Brexit and Immigration: More Millionaires than Terrorists.

Britain just decided, via a close vote, less than 2%, to leave the EU.

This is in my opinion a major mistake.  I am not British, nor am I European, so some may think I have no business talking about it.  That is ridiculous - I have no business voting on it, but I am free to discuss it, just as the British and other Europeans discuss our election.

From an economic viewpoint, larger economies are always better than smaller ones.  It's not just economies of scale, not just saving money by doing things once rather than multiple times (one decision about cigarettes, one decision about food dye #7, etc.).  Nor is it only about having to painstakingly re-do a multitude of treaties.

There is also the innate power of free trade.  It is the great equalizer.  Yes, certain British businesses lose out to more efficient European ones - but the British people benefit from the superior companies. Or they used to.   They won't anymore.

But more importantly, Britain is NOT the 'weaker' part of the EU, as such they are the ones with the better companies that will eat the lunch of the Greece and Portugal.  Yes, separate from the EU, they can set Interest rates and other government regulations to deal just with local problems, rather than European ones, but frankly this is not that big a deal.   If we TRULY knew and understood how to do that then we wouldn't have those issues at all.  Sure, we know enough to prevent extremely high inflation but quite frankly we don't really know the ideal value.  As such, our attempts to control things are misguided.  Yes, they can save a small (relative) amount of cash they contribute to the EU, but they lose out on the economies of scale, etc.

But nationality is not just about economics.  There are also social values.

I could see leaving a Union of the majority of the EU was culturally opposed to the values of Britain.  But that's not really the case.

The main 'cultural' issue that is upsetting Britain is Immigration, and quite frankly most of the EU is anti-immigration and anti-Muslim.  That's not a real difference.  The only real difference is the severity of the anti-immigration movement, which is more so in Britain than in other countries.  Not surprising, as Britain won World War II without being invaded, making them far less sensitive to accusations of tyranny than other European nations, which still the bigotry that the NAZI party forced on them.

But Britain's new bigotry isn't going to help them.   It stops one in a million terrorists, while also keeping out thousands of innovative, brilliant, creative, citizens.   There are more soon-to-be millionaires in those immigrants than Terrorists.   Hard working immigrants outnumber the criminals and give more in taxes than the criminals cost.  The net result is a worse Britain, not a better one. 

 So why do people dislike the immigrants?  They are culturally disruptive. The new millionaires invade the old institutions and demand services.   Those new hard working immigrants take jobs from hard working native born.  And the immigrant criminals steal things the native born criminals wanted to steal.    It's all about the competition, and no one wants it.  Sound familiar?  It is - it's the free market at work.

Just as a free market beats a mercantile one, an immigrant friendly country beats an anti-immigrant one.  It's the exact same principle - let anyone do it and let the market decide who is better.

Britain leaving the EU is a huge mistake.  It's obvious to the financial markets and that's why things are getting bad.    Plus side, good time to buy.

Why Democrats are Better for the Economy.

Thirty years ago the Republicans were the party of fiscal responsibility.  They were for smaller government at the time when government was huge.

Then Ronald Reagan came along and they took over the government.  They got rid of the the excesses the Democrats had at that time created and limited government.  Yes, those spending cuts were modest - because the excesses the Democrats had created were modest.


The problem was the GOP saw a winning strategy and went with it long after it stopped winning.   And stayed with it for from 1981 all the way to 2016.  That's 25 years.   The problem with cutting the fat is that if you keep doing it for almost thirty years, YOU RUN OUT OF FAT.   Picture the blind butcher, who started out trimming the fat, but has now moved on to the muscle and in some cases is now carving the bone.   That's what the Republican Party is doing.

Yes, there may be some fat left on out shrunken, anorexic government, but only a pro-ana idiot with a microscope could find it.


How do you tell that we cut enough?   Simple, you look at Kansas.   Kansas is what happens when you keep on cutting taxes - you turn a $600 mill surplus into almost a $700  million deficit, get below average job growth (even the Kansas GOP can't kill the economy that Obama gave to our country), bankrupt school districts, and (Source).




You can only cut so long, before you hit bone.   They hit bone in Kansas and need to stop cutting.

Part of the issue is that the GOP gave up on actually reducing spending, and is now just cutting taxes - just like they try to do in the Federal Budget.   That doesn't work, no matter how much it did (or did not) work in the past, increased efficiency only gets you so far.

How do you tell if you have cut to the fat or the bone?  You compare with other countries.  First of all, note that the US outspends the next nine other countries when it comes to the military. It was the next ten before Obama - thanks Obama - but he cut us back some and convinced other countries to help out in the middle east.  Keeping that in mind, you can check the general list.

Let's look at per person spending (all data from Wikipedia). 


The World spends on average $2376.  But the bigger, first world countries (20 largest economies) spend on average $16,110.   The US spends only $11,041, #15 out of the top 20.  If we wanted to spend less than South Korea (moving us down to #16), we would have to drop to $4,556.  And we all know one of the reasons why South Korea's spending is so low.


This nice graph demonstrates the Federal net outlays a a percent of GDP since 1929.
Click here for this nice graph

It is typified by 4 things.  

1. A general trend up from 3% to about 20% now.  
2. A large spike up above 40's for World War II
3. A general decline starting in the 1980's (Ronald Reagan) and getting significant in the 1990's (Bill Clinton's incredible economy that kept going and going)
4. The HUGE spike that stated with George Bush (took up back above Ronald Reagan at it's worst) and that Obama almost entirely fixed.  Almost, but not entirely.

Yes, we aren't all the way down to Clinton at his best, but  we are already below Reagan at his best.

But more than 70% of the US budget is on Military, Social Security, and Health Care.   The only place the GOP is willing to cut that HAS enough money left to actually reduce costs is the Health Care sector.  But more than half of the healthcare spending goes to Seniors - Medicare again.  The biggest cut would be the $371 Billion we are expected to spend on Medicaid in 2016. (Source).
 
The only way to really reduce spending is to cut Medicaid to the bone (or cut everything else we fund).   That is why we haven't done it.

The real problem is that government actually DOES work.  People that join the military really do act as a deterrent, preventing other countries from attacking us.  People in education really do educate our students, allowing them to get better jobs and make more money.  Health care and Senior care really do let people take risks without having to save up money for unforeseen health issues and aging.   The police actually DO stop criminals, encouraging honest economic activity. 

Which means we have 3 choices on how to reduce taxes.

1) Eliminate neccessary services, cutting long term taxes in the future, for temporary gains that get eaten up IN ONE YEAR - as proven by Kansas.

2)  Keep current services and pray that our economy gets better, reducing the need for social services.

3) INCREASE spending on certain services that we KNOW have solid return on investment.  Things like half-way housing for the insane who currently end up in prison - something that costs a lot more than a half-way house.  Things like education for at risk students - children of homeless, drug addicts, and criminals - that are almost 50% likely to go to prison - with the plan of turning them into honest, tax paying citizens.

Capitalism, Patents and Healthcare.

I am a strong believer in capitalism who also realizes the need for government intervention in healthcare.   How can I reconcile such apparently divergent views?

The United State's of America does NOT use capitalism in it's healthcare system - and never has.  

Wikipedia list six separate characteristics of Capitalism:

1. Private Property
2. Capital Accumulation
3. Wage Labor
4. Voluntary Exchange
5. Price System
6. Competitive Market

If you don't have those features, it's not capitalism.   Socialism is famous for preventing capital accumulation via taxes and the competitive market via regulating prices.  Communism goes further, wanting to get rid of the rest, but even the Soviets at their height claimed that was an ideal utopia they aspired to, rather than something they could implement.

But Capitalism predates Communism by more than 100 years.  Lets' compare it to Mercantilism, the system we had before Capitalism.

In Mercantilism, there was Private Property, Capital Accumulation, Wage Labor and a Price System.  They did not have really have Voluntary Exchanges, nor a Competitive Market.  Specifically, they had government control of exchanges - what you could buy and sell was strictly controlled.   They were known for banning the importing of many protected goods and the export of gold.  They also were known for monopolies.   Lots and lots of monopolies created by the government, given to favored people.    Queen Elizabeth of England granted monopolies on everything from coal to wine.

In Elizabethan England, under Mercantilism, they called these monopolies "patents of monopoly".

Yes, that's right, patents are not part of Capitalism.   Patents restrict people from engaging in business, which directly prevents a competitive market. They are a hold over from Mercantilism.    If you are defend the concept of patents, you are not a pure Capitalist, you are at least partly a Mercantlist.

Why do we still have patents?   We needed a way to incentivize invention, so we took the old concept of a patent, reworked it, and now they only apply to things you invent, rather than any old thing the government wanted you to have a monopoly on.

Capitalism is a pretty strong systems.  It is more than robust enough to handle some flecks of impurity.  Patents have always been a problem for Capitalists, but it's something we can usually live with.

As long as we keep the other five characteristics of Capitalism, it works well enough.


But that brings us to Health Care.   Here, we don't just have patents on medicines, techniques, and devices.  If you don't buy necessary health care or you die.  That's involuntary, not voluntary.  No different from putting a gun to your head - or ordering people to buy this or go to jail.

Notice how hospitals don't list prices?  Name one other business where that happens.  I can't think of any.  The reason is simple:  you have to pay or you die.  It's not a voluntary exchange, and they know it, so they don't even bother to tell you the cost till after it's done.

Still, it would be mostly OK, as long as we didn't also have the patents and other restraints on free trade.   If there was open market, where you could get the stuff you need to live from multiple sources, the free market would keep the price down.  When you take away both the voluntary exchanges and the patents, there is no free market - that's Mercantilism, not Capitalism.

Which   is why the US has such a problem with Healthcare - we don't use capitalism, we use a mercantile system.  That's not something new that Obama created, it's been that way for more than a hundred years.

I'm not saying we have to get rid of patents* - and by it's very nature, we can't make health care "voluntary".  (Note, we could at least require hospitals to list prices and stick to them).   But we can recognize that system is not capitalist, and that it requires government intervention in this case, because we have already intervened to help out the suppliers (by enforcing patents, among other things).  We need to counter the aid to the suppliers by also helping out the patients.

Price limits are a totally reasonable method.   We don't want to do it directly, so we chosen let the insurance industry negotiate the prices, rather than have government legislate it.  But that means everyone has to have insurance to do the price negotiating for them.  If you don't want to let the government legislate the prices, you have to require that all people have insurance to do the negotiating for them.  Or we could simply rule that the government sets prices if you don't have insurance. 


Health care is not and never has been a free market.  That's why we need consumer protections and pro-patient regulations, on top of the many pro-business regulations such as patents.**

------
*Note 1:  I am also not saying we can't get rid of patents - a bounty system could be established by the government rewarding innovation might work.  So could a set 10% royalty systems where anyone would be allowed to sell patented objects as long as they paid a 10% royalty would also work.

**Note 2:, I do know that not all health care involves patents, but  the far majority of medical care is involuntary, rather than voluntary, and even without patents there are other issues with the competitiveness of the market (see hospital prices mentioned above, one sided information, limited providers with barriers against entry) that similar issues apply throughout the entire industry, not just patented medicine.

The problem with low interest rates

Money is a complicate concept.  For the purposes of this discussion, we shall treat money as grease for an economic engine.


While there are other explanations for it, this is the one that is most applicable for current economic theory. 


First, some back ground - current economic theory has changed dramatically since the 1950's.  Before then we did not attempt to use interest rates to fight inflation.  In the 60's that changed.


The basic idea was that inflation was caused by not enough grease in the system, so we applied more grease (lower interest rates = more lending from banks = more money available for use).


The problem is this what happens when you lower interest rates and the banks don't lend more money?  This began to happen recently, mainly because interest rates hit extreme lows.  Small difference in interest rates give little if any impact.  Lowering from 15% to 7% will have a huge impact, but from 7% to 3% is small, and from 3% to 1% is no impact at all.


You see, you can't just apply grease to the system and hope it goes where it is needed.  There are times when banks won't lend more even if you PAY them to borrow money from you (negative interest rates to the banks).  Once you go negative, the bank can simply borrow money, hold on to it without lending anything then give less back to you and make a profit.  No need to lend at all.


We need a more modern system of applying the grease.   We need to apply the grease not to the banks and hope they lend more, but directly to the parts of the economy that need it the most.


What would those parts look like?   There are several places to look at.  One is new businesses.   If you want to rev the economy up, offering to make more generous Small Business Loans - for guarantees, surety bonds, and Venture Capital, - works well.


Another is to look at parts of the economy that NEED the grease but aren't getting it.   Currently a major source for that is College debt loans. They can't be refinanced, no matter what happens to current interest rates.  Often they are held by hard working, intelligent college graduates.


So another thing the Fed could and should do is to refinance any education loan that has no late payments for the past 5 years.  It could even be set up to automatically work whenever the Fed lowers interest rates to banks - boom, instant refinancing allowed.   The people that benefit from this would be exactly the ones who could make use of the grease.

Interesting take on China

There is an interesting speech given by Eric X Li at TED.


In it he offers five basic statements:

1. Democracy is not for everyone
2. China does quiet well with it's non-democratic, Bureaucracy
3. Bureaucracy is not for everyone either
4. Democracy has it's own problems that China doesn't.
5. China does have some problems but it is working to solve them and will succeed.

I agree with the first three.   I don't believe Democracy is for everyone.   To have an effective Democracy you truly need many things, including but not limited to an intelligent, educated public.   You can't run a democracy with people that are too stupid and uneducated enough to sell their votes cheaply.


China has been doing well in large part because it has a path to follow, blazed by the west.  Bureaucracies don't innovate well, but they follow very well.  As long as they are behind the west, they can follow at breakneck speed.  But they can't innovate.

Which of course is why I agree with part 3.

Now for the last two.  Those I find to be laughable.   All the problmes that US democracies have, China has as well, they just don't publicize them.

Key problems that the US currently has include Congressional stagnation caused by dramatically different political views.  China has that as well, they just cover it up by letting one side win and burying their opponents.  

Other issues that the US deals with include things heavily involved with morality, of which China ignores one side completely.   Whether it's homosexuality, abortion, torture, we lead the way on issues they sweep under the rug.

Ignoring an issue is not dealing with it.  The US looks so combative because we face the major issues head on, rather than sweeping the other side under the rug.

He brags about China's leader's experience, and the lack compared to US politicians.  Experience is the enemy.  We want innovative solutions, not the same old stuff.  We want new blood, which is why terms like maverick, new blood, outside the beltway, are all positive terms.

Honestly, if we already knew the solution, then it is easy to solve the problem.  That is why bureaucracy works so well in those situations.

But the US is not following the path of another country. We are blazing the path. China is, to use a  Nascar analogy, drafting behind us.    We solve problems that NO ONE knows the solution to.   To do that, you need the innovative power of Democracy, not Bureacracy.

Mr. Li. knows a lot about China's history.  But fails to understand why it has succeeded.  He fails to recognize that it's success is on the back of the work done by the West.   Just as we taught them how to make cars, computers, etc, we also taught them how to run a country.  

He thinks China will continue it's growth.  He predicted that China will become the largest economy in the world.  That is likely - population counts.  He also predicts it will do well on a per capita basis, that is not going to happen.   When you pass the lead car, you can no longer draft, and that's the only economical technique they know how to do.  They can't get anywhere near us without the drafting.  I can see their per capita rising to about half of what the US will have, but not much more than that.

He thinks corruption will be curbed but not eliminated.   That is likely.  He also thinks they will do a good job of curbing.  I doubt that.  Their system by it's very nature lends itself to corruption.   Bureaucracy is not good about curbing it's corruption.  Their culture and system is about respect, not challenge, which lets corruption flourish.

He also thinks that economic reform will accellerate.  I disagree.  It is already near the economy they are drafting against, they have to put on the brakes to avoid cruising past the west's car.

He also thinks political reform will continue, which is a given, and the one party system will hold firm, which I also agree is likely to happen.  It takes a generation to realize your mistake, and they haven't made the mistake yet.  China has at least 40 years of one party system left to go.   

Not because their system works so well, but because they are blind to the fact that they are drafting behind the west's economies.

Why Government Should Fund Science.

One of the Republican Party's tropes is to kill government sponsored science.  They consider it to be a waste of money.   While they admit the obvious fact that scientific research is very profitable for the government (the Internet is just the most recent and obvious example), they think business can do it better. Instead of having the government fund research, they want business and non-profits, such as universities to do it. 


They base this trope on several false assumptions.

1. Any science that doesn't make a profit and can't be funded by by a non-profit is not worth investigating.  They typically bring up moralistic examples (research into the sex lives of animals).
2. Business are better suited to decided which scientific endeavors can make a profit.
3. Businesses care more about profit than about anything else, and therefore will investigate all potentially profitable areas.

All of these assumptions are false, and they are not just small errors.  They are incredibly large errors.

Lets start with part 1.   There are a lot of science that can't make a profit.   I could talk about the endless number of orphan diseases (diseases too rare for cures/treatments to be profitable).   I could also talk about the big science questions that require HUGE expenditures to answer - such as the age of the universe.   These things are worthwhile even without a profit, yet for various reasons are not appropriate for for non-profits to answer.  Among other things, sometimes these huge expenditures need steady funding that can't depend upon non-profit.  Which brings us to part 2.

The biggest tech boons of the past 50 years derive from government funded initiatives.  But there is a corollary to this fact, which is more importantly: There was nothing stopping businesses from doing the research themselves.   The most obvious one is the internet, but the space program also counts.  Business could have created the internet, but failed to step up to the plate.  So businesses have demonstrated an INABILITY to fund key, profitable research. 

Government uses different standards to decide upon funding than businesses do. Businesses do in fact make good decisions.  They invest in a lot of valid scientific research, and ignore many bogus ones.  But so does government - and more importantly government invests in different technology than business does.

Business has a rather short timeline.   Small business has to make a profit asap.  If they don't, they change their business model right away, and if they can't get a profit within two years, they die.  Public corporations usually can't look further than 1 year, and die after six years or so of losses.  Private business can look three-four years ahead but will die after ten years without a profit.

A lot of science however takes decades. Most of the twentieth century owes itself to the scientific work of Nikola Tesla.   Make no mistake, Tesla made a lot of money - when he was young.  But he gave up his patents to save Westinghouse (which failed to work, GE eventually stole them).  But even after he lost the money, he proceeded to invent a multiple of advanced scientific devices, all of which took DECADES to become profitable.  He made discoveries related to radar, microwave ovens, computers, and even VTOL airplanes.  Business did not actually follow his research until decades after he died.  They had their chance and failed.

Goddard did his first rocket work in 1926, but it didn't really become profitable until the early1940's when the Germans turned them into a viable weapon of war.  That's more than a decade.  Not to mention it took over fifty years from Goddard's first rocket to the big business of satellites.

The internet started before 1969, but it didn't become truly profitable until 1990, and internet commerce didn't start for another 4 years.

Lots of big, profitable science takes many, many decades to make a profit.  That far exceeds the schedule that business  uses.  Worse, if you waited on these things, it would mean waiting for the results.   Some things you need to pay to do asap.   Which brings us to part 3.

Bad timing isn't the only reason why businesses miss profit opportunities.  Businesses tend to be moralistic.  They have to worry about PR and can't get involved in certain things.   Banks will reject financially sensible loans because they don't want to get involved in sex businesses.  Not to mention prejudice about gays, women, etc.   Business can't research how ducks have sex, even if the biochemistry is incredibly interesting and can lead to real scientific progress with actual financial awards.

Sometimes businesses care more about security than profit.  As in, they would rather maintain their existing business then try to create a better business model that undercuts their current one.  Worse, they are quite willing to legal (and sometimes illegal) monopolistic tactics to prevent others from doing it.  Look at Tesla and their business model.  Existing large corporations undermine new companies research, just as they undermine new business models.


Why?  Because the risk-reward is is MUCH lower to undermine something than to try something new.

People and organizations with large amounts of money care more about risk than about reward.   Not that hard to understand, the more you have to lose, the more you care about losing it.

Governments have several specific immunities to this kind of risk.  Usually they don't have to answer to anyone about specific programs - in part because they are often looked at as jobs programs, in part because they amalgamate so many programs that some are doing well even if some are doing it poorly.   In the US, the government has so much money that even large science projects take up such a small part of the budget that no one cares if they fail.

For all of these reasons, government should continue to fund science.  They don't always do it better than business does, but the different priorities of government allows it to make hugely profitable investments that the business world simply can not or will not make.

Now a couple of extra points.

1. I am talking about funding science, not restricting research.  Funding is good, restricting is bad. Laws restricting research is about picking winners and losers.  They stop better technology by laws, not through money.
2. Funding is not picking winners or losers. You can still win if your opponent is better funded.  Just ask Nikola Tesla.  General Electric and Edison had much better funding than Westinghouse and Tesla.  As a direct result GE strong armed Westinghouse, but they ended up using TESLA's inventions.   Nikola Tesla won the science, even if Edison won the money.   While it might be unfair to Tesla, the country as a whole came out ahead, despite Edison's attempts to push into using the wrong technology.

Why I believe the Banks, not Fannie Mae killed Housing.

Every once in while, I come across a news story that is so offensive, so evil, it makes me want to SCREAM!

 This is one such story.

It makes it clear and obvious why the banks are responsible for the housing issues, not Fannie Mae, or anyone else related to the government.

In Orlando Florida, a man had some issues paying off his mortgage.  So he wisely and prudently applied for and received a 'modification' of his loan.   Wells Fargo is, in my opinion, generally one of the better banks - note they actually did the modification. Wells Fargo agreed to accept a lower rate - commensurate with current rates - over a longer time.  He was told if he made four payments on time, then the lower rate would be made permanent.

Then his situation improved.

So, being a good citizen and a financially prudent man, he started putting a little extra into his monthly mortgage bill.  He also started paying it early.

Whereupon the bank foreclosed on him.

You see, the loan modification is a legal document.  His, like many others, expressly forbid people to pay extra money or pay early.  This in and of itself is within reason.  Banks lose money when you do this, and if interest rates have dropped even further they can't loan out your extra payments at the same rate you were originally paying.  So when they agree to give you a break, it is totally reasonable for them to say 'hey, no early/extra payments" with this special deal.

But a reasonable bank, would not have foreclosed.  I am sure that Wells Fargo foreclosed for some combination of the following:

• Bureaucratic nightmare that tries to force irregular reality into perfectly shaped holes
• Being a greedy, profit grubbing, house thief was too great a temptation
• Literalists too stupid to think inside the box, let alone outside the box

But the bank did not have to foreclose.   What a reasonable corporation would have done is the following:

1. Accept the check, but not cash it until the actual day the money is due.
2. Mail him back a check for the over-payment(s)
3. Along with a letter explaining that legally he can't pay more than the prescribed amount nor early, under the current contract
4. Thank him for the effort and congratulate him on being a good customer
5. Politely include a request to set up an automatic electronic transfer so as to prevent future problems

That is what a good business does, as opposed to what Wells Fargo did.

As I said earlier, Wells Fargo is one of the better banks.  They have not had the issues that Bank of America has.  So the fact that even Wells Fargo screwed up this badly is a fairly clear sign that the entire industry has major problems.

Most banks are bureaucratic nightmares, too focused on squeezing the last penny, who try to follow set rules, rather than think up new ideas, real customer service, or even good business.

Republicans Abandoning Capitalism

Tesla is an innovative small business.  They are creating electrical cars, something the big automakers repeatedly claimed was unprofitable and not worth their time.

Part of how they do it is by not paying dealers.  They sell direct to the customer.  You want a Tesla, you email/call them - or go to a Tesla owned show room.. No need to go through a middleman.

The problem is a whole bunch of car dealers don't like this.   They are afraid for their jobs.

Now a normal capable person, when faced with this dilemma, proceeds to up their level of service and advertise.  They sell cars from multiple companies and go out of their way to help you compare products and make the right decision.

If you offer a service that people find valuable, they will willing come in and buy direct from you, as opposed to online.

It is how Barnes and Nobles continues to operate despite Amazon.  They offer things that Amazon can't offer - among other things, instant free service for their e-reader, free WiFi for their e-reader, instant service (as opposed to waiting a week).


But the dealers in North Carolina are NOT reasonable. They don't want to offer things at a reasonable price, they want to overcharge you for what they offer.

In order to do that, they need exclusive licenses from the car manufacturers.  Which they have from most manufacturers.

But not Tesla.  Tesla won't play their game.

So the dealers in North Carolina talked to their state congressmen.  They bribed, oh, excuse me, contributed to campaign finances, of the Republicans running the state house.  Whereupon, those same Republicans have passed a law banning direct car sales to consumers, claiming it is 'unfair'.

It's not the only Republican controlled state to do so- Texas won't let Tesla owned 'showrooms' offer test drives, sell the vehicles directly - or even quote a price.  Tesla is already suing the state of Texas over this law - and attempting to have it overturned by the Texas State Senate.

Why exactly it is unfair for car companies to directly sell to consumers, while it is not unfair for Apple, Amazon, and a hundred other internet based businesses is not clear.
 
All I know is that the GOP in North Carolina has sold their principles out.

They are attempting to kill a new technology company that can someday save the American Car Industry, all to keep alive a dying business model.

No, the GOP has a whole is not abandoning Capitalism.  But no one is calling these state level Republicans "RINO'S"

Because the GOP as a whole considers capitalism to be a secondary issue, less important than getting themselves elected.

Warren's Idea to tie student loans to banking rates

Right now we give large banks a HUGE deal on interest rates.

The idea is to make it cheap for them to loan out money, so that they will do so.  Supposedly, the lower interest rates will trickle down to the people the banks loan out money.


Senator Elizabeth Warren (Senator from Massachusetts, driving force behind Consumer Financial Protection Bureau, oversaw TARP) wants to give students the same rate.

As per this article,  we  currently loan the money to the banks at 0.75%, while charging students almost  7.00%.   These loans are short duration loans to cover liquidity issues.   I.E.  give the bank $100 million to loan mortgage while they wait a couple of days to package them up and sell them to the Fannie Mae.

The banks get loans for hundreds of billions of dollars. (as per this report mentioned a peak of $150 billion 12 years ago, directly after the September 11th attack).


Student loans however exceed that number by quote a bit.  They are currently somewhere between $600 billion and $1 trillion. (Article about why it is so hard to tell)


Some people object to Warren's idea because of the cost.  Note that if the cost is so horrible, why do we give the banks the sweet heart deal?

Isn't the point of the Discount Window rate to encourage banks to loan money out?  Then why don't you want to encourage banks to loan money to students?


The quiet truth is we need to charge the banks more and the students less.

A solid rate of about 4% - higher than the 

Political Party and the Deficit.

The GOP and the DNC have competing claims about the deficit.  Let's take a look at the actual results.
(Source of most of my data)


Keep in mind that due to inflation, each succeeding President having a higher Deficit is not that bad.  But also keep in mind that we can totally eliminate the deficit, even getting a surplus.  It's called a Balanced Budget when the deficit is at (or near enough) zero.


Lets start with President Kennedy (D).  He had a deficit of $7 billion in his first year, $5 in his last.

Next came President Johnston, (D).  In his term, the deficit started at $6 billion, ballooned up to $25 billion in one year, but then he got it under control and dropped managed to eke out a $3 Billion SURPLUS.  Note that term, surplus.  You won't see it again till the word's President Clinton appear.

Then Nixon (R) manages to get elected.  It immediately becomes a $3 Billion deficit again.  He brings that Deficit up to $23 Billion two years in a row, before it drops back down to $6 Billion.


Gerald Ford (R) keeps up Nixon's record, boosting that deficit above $50 billion for all three of his terms, hitting $74 billion in his middle year.

Carter (D) gets it back down to $41 Billion, but ends it at $79 Billion.

Reagan (R) takes a page from Ford and immediately tries to doubles the budget deficit.  He starts at $128, gets it all the way up to $221 billion.  He manages to get it back down to $153 Billion.

George H Bush sees it reach $290 billion, but get's it back down to $255 Billion.

Finally Bill Clinton (D) gets into power, In his first year he has a $203 Billion dollar deficit.  It is also his worst year.  During his first 4 years, he slowly manages to bring it down to a $22 billion deficit.  The last time it was that low was back in 1974, under Nixon. 

But that's nothing.   In his next term he maintains a SURPLUS for all 4 years. In fact the surplus hits a high of $236 Billion dollars.  He ends his term with a $128 billion surplus.

Boom, we get hit with the disaster know as George W Bush (R).   George W Bush immediately creates a $158 Billion deficit.  He ends his term with a Deficit of of $1.16 TRILLION dollars - note that number does NOT include the Obama Stimulus act money which we are assigning to Obama)

Finally we get another Democrat.  Under Obama, the deficit immediately went up to $1.56 Trillion dollars  (Actually only $1.294 trillion, but we needed to also add in the money we spent in the last year of George Bush's presidency as part of the Stimulus Act).   But in 2013 he starts to eliminate it.  By 2012, he has it down to $901 Billion.  Yes, that billion with a "B".  As in lower than George W Bush's  best year.

A couple of obvious points.

1. Of the past ten presidents, five Republicans and five Democrats, the only two that had a surplus are Democrats.  Note if you go back before Kennedy, every single president - Republican or Democrat had at least one year with a balanced budget.  Basically, the Deficit thing is a modern invention.
2. Note, it's not that hard to balance the budget.   You look at how much you are spending, you ask the accountants how much your taxes should take in. Oh, you might be off by a small amount, but next year you just adjust the taxes up or the budget down. It won't work every year, but any year the economy grow more than you predicted, you have a surplus.  You should get at least one every 4 years.
3. President's don't really have that much control over the Deficit.   Obama had to pay for Bush's economic disaster and also his wars, and to be honest, the war against Afghanistan is not Bush's fault.  Not to mention the fact that Congress controls the Budget.

Most interesting is the Modern invention of the Budget Deficit.   It is a direct creation of the Republican Party.  I know, you are saying "That's just liberal propaganda."

Nope, it's a fact admitted by the Republican Party.   They  deliberately increased the deficit as part of a plan to reduce spending.  The Democrats had a good plan called "PayGo" which required you to raise taxes every time you increased spending.  The Republicans tried to replace it with "CutGo" which refused to ever increase spending, instead cutting old spending whenever you introduced new spending.  Apparently it doesn't take inflation into account, or the concept of emergency funding (i.e. war/disaster).

But this plan is not new, it's old.   The entire concept is decades old.  Raise deficits than use them as an excuse to cut spending.

It started under Ronald Reagan with "Voodoo Economics"  the professed claim was that lower taxes on the wealthy would stimulate the wealthy to spend more money.  It failed of course, actually increasing the deficit.  

They realized they could use the deficit as a propaganda weapon to cut spending.  Which they actively pursued for quite a time.


The problem is that it didn't work.  Instead of saying "We need to cut spending", people said "We can live with the deficit".  Which they have done.

Honestly, right now the higher deficit is not a problem - for one major reasons:  Interest rates are low.

Frankly, given treasuries rates of of 2.83% per year for a thirty year bond (source)  we would be crazy NOT to borrow tons of money.

If someone offered me a loan at 2.83%, I would max out my credit rating and invest the money.  For me, that means mutual fund.

But for a country, investing means spending money on:

• Education
• Infrastructure
• Scientific Research
• International Aid 
• Environmental Clean up
• Healthcare for the working poor

The last one is key - by keeping the working poor healthy, we get healthier employees that stay working and paying taxes, rather than moving them to Medicaid/Medicare

Note that most of these things are the very things the idiot GOP wants to cut.  In effect, they are saying they don't want to invest, instead they want to spend our cheap money on pleasures:  tax-cuts (which Reagan proved do not increase tax income) and military spending (which often we don't need - see here.)

How to Negotiate

The Republican House just submitted a laughable budget.   Note, Obama didn't do much better - both budgets lack specifics.  The Office of Management and Budget - OMB - decide not to judge how much either would save/cost because they didn't have enough detail.

But the GOP version was an insult, not an attempt at a real budget.   The GOP version included a total repeal of Obamacare 'to save money'.  This is like asking your boss for a raise and adding "Oh, and I want the legal right to sleep with your wife as well".

Please note that Republican House has passed other attempts to repeal Obamacare.  All of them went down in flames, never getting past the Senate, let a lone having to be vetoed by the President.

Not just once, multiple times.  How many times?

Here's a news story from July of last year, claiming 33 times.

Did they stop after 33?  No.  Note, that 33 includes attempts to repeal large sections of it, as opposed to the entire thing.   But we all know that the 'part' they try to repeal is core of it - the individual mandate.  


The point is that this has been before and failed so many times. So what's going on?  Are the Republicans morons?  Do they not know it won't work?   No.  They are passing symbolic votes to appeal to their base.  But they either don't know or don't care that doing so prevents a real budget from happening.

Here, let me explain how ANY negotiation works.


First, you don't start out with one goal.  That's for suckers.  Instead you start out with 3 goals,  then calculate 2 more, for a total of 5.


The three goals are, in order:

1. What you would be willing to take.  (barely doable)
2. What you expect to get.  (desirable)
3. What you reasonably could hope to get.  (dream offer)

Next you look at those three goals.  Figure out how much value is between them.  Call that your 'base units'.   If we were just talking about money (but very few negotiations are just about money), then it is easy.  I'll give you a pure money example.

Lets say you are looking for a new job.  Your current job pays 60k (welcome to the middle class).  There is no way you would change jobs, losing seniority, vacation days, 401K contributions, etc. for anything less than 66k.  So 66K is your 'willing to take' number.  Any lower and you don't change jobs.  You think you are easily worth 70k, and you can see someone desperate for you paying 75K.

Those are your numbers, 66, 70 and 75.


Next you have to figure out what a 'low ball' number your opponent might offer.  Anything less than that means they are not serious about hiring.    From your research, you find that people with no experience might work for 60k.   Anything less than that and your potential new employer is wasting your time.  They simply are not looking for someone.   If they even mention a number lower than 60k, forget about getting the job, walk away - they either don't know what they are doing, or are not serious about hiring someone of your caliber.

Now your numbers are 60 (low-ball), 66 (barely doable), 70 (desirable) 75 (dream pay).

All the numbers differ from between 4-6k.   So add on 5k, to your dream pay, and you get 80k.  If they ask you for a number before telling you anything else, that is the one you give.  It is higher than your dream pay and most likely will not be accepted. But who knows, you could get lucky.

You do not under any circumstance ask for 90k.  That is ridiculously too high and will get you laughed at and dismissed, just as if someone were to offer you 50k.  Asking for 90k (or trying to end Obama-Care) is the equivalent of saying "Oh, and in addition to the pay, I also want to sleep with your wife."

It is not an attempt to actually negotiate, it is an attempt to disrupt the negotiation (or prove you are a moron unsuited for the job.)


A good negotiator asks for the 80k, is countered with 60k, and meet at 70k.   Both sides demonstrate:

1. Knowledge of the value of the work
2. A desire for profit
3. A willingness to be reasonable
4. Good negotiating skills

Asking to repeal Obamacare (or just major parts of it), is the equivalent of asking to sleep with your new employers wife.  For God's sake it has the President's NAME in it. It's his legacy, the one thing that everyone will remember about him.  Both sides used it as a major plank in their 2012 election campaign and Obama won.

Frankly, I think Obama would be more willing to let Paul Ryan sleep with Michelle, than to repeal ObamaCare as part of the budget.   Fifty years from now, when they talk about President Obama it will be "First Black President, killed Osama Bin Laden, Reformed Health Care".  He isn't giving up that last statement.

Trying to include it's repeal proves the GOP is NOT serious at all about negotiating, instead they are just pontificating, playing to the base, and pretending to work.

The thing is America KNOWS what you are doing - all of America.  That includes Democrats, Republicans an Independents.

Anyone that is not already a died-in-the-wool Republican knows it is a lie, not real negotiation

And we will remember it in 2014 when the entire House goes up for re-election again - this time without the super-strong, just-gerrymandered election districts you built up last time.   You better pray to god the typical mid-cycle anti-incumbent-president effect counters your stupidity.  It doesn't always work that way.  Because that's the only thing that can save the GOP from yet another huge loss in 2014.

The Activated Sequester

As I have said before, the Sequester is basically what the GOP claims it wants.  A reduction in spending.  That is why they aren't fixing it.   They don't want a tax increase, so they simply will not make any kind of deal that takes a non-tax increase solution for a tax-increase version.  No matter how much better they get for a tax-increase version

Instead they have used it to cause the government to cut programs the GOP doesn't like.  They are accepting cuts in some programs they do like, in exchange.

The Senate should reject their attempts to 'help' out just the government departments the GOP likes (i.e. the military).

If the GOP is really serious about fixing ANY problems with the Sequester, they must be willing to spend as much money and power fixing the things the Democrats want.

Trying to solve just the programs they like is evil.

It's like if two parents decided to cut back on spending for their kids because of budgetary problems, then the father says "but lets put in an exception to let Billy Bob go on a field trip for the Boy Scouts" while still refusing to send Jill-Anne to her baking class.

You can't just fix the programs you like, while screwing over your partner.

When the senate rejects the GOP's recommendations remember that the Sequester is supposed to be a PUNISHMENT for the GOP, not a real budget.


Yes the Sequester is stupid.  It was supposed to be stupid.

No you can't make it smarter for your favorite programs, not without making it smarter for your opponents programs.

 This is basic prisoner's dilemma logic.   You want to get something, but if you betray your opponent, they will betray you too.

No, you can't complain about your opponent's screwing you over while you are still screwing them over.

Preppers: More about Crazy

Why do I keep talking about stupidity vs insanity?  Because is so common in politics.  Worse, as I have shown before, Stupidity tends to spread.

There are a certain group of generally extremely conservative lunatics that think the world is going to end.

They tend to 'prep' for it by getting lots of guns, ammo, survival bunkers, and lots and lots of food stored away.

Now please note I am not calling them morons because they think some kind of mega-disaster is coming.  I kind of agree with that.  Nor am I calling them morons for prepping .  That makes a certain amount of sense.  They are not stupid, nor are they evil.

My problem is that these lunatics have no idea how to really get prepared for anything.

If you think there will be a problem getting food for more than a month, then buy a farm and learn how to make it yourself.  Or at the very least become/work at a food distributor (i.e. have a warehouse that will feed 1,000 people for 100 years rather than a puny shelter containing enough food for 4 for a month).

If you think there is a chance you might need more than 1000 bullets, learn how to make them yourself.  (I admit a few of the smarter 'preppers' do this).


If you think you are going to need more than 5,000 rounds, learn how to make a crossbow and how to make crossbow bolts (or at least how to make a bow and arrows).

The idea that you should store more than a month of food is crazy unless you also start a business selling it.   The idea that you need to spend more than a day learning how to shoot a gun is also pretty damn crazy. Guns are simple to use and will scare off people unless they come in huge numbers and then your skill won't matter.   Bow hunting however does take skill, which you really should learn, if you are going try and use one to defend yourself/hunt.


It's not their assumptions that make these people crazy, it is there obviously moronic 'solutions'.


The same problem often exists in general politics.  You have idiots that pretend anti-gay laws are there to support the family, rather than make anti-divorce laws.

You really want to stop divorce?  Put a permanent tax on it - i.e. if you get married, have children, then get divorced, then both parents pay 1% higher taxes than if they had never gotten married.  Put that money to child services.

You really want to make government smaller?  End programs YOU like, rather than ones your opponent likes.  That's the best way to fix things.

You know why people don't do this?

Because their claimed 'reasons'  are a bunch of lies.  They are thinly veiled excuses for their real agendas that they think we are too stupid to see through.  Why?  Because they themselves are too stupid to see through those excuses.

The laws against gay marriage are not about protecting straight marriage, they are about anti-gay prejudice, nothing more.   The attempts to shut down liberal programs are not about saving money, they are about ending liberal programs.

Comparison of Obama vs a real socialist

Many people have falsely accused President Obama of being a socialist. 

Let's look at a real socialist country.  Specifically France, which has one of the most oppressive tax rules.

Tax rates. 

France has a high marginal tax rate of 75% (on all income over 1 million Euro)

If you live in a state like Florida with no income tax, you pay 39.6%, plus 6.2% social security for employees (39.6+plus another 6.2% from the employer - yourself if self employed) + 1.45 Medicare tax, for a total of 47.25% or 53.45% if you are self-employed

Golfer Phil Mickelson (who counts as self employed) wants to leave California, because his tax rate has risen to as high as 63%


Obama doesn't want more than a rise of 4% or so for taxes.   On a scale of 0-10 communism, with socialism as 5, that puts Obama at a 3.  

Unions

Businesses in France prefer to hire people using temporary contracts because if you have more than 49 permanent workers, a ton of nasty rules come into play.  For example, you pretty much can't fire a permanent worker.   (Source) Firing is pretty easy in America, unless discrimination or sexual harassment get involved.  I have NEVER heard of a US firm not hiring people because they are afraid you can't fire someone.  It's about firing specific people, not anyone.

Obama gets a 1/10. Pretty Capitalist.

Vacation


The French get a minimum (by law) of 5 weeks vacation a year.   (Source)  Some get as much as 8.  Four weeks is pretty standard in the developed world   In the US, two is standard, 4 is good.
Only Japan and South Korea give less than the US. (source)

Obama gets a 1/10  Pretty Capitalist.

Work Week

In France, they have a 35 hour work week.  In the US, it is 40.  We are not that far off, but we still work more.

Obama gets a 3/10. 

Health care

French Health care is universal and basically single payer, although supplemental coverage is available.   Obama care is far from it - there are lots of gaps for people to fall through, we have multiple different insurance companies.  Again, we did the minimum, not the maximum.

Obama gets a 1/10 here. 


Social Security

French Social Security starts at 62 (60 pre-2010 law), with maximum benefits at 67  The US starts at 67 (it used to be 65), with maximum benefits at 70.  The French base their system on the best 25 years,  the US on the best 35 years (which significantly lowers the value, assuming you get real raises).  The base formula (assuming full 25 or 35 years), is average salary x 50% for France (source), with a cap of  3031 euros (or $3936 given exchange rate of 0.77)  about  The base formula for the US is 90% for the first $749 you make a month, then 35% for till you hit 3768 a month, then 15% for any money above that (Source) with a cap of $2,513.

The french retirement system is far more generous, by about 50%.

Obama gets a 2/10 here.


OK, let's take a look at the scores again:

Taxes:   3
Unions   1
Vacation:  1
Work Week:  3
HealthCare 1
Social Security 2

I know, people are going to say I am comparing America to France, not Obama to France.  Obama has not made any attempt to change Unions, Vacations, Work Week, or Social Security.   As for Taxes and Healthcare, I  compared Obama's plan to France, not our current plan. 

Obama is not and never has been a socialist.  He is a liberal.  If you can't tell the difference, then you have no business being in politics.  That's like not being able to tell the difference between a Conservative and a Fascist. 

Right to counter-sue for false DMCA

The DMCA allows people to sue for copyright infringement.

The problem is it is clearly being abused.  We definitely have copyright infringement, but it is not that hard to find cases where:

1. Secondary media people suing the original artists for infringing their rights (some knowingly, some out of just plain stupidity)
2. People using the DMCA to stop political speech
3. Copyright owners mistakenly requesting their own postings be removed

Even the best people tend to make mistakes about 3% of the time.  (Microsoft's numbers for example)


So what do we do about the bad actors  - the scum that aren't doing it by mistake, but are doing it on purpose.

Well, the courts do let you sue:  (OPG vs Diebold)   But that route is expensive and by no means assured.

It also may not work at all against poor people or those that have money to spare.

I suggest a simple law - all DMCA notices must be filed with the new Consumer Protection agency.  They and only they can then forward it on to the offender.  The forwarding would normally be automatic.

If they find you have abused the system in the past, (more than 5% of your filings have been rejected), then you pay a fee to file the DMCA take down notice, refundable if the complaint is not overturned within three months.



The fee could start out at $100 for 5% bad DMCA, then double for every 5%  (i.e. at 10%, you pay $200, at 15% you pay $400, at 20% you pay $800).

For people that have placed less than 20 complaints, pretend that their total complaints are 20  (so 1 bad complaint and no other complaints count as 5% not 100%)

More important than the money, it creates a list of bad actors.  People that can not be trusted.  Make this list explicitedly admissable in court cases.

Patent reform

Recently there was an incredibly bad NYT article talking about the dearth of true invention.

It said every recent invention, with the exception of the iPhone was just incremental enhancement, not real innovation.

Which made me laugh on two counts.

First, the iPhone is the epitome of incremental enhancement, not in any way a true innovation.  It took an existing concept - the smart phone pioneered by Blackberry, and made it slightly more accessible.  It added existing ideas such as touch screen and private stores to buy apps, and was not in any way innovative.  It was stylish and well marketed, and easy to use, not a real invention.

Then it denigrated a ton of TRUE innovations, calling them incremental enhancements.


Part of the probelm was he didn't understand how many of the real invetions were created.

He thought one guy had a Eureka moment and created something out of nothing.  Not true.  Almost all inventions - even those we give full credit to one guy - are incremental.  (examples)

He had no idea that Marconi and Tesla were both working on the radio, both made startling discoveries.   Yes, Tesla came up with the innovative ideas, and Marconi turned them into reality.  They incremented off each other, just like the things he denigrated.  The same thing happened with cars.  Honestly, the same thing happened with wheels (rocks rolling down hill, logs rolling down hill, logs under an object, slim down midpoints of the logs to save weight, bind the midpoint to the cart,  axels + wheel)


So what makes for a real invention as opposed to just incremental enhancement.   Two distint things:

First, one of the increments is shockingly strange and trasnformative  as opposed to simply being obvious.  It might be complex, it might be counter-intuitive, but it is something that needs to be explained as opposed to being a 'duh' moment.

Second the result is transofrmative.  It does something NEW hat has no existing competition.

TV is not radio.  It does not compete with Radio.   It is NEW.

Streaming TV on the internet is just TV via a different source.  It directly competes with real TV.  It is not new.

Downloadable TV is however new.  It does not compete with regular TV or even DVDs because the speed of delivery is new.  You don't need to live near a video store to go and buy new video.

So lets talk about patent reform.

People that invent deserve patents.  People that increment don't.  They are just doing 'duh' work.  Yes, it might be hard 'duh' work - and it should not be stealable.  But they shouldn't be able to patent it.  Copyright yes, patent no.

(Copyrights prevent someone from directly copying your software.  Patents prevent someone from independently building something that does the same thing.)

One of the interesting things about this concept of invention is that it reduces the need for experts.  We don't care that your method of doing X is better or not.  That's just innovation.

We care about the experience of the purchaser.   Can he get something that he could not get before?  Note that a significant quality increase, price reduction or time reduction does count as something new.   We can probably use 10% quality, price or time change as a rough guide (as in 9% counts in some cases - determined by patent bureau). 

What would this do to our current world?

Well, 90% of software (and design) patents would vanish - but their copyrights would remain.  Apple would still sue to protect their copyrighted rounded corners instead of their patent'ed rounded corners.

 Would any software qualify?  Probably not.  That is not surprising. Software is written.  Like all other forms of writing, you should COPYRIGHT them, not patent it.

Claiming your software is patented is like claiming that no one else can write a love story because you wrote the first one.  

Post Office Closings

Recently, due in part to lack of congressional (i.e. House/GOP - the Senate/Democrats passed a bill that the House ignored) the US Post Office decided to end Saturday delivery.

Now, I don't have a problem with deciding to move from six days a week delivery to five.  It makes a lot of sense.

I do object to ending SATURDAY delivery.

If you need something right away, you next day it - or better yet, you messenger it.

The regular (First Class) mail is no longer used for extremely time sensitive materials.  It is still fairly fast, and we can expect stuff to get done in 2-3 days of work(source).

Assume for example that it takes 3 days - as in Monday mailed, arrive on Thursday.  Mailed on Tuesday arrives on Friday.  But mailed on Wednesday, Thursday or Friday (3/5 days), then there is an extra two day gap, and 3 days becomes 5 days.   If you drop it in the mailbox on Sunday, it gets there 4 days later.  If you drop it in the mailbox on Saturday it gets there 5 days later.


Net Net:  Two days a week it is 3 days, one day it is 4 days, and four days a week it is 5 days.  Average travel time is 4.28 days

Now assume that instead of ending Saturday delivery, they instead choose to end Wednesday (or Thursday) delivery.

If you drop it on any day except for Saturday, it gets there in 4 days.  If you drop it on Saturday it takes 5 days.

Net Net:  Average time is now only 4.14 days. Yes, it is only a slight gain, but you also gain consistency.


Now this does make scheduling postal employee's time more complicated.  In effect, you can't simply give them a normal work week.  But they don't get that right now.   We are not creating more complex postal work schedules, we are simply not simplifying it as much as we could.

The question is, do we want to help the postal employees service or do we want to help their customers.

The US Post Office choose to help the employees instead of their customers.

There is another issue -  Next day delivery.

UPS and Fed Ex offer next day delivery service 6 days a week (Saturday delivery is included free for FedEx, may cost additional for UPS)

So the Post Office will be providing one less day.  Clearly for Next Day service, giving up Saturday delivery is preferable to giving up Wednesday. But honestly, either way, the post off is turning itself into a second-tier player in the Next Day delivery business. 

I personally think they should have given up Wednesday.  It's better for the standard 2-3 day delivery business they are famous for, and either way they have screwed themselves on Next Day service.

Immigration Rreform

As it seems likely to pass, I want to talk about Immigration Reform.

One of the main issues is 'amnesty'.  By that, people refer to giving illegal immigrants a benefit, making it easier for them to become citizens than normal people.

I think they should be neither aided nor punished in the new legal system.  

But there are lots of things we do wrong.  Lets start with the first thing:

1. 1)  We have no guest worker program.  Look, America NEEDS cheap labor.  We need farm workers, maids, gardeners, and child care.   We typically hire immigrants to do this hard 'unskilled' labor.  So it needs to be part of the law.
2. We give special preferences to certain countries.  Pure racism.  It should be stopped.
3. We don't let in enough of the very talented workers.
4. We give special preferences to family members - not just husband/wives/children, but also brothers, sisters, etc.

I think we need to fix that.

Here are some numbers.

(Source) In 2011, we got 694,193 new citizens.  They tend to move to California, Florida, New York, Texas and New Jersey (in order)  The top five countries are Mexico, India, Philippines, China, and Colombia (in that order).   By far most are from Mexico, and by far most go to California.

To become a citizen, you must have Legal Permanent Resident status (LPR), be 18, lived here for at least 5 years (3 if married to a US citizen), speak, read, write English, pass a simple Government and History test, and have good moral character.

There are certain exceptions for legal (not biological) children of US citizens and people that served in our military.

Now let's talk a bit more about the various quota methods.

There is no quota on numbers to become citizen.  There are quotas on Legal Permanent Resident Status (Visas).

Immediate relatives (Spouse/widow/widower/children under 21 and parents of an adult citizen).   This includes step and adopted relationships.  There are NO quotas for this category.  An unlimited number of people can get in by marring.

Note children means under 21. Unmarried children means adult children.  Married children are adult children that are married

F1  Unmarried children (and their children, i.e. grandchildren)
F2  Spouses, Children and unmarried children of green card holders. 
F3 Married children (and their spouses and children)
F4  Brothers and sisters, their spouses and children.

First off all, this seems ridiculously complicated to me.  Partly because we seem to be running it as a charity, instead of a country.  Millions of people want to get into the US we should not give it out to the saddest story.    I have no idea why F2 and F4 exist.   People that are not citizens should not be granting benefits to other.  Brothers and Sisters should not get special treatment.


Next are the Employment based quotas.

Here you have:

E1  Extraordinary people  (Athletes, CEOs and other celebrity types)
E2  Professionals  (Doctors, lawyers, Scientists, etc.)
E3  Skilled workers
E4  Special (Clergy, employees of the US government, members of certain international organizations such as Red Cross, etc.)  also their family
E5  Investors  - you can buy in with a $500,000 investment.

That's about it.

OK,   lets talk about how it should work.  We should be offering 4 different types of Visas.

1. Work Card.   Anyone that is not pregnant and not a criminal.   States can put a 'foreign worker' extra tax of up to 25% on those that have it.   They last for a period of 6 months, renewable for another 6 months  - as long as you have not gotten pregnant (pregnancy test required for women - paid for by the US from fees charged to both male and female people that apply).  After 1 year, you must leave for at least 3 months, then you can return and try again.  If you get pregnant while on this, you will never be given another Work Card.  NO QUOTAS.
2. Legal Resident Card.   Usually only granted to spouses, children and parents of existing citizens or people with Professional Card or the Green Card.   Also may be granted to 'hardship cases' (i.e. you are seeking asylum, etc.)   You can only work upto 20 hours a week using this card.   If you are found working more than 20 hours a week using this card, you will never be given any other card (unless you yourself report it within the first month of it happening).  No special taxes.  NO QUOTAS
3. Professional Card.  You can't be taxed different with this.   To get it, you must qualify as what used to be the old E1,E2, E4, or E5.  Note this includes soldiers and other employees of the US government.   NO QUOTAS.
4. Green Card - old E3, F1 and F3.   Quota on how many can get this.   

Make it clear that Work Cards do not grant LPR.  Otherwise keep the same system.

Note, these changes mean that we will get a lot more extraordinarily people, and professionals.  We will have guest workers without being forced to give them citizenship.   Brothers and sisters of citizen and green card holders can apply for and get Work Cards.   Permanent Residency is a luxury item, not a charity item.

National Debt.

The National Debt is a very complex topic.   This is not surprising, the larger a monetary value, the easier it is to take small portions of it and do strange things.  If you have $1, in America, basically, the most you can do is keep it in 100 different places (in pennies), and that would be silly.  But if you have $1 trillion dollars, there are a lot of little secrets and tricks you can use.


Currently the US has an "official" national debt of just under 16.5 trillion dollars.  (source).  Not the word "official".  I will get back to it later.

The first question is:  "Is that a lot?"

It seems like a lot.  But it might not be.  If the US tax revenue was 500 trillion, then debt of 16.5 is not that much.

So lets figure out is it a lot by comparing it to other things

•  If you break it down per person, 16.5 trillion is more than $50,000 per citizen.
• The Federal government earns about 2.9 trillion a year (source)   
• The Federal government spends about 3.8 trillion a year (source)
• The current (2013 estimate) US deficit is about 1 trillion a year (source)
• It's a little bit over our National GDP, which puts us (just barely) in the top ten debtor nations (source)

So each year we add another 6% to the debt.   That is not horrible.  Obama has done a pretty good job of reducing the huge deficits that he inherited from Bush (the last budget GW Bush created was for 2009 - which he passed during 20008 - was 1.4 trillion.)

The debt is about 6 times what we earn.  That's not good.  If you earn 100k a year, then you should not get a 600k home(Mortgage Calculator), not unless you have more than  200k in down-payment.

But on the other hand, interest rates are incredibly low.  It costs the US less than 2% for 10 year, and just over 3% for 30 year.  At those rates it is almost stupid not to borrow,

But lets get back to the beginning.  Remember when I talked about "official"?  Guess why. Because a dirty little secret is that about 1/3 of that debt is debt the government itself owns.  (source)  Yes, we sell ourselves treasuries.

Specifically. the Fed itself owns $1.66 trillion.   It holds the bonds to trade.  We use it to control the interest rates.  Right now they are below 2% for 10 years and around 3% for thirty years.  The Fed is allowed to sell when it wants, or buy more.

That isn't real debt in any way, shape or form.  It's basically part of a cash advance from our credit cart that we keep in our wallet because the bank gave us a better rate if we took out more than we actually need.  Drop that 16.5 trillion down to 14.84

But wait, I'm not done.   Lots of federal agencies have extra cash and guess what they hold it in before they use it?  Yup, US Treasuries. Effectively, these are loans from our retirement plan currently being kept in our bank accounts till we actually pay the contractors that are working on our home.   Yeah, eventually we will pay them out, but the contractor is taking decades to finish the work he said would be done in two weeks.

Social Security is the big one at 2.72 trillion, but if you add up all the "Intragovernmental debt", it comes to another 4.9 trillion on top of the 1.66 held by the Fed.   That debt is kind of like Dad borrowing fro his own 401K to put in his own bank account labelled 'vacation'.  It's not real debt, it's just a way to track which agencies are owed money by the federal government.  The whole "Lock Box" idea for social security.

Subtract out the 4.9 trillion from the 14.84 and you get the real debt of just under 10 trillion dollars.

The real debt each person owes is about 33 thousand dollars, not 50k.   That's a big difference.

The real debt is about 3.4 times what we earn, not 6 times.   A person can borrow 3.4 times their salary to buy a home.  It's totally reasonable.

Is it a great situation?  No.   But given the incredibly low interest rates, it's OK. In my opinion  the federal government should be converting short term debt to 30 year treasuries as fast as it can, then let inflation go a bit.  If we did it just right, then in 5 years, our national debt would be gone.

One Trillion Dollar Coin.

First, let me talk about the obvious things.  A one trillion dollar platinum coin is not composed of one trillion dollars worth of platinum.

Similarly, a one hundred dollar bill is not made out of one hundred dollars worth of paper.  Or make that cotton, as US 'paper' currency is actually made out of cotton (plus some plastics and other synthetics).   It's called a one trillion dollar simply because that's what we engrave on it and claim it's worth.

Why a platinum coin - as opposed to say a gold one, or even a cotton/paper bill?  Because congress has put in rules and regulations affecting how much paper currency we can print and also how much gold, silver, and other coins we can mint.   But they put in a loophole to let Federal government mint any amount of platinum coins they want.

They did this to support coin collectors - both the sane ones doing it as a hobby with minor investment potential and the insane 'PUT YOUR MONEY IN GOLD AND PRECIOUS METAL!  THE WORLD IS ENDING!!!  NOW!"  Glen Beck people.


Done with the basics, now let's talk about the results of doing this.


Inflation.

Lots of it.

That's why congress put limitations on printing currency in the first place.


Is it an option?  Yes.  It is even a legal one.  Would I personally recommend it?  YES.  Will the president do it?  He said no.

America has had a huge period of low inflation.   For the past 70 or so years we avoided deflation entirely, but for the past 30 years we have had almost no inflation.  This is in fact one of the reasons why we had the housing problem.  If we had had some nice standard 10% inflation in 2005, 2006, and 2007, then houses would have gone up in value.  They could have sold most houses for more than their worth and the housing crisis would not have happened.

More importantly, inflation has been relatively low (see chart below) since the 1980's.   Our economy could definitely deal with a short period of inflation.   It might even be good for it.  Yes, some people are hurt by inflation (all those on a fixed income or who have most of their money tied up with long term fixed low rate securities).  But at the same time, many would benefit - for example those who have long term fixed rate debt (i.e. 30 year fixed rate mortgages).  Full disclosure - I have a 30 year fixed rate mortgage.

Is it going to happen?

NO.

Obama announced he won't.  A foolish move on his part - he should have used it as a threat to get the GOP will cave.

Why? Because the GOP loves the wealthy and the wealthy have a lot of their money tied up in the long term fixed rate securities.   They also don't want to piss off the elderly, as they have already screwed up with failed attempts to 'fix' social security.

So Obama should have threatened the GOP and they would have caved.  Because it is exactly the kind of threat the GOP would like to use against the DNC.  Which also makes it is exactly the kind of threat they would bow down to.