Errata for Karl

After reviewing just my initial google search "Maryland median income" and the wikipedia entry on household income....

Washington Post median income for Maryland: $52,868
Sure it says Election 2006, but its from 2000 Census in tiny print at the very bottom. My bad.

Three-Year-Average Median Household Income by State: 2003-2005
Maryland $58,347

In another chart on the same wikipedia page, Maryland has a median income of US$ 63,082, based on 2006 dollars.

Clearly the economy has been doing well in Maryland.

So now, I don't know if $45,000-$50,000 would put you in the middle quintile in Maryland.

There was also the point of cost of living:

Median household income comparison of two states based on PPP.

California US$ 55,000
West Virgina US$ 33,000

That means, even after cost of living is factored out, Californians still make way more than West Virginians. I will see if I can find more on that, especially in regards to Maryland, but supposedly California is a very high cost state.

p.s. There is also a figure for median income for a family of six in Maryland that is $94,017 but I think that just means those who choose to have that many children are already making more money. Because normally having more kids doesn't help increase your income.

Another census information says the median income for self-employed no-incorporated workers is only 37,000...that's way below the median income. I guess working for a big faceless corporation is much better paying.

More Kiddie Insurance

The Democrats have found another family to show off in the SCHIP kerfuffle.

This week, Democrats have brought forth the Wilkerson family, whose two-year old daughter Bethany is covered by SCHIP and had life-saving heart surgery when she was an infant. On Monday the Wilkerson family held a conference call, sponsored by USAction, a liberal grassroots advocacy group lobbying in favor of the $35 billion SCHIP expansion.

For the record, the Bo and Dara Wilkerson say they make $34,000 in combined income from restaurant jobs in St. Petersburg, Fla. They rent their house and the couple owns one car, which Bo calls "a junker."

A much better choice of families from a strictly political consideration. (Perhaps not so good for an interesting discussion of subsidies.) Like I said before, when I think of these programs I envision people like the Wilkerson's or perhaps those stoner kids in high school all grown up. Personally I am much more willing to subsidize a short order cook and his wife than a college educated couple who chose to open a marginal woodworking business. It's one thing to give a helping hand to people who are working hard and don't have a lot of prospects. It's another to fund someone's hobby job.*

But, I'm not sure there's any way around this - I can watch someone like Bread who worked the minimum amount of hours a week to maximize his free time and travel, while still getting all of the benefits of someone who makes the same amount by working 40 hours a week sorting garbage. The inner state planner in me wants to force Bread to work all the jobs he can if we're going to be handing out bennies left and right, and tax his ass to pay for the poor garbage sorter. But how about families where the mother stays home, even though she could be out earning? Or the entrepreneur who truly just started up? I guess you have to do it straight by the numbers, which means people can game the system in some respects. Such is life.

Another aspect of an expanded SCHIP is that it could damage the various mandatory insurance schemes. Most of the health care reform plans out there involve making health insurance mandatory as a way of forcing young people into the pool of the insured and thus lowering everyone's costs. However, in some states SCHIP is allowing "children" up to age 25 to be covered - which means a lot of young people won't be in the insurance pool. That could screw up the math. I still support mandatory insurance because people should be considering that as a basic cost in their life, not as optional.

By the way, both the Wilkersons and the Frosts were both already covered by this program. The veto would not affect their coverage at all, since it was about a proposed expansion of the program. Shouldn't the Democrats show us a family that isn't currently covered but would be under the proposed expansion?

The current cut-off for most states is 200% of poverty or about US$ 41,300. This seems about right to me. At 300% x poverty rate of US$ 20,650 were talking US$ 61,950 in income. Is there not some level of income where people can pay their own way? Otherwise just nationalize health care and be done with it. And tax the smokers to pay for it.

*He's making $20,000 / year with his woodworking after 15 years in business. Either he's working his ass off for no money or he's not very busy. If he's working 40 hours a week, he's making around US$ 10.00 per hour. Last time I was in California, they were hiring at Quizno's for US$ 8.25 / hour. This guy is a college grad. Do the math.

He also owns the building he works in, which means he doesn't pay rent. From an economics perspective, he should factor in that opportunity cost, i.e. if he quit the business he could make money renting his space. So he's even more of a sucker to keep that business going. (This is coming from a guy who started a beer importing business just to drink good beer. Physician heal thyself! Well, I did close that sucker down.)

Hmmmm, I wonder if the large number of illegal immigrants working in the carpentry field have depressed his wages? This could be a mitigating factor.

Yahoo News Headlines

Russia divulges Putin assassination plot

I love the use of the word "divulge" in this headline. It's like Russians are letting me in on some juicy gossip.

I imagine a suave diplomat leaning over and speaking softly in my ear at an embassy dinner party. "I'll have you know they planned to poison his soup. Luckily President Putin doesn't like lobster bisque."

Damned Chechens. Get of my lawn.

Gore wins Nobel Peace Prize

What's next?

Reincarnation as the Dalai Lama?

The Return of the Mahdi?

The Second Coming of Christ?

Revealing he is actually Elvis?

Seriously, a bit over the top I think.

Kiddie Insurance

There's been a big explosion about S-Chip expansion in the USA. I'm not sure where I stand on that, but the family the Democrats chose to showcase this program (which apparently was a GOP idea in the first place, LOL) brought up a lot of interesting questions about means testing.

The family of four has two working parents that earn somewhere between 45,000 - 50,000 per year. Hell if I know what that means nowadays though US$ 48,000 is now the median income, so technically they are middle class.

The family owns a small woodworking business. If the wife earns say 20,000 then this business only makes 30,000 per year. That's pretty low, maybe to the point where you should close shop, especially if you can't afford to buy your family insurance. When I think of these programs, I always imagine some poor high school schmuck who's forced to work at a feed plant or a warehouse. I don't usually imagine some college educated guy who owns his own woodworking business. (Also, if he's making so little, which to me implies slow business, why not get a full time job and do the woodworking at nights and on week-ends?)

The family owns commercial property and are landlords. Now, I don't expect anyone to sell their own home to get insurance, but what about other property? What if they had the equivalent amount of stocks, bonds, or simply cash in CDs rather than land?

If we did not means test the program at all, would it still be a useful program? I'm thinking in terms of encouraging entrepreneurs with children or freeing those with families to switch jobs? It might even spur the birth rate. Obviously its the childless who will get unfairly squeezed, but now that I have kids, that doesn't bother me. Funny, huh? One thing for sure is that I need to pay very close attention to all of these new programs before I move back to the states. I might be able to skip buying insurance for my kids.

p.s. Supposedly a lot of those on S-CHIP are actually adults, in some states its like 50%. Doesn't that pose a problem with a lot of the health care reform plans that assume mandatory insurance will force the young healthy folks to lower the costs for everyone else? If the young healthy folks are on S-CHIP, then it won't work.

I am cautiously for health care reform and know that I probably won't get my "ideal" plan implemented, but I do think the reform plans are getting better and better*, with a lot of state programs acting as laboratories. I almost wonder if we should wait longer to let the various ideas percolate some more before making any decision on a national scale.

*By this I mean the Democrat reform plans have moved drastically away from a nationalized system and are coming to look like some of the moderate schemes being tried out in CA and MA.

Made in the USA and Taxation

A long time ago, I read that a Value Added Tax (VAT) is a very export friendly tax system. Let's take an example of a company that makes imports beer, and exports beer. We will assume a VAT rate of 20%.

Beer Export: Every supplier up the chain pays the VAT, but the exporter is reimbursed for the tax since its not for local consumption. So, a normal wholesale price of $ 1.00 including VAT can be quoted lower to foreign customers at becomes $ 0.80 as the VAT will be rebated.

Beer Import: The importer has to pay a VAT on the imported product and so on up the chain. So, if the import beer has the same export cost of $ 0.80, it will jump to $ 1.00 once its imported.

Now, so far, as long as every country has the same VAT system in place, it really doesn't matter. But some countries don't have a VAT, like the United States of America. If the tax structure in the USA isn't set up to rebate to exporters, they end up having export pricing that includes 20% of taxes in the cost whereas the any imports from VAT countries come in cheaper.

Supposedly that rate in the United States is 22%. (say supporters of the Fair Tax.) I'd like to see more information on that, but I do know that in theory a VAT is supposedly better for exports.

A case in point:

China used to rebate a lot of taxes for exports. This summer they reduced that for many items leading to price increase. (and a huge traffic jam of containers trying to get on board vessels to beat the cut off date.)

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Karl, my one reader, said I should blog more on business stuff.

Rising prices in China

We recently had to re-quote some wooden items we make in China. There was about a 40% increase in costs from all vendors across the board. Supposedly this is due to rising oil prices affecting the cost of finishing materials and the RMB appreciating.

Pure speculation, but this increase in the cost of paints and finishes coincidentally occurred at about the same time as the lead paint furore. Could it be that there were a lot of folks using lead paints, that now have to switch to non-lead paints which sent the price up?

Then again, oil is up US$ 10/ barrel, and the RMB has kept up its steady appreciation. On the other hand, the US housing market has tanked, and the demand for furniture should be much, much lower going forward. (Maybe Europe and China's domestic markets are still good, though.)

Regardless of my personal irritation with price hikes, I also wonder if they will affect global inflation. I have tried to find out about the possibility that inflation is being exported from China. Apparently, price hikes from actual supply and demand changes aren't as inflationary as monetary inflation (more money chasing less goods) so this shouldn't affect inflation in the US. However, wasn't it argued that those low, low China prices helped keep inflation in check for the past decade or so? (Despite rising commodity prices.) How can that be true, but big upswings in product prices wouldn't work the other way around?

A few disclaimers:

1. I am not an economist.

2. I thought the number of people using lead paint would be low, but I could be terribly wrong.

3. It could be that these price hikes are only happening in the Dongguan area and that the more remote areas of China can still offer those crazy below-material cost quotations we've all come to know and love. Anecdotally, Ikea is supposedly buying from interior provinces now. We will have quotations from Vietnam coming in soon, so that will be an interesting comparison, especially since their currency is not appreciating.

By the way, Ikea is known to be a very skinflint buyer and their philosophy is that their factories will not make a lot of money, but will survive. Gee Thanks! That's why people invest in multi-million dollar plants in China or Vietnam - to survive and eek out an existence. Anyway, be forewarned!

North Korea

I am a bit of a North Korea fiend, so I was quite happy that Discovery had two shows back to back about North Korea.

The first show was about Kim Jong-Il - nothing much that was new there. A South Korean official claimed Kim Jong Il repeatedly said he did want nukes and that a guarantee by the USA would put him at ease. Then again, the defecting bodyguards, cooks, and others said K.I.J.'s only concern was his own security and power. Not mutually exclusive actually. Except that if I were an evil dictator (and yes, I think I'd enjoy that job) I'd want nukes, period. You'd have to have tons of serious pressure on me before I changed my mind. Now, I don't know K.I.J. and we don't know what kind of pressure he is under, so it is quite possible he would be willing to get rid of his nukes. We'll see. Thank God that's not my job!

The second show was about the Mass Games and followed several girls through their lives. This was actually more interesting in that you could see the normal part of North Korean lives. Yes, Moms worry about what you eat and if your backpack is packed correctly no matter what political system is used. But the video shot of the radio mounted on the wall of the kitchen that could not be turned off was AWESOME. There it was. A grey box with a single dial - volume can be turned down but never off.

It was telling that these families had a lot of food. And in one scene one Mom scolds her daughter for eating too little. I bet she was thinking "Your dad works his ass off keeping us politically connected to put rice on the table, and you eat three bites and are off to Mass Games practice!" They did have a power outage though.

Mass Games are supposed to make you a better "communist person" which make sense to me - not that it would succeed, but more as a theory tossed around during late night plenary meetings. The first documentary of course discussed the special "dance" teams that entertain K.I.J. - (Only he can touch them.) Membership has its privileges.

Other Notes:

I hope they can preserve the Mass Games and some of the environment after the regime falls. Maybe as a UNESCO park?

I did see a Mickey Mouse clock in the girl's room. Even the Hermit Kingdom has to deal with the Magic Kingdom.

They had a Chinese dub over the North Korean girl's words...they managed to get a really cheesy teenager, half-bored, half-excited feeling to it. It seemed like she had a crush on the Dear Leader. Nicely done.