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Chatham tea party

Tomorrow is April 15th, tax day.  And in case you’ve missed it, republicans, flat taxers, gold fetishists, racists, defense nuts and other extreme conservatives are planning to host tea parties tomorrow.  Tea parties?  Yep.  Protests, harkening back to the days of the Boston Tea Party when proto-American patriots dumped tea into Boston harbor to protest taxation without representation.  Tomorrow’s tea parties appear to be a bit less principaled.  Some protestors are objecting to the Bush tax cuts on the top 2% expiring in 2010… as they were scheduled to do by republican law makers.  Some protestors seem to object to having lost the election in 2008.  Others object to bailouts of home owners… or is it bailouts of banks… or is it bailouts that don’t help their bottom line?  Some seem to object to having a black president.  Others are Ron Paulites who seek to restore the gold standard?!

In celebration of all you crazy right wing nuts out there, I threw my own tea party tonight:

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From left to right, Blue wants to restore the gold standard.  Java (the cat) is upset that, while he only earns the median income of $35,000 or so right now, he might have to pay an extra $0.04 for every dollar he earns over $250,000… assuming he ever earns that much.  And Mr. Bun-bun?  Well, he doesn’t really have a grievance.  He’s just here for the tea-bagging.  Note the carrot and apparent oral fixation.  Now there’s a true republican for you!

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Recessions don’t have hidden virtues

I wasn’t originally going to write about the Michael Gerson piece from the other week where he talks about the “hidden virtues” of a recession.  Leaving aside the irony of a relatively well off speech writer for George W. Bush telling us how the recession caused by his boss’s policies will be good for us, I just assumed that the idea of a virtuous recession was self-obviously wrong and wouldn’t be taken seriously.  But since then, I’ve heard other people, even more liberal people, make the same arguments.  In several of those cases, the argument is that a recession will help (force?) Americans to lead simpler lives, to save more and to focus on what is really important.  I’m offended by that sentiment because, while I have often thought, and said, that people need to focus on what’s important and that they should save more, there is a huge difference between doing so as a choice and being forced into it due to scarcity.

Dealing specifically with Gerson’s opinion piece, the facts are that he’s just wrong.  He notes that Christopher Ruhm, a researcher at UNC-G, found that, while mental health problems increased (yay?), physical health improved during recessions.  Of course, that’s not exactly a majority opinion in public health.  Other researchers have noted that as many people start eating fast food as start cooking healthfully at home.  Moreover, gym memberships decline and cheap vices increase.  Health care is often pushed aside and in the U.S., those who lose their jobs often lose their insurance and therefore much of their preventative care.  None of this suggests improved health.  Moreover, Ruhm’s study was not longitudinal – he didn’t study people before and after suffering the effects of a recession.

Gerson also claims that it is a paradox even though crime is correlated to poverty, the Great Depression was a time of lower crime rates:

There is a parallel debate about the influence of economic hard times on the nation’s moral health. Without question, the most acute social problems — crime, illegitimacy, etc. — are concentrated in areas of highest poverty. But sociologists and criminologists have long pondered an apparent paradox. During the Great Depression — with about a quarter of Americans out of work — crime and divorce declined. During the relative prosperity of the 1960s and 1970s, crime rates shot up and families broke down.

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Recessions and depressions are brutal beasts that stalk the stragglers, especially retirees and the poor. There is too much inherent suffering during a recession to ever welcome it. But times of economic stress, it appears, can also be times of cultural renewal. “One reasonable hypothesis,” argues James Q. Wilson, “is that the Depression pulled families together, and this cohesion inhibited crime.” Many Americans who struggled through the Depression adopted a set of moral and economic habits such as thrift, family commitment, savings and modest consumption that lasted through their lifetimes — and that have decayed in our own. The Depression generation controlled the things it could control — including its own consumption and character.

But aparently, it’s not that great of a paradox.  Social science researchers have demonstrated that the Roosevelt administration’s relief efforts, which were intended in part to reduce crime, did have that effect. The researcher’s “estimates suggest that a 10 percent increase in per capita relief spending lowered crime rates by roughly 5.6 to 10 percent at the margin.”  In other words, while families may have pulled together during the Great Depression, the social spending that allowed people to feed their families was demonstrably useful in lowering the crime rate.  The republican govenors should consider that before turning down extended unemployment benefits for their states.

So, what about savings?  People definitely need to save more.  So, why aren’t we?  For a while, the U.S. had a savings rate close to 0%, sometimes it was even negative.  Over the past couple of years, the savings rate has increased, and is now around 3%.  But wait, during a recession, we need to increase spending, that’s part of the purpose of a stimulus bill.  And given that personal spending drives the U.S. economy (roughly 65-70% of all spending), will increased savings doom us to a poor economy?  Will we all just have to get used to less?  Should we learn to enjoy the current economic levels, because that’s where we’ll always be?  Nope.  Or more accurately, hopefully no.

A part of the problem is that over the past thirty years, *real* median income for men has been roughly flat.  It’s been a little better for women, but that’s mostly because of a reduction in wage descrimination.  Household income has increased, but that’s because there are more two income households.  For thirty years, households have been improving their standard of living, first by having multiple earners, then in the nineties by investing in the stock market, then by borrowing from their homes during the real estate bubble.  Savings were certainly eaten into over that period of time.  So, the way to actually increase savings would be to allow people to improve their standard of living without borrowing – i.e., if wage gains rose at the levels of productivity gains, the median wage would be probably 50% higher.  That would allow people the ability to improve their standard of living while still saving.  Instead, we’ve seen companies hoard more cash, spend less and keep the benefits of productivity gains for the CEOs.  In part, you can see this in the weakness of the last recovery.  The recovery was weak, and took quite a long time, in part because companies refused to spend.  Consumer spending had to pull us out of the recession, and it took borrowing to do so.

So what about the last idea, that the recession will help us to live a simpler and more enjoyable life?  Unfortunately, it’s not true.  More to the point, the amount of spending is not necessarily correlated to “simpleness.”  You can have a robust economy wherein people are spending money on things that matter to them.  For example, K and I don’t go to movies and we seldom eat out.  However, we probably spend more each year on books than most people do on movies.  We don’t eat out, but we do eat well.  Other people I know whose lives I admire make an effort to eat at locally owned restaurants or spend money at the farmer’s markets or on their hobbies.  All of these people are making a useful economic contribution while still living an enjoyable and “simple” life.

On the flip side, just because you have less to spend doesn’t mean that you will magically start saving more and leading a simpler life.  Sure, there’s less money available, but that could just as easily mean that you stop visiting local restaurants and start eating fast food.  It could mean that instead of telecommuting, you have to work multiple jobs at different locations around town in order to make ends meet.  Simplicity is a lifestyle choice and is not well correlated with financial situation.

Everyone has to live within their means, but as a society, our goal should be to increase those means.  We shouldn’t have a country where 20% of the benefits of society go to the top 1%.  We should work to ensure that all people have better access to the benefits of society.  We shouldn’t be “rooting” for a recession to teach us moral values.  If people choose to live a simple life and to save more, great.  If not, that’s their choice too, regardless, a recession is good for no one.

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Rant

Can anyone please explain to me, what the hell is John Boener doing on my TV and in my newspapers talking about the stimulus plan?  For 8 years, we liberal types were told that “elections had consequences” and that we should STFU and clap louder.  Fine, now that republicans have been repudiated in a full election cycle, suffering major losses in both 2006 and 2008 after running on the same policies that they now advocate will save us from the mess that their policies got us into, will they please STFU?

I have no problems listening to republicans.  Hell, if I want moral advice, who better to turn to than a bunch of public bathroom sex soliciting, diaper wearing, drug using pedophiles?  At the very least, it’s good for a laugh.  But policy?  Why the hell would I listen to them about policy?  “OMG, John McCain has said he opposes the stimulus plan.”  Really?!  Why do I care?  He ran on a platform oppossing the types of stimulus being proposed.  It would have been shocking if he didn’t oppose it – the mother of all flip-flops if you will.

At the end of the day, Obama won the election in large part by proposing to do exactly what he’s doing.  Provide a massive stimulus plan to get the economy out of the mess that it’s in.  Voters expected that the plan would be based in a reality (which means that the magical tax cutting fairy isn’t going to somehow increase government revenues).  So what do we have?  We’ve got a plan that emphasizes infrastructure building, money for states and extended unemployment benefits.  Hrm, I wonder how that stacks up against tax cuts as a way of stimulating the economy?

Well, as it so happens, we have a way of measuring these things.  Mark Zandi at Moody’s Economy.com recently evaluated a number of different stimulus measures and determined their effectiveness in stimulating the economy per dollar spent.  The EPI put this into a wonderful graph:

What we see here is that the tax cuts most favored by republicans are also the least effective.  There are some forms of tax cuts that provide moderate stimulus (i.e., greater than $1 of stimulus for each $1 spent), but that the best ways to stimulate the economy are food stamps, unemployment benefits, infrastructure spending and aid to states.  Not surprisingly, these are the forms of stimulus that are most likely to be spent.  If you gave me $500 in tax cuts, I’ll save it; net stimulus: $0.  If you ensure that a family can eat by providing an additional $500 in food stamp aid, I guarantee that it will be spent at a grocery store and provide more economic stimulus than the original $500 expenditure.

All of which is a long winded way of telling the republicans to please shut up and let sane people clean up the mess they’ve made of the country.

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Blaming the pushers?

Okay, commenting on global finance is really not my usual shtick, but I’ve got to agree with Barry Ritholtz that there’s something odd in this NY Times article on China’s role in the U.S. housing bubble.  The article describes Ben Bernanke’s 2005 theory that a savings “glut” is driving up the demand for American to borrow from foreign countries.  The article extends the theory to suggest that the financial mess that we are currently in the middle of was, essentially, caused by the Chinese.

Okay, it is true that as a country, we were essentially borrowing money from overseas in order to buy overseas products.  Essentially, borrowing from the Chinese in order to buy their stuff.  The mechanisms were somewhat complicated, home owners typically were borrowing from their homes.  As home prices rose, due to low rates and bubble psychology, people found that they could refinance their homes or take out home equity lines of credit that could then be used, not for home improvements, but for general lifestyle expenses.  Since median incomes have not risen in a decade, this isn’t too surprising.  (As an aside, I was in a conversation last week with someone who claimed that the whole recession could be over if the news would act as a good propaganda arm and declare that it was.  People would start spending and the economy would get moving.  I pointed out that he was wrong because most of the capital financing the economy was borrowed from homes, etc., and that wages hadn’t increased.  In other words, the consumer has no money to restart the economy.  He had to agree that was true.)

So, I agree that China (and other foreign countries) were necessary to the bubble, but does that mean that their “excess” savings caused it as the article implies?  No, there are more than a handful of things wrong with the article:

  1. It takes an uncritical look at the idea there is a savings glut.  I didn’t note any refutations of Bernakne’s thesis.
  2. The article’s URL ends in “26addiction.html” and in a single word, it sums up much of the article.  But this is a sad sort of exculpation for the U.S.  Sticking with the same metaphor, it’s arguing that the a drug dealer is responsible for all of the actions of a junkie and the junkie bears no responsibility.
  3. Switching from the “addiction” metaphore, it’s bad supply-side theory applied to credit.  Okay, it’s true that lower rates will attract more demand from the pool of potential borrowers.  And I’ll buy that having more creditors will drive down rates.  But that’s not what happened here.  In this case, Greenspan artificially held down lending rates through the Federal Reserve.  In other words, it wasn’t a supply-side rate cut driving up demand, it was an artificial rate cut that drove up demand and the Chinese stepped in to meet that demand.
  4. Probably more than anything else, I find the idea that there is a savings “glut” in the rest of the world (particularly China) particularly annoying.  It completely disregards recent history.  Savings imbalance, I’ll believe.  But to suggest that the Chinese are saving too much is completely loony.  At the same time Bernanke was saying that others were saving too much, the U.S. savings rate fell to 0%.  If there’s an imbalance, it’s more likely that the U.S. was to blame for increasing its borrowing.
  5. Finally, there are all sorts of little oddities in the facts and nuance of the article.  For example, there’s a general feel of “red-baiting” to the article. Or that the article notes that the Chinese now hold $2 trillion in U.S. debt, out of the, what, $11 trillion in debt we’re in now?

I do agree with the article that it would be good if China stopped pegging their currency to the dollar.  But I’m not certain how much it would help the problem being discussed here.  It might make us less likely to borrow from the Chinese, but at the same time, I don’t think it would have decreased overall U.S. borrowing.

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A simple suggestion

I wonder if the N&O would print this?

Dear Editors,

I have read with some alarm your recent stories describing a dramatic change to our way of life.  Specifically, I refer to those stories of our poor benighted multi-millionaires and billionaires who are having to downgrade their lifestyle in response to the crash of the financial markets and the banking industry.

As we all know, what has made America great over the past 30 years is the increasing increasing income inequality whereby those at the top of the income ladder make an ever increasing amount of money while the median income has stagnated.  Without these top income earners, all motivation and striving goes out of our populous; leaving us a nation of whiners.  And yet, every day, we hear stories of high powered financiers, who had been making millions each year, now contemplating the need to sell that third vacation home in order to make ends meet.

While I salute the republican administration’s efforts to save the wealth of the top 1/10th of a percent through the preservation of the salaries, benefits and bonuses of financial executives while beggaring retired auto workers, I believe that this effort has not been bold enough and that the situation calls for direct action.

Toward this end, I propose that the country establish a registry of multi-millionaires and billionaires in need.  Those making less than $100,000 a year should then be encouraged (by force if need be!) to contribute 10% of their gross earning to support these beleaguered souls who are the backbone of our economy.  This Adopt-a-Billionaire program would have the effect of immediately raising the standard of living for these poor souls, while reducing the incomes of more than 80% of Americans; thus ensuring that the salary inequities which have made this country great will remain in place for the benefit of the next generation.

Respectfully,

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A real threat to marriage

Two weeks ago as Obama won a resounding victory both in the country as a whole and even more decisively in California, Californians also passed Proposition 8.  Prop 8 was an amendment to the California constitution that defined marriage as an institution between one man and one woman.  With the passage of Prop 8, 18,000 couples had their legal marriages dissolved.

Supporters of Proposition 8 claim that the act was necessary to help defend the traditional institution of marriage.  Specifically, they looked to the Bible and its condemnation of homosexuality.  They claimed that recognizing homosexual marriage undermined the biblical concept of marriage.

Now, I’ve read a good chunk of the Bible over the years, and I’m pretty certain that what’s represented therein is not really what Prop 8 supporters had in mind.  Unless of course, they want to see the reinstatement of polygamy, at least for those that can afford it (hey, I could support two wives and it is traditional!), after all, Solomon had 700 wives and another 300 concubines.  As a side note, I can just imagine how that conversation would go with K:  honey, I think we can afford a concubine – how about it?  <smack>

So if Prop 8 doesn’t really do anything to promote the Biblical understanding of marriage, what about protecting heterosexual marriages?  I can’t speak for everyone, but I’ve been married for over fifteen years now and I can’t see any way that the possibility of gay people, some of them friends, most of them that I’ve never met could possibly threaten my marriage.  I can’t even see how the possibility of gay marriage could threaten potential marriages (i.e., the institution of marriage).  What, Bristol Palin was going to get married to her baby’s father, but now because gay couples in Connecticut can get married, she won’t?

Marriage in the U.S. is essentially a legal contract between two consenting people.  That contract can optionally be sanctified (made holy) when blessed in a religious ceremony.  But the religious ceremony itself is truely optional.  It doesn’t matter which religion has sanctified your marriage, you can opt not to have it sanctified at all by having the contract witnessed and signed by a justice of the peace.  In our case, K and I were married by my grandfather, a (Lutheran?) minister, in a non-denominational church.  The wedding ceremony itself can be important in that it publicly recognizes the marriage and encourages the observers to assist the newlyweds as they start their lives together.  That community support can be important when trying to adjust to married life.

Again, none of this is threatened by gay marriage.  If anything, the institution of marriage is stronger for being more inclusive.

But here’s the thing.  We did just witness one new threat to the institution of marriage – Proposition 8 itself.  To my knowledge, this is the first time that marriages recognized by a state have been annulled by the state [1].  18,000 couples had legal marriage contracts, signed and recognized by the state of California.  Those 18,000 couples have now been unmarried. This establishes a precedent that should worry anyone who is married.

Imagine that we took the Bible’s admonishments about divorce or adultery seriously.  The Bible traditionally doesn’t recognize divorce (which leads to the Catholic church’s crazy annulment system) and calls for the stoning of adulterers.  What if those traditional concepts became enshrined in law or the California constitution?  Malachi 2:16 – “I hate divorce, says the Lord God of Israel.”  Matthew 19:6, “So they are no longer two, but one. Therefore what God has joined together, let man not separate.”

Under the marriage threatening precedent of Prop 8, it would be entirely reasonable to further defend marriage by excluding anyone who had previously been divorced from remarrying.  Moreover, we could go further and say that marriage is between one man and one woman, neither of whom has been previously married.  All of the sudden, several million marriages could be dissolved.

I suspect that such an amendment/law is unlikely, after all, there is a bigger constituency of divorced people than gay people.  But on the merits, a no-divorcee amendment isn’t any crazier than Prop 8 and should serve as a reminder for why religious views of marriage should not impinge upon the legal contract that is a marriage.

[1] The closest comparison I can come to would be the anti-polygamy laws aimed at the Mormon Church in the 19th century, but even there, I don’t think that the original polygamous marriages had been recognized by the states before the laws’ passage explicitly stated that they wouldn’t be recognized.  The comparison is also ironic in that it was the Mormon church that largely bankrolled the Yes on Prop 8 movement.

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Blue NC

Still not official from the Election Board, but the AP has canvased all of the counties and found that there aren’t enough provisional ballots for McCain to overcome Obama’s 13000+ vote lead.

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President Obama and race

My mother tells a story about my first day in first grade (and sadly, I’m more likely to remember stories of my childhood than the actual childhood).  I go off to school, probably all 70s style – plaid pants, mop haircut, etc., and when I come home she asks me about school.  In particular, how did I like my new teacher (Mrs. Smith?)?  I told my mom that she would like the teacher, that Mrs. Smith was just like her.

At a certain point, the first parent-teacher conferences occur and my mother goes in expecting to meet someone just like her: a blonde haired, blue eyed woman in her late twenties or early thirties.  So it’s a bit of a surprise when Mrs. Smith is a 50-ish black woman.

There are two morals to the story:

  1. I’m definitely a Myers-Briggs intuitive (N) type as opposed to sensing (S).  😉
  2. As a child, race didn’t even enter my mind.  A person’s race was so completely irrelevant that it’s not clear that I even noticed it.

Over the years, I’ve tried to live up to the example set by my five year old self.  I haven’t always succeeded, but I’ve always tried.

In spite of that, I never did expect that the U.S. would elect a black president – at least not this soon.  I didn’t think that we would be able to look past race until, at least, the baby boomer generation died off.  Not that the baby boomers are racists, they made enormous strides toward equality.  But at the same time, they grew up in a world where there were segregated lunch counters, segregated water fountains, segregated bathrooms and schools.  They grew up in a world where the lynching of a black man was considered acceptable to many people.  That’s a kind of ingrained experience that’s hard to grow out of.

But yet, Obama did win.  Sure, he didn’t win the majority of white voters, but he won more of them than did John Kerry four years ago.  The electorate looked past Obama’s race and voted for the man they thought would take the country in the right direction.

My inner five year old wouldn’t have thought a black president was that surprising, but with thirty-plus years of experience, I’m amazed and thrilled that there might be some part of that five year old in everyone.

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President Obama

Polls just closed on the West coast.  With that, everyone calls Washington, Oregon and California for Obama – Obama wins!  And I’m heading to bed.  I would still like to see who wins NC.  It looks like it’ll be close, but we should know in the morning.  If I’m doing really good, I might stay up for a McCain concession.  We’ll see.

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Go vote!

I headed over to the polling place to vote this morning.  As of 8:30am or so, there were no lines at our precinct.  But then, that’s not too surprising for a small precinct in a non-populous county.  Chronological observations:

  • There were a fair number of cars parked at the polling place.  I took one of only about 4 or 5 free spots
  • The Obama people were prepared for the rain – they had decent sized open sided tents set up to stand under while handing out literature and talking to voters
  • There were about 10-15 people voting when I arrived
  • The elections officials were prepared for crowds.  Instead of the usual split of the alphabet into 3 or 4 lines, I think there were 6.  They also seemed to have extra help on hand, including some high school students.
  • The folks handing out the ballots mentioned that polling had been steady so far.
  • When I left around 8:45/8:50, I was only the 161st voter 🙂

I suspect that across NC, things will be similar.  We had such a huge number of people cast ballots early (some 35-40% of all registered voters) that I would imagine we won’t have too many problems with lines, etc.

Here’s hoping.

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