The 6 Pack Economist

What fascinates the hell out of me is that some very smart people do not understand that not everyone can be rich.  Nor can everyone be poor either.  We are rich or we are poor based on the people around us.  Both Ted Rall and Cynthia Tucker do not understand how basic everyday economics work.

Although both are correct in criticizing the executive pay of these failing institutions, what they fail to recognize is aside from pulling back a little bit on the pay for CEO’s there will always be both wealthy, rich, poor, and a bunch of levels in the middle.  I also made a very conscience decision putting in both wealthy and rich as different levels. 

To the primary reason I wanted to post about tonight.  The amount of middle class people has not changed in percentage of the population.   The primary reason has nothing to do with economic policies or anything that complicated.  The middle class are the people who make more than the lower class but less than the rich.  The factory workers were never really middle class.  The manager at the plant was middle class and the diner owner was middle class.  Could the factory worker live comfortably with the two point five kids and a white picket fence?  Maybe it really depended on the supply of houses with white picket fences.  But that is my point.  What does the average person today have in comparison to thirty years ago?

Today the average household owns two cars (with reliability and features Mercedes Benz did not have), a HDTV in one or two rooms, air conditioning in almost every room, cell phones, cable TV with 100 plus channels, a computer with internet, some type of game system, and health care that those in the 1970s could only dream of (even if it’s expensive).   

Mean while in the 1970s when according to Cynthia Tucker all was great, the average American made car was complete junk, went 0-60 in 3.4 months, got about 15mpg, and were good for about 80K miles.  Air conditioning was something only the rich people in the neighborhood had.  A house might have two TVs only one worked.  Cable was something for rich people also, if they even had it all.  There were no cells phones.  Ok that last one is bonus.  The personal computer was just a series of blinking lights.  Geeks really were geeks.  The internet was for even bigger geeks.  And healthcare although cheap was abysmal by today’s standards. 

So where did all the productivity gains that the rich people ran away with go? It came back to the “poor people” in the form of better stuff for “poor people”.   One can argue that all the stuff is not worth it, but when it comes to economics the stuff and the services that people can have does matter.  Also if someone did not want the stuff they do not need to purchase the items.  

The second point I want to make is directly related to the statistic mentioned in Cynthia’s editorial.  I don’t think there is anything wrong with it.  I think it actually shows exactly what it should show.

A few years ago, Earl Wysong of Indiana University and two colleagues published a study on social mobility in this country. As outlined in the Economist, a right-leaning British news magazine, they “compared the incomes of 2,749 father-and-son pairs from 1979 to 1998 and found that few sons had moved up the class ladder. Nearly 70 percent of the sons in 1998 had remained at the same level or were doing worse than their fathers in 1979. The greatest social mobility occurred in those families already at the top of the income ladder,” the magazine reported.

So 70 percent of the study did not move up the income ladder?  No kidding.  Not everyone can move up the income ladder since they have to move past someone else and then that person would move down the income ladder.   I would bet the statistics would come out that 1/3 moved up, 1/3 stayed the same and 1/3 went down.  Also 66% is really close to “almost 70%”. 

The second part of the statement deals with that most of the social mobility was in the upper income brackets.  This too can be easily explained without it coming down to something evil republicans did by reducing taxes.  In 1979 a college degree was still a premium and those with them came from more affluent backgrounds.  While a high school education pre 1979 may have been good enough, after that is simply was not good enough.  One needed to have something besides a high school education.  So simply showing that those who were affluent made better gains was primarily because they had access to a college education and valued it earlier.  In addition it tends to the children of the rich that become the wealthy.  The grandchildren become drug addicts and home move porn stars.  So it sort of works out in the end.

Did some people become obscenely rich, while others were brushed to the wayside?  Yes.  Do I wish that people could live in a minimal of comfort even when they are on the lowest rungs of the economic ladder?  Yes.  And they do, but in comparison to the truly poor in this world they are doing pretty damn good, even if everyone else around them is doing better.

With all the discussions about the changes to the healthcare industry in the United States I figured I should put my two cents in.  Not  to mention with the way the dollars been going you’re better off using your pennies as projectiles thrown at the car in front of you that is too slow at the green light, then using them to actually purchase something.  Back to the point, which is how I see the new healthcare system shaping up. 

First and foremost I do not believe the private system is going anywhere.  Simply put there is far too much money in it.  In addition don’t forget that everyone with socialized medicine needs the USA’s private system for when things need to get done and it’s not an emergency situation.  Given that we are not going to get rid of the private system lets discuss the options.  The private system is there to make money.  Never forget that one fact.  The private insurance industry tries to insure people that it thinks will not cost them more then the premiums the people pay.   When someone has obvious aliments that will cost the insurance company more money than they can make in premiums it will not insure the person.  It is simply bad business.  I don’t blame them per say given that they are in the business to make money.

If a strictly government run system were to replace the current hodgepodge of private and public insurance with a strict government only system it will be a disaster.  The reason being is that the government run system will not start to fail till long after it was too late.  It will fail for the same reasons the rest of the government programs in this country eventually fail.  It will be run into the ground by a series of political appointees, unions, lobbyists and lawyers.  It will start off all well and good but in ten years it will start to show its strain.

Where does that leave us?  How can the two systems be combined to satisfy everyone?  Or at least long enough to function till artificial intelligences takes over our decision making for us all ( I for one welcome our future robot masters  and hope they enjoy my sarcastic humor).  I am usually a very pro-business kind of person and I am still pro-business when it comes to the healthcare industry, but something has to be done about the coverage given to high risk and those with prior conditions.  Those with high-risk conditions and/or prior conditions are almost impossible to insure and still be profitable.  The price to be paid would simply be too high for the person to pay.  What if the government plan would take care of this high risk pool? 

I am going to go out on a limb and say that the end result system will be something similar to the mortgage industry.  Purely private companies will handle the gravy of the healthcare industry.   This means that the industry will cover those they think will not actually need the healthcare.  After all they are betting that you will use less healthcare resources then you pay for each year.  The government program will then take care of the high risk people or at least handle the high risk portion of their care. 

The system will be able to leverage the existing infrastructure and allow for most the private insurance companies to slowly fade out of existence over the next twenty or so years.  This will primarily happen as each election will bring in a new politician who will promise to have the government funded system take on more and more of what was provided by the private companies.  The private insurance companies will react as most private business react, they will allow the government to keep nibbling at the services they offer, till one day before they know it, the private companies will have no use. 

I have one other way that this will go down too.  This is the more cynical approach but given the intelligence of those running the whole darn thing it seems just as likely to happen.  The politicians will create the healthy mae and pharma mac (HMPM) almost private not quite public either corporation.  But unlike the above mentioned scenario, HMPM will not be a retail service.  They instead will be a sort of re-insurer.  They will be the dump where the private insurance companies put the people they cannot make any money from.  In the first go round the system will work very well as common sense rules will apply.  HMPM will evaluate the people and do the right thing by taking only calculated risks.  But soon the pseudo private nature of the company will come through.

HMPM will have their CEOs make their bonuses not on the smart decision making of their auditors, the bonuses will be based on just how many people they “insure”.  The politicians will be paid a portion of the bonuses via campaign donations till soon every basket case the private insurance can find will be on the HMPM roles.  They will agree to insure them with sole express knowledge that they will dish the person off on HMPM. We all see where this going right?  The private companies will just dump and dump and dump till it all just collapses.  This should be just about in time for me to retire. 

This system should last long enough for either me to die or for our computers to treat like little pets.  Personally they way my dog spends her days are pretty damn good.  Sit down, lift a paw and get a treat.  I might even be able to do better than that.  With all this crap going on, smoking seems like a pretty good habit to pickup.  It could solve the social security problem.

Apple is well on it’s way to continue it’s iMonopoly.  I have told you the stories of dealing with apple die-hards but I find it funny that most of the people I know who have an apple/mac are the biggest opponents of Microsoft and their monopoly.  But once you go with apple you are stuck with them.   Granted their new OS and much of the OSes on their products is linux based so it can be changed or “patched” to turn-off their monopoly code it still seems like you get locked in.  The lock in that is done with apple seems alot worse then the lock in you get with microsoft.

I personally like the iPhone and think it is better then my Windows Media based phone.  But in order to get and use an iPhone I have to signup for a long term contract with AT&T.  Then once I have the iPhone I am only allowed to get apple approved software.  Then again the primary reason why Apple’s seem to be so stable, is the tight control on the software and extensions available.  While Microsoft allows just about any yahoo (like me) to write software for them.

I really had no point to this post.

Ok its not like corruption ever stopped, its just has  a lot more to feed it now.  And larges pots of money feeds corruption.  I knew the stimulus would attract the flies like a pile of dog crap. 

I look at obama and his crew and see a typical academic arrogance with the stimulus bill and the extra spending bills.  Arrogance may be too strong of word but what I mean is they seem to think that while other governments have failed to spend the money properly they will succeed.  They are making a very good go at it with the media.  The speechs about holding people accountable for where the money gets  spent are all well and good but it won’t get spent correctly.  And I can’t think of anyone who really did a good job of spending our money. 

But what will happen is that after about a year the bulk of the spending money will begin to hit the local governments and by that time americas attention will be on the next great thing.  Perhaps the budding adult movie career of Britney Spears will captivate us at that point I don’t know.  Part of me thinks the reason for so much of the stimulus money being spent so long after it was signed may be because by then (a year from now) they will be able to do as they please with it.

I need another beer.

Some museam in kentucky has decided to make an exibit about creationism and apparently Darwins theory of natural selection.  I personally think that creationists give the rest of the conservatives a bad name.   Although I will say I am not totally convinced that evolution is just random either.  But everything created in about 8 thousand years?  Come on!

Lets say that you are trying to explain how the world came about to a person who has no concept of bacteria or viruses let alone DNA.  In addition the highest number that can be concieved of is a few thousand.  Now try to explain to that person that over millions of years little changes in a creatures DNA created both the mouse and the elephant.  What would you do to try and explain the begining of the world.  Most likly you would condence the whole story to more manageable level.  And then go through everything in the order it seems to have actually happend but use terms that the person would understand.

I have always found it kind of interesting that the bible story of creation parrellels what most evolutionist think happened.  The time scale is way off but it seemed very similar. 

And just to clarify I think that there is something a little more to evolution then just random shit-happens changes in DNA has created all the different species in the world.  I think there is some sort of generational push.  Basicly the generation before or in this case the chicken knows that it would be good for egg to have better feathers.  And eventually one of the eggs does.  (I appologise for the bad analogy but I am tired).

One day I will write about some of the physics books I read.  Especially the stuff about non-locality theory.

I can’t think of better way to piss of the Europeans then to start universal health insurance in the United States.  I say why should we be paying for all the research and development costs of new procedures while they can just leach off of our hard earned money.  Not to mention all of the European firms that spend all that money on research and development of new drugs can save that money. 

The overpriced system in the United States allows for the socialized mendicene states to survive.  The new treatments are created so that they can be done in united states where they can charge and arm and a leg to fix your arm or leg.  Once the initial treatment is perfected and the initial investment is recouped the rest of the world can now benefit from it.  Pharmacutical companies will end up being the biggest losers in this new plan.  Primarly because the jackpot they get when they invent the next viagra will be eliminated.  But that also means that no one will invest to invent the next viagra. 

This brings me to one of my primary principles of life.  No risk no reward.  No reward no risk.  Talent will follow the money.  I can’t think of another cliche but you get he point.  The top researcher or two may do it for the love of the task but there are about another hundred people in the chain that are not doing their job for the love of it.  These include other researchers, book keepers, IT guys, janitors, and general managers.  Without these jobs being done the researchers can not do their job.  All of these other people want to get paid, because at the end of the day they want to take their money and do something or someone they enjoy.

So now that nobody can hit the jackpot by inventing the next great thing in medicine, the research and development will dryup.  Sure the charity money will still be their but the private money will slowly leave the market.  It will be replace by government research money which will be determined by the amount pictures showing hookers with the congressmen then the actual use of the end product.  Ironicly the amout of hookers and congressmen pictures is inversely proportional to the price of viagra.

Smokem if you got em.  Mind as well look cool

I want to say I am sorry to the 8 of you how read this.  I deprived you with my wisdom for a week.  I am sure you are all very sad.  Unfortunately for me, your sad because I decided to write again.

In today’s post I want to talk about government overplaying their hand with their bailout money and thank god they did.  In this story about the strings the government attached to the bailout money the banks have basically balked at taking the money or they are trying to give it back.  In classic government fashion everyone tried to get their little social engineering or pet project task on the strings of the bail out money.  I am very thankful for that.

In general am not a big fan of large government.  The primary reason is that the government is incompetent.  Like the old saying about those that can’t do something, teach it.  Well those who can’t work, go to the government.  And of course my disclaimer about some people at the government actually trying to do the right thing.  That being said I love to limit the governments power.  By returning the money and overall telling the government bureaucrats to stay out their business they are limiting the governments power.  Which I think is great.  In addition it is less of my money going to people who are incompetent (If you needed this money then you were incompetent).

Here’s to the government continuing to overplay their hand.

Insulting CEOs (while letting them keep their perquisites) may be fun. But it doesn’t begin to address what’s killing the U.S. economy: the rancid notion that one person’s hard day’s work deserves more pay than another’s.

Ted Rall for those who don’t know is a writer who is left of, well everybody come to think of it.  The primary premise for this editorial is that the CEOs of these failed banks should be tarred and feathered and that is something we agree on.  But after that we differ on just about everything else.

I don’t like CEOs who get paid enormous amounts of money and run the company into the ground.  I believe in rewarding success and not failure.  But I firmly believe that some people should have more than others, if they deserve it because of their efforts.   I also think that the only person who can get someone out of crappy financial situation is themselves. 

First we must recognize people are not poor because of the money they have or don’t have.  They are poor because someone else has more money.  Poor and Rich are both relative.  Always remember that.  Even in the height of communist Russia there was still rich and poor. 

“In 1980, according to a Forbes magazine study, executive compensation was 40 times the average worker’s pay; by 2007, that had soared to more than 400 times,” CBS News reported on February 25^th. Now that the companies those ridiculously compensated executives were charged with running are tanking, CEO pay is coming under attack by pundits and politicians.

So what does this mean to the average employee?  Let’s say the average employee makes 50K a year and that there are 100000 employees in the company.  How much would it matter to each employee if the difference between 40 and 400 times was distributed evenly between those employees?  50K a year multiplied by 40 is 2 million.  Then 50K multiplied by 400 is 20million.  This yields a difference of 18million.  But what does that mean to the 100K employees; about 180 bucks a piece.  What would this have done to the average employee’s bills, something between diddly and squat. 

I want people to know that I do not think they deserve to get paid if the company goes down the toilet.  They should be the last ones paid but when they do well they should be richly compensated.  But the current compensation scheme is out of whack.  I would like to see a limit on salaries.  Before you call me a hypocrite I think there should be additional types of compensation.  Their money should come from bonuses and shares of stock in the company.  The bonuses would be paid at the end of the fiscal year based on the net profit of the company while the stock would be rewarded to the CEOs but it could not be sold for 2 years. 

This brings me back to my primary purpose of my post.  People should get paid what their days worth of work is worth.  I am sorry that the best someone can do is ask “do you want fries with that” but why should that person get the same as someone repairing an electrical circuit on the top of telephone pole.  A job that is both hard and dangerous.  Or perhaps someone guy making a decision that could destroy or rejuvenate the company.  I know that most left wingers believe that the CEOs of many companies are heartless pricks but in actuality they are human beings who care about their employees.  They might not be as caring as we would like but very few of them don’t sweat over laying people off. 

Although there are still too many pricks out there.

All the world’s problems can be traced to women who sleep with bad men.  It is all their fault.  Until men reach the age of 50 something their life is run by their penis.  Who am I kidding it doesn’t stop running the show till about a minute after death.  The only reason men manage to do the right thing is by telling their penis, no.  So if you want to fix the world reward the penis for the rest of the man doing the right thing.

I know that right about now there is a woman who is cursing at the screen right now (It would be a lot more women complaining but only one woman actually visits this blog).  In the end they know I am right.  They know that men are pretty much doing everything they can to help satisfy the dictator between their legs and if the dictator between their legs knew that robbing the bank was not going to help the dictator get what he wants, then it would do something besides robbing the bank.  Unfortunately many young women like to sleep with the bad boys.

Thugs, criminals, and ceo’s of banks are able to satisfy their little dictator because women dig bad boys.  If women would start sleeping with the guys who helped people at the soup kitchen or the guy who strived to get A’s in school society would be better off.  In the end women truly have all the power in our society.  If those legs closed up for all of these crooks society would improve very quickly.  If the nerds and habitat for humanity workers were getting the booty the prevalence of dregs would dry up pretty quick.

On a side note I believe that this love of the bad boy is actually a natural reaction.  In today’s society the skills that a bad boy has tends to get them in trouble but in a less stable society the bad boys are the ones who survive.  They are the ones who tend to run the gangs or become bosses and captains’ of organized crime.  But in a society that is very unstable the strong man tends to be the most stable person to hang around with.  Aside from the past 100 years the world has primarily been unstable.

In other words we are still screwed.

In one week Obama and his crew managed to alienate a staunch US ally (churchill sent packing too) and look like an ass to a world rival not once but twice.

Even Bush is watching this and thinking, that was some dumb strategery.   Part of me wonders if Obama goes ape shit over these things.  If this guy was football coach his team just fumbled the ball twice, jumped offside and then ran the wrong-way after catching the ball.  I imagine Obama gathering all of his advisors and staff into a room and just letting them have it.  Who the hell advised him that a letter to the Russians was a good idea or giving the Prime Minister Brown a DVD collection?  I can’t believe that he really thought these were good ideas.

Then again perhaps he still thinks that everyone can be reasoned with.  Unfortunately the world is not full of reasonable people.  This tends to be the mistake of over educated people.  They (those who are over educated) spend too much time with other very educated people who are generally reasonable people (notice I never said smart people this is because I do not believe that educated and smart are synonymous).   Unfortunately for Obama the world and its leaders have more in common with the biker bar in the ghetto then a Harvard cocktail party that he is used to.  It would be nice if the world was reasonable and world leaders acted rationally but it just is not the case.  Aside from Canada and some western European countries the rest of world leaders are like jackals.  They will attack if they smell weakness.  The combination of a quid pro quo letter to Russia and then making Prime Minister Brown  look like a some rube accepting a bag of crap as a prize has made it seem like this administration put on a big ole bottle of weakness cologne.

I think there is already a divot in the desk at the oval office for the amount of times Obama has hit is head against it already.   I hope he does not get a concussion before his first 100 days are over.

 Side Note:  Can anyone make another version of the Hitler Raving mad clip from downfall, but with Obama complaining about the tax problems of his staff and foreign policy blunders?