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National sales tax, When Belief in the System Fades, Living Simply, Malinvestments, union influence, handbaskets to Heck, sickcare/entitlements, Tibet, Human Capital and more  
(week of April 5, 2008)


For more stimulating ideas, please visit the Of Two Minds blog and Readers Journal.


R.W.L.

I read your site from time-to-time, as you tend to focus on concepts of current political and economic interest. I caught your article on National Sales Tax, and thought, well that sounds reasonable.

But then I thought about the unintended consequences. I am 53. All my SAVINGS have been Taxed for INCOME, except 401k money Instituting a NST, would be great if I was 20. But this STEALS money from me, that I was already taxed on.

You mean, now we imposed a NST, which is 20%, so if I take money out of the bank, it gets taxed again at the higher rate.

What's good about that??


Strawgold

I read with keen interest the latest message with his very reasonable remark about already having been taxed on his retirement income and knew the NST would get him again. (see above--CHS) Welcome to the world of double taxation, owned up to.

There is no going back and removing the idiocy of the past. He's not the only one who has been taken to the cleaners by the big lie known as "retirement funds" SS - which has been raided for every "conceivable cause" known to bureaucrat since it began. Persons such as myself can't take full retirement till 66 now and by the time my kids get there, it on't be around at all, but you can count on the fact that they will keep "withholding it" and "matching it" till it runs completely dry, all the while telling us they are going to "fix it" just as soon as "the new administration" takes over. If we are going to make a difference, we all have to accept that we have been ripped-off and adopt a policy to fix it for the next generation.

The 'tiered" NST you brought up, was sensible and was, I believe, part of the last effort - and of course, nothing will ever be "across the board" but if they work on it, and look into the "estimated" fraud a little more closely (it won't be looked into closely by the bureaucrats, count on it) it is an idea whose time has come - or at least something that should be given a chance to be voted upon.


Don E.

a couple of notes on the tax thing - a worthy subject and well presented. one is that i believe ssi is already taxed. if those aren't taxes i am paying on my ssi then someone is really duping me. the other is the size of the black mkt/underground economy. i am a firm and staunch believer in this sector. i love garage sales. i buy used all the time from others. i think in places like maine the underground economy is especially active. i am just in the process of trading my old mule harness for firewood for next winter. It feels so subversive and so damned good to deal with others without the gov't. being in the midst.

ah, i forgot the local service providers. actually i always pay in cash and tell them upfront that i think taxes are unreasonable and how they deal with the cash is their own affair. some react with horror and mouth all the correct phrases on how they 'always' declare everything. don't know if they do, but they are cautious. others are more noncommital on how they deal.

i honestly don't think the small local service providers are ripping off the gov't. to the detriment of the rest of us. my feeling is that with the load of local licensing fees, insurance premiums, etc., etc., that they are already being deeply gouged by the authorities. it is a a very competitive area, home services, with free estimates making everyone cut to the bone to get the job. a friend/neighbor who does building, and is a very, very fine workman, was forced out of biz due to insurance rates on his workers. we shoot ourselves in the foot - feet? - with this sort of thing. when we go out to eat we always tip in cash, no matter how we pay, and leave 20%. waitresses in maine make about $2/hour.


Michael S.

"It's simple, numerous advantages are straight-forward, designed to catch everyone and plays no favorites because it is based on "purchase alone."

I'd love for this write to defend the point that it "catches everyone."

The CEO's would simply have their salaries raised, if that's possible, to make the national sales tax a moot point.

The poor, on the other hand, being the victims of wallstreet, get squeezed dried even more.

The propagandists love talking about "preceived fairness," a strawman, over the systematic disparities which asymetrically allocate wealth in the first place. Of course, when the "systematic disparties" are addressed, those in power scream "that's socialism."

The piece below is one that I've read many times, that CEOs smartly pass their tax burden to the shareholders and workers:

"It's one of the easiest CEO perks to pick on: the so-called tax gross-up when a company is taken over. When SBC (T ) snatched up rival AT&T (T ) in late 2005, outgoing AT&T CEO David Dorman walked away with $29 million in cash and other severance. To help cover Dorman's IRS bill, the board forked over $11 million more."

businessweek.com

thus, the "income tax bills" of the rich are ultimately paid off by the working class and hence they're simply symbolic guestures of eqality.


Steve S.

The article looked more like a PR statement for a national sales tax. Stating that it will not hurt the poor is disingenuous at best. The plan is merely a way to effectively eliminate the capital gains tax.

Example: A household makes $30,000 and scrapes by with no savings. Basically, they spend $30,000. Another household makes $1,000,000. Do they spend $1,000,000? Doubt it. They probably save or invest a big portion. That investment grows exponentially without any tax, because it is not spent. Therefore, the sales tax rate would have to be raised to make up for the lower contribution by the wealthier taxpayers.

The bottom line is, who is pushing the national sales tax? Look at that and it will tell you who it will benefit. Rich people with high income and capital gains.


Cheryl A.

One of the editors on Minyanville just made the following post:

"One of the most questionable legislative moves in the modern era is getting rammed down taxpayers' throats without a peep from the mass media. It is the proposed loss carryback provision, which would allow homebuilders to recover taxes paid during the bubble years by offsetting the income with losses they are incurring now.

In other words, the taxpayers will give back to Robert Toll and Ara Hovnanian millions of dollars to prop up their closely held companies, ie companies in which they have majority interest and/or control, whose stocks these individuals had the magic foresight to dump by the millions of shares right before the whole Ponzi scheme collapsed."

I think I am going to burst. It appears there is no end to the insanity and plundering of the taxpayer. Not that I thought there was, but just when you think a low has been reached a surprise arrives to demonstrate how naive one can be.

Thank you for letting me vent.


M.R.H.

I can't tell you how much I appreciated reading this essay When Belief in the System Fades
(March 12, 2008) and how true everything you say in it is. I am a registered nurse for 38 years, worked long hard hours for a sizable hospital, putting in double shifts when needed, working on my off days when they had no other nurse to fill the gap, working towards that goal of a nice retirement, wanting to be a team player and a good employee, keeping my nose clean, my head down and doing my job.

Then after I was employed there for 18 years, the hospital was sold and our pension system was jettisoned and the new owners "re-employed" us without the benefit of the company pension plan. After that I learned to re-evalute my professional life, work only for my own benefit and never do anything extra unless it benefitted me. And corporations wonder why they can't find loyal employees today? Think they ever heard of The Golden Rule?

Thanks for the clarity of your thought. I forwarded the above essay to many friends and family. I know the majority will be in agreement and the minority soon will be when some like event wakes them up too.


Scott M.

Hello again Charles, and thanks for another thought-provoking article Why We're in this Handbasket--and It's Getting Hotter (Part 1) (March 25, 2008).

You are so right about the mountainous twin deficits and the magnitude of US dollars held in foreign hands. Conundrum is the right word here. So is hand basket an appropriate metaphor.

Foreign governments are stuck with mountains of US dollars with essentially few options for getting rid of them (at least anything that might appreciate in the short term). The Chinese and other nations have effectively, as you suggest, financed the US war with Iraq, by extending virtually unlimited credit to the USA. The (I think) brilliant economist Dr. Michael Hudson believes that the US has neither the capacity nor the intention of repaying these loans from foreign countries.

The big questions are: Why do foreign lenders not see how they are being used? Why are they not acting in their own self interest as the US seems to be (at least while the party was on - as it's hard to make that point now)? And when will they wake up and refuse to buy up American debt instruments? The bursting credit bubble would potentially be painfully exacerbated by such a realization. Talk about yelling "fire" in a crowded room.

My suspicion is that it is largely American military support/power (or the fear that US protection could be withdrawn) that causes US trading partners to hold their noses while they dutifully buy up the toxic waste in droves. Can they be convinced to lend support to a declining dollar as well? Even with the self-serving component of supporting the value of their US dollar "investments", that hope may soon be dashed in the face of dangerous levels of domestic inflation almost everywhere in the world.


Peter N.

The below is attributed to Wilson 6 years after his creation of the Federal Reserve Bank . . . there seems to be a bit of debate about its accuracy, but such as it is:

Woodrow Wilson signed into effect the Federal Reserve Act on December 23, 1913. And said the following just six years later.

"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men."

- Woodrow Wilson 1919

Source:

Attributed. In reference to signing the Federal Reserve Act in 1913. Most likely a compilation of 2 quotes from his book The New Freedom, 1916. No source found for "I am a most unhappy man. I have unwittingly ruined my country."


W.A.

Thanks for your writing. I found a link to "When a Belief System Fades" which was interesting.

I also found in your most recent post:

"The ills of the American educational system are well-known. Low test scores compared to other nations, half the PhDs in hard sciences are awarded to non-U.S. graduate students who we then kick out of the country in the name of "Homeland Security"--great idea, let's make it nearly impossible for the smartest, brightest people we educate to work here! That is a recipe for Homeland Insecurity, at least financially."

There has not been adequate employment for PhDs in the hards sciences in the US for at least a decade now, since the first expansion of the H-1B visa program in 1998.

Please see:

ucdavis.edu

Consider that the processes you explained in "When a Belief System Fades" have been in operation in the institutions which train and employ highly educated/trained scientists and engineers for half a generation now. Many foreigners with little capacity for due diligence are convinced that they are the only hope of an America pining for technologists, yet unable to produce them for lack of native intelligence and vigor. They are "believers" and easy marks for the institutions. Others are more cynical and worldly, knowingly working for lower wages which are the price for a green card, and maybe even citizenship.


Sean W.

Thanks for the post on human capital. Dawes's 'insight' was also observed by Adam Smith, who noted Labor is the source of wealth in capitalism, not land or gold. Of course, Marx and a whole host of subsequent economics have argued similarly, and I have for years tried to pound into my students' heads this very notion. Further, from this conception of wealth, it follows that poverty is at least as much a social problem as a monetary one. This applies to poverty differences between nations, as well as social classes. However, as geography plays a key role as well-- see Jared Diamond's work, or any Human Geography textbook.

D.E.

Ah, the art of triage. Having been a triage nurse I hate to tell you how easy it becomes to make the hard decisions of who gets treated and who not. I think the art has all but disappeared in the battlefield since so many can be saved now with the extraordinary a dvances in medicine/trauma care. (I do not begin to believe the military does this altruistically but is almost solely concerned with its casualty figures. - color me bleak) The real problem comes later, when the patient who probably might have better been left to survive, or not, on his own dime comes home brain-damaged and in need of enormous family and community services. I fear I am far too much of a fan of Dr. Krevorkian, legalizing suicide and even mandated birth control. maybe I am a 'medical fascist'?

Michael S.

you said:

"First, admit our entire "healthcare" a.k.a. 'sickcare' system is irredeemably broken."

I don' know if you saw this study:

"Smoking is a major health hazard, and since nonsmokers are healthier than smokers, it seems only natural that not smoking would save money spent on health care. Yet in economic studies of health care it has been difficult to determine who uses more dollars ó smokers, who tend to suffer more from a large variety of diseases, or nonsmokers, who can accumulate more health care costs because they live longer."

nejm.org

but it caused a big stir when it was released; i.e. most health care advocates have consistently argued that a system based on prevention is cheaper but, based on scientific studies, this position hasn't been verified.

As more proof, I'd like to highlight the automobile insurers who know that when cars have safety features like airbags, for example, drivers drive them faster despite knowing that airbags don't make high speed driving safer!

For example, look at this study on adaptive cruse control:

"The results show behavioural adaptation with an adaptive cruies control (ACC) in terms of higher speed, smaller minimum time headway and larger brake force. Driving style group made little difference to these behavioural adaptations. Most drivers evaluated the ACC system very positively, but the undesirable behavioural adaptations observed should encourage caution about the potential safety of such systems."

SOURCE: Behavioural adaptation to driving with an adaptive cruise control

or this one on antilock braking:

"The safety benefits of antilock brakes (ABS) have come under fire by such groups as the Highway Loss Data Institute (HLDI), who published a report that said antilock brakes are NOT reducing either the frequency or the cost of crashes."

aa1car.com

So I'd claim that preventative care could actually cause people to become more complacent and/or overly optimistic about their futures and, thus, they'll make the same logical mistakes as drivers who drive faster if, for example, they have an airbag even though it doesn't make those higher speeds safe.

I'd also be hesitant to say that "health care isn't insurable" since putting folks on ventilators isn't "health care" if those patients would remain on their back and nearly brain dead for life.

Thus, I truly expect people to demand euthanasia long before the whole system is broken down since poor treatment would be like living in hell; i.e. the elephant in the room is "labor intensive end of life care" and I expect that, when push comes to shove, euthanasia will be offered.

Specifically, my grandmother has seen neglected and "drugged up" seniors in nursing homes and she's told me: "I'd rather die quickly and in my sleep than in their hands."


Leon T.

I really enjoy your blog and have been reading it daily now for almost 10 months. Last April, I got very worried about owning my own home and the coming (at that time) problems in housing and the economy. So my wife and I sold out condo in the Boston area and moved to a nicer rental apartment that costs us less then our fixed rate mortgage did (interest + taxes + utilities + maintenance). I've felt a lot better ever since.

In any case, I saw this article recently:

chicagotribune.com

and I thought that there was something incredibly orwellian going on here. The fact that the IRS is making people who don't file a return file one to get the rebates seems to me like an incredibly good way to augment a national database of people who had fallen "off the map" so to say. People who have been making very little money and so weren't filing returns who the government had essentially lost track of. An additional 20 million and their children according to the estimates in the article. If I were really a hard core conspiracy theorist, I would say that this is in preparation for a draft, but I really don't want to think that badly of the government.

I was also trying to think of reasons that this wouldn't be true and that I was reading more into this than was actually the case. Obviously, those are the people whom you're trying to help with the stimulus, but at the same time, those people don't vote, so it doesn't really make sense to me why the government would try that hard to give them money.

In any case, I don't have time to think about or research it more, so I thought I would pass it off to you as a reader comment. Feel free to use or discard as you like.


Lee B.

As an early boomer social security & medicare recipient the healthcare debate is anything but academic. My comment is that if Mexico can offer single payer insurance at $175.00 per year (2004) why can't the folks who have money to go to outer space put some sort of medical program together? Mexico's program, I am told, is similar military medicine. There are no ferns in the hospital lobby, nurses do nursing not pillow plumping and all meds are free. Patients are grouped together, bused from the villages en mass to a central hospital and marched through the process, forms, blood work & so forth as a group.

No luxury treatment, but much better than bleeding to death in the parking lot.


Riley T.

As I have said before, I see many problems and I have no solutions.

The subject in question is a lovely five year old girl. She has been in a horrible car accident and has broken arms and legs and countless internal injuries. She arrives at your (or one of your readers) emergency facility. She requires years of surgery and physical therapy.

Case No. 1. She is here illegally and has no insurance and her parents have no assets.

Case No. 2. Her identity is undetermined but surgery must start immediately.

Case No. 3. She has a good medical plan but as the cost of taking care of this little girl will be millions the insurance will only cover part of the bill.

I would like to know what you or your readers would do? I have no answer. Please no babble about if-then stuff. This is now and that little girl needs an answer now.

I said I would treat the girl's injuries despite the parents' lack of insurance. Riley's response was thought-provoking:

I am glad you made the point about medical cost of keeping the elderly alive. My beloved Uncle had fifetuple by pass about 8 years ago. Now he is in a home, has dementia, doesn't know who I am, he is in good physical condition and probably in an adult diaper. What a horrific end for a wonderful man because so many emotional people can't make one objective decision because it causes them some pain.

One of the big reasons I gave up on the solution part, it is clear that the emotional part of the human brain totally overwhelms the objective part. I believe that our species has hit a dead end. A large section of India is facing starvation because of a large plague of rats. Rats they won't kill because it might be dad, yet they are begging food from other countries. I think we should feed the people to the rats.

P.S. You just spent millions on one person when that money could have given a thousand decent dental care. I am not kidding I have no solutions to any thing.


Jon H.

Iím no expert, but I have an idea that might help ease the pressure on the credit markets.

If everyone is so worried about the $500 trillion in derivatives unwinding and causing a global market meltdown, why not try to make them go away?

Obviously, the government cannot outlaw the use of them because that ship has sailed. But it could make it very unprofitable to have them.

What would be ideal is for all parties involved in derivative transactions to slowly unwind their positions and refrain from making new ones. The only way I can see that happening is if the government implements a gradual tax on any profits. Therefore, in order to capture those profits, the tax incentives would penalize those who wait to unwind. For example, start with a low tax of, say, 15% for all profits made on derivative transactions that are concluded within the next 30 days. After that, the tax rate increases by 5% every 30 days. Therefore, someone waiting for six months to shed their position would pay 40% on the gain. The longer they wait, the higher the tax rate.


Michael Goodfellow

I agree that unions are the backbone of the Democratic party, and get their way mostly now. It's not just teachers, but prison guard unions, etc. Still, in a crisis, the press will be all over their salaries and benefits. In Europe, where unions have a bigger percentage of the workforce, cutting benefits results in strikes. People more or less support the strikers, since they fear they are next.

In the U.S., they are seen as a spoiled minority, and I don't think they will be supported. Can you imagine BART going on strike for weeks like French bus drivers and getting away with it? Plus we aren't just talking about a transit strike in otherwise good times. We are talking about it happening in the middle of business closures and real estate foreclosures all over the place. They will be seen as taking advantage of a crisis, and not as just protecting their jobs.

I think the San Jose Mercury news listed the salaries of some union members, not too long ago. I think they had a list without names or something, and were asking the union who was the $150K firefighter (or whatever it was.) I don't remember the details. I agree it doesn't happen a lot though. Still, the bloggers have no fear on something like that, and we've seen those stories go from blogs to the mainstream nowadays.

As for cars, I've been somewhat surprised that there are so few city cars sold in the U.S. I would think a really comfortable, high mileage two-seater would sell here, if it were cheap enough. If you figure what long-distance commuters spend on gas, doubling their mileage would pay for a cheap second car. That's got to create some kind of market, if gas prices stay high.

Things like the Smart are close -- people think they are cute and like the idea of high mileage. Still, it only runs on premium, I'm not sure you can get it with an automatic, and they are still pretty expensive. If India can build the Tata Nano (Tata is the company name) for $2500, it seems like we should be able to build something similar with U.S. safety and emissions standards for a few thousand. I'm not sure why you can't just put motorcycle parts in a bigger shell. The base Smart car is $12,000, I think, and that's without any options.

I see pictures of Mexico, which I think is still rich by Indian standards, and there are still a few ox-drawn carts. I'm surprised you can keep an animal housed and fed and still make any money doing the jobs that these carts are used for. I would think a cheap car would be cheaper than an animal for people in that situation.


Albert T.

China Clamps Down on Tibetan Protests (Radio Free Asia)

"Chinese authorities have locked down the Tibetan capital, Lhasa, after mounting anti-Chinese protests turned violent and an unknown number of people were killed and injured when Chinese forces fired on rioting crowds."

Tibetans Cite Spreading Unrest

China Moves To Arrest Hundreds

Last week I went for a walk from 42nd street and 3rd avenue towards the U.N. in a square fashion just to clear my head and get some food depending on where I end up. I saw about two hundred people across from the U.N. with Tibetan flags, at least thats what I realized after reading the "Free Tibet" signs. I felt really really bad but knew nothing would happen until China collapses and breaks up and even then it might be too late. I didn't think they were gonna have an uprising or had one ongoing for some time just thought it was one of those protest just happened to pass by.

Dalai Lama assails curbs on protest in Tibet

I notice that our media just covers this as a non event but this will bear fruit. Although not the ones anyone will expect, my guess is any other ethnicity that wants to resist assimilating into China will not peacefully sit on the ground with a candle in their arms chanting budhist psalms while being beaten or shot. They will take cues from a non-violent protestor and do the opposite. Even Tibetans themselves will see non-violence is treated the same way as violence.


Roger

Charles, it's getting spooky out there. One of my contacts thinks the home markets could easily see at least 15% more on the downside. I concur and think it could get worse. Pendulums usually overshoot at both extremes. Here are my thoughts:

- We are on the cusp of a financial crisis, one based on well-deserved mistrust of the financial markets. All of the lying, deception, self-seeking of those who put their own good ahead of the public is now coming home to roost. The proverbial 'golden goose' is on life support at best.

- We are soon to rediscover the virtues of community unity, being a 'good neighbor', etc. That is the 'glass half full' perspective of what is coming and indeed already here. We will discover that we are not as nearly as independent as we would like to think. Modern life and conveniences has made our communities soft and specialization has discouraged development of everyday skills necessary for basic living. That is about to change.

- Average home prices remain poised to continue falling. Until the average family is able to afford a home on what should be considered a reasonable family income, affordability will remain the paramount issue. I believe that scenario remains in our future and all of the attempts to 'fix' the housing market will only delay the correction of imbalances. Cheap interest rates have enable overbuilding of homes far in excess of what is needed.

This is otherwise called a misallocation of capital. Instead of building and repairing the infrastructure, we built homes that speculators thought they would keep for a couple of years and then sell for 'big bucks'. The only problem with that is who is making the 'big bucks' these days? Fewer and fewer of us. McMansions of today will soon become the boarding houses for poor individuals so prevalent in the 1930's and 1940's.

- We will know we've reached a market bottom when the stocks present a reasonable valuation based on Price/Earnings (real earnings, not the fraudulent crap spewed out by Wall Street when it cooks its books to make things appear better than they really are. Think Enron, Fannie Mae and others for valid examples). We're nowhere near that place and between here and there lies a great deal of pain for investors.

- The beauty of dividend yield is soon to be rediscovered as investors learn that the stock markets don't naturally go up 10% - 20% each year. Some notable examples are the Zimbabwe stock market. Given Zimbabwe's inflation problems, I'm not planning on investing in it anytime soon.

More to come as we continue watching our creaky financial system struggle under the strains of years of malinvestment...


Riley T.

I don't seem to want to write much anymore, I think do to seeing many large problems and not having any solutions.

Some observations:

The financial markets are reminding me more and more of the play " The Producers ".

I believe the illegal drug market has pumped 300-600 billion into the financial markets and real estate markets every year. The beauty of what's happening now is the new rich are finding that wealth is an illusion. How do you store and keep wealth safe?

Every civilization has failed, all wealth is eventually lost.

If the need comes to use gold to barter with, how long do you think any one of us might get to keep it?

May be all the drug king pins will get mad at the bankers and shoot them. The drug players have a wonderful system of justice for those who disappoint.

I know the adjustment period will be tough, but I think the majority of the people will be happier afterward.

Mexico a much poorer country has a much higher feel good rating. We ignore this as we ignore any thing else that might cause a little pain.

The fact that so many have gained so much by shuffling paper and selling drugs has been ignored by justice system for so long the only conclusion is that the are in on it.

This most certainly includes the police, the FBI, the SEC, the CIA, the justice department, the list is endless.

If you think this is paranoia, maybe so, but a wonderful example of this is the Catholic Church. The wide spread child molesting and the wide spread cover ups made it very clear that each individual Priest may not have done the molesting ( raping of children ), but they all knew about it. Even after this came out the only punishment was financial. A few token Priests were thrown to the dogs, but for the most part it was swept under the rug.

I think these are wonderful examples of end of Empire happenings.

I participated as much as any one in my way, don't get me wrong. Some clarity of thought and the time to think and read has only come when I retired a few years ago.

Well just some observations as I have no solutions.


Jamie D.

In 2004 or so I started googling "real estate crash" , "real estate bubble" and fell into the rabbit hole leading to contrarian investors, goldbugs, peak oil/water theorists, permabears, and social politcal doomers.

I started this quest to test my gut feeling that it would best to hold off on buying a house. Now it seems like I swallowed the red pill and have come to a new, uncomfortable consciousness.

My life has been propelled by catastrophy, small and large, and I am left wondering how this skews my self-identification on the doom-nirvana continuum? Am I an atomized worker bee with an internet connection and a loose screw? or a scion of 17th century patriarchs and matriarchs that got into little wooden boats to found the cities of Montreal, Albany and Dubuque?

Paralyzed I oscillate between states of clinging to the comfort of my current existance and the shock of re-encountering the questions of "food, fuel and fascism". Intellectually I know that nobody can tell me the truth, yet here I am asking for a gut check. Will I have been a faster at the feast or the only one not to perish from food poisoning?


Michael H.

I LOVE YOUR SITE, I came upon it while suffering. I am not much of a writer. My friend came across something that may be of interest: Google....You tube { Lindsey Williams+book }, what came up was an eight part movie..... The Energy Non-Crisis. I.E. there is no oil shortage, Gull Island, AK etc,....the middlemen I.E. everyone....especially the world bank & IMF set the price. Accordingly the u.s. is very oil sufficient. You may use this/or chose not to use this info in any way you wish.

Mike L.

Did everyone forget that wall st bonuses get paid in march. the fed just guaranteed all of bears bonus checks will clear, $3+ billion! the company may fail but all the boys get paid.

David S.

I really enjoy your website. I read it every day! I though that you might be interested in an article that I wrote.

Do You Want To Know?

Excerpt:

How can federal, state, and local governments make sound economic policy if they choose to ignore economic reality?

How can businesses and individuals make wise financial decisions if they don't know the true condition of the economy?

The answer to both of these questions is, "They can't!"


John P.

Re: Belief in the System

Charles you are too gentle minded. When real people in the american workplace realize that their boss is going to screw them over no matter how hard they work they take matters into their own hands. Of course they don't quit; we all understand that there is zero safety net and the next job is no better.

They sabotage their workplace. It happens every day all over the place. They erase needed data, miss-key financial information, lose the boss's messages and shred files. The most dangerous items in the modern american workplace are no longer guns but magnets and flash drives with virus's on them. Deny your file girl the day off and your most important documents could land in the shredder.

Speaking of which before you accept a foreclose force your mortgage service company to prove ownership and proper transfers of deeds. You just might get a free house out of it. That goes double for rental agreements as they are notoriously hard to file properly for minimum wage employees.

When I was supervising a work crew for the first time I was shocked at the amount of flat fraudulent billing of work that was happening. Between that and tool thefts it was difficult to get any actual work achieved at all. Why did this happen? Because the business owner refused to listen or act on employees concerns. They knew that the sloppy workers were getting paid as much as the good workers and nobody was treated with respect. I wasn't allowed to fire the slackers so the whole merry go round kept turning.

So next time that you are standing in line, waiting on hold, dealing with a "data error" at your credit card company or failing to make part A fit in slot B think "sabotage."

Happens every day.


B.K.

This article (When Belief in the System Fades, March 12) hit home for us. We decided to pull the plug on megacorp 5 years ago at the age of 50 and simplify our lives. We bought an old homestead in the hills and pursue our interests instead of work. We found that we could live well on less than $20k a year (health insusrance brought it up to $25K). With everything paid for, a little savings and a part time job can get you enough money to live fairly well.

If you have all day to yourself:

You don't need to eat out every day, You can cook great meals from scratch.
You don't need to dread the heating bill, A couple hours, a couple days a week, for a month = year's firewood.
You don't need expensive clothes, Thrift stores work well. You don't need expensive toys, hiking boots, a bike, a fish pole work fine.
You don't need a car, well you do need a car, but it does not need to be much. Insurance in country is less.
You don't need a paper, Internet is more versatile.
You do need critters. Finally you can have a dog or cats and have the time to be best friends.

We have already had five years of stress-free living, unless you call preparing for the world to end stressful.

I tend to think of preps as insurance, and the 401K as my job. I've been dabbling in gardening and chickens. Glad I don't have to live off them. It will probably take me five years to figure out what will grow here. Chickens are a gas, but need to be added to periodically. Need to get a coop built this year.

I enjoy your articles, always thought provoking. I am trying to live the life out here. Beats work.


Lee

I saw a nature show on PBS that seemed to show primates have a sense of fairness. I believe I've seen it in my cats, at least a sour look if there is some unfair food division or some such. And I am reminded of the sardonic saying attributed to the Soviets "We pretend to work and they pretend to pay us". As for most of our fellow citizens, the sanctions against anything less than total selflessness are what is behind all the long hours of doing stupid things. I can't think of how desperate I'd have to be to do the morning Wal-Mart cheer.

S.J.R.

RE: Tragedy & Hope: A History of the World in Our Time :Yes it is a massive volume, but Alan Jones did an excellent job summarizing it. I would start there. Alan's book is How The World Really Works and it summarizes nine important volumes.

Michael Goodfellow

Well, when you talk about factory workers and academics, you are mixing two very different groups.

From my own experience, and from what I've read, the "elites" (like the high tech workers I know) are the ones who put in the long hours. And yes, they could take less demanding jobs, but that would be a considerable drop in status as well as pay. After all, who wants to work some 40-hour job for plodders when you could be out changing the world? I don't have any experience with academics except at the universities I attended, but they definitely felt like they were making a difference, not just teaching and doing admin work to get by.

So I'm not sure a slowdown is really going to cause those people to just give it up and become slackers, doing the minimum work to support themselves. Some might, but others will just take on non-paying jobs. For example, a lot of the computer programmers, if they couldn't find paying jobs, would do open source programming. It's a way for them to maintain their edge and to show off (status again.) Your comment that they don't have to work that hard is like telling professional athletes that they don't have to work that hard. They should slow down and not try to be the best! I think you'd get the same bemused reaction -- they aren't in it for the money. The money just proves they are the best.

As for the factory workers and similar "routine" occupations, they've been losing hours and pay for decades now. I really don't understand how anyone in the auto business dares go on strike anymore, or even joins a union that pushes for all sorts of concessions. The U.S. auto industry has been losing market share since the 70's. These people have spent their whole working lives watching their companies slowly die. What does it take to make them wake up? Don't they ever wonder if it's due to the unions? Due to their high benefits and salaries, the strikes, the work rules, and the resistance to automation and outsourcing?

After decades of beating up these companies and screaming about evil management, what are they going to do when one of the major car companies just rolls over and dies? All three of them are borderline bankrupt due to the benefits stacked up for retiring boomers. Chrysler is has been passed around a bit lately and is currently owned by Cerberus Capital Management. I think I've read that Cerberus is having bond trouble. With trouble in car loans and a general economic slowdown, it doesn't strike me as impossible that the weakest of the companies will go bankrupt. What then?

In any case, I don't think that a broad section of the American workforce is just going to turn into happy hippy campers who don't sweat the grind of a 60 hour week. More likely, there will be a lot of unemployment, and longer hours for the rest, as companies try to stretch their payroll dollars further, and dump anyone with full benefits.

People say that Europe is more like your ideal, with few people willing to spend all their time at work. They have had high unemployment for decades, with young people and immigrants just frozen out of the system. And they still have problems with automation and outsourcing killing jobs. I doubt they will come out of this any better than the U.S.



Thank you, readers, for such thoughtful contributions.


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