Monday, February 28, 2011

Jobs v Wages v Taxes v Growth: Part 2 - Attack of the Government Drones

2. Taxes need to rise so that the government can spend more money and grow the economy.

Please keep in mind, that I'm not trying to teach the complexities of the economy, but a broad brush of the basics and how they can be applied to analyze a situation. 

This statement, as heard in the previously mentioned on-air debate seems to stem from a perverted views of the work of John Maynard Keynes.  Keynesian economics suggests that when the government spends money it has a multiplier effect, generating almost 1.5 times the total GDP impact.  Respectfully to Mr. Keynes and the aforementioned debater, I disagree.

Taxes take money out of the economy to redirect spending.  So, before you can analyze the impact of government spending on the overall economy you have to first look at the impact of taking money out of the economy by the government.  Again, this is an oversimplification, but still remains true despite the omission of numerous factors.

When people and corporations pay taxes, this money leaves the private economy.  The government then uses those monies to pay for a variety of things.  Not least of these is paying interest on the already large amount of public debt that we owe.  Much of this debt is to people, corporations and governments outside of our country.  This money is essentially gone from the national economy.  The rest of the money is then paid out to individuals, companies, and governments chosen by the legislative and executive branches of our Federal government.  Often this money is put to productive use.  Roads are built, wages are paid, healthcare is provided, etc.  Sometimes, however, this money becomes sunk against the overall economy.  The government literally pays people to NOT work, NOT produce.  It can also be used to subsidize inefficient use of time and material resources.  As an example, the government pays to offset the inefficient production of electricity, the inefficient delivery of health services, and for outdated military systems that the Pentagon has asked to scrap. 

At the times Mr. Keynes was formulating his theory on the power of government spending on our economy, many of these expenditures did not exist or were extremely limited.  How much have these programs impacted effectiveness of the Keynesian multiplier?  Without more resources than what are at my disposal, I can't give you an exact figure, but it should not be hard for the GAO and or the CBO to give us a better estimate.

Putting all of the above arguments aside, the number one reason this statement is wrong is that it says the Government should choose how the money you've earned is spent, and not you.  The greatest incentive to encourage most people to do more, earn more and produce more is to let them keep more of what it is they do, earn and produce.

Friday, February 25, 2011

Jobs v Wages v Taxes v Growth: Part 1 - The Frantic Menace

There are many competing theories on the best ways to grow our economy.  As with most things, I tend to look for the ways that provide the most growth with the least government involvement.  Fortunately for me, these two seem to be complimentary. 

A debate I witnessed this morning included the following statements:

1.  Wages need to rise so that consumers can spend more money and grow the economy.
2.  Taxes need to rise so that the government can spend more money and grow the economy.
3.  Companies are stockpiling too much money here and overseas.  If they aren't going to spend it, that money should be taxed.  This will encourage spending or increase tax revenues.
4.  Taxes need to fall so companies will invest more in the US, creating new jobs, with better wages that will grow the economy.

Over the next 4 installments we'll cover these statements with some common sense analysis. 

Wages Need to Rise!!!

Every few years the cry goes out, the poor are getting poorer.  Companies are being greedy.  Bad corporations are turning the working class into serfs and only paying them MINIMUM WAGE.  Solution:  Raise the minimum wage.

What really happens.  The reality is that wages do not decrease, but over the past 40 years, the spending power of our wages have significantly decreased.  Inflation, most often caused by poorly managed monetary policy, overspending in Washington, and artificially depressed interest rates causes the value of the US Dollar to decrease.  Goods and services however, have a value that is not directly tied to the value of the dollar.  Meaning that as the value of the dollar falls, the price must rise to match the REAL value of the good or service. 

Monetary Policy - Let's say there are 1000 Dollars available to the world and everyone wants Dollars.  The value of that dollar would rise.  The supply is limited, the demand is high.  Basic economics.  Now, let's say that the government is printing trillions of dollars in order to spend more money.  This has two consequences (there's that word again):  First the dollar is now less valuable because they're abundant.  Instead of being rare like gold they become like blades of grass.  Second, the demand goes down because they're less valuable.  If you know what a feedback loop is then you can probably see the danger this causes.  Does this ever happen?  Look at Germany post World War I and Argentina not too long ago.

Back to the real topic.  Won't raising wages increase spending by consumers?  On a micro level, yes, but when looking at the economy as a whole, probably not.  Let's say you manage the payroll for company X.  You have $100,000 to work with.  Pretending that benefit and payroll tax costs do not exist you can either hire 2 people at $50,000 per year or 4 at $25,000 per year.  Let's say the level of employee you need is rather low.  The lower the level of employee the LARGER the supply of workers for that position.  In a pure economic system this supply and demand curve would drive the cost of wages down and you could hire more workers for greater production.  As the complexity and the needs for the position rise, so does the supply of workers qualified to do that job shrink.  This makes the necessary wage higher.  The other side of the equation is, what level of output would be required.  This may also determine the number of employees required.  If 3 employees are required to produce enough to support $100,000 in payroll, and each additional employee will increase production, then hiring 4 employees may produce enough additional capacity to support an additional employee, who may then increase production to a point to support yet another.  When you're running a company, you have to look at the diminishing return of each additional employee added.  For example.  Three employees may help you gross $200,000, but a fourth would only increase that total by $50,000 and a fifth may only increase it further by $25,000.  If the cost of employing the additional employee is less than the added value then you should obviously not add that employee. 

Now, let's introduce artificial controls.  Let's say the government steps in and says, wages are too low, you must increase your pay to a minimum of $30,000 per employee.  Suddenly you either have to trim your staff down to 3, improve the efficiency of all 4, or raise your prices to sustain the additional cost.  Most markets are priced very competitively.  If you raise your prices, you lose business.  If you increase productivity, there's a chance you lower prices by increasing the supply in the marketplace.  What have you gained?  So, you're only recourse is to cut a position. 

Here's what it boils down to.  At a given level of production, a company is only going to spend a certain amount of money on wages.  Artificially raising wages per person is not going to increase the total, but it will increase it for those people who remain employed.  For the person who gets laid off, that doesn't really help much, does it?

Don't get me wrong.  Rising wages that do so on their own will increase spending in the overall economy.  When they're not offset by rising production or price levels supported at the same production levels, what you wind up with is a recipe for lower overall employment and stagnant overall wage levels.  So, how do you get wages to increase without harming the overall economy?

More importantly, do we want to live in a country where the government decides how we run our businesses?  How much we have to pay employees?  If we can't compete on a scale of wages, then we won't get the best qualified people, regardless of the position.
More to come in Part 2 - Attack of the Government Drones

Thursday, February 24, 2011

The Complicated Conundrum

Yesterday the Executive Branch of our Government, that body charged with executing and defending the laws of the United States announced that they respectfully disagreed with one such law and would no longer enforce it.  While my initial reaction was more along the lines of "Well it's about damned time," it did cause me to stop and think.  What does this do to our supposed system of checks and balances?

Well, it wrecks them.  If the executive can willfully ignore the laws of the United States that he disagrees with, what need of a Legislative or even a Judicial Branch.  The executive can simply choose not to enforce that law.  But, but I agree with him this time!  Yes, will you next time?  What happens when the next guy comes in?  Can he, by word alone rescind enforcement of all the laws prior to his arrival that he disagrees with?  How far removed then are we from this President or the next or the one after that from using this precedence to suspending free elections, the rule of law, the right to petition the government for redress of grievances?  This action is more akin to saying "Your rules stink, I'm taking my ball and going home."

That's not the complicated part though.  Here it is:  The executive branch should not only enforce the laws on the books as they are able, but also defend them to the courts where challenged.  We are a nation built upon the rule of law.  While we disagree with many of those laws, it is not for us to decide to ignore them.  Instead we must work within the confines of the law to overturn or strike a law.  Instead of ruling by fiat, the administration should petition Congress to undo this catastrophe.  At the same time, the administration should do its duty and defend the law before the Courts.  The President needs to be the adult here, take the responsibility that comes with his position for the sake of the position. 

As with most laws that impose someone else's views in order to restrict Freedom, I'm against this law.  Let's work to repeal it in the Legislative branch.  Who knows, you may just like the process, at which point I can point you to another 500 or so laws that we can go after next.

Until next time...

Wednesday, February 23, 2011

Freedom and Consequences

This is an idea I've discussed a time or two in the past and don't be surprised if it's repeated as a theme in the future.  Freedom and consequences are the central point of my particular take on libertarianism. 

We should be free to make choices and free to pay the consequences of our choices. 

Recently a Congressman from the Northeast, in a rally on the steps of the State Assembly, told a crowd of union supporters that sometime's it is necessary to get out on the streets and "get a little bloody" to defend their rights to collectively bargain.  Now, I'm all for Freedom of Speech, and I'm all for the voters of his state showing him the consequences of making poor speech choices.  Do we really need people encouraging violence?  Do we really need our elected officials encouraging violence?  There are no excuses. 

Consequences are great, but really only when enforced.  If this Northeastern state, or really any state, continues to elect people who preach violence or hate or intolerance then there is no consequence. 

Let's look at where we're making mistakes about Freedoms and Consequences.  A bunch of banks made some really bad decisions.  The consequence?  Billions of tax dollars thrown at them to bail them out.  Zero interest loans to invest more.  So, not exactly a consequence.  Instead, the answer has been to restrict Freedom.  1000's of pages of new regulations coming, a new bureaucracy to manage, and absolutely no consequences to the companies who made bad investments.  Ahhh, but the whole system may have collapsed.  There are other ways we could have stabilized the situation.  If we introduce consequences then maybe we don't need these 1000's of pages of new regulation.  But new regulations are better than specific consequences, right?  Why punish only the guilty when you can restrict the liberty of everyone?

State Senators in Wisconsin are still hiding from their duties in representing their state.  The consequence is that 1000's of state employees are going to be laid off.  One recent report I read is that the governor is looking to withhold their pay if they don't show up to work.  That raises an interesting question.  If they're fleeing the state to "protect their constituency" aren't they in fact working by refusing to work?  Here's a better question?  Who's going to approve their expense report for that hotel in Chicago for their working retreat?  Sometimes consequences are expensive.

Sorry for the downtime...

Super nasty bug knocked me on my butt for a few days, but I'll be back at it again soon. 

Thanks for reading...

Sunday, February 20, 2011

It's time to get drastic...

So, I've read a half dozen breakdowns of the supposed cuts in the President's proposed 2012 budget and I've read the reports regarding the 2011 budget that the republicans in the house pushed through this weekend.  Seriously?  This is how you're taking a $1.6 trillion deficit seriously???

Yes, with little more than half the fiscal year remaining the republicans are trimming $61 billion from the federal budget.  So what?  That's 3.8% of the deficit.  Do that another 26 times and we're getting close. 

I'm not sure the President's budget is worth commenting on.  He promises $1.1 trillion in cuts over the next 10 years, however, $1.3 trillion of that is actually already accounted for in the total budget.  It includes over $1 trillion in projections of increased tax revenue on raised rates and new taxes and fees and otherwise grows the federal budget by nearly $1.5 trillion over the next ten years.  Like I said, not worth the time commenting on it.

What makes me think that "politics as usual" will triumph once again, that no one can afford to be serious about cutting our deficits and trimming this bloated behemoth of a government is that no one is touching the entitlements.  There is not one bit of reform of medicare, medicaid, social security, or welfare?  Nothing meaningful happens until these things are tackled. It's sad, though perhaps understandable.  If you've read my previous posts you might remember that we've discussed this before.  No one wants to be first here.  If the Republicans go first, the Democrats call them names. 

It's past time to get drastic here.  Someone is going to have to be first.  So, let me.  Cut it.  Cut it now.  Trim present benefits, and reform the system.  Allow individuals to begin purchasing long term health insurance for retirement.  If you create the conditions the marketplace will spring up.  Raise the retirement age for everyone born after 1960.  Raise it by 2 years.  For everyone born after 1970, raise it by 5.  For everyone born after 1980, raise it by 7 years.  That MAY help shore it up, but to be honest, I don't know if it can be shored. 

Our elected officials need to take this seriously.  They need to be proposing these ideas now, no matter what someone may call you.  Sticks and stones have nothing on what this debt is doing to our country.  If you do nothing?  You may as well go hang out in Illinois with some Wisconsin State Senators I know.

Friday, February 18, 2011

Trouble With Public Sector Unions...

Recent headlines this week in Wisconsin, Michigan, and Ohio, following on the heels of similar news from New York and New Jersey in the past month have brought attention to the issue of the public sector union.  Unions in the private sector represent a group of private employees negotiating (on an artificially tilted table) with private employers.  The Public Sector Union negotiates on behalf of private employees with the taxpayers' representative. 

Here's where the difference matters.  The unions collect dues (often mandatory) from the employees, then use those dues to facilitate the election of politicians.  They then get to negotiate with those very same politicians for their employees' rights.  Where do the taxpayers get represented?  Well, quite often, they don't.  Yes, the politicians doing the negotiations have to answer to the tax payers every 2-4 years, but with clever accounting, essentially burying the costs in the future the politicians, and the assistance of union money to campaign, these politicians have not been held to account for the one sided deals they have helped push through. 

Now, the bills are coming due.  Wisconsin, Florida, Michigan, Minnesota, Ohio, California, New Jersey and New York are all suffering from a significant budget shortfall, first triggered by flagging tax receipts in this recession, but now complicated by the overly generous contracts they've signed with unions in the past.  Here's my dilemna:  a deal is a deal.  These states made deals with the unions, and absent a valid legal reason to nullify those deals the contract should stand.  In the private sector this would force an employer to either conduct lay-offs, raise prices, or simply close its doors.  The governments of these states do not have all of these options.  The citizens of these states, complicit through their inattention and insistance on electing and re-electing the same people year on year, still cannot absorb yet another tax burden.  The government cannot simply close its doors.  That leaves layoffs.  From all outward signs these would have to be MASSIVE.  Extreme cuts in services, ballooning classroom sizes.  I can't say I disagree with the ultimate conclusion that many of these governors are coming to, I just think that the alternatives should be fully offered beforehand.  In lieu of these layoffs, should the unions wish to acquiesce to having its membership pick up the tab on some of its benefits, I'm sure the governors and legislators will be happy to return to the negotiating table. 

History will repeat itself.  Some have suggested that we limit the influence public employee unions are allowed to have on elections.  I disagree.  The burden is on the citizenry, to educate themselves, to understand that a vote has consequences and to PAY ATTENTION.  We must hold our elected officials to account.  We must not be complacent. 

One day soon perhaps, we'll discuss the nature of unions in the private sector, but that day is not today. 

Thursday, February 17, 2011

Playing Politics...

This morning's commute contained a scintillating discussion of political strategy.  One party is waiting for the other party to make the moves necessary to keep our country from sliding into economic oblivion so they can trounce them for being "draconian".  Who is doing the waiting and who is doing the trouncing don't matter.  Both parties have done this before, both will do it again.  It's all about politics.  You play to win.

Two problems.

Since when is politics a game?  Ok, probably since 1776, but come on people!  This game isn't fun anymore.  Second, the only Winners I want to hear about out of Washington are our nation's creditors.  I want them paid off.  Until that happens, no one wins.

I keep hearing that there are tough choices to be made.  There always are tough choices.  Time makes them harder still.  Paper or plastic just got tougher with those reusable bags.  The boxers vs briefs question is tougher again, now we have boxer-briefs.  The choice between bankrupting our nation and paying for muppets?  This is a tough choice?  Hey, Muppets are popular.  I get it.  I'm sure someone would love to make money off of them.  Go forth and join the American entreprenneurial tradition.  Wait, maybe the tough choice is to borrow $3 billion for a fighter jet engine that no one in the military wants?  No, that one doesn't seem tough either. 

Maybe the tough choice is whether or not we should spend $10 billion to distribute $21 billion to states for education grants?  That one doesn't seem too hard either. 

Then there's the ponzi scheme that made Madoff blush.  Is it a tough choice that we'll have to increase the retirement age for people under 50 years old in order to keep it from going bankrupt?  Is it a tough choice that we can no longer afford to keep spending the profits of the social security tax on other government wishlist programs?

What about the other entitlements?  To start, if there's a word that evokes more frustration, anger, and sadness from me then I do not know what that word might be.  Entitlements.  Don't get me wrong.  I understand why people have become dependent on the government to take care of them.  We are encouraged to sacrifice our future well-being for the pleasures of today.  The government has told you since LBJ reigned, don't worry.  We'll take care of you when you reach 65.  You don't need to plan for your future.  So, we haven't. 

So, here's a tough choice for you.  How do we prepare ourselves for our own future, without the chains of the government holding us up?  How do we teach our friends, our family, our children not to depend on the continued charity of the government? 

Now you too are faced with a tough choice.  To which of your friends will you recommend this blog?

Until tomorrow....

Wednesday, February 16, 2011

Why We Work...

Why do you go to work? 

So you don't get fired?  To make money?  Maybe you're just bored but don't need the money (not that it isn't nice, you understand).  The court said you had to hold down a job?

Whatever the reason, you're trading your time, your skill, your efforts for some incentive.  So it goes with all aspects of human existence.  There is always a quid pro quo.  The old saying "Freedom isn't free" is true.  But, in the [paraphrased] words of Inigo Montoya, "That [saying] I do not think it means, what you think it means."  Quite often people are referring to the heroic sacrifices of our armed forces.  More often, this quote reminds me of another quote, this time from Benjamin Franklin "Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety."  Freedom to succeed comes with the price of freedom to fail.  If you want the security of a temporary safety net, then you must give up some of your freedom. 

Have I mentioned that I hold Freedom as next to sacred?  It truly is.  The idea that my destiny is determined by what I put into my life, that I can reap what I sow is vital to me.  Without that freedom we are slaves.  Currently I am a well paid slave, living in a lovely home, about to marry a wonderful woman.  I am still a slave.  Almost 40% of every dime I earn goes to provide me with "security."  I did not choose this.  Others have chosen it for me. 

But, what about crime?  What about national defense?  There is a place for the prosecutions of crimes.  (Does that equal prevention?)  There is a need to defend our nation's borders.  I'm open to the argument that we should also defend our allies and the interests of our citizen's abroad.  Does this mean we have to have military bases in every country on the globe?  Does this require us to invade and occupy foreign nations?  Yes, I would wish everyone to have the same freedoms that I enjoy, but no, I'm sorry.  I'm not willing to trade mine for yours.

Let's get back to incentives.  An interesting phenomenon came to light last spring.  As seasonal jobs began to open up around the country, people were faced with an economic decision that went something like this:  Do I continue to draw unemployment (now guaranteed for 99 weeks) or do I take this job offer that will only last me 5 months, pay me only $200/week more than I receive on unemployment, and require that I spend $300/week for the care of my children?  The obvious answer is NO!  Of course you don't take that job.  You get nothing for your efforts.  There is NO economic incentive to work. 

Our nations healthcare system?  If an insurance company agrees to sell you an insurance product, I firmly agree that they should not be able to deny claims based upon pre-existing conditions.  If they want to protect against this they can either not sell you the insurance or price it such that it makes economic sense.  But wait.  We have a new law.  This one allows you to pay a nominal "fine" for not buying insurance, then, in the event that you become sick, you can purchase insurance and they are forced to cover you.  (I need an expert (do any exist?) in this new law.  Is an insurance carrier forced to sell insurance to someone if they are sick?)  Then there are the employers.  They can pay a fine for not offering coverage that is quite often LESS than the amount they would have to spend on insuring their employees.  The Governor of the State of Tennessee authored an op-ed piece in the WSJ last year explaining that it was to the economic advantage of his state and many other employers to do just that.  If offered up savings of better than $800 per year per employee!  There's an incentive for you.

If a company in this country sells goods overseas, they pay taxes overseas.  They can then either reinvest that money overseas or bring it back and reinvest it in this country.  Many countries have a tax on what is termed "repatriated revenues."  The tax rate in the United States is one of the highest in the developed world.  The company that has already been taxed once on that revenue must now pay nearly 35% of that revenue to the US government in order to hire more workers here, build new facilities, pass that money to its shareholders.  All of these activities are then taxed again.  So, what happens?  US companies continue to invest overseas, creating more revenue that is never seen again in this country.  In essence we are incentivizing the exact opposite behavior we claim to encourage:  domestic job growth.

To promote home ownership the government has for years been buying mortgages from their originators.  This provides more money to those originators to provide new loans, new loans provide more opportunity to buy homes, more bought homes drives up the price of existing home inventories.  Beginning in the 1990's and continuing through today, the government wanted to encourage home ownership to a broader group.  They then provided an incentive to make riskier loans be lowering the standards of the loans they would purchase.  This incentivized loan originators to make riskier loans...the rest is the history of the current crisis.

Incentives truly work in all aspects of our lives.  For the addict, the incentive to continue the addiction is a chemical release.  For those who give to charities or volunteer, it may be the warm tingle, the tax write-off, or the addition to their resume.  Entire works of economics have been devoted to the power of the incentive in our lives.  Authors Steven Levitt and Stephen Dubner expanded on how the power of the incentive effects differnt aspects of our culture in their hit bestseller Freakonomics: A Rogue Economist Explores the Hidden Side of Everything (P.S.) and Steven Levitt's powerful followup SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance.

"So, how does this fit with Freedom again?"

The incentive for giving up Freedom is a powerful one.  It's the illusion of security.  Yes, it's an illusion.  That safety net can't support us all and when it's gone it's gone and there's no surety that you get your freedom back.  The illusion of police stopping crimes is that well, they don't.  They enforce laws, investigate crimes and try to bring the perpetrators to justice.  Robbed is still robbed, violated is still violated, dead is still dead.  The illusion of national defense is that in order to pay for our military policing the world, we're borrowing trillions of dollars.  If you don't think our government's creditors can influence what we do in this country then please stop and think again.  If your credit card company will harass you for $500 outstanding balance, what will our nation's creditors do to ensure they collect the outstanding $14.15 trillion we owe them?

I'll be back again tomorrow.  In the interest of full disclosure.  My only incentive for writing this blog to date is a warm glow.  Good night.

Tuesday, February 15, 2011


In weightlifting, you don't get stronger lifting the lightest weights.  You don't get faster by walking or jogging.  In education, you don't continue to get smarter by reading below your level.  In other words, in order to improve, to grow, to excel, you have to challenge yourself.  The easy path will only take you downhill.

One of my favorite sayings as a kid was "If at first you don't succeed, try try again."  Have we forgotten this wisdom as a society?  I still see it in places.  Usually it's among the elite.  The best athletes become the best because they strive against the best.  The best in business have picked themselves or their companies out of the ground a time or two.  I hate to lose.  I'd hate not trying even more.

In all walks of life, people are taking the easy path.  This is true for individuals, corporations, and governments.  Where there is risk, there is a feeling that people have to be insulated from it.  Where there is failure, there is no fault. 

"What ARE you talking about?"

Ok, take the "Mortgage Crisis" enveloping our country.  1000's upon 1000's of people bought homes that they simply could not afford.  Yes, there were people encouraging this behavior so they could make money on these bad deals.  Yes, the government and press were also encouraging this behavior.  Yes, there were bankers making a ton of money selling, re-packaging, re-selling, then again selling insurance on the loans they'd already sold 3 times.  For the homebuyer who lied (yes, many were encouraged to lie) on loan applications, for the homebuyer who knew or should have known that they could not afford a $500,000 mortgage payment on $40,000/year in income, and the homebuyer who made the decision to make an investment in real estate that went south...what about them?  Government and Press are labeling these the "innocent victims" of the crisis.  The vastly manipulated populace, the poor suckers who fell for it.  The American Dream is just not attainable for these deserving masses. 

To be blunt:  That's crap.  Home ownership was and is a fantastic goal and absolutely attainable.  Purchasing the Biggest McMansion in the best gated McNeighborhood?  Well, maybe that much is out of your reach.  (Right now.  Work at it.  If you want it, you can make it happen.)  Don't get me wrong.  I feel bad for the people who made these bad deals.  I really do.  But let's not kid ourselves.  They MADE A BAD DEAL.  Yes, many were encouraged by friends, experts, THE GOVERNMENT, and sleazy, slimey salespeople to make these bad deals.  They were encouraged to spend well beyond their means.  And now, the government is here, with programs to "encourage" companies to try to keep these people in their homes.  Despite it's best efforts, all the king's horses, all the king's men...Well, sometimes Humpty Dumpty needs to fall down. 

Let's talk a little more about these "Programs".  Talk about bad deals.  Essentially, here's how it works.  The government pays money to Big Bad Bank to ATTEMPT to workout a "loan modification" with borrowers.  Usually these involve lowered interest rates and even interest only payments for a period of time to keep borrowers in their homes.  Most of the "experts" point out that this does nothing in the long run.  It just delays the inevitable foreclosure.  The cynic in me says, yes, it delays foreclosure until after the next election by which time the politician who established the program no longer cares.  These experts contend that the only thing that will really help our innocent victim homeowner is a reduction in the principal down to the new value of the home.  Big Bad Bank is a public company.  It's executives have what we lawyers like to  call an affirmative duty to their shareholders to maintain and increase the value of its assets.  So, Big Bad Banks hands are tied.  They can't go around reducing the value of their assets in some grand PR gesture. 

There ARE innocent victims.  (I'm not really sure that victim is the right word.  Innocent people were hurt, but are they victims?)

Some people played it straight.  They bought homes they could afford and under normal economic conditions, those homes would be growing in value at a nice, steady rate.  Instead, there was a bubble.  The bubble popped.  Now, people own homes with values less than what is owed on them. 

Purchasing real estate is an investment.  Investments involve risk. 

Moving on. 

Other examples come to mind:  gym class "competitions" where no score is allowed to be kept, (this is one of my favorites) blaming the toys in happy meals for our children being fat, students being passed up in grade level.  All of these represent failures, the failure of the losing side, the failure of the parent to make good choices for their children, and the failure of schools, teachers, and parents to educate our children.  These failures are being scrubbed from our national conscience.  They are someone else's fault, someone else's problem or no one's problem at all.  What's really happening?  Kid's aren't learning to strive, to push themselves.  Parent's can continue to neglect the health of their children, because it's always someone else's fault (oh, and the kids are still fat).  Schools and teachers get to move a problem child out of the system (no matter that they can't read the words on the diploma).  Without the freedom to fail, do we really have the freedom to succeed? 

Every year the OED adds words to the "Official" record of the English language.  Some words fade over time as well.  Personally I'm hoping for the demise of such words as "OMG" and (please God let this one die) "Chillax".  Unfortuantely, however, it seems that Consequence may go first.

All errors or omissions in this piece are my fault.  I'll try again tomorrow.

Monday, February 14, 2011

National Debt Just Topped GDP

For the math challenged among you, I'll try to explain this carefully.  Our government's debt just topped $14.15 Trillion.  that's 14,150,000,000,000.00

Pundits like to talk about how the national debt equals approximately $45,000 per person or even $127,000 per tax payer.  Let's look closer.

According to IRS Statistics (slightly dated, but probably still close) 11.8% of the population makes more than $100,000.00 per year.  This means 88.2% make less.  That same 11.8% of the population is responsible for paying approximately 70% of the taxes.

So 88.2% of the country pays 30% of the taxes.

There are 310 million people in this country.  At 11.8% that's 36,580,000 people making more than $100,000 and paying 70% of the taxes.    Those 36,580,000 are responsible for about $9,905,000,000,000 of our national debt or $270,776.38 per person.

The remaining 88.2% can relax.  You're only responsible for $4,245,000,000,000 or $15,525.57 per person.  That's a Honda Civic.

My parents loved me more....

Despite it's faults, we still live in THE greatest nation in the world.  We have more freedoms than most.  We have opportunities to succeed when many others do not.  There are some who want to, in the name of fairness or equality take away those freedoms.  From those wanting to regulate our behavior to suit their morality to those who choose to regulate our behavior through penalizing success.  They don't call it penalizing success of course, it's a tax, to raise revenues that our government needs...Why does our government need more revenue?  Probably so it can continue to regulate/control the People.  Our President once famously said that (and I'm paraphrasing), even faced with the surety that raising a certain tax rate would REDUCE tax revenues, he would do so in the interest of fairness.

Don't believe me?

Fairness.  Some will point out that I had an advantage over those "less fortunate" in that I went to school and graduated from college.  I will counter that I did those things because my parents set that expectation of me.  Then they worked their butts off to make sure I had the opportunity to do just that.  In the cosmic scheme of things, is it fair that my parents loved me more than your parents loved you?  Probably not.  When you break it down, however, you'll recognize that my "advantages" were the results of hard work.  My hard work, my parents hard work, their parents hard work.  We work hard in our lives, not only for our own benefit, but also to benefit those we care about.  When we achieve the success we reach for, we find that not only are we supporting our loved ones, but a bloated government as well.  Because, we all have to pay our "fair" share.

That my parents loved me and provided for me and made me believe that I could do ANYTHING, is this a reason to penalize me with higher taxes?    How does this help make life more fair?  How does a penalty for success make you try harder?  If only the government could make your parents love you as much as mine loved me.  Wait, no.  That isn't the way of modern governance.  What we need is a way to make my parents love you and provide you with as many opportunities as they provided to me.  It's only fair.

Happy Valentine's Day!

Friday, February 11, 2011

The Pursuit

Everybody loves a good chase scene.  The most exciting is when there's real doubt about the outcome.  When you watch a really good chase scene, you feel that bubbling excitement, the rush.  Did anyone ever doubt that the Duke Boys were going to get away and poor Roscoe P. Coltrane was going to wind up in the ditch?  Those of us watching it knew, but you could always see that little bit of worry.  They don't know the outcome, they're pushing for all their worth to get away. 

The Pursuit of Happiness is a lot like that chase scene.  The Pursuit, the ability to live, try, aim for the stars.  That's exciting stuff.  What about the outcome?  Is there doubt?  Will you be able to jump that river and leave Deputy Coltrane in the ditch?  If you know you can't fail, will you try as hard?  Will you push yourself?

This is where our world is heading.  The right to pursue happiness is slowly being replaced with an entitlement to happiness.  How many of us will really try when the outcome is already determined.  Just imagine, how exciting would that chase scene be if the Duke boys stopped, got out and lounged on the hood of their car, knowing Roscoe was just going to crash anyway. 


Join me for my next the government is going to make your parents love you just as much as mine loved me.

Thanks for reading!

Thursday, February 10, 2011

Opening Thoughts...

Dear Reader:

I've resisted the temptation as long as I can.  The lure of getting my thoughts and opinions out there has become too great.  This blog will consist of some of my random thoughts, political observations, and the hopes I have that Freedom (that oft-overused-seldom-understood buzzword) will still be around for my children to enjoy.