|December 16, 2011
When is Government Overreaching?
just came across my desk. It's about child labor on farms.
Here is the key sentence:
"Under new standards being advocated by the Labor
Department, youths under the age of eighteen would be prohibited
from working in hay lofts, giving shots, caring for baby
animals, and being in the vicinity of animals whose behavior
may be "unpredictable." For the estimated 1.3
million youths living or working on farms, this means no
longer being able to perform routine chores if the farm
is set up as a corporation or a business partnership. Today,
the vast majority of family farms are legally structured
in this manner."
As with so many items on the Internet today, one needs to
be careful to vet the truth. Here is the news
release from the DOL.
Let's get to the point. Kids need to work. They need work
Gingrich's statement about children taking up some jobs
at school is an excellent idea. When I grew up, we did do
work around the school, and got a free ice cream for it! It
was basic dishwashing in the cafeteria and the like, but it
was good to get the work experience. If kids are not allowed
to work, what kind of work ethic will they have when they
However, the article cites some dangerous activities, and
it may be that other work may still be allowed. Fixing machinery
may be allowed, or is it?
The troubling part of this is the perception of the government.
Will it foster coddled children who otherwise may be well
gifted in mechanics, but are hamstrung by Big Brother? Although
Henry Ford was quite absent around the family farm, he may
have been busy tinkering with plows. He was certainly annoyed
with the work. Had he not been able to work around the farm
freely, he may not have been successful in creating such an
advanced assembly line.
BUT, he would have been freely allowed to work, even with
this new proposal. Continuing on in the DOL press release:
"The FLSA also provides a complete exemption for
youths employed on farms owned by their parents."
At first this initiative feels like the wrong thing. But
the initiative is not event the point anymore. Search for
Department Child Farm Work" and you get all kinds
of mud being slung, but only in one direction. It takes some
digging to even get to the source.
Until we are honest with ourselves, we are not making progress.
|November 2, 2011
Another thing that makes America Great
One aspect that is often cited as the greatest part of American
governance is its ability to change with the times –
specifically the ability to amend the constitution. Our founding
fathers knew that times would change, and that an enduring
government run by the people would need to be able to adapt.
Penn Jillette, the famed Las Vegas magician of Penn and Teller,
seems to be on a quest to define atheism. However, his Ten
Commandments for Atheists are not so much atheistic, but
more an update of the original Ten Commandments adapted to
a society that has seemingly come closer to the Truth over
the past 3400 years:
The highest ideals are human intelligence, creativity
and love. Respect these above all.
I am the Lord thy God.
Do not put things or even ideas above other human
Thou shalt have no other gods before me.
Say what you mean, even when talking to yourself.
Thou shalt not take the name of the Lord thy God
Put aside some time to rest and think.
Remember the Sabbath Day to keep it holy.
Be there for your family. Love your parents, your
partner, and your children.
Honor thy Father and Mother.
Respect and protect all human life.
Thou shalt not murder.
Keep your promises.
Thou shalt not commit adultery.
Thou shalt not steal.
Thou shalt not bear false witness against thy neighbor.
Don't waste too much time wishing, hoping, and being
envious; it'll make you bugnutty.
Thou shalt not covet.
Religion has a useful place in explaining the currently unexplainable,
guiding people's actions for a more fulfilling life, and fostering
an environment to advance our society. Our religious leaders
would benefit greatly by contemplating this "atheist's"
|October 12, 2011
How easy it is to make numbers validate your cause
A friend points me to this article by Victor Hanson:
Street’s Disgruntled Utopians
Generally, any article that uses pejoratives to be convincing
is an immediate turn off. But getting the to meat of the matter
is this passage:
"In 1981, the top 1% paid 17.58% of all federal income
taxes; in 2005, this same cohort paid 39.38%. In 1981 the
top 1% paid $94.84 billion (in 2005 dollars); in 2005 they
paid $368.13, an increase of 288%"
Note that the
top 1% increase in wealth has been 311% from 1979 to 2003.
So, if Mr Hanson's numbers are correct, although the top 1%
are paying a bigger portion of the pie than before (overall
taxes paid), they are eating a larger portion of the pie than
before (overall income received). The net effect is less taxes
paid by the top 1%.
"Words be nimble,
words be quick,
|October 5, 2011
Just ignore it an it will go away
I'm not quite sure what to make of RA's recent blog post
in The Economist regarding China's
currency peg. He acknowledges there is an issue, but argues
we should ignore it and the problem will fix itself. In the
case of a mosquito bite, that may be true. Other ailments
need help or they get worse.
It's better maybe to consider his position. International
institutions, relationships and the global economy seem to
be what he is defending.
"America should ignore China's peg—and its
warnings against taking further steps to loosen monetary
policy—and adequately reflate. That will place pressure
on China to revalue, but without putting the country in
a position that weakens international institutions and a
key diplomatic relationship."
There seem to be two sides at play here. One is the international
community where the free flow of capital and ideas helps those
who are not hindered by geography, and another more domestic
component that is. Although he addresses the unemployment
problem, it's a short fragment and seems to be just a salve
for a not-my-problem morality position.
On the one hand R.A. speaks the truth about the consequences
of American action addressing the Chinese currency policy.
These actions have a high probability of a negative effect,
but only on a subset of the Population: international institutions.
On the other hand, real wages for most people in America and
Europe have fallen over the past 10 years, and there's a reason
for that. We must distinguish between what is good for some
and what is good for the People.
|October 2, 2011
Now we're talking
In an update to an earlier post
currency manipulation, the senate is taking up the debate
this week. Chuck Schumer said he has been "disappointed"
that Treasury in both the Bush and Obama administrations has
not named China a currency manipulator.
It's not the entire reason for our current depression, but
it is a big contributor to the continuing importation of lesser
living standards through poor US trade management.Let's hope
they make progress.
Krugman blog post.
|September 24, 2011
The ugly side of truth
As is well known, Google
is "blind". It does not tweak its algorithm
unless it leads to better results. So what is Santorum? and
who is Santorum?
|September 8, 2011
How to get peasants to do your bidding
tax issue has been an interesting study in the movement
of the masses by a small group of people. It reminds one of
religion and why it is important for both those that have
little and those that have so much.
As the historian James Truslow Adams defined the American
Dream when he coined the term at the depths of the Great
Depression, what we seek is “a land in which life
should be better and richer and fuller for everyone.”
|September 1, 2011
When is Satire Libel?
This is an interesting article from Forbes.com. The title
is Paul Krugman Demands More From Hurricane Irene: A Satire.
But to be a satire, it must use the truth in a convincing
way. Much of what is said is what people believe Paul Krugman
says, but if you read his blog and articles, he doesn't say
these things. In the arena of discourse to solve our problems,
this is not helpful. Forbes
should know the difference between Satire and Libel.
|September 1, 2011
How China's beating us, even on clean energy
You have to admire China, not for the way it treats its people,
necessarily, but in how China
moves decisively to build up its infrastructure and manufacturing
might. In this sense, it treats its people quite well.
The administration did challenge the Chinese government's
practice of giving subsidy grants equal to between $6.7
million and $22.5 million to Chinese wind turbine manufacturers
that agreed not to buy imported components. China agreed
in June to discontinue the practice but has already built
the world's largest wind turbine manufacturing industry
in the past five years and now has highly competitive producers
for almost every component.
|August 26, 2011
In an update to a previous post, people have been addressing
our currency issues, especially with BRIC. Here's Paul
All those accusation of hooliganism, currency wars etc.
are in effect demands that the trilemma be resolved by having
America give up having an independent monetary policy —
basically, that the Fed give up on trying to stabilize the
US economy so that emerging markets aren’t faced with
the uncomfortable tradeoff between massive appreciation
and imported inflation... [W]hat this analysis tells us
is that the hard choices emerging markets are facing don’t
reflect any kind of spectacular misbehavior on the part
of the United States. All that we’re seeing is the
classic set of tradeoffs that any currency regime faces
— and it’s not the business of the Fed to save
other countries from the necessity of making choices.
August 23, 2011
What made America Great?
Elliott gives us a warning about the global economic system,
and in fact our entire social order.
August 15th was the 40th anniversary of Richard Nixon's announcement
that America was suspending the convertibility of the dollar
into gold at $35 an ounce. Nixon also announced that the US
was imposing a 10% tax on all imports into the US (protectionism
was common at the time). It was the end of the Bretton
Woods system, which was brought about, interestingly enough,
to stabilize world economies, the lack of which many attribute
to the two world wars.
The Bretton Woods system had two
conflicting architects: Harry Dexter White, chief international
economist at the US Treasury, drafted the US blueprint, which
competed with the plan drafted for the British Treasury by
John Maynard Keynes. Overall, White's scheme tended to favor
incentives designed to create price stability within the world's
economies, while Keynes' wanted a system that encouraged economic
More importantly, the United States was in a strong position
at the time, and likely a creditor nation to war-ravaged countries.
The US balked at Keynes' plan of shared responsibility. The
US contingent was too concerned about inflationary pressures
in the postwar economy, and White saw an imbalance as a problem
only of the deficit country. Because of the overwhelming economic
and military power of the United States, the participants
at Bretton Woods largely agreed on White's plan.
Which brings us to the question: "What made America
great?" The evidence points to our leadership bringing
the fight to the oppressors. We prepared for war well before
Pearl Harbor. We developed amazing technologies for the war
effort that were also useful for peacetime products. In the
end, America was largely intact, and we believed and practiced
the fundamental principle of personal liberties. This allowed
us to attract great intellectual minds to bring even more
technology to bear while other countries spent their efforts
Today, our resources are driven to other countries with protectionist
measures while we continue to hold on to our beliefs in a
clean environment and social insurance, both of which are
under threat. More important than ensuring democracy in far
away lands, we must first focus on our own. Simply put, we
believe in life, liberty and the pursuit of happiness. We
need to bring back our protectionist measures to ensure this
August 16, 2011
The cause of the financial
asks an interesting question.
Caused the Financial Crisis?"
The answer is quite easy, but no one talks about it.
Mismanagement of trade, especially China.
I know this first hand. In the 90's China looked like a
great opportunity to reduce manufacturing costs and I was
all for it. But when China pegged their currency, goods from
China were priced artificially low. This made items sold at
places like WalMart and Home Depot a great bargain. Efficiencies
increased, people got paid more, people could afford more
in a house, and as a result, housing became more valuable.
The banks made sure they were in the game competing to provide
the best mortgages.
Slowly, however, US labor - especially for manufacturing
- became too expensive. Manufacturers shed jobs. Those jobs
were small at first, but those jobs build the foundation.
When line workers were no longer needed, their managers were
no longer needed. This is the part that crumbled (So far the
high-end is doing OK).
When China pegged their currency, the US failed to intervene
with increased duties. In fact, US duties importing from China
are extremely low. Generally, I'm not for duties. Any student
of international finance knows the top portion of efficiencies
in trade simply vanishes with duties. However, artificially
low exchange rates create inflation on one side (China is
dealing with this now) and a depressed economy on the other
(which we are dealing with now).
Anyone who has been to China knows the huge difference in
living standards between our countries. A currency that was
allowed to float would have let Chinese citizens enjoy greater
wealth and it would have moved the US labor base into higher
value work until there was an equilibrium. But with the peg,
China sees rising costs, and America sees unemployment. The
only way to get to equilibrium in this situation is to reduce
the quality of living for Americans. In effect, we are importing
China's standard of living.
Had we aggressively managed trade when China overstayed their
peg by imposing duties, much would have been saved. *HOWEVER*
this increases prices in the short term. Retailers don't like
it, manufacturers don't like it, consumers don't like it.
and investors don't like it. Nobody likes it. But to avoid
the situation we're in, you have to do it.
I'm convinced this is where this all started. The most interesting
thing is, nobody speaks about it.
Q3, Q4 2010
| Q1, Q2 2010 |