About Me

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Los Angeles, California, United States
The blog 'Breaking Bread' is for a civil general discussion, like you might have at the dinner table with guests. The posts 'Economics Without the B.S.' are intended for a general audience that wouldn't have to know the difference between a Phillips Curve, a Laffer Curve, or a Cole Hamels Curve. Vic Volpe was formally educated at Penn State and the University of Scranton, with major studies in History, Economics and Finance, and Business; and, is self-educated since by way of books and on-line university courses. His practical education came from fifty years of work experience in the blue-collar trades as well as a white-collar professional career -- a white-collar professional career in production and R&D. In his professional career and as a long-haul trucker, he has traveled throughout the lower forty-eight. From his professional career alone he has visited many manufacturing plants in the United States, Europe and China. He has lived in major metropolitan areas and very small towns in various parts of the United States. He served three years with the U.S. Army as an enlisted man, much of that time in Germany.

Wednesday, September 3, 2014

Loosing Our Heads

Economics Without The B.S.**:  Loosing Our Heads



[**  Double entendre intended.]


Loosing Our Heads

The recent beheadings from the Middle East over the past several weeks only serve to illuminate the vast differences in our “civilized” world for expressing dissenting opinions versus theirs.  It reminds me of a point Jacob Bronowski made in his televised series from the 1970’s ‘The Ascent Of Man’, that we humans were not just lower than angels but also just one step above animal behavior.  However, we are, he notes, the one animal that use our brain, we reason, use our emotional being, to not accept things as they are, but to change.  Unlike animals, we humans have evolved not just biologically, but have shaped our cultural evolution and thus his title to the series, The Ascent Of Man.
When President Kennedy spoke at Houston, Texas in 1962 to explain why we are going to the Moon, he addressed the human quest for progress that was coupled to our thirst for knowledge.  As an example he boiled down human existence to a fifty year period to explain how progress and knowledge were linked and that most of that change had occurred quite recently giving the appearance of rapid change.
I believe the conflict we have with the extreme Islamic fundamentalists is basic to that rapid change of pace brought on by technological advancement forcing change in societies not adapted to cultural change.  I do not think religion has that much to do with it.  I think the extremists have identified Western cultures with pushing the technological advancement and in reaction to that oppose anything “Western”.  And to the extent they can use religion as a tool for resistance they do.  But I think it is more of an Arab and Middle East problem that just Islam.  After all there are plenty of Islamic people in Asia that fit right in with the “modernized” world as well as those from the Middle East region that have settled in the United States and live side-by-side with others from different cultural backgrounds.  And the democratic process for resolving conflict in society does not seem to be a natural fit for an Arab culture that remains too bound to tribal ties.  And this in spite of the wealth that has been produced in many of the Middle East states and advanced education received by the elite and some of the middle class in those societies.
While the beheading of Westerners receives a great deal of attention in the Western press, there are public beheadings by our friends the Saudis on a weekly basis.  Of course when sanctioned by the State, such an affair receives all the formality one would expect for such a ceremonial spectacle.  And, unlike the recent execution of Westerners, you can view these exhibitions on the Web – they are not removed from viewing for their grotesqueness.  Also on the Web are video of Islamic terrorists beheading “infidels” in less formal arrangements and with less proficient technique.  But there is still a crowd gathered just like an old time hanging in America in the 19th or 20th Century.  There is even one video of a child being given the “honor” to do in the “infidel” and with results not anywhere as efficient as a Saudi executioner.
One of the points that Jacob Bronowski makes is that technological advance, inquiry, is part of the human spirit and that intolerance is a betrayal of that basic human spirit.  The arrogance that comes with dogma promotes ignorance.  In the program, Bronowski stood at Auschwitz, where he lost members of his family, and said we have to temper ourselves by reaching out to others – “We have to touch people.”
We have had relations with the Saudis for many, many decades – militarily and commercially.  And I am aware it is a complicated relationship – as was testified to by several of our diplomats during the 9-11 Commission hearings.  I like to think of myself as a pragmatic ‘Realist’ rather than an ‘Idealist’ or ‘NeoCon’ when discussing foreign policy; but, I have to think that something has failed in the long relationship we have had with the Saudis.  And I think they have been the prime instigator in promoting extremists in Islam because of their brand of Wahhabism, the relationship of the religious leaders with the political leadership, and the distribution of wealth and economic opportunity within the country.  I have no idea what it would take to bring the country into the “modern” world; but, just looking at our part, I would think we could put more pressure on the ruling family by economic means – and that’s keeping in mind that they initiated the Oil Embargo of 1973 which not only affected our economy but also our military readiness at that time and they have been somewhat cooperative in our intelligence networks and behind the scenes dealing with Israel.
It took Southern Italy a long time to come into the “modern” world – aspects of feudalism existed right into the 20th Century, even today.  If the paganism of Southern Italy could get enwrapped into Christianity and the Church-State relationship get realigned maybe there is a lesson for Saudi Arabia.  Let’s hope it doesn’t take as long.
The fact that this barbarity still goes on today reminds me of a book by Victor Davis Hanson, ‘A War Like No Other’.  Hanson is a classical scholar who wrote about the Peloponnesian War of the 5th Century B.C. between the democratic and “civilized” Athens and the autocratic and regimented Sparta.  He describes how after thirty years of constant war, the “civilized” Athens descended into barbaric acts just as crude as Sparta.  And Hanson asks what is the nature of man?  That “civilized” man was shielded from animalistic instincts by a thin veil that could be pierced with so little provocation.

So, when do we touch one another and put our heads together, like at the end of the movie Rain Man, and advance the human spirit?

Tuesday, September 2, 2014

Thought for the Day: On Politics

Economics Without The B.S.**:  Thoughts on the Democratic Process



[**  Double entendre intended.]


Thought for the Day:  On Politics



Participating in the democratic process is like a contact sport.  You are not going to come out of it without some bruises.   

Social Security: A Financial Problem or a Political Problem?

Economics Without The B.S.**:  Social Security:  A Financial Problem or a Political Problem?



[**  Double entendre intended.]


Social Security:  A Financial Problem or a Political Problem?


Another annual report on the financial condition of the Social Security Trust Fund has just been released by the Trustees and critics of Social Security would have you believe there is a financial problem.
The political leadership needed to manage the long-term sustainability of the Social Security Program has been lacking since the Reagan Administration last faced a similar crisis and made the necessary modifications after forging bi-partisan support.
Since the inception of Social Security from the New Deal of the 1930s, there have been critics of the program, mainly Republicans, calling it ‘Socialism’ even though the concept of social insurance was initiated by the bulwark of German conservatism, Otto von Bismarck, in the 19th Century.  However, regardless of who was president or in control of Congress, no one has been able to undo the Social Security Program as it was initially designed as the American version of a social insurance program.  Among the ‘Greatest Generation’ that was alive when Social Security was instituted, this program was considered the third rail for politicians who would not support the program – if you criticized the program, you got burned at the next election.  But as this generation passes and younger generations inherit the program, the aspect of it being a third rail has diminished.  But the administration of the program remains in the political realm.
As social insurance policy, and not just a retirement program, the Social Security Program was designed to have all Americans participate in the Program but would primarily benefit low-to-middle-income Americans who are often in a negative net-worth status or have difficulty putting enough savings aside for life’s contingencies.  Social Security addresses this by being a forced savings program, not voluntary; and, by being a guaranteed benefit, not one that is subject to the risks of the marketplace borne by the individual participant.  By having all persons participate, but by being more generous to low and low-middle-class beneficiaries, Social Security has always been re-distributive in nature and progressive in allotting benefits, the sine qua non of social insurance.
The data that has been collected by the Social Security Administration, and other organizations like the Pew Research Center, have shown, over the years, that higher income households of seniors have a greater mix of assets and income sources and are less dependent on Social Security; and, as you go from higher income seniors to middle income and lower income senior households, the asset base becomes less to non-existent and the income streams become more dependent, almost totally dependent, on Social Security benefits.  While the three-legged stool of retirement planning has been used as an analogy – one leg (Social Security) as forced savings, guaranteed benefit; a second leg (company pensions in the form of Defined Contribution or Defined Benefit Plans) consisting of professional management; and, a third leg of personal savings and investments (e.g., an IRA, a second home, etc.) – higher income senior households have all three legs, middle income senior households tend to have two legs (although the adequacy of their company pensions have been questioned), and  low income senior households tend to rely almost exclusively on Social Security.
With this data at hand and the lessons of the third rail of politics, we now have old time critics disguising themselves as the modern day “Reformers” bringing to our attention one inadequacy after another concerning the viability of Social Security and how to rescue the Program before the Great Collapse.  The vicissitudes of their reforms are reminiscent of the bumps and grinds of a tease joint obliquely situated in a side alley from the main thoroughfare.  The actuaries of the Social Security Administration, who are responsible for providing guidance for the sound management of the Program, have often stated, through the decades, that the Program with modifications that have been historically made – raising the income cap, raising the payroll tax, adjusting the retirement age, recomputing the benefit formula, etc. – and, gradually phasing these in to avoid shocks to the people affected – can restore the system to long-term sustainability, make it economically and financially sound, and keep it socially responsible.
If actuaries can make that statement then why the constant outbursts from the “Reformers” and the “Progressives”?  Could it be because the administration of the Social Security Program is entwined in the political process?  And it is the bedrock of the progressive agenda instituted during the New Deal of the 1930s and still ever present today?  And because it is identified with the progressive era of the New Deal, in other words Democrats and a Liberal agenda, it gets stuck in the craw of political opponents to this agenda and its programs?  Stephen Goss, the Chief Actuary, has said repeatedly over the decades that it is the political inaction in making the necessary modifications that has been the main obstacle and primary reason for the present state of affairs regarding the outlook for Social Security.  You can go to the C-SPAN web site and search on congressional discussions on the modifications recommended for Social Security since the late 1980s when they know (and they actually mention it) what the Program would look like in the year 2000, 2010, 2020, etc.  They discussed how gradual changes over twenty years would bring the Trust Fund into sound financial standing.  They discussed it in the late 1980s, the 1990s, the ‘00s, and since.  They discuss; but, they did nothing – in the 1990s, the ‘00s, and since.
The Social Security Program is one of the few federal programs that has always had broad support among the people who label themselves as Democrats, Independents, and even Republicans.  Even among the different generations it receives broad support – even the young generations even though they don’t think Social Security will be around when they reach their retirement age.  This was true in the past during the 1980s.  Well now for those youngsters from the 1980s it is thirty years later and as they approach eligibility for Social Security retirement, surprise/surprise, they are among the biggest advocates for keeping the Program as it was intended.
If there are no changes to Social Security it will only have enough money to pay $.75 for each dollar of benefits by sometime in the 2030s.  Is there some politician who thinks they can get re-elected after they tell Granny that she is only going to get $.75 for each dollar of benefits?


We live in a society governed by a democratic process.  Social Security is a part of that democratic process.  It is up to each generation that participates in the Social Security System to either renew that support or find a different approach.  Political will is not just a test for politicians, but also a test for the people they serve.  Lead, and they will follow.