Years ago a dogma in parochial school was that God never burdened you with more than you could bear. I thought of that when I saw a man in a motorcycle accident in the hall of an emergency room. His arm had been severed below the elbow, the immediate problems had been solved with bandages and clamps. He was stable, full of pain meds and waiting for an eventual definitive procedure. He sat in a wheelchair at the door of his room and spoke neighborly to everyone that passed by. "Hey," he would say quizzically, "I think there might be something wrong with my arm." I learned then if by chance God burdened you with more than you could bear, you underestimated the challenge.
The country looks today like that man with the injured arm, horrified beyond understanding. We are walking around like oblivious teenagers, stepping over obvious but unseen laundry. For years the governments of the West have been increasing the benefits to its citizens, and watching companies do the same with their employees, with the full knowledge that these circumstances could not continue and they never made a sound. Neither did we. Now we are alarmed. There is too much money being printed and not enough to pay for what has been promised. Who's to blame? And how are we going to solve this? Solve problem one and exacerbate problem two? Solve problem two and exacerbate problem one?
The Greek riots are a fascinating response to the question. What would make them happy? Greece has no monetary source (vs. the Americans who can print it) so they have to go to some other source, like Germany, who has been more prudent. That makes Germany at risk; they are now intimate with Greece. The Greeks still riot and now the Germans are furious. And both are furious at the effort to bail out the banks who only took the loans the European states offered so they could pay the impossible benefits. What does the citizen expect? Will he chant "Stop paying my outrageous benefits with cheaper currency!"?
This is a serious conundrum--cheap money or fewer benefits--but the ending is the same: A decline in living standards. Cheap money buys less; fewer benefits buy less.
No riot will change it.
Monday, May 17, 2010
Wednesday, May 12, 2010
Flashdance
How many things does Kagan's nomination mean? There are some obvious curiosities that will be beaten to death by the news/entertainers: Should we be governed by anyone other than the Ivy League? Is there no one else? In a country obviously obsessed with over representation of tiny minorities, can't there be some representation from us average working stiffs?
But there is another question. A number of years ago there was a movie called The Killing Fields, a harrowing story of Cambodia's Khmer Rouge and their homicidal ideology and reign. The supporting actor, a medical doctor who emigrated from Cambodia, won that year's Academy Award for Best Supporting Actor. I remember at the time asking, "How is it possible that a man with no acting experience from a country without a film industry and with limited personal exposure to film at all could win this award?" Is it that easy? Where else could this happen? What other jobs could a total amateur walk in and dominate the scene? Center field? A logistics man in a warehouse? Neurosurgery?
I remember a television program where several people were tasked to develop an amateur in a field to fool experts in that field. Short order cooks would be trained to be a line chef in an excellent restaurant and their food compared to pros working in the field for years, a casual rider would be taught to compete in dressage, a barber would be taught and compete in hair styling. The revenge of the average. Brilliance uncovered in Everyman.
Flashdance.
Some leeway must be given to the arts and the subjective world but does that leeway extend to elected officials? The Supreme Court? Military leaders? The Fed? We as a culture have always loved the underdog, the man who rises from disadvantage to succeed in the face of overwhelming odds. But to be on the Supreme Court? Maybe our surprise and outrage is misplaced; maybe this nomination doesn't oppose reality, maybe it is the truth. Maybe all of these people are simply performers--like the Cambodian doctor--and there is nothing more to them than form and dress, intelligence and ambition. Maybe that explains Hollywood's fascination with them; maybe they see them as colleagues, fellow actors on a different stage. So their disdain for someone like Palin has nothing to do with her inexperience as they know it does not disqualify her for any office.
Cincinnatis lives! If Washington is an OJT center perhaps we the people can take back the job of running the government. All the time we were deferring to these "special people" and all the time they really were just like us. Equality is not just some concept that places all men equally before God and the law. We are more than "equal", we are "the same". The Same. Equal and Interchangeable Parts in the social and political Whole. Knowing this, we now can be ruled by random choice, like jury duty. And these burdened academics can throw off their heavy leadership mantle and go back to the university coffee houses.
I'd like to be ambassador to Italy. Or some place in the Caribbean.
But there is another question. A number of years ago there was a movie called The Killing Fields, a harrowing story of Cambodia's Khmer Rouge and their homicidal ideology and reign. The supporting actor, a medical doctor who emigrated from Cambodia, won that year's Academy Award for Best Supporting Actor. I remember at the time asking, "How is it possible that a man with no acting experience from a country without a film industry and with limited personal exposure to film at all could win this award?" Is it that easy? Where else could this happen? What other jobs could a total amateur walk in and dominate the scene? Center field? A logistics man in a warehouse? Neurosurgery?
I remember a television program where several people were tasked to develop an amateur in a field to fool experts in that field. Short order cooks would be trained to be a line chef in an excellent restaurant and their food compared to pros working in the field for years, a casual rider would be taught to compete in dressage, a barber would be taught and compete in hair styling. The revenge of the average. Brilliance uncovered in Everyman.
Flashdance.
Some leeway must be given to the arts and the subjective world but does that leeway extend to elected officials? The Supreme Court? Military leaders? The Fed? We as a culture have always loved the underdog, the man who rises from disadvantage to succeed in the face of overwhelming odds. But to be on the Supreme Court? Maybe our surprise and outrage is misplaced; maybe this nomination doesn't oppose reality, maybe it is the truth. Maybe all of these people are simply performers--like the Cambodian doctor--and there is nothing more to them than form and dress, intelligence and ambition. Maybe that explains Hollywood's fascination with them; maybe they see them as colleagues, fellow actors on a different stage. So their disdain for someone like Palin has nothing to do with her inexperience as they know it does not disqualify her for any office.
Cincinnatis lives! If Washington is an OJT center perhaps we the people can take back the job of running the government. All the time we were deferring to these "special people" and all the time they really were just like us. Equality is not just some concept that places all men equally before God and the law. We are more than "equal", we are "the same". The Same. Equal and Interchangeable Parts in the social and political Whole. Knowing this, we now can be ruled by random choice, like jury duty. And these burdened academics can throw off their heavy leadership mantle and go back to the university coffee houses.
I'd like to be ambassador to Italy. Or some place in the Caribbean.
A Living Room Elephant
The economic problems of the world are becoming more difficult to understand--or perhaps the reaction to the problems are. The standard debate is over debt, taxes and spending, sometimes with the spice of bailouts added. The focus varies. In Greece the threat of austerity is met with riots led by unions fearful their benefits might be sacrificed. In the U.S. the concern is over the debt and the taxes necessary to combat it. In Germany the country has followed a frugal course and has set its collective square jaw against inflation and, indirectly, the debasing of the Euro. All of these problems, though, stem from a basic notion common to all and somehow immune to question: The concept of the Welfare State.
The problems of overspending and debt are the direct result of foolishly promising more money to people in various benefits than they put in. Their citizens are certainly complicit in this but not much. They thought they were trading for these benefits. Those that were asking for something for nothing were just being Keynesian. A program like Social Security or Medicare, as much as the politicians seeking cover might pretend, is not an entitlement program; the citizens who put money into these programs, as required by law every year of their working lives, thought this contribution was an investment in their future and expected the principle to be there when they needed it. They even expected a little interest as well. So confident were they in these political promises they did not save for retirement or medical insurance as much as they otherwise might have. Now the promises have landed. The citizens, unions and public workers want their money; they want their promises fulfilled. The citizens voted on these promises and gave their money, the union worker eschewed his raise and signed his contract. The politician now condescendingly asks which benefits the citizens want to cut, as if it is their fault. All of these unrealistic promises, all of these economically unfeasible notions where a decreasing work base could pay for a larger retired group, all of these unfounded and untried theories have resulted in the current crisis of many people waiting with heightened expectations for a check that will never come.
What is so amazing is their patience and their goodwill. I have not read a single furious letter, seen a single angry sign protesting this outrageous insincerity. The closest rebellion is the attack on incumbents in the U.S. and that rebellion is only a few months old, is emotional and diffuse, and may well not last. Indeed most people want to reestablish the same problem; they want a "rescue" using the same nonexistent money, a guarantee of that which cannot be guaranteed and will never be delivered.
We are obsessed with effect; we apparently have no head or heart for cause.
The problems of overspending and debt are the direct result of foolishly promising more money to people in various benefits than they put in. Their citizens are certainly complicit in this but not much. They thought they were trading for these benefits. Those that were asking for something for nothing were just being Keynesian. A program like Social Security or Medicare, as much as the politicians seeking cover might pretend, is not an entitlement program; the citizens who put money into these programs, as required by law every year of their working lives, thought this contribution was an investment in their future and expected the principle to be there when they needed it. They even expected a little interest as well. So confident were they in these political promises they did not save for retirement or medical insurance as much as they otherwise might have. Now the promises have landed. The citizens, unions and public workers want their money; they want their promises fulfilled. The citizens voted on these promises and gave their money, the union worker eschewed his raise and signed his contract. The politician now condescendingly asks which benefits the citizens want to cut, as if it is their fault. All of these unrealistic promises, all of these economically unfeasible notions where a decreasing work base could pay for a larger retired group, all of these unfounded and untried theories have resulted in the current crisis of many people waiting with heightened expectations for a check that will never come.
What is so amazing is their patience and their goodwill. I have not read a single furious letter, seen a single angry sign protesting this outrageous insincerity. The closest rebellion is the attack on incumbents in the U.S. and that rebellion is only a few months old, is emotional and diffuse, and may well not last. Indeed most people want to reestablish the same problem; they want a "rescue" using the same nonexistent money, a guarantee of that which cannot be guaranteed and will never be delivered.
We are obsessed with effect; we apparently have no head or heart for cause.
Monday, May 10, 2010
A Letter
We have had some discussions recently about the Swedish economic system. It seems to be successful and to be contrary to most American thinking. I came across a few articles recently about it (there are surprisingly few) and threw them into the pot. One painted a picture of increasing unemployment, increasing welfare dependence and a voracious and unproductive bureaucracy; another--a review of The Girl with the Dragon Tattoo--depicted a predatory bureaucracy prowling a desperate populous. The first article had an ad for Pat Toomey on it, the second was summarizing the book's view, a view of an author known for his leftist politics and presumably voicing his displeasure as to how the system had failed his ideals. The two articles provoked a very interesting response from a Swedish national:
"Interesting! Is this a part of the campaign against Obamas reform of the health
care system (although somewhat hidden)? Something like - you will have to pay
but the money will pass to bureaucrats, lots of people will survive on welfare
and so on if this kind of socialism is going to be introduced? I don't know but
obviously the arguments are the same as the ones from most dark conservative
right winged people in Sweden. That group who use to go to Spain to pay less tax
on the Swedish pension and then come back to Sweden when they start to be ill
and in need of elderly care (like for example Mats parents. His mother is now in
a home in Sweden and his father is dead.) Both Mankell and Larsson are
socialists (but not communists!) and their critics of society come from the
left. The arguments about not working because of high taxes is ridiculous. The
Swedish people have the highest rate of working hours in Europe. Remember that
more than 90 % of the women belong to the work force (compare with about 35 % in
Germany or France). Also, we work to higher age than in southern Europé (not to
mention the pension system in Greece or France). Income tax for wealthy people
has decreased with about 30 % during the last 10 years (also for me) and for
bluecollar workers with about 10 %. You know we had a progressive scale before
but now the marginal maximum is 50 %. And - when we pay less tax we are less
interested in working as we get more money. The theory of people working more
if the tax is lower is dead.
However, the last right winged government has started to erase the welfare
system but had to stop that. Some of the changes had to be changed back again.
Actually, most people here, also the conservative, accept the tax system, they
don't want a 1/3 very poor people to be afraid of and that you have protect
yourself, and they also think that schools, healthcare, child care and things
like that should be the same for everybody. We will have a new election in
September and the main issue is to decrease unemployment, figures like 6-7 %
(including women) are perceived as very high here and seen as a great problem,
socially and economically. All the parties say the same things, no matter what
color and that is of course boring and people loose interest in voting. Usually
about 85 % go to elections. The only question which seems to evoke any feelings
is the one of parental leave. The oppositional parties wants to individualize
parts of it. 6 months to the mother, 6 months to the father and 6 months to the
one of the parents they choose themselves. Now they can choose all of it except
one month to the father and of course the women take most of the parental leave
from work. I think it is about 90 % and 10 % of the time by men. You see what
kind of problems we have!"
These two articles were meant to open a discussion--I have no particular allegiance to either (although I have the prerequisite Yankee suspicion of big government) and I haven't read the Tattoo book--but there are some points in this letter that are provocative. These discussions are clearly difficult. People have a lot invested in these debates. While authors have a motive or are paid for one, the success of the Swedish system is accepted as a given in this country; the question is why is it successful, not why do foreigners dislike it? The problem Americans have with it is that it is against the American genotype; what worries them is they think it is in their future and they are going to have to come to grips with it regardless. And it's a Procrustean future.
The work/tax question is an old one but less resolved than is stated here. The Laffer Curve I believe is generally accepted; the question is as the rates are raised why does the tax return flatten, then fall? It is assumed in this country that people stop working but that doesn't occur elsewhere; elsewhere the economy goes underground. (It is estimated that in Greece 30% of the economy is unreported.) It has never been a quality of this culture but with the drug money now, it could be and is often used as an argument for the flat tax.
A question I would ask is why did they drop the tax rates?
Another point I have heard frequently is the fear that the haves hold for the have-nots, a civilized anxiety of some dystopic class war fought with empty gas cans and broken hypodermics. The current phrase is "income inequality." The effort to redistribute income in this instance is not charitable, it is egocentric and defensive. The working taxpayers in effect contributes to the non-working non-taxpayer in the hope the poor bastard will leave him alone, like buying off the local Mafia so they won't break your windows (Bastiat aside). The picture of the civilized part of society held hostage by the non producers is appealing in a Mad Max sort of way but I wonder if it is a good technique. The basic capitalist manifesto is that wealth benefits all by growth, not subsidy. My question is why does anyone think limited subsidy will work? And if it does, how much is enough? (As an aside, I think the real argument here is the limit of growth.) And might we run out of money to use? Isn't that what happened to Greece?
It was interesting to see the idea that the government can reduce unemployment. I admit I have never understood this. I know Keynesian theory about it, I just have a hard time believing it. What is the difference between a subsidized nonproductive job and a subsidy without a job? And why is anyone confident that the government can take money from a proven producer, take their administrative cut and then invest it in a better project than the producer would? To me, it's all Bastiat and broken windows. And why is their unemployment rate so high anyway?
I am sorry to hammer on here. I like the topic and I think it is a big deal. The problem is, while I think the topic crucial, I'm self taught about it. And I think it points to a deeper question in society: The tendency of societies to follow dogma rather than proven concepts. This makes all societies gamblers with the well being of their citizens. And it appears to me that we are seeing exactly that experiment going wrong in Greece and throughout the world.
A few years ago, Zhou Enlai was asked by a reporter if he thought the French Revolution was a success and he said: "It's too soon to tell." Now that was a swell experiment and apparently the results are still in doubt. But one of the moral, ethical requirements of any experiment is you have to tell the subjects they are part of an experiment, that the outcome is uncertain, and, of course, participation is voluntary.
"Interesting! Is this a part of the campaign against Obamas reform of the health
care system (although somewhat hidden)? Something like - you will have to pay
but the money will pass to bureaucrats, lots of people will survive on welfare
and so on if this kind of socialism is going to be introduced? I don't know but
obviously the arguments are the same as the ones from most dark conservative
right winged people in Sweden. That group who use to go to Spain to pay less tax
on the Swedish pension and then come back to Sweden when they start to be ill
and in need of elderly care (like for example Mats parents. His mother is now in
a home in Sweden and his father is dead.) Both Mankell and Larsson are
socialists (but not communists!) and their critics of society come from the
left. The arguments about not working because of high taxes is ridiculous. The
Swedish people have the highest rate of working hours in Europe. Remember that
more than 90 % of the women belong to the work force (compare with about 35 % in
Germany or France). Also, we work to higher age than in southern Europé (not to
mention the pension system in Greece or France). Income tax for wealthy people
has decreased with about 30 % during the last 10 years (also for me) and for
bluecollar workers with about 10 %. You know we had a progressive scale before
but now the marginal maximum is 50 %. And - when we pay less tax we are less
interested in working as we get more money. The theory of people working more
if the tax is lower is dead.
However, the last right winged government has started to erase the welfare
system but had to stop that. Some of the changes had to be changed back again.
Actually, most people here, also the conservative, accept the tax system, they
don't want a 1/3 very poor people to be afraid of and that you have protect
yourself, and they also think that schools, healthcare, child care and things
like that should be the same for everybody. We will have a new election in
September and the main issue is to decrease unemployment, figures like 6-7 %
(including women) are perceived as very high here and seen as a great problem,
socially and economically. All the parties say the same things, no matter what
color and that is of course boring and people loose interest in voting. Usually
about 85 % go to elections. The only question which seems to evoke any feelings
is the one of parental leave. The oppositional parties wants to individualize
parts of it. 6 months to the mother, 6 months to the father and 6 months to the
one of the parents they choose themselves. Now they can choose all of it except
one month to the father and of course the women take most of the parental leave
from work. I think it is about 90 % and 10 % of the time by men. You see what
kind of problems we have!"
These two articles were meant to open a discussion--I have no particular allegiance to either (although I have the prerequisite Yankee suspicion of big government) and I haven't read the Tattoo book--but there are some points in this letter that are provocative. These discussions are clearly difficult. People have a lot invested in these debates. While authors have a motive or are paid for one, the success of the Swedish system is accepted as a given in this country; the question is why is it successful, not why do foreigners dislike it? The problem Americans have with it is that it is against the American genotype; what worries them is they think it is in their future and they are going to have to come to grips with it regardless. And it's a Procrustean future.
The work/tax question is an old one but less resolved than is stated here. The Laffer Curve I believe is generally accepted; the question is as the rates are raised why does the tax return flatten, then fall? It is assumed in this country that people stop working but that doesn't occur elsewhere; elsewhere the economy goes underground. (It is estimated that in Greece 30% of the economy is unreported.) It has never been a quality of this culture but with the drug money now, it could be and is often used as an argument for the flat tax.
A question I would ask is why did they drop the tax rates?
Another point I have heard frequently is the fear that the haves hold for the have-nots, a civilized anxiety of some dystopic class war fought with empty gas cans and broken hypodermics. The current phrase is "income inequality." The effort to redistribute income in this instance is not charitable, it is egocentric and defensive. The working taxpayers in effect contributes to the non-working non-taxpayer in the hope the poor bastard will leave him alone, like buying off the local Mafia so they won't break your windows (Bastiat aside). The picture of the civilized part of society held hostage by the non producers is appealing in a Mad Max sort of way but I wonder if it is a good technique. The basic capitalist manifesto is that wealth benefits all by growth, not subsidy. My question is why does anyone think limited subsidy will work? And if it does, how much is enough? (As an aside, I think the real argument here is the limit of growth.) And might we run out of money to use? Isn't that what happened to Greece?
It was interesting to see the idea that the government can reduce unemployment. I admit I have never understood this. I know Keynesian theory about it, I just have a hard time believing it. What is the difference between a subsidized nonproductive job and a subsidy without a job? And why is anyone confident that the government can take money from a proven producer, take their administrative cut and then invest it in a better project than the producer would? To me, it's all Bastiat and broken windows. And why is their unemployment rate so high anyway?
I am sorry to hammer on here. I like the topic and I think it is a big deal. The problem is, while I think the topic crucial, I'm self taught about it. And I think it points to a deeper question in society: The tendency of societies to follow dogma rather than proven concepts. This makes all societies gamblers with the well being of their citizens. And it appears to me that we are seeing exactly that experiment going wrong in Greece and throughout the world.
A few years ago, Zhou Enlai was asked by a reporter if he thought the French Revolution was a success and he said: "It's too soon to tell." Now that was a swell experiment and apparently the results are still in doubt. But one of the moral, ethical requirements of any experiment is you have to tell the subjects they are part of an experiment, that the outcome is uncertain, and, of course, participation is voluntary.
Friday, May 7, 2010
Clinic
The lost and windblown, the inarticulate and the speechless, people who don't take their meds, people who take their neighbor's meds, dangerous people looking out from passive eyes, cheerful and grateful people, a fifteen year old mother of two, criminals in handcuffs, old soldiers with watchful family caretakers, men with sexual obsessions, some with new knife wounds, a man with prostate cancer who has been denied insurance coverage because his insurer has him listed as a female, men with old bullet wounds, a young man who has burned the word "BITCH" in the skin over his left deltoid with match heads because he "wants to own a motorcycle", self conscious hookers for "a checkup", meticulous and dignified old black men, brain damaged young men from institutions living in wheelchairs and wearing helmets, girls in tight clothing built like wasps, soft speaking street toughs, men and women working under the table, some healthy people who come for the friendly atmosphere, Arabs struggling with the language, students who want an exam under an alias, a man paralyzed by a bullet with a strangely distant acceptance, small business men who don't provide insurance for their employees either, sick people "lost to followup", many who have never had anyone nice to them or care for them ever.
Tuesday, May 4, 2010
Budget and Citizen Cuts
Some numbers. The budget for the U.S. in 2011 totals 3.834 Trillion dollars. This can be broken down into Discretionary and Non-Discretionary Spending.
Non-Discretionary Spending is made up of those expenses that have been agreed to or contracted; expenses that cannot be avoided without disruption. These include a) Payment on the National Debt: 251 Billion, b) Vet Benefits: 68 Billion, c) Social Security: 730 Billion, d) Income Security (Dept. of Labor): 580 Billion, e) Medicare: 491 Billion, f) Medicaid 297 Billion. Total: 2.417 Billion Dollars.
Discretionary Spending is more arbitrary and reactionary; these expenses are current non-contractual costs and are military. They include a) Military National Security: 895 Billion, b) Non-Military National Security: 520 Billion. Total: 1.415 Trillion.
The debate over the direction of the government has been poorly focused but seems to be generally concerned about federal government growth of responsibility with a parallel growth in size, expense and influence. (Some would refer some of these areas to the states.) So apparently these people hope to cut the expenses. Where? Social Security? Medicare? These programs were started not as "entitlements" but as "investments", "savings accounts". People put money in with the expectation of taking money out later. And, having done that, they did not save that money themselves. Payment on the National Debt? Medicaid? Where will the cuts come from? The Military? And all of these expenses are rising as the population grows older. And the Debt Service: It is 251 Billion this year but rates are low and the deficit this year will be at least 1.2 Trillion Dollars and there is no reason to think it will be lower next year. All of these expenses are permanent and rising. How will this be solved?
There has been some scorn leveled at those who want less spending because of this very conundrum. But it is unfair to blame these people because they can not solve this problem now. The problem was initiated long ago. The problem is that the government has promised more to its citizens than it can deliver. It is no more complex. The complex part occurs when the government stops or decreases its payments. Then the burden of cutting the costs will slide away from the complainers and return to those who created the problem: The elected officials. They will have to decide where the cuts will come, whose promise to renege on, which citizen to sacrifice.
Non-Discretionary Spending is made up of those expenses that have been agreed to or contracted; expenses that cannot be avoided without disruption. These include a) Payment on the National Debt: 251 Billion, b) Vet Benefits: 68 Billion, c) Social Security: 730 Billion, d) Income Security (Dept. of Labor): 580 Billion, e) Medicare: 491 Billion, f) Medicaid 297 Billion. Total: 2.417 Billion Dollars.
Discretionary Spending is more arbitrary and reactionary; these expenses are current non-contractual costs and are military. They include a) Military National Security: 895 Billion, b) Non-Military National Security: 520 Billion. Total: 1.415 Trillion.
The debate over the direction of the government has been poorly focused but seems to be generally concerned about federal government growth of responsibility with a parallel growth in size, expense and influence. (Some would refer some of these areas to the states.) So apparently these people hope to cut the expenses. Where? Social Security? Medicare? These programs were started not as "entitlements" but as "investments", "savings accounts". People put money in with the expectation of taking money out later. And, having done that, they did not save that money themselves. Payment on the National Debt? Medicaid? Where will the cuts come from? The Military? And all of these expenses are rising as the population grows older. And the Debt Service: It is 251 Billion this year but rates are low and the deficit this year will be at least 1.2 Trillion Dollars and there is no reason to think it will be lower next year. All of these expenses are permanent and rising. How will this be solved?
There has been some scorn leveled at those who want less spending because of this very conundrum. But it is unfair to blame these people because they can not solve this problem now. The problem was initiated long ago. The problem is that the government has promised more to its citizens than it can deliver. It is no more complex. The complex part occurs when the government stops or decreases its payments. Then the burden of cutting the costs will slide away from the complainers and return to those who created the problem: The elected officials. They will have to decide where the cuts will come, whose promise to renege on, which citizen to sacrifice.
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