Posts Tagged ‘college’
Paul Krugman is an NYT op-ed columnist, economics professor at Princeton, and everything that is wrong with academic economics. His recent article aimed at blasting Rand Paul about a tweet is a great example of his academic shortsightedness.
His worst quote is the following:
“issuing debt is a way to pay for useful things, and we should do more of that when the price is right. The United States suffers from obvious deficiencies in roads, rails, water systems and more; meanwhile, the federal government can borrow at historically low interest rates. So this is a very good time to be borrowing and investing in the future, and a very bad time for what has actually happened: an unprecedented decline in public construction spending adjusted for population growth and inflation.”
This would have made since back when the National Debt was 1/10 what it is today. Had that borrowed money been spent on infrastructure like Krugman is suggesting, we’d have amazing roads (maybe even paved in gold!), freeways, practically no student loan debt, an abundance of water retention systems in California, and massive alternative energy infrastructure. Instead, our roads are in horrible condition and cost us an average of $515/month (after double taxes – income and excise- mind you).
Sure, Krugman’s statements make sense on paper. I’ve seen this kind of thinking before when I was studying economics in college. It’s the same shortsightedness that had me question whether a degree in economics was worth anything more than the paper it is written on. Spoiler alert: the ink costs more than the paper.
Earlier this year, Krugman wrote another half-witted articles about debt (amongst so many others).
With statements like “Because debt is money we owe to ourselves, it does not directly make the economy poorer (and paying it off doesn’t make us richer)”, Krugman proves that studying economics at Princeton is a waste of money. First, our national debt is not owned entirely by American citizens. Second, owing YOURSELF money is fine (great example is taking a loan against your 401K) ONLY IF you pay it back. At some point, you aren’t going to have income, and if you’ve borrowed your entire 401K, you’re really hurting your retirement as well as what you are leaving behind for your family. The argument that the microeconomics doesn’t apply to the macroeconomics is false.
It’s certainly a reasonable argument to make that America borrowing money from itself and then paying it back is a good thing much like borrowing from a 401K is a good thing for an individual. However, if that money doesn’t get paid back and just piles up instead, you’re left with an accelerated increase in debt:
Even adjusting for inflation, the $4,118 only equals a mere $11,926.11. That’s quite a bit off from the $57K each citizen owns. It gets even worse when you only count taxpayers.
Borrowing and paying back is fine, but that’s not what America is doing. We’re borrowing and then having someone else pay it back (maybe, if they can). That’s called a Ponzi scheme. If America was borrowing from itself (which it isn’t since 35% is foreign owned) and paying back the debt within a generation, we’d see a much smaller national debt than the $18MMM+ we currently have.
At the end of the day, it appears Krugman is too smug with his academia version of national debt that he can’t see the flaws of his logic when applied to the real world as opposed to the fictitious one in which he wants to believe actually exists. He’s played his cards right and gotten to a level of academic prestige, which is great for him and the New York Times; not so good for public perceptions of debt.
The perspective of Thiel in this April 10 TechCrunch article is pure genius! One really must question the value of spending massive amounts of money on higher education when we have reached unemployment levels rivaled only by the Great Depression but have the must educated population in history. Besides mountains of debt, what has all that education provided so many Americans who are out of work? To top it all off, tuition and materials (books) continue to increase in cost. Thiel is definitely right on the money here!
I know I’m about to piss off just about every college student in America, but they really aren’t to blame for cuts to the government spending at state universities. It’s the students before them that are the issue.
The entire concept of the state government providing funding to the state universities is pretty simple: the universities provide an education that allows students to attain higher paying jobs and create businesses that in tern hire more people.
With unemployment at record highs and income a lower levels than a decade ago, clearly the universities have not produced the results the state government was hoping for. The state government pays for most everything with tax dollars. If unemployment is high and business isn’t booming, the universities haven’t produced students who can grow the economy. Their funding should get cut. It’s pretty simple.
Of course, the state governments should be providing the universities with any funding. If anything, they state governments should issue grants and loans to prospective students only. On top of that, the state governments should not rely on taxes for those funds at all. Instead, states should issue bonds to raise money for the grants they issue to students. This would eliminate “budget cut” woes for universities. A university would stand purely on its own merit and ability to compete for quality students. All of this would allow universities to actually compete for students instead of having state mandated tuition fees. Generally speaking, competition generates lower prices as cost is quite often one of the most important factors for any purchasing decisions.
I have nothing but heaps of praise for Wendi Baity’s hip hop class on Monday nights at Moorpark College! This class has been such a great experience for me as both a dancer and as a social experience. Having done mostly partnered dancing for the last six years, this class was a definite stretch for me. I am very grateful for the spirit that Wendi brought to this class. She has been an incredible inspiration for me, not just with hip hop, but with all styles of dance.
Wendi infuses this energy into her class that became so abundantly clear at the end of the semester dance performance this evening. The monday night class is packed with students from all walks of life. Everyone in that class has an amazing story to tell. They are all great people.
When we all hit the stage, something magical happened. Wendi had been asking for more energy throughout the entire semester. All that energy came onto that stage tonight. It seemed like everyone just lit up on the stage! It was an awesome experience to see and also to be part of. I’m looking forward to the funny 80s piece in tomorrow’s dance performance.
Today gives me yet another day to gloat about the idiotic college professor I had years ago at Strayer University (yes, avoid this college. It is a waste of time and money). The CEO of Dow Chemical borrowed a page straight out of my economic philosophy and is proving that energy based inflation is a reality, not some idea that deserves a B on my term paper. Dow is going to raise their prices immediately by up to 20%
If you’re asking “Who the hell is Dow? Isn’t that a stock exchange?” Check the back of half the cleaning supplies you have in your house and ask just about every company in America where they receive a good portion of their supplies from! They don’t just make scrubbing bubbles America!
Dow is just the start too. Energy based inflation starts here. Energy prices increase, putting pressure on businesses to either cut profits or slow down. Traditional economist, aka most college professors, will tell you that energy prices will come back down and everyone will be happy. However, in the real world this doesn’t and didn’t happen over the last 10 years. The result is that every company in America (except big energy, and miraculously Walmart) is being squeezed to the brink of no ability to make a profit or even be productive at any level.
There is a solution. It isn’t cheap, but it wouldn’t cost any more than the failed tax rebate of 2008. This solution would provide a long-term solution to the energy crisis in America and heavily stimulate the US economy while building the infrastructure needed.
Where have all those “tax rebates” gone? Hats off to anyone who spends it on anything other than energy.
Not long ago, I wrote a blog about the most idiotic economic political scam of the 2008 election year. Today, I read to stories about our economy that rank up there with the “gas tax vacation”.
The first story was about how the Fed has adjusted it’s estimates for 2008:
- Economic growth of 0.3 – 1.2%, instead of 1.3 – 2%
- Unemployment rate 5.5 – 5.7%, instead of 5.2 – 5.5%
Good thing they are still running those antiquated economic formulas to give us these otherwise worthless numbers. An added bonus is that the Fed also adjusted their inflation estimate upwards.
There really should be no surprise here folks. Bernanke just needs to start reading my blog to get better guidance on economic policy. I’ve written about energy-based inflation before. Of course, I even wrote about it years before that in a paper for an upper division economics course I was taking in college. The professor said it was an unrealistic theory.
Why I keep talking about this college professor is because that is what economists are learning in college (not all colleges, of course). Our economists are morons because they were trained to be morons!
Meanwhile, back in the world of ridiculous economic news for May 21, 2008… The other bit of economic news that really got me chuckling today was the news about the oil executives going before Congress again. How many times are we going to have to watch the same FAKE political interrogation? This is a political SCAM. The oil companies are pulling an Enron. Only, the goal is not to get California to sign a ridiculous long-term energy contract… The goal is to get the United States to open land restrictions in Alaska, the Rocky Mountains, and/or the Pacific Ocean so the oil companies can go drilling for oil. Enron is small potatoes compared to this scam.
Is Chevron Price Gouging? A friend of mine stopped at a gas station in Goleta, CA, the other day. He was shocked to see what was going on. Students from UCSB mindlessly paying for gas that was priced 53 cents higher than gas stations right down the street. Gas stations that are within visual distance of University Chevron.
With all the ways to communicate (cell phone, txt, Internet) is price gouging really a problem of the company that’s doing it? Or is this a problem with the customers? Anyone who is purchasing gas at this Chevron for 53 cents higher than the station right down the street is wasting my property tax money. My taxes keep their tuition low, and they are just wasting it. The problem isn’t Chevron. The problem is our colleges.
I majored in economics because I thought it was a fascinating subject. Years ago (circa 2003) I was taking an economics class at Strayer University and handed in a paper explaining that our economy was seriously threatened by energy-based inflation. Up until this point in my education, I had received an A on every test and every paper, but this paper on energy-based inflation would the first B grade I received on any economic paper. The professor even mentioned that he was going to give me a C but that I had worded my argument so well that I deserved a B.
His argument was that energy prices generally remain stable and that companies will compensate for any prolonged increase in energy prices. Failing to see the long-term trend towards higher energy consumption was my professor’s largest mistake in the analysis of my paper. He also failed to understand the world demand on supplies of energy. So, alas, I get to say I told you so! 😀
I’ve written a brief explanation of energy-based inflation on Words Cause. The idea is pretty simple. Energy is required at every stage of a product or service, which means that a sustained and rapid increase in the price of energy would severely damage the US economy. Over the last several years, my theory has essentially proven itself to be
correct. Energy prices continue to rise, causing inflationary pressures that the Federal Reserve is powerless to affect.
I’ll digress for a moment to cover the trash talking that politicians like Ron Paul have been spewing forth about the Federal Reserve. Ron Paul has no understanding of monetary policy and is exactly the political reason that the Federal Reserve is in place. Monetary policy should not be governed by the winds of politics.
Meanwhile, back to energy-based inflation… The Federal Reserve can’t do anything about energy-based inflation. Contracting the money supply will only choke the economy (which is what we’ve seen over the last 2 years since Bernanke has been Fed Chairman). Increasing the money supply will quickly be absorbed by a rapid increase in the price of energy (resulting in ripple inflation). Watch what happens with the recent decrease in interest rates.
So what would be the solution? I’ll outline my solution later this week on Words Cause.