Archive for the ‘Political’ Category

A Nation of Cowards

July 20, 2013

The Wall Street Journal article, “Obama: Trayvon Martin ‘Could Have Been Me’ ” discussing the President’s off the cuff remarks about the Martin/Zimmerman case was most discouraging. His attitude, reflecting that of a majority of blacks is that only the black experience matters.

“But he tried to explain the lens through which black Americans may see the case, saying that their own experiences and the country’s history with race inform how many view what happened to Mr. Martin.”

As a non-black my experience is also the lens though which I view life in general and this case as well. I have been called racist and sexist by a black woman (a third grade teacher no less) who did not like the job I was doing. Most blacks, male and female, appreciated the work I did. And even though a few had occasional complaints most did not raise the race or gender issue. I was never called racist or sexist by any non-black customers, employees or vendors.

In my small business I hired a number of temporary laborers, predominately black but not universally. Most were decent individuals who through luck, bad circumstance or poor life choice found themselves in difficult straits. I became friendly with some of these individuals and sought them out with work. However, there was one young black man who I did not like. He was only 21, had already fathered two children by two woman (both out of wedlock), did not support either child or woman, bragged about spending his money at strip clubs and railed about being disrespected by the agency manager. After all, this young man angrily stated, he was a man because he fathered two kids and therefore deserved respect. By “respect” of course, he meant his arrogant attitude should have been accepted, even embraced but never chastised.

At another time in my life I had long hair, a long beard, wore ragged clothes and was not regularly employed. Car doors would lock as I walked by as well. Being white didn’t matter. I looked suspicious. Years later when I owned a seat on the CME futures exchange I was advised not to apply for a job with a particular firm because I was not of the proper religious persuasion. Being white didn’t matter. Even today if a white as snow biker flying his colors walked by I too would lock my doors. The oft heard complaint about “locks click on the doors of cars” applies not just to blacks but to any suspicious looking individual. But only suspicious looking individuals. And yeah, aimlessly walking around in the rain wearing clothing that hides appearance in a neighborhood suffering a series of burglaries is darned suspicious. I too would be suspicious regardless of age, gender, or race. In point of fact as a post-military college student I did just that.

I noted a white male slowly walking down my street, stopping every few feet and looking around to see if anyone was observing. Being slightly hidden in my driveway my presence wasn’t evident. I observed this young, white male wearing jeans and shirt for several minutes because he was suspicious. The next day police knocked on my door and asked if I had seen anything suspicious because a burglary had been committed. I acknowledged what I had seen and gave them a description enhanced by my studied observation. It was never the persons age, gender, race or clothing but all of that in the context of his actions that raised my suspicion.

My experience is that too often some blacks (and women) assume that any slight, real or perceived, is due strictly to race (or gender). If I see a group of young black men walking towards me I might smile and say hello. They might be in military uniform or have the posture, poise and appearance of military men. If a different group of young black men came walking toward me I might be concerned and walk away to avoid them. This group would be wearing red or blue bandannas on their head, baggy pants dragging below their butt, over large shirts and they would be doing the “urban strut” down the street. It isn’t race that’s the problem. Either group could be white, black, brown, red or yellow or a mixture. It is clothing, gender, age, and race all within the context of actions.

For the President to chime in on race by offering support for only the black experience is for him to define his presidency that way as well. The President only intervenes in the public discourse when a non-black man kills a black man even though it was adjudicated as self defense. Meanwhile the President consistently ignores the massive amount of black on black violence and death. This is nothing short of disheartening. Maybe Attorney General Eric Holder was right when he said that in race discussions Americans are “nation of cowards”. Starting at the top evidently.

China Trade War

July 5, 2013

From a favorite blog: Humble Student of the Markets

http://humblestudentofthemarkets.blogspot.com/

A series of comments regarding China’s economic policy.

http://humblestudentofthemarkets.blogspot.com/2013/07/roach-v-pettis-on-china.html

“Michael Pettis has a different take. He wrote a Foreign Policy article about the credit crunch related convulsions within the context of the transformation from an investment-led to a consumer-led economy and also urged caution by the West in their approach to China:”

“Last week is a reminder that Beijing is playing a difficult game. The rest of the world should try to understand the stakes, and accommodate China’s transition to a more sustainable growth model. As policymakers in China continue to try to restructure the economy away from reliance on massive, debt-fueling investment projects that create little value for the economy, the United States, Europe, and Japan must implement policies that reduce trade pressures. Any additional adverse trade conditions will further jeopardize the stability of China’s economy, especially as lower trade surpluses and decreased foreign investment slow money creation by China’s central bank. A trade war would clearly be devastating for Beijing’s attempt to rebalance its economy and have potentially critical implications for global markets.”

The comment above is stunning in its implications. I translate the comment into several variants. The first and most straightforward reads, “if the West doesn’t continue to buy China’s exports there will be a global recession.”

And, if that isn’t enough of a threat, “it is the responsibility of the West to raise the living standards of China’s peasants [by sacrificing its own workers standard of living].”

Last, and most fearsome, “the West must continue to build up a China that uses its economic might to intimidate its neighbors today and will use it to build a military force to intimidate the world tomorrow.”

China is a nation that has long tantalized the Western economies and political leaders by the sheer size of its population. The West drools over the prospect of being able to sell goods and services to the Chinese population. That drool blinds the West to the self-interest of the Chinese leadership. That is, China will only buy from the West until it either steals or copies technology that enables the Chinese to sell to their own people. The Chinese market is the proverbial carrot on a stick held in front of a Western donkey to entice the donkey to pull the Chinese cart. But the donkey never gets the carrot.

The Chinese leaders know full well that their own self interest is best served by providing for its own people. It must continue to control its population. Economic freedom begets political freedom. China will only buy from the West as long as it suits them. When it no longer does various rules, regulations, laws, partnership requirements, outright theft of trade secrets and technology, and any other useful methodology will be employed to deter and defer Western benefits. The West will forever remain outside the fence looking longingly at a market they will never conquer. For a preview examine the experience of Western companies in Russia under Putin. This too was a large market the West drooled over. It has proven to be a chimera.

Given the current Chinese weaponization of its economic might the West might well respond by ceasing to be a compliant sucker market for Chinese exports. A trade war is far preferable to a military war. A trade war with China is a weapon the West can use to bend China to the interests of the West and the global welfare. A trade war could be used to pressure China to crush the North Korean (and Iranian) nuclear threat once and for all. A trade war could be used to induce China to back off from its territorial ambitions in the China Sea. A trade war could be used to align China’s global interests with those of the West in regards to the Middle East (Syria, Iran); South America (Venezuela, Cuba) and even Africa. A self-sufficient, economically powerful China is a bull [tiger?] in a global China shop.

 

Realtor to run Public Utility

July 21, 2011

No conflict of interest here … move along, move along, nothing to see here

Note: Cape Fear Public Utility Authority (CFPUA) provides the water and sewer service for both the city of Wilmington and all of New Hanover County, North Carolina

More on James Quinn from the Cape Fear PUA release:
“Quinn is a commercial and investment real estate broker affiliated with Creative Properties, Inc. A graduate of East Carolina University, he has served in many civic and service organizations. For Wilmington Downtown, Inc. he has served as President of the Board of Directors and as Chairman of the Economic Development Committee. He is a member of the Wilmington Regional Association of Realtors where he served as Chairman of the Political Affairs Committee and is a member and past president of Commercial Investment Industrial Division of the Multiple Listing Service. He has served on the Wilmington City Council. “

Letter sent to New Hanover County Commissioners

Commissioners:
James Quinn was recently appointed as chairman of Cape Fear PUA. He was noted as a long time commercial and investment real estate broker and developer who has served on the Wilmington city council among other organizations. Those are his sole qualifications to run a public utility company.
The appointment of Mr. James Quinn as Chairman of Cape Fear PUA is an appalling failure of our County Commissioners to fulfill their duty to the taxpaying, rate paying citizens of New Hanover. This appointment needs to be rescinded and a new chairman found that will keep the interests of the county, not developers upper most in their work. It isn’t important how many boards, civic or service organizations Mr. Quinn has served on, he has been an integral part of the New Hanover problems not its solutions. If his service on the Wilmington city council is any example of his impact it is eminently clear that he will not be a positive force for the county. And, exactly how hard is it to find a chairman who might actually know something about how to run a utility?
As a realtor and developer he will use his appointment to further the interests of those business constituents to the utter detriment of the rest of the county. The history of Cape Fear PUA is one of gross failure to maintain existing systems while constantly building out new areas to enable … wait for it … new commercial and residential developments. Recently the utility publicly declared its commitment to provide utility service to every piece of dirt in the county whether needed, wanted or not. Now with his appointment Chairman Quinn won’t have to ask nicely or make coy political contributions for this process to accelerate he can simply direct the utility anywhere he chooses.
The glaringly obvious conflict of interest makes it tempting to ask what process was followed, who’s campaign kitty was embellished, what private promises were made to grease the skids for this appointment. It stinks gentlemen. As commissioners each of you should be ashamed. Each of you now has a duty to publicly explain your rationale for such a manifestly detrimental appointment. Is this the type of appointment that fits with Mr. Catlin’s campaign? Is this what Mr. Berger supported? Mr. Davis? I am disappointed but not surprised at Mr. Thompson and Mr. Barfield. This appointment begs to be canceled before it causes even further irreparable harm to New Hanover county.

Your Air Conditioner Ate Al Gore and Saved The Planet

July 20, 2011

Thanks Paciloquy!  (Highly recommend this blog)

I finally made it through the paper by Dr. Qing Bin Lu. As you may guess I could not follow the math. But there was enough verbiage to explain his process and conclusions to make me think I grasped the point. How’s that for certitude?

In my somewhat simple terms the earth radiates energy in the form of heat and light (reflections?) in a range of the electromagnetic spectrum. At the lower ranges of the spectrum CO2 and H2O constitute the primary barriers to that radiated energy. At the higher ranges it is mostly CO2. But the middle range, where most if not much of the radiation occurs is the area where CFC’s are the primary radiant barrier.  Dr. Lu’s paper shows that the level of CFC’s has a strong inverse correlation to the amount of radiated energy and therefore a
strong positive correlation to global temperature increases. Thus, in his opinion, buttressed by his research, it is CFC’s that account for known rises in global temperature not CO2. And, which account for the decline in global
temperatures in the current decade.

Further, he questions how CO2 could be the culprit, the radiant barrier, when historic increases in atmospheric CO2 do not correspond to any increase in global temperature. Going one step further Lu shows that the recent
decades decline in global temperatures correlates to a decline in the atmospheric levels of CFC’s (albeit with a nine year lag). And he notes that the ban on CFC’s should in fact accelerate the cooling effects for a
multi-decade period in the future.

However, I am puzzled by your comments regarding some higher levels of CO2 that cause (I think this is right) climate forcing of higher temperatures.

Climate sensitivity to a doubling of CO2 is still unsettled.  It is the slavish acceptance of some data and the rejection of other data that drives the CAGW hypothesis.  Lu makes a powerful argument for more study and perhaps a re-calibration of climate sensitivity to CO2 but he is also making the argument that the climate sensitivity is larger i.e., a larger greenhouse effect, from a higher sensitivity to water vapor.  If Lu is incorrect on CFCs and the larger water vapor sensitivity then his theory collapses.  I find Lu’s hypothesis intriguing but then that makes methane, CH4, more troublesome because the same water vapor sensitivity would apply to increases in methane.  But this is how science advances.  As to my comments on the log behavior of CO2 concentrations and sensitivity I am favoring a lower sensitivity but I believe the pure radiative potential is still 4 W/m^2 as per Modtran.  Lu is not denying the radiative potential just that it does not show up in observations so he concludes that the net forcing is much less than 4 W/m^2.

My take away, other than that air conditioners can cool the jets on Al Gore’s CO2 plane, is that we may dodge a huge economic bullet by not shutting down the global economy in a futile gesture to corral CO2 when in fact the CFC tumor is shrinking from radiation treatments. Did I mix enough metaphors there?

I also read the bit about switching from coal to natural gas as a mechanism to reduce the CO2 impact on the planet. No doubt it will do so and for economic reasons may be preferable. But is the CO2 impact in and by itself
sufficient to warrant a change? Or  would a future technological advance provide a better, cheaper, alternative mechanism. Say natural gas electric generators dedicated to creating hydrogen for fuel cells? By dedicating the electrical output the plant can run more efficiently than if it was used to buttress the variable demands of the electrical grid. Plus that way we burn hydrocarbons in a controlled process (read: cleaner) to generate future energy. As opposed to catalytic cleaners on millions of automobiles. Until we develop a vessel to handle the hot salts required for Thorium reactors of course.

War Monger, not Isolationist

June 27, 2011

POTOMAC WATCH     JUNE 24, 2011

http://online.wsj.com/article/potomac_watch.html?mod=WSJ_topnav_na_opinion

The GOP’s War Powers Opportunism

Republicans abandon principle in a rush to score political points on the president.

By KIMBERLEY A. STRASSEL

Ms. Strassel,

First, I admire, occasionally greatly so and often agree with your writings and your appearances on WSJ Reports. Unlike many of your professional brethren you seem to think as well as you write. Not so much this time. In taking shots at Republicans who now oppose the Afghan and Iraq actions you join the great punditocracy in demanding party loyalty over good sense. I am a life-long Republican who frequently re-evaluates my association with that party over the Democrats or being independent. No one who knows me would dare suggest however, that I am a moderate.

Quite the opposite. I am an ardent, non-religious, fiscal conservative, social libertarian, war mongering globalist to throw out a few bumper sticker labels. My point is that just being a “Republican” ought not to require that I stifle my good sense in favor of a party line that fits on a bumper sticker. Why do you favor knee jerk Republicanism aka party loyalty over good sense? In fact, were I to ever rise to elected office my good sense would be the only anchor in a sea of contradictory demands. You, and others, are entitled of course to dispute my claim of “good sense”.

What I want to relate to you (Charles Krauthammer and Steve Hayes as well) is the consequences of the demand for knee jerk Republicanism in opposition to what you claim is a new form of isolationism. “They’ve
highlighted their own divisions and given voters reason to question whether the party is throwing over principle in favor of political opportunism or, more worrisome, a new form of GOP isolationism.”
Is it high principle to favor an unjustly constricted military operation whose functional objective is merely the political delay of an enemy at the great cost of soldier’s lives and national treasure? Or is it high principle to oppose this failed political policy that masquerades as a military intervention? The United States holds claim as the world’s greatest military power. Yet in 10 years this great nation cannot defeat, militarily or politically, a two-bit near stone age group of rag tag fighters and corrupt leaders. Why not?

I was once a volunteer soldier, a combat medic in Vietnam (173rd Airborne Brigade Oct 68-69). I served with pride, as much courage as I could muster yet often in considerable fear. But I felt a great desire to serve my country. For six months I was a proud soldier though I knew the sound of bullets whistling past my ear and the sight of blood on a comrades chest. During this time my unit was patrolling the Central Highlands, “Two Corp” it was called. We were in a “free fire zone” meaning, basically shoot first ask questions later. My captain developed a successful tactic that enabled us, at some cost, to kill a number of our enemy with few casualties on our side. This was war. Boring, unpleasant, with surprising camaraderie and sense of pride amongst fear, death and despair.

Then we were shifted to a populated coastal region. This is the birthplace of my anger. This was the model for contemporary military (in)action. This is why I am part of that Republican wing now in opposition not only to Afghanistan but Iraq, Libya and anywhere else in the world that politicians crave to send our troops for mere political posturing. In that populated costal area we were essentially ordered not to hurt anyone unless they were literally about to kill us. We could not call in air strikes, no napalm, no helicopter gunships, no C-130 war ships, no artillery. The most powerful military nation on earth tied its soldiers hands and ordered them to die. We went from a “free fire zone” to a “free to die zone”.

And why? So the media wouldn’t be able to display pictures of dead women and children. That is a good thing isn’t it? Does any soldier want to kill women and children? Except for the occasional psychopath no they most decidedly do not. I had to counsel one soldier who happened upon two women on a trail. They ran from him. He shouted at them to stop, they ran, he shot, they died. He was genuinely upset. I told him he did the right thing. Trust me Ms. Strassel, a woman can put a trigger, throw a hand grenade or set a booby trap just as easily as a man. She can also carry supplies, dress wounds and gather intelligence just as a man.

And, for the record, so can a child. While in this “free to die zone” I witnessed a child, a young boy maybe 12 or 13 walk across a rice paddy heading directly towards a small clump of Palm trees. I was on a hill across a road looking at the paddy. The boy entered that clump. Given the isolated location of those Palm trees in the paddy it was clear the boy intentionally entered the clump. I still remember thinking he must have wanted to go to the bathroom and was merely looking for a private place to do so. But that was curious since they normally just used the rice paddy as their toilet. Then the clump of trees exploded. The boy was killed as the booby trap exploded in his hands. In one instant I understood more clearly than any instruction could provide that women and children are as much the enemy as a soldier in uniform. I believe that booby trap was destined for my unit and would have been placed on one of our regular patrol routes.

Yet that is not the most extreme instance of political cowardice that I suffered. It was mid-April 1969 when we were ordered to go look for what military intelligence described as a “large force of NVA” (North Vietnamese Army). The captain, the same man with the successful tactics in the Central Highlands called the company together to give us our orders. With the strained look of suppressed anger he ordered us, that is the right word, a direct order, not to return fire unless we could see the individual firing at us. I actually could not believe this order was accurate and I asked a follow up question. “Captain, what if someone who is in a hutch pops up in a window, fires off a few rounds and ducks back down? Can we fire into the hutch then?”. His answer was singularly blunt: “NO”. We were ordered not to return fire unless we can literally see the person shooting at us.

And we went on that late afternoon patrol looking for a “large force of NVA”. If we found them we would engage them in battle. Sort of. If we could see the person shooting at us. We were not permitted to call in Air Strikes even if we spotted this large force. No artillery either. Might hurt someone. Maybe the AP would take a picture. No mortars either of course. So off we went. Shots rang out. Sniper. Everyone hits the dirt, waits for a further attack. Nothing happens. The captain leads us off in the direction of the sniper. More shots. More dirt. No one can return fire of course. Get up, move out. Chase the bastards they must be a small patrol from that NVA force. Still again more shots. It’s getting dark now. Can’t see anyone even if they are shooting at us. Could see the muzzle blast. Does that count? Get up, go after them.

BOOM! One of our 155mm artillery shells had been set as a booby trap. The snipers knew we were on patrol for a NVA force. They fired at us to get us to chase them. They lead us right into the booby trap. It was dark. The trip wire had been placed from the middle of the trail across to one side. They hoped (and were right) that the first few soldiers might miss the wire. Eventually someone would go on the deadly side and it worked. For them. Six South Vietnamese soldiers who were working with us died immediately. Another six or so US soldiers also died immediately. In the dark, with one booby trap already exploded and having been shot at all evening I had a job to do.

I grabbed my emergency kit and … turned on my flashlight. Nothing like being a bright target on a dark night to focus the mind. But there were another 6-8 soldiers wounded, including my captain. I gave morphine to the friend who was writhing in agony from two badly broken legs and moved towards the front of the line. I stepped on a log and shined my light on it so as to make sure it wasn’t another booby trap. Nope, it was the chest of a friend that I had chatted with just before the patrol started. His chest had a basketball sized hole. I moved forward again. I called out to see if anyone was alive. The man on point (in the lead) was still alive and had only a minor wound. He stayed put to be on guard. A brave man. The dozen behind him were dead and the half dozen behind them badly wounded.

I checked the bodies looking for anyone still alive. I found one! A young man-boy about 18. His right leg was blown off above the knee. Odd, it wasn’t bleeding much. Must be the blast cauterized the wound. His face was so pocked with sand from the blast it looked like a beach version of black face. As I put the tourniquet on what was left of his leg and tried to find a vein for an IV he sat up bold and brash. Instinctively I shined my light on his face, highlighting the whites of his eyes against the sand embedded on his face. Then only inches from my face he screamed, “I’m gonna die, I’m gonna die”! And he laid back down and died.

Please think all this through for a moment. If you were a soldier would you stick you head up when the enemy is shooting so that you could see them shooting and thus return fire? Not likely. Or, if you did you might only be able to do it once. What this episode did was crystallize my understanding of what it meant to be Cannon Fodder. It highlighted the political motivations behind wasteful military operations. In short, I knew then that my government did not care about my life. It wasn’t that I might die in war that would be understandable. It was here, in this populated coastal region that my country became far more concerned about its media image than about my life and the lives of my comrades. My country preferred that I die rather than some child of the enemy.

And that Ms. Strassel is why I now oppose Afghanistan, Iraq, Libya and other hypocritical political operations hiding behind soldiers. Our military is not permitted to fight the enemy. Do not ever assume our enemy is unaware of our political puppet masters motivations. They count on them. They manipulate the media and the punditocracy. You have, perhaps unwittingly perhaps not played into their hands. You accuse Republicans of isolationism when their motivations may be a refusal to sacrifice soldiers for domestic political posturing in front of an anti-military media. If you instead took up the journalistic cudgel to take off the handcuffs of our military you would be reviled by many of your peers but you would be right. I am confident that our soldiers can destroy the enemy. Yes and a fair number of women and children as well. Tough. War is hell. Get over it.

If we are not going to permit our soldiers to fight then don’t send them into battle. This is my anger. This is my rationale for opposing the continued political abuse of soldiers. If you call this isolationism you could not be more wrong. I favored invading Afghanistan and Iraq. I favor destroying Iran and its nuclear program. Let us go after and kill Khadafy – and 10,000 men, women and children if necessary. I am a war monger. I am not an isolationist. But in good conscience I cannot any longer support the waste of our soldiers lives and our national treasure for the benefit of a group of miscreants running bumper sticker bi-annual political campaigns.

Went the day well?

May 30, 2011

I read a review of an old British war movie titled, “Went the day well?”. The review was good so we watched the film from Netflix. The title was taken from a John Maxwell Edmonds piece. The film was worth watching as an old British war flick and as warning for our times today to be vigilant against treachery from within and threats from without.

Went the day well?
We died and never knew.
But, well or ill,
Freedom, we died for you.
Went the day well?

From Wikipedia: The epitaph is by the classical scholar John Maxwell Edmonds, and originally appeared  in The Times dated February 6th 1918, page 7, under a short section headed Four Epitaphs. It is the second of four epitaphs composed for graves and memorials to those fallen in battle – each covering different situations of death.

For some reason the title, “Went the day well?” strikes a chord for me. [I was a combat medic in Vietnam 68-69; 173rd Airborne Brigade.] I can picture fallen comrades asking me that question. Out of the ethos the
query hangs over like a branch on a tree. It is in one sense an admonition to live one’s life well. After all, the fallen comrade cannot and gave their life in exchange for my freedom. It is now my duty to live my life well, on their behalf and mine.

Went the day well? I shall do my best.

Retiree Stumbling Blocks

May 30, 2011

Five Retiree Stumbling Blocks

by John Wasik  May 27, 2011  posted on Morningstar.com

Comment regarding this post by John Wasik

“Republicans in the U.S. House have proposed privatizing Medicare for those under 55.”

Not true. First, “privatized Medicare” is an oxymoron. It’s either privatized or Medicare.  The Ryan plan provides a subsidized insurance voucher so that individuals can purchase the health insurance they need. I’m almost 65 and would prefer this approach to a one size fits all Medicare system that can’t tell the difference between
Prostate Cancer (for which I had surgery 6 months ago) and “The Scooter Store” mechanized chairs.

My private, individual insurance (BCBS) for myself and my wife is less than $12,000 a year (high deductible, HSA) and it provides excellent coverage. An assist on the premium/deductible (the Ryan plan) is all I would ask for in exchange for the Medicare taxes paid in over a lifetime. [Or, don’t tax me and I’ll pay for it all.]

Raising the retirement age is shorthand for letting more people die before they (a) collect any social security or (b) before they collect enough to recover what they paid in taxes. It ends up screwing the families of those
who end up in (a) or (b). Social Security is a massive, generational Ponzi scheme that depends on an ever growing mass of workers that either die young or young enough to ensure that benefits can be paid to those who win the longevity lottery. It is an insult to those who work with their hands and backs crafted by those who sit on their butts.

“My humble prediction is that taxes will be raised on retirees, out-of-pocket medical expenses will increase, or overall retirement benefits will be cut in some way.”

We have to do something to prevent national bankruptcy. As even Bill Clinton acknowledged, we can’t let health care devour the economy. Canada is facing that fact at this time and is struggling to figure out how – besides
letting people die – to pay for all the benefits promised. Doctors are leaving the Massachusetts single payer plan. It is a hopeless bureaucratic paper shuffle to promise a benefit that can’t be provided. It is high time we geezers take the lead in moderating our entitlements.

Didn’t save enough for retirement? Why is that a problem for my children, my grandchildren, my great grandchildren not to mention my neighbors? If you would not ask your children/grandchildren/great grandchildren for $500, $1000, $1500 or more each month why would you have government take it from them
and their neighbors?

The use of TIPs as an inflation hedge pales beside high quality, dividend stocks as suggested by the S&P Dividend Aristocrats. Combine those with an investment grade bond fund or individual bonds and manage the allocation between 25/75 (bond/equity) to 75/25 (bond equity) depending on your economic outlook.

Mr. Wasik’s suggestion to be flexible is about the only useful point to this article. If you can’t determine a retirement budget (replacement rate / cost of living) how did you ever figure out a pre-retirement budget?

As for political changes? They are always coming. The best defense is to be a responsible individual and vote for the rare politician who supports responsible policies. You don’t have to agree with the Ryan plan (I don’t agree
with all of it) but it is a well developed, responsible plan that deserves honest debate. Not MediScare tactics to scare my 92 year old mother. That’s total BS. It is time to face up to the fact that our government spends too
much, we have too much debt and we must cut back in order to enable our children and grandchildren to have a chance to grow the economy. That would be the best thing we can do in our retirement.

Social Security: Welfare or Earned?

March 28, 2011

In 2010 President Obama’s Deficit Commission (ODC) announced some findings regarding, among other areas, Social Security. The result of all this political brain power are proposals to raise the full retirement age (again), raise the income subject to taxation (again), raise the minimum benefit amount (again), add (more) means testing, lower the cost of living adjustment (by changing how it is calculated) and enact a variety of bureaucratic administrative changes. Their combined efforts amount to little more than rough tweaking and kicking the SSA can down the road another 50 years. So they say. Given the obvious failure of the 1983 Greenspan Social Security Commission whose “solutions” didn’t even last 30 years it is highly unlikely that the ODC proposals will make it that far if they even see the legal light of day.

Missing from the political discussions of Social Security (SSA) is any description of the of actual program versus the rhetoric used to describe the program. Rhetoric from opponents of SSA claim individuals could obtain higher retirement benefits if they invested their own social security taxes and that SSA bankrupts the young to support the old. Rhetoric from supporters of SSA claim it is good social policy with descriptions ranging from insurance against senior poverty to wholly earned benefits. Neither side provides even a basic understanding of the actual SSA program. Instead they are content with tossing rhetorical fire bombs left and right.

To examine today’s SSA program in operation it is useful to determine how initial benefits payments related to the SSA taxes paid in to the system over a theoretical working career. If taxes paid amounted to less than benefits received then the recipient would be receiving some portion of welfare in their SSA benefits. If taxes paid were more than the benefits received then those individuals would, in effect, be subsidizing the benefits of the welfare group. One could certainly consider that subsidy as an ongoing “tax” paid by those, usually higher income, workers.

Chart #1 depicts the initial maximum SSA benefit provided in the year of retirement versus the level of benefit provided by the assumed SSA Earned Annuity. The earned annuity is a fixed payment lasting for 22 years and is dependent on the amount of SSA taxes paid. The higher the tax paid the higher the initial annuity. Thus the annuity beginning in 2007 is much higher than the annuity in 1987. And so were the SSA taxes. The initial SSA benefit assumes the maximum benefit payout in the year of retirement. While there was a flattening of this curve from 2002-2004 it otherwise is rising each year.

The key point in this chart is the difference between the two curves. From 1987 through about 1998 the maximum SSA benefit was far above the assumed earned annuity. The difference represents a welfare payment to the benefit recipient. In later years, starting about 2000 the earned annuity rose above the initial maximum SSA benefit. The difference this time represents earned income that is taxed away.

SSA Benefits vs Earned Annuity

Initial Maximum Benefit at Year of Retirement

Using data from the SSA website I created a spreadsheet that links maximum tax payments with maximum SSA benefits over the period 1937 through 2010. For its own reasons the SSA website assumes a 40 year working career. Thus someone retiring at the end of 1976 who worked the full 40 years and who paid in the maximum amount of taxation each year would have paid a total of $6,962 in SSA taxes. Their employer would have paid the same amount. Upon retirement at the end of 1976 this worker would be eligible to receive an SSA benefit of $3,427 per year. In just under two years this worker would have received back every dime they paid in SSA taxes. And this assumes the worker retires with reduced benefits at age 62.

That same worker retiring at 65 would receive $4,368 per year if a man and $4,546 per year if a woman. [There is a period from 1962 through 1977 when women aged 65 received a larger maximum SSA payment than men. It was 1962 through 1974 for women aged 62.] A woman retiring at 65 in 1976 would receive her entire SSA contributions back in just under 1 ½ years. A man would receive his back in just over 1 ½ years. But each would continue to receive those payments, along with inflation adjustments for the rest of their lives. Was that benefit earned or is it welfare?

Reasonable arguments regarding the earned versus welfare aspect of SSA benefits can be made on three grounds: (1) employer contributions are not included; (2) prospective earnings on the SSA contributions are not included; and, as always, (3) the situation is different now. Fair enough.

Employer Contributions: as a small business owner and employer, if I was not required to pay SSA taxes based on employee wages that money would not accrue to my employees. This is after all a tax on my status as an employer. If I had partners or utilized sub-contractors no SSA tax would be charged. Certainly some of that tax might find its way to the employees for competitive reasons but it is highly unlikely that all of it would accrue to them. More importantly that tax is no more the employee’s money than the income tax, property tax, unemployment tax or worker’s compensation tax. However, there is a substantial argument regarding the employer portion of SSA taxes. That money provides a revenue stream to the government be used for the other benefits (disability, spouse, etc.) currently provided by SSA.

Earnings on Contributions: this argument could turn either way depending on the investment return being assumed. It may or may not be sufficient to cover a retirees SSA benefits. There is a myth that individuals could have earned a far better return on their SSA tax than is implied by the benefits paid. Maybe, but not very likely. Consider that as long term retirement savings it is not reasonable to assume that individuals would be able to invest their SSA taxes in the stock market (or any other market). No rational person wants the government to do so and politics argues against letting individuals do so on their own behalf. If individual investors or markets temporarily failed it could result in a massive taxpayer cost for outright welfare support during retirement. (Politics would require a bailout whether I agree or not.) That would be a prime example of public risk versus private gain albeit on an individual basis. There is another alterative the Retirement Certificate of Deposit (RCD).

In order to estimate the earnings power of SSA taxes I assumed that individual employee SSA taxes earn the higher of 6% or the 10 year treasury bond rate and that all earnings be tax free. Accumulated contributions would be compounded annually and the rate would adjust annually depending on the then current 10 year treasury bond rate. Note that since 1968, 30 years had a 10 year treasury bond rate above 6%. This may seem rather conservative but then again, a conservative investment policy for retirement funds is wholly reasonable. As a example of how this might work we could assume all SSA taxes are held in a bank retirement certificate of deposit or RCD on behalf of each individual worker. Each year the bank accrues the current taxes and then pays the higher of 6% or the 10 year treasury bond interest rate on the total sum which is compounded annually. Note that a 6%, tax free, guaranteed rate of return provides good value compared to the 10% average historical stock market returns. Yes, government would be required to subsidize the interest rate as necessary to ensure the minimum 6% rate of return. Where might that money come from? From the employer portion of the SSA tax.

On this basis our worker who retired in 1976 after 40 years work, paying SSA tax at the maximum rate and receiving the aforementioned return on those taxes would accumulate a total of $14,439 of which $6,962 was actual taxes. At the maximum SSA benefit level of $3427 per year at age 62 the payback takes just under 4 ¼ years. At $5069 for women age 65 the payback takes just over 3 years 2 months. But the payments continue, with partial inflation adjustments for the rest of their lives. Since SSA uses a life expectancy of 22 years that means roughly 18-19 years of welfare payments for the 1976 retiree.

It’s Different Now: yes, actually it is different now but not all that much. It was earlier noted that the employer portion of SSA taxes is unlikely to accrue to the individual employee. Either because the employer would retain all or a portion of them or the government would utilize that revenue stream for other purposes. And, in all likelihood that’s exactly what would happen. So only the individual portion of SSA tax could be invested in a bank RCD on behalf of each individual while the employer portion of the tax would be retained by the government. It would be used for such purposes as: (a) subsidize the 6% retirement earnings as necessary; (b) provide for the disabled; (c) provide for non-working spouses or other individuals; and (d) pay existing retirees their benefits. Note that items (b), (c) and (d) are existing SSA programs. Good arguments can be made to shift all or some of those existing programs to general welfare as a more appropriate funding source but that’s another issue.

It is reasonable then to only look at the individual portion of SSA taxes versus benefits to determine how much welfare – if any – exists in the program today. An individual retiring at the end of 2009 (the first of the baby boomers) after working 40 years and who paid the maximum amount of SSA taxes would have paid in $115,800. If we assume the 6% RCD earnings scheme noted above the taxes plus earnings would amount to a combined total of $333,826. Continuing the 6% earnings scheme through retirement and assuming a life expectancy of 22 years that amount provides an annual annuity of $27,723. But only for 22 years. And no inflation adjustment either.

However, an individual with that work history who retires at age 62 at the end of 2009 would today be awarded an SSA benefit of only $21,228 per year. Thus today’s baby boomer retiree would be forgoing earned benefits of $6,495 per year (reduced by any future inflation adjustment). However, if that worker were married their spousal benefits would be $10,614 or $4,119 in net unearned – welfare – benefits. Of course that would be reduced by the work history and SSA taxes of the spouse.

Chart #2 is similar to Chart #1 except that it shows the SSA benefits as of the beginning of 2011 instead of the initial maximum at retirement. While the earned annuity curve has not changed the series of cost of living adjustments (COLA) has raised the SSA benefit level well above the annuity curve until the year 2004. Retirees from 2004 to the present who paid the maximum SSA tax and who could receive the earned annuity amount are actually receiving less from SSA than they would from the assumed annuity. More recent retirees are receiving considerably less. Again, this represents a tax on high earning retirees.

SSA Benefits vs Earned Annuity

Maximum SSA Benefits as of 2011 vs Earned Annuity

If instead this boomer retires at the end of 2009 at age 65 their SSA benefit would be $26,064 or $1,659 below their “earned” amount. Of course spousal benefits would raise the total accordingly well above the “earned” amount depending on the spouse’s work history. The significant point is that while SSA Welfare isn’t as substantial for boomers as it is for WWII’ers even today’s boomer retirees could receive major welfare payments (if married) in the guise of SSA benefits. Single retirees however, end up subsidizing others. So, yes it is different today but only in degree.

Millennials: How will it be tomorrow for today’s millennials? Well, the bottom line is that since 1999 high earners (if single) began receiving less in SSA benefits than they would by investing and annuitizing their own tax payments. This trend will only be exacerbated as full retirement age is increased, as income levels are raised and as the tax rate inevitably increases. The trend then is for the upper earner millennial to become more and more a subsidizer of  lower income earners. At some point in the future even the addition of spousal benefits may not shift a high earner into a welfare recipient. This can only be considered as a stealth tax on high earning millennials above the federal income tax and hidden from view by bureaucratic dictate.

What is important to take away from this exercise is that whatever the rhetoric, social security was clearly designed in the form of a massive Ponzi scheme that required an ever larger number of workers to support current retirees. When that quickly became impractical the tax rates and income levels were raised in lieu of additional workers. Indeed, were it not for those who die before receiving benefits or who die early after receiving benefits (thus cheating their families out of their tax payments) the SSA program would have long since imploded. Adding fiscal injury to monetary insult one Congress after another purchased votes by raising benefits, expanding eligibility, and adding inflation protections. Again the total cost as well as tax rates and income levels rose dramatically. From an original 1% tax on the first $3000 of wages in 1937 (over $45,000 in current dollars) the cost has risen twelve fold to a 6.2% tax on $106,800 (and rising) of wages. The worst of both worlds.

Regrettably as the 1983 Greenspan Social Security Commission did so does the Obama Deficit Commission. Both simply tweak the system and kick the SSA can down the road. There is no discussion of the inherent structural flaw of the SSA program. By continuing the dishonest assumption that SSA benefits are somehow fully “earned” workers (and non-workers) continue to expect to receive those benefits. Yet even today a high earner with a non-working spouse continues to receive unearned benefits especially as they live beyond the actuarial life span. A more honest explanation of the structural flaws in the program would provide a firm basis to propose more realistic and responsible long term solutions that might provide some financial security for individuals and their families without robbing their neighbors or their children. It’s time to trust the people with the truth.

My proposal is to vest individual SSA tax payments in an RCD investment vehicle with a minimum return and taxpayer guarantee. This provides a wealth creation mechanism for the working class and ensures that future Congresses cannot borrow and spend that money and that Wall Street will never get their hands on those funds. At the same time the employer portion can provide benefits for the non-working spouse, the disabled and those who exceed their actuarial life span as well as the minimum investment subsidy. However, some SSA programs such as disability should be transferred to general welfare.

Social Security: The 6% Solution *

March 27, 2011

* Or, How to Transform SSA into an Individual Retirement Plan

Late in 2010 President Obama’s Deficit Commission disgorged their budget recommendations. The complex and difficult work under the combined wisdom of these earnest, well regarded, leaders has resulted in a series of entitlement proposals that are significant for their disregard for physical laborers, all young people and every responsible individual. Not to have seized this opportunity to revamp a failed program is a feckless and cowardly insult to hard working, responsible individuals and is most egregious to young people. Choosing to raise the taxation level, institute means testing and bump out the full retirement age could not be a bigger insult to America’s responsible citizens. No, this is just another instance of kicking the entitlement can down the road just as did the 1983 Greenspan Commission on Social Security. It too failed to correct the long term entitlement program and so will these proposals.

Raising the taxation level will, under the current SSA benefit scheme merely result in larger benefits to the upper income retirees down the road. It only temporarily solves the current benefit issue and does so by creating a worse predicament in future years. Means testing seems viable but it ignores the current SSA rules that link tax payments to benefits. Further, to change the program after the fact, when upper income individuals have already paid in their full tax payments only to find their benefits arbitrarily reduced upon retirement is dishonest at best. It will achieve full disrepute not by means testing directly but by instead instituting an increased tax rate on upper income SSA benefits. The left hand will take what the right hand gives. And the always favorite scheme of bureaucratic desk warmers to bump out the retirement age, is so rife with discriminatory application one wonders how it can pass the ADA (American’s with Disability Act). Anyone who physically labors will pay a steep price in lost benefits and lost jobs as they approach their later years. Who will hire a 60 year old laborer?

I propose a “6% Solution” to the current Social Security Ponzi scheme. My proposal gives individuals control over their retirement funds and retirement age. It also provides a wealth creation scheme that protects their families in the event of early death or disability. It specifically avoids giving monies to Wall Street or to the government. It utilizes existing government guarantees to protect the individual accounts along with a new scheme to provide a minimum return on their retirement funds. At the same time it provides a secondary revenue stream to government to provide funds for current retirees, those who are disabled and to provide for the minimum return on the retirement accounts. That secondary revenue stream is simply the employer’s portion of the current social security tax.

My proposal will result in the “Individualization of Social Security”. This is not privatization with its Wall Street connotations. Individualization uses the existing banking system with its FDIC guarantees and is premised on typical bank Certificates of Deposit. In essence an individual’s monthly social security tax payments would be deposited in a Retirement Certificate of Deposit (RCD) in a bank of their choosing. This RCD would, to the bank, be the same as any other CD. The bank would use those funds to make loans to individuals and businesses. The RCD would receive the current FDIC protection ($250,000 at present). However, the RCD may not be cashed or used as collateral. It is strictly intended to provide retirement benefits.

The new minimum return scheme is to ensure that every individual is able to earn a minimum 6% return on their RCD. This is necessary because of the Federal Reserve’s repeated and ongoing action to maintain interest rates at levels that provide little or no interest income. The basic idea is that the bank will pay the RCD interest at the higher of 6% or the current 10 year treasury note rate. The government will guarantee the bank the difference between 6% and the current 10 year treasury note. This difference is currently about 3.35% owing to the Federal Reserve’s monetary policies. The money to provide this subsidy is obtained from the secondary revenue stream. Of course if the Federal Reserve would raise interest rates to more normal levels the subsidy would all but disappear.

There would need to be a transition of course for those who have been in the workforce for some time but who are still distant from retirement age. Such a transition could be accomplished by a transfer of the existing Treasury notes or notes in the social security trust fund to each individual according to their own individual work history. Each bank can redeem those treasury notes/notes for capital from the Federal Reserve. In this way the individual retirement CD accounts, the RCD’s, can be funded.

This not a perfect scheme and likely has serious flaws. However, it is an attempt to put each working individual in charge of their retirement. At the same time it removes government from direct responsibility while leaving government (e.g., taxpayers) liable to protect and guarantee the retirement accounts. By limiting the accounts to an RCD as opposed to stocks or bonds the taxpayer guarantee is likely to have limited exposure. There are three principal benefits to this scheme.

  1. charge each individual worker with responsibility for their own retirement by giving them direct ownership of their retirement account.
  2. remove the workers retirement funds from government control thus eliminating the resulting spending of those funds by the government and limiting government control over individuals retirement choices.
  3. ensure workers retirement funds are isolated from Wall Street and in exchange provide guaranteed minimum returns and security of the accounts.

Do Ask, Do Tell

March 24, 2011

Repeal of “Don’t Ask, Don’t Tell” (DADT) on the premise of Gay Rights is a false step on a left footed march to utopia. Advocates for the repeal of DADT are only considering homosexual or Gay Rights. The rights of heterosexuals or Straights are simply ignored in a conspiracy of silence. Such silence needs to be challenged. The intent of the DADT repeal is not simply to end one policy, it is to create a wholly new policy of: “Do Ask, Do Tell” (DoADoT). Repeal of DADT now means homosexuals have a constitutional right to openly and freely participate in the military. It also means that they are now free to openly and actively seek and engage sex partners within the minimal limits conditioned by military policy. Even so, they can now “ask” and “tell” with constitutional protections.

The political expectation is that military training and discipline should be sufficient to cure all social ills. Yet most often those who demand that military discipline restrain the hormonal instincts of young people are anti-military forces in pursuit of a political agenda. Pregnancies of military women by military men while both are on duty testify to the limits of such discipline. Not to mention the volume of sexually transmitted diseases (STD’s) by military men and women. The greatest military discipline at issue under DoADoT it will be how to keep homosexuals from widespread sexual activity and the concomitant spread of HIV and other STD’s throughout a unit. Good luck with that. But the discipline issue is a mere distraction, not the key issue at hand. Individual rights – for straights and gays – are the key issue. Straight Rights deserve and must have equal constitutional protections as any presumed Gay Rights.

The issue, indeed even the very concept of Straight Rights has been willfully ignored out of political cowardice. As DoADoT becomes policy male and female homosexuals will be granted superior constitutional rights to male and female heterosexuals. For Straights to have the same constitutional value as Gay Rights, heterosexual men and women must not and cannot be segregated simply because of gender. This new DoADoT policy should require that males and females not only work together but live together in an unrestricted environment. After all, if such physical differences as skin color, height, weight, hair color, and sexual orientation are immaterial then why are mere physical differences in genitalia of any importance?

Clearly there are obvious differences in genitalia within gender as well as between genders. What ought to be equally obvious is that such differences pale in comparison with sexual attraction as a valid rationale for gender segregation. Males and females have not been segregated merely because of physical differences. They have historically been segregated due to presumed sexual attraction. Yet the DoADoT policy explicitly eliminates sexual attraction as a valid basis for gender segregation.

Under DoADoT homosexuals are entitled to openly and actively live with and among that gender to which they are sexually attracted. By what constitutional doctrine or legal logic are heterosexuals to be denied those same rights? Yet, what member of Congress or military policy maker will require male and female military personnel to live together in a wholly unrestricted environment? Will the military chiefs fulfill the constitutional requirement that men and women now must use the same showers together, toilet together, use the same sinks side by side and of course dress and sleep in the same room or barracks? Will Congress stipulate that there cannot be any segregation based on gender? Will the President, Congress or the military chiefs acknowledge that under DoADoT all gender segregation will in fact be constitutionally prohibited?

Presuming that gays are somehow immune to sexual attraction towards straights is utterly laughable. Are straight males immune to sexual attraction towards females, homosexual or not? And since a DoADoT policy enables gays to openly ask and tell if any sexual attraction is mutual it follows that sexual solicitation and activity will follow. And because gays will be living with and among that gender to which they are sexually attracted they will be able to ask gays and straights alike. Homosexual “Gaydar” is no more effective than anyone else’s. But straights will not be able to “ask” and “tell” until living arrangements within the military are modified to remove all gender segregation. Under DoADoT there will no longer be any constitutional doctrine or legal logic to preclude such modifications. Indeed, one can presume that removing gender segregation is not merely permitted, it is mandated as equal protection.

Ultimately DoADoT  means females (homosexual and heterosexual) will be subject to sexual solicitations from heterosexual males while both are showering, toileting or dressing. Males will be equally subject to such solicitations. Under the DoADoT policy there cannot be any gender segregation, everyone is free to “ask and tell” and everyone will be subject to sexual solicitation. Will females freely submit to such a policy? What about homosexual males? It can only be imagined what impact such a constitutional right may have on the military enlistment rates of females (heterosexual or homosexual). It is unlikely to raise them. Nor is any of this likely to improve military readiness or morale.

But the DoADoT  policy rises well beyond the military. If the military must follow a constitutionally mandated social policy of DoADoT, then by what constitutional doctrine or legal logic will civilians be excluded from such a policy? And under a DoADoT constitutionally mandated social policy all gender segregation will henceforth be prohibited. That means bathrooms, locker rooms, and dorm rooms, for elementary, middle and high schools as well as all colleges and universities will be gender neutral. No gender segregation period. This policy will apply to adults as well whether in business or government although one can assume Congress will (as usual) exempt itself. Repeal of DADT is not a trivial exercise to provide one thin segment of society with a presumed “right”. It will result in a massive cynical overthrow of the most intimate human social policy for mere political gain.