Legislators must prove they have read the books

I have had on my to-do list for awhile to write a blog entry about a standardized test for legislators.  After all, if a standardized test is good enough to judge school children's abilities, a standardized test should be good enough to judge legislators' abilities.

I was prodded to act on this to-do item on seeing "Teachers must prove they can do the math", Rachel E. Stassen-Berger and Kim McGuire, Star Tribune, 2012-02-23.  Gov. Mark Dayton signed a law that "requires would-be teachers to pass a college-level basic skills test before they can lead a classroom."

So, again sauce for the goose is sauce for the gander.  Shouldn't we have a requirement that legislators pass a political history test before they can serve in a legislature?

Here are a few questions:

What did Adam Smith state was the basis of a nation's economy?

Was Adam Smith concerned with special interests?

Was Adam Smith more sympathetic to workers or to employers?

Did Adam Smith think that banks should be regulated?

Were the writers of the Constitution concerned with the common good and virtue?  Please define these terms and give examples of their use in the Federalist Papers.

To what degree did the writers of the Constitution think that commerce should be regulated?

What was the intent of the writers of the Constitution when they used the words "people", "person", and "citizen".  Please define each term.

Did Thomas Jefferson think that "limited government" applied to financial institutions and other corporate interests?

Please feel free to send these questions to your legislatures at the state and federal level.

Comment on "job creators"

I posted the following as a comment to the Coffee Party's Facebook posting of "7 Ways to Support the Real Job Creators".
I highly recommend slogging through the 1000+ pages of 18th Century English that are Adam Smith's "Wealth of Nations".

Would you believe that he is more sympathetic to the workmen than the masters? That he thinks banks should be regulated? That taxes are necessary? That we have to co-operate with and assist one another? That talents come from our experiences? That he doesn't believe in giving 110% to employers? That the rich get rich at the expense of the poor? That governments are needed to enforce contract law? That merchants complain that high wages affect the economy but say nothing of how high profits affect the economy? That honorable professions are underpaid? That regulations are needed to prevent abuse? That he doesn't think much of corporations controlling government? That corporations are not concerned with the public interest? That although he complained it was illegal for workers to unite to raise wages but legal for masters to unite to keep wages down, he didn't think much of labor unions? But that regulations in favor of workers were just but those in favor of the masters were unjust?

Those are only some of the comments with which I annotated the first 150 pages of my Project Gutenberg copy of "Wealth of Nations".

Short term profits, long term losses

Before I get into the title subject, let me explain that I was led by two items on the Coffee Party Facebook page to two different Forbes Magazine articles. Remember that Forbes is a magazine for business leaders; the current slogan of Forbes.com is "Information for the World's business leaders". Also, the CEO and Editor-in-Chief is Steve Forbes who ran for president in the Republican primaries in 1996 and 2000. Among other "conservative" proposals, he called for a flat tax. For more, see Wikipedia http://en.wikipedia.org/wiki/Steve_Forbes.

The two articles I found are both by Steve Denning, who writes a column called "Radical Management" and wrote a book "The Leader's Guide to Radical Management. The two articles are titled "Retirement Heist: How Firms Plunder Workers' Nest Eggs" and "Lest We Forget: Why We Had A Financial Crisis".

The first is about how many companies take funds out of employee pension plans and use these to bolster returns. Companies have also sought to reduce contributions to pension plans, citing them as a drain on profits. Many of these same executives do not look on their golden parachutes and high-priced pensions, including platinum life-time health care as a drain on profits.
The second is an examination of the causes of the financial crises and the lies to deny these causes. Many say that the Federal Government caused banks to make risky loans. But it wasn't banks that made the risky loans, it was non-bank companies that did. For various reasons, these non-bank companies were not supervised by the government anywhere near the extent banks were supervised. Even then, there were many who prodded Congress to weaken the laws governing financial institutions. "These agencies of government were being strenuously lobbied to do the very things that would benefit the financial sector and their managers and traders. And behind it all, was the drive for short-term profits."

Maybe we should stop conjoining "pro business" and "pro overpaid executives".

Fable about a king's palace

A fabulously rich king decided to build a fabulously magnificent palace. He got his privy council to agree because he argued that doing this project would create many jobs for the five years it would take to build it and for the years beyond that to maintain the palace.

For starters, he took by eminent domain 10,000 acres of prime farmland by the river. People said it would reduce the food the country could grow to feed itself. The king replied that the project would create jobs.

He had 10,000 acres of prime forest cut down to supply the lumber for his palace. People said it would decrease wildlife habitat and increase flooding. The king replied that the project would create jobs.

He hired 1,000 workers to build his palace. People said it would decrease the number of workers to build and repair houses. The king replied that these workers would be paid high wages.

He had a million gallons of water per day diverted from the river to supply all the fountains, to water his extensive lawns, and many other uses. People said it would practically dry up the river reducing the water downstream for drinking, washing, and irrigation. The king replied that the project would create jobs.

He built no sewage treatment system to handle the garden runoff or the flushing of 1,000 toilets. He said it would cost too much money. People said sewage would make the river downstream unsuitable for drinking and washing, and irrigation. The king replied that the project would create jobs.

And so it came to pass that many people were hungry because there was insufficient farmland to feed them.

And so it came to pass that many people became homeless as the cost of existing houses skyrocketed because no new house were being built.

And so it came to pass that many people became sick because of the lack of clean drinking water.

And so it came to pass that many people migrated to lands where there was plenty of farmland and clean water.

And so it came to pass that tax revenues dwindled because there were fewer people to pay them.

And so it came to pass that the banks foreclosed on the king's palace because he couldn't pay back all the loans he had taken out to build the palace.

And so it came to pass that after an unusually heavy rain, a mudslide from the former forest buried the partially built palace.

What's the point of this fable? It can't happen here. Oh, but we are a nation populated by people who immigrated from lands that did not have good governance. Will we follow as we lack the foresight to rein in the indulgences of the wealthy as they create short-sighted projects using jobs as a justification without regard to all the other costs?

And the "Free Market" Party keeps opposing free markets

The Democrats are often wishy-washy on issues and often beholden to corporate interests, but the Republicans take the blue ribbon on hypocrisy.

The Republicans claim they are for free markets, but an economist's definition of a free market and the Republicans' definition of a free market are polar opposites.

The economist's definition of a free market includes that both buyer and seller should have all the information they need to make a decision.

The Republic's definition is that big corporations should be free to do what they want, including hiding or obfuscating information buyers need to make a decision.

A case in point is the opposition to Elizabeth Warren to head up the Consumer Financial Protection Agency.  She is called "controversial", but what is controversial about true free markets in:

“We’re trying to make the price clear, the risk clear, and make it easy to compare products,” Warren said. “If banks can’t build a business model without fooling people about the price, or hiding the risks, or obfuscating the products so nobody can make any direct comparisons, they’ve got a problem.”

This quote is from "Warren tells the controversial truth", Al Lewis, MarketWatch, 2011-04-22.

Business-friendly? Friendly to which businesses?

One of the current political buzzwords is "business-friendly" or more likely "business-unfriendly".  "Business friendly" generally means minimum or no interference with businesses or giving of breaks, tax or otherwise, to businesses.

Although some consider "business-friendly" to mean "people-unfriendly", one "business-friendly" act for one business can be "business-unfriendly" to another business.

I read a case of this in today's Star Tribune, "TCF gains in fight over debit-card fee limits", 2011-01-21.  TCF and other banks are complaining that new Federal Reserve rules on exchange-fee limits will hamper their profits.

However, other businesses complain that the exchange fees cut into their profits.  And of course, the exchange fees may cut into people's pockets with higher prices.

It wouldn't surprise me that many of the proponents of higher fees see no conflict with their call for lower taxes.  It's all right for businesses to raise prices when their costs go up but not all right for government to raise taxes when its costs go up.

Another example of one business' gain being another business' loss is fuel costs.  Maybe the producers will have more profits, but the truckers and the airlines, will have higher costs.  The fuel users will do their best to raise their prices, but another fuel user, the governments that clear the snow will be constrained.

Maybe we should have a mantra to match "No new taxes" with a people-friendly "No new prices".

The same issue of the Star Tribune reports that the newly elected governor of Wisconsin want to increase the setback for wind-farms, "Wind showdown".  On first glance, this would seem a business-unfriendly move.  But I suspect it's only towards a new business many Republicans don't like - alternative energy.

Were these politicians opposing a high-voltage power line when many Wisconsin residents were fighting against it?  The line went across, not near, their property, and they were forced to sell the right-away at a cost determined by others.  Doesn't sound very free market to me.

I wonder if the Wisconsin Republicans will bend to the popular will if there is land-owner opposition to a new nuclear plant.

Ideology, compromise, and the big picture

Today was another publication day for me.  My letter to the editor of the Star Tribune was published as "Political Discourse: You want compromise?  Are you sure about that?"

Ross Douthat also wrote a blog about politicians jockeying for position rather than trying to solve problems: "The Roots of Overheated Rhetoric".

He does take a good look at bigger issues than just who believes what on some "little" issue.  However, I take issue with one of his statements: "a protective government ready to save us from our foolishness when the economy goes bad".

Who is this "we" in "our foolishness"?  Granted, many of "us" overextended ourselves with inducements from many sellers of this and that; a little reflection could have kept our credit card bills small.  On the other hand, credit was extended by "trusted advisors" who few had any reason not to trust.  When the mortgage officer at "Neighborhood Bank and Trust" tells us we can afford the mortgage, few of us have the expertise to ask the right questions.  And when "Oversize Bank and Trust" of Wall Street tells Neighborhood Bank and Trust that it will buy Neighborhood's mortgages, Neighborhood feels it can and should sell as many mortgages as it possible.  The whole problem was out of "our" hands.

Well, maybe not completely.  Enough of us believed the rhetoric about "getting the government out of the way", not realizing less government oversight meant less corporate oversight of the long-term effects of its short-term thinking.

Duluth has become more international

I find it amusing that so many small cities call their airports International, as in Duluth International Airport.  Unfortunately, there are few, if any, flights from some "International" airports to cities in other countries.

For example, to fly from Duluth MN to Winnipeg, Manitoba, one has to go first to Minneapolis-St. Paul or Chicago.  Today's flights from Duluth International Airport are to Minneapolis, Detroit, Chicago, and Orlando.  It could be that freight or private planes fly in and out of Duluth directly to Canada, Asia, or Europe.

Another "requirement" for an "International" airport is currency exchange.  I've never seen any currency exchange at the Duluth airport.

Even currency exchange anywhere in Duluth has been difficult.  A local bank had to get the money from a correspondent bank.  On the other hand, I could go into a bank in a small town in Ontario and exchange U.S. travelers cheques for Canadian dollars.  Today I told a teller that I had taken my nasty pills and asked if she could give me Canadian money.  She replied, "Yes."

She couldn't give me the exact equivalent because she didn't have small change, but that is to be expected almost anywhere.  So, I asked for Canadian dollars in an even amount, and she was able to give me change in U.S. money.

On top of that, I can bring back any left over Canadian money and exchange it for U.S. dollars.  Except for small change, like everywhere else.

Will yen and euros be far behind?

Phishing against which bank this week?

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The House of Cards came tumbling down

The newspapers and the blogosphere are filled with commentary pointing blame for the credit crunch all over the place - Federal government forcing banks to loan to high-risk people, greedy investment bankers who gave themselves big bonuses for just moving money around, house buyers signing for loans they couldn't pay in the end, the media, the conservatives, the liberals, and...

I think that, yes, blame can be spread far and wide, but all of these malefactors had the same basic premise: loaned money can be bought and sold.

The beginning premise sounds simple. A local bank lends money to someone for some purpose. At a certain point, the bank has no more money to lend except for what dribbles back in as loan payments. To raise more money, the bank sells its loans to a larger entity. But the larger entity can only do this far so long. In order to buy more loans, it has to raise more money. So it sells its loan to a larger entity. Where does it end?

If house prices keep going up, it never ends. But prices will not keep going up. Either everyone who wants a house has one, or prices go so high that fewer people are willing to buy houses. So, prices go down, sometimes very rapidly.

Sometimes prices drop so rapidly that people would rather stop paying their loans than pay more than their house is worth. Of course, if they walk away from one house, they will have a hard time buying a house of much less worth. That further reduces the number of qualified buyers further reducing the prices of houses.

Tulips, Florida real estate, houses, when will they ever learn?

A computer is not a brochure

I am reading a company's annual report online in lieu of having my mailbox stuffed and my desk piled up with lots of brochures and booklets.

It makes a hard read because the online version is exactly as how it would appear on paper. It has two columns that are each longer than my screen. So, I have to scroll down and then back up to read any given page.

One software company has made it easier to read many newspaper pages. By putting its bookmark in the bookmark bar of your browser, you can quickly get a page that you can read continuously. See www.tidyread.com.

Unfortunately, it doesn't work on PDF files such as annual reports.

This is another case of many where people apply the old paper methods to computers. Think of your bank that limits access to your account while they balance their books every evening, just when you want to make that crucial transaction. Computer-based financial systems have had audit trails for over forty years. Your bank could let you make the transaction, save it until the books are balanced, and then apply it.

Lawyers and objectivity

Every so often a lawyer will use the term "facts of the case" as if he or she has an objective view of a situation. But is the "objectivity" based on a subjective selection of the facts?

I think of this because of different interpretation of online security and of how things should be named.

My current irritation is with my bank requiring me to reset my PIN every so often. It is the only financial institution that I deal with that requires this. I know it's bad practice to keep passwords for a long time, but I'll change them on my own schedule, thank you.

I used to change my bank password when required, and then change it back again. Now it won't let me use any of the last four passwords. Worse yet, if I make any mistake in the entry, the site makes me change other information. Most sites leave all the correct information in the form and only want the missing information entered or the correct information entered. I gave up trying to figure out what the "correct" information I should enter.

A long standing irritation is with a mutual fund company that wants me to agree to the terms and conditions every time I sign on. This is the only company that I know that requires this.

My only explanation is that the companies' lawyers required these steps even though few other companies see these steps as important.

An example of a lawyer not going far enough. I applied and received a trademark for "Helper" with respect to software. The application was for "cassette tape and magnetic media". Then came electronic distribution and CDs. Of course, any challenges my lawyer made were stonewalled by other lawyers, regardless of how the other "Helper" software was distributed.

The most ridiculous case was the advice that a computer club received. It had had a DOM, disk-of-the-month, for many years. When it hired an attorney to register its name and to ensure its tax-exempt status, he suggested that it change DOM to eDOM, educational disk-of-the-month. Of course, how educational are a bunch of games and utilities?