Do you want to find out the truth about the What? I think you should! It's a dreadfully real and frightening story about the precariousness of life. It will teach you the preciousness of your own life and the chances and opportunities that have been afforded you. And it will show you that even with all the obstacles that you have had to face, opportunity is still abounding.
Afterward, you can look into the Valentino Achak Deng Foundation, and know that something good has come out of the terrible suffering that a single man endured in Africa.
Wednesday, August 17, 2011
Friday, August 12, 2011
Cool article about government debt increases
Here's a cool blog post about how much government debt increased under different administrations. It's not the most accurate reflection of a President's actions; a policy that one president enacted might not begin to add to debt until after that President leaves office. For example, Obama already has a higher yearly percentage increase of debt than his forebear, Bush II but most of the policies that add to this debt are the wars and tax cuts which Bush implemented before leaving office. It's a nifty little graph nonetheless.
Thursday, August 11, 2011
GDP as a measure of Economic Health
Amidst a dearth of work in the office, my coworkers and I began to engage in an office taboo: discussing politics in the workplace. One made an excellent point about the state of financial affairs in our country, GDP is the commonly accepted measure for economic health, but she felt it was too simple a measure of economic reality.
Afterall, GDP only considers production as a determinate of economic health. A developed economy like the United States doesn't have the need for tremendous levels of production like a developing country such as Brazil, India or China. So why are developed countries with high standards of living attempting to operate at growth of GDP levels equivalent to the developing world? The standard of living in developing countries is much lower, and the need for basic goods and services much greater in these countries. Their GDP levels are much lower than developed countries. Basically, if incomes in a developed country are already higher, then why is it even important to have high GDP growth if we're already adjusting for inflation?
What exactly does GDP factor in?
Really, the United States has an EXTREMELY healthy economy. So does most of Europe (EU has the #2 largest GDP). What worries economists is not that their GDP might be shrinking, but that it is increasing at a much lower rate than it used to. Is this actually a cause for concern? Per capita, the US is still one of the most affluent countries in the world. The countries with higher per capita incomes all have extremely small populations and half are oil exporters. A lot of those countries may have high per capita incomes but their income disparity is even higher than the US' (which is already high).
US citizens do not need to worry about their economy as a whole, it's already producing an enormous amount every year! So what's the deal, why are Americans not happy if their economy is actually doing really well? As far as I can tell, the reason Americans continue to hurt despite a vibrant economy is that the dividends of production are being felt increasingly by an upper class minority rather than a broader middle class. Put another way, the rich are getting richer, the poor are increasing in number, and the middle is shrinking. As the middle shrinks, the number of families with less money to spend in our economy grows, and they become more dependent on government aid (the government has to spend more).
People spend money in an economy because they have to, the market is our capitalistic means of handling the self-interest of an entire nation's worth of people. The premise of such a system is that people are receiving money for services/goods that they provide, which they can then exchange for the goods/services that they desire. If people are receiving less money for the services they provide, they have less money to spend on all that they desire. And if you're not able to get much of anything that you need to survive, you're going to be unhappy.
Polls claim that Americans are most concerned about the job situation, companies are claiming that Americans aren't spending enough to warrant job creation. Other people claim that the government taxes too much, and that's stopping job creation. Let's remember that we have a booming economy, the biggest in the world by far. Even though it's not growing at the rate it used to, it's still massive and corporations are reaping huge profits. High unemployment exists because corporations, the biggest employers in our country, eek out higher rates of production from fewer employees. Even as employees are working harder than ever, it's the management and executives who are reaping most of the benefits. Our economy is FINE, it's the balancing act that redistributes wealth to lower income earners that is suffering.
One of these balancing acts is the minimum wage. People long ago realized that living in a city like New York would be impossible even with the minimum wage laws Congress has passed. Cities in similar situations have passed living wage ordinances. Here's a cool website that tracks the minimum living wage estimate for any particular geographic region of our country, compared to the actual minimum wage of that State. Our extremely low minimum wage compared to our extremely high per capita income compounded by the fact that almost half of our country is barely earning a living wage means that those lucky few who consider themselves upper income earners are in vastly better shape than the majority!
What has happened here? We are the wealthiest country on Earth. Our economy is booming, don't let any analyst or pundit fool you. Just look at our GDP for crying out loud. GDP doesn't need to grow for it to still be HUGE. And yet, our country has returned to the dark days of the depression and industrial revolution! We are not in the midst of an economic recession. We are in the midst of economic robbery.
Afterall, GDP only considers production as a determinate of economic health. A developed economy like the United States doesn't have the need for tremendous levels of production like a developing country such as Brazil, India or China. So why are developed countries with high standards of living attempting to operate at growth of GDP levels equivalent to the developing world? The standard of living in developing countries is much lower, and the need for basic goods and services much greater in these countries. Their GDP levels are much lower than developed countries. Basically, if incomes in a developed country are already higher, then why is it even important to have high GDP growth if we're already adjusting for inflation?
What exactly does GDP factor in?
- Wages, Salaries, Income
- Corporate Profits
- Interest on Investments
- Farmer's Income
- Income from non-farm unincorporated businesses (small business)
- Savings (ie, investments) - if you have money in a bank account, it's technically not money your earning, only the interest is income which is why that is included in the above and not the investment itself.
- International products owned by the country's company - GDP only reflects domestic products. If China is producing your country's goods, then that's not a domestically produced product. However, the corporation is likely reaping profit and that would be reflected in the GDP? (I dunno)
Really, the United States has an EXTREMELY healthy economy. So does most of Europe (EU has the #2 largest GDP). What worries economists is not that their GDP might be shrinking, but that it is increasing at a much lower rate than it used to. Is this actually a cause for concern? Per capita, the US is still one of the most affluent countries in the world. The countries with higher per capita incomes all have extremely small populations and half are oil exporters. A lot of those countries may have high per capita incomes but their income disparity is even higher than the US' (which is already high).
US citizens do not need to worry about their economy as a whole, it's already producing an enormous amount every year! So what's the deal, why are Americans not happy if their economy is actually doing really well? As far as I can tell, the reason Americans continue to hurt despite a vibrant economy is that the dividends of production are being felt increasingly by an upper class minority rather than a broader middle class. Put another way, the rich are getting richer, the poor are increasing in number, and the middle is shrinking. As the middle shrinks, the number of families with less money to spend in our economy grows, and they become more dependent on government aid (the government has to spend more).
People spend money in an economy because they have to, the market is our capitalistic means of handling the self-interest of an entire nation's worth of people. The premise of such a system is that people are receiving money for services/goods that they provide, which they can then exchange for the goods/services that they desire. If people are receiving less money for the services they provide, they have less money to spend on all that they desire. And if you're not able to get much of anything that you need to survive, you're going to be unhappy.
Polls claim that Americans are most concerned about the job situation, companies are claiming that Americans aren't spending enough to warrant job creation. Other people claim that the government taxes too much, and that's stopping job creation. Let's remember that we have a booming economy, the biggest in the world by far. Even though it's not growing at the rate it used to, it's still massive and corporations are reaping huge profits. High unemployment exists because corporations, the biggest employers in our country, eek out higher rates of production from fewer employees. Even as employees are working harder than ever, it's the management and executives who are reaping most of the benefits. Our economy is FINE, it's the balancing act that redistributes wealth to lower income earners that is suffering.
One of these balancing acts is the minimum wage. People long ago realized that living in a city like New York would be impossible even with the minimum wage laws Congress has passed. Cities in similar situations have passed living wage ordinances. Here's a cool website that tracks the minimum living wage estimate for any particular geographic region of our country, compared to the actual minimum wage of that State. Our extremely low minimum wage compared to our extremely high per capita income compounded by the fact that almost half of our country is barely earning a living wage means that those lucky few who consider themselves upper income earners are in vastly better shape than the majority!
What has happened here? We are the wealthiest country on Earth. Our economy is booming, don't let any analyst or pundit fool you. Just look at our GDP for crying out loud. GDP doesn't need to grow for it to still be HUGE. And yet, our country has returned to the dark days of the depression and industrial revolution! We are not in the midst of an economic recession. We are in the midst of economic robbery.
Wednesday, August 10, 2011
Vacuous Hole
Work can be a great experience. It's chock full of the sort of lessons that school just cannot provide.
It can also, on occassion, be mind numbingly dull. It is the very rare astute and brilliant individuals, who amidst all that inane sleep-inducing nothing time, manage to get something productive done. I am not one of those people.
Shochu
Kiken Na Aneki
Economist
Xianjiang
Specialty cookies
Water recovery!
My blog
Oh well.
It can also, on occassion, be mind numbingly dull. It is the very rare astute and brilliant individuals, who amidst all that inane sleep-inducing nothing time, manage to get something productive done. I am not one of those people.
Shochu
Kiken Na Aneki
Economist
Xianjiang
Specialty cookies
Water recovery!
My blog
Oh well.
Thursday, August 4, 2011
TH White at his best
"Argument is only a display of mental force, a sort of fencing with points in order to gain a victory, not for truth. Opinions are blind alleys of lazy or of stupid men, who are unable to think. If ever a true politician really thinks a subject out dispassionately, even Homo stultus will be compelled to accept his findings in the end. Opinion can never stand beside truth."T. H. White, The Book of Merlyn
What a guy. Good grief.
Did you know?
With all this talk of debt limits, we the lay people get a special peak into the political chaos surrounding the US budget. A lot of the elements that are typical of an American budget debate are missing, however. University political scientists will tell you with disdain that it's a sign of how far right the political base of America has shifted. Republican leaders insist to the press that this is how much the people have come to mistrust Big Government with their money. Both seem to be playing counterpoint, but they're really just talking about two sides of the same coin. The annual budget has grown astronomically as a percentage of GDP (note that the CBO graph I just linked to offers much more conservative views of government spending than this one by Paul Ryan supporters).
Democratic pundits claim that income tax revenue has fallen dramatically since the Tax Reform Acts in the 1980s. Even so, government programs (and therefore, government spending), have continued to rise unabated. Even as recently as 1981, highest earners expected taxation rates as high as 70% of total earnings!! This was the status quo for two decades, a sigh of relief compared to their previous levels of taxation. For the highest earners before 1964, it was 90% of yearly earnings! How did the 1980s implementation of such a different system of taxation affect our government?
When talking about our historically low tax rates, Democrats typically refer to tax rates in the 1960s... Which country's income taxation rates are we referring to here? Even in 1960, when the the average household was earning somewhere around $35,000 a year, their income tax was 44.5%! That means they paid nearly half their income in taxes! That's not a lot of discretionary spending money left to the family by today's standards. The equivalent of the 60th percentile nowadays pays a meager 25% of income. That's nearly half the amount, and the next highest quintile is also covered by that percentage and the 28% tax bracket. That brings up another odd point about taxation rates in our country nowadays: married couples earning $70,000 pay the same percentage on taxes as people earning nearly twice their levels (up to $139,000 pay the same percentage)! Our country has grown a great deal richer, but actually pays less percentage-wise, in taxes. That begs the question, how is it that taxation rates now resemble the 1960s, when taxation rates were so much higher back then?
I've found graphs from 3rd parties that describe the above situation, but I've grown tired of using graphs from sources that aren't necessarily deserving of trust. Whether or not the government defaults, their graphs are the best; the data gold mine. I want to examine government income tax revenue.
 |
| All data from IRS.gov |
There's total government income (which includes not only income tax, but corporate, commodity, etc), which seems to rise steadily until 1994 where it really takes off... until a sharp fall in 2001 (tax cut?). Looking through the federal tax brackets, it's difficult to find any reason for the steady increase of government income tax revenue. Now let's take a look at total income throughout America compared to the total income tax the IRS took in:
Income tax has never made a huge dent in the total personal incomes of Americans. Although it might seem from this graph that the percentage of income tax taken into government coffers compared to total income has gone down... it's actually at about the same levels as the 1960s (there it is!). And compared to total GDP, income tax revenue stands at just a percentage point below the average (let's keep in mind though, that a single percentage point adds up to A LOT of money at these levels). The conclusion? Despite a tax bracket system that seemed much more severe, the 1980s on have seen very little change in the percentage of total income earned to taxation, in fact, that percentage has been higher on average than in previous decades!
I'm left wondering a few things: What's the deal with those crazy percentages for tax brackets before the 1980s? My guess would be a huge reform of the tax code in the 1980s which took away many of the complicated deductions allowing people to avoid actually paying over 50% of their yearly income in taxes. Otherwise, the amount of money going to government coffers in the 1960s would have been much greater than they were.
What conclusions can we draw from all of this? Income taxation (and therefore government revenue) may be lower than it was in the '90s, but that still doesn't excuse the massive increase in government spending compared to total tax received. Of course, we haven't been looking at other forms of taxation (corporate, commodity, excise, etc)... have those levels changed dramatically in recent years? Should government be limited in the amount it spends related to GDP? That makes a lot of sense, after all, a government shouldn't spend more than it's people are generating. But if there's a limit, what's the target? Is government efficient when it comes to spending? I tend to think that private forces are more efficient than the public sector, but that this does not necessarily mean that public forces are unnecessary. Despite being less efficient, public services are extremely important when a service needs to be provided universally on moral grounds. Either that, or a private provider needs to be heavily monitored and regulated by the government when providing a universal service (as in the case of electrical services through PG&E).
Friday, July 22, 2011
Incomprehension
As I drive to my desk job every morning, a 50 minute or longer journey through the poorly maintained freeways of the East Bay, there's ample time to ponder the mysteries of modern life. The Kevin and Bean show was the thematic vaulting point for today's musings. As the host geeked out over Wired magazine and the latest movie craze, it occurred to me just how artificial our world has become. The editor and talk show host bantered about humanity's journey into the "realm of science fiction," without ever stopping to mention how most of the world doesn't feel the results of this so-called future-tech. Just yesterday, an embedded reporter talked about the sprawling refugee camp in Somalia, 20 years in the making!!
While Americans fret over the release date of the iPhone 5, thousands are struggling to survive amidst bloody conflict in Africa. I'm not saying Americans have an obligation to be concerned. All I am saying is, while people in America waited in line a couple of hours for the midnight showing of Captain America, another line of people were waiting for a meager hand-out of food and water in Somalia. California is the technological hub of America, where new ideas are blooming every day. What is the actual value of these new ideas though? How important is it that we have tablet technology?
From the perspective of finance and economics, the tech industry is hugely important. Far more important than the millions of starving people who live on less than a dollar a day. After all, just think about how little they survive on! From a financial perspective, these people are simply not a profitable demographic. News corporations would be more inclined to cover issues of extreme poverty if the deep pocketed first-worlders sank more money into the non-profit industries that supports these people, rather than waiting feverishly for the latest movie, restaurant or tech gadget. Although the suffering of the far-off masses might pull at our heartstrings for a moment, the seductive draw of American society is designed to be undeniable. The latest food fad, concert diva, and explosive action flick are all carefully presented to the public for maximum appeal that translates into ultimate profits. This isn't commentary, it's just the way our society has evolved amidst the Market Economy.
Our society has benefited hugely from an economic system rewarding cunning, intelligence, and gamesmanship. Even the lower classes in our country have more than the have-nots of other, less developed nations. This economic model works so well because it depends upon novelty. Throughout history, establishing new methods and dismantling inefficient routines has been beneficial to humankind. I don't know if "modern" society is any different from past eras. I do know that the massive financial success of blockbuster movies juxtaposes oddly with farmers struggling to get by. One is actually a necessity and therefore undervalued, the other is a frivolity. And now we're back at the beginning. As Somalis struggle to survive, a couple of nerds interview the stars of the latest movies about their favorite app. I guess this is truly the age old struggle. Now that we live placid, fundamentally safe lives, we have the leisure to either confront the vapid emptiness of our culture, where our fleeting pleasure is merely a vehicle for finance, or lose ourselves in it. Maybe one day, we'll hear from the embedded reporter whose standing at the premier of Captain Somalia.
While Americans fret over the release date of the iPhone 5, thousands are struggling to survive amidst bloody conflict in Africa. I'm not saying Americans have an obligation to be concerned. All I am saying is, while people in America waited in line a couple of hours for the midnight showing of Captain America, another line of people were waiting for a meager hand-out of food and water in Somalia. California is the technological hub of America, where new ideas are blooming every day. What is the actual value of these new ideas though? How important is it that we have tablet technology?
From the perspective of finance and economics, the tech industry is hugely important. Far more important than the millions of starving people who live on less than a dollar a day. After all, just think about how little they survive on! From a financial perspective, these people are simply not a profitable demographic. News corporations would be more inclined to cover issues of extreme poverty if the deep pocketed first-worlders sank more money into the non-profit industries that supports these people, rather than waiting feverishly for the latest movie, restaurant or tech gadget. Although the suffering of the far-off masses might pull at our heartstrings for a moment, the seductive draw of American society is designed to be undeniable. The latest food fad, concert diva, and explosive action flick are all carefully presented to the public for maximum appeal that translates into ultimate profits. This isn't commentary, it's just the way our society has evolved amidst the Market Economy.
Our society has benefited hugely from an economic system rewarding cunning, intelligence, and gamesmanship. Even the lower classes in our country have more than the have-nots of other, less developed nations. This economic model works so well because it depends upon novelty. Throughout history, establishing new methods and dismantling inefficient routines has been beneficial to humankind. I don't know if "modern" society is any different from past eras. I do know that the massive financial success of blockbuster movies juxtaposes oddly with farmers struggling to get by. One is actually a necessity and therefore undervalued, the other is a frivolity. And now we're back at the beginning. As Somalis struggle to survive, a couple of nerds interview the stars of the latest movies about their favorite app. I guess this is truly the age old struggle. Now that we live placid, fundamentally safe lives, we have the leisure to either confront the vapid emptiness of our culture, where our fleeting pleasure is merely a vehicle for finance, or lose ourselves in it. Maybe one day, we'll hear from the embedded reporter whose standing at the premier of Captain Somalia.
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