United States of Mexico

You probably didn't realize this, but the real name of the country we call "Mexico" is actually "The United States of Mexico" (Estados Unidos Mexicanos).   Suppose the USA ended up like Mexico?   Or perhaps worse yet - like Brazil?  Who would be the winners and who the losers?   And are some folks gunning for this to happen - at your expense?

I had a dream the other night - more of  a nightmare, actually - that our Country had devolved into a country like Mexico.  There were a few wealthy multi-Billionaires  - less than 1% of the population - controlling most of the nation's wealth, and the rest of us were scrambling to get by on a day-to-day basis.

The GOP won the Whitehouse, and got a super-majority in both Senate and House, and pushed through a radical agenda of "reform".   Government programs were slashed to the bone - that is to say, any government program that did not send funds to Lockheed-Martin, Boeing Aerospace, United Technologies, or any one of a number of huge government defense contractors.   And of course, restrictions on lobbying were eliminated (along with the tattered remnants of campaign finance reform).

What few government agencies were left were basically handed over to the industries they were supposed to regulate.  The FCC was run by Rupert Murdoch.  The FAA by USAir.  And of course, all banking regulations and Wall Street regulations were abolished as "impeding the invisible hand of the marketplace!"

Unions were weakened to the point of extinction.  And since any form of entitlement from Medicare, to Medicaid, to Social Security, to Welfare, was either cut down drastically - or completely eliminated - people became desperate for money, and would do anything for a job.   The minimum wage was dropped back down to $4 an hour - then abolished entirely.

Of course, the new Right-Wing Supreme Court lost no time in striking down any law or regulation that would interfere in the economic marketplace.   Bosses were now free to sexually harass their secretaries, discriminate on the basis of gender or race, and do pretty much whatever they wanted to.

New voting regulations, of course, made it harder to even go to the polls.   You needed three forms of ID to vote, and two of them are only available from government agencies open on Wednesdays from 9-11AM and 2-4PM.  Bring a magazine, I hear the line is two hours long.   But of course, since you can't afford to lose your $3.50 an hour job a Wal-Mart, you aren't about to ask your boss for time off, are you?

Of course, it is a good time to be rich - fabulously rich.   If you are born into wealth, you have it made.   You will go to the best schools and get good grades of course (your Dad donated the new History building).  And you'll have your own helicopter - a graduation gift from your parents.   That is to say, a High School graduation gift.

And you'll be used to having servants, of course - and abusing them in any way imaginable.  Since you are spoiled rotten from day one, you think nothing of ruining the lives of a gardener or butler or raping the upstairs maid.   What are they going to do about it, complain?    You'll have them out on the streets and living in one of those cardboard-box ghettos you fly over in your helicopter on the way to the country club!   "How do people live like that?" you think, as you fly over.  Why don't they try to improve themselves!  If only they would pull themselves up by their bootstraps like you did!

Yes, life is sweet, if you are rich, and the rest of the world is desperate.   You can do what you want, manipulate people, and get away with murder - quite literally, if you are inclined that way.

It is not like those bad old days your Dad and Granddad told you about - back when accumulating dynastic wealth was harder to do.  They actually taxed your income, if you can believe that!   And poor people were given a "safety net" of benefits, so that if they could not find a job, they could live in some dignity.   It was a horrible system, your Dad told you - after all, if the poor can make money without working, why on earth would they put up with being abused at work!   According to Grandpa, back then, you had to be nice to your employees.   Strange but true!

You are glad you are born in the era you are in.   You have the world by the string - endless dynastic wealth that will never dissipate over time, even if you do nothing but spend it all day.   And legions of desperate humans who will do your bidding - as if they were slaves.   They will scramble just to get sufficient caloric intake for the day.  Life is sweet!

But of course, for the upstairs maid you just fired (for having the audacity for complaining about that rape thing - sheesh!) life is a different story.  She now can't get a job -anywhere - thanks to your "black-balling" her.  She lives in one of those cardboard-box ghettos, and watches your helicopter fly overhead every day.   She searches the dump for scraps of food.  Sometimes she finds bits of leftovers from your banquets, that your servants and the other scavengers missed.  She can only hope to get enough calories in the day to stay alive, before the inevitable illness and lack of medical care kill her.

* * *

OK, sounds like a pretty fantastic dream, right?  I mean, that is a pure exaggeration - that could never happen anywhere in the world today, right?    Well, not exactly.   It does describe life for a lot of people in places like Haiti, Brazil, and other third-world countries, where a very, very few live ultra-rich lives, and the great masses live like desperate animals.  Um, Africa, parts of Asia.  Well, all of China.  Indonesia, much of the Balkans.  Many Arab countries too.   Come to think of it, most of the world lives in abject poverty, compared to how we have it.   For about half the planet, scrambling to just survive another day is their main goal in life.

I've been to such places - where the well-to-do live in walled compounds (like in Mexico) and often obtain their riches through financial machinations, bribery, corruption, or various criminal enterprises.   But of course, they are just "free market capitalists" - and bribery is the end result of an utterly free market, right?

Well, OK, you say, maybe that sort of thing happens in South America or impoverished island nations - or perhaps in Africa.  Or Indonesia.  Or, well, actually in about half the world, right?  But it will never happen here - this is the United States of America!

All I can say is, I hope you're right.   But if you look at countries that were run like that - such as a the Philippines, they relied on a scrambling middle class, that they could play off against the underclass, to stay in power.  They dangled out the carrot of promised riches which never quite materialized, except for the very few, on the premise that they step on the face of the person below them in the economic chain, to get ahead.  They told the middle class, "Your problems are not with us, the very rich - we are like you!  No, your problems are the very poor, who are dragging you down!  Turn on them, and be like us!"  And people believe it.

If you are wealthy, it pays for poor people to be desperate.  They will do your bidding that much more easily.   And one has to wonder, with all this talk about cutting Social Security, Medicare, and other programs that help the poor and the middle-class, if there isn't some sort of overall design to this.   After all, if we can keep people desperate and hungry, they are far easier to manipulate and abuse.

And that would be a swell world to live in, if you were very, very rich.   But for most folks, it would be (and is) a nightmare.

How Big is the Deficit? How Big the National Debt?

What is the deficit and the national debt?  Are they as huge as people say?  Is this really another "crises"?  Or like most government "crises" is it just politicians trying to get everyone alarmed, in order to get elected?

There is a lot of talk this election year - and rightfully so - about the deficit and national debt.   A lot of people don't understand the difference between the two, even as they have strong opinions about the matter.

(In fact, some people don't even know what a Billion is (a thousand million) or a Trillion (a thousand Billion) and come up with all sorts of cooked numbers when discussing this issue.   A common trick is to count a Billion as a million million which of course throws everything off by a factor of 1,000).

The deficit, of course, is how much more the government is spending than it is taking in, in revenues.   The national debt is the accumulated debt as a result of this deficit spending.

Why do we have budget deficits and a national debt?   The first is a result of both increased spending and decreased income.   In good times, people make more money and the government collects more taxes.  During the Clinton years, we had budget surpluses (but did not pay off the national debt, of course) because the economy was doing well - so the IRS collected more money.  Tax rates, on the very wealthy, were higher then as well.

During the Bush administration, these surpluses evaporated.  Part of this was due to the two wars we were fighting, as well as the massive amounts of money thrown at "homeland security".   And part of this was just spending on all sorts of projects, which Congress just couldn't control, and the White House did not make a priority.   And also part of this was due to the Bush Era Tax Cuts which cut revenues at a time when spending was higher.

In the last four years, things have gone from bad to worse, in terms of budget deficits and the overall national debt.   Income is down, because of the recession.  People make less money, so they pay less to the IRS.  The Bush Era Tax Cuts have not helped any - and some say that eliminating these would eliminate or reduce the defict.   Increased spending, in the form of unemployment benefits as well as other benefits to the poor (of which there are more, because we are in recession) haven't helped, of course.

And stimulus spending adds to the balance as well - although some economists would argue that such stimulus results in a faster economic recovery, and thus will lead to improved revenues down the road.  Think of this in business terms.  If you want to make money running a business, sometimes you have to borrow money from the bank to invest in new machinery and technology.   When you borrow this money, it often means your business balance sheet doesn't look as good the next day.   But down the road, once you start making more money from this investment, you can pay back the loan and then some.

That's the theory, anyway.

But what are the actual amounts of the deficit and the national debt, and should we be concerned about them?   What have these deficits been like, historically?  Let's take a look.

How much is the deficit?

The Congressional Budget Office predicts the deficit for the full year, which ends on Sept. 30, will total $1.17 trillion. That would be a slight improvement from the $1.3 trillion deficit recorded in 2011, but still greater than any deficit before Obama took office.

One positive sign this year is the deficit is growing more slowly than last year.

That data, of course, is outdated.   This spreadsheet from the Office of Management and Budget, shows more up-to-date numbers.   During the Bush years, the deficit went from surplus to a high of about a half-trillion a year.   Since the recession, this has ballooned into about 1.2 trillion.

The GOP is right that the deficit has ballooned over the last four years.   But with reduced revenues, extension of the Bush tax cuts for the wealthy, and a crappy economy, could this really have been avoided entirely?   I think not.  Even with deficit hawks in the White House and Congress (good luck with that, the GOP is as pork-barrel as the Democrats are) they might have been able to reduce to this to say, maybe 1 trillion even.  And then, only at the expense of a slower and more agonizing recovery.

So, much is the national debt?

At the end of September 2012, debt held by the public was approximately $11.311 trillion or about 72% of GDP. Intra-governmental holdings stood at $4.848 trillion, giving a combined total public debt of $16.159 trillion.  As of July 2012, $5.3 trillion or approximately 48% of the debt held by the public was owned by foreign investors, the largest of which were China and Japan at just over $1.1 trillion each.

Are these numbers to be concerned about?

This chart illustrates the national debt, over time, as a percentage of Gross Domestic Product:

As you can see, as a percentage of GDP, our national debt is not really as scary as $16 Trillion sounds.  In fact, it is really right in line with what you would expect during a recession, and compared to the last few decades.

The GOP, of course, prefers to look at the debt in terms of actual dollar amounts, as opposed to percentage of GDP, as it makes for scarier charts, and it is, after all, nearly Halloween.   But of course, a dollar today is worth far less than a dollar in 1945, and that is one reason why the comparison to GDP is often more illuminating.

And of course, the ratio to GDP will drop dramatically once the GDP increases - as we recover from recession.

This chart illustrates the amount of the National Debt, both in % of GDP and in dollar amounts.  For some reason, the chart is overlaid by who is President (like that makes a difference, Congress passes budgets, not Presidents!):

As you can see the upper chart, in dollars, is far more alarming than the lower one.   Democrats use the lower chart, Republicans the upper one, to make their points.   As for the national debt growing or receding based on who is in the White House, I see no pattern here, nor a causal relationship.   Congress passes budgets, not the President.

Another way to look at the debt is by dividing it up by the number of people in our country.   We are a nation of about 330 million people (about 1/3 Billion) depending on whose numbers you use.   And that right there is one thing to take into account when looking at these numbers.   We are a huge country, in terms of size, population size, wealth, and economic power.  We are the largest economy in the world.

So you have to take that into consideration when looking at numbers like this.   An annual budget deficit of 1.3 Trillion dollars sounds like a lot of money, but it works out to about $3900 per citizen in this country.  Yes, that is a lot of money we have to somehow make up, over time.

The national debt, at $16 trillion, comes to about $53,000 per citizen, or a hefty mortgage on each of us.   But like any mortgage, it doesn't have to be paid off all at once, but over time.  And like with the GDP ratio, one way to reduce the amount of debt per citizen is to increase the number of citizens.   As the population increases, these amounts per person could go down.  Growth is ultimately the best way out of recession, not cutting back.
 
As I look at our debt, from the charts above, I come to some interesting conclusions:

1.  Our nation has been in debt pretty much since its inception.

2.  We very rarely have "paid down" the debt by very much, since WW II, except briefly in the Clinton years.

3.  Decreasing the deficit, in the past, was accomplished by increasing revenues, not by cutting spending.  Spending, historically, has always gone up.  See the OMB Spreadsheet.   The idea that we can "cut spending" is nonsense - at best, we can arrest its growth rate, somewhat.

4.  Our National Debt, while large, is financed at some of the lowest interest rates in history.

5.   Over time, our country outgrows its debt, as our economy grows and as inflation eats into it.

Thus, the idea of us "paying back" the entire national debt is probably a fantasy and will never happen in our lifetimes.  What will happen, of course, is that as our economy recovers, the size of the debt, as compared to GDP, will shrink, and people will worry less about it.

A note about interest rates:   The last time the "national debt" was a huge political issue (as opposed to a general, every-four-years issue) was in 1980.  Back then, our debt was a lot less, but thanks to high interest rates, the amount we spend servicing the debt had ballooned.   A lot of our debt today is financed on long-term treasury notes that have fairly low interest rates extending out over 10, 20, or even 30 years.  We are in better shape than in 1980, in this regard.

A note about "Debt Clocks":  In researching this article, I found a lot of sites, mostly right-wing, with various "debt clocks".  One site has about 50 of these various clocks, which are all spinning in an alarming manner, which induces a kind of panic in the viewer.  These are less than illuminating, as spinning numbers are just dramatic, and not really useful for mathematical analysis.   And often these "debt clock sites" take things like "all unfunded liabilities" (which I guess would include all medicare and Social Security, potentially paid out from now until 2065) and then make the argument that our "total liabilities" are well over $100 Trillion Dollars !!!! (with lots of exclamation points!!!)  But these sort of specious calculations and spinning numbers prove little or nothing.   But they do make an emotional hook into the viewer, as they induce a sense of anxiety and panic in the viewer.  No wonder the "debt clock" was the centerpiece of the GOP convention.   Again, when someone tries to sell you fear they are selling you a wagon-load of horseshit, whether it is "buy a house now, before you get priced out of the market!" or "The debt will explode if you don't elect me!"

But what about all those foreigners who are holding our debt notes?   Romney and the GOP make a big issue of this - that the Chinese are "holding a trillion dollars of our debt" - as if they are going to foreclose on us, and repossess Air Force One.   But of course, it isn't quite like that.   Anyone can buy U.S. Government debt instruments.  You can go online right now and buy T-bills or bonds, as I have written about before.   They are a pretty crappy investment, right now.

So is this something to worry about?  All those Chinese holding our low-interest-rate notes?  I think not, and for several reasons:

First, we can't limit who buys our debt.  It isn't practical to do that.

Second, allowing overseas investors to buy our debt brings down the interest rates on our debt.  

Third, holding our debt instruments doesn't mean the Chinese (or anyone else) can "foreclose" on the USA or repossess it, or that they have some sort of hold over us.   I own a t-bill, it gives me no special rights, believe me.

Fourth - and most importantly - the reason so many foreigners are holding our debt notes is that it is considered to be one of the safest investments on the globe, even if it pays bubkis in interest.   And that should tell you a lot, right there.   While the GOP doesn't have confidence in our country, the rest of the world does.

So why does the GOP make a big deal about "China holding $1 Trillion of our debt?"    Well, it sounds scary to the plebes.  Selling fear, yet again!    They talk as though we are  enriching them with a 2% rate of return or something.   It is a bullshit argument, and when someone makes a bullshit argument, well, you know where things are headed.  They are lying to you - for a reason.

So, does this mean we should not be concerned about the deficit or the national debt?   Of course not.  It is an important issue - but you have to separate fact from fiction and scare stories from actual truth.   And this being an election year, it is easy to spread scare stories about the debt - every party does it, every four years.

Believe it or not, Obama ran on this issue as well, pointing out how Bush increased the deficit and the national debt.  And of course, Republicans, at the time, said, "Well, we had two wars going on!  A war on terror!  We had to spend the money!"   But some would argue that $1.9 Trillion of that money went to the wrong war - invading Iraq, instead of Afghanistan.   And now there is talk of attacking Iran.   Who knows?   Maybe it was worth it - maybe the "Arab Spring" uprisings would not have taken place, if not for the Iraq war.   Or maybe they would have, and Saddam would have been overthrown anyway.   You can't unbark the dog.

I think the fantasy the GOP is selling is that we can actually decrease the budget over time, and thus spend less (except on defense of course!  We need to increase that!) while lowering taxes and decreasing the deficit and actually paying down the national debt.   That last item is a real whopper, if you look at the charts above.   Only during the Clinton years did we ever do that, and even then, by a trivial amount.

I think a better goal is to continue to reduce deficits over time, as the economy recovers, by keeping spending increases in check, and by increasing revenues by allowing the Bush Tax Cuts for his Wealthy Buddies to expire.  We got along just fine in the Clinton years, with the old tax rates - we can do it again.  It just means that Muffy can't have a new helicopter for her Sweet-16 party.

As for the National Debt, the best we can do (and should do) in the next decade, is to arrest its rate of growth.   Paying it down is an infantile fantasy - and a basic LIE, used to get the plebes all riled up for the election.

And that is the whole point, really - to get elected.   We will recover from this recession, come hell or high water.   The USA is not having a "going out of business sale" anytime soon.   And as the economy recovers and the government's income increases, we will see these deficits shrink and the ratio of the national debt to GDP decrease.   And whoever is in the White House when this happens, will claim credit for it and say it was their idea.

So, now you understand why Romney isn't more specific about his plans.   He needn't be.  Why box yourself in by promising anything more specific than cutting funding for PBS?    If you say you will do X, then your opponent will call you out on it, in four years, if you don't - just as Romney is going through everything Obama said and criticizing him for not following through (why Obama decided not to lower unemployment rates is beyond me!  If I were President, I would select a lower rate - as well as lower gas prices.  I mean, it is a no-brainer, right?  Sheesh!).

So the real race here is the race for who gets credit for the inevitable recovery.   And if Obama does it, he will be lauded as a visionary.  And if Romney does it, he will get credit for his "financial acumen".   But in either case, there are greater forces at work than the actions of an individual President, whose powers are really limited, in terms of what they can accomplish, with a balky Congress to deal with.

Closet Minivan Fan

Minivans are cool - but saying that you like them isn't cool.

Probably one of the best automotive designs of the last 30 years was the minivan.   No, really.  In terms of space efficiency, packaging, features, fuel economy, and safety, the mini-van has it hands down, over other forms of transportation.

A reader recently wrote me, telling me how he planned on starting a family.  And I thought, "Cool, he gets to buy a mini-van!"   But of course, I did not say that to him, as he would have thought I was weird.

Why do I think minivans are cool?  Well, to begin with, they haul a lot of people and have a lot of interior room.   A basic minivan has more usable room in it than a Ford Expedition.   I rented an Expedition once, after requesting a minivan (they were sold out, which tells you something) and that damn Expedition could barely carry four adults and two children - and their gear.  We had to put a rocket-box on the roof, and it was hard to reach.  And the gas mileage was atrocious.  And it was poorly made.  Expeditions suck, really, unless you are towing a 28' boat or something.

The minivan gives you more room, but in a smaller vehicle - one that will fit in your garage and doesn't suck gas with two straws.

And then there are the interior features.  The minivan market segment is competitive, so the makers are lavishing features on these boxes.  You can get entire entertainment centers in these things, so the kiddies can watch their Disney movies, while you zone out to NPR or whatever.  And then there are all the cupholders, cubbies, storage bins, and the like, some of them hidden in the floor.

Speaking of floor, some of these things have seats that fold up and go into the floor.  How cool is that?  and no, your SUV can't do that, as it is physically impossible.

And they have electronic doors that open and close remotely, and well, just about any toy you can imagine and then some.   Some even have the child seats built-in, so they pop out of the regular seat.  That, I thought, was a cool feature - no more lugging those huge plastic baby-buckets around!

And minivans are cheap, too!   You can buy them for next-to-nothing, even brand new.   They are so disparaged by the status-seeking soccer mommies in their lumbering SUVs (are there any other kind?) that while the SUV might have a premium price markup, the minivan is usually on sale.

And chances are, that "SUV" is just a car chassis with an SUV body on it - with less interior room and crappier gas mileage.  Let's face it, you aren't going "offroad" in a Chevy Traverse or Honda CRV anytime soon.

So why don't I buy a minivan?  Well, I already have a working car, and there is no need to trade-in. It would be a waste of money at this point.  And minivans generally don't have great tow ratings.  And since I don't have a brood to haul around, I don't need one.  When the time comes to buy another car, I will probably downsize to a small sedan or wagon or coupe.

But if you have a family and are thinking, "Gee, should we get an SUV or a Minivan?" I would say "Minivans!  They rock!"

UPDATE January 8, 2013:  We rented a Dodge Grand Caravan for a trip to Atlanta for four people.  It gets an average of 19.7 mpg and over 20 mpg on the highway.  The seats fold into the floor and it is well optioned, including dual electric doors and tailgate.  And there is no shortage of room.

Downsides?  The plastic on the dash is a bit cheesy, and while it accelerates well, the brakes are not what I am used to, coming from a BMW.  But it does have a six-speed automatic and dual-zone and rear A/C.

Used, you can buy these pretty well optioned with about 20-30K miles from the rental car company for $17,000, which is pretty cheap.

There are worst things you could drive.  Most SUVs cost more, use more gas, and have far less creature comforts and interior space.

Yet SUVs outsell minivans.  Go figure! 

Find Your Muse

A muse may inspire you - if you find it.

Many people, it seems, never find their muse.  And this is sad.  I see a lot of young people and when you ask them what they want to do with life, they mumble, "dunno".

What causes this death of creativity?  It is hard to imagine that someone could start out life and have no clue what they want to do with it.

I think, though, a number of factors may be a work.


1.  Television:  Watching television sucks the life and ambition out of you.  On television, the message is clear:  Everyone is a STAR and you aren't shit.  They reinforce this message periodically by allowing "one of us ordinary folks" to be on TeeVee, where we, of course, act like total rubes.   The message is clear:  Leave it to the "experts" and the "superstars" and don't bother trying, just be a passive consumer.

While this is a good way to harvest money from Mr. & Mrs. Average American, it is a horrible normative cue for young people to take away.  If you fall for this, you end up believing that nothing you can do in life will measure up to the "experts" and "superstars" on TeeVee.  And this is likely true - there can be only so many people on TeeVee, and they tend to get the most talented folks (although not all the time).

But that does not mean you lack talents at all.  Moreover, many of us have talents that are not ready for prime time.

The television tells you it knows-all and sees-all, and it reinforces passivity in human beings.  The moment you shut it off your real life begins.

Sadly, many folks never do.   If you watch TeeVee, you are not living life, you are watching it.


2.  Pot: Smoking Pot sucks the life and ambition out of you.  I wrote before how it induces a sense of statsis in people.  The pot smoker will stay at a crummy job, until fired, a bad marriage, until divorced, his parents' basement, until thrown out.   It may be relaxing and "fun" - for a while - but long-term, it keeps you as a kid for a while longer, which of course is the point for most users.

So the pot-smoker does another bong hit and says, "Gee, I don't know what I want to do with my life."  Trying hard things seems, well, hard.   I know that I never dreamed I would be a lawyer, when I was smoking pot - and being an Engineer seemed pretty far-fetched at one point as well.   And that is why pot-smokers gravitate toward shitty, minimum-wage slacker jobs.  There is no fear of failure there, and if you do fail, well, it was a shitty job anyway.

And I see this pattern all the time among po-theads.  They try less hard, and as a result, succeed less.  And this is sad, as they have real talents they can use, but their talents end up going to "waste" quite literally.


3. Disconnect:  It is hard, as a young person, to see the connection between something as obtuse as schoolwork and "real life" in the "real world".  And this is one reason why I am glad I was in a co-op program at GM, and later worked my way through college at Carrier.   When I took thermodynamics for the third time, I really understood it - not from a textbook, but from working in the lab at the ultimate in "applied thermodynamics."  To most of the other kids in school, the material was just dry equations, not real machines that they had worked on and sweated over.

High School, in terms of education, is basically worthless.   You might have a few good courses, but most of it is study hall and lunch and gym class.   If you are lucky, you might have a good art teacher, if they haven't cancelled all the art classes in favor of football.  And maybe you can learn something about computers, literature, some math and science - and for God's sake, learn how to type!

But few do, and often College is the place where they realize how crappy their education was.  But college often is no better.   Schools that tout their rock-climbing walls are not providing a real education to students, but just perpetuating the disconnect.

What do I mean by disconnect?  Well, we have so much wealth in our society, and as a kid, you have earned none of it.  Your typical college kid is living on money provided by Mom and Dad and Student Loans, and most of what he has in life are things handed to him.  A few years of after-school jobs is not the same thing as a career.   So you have all this nice shit, but have not earned any of it.  And it seems scary and you begin to think that maybe you ever will.

And some kids react to this mental disconnect by assuming that they are entitled to all this nice shit and then act shocked when they graduate and the bills come due.

And maybe that is why, when a young man gets his first paycheck, the first thing he does is run off to the new car dealer to buy a shitty econobox that is all the rage with his age group.  It is a means of connecting - between earning and having.  The chance to say, "this is something I bought, on my own, and without my parent's help!"   Unfortunately, many of them end up asking Mom and Dad to co-sign the loan, which sort of defeats the whole point.

* * *

I know that a lot of the rich kids I knew growing up never found their muse.  Their parents were hyper-successful, and they felt like, well, jerks in comparison.  And often this was reinforced by shouting Fathers who told their kids they would "never amount to anything" - a self-fulfilling prophesy.   How can you ever get out from under the shadow of a successful Dad who is making tons of money?   It is pretty hard to do, even if you are given a lot of nice shit - perhaps especially if you are given a lot of nice shit.

It isn't easy, to be sure.  And perhaps my experience has some clues.  I started working early on in life, precisely because I was sick of being dependent on others for money.    I realized that other people could be quite undependable, and relying on them to support me was dicey at best.   Other kids were not so motivated.

Working gave me a different perspective about money and my own self-esteem.  As a returning adult student at college, the contrast between myself and my classmates was staggering.  I owned my own home and my own car - that I had paid for myself.  And I had a job, or actually several.   The kids in the dorms had money and things, but they were all gifts from their parents.  They had yet to prove themselves in life, and thus could not make the connection between their own self-esteem and their own self-worth.

For example, one friend of mine never worked any jobs after school, or even during the summers when he was home from college.   Perhaps he lacked the confidence - and that lack of confidence bootstrapped itself in to less and less self-confidence.   And pretty soon, he was smoking a lot of pot, which meant that even when he tried to find a job, he was fired within a week or so - causing the low-self-esteem engine to chug on and on.

Did he have a muse?  Of course he did.  He just never embraced it.   He was a talented guy - smart, clever, and could work well with his hands.  He got good grades in school, particularly in math and science.   But he dropped his interest in those courses early on, and never really found his way after that.

He had a muse, but he couldn't find it.   And thinking he had no skills or talents, he let depression and low-self-esteem take over, with the end result, well, he ended up a very unhappy man.

Everyone has a skill or talent, large or small.  Not everyone can be a rocket scientist or a superstar, but that doesn't mean we are utterly worthless, either.  Find your muse - and nourish it!

Frontline Generic - Pronyl OTC™

Flea and Tick treatments for dogs and cats were very expensive.  Fortunately, the ingredients in Frontline are now available as generic equivalents for as little as $4 a dose.

I mentioned before in The Pet Trap, how the cost of a dog or cat can easily exceed $1000 a year.   With vet visits, flea and tick prevention, heartworm prevention, as well as the cost of dog food, occasional boarding, accessories (toys, collars, leashes, bedding, clothing), it is not hard to spend a lot of money on a pet, and the pet industry knows this.   (What your pet really would like, however, is if you spent less money on them and more time with them.   Oddly enough, children are the same way).
 
How people making less than $50,000 a year can afford a pet, I do not know.  I suspect a lot of poor folks don't spend money on heartworm protection and flea and tick prevention.   After all, 30 years ago, such things hardly existed.

Going to the Veterinarian for such supplies is often problematic - the vet charges a lot of money for these supplies, and heartworm medication is considered a "prescription" medication.   Often, a six-month supply of Frontline could cost $120 or more - about $20 a dose.  Back in the day, I would just pay this, scratching my head after leaving the vet as to why my bill was over $400.  And I would scratch my head as to why my credit card balance kept creeping up.  I never made the connection.

Buying these medications online, of course, saves some money.   Today, you can find Frontline for as little as $10 a dosage, on Amazon or eBay.   But so long as they had a monopoly on these drugs, there was little incentive to lower the costs, and until recently, prices were much higher than that.

But now there are generic equivalents, such as Pronyl OTC, which I recently purchased for about $12 for three dosages (yes, I bought a year's supply at this price for about $60).   This is a considerable savings over the $240 a year I used to pay!   As with everything else, it pays to shop around, and Googling "Front Line generic equivalent" found this blogger entry:

Good news if you've been using Frontline for flea and tick prevention! The active ingredient in Frontline is now available generically via FiproGuard™ Plus (available in pet specialty stores) and Pronyl OTC™ Plus (available at grocery, drug and mass retailers). Expect to pay $19-$30 for three doses instead of $45-$60.

From the official Sergeants press release:

(Omaha, Neb. – May 12, 2011) In the thick of flea and tick season, there’s great news for pets and pet owners – but bad news for fleas and ticks. Generic equivalents of Frontline Plus® are now available in pet specialty, grocery, drug and mass retail stores. Two new generic versions – FiproGuard™ Plus (available in pet specialty stores) and Pronyl OTC™ Plus (available at grocery, drug and mass retailers) – provide pets with the same flea and tick protection and use the same active ingredients as the brand name version.

The difference: besides being available in a variety of shopping venues and therefore more convenient, the new generic versions are also less expensive. This is great news for both owners and their furry friends, as the flea and tick season moves into high gear.

The move to generics has increased in the animal health care world over the past decade. Veterinarians commonly prescribe generic medications to their patients, just as physicians do for their human patients. FiproGuard™ Plus and Pronyl OTC™ Plus mark the beginning of generic versions of name brand flea and tick treatments, however.

Both products are produced by Sergeant’s Pet Care Products, Inc., a leader in the pet products industry that has been developing and manufacturing pet health products for more than 140 years. Both FiproGuard™ Plus and Pronyl OTC™ Plus are manufactured in the U.S. in their Memphis, Tennessee facility. The facility has passed stringent U.S. regulatory inspections that ensure these new flea and tick topical products are quality controlled and up to U.S. health and safety standards. While other generic flea and tick topical products have been rolled out, not all are manufactured in the U.S.

Just like Frontline Plus®, FiproGuard™ Plus and Pronyl OTC™ Plus contain a powerful adulticide, Fipronil (which that kills adult pests including fleas, ticks and chewing lice), and an IGR (insect growth regulator), S-(methoprene), which kills flea eggs, flea larvae and prevents the development of flea pupae. Both topical products also aid in the control of mites that may cause sarcoptic mange in dogs. The final results: dead fleas and ticks and protection against reinfestation.

A True Free-Market Economy - Reality or Economic Model?

Adam Smith, who postulated that in a free market economy, the "invisible hand of the marketplace" would establish equilibrium.  Smith was talking about a theoretical model, not a blueprint for an economy.

Free-Market Economies don't exist, except in the heads of economists.  They are economic models or thought experiments, designed to analyze market factors.  And in that regard, they are useful in making broad generalizations of how an economy will work.   In real life, however, nothing is ideal, even if there isn't market manipulation by individuals, groups or the government.

And these manipulations are many, and many are inevitable.  We are not logical creatures, but rather we are often very emotional beings who are easily swayed to work against our own self-interest.  So the idea that we will all act as rational players in the marketplace is a fantasy.  There are a number of factors which skew the "free market" from its theoretical ideal:


Psychology:  Perhaps the biggest factor that affects free markets is that we are rarely the rational market actors that Smith postulated.  People buy things because they are sexy, or they think they will make them look sexy.  They buy things for status.  They go into debt for status.  In short, we do the opposite of rational behavior, most of the time.

This skews every single market - and explains, in part the blow-up of the Real Estate Market (in 1989 as well as 2009) as well as the IPO debacles of 2002 and 2012.   Individuals buy stocks, or houses, or cars, or iPhones, not as logical decisions, but as emotional ones.   As a result, the "invisible hand" is blinded half the time, and the equilibrium of the marketplace is distorted.   When cold, hard logic finally takes over (when people realize they can't afford their houses, or that Facebook stock is a poor investment), things swing back the other way - creating a few winners, and a lot of losers.


Government Intervention:   Folks on the Right decry government intervention in markets, as it tends to distort the market and cause people to do things they would not ordinarily do.   And this is a valid criticism.   Whether it is your home mortgage interest deduction, or a tax credit for buying an electric car, chances are, you are chasing after one form of deduction, credit, or tax haven.

For every government distortion in the marketplace, however, there is a constituency or promoter, who would argue that such distortions are necessary, even if they just favor a small minority of people.  And that right there is one problem with these programs.  When everyone is getting some sort of "fix" in the marketplace from the government, it becomes impossible to eliminate all these distortions.   Pretty soon, all of us are relying on the government to alter the market, to our perceived advantage.

There are a number of such distortions that the government creates in the marketplace.   Here are just a few:

Price Controls - everything from the price of gas to the price of milk has, at one time or another, been controlled by the government.  And often these controls, designed to protect consumers or producers, can backfire in a big way.   In California, price limits on milk, designed to protect consumers, are resulting in many milk producers declaring bankruptcy, as the drought raises the cost of feed and makes their dairy operations unprofitable.   Before you go blaming Democrats for price controls, though, remember it was Richard Nixon who imposed wage and price controls, back in 1971.  No one has "clean hands" in this deal.

Regulations - Regulations can be useful in creating a fair market.  They can prevent dishonest players from selling fraudulent or unsafe products.  They can, in effect, enhance trade by providing a level of confidence in the marketplace.   But they all have a cost, and a cost/benefit balance needs to be made.   And of course, many players in the marketplace will insist on regulations that do not help the market, but rather help only themselves.   The latter pretty much sums up all telcom regulations in the last 20 years.

Subsidies - Getting back to Milk again, we paid (or used to pay) farmers huge subsidies to produce milk.  And we did this often by buying up huge quantities of butter and cheese.  We also paid some farmers not to produce, directly subsidizing their incomes.   These actions, of course, distorted the market, causing a lot of people to get into the dairy business (a guaranteed income, why not?) or to leave land fallow that could have been put to good use.   Weaning ourselves from these subsidies is not easy - too many powerful interests are at stake.   And you realize this when you look at the defense and aerospace industries.

Taxes - Most citizens are herded by the carrot and stick of taxes.  We all live in fear of the IRS and yet we all love to chase after deductions and tax credits.   As a small businessman, I can tell you that running a business in America today seems like one long tax season.   Everything you do, it seems, is predicated on how it will affect your taxes, or what deduction you will get.  And keeping tax records is the main business of most businesses, it seems.  Corporations, too, chase after deductions and credits, and often this causes them to do things against the interests of the country.  Sending jobs overseas, for example, is not only profitable because of lower costs, but because of lower taxes as well.

Entitlements- These might not seem like a market distortion at first.  After all, entitlement programs are designed to help people, right?   But they have the effect of simultaneously raising and lowering wages, depending on circumstances.  For example, the laid-off middle-level manager in his mid-50's will never likely see that near-six-figure job again in his lifetime.   But since he is getting the equivalent of $20 an hour with unemployment, he turns down jobs that pay less - the jobs he will eventually be forced to take, once unemployment runs out.   On the other side of the coin, the $8-and-hour worker can't really survive well on that salary, unless it was subsidized with food stamps, medicare, and other supplemental income sources from the government.   Entitlements for the working poor often end up being a wage subsidy to the employers who hire them - such as Wal-Mart and McDonald's.   These subsidies make it possible for people to work at such low wages.

Manipulation by Individuals and Groups:  Over the years, the market has been distorted, intentionally, by various individuals and groups.   Folks, such as the Hunt Brothers, try to "corner the market" by buying up all supply, and thus distort prices.  Sometimes this results in huge profits, other times, the folks doing this get wiped out.   And it goes on today, even.   Apple was very successful with the first generation iPod, not because of the technology, but because they bought the entire first two years' production of the then-new 1" hard drive.   This allowed them to "corner the market" on MP3 players, as no competitor could come up with a competing product, at least initially.

Other groups have tried to manipulate the price of stocks, with varying success.   You can play the game, or game the system, with the latter often being far more lucrative.   These types of distortions can be very corrosive in the marketplace, as it causes people to lose confidence in their markets.  If every transaction is a rip-off, people will often just shy away from making transactions.   And some regulations, in this regard, are a good thing as they prevent this sort of distortion from taking place and restore confidence in the marketplace.

* * *

Are free-market models worthless?  Of course not, but they are just economic models, not real-life blueprints for an economic system.  The idea that "but for" our markets being unfettered, we would all be Billionaires, is just a fantasy.   And by the way, when someone tries to sell you on the idea that one thing can fix everything, chances are, you are being lied to.

Why is is a truly free-market economy a fantasy?  Because a truely free-market economy - one with no regulation or intervention by anyone - would be Anarchy.

Think about it.  In such a State, bribery and corruption would be rampant.  Why?  Well, a government official selling his office to the highest bidder would just be exercising Adam Smith's "invisible hand" of the marketplace - and with no regulation to hinder him, why not?

Buying and selling anything would be problematic, as con artists and fraudsters would have a field day.  You'd lose your shirt in the stock market to stock manipulators and people selling phoney stocks - like in the 1800's.  Every transaction would be a test of trust between the parties - perhaps transacted at gunpoint.   Commerce would slow, not quicken.

Similarly, while you might get excited about the prospect of a truly "free market" where prostitution, drugs, and firearms were all unregulated and legal, it stops being fun when you see the consequences, particularly when under-aged people are involved.  But hey, free market, right?  No need for "regulations" to disturb the pure and unfettered stream of commerce.

In other words, society would fall apart pretty quickly.  Anarchy is not the answer.  And utterly free market is not the answer.

OK, Bob, you are being dramatic to make a point, again.  We get it.   Some regulations are needed in any marketplace to establish boundaries and create a level playing field for all the players.   It is just we don't need unnecessary regulation, that's all!

So we agree then, that a free-market economy is just an economic model, and a Randian fantasy of the word - not a workable blue print.

Then the only real question that remains is, how much regulation of the marketplace is acceptable?

Fine.  I'll debate that all day long.   And over time, our government stumbles along and pretty much hashes it out.   We end up doing pretty well, even if we oscillate from "too much" to "too little" regulation at times.

But don't try to argue that "Free Market Economy" policies are a panacea to anything.   Because they aren't.  If you really believe in that sort of thing, you are right up there with those kids in France who wear bandannas, spray-paint the letter "A" for "Anarchy" on walls and smash the front windows of a McDonald's, as if it were a political statement.

Because a true "free market economy" would be Anarchy.   And Anarchy sucks, let's face it.  It is not a "solution" to anything.

Yea, it's true.  You go far enough Right, you end up Left!

UVERSE after one month

So far, AT&T UVERSE seems to be working out OK.

It has been a few weeks since I signed up for AT&T UVERSE service for both voice and internet (they do not offer television here, nor do I want it).   And so far, so good.

The only fly in the ointment has been their customer service by phone.   I would advise just not calling AT&T as their call centers are horrific and you will wait on hold forever and get nothing resolved.

Their website, however, is pretty well designed, even if it could include more information.

I signed up for their elite 6 mps service, which cranks over 5.5 mps on a regular basis.  This costs $43 a month.  The VoIP phone line costs $25 a month for 250 minutes.

The install was painless, although delayed by a day.  There was some confusion as to whether AT&T DSL would disconnect first.  They did, right after the UVERSE installer called.  I called him back, and he arrive about an hour later.

I had a separate line run directly from my Network Interface Box to my DSL modem/router, bypassing the customer interface. I did this so I could filter all the house lines with one filter (so I could use my AT&T business phones with intercom).  This made the UVERSE install about a 20-minute deal.  Unplug the DSL modem, plug in the UVERSE modem, and voila.   For normal wiring, it might take longer, of course.

The house phones were then back-fed through a wall jack, and the network interface disconnected, so the signal did not feed-back to the pole.   All up and running in about 45 minutes overall, with us bullshitting and whatnot.

The tech was pretty good, once I explained to him my unique phone wiring arrangement.   He was not a Communications Worker of America Union member, and you can see where AT&T is going with this.  UVERSE is not a "regulated utility" and the eventual goal, I think, is to spin off the wireline side to some shell company like Frontier Communications, and then stick with unregulated services like UVERSE, which is based on fiber optic.

My internet speed is about twice as fast as before, and yes, this is noticeable.  The phone signal is clear and strong, and not weird like some Vonage lines or magic jack.  I'd say the quality is better than POTS (Plain Old Telephone Service) bandwidth.

The 250 minute a month thing was troubling, as I used a number of minutes initially.  Additional minutes are 5 cents apiece, and you could easily go over and end up paying more than you would for the "unlimited" service of $35 a month.  Was it really worth it to save $10?  For me, I think, yes.   But how the minutes are billed was initially a mystery.

Again the website is useful, as it provides a log of billed minutes and also a log of all phone calls, incoming and outgoing.    By comparing the two, reading the site, as well as going to their user forums, I learned that:

1.  Unused minutes do not "rollover" to the next month.

2.  Incoming calls do not count toward your minutes.

3.  1-800 calls do not count toward your minutes.

4.  You can check your billed minutes in near-real-time (it updates on the half hour)

5.  You can check your total phone call log in real time.

So far, I am under the 250 minute level, so I don't see this as an issue.

On the website, you can change a lot of your phone settings, which is much better than landline, as that requires you CALL IN to make settings changes.  You can set up call forwarding, call blocking, and also block overseas calls and directory assistance (for example, if you don't want your kids or customers making expensive phone calls!).  I chose to block both.

For overseas calls, we use an AT&T calling card, which I think is the best option if you only occasionally call overseas.

So, the service works great, customer support by phone sucks (what else is new?) and the website is pretty decent.  What about the billing?

I got my first bill today.  They nailed me for $200 in install fees and the modem cost.  This offsets the "discount" for the first year's usage neatly (I save $276.60 with the package, over one year).  I was charged $6 in State and County Taxes and a $5.59 "Federal Universal Service Charge" whatever that is.  Whether or not this is a recurring charge, I do not know.  It appears to be so, as it was not listed as a "One-Time Charge".  I will update when the next bill comes.

Actually, that is an interesting line-item, and it will be interesting to see if it is repeated.  They told me on the phone that there were no such additional charges to appear on the bill.  And as the link above notes, this is not some 'mandatory' charge that the FCC requires, but actually a business expense that AT&T chooses to pass on to their customers in their bills:

Carrier Universal Service Charge:

Because telephones provide a vital link to emergency services, to government services and to surrounding communities, it has been our nation’s policy to promote telephone service to all households since this service began in the 1930s. The USF helps to make phone service affordable and available to all Americans, including consumers with low incomes, those living in areas where the costs of providing telephone service is high, schools and libraries and rural health care providers. Congress has mandated that all telephone companies providing interstate service must contribute to the USF. Although not required to do so by the government, many carriers choose to pass their contribution costs on to their customers in the form of a line item, often called the “Federal Universal Service Fee” or “Universal Connectivity Fee”.

The phone service was billed at $25 (plus a pro-rated amount for the first month).  And additional "Federal Universal Service Charge" of $3.20 was assessed,  plus the Georgia 911 service fee of $1.50, which appears to be a flat-rate fee.

From what I can see, the FUSC is about 6% of the overall bill for services.  How AT&T calculates this is a mystery to me.

The internet was billed at $19.95 (the promotional rate, $43 regularly) with no apparent add-ons or fees.

Assuming the County and State sales taxes were only for the modem ($100 value, 6% dales tax), and the $5.59 FUSC was for that as well (it was also billed separately for the phone service) I can assume that our "regular" phone bill might be as follows:

1.  UVERSE Elite Internet (6 mps):  $43
2.  Phone service, 250 minutes per month:   $25
3. GA County 911 Service Fee:   $1.50
4.  Federal Universal Service Charge:  $4.27

TOTAL:  $73.77 (Ouch)

Using the same calculation for the "promotional" service, I would expect my "regular" bill for the first 12 months will be $49.27.   So you get short-term relief with these "Come ons" but as I noted, since the overall savings are about $293.97 (with taxes) and you pay $210.59 (with taxes) for the modem install, the net savings is only about $83.37, or one month's free service.  And of course, you are locked into a 12-month contract.

Is this a savings?  Well, my last few AT&T DSL/Landline bills, billed at the regular monthly rate, have been on the order of $89.45 to $106.22.  So this looks to be a savings of $15 to $30 a month, compared to their current billing rates.  This could be a savings of $180 to $360 a year.  But savings can be deceiving when you are comparing to inflated prices.  My AT&T bills were as low as $60 a month, last year, and only in the last 12 months have been edging up, for reasons that the customer service department seems impossible to explain.

And since this is basically my only telecommunications bill (other than the $100 a year I spend on my AT&T Gophone) I guess it is not too bad, overall.

Compared to some folks, who have a $100 a month cable bill, a $100 a month phone bill, and a $100 a month cell phone bill, I guess I am not doing too badly.   And when you ask people what they pay for their phone bill, cell phone, or Cable bill, invariably they quote you the come-on "promotional" price, not the actual price - and certainly not with all the fees added on!   I have heard this from many people, who claim their cable bill is "$39.99 a month!" which of course, is not correct.  People lie to themselves, a lot, it seems.

Is there room for savings?  Yea, maybe.  I could try using a 3rd party phone service, like MagicJack, or some other VoIP provider.   But my experience with such services has been odd sounding phone calls and dropped calls.  And the better VoIP providers, like Vonage, are no big savings over $25 to $25 a month.  And yea, they are starting to charge 911 fees as well now, too.

And I could drop to a lower Internet speed as well, and save some money.  Movies stream just fine at 3 mps over the DSL line.  I suppose I could drop to a lower speed and save money there as well.

So, my initial verdict is this:

1. Better connection than DSL and landline.
2.  Easy install
3.  Better website service for features
4.  Lousy customer service over the phone
5.  Slight savings in price, over time.

But overall, I would prefer to pay less than $77, and next year, I will examine this plan again, carefully, and see if we can trim it further.

Someday, when I am retired, perhaps I will have no internet service, and just go online once a week to answer e-mails, at the local Internet cafe.  Now, that would be sweet!