My Free Speech Political Quotations and Commentaries Directory and Log
---
http://www.cs.trinity.edu/~rjensen/temp/Political/PoliticalQuotationsCommentaries.htm
Be brave enough to start a conversation that
matters.
Margaret Wheatley,
We must be willing to get rid of the life we've
planned, so as to have the life that is waiting for us.
Joseph Campbell
If everyone is thinking alike, then somebody isn't
thinking.
George S. Patton
It's better to walk alone than in a crowd going in
the wrong direction.
Diane Grant
A Former US President (Clinton) Had A Special
Insight Into The Evil Of Hamas
The Atlantic ---
http://www.theatlantic.com/international/archive/2014/07/understanding-what-hamas-wants/374656/#ixzz380f7tjqD
Bill Clinton reportedly has a buxom blond mistress
who visits so often when Hillary Clinton isn’t home in Chappaqua that the former
president’s Secret Service detail have given her an unofficial code name:
Energizer. (Or is that the Energizer Bunny?)
Richard Johnson ---
http://pagesix.com/2014/07/21/the-secret-mistress-for-bill-that-agents-have-named-energizer/
Also see
http://www.dailymail.co.uk/news/article-2700882/Bill-Clinton-busty-mistress-nicknamed-Energizer-Secret-Service-works-hide-Hillary.html
Israel Uses Rockets To Protect People, Hamas Uses
People To Protect Their Rockets
Greg Hengler ---
http://www.townhallmail.com/zbzjrctbjjwkrbjbkbrptkgllfkllbftddpcqrwdmwsspl_asdmtldhmpt.html
Israel Is Winning Battles But Losing The War.
Jeffrey Goldberg, The Atlantic
http://www.businessinsider.com/6-reasons-why-israel-is-losing-the-war-while-winning-against-hamas-2014-7
Read more: http://www.theatlantic.com/international/archive/2014/07/why-is-israel-losing-a-war-its-winning/375116/#ixzz38m5cOZLk
Veterans Health Administration is "a huge policy
success story, which offers important lessons for future health reform" because,
among other things, "it's free from the perverse incentives created when doctors
and hospitals profit from expensive tests and procedures."
Former Princeton University Economics Professor and Political
Activist Paul Krugman
http://news.investors.com/ibd-editorials-obama-care/071414-708679-krugman-turns-a-blind-eye-to-obamacare-failures-webhed-krugmans-blind-eye-to-obamacare-failures.htm
Paul Krugman has butchered numbers when writing
about fiscal policy in nations such as
France,
Estonia,
Germany, and
the United Kingdom.
Daniel J. Mitchell ---
Click Here
http://finance.townhall.com/columnists/danieljmitchell/2014/07/26/krugmans-gotcha-moment-leaves-something-to-be-desired-n1867208?utm_source=thdaily&utm_medium=email&utm_campaign=nl
Did Federal Climate Scientists Fudge Temperature
Data to Make It Warmer? ---
http://reason.com/archives/2014/07/03/did-federal-climate-scientists-fudge-tem
I bet Ed Snowden could find the lost Lerner e-mails! ---
http://www.freerepublic.com/focus/f-chat/3168952/posts
We live in a complex world and at a challenging
time,
Barack Obama
http://www.businessinsider.com/obama-foreign-policy-statement-2014-7
Non-Refugee Migrant Kids Will Be Sent Back
Barach Obama
http://time.com/3037414/barack-obama-migrant-children-humanitarian-claims/?xid=newsletter-brief
But 99.99% of them will be declared refuges.
Democracy is Wrong for the World and Belgium is a Test Case ---
http://www.cbn.com/tv/embedplayer.aspx?bcid=1509282970001
Ray Stevens at the Border ---
https://www.youtube.com/embed/WgOHOHKBEqE?feature=player_detailpage
To help save the economy, the Government will
announce next month that the Immigration Department will start deporting seniors
(instead of illegals) in order to lower Social Security and Medicare costs.
Older people are easier to catch and will not remember how to get back home. I
started to cry when I thought of you. Then it dawned on me...oh, shoot...I'll
see you on the bus.
Forwarded by Denny Beresford who, I think, is even older than me but not by
much.
pop.east.cox.net/Inbox?number=2146820&part=1.2&filename=mime-attachment.jpg]
Question
Can you believe our highest-ranking elected representatives would cheat us?
The House and Sutter are fighting the subpoenas.
Their lawyers argued in a July 4 filing that staff members are “absolutely
immune” from having to comply with subpoenas from a federal regulator in an
insider-trading probe.
"SEC Says House Insider Probe Involves 44 Funds, Entities," by Patricia
Hurtado, Bloomberg Businessweek, July 17, 2014 ---
http://www.businessweek.com/news/2014-07-17/sec-says-house-insider-trading-probe-involves-44-funds
An insider-trading probe involving the U.S.
House Ways and Means Committee and a top staff member also includes dozens
of hedge funds, investment advisers and other firms, the U.S. Securities and
Exchange Commission said in a court filing.
In arguing against the House’s motion to dismiss
the case or send it to a court in Washington, the SEC told a Manhattan
federal judge that the geographic scope of its investigation is “much wider”
than described by lawyers for the House and involves a total of 44 entities.
The probe concerns some of the largest hedge funds
and asset-management advisers in the U.S., the SEC said in the July 16
filing. Twenty-five of the 44 are based in New York, it said.
The agency subpoenaed the House committee and the
staff member, Brian Sutter, for its inquiry into whether non-public
information was illegally passed about a change in health-care policy that
resulted in a spike in share prices of insurance companies. The case is
testing whether U.S. insider-trading laws allow regulators to investigate
the committee or its staff.
According to the regulators, minutes before the
government announced the policy change, an analyst at Height Securities LLC
sent clients a flash report outlining the proposal. Sutter may have been a
source used by a lobbyist at Greenberg Traurig LLP who disclosed the health
policy changes to the Height Securities analyst, the SEC said.
Trading Spike
The government announced an increase, rather than
decrease, in payments to health insurers, boosting the shares of companies
including Humana Inc.
“The Humana investigation is substantially
concerned with the investor clients of Height Securities who received the
subject Height e-mail, and who the commission believes may have engaged in
relevant trading,” the SEC said in a filing to U.S. District Judge Paul
Gardephe. It didn’t name the investors.
Sanjay Wadhwa, senior associate director of the
SEC’s New York regional office, said in a memo to the court that 25 of the
firms the agency is looking at have headquarters in New York, while the rest
are based predominantly in Connecticut, Massachusetts, Illinois and
California. One is in Washington. The probe is being handled by SEC lawyers
in New York, he said.
2012 Law
The SEC cited a law Congress passed in 2012 that
requires public officials to keep confidential non-public information about
government matters that could move stock prices.
The House and Sutter are fighting the subpoenas.
Their lawyers argued in a July 4 filing that staff members are “absolutely
immune” from having to comply with subpoenas from a federal regulator in an
insider-trading probe.
Kerry W. Kircher, the top lawyer for the House,
said the information the SEC is seeking concerns legislative activities
protected by the Constitution, which can’t be reviewed by federal judges. If
Gardephe won’t dismiss the case, it should be moved to federal court in
Washington, Kircher said.
The case is SEC v. The Committee on Ways and Means
of The U.S. House of Representatives and Brian Sutter. 14-mc-00193. U.S.
District Court, Southern District of New York (Manhattan).
Nancy Pelosi Alleged Insider Trading---
http://en.wikipedia.org/wiki/Nancy_Pelosi#Allegations_of_insider_trading
In November 2011, 60 Minutes alleged that Pelosi
and several other member of Congress had used information they gleaned from
closed sessions to make money on the stock market. The program cited
Pelosi's purchases of Visa stock while a bill that would limit credit card
fees was in the House. Pelosi denied the allegations and called the report
"a right-wing smear.
Question
Trading on insider information is against U.S. law for every segment of society
except for one privileged segment that legally exploits investors for personal
gains by trading on insider information. What is that privileged segment of
U.S. society legally trades on inside information for personal gains?
Hints:
Congress is our only native criminal class.
Mark Twain ---
http://en.wikipedia.org/wiki/Mark_Twain
We hang the petty thieves and appoint the great ones to public office.
Attributed to Aesop
Answer (Please share this with your students):
Over the years I've been a loyal viewer of the top news show on television ---
CBS Sixty Minutes
On November 13, 2011 the show entitled "Insider"
is the most depressing segment I've ever watched on television ---
http://www.cbsnews.com/video/watch/?id=7387951n&tag=contentMain;contentBody#ixzz1dfeq66Ok
Also see
http://financeprofessorblog.blogspot.com/2011/11/congress-trading-stock-on-inside.html
Jensen Comment
- It came as no surprise that many (most?) members of the U.S. House of
Representatives and the U.S. Senate that writes the laws of the land made it
illegal for to trade in financial and real estate market by profiting
personally on insider information not yet available, including pending
legislation that they will decide, wrote themselves out of the law making
it legal for them to personally profit from trading on insider information.
What came as a surprise is how leaders at the very top of Congress make
millions trading on inside information with impunity and well as immunity.
- The Congressional leader that comes off the worst in this Sixty
Minutes "Insider" segment is former House Speaker and current Minority
leader Nancy Pelosi.
When confronted with specific facts on how she and her husband made some of
their insider trading millions she fired back at reporter Steve Kroft with
an evil glint saying what is tantamount to: "How dare you question me about
insider trades that are perfectly legal for members of Congress. Who are you
to question my ethics about exploiting our insider trading privileges. Back
off Steve or else!" Her manner can be extremely scary. Other Democratic
Party members of Congress come off almost as bad in terms of insider trading
for personal gain.
- Current Speaker of the House,
John
Boehner, is more subtle. He denies making any of his personal portfolio
investment decisions and denies communicating with the person he hires to
make such decision. However, that trust investor mysteriously makes money
for Rep. Boehner using insider information obtained mysteriously. Other
Republican members of Congress some off even worse in terms of insider
trading.
- Members of Congress on powerful committees regularly make insider
profits on legislation currently being written into the law that is still
being held secret from the public. One of my heroes, former Senator
Judd Gregg,
is no longer my hero.
- Everybody knows that influence peddling in Congress by lobbyists, many
of them being former members of Congress, is a dirty business of showering
gifts on current members of Congress. What is made clear, however, is that
these lobbyists are personally getting something in return from friendly
members of Congress who pass along insider information to lobbyists. The
lobbyists, in turn, peddle this insider information back to the private
sector, such as hedge fund managers, for a commission. Moral of story:
Voters do not stop insider trading by a member of Congress by voting him or
her out of office if they become peddlers of insider information obtained,
as lobbyists, from their old friends still in the Congress.
- Five out of 435 members of the House of Representatives are seeking to
sponsor a bill to make it illegal for representatives and senators to profit
from trading on inside information. The Sixty Minutes show demonstrates how
Nancy Pelosi, John Boehner, and other House leaders have buried that effort
so deep in the bowels of the legislative process that there's no chance in
hell of stopping insider trading by members of Congress. Insider trading is
a privilege that attracts unethical people to run for Congress.
"The Cellulosic Ethanol Industry Faces Big Challenges: The advanced-biofuels
industry is in danger of withering away," MIT's Technology Review,
August 12, 2013 ---
http://www.technologyreview.com/news/517816/the-cellulosic-ethanol-industry-faces-big-challenges/
"It's Final -- Corn Ethanol Is Of No Use," by James Conca, Forbes,
April 20, 2014 ---
http://www.forbes.com/sites/jamesconca/2014/04/20/its-final-corn-ethanol-is-of-no-use/
OK, can we please stop pretending biofuel made from
corn is helping the planet and the environment? The United Nations
Intergovernmental Panel on Climate Change released two of its Working Group
reports at the end of last month (WGI
and WGIII), and
their short discussion of biofuels has ignited a fierce debate as to whether
they’re of any environmental benefit at all.
The IPCC was quite diplomatic in its discussion,
saying “Biofuels have direct, fuel‐cycle GHG
emissions that are typically 30–90% lower than those for gasoline or diesel
fuels. However, since for some biofuels indirect emissions—including from
land use change—can lead to greater total emissions than when using
petroleum products, policy support needs to be considered on a case by case
basis” (IPCC
2014 Chapter 8).
Continued in article
"At Long Last, Al Gore Thinks Ethanol Subsidies Are a Bad Idea," by
Ronald Bailey|, Reason Magazine, November 22, 2010 Nov. 22, 2010 ---
http://reason.com/blog/2010/11/22/at-long-last-al-gore-thinks-et
Jensen Comment
With Iowa playing a pivotal role in both the 2014 and 2016 forthcoming elections
don't expect science and engineering to trump ethanol politics and consumer
spending waste.
Five Of The World's Lakes About To Dry Up: Things Don't Look Good for
Santa Barbara ---
http://www.accuweather.com/en/weather-news/world-lakes-drying-up/30646819#ixzz38CuZ79yj
Question
Why is a "slip of paper" issued by the Department of Homeland Security more
valuable on the black market than a passport or drivers license?
Answer
It allows people to board commercial air flights without a photo ID. Hence, it's
possible to buy this slip of paper and fly from San Antonio to NYC without
looking the least bit like the person to whom the "slip of paper" was initially
issued. This makes the slip of paper exceedingly valuable to persons, including
criminals and potential terrorists, who want to board our commercial airliners
anonymously ---
http://www.judicialwatch.org/blog/2014/07/dhs-source-tsa-lets-illegal-aliens-surpass-airport-security-board-planes/
"Walmart Managers Average Salary Higher Than Starbucks," Time
Magazine, July 23, 2014 ---
http://time.com/3026504/wal-mart-managers-average-salary-higher-than-starbucks/?xid=newsletter-brief
Many of their cashiers, however, make less than the USA national average of
$11.22 per hour.
Jensen Comment
Walmart managers and senior executives are almost always promoted from within.
Many of the Starbucks stores are not owned by Starbucks, and employees at all
levels may be hired from the outside, including the hiring of relatives of the
owners of the stores.
Both Walmart and Starbucks subsidize higher education in different ways for
virtually all full-time employees. Starbucks will pay Arizona State University
distance education tuition for the last two years of a four-year degree for
employees of Starbucks-owned stores. In an older program, Walmart will subsidize
all four years of distance education in what is almost tantamount to its own
for-profit accredited university. Of course Walmart is much larger with over 2.2
million global employees ---
http://en.wikipedia.org/wiki/Walmart
Starbucks has fewer than 200,000 employees with a higher proportion of
part-time workers ---
http://en.wikipedia.org/wiki/Starbucks
Starbucks pays all workers more than $10 per hour. Walmart may pay less than $10
to new and part-time employees.
Starbucks has seven stores that are unionized which is a miniscule but
possibly growing percentage of all stores. Also many Starbucks stores are
franchised stores not owned by Starbucks. Walmart owns all of its stores and
typically fights off unionization efforts in the USA. Washington DC fought and
then caved in to new Walmart stores that are now swamped with job applications.
No such luck for the unskilled and unemployed in Boston and Vermont.
Some places like Boston and Vermont will not allow Walmart to build
non-unionized stores --- which is partly why so many people from Massachussets
and Vermont travel to nearby Walmart stores in New Hampshire to shop. Of course
not having a sales tax in New Hampshire is an added attraction.
However, to my knowledge Boston and Vermont will welcome non-unionized
Starbucks stores with open arms. Go figure!
My guess is that unions salivate over the number of employees to organize in a
single Walmart store whereas there are not enough employees in a Starbucks store
to get excited over --- especially since many of the Starbucks stores are
franchise mom and pop owned operations that operate more like the many mom and
pop non-unionized small retail shops in Boston and Vermont.
"Nearly a Third of Borneo's Rainforest Is Gone," by Zoë Schlanger,
Newsweek. July 16, 2014 ---
http://www.newsweek.com/nearly-third-borneos-rainforest-gone-259291
Rainforest ---
http://en.wikipedia.org/wiki/Rain_Forest
. . .
Effect on global
climate
A natural rainforest emits and absorbs vast
quantities of
carbon dioxide. On a global scale, long-term
fluxes are approximately in balance, so that an undisturbed rainforest would
have a small net impact on atmospheric carbon dioxide levels,
though they may have other climatic effects (on
cloud formation,
for example, by recycling
water vapour). No rainforest today can be
considered to be undisturbed. Human induced deforestation plays a
significant role in causing rainforests to release carbon dioxide, as do
other factors, whether human-induced or natural, which result in tree death,
such as burning and drought. Some climate models operating with interactive
vegetation predict a large loss of Amazonian rainforest around 2050 due to
drought, forest dieback and the subsequent release more carbon dioxide Five
million years from now, the Amazon rainforest may long since have dried and
transformed itself into
savannah, killing itself in the progress (changes
such as this may happen even if all human deforestation activity ceases
overnight).The descendants of our known animals may adapt to the dry
savannah of the former Amazonian rainforest and thrive in the new, warmer
temperatures
Continued in article
Sadly,
more than half of today’s U.S. retirees will rely on Social Security for more
than 50% of their total income, leaving them with the
painful choice of either a rather severe drop in living standards, or else
risking prematurely exhausting savings and being at the mercy of children or
relatives.
"Latest DALBAR report underscores poor long-term performance of individual
investors," The Mathematical Investor, July 2014 ---
http://www.financial-math.org/blog/2014/05/latest-dalbar-report-underscores-poor-long-term-performance-of-individual-investors/
As we emphasized in a December 2013
Mathematical Investor blog, individual
investors are not very well equipped, and certainly not very effective,
in managing their own investment portfolios.
This is unfortunate, because fewer
workers than in the past, particularly in the U.S., are covered by a
“defined-benefit” retirement system, namely a pension that guarantees a
certain proportion of one’s income at retirement, based on the number of
years in service, in perpetuity until one’s death. Instead, the majority
of the growing army of American baby boomers (according to the
Population Reference Bureau, 76.4 million
Americans were born in the period 1946-1966) have to rely on 401K
systems or the equivalent, where they must contribute (along with
matching contributions, in many cases, by employers) to an investment
fund that they have either partial or full discretion to manage. Indeed,
more than any generation before, the present generation of workers will
be personally responsible for their future financial well-being.
Other nations are facing similar
challenges. In Canada, for instance, their version of “social security”
provides only about half what it does in the U.S. In Australia, large
employers such as universities typically place roughly 17% of a worker’s
income into a “superannuation fund”. In New Zealand, this fraction is
7%. In Canada, pension savings are taxed as they are withdrawn, whereas
in Australia superannuation funds are not taxed provided they are
withdrawn as annuities. In continental Europe, mandatory retirement
rules still exist, while in the English-speaking world, such rules,
mercifully, are largely a thing of the past.
How well are today’s workers
doing in saving for retirement? Sadly,
more than half of today’s U.S. retirees will rely on Social Security for
more than 50% of their total income, leaving
them with the painful choice of either a rather severe drop in living
standards, or else risking prematurely exhausting savings and being at
the mercy of children or relatives. Many should at least
lower their expectations for life after retirement, but there is
little evidence that most workers nearing retirement are facing this
unpleasant reality.
Of even greater concern is the level of skill with
which most individual investors manage their nest eggs. We mentioned in
our earlier
Mathematical Investor blog a report known as the
Quantitative Analysis
of Investor Behavior, produced by the
DALBAR organization, which
attempts to measure short- and long-term success by individual
investors. In that blog, we cited results from the 2012 report.
Now the
latest
(2014) edition of this report is available. So
how well are today’s investors doing? The results are even more
discouraging than in previous reports. The report notes that:
- Over the past 20 years, “equity
fund” investors achieved an average 5.02% annualized return, which
is 4.2% less than the 9.22% that he/she could have achieved by
simply investing funds in an S&P500 index-tracking fund. This gap
expanded in 2013, for only the third time in ten years.
- Over the bull market of the past
three years, “equity fund” investors achieved only an average 10.87%
annual return, lagging the average annual S&P500 return (16.18%) by
5.31%.
- Investors in “asset allocation
funds” did even more poorly. Their 20-year average annual return was
only 2.53%, lagging the S&P500 index (9.22% per annum) by 6.69% per
annum.
- Investors in “fixed income funds”
did more poorly still. Their 20-year average annual return was an
abysmal 0.71%, fully 8.51% less than the S&P500 index, and 5.03% per
annum less than the Barclay’s Aggregate Bond Index (5.74% per annum)
over this time.
- Not surprisingly, investors show
little evidence of skill in “market timing.” The DALBAR report notes
that in the six best months of 2013, when the market was up sharply,
there was no evidence that individual investors moved more than
average amounts into equity funds.
As MarketWatch commentator Paul
Merriman
observes, the typical investor’s emotion-based
trading in and out of securities based on fear and knee-jerk reaction to
crises is counter-productive to long-term success:
Every year the conclusion [of the
DALBAR report] is the same: On average, investors earn less than
mutual fund performance figures imply. Sometimes they earn much
less. … One conclusion: No matter whether the market is booming or
busting, “Investor results are more dependent on investor behavior
than on fund performance.” Investors who buy and hang on are
consistently more successful than those who move in and out of the
markets.
In our previous
Mathematical Investor blog, we emphasized how
the typical individual investor is relatively poorly educated and
informed about making personal financial decisions. As the U.S.
Securities and Exchange Commission noted in a
2012 report, “investors have a weak grasp of
elementary financial concepts and lack critical knowledge of ways to
avoid investment fraud.”
These experiences are
exacerbated by the larger plague of disappointing performance in
mathematics and science education. This was underscored today with the
release of the latest results for U.S. 12th graders on the
National Assessment of Educational Progress (NAEP) test.
The overall score of 153 in mathematics is
identical to that from 2009, and is only slightly higher than the 150
score in 2005, in spite of years of effort and billions of dollars spent
to improve K-12 education.
The DALBAR report concludes
Attempts to correct irrational
investor behavior through education have proved to be futile. The
belief that investors will make prudent decisions after education
and disclosure has been totally discredited. Instead of teaching,
financial professionals should look to implement practices that
influence the investor’s focus and expectations in ways that lead to
more prudent investment decisions.
Similarly, Louis S. Harvey,
President of DALBAR,
argues that
It is now past the time for the
investment community and its regulators to understand that the
principle of educating uninterested investors about the complexities
of investing is unproductive. … We need a fundamental change that
transforms investment thinking into meaningful decisions and choices
for retail investors.
[Added 12 May 2014: A
column by Chuck Jaffe summarizes a study by
Natixis Global Asset Management on why investors often make poor
financial decisions.]
Bob Jensen's helpers for personal finance ---
http://www.trinity.edu/rjensen/Bookbob1.htm#InvestmentHelpers
CBO = Bipartisan Congressional Budget Office ---
http://en.wikipedia.org/wiki/Congressional_Budget_Office
The increases in revenues won’t keep anywhere near
the pace of projected government spending, so CBO still sees debt growing
rapidly over the next quarter century.
"CBO: Everyone’s taxes will go up quietly," by Brian Faler,
Politico, July 16, 2014 ---
http://www.politico.com/story/2014/07/tax-increase-ahead-congressional-budget-office-108983.html
Jensen Comment
To understand these revelations you must read the entire article carefully while
keeping in mind that this is the CBO talking --- not some conservative nut case.
Many of the tax increases, especially rising taxes on the poor, are automatic if
Congress does nothing to stop them. The major culprit is rising household income
over time coupled with inevitable inflation There will be huge tax increases
over a very long period of time according to the current tax code if nothing is
done to change the code and curb government spending. Keynesian economics is
not a panacea over the long haul.
However, you must also realize that tax laws are not set in stone. The worst
case scenario is that taxes will not increase nearly as fast as
ever-increasing government spending. Deficits will grow and grow and grow with
the only options being more borrowing, more inflation, and/or the current Fed
approach to printing money to reduce the deficit --- something that would become
an inflation disaster at some point in time.
Bob Jensen's threads on the entitlements disaster, especially
unsustainable Medicare and Medicaid ---
http://www.trinity.edu/rjensen/Entitlements.htm
Paul Krugman has butchered numbers when writing
about fiscal policy in nations such as
France,
Estonia,
Germany, and
the United Kingdom.
Daniel J. Mitchell ---
Click Here
http://finance.townhall.com/columnists/danieljmitchell/2014/07/26/krugmans-gotcha-moment-leaves-something-to-be-desired-n1867208?utm_source=thdaily&utm_medium=email&utm_campaign=nl
"Is Paul Krugman Leaving Princeton In Quiet Disgrace?" by Ralph Benki,
Forbes, July 14, 2014 ---
http://www.forbes.com/sites/ralphbenko/2014/07/14/is-paul-krugman-leaving-princeton-in-quiet-disgrace/
Professor Paul Krugman is
leaving Princeton. Is he leaving in disgrace?
Not long, as these things go, before his departure
was announced Krugman thoroughly was indicted and publicly eviscerated for
intellectual dishonesty by Harvard’s Niall Ferguson in a hard-hitting
three-part series in the Huffington Post, beginning
here, and with a coda in
Project Syndicate, all
summarized at Forbes.com. Ferguson, on
Krugman:
Where I come from … we do not fear bullies. We
despise them. And we do so because we understand that what motivates
their bullying is a deep sense of insecurity. Unfortunately for Krugtron
the Invincible, his ultimate nightmare has just become a reality. By
applying the methods of the historian – by quoting and contextualizing
his own published words – I believe I have now made him what he richly
deserves to be: a figure of fun, whose predictions (and proscriptions)
no one should ever again take seriously.
Princeton, according to
Bloomberg News, acknowledged Krugman’s
departure with an extraordinarily tepid comment by a spokesperson. “He’s
been a valued member of our faculty and we appreciate his 14 years at
Princeton.”
Shortly after Krugman’s departure was announced
no less than the revered Paul Volcker, himself a Princeton alum, made a
comment — subject unnamed — sounding as if directed at Prof. Krugman. It
sounded like “Don’t let the saloon doors hit you on the way out. Bub.”
To the
Daily Princetonian (later reprised by the
Wall Street Journal, Volcker
stated with refreshing bluntness:
The responsibility of any central bank is price
stability. … They ought to make sure that they are making policies that
are convincing to the public and to the markets that they’re not going
to tolerate inflation.
This was followed by a show-stopping statement:
“This kind of stuff that you’re being taught at Princeton disturbs me.”
Taught at Princeton by … whom?
Paul Krugman, perhaps? Krugman, last year, wrote
an op-ed for the New York Times entitled Not
Enough Inflation. It betrayed an
extremely louche, at best, attitude toward inflation’s insidious
dangers. Smoking gun?
Volcker’s comment, in full context:
The responsibility of the government is to have
a stable currency. This kind of stuff that you’re being taught at
Princeton disturbs me. Your teachers must be telling you that if you’ve
got expected inflation, then everybody adjusts and then it’s OK. Is that
what they’re telling you? Where did the question come from?
Is Krugman leaving in disgrace? Krugman really
is a disgrace … both to Princeton and to the principle of monetary
integrity. Eighteenth century Princeton (then called the College of New
Jersey) president John Witherspoon, wrote, in his
Essay on Money:
Let us next consider the evil that is done by
paper. This is what I would particularly request the reader to pay
attention to, as it was what this essay was chiefly intended to show,
and what the public seems but little aware of. The evil is this: All
paper introduced into circulation, and obtaining credit as gold and
silver, adds to the quantity of the medium, and thereby, as has been
shown above, increases the price of industry and its fruits.
“Increases the price of industry and its fruits?”
That’s what today is called “inflation.”
Inflation is a bad thing. Period. Most of all it
cheats working people and those on fixed incomes who Krugman pretends to
champion. Volcker comes down squarely, with Witherspoon, on the side of
monetary integrity. Krugman, cloaked in undignified sanctimony, comes down,
again and again, on the side of … monetary finagling.
Krugman consistently misrepresents his
opponents’ positions, constructs fictive
straw men, addresses marginal figures, and
ignores inconvenient truths set forward by figures of probity such as the
Bank of England and the
Bundesbank,
thoughtful work such as that by Member of
Parliament (with a Cambridge Ph.D. in economic history) Kwasi Kwarteng, and,
right here at home, respected thought leaders such as
Steve Forbes and
Lewis E. Lehrman (with whose
Institute this
writer has a professional affiliation).
Continued in article
Bob Jensen's threads on professors who plagiarize or otherwise cheat (e.g.
create phony data or cherry pick data) ---
http://www.trinity.edu/rjensen/Plagiarism.htm#ProfessorsWhoPlagiarize
Princeton's Nobel Laureate economist and political activist Paul Krugman is
sometimes known to cherry pick data or even invent data in order to make a
political point ---
Paul Krugman ---
http://en.wikipedia.org/wiki/Paul_Krugman
Professor Krugman is now moving to CUNY as an endowed professor of economics.
. . .
Krugman's columns have drawn criticism as well as
praise. A 2003 article in The Economist[ questioned Krugman's
"growing tendency to attribute all the world's ills to George Bush," citing
critics who felt that "his relentless partisanship is getting in the way of
his argument" and claiming errors of economic and political reasoning in his
columns. Daniel Okrent, a former The New York Times ombudsman, in his
farewell column, criticized Krugman for what he said was "the disturbing
habit of shaping, slicing and selectively citing numbers in a fashion that
pleases his acolytes but leaves him open to substantive assault.
"The Missing Data in Krugman’s German Austerity Narrative" Daniel J.
Mitchell, Townhall, February 25, 2014 ---
http://finance.townhall.com/columnists/danieljmitchell/2014/02/25/the-missing-data-in-krugmans-german-austerity-narrative-n1800047?utm_source=thdaily&utm_medium=email&utm_campaign=nl
There’s an ongoing debate about
Keynesian economics, stimulus spending, and
various
versions of fiscal austerity,
and regular readers know I do everything possible to explain that you can
promote added prosperity by reducing the
burden of government spending.
. . .
But here’s the problem with his article. We know
from the (misleading) examples above
(not quoted here) that he’s complained about supposed
austerity in places such as the United Kingdom and France, so one would
think that the German government must have been more profligate with the
public purse.
After all, Krugman wrote they haven’t “imposed a
lot of [austerity] on themselves.”
So I followed the advice in Krugman’s “public
service announcement.” I didn’t just repeat what people have said. I dug
into
the data to see what
happened to government spending in various nations.
And I know you’ll be shocked to see that Krugman
was wrong. The Germans have been more frugal (at least in the sense of
increasing spending at the slowest rate) than nations that supposedly are
guilty of “spending cuts.”
"The Latest Public-Sector Pension Scandal: The
state-pension-industrial complex corrupts politics on multiple levels," by
Ira Stoll, Reason Magazine, July 14, 2014 ---
http://reason.com/archives/2014/07/14/the-latest-public-sector-pension-scandal
"By the end of approximately 2007, Villalobos had
made, and I had accepted, bribes totaling approximately $200,000 in cash,
all of which was delivered directly to me in the Hyatt Hotel in downtown
Sacramento across from the Capitol. Villalobos delivered the first two
payments of approximately $50,000 each in a paper bag, while the last
installment of approximately $100,000 was delivered in a shoebox."—Plea
Agreement, United States of America v. Fred Buenrostro, U.S. District Court,
Northern District of California, filed July 11, 2014.
The government official who pleaded guilty here,
Fred Buenrostro, wasn’t some city council member or state senator, but
rather, from December 2002 to May 2008, the CEO of the California Public
Employees Retirement System. Calpers, the largest public pension fund in the
country, managed assets of as much as $250 billion during that period.
The bribing of Buenrostro was part of a successful
effort by a New York money management firm (which claims it had no knowledge
of the bribe and has not been charged with any wrongdoing) to win $3 billion
in business managing pension money for California state employees and
retirees.
Crooked government officials come along often
enough that there’s a tendency to tune them out, but this case is worth
pausing to analyze further for a number of reasons.
For one thing, there’s the hypocrisy angle. Calpers
has been at the forefront of criticizing company boards for practices that
are not shareholder friendly. Sometimes it’s right about that, but even when
it is, it manages to come off as holier-than-thou. It doesn’t exactly add to
Calpers credibility denouncing board-management coziness at big publicly
traded companies when its own CEO is taking paper bags full of cash from a
representative of a contractor.
For another thing, Calpers isn’t the only big
public pension fund with a recent scandal. The New York State Comptroller,
Alan Hevesi, pleaded guilty in 2010 to a felony in connection with
corruption in managing the $125 billion fund that covers New York public
employees.
What I’ve called the state-pension-industrial
complex has deleterious effects on several levels.
The current system takes rich money managers, who
ordinarily might be a voice for lower taxes and restrained government
spending, and makes them beholden, for business, on public pension boards
that sometimes include union officials. Instead of arguing for less generous
pensions, or for personal accounts that employees would manage individually,
the money managers now have incentives to argue for more generous pensions
and to avoid upsetting the system that is enriching them.
And the current system takes public employees, who
if they had personal accounts might be able to invest in corporate stocks
and root for their success, and instead makes them reliant for their
retirement income on the same state government bureaucracy that now employs
them.
Naturally, it also breeds corruption. So much money
sitting in the hands of government officials is a temptation too strong to
resist. It is too strong for the money managers who want to get a piece of
it, and it is too strong for the government officials and their friends who
want some money or other benefits in exchange for helping the money managers
get a piece of it.
Continued in article
Bob Jensen's Fraud Updates ---
http://reason.com/archives/2014/07/14/the-latest-public-sector-pension-scandal
Bob Jensen's threads on pension accounting ---
http://www.trinity.edu/rjensen/Theory02.htm#Pensions
Bob Jensen's threads on the sad state
of governmental accounting ---
http://www.trinity.edu/rjensen/Theory02.htm#GovernmentalAccounting
NYC Mayor Proves Again and Again and Again That He's a Union Puppet
"New York City’s mayor handed teachers a big win: Struggling
students will be the losers," by Joe Klein, Time Magazine, July 21,
2014, Page 16 ---
http://time.com/2972329/the-students-vs-the-unions/
Back in 2005, when New York City was pre-crash
flush, Mayor Michael Bloomberg offered the United Federation of Teachers a
raise in return for 150 extra minutes of classroom work per week. The
mayor’s idea was to spend that extra time tutoring the kids who needed the
most help–the bottom third of each class. UFT president Randi Weingarten
agreed that the group sessions would be small, no more than 10 students per
class. Schools chancellor Joel Klein wanted three 50-minute periods per
week. The union wanted five 30-minute periods. They compromised on four
37½-minute sessions. More California May Vote on ‘Six States’ Plan in
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Migrant Busloads NBC News
The program was never given a name, which made it
easier for New York’s new “progressive” mayor Bill de Blasio to give it
back–to eliminate the required 150 minutes of special instruction–in his
negotiations with the UFT this spring. You might well wonder why. I tried to
find out but received a heaping ration of gobbledygook from a source close
to the mayor. He said that the program had been “inflexible” and “one size
fits all.” That it was not “workable to the purpose.” Translation: it didn’t
work. But how do we know that? No studies or evaluations were done. At his
press conference announcing the new union deal, the mayor and his schools
chancellor, Carmen Fariña, gave several foggy reasons for the change: the
time would be used for additional parent conferences and for “professional
development” so the teachers could learn how to teach the new core
curriculum. A lot of unspecific wiggle room was negotiated on both
counts–part of the mayor’s drive toward “flexibility.” Popular Among
Subscribers Eat Butter Fat Time Magazine Cover Ending the War on Fat
Subscribe The End of Iraq How Many People Watched Orange Is the New Black?
No One Knows
But flexibility is not a trait often associated
with teachers’ unions. The American Federation of Teachers, which Weingarten
now heads, calls itself “a union of professionals,” but it negotiates as if
it were a union of assembly-line workers. Let’s start with the 37½ minutes,
especially that half-minute. What happens if the teacher is in
midsentence–or is in the midst of a breakthrough with a student–when the
bell rings? A professional finishes the lesson and is paid in personal
satisfaction. (I’m sure that the overwhelming majority of teachers do so;
these sorts of work rules insult their dedication.) A professional talks to
parents whenever and wherever. A professional also doesn’t resist
evaluation–but the current New York City union president, Michael Mulgrew,
actually bragged that he “gummed up the works” on an evaluation agreement
with the far more rigorous Bloomberg administration; de Blasio, of course,
hasn’t sought to implement that deal.
The most damning aspect of de Blasio’s giveback is
the “didn’t work” argument. We are talking about one of the ground-zero
principles of a healthy school system: extra help for those who need it. If
the program doesn’t work, you don’t eliminate it. You fix it. The mayor’s
spokesman said the extra help would be continued in “flexible” ways.
Apparently, “flexibility” is a mayoral euphemism for “I cave.” And given the
current atmosphere, if it isn’t specified in the contract, it doesn’t exist.
A mayor who actually cared about education would be seeking longer school
days, longer school years, more charter schools (which have to be more
rigorously monitored) and the elimination of tenure and seniority rules to
make sure that the best professionals, not the longest-serving assembly-line
workers, are in the classrooms.
Teachers’ unions are suddenly on the defensive
across the country. The Supreme Court recently ruled–unfairly, I
believe–that some home health care workers did not have to join the union
that negotiated their contract. That could have an impact on all
public-employee unions. In California, a district court judge recently threw
out the state’s tenure rules. In his ruling, he wrote that the widespread
protection of incompetent teachers “shocks the conscience.” A group called
the Partnership for Educational Justice, which is led by former CNN anchor
Campbell Brown, is filing a similar suit in New York and promises to take
the movement national. Brown’s group has hired Robert Gibbs, the former
Obama press secretary, to run its communications strategy; other Obama
stalwarts will soon join the effort as well. Obama’s Secretary of Education
Arne Duncan praised the California decision, which caused the National
Education Association, the country’s largest teachers’ union, to call for
him to be fired.
Continued in article
Question
In the realm electric power, what is a "levelized cost?"
Hint
The Economist: Wind
and solar power are even more expensive than is commonly thought ---
http://www.businessinsider.com/free-exchange-sun-wind-and-drain-2014-7#ixzz38bOmPFSx
. . .
But whereas the cost of a solar panel is easy to
calculate, the cost of electricity is harder to assess. It depends not only
on the fuel used, but also on the cost of capital (power plants take years
to build and last for decades), how much of the time a plant operates, and
whether it generates power at times of peak demand.
To take account
of all this, economists use "levelised costs"--the net present value of all
costs (capital and operating) of a generating unit over its life cycle,
divided by the number of megawatt-hours of electricity it is expected to
supply.
The trouble, as Paul Joskow of the Massachusetts
Institute of Technology has pointed out, is that levelised costs do not take
account of the costs of intermittency. Wind power is not generated on a calm
day, nor solar power at night, so conventional power plants must be kept on
standby--but are not included in the levelised cost of renewables.
Electricity demand also varies during the day in
ways that the supply from wind and solar generation may not match, so even
if renewable forms of energy have the same levelised cost as conventional
ones, the value of the power they produce may be lower. In short, levelised
costs are poor at comparing different forms of power generation.
To get around that problem Charles Frank of the
Brookings Institution, a think-tank, uses a cost-benefit analysis to rank
various forms of energy. The costs include those of building and running
power plants, and those associated with particular technologies, such as
balancing the electricity system when wind or solar plants go offline or
disposing of spent nuclear-fuel rods.
The benefits of renewable energy include the value
of the fuel that would have been used if coal- or gas-fired plants had
produced the same amount of electricity and the amount of carbon-dioxide
emissions that they avoid.
Mr Frank took four sorts of zero-carbon energy
(solar, wind, hydroelectric and nuclear), plus a low-carbon sort (an
especially efficient type of gas-burning plant), and compared them with
various sorts of conventional power. Obviously, low- and no-carbon power
plants do not avoid emissions when they are not working, though they do
incur some costs.
So nuclear-power plants, which run at about 90% of
capacity, avoid almost four times as much CO{-2} per unit of capacity as do
wind turbines, which run at about 25%; they avoid six times as much as solar
arrays do. If you assume a carbon price of $50 a tonne--way over most actual
prices--nuclear energy avoids over $400,000-worth of carbon emissions per
megawatt (MW) of capacity, compared with only $69,500 for solar and $107,000
for wind.
Nuclear power plants, however, are vastly
expensive. A new plant at Hinkley Point, in south-west England, for example,
is likely to cost at least $27 billion. They are also uninsurable
commercially. Yet the fact that they run around the clock makes them only
75% more expensive to build and run per MW of capacity than a solar-power
plant, Mr Frank reckons.
To determine the overall cost or benefit, though,
the cost of the fossil-fuel plants that have to be kept hanging around for
the times when solar and wind plants stand idle must also be factored in. Mr
Frank calls these "avoided capacity costs"--costs that would not have been
incurred had the green-energy plants not been built.
Thus a 1MW wind farm running at about 25% of
capacity can replace only about 0.23MW of a coal plant running at 90% of
capacity. Solar farms run at only about 15% of capacity, so they can replace
even less. Seven solar plants or four wind farms would thus be needed to
produce the same amount of electricity over time as a similar-sized
coal-fired plant. And all that extra solar and wind capacity is expensive.
A levelised playing field
If all the costs and benefits are totted up using
Mr Frank's calculation, solar power is by far the most expensive way of
reducing carbon emissions. It costs $189,000 to replace 1MW per year of
power from coal. Wind is the next most expensive. Hydropower provides a
modest net benefit.
But the most cost-effective zero-emission
technology is nuclear power. The pattern is similar if 1MW of gas-fired
capacity is displaced instead of coal. And all this assumes a carbon price
of $50 a tonne. Using actual carbon prices (below $10 in Europe) makes solar
and wind look even worse. The carbon price would have to rise to $185 a
tonne before solar power shows a net benefit.
There are, of course, all sorts of reasons to
choose one form of energy over another, including emissions of pollutants
other than CO{-2} and fear of nuclear accidents. Mr Frank does not look at
these. Still, his findings have profound policy implications. At the moment,
most rich countries and China subsidise solar and wind power to help stem
climate change.
Yet this is the most expensive way of reducing
greenhouse-gas emissions. Meanwhile Germany and Japan, among others, are
mothballing nuclear plants, which (in terms of carbon abatement) are
cheaper. The implication of Mr Frank's research is clear: governments should
target emissions reductions from any source rather than focus on boosting
certain kinds of renewable energy.
Bob Jensen's threads on cost and managerial accounting ---
http://www.trinity.edu/rjensen/Theory02.htm#ManagementAccounting
"Though Scorned by Colleagues, a Climate-Change Skeptic Is Unbowed,"
by Michael Wine, The New York Times, July 15, 2014 ---
http://www.nytimes.com/2014/07/16/us/skeptic-of-climate-change-john-christy-finds-himself-a-target-of-suspicion.html?ref=us&_r=2
Thank you Dennis Huber for the heads up.
John Christy, a professor of atmospheric science at
the University of Alabama in Huntsville, says he remembers the morning he
spotted a well-known colleague at a gathering of climate experts.
“I walked over and held out my hand to greet him,”
Dr. Christy recalled. “He looked me in the eye, and he said, ‘No.’ I said,
‘Come on, shake hands with me.’ And he said, ‘No.’ ”
Dr. Christy is an outlier on what the vast majority
of his colleagues consider to be a matter of consensus: that global warming
is both settled science and a dire threat. He regards it as neither. Not
that the earth is not heating up. It is, he says, and carbon dioxide spewed
from power plants, automobiles and other sources is at least partly
responsible.
But in speeches, congressional testimony and
peer-reviewed articles in scientific journals, he argues that predictions of
future warming have been greatly overstated and that humans have weathered
warmer stretches without perishing. Dr. Christy’s willingness to publicize
his views, often strongly, has also hurt his standing among scientists who
tend to be suspicious of those with high profiles. His frequent appearances
on Capitol Hill have almost always been at the request of Republican
legislators opposed to addressing climate change.
“I detest words like ‘contrarian’ and ‘denier,’ ”
he said. “I’m a data-driven climate scientist. Every time I hear that
phrase, ‘The science is settled,’ I say I can easily demonstrate that that
is false, because this is the climate — right here. The science is not
settled.”
Dr. Christy was pointing to a chart comparing seven
computer projections of global atmospheric temperatures based on
measurements taken by satellites and weather balloons. The projections
traced a sharp upward slope; the actual measurements, however, ticked up
only slightly.
Such charts — there are others, sometimes less
dramatic but more or less accepted by the large majority of climate
scientists — are the essence of the divide between that group on one side
and Dr. Christy and a handful of other respected scientists on the other.
“Almost anyone would say the temperature rise seen
over the last 35 years is less than the latest round of models suggests
should have happened,” said Carl Mears, the senior research scientist at
Remote Sensing Systems, a California firm that analyzes satellite climate
readings.
“Where the disagreement comes is that Dr. Christy
says the climate models are worthless and that there must be something wrong
with the basic model, whereas there are actually a lot of other
possibilities,” Dr. Mears said. Among them, he said, are natural variations
in the climate and rising trade winds that have helped funnel atmospheric
heat into the ocean.
Dr. Christy has drawn the scorn of his colleagues
partly because they believe that so much is at stake and that he is
providing legitimacy to those who refuse to acknowledge that. If the models
are imprecise, they argue, the science behind them is compelling, and it is
very likely that the world has only a few decades to stave off potentially
catastrophic warming. Continue reading the main story
And if he is wrong, there is no redo.
“It’s kind of like telling a little girl who’s
trying to run across a busy street to catch a school bus to go for it,
knowing there’s a substantial chance that she’ll be killed,” said Kerry
Emanuel, a professor of atmospheric science at the Massachusetts Institute
of Technology. “She might make it. But it’s a big gamble to take.”
By contrast, Dr. Christy argues that reining in
carbon emissions is both futile and unnecessary, and that money is better
spent adapting to what he says will be moderately higher temperatures. Among
other initiatives, he said, the authorities could limit development in
coastal and hurricane-prone areas, expand flood plains, make manufactured
housing more resistant to tornadoes and high winds, and make farms in arid
regions less dependent on imported water — or move production to rainier
places.
Dr. Christy’s scenario is not completely out of the
realm of possibility, his critics say, but it is highly unlikely.
In interviews, prominent scientists, while
disagreeing with Dr. Christy, took pains to acknowledge his credentials.
They are substantial: Dr. Christy, 63, has researched climate issues for 27
years and was a lead author — in essence, an editor — of a section of the
2001 report of the United Nations Intergovernmental Panel on Climate Change,
the definitive assessment of the state of global warming. With a colleague
at the University of Alabama in Huntsville, Dr. Roy Spencer, he received
NASA’s medal for exceptional scientific achievement in 1991 for building a
global temperature database.
That model, which concluded that a layer of the
atmosphere was unexpectedly cooling, was revised to show slight warming
after other scientists documented flaws in its methodology. It has become
something of a scientific tit for tat. Dr. Christy and Dr. Spencer’s own
recalculations scaled back the amount of warming, leading to further
assaults on their methodology.
Dr. Christy’s response sits on his bookshelf: a
thick stack of yellowed paper with the daily weather data he began recording
in Fresno, Calif., in the 1960s. It was his first data set, he said, the
foundation of a conviction that “you have to know what’s happening before
you know why it’s happening, and that comes back to data.”
Dr. Christy says he became fascinated with weather
as a fifth grader when a snowstorm hit Fresno in 1961. By his high school
junior year, he had taught himself Fortran, the first widely used
programming language, and had programmed a school computer to make weather
predictions. After earning a degree in mathematics at California State
University, Fresno, he became an evangelical Christian missionary in Kenya,
married and returned as pastor of a mission church in South Dakota.
There, as a part-time college math teacher, he
found his true calling. He left the pastoral position, earned a doctorate in
atmospheric sciences at the University of Illinois and moved to Alabama.
And while his work has been widely published, he
has often been vilified by his peers. Dr. Christy is mentioned, usually
critically, in dozens of the so-called Climategate emails that were hacked
from the computers of the University of East Anglia’s Climatic Research
Center, the British keeper of global temperature records, in 2009. Continue
reading the main story Continue reading the main story Continue reading the
main story
“John Christy has made a scientific career out of
being wrong,” one prominent climate scientist, Benjamin D. Santer of the
Lawrence Livermore National Laboratory, wrote in one 2008 email. “He’s not
even a third-rate scientist.”
Continued in article
Jensen Comment
Galileo Galilei was also considered third rate among the scientific and
religious sheep of his day ---
http://en.wikipedia.org/wiki/Galileo_Galilei
"5 states, IL, HI, CT, NJ, KY need over 60% of their citizens’ average
yearly earnings," State Data Lab, July 11, 2014 ---
http://www.statedatalab.org/chart_of_the_day/
. . .
Truth in Accounting (TIA) calculates
"Per Taxpayer Burden" - remaining debt after
available assets are tapped, for all 50 states. Much of this debt is
retirement contributions not paid each year, as part of employee
compensation.
So tomorrow’s taxpayers must pay retirement costs
for services they never received. Select your state on the map at
http://www.statedatalab.org/
to see more.
State |
Per Taxpayer Burden |
Average Income |
Percent of Average
Income |
Illinois |
$42,200 |
$45,832 |
92% |
Hawaii |
$41,300 |
$44,767 |
92% |
Connecticut |
$46,000 |
$59,687 |
77% |
Kentucky |
$26,700 |
$35,643 |
75% |
New Jersey |
$34,200 |
$54,987 |
63% |
Some politicians claim state debt can be paid “over
time.” But the debt also grows over time, as more employees retire and
collect pensions and retirement health benefits.
Truth in Accounting recommends legislators tell
citizens the truth about state debt during the budget cycle. Read more
about FACT Based Budgeting (Full Accrual and Counting Techniques)
here.
READ MORE ---
http://www.statedatalab.org/chart_of_the_day/fcdetail/are-you-informed-to-give-consent-of-the-governed
Jensen Comment
Especially note the charts for the Top 25 and the Bottom 25 states at ---
http://www.statedatalab.org/library/doclib/2010_FSOS.pdf
"Miscalculating the Retirement Income You'll Need: Proposals to
raise Social Security benefits use a dubious formula. That could spell big
trouble," by Andrew G. Biggs And Sylvester J. Schieber, The Wall Street
Journal, July 14, 2014 ---
http://online.wsj.com/articles/miscalculating-the-retirement-income-youll-need-1405380517?tesla=y&mod=djemMER_h&mg=reno64-wsj
It is now conventional wisdom that Americans face a
retirement "crisis," in part because Social Security benefits are seen as
inadequate. For instance, the Social Security Administration's website
explains that "most financial advisers say you'll need about 70% of your
pre-retirement earnings to comfortably maintain your pre-retirement standard
of living." It then notes that "under current law, if you have average
earnings, your Social Security retirement benefits will replace only about
40%."
That line of thinking is misleading, often cited by
progressives fighting benefit reforms that would address Social Security's
$10 trillion shortfall. Here's why: Financial advisers do not calculate
replacement rates the same way the Social Security Administration does. When
the calculations are consistent, the replacement rate paid by Social
Security comes closer to 60%, which substantially changes the
retirement-income picture.
Financial advisers measure replacement rates
relative to final earnings, generally meaning they divide the first year of
retirement income by a worker's final year of working income, or average pay
during the past five working years. The SSA, on the other hand, measures
replacement rates relative to the wage-indexed average of lifetime earnings.
"Wage indexing" increases past earnings to reflect the growth of average
wages. These are very different numbers that produce very different
outcomes.
By increasing the denominator, SSA's methods
produce far lower replacement rates than the calculations of financial
advisers. Our analysis of SSA data shows that the typical long-term employee
who works until full retirement age receives a Social Security benefit equal
to about 62% of his final earnings, defined here as the average of nonzero
earnings in the five years before claiming Social Security benefits. For
full-career workers with lower earnings, replacement rates average 70% of
final earnings.
When including early retirees who receive reduced
benefits, the typical replacement rate drops to 53% of final average
earnings. But an individual who seeks to retire early must save a greater
portion of his pre-retirement earnings, leaving less for consumption. Thus,
an early retiree can match his pre-retirement consumption while receiving a
lower replacement rate from Social Security and other sources of retirement
income.
These distinctions may seem pedantic, but the
underlying concepts are fundamental: Retirement plans are in theory designed
to help retirees maintain their standard of living as they move out of the
labor force. The SSA's wage indexing overstates an individual's
pre-retirement earnings, which raises the bar for what counts as adequate
retirement income.
Say you are retiring at age 65 this year and earned
$20,000 in 1985. The purchasing power of that 1985 salary in 2014 dollars is
$43,640. But in calculating replacement rates, SSA wage indexes that $20,000
for the growth of the economy, and so under that model you earned $53,281.
Replacing 70% of $53,281 is a lot more difficult than replacing 70% of
$43,640. SSA's wage indexing of past earnings in effect credits retirees
with salaries that they never had, then deems retirement income inadequate
if it fails to replace that nonexistent past salary.
There's a more consistent way to measure. If we
calculate replacement rates relative to the inflation-adjusted average of
total lifetime earnings, the typical retiree would receive a Social Security
benefit equal to around 55% of his average lifetime income—and a low-income
retiree would receive a replacement rate of around 70%.
These faulty replacement-rate calculations lead to
profound errors. For example, analysts at the New America Foundation propose
increasing Social Security benefits to raise replacement rates for an
average worker from a supposedly inadequate 40% to 60%. This implies,
however, that a typical worker could retire with a Social Security benefit
that amounts to roughly 85% of his final salary, while a low-wage worker
could retire at 140% of his final salary. If enacted, these changes would
have disastrous effects on labor supply at older ages, not to mention the
federal budget.
The issue here is not whether Social Security's
benefit formula should be waged-indexed, which is an entirely separate issue
that unfortunately uses similar terminology. Wage indexing of the benefit
formula ensures that average replacement rates, however measured, remain
roughly constant from one generation of retirees to the next.
Analysts are still debating whether to increase
Social Security benefits, and figuring out how to return the program to
solvency. But grappling with those problems requires fair, meaningful
measurements of retirement income.
Mr. Biggs, a former principal deputy commissioner of the Social
Security Administration, is a resident scholar at the American Enterprise
Institute. Mr. Schieber, a former chairman of the Social Security Advisory
Board, is co-author of "Fundamentals of Private Pensions" (9th ed., 2010).
Bob Jensen's personal finance and retirement savings helpers are at
http://www.trinity.edu/rjensen/Bookbob1.htm#InvestmentHelpers
"India Is Home to More Poor People Than Anywhere Else on Earth," by
Nilanjana Bhowmick, Time Magazine, July 17, 2014 ---
http://time.com/2999550/india-home-to-most-poor-people/?xid=newsletter-brief
Jensen Comment
But with a terrific Gini Coefficient almost everybody is equally poor. Why is
income equality such a terrific goal in economics?
http://en.wikipedia.org/wiki/List_of_countries_by_income_equality
"Lessons From Brazil’s War on Poverty," by Berk Özler, Nate Silver's
5:38, July 2, 2014 ---
http://fivethirtyeight.com/features/lessons-from-brazils-war-on-poverty/
Brazil is a giant when it comes to soccer. In the
late 1990s, it was a giant in another area, this one much less desirable:
Brazil had one of the highest levels of income inequality in the world, as
home to some of the world’s poorest people, while its richest competed with
the wealthiest in the United States and elsewhere.1
In 2001, Brazil’s Gini coefficient — the most
common (but not necessarily most attractive) measure of inequality2 —
hovered around 0.60, a very high figure by any standard. (A Gini coefficient
of 0 represents perfect equality where everyone earns the same income, and 1
represents complete inequality where all the country’s income accrues to a
single person.) By comparison, the U.S. — not exactly a bastion of equality
— had a Gini coefficient of 0.4 in 2000.3
But from 2001 to 2007, income inequality in Brazil
started to decline at an unprecedented rate: The Gini coefficient fell from
above 0.60 to below 0.55, reaching its
lowest level in more than 30 years. The incomes of
the poorest tenth of Brazilians grew by 7 percent per year, nearly three
times the national average of 2.5 percent. In less than a decade, Brazil had
managed to cut the proportion of its population living in extreme poverty in
half.
This sharp decline coincided with the introduction
of Brazil’s first cash transfer programs in 2001. Created to reduce poverty
in the short-run, these programs also provided incentives to households to
invest in their children’s education, health and nutrition. Brazil was
following on the success of Mexico, which a couple of years earlier had
introduced PROGRESA, perhaps the world’s best-known and most influential
conditional cash transfer program.
Brazil consolidated its programs into one program, called Bolsa Familia, in
2003.
Bolsa Familia targeted households whose per capita
monthly income was less than 120 reais (a yearly income of $828). The
government paid these households between 20 to 182 reais per month (between
$132 to $1,248 a year) if they met certain conditions: Children under the
age of 17 had to regularly attend school; pregnant women had to visit
clinics for prenatal and antenatal care; and parents needed to make sure
their children were fully immunized by age 5 and received growth check-ups
until age 6. It also provided a small allocation to extremely poor
households with no strings attached. By 2010, Bolsa Familia had grown to one
of the world’s largest conditional cash transfer programs, providing
40 billion reais
(about $24 billion) to nearly 50 million people, about a quarter of Brazil’s
population.
So what role did Bolsa Familia play in the decline
of inequality in Brazil since 2000? With such a large transfer of money from
taxpayers to Brazil’s poorest, you’d imagine there must have been some
impact, but how much of one? Identifying the causal effects of large,
nationwide government programs is challenging. Many factors can affect the
distribution of income over time. Shifting demographics, the changing nature
of work, and women’s participation in the labor force can all affect income
inequality. If you wanted to truly isolate Bolsa Familia’s effect, you could
theoretically conduct an experiment — not unlike the trials that
pharmaceutical companies routinely do to test a drug’s effectiveness — where
you’d randomly assign some communities and not others to the cash transfer
program, and then compare inequality between them.
However, this type of social experiment is hard, if
not impossible, for governments to conduct for a long period of time. For
example, Mexico did randomly assign some eligible communities to PROGRESA
while withholding the benefits from other (equally eligible) communities at
the start, but this pilot phase lasted only 18 months, after which the
program was rolled out to all eligible areas. An 18-month period might have
been sufficient to evaluate the effects of the program on children’s school
attendance and women’s visits to health clinics, but it was too short a
period to evaluate the program’s longer-term impacts on poverty and
inequality. In any case, researcher Gala Diaz Langou says that
leaving some areas out of the program was not politically feasible in Brazil,
so there was no such experimentation with Bolsa
Familia.
So if you can’t do a randomized trial, what can you
do to assess the program’s effect on Brazil’s drop in income inequality?
Economists often try to understand changes in income inequality by
quantifying all the elements that affect the distribution of income, such as
the proportion of adults who work, the number of hours they work, their
hourly wages, whether they have income from other assets, and whether
they’re receiving money from the government. Once income is broken down by
source at a given point in time, researchers can try to isolate the role of
each source in changes in the distribution of income by keeping that factor
constant over time and allowing all the remaining factors to vary. While
this approach doesn’t identify the causal effect of any one factor on
changes in a country’s Gini coefficient, it’s still a useful accounting
exercise — helpful in focusing on the main factors associated with the
changes in the distribution of incomes.
Using this approach, two studies — a
2010 paper on Brazil (by Ricardo Barros and
co-authors from Brazil’s Institute of Applied Economic Research) and a
2013 paper on a number of countries
in Latin America including Brazil (by the World Bank’s Joao Pedro Azevedo
and co-authors) — have separately found that government transfers accounted
for about 40 percent of the decline in inequality in Brazil, with expansions
in pensions and Bolsa Familia (and a related program for people with
disabilities) contributing roughly equally to the decline in income
inequality. However, of these government transfers, Bolsa Familia was by far
the most important component in raising the income levels of Brazil’s
poorest households: Between 2001 and 2007, the share of people receiving
these conditional cash transfer payments increased by more than 10
percentage points, from 6.5 percent to 16.9 percent. This accounted for the
entire increase in the share of households that received non-labor income
(i.e. income from sources outside of working a job).
Jensen Comment
Jensen Comment
There is a delicate balance between generous welfare and work incentives. The
Governor of Vermont complained that, before the recent rise in the minimum wage
level, there was more incentive to stay on Vermont's generous welfare system
than go to work.
Although low by USA welfare standards, Brazil poverty was much, much worse
and has showed remarkable gains in raising absolute poverty levels. The goal
should be one of raising the living standards of the poor rather than reduction
of inequality. For example, the USA has a worse, but reasonably close Gini
coefficient relative to the Sudan in Africa, suggesting that there is more
inequality in the USA than the Sudan., But the USA poor with HDTV, vehicles,
food stamps, free education, housing subsidies, Medicaid, etc. would be
considered wealthy in the Sudan.
In Cuba where the goal was to eliminate inequality, Fidel Castro found that
his ration books, free housing, free public transportation, and minimal wages
destroyed incentives to work.
"Report: Castro says Cuban model doesn't work," by Paul Haven.
Associated Press, Yahoo News, September 8, 2010 ---
http://news.yahoo.com/s/ap/20100908/ap_on_re_la_am_ca/cb_cuba_fidel_castro_5
Fidel Castro told a visiting American journalist
that Cuba's communist economic model doesn't work, a rare comment on
domestic affairs from a man who has conspicuously steered clear of local
issues since stepping down four years ago.
The fact that things are not working efficiently on
this cash-strapped Caribbean island is hardly news. Fidel's brother Raul,
the country's president, has said the same thing repeatedly. But the blunt
assessment by the father of Cuba's 1959 revolution is sure to raise
eyebrows.
Jeffrey Goldberg, a national correspondent for The
Atlantic magazine, asked if Cuba's economic system was still worth exporting
to other countries, and Castro replied: "The Cuban model doesn't even work
for us anymore" Goldberg wrote Wednesday in a post on his Atlantic blog.
He said Castro made the comment casually over lunch
following a long talk about the Middle East, and did not elaborate. The
Cuban government had no immediate comment on Goldberg's account.
Since stepping down from power in 2006, the
ex-president has focused almost entirely on international affairs and said
very little about Cuba and its politics, perhaps to limit the perception he
is stepping on his brother's toes.
Goldberg, who traveled to Cuba at Castro's
invitation last week to discuss a recent Atlantic article he wrote about
Iran's nuclear program, also reported on Tuesday that Castro questioned his
own actions during the 1962 Cuban Missile Crisis, including his
recommendation to Soviet leaders that they use nuclear weapons against the
United States.
Even after the fall of the Soviet Union, Cuba has
clung to its communist system.
The state controls well over 90 percent of the
economy, paying workers salaries of about $20 a month in return for free
health care and education, and nearly free transportation and housing. At
least a portion of every citizen's food needs are sold to them through
ration books at heavily subsidized prices.
President Raul Castro and others have instituted a
series of limited economic reforms, and have warned Cubans that they need to
start working harder and expecting less from the government. But the
president has also made it clear he has no desire to depart from Cuba's
socialist system or embrace capitalism.
Fidel Castro stepped down temporarily in July 2006
due to a serious illness that nearly killed him.
He resigned permanently two years later, but
remains head of the Communist Party. After staying almost entirely out of
the spotlight for four years, he re-emerged in July and now speaks
frequently about international affairs. He has been warning for weeks of the
threat of a nuclear war over Iran.
Castro's interview with Goldberg is the only one he
has given to an American journalist since he left office.
Charles Bukowski Rails Against 9-to-5 Jobs in a Brutally Honest Letter
(1986) ---
http://www.openculture.com/2014/07/charles-bukowski-rails-against-9-to-5-jobs.html
Jensen Comment
Those 9-to-5 jobs should be given to people who are grateful for them, and let
those who prefer poverty live on food stamps and other handouts.
Karl Marz asserted that everybody should be allowed to work at what they like
best. The problem is that demand for goods or services is no longer equated with
supply. Cleaning hotel rooms is seldom a job where workers maximize enjoyment of
work. Hence, under pure communism it's best not to expect to have clean hotel
sheets, toilets, and carpets. In fact nobody probably wants to lay new carpets
and fix broken toilets.
Capitalism, on the other hand, exploits unskilled labor in abundant supply
such that hotel chambermaids usually live only slightly above the poverty line
unless there's a dire shortage of chambermaids --- such as in Manhattan where
the pay scales are higher due to shortages of chambermaids and other honest
workers having low job skills. This is also a reason why many young people on
the streets prefer higher paying crime like drug dealing and prostitution to low
paying unskilled jobs.
The underground cash wage economy also contributes an abundant supply of of
unskilled labor such as the supply of roofers, ranch hands, yard workers,
swimming pool cleaners, and housekeepers in San Antonio where there's an
ever-increasing supply of undocumented immigrants ---
http://www.cs.trinity.edu/~rjensen/temp/TaxNoTax.htm
"What Millennials Want That
Their Boomer Parents Hate," by Taylor Tepper, Time Magazine, July 21,
2014 ---
http://time.com/money/3006715/millennials-higher-inflation-baby-boomers/
Jensen Comment
The argument is that millenials want more inflation such that their student
loans, mortgages, and other long-term debt that they incurred getting dear
dollars (higher purchasing power) can be paid off with cheap dollars (less
purchasing power) obtained from inflated wages. Taken to extremes the burden the
entitlement burdens of their boomer parents for Social Security and other
pensions can be paid back in in cheap dollars.
And their parents do indeed hate inflation, especially since low interest
rates are causing them to cut into the capital of their retirement savings
rather than allowing them to live on interest income from those savings.
But Taylor Tepper overlooks some real dangers of inflation to millenials.
Firstly, for those whom wage increases do not keep up with inflation they will
face enormous hardships in for their living expenses, things like food,
vehicles, fuel, medical care, costs of having children, costs of raising
children, including education costs.
There are big dangers of inflation for things that increase faster than
inflation in general such as medical costs for millenials and their parents on
Medicare. Unlike Social Security, Medicare is not sustainable with no inflation
and even less sustainable with inflation. Also Medicare does not pay for nursing
care of their boomer parents whose retirement savings are disappearing fast due
to low interest rates. Many of these millennials will have to dig deep to pay
for the inflated nursing care of their boomer parents.
I think that an economist that advocates high inflation is not a very
scholarly economist. Has there ever been a high inflation nation that is the
envy of other nations?
Bob Jensen's threads on the looming entitlements disaster ---
http://www.trinity.edu/rjensen/Entitlements.htm
Have The New York Times and The Guardian Become Hama Propaganda
Newspapers?
"Noah Pollak, All the news Hamas sees fit to print in The New York Times
and The Guardian." WeeklyStandard, July 20, 2014
As forwarded by Naomi Ragen
Something important is missing from the New York
Times's coverage of the war in Gaza: photographs of terrorist attacks on
Israel, and pictures of Hamas fighters, tunnels, weaponry, and use of human
shields.
It appears the Times is silently but happily complying with a Hamas demand
that the only pictures from Gaza are of civilians and never of fighters. The
most influential news organization in the world is thus manufacturing an
utterly false portrait of the battle—precisely the portrait that Hamas finds
most helpful: embattled, victimized Gaza civilians under attack by a cruel
Israeli military.
A review of the Times's photography in Gaza reveals a stark contrast in how
the two sides are portrayed. Nearly every picture from Israel depicts tanks,
soldiers, or attack helicopters. And every picture of Gaza depicts either
bloodied civilians, destroyed buildings, overflowing hospitals, or other
images of civilian anguish. It is as one-sided and misleading a depiction of
the Gaza battle as one can imagine.
Today's Times photo essay contains seven images: three of Gaza civilians in
distress; one of a smoke plume rising over Gaza; and three of the IDF,
including tanks and attack helicopters. The message is simple and clear: the
IDF is attacking Gaza and harming Palestinian civilians. There are no images
of Israelis under rocket attack, no images of grieving Israeli families and
damaged Israeli buildings, no images of Hamas fighters or rocket attacks on
Israel, no images of the RPG's and machine guns recovered from attempted
Hamas tunnel infiltrations into Israel.
Another report yesterday was accompanied by a single image: that of a dead
child in a Gaza hospital.
A second report yesterday, ostensibly about Hamas tunnel attacks on Israel,
bizarrely contained not a single picture related to those attacks. The three
pictures it contained presented the same one-sided narrative of Israelis as
attackers, Palestinians as victims. One picture showed an IDF artillery gun
firing into Gaza; a second showed Palestinian mourners at a funeral; a third
showed Palestinians waiting in line for food rations.
Indeed, a check of the Twitter feed of the Times’s photographer in Gaza
shows not a single image that portrays Hamas in a negative light. It's
nothing but civilian victims of the IDF.
Likewise, the Twitter feed of Anne Barnard, the Beirut bureau chief for the
Times currently "reporting" from Gaza, is almost entirely devoted to one
thing: anecdotes, pictures, and stories about civilian casualties. Perusing
her feed, one would think there are simply no terrorists in Gaza who started
this war, who are perpetuating it, who are intentionally attacking Israel
from neighborhoods and apartment buildings and thereby guaranteeing the very
civilian casualties Barnard appears so heartbroken over.
Maybe all of this is an illustration of just how biased against Israel the
Times has become—so biased that Times photographers and editors are simply
blind to any image that doesn’t conform to their view of the war.
Or maybe, in the interest of the safety and access of their journalists, the
Times is complying with Hamas instructions. As reported by MEMRI, Hamas
published media guidelines instructing Gazans to always refer to the dead as
"innocent civilians" and to never post pictures of terrorists on social
media. Hamas is currently preventing foreign journalists from leaving the
Strip, in effect holding them hostage. These journalists must be
terrified—and they also must know that the best way to ensure their safety
is to never run afoul of the terrorists in whose hands their fates lie.
It would appear that Hamas’s media instructions have been heard loud and
clear at the New York Times, and the response is obedience. But the Times
also isn't bothering to inform its readers that the images they’re seeing of
Gaza are only the ones Hamas wants them to see. It’s time for the Times to
tell its readers exactly why they are being presented with such a distorted
picture of this war.
"The Full-Time Scandal of Part-Time America Fewer than half of U.S. adults
are working full time. Why? Slow growth and the perverse incentives of ObamaCare,"
by Mortimer Zuckerman, The Wall Street Journal, July 13, 2014 ---
http://online.wsj.com/articles/mortimer-zuckerman-the-full-time-scandal-of-part-time-america-1405291652?tesla=y&mod=djemMER_h&mg=reno64-wsj