The real bailout prescription

Banks Only

It seems like I am in a statistical state-of-mind lately.
If you were to go to the IRS website you will find the total number of Individual Income Tax Returns for the year 2008 is: 156,297,000 (Source: http://www.irs.gov/taxstats/ –>Filing Season Statistics –>Filing Season Weekly Reports –> Report for filing year 2008 –> End of Year End Report.)

Let’s take the top 25% of tax payers out and we are left with 117 million individuals.
Next, let’s take the $3.8 Trillion (anticipated government spending across current and pending stimulus and bailouts including Bush bailout) and distribute it evenly to the 117M individuals that filed taxes.

You will arrive at the astounding number of $32,478!

That’s what we all could have gotten (except for the top 25% of earners who shouldn’t need it) instead of the current morass of bailouts and stimulus.

Let’s play this hypothetical scenario out a little further:
Imagine how fast our economy would have recovered if we were given this money, income tax free in a special account, to spend within two years within United States including purchase of airline tickets to fly out of United States (money spent abroad will not count). For any one with credit card loan or mortgage default, there would be additional stipulation that they pay off the loans/mortgage first. I am sure IRS can think of many other stipulations (and that would be fine). At the end of each of the two years we all would have to submit receipts to ensure we complied with the stipulations.

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Average Joe

Actually, Joe Biden is not even average. He is way below average. Let me just break the news — he comes in last, at the bottom, no one behind him. I am of course talking about his Net Income and Net Worth when compared to other Senators.

Biden’s tax returns for 2008 showed earnings of only $269,256 and paid $46,952 in federally taxes.  The salary paid to a US Senator by us, the tax payers is, $169,300. I believe the remainder of Biden’s income is from teaching engagements in local colleges in Delaware. His net worth could possibly be negative.

And quite honestly, that’s the way I like my Vice President.  While he still makes more than the average American — which he should given his responsibilities — he is the closest to understanding what an average person’s daily trials and tribulations are like.

  Being a US Senator doesn’t require filing of exact value of assets, instead a range for each asset is provided. Hence it is difficult to know he exact net worth of a Senator but it is very easy to decipher who is filthy rich, very rich and rich (note: there are no poor senators — except of course for Mr. Biden in 2008 given Senator standards).

So that you get an idea, the richest five and their avg. net worth (all data from 2006):

1 Herb Kohl (D-Wis) (owner of Kohl’s Dept store)   $336,885,513  
2 John Kerry (D-Mass) (wife owns Heinz Ketchup)   $267,789,805  
3 Edward M. Kennedy (D-Mass)   $102,822,519  
4 Jay Rockefeller (D-WVa)   $90,713,011  
5 Dianne Feinstein (D-Calif)   $79,555,657  

Interestingly enough, all five are Democrats but lest you get carried away, Republicans make a fine recovery and occupy 12 out of top 25 spots.  The 25th rank goes to:

25 Maria Cantwell (D-Wash)   $6,181,006  

And the 75th, spot goes to:

75 Patty Murray (D-Wash)   $641,509  

So the questions we really need to ask are:

1. Is it only the rich that can make it to the Senate?

2. Or, is it getting elected that somehow allows for Senators to get rich? (This can be found out by looking at historical records, may be one of the readers who is in the know can comment on this.)

3. Most importantly, is democracy actuallya pseudo-aristocracy? Pseudo because I do believe we are, on the average, much better off than under a true aristocracy.

4.  First a statement then a question. Statement: I believe America till recently has not been class envious, i.e. rich have not been envied for their wealth but actually look upon as inspiration and American ideals promoted all to aspire to be rich. Question: With the recently acquired knowledge of how many rich people got rich and the recently acquired loss of their own net worth, will Americans start thinking differently?

I have opinions (of course!), but what do you think?

Data source: http://www.opensecrets.org/ (click on Politicians and Elections –> Net Worth)

Foxes vs. Hedgehogs

A certain aspect of Mr. Kristof’s New York Times article dated 3/26/09 , “Learning How To Think”  really caught my attention. 

In the article he provides results from research conducted by Philip Tetlock, a professor at the University of California, Berkeley. The research is conducted on Expert Opinion provided by Experts and its accuracy. Dr. Tetlock  tracked 82,000 predictions by 284 experts over two decades. The experts’ forecasts were tracked both on the subjects of their specialties and on subjects that they knew little about.

The result? It appears the experts were, on average, only a tiny bit better than random guesses! More confounding, it made no difference what their education level or experience level was.

Next, to quote from the article:

 “Indeed, the only consistent predictor was fame — and it was an inverse relationship. The more famous experts did worse than unknown ones. That had to do with a fault in the media. Talent bookers for television shows and reporters tended to call up experts who provided strong, coherent points of view, who saw things in blacks and whites.  People who shouted — like, yes, Jim Cramer! “

I consider it important to interject a note here: Mr. Kristof and Dr. Tetlock seem to be soley focused on opinionators in the media and the opinions they aired in public. However, the way the column is written it is misleading since it seems to undermine all expert opinion. That is not the point I agree with or I am focused on.

I am more interested in creating more foxes vs. hedgehogs, you will soon see what I mean.

Quoting the paragraphs that are most important for the purposes of this post:

 “Mr. Tetlock called experts such as these the “hedgehogs,” after a famous distinction by the late Sir Isaiah Berlin (my favorite philosopher) between hedgehogs and foxes. Hedgehogs tend to have a focused worldview, an ideological leaning, strong convictions; foxes are more cautious, more centrist, more likely to adjust their views, more pragmatic, more prone to self-doubt, more inclined to see complexity and nuance. And it turns out that while foxes don’t give great sound-bites, they are far more likely to get things right.

This was the distinction that mattered most among the forecasters, not whether they had expertise. Over all, the foxes did significantly better, both in areas they knew well and in areas they didn’t. “

This I believe in. 

Mr. Kristof ends his column (not quoted here) by talking about putting a system in place that measures the success ratio of experts that are paraded out in the media. While important, I think he missed the opportunity to make a more fundamental point: How do we train people to be more like foxes than hedgehogs?

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The crime of being poor in America

So most of us despite Iraq, despite Wall Street greed, despite Washington politicking (and may be because of them) do not get shocked easily.

But I was shocked by the New York Times editorial, “The New Debtor’s Prisons.” It cites cases where poor people in Michigan, Georgia and Mississippi who could not afford to pay meager court ordered fines were imprisoned!

Here’s an excerpt, “Edwina Nowlin, a poor Michigan resident, was ordered to reimburse a juvenile detention center $104 a month for holding her 16-year-old son. When she explained to the court that she could not afford to pay, Ms. Nowlin was sent to prison. The American Civil Liberties Union of Michigan, which helped get her out last week after she spent 28 days behind bars, says it is seeing more people being sent to jail because they cannot make various court-ordered payments. That is both barbaric and unconstitutional.”

If we needed any more proof of the highly toxic affect of American capitalism this has to be it.  Everyone, and I mean everyone, in any position of power is just thinking about money. States and cities have been taught that money is of paramount importance to keep them financially healthy, attract investment and simply to prove that they are run well. The thinking is so warped that a failure of $106/month payment – that too to a juvenile detention center — can be cause for imprisonment. The city doesn’t care that it is unconstitutional, immoral and unethical — poor people cannot be charged for being poor, especially when the state has provided no recourse for them.

Of course a minute of thought will tell even a smart money manager that locking this lady, for example, is only going to cost the state more in terms of prison expenses and keeping that whole apparatus alive. And they could have funded her rehabilitation if only they had not give yet another pork barrel project to a relative or corrupt contractor who in turn would grease their palms.

I am speechless at the heartlessness, and mindlessness, of the American system.

Obama’s “real” agenda

Mr. Krauthammer, in his Washington Post article titled, Obama’s Ultimate Agenda writes, “Obama has far different ambitions. His goal is to rewrite the American social compact, to recast the relationship between government and citizen. He wants government to narrow the nation’s income and anxiety gaps. Soak the rich for reasons of revenue and justice. Nationalize health care and federalize education to grant all citizens of all classes the freedom from anxiety about health care and college that the rich enjoy. And fund this vast new social safety net through the cash cow of a disguised carbon tax.

Obama is a leveler. He has come to narrow the divide between rich and poor. For him the ultimate social value is fairness. Imposing it upon the American social order is his mission. ”

And to that I say……ummmmm…..and what’s wrong with that?

I urge you to read the full article. For, nowhere does he mention a logical, cogent thought as to why that is bad for the country? Which, is of course nothing but the people of America and it is indeed the people of America that Obama, even according to the incredulous Mr. Krauthammer, is trying to support.

Dyed-in-wool dogmatics like him belong in comics not in newspapers. Somehow to allow equal opportunity, education, energy self-reliance, and relief from anxiety regarding health coverage, food and shelter is implied to be evil!

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