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  • We are all rich when we are all poor

    Posted on March 30, 2009 by drinker

    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.

     

    This entry was posted in Economics, Politics and tagged , , , , , , . Bookmark the permalink.

  • How to piss off the Europeans

    Posted on March 18, 2009 by drinker

    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

    This entry was posted in Economics, Politics and tagged , , , . Bookmark the permalink.

  • And they overplayed their hand

    Posted on March 17, 2009 by drinker

    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.

    This entry was posted in Economics, Politics and tagged , , . Bookmark the permalink.

  • Ted Rall is officially a Communist

    Posted on March 10, 2009 by drinker

    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 25th. 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.

    This entry was posted in Economics, Politics and tagged , , , . Bookmark the permalink.

  • Foreign Policy Blunders

    Posted on March 8, 2009 by drinker

    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? 

    This entry was posted in Politics, Random Thoughts for the Day and tagged , . Bookmark the permalink.

  • Drinking to forget your broke

    Posted on February 19, 2009 by drinker

    When they came for cigarettes,  I did not speak up
    When they came for porn, I did not speak up
    When they came for my beer, I was freaking too drunk to speak anyway.

    There is nothing like slaughtering the golden goose.  Oregon wants to raise the tax on a barrel of beer by  about 1900% or something like 2.50 a barrel to upwards of 50.00 a barrel.  If you don’t know a barrel of beer is about 31 gallons or two kegs.  In Pennsylvania a keg will run you about 60 bucks for something descent.  So if this was happening in Pennsylvania it would be an additional 25 bucks or almost a 50% surcharge in the price of keg of beer.  You can decide if you think that this is too much, but for me I think it is just a money grab.

    You know that I could not preach about something after this but here goes.  Taxes should never have to increase if they are based on a percentage of something.  By something I mean income, stamps, tea, or beer.  In other words if taxes are taken as a percentage of the cost of something then they will automatically adjust with inflation. 

    Unfortunately taxes are taken by a group of people who are not held accountable.  Go over budget and the next year you get more money.  Do poorly with the money you have, just ask for more.  Achieve goals and do it for less then you thought, then you lose your budget to someone who did poorly.  This is why taxes never really go down. 

    What really sucks is that for you in Oregon, crying in your beer will cost you a lot more.  Oh and they want to raise the taxes on your cigarettes too.

    This entry was posted in Beer Reviews, Economics, Politics, Random Thoughts for the Day and tagged , , , , . Bookmark the permalink.

  • The proper preparation for Rich People Casserole

    Posted on February 9, 2009 by drinker

    Eating the rich has always been sort of a sport for most of human history. Unfortunately eating rich people is like eating your seed stock or slaughtering your birthing age cows. Sure the seeds make great bread and the cows make for a really succulent steak sandwich, you will starve later.

    If you don’t believe me, when was the last time you worked for a poor person? Ok all of you social workers sit down those people don’t actually pay you. As much as I don’t really like mega-rich people, especially those that did nothing to get it besides win the vagina lottery. They are a necessary evil. They are the only ones that have enough disposable income to invest it into non-consumption based spending. In other words expanding supply by investment.

    During a recession or depression (depending on your own personal employment status) there seems to be an excess supply of goods (and services) and a non-existent supply of money. This is only a short term situation. Soon the excess supply will be sold when the price is lowered enough and new goods will need to be produced. Unfortunately the people who owned the original production facilities were turned from rich producers to a rather succulent casserole by those less fortunate.

    Unfortunately we normally do not see farther than our own noses when it comes to economics. Part of this is natural, after-all when faced with starvation we look to find food first. But if we eat next year’s food crop to eat for today we will only starve worse later. The more we as a people continue to take from those of us who are successful and give it to those that are not successful the more we eat our seed crop. I should also state that in reality rarely to the less successful actually see a bounty from those that are successful. Usually what happens is the money is transferred from the successful to the politically connected successful.
    People have to remember that we are not rich or poor based on the money in our check accounts or stock portfolio but in our relationship to everyone else. And I don’t mean some squishy love crap I mean that if everyone else has the same as you then you are all poor.

    And I prefer my “rich people” with a little butter and a nice merlot reduction.

    This entry was posted in Economics, Politics and tagged , , , , . Bookmark the permalink.

  • Riots of the Financial Crisis

    Posted on February 3, 2009 by drinker

    So there seems to be a bunch riots going on over the finincial crisis.  Many of the acts of protest seem to be strikes or work stoppages.  Given that the businesses and factories are dealing with a surplus of product this is a good thing for them.  After all the plant does not have to pay people who are not working. 

    This ends up being counter productive for the people actually performing the strike since they are not earning money and with the surplus of goods decreasing the price of the goods will stay steady.  Unless of course the whole damn system collapses and at that point who cares.

    This entry was posted in Economics, Politics and tagged , , . Bookmark the permalink.

  • Smoot Hawley 2 update

    Posted on February 3, 2009 by drinker

    It seems that after europe threatened a trade war the clause was removed.  This clause was more extensive then I previously thought.  Basicly it stated that all products that were to be purchased for work done with the stimulus package money must be american manufactored.

    I guess someone told Obama that this will make the europeans pissed off at the US faster then invading a dictator’s country.

    This entry was posted in Economics and tagged , , . Bookmark the permalink.

  • Smoot-Hawley Part 2?

    Posted on January 31, 2009 by drinker

     A baby of the protectionist in the US is raising tariffs or restricting what can be imported.  I am not against restricting products from some crazy dictator or murdering nut job but usually it restricts stuff from a country like Canada. So is this Smoot-Hawley part 2? 

    I know that most people’s understanding of history is on par with their understanding of particle physics in a singularity but something similar happened during a past round of economic turmoil.  This was brought by republicans in the 30’s.  It was called the Smoot-Harley Tariff Act and a bunch of protectionists thought it was great to just kill all imports. 

    Let me preface this by relating a rule of life “Never screw people who can screw you too”.  This held true through the cold war.  The US and USSR never shot their Nuclear ICBM at each not because they were buddy-buddy but because they knew the other guy would shot back and everyone would lose.  Large tariffs against other-wise descent trading partners work the same way. 

    The current economic “stimulus” package has some rule about only buying US steel which means it is not a tariff deal per-say.  But this spending package is the GDP of many other nations.  So by keeping other countries out of the deal it is working like a tariff.  In addition other countries are going to be doing their own stimulus packages and US goods will be restricted from theirs.  In the end it may just have a very similar effect of smoot-hawley tariff, although not nearly as devastating.

     

    This entry was posted in Economics and tagged , , , . Bookmark the permalink.



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