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Friday, September 11, 2009

Props to this Mother

More GOOD FINANCIAL advice from a Yated letter writer. She has put "don't count your eggs before they hatch" into practice by making her children wait for their gift before allowing them to spend it. Hopefully all will keep this lesson in mind and not fall into common practices such as spending more money than you have on a wedding and counting on the (cash) gifts to make up the different or signing contracts to pay tuition when in all reality that money will likely never materialize.

Shabbat Shalom! I'm hoping that the upcoming new year is going to bring a financial turnaround for the Jewish community as we start making old-fashioned finance fashionable again.


Dear Editor,
I couldn’t agree more with Rabbi Avrohom Birnbaum’s thoughts in his article about “The Frum ‘Cash-for-Clunkers’ Mentality.” The mentality of spending before actually having the means to do so has most certainly seeped in and affected many in the frum community. One possible cure for this “Obama mentality” is to teach our children when they are young not to spend money they don’t have.

Case in point: My children receive ice cream money from a great-uncle every summer. The uncle told them on the phone that he would be sending them some money for ice cream. On a hot day, my children wanted me to lay out the money so they could purchase the ice cream immediately, counting on the funds coming in the mail. There was my chance to impart Rabbi Birnbaum’s important lesson: We don’t spend money that we don’t have! The children had to wait, and when the money arrived, they were happily permitted to buy ice cream. Hopefully, the lesson will be remembered long after the ice cream.

Thank you, Rabbi Birnbaum.
Name Withheld
Los Angeles, CA


David said...

"One possible cure for this “Obama mentality” is to teach our children when they are young not to spend money they don’t have."

Obama was by no means the first nor will be the last to spend money that the government does not have.

SephardiLady said...

True, true. Republicans and Democrats have spent this country into a hole. And on the Ortho level, plenty of people who are themselves fiscally conservative have let commonsense go when it comes to spending communal money.

Jeffrey said...

Regarding that "Obama mentality": Not to take away from the cuteness and importance of the letter writer's point, but President Bush spent a lot more money than we had and gave significant tax cuts when we couldn't really afford them.

As an aside, its funny to me how the frum world, especially the Jewish Press, Hamodia and Yated constantly piles on Obama. Don't these folks know that an extraordinary percentage of Williamsberg, Boro Park, Kiryas Joel, New Square, etc. is on public assistance of all sorts? If anything, Obama and the Democrats will keep the public assistance flowing while its the Republicans who would be more likely to cut public assistance.

I'm not arguing for or against cutting assistance, but the frum world show know better to keep a low profile.

SephardiLady said...

I think we'd be far better off without all of the assistance, both materially and spiritually. But that is another discussion. So much incentive is squashed by planned dependence.

SephardiLady said...

My comment above isn't really fair. Without all of the social programs that community would look far different. But, at this point I think the planned dependency is biting us in the rear. Entitlement, fraud, loss of incentive to work because loss of benefits + increased tuition will hurt.

Different discussion.

I think this mother taught an important lesson in a very tangible way.

Commenter Abbi said...

Just had to chime in with Dave- it was Bush who spent the first billions to bail out the banks last October and it was poor financial regulation of both Democrats and Republicans who got America in this mess in the first place.

But I guess it's easier to just blame the guy in office.

Anonymous said...

I think I would call what this Mom did more of an example than a lesson. These kids were not asked to make choices, work out the solution to a problem, debate the pros and cons of having the ice cream now or later or of spending the money now and dealing with what happens if it doesn't come later, or come up with alternatives like opening a lemonade stand or doing extra chores or giving up something else, like a new toy or trip to the zoo, so they could have ice cream now and later. This was just Mom saying "no." While that's important and not all moms and dads know how to say "no" I'm not sure this is a great lesson.

Conservative SciFi said...

Let's see, hmmm. When Jimmy Carter(D) left office the debt was 994 billion, which actually was a reduction relative to the GDP from the Ford Administration.

When President Reagan (R) left office, the debt was 2.8 trillion, almost tripling the debt. After only four years, when George Bush Sr. (R) left office, the debt was 4.3 trillion. Both of these increased the debt relative to GDP.

But when Bill Clinton (D) left office, the debt was 5.7 trillion which again represented an actual reduction of debt relative to GDP (and a much slower rate of increase after 8 years then Bush Sr.).

When Bush Jr. ended his 8 years, the debt stood around 11 trillion, a huge increase relative to the GDP.

So what we have seen based on actual numbers is that Republican Presidents run huge deficits which increase the debt relative to GDP and Democratic Presidents are fiscally prudent. (see for a lovely chart.

Of course, I know that Republicans never like to let facts get in the way of their opinions. (See, e.g., Congress Joe Wilson "You Lie" regarding coverage of illegal aliens and section 246 of the house bill titled SEC. 246. NO FEDERAL PAYMENT FOR UNDOCUMENTED ALIENS which states that "Nothing in this subtitle shall allow Federal payments for affordability credits on behalf of individuals who are
not lawfully present in the United States")

Anonymous said...

Conservative SciFi: Thank you for that data. Mind if I plagarize it from you?

Ragnar Danneskjold said...

Deficit is income minus expenses. Without the Bush tax cuts, we would have had much worse deficits as the tax cuts increased revenue. The problem is twofold. First, Bush did not cut taxes enough for the wealthy. He cut taxes so much that even more people stopped paying taxes at all. Under Bush, tax burden paid by the wealthy as a percent of total revenue went the highest it has even been. He should have cut taxes even more on the wealthy, and made everyone pay their fair share by cutting the "earned income tax credit". (or just adopt the fair tax)

The second problem was that Bush took the increased revenue and plowed it 10-fold into all the Democrat's social programs (No Child Left Behind, Medicare Prescription Drugs, etc, etc). Bush's popularity wasn't low because we were clamoring for a left-wing statist to save us from the right. His popularity was low because his own party saw him as a Democrat-lite, so they abandoned him and the party. That allowed Obama to come to power (who has increased the deficit more than any previous administration).

Ragnar Danneskjold said...

Jeffrey---while I'm sure we disagree on 99% of political issues, I will agree with your point that it is hypocritical for the frum world to largely support Republicans while they all live on the dole.

Now, I think issues of pikuach nefesh for Israel (Obama's antisemitism), and concern over care of the young, the elderly, and the infirm (Obamacare) also play a large role for religious Jews, they can hardly argue that taxes should be lower when (A) they don't pay taxes anyways and (B) they are stealing tax money.

Dave said...


Decreasing taxes only increases revenues when the tax right is to the right of the "Laffer Curve".

It has not been there since the early 1980s.

The Bush tax cuts decreased revenue. The "Laffer Curve" is more precisely, the point of maximal tax revenues. If you increase taxes above that rate, you decrease revenue, and if you decrease taxes below that rate, you decrease revenue.

Ariella said...

"So much incentive is squashed by planned dependence." That is well put, SL.

Ragnar Danneskold said...


First, the Laffer Curve is not an economic formula---it is a description of trends. You cannot point to a parabolic equation for our economy and tell me we were on the "right" of the Laffer curve.

Second, even Barack Obama admits that decreasing taxes increases revenue. He believes taxes are not about revenue, but about fairness (some people make too much and shouldn't get to keep it all). Trust me---we have never been close to the point of increased revenue from lower taxes since the inception of the income tax.

Not sure why we are quibbling these points. All presidents increased the deficits, but none as bad as Obama. Both parties are diseased... the only difference is Republicans stop supporting their diseased candidates, and Democrats just double down on failure.

Dave said...


First, no. Decreasing taxes does not mean increasing revenue. It only means increasing revenue under limited conditions.

Second, no, Barack Obama has said nothing of the sort. Please point me to where such a statement was made.

Third, when the Republican party shows some sense of caring about deficits at times when they are in power, I will believe they "stop supporting" their candidates. But there is (as has been pointed out) absolutely no evidence to support the notion that they do.

Fourth, we've actually tried the Republican sudden deficit hawk strategy in response to economic failures. We tried it in the 1930s, and it failed, catastrophically. The worst thing you can do in a bank collapse is curtail government spending.

We're paying the price for the bubble economies of the 1990s and first part of this century, because the bill has finally come due. But sorry, it looks like Keynes was right; when the economy fails, you need to prime the pump with government spending.

Had we actually been fiscally responsible during the Bush years, and suffered the same bubble, we'd have been in a better situation to take on additional governmental debt, but there isn't an option short of letting the world economy crater for a decade or more.

conservative scifi said...


With all due respect, you simply state opinions without facts. (My consistent complaint about Republicans). Reducing income (as performed by the Bush tax cuts) INCREASES deficits, because with less income, and larger expenses (due to the two wars started by Bush Jr.), he spent more money but got less in taxes.

As someone who pays about the maximal tax rate (two earners who pay max social security, and AMT), I don't love taxes any more than you. But they are the price for a civil society and I pay that price for America gladly and without complaint.

On "Obamacare", I think that Jewish values mandate that we provide health care for everyone. I think the current system of rationing based upon employment and wealth is not equitable, fair, or efficient. Whether Obama's plan is ideal, I don't know. But I think some solution should be created, so that people aren't punished for losing the genetic lottery.

Lastly, while obviously a lefty on most issues, I am a little more to the right on Israel, and am not thrilled so far with Obama's failure to address Iran's nuclear ambitions and his relative lack of balance over the natural growth of settlements. However, I am happy with Netanyahu's approach to the west bank so far, and I think he may actually make progress.

Anonymous said...

Jewish values mandate we provide healthcare for everyone? Since when is the USA supposed to be run according to Jewish values? I suppose we should also ban abortion and intermarriage? Cmon, be consistent....

Obama's plan is not about health or care... it's about control. Read HR3200. If you really think everyone needs health insurance, expand Medicaid and the problem is done. If you want to reduce costs, reduce government regulation that drives up the cost. Taking over 1/6 of the economy is an appealing desert after gobbling up the banks, the car companies, and the energy companies, but I guarantee it will not reduce costs.

And by the way, getting a claim denied by insurance is not the same as rationing. You will always get treatment---you will just need to work out payment plans after your life is saved. I'd rather spend 30 years paying off medical debt than those 30 years in the ground.

Dave said...

Sorry Anonymous, but that simply isn't true.

The only Healthcare that is "guaranteed" is that it is illegal to deny someone emergency care based on their (perceived) ability to pay.

It is perfectly fine for Doctors and Hospitals to deny treatment to people without adequate insurance under any other circumstance, and it is far from uncommon.

And, please. Expanding Medicaid or removing the age requirement on Medicare would be a shift to full on Single-Payer National Healthcare -- exactly the "taking over" you claim to be against.

Anonymous said...

Tell you what---there are dozens of countries where the government dictates everything you must do. America was founded to be different... why not move to one of the countless countries that provide everything for free, and let those of us who like freedom stay here in peace?

Dave said...

Sorry, Anonymous, but if I wasn't going to leave when the previous Administration declared that the President was both above the law as the "unitary executive" and had the power to order any American citizen incarcerated indefinitely at his discretion, I'm certainly not going to leave over Health reform.

Anonymous said...

SL: I fear that your wonderful blog is going to deteriorate if the discussions all turn to politics. While I understand that economics and politics are, of course, interrelated, arguing about tax rates, government fiscal policy, the fed and the healthcare crisis, is going to detract from the more productive microeconomic discussions your site is known for. It might make sense to discourage some of the politicing.

sethg-prime said...

According to my understanding of Keynesian economics, it is proper for the government to run a deficit during a recession (because the whole problem during a recession is that consumers are reluctant to spend money which causes employers to lay people off which causes consumers to be even more afraid to spend, creating a vicious cycle) and then to run a surplus when the economy is doing well (because with the stronger economy people can afford to pay more in taxes and need less government services, and because the government needs to prepare for the next recession).

It's unfortunate that during the last round of economic good times, the US government did not follow the second half of this rule, but if we defy the first half of this rule during the current recession, it will make the situation even worse.

Dave said...

Yeah, that's basically it, Seth.

Keynesian economics is effectively the "7 fat cows, 7 lean cows" as macroeconomics.

Miami Al said...

Seth, the reason we don't practice Keynesian economics (beyond the fact that it's questionable if it works), is that while Congress is happy to pump money in bad times, nobody slows the economy down in good times. So our "automatic stabilizers" work, but Congress's ability to get a stimulus package... this "recent" one might be the first one Congress passed before the end of the recession, and it did so just a few months before the end with 90% of the spending occurring after the recession ended (it appears that the GDP bottomed out in June or July, but we won't know for another few months).

Automatic stabilizers: In a recession, jobs decrease, causing more draw on unemployment, welfare, and the earned income tax credit (people that might make too much lose their job in October/November and make it). During a prolonged recession, capital gains and income taxes drop as earnings from capital, etc. drop, so automatically less tax revenue and more expenditures, pumping the economy.

During a boom, capital gains taxes increase, income taxes increase, unemployment spending drops, people come off welfare rolls, etc. All these things automatically cut government spending and increase revenue.

As a result, the modern government is automatically Keynesian in that the stabalizers create a negative feedback on the economy, which is what you want. Lots of growth: slow it down and repair the balance sheet, too little growth: speed it up.

If any of this were economics and not politics, the Democratic Party would be pushing long term changes in a more Keynesian direction (since the Democratic Party is more inherently Keynesian and less monetary than the GOP), which would mean higher receipts in good times (higher capital gains, more progressive of a tax code), and changing unemployment to be more weeks and more money, but also more unemployment taxes to counteract it.

Stimulus packages on Congress's schedule, usually a disaster. As a rule, the GOP's policies of low taxes encourage growth that breeds inequality, and the Democratic Party's policies breed a more equitable distribution of a smaller pie, but neither party REALLY stands for what they say, so it's kind of irrelevant to speak in generalizations.

Charlie Hall said...

Ragnar Danneskjold is like many Republicans, playing fast and loose with facts. Under Clinton, we had budget *surpluses*. Which would have contin
ued had Gore become President.

And Anonynous September 13, 2009 9:48 PM, yes, Jewish values do require us to provide healthcare for all. Not doing so means we are over the averiah of standing by while blood is shed. I can point you to a shiur by Rabbi Dr. Moshe Tendler where he brings this down as halachah, and I've heard no posek disagree. And regarding regulation of health care, some of the most expensive regulations were put into place in New York State after aggressive lobbying by the Orthodox Jewish community -- specifically, the mandate for coverage of assisted reproductive technologies. Yes, even women on Medicaid get to attempt to have children via *in vitro* fertilization. And before you start blasting this as Socialism or some other right wing buzzword, consider that there exist frum kids today who would not exist were it not for this mandate. Would you disappear them from the planet?

And no, Jewish values would not require us to ban abortion, at least in the way some Christians would like. The extent to which abortions are permissible is a dispute among poskim.

I'm frankly sick and tired of the way people in the Orthodox community substitute right wing Republican values for Jewish values. It is just as much as sign of assimilation as is intermarriage. And it is particularly hypocritical given that our communities benefit disproportionately from these often generous social programs.

SephardiLady said...

Those who oppose Universal Health Care don't do so because they want to deny care, but because they believe that the laws of economics dictate the the best care for the most people will be achieved through the free market.

Dave said...

And doctrinaire Marxists believes the State will wither and die.

Neither belief seems to be backed by the evidence.

The United States spends more per capita on Health Care than any other nation, but our overall results are inferior to the rest of the developed world.

Whatever else can be said about it, the American system does not provide the best care for the most people.

mlevin said...

"The United States spends more per capita on Health Care than any other nation, but our overall results are inferior to the rest of the developed world."

That depends on how the statistics are taken and who is part of these statistics. For example in many developed countries babies that die within days or even one month of birth are classified as still birth as apposed to US where once that breath is taken it is classified a live birth and even if that baby dies an hour later it will be marked as baby death rather than a still birth or miscarriage if the baby in question is very premature.

In many developed countries doctors practice authinasia on regular basis as apposed to US. Prolonging a terminal person's life by one week is very costly which significantly increase medical cost per capita in US.

Dave said...

In many developed countries doctors practice authinasia on regular basis as apposed to US. Prolonging a terminal person's life by one week is very costly which significantly increase medical cost per capita in US.

If true, the US would have a greater life expectancy. But American life expectancy significantly lags the other developed nations. The evidence doesn't seem to match your assertion.

Dave said...

Incidentally, I'm always willing to consider new evidence.

Since you say it depends on how the statistics are taken, presumably you have different studies that place the United States ahead of some or all of the rest of the developed world as far as overall health outcomes. I'd love to see a reference.

(Remember, the discussion is "the best care for the most people").

mlevin said...

When I said "how statistics are taken" I meant that they [many developed countries] don't include many typies of baby deaths into their statistics, instead they classify it as stillbirth. Thus their death stats are lower. Also, if doctors are incoraged no to prolong lives of extremely sick babies (not recessitating at birth or soon after), the statistics are also affected.

I know quite a few babies who were literally brought back to life here in US, but because they were dead they suffered depilitating damages to their various organs and brain. These babies are already a number of years of age but from their friquent visits to the emergency room it is obvious that their lives will not be long. Thus, stats are scued due to these cases.

mlevin said...

Dave - I just wrote a long response to you, but it disappeared. I will try to do it later.

Dave said...

Can you start by pointing me to the source for these variant recordings of baby deaths/still births? I haven't been able to find anything on it.

mlevin said...

I'm late for an appointment, but here's a link, hopefully tonight I will give you more

Dave said...

Thanks for the link.

I did a little digging based on that, and it appears that the information traces back to a US News & World Report article in 2006.

At least according to Wikipedia, that is incorrect, and Europe adopted the same WHO standards for reporting that the United States uses in the 1980s and 1990s:

The blog link also includes an interesting claim:

It is illogical to say spending half of what we spend per capita produces a better system.

Frankly, this is just silly. If you spend money unwisely, spending more doesn't necessarily increase your efficacy. For that matter, I suspect that the blogger in question would argue that increased spending on schools doesn't necessarily increase efficacy, which is an analagous case.

mlevin said...

Dave - I did some research today, the raw data I found to back the claim that French were not using the same methodology in their IMR as was US happened to be in french and I couldn't understand it. Otherwise, it seems that the claim is coming from Dr. Linda Halderman who is a policy advisor in California State Senate. She has been siting the"inequalities" in determining the IMR in 2008 and not in 1990 or 1980's as was suggested by wikepedia. There were other places where I saw (but couldn't find raw data to back it up) that in France and other countries miscarriages, abortions due to genetic problems with the baby, and stillbirths are higher in these same developed countries which have a lower IMR. So, based on my research I conclude, that although they claim to be following WHO standards, many countries simply ignore them. If you want to do your own research follow Dr. Halderman and see where it leads you. I also saw referenced to CDC rather than CIA which back up Dr. Halderman's findings.

There is also a nice read here

But I do agree with you that spending more or less money on something doesn't necessarily correlate with the type of quality this money buys.

Dave said...

As I understand the IMR, it is based on deaths in the first year of life as a percentage of live births.

Abortions, miscarriages, and stillbirths are separate from the IMR.

mlevin said...

1. Since in US fewer women abort babies due to deformities and other genetic abnormalities, they contribute to more weaker babies born, and therefore more (statistically speaking) babies will die during the first year.
2. If doctors in US consider half a pound baby a preemie, but in France they are categorized as miscarriages this would change the statistics too, wouldn't it.
3. If a baby in US dies within an hour or two of being born and is considered a death because there was a heartbeat or two or a couple of breaths were taken, it would be classified as a death in US, but a stillbirth in France.

All three of these scenarios would change the final outcome of the IMR statistics

Dave said...

1. We need evidence as to whether or not this is the case.

2. Again, we need evidence of this one. This was was the "less than 26 weeks" claim that is disputed. It should be worth noting that at least 20 years ago, the United States considered any birth weight of less than one pound a "living abortion".

3. There is no evidence of this at all.

There are an awful lot of ifs up there. Moreover, we need numbers so we could see what percentage of the differential these claims (if true) would make up.