Pages

Tuesday, July 31, 2012

Voting is a Waste of Time

Today, people in the Atlanta metropolitan area will head to the polls to decide on a sales tax increase to fund infrastructure projects in and around the city. Atlanta, the seat of Fulton County, will see its sales tax increase from 8% to 9%. Most of the electorate is polarized and despite the intensive get-out-the-vote operations by both sides, none of it will matter. At least, not on the individual level. The problem is that voting is for chumps because one vote doesn't matter.

Now, before you play the "well what if everybody thought that way?" card, let me just cut you off right there. If everybody did indeed think that way, then the calculus changes and then voting would be extremely valuable. But it's useless to say that because most people don't think that way. If your grandfather had a vagina he'd be your grandmother. It's useless to speculate on a reality that doesn't exist.

An individual vote, in and of itself, only matters if it casts the deciding ballot. That is, voting or not voting a certain way could change the outcome of the election. If the election is decided by a single vote, then the people on the winning side can all pat themselves on the back and say that their votes mattered. If any of them hadn't had voted, then the outcome would have been different. If the margin of victory is greater than a single vote, then the ability to assign importance to each individual vote essentially becomes impossible.

In any significant election, where turnout is expected to be at least six figures, the possibility of this happening is impossibly small. For example, let's say we know beforehand that the election will have a turnout of exactly 100,001 voters voting for A or B. The polls show an absolute nailbiter, with a 51/49 split in favor of A. If we assume that the polling represents the likelihood of any random person's vote, then in order to have our 50%+1 scenario (where all the votes on the winning side matter), we'd need either A or B to have 50,001 votes.

Mathematically, this will never happen. If 51% of voters will vote for A, that puts A at approximately 51,001 votes. In order for every vote to count, then in the actual instance of voting, 1000 votes from A have to take the less likely route and go for B instead. It's like flipping a slightly biased coin that lands on heads 51 out of 100 times. So the probability of that coin landing on tails 1000 times in a row is approximately .51^1000. You have a better chance of winning the Powerball lottery twenty times in a row. Let's say the election is even closer than that and the probability is 50.1% to 49.9%. That brings down the expected value to 50,101 votes for A. You still need 100 votes to go the other way. You have a better chance of winning the Powerball lottery twice in a row.

Even on the off chance that such an event miraculously occurs, your vote probably won't matter anyways. Because in such a close election, the actual outcome will be decided by the court system. If it's a state election, the state Supreme Court has the final say. If it's a Federal election, the Supreme Court has the final say. This brings me to Bush v Gore.

In the end, the recount (and the result of the election) depended on a bunch of old, possibly senile volunteers recounting the ballots by hand. They had a billion times more influence on the election than your vote did, and even then it was still worthless. If some enterprising Democrat tried to "discover" a box of ballots that they "forgot" to count on election day, the Supreme Court would have final say on the certification.

So mathematically and politically, there is essentially no possibility of your vote mattering in any significant election. 

That being said, my friend promised me a beer if I voted for the tax in the referendum. I'm still undecided on whether to take up his offer or not.

Monday, July 30, 2012

The Newsroom: Counterpoints (7/29/12)

None for this episode. I guess Aaron Sorkin toned down his liberal preachiness for an episode. But a couple of quick hits:

Rick Santorum: I'm amazed that this guy was able to go so far in the Republican primary. There is no way he could have beaten President Obama in the general election and yet he came so close to upending Romney's bid for the Republican candidacy.

Fukushima: The fail-safes worked as advertised and the event was nowhere close to how disastrous Chernobyl had been. If anything, this just underscores the rock solid stability of Japanese engineering in the face of an incredibly powerful earthquake (9.1 on the Richter scale) and the solid design principles behind the Gen II nuclear reactors. The Newsroom didn't really pass a lot of judgment on the incident, it was mainly used as a backdrop for further character development of Will McAvoy and Sloan Sabbath.

Energy sidebar: The vast majority of the Gen II reactors (including Fukushima's) were created in the 60s and 70s. Since then, the nuclear industry has developed vastly more efficient and safer reactors (currently classified as Gen III). Due to gross exaggerations (if not outright lies) made by certain politically active elements (parts of the green lobby, local NIMBYism) combined with public ignorance, the United States has been forced to keep operating its fleet of Gen IIs despite the fact that they were originally rated for an operational lifetime of 30 years.

As a result of extraordinarily prohibitive regulation, natural gas is now the cheapest electricity source in the US due to the advent of hydraulic fracturing, which the green lobby is also trying to fight. I don't think most people realize how dependent modern society is on cheap energy. But the energy industry is constantly vilified in the media despite its overwhelmingly important role it has in our economy. If Sorkin wants to maintain some semblance of credibility for Will McAvoy being a Republican, he should talk about this subject.

The bodyguard: That guy has some nice chemistry with McAvoy. I hope he sticks around for a few more episodes.

Sunday, July 29, 2012

A Quick Hit on Gun Control

For the record, I am in favor of unrestricted concealed carry and against the registration of firearms. However, I am not against government regulation on the design of firearms by manufacturers or the transfer of firearms from one private party to another.

Fareed Zakaria came out with an article on gun control, and being the masochist that I am, I skimmed briefly through the user-submitted comments and came across this gem, in which a pro-gun control unwittingly undermines the gun control cause:

"STOP using Switzerland in your pro gun arguments, you are making yourself look ignorant.

Guns in Switzerland are a very diffrent (sic) story. Private ownership and collecting is regulated with private ownership of military weapons being prohibited by law. The military weapons in our homes are not ours they are the militaries (sic) and there are rules, restrictions and penalties for using them without proper authority. Many Swiss chose to hand them in after their service as they do not want an assault rifle or hand gun in their home. These weapons are for military use not for private paranoid protection.

We are a very content society, we are not lonley (sic), disenfranchized (sic), and angry with the world. That is why we do not have as many gun crimes. It is not because of our arms."

The first bolded quote plays right into many pro 2nd Amendment arguments: If you outlaw guns only outlaws will have guns. People who are of a mind to commit gun homicide generally don't care that there are laws against gun homicide.

The second bolded quote is far more important, and again it plays right into many pro 2nd Amendment arguments: Guns don't kill people; people kill people. It's about culture and behavior, not availability of a tool. A tool without intent is nothing in and of itself, even if that tool's primary purpose is to kill somebody.

One last thing. I recognize the fact that, unlike cars, cigarettes, and alcohol, things that kill far more people per year than guns, have a utility other than the ability to kill or seriously wound a person. On the other hand, given the fact that a gun can so easily kill a person and that they are so remarkably easy to acquire, if guns were as dangerous as the gun control advocates would claim, why do cars, cigarettes, and alcohol kill far more people per year?

Thursday, July 26, 2012

Bain is a Winner for Romney

Recently, the Obama campaign unveiled a new set of commercials that emphasized President Obama's accomplishments and gravitas. This was a stark contrast to a few weeks ago when the campaign blanketed the airwaves of swing states with many ads criticizing Romney's tenure at Bain Capital.

Despite the shift in focus from Romney to Obama, the Democrats still think they have a winning issue with Bain. They're using a classic tactic: turning an opponent's strength into a weakness. There is no doubt that both sides will continue to fight over Romney's business credentials between now and November, but I think the Republicans ultimately have a winning issue with Bain.

1. The Debates -  There is no doubt that the issue will come up during the debates. But this is where Romney can really shine. The reason is extremely simple: informational asymmetry. Simply put, Romney knows a hell of a lot more about Bain Capital than President Obama does. He ran the company for 15 years.

Obama has to rely on what his advisers tell him, and he doesn't know nearly as much about business as Romney does. This will allow Romney to gain the upper hand on any confrontation about Bain. He can explain his side of the story in greater detail than Obama's critiques, and then counter on Obama by saying a person only with superficial understanding of how businesses work would make that criticism.

2. The Company - Bain Capital is a highly regarded firm and was one the first prominent success stories in the fields of venture capital and private equity. Many VC and PE firms today are modeled on Bain Capital. And the company isn't like a investment bank's prop desk, which only seeks to create profits for the firm. Many investors have a stake in Bain's funds and have experienced extraordinary gains over the lifetime of the firm.

Again, all Romney has to do is explain that when people save money and invest it into good companies, they can make a lot of money. He can then indict the Federal government for spending money it doesn't have, and, if he has the guts, claimed that if firms like Bain Capital had managed the Federal government's money, the country would be in vastly better financial shape.

 3. Class Warfare - The Democrats have one overarching message on Bain: Look at how rich this guy is, and he did it by screwing ordinary people over too. But it's not hard to look at the success stories of Bain: Staples, Bright Horizons, Domino's Pizza, The Sports Authority, Steel Dynamics. Even Michelle Obama praised Bright Horizons (Romney invested in the firm when it started up in the 80s, Bain Capital currently owns it now) for its work in child daycare.

Nobody holds a gun to a customer's head and tells them to buy a product. And plenty of people have bought goods and services from companies owned by Bain. Buying from the private sector gives consumers choice, whereas they have to accept a government's word as law. A Republican message crafted on associating the voter as a consumer (who is empowered) who voluntarily buys stuff from Bain-owned companies can counter the Democrats' message that the voter is like an employee that got laid off by Bain.

Strengths are strengths for a reason. And Romney's tenure at Bain is a net plus for the Republican campaign.

Wednesday, July 25, 2012

The NCAA Reveals Why the Federal Government Is So Bad

By now, most college football fans will have heard about the penalties that the NCAA imposed on Penn State. A 4 year postseason ban, 4 years of reduced athletic scholarships, and a 60 million dollar fine intended to be donated to charities that support child abuse victims. At the exact same time, the NCAA revealed why the Federal government is so terrible at governing the country.

The reason why the NCAA instituted the sanctions is because of the child sexual abuse committed by Jerry Sandusky and the actions of a few Penn State officials to cover it up in an effort to protect the image of Penn State's football program. At the same time, people have to wonder why they felt the need to address the issue.

Joe Paterno is dead. And the other guilty parties singled out by the Freeh Report have all resigned in disgrace. Jerry Sandusky has been convicted of child sexual abuse and will now serve a life sentence in prison. Everybody close to the scandal has already been punished and tarnished by the scandal. Why did the NCAA feel like they needed to act?

The penalties that the NCAA levied punish only those who had no connection to Sandusky. Many of the football players at Penn State will have to transfer to another school to play under scholarship. The fanbase will suffer years of mediocre teams because of the NCAA restrictions. And the university has already suffered rounds of budget cuts over the years due to the bad economy. This is all because the NCAA felt like it had to send a message.

What was the message? That they would arbitrarily punish innocent parties in an attempt to scare other universities straight? As if a university president and football coach in another state could look at the situation before the NCAA sanctions and think "yep, if that happened here, we'd have to cover it up".

This brings me back to the Federal government. Whenever something bad happens, such as the Enron and Worldcom accounting scandals, the financial crisis of 2008, the Columbine, Aurora, and VT massacres, the government always feels compelled to create new laws to prevent another similar event from occurring.

After Enron and Worldcom, Sarbanes-Oxley was signed into law and it costs publicly traded companies billions of dollars in compliance costs. Even though Enron and Worldcom both ceased to exist as companies while their corporate officers were convicted of fraud, the Federal government felt the need to slap additional restrictions on companies who had nothing to do with the scandal.

After the financial crisis, Congress passed Dodd-Frank in an attempt to "rein in" the financial sector. Although the implementation is so terrible (it effectively delegates all authority to the executive agencies already overseeing the banks) and affects many companies that aren't even part of the financial sector (via the creation of the Consumer Financial Protection Bureau). But the Federal government still felt the need to do something.

After every shooting in which a lone gunman, who is clearly mentally unstable, kills a bunch of people, we have people pushing for gun control on people who aren't even tangentially related to the incident. As Rahm Emanuel would say, "never let a crisis go to waste".

Every time something bad happens, people feel the need to "do something" even when there are laws and protocol put in place that already deal with the issue. They feel the need to do things that give them the illusion of protection from and prevention of future tragedies, even when they do nothing but inconvenience normal, law abiding citizens.

We let the exceptions write the rules. And that gives us a dysfunctional government that can't figure out what to do when the times are good and wants to look like they're doing something when times are bad.

The reality is tragedies happen and no amount of preventive measures will ever eliminate the possibility of another tragedy occurring. The best thing we can do is not overreact instead of being pressured into "doing something" for the sake of doing something. Because doing something usually does something for the worse.

Tuesday, July 24, 2012

The Failure of Occupy Wall Street

There are a lot of people out there who identify with the Occupy Wall Street movement and range from mildly annoyed to secretly fuming over its demise. And make no mistake, Occupy failed spectacularly in the hopes of certain parts of the media to become the Democratic answer to the Tea Party.

Both the Tea Party and the Occupy movement began out of frustration. People felt frustrated over the way that their country and their own personal situations had changed. And they wanted a way to express their anger. But the reason why one movement succeeded (as a political movement) and the other one failed is mainly an issue of demographics.

Contrary to the media narrative that the Tea Party is a movement primarily of old, angry men, it's actually pretty representative of the population at large in terms of gender and age, although it does skew Republican and independent.

Accurate demographic polling for the Occupy movement isn't publicly available, but I think it's safe to say that it is mostly a young person's movement. An internal pollster for the Democratic party surveyed 198 people from the actual movement at Zuccotti Park and found that about 28% of the Occupy movement are over the age of 40. In contrast, 50% of the Tea Party movement are over the age of 50 or older while 47% of all American adults are over the age of 50.

With that in mind, it becomes easier to see why the Occupy movement failed. Because most of its supporters are young, a much larger percentage of their formative years were established during a time of turbulent financial distress. The internet bubble, the Enron and Worldcom accounting scandals, the financial crisis of 2008 and its aftermath, all of that created a negative perception of the financial sector.

They also spent a larger portion of their life under President Bush (43), who cut taxes for everybody, but the media spent most of the time denouncing the cut in rates at the top brackets. For much of their lives, media coverage of the financially well off and Wall Street was decidedly negative. So when the Occupiers took to the streets, they directed their anger at the rich and Wall Street.

Unfortunately for the Occupiers, the real world doesn't work like politics. You can't wait for an election to throw the rich and the bankers (largely synonymous in their eyes) out of power. The United States was founded mainly to protect the property rights of the citizen, and you simply can't vote a new class of plutocrats and bankers in.

Most people in the Tea Party grew up when President Reagan was in the White House. And for 8 years, they listened to the media excoriating Reagan for cutting taxes, shrinking government (except for defense spending), despite the fact that the economy under Reagan boomed and real household income and wealth increased for the first time in a decade. Nostalgia makes the heart grow fonder and most adults who lived through the Reagan era remember it very fondly.

It's been no secret that Federal spending has skyrocketed since 2008. So the Tea Partiers, in an attempt to revert back to the Reagan status quo, advocated the things that Reagan advocated. That meant smaller, less intrusive government.

The Occupiers weren't so lucky. In an attempt to revert back to the Clinton status quo, they excoriated the rich and Wall Street. But the problem is everybody else didn't share their opinion on the 1%.

In the average American's heart of hearts, he knows that he needs the rich. That he needs Wall Street. That he needs all the symbols of American power and dynamism. Because, despite what most people will tell you, the average person in America lives a life of extraordinary prosperity. Although the average American can't quite place their finger on what the golden goose is, they know that they have the golden goose. And they want it kept alive at all costs.

That's why the public furor over the bailouts of the financial sector didn't ignite until after the economy was in the clear. They want to preserve their way of life. A life that they instinctively know is much better than the vast majority of people in the world live.

The young idealists of Occupy Wall Street railed against the American 1%, because they wanted a better life for themselves. But the older realists of the Tea Party had a feeling that they were part of an economic elite that had to be protected at all cost.

And when individual income of 50k USD per year really does put you in the global 1%, it becomes less about excoriating the richest of the rich, and more about the failure of the most powerful American institution on earth: the Federal government.

Monday, July 23, 2012

The Newsroom: Counterpoints

I've written about The Newsroom in the past, and while I still find it television worth watching, the obvious political slant can get pretty grating at times. So if you're watching it as well and would like to read reasonable counterarguments against the stuff they say on the show, keep going. I'm thinking about making this a weekly thing, so let's start with last night's episode, Amen (7/22/12): 

1. Newsroom Argument - Glass-Steagall ruined our country (seriously, they should have just said Gramm-Leach-Bliley raped America. It's that heavy handed). The economics expert in the show argued that after Glass-Steagall, we got out of a Depression, won WWII, put a man on the moon and we got a computer in every pot, or something like that.

First off, correlation-causation problem. Glass-Steagall was responsible for approximately none of that shit.

Second, let's stop pretending that allowing commercial banks and investment banks to be housed under one corporate entity destabilized the US. Banks in Europe didn't have the same restrictions, which is why there was bipartisan support in Congress and in the executive branch to repeal Glass-Steagall. It was the chief reason Bill Clinton cited when he signed GLB into law.

Third, even if the banks were separated, it's still impossible for "Wall Street to melt" while Main Street gets off easy. In 2008, money market funds (considered as a near-cash equivalent component of M2) "broke the buck" and highly rated corporate bonds also tanked. Commercial banking divisions have a provision where they can only buy highly rated fixed-income assets with their deposits, and we still had AAA rated assets default and fall in value. A panic is a panic and it affects everybody.

Oh, and as an aside, nice misuse of the term "firewall", Aaron Sorkin. In the finance industry, the firewall (aka "Chinese wall") is there to prevent divisions within the own company from discussing matters that could lead to conflicts of interest. A firewall can only exist within a company itself. Glass-Steagall would prevent commercial banks and investment banks from being part of the same company. There is no such thing as a firewall between two completely individual entities, at least not in current financial parlance.

2. Newsroom Argument - Governor Scott Walker should not have tried to dismantle the unions by stripping of their ability to collectively bargain. The average state worker in Wisconsin doesn't get paid that much, anyways.

 The problem with this argument is that Walker didn't strip public sector unions of their ability to collectively bargain wages. They stripped non-police and non-fireman unions from their ability to collectively bargain health and pension benefits, which account for a disproportionate amount of a state employee's total compensation package.

The salaries of existing workers aren't what's causing budget crises in our various state capitols. It's the health and pension benefits that's breaking the bank. And Walker actually increased the take home pay of most state workers by allowing them to opt out of direct deposit of union dues from their paychecks. And the majority of state employees have chosen to do so after being given the ability.

3. Newsroom Argument - Thomas and Scalia should have recused themselves from Citizens United v. FEC due to their connections with the Koch Brothers who are huge donors to Citizens United.

Come on, man. Oh, and Clarence Thomas didn't disclose his wife's income because they file taxes separately.

4. Newsroom Argument - The deregulation craze got started under President Reagan.

Actually, it was Carter. Seriously.

Friday, July 20, 2012

The People Who Listen to Rush Limbaugh

Okay, this post has to be short and sweet because I'm exhausted and I just can't muster up the time and effort to bring you the hard hitting stuff you've come to expect from me day in and day out. I'm at the point where my writing style is so sloppy that this could easily be a waste of time. But I promised myself that I would at least have one post a day so here goes.

Who actually listens to Rush Limbaugh? He has the most popular radio talk show in the United States but I've never had a friend or colleague or anybody who even gave a hint that they listen to the guy. I'm starting to believe that this is really all just a lie, and that Rush Limbaugh is actually a Big Brotheresque creation of a faction of political media that they use to trot out and show how stupid and ignorant that people of a certain political persuasion can be for listening to this clown.

Now, I'm not stupid. I know that I cloister myself among people of the middle and upper middle class and that most of Rush Limbaugh's listeners live and work in vastly different places than people like me. But at the same time, I'm having massive cognitive dissonance.

The people that I talk to, hang out, and work with, are, for the most part, reasonably intelligent people. At the same time, I know that there's this gigantic portion of the population that is so mind numbingly stupid that it makes me fear for the future of this country, and yet I've never really met them in real life. I mean, really met them. They might have served me food or towed my car or something else along those lines (yes, I realize how horrible this sounds), but I never stop and talk to them.

Normally I would then expound on how isolated the highest quintile of Americans are from the rest of the country and how this is a problem, but I'm just too tired. But I'm gonna leave with this: we (and when I use "we" this time, I really am including myself among the group) are doing ourselves a massive disfavor by only associating with people in our same socioeconomic group.

Thursday, July 19, 2012

Santorum Was Right (About Families)

If you throw enough pitches, some of them are bound to be strikes. And even though Rick Santorum is a loathsome politician who cares way too much about gay people and pornography, he was right about one thing: It starts with the family.

Child rearing is something that preoccupies the minds of upper middle class people everywhere. Even as marriage is fraying as an institution (single mothers are the majority among mothers under the age of 30), it seems that interest in being a good parent has never been higher.

Early this year, Charles Murray came out with a book entitled "Coming Apart: The State of White America, 1960-2011" and it caused another bout . The statistics were frightening and represented an increasing divide between the working class and the upper classes. Not just in terms of material wealth, but also in cultural attitudes and social behavior.

I just wrote on how to get into the upper middle class two days ago, but I never really wrote on what it means to be upper middle class. We watch vastly different television. We read much more. But most importantly, we marry people in our same socioeconomic strata. And we're more likely to marry and less likely to divorce or have a child out of wedlock.


That is the key issue here. When you have two groups of Americans, one group who marries and raises children between in a two parent household and another group who have children out of wedlock and are often forced to raise them in a single parent household, the average child from each group is going to vastly different from one another.

I don't think anybody can argue with a straight face that the average kid in a two parent household is going to turn out better than the kid who was raised in a single parent household. It's so tough to financially and emotionally support your children if you're just by yourself. Just having another person around in the household to lighten the workload would be of tremendous help to single mothers (let's get real, the vast majority of single parent households are headed by females).

This is the first generation where single parents aren't treated as moral lepers. Some are even proud of their state. But Charles Murray doesn't think this is going to be a generation that turns out well. One of the primary arguments that Murray makes is that we already know how this story plays out. All you have to do is look at the average single black mother and her household.

During the GOP debates, Rick Santorum got his biggest applause lines when he started talking about the importance of the family. And when he was talking about familial affairs, he actually looked and sounded like a reasonable person rather than the virulent homophobe he really is. The best chance a kid can have to succeed in life and be well adjusted is if he is in a home with two parents, be it a traditional father-mother marriage or a same sex couple. We need to stop pretending otherwise.

Wednesday, July 18, 2012

Predicting The Outcome

Predictions are something that I'd like to do regularly. Here's how it works. I make a prediction and then keep a track record of it. It's how you know that I'm (not) worth listening to.

So here we go. Prediction # 1: Marissa Mayer's tenure as President and CEO of Yahoo! Incorporated will end in disappointment.

Here's my reasoning, in no particular order of importance:

  • Forget those clueless tech bloggers gushing over her capacity as head of search. That means nothing. The original Google was dominant in search because of Brin and Page. I can't find anything about her that says she was anything other than a glorified UX person. Yes, she holds several patents and is extremely intelligent and accomplished, but Brin, Page, and Schmidt were always the brains of the operation.
  • Yahoo is too far gone. Former CEO and co-founder Jerry Yang shouldn't have rebuffed Microsoft's ridiculous 40 billion dollar acquisition offer. Their stock has since halved and the company just doesn't have the clout, morale, resources, or capability (technically or otherwise) to pull off a successful second act. There's only been one person and one firm in the industry who did it: Steve Jobs and Apple. Marissa Meyer is no Steve Jobs and Yahoo is no Apple.
  • She's pregnant. She won't be able to dedicate her full and undivided attention to her duties as Yahoo's chief executive. In fact, I'll make a sub-prediction (that doesn't count for or against my prediction total) that everybody will eventually use her pregnancy and motherhood as a way to avoid tarnishing her stellar reputation.
  •  She has no real executive experience at the corporate level. It's one thing to be the head of a division with a clear purpose. It's another to head the entire company and trying to make it move in one direction.
  •  The lay of the land is different. Yahoo will need to create a completely new service/product in a completely new area in order to restore it back on a positive trajectory. I just don't see where that could come from. 
  This is not to say that I don't think Meyer can be a capable chief executive. Another place and time with a favorable tailwind (instead of considerable headwinds blowing from multiple directions), and she could have completely shattered the glass ceiling. But she won't do it at Yahoo. Book it.

Tuesday, July 17, 2012

The Keys to the Upper Middle Class

I remember reading an article somewhere where the person wrote something to the effect of: if you told upper middle class parents that their children had a 10% chance of becoming poor, they would immediately hire extra tutors and enroll their kids in more college application friendly extracurricular activities.

Like it or not, the people who are in the upper middle class know the best way to make sure their children stay in the upper middle class. There's no official description of upper middle class (henceforth known as "UMC"), but you can be sure that they're located, more or less, in the top quintile of American households by income. For individuals in the work force, the entry level to the UMC is about $55000.

If you are a member of the UMC, chances are you went to college and got at least a Bachelor's degree. You also happen to have a job with a career track and most likely your parents went to college as well. Your first "real" job out of college started you out at a salary above the median working American and your earning power will vastly outpace inflation for the next 15 years of your working life and then plateau for the next 20.

It's good to be in that position, isn't it? Parents in the UMC know that, and they also know how to make sure their kids stay in there. It really boils down to 3 points:

1. Finish your college degree in 4 years. The percentage of people who hold at least a Bachelor's degree was 30.4% at last count. Only half of them actually finished their 4 year degree in 4 years, though. That means if you're 22 with a bachelor's degree, you're "on schedule", compared to the ~84.8% of the population who currently aren't. And don't bother switching majors, even if you hate the one you're in. That just wastes time and money. Chances are your future career won't even be tangentially related to your major (unless you're in an applied STEM field) anyways.

2. Go to a "tier 1" public school. Graduates from "directional schools" (ie: University of Central Michigan or University of South Florida) can make it into the UMC just fine, but your chances are greatest with a degree in hand from the best public university in your state (if you live in a state worth living in, unlike say...Wyoming).

As a side note, where you got your bachelor's degree means a lot in your first job but becomes progressively less important as you build your career up. To have a shot at going from the UMC to the upper class, though, where you went to school and your very first job out of college makes all the difference. Goldman Sachs won't take graduates from directional schools but they will take a person who graduated from Berkeley, Georgia Tech, Virginia, etc, to say nothing of the elite private schools.

3. Get people skills, and learn how to talk with a mix of discretion, brevity, and intelligence. Your college degree got your foot in the door for an interview at that awesome company, but your communication skills and situational awareness will determine whether you are a "good fit" for the company. Many firms will turn away applicants who are capable of performing the job's actual duties, but if they don't get along with others or they show signs of extreme personality faults, employers just won't bother.

If you read this list and you decided you have all of them, chances are you're in the UMC. Congratulations, life is much more awesome for you compared to 99% of the world.

For the rest of you, sorry, guys. But those after school specials were right. Knowledge is power and education (plus enough intelligence to put that education to use) is the key to getting into and staying in the upper middle class.

The only real problem is if you're not "on schedule", then it becomes increasingly hard to break into the upper ranks. A lot of people think young people can afford the most risks, but it's actually the exact opposite. Once you're a proven commodity, you're afforded much more latitude compared to when you're younger. You've also built up a large capital base, your career and the fruits of your career, to take careful, calculated risks without jeopardizing your future.

That's not true when you're young. When you're young, you have to stay in the rat race because if you fall out of it (or are kicked out of it), not only does it become harder to get back in, but you'll also be dealing with the up and comers without the ability to rely on experience and your professional network like the old pros can.

Don't listen to those bloggers who say "follow your heart" and "take a semester off and backpack across Europe". You have plenty of time to do that once you're rich and retired. Staying in the UMC should be your biggest concern. And if you aren't in the UMC, either resign yourself to that fate or try your hardest to break in.

I've said a ton of politically incorrect things in these past 800 words or so, but you'll be hard pressed to find a person, in their heart of hearts, who will say I'm wrong.

Monday, July 16, 2012

Ignoring Reality

I recently bought a new phone and re-upped my contract with AT&T for 2 more years, and I have to say, I'm completely disheartened by the American consumer. I would have no problem buying a phone at full price in exchange for a lower monthly service bill. But none of the major carriers have a reduced fee month-to-month service plan for smartphones.

 Have people become so terrible at saving money that they can't pay an additional 400-450 dollars per phone in exchange for saving money over the long run? Everybody knows that all the carriers charge higher prices for their service plans because they subsidize the upfront cost of the phone purchase. Why there hasn't been greater demand for an unsubsidized phone plan eludes my understanding.

One of my best friends refused to get a credit card for the longest time, because he was afraid that he'd max it out, make the minimum monthly payments, and ultimately pay more money in the long run due to credit card interest payments. Almost a year ago, he finally got a credit card, quickly maxed it out, and is currently making minimum monthly payments. His 0% interest offer expires in a few more months, and I'm not sure if he has a plan to pay off the complete balance before the account starts accruing interest.

I know I keep going on and on about how terrible people are with their money, but how did it come to this? Why are people so terrible with managing their finances? My friend is not a dumb person. On the contrary, he's very intelligent. But when it comes to the issue of money, he just can't seem to control himself. I have to wonder whether our politicians are the exact same.

Every year, Federal spending grows. That's a given. The only question is at what rate does the spending grow. Will it be 3% this year or 5%? We never seem to be able to cut spending. And lately, it seems to be completely impossible to even think about balancing the budget within a reasonable time frame.

Going back to what I said earlier, "the most predictable fiscal crisis in history" is going to eventually happen. Whether we decide to deal with the country's debt burden and spending problem now or later will determine how painful the prescription will be. This year's projected deficit is 1.33 trillion dollars. To put that in perspective, that's larger than what Social Security pays out in a year. It's double what we spend on our military. It's Medicare, Medicaid and unemployment benefits spending combined.

All of those things are sacred cows to some constituency or another. Even moderate cuts are immediately met with anger and panic. At the same time, everybody knows that the Federal government's finances are in deep trouble.

Has the country, as a collective whole, shut their eyes and covered their hands over their ears screaming "lalalalalalala" hoping that the problem eventually goes away? Because it sure seems like it.

I've talked about our country's fiscal problems at considerable length. But I plan on addressing the consequences pretty soon. So stay tuned.

Sunday, July 15, 2012

Term Limits Are Undemocratic

Something that always seems to elicit widespread support is term limits. It polls well, with a Rasmussen poll from last year showing 71% of the public favoring the concept. To put that in perspective, no politician in this country has an approval rating over 70%. It's something usually reserved for recently inaugurated Presidents, whose terms are initially so full of promise until reality sets in.

But term limits go against the underpinnings of modern democracy. I'm not exactly sure how people square away their cognitive dissonance when they believe in both voting and term limits. Because the two are completely antithetical. If we believe in the concept of one person, one vote, then not allowing a public official to run again for office simply because they've been in the office for an arbitrary length of time robs voters of a potential choice.

Imagine if the NCAA instituted an arbitrary 4 season cap for basketball coaches at one school. It would create a furor at places like Duke, Michigan State, North Carolina, Kentucky, and any other school with a longtime coach that has a long track record of success. It makes no sense to limit a person's length of office because they've been in charge for too long. If that person gets results, and the people want him to stay, then they should stay.

The truth is people who are in favor of term limits ultimately mistrust their follow voters. It's essentially saying to other people: "You are dumb for continually voting this politician into office. I'm saving you from yourself by eliminating that politician's ability to run for reelection."

Don't get me wrong. Voters are dumb and easily manipulable. But that doesn't erase the fact that this country is a representative democracy. And term limits are thoroughly undemocratic.

That brings me to the 22nd Amendment, which limits a public official to two terms in the office of the President. Only a blatantly self-serving institution like Congress would vote for term limits on the President while not instituting term limits for their own elected officials.

Of course, the Supreme Court can't rule a part of the Constitution as unconstitutional. But things like the 22nd Amendment make the grand American experiment a bit less grand. It should be repealed.

You might be wondering why I'm advocating the repeal of the 22nd Amendment when there are so many other issues that are much more relevant to the times. But a political culture that is unable to see past its immediate future is a bad one. And sometimes it's important to keep the foundations of our country as ideologically consistent as possible.

Saturday, July 14, 2012

Politics is a Continuation of War By Other Means

I have always detested the term "happy warrior". The only proper context for that term is when a writer is describing a politician, similar to how you never see things like "gaffe" and "x blasts/slams y" outside political journalism. It's an evolution of the American lexicon which is emblematic of a rotten political culture.

There is no such thing as a happy warrior. People who go out and fight wars do not take joy or feel happy in killing another person. Even those who are addicted to the adrenaline caused by combat are not happy about going to war. Addicts are never happy about the fact that they are addicts.

The primary reason why combat infantry reenlist in an active war zone is to protect their comrades-in-arms who must stay on the battlefield. A soldier will cover himself on a grenade not because he's suicidal, but because the lives of his squad are worth more than his own. You will never see a soldier throw himself on an explosive if there's nobody in the room but him.

In other words, a warrior's motive is driven by a sense of duty to something greater than himself. And doing your duty should never make you happy.

Now, the fusion of military terms into politics has a long history. Campaigns used to be used strictly in the military sense. Now we have political campaigns. Political operatives can be "tenacious" and "combative". You need to have your people, your loyal "foot soldiers", "on the ground" and "in the trenches" to "mobilize" voters. The result of a political election is referred to as a victory, originally a term describing the success of a (military) campaign.

Clausewitz had it wrong. In modern times, politics is the continuation of war by other means, not the other way around. The intense polarization of the electorate reflects a growing problem in our country, and it's exacerbated by the increasingly militarized (see how easy it is?) political campaign.

The problem isn't what you think it is. Political incivility hasn't occurred because this generation is fundamentally more boorish than previous ones. Nor has it occurred because it's the other party's fault for being arrogant, close minded, and stupid. The problem is that everything now revolves around the American government, therefore the consequences of elections that determine who ultimately pulls the levers of power within American government are greater than ever before.

When two reasonable people disagree on the issue, they acknowledge their differences and go about their separate lives. This is no longer possible because of how intrusive the government can be in your personal life. If I support lower taxes and my friend supports higher taxes and we both vote in an election that will determine whether taxes will be lower or higher, I can't simply agree to disagree. The same goes for my friend. He wants higher taxes, but he can't simply walk away if I want lower taxes.

The issue of taxation is a fundamental component of government. And when the government requires so much money to keep operational, political differences over how much taxes people should pay become irreconcilable. You can't walk away from the issue anymore. A disagreement that my friend and I could ignore becomes impossible to ignore.

The issues that engender the most passionate response from voters today have a huge impact over people's lives. Drug laws limit what a person can and can't put in their body. Abortion laws limit what a female can and can't do to her body (and possibly to a soon-to-be human within her body). Tax laws limit how much a person can keep of their own money. Regulations limit what a business can or can't do with their own assets and so on and so forth.

Government, at all levels of the United States, now comprise about 40% of the entire economy. The Federal government is 25%. A single entity that large becomes impossible to ignore. And the natural conclusion that citizens make is that they have to chain the beast with their own ideologies and beliefs, lest someone chains it with something else.

That's when politics becomes a war. Because no single person can move the needle on their own. That means they have to forge alliances, make compromises, and then once all the internal conflict is squared away, array all of their power and then use that power to crush their opposition. When that happens, the other side can't walk away. They have to do the same and hope that the next time they meet, their side is more powerful.

 This is not how the government should operate. If 50%+1 of the country wants something to happen and 50%-1 of the country doesn't, the 50%+1 shouldn't get their way. It should be a stalemate according to a philosophy that 100% (or, more realistically, 95%+) of the country can agree on.

That philosophy is freedom. And I think that's what our society should base government policy on. If the country is more or less evenly divided on an issue, err on the side of freedom. If that issue seeks to limit somebody's freedom, don't let it happen unless a vast majority of the country agrees that it needs to happen.

Friday, July 13, 2012

My Respect For CNN Just Shot Up Immeasurably

And it's not because I'm an employee of TBS and therefore am contractually obligated to defend all things Time Warner. I've written about CNN's missteps before, but things like this remind me that there is still a modicum of decency and fairness in political journalism.

John King, a recently demoted media personality at CNN, wrote an article addressing the issue behind Mitt Romney's departure from Bain Capital to head the Salt Lake City Olympics. Earlier in the week, the Obama campaign and biased political writers tried to say Mitt Romney lied when he said he left Bain in 1999 because SEC filings show him as the CEO and President of Bain Capital until 2002.

The reality is that private LLCs have much different governance than public companies, and a founder and extremely successful executive like Romney can remain CEO and President while taking an extended leave of absence from the company. A publicly traded company CEO would have to resign his position if he were to leave to run a different organization that demanded his full time for 3 years.

I'm glad that King, who probably is more closely aligned with the Democratic party, had the guts to say what everybody knew: this is a complete non-scandal and the Obama campaign simply found new material it can use to bash Romney over but they can't because he really left the company in 1999, like he said all along.

Good job, John King. And good job, CNN, for reporting the news as it is, not how they want it to be.

The Trouble With Saving Is...

I've been investing since 2007 and as of yesterday, my net nominal gain on my investments is -3.41%. It's hard out here for an investor. It's really hard. In fact, it's so hard that most people don't invest a significant amount of money, whether it's in stocks, bonds, or even CDs. Most people save in the form of home equity and the interest rate offered on their bank accounts.

 
2008 was a hell of a year

This is a real shame, because even though I haven't turned a profit on my investments (it actually varies on any given month whether I'm net positive or net negative), I know that investing in equities is the only way to get a decent return on your money in the long run.

Real estate, on average, grows at the rate of inflation. Bank CDs yield about 2% above inflation. Long term Treasury bonds (30 year) offer about 3% above inflation. But over the course of the American stock market's extraordinary run in the 20th century to now, they've averaged almost 5% above inflation.

The only problem is that stock values can fluctuate wildly from year to year. One of the most famous quotes in investing is this: "Anyone who bought stocks in mid-1929 and held onto them saw most of his or her adult life pass by before getting back to even."

That's why it's so hard saving money. One stroke of incredibly bad timing can wipe out a fortune in no time at all. Humans are notoriously short term thinkers, and today's gotta-have-it-now culture and the accompanying technological advances have exacerbated our spending and saving habits for the worse.

That's why this current recession is so brutal. People didn't even save money when times were good. In fact, according to the Bureau of Economic Analysis, the personal savings rate in April of 2005, in the midst of a strong economic recovery and soaring stock market, was just a paltry 1%.

So when times are bad and people have no money, people with money have all the leverage. That's why things feel so unfair and why many politicians are stirring up populist sentiment and class envy. That's why there's so much resentment for corporate America. Companies have to save money for their long term health. Except in very few circumstances, nobody likes helping a corporation when they're going down.

They have money and most Americans don't. And it also explains why this current economic slump feels so bad. In the Great Depression, times were hard for so many Americans because it was the first major economic contraction that happened when most Americans lived in urban areas instead of on farms.

A family living on a farm has a hard life and a mostly penurious lifestyle, but they have a lot of tangible capital: land and farming equipment. A factory worker who lives in the city, at the time, would have a higher standard of living when times were good. But if he lost his job, he has nothing to fall back on.

Well, we all live in the city, or close enough so that it makes no difference. And most Americans have nothing to fall back on when they lose their jobs. When almost half of the population can't raise 2000 dollars in a month, any economic downturn is going to be devastating for them. But when it persists, it just feels so much worse.

 Americans need to learn how to save. Our country would be so much better off if we could all save our income when the times are good so we can weather through the times when they're bad.

Thursday, July 12, 2012

When Hindsight Isn't 20/20

Politico came out with an article yesterday and I'm kinda annoyed about the writer's specious claim. The writer refers to Solicitor General Donald Verrilli's arguments in front of the Supreme Court as his victories, but they were anything but.

Read Sun Tzu. Art of War. Every battle is won before it is ever fought. Oral and legal arguments brought forth before the Supreme Court in high profile cases never sway the Justices. Their jurisprudence, ideology, and morality will guide their decisions. Saying that the Solicitor General's arguments swayed the Supreme Court is like saying that whoever argued Dred Scott v. Sandford swayed Taney and the other Justices to vote against the black guy.

This kind of media coverage really has me wondering how much perceptions, regardless of their accuracy, drive a narrative. The saying "victory has a thousand fathers" really stands out. Because whenever something good happens, everybody wants a share of the credit, deserved or not.

I'm sure Trent Dilfer would suggest that he was integral to Baltimore's Super Bowl run in the 2000-2001 season but deep down in places he doesn't talk about at parties, he knows it was just their incredible defense that carried them to the championship.

The point is, people always want more than they're entitled to. And if they can claim credit, then why not? The problem is whenever you talk about some great victory, it gets harder and harder to sort out who really mattered and what really counted.

Everybody regards Bill Clinton as a brilliant politician, but a lot of people ignore Ross Perot's independent Presidential campaign. If it weren't for one pissed off billionaire splitting the hardcore conservative vote in '92, Clinton would not have been elected President, and we might well be talking about a Republican Presidential dynasty from 1988-2004 instead of how a philanderer from Arkansas was able to confound the Gingrich-led Republicans in the 90s.

We can't rerun 1992 again. It's impossible. The infuriating thing about current affairs is that it isn't a science. You can't test and retest, consider new information and run it in a simulated test setting. And sometimes little things, things that people never would have considered at the time, can be enough to tip the outcome to the other side.

Consider the line from Al Pacino's speech in Any Given Sunday: "You find out life is a game of inches. So is football. Because in either game, life or football, the margin of error is so small. I mean, one half step too late or too early and you don't quite make it. One half second too slow or too fast and you don't quite catch it. The inches we need are everywhere around us."

Whenever somebody goes through a big defeat, they keep replaying the moment in their head. They start burying their heads in a bunch of what-ifs and if-onlys. If only I hadn't screwed up in that debate (Rick Perry), what if I didn't do that stupid tank photo-op (Michael Dukakis), why did I/my husband talk about high black turnout in South Carolina (Bill and Hillary Clinton)?

The victorious usually walk away with a distorted view of how they achieved their victory, more often than not attributing their success to their hard work and prodigious skill. Luck very rarely enters their mind. And in the world of electoral politics, as in boxing, the defeated are quickly forgotten and most likely doomed to obscurity, and we'll never really know why. We can only guess.

Wednesday, July 11, 2012

High Taxes Equals Low Growth

President Barack Obama recently announced his intention to preserve the Bush tax cuts for everybody except those who earn 250,000 or more in a year. Republicans, of course, denounced it as class warfare. And a significant number of Democrats argued that while they didn't want to preserve it for the super rich, the ceiling should be raised to 1 million dollars a year.

The political calculus behind it is that average Americans want lower taxes for themselves, but they won't mind people earning a lot of money (I don't want to get into the "250k a year isn't a lot of money in some parts of the country" argument) paying more in taxes. And, if spun the right way, the average American is going to go along with that calculation.

The only issue is there's still a nagging feeling that those taxes are still going to hurt the economy. Republicans launch into the usual rhetoric of class warfare, but they actually have a very good argument if they can spin it the right way.

Let's face facts. America has a rather large wealth disparity. The top 1% of income earners control about 35% of the wealth, and the top 10% controls about 85% of the country's investable assets. But this is precisely why raising taxes on the rich is a bad idea. The Atlantic's Derek Thompson explains why, if unwittingly.

A lot of rich people derive a ton of their assets from investment income. You know, stuff like interest, capital gains, dividends, etc. When taxes rise on the rich, they structure their payments in a way that defers and shelters their income so they can maximize their after tax income (don't act shocked. Regular people do this all the time, just at a much smaller scale).

That usually means parking their wealth in assets that aren't as liquidable. So their wealth isn't as mobile. That hurts the rest of us.

Because so much wealth is concentrated at the top, raising taxes on them will discourage risk taking and encourage wealth preservation. That means you'll see less rich people moving money around trying to chase profits and more rich people parking their money in safe, tax-efficient investment vehicles that don't generate as much economic activity.

The number one concern of voters is the state of the economy and their ability to acquire and keep a job that pays well. To get a job, you need economic activity at the demand and you need an employer that has the capital to employ you. Preventing rich people from easily moving their wealth to chase returns (by investing in businesses or lending to them) prevents a regular person's ability to get a job.

The largest financial market in the world is the American bond market. And the two largest components of the US bond market are corporate bonds and real estate mortgages. Taxes by definition discourage the activity they're taxing. High taxes on the rich will discourage the availability of funds for companies that need money and prospective homeowners who need affordable housing.

It's a much more complicated concept than "YOU'RE INCITING CLASS WARFARE", but arguments are always more complex than rhetoric. My advice to Republicans is to try and argue intelligently and concisely, because while the average American is pretty stupid, they will eventually piece together reality. It's in the best interest of the Republican party and the country to hasten the arrival of that collective epiphany.

Tuesday, July 10, 2012

Reality, Not Fantasy

I have a personal motto, and it's a remarkably cynical one: "Your opinion is worth as much as the money you're willing to put behind it." The meaning behind it is pretty transparent. I don't care about what you're saying unless you can be held accountable for what you're saying. This is what infuriates me about talking head television and Jim Cramer. They make a bunch of predictions, most of them wrong, and they keep doing it because nobody's keeping score.

Accountability is what makes people try their hardest. And when people are considering their financial future, you can be damn sure that they're paying attention. Nobody wants to be poor, and money, despite some people's naive protestations, is the number 1 issue in their life unless they have so much money that they don't need to worry about it.

That's why I like Intrade. It's a website where you can bet on the outcome of future events. The most popular markets are, by far, US political elections followed closely by high profile international political events. Just go there and see how other people are pricing the future. Some of the prices will surprise you. Others are more obvious. But there's one thing you can be sure of, everybody participating on Intrade is using real money and they're not out to lose it.

Now I'm not encouraging you to go there and try and make a fortune. Most people would lose money because most people don't have an unfiltered view. They have their own worldview lens that distorts what is actually there with what they want to see. We all have our blind spots, and tons of people have political blind spots.

So let me head off your first thought. You don't care about predicting the future. You have your beliefs and you'll fight for those beliefs regardless of whether other people agree or not. I have a few choice words for you: you are a chump. Fighting a lost cause is the dumbest thing you can do. You're throwing good money (or effort) after bad. There's no point wasting time and energy on something you know can't happen.

Now you've got a second thought. Your cause isn't lost. And even if most people don't agree with you now, that doesn't mean they won't in the future. If that's the case, wouldn't it make sense to get a gauge on how other people perceive the future? If you want to bring people to your side, you have to know how they see the situation. And then you have to be able to argue why their view is wrong.

If you just surround yourself with people who agree with you, you're just making your reality-distorting lens even thicker. The best way to see reality is to follow the money. When people's money and livelihoods are at stake, things like honor, morality, and "being in the right" mean nothing compared to being in the money.

That's why campaign staffers obsess over polls and surveys. They want to know how everybody is thinking at that particular moment in time. They want to know who approves. Who disapproves. Who's undecided. And then they go out and think of ways to get people to their side.

Any candid conversation with a politician or their campaign staff would be unpublishable in the press. Because the truth, aka the reality, isn't welcome to most people. People want their worldviews confirmed. They want bullshit. And they don't want to feel less than human, as hypocritical as that is.

The fact is you can't treat everybody like human beings. There's too many people. Eventually you have to condense other people to something that doesn't even resemble a human, or even an animal. You reduce them to an abstract figure that can be described in 10 words or less, generalized to the point of being unable to distinguish one person from another.

There is a bit of Beltway cynicism in the following phrase: "Medicare is the most predictable fiscal crisis in history". If you asked a politician to give the no-bullshit translation, it would be something like this: "People really, really like Medicare. And it'll get to the point where too many people are using too much of Medicare and eventually we're going to have to drastically reduce the benefits of the program and raise taxes to pay for it, and we'll do it in a way where nobody is going to be happy about it."

I wish more people would see politics in reality and not fantasy. And here's the reality: it doesn't matter who's in office. This is a country of over 300 million people with so much wealth that we can afford to ignore almost all of our long term problems right up to the point where we can't. And when that point arrives, that's when the hard, unpopular decisions will get made. And those decisions are going to be the same regardless of which party controls which branch of government.

Sucks doesn't it? I can see why people prefer fantasy.

Monday, July 9, 2012

Aaron Sorkin, Deconstructed, Oh, and the Newsroom Pilot

I never saw the West Wing, which is probably the Sorkin drama that everybody will remember him for. Well that and the Social Network. But I did see A Few Good Men after watching the HL2 rendition of the famous court scene "A Few Good G-Men". I also saw Charlie Wilson's War and, more recently, Moneyball. And they were all entertaining movies.

Of course, this is the part where I then criticize his writing style, and more specifically, his dialogue. And lack thereof. It's crazy how Aaron Sorking makes his characters speak because they're either firing away talking a mile a minute or they're in the middle of some grandiloquent dramatic monologue.

First off, the rapid fire dialogue. Very rarely do I actually see people talk as fast as his characters talk. Now, it's not always a "natural" scene. In Moneyball's talking-trades-over-the-phone scene, there are a lot of cuts in the scene. But the intent is clear. Billy Beane is wheeling and dealing and he knows something that the other GMs don't. But when you actually get down to a dialogue scene, where each character is talking in quick succession and snapping off semi-clever quips that none of us in real life can improvise on the fly that many times in a row, they're talking completely unnaturally.

I get that there are a limited number of minutes you can show on the screen and that Sorkin probably believes in giving viewers more dialogue for their money, but nobody actually talks like that. Sometimes when you are talking that fast to a person, they'll nod and say "uh huh" and "right" and "yeah". But they don't talk back to you with similar cadence and frenetic-ness. Or you're talking that fast and they'll interrupt and say "wait, can you repeat that?" Both people speaking that fast never happens. Some people will dismiss it and say "that's just signature Sorkin" but it can completely ruin some scenes.

The audience (or at the very least, the non-mouth-breathing portion of the audience) should not have to stop and say "wait, what did they just say?" unless the director crafts a scene like that on purpose, usually for comedic effect, a la Jack Sparrow. I know that Sorkin's subject material is a lot more highbrow and exciting in comparison to most people's mundane work lives, but the fast talking is just a distraction.

Secondly, the monologues are ridiculous. Again, nobody ever talks like that. Colonel Jessup would have never gone in a tirade like that (and the court wouldn't have let him). Boston's owner would have never spelled out Beane's feat to him to convince him how awesome he was. And, in The Newsroom, McAvoy wouldn't have gone on his self-important speech about how America was so much better in the era where the government ordered US soldiers to march through nuclear test sites to study the effects of radiation or deceived people into believing they didn't have syphilis just so they could study the untreated prognosis of the disease.

The main character in The Newsroom is Will McAvoy, who I initially thought was British because the actor reminded me of Jeremy Clarkson in the opening scene before he actually speaks. And he's an asshole. Not only that, but it's like he just discovered he was an asshole. I can't buy that for a second. I don't have a problem with unlikable protagonists, but can we also not let them have a gigantic blind spot when it comes to their main personality fault?

I know a lot of TV shows often start with the main characters in a state of flux, but most handle it poorly. It's almost a wink to the audience that "hey, this show just started!" The actions of the characters don't feel natural. There's either too much exposition or too little. When the old division head informs McAvoy that he's hired his old flame Mackenzie as the new showrunner, both of them skate around the fact that she is his ex. And not in a "let's not talk about it" kind of way, but in a way where they don't even acknowledge the fact that she's his ex.

Yes it's heavily implied and they later reveal that they were together at one point, but conversations like that don't happen without at least one party acknowledging point blank that there are emotional entanglements.

Mackenzie, the love interest, has a few Sorkinian (if that hasn't already been coined, I claim any and all rights to it, although it probably has been, I mean, let's get real) moments and speeches. Nothing out of the ordinary with her. Although she is playing a British-American. Fitting, considering that she is British. But I wonder why they went with an English actress. I wonder what goes through the minds of the casting directors when they decide who should play what. I remember her primarily as Phoebe, the fake art director with "Avian bone syndrome" from 30 Rock, a show which has gone drastically downhill the past two seasons.

Alison Pill plays McAvoy's assistant. I loved her in season 2 of In Treatment and I like her in this show. She's the standard ingenue character but she pulls it off well and it's nice to see her not playing a girl who doesn't know she's depressed and angry. That's just a side note, mainly because I like Alison Pill.

The rest of it is standard Sorkin. You have the love interest, the busy-body young gun, and they all fit in nicely within The Newsroom. You get this thing about the BP oil spill 2 years ago and they go into a flurry about that. It's convenient how one of the characters had two personal relationships with two people at BP and Halliburton. Apparently acknowledging on screen how unlikely that was is supposed to negate the convenience, but whatever. I get that TV is about the dramatic, exciting, and interesting, otherwise we'd just watch ourselves on camera every day instead.

Most of the stuff I've written comes off fairly negative, but I like the show. It's entertaining even as it fails to be fluid and natural. In that respect it's kind of like a CBS drama for higher socioeconomic status viewers. I'll keep watching and tolerating Sorkin's preachiness and self-satisfied writing only because it's not like there's another American show like it. Now that's a left handed compliment even Sorkin would be proud of.

Sunday, July 8, 2012

Transparency in Health Care

A few months ago, I dislocated my shoulder twice within 2 weeks and being unable to pop it back in, I went to the emergency room. I received treatment, and a few weeks later, I received the bill from the hospital. The first occurrence cost about 3300 dollars and the second occurrence cost 2800.

My health insurance plan reduced the actual cost to about 700 dollars each and, being on an 80/20 plan, my share came to around 140 dollars. I can only imagine what would have happened if I didn't have health insurance and was unable to bargain down the cost of face value of the bill.

If I did have to pay for the full cost by myself, I would have had a few questions. The first of which being, how the hell could my visit have cost around 3000 dollars? In my first visit, I was there for a total of 2 hours and spent half of that time waiting for treatment. The second visit I was there for 5 hours and spent 4 of them waiting. Had I known the second visit would have taken so long, I would have tried to go to another emergency room.

Both times, I really received about 1 hour worth of actual health care. The rest of the time was spent waiting with a bunch of other people in a thoroughly depressing waiting room. How could that have been worth 3000 dollars? Everybody has heard of the stories of 27 dollar pills of aspirin and 300 dollar syringes, but it hits home a lot quicker if you're stuck with the full freight of the bill.

Second, why doesn't the hospital display the actual prices for services rendered? The kind of billing practices that hospitals use would be illegal under any other industry. Imagine buying a Big Mac and then having McDonald's bill you for 20 dollars a few weeks later. That seems patently ridiculous, but it's perfectly acceptable in the health care sector.

There is a huge problem with transparency. As consumers, we don't know how our health insurance companies bargain with health providers. And we don't know the actual prices for the services we pay for. It's almost impossible to drive down prices in a system where the price discovery mechanism doesn't work because only a few parties know the prices and the actual consumers don't.

Tuesday, July 3, 2012

Exceptional America

In true American form, most of us will spend the 4th of July engaging in mildly hedonistic acts of food consumption and novelty entertainment while the real meaning of the holiday will be remembered and appreciated by the few. Just about every American (myself included) takes this country for granted, because most of us have lived most of their lives in a land where concepts like hunger, disease, and strife are foreign.

 The nation that we celebrate tomorrow is the first nation to be ushered in an age of prosperity. Where working for a few hours at any job can buy a week's worth of groceries. Where people struggle to be thin, not fat. Where parents invest and nurture their children rather than use them as cheap labor.

It's no secret that America is a special place. And people around the world know it too, which is why we still admit more immigrants than any other country. People will wait in lines decades long to come to the promised land (although it's shameful on our part to make them wait so long). Throughout our history, Americans and others have known this place was a special place. An exceptional place. Every citizen might be unduly proud of their country, but Americans are always less so, because our country is just that awesome.

Despite her faults, America is still the last, best hope of freedom and prosperity. Despite a growing international chorus of doubters and naysayers, people still look to America to make things right. Despite increased disillusionment in our politicians at home, Americans still believe in the fundamental message and promise of America. There is no other America to move to. We're already in the promised land. And the promised land has vastly more air conditioning per household than Europe.

So tomorrow, go ahead, kick back, relax and enjoy a nice cold (possibly alcoholic) beverage of your choice and watch some fireworks. We get one day out of a year to celebrate the greatness of this country. We'll spend the rest of the year building upon it.

Monday, July 2, 2012

The High Price of Bad Education

In June, Slate came out with a crusade to get more people to aspire to be scientists and engineers. The original article was not written by a scientist or engineer. It was written by a person who graduated from Harvard with a degree in Social Studies. This is yet another example of misguided sermonizing by people who think they know better. This works out well when they're actually right, but America's problem is not that it lacks for scientists and engineers.

America's problem is that the economy changed and our K-12 public education system failed to change with it. This is not exactly surprising. As a rule, widespread government programs are always the last to respond to changing circumstances. But the issue isn't about trying to foster greater interest in the sciences. It's all about a failure to educate our kids about the incredible importance of financial matters.

I can recall exactly 2 instances in my K-12 education where I was taught about a real financial matter. One was learning how to balance a checkbook in second grade. The other was investing in the stock market in 11th grade in my AP economics class. And the investing lesson was pretty terrible, because it gave the impression that investing is a short term endeavor. It's not.

If you asked Americans between the age of 51-56 to solve a simple problem about compound interest, over 82% of them will get it wrong. The very people who need to worry most about retirement and the state of their portfolio get one of the simplest concepts of finance wrong. But the thing is, 30 years ago, that wouldn't have mattered.

What changed? The answer is the shift from defined benefit pensions to defined contribution investment accounts. Pensions are a gigantic financial liability on a corporation, and the huge legacy costs associated with them drove many companies into bankruptcy. Newer companies and companies with the foresight and flexibility to change thus began eliminating pensions for their employees in favor of 401k investment accounts.

If a person didn't understand compound interest and he was going to retire in the 80s, chances are he would have retired with a pension. You don't need to understand exponential growth because you understood you would receive X amount of dollars every year until you died.

 That world doesn't exist anymore. Cost cutting and eliminating future liabilities have led to the individual retirement account. Each person would be responsible for managing their own finances and retirement, and the company they worked for would contribute a small amount each year to help them. But the company would never again be directly responsible for providing for their retirement.

Is it getting clearer now? The pensions are gone, but the financial ignorance remained. The truth is, Americans have always been ignorant about money matters. But things like home mortgages built up equity while Social Security and pensions gave them the income to live comfortably in retirement.

With the extraordinary economic growth in the 80s and 90s, nobody really cared about the elimination of the corporate pension, because jobs were plentiful, pay was good, and markets were booming for those who had the foresight (or sheer luck) to invest in them. But when the 2000s came around and the markets corrected, Americans' portfolios crashed back to reality and it was a shock to most people.

That's fine, though. Because as long as they kept building equity in their house, everything would be fine right? Wrong. Once the financial crisis hit and real estate values plummeted, people literally lost everything because they had invested everything in stocks and their homes.

After all that, is it any surprise why the current recession is so brutal? The median balance sheet has to undergo massive repair and restructuring, and that takes time and a lot of money. And it also takes knowledge. Knowledge that most Americans don't have.

This brings me back to education. We need financial education to be a vastly larger part of the curriculum than it currently is, which is miniscule. But since most teachers are still stuck in pension utopia (thanks to the fact that they still have pensions courtesy of their state and local governments), we have to retrain the teachers.

Wall Street needs to get the message out. What they do is incredibly important and people need to have a proper appreciation of finance. And once they get that appreciation, they'll realize that everything has to change, from the way we save our money, to our purchasing decisions of both cyclical and durable goods, and our views on housing and retirement.

Because the truth is you only need a few incredibly bright scientists and engineers to push the boundaries of technology and science while everybody else just follows in their wake. America doesn't need more scientist and engineers (although they are still welcome). America needs more financial education. That starts at home and in the school. So get to it.