Friday, July 8, 2011

Common sense view of government spending and debt

Imagine that you are a shop keeper in Anytown, USA. All of a sudden, a rich man moves into town. He starts spending a lot of money all over town, including at your shop. This makes everyone very happy, because the shop keepers make more profits, and they turn around and spend a lot of their profits locally as well. Now imagine that the rich guy likes it so much that he encourages another of his rich friends to move in about six months later. This guy likes to spend money too. Now things are really booming. Anytown shop keepers have never seen so much business. Some of them have to build additions onto their warehouses and hire more employees. This new rich guy has yet another rich friend of his own, and another six months later he encourages that person to move into town. Fortunately the local shop keepers expanded, so they are able to keep up. However, a substantial portion of the local economy exists largely to fulfill the needs of these three rich men.

OK. Now, what if, all of a sudden, all three of these rich men decide that they want to save their money and they stop spending, perhaps because they all become convinced that saving money is "virtuous". In fact, they pack up and move out of Anytown, never to return, because it reminds them of their free spending past. I suppose that from a personal virtue point of view they are sticking to their principles, and bully for them for doing that.

However, it doesn't take a person with a degree in economics to figure out that this kind of dramatic drop in spending will be catastrophic for local businesses. It's true that, only a year and a half ago, locals all managed to survive without any of these rich men living there. But now they have taken out loans to buy bigger shops and have more inventory on the shelves. They have way more employees than they used to. Some people even moved to Anytown in order to take these jobs.

Clearly, the local economy is going to go into a tailspin. It won't be as simple as returning to the way that things were because shop keepers and their employees took out loans to buy houses and cars of their own with the excess profits that were being generated. The bank won't let them just give those back, and anyway, interest is owed on those loans.

As it turns out, this is exactly the kind of situation we would be in, only on national scale, if House Republicans, aided by their bed-fellow Barack Obama, cut $4 trillion dollars of government spending out of our economy in the next ten years, as they are currently proposing. Of course, now that I said something partisan, the bickering will begin. Some of you guys will start spouting talking points that you heard on Rush Limbaugh or Sean Hannity. The national debt is too high. We can't keep doing this forever! We need to stop borrowing so much money. We can't afford all that interest. Those all sound like reasonable concerns, in the abstract.

However, let's at least not kid ourselves about one thing. Anytown is going be far worse off than it was before. Imagine that, even with these rich guys buying things, that some people were still barely getting by, and that there were still plenty of people who wanted work who could not find any. Things are not going to be better for these people when the rich people stop spending. There will be more people out of work, and therefore the competition will be even harder. Maybe these rich men are right that saving money is "virtuous", but it certainly will suck for the labor market. You can't tell me that cutting spending will be a good thing for the employment market. You can't hire someone without spending money, and if there is a lot less being spent, there will be less hiring.

It's also worth pointing out that nobody much cared where these rich guys got their money, in the first place. Well maybe one or two cranks were concerned that these guys were Mafia or something, but there was no proof, and if they are Mafia, you probably don't want to make them mad by refusing to do business with them based on rumors alone.

As it turns out, the for purposes of this story, none of these rich guys were criminal. However, you don't know where they got their money. They might have carefully saved it, or they might have borrowed it on their credit cards. Are you as a shop keeper going to interrogate them about it or are you going to make the sale?

All you know now is that a dramatic cut in spending will not be good for most people. It might be good for the rich people, at least in the short term, to save money, but pretty soon they will have no place to buy any goods and services. People will move out of town, and it will fall into disrepair. Even the rich people will not be able to sell their homes for what they originally paid, because who wants to live in a place where there are no stores or jobs.

It might seem "virtuous" to "cut spending", especially if a person is spending on a credit card, but everything has tradeoffs. For every cause, there is an effect. What effect are we trying to create?

To the causal observer, it almost looks like Republicans are trying to make the economy of Anytown worse, instead of better. Why might that be? Could it be that they think this could benefit them in elections if they blame the bad economy on other people, like the Mayor Barry of Anytown, who actually got the first rich guy to come to town, and tried his best to encourage them to stay? Could it be that they have other rich friends who plan on buying things up, once the economy is in the dumps? Could it be that they want the government of Anytown to be so impoverished that they can be easily swayed by someone with a lot of cash who will be able to dictate his terms, regardless of whether such plans are good for the people who live there?

Tuesday, July 5, 2011

Proof Tea Baggers Don't Understand Debt, Lack Common Sense

Let’s say you’re out of work and owe $14000 on your credit card. You’ve cut your expenses and managed to save up $1000. Now according to tea baggers, the smartest thing you could do is hand that $1000 over to the credit card company, even though most of that will go to interest and fees, instead of principal. Instead, people with common sense (i.e. not tbaggers) would say to the credit card company, look, we need to work something out, but I can’t give you all the money I have to live on. Instead, I might spend it on training, so I can get a new job and then be able to pay some of what I owe. See, even if you’re in debt, you sometimes still need to spend money for things to get better. That’s called using your brain, instead of your tea bag, to do your thinking for you.

Wednesday, June 29, 2011

Bachmann ludicrously thinks killing minimum wage would eliminate unemployment

Michele Bachmann really wants to abolish minimum wage for her corporate masters. That's why she was on hand in Iowa today, insisting that abolishing minimum wage could "virtually wipe out unemployment".

Of course no serious economist thinks she has the first clue what she is talking about. Current minimum wage increases have not increased unemployment. In fact unemployment rates have gone down (i.e. gotten better) from where they were at the height of the Bush Recession which started in 2007. This improvement in employment coincided with a phasing in of higher minimum wages.

Even dishonest Heritage Fraud-peddler James Sherk who was defending her said, "While large numbers of people do not lose jobs because of hikes in the minimum wage, employers put off hiring people, he said, which delays the age that young people, in particular, enter the workforce." Note that this has basically NOTHING to do with the issue of whether it would wipe out unemployment. Young people are not the reason that we have massive unemployment. Furthermore, he apparently is clueless that young people often receive training wages until they are 19 under laws that republicans have already ram-rodded through for McBusiness. So even this ridiculous clown couldn't defend her and the Heritage foundation is as far right-wing whackadoodle as they come.

Saturday, April 16, 2011

The true cost of nuclear power

In an April 14, 2011 interview with the Financial Times, Norio Sasaki, the president of Toshiba, a major supplier of nuclear reactors confidently comments that, "The costs [of nuclear] are low, even if an accident happens once every 30 years." He apparently has missed the fact that there have been about 100 nuclear accidents in the last 60 years, including Chernobyl in 1986 and Three Mile Island in 1979, and Fukushima in 2011. That makes at least three major accidents in 30 years, not one, and when the cost is in the tens of billions per accident, that may not really be as insignificant as he would have us believe.

That would be especially true if we had substantially more nuclear power plants than we have today. Imagine, for example, that we had ten times the amount of reactors that we have today. Even if we use Mr. Sasaki's already discredited figures, assuming the same accident rate, that would translate into a major disaster every three years. If we go back to reality, it would translate into 1000 accidents in the last 60 years. Of course, those are rough estimates. Surely we would learn from those mistakes and build better, safer reactors. However, that costs more money up front. It seems like Mr. Sasaki et al in the nuclear industry isn't too worried about the cost, perhaps because he knows that the government will pick up the tab for the mess afterward, and he will avoid having to spend comparatively little upfront to prevent accidents in the first place.

Oh no, you might say, people learned their lesson after this disaster. They will never allow this kind of thing to happen again. Hardly. In actual fact many people want to go on with business as usual, as though nothing had happened. TEPCO, the Tokyo Electric Power Company, that is doing such a terrible job at Fukushima, has been slated to build two new reactors on the Texas Gulf Coast ... along with their partner Toshiba, whose president was quoted above as thinking that the occasional nuclear accident is no big deal.

As I have pointed out before, imagine if other industries produced disasters on this scale. Well, actually, companies like BP and Exxon have produced accidents on the multi-billion dollar scale with petroleum, but we use a lot more petroleum than we do nuclear. Right-wingers love to fanatically hate all things renewable, but a wind farm or a solar power plant could never catastrophically fail in this way, such that hundreds of thousands of people would have to be evacuated or face death from cancers over decades.

Again, the nuclear industry loves to point to their current, often whitewashed track record, and claim that there are far more workers killed in coal or petroleum industries. However, nuclear makes up only around 15% of electric power generation and not anything to speak of outside of electric power. Coal and Oil both are used on a far wider scale. Plus, the fact that more nuclear accidents haven't happened in the past may largely be luck. We have far more densely packed spent fuel rods in cooling pools in the US than the Japanese do. They are so densely packed that they are almost as dense as the racks used in reactor cores and the only thing keeping them from going critical is the boron moderator between them. We know that it would be safer to move to "dry cask" storage of the rods, but that's expensive, and the industry swears on a ten-story stack of bibles that something similar to what happened in Japan can't happen here. I don't know about you, but I'm not highly inclined to believe them.

What is abundantly clear to me is that the true cost of nuclear power, where safety systems were put in place that would prevent many of the dangers presently unmanaged, is several times higher than the costs today. Given that nuclear plants are already some of the most expensive objects on the face of the Earth, few people want to spend the money that would be needed to make them safe. Instead, they would rather just tell everyone else to shut up and suffer what they must when disaster inevitably strikes.

Monday, March 28, 2011

It seems like every job pays the same

There are always a million advertisements promising wages two or three times greater than what seems to actually be available on the market. However, whether you're a beginning public school teacher, or a truck driver, or an airplane engine mechanic, or a journeyman electrician, when all the smoke has cleared, it seems that you end up making a real wage of around $15 in most parts of the country. On the coasts, of course, that would be a bit low, and in some places they would be glad to have it. It's certainly not what most people expect to be paid. It's almost like it doesn't matter what you do. Society doesn't seem to care or value even the better educated any more.

Even with tons of education you will still keep banging your head against some of these real wage levels. And there is always an excuse. There is always more training you could have. There are always completely arbitrary and unnecessary demands that applicants must have 5+ years of experience in an area where such job might not have even existed in their present form for 5+ years. In a high tech field 5 years of experience might mean experience with obsolete hardware, software, and methods. And if you try generalism that won't work either, because employers will demand that you have narrow, specific skills. Many employers have absolutely no clue what they even want when they write a given job description. They fill them with fantasies about how the applicant has to have several times the knowledge and skill level of the actual people who work there. And you better not embellish your resume, even when they embellish their job descriptions with unnecessary requirements.

They will also often make the asinine demand that your resume be no longer than a page, but still include every pertinent detail about you. Here's a free clue. A person who is 21 might be able to fit all their work experiences and skills on a single page. A person who is 31 or 41 or 51 will have progressively more work experiences, skills, etc. The one-size-fits-all, one-page resume rule is ridiculous for older, more experienced workers. However, most employers would have no clue what a CV was, and they wouldn't read your resume even if it were one page. I've gone to a number of interviews where they ask me multiple questions that are explicitly stated on my resume or my cover letter. The interviewers walked into the interviews having never read either my cover letter or resume.

It's a good thing that I have a job/jobs for now, but it is scary to think about the future when I may have to look for other jobs, or even consider switching careers. A master's degree is no guarantee of a job. Professional licensing is no guarantee of a job. The jobs that you can get fairly easily are low enough paying so that you do nothing but slowly kill yourself while running in place. There have got to be better solutions for intelligent, hard-working people. So much brain power is going to waste while only the tiniest fraction of people ever see their ideas turned into new technology ventures.

We, as a nation, and as a global community have got to figure out how to tap more of the brain power and potential which is out there, if we want to have any hope of overcoming the problems which exist in the world today.

Tips on buying a mattress

If you go shopping for a mattress unprepared you could end up dropping thousands of dollars more than you expected. Some people are not surprised by this, but the rest of us probably weren't even aware that it was possible to have a mattress that costs in excess of $4000-5000. Mine was far more modest, because I resolved to buy it only with the money I had and not on any kind of financing that would encourage me to spend more now and pay later. As one might expect, those "financing" deals usually have APRs in the 25% range. Given all that, here are some tips that could save you some money.

Usually the more expensive mattresses are the ones near the front. The cheap mattresses usually aren't even set up on a bedframe, but are stacked on their side toward the back of the store.

Those are usually the ones that are advertised as on sale. You should make sure that you bring any advertisement with you to the store, because otherwise they will go based upon the prices on the tag and pretend that knocking a little bit off that price is a big deal. It's usually nowhere near the advertised teaser deals. It's also good, if possible, to go in with a friend or relative who has a military id, or who is a senior citizen, since they will sometimes give discounts to those individuals.

Another game the mattress stores like to play is charging for the mattress frame and delivery. In reality, you could probably find a perfectly fine, basic mattress frame for $5 to $10. They will charge a minimum of $40 to $80 for essentially the same basic metal frame. This doesn't include any special head board, foot board, etc.

They will usually also charge at least $40-60 for same day delivery. If you have a friend with a truck or van then you can save on this too.

Often the stores will claim that they have money-back guarantees, but the major conditions is that there can be no stains, snags, tears, etc on the mattress and the legal tag cannot be removed. I would recommend that you buy a can of Scotchgard and spray the mattress thoroughly. This will make it much easier to remove stains that may occur. Most people don't want to sleep on a plastic protector sheet that they sometimes make for people who are chronic bed-wetters, though I've known people who will take these kinds of measures to protect their beds.

Many of the mattresses come with 5 or 10 year warranties. Of course they do not cover all types of damage. Usually they cover defects that might lead to "collapse" or "mattress failure". These warranties are usually factored into the price, but I would not buy any additional warranty. In some of the places I went they were selling warranties as long as 20 years, but realistically, who is going to have the same mattress for 20 years? Do you really know that the company you bought it from will be there in 20 years to honor the warranty. 10 years is the max that would probably be reasonable for most people to warranty.