Wednesday, December 29, 2010

Who Villanized "Woman's Work?"

Part, if not, a majority of my super awesome economic/political insight comes from the fact my profession requires many miles and many hours on the road. It gives you time to think when you get outside the range of talk radio and are too tired to sift through the country and Jesus stations out in the boonies to pick it up again. Of course my contemporaries and competitors do not have this advantage. Matter of fact they're disadvantaged being couped up in cubicles and offices, forced to study what their employers or grad school uberkommandants tell them to study and not what their brains might genuinely be curious about and things that might actually be interesting. And thus their brains decompose into automotonic (albeit highly mathematically inclined) mush.

So once again time for something that will be more interesting (and much more brief, pointed and useful) than anything you'll read out of the Journal of American Politcal Economy.

I was driving with Natasha during the Christmas season and of the many things she was saying, one piqued my interest - the amount of money she saved using coupons. I'm not talking about 30 cents here or there, but she managed to find sushi for two for $15. And it was good sushi.

This rekindled an observation I had in the never-to-be-solved arena of courting, marriage and men and women. And that observation is despite being villianized, degraded and shamed, activities that were traditionally considered "woman's work" were and still are vitally important to the family and society. Ergo, why were they villianized in the first place? Why were women "shamed" for being "housewives" or "stay at home moms?" And more importantly, WHO DETERMINED THEY WERE TO BE SHAMED IN THE FIRST PLACE?

First, look at what "traditional woman's work" entailed. For the most part it boiled down to three things;

1. Child rearing.
2. House keeping
3. (and this is where Natasha really made it interesting) increasing standards of living by becoming the procurer of consumables for the family.

These things are "trivial" compared to "man's work?" These things are "inferior" compared to "man's work?"

Second, if you look at them they are VITAL, just as vital as brining home the bacon. Rearing children is what prepares them for the real world and makes them productive functioning members of society. Not criminals. Just look at broken families and the correlation with crime, divorce, and other societal ailments.

Housekeeping is what supports the children, the wife and the husband (though men could do with just a cave and a hammock).

And clipping coupons, finding great deals, and making the most of the money increases the standards of living for the whole family. It's economically just as important to spend the money wisely as it was to earn it (making "woman's work" just as important as "men's work" as it is two sides of the same economic earning/consumption coin).

And third, it is arguably the simplest and most important example of the division of labor. If you want to be a DINK (double income, no kids), fine, then both people can work, enjoy life, drink martini's and go to town at Fredericks of Hollywood, but once you bring children into the equation,it behooves SOMEBODY (husband or wife) stay at home and do the "womanly duties." Not because the person who stays home is the lesser of the spouses, but because it just plain makes economic sense to.

Of course today we simply outsource the upbrining of children so that both spouses needn't be bothered with that nasty childrearing. You can kennel the kid at day care or school and afterschool activities and never have to suffer the inconvenience of spending any time with them. And (in an ironic sense) many women seem to pursue careers in industries where they simply seem to be taking care of other people's children, while ironically they have to work in the first place so they can pay the taxes and private sector child-caring services where essentially they're paying other women to take care of their kids (instead of just staying home to take care of their own children in the first place - which I plan on writing about in the future once I refine the thought a bit and pull some economic data).

Regardless, the larger point (and my sarcasm and cynicism aside), why did something so important and vital to society such as "traditional woman's work," regardless of who does it, get disregarded and villianized by society in the first place? And it leads me to a theory that is a bit black-helicopterish, but I am permitted one of those every once in a while.

Ergo, it's time to play Guess the Captain's Helicopter Conspiracy Theory!

I shall give you a couple clues and see if your line of reasoning doesn't come up with the same (thereby showing you I'm not completely insane).

1. The main drive to criminalize and minimize the vital importance of "woman's work" occurred during the 1960's, the peak of the cold war.

2. It mainly came from feminists quartered in the academian world.

3. Unless, I'm way off, I'm going to assume the importance of "woman's work" was so obvious to people at the time, conventional wisdom would never question the value of it.

Any guesses young intrepid junior, deputy, official and otherwise economists?

Tuesday, December 28, 2010

Gold Silver Ratio

This is one of those things that when I'm driving in the middle of nowhere Minnesota I think of calculating, but then forget to do by the time I get home. You hear a lot about gold, but nothing of silver. And (more or less) it seems silver is not as bubbly as gold is (certainly no doubt to the advertising and press it gets).

Sunday, December 26, 2010

What Will Happen When Social Security Runs Out


Except it will be a whole lot larger and bigger.

But don't worry. You keep watching American Idol and reusing bags when you go grocery shopping. I'm sure that will save us.

Thursday, December 23, 2010

Recession Medicine

Oooo, you'll get in trouble for that!

What Should I Major In?

I'll make this short and sweet for you young kids out there kicking around what kind of major you should choose.

Don't listen to your "guidance counselors." They don't know jack.

Don't even listen to your parents, especially if they're the type of parents who "are your best friend."

This isn't some light-hearted decision that you can just make willy nilly and just assume you'll have a job at the end of 4 years of your youth and $60,000 in tuition bills later.

Just spend the $5 bleeping dollars on this book and the whopping 3 hours it might take to read it, and you'll have all your questions answered, not to mention a future void of poverty and debt.

Wednesday, December 22, 2010

Aaron Clarey and the Great Wyoming Hike

The Difference Between Statutory and Effective Corporate Tax Rates

If you get ever so slightly into a debate with one of our lefter leaning brothers and sisters a very common (and economically) important disagreement will be the issue of corporate taxes.

The bumper sticker line from the right is "we have the second-highest corporate tax rate in the world." (which is true).

The bumper sticker counter argument from the left will be "that's the statutory rate (if they even know that official word) and corporations pay much less than that because they get tax deductions and shield their money using loopholes and offshore subsidiaries" (which is also true).

The stated tax rate in the US is about 40% (depending on state taxes).

The estimates of the "effective tax rate" is anywhere from 17% to 32% and the difference is largely due to corporations moving their money overseas or through various accounting methods recognizing the majority of their income in lower taxes countries (Google for example setting up shop in Ireland).

NOW LISTEN TO ME AND FOLLOW ME VERY CAREFULLY for this economic lesson is vital to both people on the right and the left to understand.

99% of the time this argument comes up is because the two individuals are talking about how to create jobs and get the economy going again. The person on the right points out the high STATUTORY tax rate as a reason corporations don't invest here and are loth to create new jobs.

The person on the left will say the statutory rate doesn't matter, because corporations don't effectively pay that rate. They pay a much lower rate ergo why lower corporate taxes period?

However, here is the flaw in that thinking.

The person on the left thinks that the statutory rates don't matter. When in reality they DO matter because they are what drove corporations to shield their money offshore in the first place. In other words it is the statutory rate that drives the effective rate. Not the other way around.

Let us assume for instance that the very low estimate of 17% is the real effective tax rate.

The left is complaining about how corporations are "getting away" with such a low rate.

How do they get away with it though?

By shipping, sending, and investing their money offshore.


The obvious solution then would be to lower taxes to the point that corporations would not ship/invest/shield/deposit/etc., their money offshore, but rather HERE. You would have the same corporate tax revenue (actually more, because they'd be repatriating their funds back to the US) because there would be no change in the effective tax rate. It's just that in lowering the statutory tax rate to the same level of the effective tax rate corporations would redirect their money flows. One might think about giving them an extra percent or two just to make it worth their while to repatriate the funds here, so a statutory rate of say 15% would be in order.

However, the "obvious" solution if you ask the person on the left would be to "close the loopholes" and raise the effective tax rate to the statutory tax rate. Well that is what triggered the corporations to ship their money overseas in the first place. They didn't WANT to pay those taxes. And while simpleton logic and thinking would say, "ah ha! We have those corporations now! They'll finally be FORCED to pay the statutory tax rate!" all it will do is drive corporations further into the arms of lower taxed countries as they not just move and shield money overseas, but move entire corporate headquarters since the loopholes are closed.

Which now brings us full circle and you see where the people on the left have an argument that contradicts itself.

The whole POINT of the original argument was to assess the merits of lowering taxes to spur economic growth and job creation. The left's logical flaw in this stream of debate is that they fail to address whether such a lowering would help. They instead see red and go to the tidbit little bumper sticker and regurgitate, "Well corporations don't pay that rate!" which has NOTHING TO DO WITH THE QUESTION. They also fail to see that it is the high statutory rate that drives the low effective tax rate and thus capital and investment out of the US.

Since they don't understand that relationship, their solution is to make matter worse;




THAT'S going to woo corporations to reinvest in America??? A 5 year old could even see the flaw in the logic. Not that I wish to use such a violent analogy (but I can think of none other that would really do this justice as well as point out the absurdity of the left's solution), but it's literally like hitting your wife and when she runs away you conclude that you didn't hit her hard enough.

Of course, spousal abuse and leftist perceptions on corporations I believe share a common flaw - they are possessive and controlling.

They don't realize these corporations are NOT THEIRS.

They don't realize they have NO OWNERSHIP in the corporation and therefore logically (and morally) the corporation doesn't owe them squat!

But their behavior belies their true belief and that is they think corporations are here NOT to produce goods and services for their customers, but to generate revenue for the government so it can be spent on themselves. The corporation is there to serve the freeloader, not the customer.

Another common flaw (and one I use to win this argument when I invariably run into the Impenetrable Wall of Ignorance) is to ask them if they would like their 401k or 403b plans to go up in value. Or if they would like their pensions to be fully funded. NOT ONCE have I heard them say, "no."

Yet they fail to realize that it is corporate profits that drive the value of their retirement plans. Again eluding to The Impenetrable Wall of Ignorance.

Of course I don't expect to convince anybody on the left by this simple lesson in economics and logic. I'm simply putting there here for posterity's sake and for those of you who run into the "statutory vs. effective tax rate" debate you'll at least NOT be ignorant when you speak about it.

In the meantime, enjoy they decline.



But no, they just couldn't let it be a great happy warm fuzzy feeling story.

No, they have to go and lecture us about how these fossils will help us understand how species will recover from "the damage humans have done to the Earth."

Honest to Pete.

I guarantee you the Chinese paleontologists that found it are not flagellating themselves over their find.

Tuesday, December 21, 2010

Sociology Degrees Are Worthless

Yes, sorry to say, kids, sociology degrees are worthless.

But you don't have to listen to me.

How to Pick a Major

Kiddies, there's the easy way and the hard way.

The hard way is doing a ton of research, sitting with your guidance counselor who will ask you about puppies and flowers and "what does your heart tell you" bullshit.

Then there's the easy way where you'll get the straight dope.

Or the $5 Kindle version which is cheaper.

Monday, December 20, 2010

The Crowding Out Effect

So I decided for my own curiosity to test whether or not there is a crowding out effect. And take note young aspiring male economists, it's stuff like this that makes picking up chicks easy. So when you go to the clubs or the bars or dance halls and you approach a girl and she says,

"So, what did you do today?"

You can say with confidence and a smug smile,

"Well, baby, I tested whether or not there is indeed a crowding out effect."

Anyway, for those of you who are not familiar with the crowding out effect it is the theory that when the government borrows all this money to finance federal deficits (like the ones we have now) that means it takes away these loanable dollars from private citizens and business and thereby increases the interest rate.

To test this I compared the government budget balance (as a percent of GDP) against the real interest rate of 10 year constantly maturing US Treasuries (ie- took out inflation).

Resulting in this;And these correlations/trendlines (10 year interest adjusted for core and nominal inflation);

Notice with the polynomal trendline there is an uptick in the correlation with budget surpluses and interest rates. It suggests to me that the economy in those periods was growing so fast the natural private sector demand increased interest rates, while at the same time a booming economy resulted in an enlarged tax base increase budget balances into the black.

Sunday, December 19, 2010

Amelia "Affirmative Action" Earhart

The primary reason I disagree with affirmative action is not that it gives an unfair advantage to a group of people on worthless grounds (though that itself is enough to be against it), but rather that it disenfranchises people who happen to be a member of a minority or "victim class" of a very important thing;


For example my Kuwaiti supplier of cigars IS the best tobacconist in the Twin Cities.

But, does he know that for a fact?

A friend of mine whose pigmentation HAPPENS to make him black IS the first person I would hire in a heart beat for a CEO position of a corporation I am kicking around starting.

But, does he know that for a fact?

Natasha is arguably one of the best corporate accountants in the state.

But does she know that for a fact?

And another black friend of mine IS the best banker in the Twin Cities because he (like me) refused to go along with the corruption laden real estate scams in the state. He is fortunate to have found work after quitting on moral grounds at our previous employer.

But does he know he got hired at another bank because he was the best banker in the Twin Cities for a fact? Or because PR-sensitive HR departments were anxious to parade him in-front the politically correct castratti of Minnesota?

It is this that I find to be the biggest cost to affirmative action because it deprives those people (who through birthing or conceiving circumstances beyond their control) were fated to be "black" or a "woman" or a member of some "victim" group of the confirmation and knowledge that they are indeed the "best" or "damn good" at their job or profession.

Which leads us to Amelia Earhart (whose potential bones have put her back in the news).

A compelling piece was put together that deserves more attention about Amelia and how unlike Charles Lindbergh and other male aviation pioneers she had a ton of help which was essentially a 1930's prototype version of affirmative action. Male pilots and navigators piloting for her. Lack of radio skills. Acknowledging she basically just took orders. And let's not forget the fact she (regrettably) FAILED in one particular flight resulting in her death and unknown whereabouts.

I was brought up believing she was this great aviator. Notice I said "aviator." Not "female aviator." There was no discernment between male or female. She was just this kick ass chick who could do what the boys could do. Matter of fact, until I read more about Amelia I thought she was side by side with Charles Lindbergh in terms of feat-accomplishment in terms of a time line. She was like the hot IT geek chick of her time and like hot IT geek chicks of our time, we absolutely adore, worship and honor them. And this of course is what everybody else my age, as well as younger and older viewed her as.

What is so upsetting about this article is not that we were misled, but rather that if even half of it is to be believed, then the spirits and admiration women (and certainly men) had for Amelia were all in vain. Women who went onto pursue and "be like Amelia" or made Amelia their hero were putting their faith not in a truly independent woman, but one who needed a serious dosage of helping from men. Which behooves the question -


Is not history full of genuinely powerful and legitimately independent women?

Joan of Arc comes to mind.

Catherine the Great.

Or (my favorite because she was a lower class prostitute-turned empress) Theodora who grew a spine when her pansy beta husband Justinian wanted to retreat from the Nika revolt.

Margret Thatcher is another.

Not to mention I'm sure all of you know women in your lives personally who are heroes within their own rights (and forget something "strong" or "heroic," how about just great women who did simple things like making life enjoyable and being a great mom or a great wife?)

But no, we need to create a media sensation as well as make it look like we're doing something for society so we can get re-elected.

Of course the cost is nowhere near worth the benefit.

In implementing things such as affirmative action (or predecessor gimmicks such as Amelia Earhart) we truly undermine current and future generations of minorities and women by making it impossible to have pride as well as to know for a fact they are the best.

And I don't say this as some kind of "appeasing, oh look ,the Captain really does have a heart or is extending a palm branch to the left" kind of way. I mean this as in "Damnit, I know people who are the best at what they do, and they are PEOPLE who are the BEST at what they do."

Not some "black guy" who is really good at managing a business "for a black guy."

Or "some chick" who is really good at accounting "for a chick."

Or some "muslim guy" who is really good at negotiating tobacco prices "for a muslim guy."

It is THE ONE guy who is the BEST at managing a business.

It is THE ONE guy who is the BEST banker in the ENTIRE Twin Cities.

It is THE ONE girl who is the BEST assistant controller in the state.

And it is THE ONE guy who is the best tobacconist in the Twin Cities.

They may just happen to be inconsequentially black, hispanic, female or muslim, but that is NOT them and does not define them. Their brains and personalities and persons are who they are, regardless of skin color, gender or religion.

But no, you lefties have to make these excellent professionals question their achievements because you've now given society an incentive to hire people for reasons other than performance. And not only that, you've now seeded doubt into any intellectually honest minority group member as to whether they'll be judged on merit and performance and ultimately THEMSELVES or the color of their skin and gender.

MLK and Susan B. Anthony would (and probably are) rolling in their graves and having a heart to heart with Amelia as well as her modern day compatriot Kara Hultgreen.

Post Post

I just wanted to add an addendum to this post to show you a concrete example of what I'm talking about. I've highlighted this before, but this really is the epitome of what I've been talking about above. The Nicholas Brothers were, are, have been and (frankly) will forever be the best tap dancers in the world. Oh, mock "tap dancing" as you might, I will bet my fortune there isn't and never will be another brotherly duo on the face of this planet that will ever achieve what they did (see below).

Both of them have unfortunately passed away, but they damn well knew they were the best. And you want to know why THEY knew they were the best?

It's not because there was some lefty female 40 something philosophy doctorate placating them about "institutionalized racism" and how "they had to overcome such hurdles" "explained" why their performance was great "given their handicap."

It's not because their elementary school teacher told them they were all "special" and were "bound for greatness by their mere existence."

And it's CERTAINLY NOT because Barack Obama is the president of the United States.

It's because they WERE, ARE and FOREVER SHALL BE the best.

Do you think for a second they ever thought about their RACE when it came to them pulling off this feat of brilliance?

When they were done with this dance I guarantee you they knew they were the best. And to have some pansy ass goatee wearing lefty schmub from the suburbs dare to insult them posthumously by daring to apply a lesser standard to them because of their skin color. They would rise from their grave and pummel them.

The reason why?

It's because the performance of the Nicholas Brothers has nothing to do with the color of their skin. They were just the best damn tap dancers in the world. They dedicated themselves to the study, training and physical demands of such a performance.

And in the end, nobody is looking at the color of their skin. They're simply looking at the real core and soul of the men who gifted society with such a brilliant and unapproachable piece of American culture.

Saturday, December 18, 2010

Recession Medicine

Wait for the 1 minute mark or so.

And if that is too violent, perhaps this is more appropriate;

Thursday, December 16, 2010

"Perception is Reality," the Leftist Chick I Was Dating Said

In my series on capitalism vs socialism, I told the tale of a girl I was on a date with where our date consisted of walking a lengthy 7 mile trail of the Mississippi River. The girl was a big leftist and, long story short, I had so completely destroyed her arguments with basic facts and logic that in the end she said, "well I choose to believe what I want because my perception is reality."

Understand this is literally, in its purest definition, psychotic. This girl was delusional. She chose to ignore reality.

Ergo why this article is so interesting. It basically highlights what is going to become more and more common amongst the "educated" collegiate youth of today. Since they were brought up with limitless funds from mommy and daddy (who mortgaged the house and have since ran out of money and can no longer afford to finance their childrens' lives) or had a bevy of government programs (financed through borrowing as well), they have lived in a bubble. A bubble where resources are unlimited and they never spent one calorie of energy worrying about the future. If anything they worried about whether they might not get the latest Apple product for Christmas.

However, as the funds have run out both from parental sources and government sources, the economic REALITY is starting to hit them. And with no more money available to shield them from this reality, they frankly can't take it.

So intellectually weak and unprepared are they for the real world, they instead protest against reality. And so childish are they, they are incapable of understanding the concept of "reality."

They literally, LITERALLY could be protesting against gravity.

Of course, those of us with the slightest bit of common sense know they are in for a rude awakening. But why ruin their fun? Let them protest and hold their breaths till their faces turn blue. I'm prepared for the decline.

Are you?

Wednesday, December 15, 2010

Tuesday, December 14, 2010

Recession Medicine

First it was the Star Tribune.

Then it was GQ.

And now your Captain's meteoric rise continues with the latest expose from The Eagan Patch!

However, though I am an old curmudgeon of a bachelor, I have to admit the following video is actually very cute with the old couple kissing at the end.

What Did I Tell You About Major Cities' Property Values?

From my Rochester affiliate.

If ONLY somebody knew!

Sunday, December 12, 2010

A Man's Man

From Wiki

[edit] Military service

Brig. Gen. James M. Stewart, USAF Reserve, c.1960.

The Stewart family had deep military roots as both grandfathers had fought in the Civil War, and his father had served during both the Spanish-American War and World War I. Since Stewart considered his father to be the biggest influence on his life, it was not surprising that when another war eventually came, he too served. Although members of his family had previously served in the infantry, Stewart chose to become a military flyer.[24]

An early interest in flying led Stewart to gain his Private Pilot certificate in 1935 and Commercial Pilot certificate in 1938. He often flew cross-country to visit his parents in Pennsylvania, navigating by the railroad tracks.[6] Nearly two years before the December 1941 attack on Pearl Harbor, Stewart had accumulated over 400 hours of flying time.[25]

Considered a highly proficient pilot, he even entered a cross-country race as a co-pilot in 1939.[26] Along with musician/composer Hoagy Carmichael, seeing the need for trained war pilots, Stewart joined with other Hollywood celebrities to invest in Thunderbird Field, a pilot training school built and operated by Southwest Airways in Glendale, Arizona. This airfield became part of the United States Army Air Forces training establishment and trained more than 10,000 pilots during WWII, and is now the home of Thunderbird School of Global Management.[27]

Later in 1940, Stewart was drafted into the United States Army but was rejected for failing to meet height and weight requirements for new recruits—Stewart was five pounds (2.3 kg) under the standard. To get up to 148 pounds he sought out the help of Metro-Goldwyn-Mayer's muscle man, Don Loomis, who was noted for his ability to add or subtract pounds in his studio gymnasium. Stewart subsequently attempted to enlist in the Army Air Corps, but still came in under the weight requirement, although he persuaded the AAC enlistment officer to run new tests, this time passing the weigh-in,[28] with the result that Stewart enlisted in the Army in March 1941. He became the first major American movie star to wear a military uniform in World War II.

Stewart enlisted as a private[6][29] and began pilot training in the USAAC. During this time the Japanese attacked Pearl Harbor, bringing the US into direct involvement in the war. Stewart continued his military training and earned a commission as a second lieutenant in January, 1942. He was posted to Moffett Field and then Mather Field as an instructor pilot in single- and twin-engine aircraft.[29]

Public appearances by Stewart were limited engagements scheduled by the Army Air Forces. "Stewart appeared several times on network radio with Edgar Bergen and Charlie McCarthy. Shortly after Pearl Harbor, he performed with Orson Welles, Edward G. Robinson, Walter Huston and Lionel Barrymore in an all-network radio program called We Hold These Truths, dedicated to the 150th anniversary of the Bill of Rights."[30] In early 1942, Stewart was asked to appear in a propaganda film to help recruit the anticipated 100,000 airmen the USAAF would need to win the war. The USAAF's First Motion Picture Unit shot scenes of Lieutenant Stewart in his pilot's flight suit and recorded his voice for narration. The short film, Winning Your Wings, appeared nationwide beginning in late May and was very successful, resulting in 150,000 new recruits.[31]

Stewart was concerned that his expertise and celebrity status would relegate him to instructor duties "behind the lines."[32] His fears were confirmed when he was stationed for six months at Kirtland Air Force Base in Albuquerque, New Mexico to train bombardiers. He was transferred to Hobbs AAF to become an instructor pilot for the four-engined B-17 Flying Fortress. He trained B-17 pilots for nine months at Gowen Field in Boise, Idaho.[29]

"Still, the war was moving on. For the 36-year-old Stewart, combat duty seemed far away and unreachable and he had no clear plans for the future. But then a rumor that Stewart would be taken off flying status and assigned to making training films or selling bonds called for his immediate and decisive action, because what he dreaded most was the hope-shattering spectre of a dead end."[33] Stewart appealed to his commander, a pre-war aviator, who understood the situation and reassigned him to a unit going overseas.

Col. Stewart being awarded the Croix de guerre with palm by Lt. Gen. Henri Valin, Chief of Staff of the French Air Force, for his role in the liberation of France. USAF photo.

In August 1943 he was finally assigned to the 445th Bombardment Group at Sioux City AAB, Iowa, first as Operations Officer of the 703rd Bombardment Squadron and then as its commander, at the rank of Captain. In December, the 445th Bombardment Group flew its B-24 Liberator bombers to RAF Tibenham, Norfolk, England and immediately began combat operations. While flying missions over Germany, Stewart was promoted to Major. In March 1944, he was transferred as group operations officer to the 453rd Bombardment Group, a new B-24 unit that had been experiencing difficulties. As a means to inspire his new group, Stewart flew as command pilot in the lead B-24 on numerous missions deep into Nazi-occupied Europe. These missions went uncounted at Stewart's orders. His "official" total is listed as 20 and is limited to those with the 445th. In 1944, he twice received the Distinguished Flying Cross for actions in combat and was awarded the Croix de Guerre. He also received the Air Medal with three oak leaf clusters. In July 1944, after flying 20 combat missions, Stewart was made Chief of Staff of the 2nd Combat Bombardment Wing of the Eighth Air Force, and though he was no longer required or expected to fly missions, he continued to do so. Before the war ended, he was promoted to colonel, one of very few Americans to rise from private to colonel in four years.[6][29]

At the beginning of June 1945, Stewart was the presiding officer of the court-martial of a pilot and navigator who were charged with dereliction of duty when they accidentally bombed the Swiss city of Zurich the previous March—the first instance of U.S. personnel being tried over an attack on a neutral country. The Court acquitted the accused.[34]

Stewart continued to play a role in the United States Air Force Reserve after the war, achieving the rank of Brigadier General on July 23, 1959.[35] Stewart did not often talk of his wartime service, perhaps due to his desire to be seen as a regular soldier doing his duty instead of as a celebrity. He did appear on the TV series The World At War to discuss the October 14, 1943 bombing mission to Schweinfurt, which was the center of the German ball bearing manufacturing industry. This mission is known in USAF history as Black Thursday due to the high casualties it sustained; 60 aircraft were lost out of 291 dispatched, as the raid consisting entirely of B-17s was unescorted to Schweinfurt and back due to the available escort aircraft lacking the range. Upon his request, he was identified only as "James Stewart, Squadron Commander" in the documentary.[36]

He served as Air Force Reserve commander of Dobbins Air Reserve Base in the early 1950s. In 1966, Brigadier General James Stewart flew as a non-duty observer in a B-52 on a bombing mission during the Vietnam War. At the time of his B-52 flight, he refused the release of any publicity regarding his participation as he did not want it treated as a stunt, but as part of his job as an officer in the Air Force Reserve. After 27 years of service, Stewart retired from the Air Force on May 31, 1968.[37] After his retirement, he was promoted to Major General by President Ronald Reagan.

The entry goes on to say he was a staunch Republican.

Let's see Clooney or Pitt or any of the current crop pull anything near what Stewart did.

Ignore M3 at your Own Peril

There are many measures of the money supply; M1, M2, M3, L.

And the question is, of course, what constitutes money?

Should 2 year CD's be considered money? They technically aren't legal tender, but can be used for collateral and technically are easier to barter with than say a house. Should stocks and other marketable securities be considered money which in times could be pledged as collateral or used for a down payment on a house?

I have not studied it much beyond occasionally thinking about it whilst running, but I do know that money, regardless of its form, has a tendency to sneak into prices if you let it get too loose.

Thus I found the following chart very interesting;

Suggesting that this;

is somewhat to blame for the high property prices and perhaps even securities prices.

It seems Derek Jensen was onto something.

Saturday, December 11, 2010

Natasha's New Shoes

The lovely Natasha, which some of you are fans of, recently made a purchase. I fully endorse this purchase on account I believe it is about the same value as the Louisiana Purchase or Seward's Folly - absolutely a steal.

She spent a whopping $23 on these shoes and I thought some of you of the male persuasion in the Capposphere would confirm her decision to purchase these shoes (on top of it, may I add, she had to wait 2 years for these shoes to go on sale because she is 6'1" tall and needs 12 size shoes. She's now 6'6" with these shoes when dancing with your much shorter 5'9" Captain. And yes, I'm bragging right now just to make you all jealous!)

Let me know if you concur. In the meantime, Natasha is poking me and telling me to remind you that the donation button is up and to the right.

The Education Bubble Continues

Keep going to college kiddies.

Friday, December 10, 2010

Communication Degrees Are Worthless

Honest to god, do I have to explain this? "Communications?" How do you get a 4, let alone 6 or 8 year degree in "communications?"

Look, kids, I know you won't listen to your parents, but for god's sake before you piss away $50,000 learning how to talk to other people, drop a couple bucks on this first.

Thursday, December 09, 2010

The Economic Cancer is Spreading More Slowly

I wanted to call it "Derivative Economics" where people are so desperate to paint a "bright" economic picture they claim a "slowing down in the collapse" is a good thing. Ergo, it's akin to having a cancer patient and saying,

"Hey! GREAT NEWS! The cancer is spreading MORE SLOWLY NOW!"

"You mean I'll survive?"

"Oh, good lord, no! It's still spreading like a wildfire. Just slightly less fast now! We've increased your life expectancy from 2 weeks to 2 weeks 15 minutes!"

Ergo, why I tire of these types of stories.

Therefore, ladies and gentlemen, it's time for the ole Captain to do the job of the AP and just show you what unemployment claims look like.

I love how the "recovery" is still higher than any peak of unemployment in the past bar the Volcker Recession.

You know what to do!

Enjoy the decline!

Monday, December 06, 2010

Minnesota State Spending as a Percent of GDP

This shall be short.

This last election cycle the democrats in Minnesota had one (of several) main talking points when it came to the local elections;

"Tim Pawlenty was evil and gutted the government of necessary and precious spending."

So I decided to see just how much the state has spent as a percent of gross STATE product which gives you the overall tax rate local Minnesotans pay at the state level;

Yeah, what a cheapskate!

On a side note I love how Minnesota had an overall tax rate of just 6% back in 1963 and now we have an estimated 11% (depending on how 2010's GSP comes in).

Just remember how "evil" Tim Pawlenty and all those nasty Republicans were when they "cut" the budget.

Recession Medicine

Because the recession is over, you just don't know it yet!

Medicine One

Blue Pill

Red Pill

Sunday, December 05, 2010

How Property Taxes Undermine Housing Prices

It snowed about 8 inches here in the Twin Cities this weekend. Normally this would upset people, but I enjoy it. And the reason I enjoy it is because when it snows like this I am happily reminded of the fact I no longer have to drive to Minneapolis to shovel my duplex.

It's the same feeling I get when it's late in fall and the leaves are on the ground. I no longer have to drive to my duplex in Minneapolis to rake the yard. I just mow over what few leaves fall on my new yard in the burbs.

Of course these are seasonal feelings. I get about a weekly dose of "post-partem-von-Minneapolis" happiness when I have to drive through the town and pass the Riverside exit knowing full well I never have to take that exit ever again to deal with my former rental property be it tenants, mice, or just general maintenance problems.

But the biggest smile on my face is when I look at my property tax bill and see that in my current abode (which is a nicer property and in a nicer neighborhood) I pay literally 1/4th the property taxes I did in Minneapolis. Not to mention I have much better schools, police, public services and plowing service (and I have yet to have my car stolen!).

Regardless, the snow this latest time around got me thinking about another aspect of my former place in Minneapolis and that was whether or not home prices were coming down enough to rationalize investing in my old neighborhood once again. To do this we need to take a look at that old standard classic ratio;

House price to rents.

There are varying measures or ways to do this, but they all measure the same thing - how much of a multiple of rents is the price of the house.

It is identical to the P/E ratio of stocks. The idea being a low ratio shows you, you are getting a lot of rent for a relatively low price. A high ratio shows you the rent is likely NOT worth the cost of the house.

I pulled figures from 2001 (most available) to the present using the "fair market rents" for a one bedroom apartment in the Twin Cities area and the median sales price from the Minneapolis Area Association of Realtors and came up with the blue line.

And what do you know, it looks like the bubble is finally over, hallelujah! Price to rents was originally about 26, reaching a peak of 32 and now because of the crash, back down all the way below 20! Certainly a deal!

But what has your old wise Captain been telling you about the biggest largest threat to the recovery of the housing sector, especially in big cities?

That's right, property taxes.

You see, charge all the rent you want, you don't get to keep all of it. You have to pay for insurance, interest and repairs. These things (bar having an ARM as a means of financing your house) stay relatively stable. But there is one thing that you pay every month and has a tendency to go up.

Property taxes.

I remember when I first bought my house my property taxes were just $1,100. Ten years later they were over $4,000. Certainly more than the rate of inflation.

Now I know property taxes figure in lastly when most people buy a house, but please listen to me.

Property is nothing more than an asset. Assets only have value if they have some means of feasible cash flow. This is why you compare a stock price versus it's earnings. Or a mutual fund against its dividends. And a house against its rents.

However, if you are going to buy any one of these assets, keep in mind you don't get to keep all the profits they generate. You have to pay taxes to various governments on various assets. And if the taxes on those cash flows goes up, it directly and negatively affects the value of that asset, driving asset prices down.

Thus, the red line.

The red line is much more representative of the true over/undervaluation of properties in the MInneapolis area. It takes out the average property taxes one pays (no historical data was at the Minneapolis city's web site so I used my own as a proxy) and then applies the price of the house to NET rents (rental income after property taxes).

The trend is a little bit different.

The ratio started at 30, went up to 50, and then back down to 30. Meaning housing is no more of a deal today than it was in 2001. Why? well prices are actually lower today than they were in 2001 (by about $30,000), so how did the ratio not drop as much as its gross rent counterpart?

Those wonderful property taxes.

When you account for property taxes, you're still buying into a bubble. A house isn't worth a ratio of 30 times annual net rental income. You can find a lot cheaper (and safer and better and lower taxes and etc. etc.) in the burbs.

But this also has ramifications for the appraisal and collateral based industries. REIT's heavily invested in major cities, banks with overexposed real estate portfolios in major cities (or any heavily taxed city) and hedge funds chomping at the bit to take positions in real estate hoping to buy at the bottom better pay close attention to net rental rates and not gross.

Of course if they have even the slightest bit savvy of models (or analysts) their calculations will account for net rent. However, it's not that as much as it is the perpetually increasing chunk property taxes take out of rents. Using my property taxes as a historical proxy against the FMR in Minneapolis, property taxes were originally just 14% the rent I could get from the available unit. Now it's 42%.

(technical note - this is for a duplex, so the above chart could be halved if one were to consider renting out the additional unit for rent, doubling the rent instead of living in it)

Regardless of whether the unit is rented or not, the issue is the perpetually increasing property taxes relative to the rents. As property taxes take more and more profit from the property, that property will continue to have less and less value. So the issue is not one of what property taxes are today. It's what they are going to be in the future. And given the ilk on the Minneapolis City council, you can expect all rents to be consumed by property taxes by ehhh, roughly 2030/2035ish or so.

Enjoy the decline!

Recession Medicine

Because the recession is over according to the NBER;

She Did NOT Get "Hit By a Truck"

I was accidentally eavesdropping on a cell phone conversation at a cigar lounge I was at recently. It was a young kid (20 something man) talking to either a female friend or his mother (I could not tell which). And far as I could tell he was trying to figure out why a girl who had agreed to go out with him at the last minute the night before canceled. I could not hear what the other person was saying, but the conversation went something like;

Boy - "Well she said she wanted to go out, but when I called her, she didn't pick up. I tried texting, but she didn't respond either."

Person on other line - "Well maybe she was sick"

Boy - "Well yeah, but if she was sick the least should could do would be to text me back saying so."

Person on the other line - "Well there could have been an emergency of some kind. Maybe she's just really busy and hasn't been able to get back to you."

Boy - "How busy can you be to not call somebody for 4 seconds to tell them you're not able to go out?"

The conversation went on, but I needed not eavesdrop anymore because I could already finish the conversation myself. Regardless, it showed me there is a vital and necessary lesson needed to be passed on to the younger Cappy Capites of the male persuasion about the fairer sex, so please take out your note books and pencils and take note.

1. She was not "sick" or "in the emergency room" or "really busy." She just plain didn't want to go out with you.

Understand that women in their 20's and late teens will say yes to avoid the hardship of telling you no. Of course when it comes time to actually show up for the date, then they will bail and just not return any calls that could lead towards a cementing of a time or a place you pick them up. This is why the Rule of 505025 exists (look it up, I won't link to it).

2. How did I know the person on the other line was a girl? Because only women will go to great lengths to rationalize what is empirically and obviously a rejection. They will always try to make you feel better, even though deep down inside they know you just got stood up. Ergo the "well, maybe she got sick." Or " Well, maybe she's just really busy." Or, "Well, maybe she just forgot. You know, people with their busy schedules and all."

Honest to truth when I was a youth in college and had a similar such conversation with my mother she said in ALL SERIOUSNESS (no sarcasm intended) "Well, maybe she got hit by a truck and is in the hospital. You never know!"

Actually, you do, because I'm telling you now.

In every case, no matter what the excuse, the rationalization, explanation or theory, in the end the girl just plain didn't want to go out with you.

Now you have a choice. You can waste your time worrying about it, worse still you can somehow think it reflects upon you personally, or you can follow the Ole Captain's simple rule;

"The Why Doesn't Matter, All that Matters is What IS."

In short, what matters is the reality of the situation - she didn't show up.

You can rack your brain and burn out a 100 terraflop supercomputer trying to figure out the reason and rationalization "why she didn't show up," but in the end all the matters is you wasted your Friday night thinking you had a date. Not to mention calories of energy trying to figure out why she didn't show up.

And to come up with and opine about outlandishly pathetic excuses for her standing you up is foolish and frankly, self-DISrespecting.

Many a man has wasted untold amounts of time, psychological energy and fret/worrying about the "why she didn't show up" when the "why she didn't show up" doesn't matter (and should be self-evident). All that matters is what IS. And that "is" "is that she didn't show up."

The poor guy got stood up and instead of wasting time worrying about it he should instead just simply realize that he got stood up and move on. Perhaps next time being sure to have a back up plan and CERTAINLY NOT put any hope or faith in the fact he "might" have date the next time a girl agrees to go out.

Therefore men (of the younger Cappy Cappite persuasion), save yourself a LOT of stress and learn from the old man's experiences. Realize she didn't not get hit by a truck. She didn't forget to call. Her cell phone was not "not charged." And she was not abducted by aliens. Please have some self-respect, accept the fact she flaked, move on and hold your head higher with a little bit more dignity and simply remember that the next time a girl says "yes" to a date to have a back up plan, if not, fully plan on doing something else that night.

This has a been a public service announcement to the 20 Something Male Capposphere.

Meet Kelli Space, a Banker of a Different Stripe

I have had this sent to me multiple times.

I ask you, how is she any different than a bank now asking for a bailout at the expense of other people to pay for her idiotic mistakes?

Wednesday, December 01, 2010

The BAC Freedom Index

A God given right to all people is the freedom to drink. But how much the government infringes on this precious and life-enhancing right varies depending on the BAC limit enforced. The theory governing this index is that the more people are allowed to drink, the happier and thus more productive they are.

While not exactly scientific the BAC Freedom Index is an astonishingly accurate predictor of economic growth. Countries such as Japan (where more for biological reasons) and Sweden (more for Scandinavian reasons) have the BAC limit set so low that you literally cannot legally drive after one drink. This, along with very high and disproportionate taxes on alcohol in most Scandinavian countries, forces people to stay at home and drink, rather than spend their money going out, meeting members of the opposite sex, thereby keeping their economies from growing.
Whereas in countries such as the United States and Ireland, one can very well drink themselves silly, flirt with untold numbers of the opposite sex, and still be allowed to drive home. This has not only resulted in some of the best drunk drivers in the world, but some of the highest GDP growth rates in the developed world.

This is confirmed when we correlate GDP growth rates against BAC limits. Countries with more liberal limits tend to have higher economic growth. Those restricting their population to the point they cannot "go out and have a drink" because it’s effectively illegal, have smaller (and in the case of Russia) shrinking growth rates, all of which results in a remarkably strong correlation coefficient of .43
Thus we have no choice but to conclude that drinking is vital and necessary to economic growth and government policies should endorse it and it is your patriotic and American duty to drink.

Household Debt to GDP

I remember these charts were quite at the cutting edge of economics and finance about a decade ago. Now it seems the rest of the population is FINALLY getting around to paying some attention to the merits of adjusting everything as a percent of GDP. Regardless, looks like debt as a percent of GDP is going down. Of course this is household debt and this is primarily due to people filing for bankruptcy and more than this decrease in debt has been offset by the federal government's increase in debt, but hey, at least it's going down. When it reaches it's 1950's average of 25%, let me know. Then I'll start reinvesting in dollar denominated assets.

Tuesday, November 30, 2010

The HR "Wish List" and Courting "Wish List" are Inexorably Intertwined

It is links between two seemingly unrelated things that start to show you the odd and sometimes amazing psychological, financial, sociological, economic, etc., relationships that exist in the world and helps bring about your understanding of the world to a clearer fruition.

One of which I hit on recently and went on at length about, but just found this whilst looking for means of employment which further proves my theory;

It's identical (not "similar," not "akin to,") but IDENTICAL to the girl/s who complain "there just aren't any good men."

Notice the year this was posted - Mid Year 2010.


1 in 5 jobs go unfilled because they CAN'T FIND A QUALIFIED EMPLOYEE?????

And nearly HALF of the organizations in your firm lack qualified workers????



Mayhaps I suggest there is a little bit of impossibility in both HR's and women's "requirement list" for potential suitors, be it for a job or a romantic suitor? That asking for a man who is 6'2" or taller, makes lots of money, loves his mother, wants to go to church, but is a bad boy in bed, but not unless you say so, who likes to write you poetry, votes liberal, but is a man's man is about as probable as finding the candidate with 10+ years uninterrupted and progressive experience with a masters in blah blah blah blah (PhD preferred, of course) and billions of certifications who is going to work for an average wage and travel 90% of the time and have no social life out of work?

But, no, no. That CAN"T be it! You keep on going. You keep waiting for that perfect candidate to come along who magically has 8 years of experience in a software that has only been on the market for 3. I mean, there's no WAY charlatans and con artists would ever get through your impenetrable filtering and screening process and just tell you what you want to hear just so they can get the job. I mean it's just like dating, right? Nobody has EVER passed through that shield of yours that was unqualified, and CERTAINLY nobody who was ever qualified did you ever shoot down only to regret later.

Of course.

That never happens.

Heh heh.

Enjoy that decline, people. Enjoy that decline.

Monday, November 29, 2010

I Found This on the Floor of a Public School

Though I don't like to admit it (for it is charitable and therefore commie in nature), I do seminars at a local high school to teach juniors and seniors about various aspects of personal financial management. You know, simple things like 401k's, retirement, how you should pay for college, budgeting, etc., meaningful stuff that would actually help them in the real world unlike "Psychology" or "Peace Studies" or the bevy of "requisite" classes they force down these poor kids' throats to graduate.

Regardless, neither here nor there, it was a later seminar and by the time I packed up my LCD projector, I left the classroom and the school was deserted. I'm sure a janitor was on the grounds somewhere, but I could tell I was all of 3 people on the entire campus. And off in the corner of my vision I noticed a sole piece of paper laying on the ground that somehow didn't get swept up. So I walked over to where the paper was and picked it up.

It was a report of LBJ. I decided to keep it, bring it home, scan it in and then share it with you guys.

Now I used to substitute teach and I used to teach college econ, but I learned a long time ago, where the student has the ability and just chooses not to use it or if that student is a genuine idiot, it doesn't matter, you have to deal with the effective reality of their work.

Sadly, this is the generation I'm relying upon to produce the wealth to pay for my social security.


Horses Correlate with Bankruptcies

What do I keep telling you about horses?

I wonder if she tried to pledge them for collateral like one borrower I had the displeasure of underwriting for a while ago?

Understand people (but more importantly, BANKERS), if your client lists horses in the "assets" column of their balance sheet and NOT the liabilities section of the balance sheet, then you need to have those financial statements re-audited.

Sunday, November 28, 2010

Capitalism Is NOT Why the US Will Fail

Cappy Cap readers should be really appreciative of me. Not because of the awesome economic commentary I make. Not because of the super awesome economic foresight I have. But rather because I screen out the most inane and idiotic comments that would shorten your life expectancy with high blood pressure if you did indeed read them.

Of all of them, however, there is one no more blood boiling than this one;

"CAPITALISM is what is going to destroy the US."


"The US will fail because of capitalism."

This is, without a doubt, the most ignorant, intellectually dishonest and patently wrong comment I receive.

Now, I'd like to go into detail in my typical arrogant prose, but since this post is very important, I am instead going to be brief and succinct in the hopes of keeping most people's attention. It really is just too important not to read. The reason why is that when the US economy DOES ultimately collapse, I want it recorded here exactly what kind of economic system was in place before knee-jerk college students just regurgitate what their aging hippie professors tell them.

First, we are no longer a "capitalist" economy. We are a mixed or socialist economy (please don't make posts on technicalities and nuances in the terms - they will be ignored). We have the same public sector spending as Norway (the left's favorite nation - and probably more thanks to BO).

Second, we have the world's second highest corporate tax rates at roughly 40%. An effective rate of 32.5% (I'll give a shinny nickel to a liberal who can explain the difference between the two, instead of just relying on this fact as a talking point when talking about corporate taxes).

You throw in dividend taxes and you're roughly at a 50% overall tax rate.

Third, understand the US economy and people's standards of living were growing fastest when tax rates (as measured by government spending as a percent of GDP) were the lowest. Standards of living have gone down as the US economy has become socialist;

(*I get a lot of confusion on this chart. The rolling 20 year includes 20 years worth of data. The data point I place in the middle, which is why it seems there is 10 years of data missing on the start and end of the blue line)

Fourth, understand the majority of government spending is NOT for governance, but rather income transfers, which is the epitome and definition of socialism.

Fifth, understand that it is these income transfers and entitlements into the future that are the primary reasons for our current and future projected deficits and is the primary reason we are facing bankruptcy as a nation. These are DISTINCTLY socialist policies. NOT CAPITALIST.

Now there are more statistics, but the above is enough. I cannot make it any clearer and I don't have to because it's not a matter of opinion. It's a fact. It is SOCIALISM that is destroying the United States. NOT capitalism.

Therefore, please, I beg of you idiots who just regurgitate the above inane comment, since you have the right to vote, stop being ignorant and start getting educated on economics. This isn't a "choice." This isn't a "fun little game we're playing." And this isn't some "crusade" where you try to impress the hippie grunge chick at the coffee bar by extolling socialist tripe as you try to pass it on as "virtues." You future is at stake. Your current state of unemployment is a direct result of your own ignorance. And if you'd want any kind of future for your children, let alone yourselves, knock it off with the childish "ranting" and "protesting" and grow up. The country depends on it.

Owning Property in Major US Cities Is a Liability

I've said it before, and you people didn't listen to me, but owning property in major US cities is a liability. Not only because of perpetually dropping housing prices, but the risk just isn't worth it. You have to deal with leftist regulations, the threat you'll be forced to abide by progressively increasing municipal environmental regulations (recycling, insulation, heating requirements, etc), and as capital and labor flights out of the city to the burbs, you will face a Detroit like environment. But the biggest risk, property taxes.

You don't think AFSCME and SEIU at the local government shops are going to take pay cuts do you?

And you don't think good liberals in major cities are going to vote in any kind of republicans or politicians that will cut spending, do you?

Ergo you can expect your property taxes to go up regardless of the economy and the value of your property, which will directly force your property value down further because the net cash flow it could feasible generate has gone down.

Smart people will make moves like this.

Daddy, Where Do Jobs Come From?

A repost of a classic in that unemployment is still around 10% and I'm guessing some of you might like jobs about now.

Jobs, it seems is becoming a very important issue as we seemed to have shed 5 million of them recently and are on the precipice of the worst recession since 1929. But fear not, for our president elect has a plan and it’s quite simple;

“More jobs.”

Yes, that’s about it, we’ll just “create” more jobs.

Now 3rd grade logic would tell you something is wrong. You can’t put your finger on it. Maybe you can’t full explain it. But you have this twingling sensation in the back of your head that you know something just ain’t right. That it ain’t as simple as;

“Just creating more jobs.”

It’s the same kind of twingling sensation you got back in school when you said, “Well why don’t we just print off more money.”

You intuitively knew something had to be wrong with that solution, but you perhaps couldn’t explain why. And thus it’s the same thing with Barack’s plan to create new jobs.

His idea for this massive infrastructure (and Keynesian) investment gives us all the same twingling sensation in the back of our heads. Why, if it was that simple, to just build roads, bridges and splurge more on education, what were we getting all worried about in the first place? Why are the stock markets so low? Why don’t we create jobs right now today? And so, since we all intuitively know it can’t be that simple, let me explain why. Let me explain to you where jobs come from.

Jobs come from one thing; demand.

Demand for goods and services currently existing or yet to exist. For example I demand food, a good that already exists. I also demand a hovercar and a clone of Jennifer Anitson, a good and service that have yet to exist. Regardless, if the product or service exists or can be created, and there is demand for it, then there is the potential for jobs to be created.

But demand must be met with supply and here is where the actual jobs are created. In order to supply these goods and services an entrepreneur or a company must hire people to help provide those goods and services. This includes everybody from the head of the company managing the firm to the suppliers, vendors, laborers, admins, marketers, accountants and anybody else required to bring these services to reality. However, there is a key element to make this all happen and that is profit.

Oh yes, that “evil” profit.

For you see, no entrepreneur, nor company, nor corporation is even going to bother going through the trouble of setting up the venture in the first place unless they are actually paid for it. And before you start berating these “evil capitalists” to have the temerity to demand recompense so that they may earn a living, you might want to look at yourselves in the mirror because no laborer (let alone you) is going to work unless they are compensated too. So just accept the fact we’re all financial whores, not out of evil or greed, but because it’s necessary for us to live and survive.

Regardless, immediately we see a problem with, not so much Obama’s infrastructure plan, but his fiscal policy in that he is going to raise taxes on not only the rich who employ the majority of people, but also corporations. Envy them and hate them all you want, increasing taxes on them will lower the incentive for them to invest, let alone start a new venture in the first place. And with the rapidly integrating global economy, if they really do have a great idea, why would they set up shop here in the first place? Ireland has a 12.5% corporate tax rate. Dubai has 0%. Russia has a flat tax. And “communist” China has a 20% corporate tax rate.
The good ol’ US o’ A has a 39% corporate tax.

So even though we haven’t addressed Obama’s specific infrastructure jobs creation plan, it’s quite possible other parts of his fiscal policy will impair it or destroy more jobs than it creates, simply because it destroys the incentive to create jobs in the first place; profit.

As for the specific plan itself, it’s not an issue of whether it will create jobs as much as it is a question at what cost.

Understand that to finance this infrastructure plan Obama has two choices; taxation or borrowing. And both options are going to cost jobs as well as efficiency.

In taxing people (no matter how “rich” they are) that takes money that would have been invested or spent anyway which would have created jobs as well. So if you tax the “rich jewelry dealer” an extra $50,000 so 2 employees in Obama’s Civilian Conservation Corps can pour concrete for a bridge, that’s all fine and dandy except for the fact the jewelry dealer now had to lay off his assistant and his admin to compensate for the cut. Congratulations, you created a big fat zero net new jobs.

Borrowing is no better in that the money borrowed by the government to finance the infrastructure jobs creation plan could have been borrowed by a company, an entrepreneur or even an individual to be used to create a new company, expand a factory or just plain spent, all of which would have created jobs too. Congratulations. You not only borrowed money and destroyed as many jobs as you created, but you’ve managed to increase interest rates as well! Thanks!

But the real cost is this, and is often the forgotten about or never-thought about aspect of economics, and that is efficiency. Specifically, as it relates to production.

If the money was left in the hands of the people, the people could then spend or invest that money as they saw fit and to their best benefit. Allowing people to make their own decisions as to how to expend their resources is the best way to make sure the goods and services produced in the economy are those that most benefit the people and increase standards of living the most. Of course, people make mistakes. The sickening, gluttonous binge of using one’s home equity as an ATM machine which has brought upon this financial crisis in the first place is a perfect example where the people will make mistakes. However, for all their flaws, recessions and depressions, free markets, ie- the people have historically been proven to be the best determinants of what to be produced.

Governments have not. And herein lies the flaw in Obama’s advisor’s plan; taking massive amounts of resources either through taxation or borrowing, takes money out of the hands of individuals and puts it in the hands of government. People now no longer get to decide what to spend their now dwindling resources on, and are instead forced to spend it on roads, infrastructure, and schools they may not need.

Now people may rightfully point out that things like roads, bridges, infrastructure, etc., are hardly foolish investments, and they’re right. But again the question is at what cost? Who would be better judges of how to spend this money and who would do more to help the economy out of recession;

A handful of bureaucrats and former Fannie Mae and Freddie Mac advisors now consulting a no-real-world-experience-president-elect determining what the best use of your money is?


300 million Americans who are intricately familiar with their own personal financial situation and the problems/opportunities they face?

This is where the real costs come in that what determines our standards of living is whether we use our resources efficiently to produce the goods and services we NEED. We just promised $700 billion (more like $2 trillion) to bailout those same Harvard ef-ups who ran Wall Street and the government into the ground. Could the people not have used a $700 billion tax cut? Would that not have solved our little economic growth problem? No, we’re stupid, we don’t know what we’re talking about, now shut up and give us the money.

Obama’s infrastructure plan is no different (although, I will admit spending the money on bridges and roads is infinitely wiser than bailing out Ivy League deadbeats). We don’t know what’s best for us. You don’t need that money. Give it to us and we’ll build shinny new roads and bridges. Just what you wanted. No, not that new icky gross Pontiac Solstice that would ACTUALLY HELP OUT DETROIT WITHOUT A TAXPAYER BAILOUT. No Captain, that’s not what you want. You want an addition to the elementary school named after Barack Obama where a newly hired teacher will brainwash…errr….I mean “educate” the children about the evils of capitalism…errr…I mean “global warming.” That’s what you want.

It is this that is the true cost to this Keynesian nightmare. The loss of productivity and efficiency causing American’s standards of living to go down. Not because of a loss of jobs (for I’m optimistically assuming this infrastructure plan will ONLY destroy one job for each one it “creates”) but because the stuff we’re producing with it is not what the American people optimally want.

And finally, permit me a third point.

I know building bridges, though not optimal, is not a waste of money.

I know roads, albeit not optimal, are not a waste of money.

But notice how education was thrown in there?

Please. Please, just stop with the “we don’t spend enough on education.”

It’s a sickening lie and you’re not fooling anyone. By every measure, every stretch of the imagination we spend WAY TOO MUCH on education and the fact education is part of Obama’s jobs creation plan shows me just how inefficient this plan will be. Bridges, fine. Roads, fine. But more money for education would be on par with bailing out the losers of Wall Street and sub prime deadbeats.

Alas, appetizing as new roads and bridges are, it was the inclusion of education, above all else, that made me supremely confident the stork will not be bringing any new jobs to Obama with his little infrastructure plan.