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Thread: Everybody should read this

  1. #1
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    Everybody should read this

    Inequality Is Holding Back the Recovery - NYTimes.com

    Inequality Is Holding Back the Recovery

    Politicians typically talk about rising inequality and the sluggish recovery as separate phenomena, when they are in fact intertwined. Inequality stifles, restrains and holds back our growth. When even the free-market-oriented magazine The Economist argues — as it did in a special feature in October — that the magnitude and nature of the country’s inequality represent a serious threat to America, we should know that something has gone horribly wrong. And yet, after four decades of widening inequality and the greatest economic downturn since the Depression, we haven’t done anything about it.

    It is a long piece, but absolutely worth reading. It basically explains the root cause of the vast majority of our economic problems and why we can pretty much forget about any kind of real "recovery".

    There are four major reasons inequality is squelching our recovery. The most immediate is that our middle class is too weak to support the consumer spending that has historically driven our economic growth. While the top 1 percent of income earners took home 93 percent of the growth in incomes in 2010, the households in the middle — who are most likely to spend their incomes rather than save them and who are, in a sense, the true job creators — have lower household incomes, adjusted for inflation, than they did in 1996. The growth in the decade before the crisis was unsustainable — it was reliant on the bottom 80 percent consuming about 110 percent of their income.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

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    Quote Originally Posted by daewoo View Post
    Inequality Is Holding Back the Recovery - NYTimes.com

    Inequality Is Holding Back the Recovery




    It is a long piece, but absolutely worth reading. It basically explains the root cause of the vast majority of our economic problems and why we can pretty much forget about any kind of real "recovery".
    This article contains facts and fills in the rest with worthless conclusions of one particular viewpoint. I fully agree that income inequality is dragging us down but the author offers no real solution to this. From what I can tell the author feels if we raise taxes on the rich, throw more money at schools, reduce everyone's mortgage, allow discharging of student loan debt, and strengthen unions our problems will be solved. There was a brief mention of infrastructure improvements but only in passing. Other than the tax increases every one of those is a bad idea. I'd have a hard time explaining to the "1%" why we should tax them more for schools when we've over doubled the money going to schools since 1960 (adjusted for inflation) while at the same time not increasing teacher pay and lowering the quality of education. I'd have a hard time explaining to a small bank who made loans in good faith why they must close because we want to give a slap on the wrist to big banks (which will now be bigger). I'd have a hard time explaining to an inner-city kid why we can't go to college because no one wants to loan money to students anymore. Finally, I'd have a hard time telling a bunch of workers why they have no job because we shipped manufacturing to Canada because the US labor laws were too burdensome.

    "The right is wrong and the left just don't get it". How true.

  3. #3
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    Quote Originally Posted by Steeeeve View Post
    This article contains facts and fills in the rest with worthless conclusions of one particular viewpoint. I fully agree that income inequality is dragging us down but the author offers no real solution to this. From what I can tell the author feels if we raise taxes on the rich, throw more money at schools, reduce everyone's mortgage, allow discharging of student loan debt, and strengthen unions our problems will be solved. There was a brief mention of infrastructure improvements but only in passing. Other than the tax increases every one of those is a bad idea. I'd have a hard time explaining to the "1%" why we should tax them more for schools when we've over doubled the money going to schools since 1960 (adjusted for inflation) while at the same time not increasing teacher pay and lowering the quality of education. I'd have a hard time explaining to a small bank who made loans in good faith why they must close because we want to give a slap on the wrist to big banks (which will now be bigger). I'd have a hard time explaining to an inner-city kid why we can't go to college because no one wants to loan money to students anymore. Finally, I'd have a hard time telling a bunch of workers why they have no job because we shipped manufacturing to Canada because the US labor laws were too burdensome.

    "The right is wrong and the left just don't get it". How true.
    I certainly agree with you on 90% of this, though I think you underestimate the impact that raising taxes on the rich would have, if done properly. Here is an idea...forget about taxing capital gains at the income tax rate, tax it at regular income rates plus 5%, or 10%, or 15%. For years now we have been operating with a HUGE incentive to take money out of productive enterprises and invest it in pretty much anything that returns "capital gains" as opposed to income. That is the root of the mortgage meltdown. That is a lot of the trouble with our stock market and our apparently never ending cycles of booms and busts. Reverse the incentive. That right there would make a HUGE, HUGE difference.

    We do NOT need more eduction. If anything we need to take a long hard look at all our jobs and ask ourselves "do you really need a college degree to do this job". That is going to take some time, though, because currently you have a bunch of semi literate middle managements types with degree mill paper setting the standards for employment in this country. I am absolutely AMAZED at some of the jobs that I see listed that list a degree as a requirement. Many of them I can tell you from experience would be better filled with somebody with experience in the field, not some kid with a degree, but that is what they will end up with.

    I was talking to a friend of mine the other day who runs a local business that his now semi-retired father started. I had noticed he has an ad posted locally for a welding shop foreman. One of the qualifications he listed was an engineering degree. I was perplexed by that because I am extremely familiar with their operations (we had teamed up on some projects back when I owned my shop) and could not imagine why they would want a foreman with a degree. Their weld shop foreman does the administrative stuff in the shop (work assignment, etc...) as well as solving fit up problems, material cutting and handling problems, etc... Those are not the kinds of things an engineer does. They are not the kind of things that an engineer is good at. They are things that an experienced welder does and is good at. I am not hating on engineers here...I have an engineering degree. There have been times in the past that I have had 20 of them working for me. Right now I have 3. They have a very definite place and are valuable in that place, but that place is NOT as foreman in a weld shop. I have a very strict rule for my engineers. I first made it 15 years ago and have kept it ever since and am very strict about it. My engineers are NOT to be harassing the fab guys. Once you move past the paper you are in a different realm. Being able to design something, and even having an intellectual understanding of how it is produced does not make you a welder or a machinist or a fitter. I have fired engineers before because they just could not seem to avoid going back to the shop and trying to tell machinists with 20+ years of experience how to machine a part. Engineers in your shop = mayhem, and this guy wanted to hire one as shop foreman.

    The problem is that he has a business degree and has basically been conditioned to believe that anybody worth a damn will also have a degree. I can tell you flat out from years of expensive experience that is NOT the case. In the "doing" world, where you have plumbers and carpenters and welders and machinists and fabricators, a degree does not help. Even to some degree in the "thinking" world a lot of operations side positions are now requiring degrees that would probably be better served by somebody with experience in the field or in the position they will be overseeing. A local manufacturer here has a director of maintenance operations who pretty much knows nothing about industrial maintenance or industrial processes. He recently hired a new IT guy for the company who also knows nothing about industrial processes. He primarily hired him because he "programs" in visual basic and the front end to most of their equipment is programmed in visual basic. Neither of them know enough about the setup to realize that being able to put together macros in Accel is NOT the same as being able to program the PC frontend for a production line. I look forward to watching this play out

    As far as the rest goes, we have essentially ended up with a system that is HUGELY stacked in favor of the wealthy. We need to consider that and change our way of thinking. When the mortgage meltdown happened our first thought should not have been "How do we protect citibank" it should have been "how do we protect the 95%". Frankly the authors idea of mortgage writedowns is not terrible, as long as we made it universal. Take that MBS paper that was selling for pennies on the dollar and re-value the underlying mortgages based on the market price of the security...I.E if you had a $100,000.00 mortgage and the security was trading at $0.20 on the dollar, write the mortgage down to $20,000.00 and then re-structure the security based on the new, lower, mortgage values. As I have pointed out before, we could also have instituted a clearing house and allowed mortgage holders to buy their mortgage out of the securities (same impact in the end). That would have been a 100% free market solution to the problem. Instead we bailed out all the banks and the federal reserve basically bought up all the mortgage securities at face value. When push came to shove we said "forget the free market, we are protecting the wealthy"

    The other thing that he touches on in the article but does not spend (imo) nearly enough time on is productivity gains. Technology has provided us with MASSIVE productivity gains. In theory, productivity gains should drive up labor prices since the people you have working are producing so much more. They should also drive consumer prices down, making goods more affordable for those workers. In reality they have allowed workers to produce so much more that we have needed fewer workers, which has depressed labor prices, and manufacturers have not passed those savings on to consumers. All those productivity increases have gone to corporate profits.

    Part of this goes back to the inequality he is talking about in the article and the fact that the middle class cant get capital together to start businesses, which would increase competition. Another big part of it, though, has to do with federal regulation. Our patent system is completely an utterly out of control. It is anywhere from difficult to impossible to bring a new product to the mass market because of the insanity of our patent system. IF you decide you can produce widgets cheaper and of a better quality than Namelesscorp international, it does not matter because the minute you get big enough to be viewed as actual competition, Namelesscorp international will throw their patent attorneys at you and sue you out of business. It does not actually matter who is wrong or who is right, or whether they should have ever gotten their original patent to begin with, they will fire up their legal department and their opening shot will be an avalanche of paperwork and motions, and you have to pay an attorney to answer every single one of them. You will go bankrupt.

    Safety and health, environmental, consumer protection, federal acquisition, and even tax regulations are all heavily, heavily weighted toward Namelesscorp intl over the smaller business trying to carve out a market niche. These guys have essentially legislated their competition out of business.

    I am going to stop now because if I keep going this is going to turn into a 5000 word rant Suffice it to say that while I agree that the solutions he offers are simplistic, and in some cases wrong, he identifies the problem extremely well, which I think was his primary goal in writing the article. The solutions will require structural changes to virtually all areas of our economy, our society, and our thought processes. I think that to some degree, though, those changes are taking place. At one time there were little freedoms all over the place spewing their ignorant garbage. I doubt there has been any other time since 1980 that over 75% of people approved of tax hikes for the wealthy. The republicans, who as a party have pretty much been bought by the wealthy, are on their back foot and it looks like they will stay there for quite a while. For a long time, saying "class warfare" any time somebody suggested making the wealthy pay for anything worked to silence those who were proposing it. Now it seems like people are finally waking up to the fact that this IS class warfare, and 99% of us have been losing.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

  4. #4
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    Quote Originally Posted by daewoo View Post
    I certainly agree with you on 90% of this, though I think you underestimate the impact that raising taxes on the rich would have, if done properly. Here is an idea...forget about taxing capital gains at the income tax rate, tax it at regular income rates plus 5%, or 10%, or 15%. For years now we have been operating with a HUGE incentive to take money out of productive enterprises and invest it in pretty much anything that returns "capital gains" as opposed to income. That is the root of the mortgage meltdown. That is a lot of the trouble with our stock market and our apparently never ending cycles of booms and busts. Reverse the incentive. That right there would make a HUGE, HUGE difference.
    I'm for this. I'd probably just do a "tax a normal income up to $250k" and then add the surcharge on capital gains that aren't really productive. There is no question that it takes money away from actual investment in new businesses. I honestly can't say I blame people for taking advantage of this. You can make millions playing the stock market and pay MUCH less tax and have MUCH less regulation than if you start a business. Go try and start up a bakery in Maryland somewhere. If you can do it in under 2 years and have for less than a few million, I'd be shocked. I know this because I talked with someone who tried to do it and it wasn't worth the effort. The mountains of regulations and "studies" you have to conduct is unreal. Government punishes basically all businesses that are not massive in size. And if you do start up you now pay ORDINARY income on all your profits. Who wants that kinda drama when you can give your money to someone and get 5-8% returns on people passing paper around.

    We do NOT need more eduction. If anything we need to take a long hard look at all our jobs and ask ourselves "do you really need a college degree to do this job". That is going to take some time, though, because currently you have a bunch of semi literate middle managements types with degree mill paper setting the standards for employment in this country. I am absolutely AMAZED at some of the jobs that I see listed that list a degree as a requirement. Many of them I can tell you from experience would be better filled with somebody with experience in the field, not some kid with a degree, but that is what they will end up with.

    I was talking to a friend of mine the other day who runs a local business that his now semi-retired father started. I had noticed he has an ad posted locally for a welding shop foreman. One of the qualifications he listed was an engineering degree. I was perplexed by that because I am extremely familiar with their operations (we had teamed up on some projects back when I owned my shop) and could not imagine why they would want a foreman with a degree. Their weld shop foreman does the administrative stuff in the shop (work assignment, etc...) as well as solving fit up problems, material cutting and handling problems, etc... Those are not the kinds of things an engineer does. They are not the kind of things that an engineer is good at. They are things that an experienced welder does and is good at. I am not hating on engineers here...I have an engineering degree. There have been times in the past that I have had 20 of them working for me. Right now I have 3. They have a very definite place and are valuable in that place, but that place is NOT as foreman in a weld shop. I have a very strict rule for my engineers. I first made it 15 years ago and have kept it ever since and am very strict about it. My engineers are NOT to be harassing the fab guys. Once you move past the paper you are in a different realm. Being able to design something, and even having an intellectual understanding of how it is produced does not make you a welder or a machinist or a fitter. I have fired engineers before because they just could not seem to avoid going back to the shop and trying to tell machinists with 20+ years of experience how to machine a part. Engineers in your shop = mayhem, and this guy wanted to hire one as shop foreman.

    The problem is that he has a business degree and has basically been conditioned to believe that anybody worth a damn will also have a degree. I can tell you flat out from years of expensive experience that is NOT the case. In the "doing" world, where you have plumbers and carpenters and welders and machinists and fabricators, a degree does not help. Even to some degree in the "thinking" world a lot of operations side positions are now requiring degrees that would probably be better served by somebody with experience in the field or in the position they will be overseeing. A local manufacturer here has a director of maintenance operations who pretty much knows nothing about industrial maintenance or industrial processes. He recently hired a new IT guy for the company who also knows nothing about industrial processes. He primarily hired him because he "programs" in visual basic and the front end to most of their equipment is programmed in visual basic. Neither of them know enough about the setup to realize that being able to put together macros in Accel is NOT the same as being able to program the PC frontend for a production line. I look forward to watching this play out
    I think we need more education, just not in English Lit. I can't figure out why class sizes are "getting smaller" yet teachers will tell you they aren't, why education costs have doubled yet teachers aren't paid anymore than in 1960 (inflation adjusted), and why students are coming out of school not knowing who our current VP is. I also can't figure out why we feel we have to pay for upper middle class students to have a 4 year vacation and then pay for them to whine about how they can't get a job for another 2. Finally, why do we subsidize accountants and engineers but force companies to educate welders and auto-mechanics (to some extent)? Perhaps we don't need "more education" overall but rather more education in certain areas...aka redo our education system. We certainly don't need more money for it....in the aggregate.

    As far as the rest goes, we have essentially ended up with a system that is HUGELY stacked in favor of the wealthy. We need to consider that and change our way of thinking. When the mortgage meltdown happened our first thought should not have been "How do we protect citibank" it should have been "how do we protect the 95%". Frankly the authors idea of mortgage writedowns is not terrible, as long as we made it universal. Take that MBS paper that was selling for pennies on the dollar and re-value the underlying mortgages based on the market price of the security...I.E if you had a $100,000.00 mortgage and the security was trading at $0.20 on the dollar, write the mortgage down to $20,000.00 and then re-structure the security based on the new, lower, mortgage values. As I have pointed out before, we could also have instituted a clearing house and allowed mortgage holders to buy their mortgage out of the securities (same impact in the end). That would have been a 100% free market solution to the problem. Instead we bailed out all the banks and the federal reserve basically bought up all the mortgage securities at face value. When push came to shove we said "forget the free market, we are protecting the wealthy"
    I used to think this was a good idea before I realized it basically kills all small banks who had nothing to do with the crisis. The whole thing is basically a win/win for the big banks and a loss/loss for anyone that was responsible in their own finances. That leaves us with either hurting the small banks or hurting the crack wh*re who thought she could afford a McMansion. The bailouts and Dodd Frank basically opted for half-killing the small banks and mildly(very) helping the McMansion owner. Doing what you said, from what I understand, would end small banks as we know it. But that's from a small bank guy I know in Illinois...sometimes they are dramatic.

    The other thing that he touches on in the article but does not spend (imo) nearly enough time on is productivity gains. Technology has provided us with MASSIVE productivity gains. In theory, productivity gains should drive up labor prices since the people you have working are producing so much more. They should also drive consumer prices down, making goods more affordable for those workers. In reality they have allowed workers to produce so much more that we have needed fewer workers, which has depressed labor prices, and manufacturers have not passed those savings on to consumers. All those productivity increases have gone to corporate profits.

    Part of this goes back to the inequality he is talking about in the article and the fact that the middle class cant get capital together to start businesses, which would increase competition. Another big part of it, though, has to do with federal regulation. Our patent system is completely an utterly out of control. It is anywhere from difficult to impossible to bring a new product to the mass market because of the insanity of our patent system. IF you decide you can produce widgets cheaper and of a better quality than Namelesscorp international, it does not matter because the minute you get big enough to be viewed as actual competition, Namelesscorp international will throw their patent attorneys at you and sue you out of business. It does not actually matter who is wrong or who is right, or whether they should have ever gotten their original patent to begin with, they will fire up their legal department and their opening shot will be an avalanche of paperwork and motions, and you have to pay an attorney to answer every single one of them. You will go bankrupt.

    Safety and health, environmental, consumer protection, federal acquisition, and even tax regulations are all heavily, heavily weighted toward Namelesscorp intl over the smaller business trying to carve out a market niche. These guys have essentially legislated their competition out of business.

    I am going to stop now because if I keep going this is going to turn into a 5000 word rant Suffice it to say that while I agree that the solutions he offers are simplistic, and in some cases wrong, he identifies the problem extremely well, which I think was his primary goal in writing the article. The solutions will require structural changes to virtually all areas of our economy, our society, and our thought processes. I think that to some degree, though, those changes are taking place. At one time there were little freedoms all over the place spewing their ignorant garbage. I doubt there has been any other time since 1980 that over 75% of people approved of tax hikes for the wealthy. The republicans, who as a party have pretty much been bought by the wealthy, are on their back foot and it looks like they will stay there for quite a while. For a long time, saying "class warfare" any time somebody suggested making the wealthy pay for anything worked to silence those who were proposing it. Now it seems like people are finally waking up to the fact that this IS class warfare, and 99% of us have been losing.
    This is no joke. Just look at Apple. You can patent rounded corners on a phone? Like I said earlier, federal governments favor large businesses and it doesn't matter if you are democrat or republican. They think they help the little guy but I haven't seen a piece of legislation in a decade that has.

  5. #5
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    Quote Originally Posted by Steeeeve View Post
    I'm for this. I'd probably just do a "tax a normal income up to $250k" and then add the surcharge on capital gains that aren't really productive. There is no question that it takes money away from actual investment in new businesses. I honestly can't say I blame people for taking advantage of this. You can make millions playing the stock market and pay MUCH less tax and have MUCH less regulation than if you start a business. Go try and start up a bakery in Maryland somewhere. If you can do it in under 2 years and have for less than a few million, I'd be shocked. I know this because I talked with someone who tried to do it and it wasn't worth the effort. The mountains of regulations and "studies" you have to conduct is unreal. Government punishes basically all businesses that are not massive in size. And if you do start up you now pay ORDINARY income on all your profits. Who wants that kinda drama when you can give your money to someone and get 5-8% returns on people passing paper around.
    This is, IMO, one of the most serious problems we have. Somehow they have managed to rig the system so money you actually WORK for is worth less than money you did not work for. It is absolutely insane.

    As far as the other goes, knowing how to deal with government regulation, or get around it, is in my experience one of the prime reasons that businesses either succeed or fail. If you think that a bakery in Maryland, try a quarry or a mine ANYWHERE. I know 4 or 5 guys who have tried to open quarries and have all been killed off by MSHA and the EPA. The guy I bought most of my startup equipment from had been driven out of business by MSHA. The tangle of regulations is not a big deal for a giant corporation...they just keep a couple of regulatory compliance guys on staff full time who take care of filling out useless paperwork and making sure that people put wheel chocks behind their wheels in the parking lot (nope, not kidding). A company that either cant afford a couple of full time compliance guys, or who dont know how to get around the regulations, or fight them effectively, is pretty much dorked.

    I think we need more education, just not in English Lit. I can't figure out why class sizes are "getting smaller" yet teachers will tell you they aren't, why education costs have doubled yet teachers aren't paid anymore than in 1960 (inflation adjusted), and why students are coming out of school not knowing who our current VP is. I also can't figure out why we feel we have to pay for upper middle class students to have a 4 year vacation and then pay for them to whine about how they can't get a job for another 2. Finally, why do we subsidize accountants and engineers but force companies to educate welders and auto-mechanics (to some extent)? Perhaps we don't need "more education" overall but rather more education in certain areas...aka redo our education system. We certainly don't need more money for it....in the aggregate.
    Welders that come out of welding school are generally really bad welders. There is certain stuff, like plumbing, welding, machining, etc... that sticks to the old "apprenticeship" model because it works and we have not figured out a way to educate them any better.

    I guess what I am trying to say is that we need to look at jobs and actually make a rational decision about whether a degree is needed for the job or not. Then we need to make our degrees actually MEAN something. We have in many ways gotten to the point where a college degree has replaced a high school diploma in the job market. That would be fine if the degree did not cost $200,000.00. That is one hell of a price to pay for entry into the job market. To be fair, though, maybe that is because we have failed so miserably when it come to K-12 education. I did once have a VP from a fortune 500 company tell me "A college degree is the only way we can be sure they can read and write at an 8th grade level....a masters means they can probably also do some math".

    I think we need to make college HARDER. Much, much HARDER. I know when I was in college I spent more time drinking and chasing women than I did studying. It just wasn't that hard.

    I used to think this was a good idea before I realized it basically kills all small banks who had nothing to do with the crisis. The whole thing is basically a win/win for the big banks and a loss/loss for anyone that was responsible in their own finances. That leaves us with either hurting the small banks or hurting the crack wh*re who thought she could afford a McMansion. The bailouts and Dodd Frank basically opted for half-killing the small banks and mildly(very) helping the McMansion owner. Doing what you said, from what I understand, would end small banks as we know it. But that's from a small bank guy I know in Illinois...sometimes they are dramatic.
    The only way a small bank would have taken a hit is if they were holding a bunch of mortgage backed securities, which should only have happened if they were acting as an investment bank. When the whole mortgage mess exploded I actually went and talked to the guy who runs my local bank to see what kind of exposure they had and to see if I needed to break my money up into insurable sized accounts. He said they had none...not a single iota. When they made mortgages, they held them. There was no securitizing and selling them, and they sure as hell were not gambling with their patrons money by buying up junk mortgages that other people had originated. The problem, according to him, is that roughly 95% of banks in this country, big and small, have an investment division that engages in proprietary trading using their deposits. The Volker Rule will put an end to that, and people have been predicting the end of small banks because of it since the day Volker proposed it. The thing is, prior to 1999, the Glass-Steagall prohibited that anyway, and unless I REALLY missed something, I am fairly certain we had small banks prior to 1999.

    I'm sorry, but the fact that small banks have to act like...you know...BANKS...instead of hedge funds does not bother me at all. The idea of a bunch of small banks who bet their customers deposits on junk mortgages going under also does not trouble me.

    This is no joke. Just look at Apple. You can patent rounded corners on a phone? Like I said earlier, federal governments favor large businesses and it doesn't matter if you are democrat or republican. They think they help the little guy but I haven't seen a piece of legislation in a decade that has.
    I don't know how you fix that, though. Part of the problem, obviously, is that congress is full of wealthy people, so not only do they not have any real incentive to help out the middle class, in many cases I am not sure they know HOW. The only thing I can really think of is political awareness...get the public involved, get them educated when it comes to these matters, and have them hold their politicians accountable. That last part actually seems to be the hardest.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

  6. #6
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    Quote Originally Posted by daewoo View Post
    This is, IMO, one of the most serious problems we have. Somehow they have managed to rig the system so money you actually WORK for is worth less than money you did not work for. It is absolutely insane.

    As far as the other goes, knowing how to deal with government regulation, or get around it, is in my experience one of the prime reasons that businesses either succeed or fail. If you think that a bakery in Maryland, try a quarry or a mine ANYWHERE. I know 4 or 5 guys who have tried to open quarries and have all been killed off by MSHA and the EPA. The guy I bought most of my startup equipment from had been driven out of business by MSHA. The tangle of regulations is not a big deal for a giant corporation...they just keep a couple of regulatory compliance guys on staff full time who take care of filling out useless paperwork and making sure that people put wheel chocks behind their wheels in the parking lot (nope, not kidding). A company that either cant afford a couple of full time compliance guys, or who dont know how to get around the regulations, or fight them effectively, is pretty much dorked.
    But don't you want your baker to be better at making bread than dealing with government regulations? I know I do. I can't even imagine what it is like with MSHA and EPA. The biggest I deal with is DoE as it relates to Student Financial Aid. You need to provide less to a bank to get a $200k loan than you need to get a Pell grant.

    As an example, take a look at the differences between the Pell Grant and Virginia's Commonwealth Award. The eligibility regulations for Pell are best seen in the SFA handbook here: IFAP - Federal Student Aid Handbook. The handbook has 6 VOLUMES of which eligibility is one. It's roughly 80 pages. That's just to see if you can give someone aid. Now, the Commonwealth Award. The eligibility requirements are that you are a Virginian attending a Virginia school and are more than half time. How much you get and who gets it are determined by the school. Schools are free to determine who needs the money and for what reasons. In the far west coal area where everyone gets Pell they give it to students who don't get max Pell as it helps pay tuition and avoid loans. At rich UVA they give it to the poorest students. At others it is first come first serve. The only downside to the program is it can't be funded enough because we have to pay too many people to comply with federal XXXX. I can't imagine you experience anything less with MSHA.

    Welders that come out of welding school are generally really bad welders. There is certain stuff, like plumbing, welding, machining, etc... that sticks to the old "apprenticeship" model because it works and we have not figured out a way to educate them any better.
    I dunno about welders but I know auto mechanics and HVAC companies prefer they get some vocational training. Our vocational schools have apprenticeships with them. For example, a buddy of mine studied networking and every other day worked for the county to learn.

    This is what Switzerland does, and honestly, they are the best run country at present time. Their education system is better, health care system better, hell...even the debt brake idea is better than anything suggested here.

    I guess what I am trying to say is that we need to look at jobs and actually make a rational decision about whether a degree is needed for the job or not. Then we need to make our degrees actually MEAN something. We have in many ways gotten to the point where a college degree has replaced a high school diploma in the job market. That would be fine if the degree did not cost $200,000.00. That is one hell of a price to pay for entry into the job market. To be fair, though, maybe that is because we have failed so miserably when it come to K-12 education. I did once have a VP from a fortune 500 company tell me "A college degree is the only way we can be sure they can read and write at an 8th grade level....a masters means they can probably also do some math".
    That VP must not hire a lot of people out of college...I deal with people out of college on a regular basis and often wondered if someone forgot to tell me that English is no longer required learning for people ages 1-22. The best recruiter I know told me he doesn't base ANYTHING on GPA. His two criteria are 1) did you work in college 2) what school did you go to. Most kids out of a school tend to know the same things (they all had the same professors) so you generally know the knowledge you get. If the kid worked in school you know they were serious about making their life work.

    I think we need to make college HARDER. Much, much HARDER. I know when I was in college I spent more time drinking and chasing women than I did studying. It just wasn't that hard.
    Ha, In one of my accounting classes I had the highest test average but got a B- in the class because I had a 0 homework average...It was so easy to do other things. You're right, college is basically a joke these days.


    The only way a small bank would have taken a hit is if they were holding a bunch of mortgage backed securities, which should only have happened if they were acting as an investment bank. When the whole mortgage mess exploded I actually went and talked to the guy who runs my local bank to see what kind of exposure they had and to see if I needed to break my money up into insurable sized accounts. He said they had none...not a single iota. When they made mortgages, they held them. There was no securitizing and selling them, and they sure as hell were not gambling with their patrons money by buying up junk mortgages that other people had originated. The problem, according to him, is that roughly 95% of banks in this country, big and small, have an investment division that engages in proprietary trading using their deposits. The Volker Rule will put an end to that, and people have been predicting the end of small banks because of it since the day Volker proposed it. The thing is, prior to 1999, the Glass-Steagall prohibited that anyway, and unless I REALLY missed something, I am fairly certain we had small banks prior to 1999.

    I'm sorry, but the fact that small banks have to act like...you know...BANKS...instead of hedge funds does not bother me at all. The idea of a bunch of small banks who bet their customers deposits on junk mortgages going under also does not trouble me.
    Next time I talk to him I'll get more details but he seemed pretty upset about the whole idea. Like I said, compliance folks are a bit high-strung but he knows what he is talking about...most times.

    I don't know how you fix that, though. Part of the problem, obviously, is that congress is full of wealthy people, so not only do they not have any real incentive to help out the middle class, in many cases I am not sure they know HOW. The only thing I can really think of is political awareness...get the public involved, get them educated when it comes to these matters, and have them hold their politicians accountable. That last part actually seems to be the hardest.
    Well, so far I've convinced...well...no one. I'm not sure how you get people to stop believing that "their party" would fix it if you only elected them.

  7. #7
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    Quote Originally Posted by Steeeeve View Post
    But don't you want your baker to be better at making bread than dealing with government regulations? I know I do. I can't even imagine what it is like with MSHA and EPA. The biggest I deal with is DoE as it relates to Student Financial Aid. You need to provide less to a bank to get a $200k loan than you need to get a Pell grant.

    As an example, take a look at the differences between the Pell Grant and Virginia's Commonwealth Award. The eligibility regulations for Pell are best seen in the SFA handbook here: IFAP - Federal Student Aid Handbook. The handbook has 6 VOLUMES of which eligibility is one. It's roughly 80 pages. That's just to see if you can give someone aid. Now, the Commonwealth Award. The eligibility requirements are that you are a Virginian attending a Virginia school and are more than half time. How much you get and who gets it are determined by the school. Schools are free to determine who needs the money and for what reasons. In the far west coal area where everyone gets Pell they give it to students who don't get max Pell as it helps pay tuition and avoid loans. At rich UVA they give it to the poorest students. At others it is first come first serve. The only downside to the program is it can't be funded enough because we have to pay too many people to comply with federal XXXX. I can't imagine you experience anything less with MSHA.
    I agree entirely. What people need to realize, though, is that when it comes to a lot of the regulatory garbage in the private sector, that is not just "the government screwing us" that is "big companies using the government to screw us". I am going to use MSHA as an example because I am most familiar with them. They propose new rules, or "new interpretations" of the rules (which at the end of the day boils down to a new rule) and you would expect pretty much everybody in the mining industry to object. They don't. They open their proposal for public comment and you end up seeing big companies like Vulcan Materials and APAC supporting the rules despite the fact that the costs will be high and in many cases the rules don't make sense.

    They do it because they know that it creates a relatively minor hardship for them, but will literally drive smaller companies out of business and keep smaller companies from coming into the industry, which will limit competition and make them a lot more money.

    In your example dealing with the DOE and student aid, those complications tend to be the result of people who feel it is vitally important that nobody get a dime that they don't deserve (by somebodys definition). They are so afraid somebody might get a dollar that they don't absolutely need that they complicate the holy living hell out of the entire system.

    I dunno about welders but I know auto mechanics and HVAC companies prefer they get some vocational training. Our vocational schools have apprenticeships with them. For example, a buddy of mine studied networking and every other day worked for the county to learn.
    HVAC and auto mechanics require a lot of knowledge that is not really hands on. Those systems are a LOT more complex than they used to be. A GOOD modern auto mechanic is a lot closer to a robotics tech than the "grease monkey" image of old. There are still "mechanics" out there that are basically "parts changers", but a good modern mechanic can tear into a fairly complex robot and feel right at home.

    Welding is more art than science. Where an HVAC or auto tech will spend a year learning about electronic control systems, a welder will spend a year (or more) learning how to correctly manipulate his electrode and listen for the correct sound as he makes his weld. There is not that much bulk knowledge required, what makes a good welder is basically repeated practice of an intricate task.


    That VP must not hire a lot of people out of college...I deal with people out of college on a regular basis and often wondered if someone forgot to tell me that English is no longer required learning for people ages 1-22. The best recruiter I know told me he doesn't base ANYTHING on GPA. His two criteria are 1) did you work in college 2) what school did you go to. Most kids out of a school tend to know the same things (they all had the same professors) so you generally know the knowledge you get. If the kid worked in school you know they were serious about making their life work.
    LOL. I can see than.

    Next time I talk to him I'll get more details but he seemed pretty upset about the whole idea. Like I said, compliance folks are a bit high-strung but he knows what he is talking about...most times.
    If you could I would appreciate it. The banking industry is such a freaking mess anymore that it is hard to figure out exactly what the heck is going on. Even insiders don't always seem to understand it. I did finally figure out that the term "innovation" in the banking industry pretty much means "dodging regulations".

    Well, so far I've convinced...well...no one. I'm not sure how you get people to stop believing that "their party" would fix it if you only elected them.
    What gets me is that so many people seem to have an emotional investment in "their party" and the "ideals" of that party. It is like the republicans arguing that raising taxes on the wealthy will hurt economic growth. We have study after study after study showing that is not the case. There is not a logical argument that can be made in support of that position. It is still the cornerstone of their party platform. The democrats have their own list of nonsensical beliefs and even when you can show that they are complete nonsense, they discount any information that does not agree with their nonsensical viewpoint and stick to their guns.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

  8. #8
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    Quote Originally Posted by daewoo View Post
    In your example dealing with the DOE and student aid, those complications tend to be the result of people who feel it is vitally important that nobody get a dime that they don't deserve (by somebodys definition). They are so afraid somebody might get a dollar that they don't absolutely need that they complicate the holy living hell out of the entire system.
    Bingo. And the odd thing is, the regulations basically CAUSE more people to get aid that shouldn't. You discuss below how people hang on to bad ideas, this is one I can attribute to democrats. They are convinced that more "accountability" and more money at the federal department of education will solve all our education woes. It's probably the biggest hindrance to education in the last 40 years (not the only).

    If you could I would appreciate it. The banking industry is such a freaking mess anymore that it is hard to figure out exactly what the heck is going on. Even insiders don't always seem to understand it. I did finally figure out that the term "innovation" in the banking industry pretty much means "dodging regulations".
    He's busy doing compliance stuff to get back to be right now :-P Apparently a bad time of year. I'll try not to forget. I think it had something to do with applying it to everyone as the impact would greatly hurt a small bank who mostly gave out good loans but due to other people giving out bad loans and foreclosing the value has gone down on everyone. This would put a strain on small banks more so than a large bank. Again, banking is not my specialty...I only know slightly more than Geithner .

  9. #9
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    Quote Originally Posted by Steeeeve View Post
    Bingo. And the odd thing is, the regulations basically CAUSE more people to get aid that shouldn't. You discuss below how people hang on to bad ideas, this is one I can attribute to democrats. They are convinced that more "accountability" and more money at the federal department of education will solve all our education woes. It's probably the biggest hindrance to education in the last 40 years (not the only).
    Absolutely. Just like the republicans and "low taxes will make the economy BOOM" the democrats need to actually look at the data and see that throwing more money at education solves nothing and causes a whole boatload of problems.

    They complicate the hell out of the system to make sure the money gets in the "right" place, but in doing so they end up creating such a jumbled system that they end up with "loopholes" a mile wide.

    Most federal regulations are the same. That is why I say that knowing how to deal with them or how to get around them is often the primary key to success in businesses that are heavily regulated. I have a site that I really wanted to do but I knew I could never get EPA approval for a mine site and I knew that MSHA was never going to let me do what I wanted to do there. So I got a geoengineer to come out and survey and put together a plan for a large watershed pond...and made sure that the pond was located and designed to intersect with the ledges I wanted to mine. The EPA does not have standing to oppose a watershed pond and buried in mine safety and health laws and case law is a provision that if the harvesting of the stone is not the primary purpose of the project but rather auxiliary to it, it is not a "mine" under federal law and does not fall under the jurisdiction of MSHA. Fortunately mother nature was kind enough to provide us with a terrible drought, making the construction of watershed ponds especially logical right now.

    He's busy doing compliance stuff to get back to be right now :-P Apparently a bad time of year. I'll try not to forget. I think it had something to do with applying it to everyone as the impact would greatly hurt a small bank who mostly gave out good loans but due to other people giving out bad loans and foreclosing the value has gone down on everyone. This would put a strain on small banks more so than a large bank. Again, banking is not my specialty...I only know slightly more than Geithner .
    That makes sense...the actual liquidation plan would not have hurt them, but the broader market implications would have.
    If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen. —Samuel Adams

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