Don't Quit Your Day Job…

Interesting article in the New York Times the other day: “Is Your Religion Your Financial Destiny?“.  The Times took the income line of $75,000 and plotted the percentage of members of various religions who make more than that amount (2007 Numbers).  The top three religions, when it comes to high income members?  Reform Judaism, Hinduism, and Conservative Judaism.

Genius? Disturbing? Unfair? Disgusting? Misguided? There are many words that can apply to a new concept in higher education: increasing tuition based upon the expected career earnings of an industry. Yes, Engineers can now expect to pay more than English majors at some colleges. 57 Percent of the 162 Public Research Institutes now charge different tuitions based on majors, including 18 institutions which have adopted the practice in just the last 3 years.

Here’s a completely understandable statement: taxing the rich heavily is a poor recipe for fiscal health.  In the recent boom times (which we can probably define as from the post-bubble years until 2007), some states relied very heavily on the tax receipts provided to them by their highest earning residents.  California, New York, New Jersey and Connecticut got more than 40% of their tax revenues from their highest tax brackets.  During the boom times those states boomed right alongside their highest earning residents… and now the faucet’s flow has been reduced to a trickle, the states stand in line as well.

Recently an interesting Forbes article was published which looks at the state fiscal crisis in a new and refreshing way.  Using a ‘deadweight ratio’ of the number of private sector workers paying into state funds versus the number of public sector workers and pensions being paid out.  By this measure you can tell how many people each private sector worker is supporting in the public sector -whether a retiree or a public sector worker.  Yes, by this measure, in California, the results are still dire.  Read on to see what I mean!

… the dollar bill, a huge sign of freedom and independence in this country, is not made out of paper. In fact, it is actually made of a blend of cotton and linen, and purchased from Crane & Co. in Dalton, Massachusetts. Why is this relevant? Well, it just so happens that the very commodity used to weave our dollar bills happens to have experienced quite a bit of a price hike lately. The hard numbers? The cost of a dollar bill has increased 50% since 2008.

In this article, Cameron Daniels explains that the small decrease in poverty levels from 13.3% to 12.8% from 1967 to 2003 (36 years!) is not so bad as it initially seems as Simpson’s Paradox rears his ugly head.

Many debates revolve around the fact that both within group skill levels (as in amongst high school graduates or college graduates, for example) and between group skill levels (comparing high school to college graduates) income disparity has been increasing. This fact has been politicized many times and is used as a catch-all method to support almost any policy: why we need more of a welfare state, why we need less of a welfare state or a higher minimum wage, why we need more funding (or less) for public education, why we need higher or lower taxes, more progressive taxes, et cetera. I am not going to speculate on the need to change this trend or its best method but simply to offer an explanation… Most large socioeconomic phenomena such as these do not have a single solution, so consider this article to contain one of many explanations.

We haven’t looked at inflation expectations since November 15! Quantitative easing, historically low interest rates, and a rise in consumer spending haven’t been enough to increase inflation past a tame (again, historically low) 0.7% since December of 2009. However, we live in the real world and even if we were spared from inflation’s clutches today, we might not be so lucky in the future. On that note, let’s look at the market’s inflation expectations – which we calculate by subtracting the Treasury’s Daily Real Curve Rates from the Daily Treasury Yield Curve.

You don’t have to watch television for long to discover that the United States has a ‘historical’ balance of trade problem. Plenty of causes are given for the United States’ “decline in competitiveness”, like a skill drain, increased educational opportunities elsewhere, the ratification of NAFTA in 1994, outsourcing, and various other bogeymen that politicians on both sides of the aisle like to trot out. However, the fact remains that there has been a trade deficit between our country and various other countries recently. As Milton Friedman said, a sustained trade deficit is the best possible outcome…. we get physical goods like cars, flash memory, oil, computers, toys, and all sorts of other goods for cheaply produced ‘paper’ known as currency.

Next up: an interesting piece by the Economist which requires a link from DQYDJ! Sick of people from California telling you they would be the eighth (or ninth, depending on the list!) largest economy in the world if they were their own country? Well, now you can have a rebuttal, and tell them which country your state has a close proxy! So…. California can have Italy, and you folks in Texas have Russia as sister economies. Here’s a wikipedia link to GDP by state (actually, technically it’s GSP, Gross State Product).