Hobbyists, Take Heart!

Please read this disclaimer before proceeding:

I don't have a diploma from Harvard like John Thain, Rick Wagoner, Barney Frank, Jamie Gorelick, Chuck Schumer, Ted Kennedy and Eliot Spitzer.

I don't have any high-level executive experience at rock-solid enterprises like Lehman Brothers, Pan American World Airways or Studebaker.

Most importantly, I do not have any special insight or intuition regarding arcane, high-yield investment opportunities like Bernard Madoff, Ivan Boesky and Carlo Ponzi.

No, I'm merely a poor, starving writer with a degree in theater arts from a humble municipal institution of slightly higher learning. However, I do know that a business has to take in more money than it shells out, provide products and services that customers actually want, and pay back money that it borrows. Call me naive. Call it 19th century thinking. Call it anything you want, yet these simple facts of life remain in force today as they have for more than 5,000years. Surprisingly, these concepts seem to have been lost on most graduates of high-tone universities.

This isn't a new phenomenon and you don't have to look back very far for parallels.

During the dot.com bubble we were told that "old economy" metrics like share of market and price-to-earnings ratio were no longer relevant.

No, in this new Gilded Age investors foamed at the mouth to invest in startups with high share of mind and price-to-concept ratios.

Then, when the inflow of new cash couldn't keep up with the outflow of marketing funds (i.e. Super Bowl commercials necessary to maintain high share of mind) the house of cards came tumbling down. These were companies with no tangible products, services or value. In short, investors had no reasonable expectation of profit--long term, near term, any term. Oops, forgot to ask.

How is the Madoff scam any different?

If there's any lesson to be learned it's that traditional business models and metrics matter.

Today, any objective observer looking at General Motors would determine that GM is not, by any definition, a car company.

No, it's the world's largest nursing home with a small money losing operation that makes cars.

In spite of the fact that they employ the greatest minds in the automotive industry every car that rolls off the GM assembly line sells for an average of $900 less than it costs to produce. We can debate all day about the reasons, but--LISTEN UP CLASS--a company that continually produces products at a loss is not a viable business.

General Motors Chairman Rick Wagoner acknowledges that his company loses money on every car they sell. His public statements suggest a belief that they can make it up in volume.

Do you get the message folks?

If Americans will simply open up their grandchildren's piggy banks to them they're confident they can come up with a plan to sell more cars at a loss. Is it possible that he learned of this curious business strategy while pursuing his MBA at Harvard? If so, I'll take my degree from UCLA (The University on the Corner of Lexington Avenue) any day of the week.

As an independent contractor I have to file a Schedule C every year detailing business income or loss from my modest enterprise. According to IRS rules any business that shows a loss in three of the previous five years is not really a business at all, it's a hobby.

Now, if GM gets its way, independent contractors from coast-to-coast will have a wide variety of opportunities to report losses from fishing, golf, TV watching, snowboarding, jetskiing and every other diversion they can conjure.

In its own way GM can almost singlehandedly transform the American economy. Rather than producing goods and services, Americans will be able to focus all their energies on avoiding the production of goods and services. That is, of course, unless your business happens to be fishing tackle and golf clubs.

Perhaps the best part of this whimsical adventure is that next year President Obama will get to change the name of the Commerce Department to the Federal Bureau of Diversion and the Secretary of Commerce will forevermore be known as the Hobby Czar.

Escape, American Style

One interesting demographic trend that was ignored in this past election cycle is the outmigration from California and the northeast by retirees and others who are trying to escape the oppressive burden of taxes in their home states.

When you look at the highest combined tax burdens among all fifty states the numbers are staggering. Connecticut: Number 1. New York: Number 2. New Jersey: Number 3.

In fact, the only state in the northeast that's not in the infamous Top Ten is New Hampshire which ranks 29th in combined taxes and has no state sales tax. Maybe that's why New Hampshire is seeing an increase in population compared with it's neighbors.

But there's a festering problem on the horizon and the evidence is clear in the state-by-state election returns of last November. New Yorkers, and others from liberal enclaves move out to escape the oppressive burden of taxation.

Then they get to their new home and pull the lever on election day for the same scolds, bloodsuckers and losers who have made life unlivable in their former hometowns.

So, how do the rest of us avoid this tragic fate?

It turns out that we’re looking to make a move in the next few years to escape from sales taxes, state income taxes, five-figure property taxes, increases in tolls and fees, along with confiscations we cannot even imagine now as New York's deficit grows and its population dwindles.

In analyzing our choices we determined that our destination will have to fulfil several criteria.

It must be in the Bottom Ten in combined tax burden.

There must be no major cities.

It must have little or no migration from the northeast or any other liberal mecca.

This last factor is critical.

We were at a recent going-away party for friends who were moving to North Carolina because they could no longer afford New York. When I told Ben that we were looking to relocate and were considering North Carolina he raised his glass and said:

“Good. We’ll turn that red state blue in no time.”

I walked away shaking my head while making a mental note to cross North Carolina off of our prospective destination list.

Right now, our leading choices are Biloxi, Mississippi and Gulf Shores, Alabama.

When I mention these two destinations to friends here in Fun City they gag and become physically ill.

I think we're on the right track.

UPDATE: December 26th, 2008.

This morning, while browsing through the New York Times, I choked on my porridge when I got to the "Escapes" section. Seems that the Manhattan intelligentsia have discovered Gulf Shores, Alabama. Looks like we'll have to cross this one off the list as well. Costa Rica is looking pretty attractive.

The Invisible Hand

I recently stumbled upon a very interesting website from a company in the Great Northeast that designs and builds high-end, high efficiency homes and commercial structures. This is a field that has interested me since my old advertising/public relations days with a great metropolitan electrical plug and connector manufacturer.

But enough about me.

On his blog page Tedd Benson (founder of Bensonwood, Inc.) takes his own industry to task for their complicity in the current housing collapse.

According to Tedd, the National Association of Homebuilders (NAHB) ignored the public good and continued to lobby for loose or non-existant credit standards in order to keep the housing bubble inflated. But for how long? The current bust, which may have broader implications far beyond our wildest nightmares, was both inevitable and predictable.

Tedd ends his blog entry with the following statement:

"Economist Adam Smith didn’t contemplate conscious, rationalized idiocy on such a large scale; his “invisible hand” was no match for such a massive, wanton snow job."

I enjoy Tedd's blog and often agree with his observations and conclusions. However, in this case I respectfully disagree.

Actually, Adam Smith anticipated exactly what has happened in this particular boom/bust cycle.

He made it very clear that considerable structure was needed before the invisible hand of the market could work efficiently.

For example, property rights must be strong, and there must be widespread adherence to moral norms, such as prohibitions against theft and misrepresentation.

In his time, property rights were only recognized among the aristocracy.

Adam Smith developed his theories in a centralized, heavily planned and dictatorial society where some individuals were above the law and others were effectively without any rights.

He saw the system of his time as corrupt and inefficient--a massive and wanton snowjob that enriched the few at the expense of the many.

He even anticipated the influence of special interests, writing that:

"People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or some contrivance to raise prices."

The two greatest misrepresentations (uhh... outright lies) of the modern liberal/progressive movement are:

- Those who favor an Adam Smith approach to economics seek a law of the jungle society where the strong devour the weak without constraint, and…

- Adherence to Keynesian macroeconomic theory can eliminate the normal ups and downs of the business cycle.

Rather than leveling the cycles the present economic crisis is the result of the massive doses of Keynesianism our government has given us for decades. John Maynard Keynes did not trust the market economy therefore he called for central management of the economy by governments and central banks.

According to Keynes, since spending and consumption drive an economy the more that is spent the better. Smith, on the other hand, recognized the distinction between productive and nonproductive consumption.

It seems axiomatic that productive consumption is an agent of economic growth while nonproductive consumption--paid for with money fabricated out of thin air--leads to economic impoverishment, but this fact is lost on today’s generation of economic experts, including Nobel laureates.

In my opinion the strongest reason for leaving the allocation of effort and reward to the invisible hand is that when it misappropriates goods it is usually on a small scale. Centralized methods of allocating goods are more prone to corruption and waste. More importantly, when centralized planning succeeds it succeeds modestly and when it fails, it fails on a massive scale.

Smith wrote about the spending of other people's money this way:

"It is the highest impertinence and presumption, therefore, in kings and ministers to pretend to watch over the economy of private people, and to restrain their expense...They are themselves always, and without exception, the greatest spendthrifts in the society."

In place of kings and ministers substitute presidents, committee chairs, university professors and columnists… most especially columnists who are also university professors.

I don't blame the NAHB. They were advocating for their constituents. Where were our elected officials? Where was the adversarial press? Yes, there were some in 2004/2005 who wrote of the 18-year housing cycle and warned that the next bust could be deeper and longer than any in recent memory, but you really had to dig deep to find them.

Son of Privilege

Just saw a CNBC interview with Michael Gates Gill the author of How Starbucks Saved My Life: A Son of Privilege Learns to Live Like Everyone Else.

What a pantload!

Son of privilege is right.

Son of Brendan Gill, New Yorker critic and columnist, he grew up in a Bronxville mansion with regular guests like John and Jackie Kennedy, Ernest Hemingway, John Updike and Brendan Behan showing up for tea and crumpets and Chivas Regal. His life story is a prototype blueprint illustrating how birth privilege provides a safety net for all manner of irresponsible behavior.

Drop out of college... not a problem when your frat buddy can get you a job at his Daddy's Madison Avenue advertising agency.

Marry, divorce... have an affair... marry divorce... have an affair... father more children... Hey, just brush it off with trust-funds, inherited money and a six-figure salary from advertising giant J. Walter Thompson.

Then, when you run out of great ideas like "Plop, plop. Fizz, fizz." and they toss you out on your butt, just use friends and family to fund a vanity consulting business. Go bust? Well, it wasn't your money anyway.

Then what? No more money, nobody left to borrow from, no job prospects and no wife.

Ever wonder why a young woman would be attracted to a pasty-faced, balding, pot bellied has been? Duh... he's rich.

Not rich anymore? Not married anymore either.

So this modern day Siddhartha, who had never taken a subway ride until forced into it by penury, had a revelation while rubbing up against the unwashed:

Eureka! Simplicity is key to happiness!

Now that his sob-story memoir has become a best seller, soon to be a major motion picture starring Tom Hanks, his advice for America is simplify your life, reduce your overhead and live the life of a modern-day Thoreau.

Great idea, Einstein.

Why didn't the rest of us think of that?

Tell a young family that runs out of money on Wednesday and has to wait until payday on Friday to buy groceries that they should lower their overhead and live simply. If you live in a 25-room mansion, like Mr. Gill once did, it's easy to scale back. For the rest of us it's hang on for dear life and ride out the storm.

My father worked in a sweatshop, when he wasn't on layoff. We ate plenty of spaghetti for dinner. Then I got to college on the Upper East Side of Manhattan and discovered that all those "Sons and Daughters of Privilege" who all grew up without a care believed in the nobility of poverty. They actually envied those of us who had nothing and didn't hesitate to tell their therapists and anyone else who would listen.
Let them try it for a day or two.

This morning I started writing a book entitled...

"How Having Plenty of Money Saved My Life: A Son of The Working Class Learns to Live Like a Child of Privilege."

What are the chances that Tom Hanks will give me a $50,000 advance for the rights?

Excuse me while I go plunge my hands into boiling water and wait for Mr. Hanks' people to text message my people.

Uh, oh... L'il Angel--my 15 year old daughter--just yelled out that she's ready to be chaufered off to school. On the way I'll ask her what she thinks of switching over to the simple life.

"Live like everybody else, Dad? We already live like everybody else."

I guess the romantic view of everybody else is a little bit different from up on that perch in Westchester.

Munchausen By Proxy, Washington Style

By the time she was 8 years old, J.B. had been hospitalized 200 times and had undergone more than 40 operations, including the removal of most of her intestines.

K.C., a 2-year-old boy, was hospitalized more than 20 times due to complications from asthma, severe pneumonia, mysterious infections, and sudden fevers. His doctors were baffled and unable to determine the cause of these illnesses.

Productive Americans who work hard, play by the rules, pay their bills and live within their means have lost nearly half of their net worth in 2008. Politicians scramble to stop the bleeding, but nothing they do seems to help.

What do these seemingly unrelated cases have in common? They were all the result of Munchausen by proxy syndrome.

This relatively uncommon condition involves the fabrication of illnesses or symptoms by a primary caretaker. One of the most harmful forms of child abuse, Munchausen by proxy syndrome was named after Baron von Munchausen, an eighteenth-century German dignitary known for telling outlandish stories.

J.B.'s medical history was traced to her mother, who manufactured her daughter's illnesses. Similarly, when K.C. was thought to have AIDS, he eventually complained to his mother's friend that his thigh was sore because "Mommy gave me shots" (indicating that the mother was giving her son something to cause his symptoms).

In the case of the American economy, Washington politicians caused the disease through legislation (Community Reinvestment Act) and executive order.

Through these actions they, along with their hired extortionists like ACORN, coerced lending institutions into making loans to clients who did not have the ability nor the willingness to pay them back.

Many of them took huge campaign contributions from lenders like CountryWide and Fannie Mae. Fannie Mae, in fact, became a dumping ground for government cronies who made tens of millions at the same time they were producing phantom profits from loans they knew would never be paid back. Franklin Raines, former CEO of Fannie Mae, ascended to his high office after several years in government service advising that other famed real estate guru, William Jefferson Clinton.

Comrade Raines took salaries and bonuses totaling more than $90 million during his short stay at Fannie, but shows no willingness to pay back any of it.

Now that the financial mess has reached crisis proportion, these same psychopaths claim they are the only ones qualified to solve the problem.

Often Munchausen perpetrators give themselves away with subtle verbal clues or attempts to shift blame.

Rahm Emmanuel's recent statement that Democrats should "never let a crisis go to waste" is one example.

Harry Reid's demand that Detroit executives need to submit a detailed plan before "we show them the money" is another.

These geniuses have been running their industry into the ground for five decades, but the esteemed Senator wants a turnaround plan in two weeks.

I've got an idea. Since I'm an independent contractor and file estimated taxes, instead of a tax check I'll send a polite note informing Senator Reid that he must submit a detailed plan to retire the national debt before I "SHOW HIM MY MONEY."

Anyone care to join me?

In Munchausen by proxy syndrome, an individual deliberately makes another person sick then misleads others into thinking that the child has medical problems by lying and reporting fictitious episodes. He or she may exaggerate, fabricate, or induce symptoms. As a result, doctors usually order tests, try different types of medications, and may even hospitalize the child or perform surgery to determine the cause. Sound familiar?

Typically, the perpetrator feels satisfied by gaining the attention and sympathy of doctors, nurses, and others who come into contact with him or her and the child. Some experts believe that it isn't just the attention that's gained from the "illness" of the child that drives this behavior, but also the satisfaction in being able to deceive others. Remind you of anyone?

Because the caregiver appears to be so caring and attentive, often no one suspects any wrongdoing.

Most often, abusive Munchausen by proxy syndrome cases are resolved in one of three ways:

The perpetrator is apprehended.

The perpetrator moves on to a younger child when the original victim gets old enough to "tell" on them.

The child dies.

To get help, the caregiver must admit to the abuse and seek psychological treatment. But if the perpetrator doesn't admit to the wrongdoing, psychological treatment has little chance of remedying the situation.

Psychotherapy depends on truth, and Munchausen by proxy perpetrators generally live in denial.

Now the questions remains: Will those of us who work hard, pay our bills and play by the rules continue to drop our pants and invite the syringe every time Pelosi, Frank, Reid, et. al. declare a crisis that only they can solve?

With thanks and apologies to Kidshealth.org

Getting on With Life

John McCain's choice for Vice President has inspired some very interesting comments from the left-wing blogosphere:

i'm outraged that mclame piked a chearleeder

Well... actually... she was point guard for her high school basketball team and hit the winning free throw that clinched Alaska Small School State Championship.

another big oil stooge

Well... actually... she raised state royalties on oil drillers and gave every Alaskan a $1,200 energy credit from the proceeds. I understand that to the current crop of Neo-Socialists, tax credits that provide direct cash are anathema. After all, it's the responsibility of the state to confiscate earnings and profits then provide "services" designed to dictate behavior and promote a utopian society--while providing huge monetary gains for state-supported cronies. This is the culture of corruption in Alaska politics that Governor Palin was elected to combat, and did. Any comments from Mr. Obama--an extortionist for ACORN as well as willing accomplice to the Chicago corruption cartel--would be greatly appreciated.

once again an attractive woman gets picked ahaed of qualified women

This one is especially amusing. First, because it suggests that a woman with nearly a decade of executive experience is less qualified for Veep than a man with barely three years in the Senate and not a single legislative achievement on his resume is for President.

And second, because this feminist tactic confirms Rush Limbaugh's contention that:

"Feminism was created to allow unattractive women access to the mainstream media."

Okay, here we are. Many comments, very few surprises--until this little gem after it was made known that Governor Palin has a four-month-old child with Down's Syndrome.

she should have had an abortion and gone on with her life.

An isolated kook, right. Wait, there's more.

any woman who would give birth to a down sindrome baby isn't smart enough to hol office

she should quit her job, stay home and take care of her family; what's she doing having five kids anyway

Yes, I do agree with population control, and would want it guaranteed by
mandatory sterilization after one-half a live birth per person. Both people involved get the knife. And any guy who gets more than one woman pregnant at a time loses his nuts.

These vitriolic blatherings should not have come as a surprise. As I was reading these thoughtful postings my "Horrid Comment" memory chip kicked into gear. Years ago when an acquaintance from work gave birth to a Down's Syndrome child a highly-evolved colleague suggested that she should: "Leave the kid at the hospital."

Some turned away while others nodded.

And in fairness, even on the Leftoid message boards there were expressions of disgust from many posters. But that didn't keep the whackos from posting on.


I think it is dumb to have a kid that you know will be born all messed up. Period.

Actually, Trig's biggest problem isn't that he has Down's Syndrome it's that he has a repuke for a Mom.

Granted, as an adoptive father I'm biased. When our son was born, the inseminator (referred to euphemistically as the birth father) believed that his responsibility ended with an offer to pay for an abortion.

Our daughter was born three years later and our legal liaison relayed the same story.

But then, when I proudly showed her picture to a group of professional associates at an Upper West Side cocktail party I was left speechless (not easy) by a comment from a complete stranger who proclaimed with an unassailable aura of authority that:

"Foreign adoptions are a conspiracy to depopulate the Third World."

As I said, none of this should surprise me.

Staring at the Ceiling Fan

I'm sullen, confused, depressed. My normally cheerful outlook on life has been dragged through the depths of despair. All of the poisons that have lurked in the mud for millenia... well... never mind.

Every once in awhile I see, hear or read something that makes me want to go straight to the nearest cliff and throw myself to the mercy of gravity.

That was my reaction recently when I happened upon this essay written by a young gentleman, Ken Ilgunas, from Niagara Falls and published in the Buffalo News. The whining ruminations of Mr. Ilgunas are reproduced below in Bolshevic red.

I am 24, live with my parents, can’t find work and am floundering in a sea of debt five figures high. I think of myself as ambitious, independent and hardworking. Now I’m dependent, unemployed and sleeping under the same Super Mario ceiling fan that I did when I was 7.

How did this happen? I did what every upstanding citizen is supposed to do. I went to college. I took out loans so I could enroll at Alfred University, a pricey private school. The next year, I transferred to the more finance-friendly University at Buffalo, where I could commute from home and push carts part-time at Home Depot.

I related my forthcoming debt to puberty or a midlife crisis — each an unavoidable nuisance; tickets required upon admission to the next stage of adulthood. But as interest rates climbed and the cost of tuition, books and daily living mounted to galactic proportions,

I realized this was more than some paltry inconvenience.

Upon graduating, I was helplessly launched headfirst into the “real world,” equipped with a degree in history and $32,000 in student loans. Before ricocheting back home, I would learn two important lessons: 1) There are no well-paying — let alone paying — jobs for history majors. 2) The real world is really tough.

Desperate times called for desperate measures, and I had no intention of living in a society that was as unfair as this one. To seek a haven devoid of the ruthless 9-to-5 ebb and flow of contemporary America, I moved to Alaska.

As a liberal arts major, I dreamed of making a profound difference in people’s lives. Instead, for a year, I lived in Coldfoot, a town north of the Arctic Circle that resembles a Soviet Gulag camp. My job as a tour guide for visitors temporarily alleviated my money woes because it provided room and board, but when the season ended and I moved back home, I was again confronted with the grim realities of debt.

Desperate, I browsed through insurance and bank job descriptions. I had hit an all-time low. Could I surrender my soul for health coverage and a steady income? Could I sacrifice my ideals by falling into line?

Suddenly, living at home didn’t seem nearly as degrading as selling out. But sadly, other graduates don’t have any choice but to work for temp agencies and retail stores to eke by.

That’s the tragedy of student debt: it doesn’t just limit what we do, but who we become. Forget volunteering. Forget traveling. Forget trying to improve your country, or yourself. You’ve got bills to pay, young man.

Unfortunately, the recent passage of the College Cost Reduction and Access Act doesn’t portend that times are a-changin’. The act reduces interest rates on Stafford Loans and increases Pell Grant awards. Whoopty-do.

There’s no question that this is a step forward. But we’re still talking pennies and nickels when we need to completely revolutionize the government’s role in financing post-secondary education.

College is a wonderful experience and something every young citizen should pursue. But without help, a college education is becoming an unaffordable rite of passage and a privilege of the affluent.

My loan payments can’t wait much longer, and soon I must leave home to find work that doesn’t compromise my integrity. Although I sometimes wonder what it would be like if I had declared as an accounting major and got a cushy job punching numbers somewhere, I’ll take my history major, my debt and my mom’s cooking any day of the week.

Being a heartless windbag I'm probably the last person who should be commenting on this doofus' ramblings, but I can't help myself.

HEY MR. ILGUNAS... A COLLEGE DEGREE DOES NOT GUARANTEE A LIFETIME OF COMFORTABLE, RESPONSIBILITY-FREE ADOLESCENCE!

Wanna travel? Get a job.

Wanna help your fellow man? Earn your own way and set a good example.

Wanna get out of the basement?

Stand on your own two feet and quit the whining and self pity.

America's future? I hope not.