Category: Economy

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Dealing with Life’s Risks


 
BASE jumping is one of the most dangerous sports a human can undertake, with one fatality per 60 participants. The desire to jump from great heights is practiced by a small percentage of extreme sports enthusiasts. BASE jumping, like sky-diving, skiing potentially fatal slopes, or rock climbing without a rope, is a high-risk activity.
 
According to The New Zealand Medical Journal, the likelihood of injury or death from BASE jumping is 5 to 8 times greater than skydiving. Why would any sane person take such risks? Dr. Erik Monastery, one of the authors of the study, noted that BASE jumpers score high on a measure called novelty seeking: the person’s propensity to become easily bored and look for exciting activities. They also have a low sense of harm avoidance, so they have the advantage of “confidence in the face of danger and uncertainty, leading to optimistic and energetic efforts with little or no distress.”
 
Some have characterized those who regularly take such risk as adrenaline junkies or daredevils. They actively seek sensation in activities like skydiving. Dr. Cynthia Thomson of the University of British Columbia suggests that risk-taking behavior may be genetically based. Her research found that people attracted to dangerous sports shared a common genotype, a variant of the DRD4 receptor commonly called the “adventure gene.”
 
So, is risk-seeking behavior genetic or a matter of choice? How can we use these answers to make better decisions and lead happier lives?

What Is Risk?

Uncertainty pervades every aspect of life; the future is unknown. The term “risk” refers the negative aspect of that uncertainty – the possibility that something harmful may or may not occur. Risk differs from loss just as uncertainty differs from certainty. Running across a busy street blindfolded is a risk; getting hit by a car while doing so is a loss.
 
Risk is present in everything we do. For example, a person could be injured by a herd of stampeding zebras while walking the streets of Manhattan, although there are no recorded instances of such occurring.

Probability

For that reason, the Stanford Encyclopedia of Philosophy refined the definition by replacing the word “possibility” with “probability.” In common terms, risk is referred to as “odds.” For example, the probability of your home being damaged by a fire in the coming year is about one-quarter of 1% (0.0028%) while the probability that you will die in the future (based on current science) is 100%. The risk of death is not an if, but when. However, probability alone is not enough to understand risk and effectively manage it.

Impact

A second dimension of risk is consequence. In other words, what is the impact upon those experiencing the event? The impact may be slight or catastrophic. For example, the probability of the paperboy tossing your morning edition into the shrubs sometime during the year is high, but the consequences are slight (inconvenience and possibly scratched retrieving the paper). On the other hand, the likelihood of a tornado destroying your home in Elmhurst, New York is low, but the financial costs of such an event would be significant.
 
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Can Social Security Be Saved?

More than one-half of Millennials believe there will be no money in the Social Security system by the time they are ready to retire, according to a 2014 Pew Research report. “I don’t think anyone honestly expects to Collect a single penny they pay into social security. I think everyone acknowledges that it’s going to go bankrupt or kaput,” says Doug Coupland, author of “Generation X.”
 
What went wrong? Will Social Security go bankrupt?

A Brief History of Social Security

In 1935, few of the program’s creators could have anticipated the condition of the Social Security program today. The country was in the midst of the Great Depression with a quarter of its labor force – 15 million workers – idle, and those with jobs struggled to make ends meet as their hourly wages dropped more than 50% from 1929 to 1935. Families lost their homes, unable to pay the mortgage or rent. Older workers bore the brunt of the job losses, and few had the means to be self-supporting. One despairing Chicago resident in 1934 claimed, “A man over 40 might as well go out and shoot himself.”
 
Hundreds of banks failed, erasing years of savings of many Americans in a half-decade. People lived in shanty towns (“Hoovervilles”) or slept outside under “Hoover blankets” (discarded newspapers). Breadlines emerged in cities and towns to feed the hungry. Thousands of young American men hopped passing trains, sneaking into open boxcars in a desperate attempt to find work.
 
Democrat Franklin D. Roosevelt (FDR), promising a New Deal, defeated former President Herbert Hoover in 1932 with more than 57% of the popular vote and 472 of 531 Electoral College votes. Three years later, FDR signed a bill that would “give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age.”
 
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1 Way to Fix the U.S. Federal Debt No One is Talking About

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Public lotteries have a long history. From Caesar Augustus (where tickets had prizes of slaves, real estate, and ships) to European governments during the Middle Ages (which relied heavily on lotteries for revenue), state-run lotteries have continually proven lucrative, according to the Encyclopedia Britannica.
 
Not surprisingly, the United States of America also has a long history of lotteries. Considered “voluntary taxes,” early lotteries were used to fund new colleges such as Harvard, Dartmouth, Yale, and Brown. In 1745, the General Court of Massachusetts passed an act allowing a lottery to pay off costs defending the colony’s frontier and seacoasts. By 1831, eight states held 420 lotteries.
 
Today, lotteries are the most popular form of gambling in the United States, with two times as many annual participants as those who visit a casino. A Gallup Research Poll indicates that nearly 50% of Americans buy state lottery tickets each year. The majority of participants have a technical, college or post-graduate degree, earning more than $36,000 a year.
 
The popularity of gambling has also been global, with numerous governments taking a cut. One of the longest-running lotteries was the Irish Sweepstakes from 1930 to 1987, the revenues of which benefited Ireland’s public hospitals. A state-run lottery managed by the country’s postal system replaced the Sweepstakes, providing more than £30 million for government-sponsored projects each week. According to the United Kingdom’s official National Lottery website, more than £1,901 million ($2.37 billion in U.S. dollars) has funded 500,000 projects since its origination in 1994.
 
According to the North American Association of State and Provincial Lotteries (NAASPL), more than $110 billion of lottery tickets were sold in the United States in 2015. Roughly $33 billion of that was redirected to state and local governments. According to figures compiled by the U.S. Treasury Department, that represents approximately one-tenth of the Federal Government’s annual revenues from corporate taxes ($344 billion) and slightly more than 2% of the $1.5 trillion received from individual income taxes.
 
With huge participation rates and billions in revenue, redirecting lottery funds can make a significant impact. As the national debt continues to rise, many have called for a national lottery, with proceeds spent paying down debt.
 
Is it time to offer a national lottery in the United States to retire the National Debt?

The Growing National Debt

According to the Federal Reserve Bank of St. Louis, the total U.S. national debt will be $20 trillion by the end of 2016, a 347% increase since 2000. Many economists consider only the debt held by the public in their calculations, discounting the effect of intra-government holdings (an estimated $5.5 trillion at the end of the year). The majority of the intra-governmental holdings are in the Medicare and Social Security Trust Funds, as well as the Federal Financing Bank securities.
 
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How We Can Create and Keep Manufacturing Jobs in America

manufacturing-factory-worker-918x516The loss of American jobs has become a potent political issue. Politicians promise to reverse the trend of offshoring and to restore American workers to their previous position as the premier workforce in the world. Many tout new reshoring initiatives, claiming that jobs will return as wage differentials shrink, the quality of foreign goods falls, and shipping costs increase. Others propose new punitive legislation with penalties for moving jobs to foreign countries while erecting trade barriers to ensure that domestic products can compete with lower-priced foreign goods.
 
Unfortunately, their promises are empty and fail to consider the underlying causes of offshoring, the probable consequences of trade barriers, or the increased pace of technology. In efforts to gain public favor, existing and wannabe office-holders vow to turn back the clock and return American manufacturing to its heyday in the 1950s. Simple, quick fixes for public consumption ignore the relentless expansion of globalization and the economic interdependence of world economies.
Manufacturing’s Role in the American Economy
 
According to the Center for American Progress, manufacturing is critical to the American economy, and its success or failure affects the economy as a whole, our national security, and the well-being of all Americans. In his book “Were You Born on the Wrong Continent?,” Thomas Geoghegan goes further, claiming without a strong industrial base, democracy dies.
 
According to Manufacturing.net, “Manufacturing was the primary reason for post-World War II growth of the middle class, and they are still inextricably linked today.” American manufacturing provided middle-class workers good paying jobs, and their factories were the main employers in American cities throughout the northeastern United States.
 
The area once referred to as the “Manufacturing Belt” or (“Factory Belt”) is now known as the “Rust Belt,” as job losses significantly impacted cities such as Detroit, Gary, Youngstown, Buffalo, and Toledo. Even companies whose names are synonymous with the towns and cities where they began (such as Hershey, Pennsylvania, and Kohler, Wisconsin) have offshored manufacturing jobs to the detriment of their communities. The collapse of the sector increased unemployment drastically in the forsaken communities, leading to urban decay, deteriorated services, and ghettos.
 
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