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

Human capital is where it’s at!

Continuing from my last posting, I stated the World Bank has seen the light. It has put out a report: Where is the Wealth of Nations?
Reason Online has an interview with the prime author Kirk Hamilton.

Oil, soil, copper, and forests are forms of wealth. So are factories, houses, and roads. But according to a 2005 study by the World Bank, such solid goods amount to only about 20 percent of the wealth of rich nations and 40 percent of the wealth of poor countries.

So what accounts for the majority? World Bank environmental economist Kirk Hamilton and his team in the bank’s environment department have found that most of humanity’s wealth isn’t made of physical stuff. It is intangible…Hamilton’s team found that “human capital and the value of institutions (as measured by rule of law) constitute the largest share of wealth in virtually all countries.”

The World Bank study defines natural capital as the sum of cropland, pastureland, forested areas, protected areas, and nonrenewable resources (including oil, natural gas, coal, and minerals). Produced capital is what most of us think of when we think of capital: machinery, equipment, structures (including infrastructure), and urban land. But that still left a lot of wealth to explain. “As soon as you say the issue is the wealth of nations and how wealth is managed, then you realize that if you were only talking about a portfolio of natural assets, if you were only talking about produced capital and natural assets, you’re missing a big chunk of the story,” Hamilton explains.

The rest of the story is intangible capital. That encompasses raw labor; human capital, which includes the sum of a population’s knowledge and skills; and the level of trust in a society and the quality of its formal and informal institutions. Worldwide, the study finds, “natural capital accounts for 5 percent of total wealth, produced capital for 18 percent, and intangible capital 77 percent.”

For under developed or undeveloped countries you can see what direction they have to go in. But what about our country? We have had discussions about infrastructure. We have talked about the need for education. When I skimmed the report (200+ pages), savings was a must in order to be able to invest in the intangible capital. We have debated the share of benefit a person receives from the country’s infrastructure and institutions based on the wealth and/or income they control. We always argue about where growth comes from such that it raise all boats. (Sing that jingle!) And there is the “free market” debate revolving around regulation. Oh that nasty governance issue! If only we hadn’t signed on to form a more perfect union.

My quick assessment of this report is that it is a testament to the misdirection of our policies. We do not make money from money even though we have been trying to. You did catch the reference to “labor”. These breakouts of wealth suggest that there is a bottom limit to taxation as taxation reflects our investment in us. In the study, European countries dominate the top wealth and England is not in the top 10. This report implies that the wealthy do benefit more from the country’s structure and investment because the majority of their wealth is from this “intangible capital”. The few of the wealthy have accumulated their wealth from the investment of the many in the intangible. It also means capital gains should be tax equal to labor if not higher.

Rich countries are largely rich because of the skills of their populations and the quality of the institutions supporting economic activity,” the study concludes. According to Hamilton’s figures, the rule of law explains 57 percent of countries’ intangible capital. Education accounts for 36 percent.

With only 18% of wealth from produced capital and less from natural resources as a country becomes wealthier, freeing up money to produce money as we have been promoting is very poor investment strategy it would seem when 77% of our wealth is from the human element. In a broad sense, we are talking about what ideology concerning the conduct of human life works best to produce wealth.

An economy with a very efficient judicial system, clear and enforceable property rights, and an effective and uncorrupt government will produce higher total wealth. For example, Switzerland scores 99.5 out of 100 on the rule of law index and the U.S. hits 91.8. By contrast, Nigeria gets a score of just 5.8, while the war-torn Democratic Republic of the Congo obtains a miserable 1 out of 100.

It is not just that we need to invest in education,or just have a legal system or just fix the bridges. These can be measured as noted in the World Bank Doing Business chart.

“Trust” seems to be the real intangible the report is talking about. We as a whole can be educated to the hilt, but if we can’t trust that our efforts will be put to constructive use, we have problems. Think habeas corpus, FISA, election fraud, threatening of the press, intimidation of speech, extension of free speech to none human entities, the equating of one voice-one vote to spending of one’s money, K Street project, etc. Think of the use of fear. If only a few are educated to the hilt or have access to the governance, we can not build capital.

If the country is 100 people large, but only 10 trust each other to do for each other, then how much wealth can they actually build if 93% of the 77% of intangible capital is related to law access (trust) and education (the removal of fear; trust) of the populace? But then, our founders seemed to have already reasoned this. Jefferson started the free education to including college!

So why should this report seem so “new”. This makes me think of the years of government bashing we have been hearing from the republican side. Reagan’s infamous “nine most dangerous words in the English language: I’m from the government and I’m here to help you.” It makes me realize we have to dump the Bush/neocon ideology here and in our foreign policy if only to remove the fear so that trust can return.

Mr. Hamilton’s example of the difference in thinking is in when he discusses pollution as a resource management issue:

It’s not a pollution problem; it’s a natural resources management problem. How do you maintain soil quality? How do you generate profits with the assets that you have, which in this case is land that can be invested in other things? The problem in China is they’ve figured out how to grow 9 percent a year pretty successfully but they’re now facing the environmental consequences of uncontrolled growth.

This is policy that he is talking about. Policy of what to spend on and policy governing relationships both boiling down to regulation. (What was that Milton quote the other day?)We’re talking government. I interpret this report as making a case that shrinking government to where it can be drowned in a bath tub is not the way to build wealth. The market will not solve our problems of growth for us. It is not the answer to Save the Rust Belt’s question of how to save the rust belt? We have to do it and we have to do it in a manor that is inclusive for that is the only way to maximize the “intangible capital”. It also means we have to do as Cactus is attempting to do; qualify our policy results related to specific ideology. Just charting to see what GDP is doing or just looking at supply and demand theory won’t do it. That’s just bench racing.

The World bank has done some qualifying and changed their ideology:

Hamilton: In the old days, we thought if you built the infrastructure then development would come-the Field of Dreams model of development. It turns out to be a lot harder than that.

Dare I suggest that the World Bank has discovered that an economy exists for our benefit and not for it’s own sake? Maybe they read our Declaration and our Constitution.

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Money from money? Not good.

On September 28th Bill Moyers’ guest was John Bogle. You can see the interview or read the transcript from here.

The setup for the interview is about private equity firms and he mentions the Sunday NY Times front page article: At Many Homes, More Profit and Less Nursing.

His introduction of Mr. Bogle is:

It’s this kind of capitalism that drives John Bogle up the wall, as you’re about to learn. John Bogle believes owners should be in charge — and accountable. He’s known and respected world-wide as the father of index funds and the founder of The Vanguard Group, one of the largest mutual funds anywhere, with over a trillion dollars in assets.

I make no bones about it. My opinion is that the focus is currently wrong 1. as it relates to purpose of an economy and 2. by the philosophy that studies it: economics. The focus of understanding resulting in the judgment of an economy, should be in how successful it is in fulfilling these two aspects of the constitution: insure domestic tranquility, promote the general welfare.

I’ll put it this way: to what purpose is there to knowing how to make horse power, greater efficiency, greater durability, the relationship of the parts in motion, the chemistry of fuels, the metallurgy, flow dynamics, etc., etc., etc. if not to serve people? Just because? Just to make more?

So picture me in my recliner (be kind), suspicious of what I will hear when Mr. Moyers asked:

BILL MOYERS: What should be the dominant? What is the job of capitalism?

JOHN BOGLE: Well, ultimately, the job of capitalism is to serve the consumer.

WHAT?!!!!!!!! There is someone with more money than God that thinks like me? But…is there a but? Don’t tease me like this. I’m the one saying we are making money from money and that such is of no substance especially as it relates to our purpose (see US Constitution).

Within his answer is:

But, we’ve moved from that to a big capital accumulation — self interest — creating wealth for the providers of these services when the providers of these services are in fact subtracting value from society. So, it doesn’t work.

You can mail my PhD diploma — thank you very much, to: … : )

He notes that Lord Keynes has gotten “misshapen”. How?

JOHN BOGLE: Well, it’s gotten misshapen because the financial side of the economy is dominating the productive side of the economy…We’ve become a financial economy which has overwhelmed the productive economy to the detriment of investors and the detriment ultimately of our society.

How bad is it?

It’s just gotten totally out of hand. My estimate is that the financial sector takes $560 billion a year out of society. Five hundred and sixty billion.

Did I hear this right, focusing on making money from money is not where it’s at? It’s hurting us?

I want to come back to the difference between the financial system and the productive system. The productive system adds to the value of our economy. And, by and large, the financial system subtracts. And, yet, it’s growing and growing and growing. And this short term thing where short term orientation in which trading pieces of paper is regarded as a social value. It is not a social value.

But what about labor? Do those at the top really get what they deserve?

And they get enormous amounts of pay for actually doing very little. I’m a
businessman. Listen, we all– we chief executives get an awful lot of credit
that we don’t deserve. Real work in companies is done by the people who are
getting themselves together and doing the hard work of making companies grow–

So, Milton knew of externalities, and a need for governance. Although it’s already in the constitution and should not be debatable. Cactus’ is showing us ideology matters. And now a person who makes money from money is telling us the current ideology has gone to far. What’s next? The World Bank seeing the light? Glad you asked. That is exactly what is next.

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Doing Business, World Bank ranking

Just a little break from the usual. Did you know you can pay your taxes easier in Iraq than in the US?

I stumbled across this today. It is the World Bank page on Doing Business. It ranks 178 countries on 10 topics. You can resort the order depending on 3 different settings. When you initially open the page you see the overall order.

Interestingly, the US with it’s over all ranking of 3, under ease of paying taxes: 76th. Iraq ranked 37 under this topic and is not even at the bottom over all! It even ranks 40th on registering property. But it is 164th on starting a business and once you start it, you probably can’t close it as that topic ranks 178 (the bottom).

Have fun.

Update: There is a report that goes along with this. Doing Business in 2005

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Even earlier Cheney

I have intentionally let others post about the politics of this war wanting to keep the focus on economics as that is what attracts me to this blog. BUT…for all the postings here that have resulted in supportive comments for the war, please explain this.

Dick Cheney at the Economic Club of Detroit in 1992 (2 years earlier than the 94 Cheney). Note that Cheney refers to the objectives and achieving them. Note the mention that going in would have resulted in the “disintegration of the Arab coalition”. “The world was with us” was not a post 9/11 phenomenon. It was who we always were.

“It’s not the kind of situation where you could pull up in front of the presidential palace and say common Saddam you’re going to the slammer.”

“For the 146 Americans who were killed in action and for their families it was not a cheap or a low cost conflict.”

I new when Bush was first running he wanted a war. It was in what he was saying. My sweety and I wonder how those supporting him could not see this assuming a reasonable person would not want a war talking president when there was no war potential in sight.

So please (I’m being polite here) tell me how this current war was undertaken for my benefit? Before you hit that comment button, read this too.

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Greenspan vs Klein on Democracy Now

Just an FYI related to recent postings here. Democracy Now for 9/24 has about a 38 minute discussion with both Naomie Klien and Alan Greenspan. The remaining minutes is with Jeremy Scahill.

This particular exchange caught my attention:

AMY GOODMAN: Alan Greenspan, you write in the end of your book, “A Federal Reserve System that will be confronted with the challenge of inflation pressure and populist politics that have been relatively quiescent in recent years” is something that is very significant. You say the year — the United States in 2030 is likely to be characterized by populist politics that have been relatively quiescent in recent years. How important is populist politics, and what do you envision those to look like?

ALAN GREENSPAN: Well, remember what populist politics is. It’s a very special brand of short-term focus, which invariably creates very difficult long-term problems. A goodly part of the book, as you know, is written about how populism has gripped, say, many Latin American countries to their detriment. And the term “populist politics” is essentially another way of saying short term versus longer term. And people who emphasize short-term benefits for long-term costs end up with very little in the way of economic growth and prosperity.

Personally, I have never viewed populism as short term viewing. Infact, I read nothing at Wikipedia that suggested such.

Populism is a political doctrine or philosophy that purports to defend the interests of the common people against an entrenched, self-serving or corrupt elite.

I think Mr. Greenspan has a little projection (in pysch terms) happening here. Naomie Klein furthers the question and raises his policies as playing a part in the rise of economic populism. His answer, we have bad education. She follow up on his example of Latin America:

But you also mentioned economic populism in Latin America in your book, and you blame it for inflation episodes and the collapse of regimes and the toppling of governments, and one of your examples was Chile in the 1970s. Was Chile — was Salvador Allende’s regime toppled because of inflation, or didn’t the CIA have something to do with that?

ALAN GREENSPAN: Well, look, let’s — I’m using Latin America as an example. The key question is not Latin America. Let’s get back to the United States. Let’s get back to the world at large and face the issue of populism here. Remember, the populist issue in Latin America goes back to the roots of Spanish and Portuguese colonization.

I’m sorry, but if that answer wasn’t a classic “troll” response I don’t know what is.
Enjoy.

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Growth, more than freedom of capital

We have been discussing a lot of economics through the political viewer lately. And I certainly have laid my point of view out there, but I also like the theory discussion. I like to think and know how stuff works or how someone interprets what they see. I believe discussing theories leads to better political discussion. With that, I hope this might inspire some tangent topics into the political here at AB.

This is a paper out of France by Robert U Ayres & Benjamin Warr titled: Accounting for Growth: The role of physical work

They suggest the increasing extraction of work from energy do to the increasing development of energy use is the missing factor that explains our growth.

“However the major result of the paper is that it is not `raw’ energy (exergy) as an input, but exergy converted to useful (physical) work that – along with capital and(human)labor – really explains output and drives long-term economic growth.” “However, if we replace raw energy as an input by `useful work’ (the sum total of all types of physical work by animals, prime movers and heat transfer systems) as a factor of production, the historical growth path of the US is reproduced with high accuracy from 1900 until the mid 1970s, without any residual except during brief periods of economic dislocation, and with fairly high accuracy since then.”

There key concept is the definition of exergy.

“The formal definition of exergy is the maximum work that could theoretically be done by a system as it approaches thermodynamic equilibrium with its surroundings, reversibly. Thus exergy is effectively equivalent to potential work. There is an important distinction between potential work and actual work done by animals or machines. The conversion efficiency between exergy (potential work), as an input, and actual work done, as an output, is also an important concept in thermodynamics. The notion of thermodynamic efficiency plays a key role in this paper.
To summarize: the technical definition of exergy is the maximum work that a subsystem can do as it approaches thermodynamic equilibrium (reversibly) with its surroundings.”

This summarizes their theories development:

The supposed link between factor payments and factor productivities gives the national accounts a direct and fundamental (but spurious) role in production theory. In reality, however, (as noted in the introduction) the economy produces final products from a chain of intermediates, not directly from raw materials or, still less, from labor and capital without material inputs. In the simple single sector model used to `prove’ the relationship between factor productivity and factor payments, this crucial fact is neglected. Allowing for the omission of intermediates (by introducing even a two-sector or three-sector production process) the picture changes completely. In effect, downstream value-added stages act as productivity multipliers. This enables a factor receiving a very small share of the national income directly, to contribute a much larger effective share of the value of aggregate production, i.e. to be much more productive than its share of overall labor and capital would seem to imply if the simple theory of income allocation were applicable [Ayres 2001a].

If this is true, then we have a bigger problem concerning how to keep this boat floating than subprime lending and fed rates. We have a policy problem. And that speaks to all the work Cactus has done about presidents.

Related to Cactus’ work, this chart from the this paper is interesting. It is the unexplained portion of growth by their theory.

Note that this phenomenon begins right about where we see the lowest point of the top 1% share of income, just after we see the split of productivity from wages and the beginnings of the supplyside policies and a change to a net debtor nation. The authors suggest some of this is do to conservation.

“We conjecture that a kind of phase-change or structural shift took place at that time, triggered perhaps by the so-called energy crisis, precipitated by the OPEC blockade. Higher energy prices induced significant investments in energy conservation and systems optimization.”

They further refine the explanation with:

“The marginal productivity of capital has started to increase whereas the marginal productivity of physical work – resulting from increases in the efficiency of energy conversion – has declined slightly.”

Could this marginal capital productivity increase be a result of our policy focus on capital as the driver of growth? Money from money? Are we seeing in their explanation that part of our growth that is borrowed from our future, thus artificially created?
As I read this paper it made me think about the European economies who have been focusing on alternative energy development, wind in Denmark, solar in Germany, (Japan), wave generation in England and northern parts, geothermal in Iceland/Greenland. This paper to me suggests that this coming election has at the core of all our topical issues (health care, war, inflation) energy. As the authors conclude keeping in mind peak production issues and the declining output of Saudi’s fields:

“From a long-term sustainability viewpoint, this conclusion carries a powerful implication. If economic growth is to continue without proportional increases in fossil fuel consumption, it is vitally important to exploit new ways of generating value added without doing more work. But it is also essential to develop ways of reducing fossil fuel exergy inputs per unit of physical work output (i.e. increasing conversion efficiency). In other words, energy (exergy) conservation is probably the main key to long term environmental sustainability.”

Is China in trouble? There is a start of a discussion about peak oil and it’s potential effect here.

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Never thought I’ld make it to the aristocrat class

We have a lot of discussion about the moral hazard of Iraq, related to life (the trump card), but I think we need more discussion concerning the policies related to the flow of money because after all, this is an econo blog. Thus, these two articles. The first one: The Great Iraq Swindle (RollingStone) and the second one: The Mercenary Revolution (The Indypendent).
First, are you an aristocrat?

Both of these are reporting on the extent of privatization that has taken place concerning our security. I’ll get right to my point of the question: We are paying people dirt to do our dirty work. We have collectively become a nation that insulates it’s responsibility for all that is a military involved exercise by buying our war making. We just go to War is Us, sign a contract and wah la, we have the fight’n 9th or 99th or 101 or what ever and no one has to ever worry again about that little question of “did you serve?” Nope, we can now without the risk of harm to our person or our mind bench race our wars. And the race is not about winning the ideologic battle of democracy vs something else. No, it’s about getting yours.
From the first article, The author’s sums it up:

It was an invasion of the federal budget, and no occupying force in history has ever been this efficient.
In Iraq the lines between essential government services and for-profit enterprises have been blurred to the point of absurdity — to the point where wounded soldiers have to pay retail prices for fresh underwear, where modern-day chattel are imported from the Third World at slave wages to peel the potatoes we once assigned to grunts in KP, where private companies are guaranteed huge profits no matter how badly they fuck things up.
This is the triumphant culmination of two centuries of flawed white-people thinking, a preposterous mix of authoritarian socialism and laissez-faire profit­eering, with all the worst aspects of both ideologies rolled up into one pointless, supremely idiotic military adventure — American men and women dying by the thousands, so that Karl Marx and Adam Smith can blow each other in a Middle Eastern glory hole.

We’re taking about profit­eering at the expense of the commons. It is our budget going to hell. It is our future spent today. It is our children carrying us. To me, it is selfishness to the extreme. It is what I think of with the use of the word aristocrat. That it is done in our name being that we are the government means we are aristocrats in persona.
As aristocrats, we are keeping it close to family:

[Bush] named Jim O’Beirne at the relevant evaluation desk in the Department of
Defense….he sent a twenty-four-year-old who had never worked in finance to
manage the reopening of the Iraqi stock exchange, and appointed a recent graduate of an evangelical university for home-schooled kids who had no accounting experience to manage Iraq’s $13 billion budget. James K. Haveman, who had served as Michigan’s community-health director under a GOP governor, was put in charge of rehabilitating Iraq’s health-care system and decided that what this war-ravaged, malnourished, sanitation-deficient country most urgently needed was . . . an anti-smoking campaign.

Throughout the article there is the theme of exemption, exception, and favoritism. Are these not the means of play by aristocrats? Referring to the Custer Battles company:

The Bush administration not only refused to prosecute the pair — it actually tried to stop a lawsuit filed against the contractors by whistle-blowers hoping to recover the stolen money. The administration argued that Custer Battles could not be found guilty of defrauding the U.S. government because the CPA was not part of the U.S. Government.

A judge set aside the jury’s guilty verdict. Oh the life of an aristocrat.

There is more, read the article. Half way through it is suggested that these activities are a result of a lack of patriotism. But, aristocrats are very patriotic. One might say super patriotic. Are we not?

None of this could take place without the removal of the responsibility for the physical execution of a military exercise via privatization of the military. Why do we not see more protesting? Because we are all allowed to be aristocratic in our relationship to this military adventure. From the second article:

If you think the U.S. has only 160,000 troops in Iraq, think again. With almost no congressional oversight and even less public awareness, the Bush administration has more than doubled the size of the U.S. occupation through the use of private war companies. There are now almost 200,000 private “contractors” deployed in Iraq by Washington. This means that U.S. military forces in Iraq are now outsized by a coalition of billing corporations whose actions go largely unmonitored and whose crimes are virtually unpunished.

The single largest U.S. contract for private security in Iraq was a $293 million payment to the British firm Aegis Defence Services, headed by retired British Lt. Col. Tim Spicer, who has been dogged by accusations that he is a mercenary because of his private involvement in African conflicts. The Texas-based DynCorp International has been another big winner, with more than $1 billion in contracts to provide personnel to train Iraqi police forces, while Blackwater USA has won $750 million in State Department contracts alone for “diplomatic security.”

We’re even paying people outside the military to guard our generals!

What is unique about this period of aristocratic war playing is that the aristocrats are not just hiring out the war labor, but are the company them self and thus as is consistent with aristocratic play, exempt them self and by extension anyone they pay from the hell they create.
We are holding no one responsible.

Dozens of American soldiers have been court-martialed — 64 on murder-related charges alone — but not a single armed contractor has been prosecuted for a crime against an Iraqi. In some cases, where contractors were alleged to have been involved in crimes or deadly incidents, their companies whisked them out of Iraq to safety.
Rep. Jan Schakowsky (D-Ill.), a leading member of the House Select Committee on Intelligence, which is responsible for reviewing sensitive national security issues, explained the difficulty of monitoring private military companies on the U.S. payroll: “If I want to see a contract, I have to go up to a secret room and look at it, can’t take any notes, can’t take any notes out with me, you know — essentially, I don’t have access to those contracts and even if I did, I couldn’t tell anybody about it.”

This is not Bush et al alone. He is only the elected executive with an elected board (congress) representing us in our governance of us. So, as he and they act in an aristocratic style, we are too acting in an aristocratic style. Sounding convoluted? Yes, it is what comes of a means constructed to immune one’s self from one’s actions.

The article also discusses the business model for our new privatization of all that is military. It is consistent with what we have discussed concerning globalization. It is referred to as the “branding” of the military, “a hollow company like Nike”. And as would be expected, they are doing it on the cheap by outsourcing the labor. Literally hiring military personal from defunct 3rd world dictatorships.

On so many levels, morally, ethically, what ever you call it, not being responsible for your own actions is wrong. Some may think they are exempt from being labeled an aristocrat because all these aristocratic actions Bush et al are doing are considered to be outside the government by Bush et al. If it were only so easy. Darn government of, for and by the people!

But, let’s consider what we have created with our aristocratic attitude that is more germane to this blog. From The New Yorker, Hendrik Hertzberg reports:

At a forum on foreign policy, Lorelei Kelly, a former Capitol Hill
national-security aide who blogs at Huffington Post and democracyarsenal…

In that connection, she made another point that was new to me. The military-industrial complex produced by the Cold War …was and is able to prosper in the absence of actual fighting. The purpose of piling up all those missiles targeted on the Soviet Union, after all, was to avoid using them. But the kind of privatization represented by the gun-toting Iraq war contractors has created what she called “a live war military-industrial complex”—that is, an industry that depends for its profits, even its existence, on hot wars, wars that kill people. “Free-market conservatives have given us this,” she said. “In conversations with military people, it’s an opening to all sorts of other issues.”

We created this now multibillion dollar, job creating, money making new addition to our GDP — how do we now get rid of it when Iraq is done?

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Make a better election choice

Just want to let everyone here know of this web site I heard about. It is My Election Choices.com. Their opening statement:

Isn’t your vote for President worth more time than a game of Sudoku?

This site helps you learn which candidates most agree with you. The creators of the site have taken statements made by all the presidential candidates and classified them into 18 categories. You then check off the statements you agree with. You are blinded as to which candidate made the statement.

I have done 2 categories that each had 3 pages of statements. When you click Finish, you are taken to a page that has a bar chart showing you the relationship of agreement you have with each candidate. As you complete a category, it adjust your chart to reflect the summation of agreement with each candidate.

I have completed On Taxes, Spending and Fiscal Policy and On Trade and Globalization. Interestingly, so far I have agreement on 8 Clinton statements, 7 Ron Paul, 5 each for Dodd, Hunter, Richardson and Tancredo. It goes down from there with the other candidates to where I have only 1 statement of agreement with Biden and Brownback. I have to say, some of the statements I agreed with I did not expect to have been made by the particular candidate. You are shown in the results who made each statement and the percent of agreement to date of all those who have completed said category.

You can also see what the cumulative is for all those who have completed all the categories based on topic, gender or most popular category. Currently the leading candidate at 27% based on topic is Dodd. At 23% is Kucinich, Hunter, and Huckabee. Clinton is at 11% as is Gravel!

I think this site is just what has been missing in our modern elections. It give one an opportunity to work through all the candidates’ positions while minimizing the prejudice you might have already assigned to a candidate. It is a way of cutting out the coloring that our media adds to our learning about a candidate.

I encourage you to give it a run. But, as they suggest, only pick one or 2 categories to start. You can go back anytime and pick up where you left off. I think you’ll be pleasantly surprised. Enjoy.

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Guess we don’t want all that Globalizing has to offer?

By way of Crooks and Liars comes an article about our declining international tourism industry. This article is a personal account of stopping in the US as the author travels from London to New Zealand.
The first paragraph is the econ specifics:

The travel and tourist industry is one of the United State’s biggest money-makers, generating $103 billion in tax revenue every year. Without this tax revenue, every American household would pay nearly $1,000 more in taxes every a year. But while the travel business is flourishing internationally, tourism to America has been on a steep decline, dropping 36 percent between 1992 and 2005, with a loss of $43 billion in 2005 alone. The nation’s international tourism balance of trade declined more than 70 percent over the past 10 years – from $26.3 billion in 1996 to $7.4 billion in 2005.

Don’t stop there. Read about how the author’s fellow passengers were cataloged via photo and finger prints even though they were not visiting the USA. They were just stopping over for fuel. Is it any wonder we are seeing such a decline in tourism? One passenger summed it up:

‘You bloody Yanks seem to think terrorism is something new and only ever happens to Americans,’ he groused to me… ‘We’ve had the IRA and the French have the Algerians and the Spanish have ETA. Now you know what the rest of Europe’s been living with for the last few hundred years. Why don’t you lot just grow up?’

I know our reputation in the world has become suspect via what is reported, but people with first hand accounts such as what these passengers experienced I would assume are more probative when judging us. What these passengers experienced is the results of setting policy as driven by paranoia. I personally do not want to be associated with such a mind set. At the same time, what the heck happened to all that we learned from the focus on paranoia and it’s harm in the 60’s? I can recall many bands having songs about it as we became aware of how it was driving policy then. This is one of my favorites:
Grand Funk Paranoid:

Did you ever have that feeling in your life That someone was watching you? You don’t have no reason that’s right But still he’s there watching you Someone is waiting just outside the door To take you away

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Social Security, the new method of income redistribution

Get this. The problem is that globalization is being threatened, all that good could be lost. The solution; Social Security.

In the July/August issue of Foreign Affairs (published by the Council of Foreign Relations) is an article: A New Deal for Globalization by Kenneth F. Scheve is Professor of Political Science at Yale University. Matthew J. Slaughter is Professor of Economics at the Tuck School of Business at Dartmouth.
Seems some people somewhere are getting concerned that their pet project might be getting derailed.

Advocates of engagement with the world economy are now warning of a protectionist drift in public policy. This drift is commonly blamed on narrow industry concerns or a failure to explain globalization’s benefits or the war on terrorism. These explanations miss a more basic point: U.S. policy is becoming more protectionist because the American public is becoming more protectionist, and this shift in attitudes is a result of stagnant or falling incomes.”

The authors say they don’t know why the incomes are falling, that there are no clear answers:

“Over the last several years, a striking new feature of the U.S. economy has emerged: real income growth has been extremely skewed, with relatively few high earners doing well while incomes for most workers have stagnated or, in many cases, fallen. Just what mix of forces is behind this trend is not yet clear, but regardless, the numbers are stark.”

First — “new feature”? Did they not read about the early years of the rise of the industrialists and the division in income way back when? Or is it that they as others took for granted that those making the money via globalizing their operations were going to be nice to those who worked for them at home and share the spoils via wages. Now that would have been a “new feature”. Being nice that is. I know, maybe they just thought everyone could and would outsource their own labor.

Actually, they do know about the old days:

“By some measures, inequality in the United States is greater today than at any time since the 1920s.”

What’s the solution to rising protectionism talk? Well, first what is not going to work (read carefully all you who think it’s just a matter of the populace getting off their intellectually lazy butts):

“They must also recognize that the two most commonly proposed responses — more investment in education and more trade adjustment assistance for dislocated workers — are nowhere near adequate. Significant payoffs from educational investment will take decades to be realized, and trade adjustment assistance is too small and too narrowly targeted on specific industries to have much effect.”

So, go to school, get a job is not it. Darn! The solution envelop please, (I’m so nervous):

“The best way to avert the rise in protectionism is by instituting a New Deal for globalization — one that links engagement with the world economy to a substantial redistribution of income. In the United States, that would mean adopting a fundamentally more progressive federal tax system.”

WHAT!!!!!!!!!!!! REDISTRIBUTION?

“The notion of more aggressively redistributing income may sound radical, but ensuring that most American workers are benefiting is the best way of saving globalization from a protectionist backlash.”

And they said they didn’t know why “income growth had been extremely skewed.” Well, if they didn’t know, then how is it they are channeling what was proposed before? They are even referring to it in it’s historically correct name: New Deal.

The article is very basic thinking and made me wonder why does it take 2 professors writing for 6 pages to state what I was taught under the lesson of morals: that is to share and share alike,
And then under the lesson of civics: that is social commons,
Then what I learned in history: Ford paying the help and Roosevelt’s New Deal. Why?

I think the answer is because then they could not write as if skewed income distribution is “a striking new feature” and thus suggest as an example of effecting redistribution by targeting the last remaining New Deal concept expressed in the program commonly called Social Security. They specifically rule out that other monster of a New Deal brain storm:

This does not, however, mean making the personal income tax more progressive, as is often suggested. U.S. taxation of personal income is already quite progressive. Instead, policymakers should remember that workers do not pay only income taxes; they also pay the FICA (Federal Insurance Contributions Act) payroll tax for social insurance. This tax offers the best way to redistribute income.”

Well if that is not the ultimate bastardization of the purpose of Social Security. It’s now proposed to use it as an income redistribution machine.

Think I’m being to distrusting?

“In many ways, today’s protectionist drift is similar to the challenges faced by the architect of the original New Deal. In August 1934, President Franklin Roosevelt declared:
“Those who would measure confidence in this country in the future must look first to the average citizen. . . .”

See, they know the answer. They know exactly what they are doing here. By the way esteemed professors, stupid is not written on our foreheads.

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