Greatest Fallacy Ever: The Middle Class

We as human beings like balance. When there are differences, we tend to want to compromise for a resolution. When there are polarizing views, we tend to want to take a middle view as we all find something to agree with or disagree with no matter what side we're standing on. We generally believe that absolution is mere idealism because out of every one person that conforms, there's another that's serving as a renegade.

So it's no surprise that we developed the concept of the middle class here in the United States, really taking shape in the postwar years of the 1950s and 1960s as many Americans, many for the first time, were able to participate in the economy in ways that they were never able to before, exercising their power of choice in a favorable economic climate -- even if poverty levels were at 20% (and dropping by 1959) and a lot of the economic boom was only enjoyed by whites. The American middle class became sacred ground -- those that believe they are middle class live by it, adore and resent the rich, pity and resent the poor, and in the midst of it developed an "it should be about us" attitude.

The reality is that the middle class is the biggest fallacy to ever be devised out of mythical Americana.

There's only two socioeconomic classes -- those that can weather the economic storm with little scathing and those that can weather the economic storm with massive consequences, largely debt. Observe the following three things:

• According to a graph produced by CNN Money with data from IRS and analysis from Thomas Piketty and Emmanuel Saez of the University of California, Berkeley, the average American income had only gradually increased in the years between 1917 and 2008, with it being largely stagnated since 1988. However, the top 1% in income earners have see their incomes rise 33% in the years between 1988 and 2008. Cost of living inflation has the greatest adverse effect on those making average incomes, and to mitigate cost of living increases against incomes that are not really going anywhere, people generally had to turn to increased borrowing (i.e. credit cards). (Source CNN Money)
• That same article cited three main factors -- outsourcing, American economic transition, and the decline of unions -- that contributed to incomes largely being stagnant for the wide majority of Americans. Give credit to technological advances as well, even though it was not nearly as credited as the first three things I mentioned. Wealthier Americans have more to gain from a company having a solid economy of scale (when the average cost to produce something falls against increasing input, which pretty much forms the basic motivation for outsourcing) generally because of capital gains. (Source CNN Money)
• American household debt is standing at 114% (through the first quarter of 2011), down from the peak of 130% in 2007. While debt is a weight that affects everybody, you have to take something into consideration -- the lower your income, the less liquid your assets are, because most likely you have liabilities tied to those said assets (i.e. auto home, home loan, or massive credit card debt). I will note that considering home loans and auto loans are harder to come by now because banks realize that granting easy credit is a stupid fucking practice and people in general cutting back on expenses (thus inhibiting consumerism), the debt to income ratio will go down, but I expect it to remain over 100% for a while. (source: Wall Street Journal).

There's two further viewpoints that can be made. I'm going to express each along with the flaw in both:

The first thing that can be said, at least for those that can weather an economic storm, is that these said people are smart with their money. They don't live outside their means. Their consumerism is in harmonic balance with their individual buying power, as they will not make economic choices that they cannot pay for either immediately or within due time with confidence. A further argument beyond that is that these people that have money and are financially happy are "driven". They're "go-getters". They "realize" that capitalism is an economic system that "rewards" and not "gives".

The issue with that view is that that's not the absolute reason why these said people are in good financial health, especially the extremely wealthy. Higher incomes provide additional insulation against any major changes in the economy that could pose an adverse direct effect. The majority of Americans went into poor to bad financial health because their increased dependence on borrowed money -- i.e., increasing costs to finance a car, to buy a home, to finance college tuition, and to finance day to day expense either necessities or luxuries.

The second is that the wealthy are hording the money, the wealthy have eroded the middle class, and all government does is either cater to the very rich or very poor. The middle class has been victimized. The illegal aliens are ruining the American middle class. It's the whole American economic system versus the middle class.

It's not really the sole reason why the so called "middle class" is being "attacked". As the CNN Money article noted, because of the outsourcing of manufacturing jobs (as companies increasingly found it lucrative to hire in places with a lower cost of living with favorable exchange rates as it is indeed cheaper), the United States economy is shifting from hard skilled, blue collar economy to a soft skilled, white collar economy which gives even increased value to collegiate education. In essence, because of the outsourcing of work that has provided increased competition for job seekers amongst each other, it causes a downward force on wages (hell, Adam Smith said it himself). Ironically (and I say this because Adam Smith is seen as the preeminent champion of free market, lassiez-faire economics), Karl Marx actually wrote about what happens when companies becomes motivated by profit at the expense of the worker, which loosely concurs Smith's argument, and illustrates what is happening today.

The truth is the middle class never really existed. When adjusting for inflation, as evidenced in the graph, average incomes have largely remained stagnant for the past 70 years, except for the gradual increase in the post-World War II years. We could get into a further argument about the role of inflation, but it only confirms that you either can make it in the economy or you can't. Even if the money supply was backed by specie, it wouldn't change the fact that economic cycles still exist, wages wouldn't change for most, and inflation would still exist. In fact, you can look here to see how violent inflation rates were during the years under the gold standard, and especially during the years of the Bretton Woods system (1944 - 1971). In truth, wages are generally nominal -- that's the reality of a fiat currency -- and the real value of your wages is only as good as how much you can exercise your power of choice freely. You may make $60,000 a year but if your total yearly financial obligations average out to say $70,000, then that $60,000 doesn't look as alluring.

The Power of Liberty, Part I

Just what do I really mean by the power of liberty?

The power of liberty means that I can choose to live my life free of the shackles of collectivist and corporatist thought.

The power of liberty means that I can choose to live my life free of religious indoctrination.

The power of liberty means that I can choose to live my life in peace.

The power of liberty means that I can choose to live my life because I have been given that inalienable right.

The power of liberty means that I can choose to live my life to my own terms and conditions, so as long as I respect the human rights of others.

The power of liberty means that I can choose to live my life to suit myself, so as long as I respect the human rights of others, and conformity should not be my primary goal.

The power of liberty means that I can choose to live my life free of any curse that is spoken of by those who think we're in control of the universe.

The power of liberty means that I can choose to live my life with the view that freedom is my ultimate goal.

And most of all, the power of liberty means that I can choose to live my life by walking down my own road, planned and paved by me, and be truly honest with myself about it.

The power of liberty is real and it's sacred to me.

Could we learn something from the Canadian model?

I came across a highly interesting column concerning early 1990s Canada, who which saw their debt to GDP ratio skyrocket, slow growth stemming from high interest rates, and downgrades by the major credit rating agencies. Canada's welfare state grew under Prime Ministers William Lyon Mackenzie King, Lester Pearson, Pierre Trudeau, and Brian Mulroney, but reached a point that by the 1980s, fiscal issues stemming from the expansive social programs along with the slowing growth were looming and would eventually explode heading into the 1990s. Further exacerbating this issue was the weakness of the Canadian dollar.

After a Liberal Party budget released in 1994 to widespread criticism for the fact that it still included spending increases despite the numerous reforms that were included in the budget package, Chretien, then Finance Minister Paul Martin, and the rest of the Liberal Party broke out the scissors, shears, axes, chainsaws -- whatever adjective that describes cutting that you want to use -- and took to reducing Canada's debt.

Canada's debt-to-GDP ratio reached its all time peak in 1995-96 in the midst of the implements of the cuts. Growth actually did stagnate, according to a CBIC study, whenever Martin called for widespread spending freezes in 1996. Chretien would push for departments to cut budgets -- which ranged from as little as 5% to as much as 65%. In addition, the ratio of spending cuts to revenue increases were 7 to 1, as Chretien would note in his interview with Reuters it was about "what was needed most." The spending cuts did have adverse effects as Canada's Medicare system suffered budget cuts that lengthened medical waiting lists (which is what you hear of constantly when United States conservatives deride the Canadian healthcare system) and put many provinces in a serious bind as they depended on the federal government for funding of some services.

The final component of the turnaround came when the Bank of Canada lowered interest rates in 1996, allowing Canada to finally reap the benefits of the fairly positive global economy, spurred by the United States and China's economic growth. Canada's budget returned to black ink in 1997 and remained so until the global financial crash and North American auto industry crash of 2008 and 2009. There's also the fundamental difference between the Canadian outcome from the recession as opposed to the outcome in the United States -- Canada emerged from it a year later as the most fiscally healthy country of all the G7 nations.

There are two key things about the success of Canada -- for one, the Canadian government scaled back to a more manageable proportion of size and role versus population it is supposed to serve. Let's not get confused here -- Canadian social programs are held to high regard and are fairly popular in Canada, even though some of the Canadians I spoke to complain about the Goods and Service Tax.  In addition, and probably the most important thing, is that the Canadian government was largely united in tackling the deficit.

However, here in the present-day United States, we're treated to ideological warfare between a left that is sick of concessions and a right that is exercising reactionary power play. Austrian economists such as presidential candidate Ron Paul (R-TX) argue for spending cuts, tax cuts, and reduced government while Keynesian economists such as Nobel laureate professor and New York Times columnist Paul Krugman that argue against draconian cuts because of the harm they would do to the economy. I cite Paul as an example because Paul has demonstrated to be the only person on the Republican side that truly has an understanding of economic theory. I cite Krugman, not because of him being a Nobel Prize winner in economics, but because he is the largest trumpeter for the mixed economy.

The Canadian government's austerity push in the mid-1990s proved both of them to be right. As stated before, spending freeze mandates and tax cuts actually stagnated Canadian economic growth (proving Krugman right), while at the same time allowed the Canadian government to become leaner and more efficient (proving Paul right). However, the fundamental difference was how instrumental the central bank was in Canada's recovery -- something that would be to the chagrin of Paul, but not exactly -- the Bank of Canada decided to finally rectify years of poor monetary policy by reducing interest rates. The Federal Reserve's monetary policy is pointless -- low interest rates really only work when banks see credit extension as an asset and not a liability.

The true value of Canada's turnaround is not necessarily about luck; its about how political leaders put aside ideology for the greater good of a nation in recognition of what needed to be done. The Liberal Party cutting spending is similar to the Republican Party reversing Bush era tax cuts, but as much as the Liberal Party hated to do it (as then Finance Minister Paul Martin once disclosed), the Party had to set aside its ideological platform of social welfare expansion for the greater good of Canada. The Liberal Party actually demonstrated that neither political party has been able to demonstrate down here -- putting aside a staunch ideology stance to bring needed stability to the country instead of only having a narrow minded view through the eyeglasses of their beliefs as to how to achieve it. The greatest failure, in my opinion, of Washington these days is that a political party's need to triumph in political chess is outweighing getting anything done -- especially in the case of the Republican Party.

There was an additional footnote that Chretien and others noted that politicians can still win elections despite massive austerity measures. However, one thing that kept Chretien in power for 10 years as Prime Minister was the growth of the Canadian economy in the late 90s to the early 2000s. If people can see a beneficial payoff of a given administration, then people will keep that administration in power. People saw the payoff in keeping Ronald Reagan in power in 1984, Bill Clinton in 1996, and George W. Bush in 2004.

So what is the greatest lesson that can be learned from the Canadian austerity model of the 1990s? Its not the spending cuts and tax cuts and those said cuts exceeding, by proportion, increased taxation. The reason why the measures taken by the Liberal Party of the mid-1990s worked for Canada is because Canada provided a welfare state that was way too big for a population to be able to pay for and had an economical system that allowed for the federal government to carry too much weight in the mixed economy balance. The issue in the United States is less about the welfare state and more about entitlement spending and an eroding tax base augmented by a complicated tax code that actually does more bad than good to the fiscal health of the United States. The biggest lesson learned is that the controlling Liberal Party set aside ideology to solve a problem. The United States government needs to solve problems first and worry about how that problem solving abides to ideology second (preferably, not really worry about it at all). A continued failure to do that will only exacerbate problems and quite possibly lead the United States to that "decline" from the perch of secured supremacy in an insecure world.

On The Subject of Abuse

I'm going to tell two different stories in this blog post -- the one that the media has been covering in a frenzy and one that should serve as more than just a plaintive footnote, but won't.

The first story, of course, is the Penn State sex scandal, where former Nittany Lion defensive coordinator and professor emiterus Jerry Sandusky has been accused of sexually abusing young boys over the course of the past 15 years (or longer, for that the earliest reported incident was in the mid-1990s). It occurred at Sandusky's private residence and even on the Penn State campus -- apparently under the noses of Penn State administrators and now former Penn State head coach Joe Paterno. I'll save discussion of whether or not there was any merit to have Paterno terminated after over 60 years at Penn State for another post. The details of the abuse is absolutely disgusting and I feel deep empathy for the boys, now young men, that had their lives ruined. The coping strategy -- for both men and women that have endured years of sexual abuse -- is brutal. There's nothing that makes me angrier than innocent children having their innocence stripped at the hands of a predator that has pedophilia running through their veins.

Let's face it -- we're going to talk for years about the purported failure of Penn State to act, considering that the University Police, who has the same jurisdiction as the state police of Pennsylvania, did not take a more proactive role in pursuing an aggressive investigation into these allegations which could have prevented additional abuse. And who knows whether or not Sandusky has abused other young boys even in the past year, two years, or even three years as the targeted boys were from his annual camp. I would have to unfortunately err with the belief that Sandusky has continued his abuse because as my government professor once told my class that there is no such thing as rehabilitating pedophilia. It's the same conversation we have about the Catholic Church, which undoubtedly has a legacy of abuse that extends for centuries. It's heartbreaking.

The second story I'm going to tell you is about Ashley Billasano, a high school student of suburban Houston. After over 100 posts on Twitter of an emotional catharsis revealing the abuse she had suffered from at the hands of family members and other men, she ended her young life after attempting previously a month before. She was frustrated and depressed over the fact that she never received justice for the abuse that had endured. What is a damn shame, unfortunately, that there are more stories out there of young people getting abused, too scared to tell, cries falling on deaf ears, and justice not being served.

That is a theme that too many can speak of -- justice not being served. Lackadaisical police work, parents simply not giving a shit, courts enforcing laws that are rather weak when it comes to abuse. Yes, an argument can be made against those that choose to remain silent out of fear and shame, but an overwhelming majority of the time, the silence is not forever and they will speak up.  And on speaking up, whoever, listens or actually does the speaking, it is a call to action, for that now there is a moral obligation to do what needs to be done to keep the predators from preying. But of course, there is not anything that's absolute.

Granted, some people move on to have healthy and productive lives. But this is not a story about if one person can then another person can too. That mentality is foolish and unrealistic, because human emotion is human emotion, and I would think that the whole point of counseling should not necessarily about focusing on what worked on others previously but focusing on what will help the victim specifically. Humanity is a cruel and complex species, with saviors and savages of all shapes, colors, cultures, and ethnic backgrounds, and for what it is worth, it is in our nature to bring about a range of things in a continuum of pleasure and pain on to others and ourselves. Yet, abuse is about one brings pain to others for their own gratification, whether emotional, mental, or in the case of this post, perverse.

I'm trying not to sound too idealist. There's too many caveats to where any points that I am making can be absolute. What can be said, however, is that I hope that anybody that has been abused or is being abused -- and this is going beyond sexual abuse -- overcome their suppressing fear and speak up and act. Save yourself. Save others. Your voice is vital. And hopefully much as possible can be done about justice not being served in the wake of abuse because it's a reality that's not only painful, but can cost lives. There is no such thing as rehabilitation for pedophilia: pedophiles need permanent incarceration.

Love Is The Investment

Here I am trying to be all philosophical again. This time on a subject that I really don't care to be philosophical about -- relationships.

Human emotion and the human mindset are strange things to attempt to be objective about, even for those that take part in the scientific field that requires objectivity. It's a strange thing for me to be objective about for I've certainly run the gauntlet of emotions and thoughts daily and I am certain that I am not the only one.

I'd rather that than live life stoic and nihilist, though whatever meaning I get out of living is of my own judgment.

Historically, I've whined and bitched about getting cheated on, flaked out on, used, blown off, screwed over, this, and that, but none of my whining and bitching was particularly constructive and it was just good whining. As usual, if you're consistently feeling undervalued and unappreciated, your self concept is going to go south. There some people I know that, after piss poor relationship after piss poor relationship, have a self concept and self-esteem so catastrophically low, that they have written themselves off as a lost cause. I've been there and done that. But yes, life is whatever one makes of it. I can look back at all the past attempted endeavors in a relationship and say that it was not meant to be. Or I can say that it's probably better it didn't happen. Or I can say anything that is a synonym for hindsight being 20/20. But what if your vision is better than 20/20? All right, I'm digressing.

Going back to my own personal philosophy of life being a business, a relationship is a partnership. Just like any business, the partnership has to be strong, cooperative, and most importantly, balanced. A partnership is not much of a partnership if it's dominated by one side or one side is not living up to their end of the bargain. It's a partnership in the observable sense, but it's clearly not something that's sustainable. Same as a relationship -- if someone's dominating too much or if someone's not living up to their end of the bargain, then it's not sustainable. That's fairly obvious. However, your foresight has to be clearer than your hindsight for you to realize that and do something about it.

Staying with that philosophy, the corollary is that love is an investment. And just like any investment it is indeed a crapshoot as to what kind of return you will get on it. You may profess all the love and adulation and belief in the world to someone and yet it will pay you no dividends, just like having faith in a stock that could eventually reap no benefits. But there are many times that an investment is worthwhile; a loving investment that is solid and productive that leads to a healthy, prosperous, and stable relationship. However, the bottom line is people invest because they want the payoff, in the case of the relationship -- one that lasts. Which leads to my next point.

Just like in the markets, there are those invest liberally and invest conservatively -- as in, there are those that will invest in as many stocks they can and hopefully there will be one that turns into a clear winner and then there are those that look to make sure that a prospective stock is sound and has room for growth before they put their money towards it. Just like relationships. There are those that will burn through relationships trying to find a winner and then there are those that will sit around until they found what's right for them. I'll admit, I'm in the latter camp.

The truth is, no matter how frequent or how brave or how whatever you are in your approach of finding somebody, it is indeed a game of chance and it is obviously better to know what you have sooner than later, even though its never conclusive. It's the fact that it is never conclusive at the outset and it's only conclusive when a resolution (a dissolving of the relationship or the maintaining of one) is what makes or breaks your self-esteem and self-concept, is what determines who you end up with, is what determines how many times you'll give somebody a second chance, is what determines if you'll play a Nash equilibrium game against yourself, and the list goes on.

Something can be learned from good investments and bad investments. What can be learned from a good investment is that you found a formula of what works. Granted, there's no telling if that formula that a formula works permanently, but it has to be a fluid formula that allows for evolution. A relationship is an evolving investment, an evolving partnership for stagnation only means damnation for the relationship.

As for the bad investment, you can take away what's not working. After a series of bad investments, of which I hope you can recover from, you'll have a clearer picture of what isn't working, whether it is the character of the people you get involved with, whatever faults that they have that you were willing to put up with, or whatever faults that you have that keep a relationship from being successful. Hopefully you will not get caught in the stagnation trap -- as in, the fairy tale that you had at 15 years old, should not be the same fairy tale that you have at 20, which should not be the same fairy tale that you have at 35, and certainly should not be the same fairy tale that you have at 45. 

However, allow me to say this: this is more a philosophical post, not an advice column. If you want advice then here it is: your most rewarding relationship will be a loving investment that you do not have make apologies for. You don't have to make apologies for yourself. You don't have to apologize to yourself. It will be an investment that comes naturally, where dividends and payoffs will be measured in love and happiness instead of pain and despair. This advice will not work for everybody, because indeed life is whatever you make it, but it goes back to what I more or less said in the power of living -- that there is value in this so-called life to be had if you're willing to open yourself up to it.

3 Surprising Teams in the NHL

Toronto Maple Leafs (from MapleLeafs.com, edited heavily by myself). FAIR USE.

Now that an exhilarating postseason of Major League Baseball has concluded, I can turn my attention to my first love -- the National Hockey League. Despite the fact that most teams are a little more than just 1/9th into their season, there are five teams that are standing out right now as surprises. Whether they keep up their early momentum into a Stanley Cup Playoff berth remains seen (I think these three teams will), but considering where that position these teams are coming from, it's still a remarkable start.

I'll start with the Toronto Maple Leafs, whom at long last, may finally be gelling under the Burke-Wilson Era. The Leafs have a special place in my heart as they were the first hockey team I truly followed when I started watching the NHL around 10 years ago. Phil Kessel enters November as the league's leading scorer in goals and total points. Joffrey Lupul and Mikhail Gravboski have also been instrumental in Toronto's top five offensive attack. Captain Dion Phaneuf is off to a strong start manning the blueline (which he credits his defensive partner Carl Gunarsson), and if he keeps this up he'll definitely shed his "overrated" image. My concern is the goaltending -- James Reimer is currently injured and Jonas Gustavsson is consistently inconsistent. However, what will be key for the Leafs besides a healthy James Reimer will be improving its special teams play -- while the Leafs are running in the middle of the pack in terms in their power play, they are putrid in their penalty killing which is near the cellar of the NHL.

LOOK FOR: Reimer to go back to being the starter once he gets healthy. The Leafs are not going anywhere with Gustavsson in goal.

Youth is in full bloom in Edmonton, and the Oilers are beginning November in a three way tie at the top of the Western Conference standings because of it. Rookie Ryan-Nugent-Hopkins is already making his case as the early leader in the Calder Memorial Trophy race by being the first player since The Great One himself to record 11 points in his first 11 NHL games. Second year players Jordan Eberle and Taylor Hall have contributed to strong play on the offensive side of the puck. However, the glaring story of the revival in the Canadian prarie is 38-year-old veteran Nikolai Khabibulin, who is leading the league in goals-against-average and save percentage.  Khabibulin has formed a very good tandem with Devan Dubnyk in the early going, forming quite a two headed monster behind the pipes. Edmonton will make the playoffs -- but I expect Vancouver to wake up and win the Northwest Division.

LOOK FOR: Dubnyk to get more starts than what would be the norm for a back up goalie.

Finally, its the curious case of the Ottawa Senators, after losing five of their first six games, the Sens didn't lose another game in the month of October, rattling off six straight wins. Jason Spezza is among the league leaders in scoring. Winger Milan Michalek is leading the team in goals scored while workhorse defenseman Erik Karlsson has racked up 12 assists. I hope Daniel Alfredsson gets healthy because the team needs him and, as one of my favorite players to follow over the years, hope that he rebounds after last year. The Senators have been proving they win the close games, with five of their last six wins being only by one goal, including two by shootout. That is a testament to the play of Craig Anderson, who settled down now that after allowing 16 goals in his first three starts (losing two of them), he's allowed just 15 in his last five starts (all wins).   However, despite the six game winning streak to close out October, the Senators still have glaring issues on the penalty kill (they ended the month 29th in the NHL).

LOOK FOR: As the Senators somewhat settle down defensively, look for their penalty kill percentage improve.

An honorable mention go out to the Colorado Avalanche, which is having a youth revival of its own.