Amanda Stanhaus

Tag: government

Government Bond

The Government needs me to spot it some $$. A formal certificate, instead of crumpled up napkin with a scribble, “I owe $$ to…”

(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)

Boys:Men::Bonds:Maturity

image

I’m glad I have reached the point in my life that I am not waiting for boys to mature into men, and instead I am waiting for my bonds to mature into money!

There are many types of bonds and I had a bit too much creative time on my hands, so below I describe them in their boy equivalents. Click on the bold for the classic definitions.

Callable bond: His ex-girlfriend takes him back.

Corporate bond: The well dressed, business type that meets me on time unless the market is hurting.

Coupon bond: Without fail, I’m given gifts twice a year.

Discount bond: He is still hurting from his last relationship, but if I stick it out I could be one lucky lady.

Government bond: The young politico raising money to make the world a better place.

Junk bond: Good at sweet talking $$ out of me. Not sure if I will every get my $$ back…but if I do, it will be much more than I gave him.

Premium bond: Top of the line trust funder.

Zero coupon bond: The type who gives no gifts, but I’m well-rewarded at the maturity.

image

(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

Behavioral Finance

image

My man becomes a nervous nelly before weddings. Mr. Style Savvy has even worn one navy and one black sock. Thankfully, I caught this mismatch before any damage to his picture perfect reputation was done.

Fingers crossed, he’s too busy thinking that could be us one day. And like clockwork, by the time we are on the dance floor, we’ve danced his worries away!

I don’t blame him. Thinking about the past and the future can bring out the weirdo in all of us. And we can become total wakadoodles when we contemplate the past/future of our finances.

A Random Walk Down Wall Street’s chapter on behavioral finance is as eye opening as He’s Just Not That Into You.

Random Walk Takeaways:

“There are four factors that create irrational market behavior: overconfidence, biased judgements, herd mentality, and loss aversion.”

“It seems that other people’s errors actually affect how someone perceives the external world.”

“Losses are considered far more undesirable than equivalent gains are desirable”

“Many behavioralists believe that overconfidence in the ability to predict the future growth of companies leads to a general tendency for so-called growth stocks to be overvalued.”

Obviously true assertions:

“Men typically display far more overconfidence than women, especially about their prowess in money matters”

“Male investors traded much more than women, with correspondingly poorer results.”

Action plan:

1. Avoid herd behavior

2. Avoid Overtrading

3. If you do trade: Sell losers, not winners

Thanks A Random Walk Down Wall Street for the tips. Here is the copy I read.

image

(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)

Property Tax

The government  wants me to pay up for those few feet of real estate I own.

(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)

Security

Own a piece of the pie (of a company, govt., etc.). Examples include stocks and bonds.

(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)

What is the Welfare State?

Originally submitted for an independent research project comparing North America’s welfare states with Professor Antonia Maioni at McGill University.

      Welfare is intangible. It is difficult to describe. Yet, when not present in one’s life, it’s lack of presence is felt. Pierson makes a great attempt at the ever-elusive definition, “at its simplest, welfare may describe ‘well-being’ or ‘the material and social preconditions for well-being’.”[1] An individual’s well-being is subject to change, yet drastic changes can be limited by welfare state intervention. A welfare state’s lofty goal of eliminating chronic misfortune and smoothing the adverse effects of business cycles on citizens crashes against the ceiling of practicality.  While motivated to fulfill a basic welfare standard for citizens, a welfare state is constrained by interactions with other welfare producers, in addition to conflicting political philosophies of policy makers and murky moral implications of public intervention.

          Government is only one of three players in welfare production. Esping-Andersen explains that to effectively allocate welfare production, responsibilities must be divided between markets, families and government.[2] Notably, he understands the markets to be “the main source of welfare for most citizens through most of their adult lives, both because most income comes from employment and because much of our welfare is purchased in the market.”[3] Yet, the three overlap, “the family, just like government, may in theory absorb market failures; similarly, the market (or government) may compensate for family failure.”[4] The triumvirate’s interaction produces a society’s welfare.

          While welfare states are the norm, each composition is unique. Flora and Heidenheimer point to economic realities to explain the prevalence of welfare states: “If the earning and learning capacities of capitalism are entering a phase of stagnation, then the limits of welfare state development may become apparent through a series of crises.”[5] As capitalism became common, welfare states were created to provide a basic standard of welfare, no matter the stage of a business cycle. Esping-Andersen poses the question all welfare policy makers must answer, “can the family, market, or, alternatively, the state realistically absorb such responsibilities and, if so, would this be the most desirable option?”[6] Pierson notes the range of welfare policy options, as policy makers can influence health, education, housing and income maintenance through either services or income transfers.[7] Even though welfare states are just as common as capitalism, there is no one size fits all welfare policy solution, instead a potpourri.

          In addition to picking through the policy potpourri, fundamental political philosophy conflicts over the role of government inhibit smooth implementation of welfare state policies. Gilbert and Terrell explain that conservative thought “generally resists going beyond the minimum safety net required to protect the social order.”[8] Meanwhile progressives, “value government as…the one institution in society with the authority to protect the interests of all against the agendas of the few.”[9] The question for compromise becomes, how much should the collective provide an individual, who conservatives see as excessively lazy, while progressives view this same individual as burdened with misfortune?

          All welfare state policy makers are morally motivated. Moon sees the forest through the trees, “in contrast to approaches that focus on rights or equality, I will argue that we can best begin to understand the democratic welfare state as an attempt to solve a serious moral dilemma that necessarily results from the central role of markets in modern society.”[10] Even at equilibrium, capitalistic markets allow for some individuals to have more, while other individuals have less. While a welfare state looks to correct imbalances, its intervention infringes upon self-respect; according to Moon, “self-respect is a complex function of membership in a democratic society ‘and depends upon equal respect among the members.’”[11] He poses a thought-provoking question, “if people hold the norm that they should be independent (in the sense of self-supporting), then how can the state provide them with the means of subsistence without violating their self-respect?”[12] Moon concludes,  “that the moral basis of the welfare state cannot be charity or altruism on the part of those more fortunate individuals whose taxes pay for its services.”[13] While the welfare state is well-intentioned, Moon, with his astute view of morality, questions if government policies are effective, if they do not preserve the key characteristic of democratic citizens, self-respect.

          The welfare state is an imperfect entity. Most agree society should provide basic welfare provisions. Yet, should the family, market or government provide such support and to what extent? The welfare state breaks with traditional family support, as little can match the resources of the state to resist persistent misfortune and smooth the adverse effects of capitalism’s business cycles. The welfare state is the consequence of policy makers’ compromise on the government’s role in welfare production. The welfare state calms those who are morally concerned with the inequality produced by capitalism. A country’s welfare state is the product of its interaction with other welfare providers, political compromise and moral considerations.


[1] Christopher Pierson, Beyond the Welfare State?: The New Political Economy of Welfare ( University Park:Pennsylvania State University Press, 1991), 9.

[2] GØsta Esping-Andersen, Why We Need a New Welfare State (New York: Oxford University Press, 2002), 11.

[3] Ibid.

[4] Ibid, 12.

[5] Peter Flora and Arnold J. Heidenheimer, “The Historical Core and Changing Boundaries of the Welfare State”  in The Development of Welfare States in Europe and America, eds. Peter Flora and Arnold J. Heidenheimer (New Brunswick, U.S.A.: Transaction Books, 1981) ,31.

[6] Esping-Andersen,13.

[7] Pierson, 10.

[8] Neil Gilbert and Paul Terrell, Dimensions of Social Welfare Policy (Boston: Pearson, 2013), 17.

[9]Ibid.

[10] J. Donald Moon, “The Moral Basis of the Democratic Welfare State,” in Democracy and the Welfare State, eds. Amy Gutmann and Project on the Federal Social Role (Princeton: Princeton University Press, 1988), 28.

[11] Ibid, 35.

[12] Ibid.

[13] Ibid.