The Fracking Debate Would Benefit from Logic

But we may need to teach reasoning skills

Let’s have Dr. Spock look at the debate.  He doesn’t get to decide the issue.  We just give him a cattle prod and let him zap those who get illogical. 

First let’s address the structure.  The Federal government is about to set rules for drilling on Federal land.  No problem there, but get the prod charged up. 

The Federal government seems to be gearing up to set a standard that will apply to all Federal land.  ZAP!  That makes no sense.  In some areas groundwater, which is what the rules are supposed to protect, is an important resource. In other areas, groundwater is not so important.  Geology isn’t vanilla.  The risks and impact of fracking varies with geology.  So should the regulations.

Further, in some areas other issues, like the use of surface water, may be more important than the risks to groundwater.  What is important isn’t the same on all Federal land. Also, there is no logical reason that regulations that protect groundwater would not be damaging to other concerns like surface water supply, carbon emissions, or economic growth.   They might or might not be. It’s an empirical question not a logical one.  Witness how dams create other environmental issues. It is logical to regulate what is important.

Keep that zapper handy.  Now we’ll look at lobbyists’ positions.  Let’s start with the Natural Resources Defense Council.  They state that they think that the Interior Department should have strong rules that “should not be weaker than what any state has on its books.”  They get a double for that statement. ZAP! ZAP!  One zap for the failure to distinguish between optimum and maximum. Logically they are saying they don’t want the best regulation (unless it’s the most). They get a second zap for applying maximization where it doesn’t apply.  One can’t assume that it is possible to have “strong rules” across diverse situations.  What is strong in one situation isn’t in others.  A single approach can only maximize uniform situations. They’re saying they don’t want the strongest rules for some situations unless that set of rules is strongest in all situations.  Never mind whether strongest is best.

But it doesn’t stop there.  Environmental groups say hydraulic fracturing should be stopped until experts can confirm it is environmentally safe.  ZAP!  The U.S. government hasn't produced any evidence that contamination occurs.  But that doesn’t mean damage couldn’t occur.  It is impossible to prove a negative. It is illogical to expect the impossible. 

Companies say state officials are in a better position than federal officials to regulate hydraulic fracturing because they understand the local geology and community concerns. That gets the same zap as the idea of a Federal set of rules.  Geology is no respecter of state boundaries. Groundwater flows.  But, it’s a lowercase zap because at the state level interstate agreements are possible. 

We have authorities for river basins.  If groundwater really were the concern, someone would raise the suggestion that we at least consider a similar approach for groundwater.

Energy experts say the new rules could serve as a template for States, and many people expect the rule for Federal land to become the model for a standard for natural-gas wells on all lands.  ZAP!  Federal land is almost by definition different -- different population densities, different ecological systems, often unique geological formations, etc.  It has different property structures by definition.  With Federal land, the government is saying how its land can be used.  On other land, the government is saying how other people can use their land.  The rules should only be uniform if property rights don’t exist. 

Often the issue arises around conflicting property rights: the private property rights of well owners specifically the rights of the owner of the water well verse the rights of the owner of the natural gas well.  It gets interesting when the government ventures into areas where they don’t own all mineral rights.  In many areas, groundwater protection involves protecting a private property right to a good that the owner often paid nothing to get, well water, verses a good that the owner bought, potential natural gas well output.  So, one is often a right to a good that the water well owner values because it is free while the other is often a right to a good for which the natural gas well owner will pay royalties.   It’s hard to imagine a one size fits all solution to such varied situations.

Spock, of course, would point out that the zapper itself is illogical.  Negative reinforcement is so much less efficient than positive feedback.  Incentives work.  People, however, are illogical.  So, a game that punishes deviations from logic comes close to being trapped by “It is illogical to expect the impossible.”  Those who expect fracking rules  that are logical will get zapped, but not by Spock.

Is a Vote for Obama a Vote for Inequality?

Lies, damn lies, and statistics

Two truths provide endless entertainment.  First, we all should know politicians are masters of using statistics to distort the truth.  It’s fun to watch, but it’s sad that so many voters don’t see through it.  The fun is trying to determine which politicians are good liars and which are so stupid that they believe their own lies.  As voters, we have to decide whose lies are most destructive.  Personally, who is more destructive seems more important than who’s the bigger liar. 

Second, journalists can be equally entertaining when they have to deal with numbers.  It’s easier to forgive journalist.  By definition, their expertise is words not numbers.  When a politician dismisses the trillion dollar deficits of the current administration as nothing different from the hundred billion dollar deficits of the last administration, one can forgive journalists for not noting the dollars to dimes difference on order of magnitude.  So, regardless of whether one thinks the differences are justified, it is foolish to look to the media to help one assess the difference.    

However, as with politicians, one has to wonder whether it is ignorance or intent that distorts journalistic endeavors.  It does become annoying when one suspects a supposed reporter is editorializing. It’s a major failing of our journalism schools that they don’t teach the difference between the editorial pages and the news pages.

“All well-and-good” you say, but what does that have to do with whether a vote for Obama is a vote for income inequality.  Simple.  Let’s turn to “lies, damn lies, and statistics” as it is reported by journalists and used by politicians.  A recent example is an article entitled “Wage Divide Grows Wider” in the April 18, 2012 print WALL STREET JOURNAL or “Workers' Pay Divide Persists” online.

The article starts out saying “The gap between America's highest- and lowest-paid workers is widening.” It cites: “Labor Department figures released Tuesday show that between the end of the recession in mid-2009 and the first quarter of 2012, earnings of Americans at the top—meaning those who earned more than 90% of all workers—rose 7%, before adjusting for inflation. During the same period, wages of those at the bottom—meaning those who earned less than 90% of all workers—rose 2.5%.”  

“Mid-2009” on!  That is Obama’s show any way you look at it.  There wasn’t an opposition at the Federal level worth mentioning until the legislatures elected in 2010 were seated the following year.  Even then it was only one house of Congress.   So, based only on the data, Obama is promoting income inequality. 

Alas, the truth is that most class warfare rhetoric about income inequality is just noise made to appeal to a constituency.   Nothing illustrates that better than the fact that Obama has made the gap between top and bottom a theme of his re-election campaign. To quote his State of the Union: "We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by, or we can restore an economy where everyone gets a fair shot."  Talk about hypocrisy.  Create inequality with a massive “stimulus,” then rail about it as if you would do something about it.  That’s the “lies.”

The article goes on to note: “That pay difference predates the global financial crisis: Between 2003 and 2007, wages grew 12.9% for high earners, compared with 8.4% for the lowest-paid 10% of workers.”  Those who keep score on a political basis might find it interesting that during the Bush recovery the bottom 10% did a better job of keeping up than during the Obama recovery.  The difference wasn’t small either. Under Bush the growth rate for the bottom 10% was about two thirds of that for the top 10%.  Under Obama it was one third.  The interesting thing is that since high incomes tend to grow faster during expansions, Obama’s failure to stimulate economic growth should have produced a convergence of income growth rates relative to the better economic performance under Bush.  That’s the “damn lies.”

But, it is just the beginning of “lies, damn lies, and statistics.” Why does the article ignore 2007 until mid-2009? The answer is because the writer isn't reporting meaningful data. Starting out with an agenda and finding data to support your conclusion is not quality reporting. Upper incomes are more volatile as in high beta wealth. By ignoring periods of recession the article turns the tendency of upper incomes to fluctuate most over the economic cycle into what looks like a trend.  That’s the “statistics.”

There are at least two unfortunate consequences of this game of “lies, damn lies, and statistics.” First, the game can be played while ignoring the volatility of incomes.  One suspects it is intentional. Politicians find it convenient to promote the notion of a plutocracy in order to support their class warfare substitute for serious thought.  Sort of a “keep ‘em stupid and in their place” approach.  

Reporters can avoid reporting information that would challenge peoples’ preconceptions.  Reporting news is much easier if the news isn’t unfamiliar.  Besides, avoiding things that are unfamiliar is easier for the mentally lazy. 

That it leads to stupid decisions is just an unfortunate side effect.   What if income gains for the poor and middle income groups can only occur when the upper income tail of the distribution goes up more?  (For the math geeks, what if the median, kurtosis and skew are all dependent of the same variables?  After all they are all a part of the same distribution).  It doesn’t decide any issues, but it’s worth knowing.

Second, we avoid addressing or even discussing the important issue of mobility and opportunity.  Scott Winship of the Brookings Institution is quoted in the same article as finding that “there aren't signs of weaker social mobility between the poor and the middle class over the past 60 years.” 

There is data relevant to mobility.  The best data is longitudinal data that tracks incomes of a large sample of people over time.  Follow up surveys and personal historical reconstructions have also been used to address the issue. My impression is we know mobility hasn’t changed a lot, but we are measuring with a yardstick.  That’s fine unless inches have major social implications.  What if inequality can only be reduced by eliminating mobility?  What if minor changes in mobility have major implications for the stability of a society?

Can a Controversy Exist If Only a Referee Participates?

Truly a head scratcher

One would think a controversy would require some new disagreement between people besides the referee. Evidently not. Seems the JOBS Act has created a controversy without new contesting opinions. Let’s start with a little background. The WALL STREET JOURNAL reported on April 12, 2012 (“JOBS Act Jolts Firms to Action”) that “Two companies have submitted confidential plans for initial public offerings under the JOBS Act that was signed into law last week, an indication that some firms and their backers are moving quickly to capitalize on the controversial measure.”

What’s the controversy? As always, there are those who might buy and those who might sell. Is that the controversy? One has to hope not. That is a market. There are people who participate in new offerings and people who don’t. Is that the controversy? Hardly. That’s true of any market unless the government enacts a mandate that everyone participate. Beside, as we saw when the government tried to open up IPOs during the tech bubble and then restrict IPOs when their actions backfired, it is dangerous to try to manage market participation.

One of the absurdities of those who want to report a controversy is what they use to justify the notion. One provision of the JOBS Act is that certain companies can file draft registration statements for their IPOs on a confidential basis for review by the SEC staff. Before it had to be made public in an initial filing, usually made several months before an IPO is actually priced and completed. The JOBS Act allows qualifying companies to postpone public disclosure of such information until 21 days before they launch a series of "roadshow" meetings to sell the IPO to investors. Because such meetings usually take about 10 days, the result is that investors may only have a month to scrutinize disclosures instead of three months or longer. That time difference is the great controversy.

To support the contention that the two month difference is controversial they use the example of online coupon company Groupon Inc. Groupon revised the first quarterly financial results it reported as a public company. It discovered that executives failed to set aside enough money for customer refunds. The changes reduced fourth-quarter revenue and widened its loss.

Alas, you respond, “Don’t companies that have been public for decades have to revise financial results?” Yep! “Didn’t Groupon go public under the rules that existed before the JOBS Act.” Yep! You got me again. Fact is Groupon is totally irrelevant.

Will some people lose money investing in the IPOs made possible by the JOBS Act? For sure. Hopefully, that’s not controversial. It’s true of all investments. No matter how good an investment is, someone will figure out a way to lose money on it. Investing is risky. IPOs are particularly risky, and most investors should avoid them. No regulation can change that. They can have a roll in a diversified portfolio, but as has been argued in previous postings, angel investing is probably a better portfolio fit for many investors.

The JOBS Act shouldn’t be subjected to contrived controversy based on the referees’ aspirations for power. Startups are too important to be made the political football of power hungry regulators or their mouthpieces.

Predictions: Win Some, Lose Some.

So what if it’s not January.

The last posting, “Investing PART 15,” mentioned that volatility this year would be different from last year. The difference affects the return on the investment strategy discussed in that posting. The logic: One of the factors determining option prices is volatility. So far this year, volatility has been more like the second half of 2010 than 2011. Thus, it seems the prediction that volatility this year wouldn’t resemble 2011 has been borne out, and it has affected the return on the strategy. Nevertheless, the nickels are still there to be picked up.

My second fearless forecast looks more questionable. Logic would suggest that sometime this year financial economists should recognize that the concept of (and purported measure of) the risk-free rate of return is a joke. It seems logical since both the President and congressional leaders (of both parties) openly discussed defaulting on Treasuries. (Treasuries are the traditional definition of the risk-free rate of return). So, default risk is there. (If you think not, look at how the voluntary Greek rescheduling was structured. One has to be increditably naïve to think that the US government wouldn’t resort to the same sort of picking winners and losers. Just make it politically advantageous and it will happen).

Bernanke and other Fed official regularly debate when rates will rise. That will affect the price of existing bonds. So, interest rate risk is apparent. To argue there is no downgrade-risk is counter factual. The currency risk was highlighted earlier last year when we saw an international flap over the currency impact of Fed policy. In the April 1, 2010 posting on this blog, “Beware the risk-free return,” other risks were discussed.

Yet, financial economists persist in misinterpreting risk in order to defend the theoretical edifice they’ve built. This blog has often pointed out how that theoretical structure yields some very useful ideas that can be employed to increase return and reduce risk. However, keep in mind that the mathematics of the structure are often employed to fabricate a quantitative precision that just doesn’t exist in the real world of investing. More importantly than false precision, the edifice is misleading investors regarding risk.

To illustrate, the ECONOMIST (3/17-23/2012) had an article on the spread (i.e., difference in returns) between stocks and Treasuries (“Shares and shibboleths: How much should people get paid for investing in the stock-market?”). The spread is known as the equity risk premium. The article first discusses before the fact verses after the fact risk assessment. That investors are sometimes wrong isn’t a very enlightening explanation of the spread. Then the article provides the following very traditional definition:

“Another explanation for the high returns is a paradoxical one: that equities have become less risky.”
“The first step is to define the equity risk premium more exactly….break it down into the following components: the dividend yield, plus the real dividend growth rate, plus or minus any change in the price/dividend ratio (the inverse of the dividend yield), minus the real risk-free interest rate.”

This is all well and good EXCEPT that the conclusion that equity risk is the total explanation is wrong mathematically and factually.

Mathematically the spread is the difference. It is wrong to attribute a difference to the value of only one of the two numbers that generate the differences. The math is wrong if one focuses just on the risk in equities. One can’t solve a - b = c and d - e = f and c > f for a, b, d, or e. The equations say nothing about the relationship between a and d. Just assuming that b = e is a copout. The result is simply a restatement of the assumption.

Factually, 1) Treasuries have been downgraded from their almost default risk-free status. But, even when Treasuries where triple A, there was always some default risk. 2) Short maturities reduce but do not eliminate interest rate risk. 3) Especially since, as implied in the WALL STREET JOURNAL (3/26/2012) article entitled “Treasuries Pile Up With Dealers,” the assumption of perfect liquidity is violated. When dealers have to accumulate Treasuries beyond levels they require in order to maintain a liquid market, they are creating the illusion of liquidity by suppressing price discovery. The violation of the assumption of market liquidity should be the nail in the coffin of risk-free return nonsense. Risk-free without market liquidity that supports price discovery is a contradiction. As Spock would say, “that is illogical.”

In short, Treasuries have risk and a change in the level of that risk is an equally logical explanation for changes in the equity risk premium. Investors would be well served if financial economists would sacrifice their quantitative precision and actually address risk.

Investing PART 15

Options: 2012 won’t be 2011

About January 1st everyone seems to think they have to make a prediction for the coming year. My plan was to do the same. Guess I’m a little late. The subtitle contains the essence of the prediction: 2012 won’t be 2011. As obviously true as that is, people can’t help using recent experience to forecast. So, how does that relate to options?

The option strategies of selling covered calls and selling cash covered puts are well known. Selling covered calls involves selling someone the right to buy your stock at a designated price. There are two ways to use covered calls. One is to remove emotion for the sell decision. For example, you may decide that if you can get an increase in price of, say, 10% over the next few months, you don’t expect more or you can be content with that gain. If you sell the call, you aren’t subject to the temptation to raise your sights as the stock climbs.

Alternatively, income investors may target a yield. If the stock price goes up without a dividend increase, the dividend yield falls. Pre-committing to sell if that happens (and getting paid for the commitment), can make sense if other investments with higher yields are available.

Not all sellers of covered calls are using them to sell stocks. Some sell the calls for the income that selling the call generates. They pick a selling price they don’t think will be reached. They sell the right for someone to buy the stock while hoping/expecting that the stock won’t increase enough for the option buyer to exercise the right.

Selling a cash-covered put is the inverse. The option seller is selling someone the right to sell them a stock at a certain price. It’s a way to target an entry point. You agree that you’ll buy the stock at a certain price, and get paid (the proceeds from the option sale) to hold the cash while you wait for your price. Again, some people sell cash-covered puts to collect the premiums and don’t really want the stock.

Both strategies have been described as picking up nickels. BARRONS (2/11/12) described them as “How to Hit Profitable Singles.” The article is a good overview.

Rather than describe the strategies in detail with examples, this posting just references some good discussions:


SeekingAlpha.com in “My Long-Term, Enhanced Investing-For-Income Strategy” describes the strategies as follows:

“The two purposes for using options are: 1) Increasing income and 2) taking emotions out of your buy/sell decisions. The proper use of puts allows an investor to make their planned buys on down days when stocks are on sale. The other result of selling puts is creating an income stream from cash that is otherwise not invested.”

“The proper use of calls is to increase the yield from a portfolio of owned stocks that consistently pay a rising dividend. The key to this strategy is first choosing the companies you want to buy and hold and having the patience to collect a good income while you wait for your price.”

The article provides a number of examples.

Another article that addresses return on options with different examples is “How To Double Your Yields On Dow Dividend Stocks”

“How NOT to bet on Apple's quarterly earnings report” discusses why using options in a specific situation often backfires. It provides examples then notes:

“The explanation for those numbers is simple,… Over time, the options tend to overprice the potential post-earnings move. Those options experience huge volatility drop the day after the earnings are announced. In most cases, this drop erases most of the gains, even if the stock had a substantial move."

This Apple example highlights the issue in 2012. The price of an option is sensitive to volatility. Last year volatility was particularly kind to the option strategies described above. Most people think of 2011 as particularly volatile. That may be the case, but there is a counter argument as presented in BARRONS “The Volatility Illusion.”

It argues there was a "volatility illusion" based on three factors:
1. The admittedly high volatility of the European stock markets is being mistakenly extrapolated to a relatively quiescent U.S. market.
2. The volatility of so-called safe 10-year U.S. Treasury notes actually exceeds that of the S&P.
3. Investors are not spooked by increasing volatility if it is in the context of a bull market.

The article, in fact, doesn’t make the full case. Whether 2011 was anything more than just a normal market year depends upon how one measures volatility, especially what time horizon one uses. The issue for options, however, isn’t overall volatility. It is the volatility of volatility itself. The pattern of fluctuations in volatility in 2011 made covered call and cash covered put strategies particularly profitable, and I would argue easy to manage. It would be unusual for the pattern of volatility in 2012 to be as friendly to these option strategies as 2011. Basically, if the strategies can be characterized as picking up nickels, in 2011 there were a lot of dimes among the nickels. In 2012 the nickels will still be there.

More Questions About: “Why Do We Pay These People?”

Perhaps the better question is: Who Is Paying These People?


As mentioned in the last posting: “Questioning why we pay the 1% so much doesn’t stop with politicians and entertainers.” The posting mentioned that the ECONOMIST (12/21/2012) had an interesting article entitled “Who exactly are the 1%?”

From that perspective, the ECONOMIST presented some interesting data. It is a highbred that resembles a breakdown by occupation. Some discussion of how the 1% earn their income is productive. It indicates the role of the 99%ers as willing and often enthusiastic sponsors of the 1%’s high incomes. Basically, they give the 1% the income and then complain that the 1% have it. As discussed below, the usefulness is limited. It doesn’t provide much insight beyond some speculation about what motivates people to pay other people so much. That’s partially inherent in the data, but one suspects it is also due to misuse designed to support an editorial stance.

The three groups mentioned in the last posting (i.e., professional sports figures, entertainers, and national politicians) fall into the largest category identified as “other” in the ECONOMIST’s article. The “other” category is unfortunate because it’s such a catchall. It’s an interesting discard. It’s interesting in the sense that the people in it are interesting. Almost by definition they’re exceptional (i.e., different); a part of a small, 1%, group.

The next largest category is another catchall, but it is a bit more bounded. The category is “managers and executives.” It’s a catchall because it includes everything from the CEO of the largest public corporations to the manager of a successful small business. Needless to say, executives from private, public, nonprofit, government and government-sponsored organizations are included.

It’s not just the senior levels: as middle management has shrunk, the remaining managers and executives are more likely (larger portion) to be the well paid. The one thing we do know is it excludes finance, but it’s not clear whether they mean financial executives at all organizations, all executives at financial firms, or both.

The exact definition isn’t needed in order to reach some general conclusions about who pays these members of the 1%. To gain the most insight into who is paying the 1% who are designated as executives and managers, it helps to consider sources of income. The article points out that: “The richest 1% earn roughly half their income from wages and salaries, a quarter from self-employment and business income, and the remainder from interest, dividends, capital gains and rent.” Unfortunately, it doesn’t say anything about head counts. The same people could be receiving the 25% of income from self-employment, wage and salary income earnings, dividends, etc.?

Nevertheless, the data does tell us that, to the extent income is from self-employment, they’re paying themselves. If their business earns enough, then they end up in the 1%. If not, they’re 99%ers.

Managers and executives at public companies, by contrast, are paid by owners (i.e., stockholders). About half the 99%ers don’t have any stock exposure. Basically, they chose to be broke in the sense described in “The Only Truth About Finance.” Interestingly, it seems many of them don’t understand that what executives get paid is literally none of their business.

Of the other half of the 99%ers, a big portion delegates the decision to their pension fund or mutual fund manager. They’re are paying the executives and managers, but avoiding an explicit decision to do so. Interestingly, the pension, annuity, and mutual fund owners who delegate the decision about how much to pay the executives are delegating the decision to people in finance who may well be among the 1%. So, in effect they are paying twice to support the 1%. One is tempted to suggest that they stop complaining about the injustice of the incomes of the 1% and instead take responsibility for their decision to support them.

That leaves a portion of 99%ers (holders of voting stock) who explicitly make a decision. In aggregate, they often represent a minority of the shareholders and can easily be outvoted by institutional shareholders like pensions and mutual funds. Thus, it’s fair to say about half the 99%ers pay the highly paid executives, but many, probably most, leave the decision to others.

Medical professionals constitute 16% of the top earners. Now, recommending 99%ers stop seeing doctors and going to hospitals in order to stop paying the 1% doesn’t seem reasonable. I wouldn’t consider it, but then I’m inclined to think the 1% aren’t the problem. But it is worth considering whether the 99%ers should ask why the 1%ers in the government think the 99%ers should be taxed to expand programs to fund the 1%ers in medicine.

Another significant group is lawyers at 8% of those with incomes in the top 1%. Lawyers are useless, unless they’re pleading your case of course; then they are very valuable. There is, however, one exception. In concert with their 1% breather in government, the legal profession has figured out how to co-opt people into becoming a plaintive in class action suites. They just make it a nuisance and costly to opt out. They know it’s too much to ask the 99%ers to interrupt life to opt out of ridiculous class action suites, and in the same spirit, we’ll give 99%ers a pass.

That leaves people who earn their income in finance. As mentioned before, it isn’t clear what this means: it’s not clear whether they mean financial executives at all organizations, all executives at financial firms, or both. What is clear is that the author is concerned by the size and growth in the portion of the 1% who are in this category. This group makes up about 14% of the 1%ers. The growth of this category seems to trouble the ECONOMIST.

If assets being managed are growing, as occurs as populations accumulate, say to accommodate the approaching retirement of baby boomers, more resources will be required to manage them (i.e., finance will grow). Similarly, older populations tend to have accumulated more resources. However, probably the most important factor is the trend toward hiring financial managers. It seems to me that it’s the 99%ers who are the source of growth in demand for people in finance.

This last point illustrates why the data are only useful for such idle speculate about who pays the 1%. It doesn’t seem to occur to the authors that the percent of the 1% is a meaningless statistic in terms of their focus (which is what to make of changes in the portion of the 1% in various occupations). It says nothing about the portion of occupational category. That finance increased as a portion of the 1% says nothing if finance became a more common occupation. It may just reflect a change in industry employment in response to changes in demand.

Why Do We Pay These People?

Will the 99%ers occupy the Super Bowl?

You may have figured out from previous postings that 99%ers can be very entertaining. Most entertaining of all is how often they’re paying the top 1%. Perhaps being a vocal 99%er is just so easy that they don’t really believe that it matters whether they know who the 1% are. Facts have a nasty habit of interfering with a good rant.

Yet, in the Super Bowl spirit, a posting on the topic seems appropriate. When other than Super Bowl Sunday do Americans huddle around the screen to cheer for their favorite group of the 1% of earners? Granted other professional sports and entertainment awards shows gather large audiences for no purpose other than to watch some of the 1%, but the Super Bowl is the king. Don’t get me wrong. Entertainers and sports figures deserve what they earn. After all, they are entertaining. But, if income inequality really bothers you, skip the Super Bowl. If you watch it, you’re just contributing to inequality by justifying the earnings of some of the 1%.

Not so entertaining are the US congress and the appointive executive branch. Why we put then in the top 1% by income escapes me especially since some of them do little other than rant about the injustice of the 1%. It doesn’t seem logical to pay someone enough to be in the top 1% if all they do is create obstacles to keep others from earning as much as the 1%. If you’re bothered by inequality, get rid of them.

Questioning why we pay the 1% so much doesn’t stop with politicians and entertainers. The ECONOMIST (12/21/2012) had an interesting article entitled “Who exactly are the 1%?” Many of the 2011 November and December postings already explored some data about the income distribution. What is it about this article that makes it interesting? What does it add?

It provides some interesting data on how the 1% earn their living. But, discussion of the article will have to wait lest we miss this opportunity to either protest the inequality the Super Bowl represents, or enjoy the day when America celebrates merit even if everyone can’t play professional football. The Super Bowl represents inequality (income and all) that we all appreciate.