Thursday, September 30, 2010

Reliable Net Worth Numbers?

It's difficult to analyze the average person's net worth because most of the data comes from informal surveys. In a way, it's like asking people how many times they have sex--chances are, they're going to focus on the good times and give you a higher number.

Anyway, here is one link that leads to a compilation of net worth numbers. CNN's money calculator indicates that most people making $120K a year have a $301K median net worth. When you examine the retirement account numbers below, a $301K net worth seems high, but perhaps not so unusual for a two-income family on either coast who bought their home more than ten years ago.

Bonus: according to EBRI, "More than half (56.4 percent) of those owning at least one IRA had less than $25,000 in them in 2008."

The average IRA account balance in 2008 was $54,864. Because the EBRI IRA database can aggregate multiple accounts held by one individual, the new EBRI analysis also finds the average IRA individual balance (all accounts from the same person combined within the EBRI IRA database) was significantly higher, at $69,498.

The median IRA account balance was considerably less: $15,756 per account and $20,046 per individual. Median levels mark the mid-point (half above and half below) and are less affected by outlier data.

Elsewhere on EBRI, they report that at "year-end 2007, the average account balance in the EBRI/ICI database was $65,454, compared with $61,346 at year-end 2006. 401(k) account balances varied with participant age, tenure, and salary. Individuals with account balances of less than $10,000 were primarily young workers or workers with short job tenures. In contrast, those with account balances in excess of $100,000 were primarily older workers or workers with longer job tenure."

Median 401k balances are harder to come by. According to EBRI and the Investment Company Institute, at the end of 2007, someone in his/her 50s making $60,000 - $80,000 had a median 401k balance of $160,324 and someone in his/her 50s making $80,000 - $100,000 had a median balance of $226,266.

It appears almost all Americans have most of their net worth in their homes.

Wednesday, September 29, 2010

David Walker, Fiscal Hero

David Walker, former comptroller of the United States, on gerrymandering: out of the 435 House of Representatives' seats, only 60 seats have any real competition. We are not a true representative democracy/republic. We need to consider political districts, campaign finance reform, and open primaries. We may also need to look at term limits.

(Elsewhere, Mr. Walker has recommended electing members of the House of Representatives to four-year terms instead of the current two-year terms to minimize 24/7 re-election efforts. He would also limit the tenure of Representatives and Senators to 12 to 18 years and even suggests electing Presidents to a single 6 or 8-years term.")

Another (paraphrased) gem, on the so-called Social Security trust fund: government uses terms in its own way, outside the Merriam-Webster definitions. For example, take "trust fund"--you can't trust it, and it's not funded.

Bonus: from Walker's book, Comeback America (hardcover, page 121): "we must realize that corporations don't really pay taxes. Rather, they pass along any tax, in the form of higher prices to consumers, lower wages to workers, and/or lower returns to shareholders."

Tuesday, September 28, 2010

True Patriots Don't Suffer from Blind Allegiance

I love good police officers. Good, honest cops are essential to a civilized, well-functioning society. It's the bad cops I despise--and it continues to astound me when normal people defend bad cops, as if wearing a badge is a license to do harm.

To anyone who has raised issues with corrupt police officers, only to have someone say, "Why are you criticizing the police? Don't you know they risk their lives every single day?"--I offer the following handy response:

I apologize. Any criticism of police officers, even the worst ones, is unpatriotic. Unlike mine workers, loggers, taxi drivers, pilots, construction workers, and farmers--all of whom have higher job fatality and/or injury rates--police officers risk their lives every single day.

In any case, don't assume that respect is a two-way street. Like any abusive relationship, you should not complain publicly, even if someone has done something unethical, wrong, and indecent.

Before you say anything else, remember this: America was founded on blind allegiance to executive authority. The founders clearly envisioned a country where citizens would be unable to use their free speech rights to criticize the government. I question how you were able to graduate high school without learning these basic facts about our country.

Now, the person on the other side has three options: one, say he didn't mean what he actually said, in which case you thank him for his clarification; two, he gets upset and starts calling you names, in which case you win by default; and/or three, he protests your use of sarcasm, in which case he is just protesting style, not substance.

Monday, September 27, 2010

Journalism Lives at SCU Magazine

Sam Scott has written an excellent article in SCU Magazine (Fall 2010) about how one man saved the internet. More HERE.

[W]hat he finds is a gaping hole in the very pipes connecting computers across the Web—a weakness so fundamental that the security of practically everything online seems suddenly at risk. “At first I thought I must be missing something,” Kaminsky says, looking back. “I thought, ‘This can’t work—because if it worked, the Internet would be in so much trouble.’ Then it worked.”

Great story.

Saturday, September 25, 2010

On the History of American Religious Tolerance

I found this interesting article on

From the earliest arrival of Europeans on America’s shores, religion has often been a cudgel, used to discriminate, suppress and even kill the foreign, the “heretic” and the “unbeliever”—including the “heathen” natives already here. Moreover, while it is true that the vast majority of early-generation Americans were Christian, the pitched battles between various Protestant sects and, more explosively, between Protestants and Catholics, present an unavoidable contradiction to the widely held notion that America is a “Christian nation.”

Read more:

Bonus: interesting article about Roald Dahl.

Friday, September 24, 2010

George Soros: an Amazing Lecture

I recently discovered one of the best lectures ever. It's by George Soros and titled "Capitalism vs. Open Society." You can read the transcript HERE.

On Free Markets and Morals: "The distinguishing feature of the market mechanism is that it is amoral: one person’s dollar is worth exactly the same as another person’s, irrespective of how she came to possess it. That is what makes markets so efficient: participants need not worry about moral considerations. In an efficient market, individual decisions affect market prices only marginally: if one person abstained from participating as either buyer or seller, someone else would take her place with only a marginal difference in the price. Therefore individual market participants bear little responsibility for the outcome. But markets are suitable only for individual choices, not for social decisions..."

On Government Interference: "[T]he main policy implication of market fundamentalism, that government interference in the economy should be kept to a minimum, is not as unsound as the arguments employed to justify it. The market mechanism may be flawed but the political process is even more so. Participants in the political process are even more fallible than market participants because politics revolve around social values whereas markets take the participants’ values as given. As we have seen, social values are highly susceptible to manipulation. Moreover, politics are poisoned by the agency problem [Agents are supposed to represent the interests of their principals, but in fact, they tend to put their own interests ahead of the interests of those whom they are supposed to represent]. To guard against the agency problem, all kinds of safeguards have to be introduced and this makes the behavior of governmental authorities in the economic sphere much more rigid and bureaucratic than the behavior of private participants. On all these grounds, it makes sense to argue that governmental interference in the economy should be kept to a minimum. So market fundamentalism has merely substituted an invalid argument for what could have been a much stronger one. It could have argued that all human constructs are imperfect and social choices involve choosing the lesser evil, and on those grounds government intervention in the economy should be kept to a minimum. That would have been a reasonable position. Instead, it claimed that the failures of government intervention proved that free markets are perfect. That is simply bad logic."

Thank you, Mr. Soros. This lecture was amazing.

Update on 6/3/12: from Sebastian Mallaby's 2010 book, More Money than God:

"By now Soros had melded Karl Popper's ideas with his own knowledge of finance, arriving at a synthesis that he called 'reflexivity.'  As Popper's writings suggested, the details of a listed company were too complex for the human mind to understand, so investors relied on guesses and shortcuts that approximated reality.  But Soros was also conscious that those shortcuts had the power to change reality as well, since bullish guesses would drive a stock price up, allowing the company  to raise capital cheaply and boosting its performance.  Because of this feedback loop, certainty was doubly elusive: To begin with, people are incapable of perceiving reality clearly; but on top of that, reality itself is affected by these unclear perceptions, which themselves shift constantly.  Soros had arrived at a conclusion that was at odds with the efficient-market view...To a disciple of Popper, this [EFM] premise ignored the most elementary limits to cognition." (pp. 85, hardcover edition)

Update on November 9, 2019: I learned Soros supported dissident groups Charta 77 in Czechoslovakia and Solidarity in Poland. Vaclav Havel was one of Charta 77's founders. 

Thursday, September 23, 2010

American Teachers: World's Best PR Operation?

The following status update caused quite a discussion:

If you can't understand basic economics, can't compete against international students in math and science, and think that bigger government can solve our problems, thank a California K-14 teacher.

P.S. students in India, Israel, China, Iran, and Eastern Europe can't wait to compete with you.

EzD: That's a pretty wide brush. I used to be a teacher (not in CA, admittedly) and know that there are plenty of great, bright motivated teachers that find themselves fighting against the District offices and our awful myopic focus on standardized tests. It's not always (or even most of the time) the teacher's failure that causes our educational issues.

SlW: I've been put through the system in Poland (K-5), Germany (6-7) and Canada (9-12). The math I was taught in grade 9 in Canada I already knew in grade 5 from Poland. really sad...

JA: And that's why I attended private school most of my life.

TrB: I agree with SlW--after I returned from 3 years in Germany I got to "coast" for a couple years while the rest of the kids caught up to where I was at. Sad.

MaR: @EzD: no one said that teachers don't work hard or that there aren't any bright teachers. At the same time, it's easy to see that our public school system is failing students when it comes to basic knowledge, especially in math, economics, and science.

(By the way, I was doing a riff on the more common quote, "If you can read this sentence, thank a teacher.")

EzD: My first year of teaching, on my first day I had 36 students, 34 sets of books and 33 desks. We don't set our teachers up to succeed any more than we do our students.

DaC: Why blame everybody and the system when the fault lies with the students themselves. What with the WII and PS3 and modern day toys, does anybody really focus on school. Kids can't wait to get home and play. Parents need to enforce stricter ground rules for the kids also.

RoW: the teachers can only work with what they are given. My dear friend is a third grade teacher and often finds herself spending her own money on school supplies when she is short. She also has to buy snacks/meal substitutes because so many kids get sent to school hungry. If they can't focus because the are starving, they aren't learning.

MaR: I'm not surprised kids don't have sufficient resources. 80 to 85% of the education budget goes into the pockets of teachers and administrators. More here.

ScL: Well, you just hit the nail. It's the same thing killing the university system as well. Bureaucrats and Administrators are a metastasizing cancer that starve the rest of the system of resources but the same can be said of government and large banks. Add in a general unwillingness for an objective rating system for teachers and the whole thing's hosed.

NiP: This was a complaint about PS when I was growing up in Chicago. My parents made sure we were challenged by giving us extra homework. "Not all parents are equipped to do that," you counter. True, but there are all sorts of after school help parents can get for their children, some of it free. Some effort needs to be made to help the teachers teach the students, including imposing some home discipline and a good night's rest.

EzD: Heh, I think you have this image of teachers as being overpaid. Strangely, I (and I think a lot of other folks) have a different experience. I make more working at a small non-profit than I ever did teaching. It may very well be that administrators & union folks are rolling in dough, but I don't see anyone getting rich from teaching. Hardest job I ever had, and second isn't even close.

NiC: Teachers should be paid more, the school year should be longer, and there should be less administration.

MaR: @EzD: you mentioned you did not work in California. In California, teachers are adequately compensated. "According to the CTA's parent union, the National Education Association, California teachers were the nation's top-paid, with $64,424 average annual salary in 2007-08." See here.

Teachers also receive special benefits including pensions, lifetime medical benefits, and job security. If teachers agreed to switch to a private sector retirement plan (i.e., a 403b plan), we could pay them even more. However, as long as teachers receive millions of dollars on the back end (i.e., when they retire), we cannot afford to increase the salaries of newer teachers. I guess we care so much about children we don't mind paying newer teachers less money so we can pay millions of dollars to retired, non-working teachers.

EzD: True, I taught in New Orleans and was not so well paid. Does that job security you list in the benefits include the mass pink slips that districts up & down the State are sending out?

The real reason our system is hosed? Prop 13. If we got rid of Prop 13, our schools would almost instantly improve.

NiC: Really, more taxation is the answer??? Houses can't sell as it stands now. Higher taxes is not the answer. How about not wasting the money we already send to the schools. I agree with MaR.

MaR: @EzD: again, the reason newer teachers are receiving pink slips--which were canceled after states received $26 billion in emergency federal aid--is because we are spending millions of dollars paying retired teachers who no longer work. Until the day money grows on trees, we have to decide between paying millions of dollars to retired teachers or paying millions of dollars to newer teachers. California, much to my chagrin, has decide to focus on retired teachers at the expense of newer teachers.

Also, Prop 13 has been a boon to California's middle class (not just the rich). People who support the repeal of Prop 13 support taking money from the private sector middle class and giving it to government employees and unions. It's hard to sympathize with such an approach when the private sector middle class is experiencing major unemployment and financial difficulties.

AnL: You're tough!

MaR: you think I'm tough? Listen to Chuck Thompson:

"And, yes, poor unappreciated teachers. I did say sweet deal. American public school teachers have the world's best PR operation going. Whining every chance they get about how demanding their jobs are, how many 'extra hours' they put in, how little they make, how much of their own money they have to spend just to do their jobs, how noble they are working this job that nobody ever asked them to do--welcome to the f*cking world...

You think you got it tough? You don't got it tough. American teachers would crumble if they ever had to work the real hours of a cabbie, doctor, bartender, fisherman, truck driver, small-business owner, hotel clerk, mechanic, architect, janitor, musician, surveyor, accountant, or the million other jobs that don't observe weekends, much less every city, county, state, and federal holiday on the docket, almost three months' paid vacation a year, and pension programs funded out of the public trough. How is it we go through school painfully aware that half our teachers are lazy or incompetent or pathological control freaks, then turn around and let them convince us what a bunch of saints they are as soon as we become taxpayers?" (p. 100, Smile When You're Lying)

ZiL: I did K-6 (and some college) back in the old country [Poland]. And yes, the curriculum there was more demanding, esp. in mathematics. But their system sucked (and continues to suck) in many other respects, such as lack of individualized attention and a complete disregard for psychosocial development.

MaR: I agree that psychosocial development and academic aptitude are not contradictory goals, but thus far, our schools have been artificially boosting children's self-esteem with their low standards. From my perspective, families should provide self-esteem, and schools should focus on teaching viable skills so students aren't required to work for the government to enter the middle class.

One could almost describe our current education system as a scam. If schools teach most kids no marketable skills for 18 years, it forces them to rely on the government for jobs. As a result, most kids become adults who are forced to vote to expand government, which means teachers and government unions get even more money...for teaching kids no viable or useful skills.

Wednesday, September 22, 2010

Gerrymandering Killed the Political Process

Dan Walters, SJ Merc, 9/18/10: "Just one of California's 53 congressional districts has changed partisan hands since they were redrawn in a bipartisan gerrymander by the Legislature after the 2000 census."

I guess it's not how you vote or who you vote for, but where you live...

Tuesday, September 21, 2010

I'm Just Sayin'

D.C. Democrats tend to do okay, because the federal government can print money. States, unlike the federal government, cannot print money and must balance their budgets each year. Right now, the only reason many states are able to survive without massive cuts in services and layoffs is because the federal government has loaned them billions of dollars.

If your economic strategy is tax-and-spend, i.e., using tax dollars to create government jobs and to increase services, you have to make sure the private sector can generate enough revenue/taxes to support government employees and their salaries and benefits. In other words, if you want a bigger government, you have to make sure you can pay for it, which means you should also support a larger, more successful private sector. However, most people who favor bigger government want more regulation and more restrictions on corporations and businesses, which usually lower the government's revenue and therefore its growth.

Apparently the Swedes have found an economically-viable balance: high taxes and a strong private sector. They're like libertarians that don't mind high taxes because they see their taxes being used effectively. (Indeed, Sweden has one of the best education systems in the entire world.) California Democrats, on the other hand, don't seem to understand basic economics: they continue to restrict the private sector--i.e., the people paying their bills--even as they demand more government. It's like a child telling his parents not to work and instead demanding that they stay at home and take care of him. It might work for a while, but after some time, the child will be homeless and destitute, perhaps regretting the decision to restrict his parents' time and efforts. Right now, though, California seems happy to have major industries leaving the state and choosing to hire elsewhere. It remains unclear how the state is going to pay for the bigger government it wants.

Bottom line: if you vote for a pro-union, pro-regulation Democrat without having a financial printing press ready to go, it's like having sex without a condom--stupid and unsafe.

Michael Lewis Goes Greek

Michael Lewis always delivers. He's easily my favorite magazine writer. Below is a link to his article on Greece:

My favorite sentence from the article: "In Greece the banks didn’t sink the country. The country sank the banks." Mr. Lewis also quotes the ancient orator Isocrates: “Democracy destroys itself because it abuses its right to freedom and equality. Because it teaches its citizens to consider audacity as a right, lawlessness as a freedom, abrasive speech as equality, and anarchy as progress.”

Bonus: if you haven't read Mr. Lewis's article on article on Iceland, you are missing out.

Monday, September 20, 2010

Meg Whitman is Telling the Truth

Meg Whitman is telling the truth when it comes to Jerry Brown and taxes. According to, "state taxes...increased during four of Brown’s eight years, and during six of those years they were higher than before he took office. But they were lower during his final two years."

For me, the bottom line is fixing structural long-term deficits, and Meg Whitman has shown more willingness to do that than Jerry Brown. One measuring stick is government employee pensions--does a politician wants to reform government pensions, or does s/he want to maintain the current pension system?

By the way, some of the anti-Meg literature seems counter-productive. I received a 9/23/10 letter from a Consumer Attorneys Group with the following line: "Meg Whitman has a plan--to change California to be a world without [civil] lawyers." Does the pro-Brown camp really want to align themselves with lawyers? When large organizations of civil lawyers support a candidate, it usually means the candidate supports greater regulation of businesses, including small businesses.

Bonus I: Allow me to explain how our federal government works. To begin with, by the federal government I mean Democrats and Republicans working together. And the only thing dumber than a Democrat and a Republican is when those pr*cks work together. You see, in our two-party system, the Democrats are the party of no ideas and the Republicans are the party of bad ideas. It usually goes something like this. A Republican will stand up in Congress and say, "I've got a really bad idea." And a Democrat will immediately jump to his feet and declare, "And I'm gonna make it sh*ttier." -- Lewis Black

Bonus II: “I am not a Democrat, because I have no idea what their economic policies are; And I am not a Republican, because I know precisely what their economic policies are.” -- Barry Ritholtz

Bonus III: "If the choice is between a crackpot, small government conservative or a tax and spend, nanny-state liberal, I’ll choose the crackpot every time." -- as seen on message board

Saturday, September 18, 2010

Abraham Lincoln

With malice toward none; with charity for all; with firmness in the right as God gives us to see the right, let us strive on to finish the work we are in, to bind up the nation's wounds; to care for him who shall have borne the battle and for his widow and his orphan; to do all which may achieve and cherish a just and lasting peace among ourselves and with all nations. -- from Abraham Lincoln's Second Inaugural Address

Donate to Pakistani Relief Efforts

If you are looking to donate to Pakistani relief efforts, check out the following link:

IRC seems to be providing much-needed help all over the world.

Friday, September 17, 2010

California's Budget Mess: Blame the Stock Market

A must-read for anyone interested in the reasons behind California's budget mess:

An excerpt: "[E]veryone related to California's pensions must have known for quite some time that the underlying assumptions were way too high. Yet, absurdly, when someone tried to correct these obviously broken assumptions, he was kicked out [by Democrats]."

My kingdom for a fiscally-sane Democrat or a socially-sane Republican. Sigh.

Bryan Caplan on Immigration

Bryan Caplan has an interesting post on immigration here.

Thursday, September 16, 2010

American Dollar: Fallin' since 1971

The New York Times chart above shows the American dollar's relative value. As you can see, a dollar just 30 or 40 years was worth much more in the international marketplace. I am willing to bet if you asked most college graduates how much the American dollar has been devalued since 1971, almost no one would know.

I wish high schools would teach Americans basic statistics and macroeconomics, but with teachers' unions and religious fundamentalists influencing the academic curriculum and refusing to adapt to the 21st century, I don't see much change on the horizon.

Here's a basic tip: when analyzing economic data, you cannot rely on one set of numbers. For example, if someone shows you a chart of income growth rates, such data is meaningless without also evaluating inflation rates during the same time periods. More specifically, if your income rises 3% but inflation rises 4%, you are worse off than if your income rises 2% but inflation rises 1%. That's another interesting question to ask a high school senior--whether you are better off under the former or latter scenario. Again, I bet most of the high school seniors would answer incorrectly.

Wednesday, September 15, 2010

Random Thoughts

1. In most cases, the single most important factor in keeping a marriage together is keeping the primary breadwinner employed.

2. I read the following line in a review of the German film, The White Ribbon: the main character is "an intellectual whose pursuit of the truth is enabled by the inability to change anything." It made me stop and think about the possibility of an inverse relationship between power and truth.

3. I was playing chess in Campbell, and my opponent gave me the following gem: "In the old days [before cell phones, email, etc.], it was harder to communicate, but easier to understand each other. Now, it is easy to communicate but harder to understand each other."

4. If you like action flicks, you should see the Korean film, The Good, the Bad, and the Weird (2008). The plot involves a treasure hunt where a cowboy, gangsters, the Japanese military, and various thieves are all after the same prize. Lots of fun.

5. I recently discovered Republican Chuck Hagel. Along with Ron Paul and Richard "Dick" Armey, he appears to be a true Republican. When he was Senator, he questioned George W. Bush and the Patriot Act, stating, "I took an oath of office to the Constitution. I didn't take an oath of office to my party or my president."

Tuesday, September 14, 2010

CTA Issues Press Release from Fantasyland

Prior to losing millions of dollars in federal aid because it refused to accept educational reforms, the California Teachers' Association (CTA) had issued a hilarious press release (see here). I couldn't help but laugh at this line: "It's alarming that the president wants to focus on a competition system that creates winners and losers." Are you kidding me? Welcome to the real world, CTA. The 88% of schoolchildren who don't end up working for the government will eventually enter a system that creates winners and losers. Sheltering students from reality or protesting methods that evaluate academic progress doesn't help anyone.

Also, when teachers' unions view the public's desire for accountability as a threat, something is obviously wrong with our educational system. No one but California teachers would ever dream of accepting $50 to $62 billion each year and then crying foul when taxpayers want to see results.

I never thought I'd see a Democratic president stand up to the teachers' unions in my lifetime. Thank goodness President Obama cares more about children than teachers' unions.

Bonus: most people don't know that most California teachers are adequately compensated. See here:

According to the CTA's parent union, the National Education Association, California teachers were the nation's top-paid, with $64,424 average annual salary in 2007-08...Because of its huge student population and its high-priced teachers, California spends 44 percent more on K-12 public education than does Texas, the next highest-spending state, $59 billion versus $41 billion.

Tenured teachers also receive unique benefits including pensions, lifetime medical benefits, and job security.

Monday, September 13, 2010

USA Today on Immigration

USA Today's Darrell M. West on immigration:

One study found that 25% of all the technology and engineering businesses launched in the USA from 1995 to 2005 had a foreign-born founder. In Silicon Valley, that number was 52.4%.

If you live in a middle-class or affluent area of Silicon Valley, you probably owe much of your good schools, steady home prices and safe neighborhoods to highly educated immigrants from the Middle East, Asia, and Southeast Asia.

Sunday, September 12, 2010

Keynes on Capitalism

I don't know if Mr. Keynes actually said this, but the quote is too good not to share:

“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.” —John Maynard Keynes

Mr. Keynes seems to forget that neither regulation nor socialism will reform wicked men. As I've written before, effective capitalism requires mutual trust to be effective. In short, the best economic systems are as honest and transparent as possible. It is possible to have capitalism that is transparent and honest, and that kind of economic system should be our goal--not simple-minded socialism or cuckoo conservatism.

Thursday, September 9, 2010

Teachers' Unions: Running California Politics?

Do you have any idea how much California spends on education? Where does all that money go? If you're not sure, keep reading--you might be surprised.

The California Teachers Association has been the largest individual lobbyist in California over the last decade and has spent more than $200 million on campaign contributions and lobbying efforts.
From California's Secretary of State website, which apparently stopped publishing these reports in 2005-06.
Teachers' unions have also been effective lobbyists at the federal level. Unions have received federal money for 400,000 jobs. According to the White House, "Additional federal aid targeted at preventing [teacher] layoffs can play a critical role in combating the [economic] crisis. Such aid would be very cost-effective. There are no hiring or setup costs...The American Recovery and Reinvestment Act of 2009 included some of this aid for 2009 and 2010. The recipient reports filled out by states and school districts show that, last quarter, Recovery Act funds supported more than 400,000 education positions. (White House blog, June 12, 2010)

August 11, 2010: the gravy train continues for unions, even as the private sector continues to bleed jobs--"
The [$26 billion] legislation would funnel $10 billion to school districts to rehire teachers who were laid off, or prevent additional cuts just before the school year begins. Advocates estimate the money would keep more than 160,000 public education positions." More here.

Being one of the largest individual lobbyists in California has its rewards:

"In 2007, more than four-fifths (82.9 percent) of statewide spending for schools went to pay for the salaries and benefits of teachers and other staff."

From a California Dept of Education affiliated website (Jan 2010, "Teachers in California"): "Although there is some variation, expenditures on salaries and benefits for all employees typically make up 80 to 85% of a district’s budget, with the bulk of it going to teachers." More here. [Note: Ed-Data website no longer allows a direct link to the aforementioned statistics; for now, go to link and search for "Teachers in California" link.]

"According to the CTA's parent union, the National Education Association, California teachers were the nation's top-paid, with $64,424 average annual salary in 2007-08." More here.

From State of California website: "California ranks almost last in student achievement." "California has the highest average teacher salary of any state in the country." ( [Added May 9, 2012]

"Because the termination process requires years of documentation, it not only is costly but it also seldom works – 91 teachers have been dismissed over 10 years in the entire state. Of those dismissals, 19 were based on unsatisfactory performance, while the vast majority were for egregious conduct." [Added August 1, 2014, from CS Monitor, "Vergara v. California," by Daniel B. Wood, 1/28/2014)]

As a result of Proposition 98, California is legally required to use a large portion of the growth in General Fund revenues for K-12 education. Basically, Prop 98 forces California to use at least a certain percentage of its revenue for education, even if California needs funding for other projects, and even if it constrains funding for other portions of the state's budget. Prop 98 passed (barely) with a 50.7% vote and amended the state Constitution, Article 16, Section 8. Here's subsection (a):

From all state revenues there shall first be set apart the moneys [sic] to be applied by the State for support of the public school system and public institutions of higher education.

Post-Prop-98, California tends to direct about half of its General Fund towards education. How much are we talking about in overall K-12 education spending? Total funding for K-12 education was projected to be $68.5 billion in 2008-09. For fiscal year 2006-07, K-12 funding was $55.1 billion. Again, 80 to 85% of this money goes into district employees' salaries and benefits, with the bulk of it going to teachers.

California state generally provides about 61% of total K-12 funding. The federal government provides an additional 11% and local property taxes provide another 21%. (See here.) (Update in 2019: lottery revenues now provide over a billion dollars each year.)
Seen June 2019 in California supermarket.
By the way, how's your 401(k) doing? Worried about your retirement? California's government employees don't have to worry so much. CalPERS has approximately $200 billion for their retirement. In addition, public school teachers have their own pension fund called CalSTRS. As of September 2009, CalSTRS was the second largest public pension fund in the United States and is currently the seventh largest public pension fund in the world. [CalSTRS had assets of $154.6 billion as of May 31, 2011--and is still underfunded by tens of billions of dollars.] Like it or not, you and your children will be paying for California government employees' safe jobs and safe retirements. And if the pension fund managers make mistakes or turn out to be Bernie Madoffs, too bad--you're going to make up the difference, because taxpayers are ultimately on the hook for every penny of government employee pensions.

[For more on California politics and government unions, click HERE (detailed article by Troy Senik, Fall 2009) and HERE (chart).]

What's the problem with having teachers' unions control such a significant portion of California's tax dollars? First, teachers lack a system and culture of accountability. Even the worst teachers can stay employed until retirement, and there isn't much anyone can do about it. Meanwhile, in the private sector, employees cannot typically under-perform for long and retain their jobs.

Second, teachers receive benefits far beyond what is necessary to retain or motivate them. After 25 years, California teachers can retire and receive annual pensions of $69,000. As of 2010, if you or I wanted to receive a stable $69,000 a year in retirement, we would have to save at least a million dollars in 25 years--and we're not even including the costs of the lifetime medical benefits some government employees receive (Note: for teachers, medical benefits can vary based on individual school districts). In short, we are overpaying tenured teachers, especially retired teachers, and we do not have the money to be so generous. To make matters worse, the cost of paying retired teachers is so staggering, we cannot afford to pay newer teachers higher wages. As a result, many new teachers quit within five years.

Third, Americans used to understand that union and government jobs were favors given to family members or politically-connected people. The Boston Irish, for example, used to joke that police jobs were "Irish welfare." Things haven't changed much. Unions and the government hire people they know and like, and in my experience, the testing and interview processes are mere procedure and show. (The government can score your interview responses however they like, while giving minimal weight to an initial objective/multiple choice test.) Nothing will change until government hiring becomes transparent and more objective. Until then, a vote for a California Democrat or pro-government-union candidate is a vote for non-accountability; a two-tier employment system where government employees get better benefits than non-government employees; and overly subjective hiring practices.

Michael Moore can talk all he wants about his idyllic youth and the union jobs that created the Michigan middle class. What he doesn't tell you is that back then, a hamburger, fries, and soda cost 85 cents and a gallon of gas was about 32 cents, so it was possible to create a middle class at very little cost. These days, public sector unions are running a tab of trillions of dollars, much of it borrowed from future generations of Americans, i.e., children.

Americans need to understand that the greatest threat to American prosperity isn't necessarily a foreign one. Most empires collapse because of overreach and inflation, which is usually caused by excessive government spending and borrowing. As Arnold J. Toynbee once said, "Civilizations die from suicide, not by murder." We would do well to heed Toynbee's sage words. Our respect for educators, firefighters, law enforcement, and other government employees is causing us to commit fiscal suicide. Surely we can provide essential services without bankrupting our children. Thus far, however, we've been unable to strike the appropriate balance.

Bonus: from Joel Klein, The Atlantic, June 2011:

[C]onsider the financial burden that comes with providing lifetime benefits. Given the time between first putting aside the money to fund such a “long-tail exposure” and having to begin paying it, the amount “reserved” by the employer necessarily depends on a host of imprecise assumptions—about the rate of return that the money invested in the pension fund will earn, about how long employees will live, and even about how much overtime employees will work during their last few years, which is normally included in calculations of the amount of the pension. Each dollar set aside this year to cover the ultimate pension exposure must be taken from what would otherwise be current operating dollars.

Consequently, elected officials have had every incentive to make extraordinarily optimistic assumptions about the pension plan—or to simply underfund it—so they can put as little as possible into the reserve. Unfortunately, but predictably, that’s exactly what has happened: most states “assumed” they would get an average 8 percent return on their pension reserves, when in fact they were getting significantly less. Over the past 10 years, for example, New York City’s pension funds earned an average of just 2.5 percent. Now virtually every pension plan in America that covers teachers has huge unfunded liabilities. A recent study by the Manhattan Institute estimated the total current shortfall at close to $1 trillion. There’s only one way to pay for that: take the money from current and future operating budgets, robbing today’s children to pay tomorrow’s pensions.

Update in 2017: a more recent post on this issue is HERE.

Update on April 2017: "61 percent of budgetary expenses are related to instruction, followed by 35 percent for support services, 4 percent for food services, and less than 1 percent for enterprise operations. Trying to infer salaries... is tricky, because salaries and benefits will be reflected across the categories, appearing in instruction, support services and enterprise operations. Generally speaking, a school district spends between 80 and 85 percent of its entire budget on salaries and benefits, meaning only 15 to 20 percent remains to address all of the rest of the budget’s priorities and needs... Salaries account for 67 percent of the budget, followed by 22 percent for employee benefits, meaning that school districts have spent close to 90 percent of their instructional budget on staff and benefits."  (From AASA.)

Wednesday, September 8, 2010

An Ideal Place

I'm just thinking out loud today. As an immigrant, I don't have deep roots in any country or particular place. Consequently, while others say that they'd never move out of a particular place because their family has been there for generations, I am more geographically open-minded. I often think about what my ideal place would be, and I've come up with a basic list of its characteristics:

1. 5 mins (by car) near a YMCA.

2. 5 mins (by walk) near a small park with a basketball court.

3. At least two Vietnamese/pho restaurants.

4. A community college or university within 30 mins that has a good speakers series.

5. Little to no natural disaster risk.

6. A diverse age demographic.

7. Little to no air pollution.

8. Low crime rate.

9. Reasonable prices for a 3 bedroom, 2 bathroom, 1200 to 1500 sq ft house.

10. Located in a county that voted for President Obama in the 2008 election. I am not a registered Democrat, and I did not vote for President Obama in the national election; however, I prefer to live in a county where a majority of people rejected Sarah Palin's brand of conservatism and the Iraq war.

Additional considerations: a Dave and Buster's nearby would be nice.

It appears that Minneapolis, MN and Milwaukee, WI are two major cities that meet my criteria. Columbia, MO also meets my criteria. Newark, CA might make the list if housing prices deflate. (Some places within Newark, CA appear far enough from the Hayward Fault Line.) Others have suggested Lawrence, KS and Bloomington, IN. There must be a city in Iowa that meets my criteria, but I can't seem to find one that is safe from natural disasters. If you have other suggestions, please post a comment.

Tuesday, September 7, 2010


Most people know about the EFF, but what about CalAware? Kudos to them for helping keep California government open and transparent.

Sunday, September 5, 2010

Michael Moore's Capitalism

Michael Moore, from the movie Capitalism (3/5 stars):

In the land of the brave, nothing works better than good old-fashioned fear.

When it comes to acerbic wit, Mr. Moore is quite good.

Saturday, September 4, 2010

Funny?: Getting Kicked in the Gonads

If someone takes the time to post an insightful comment, I usually check out his or her profile. If I'm lucky, the profile will lead me to the commenter's blog. Here's an interesting blog post from "Matt," who appears to be Indiana-based. I'm going to share one of his funny Q&As with you:

What does being kicked in the balls really feel like?

Like being kicked in the balls. To those who know, no explanation is necessary. To those who do not know, no explanation is sufficient. I won't claim women are incapable of experiencing comparable pain (you'd NEVER get me to go through childbirth!) but there's really no adequate frame of reference to _explain_ the feeling more specifically than "it hurts. A lot. Way more than you'd think it would. Be glad YOUR gonads aren't hanging around outside your body, OK? Evolution wants us to protect them even slightly more than it wants us to _survive_, so when we fail to do so, it punishes us."

Original Q&As here (Warning: no pictures, but probably NSFW).

Friday, September 3, 2010

Movie Recommendation

If you're looking for a movie to watch this weekend, consider 2009's The Art of the Steal. It's about what happens when a man's principles confront financial issues, politicians, and the law. My hero Julian Bond participates in the film.

"One man's conspiracy is another man's political consensus." -- from The Art of the Steal

Funny: Chain Emails

The British seem preternaturally blessed with wit, and the following two email chains prove it:

Hilarious stuff, isn't it? I liked the first one more than the second one--the second one seemed more mean-spirited to me, even though I know it's all fake.

Thursday, September 2, 2010

Update on Brocade

On July 23, 2010, I wrote: "I own Brocade (BRCD) shares. As of July 23, 2010, Brocade is my largest individual stock holding." The original post is HERE

On July 23, 2010, BRCD was trading around 5.03. BRCD declined further over the next few weeks, dropping to around 4.70. I continued to buy on the way down, even as I doubled my workout routine to deal with the stress. 

On September 2, 2010, BRCD went up to 5.64. I sold most of my shares around 5.57. 

Although it seems counter-intuitive, I get very anxious when a stock pops over 20% in less than a month. With my "two in the hand is better than one in the bush" mentality, I sold almost all of my BRCD stock. BRCD is no longer my largest holding, and I no longer have an opinion about the direction of its stock price. However, I continue to think a "horizontal acquisition" (when a competitor buys out its competition or supplier) would be ideal for EMC and BRCD, especially because the risk of a DOJ anti-trust objection appears negligible. (Strangely enough, rumors are floating now about EMC being a takeover target, even though very few companies could afford to buy EMC.) 

It's puzzling to me that almost no one has suggested EMC as a potential acquirer of BRCD. Dell (DELL), Hewlett-Packard (HPQ), IBM, and Oracle (ORCL) are usually mentioned in every story about Brocade--even though Larry Ellison once said he wasn't interested in Brocade, and HPQ might not be too keen on making another acquisition so soon after its 3PAR (PAR) deal. 

Regardless of the potential synergies, a Brocade buy-out isn't a sure thing. For example, a company interested in Brocade may decide to look at QLogic Corp. (QLGC) instead. Also, Brocade's Board of Directors may demand a buyout price beyond what an interested acquirer would consider fair or reasonable. And of course, Brocade may simply decide to move forward on its own. 

I do know one thing, though--with so much cash on their books, tech companies are sick of getting close to 0% for it. Most tech companies--mindful of the boom/bust cycles common in the technology arena--usually hoard cash and pay either no dividend or a paltry one. As long as interest rates remain low, many tech companies will be looking to grow through acquisitions. Good luck to them, and good luck to Brocade and its CEO Michael Klayko. 

Prior to Brocade, Mr. Klayko held positions at EMC and IBM. 

Disclosures: I continue to own some Brocade (BRCD) shares, but my holdings may change in the future.

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They're Outraged, and We're Laughing

Like the hilarious Dave Chappelle skit where each racial group has to draft celebrities for their team, the right has selected Outrage, while the intellectual liberals have selected....Humor. Think about it. What's the best liberal program in print or paper today? The funny Daily Show. What do right-wingers watch? Glenn Beck and Bill O'Reilly yelling and screaming in anger at the America they believe they're losing. What's wrong with this picture?

Anger, even simple-minded anger, usually spurs action. If you're angry, you write to someone, march the streets, or join a political organization (like the Tea Party). But if you're laughing, you're feeling either superior to someone or temporarily happy. The laughter eliminates your anger and in doing so, your drive to cause change. This may be one reason conservative right-wingers have managed to create a viable political movement, while the Green Party has floundered or been counter-productive (i.e., impacting Al Gore's presidential aspirations).

If this trend continues, Sarah Palin's right-wing movement may have the last laugh.

Wednesday, September 1, 2010

Just and Fair Leaders

“Most people prefer to believe that their leaders are just and fair, even in the face of evidence to the contrary, because once a citizen acknowledges that the government under which he lives is lying and corrupt, the citizen has to choose what he or she will do about it. To take action in the face of corrupt government entails risks of harm to life and loved ones. To choose to do nothing is to surrender one’s self-image of standing for principles. Most people do not have the courage to face that choice. Hence, most propaganda is not designed to fool the critical thinker but only to give moral cowards an excuse not to think at all.”

– Michael Rivero

Funny: Maz Jobrani

Maz Jobrani is one of the best standup comedians working today. Check him out at the link below: