CA Demographics, 2008 Population Growth

Some people were contesting my earlier statement that California, for the first time in years, was losing population. They were technically correct--it appears that CA is still experiencing population growth, but at a reduced rate. My overall point remains the same--with fewer people, California will most likely receive less tax revenue. See this link:

http://www.ebudget.ca.gov/BudgetSummary/ImagePages/FG-DEM-01.html

The budget website is quite interesting to review. Tax dollars are being sent into K-12 education services more than any other area:

http://www.ebudget.ca.gov/agencies.html

http://www.ebudget.ca.gov/StateAgencyBudgets/6010/6110/spr.html

So the next time California teachers ask you for more money, keep in mind that most of your tax dollars already go to their schools, especially if you pay property taxes. As a result of these outlays, which are very hard to reduce, California is one of the few states projected to have budget gaps between two and eleven billion dollars in 2009. The only other states in this ignominious category? Florida, Nevada, New Jersey, and Arizona. See

http://www.ncsl.org/bookstore/productDetail.htm?prodid=0151010153pdf

Something must be done about our K-12 schools. Vouchers, anyone? (At least for a start...)

Thomas Paine

So many people have mangled Thomas Paine's famous saying, I feel the need to quote it properly. See Rights of Man (1791):

When it can be said by any country in the world, my poor are happy, neither ignorance nor distress is to be found among them, my jails are empty of prisoners, my streets of beggars, the aged are not in want, the taxes are not oppressive, the rational world is my friend because I am the friend of happiness. When these things can be said, then may that country boast its constitution and government. Independence is my happiness, the world is my country and my religion is to do good.

Actually, the incorrect quotation does sound better: "The World is my country, all mankind are my brethren, and to do good is my religion."

The Anti-Imperalist League

Yes, such a group actually existed back in the day, and Mark Twain was a member. Below is part of the Anti-Imperialist League's mission statement, which refers to the American annexation of the Philippines and the Philippine-American War:

We deny that the obligation of all citizens to support their Government in times of grave National peril applies to the present situation. If an Administration may with impunity ignore the issues upon which it was chosen, deliberately create a condition of war anywhere on the face of the globe, debauch the civil service for spoils to promote the adventure, organize a truth suppressing censorship and demand of all citizens a suspension of judgment and their unanimous support while it chooses to continue the fighting, representative government itself is imperiled.

We hold, with Abraham Lincoln, that "no man is good enough to govern another man without that man's consent. When the white man governs himself, that is self-government, but when he governs himself and also governs another man, that is more than self-government--that is despotism." "Our reliance is in the love of liberty which God has planted in us. Our defense is in the spirit which prizes liberty as the heritage of all men in all lands. Those who deny freedom to others deserve it not for themselves, and under a just God cannot long retain it."

Boston, 1899

Two Reading Tips: Money and China

National Geographic Magazine is probably one of the most overlooked publications in the U.S. This month's (April 2008) issue focuses on China and is absolutely fantastic. In addition to the articles and pictures, there is a detailed map of modern-day China.

I also read a newer publication, Lapham's Quarterly, Vol 1, No. 2, titled, About Money. All of the articles in the Spring volume's journal are about--you guessed it--money. There are too many interesting tidbits to quote everything, but the writers include everyone from Alexis de Tocqueville to Orson Welles. I especially enjoyed the Benjamin Franklin and Jim Cramer pieces. Here are some quotes from the journal:

Thomas Jefferson: "Money, not morality, is the principle of commercial nations."

Roger Starr: "It is not the accumulation of money which is vicious, but overconsumption...[the very poor] are "dehumanized because his relative poverty deprives him of the human responsibility of choice."

Henry Ford(!): "The automobile business was not on what I would call an honest basis, to say nothing of being, from a manufacturing standpoint, on a scientific basis, but it was no worse than business in general." "How much gasoline it [a car] used was of no great moment..." (In 1922, oil was around $3.50 a barrel)

James Boswell: "In civilized society, personal merit will not serve you so much as money will. Sir, you may make the experiment. Go into the street, and give one man a lecture on morality, and another a shilling, and see which one will respect you the most."

Tocqueville: "What grips the heart most powerfully is not the peaceful possession of a precious object but the imperfectly satisfied desire to possess it and the constant fear of losing it."

Elias Cannetti: "What is that happens in an inflation? The unit of money suddenly loses its identity. The crowd it is part of starts growing and, the larger it becomes, the smaller becomes the worth of each unit...Just as one can go on counting upward to any figure, so money can be devalued to any depth... [Are you listening, Bernanke?] An inflation cancels out distinctions between men which had seemed eternal and brings together in the same inflation crowd people who before would scarcely have nodded to each other in the street."

Upton Sinclair: "The assumption [in the entertainment business] was that they would live happily ever after, though never was it shown how that miracle would be achieved, and though the divorce rate in America was continually increasing."

Andrew Carnegie: In bestowing charity, the main consideration should be to help those who will help themselves; to provide part of the means by which those who desire to improve may do so; to give who desire to use the aids by which they may rise; to assist, but rarely or never to do all. Neither the individual nor the race is improved by alms-giving. Those worthy of assistance, except in rare cases, seldom require assistance."

Sallust: "Growing love of money, and the lust for power which followed it, engendered every kind of evil. Avarice destroyed honor, integrity, and every other virtue, and instead taught men to be proud and cruel, to neglect religion, and to hold nothing too sacred to sell."

Jack Weatherford: "Compared with the physical force of the military and the spiritual authority of religion, money offered a third and completely novel way to organize society. Without regard to rank, class, or standing, anyone with the proper coin could buy a goat or a turnip, a jug of wine or a basket of fish, a parcel of land for a vineyard or a pinch of salt to flavor dinner...In the global economy that is still emerging, the power of money will supersede that of any nation, combination of nations, or international organization now in existence. The newly ascended financial elites hold no brief or loyalty for any particular country, and the third revolution in the history of money threatens to erode the value of kinship, religion, occupation, and citizenship as the defining components of civil and social life."

Tim Parks: "The real scandal of money, and particularly usury, as we have already said, is that it does not respect traditional hierarchies. The merest artisan can make a fortune and start strutting around in expensive crimson. The feudal order breaks down."

Mozart

Other than a classical music class I took at a community college--one of the best deals in existence, as the CDs that came with the textbook are still used--I have no expertise in music. But this article about Mozart caught my attention, primarily because it states in different, more concise words my belief that our brains get caught up in limited local patterns that inhibit intellectual growth.

See Corinna Da Fonseca-Wollheim: "The Magic Flute" is as utopian and abstract as "The Abduction" is fresh. By placing his characters in an oriental setting, Mozart reminds us that it is only in confrontation with an Other from whom we allow ourselves to learn that we can find our own voice and transcend prejudice. (WSJ, April 26, 2008)

Absolutely correct, in my humble opinion.

Peggy Noonan's Life, Liberty and the Pursuit of Happiness

I enjoy reading Peggy Noonan's column in the Wall Street Journal, so when I saw one of her books in a used bookstore for $5.50, I bought it. Noonan's style is difficult to describe. It is best-suited to columns and short speeches, but I could not explain to you why I feel this way. The writing in Life, Liberty, and the Pursuit of Happiness (Adams Publishing (1994)) evokes a calm, folksy demeanor, favoring anecdotes over heavy prose. Basically, Noonan's style is vintage Erma Bombeck--if Bombeck had a political agenda.

When Noonan is more concise and quoting others, she is less preachy; for example, she introduces the reader to two interesting quotes, such as "Life makes conservatives of us all," and "Politicians prefer unarmed peasants." The second one made me laugh, and the first one was used very well in its full context. Noonan clearly aims to be a political philosopher, and here is what she says when she refers to Jack Kemp's evolving views of limited government:

[I]t's not the federal government that is the prime helper of the poor in America, it is freedom. Freedom to build, freedom from excessive taxation, from regulations and lawsuits that can ruin your dry-cleaning business because someone says you don't employ enough of this race and that gender. Freedom to work as a kid off the books and learn and get good habits and not have the guy who runs the candy store be buried under tax and medical forms. (page 178)

As a political insider, Noonan also has access to Justice Clarence Thomas, and in response to how he felt during the Anita Hill hearings, we see a more human side of the man:

"I didn't go in there strong," he says. "I went in there a broken man. I had been broken. They had reduced me literally and figuratively to a fetal position. I was broken. And what got me through it was I prayed, I said 'Lord, I am weak, I am weak, you must help me.'" (page 114)

On Dick Cheney, Noonan's experience is telling, even in 1994. After asking him to keep a diary so he could one day write a book, here is what happens:

Cheney makes that wince face he makes and looks down. "No, unfortunately you can't keep diaries in a position like mine anymore." "Why?" I ask. "Because," he says, "anything you write can be subpoenaed or become evidence in a potential legal action. So you can't keep and recount your thoughts anymore. (page 89)

Later, Noonan, a Republican insider, states, "Fact: No one really knows what Cheney would do or think domestically." (page 184) It's enough to make an American do a wince face.

Speaking of domestic issues, California is having heated discussions about immigration in 2008. However, it appears the issues were the exact same in 1994, and after 14 years, California is doing relatively fine, and the same issues keep coming up every few years (it's almost enough to make you think that politicians play the immigration card when it's convenient for them and when they need to get votes):

"What are you going to do about immigration?" "It isn't xenophobia," he said; the Mexicans and other recent immigrants were coming up to him and asking about it, they're taxpayers and they're seeing California sink under the weight of illegals who come into the state and go on its services...California's going broke." (page 186)

And there is what makes Noonan slightly unbearable to read in an expanded format: wide brushes of policy packed in folk style, which are designed to impart a certain lesson, but without regard for accuracy. It's passive-aggressive politico-speak. California is suffering from a lower bond rating in 2008--many years after her book was published--but it is not clear at all whether undocumented immigrants are the reason for the decline in the state's ability to pay future projected costs. (In fact, it appears most payments from the State go to bonds relating to schools--which, last time I checked, needed approval by by citizen taxpayers and which benefited all children.)

Noonan's folksy style becomes excruciatingly asinine in some places:

Young black men will save our country. I'm not sure completely what I mean by this but--they're tough and smart and know how to survive...Anyway, something just tells me they're going to save our country." (page 26)

Although she is foremost a political insider, Noonan comes across best when she dispenses common sense advice:

When you think about your enemies, you're letting them live in your head without paying rent. (The same person told me, When you worry, you're paying a deposit on trouble that may not be delivered.) (page 157)

Noonan continues to be most interesting when she talks about being a mother and about life in general, such as her own born-again experience. Noonan's use of personal experiences are her greatest strength--feet on the ground, writing to lift you just far enough so you can see beyond the horizon and see the promise of conservative principles:

[I]n a way, life is overrated. We have lost somehow a sense of mystery--about us, our purpose, our meaning, our role. Our ancestors believed in two worlds, and understood this to be the solitary, poor, nasty, brutish and short one. We are the first generations of man that actually expected to find happiness here on earth, and our search for it has caused such unhappiness. (page 215)

As long as she sticks to shorter pieces of work, she'll continue to be one of my favorite writers.

© Matthew Rafat (first published April 2008, revised)

April 21, 2008 -- Stocks

I have a bench trial this morning where I'm representing an employee not paid his wages, so I went to the office at 6:30AM to review my notes. I did my usual routine and checked my stocks, and also noticed that oil was selling for $117 a barrel. I immediately sold most of my individual stock holdings, except for MOT (I have only 200 shares, which I bought at around 9 dollars a share), PFE (earnings already released), and SNY (a Buffett holding). I even sold GE, but will buy it back if it dips. I did buy a few shares of SWZ for my Roth, and I continue to have stock holdings in my 401(k) in the form of mutual funds. However, I now have no individual holding worth more than 2,400 dollars.

I sold most of my individual stocks because the market rose too much last week without any fundamental change in the economy. Merely because one company--Google--reported stellar earnings, the Dow almost hit 13,000. But Google is not dependent on oil prices or consumer spending, and most of the economy is dependent on those two factors. With oil priced at $117/barrel and consumer spending projected to be anemic, the case for owning individual stocks becomes harder to support. In addition, with several earning reports coming out this week, the market should be volatile. If you own stocks in a Roth, there is no tax penalty for selling, and the case for being a buy-and-hold investor diminishes with increased volatility.