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

Experiment: How would you advise Sen. Clinton?

Twice now in this political session we have had the opportunity to move beyond the Carl Rove/Frank Luntz school and system of communication. The first was Sen. Obama’s speech on race. The second is this current statement discussed in PGL’s post.

I understand the current structure of our MSM and their strategy to earning viewers and thus money; stir the crap. Even Olberman had one guest ask if the public was smart enough to understand Sen Obama’s speech on race as oppose to running after the handoff of the baton of: Or, at this moment, in this election, we can come together and say, “Not this time.” This time we want to talk…

That was it. The biggest opportunity to step out from the focus on the word or words and into the focus on the message the person speaking was attempting to relay. Less emphysis on one’s interpretation of the words used and more focus on the interpretation used by the one you are communicating with for the sole purpose and desire to fully commune.

This current statement by Obama is now the second opportunity for the US to step away with no penalty of loss of honor from the inward focus on the word/words into the outward focus on the message.

I’m not really expecting the MSM to make the change. Would be nice, but it will not happen until our elected ones make the change. That Sen. Clinton did not and has not recognized these two opportunities and run with them is evidence of the lie of her political prowess. She has failed to sense that the common thread in all of the “change” dialog regarding political change evolving into policy change is the cessation of the focusing on the word/words for the sake of winning the argument. Such a focus is a selfish life approach.

Our loss of respect in the world, our feelings of distrust, our decline of a sense of comfort, even the bank issue, the war, all of it began with shift to an approach of dialog of word/words. Our dialog has been dominated for 3 decades by a style of communication that manifests out of selfishness. It is the “lazy” in the presentation of the fat American, the me generation, the welfare queen, the illegal immigrant.

It’s easier to focus on the word. Every word has an emotional response and every emotional response has a physical response. It is physiology. Thus it is simple to generate a belief in one’s self that you are what I say you are and to feel good and confident in your righteousness. It is the style of dialog one becomes engaged in when holding a conversation with another who is drunk or stoned, or high or manic, or schizophrenic or panicked or shocked. It is the irony of the framing of Bush as being capable of relating because you could sit and have a beer with him. You can. You just won’t be able to communicate to any point of resolution. With no ability to truly comprehend the message of the one you’re talking to, you have no ability to trust that person. Consequently you have no ability to commune with that person. In terms of economics, no ability to trade.

Sen. Clinton has shown twice now that she either: 1. does not understand this most basic of lessons of communication or 2. does understand, but for selfish intent will use it against those she professes a desire to serve or 3. does understand, but has little faith or trust in those she professes a desire to serve.

With that, how would you advice Sen. Clinton to respond to Sen. Obama’s statements knowing that he put the following out there: Or, at this moment, in this election, we can come together and say, “Not this time.” This time we want to talk…
END

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US Legislators Profiting from War? Say it ain’t so, Joe

Seems it’s not just the executive branch and their friends that have “invested” in this war. From IPS comes a news article about the money invested by our legislators.

Members of Congress invested nearly 196 million dollars of their own money in companies that receive hundreds of millions of dollars a day from Pentagon contracts to provide goods and services to U.S. armed forces, say nonpartisan watchdog groups.

The article is based on a report by the Center for Responsive Politics, via their site: Opensecretes.org

Before we get to the meat of this, consider that I found this via Common Dreams.org’ copying the news article. The article is not a US based media article. Oh nooooooooo! It is a nonprofit, global news organization out of Rome publishing an article on a report by a US based watch dog group. THANK GOD FOR THE INTERNET!
Ok, I feel better. Don’t you?

The original article, Strategic Assets has a wonderful chart. Of the top 10 legislators invested in our military industrial complex, can you guess who has the most tied up? A hint: Of the top 10, 3 are democrats and they don’t include Nancy or Diane.

According to the most recent reports of their personal finances, 151 current members of Congress had between $78.7 million and $195.5 million invested in companies that received defense contracts of at least $5 million in 2006. In all, these companies received more than $275.6 billion from the government in 2006, or $755 million per day, according to FedSpending.org, a website of the budget watchdog group OMB Watch.

In 2004, the first full year after the Iraq war began, Republican and Democratic lawmakers—both hawks and doves—had between $74.9 million and $161.3 million invested in companies under contract with the Department of Defense.

Our esteemed colleagues have seem to have no concern about the image such investing may present:

The minimum value of Congress members’ personal investments in these contractors increased 5 percent from 2004 to 2006,…

Granted, some of the companies counted may seem unlikely candidates for being considered defense until you read:

As the military operations in Iraq and Afghanistan have expanded and transformed, so, too, has the need for goods and services that extend beyond helicopters, armored vehicles and guns. Giant corporations outside of the defense sector, such as Pepsico, IBM, Microsoft and Johnson & Johnson, have received defense contracts and are all popular investments for both members of Congress and the general public. So common are these companies, both as personal investments and as defense contractors, it would appear difficult to build a diverse blue-chip stock portfolio without at least some of them.

So, what’s a person to do with their 401K money if they want to be in the good, secure companies but does not want to promote war profiteering? As noted in the article, even without war, the solder needs tooth paste. But we are exercising our military currently and we’re using it up, which means replacement costs are accelerated. Though maybe tooth paste is used at no greater rate. Though we did call in all those reserves. Which might explain Pepsico getting $187 million in 2006 but it does not explain:

In the case of Sen. Jay Rockefeller (D-W.Va.), chair of the Senate Select Intelligence Committee, his stock in Pepsico, which is worth at least $1 million, is actually held by his wife, who is on the food and beverage corporation’s board of directors.

Nor does it explain this:

Petraeus will speak on April 8 and 9 to the Senate Foreign Relations and Armed Services committees. In 2006, members of these two committees had between $32 million and $44 million invested in companies with DOD contracts. Foreign Relations member Kerry’s investments accounted for most of it—between $28.9 million and $38.2 million. Members of the two committees held between $3 million and $5.1 million in defense-only companies.

What is there to say? Military spending of war does increase GDP for the good? Privatization of the military goes far beyond mercenaries? The USA is an economy of war making? It’s just business? I’m a fool for not riding the money wave?

The army and the empire may be falling apart
The money has gotten scarce.

One mans word held the country together
But the truth is getting fierce.

END

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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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