Confessions of a Bean Counter

Public Opinion on Raising Taxes

2011-09-20T06:49:00.001-07:00

USA Today/Gallop released a poll showing 66% of Americans favor raising taxes on families earning is excess of $250,000. Here is the passage from Bulletin News

"Voters are evenly divided (45%-45%) between Obama and Republicans in Congress on who they trust more to take steps to create a strong US economy in the long run, according to the latest USA TODAY/Gallup Poll" of "voters" who "were surveyed from Thursday to Sunday." USA Today adds, "70% favor increasing taxes by eliminating certain tax loopholes, and 66% back increasing income taxes for individuals making more than $200,000 and families earning at least $250,000."

My question is, how many of those who think it ought to be higher actually know what the current rate is? And how many of those who favor closing loopholes actually know what the loopholes are? These are primarily responses of the uninformed based on what they are fed by the media who get their material from political hacks.

Warren Buffet argues that his rate ought to be higher than that of his secretary without any discussion of why his rate is lower than his secretary. Capital gains and dividend taxes were lowered to promote investment and those earnings have already been taxed once as corporate earnings. Berkshire Hathaway already paid 30% federal tax on its earnings before it paid dividends to Warren. So when Warren pays 15% tax on his dividends, the total tax is nearly 50%. That is more than enough.

Global Warming: Article from Newsmax

2011-09-06T07:15:00.000-07:00

I find the following article from Newsmax to be instructive. I will try to find the Nature article to corroborate.

New Evidence Debunks Manmade Global Warming
New research from one of the world’s most prestigious scientific organizations indicates that cosmic rays and the sun — not manmade carbon emissions — are the major factors influencing global climate.
“The science is now all-but-settled on global warming, convincing new evidence demonstrates, but Al Gore, the IPCC (International Panel on Climate Change) and other global warming doomsayers won’t be celebrating,” writes Lawrence Solomon, executive director of Energy Probe, in Canada’s Financial Post.
“The new findings point to cosmic rays and the sun — not human activities — as the dominant controller of climate on Earth.”
The findings, published in the journal Nature, come from CERN, the European Organization for Nuclear Research, one of the world’s largest centers for scientific research involving 60 countries and 8,000 scientists at more than 600 universities and national laboratories, according to Solomon.
CERN — the organization that invented the World Wide Web — built a stainless steel chamber that precisely re-created the Earth’s atmosphere.
“In this chamber, 63 CERN scientists from 17 European and American institutes have done what global warming doomsayers said could never be done — demonstrate that cosmic rays promote the formation of molecules that in Earth’s atmosphere can grow and seed clouds.” And the cloudier it is, the cooler it will be, Solomon notes.
“Because the sun’s magnetic field controls how many cosmic rays reach Earth’s atmosphere (the stronger the sun’s magnetic field, the more it shields Earth from incoming cosmic rays from space), the sun determines the temperature on Earth.”
So when the sun’s magnetic field is strongest, fewer cosmic rays impact the Earth, which in turn leads to decreased cloud formation and warmer temperatures.
The link between cosmic rays and global warming was first proposed by two Danish scientists in 1996, and was immediately denounced by the IPCC.
But CERN scientist Jasper Kirkby, a British experimental physicist, accepted the Danes’ theory. He told the scientific press in 1998 that it “will probably be able to account for somewhere between half and the whole of the increase in the Earth’s temperature that we have seen in the last century.”
It took Kirkby nearly 10 years to convince the CERN bureaucracy to proceed with his plan to create the chamber that replicates the Earth’s atmosphere and has produced the recent results.
But CERN “remains too afraid of offending its government masters to admit its success,” observes Solomon, author of “The Deniers: The World-Renowned Scientists Who Stood Up Against Global Warming Hysteria, Political Persecution, and Fraud.”
CERN told Kirkby and his team to downplay the results by stating “that cosmic radiation is only one of many parameters.”
Solomon concludes: “CERN, and the Danes, have in all likelihood found the path to the Holy Grail of climate science. But the religion of climate science won’t yet permit a celebration of the find.”

Global Warming

2011-08-01T04:30:00.000-07:00

This is copied from Newmax:

Global Warming Could Boost Crop Yields

A leading atmospheric physicist asserts that global warming, rather than endangering food production as climate change alarmists say, will likely increase production instead.

“The latest catastrophic forecast comes to us from climate alarmists who focus on a world food crisis, supposedly as a consequence of global warming,” says S. Fred Singer, a professor emeritus of environmental science at the University of Virginia and former founding director of the U.S. Weather Satellite Service.

“While there may well arise problems about world food, it is more likely that global warming — if it does take place — will increase food production rather than lower it.”

Singer cites three reasons.

First, the main cause of lowered crop yields is the loss of soil moisture, but any increase in global temperature will also increase evaporation from the oceans and raise global precipitation.

“Global warming is a perfect recipe for creating more fresh water, which according to the alarmists is badly needed,” Singer, now a research fellow at the Independent Institute, writes for its website American Thinker.

Second, warmer temperatures will affect higher latitudes, where climate tends to be more severe, more than the tropics.

“So it may be that Canada and Siberia will see increases in crop production because of longer growing seasons, warmer growing temperatures, and fewer frosts — but there will be little change at lower latitudes,” Singer says.

Third, the increase in atmospheric carbon dioxide from the burning of fossil fuels, which alarmists say is the cause of global warming, will be good for plant growth.

“CO2 is plant food and a natural fertilizer,” Singer points out. “Increased CO2 levels not only speed up plant growth of crops and forests, but enable plants to do better under stressed conditions of drought, pollution, and attacks by insects and fungi.”

The looming problem of world hunger, Singer adds, has more to do with difficulties in food distribution and purchasing power than with food production.

El Portal de Zacatecas

2011-03-20T15:41:00.000-07:00

Jarom and I found good authentic Mexican in an unexpected place. Now you might think that the 7700 block in Midvale in a restaurant named El Portal de Zacatecas (I am not sure of the last word but it does start with a Z.) is not an unexpected place to find good authentic Mexican. But we were surprised. You see, we stumbled on the place at about 11:45 one morning last week. We were the only ones there. We stayed 45 minutes and were still the only ones there when we left. When we got our menus almost all the choices were American dishes. But we were there for Mexican and so searched until we found the tacos, 3 for $3.99.

The choices were interesting; asada, cabeza, chicharon, lenqua, etc. We went for the asada. I also noticed that the window advertised menudo. We went for the tacos with carne asada (3 each) and a bowl of menudo. Our waitress brought us pork rinds and salsa for an appetizer. I thought the pork rinds were a fun alternative to tortilla chips and the salsa was excellent. The tacos were made on what appeared to be homemade corn tortillas. Two salsas were served on the side. Both were excellent. The menudo was served with more tortillas. Either one, the three tacos or the menudo would be enough for a meal, though I did manage to eat them both.

Though most of the items on the menu were American dishes, they made no concession for American sensibilities in the Mexican food. I mean having tongue and face tacos on the menu would be enough, but the tail bones in the menudo completed the deal.

The tab came to $14. I paid in cash but they only had three one-dollar bills in the till. I took the three and left the other three as a tip. I hope they can stay in business a little longer. I look forward with real anticipation for my next trip to Utah so I can take my wife and my other children.

If you get a chance to try it, I think you will like the adventure.

M Goes on a Mission

2011-03-20T14:58:00.000-07:00

People wonder why we named him M. The answer is simple. I admire my dad more than any other man I have ever known. His name is Milton. 'nough said.

"Dad, I've got my list of things to do today."

"Yeah?"

"Yeah,

Pick up suit at Mr. Mac's.
Pick up immunization record from sister.
Stop at Winco.
Eat lunch.
Go on a mission.

The boy does have a sense of humor. We pick up the suit.

"I really want to do some good."

"I'm sure you will."

"For others and for me too. I want to learn to use my time better. I waste a lot."

He tells me other ways he wants to improve. He is, at the heart, an impressive young man.

We get the immunization record from his sister and stop and Winco for some things his dad wants. Time for lunch.

"How about Mexican?" he asks as he sets the GPS for Mexican food. We find one just a few blocks away. The tacos are made with homemade corn tortillas. The salsas are fantastic. We have a good lunch.

"Dad, are we going to be late?"

"Go check the ETA on the GPS while I pay the TAB."

He does. It looks like we will be a few minutes late. The Mexican food was worth it for me, but for his sake we probably should have had fast food.

We are off to the Missionary Training Center.

"I'm really off on a new adventure, a whole new phase of my life."

"You are."

I am used to the platitudes of Mormon boys going on missions. "He is in God's hands now." "He goes away a boy and comes home a man." I've heard a lot of that.

"I get to start over. No one I will be with for the next two years knows me at all."

"True."

I know that in the Lord's economy the return on investment is tremendous. Every sacrifice made in God's service is rewarded several times over. I know this by faith and by experience.

We are there and it is time for goodbyes. We hug. Bye, Dad. I love you."

"I love you. Do your best."

Mind you, I would not have things any other way. There is no choice he could make that would bring me more joy. But what I feel as he turns and walks away, what I feel most intimately in this moment, is the sacrifice.

"I'll see you in a couple of years."

Understanding My Liberal Friends, Part II

2010-12-15T08:07:00.000-08:00

From Newsmax: . . .according to a report at TheHill.com. The “die is cast,” The Hill quotes Rep. Peter Welch as saying. “Once the president entered into that agreement with the Senate Republicans . . . that set the tone for the weekend and now you got Americans excited about a trillion dollars that is going to be in effect given away.”

It takes a different mindset to think the mugger generous that leaves you a few dollars for lunch and a taxi ride home.

Disturbing

2010-12-07T06:34:00.000-08:00

From CSN News:

"House Speaker-to-be John Boehner (R-Ohio) is telling the Smithsonian Institution to pull an exhibit that features images of an ant-covered Jesus or else face tough scrutiny when the new Republican majority takes control of the House in January."

Response from the New York Times:

Bullying and Censorship

"The Smithsonian pulled a video from an exhibit after complaints from the Catholic League and John Boehner, failing in its important role of challenging, disturbing and enlightening."

The distance between the limited government as outlined in the Constitution of the United States and the idea that the government would fund an institution with tax dollars and charge it to disturb the public is immeasurably close to unfathomable. I try to understand my liberal friends, but it seems I am not sufficiently nimble to contort myself into the pretzel minded perspective required to see it. Thank you Catholic League and thank you John Boehner for getting the Smithsonian to pull the disturbing exhibit.

They Are Not Hypocrites

2010-12-02T12:38:00.000-08:00

From today's news:

"Members of the Congressional Tea Party Caucus may tout their commitment to cutting government spending now, but they used the 111th Congress to request hundreds of earmarks that, taken cumulatively, added more than $1 billion to the federal budget."

The implication here is that if you are against earmarks and still request them, you are a hypocrite. No so.

Imagine that in your town you are required once a week to attend a town gathering. The mayor walks through the crowd and takes money from everyone. He then proceeds into the court house where he sets half of the the money aside and throws the rest out the window. You protest this practice, but you are not a hypocrite if you hang out under the window and try to catch some of your own money as it flutters to the ground.

We may think it best if the government were not involved in earmarks, energy assistance, tuition grants, food stamps, WIC, AFDC, tax rebates, etc., but trying to get some of our money back through participation is not hypocrisy.

I Aint So, Again

2010-07-30T10:22:00.000-07:00

The president claims that federal intervention in the auto industry saved 1.1 million jobs. It isn't so.

The president is assuming that bankruptcy of GM and Chrysler would have meant that the companies would have gone out of business. But that is not the result of bankruptcy. Bankruptcy would have changed ownership of the company, cancelled liabilities, and possibly cancelled or modified contracts.

What we got from federal government intervention was companies owned primarily by the federal government and labor unions with labor contracts slightly changed and much of the cost-structure problems still in place. Creditors, those who loaned the company money over the years, got almost nothing.

What we would have gotten in bankruptcy is a company owned by the creditors, cancelled labor contracts, and a chance to start again with totally new cost structure and better ability to compete.

On the other hand, we did get that $41,000 electric car.

I . . . Kew . . . You?

2010-07-29T19:20:00.000-07:00

Sitting in the living room. Two year old son says, "I . . . kew . . . you?"

"You want me to carry you?"

"No, I . . . kew . . . you."

"You carry me?"

"No, I kew you."

"You kill me?"

He nods yes. The wife and I laugh. "You'll have to show me what you mean."

He leads me out into the middle of the floor and points down at the floor. "Down."

I kneel down on hands and knees. "Like this?" He is still pointing down. I bend down a little farther. "Like this?"

"No."

I lay down all the way. "Like this?"

"No."

I roll over on my back. "Like this?"

His face lights up. "Yes!" He climbs on my gut with both feet and then jumps off.

"Ow you're killing me!"

Aha! Realization and laughter.

It Just Isn't Fair!

2010-04-04T17:26:00.000-07:00

It isn't, I say, fair at all.

I want to be a good husband and treat my good wife with respect, but what am I supposed to do when she says these kinds of things? Just let it pass? You tell me.

We are walking down the aisle at Target and she notes something she doesn't like. "That drives me butt nuts," she says. To tease or not to tease.

It just isn't fair!

All You Have to Do Is Show UP

2010-02-28T19:43:00.000-08:00

One of our local church leaders, while spilling his concerns to God that he wasn't sure he could cope with all of the things he had to do, got his answer. "All you have to do is show up."

My thoughts here will be different than his. His point is that if you are in God's service, that he will sometimes just take over and make good things happen through you if you will just be there. But it got me to thinking about the situations in which it is true that all you have to do is show up. Now I don't want to minimize the importance of preparation, but there are times when showing up is the main thing. Here are just a few.

1. Children that need our time. They don't actually need well planned and thought out activities. They just need us to show up.

2. Class. There is a lot that can be learned just by showing up.

3. Church. There is real fulfillment there that can come with little preparation.

4. Winning a war against the French.

5. Meetings at work. Sometimes a variety of perspectives is needed and no preparation is required to make a valuable contribution.

6. Family reunions.

7. Fun with loved ones and friends.

8. Funerals and weddings.

9. Etc.

It does seem to be true, doesn't it, that the pleasure and value of life can be enhanced by just showing up at the right places.

When Your Performance Is Really, Really Poopy and You Know It

2010-02-18T15:57:00.000-08:00

It was a simple request, "Will you teach a group of church kids, ages 12 to 18, how to balance a checking account and how to budget?" How did I mess it up so badly?

Well, it started with the materials. I didn't think the church had a projector that I could hook up to my laptop, so I opted for the old fashioned projector and plastic slides. I alternated paper and slides in the paper tray of the feeder so when I asked for two copies of my slides it would give me a paper copy and a film copy. I forgot to ask for two. What I got was every other item on film and every other item on paper. Bummer.

Then when I went to make my presentation, I forgot to take a marker, so I couldn't write on the slides as I had planned.

So there I am with every other slide and nothing to write on. You can imagine how it went.

So I had this great idea that I would talk to them about investing as well. You should have seen the eyes of the younger kids when we got to "short selling stocks."

Ten minutes after I was done, I got these two good ideas about how I could have presented the budgeting and the investing. We could have asked the kids what they wanted when they grew up, you know, how many kids they wanted, the kind of house, the make of car, food, etc. Then we could have budgeted it all out and shown them the kind of income they would have to have or the kinds of trade-offs they would have to make. That isn't what I did. The other great idea was to compare a $100 a month investment in different vehicles like savings, CDs, government securities, mutual funds etc. I could have shown them how much wealth would accumulate under each alternative. I didn't do that either. The more ideas I got about what I could have done, the worse I felt about what I did do.

So, you ask, were there any positives? Hmmm. Let me think. Well there are a few positives. First, when I told my wife about it she felt sorry for me and said nice things. Second, they won't ask me to do it again. Third, they won't ask me to do it again.

But the Cost is Relevant

2010-02-18T06:56:00.000-08:00

From U.S. News: "The Hill says Democrats 'have hung their election year hopes on the $787 billion program and are marking its one-year anniversary with events throughout the country.'"

They keep wanting to talk about the benefit without considering the cost. Did the $787 billion stimulus create or save some jobs? It may have. But using the most optimistic estimate, 2 million jobs, the cost is very excessive, $393,500 per job. Whenever someone touts the jobs saved, we have to remind them of the cost. Is this really the best we can do? If they hang the election on this, I think they are going to choke.

How To Drive a Toyota Death Trap

2010-02-17T19:59:00.000-08:00

With all the hype about the Toyota Death Traps with the uncontrolled acceleration, you would think that along with all the Toyota bashing the transportation department would give some practical advice for Toyota drivers. They haven't. I will.

When the accelerator sticks, rather than speeding of to your death, turn the ignition off.

A few months ago, I did something I hadn't done in years. I jammed the pedal to the medal and pulled out into traffic. The pedal stuck in the full open position. I stepped on the brakes and that helped only a little. So . . . I turned off the ignition and pulled over.

That's it. Have a safe day on the road.

A Really Good One-Term President?

2010-02-16T19:34:00.000-08:00

"I'd rather be a really good one-term president than a mediocre two-term president."

This Obama quote has sparked a lot of comment. Let me give mine.

Obama was trying to say that his job is not to get reelected but to do the country's business, and if doing a great job at the country's business wouldn't get him reelected to a second term, then that was OK. That sounds good, but it is the equivalent of saying, "If the people don't want what is good for them, I will give it to them anyway." There is an air of arrogance in saying that once elected, you have no accountability to the electorate until the next election.

This president is sold as someone that has great power of persuasion. He has employed those skills a number of times in trying to sell his program to the people. With all of that selling work by the great salesman, the people aren't buying. So, being a really good president from his point of view means pushing on the people the medicine few of us want to take. From my point of view, this kind of arrogance will make him a poor president. We can only hope it will be for a single term.

$393,500 each

2010-02-15T11:20:00.000-08:00

The AP reports the White House said the US "is likely to add an average of 95,900 more jobs each month this year, while personal savings will remain high as credit remains tight." With the "public souring" on President Obama's "handling of the economy, the White House's Council of Economic Advisers' report trumpeted the $787 billion economic stimulus package as creating or saving some 2 million jobs." The Hill reports Council of Economic Advisers Chairwoman Christina Romer said the stimulus package "has been an 'unsung hero of the past year.'"

Let's do the numbers. Seven hundred eighty-seven billion divided by two million equals $393,500 per job. Is anybody else reminded of thousand dollar toilet seats?

General Motors Learns to Compete

2010-02-09T07:32:00.000-08:00

Were you wondering, like I was, how General Motors and Chrysler could ever compete when they were owned by the federal government and the labor unions? They have found a way.

Secretary of Transportation Ray LaHood seems to be on a campaign to impune the quality of the main competition, Toyota. We see news each day coming from the transportation secretary's office about how Toyota has let quality slip. This continued drum beat warning of the dangers of driving a Toyota is hurting the Toyota reputation and raising the comparative image of the other makers. It seems to be a calculated campaign against Toyota Motors.

While Toyota has a problem with an accelerator (one designed in the U.S., by the way) and possibly with some brakes, it remains the best quality car available. Really, now, if you are going to be driving across country, wouldn't you still feel more confident in a Toyota Corolla than in a Chevy Aveo?

On the other hand, I have my bet on Ford. Go, Ray Lahood!

State of the Union Address - Part 6

2010-02-08T19:24:00.000-08:00

"Because of the steps we took, there are about 2 million Americans working right now who would otherwise be unemployed — 200,000 work in construction and clean energy, 300,000 are teachers and other education workers, tens of thousands are cops, firefighters, correctional officers and first responders. And we are on track to add another one-and-a-half-million jobs to this total by the end of the year.

The plan that has made all of this possible, from the tax cuts to the jobs, is the Recovery Act. That’s right — the Recovery Act, also known as the stimulus bill. Economists on the left and the right say that this bill has helped saved jobs and avert disaster. But you don’t have to take their word for it."

Maybe, but it could have been so much better. As shown in a previous blog, the money spent on the stimulus could have provided $3,000 to every American citizen. Instead of $5o billion to help teachers, and $30 billion to get people to buy cars, and $ billions here to study high speed trains, and $ billions there, they could have given every person $3,000. Instead of the government buying us things they think we need, they could have given us the money and each of us could have bought what we actually needed. Some would have bought cars, some would have caught up there mortgages, some would have gone to school, some would have paid off debt. And all of that money would have been spent by now, creating a real stimulus instead of having the federal government leak it out over three years, destroying any chance it had of actually giving the economy the quick jolt that might have avoided most of the downturn and the high unemployment we now face. Expanding government programs is no way to stimulate an economy. The sad part is that we are spending the $787 billion dollars in a way that provides little stimulus, but any attempt to pay it back will be an economic deterrent.

State of the Union Address - Part 5

2010-02-07T17:37:00.000-08:00

"As a result, the markets are now stabilized, and we have recovered most of the money we spent on the banks. To recover the rest, I have proposed a fee on the biggest banks. I know Wall Street isn’t keen on this idea, but if these firms can afford to hand out big bonuses again, they can afford a modest fee to pay back the taxpayers who rescued them in their time of need."

I realize I have already spent a bit of space criticizing this statement, but there really is more. Have you ever wondered how the banks were able to pay the money back so quickly? Were they unprofitable and in need of help one month and then prosperous and profitable the next?

The banks were always profitable. The trouble was with the mortgage backed securities. Because of the burst in the real estate bubble, the value of mortgage backed securities dropped precipitously. Thus, the banks were not able to maintain government regulated ratios of assets to deposits. If the government had allowed the banks to list the mortgage backed securities at the amount expected to be collected from the mortgages rather than at their market values, the ratios for most banks would have been fine and little government help would have been required. The banking crisis was not caused by the banks but by government regulations that were not flexible enough to respond to the crisis.

You might ask why regulators didn't respond and change the rules quickly. Regulators are better at enforcing rules than analyzing economic effects. So why didn't congress respond? Honestly, how many congressmen do you think actually understand any of this?

State of the Union Address - Part 4

2010-02-06T17:30:00.000-08:00

"To recover the rest, I have proposed a fee on the biggest banks. I know Wall Street isn’t keen on this idea, but if these firms can afford to hand out big bonuses again, they can afford a modest fee to pay back the taxpayers who rescued them in their time of need."

It may make good politics to criticize big bonuses and use them to justify a new bank tax, but the relationship is bogus. The government already takes 40% of the bonuses in income tax and the states take another 10%. The tax itself reduces the companies' incomes and thus return to shareholders. And who are the shareholders of the biggest banks? The largest firms are widely held and most of the holdings are in retirement plans, IRAs, and 401Ks. So the tax is on middle class taxpayers, anyone that has a retirement plan, IRA, or mutual fund.

State of the Union Address - Part 3

2010-02-05T17:24:00.000-08:00

State of the Union Address - Part 2

2010-02-04T17:14:00.000-08:00

"So I supported the last administration’s efforts to create the financial rescue program. And when we took the program over, we made it more transparent and accountable. As a result, the markets are now stabilized, and we have recovered most of the money we spent on the banks."

The program is called the Trouble Asset Restructuring Program or TARP. The government has not only collected all the money given to banks, they have earned some interest and made a profit on it. However, all of the TARP money was not given to banks. Some of that money was given to the automobile companies to protect the union contracts in bankruptcy. That money has not been paid back and may never be. But you won't see the president criticizing the auto industry. In fact, he has proposed a tax to recoup the money from the banks that the auto industry will never pay back.

State of the Union Address - Part 1

2010-02-03T17:00:00.000-08:00

"Our most urgent task upon taking office was to shore up the same banks that helped cause this crisis. It was not easy to do. And if there’s one thing that has unified Democrats and Republicans, it’s that we all hated the bank bailout. I hated it. You hated it. It was about as popular as a root canal."

Laying the blame for the economic crisis we are experiencing is politically convenient, but not accurate. The current crisis was caused by a bubble in the real estate market that no one saw coming and by a bubble in oil prices. Did the banks cause the bubble in the real estate market? How did they do it? By lending too much money? By lending to people that would not be able to repay? But aren't the people borrowing the money as much to blame as the people who loan it?

Much of the problem was caused by Fannie Mae and Freddie Mac, government created mortgage underwriters, buying up mortgage backed securities. Questionable mortgages would not be written if there was not someone to buy them, and they were being purchased by government created mortgage underwriters with the encouragement of government officials. And that encouragement was done to help more people be able to buy a house.

Blaming the mess on the banks is convenient but inaccurate. If the government wants to point a finger it should point at the folks in the mirror. It is another example of good intentions gone wild.

Goodwill Drop Off for Food or Ward Pot Luck?

2010-01-24T14:25:00.000-08:00

Today was pot luck Sunday, and while I had a wonderful time, my conscience is bothering me. I will unburden myself here on this blog. But before you read any further, you have to promise not to tell anyone in my congregation about this.

A few months ago, we found some boxed dinners on clearance at Wal-Mart. Now, I know it is a little dangerous buying food that couldn't be sold to anyone else, but the price was too good to pass up. So I picked up a couple of boxes. My dear and lovely wife threw in a dozen more. After all, she said, we eat all sorts of things no one else would touch.

Campbell's Supper Bakes. Heard of them? No? That's probably because the few who tried them threatened to sue the company for pain and suffering. Anyway, that's what we thought after we tried one. "What are we going to do with thirteen boxes of Campbell Supper Blechs?" we asked each other. "Ward potluck?" I suggested. "You wouldn't dare."

Well maybe not when she was around, but she was gone this week visiting family. I dared. To make it more potluckish though, instead of using chicken breasts and putting stuff on top, I chopped the chicken breasts and mixed the whole thing up. Then I added some cheese, baked it up, and snuck it into the church when no one was looking.

Not only that, but while I was feeling sneaky, I fried up a 10 pack of burritos we had had kicking around in the freezer for a few months that none of my kids would eat. Then I thought, I could get rid of some old apples I had hanging around and going bad in the fridge. There were five different kinds, Granny Smith, Fuji, Jonagold, Cameo, and Braeburn. I had gotten them on clearance at Sunmart and just hadn't used them up. So I used eleven big apples and made a big apple pie in a glass 9X13 baking dish.

There, I have unloaded. Pretty bad isn't it? Using the church potluck like a goodwill drop off for food. Funny thing is though, since my conscience was so burdened I decided I had better eat what I brought as a sort of suffering for penance action. And you know what? It was all pretty good. Not only that, but all three of my things got totally eaten up. You know what they say. One man's trash is another man's treasure.

Worst Decade?

2010-01-05T12:27:00.000-08:00

It seems that our current economic difficulty is being used to smeer the whole decade and indirectly the prior administration. Current suffering now does not impune all policies that preceeded it, but only those that led us here.

Bob Herbert, from an op-ed in the New York Times: "As The Washington Post reported over the weekend, the entire past decade 'was the worst for the U.S. economy in modern times.' There was no net job creation — none — between December 1999 and now. None! No previous decade going back to the 1940s had job growth of less than 20 percent.'"

A look at the Bureau of Labor statistics shows that the decade was not too bad. It started with 130,532,000 jobs. 2005 ended with employment of 134,861,000 jobs, an all time high. 2006 ended with 137,000,000 jobs, an all time high. 2007 ended with 138,152,000 jobs, an all time high. 2008 ended with 135,074,000, a large decline from 2007, but still higher than 2005. The large job losses happened in 2009. It was overall, a good decade for employment.

If we compare the growth in jobs with growth in population, we find some interesting stuff. In no decade since the one that ended in 1910 have we had a 20% increase in population. So how did we have a 20% increase in non-farm employment in each of those decades? It was movement from the farm and a larger percentage of women in the workforce. Such increases in employment cannot be maintained. We soon run out of farmers and unemployed women. The rate of population increase has been falling, the average age of the population has been increasing, and we cannot expect double digit increases in employment over the long term.

Herbert continues, "The real story right now is the entrenched suffering (with no end in sight) that has been inflicted on scores of millions of working Americans by the Great Recession and the misguided economic policies that preceded it."

We know what caused the current problem. It was precipitated by the bubble in housing prices and risks taken because it seemed the good times would never end. It is a rather perverse result that the very thinking that the good life will go on forever is what actually caused it to end. The recession was not caused by low tax rates.

The real story right now is the suffering that will continue to be experienced by millions of Americans because of the misguided economic policies of the current administration.

Taxing the Rich

2010-01-04T16:52:00.000-08:00

The IRS recently released statistics on taxes and income. To get into the highest 10% of income earners takes about $110,000. It takes about a half a million to get into the top 1%. The top 1% of income earners pay 40% of the federal income tax. The bottom 50% pay 3% of federal income tax. This information has several implications for me.

1. When we hear that recent tax cuts were a give away to the rich, it doesn't gibe well with these numbers. What are we giving to them? The top 1% are still paying 40% of the burden.

2. If people vote the naive self interest, cutting taxes can't be a winning campaign issue since half of the population pays no taxes.

3. The tax cuts that so many say are give-aways to the rich have left half of the population as free loaders. They don't contribute to the national defense, assistance for the poor, or most of the federal government programs. We sometimes complain about how our tax money is spent, but half of the American population has no stake. They can't wonder how their tax money is spent. Can we expect them to care how our tax money is spent?

4. Now, there are a host of new spending proposals before congress. Those proposals probably don't bother too much the half of the population that will pay nothing for them. What they should understand, however, is that those programs will make it less likely they will ever be able to climb the ladder to the income level of those who are paying the taxes.

Stock Picks for the New Year

2010-01-02T16:32:00.000-08:00

One of the great myths of finance is that experts can pick winner and loser stocks. It can't be done. Oh, all right, it can be done, but it is random. All academic studies show it. Anecdotal evidence suggests that some people have been very successful. But when you look at all the people giving advice or managing mutual funds, the high paid experts, the number that are very successful is no larger than what you would get by chance. The deal is that if experts could identify winners, the price would be immediately bid up to its appropriate price. If experts could pick winners, they could make a lot more money trading in those stocks than they could giving advice.

The Wall Street Journal recently did a study that looked at the most recommended stocks at the beginning of the decade. The most recommended stocks lost two-thirds of their value. The average return on stocks during that period was a three percent increase. This doesn't mean the experts are stupid, it only means they were out to enhance their reputation by recommending stocks that could be big winners, riskier stocks.

None of this means that professionals are not important in picking stocks. They can help investors pick stocks appropriate to the investor's investment goals. They just can't tell you whether a stock is over or under priced unless they have insider information, and trading on that would be illegal.

So, here is my stock picking advice. Pick a company that you like, something that interests you, so you can have fun watching the price change. My Ford stock has been a real gas over the last two years.

New Years Resolutions, Addiction, and Pizza Sauce

2009-12-31T17:23:00.000-08:00

A few years ago, Aunt Pat took the family out for pizza. The kids were smaller then, one only a baby in her arms. When she went up to pay, balancing the baby on one arm and trying to write a check with the other, she noticed some pizza sauce on her arm. In the hurry and without thinking she just licked it off. . . It wasn't pizza sauce.

Appearance often depends on the light that illuminates.

Part of overcoming addiction or otherwise undesirable behavior is a matter of perspective. Many of us would like to lose weight because we know we would look better, feel better, avoid obesity related illnesses, and be generally healthier. Those motivations are most often not enough. But there is better way to see the problem.

Central to God's plan for us is agency or free will. It is through the exercise of our agency that we choose to follow him. It is through exercise of free will that we experience the greatest joys and rewards of mortality. Sometimes, however, some of our choices restrict our agency in undesirable ways. Spending beyond our means puts us in bondage to debt. Other choices leave us addicted.

And so, I resolve not to loose weight, but to reclaim my agency. In this light, when faced with the choice to eat another doughnut, it is not just a matter of the effect on my health, but rather a question of whether I will surrender my agency to the doughnut. In this light, when faced with a second helping of pasta, it is not just a matter of my appearance, but a matter of being able to make choices with my conscious mind, following through, and thus reclaiming my agency. In this light, I should be able to plan what I eat and eat what I plan. In this light, I will see the pizza-sauce-looking splotch on my arm as the baby poop that it is, and perhaps I will not lick.

What Can I Say?

2009-12-30T19:47:00.000-08:00

As I review my list of goals from the past year and ponder what plans I should make for the new one, I notice that most of my goals have focused on me. How can I be healthier? How can I accomplish more? What do I need to do for my children or spouse? They rather ignore the contributions of others around me.

I wonder, how I could more fully acknowledge the contributions of other people? Perhaps I can make a resolution to acknowledge the contributions of others. Perhaps I can resolve to speak the gratitude I feel rather than continue to leave it unexpressed.

The Year Is Going, Let Him Go

2009-12-29T19:31:00.000-08:00

Tonight I am thinking of a few lines of the poem, Ring Out Wild Bells, by Alfred Tennyson.

The year is dying in the night,
Ring out wild bells and let him die.

The year is going, let him go. . .

It is that time of year again. We can review the year that is past, but it is past. It may have been a good year with great experiences and wonderful learning, but, alas, a new one is coming. It may have been a tough year with loss or disappointment or personal failing. Thank goodness, a new one is coming.

Something Remarkable!

2009-12-28T18:40:00.000-08:00

It is that time of year again. Time to think of the next one and make plans. As I look over last year's plans - to write papers, read books, exercise, lose weight, work on cub scout advancement, and so on - I see that I have accomplished most of the things on the plan. But somehow, it doesn't seem too meaningful. Let's see, what can I do in the coming year to make my mediocre performance a little better than mediocre?

I am reminded of Joseph Worthlin's story of Snowman the horse, an old gelding workhorse that was given up as nearly worthless. In the right hands he became a champion jumping horse. And Joseph Worthlin's conclusion? "No matter our age, circumstances, or abilities, each one of us can create something remarkable of his life."

All planning starts at the end, with what we want as the outcome. I now need a vision of remarkableness around which to build my plan for the new year and beyond. Did you ever get tired of the mundane and just want to do something big? Hmm. It is that time of year again.

Amazed

2009-12-27T13:53:00.000-08:00

I am sometimes amazed at the news out of Washington. It appears the Senate has passed its version of a health care reform bill. The boasting part is that it will take us from having 84% of the population with medical insurance to having 93% of the population with medical insurance. What a miracle! How did they accomplish such a grand thing?

They passed a law that made the uninsured buy insurance. Wow! Those who can't afford it will be provided a subsidy. That in itself wouldn't be too bad. (It is bad, but not too bad.) However, we could write that into law with a few pages. The problem is the regulations and taxes in the other 2,000 pages.

Amazing, isn't it?

Merry Christmas

2009-12-24T13:25:00.000-08:00

I feel real joy and contentment during this Christmas season. "Why," you ask? I am inclined to answer as the shepherds in the Christmas Song, Angels We Have Heard on High.

"Shepherds, why this jubilee: Why your joyous strains prolong? What the gladsome tidings be which inspire your heav'nly song?"

"Come to Bethlehem and see . . . "

Merry Christmas

But We Can't Do That

2009-12-20T07:36:00.000-08:00

From Yahoo news, "New computer modeling suggests the Arctic Ocean may be nearly ice-free in the summertime as early as 2014, Al Gore said Monday at the U.N. climate conference."

I hope we all realize there is nothing we can do about that. Even if greenhouse gasses are causing the global warming that is causing the ice to melt, there is nothing we can do in five years to reverse that. We might slow the increase in the concentration of greenhouse gasses, but it is not possible to return the concentrations to levels that would actually cause the earth to cool in time to prevent the ice from melting.

Would it not be a better use of resources to adapt to the climate that we have?

The Show Must Go On

2009-12-18T06:31:00.000-08:00

Have you noticed the charades being played in Washington. Let's look at a few.

1. First was the jobs summit. From the Washington Times, "President Obama is hosting a 'jobs summit' . . . that will be packed with business leaders and economists supportive of White House policies but lacks a diversity of opinion, several analysts say. Missing . . . are the U.S. Chamber of Commerce and the National Federation of Independent Business - both of which have been critical of Mr. Obama's proposed health care overhaul. Confirmed attendees include liberal economists credited with shaping the $787 billion stimulus package, union leaders, environmental advocates and executives from Google and other blue-chip firms." There is no attempt here to address the problem, only to appear to address the problem.

2. Next was the speach on job creation. From the Huffington Post, "Obama proposed new spending for highway and bridge construction, for small business tax cuts and for retrofitting millions of homes to make them more energy-efficient. He said he wanted to extend economic stimulus programs to keep unemployment insurance from expiring for millions of out-of-work Americans and to help laid-off workers keep their health insurance. He proposed an additional $250 apiece in stimulus spending for seniors and veterans and aid to state and local governments to discourage them from laying off teachers, police officers and firefighters." So, in essence, let's do more of what didn't work last time and see if it will work this time.

3. Then there was the lecture to the bankers. Obama lectures the bankers. They agree to increase lending. Wow! But since the country is coming out of recession, the banks will be increasing lending anyway. So the bankers look at the lending budget for 2010, commit to lend what they were planning on lending anyway, the president proclaims victory, and everyone seems to be helping create jobs. Pretence. It is all pretence.

So the acting goes on. Pretend to gather ideas on job creation. Announce plans to do things to create jobs that are proven ineffective. Accuse the party polling lowest in public opinion of causing the job losses. Pretend that new lending is a concession won by arm twisting, and when employment comes back (as it would without any of these actions) claim credit for it.

The show goes on.

Argentine Beef and Health Care Reform

2009-12-16T14:20:00.000-08:00

You may have seen this from the Associated Press.

"Intense government efforts to keep meat affordable through taxes, export restrictions and price controls have enabled Argentines to eat record amounts of beef this year, but the short-term bonanza has come at a very steep cost. With little or no profit left in meat, ranchers are selling out, slaughtering even the female cows needed to maintain their herds."

I found this article fascinating, partly because I spent two years in Argentina in the 1970s, and partly because it is another illustration of government interferance in economic markets. Things are easier to see in simple markets like this. The price of beef is rising, our people really like beef, so let's set price limits. Since the local price limit is lower than the international price, producers export more of their product causing local shortages. So, let's put high export taxes on the beef and pass other export restrictions. Now the production of beef becomes unprofitable so producers slaughter breeding stock. Now we import beef.

There are several interesting effects of the government interference in the beef market in Argentina that can be generalized to governement involvement in general.

1. Consumption of beef in Argentina increased to 165 pounds per person per year. That is a little less than a half pound of beef per day, every day. When government lowered the price of beef, it increased consumption. In general, when government lowers the price of any good or service to the consumer, it will increase consumption. In particular, when government or insurance policies lower the cost of medical services, it will result in more consumption. More consumption will increase costs overall and raise the cost of medical insurance.

2. The governments rules make it uprofitable to raise cattle so breeding stock is being sent to slaughter. In general, when government is involved in setting prices, those prices will make production unprofitable for some producers. Those producers will quit producing. In particular, when government attempts to lower the costs of drugs, it will make it unprofitable for some to continue. It will not stop the manufacture of drugs currently on the market, most of the costs of those drugs have already been incurred in developement. I will, however, inhibit the development of new drugs. Similar effects will occur with doctors and hospitals when government tries to reign in the costs of medical insurance.

3. If the government in Argentina comes to its senses and realizes that its policies are counter productive, it will take years to recover. Slaughtered breeding cows have to be replaced over time as heifer calves are kept back from slaughter to be raised as new breeding stock. In general, it takes longer to recover an industry from government caused destruction than it takes the government to ruin it. In particular, if a pharmaceutical company discontinues a line of research because the government has made it unprofitable to pursue, you can't just pick up on it when the government says oops. Scientists have to be hired, and trained, and caught up to speed. If doctors have left the industry in frustration, you can't just replace them by putting an ad in the classifieds. New doctors will have to be educated.

The Argentine delimma gives new meaning to the old question, "Where's the beef?" We might better ask, "Where's the beef gone?"

The U.S. dilemma may have us soon asking, "Where's the doc?"

Big Bums and Global Warming

2009-12-14T14:09:00.000-08:00

My three year old daughter says she knows why some people have big bums. "Why do some people have big bums, Sweetie?" "Because they hold in their poop." Cute girls, isn't she?

I guess it makes sense. Some people do have big bums. Poop does come out of the bum. So two plus two gets you four.

I sometimes wonder why the world is warming. Well, there is an increase in the concentration of carbon dioxide in the atmosphere. Two plus two again.

On the other hand, we know that the world has been warmer than it is today, and warmer when there was no chance that humans caused it. We also know that the world has been somewhat colder. I am still not convinced, when it comes to global warming and efforts to stem it, that we are not off on a fool's errand.

Letter I Sent to Senator Nelson Today

2009-12-11T08:32:00.000-08:00

Dear Senator Nelson:

I am writing to thank you for your resistance to the health care legislation before congress and express my own concerns with it.

The primary reason we find ourselves in the situation we are in relative to medal care costs is that the responsibility and accountability for purchase of medical services have been taken out of the hands of the consumer of those services. Legislation before congress tries to control costs by increasing competition at the level of the insurer, but the costs are incurred at the level of the consumer. No significant and enduring cost savings can be attained at the insurer level without addressing the costs at the consumer/provider level.

We ought to give capitalism a chance by focusing at the consumer/provider level. If every medical transaction has a wealth consequence, the market will bring costs and consumption into line. Such can be done by converting to a system of medical savings accounts and catastrophic health insurance.

For example, imagine that the $15,000 that is paid out by and for my family each year for medical insurance, deductibles, and co-pays were put in trust instead. In a typical year my family will consume about $5,000 of medical services. In the second year of such a system, I would have the new $15,000 plus the $10,000 carryover from the previous year. Now we have $25,000. It would not be long before our trust would have sufficient funds for pay for anything that came up. And, since each purchase of medical services would affect my personal wealth, I would begin to shop for medical services more wisely and would be less likely to over-consume. And when I approached the last year of life when a large portion of health care expenditures are made, I would not need to worry about adding to the burden of insurance rates. I would weigh the decision for expensive medical treatments against the estate I leave my children.

I am concerned that the legislation being considered treats the symptoms of our problems only, takes the responsibility and accountability further out of the hands of the consumer of medical services, and in the long run plunges us deeper into the morass of insurance company and governmental management of the medical system.

The Pizza, Adventures in Sao Paulo Part IV

2009-12-10T18:54:00.001-08:00

The wife asks at the front desk about a pizzeria. We are directed to a place a few blocks up the street. We head up the street, find the pizzeria, and are seated. It is a bit nicer than we had expected. The place is elegant. There are musicians on a piano and base playing background music. We get our menus. The pizzas are from $R48 to $R60 and the water is $R4 per small bottle. We wonder if we should stay, but decide to. "The price must be higher to pay for the elegant atmosphere and the musicians." We find out it is not to pay for the musicians. The is a $R9 per person cover charge.

The pizza comes out and with a wonderful flair the waiter serves us each a piece. "Maybe the price is high to pay for the flair." We eat the pizza. It is better than any pizza I can remember. All agree. We have a great time.

I wonder if we have lost something with all of our national pizza chains.

Atonement

2009-12-06T17:21:00.000-08:00

On this Sunday my thoughts are of a religious nature. So those of you who are here to read the rantings of a bean counter trying to make sense of the numbers coming out of Washington, this may not be for you. And those of you who are here to read the musings of a father of seven who is sharing the adventures of life may not be interested today.

I have been thinking of the atonement of Jesus Christ and of his role as my Savior. He is my Savior in several ways.

1. Jesus' atonement overcomes physical death. We will all be bodily resurrected and live eternally in bodies of flesh and bone.
2. Jesus took upon himself the sins of the world atoning for the sins of little children, of those who died without a knowledge of the gospel and thus sinned not knowing the laws of God, and of those who repent of their sins and follow him.
3. Isaiah teaches that Jesus suffered our sorrows and our pain. Thus, through his atonement all human suffering can be alleviated.
4. Alma teaches that Christ, through his atonement, came to "know according the flesh how to succor his people." There is nothing we can pass through that he does not understand.

So, Jesus Christ is my Savior. He saves me from physical death through the resurrection. He saves me from spiritual death by taking my sins upon himself. And because he has suffered the weight of my sorrow and sickness, and because He understands perfectly the human condition, he can save me from every mortal hazard. He is my Savior indeed and I love him.

They Are Singing Our Song, Adventures in Sao Paulo Part III

2009-12-05T10:41:00.001-08:00

We are walking down the street in the center of Sao Paulo. We see a ring of people watching a couple of guys singing. There are two men in the center about 15 feet apart facing each other. They each have a tambourine size drum. They take turns singing a chanting little ditty back and forth. We can't see well so we move around to where the crowd is a little thinner. When we arrive at the better spot I notice a young lady super embarrassed and hiding her face in her boy friend's shoulder. The crowd is laughing. Hmmm.

Now the crowd begins to look at us and chuckle. I tell the wife that she had better translate for us. "Let me see. 'Look at that pretty lady.' 'The pretty lady with the mineral water.'" My pretty wife holds up her mineral water in her hand. "'Look at the pretty lady. She is with a strange man.'" That would be me. "'See the pretty lady with the strange man.' 'I think they should give us some money.'"

I wave to the singers and the crowd and head out. They all laugh and the singers move on to torment someone else in the crowd.

Avestruz For Me and Yous, Adventures in Sao Paulo Part II

2009-12-01T11:09:00.000-08:00

We want to take in a rodizio churrascaria. My lovely wife asks at the hotel front desk. "He tells me there is a churrascaria across town that will pick us up and bring us back. It will cost $R20 or $R30."

"Let's go," I say.

We wait an hour or so because the van's license plate ends in an odd number and it is even number day in Sao Paulo until 8:00. The driver picks us up and takes us 5 to 10 miles across town. We walk in and are seated. The place is very nice. We sit at a table for four and find that many waiters hovering over us. They immediately begin to set out little plates with appetizers. There are lobster tails, shrimp, smoked salmon, and all sorts of other things I can't remember or can't identify. Daughter says, "Dad, I think this is going to cost more than $R30."

"You think?"

Son says, "The sign on the way in says $R89."

We look at each other. We are not the $R89 per plate types.

"Dad, what should we do?"

Well, what could we do? "Take a deap breath, forget what it costs, and enjoy yourselves."

The waiters bring by all sorts of meat; 4 or 5 cuts of beef, pork, lamb chops, chicken, sausages, bacalhau (cod fish). It was all delicious, first class. The waiters were fun. It felt almost naughty (in a fun way) to spend that much money for dinner.

The acme of the evening, however, comes when they bring us some raw meat on a cart. They want to know if we want any jacaré, peito di pato, or avestruz. We decide to let the pato keep his peito. The kids want to try the jacaré. So the attendant cooks us up some alligator right there next to our table. It seemes a bit of a cross between chicken and fish with a little more bounce on the teeth, but not bad. After the jacare is done cooking, I think we'd best try the avestruz. How can you let something with a name like avesteruz go by without trying it? The ostrich looks like meat. It smell good. I take a bite. The texture isn't much different from that of beef. And the flavor is such a surprise. It is absolutely dreadful. I haven't tasted anything that bad since Julie Hanson used cream of shrimp soup in scalloped potatoes. It was is just plain awful.

We laugh and eat the evening away. I never would have spent the money had I not felt trapped, but we are glad we were trapped. It is a wonderful adventure.

Sao Paulo

2009-11-23T14:34:00.000-08:00

Sao Paulo, Brazil is an adventure. The food is delightful. The shopping is wild and wonderful. The biggest surprises are cultural. There was this percussion band and dancers in a small plaza that had me fascinated. We stopped where there was a circle of people watching some singers. It was mearly enjoyable until we found out they were singing about us. My free motel internet time is about up. More later.

$250,000 Bucks Each

2009-11-18T16:25:00.001-08:00

There seems to be some dispute in the news over whether the $160,000,000,000 of stimulus money spent on job creation really produced or saved 640,000 or whether the Obama administration overcounted. I don't see how it matters. Even if we accept their numbers, $160,000,000,000 divided by 640,000 jobs comes out to $250,000 per job. This is what happens when your government comes to call. Why don't we rely on them to fix our health care system as well?

The Thick of Thin Things, Part 2

2009-11-15T08:37:00.000-08:00

In taking stock of my activities, I have noted some things that are terribly thin and should be eliminated. However, eliminating some is not so simple.

The thinnest of all the thin things I do is participating on the faculty senate at my university. Two things make this a thin activity. First of all, my opinion is almost always the minority opinion. When I speak it doesn't matter because things always go the other way. So, my participation is faculty senate is like a father trying to introduce a logical argument into his teen-age daughter's pajama party. It isn't about logic. You can't win with economic arguments in a world that cannot think in economic terms. The act of speaking when there is no one listening is a very thin activity.

The second reason that makes participation on faculty senate the thinnest of thin things is that thin things are the faculty senate's specialty. We bring busy faculty members together and talk about things that really don't matter. We take turns sharing our great wisdom and experience when the underlying topics have no import. Most of what happens in faculty senate meeting could be handled in an email. That is faculty senate.

Now, why not just resign? Well, I don't know if it is fair to resign and make some other person waste their time. Perhaps, though, the other faculty member won't know that the faculty senate is busy with thin things and will find some satisfaction in participation. Or perhaps the other faculty member is inolved in even thinner things (heaven forbid) and this would be a step up. However, since it is hard to get anyone to run for faculty senate we can probably assume that the "jig is up, the news is out."

Hmm. What to do? Perhaps I will bring some work that I can do while sitting in the faculty senate meeting. Then I can be involved in something worthwhile while attending to a duty that is the thinnest of thin. In this way, I will quietly serve out my sentence - I mean term.

The Thick of Thin Things

2009-11-13T07:59:00.000-08:00

I recently read a sermon delivered by the Mormon prophet, Thomas Monson, that gave me cause to pause. He said, "We become so caught up in the busyness of our lives. Were we to step back, however, and take a good look at what we’re doing, we may find that we have immersed ourselves in the 'thick of thin things.'”

Isn't it the truth? Unless we periodically take stock of our lives, we have a tendency to spend so much time on things that don't really matter, and neglect some of the things that do.

I cannot enumerate all the ways I waste time, it would be too embarrassing. But, how does shopping for a new belt compare with writing a thank you note to someone who showed you some kindness? How does watching another news show compare to playing trucks with a toddler?

The message hit me. It seems to be time to think through the thick and thin of my activities and see if there isn't need for some change.

What Is Wrong With Winning?

2009-11-12T10:54:00.000-08:00

From an AFP news article today -

"Gates said the administration was now trying to balance the need to show a commitment to Afghanistan at the same time as conveying to the Kabul government that the American presence was not indefinite."

What a way to decide strategy and troop deployment, eh? We have to do it so it looks like we are committed without giving the impression that we are committed for too long. Doesn't it make you miss the guy who made decisions based on real outcomes. What is wrong with winning?

It's All About the Future

2009-11-11T07:33:00.000-08:00

Every decision we make involves a prediction of the future. We choose corn flakes over eggs either because we predict they will be more satisfying or because we predict that they will be better for our health, or whatever. The decision is based on the prediction. The past is important only to the extent that it helps us predict the future. "I don't like corn flakes," means "I have eaten corn flakes in the past and didn't like them and so I predict that I will not like them in the future."

Unemployment in the U.S. has reached 10.2%. If we include those who have given up looking, the rate exceeds 17%. This will change when business people decide to hire. And what will prompt the decision to hire? The prediction that business conditions for their companies will improve.

This administration continues to pursue policies that produce predictions of a jobless recovery. While members of the administration contend that these policies will produce countless jobs and prosperity, such contention is not enough. They need to convince the business people that make the hiring decisions.

Our best prediction is that this administration and congress will continue pull large amounts of money out of the economy through increased taxes and deficit spending. They will continue to regulate and interfere with free enterprise whereever they find it. They will continue to demonize the notion of profit and capitalism.

It's all about the future. Hang on for a bumpy ride.

Forever Aint What It Used to Be

2009-11-04T19:26:00.000-08:00

My three year old daughter has something new that she says. "I love you forever and I still do."

Cute, isn't it? She is adorable.

I hope, however, that she doesn't take too long to learn the true meaning of forever. And I also hope that after she learns what forever means, she will come to appreciate the significance of the fact that the future is a lot longer than the present.

He Says He Doesn't Like to Read

2009-11-02T19:13:00.000-08:00

My eleven year old asks me to take him to the library. "I need a book to read."

"Enjoy reading, eh?"

"No, I hate reading. I just need a book for my reading class."

Hmmm. But what about all those Calvin and Hobbes books and those Captain Underpants books I saw him reading over the summer when no one was making him read? Doesn't like to read, or doesn't like the books he has been reading?

"I can't take you today, but come down stairs with me and I'll find you a book."

We go down in the basement and I find him a copy of The Forgotten Door by Alexander Key.

Day one: "Dad, that's a good book."

Day three: "What time is it? Really? Darn, I only had to read for 20 minutes and I've been reading for 61."

Doesn't like to read? Indeed!

The Trigger

2009-10-25T17:01:00.000-07:00

Senator Snowe from Maine says she will not support a health care overhaul bill that includes a public option. She wants one instead that has a trigger. If the private insurance companies don't control the costs of insurance adequately, that will trigger the public option at a later date.

The trigger is a ruse. As PricewaterhouseCoopers estimates, the mandates in the Senate plan for healthcare will likely add about $4,000 to the annual cost of insurance. So the congress passes mandates that increase the cost of insurance and a trigger to allow a public option if the private insurance companies don't control costs.

Doesn't it seem that the fix is in?

The Insurance Industry Report

2009-10-24T16:44:00.000-07:00

When the insurance industry released a report indicating that the health care overhaul bill passed by the Senate Finance committee would significantly increase the costs of health insurance, much of the media ignored it or criticized it as self serving. Another interpretation is more likely true.

PricewaterhouseCoopers is one the big four international accounting firms. Their study should be trusted for several reasons. One, they have the expertise to do the study. PricewaterhouseCoopers has a large business consulting practice. They study and predict the costs of health care each year for their clients. Two, other than accounting and business expertise, all an accounting firm has to sell is objectivity and credibility. You don't sacrifice the greatest asset you have to sell, to do a single report.

So what is the more likely scenario? The insurance companies signed on to Obama's proposal for health care reform understanding that there would be a mandate for everyone to buy insurance. The extra money to be had from healthy people buying insurance they don't need would offset the cost of insuring people with known costly health problems. When the Finance Committee backed off from the assurances Obama gave the insurance industry to mandate universal coverage, the industry commissioned a study of what the effects would be. PricewaterhouseCoopers studied the effects and found that the Finance Committee bill would significantly increase the cost of insurance for everyone, an extra $4,000 per year within a short time. As a result of the study, the industry came out in opposition to the health care reform plan in the Senate.

The fault of the insurance industry is not in releasing a misleading report. The report is good. The fault of the insurance industry is selling their souls to the devil in the first place.

Individual Responsibility and Medical Costs

2009-10-22T11:41:00.000-07:00

Imagine that at age 16 everyone was given a new car. You would have this car and this car only for the rest of your life. No one could buy a second car, trade their car in, or replace it. Now imagine two different scenarios. In the first, each individual is required to pay for both maintenance and repair of his or her car. Every scratch repaired, every part replaced, every tune up, every overhaul is paid out of the pocket of the owner. These cars will likely be well serviced, well maintained, and driven safely.

Now on to the second scenario. Individuals are not responsible for servicing or repairing their own cars, but are assessed a monthly fee that covers it all. So, the monthly fee covers every scratch or ding. Every part that needs replacing, every overhaul needed, every bit of body work is covered by the monthly fee. Now predict the behavior of the owners. Some owners are less likely to service or maintain their cars. These owners will be much more likely to drive recklessly since every bit of damage will be repaired without additional charge. On the other hand, these owners might take cars in to be repaired for every squeak or wobble, because the repair is free, after all. And now, if the monthly fee has to cover all the repair and service that will be done, that monthly fee will be much higher than would be the total of the costs expended by people if the owners paid for their own service and repair.

Now, let's transfer this analogy to the body. We have each been given a body. It is the only body we will have for life. If we are required to pay for maintenance, i.e., nutrition, exercise, etc., but not the costs of service or repair, i.e., health care costs, we will likely consume relatively less of what we have to pay for and more of what is free. Some will be less likely to care for their bodies by providing good nutrition and exercise, and more likely to depend on medical professionals to fix us when things go wrong. Some will be more likely to engage in risky behaviors like smoking, obesity, poor diet, drugs and alcohol, etc. Some will seek the help of medical professionals with every sniffle or cough or pain. In addition, many will be less likely to learn to care for themselves and rely more on the medical community. We will be less healthy and pay much more as a society in health care costs if the care if free to the consumer.

It is almost always this way. When the individual has responsibility, the choices are more efficient and effective than when the responsibility is shifted to a group. Our trouble in health care is not the lack of insurance. The trouble, indeed, has been caused by insurance. Whether supplied by the government or by the employer, medical insurance has actually degraded the lives of the very people it is meant to help.

The Same Old Thing Again

2009-10-20T10:44:00.000-07:00

A friend asked me the other night why I hadn't blogged for some time. I told him that my primary interest was national politics and economics and that I was getting tired of the same old thing. Same old thing? Sure. I don't know how many ways I can say that this guy either knows nothing about economics or he is deliberately setting out to ruin us.

They say he is a good and intelligent man. In view of his economic policies, he cannot be both.

The Myth of Medical Cost Inflation Part 2: The Doctor Visit

2009-09-26T09:49:00.000-07:00

In the current debate on the health care system, there is much discussion about the unsustainable inflation in the cost of medicine. That inflation is a myth. Yesterday we looked at the costs of pharmaceuticals. Today, let’s look at the cost of going to the doctor.

From a doctor who entered the profession in 1966, I learned that most of his colleagues charged $8 for a doctor visit. I looked up the average inflation rate in the United States for each of the 42 years from 1966 until 2008. Applying that average inflation rate each year to the $8 charge, the charge would have grown to $53 in 2008. The average inflation rate over that time is calculated to be 4.60%. Now, the median cost of a doctor visit in the United States in 2008 was $63. That is $10 more than we would get if the cost of a doctor visit had increased by the average inflation rate. The $63 is what we would get if the cost of the visit had increased by an average of 5.04%. While 5.04% is higher than 4.6%, it is not extremely higher. On the other hand the doctor visit one gets in 2008 is not the same doctor visit one would have gotten in 1966. While the doctor would have spent more time with each patient in 1966, he would not have had the resources to treat the patient he had in 2008. We have improved medical knowledge, improved equipment, improved treatments, and improved drugs so that the visit to the doctor actually has more value than it did in 1966. $10 more? I think so. What is remarkable, is that with the demand for medicine resulting from widespread insurance coverage and the increase in the quality of care, the costs have not increased more than they have.

So, if neither drugs nor doctors drive the increase in medical costs, what is it? It is innovation and consumption.

The Myth of Medical Cost Inflation Part 1: Pharmaceuticals

2009-09-25T09:45:00.000-07:00

In the current debate on changing the medical system, much attention focuses on cost. The typical argument compares the increase in the cost of medicine to the general rate of inflation. Such a comparison is spurious. There is no excessive inflation in medical costs. Let’s focus today on the cost of pharmaceuticals.
When a patented drug is released on the market, it is generally sold at a high price because the patent gives the manufacturer exclusive rights to its manufacture. The general pattern is that the cost will decline a bit over time as competitors enter the market. Then when the patent expires and other companies are free to produce generic versions of the drug, the price will plunge. Most of he drugs that were expensive 20 years ago are now available at your local Wal-Mart pharmacy for $4.
So, looking at any one drug, the price falls over time. Not only is there not excessive inflation, but there is a general pattern of deflation in the price of pharmaceuticals. So why are the costs of prescription drugs rising every year? It is because of innovation and consumption. The public demands more and better drugs and the drug companies supply them. But they come with a price. We either pay the price for innovation and development of new drugs or we use the cheaper older drugs.

2009-09-10T14:08:00.000-07:00

This is excerpted from Obama's speech on health care delivered to Congress on 09/09/09. "Then there's the problem of rising cost. We spend one and a half times more per person on health care than any other country, but we aren't any healthier for it." Obama uses rising costs as a justification for his plan, but his plan will increase costs.

His plan has three several parts:

1. For those that have insurence, the president's plan outlaws denial of coverage for pre-existing conditions, eliminates annual and lifetime maximum coverage, and puts limits on deductibles and copay amounts. Such changes will have no effect on the underlying costs of care, but will drive up the costs of insurance.

2. He plans to create a "a new insurance exchange -- a marketplace where individuals and small businesses will be able to shop for health insurance at competitive prices. Insurance companies will have an incentive to participate in this exchange because it lets them compete for millions of new customers." This is probably a good idea, but it will do little to change costs. If there was profit to be had from these folks the insurance companies would already be marketing to them.

3. His plan would require the uninsured to buy insurance. These are generally those who are healthy and have low medical costs. This is where the real savings in insurance rates can come from. We can lower the costs of insurance to all by requiring those who have no need for it to pay for it anyway. It is a tax on the young and healthy, and while it lowers the cost to some, it certainly raised the cost to the young and healthy and the net effect is nil.

To really lower the costs of health care, we need to either increase the supply, decrease the demand, or stimulate competition in health care delivery. His plan increases demand without addressing supply (something that will increase prices) and tries to increase competition in insurance offerings rather at the level of delivery. He uses rising cost to justify a plan that will actually increase cost.

Answers to the President's Questions: the Easy One First

2009-09-08T12:31:00.001-07:00

The following is a statement and question excerpted from the president's labor day speech before the AFL:CIO in Cincinnati, Ohio.

"For the first time in 18 months, we’re seeing growth in manufacturing. When was the last time you heard that here in the United States of America?"

Well, Mr. President, that would be 18 months ago.

My Ford

2009-07-13T09:44:00.000-07:00

On Wednesday, I took my daughter shopping for cars. We looked all over and then drove the Nissan Versa, the Sion 4D [?], and then the Toyota Corrola. We all agreed that the Corrola rode better. It also get better mileage and has a lot more room inside.

Then I got in my 2002 Ford Explorer. As I rode home I was thankful for my 18 mpg gas guzzling, wonderful to drive, man car. As I drove along I was passed by a happy man in a Chevy Suburban. The little cars don't come close to proving the joy and comfort of a good gas guzzler.

With the federal government taking over GM and Chrysler, and congress passing tough mileage standards, I wonder if pleasurable driving will be a thing of the past.

Obama Man

2009-07-11T09:31:00.000-07:00

One great thing about poetry is that it can sometimes reduce a huge issue to a poetic phrase. Greg Morton does this with his song "Obama Man" sung to the tune of "Candy Man." There are several versions on YouTube. My favorite is on the Bob & Tom Show.

Anyway, the phrase that summarizes Obamanomics to me is,

"Who can take tomorrow,
And spend it all today. . .
Obama Man, Obama man can.
Obama Man can because he mixes it with hope
And makes the world feel good."

Who can take tomorrow and spend it all today?

The Non-Stimulus

2009-07-10T09:17:00.000-07:00

The $787,000,000,000 supposed economic stimulus is not a stimulus. It was obvious from the start. Some will say, but only 10% has been spent. Wait till the other 90% kicks in, then you will see improvement. We will see improvement, but it won't be because of government spending.

The economy naturally runs in cycles. All past recessions have ended. This one will end eventually as well. The idea of a stimulus is to put some energy into the economy early to moderate the deapth of the economic fall. This so-called stimulus was designed to put money into the economy for two years after the fall began. Why wait through months of painful economic recession before doing anything?

When the government spends money it takes it from the private sector. It can do that either by taxation or by borrowing, but it is just a surely taken. Taking money out of the economy is recessionary by nature. A stimulus up front that provides a quick jolt to the economy may get some economic improvement that will offset the negative effects of the taking from the private sector. Governemnt spending over a two year time frame will not result in a jolt and will be completely offset by reduction in private sector activity.

The economy will rebound, but it will not be because of the $787,000,000,000 non-stimulus.

So My Wife!

2009-06-26T22:24:00.000-07:00

This event never happened but is so "my wife" I thought I would share it anyway.

We were having dinner at Perkins, my wife, four of our children, and I. Our waitress had a cute accent. It sounded sort of like a Jamaican accent but we couldn't quite place it. My wife strikes up a conversation with the waitress.

"You have a cute accent. Where are you from?"

"Nebraska."

"I thought it sounded like it might be Jamaican."

"No, I'm from Nebraska."

"Are you pregnant?"

The Latest Absurdity

2009-06-25T14:54:00.000-07:00

The New York Times reports Obama "argued that a government-run plan competing with private insurers would be an 'important tool to discipline insurance companies' and scoffed at complaints that it could drive some out of business."

Is that absurd or deceptive? Does he mean that the government plan and the private insurance plans would compete with each other? That would mean he was being absurd. How do you compete with someone that has unlimited resources and no need to worry about making any money? Or does he mean that the government plan will compete with the private insurers, but not the other way around. That would mean he was being deceptive.

Doesn't the idea of the government inventing tools to 'discipline' private companies scare you just a bit? Who else will need 'disciplining'? Fast food? Oil companies? Pharmaceuticals? Power companies? In a capitalistic society, the market itself does the disciplining. Our current sorry state of affairs has resulted from government action. It is not a problem of the market. If the market were freed up by relaxing regulation of the delivery of medicine, supply would increase, prices would come down, and insurance would not be an issue.

The Los Angeles Times reports Obama "ridiculed critics of his government-run insurance proposal, saying private insurers have nothing to fear if they are efficient and consumer-friendly."

What? Just trust the governement, you'll be fine if you will be good? Is he serious? He speaks just one absurdity after another.

But I guess his delivery is good.

Fuel Efficiency Standards

2009-05-20T12:48:00.000-07:00

The new fuel efficiency standards are another loser. We might call them economic inefficiency standards. Here are a few thoughts on why they represent bad policy.

They result in manufacturing inefficiency. For example, say one automobile company has perfected small fuel efficient cars and another company has perfected sport utility vehicles (SUVs). Instead of each company producing the product they do best, the maker of the SUVs will also have to produce small fuel efficient cars. To meet the standard they will have to sell a lot of them to offset the lower mileage of the SUV. And, since they haven't perfected the small fuel efficient car, they will have to sell them at a lower price than the other company to induce customers to buy. "I can't sell this SUV at a profit to this family of six until I unload another five subcompacts at a loss." It is a losing strategy for those companies that do not specialize in small car technology.
The policy will result in disappearance of the products consumers want. In the free market, car companies produce cars that they think customers will buy. They do this to make a profit. If the company fails to produce a car consumers want, the car company will go out of business, its assets will be sold off, and the buyer of those assets will attempt to produce what the consumer wants. Now the government interferes. Only fuel efficient cars will be produced. Those who want fuel efficient cars will get them. Those who want vans, pickups, SUVs, large comfortable cars, etc. will get only frustration.
The whole process of decreasing dependence on oil is costly and inefficient when addressed by regulating the producers of cars, especially compared to what you would get if you addressed the problem directly by lowering demand for oil and increasing the supply of alternative fuels. It would be so much more efficient and effective to raise the tax on gasoline and offer gasoline retailers a carrot to install natural gas facilities at their filling stations. Higher gas prices would lead to lower consumption either through consumer downsizing of cars or fewer miles driven. It would also pull consumers toward natural gas, an energy source we have in abundance. So the result would be, less energy consumption, a move toward alternative fuels, and consumers getting the cars they want.

But, it won't happen that way. Instead of calling for shared sacrifice, the party in charge will demonize the auto industry. This way it looks like only the auto industry is required to sacrifice, but that charade is performed at the price of economic inefficiency for all.

Happiness and Political Affiliation

2009-05-20T09:33:00.000-07:00

Did you see it? The Pew Survey on happiness. According to the survey, happiness varies along several demographic characteristics. Men are happier than women. Old people are happier than baby boomers. Republicans are happier than Democrats. Hmm.

Today let's think about the Republican/Democrat happiness difference. Don't you find it interesting to think about? What could it be that makes Republicans happier than Democrats?

Some will say that Republicans are happier because they have more money. Two observations from the survey show this not to be the case. One, there is little correspondence between income and happiness. The only exception is for those who don't have enough to meet life's necessities. They are generally less happy. Two, factoring out the difference in income, Republicans are still happier. Let's speculate.

Optimistic people are drawn to the Republican party. Life is generally good. People are generally capable. Let's create an environment where those capable people can enjoy a good life. Pessimistic people are drawn to the Democrat party. Life is generally difficult. People are generally incapable. Let's create government programs to help the generally incapable people get through this difficult life. Optimistic people are generally happier, they are drawn to the optimistic part. Republicans attract happy people, Democrats attract unhappy people, thus, Republicans are happier than democrats.
Republican ideals lead to happiness. For example, Republicans believe in individual responsibility. If you want something, it is up to you to work for it. If something goes wrong, it is up to you to fix it. You are in control of your own life. On the other hand are the Democrats and the government responsibility notion. When people want things, the governments should find ways to help the people get them. If something goes wrong, we ought to see if the government can fix it. Since government is generally inefficient and ineffective, people of the government-dependency mindset are rarely satisfied with outcomes. People are happier when they are in control. Republicans espouse individual responsibility. Republican are happier.
Republican principles correlate with core beliefs and standards, both religious and constitutional, that produce greater happiness. Let's look at Christianity for example. While there are many Christians in both the Republican and Democrat parties, there is a significant difference in the nature of the Christianity practiced. Republican Christians are more likely to be traditionalist, orthodox, or fundamentalist Christians. These Christians are more likely to believe that the commandments are still in effect; that adultery, fornication, lying, steeling, cheating, and being uncharitable are sins. Pleasing God requires following his commandments. Following those commandments naturally results in happiness, because a loving God gave the commandments specifically because He new that happiness would result from following them . On the other hand we have those who believe that if they love God and confess him they will be saved and there is no behavioral requirement. Such a belief leaves one without much of an anchor in a changing and confusing world. Such Christians are more likely to engage in behaviors that naturally detract from happiness. They are also more likely to be Democrats.

For those who are both happy and Democrat, enjoy it while you can. Democrat policies of government intervention will fail. The government rarely does anything well. Failure rarely leads to happiness.

What Should Republicans Do?

2009-05-13T03:44:00.000-07:00

I cannot remember a time when the Republicans were this far out of power. Some are panicking and some are gloating. It doesn't seem time for either. The assumption that the Republicans will be out of power for a long time implies that the Democratic policies will be successful. Trillion dollar deficits and government intrusion into the free market are not the recipe for prosperity.

I can see three scenarios in which the Democrat Party keeps the power long term.

Their policies are actually successful.
The American people come to prefer governmental protection over prosperity, governmental punishment of the successful over individual opportunity, and loss of status as first place in the world.
The Republican Party makes the mistake of becoming too much like the Democrat Party.

Elections are decided mostly by the mood of the moment. When the mood sours again, Republicans need to be ready with a clear alternative.

One sided risk of Government

2009-05-05T07:55:00.000-07:00

The risk of more government is one sided. It cannot increase prosperity, but it can destroy it.

It has been tried in many forms, but it has always failed. Government cannot create prosperity. I was in Argentina for two years in the late 1970's. The government owned the railroad, the telephone company, the auto industry, the oil industry, etc. No one could afford telephones, cars, or gas for their cars, and the railroads were awful. The conditions were much different just a decade earlier before the government intrusion. In the history of the world, government has not been successful in creating prosperity.

On the other hand, government can destroy prosperity. Some look to China and see the prosperity growing because of changes in government policy, but those changes reduced the role of government. China could have been prosperous decades earlier if not for the drag of government.

So when we venture in to an era of more government, as we appear to be doing, understand the risk is one sided. We cannot emerge more prosperous. The government may spread the wealth around differently, it may make one group of people happier at the expense of another, but it will not produce prosperity. All the risk is on the downside, and so I wonder, why take that risk?

What a Precedent!

2009-04-29T21:50:00.000-07:00

Much of the argument surrounding the firing of the GM CEO centered on whether it was a good business decision or whether it might not have been better to allow the company to go into bankruptcy earlier and let the bankruptcy court decide the final outcome. The more important question is whether this is the proper role of government. What a precedent!

On the other hand, we can now answer the less important question, whether it was a good business decision. GM announced a restructuring that gives the federal government a 50% equity interest, in effect making the federal government the majority shareholder. How is this better than bankruptcy would have been without federal government bailout money? How is this a bailout at all? This is, rather, a takeover; one that shafts the stockholder and shafts the taxpayer. It is hard to imagine who wins, the union perhaps. It was a bad business decision. It is bad government. It is bad economics. It is a first rate boondoggle.

Adventures, All Around

2009-04-23T15:52:00.000-07:00

I was asked to attend a meeting about preparedness some time ago to give a talk about my family's experience with the ice storms of a couple of years back. (We had been without power for about two weeks.) I wondered if they were just in need of a bad example because we had not been prepared in any way for the ice storm. Anyway, I told our story and ended with this thought -

There were some who approached the ice storm and its aftermath as a trial. There were others who approached it as an adventure. Adventures are more pleasant than trials.

I was planning to attend a banquet tonight sponsored by our college's Accounting Society, a chapter of the national accounting and finance honor fraternity Beta Alpha Psi. I was planning to attend to support the organization and our students. During class today, one of my students said, "You know you are doing a welcome, don't you."

"I do now."

After I got home from work, our secretary called and said she had a look at the itinerary and I was down for giving the opening address. Well now, an hour and a half until speech time. "Oh no! What will I do?" I thought. Then I remembered that life is supposed to be an adventure. "Oh boy! I wonder what I could share tonight?" I thought. You see the difference perspective makes?

Perhaps I will give a speech about how adventures are better than trials.

Earth Day

2009-04-22T20:22:00.000-07:00

One of the problems with this whole global warming question, for those of us who are still undecided, is that the science is drowned out by the politics. There are those in the environmental community that are extremist. Nature is paramount and humans are parasites. They will grab onto any issue that will help them push back human progress. They preach that the earth is warming because of human activity, if not stopped the consequences will be disastrous, and thus the human activity causing it must be curtailed. But those conclusions are way beyond the science.

Brushing away the politics, we come back to the basic questions?

Is the earth warming? Even this most basic question remains unanswered. Some scientists who have said yes in the past are now not so sure. The models of rapid warming are contradicted by recent trends.
If the earth is warming, is human activity causing it? The world has been warmer in the past.
If the earth is warming and humans are the cause, what will be the consequences? There will be winners and losers. What will be the net benefit or detriment of warming?
If the world is warming and human activity is causing it and the net affect is detriment, can we realistically do anything about it? It is possible that the remedies may be more disastrous for humankind than the malady itself.

All of these questions remain unanswered. For some, the likelihood that the world is warming and that human activity is the cause, impels them to action, but they take that action without answering questions 3 and 4.

The earth has been around for billions of years. It will be around for billions more. We cannot destroy the earth by driving our cars. Rather than worrying about what humankind is doing to the earth, we should concern ourselves with how we can best use the earth for the benefit of humankind.

Emergency Cost Cutting Obama Style

2009-04-21T06:41:00.000-07:00

Joe brings home $52,000 per year. Because of some emergencies and unexpected costs, and assuming Joe's family spends like it did last year, it looks like Joe's family will spend $72,000 next year and will need to borrow $20,000. So Joe gathers the family around and with his most serious voice tells them that they are going to have to make some sacrifices so the family budget doesn't get totally out of control. He says,"I need you to put your heads together and see if we can't come up with a way to save $2 next year."

This is the Obama instruction to his cabinet to save $100,000,000. It is as we have come to expect, style without substance. Should they do it? Sure, but it is not significant nor lauditory. Nor is it news.

This Hell I'm Living?

2009-04-19T20:26:00.000-07:00

I had a dream my life would be
So different from this hell I'm living,
So different now from what it seemed...
Now life has killed the dream I dreamed...

I have never seen Les Miserables, but inspired by Susan Boyle's performance of the song, I Dreamed a Dream, I looked up the lyrics. The song is incredibly sad. What is remarkable to me is that things can be so incredibly different.

Growing up, leaders and teachers would encourage us saying things like, "Watch out what you dream of, you are likely to get it," or, "You will become what you dream of most," and other such things. Now, I don't know if they were liars or just incredibly naive. But I don't ever remember dreaming of becoming a balding and bulging bean counter from Nebraska. Similar to the sentiments in the song, life is much different than dreamed of two or three decades ago. There is not as much money or recognition and there is less sleep and more hard work. Sometimes there is even loneliness or incredible sorrow. On the other hand, I could not have imagined the joy I feel just living.

In Galatians, Paul lists love and joy as fruits of the spirit. The dreams I dreamed as a kid cannot compare with the gifts of God. And those gifts are available to anyone willing to walk the Christian walk.

Thank you, Susan

2009-04-18T17:33:00.000-07:00

I realize that I am late to the party, but I want to say thank you to Susan Boyle. For the few of you who haven't already seen her on UTube, she performed "I Dreamed a Dream" from Les Miserables on the television program "Britains Got Talent." She is a 47 year old, single-never-been-kissed, bushy eye-browed, chunky, double-chinned, fuzzy-haired British lady. No one expected much from her. There were laughs and sneers and rolled eyes when she announced that she was going to sing. But she opened her mouth in song and blew the audience away. She hadn't finished the first line before jaws were dropping and people were chearing. She hadn't finished the second line before people were on their feet. She inspires me each time I watch and listen and I have watched and listened quite a few times by now.

I don't quite know what to say, but feel impelled to say something. Here goes:

In a time when it is so easy to be negative, it is wonderful to be so inspired.
We do not know where and when inspiration will come. The most ordinary people can have amazing talents and gifts.
When asked why her desire to be a professional singer had not worked out, she said, "I've never been given the chance before." Perhaps it would be good to give more people a chance.

None of these things really do justice to how I feel when I watch the video, but I thought I would at least say thank you.

Deficits and Taxes and the Economy

2009-04-16T07:51:00.000-07:00

Our president wants to raise taxes on couples making more than $250,000 a year. However, recognizing that taxes are a drag on the economy, he has decided not to raise them immediately. I am left with two questions,

If taxes are a drag on the economy during difficult times, won't they also be a drag during better times?
If instead of taking money from the private sector in taxes, the government spends just as much and takes the money from the private sector in borrowing, isn't the money just as taken?

The problem for the economy is not how it is taken, but that it is taken. In other words, the harm to the economy is government spending itself. The arguments about tax rates and budget deficits are peripheral distractions. When our president explains the huge deficits by saying that we need the extra spending to lay the groundwork for future prosperity, he is ensuring that that prosperity will be longer in coming and less vigorous when it get here.

The Chinese Experience With Capitalism

2009-04-05T07:53:00.002-07:00

From all accounts, the Chinese experiment with capitalism has been a huge success. China is one of the fastest growing economies because the government loosened up control on the economy and allowed private businesses to flourish. We, on the other hand, are moving in the opposite direction. The government is exerting more control over business. This move will, naturally, produce the opposite result of the one experienced by the Chinese. It will slow the growth of our economy.

Some will say that more government is necessary because the private sector was failing. The auto industry is used as a prime example. However, the failure of the auto industry is the direct result of government intrusion in the first place. It was the government that gave the unions the power, and the unions destroyed the domestic auto industry. Auto makers were not operating in a free market for inputs.

Others point to the banking industry as an example of capitalism run amok. But banking is the most heavily regulated industry in the country, and it was largely government intervention (encouraging subprime loans to help low income folks by encouraging purchase of mortgage securities by government affiliated institutions) that caused the banking failure.

I wonder if, instead of greater government regulation and intervention, we would not benefit by another experiment with capitalism ourselves.

Unions Are Obstructions to Progress and Prosperity

2009-03-24T15:54:00.000-07:00

Unions are obstructions to progress and prosperity. Here are three examples.

The unions have ruined the American automobile industry. When the unions bargain for wages far above the market rate, they increase the cost of labor relative to other inputs. That decreases the demand for labor. So, the unions get increased wages at the expense of all other workers. When the unions bargain for wages well in excess of the market rate, they increase the attractiveness of foreign labor and push companies to manufacture in foreign countries. When unions bargain for wages well in excess of he market, they increase the cost of the product and make their companies' goods less competitive with foreign goods. When the union representatives tell you that the US auto industry is failing because of bad decisions regarding cars produced and not because of the union, rest assured that they are wrong. The US auto companies concentrated on larger cars because the larger cars had a higher markup. There was more profit per car. Because of union contracts, the US auto makers could not be competitive manufacturing smaller cars with smaller markups. The main error made by American auto makers was giving in to union demand for all these years.

Unions block meaningful changes to the American system of education. In districts where schools are failing, radical change is needed. (I am not referring to the longer school days, additional days per year, and merit pay proposed by Obama. Those proposals are laughable and would produce no significant change.) Home schools, neighborhood schools, charter schools, co-op schools, etc. could bring real meaningful improvement in education. Any meaningful change will be blocked by teachers unions.

Unions block meaningful incentives for good performance. There has been a lot of bruhaha about executive bonuses, but bonuses for good performance are one of the best ways to improve performance. I have worked in environments where the annual raise was merit based. The raise for the organization was based on inflation, but how that was divided up was based on merit. Those most meritorious got raises that were double the inflation rate or more. Those least meritorious got no raises. These were primarily a hard working group of folks. Unions will not allow such a system.

The unions will spend their money fighting any idea that will actually lead to improved performance and progress in any organization of which they are a part.

Real Education Reform

2009-03-23T15:27:00.000-07:00

In the United States, the 2007 average cost per pupil in public schools was $10,770. The average pay per teacher was $44,400. Hmm. Maybe there is a better way. There are probably several better ways. Consider these.

Consider home schooling. Home schooled students score higher on average than public or private schooled students. This may be because the parents of home schooled students care more about education on average than do the parents of other students. Still, if a family has two kids in school, we could pay one of those parents $20,000 to home school the kids and still save money. The children would actually spend less time on school work, would advance faster, and learn more. The public would save money. It seems like a win-win situation.
Consider Co-op schools. Several parents join together to provide education to their children. For example two parents in a neighborhood teach twelve children. So the classes would have 6 students each. We could pay each teacher $50,000. Each child would get more individual attention, could advance at his/her own rate, would spend less time in school, and would learn more. The taxpayer would save money.
Consider neighborhood schools. Schooling could take place in a rented storefront or office complex. We could keep class sizes down to about 10 students. Let one of the teachers act as principal for a little extra compensation. With individual attention, the school day or school year could be shorter, students would advance faster, they would learn more, and we could pay the teachers a very good salary and still save the tax payer a lot of money.

These alternative delivery systems should be encouraged and funded. They would constitute real education reform.

Have We Found the Way?

2009-03-22T23:23:00.000-07:00

I have been worrying about the amount of debt we have been accumulating as a nation. It is now in the tens of trillions and rising quickly. But it seems the federal government has found a way. It was announced just a few days ago that the Federal Reserve Bank will increase liquidity by repurchasing a trillion dollars of federal debt. Hmm. . . The federal government will in a year of a trillion dollar plus deficit, repurchase a trillion dollars of debt? Where does the money come from? It must be newly created money. It appears that the federal government has a new policy of "printing money" to pay the debt. Well, now, that is certainly one way to go about it. But I don't know that it has ever been done before successfully. We will hope that Mr. Bernanke is careful about how this happens. He is the only one at the federal level in whom we can still have confidence that he knows what he is doing.

Love, Communication, and Forgivness

2009-03-21T12:22:00.000-07:00

The other day I was out to dinner with my wife, six of my children, two sisters, a brother, two in laws, and other family members. It was a splendid time. I got to telling stories that I thought we fun. After it was all over I realized that some of the stories I told put my wife in a rather negative light. I felt bad. I love her deep down to the bones and wouldn't want to anything to hurt her. So I immediately apologized and she immediately forgave me. I am so very thankful for her.

Now to the best of the stories that put her in a negative light. We were off to visit the relatives in two cars because I was planning a two day visit and she was planning a ten day visit, perfect for both of us. She had a 10 month old and a 2 year old in her car. I had a ten year old in mine. We were in an area that I new better than she did. She called me in a panic to let me know that the 2 year old was throwing up. I got us off at one of the next exits and led us to a Target store where we could clean her up. When I got out of the car my wife was on the phone. "Dear, you called in a panic, don't you think we ought to clean the little girl up?" She signalled to me that it would only be a minute or two. I sighed a bit, looked the barfy little girl over, and headed into the store to get some paper towels. I got some in the bath room, some wet and some dry, and headed back out. I showed them to my wife. "She said, oh good, I will run and buy her a new shirt." And off she went leaving me with the towels in my hand and a barfy girl in the car.

Now the story is lots better with the I-couldn't-believe-it inflections in my voice. It is all true, by the way. However, it is not fair. You see, the phone call was from someone she had been trying to get a hold of for some time and he had called at just that moment. And, she knew that I really didn't mind cleaning up our barfy little girl. I don't see her as much as my wife does, so these are just little bonding experiences. But if I had given that background, the story itself would not have been near as much fun.

Anyway, I felt a little bad. I apologized. She forgave. We both love each other terribly. Life is good with love, communication, and forgiveness.

Good Questions

2009-03-20T22:24:00.000-07:00

I got interesting questions from two of my boys today. My ten year old asked if there was slavery during the time of the revolutionary war. When I told him yes, he wanted to know why George Washington didn't end it. Why did we have to wait clear until the time of Abraham Lincoln. I thought that those were pretty good questions for a ten year old. (I have renewed hope for the boy.) I explained that we can't judge historical figures by our current sensitivities and awareness of right and wrong. It was acceptable then. We can be happy we have progressed beyond that.

Later in the same day, my 17 year old son, who had been playing a computer war game that was set in colonial America, asked why we as a nation had treated the American Indians as badly as we had. "They're just savages!" I said. He was a bit taken aback by my answer, but quickly smiled when he realized that I was just trying to help him see that attitudes were just different then. We can be thankful we have passed beyond that.

Later I stopped to ask myself. Have we passed it all? Or do we still have attitudes that allow us to oppress people in classes that are just so low they don't merit protection? The obvious answer is yes, our attitudes still allow oppression, and the unprotected class is the unborn. The words are a bit different, but the arguments are about the same. We have political, economic, legal, societal, constitutional and moral justifications to make the savage act of abortion acceptable, just as we had similar arguments to make slavery and oppression of native Americans seem acceptable. The unborn do not rise quite high enough to be worth protecting so we are allowing them to be killed.

Perhaps in some future generation, a grandchild of a grandchild of a grandchild will ask his father how in the 21st century Americans could be so cold and so cruel to those so innocent and so defenseless. And the Father will be able to say that attitudes were much different then. We can be thankful we have passed beyond that.

Motivation in the Classroom

2009-03-16T14:27:00.000-07:00

Many of us that have some experience teaching or have had kids in school find that kids learn when they are motivated. Sometimes, an enthusiastic teacher can have a huge effect on student motivation to learn. I think we ought to pay these teachers more, but we shouldn't think that paying them more will make them better teachers. They will be wonderful teachers anyway. Nor do I see that paying them more can make other teachers more loving, caring, exciting, or fun. Government can, however, have some effect on student motivation.

Motivation can be increased by increasing the reward for success. The reward is the difference between the quality of life with a high school education versus the quality of life without that education. By leveling the outcomes, lifting the quality of life for those without an education through social programs, the government decreases the rewards of receiving an education.

On the other hand, the reward is also raised if during the education students attain actual skills that allow them to earn more than they would without the education. Such an education would involve reading, writing, reasoning, problem solving skills, or alternatively, actual work skills like welding, dental hygiene, bookkeeping, etc.

Finally, let me just say that motivated students seem to come from motivated families. We can double the amount of money we spend on education and will see only marginal differences in success if the students come from homes that do not value education.

Productivity in Education

2009-03-16T14:10:00.000-07:00

The focus of education reform seems to be only on the outcome. If we increase resource inputs we will increase outputs. No business would survive focusing only on the outputs. We have to consider productivity, the measure of outputs relative the the level of inputs. The Obama proposal focuses on improving outcomes by increasing resources, both money spent and time in the class room. The likely result will be a decrease in productivity and efficiency, a waste of taxpayer money.

There are basic impediments to improving education in America that an increase in inputs cannot overcome. The primary impediments are the motivation of students and the educational environments. If students are not motivated or if classrooms cannot be controlled, there will be no benefit to increased funding or more time in the classroom.

Education Reform?

2009-03-16T13:05:00.001-07:00

Imagine for a moment that there is a problem with child nutrition. Studies show that 80% of children are offered nutritious meals; half of those offered nutritious meals reject them in favor of ramen noodles and cupcakes; and 20% of them are offered only ramen noodles and cupcakes. The study also finds that some kids run away from home because the food bores them. They get poor jobs so they can only afford ramen noodles and cup cakes.

So what we need is nutrition reform. The nutrition reform will consist of the following. Whatever food the kids are being offered, we will increase the portions and the number of meals. In addition, we will have them weaned earlier so they can eat this food at an earlier age. And regardless of what food is being provided, we will pay bonuses to those who provide food to the kids that are healthiest. I don't think many would expect this plan to produce healthier kids.

This is the Obama education reform.

Public education serves most students well. However, there are school districts where students learn little and where over half drop out before graduating high school. Obama would lengthen the school day, add more days per year, and introduce merit pay. If the students are not getting what they need in school why give them more of the same?

Look A Little Further Down the Road

2009-03-15T18:32:00.000-07:00

I heard the expression again today. "I'm just taking it one day at a time." Now I realize that in one sense the statement is logically true for all of us. Do any of us live two days at a time? However, recitation of the expression more seems an indication that one is enduring life in little bits.

A couple of years ago, I set out to teach my 15 year old son to drive. His steering was somewhat erratic. "What am I doing wrong, Dad?" He was a bit nervous and was looking at the road right in front of him, doing his best to stay between the lines. "Quit looking right in front of you and look a little further down the road," I said. He steering straightened out.

Life is like that. Enduring life a day at a time will get us to the end as well as any philosophy will, but to what end? It is better to look a little further down the road, set your eyes on the best things you see, and go.

Not Any Time Soon

2009-03-11T11:57:00.000-07:00

When will stock prices recover? Not any time soon.

There has been much said and written about the economic uncertainty caused by the Obama administration and the effect that is having on stock prices in the short-term and the depth and length of the recession. (It is decreasing stock prices in the short term and deepening and lengthening the recession.) My purpose today is to discuss some of the certainties and how they will effect wealth in the long-term.

While the uncertainties of what the government will do relative to the banking industry, the auto industry, the coal industry, the oil industry, etc. are deflating stock prices and decreasing the wealth of millions of Americans and others around the world, some things are more certain.

We will have a deficit this year in excess of $1 trillion dollars. Obama proposes a budget for next year that will result in a deficit of $1 3/4 trillion.That budget is based on rosy scenarios of growth and tax collections. We are likely to have a deficit of $2 trillion dollars. He predicts a deficit of only $1/2 trillion dollars four years out. That is based on overly optimistic predictions as well. The government is likely to spend 4 to 5 trillion dollars more than it take in over the next four years.

What will those deficits mean for the investor? I think they mean that the markets will not fully recover in this decade. Investment money is not unlimited. Pulling $5 trillion out of private investment and putting it into government securities will, in and of itself, put downward pressure on stock prices. However, to attract that much capital, the interest rates paid on government securities will have to rise. The increase in the interest on government securities will make alternative investments relatively less attractive. Increased rates on government securities will drive up required returns on other classes of investment, and increased required returns will drive down prices. We should not expect prices to fully recover for some time.

It Doesn't Work That Way

2009-03-04T09:09:00.000-08:00

The president has been getting a lot of criticism for "talking down" the economy. I am one of those critics that believes a president should put in place the program he believes in and then sell it. Explain to the public why it will work and give them confidence to resume life as normal. It seems he is getting the message that stock prices are falling because of a lack of confidence that his policies will be helpful.

Here is what he said yesterday. "Profit and earning ratios are starting to get to the point where buying stocks is a potentially good deal, if you've got a long-term perspective on it." Wow! Imagine someone gets an illness, loses his appetite, and sheds 50 pounds. He looks and feels terrible. He goes to his doctor and the doctor tells him it might be a good time to eat. Most of us recognize that the patient would be better off if the doctor had actually treated the illness.

What our president seems to be saying is that we ought to buy stocks because the prices have fallen. We ought to eat because we have lost weight. We will eat when the illness is treated. We will buy stocks when the economy is treated in a way that restores confidence.

Now, as an aside, when the president said "profit and earning ratios" was he referring to P/E ratios? If he was, it means that our president is starting his economic education at the remedial level. P/E is price to earnings. It is a measure of the price of a share of stock compared to the earnings per share, and is a useful tool for decision making. Profit and earnings are synonyms and a profit to earnings ratio would always be one, not a very useful measure. Perhaps he was just referring to profit ratios, but profitability tells us nothing about whether a stock is a bargain or not. Hmm. Either way, it seems Economics 099 may be needed for this president.

Anyway, it is hard to have confidence in a program when the chief sales person can't describe it himself. It seems that our president has spent his time devising a program to sell to the economically uneducated. The health of the stock market and, to a large part, the economy itself depends on selling the program to the economically literate. He has yet to do that. Is it because he has not yet slipped out of campaign mode, or is it because he really is ignorant of economic reality. How long should we reserve judgement?

Even Bill Clinton Agrees with Me

2009-02-23T10:11:00.001-08:00

I was totally shocked and delighted when I read that Bill Clinton thinks Obama should quit talking down the economy. You know things are serious when Bill Clinton criticises Barak Obama.

It seems to me that Obama is behaving like a new CEO. Research shows that new CEOs use the discretion allowed under accounting rules to reduce earnings in the first year of their tenure. That poor performance can be blamed on the prior administration and it 'clears the decks' of losses allowing them to report higher earnings in the future.

So is Obama (A) doing things to lower stock prices and deepen the recession on purpose to make himself look better later on, or (B) just bumbling around because he doesn't know any better? He has only been president for a month, so it is still too early to tell, but I am leaning toward (A).

Weathering Difficult Times

2009-02-23T08:57:00.000-08:00

The certainty of difficult times is that we will have more of them. If we choose to treat difficulties as adventures, they will be adventures. If we choose to treat them as trials, they will be trials. Adventures are more pleasant than trials.

Does He Know How We Got Here?

2009-02-17T12:17:00.000-08:00

I quote President Obama. “Now, I have to say that given that they [Republicans] were running the show for a pretty long time prior to me getting there, and that their theory was tested pretty thoroughly and it’s landed us in the situation where we’ve got over a trillion-dollars’ worth of debt and the biggest economic crisis since the Great Depression, I think I have a better argument in terms of economic thinking.”

The problem with this kind of broad stroke of history is that we don't learn the right lesson. The lesson Obama is pushing is this: "They were in charge for eight years and now times are hard. I have a different plan than they do. So, my plan is better." The logical connections are tenuous. He never tells us what policies caused the problems that we are in. Does he think that low tax rates caused this recession? Does he believe that slow and cautious action on climate change caused this recession? Does he believe that the war in Iraq caused this recession? He uses the recession as the hammer on the head to any Republican that disagrees with him, but he fails to show any understanding of what got us to this point.

Please, Mr. President, tell us which policies led to this recession. Please, say something that indicates you have some understanding of what happened. Then we might have some confidence you can do something about it.

It is, of course, too much to hope for. This recession will end. They all do. When it does, Obama will claim he did it and in his mind and in the minds of his uniformed followers his policies will be vindicated. But we will be left with a society more in debt and more dependent on the Federal Government, the very entity that brought us this debacle in the first place.

Markets and the Long View

2009-02-17T11:56:00.000-08:00

When asked about the sharp drop in the stock markets after Treasury Secretary Tim Geithner announced an expanded bank bailout plan last week, President Obama replied, "I am not planning based on a one-day market reaction. In fact, you can argue that a lot of the problems we’re in have to do with everybody planning based on one-day market reactions, or three-month market reactions, and as a consequence nobody was taking the long view."

Mr. President, your response sounds nice, but it makes a false assumption. The false assumption is that the stock market is a measure of short-term value. The value of firms is determined by projections of earnings out into the idefinite future, discounted back at reasonable rates of return. Those rates depend in large measure on the confidence of the investment community in the firm under consideration, but also on confidence in the economy as a whole. When the market falls, it is because earnings are predicted to be lower in the future than previously estimated or because of increased uncertainty or both. Market prices are a long view.

That one day market reaction was caused by the increased uncertainty generated by your treasury secretary. He, under your watch, is making the future look less atractive and more uncertain. You need to own it. Then we might some confidence you can fix it.

The continued drop in prices over the last two months are not a result of the recession that began last year, those expectations were already captured in last year's prices. The continued fall in prices is because your actions and words have decreased investors' expectations about the future. You campained on platform of hope. Please, say something or do something that will give us hope that you know something about economics.

The Debilitating Effects of Uncertainty

2009-02-16T09:00:00.000-08:00

First let’s consider the effect of rates of return on value. We all know that a simple return is equal to the amount of the investment times the interest rate. If someone invests $100 for one year at 5% he will have $105 at the end of the year. If he invests at 10% he will have $110 [Future value = present value X (1+i)(n times)]. Higher interest rates produce a higher return. We also know that the riskier the investment, the higher the expected return. For example, a government insured savings account will give interest rates of about 1% in today’s market. We would expect something higher of good quality corporate bonds and something still higher of reliable stocks, maybe 7%. But junk bonds or more risky corporate stocks might be sold to yield several times that level of return. Now let’s say you have three different investment options each projected to yield $100 in a year’s time but each having a different level of risk. Based on the risk you assign required interest rates of 1%, 7%, and 20%. What would you be willing to pay for the investments? The calculation is just the reverse of what is given above to calculate future value. [Present value =Future Value ÷ (1+i)(n times)]. Thus, for the 1% alternative we would be willing to pay $99, for the 7% investment $93, and for the 20% investment $83. Now consider that the $100 return was two years out rather than one. Now the calculation is the same except that now we divide by (1+i) twice instead of once. We would be willing to pay $98 for the 1% alternative, $87 for the 7% alternative, and $69 for the 20%. The longer the term of the investment, the larger the 'n', the greater the difference in values between safe and riskier investments. Higher interest rates result in lower asset values.

So, why is all this important? Asset values are in large part determined by projections of future returns discounted by interest rates. Those interest rates depend in large part on the level of uncertainty. The Obama administration preaches doom and gloom which increases uncertainty and it offers no prescription to inspire confidence among economic and financial experts. It is, thereby, decreasing asset values and diminishing the material wellbeing of the nation and the world.

The Economy

2009-02-10T11:49:00.000-08:00

The president's doom and gloom preaching may increase the chance of getting his spending bill passed, but it is bad for the country. Let's review the numbers.

In January the unemployment rate is 7.6%. 11.6 million people are unemployed. This is bad, but needs to be put into perspective. Of the labor force of 153.7 million people, 142.2 million people are working. A year ago, that would have been 146 million people. Four million people have lost jobs in the last year, but 142 million have jobs. Add to that the 50.1 million people that recieve Social Security benefits, and we have 192 million people either employed or recieving Social Security benefits.

The point is, most people are no worse off than they were a year ago. Our national leaders ought to be out touting the positives, getting people to relax and spend, and assuring those who are hurting that help will be coming. Such a course would help the economy and those who are hurting.

We are left to wonder, again, does this president not understand basic economics or doesn't he care?

$920,000,000,000 and counting

2009-02-06T13:40:00.000-08:00

With the price tag of the proposed economic stimulus at $920,000,000,000, some are trying to find ways to chop that down a bit. The question seems to be, how much less should we waste? You know, the $920,000,000,000 is about 3,000 times the U.S. population of 305,000,000.

With those numbers in mind, let me offer an alternative proposal. It will cost about the same amount. Give to each American citizen $3,000 cash.

This would work so much better than any program the government might devise.

It would provide $900,000,000,000 dollars of stimulus.
The wealthy would get a bit less, because they would have to pay 40% or so back to the federal and state government in taxes. So the program would actually cost less than the one before the senate.
The state would get increased tax revenue taxing the stimulus.
The money would go to meet the most immediate needs. I mean, with four kids at home, we would get $18,000. We would buy the van my wife has been wanting. One of my daughters has significant amounts of miscellaneous debt. She could pay off $3,000 of those debts and have more disposable money to spend. Another daughter has been saving for a car. That car would now be six months closer. My oldest son could use his $3,000 to go to college.
There is stimulus all over the place, and every individual's most pressing needs are met.

Ask most anyone you know. "Would your family be made better off with $3,000 per person in cash, or would you be better off by having the government give that money to school districts, state road departments, family planning clinics, historical museums, and on and on? Indeed.

The stimulus as planned? Bad policy.

Obamanomics

2009-02-05T11:16:00.000-08:00

Some are happy that we have an administration in White House the believes in science. I must say that there is one science that is low priority in the White House, e.g., economics.

I am trying to figure out Obamanomics. It is not easy. Here are some recent examples that are hard to explain.

WASHINGTON (AP)– "President Barack Obama is warning that failure to act on an economic recovery package could lead to a recession that lasts for years and could be irreversible. " He actually said that. Could you imagine the ridicule George W. would have taken for saying such a thing? Have you ever heard of in irreversable recession? What would that look like? Our economy would continue to retract forever. That is an impossibility. So Obamanomics proposes that ecomomies can retract forever.
President Obama plans to limit executive pay to $500,000 in firms that receive large amount of government assistance. Don't get me wrong. I think executives often take too much money from companies at the expense of the shareholders. But setting a maximum wage will only ensure that the companies that need the best talent to turn them around will not be able to pay for the best talent. This is like taking the poorest performing team in the NFL, loaning them some money to get them through a difficult time, and then telling them they cannot pay coaches or players more than $500,000 per year. What is the chance the team will become successful? Indeed. So Obamanomics holds that poor performing firms will be benefitted by hiring less skilled people.
Obama criticises the idea of tax cuts to stimulate the economy. He says we cannot fix the economy by returning to the policies that got us into this mess. You know, though, it is hard to find a serious economist that thinks low tax rates got us into this mess. How will low taxes lead to a fall in real estate prices, increased mortgage forclosures, and overcautious lending practices? So, Obamanomics holds that low tax rates lead to mortgage foreclosures, risky lending practices, greed on wall street, lack of automobile purchasing, divorse, child abuse, and intestinal worms. Tax rates and our current difficulties are unrelated and he is either ignorant of the basics of the science of economics or he is disingenuous.

So according to Obama:

Recessions can last forever.
Government can help firms by ensuring they are led by the less capable.
Low tax rates lead to recession.

(I am not really sure he believes any of these things. He may just say them because he thinks the public will believe them. So, is he a prevaricator or a doodle? Either is dissapointing for the man who promised change we could believe in.)

You, sir, are no Ronald Reagan

2009-01-30T13:53:00.000-08:00

I do hope our current government governs well, but after months of the media lovefest, I am rather turned off. You would think that the country and the world were all enamoured by our new president. Various outlets reported that the number tuned in was the highest in 28 years. That said alone is a little decieving. If you want to judge the draw of an event you have to measure attendance against the population available. For example, Obama gave his speach to 31.8 million television viewers out of a population of 303 million, or 12.45% of the population. Reagan gave his speach to 41.8 million viewers out of a population of 229 million or 18.25% of the population. The percentages of the population tuning in for the inaugeration in the last ten elections, ordered by percentage, are as follows:

1. 1981 Reagan 18.25
2. 1973 Nixon 15.64
3. 1977 Carter 15.50
4. 2009 Obama 12.45
5. 1993 Clinton 11.56
6. 1985 Reagan 10.55
7. 2001 Bush 10.28
8. 1989 Bush 9.47
9. 1997 Clinton 8.09
10.2005 Bush 5.25

While the man gives a decent speech, and while the media gave him an extrordinary amount of advertising, he audience was less than one percentage point higher than Clinton and two points higher than George W. He drew less than Carter or Nixon and was almost six points below Reagan. And so we continue to wait for someone who can inspire the nation again.

Business as Usual with a Liberal Tilt

2009-01-27T16:24:00.000-08:00

It is not certain yet. It is too early to tell for sure, but it seems we may have elected another doodle to the White House. In just the first week we find the following indicators:

Our new president issued an executive order to close the prison at Guatanamo Base. However, he did so without knowing what he will do with the prisoners there and he gave himself a year to get it done. On the bright side, he might do with Guantanamo what Clinton did with his promised tax cuts. Just say, "I tried real hard for a whole year, but I couldn't find a way to do it."
He issued an executive order implementing new stiff ethics rules regarding the hiring of lobbyists. The problem is that he violated the rule twice in his first week.
He promised a new era of bipartisanship and reaching out to the other side. When the other side expressed some disagreement with him his responses were, "You can't just listen to Rush Limbaugh and expect to get things done," and "I won." Three cheers for the great uniter!

Now, it may just be that he is off to a bad start. We will wait a little longer before we start referring to him as President Odoodle.

Thank You, PB and R

2009-01-19T12:39:00.000-08:00

I want to take a moment to thank President Bush and the Republicans.

The republicans helped restore states rights through legislation and appointments to the courts. It wasn’t too long ago that the states didn’t have the power to set their own speed limits. States have more rights and we have eliminated the inefficiency of snail paced transportation. Thank you.
The Republicans helped slow the move to the left. They reformed welfare so recipients can no longer use it as a way of life for the long term. Though Clinton tried to nationalize healthcare in 1993, Republicans have kept the federal government from ruining our health care system for over 15 years. Bush appointed people to the courts that will not move the leftist agenda in the courts. Thank you.
Starting with Reagan, Republicans have been responsible for keeping tax rates relatively low, which has in turn, kept our economy relatively prosperous. They have also been responsible for keeping federal regulation in check and decreasing the regulatory burden, keeping our economy vibrant. Thank you.
President Bush took the threat of terrorism seriously. While many of his decisions have been criticized, he consulted with those who should know and made the decisions he thought best for the country. He displayed uncommon courage in the face of unprecedented assault by the left and the media. Thank you.

I feel blessed to have had George W. Bush as my president for the last eight years and am grateful for the contribution of congressional Republicans to the good of our country. Thank you, and Thank you again.

Debt, Debt, and More Debt

2009-01-13T11:43:00.000-08:00

The official Federal Government debt now stands at about $10 trillion dollars ($10,000,000,000,000). That is a lot of clams. With the U.S. population of about $305 million, that translates to about $32,800 per person. Our president elect tells us we can expect deficits of around a trillion dollars for the forseeable future. That will add over $3,000 per person to the national debt each year.

That, however, is only part of the story. We take money from people's payroll and promise them social security benefits when they retire. The Social Security Administration estimates the unfunded liability for people currently enrolled in the system (those working and those retired)to be $15.2 trillion. The unfunded liability is the amount expected to be paid out over the life of the participants, minus the amount expected to be collected in taxes from those participants. Added to the Federal debt, that gives us a debt of $25 tillion, or about $82,000 per person. Our country's total domestic product is only $14 trillion.

That, however, is only part of the story. Most households have their own debt. The household debt in the United States is about $14 trillion; most of that is mortgage debt. That is an extra $45,000 of debt per person. So, included Federal government debt and household debt, the total is $39 trillion dollars, or $127,000 per person.

That, however, is not the end of the story. The U.S. financial sector has debt of about $16 trillion, other U.S. business debt is about $10 trillion, and the debts of state and local governments is about $2 trillion. That is a total of $67 trillion, or about $220,000 per person.

The amount is staggering. Now, I realize that all of this debt is not additive. For example if Bob loans me a dollar, and I loan Sally a dollar, and Sally loans a dollar to Bob, the net amount of debt is zero. Still, the debt is enourmous. It is historically large by any measure; inflation adjusted, gdp deflated, etc. In addition, the plans of the Federal government are to keep it growing at historic rates.

With government debt of $10 billion, the interst on that debt is 400 to 500 billion dollars each year. That is about $1,500 per person per year. So, a family of 4 would have to pay $6,000 in taxes per year just to pay their share of the interest on the federal debt. And since half of the households in the U.S. pay no federal income taxes, you see the burden.

So what to do? Nationally, there needs to be a whole new thinking about what the Federal government will provide, and is has to be a lot less. Personally, we should pay off all our household debt and make sure we are those receiving the interest and not the ones paying it.

Wal-Mart, Good or Bad?

2009-01-08T16:57:00.000-08:00

Most companies will have practices we can pick at, but the question for today is, on balance, is Wal-mart good for a community, or is it bad?

When goods are sold at a lower price, consumers will use the money saved in several ways. They will buy a greater quantity of goods, buy higher quality goods, consume more services, donate more to charity, or save more. All of those are positive outcomes. If a greater quantity of goods are consumed, more workers are needed to process the goods through the system, creating more jobs. If more services are consumed (movies, dining, etc.), more workers are needed to perform those services. If higher quality goods are purchased, more workers are needed at the establishments that sell the higher quality items. If more is saved, there is more security society wide. Low prices are a boon to any community. Wal-Mart specializes in providing goods at low prices.

Wal-Mart, good.

Some will claim that Wal-Mart presents unfair competition to smaller retailers. They cannot compete on price and must either close or cut back. Closing or cutting back results in those smaller retailers employing fewer workers. Hmm. So, the argument is that Wal-Mart is bad because it is more efficient. It can buy and sell goods at a lower cost than can other retailers. So is the measure of a company's worth how inefficiently it can use labor? If it takes one company two employees to produce a product and another company needs three, then is the second company somehow a better company because it uses more labor? Then if a third company needs five employees, we should give them some kind of award. A single farmer with the right equipment can manage a thousand acres. Should we take away his tractor, give him some mules, and let him hire a dozen people to manage his farm? He would employ more people and therefore contribute more to the social good.

It is ridiculous. But so is the argument that a retailer is bad for a community if it can sell more goods at lower cost. If the quantity of goods in a community can be delivered with fewer employees, that is good for a community. Workers can then be employed in places will they will actually make a contribution to the economy.

Wal-Mart, good.