If we taxed the "Super Rich" at 100% of their income, would that close our budget deficit? An interesting look at those numbers here...

There has been a lot of talk about putting an additional tax on millionaires to increase revenues to the Federal Government.  Let me be more radical. Let's take ALL their taxable income for one year!

Below are data from the IRS (year 2009). Look at the incomes for "$1,000 under $1,500" on down to "$10,000,000 or more". The data are in "thousands", so add 3 zeroes to the end of the numbers to get millions.  The third column shows "Income Tax Paid" and the fourth column shows "After Tax Income (What is left)" for each of the benchmark levels of income. 

In addition to to what they have already paid in the third column, let's go ahead and take the amount in the fourth column too (the amount the rich have left over after paying taxes).

That total is $549,411,208,000 (billions).


Look at the data below, specifically the "Deficit (-) or Surplus (+)" line of numbers. If, in 2009, we took what rich taxpayers already pay in taxes PLUS what they have left over (in others words tax them at 100%), it would still not come close to closing the budget deficit for the fiscal year 2010 (or 2011 or 2012). Add the $549 billion number to the negative number--it becomes LESS negative.

The budget deficit would be very small in 2013, and indeed, it be gone by 2014... BUT that assumes there would be ANY millionaires around anymore to tax.

Far be it from me to defend the rich. Not one and never will be.  My goal here is to show the scale and scope of our budget issues at the Federal level. If taking all money from the rich does not come close to solving the problem, then what IS the problem? (Art--I DO already know the answer :) )

Do the Super Rich need to be subjected to higher taxes? That is a political question. It might make people feel better, but it is not the solution to our long term budget problems.  Can't we have a better class of politicians (Dem/Reps) working on our behalf? Rhetorical question, needs no answer....

A short opinion piece in Newsweek written in 1995 on how implausible it will be for the internet to change much. The perils of trying to predict the future when it comes to technology.

The following is from a Newsweek magazine opinion piece in 1995 on the viability of the intenet--around the time most of my students were one or two years old.  Some of the things he is defending as absolutes have gone by the wayside or soon will be.  Quite amazing how far we have come in a relatively short period of time.

The Internet? Bah! (HT: The Agitator)

""I’m uneasy about this most trendy and oversold community. Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms. They speak of electronic town meetings and virtual communities. Commerce and business will shift from offices and malls to networks and modems. And the freedom of digital networks will make government more democratic.
Baloney. Do our computer pundits lack all common sense? The truth in no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works. . . .

Every voice can be heard cheaply and instantly. The result? Every voice is heard. The cacophany more closely resembles citizens band radio, complete with handles, harrasment, and anonymous threats. When most everyone shouts, few listen. How about electronic publishing? Try reading a book on disc. At best, it’s an unpleasant chore: the myopic glow of a clunky computer replaces the friendly pages of a book. And you can’t tote that laptop to the beach. Yet Nicholas Negroponte, director of the MIT Media Lab, predicts that we’ll soon buy books and newspapers straight over the Intenet. Uh, sure . . .

Then there’s cyberbusiness. We’re promised instant catalog shopping—just point and click for great deals. We’ll order airline tickets over the network, make restaurant reservations and negotiate sales contracts. Stores will become obselete. So how come my local mall does more business in an afternoon than the entire Internet handles in a month? Even if there were a trustworthy way to send money over the Internet—which there isn’t—the network is missing a most essential ingredient of capitalism: salespeople.""

How wrong one person can be!!

Results of a Gallup Poll on how people view their childs school relative to other schools around them.

Is this a case of cognitive dissonance?  People surveyed tend to rate their own childs school highly while the other schools in their area are viewed as a cut below (or many cuts below).  I think it is because we are more aware of what goes on in our schools and tend to take ownership of it because it is more personal.  Or is it simply more of a comfort thing---it HAS to be good/fine/ok because I trust them with my child. 

How can the public simultaneously like their own school, but not have a positive view of everone elses school?  This is similar to our views on politicians---everyone loves their own, but thinks Congress as a whole is broken.  How do we reconcile the two?  Maybe we ARE crazy....

Source: Gallup Poll

As an aside: Why did the percentage of people expressing a positive view of their childs school spike from 2007 to 2008? That is a 58% increase!  It was the first year of the recession.  I cannot think of a good reason, can you?

Fact of the Day---Over 50% of the plastic bottles we "recycle" go to (mostly) China for processing...Think about that when you fill up your little recycling bin...How does THAT help the environment?

Bottle Recycling Plan Is Left at the Curb: For Coke, Supply of Used Plastic From Neighborhood Programs Falls Short as Demand Climbs in China

""A bit more than half of the PET bottles recovered for recycling in the U.S. since 2006 have been shipped to other countries—mostly China, which refashions them into fiber for clothing and furniture. It often costs less to transport PET bales on empty ships returning to China than to transport them across the U.S., according to industry officials.""

Notice is says it "costs less"..I am guessing they are only counting direct, accounting costs.  How about the cost of the pollution and non-renewable resources consumed in transporting the plastic to China AND BACK! Should we just bury it in the ground and be done with it??

This graphic below was a part of the article. I was somewhat surprised to see how much recycling of plastic bottles is actually done compared to the number of plastic bottles produced, roughly a 1 to 4 ratio.

Source: Wall Street Journal

Nice graphs/charts showing the relationship between food prices and social unrest. Invariably it is the consequence of bad economic policy...

I often tell students the genesis of many/most incidences of civil unrest are for economic reasons, not  for "freedom" or "liberty"---these attributes usually come along later. The graph below shows the correlation between the spike in food prices and riots in various countries. The relationship is pretty strong wouldn't you say? The second chart shows why.

Source: Conversable Economist

In all poor and developing countries food is a much larger percentage of a families budget. They are more sensitive to changes in food prices and it can plunge people into crisis relatively quickly.

SOURCE: CIVIL EATS

Economics is about the allocation of scarce resources to meet needs and wants. If basic needs are not met by the powers that be, then they can expect social problems and unrest. 

A nice graphic showing the perils of making only the minimun payment on your credit card. DO NOT fall into this trap. It will be the most expensive mistake of your life...

If you purchase something on a credit card, here is, literally, a graphic reminder of the importance of paying MORE than the minimum required. Paying the minimum is a fools game. I don't have to tell you who the fool is...

Source: Visualizing Economics

More evidence that the good ol' days were not so great. The earninig power of the minimum wage in 1952 and Today...When would YOU have preferred to live?

With much hostility lately towards Capitalism and Free Markets in general (with justification) it is sometimes difficult to see the forest for the trees.  It has been the greatest force in history towards advancing the standards of living for a vast majority of the worlds people.  The good ol' days were not so great...I know this because I was there...

This is also a good lessson in purchasing power.  Money has value because of what it can purchase.  It is not how much you have, but what you can get in exchange for it. The choices today are amazing.

The following, in its entirety, is from Carpe Diem:

""To demonstrate how free market capitalism generates increased prosperity over time for average (or even low-income) Americans, economist W. Michael Cox of the Dallas Federal Reserve has compared the purchases at different points in time from the income earned by high school graduates or entering college freshmen working at a full-time, minimum-wage summer job (ignoring taxes). Here's a summary of his article "Capitalism's Many Benefits Create 'Luckiest Generation,'" which appeared in Investor's Business Daily in October 2000.  Several years ago, I presented an updated comparison of the purchases from summers jobs in 1949 and 2009 in this CD post. Here's another update:

In 1952, the minimum wage was $0.75 per hour (equivalent to $6.39 in today's dollars), and a full-time summer job at 40 hours per week for 12 weeks would have generated $360 in total summer earnings (ignoring taxes). Using retail prices from a 1952 Sears Christmas Catalog, I found that a teenager then would have only been able to purchase the following 3 items with his or her entire pre-tax summer earnings of $360 working at the minimum wage (with $15 borrowed from the parents to cover the full $375 cost):

Source: Carpe Diem

Now compare that that to the items in the table below that could be purchased by a teenager or college student this year with his or her summer earnings of $3,480 (ignoring taxes) at the current minimum wage of $7.25 per hour:

Source: Carpe Diem

According to Cox: "Add it all up. When it comes to their economic prospects, today’s young Americans are the Luckiest Generation in history—at least until their children grow up and forge an even luckier one. And even if real wages are flat, the explosion of new products over time at lower and lower prices translates into a rising standard of living for all income groups, even minimum wage workers." 

MP: Teenagers today can afford products today like laptop or notebook computers, Kindles, digital cameras, GPS systems, iPads, iPhones, and iPods that even a billionaire couldn't have purchased 20 years ago.  The comparison above illustrates that we've made a lot economic progress over the last 60 years since 1952 that has increased our national prosperity - and that's happened in spite of ten recessions, the stagflation of the 1970s with 18.5% mortgage rates and a 20% prime rate, the S&L crisis with almost 3,000 bank failures, several major stock market corrections, the Great Recession, etc. 

Even though the economy is still struggling to recover from the 2008-2009 recession, and we've had sub-par economic growth and sluggish job creation this year, economic progress and a rising standard of living will continue to move forward.  The economic challenges of the past haven't stopped innovation and prosperity in the long run, and the current challenges might slow progress in the short run, but won't in the long run.  Just like today's teenagers are infinitely more abundant than their counterparts in 1952 and can afford items not available to billionaires of past eras, the teenagers in 2070 will be infinitely more abundant than today's teens and will be able to afford products that today's billionaires can't even imagine, much less afford.  ""

The Worst Subsidy of the Week: Airplane flights to no-where---Small airlines fly with NO passengers so they can receive Federal subsidies.

File this under "you can't make this up"...I bet the writers over at The Onion are wondering if Congress is trying to challenge them in making up ridiculous stories. Problem is, the stories out of Congress are true...

Read the whole article and see some TEA party hypocrisy to go along with the Establishment (Reps and Dems). I grew up in a VERY small town in a relatively sparse part of northern New Hampshire and I ask the question: WHY, in the 21st century do we suck-up to "rural interests" as if they are sacrosanct and have to travel by horse and buggy to get anywhere? Again, a subsidy that has little merit to the nation as a whole and adds little to the national output. 

Gov't pays for empty flights to rural airports

""On some days, the pilots with Great Lakes Airlines fire up a twin-engine Beechcraft 1900 at the Ely, Nev., airport and depart for Las Vegas without a single passenger on board. And the federal government pays them to do it.

Federal statistics reviewed by The Associated Press show that in 2010, just 227 passengers flew out of Ely while the airline got $1.8 million in subsidies. The travelers paid $70 to $90 for a one-way ticket. The cost to taxpayers for each ticket: $4,107....""  Associated Press

Are you mad, yet???

I did not see the "Unseen" of this policy coming and helped support a policy that hurt people in The Congo...I must remember to think with my head, keeping my heart in mind. I got that backwards on this one...

I should have known better since I pride myself on teaching my students to discern between the "seen and the unseen" when it comes to policies of a political nature.  I teach the "unseen" is actually very visible if you look hard enough.

I advocated among students for inserting a reporting mechanism in the Dodd-Frank Bill of 2010 that requires corporations, mostly cell phone producers, to publicly report the amount of "conflict minerals" they use to manufacture phones.  These highly coveted minerals are found in large quantities in the Eastern Congo and the fight for control of the mines has lead to unspeakable human rights violations. The passage of this law with this particular provision has not helped the people of The Congo, but has cruelly done just the opposite (in the short run):

""The “Loi Obama” or Obama Law — as the Dodd-Frank Wall Street reform act of 2010 has become known in the region — includes an obscure provision that requires public companies to indicate what measures they are taking to ensure that minerals in their supply chain don’t benefit warlords in conflict-ravaged Congo. The provision came about in no small part because of the work of high-profile advocacy groups like the Enough Project and Global Witness, which have been working for an end to what they call “conflict minerals.”

Unfortunately, the Dodd-Frank law has had unintended and devastating consequences, as I saw firsthand on a trip to eastern Congo this summer. The law has brought about a de facto embargo on the minerals mined in the region, including tin, tungsten and the tantalum that is essential for making cellphones.

The smelting companies that used to buy from eastern Congo have stopped. No one wants to be tarred with financing African warlords — especially the glamorous high-tech firms like Apple and Intel that are often the ultimate buyers of these minerals. It’s easier to sidestep Congo than to sort out the complexities of Congolese politics — especially when minerals are readily available from other, safer countries.       ...""NYTimes

Lesson learned for me...Think with your head with your heart in mind, not the other way around..

The Texas Association of School Boards publish a survey showing 90% of Texans support increasing spending on education...Let me explain why this is one of the MOST bogus surveys I have ever seen. I think you will be convinced too.

I missed this one: Last year, the Texas Association of School Boards (TASB) published the results of a poll they commissioned as proof that Texasn overwhelmingly support increasing funding for public education.

""Ninety percent of Texans agree that Texas’ public schools need more money from the state, according to a survey recently commissioned by the Texas Association of School Boards (TASB) and conducted by Texas Poll. This number remains consistent from a year ago, when 88 percent said the state should provide more funding to public education.

 These results do not surprise me, given the question asked (This IS the question they used):

Source: Texas Poll

I encourage you to look at this survey (HERE) and consider it an example of a REALLY bad survey. In general, MOST people do not know how much is spent on all (or any) facets of education.  In a GOOD academic survey people are asked this question as posed above, then they are told HOW MUCH is ACTUALLY spent on on different areas of education. The poll numbers change rather dramatically as a result.  Here is a national study from EducationNext and the outcomes from asking the question from both sides:

Source: EducationNext

The first question gives the respondents the ACTUAL cost of delivering education in their area and the second question is similar in tone as the TASB question. The questions were not asked in this order--they were randomized.

Just look at the "Greatly Increase" and "Increase" and "National" columns. When no cost reference is given, people are more generous---59% want to greatly increase or increase. When a cost reference IS given, the percentages drop to 46%.  Most of the ones that bailed on increasing spending went to "Stay the Same". This is statistically significant.

Even the self-identified teachers had MUCH LARGER drop in support when given a cost reference!! 

My conclusion is the TASB poll is a political poll and should not be taken seriously. I wonder how much they paid to have it conducted?

If the Texans polled had been presented with similar cost information would the results had been so overwhelmingly favorable? Also, TASB shows that most favor increasing taxes to pay for education, but they did not ask if the respondent would want THEIR taxes raised. Yes, there are two possible answers to that question.  I think that is something TASB did not really want to find out.   

Teachers: We don't escape as a group either. Here is the question about teacher pay. The first question is asked when told what average salaries are (43%), and the second question is asked as a general policy should teachers make more money (58%). 

 Beware of any survey result that gives an overwhelming edge to one side or the other.  There probably was a large disconnect between what people thought and the reality. 

Class dismissed....

Here are the members of the "Super Committee" that are going to "fix" our budget/debt crisis AND what the National Debt WAS when they were elected to Congress.. Arsonists giving Fire Prevention Advice is an analogy that comes to mind...

These are the 9 members of the "Super Committee" named thus far. There are still 3 to be named in the next couple of day by House minority leader Nancy Pelosi.  I put their name, political party, House or Senate AND what the National Debt was when the took office.

Not to be cynical (ok, I am cynical), but the SAME people who watched/participated in creating this problem are going to be the ones to fix it?  REALLY?? I am not confident of this process.  Hope/Change I am wrong...

1. Max Baucus (D) Senate 1978--Present  ($771,544,000,000)
2. John Kerry (D)  Senate 1985--Present    ($1,823,103,000,000)

3. Jon Kyl (R)  Senate      1987 -Present       ($2,350,276,890,953)

4.Fred Upton (R)  House  1987--Present    ($2,350,276,890,953)

5. David Camp (R) House 1991-Present       ($3,665,303,351,697)

6. Patty Murray (D) Senate   1992-Present   ($4,064,620,655,521)

7. Rob Portman (R) 1993-2005 House 2009-present Senate   ($4,411,488,883,139)

8. Pat Toomey (R) 1999-2005 House 2010-now Senate       ($5,656,270,901,615)

9. Jeb Hensarling (R) 2002 House      ($6,228,235,965,597)

10. ??

11. ??

12. ??

National Debt as of TODAY: $14,591,991,499,526.02

A simple, inexpensive product is saving lives in Somalia...Why do the inventors of this product NOT have a Nobel Prize?

I learned something new today. It is one of those things that makes me wonder why the inventors of this product have not won an Nobel Prize.  At the minimum, they should be featured on "Oprah"!!!

The product is called "Plumpy'Nut" and it is an easy to administer, peanut base food, that is fed to extremely malnourished people.  It is playing a major role in the current human tragedy in Somalia. It is very inexpensive and easy to prepare and feed to children.  Apparently it actually tastes good too.

 Anderson Cooper interviewed someone about this product (he may have been a rep for the company, but I don't remember). Anderson asked him about the dangers for a child that might have a peanut allergy.  The person said something that really surprised me AND Anderson too: Peanut allergies are an issue in developed countries and not in under-developed, especially very poor ones.  I had never heard this before.  I could not find a definitive reason for this, but the "Hygiene Hypothesis" seemed to make sense to me, but I cannot vouch for its veracity:

""In medicine, the Hygiene Hypothesis states that a lack of early childhood exposure to infectious agents, symbiotic microorganisms (e.g., gut flora or probiotics), and parasites increases susceptibility to allergic diseases by suppressing natural development of the immune system.^[1] The rise of autoimmune diseases and acute lymphoblastic leukemia in young people in the developed world has also been linked to the hygiene hypothesis...""

In other words, a high(er) level of hygiene makes us less immune to potential allergies of all types.

Whatever...This is a good lesson for students and how they can impact people with science and technology.  You may not be a "Do-Gooder" in the classic sense of helping people directly, but your research and development skills/knowledge may do more good than anything else.

The Dow is DOWN! The Dow is UP! What the heck is the DOW? Something about the Stock Market, right? Short explanation here

If you are not sure what the "Dow" or "Dow Jones" or "Dow Jones Industrial Average" means, don't feel bad. I believe most people have an idea that it somehow measures how the stock market is performing---and that would be correct. But let's look at what it is exactly the talking heads on TV are referring to.

Dow-Jones is a financial company that has been around since the 1920's. Go HERE for a very short history of the company.

The "Dow" is a collection of 30 companies that sell shares of stock to the public on the major stock exchanges. They are well-known companies as, as you can see from the list below:

These companies are the marquee leaders in their particular industry.  They are selected to be representative of all companies in their business sector.  Not all sectors are equal and are given different weights when calculating the Dow Index:

Within each sector, each company has different weight, indicating it has a bit more market relevance relative to the other companies in their particular sector. Look at the weights in the "Weight by Price" column.

I am not going to explain all the math...Please go HERE for that explanation if you need it.

What you see on the news is a mathematical compilation of the increases or decreases of these 30 stocks AS A GROUP at the SAME TIME in the form of  an "Index".  Right now as I watch the news (CNN), the DOW is at 10,812.12 points. It is showing a -5.53% change, or a decrease of 633.17 points off the Index from opening this morning. 

If you bought one share of stock in each of the 30 companies above first thing this morning, the value of those stocks collectively would be 5.53% LESS this afternoon. 

Now, does this mean ALL stocks are down across the board? NO! It is possible that a majority of the 1000's of other stocks actually increased.  However, it is usually the case that "As the Dow goes, so goes the rest of the stock market".  For more info on the Dow go HERE.

Bottom line: When you watch the news keep in mind that they are broad brushing the stock market with the performance of only 30 companies.  To find out the truth of the situation, you have to dig deeper.  DON'T BE FRIGHTENED BY THE TALKING HEADS!! Look at your own particular investment before you panic...

Where have all the dollars gone? Look East, young man/woman. Nice graphics showing the flow of dollars since 1991...

A nation's stock of Foreign Currency Reserves is one way you can look at patterns of trade. The more a nation holds of a particular foreign currency, oh, say, dollars, is another way of saying that nation sells more ''stuff" than it buys from the other nation, oh, say, the US.  Hence, they are net holders of dollars.  China holds currencies other than dollars, but the perponderance of the reserves are US dollars.

This interactive from the Financial Times shows an amazing transition of foreign currency holdings just since 1991.  In the 2000's there is a massive tilt in one direction.  What to do with all those dollars? Well, we know at least one place it ends up...

 Well, we know at least one place it ends up...

Economix

Look around your house. Do you have more living space then your really need? Do you have room(s) that are glorified storage spaces? Now you see the problem with our national housing policy.

Yes, I do too...
Before I became a teacher, I had a furniture upholstery business (Dallas/Ft Worth Area).  I was amazed at the number of houses I would visit where residents would have rooms they did not use at all. It always perplexed me...until I could afford to move into a upper-middle class neighborhood.  Now I understand....

Source: Carpe Diem

The period 1986-87 seems to be the birth year for the slope of the square footage to become very steep only to be interrupted by recessions/slowdowns (line flattens out 1990-95, 2001-2003, 2007--?).  I don't think there is one particular reason for this, seems like a combination of housing policies (mortage interest deduction, low-to-no down payments, interest only loans, etc) PLUS Americans attitude towards homeowership (a "right") and "conspicuous consumption". All contribute to an over-allocation of societal resources towards this one sector of the economy, which makes the whole economy vulnerable to housing slowdowns. 

 I look around my own house and see wasted room and space (what is the purpose of vaulted ceilings?). This "extra" space is full of natural resources that are unproductive (wood, metal, etc) and it takes energy to cool or heat it---GAH!  Look around your residence---do you notice the same thing? 

The chart below shows the rather stark difference in living space between the US and Europe (this chart included houses as well as apartments, whereas the one above is just houses). Even US residents classified as poor apparently require 33% more living space than the average European.  Why do we need so much personal space?

Source: Carpe Diem

I am not advocating pro-active government policy to discourage the building of larger, wasteful homes--better known as "social engineering" by my conservative friends.  I would advocate government doing less--by that I mean discontinuing subsidies/policies that encourage over-building and over-spending on homes.  If you want a bigger house, don't ask me or any other taxpayer to subsidize it.

If you are going to take a conservative/libertarian stance, my friends, then you must be willing to pay for it yourself. Don't say yes unless you REALLY mean it.  Otherwise, we should not bag on someone else's subsidy/deduction...That is only "fair", right?

If you are a liberal/environmentalist-type, you don't escape criticism either.  Why do you have some much extra space soaking up societal resources?  The little bit of recycling you do to feel good is more than off-set by the extra housing you consume relative to what is sufficient for "sustainability".  Kinda  forgot about that, didn't ya?

There! I bagged on both sides of the spectrum. Guess that makes me the morally superior one, doesn't it?

Glad I am so perfect! :)