Gas Prices Falling ahead of the Presidential Election?

So we may be in for a gasoline price plummet. Will Barrack Obama be credited? Does the president sit there at his desk and wiggle the gas price lever and watch what happens?

Republican strategists, advice for you: Blame Obama for not keeping the price of gas stable. Get on FOX and say how you would have been fine with high gas prices. Say that the real problem is market instability. Then somehow claim that the instability results from TOO MUCH government interference in a market that’s actually far too global and unregulated to impact significantly by government action.

Will Obama get an easy ride to reelection if prices do drop significantly? Perhaps. Whatever the case is, We need to double down on economics education for the general public, because the electorate seems clueless about the true complexity of economics issues.

The Economy and Education- Inextricably Tied

Hello world,

I’ve been away from blogging for a while.

Education funding is suffering mightily in the current economic downturn- as tax dollars drop, so goes education. This is not inevitable. Repeatedly, liberals have attempted to structure education funding mechanisms that were not so acutely tied to revenues. Their efforts are consistently thwarted at every level by conservatives who attempt avoid funding public schools.

The compromise that is inevitably reached in this power struggle is that school funding is inextricably tied to variable and fragile funding streams that vary with fluctuations in the economy, and variations in tax rates. Consequently, when taxes are cut, schools also suffer.

When taxes are cut in an attempt to create stimulus, during a period of economic downturn and low tax revenues, schools are hit doubly. Localities are then hit with devastating choices of loss of personnel, school closures, large classes, eliminated programs and services, and inevitably: education decline.

There are young people’s lives caught in this power struggle. Kids who need help, attention, and special services. Kids who need sports, or music, or technology to thrive; denied.

The economic downturn is wreaking havoc on education funding. There is no lesser need for high quality education during recessions. History has shown quite the opposite- that boosts to education and retraining during downturn and vital to economic recovery.

I beg our leaders to find a way. I urge conservatives to stop placing public education in the same category as expendable services.

Ed Potosnak on Innovation

Ed Potosnak has a great post on innovation over at downwithtyrrany:

http://downwithtyranny.blogspot.com/2010/03/dont-be-deceived-by-new-jersey-democrat.html

“As a technophile and science nerd I may be biased, but I believe America’s economic stability depends on how seriously we respond to the challenges presented by an increasingly technological global economy”

Read More:

http://downwithtyranny.blogspot.com/2010/03/dont-be-deceived-by-new-jersey-democrat.html

Kevin Phillips – Political and Economic Analysis from a Guy Who Keeps Being Right

I like to read books on economics. I’ve found time and again that my field, education, is inextricably tied to economic shifts and economic policy. Two books I’ve read recently deal with the details of what’s been going wrong in finance, monetary policy, fiscal policy, and government that has led to the current recession, and don’t bode well for the future of U.S. prosperity.

I highly recommend the following books: Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism

and American Theocracy: The Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century

Below are some videos where you can hear Kevin Phillips discuss some of these topics:

U.S. National Curriculum Standards – for the future of the Nation

Liquid Density

Science is science, anywhere in the Nation.

The following is a blog post from Luke Laurie’s Blog: Teacher Blog.

https://lukelaurie.wordpress.com/

In this post, I explore reasons why implementing a National Curriculum is a vital piece for future educational and economic policy. I also discuss some of the guiding principals that must be adhered to in order to make a National Curriculum functional and applicable.

Why National?

The vastly different expectations for students in each of the fifty States is archaic and parochial. The technological, scientific, and ethical challenges our nation faces are not regional, they are universal. This is not a liberal or conservative issue. This is an issue of national security.

We need to look beyond the old notions of townships community schools serving the needs of the local community. The vast majority of our students won’t be working on the family farm or taking over the mom & pop. They will be out there, in the world. They will move to where the work is. They need concrete knowledge of a complex world, and preparation for a workforce in an uncertain future.

What do we say by NOT having National Standards?

By not establishing and implementing clear national guidelines for curricula, we have tacitly accepted that what we teach our children really isn’t that important, and that States and localities are equally qualified to determine what form of education is best suited to the future of the United States of America.

By clinging tightly to the totem pole of local control, we are denying pursuit of progress that’s in everyone’s best interest. Ironically, by passing the buck to lower tiers such as school districts to develop curricula, we impose undo burdens on these resource-strapped institutions. This blessing of local control becomes a curse of endless cycles of trial and error in curriculum development in small, isolated geographic regions. Some districts have found success, only to see their work destroyed by another cycle of textbook adoptions. Others continue to find a cohesive program that works, and would welcome a functional curriculum structure. In scattered schools and districts across the U.S., we’ve invented and destroyed the metaphorical wheel, thousands of times over, and we still can’t make it roll.

A balanced approach to National Standards would take away some of the guesswork in designing instructional programs, and save the time and effort of education professionals for the more innovative and creative tasks associated with delivering instruction. How many creative educators have spent years designing units, programs, or courses, only to see them swept away by changes in policy, funding, or curriculum? A national curriculum could provide the stable foundation that educators need on which to create innovations in education.

Every day we hear policy makers and academics talk about how to improve America’s schools and the “school system.” But until we have a common framework between states, we have no real “system” to improve. That framework should begin by deciding what should be taught. What we have now is a failure to decide.

No Unified Vision on Which to Base a National Curriculum

If we are to implement a National Curriculum, we need a clear set of guidelines for what education is really for. The curriculum should fit the larger vision eduction vision, and the education vision should, in turn, fit the national vision. But foresight is not an American value, and it’s certainly not a defining property of our public policy.

The following quote comes from Clyde Prestowitz, President of the Economic Strategy Institute, who served as counselor to the Secretary of Commerce in the Reagan Administration. From his Testimony before the U.S.-China Economic and Security Review Commission from 2005:

America needs to recognize that many of the assumptions guiding its economic policy are at odds with the realities of today’s global economy. Its performance in a broad range of areas—including saving, education, energy and water conservation, critical infrastructure, R&D investment, and workforce upskilling—is far below the standard of many other nations. America needs to understand that its refusal to have a broad competitiveness policy is, in fact, a policy. And it gives leading U.S. CEOs no choice but to play into the strategies of other countries. This policy, according to its proponents, leaves decisions to the unseen hand of the market. Actually, however, it leaves them to the highly visible hands of lobbyists and foreign policymakers. It is a policy that ultimately leads to impoverishment.

In other words, our failure to modernize education and to make an effective tool in encouraging scientific and technical innovations, and to create a capable and appropriate workforce leaves U.S. industries and finances in a reactive position. In the immortal words of Rush (the band, with lyrics by Neil Peart, not the talk-radio windbag) “If you choose not to decide, you still have made a choice.”

I don’t typically chime in on the scare tactics of xenophobia, but in this realm, the U.S. is completely vulnerable to the whims and intentions of other, more deliberate nations. There’s no invisible hand in China. Nor should we trust the invisible hand to fix our most valuable institutions.We don’t need to fear China and other rising economic powers, we should fear ourselves for the lack of backbone, commitment, and foresight to lead us to create national policies that will enable the U.S. to survive and thrive in the future. 90% of Americans attend public school for a large portion of their lives. There is no other institution so clearly capable of shaping the future of the nation.

A National Curriculum must be based on a national vision for public schools. Agreeing on such a vision has been avoided by policy makers throughout the history of public schools, because of the existence of so many differing viewpoints on the matter, and the acknowledgement that we have designated schools as the catch-all social institution. Schools are tasked not only with academic education, but are also responsible for health and well-being, drug, alcohol, and disease prevention, and fostering cultural changes; i.e. tolerance education, sexual harassment prevention, and dealing with any issue that is not be addressed in the homes and communities of students.

Some believe our schools exist to make good citizens of a democracy, others say to achieve individual economic potential, and still others claim that public schools are the great equalizer, fulfilling a civil rights role. Learning is inevitably part of each vision, but agreeing on the primary purposes for the learning will influence how we go about teaching. Teachers themselves, possess different philosophies on their role and purpose, and consequently approach their work in different ways. In addition, various policies and legislation have added additional tasks, often well-meaning, but overreaching the limits of resources and time. Note that I am not arguing the virtue of these goals, they are all valid societal objectives. The issue here is that we have created an undo burden on a single public institution.

Consequently, we arrive at a situation where schools have been tasked with seemingly impossible goals. They exist to educate all students academically, while simultaneously overcoming any shortcomings of the family, community, or the nation. They are to do so with extremely limited resources. And even when they succeed in some areas, they will inevitably neglect others. It’s not just the raised bar that makes schools “fail”, it’s that there are hundreds of hurdles, and no one can even keep track of all of them.

In essence, schools have the function of providing for nearly every need, for nearly everyone, until they reach the age of adulthood. The inability of any adult to function in society or to have requisite employment skills always reflects back on their education.

Where to Start: A National Vision

A National Vision for Education needs to acknowledge that schools will inevitably serve a variety of purposes, but these goals must be carried out within the context of serving a unified national purpose. Education should be by design, not just a result of historical peculiarities. Developing such a vision will not be easy, and is most certainly not the work of a single individual or organization.

So what is this vision? What does it include? How different is what we should do from what we are doing? What new topics must be addressed? What historical baggage must we shed in order to evolve?

(See also my previous post on National Curriculum Standards: https://lukelaurie.wordpress.com/2009/05/27/national-curriculum-standards/)

Move Your Money

So, you may have heard of the new video and movement, Move Your Money, encouraging the patrons of big banks to move their accounts to small community banks. The video is quite compelling, featuring clips from It’s a Wonderful Life, along with damning clips of modern bank malfeasance. The video is worth viewing, even if the argument doesn’t sway you.

The premise is simple: hit them where it counts, in the pocketbook. It’s a grassroots attempt to undermine the “Too Big To Fail” institutions who continue to be found, time and time again to be complicit in or responsible for economic travesties, big and small.

Senator Bernie Sanders has his own idea: Break ‘Em Up.

Of course, small town banks can engage in their own shenanigans. They also may not have the capacity or breadth of services for all customers. But we should be good consumers and move our money where it serves us best.

If I ever have any money, I want some interest from that money, and it sure would be nice if some of the money was in turn invested in my community. I certainly don’t want a slice of my hard earned money to pay for six-figure financial services lobbyists who are tightening the screws on ethically challenged Members of Congress.

I think I just might move my money.

Money Makes Money Better Than Work

Luke Laurie- Teacher Blog    https://lukelaurie.wordpress.com

Money Makes Money Better Than Work

I’ve always been a believer in hard work. Indeed, for most of my life I’ve worked hard, probably too hard sometimes, at my job, my hobbies, and my projects. Weekends, evenings, and vacations have all been sacrificed for my commitment to my career.

For the most part, I’ve been rewarded for my efforts. But I recently came to a conclusion that made me question almost everything I do, when I suddenly realized the cards are stacked against me. My bootstraps are tearing.

I realized- Money makes money better than work.

I’ve been going about this all wrong. My efforts at work barely matter in our economic structure, unless I do something differently, my family will be confined to our caste for my entire life.

No matter how much I devote myself to my work and extra projects, I will never be as well off as someone who started out rich, even if that person never worked a day in their life. In this blog entry, I’ll explore some of the financial differences between the rich and the working, and show a principal flaw in “trickle down” economics. This brief analysis will no doubt be simplified, but be no less true than a more complex analysis.

Work makes money, but not very well

Over the course of my career, I will make an estimated 2.5 million dollars total.

I’ve been a teacher for 12 years. For my first few years, I was paid at poverty level, my next decade at lower middle class, and for the rest of my career, I’ll be paid a middle class salary. If I had not quickly achieved my master’s degree, the poverty level wages would have continued for most of a decade. Most teachers don’t stay in the field that long. When my home is paid off, I should be comfortable, barring a medical catastrophe. I will never be rich. I will be able to retire if the system remains solvent.

How does my income and lifestyle compare to someone, who, instead of working, begins the game with the same amount I will make over the course of my life?

Let’s image that someone is fortunate enough to begin their adult life with 2.5 million dollars. They didn’t earn it. They just got it. Perhaps there was some “death tax” on it, perhaps not, but there are very easy ways around estate taxes, and when you’re rich, its easy to pay someone to figure them out.

In this comparison, I’ll refer to the person with income like mine as the worker, and person who begins with 2.5 million as the heir.

Income

Worker: Early in the worker’s career, she survives on about 20k annually. She drives a used car, rents an apartment, and bargain shops. Her income is entirely devoted to basic living expenses. Food, housing, medical expenses, and transportation. She likely is accruing debt during this time in her life, with the hope that future earnings will allow her to pay this debt off. She has no disposable income.

Heir: Without any work at all, and without any creative investing whatsoever, the heir can expect to make a minimum of 100,000 dollars on simple interest annually. Naturally, the heir would be tempted to make investments with higher potential return, but would be equally likely overspend. By spending a million dollars upfront on cars, real estate and other luxury items, we can chop the Heir’s savings down to only 1.5 million. With very safe investments, the Heir can still look at making an easy 7% return, which puts him back to generating $100,000 annually without work, with a million in swag. He eats well, he drinks well, his expenses are not confined to necessities. He has tens of thousands of dollars in disposable income.

Property

Worker: If she’s fortunate and frugal, within a decade, she’ll be able to scrape together a down payment and buy a modest home. She will pay for this home for the next 30 years, and by the time she’s done paying for it, because of compound interest, she will have paid for the home two and a half times. She’ll pay nearly half a million dollars for a home that’s worth $200,000.

Heir: The fortunate son doesn’t need to worry about a loan and overpaying for real estate. He can pay cash for a home worth $500,000. He actually gets what he pays for. If he decides that he wants income properties, he can pay cash for property that will guarantee income. In most markets, he could leverage his cash, putting only half down for the property, borrow the balance, and STILL be guaranteed income. As a landlord, he can write off any improvements, repairs, or upgrades to these properties, unlike the Worker who’s stck with the bill for every broken thingamajig. His 500,000 dollars cash could easily turn into a million dollars in real estate, with the capacity for paying for itself. The Heir does not have a mansion in this scenario, but makes real estate decisions that will not necessitate having to work for a living.

Savings

Worker: Without significant sacrifice, amassing any sizable savings will not be possible in the worker’s first decade of her career. If she has children and a family to support, this will become increasingly difficult. Not until midway through her career will she start to get ahead. More likely than savings, the Worker will be amassing debt. The degree of this debt will affect her ability in the future to accrue savings.

Heir: The Heir starts with income generating savings. By keeping some of this income, the Heir has an income generating perpetual motion machine. Let’s say, for example, the Heir begins with the 1.5 million in savings as described above, and he makes 7% interest on the money from investments. He spends half of the interest income, and returns half to the pot. We’ll say he puts a paltry 3% interest back in to the savings. He’s blowing 60,000 dollars a year in disposable income. Result: In 10 years, the 1.5 million in savings is now 2 million. He does nothing, and his net worth grows.

Work

Worker: Of course, the worker works. She spends most of her days at work. She schedules appointments outside of her work day. She misses some important events because of her professional obligations. She works when she’s sick from time to time because of her limited leave days. She usually has weekends and evenings to herself. After all, she’s a college educated professional and deserves some leisure time.

Heir: The Heir doesn’t need to work. The interest his money makes provides him with more consumable income than the Worker could ever hope to have. Perhaps he’d be tempted to spend even more of that money, because he needs to do something with his time. He has 365 leave days each year. He stays home when he’s sick, and can devote his time to thinking about ways to have his money make even more money.

Investment

Worker: By and large, the worker will have few, if any investments. She might consider her home an investment, and in a good housing market, it might be. More likely, others will invest in her, requiring her to pay them interest. They’ll loan her money for cars, for real estate, for home improvements, and for month to month expenses. They’ll invest in her vacations and earn 10% or more on credit card interest. She’ll feel lucky about all the great things she’s gotten to have and do with the borrowed money, but all the while, she’ll be paying extra for almost everything.

Heir: The Heir’s money makes money. He doesn’t borrow, unless it’s for short term leveraging, or unless it’s like the real estate scenario above, where he can increase the long term earnings on his investments by accruing more appreciation by having a greater number of assets. He may own stocks, bonds, real estate, or other securities. Interest is good for the heir. He is paid interest. Rent is good for the Heir. He is paid rent. He’ll scrape a little off the top to pay a financial advisor who will constantly look for the best ways for his money to make money.

Taxes

Worker: Many might assume that this category is where the tables would be turned, where the worker, due to his deductions and so forth would have a distinct advantage over the Heir. They would be wrong.
The worker pays income tax, sales tax, property tax, and payroll taxes. Approximately 15-20% of her income will go to income tax and payroll taxes, about 5% will go to property tax, but only about 1-2% would go to sales tax. During her career, she will have about $600,000 of her income go to taxes. That’s more than she paid for her home. The taxes the worker pays directly reduce the worker’s quality of life, ability to save, and financial security. But she dutifully pays them out of respect for her country.

Heir: The Heir pays income taxes on the interest income on his investments, and capital gains taxes on the sale of investments. He, of course, will pay significant sales taxes on all of his spending. With the 100,000 annual income described above, he could expect to pay 30,000-40,000 in taxes, considering his properties, transactions, and investments. These taxes aren’t preventing him from getting ahead, they just slow down his disposable income a bit. His investments, holdings, and net worth continue to grow regardless. The high tax rates imposed on the wealthy only slow the rate of the growth of their wealth, they don’t make them poorer, as some may try to make you believe. Income tax on investments and capital gains slice into his profit, not his wealth.

But many wealthy Americans don’t feel obligated to even pay the taxes they are legally obligated to pay. After pressure from the US, Swiss Banks recently agreed to turn over the names of American account holders who were using Swiss accounts to avoid taxes. They all thought they were in a James Bond film. The IRS, in an effort to increase Federal revenues, thought it would be a good idea to pardon some of these felons. They offered an amnesty program in which millionaire crooks would avoid prosecution in exchange for PAYING THEIR TAXES. How many rich American crooks came forward when they knew the game was up? 15,000. Billions in taxes. Thousands of unethical wealthy people. Read this article for more on the amnesty for rich tax cheaters.

Conclusion

The Worker, if she’s fortunate will be able to live a modest, stable life, and be able to retire with some degree of security. The Heir will watch his holdings balloon over time, and could easily have many times the amount he started within a couple of decades. The cards are clearly stacked in the Heir’s favor. The Heir has no grounds to complain about tax policy, estate taxes, etc. His gravy train is firmly ensconced in the tax codes and our economic structure. The Worker, in this case, a public school teacher, must be content in knowing that her life of work is doing good, that the Heir’s tax deductible donations will never do. The rich will get richer, and the workers will keep on working.

Or, one can get cynical, realizing that working is futile, and find a way to get a hunk of cash and sit on it. It’s clearly the American way.