Wednesday, September 28, 2016

Project Timelines Series, Part II: Syria Border Wall

I wrote in June about how to fix the problems with long timelines and cost overruns (usually at the same time) which plague developed countries like the United States and Germany. Politicians in these countries tend to blame all sorts of factors on why they are unable to develop their countries in a reasonable time frame, but they don't put in reasonable safeguards to get projects done in a timely manner.

Today Deutsche Welle reported that Syria is building a border wall with Turkey, which is a distance of 822 km. This is longer than the drive from Hamburg to Munich, which is 777 km. They also expect they will finish building this wall next year.

There is no reason that GDP building projects like high-speed rail, airports, and light rail can't be done at a similar time frame. Germany and the United States were once willing to do these grand projects at a timeline similar to what Syria is currently embarking on, or what China did over the last decade with their new high speed rail system. The politics and economics of today are not fundamentally different from that of 50 years ago when grand infrastructure projects were the norm in modern countries. The building of highways around Europe is yet another modern example of this.

The issue is not the ability to do amazing things but the political will and the willingness to do what is needed. The US has a GDP per capita 5 times the size of Turkey. We are far richer, far larger, and have far more resources available. American and German politicians need to stop making excuses, hold contractors accountable, and do their jobs to revitalize and modernize our infrastructure now. Shame on the Seattle City Council, shame on Congress, shame on der Bundestag, shame on der Abgeordnetenhaus, and shame on der Landtag Brandenburg. It is time for people across the world to expect as much out of today's politicians as we got out of government 50 years ago, with massive infrastructure, human rights legislation, and compassion. We can do this, but only if we make it so.

Tuesday, September 27, 2016

Do not waste your vote

I know that they are a small number of the population, and that given my circle of friends I have an incredible sample bias. I also understand that as of today this does not look like it will be enough to swing the election. Clinton is currently projected at a 55% probability of winning in a month by fivethirtyeight, and is leading betting odds at 2/5 vs. Trump's 2/1. Even though, if this election turns out be close if Trump doesn't completely implode it is possible we could see a replay of the 2000 election.

Here is the reality. A third party candidate is not going to win and nobody is going to know who you vote for if you don't tell them. We have a first past the post voting system and this means that we have to deal with those effects until we reform our election system. Even worse, we have a delegate system for President, which is why we had the fiasco of 2000 when George Bush got to become President following the Supreme Court awarding him the Florida votes. If enough people were to vote for Jill Stein and Gary Johnson we will end up with a similar situation this year.

The stakes have never been higher right now in Flint, Michigan where the people are drinking lead because the EPA has been unable to do its job due to Congress not giving it the funding it needs to clean up the water supply. There are children right now in Flint Michigan who are drinking lead, an American city. In my opinion, providing one of the basic jobs of government is to not poison your people and to be there to maintain the city's water supply. This has been a basic function of government since the Roman Empire. The government of Michigan and the federal government have failed in their most basic job. Democrats in Congress have proposed to bring in funding for the EPA so they can clean up the water in Flint. The Republicans however, unwilling to give the Democrats the smallest political benefit, have decided that they need to block this along with everything else to prevent the Democrats gaining any tension. That's right, the Republican Party would rather poison thousands of children with lead, a toxin that if I were to touch it in a scientific laboratory I would wear gloves when I touch it because it is so poisonous. Children in Flint currently are drinking this in the water supply in an American city. If you are not outraged by this I do not believe you have a heart.

This is the difference also between Trump and Clinton. They were nominated and voted for by the same people who vote for these members of Congress refused to do the basic jobs of government. To keep your people healthy and keep your people safe the Congress today has failed to do both of those jobs that is not something I'd expect in a country as rich as the United States. That is what I would expect from a third world country. Trump will not comment on this issue, while Hillary Clinton has received support from Jesse Jackson on this issue.

This is what I fully believe if you truly think you are going to waste your vote on Jill Stein or Gary Johnson that you are incredible privileged. That's why I fully believe that if you really think you can waste your vote you are incredibly privileged. Live in a community which has good enough States government that you will not be drinking your water supply. It is sad that I even have to say such a thought would even come into my mind, but that is what today's politics have devolved to over the last decade.

Now, I would love to see rank voting as I have written frequently on this blog. I would love to see multiple parties competing in the marketplace of ideas for our votes to lead our country. I believe such a system would make America a far stronger country than we are today, albeit we are great but we could be so much more if we had that competition of ideas. But the reality is we are not going to have that until we start to have election I have not seen a post on for ballot measures to make it competitive election system anywhere in this country or any state level, and until that happens voting for a third party is a sport will have the spoiler effect.

This is why it is very important to vote for your Democratic politicians this year. Even if they don't share all of your values if you are a mercantilist and Believe free trade is the devil, if you are unhappy with the prosecution of Edward Snowden. Or if you aren't happy with other individual issues with the Democratic party, then at least help you want to have clean water in every American city because that is a very basic fundamental right in this country that we should have a Republican government they don't care if we do not care about them and they have been alive. The detail of the issue is that the Louisiana Senator wants to put in aid to flood victims in Louisiana, and the Democrats agree with putting that in, as long as Flint gets help as well, which the Republicans do not want to do until after the election. Poisoning people is not something that should wait another 4 months, it should happen immediately. On top of this, there is even a hangup on whether we should be funding to combat the Zika virus which is a threat to the world. NPR

The appropriate mature response from Republicans after the Democrats requested funding for Flint should have been "Oh, of course" and then supported the amendment, as opposed to blockading their attempt to serve their constituents. However, this had to be drawn out into a long fight which is inappropriate. Democrats did not oppose the Republican efforts to help the people in Louisiana, they only wanted to make sure that the Federal government served the entire country equitably.

The Republican Party has demonstrated this week that they are absolutely incapable of government. This is what is at stake in this election, and I don't see any other choice but vote for the one party which wants to take care of the entire United States.

Sunday, September 18, 2016

Sustainable Aging

Japan is the oldest country in the world, and 32000 people are going to turn 100 this year. I see long lives as a good thing. People can share their experience and knowledge with younger generations and help in material ways as well.

The issue with this starts with how we have managed how people get wealth in their latter years.  Historically of course this had meant that seniors get a pension from their company which pays them out of future profits until they die. This is the classic putting your all of your eggs in one basket. Fortunately the future of this is knocking to last forever the old pensions of your our dying as people have pensions die. In the future my of the generation born in the 1950s and 1960s is going to see billions of seniors across the world owning capital in corporations across the world this a going to be at least 1 billion people within a few decades as they are retiring. The difference of this is going to make is first of all the more distribution of wealth because many pensions are not inheritable upon someone's death and you can't really say I have Y amount of money in the pension the way you didn't say I have X amount amount of stock in Google or some other company. The reality is that the richest families of in the world have become rich because they own capital. And the middle class until the 1980s did not have inheritable assets beyond maybe their house, and even in the 2000s the cost of Housing did not go up as much as the stock market, and has not recovered at the same rate since the great recession. All of this means that in 30 years we won't have the same pensions coming up for seniors at the rate we are having today. This is caused because in the 1930s when these programs were made they didn't expect such a huge revolution in healthcare, which is due to things like antibiotics chemotherapy and countless other medical discoveries and inventions over the last 50 years. This has made it so that life expectancy has increased from 59 to 79. Programs were designed with the idea that less than half the population would retire, however today most people will retire yet our Public Safety nets have not evolved to face this massive change.

In the long run assuming that we continue to have technological growth this problem will go away because of this change in retirement plans. The question today is how do we survived with this existing system over the next 30 years as people born between 1920 and 1950 are in retirement. I do not know how we are going to survive as pensions stop being paid out to people. It is going to be a very difficult time for developed countries with such systems. If we chose to front load the pension plans in capital which will grow in value until they die we will be pulling money out of current Investments into the younger generation. This will have gigantic long term costs as we have less money for education or be pulling money out of the economy today for people who are not currently working for creating any real value. That is the problem as I see it. It is not that's we cannot afford to pay pension retirees but more that we are pulling money out of current economic growth to support people who have never consulted a financial advisor or Economist in their lives. This reduction in investment is why pensions reduce our GDP growth. At least with modern retirement plans that's money is being used by the private sector to invest in the future which is why it is fundamentally different from pensions and why 401k plans are sustainable while pensions are not.

In most of my posts I and with an uplifting note of a solution to the problem. The solution has been found and it is that retirement is now based on capital, but in this case I do not know how we can take care of the promises made by my great great great grandparents generation without massive costs to my generation and my children and grandchildren's generations. The private sector already solve the problem as best as is possible today (as I see it) without breaking the promise and leaving seniors out on the street without what they were promised by their grandparents.

Wednesday, September 14, 2016

Clinton 100 days

Hillary Clinton's 100 day jobs plan is mediocre at best. It focuses on building infrastructure, increasing science investments, green collar jobs, reducing regulation, and increasing US manufacturing.

As an economist I obviously agree with the first two planks. Investment is an essential part of GDP, and you cannot have economic growth without it. Both infrastructure and science are necessary for the future of America. Being able to do more with fewer people with an aging population is where our economy is moving in order to maintain our quality of life and increase access to a good lifestyle.

As an environmentalist I agree completely with green collar jobs, which is where we need to go.

She isn't specific about what regulations she wants to reduce, so this plank could be either good or bad. I personally hope she will cut the barriers to starting a business and increase the penalties for fraud which is where I believe we need to go. New college grads in finance should not be paying the regulatory cost of the Great Recession while Jamie Dimon gets yet another million dollar bonus. I have written about financial regulation before, particularly when it comes to advising. Having more places to do business will keep up competition and force them to be honest.

The final plank, increasing US manufacturing I disagree with. Manufacturing jobs pay far less than high skilled science and technology jobs, because they produce less product. We need to move towards increasing access to college and make it so more people get the math skills they need to succeed in college and get good jobs. We need to encourage the employment of new college grads because it is criminal that so much talent is going to waste. We should have programs for job placement for young people so that we can start our careers as soon as we leave college and give tax breaks towards hiring young professionals in real jobs, and outlaw unpaid work. This would do far more in terms of improving the American economy and spurring GDP growth than encouraging the creation of low pay jobs. The average machinist salary  (the jobs Clinton's plan would create) have an average wage of around $40,000 per year, which is not enough to support a family. Economists, scientists, and programmers make an average of $80,000 per year with a wider standard deviation, and many make 6 figure salaries.

The Mankiw-Romer-Wile model of economic growth is functional and makes it clear that if you want to grow your economy you don't just need technology to grow an economy, you also need an educated population. I can give a ten year old a complex data analysis program, but they won't know how to use it. I can have someone who can solve the mysteries of quantum physics but without a place to run experiments they won't be able to get hard data. We need to have both, and running backwards to a secondary economy is going to reduce our GDP and quality of living.

The fact that education is missing from her economic plan shows she is listening to bad advisors and doesn't understand much about economics. I still wish Elizabeth Warren was in her place.

Tuesday, September 13, 2016

Supreme Court reduces voting in Ohio

The supreme Court made a decision today which makes it so that the Golden Week, which allowed Ohioans to register and vote on the same day starting on October 5th. This is a victory for the Republicans since people who used October 5th.

Hank Green explains how to vote in Ohio:

I live in Washington State, and you can register to vote online and when you get your driver's license, change your address with the postal service, or basically any time you do anything with the government. Since every public library has internet access, there is no reason any citizen is not able to register to vote in Washington, and with mail in voting combined with being able to print your ballot off online (at a public library for free if you don't have printer) there is no excuse for not voting in Washington State. If you are not registered, register immediately at

In Ohio, this is a very different situation. Like many parts of the country they do not have universal mail in voting, people have to wait in long poll lines, so for people with crazy work schedules and children voting can be a real hassle. This is why early voting in Ohio is so important for people who fit into these disadvantaged situations.

According to ThinkProgress, 80,000 people used Golden Week in 2012 and 60,000 in 2008. For comparison, in 2012 Obama won Ohio by 160,000 votes and in 2008 he won by 263,000 votes. Without Golden Week Obama would have won regardless, even if Golden Week voters wouldn't have voted otherwise even if they all voted for Obama which is impossible. This makes it unlikely to swing the election this year. However, unless if Ohio makes voting easier for people do by mailing in a ballot or voting online, giving people more opportunities to get to the polls is extremely important and vital to democracy. Even though I do not expect that this will swing the election for Trump, it is against the principles of democracy and equality of opportunity which our nation must strive to achieve.

Additional Source:
Huffington Post