Never ceases to amaze me!

I heard some newer examples of corruption–at-least the ones I couldn’t imagine–from a singular source. I don’t intend to investigate it further but just felt like sharing. So an uncle, father of a close friend, arrived from India recently. He always has some opinion on everything and is game to hear you out on the issue. He is also well-connected in the sense that he knows people, successful (I think), from different fields. He is a warm person in general but these stories will give anyone a chill.

Similar to western world, now even Indian citizens are also complaining, at-least with more intensity than before, about corruption in India. We always focus on seemingly obvious places of corruption, may it be by politicians or government employees or traffic police or as some repentant indians would point out, themselves giving bribes to all these folks. It’s not the place of corruption or people involved that surprised me from all the cases he told me. On the contrary, the sheer organized way things are happening and how people are oblivious, even appreciative in some of the cases. The funny thing about corruption as with anything is–its most interesting to read or hear about when its unexpected.

corruption-300x192

Source: harvardpolitics.com

Now the trains traveling to different cities from Mumbai usually leave from certain stations, at least some major stations. The trains are in the yards to be cleaned and washed before they start their journey, in some cases lasting multiple days. Railways gives out the contracts for the water, in tankers, to be supplied to them for this purpose. The way system works is very similar to other places such as Hospitals where doctors would charge for 4 bottles of saline but will send one or two back to hospital pharmacy to be resold to next victim. Now what happens here is that they bill for say 40 tankers but would only supply 10 and those too partially empty. The dark comedy comes from something that one of these contractors said –I paraphrase– All the effort with this job goes into making sure all the paper work is spot-on, the appropriate people are paid ‘their dues’ and the tender calculations are correct. It would probably be easier and cheaper to do the actual work but that’s just doesn’t work in india. If you are not amazed by this example then wait till you read the next one. This one is about something that’s happening at the Mumbai local stations and millions of Mumbaikars are walking past it everyday. The re-tiling of the platform that has become kind of regular site for local travelers has a very hidden side. So this comes directly from the horse’s mouth, a railway contractor. They get a tender to retile, 2nd platform of Ghatkopar station, for instance. They uproot the tiles from the platform 5 and place them onto 2nd one. Now platform 5 is in need of maintenance. So they get a contract to retile the platform 5 and you get the drift. The key is to keep all the pockets filled. In reality the railway officials instruct contractors to follow these practices. An average passerby looks at the work and thinks how well the stations are managed that they constantly repairing something or the other.

I have been joking and expressing my surprise at the recently concluded US government shutdown with one of my professors. I asked him if he heard about the congress unanimously passing a bill that provides back pay to furloughed federal workers. What this means is the US government, in reality the taxpayers, is going to pay some 800,000 federal employees and ask them to not show up. He shook his head and said such broken system and said that we should have a system similar to India. Of course, he was joking. Who would recommend the pathetic political system we have in India. The important issues get ignored. The so-called secular parties actually favor religions and castes to get elected. The local politics matters more to people when voting in national elections. Indeed, we have some people in India, like that guy from Swades. Munishwar says, loosely translated it means, “Whatever you say about the western development and fortune but they will never have what India does, (He takes a pause and says with all the pride he can muster) our ‘Sanskar’ and ‘Parampara.” It is sad to see the older guy clinging to a convenient reason for lack of the progress of a nation he thinks to be the greatest and the current youth who has neither and not even that convenient reasoning. I read somewhere that this recent fast paced westernization without basic development (at-least not enough), has left India with worse of both the worlds.I wonder if that’s indeed the case.

I am no india basher or even a harsh critic but it’s just sad to see the current affairs of india at both political as well social levels. I mean I am not even there. Its like me and my buddies criticizing the indian cricketers for being unfit while becoming couch potatoes ourselves.

P.S. I wouldn’t delve into ideas for solving the corruption issue. It is a subject that warrants a separate post.

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Stocks basics

345px-NewYorkStockExchangeWallStreetManhattan I really didn’t want to call it ‘Stocks 101’. It makes it sound boring. Anyway so what I am trying to do here is to give a general view of the way the things occur in equity markets. Some terminologies used. I have been trading for a very short time now and would like to share some knowledge that I have gathered during all this time.

Stocks are one of the best tools available to build wealth. Stocks or Common stocks are like contracts that gives the buyer ownership to a part of the institution. It means, if I own a Halal cart and divide its price into 100 equal parts and sell 10 of those to my friend liberalcynic then he would own 10% of my Halal cart business and I bet he would love it. Now simply extrapolate this to a company as big as Apple Inc. and you have a $500 per share to own a piece. And that one piece is one out of 908.44M pieces. This is called outstanding shares which comprises of all the shares owned by company and company insiders such as Timothy D. Cook. Now you multiply this number of share by the current price say $500, you get the current value of company in share market aka market capitalization as $455B. Apple_logo_black

Lets continue with the example of this well known company to learn some other terms and concepts about stocks commonly used in the market. Everyone knows Apple sales iPhones, iPods, iMacs, and if I may, all the other i’gadgets. All the profits from these sales go in a pot that apple has been holding on for so long that company’s cash reserves has ballooned to some $120B today. This pot is called cash on hand. Now that’s surprising because if I made some profit on our halal cart, liberalcynic won’t let me hold on to that money without taking his share of profits. So it is historically an unusual albeit currently common practice for companies to hold all that cash and not give it back to share holders. An aggressive growth stock that AAPL has been for more than a decade, can afford to not pay share holders back unlike a growth and income stock such as MSFT (Microsoft Corp.). Recently Apple started paying a dividend to share holders to the amount of $12 per year divided and paid quarterly. Now another way to pay back investors is to buy shares back. If a company buys its own shares using this pot of money it has, it helps the price of share rise and the investors see there portfolios swell. I own an iphone and macbook pro so I have an emotional soft-corner for Apple but your emotions have no place in stock market or at least one shouldn’t heed to emotions. A lesson I learned the hard way. So how can one know if a company is good to invest or not. There are various parameters to valuate a company. I will explain a very easy yet not sufficient metric of stock valuation. Say apple earned some $50B in a particular year–they have never– by the sale of goods, services and licenses. There price to earnings ratio as denoted as P/E will be 10 for that year considering the price being $500. If Apple is good –actually great– at this price and earnings, then if the earnings for Apple go to $55B next year and the price stays at $500 then Apple will be even greater of an investment opportunity. Now stocks belong to different industries such as Technology, Pharmaceuticals, Food industry and Biotechnology, etc. There is always a P/E ratio for the industry that you can compare with the ratio for an individual company. If the ratio is lower than industry and other metrics look good then the company is in better position for investement.

I hope this was easy enough to follow and may encourage you to invest. Investing is only way one can fight inflation –a big deal for people like me from countries like India– and grow your capital. Finally lets wrap this a fitting movie quote-

                                                                   “Money Never Sleeps.”

A Night out in a blizzard

This is not some story in which so many horrible things happened to me during the recent blizzard in NYC that I had to share it with people. Contrary to that this was a night to remember. I guess writing it up is my way of making sure that I can always have something remember it by.

It all began with a text from my good friend liberalcynic. It said–“BTW this friday or sat night—depending on Shashank’s availability—guys’ night out at Prakash’s place”. My reply was ‘yes’ as usual to a Manhattan outing. Not that we have nearly enough of those. Shashank bailed and it was just me and Bharat going to his cousin.

JoeysApartment1 foos

(Pic: Wikia)

First we got delayed due to my unyielding quest in research which ended for the day around 5 then we got delayed waiting for the Bus for an hour. Finally when we reached Prakash’s place the snowing had started to get a hold. We decided to go to a nearby bar for a drink or two. I would like to mention the bar by name but Prakash calls it ‘the bar with ‘Foosball table’. It charged some five quarter to play a game. A game was worth a number of goals that I don’t remember even after playing for an hour or so. I had never played on a foosball table before so I let Bharat play the first game. He lost miserably to Prakash. Now in the tradition of winner plays the next guy, I was to play against Prakash. All my desires to have that Joey and chandler kinda life with those recliner chairs and the foosball table came to life as soon as I took control of the bars. Prakash had two goals on me before I could say ‘foo’. This prompted Bharat to join my end to operate forward line. I guess it was like 15-20 dollars gone before we started winning. By the time we were done and ready to move on, it was pretty nasty outside like we were at pole or something.

Improvvisato...(Pic: nycgo.com)

Improvvisato…
(Pic: nycgo.com)

We started walking on E Houston street towards ‘Katz’. I usually don’t pay attention to where we are going but this time I did just so that I get these details right. To our demise it was closed and we, I mean Prakash and Bharat, decided to go to ‘DBGB’. Now we started running on the snowy sidewalk with I guess no visibility. Bharat and I were trying to keep up with Prakash. All of a sudden we stopped at a theater which I just looked it up to be ‘Sunshine Cinema’. Prakash saw ‘the Godfather’ for midnight show. We discussed it for like 30 seconds and we were buying tickets for the show. Probably everyone has watched ‘Godfather’ on TV, DVD or Netflix before they took it off streaming before I got to watch it. I did watch it later but how many people who are below 35 or something can say they watched it on the big screen. It was awesome, watching ‘The Godfather’ at a midnight show impromptu during a blizzard.

Pizza --fitting after Godfather.(Pic: Wikizip)

Pizza –fitting after Godfather.
(Pic: Wikizip)

We left theater still hungry and settled for a nice brick oven pizza at ‘Frankies’. That was all for the day as we packed it up. Next morning we went to our staple place for breakfast close to Prakash’s place–‘Clinton street baking Company & Restaurant’. Two hour wait meant no breakfast there. We started going to some place which I don’t remember now but we went to ‘Katz’ instead. We had an awesome lunch and this is where I would like to end this story.

Best sandwiches here!(Pic: Wikipedia)

Best sandwiches here!
(Pic: Wikipedia)

It was really a refreshing experience and to think that at one time while I was working in lab around 1 or so on Friday I thought of bailing and boy am I glad that I didn’t. Lastly I would like to thank both Prakash and Bharat for this weekend and this story.

Democracy, really?

Untitled

(Pic: Wikipedia)

I read similar headlines in multiple news outlets and have read about this for a while. ‘India and China being the shining stars of asia. They will finally restore the balance of world power and economy with asia being as important if not more than west’. This made me wonder about certain aspects of this India-China duo. The pair supposed to make it big on the World stage in  2030. West has, for long, believed in the philosophy–Democracy and not Autocracy is better for people and I concur with it. After-all ‘For the people’ has been part of the definition. The pair presents a good opportunity to test this belief. They have similar population, started the being independent entities at the same time (WWII) and are in similar regions, which takes the demographics out of question.

In 1947, India elected Jawaharlal Nehru as the Prime minister and that sealed India’s fate as socialist democracy. Following the Chinese Civil War, Mao Zedong’s Communist forces took power and founded ‘Peoples Republic of China’ in 1949. If you compare the policy of both countries in initial phases it was similar being socialist. Mao and Nehru both adapted the Soviet-style Five year Plan as a part of centrally controlled economy. Nehru era created extensive regulations and red tape widely known as ‘Licence Raj’ in his daughter’s time. India’s per capita income grew at a meager 1% annualized rate till 1980s. If this paints a dire picture my country, China was not far behind. Actually Chinese economy was behind India up until 1978 in terms of GDP. It is pertinent that both countries were socialist, mildly put. No critic of Indira Gandhi governance stayed jail-free during India’s ‘state of emergency’. Similarly, Mao Zedong’s influence was so strong that his successor Deng Xiaoping coined a famous phrase “7 parts good, 3 parts bad” but failed to acknowledge the economic disparity prevalent three decades of Mao’s reign.

The history looks comparable for India and China at least for their first thirty years or so. The key difference between the two was the ‘elected’ part for Nehru and ‘took power’ part for Mao. The picture for both the countries changed to paved way for western world to enter the these markets as producers, investors and consumers. Various rounds of economic liberalization that led to development of relatively free market economies. Even-so there came a drastic difference between two in 21st century that has developed in short time of two or so decades. Widely known fact is China having bigger economy on a size of GDP scale. Although I would grade a country on the basis indicative of the level of life in that country than the poster growth.

First up is the economic shock that all of my friends here in US have felt when they went to their recent trip back home. Trip to a decent restaurant that used to cost around Rs. 100/person has ballooned to around Rs. 300 at least. This concurrent with the ~10% inflation rate in India. In contrast China has that rate at acceptable 1.3%. This affects the budgets of even the middle class families let alone the poor which is available at wholesale rates in India. The current population below the poverty level–less than $1.25 per day– stands at a daunting ~32% for india which is huge considering China’s ~13%. This tells you distinction in the overall financial demographic of two countries. There has been two sides of employment creation in US. Democrats think the government can assist the private sector with stimulus and Republicans think that it should be completely left to private sector. Whichever you support India has failed to do as good as China. India has unemployment rate at 9.4% compared to China’s healthy 4.2%. Either Indian government is failing at adding enough stimulus into the economy or is doing a bad job at not coming in the way of private sector. Later being more likely scenario. The next characteristic a bit loose in my opinion but still a contrasting one. The average gross salary for an Indian is ~$1410 per annum as oppose to his/her Chinese counter part who earns ~$5400. This to me is a weak measure because cost of living in two countries is completely different thus making a straight up income comparison less worthy.

I cannot help to think that all this prosperity that these countries have enjoyed in recent decades should have cost them in some format. This would show in the balance sheets of the countries. This is also a bad report card for India. India manage all the growth that current congress government likes to boasts about at huge public debt of 68% of its GDP while China managed by borrowing only 25% of its GDP. The rates at which a country borrows is dependent ont its credit rating. India has a BBB- to China’s AA-. In 2011 India ran a ~$110 billion deficit on top of a ~$196 billion revenues. China in same year ran a ~$83 billion deficit on top of their ~$1.64 trillion revenues. Foreign reserves for India stand at a meager ~$295 billion as opposed to ~$3.2 trillion of China.

Digging this up has made me wonder if India is any better off by being this pseudo democracy compared to communist China. My good friend liberalcynic argues that a Communist country has disadvantages such as lack of freedom of speech, lack of competition and central economic planning that results in inability to account for volatility in market. Lets take a look of our ‘Non-communist India’ in all these aspects. India has threatened to ban social media and media outlets like Facebook and Google unless they comply with government requests. This gets worse when the judicial system also supports this restricted freedom of speech, as it is being called. I admit that this is still better than Chinese situation but not as good as western countries like US. ‘2G spectrum scam’ involving politicians and Indian government officials under-charging companies for licenses. Coal mining controversy famously known as ‘Coalgate’, involved coal block allocations as oppose to auctioning them. This doesn’t sound like competition friendly environment to me. As I mentioned before the ‘democratic’ India has a centralized planing known as Five year plan.

In summary, I think India has all the bad you assign or expect to come from communism and still lacks the economic prosperity that is guaranteed by communism advocates. I have been and still in support of democracy and free market economics. It is the Indian scenario that makes me sad. I wonder what and where India would have been has it taken a few right steps.

My sitcom story…

If I remember it correctly, Fraiser Crane’s series (by the same name) was my first american sitcom. It was a lot of high level rich comedy which was a little cerebral and snobby at times. It was a show that is based in ‘Rain City‘. It is sleepy but still makes you think when you listen to those witty jokes made by pretentious Kelsey Grammer and David Pierce combined with a quick pragmatic insight of blue-collared John Mahoney. A very good dialogue, I would like to share here is–Martin (John Mahoney) sets a fatty breakfast for snobby Fraiser (Kelsey Grammer) and asks if he wants cheese on it. In a quick reply Fraiser says that he would like to leave some blood flow for the clot to go swiftly into his brain. This series was filled with such brilliant jokes.

Some of the very BEST sitcoms.

I started watching Seinfeld right after that. It was like watching a cultural phenomenon. Probably the greatest television program of all time, Seinfeld had a different tune to it. It was a light show with astute observations of day to day life. It was the first show in which principle characters were absolutely unrelated. They didn’t work together, didn’t belong to a family or lived together but still remained pretty close friends. Seinfeld was the first and probably the only show in which characters didn’t mature and were stuck in a phase for its 9-season run. I didn’t realize this until after I was finished watching all the seasons and my good friend Liberalcynic pointed it.

I think I started watching ‘Everybody Loves Raymond’ and Friends at the same time. One is set in Manhattan and other in the suburbs of long island. Despite being geographically close, they are two completely different shows. ‘Friends’ is about a group of people with completely different characters who came together and became friends to face the challenges brought about by ‘The Big Apple’. Show had characters ranging from smart and geeky (Ross), good looking but dim (Joey), charming but eccentric (Phoebe), sexy and wholesome (Rachel), efficient but neat-freak obsessive (Monica) and amusing (Chandler). One amazing scene, as I remember it, is when Phoebe spells her name as–‘P’ as in ‘Phoebe’, ‘H’ as in ‘hoebe’, ‘O’ as in ‘oebe’, ‘E’ as in ‘ebe’, ‘B’ as in ‘bibi’ and ‘E’ as in ‘ello there mate’. As oppose to that ‘Everybody Loves Raymond’ was a bit family oritented show where an honest but lazy worker-writer (Raymond), a complaining housewife (Debra), an older brother who lives with his parents (Robert), a carefree and diehard father (Frank) and a nagging yet caring mother-in-law (Marie) come together. The show had everything from sibling rivalry, mother-in-law and daughter-in-law troubles, husband-wife fights, children responsibilities and a hell lot of good writing.

Modern sitcoms…

Now, the new generation of sitcoms (as I would like to call them) started with Scrubs which was fresh in the sense that it was a single camera sitcom with a young and dynamic cast. It had wittiness of ‘J.D.’ and cocky Dr. Cox. It was a well integrated cast which made it look very natural. I started watching ‘Two and a half Men’, ‘The Office’ and ‘How I Met Your Mother’ almost around the same time. It is always nice to mix sitcoms. Two and a half Men was made with a simplistic cast where the charm of Charlie Sheen and misery of Jon Cryer and dumbness of Angus T. Jon blended like a scotch. The Officie being the first mockumentary that I ever saw, was a very new experience. It is a copy of a successful british series by the same name, which I never cared to check out. Since I was new to the format, it felt so slow and taxing to watch for first few episodes but it grows on you. My good friend Liberalcynic stayed resistant to my suggestions about watching this one but ultimately when he started watching, it grew on him too. It is a series that is so close to reality and theater at the same time. 30 Rock and ‘How I Met Your Mother’ has been good and refreshing sitcoms. They are currently running. Goofiness of Ted and Marshal combined with class nay “awesomeness” of Barney and not to mention hotness of Robin adds a zing to ‘How I Met Your Mother’.

My most recent sitcom, ironically enough, was a very old one by the name ‘Cheers’. It seems to be, in many ways, the grand daddy of most of the sitcoms that came after it. It was probably a pioneer in some of the concept that proved to be hit for so many sitcoms that followed. Some examples would include having a dumb guy who is constantly patronized, having a popular guy who is showed to be with a smarter appearing female and having a romantic couple that never gets to their happy ending.

It was nice to visit or, as it looks after 686 words, catalog the sitcoms that I have been exposed to. It goes without saying, do comment if you remember a particularly funny part from any of these series.

Liberal Mathematics!

In my previous article I mentioned that I want to study the issues such as US national debt, Taxing rich and the war, Republicans so desperately want and know how to win. People take the issue of debt so lightly. I have read people mentioning debt to be a non-issue for individual people. I don’t know the logic behind such view, but I see the recent European stories alarming. Europe is the crystal ball which Americans can look into to see their future if they choose to ignore their debt and/or let it increase it. In this NYTimes graphics the ratio of government debt to GDP for Ireland is 113%, Italy is 123% and for Greece is 153% (as of April ’12). The same ratio for the US was 101% (2011). Now if you take a look at the so-called rigid economies of the world we see the contrast. The same ratio for France and Germany was 86.5% and 82% respectively (2011). The countries –with booming economies– such as India has 51.3% and China has 43.5% of debt to GDP ratio. Even if we exclude developing economy as being not big enough it is clear that US is not in a great position as far as government debt is concerned.

Paul Krugman rightly points to some key aspects of US debt in his article ‘Nobody Understands Debt’. He explains how governments are different from families or individuals as they never actually pay their debt. They only pay the timely interest on the debt. Governments still should make sure that the debt should not increase faster than their tax base. This is where the US is in trouble. US debt of $14.3 Trillion is owned by US government ($6.2T), Foreign countries ($4.5T) and Public (3.6T). So most of US debt is owned by US government. People often fear that China owns most of the US debt but in fact it owns only $1.2 trillion. Another important piece of data is that every dollar owned by a foreign country  in US debt, US owns 89 cents of foreign debt or assets. US earns better returns since the interest rates paid by other countries are higher than the 3% paid by US. So one can sign debt off as a nonissue but the key aspect here is payment of interest.

“(T)he principle of spending money to be paid by posterity in the name of funding, is but swindling futurity on a large scale.”
— Thomas Jefferson (Source: thecomingcrisis.blogspot.in)

This payment, in economically sound way, would come from the revenues generated by the country. US has chosen the not so prudent way of printing money to pay the interest. The wars that Republicans started to defend US has left it vulnerable in a much deeper sense. They didn’t pay for it, didn’t make any future provisions for the payment and blocked liberals whenever they tried. The ‘Reducing your expenses’ philosophy goes only so far. The large and popular projects such as Social security, Medicare and Medicaid makes it nearly impossible for US government to reduce their expenses significantly. The current US expenses for these projects is $725B, $485B and $275B respectively. On average they are expected to increase by 40% by 2017. These three are just part of what US spending. I haven’t even touched the on and off budget defense expenses. This bit of statistics might help republicans believing in the slogan ‘We spend too much’. Still the important piece of information is the interest paid by US government. It stands at $229B and is estimated to double by 2017.

Once you consider the revenues that US government generates then the real picture emerges.  Total revenues including personal, corporate, production and import taxes; social security contributions and income generated from assets is $2.5T. This is almost same as the amount generated in 2006 thanks to dear Republicans. On the other-hand the Federal expenditure has gone up from $2.7T in 2006 to $3.8T in 2011. This makes me wonder how one is supposed to believe that cutting taxes will help US reach sustainable growth as a country. Personal Income tax accounts for about $1.0T of the revenue. This is where the ‘1% vs the Rest’ fight is being fought.

Source: Internal Revenue Service.

The top 1% has paid 36.7% of total income tax compared to 2.25% paid by bottom half in 2009. This means whatever rate this top 1% is paying, they are paying a big chunk to US. The argument, I frequently make with my good friend Liberalcynic, is someone has to pay to cover the expenses. The debt may never be paid in full but the interest payment makes it necessary for the tax increase.

Source: Internal Revenue Service.

Since top 1% is paying more than a third of total taxes, it seems feasible to me that this is the only group which can make any significant difference to US revenues if the tax rates go up. The bottom half is paying negligible amount which makes them useless as a direct source of income to US government. Thus the tax rates should not or maybe should never increase for these people. The Republican notion is and has been –the millionaires and billionaires are the ones who invest and keep the economic engine running and thus we should not increase their taxes– The share of tab picked up by top 1% has been constantly increasing since 1981 and if taxing rich was so bad for economy then we would have never seen the ‘Post Reagan’ growth that Republicans so often boast about. Moreover, the sharp increase in share of total income tax paid by top 1% occurred during Reagan years.

The top 1% has been paying more and it is this top 1% who will be needed to pay more if we are to increase our revenues.

Case against Libertarian philosophy in 2012!

The core belief of Liberty is that an individual is able to govern himself. Intrusion by society or institution such as a government, on one’s interest is as good as lacking freedom. In concept it differs from the well accepted although not completely understood concept of democracy. People love democracy but conveniently forget to analyze the fact that in concept a democracy should be morally tolerant, more over supportive of the decision of 51% of a population deciding to kill the rest 49%. I admit, I exaggerate  but a possible situation none the less. A simpler and practical example could be government using tax dollars of a single person or a person devoid of any kids to give tax breaks to a family with kids. It is repugnant to see the child just because is born it has to be taken care of and if the parents are can not suffice then the government—in reality all the honest tax paying people—should pick up the tab. This is something a libertarian will die to oppose. John Stuart Mills, a 19th century political economist calls it ‘tyranny by majority’. The Idea of Liberty is easy to understand and agreeable to  even a person who might be hearing about it for the first time.

I personally am in accordance with the conceptual part of the Liberty but fail to accept the full practicability. The Nobel prize-winning economist Milton Friedman is credited for explaining the practical aspect of Liberty and easily ignored damage resulting from lack of liberty in the simpler terms. One of his famous quotes is, “The society that puts equality before freedom will end up with neither. The society that puts freedom before equality will end up with a great measure of both.” People from developed world consider the constraints placed on the women in developing or poorer countries to be immoral. If you agree with this then you are attacking their ‘Democratic’ right to choose the way of living. Some economic decisions taken here in US are subtle in the ways of ridding a citizen of his/her Liberty. Milton Friedman in his PBS special ‘Free to choose‘ explains the detriment the so-called for-the-people-laws such as minimum wages brings. There are low skilled individuals such as teenagers or individuals from minorities, which generally could have worked for lesser wages and gained experience which could help them advance. The minimum wage law would discourage employers from hiring these lowly skilled workers and these same individuals who were supposed to benefit from this law are its first casualty. Next is the consumer who ends up paying more for that product.

In this video from Milton Friedman’s series, William H Brady says “Freedoms are inter-dependable and indivisible.” People often forget that as they are entitled to certain rights by virtue of freedom, they also have to bear the responsibilities that come with it. Libertarian philosophy puts one responsibility above all, ‘ones should not use or be able use ones right to trample others’. This is where the individuality comes into the picture. The phrase ‘For Greater Good’ is not so palatable to libertarians because the definition of ‘Greater Good’ is always subjective and often skewed to benefit one group over other. If one gives a serious and sincere thought to this, it does make sense. I shouldn’t be asked to sacrifice my rights so as to benefit other. However selfish it may sound but this is the only way to protect individual from a bunch of people, government or as my friend Liberalcynic likes to call “People who have much bigger guns than me”.

Republicans and Libertarians have been able to live together for so long. There are some similarities in their way of thinking. Both believe that a government can never be better judge of how an individuals money can or rather should be spent. For this reason they both believe in small government. They also believe that big government can not be distinguished from the tyrannical system, which the Americans refused so long ago. In recent primaries, Republican politicians have gone on record to make President Obama, so-called big government president, a devil. Rick Santorum compared President Obama to King George III. Rick Perry went further and said President Obama is Nazi Germany. One can easily dismiss this as a scare tactics aimed to distance americans from President Obama by comparing him to the British King at the time of american revolution and second one’s a little better known and recent american fear. Even so there is an important point to understand here. They used these specific comparisons to exploit the inherent fear in american people of the authority.

If you hand the command to a true Libertarian at the time of crisis such as the ‘Great Recession’ of 2008, then you can assume some decisions to be scrupulous but yet widely unacceptable. A libertarian will never bail out any bank or the auto maker. I have some reservations about the auto industry bailouts but in my opinion banks had to be bailed out. The usual measures a Government takes to tackle the recession are lowering the interest rates, lowering the taxes and increasing government spending. A libertarian will only lower taxes which will not be enough. 2008 recession is sometimes referred to as ‘Great recession’ for a reason. When this particular recession struck, the interest rates where already low, taxes were lowered twice in past 6 years and government was already under massive debt from the tax lowering and fighting two wars. Libertarians are considered fiscally conservative but one must spend to insert capital in the stagnated economy at the time of recession. The banks—institutions that are known to make capital available—were themselves in trouble. This makes the government spending mandatory.

Libertarians and Republicans believe in the ability of market to take care of itself and good businesses arise on the backs of the bad ones. This means that there is no need for governmental spending at the time of crisis/recession. If there had been a Libertarian President in this particular scenario then he might have spent to get the economy back on track but there was one, one might argue. President Herbert Hoover not only believed in Liberty but he also implemented it in his life. He, at the time of “Great Depression’, chose not to act because he believed in rich investors to come forward and give economy the kick-start it needed. Nobody came. He lost 1933 election by a landslide as a consequence. The most important and popular aspect of ‘New Deal’ was that President Roosevelt was doing something. Some of his policies didn’t workout but some worked and that was enough for the american economic engine to start running.

Today in 2012, when all is said and done to get economy out of recession, the important question is the debt. The debt is almost equal to the GDP. This to me seems very dangerous scenario because first you don’t own anything anymore and plus you have to pay hefty interest on the same debt. In my opinion one can expect a liberal and not conservative President to tackle this scenario effectively. One has to increase taxes and reduce unnecessary spending at the same time. Considering the current political environment, the best bet for americans would be to give Presidency to Democrats but keep house with republicans. This arrangement assures the reduction in spending because of house leadership and at the same time a presidential push to increase taxes.

One can always argue who should pay more and which department should get the scissor. Current divide between 1% and 99%; people who want the entitlement programs to stay and the ones who want to get rid of them; people who want to bring back troops and the ones who want to “win” the Afghanistan war, is very deep. I want to explore this in detail but first I would like to check some mathematics regarding the US debt.