Random Thoughts: Inflation, Housing, and Marriage

A.

1. The more government spends, the higher the risk of inflation.
2. The higher the risk of inflation, the more likely that prices go up.
3. When prices go up, essential items such as food and housing cost more.
4. When housing costs more, it becomes more difficult for an individual to buy a home.
5. Most individuals prefer to own a home before having children.
6. Most individuals prefer to own a home soon after getting married.
7. When the government makes it more difficult for single adults to buy a home, the most responsible ones among them will delay marriage and children.

[#7 assumes that most individual adults will have either little or no parental financial support when buying a home. It may be more defensible to change "single adults" and "individuals" to "single immigrants," who are probably less likely to be able to rely on parental financial support.]

B.

1. When prices go up, various items may become unaffordable for many families.
2. When prices go up, many families will have to use credit to finance a purchase.
3. The more expensive a product, the more likely a person will rely on credit.
4. Wall Street relies on credit. Without credit, Wall Street would probably have very little influence over the average person's daily life.
5. If you are against Wall Street and big banks, you should also be against credit.
6. If you want to minimize the use of credit, you should oppose rising prices.
7. When any large entity distributes large amounts of money to any area, it tends to increase prices in that area.
8. Government is a large entity that distributes large amounts of money to various areas.
9. The less government spends, the less likely it is to cause inflation and therefore rising prices.
10. Therefore, people who are against Wall Street and big banks ought to oppose increases in government spending.

Update: see link HERE for more on this topic. 

James Fallows on Coal and Energy Use

James Fallows, "Dirty Coal, Clean Future," The Atlantic (December 2010):

Overall, coal-burning power plants provide nearly half (about 46 percent this year) of the electricity consumed in the United States. For the record: natural gas supplies another 23 percent, nuclear power about 20 percent, hydroelectric power about 7 percent, and everything else the remaining 4 or 5 percent. The small size of the “everything else” total is worth noting; even if it doubles or triples, the solutions we often hear the most about won’t come close to meeting total demand. In China, coal-fired plants supply an even larger share of much faster-growing total electric demand: at least 70 percent, with the Three Gorges Dam and similar hydroelectric projects providing about 20 percent, and (in order) natural gas, nuclear power, wind, and solar energy making up the small remainder. For the world as a whole, coal-fired plants provide about half the total electric supply. On average, every American uses the electricity produced by 7,500 pounds of coal each year. Precisely because coal already plays such a major role in world power supplies, basic math means that it will inescapably do so for a very long time.

More here. The "green revolution" might peter out unless it creates products that impact coal use.

Random Thoughts of the Day: Observant Edition

1. "Let us touch the dying, the poor, the lonely and the unwanted according to the graces we have received and let us not be ashamed or slow to do the humble work." -- Mother Teresa

2. Next to my building is a small retail store area with room for two tenants. A hookah lounge has filled up half of the space for the last couple of years, but one of the spaces seems to change tenants every six months. Recently, a bartending school moved out and was replaced by a medicinal marijuana clinic. It's very nondescript from the outside, so I knocked and said hello. Two people, one male, one female were present. There were several very comfortable looking white couches. A large television was playing a Dave Chappelle movie or show. Here's a paraphrased version of the conversation:

Male: Do you have a license?

Me: No, I'm a neighbor, just saying hi. Most tenants move out after six months, so I just wanted to see who had moved in this time.

Female: [She was friendly and said she hoped to be here longer than six months, etc.]

Male: [Asked me for my business card after I said I was a lawyer. I produced my business card. He still didn't look very happy. For some reason, people tend to think I'm either a cop or a nice target when they first meet me.]

Ah, the wonders of California. Anyway, I wonder if this business lasts more than six months. I find it a little weird that the new businesses that tend to move in have some connection to legal drugs (e.g., booze, MJ, nicotine, etc.).

3. I have never seen so many vacant buildings in downtown San Jose, California--and I was here during the dot com bust. It is becoming clear that this recession will impact Silicon Valley for at least another year, if not longer. Meanwhile, the last of the residential five-year ARMs are coming due in 2012. Hard to see a recovery before then.

Also, according to a CBO slideshow presentation, the unemployment rate won't go below 6% until around 2014-2015. The CBO is an independent, non-partisan government agency.

Simpsons Episode Tonight is a Must-See

Tonight's episode of The Simpsons (the X-Mas special aired on December 5, 2010) was an instant classic. I am so happy.

Most Sundays, I sit in front of the television for the only show I even consider watching. Usually, it's an average episode, but I continue to keep the faith, because the Simpsons will surprise you. This Sunday, my faith was rewarded. Hallelujah.

Where a California Teacher Gets Schooled

There's no sport in debating most K-14 California teachers because it's just too easy. Sigh.

California Teacher 1: Interesting perspective however, why is the average salary of a CA teacher below that of a secretary of a private sector company. Why do education administrators who have less than 4 years of classroom experience earn 3 times that amount and fail to make good decisions about classroom teaching and materials? 80% of a school budget does not go to teachers. Mainstreaming in education has pulled funds in so many directions. The other factor people fail to see is that somehow we began printing materials and textbooks and interpreters for students who do not speak English and creating a system that allows children starting school in kindergarten to reach 8th grade without mastering reading, writing and speaking in English even though they have been in the U.S. for 14 years or more? The printing costs alone could change the funds for education! Why do teachers have to ask parents to donate facial tissue, loose leaf paper, pencils, copy paper, markers, crayons, color pencils, funds for class set of literature, and other supplies in nearly 50% of public schools nationwide? It is not true that half of the General Fund does not make it to education and if it were true, then we are not collecting enough taxes for anything (including education K-12 and beyond). Prop 13 killed funding for education a long time ago. It has been a steady decline of funding for public education and even the Lottery monies never really get to education as they were intended to do when we sold the idea of legalizing gambling.

Teacher 2: I believe, from conversations I have had with [NAME], that she is basing her facts on both her own experience in the private sector and her experience in education.....

Lawyer: let's take what [California Teacher] said and break it down logically.

1. She said, the average salary of a CA teacher is less than [an average] private sector secretary. FALSE.

According to the teachers' own union, the average CA teacher makes over $64,000, and receives additional compensation in the form of pensions (usually after just five years) and full medical benefits.

Please cite reliable stats showing that the average secretary in the private sector makes over $64K and is eligible for a pension and full medical benefits. You won't find any such statistics because her statement is incorrect.

2. She said that canceling printing costs for ESL students would substantially increase funds for education. Really? With $40+ billion annually spent on CA K-14 education, it is highly unlikely that ESL "printing costs" are a major problem. Common sense says that textbooks and other materials are bought once and used for many years. I'd love to see total expenditures each year on ESL printing costs. My hunch is that [California Teacher] was scapegoating American citizens who speak ESL in an attempt to shift direction from the fact that 80 to 85% of CA K-14 education funding goes into the pockets of district employees.

3. She said, "Half of the General Fund does not make it to education." FALSE, unless you want to quibble over 48% vs. 50%. Total funding for K-12 education was projected to be an astounding $68.5 billion in 2008-09 (it appears that the teachers' unions were forced to make some concessions, lowering spending projections). In CA Fiscal Year 2008, about 48% of the General Fund went to California elementary, secondary, and higher education. http://www.statehealthfacts.org/profileind.jsp?rgn=6&ind=33&cat=1

Again, people are entitled to their opinions, but not their facts. Isn't it sad how so many teachers don't know how to make a logical, fact-based argument?

Bonus: more here from Bill Baker, Editor and Publisher, The San Bruno Beacon.

Bonus II: Governor Christie also shows us how it's done. More here.

Update in April 2017: to sum her up, "You're bitter but well-read... go teach college." I don't know whether to laugh or cry.

Gov Workers Not Overpaid?

A recent study claims that government workers are not overpaid when considering their education levels. I laughed out loud. Here are some questions to ask people who take such studies seriously:

1. In the study you cite, please tell me how much money or value the researchers assigned to the much higher job security of public sector workers, who are usually not at-will.

2. Please name 10 major corporations that have long term, unpredictable debts owing to hundreds of thousands of non-working employees. Within these 10 major corporations, how many of them are able to shift 100% of the debts to taxpayers?

(Note: major banks do not count because 1) the debts aren't owed to non-working employees; and 2) unlike gov employees, banks must pay back all taxpayer monies, i.e., the taxpayer has provided a loan, not a grant that causes higher taxes.)

3. You seem to gloss over the additional compensation provided to government employees in the form of pensions. Do you know what percentage of private sector workers under the age of 55 receive pensions? If so, please list the percentages of under-55 gov workers and private sector workers who are eligible for pensions.

Bonus: did the study provide any additional weight to the gov worker's guaranteed pension vs. a private sector worker's non-guaranteed 401k? If not, do you believe a retirement guarantee is worthless?

4. In the private sector, how many entities are able to pass along their higher costs and COLA to taxpayers instead of cutting spending, jobs, or salaries?

5. Let's assume that gov workers, on average, have higher levels of education than the general population. Outside of universities and university-backed research labs, what useful inventions have government workers provided to the general public vs. private sector workers with similar education levels, such as those who work for Google, eBay, GM, Intel, etc.?

Click here for more on these issues.

Global Budget Issues

The Wilson Quarterly is my favorite journal. Douglas Besharov and Douglas Call's article on our budget issues is a good example of the kind of brilliant writing often found in the WQ:

[M]any government pension and health care systems for the elderly worldwide are now little more than Ponzi schemes that are running short of new “investors.” Aggravating the budget situation is the rapid rise in health care costs caused by the development of new—and expensive—medical technologies, drugs, and treatment procedures. The math is simple: Projected tax revenues are not nearly sufficient to cover future obligations—with the imbalance growing over time as larger shares of the populations in these countries begin to receive benefits. The U.S. Social Security and Medicare trust funds are giant and growing IOUs from the federal government to future recipients. Last year, the government “owed” the trust funds about $4.3 trillion. (These IOUs are dutifully printed at the Bureau of the Public Debt in Parkersburg, West Virginia, and placed in a filing cabinet. Not exactly Al Gore’s lock box.)

To read the full article, click here.