Meg Whitman is Telling the Truth

Meg Whitman is telling the truth when it comes to Jerry Brown and taxes. According to factcheck.org, "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

In 'N Out

Just because.

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:

https://www.theirc.org/donate/help-rescue-lives-pakistan

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

California's Budget Mess: Blame the Stock Market

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

http://www.businessinsider.com/california-pension-dow-25000-2010-6

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.

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.

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."

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.

USA Today on Immigration

USA Today's Darrell M. West on immigration:

http://www.usatoday.com/news/opinion/forum/2010-09-01-column01_ST1_N.htm

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.

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.

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." (http://www.lao.ca.gov/reports/2011/calfacts/calfacts_010511.aspx) [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.)

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.

CalAware

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

The Cost of the Protected Class

Hat tip to Mish.

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.

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).

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:

http://www.27bslash6.com/p2p2.html

http://www.27bslash6.com/missy.html

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.

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.

The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result. Unless specifically stated otherwise, no portion of this blog is commercial in nature in any fashion, nor operated for profit. All copyrighted material reproduced herein appears under a claim of fair use. Nothing herein constitutes legal advice, in any state; those seeking legal advice should consult with an attorney licensed to practice law in the appropriate jurisdiction. No guarantee made of updates at any rate of frequency or periodicity. All statements of fact in this blog are derived from sources reasonably and in good faith believed to be true and accurate. Author not responsible for any harm arising from following anything construed as advice herein.

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.

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:

http://www.ted.com/talks/maz_jobrani_make_jokes_not_bombs.html

On the Tea Party

I recently read Glenn Beck's book, Common Sense. He trashes Bush, McCain, Clinton, Pelosi, T.R, and Progressives. I agree with many of Beck's ideas re: fiscal responsibility, but he delivers almost all of his ideas in sound bites, using extreme examples. He's the flip side of Al Sharpton, so I'm not surprised that Sharpton and Beck had competing rallies in D.C. on the same day.

At the same time, I get very disappointed when people try to discredit the Tea Party using irrelevant information, such as their alleged funding sources. Below are excerpts from an online discussion I had re: the Tea Party's alleged connection with the libertarian Koch family:

Lawyer: It is really necessary to look behind Beck to see where the money for Beck and the Tea Party is coming from.

Me: I don't approve of ad hominem attacks. I prefer to look at ideas and the people involved in a movement. If you want to discredit the Tea Party, you should refer to polls showing that 50+% of the Tea Party approves of George Bush II. One can't be pro-fiscal responsibility and pro-Bush II.

Also, arguing that the Tea Party movement is bad because of its association with pro-business billionaires is like saying Obama is bad because Goldman Sachs was the second largest contributor to his campaign, or that Obama is anti-American because of his association with Jeremiah Wright. Lawyers ought to eschew "associational arguments," which divert attention from substantive issues.

Lawyer: I am not sure what you mean by "ad hominem"--I use it to mean an irrelevant fact that has nothing to do with the discussion. Clearly the Tea Party discredits themselves as you point out; just as clearly they are disorganized and we cannot always impute the beliefs of some of them to all of them. BUT we can look at the source of their funding (which goes to all of them) from Fox News to Dick Army to right-wing businessmen. This is the same group that spent millions attacking Clinton and funded the "Whitewater Investigation," as well as the various sexual allegations and the impeachment.

Me: absent an employee or contractor relationship, what direct bearing does someone's funding source have on his/her ideas? For example, I have a blog. If Glenn Beck started paying me 1000 bucks a month to advertise on my blog and diverted traffic to my blog, how does that change the legitimacy or integrity of my ideas? At most, you could argue that my funding sources make it more difficult to criticize my financial backers, but when you also say the Tea Party is "disorganized," you cannot reasonably rely on the "conflict of interest" argument.

Lawyer: Well yes and no. But you did not START your blog with a grant from Glen Beck and yes IF you want to keep getting the money you would have to compromise your principles. And I only say (correctly) that the Tea Party is disorganized because I don't want to say that they are all racist dogs because some of their gun-loving redneck wackos are in fact racists and proud of it. BUT, clearly there is a struggle on the right for control of the Tea Party types. Look at what has happened in Nevada and in Kentucky where the GOP is now controlling the Tea Party and moving it into the mainstream. That is why I look to the money, because money is all about control. The Tea Party gets about 500% more publicity than they deserve. The Media is all hyped up on "change" and anti-incumbent feeling, when in fact reality does not bear that out. The money (and help from Fox in particular) keeps them in the spotlight when an objective analysis would tell they they have very little political power but do have a lot of media and money power. I predict they will die out and/or be irrelevant by this time next year, because the money people will be moving away from the radical right and back into the traditional GOP.

Me: I guess we'll see in a year if you're right about the Tea Party. For the record, I think the Tea Party will eventually become a viable political third party. I, for one, would be happy to see someone break the monopoly of the Republicrats.

Lawyer: You know I hope you are right. I would love to see the U.S with at least three real political parties as in the UK and Canada. I would even more love it see the U.S. with 5 or 6 real parties. The French talk about voting with your heart in the first round and with your head in the second round. I would like that.

Corporate Attorney: I think I agree with "Lawyer" about revealing the source of funding (which, from my understanding, has come in significant amounts from the Koch brothers, two oil billionaires). I don't see this as an ad hominem attack; instead, it is an examination of these ideological leaders.

Entities with large sources of funding their agenda's interests have proven their ability to shape the political discussion in this country. We saw it with the healthcare debate, where many of these people didn't even know why they opposed it, and those who did were factually misinformed about specifics of the bill (recall "death panels", "jailtime for lack of insurance", "it's socialism!", "keep government hands off my Medicare!", etc etc.). To me, the fact that this opposition grew so large is not because of the factual nature of the claims, its because of the big money behind the claims. This impacts our democracy. I don't mean that we should criminally go after these financial backers, but they should be exposed.

Another example is the ability to get such large numbers of the lower 95% of income earners to advocate the interests of the upper 5% of earners when it comes to taxation. I don't believe this is coincidence, I believe that it comes from the scripts handed down by the financial backers of this movement.

I think exposing the influence behind the Tea Party message is important to exposing the lies and insincerity as well. Just my opinion.

Me: any argument that relies on showing your opponent lacks free will and is being led on by the nose will fail to convince the other side and will harden your opponent's stance. The only thing such an "argument" will accomplish is to make the proponent of the "argument" feel better and self-satisfied about his own position. The inefficacy and counter-productiveness of charging someone with special interest bias instead of arguing the merits of his position is why lawyers (and gentlemen) should avoid making subtle ad hominem attacks.
Corporate Attorney: I don't propose that this financing is a negation of arguments that have merit. I propose that it is an exposure of the sources of misinformation and lies. Also, I don't believe that many of the Tea Party movement is actually going to be convinced by a discussion that is founded upon logic and facts. I personally don't believe that many of them (not all, of course) are sincerely expressing their motives. I believe many of these people are the same people who were chanting "TERRORIST!" "KILL HIM!" "N-WORD!", etc at the McCain rallies. They simply found a home, and continue this type of attack under the guise of "issues".

I don't say this as an ad hominem attack, I say this because I am unable to debate such claims as "death panels", the "bill pays for illegals", "there will be jailtime for those who don't buy insurance", "Obama is a Muslim", the birther movement, etc. I strongly believe all of these movements are connected by their sources of funding. Its not cheap to make a substantial part of America believe that a man who sat in a Christian church for 20 years, whose "spiritual mentor" was a Christian, married a Christian woman, baptized his children Christians and eats swine is a Muslim (I guess the larger question is "so what if he is? Is it a crime?"). This takes a lot of money.

Again, to me the source of money is more about finding the source of misinformation, which cannot be debated beyond demonstrating those facts to be false (although the message is usually lost by that time, see ACORN and Sherrod videos), it's more about finding the source of propaganda and misinformation.

Me: stupid people exist in every movement and in every large group. You cannot discredit an entire movement or large group by pointing to the idiots in the group. To do so is like arguing that Islam and all Muslims are evil because of the 9/11 hijackers, or all Jews are dishonest because of Madoff, i.e., specious and irrational.

Most reasonable people understand that it is unfair to ascribe the idiocy of some members of a group to the entire group. Thus, until you can prove that a majority of Tea Party members believe that Obama is a Muslim, etc. you are merely speculating, and speculation has no place in an honest, fair discussion.

The Philosopher: Nonetheless, there is no more valid directive in politics than to "follow the money." Following the money leads to the conclusion that the "Tea Party" is far from a spontaneous uprising of grassroots citizens; in fact, It is as clear as an example of Astroturfing as you'll find.

Koch-financed "Americans for Prosperity" delivered 40 busloads of "independent protesters" to Washington, D.C. for a march. Note especially the signs the paid staffers made for their passengers to carry, bearing AFP slogans, made with a media producer's knowledge of how colors and letters will appear on camera and (better yet) handprinted so as to lend to the illusion that an angry citizen made it rather than a PR flack. Best line is the AFP PR rep to his "protestors": "We've got donuts and everything for you guys!" (Note also that this is only AFP buses; this doesn't include all of the crowds that were bused in by Dick Armey's "FreedomWorks," also originally funded by the Koch brothers.

Of course, this is nothing new. During the Clinton era, billionaire industrialist Richard Mellon Scaife spent hundreds of millions in his efforts to destroy the Clintons, with such allegations as Hillary murdered Vince Foster after a liaison at their secret love nest, then had his body dumped in a park and framing it as a suicide because Foster "knew too much;" that the Clintons' Christmas tree was decorated with cocaine spoons, that Clinton personally oversaw cocaine smuggling from Nicaragua to a small airport in Arkansas, and of course let's not forget the Whitewater investigation, etc.

There is no doubt many Americans are sympathetic to the "Tea Party" cause, but they must realize that there really *is* no "Tea Party." It's Astroturf, and it's brilliantly evil Astroturf at that: it convinces a certain type of poor and middle class Archie Bunker/Joe Sixpack American to rage in the streets for fear that the Republic will be destroyed and America crumble into a pre-1989 Eastern European Communists concrete wasteland, should the multimillionaires and multibillionaires funding the "Tea Party" be subject to a 2% tax increase (which is *still* less than the rate the ultrawealthy paid under Ronald Reagan.)

Me: all you've done is portray the Tea Party's arguments in the least nuanced, least flattering light possible in order to knock them down. This is called "making strawmen." Anyone can do it.

As for the idea that Tea Party members are willing to accept the support of PR people, what does that have to do with the substance of their beliefs or opinions? Are you saying that if I let a rich woman tell me what to wear to a party, the opinions I share at the party are somehow automatically invalid? Aren't you being just as bad as Glenn Beck by not evaluating the Tea Party's arguments on their merits and by painting the other side in the worst possible light?

The Philosopher: The invective has grown so fierce (...and I'm as guilty as anyone!) that it's rare to find room for reasonable discussion of politics and policy. And it is all too easy to scream at the TV and extrapolate the beliefs of those we've never met, be they hippie or redneck or centrist; that hurts us all.

I know what you mean about ad homs and strawmen. I wish we could conduct the nation's business in the manner of Atticus Finch, but I fear we're doomed now to live in a Karl Rove world, where anger, volume, and specious/falsified data rule the day.

It's so hard to rely on reason, especially when there is so much rage. If we are to survive, ultimately, then reason must again supplant that rage. We all have souls, we all hunger, and we all thirst; what unites us is greater than that which divides us...

I don't like using absolutes, but there really *are* no merits to Tea Party arguments. It's just a yet more populist redo of Newt Gingrich and Frank Luntz' "Contract with America" of 1994. It's a new veneer on Reaganite trickle-down economics, now newly repackaged as tri-cornered hat/puffy shirt/Gadsden flag cosplay for those who really know absolutely no history of the Founders beyond out-of-context quotes trumpeted on FreeRepublic, Drudge, FOX, e-mail chain letters, et. al. Beck is the single worst offender. He fetishizes the Founders, so much so that he appropriates the "Common Sense" title from Thomas Paine, then devotes over half of "his" book to a reprinting of it. This pads his book out like a high school kid looking to stretch out a term paper while simultaneously wrapping himself in the cloak of the Founders. And hey, it doesn't hurt profits that Paine's work is in the public domain.

Another example: consider healthcare. 17 years ago we were told by a massive, extremely well-funded alliance of insurance corporations and Gingrich Republicans that Clinton's "pay or play" health plan was the dark, wicked heart of socialism that would cause America to crumble into ash; the Republican alternative at that time was the "Individual Mandate," or requiring every American to purchase private health insurance.

So, now in 2010 we've passed the 1993 Republican plan, but now the right has redefined it as the road to serfdom.

A professor of mine once played us Country Joe McDonald's "Feel Like I'm Fixin' to Die Rag" from Woodstock. After the song, the professor told us in his calm and measured manner, "The Vietnam protestors were right. It was a pointless and unwinnable war. But you don't win people to your cause by telling them they are a bunch of schmucks." That was a moment of great clarity for me.

And yet, it's hard to see the vast majority of the Tea Party crowd as anything but [schmucks]. They believe their income taxes have gone up under "that socialist Obama," when in fact they've gotten a tax cut. They decry spending a few hundred million repairing American roads and bridges that have been been neglected for decades, but multiple trillions of dollars spent on fabricated, counterproductive wars in which thousands of Americans and tens of thousands of Iraqs/Afghans are killed don't even cause them to bat an eyelash. They blame Obama for TARP, when it was a Bush initiative, and the root of the problem was Sen. Phil Gramm's 1998 repeal of New Deal banking laws (signed by Clinton) which had prevented such a crash for over 60 years. Less than ten years after the deregulation, the financial system suffered its 2008 crash and the American taxpayer was put on the hook for $2 trillion; and yet Obama, who would not take office for another 4 months, is blamed.

How can you employ reason with people who not only lack it, but are scornful of it as an academic affectation? The Tea Party has nothing but anger. It's no different than the 10-15% that backed George Wallace in 1968, or (even more accurately) that 20% Ross Perot garnered in 1992 and 12% in 1996. Remember how Perot pledged that "restoring America" was now his life's calling, and though (of course) it had nothing to do with him as an individual, he would now fund his dream, the "U-nited We Stand, America" 3rd party, in perpetuity? He's been MIA for 14 years now.

Nonetheless, I hope you're right about the Tea Party becoming a valid 3rd party. This will cause a crucial portion (10%-15%?) of the Conservative base to slip away from the Republicans, thus ensuring that more reasoned voices will direct the debate. I know it's rude and wrong to paint this subset of the electorate as dimwits, but frankly they've done nothing to convince us otherwise. Being purely pragmatic about it, I wish them well, because the Republicans who have exploited their allegiance for the past 30+ years cannot win on a national level without them.

Insofar as knocking over strawmen, many strawmen need to be knocked over! A better description might be "knocking over scarecrows," scarecrows erected at great expense by self-interested Titans of Finance in order to scare people into voting in direct opposition to their own best interests. If they are kept in a constant state of fear ("socialism!" "czars!" "illegal Mexicans!" "anchor babies!" "terror babies!" "they hate us for our freedom!" "terrorists!" "Social Security is bankrupt!" "liberals!" "taxes!" "mushroom clouds over Washington and DC!" "yellowcake uranium!" "flag-burning!" "weapons of mass destruction in Iraq, and we know exactly where!", et cetera, ad nausea) they won't notice they've been screwed ten ways to Sunday, and then vote for the very people who whipped them into the paranoiac frenzy in the first place under the guise of "we'll keep you safe."

Public Defender: Bush, McCain, Clinton, Pelosi, T.R. (seriously, he trashed Teddy Roosevelt, the president who gave us the national parks?), the Progressives. So everyone is wrong except for Beck. I'm sure that's accurate.

Me: if Beck believes that Congress is inefficient and corrupt, it's not unreasonable for him to blame everyone there.

The Techie: a public figure's funding is not entirely an ad hominem argument. If the argument is that someone is receiving money because it is good for those giving the money, that is not a logically flawed argument.

"Follow the money" is valid for politicians as no one gives them money for nothing. There is always a trade or expectation of support for any sufficiently large expenditure.

For instance, if several senators are supporting an "environmental" bill but are being payed large sums by big oil, it is not logically flawed to assume you need to dig deeper into the real effects of said legislation, and that it might not be what it seems, despite their arguments being sound.

The same logic applies to those who make their money off being a public personality such as Beck and Limbaugh. For instance Beck makes a lot of arguments which on the surface seem non secular but are very much aimed at promoting specific religious ideals.

Me: I agree Glenn Beck doesn't respect separation of church and state, but why not discuss his ideas directly? Examining someone's funding sources may reveal conflicts of interest, but alleging a conflict of interest is not an argument. At most, it's like character evidence, i.e., making a personal attack, which draws attention away from the content of his ideas.

The Philosopher: The larger question is "how do you employ reason, measure, and balance with those who would seem to lack all three?"

If they are not willing to return mutual civility and insist on clinging to obvious fabrications (birth certificate conspiracy theories,) what is their due in public discourse?

Obama has to his infinite credit remained Lincolnian.

Ryan Dawkins on Park51

Ryan Dawkins writes a very interesting piece about the Park51 project (aka Muslim Community Center near Ground Zero):

http://ryanpolitics.blogspot.com/2010/08/assimilation-or-alienation-politics-of.html

I can't believe I'm saying this, but I especially liked the quotes from George W. Bush.

Note: the following is a list of prominent people and entities opposing the Park51 project. I call them "Americans for Selective Constitutional Application": Carly Fiorina, Investors' Business Daily (IBD), Newt Gingrich, John McCain, Anti-Defamation League, the WSJ's James Taranto, Rep. Peter T. King, Rep. Rick Lazio, John Bolton, Howard Dean, Rudy Giuliani, Geert Wilders, Gary Berntsen, Jordan Sekulow, Michael Grimm, Andrew Breitbart, Ilario Pantano, Gov. David Paterson, Pamela Geller, Robert Spencer, Michelle Malkin, and more...

I am most disappointed in McCain and Gingrich.

At least I can rely on Ron Paul's consistent brilliance:

It is repeatedly said that 64% of the people, after listening to the political demagogues, don’t want the mosque to be built. What would we do if 75% of the people insist that no more Catholic churches be built in New York City? The point being is that majorities can become oppressors of minority rights as well as individual dictators. Statistics of support is irrelevant when it comes to the purpose of government in a free society-—protecting liberty...This is all about hate and Islamaphobia.

Thank you, Mr. Paul. Props also to Roger Ebert.

Seeking Alpha's Editor-in-Chief

SeekingAlpha's Editor-in-Chief Eli Hoffmann and myself at a S.F. event. If I had just two words to describe him, I'd go with "driven" and "professorial"--the perfect combo for an editor-in-chief.

Megan McArdle on Government Pensions

Megan McArdle, on public pensions:

For decades, politicians have promised lavish pension benefits in return for the support of the public sector unions—-promises that they, unlike their counterparts in the private sector, did not have to cover by setting aside a reasonably large asset base. Now the bills are coming due, and many funds are disastrously underfunded. The California state pension system, for example, has only 60 percent of the assets needed to pay its obligations through 2042.

(from The Atlantic, August 2010)

Politicians have sold out the next generation of workers. Unfortunately, many of the workers on the hook for public pensions have had no say in the process--they were either too young or too uneducated to understand what their parents and politicians were doing.