Saturday, January 31, 2004
Read all about former Soviet bloc republics at Sheila Astray's Redheaded Ramblings (link from Winds of Change.NET). I did. Very interesting stuff. Leaves me wanting to learn more about the communist empire. These excerpts sound like it was, in truth, exactly 1984. Running rivers and seas empty to grow cotton in the desert, letting the locals starve by forcing them to abandon their gardens. Forcing children in the Ukraine to farm but shooting them for eating grain. Relocations. Spies. Cult personalities. Killing those with educations. Burning history books.
It sends shivers up my spine to think it ever existed.
There's a fellow engineer at my work from Czeck Republic. Makes me wonder what he lived through (pre 1989 velvet revolution).
Sunday, January 25, 2004
I've been thinking about real estate today. In my adult life I've witnessed a doubling of the price of a 3-4 bedroom split level or rambler in the outer Twin Cities metro area. I've got a number of questions:
Why are real estate expenses increasing?
Are people spending a greater percentage on their mortgage?
Are costs to government housing-assistance programs (i.e. my taxmoney) increasing?
Is there any relationship between the amount of homes alloted to be built by towns or the Met Council and the real estate trend?
Is the price of a house the result of government control of land, zoning, etc.?
Are building costs truly increasing or are inflated union wages subzidized by the government creating price increases?
Are people taking out equity mortgages to pay for things they otherwise wouldn't need a loan for because a higher % of their income is paying the mortgage?
If skyrocketing house costs are a result of community planning and metropolitan councils, the market will inevitably have to "shake out" the bad investments and crash. If, however, historical house prices were damped by government assistance in 70s (a big building boom time, especially for the aforementioned split levels), are houses just now reaching their appropriate market levels as a % of after-tax income? A third possibility strikes me after writing this: perhaps the rise in housing prices is the market's response to super-low interest rates (because it the mortgage payment that the household worries about, not so much the absolute price of the house I guess)? Probably its a combination of all three, but it'd be interesting to know if one dominates.

I tried in vain to google my way to answering these questions. I found many an article (this, for instance) speculating on whether the real estate boom was "real" or not, and all came to the conclusion that it was, and cited things like increasing household income and increased equity mortgages as signs of security. Which only served to raise above questions in my head. Household income is increasing nowhere near the rate of real estate increases. Real estate increases are not a result of nicer, more affluent housing (the very same house I grew up in, sold for $100k in 1998, now lists at over twice that amount - and its in worse condition now than then). Is mortgage-taking a sign of security in the housing market or an unavoidable result of skyrocketing mortgage payments?
The most useful thing I found was on the metropolitan council's website. Their Housing Profiles lists housing costs as a percent of household income for 2000, but neglects to specify if this is before or after tax. Further, it is limited to "below 30%" and "above 30%". I'd say this subject is hardly one of concern over at met council, if that's all the further they collect or assimilate information on it. I shot them an email asking for more information; we'll see what happens.
To that end, some basic tax information will be helpful. Federal Income Tax Rates (single filers, like me):
Income Tax
<7000 10%
7001-28400 15%
28401-68800 25%
68801-143500 27%
143501-311950 33%
>311951 35%

Minnesota State Taxes (again single people only):
<19010 5.35%
19011-62440 7.05%
>62440 7.85%
You'll note that, for a state that is awfully liberal (I mean awfully - he he), the state tax system is horrid for those making less than 19 grand, relative to the federal scale.

Social Security tax (bad ref, I know, go look at www.ssa.org. I didn't want to expose my computer to that sort of thing though, it might pick up bad habits and start deciding to take money out of my checking account and (not even) promise to give it back later at negative interest).
up to 87900, 6.2%

Same bad ref for Medicare:
No limit: 1.45%

My (approximate) property tax (therefor not representative of anything, but I couldn't find averages on the web easily, and I didn't try too hard due to waning interest):

Add all that up, then figure what % of your income is spent on housing costs. Then figure that those tax rates haven't much changed since 1996 or so, and that at most income levels have gone up 10-20% (remember we're comparing to a $100,000 increase in the price of a home).
I think I'll ask the metcouncil if they have housing costs as a percent of household income in 1996. Maybe the huge drop in interest rates has evened it all out?

[update 1-31-04: Gotten emails back from the metcouncil. They make it look like these sorts of questions are phenomonally complicated. They agree that post-tax income vs housing costs make more sense (more like any sense), but cannot do tax or deduction estimates themselves, apparently (math and multiplication are perhaps beyond this organization?), as they referred me to the "local HUD" people (no names or contact info, either) and somebody at the U of MN! These people are charged with working with the Twin Cities metro municipalities to plan and prepare for projected population growth, and they cannot accurately estimate the real cost of housing or how it might change. Nice. Perhaps "high level" thinking is reserved for the University, not those with public jobs.]
Saturday, January 24, 2004
Does the market correct itself? If all the unskilled labor positions leave for China, what happens in the US?

Demand to get into public universities in Minnesota appears to be up again this year, with officials at several schools reporting near-record numbers of applications to enter school this fall.
Reasons cited are increasing HS class sizes and a slow economy at least for unskilled workers.

So you're saying that, without government intervention at all, people actually recognize for themselves what sort of education will be required to be financially secure, even if the economy is "bad"?? Shocking!
Senator Joe Lieberman recently wrote an article in the Dec. 2003 Materials Research Society Bulletin (see www.mrs.org if you're a member). Now the article was an opinion piece, but it described the movement of semiconductor manufacturing to Asia (in particular, China) as a dire threat that must be corrected in months. Or else, presumably, democracy will fail. At any rate, I wrote him a letter in response claming a) research and development positions and fabs are not particularly closely related to full-scale manufacturing facilities (the opposite claim on which the entire article was based) and b) why is it a bad thing that semiconductor manufacturing facilities are leaving the US for China, where they're subsidized and manufacture parts for significantly less. Doesn't that mean more people in the US can afford consumer electronics? Most of the jobs lost are unskilled labor filled by foreign workers anyway.
Now, I don't actually except anyone in government to use this sort of common sense or take advantage of an "insiders" insight to the "problem," but I bring it up because someone smarter than me makes the same argument! Check it out:

On the contrary it is beneficial for first world countries. Reisman makes clear that "loss of capital" to third world countries is compensated by: (a) Lower import prices which make up for the loss of nominal wages; (b) Capital allocated where it is more productive cumulates at a higher rate in third world countries, which results in most of this capital being ploughed back into USA. This new capital invested in USA (be it "financial" or "real" assets) bids up productivity of USA labor.

Even if USA workers were not better off, USA considered as a whole (capitalists and workers) would be much better off. The gains to be derived by capitalists resulting from free movement of capital are enormous.

Now the part as to why Senator Lieberman will never, ever, listen to my argument:

What really happens (and this is what bothers "welfarists") is that migration of capital results in the erosion of the tax base. Such erosion jeopardises the welfare state. It might even happen that the less competent USA workers might actually see their purchasing power being reduced, since it may well occur that the losses of welfare benefits exceed the gains brought about by free movement of capitals.

Its simple, really. Cut taxes, cut spending. Suddenly the emmigration of semiconductor manufacturing screws China's economy to the benefit of ours. Because their government subsidizes our companies. Suckers!

[update 1-27-04] via Instapundit, yet another article sharing my viewpoints. Outsourcing of even white collar jobs is likely a benefit to the economy. Except of course, governments are quickly passing laws to prohibit outsourcing for government contracts. Because, you know, it would be silly to get the job done for the cheapest amount. Taxpayer money is all about spending it on misplaced morals. Go-tards.
Scroll past all the graphs and such and get to an excerpt of Lew Rockwell's book in this Merrill Lynch report (courtesy Mises Economics Blog). Some excerpts:

...when the central bank artifically lowers interest rates, it causes distortions in the capital-goods sector of the structure of production. When malinvestments occur, and economic downturn is necessary to wash out bad investments.

Socialism holds that the means of production should be in collective hands. This means no buying or selling of capital goods and thus no proces for them. Without prices there is no profit-and-loss test. Without accounting for profit and loss, there can be no real economy. Should a new factory be built? Under socialism, there is no way to tell. Everything becomes guesswork. ... One top socialist, Oskar Lange, conceded that prices are necessary for economic calculation, but he said that central planners could generate prices out of their own heads, watch the length of lines at stores to determine consumer demand, and provide the signals of production themselves

Why on earth would you want to do this yourself, when there is a perfectly good tool for doing so already existing and intuitive to every human since the dawn of civilization? Could it be ... power? People long for the days when they could be kings and claim divine right. From what I know of this theory's application in the USSR, the government must have concluded that there was strong demand for bread.

Austrian economists [a school of thought, not Austrians in particular] ... argue that the only real monopolies are created by the government. Markets are too competitive to allow any monopolies to be sustained

This brings to mind another article (that I probably shouldn't even bring up since I don't remember where or when I read the darn thing) that discussed the concept that governments cannot create wealth, only remove it. By offering special favors that entities desire (trade protection, subsidies, contracts) but only a select few can get, millions of entities spend trillions of dollars attempting to obtain these special favors that end up saving a select few significant less than the trillions spent by many. It is these select few that end up being government created monopolies, in some cases. It was interesting to think about, and is obviously reflected in a number economic analyses.

Now this bit is really good:
It is not necessary for consumers to know, for example, that a disease has swept the chicken population to know that they should economize on eggs. The price system, by making eggs more expensive, informs the public of the appropriate behavior

Genius! It seems to me that in our current system the price of eggs is more likely to fluctuate based on consumer perception of media-reported chicken diseases in Paraguay. Certainly flu vaccinations seem to run out every time the media creates an alarm (by reporting on nothing but the flu for 3 straight months), and yet there are never more than 10 deaths of un-vaccinated people during the flu season despite the dire predictions. The effective price of the flu vaccine skyrocketed based on media-generated panics. Not that the media alone is to blame, certainly panics can start on rumors spread normally (ever see Its a Wonderful Life?). But the above excerpt shows what could happen, minus human error, so to speak. Pretty cool.

Another example of questionable statistical technique is the index number, the prime means by which the government calculates inflation. The problem with index numbers is that they obscure relative price changes among goods and industries, and relative price changes are of prime importance. ...
And the GDP statistic is riddled with composition fallacies inherent in the Keynesian model. Government spending is considered part of aggregate demand
[I did NOT know that!!!], and no effort is made to account for the destructive costs of taxation, regulation, and redistribution. If Austrians had their way, the government would never collect another economic statistic.

The article goes on to discuss (1 paragraph each) regulation, environmentalism (whose sole purpose is to "lower the standards of living" - heh), antitrust policies, and civil rights legislation ("undermines the public's sense of fairness..."). On redistribution of wealth,

By making property and its value less secure, income transfers lessen the benefits of ownership and production [or education, hard work, and dedication], and thus lower the incentives to both

On government investments:

We hear talk of this or that "government investment." Austrians reject this term as an oxymoron [Heh]. Real investment is taken on by capitalists risking their own money in hopes of satisfying future consumer demands

So spending money that isn't yours doesn't always result in good investments? Hmmm... As I once read somewhere, why do women spend more time shopping? Because its usually not their money. Ha!

What then should policy makers do when the economy enters recession? Mostly, nothing. ... If the government wants to make the recovery process work faster ... there are some things it can do. It can cut taxes, putting more wealth into private hands to fuel the recovery process.

Is Bush a Mises economist, or is it coincidence? Now if only he'd eliminate government regulations and cut spending on public and corporate "welfare".

Tuesday, January 20, 2004
Check out this article containing references to the results of a study on grade inflation at the University of Alabama (not the main topic of the article, but more interesting I think) - attention brought from instapundit.

In fall 2002, the Alabama organization reported that some academic departments at the University of Alabama were handing out a much higher ratio of "A" grades than others. Topping the list was the women's studies department, where the percentage of "A's" averaged more than 78 percent for freshman and sophomore courses, according to the group. For the Department of Biological Sciences, the comparable percentage was 11.5 percent.

No big surprise, here. But it gets better, as someone is dumb enough to ask school administration why this might be:

Fendley also called the scholars association's handling of the data "shallow," because it didn't take other factors into account. Higher admission standards might be producing better students, Fendley said, or some teachers might be doing a better job of instruction.

You can't make this stuff up!! So evidently the higher admission standards are resulting in geniuses in women's studies and idiots in the Dept of Biological Sciences. You bet.
However, perhaps the instructors in women's studies are better teachers than those in the Dept. of Bio Sci. (That I'd believe, as many scientists are not really good at teaching.) But most scientist-students are good enough to make up for bad teaching (which is probably why they're in the Dept of Something Usefull as opossed to women's studies), so it really comes out in a wash.
Also noted in the article: the U of AL has discontinued recording grades and providing that information for studies such as this. Not because of this study mind you, but because ... well, um, funding cuts? (As an engineer, it strikes me that they're avoiding the problem, seeing as how to solve the problem you sort of want to know the facts first. Why on earth would you not want to solve this problem?)
Sunday, January 18, 2004
This has a quote from Hamas leader Mahmoud Zahar:
the march of resistance will continue until the Islamic flag is raised, not only on the minarets of Jerusalem, but over the whole universe

Thank the U.S. armed forces that Saddam no longer gives $20k to the families of these bastards. Further, why haven't we attacked and eliminated the Hamas yet? Obviously, they mean to support terror against the entire world. Do people think Hamas leaders are lying when they say these things? That they won't really do it?
So I sit here reading about tax cuts and thinking about how much money we really spend on government, and also that the reason Bush will be re-elected is national security, not backing down, and pursuing (successfully) the war on terror. Simultaneously, "Instant Karma" came on my Winamp (on shuffle) and I absentmindedly brought it up, hit the "forward" button, saw it flip to "Mama Tried" and re-minimized it, satisfied with the choice. Later I retrospectively wondered if that was a manifistation of being in the mood for country music as opposed to light rock, or was my choice of mood based on the mood of the choices of music (work hard vs. can't we all just get along?). Or do I just analyze things like a choice of music too much?
(Note: I deleted "Instant Karma" and "Happy XMas (War is Over)" from my playlist to avoid another such occurrance today.)
[Update: The Zombies just came on, and I didn't forward it, but rather enjoyed their soulfull singing of "She's Not There," suggesting that I am in the mood for light rock.]
Friday, January 16, 2004
Not that I intended to not vote for Bush, but check out what Dean says in a Newsweek interview (again courtesy Right-thinking):

After five straight questions about Iraq and the war on terrorism, Fineman asks Dean, out of nowhere, "Do you see Jesus Christ as the son of God and believe in him as the route to salvation and eternal life?"

Dean, belying his reputation for having a hot temper, gives a low-key reply: "I certainly see him as the son of God. I think whether I'm saved or not is not gonna be up to me."

Now check out what a commentator at Salon has to say:

But Fineman didn't merely ask if the Vermont doctor was religious; he phrased his question in a way to root out whether Dean subscribes to a particular kind of born-again Christianity.

What?? People pay this guy to write? Dean obviously doesn't believe in the concept that baptism brings one into God's family, and that Jesus Christ's death on the cross absolves us from sins and brings us salvation. He believes that his works (i.e. what he does in life) dictate his salvation, as opposed to Jesus dying on the cross. Contrary to the Salon idiot's claim, it is Dean's views that are consistent with particular (one might say peculiar) kinds of born-again Christianity "cults".
Weren't there Christian groups that believed in salvation by works that came to America (some of the first) to avoid persecution? Was it the puritans??
In reality, this most likely doesn't show that Dean's a puritan, but rather that he's probably never been to church, and is bringing up religion to garner votes. Does he hold nothing sacred? (Of course not, he's a liberal...) Back in the Old Testament days, God would have just smote him and been done with it.
Check this out (courtesy Right-thinking):

Sales of mobile phone ring tones, those tinny song recordings programmed into millions of cell phones around the world, jumped 40 percent in the past year to $3.5 billion, according to a study released Tuesday.

The western economy is the most powerful force in the world, generating money and new sources thereof constantly. Friggin' amazing.

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