Sunday, July 31, 2011

What Is The Role Of Government In Our Lives?

      The founding fathers left us with two concise views of the role they expected government to play:
  1. In the Declaration of Independence, Thomas Jefferson wrote, “...all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness – That to secure these Rights, Governments are instituted among Men...”
  1. The Preamble to the Constitution states, “ order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, [we] do ordain and establish this Constitution for the United States of America.”
      Because of the makeup of society, however, the fathers were not quite as principled, at least by today's standards, as one would expect from the foregoing statements. Electors in federal elections were required to have the same qualifications as the most numerous branch of the state legislatures, which in every state was made up of landowners. Thus to the fathers, the word “men” meant landowners – renters, servants, women, Indians and slaves were excluded. (Although most civilized nations had outlawed slavery by this time, the fathers were forced to either ignore it, or face non-ratification by the southern states.)
      The resulting government turned out to be what we today would call “libertarian.” With the above exceptions, citizens were assured equal basic liberties, and the distribution of income and wealth was determined by a free market. And at least in theory, everyone was free to pursue his own conception of happiness.
     But in practice the theory soon broke down. Because of differences in family income, social status, gender, race, etc., some people had a societal handicap which could not be overcome regardless of the effort they expended. Just as today Bill Gates's son has a better chance of finding happiness than the son of an absentee father and a crack-addict mother, so the son of a Virginia tobacco planter was more likely to find happiness than the son of a pioneer hacking out a log cabin on the frontier. The playing field was level, but through no fault of their own, some people found the goalposts further away than they were for others.
     The first effort to overcome the accidental disadvantages of birth was the institution of compulsory public education. Although enacted in Massachusetts as early as 1852, it was not until 1918 that all states required children to attend at least elementary school. By means of Head Start programs, job training, subsidized housing, healthcare, etc., the movement for equality of opportunity has made significant headway, especially during the past fifty years,
     But there is one inequality that no amount of government tinkering can equalize, nor should it: people are born with different talents and attributes, e.g., musical ability, good health, physical attractiveness, mathematical aptitude, athletic ability, etc. In particular, if an individual is born with an attribute that society values, he has a great advantage.
     Think of Derek Jeter's ability to hit major league pitching, or Albert Einstein's capacity for theoretical thinking. In an earlier society, say, during the Spanish Inquisition, Jeter would have been considered the village good-for-nothing, and Einstein would probably have been burned at the stake.
     Of course, these examples are exceptional - most people are born with both advantages and disadvantages clustered around “average.” As a result, there will always be some people who do better than others. In my opinion, this is as it should be; unless people can profit through their efforts, there is no incentive.
     But there is a caveat: people should not get rich to the detriment of lower social classes. And it is on this point, again in my opinion, that government has gone astray.
     The founders retained a healthy fear of corporate power, and wisely limited corporations exclusively to a business role. They were forbidden from attempting to influence elections, public policy, and other realms of civic society. The privilege of incorporation was granted selectively to enable activities that benefited the public, such as construction of roads or canals. Enabling shareholders to profit was seen as a means to that end. In theory, anyone could strive to compete and win.
     Compare that view with the power of corporations today. Many international corporations have greater assets than some nations. In 2010 the Supreme Court decided that corporations are persons – they may do anything a natural person may do, except vote, e.g., they may donate any amount of money they desire to influence an election, with the exception of direct contributions to a candidate, without having to disclose how much they spent. In 2010, over 11,000 corporate lobbyists doled out almost $500M to politicians. The fact that corporations cannot vote is unimportant – they can have the best government money can buy.
      The Supreme Court did not take into consideration the fact that a corporation has only one goal: profit. Every move a corporation makes is with that goal in mind; even charitable contributions are made in anticipation of furthering public relations. A corporation has no heart, no soul, no feelings, no empathy. It will replace workers with machines, ignore environmental safeguards, and even leave the United States in order to avoid taxes and move jobs, all with the ultimate prize, profit, in sight. The fact that the lower social classes are hemorrhaging money, jobs, healthcare, housing and other necessities means nothing.
     Now don't get me wrong – I realize that only corporations can invest in the research and development required to develop and improve our lifestyle. For example, according to PhRMA, the U.S. pharmaceutical industry’s advocacy group, it costs $1.3 billion (in 2005 dollars) to bring a new drug to market. Corporations are indispensable, but their power is out of control.
     Why do we keep electing politicians whose interests are so contrary to our own? It's because our corporate controlled media keeps feeding us the rags-to-riches stories a la Bill Gates and Steve Jobs: Work hard and you will succeed. We never hear the true story: A kid from the poorest fifth of all households has a 1% chance of reaching the top 5 percentile income bracket, while a kid from the richest fifth has a 22% chance. Polls indicate that a majority of Americans think the richest fifth of them own 59% of the wealth; the actual figure is 84%.
     I am not sure that in this case the truth will set us free, but it can't hurt. Only by curbing corporate power can government return to its primary role: securing the right to the pursuit of happiness. As regards corporations, the founding fathers had the right idea.
      Category three, distortion of spelling, is the home of many, many puns, so love them or hate them, it's pun time. Puns, or "groaners" as some folks like to call them, are fun. Try them on your friends and relatives, but keep a straight face when you tell them and be prepared for GROANS... then you'll see why they are so called . . . so enjoy them and pass them on!
      Distortion of Spelling – There Are Only Seven Jokes

There Are Only Seven Jokes” and “The Spirit Runs Through It” are

available in paperback, or at the Kindle Store.

Wednesday, July 20, 2011

The Inmates Are Running The Asylum

     The decision to raise the debt limit of the United States Government should be a no-brainer, but the idiots in Washington seem to be unable to rise to that level. When a person, organization, and especially a nation makes a promise to pay, one should be able to expect that promise to be kept. Is it asking too much to assume the United States will pay your government bond when it comes due?
     I find it hard to see the difference between demanding concessions for keeping one's word, and someone who takes a hostage and demands money for a safe return - both are bandits! This whole thing reminds me of little boys holding a pissing contest behind the barn.
     I know there are legitimate arguments concerning government revenues and expenditures, tax reforms, entitlements, discretionary items, jobs, recession, wars, and a host of other subjects, but whether or not to throw the government into default is not one of them. Most of them should be settled during the budgetary and appropriations processes.
     Of course, these jerks are following the number one rule of politics: get elected, and all the posturing is for the benefit of the folks back home who will be doing the electing. But as one of the folks back home, I am more favorably impressed by the few who are honestly trying to find a way to get the job done, regardless of their party affiliation.
     Why do we keep electing these other idiots?
     Not surprisingly, most locker room humor finds a home in this [distortion of body parts] category. In fact, any joke fitting this category is almost by definition risqué, if not actually lewd.
     However, I have managed to find a couple of rather long examples that avoid “potty mouth” language and sexual situations, although because of the delicate nature of the settings, I suggest you consider them rated TVMA14 - D.
     Distortion of Body Parts – There Are Only Seven Jokes

“There Are Only Seven Jokes” and “The Spirit Runs Through It” and are available in paperback, or at the Kindle Store.

Saturday, July 16, 2011

Some Really Big Numbers

     The numbers being bandied about in Washington these days are so big that most non-mathematicians, especially politicians, can't conceive of their magnitude. So let me see if I can give you some idea of what these guys are talking about.
     There are thousands of web sites one can visit in order to visualize large numbers, but for my purpose I wish to focus on just one number: $10B. You can either do the arithmetic or take my word for it: this would be a stack of one-dollar bills approximately 678 miles high.
     Now let this $10B be represented by a standard pack of playing cards. The question is: If we piled up packs of cards to the height of the Federal Budget (Note 1), how many packs would we need? The answer is 345 packs, or a 17.4-foot-high stack! Keep in mind: each pack represents a 678-mile-high stack of one-dollar bills!
     But of that 368 pack budget, 211 packs have been set aside as entitlements – such things as Social Security, Medicare, Health Care, Food Stamps, Unemployment Compensation, Child Nutrition and Tax Credits, Supplemental Security for the Disabled and Student Loans; the amounts of these items are dependent upon circumstances that are beyond the immediate control of the President and Congress.
     That leaves 134 packs for “discretionary” spending – items that are negotiated each year between the President and Congress through the budgeting process. By far the largest of these amounts, 67 packs (50%) goes to the Department of Defense. That leaves just 67 packs for Health and Human Services (8), Education (6), Housing and Urban Development (4), Justice (3), Agriculture (3), and all other government expenses (43).
     Let's take a look at the Pentagon's budget of $671B, which is as much as the combined military expenditures of the next 19 countries. Are we preparing to take on the world? To top it off, if fighting in Iraq and Afghanistan (which is not included in the budget) is an example, the equipment we are producing is not designed to fight 21st. century-style wars.
     Obviously, some minor shifts in priorities are called for. For example, moving two packs of cards from the Department of Defense to Education would add 40% to the Education budget and still leave us ahead of the next 17 countries in military expenditures. That sounds like a reasonably good trade-off. With a little study, other such adjustments become obvious, except, of course, to politicians.
     Another large number is the amount of government debt – money owed on Treasury bonds. Estimates are that the current limit of $14.29T will be reached by August 2, 2011. This would be represented by 1,429 packs; a stack 72 feet high. Using 2010 figures, the International Monetary Fund places the total U.S. debt at 96.3% of GDP, ranked 12th highest against other nations.
     But we are moving up. Is that what we really want?

      Note 1. Budget figures are based on President Obama's budget presentation for fiscal year 2012.
     In the previous chapter I explored the first of seven categories, each representing a distortion of reality; every joke fits into one of the categories. In this chapter I take a look at the second category: distortion of body parts.
     Distortion Of Body Parts – There Are Only Seven Jokes

      “There Are Only Seven Jokes” and “The Spirit Runs Through It” and are available in paperback, or at the Kindle Store.

Saturday, July 9, 2011

Words Of Wisdom From Washington - An Oxymoron

     Of all the wise politicians (another oxymoron) in Washington, who do you think made the following remark: “Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs.”? Rep. John Boehner R-OH), Sen. Rand Paul (R-Ky.), Rep. Michele Bachmann (R-Minn.) or Sen. Jim DeMint (R-S.C.).
     Although it could have been any of these, the quote is actually from President Obama's last weekend address to the nation. Apparently he was either joking, taken leave of his senses, or joined the Republican party. This is the same old gibberish the GOP has been mouthing since the days of Herbert Hoover. Let's look at these suggestions one at a time.
  1.      “Government has to start living within its means, just like families do.” The government is not a family – one excellent way to put the brakes on any recovery is to cut spending. There is a fear that the debt will rise to a level equal to the Gross Domestic Product. If a family were to limit debt in that way, it would have to hold its mortgage, car payments, etc. to not more than its income. Only millionaires would own real estate.
  2.      “We have to cut the spending we can’t afford...” Of course we have to cut spending...eventually. But at this point we need to build roads, repair bridges, upgrade outmoded equipment, etc. Government policy should be to level the peaks and valleys of the economic cycle, and the time to cut back is during peak activity, not during a recession. If the President wants to behave like a family, he needs to save for the bad times during periods of prosperity. If Dubya had done this with the surplus he inherited from Bill Clinton instead of returning it to his upper-income friends while simultaneously fighting two wars, perhaps the recession might not have been quite so bad.
  3.      “...and give our businesses the confidence they need to grow and create jobs.” Presently businesses are not lacking confidence, they are lacking customers. They are sitting on $1.8T domestically, with trillions more stashed overseas because they would have to pay tax on it if they brought it home.
     Jobs could be created, and paid for, by eliminating (1) tax breaks for machinery and software which replaces human workers, (2) subsidies for mega-farms and energy companies, and (3) the capital gains rate (15%) for hedge fund managers' income. (The top manager received almost $5B last year.)
     Where is the dynamic Barack Obama we elected? It's time for him to step up and become a leader rather than an appeaser.
     Although their I.Q. range is pretty much the same as that of the population as a whole, certain sets of people, e.g., blondes, Irish, Jews and other ethnic groups have been singled out for special ridicule. Supposedly the gullibility of these folks makes them easy targets for the lie, therefore many of the jokes at the expense of these groups fall into this category.
     Distortion of Truth – There Are Only Seven Jokes

“There Are Only Seven Jokes” and “The Spirit Runs Through It” and are available in paperback, or at the Kindle Store.

Wednesday, July 6, 2011

How Is Your Recovery Going?

     It should come as no surprise to readers of this blog to learn that the transfer of resources to the super-rich from everyone else is well underway. For details see the series “The Recession Is Over For Some People...” posted between 16 February and 18 March, 2011. A May, 2011, study by the Center for Labor Market Studies of Northeastern University, Boston, confirms it. For my purpose, two findings from the study are relevant:
     (1) Using the lowest point, 30 June 2009, of the recent recession as the base figure, as of 30 April 2011, real corporate profits increased 39.6%, the Dow Jones Industrial Average increased 45.8%, and Average Real Weekly Earnings of the Private Sector decreased 1.0%.
     (2) During the same period, Annualized National Income grew by $505B. While corporations' share of the growth was 92%, the share going to wages and salaries was 0%.
     A recent article in Forbes provided further evidence of the transfer of resources: “The Hay and Equilar executive pay surveys show that in 2010 the average pay package for the head of a large U.S. company was over eight million dollars – an increase of about 25 percent from the previous year.
     The pay difference between the top and the bottom in large corporations has expanded tremendously since the early 1980s (roughly speaking, it has gone from 100 to 1 to 500 to 1).”
     Now the super-rich have come up with another scheme to accelerate the upward flow of resources. According to The Washington Post, a powerful coalition of more than two dozen business groups and corporations, e.g. the U.S. Chamber of Commerce and technology giants Apple, Google and Microsoft, have come up with a seemingly great offer to the government: Give us a big tax break, and we’ll give you $50 billion or more in fresh revenue.
     Currently, U.S. companies can avoid paying taxes on foreign profits until they bring the money back home. The coalition is proposing a one time reduction in income tax rates, say to 5% instead of 35%, on “repatriated” funds. Supposedly these funds would be used to improve the economy.
     But which economy - the corporate economy or the not-so-rich economy? Keep in mind that corporations are presently sitting on the largest aggregate domestic cash amount in history - $1.8 trillion dollars. For starters, why not inject some of that into the general economy?
     What does history tell us about repatriated funds amnesty? The Homeland Investment Act was enacted in 2004. The Washington Post reports “In the most recent study of the 2004 law, to be published in June, a team of researchers from MIT, Harvard Business School and the University of Illinois found that up to 92 percent of the estimated $299 billion brought back to the United States went to shareholders. That happened despite language in the statute aimed at forbidding companies from using the money to raise dividends or repurchase shares, the study found.”
     According to a recent study by the University of California at Santa Cruz, 91% of the stock is owned by 20% of the shareholders, the very wealthy, leaving 9% for the rest of us.
     A second objection to the amnesty proposition is that it appears to be a reward to those corporations which shipped jobs overseas.
     A popular metaphor for the “trickle-down” theory of economics is that of a horse (business), to which you feed oats (resources). Supposedly some oats will pass through undigested which will feed the sparrows (the rest of us) on the ground. The horse is rapidly developing a bad case of constipation.
     To give you a head start, the categories are distortions of: truth, the human body, spelling, pronunciation, construction (topsy-turvy language), idea, and double entendre.
     Introduction – There Are Only Seven Jokes

“There Are Only Seven Jokes” and “The Spirit Runs Through It” and are available in paperback, or at the Kindle Store.

Tuesday, July 5, 2011

Some Interesting Statistics

     If you are not into mathematics, don't worry – you can skip that part and still understand the discussion. But here are a few items that I find somewhat intriguing, and I hope you do too.
     The Monty Hall Problem: I discussed this subject on 9 March 2010, so you can read the details there if you wish. Briefly, Monty Hall was the emcee of the game show “Let’s Make A Deal.” The contestant had a choice of three doors to open; behind one was a prize, and goats were hidden behind the other two. After the contestant chose one of the doors, Hall, who knew where the prize was, opened one of the doors behind which was a goat. The contestant was then given a choice: he could either open the door which was his original choice, or he could switch and open the other closed door.
     Not surprisingly, most people opted to stay with their original choice. It seems logical that since there are now only two doors from which to choose, there is a 50/50 chance the prize is behind either door.
Unfortunately, that’s wrong! The chances of winning are twice as good if one switches! To see why the apparently illogical choice of switching is actually better, one must understand that before the host opened one of the three doors, the contestant did not know the location of the prize; thus when a door was chosen, he or she had a 1 in 3 chance of being right.
     That does not change even after the host opened a door. If the probability of the first door the contestant chose remained the same, and there were only two doors left, that meant either of the remaining unopened doors must have had a 2-in-3 chance of being right — that is, it had twice the chance of holding the prize.
     OK – So it doesn't have much practical value, but I think it's an interesting illustration of a counter-intuitive real world event.
Even if one is not a sports fan, everyone has heard of the next item.

Joe DiMaggio Had At Least One Hit In 56 Consecutive Baseball Games: I believe this record will never be broken, in fact, I don't believe any record in any sport will surpass this one. First, the mathematics. This has been figured many ways, but I will use the simplest method I can find.
     The probability of any particular event's occurrence is represented by a fraction. For example, the probability of getting heads on a single coin flip is one out of two, or 1/2. The probability of getting heads on two flips in succession is 1/2 x 1/2, or 1/4; three heads in succession is 1/2 x 1/2 x 1/2, or 1/8, a probability of .125, and so on. The odds of three heads in succession are (1-.125)/.125, or 7 to 1 against.
     To make it easy, let's assume that DiMaggio came to bat five times in every game. His lifetime batting average was 325. Now you can take my word for this: The probability of his getting at least one hit in five tries was approximately .861. In 1,000 games he would average at least one hit in 861 of them. So his probability of getting at least one hit in 56 consecutive games was .861 x .861 x .861...56 times. That works out to .00022918. Converted to odds, they are 4,362 to 1 against.
     With all the baseball games being played, that doesn't really sound like impossible odds, and it isn't. In fact, in a 2008 New York Times op-ed column, Cornell’s Samuel Arbesman and Steven Strogatz wrote that they let a computer replay Major League Baseball’s 135 seasons through 2005, 10,000 times over. And of these simulations of baseball history, 42% of the time there was at least one streak at least as long as DiMaggio’s. Fewer than three times out of 1,000 did the record-holder himself reach that mark. So why do I believe his record will never be broken?
     The way I calculated the odds above, I assumed the various games were independent, that is, the outcome of one game did not depend upon any previous games. When one flips a coin, it doesn't matter how many consecutive heads came up previously – the outcome of the next flip is still 1/2. But that's not true of a hitting streak.
     Suppose a hitter today gets a long streak going: 20 games, 30 games, etc. As the streak goes on, imagine the mounting pressure he faces. He is constantly being besieged by reporters and fans. He will soon feel that he is letting the team down if he doesn't get a hit. Most importantly, opposing pitchers nibble at the corners of the plate in an effort to get strike calls on questionable pitches. Umpires are under pressure to make the right calls. The longer the streak goes on, the more the pressure mounts.
     As I said, it's possible for DiMaggio's streak to be broken, but it would surprise the heck out of me.
     Perhaps you can make a little money from my last item.
     The Birthday Problem: In a room full of people, what is the probability of finding two who celebrate their birthday anniversary on the same date? Most people have heard that the odds are 50/50 when there are 23 people present, but what if you would like better odds? Here are a few figures:
     2 to 1: 29. 3 to 1: 32. 4 to 1: 35. 5 to 1: 36. And the real surprise, if you can find a sucker in a group of 42 people, the odds are 10 to 1 in your favor.
     If you really want to know the math, here it is, but be warned, you are going to get into some really, really big numbers:
     The probability for a group of size k = 1-(365 x 364 x 363 x ...(365-k+1)/(365 x 365 x 365...k times)).
     If you make any money on this item, please remember, you heard it here.
     Each of my next seven chapters will be devoted to exploring one of the categories of jokes. In addition, I shall attempt to give an example or two of jokes which I think fit each category.
     Introduction - There Are Only Seven Jokes

“There Are Only Seven Jokes” and “The Spirit Runs Through It” and are available in paperback, or at the Kindle Store.