Modern Democratic Ideology in Economic Perspective

American Liberalism

Before understanding the economic agenda of the Democratic Party, it is important to first understand the political ideology of the Democratic Party. Traditionally, Democrats believe in social liberalism.

Liberalism is a political ideology that seeks to maximize individual liberty. Liberalism in the United States is known as social liberalism which should not to be confused with classic liberalism, as referred to in the rest of the world.

Social liberals believe in moral values such as empathy, compassion, trust, and cooperation. Generally, they believe that the State must provide the necessary socioeconomic support such as education and welfare for the poor and the helpless in order to achieve positive freedom and social justice. Such beliefs lead American liberals to support progressive income taxes, regulation of society, and more state enterprises. They support:

• Government spending on education, health care, child care, and often many state enterprises.
  
• National health insurance or universal health care in a variety of forms to address the rising costs of modern health insurance
  
• Regulatory bodies over private enterprise in the interests of workers, consumers and fair competition.
  
• Spending on social security.
  
• A moderate or heavy level of taxation.
  
• Decentralized decision-making.
  
• Internationalism.
  

Centrism, The Third Way

However, as the Democratic base traditionally dominated by labor unions and working class became more diverse to include the intelligentsia and college-educated professionals, the Democratic base today includes a significant number of conservatives in addition to liberals. In recent decades, the Democratic Party has adopted a centrist economic and more socially progressive agenda.

Today, Democrats advocate more social freedoms, affirmative action, balanced budget, and mixed economy. The party believes that government should play a role in alleviating poverty and social injustice, even if such requires a larger role for government and progressive taxation.

Related Links:

• Democratic Party Platform, 2008, PDF
  
• Obama, McCain, and Your Money:
  Where the Candidates Stand on Key Economic Issues
  

American Economy Turning Into Socialism?

If you have paid attention to the news or radio lately, you most likely heard the term socialism a lot over the last couple of weeks. You may be wondering what socialism has got to do with America. My understanding is that people are concerned with the recent intervention by the US government seen by many as socialist measures.

The US government is planning to buy up large stakes in major banks across America. In the traditional American economic system, that was unthinkable. Yet, the economy has gotten so bad that the government has no choice but to take drastic measures.

In socialism, the ruling regime takes ownerships of core capital infrastructure of the economy. The banking system is vital to the economy and can be regarded as economic infrastructure. If the US government takes over major financial institutions, would it be the end of American capitalism? Apparently, the US economy is already disintegrating.

In fact, many economy professors would happily tell you that the American economic system is not perfect capitalism, but indeed a hybrid system of capitalism and socialism. In the current crisis, it may seem that the US economy is shifting toward socialism.

The Presidential Candidates' Economic Proposals @ Yahoo! Video

Related Posts:

• And So It Begins: Suntrust, BB&T Embrace Socialism
  
• Credit Crisis — The Essentials | NYT
  

Investment Tips: Weathering the Financial Crisis

Washington Post has a good discussion section where you can find enlightening discussions on various topics and read helpful advices from experts. I found an interesting business discussion in which Tim Hanson of The Motley Fool answered investment questions dealing with the financial crisis. Some of the key points are as follows:

1. The stock market is a crazy and irrational place that fluctuates violently according to news and rumors. However, in the long term, stocks are much more predictable. If you focus on diversification, smart allocation, and companies with strong brands, balance sheets, and good management teams, you can be a successful long-term investor. Good companies will attain to their intrinsic/fundamental values over the long term.



2. In times of financial instability, do some asset reallocation. Move your funds from small cap funds to large cap funds or bonds.



3. If you are relatively young, it's okay to invest more in stocks. But if you are nearing retirement, invest in high cap stocks or bonds.
   
   
   If you're more than 10 years from retirement, you want to be 80% to 90% in stocks. If you're 3 to 10 years from retirement, you want to be 60% to 70% in stocks. And if you're nearing or in retirement, you want to be about 50% in stocks and 50% in principal-protecting bonds and treasuries.



4. When the market crash causes every stock value to plummet, it creates opportunities for long-term investors to buy normally high stocks at a bargain and diversify their portfolio. Also diversify your investment outside the US. Foreign stocks in China, Brazil, India, Europe and the like provide good value/growth opportunities.



5. Use dollar-cost averaging technique for investments such as Roth IRA. You can get more bang for your buck as the market drops. Make sure you invest in chunks that are big enough to keep transaction costs to less than 1% or 2% of your investment.



6. Generally speaking, if you own an index fund, that's going to be so broadly diversified that owners have no reason to panic. They're generally low-cost, broadly diversified, and offer returns that most well-paid active mutual fund managers can't beat.

Check out the full read: The Financial Crisis And You: Impact on Your Investments

Outlook on eBook Business

I've been aware of ebooks since long ago. In fact, I was scouring the
Internet for ebooks of all sorts, including literature and technical
books years ago. I haven't been collecting ebooks for quite a while,
but when I checked recently for an economy textbook, I found tons of
ebooks, including various collegiate books. That's intellectual bonanza.



Anyway,
what I am trying to say is, is it reasonably feasible to make profits
from ebooks? Just take a look at all the publications and audio books
circulating in the IRC networks and sharing networks.



When
a publisher sends manuscripts of books in PDF form to a printing house,
some of these manuscripts get leaked to the Internet. Even if the
manuscripts are in encrypted PDF form, it's possible to break the encryption. Years back, there was one hacker who succeeded in breaking the encryption but got arrested by FBI (Poor guy, what about freedom of speech).



However,
if someone becomes successful in selling ebooks for reading on cell
phones or iPods, ebooks can possibly become a profitable trend.



Recent rampant success of Apple iPhone and its App Store
has opened opportunities for many entrepreneurs. I don't own an iPhone,
hence I don't know what's available in the iPhone App Store. But
piggybacking on iPhone madness, developing an ebook reader for iPhone
and making deals with publishers or even wanna-be writers might be a
good business idea.



Anyway, if you are into serious classic literature without much concern for modern recyclable literary garbages, I recommend Project Gutenberg. Gutenberg is a wonderful philanthropic repository of copyright-free literature.

Microsoft Weakening? Upcoming OS Battle

Now that Bill Gates has shifted his endeavors from monopolist Microsoft to his philanthropic foundation, once invincible Microsoft is now constantly threatened by the rise of Apple and Google. With its charismatic leader gone, Microsoft is no longer a leader in technological innovation and trends. Indeed, the Zeitgeist of technology is being dominated by Google and Apple. Microsoft is facing increasing challenges in multiple fronts, one of which is the Internet.

The Internet has become an integral part of modern computing. The Internet has a potential to become a new platform from which applications are delivered on demand. Google is dominating the Internet industry based on its lead in the search market, and expanding to other markets such as cell phone industry. So fascinated with Google, people are willing to follow the trends set by Google, buy the products from Google, and becoming bored with Microsoft. Facing the threat of Google, Microsoft is desperate to take over the Internet for which it has unsuccessfully spent billions of dollars and a decade.

Apple has also stole public spotlight from Microsoft. With the help of public craze over iPods and iPhones, Apple has set out a massive marketing campaign against Microsoft Windows operating system. Thus far, Apple is gaining in sales of Macs and MacBooks.

Microsoft is also facing oppositions from the open-source world. The open source trend has released a multitude of free software whose quality rivals most products from Microsoft. Among the numerous open-source software, we can find many fine software that can be used in place of Microsoft Windows. The main contenders for the operating system market are as follows:

• Microsoft Windows
  
  Microsoft Windows come bundled with most new personal computers. Still, many people in business stick with Windows XP, reluctant to switch to Windows Vista because of many problems posed by Vista.



• Linux
  
  Linux is gaining popularity especially in the network sector. Linux is also seeing increase in its user base who's trying to find alternatives to Microsoft Windows.



• OpenBSD
  
  Another group of contenders for OS market comes from the BSD camp. Besides the popular FreeBSD, I am fond of OpenBSD.



• OpenSolaris
  
  Sun Microsystems was once a dominant player in the network server market. However, after its market share dwindling, Sun decided to release its Solaris operating system free to the open-source community. Now people can experience the stability and solid performance of OpenSolaris. It will be interesting to see if OpenSolaris can become a formidable force in the OS market.

$2 Trillion of Retirement Money Lost in Economic Turmoil

I heard stories of people losing money from their retirement savings like IRA and 401K. Check out this article:

Pensions lose $2 trillion: congressional budget analysts - Oct. 7, 2008

$2 trillion?! Maybe a bloated figure. But I don't quite understand how retirement savings can lose value. My guess is that:

1. Inflation and decreasing dollar value decrease the value of retirement savings,


2. Financial institutions go under depleting money in retirement savings accounts, or


3. IRA and/or 401k can have assets like stocks as its basis and lose its value when the stock value plummets.

Anyway, here's an Washington Post article in which a finance Guru gives some good advices on dealing with the financial crisis.

Hawaii's Renewable Energy Frontier

Under the Hawaii Renewable Portfolio Standards law, Hawaiian Electric Co. is required to supply up to 20% of all electricity for Oahu from renewable sources by 2020. HECO has come up with nine proposals for renewable energy projects that are subject to PUC approval. Now HECO is proceeding with 110-megawatt biomass power plan in Campbell Industrial Park. Among the proposals under consideration are solar, wind and ocean thermal energy.

All this progress toward renewable energy is welcome in environmental perspective. Increasing renewable energy production in Hawaii will reduce its dependence on oil and will be beneficial for Hawaii's economy in the long run.

However, all this transition toward renewable energy doesn't necessarily guarantee cheaper energy cost. I think we'll see high price for renewable energy to cover the start-up cost for the foreseeable future.

In the oligopolistic or monopolistic market of energy, expecting cheap price for electricity may be wishful thinking. Barrier to entry into renewable energy market is so high with requirements of large capital and technological expertise. However, the future of energy market will be promising with the Hawaii government's push for renewable energy.

Links:

• Renewable Energy - Department of Business, Economic Development & Tourism
  
• Facilities on Big Isle to tap sea for energy
  

Hawaii's Transition to Green Energy: Ethanol & BioDiesel

As the price of oil has risen so high, Hawaii is seeking alternative ways to replace fossil fuel and generate electricity.

As for replacement of fossil fuel, Hawaii government is moving ahead with a plan to build ethanol plants in Oahu. This plan has some people worried that the use of corn for ethanol production may cause a global famine. Corn is supposed to be imported from Mexico and used to produce ethanol. Ethanol is favored by many people because it burns cleaner with less carbon emission than other fuel.

However, Hawaii doesn't plan to replace gasoline completely with ethanol yet. Ethanol will only be used as additive oxygenator to form ethanol-blended fuel. Mixing Ethanol with gasoline will produce so-called gasohol or E-10 Unleaded which contains 10% ethanol. The current Hawaii mandate requires all gasoline to contain 10% ethanol. We are already using ethanol-blended fuel whether we are aware or not.

Ethanol can be processed as E85 fuel which contains 85% ethanol. E85 can replace gasoline in a flexible-fuel vehicle but is very expensive to produce. Until a cheaper way to produce E85 is found, complete replacement of gasoline by ethanol won't be feasible in Hawaii yet.

I think biodiesel is better biofuel than ethanol. Ethanol is made from sugar cane or corn, but Hawaii has long since abandoned agriculture. Hence, Hawaii will import corn to produce ethanol, which doesn't guarantee cheap costs. Biodiesel can be made from soybean, Jatropha or algae. Especially, growing algae to produce Biodiesel in Hawaii is a very intriguing idea. Tropical plant Jatropha can also be used in biodiesel production but may face opposition in Hawaii due to its poisonous, weather-resistant nature and potential adverse effects on the ecosystem.

Since the gasoline price has risen so much, many people have switched to diesel. Diesel is also used in many trucks, heavy-duty machinery, ships and airplanes, so biodiesel will have further reaching usages than ethanol fuel.

Links:

• Hawaii government site on ethanol-blended fuel
  
• Honolulu Advertiser: Hawaii ethanol law falls short of goals
  
• Royal Dutch Shell ventures into biodiesel algae in Hawaii
  
• Making Fuel from Algae - Shell Plans Biodiesel Algae Plant in Hawaii - thedailygreen.com
  
• Jatropha Plant Gains Steam In Global Race for Biofuels - WSJ
  
• Jatropha Biodiesel