Category Archives: Economics

Why Choose Networking?

This was something I wrote on a forum in response to that question. Consider this to be career guidance for any young person looking to get ahead in the world.

The first time I left teaching, I got into IT. I realized that it was like the Wild West as far as careers went. See, I had a great-grandfather that got to be an engineer for the railroad because there was an opening and he learned quick how to use dynamite. He later found out the opening was created because his predecessor apparently didn’t learn the ins and outs of dynamite quickly enough. No college degree required, no certification exam, just hands-on, can-you-do-it stuff. If you said “yes”, you got a shot at proving yourself. If you were wrong, you didn’t last long. If you were passably good, your career was set.

That’s how it was in the 90’s. If you could spell “PC”, you had at least an entry-level job. As I watched my compensation packages grow from job to job and over year to year, I thought that the pay would eventually draw in millions more people to the profession, like medicine, law, and business had in theirs, and that the requirements for job qualifications would get more stringent. I thought then that, by 2005 or so, everyone would need a CS degree and post-graduate certifications on the lines of a bar exam/MCAT/CPA/brokerage license in order to be a practicing networking professional. Like engineering, the Wild West days would fade to more structured qualification procedures and regimented courses of education, just to weed out the people that wanted the money, but didn’t have the talent.

When I taught economics for 11 years after leaving IT in 2001, I kept up with what careers had good prospects and which ones were getting harder to get in to. I was always pleasantly surprised each year as IT jobs remained hard to fill. People were not flocking to them. If you were a talented person that wanted to rise quickly, relative to other jobs, IT was the way to go. There was a rough patch in the early 2000s when there was the outsourcing craze, but that has passed over and IT jobs are back on native soil. Because of the lack of talent in the field, the jobs are still Wild West jobs. Can you do it? If you don’t blow yourself up, you have the job. If not, consider your last brush with dynamite to be your exit interview.

2008’s crash changed a lot of things. It ended the days when a college degree meant an automatic job, regardless of your major. Those jobs are going, going, and gone, either because the company that did that stuff is closed permanently or because a Python script can now do that same job – which means a business can stay profitable in a recession/depression, but only if it cans the humans that are less productive than a script. Read this, especially if you have children: Oxford report on employment.

The summary is simple: computers are replacing people in low-skill and semi-skilled jobs. Pages 57-72 show a list of jobs and the probability a computer takes it over. Network admins? 3% chance of losing a job to a computer. Compare that to Cashiers at a 97% chance of getting canned in favor of a computerized system. 47% of US jobs are at high levels of risk of being lost to computers, and many of those jobs are where the middle class used to eke out a living.

I wanted to leave teaching in 2013, and because the IT world still had many jobs and few qualified persons, I returned to the Wild West. My teaching job is still there, but it’s no longer the kind of teaching I want to be doing. Although the Oxford survey I cited puts a low chance on teachers being replaced by computers, teaching itself is giving way to online content delivery, with the teacher being a sort of combination child psychologist/prison guard that follows a strict syllabus in lockstep content delivery. My job here in IT still affords me great leeway to apply my professional knowledge and I am happy to say that I am well compensated for my skill.

True, I have to put up with constant recruiter emails, but that’s a nice problem to have. I see people desperate to get minimum-wage jobs where they have to put up with all kinds of awful, picky, petty requirements in order to keep those jobs. I see people crowding into colleges because that was the rat maze path that used to deliver the cheese at the end. They graduate with massive debt, no job, and misery awaiting them as they get in line to get a minimum-wage job where the assistant manager is a guy that started there right out of high school.

Take the same guy that has a knack for thinking well and, instead of putting him into a college, get him to spend a few thousand dollars on equipment and certification materials. After a few months, he’s ready for an entry-level IT job. Salaries there are in the $40K area, well above the average starting salary for a college graduate of $30K, which is down $3K since peaking in 2008. The same guy getting $40K also has no student loans to pay off, so he’s ahead of the recent grad in that respect, as well. If you look at the time spent, college means exchanging four years of drawing a salary in the hope of getting a bigger salary with that degree. Compared to an IT career, it doesn’t add up. The guy that spends a few months getting a CCNA starts out at $40K, and earns that much or more for the next four years while his counterpart is living in a dorm at the university. After those four years, the IT guy can be a CCNP, possibly in multiple areas, and will be contemplating a CCIE and a six-figure income, if he doesn’t have that already. The guy with a BA in some liberal arts area? $30K, *if* he gets a job, and it’s a long, hard slog to the top. A BS in engineering can get a person to the $60-80K area, but that’s still with debt. Meanwhile, our CCNP is already clearing that much or more after 4 years, debt-free. It’s not a life of luxury, but it *is* a life that affords many opportunities and options because of the amount of money being earned.

Let’s say that our networking guy is being considered for a management position and he’d like to get into that area, but he needs a college degree. Guess what? He’s probably now at a company that will pay for his college, provided he makes good grades. Worst case, it’s on his own dime, but he’s earning his way through college the right way, with a full-time job in a career with potential.

That’s why I’m in networking. It offers an exceptionally rapid career development phase for a person with talent. If poets were similarly rewarded with a similar dearth of qualified persons in the profession, I’d be slinging rhymes and anapestic hexameters for a living. They’re not, so I’m a networker. Very early on in networking, you’ll have a job that pays better than 75% of the available jobs out there. That cutoff for that better than 75% number is an annual salary of $50K, by the way. When you hit your stride in the mid-range of IT jobs, you’ll be in the top 10%, easily. Again, it’s not cruising around the world on your yacht as you work remotely 15 minutes per day, but it *is* decent and cheap life insurance quotes, retirement, paid time off, and flexible workplace policies for the most part. Considering the outlay and the return on investment, it’s one of the best things one can do as far as career choice goes.

Yes, I enjoy what I’m doing, but I also know there’s a lot of crap they can throw at me that’s mitigated by my compensation package. This is not a minimum-wage job that I can do no better than the next shlub waiting in line behind me. This is a field in which most employers know that if they’re not offering a good deal that their IT talent can walk out the door at any time and start somewhere else where there is a good deal. This will continue until kids decide that this is where the gold rush is and swarm the profession. That is not likely to happen for two reasons: math and smartphones. People see numbers and they panic, typically. Subnetting turns away most folks not already scared off by the 10 in 10BaseT, let alone the 100 in 100BaseT. Smartphones mean that kids that would have been tinkering with their PCs no longer have those in their hands, so there are far fewer PC/Network gurus in the making among the rising generation than there were in GenX and GenY. It’s going to be wide open for a good, long time, and while I’m not planning on becoming complacent, I’m also not worried about a Python script suddenly doing my job. This is a good field to be in, where merit and talent are proportionately rewarded with quality of work and compensation packages.

If a kid out there can learn to get over the natural human tendency to be afraid of numbers and then gets his hands on a PC and some second-hand routers and switches, he’ll be well-placed to enter a dynamic, rewarding, challenging career in networking. Given the costs and rewards of the alternatives, it’s easy for me to see why one should choose a career in networking.

Realistic Monopoly

When I taught Economics, some people would ask if I used Monopoly to teach about monopolies. I did not. Now, though, I think I could… but I’d need some rule changes. Here they are:

1. PLAYERS. We now need 100 players. The first player is now the top 1% player. He is the banker and handles all the properties. He also gets half of all the money in the game, rounded up. The top 1% player gets the top hat. The other tokens are for the well-paid employees of the top 1%. They never pay rent on properties owned by the first player, get as close to normal an amount of money as is possible with what’s left, at the first player’s discretion, and any properties they purchase will go to the first player.

The rest of the players need to go outside and find a distinctive-looking rock. Like snowflakes, no two rocks are entirely alike, but in aggregation kind of all blend together. They keep track of their (often negative) balance on their own sheet of paper, one of their few possessions in the game.

2. PROPERTIES. Before the game starts, the first player gets to inherit property equal to half the value of all properties on the board. He may then build houses and hotels as he sees fit on any monopolies prior to the start of the game.

3. FIRST PLAYER MOVEMENT. When the first player rolls the dice, he may use them as he sees fit. He may move forward, backward, a combination of the two, or just get in his private helicopter and put his token wherever he wants to put it.

4. OTHER TOKEN PLAYER MOVEMENT. The other players with legitimate tokens move them normally, unless the first player wants them to be somewhere else, in which case he places them somewhere else.

5. MOVEMENT OF THE ROCKS. These guys move as per game rules. The exception is if they land on a railroad and decide they want to become hobos. In that case, they roll dice. If they roll doubles, they move to another railroad. If not, they are arrested for trespassing and wind up in jail.

6. JAIL. The jail is now privatized and is owned by the first player, who also exercises substantial influence over the judicial system. Neither the first player or any of his agents ever goes to jail, unless the first player decides to send one of them to jail. Players must now pay $50 to get out of jail, with the money going to the first player. Players may not languish in jail for more than one turn before paying to get out, as there is a federal court order against overcrowding.

If the players revolt and demand that the first player goes to jail, he may designate a hotel on either Boardwalk or Park Place as a jail for white-collar criminals and place his token there for a while.

7. DEBT. When the players with rocks run out of money, they go into debt by borrowing money from the first player. They can then use that money to pay the first player what they owe him.

8. WINNING. The first player automatically wins the game before it even starts.

There you go, kids! Have fun!

This Should be the Romney Comment Being Discussed

[The] former head of Goldman Sachs, John Whitehead, was also the former head of the New York Federal Reserve. And I met with him, and he said as soon as the Fed stops buying all the debt that we’re issuing—which they’ve been doing, the Fed’s buying like three-quarters of the debt that America issues. He said, once that’s over, he said we’re going to have a failed Treasury auction, interest rates are going to have to go up. We’re living in this borrowed fantasy world, where the government keeps on borrowing money. You know, we borrow this extra trillion a year, we wonder who’s loaning us the trillion? The Chinese aren’t loaning us anymore. The Russians aren’t loaning it to us anymore. So who’s giving us the trillion? And the answer is we’re just making it up. The Federal Reserve is just taking it and saying, “Here, we’re giving it.” It’s just made up money, and this does not augur well for our economic future. You know, some of these things are complex enough it’s not easy for people to understand, but your point of saying, bankruptcy usually concentrates the mind. – Mitt Romney, May 2012

He’s not making this up. This is the honest truth. The Chinese might even dump about a trillion in our bonds and another trillion in Japanese bonds, further burdening both our central bank and the Bank of Japan with those debt burdens. Tax cuts make the deficit worse. Spending cuts would have to be not $1.2 trillion over ten years, but about $1.5 trillion right now to balance the budget – which would likely wreck the Treasury Department’s “rescue” of the major banks… aaaaand there goes the banking sector!

On average, major economic collapses like the one we had in 2008 see a 180% increase in sovereign debt. We’re still about $6 trillion away from that benchmark. It won’t matter which party is in Congress or the White House: those numbers are relentless in their historic precedents. While it could be better, it could also be much, much worse – and there’s plenty of underlying instability and unaccounted-for losses to trigger a much worse knock-on disaster to the current situation.

I said it makes no difference which party runs things in regards to this problem. Perhaps the reason it’s not being discussed in the national media is that we, as a people, will realize that neither party will make a difference and, in that realization, stop dividing ourselves with anger over issues that distract us from how the nation has been sold out from under us.

“Helicopter Ben” Lives Up to His Name – But What Will Be His Legacy?

Ben Bernanke said the Fed will buy $85 billion in US debt every month through to the end of 2013. That means, by that time, the Fed balance sheet will have 25% of US GDP on its hands. It will eventually have to unwind all that. That will be hard to do.

But for the short term, look for higher prices at the pump, higher food prices, more desperate people about to retire that can’t get good yields on their investments, more insolvent state pension plans, aaaaaand… more riots, revolutions, and civil wars around the world.

Food prices spike up when the Fed does a round of QE*. When the Fed did its first move in 2008, we saw massive riots in the poor nations of the world. When QE2 hit in 2010, the riots were severe enough in North Africa to deliver the Arab Spring. Prices were already high enough this year to intensify the Syrian civil war and provide the foundation for the latest round of anti-US violence in Egypt, Libya, Yemen, Sudan, Tunisia, and Morocco (so far). This new QE looks set to send food prices even higher – and they were already higher in 2012 than they were in 2010.

Jeremy Grantham has said that we are five years into a severe global food shortage. This “QE to Infinity and Beyond” business from Bernanke is going to exacerbate that situation. We may soon see nuclear armed Pakistan and China descend into civil war because of food prices. China might be able to avoid war through draconian internal measures, but Pakistan is not capable of such action in my assessment.

The law of diminishing returns says that this QE will have less effect on the US economy than previous ones. It might even have no effect on the US economy outside of fueling a stock market bubble that will have tremendous fallout when it pops. But that law of diminishing returns is the least of our worries when we look at the law of inflation and how those food prices are going to affect Central America, South America, North Africa, Sub-Saharan Africa, the Middle East, South Asia, Central Asia, Southeast Asia, and East Asia. Think about each in turn, because we do ourselves a disservice if we lump them all together. Can governments in those regions withstand an even more severe food shortage than the one they’re facing now?

*QE= Quantitative Easing, or the Federal Reserve’s purchase of bank loans that may or may not be dodgy… Japan tried it in 2001 and found it to be highly ineffective in the long run.

Dystopian Nonfiction

Unless you live off the interest of your interest, you’re poor. Got that? If you think you’re middle class, then you just think you have a shot at getting rich. In the USA, that’s in the past unless you’re ready to participate in some truly massive crimes. Born poor, you stay poor, because that’s the way it is and you can check the statistics on that for yourself. I’m here today to talk about how to calculate the rate of decrease of wealth among the poor in the USA.

It’s simple. Look at the interest rates they’re paying on credit cards, houses, cars, and other loans. The interest rate is money they are boxing up and shipping to the richest of the rich, because that’s who’s lending the money at interest. I’ll start with the credit cards. The average interest rate on credit cards in the USA is just short of 17% and the average credit card debt in the USA is $16,000 per household. Now, yes, I know those are averages: the poorest folks don’t have credit card debt and the folks that call themselves middle class have many times more than that in credit card debt, but they’ll serve for my illustration just fine. 17% of $16,000 is $2720 in interest paid by every household in the USA on credit cards. There are 114 million (and change) households, so that’s roughly 113 million households that aren’t in the top 1%, so they’ll be paying that interest… so that’s about $308 billion dollars a year that go from the bottom to the top in credit card interest. Money flows uphill, people.

Put another way, credit card debt provides over $300,000 in income every year for the top 1%. They don’t have to work for it: you do. That 6% of average household income going to pay only the interest on the credit cars is paying for a year-round vacation for those beautiful people at the top. But wait – there’s more!

College loans in the USA are at $1 trillion now. That’s more debt than what’s in the credit cards. The average interest rate on student loans is 7.9%. That’s an additional $79 billion flowing uphill. If we have the households average all this out again, that’s $700 per household per year. That average household income of $44,389 just got squeezed by another 1.5% What could we do with a 7.5% pay increase? Well, the richest folks certainly don’t want to end their gravy train, so you’re not having that.

Don’t believe me? Look at how real wages have been flat or declining for a very, very long time. At the same time, our banks made it possible to borrow money in ways that it’s never been borrowed before. That’s two sources of increased profits: making you borrow more and paying you less than what you’re worth.

Then there’s mortgages: if credit cards are #3 and student loans are #2, then mortgages are #1. While it was relatively easy to get numbers on the first two things, mortgages seem to be a good deal more obfuscated in terms of aggregate data. No surprise to me: This is an industry in which 20% of the professionals have a felony conviction and the main real estate lobbying group has made sure that property purchases are exempt from money laundering restrictions – which means that high-end property in the USA is the perfect sink for the profits of crime.

This helped, though: Fun fact: people that spend less money on houses away from city centers, on average, pay considerably more for transportation. 48% of household income goes in that direction – money for the real estate people, mortgage banks, car finance companies, and big oil.

Working families – under $50,000 in annual household income – pay another 9% of income in transportation costs. They also pay 15% of their income for food and 7.7% for medical care. 57 + 15 + 7.7 + the 7.5 from above = 87.2% of income… that leaves $5800 per year for everything else in our average family of $44K income. Could be worse – and it is for those closer to the poverty line – but it could also be better, without those interest payments going up to the people that really don’t need more of our money.

It could be much, much better as well if we didn’t have banks being run as casinos for the benefit of those rich people that aren’t content to simply hit us up for our spare cash every year. No, they need to make massive gambles in which they gain all the profits but – thanks to their lobbyists and de facto ownership of Congress – have zero risk of paying out to cover any losses. Trillions of dollars of losses.

Each trillion a megabank loses means $8849 per non-rich household in America. The nine biggest banks in the USA are on the hook for over $228 trillion in derivatives that are on the razor’s edge of going bust – that would be over $2 million per household in the USA when the bill comes due.

Don’t worry: we won’t have to pay it all at once. I’m sure we can arrange a payment plan.

I Need to Make a Correction in My Teachings…

… as it turns out, I wasn’t paranoid enough. To all my former Economics students, I apologize.

It seems as though the major banks have been colluding to rig the main interest rate in the world, the LIBOR, for their fun and profit since 2005. That means the guys that kept hollering the loudest to let the market decide efficient outcomes were in a back room, letting their own greed decide the best outcome for themselves, no matter who they killed to get it.

These guys that demand there be no regulations because banks can self-regulate are also the first to claim innocence when their banks are caught doing heinous things. Why? They claim there’s no way they can watch over all the far-flung operations of their banks.

When guys like that pulled stunts like that in the Roman Republic, the senators there passed ex post facto laws that made stuff like that retroactively illegal and then had the culprits sewn up in bags full of snakes and then tossed into the Tiber. The British Parliament considered a similar course in the wake of the South Sea Bubble of 1721, but chose instead to personally fine each man involved in that financial crisis. In the USA, we can’t do ex post facto laws and corporations have limited liability – the perfect combination for the perfect crime, one in which the government itself is a partner.

So, in sum, interest rates are not set by the market. They are set by gangsters that are out to get every last bit of your money. I’ll be teaching that from now on.

Yet One More Way Wall Street Has Ripped You Off

Rolling Stone has an important article that should be required reading for anyone that still believes markets are efficient or that it makes a difference if we vote for Democrats or Republicans. Markets are rigged, frequently, and the parties exercise a cozy duopoly in which they do the bidding of the big corporations doing the rigging of the markets.

This isn’t isolated stuff, either. This is the way things roll in the USA. We’re not a land of the free, nor is there justice for all. The big players pay tiny fines, keep their ill-gotten gains, and then go on to keep doing what they’ve been doing. They commit massive felonies, admit no guilt, and then the government sets them up to commit the same felonies over and over.

Three-time losers get life in jail, but only if they’re individual felons. Corporate three-time losers face no such penalties. Instead, they can bend Congress to let them murder to get gain. And before anyone balks and says nobody in the financial world is directly killing anyone, I’m going to come right back and say that acting as the killer or the killer’s accomplice is the same thing. They’re responsible for health care not provided to the poor, food not available for the hungry, shelters unbuilt for the cold. Inasmuch as they have done it unto the least among us, they have done it unto Jesus, as far as my religion goes.

And now you know why Jesus had so much hostility towards the rich. They tend to be Satan’s most dependable servants.

Is Your Bank About to Murder You?

Strange times we’re in when that’s a legitimate question. Here’s the proof behind the question mark:

Citibank arrests people for withdrawing money legally:

Goldman Sachs execs preparing for the Muppet Apocalypse:

Citibank kills a guy for not paying his credit card:

Does the list go on? Yes, yes it does… Read the whole page.

The banking industry is behind the campaigns of both Obama and Romney. Whichever man wins, they want him under their control. Why is that?

Well… ask yourself… what happens to you if you decided to just quit paying your credit cards? Would your bank decide to make an example of you? Maybe not by having you whacked by a hitman, but there are other ways these guys can rain hell down on you, all 100% legal and taxed at a rate of 0% or less.

I’ve said it before, and I’ll say it again: interest on debts of any amount is a tool of oppression, a tool of the devil. Jefferson was absolutely right when he said banks were more dangerous than standing armies in terms of threatening our liberties.

Violence Will Not be the Answer

While I say violence will not be the answer, it doesn’t mean that others will try to see if it will be the answer. If history is any guide, and it most assuredly is, then the United States of America will be entering a period of heightened violence. It may be directed inwardly or outwardly, but it is going to be much, much more violent in the near future. It will either be a revolt against those who are both too wicked and too rich, or – more likely – a diversionary conflict with a high body count that may well be the fight of the nation’s collective life.

No war, no violence will solve the problems of a nation. People yearn for peace, trust, and quiet: things that are impossibilities in war. If possible, a people should leave an area of conflict and put distance between themselves and a potential aggressor. If not possible, then that people should defend itself and trust in God for deliverance.

That last part is important. It demands that a nation be righteous, that it be honest, and that it be virtuous. It demands that the nation is led by people that use their power to comfort the afflicted, not to comfort the comfortable. It demands that a nation be guided by principles of sacrifice and not personal profits. To trust in God means a nation cannot have its leaders enmired in the pursuit of profits and powers with an eye towards self-aggrandizement. A nation that trusts in God will face trials, but it will emerge from those trials all the better for having endured them. Trusting in God for deliverance implies that dangers and perils will arise and may nearly overwhelm, but that God will see the nation through those trials. Men and women will make sacrifices, even ultimate sacrifices, but the nation will endure in faith and humility.

A nation that does not trust in God for deliverance will instead play the devil’s game and kill before it is killed. It will exist as a paranoid entity. It will exploit the weak for its own game and assert that all is fair when the fittest are about the business of surviving. Darwinism is dangerous not in the biological sciences, but in the social fields – where it does not belong. In its lack of trust in God, it embarks on a history of violence.

That violence will not solve any problems. It will only lead to the breakup and destruction of nations. Then, when there are no more fit targets for conquest, the remaining nations will exhaust themselves in a mutually destructive war. With nuclear weapons, that mutual destruction will happen at a faster rate than ever before.

I see the events in the world today, and while they are not good, I don’t think I’ll be overly troubled by them. I still trust in God for deliverance. I have my reasons for my faith, and they are sound in my judgment, and that is all I need as precondition for my faith. I do my best to keep honest, to do the best work I can do, and to forgive debts others owe me. If the leaders of the USA were of the same mind, I would not be writing this essay.