but was not in the race.
We have two definitions of "factoid." Across the pond, it means something of little value, and probably not true. In America, a factoid is a very small bit of information -- true, but not important. And we have Stephen Colbert's coin, "truthiness," meaning something that sounds true but may not be.
GLEANINGS -- "The river is full of flotsam and jetsam." Colorful, but if the river were full, no water would flow. And "flotsam" is that which floats and can be seen. "Jetsam" is carried along beneath the surface.
SMITH-SMITHY -- The smith is a person who works at the smithy, the place where iron work is done.
GRISLY-GRISTLY -- Pronounced almost the same, but the first, with a "z" sound, involves something gory and bloody. The second, with more of an "s" sound, refers to tendons (gristle) left in your burger or chicken salad.
KEEP IN MIND -- Stories go on Page One because they're important.
Stories become important when they go on Page One.
Monday, November 5, 2012
Trust
Who you gonna believe, me or your own eyes? -- Chico Marx
It must be true, I saw it on the Internet
Yes, Virginia, there is a Santa Claus.
If you see it in The New York Sun, it's so
Or so Papa said to little Virginia, who promptly wrote to the editor for verification. But we have been bombarded with so much verbiage, both written, oral and electronic, that it's hard to know whom to believe. It used to be that print had a higher "believability quotient" than neighborhood gossip, pictures were "worth a thousand words" and eventually television achieved even more believability when it added sound and movement.
Then came the Internet, when anyone with a keyboard could perpetrate the most outlandish nonsense, and people believed it even more.
There was a time when reporters and editors filtered what people said, and sought to verify it. Today they're called "fact checkers." Many, however, have agendas.
There was a time when people had some confidence in newspapers -- at least those with good reputations -- and either believed what was printed or disagreed with the treatment or felt that the publication was biased (based on their own past experience) or charged that newspapers were not to be believed no matter what.
But at least they considered their options and took a position.
Today, however, we are besieged with opinion masquerading as fact with no supporting evidence. Moreover, there are even examples of forgeries -- emailers "borrowing" the names, photos and reputations of others and using that as a base for their own wild rantings.
It's time for readers to turn the same jaundiced eye to what they see on the Web as they have previously turned on traditional print and other media.
Beware of allegations that masquerade as truth, especially those that have just enough "truthiness" to be believable but offer little or no or questionable supporting evidence.
As the old-time city editor said, "If your mother says she loves you, check it out."
Therein lies the key: Choose your "fact checkers" carefully, and question everything.
That includes this commentary.
We offer opinion, supported by evidence, and ask you to consider the issues.
It must be true, I saw it on the Internet
Yes, Virginia, there is a Santa Claus.
If you see it in The New York Sun, it's so
Or so Papa said to little Virginia, who promptly wrote to the editor for verification. But we have been bombarded with so much verbiage, both written, oral and electronic, that it's hard to know whom to believe. It used to be that print had a higher "believability quotient" than neighborhood gossip, pictures were "worth a thousand words" and eventually television achieved even more believability when it added sound and movement.
Then came the Internet, when anyone with a keyboard could perpetrate the most outlandish nonsense, and people believed it even more.
There was a time when reporters and editors filtered what people said, and sought to verify it. Today they're called "fact checkers." Many, however, have agendas.
There was a time when people had some confidence in newspapers -- at least those with good reputations -- and either believed what was printed or disagreed with the treatment or felt that the publication was biased (based on their own past experience) or charged that newspapers were not to be believed no matter what.
But at least they considered their options and took a position.
Today, however, we are besieged with opinion masquerading as fact with no supporting evidence. Moreover, there are even examples of forgeries -- emailers "borrowing" the names, photos and reputations of others and using that as a base for their own wild rantings.
It's time for readers to turn the same jaundiced eye to what they see on the Web as they have previously turned on traditional print and other media.
Beware of allegations that masquerade as truth, especially those that have just enough "truthiness" to be believable but offer little or no or questionable supporting evidence.
As the old-time city editor said, "If your mother says she loves you, check it out."
Therein lies the key: Choose your "fact checkers" carefully, and question everything.
That includes this commentary.
We offer opinion, supported by evidence, and ask you to consider the issues.
Thursday, November 1, 2012
Splitsville NJ
A liberal is a conservative whose bank has failed and whose house has been washed away in a storm.
Big government means you have more family to help you when you need it.
Successful Republicans in New Jersey have always been moderate. Political radicals in the Garden State are losers, regardless of party affiliation.
This week, Republican Gov. Chris Christie says he doesn't "give a damn" about politics or elections while his state is in a shambles, and has no interest in escorting Mitt Romney around his storm-tossed state. He did, however, have high praise for the current President of the United States, Barack Obama, and the Democrat's rapid response in getting federal aid to New Jersey.
The forecast from here is to watch for Christie to seek higher office -- possibly the White House -- in 2016. Meanwhile, look for signs and symptoms of deterioration in the Republican Party, so much so that many East Coast GOP moderates, and Christie, may seek a new affiliation.
Unless the Republican Party returns to moderation, look for Christie and others to switch, or start a new party, closer to the main stream of American politics.
Meanwhile, there are several possibilities.
-- The GOP will evict the Tea Party radicals.
-- The GOP will self-destruct as conservatives shift the party further to the right.
-- GOP moderates will leave, either to join Democrats or to set up a new party.
Possible also: Conservatives will win on Tuesday and implement their policy of bootstrap recovery, which will leave the storm-tossed Jersey Shore and other East Coast areas low and not so dry, left to fend for themselves.
Possible? Yes. Plausible? No.
More likely: Christie's praise and Obama's help will swing undecided voters to the Democrats and victory. Unless Great Plains suspicion and dislike of East Coast liberals remains strong and overcomes television views of federal emergency aid to recover from Nature's wrath.
Big government means you have more family to help you when you need it.
Successful Republicans in New Jersey have always been moderate. Political radicals in the Garden State are losers, regardless of party affiliation.
This week, Republican Gov. Chris Christie says he doesn't "give a damn" about politics or elections while his state is in a shambles, and has no interest in escorting Mitt Romney around his storm-tossed state. He did, however, have high praise for the current President of the United States, Barack Obama, and the Democrat's rapid response in getting federal aid to New Jersey.
The forecast from here is to watch for Christie to seek higher office -- possibly the White House -- in 2016. Meanwhile, look for signs and symptoms of deterioration in the Republican Party, so much so that many East Coast GOP moderates, and Christie, may seek a new affiliation.
Unless the Republican Party returns to moderation, look for Christie and others to switch, or start a new party, closer to the main stream of American politics.
Meanwhile, there are several possibilities.
-- The GOP will evict the Tea Party radicals.
-- The GOP will self-destruct as conservatives shift the party further to the right.
-- GOP moderates will leave, either to join Democrats or to set up a new party.
Possible also: Conservatives will win on Tuesday and implement their policy of bootstrap recovery, which will leave the storm-tossed Jersey Shore and other East Coast areas low and not so dry, left to fend for themselves.
Possible? Yes. Plausible? No.
More likely: Christie's praise and Obama's help will swing undecided voters to the Democrats and victory. Unless Great Plains suspicion and dislike of East Coast liberals remains strong and overcomes television views of federal emergency aid to recover from Nature's wrath.
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