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Book Review of: America, Welcome to the Poorhouse

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Review of America, Welcome to the Poorhouse, by Jane White (Hardcover, 2009)

(You can print this review in landscape mode, if you want a hardcopy)

Reviewer: Mark Lamendola, author of over 6,000 articles.

She destroys her own credibility, while insulting the intelligence of her readers.

The author is upfront in stating she has an agenda. She proposes specific legislation, but she fails to make a case for adopting her proposals. In fact, her habitual reliance on errors of fact and on fallacious logic requires the reasonably well informed reader to reject anything Ms. White proposes.

The book is remarkably full of factual errors and logical fallacies, some of which I will address shortly. It also promotes several ideas that show a lack of understanding of such things as what regulatory burdens do to jobs.

One of her proposals is to do away with Adjustable Rate Mortgages (ARMs). The author had a bad personal experience with this form of financing, so has concluded it's inherently predatory. It's not.

My personal experience with ARMs has been very positive. The key here is that you base your loan on the "worst case" cost of the ARM and then apply the 30% formula. If you do this, you can get excellent financing that poses no extra risk. Simply abolishing ARMs won't stop abuse in the loan industry, because the banksters will just use something else.

Using the "logic" that the product is somehow inherently dangerous or evil, the UK recently passed some legislation doing away with glass beverage containers in pubs because they could be used as weapons. That idiotic legislation will do nothing to stop physical abuse, but it will mean a greater rate of disease spread (plastic is less hygenic than glass) and more green house gases being emitted to produce all that plastic. Someone wasn't being very smart.

Similarly, banning ARMs will do nothing to stop financial abuse. The reason the author didn't make a decent case for banning ARMs is there is no decent case that can be made. The facts simply aren't there, which is why she fabricated her own I guess. Rather than buld a proper argument, she can only recount the bad things that happened to people when ARMs were used in the abuse process. Fortunately, the author does make some other recommendations that could be effective. But who can trust her after the botching on the ARMs?

Let's look at another area where she's got it all wrong. Picture the economy as a balloon. What happens when you let air out of a balloon? It doesn't rise, it sinks. When the government spends money, it does not spend its own money because it doesn't have any. It must take that money from the private sector (which produces wealth).

This taking of money lets air out of the economic balloon. You do not create value by creating money. You create value by producing goods and services you can sell in the marketplace. To produce, you need capital. When the government removes capital, it weakens the economy. Government spending doesn't stimulate the economy, precisely for this reason. And, for precisely this reason, it weakens the economy.

Anything spent on or by the government is pure overhead. Some overhead can't be helped. But there's a limit to how much overhead an organization can carry, whether it's a business or a country. And it's painfully clear that the USA is way, way, WAY past that limit. This has been documented six ways to Sunday, even by the GAO.

Beginning in 2004, a first-term US Senator began establishing his track record. He voted for every spending measure that came before him, earning him an F rating from such citizen watchdog groups as the National Taxpayers Union. In other words, he devoted his entire senate career to damaging the US economy any time the opportunity to do so arose.

Ms. White adores this same man, speaking glowingly of him and repeatedly holding forth the idea that he is going to fix the economy and do other wonderful things. However, he's already stuck a big pin in that balloon we mentioned earlier. His baby, the Porkulus Package, stimulated massive layoffs and other economic damage instead of leaving capital in the system where it could do some good. Most of the provisions are wealth transfer schemes.

We're supposed to believe that this product of the Chicago corruption machine, who has dedicated his entire political career to transferring wealth from regular Americans to the corporate fat cats, is somehow our pal and will somehow clean things up. This would be nice, if not for reality.

If he had wanted to fix the economy, he would have pushed for the repeal Sarbanes-Oxley--a worthless piece of legislation that didn't stop AIG but has put American corporations at a huge competitive disadvantage. People who are out of work need to send their bills to Sarbanes and Oxley for payment. The GAO reports that IRS employees spend half their office time surfing p*rn and gambling sites. They spend much of the other half running self-enriching scams like the Hoyt Fiasco. They have something like 120,000 employees. Back in the 1980s, several studies concluded that each government job destroyed about 50 private sector jobs. Solution: Lay off half the IRS and create 3 million jobs in the private sector.

The author seems oblivious to this bit of reality, instead praising a guy whose entire political career has been about two things: bloating the bureaucracy even more and voting for wealth transfers to the fat cats.

The Obama spending problem isn't the only area where the author needs a reality check the author needs. She wants a mandatory 9% 401(k) matching on the part of employers. Let's do the math. Joe makes $50,000 a year. His employer is now forced to give Joe a 9% pay raise or fire Joe. Hmm. Multiply 9% times zero salary and Joe isn't doing so well. Joe's employer now pays an offshore person $30,000 a year to do the job that Joe did.

The reason for this is, amazingly enough, money does not grow on trees. Businesses can carry only so much overhead, period. Add more, and they let people go. It's as simple as that.

Yes, it's true many big corporations are essentially raped by their corrupt, thieving boards because the same people serve on each other's boards and have an inherent conflict of interest like the fox guarding the chicken coop. Simple solution: Enforce the laws against theft. This would free up funds for employee pensions and retirement plans. Since we have a plunderment instead of a government, don't hold your breath for this to happen. What is happening is mid-size and small businesses are creating the jobs that those in the previous case cannot (due to the parasites at the top).

I'm not sure that forcing businesses to lay people off is a good idea. Maybe Ms. White would like to turn down all income for a year to see what that feels like.

But, she says, Australia did the 9% thing and it's working just fine for them. That may be true (I don't believe it just because she said it, as she gets so much else wrong and contrary to actual fact), but Australia also is not carrying $60 trillion in unfunded obligations, paying to support 24 aircraft carriers (twice as many as the rest of the world combined), running a current debt north of $11 trillion, staggering under a President who plans on $1.2 trillion in deficit spending, and so forth.

The two economies are very, very different. And in 2011 when the babyboomer demographics hit with a vengeance, the differences will be even more stark.

She also wants university tuition to be subsidized. With what? Money we don't have?

The solution isn't to throw taxpayer's hard earned dollars at things. If the government wants to do something, it could force universities to modernize. There are also non-government ways to solve this. University productivity is right where it was 100 years ago, or maybe even worse. Adopting modern management methods and business practices would allow universities to cut their tuition to 10% of current levels (yes, these are real numbers).

Simply subsidizing poor management and bad business practices is not a solution, and all we will get for our money is more of the same behavior. We've subsidized K-12 and graduate people who can't read and write. Do we really want to subsidize higher education? It's a moot question anyhow, as the money to do it does not exist. The United States federal government can't even make the minimum payments on its credit card, so having it make even more purchases is irresponsible at best and insane if you think about it for 3 seconds.

She also confuses a college degree with college connections. Ivy League schools don't give a better education (unless you consider being taught by an undergraduate at Harvard better than being taught by a qualified professor at a non-Ivy school), they give the connections to the elite. This has been widely written about in the literature. The whole thing is about class and social standing, not about money. She looks only at the money.

The purpose of graduating from Harvard isn't to be the best educated. In fact, Harvard MBA are famous for their colossal blunders and amazing incompetence--see the business literature. The purpose of graduating from Harvard is to get the social "creds" in the right circles. Ms. White complains about how Harvard awards scholarships, but seems clueless as to why the university's degree program exists.

Ms. White paints the political spectrum as a left/right contest. It's not. While she's correct about the two wings of the Demopublican Party basically being the paid employees of lobbyists (though she frequently applauds members of its left wing), she overlooks the fact there's a viable second party: the Libertarian Party. The same issues she bemoans about the Demopublicans are not happening in cities and counties with Libertarians serving as a majority on their councils and boards. In those locales, people are getting improved services and lower property taxes.

Another thing she gets wrong is her idea of what causes inflation. In fact, on page 201 she makes a false statement that there's been no inflation since the 1980s. During Alan Greenspan's 18 year reign of error (August, 1987 to January, 2006), the value of the dollar was cut in half (50% inflation). If you move the starting point of inflation analysis to 1999, and look at the following 10 years you also see a 50% inflation rate. This is an astounding level of inflation.

But Ms. White claims inflation has been killed by lower-wage countries. No, jobs have been killed by outsourcing to those countries, the same way they would be killed if we adopted the 9% tax she recommends. That has not affected inflation one iota. There is no causality between the two.

Inflation is what you get when the number of dollars in circulation rises in relation to the value of goods and services. When the Federal Reserve pumps out money, we get inflation. When it contracts the money supply, we get deflation (typically, the amount contracted is far less than the amounts injected thus an inflationary trend over time).

She likes Keynes. He was debunked over 20 years ago. Nixon used Keynesian economics with disastrous results. As did FDR.

She claims FDR's spending ended the Depression of the 1930s. That bit of propaganda was thoroughly debunked by economists years ago, because it defies logic. You cannot get a balloon to rise by letting air out of it.

She talks about "the business lobby" as if the businesses that provide jobs are evil. Yes, there are evil people running certain businesses. And most members of CONgress are simply the paid employees of those businesses, passing wealth transfer legislation to benefit those businesses.

But her indictment of all businesses as bad and somehow opposed to the workers on whom those businesses depend does not have a factual base on which to stand.

There isn't a "business lobby." There are specific lobbies that use government as a tool for stealing from other people. I suggest the author read about Teddy Roosevelt's battles so she can understand the distinctions. The same kind of people battled Andrew Jackson. There were four assassination attempts on Jackson, for that reason.

She claims Greenspan followed Milton Friedman. This isn't true. Dr. Friedman wanted to abolish the Federal Reserve. It just isn't the case that the Chair of the Federal Reserve held that position for 18 years but was somehow an acolyte of Dr. Friedman. Let's not forget also that Greenspan pumped out so much money during his reign of error that the dollar lost half its value. That's a 50% tax on everything you own and ever will own plus all revenue. This staggering confiscation of wealth is the opposite of what Dr. Friedman called for.

This book has many more errors of fact and many other nonsequitors. The author filled the book with falsehoods from which her case does not logically follow, and tossed in some facts from which her conclusions also do not follow. She relies heavily on the old "there's water in the ocean so my point is true" argument. She doesn't care if a purported fact is relevant or true, she uses it to leap to a conclusion that isn't logically related to it.

The subtitle gets fulfilled via proposals that would be disastrous if adopted, and also by some basic advice that is the same stuff we've been reading for years.

The author has a good writing style, and she presents some good information. But most of what she says is nonsense. I'm not providing a chapter by chapter synopsis for this book because I can't recommend it. 

Shame on Ms. White for releasing this fantasy work and calling it "nonfiction." It's one thing to be disinformed on a few facts, but it's quite another to use a litany of falsehoods as the basis for supporting your agenda.




About these reviews

You may be wondering why the reviews here are any different from the hundreds of "reviews" posted online. Notice the quotation marks?

I've been reviewing books for sites like Amazon for many years now, and it dismays me that Amazon found it necessary to post a minimum word count for reviews. It further dismays me that it's only 20 words. If that's all you have to say about a book, why bother?

And why waste everyone else's time with such drivel? As a reader of such reviews, I feel like I am being told that I do not matter. The flippancy of people who write these terse "reviews" is insulting to the authors also, I would suspect.

This sound bite blathering taking the place of any actual communication is increasingly a problem in our mindless, blog-posting Webosphere. Sadly, Google rewards such pointlessness as "content" so we just get more if this inanity.

My reviews, contrary to current (non) standards, actually tell you about the book. I always got an "A" on a book review I did as a kid (that's how I remember it anyhow, and it's my story so I'm sticking to it). A book review contains certain elements and has a logical structure. It informs the reader about the book.

A book review may also tell the reader whether the reviewer liked it, but revealing a reviewer's personal taste is not necessary for an informative book review.

About your reviewer

  • Books are a passion of mine. I read dozens of them each year, plus I listen to audio books.
  • Most of my "reading diet" consists of nonfiction. I think life is too short to use your limited reading time on material that has little or no substance. That leads into my next point...
  • In 1990, I stopped watching television. I have not missed it. At all.
  • I was first published as a preteen. I wrote an essay, and my teacher submitted it to the local paper.
  • For six years, I worked as an editor for a trade publication. I left that job in 2002, and still do freelance editing and authoring for that publication (and for other publications).
  • No book has emerged from my mind onto the best-seller list. So maybe I'm presumptuous in judging the work of others. Then again, I do more describing than judging in my reviews. And I have so many articles now published that I stopped counting them at 6,000. When did I stop? Probably 20,000 articles ago! (It's been a while).
  • I have an engineering degree and an MBA, among other "quant" degrees. That helps explain my methodical approach toward reviews.
  • You probably don't know anybody who has made a perfect or near perfect score on a test of Standard Written English. I have. So, a credential for whatever it's worth.

About reading style

No, I do not "speed read" through these. That said, I do read at a fast rate. But, in contrast to speed reading, I read everything when I read a book for review.

Speed reading is a specialized type of reading that requires skipping text as you go. Using this technique, I've been able to consistently "max out" a speed reading machine at 2080 words per minute with 80% comprehension. This method is great if you are out to show how fast you can read. But I didn't use it in graduate school and I don't use it now. I think it takes the joy out of reading, and that pleasure is a big part of why I read.

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