Relevant and even prescient commentary on news, politics and the economy.

About funding education

From Rdan’s Sallie Mae post I got the urge to hunt because vtcodger mentioned greed.

Greed? Yes, I have recently learned that one person who works to manage the endowment fund for Harvard got a bonus for last year performance that was less than the year before of $2M. Imagine that! The endowment is so large and produced so much, that $2m could be handed out like a tip. (Of course, this is second hand knowledge.)

So let us see how Harvard is doing.
The fund is currently valued at $34.9 Billion.

Harvard University’s endowment earned a 23.0 percent return during the fiscal year ending June 30, 2007.
From fiscal 2001 to fiscal 2007, for example, scholarships and awards to students from University funds increased by over 94 percent, to $302 million from $156 million. Endowment dollars distributed for overall Harvard programs rose more than 70percent during the same period, from $615 million to $1.04 billion.

$1.04 billion or 3%. Only 3%. Yet:
Since its inception, HMC has averaged an annualized rate of return of 13.3 percent.

The industry average is: the median for the 151 large institutional funds as measured by the Trust Universe Comparison Service (17.7 percent), as well as the 20.9 percent that marks the top 5 percentile.

Granted, I’m sure and as they say there are restrictions. However, Harvard says they are trying to spend 5% annually. They note tuition only covers 2/3 of the cost. Well if they really tried to get to that 5%, they would have another $705 million for it. At their tuition of $47,215, that’s 14,932 students. The total enrollemnt is only 25,017 including part-timers.

Hello?

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Reality going to the Dogs

This one is for those concerned about how we spend our tax dollars. It is a robotics project funded by the pentagon performed by Boston Dynamics called the BigDog.

I’m not going to comment because I can think of many positives as in the moon shot program and transitors and I can think of many negatives, as in militarizing space. What do you think?

Enjoy.

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I’m converting dollars. (In order to save the rustbelt)

With all the discussion about our plight money wise I thought it would be interesting to see just how distorted our view can become depending on what factor we choose as a comparison. Also, I find this site fun.

So, just how do we compare today to the fondly remembered yesterday? I am very grateful to you for asking. Let’s see, we need a base. Let us use Social Security (OASDI to be complete) as a base dollar source. There have been suggestions that we need to raise the wage cap. OK, maybe, but what should it be? Using this OK, but what should it be? Using this pdf chart I picked 3 different years as starting points. 1937, because “In the Beginning” there was poverty. 1966, because the beginning went so well, we added more. And 1983 because we became enlightened .

Using the Measuring Worth site I produced this chart:

The 6 factors are explained at the Measuring Worth site. My short hand is: C Bundled = Consumer Bundle, Unskilled = Unskilled Wage. The N in NGDP stands for nominal.

So, what number do we pick? The one that shows the current cap is set way to high, so we obviously are covering too much in OASDI as compared to the past. Or the one that shows the current cap is too low, so we obviously are not covering as much in OASDI as in the past.

I vote for the one which shows that the $94,200 cap is about the proper income to be earned by the Unskilled Labor force allowing such a person to have maintained their standard of living based on the Consumer Bundle. Yet even at that, their share of GDP would be historically rather low.

Anyone recall me presenting an argument that we have pushed the cost of the American Dream up to the point that one has to be in the top 10% of income earners to have it? It also takes 2 people working to do it.

In fact how uncanny that the median household income in which the wife is not working, for 1967 (couldn’t find a number for 1937) converts to an Unskilled Labor income of $48,353 and the Consumer Bundle is $51,019.

Maybe we shouldn’t feel to bad. Based on Measuring Worth’s President George Washington example, the current President George is getting screwed by about $100K. But, this does not include the benefits received by the present George. Guess we are getting the short end compared to being president.

Saving the rustbelt goes beyond a geographic area. Saving the rustbelt is referring to a demographic group.

Update: Link American Dream

Update: fixed the chart link paragraph missing before the chart.

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Labor’s fighting back

Seems Colorado wants to change to a “right to work” state. They have been trying for at least a decade. Funny phrasing. I always thought I had a right to work. You know… pursuit of happyness, freedom and all. What does it mean for me if I have no right to work? Would I need to have permission to say, clean my toilet? Or feed myself? Or help you shovel the snow from your steps? So, I guess some in labor have finally woken up to the mind game of such laws which manifests as lower wages.

Labor now has a couple of measures of their own:
Initiative 62: Just cause for employee discharge.
The definitions of just cause:

a. Incompetence;
b. Substandard performance of assigned job duties;
c. Neglect of assigned job duties;
d. Repeated violations of the employer’s written policies and procedures relating to jobperformance;
e. Gross insubordination that affects job performance;
f. Willful misconduct that affects job performance; or
g. Conviction of a crime involving moral turpitude.
h. filling of bankruptcy by the employer or;
i. simultaneous discharge or suspension of ten percent or more of the employer’s work force in Colorado

I know, start firing away about the need to not tie the bosses hands so tight, free markets in labor…etc, etc, etc. Personally, I see this as a step toward moving labor from an identity of “commodity”. Besides, the labor department has been against labor for about 8 years now.

Ah, but this one is the one that I find interesting especially as we have discussed the need for holding the top of the companies responsible, initiative #74:

(1) A business entity is guilty of an offense if:
(a) The conduct constituting the offense consists of an omission to discharge a specific duty of affirmative performance imposed on the business entity by law; or
(b) The conduct constituting the offense is engaged in, authorized, solicited, requested, commanded, or knowingly tolerated by the governing body or individual authorized to manage the affairs of the business entity or by a executive official acting within the scope of his or her employment or in behalf of the business entity.
(1.5) AN EXECUTIVE OFFICIAL IS GUILTY OF AN OFFENSE IF THE CONDUCT CONSTITUTING THE OFFENSE CONSISTS OF AN OMISSION TO DISCHARGE A SPECIFIC DUTY OF AFFIRMATIVE PERFORMANCE IMPOSED ON THE BUSINESS ENTITY BY LAW AND THE EXECUTIVE OFFICIAL KNEW OR REASONABLY SHOULD HAVE KNOWN OF THE SPECIFIC DUTY TO BE PERFORMED.

They do provide a defense for those charged. They just have to have reported the offense prior to being charged. They have to blow the whistle first! Just imagine what it would take to keep an entire board and the officers mum now that the individual won’t be protected unless they blow that whistle. How much would you gamble that just one (it only takes one) would not tell?

There is an even tougher version of this initiative # 57:
This one goes a step further and allows a Colorado citizen to file suit against the company or it’s executive officials. Any awards after expenses goes to the government agency THAT IMPOSED BY LAW THE SPECIFIC DUTY TO BE PERFORMED BY THE BUSINESS ENTITY. It’s a means to prevent frivolous actions.

So, if this passes they will have required by law that every executive official has a duty to be the whistle blower and they will have enabled every citizen to be the cop.

Nothing like competition in the market place…is there? Think some in Colorado are learning from the right’s play book on how to get voters to the polls?

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Ain’t been no progressiveness since 1980

In this post, Bruno commented and posted this link to reference this statement:

In 2005, the top 1 percent of tax returns paid 39.4 percent of all federal individual income taxes and earned 21.2 percent of adjusted gross income, both of which are significantly higher than 2004 when the top 1 percent earned 19 percent of AGI and paid 36.9 percent of federal individual income taxes.

I assume that the purpose of reporting the data in this way is to invoke a natural sense of fairness to people. That being that one’s share of B should reflect their share of A. That B became “significantly higher” suggests some unfairness. Oh for the humanity of it.

The report could have reported that the top 1%’s tax burden in dollars was 20% higher, however their share of income was 21.8% higher. Now is this fair? Is this fair of the report to have noted the rise of both income and taxes paid in a manor that makes the top1% look as if they are getting unfair treatment and not show that the bottom 99% ‘s income only went up 6.2% but their dollars paid in income taxes went up 7.9%?

How fair is this? All of it? 1980 to 2005 all? Adjusted incomes all?

Well, it turns out this report had a link to an exel file of their data. Perfect! As a dutiful AB’er I took it as my charge to see what that data was really showing. Turns out since 1980, the messing with the tax rates has had some strange effects. Fairness is missing in all of it, even the vaunted Clinton era.

Look at this chart. Notice how the income for the bottom 99% is continuously falling away from the total income. Of course, you can’t miss the top 1% line. Up, up and away (in my beautiful, my beautiful balloon…)

The next chart is of total taxes paid. Notice the similarity. The rising share of total income that becomes income taxes is certainly a function of one’s rising share of total income.

But, the income going up faster than the rise in taxes paid or the taxes paid rising faster than the income is a function of the rates.

This chart may not be to impressive unless you look real close. Look between 1991 and 2000 at the bottom 99%. Do you see that it is rising? This is a period that we are suppose to be considering a symbol of progressive taxation and yet income taxes paid as a percentage of income is rising for the bottom 99% while it is descending for the top 1%. The actual percentages for the 99%’ers start in 1992 at 10.9 and peaks in 2000 at 12.1%. Where as the top 1% go from 25.05% 1992 to 28.87% 1996 to 27.45 2000.
Update, forgot these 2 paragraphs:
Is this what we are to consider progressive taxation? No it is not. The covers blown. We have not had a progressive tax adjustment since we started playing with the code with Reagan. And it hurt more knowing that it was decidedly unprogressive during a term when the president ran as a progressive. It hurts even more because Clinton’s term is being pointed to as a time to emulate. A rise of share of income to the top 1% of 6 points in 8 years and now we see that the bottom got buffaloed in the income tax department too.

The highest total of income collected as income taxes in this series of data was 1981 at 15.76%. Being that Reagan hadn’t started blowing the budget, this could reasonably be considered the amount of money we have to pay to keep the budget in good shape. (That is assuming all other taxes stay the same as 1981. They didn’t.) But NOOOOOOOOOOO. We see us paying less each year until 1990. Only 23.25% was paid to take care of our house that year. The top 1% paid 25.1% of the house needs out of 14% of the income. The rest of us paid 74.9% of the house needs out of 86% of the income.
By 2000 we are paying 15.26% of our total income for the needs of the house. The top 1% is paying 37.4% of the need out of 20.8% of the income. The rest of us are paying 62.6 % of the needs out of 79.2% of the income. Ok, I guess there was some progressiveness here.
But! In 1992 the income per capita for the top 1% was $152,743 and $11,055 for the rest. By 2000 it’s $343,357 and $15,999 respectively. Now I ask you, is this progressive? A 124.8% increase for the 1%’ers and only a 44.7% increase for the rest of us. Remember, this is during the Clinton years!
Since that time, the house has really been starving for attention. In 2005, the year the top is or is not getting screwed (I think the numbers show they are not) we collectively only paid 12.45% of our income to the house needs. We have never paid so little. Well, except for 2003 when we paid 11.9%. Which just happens to be somewhere between the 1999 and 2000 percentage for the share of income paid by the bottom 99%. Yes folks, currently we are trying to fund the house on the same percentage of income that only the bottom 99% use to pay. Or, put another way, we are funding a 304.2% (BEA table 3.1 1981 to 2005) increase in house needs on only a 234.3% increase in payments to the house while the total source has increased 319.2%. That’s 260.2% (awfully close to the house needs rise) for the bottom 99 and 970.3% for the poor souls burdened with 39% of the house needs.
Let me be blunt: This all sucks. Just plain sick and tired of having my head played sucks.

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How are we going to fix a money from money economy?

Just sounding the broken record: Money from money. I have posted about the share of our money coming from licensing agreements. I’ve posted Bogle’s opinion that we have $560 billion/yr loss because we focus to much on the finance end of making money. I’ve shown that there has not been enough money in the hands of 99% of the population to stay above personal outlays since 1996. Another commenter presented a similar argument looking at it from the perspective of the middle man model. Just taking my cut!

Yet, money policy whether savings, rate changes or government stimulus is still being debated in a consumer driven economy that has been based on consumption via borrowing. Sign them up at $50/mon until they have nothing left and then give them a loan on the house.

Walmart, Target, Sears? Are they something more than a middleman?

Lets consider that 16% of GDP is health care. Sixty percent of that is via private insurers. The ultimate middle man. They are exempt from the anti trust laws. They control the money coming into them. They control the money they are paying out. They have set up all sorts of sub companies to “farm” out review and even sold contracts to do such for others. All the while taking a piece of the action. It’s an all in the family model. Time to rewatch the God Father?

Nothing is being added or created that can be sold to another non-US trading partner because all the trading partners have done away with their middle man in health care. Yet, it is the fastest growing sector of our economy.

Well maybe not. I just found an article at Wikipedia. They have a name for money from money:
Financialization.

There is a nice chart. (A few actually). Especially this one.

Total financial turnover went from $17,804 billion in 1980 to $508,456 billion in 2000. We’ve seen GDP go from 37.8% of turnover to 1.9% of turnover. That’s how big the money from money train is. Our GDP is only 1.9% of the money from money machine.

What am I not understanding concerning how to fix this via rates, savings and government stimulus as it concerns 99% of the population?

How we going to fix it?

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Job openings for the progressive minded

I was cruising around The Center for American Progress. They have a nice report looking at credit card use rise and a rise in writing off the bad ones. Any way, I like to click on the Job Opportunities at these sites just to see. Sometimes I think it might be fun to work with a big organization that is very much in the thick of the political fight for the soul of this country.

Well, they need an economist. That’s not me. But hey, maybe there is one hanging around the AB looking for something different. Though they don’t say if they want a bear of a bull.

Here is the job description.

We are looking for somebody who is widely experienced in a range of fields, and who has in depth expertise in at least one the following fields: macroeconomics, innovation and growth, labor economics, economic mobility, and/or public finance. This person would conduct their own research,…

Here is their economic policy team.

Here is their help wanted page if anyone else is curious.

Just thought I’d pass it along. You know, in the spirit of change.

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Free trade, Republican’s no like (along with others)

From a poll by the WSJ/NBC reported in October, 2007 comes:

While 60% of respondents said they want the next president and Congress to continue cutting taxes, 32% said it’s time for some tax increases on the wealthiest Americans to reduce the budget deficit and pay for health care.

Can you imagine? They have started to figure out that their pocketbooks matter.

In a December 1999 Wall Street Journal-NBC poll, 37% of Republicans said trade deals had helped the U.S. and 31% said they had hurt, while 26% said they made no difference.
The new poll asked a broader but similar question. It posed two statements to voters. The first was, “Foreign trade has been good for the U.S. economy, because demand for U.S. products abroad has resulted in economic growth and jobs for Americans here at home and provided more choices for consumers.”
The second was, “Foreign trade has been bad for the U.S. economy, because imports from abroad have reduced demand for American-made goods, cost jobs here at home, and produced potentially unsafe products.”
Asked which statement came closer to their own view, 59% of Republicans named the second statement, while 32% pointed to the first.

I don’t think these questions are the best framed. They seem kind of load in that it states “foreign trade” instead of Free Trade, or NAFTA. But, the qualifications I’m sure are what the people responded to.

From Fortune Magazine, January, 2008:
This is a poll of the general public.

With much of the country worried about the state of the economy, many (67%) Americans say they now closely follow news about US trade policy with foreign countries. Americans see the current trade policy as a reason for the economic woes the US is currently facing.
Almost 7 in 10 (68%) Americans believe international trade benefits other countries more than it benefits the United States.
International trade is seen as having a largely negative impact on American workers (78% negative) and the Untied States as a whole (63%).
Eight in ten Americans (79%) feel the US Government has not done enough to help workers who have lost their jobs to increased foreign competition. A majority of Americans would support the following proposed policies aimed at helping workers who have lost their jobs to foreign competition and outsourcing:

Policies with the greatest amount of support include: providing special training programs (90% support), providing tax incentives for companies to relocate to areas where workers have lost their jobs because of foreign imports (84%), allowing imports only from countries that ban child labor (82% support), and allowing imports from countries that meet certain clean air and water standards (78% support).
About two-thirds (64%) of Americans are willing to pay more to keep down foreign competition.

There is a disconnect in the above responses. 90% want training, but in another question about boosting the economy, 41% opposed extending unemployment benefits. Though 67% support public works projects. This shows me that the public has not made the connections between our current trade environment and the economy. But, how about that 64% would pay more to keep down foreign competition. Can you get a more patriotic response? I don’t think the Republican’s had this kind of patriotism in mind.

When it comes to China:
Where a product is manufactured does not impact Americans’ purchasing decisions except when that product is made in China.
Nearly three-in-five (57%) Americans are less likely to buy a product if it is made in China.
When products are manufactured in other areas, such as Eastern Europe (57%), Western Europe (55%), Canada (53%), India (52%), Africa (51%), Mexico (48%), Japan (47%), and South Korea (46%) nearly a majority say it doesn’t matter.

I can ‘t imagine that people are specifically boycotting Chinese made goods. Walmart et al would be in trouble. I think this is more of a gut response.

Over all, the public is waking up and seems more sophisticated in their understanding than I believe the Beltway crowd is willing to accept. But, I believe some work needs to be done so that they connect the dots of the US economy as a function of trade policy. I would like to see a de-emphasis of the fear and a disconnecting of foreign trade equals free trade policy. I really don’t believe anyone is against trading, they just have a major problem with the current rules and the referees.

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Tic Tac Toe, Supreme Court style

Bribes, payola, favor of the physical kind? Forget-about it. Just put the right person in the appropriate agency, preferably a person from the line of business the agency is to regulate. But, for extra insurance over the long haul, with a little luck of timing you get to fix the legal issue almost permanently: supreme court justices.

Justices Make it Tougher to Sue Makers of Medical Devices

The case has significant implications for the $75 billion-a-year health care technology industry, whose products range from heart valves to toothbrushes. In a recent three-month span, federal regulators responded to over 100 safety problems regarding medical devices.

At issue before the Supreme Court was whether the estate of Charles Riegel could sue a company under state law over a device previously cleared for sale by federal regulators. State lawsuits are barred to the extent they would impose requirements that are different from federal requirements, said the ruling by Justice Antonin Scalia.

In dissent, Justice Ruth Bader Ginsburg said that Congress never intended “a radical curtailment of state common-law lawsuits seeking compensation for injuries caused by defectively designed or labeled medical devices.”

But Scalia, in response, said, “It is not our job to speculate upon congressional motives.”

The Bush administration sided with industry, saying unfavorable state jury verdicts would compel companies to alter product designs or labels that had already gotten FDA approval.

Hey, the government said it was good, what the f#$k is your problem?

Well, besides lending its self to a commentary of fascism , or that all the court is saying is that congress needs to do a more complete job, or that this represents another major blow for our constitution in that the government is failing to respond to the people, this is the manifestation of gamesmanship having fully ascended to our final stop gap measure. I forget who, but a commenter stated that law suits are the free market response to a lack of government regulation (I think I have it corret). If true, then the free market is truly dead and it has been killed by the most effective means of all; legal tic tac toe. We have been observing it in congress for years, with it most refined and skillfully played currently.

Here’s how you play it. I ask you a question literally: X. You respond literally: X. I say no, I was asking figuratively: O. Everyone knows that you can not win it. But, and it’s a big BUT, the purpose of this version of tic tac toe is not to win. It is to perpetually play the game. Just keep on blocking. It can be played with me asking a question: O, feeling you out. You respond: X. I think Ok and ask it again as you have responded: X. You respond: O.

Think I’m wrong? Then think about the hearings for the supreme court justices. Think about the AG performance concerning torture. Think about the definition of “is”.

This form of tic tac toe servers a very specific purpose. It forever releases the player from being responsible. You can never fully come to terms with a person who’s entire approach to life is to perpetually play tic tac toe because there is no way to win the game of tic tac toe. You can only move beyond them. Stop playing the game. For a society with a form of governance like ours, it means voting. Voting not to approve those who do not answer the question as a responsible person. Holding in contempt, etc. For me it was a divorce.

updated to finish the last paragraph.

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