Suggested Answers To The Short Quiz

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johnkarls
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Joined: Fri Jun 29, 2007 8:43 pm

Suggested Answers To The Short Quiz

Post by johnkarls »

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Editorial Note: As usual, the Short Quiz was composed before the suggested reading was available to Yours Truly. However, this month’s Quiz was composed (1) with the mindset of Q&A-3 that Alinsky-disciples Obama and H. Clinton have abandoned the inner-city poor and focused on the Middle Class as an end unto itself, rather focusing on the Middle Class only as an Alinsky tactic to be employed solely for achieving an electoral majority in order to serve the poor and (2) with the mindset that our authors, Hacker and Pierson, are guilty of the same misplaced focus, though Hacker and Pierson may have the defense that they were never Alinsky disciples.

Question 1

Who was Saul Alinsky?

Answer 1

Saul Alinsky (1909-1972) is considered the “Father of community organizing” and one of the greatest American leaders of the non-socialist left. His goal was to improve the conditions of the poor and, in doing so, his philosophy was to “work within the American democratic political system.”

The “Bible” of liberals since its publication in 1971 has been Alinsky’s “Rules for Radicals” which was the focus of our 9/10/2008 meeting.

As we studied and discussed, Alinsky’s cardinal rule in working to improve the conditions of the poor in general and the inner-city ghettos in particular, was “do NOT under any circumstances alienate the Middle Class” because without the Middle Class you are in the minority.

Question 2

What did the young Barack Obama and the young Hillary Rodham (who later married Bill Clinton) have in common?

Answer 2

Barack Obama’s experience as a “community organizer” on the South Side of Chicago before leaving to attend Harvard Law School was acquired on the payroll of one of the many community-organizing projects that were founded, financed and, until his death, run by Saul Alinsky.

Hillary Rodham (who later married Bill Clinton) wrote her Senior Honors Thesis at Wellesley College on the subject of Saul Alinsky.

Indeed, as we studied and discussed for our 9/10/2008 meeting which focused on Alinsky's "Rules for Radicals," when Bill Clinton began preparing to run for President of the U.S., one of the first things he did was to successfully importune Wellesley College to embargo Hillary’s Senior Honors Thesis (at least until after Bill left the Office of U.S. President) for fear that if the thesis were publicly available, Hillary would be labelled a “radical” as would he by association.

Question 3

Have the mature Barack Obama and the mature Hillary Clinton misread Saul Alinsky?

Answer 3

They have either misread or abandoned Alinsky.

Because Alinsky was focused on improving the conditions of the poor and the inner-city ghettos. And the tactic of not alienating the Middle Class was only a policy that “had to be swallowed” in working for the poor and the inner-city ghettos -- not championing the Middle Class being the principal focus!!!

As we have studied for several of our meetings, both Barack Obama and Hillary Clinton failed to focus on enabling inner-city children to escape the vicious cycle of the American permanent under-caste with effective education.

Both chose instead to try to provide a universal-healthcare entitlement -- a goal of virtually every U.S. president since Teddy Roosevelt!!! And certainly not a goal for which we needed a “community organizer” such as Barack Obama or an inner-city-education expert such as Hillary Clinton who served on the Advisory Board of Eugene Lang’s “I Have A Dream” Foundation until the 1992 Iowa caucuses!!!

Question 4

What is a cruzeiro?

Answer 4

It was Brazil’s currency from 1942 to 1986.

Question 5

What is an indexed cruzeiro?

Answer 5

In the 1960’s, 1970’s and 1980’s, Brazil had hyper-inflation exceeding 100% annually.

As a result, all contracts (employment, loans, long-term supply, etc.) were cast in terms of “indexed cruzeiros” the number of which offset inflation. For example, if your salary was 1,000 cruzeiros/month at the beginning of the year and inflation was 15%/month, you would have received 1,000 nominal (or physical) cruzeiros for January, 1,150 nominal or physical cruzeiros for February and 1,322.50 nominal or physical cruzeiros for March.

Question 6

Did the dual monetary system of the indexed cruzeiro vs. the nominal cruzeiro enable Brazil to achieve full employment without any concern for inflation?

Answer 6

Of course!!! No mystery there that the inflation rate of the nominal cruzeiro was rendered irrelevant!!! Because nobody cared about it because nothing was calculated with reference to it!!!

Question 7

Did Brazil build its economy with free trade?

Answer 7

Of course not!!! Has there ever been a country throughout the history of humankind that has???

Question 8

What was the tax on dividends paid by a Brazilian subsidiary to its foreign parent corporation? Ditto for interest and royalties, two other avenues for a foreign parent corporation to pull funds out of a subsidiary?

Answer 8

The rates were prohibitive, indeed confiscatory!!!

They were designed to compel multi-national companies to leave profits earned in Brazil in their Brazilian subsidiaries.

At the same time, Brazil provided tax incentives to multi-national companies to use the earnings they were accumulating from marketing operations in Brazil to invest in manufacturing operations there to serve the Brazilian market!!! And eventually, Brazil provided incentives to expand the Brazilian manufacturing operations of U.S.- and European-based multi-national companies to provide the goods for the MNC’s marketing subsidiaries throughout Latin America.

Generally Accepted Accounting Principles (“GAAP”) aided and abetted this process because GAAP provide that withholding taxes on future dividends to a foreign parent do not have to be accrued if the earnings are “permanently re-invested” in the subsidiary so that, at least in theory, the dividends to the foreign parent will never be paid.

Question 9

What is a “Bowley Box Diagram”?

Answer 9

Every economics student, such as Yours Truly before he headed to law school, studied Bowley Box Diagrams in International Economics 101.

The BBD explained why international specialization was beneficial to both countries involved. If each specialized in activities in which it had a “comparative advantage,” then such specialization would increase their combined output.

An interesting question usually thrown at the economics students by their professor after they thought they understood the BBD was cast in the context of two individuals (rather than two countries), one of which was an attorney who can type faster than any legal secretary.

The question was always whether the attorney should do her own typing because she can type faster than any of the legal secretaries.

The answer, of course, is meant to illustrate the concept of COMPARATIVE advantage. Yes, the attorney can type faster than any of the legal secretaries. But her COMPARATIVE advantage is greater performing legal work which the legal secretaries cannot perform.

Question 10

Is Bowley’s economic theory correct?

Answer 10

Only if both parties (or countries) are fully employed. If so, then just like the attorney and her legal secretary, greater output is achieved by specialization.

Question 11

Is full employment a prerequisite for Bowley’s economic theory to be correct?

Answer 11

Please see Answer 10.

Question 12

Is “free trade” antithetical to Bowley’s economic theory rather than, as commonly thought, the logical conclusion of Bowley’s theory?

Answer 12

Bowley’s theory of specialization is usually cited for the proposition that “free trade” is necessary to permit specialization.

However, “free trade” for America has usually meant that the countries that enter into “free trade” agreements with the United States are able to specialize in exports for the American market, thereby displacing American workers, while new American jobs that are supposedly specialized or tailored for creating exports to America’s trading partners fail to materialize.

Question 13

From the viewpoint of full employment, isn’t it better economic policy to control both your currency and your foreign exchange à la Brazil during its “boot-strap growth” period and à la so many other countries today such as China, rather than engage in “free trade”?

Answer 13

Of course!!!

Question 14

Isn’t it also essential to provide an education (much less a decent education) for America’s “permanent underclass”? In other words, for inner-city children? In other words, to do something about the 30% of the American population that the U.S. government for more than 50 years has described as illiterate as defined by the ability to read the warning label on a can of rat poison?

Answer 14

Of course!!!

Question 15

In the 2-3 decades following World War II, one of the burning political issues in the U.S. was how much “foreign aid” to give to other countries. Aside from the “Marshall Plan” for Europe, how much “foreign aid” did we typically give in any year?

Answer 15

A “rounding error” -- that is, it rounded down to 0% rather than up to 1%.

Question 16

Is “out-sourcing American jobs” really a modern-day form of “foreign aid” (however, unintended)?

Answer 16

Of course!!! And we have given away a sizeable chunk of the American economy rather than merely giving away an infinitesimal portion of our income (that is, in Law School 101 terms, we have given away a sizeable portion of the proverbial “tree” rather than an insignificant portion of the “fruit” of the “tree”)!!!

Question 17

Does “out-sourcing American jobs” comprise political malpractice unless (A) the ENTIRE American population has been educated, (B) only jobs that do NOT require the up-graded skills of the American work force are exported, and (C) the jobs that are retained are configured to utilize fully the skill sets of American workers, all of whom have seen their educations maximized?

Answer 17

Of course!!!

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