The Skeptical Optimist

Easy National Debt Quiz for the Candidates: Part 1 of 2

Here's an easy question for the next presidential debates, if only we could get somebody to ask it.  It's the first of two simple questions about the national debt; it's a question about today's circumstance.  (The second simple question will be coming soon; it will be a question about how the national debt situation might change in the future, both near term and longer term.) 

The question is simple enough, and it's intended especially for politicians fond of pointing only to the big, scary debt number of $9 trillion, while mysteriously avoiding any mention of the big, encouraging GDP number of $14 trillion.  When they talk only about a single debt number ($9 trillion), out of context, it's single-entry accounting—but that became obsolete several centuries ago.  It's time we introduced our politicians to double-entry accounting, don't you think?    

I do.  That's the reason for this two part quiz.  After seeing what kind of response this one brings in, I'll post the part two question (...the one about the future). 

Economics on the geological time scale, to scale

I was brushing up on the geological time scale two days ago, and didn't find much on the web that placed the various eons, epochs, and eras on a timeline that was to scale.  I'd like to say my goal was to place the history of economics on that backdrop, because that would make this exercise sound more relevant to this blog; unfortunately, it had almost nothing to do with economics, so I can't say that. 

Truth is, I was in the middle of a book that was talking about various periods like the Cambrian, Permian, Cretaceous, etc., and was wondering where they fell, relatively, on the number line going all the way back to earth's birthday.  One of the better timescales I found on the web was the color-coded pdf at this link; it's pretty, but definitely not to scale, and I still wanted to imagine things in the proper perspective.  So I decided to generate a to-scale timeline myself.  What a pain... but I did manage to find an excuse for calling it an economics history chart.  Finding economics on the geological timescale is like playing Where's Waldo; see if you can spot it. 

Click to enlarge.

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I'll get back to economics with the next article.  This took more time than expected, but at least I've got a better picture of the epochs in my head now. 

Honing the class warfare message: First draft, final draft, and possible specifics

Hillary Clinton didn't like the employment report that came out last Friday*, and used the occasion as a chance to hammer away at the class warfare message.  The final draft—the end result of the message-honing process—is the only thing we usually get to see.  But I thought it would be enlightening to contrast that with the first draft of the message.  The comparison is instructive for anyone interested in how an effective political message comes together. 

First draft of the class warfare message:

The demons in the other party have totally ruined the economy and completely ignored the middle class.  I am not a demon; I will think about the middle class a lot—probably every day.  So, if you are middle class, you should award me with the presidency. 

Contrast that with the following final draft:

For seven long years, the economic hardships facing hardworking middle class families have been invisible to this administration. But the job struggles of these families aren’t invisible to me, and when we take back the White House, they will no longer be invisible to the President of the United States. 

The complete press release in its final form is at this link; it's brief, so be sure to read it, to see her several specific grievances against the incumbent demons' economic results.

Further musing
As is usually the case with political rhetoric, her message was long on what's wrong with the opposition, and short on what the candidate in question would do differently.  So I decided to speculate on how Hillary would specifically prevent or fix each of the grievances she spelled out.  Below is my first draft .

Specific solutions to the problems created by the incumbent demons:

• To prevent any increase in the ranks of the uninsured, force taxpayers to fund health insurance for all illegal aliens, and for all who can now afford it but choose not to pay for it.

• To prevent anyone else from falling into poverty, triple the minimum wage, make layoffs and firings illegal, and subsidize any business in danger of failing so that its "stakeholders" (employees) never lose their jobs unwillingly. 

• To prevent household incomes from falling, establish a minimum income below which the government and its taxpayers will not allow any household to drop. 

• To prevent an increase in the national debt, steadfastly veto any increase in the statutory debt limit, and force the budget into balance each year via tax increases.

• To prevent future crises in the housing market, make mortgage loans illegal for low income families who don't meet federal guidelines on personal solvency.

• To reduce the yawning gap between most Americans versus the richest, prevent anyone else from getting rich (...starting with those people trying to invent a super battery that would obsolete the internal combustion engine). 

Again, that's just a first draft, which I'm sure could be honed into a message that sounds better to the ear.  And I'm sure I left a few other possible solutions off the list, so feel free to add your suggestions.

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* see my take on Friday's employment report in the article immediately below this one.

Employment, Aug ’07 vs Year Ago: Still looking good

If Friday’s panicky 2% drop in the stock market was a reaction to the latest employment report from the Bureau of Labor Statistics, it was an overreaction. 

Why so much fuss over a one-month change that's likely to be revised significantly in the coming months?  I don't get it.  The first Friday of each month seems to be, more often than not, the market’s overreaction to a highly uncertain monthly change in the employment numbers; last Friday could be a good example of that.

Before posting my usual monthly charts of the 12-month change in employment, I’d like to post an important passage from Barron’s editor Gene Epstein’s book (Econospinning: How to Read Between the Lines when the Media Manipulate the Numbers). This is the passage that explains why I originally chose the 12-month change, not the 1-month change, for the chart:

The change in payroll employment could be, in principle, reported hourly, daily, weekly, monthly, quarterly, annually, or decennially.  It was decided many decades ago to release monthly updates.  But just because that decision was made doesn’t mean it was prudent...

The BLS should announce that each newly minted monthly figure and prior-month revisions will henceforth be treated as though they add one-twelfth to our knowledge.  A dozen of these out-of-focus snapshots must be laid side by side before we can discern what might be going on.  So it would continue to release its monthly report, but the headline figure would be the 12-month change.

Okay, here’s the chart of the 12-month change, below.  I see almost nothing but good news.  If you spot anything alarming enough in it to justify a 2% market drop in a single day, please explain it in a comment. Click to enlarge:

And here are the numbers behind the chart:

And here’s the change in government jobs:

FQ.07.36: Favorite Quote for This Week

The moment a person forms a theory, his imagination sees in every object only the traits which favor that theory.
—Thomas Jefferson

Why not just drop the AMT, and forget how to "pay for it"?

The Alternative Minimum Tax was designed decades ago to prevent a handful of rich people from getting away with zero taxes.  Congress unsurprisingly "forgot" to index it for inflation; as a result, millions of today's non-rich people are getting unfairly snagged by the AMT. 

The tax code's complexity, even back in the '70s, had created loopholes permitting those few rich people to get away with zero taxes.  The solution, as usual, was to make the tax code just a little more complex, instead of simplifying the tax code to eliminate the loopholes.  Politicians haven't changed much, in other words. 

The question everybody is asking today:

"When we eliminate the unfair AMT, how should we pay for it?" 

That's the question Charlie Rangel and Jim McCrery (both Congressmen on the Ways and Means Committee) kept getting on Larry Kudlow's show yesterday.  Think about it: If we dropped the AMT, how would you "pay for it"?

Sorry, that was a trick question.  The key question—the one nobody is asking—is this:

Who cares whether we "pay for it"?  Why not just drop the AMT, PERIOD?

Just for fun, ask your friends to ponder that one over the weekend. 

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End note:

I can almost guarantee what your friends' reflex answer will be: It will contain the word "deficit" or "debt" or both.  The obvious followup question should then be, "Why, what's wrong with having a deficit?"  Before accepting any answers to that question, send them to the following links:

• The Debt Doomsday myth
• "Fiscal responsibility" defined

Who is this?

Need some technical help.  Firefox is now popping up these security screens on me frequently.  I would appreciate some advice about who this is and why it's intruding all of a sudden.  Comment or email, whichever is easier for you.  Here are two screenshots (click to enlarge). 

The global warming non-consensus

Because of articles like the one below, sent to me by an internet friend (Alan A.), I still have serious doubts about the "global warming is our fault" assertion that has gained such a vocal political following.  [Note to Houston readers: keep reading; some of your local historical trivia is at the bottom of this post.]

If there's anything even approaching a consensus, it's on the the political dimension; according to the article, the science is apparently not even garnering a majority, let alone a consensus.  I remain skeptical, because I'm a strong supporter and advocate of the scientific method—which, as Galileo and others proved, is capable of eventually revealing the truth, while withstanding tremendous resistance from politicians and priests. 

The article is titled Global Warming: Man-Made or Natural?, which I recommend reading all the way through.  Here is an excerpt that helps explain my continuing skepticism:

In identifying the burning of fossil fuels as the chief cause of warming today, many politicians and environmental activists simply appeal to a so-called “scientific consensus.” There are two things wrong with this. First, there is no such consensus: An increasing number of climate scientists are raising serious questions about the political rush to judgment on this issue. . .

The second reason not to rely on a “scientific consensus” in these matters is that this is not how science works. After all, scientific advances customarily come from a minority of scientists who challenge the majority view—or even just a single person (think of Galileo or Einstein). Science proceeds by the scientific method and draws conclusions based on evidence, not on a show of hands.

That bears repeating: Scientific truths are not determined by a show of hands.  If that were not the case, we'd never have heard of Copernicus, Galileo, Darwin, Einstein—or much of the contemporary evidence on the other side of the AGW debate, now begging for a hearing. 

The scientific jury is still out. 

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End notes:

The author of the article was S. Fred Singer.  Anyone interested in his credentials (...or, for that matter, anyone interested in finding material for an attack on him of the ad hominem or guilt-by-association variety) should start with his Wikipedia entry here. 

Commenters:  Please remember that ad hominem and guilt-by-association attacks are logical fallacies, regardless of their effectiveness in politics to dodge the issue at hand.  The best example of those tactics in my memory was a post-Watergate congressional race in Houston; here was the exchange as I heard it on the radio news:

Candidate A (a Democrat), to reporters:

My opponent looks, talks, and acts exactly like Richard Nixon.

Candidate B (a Republican), to reporters, when they told him of Candidate A's comment:

Oh jeez, he must be drunk again.

Is oil independence day within sight?

The secretive company Eestor will apparently make its new technology available to a third party for inspection soon, probably by the end of 2007.  Its new technology is the ultracapacitor, and if it lives up to its media hype, it will render today's battery technology obsolete.  That, in turn, would render the automobile's internal combustion engine obsolete. 

That's the hype, anyway.  If it turns out to be true, or even half true, and there are no show-stopping drawbacks, oil independence for North America would at last be within sight. 

There are skeptics, and rightly so.  The recent article in the Canadian Press details the promise of the new technology, a well as a few potential roadblocks.  The promise is that it will knock down one huge barrier we've been discussing here for quite a while:

...chemical researchers say the strength and functionality of this [ultracapacitor's] material is the only thing standing between EEStor and the holy grail of energy-storage technology. 

I, for one, hope this doesn't turn out to be just another cold fusion fiasco.  We should know by the end of the year, after outside experts have had a chance to see and test Eestor's ultracapacitor. 

The way I see it, there's almost nothing but upside, because if it works...
• the world won't need Middle East oil much longer;
• the world won't need Peak Oil blogs much longer (...the Stone Age didn't end because we ran out of stones, and the oil age won't end because we ran out of oil);
• the world won't need global-warming-is-our-fault blogs much longer;
• the USA won't need food-supply-reducing ethanol any longer;
• government-imposed performance mandates for new gasoline-powered cars will become irrelevant;
• the inventors and entrepreneurs will be odds-on favorites to become the world's first trillionaires, setting records for the amount of taxes they'd pay. 

On the other hand, if it doesn't work (i.e., if it turns out to be just another cold fusion fiasco), we'll at least get a few good jokes about it from Leno and Letterman. 

As I said, nothing but upside.  For North Americans, anyway. 

Look who's exporting jobs

Just a thought-provoking tidbit in the few days leading up to the latest employment numbers:  A software firm in Bangalore, India is exporting jobs to the USA.  Or maybe it's more accurate to describe it as the USA importing jobs from India.  Not sure; maybe Lou Dobbs will help us with what to call it.  Here's the story. 

Hmmm.  I hope Congress, in its infamous wisdom, doesn't slap an import tariff on jobs we import from India, as it did on ethanol we import from Brazil—both of which, in theory, are good for our economy.  [I must keep in mind, however, that Hope is Not a Strategy—as the recent bestselling book reminded us.]