Where Will the Money Come From?

It's pretty basic accounting: when you buy something, you have to pay for it. The problem is no one is paying for it.

I was pretty shocked to discover the following. To the right is a glimpse of the tax structure in 1945 just after World War II, taken from the Tax Foundation. Using a typical household income in 2007, $46k is approximately equivalent to $4000 in 1945 and $2.33 million dollars is approximately $200k in 1945. It follows from the chart if you make $40k right now, you would have been taxed at about 29% in 1945, essentially equivalent to where you're currently being taxed. Historically it's been the upper class and corporations who were penalized with high taxes to fund wars. Note that.

Prior to 1931, the highest tax rate was a paltry 25%. When war broke out in 1933, taxes skyrocketed, the highest rate being 63%. The lesson? War is expensive, real expensive.

I come from an upper-middle class family, so I empathize with those who feel like they're being taxed out their ass. But after discovering this chart, I'm going to make the controversial claim that I don't think the upper class has the right to complain. Taxes in 1945 were appalling compared to today! Anyone making more than $100k (today's standards) was being taxed at 46%. Anything more than that, you were getting absolutely screwed. Given that we're currently funding a war, I think people should be happy taxes are as low as they are. If we could figure out how to NOT be at war, they'd be even lower, maybe as low as they were pre-1933!

I focused a lot on comparing the past to the present in this post but the take home theme here is that we've gotten used to funding government programs without hiking up the taxes to pay for them...the money has to come from somewhere. Selling bonds to China isn't a sustainable solution. Taxing the rich isn't a solution either, but given the historical data I am less inclined to listen to their whining until the tax rates get much worse. There needs to be more work done to make those spending the money more accountable -- government doesn't have to be bureaucratic and wasteful. We're the bright generation! We ought to be able to fix these things.

Thoughts? Flaws? Counter-arguments?

Flip-Floppers

I lean towards Obama at the moment but I think neither candidate is ideal -- they never are. McCain seems to be bent on conflict with Iran, Obama on expensive socialized health care. But where they do not differ is in their job title. They are politicians and they will flip-flop, unequivocally. I'm jumping the gun and posting flip-flop lists for both candidates so as to get it out of the way. It will save us the "Obama is a flip-flopper" post, and subsequent "McCain is a flip-flopper too" post.

From Michael Dobbs blog, The Fact Checker:

Top Obama Flip Flops (link)

1. Special Interests
Back in January, the Obama campaign described union contributions to the Clinton and Edwards campaign as "special interest" money. He changed his tune as he went after union endorsements himself. He now refers respectfully to unions as the representatives of "working people" and says he is "thrilled" by their support.

2. Public Financing
Obama replied "yes" in September 2007 when asked if he would agree to public financing of the presidential election if his GOP opponent did the same. His spokesman now says that he never gave such a pledge, and Obama himself has attached several conditions, including regulating spending by outside groups.

3. The Cuba embargo
In January 2004, Obama said flatly that it was time "to end the embargo with Cuba," because it had "utterly failed in the effort to overthrow Castro." Speaking to a Cuban-American audience in Miami in August 2007, he said he would not "take off the embargo" as president because it was "an important inducement for change."

4. Illegal immigration
In a March 2004 questionnaire, Obama was asked if the government should "crack down on businesses that hire illegal immigrants." He replied "Oppose." In a televised debate on January 31, he said that "we do have to crack down on those employers that are taking advantage of the situation."

5. Decriminalization of Marijuana
While running for the U.S. Senate in January 2004, Obama told Illinois college students that he supported eliminating criminal penalties for marijuana use. In the October 30, 2007 presidential debate, he joined other Democratic candidates in opposing the decriminalization of marijuana.

Top McCain Flip Flops (link)

1. Taxes
McCain was one of two Republican senators to vote against the Bush tax cuts of 2001, saying that he coult not support a tax cut that went to rich Americans rather than middle class Americans. He now favors making the tax cuts permanent.

2. Religious Right
During the 2002 election campaign, McCain attacked Jerry Falwell and Pat Robertson as "agents of intolerance." He withdrew that remark in a 2006 interview with Meet the Press, saying that the Christian Right had a "major role to play in the Republican party."

3. Immigration
Last year, McCain sponsored a bill that would combine a temporary worker program and path to citizenship for many illegal immigrants with increased border security. But he now puts the emphasis on securing the borders first.

4. Roe vs Wade
In August 1999, McCain told the San Francisco Chronicle that he would "not support repeal of Roe vs Wade" because it would force women to undergo illegal operations. He has subsequently said that he was speaking about the need to change the "culture of America", and supports the repeal of Roe vs Wade.

5. Ethanol
In 2003, McCain said that ethanol "does nothing to reduce fuel consumption, nothing to increase our energy independence, nothing to improve air quality." Campaigning in Iowa in August 2006, he described ethanol as a "vital alternative energy source, not only because of our dependency on foreign oil but its greenhouse reduction effects." Yesterday, in Massachusetts, he reverted to his anti-ethanol position.

Another Great Music Streaming Service - Mix Turtle

I've written about music streaming services in the past (MuxTape, Last.fm, Pandora, MuxFind, etc.) because I love these types of disruptive technologies -- they shake shit up. And that's good for consumers.

Enter a new player to the arena -- Mix Turtle. Mix Turtle is essentially the same service most of the above listed sites offer, except that it's clean AND complete. MuxTape lacks a search function. Last.fm is cluttered and difficult to navigate. Pandora is cool, but doesn't allow you to listen to an entire album by a single artist. MuxFind's search is based on similarity so that when you search for 'Fergie', you don't get Fergie...you get artists who are similar to Fergie. Ugh. Mix Turtle is the clean version of all of these services.

Search a song and you're presented with a list of matching songs/artists. Clicking the song causes it to play, clicking again causes the song to pause. If you register you can add songs to a playlist by clicking the 'plus'. If streaming is lackluster, one has the option of switching to a different source.

Lurking underneath all these fun music streaming sites however is a glimpse of the future. It used to be that consumers purchased cd's and dvd's. Then iTunes monetized digital music by selling individual songs for .99 cents, essentially killing the compact disk. Similarly, online movie rental services like Amazon, NetFlix, Blockbuster, and most recently Apple are attempting to place a price on the digital movie file. Music streaming services like MuxTape and Mix Turtle are different though -- there's not even a digital file anymore. The same way myspace songs live on the web and are streamed to your pc, your favorite playlists will live on the net and be streamed to your pc. Increasingly you're going to find yourself storing fewer and fewer music files on your home pc, you'll simply stream music wherever you need using an online service of some kind. Rather than purchasing songs for .99 cents on iTunes and putting them on your ipod, you may pay a yearly subscription to Mix Turtle to unlimited have access to their library.

Welcome to the future.

New Rails Hosting Option - Heroku

Web developers typically develop pages and apps locally. They set up a rudimentary web server and then test their code by simply navigating to localhost. But clients always want to track the progress of their product. To satisfy their needs, we set up a staging areas to show off the page - real web servers, hosting the project, typically with an obfuscated name and hidden in a subdirectory so as not to be navigated to by your average user. The process is definitely a pain in the ass, requiring the configuration of Apache, Capistrano (or other alternatives), time to allow DNS info to propagate, etc.

At StepChange this week, we finally discovered an alternative. If you're tired of setting up development sites to show off/test new Rails apps, Heroku is definitely worth a look. Getting your Rails app on Heroku is quite possibly the easiest thing you could do. Step 1 - upload a single .tar.gz of your app. Step 2 - view your app. That's it.

What about migrations?! What about my database?! Migrations are run automagically when your app is uploaded. No need to do it explicitly (although you can if you like, more later). If you need to upload a database, it's three commands on the command line and they have a clear "how-to".

Heroku also offers several tools that probably aren't worthwhile development tools, but still very useful. They've managed to included an integrated online editor (for quick changes on the fly), an online console (for testing), full ruby environment, etc. Check the Features section for a complete listing of tools. These tools are a bit on the slow side, and you will inherit a Heroku footer on all your apps, but its still a useful service.

Most people won't find this info too relevant. But if you're a Rails developer looking for a quick deploy option, or someone new to Rails just trying to learn the ropes, Heroku can be a great test area.

Kenya: A Personal Account

A good friend of mine from college, Steven Ishmael, has spent quite a bit of time in Africa over the last decade. Some of you may or may not be aware of the recent events occuring in Kenya so we thought we would sit down with Steven to get the inside scoop.

As a senior in high school, "Ish" was named Player of the Year in the powerhouse 4A KingCo league for Redmond High. Steven will be graduating with a degree in Missions from Northwest University in the Seattle area this fall. The 6 foot 7 inch skinny white guy was also a 3 year starter on the NU Men's Basketball team which included awards for Freshman of the Year, All League, & an appearance in the NAIA Final Four. Ish decided to forego his Senior season (and favor with the NU ladies) to spend the year studying abroad in Africa. Read on for a unique insight into an often overlooked region of the world....


1. So Steven, you've spent some time in Africa over the years. What areas have you explored and how much time have you spent there?

I've pretty much been all over Kenya. I've been all over central, western, and southern Kenya. I've spent some time in Northern Tanzania and a little time in Eastern Uganda. But by far the majority of my time has been spent in Central Kenya.

The total time I've spent in Africa is a little more then 2 years over a span of 8 years. Just got back from being in Kenya for 8 months recently. I have experienced Kenya every month of the year.

2. What were the goals of these missions/trips?

Not every year that I went was for a missions trip. The first 4 times I went was for missions but the last 4 times have been for school and just to continue being an active part of the kids and people of kenya's lives.

Each mission trip has changed a little. The first mission trip I went on was mostly college age kids and we went specifically for school outreaches and a small youth conference. It was geared to let youth from here go over there and meet youth from there and just encourage each other.

The second year I went was college age again and was meant to build on the previous years foundation. We did a lot of school outreaches and a huge youth conference with youth from all over Kenya coming to Nairobi.

Third year was also a youth purpose with a little bit more of a sports emphasis and we did a couple outside crusades doing dramas and skits.

Fourth year was pretty much the same as the third year.

All four years there was a huge emphasis on the 4 orphanages that CMIA that are home to more then 150 kids ranging anywhere from new borns to 18 years old.

The last couple years that I've been going have been going by myself i have done a ton of different things. Just to list them off........ taught computer and P.E. at a primary school (kinda like an elementary school here), I've spent a lot of time working at a boys home that houses over 50 former street boys in Nakuru just doing bible studies and being there for the kids, I've spoken in churches and outdoor crusades, visited a lot of churches, done a lot of work with youth from various churches, and of course this last year I was a student.


3. Fill us in about the recent chaotic events in Kenya...

* ****Just to let you know the answer to this question is more based on what exactly happened in Kenya, if you would like a more personal experience of being over there while it was happining just let me know and I'll send it to you.

Wow, this is a loaded question and I'll try my best to give you a good answer without my bias and opinions showing threw too much.

Basically what happened was the President Kibaki ( the current president) went up against Raila Odinga. First off when Kibaki became president in 2004 he promised to only serve one year and work extremely hard against governmental corruption, needless to say he changed his mind and made no actual attempts to stop corruption. Anyway during the election Odinga was ahead by quite a bit. A couple districts, where Kibaki was from, the results were delayed and when they finally were released Kibaki had miraculously turned the tide and one the election. In certain districts there was 100% turn out which is un heard of. Usually the winning candidate is sworn in a couple weeks later but when Kibaki "won" he was sworn in withing a couple hours of the results being announced. It was only Kibaki a couple others in a small room, no media or nothing when he was sworn in. Obviously pretty shady stuff.

Anyway, there usually is violence after elections in Kenya but no where near the size that there was this last election. Kenyans aren't naive enough to believe this was the first time that an election was rigged, Moi use to do it all the time. The difference was that this time it was obviously rigged and the whole world was able to witness the rigging taking place.

Another added realm to this whole thing was that Kibaki is from the Kikuyuu tribe, the biggest in Kenya and Odinga is from one of the smaller tribes. History has always been kind to the Kikuyuu's with past presidents being from that tribe so that have benefited from land acquisition and other things like that in the past. So the other tribes felt like they were again being second class.

The violence started because of the election but after a while it became obvious that the violence wasn't continuing because of the election. It started to become a tribal war. For a long time neither candidate would budge at all to bring peace back to the country. It became very appearant that neither candidate really cared about the violence, especially Kibaki, for a while. Even to this day I dont feel like Kibaki cares about what happened, he just wanted the power and unfortunately he still has it.

All of this lead to a lot of violence, and a mini Rwanda. People from seperate tribes were being hacked to death, the stories are unimaginable. Probalby one of the most shockin stories was a church was burnt to the ground with over 20 people inside most being kids. One witness said that one lady was holding her baby out the window and then someone came took the child and then threw him back in the church. Stories like this just make it even more frustrating seeing the political leadership over there caring more about their personal power then the people of the country. Things i will never forget.

The ramifications of this are going to be huge, not just politically but emotionally. Kenya was working really hard to put aside tribalism and now the younger generations, the ones that didn't know about tribalism, have seen it first hand and the lasting effects are going to really damage Kenya's chances of making progress. Older generations have corrupted teh minds of the future and for this reason Kenya will take a lot of healing to get back to where it was only last year before the election.

4. Do you plan on going back any time soon?

Yeah I'm planning on going back as soon as I can. Right now I have a lot of school debt that I need to pay off so I'm working to pay that off right now and as soon as I get all that paid off then I'll start saving to head back over. I would like to start sports ministry/transition home over there eventually so I would like to go back soon and see what I can be doing in the meantime to accomplish this vision of mine.

Basically the vision is to start a sports facility in Kenya fully equipped with a soccer field, basketball court, swimming pool, dirt track for biking, rounders field, dormitories, and a game room. I would like the facility to be nice enough where big sports teams would be interested in playing and practicing there but making the facility specifically for kids. Then we would have sports camps where kids from the slums would come in and just be able to play sports and be kids for once in their lives. Then we would also have it be a transition home where kids coming out of orphanages, who dont have the grades to go to college can come and make the transition into real life. They would have to have jobs and have a lot of responsibilites, one being working the sports camps but it would be a place for them to live while they figure out what they want to do with their lives (thats the short description)

5. Anything else to add?

yeah if your interested in sponsering a child or want to somehow get involved in Church on the Rock-Kenya, or just have any questions visit. http://christianministriesinafrica.org/ or you can contact me at stephen.ishmael@northwestu.edu.

The Dow Jones Industrial Average & Las Vegas

I'm not quite sure how the Dow became the staple of market headlines across the world. After all, it represents a mere 30 stocks...albeit 30 of the most widely held stocks.

The roll of the media is clear though, their job is to earn your click or viewership plain and simple. Watching the S&P 500 Indice is not as sexy being that its current value is around 1,200. The Dow, which just today dipped below 11,000, often has swings of 200 or even 300 points in a given day. These swings are usually followed by graphs with massive red or green arrows pointing up or down as if you've won the Vegas jackpot or lost all of your money in a single day. Obviously, this is not the case. A 200 point drop on an $11,000 fund is about a 1.8% loss. Somehow, the psychology of the whole thing makes us feel as if 200 pts is far greater than the 1.8%, when in actuality they are exactly the same.

I would encourage investors not to pay attention to these sorts of gimmicks. If anything, watch the S&P 500 Index which represents the 500 largest companies. OR, for those of us who want our portfolios to outperform over the long term....properly diversify, make like an Italian mobster, and FORGET ABOUT IT!

Similarly, rolling the dice on individual stocks is like trying to run out of a casino with two bags full of cash. Bear Stearns & WaMu are two of the latest stocks recommended by "Top Analysts" up until the day they lost 80%+ of their value. Stick with index funds, mutual funds, and alternative investments to cover multiple asset classes (large cap, mid, small, international, real estate, BONDS, etc).

Like I always say....if you want to have fun, go to Vegas.


PS If you want more information on how you can properly diversify your portfolio, feel free to send me a message. I refrain from posting general allocation models ie. 60/40 stock/bond mix, because there are way too many other factors (age, risk tolerance, income needs, cost of living, and bla bla bla)

Who Are "The Rich"?

80%+ of millionaires are first generation according to stats listed in the book "The Millionaire Next Door."

Taxing 'the rich' is taxing small business entrepreneurs who have worked their asses off their entire life to build a company. One of my problems with raising the taxes even more for these people is that the top 10% of earners already pay a majority of our nations taxes (50%+).

Business owners have 3 options when their taxes are increased:

1. Eat it.
2. Pass it on in the form of higher product costs.
3. Fire people/Cut Wages

How many of you think they decide to eat it?? The result of this is that raising taxes for the rich ends up hurting the very people it was meant to benefit. Lower income individuals end up paying higher prices and a higher percentage of income for goods and services as well.

This is a huge political hot point, and I think it is important to be informed.

Click here for a NY Times article displaying stats regarding who the rich actually are (ie. the majority are NOT fortunate sons inheriting wealth).

Also, read below for a political discussion between a father and daughter. Obviously, this is a just a story but it makes an interesting point. Read on!




A young woman was about to finish her first year of college. Like so many others her age, she considered herself a liberal Democrat and among other liberal ideals, was very much in favor of higher taxes to support more government programs.

She was deeply ashamed that her father was a rather staunch Republican, a feeling she openly expressed. Based on the lectures that she had participated in and the occasional chat with a professor, she felt that her father for years harbored an evil, selfish desire to keep what he thought should be his.

One day she was challenging her father on his opposition to higher taxes on the rich and the need for more government programs. The self-professed objectivity proclaimed by her professors had to be the truth and she indicated so to her father. He responded by asking how she was doing in school.

Taken aback, she answered rather haughtily that she had a 4.0 GPA, and let him know that it was tough to maintain, insisting that she was taking a very difficult course load and was constantly studying which left her no time to go out and party like other people she knew. She didn't even have time for a boyfriend and didn't really have many college friends because she spent all her time studying.

Her father listened and then asked, 'How is your friend Audrey doing?' She replied, 'Audrey is barely getting by. All she takes are easy classes, she never studies, and she barely has a 2.0 GPA. She is so popular on campus; college for her is a blast. She's always invited to all the parties and lots of times she doesn't even show up for classes because she's too hung over.'

Her wise father asked his daughter, 'Why don't you go to the Dean's office and ask him to deduct 1.0 off your GPA and give it to your friend who only has a 2.0. That way you will both have a 3.0 GPA and certainly that would be a fair and equal distribution of GPA.'

The daughter, visibly shocked by her father's suggestion angrily fired back, 'That's a crazy idea, how would that be fair! I've worked really hard for my grades! I've invested a lot of time, and a lot of hard work! Audrey has done next to nothin g toward her degree. She played while I worked my tail off!'

The father slowly smiled, winked and said gently, 'Welcome to the Republican party.'

A Creative Computer Scientist

I stumbled on this excellent TED talk earlier tonight. Johnathan Harris has created some really creative software for visualizing trends in the world.

The first piece of software he describes, titled "We Feel Fine," samples variations of the phrase "I feel" across the blogosphere, captures the sentence in which the phrase originates, nabs any accompanying photos, and stores it to a database. The software attempts to extrapolate the age, gender, and geographical location of the blog author and also stores that to its database. Using time/date stamps and geographical location, the software searches and stores the current weather for each phrase. The result of all this data, and some very good graphical programming, is a very unique and insightful look at people's emotions across the blogosphere.

Johnathan highlights two other pieces of software based on simliar principles: capture a unique set of data and display it in a captivating way. Particularly interesting was his Yahoo timecapsule project that culminated in a giant display of the timecapsule's contents (Flickr set) along the red rock walls of the New Mexico desert.

If you've got a spare 18 minutes or so, check out the video. The TED talk videos are usually quite spectacular. None of the top 10 talks will disappoint. Hans Rosling's talk is very good for the statistically minded.

Judge Orders Google to Turn Over YouTube Records

Uh oh! I'm soo busted.

"A federal judge in New York has ordered Google to turn over to Viacom a database linking users of YouTube, the Web’s largest video site by far, with every clip they have watched there." -- MIGUEL HELFT of the NY Times

Yes, this is ridiculous. Yes, there is no such thing as privacy anymore. BUT, let's get down to the important part. I have YouTubed old Whitney Houston music videos, High School Musical clips (just to see what all the hype was about! come on), & many many more completely embarrassing vids. So in light of this recent news, I am beating Viacom and the dirty judge to the punch. Here are some of the videos I'm most disappointed with myself for having viewed:







Yeah yeah have your laughs at my expense but you know you just watched the full "Foot Loose" video....and loved it!

How To Steal An NBA Franchise by Clay Bennett

That's right folks. We here at Utopian Realist (dot com) have gotten in touch with Seattle Sonics owner Clay Bennett to write tonights column. He recently pulled a fast one on Sonic fans and decided to move the team to Oklahoma city. Take it away Clay!

"Alright guys, first of all thanks for having me here. I've gotta jet to Oklahoma tomorrow morning so I'll make this quick. Here is my 5 step process when it comes to hi-jacking an NBA Franchise:

1. Befriend the league commish

- The fans have very little power in this league. By befriending Commissioner David Stern, it's kind of like having Jon Bon Jovi's ear or someone like him with a ton of power. We spent our mornings together sipping tea and talking about our feelings. Years later, when I needed to steal a team, all it took was a phone call.

2. Find the city with the most INCOMPETENT politicians

- This was easy. They can't get anything done in Seattle (besides building bike trails of course). I mean, seriously, I sat in on a few legislature sessions and all we did was bs about latte's and REI!

3. Trick the owner into selling you the team

- That Brian Schultz or whatever his name is really had some great ideas (editors note: Clay meant "Howard Schultz" former Sonics owner). He wanted me to keep the team in Seattle so he put in a BRILLIANT phrase into the lease "Must make BEST EFFORT to keep Sonics in Seattle." As you can see, BEST EFFORTS is an AWESOME trick. Harharhar

I am AWESOME. No question about it. I stole an NBA franchise in ONE year, fooled the entire Washington State government, and in the process had some sweet coffee. Did I say 5 Step Process??? Guess it was just 3! Bennett OUT."


Click here for a great article by ESPN's JA Adande on the Sonics move.

Goose Egg for 2nd Quarter IPO's

This just in--- Market conditions have been bad this year. Welcome back from your year long coma if that's news to you.

The National Venture Capital Association is declaring a 'capital market crisis' as the second quarter ends with zero IPOs. Normally, 10-15 IPO's would occur during this time period according to stats provided by the NVCA.

Is it a lack of innovation, venture capital blunders, or possibly a strapped investment banking community due to their ridiculous over extension into sub-prime mortgages? We haven't seen this much hesitation since Bill & Hillary Clinton stayed in the same hotel room. OHH SNAPPLES!

But seriously, check out this CNN video on the difficult IPO season.

Chicago Sales Tax Highest In Nation

This shouldn't be a surprise....

Cook County Tax Hike In Effect, Businesses Furious