Is Edward Snowden a Traitor?

I became furious listening to John McCain, Arizona Senator and President Obama. They called Edward Snowden a traitor who needs to return to the United States to face justice. During the same speech, they stated the National Security Agency needs more transparency. Isn’t that what Edward Snowden did? He forced the NSA to become transparent by revealing the NSA surveillance programs. Despite our leaders, some claim Edward is a hero or a whistleblower because he revealed the United States and British governments are spying on their citizens.

U.S. government encourages whistle blowers to expose a company’s wrongdoing and crimes. Whistleblowers can sue the companies in courts and win a portion of federal money the company used improperly. President Abraham Lincoln encouraged whistle blowing during the Civil War to crack down on companies violating military contracts. Nevertheless, I thought lying to Congress constituted a crime, perjury, and Edward Snowden revealed the NSA lied to Congress about its activities. Consequently, a whistleblower can rat out a company that violates rules and regulations, but a person becomes a traitor if the person reveals a government’s illegal activities.

A government imposes two sets of laws. First, government imposes its laws, rules, and regulations on society that everyone must follow. Then government fines, penalizes, or imprisons any violators. Second, government follows its own rules, exempting itself from the rules that it forces upon everyone else. Government does not write these rules down, so the leaders can change their laws and rules at will. Unfortunately, a broke government will take shortcuts.

Edward Snowden did not profit or made money from revealing the NSA’s secrets. He was a computer specialist who worked for the NSA and CIA. He became concerned over the U.S. and British governments spying on their citizens. He thought President Obama would shift course, and end President Bush’s wars and reestablish civil rights. Instead, President Obama has expanded the military programs. United States military continues fighting in Afghanistan and Iraq since 2001 even though it killed Osama bin Laden and the top leaders of al-Qaeda. Subsequently, President Obama wants to intervene in Syria, Iran, and North Korea. U.S. military has stationed troops in the Philippines in 2013 to thwart China’s claim to the South China Sea. China claimed several rocks in the sea belong to China, granting the Chinese navy the right to patrol these rocks and protect its territory. Of course, these rocks stretch from the coast of Japan, along the Philippines’ coastline, and ends at Borneo. If China maintains control of these rocks, then China controls the whole South China Sea. U.S. government wants to thwart China. Being an economist, where in the hell does the United States government find money to finance these military operations across the world. We do not have the money!

Snowden’s father plans to challenge the criminal charges from the U.S. government. I wish him luck, but his dad is wasting his time. The U.S. government would hire a team of prosecutors and experts and spend millions of dollars to win the case at all costs. Even if Snowden’s father convinces a federal judge to dismiss the charges, Edward Snowden would experience the wrath of the U.S. federal government. The U.S. government does not play fairly. IRS would scrutinize his previous tax returns, searching for the tiniest mistakes. The State Department would study his passport application, ensuring Edward Snowden dotted every i and crossed every t. When the federal government wants to incarcerate someone, it will find a reason to do so. For example, the U.S. government accused George Norris of importing endangered orchids into the United States, but he never violated the law. Since the U.S. government would not apologize and spent millions investigating the case, the government agents scrutinized Norris’s import documents until the agents found enough paperwork mistakes to imprison him. Consequently, Edward Snowden has little chance of winning his fight against the U.S. federal government. U.S. federal government does not play fair.

Russia has granted Edward Snowden asylum to live in Russia for a year. U.S. political leaders are furious at Russia, and President Obama said the United States will “recalibrate” its relationship with Russia. Of course, President Obama would not launch the drones at Russia because Russia can fight back. The president saves the drones for countries that cannot fight back like Yemen and Pakistan. Since President Obama cannot punish Russia with the military, he will use international trade as a weapon. Now, two bullies can fight it out on the world’s schoolyard.

Why are people shocked the U.S. government spies on everyone? Many people suspected the U.S. government is spying on its citizens. Edward Snowden just provided the proof. As long as I can remember, the U.S. government was encroaching on liberties. After September 11, 2001, the encroachment accelerated while the federal, state, and county governments threw out the Bill of Rights. After the terroristic attacks on the United States in 2001, the Arizona State Police called anyone a terrorist who recited the Bill of Rights to law enforcement officers. The Bill of Rights, a fundamental document to the U.S. Constitution, restricts a government’s power. Thus, a terrorist recites the law to the police. I thought a terrorist creates chaos and disorder in a society by exploding bombs and murdering innocent people. I knew the federal, state, and local governments stopped enforcing the Bill of Rights long ago.

After September 11, 2001, President Bush and Congress passed laws that broadened the federal government’s powers. For example, the U.S. President can label any person a terrorist. Then the U.S. prosecutors can seize a person’s property and try him or her in a tribunal court with no jury trial, violating the Bill of Rights. Everyone thought President Obama would differ from his predecessors. Then he passed a law making it a felony for people to protest near Secret Service agents, even though President Obama had protested at Harvard University as a young man. That adage that parents tell their children– do as I say and not as I do. Unfortunately, leaders become more concerned about maintaining control than doing the right thing.

The U.S. government rules the world like an empire. Unfortunately, this story has happened already. The ancient Roman Empire dominated the world 2,000 years ago. The Roman Empire experienced four eerily similar trends to the United States. First, the emperors kept usurping power away from the local governments. The Roman government’s bureaucracies continued growing in size and scope. Third, the emperor financed a large army and navy. As a Roman colony or province broke away, the emperor sent its army to squash the rebellion. Finally, the emperors kept raising taxes over time to finance the expensive military and bureaucracies. Eventually, the emperor lost control as the Western Roman Empire collapsed around 500 AD. Many people were happy to see it go.

Is Edward Snowden a traitor or hero? He destroyed his life to leak the NSA’s surveillance program, and the U.S. government will hunt him down for the rest of his life. Only a hero risks his life for doing the right thing.

Something is Wrong with Microsoft

Microsoft has evolved into a monopoly that dominates software for the PC laptops and desktops. It derives its monopoly power from three sources: Operating system, office suite, and a technology standard. An operating system allows the user to use and manipulate the computer using icons and graphics. Microsoft’s estimated market share for operating systems comprised 93% of desktops and laptops in July 2013, dominated by Windows 7 and Windows XP. Computer users can install a free operating system, Linux, but Linux consistently has a 1% market share or less and remains the realm of computer specialists and geeks. Then Microsoft dominates the Office Software market. People use office software to create documents, spreadsheets, presentations, and design layouts. Microsoft’s office software dominated 92% of the market in 2013 even though Apache offers Open Office for free. Finally, Microsoft sets the technology standard. As people create and share their work with others, which computer files do they send? Most people have no trouble using Microsoft’s formats for Word, PowerPoint, and Excel. Would you risk sending your resume to an employer using an Open Office format?

Microsoft has developed into a monopoly. A monopoly does not have any competitors although Microsoft has competitors that offer free software while Microsoft charges hundreds of dollars for its operating system and office software. Monopolies can earn long-run profits. Forbes listed Microsoft’s founder, Bill Gates, as the world’s richest person until the 2008 Financial Crisis. Now, he consistently ranks second. Monopolies become plagued with several problems. First, a monopoly becomes bureaucratic and stops listening to its consumers. Second, monopolies adapt new technology slowly, and they treat their customers poorly. I have heard Microsoft does have good customer service in the United States.

Microsoft grew rapidly, and users loved Windows XP. Then Microsoft introduced Vista in 2006. Operating system hogged resources, was slow with long boot and shut down times. Moreover, Vista would not work on computers with certain hardware while some software crashed frequently; even Microsoft’s Office XP had glitches. I remember my Word or Excel program would crash several times in a row before it would work. Some functions never worked correctly such as the search function. Microsoft stuck many people with this crappy operating system. After I had bought a new laptop with Vista, I tried to return to Windows XP, but I was missing several critical drivers. Computer manufacturers never go backwards in designing drivers.

Microsoft realized its mistake and released Windows 7. However, most people may not realize Windows 7 is a fixed Vista. Vista turned into a catastrophe; Microsoft had to rename its operating system, moving away from the Vista name. Windows 7 used Aero introducing a sharp, refined look to the operating system with translucent windows and bars. Microsoft introduced the gadgets, the eye candy, to the right of the screen. (I noticed several features of Windows 7 resembled Apple’s OS). Finally, the operating system worked properly. Microsoft fixed its mistake. It would be nice if Microsoft let people stuck with Vista to update to Windows 7 for free.

A monopoly becomes out of touch with its customers. Microsoft forgot its mistakes and unleashed Windows 8 upon the world. Operating system moves backwards! Microsoft removed the start menu from the operating system. Users do not think about the start menu until Microsoft has eliminated it. Without a start menu, the desktop feels alien and useless because everything revolves around the start menu. I became lost, trying to navigate around the operating system. Then Windows 8 turned off Aero, so Windows 8 loses its sharp, refined features, such as transparency and gadgets.

Microsoft has forgotten its customers, or who uses their software. Users must toggle to a separate screen to access their programs. This screen resembles an ugly version of Android. Why copy Android? Microsoft wants to enter the tablet market, and Android has evolved into the premier operating system for tablets and smartphones. These devices use simple processors, where people can view pictures, read e-books and documents, watch videos, and play simple games. On the other hand, a person needs a full-fledged operating system to play games with heavy graphics, write and create documents, process image, etc. Simple processors cannot handle the complex tasks that a desktop or laptop provides.

Microsoft became out of touch with its consumers. First, Microsoft should never restrict consumers’ choices. As a user turns on the laptop or desktop for the first time, let the user choose if they want the traditional desktop with the start menu or the new Android-like menu screen. Windows 8 is better suited for tablets than desktops, even though Microsoft forces tablet software onto customers who use desktops and laptops. Second, Microsoft partially caved into the consumers. It released Windows 8.1 that places a start button on the lower left corner of the desktop that leads to the ugly Android-like screen. Microsoft refuses to return the traditional start menu. Third, Microsoft should improve the operating system if it wants people to use it. Fourth, Microsoft should never impose something new on users without testing its products on test groups. Microsoft has launched two duds upon the world: Vista and Windows 8.

People are leery of Microsoft as they avoid Microsoft products whenever they can. Perhaps Microsoft burned too many consumers with Vista and Windows 8. Managers at Microsoft see the declining PC sales while sales for tablets and smartphones show strong growth. Microsoft released the Surface tablet to compete with the Android tablets and Apple Ipads, but consumers are not buying Microsoft’s tablets. Then Microsoft released Windows Phone 8 for smartphones that three manufacturers use. Nokia offers a whole line of Lumia smartphones. Huawei sells one model while Samsung offers two models. Nevertheless, Microsoft’s sales remain weak. Investors have caught on, and Microsoft’s stock plunged 10% during one trading day in July 2013.

Microsoft embodies a monopoly that became out of touch with its markets and its consumers. Company has failed to introduce new products, and it pushes an operating system that people do not want. In my case, Vista forced me to look at the competitors. Since 2009, I always install a version of Linux on my system next to Windows. I tried Windows 8, but I will return to Windows 7 and wait for Windows 9.

Internet Accounts Hacked in Bangkok

This blog serves as a warning to any computer users, who use a public internet connection at coffee shops, restaurants, hotels, and libraries. Hackers can use clever methods to gain access to internet accounts. When I visited Bangkok, someone hacked into most of my accounts, except Skype and my bank accounts. The hacker gained access to my accounts for Hotmail, Yahoo, Facebook, Netflix, Amazon, Orbitz, Kohls, etc.

Hacking into internet accounts is extremely difficult, especially if users use strong passwords, such as "Conway@579#." The password is a mixture of numbers, upper and lower case letters, and symbols. Hackers are not likely to deduce the password correctly because it has too many variations. Thus, they steal passwords by relying on phishing and keyloggers. Phishing is a hacker tricks a user by directing the user to a fake webpage that looks genuine. The user enters his personal information, thinking he/she is at the correct website and sends the information to the hacker. The fake website then logs into the correct website , so the user suspects nothing is wrong. A keylogger is a hacker tricks the user into installing a program that records keystrokes from the keyboard. Then the program sends the keystrokes to the hacker. Of course, a relative, spouse, or friend could install a keylogger on the user's computer, joking around, stealing information, or creating mischief.

While in Bangkok, I inadvertently discovered another method hackers can use to gain control over internet accounts. Someone hacked into the hotel's computer network. The first day in the hotel, I checked my Hotmail, Facebook, Yahoo, and my private email accounts using the hotel's wi-fi and my personal laptop. When I returned later in the afternoon, someone changed the passwords to Hotmail, Facebook, and Yahoo. My private email accounts were fine because these accounts require an administrator password, and I never logged on as administrator. Thus, the hacker could not change this password, or at least, I thought he could not.

I recovered all my accounts immediately, using the hotel's wi-fi. Later towards evening, I checked some of my accounts again, and the hacker changed my passwords again. Consequently, I thought someone hacked into the wi-fi network, circumventing the signal's security. Usually people use WPA or WPA2 to encrypt their internet communications as their computers send information through the air. However, encryption fails if someone has hacked into the network.

I made a severe mistake. I should have left the hotel and gone to a computer club to recover my accounts. Instead, I used the public computers in the hotel's lounge that connected to the internet through a line connection. Thus, I recovered my accounts with no problems. I thought I was safe because I did not transmit anything through the air via wi-fi. Nevertheless, the hacker had access to the hotel's network including the computer I used in the lounge.

The next morning, I logged onto several email accounts, using the hotel's public computer, checking my emails. Everything was fine. Then an hour later, I started losing all my internet accounts, including my important account for managing my website. Although I never logged onto my personal website using my administrator password, the hacker found information in my Yahoo email account. The hacker changed the password to my personal website by doing a password reset – the user requests a new password by sending a confirmation email to Yahoo (that he controls, of course). Similarly, the hacker changed all my accounts for Kohl's, Orbitz, Netflix, Amazon, etc. by using the password reset.

I approached the hotel staff and complained to them. I explained someone has hacked into the hotel computer network, and he had changed my passwords. They thought I was crazy. Then I showed them my laptop, and I logged onto Facebook, where it showed someone changed my password by using my laptop or by accessing through the hotel's network. The staff refused to believe me as if I were wasting the staff's time with incredible stories.

After walking around, seeing the sights, I went to a computer club and created a new email account, using Hushmail. First, I recovered my Hotmail account and sent the reset link to Hushmail. Hotmail allows users to recover their email accounts by answering personal questions and sending a confirmation to a new email account. Some questions were subject lines of emails, folder names, and email contacts. Second, I reclaimed Facebook and Yahoo because I already linked those accounts to Hotmail. After recovering Yahoo, I reset all my passwords to my other accounts including the important account for managing my website.

What did the hacker gained by doing this? He did not delete anything or did not attempt to steal money from my bank accounts, but I did cancel my old debit cards and applied for new ones before I left the United State. I never updated the debit card information on most of the internet accounts. Luckily, I did not log onto my bank's website; otherwise, the hacker would have information to these accounts. Consequently, I am careful about checking internet accounts. I use the ATM for account balance inquiries and check one email account using a public wi-fi.

Unfortunately, I was an email hoarder and retained all my vital emails. The hacker read my emails and knew which websites to visit to reset and change my passwords. I still have a potential problem. If the hacker can remember enough account details, then he can recover accounts. After two weeks, all my internet accounts were fine, but I deleted emails that contained too much information to other internet accounts. I also used a different password for every internet account.

After some research, I deduced the method the hacker used. He used a program that identified my computer on the hotel network, and then he rerouted all communications between my computer and the network through his computer. I did notice the internet slowed down as he rerouted communications. Then the hacker saw all the websites I visited. He accessed the websites as if he were me, and he circumvented the encryption. Encryption only works when we send information onto the internet, sending pieces of information over time that travels through thousands of different channels randomly. An eavesdropper only would capture a nugget of encrypted information while the hacker has access to all information. Then he has access to your account and change the password. I was shocked by this method's ease because the programs are available freely in Linux, the choice for computer hackers. Thus, all you users out there, beware!

The University of Phoenix’s Crazy Hiring Practices

The University of Phoenix (UoP) revamped its hiring procedures for part-time faculty for 2011, making it much longer while it expropriates an applicant’s free time. I documented the UoP hiring stages to show the idiocy that infects universities and colleges. The current hiring stages apply to ground courses (actual classroom) and online learning courses.

Stage 1: I submitted a resume to a recruiter. They were interested in me, and a recruiter scheduled a telephone interview.

Stage 2: The telephone interview was simple and straight forward, and I passed with flying colors. Then the recruiter sent several documents via email for a written interview. I filled these forms and returned to the recruiter. The questions asked hypothetical situations such as rising tension and conflicts between workers and colleagues, managing difficult students, and the methods I used to resolve these conflicts.

Stage 3: The UoP was still interested in me, and the recruiter requested an official transcript to be mailed to their corporate headquarters in Phoenix, Arizona from my alma mater.

Stage 4: Now, the UoP wanted a campus interview that spanned four hours. I prepared a 15-minute presentation that UoP staff evaluated. After I had passed the interview, UoP pulled my credit report from TransUnion. You must be kidding? I guess a professor with bad credit translates into a terrible teacher. I could argue a worker with bad credit may need the job more than someone with good credit does.

Stage 5: If the interview process stopped here, then UoP would be reasonable. However, I have just started. Now, UoP required me to attend a four-week Faculty Certification course that meets four hours on Saturday morning. The UoP did not pay me to attend his course. The two facilitators, UoP speak for a professor or teacher, taught the class well at the Little Rock campus. I completed reading and writing assignments every week and passed the exam before the last class. The exam had 12 multiple-choice questions and 18 short essay questions.

Stage 6: After I had passed the certification, the recruiter requested the standard documents - bank deposit form, W4, and proof of your right to work in the United States. The UoP also does a criminal background search. I guess an applicant’s credit report was not good enough.

Stage 7: I did not make it to this stage because this stage was not clear to me. At this stage, UoP assigns the courses to the facilitator, but he or she is not a faculty member. The facilitator has a mentor who reviews your syllabus, assignments, lectures, etc. The facilitator must meet with the mentor before the course begins. A mentor is not bad because he or she advises and guides the facilitator, but this last point was fuzzy. As I understood, if the facilitator taught the class poorly and UoP did not want to hire the facilitator, then UoP does not pay the facilitator for teaching this course. Unfortunately, the undergraduate courses are five weeks long, and the facilitator must devote a time segment daily to this UoP online learning system, where the facilitator inputs all assignments, grades, questions, and feedback.

Once an applicant passes all seven stages, then they become a PHOENIX! However, faculty members must participate in annual development seminars without pay. I have never seen an employer expropriate an employee’s free time, just to have the privilege at teaching part time for UoP. The Little Rock campus director commented they needed PhDs, especially for the business school. I have a PhD in agricultural economics, and I stopped at Step 6. I thought I could teach two courses before I left the United States to teach in Malaysia. Ironically, I would earn far more in Malaysia than at UoP teaching full time. My credentials impressed the university in Malaysia that they skipped the interview and sent me an appointment letter and contract immediately.

Just to traverse from Steps 1 to 5 required three months and possibly another three weeks for Step 6. I would expect UoP to have faculty recruitment problems for PhDs for a while, unless UoP revamps it recruitment practices. I know colleagues who want to teach part time, but no way in hell he or she would dedicate large blocks of time for a part time job.

The sad news is I worked for UoP between 2003 and 2006 at the Houston Campus, and UoP did not exempt me from this long, drawn out hiring process. If a facilitator switches teaching from one campus to another, or transfers from a ground course to its online degree program, then he or she must start at Step 5 with the Faculty Certification, which seems terribly inefficient. Why does UoP require its faculty to repeat the same course continuously because they had changed campus or learning environment?

I believe this long drawn out process indoctrinates the applicants into UoP’s clique, and an excited applicant has completed another stage. Then they become part of the team, where UoP can pay low wages to its part-time teaching faculty, even though the founder, John Sperling, is a billionaire. Furthermore, UoP terminates all difficult, complaining applicants, ensuring they do not complete a stage. UoP cannot have independent-thinking faculty that questions the administration.

Some applicants should complete the UoP training. The rumor is the other for-profit schools do not have this long, time intensive certification program, and they hire UoP faculty who passed this certification. Thus, the certified UoP facilitators are valuable to UoP’s competitors, and the competitors pay better.

Finally, I read an interesting fact about UoP. It reported a 42% enrollment drop for 2011. Which organization would hire workers if they lost 42% of their customers? Furthermore, if the U.S. economy continues to stagnate and college students cannot find jobs, then the student loan program will take a huge financial hit. UoP relies heavily on student loans with student debts often exceeding $40K per student. UoP charges the students high tuition, pays faculty low wages, and has the lowest graduation rates of all universities. It sounds as if UoP is sinking faster than the Titanic. Once the U.S. government revamps the student loan program, then say farewell to the University of Phoenix.

Is the United States Experiencing Institutional Failure?

I returned to the United States in June 2011. Although I earned a PhD, published research, and taught in a variety of universities across the world, I would accept any position in the United States. I will admit old age has caught up with me, and I am getting too old to be lugging heavy suitcases from university to university, from airport to airport, from country to country. Subsequently, I returned to the United States, willing to accept any job, even a position at the bottom rung of the social ladder. Then I noticed and discovered observations about the U.S. economy that have far-reaching consequences. The United States is suffering from institutional failure. Unfortunately, the institutions in the United States have failed us, giving us the eternal gift of a stagnating economy and weak job growth.

I returned to Conway, Arkansas in 2011. Conway is a small, prosperous community approximately 40 miles north of Little Rock. During the summer of 2011, employers advertised roughly 300 to 500 jobs within 25 miles of Conway. However, no one is hiring. Why is this? I thought deeply about this conundrum, and realized the United States has six problems.

Problem 1: Hiring new employees scare employers. Unfortunately, if an employer terminates a new employee, the employee could collect workman’s compensation or unemployment insurance, or even file a lawsuit against a company. During good economic times, another employer may inadvertently hire the bad employee. Thus, the bad employee never files for unemployment or workman's compensation or hires an attorney. After the 2007 Great Recession struck the U.S. job market, a bad employee could be unemployed for a long time. Consequently, the terminated employee has an incentive to retaliate against a former employer. Finally, the President Obama's Health Care plan looms on the horizon. Many companies do not know how their costs will change once the law comes into force. Hence, the employers refuse to hire anyone.

Problem 2: Employers have extraordinarily complex procedures to hire new employees. When I entered the workforce in the late 1980s, everything was much simpler than today. Several times, employers hired me immediately after a successful interview, and I started the next day. Employers rarely check criminal records (difficult to check court records outside the employer’s county before 2000) and drug testing did not exist before the 1990s. Our modern life has become complicated, and consequently, an employer needs months to hire a job applicant. Most employers perform background checks like criminal records, driving records, drug testing, skill-level testing, and my personal favorite, the 80-question personality assessment test. An online university in 2011 viewed my credit record from Transunion after the first interview. I guess if I have a poor credit history would imply I am a terrible teacher. Of course, poor credit implies I need a job because I cannot pay all my bills. I can understand possessing poor credit would pose a problem for handling cash or working at a bank, but to teach? (By the way, I do have good credit, at least at this moment). Thus, these complicated procedures make employers leery to hire new workers. Employers do not want to take a chance on someone. Consequently, institutional failure causes jobs to be available, but employers do not hire.

Problem 3: During my quest for a job search, I noticed employers do not train workers anymore. An employer wants the job applicant's experience and education to match the new job perfectly; otherwise, the job applicant would have no luck. I first saw this when I applied for a data entry position for a truck parts company in 2011. I did data entry for a music company in the late 1990s. However, the interviewer stated these skills are not transferable. The trucking company has a fast-paced environment, and they do not have the time to train me. I noticed this particular job remained vacant for quite a while. I guess this employer could not find the perfect applicant. This example illustrates a key point. If employers do not train new employees, social mobility freezes. How can an employee move up an organization? Instead, employers would poach talent from their competitors. Thus, the employer boosts salaries and benefits to hire employees from its competitors. Unfortunately, as the companies eliminate training, a crisis strikes the employers once skilled workers retire. The retired workers do not pass their training and knowledge to the next generation. Consequently, institutional failure freezes social mobility, and knowledge and skills become lost. Then for the select few with the right skills, their salaries and compensation would continue to soar.

Problem 4: I noticed employers are extremely fussy. As applicants form long queues for every job, the employers shift through all applicant's personal information. If they find one speck of dirt on an applicant's record, they reject the applicant immediately. For example, after an interview with a temp agency in Little Rock, the recruiter stated if anything comes up during a criminal history search, an employer stops looking at the applicant. Unfortunately, this problem has three implications. First, everyone assumes the criminal record is accurate. Thus, the private company correctly entered the information into their database and matched the record to the correct person. Second, many countries around the world do not have large computer databases filled with criminal records. Thus, immigrants to the United States would not worry about past transgressions because employers would never discover an immigrant's criminal history if it happened outside the United States. Finally, our society has tossed out the Christian notion of forgiveness. A criminal history becomes a lifelong shackle that a person can never remove because a criminal record exists forever. Our society will throw good people away, even for minor crimes such as trespassing and curfew violations. Consequently, nearly 65 million Americans possess a criminal record. Even though, these Americans were employed before the 2007 Great Recession, they become unemployable after their employers lay them off. What will these people do to earn a living? They could return to criminal behavior, and become part of the underground economy. Consequently, institutional failure leads to a growing, thriving shadow economy.

Problem 5: After the 2007 Great Recession, employers believe unemployed people have something wrong with them. The longer a person remains unemployed; the employer is less likely to hire him or her. Unfortunately, employers lay off millions of good, hard-working people. Nevertheless, employers resent unemployed people. The employers believe the skills of the chronic unemployed degrade rapidly, and the employers do not want to train them. Consequently, institutional failure leads to a rising class of chronic unemployed as millions of people become unemployable.

Here, I am still unemployed, but somehow I hold onto a glimmer of hope. Then the words from conservative talk show hosts echoed through my mind. If you cannot find a job, then you can create your own job. I live in the freest country in the world whose greatness was constructed on a foundation of capitalism. I remembered the stories how Michael Dell started his company in his dormitory room at the University of Texas. Steve Jobs and Steve Wozniak built the first Apple computer in their parent's garage in California. Then the richest man in the world, Bill Gates, started Microsoft in a rundown hotel in New Mexico after dropping out of Harvard University. Then reality sets in, and I remember this happened over thirty years ago, in a different legal climate. Has our legal climate changed? Does institutional failure penalize the entrepreneurs?

Now I hear stories of self-employed people clashing with different institutions in our society. For example, my sister started a thriving daycare business in her home in Indiana in the late 1990s. After she had complied with the state's numerous regulations, the homeowner's association closed her business down. The association claimed ten additional cars traveling through her neighborhood twice a day, created a nuisance for the neighbors, reducing home values. I experienced another instance while living in Texas. I wanted to pay a mechanic to teach me to change a timing belt on a Honda. Once the Code Enforcement of the City of Bryan discovered the mechanic fixing cars at his home, the inspector threatened to fine him $500 per day if he repaired any more cars. (Although Texas does not have a state income tax, it collects taxes and fines aggressively). Then I read stories how kids who started a lemonade stand found trouble with the city government. The kids need a business license while the state government wants to know and approve all the ingredients in lemonade, which is water, lemon juice, and sugar – the last time I checked. Of course, the same officials become silent when the food industry develops genetically modified animals and plants and dumps preservatives and chemicals into our foods.

Problem 6: I am good with computers, and I thought about starting a computer repair business in my home. However, I know I will clash with some government agency because local governments dislike home-based businesses. Furthermore, I must comply with numerous rules and regulations. One simple, honest mistake can land an inspector at my door as the state demands compensation for my transgression. Then I realize starting my own business may not be a good idea. Consequently, institutional failure hinders the creation of new businesses, although small and medium size businesses drove the economy during the 1980s and 1990s.

My options are severely limited in the United States. What else can I do? I do not want to return to school. I already earned a PhD. Do I need two or more PhDs to become employable in the United States? I do not want public assistance. Although I would enjoy the free time to write blogs and draw pictures, I want to be a productive member of society. The only option remaining was to leave the United States. I had to go where the jobs are, and the jobs are in Asia. I can only dream someday I can return to my homeland, the United States, and settle down in a good community with a good future. Nevertheless, I know Americans must reform their institutions before the American job machine turns on and begins cranking out jobs again. Therefore, I can only wait until this day happens.

The U.S. Unemployment Rate: "Lies, Damned Lies, and Statistics"

The quote from Mark Twain, "Lies, damned lies, and statistics," sums the theme of this blog. Politicians are haunted by one fundamental law of economics; a downturn in an economy leads to an ouster of its political leaders. Hence, our governmental leaders will do anything that is immoral, illegal, or unethical to garner votes for another term in office. Furthermore, the politicians may encourage government agencies to skew, distort, or exaggerate its statistics to appease, mollify, or mislead its citizens, especially the ones who vote. Consequently, this blog examines the U.S. unemployment rate in order to gain insight about the true impact of the 2007 Great Recession.

The first observation of U.S. government statistics is the sheer volume of information, data, and reports a bureaucracy can offer. Each department of the U.S. federal government has a branch that collects, analyzes, and publishes statistics. Then this branch literally publishes hundreds of different statistics with thousands of technical reports. Most people who visit these websites are easily overwhelmed by the information. The Bureau of Labor Statistics is the branch that collects and publishes statistics for the U.S. Department of Labor.

The second observation is the definition of unemployment. The U.S. government defines unemployment (called U3) as a person who is currently not working and actively seeking employment. If a person works one hour per week, he/she is not technically unemployed, although an hour a week cannot support a level of living. If a person wants to work, but the job market is extremely bad, he/she gives up, then that discouraged worker is no longer considered out of work. Consequently, the unemployment rate can decrease if a large number of jobless give up the pursuit for a job. The Bureau of Labor Statistics publishes the labor underutilization statistic (called U6) that includes discouraged workers and part-timers who want to work full time. The (seasonally adjusted) U6 was 15.1% for January 2012.

The third observation is a bureaucracy continuously revises its statistics. Hence the reported numbers are always in flux. For example, the Bureau of Labor Statistics uses telephone surveys to gather unemployment data and examines reports from the states' unemployment offices. Then the statisticians compute the statistic for that month, quarter, or year. Here is the kicker. After a statistic is released to the public, a bureaucracy may boost or reduce this number a few times over the next several months. Why are the numbers constantly revised? Did the statisticians not count all the surveys? Were the states late in reporting their statistics? Hence, government statistics have a degree of arbitrariness as the numbers are continuously revised.

The fourth observation is the statisticians seasonally adjust the numbers for monthly and quarterly data. For instance, the Bureau of Labor Statistics reported the U.S. unemployment rate fell to 8.3% in January 2012. The news reporters blindly reported this number to the masses without any serious analysis or verification. U.S. reporters have regressed into parrots who caw in unison for the government's slogans, sound bites, and propaganda. What does 8.3% really mean? First, this statistic was seasonally adjusted. Statisticians smooth monthly and quarterly statistics; high numbers are reduced while low numbers are increased. The reason is the economic activity is different for every month. January cannot be compared to December because December has more economic activity than January. Once the statistics are seasonally adjusted, then different months or quarters can be compared. The unemployment rate that is not seasonally adjusted was 8.8% for January 2012. Although this number cannot be compared to December, it can be compared to January 2011, which was 9.8%. Similarly, the not seasonally adjusted U6 was 16.2% for January 2012, falling from 17.3% for January 2011.

The fifth observation is the slight upward trend of the unemployment rate. In Figure 1, the annual unemployment rate is plotted between 1947 and 2011. The blue line indicates the jagged oscillations of the unemployment rate. Economists define a recession when the real growth rate of the Gross Domestic Product (GDP) is negative for two consecutive quarters. All recessions since 1947 were drawn with pink boxes on the graph. When examining Figure 1, the Great Recession of 2007 and the recessions of the early 1980s were particularly severe when compared to previous recessions because the unemployment rate soared to 10%. The early 1980s had a quick succession of three recessions. Using statistics to fit the best line through the data yields the red line. Moreover, the examination of Figure 1 shows the impact of the housing bubble during the 2000s. The housing bubble temporarily lowered the unemployment rate below the trend, as the bubble created millions of jobs. Unfortunately, the red line angles upward with a slight slope, indicating over time, the unemployment rate is creeping upward. Thus, the U.S. economy went through structural changes that were not conducive to low unemployment rates. The structural changes were de-industrialization, outsourcing, rise of the service economy, rise of the IT industry, aging population, and growth in government. Consequently, all structural changes impose benefits and costs on society, and they would require a separate blog.

Figure 1:  The U.S. Unemployment Rate between 1947 and 2011

The sixth observation is the structural change in employment. All the statistics were converted to a percentage of the U.S. population to remove the impact of a growing population. In July 1, 1947, the United States had a population of approximately 144 million, which increased to 312 million by July 1, 2011. In Figure 2, the first trend is the shift to more part-time labor. Part-time labor comprised 5.3% of the population in 1968 and gradually rose to 8.8% in 2011. The second trend is the impact of a recession on full-time employment. Every U.S. recession since 1947 was drawn manually onto Figure 2 in pink boxes. A recession always caused the destruction of full-time jobs. The 2007 Great Recession was particular nasty as the percent of full-time workers decreased from a peak of 40.4% in 1999 to 36.1%. This indicates a loss of approximately 13.5 million full-time jobs in 2011. The third trend is the rise of the number of people who dropped out of the labor force. Again, the 2007 Great Recession had a severe impact on the economy. The percent of people not in the labor force was 27.6% in 2011, increasing from a trough of 24.8% in 2000. Approximately, 8.7 million people left the labor force. Many reasons account for the exit from the labor market, and they are discussed in the next paragraph.

Figure 2:  Full time, Part time, and Unemployed

The seventh observation is a little discussed statistic buried within the Bureau of Labor Statistics' website. The statistic is the labor participation rate as a percentage of the population (age 16 and older). This statistic by nature will never equal 100% because several groups of people are not in the labor force. The groups are teenagers (16 to 18 years old), discouraged workers, retired workers, prisoners, committed patients, students who do not work, and soldiers. Illegal immigrants who work may not be reflected in the participation rate because the Census Bureau counted them in the population, but the Bureau of Labor Statistics did not count them in the labor force. In Figure 3, the labor participation rate is graphed between 1947 and 2011. The U.S. recessions were drawn manually onto Figure 3 as pink boxes, and a recession always lowered the labor participation rate. The 2007 Great Recession was particularly gruesome. The labor participation rate fell to 58.4% in 2011 from a peak of 64.4% in 2000. (The Year 2000 was an exceptional year). Roughly, 14.2 million people left the labor force. (The last paragraph indicated 8.7 million workers dropped out of the labor force; government statistics when viewed from different angles usually yields different results!) The real question is where did these people go? Are they discourage workers who gave up the pursuit of a job? Did more people retire? Did more people enter college without working, or the states incarcerate more prisoners?

Figure 3:  Labor Participation Rate between 1947 and 2011

 

One important assumption was made in this blog; the assumption is the Bureau of Labor Statistics is not manipulating the numbers. Although U.S. bureaucracies are not political in nature, the top leaders of the bureaucracies are chosen by the President with confirmation of the Senate. Moreover, a bureaucracy's funding depends on the President and Congress. The President and Congressmen want to be re-elected, and they may put pressure on the bureaucracies to release positive statistics. Consequently, bureaucrats have an incentive to skew the statistics, making it appear the economy is improving especially before an election. The 2012 presidential election is around the corner, and the news is reporting optimistic unemployment statistics, indicating a possible economic recovery. However, if one reads the comments at the end of those rosy unemployment stories, the readers' opinions express disbelief in those numbers. Unfortunately, this blog cannot uncover fraudulent government statistics. Nevertheless, the U.S. government's statistics do indicate the following:

• The 2007 Great Recession was one of the worse recessions to hit the U.S. economy since the Great Depression. 
• Employers are using more part-time labor and fewer full-time labor.  The 2007 Great Recession was particularly harsh on workers with full-time jobs.
• A large number of workers left the labor force.  The million-dollar question is why did these workers go?  Did millions of workers become discourage and give up their search for a job?  Are more workers retiring?  If more Americans are retiring, why are the younger workers not filling these vacancies?

Hyperinflation: Effects, Cause, and Survival

Many Americans have never experienced hyperinflation, and they do not know how to protect themselves from it. We had an excellent political and economic system that sheltered us from hyperinflation for two centuries. Hyperinflation is the rapid, excessive growth of prices, when a country's inflation rate exceeds 130% per month. What does this mean in real terms? If the United States has 100% inflation rate per year, then every year on average, prices would more than double. If your favorite bubbly soda cost $1 at the beginning of the year, subsequently, its price would rise to $2.00 by the end of the year. If your house were appraised at $150,000, then its price would climb to $300,000 by the end of the year. Thus, hyperinflation increases the prices of all products and services in our economy.

Hyperinflation, unfortunately, disrupts an economy. Hyperinflation rapidly decreases consumers' purchasing power because prices in an economy rise faster than workers' wages. Employers and workers who once enjoyed the comforts of middle class can be shoved into poverty overnight. For example, if our economy experiences an inflation rate of 100% and workers' wages rise by 50%, then these workers suffer a decline in their purchasing power. For instance, you earn $30,000 per year at the beginning of the year, and your favorite soda costs $1. Thus, your income allows you to buy 30,000 sodas. However, if the inflation rate is 100% while your salary rises by 50%, then you can only buy 22,500 sodas at the end of the year. The price for soda rises to $2 each while your salary climbs to $45,000, causing a 25% decline in purchasing power.

Hyperinflation causes interest rates to soar. The increase in interest rates is similar to a decline in purchasing power. If the inflation rate equals zero, and a bank charged a 5% interest rate on a loan, subsequently, economists call this interest rate real because the borrower repays his loan with 5% more money. If the inflation rate climbs to 10% and the bank still charged 5% interest, at the end of one year, the average prices in our society increased by 10%, but the bank only collects 5% more money. Consequently, the purchasing power for the banks falls by 5%. Thus, hyperinflation can disrupt a country's financial sector. Banks and financial institutions can collapse overnight as the value of their loans shrivels to nothing.

Hyperinflation harms the savers. If a person saves money by hiding it in their mattress or deposits it in a bank account, his or her savings lose value. For example, Brazil saw a hyperinflation rate of 10,000% per year during the 1980s. At the beginning of the year, a city bus ride cost one peso that soared to 10,000 pesos by the end of the year. Hyperinflation wipes out savings as consumer prices rise to astronomical levels. If a saver deposits their savings at a bank and the bank pays a low interest rate, then hyperinflation reduces the savings’ purchasing power. (Of course, we assume the bank can remain in business). Thus, savers must convert their savings into a stable currency or into physical assets to protect their purchasing power.

Hyperinflation is cruel to people on fixed incomes. Hyperinflation quickly erodes a person’s income from Social Security, an annuity, fixed investment income, or government aid. The U.S. government does index Social Security for inflation. Hence, government payments automatically rise with inflation, or at least in theory. However, hyperinflation causes prices to soar quickly, and the government might not boost Social Security in step with inflation. Consequently, people on fixed incomes will become the most vulnerable in society and will succumb to hyperinflation.

Hyperinflation could benefit the debtors, depending on the loan type. For example, if a debtor owes $100,000 mortgage on his house with a fixed interest rate, a debtor can repay this debt with devalued money. The hyperinflation boosts the value of the house and the debtor's wages, but the monthly loan payments remain fixed while people repay them. If the loans have an adjustable interest rate, the debtor's monthly payment rises as both the interest rate and hyperinflation rise. Then the debtor could default as his monthly payments spiral to high, new levels, far beyond his income. Consequently, debtors with fixed interest rate loans will benefit, while those with adjustable interest rates will most likely default.

A country in the throes of hyperinflation will suffer from a severe recession or depression. As the currency’s value rapidly deteriorates, hyperinflation shoves the savers and people on fixed incomes into poverty. Consequently, Hyperinflation quickly erodes the value of their savings and fixed income. The loss of purchasing power will reduce imports, improving a trade deficit. (Hyperinflation could boost exports if the exporting industries can survive the hyperinflation). Moreover, foreign countries will also stop accepting that country's currency for payment. Then hyperinflation causes interest rates to rise to insane levels, shutting down the financial system. Banks, finance companies, and pension fund companies will close their doors. Finally, hyperinflation destroys the tax base, causing government tax revenues to fall. People may evade their taxes if they know their tax office is devastated. (A tax authority cannot audit a person if tax officials do not report to work.)

Hyperinflation has only one source if it exceeds 10% per year. That country's central bank creates inflation by expanding the money supply. For instance, the central bank can help a government finance its budget deficit and debt. Consequently, government in countries with towering deficits and debt tend to experience high inflation rates. Many believe the United States will experience hyperinflation as the Federal Reserve finances the U.S. government's deficit and debt. The U.S. government debt has grown to a catastrophic $1.5 trillion deficit and a soaring $16 trillion debt. The U.S. government does not index most of its debt for inflation. Thus, hyperinflation can wipe this debt clean. Unfortunately, the United States would enter a severe recession that we would export to the world. Finally, the U.S. dollar as the world's reserve currency ends.

The expansion of the money supply is more complicated than printing money. For example, the Federal Reserve granted anywhere from $2 trillion to $8 trillion in emergency loans to banks during the 2008 Financial Crisis. (Nobody really knows the exact amount except the Board of Governors of the Federal Reserve). The Federal Reserve changed numbers in their computer system for the loan amount that the banks held at the Federal Reserve. Nevertheless, the banks chose to save this money. If banks loaned this money to borrowers, then the banks convert their reserves into loans that people eventually deposit in checking and savings accounts, boosting the money supply. Then inflation tails the growth in the money supply.

People will have a warning sign before the hyperinflation strikes the U.S. economy. Observe the international investors. Investors and governments in China, Kazakhstan, South Korea, Russia, etc. believe the U.S. growing debt is unsustainable. Consequently, investors would reduce their holdings of both U.S. dollars and U.S. government securities. Subsequently, the U.S. debt will reach a point when investors stop buying U.S. government securities. Then the U.S. government would be short of cash in the trillion-dollar range. If the U.S. government does not have the cash, then it cannot pay its workers, bureaucrats, soldiers, or citizens receiving entitlement benefits. Thus, the Federal Reserve could buy this debt, and the inflation begins to soar as the government spends the reserves, injecting the reserves into the economy.

The U.S. government could increase taxes or reduce government spending to reduce the deficit and slow the debt’s growth. However, we will reach a point of no return. Congress and the President remain at an impasse, and they have no intentions to boost taxes or reduce government spending or eliminate the trillion-dollar deficit. In 2012, the average U.S. debt per every American man, woman, and child was approximately $50,000, far exceeding most people's income level. Unfortunately, Americans have entered a dangerous time, when deficit spending sparks a severe financial crisis while the United States enters the Second Great Depression.

How do you protect yourself from hyperinflation?

1) Hyperinflation will lead to a breakdown in society. Store shelves will become empty and bare as food prices exponentially rise. You need to stock up on the following items:

• If you require medications, then you need to stock a year supply or more. Furthermore, you must stock a first-aid kit that includes antibiotics and painkillers.

• Stock up on nonperishable food because they can be stored safely for years. Many dried fruits, dried milk, dried vegetables, dried soups, dried beans, and dried lentils could be stored for years and safely eaten. Canned products could spoil within a year or two. Some recommend you scatter your food over several secret storage sites. As millions go hungry, they will resort to violence, theft, or home invasions, searching for food and supplies.

• Accumulate weapons, such as guns, bullets, and knives to protect yourself and your family. If riots break out in the cities and hyperinflation whittles police paychecks to nothing, then the police may not show during outbursts of violence. In some U.S. cities in 2011, police do not show for minor offenses.

• Become self-sufficient. Learn to grow a garden, raise chickens, fish, or hunt. You would also need to stockpile equipment that supports these activities. Even if you do not smoke tobacco, you should grow tobacco. You can use tobacco to barter with friends and neighbors for things you need.

• You need access to safe drinking water. You may need to boil water to kill any microorganisms.

• Accumulate useful items such as an emergency radio, flashlight, small propane stove, tools, etc. Some good items include a hand crank radio, or a solar cell panel that charges batteries.

2) Money becomes useless during hyperinflation as money quickly loses its value. People who depend on the government for income such as Social Security, Medicaid, Medicare, food stamps, etc. will see their benefits erode. A government will raise the benefits slower than the inflation rate. Unfortunately, our most vulnerable citizens might perish during a bout of hyperinflation.

3) If you are still earning wages, then once your employer pays you, you convert your wages into assets. Many analysts recommend people to invest in gold, silver, and other precious metals. With the downturn in the world economy in 2012, these metals could rapidly soar in price. However, they may or may not be good investments. First, government can pass laws to confiscate gold and precious metals to protect its national security. Usually government officials worry about their safety and security before their citizens. Second, people cannot appraise the value of a gold coin. The person must know the purity of the gold because coins can be gold plated with a zinc core. However, any assets other than precious metals will retain their value. Once money becomes useless, people will barter for goods, they need. Medications, seeds, guns, bullets, gasoline, cigarettes, liquor, and nonperishable food become the new currency.

4) If you want to transfer money outside of the country, transfer it now. During a financial crisis, a country can impose capital controls. Often capital controls limit the outflow of currency or precious metals. If you are planning to flee the country searching for greener pastures, then you must do this before hyperinflation strikes. Other countries will erect barriers to isolate themselves from the crisis and prevent an influx of refugees. Fleeing to another country does entail risk. If a worldwide depression ensues after the U.S. hyperinflation, a country may expel all the foreigners. For example, Britain plans to close its borders, expel foreigners, and impose capital controls after the euro collapses and the European Union begins disintegrating.

5) Many Americans live from paycheck to paycheck and do not have financial resources to weather and survive a hyperinflation. Riots and civil unrest will erupt in the cities as people search for food to feed their friends and family. The Occupy Wall Street protestors were tame and would pale in comparison to civil unrest from a starving population. Unfortunately, government officials will do anything to retain their power and control. If hyperinflation severely limits and reduces a government's resources, it will use soldiers to fire real ammunition on its citizens, retaining control over society. Rural towns become the best places to live, far away from large cities. Then you become friends with your neighbors, and watch each other's backs, forming a true community.

6) Do not count on the media to warn their viewers of imminent hyperinflation. Unfortunately, reporters rely on the government for information, and they never ask our political leaders the difficult questions or rarely checks facts. Most government officials will not inform the public after hyperinflation strikes the economy. However, the news will bombard the viewers with the hyperinflation diet, how to look fabulous on a hyperinflation income, or dating secrets for singles who have hyperinflation troubles. Unfortunately, hyperinflation comes swiftly and unannounced like a torrential storm system pummeling a small town. The only signal is investors stop buying U.S. government debt. Afterwards, prices for food and consumer goods begin rising gradually at first, and then the prices accelerate to insane high levels.