Category Archives: Economics

The Edge of the Cliff: Deadlines Reveal 16 Trillion Fault Lines

Posted on by
Reply

Fiscal-CliffI wish everyone a happy new year as we together, hand in hand, jump off the cliff into fiscal oblivion…

I have spent the last two weeks consumed with work related to two deadlines that strangely parallel the deadlines facing our political system. I disconnected myself as much as possible from distractions and focused on making concrete progress every day. It’s been a tough process, and I’m disappointed with the rate of progress. The only thing that brings me comfort is when I compare my accomplishments in these two weeks with that of the United States Congress. Of course, they got nothing done, and anything is more than nothing.

There is an absurd game going on in Washington that is summarized well by Senator Everett Dirksen a half century ago: “A billion here, a billion there, pretty soon, you’re talking real money.”

The United States is in debt about 16 trillion dollars. That’s about $140,000 per taxpayer. That’s how much you owe. Assuming you would resort to crime in order to repay that, you would have to rob a bank over 20 times to cover that amount (source: US News article).

The problem is that we are (1) spending too much and (2) being taxed too little. You probably disagree with one of those statements depending on whether you like the color blue or red better. The problem is that your disagreement is grounded in an ideology that isn’t based in honest evaluation of where you really stand. Majority of people who call for “smaller government” want a smaller government as long as it doesn’t affect them. Everyone is for “spending cuts on that other guy’s stuff but not my stuff”. Same hypocritical philosophizing goes for taxes.

And of course the poor politicians have to represent us selfish contradictory facebook-positing taxpayers. Their job is essentially to try and make 300 million children eat broccoli, while pretending it’s delicious cake. Of course when the children discover that there is not cake, it’s the job of the politicians to blame someone of the opposite party.

There are no easy solutions. The only thing I can recommend, and will do myself, is to be a productive citizen who does not add to the bickering but adds to the civil discourse about the ideal that our country is (on its better days) slowly edging towards.

Everyone Has a Holiday Except the Nihilists

Posted on by
Reply

pastafarianismThe holiday season (aka the shopping season) in America starts with Thanksgiving and ends with New Years day. In a bizarre side-effect of commercialization of Christmas, a number of other holidays have sprung up in prominence as a way to make everyone (no matter your beliefs) feel the holiday cheer (and spend money). For example, picture left is a representative of the Pastafarian religion celebrating their holy day with the ambiguous but easy-to-remember name of “Holiday”.

The following are some holidays I’m aware of that are the Apples and Google to the Microsoft that is Christmas.

The Jewish Holiday

Coming from a family of strongly rooted Jewish heritage, I have to say that Hanukkah used to be a source of embarrassment to me on a philosophical level. It’s not a major Jewish holiday and has gained prominence solely (it seems) as a way for Jewish families to participate in Christmas-style gift giving. In recent years though I’ve come to accept that holidays are often less about some particular message (religious or otherwise) but more about an excuse to spend time with friends and family. So whatever you call it, it’s fine with me.

The Atheist Holidays

Let’s be honest, most of the funniest people on this planet are all atheist or at least take a very satirical view towards organized religion. So it’s no surprise that there is a great variety of holidays for the atheists among us to choose:

  • Festivus: Popularized by Seinfeld, it’s a secular holiday built on the exact opposite of what commercialization has made of Christmas. Instead of a Christmas tree there is a Festivus pole. There’s the Airing of Grievances, Feats of Strength, and of course the Festivus miracles which is the term used for easily-explainable events.
  • Newtonmas: December 25th is the birthday of Isaac Newton under the old Julian calendar. This is a popular holiday among skeptics as a parody of the religious view of the natural world. Jesus, to many, is an icon (perhaps unjustly) of unscientific thinking, and relying on faith vs reason in understanding the workings of our mind, society, and the universe.
  • Holiday: A little know, but my favorite holiday in terms of comedic value is called simply “Holiday”, and is the Christmas competitor from the “religion” of Pastafarianism (officially called the Church of the Flying Spaghetti Monster). It does not take place on a specific date and does not have any requirements, because Pastafarians “reject formalism”.

The Black History Holiday

I never liked Kwanza. I know I’m a white guy, so my opinion should theoretically not matter on this subject, but I’ll voice it anyway. It has evolved into a positive holiday of celebrating African American heritage and unity. However, it was born on a message of segregation  as an anti-Christmas anti-white holiday. I think it served its purpose well as part of the civil rights struggle of the 60s, but beyond that it seems more like a symbol of separation than unity. That’s probably why only about 1 percent of African Americans celebrate it. I was always a believer in the Martin Luther King Jr message of unity vs the Malcom X’s message of separation. This holiday to me is unfortunately too intricately connected to the history of the latter, but perhaps that will change with the passing of time.

The Capitalist Holiday

The holiday season is a holiday in itself for the capitalists. If you have products to sell, this is a good time to sell it. In just online shopping, there’s $35 billion of American dollars on the line every year. That’s a reason for business owners to be filled with cheer, even in difficult economic times.

Paul Ryan is no Sarah Palin and no Ron Paul

Posted on by

Romney announced that his vice presidential running mate will be the Representative from Wisconsin Paul Ryan. As the chair of the House Budget Committee, he is mostly known to the public as the person who proposed a bold plan that tries to deal with rising Medicare costs. I would make an analogy that he is proposing to deal with a serious infection in the foot by amputating the leg. While this may be an effective solution in an academic sense. In the broader social and economic reality of our country, I think his plan is not only naive but, more importantly for his current political situation, unpopular and unsellable.

So while Paul Ryan is no Sarah Palin in that he is intellectually rigorous. He holds some  extreme views on issues that actually matter for our countries future. But neither is he Ron Paul, because his fiscal conservatism extends only to some parts of the economy, and do not seem to be based on a consistent set of principles.

On a purely political level, I think the Romney-Ryan ticket will lose in a landslide election (60-40 perhaps). Romney reminds me of Kerry in that he is a boring, awkward, gaffe-machine. It’s unfortunate, because I would love to see a strong fiscal conservative debate our president, and create some distance between the two candidates. Because without a strong challenger, it seems that our foreign and domestic policies are not likely to change.

On a positive note, I’m glad Romney picked Paul Ryan as opposed to a more gimmicky running mate. Ryan is known to speak his mind, and make careful arguments. So hopefully he will help inspire some good policy debates, as opposed to just the flinging of radicalized talking points back and forth.

Happiness is a Cheap Bike

Posted on by
Reply

For the last 3-4 years, I have been riding a $100 road bike purchased at Walmart. Concerned friends told me that it’s a waste of $100 because it would break down in a week. Instead I was recommended by said friends to buy something like a 1985 Bianchi at a garage sale (for the same price) and that would last me much longer, or instead save up and get a legitimate new $700+ version.

Let me tell you something, friends. I like my life simple and functional, and while I understand that you have to pay for value, I’ve found that in most aspects of my life, I can be happy with the cheap option, at least at first. I like learning about what works for me by starting with the cheap option, embracing it, and fully exploring the ways in which it is awesome and of course the ways in which it sucks.

If the cheap option leads to a serious interest in the activity it relates to, I then invest in a more expensive option. In most aspects of my life, I have yet to move past the first stage of enjoying the hell out of the cheap option. For judo and jiu jitsu, all my gi’s are still some of the cheapest out there (Fuji). Same goes for mp3 players, computers, furniture, food, cellphones, coffee, and women (only kidding on this one).

Well, my bike finally “broke down”, because the repair guy messed up an inner tube swap ($5) that now requires a $40 axle replacement. I said screw it and bought a new bike for $70. This time: a mountain bike. I’m as happy as a little kid with it. It’s not going to be as fast as a brand new Bianchi, but it’s pretty damn comfortable, and gets me from A to B in style.

Life is good.

The Past and the Present of the Income Tax

Posted on by
3

The current tax code is a mess, and that fact is used by every politician to peddle his/her personal agenda, whether that involves raising or lowering taxes. In 1913 the tax code was contained in a single 400 page book, and today it spans volumes with over 70,000 pages. There are 60,000 full-time lobbyists in Washington focused on pushing tax reform of one kind or another. It’s an industry in itself.

I think who we tax, how much, and for what purpose fundamentally reflects our view of human nature and justice. On this subject, I’ve always been very torn (at least at the philosophical level). On the one hand taxation at its worst is an oppressive tool of government bureaucracy backed by force. On the other hand, at it is best, it is a funding source for implementing the ideas that emerge from our democratic process.

I find too many people are unaware of: the past and the present of the U.S. income tax. Le me put up some simple numbers…

That’s the income tax for the top bracket from 1913 to 2009. Throughout its history, it’s gone under 10% and over 90%. These days, I hear conservatives will argue that 10% marked the prosperous times, while liberals will argue that 90% was the real source of growth. It’s a chaos of facts interpreted in any number of ways to prove arbitrary subjective points. Though there is science amid the chaos, sometimes it’s hard to identify.

The other set of numbers is the current marginal income tax rate per bracket:

  • 35% for over $370,000
  • 33% for $171,000 to $370,000
  • 28% for $82,000 to $171,000
  • 25% for $34,000 to $82,000
  • 15% for $8,000 to $34,000
  • 10% for under $8000

I do want to emphasize a surprisingly misunderstood fact. If I make $400K, only $30K of that is taxed at 35%. The rest is broken down into the above brackets and taxed at 33%, 28%, 25%, 15%, and 10% respectively.