Arguing Over Directions When We Desire Different Destinations

How can we argue about leaders or even directions when we desire different destinations? Here's the analogy: All of the voters are in a bus and we're deciding on a bus driver. We can look primarily at candidates' bus driving experience etc. if both have the same directions and destination in mind. Then if we don't get there, it's really easy to determine the driver's efficacy. Either we got there or didn't. Either we got closer or not. But that is never the most fundamental issue because the directions are always different (e.g. small government vs. big government, cutting taxes vs. cutting deficits etc.). If one driver wants to take the road on the left and the other driver will drive the road on the right then the difference between drivers themselves (assuming both are at least minimally competent) is secondary to the intended path. If prosperity is North East of us and of the two roads, one heads East and other West then, intuitively ceteris paribus, it's wiser to head East. But if the road East actually leads off a cliff and the road West eventually winds towards the North-East destination then it's wiser to head West. However, the intended path must first be a function of the desired destination. What if we can't find consensus on the destination? Shouldn't we first ensure the public debate focuses on the destination? Shouldn't we first at least attempt to resolve the most fundamental question from which all subsequent questions & answers depend? I want our leaders to articulate their ideal but viable visions of the future. I think there is comparatively little value in them doing so in abstract terms (as they often do). More practically, they should outline measurable, "falsifiable" goals with all of their conceivably attendant ramifications. Necessarily, these goals will have some new "losers" despite their projected overwhelming "winners". It is my contention that if this were done to American presidents starting in the 20th century that the Democrats would get substantially better scores than Republicans. It seems to me that despite the recent, over-hyped attention given to Tea Party activists, Americans have, over time, evolved towards a belief system where the desired "destination" is more in line with the Democrats. Consequently, Democrats' paths have been more effective in leading closer to that shared destination. And as expected, Democratic office-holders have been more effective in driving that road. Just my opinion. P.S. I was inspired to write this after re-reading an infuriatingly specious column in Fortune magazine (from February 11, 2009) that claimed: "It's inarguably true that in the very short-term, the New Deal did not fix the economy. Roosevelt's programs were first passed in 1933 but economists generally agree that the Great Depression did not end until 1939, when the country began preparing for World War II. Unemployment rates, which reached as high as 25%, took several years to recover and did not get below 9% until 1940." MY INARGUABLE REPLY: So the New Deal had to completely "fix" the economy for it to be good? As it even states in that very same paragraph, unemployment was cut in half and but somehow the writer thinks that shouldn't be seen as a good result. MY BIG OBVIOUS POINT: Moving closer to the desired destination should be seen as good! (e.g. Obama's first moves in Health Care Reform, Financial Reform, & Reducing Nuclear in the world). BTW - I dare Tea Party Activists, Libertarians and Right-wing conservatives to describe their desired destinations and specifically outline their preferred visions for the future. (q.v. Rand Paul's theories on civil rights). If they do (ceteris paribus) then the Democrats will have a very good year in 2010.

"Universal Value" & Price the Dollar to "Years of Sustenance" Standard

For years, I've been opining about what I call "Universal Value" which I think is one of the most fundamental aspect of economics. This idea runs contrary to free-market purists who think "the market as a whole can never be wrong" and that "crashes should not be avoided with regulation". (Maybe you should skim my February 10, 2009 post or my December 25, 2006 post for previous allusions to what I hope to explain here). So this post may only be a tiny bit interesting to those who are excited by monetary policy (the poor bastards). Here's my first attempt at articulating my idea to re-attach the dollar to a new "standard". Problem: Possible Rampant Inflation - devaluing American currency and thus our investments & assets. (q.v. countless examples of third-world countries where people carry wheelbarrows full of local cash to the market to pay for a few meager groceries). Many of you already know that I think tying currency to gold or any other shiny metal, regardless of its scarcity, is fundamentally absurd despite that history/tradition. Gold-standards are/will be worthless once people stop placing such an extreme premium on that yellow shiny element. So tying a currency to gold is systemically just as precarious, if not more so, than one that is "untied" or freely subject to the market. So here's my solution (which may or may not be original or effective): STEP #1: The government can create an ultra "bundle of goods" (which others have recommended) which... (here's "my" twist) are a function of a human's needs for a given year. This ultra bundle of goods would include: - shelter/safety for one year - nutritious food for one year - clothing for one year - minimal medical treatments - entertainment/education for one year - utilities Then the government could find locations in the US where it would be most economical to establish such housing (e.g. Wyoming, Texas or other wide-open but less-populous areas). I would think there would be overwhelming interest from communities across the country (especially depressed areas like Detroit, Cleveland etc.) seeking government funds to create these communities. NOTE - I'm not saying we put all of these in one segregated area. I'm saying the opposite of that. I would want there to be such communities in virtually every zipcode. Once you figured out the cost of this extraordinary "ultra bundle of goods" on a per year basis (dividing the cost of building & sustaining it by the number of years it will last) you would get the cost of a "Year of Sustenance" (YoS). Here's my first rough budget: - shelter for one year (e.g. a private trailer or apartment in a safe, unpolluted area) = $3k - nutritious food for one year (e.g. 2000 calories per day of assorted MREs) = $2k - clothing & goods for one year (e.g. those sufficient for the climate of that location) = $1k - minimal medical treatments (e.g. set by international human rights standards) = $1k - entertainment/education for one year (e.g. computer with access to the internet and/or DVDs & TV) = $1k - utilities (e.g. clean water/plumbing and solar electricity) = $2k GRAND TOTAL = $10,000 per year (but this could easily be "scaled-up" to nicer standards - e.g. "a house with a yard and fresh food" - for more money) STEP #2: The government actually builds/buys millions of these minimal housing/sustenance communities with their accordant amenities. They then make them available to the public for rent. Hopefully, not just as "the projects" for low-income people. (Social services / charity implication: the homeless, victims of domestic violence, parolees etc. could be given temporary access to these communities). STEP #3: The government then prices the dollar relative to the cost of "one year of sustenance". Thus, in this example, one dollar would be worth 0.01% of a "YoS". - $100 would be worth 1% of a "YoS". - $20,000 would be worth 2 "YoS". And one million dollars would be worth 100 "YoS". STEP #4: The US would then be required to have "YoS" built/ready for all the dollars in circulation. This is akin to casinos being required to have cash for every chip in play. The US could get sufficient "YoS" ready by at least 3 ways: a) actually building & supplying them - q.v. the WPA which helped America emerge from the Great Depression. b) buying them from real-estate developers desperate to fill up their oversupply of space or manufacturers with fallow factories. c) getting legal commitments from established companies which make those items based on mutually-agreed-upon exchange rates (e.g. Apple agrees to build 10 million laptops or Wall-mart agrees to feed 10 million people for year in exchange for 1 million acres of specified public land --- should it ever have to come to that). CONCLUSION: By requiring the US to have "YoS" built/ready, the dollar could never drop below the floor of 1/10,000th of what it costs to survive (albeit austerely) for one year. Assuming life-expectancy is 80 years, $800k would enable you live for a lifetime. Building up a next egg of cash/U.S. bonds worth $400k would guarantee you a 40-year retirement instead of possible death if markets or inflation destroys your investment. Now compare my idea to third-world currencies where inflation has been so rampant that they printed "100 trillion" dollar notes. At least with my idea there is a floor preventing further damage. The living at "YoS-level" certainly ain't desirable for most Americans in 2010 but it ain't supposed to be. It's just a floor. Otherwise, properly regulated markets can determine the swings. I know there are countless implications to this idea but I wanted to get this first draft posted. It's a work in progress. And I further note that it could be fundamentally flawed and impossible (but I currently just don't see how that's so). Stay tuned for further exploration of this topic. Good karma to you.

At $71, Oil is cheap

Checking the price of oil today (Monday, May 17, 2010) at 4:30pm EST on - http://www.bloomberg.com/energy/ showing NYMEX Crude is at $70.57 per barrel which seems very cheap to me. It seems like people are panicking (due to Greece et al.) that there will be a global depression (which is one of the few things that could substantially drop the price of oil). It's also possible that Big Oil is trying to keep the price down to counter any potential economic arguments to get off fossil fuels as a result of the giant BP spill. It's tougher to argue that renewable energy is "price competitive" when oil gets really cheap whereas the case for Solar & Wind is extremely compelling when oil gets to where it will trend for the foreseeable future (namely $70 - $90 a barrel as I've been saying for years, and massively more compelling when oil gets above $140 as it conceivably could). So BUY OIL at cheaper than $73 and sell it before it hits $85 or so (don't get too greedy). I guess if I had to put a "stop-loss" it would be at $64. And yes, I'm aware that following my most recent oil trade recommendation would have lost money (when I said, on March 29 2010, when oil was at $82.36 that it was "a little high" and that I recommended you sell when it drops to $78 and cut your losses if it goes to $85 - which it then did. Consequently I should have had the confidence to say it will eventually drop well below $82.36 which is has since done. Hindsight is 20/20). So overall, my predictions about oil have been pretty darn accurate. We'll see how good this one is.