BillKarwin’s blog

In the theory of Trickle-Down Economics, we let the wealthy keep more of their wealth, and don't tax it.  The theory being that they will use that money to drive their business and thus the money will keep moving, creating jobs and generating growth.

The other thing a wealthy person could do with their money is invest it, and hope it grows rapidly on its own.  In this model, the jobs are not created, and sustainable growth is not achieved.  An individual investor may get some returns on their money, but there's no Trickle-Down effect; the wealthy amass more wealth, and the middle class don't get a penny.

Under what conditions would this happen?  When the investor believes that they will get more for their money by investing it, instead of spending it.  Keep in mind that part of this equation is the savings one gets by making tax-deductible expenses.  So the gains from investing the money has to be greater than the tax savings one would get by spending it.

Trickle-Down Economics doesn't work if the tax rate for the wealthy is too low.  There's less incentive to spend the wealth on deductible expenses if it's more advantageous to keep the assets and invest them.  If the top marginal tax rate were higher, wealthy individuals would have more incentive to put their money back into the economy.  You can't be an advocate of tax cuts for the wealthy and an advocate for Trickle-Down theory at the same time.

No one likes redistribution of wealth in an artificial way.  It would be much better to achieve it organically instead of through handouts, because the former creates jobs and promotes growth.  The latter only promotes dependence and resentment.

If the federal tax structure were truly to encourage Trickle-Down effects, the top marginal tax rates should be raised, while making sure that wealthy individuals have the opportunity to reduce their taxable income by deducting expenses that help boost a healthy economy.  The wealthy have had a free ride for the last eight years, it's time for them to give something back.  The alternative is an unsustainable trend for the rich to get richer, while the rest of Americans go bankrupt.

The ACLU and many other voices have urged President Obama to rescind the so-called "Health Care Denial Rule" that George W. Bush proposed in August 2007 and issued into regulation in December 2007.

On the surface, the Bush rule was intended to protect health care workers from being required to violate their own morals and conscience by providing medical services or even information about services, if they conflict with the workers' religious values. 

It sounds like a benefit for religious freedom, but it's transparently an attempt to hamstring patients' access to abortion services.  It encourages health care workers to violate existing federal laws (no executive order from the president can overturn or ignore laws passed by Congress).  The order was also considered to be poorly worded, allowing it to be used with unintended effects.

President Obama is now proposing to rescind the Bush rule, and return the medical profession to the state it had been in before.  The existing federal laws that try to balance the rights and responsibilities of both patients and the health industry would be upheld.

The ACLU is organizing advocacy from people who want to support Obama's proposed change.  One of their arguments is that the Bush rule doesn't even achieve the intended result of reducing abortions:

According to researchers at the Guttmacher Institute -- a nonprofit think tank on sexual and reproductive health -- without the contraceptive services provided at publicly funded clinics, there would be 46 percent more unintended pregnancies (1.4 million more) annually in the United States than currently occur.

This research supports opinions I've written about before, that restrictions to health care will increase demand for abortions, not decrease demand.

During his speech on February 24th, Bobby Jindal made a point that his mother was 4.5 months pregnant with him as she immigrated to the US.

If life begins at conception, as is the claim of many Pro-Life advocates, then Bobby Jindal's life began when his parents were outside the US.  And of course his parents were not US citizens, they were Indian nationals. 

Does that make Bobby Jindal ineligible to seek the office of US President?

I'm not the only person to pose this question.

Today Barack Obama restored US aid to international family planning organizations that include abortion among their services.  This reverses the 1984 "Mexico City Policy" -- a ban on such aid enacted by Ronald Reagan, and both Bush presidents.  Coincidentally, yesterday was the 36th anniversary of the Roe v. Wade decision.

Pro-life advocates have condemned Obama's move.  "He is effectively guaranteeing more abortions by funding groups that promote abortion as a method of population control," said Douglas Johnson, legislative director of the National Right to Life Committee.

But they are being short-sighted.  If their goal is to reduce abortions, the best method is to assist family planning efforts.  Abortion is not the only method of family planning supported by these organizations, although you might think so from the outcry among pro-life advocates.

Federal funds are not used for abortion services, either in the US or abroad.  This is true even with the change to the policy Obama enacted today.

Family planning organizations promote education, contraception, and health care for women and children.  These low-cost, safe solutions can be effective at reducing unwanted pregnancies, and hence reducing abortions.  Withholding funding from these organizations so they cannot support these methods likely leads to less family planning, more abortions, and threatens health for women and children in many other ways.

Barack Obama is promoting policies that will be more compassionate, and more pragmatic.

Monday I posted a comment to Matt Miller's blog article, "Economists in Trouble:"

I'm still waiting for some economist to dare mention the elephant in the room: nationalization of the banks.

The problem facing the banks can't be a lack of money. They've already received $350B, and quite a lot of cheap money auctioned by the Federal Reserve earlier in 2008. Where did all that money go?

People like Robert Reich have stated that the real problem is that the financial market has lost its mutual trust. The banks are still too wary of each others' toxic assets, so they won't do the day-to-day interbank loaning necessary to keep the economy working.

The toxic assets are gradually being handled. But it's a painstaking process, getting the market to examine and bid on each CDS in turn, thus determining its market value. It'll take years, and the rest of working America can't wait.

I'd say the solution is to take the remaining $350B, plus the $800B+ they're now talking about, and forming a new, nationalized bank (hopefully one that does not participate in any of the post-FSMA monkey business), a bank that's ready to loan directly to businesses and local governments.

I have no doubt that the financial services industry will get their house in order eventually. But forming a national lending institution may be the only way to keep people working in the short term, until that can happen.

Then Tuesday, as if on cue, I heard this report on APM Marketplace, about a statement from Federal Reserve Chairman Ben Bernanke:

Today [Tuesday 1/13], Fed Chairman Ben Bernanke gave a speech at the London School of Economics. He said Obama's stimulus plan will give a "significant boost" to the economy. But it won't be enough. He wants the government to give banks -- brace yourself -- more money, and to help homeowners in trouble.

Bernanke also brought us back to the toxic assets burning a hole in bank balance sheets. For that problem, he thinks we should create "bad banks."

Financial firms could sell their dodgy securities to the government's bad banks. They'd be paid with a combination of shares in the bad banks and cash.

Not exactly the same thing as nationalization of the banks I conjectured in my Monday comment, but we're inching closer...

George W. Bush is interviewed today by ABC News' Charlie Gibson.  In the interview, he reflects on his decision to stay the course in Iraq:

"I listened to a lot of voices, but ultimately, I listened to this voice: I'm not going to let your son die in vain," he said. "I believe we can win. I'm going to do what it takes to win in Iraq."

In business, this is known as "throwing good money after bad."  In other words, to spend more and more money (or in this case American lives) on something that will never be successful.

Our president holds an MBA from Harvard.  This education should have exposed him to the fallacy of throwing good money after bad.  George W. Bush should have known better.  Perhaps he wasn't paying attention in class that day.

One might think that the tragic cost of the War in Iraq makes it even more important to stay the course and ensure that we win, instead of "cut and run."  In other words, it's fine to cut your losses when you're down $200 at a casino in Vegas, but to do so in a war dishonors the service of the fallen.

I would say, however, that the gravity of losing American lives in pursuit of folly doesn't make it more important to sacrifice more troops -- it makes it more important to stop.

Today's news is that Ayman al-Zawahri, the number two guy in Al-Qaida, posted a message insulting Barack Obama.  It seems Bush is old hat to them, and they're wasting no time antagonizing the new guy.

Al-Qaida has nothing to do with Islam or religion at all -- it's a political group. They gather followers and their leaders like to have followers.

But with followers like the ones they have, who respect nothing but strength, the leaders have to show strength and guts. Who better to antagonize than the wealthiest, most powerful nation on earth? The followers are sure to be impressed by their leaders if they have the guts to do that.

We in America see Al-Qaida from an egotistical point of view. If they're attacking us, they must hate us, right? WRONG. It's only because we're the biggest kid on the block. The leaders of Al-Qaida need to challenge America so they can impress their own followers and retain and promote their leadership roles.

Tip O'Neill said, "all politics is local." It's not about us, it's about them.

Newsweek is now publishing a special report of some behind-the-scenes information about both campaigns, that they agreed not to report until after the election.  One of the interesting revelations was about Sarah Palin's infamous clothing expenses:

Palin's shopping spree at high-end department stores was more extensive than previously reported. While publicly supporting Palin, McCain's top advisers privately fumed at what they regarded as her outrageous profligacy. One senior aide said that Nicolle Wallace had told Palin to buy three suits for the convention and hire a stylist. But instead, the vice presidential nominee began buying for herself and her family—clothes and accessories from top stores such as Saks Fifth Avenue and Neiman Marcus. According to two knowledgeable sources, a vast majority of the clothes were bought by a wealthy donor, who was shocked when he got the bill. Palin also used low-level staffers to buy some of the clothes on their credit cards. The McCain campaign found out last week when the aides sought reimbursement. One aide estimated that she spent "tens of thousands" more than the reported $150,000, and that $20,000 to $40,000 went to buy clothes for her husband. Some articles of clothing have apparently been lost. An angry aide characterized the shopping spree as "Wasilla hillbillies looting Neiman Marcus from coast to coast," and said the truth will eventually come out when the Republican Party audits its books.

One wonders if the garments she "lost" will turn up coincidentally in Palin's closet back in Wasilla.

The RNC shouldn't be surprised.  Sarah Palin is a "maverick" whose political career has been characterized by a supreme sense of entitlement, and a pattern of exploiting her allies and then discarding them.  Some people are casting Sarah Palin as the next generation of Republican leadership, but I don't see her chances as good.  She is self-serving, egotistical, greedy, and faithless.  No one will join the team to support the ambitions of such a person, unless they're just as much motivated by personal gain.

In fact, Sarah Palin truly represents the opposite of the spirit of service and sacrifice that Barack Obama speaks of.  In contrast with Obama's "Yes We Can," Sarah Palin's slogan could be, "Charge It!"

I've been using computer discussion boards for about 30 years.  It's very frustrating having to cope with people who are rude, antagonistic, or worst of all, prolific. 

The people who are the most rude honestly don't think they're doing anything wrong.  This makes sense; if they understood how obnoxious they are, they wouldn't do it.

I administer a Yahoo! Group for networking between former employees of a tech company where I used to work.  Many "alumni" joined for networking purposes, to trade job hunting tips, and so on.  We had a situation where two individuals engaged in public dueling, mostly over political issues.  Other members started unsubscribing as the discussion got nasty and personal.  Who wants their email inbox full of someone else's feud?

Since I had created the Yahoo! Group, I felt I had the responsibility to do something.  I asked both offenders to refrain from personal attacks, but they both insisted the other had started the flames, and they both felt justified (or even obliged) to "return fire."  So I invoked moderator's controls, reviewing each of the offenders' messages before they were sent to the full distribution.  To remain fair, I did this with both offenders, not just the one with whose politics I disagreed. 

Ironically, after being told they were now being moderated, the offenders became offended and quit the group, and we haven't had any more problems.

I've come up with a few personal rules for communicating on discussion boards.  I'd like to offer them in case they're useful.

1. Respond to the content, not the delivery.  Text words in a forum posting don't carry any of the non-verbal communication we rely on, so it's easy to misinterpret the intent of the message.  All we have is the words.
2. Don't tell someone else what they feel.  You can't infer that from text, and people really react poorly to being psychoanalyzed.  Also don't put words in people's mouths. For example: "If you feel ABC, you must also think XYZ!"
3. Don't tell someone their feelings are wrong.  Feelings are always true.  They may be based on false information, but nevertheless it is true that the person feels the way they do.  For example: "I'm scared because that candidate is Muslim!"  Even if it's false that the candidate is Muslim (not that there's anything wrong with that), it's still true that the speaker feels scared.
4. Don't respond to any perceived "attack" against you.  Responding starts a debate that will never finish, and honestly, no one wants to hear it anyway.  It's tempting to say, "I have to defend myself, it's a point of honor!" but you don't have to.  Really.  If you do defend yourself, keep it about you, not about them.  For example:  "I didn't say that," is better than, "well you said blah blah blah."
5. Be quick to apologize.  Retract your own statements that others may have been interpreted as offensive or out of line (regardless of your intent).  Nothing defuses an antagonistic exchange more quickly than a sincere apology.

These are my general guidelines, for what they're worth.  I don't always follow them flawlessly myself, but when I get into heated discussions, I look back at these guidelines and at least I understand what probably went wrong.  :-)

Republican Vice President candidate Sarah Palin has been interviewed a few times lately, and each time she reveals her own ignorance and complete lack of anything to offer in the realm of public policy.  One blog observed that her responses to interview questions consist mostly of rewording the question asked of her, frequently showing no glimmer of understanding of the issues, or any vision for how to address them.

This has prompted several people to compare her to George H. W. Bush's Vice President 1988-1992, Dan Quayle.  Quayle was known for extraordinary gift for circular rhetoric, although the assumption is that it was inadvertent.  He delivered his speeches with conviction, but Quayle's statements were frequently without substance.

Sarah Palin may have the ambition to achieve what Dan Quayle did.  But she's out of her league.  For old times' sake, consider some of the gems that Dan Quayle gave us.

• "My friends, no matter how rough the road may be, we can and we will never surrender to what is right."
• "The question is: Are we going to go forward to tomorrow, or past to the back?"
• "I have been asked who caused the riots and the killing in LA, my answer has been direct & simple: Who is to blame for the riots? The rioters are to blame. Who is to blame for the killings? The killers are to blame."
• "The future will be better tomorrow."
• "We should develop anti-satellite weapons because we could not have prevailed without them in 'Red Storm Rising'."
• "One word sums up probably the responsibility of any Governor, and that one word is 'to be prepared'."
• "We're going to have the best educated American people in the world."
• "Hawaii has always been a very pivotal role in the Pacific. It is in the Pacific. It is a part of the United States that is an island that is right here."
• "What a waste it is to lose one's mind. Or not to have a mind is being very wasteful. How true that is."
• "We are on an irreversible trend towards more freedom and democracy - but that could change."
• "For NASA, space is still a high priority."
• "We are ready for any unforeseen event that may or may not occur."
• "I have made good judgments in the past.  I have made good judgments in the future."
• "Quite frankly, teachers are the only profession that teach our children."
• "I stand by all my misstatements."