Posts filed under ‘Money and Finances’

The 99%

Classic General Electric neon sign, in Willaco...

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An article in Vanity Fair from the May edition (the one with Rob Lowe on the cover) talks about income disparity in America. I’m sure it’s nothing that people in America don’t already intrinsically sense, but just in case you missed it: 1% of the people in America make 25% of the income, and the same 1% own 40% of its assets.

Instead of being the land of opportunity it dreamily advertises, America is on par with Russia and Iran in terms of the disparity between its haves and its have nots. This only addresses the top 1%: the wealthiest of the wealthy. Income and wealth distribution in America is much more unfair when you factor in divisions amongst the remaining 99%.

Once upon a time in America, this was a land of opportunity. Our founding fathers and subsequent leaders wanted to ensure an equality of opportunity (or at least as much of one as possible) and fought to keep America from becoming like a feudal European state. Part of the point of having a graduated income tax and estate and capital gains taxes and anti-trust laws was to keep the wealthy from, in effect, owning the country and then having those wealthy pass it on to their children. And so on and so on and so on, in perpetuity.

Now the rich get around these laws with special tax breaks for big corporations and the wealthy. I’m not anti-business. I’m not even anti-big business. The problem is when I hear that multi-billion dollar behemoths like General Electric paid no federal taxes last year. That’s something I take issue with.

The problem is when I see executives that make millions of dollars a year go unscathed after they make unethical decisions that cost “regular” people their jobs and their homes. That they haven’t been prosecuted is something I intend to remember in the next Presidential election.

The 1% elect other members of the 1% to represent the 1% and the interests of big business (not surprisingly, how much of the 1% makes its money). The 1% funds the campaigns of the 1% it elects. They fund the lobbyists who barrage the lawmakers with their requests on behalf of the 1%.

But there will be a day of reckoning. Make no mistake about it. I hope that day of reckoning will just be a day at the polls. One day the 99% will wake up and see what’s going on, and I only hope that the 1% make adjustments towards greater equality before that happens. I hate to think about what else could happen. Read The Decline and Fall of the Roman Empire. Ask Anistasia. Ask Marie Antoinette.

Now, since I sometimes criticize certain conservative politicians for bitching about problems without solving them, I would like to propose some prospective solutions. For one thing, we have laws in place to protect consumers in this country. It’s time we started enforcing them. Let Elizabeth Warren head the Consumer Financial Protection Bureau and give her the power and influence necessary to carry out her job instead of being a mere figurehead.

Take away all the special tax breaks and loopholes for the wealthy. Who are the wealthy, you might ask? Well, that probably depends on the size of a person’s family and the number of his dependents. However, I think most people in America would consider themselves very fortunate to make a six-figure income. Certainly, if you are making $250,000 a year, then I don’t care if you’re the Duggards or the Browns of The Sister Wives, you couldn’t possibly have enough children to be hurting on a quarter of a million dollars a year. No “special” tax credits for you.

With 401(k) plans, the government makes employers conduct something called nondiscrimination testing on an annual basis. If the rank and file workers in a company are making a disproportionate percentage of income compared with a company’s officers and upper management, then the upper management doesn’t get to sock away as much money on a tax free basis. These people received distributions from their 401(k) plans, and they are taxed on them at the normal rate…or they have to find other tax loopholes created for the wealthy. I have no doubt that there are some.

How about doing nondiscrimination testing on salaries as well. Establish a percentage that seems reasonable, and then for every dollar they make above what’s considered a fair amount, tax the hell out of it at a higher percentage rate. It’s unconscionable that executives, officers, and managers at a corporation should make well over 10, 20, or 30 times the salaries of the typical worker.

It’s immoral when these executives take all of the credit for a company’s success and none of the risk or the blame when it fails. A company’s success or failure depends on all of its workforce. I’m not advocating equal pay for everyone regardless of risk, stress, education, experience, and competence level. What I am saying is that it’s wrong for a few men to make billions of dollars while the men who work hard to keep his company afloat have to apply for food stamps and Medicaid when the company flourishes and get pink slips when it doesn’t.

I don’t expect that this post will get much traffic or inspire much thought or change. I expect things to remain in the status quo, right where they have been for the most part since Ronald Reagan was elected. I had hoped that Obama might accomplish change, but apart from his health care plan, I see little that has changed. And the health care plan hasn’t taken effect yet. If the Republicans and Tea Party revelers have their way, it never will.

July 1, 2011 at 1:44 am 1 comment

Inside Job

Great Depression: man dressed in worn coat lyi...

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Inside Job starts off with a cautionary tale about Iceland. Iceland’s economy was, for a time, almost entirely based on finance. Economists from America (who were paid by the Icelandic Chamber of Commerce) penned scholarly articles on the health and stability of Iceland’s economy. Turns out it was a house of cards.

The movie is a documentary film by director Charles Ferguson, narrated by Matt Damon. It explains and tracks the events of the global recession that ushered in the Obama administration. It explains the roots of the problem, tracking all the way back to the Great Depression and the Glass-Steagall Act and its appeal during the Reagan administration and the savings and loan scandals of the ‘80s. It explains it in pretty plain language in a way that ordinary Americans like you and me can understand.

The Glass-Steagall Act was a piece of legislation passed in 1933 in response to the Great Depression. It established the FDIC and made it illegal for conventional banks to offer speculative investments. It also basically banned insurance agencies and investment services firms from merging with traditional banks.

That all changed, beginning in the 1980s, and the Republicans, and later, Bill Clinton, helped to pass laws that removed the regulation and controls that the Glass-Steagall Act had put into place for the protection of ordinary Americans. Not only were the laws changed to accommodated a laissez faire attitude, the laws that remained in place were blatantly disregarded and unenforced. Under the influence of Alan Greenspan, Ayn Rand‘s former lover and protege, free market was good, regulation bad.

The movie explains how the housing bubble, CDOs and derivatives worked together to cause a global catastrophre. Everyone gets in on the blame: Wall Street traders, mortgage lenders, insurance companies, politicians, lobbyists, ratings agencies and insurance companies. The individual greed of these people works in a kind of synergy to provide a perfect storm of collective immorality.

Everyone is out for his own piece of the pie. Everyone thinks he’s entitled to receive something for nothing. One thing in the movie that’s especially shocking is when the increase in the average Wall Street employee’s salary over the last forty years or so is tracked on a line graph. If you weren’t angry about the bailout before you saw this movie you certainly will be afterward.

Why and how did these people escape prosecution? An entire nation has been defrauded of billions of dollars, and not one single person has been jailed for it. Instead, they got bonuses or millions of dollars in severance pay and a McMansion in the Hamptons. It’s a travesty. And if you are an American, and you don’t stand up and let your outrage be heard, well, you should just be ashamed of yourself.

You owe it to yourself to see this movie. If I can read Too Big to Fail and watch Inside Job and understand complex finance geek speak, then you can, too. Do it. And remember next time you vote for a President what was done or not in order to right this situation. You can bet that I will.

April 29, 2011 at 12:49 am Leave a comment

Aging Italian Lothario

Silvio Berlusconi in a meeting

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We all know that I like to read. I was reading last week’s issue of The New Yorker when I came across an article on Italy and Italy’s Prime Minister, Sylvio Berlusconi. And you thought the title of Italian Lothario was going to be a puff piece on George Clooney! Berlusconi is currently the European leader who’s been in office the longest but not consecutively.

He’s embroiled in a controversy that involves a sex scandal, a divorce, allegations of government corruption, and sex with teenage girls. In Italy the age of consent is 16, but paying for sex is illegal. It’s alleged that Berlusconi, in his 70s, paid for sex with underage girls.

The article that I read in The New Yorker made it sound like Berlusconi’s sexual exploits are not only tolerated but virtually approved. It sounds like in Italian culture the primary qualification for public office might be the ability to get an erection. Maybe if both candidates have access to Levitra, they measure penises in order to find out who will be the better leader. Okay. That’s an exaggeration but not much of one. It is a heavily sexist, machismo culture.

Berlusconi describes his politics as moderate right, and he hangs on to the number of votes he needs to retain office by the skin of his teeth and with the help of another political party called the Northern League. The Northern League is dedicated to making the money in the North stay in the North and tends to be divisive. However, they say if Berlusconi will back what they term “fiscal federalism,” they’ll stand behind him.

But I gotta wonder why this guy is Prime Minister. Clinton couldn’t keep it in his pants, either, but at least our economy thrived while he was in office. And as far as I know he wasn’t playing the cigar game with teenage girls. He also wasn’t objectifying women or rewarding political positions to women that are basically based on whether or not he wanted to nail them.

Sure enough, if you can ignore the allegations of paying for sex or paying for sex with underage girls, then there’s the problems of this yahoo’s mismanagement. Corruption (in the form of bribery) abounds. The unemployment rate is high, particularly amongst young people, and those that are employed are mostly underpaid. They are second only to Greece in terms of debt ratios of European Union Nations.

It begs the question of how an effective businessman can manage to run his nation’s economy into the ground while he’s busy throwing parties to rival Hugh Hefner. Berlusconi has escaped criticism so far because he actually owns all 3 television networks in Italy. That’s not a conflict of interest. Not at all. It’s like if Rupert Murdoch ran for President, if Rupert Murdoch also purchased ABC, NBC, CBS and CNN. I shudder to think.

Berlusconi works to make sure that his country sees only positive images of him. He squashes anyone who protests or opposes him in the court of public opinion. Mostly, the message is that anyone who criticizes him must be partisan and leftist, as well as disloyal to Italy.

The tide is turning. Some Italians are finally tired of this guy’s nonsense. Guess who’s one of the groups leading the charge. Just guess. Feminists. They recognize this dick for just what he is. In case you were inclined to feel sorry for this dirty old man, just keep in mind that this is a man who also calls Muammar Ghadafi his dear friend.

April 21, 2011 at 11:13 pm 1 comment

The Structural Deficit

Texas legislature

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What is a structural deficit? Well, it’s why we here in Texas may soon be firing thousands of teachers and school workers. It’s why social services are going to suffer across the board. But since that doesn’t move the hearts of the most far right wing politicians, I’ll put it in a language they can understand.

When you cut taxes without bringing in revenue to make up for the costs and you spend at the same rate, eventually something has got to give. The Republicans get that. It’s not that they don’t. They just want the people who can least afford to suffer the consequences to bear the brunt of the burden.

There’s no talk of increasing corporate taxes or bringing back the old property tax rates that used to fund our spending. Instead, the Republicans want to cut funding to schools. Why not? Their children will be well schooled regardless. The richest of the rich send their children to private schools. Why should they care about how well other children are educated? It won’t affect their children.

But this is so stupid and short sighted that we should wonder about the quality of these lawmakers’ own educations. For a state that supposedly loves big business, this state seems to have forgotten that businesses need workers. Those workers need to have basic educations. Even working in retail requires one to be able to count change.

In 2006 the Texas state legislature and Rick Perry created a structural deficit by causing less money to go in the coffers than we were spending. We can fix this. How?

Well, we can say that it’s unacceptable for our children’s educations to suffer because of some lawmakers’ fiscal irresponsibility. We can remind politicians like Ron Paul that the state constitution says that the state has a duty to fund public education. We can remind the legislators that firing teachers and school workers and social services professionals will raise our unemployment rate to above 10% and cause a further drag on the economy with unemployment benefits and other seemingly unforeseen consequences.

We can tell our legislators that they have a duty to our children and our economy. That duty is clear. Education has to be a priority. It is the only way to prosperity, both individually and collectively. Doing anything less is nothing short of moral bankruptcy.  And Rick Perry should be ashamed of himself. I don’t know how he sleeps at night.

Let’s run our state like a business. When the costs of a business increase, then the prices of its goods and services have to rise accordingly. The state of Texas should be no different. You can tell Rick Perry what you think by clicking on the last link.

April 13, 2011 at 12:14 am 9 comments

I’d Like to Buy the World a Coke

The recent political unrest in predominantly Muslim countries in Africa and the Middle East has seemed like a stack of dominoes falling. The dictatorships of Yemen, Tunisia, Egypt, Libya: they all fall down like toy soldiers. Of course, some people in the United States have been terribly alarmed at these turns of events. It is disturbing, but it’s also refreshing, isn’t it?

These people have been under the rule of brutal regimes in some cases. In all cases they have been subject to economic hardship that maybe even the poorest of those of us in the United States would not be able to comprehend. The countries are overpopulated, and their young people cannot find work. In fact, I’ve read recently that the Muslim population of the world is the fastest growing population in the world.

What’s worse is that in many of these countries our government has been complicit in keeping these people under the thumb of tyranny. We’ve supported inept, corrupt leaders who were guilty of countless human rights violations in order to ensure that we had someone in power who supported American interests.

A lot of things I’ve read recently have been coming together for me with a click. I’ve read about our government’s enslaving poor nations into crippling debt. I’ve read about Arab people all over the world having economic difficulties. I’ve read about political unrest in predominantly Muslim nations. How much of the political unrest do you think comes from political and economic oppression?

I’ve read about people in these countries demonstrating for democracy, for the right to be heard and for their concerns to be validated. I’ve read about many of these people being women, and there’s been more than one article written about the feminists in Tahrir square, as well as how the Muslim Brotherhood held hands to form a bond of chains around the women so that they could protest alongside the men safely.

I read an excellent Newsweek article on Hillary Clinton and her tenure as Secretary of State and how she champions women’s rights globally. I saw an interview with Melinda Gates about how empowering women in third world countries provides further opportunities for both women and men alike. I read Half the Sky where women who were the benefactors of microfunding produced profits for their investors and themselves. They became entrepreneurs and created income for others. There’s no reason why the same model, with maybe a few tweaks, can’t work for men as well.

I read an article in The New Yorker about Mo Ibrahim, a multi-billionaire Sudanese Muslim businessman who made his fortune in the cell phone industry. He retired to start his own charitable foundation that now bestows a prize to any leaving African political leader who has made a significantly positive contribution to his society. For the last two years it’s been awarded to no one because no one was deemed worthy of the prize.

Ibrahim’s foundation keeps records on African countries and their rulers. The Ibrahim Index assigns a numerical score based on human rights, gender, sanitation and access to clean water, corruption, and economics among other categories. It then judges Africa’s leaders’ effectiveness based on these criterion.

China, India, and, indeed, all of Asia is undergoing enormous change. Economic opportunity abounds. This is nothing new. It’s been going on for decades. We’re on a cusp now of a real revolution in Africa and the Middle East as well. We can help these people flourish and encourage them in their efforts to define democracy for themselves. Or we can do what we’ve done in the past. We can covertly support their poverty and enslavement.

In the past the Western world has been reluctant to invest in this part of the world because it’s unstable. But is it poor because it’s unstable or is it unstable because it’s poor? Which came first? The chicken or the egg?

Most of these people don’t actually hate Americans, you know. They’re not really fond of our government – with good reason, I might add. But I think we might find, like Greg Mortenson did when he was nearly dying on the descent down from a mountain climbing expedition, that people are people.

We can win the war on terror, and we can win gender equality for women in countries where there is none. But we aren’t going to be able to win the war on terror with weapons. Remember that old saying? Kill them with kindness? We need to change our foreign policy, both as a government and as individuals. We need to invest in these countries and these people.

We need to throw our economic and political support behind the countries that meet a certain standard on the Ibrahim Index and withhold our support from those that don’t. We need to forgive the debt of African countries. We need to work in tandem with these people to create a sustainable environment of prosperity and invite women to participate. When men in these countries see tangible results from the efforts of women, when these results benefit them and result in more economic opportunities for them, then they won’t protest so loudly anymore.

I know this argument has a tendency to sound oversimplified, and no doubt it is greatly oversimplified and idealistic. But there’s something to the old Southern saying that you catch more flies with honey than with vinegar. We can’t just buy the world a Coke and teach them all to sing, but if someone bought you a Coke would you then be inclined to blow him up with an improvised explosive device? I wouldn’t.

March 12, 2011 at 9:53 pm 3 comments

Women and Food

Two women cooking

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A few months ago I wrote a blog post about how I learned to cook when I was a girl while my dad got to sit on his ass and continue to brag about how he could only make steak and popcorn. This blog post was actually kindly featured by a woman named Addie Broyles, a professional journalist for the Austin American-Statesman. She’s a food and film critic, but she usually writes about food. She has her own blog, which she calls feministkitchen.

At the time I remember that I thought it was odd that someone would combine the topics of food and feminism and have enough to maintain a blog. She may have thought the same thing about Christianity and feminism with regard to my own blog.

I started thinking about Addie and her blog and how my most recent blog posts would fit in quite nicely with what she’s doing. With my last post about the blatantly sexist research article that tries to implicate working mothers for the childhood obesity problem, I thought about just why it is that women do the bulk of cooking in American households?

Most couples nowadays marry later in life. They’ve been out on their own for a while before they settle down. Presumably, the men would have to eat. Do they just make sandwiches and eat out all the time? I don’t think so. Most of the men I’ve known could cook on some level.

I always kind of thought that was sexy. One guy I had a crush on in my late 20s actually made baked beans from scratch, and the idea kind of got me excited. When I say from scratch, I mean he soaked the dry beans in water overnight and then cooked them and then stuck them in a dish with bacon and seasonings, Martha Stewart style. God, he was hot! He was a little blond accountant geek with wire rimmed glasses, but those baked beans made him Adonis.

So, we’ve established the fact that men can cook. Why don’t they? They do when they live alone. They do if they get paid to cook. Most highly paid chefs are still men. The most famous chefs are men. That’s not exclusively their domain; women are also professional chefs, but the majority of upper echelon professional chefs are men. Clearly, not only can men cook, but if we pay them to do so then, if you can judge their abilities to cook based solely on their career success and pay rate, they can cook better than we can.

To my mind, there are several possible reasons why women usually do the cooking:

  1. Society expects women to do the cooking, and therefore women feel that they have failed as women if they are not doing the bulk of the cooking. Maybe it’s women who actually insist on doing the cooking because they don’t want to feel like they’ve failed as wives and mothers.
  2. Men want women to cook because they simply prefer not to have to do so. As such, the woman does the cooking or it doesn’t get done. Women cook by default.
  3. Men want to do the cooking, but they defer to the women in their lives because the women prefer to do the cooking, which may have something to do with reason #1.
  4. Men don’t cook, unless it involves a grill or a smoke pit, because slaving over a stove isn’t “manly.” They don’t want to be seen as a wuss. So, men insist that their wives do the cooking because if they did the cooking it would make them less of a man.
  5. Men would cook, but they aren’t sufficiently motivated to do so. Obviously a big fat paycheck motivates them. But you don’t want to have to pay your husband to cook, so what else do big-time professional chefs get out of their careers besides money? They get praise and recognition.

I suspect the real reasons why women usually do the cooking are as varied as the couples themselves and their own attitudes towards food and gender but that the bulk of the reasons could have something to do with some combination of the reasons listed above or it could just have to do with the fact that men, on average, work longer hours in the workplace than women do. It averages about 42 minutes more per day, which is just about enough time to cook a meal and put the food on the table.

Do I think most men really want to work 42 minutes more than women do? No. I think some men find their jobs satisfying and fulfilling and do this out of choice, but I also think that there are probably even more men who toil in crappy jobs in order to support themselves and their families.

Why do they do this? Someone has to pick up the kids, and it makes sense that the person who picks up the kids is the person who makes the lesser amount of money. This means the woman usually picks up the kids and puts food on the table so the man can get an additional 42 minutes of pay at a higher rate.

This is why gender equality is in everyone’s best interests. If women averaged the same work for the same pay, then it would make sense for mom and dad to take turns cooking and cleaning and picking up the kids. Men would have less stress at work, since they’re not working as much, and they’d have better relationships with their wives and children because they’d have more time to spend with them.  The key to male and female satisfaction is in a more balanced relationship. This means that changes have to take place in both our private and public lives.

February 5, 2011 at 10:54 pm 4 comments

The Jevons Paradox

Microgeneration Certification Scheme

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Recently, I was reading an article in The New Yorker about the ecology and the green movement in the United States. This article mentioned an economic principle that apparently has been around since long before my time. I’d never heard of it, probably because I didn’t study economics in school. It’s called the Jevons Paradox.

William Stanley Jevons was a British subject. In 1865 he wrote a book called, The Coal Question. In his book, Jevons was proposing a theory for the usage of coal, then the primary source of energy in the developing industrial world. He observed the effect that fuel efficiency had on coal usage.

Instead of improved efficiency limiting coal usage, it actually had the opposite effect. Because technology allowed less coal to be used to produce the same or better results, that lowered the cost of the coal, and then the coal, as more and more people became able to afford the latest technology, became cheaper. A cheaper product created greater demand. Thus, more coal was used.

The increase in demand, which fuels the increase in usage, is called the rebound effect. When the rebound effect is an increase of more than 100%, then it’s called a backfire. And the backfire is the crux of the Jevons Paradox, when the rebound effect exceeds the gains made from conservation.

We don’t use coal as our primary fuel source anymore. It’s interesting to note that at the time that Jevons wrote his book people were worried about eventually running out of coal. Coal was eventually replaced with petroleum and natural gas. And people currently worry that we are running out of all fossil fuels at the rate we’re depleting them.

Frequently, this scientific theory is quoted by conservatives as a reason not to bother with energy conservation efforts. After all, they don’t work anyway. In fact, they produce the opposite result. We should all just go out and buy Hummers. The only problem with that is that eventually we will run out of fossil fuels, and it will become impossible to use them as our primary energy resource any longer. And if we don’t have an alternative in place by then, then we’re kind of screwed.

The oil won’t just keep perpetually replenishing itself. And with more and more developing nations, particularly in Asia, requiring their own increasingly larger slices of the pie, it’s likely to run out sooner rather than later if we don’t take the lead in looking for a replacement.

This is not to mention that our dependence on fossil fuels puts us at the mercy of volatile middle-eastern governments. In some cases, one could even go so far as to say that every time you fill your gas tank you’re funding some terrorist organization.

Where do you think Osama bin Laden’s money came from? Much was made of the Hummer and then the Hummer II during both Iraq Wars. It was like a symbol of patriotism to drive a military tank as your personal vehicle. The truth is just the opposite. The symbol of true patriotism is a Smart car, or, better yet, a bicycle.

Our government should encourage conservation by taxing fossil fuels at a rate that makes up for any savings created with the Jevons Paradox. Then we should take that savings and invest it in research and development toward clean energy resources. We could do the same thing with cigarettes and junk food and the health crisis. Our government gives a lot of breaks to tobacco farmers and to growers of corn and soy beans. And where have you heard the words corn and soy bean come up most in the news lately? Oh, yeah.

No doubt, some of the actual economists or business enthusiasts who read this article will fault me for wanting to interfere with a “free market” economy. But this isn’t a free market economy and never has been. Our government picks and chooses which industries that it sanctions in the form of tax breaks, incentives, trade embargoes, etc. It always has; that is nothing new. Why not sanction our future instead of continuing to pour money into dinosaurs, both literally and figuratively?

The world is changing, whether we like it or not. We can do nothing and perish, or we can evolve and survive.

January 23, 2011 at 9:23 pm Leave a comment

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