thousand mile journey
Jeffrey Sachs presents his latest book, The Price of Civilization: Reawakening American Virtue and Prosperity, on Charlie Rose's Show. You may want to pay attention to two dimensions in Sachs' view, which resonate with prior views I expressed on this blog:
1) Structural problem, or a) the mismatch between our skills supply and the demand of an economy to support our lifestyles;
2) Values problem, e.g., the common view on taxation not as a condition for civilization, but symptom of free-riders and/or government waste.
Surely, from the height of one's ivory tower, the commoner hears little about institutions mistakenly, if not criminally, entrusted with our money supply that have become too big to fail, a Tobin tax on financial speculation, or a qualified statement about the need for investment in scientific and technical education--yup, not all education is created equal. To place one close to Sachs, the discipline of economics should admit its limits and give up relax the status of dogma or ideology.
Couple Sachs' views with the following:
I | II |
The price of arrogance By Mark bennett "Mark" Sachs basically wants to transform the US into Sweden. He dresses up this call for social & economic transformation as a matter of "morality" and "virtue". Over and over he makes his case in an openly dishonest way. As of the United States had been Sweden in the past, had somehow lost his way and needed to come back to that system. He tells us that high taxation is equal to "good citizenship" and "civilization". Or in other words that anyone who doesn't want a country where half of national income is spent by the government is somehow a selfish barbarian. Its the basic dishonesty of the man and his arguments as presented in the book that makes it so bad. I could live with a book which called for moving to a different economic system. But its a different matter when a educated man confuses his own political desires with "morality" and "virtue". When people start dressing up their personal political goals as the sole embodiment of virtue, they have crossed the line. If an author says "we should make the US look more like Sweden", thats fine. But when that author tells us that any other government model than that of Sweden is immoral, thats not acceptable. Worst of all, Sachs is one of those people who believes in the paterialistic saving of the "common man" by the rich. Normal people are simply too stupid to know what is good for them. Therefore the rich should decide for them and the rich should take up the cause of "fixing" America in the name of the poor. He tells us that throwing R&D is the magic solution to every problem. He tells us, for example, that if we had just continued Jimmy Carter's energy R&D, America's energy system today would look radically different. But when you get beyond the empty phrases of "R&D" and look at what Carter's program actually consisted of, its not so nice. Carter's program was at its heart a program to shift the US to coal. And anyone who thinks that transforming coal into liquid fuel or building coal slurry pipelines would have been a step forward in American energy policy is crazy. And no amount of "research" into solar power can overcome the basic problems of cost and inconsistant power generation. People like Sachs believe that science is "magic" and that throwing money at R&D can change the laws of nature. But it is not so. We live in a world that is resource interdependent. Jimmy Carter's energy programs were based on the idea that science could make it 1950 again and deny the reality that America was part of the world rather than a standalone fortress. Carter's dream of an America run on coal was foolishness that was rightfully abandoned. And its also worth pointing out that the so-called countries of civilized virtue didn't themselves take it up in a way that led anywhere. The only way to improve America is to fix the problems of America. Trying to turn the United States into Sweden or Germany isn't a viable solution. What that means is looking at the institutional problems of America and asking hard questions about them. For example, that means asking WHY the costs of higher education in the united states are going up rather than just throwing more government money at the problem. That means asking WHY its impossible to get health care outside of an insurance plan regardless of how much money a person has. Why does it cost proportionally so much more today for simply medical procedures (take a broken arm) than it used to? Why do those costs seem to have nothing to do with the cost of the service delivered? What people in the United States need to do is to stop talking about fixing problems by throwing money at them and start fixing what is broken in American institutions by asking hard questions. The sort of easy answers (copy Sweden) that fill this book will ultimately lead nowhere. | An Eloquent Plea for Meaningful By Tiger CK In the Price of Civilization Jeffrey Sachs makes a powerful call for significant changes in the way the U.S. government manages the economy. According to Sachs, an economics professor at Columbia University, Washington has not devised policies that meet the challenge of globalization. Rather than investing in education and infrastructure, as many Asian countries have during the last twenty years, they have resorted to popular short-term stimulus measures such as cutting taxes and reducing interest rates. These problems have been exacerbated by lobbyists whose influence over Republicans and Democrats has made meaningful change impossible. Sachs argues that the best solution for these problems is for Washington to move toward a "mixed economy" in which a more effective government plays a larger role in regulating businesses. He believes that the current problems in the American economy are structural and not short-term. With the Republicans and Democrats both seeking solutions that will prop up the economy for a year or two rather than address the structural issues, the United States is on the wrong course and not likely to return to the levels of prosperity it previously enjoyed. These problems can only be solved if the government makes a long-term commitment to investing in industry in part by raising taxes on the wealthy and reducing the growing gap between the rich and poor. Sachs's bold argument is not likely to be welcome by either Democrats or Republicans. One Republican congressman (Paul Ryan) has already published a scathing review of the book in the Wall Street Journal more or less equating Sachs's proposals with socialism. But I think Americans fed up with Washington and its inability to solve the current crisis will find many of Sachs's arguments very compelling. The majority of Americans do wish that the government could be reclaimed form corporate lobbyists and the people empowered and they recognize that politicians on boths ides of the spectrum are part of the problem. Is Sachs right? I don't agree with him on everything but I do think he makes many valid points especially on the shortsightedness of our politicians and the methods that they are now using to attack our economic problems. I am not completely sold on Sachs's mixed economy solutions, however. I believe the key to economic policy is not whether we lean toward laissez-fair or a mixed economy. In fact, both of these have been successful in certain situations and may be part of the solutions. The key is that our economic policy be smart and farsighted. In this sense, Sachs's book is at least a step in the right direction. _________________________________ Rdl27c Connecticut There is an abundance of jobs out there, the problem is, Americans can't fill them! The rapid advance in technology that facilitates and enhances our everyday lives has also rapidly eliminated many job positions that are no longer needed, or can be accomplished by far fewer hands. It's the biggest irony of our time in that we both benefit from technology but at the same time we are hurt by it because we are not prepared for it. Americans do not focus on the right things. What's generally important to Americans is not what's important to the new job market. The emphasis should be on math, science and technology, etc.. But instead too many of our students major in things that don't build anything; things that don't improve anything; things that don't result in inventions for the future, or forward our understanding of the world we live in. We have a whole generation growing up motivated and inundated by crime shows/news 24/7. They would rather work in a crime lab than for NASA! They don't want to be astronauts or mathematicians, but instead CSI forensic examiners and ambulance chasing lawyers. I'm not trying to disparage these positions, but we've got enough people performing these tasks and we don't need more of them, we need less. Living in a culture that emphasizes all the wrong things, I'm not hopeful of a change anytime soon. The only thing we can do is continue to draw talent from other parts of the world to fill positions that we at the moment are not capable of filling. Sad, because we have the potential, but our culture says something different. |
To briefly return to our militant youth, they are a symptom many are looking to pin to a cause now. However, from the above views, one can see there are no shortcuts. Some day, in the future, it may be said that the thousand mile journey started with/in a blog.
The Greenback Effect - WARREN BUFFETT
Via Flickr:
Warren Buffett now says that the backlash from the huge spending that made the recovery possible maybe just around the corner. Writing an Op-ed piece in New York Times, he says: In nature, every action has consequences, a phenomenon called the butterfly effect.
Stop Coddling the Super-Rich
By WARREN E. BUFFETT
Omaha
OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.
If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.
To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.
Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.
I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.
Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.
The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)
I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.
Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.
Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.
But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.
Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.
When are we told it's bad?
Not a day too early? Cautious.
A day later? Clever; It may OVER by then.
Congressman Ron Paul compares our debt ceiling Bunraku with the following situation:
This is akin to a family "saving" $100,000 in expenses by deciding not to buy a Lamborghini, and instead getting a fully loaded Mercedes, when really their budget dictates that they need to stick with their perfectly serviceable Honda[...] Our revenues currently stand at approximately $2.2 trillion a year and are likely to remain stagnant as the recession continues. Our outlays are $3.7 trillion and projected to grow every year. Yet we only have to go back to 2004 for federal outlays of $2.2 trillion, and the government was far from small that year. If we simply returned to that year's spending levels, which would hardly be austere, we would have a balanced budget right now. If we held the line on spending, and the economy actually did grow as estimated, the budget would balance on its own by 2015 with no cuts whatsoever. We pay 35 percent more for our military today than we did 10 years ago, for the exact same capabilities. The same could be said for the rest of the government. Why has our budget doubled in 10 years?Now, who's the audience? Surely US. Outside the US, there might be those who'd still point out how responsible we are even when evidence suggested otherwise. Yet I have a feeling that the monied outsiders are not buying in and, to get a bit speculative about it, I'd not be all surprised if Mr. Murdoch followed his doctor's advice and took up residency in some warmer and humid climate, as in HK if you get my drift.
Here in the US we are well on our way to the structural adjustment I keep talking about, e.g., here, yet the latest Bunraku play in discussion shows that the burden won't be share equally, which can make the situation very volatile. The progressive left has been administered its 'leave politics for the lowly!' signal, now it's the turn of the Tea Party folk to be sent packing. Also here, as no bubble is in sight, the hope might well be that portions of the rest of the world would be become so much worse, and the more their difficulties are denominated in dollars the better, that we couldn't look so bad in comparison. So there you have a type of OVER. There could be many other types of OVER, but the fabricants of reality and money must have become so sure of their craft and our confusion that they are banking it all on the first kind of OVER. For the individuals not associated with these schemes there is only one way to see the light, get back to the fundamentals! Yup, those we've been conditioned to scorn. In case you don't know where to start, pick up any wise text that had been written more than, say, 100 years ago. Then, after internalizing some of that stuff, join conversations, talk back!
What do you see outside?
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| Francis Bacon, Study for Bullfight No 2 (1969) I think that man now realizes that he is an accident, that he is a completely futile being, that he has to play the game without reason. [...] You see, all art has now become completely a game by which man distracts himself (Bacon-Sylvester, Interviews, pp. 28,29). |
I have signaled the descent of our western system, based on economic liberalism and democracy projected to global proportions, since before its 2008 Crisis. After three years, during which governments have saved the capitalists by imposing austerity on the populace, we are semi-officially in a 'Small Depression' according to Paul Krugman. The ordering belief must be that in a world distracted from facts, the capitalists are the only ones to be trusted to {harness, muster, unleash, ...} {creativity, innovation, renewal, growth...}; indeed, capitalists are always selected according to their being best able to align self-interest with action, the best indicator of a well-running capitalist engine, that is. Stimulating the economy by placing money in the hands of the populace, yours and mine, mostly increases the trade deficit--I have written this too. Problem is that capitalists are known to buy imports too, unless they park the money in some unproductive niche.
So, what's a government to do anymore? A cynical may say that those populating governments are merely interested in preserving class privileges while subsidizing a nice show. While that is true, can you think of a way out?
For example, the French and Italians citizens thought that by electing economically-liberal demagogues, growth would be assured. I am skeptical Berlusconi or Sarkozy fulfilled any of their electoral promises. I am equally skeptical of Cameron's prospects in the UK.
Could it be that we need to take a half-step back from globalization? Taxing the incentive out of the financial speculation can certainly help. This addresses in part the flexibility of capital, and the question becomes, how flexible ought capital to be? For example, Simon Johnson, MIT professor and former Chief Economist of IMF, is not the only to suggest a tax on “excess leverage;" Tobin taxes are also quick to come to mind. Then, shouldn't we reconsider the French idea for a reduced work load for all, thus being able to employ more? Yes, we must also get adjusted to the idea that floating is better than sinking, while not as fun as swimming. In the end, I don't care much about the extent to which these ideas are in agreement with one's standard of free-market capitalism, for I remind you, what we've had so far hasn't been free-market capitalism either. Don't you also find it problematic that each time one tries to argue for active management of the situation, the capitalist (ventriloquist) counters that due to the complexity of the system, the self-adjustment capability of the markets, free of regulation and taxes, is better than any one's fallible mind?
In any case, the above ideas are neither of the left, nor of the right. They are about the art of living and reflecting upon it not long thereafter.
Shock and/or incomprehension, ensuing the massive destruction inflicted by World War I on so many, was not enough to prevent fascism or Nazism from coalescing as reaction to the dissolution of the world order, perceived then by the former as the result of the centrifugal forces of communism and/or international finance.
As wise people have always said, and the demagogues exploited to i/a-mmoral ends, humans need to believe in something greater than, say, self-interest. That something had better be based on moral law. Replacing sacred religion with the secular religion of self-interest, briefly introduced as part of a moral code based on natural law by Adam Smith, has not worked too well. As for how religion is observed in the US, let me just say, per out tax code and all that, it's big business for a minority and of whatever comfort for most--read this last statement in terms of effectiveness.
What do these youth know and the world hasn't figured out yet?
Do the police know whom they are con/fronting, as in interfacing?
Is democracy the legitimate monopoly of power? What makes it no longer so?
When humanism is lost, do we regress to homo homini lupus? How do we come back?
Crepuscular Murdoch or a falling media empire?
 |
Keith Rupert Murdoch, AC, KSG ( born 11 March 1931) is an Australian-American media mogul and the Chairman, and CEO of News Corporation.Murdoch's first permanent foray into TV was in the USA, where he created Fox Broadcasting Company in 1986. In the 2000s, he became a leading investor in satellite television, the film industry and the Internet, and purchased a leading American newspaper, The Wall Street Journal. Rupert Murdoch was listed three times in the Time 100 as one among the most influential people in the world. He is ranked 13th most powerful person in the world in the 2010 Forbes' The World's Most Powerful People list. With a net worth of US$6.3 billion, he is ranked 117th wealthiest person in the world. |
The resizing of the Murdoch media empire has just started. I think it's been payback time for a while, at least since Obama won the presidential election. While the circus took place on stage, with Obama and the other characters following their scripts, life was dandy. As the Conservatives switched places with the Progressives (recall those 8 too many years under Bush the lesser), the former needed some pacifying device; Murdoch obliged, everything looked under control while the stage and scripts were outside (Golem-like) surprise.
However, I think that some powerful figures must have gotten a bit nervous by media fueled chaotic phenomenon known as the Tea Party movement. I mean, they calmed Ron Paul down, someone who had built a credible image about fighting financial elites, and couldn't get some junior Congresspeople to toe the line? Ha, nobody should forget the Alexander Hamilton financial chapter in the history of the nation! That is, no mortal of the realm questions the financial logic.
So, I wonder where things went amiss and what Murdoch's contribution might have been. I suspect you cannot have good Americans think they may get Congress to listen to them on such arcane matters as kicking the financial can down the road. Could it be that Murdoch either switched masters or thought dangerously for one as if in defiance of old age?
Be that as it may, but what do you do when you've had a finger on all digital pulse? You start by turning Murdoch in to the British, let it go down with his base here, and finally administer justice.
 |
| Are we to witness a crepuscular Murdoch or a falling media empire? Are they going total war here? If it's the end of the person, we shall conclude that some people don't know how to age. Otherwise, I leave it to you, my reader(s) to figure the details of the next rise from the ashes of this media Phoenix... |
re-newed public consciousness needed
...are these the capitalists sucking the government, or the many taxes sucking capitalism?
Here's what Greg, from Brooklyn NY, a NYTimes reader, wrote back recently:
Democracies cannot last, because eventually the majority realizes that it can vote itself a stipend. That is where we're headed--any politician who promises to provide lavish services while cutting taxes wins in a landslide, despite the basic idiocy of that position. Eventually we will end up like Greece. Just as Greece is gradually becoming an economic colony of the EU (specifically Germany, or German banks) we will soon be an economic colony of China, to which we owe more money that we can ever possibly pay. The only alternative is to tighten our belts, pay more taxes, and accept more limited services. But we won't. The American Century is over, and with it our way of life.It's painful, some argue that even long necessary, but we are getting there.
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