Monday, May 27, 2013

Balance between investment and expenditures

One economic principle I recently discovered is the theory that there is a balance between investment and expenditures in a society and somewhere on the range where each is 100% going towards investment or expenditures, and in the middle there is a balance where there is both investment in new companies and expenditures in older companies.

First, some background.

Both investment and spending are critical for an economy to run. When a company begins it needs money to put together its capital to start a business, storefronts, materials, etc. This money comes from angel investors and banks. For the angel investors, they usually get stock in the company, and banks receive the money back plus interest. This is the easiest and most effective way to create an environment where businesses can start.

Once the business has hit the ground, it needs customers. At this point in the business' development while they might occasionally take out a loan, most growth will come by selling its services to customers. Most businesses will be marketing to individuals for a whole range of services. There are fewer cases at this point for taking out loans, though issuing stock is often a good way to get cash for future growth. Sometimes corporations will buy up their stock when the price is low (or that of another corporation) and then sell the stock when it is higher which is an extremely efficient way to make money to grow the company. The number one goal of a corporation is to generate income for its owners, and this is historically done most effectively by building a trusted brand with long-term employees because turnover is costly. When an employee has a literal stake in the company, he/she has an incentive to create returns for the company because he/she will receive a personal benefit for increasing the company's value, and has a smaller incentive to move to another job, which is mutually beneficial for both manager and employee (who are both owners in this scenario). This is one reason Microsoft and other technology companies are so successful, people have few incentives to move between those corporations because beyond making a large salary as a programmer, people working for these companies often receive stock as part of their compensation. They make the owner's interests tied in with the employee's interests and levels the playing field, which benefits everyone involved.

In order to make certain that an established company can keep growing in the long-term, it needs to ensure that it has a great product that people will keep buying, and have a competitive edge over their competitors. If a company makes poor products, people will stop buying it. That is a major reason why the American car industry collapsed in 2008 because they were not competing with Toyota et al from Japan and Korea. The customer must come first, it is in the interest of everyone involved because customers can always shop somewhere else.

On the macroeconomic level, the policy maker needs to look at it with an incentive to grow the economy, and whether he/she looks at it from the business owner's perspective or the customer/employee's perspective, the answer is the same. People need to have enough money to buy products. If this is forgotten than there won't be money flowing through the economy so businesses can grow, and this means that people who work need to be paid a decent amount of money. Not only will it reduce turnover (read costs) for businesses which increases the medium-term bottom line, but it will create an economic system where social mobility is more prevalent and that people will the ability to create new products and businesses which is how innovation works best. people will have better products at lower costs because of competition. Companies will be easy to form, and if a company is doing really poorly than bankruptcy will be an option whether it is a restructuring or dissolving the whole company. Everyone benefits financially in the long-run from an economy where innovation is high and people can purchase new products.

In conclusion, it is important to realize that both investment and consumer spending are critical to maintaining a high quality economy, and economists, politicians, and businessmen must realize the balance that is economics.

The Estonian Miracle, repeatable?

Today I was reading about Estonia's economy and trying to find out what makes it so different from let's say, Greece. We have been taught by the media the past three years that the reason that the Mediterranean nations are failing economically is because they are part of the big bad Euro. However, when one looks at the information on unemployment across the Eurozone one finds that there is a wide range of unemployment ranging from 4.7% in Austria, to 14% in Ireland, and Greece is by far an outlier at 27%, the only country in Europe currently above 15% unemployment. This is really different from what the media have been implying, and compared to all countries in Africa, every European nation, including Greece, is doing extremely well in terms of unemployment. The current status of Greece nullifies the argument that Estonian economic growth is a direct product of austerity because the same claimed means of Estonia's growth are being used in Greece with the opposite effect. There is more to this story.

So, what is so different about Estonia? Well, Bloomberg spilled the beans, they are talking about massive private investment in Estonia going on right now. The equation is quite simple. Businesses move into Estonia and hire Estonians, Estonians work and have money to spend, their spending helps Estonian businesses grow by raising the demand curve, unemployment and productivity improve. The reduction of public investment in Estonia is being offset by private investment. What is happening in Greece in terms of the private sector is quite the opposite in fact. Greece and Estonia have both been practicing austerity. The difference is that while Estonia has seen the private sector come in reaction to a high credit rating and low corporate taxes, people have been fleeing Greece and their banks have run out of money, hurting the chances that they will be able to fund new businesses to put Greeks to work, which reduces one of the four major sectors of the economy (government, financial, consumers, producers/retailers).

I do agree the majority of the economy should be on a free market, I do agree with free trade balanced with human rights protections, and I think some parts of the economy that are naturally oligopolistic need to be regulated or controlled by a democratic government. The Estonian miracle is only repeatable so long as there is enough domestic and foreign investment to offset the collapse of the government's role in the economy.

The only questions remaining has to do with the implementation of a flat 20% income tax in Estonia, the only flat income tax in the world. My question is how is it going to effect their currently relatively equal distribution of wealth and how is that going to effect future growth if my concern of a less equitable economy is realized. What is going to happen to their quality and cost of health care and education in the long term if they are privatized? How much of this economic growth is being seen by the average Estonian? Only time will tell, but my knowledge of American economic history doesn't leave me optimistic.

One lesson however is clear, in the short term it doesn't matter where investment comes from after a recession, there must be investment. However, I am not certain on the effect it will have on distribution of wealth and the quality and cost of public goods. Only time will tell, and I am pessimistic about the long term because of the great potential of a skewed distribution of wealth if economic growth is only felt by a small percent of the population in the long-term which could offset growth if it is not balanced by making sure the doors of opportunity are open for all regardless of income.

The more I study economics the more I realize how balancing different pros and cons is critical, there is no one policy that works all the time, and no one absolute driver to economic growth. It is all about balance. One must counteract an excess of collectivization with privatization and an excess of privatization with some more collectivization. Bubbles must be avoided, economic growth must be positive. Even GDP growth is not isolated because it must be taken in relation to population growth. GDP per capita growth is a more useful metric, because if a country with negative population growth saw a negative GDP growth their GDP per capita growth could in fact be positive. The economist must then look at distribution of income which in the long run is a marker to determine long term stability. Estonia's case is just one more example of how it is critical for economists to look at the whole picture, not just their favorite statistic.

Sunday, May 26, 2013

There will be airplanes in 100 years, and they will be carbon neutral.

On my current trip to Europe one thing that I have been thinking about is the future of flight, and how sustainable it will be in the future. I have been pretty convinced that hydrogen will be the choice in the long-term future, and understand there are large hurdles to creating a global hydrogen structure. There are a few points I wish to make.

  1. Natural gas is currently used here in Georgia and across Europe for transportation and it is as safe as gasoline. It also is as efficient, and people use it here with SUVs that get about 30 MPG, which with modern technology is impossible to achieve with gasoline. Natural gas however is not carbon neutral, and there is a finite supply of it, so even though it might last my generation, it won't be useful in the extreme long term, like oil. The world currently consumes 93 million barrels (or 14.786 billion liters, I use metric, the math is easier and has fewer rounding errors) per day (which will increase with the rise of China and eventual development of Africa) and our current proven natural gas supply is 22,000,000 million liters, which means (assuming the rate of consumption stays constant, which is unreasonable) that we have enough natural gas to last 648 years assuming there is no massive increase in demand. The problem however is that natural gas is not carbon neutral, which will mean that global warming will continue. It could be used as a small step as hydrogen is being improved, but the storage and nature of natural gas is not that different from hydrogen. The issue is that natural gas is not available in every country, which means it won't be a local resource for everybody. Natural gas production by country This means that if a cartel like OPEC was formed between Russia, Iran, Turkmenistan, and Qatar they would control over half of the world's natural gas supply. This is not acceptable.
  2. The other alternative I see having potential is hydrogen. I am a big fan of hydrogen and the major advantage is that hydrogen is the most ubiquitous element in the universe. It is one component of water, which is one of the most ubiquitous molecules on Earth, and since fuel cell cars emit water vapor there won't be a major effect on the climate. The largest hurdle is making sure there enough energy to break the hydrogen bonds in the water molecule, which will mean we need to harness more renewable energy which has been underway for a long time. There are two large advantages to hydrogen over natural gas. The first is it won't cause negative effects to our environment, which is why I prefer it to natural gas. The second is that hydrogen is also found in water, which makes it available across the world, while natural gas is available in only certain places, a large number, but not everywhere. This prevents the formation of a cartel that could effectively control the price of hydrogen, which is good for the global economy. From an economical or environmental perspective this is the answer.
  3. Electric cars take too long to charge to be a truly viable and likable alternative, and I think there is a much more likely return on investment on hydrogen than electric cars.
  4. The reason that oil won't last is because we will get into a really desperate situation in 60 years when oil will be gone if we stay the course. 1,500,000 million barrels of oil available divided by 93 million barrels a day yields 44 years left until oil runs out if consumption stays constant and there isn't a random discovery of a trillion barrels of oil which I am not anticipating. There will be no oil left in 2070, and I plan on being alive at that point. With China, India, and Africa developing 30 years would be a more reasonable estimate for when we will run out. I am optimistic, because I see that we can do this. We have to do this.
The largest complaint I have seen about changing things, whether it is making the world freer or moving towards better economic systems is that it takes so long to get things done. Our politicians who should be leading us to a better world get trapped in the pattern of whining "it's so hard" so nothing ever gets done. Yes, making a new economy is not going to be easy, no, it is not going to be a 5 second download onto your computer. It is not going to be a 2 minute transfer of money across the world, or a email zipping to your antipode in 10 seconds. It will take time, like anything good, but like college, kids, friendships, a flight to visit someone, or freedom it will be worth every second of the hard work and sometimes waiting when it is complete.

Sources: which inspired the post, along with years of research and thinking about the sustainability of my current trip. This talks directly about hydrogen in flight and how hydrogen is extremely efficient compared to the alternatives. is a recent breakthrough. Hydrogen currently is seeing a lot of breakthroughs over the past ten years, and this is just one of them. outlines issues on a new hydrogen economy. is about the current hydrogen economy being developed in Iceland and is proof that it can be done.

*19 June Correction: I made an error and said that water is an element, I have fixed my elementary mistake.

Saturday, May 25, 2013

Europe or the USA?

The difference we were discussing is the disproportionate number of Fortune 500 companies that the United States has compared to other regions, when looking at companies with revenue above $100 billion, the United States has  of the companies, and the European Union has 18 and the United States has 19. This means that there are 27,777,778 Europeans and 16,315,789 Americans per Fortune 500 company. The largest economy in the EU is Germany and there are 5 companies on the list, or 16,000,000 Germans per Fortune 500 company. Italy has 15,000,000 Italians per Fortune 500 company. Well there goes one urban myth out the window. This would say that Italy has an economy more competitive than Germany by number of Fortune 500 companies. The US isn't an outlier on that account, our size gives us an advantage, but per capita the number of gigantic companies is on par with Europe. The advantage I personally see most with the US is that most things (except food) are less expensive at home than in Europe, but besides that the US and Europe today are on a pretty level playing field, except of course that countries in Europe have universal health care in one form or another, a more equitable distribution of income, and cheaper college, which makes comparing the status of the two for how it will be for an average individual more complicated and multidimensional.

Americans tend to have yards and Europeans don't, but this can mostly be attributed to our population densities which are very different (excluding Russia, Scandinavia and the Baltic States). The USA has 34 people per square KM, and Ireland (the least dense country in the EU excluding the above) has 65 people per square KM. The EU as a whole has a population density around 116 people per square KM, so that explains why Americans tend to have bigger yards at lower prices than Europeans, we have more land per person! Excluding Alaska the US has about 44 people per square KM, still lower than most European nations. When it comes to quality of life, this is an important statistic with large trade offs. A lower population density (America) means larger yards. A higher population density (Europe) means shorter travel times. Depends which you prefer.

So basically, when it comes to my time in Europe the differences I have noticed so far is: 1. Education is of similar (in some ways better) quality and is given a lot more money meaning that people here don't have to spend nearly as much money out of pocket to get a degree, because that is where their tax money goes. 2. Prices are more expensive, and this isn't due to taxation or tariffs. This is probably due to the amount of oil that Europe gets from Gazprom as opposed to other sources, and when Europe becomes energy independent I expect prices will drop. The price of natural gas here in Georgia is really low because of the Baku-Turkey natural gas pipeline which greats a glut of supply which decreases the price here. Once a renewable energy source is found that is economical in all circumstances and is able to be marketed in a competitive fashion, prices will drop across the board. 3. Europe is of a similar quality of living in most other ways. Their cost of living in Northern Europe is close to that of the United States, and the purchasing power of the average Swiss citizen is higher than that of the average American. Their higher wages for the person in the middle combined with their more equitable distribution of income mostly offsets the higher costs. These points are critical to understanding the differences between the American and European economies and quality of living, and frequently forgotten.

So, which is better, Europe or the USA? With similar purchasing power indexes and similar rates of highly successful companies and similar rankings on ease of doing business (best in the world) I have to say that I think both Europe and the USA are wonderful places to live. I love my country, I love Europe, and I love Georgia. Our cultures have their differences (Most Americans drink filtered tap water, most European drink sparkling water) and their similarities (historically Christian societies with growing rates of Eastern religions, agnosticism, and atheism, immigration being debated, racists and human rights defenders battling it out on both sides of the Atlantic). We have dark period in our history (Trail of Tears, Holocaust) and eras of great prosperity. We are highly developed economies and the envy of the developing/undeveloped world along with Japan, South Korea, Australia, New Zealand, Canada, etc. We are all democratic in our government, and our economic systems are extremely similar (except for how we treat public goods like health care and education).

For me, I like being in both Europe and the United States and (with an exception of mass transit where Europe is the clear winner) for the most part can't say I prefer one over another. We both have amazing cultures (Doctor Who, Monty Python, countless movies, and Star Trek, Big Bang Theory and countless movies again) similar food, and differences in what we have to offer (Europe has no Yosemite, America has no authentic Medieval castles and churches). If someone in a third world country had to choose between the two I would say it would be a tough choice. As an American, I find it hard to say which one is clearly better, it depends on what you value most.

Wednesday, May 22, 2013

Drone strikes

I just watched a short documentary by investigative journalists who were in West Pakistan where the United States is currently waging war.

There is absolutely no reason, no excuse, and no rational for what the American government is doing to these innocent people. Drone strikes have been demonstrated by these reporters to be ineffective, and are hurting our image abroad. As some people said here, this is becoming the number one tool of al Qaeda to recruit good people to their evil cause, and as a patriotic American whose ancestor's blood was spilled to form this country, I cannot blame them. This policy must end, because it serves no good purpose, except that it is just one more piece that proves how General Smedley Butler was correct that war can only be ended once the profit is taken out of it. If we removed all funding for drones we would free a lot of money from our budget, but the amount of influence from corporations that make drones or the banks that own their stock.

This is just plain not right, this is an act of terrorism as it is frequently defined, in how it is targeting civilians, even though the definition between terrorism and war etc. is frequently blurred. This should be brought to the ICC because Obama will lose.

Friday, May 17, 2013

Rail crisis illuminates need to make the railroads public.

Today an accident happened in Connecticut where two passengers trains collided head on in an accident. The trains were going opposite directions on the same track and hit each other. Reuters

The cause of this is very clear. I have ridden AMTRAK several times this year and I know exactly why this happened. Our railways are mostly privately owned. We don't have clear laws on northbound or southbound railways. We don't have clear rules for passing. If we did than there would never be a case where the passenger train has to stop and have a freight train go past because there is only one track at that place for both directions. Imagine if the freeway was like this.

The reason is because our railways are not owned by the government, they are owned by private companies. They don't manage the railways to work effectively, Imagine if our highways were done the same way. Imagine if the railways in the South were owned by UPS, by FedEx in the Northeast, and by Swift in the West. In order to save money these trucking companies decided that there was no need for two lanes across Snoqualmie Pass east of Seattle, or no need for two lanes around Lake Tahoe, and they were going to have the cars and trucks alternate in order to save money on paving in these conditions. No other trucking companies may use the roads they own, and if there is a truck in one of these bottlenecks than other people just have to wait and let the trucks go through. There is a toll every 50 miles or so, and the rates are high because otherwise you would go on surface streets maintained by counties, which no one will do. Another way would be saying "you can drive in the right lane, or the left lane, it's a free country you know!" which is of course absurd and dangerous.

This is how America's train system works.

A question I have had is what would keep a Chinese, Russian, or North Korean firm from buying out CSX, Norfolk Southern, or another major American rail operator? They wouldn't just have trains they are delivering, they would own a vital part of America's infrastructure. Something to think about.

We really need to own our railways through the government so that there can be clear regulations and that there can be competition in the industry. This will help both passenger trains and commerce. It will help consumers because there will be more options available to ship by freight trains (which are the most energy efficient form of transportation) and AMTRAK will be able to be run on time and eventually be less expensive because trains will fill up, which will increase AMTRAK's largest source of revenue bringing it closer to having a surplus.

Refugees and war

My other blog has my travel journal, and this post builds off it. I just posted about my first direct experience with a young refugee:

The world spent $1.735 trillion USD collectively in 2012. Source

There are about 2 million refugees in the world. Source

If every refugee, from birth to death, was given only $1000 per year out of the global military budget than the military budget of the world would decrease to only $1.733 trillion.

There are approximately 284,000,000 people age 20-24 in the world today (Source). If every college age student received $5,000 guaranteed college tuition from this military fund the military budget of the world would decrease to $299 billion.

A more peaceful world is possible. A more just world is possible. As the 11th most decorated American soldier ever, Major General Smedley Butler said,
"Three steps must be taken to smash the war racket, 1. We must take the profit out of war."

If war wasn't profitable there wouldn't be the need to save 2 million refugees. If the people of the world made it clear that their money was to be used for building their countries, we would have money to ensure that every person has a decent education and the world would be a much better place. But this will only happen once we realize it is what we really want.

Thursday, May 16, 2013

Biometric social security cards and real security

The current bill S.744, the JOLT ACT is a very long bill, over 800 pages and Section 3102 talks about creating wear-resistant, fraud resistant social security cards with biometric data. This is supposed to make social security fraud more secure, and having a plastic social security card as opposed to a paper one makes a lot of sense, but two parts of this section make absolutely no sense, and there is one thing that should be here that isn't.

  1. Biometric data won't realistically improve the security of social security numbers. It also is expensive. This will mean the government will need to ensure that there are encrypted cards in each social security card, and make certain that the encryption can be only read by government approved machines to read the cards, to prevent the biometric data from being read from people who have no right to access the information. This means it will cost money. It makes sense for passports to have biometric data because travelers are going through customs across the world and scanning the passport allows customs to go quickly, but social security cards are used primarily for employment, and there is already a system to verify that someone has the right social security number on the Social Security Administration's website, so all that will happen with this is the government will waste money on a feature that has no clear advantage.
  2. The individual is limited to receiving 10 replacement social security cards in his/her lifetime under this bill. If someone had a series of unfortunate events which led to him/her losing his/her social security card 10 times, whether through moving, fire, or another event, than this person would be unable to receive a replacement. Because social security numbers can be verified, and in conjunction with picture ID, whether it is a Driver's License, or preferably a Passport, it is extremely difficult to get away with making a fake social security number. If an employer didn't do this step right than that person would not be very intelligent. This won't effect the security, it just puts in one more administrative hurdle for people to follow.
  3. There needs to be some way to verify that someone is using the right passport number through the Department of State. American Passports can be forged, like anything, and if the employer just has the copy of the passport but isn't able to verify the biometric data (which most employer's can't) than holding what looks like an American passport isn't worth much to be honest. If we really wanted to ensure that social security fraud was at a minimum and that people applying for work are who they say they are this bill would first allow any American Citizen to get an American Passport for free with proper documentation (which the government would verify using social security, driver's licenses, etc.) and then make it so that potential employers can verify that a claimed passport number is correct giving them the name, passport number, and date of birth on a secure part of the website.
  4. Also, there should be some federal standards for how States verify that people have the correct information when applying for a state license, a system like the following would be fool-proof. These are for first time applicants (the most difficult part of verification) who have not had a passport, driver's license, or other form of government-issued ID before.
    1. For an American citizen by birth who doesn't have a passport or other form of id, a certified birth certificate, social security card, and the presence of a parent or legal guardian with proof, along with proof of the parent or legal guardian's identity and citizenship. If the person's parent or legal guardian is deceased proof will be required. For legal guardians proof of custody is required. This means we can verify that they are an American citizen (social security number) their relation to their parents, and that their parents are who they say they are. It will be verified that the individual has not acquired a form of ID before. This would be extremely difficult to hack.  
    2. For a naturalized American citizen, a naturalization certificate, social security card, and picture identification from when they immigrated would be required. New immigrants will have access to receive a passport as soon they have their immigration ceremony which will be provided immediately free of charge. This will make their lives easier.
  5. For employment verification, the following should be sufficient. I have been a private investigator since January, and have been studying more about this issue since it has to do with my work. The following procedure or something very similar should be standard practice for employers to verify information
    1. A social security number to verify that the person is legal to work here.
    2. Picture identification that can be verified. This is why my third point here is saying there needs to be a way to verify a passport online for employers. Passports are the most standard form of identification in this country and since they are issued by the federal government are recognized throughout the world. A driver's license is good, but since different states have different licenses, an employer in Oregon who sees a driver's license claiming to be from Arkansas will probably have absolutely no idea what an Arkansas driver's license looks like. It is very easy to purchase machines that will print plastic cards. The embossing and engraving can be done, though it adds an extra hurdle. The driver's license would have to be verified of course, but using a passport would be the easiest way to tell at a glance, since they have a standard design and are issued nationwide, and as soon as we are able to verify them online through the State Department, they will be my preferred method of proving citizenship.
Most of the rest of this bill on a glance looks very reasonable, with the DREAM ACT and a farm worker visa which will cut back on an immense amount of abuse that currently goes on this country towards farm workers. But I find it particularly disturbing that there is no way to verify that someone has a passport through the Department of State, and that they think making biometric social security cards will make a real difference. Social security cards are not and should not be photo id, they should be designed to last a lifetime, and limiting the amount of replacement cards won't have a real effect on cutting down on fraud as long as employers know to verify their social security number and are able to verify their ID. Passports are the most universal form of identification and need to be able to be verified through the State Department. This is a major flaw in the current system the US has for verifying identity and needs to be fixed.

Wednesday, May 15, 2013

Euromyth 1: Agriculture

I was just reading an article on the BBC where an Austrian economist (think Creationist Biologist) was saying how the Euro was never going to work because the economies of north and south are so terribly different, because the north is industrial and the south is agricultural.

This may have been true when he was a child, but today is no longer completely accurate. Sure, southern Europe does have a larger percentage of the economy involved in agriculture than northern Europe, and if you look at Italy this is clearly the case. There are fewer large cities in Southern Europe and they have smaller incomes than Northern Europe.

If you look at a list of countries by the percent of the economy engaged in agriculture, one will very easily see how this is so very not true, and that Greece, Spain and Italy which are the hardest hit by austerity have a smaller percentage of their economy dedicated to agriculture than Denmark, and just glancing at the numbers one finds there is absolutely no correlation (let alone causation) between agricultural output and GDP growth among highly developed nations.

More to come as they come out of the Anti-European wing of economic thought, if one can call it thought when it is consistently so clearly contrary to the measured facts.

Tuesday, May 14, 2013

Republicans and Benghazi

So, the Republicans are trying to turn Benghazi into the next Watergate and make it into a huge scandal that will prevent Obama from being popular and Clinton from getting elected with their terrible leadership.

Why don't we focus on this photograph on the Republican's historically successful leadership as this 2003 photograph points out?

Monday, May 13, 2013

Solve AMTRAK's problems

AMTRAK has several serious problems with it. The largest collection is that the trains are never filled, the tickets are overpriced, and they don't run on time.

I took the train today, and it was the best ride I have ever had on AMTRAK. The problem was that the train got to the station too early. I arrived around 30 minutes early to my planned destination. The train was going from point to point without a single unscheduled stop due to freight, the first time this has ever happened and I've rode about 5 round trips from my original destination. This is due to the train automatically correcting for being held up by freight trains. People were missing the train due to it being early, and it didn't self correct which is not acceptable. The Wifi was excellent, food was reasonably priced, but I hate to think of how many people missed the train due to it not being on time. When it comes to transportation there is only one appropriate time, which is ON TIME. It is better to leave a minute late than to leave a minute early because you will miss passengers if you leave early, while if you leave late you will only have annoyed passengers.

Last weekend I took Greyhound and it was about half an hour late to the station. Granted, it was a cross-country route and I was close to the end of its route, but still, there need to be some serious changes in how mass transit operates in this country.

So, what are the solutions to these problems?

  1. Give AMTRAK priority on our railways. AMTRAK needs to have reliability and speed which will come through requiring freight to wait for AMTRAK to pass, because passenger trains are (or should be) faster than freight given how they are smaller and have better acceleration.
  2. AMTRAK needs to follow its schedule precisely, and by not correcting for early arrivals at stations, people miss the train. If the train waits at the station, so be it.
  3. There need to be bypasses past train stops so that no one will be held up in the possible event that one train is stopped but another train doesn't have to stop at a station.
  4. The prices for AMTRAK need to be set as if the train was going to be filled, because it is a very expensive mode of transportation currently. By doing this they will be more likely to fill, by simple supply vs. demand curves.
This needs to be advertised so people will try riding AMTRAK and find that it is more convenient than riding a car.

Fortunately, this is starting to happen with new trains that will make AMTRAK an even better system.

The future looks bright.

Saturday, May 11, 2013

The Future of Strauss-Howe

The Strauss-Howe Generational Theory is one of my favorite theories in history. It hypothesizes that America's history flows in cycles, and the dominant attitudes of generations are effected by those cycles. It was hypothesized in the 1990s and it predicted a crisis starting between 2005 and 2010 following an identified pattern, and it was correct on that count.

First, I think it will continue over the next 130 years, which means the rest of my life, and everyone reading it unless my blog is read in a hundred years, will follow this theory.

  • 2005-2025: Crisis, unemployment, reform of the financial industry, revolutions abroad, immigration reform, environment, government reform.
  • 2025-2045: High, high employment, economic stability.
  • 2045-2065: Awakening, due to the amount of oil left in the ground an environmental awakening takes place. People notice changes in climate which makes the environmental movement gain ground.
  • 2065-2085: Unraveling, oil starts to rise in price and people panic.
  • 2085-2105: Crisis, the global oil supply runs out and our infrastructure can't handle the lack of oil available. New energy sources are developed and implemented.
  • 2105-2125: High, creation of a sustainable economy, America has energy independence.
  • 2125-2145: Awakening, I don't know what will happen at this point, it is too far in the future to predict. Anything is possible.
Given the money in politics and the large number of people who deny the scientific evidence, large scale action from governments to fight climate change seems unlikely to me. In fifty years it is going to be very clear that oil is not sustainable, and we need alternatives imminently. Unfortunately it will be too late to avoid a crisis which will exist when I and other people of my generation are dying and our children are retiring. My grandchildren and great-grandchildren's generations who will be born in about 55-60 years will be the hardest hit.

The awakening in the early 22nd century could be (if many science fiction stories like Star Trek were right) could be the discovery of economically and demographically useful space travel. If this happens than it will be a gigantic awakening in terms of our relationship with the Universe. In this future the unraveling from 2165-2185 will be due to

This post brought to you by the stimulating music of Joly Braga Santos who defeated a three day blogger's block.

Also, Time predicts that my generation (Millenials) are the new greatest generation, which is amazing because that is exactly what Strauss-Howe predicted.,9171,2143001,00.html

Saturday, May 4, 2013

If corporations are people...

I just saw a post by Robert Reich that said the following:
"If the Supreme Court and most regressives insist big American corporations are people that deserve to be treated as American citizens – given tax breaks and subsidies, along with the right to make unlimited political contributions -- why shouldn’t those corporations take a pledge of allegiance to the United States? I’m thinking of a voluntary pledge so American consumers can at least know which companies that enjoy the benefits of American citizenship act like American citizens, and can boycott those that don’t.

Something like this:

Our Corporation Pledges Allegiance to the United States of America: We will create more jobs in the U.S. than we create outside the U.S. No more than 20 percent of our total labor costs will be outsourced abroad. If we have to lay off American workers when we’re profitable we will give them severance payments equal to their weekly wage times the number of months they’ve worked for us. No executive will be paid more than 50 times the median pay of American workers. We will pay at least 30 percent of what we earn in the U.S. in taxes in the U.S. We will not use our money to influence elections.

What do you think? Want to get behind this?"

While this isn't a bad idea, I have a proposal that is more in line with the saying "corporations are people too" and even more damning for why corporations shouldn't be treated as people.
  1. If a corporation is foreign and is going to operate in this country for a specific amount of time based on where it is based, it will have to pay for the appropriate visa. If a foreign corporation decides to buy an American corporation it will have to pay the appropriate visa, otherwise it would just be unfair. This is one example where it is easy to see how different corporations and people are.
  2. Corporate income should be taxed as individual income, because they are people. This will mean that they will get all the same deductions and tax rates as an individual as opposed to the rate of 15% to 35%, which will then range from 10% to 39.6%, and every large corporation will pay 39.59999% because they will make well into that range. As American citizens, they will be required to pay on their global income, not just domestic. Since most of the deductions won't apply to them, they won't have many to take. This is a bad deal for businesses.
  3. Corporations should be able to vote since they are people! (this is a bad idea)
Let's keep defining companies and people differently, and instead of blaming decisions on the corporation blame it on the responsible parties. Claiming that corporations are people is an absurd assumption. Let's make our elections publicly run and publicly financed to avoid corruption and if a company wants to get a grant it will have to apply and the company that gives the best bang per buck will get the job if it is a job that will last less than a year.

Thursday, May 2, 2013

How to look at big numbers

So, when it comes to budgets, people often label them in the billions or trillions of dollars. This is accurate, but needs to be taken into comparison. People often cringe when they hear of the government spending money on a social project that makes our country better, whether it is transportation, education, or health care. While the total cost is right it needs to be taken into account how much money is being spent per capita. If the government of Los Angeles county is spending $50 million on a new project to expand their mass transit, people need to ask the question “how much will the average person's tax bill be raised?” instead of immediately jumping to the conclusion that it is too much money. If you took the people of Los Angeles investing $50 million in a new transportation network per year over 10 years you would be spending $12.50 per capita per year on the project. $12.50 seems like a reasonable cost for getting rid of congestion and other problems that plague Los Angeles. Looking at it this way makes it seem a lot more reasonable.

Another way to look at it would be how much per household is being spent on a project. If Los Angeles had an average of 3 people per household, than that would mean that $50 million project would have a per household cost of $37.50. Taking these two comparisons together can bring the millions, billions, and even trillions into numbers that people can understand, and make it seem more reasonable. Also, $50 million dollars is 1/1000 of Warren Buffett's wealth.

This would mean that the United States deficit (not debt) this year is $2,907 per capita. The government collected $9,361 per capita in taxes this year. Government spending then is $12,268 per capita, less than the cost of living by pretty much any measure. When the upper class invests their money in stocks and pay 20% taxes on those as opposed to the 39.6% they would pay if capital gains were treated as regular income, the solution to our deficit becomes obvious. For comparison, the government spends $2,150 on defense per capita. If we spent as much as China on defense we would spend around $322 per capita on defense. NASA gets $57 per capita. Social Security is $2,847 per capita. Long attacked AMTRAK funding is $4.70 per capita.

Another way would be to find the number of taxpayers (using income tax) and then find the average taxpayer burden, and the numbers will be larger, but more accurate depending on what you are looking for.

So, next time you hear the talking heads on (mostly) the right talk about how much the government spends, keep in mind how much they are spending per person and it won't seem so unbelievably large.