Sunday, October 30, 2016

Common Sense Economics III

Primarily households use labor to accumulate money for goods and services they want. If the government raises taxes, the household must adjust to the lesser income. If government gives you a subsidy, it usually means you have more income to spend on things that are not subsidized. Taxes and subsidies are the basic way government decides what should be valuable to you. Get that. Not what you think is valuable, but what government wants you to have. If government gives you free electricity, you get rid of the gas stove and buy an electric stove. You also realize there is no incentive to save electricity so you buy more products that use way more electricity than you need. You may even have neighbors that think bigger than you and become electricity hogs.

Someone is going to have to pay for the necessary electricity and the excess electricity. Since the government pays the bill for the excess electricity, they need more money. The only way they can get your money is through taxes, so they raise your taxes. Now you have less money to spend on things you need. You are also in debt for the extra electric devices you bought because of free electricity. Free sounded great when they gave it to you, but now you are paying for it. You are also paying extra tax money to subsidize the electricity hogs.

You complain to your government contact that you are paying more of your fair share of taxes to subsidize your neighbor’s electricity usage. The government thinks you are right and hires a few bureaucrats to monitor individual household electrical usage. One day you wake up for a good night’s sleep and realize you were taken advantage of by the government again, because they thought they knew what you needed better than you did. Even worse than that, your tax money is now paying the exorbitant salaries for these people to make decisions that take advantage of you.

Everyone understands these concepts and ideas. Nothing is free. If your government wants you to have less of something they tax it. If the government wants you to have more of something they subsidize it. Either way the government is involved it requires more government bureaucrats, so not only do you pay for subsidies you pay more money for a bigger government you would not have needed if they would have stayed out of your household’s business. Anytime government is involved the cost goes up. It is a fact of life.

If we need more jobs, the best opportunity to get more jobs is to have more employers. When you raise taxes on employers do you get more jobs or fewer jobs? Remember the basic tenet. If you want less of something, you tax it. Raising taxes on employers reduces the number of employers.

Let us raise taxes on employers anyway and make up the job losses by funding government projects. Of course, government is going to have to raise your taxes to pay for the additional government services and even more taxes for the bureaucrats to monitor the additional workers providing the new services. As soon as government gets involved, the price goes up. There is never a time this does not happen. It is worth repeating. Anytime the government is involved, the price goes up. Government is almost never the best answer economically.

Thursday, October 27, 2016

Common Sense Economics II

Today, I am going to continue my discussion on economics and bring in the effects of government involvement.  First I would like to state my personal definition of economics. Economics is the study of the distribution of scarce resources to benefit mankind. I prefer my definition for several reasons and many economists might disagree with my brevity, but I like it for that very reason. Yin and yang, truth or consequences, hot or cold, free or costly, synonym and antonym or any other pair of opposites explains how you need to think about economics. What’s good for the goose is good for the gander is a different story and I will not discuss geese in this treatise.

I think the word scarce is important in my definition. If we were not talking about scarce resources, we would not need economics. Everyone would live a life of luxury with an abundance of everything. Of course, we would all become depraved and covetous because someone had bigger hands, bigger arms, bigger storage bins or bigger dreams. Let us stay in the real world and avoid the depravity caused by abundance.

For the discussion about government involvement in economics, it is best to remember the two premises. If you want less of something you tax it. If you want more of something, you subsidize it. Yin and yang. My discussion works for all government structures, but I am going to limit my discussion to the U. S. federal government. For instance, if the government wants more people to own their own home, they allow you to deduct the cost of your mortgage on your federal income tax. That is a subsidy. Think about that. They give you a tax break on your home, giving them less tax income which means raising taxes on someone to make up for the loss of revenue. Sooner or later that person with their taxes raised is you. To us it is a tax – money out of our pocket. To the government it is income.

For a mini-case study, consider the war on poverty. The government expresses a will to pay our tax money to help poor people. The more government money that is involved increases the incentive for more people to get into the poverty removal business. Next thing you know the group of poverty suppressors realizes that if they actually got rid of poverty, their government paycheck would go away. So, the poverty suppressors job has changed from getting people out of poverty to assuring more people live in poverty to increase your check from the government. Now we have our government subsidizing poverty. Get the idea?

The government needs more tax money to keep the subsidies going, so the increase taxes on corporations to pay for their social program. What happens next should surprise no one. Raising corporate taxes means the companies have less income, so they either raise prices or cut back on hiring new people. At some tax level the corporations will realize it would be more profitable to live in an environment that was more corporate friendly, i.e. lower taxation countries. Corporations reduce jobs and leave the country which means more people out of work and more poverty.

Our government has subsidized poverty reduction groups and paid for it by driving away the tax base that could have solved the problem.

A couple of Reagan quotes. “The most terrifying words in the English language are: ‘I’m from the government and I’m here to help.’”  He also said, “Government is not the solution, government is the problem.” Some people may never understand the way Reagan did. We need less government. No doubt about it.

Sunday, October 23, 2016

Basic Economics I

Today I would like to discuss economics from a common-sense point of view. First let us define economics:

“Economics is a social science that is concerned with factors that determine production, distribution and consumption of goods and services.”   -- Wikipedia

That sounded a little complicated to me so I looked for a simpler definition.

As a social science that studies how a society's resources are shared, economics (a) describes and analyzes choices about the way goods and services are produced, distributed, and consumed, and (b) assesses the consequences of those choices.”   -- Encyclopedia Britannica – Kids

That’s the kid’s version? Wow. Maybe it is not so simple after all. Britannica goes further to explain the root of the word:

“The word “economics” comes from the Greek oikos, meaning “household,” and nomos, meaning “rule,” or “governance.”

I find that interesting. The word began as household rule. Governance mean Mom and Dad, so a kid’s definition is probably a waste of time, anyway. Of course, some of us are not kids, so we see economics much bigger than that. The problem is we probably should not do that. If you think about economics of a country and all that entails, it gets too complicated to discuss easily. What we learn at home is that you need to manage your resources in a way that suits the needs of the family.

I hate to do this, but I am going to talk about resources at home. I am going to leave out air, because that is even too basic for me. Resources are money, food, water, labor, shelter, clothing, cars, gas, gasoline, electricity, education, laundry, dry cleaning, etc. These things are so common we do not even think about them, unless we do not have them. By then, it is probably too late to discuss economics.

We grow up with economics. It becomes second nature to us. Other than the family budget, people normally do not spend a lot of time talking about economics. Unless a child arrives, a destitute family member moves in. your car breaks down or you lose your job.

Nothing is static. Things change constantly that affect the resources available to you. Most things are slow and economically aware and economically capable families have some sort of savings they can rely on for emergencies. Many families do not have that luxury today.

A couple of things that are basic to economics. If you want more of something, you make it easier to get. If you want less of something, you make it harder to get. Pretty simple, right?

Next post I will discuss the impact of subsidies and taxes and how they affect households.

Saturday, October 8, 2016

The Same Things

I think most people want the same things in life. Basic needs are air, water, food, clothing and shelter for themselves. Even to get basic needs, a person needs some type of employment. If you work outside the home, you may need transportation to get to your place of employment. After basic needs are met, most people want someone to love and someone to love them. Some people want families. With families you need more clothes and because they need more room, a larger shelter is required. They may want a vehicle that will carry more people. In order to get bigger, better and more, people often feel the need for more education. People also get sick and need medical care. Everyone with more than one mouth to feed knows that with larger families you deal with much more need for medical attention.

For most of the time the earth has existed, life was not possible. The air and water were unfit for consumption, the way we think of it today. Plants evolved from the mire while one celled animals came into existence about two billion years ago. Next came fish and amphibians, then dinosaurs. After the dinosaur’s extinction there was an ice age where it was so cold life as we think about it was non-existent. At this point the earth had been around for 98 percent of its total existence and people had not arrived.

People similar to us have been around less than two million years. Plant life was vociferous in parts of the world and non-existent in other parts. About 11,000 years ago, grasses began sprouting around the earth and people discovered they could move and survive. Humans started roaming the earth looking for food, better climates and often just curiosity. Those migrants still had the same needs that we have today.

Industrious people took advantage of their skill and often created or grew more than they needed, so they used the excess to trade for things they did not have the skills or resources to make or grow for themselves. People conglomerated in groups because they discovered some tasks took more than one person or one family to achieve. As communities were formed it became apparent we needed some kind of structure to keep people from taking advantage of one another. Next thing you know we have government. Your mind can take you from a single village to the huge monstrosity of a government we have today. Other countries have the same issues, although man has made living together with others more difficult. There are social differences, cultural differences as well as different desires and different ideas of what constitutes success.

With all that going on we all need air, water, food clothing and shelter. And a little love.

Our political discussions and disagreements in this country are all based on how our government helps or hinders us getting what we want to achieve in life. Our country is still evolving, just like the earth had to have time to evolve to what it is today. We are all trying to strive toward a government that treats every individual and every embedded organization fairly.

One group feels individuals have insufficient skills and abilities to take care of themselves and wants more government and more government involvement in individual activities. Another group thinks individuals can take care of themselves and they want less government and less interference in individual lives. With all that said, we all want the same basic things. We should spend more time understanding each other and less time bickering. We are all in this together.

Thursday, October 6, 2016

Choosing Ignorance

Why do the FCC, the FEC, the Obama administration and the Democrat party want to stifle the news? There is a lot of print media available. Most of the newspapers support the Democrat party. Most broadcast channel news stations favor the Democrat party. Most cable news, except Fox news is biased toward the Democrat party. They have also hinted at trying to control news stories available on the internet. The Drudge report is their favorite internet news whipping boy. The FEC is even talking about suppressing what kind of political information you can put in books.

Newsroom of the past
The Obama administration has been trying to shut down dissenting news organizations ever since he got into office. He appointed people into FEC and FCC positions that would try and suppress conservative viewpoints. Why are they doing that? Certainly people that hear and read news stories can reject any story that does not fit their beliefs.

What are they trying to hide? It is very simple. They are trying to keep people from hearing the truth. CNN, MSNBC, Headline news, ABC, CBS and NBC news are all biased toward the left. So what? Everyone knows that. Fox is biased toward the right. So what?

What the Democrats want to stifle is not the bias. What they want to stifle is the truth. If you watch Fox news, listen to Rush Limbaugh on the radio and regularly read the Drudge report, you get about 20% more news stories than you will hear on the left-leaning media sources. If you do not believe me, run a test for yourself.

Record CNN and Fox news for a month. Each day watch CNN, then Fox new and I guarantee you get stories on Fox that CNN will not broadcast. That is the key. It is not the biased way that stories are printed or shown that is the issue. The real bias is shown by what is suppressed.

Normally stories that hurt Republicans show up on page one. Stories that may hurt Democrats are on page 19. Fox news does not suppress stories. Every story they tell may have a right slant, but you always hear the opposing view – not so with left leaning media coverage. CNN often tells only one side of the story. Likewise, in print and broadcast media.

Democrats know that if people know the truth, they lose their support. The Democrat party thrives on misinformation and omissions. Obama may be the greatest obfuscator in our history. He stalls, bobs and weaves and ignores requests for information, but if it will damage him, he keeps it hidden. The news media is complicit.

I have some pretty smart friends that refuse to watch Fox news. Why the fear? They probably do not even realize they are choosing ignorance about the available news. The reason they tune out Rush Limbaugh, the Drudge Report and Fox news is because the left and their media support lie to the public about what the right leaning venues represent. If you have any interest in the truth, go to the source. You cannot believe what people with an agenda tell you someone else said. They lie distort and hide the truth. Do not choose ignorance.

If the stories do not matter, why are the Democrats and progressives so determined to shut them up?

Sunday, October 2, 2016

My Thoughts on Immigration

This post is a repeat of a post with a similar title posted on July 6th of this year. Immigration has become more and more an issue in this election season. I have never repeated a post before, but I think this issue has some importance.

The United States population is made up of immigrants. The first settlers were explorers. Then came the trappers and tradesmen. Indigenous peoples were encountered sporadically throughout the country. Some people left their homelands to get away from tyrannical governments. The Puritans came for religious freedom. Some people came just because they had a spirit of adventure. Some people came because the United States needed workers to construct large projects, like the Chinese who helped build our railroads. Many of the Irish came because of famine in their homeland. All the people that came here throughout the short history of our country were looking for a better life and they thought they could find it here.

Immigrants who came here learned to blend in with their neighbors. It was not quick and easy – it always takes time for new arrivals to integrate. Immigration laws were created to meter entry into the country at a rate that allowed new arrivals to assimilate, find employment and become assets to the country. The more successful immigrants learn the language of their neighbors and meld into society.

Historically, the people that came here became Americans, with loyalty to their new country while maintaining allegiance and feelings for their heritage and the family they left behind in their old countries. They wanted citizenship and happily swore an oath of allegiance to this country and showed a willingness to fight to keep the country free. They contributed to the growth of our population and our prosperity. Immigration was a good thing.

Then something changed. Many people that have lived here all their lives no longer respect the country that allowed them to prosper and families to improve their position in life. Immigration stopped being metered. The borders became porous. The efforts to assimilate stopped. Even the oath of allegiance for new citizens was changed so that people no longer had to swear allegiance to this country. They no longer had to agree to support the country’s military in times of war. For the first time we started inviting new people into the country who were a burden to the United States and expected to be on the welfare rolls throughout their lives.

The result of unmetered immigration is a weaker country with a growing disloyal population. There are few jobs available for the currently unemployed citizens and certainly no jobs for new arrivals. Their enclaves have many destined for poverty row. They will join gangs and riot in our streets, since their progress is almost nil. Their allegiance is to the country they left behind and destruction of the United States is of no consequence to them. Their dire circumstances turn them to violence increasing the crime rates in their vicinity.

No one is anti-immigrant. The people that are accused of being anti-immigrant for wanting metered immigration are the people with the knowledge of the history of our country. The accusers have no interest in history and no knowledge and obviously no foresight of the outcome of their positions.

We have become a weaker country with a less loyal population and I think it is by design. A sad situation, Ollie.