Free Bazaar Blog

This is a great service you can use to get your photos converted into hand made oil paintings. This can be a great gift for your loved one.
Disclaimer: This is run by my wife.

Here is an example:

The individual income tax share that the wealthiest Americans pay has steadily increased over time.
• In 1980, the individual income tax share paid by the top 1 percent of income earners was 17 percent. By 2004, the tax share for this same group had more than doubled, to 37 percent.

• The share of income tax paid by the top 5 percent and top 10 percent of income earners has also increased during the same time period, albeit not as drastically.

–In 1980, the share of income tax paid by the top 5 percent was 35 percent. In 2004, the share paid by this group had increased to 58 percent.

–For the same years, the top 10 percent of income earners paid 48 percent and 71 percent, respectively, of income tax.

• Over the same period, the share of pretax income that the top 5 percent and 10 percent earned increased from 21 percent and 31 percent to 29 and 39 percent, respectively.

Whereas the top 10 percent of income earners earned 39 percent of the pretax income, they paid 71 percent of individual income taxes.

Interesting article in NY Times:

Professor Nisbett provides suggestions for transforming your own urchins into geniuses — praise effort more than achievement, teach delayed gratification, limit reprimands and use praise to stimulate curiosity — but focuses on how to raise America’s collective I.Q. That’s important, because while I.Q. doesn’t measure pure intellect — we’re not certain exactly what it does measure — differences do matter, and a higher I.Q. correlates to greater success in life.

Bank Bailout Cartoon

10 Surprising Facts About American Health Care
Fact No. 1: Americans have better survival rates than Europeans for common cancers.

Fact No. 2: Americans have lower cancer mortality rates than Canadians.

Fact No. 3: Americans have better access to treatment for chronic diseases than patients in other developed countries.

Fact No. 4: Americans have better access to preventive cancer screening than Canadians.

Fact No. 5: Lower income Americans are in better health than comparable Canadians.

Fact No. 6: Americans spend less time waiting for care than patients in Canada and the U.K.

Fact No. 7: People in countries with more government control of health care are highly dissatisfied and believe reform is needed.

Fact No. 8: Americans are more satisfied with the care they receive than Canadians.

Fact No. 9: Americans have much better access to important new technologies like medical imaging than patients in Canada or the U.K.

Fact No. 10: Americans are responsible for the vast majority of all health care innovations.

Conclusion: Despite serious challenges, such as escalating costs and the uninsured, the U.S. health care system compares favorably to those in other developed countries.
Source: Scot Atlas, NCPA

Update: The stuff below seems like science fiction, but see the references at the end to research which shows that this already starting to become real.
I have been reading a couple of books that got me thinking about a very interesting idea. One of them is the sovereign individual by James Dale Davidson and Lord Williams and the other is out-of-control by Kevin Kelly. Both of the books talk about how information revolution is reshaping our future Both of them seem to imply that as the cyberspace and the Internet gain more traction, the individuals will have more control over their lives. To understand what they mean by that imagine the following world in future:

3-D printers have become cheap enough and powerful enough to almost manufacturer anything that you wish. Printable electronic circuitry and home silicon integrated circuit fabrication have made it possible to print your own computer at home with the designs downloaded from the Internet. It is now possible to even print your own car or TV refrigerator for that matter. Nanotechnology has also advanced far enough that you can now create your own food out of basic ingredients carbon hydrogen and oxygen available in in the atmosphere, soil etc. Power generation has become distributed and homes generate their own power from solar, geothermal or other means.

You wake up in the morning and suddenly you feel like driving a new BMW. But, you do not have the car parked in your garage. So, what do you do? You don't know that designed for the B&W from the Internet. You set up your printer to print all the parts needed to manufacture a BMW car. The parts are manufactured out of different forms of plastic. The plastic is made out of the basic organic ingredients. These could come from your own backyard or even your own basement which has a Nano-organic factory continually churning raw material out of soil, sunlight and air or by recycling your old stuff that you no longer want to drive. Once the parts are all manufactured, your household Robots work together to build the car.

Since you made all of this in your home, using the ingredients that you already own, using the designs that you downloaded from the Internet, how can any entity like the government try to get a cut of the transaction? In other words hold you charge income tax or sales tax on transactions that are only bits? It is an impossible task. People will always find a way to transact bits without the government knowing anything about it. The whole field of cryptography will aid the individual to do so.

To look at it another way, the Internet and cryptography is going to level the playing field in asymmetric relationship between the government and the individual today. I think this is unstoppable. And as James says in his book, this is similar to how feudalism evolved into today's nation-state when the industrial revolution happened. In a similar manner the information revolution will create a new form of governments and organization. Since the government will lose its ability to tax, it will slowly lose all its power, though not without a fight. Expect Draconian tax laws and severe punishments for not paying you "Data Transaction Taxes" in future.

I know it sounds very far-fetched today. But I am talking about 20-25 or maybe even 50 years from now on the way the technology is advancing all this is definitely possible.
Update:
References to research that shows why this future may be here soon.
Wikipedia on 3D printing
Buy 3d printers here
Nanotechnology manufacturing
Nanotechnology for unlimited and free food manufacturing
Self replicating machines for manufacturing

How much do you think the President of the united states make in a typical year? You will be surprised... For comparison CEO of Exxon made about $8million including stock exercise in 2008
This is a very interesting analysis at the dealbreaker website

Cash Compensation:
Salary: $400,000
Cash Subtotal: $400,000
Room and Board:
55,000 square foot mansion, in historic Washington, D.C.: @ $100/sqft: $5,500,000/yr
Personal Chef / Kitchen Staff: $300,000 / year
Other Servants / Attendants: $500,000 / year
Subtotal: $6,300,000
Discretionary Use Of Private Aircraft:
(One of 2 Boeing 747-200Bs "Air Force One"):
Annual Costs: 120 hours @ $65,000/hr: $7,800,000
Annual Costs: 700 hours @ $65,000/hr: $45,500,000
Helicopter Fleet:
Annual Costs: 50 hours @ $5200/hr: $260,000
Aircraft Subtotal: $8,060,000
Aircraft Subtotal: $45,760,000
Other Personnel:
Personal Driver On Retainer (Defensive Tactical Driving Trained) @ $300/day $109,500
Personal Body Guards 35 @ $500/day $6,387,500
Use Of Personal Car 60 days @ $2000/day $120,000
Personnel Subtotal: $6,617,000
Annual Benefits Total: $59,077,000
Four Years of Same: $236,308,000
Pension And Related Benefits:
Present value of Pension Benefits ($200,000 per year): $2,251,556
Total Benefits: $238,559,556
Average Annual Benefits: $59,639,889
Also, think we need to strongly consider "pay for performance" here. This is a lot of compensation and I think clawbacks if the executive fails to pull us out of this recession are called for. I propose we institute a temporary "efficiency in government court" empowered to enforce pay for performance in the executive branch. The time to reward these employees for non-performance is over. Some accountability needs to be put in place. We won't have them kicking sand in the face of taxpayers any longer.

And, by the way this is underestimation, since a lot benefits like retirement benefits, vacation benefits, use of other expensive items etc. are not included here. So, CEO of Exxon makes $8 million in compensation, while the president makes $59 million. and, he wants to cap CEO excess? He should first cap his own...

An interesting advertisement that Cato is taking out in many leading newspapers.

"There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy."

— PRESIDENT-ELECT BARACK OBAMA, JANUARY 9 , 2009
With all due respect Mr. President, that is not true.

Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan's "lost decade" in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policy makers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.

For the list of 250 economists who signed this statement click here.

Lot of folks like to demonize corporate and business world, while assuming that the government and no-profit sector does not suffer from greediness etc. This lady convincingly talks about why both have their share of greedy and good people and really as I keep on saying neither should be blindly trusted. Some quotes:

[People] fail to differentiate between business leaders and dismiss the whole sector as greedy, uncaring, and destructive. Yet, even with much evidence of greed and wrongdoing in the public and social sectors, that same categorical condemnation is not present.

In fact, you can make a vital contribution in any of the three [public, private, social] sectors, because all three are needed for a society to function well. (If just one sector is weak or absent, the result is usually a failed state. Think of the former communist states that tried doing away with private business, or the chaotic warlord states without effective government.)

Mother Teresa became a symbol of charity ... If we asked the question, "Where does goodness lie?" it was in the heart of Mother Teresa,

Julius Walls, Jr.? Mr. Walls is CEO of Greyston Bakery, a $6.5 million for-profit enterprise in Yonkers, New York. Greyston bakes gourmet pastries for the New York City market and supplies brownie bits and other baked items for Ben & Jerry's ice cream worldwide. Greyston delivers high-quality goods while maintaining its policy of hiring and promoting the very people who have the hardest time finding good work. Nearly the whole workforce, including supervisors, consists of men and women who once were either in prison, addicted to drugs, on public assistance, or homeless. Some even go on to start their own businesses with help from Greyston, which also has a foundation for community development in Yonkers. The goodness here lies in Mr. Walls and in his colleagues. They work in the private sector.

This headline in the San Francisco Chronicle on May 13, 2007, demonstrates this point: "The Teachers Who Cheat: Some help students during standards test—or fix answers later—and California's safeguards may leave more breaches unreported." There have been similar stories around the country. The St. Petersburg Times wrote: "A former United Way executive pleaded guilty Thursday to stealing nearly $1.9 million to buy expensive show horses in what is believed to be the biggest embezzlement case in the agency's history." Sadly, it is all too easy to cite examples of corruption in the public sector as well, such as the recent Jack Abramoff lobbying scandal. All three sectors are equally open to corruption or virtue.

Morality, ethics, and the ability to make the world a better place are not the domain of any one sector. It is individuals, and how they conduct themselves in the world, that matter. As you complete your college work, I hope you will take at least one course in entrepreneurship to learn how to translate your creative ideas into enterprises that create value for society. I hope you remember the many young people around the world who seek the opportunities afforded by entrepreneurship. And, I hope your story is told one day as an example of how you placed opportunity and choice in the hands of others. I hope people know through your actions that you used your unit of potential for good—whether in the private, public, or social sector.

For those who believe that this crisis is about lack of government regulation here is an interesting post by Coyote, one of my favorite bloggers.

You see, kids, government has to closely regulate evil capitalists, because these capitalists sometimes make investment mistakes, like making highly leveraged investments in risky bubble assets. The government must be the one to watch over their shoulder, because well-meaning public servants would never make such a mistake themselves---
...real estate has tanked CalPERS(California Public Employees’ Retirement System -- run by public servants) expects to report paper losses of 103 percent on its housing investments for the fiscal year ending in June.
Read on for more

I have mentioned this to lot of my friends and everybody is surprised about this fact. So, I figured I would find a reference and add it here for future.

Times of India reference

Indira Gandhi raised the top rate to 97.5 per cent, yet collections barely exceeded one per cent of GDP.

In the make believe world of politicians as I mentioned in my last post, there are no consequences and the impossible is possible. One of the things like that is the issue of minimum wage. To understand why there will always be some bad effect of the minimum wage, engage in this simple thought exercise--
Imagine that minimum wage was increased to $100/hr. Do you think there would be some bad effects? The $100/hr increase has obvious and immediate bad consequences, while the $7 minimum wage has less obvious but equally real bad effects.

I will write more on this topic some other time, but today I just wanted to point out this interesting post from a small business owner in Arizona on the effects of the minimum wage on his business. Some quotes from Coyote's blog:

The annual increase is the third since voters approved the minimum-wage initiative by a 2-1 ratio in 2006. This year’s increase is 5 percent. At $7.25 an hour, the wage is up nearly 41 percent from December 2006 but still only about half of the state’s median wage of $14.25, according to the Arizona Department of Commerce.

Oh my God! You mean the minimum is still below the median? (Sorry, that is a bit off-topic, but I just can never resist making fun of journalist’s understanding of math and statistics).

In just over two years, the minimum wage is up over 41%. As a company that employs a lot of minimum wage workers in Arizona, I thought I would report on the impact to date...

Well, our labor costs are about 50% of revenues (we are a service business)... [So, due to minimum wage increase:]

• We are increasingly turning to automation solutions, like automatic pay systems and gates, to replace people. ...
• We are changing our operating strategy from hiring retired couples who live on-site to hiring younger workers. ...

Do you think that it is possible to have lower electricity prices without building new plants? California voters think so and the politicians promise that.
Do you think it is possible to reduce cost of housing and at the same time have open space laws that limit the supply of land? Voters believe that is possible too...
This and more is being discussed by one of my favorite economists Thomas Sowell here.

Even politicians are surprised when the public believes what they say....

Madoff interrogated

David Neumark and William Wascher did a two decade long study on effects on minimum wage. And, guess what they found:

• They reduce employment opportunities for less-skilled workers and tend to reduce their earnings
• they are not an effective means of reducing poverty
• and they appear to have adverse longer-term effects on wages and earnings, in part by reducing the acquisition of human capital.

The authors argue that policymakers should instead look for other tools to raise the wages of low-skill workers and to provide poor families with an acceptable standard of living.
But, of course some people will choose to ignore science of economics just as others choose to ignore science of evolution. Interestingly enough lot of times they are not the same set.

Bailout summarized in a simple advert

In an experiment by BBC had 9 volunteers follow an "Evo" diet for 12 days. The results were nothing short of miraculous. Some excerpts :

Overall, the cholesterol levels dropped 23%, an amount usually achieved only through anti-cholesterol drugs statins.
The group's average blood pressure fell from a level of 140/83 - almost hypertensive - to 122/76...

.....Ms Garton looked for inspiration to the plant-based diet of our closest relatives, the apes, and devised a three-day rotating menu of fruit, vegetables, nuts and honey. The prescribed menu was:
• safe to eat raw;
• met adult human daily nutritional requirements; and
• provided 2,300 calories - between the 2,000 recommended for women and 2,500 for men,
Volunteers could also drink water. In the second week, standard portions of cooked oily fish were introduced - a nod to a more hunter-gatherer lifestyle.

Scientific proof that you make your own breaks.

Some excerpts :

To investigate scientifically why some people are consistently lucky and others aren't, I advertised in national periodicals for volunteers of both varieties. Four hundred men and women from all walks of life -- ages 18 to 84 -- responded.

Over a ten-year period, I interviewed these volunteers, asked them to complete diaries, personality questionnaires and IQ tests, and invited them to my laboratory for experiments. Lucky people, I found, get that way via some basic principles -- seizing chance opportunities; creating self-fulfilling prophecies through positive expectations; and adopting a resilient attitude that turns bad luck around.

This is one of the funniest videos you can watch on investment and stock markets.

Found an awesome quote by F.A. Hayek's Nobel speech from 1974:

"The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men's fatal striving to control society -- a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization"

If only the economists running the fed/treasury and the rest of the government were listening to Hayek...

It seems that govt is pushing for loan interest rates to fall to 4.5% conventional loan with the help of Freddie and Fannie.

I would be surprised if it halts the price slide though. The appetite for second and third homes is gone for next 10-15 years – no matter what the interest rate -- and all those will take a long time to work through the system. Also, given the uncertainty in economy and current and for sure future job losses most people will wait and watch. In Japan the interest rate was taken to 0%, and still people refused to borrow and the property prices have kept on sliding for last two decades. The funny thing is that US govt. chided Japan for tying productive assets by bailing out the big institutions and now is following the exactly same Japanese prescription – with probably the same end game.

The other funny part is that the very cause of housing crisis, i.e. low interest rates is now being touted to cure the disease. It is like injecting cocaine into person who is dying from prolonged addiction to cocaine.

Christmas is when kids tell Santa what they want, and adults pay for it.
Deficits are when adults tell the government what they want, and their kids pay for it.

From this interest story about a real life experiment here by Ken Wood

Today on my way to lunch I passed a homeless guy with a sign that read "Vote Obama, I need the money." I laughed.
Once in the restaurant my server had on an "Obama 08" tie, again I laughed as he had given away his political preference--just imagine the coincidence.
When the bill came I decided not to tip the server and explained to him that I was exploring the Obama redistribution of wealth concept. He stood there in disbelief while I told him that I was going to redistribute his tip to someone who I deemed more in need--the homeless guy outside. The server angrily stormed from my sight.
I went outside, gave the homeless guy $10 and told him to thank the server inside as I've decided he could use the money more. The homeless guy was grateful.
At the end of my rather unscientific redistribution experiment I realized the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave away the money he did earn, even though the actual recipient deserved money more.
I guess redistribution of wealth is an easier thing to swallow in concept than in practical application.

Market capitalization of General Motors, makes real cars like Buicks and Cadillacs: $3.2 billion.

Market capitalization of Mattel Inc., makes toy cars like Hot Wheels and Matchbox cars: $4.9 billion

Link.

First post