What we need to do NEXT Part 4

This is the fourth part of my massive essay, "What we need to do NEXT." For the previous three parts, read them below.

Education

In the 1960’s, the average college graduate had little debt when given their diploma. Most of their education was funded through grants or the GI Bill. Now, most students graduate with a minimum of $30,000 in debt, usually more. Most of the funds spent on tuition and books come from loans. This needs to end. With credit becoming scarcer, we need to start funding our higher education. This is where fortunes are started, through education. Businesses cannot produce good products without well educated people. Government doesn’t work well without well educated people. Money spent on education is not lost, it is invested, and we need to start treating it this way, instead of treating it like it’s money thrown down a well.

We need to support our troops by giving them a free education. Honestly, how can we say that we are supporting them when in fact all of the funds they are getting for education right now are a part of their pay? We need to do more for those who would sacrifice themselves for us.

Money paid into colleges also helps our country by supporting basic research. The more basic research that is done, the more our industry benefits and the more jobs that are created.

For primary education, we need to start the reforms by paying our teachers better. The starting pay for an elementary school teacher in California is about $24,000. That’s nothing. Two teachers together aren’t making $50,000 per year. That needs to be changed dramatically. You absolutely can’t get a first-rate education from someone who can’t survive on their pay, let alone pay off their college debt. It’s scandalous.

After doing this, we need to reform our textbooks, and how they are written and chosen. History text books are written as propaganda pieces, and chosen based on how much they project the way we wish our country had been, not on actual history. That’s nuts. Let our kids know what has happened in our country, or they might make some kind of dumb mistake, like allowing a depression to happen again.

None of this is optional. If we refuse to do these reforms we have in effect decided that our country will fade away into history.

Barack Obama's Same Path Ad

Folks-
I'm not certain if I have mentioned that I am a supporter of Barack Obama. In case that isn't obvious, I am.

I do not believe that he is perfect. I'm not sure we share the same sense of urgency about the environment and alternative power, but I am very certain that McCain't and I are on different plains of existence about these subjects. Mr. Obama believes that something should be done, while McCain't thinks we don't have to change at all, except maybe by making it easier to pollute.

When it comes to the economy, Mr. Obama and I seem to be in greater agreement. I would like to see more details in his plan, like what he intends to do about the mortgage mess. Where McCain't is concerned, I would like to see him stay the heck away from the mortgage mess, since he obviously has no idea just what the heck he should be doing. Throwing money at rich people will only make them richer, not improve the economy. "Trickle-down economics," what used to be called "Reaganomics," has been an utter failure. That's what is responsible for our economic woes right now.

I'm not sure if Mr. Obama would agree with me about what to do to increase investment by rich people in America. Personally, I would tax those making 7 figures or more at a much higher rate, perhaps as high as 70%. No joke. That's still not the highest rate we have ever had. In the '60's the highest rate was 90%, and the net effect was that people who made the most money did what they could to stay under that tax rate. Think about that for a second. Imagine these CEOs suddenly trying desperately to avoid making tens-of-millions of dollars. Where do you think the money would go? Back in the '60's it went back into the business. Imagine just how solid American businesses would be if suddenly each one of these major companies had another $50-100 Million available per year, just from executives not taking such large salaries. Is it possible that this one change would fix our economy? Probably not, but it wouldn't hurt.

I'm certain that Mr. Obama agrees with me that education is the best buffer against a bad economy. McCain't clearly disagrees with us. Just this year, McCain't voted against a bill that would give Iraq War Veterans full tuition at any college or university in the U.S. because he thought it would lead to fewer soldiers re-enlisting. He didn't account for the fact that it could lead to more people enlisting in the first place. Right now, that's the problem our military is facing.

In any case, Mr. Obama has released a new short video on his economic plan. I'm including the link to that video here. Please take the time to watch it, and then read the comparison of his economic plan to that of McCain't's at http://www.barackobama.com/issues/economy/sidebyside.php.

-Edly

Has the McCaint campaign jumped the shark?

Folks-

Maybe it's just me, but it seems that with the most recent TV ads comparing Barack to Paris Hilton and Britney Spears that the McCaint campaign has hit a new low. The desperation is palpable to everyone. McCaint has no message worth listening to, so his campaign is going to throw everything they can at Barack in the hope that something sticks well enough to him, and doesn't bounce back at them.

TV fans hace had a term for a long time, called "jumping the shark". The term comes from an event on "Happy Days" where Fonzie jumps over a shark while surfing. It simply means that a show had an event that forever changed all episodes of that show afterwards. It is often interpreted as an event that pretty much wrecked the show. Although I have never heard of this term being applied to a political campaign, I do think the Paris Hilton ad is a good example of a campaign jumping the shark.

The level of desperation on display right at this moment from the McCaint campaign is incredible. He dared Mr. Obama to go on a world tour, visiting Iraq and Afghanistan, and other world powers, and he did so, looking much more Presidential than Mr. McCaint did on his trips. Mr. Obama attracted hundreds of thousands to his speeches overseas, when McCaint has a hard time attracting hundreds to his at home.

I won't say that Mr. McCaint doesn't have a chance, but his cances right now aren't good. We will see if their desperation can muster something that can prevent real change or not.

This blog entry is also available at my.barackobama.com. I recommend anyone who is interested in positive change in this country register at that location and makes a donation to Mr. Obama's campaign.

McCain's Victory Speech

By Ed Smallwood

This is the kind of speech that John McCaint may be giving this November if things don’t start changing real soon.

“My friends, I have just been told that we have achieved victory in our campaign! We have won this battle and will be in the White House this January, as we planned!

“There are some people that I must thank due to their special help! To those who supported Hillary Clinton and voted for me, I give a special thanks! You helped us win this election by an overwhelming mandate of almost 1% of the vote! You made all the difference! To those who refused to vote because Mrs. Clinton lost the primary, you helped by not standing against our mandate! Thank you!

“Your insistence on avoiding party unity helped to ensure that women’s rights will be set back in this country! By throwing a public tantrum through sites like ‘P.U.M.A.’ or ‘Party Unity My A$$’ you made sure I will be able to replace at least two moderate Supreme Court Justices with the most conservative judges I can find! You personally, either through your vote for me, or by refusing to vote for my opponent, made sure I can mend the divisions in our country by reaching across the isle in Congress and bullying the Democrats into voting in step with Republicans on important issues like making sure I can tap your phone conversations at will and without oversight, and ensuring that rich people get permanent and generous tax breaks! We will be able to pass an amendment to the Constitution outlawing all abortions in our country by the end of my Presidency, and it’s all because you couldn’t forgive Obama for not realizing it was a woman’s turn in office!

“Yes, my friends, we do owe these stubborn Hillary supporters a lot! Especially my friends in the financial and energy industries! By throwing the biggest hissy fit in our times, they have ensured that all government regulation of these and other industries will end, allowing fraud and outright thievery to take the pensions of innocent retirees! We will, because of Hillary’s most stubborn supporters, be able to hand Social Security trust funds over to the same people responsible for the current mortgage disaster!

“And we will be able to keep our troops in Iraq for at least the next hundred years, ensuring money flows through there to our friends in Black Water and Halliburton without oversight!

“Because of them and you, my friends, the mass shipping of U.S. jobs overseas will continue unstopped, and at a greater pace than in the past, to be replaced by minimum wages jobs! And if we can get those cowardly Democrats in Congress to back down, we can even get a reduction in the minimum wage to help our struggling industry keep pace with slave wages in communist countries!

“Yes, their help was invaluable to us, and we owe them a huge debt that we can never repay. Except through higher debt to foreign governments.”

The Political Anchors Dragging Down John McCain

By Ed Smallwood

Senator John McCain has problems. He has been trying to distance himself from an unpopular President in G.W. Bush. He has been trying to convince you that because he is a former POW from the Vietnam War that he is a military supporter. He also wants you to believe that the economy is going well. Each of these issues is weighing him down like anchors around his neck.

It came out recently that former Senator Phil Gramm, who was a lobbyist for UBS, and who lobbied hard for deregulation of the mortgage industry, is a leading economic advisor to Senator John McCain. That’s right; the architect of the current “Mortgage Meltdown” is a senior advisor for Mr. McCain’s economic policy. We’ve already seen what happens when the President’s closest advisors are former industry big-wigs—you get $4 per gallon oil, manipulation of the electricity market in California, implosion of Enron, and the destruction of the home owning dream in America. Do we want to continue down this road with John McCain.

Right now the Senate and the House of Representatives are in conference to put the finishing touches on a new G.I. Bill that the President has vowed to veto. It would allow veterans to go to college after their service is completed. Many of our Military Servicemen and Servicewomen went into their branches of the service with the understanding that they would get monetary assistance in college as a result of their service to our country. All of the major veteran’s groups have come out in favor of this bill.

John McCain has publicly come out against the new G.I. Bill, in opposition to many of his peers in the Republican Party. He says it will cost too much. I’m not joking. Mr. McCain has said in no uncertain terms that he is not willing to give an education to people who are willing to give their lives for him and us. The cost of the lives of those over 4,000 dead in all of the branches of the military including the National Guard is not enough to make sure the rest get an education. Over 30,000 have been wounded, and that is not payment enough, according to John McCain and G.W. Bush, to make sure they and their compatriots get an education. Mr. McCain says he is afraid that one of the main recruiting tools that the military has, the offer of a free education in exchange for military service, will encourage current military personnel to leave the military instead of spurring more enlistment, and that could make a difference in his 100-year-war. Is that supporting our military?

Relying on industry to give input on how it should be regulated. Giving military support lip service. Allowing the economy to fall into disrepair from neglect. Don’t these all sound like the methodology of G.W. Bush? Can McCain really distance himself from Bush while using these tactics?

More importantly, can we vote for McCain while knowing all of this? For myself, I know that the answer is an emphatic “No!”

Sources:

Military Casualties:

http://www.antiwar.com/casualties/

McCain’s Veteran’s Problems:

http://www.time.com/time/politics/article/0,8599,1808161,00.html?xid=rss-topstories

http://washingtonindependent.com/view/mccains-gi-bill

Sen. Phil Gramm’s lobbying:

http://www.bizjournals.com/phoenix/stories/2008/05/26/daily15.html

Mass Commuter Migration

By Ed Smallwood

Right now we are all glued to our sets, wondering how the coming elections are going to go. Will Hillary somehow manage to get the Democratic nomination even though she’s behind? Will McCain manage to get more than 75% of his party to vote for him, even though his only competitor, Ron Paul, is getting less than 8% of the vote, and Huckabee is still pulling about 12% even though he’s no longer in the race?

I’m going to take a much longer term look at what is going to be happening. Much will happen regardless of who is President. The main difference the President and other politicians can make in the next few years will be in how traumatic these changes are.

I’m sure by now that you are aware that we have been in a significant Real Estate downturn for the last year or two. One analyst has said that he expects U.S. home values to decrease by as much as $7 Billion in the next 18 months. Some of the hardest hit areas in the country are in the state of California, specifically Stockton and Modesto. Home foreclosures could hit as much as two-thirds of the properties in Stockton. 90% of the homes for sale in Los Angeles are short-sales—being sold for less than is owned on the property.

Let me throw in another piece of information that may at first seem unrelated, or perhaps related in another way. Goldman Sachs released a study a few days ago that predicted that oil will be priced at $200 per barrel in the next two years. This sent prices for oil up to $123 dollars on Wednesday. We should expect to be paying $7, $8, or even $10 per gallon in 2010 according to this study.

I’m going to be mentioning Modesto a lot in this essay. I live in San Jose, which is the self-proclaimed Heart of Silicon Valley. Modesto, about 90 miles away, has been a bedroom community for Silicon Valley for a couple of decades now. I have known people who have commuted between Modesto and Scotts Valley, 110 miles apart, just because they could afford a home in Modesto. Keep in mind that in this part of California, a 110 mile commute takes about 3 hours each way, more in rush hour.

Since I was a child Modesto had filled two roles—It was the bedroom community for Silicon Valley, and it was an agricultural community. The population of Modesto has grown from 194,506 in 1970 to 446,997 in 2000. In short, it grew about 230% in that time. I’m sure if we had more recent information you would find that Modesto had grown even more between 2000 and 2005.

In the 20^th Century, the single biggest change in our society was brought about by the introduction of the relatively inexpensive automobile. Fueled by cheap gas, it allowed its owner to go almost anywhere they wished to go (within reason), pretty much anytime they wished to go. People were no longer restricted by how far they could walk, or what time the train was leaving. In addition, a car could be much faster than virtually any previous form of travel.

This resulted in many changes to our society. The one I am most interested in as far as this essay is concerned is our living habits. Before the car, you lived close to where you worked. Either you worked on the farm where you lived, or you lived in the town or city where you worked. You either walked to your worksite, or you rode a horse or took a train of some kind the short distance to your workplace. The idea of living in one town and working in another was unheard of, even for the rich. It was simply too expensive and too time consuming to do this.

With the introduction of the Model T by Henry Ford’s car company, this all changed. It started to be possible to live further from your workplace and commute. Suburbs started to form. This trend accelerated in the post World War II era, and continued on until very recently.

Some of you may be asking why I would talk about this trend in the past tense. The reason is because I believe it is over. The new trend will be the reversal of the past 80 years of suburbanization.

The popping of the Real-Estate Bubble about 2 years ago is simply the first shot. People ran up the cost of homes they could not afford, and when they could no longer pay back the money, the banks started to foreclose on the assumption that they could sell these properties to someone else and make their money back. In some circumstances they are tragically wrong. The smart banks are going to negotiate with the borrowers and write-off their losses. The stupid banks are going to foreclose on the assumption they will find buyers, and then find themselves stuck with many homes that they will never be able to sell.

You may be thinking that I must be wrong. People have to live someplace, right? Those homes will be sold to someone at some price, even if it is a loss, and probably most will be sold eventually for more than they did originally, right?

Not when gasoline is $8 per gallon. We are running out of oil. No amount of hope or denial is going to change that. Gasoline prices are going to ratchet up from this point out. There will be times when it is a bit cheaper, but the trend is going to be. This is unavoidable. This will have a direct effect on where we choose to live.

We should not be asking ourselves what we can do to bring down the cost of gasoline. We need to be asking ourselves what we can do to bring down transportation costs. Hybrid and electric cars may not be a solution for many people. In the near future it may cost as much to fuel up a Prius as it currently costs to fuel up a large SUV. As demand for rechargeable batteries increases, the cost is likely to increase as well. This will increase the cost of hybrid and electric vehicles. The most obvious way of bringing down the costs of commuting is not to commute very far. Living close to where you work is an easy way spending less of your paycheck on transportation.

This is an ominous thing for cities like Modesto. Modesto has very little industry outside of building homes and shrinking agriculture. Most of the jobs there are services provided to people who live there. Over time, the combined cost of commuting plus the smaller mortgage payment in the bedroom city will begin to approach, and eventually surpass the cost of the larger mortgage payment closer to the workplace. For example, a person commuting in a Honda Accord, getting 31MPG Highway commuting between Modesto and San Jose is going to be paying $465 a month for gas at $4 a gallon. When the cost hits $8 a gallon, it will go up to $930. Commuting in a Jeep Grand Cherokee getting 20 MPG brings those costs to $720 and $1440 respectively. The amount that you are paying in gas at $8 per gallon can make up the difference in your monthly mortgage payment between a $300,000 loan and a $455,000 loan for the Honda driver, or a $540,000 loan for that Jeep driver. That makes up for the difference right now between living in Modesto and San Jose, easy.

Cities that are closer to Silicon Valley than Modesto will face this issue a little later, but not a lot. Tracy and Salinas at about 60 miles away from San Jose and Gilroy at about 30 miles away may have a little bit more time than Modesto, but they will have to face a declining population of commuters eventually.

The big question for leadership in these areas is how they will face this issue. You can ignore it and allow significant parts of a city to become a ghost town. You can look to create another industry. This could involve adding Indian Gaming Casinos, and living with a greater crime rate, or adding an amusement park, and living with more noise. It could involve something else entirely. It could involve the city declaring imminent domain on abandoned tracts, bulldozing the properties, and putting in parks to improve property values nearby. You could even allow people to buy vacant properties next to their own and combine the lots, and build a nicer home on the combined property. This might be a good idea in certain areas of a city. Some of these combined properties might even be returned to agriculture as large gardens or small farms.

Regardless, the trend is obvious: With expensive gas, people will choose to live close to their job. Doing otherwise will not be an option for most people. Political leaders will have to deal with this sooner or later. Smart ones will deal with it sooner. Lesser ones will deny the problem until the trend is obvious to everyone, and difficult to deal with because tax revenues will already be dropping. Stupid ones will say having abandoned properties in a city is not a problem, and hopefully, will be voted out.

Bringing these facts to the attention of local politicians will help. People living in these areas ignore the migration of commuters toward their job city at their own peril.

Sources:

Modesto’s population:

http://recenter.tamu.edu/data/popmd/pm5170.htm