Wednesday, October 12, 2011

100 people, 100 dollars

My daughter asked me today about the Occupy protests. She's heard me blathering excitedly about them and was curious about what they are doing and why.

It's can be a pretty tricky topic to explain to most adults, and touches on the financial crisis, credit default swaps, the decline of the labor movement, Glass-Steagel, Citizens United, etc, so I struggled a bit about how to explain it to a 10 year old. Rather than tell her, I decided to pose a situation and ask her some questions about it.

Me: Imagine if the whole country were just a group of 100 people, and they had 100 dollars of money to between them.

Ella: OK

Me: How much money would every person have if they all had the same?

E: that's easy, one dollar.

Me: Right. Now you know that some people have more money than others, so how much money do you think the richest person has?

E: hmmm.... I don't know. 5 dollars?

M: OK, then how much do you think the poorest person has?

E: there are people in the world who don't have anything at all!

M: true, but I'm talking about in this pretend country that we just made up that has 100 people and 100 dollars.

E: right. The poorest person would have 5 cents I think.

M: OK. So how much money do you think that the richest 1 person would have to have before the poorest 50 people would get really mad and start to protest the situation?

E: uuuhhhh.. hmmm... if the richest person had 25 dollars that would be a lot.

M: OK, then how much would the poorest 50 people have combined?

E: I guess 50 dollars?

M: I don't think that would work. Because if the richest 1 has 25 dollars and the poorest 50 have 50 dollars, then that leaves only 25 dollars for the almost richest 49 people. So I think with that example, if the richest 1 had $25, then if everyone else had exactly the same, they'd each have about 75 cents each. Which would mean the the poorest 50 would have about 35 dollars combined. But that's not really likely since some people have more than others.

E: ok, so I guess if the poorest 50 people had 25 dollars combined, then they would be really mad and protest.

M: OK. Do you want to know how it really is now?

E: yes

M: the richest person has about 40 dollars and the bottom 50 have about 1 dollar between all of them combined.

Her eyes got really big, and she understood why so many people are so pissed off. Then we got in the car to pick her brother up from basketball practice. We took the long way there so we could drive past City Hall and see the protesters. We passed them at about 7:15pm, while they were in the middle of a General Assembly. Hundred of people listening to each other. Quietly, peacefully making the point that enough is enough.

Thursday, August 11, 2011

28 Years

A tiny little bit of justice was handed down today in the cash for kids scheme. The judge was sentenced to 28 years.

It's impossible to know how many kids had chunks of their life stolen by this creep. The PA supreme court has recommended that every case that the judged handled between 2003 and 2008 be vacated and the children involved have their records expunged. That involves 4,000 children.

This situation is the poster child for why we should never ever privatize prisons... not running them, not building them, not administering them, nothing. The profit motive in the prison industry has a voracious appetite for human liberty and tax revenue. Prisons are a necessary evil that a sane society would do its best to minimize. Any company which makes profit on prisons has an incentive to maximize the number of people in prison. Therefore, there is no way for such a company to exist in harmony with the goals of a reasonable society.

Monday, August 8, 2011

Goofy Financial Analogies

In order to make sense of our federal government's budget, lots of normal folks have been making the "if the government were a family..." type of analogies lately. Here's a pretty typical example:
"If the US Government was a family, they would be making $58,000 a year, they spend $75,000 a year, & are $327,000 in credit card debt. They are currently proposing BIG spending cuts to reduce their spending to $72,000 a year. These are the actual proportions of the federal budget & debt, reduced to a level that we can understand." - Dave Ramsey

For the sake of the argument, I'll accept that the numbers are accurate. That's entirely besides the point. The analogy is dangerous because it implies the common sense, and entirely wrong, solution that we need to spend less money. Folks understand that.

Let me propose a different family analogy:

If the US were a family, it would be one where mom, dad and the oldest kid were all contributing roughly $25k each to family expenses. Since those expenses come in at about 73 to 74k, they are putting a little money aside by paying down their home equity line, their mortgage, their credit cards and the loans they took to get junior (the oldest) through college. The rest of the home includes grandmom (who is past her ability to work, and in fact requires some expensive medicine), a college student and a grade schooler, none of whom have jobs.

Then, junior (who makes more than mom and dad combined) decides that he doesn't want to contribute such a large portion of the household expenses, and starts paying $20k instead of the 25k he had been paying. After all, he's not 1/3rd of the family, why should he pay a third of the expenses? Mom and dad figure that things will work out, so rather than cut back or give junior a swift kick, they just continue on as if nothing had happened and take our another home equity loan to avoid having to cut back or have that difficult conversation with junior (after all, junior did take them out for a nice dinner to announce his reduced contribution). Then, the financial crisis hits and Mom gets her hours cut and dad is forced to take a pay cut in order to hold on to his job. So now between the two of they are contributing 33k instead of their normal 50k. To make matters worse, the maintainance on their big house, that they had been deferring since junior cut back his contribution, is starting to catch up to them and the roof has started leaking. And junior, feeling his oats, is insisting that since his parents are contributing less, he should also contribute less. But junior being a smart kid recognizes that eventually the bank is going to stop extending the HELOC, so he gets the idea that mom, dad and the rest of the family (who fed him, paid for his education, financed his first small business and still patronize it) should eat less, use less medicine ignore the leaking roof, and not worry about his younger siblings' current and impending college education costs. Meanwhile, he's gotten a 7 figure bonus for outsourcing jobs like his mom's and for forcing laborers like his dad to take a pay cut.

Now I get that my analogy isn't nearly as concise or pithy as Mr. Ramsey's. In fact mine is a little complicated and perhaps difficult to follow. But it's a damn sight easier to follow than the actual US economy. Which is really the point. The Federal Budget is not like a family budget. Not at all. Which isn't to say that we can't understand it. We can. But only if we stop pretending that the situation is as easy to understand as a family budget.

Friday, April 29, 2011

The Energy Speech I Wish the President Would Make

The Energy Speech I Wish the President would Make.

It's as predictable as the tides. Every time the price of gas goes up, three things happen. First, people complain about how much it costs to fill up their tanks. Reporters are dispatched to gas stations and show people putting 20 or 25 gallons into the tanks of their large vehicles (only vehicles that get poor gas mileage have 20 + gallon tanks, as tank size is calibrated to roughly get us 300 miles between fillups), and to listen to them claim poverty about how they can't afford to spend that much money on gas, how it's taking food out of the mouths of their children, etc. Second, politicians call press conferences and say that the price of gas is too high, ordinary Americans are suffering, and if they are from the opposition party, something must be done. If they are from the majority party, they claim that they will do something.

The third thing of course is that people use less gas.

What I really wish our President would do is let his brainiac of an Energy Secretary write his speech. I imagine it would go something like this:

My fellow Americans, I'm going to tell you something that you already know. The price of gas has gone through the roof. It's causing you pain at the pump. Some of you are suffering because of it. You're spending an increasing amount of your paychecks not on good food for your kids, or education, or healthcare, or even vacations, but simply on getting to and from work. You drive by the gas station and the price seems higher each time you go by. You're not sure if you should top up today at $4.50 per gallon or drive until your tank is empty and hope that it will be back down to $4.25. Its frustrating and to be quite frank, scary.

It's also dangerous to our economy. The price of fuel is a part of the price of almost everything we buy. When fuel costs, or more specifically, transportation costs, go up, the price of any good that has to be transported will go up.

And it gets worse than that. Since we currently import most of our oil, the benefit of that higher gas price flows primarily out of the country. It increases our trade deficit, and does nothing but harm to our economy. We have to find a better way.

And that's actually where the good news is. There is no resource mightier than the ingenuity of the American spirit. We might not have enough oil to to fuel our current transportation energy needs, but the American entrepreneur, the American Engineer, the American innovator and the American people in general can fix pretty much any problem that is thrown their way. If.... If they are given the proper incentives and if the government does not try to solve the problem for them.

I am going to put a plan forth today that meets the following criteria:

- First - it will provide immediate assistance to all Americans, especially those who are having difficulty making ends meet.
- Second - it will not add a single penny to the deficit. Nor will it create a new source of government revenue
- Third - it will provide the proper incentives to encourage us to innovate our way out of our dependence on imported oil

I know that these three criteria sound almost impossible to meet in one program. Presidents have been promising to do something about the high price of oil since the first oil crisis in 1973. The truth is that we have always known how to address the problem, we just haven't mustered the political will.

American individuals and businesses are fundamentally intelligent. We respond appropriately to situations that we can predict and understand. If you knew today that the price of gasoline would never come down, ever, and in fact, you knew that it would continue to rise at a rate faster than that of inflation, it would affect your decisions, wouldn't it? You might go and immediately check the inflation on your tires. You might call your co worker who lives a few blocks away and see about arranging a car pool. You might look at your old gas guzzler and decide that it was time to trade it in for a more efficient car. If you were looking longer term, you might even consider moving closer to where you work or getting a job closer to where you live.

If you owned a business that spent a lot of money on transportation, you'd be even more likely to look into how you use energy. You'd find ways to spend less money of gasoline, whether that was using more efficient routes for your delivery trucks, buying new trucks or even changing how you get products to market.

If you ran a company that makes cars, trucks, generators and other things that burn gas, you'd likely spend more getting more efficient products to market. But only if you were absolutely sure that gas prices weren't going to come back down. Because if they did come down, you know from history that as soon as they do, consumers stop caring about efficiency, and all of that money that you spent creating more efficient cars, trucks or generators would have been wasted.

Hopefully by now, I've been able to convince you that there is an opportunity in high gas prices, that we can use these high prices, as long as they stay high, to make some changes in the way our economy works, so that we can become more efficient and use less gasoline. But even if I have convinced you that it might be a good idea, some of you are going to point out, rightfully so, that high gas prices cause real Americans real pain, right now. And if the prices go any higher, that pain is going to get worse.

You're absolutely right, and my plan will address that.

I propose to give every American a subsidy to help them pay for the high price of gas. The amount of that subsidy will start fairly small, but will increase over time. This will ensure that the people who are barely making ends meet right now won't be pushed over the edge by increased gas prices.

I see that you are looking at me like I'm crazy. After all, with a large budget deficit and and huge debt, how can we afford to increase government outlays. Here's how - the subsidy, I'm going to call it a royalty payment, is going to be paid for by implementing a new fee on oil. In other words, this royalty will cost the government not one penny, nor will it be used to raise government revenue. It will be a straight pass through - we will pay out in royalties all of the money that we collect. The only difference will be the cost to administer the program. But since that will be done using the existing tax collection infrastructure, even that amount should be small.

Here's how it will work: the royalty will be a refundable tax credit. We will immediately apply that to the way withholding is computed, so that you will see more money in your paycheck as soon as the plan is passed.

But let's be clear, you will all also see an immediate increase in the price of gas. For those of you who use the average amount of gasoline, the net effect will be that you will have a larger paycheck and will spending more at the pump. If you make no changes in how and what you drive, there is no net effect on your wallet.

But, if history is any guide, you will see that high price of gasoline at the pump, and will decide that you'd like the benefit of the bigger paycheck without having to pay the cost of the higher gas prices, and that will motivate you to act. Some of you may decide to stop driving altogether, and ride a bike to work. Or take public transportation. Or walk. Those might be good outcomes for you and your family, but you won't do it because you can't afford to drive, you'll do it because you would rather use your royalty payment for something other than buying gasoline.

The whole point of the plan is to unleash the energy of the American spirit to solve this problem. But if we want to kick our addiction to foreign oil, the only way to make sure that we will do that is to increase the price that we pay. And if we don't kick our addiction to foreign oil, we can be pretty sure that the price will go up anyway, there just won't be any royalty payment to offset it.

Monday, April 4, 2011

Grant Hill comments from privlege

You may have already read Grant Hill's response to the Fab 5 documentary on HBO. You may have, like I did, read Hill's New York Times Op-Ed, and felt that Hill had a great point. I mean if we are going to say that the children of stable middle class families are Uncle Toms (probably one of the worst things one black person can call another), then we, as a community, are doomed.

But I urge you to not make the mistake of coming to a conclusion without seeing the documentary. And not just the part where Jalen Rose explained why he disliked Duke and its players. Watch the whole thing. Understand where the players involved were coming from (interestingly, Chris Weber did not participate). If you do that, I think you'll come to the conclusion that the documentary was not about Hill or Duke.

Lots of words have been written about the documentary. I'm not going to add to that. I am focused on Hill's response.

I've been learning a lot about anti-racism work. In doing so, we focus a lot on what is called white privilege. It's basically the pass, the benefit, that white folks get just from being white. Generally, I think that we make too much of the racial element of privilege and too little of class element. But that's splitting hairs.

What's not splitting hairs is when someone from privilege watches someone talk about the hurt and pain and alienation that comes from being ignored or marginalized. and thinks that somehow it's about them. It's like when, as a black man, you talk about the pain of not being able to hail a cab, and a white person feels hurt because you bothered to mention it. Or minimizes what you say by mentioning the one time a dark skinned cab driver drove past him to pick up the black man 20 yards further down the street (who may or may not have been there first in any case). It's infuriating.

And it sounds a whole lot like the self indulgent piece that Hill wrote in the NYT.

I agree with the idea that we should celebrate families that manage to give their kids the best of all possible opportunities. We should celebrate those couples who manage to stay together and provide a stable platform for their kids. That's the ideal, and when it works, it's best for everyone involved. But we should also celebrate those single moms and dads and nanas and pop-pops who manage to provide against all of the odds. And we should work hard to make sure that their work is easier not harder. Ignoring or minimizing their pain to focus in the fact that sometimes, when someone is in the position where they can clearly see that their life is harder than yours, they might think ill of you. Especially if their a teenager. And especially if you, or your college, don't do anything to help them out.

And another thing... why did Grant put that piece in the NYT? If he was interested in reaching out to black folks so we could work, together, on some of our issues, then wouldn't The Root, or Ebony or Jet, or or or, have been better? Maybe he was reaching for a different audience, one that was perhaps less black? Is he planning to run for office? Or perhaps he feels that the NYT readership would be a more hospitable audience for his whining, I mean opinion. I don't want to give away anything from the documentary, but one thing it points out is that in America, you can get pretty far exploiting or demonizing black folks. Especially young, black men from the hood.