Congress: An Idiocracy, A Theocracy, But not a Democracy

This is Congress.  Faith leads to higher certitude than knowledge. [I had a Jesuit Education.]

This does not mean they are more right.  Only that they are more sure.

This is Congress.

On one side, people believe that if you cut taxes for the rich, the money will trickle down and the economy will trickle up.

Trickle down economics is a myth.

The other side believes that if you raise taxes and spend money, you will stimulate the economy.  You will create jobs.  As one pundit said, “No country ever taxed its way to prosperity.

Now, both sides have experts.  Economists.  Well, back in my youth someone said, “He knows the price of everything but the value of nothing.”  We can move in that direction.  However, can we say, “He knows everything but understands nothing”?  Well, not quite.  It is simply a matter of the interpretation of the truth.

As Jack Nicholson said to Diane Keaton in the movie, Something’s Gotta Give.  “I always told you some version of the truth.”

Thus, it is with Economists.

Here goes.

One Economist works for a company that sells red paint. He says, "If you want to improve your business, paint the walls red."

Another Economist works for a company that sells blue paint. He says, "If you want to improve your business, paint the walls blue."

That much may be obvious. The difficulty arises when they cite the statistics.

The Red Paint Economist says, "Our study shows that red paint motivates employees. They produce more widgets. Your productivity will go up."

The Blue Paint Economist says, "Our study shows that blue paint creates a more serene atmosphere. Your employees will make fewer mistakes and the quality of your widgets will go up."

What each side does not tell you is this:

With red paint, the employees work faster, make more errors, and reduce the quality of the output.

With blue paint, the employees make fewer mistakes and produce higher quality widgets, but make fewer widgets and productivity goes down.

However, they are experts; and we listen to them.

The following aspects of Economics must be taken into consideration.

Economic Stimulus.

Economic Stimulus works.  The issue is where do you stimulate the economy?

Now to explain. For this, we will need to create that all-important metaphor. In addition, I should like to apologise in advance for the one snarky remark I will make about a former President. (One must compare apples to apples.)

For the purposes of this lesson, we will assume that Joy, brown-bags it every day except Friday. On Friday, she takes 10 hard-earned dollars and goes to Whoopi's Sandwich Store for a baloney sandwich.

Now Elisabeth is out of work. However, Jimmy Carter feels her pain. Therefore, he taxes Joy $10 and gives it to Elisabeth so she can buy a baloney sandwich. Joy is not happy. She's being ripped off. Elisabeth is no better off because she still does not have a job. Now, what about Whoopi? She is no better off because she is still selling one baloney sandwich a week.

In response to critics, Jimmy decides to tax Whoopi $10 to train Elisabeth how to make baloney sandwiches. After getting her certificate, she goes to Whoopi's store looking for a job. However, Whoopi tells her, "Sorry, Friday is my last day. Jimmy Carter taxed me out of business."

Now, President Obama comes along and says, "That is not how to do it. I am going to have the SBA lend Elisabeth the money to go into her own business."

Elisabeth opens up a soda store next door to Whoopi's Sandwich Store.

Back to Joy. Aptly named because her tax cut allows her to go back to Whoopi's store and buy a baloney sandwich; and she goes next door to buy a soda.

Elisabeth is happy because she's making money, so she treats herself to a baloney sandwich.

Whoopi is thrilled because she doubled her sales volume and revenue. In fact, she is doing so well; she hires Sherri to help make sandwiches. (Whoopi trains Sherri, as it should be in business.)

Sherri is happy because she has a job, and, please forgive my little joke, her compensation package includes a free lunch. However, no beverage. Therefore, Sherri goes next door to Elisabeth's soda store to buy a soda. Well, with all this soda being sold, Elisabeth hires Barbara to work in her soda store. Now Barbara is thrilled because she has a job.

Back to the Oval Office:

The President's Economic Advisor comes in.

"You wanted to see me, Sir?"

"Yes, I have some money for you. It is part of Sherri and Barbara's benefits payments. They are out of work. I want you to send the money to Sherry and Barbara."

However, the advisor says to the President, "But Mr. President, Sherri and Barbara don't need that money anymore. They have jobs."

"That's great," the President says. "The government is saving money."

The advisor continues. "It's better than that. Since they are working, they are paying income taxes. So, I have some money to give to you from Sherri and Barbara."

"Wow", the President says. "I save money because Sherri and Barbara are working, and I bring in money because they are paying taxes. This stimulus package is great."

This is how economic stimulus works. It takes a little time, but this is how the economic stimulus works.

Government Borrowing

Wolf Blitzer wants to buy a new suit.  This, he figures, will attract more viewers [customers].  He borrows the money from John King—a CNN colleague.

Mr. Blitzer’s ratings [revenue] go up.  He repays Mr. King.

Mr. King, seeing Mr. Blitzer’s success, uses the profits from his lending venture to buy a new suit.  His ratings [customers] go up.

Upstairs, Mr. Turner is looking over the balance sheets.  He sees this uptick in [revenue].  He asks his accountant what happened.  His accountant tells him.  Mr. Turner gets an idea.  He issues a memo to his on air people.

CNN will make low interest loans to those who want to go out and buy a new outfit to wear on the air.

Ratings go up.  Revenue goes up.  Mr. Turner issues another memo.

Up until now, in the cafeteria, employees could buy a meal [breakfast, lunch, or dinner] for $10.  Due to the increased revenue, we are going to charge you [tax you] only $5.

As a result, the employees have more money to spend.  John King buys a new tie.  Gloria Borger buys a new scarf.  Candy Crowley buys a necklace.  Don Lemon buys a new shirt.

This upgrade in the “metaphorical image” generates more viewers [customers].  Revenues go up.  Salaries are increased.  All is well in CNNtopia.

However, what if all were not so enlightened.

What if Wolf Blitzer had borrowed the money from Bret Baier?

Well, Mr. Blitzer would still have a new suit.  However, the profits would have gone to Mr. Baier who would have used his profits to buy a new suit.  Mr. King, not having the profits from his loan to Mr. Blitzer, would have had to go to Shepard Smith for a loan to buy his new suit.

Now, Bret Baier and Shepard Smith could use their profits to invest in a business partnership to lend money to fellow Fox News Anchors.  They would have a spiffed up image and more viewers [customers] generating more revenue.

Back to CNN.

With Mr. Blitzer and Mr. King having to pay interest on the loans to people at Fox, they have to cut back on expenditures.  Now, instead of buying lunch or dinner in the cafeteria, they brown-bag it.  Revenues in the cafeteria fall.  CNN issues a memo.  Due to lost revenues, the cafeteria will have to raise prices [taxes] on lunches and dinners.  This affects the other employees.  No shirts, no scarves, no ties, no necklaces, declining image, lost customers, decreased revenues—CNNistant.

What is the crucial difference between CNNtopia and CNNistan?  That is the difference between solving the US economic crisis and not solving the US economic crisis.

The Multiplier Effect

Next, we have the Multiplier Effect.  While trickle down economics is a myth, the multiplier effect can be seen as counting the dollars in our economy.  This is an illustration.

This does not lend itself to a blog posting.  Thus, a brief PowerPoint presentation is available.  Real Brief.  Look and click to the next of several slides.

http://www.slideshare.net/slimfairview/the-multiplier-effect-4962273

I will not use the word dishonest.  Our Congressional Leaders truly believe what they are saying.  Then, when the mounting debt is still there in the morning, they say, “I thought so.”

Regards,

Slim

PS.  I am no Paul Harvey; however, I will entertain job offers as a paid blogger or commentator.

slimfairview@yahoo.com

Regards,

Slim

Copyright © 2011 Slim Fairview

America Fails to Succeed or Succeeds to Fail?

Succeed to Fail

Did we really fail to succeed?  Or, did we succeed to fail?

Let me give you an example of what I am talking about.  Rather than a metaphor, I will use an analogy.  

About 40 years ago, my College Professor gave me a hot tip.  It was not a stock tip.  It was not a tip on a fast horse.  I don’t gamble.  It was a tip on a great wine.

I went to the wine shop to buy the wine.  Approximately $3. a bottle,  or, $3. The Bottle if you read one of the posh glossies,  10% off on the case.  I bought a case.

I used to smoke cigars. $2.50 in the cigar store, $1.75 if I bought a box from a supplier.  Rough average, $2. a piece.

Then Ronald Reagan became President.

Now, I considered Ronald Reagan a President of Mythic Proportions.  He single-handedly tore down the Berlin Wall.  But, I digress.

One pundit wrote that Ronald Reagan created too many poor people.  That begs the question, “How many poor people did that writer consider to be enough poor people?”  I, however, think Ronald Reagan’s biggest sin was that he created too many rich people.  It did not take him long.

It wasn’t long before the Cigar Bar Craze.  It wasn’t long before the French Wine Fad.  It didn’t take long.  Soon, people were paying 22 dollars for a 2 dollar cigar and 25 dollars for a 5 dollar glass of wine.

Another observation was made in the media.  It was a lament for a time when the Bank President and the Grocery Clerk (his words, not mine) lived in the same town.  That, for me, was not a long time ago.  That was where I lived while that writer lamented a bygone era.

What does all this have to do with our Economic Failures?  What does this have to do with our Diplomatic Failures?

Simple enough to explain.

Read the newspapers.  Read where those who know (what they know, I don’t know), criticise China for their policies—foreign and domestic—political and economic. 

Read how they deride China for working for the best interests of China.

Pundits are attempting to blame our problems on China.  This reminds me of something my wife said to me during a conversation.  I can’t remember the problem, but my wife accused me of blaming her.

“I’m not blaming you, I’m blaming myself.” I said.

“No, you’re not,” my wife said.  “You’re blaming me.  You’re just taking the responsibility.”

Back to wine bars and cigars.

When a country like China invests in the U.S., they enjoy one of two benefits.

1.  They reinvest the profits in another U.S. venture.

2.  They bring their profits home and invest in China.

When we make a profit, we invest in loud noises, bright colours, and shiny things.

The newly minted rich spending 22 dollars for a 2-dollar cigar.  Spending 25 dollars for a 5-dollar glass of wine. 

Of course, they have the retort.

“Can you afford a 22 dollar cigar, Slim?”

“No.”

“Can you afford a 25 dollar glass of wine, Slim?”

“No.”

However, I have the proper rebuff.

“Neither can you.” 

By their economics, a 22-dollar cigar would cost about 50 dollars.  A 25-dollar glass of wine would cost about 50 dollars.

The Bank President no longer lives in the same town as the Grocery Clerk.  There are no McMansions in my town.

How did we succeed to fail? In two words?  Frusen Glädjé.

Well, actually, there were two main reasons.

1.  Conspicuous Consumption

2.  Disposable Stuff

When I was a youngster, my parents had an ice-cream scoop.  My sister has that scoop now—over 50 years later.  Good as new.

The old canard, no one is going to buy more scoops if the old scoops last 50 years, left us with disposable scoops.  You won’t miss the dollar you spend on the scoop.  When it breaks, 3 or 6 months later, you won’t care.  It’s only a dollar.

The other problem is Conspicuous Consumption.

As a nation, we think nothing of it when someone spends $300 on a pair of sneakers or $600 on a blazer.  We are not concerned that the sneakers were made in a Third World country by a child making 3 cents an hour.  Nor do we care that that blazer was made in a country by a child earning 25 cents a day.

We rationalise that the child needs that $1.75 a week so his family can buy food.

Of course, the problem isn’t a $300 pair of sneakers, if the sneakers were worth $300.  The $600 blazer wouldn’t be the problem if the blazer were worth $600.  However, we are right back to wine bars and cigars.

It was a few short decades ago that the members of the ILGWU (International Ladies Garment Worker’s Union) ran a commercial with the song: “Look for the union label, whenever you buy http://www.youtube.com/watch?v=QO7VUklDlQw

The rebuff was that buying products made in America would cost more.  I am supposed to believe that the $600 blazer would cost too much for someone who buys a $600 blazer.  I don’t. 
Figures don’t lie but liars figure.  I don’t need to see figures on the cost of producing that unaffordable blazer.  Or, for that matter, how much the unaffordable sneakers would cost if they were made in America.

Figures on the Auto Industry are even more confusing.  Direct employment, lost wages, negative percents.  You Google it. 

In the past several decades, we lost many industry jobs.  We are getting many of these jobs back.  What we lost in the interim was the benefits of the multiplier effect. [Trickle down economics is a myth.  The multiplier effect is a counting of the number of dollars being spent in America.]

Here are two essentials.

The Multiplier Effect

http://www.slideshare.net/slimfairview/the-multiplier-effect-4962273

Economic Stimulus

http://slimviews.blogspot.com/2011/06/economic-stimulus-by-metaphor.html

Each is essential to understand a healthy economy.  Why an economy is healthy.

To explain why things go wrong with the way we invest our money, I will copy-paste the monograph here rather than send you to another site.

Wolf Blitzer Buys a New Suit


For those who still have no grasp on how to fix the economy, another metaphor.

Wolf Blitzer wants to buy a new suit.  This, he figures, will attract more viewers [customers].  He borrows the money from John King—a CNN colleague.

Mr. Blitzer’s ratings [revenue] go up.  He repays Mr. King.


Mr. King, seeing Mr. Blitzer’s success, uses the profits from his lending venture to buy a new suit.  His ratings [customers] go up.

Upstairs, Mr. Turner is looking over the balance sheets.  He sees this uptick in [revenue].  He asks his accountant what happened.  His accountant tells him.  Mr. Turner gets an idea.  He issues a memo to his on air people.

CNN will make low interest loans to those who want to go out and buy a new outfit to wear on the air.

Ratings go up.  Revenue goes up.  Mr. Turner issues another memo.

Up until now, employees could buy a meal in the cafeteria [breakfast, lunch, or dinner] for $10.  Due to the increased revenue, we are going to charge you [tax you] only $5.

As a result, the employees have more money to spend.  

John King buys a new tie.  

Gloria Borger buys a new scarf.  

Candy Crowley buys a necklace. 

Don Lemon buys a new shirt.

This upgrade in the “metaphorical image” generates more viewers [customers].  Revenues go up.  Salaries are increased.  All is well in CNNtopia.
 
However, what if all were not so enlightened.

What if Wolf Blitzer had borrowed the money for his new suit from Bret Baier?

Well, Mr. Blitzer would still have a new suit.  However, the profits would have gone to Mr. Baier who would have used his profits to buy a new suit.  

Mr. King, not having the profits from his loan to Mr. Blitzer, would have had to go to Shepard Smith for a loan to buy his new suit.

Now, Bret Baier and Shepard Smith could use their profits to invest in a business partnership to lend money to fellow Fox News Anchors.  

They would have a spiffed up image and more viewers [customers] generating more revenue.

Back to CNN.

With Mr. Blitzer and Mr. King having to pay interest on the loans to people at Fox, they have to cut back on expenditures.  

Now, instead of buying lunch or dinner in the cafeteria, they brown-bag it.  

Revenues in the cafeteria fall.  

CNN issues a memo.  

Due to lost revenues, the cafeteria will have to raise prices [taxes] on lunches and dinners.  

This affects the other employees.  No shirts, no scarves, no ties, no necklaces, declining image, lost customers, decreased revenues—CNNistant.

What is the crucial difference between CNNtopia and CNNistan?  

That is the difference between solving the US economic crisis and not solving the US economic crisis.

Now, on to Economic Experts.

In another monograph, I referred to selling blue paint.   I chose blue because blue is my favourite colour.  However, as Freud said, “Sometimes a cigar is just a cigar.”
 
However, there is an opportunity to create a metaphor as well.


You watch CNN.  You watch as experts explain the economy.

One economist works for a company that makes red paint.  He says, “If you want to sell more widgets, paint the walls of your company red.”

Another economist works for a company that makes blue paint.  He says, “If you want to sell more widgets, paint the walls of your company blue.”

Well, the bias is obvious.  Less so, the supporting facts.

Red:  “We have a study that says employees in companies with red walls are more pumped up and make more widgets—increased productivity.

Blue:  We have a study that says employees in companies with blue walls are more serene and make fewer mistakes—higher quality.

What both sides don’t say:

Employees in companies with red walls make more widgets but make more mistakes resulting in many widgets rejected for poor quality.

Employees in companies with blue walls make higher quality widgets with fewer mistakes, but make fewer widgets which results in lower productivity.

You can say both the Red Economist and The Blue Economist told the truth, half the truth, or half a lie [by omission].

Both sides misled the customers of the benefits of the paint they sell.

How do you fix an economy?

Here is another easy to understand monographs on the topic. 

Will this help you fix the economy?  Well, is fixing the economy your job?  

What it will do is protect you from the politicians trying to sell you paint you don’t need to fix a problem that can’t be fixed with a can of paint.


Will $1 Billion Dollars create 7,000 jobs?  Yes and No.

http://slimviews.blogspot.com/2011/07/will-1-billion-create-7000-jobs-yes-and.html


The Politicians are shifting blame by accepting responsibility.  We are destroying our nation with a disposable mentality and with conspicuous consumption.  [Also, we are hurting the environment and our health.]


However, now you have a better picture of what has happened, what is happening, and what will happen.  In addition:  I don't sell paint.



Regards,


Slim

PS.  I am not Paul Harvey.  However, I am open to becoming a commentator, columnist, or paid blogger.

If you’ve found anything I said to be helpful, please don’t hesitate to send me one of those tricked-out laptops and to tuck a few dollars into the envelope along with the thank you note.
Sincerest regards, 

Slim

slimfairview@yahoo.com


Copyright © 2011 Slim Fairview

We Can Fix the Economy. This is why we don't.

Am I an optimist?  Usually.  However, when it comes to fixing the economy, the fact that I keep beating a dead horse is more in indicator of my willingness to embrace hopelessness.


The metaphor I created for experts in economics involves this:

One economist works for a company that sells red paint. He says, "If you want to improve your business, paint the walls red."

Another economist works for a company that sells blue paint. He says, "If you want to improve your business, paint the walls blue."

That much may be obvious. The difficulty arises when they cite the statistics.

The Red Paint economist says, "Our study shows that red paint motivates employees. They produce more widgets. Your productivity will go up."

The Blue Paint economist says, "Our study shows that blue paint creates a greater sense of well-being. Your employees will make fewer mistakes and the quality of your widgets will go up."

What each side does not tell you, is that with red paint, the employees work faster, make more errors, and reduce the quality of the output; and, is that with blue paint, the employees make fewer mistakes and produce higher quality widgets, but make fewer widgets and reduce the quantity of the output.

To further the explanation, as most people don't understand economics, I posted several monographs, using metaphors, to explain the concepts.

1. A Primer in Economics.

2. The Multiplier Effect.

3. Economic Stimulus

4. How to fix the economy.

5. Another monograph on the economy

The Several Monographs on Economics will help non-economist visualise what happens in the economy.

http://slimviews.blogspot.com/2011/07/understanding-economics-introduction-by.html

Regards,

Slim

PS.  I am not Paul Harvey.  However, I am open to becoming a commentator, columnist, or paid blogger.

If you’ve found anything I said to be helpful, please don’t hesitate to send me one of those tricked-out laptops and to tuck a few dollars into the envelope along with the thank you note.

Sincerest regards,

Slim

slimfairview@yahoo.com

Copyright © 2011 Slim Fairview

The EuroVisioning Process: Shared Visions or Divisions

As I've been following the EuroCrats, a few questions have come to mind.

Is there no SOP?

Is there no metaphorical algorithm?


There are cause and effect relationships in economics.

There seems to be one of two possibilities.


That actions in one country (or agency, e.g. The EuroBank) will have an effect on another country's economy, those actions will either hurt or help the other country's economy.


If such actions are helpful, they should be taken.

If such actions are not helpful, then this EuroTopian vision won't work because the policies to benefit two countries are mutually exclusive.

Does no one have a pencil and a piece of paper?


Regards,

Slim


slimfairview@yahoo.com 


Copyright (c) 2011  Slim Fairview