Tag: economy

Visas for the Bandits

~ Clarissa ~ 12 Comments

Among all the ridiculous measures our politicians are proposing to deal with the economic crisis, the following really stood out to me because of its sheer ridiculousness:

Two Senators have come up with a plan to boost the moribund U.S. housing market: Give residence visas to foreigners who spend at least $500,000 to buy a home in the U.S.

A report in The Wall Street Journal says Sens. Charles Schumer (D., N.Y.) and Mike Lee (R., Utah) are preparing to introduce the idea as part of a larger package of immigration measures. The idea is to help make up for the lack of American buyers in the housing market, according to the report.

I can just imagine the joy that the Russian bandits will experience when they hear about this helpful policy. Until now, they’ve been hiding from the retribution for their crimes in London and Greece. How cool is it for them that now the US wants to open its doors hospitably to them? And how about all those drug overlords, mafia bosses, and corrupt politicians terrified that the justice system in their countries will catch up with them? This legislation will be a godsend for them because now they will be able to effectively buy themselves papers that will allow them to escape from justice in their countries. The influx of these criminals will do wonders for the United States.

A healthy alternative to this exercise in idiocy would be to distribute green cards to all people who completed their graduate degrees at US universities instead of kicking them out the second they graduate. Who needs all those smart high-earners, though? We can have criminals, mail order brides, lottery winners, and folks who managed to buy paperwork about how they have been religiously persecuted. Oh, this is so going to save the economy.

Do you think these senators are plain stupid, or are they being paid off by foreign criminals to promote this piece of legislation?

P.S. I just found a really wacky objection to this policy:

There’s an important caveat highlighted by Matt Yglesias: the housing visa doesn’t include a work visa. These new immigrants wouldn’t have the right to work here. Without jobs, what’s holding them here?

Yes, people who found a way to make half a million dollars in third world countries are really in a huge need of jobs. I can just imagine those criminals organizing their CVs and prepping for job interviews.

This is what happens when you project your own cultural hangups onto completely different cultures.

Through the Eyes of a Stranger: Discovering Inequality

~ Clarissa ~ 57 Comments

The collapse of the Soviet Union was so traumatic for many of its citizens because people discovered very visible economic inequalities and didn’t know how to deal with that. Of course, since the closing years of World War II, really immense differences in the economic status existed between different groups of people in the Soviet Union. However, the Soviet ultra-wealthy never had a chance to mix with the regular citizens, which is why we could pretend that we were all equally poor and didn’t have to feel tortured by observing inequality on a daily basis.

In the 1990, the “wild capitalism” stage of the disintegration of the Soviet Union began. Now, anybody could make a fortune. Just as easily, anybody could become indigent overnight. Differences in the standard of living among neighbors, life-long buddies, former colleagues, sisters, brothers, etc. became striking and impossible not to notice. Many people didn’t find a way to process these changes and adapt to them. When the opportunities to live a lavish lifestyle had been limited to the chosen few who simply had the luck of being born into the right sort of family, one could tolerate that. However, the idea that one’s childhood friend could suddenly strike it rich right in front of one’s own eyes was intolerable.

Here is my question, though. People in the US never experienced any other economic reality than the fully capitalist one. Why, then, are they all acting like they suddenly discovered economic inequality two minutes ago? Haven’t the Americans had two centuries to adapt to the existence of glaring differences in the standard of living and find ways of processing them? I just read this article, and it reminded me a lot of articles that proliferated in the FSU countries between 1991 and 2001.

When I go on my daily walks, I first pass through my own middle-class neighborhood, then a poorer neighborhood, and finally arrive at an incredibly wealthy neighborhood. There are veritable mansions that I see there. As somebody who was born in the Soviet Union, my first reaction to these palaces is to feel joy that it’s possible for people to live this well. For me, it’s still something new and surprising. I always thought that for people who were born in a capitalist country this should be a non-issue and they should not have an emotional reaction of any kind to it because they must be very used to the great disparity in wealth. But then I read the articles like the one I just linked to and I feel like I’m back home, discovering capitalism for the very first time.

You’ll say this is because of the recession but, honestly, I don’t buy that. This isn’t the first economic crisis and neither is it the last. Capitalism by its nature does not exist without constant crises, shocks, and upheavals. It is not a static system and would not survive as such.

So here is my question: how do you react to the great disparity in economic status that you observe around you on a daily basis? Do the mansions of the very rich make you feel curious? Angry? Or do you fail to notice them because you are used to their existence?

Bankers Eager to Donate to Obama’s Campaign

~ Clarissa ~ 11 Comments

Washington Post reports:

Despite frosty relations with the titans of Wall Street, President Obama has still managed to raise far more money this year from the financial and banking sector than Mitt Romney or any other Republican presidential candidate, according to new fundraising data. . . As a result, Obama has brought in more money from employees of banks, hedge funds and other financial service companies than all of the GOP candidates combined, according to a Washington Post analysis of contribution data. . .

Obama has raised a total of $15.6 million from employees in the industry, according to the Post analysis. Nearly $12 million of that went to the DNC, the analysis shows.

Romney has raised less than half that much from the industry, while Texas Gov. Rick Perry brought in about $2 million. No other Republican candidate has raised more than $402,000 from the finance sector, which also includes insurance and real estate interests.

The ultra-conservative Washington Post uses this information to paint Obama as pro-banks and pro-financial sector in order to make him less attractive to progressive voters. Of course, people who follow politics at least minimally will find this information to be very belated. We all remember how Obama appointed Summers and Geithner, of all people, to key positions two seconds after he was elected. This gave us all the information we could have possibly needed about the new President’s position on the economy. Today, we are reaping the results of those appointments.

In my opinion, the huge support that the financial sector offers Obama today has to do with Wall Street’s realization that Obama is the only candidate who might, if given enough reason to, listen to the #Occupy protesters and start bringing back some of the regulation measures on the financial industry that are the only way of saving us all from complete and utter economic collapse.

At this point, Obama is not listening to his erstwhile progressive supporters. However, he might. Especially, if the protests intensify as the election draws closer. This is why Wall Street is trying to buy him off as fast as possible. Overall, I’d say this is very good news because it demonstrates that the bankers are finally taking the #Occupy protesters seriously. President Obama will be well served to do the same.

Thinking About the Economy: Is Pessimism Preventing Economic Recovery?

~ Clarissa ~ 6 Comments

This is an excerpt from a really interesting article on the economy I found in a very unlikely place. Namely, The Washington Post:

Americans see themselves as go-getters and risk-takers. Our optimism will ultimately rescue us. So it’s said. But the folklore increasingly collides with reality. The 2008-09 financial crisis traumatized millions. It swelled the ranks of risk-avoiders, worrywarts and victims. Of course, this was mainly a reaction to overborrowing, inflated home values and lost jobs. But now the fear factor is feeding on itself — and it’s smothering the recovery.

We are prisoners of our rotten mood. Everywhere, the bias is to spend less and wait to see how things turn out. Just as optimism sustained the boom, pessimism prolongs the bust. This is the reverse of “irrational exuberance,” because as long as most people feel this way, the psychology is self-fulfilling. Unfortunately, that’s how they feel.

Admittedly, I am still in the very early stages of figuring out how the economy works in this country. I find it very obvious, however, that the country is going through a doom-and-gloom period where predictions of imminent disasters are more welcome than good news. Grievances and meticulously inventoried while timid suggestions that things might not be all that horrible are greeted with derision.

“Why are you in such a good mood?” people ask incredulously when they meet a content and smiling person. As if happiness needed justification while misery were completely normal and required no analysis.

I’m not qualified to analyze whether there is a link between this culture of misery and doom-saying and the economy. I can say, however, that the fascination with unhappiness does exist and its influence is only growing.

True or Not?

~ Clarissa ~ 13 Comments

Just as I posted the most recent post, I read the following:

The top 10 percent of earners pay nearly 70 percent of all income taxes, according to the I.R.S. People in the richest 1 percent pay 31 percent of their income to the federal government while the average worker pays less than 14 percent, according to the Congressional Budget Office.

This comes from an article by David Brooks, and I don’t think anybody here is likely to believe everything he says. I’d like to know, however, whether the claims he makes here are in any way true. Do people in the richest 1% pay 31% of their income in taxes? And if so, then why do we keep hearing about the need to raise taxes on the rich who somehow manage to wiggle out of their tax obligations?

I’m trying as hard as I can to understand how this works but such disparate claims come from the opposing political camps that nothing makes sense any more.

Thinking About the Economy: Let’s Stop Simplifying

~ Clarissa ~ 7 Comments

Within the last few days, I have seen one journalist after another recycle the following idea:

Both parties agree that we need to reduce the deficit by the same amount — by $4 trillion. So what choices are we going to make to reach that goal? Either we ask the wealthiest Americans to pay their fair share in taxes, or we’re going to have to ask seniors to pay more for Medicare. We can’t afford to do both.

I know it’s fun to condescend to the President and the Congress, but seriously, people, it’s so much more complicated than this. Just think about it. When in your field of knowledge or your professional specialization, somebody comes up with a gross simplification of this kind, how does that make you feel?

In the novel Heart of a Dog by a great Russian writer of the Stalinist era Mikhail Bulgakov (and, incidentally, Stalin’s favorite writer), the main character, Sharikov, is transformed from a dog into a human being. He shocks his highly intellectual creators with his simplistic view of history. After reading the correspondence between Engels and Kautsky, the former dog announces that he knows how to fix the economy of the world: “We need to take everything from everybody and share it equally”, Sharikov announces.

Please, let’s stop imitating Sharikov already in his inane views of how the economy actually works.

Thinking About the Economy: Why Can’t We Be Like Canada?, Part II

~ Clarissa ~ 38 Comments

The middle class and the small businesses in Canada carry a really harsh tax burden. There is just no comparison with the kind of tax rates I, as a college professor, pay here in the US and what a person in Quebec with a similar level of income has to shell out. Of course, having access to the really excellent Canadian healthcare system for free is a great benefit that people get in return for their taxes. This is undoubtedly so, and there is nothing to argue here about.

However, if we are talking about young professionals, these are people who don’t really need (for the most part) any ultra-expensive medical services. I’ve had many conversations with younger Canadians defending the healthcare system of Canada from their criticisms. (I’m a huge, huge fan of that system, in case you don’t know).  A young person who pays a humongous sum in taxes finds it difficult to be convinced that it will all make sense once he or she is 60 and in need of an expensive operation. Once again, working more and harder to bring your salary from one level to the next makes no immediate practical sense to people, since the salary increase will immediately push them into an even more highly taxed income bracket.

To give an example, my younger sister pays more in taxes per year than what I make in a year. She sees no return on those taxes because she has a private health insurance and no other welfare benefits are extended to her. She says she’d be much happier paying these taxes if she knew that they went directly to provide some professor’s salary. Sadly, this isn’t how it works.

So here you have a situation where quite a few people are discouraged from working at all. Many more realize that starting a business is too much trouble, and who needs the constant aggravation from the Ministry of Revenue? The Canadian tax people never persecute the large corporations, of course. They just choose some poor schmuck trying to run a small Mom and Pop business and squeeze him until he hands over everything he has and declares bankruptcy. They actually tell that to you face when you beg them to see reason and not fine you for an amount you simply do not possess.

Once again, please don’t dispute this point with me because I just finished talking on the phone with precisely this kind of poor Canadian schmuck who is going through this type of torture right now, and I’m understandably upset.

(To be continued. . .)

Thinking About the Economy: Why Can’t We Be Like Canada?, Part I

~ Clarissa ~ 23 Comments

In the Liberal circles in the US, the Canadian system of welfare is often an object of envy. “Why can’t we provide the same social safety net that Canadians do?” people keep asking. I can’t tell you whether the welfare system of Canada can be transplanted to the US. However, as a proud citizen of that great country whose family and closest friends live there right now, I have to tell you that the Canadian system, as I see it, is deeply flawed. Over the years, I have come to believe that the Canadian version of “capitalism with a kind face” is a road to nowhere. Now, please don’t start getting angry already and just let me tell you why I think that.

My experience is mostly limited to the provinces of Quebec and Nova Scotia, so if things are dramatically different in other parts of the country, feel free to tell me that.

The system of welfare in Quebec seems to rely on the basic conviction that if a person doesn’t feel like working for whatever reason, then she or he should be allowed to do so and be provided with basic necessities by society. (In Nova Scotia, this idea is less strong but it’s still there, at least do a degree.) If you want to spend your entire life in Canada and not work for a single day, you can absolutely do that. Abusing the system is very easy. I keep seeing people who declare themselves indigent and permanently unemployed (or unemployed most of the year) and who have much more comfortable lifestyles that those poor losers who work day and night, pay ruinous taxes, and can’t scrounge up enough money for a vacation.

“Ha ha ha,” the welfare-recipients sometimes say to the working bees. “You’ve got to be silly or something. You work and work, and what have you got? I, in the meanwhile, am going on a cruise in the Caribbean on my welfare money.”

If somebody is experiencing the need right now to tell me that I’m making this up, don’t. You’ll just make a fool out of yourself. I have played the working bee part in such conversations and have witnessed my family members doing so very very recently. And yes, I’m angry about that.

Of course, as a result, people start getting discouraged from working. My sister has her own job recruitment agency in Montreal. She tells me that often, when she offers entry-level positions to young people, she hears, “Nah, the salary isn’t all that much more than what I’m getting on  the unemployment, so why bother?”

An entire generation of the over-entitled, nah-why-bother people grows up.

(To be continued. . .)

Thinking About the Economy: The Introduction

~ Clarissa ~ 23 Comments

I’m currently trying to figure out how the American economy works and elaborate my own position on the economic issues. Right now, I don’t have a definitive point of view because I simply don’t possess enough information to arrive at it. In the nearest future, I will be writing a series of posts that will record my attempts to create my personal approach to the issues of economy.  This series will be titled “Thinking About the Economy.”

For the most part, I’m not content with how the Liberal sources I access deal with the economic issues. Back in the Soviet Union, we were all really unhappy with the kind of economy we had. For us, everything that wasn’t similar to the only system we knew and abhorred had to be perfect. The logic behind this was that if the system we are familiar with sucks, then its exact opposite should be great. So we all worshiped capitalism as some kind of a paradise where everybody is rich, has cars, yachts and houses and is happy beyond belief.

In 1991, we were dragged by history through a rapid transition to capitalism. For many people, their first encounter with capitalism was deeply traumatic. We discovered that capitalism brought about very visible income inequalities (they always existed in the USSR, of course, but were often concealed from view), the need to offer yourself on the job market, compete and suffer rejection, the necessity to work really hard with no promise of success, the possibility of indigence that was hard to tolerate when you could see your neighbor getting rich and buying diamonds as a matter of course.

Many of us discovered they couldn’t deal with the new reality. Instead of offering us instant riches, capitalism brought many harsh demands that many people were not equipped to meet. The rewards seemed distant and the need to disinter the skills of entrepreneurship and hard work that had been beaten out of us over the decades of Communism was painful.

The reason why I’m telling you all this is that I see a very similar tendency currently at work in the US. People are only familiar with a single economic system, capitalism. They see its defects and believe that what’s needed is the exact opposite. I find this approach to the economy to be naive. Nothing annoys me more than arm-chair Marxists who believe they are militate on behalf of some vaguely defined proletariat they rarely even see.

When I say that collective ownership of the means of production results in an almost instant impoverishment of the population on a scale that Americans cannot even begin to imagine today, I speak from experience. I know that my experience of a person who grew up in the Soviet Union is not fashionable in the intellectual Liberal circles. Nobody wants to hear anything that contradicts their pipe-dream of Communism and socialism.

In the Soviet Union, whenever we heard that there was racism or poverty in the US, we always concluded that it was all just Cold War propaganda. Liberal Americans still believe that everything negative they heard about the USSR was propaganda that doesn’t contain a grain of truth. They seem to need this belief in order to continue engaging in their sad little Marxist fantasies.

I, however, am not prepared to relinquish my own memories for the sake of spoilt rich American kids of pseudo-Liberal persuasion. I want to look for my own understanding of the economy and I don’t care how offended people are that my search subverts their cherished pieties.

A Liberal Approach to the Economy

~ Clarissa ~ 37 Comments

It’s impossible to say, nowadays, if what one reads on the subject of the economy is being said seriously or in jest. See, for instance, “The Golden Laws of Prosperity” from Ian Welsh’s blog. Judging by the comments, I’m not the only one who thought the post was a parody. For now, however, the author seems to maintain he was in earnest when writing the post.

I will give you a few of Welsh’s prosperity rules, and you can go see the rest at the original post.

Implement policy which is as good for as many people as possible.

I thought if history had taught us anything whatsoever it was that the scariest political leaders were the ones who were trying to be benefactors of the majority. Seriously, how can anybody figure out what’s “as good for as many people as possible” without relying exclusively on one’s own personal ideology? Isn’t it time to remove the categories of “good” and “evil” from our economic and political vocabulary already?

Keep the rich poor.

Of course, after this suggestion, one immediately thinks that the entire list is a tribute to Ayn Rand.

Do not allow elites to opt out of the experience of ordinary citizens.

And how is that going to be enforced in practice, I wonder? A representative of the elite would be forced to wear jeans to a burger-grilling beer-drinking Springer-watching party and prohibited from putting on a dress and watching an opera while drinking champagne and eating caviar? Was this going to be done through police involvement? I can just imagine police officers shaking folks out of suits and tuxedos and stuffing them into jeans. Of course, I’m exaggerating. However, the point is that when you start regulating “experiences”, scary things begin to happen.

Do not reward people for winning lotteries (economic competitions someone was going to win, like Facebook winning the social site competition)

This, of course means clamping down on absolutely any new area of development or research. Imagine the people who’ll find a cure for cancer. Those folks will win the lottery like nobody has ever before. Ergo, let’s make sure looking for the cancer cure is completely unprofitable. Who cares about a valuable service to humanity? As long as we can prevent somebody from getting rich, our central goal will be served.

Do not allow anyone to take future profits in the present.

This can easily be translated as kill the economy outright. Gosh, even the USSR didn’t go this far in regulating its companies.

Restrict capital flows significantly.

This, however, is what the Soviet Union was great at doing. Does anybody want me to narrate the results once again?

Treat credit as a utility and regulate all credit grantors as utilities.

Credit rates should be based on utility of the end use of credit.

The problem with this approach is that only a completely insane person will want to be a creditor under these conditions.

Make sure your population eats healthily, there is no such thing as cheap food, cheap food is paid for by death, disease and health care costs.

As most of my readers know, I’m very worried about the low quality of food in the US and have suffered serious health consequences because of that low quality. However, ensuring that the population eats healthily is an obvious infringement on individual rights. If the suggestion was to offer an opportunity to the population to eat healthily, I wouldn’t have a problem with this advice. Making people eat healthy in order to make them live longer sounds like a first step down the very slippery slope of treating human bodies as the property of the government.

Do not allow city folks mores to run the country, nor country mores to run the cities.

The moment we get the government regulating the mores, we arrive at totalitarianism. Maybe people can sort out their mores and ways of being without a prescriptive authority.

Do not allow unproductive suburbs which do not allow light businesses or have covenants.

As we can see, this philosophy is all for giving the rights to allow or not allow to one large body and taking them away from smaller local bodies. Another slippery slope. Besides, “do not allow those who do not allow” sounds a tad hypocritical.

Use competition between the private and public sectors.

Is there still one person under the sun who doesn’t know who will win this competition? (If it’s allowed to be run as a real competition, not a rigged foregone conclusion, of course.)

Do great things, not because of the return, but because they are great.

If only there was any hope of a group of people reaching a consensus as to what constitutes “great things.”

Seek the health and happiness of your citizenry, not maximum income.

Honestly, nothing terrifies me more than a government, an entity or a private individual that seeks my health and happiness. The best system in the world is the one that allows me to seek my own good or ill health and happiness or misery as I see and want them. God save us all from well-meaning benefactors, for they are the scariest people out there. Everybody’s understanding of happiness is so different that anybody who tries to impose their own vision of it always ends up digging mass graves for the millions who are not content with the state-mandated version of bliss.

I have to tell you, people, the liberal approach to the economy isn’t really doing anything for me lately. It’s all based on such do-gooder prescriptions that are supposed to make one feel self-righteous when one pronounces them but that have very little practical value.

The journalist who came up with the list is Canadian. In one of my future posts, I will tell you why I have massive issues with the Canadian approach to the economy.