“But listening to lies does not make us safer, even though it might make us feel better about ourselves. The truth is that ending these misguided wars and occupations will make us safer, more prosperous and more free.”

September 12, 2011 Leave a comment

Ron Paul:

Ten years ago, shocking and horrific acts of terrorism were carried out on U.S. soil, taking nearly 3,000 innocent American lives. Without a doubt this action demanded retaliation and retribution. However, much has been done in the name of protecting the American people from terrorists that has reduced our prosperity and liberty and even made us less safe.

This is ironic and sad considering that the oft-repeated line concerning the reasoning behind the attacks is that they hate us for who we are – a free prosperous people – that we must not under any circumstances allow the terrorists to win. Though it is hard for many to believe, honest studies show that the real motivation behind the 9/11 attacks, and the vast majority of other instances of suicide terrorism, is not that our enemies are bothered by our way of life, neither is it our religion or our wealth – rather it is primarily occupation. If you were to imagine for a moment how you would feel if another country forcibly occupied the United States, had military bases and armed soldiers present in our hometown, you might begin to understand why foreign occupation upsets people so much.

Robert Pape has extensively researched this issue and goes in-depth in his book “Cutting the Fuse: The Explosion of Global Suicide Terrorism and How to Stop It”. In fact, of the 2,200 incidents of suicide attacks he has studied worldwide since 1980, 95% were in response to foreign occupation. Pape notes that before our invasion of Iraq, only about 10% of suicide terrorism was aimed at Americans or American interests. Since then however, not only is suicide terrorism greatly on the rise, but 91% of it is now directed at us.

Yes, the attacks of 9/11 deserved a response, but the manner in which we responded has allowed radicals in the Muslim world to advance a very threatening narrative about us and our motivation in occupying their lands. Osama Bin Laden referred to us as “crusaders” with a religious agenda to convert Muslims, westernize their culture and take control of their resources. If we had targeted our response to only the thugs and criminals who attacked us, and refrained from invading countries that had nothing to do with it, this characterization would seem less plausible to the desperate and displaced. Blaming Islam alone is grossly misleading.

Instead, we chose a course of action that led to the further loss of 8,000 American lives, 40,000 wounded, and has left hundreds of thousands seeking help from the Veterans Administration. We are $3 to $4 trillion poorer. Our military is spread dangerously thin around the globe at the expense of protection here at home. Not only that, but we have allowed our freedoms to be greatly threatened and undermined from within. The PATRIOT Act, warrantless searches and wiretapping, abuse of habeas corpus, useless and humiliating circumstances at the airport, are just a few examples of how we have allowed the terrorists to win by making our country less free. Suicide terrorism did not exist in Iraq before we got there. Now it does. There are no known instances of Iranians committing suicide terrorism. If we invade and occupy Iran, expect that to change, too.

Sometimes it can be very uncomfortable to ask the right questions and face the truth. When a slick politician comes along and gives a much more soothing, self-congratulating version of events, it is very tempting to simply believe what we would like to hear. But listening to lies does not make us safer, even though it might make us feel better about ourselves. The truth is that ending these misguided wars and occupations will make us safer, more prosperous and more free.


College Degree Wage Premiums: Signaling vs. Human Capital Accumulation

September 12, 2011 Leave a comment

The general consensus in the sub-field of education economics is that college graduates command a wage premium because of two separate effects: human capital accumulation (a.k.a. learning) and signaling (a.k.a. getting a piece of paper for being a good little monkey and jumping through the hoops). Every study I have read on the subject comes to a different conclusion about how much of the premium comes from human capital, and how much comes from signaling. The general consensus, from what I remember from the survey course I took in 2008, is that the majority of the effects come from signaling.

This recent study done at Georgetown, that specifically looks at wages and how they are effected by college degrees and other factors such as demographic identity and occupational choice, doesn’t really tell us anything that is new. It does have some surprising figures about proportions of relatively uneducated people who hold “highly respectable” occupations such as executives and legislators, but all in all it isn’t paradigm shifting or even a surprise to anyone who is already familiar with the subject.

This article makes the claim that signaling makes up most of the wage premium. The article is a commentary on the aforementioned study, and more anecdotal than empirical in its analysis, but it does make interesting implications about the supposed bubble in higher education.

It is hard to measure a bubble in higher ed. Most of the models Read more…

Categories: Economics, Education

On Greece and the Market Psychology of Bailouts

September 12, 2011 Leave a comment

“You know the first time someone plays poker they are afraid to bluff. The second time they decide bluffing is great. By the third time they are so confused about who is bluffing and when that they might as well just hand their chips to the best player at the table and save everyone the time and effort or taking the chips.  I think the central bankers and governments have gotten so confused they are bluffing with a few low off suit cards and don’t even realize the cards are face up.”

More here at Zero Hedge.

Categories: Economics, Institutions, Money

Greek Bond Death Watch: Current Time is Oh Shit O’Clock

September 12, 2011 Leave a comment


The Good News today: The Chinese are signalling interest in buying Italian bonds (here is the best piece on the news). While Greece is probably too far gone, shoring up Italy and (hopefully) Spain should limit most of the spillover to world markets.

Categories: Economics, Money

FDR on Social Security

September 12, 2011 Leave a comment

Franklin Delano Roosevelt:  (thanks to commenter Preston Madison for the link)

“This law represents a cornerstone in a structure which is being built but is by no means completed–a structure intended to lessen the force of possible future depressions, to act as a protection to future administrations of the Government against the necessity of going deeply into debt to furnish relief to the needy–a law to flatten out the peaks and valleys of deflation and of inflation–in other words, a law that will take care of human needs and at the same time provide for the United States an economic structure of vastly greater soundness.” -August 14, 1935

Beautiful example of our country covering the asses of the rich and pandering to the poor with cardboard castles. Let me translate this from Politician to The People’s English:

“a structure intended to lessen the force of possible future depressions, to act as a protection to future administrations of the Government against the necessity of going deeply into debt to furnish relief to the needy”

really means: “We designed this program so that the government won’t go bankrupt taking care of all you poor people, which I guess we have to do, otherwise you’d all probably riot and cause a commotion that would further depress the prices of our joint-stock shares.”

“a law to flatten out the peaks and valleys of deflation and of inflation”

*the Fed’s inflation mandate didn’t come until 1946, so it is less weird than it sounds that he said this.

in other words, a law that will take care of human needs and at the same time provide for the United States an economic structure of vastly greater soundness.” 

“I want you to believe this program will take care of your human needs, that it is a pension for you miserable throngs of dust bowl refugees and soup line inhabitants. In reality, we are just taking your money now and giving you some back later, because none of you are very good at saving or investing, and frankly the economy has been so volatile over the last 50 years that even if you were shrewd, it is very likely you’d still be in the poor house. This will make the entire financial system much more secure because us richie riches will be able to sleep easier at night, knowing that we’ve contained the kind of widespread poverty that leads to social unrest and revolutions, and as an added bonus, it won’t really cost us anything since you all are paying for it. Now that JP Morgan and Andrew Carnegie are dead, and John Rockefeller is 96, practically the oldest man in America, there aren’t any rich people left who are willing to come to the national economy’s rescue, so we have to force you poor people to take care of yourselves.”

I am struck by the straightforwardness of FDR’s words. I might have the benefit of hindsight and historical context to assist me in interpreting them, but politics today seems so much more theatrical, so much more like a magic show with all the misdirection, or a professional wrestling match.

I was born in 1984, have memories from childhood of Reagan and Bush I on TV. They were relatively straight talkers who seemed to have no problem being frank about helping out rich “job creators”, but I guess it was a different time back then, the go-go 80’s.

After Lewinsky, 8 years of Bush II, and now 3 years of Obama, my generation could very well be the most politically cynical. Bush II was such an obvious bullshiter, but it worked to his benefit because you never could really read directly between the lines and get any meaning from it (maybe because he didn’t even know what he was supposed to be obfuscating, since it was Cheney’s master plan). When he was trying to privatize social security, he seemed just as confused as the public was, as if he didn’t understand that the goal was to “get this piece of shit off the government’s balance sheet!”

Obama is a good orator (sometimes I think that is about all he is good at); his deceit doesn’t come across readily in his words (I know some will disagree with me on that, perhaps I am too used to Bush II’s obvious chicanery), but his actions speak volumes for what he is up to: look at his appointments, the compromises he has made, the end result of the policies he gets behind.

Categories: Politics

The Feta is About to Hit the Fan

September 12, 2011 Leave a comment

I’ve been pretty busy on the internet today. To my intellectual detriment, I haven’t really been paying attention to the EU this year, so I caught up on things today. My worry meter is at about a 9/10. European politicians aren’t all that different from the ones here in the USA. The conservatives are essentially holding the economy hostage by not bailing out the troubled sovereign economies. I am not sure if they don’t understand what is at stake, or if they do and just don’t care because it is all part of some diabolical plot. In either case, things are not boding well for any type of political solution.

Spain, Italy, France, and then the entire EU are at risk, in that order. I would wager that if any country’s beside Greece default, we will be in for another sharp recession, and if they all go down (I have to believe the ECB or even the Fed would step in before this happened) we will be witnessing the final curtain for the Western finance, The Greater Depression. I don’t like sounding so melodramatic, but its warranted given the circumstances. How many politicians are willing to double down on another bailout? How many people would take to the street if such a thing came to pass? I know I would…

We’ve been hearing this possible chain of events for almost three years now, but the chickens have come to roost finally. The time frame for this happening is before the end of year; Greece may default as early as this week.

Social Security is NOT a Ponzi Scheme, It’s Just A Socially Regressive Tax Used To Fund A Mandatory Insurance Scheme

September 11, 2011 2 comments

Lots of talk in the blogosphere about Social Security: is it a Ponzi scheme? Yes, no, maybe so…

I started writing this article thinking “of course its a Ponzi scheme”, then I went to thinking it wasn’t, then back to it was, and finally, I have settled on the conclusion that it is not a Ponzi scheme, “definitely not”, and I’m actually kicking myself for not realizing it sooner.

The short reason why Social Security is not a Ponzi scheme is because Social Security is not an investment scheme; instead it is a mandatory insurance scheme (akin to Obamacare).

Read more…