Wake up. Housing is not coming back. In the past several years while the USA economy was being wiped out by the hard work of the rest of the world, we built new houses. On Easter Island, they built those big heads. Did building all those big homes make us more wealthy? No! It put us in debit. Notice that it was one of the few items that we could not import. If we could have imported homes from China, it would have been clear what was happening, but just like those poor souls on Easter Island, we kept building houses. I blogged this before, but ask yourself if you are really richer if your home goes up in value by 10% in one year? You may be or think you are richer, but what about your kids? Can they go out and buy your home for what you paid for it? No, so they are not richer, they are poorer. If this is not coming thru, I am sorry.
Housing is not coming back. We were like drunks on a binge. Now we have the head ache. Is what we need to go out and start drinking again? You know the answer. Housing is not coming back. Get used to it, housing is not coming back. You gamed the system like many Americans and now we all have to pay.
This all did not happen yesterday. It started a long time ago. Did you see it coming? Did you notice that people around the world were not buying our stuff like we were buying theirs? What ever happened to all the textile jobs in the South or the shoe companies in the Northeast? Where did they go and when? You like me liked to be able to buy shoes made somewhere else for less. It made us fill rich taking our money out of the bank and buying those shoes and cloths. We we rich or were we just eating our own children? You can answer that one.
Housing is not coming back, so get used to it. Our problem is that we have to figure out what we can produce that someone else in the world wants to buy. Also get used to the fact that you can produce as many of those items per hour as you may think and you can't sell them for very much either. Look in the mirror. The bottom line is that you are really not worth as much as you think. Get used to it.
How about a little joke? This is one you hear all over South America. "If you want to make a lot of money, buy an Argentine for what he is worth and sell him for what he thinks he is worth". Now where is Argentina? In the toilet, and where are we going with the same attitude? In the toilet. Get used to it because housing is not coming back.
Thursday, June 30, 2011
College Rip-Off --- Stossel
Now, John Stossel seems to be coming around to the fact that many of our colleges are a rip off. I have been blogging on this point for some time. Maybe I am starting to get some traction on the subject. Think about this one. Here are two families who make the same and pay the same in taxes, but one has a very smart kid and the other just a normal kid. Both want their kids to do well in life and feel that college is an important part of that, but here is what actually happened. The smart kid was accepted into the state college and the normal kid was rejected. Sound OK so far? But wait! Both parents paid the same in taxes and which kid needs more education to do well in life? See the problem? The average kid needs the help, not the smart kid.
Now look at it another way. If you go thru the high schools and pick out all the smart kids and send them to college, what group do you think will do best in life? Wrong!! The smart kids. It just happens that the smart ones were the ones who also went to college. What we need to know is cause and affect. Isn't it interesting that you never see "double blind" testing to see how much college actually helps and then to ask if it is worth it or not. From my high school graduating class, most of the smart kids went to college and most of the others did not. Now what kind of conclusion do you think that most people will draw from this?
In my past blogs, I discussed the fact that colleges define what classes will be required for each degree and that they seem to do this more in their own personal financial interests than those of their students. Why else would a physics major have to take Philosophy or some Art class? Isn't Physics and Engineering Art? If so, why don't Art majors have to take advance Calculus. I have the answer to that one. The market size would be too small so that fewer professors would be needed and many people who could not find another job would be out of jobs. Like most things, it is just that simple.
For a person with three college degrees and who taught at the 6th largest engineering school in the USA for four years, how could I come down so hard on the state of our colleges? Easy!! Look at what they teach and what degrees our kids are earning? Look at the cost? Look at how few classes most professors teach? Look at the worthless research they claim to do or direct? Look at who are on the boards of regents for most of our colleges? Look at the increase in cost?
In a past blog, I proposed a solution and that was for our colleges to become "a la cart", where you pick your own classes rather than eating only fixed plate lunches.
In that blog, I recommended that you take the classes that you want to build up the transcript that you want and then go out and sell yourself. It would save money and allow more kids to "add" to their education.
Think of the great football coaches who coached at Notre Dame? We they great coaches or did they just recruit the best players from all over the world? We the players they had better when they graduated due to the great coach or was it that they played along side other great players? You tell me. We seem to be mixed up on "smarts" and "education". Great football players are created in the baby crib not on the football field and similarly, smarts are created in the baby crib too.
Now look at it another way. If you go thru the high schools and pick out all the smart kids and send them to college, what group do you think will do best in life? Wrong!! The smart kids. It just happens that the smart ones were the ones who also went to college. What we need to know is cause and affect. Isn't it interesting that you never see "double blind" testing to see how much college actually helps and then to ask if it is worth it or not. From my high school graduating class, most of the smart kids went to college and most of the others did not. Now what kind of conclusion do you think that most people will draw from this?
In my past blogs, I discussed the fact that colleges define what classes will be required for each degree and that they seem to do this more in their own personal financial interests than those of their students. Why else would a physics major have to take Philosophy or some Art class? Isn't Physics and Engineering Art? If so, why don't Art majors have to take advance Calculus. I have the answer to that one. The market size would be too small so that fewer professors would be needed and many people who could not find another job would be out of jobs. Like most things, it is just that simple.
For a person with three college degrees and who taught at the 6th largest engineering school in the USA for four years, how could I come down so hard on the state of our colleges? Easy!! Look at what they teach and what degrees our kids are earning? Look at the cost? Look at how few classes most professors teach? Look at the worthless research they claim to do or direct? Look at who are on the boards of regents for most of our colleges? Look at the increase in cost?
In a past blog, I proposed a solution and that was for our colleges to become "a la cart", where you pick your own classes rather than eating only fixed plate lunches.
In that blog, I recommended that you take the classes that you want to build up the transcript that you want and then go out and sell yourself. It would save money and allow more kids to "add" to their education.
Think of the great football coaches who coached at Notre Dame? We they great coaches or did they just recruit the best players from all over the world? We the players they had better when they graduated due to the great coach or was it that they played along side other great players? You tell me. We seem to be mixed up on "smarts" and "education". Great football players are created in the baby crib not on the football field and similarly, smarts are created in the baby crib too.
Friday, June 24, 2011
Consumption or Value Added Tax
Most of you didn't catch it when it happened, but our boy Obama reduced the share of Social Security tax paid by workers and it is still in affect. It was a tax reduction for all the people who voted for him. You did not notice that he did not reduce the share of Social Security tax paid by the employer. If you think about it, it is all the same money, the worker's money. The employer would just as soon give the employee the 7% that they pay and have the employee mail in the money to Uncle Sam. It is all games and it is not doing much to help the economy. If you notice that about 25% of what people spend ends up in China. Our government borrows the money from China and gives it to the voters and they send the money back to China when they purchase those good buys from WalMart. Nice game and China knows how to play it a lot better than we do. There are, how ever, some things that we could do to level the playing field, but our voters would have to be smart enough to understand it and that is the rub.
I learned this one from the Communist Manifesto and that is, "all wealth is really labor". I never learned this in Econ 101. In Econ 101, they seemed to be focused on fiscal policy and economic stimulus. It was the new thing back in the 30's and does not seem to want to die. It is still a big part of Econ 101 because it is easy too understand. It is kind of like the "flat Earth" concept. It is easy to understand, except for the fact that it is dead wrong. Now if all wealth is really just labor, why is there so little attention to "labor" and "productivity"? That's the problem. Look at what we have done here in the USA?
For some reason we have tried to hide the cost of our government from the voters. The Social Security system is a good example. We have the voters pay about 7% of their pay toward Social Security and the employer another 7%. Most voters think they are the only ones paying into the Social Security fund. The have no idea that their employer is paying them 7% less and then sending that money into the government. Now we come back to all wealth being "labor". The cost of the product that the employer produces is about 90% labor and 10% profit. Of that 90% labor, you have 14% added for Social Security. This makes every thing that is produced in the USA cost about 14% more than items produced and imported from China. If this is such a great concept, why don't we collect all of our taxes and Social Security in the form of payroll tax? You know that when you add tax or extra cost to an employer's product, he just adds it to the price so the consumer ends up paying in the end. Now what is the solution to all of this and how do we get more jobs here in the USA?
We stop letting China "game" or tax system by shipping in their products that do not have any added tax to compete with our's that are all loaded with hidden tax. The way we do that is to take all the hidden cost off our products and add them back to both China's products and ours at 50% of the current rate. If the added cost is now 33% on USA made products, the new tax would be 16.5% on our and 16.5% on China's products. That means that products from China or anyplace else would cost 16.5% more and ours would cost 16.5% less. If that were the case, you would see a lot more jobs here in the USA while we collected the same amount of tax. It is time that we stopped letting China and most of the world "game" our economic systems and level the playing field. The problem is that our voters don't seem to get it, nor do our politicians. If you don't agree with this, I am not sure this country has a future.
I learned this one from the Communist Manifesto and that is, "all wealth is really labor". I never learned this in Econ 101. In Econ 101, they seemed to be focused on fiscal policy and economic stimulus. It was the new thing back in the 30's and does not seem to want to die. It is still a big part of Econ 101 because it is easy too understand. It is kind of like the "flat Earth" concept. It is easy to understand, except for the fact that it is dead wrong. Now if all wealth is really just labor, why is there so little attention to "labor" and "productivity"? That's the problem. Look at what we have done here in the USA?
For some reason we have tried to hide the cost of our government from the voters. The Social Security system is a good example. We have the voters pay about 7% of their pay toward Social Security and the employer another 7%. Most voters think they are the only ones paying into the Social Security fund. The have no idea that their employer is paying them 7% less and then sending that money into the government. Now we come back to all wealth being "labor". The cost of the product that the employer produces is about 90% labor and 10% profit. Of that 90% labor, you have 14% added for Social Security. This makes every thing that is produced in the USA cost about 14% more than items produced and imported from China. If this is such a great concept, why don't we collect all of our taxes and Social Security in the form of payroll tax? You know that when you add tax or extra cost to an employer's product, he just adds it to the price so the consumer ends up paying in the end. Now what is the solution to all of this and how do we get more jobs here in the USA?
We stop letting China "game" or tax system by shipping in their products that do not have any added tax to compete with our's that are all loaded with hidden tax. The way we do that is to take all the hidden cost off our products and add them back to both China's products and ours at 50% of the current rate. If the added cost is now 33% on USA made products, the new tax would be 16.5% on our and 16.5% on China's products. That means that products from China or anyplace else would cost 16.5% more and ours would cost 16.5% less. If that were the case, you would see a lot more jobs here in the USA while we collected the same amount of tax. It is time that we stopped letting China and most of the world "game" our economic systems and level the playing field. The problem is that our voters don't seem to get it, nor do our politicians. If you don't agree with this, I am not sure this country has a future.
Thursday, June 23, 2011
Battle Of Alamance
Did you ever hear about the "Battle of Alamance"? It is a very significant part of our American history and I know for a fact that 99% of Americans never heard of it. I would go even farther and state that 90% of our public school history teachers never heard of it either. After the formation of Jamestown in 1608, I feel that the next most significant event was the Battle of Alamance that happened in 1771. That is about 150 years after the first English settlement in what is now the USA. Part of the reason that I am aware of the Battle of Alamance is that my family was both at Jamestown and the Battle of Alamance. It is in my blood, so I have a responsibility to know about these things, but what about people who came much later? Do they have a responsibility to know about these significant events too? I say that my family paid in blood for what we now have and it is the least that these new comers should do is to find out who paid in blood for what they can now take advantage of. Those of us who were here first and built this place have not required any of the newcomers to pay at the gate some share before they could enter. We let them in "free". We let Obama's father come in "Free" and all we expected is to have respect for those who came first and built this place, but for some reason he and his wife hate the USA. They want to change it to something that they have in their mind. As I see this, he and his wife have no respect for those who came first and built this place and thru the goodness of their hearts let all of these newcomers come in "free". Did Obama's father have to pay any dues? No, so why should he and his wife be so bitter? That is the question that those of us whose families paid in so much blood are asking.
I know that a lot of people get stuck on slavery and it is a fact that one of my ggg mothers owned three slaves. They did and I can't change that. I have a letter from one of their slaves and it tells about how he was treated. It was like a regular member of the family. He claims they tried to teach him to read, but he just could not learn. He never wanted for food or a warm place to sleep. I can tell you that I have slept under bridges while not a slave and bathed in creeks.
Another fact that seems to get lost in our history classes is that no slaves were ever legally imported into the USA. Slaves were here, but they were only imported while the country was under English control. That is a fact. When the USA was formed by all the 13 colonies joining together under a contract called the "Constitution", no more than half of the states were allowed to have slaves. That contract has held upto this day and was changed as part of our Civil War to not allow any more slaves in that half of the states. From the start, slavery was a problem for the new union. If my forefathers had tried to end slavery in 1780, the union would never have been formed and they knew that. They also knew that someday they would have to deal with the problem and that there was only one ending and that was to free all the slaves. They eventually did that, but not after the worst war that this nation has ever had. Go to the battle fields and you will agree.
Again, the problem that I have is why after all this time is there still so much hate? Why is it that Obama and his wife have so much hate for this country? How could it have been any different? England crated the slavery mess and we eventually cleaned it up. What else could have been done? If you have not gone back to the Battle of Alamance, then you don't really know much about our American history or the people who built the nation. Do some home work and get your friends to do the same. The deeper that you did the more you will "know" and thus "think" about these issues more clearly. It is upto you.
I know that a lot of people get stuck on slavery and it is a fact that one of my ggg mothers owned three slaves. They did and I can't change that. I have a letter from one of their slaves and it tells about how he was treated. It was like a regular member of the family. He claims they tried to teach him to read, but he just could not learn. He never wanted for food or a warm place to sleep. I can tell you that I have slept under bridges while not a slave and bathed in creeks.
Another fact that seems to get lost in our history classes is that no slaves were ever legally imported into the USA. Slaves were here, but they were only imported while the country was under English control. That is a fact. When the USA was formed by all the 13 colonies joining together under a contract called the "Constitution", no more than half of the states were allowed to have slaves. That contract has held upto this day and was changed as part of our Civil War to not allow any more slaves in that half of the states. From the start, slavery was a problem for the new union. If my forefathers had tried to end slavery in 1780, the union would never have been formed and they knew that. They also knew that someday they would have to deal with the problem and that there was only one ending and that was to free all the slaves. They eventually did that, but not after the worst war that this nation has ever had. Go to the battle fields and you will agree.
Again, the problem that I have is why after all this time is there still so much hate? Why is it that Obama and his wife have so much hate for this country? How could it have been any different? England crated the slavery mess and we eventually cleaned it up. What else could have been done? If you have not gone back to the Battle of Alamance, then you don't really know much about our American history or the people who built the nation. Do some home work and get your friends to do the same. The deeper that you did the more you will "know" and thus "think" about these issues more clearly. It is upto you.
Connect The Oil Dots-----PS
Our President Obama has opened our oil reserves to help drive down the price of gas. Isn't that great? He is really looking after the little guy. So what if the oil traders and big oil companies loose a little money with lower oil prices. Obama is our guy. This is how a lot of voters look at it. They have no idea what is going on. Would you like to see me connect the dots? Here goes.
We need to look at a couple of areas to understand what is going on. First, oil prices are based on world wide demand, not just the demand in the USA. We use more per person than any other country and we use about the same as China in total. If you notice, the country that uses the most oil per person also has the highest quality of life. The Pygmies of Africa use almost no oil and see what their standard of living is. Countries with higher population densities use less oil per person than more rural countries. Farmers use more oil than city people on a per person basis too. The point is that the demand for oil is increasing because people all over the world want a higher standard of living and the total number of people is increasing at the same time. World wide population doubles every 33 years while each person demands more. I figure that the world wide demand for oil doubles about every 25 years. That is what we are looking at.
Now with the Obama administration we are looking at a situation where he is doing every thing that he can to reduce the amount of energy that we produce. It does not matter if it is oil, coal, natural gas or nuclear. Look at his record and tell me if he has done one single thing to make it easier to produce any of these basic forms of energy here in the USA?
Our strategic oil reserves are like money in a back for hard times, to be used as a last resort. Do you think we are at that point yet? Has any federal worker had his pay decreased so far? Not that I know of. The amount of oil in that reserve is so small that it can only have a very short time affect in any case. We all know that when we borrow something, we have to consider how we are going to pay it back. We have to think about the "short term" benefit and compare that to the hard work that will be required to pay it back. We have to ask if it is worth it or not.
Remember how I analysed Obama's decisions in the past? I asked if his decision (1) Produced more wealth or (2) Made the country more unified? How does releasing the oil reserve make us more wealthy? It does not. Do we as a result produce more of anything? No! What is allows us to do is to, in the short term, pay a little less for our gas so that we have money left over to buy products from places like China who make things cheaper than we do. Great idea isn't it? We are poorer as a result, just like you would be poorer if you took money out of your savings account to buy a thin screen TV. The business community uniformally feel that Obama has made another very bad decision regarding how to deal with the economy.
Oil does not cost too much. We are just not productive enough. That is the problem. We have to work longer, harder and faster. Sorry but those are the facts of life. The hay day after WWII is over and the rest of the world is now in a much better position to compete with our once monopolistic position.
PS, This one deserves a "PS". I have a little local knowledge because I worked on the Elk Hills oil reserve at one time. You don't even know where it is located and you did know that it is "crude oil" still in the ground. That oil would take a minimum of a month to get to your gas tank. Here are the numbers. Obama released 30 million barrels of crude oil. That oil is worth $2.7 billion dollars. Not much in Washington DC terms. More oil or lower prices is not our problem, the rest of the world pays these same prices too. What we need are more jobs that create more wealth. What Obama did was to take the equivalent of $2.7 billion dollars out of our bank and pass the money out to the voters. That's it. Using our 4th grade math, how many jobs at $50,000 per year have to be created to create that same amount of wealth? Just 52,000. That's all. You could create those in 10 minutes by lifting the restrictions on drill in the Gulf and in Alaska and getting off the backs of the coal companies. Wouldn't cost a dime and it would do a lot more good. When your grand kids can't afford food are you going to be happy that all the bad old coal mines are closed down in return? I want my grand kids to have food on the table first. If using corn for our cars is so good, why don't we pass a law that 50% of our cars have to run on corn. Get real before it is too late.
We need to look at a couple of areas to understand what is going on. First, oil prices are based on world wide demand, not just the demand in the USA. We use more per person than any other country and we use about the same as China in total. If you notice, the country that uses the most oil per person also has the highest quality of life. The Pygmies of Africa use almost no oil and see what their standard of living is. Countries with higher population densities use less oil per person than more rural countries. Farmers use more oil than city people on a per person basis too. The point is that the demand for oil is increasing because people all over the world want a higher standard of living and the total number of people is increasing at the same time. World wide population doubles every 33 years while each person demands more. I figure that the world wide demand for oil doubles about every 25 years. That is what we are looking at.
Now with the Obama administration we are looking at a situation where he is doing every thing that he can to reduce the amount of energy that we produce. It does not matter if it is oil, coal, natural gas or nuclear. Look at his record and tell me if he has done one single thing to make it easier to produce any of these basic forms of energy here in the USA?
Our strategic oil reserves are like money in a back for hard times, to be used as a last resort. Do you think we are at that point yet? Has any federal worker had his pay decreased so far? Not that I know of. The amount of oil in that reserve is so small that it can only have a very short time affect in any case. We all know that when we borrow something, we have to consider how we are going to pay it back. We have to think about the "short term" benefit and compare that to the hard work that will be required to pay it back. We have to ask if it is worth it or not.
Remember how I analysed Obama's decisions in the past? I asked if his decision (1) Produced more wealth or (2) Made the country more unified? How does releasing the oil reserve make us more wealthy? It does not. Do we as a result produce more of anything? No! What is allows us to do is to, in the short term, pay a little less for our gas so that we have money left over to buy products from places like China who make things cheaper than we do. Great idea isn't it? We are poorer as a result, just like you would be poorer if you took money out of your savings account to buy a thin screen TV. The business community uniformally feel that Obama has made another very bad decision regarding how to deal with the economy.
Oil does not cost too much. We are just not productive enough. That is the problem. We have to work longer, harder and faster. Sorry but those are the facts of life. The hay day after WWII is over and the rest of the world is now in a much better position to compete with our once monopolistic position.
PS, This one deserves a "PS". I have a little local knowledge because I worked on the Elk Hills oil reserve at one time. You don't even know where it is located and you did know that it is "crude oil" still in the ground. That oil would take a minimum of a month to get to your gas tank. Here are the numbers. Obama released 30 million barrels of crude oil. That oil is worth $2.7 billion dollars. Not much in Washington DC terms. More oil or lower prices is not our problem, the rest of the world pays these same prices too. What we need are more jobs that create more wealth. What Obama did was to take the equivalent of $2.7 billion dollars out of our bank and pass the money out to the voters. That's it. Using our 4th grade math, how many jobs at $50,000 per year have to be created to create that same amount of wealth? Just 52,000. That's all. You could create those in 10 minutes by lifting the restrictions on drill in the Gulf and in Alaska and getting off the backs of the coal companies. Wouldn't cost a dime and it would do a lot more good. When your grand kids can't afford food are you going to be happy that all the bad old coal mines are closed down in return? I want my grand kids to have food on the table first. If using corn for our cars is so good, why don't we pass a law that 50% of our cars have to run on corn. Get real before it is too late.
Wednesday, June 22, 2011
Chile's Allende vs Obama
Back on May 20, 2010, I wrote a blog on my personal experience with Salvador Allende in Chile. It is worth reading again. What Allende did was exactly what Obama is doing now. He made no bones about his intentions in support of labor unions and those people who voted for him. He saw his job of taking care of just those who voted for him and not doing anything for the whole country. Remember when Obama made the speech a few weeks ago to one of the automaker unions? He told them not to worry because, "he had their backs". I thought that we elected a President who would look after the "total" interest of all the people, not just those who voted for him.
In the original Allende vs Obama blog, I pointed out how Allende used the bureaucrats that reported to the executive department to "make his own laws". This is what is going on right now with the EPA and the Labor Relations Board. The Attorney General is going after anyone who Obama disagrees with even if he knows that he will lose. He knows that he can bleed opponents of their financial resources while he uses our tax money to destroy them.
Before Allende took office, I predicted that he would screw up Chile before opposition could take action, but I did not know how he would do it or how fast it could happen. Think of Obama Care and how fast such a major bill was written and passed. Obama kept saying that it had to be done by "next week". Now we are starting to see how crazy that bill was and that most of the positive claims for it have turned out to be false.
I am just one voice, but I was there when Allende took office and now I am here to see Obama do the same thing. All I can do is to point out what I have seen and warn you so that you can be prepared. Remember my blog on "Connecting the Dots"? If you open your eyes, the picture is very clear.
In the original Allende vs Obama blog, I pointed out how Allende used the bureaucrats that reported to the executive department to "make his own laws". This is what is going on right now with the EPA and the Labor Relations Board. The Attorney General is going after anyone who Obama disagrees with even if he knows that he will lose. He knows that he can bleed opponents of their financial resources while he uses our tax money to destroy them.
Before Allende took office, I predicted that he would screw up Chile before opposition could take action, but I did not know how he would do it or how fast it could happen. Think of Obama Care and how fast such a major bill was written and passed. Obama kept saying that it had to be done by "next week". Now we are starting to see how crazy that bill was and that most of the positive claims for it have turned out to be false.
I am just one voice, but I was there when Allende took office and now I am here to see Obama do the same thing. All I can do is to point out what I have seen and warn you so that you can be prepared. Remember my blog on "Connecting the Dots"? If you open your eyes, the picture is very clear.
Tuesday, June 21, 2011
Economic Stimulus Myth
I have blogged on the Economic Stimulus before, but it still needs more clarification. First, the name needs to be changed to make it more understandable. The whole concept is a "theory" and not ever proven by "double blind" testing. There have been a lot of "theories" in the past that have been proven wrong. It was not all that long ago that most of the world thought that the Sun revolved around the Earth. Remember that the Catholic church arrested Galileo when he said that the Earth was not the center of the universe and that the Earth revolved around the Sun. Galileo was right and the Church and most of the world were wrong. The point is that for most people and most calculations assuming that the Sun revolved around the Sun did not affect the validity of most calculations or decisions. It was the same for those who thought that the Earth was "flat". Most people could go thru life thinking the Earth was "flat" and it would not have made any differences, but they were flat wrong. When Newton discovered the universal laws of motion, he was able to explain all the positions and movements of the planets and those laws still work the same way today. The point is that theories can look correct and produce the correct answers, but be totally wrong. Above are just a few.
How about a new name for "Economic Stimulus"? Let's call it a cash advance and see how that makes us think differently. Another small point is that for a theory to be correct, it has to work in the macro and micro domain. That is, if it works for the whole nation, it has to also work down to the individual. Any correct theory has to work at both extremes. Now how does the "cash advance" theory stack up?
We have this guy who has been working at a job as part of the economy and is layed off. Let's say that he is a carpenter so the state gives him a "cash advance" to stimulate him until he gets another job. Now think this thru. He is out of a job and not working, but he has income from the state. How does this stimulate him to go out and find another job? See the problem? Now if this is a cash advance to help feed his family until he gets a new job and is in a position to pay the money back, we can understand that. The pay back is a critical point. Now if the guy lost his job as a carpenter and the demand for carpenters has gone down due to the lack of need for new homes, we have a very different problem. Did giving the guy money to feed his family while he is out of work help to create the demand for more homes? I don't think so. We all know that we don't make shoes in the USA anymore, so how did economic stimulation help those shoemakers who were out of work?
Now take the farmer who had bad weather and lost his crop. If nothing is done, the weather next year will be different and he could make a good normal crop. In this case, the state gives the farmer a cash advance to feed his family and he pays it back next year when he has a good harvest. Logical? Did the cash advance make the weather get better the next year? The weather got better and only Obama would claim that his "stimulus" changed the weather. See?
I think you can see that we have had various "business cycles" since the beginning of time and this whole business of Stimulation has no affect on the basic "business cycle", it only works as some kind of cash advance to get people thru a tight spot so that they can pay the money back in the future. If nothing were done, as had been the case for hundreds of years, the individual and their families would have had to tighten their belts to get thur until the next business upturn. I think you are starting to see how this all works and what name it is given has had a big impact on what people think.
Notice that in my blog, there is no free lunch. The cash advance has to be paid back out of future earnings. If you know that you will have to pay the money back, are you going to throw it around like Obama has? I don't think so. What is our problem now? Now we seem to be concerned that we might never be able to pay back China for all the money that we dumped in the form of cash advances so that people would not have to tighten their belts. Interesting!!! Have you ever heard Obama say that the times are tough and that we will all have to "tighten our belts"? No!! He is going to make all this painless, but in the end painless for who?
How about a new name for "Economic Stimulus"? Let's call it a cash advance and see how that makes us think differently. Another small point is that for a theory to be correct, it has to work in the macro and micro domain. That is, if it works for the whole nation, it has to also work down to the individual. Any correct theory has to work at both extremes. Now how does the "cash advance" theory stack up?
We have this guy who has been working at a job as part of the economy and is layed off. Let's say that he is a carpenter so the state gives him a "cash advance" to stimulate him until he gets another job. Now think this thru. He is out of a job and not working, but he has income from the state. How does this stimulate him to go out and find another job? See the problem? Now if this is a cash advance to help feed his family until he gets a new job and is in a position to pay the money back, we can understand that. The pay back is a critical point. Now if the guy lost his job as a carpenter and the demand for carpenters has gone down due to the lack of need for new homes, we have a very different problem. Did giving the guy money to feed his family while he is out of work help to create the demand for more homes? I don't think so. We all know that we don't make shoes in the USA anymore, so how did economic stimulation help those shoemakers who were out of work?
Now take the farmer who had bad weather and lost his crop. If nothing is done, the weather next year will be different and he could make a good normal crop. In this case, the state gives the farmer a cash advance to feed his family and he pays it back next year when he has a good harvest. Logical? Did the cash advance make the weather get better the next year? The weather got better and only Obama would claim that his "stimulus" changed the weather. See?
I think you can see that we have had various "business cycles" since the beginning of time and this whole business of Stimulation has no affect on the basic "business cycle", it only works as some kind of cash advance to get people thru a tight spot so that they can pay the money back in the future. If nothing were done, as had been the case for hundreds of years, the individual and their families would have had to tighten their belts to get thur until the next business upturn. I think you are starting to see how this all works and what name it is given has had a big impact on what people think.
Notice that in my blog, there is no free lunch. The cash advance has to be paid back out of future earnings. If you know that you will have to pay the money back, are you going to throw it around like Obama has? I don't think so. What is our problem now? Now we seem to be concerned that we might never be able to pay back China for all the money that we dumped in the form of cash advances so that people would not have to tighten their belts. Interesting!!! Have you ever heard Obama say that the times are tough and that we will all have to "tighten our belts"? No!! He is going to make all this painless, but in the end painless for who?
Wednesday, June 15, 2011
Solve Our Economic Problem By Going Shopping
All we need to do is to solve our economic problems is to go shopping. It is easy, just go shopping. I think you must know that this is some kind of trick and it is, but you have to go shopping first. Here is what you do.
Go shopping any place and check out the things that you would like to buy. Check them over well. Next, figure out how you could make that product just as good and for less money. That is the trick. Some one made the product that you are checking out and the price is right there. Now, they were able to make that product for a little less than what it is selling for since the store has to make a little profit too. Figure that some one made that product for 75% of what it is selling for. If you know 4th grade math, that calculation will be a snap. Now you have the number you need to work from. The first thing that you need to do is to estimate the cost of the raw material. If you made the same product, you would have to pay the same price for the raw material that the manufacturer did so we are even on that one. If you take out the raw materiall value from that 75%, you now have the amount that you could get if you made that same product. In most products, you would be looking at making the product for less than a third of what it is selling for. Next, figure how many of the items you could make per hour or per day. Next, multiply the number you could make per hour times the one third of the selling price and see what you get? This is our first cut at what you are worth per hour. If you did this right, you notice that you are now worth very much per hour. Sorry, but those are the facts of life.
Now, I say that this is the first cut, because in reality, the labor cost is much less than one third of the selling price. In many products it is much lower. Now are you starting to understand why China is selling all the products to us that we used to make right here? From the figures above, the people in China are very happy working for the value that you calculated. While most of us sit around looking in our mirrors thinking we are worth a lot more, most of the people of the world are very happy making this much per hour. The people in China and most of the world are cleaning our plow. I have no idea where the expression "cleaning one's plow" came from, but that is what is happening to us. Get used to it, most of us Americans are not worth all that much. Isn't it intersting that you would shop for the cheapest gas for your car and think you were smart, but when the world shops for the cheapest labor, you can't figure that one out? Just may be, we are not all that smart!!!
PS, John Deere made millions by inventing a plow that "cleaned its self". At one time this was a big job for a farmer and many asked their kids to "clean the plow".
Go shopping any place and check out the things that you would like to buy. Check them over well. Next, figure out how you could make that product just as good and for less money. That is the trick. Some one made the product that you are checking out and the price is right there. Now, they were able to make that product for a little less than what it is selling for since the store has to make a little profit too. Figure that some one made that product for 75% of what it is selling for. If you know 4th grade math, that calculation will be a snap. Now you have the number you need to work from. The first thing that you need to do is to estimate the cost of the raw material. If you made the same product, you would have to pay the same price for the raw material that the manufacturer did so we are even on that one. If you take out the raw materiall value from that 75%, you now have the amount that you could get if you made that same product. In most products, you would be looking at making the product for less than a third of what it is selling for. Next, figure how many of the items you could make per hour or per day. Next, multiply the number you could make per hour times the one third of the selling price and see what you get? This is our first cut at what you are worth per hour. If you did this right, you notice that you are now worth very much per hour. Sorry, but those are the facts of life.
Now, I say that this is the first cut, because in reality, the labor cost is much less than one third of the selling price. In many products it is much lower. Now are you starting to understand why China is selling all the products to us that we used to make right here? From the figures above, the people in China are very happy working for the value that you calculated. While most of us sit around looking in our mirrors thinking we are worth a lot more, most of the people of the world are very happy making this much per hour. The people in China and most of the world are cleaning our plow. I have no idea where the expression "cleaning one's plow" came from, but that is what is happening to us. Get used to it, most of us Americans are not worth all that much. Isn't it intersting that you would shop for the cheapest gas for your car and think you were smart, but when the world shops for the cheapest labor, you can't figure that one out? Just may be, we are not all that smart!!!
PS, John Deere made millions by inventing a plow that "cleaned its self". At one time this was a big job for a farmer and many asked their kids to "clean the plow".
Tuesday, June 14, 2011
Obama And Job Training and Football
Now Obama wants to help to create jobs by "investing" our tax money in job training. Like most of what Obama says, at first it sounds logical. The problem is that when you "think" about what he just said, it is "not" logical. I have talked to several executives who have created jobs and having local people who were already trained by the government was never a consideration. I'll give you an example of how a big investment in training has not created a single job.
What have we invested the most money and personal effort into over the past 50 years? If you think about it, you may come up with the biggest area. It is "football". More money and more time from our kids have been "invested" in learning to play football than any other single "investment". Now, let's look at how many net new jobs have been created? Over the past 25 years the number of professional football teams have not changed, nor have the number of players per team. That means that all the "investment" in training for football has not created one net new job.
If we want a better qualified workforce, all we need to do is to require that every high school student get "A's" in every class. We have already paid for the schooling so all we need to do is to demand that the kids study an not waste time on worthless activities. In my 50 years experience in business, I have always found that it was easy to train new workers for their jobs if they had learned what they should have in high school. I have found that if you start with a stupid person who did not want to learn or help themselves that your efforts and money were a total waste of time. Our problem is how to get our kids to work harder for less pay.
I think I blogged on this point before, but it deserves repeating. You can't help someone who does not want to help themselves. That is a fact. If our kids think that the government will take care of them, they will never try to help themselves. Our kids need to start worrying about where their next meal will be coming from rather than their parents giving them a new ipad or texting their, also worthless, friends. We will have to get hungry and cold before we wake up. If you know of another way, I would like to hear it.
PS, 95% of kids who played football in high school never put on a uniform again and it is the same for those who played football in college. It does not sound like a very good training "investment" to me.
What have we invested the most money and personal effort into over the past 50 years? If you think about it, you may come up with the biggest area. It is "football". More money and more time from our kids have been "invested" in learning to play football than any other single "investment". Now, let's look at how many net new jobs have been created? Over the past 25 years the number of professional football teams have not changed, nor have the number of players per team. That means that all the "investment" in training for football has not created one net new job.
If we want a better qualified workforce, all we need to do is to require that every high school student get "A's" in every class. We have already paid for the schooling so all we need to do is to demand that the kids study an not waste time on worthless activities. In my 50 years experience in business, I have always found that it was easy to train new workers for their jobs if they had learned what they should have in high school. I have found that if you start with a stupid person who did not want to learn or help themselves that your efforts and money were a total waste of time. Our problem is how to get our kids to work harder for less pay.
I think I blogged on this point before, but it deserves repeating. You can't help someone who does not want to help themselves. That is a fact. If our kids think that the government will take care of them, they will never try to help themselves. Our kids need to start worrying about where their next meal will be coming from rather than their parents giving them a new ipad or texting their, also worthless, friends. We will have to get hungry and cold before we wake up. If you know of another way, I would like to hear it.
PS, 95% of kids who played football in high school never put on a uniform again and it is the same for those who played football in college. It does not sound like a very good training "investment" to me.
Tuesday, June 7, 2011
Engineering Demographics
A few facts to start out with. The baby boom started in 1942 and was in full bloom in 1945. Kids born in 1942 were 18 years old in 1960 when our colleges and universities were over run with kids wanting to become engineers and scientists. The boomer kids going into engineering hit their peak in about 1980, only 20 years after the big boom in engineering had started. The actual number of engineering graduates started to decline in absolute numbers in 1986 and has kept going down. The net affect of all this is that we had a boom in engineering graduates like the USA or most of the world had never seen before. In 1986, we had a workforce of engineers who had graduated between 1940 and 1986. Most were young and under 40 years old, but they were all aging fast. In 2000 many of the 60 year old engineers who were born in 1940 started to retire. There was a strong trend to retire earlier and earlier, since many had made good money and had large net worths. Why keep working? Have fun and buy that second home and many did just that. Now what is the bottom line of all this? In 2011, it has been 25 years since the absolute number of engineering graduates started going down. Over a period of 25 years, that has created a large short fall of engineers in the work force. Now add this to the fact that the boomer engineers are retiring at record rates and you have the recipe for a total technical collapse of the economic system that had created much of the wealth of the past 50 years. 40% of our high school kids drop out and don't graduate and many of our kids who do go on to college take courses and degrees that are next to worthless.
We have a serious problem and the cure will take at least 25 years to come out of it if that is even possible given the degree of world wide competition. To catch up, we have to first stop falling farther behind and only then can we have a chance of catching up. The rest of the world is not waiting for us to catch up. All of our kids who are punching keys and texting are doing so on computers that are being built some where else. When they run out of their parents money, they are not going to be able to eat those cell phones. It is like a tornado bearing down on us and most of us don't even know it.
We have a serious problem and the cure will take at least 25 years to come out of it if that is even possible given the degree of world wide competition. To catch up, we have to first stop falling farther behind and only then can we have a chance of catching up. The rest of the world is not waiting for us to catch up. All of our kids who are punching keys and texting are doing so on computers that are being built some where else. When they run out of their parents money, they are not going to be able to eat those cell phones. It is like a tornado bearing down on us and most of us don't even know it.
Thursday, June 2, 2011
Good Is Not Enough
How many times have you heard someone say that this or that is "Good". Well, "Good" is not enough. Take what we spend on medicine and doctors? We spend more than any other country in the world and the cost is growing faster than the economy. How can we keep something like that up? Is it "Good" to be spending all that money (our resources)? Good is the wrong question. We should be asking if it is "Worth it" or not. Exactly what is the objective of spending all this money on medicine? Is it to allow us to live longer? If that is the case, it is a failure. I think that the USA ranks 33 in the world in terms of life expectancy, yet we spend the most.
Now we only have so much money and how we spend it depends on how one expenditure compares to another. Take fertilizer. I think that if we want to increase life expectancy that we would be bettor off spending less on medicine and more on fertilizer. Both might be "Good", but one is "Better" or "worth It" where as one may not be. Every time you hear someone say that something is "Good", ask them "compared to what?"
How about the big trillion dollar economic stimulation? It does not appear that it did the job, so was it worth it? Even if it did the job, I have some serious questions about weather it was worth it or not. Even if the economy got better, we would still be saddled with the job of paying back the borrowing. You have to deduct the cost of the stimulation from the value of any economic improvement. Why is it that no one ever looks at the cost or down side of anything that comes out of government? We will keep getting the kind of government that we deserve as long as we keep putting these same types of people in office. They are not the problem, we are.
Now we only have so much money and how we spend it depends on how one expenditure compares to another. Take fertilizer. I think that if we want to increase life expectancy that we would be bettor off spending less on medicine and more on fertilizer. Both might be "Good", but one is "Better" or "worth It" where as one may not be. Every time you hear someone say that something is "Good", ask them "compared to what?"
How about the big trillion dollar economic stimulation? It does not appear that it did the job, so was it worth it? Even if it did the job, I have some serious questions about weather it was worth it or not. Even if the economy got better, we would still be saddled with the job of paying back the borrowing. You have to deduct the cost of the stimulation from the value of any economic improvement. Why is it that no one ever looks at the cost or down side of anything that comes out of government? We will keep getting the kind of government that we deserve as long as we keep putting these same types of people in office. They are not the problem, we are.
Wednesday, June 1, 2011
What To Do About The High Cost Of College--PS
Our kids are graduating college with high debit that most will never be able to repay. What has happened? Realize that many of the college degrees are totally worthless that families are going into debit for. Why is that? What can we do about it? The answer just may be simple. I have blogged on the sad state of education in the USA and particularly that of many of our colleges and universities. Remember my list of the top undergraduate degrees that showed that the top 5 were totally worthless when it came to getting a job after college. Here is what I think we can do right now.
What we have done is to turn over the education of our kids to our colleges and universities rather than taking the lead ourselves. Businesses have also caved in to colleges and universities. Just who is it who determines what classes are required for a particular degree? It is those same "union" teachers and department heads who have a clear vested interest in bleeding us parents of our hard earned money. Now, I know that most of you parents who pay the bills have never read the class description in the school catalog. It is all there. What we need to do is to screw the degree and take just those classes that will count toward the profession that we plan to enter. I can tell you for a fact that at least 75% of most college classes are totally worthless. Many of these are interesting and enjoyable, but do not contribute anything toward a person's future success. In the technical degrees, the ration is no better than 50%. In the past, I have recommended "challenge degrees" and now I want to go one step farther and recommend that a person tailor their own personal college degree. There are at least two big advantages of this concept. First, the student saves at least 50% of their cost of college and Second, they graduate in half the time. This means they have less money to pay back and they have more working years to pay that money back.
The one other thing that needs to be changed and that is the was businesses look at college degrees. Students and businesses need to start looking at transcripts rather than just degrees. We all know that at least 50% of the classes taken in most degrees are worthless, so the fact that the student did not pay for or take the class should not affect the student's job performance. Recall, the college department heads and administrators determined the classes required for a degree, not businesses. I am not recommending tech schools over regular universities and am not recommending that technical classes be watered down or made easier. Think about this? If a student takes a class in high school and gets college for it, it does not "reduce" the total number of classes needed for the degree. This is clearly a stunt by college administrators to bleed more money out of students and parents.
It is clear to me and I see this as a way to cut the self serving college department chairmen out of the process and just allow them to do what they are there for and that is to teach the individual classes. Us parents, students and businesses people are the ones who should be determining what real education means. We need to sell our education by promoting out transcripts and grades rather than just different named degrees. I want to start hearing parents tell their friends at cocktail parties about the grades their kids are getting in specific courses rather than just bragging about their degrees. It is clear that a degree from one college with the same name may be very different, but transcripts don't lie.
PS-----
I have gotten a few comments that I am biased and don't know what I am talking about, so I have added this "PS". Taking the University of Wisconsin at Madison as an example, the top 5 BS/BA degrees are (1) Political Science, (2) Communications, (3) Psychology, (4) English, (5) History and the top Master's degree is Social Worker. How many want adds have you seen for these top 5 majors? How about "zero". That is what I am talking about. Now why do you think there are so many masters degrees for Social Worker and so few BA degrees? Did I stump you? Social Workers are unionized public employees and they have gamed the system to get higher pay for a Social Worker degree that only really requires a tech school degree. I think it is clear that our universities are screwing us tax payers. Ask yourself why we import 60% of our new doctors? Some thing smells in our public universities. I am just the messenger.
What we have done is to turn over the education of our kids to our colleges and universities rather than taking the lead ourselves. Businesses have also caved in to colleges and universities. Just who is it who determines what classes are required for a particular degree? It is those same "union" teachers and department heads who have a clear vested interest in bleeding us parents of our hard earned money. Now, I know that most of you parents who pay the bills have never read the class description in the school catalog. It is all there. What we need to do is to screw the degree and take just those classes that will count toward the profession that we plan to enter. I can tell you for a fact that at least 75% of most college classes are totally worthless. Many of these are interesting and enjoyable, but do not contribute anything toward a person's future success. In the technical degrees, the ration is no better than 50%. In the past, I have recommended "challenge degrees" and now I want to go one step farther and recommend that a person tailor their own personal college degree. There are at least two big advantages of this concept. First, the student saves at least 50% of their cost of college and Second, they graduate in half the time. This means they have less money to pay back and they have more working years to pay that money back.
The one other thing that needs to be changed and that is the was businesses look at college degrees. Students and businesses need to start looking at transcripts rather than just degrees. We all know that at least 50% of the classes taken in most degrees are worthless, so the fact that the student did not pay for or take the class should not affect the student's job performance. Recall, the college department heads and administrators determined the classes required for a degree, not businesses. I am not recommending tech schools over regular universities and am not recommending that technical classes be watered down or made easier. Think about this? If a student takes a class in high school and gets college for it, it does not "reduce" the total number of classes needed for the degree. This is clearly a stunt by college administrators to bleed more money out of students and parents.
It is clear to me and I see this as a way to cut the self serving college department chairmen out of the process and just allow them to do what they are there for and that is to teach the individual classes. Us parents, students and businesses people are the ones who should be determining what real education means. We need to sell our education by promoting out transcripts and grades rather than just different named degrees. I want to start hearing parents tell their friends at cocktail parties about the grades their kids are getting in specific courses rather than just bragging about their degrees. It is clear that a degree from one college with the same name may be very different, but transcripts don't lie.
PS-----
I have gotten a few comments that I am biased and don't know what I am talking about, so I have added this "PS". Taking the University of Wisconsin at Madison as an example, the top 5 BS/BA degrees are (1) Political Science, (2) Communications, (3) Psychology, (4) English, (5) History and the top Master's degree is Social Worker. How many want adds have you seen for these top 5 majors? How about "zero". That is what I am talking about. Now why do you think there are so many masters degrees for Social Worker and so few BA degrees? Did I stump you? Social Workers are unionized public employees and they have gamed the system to get higher pay for a Social Worker degree that only really requires a tech school degree. I think it is clear that our universities are screwing us tax payers. Ask yourself why we import 60% of our new doctors? Some thing smells in our public universities. I am just the messenger.
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