Tag: Economics

–Talking past each other

The debt hawks are to economics as the creationists are to biology.

The proponents and opponents of same-sex marriage cannot and will not ever agree. They are talking past each other. The problem is that the issue is religious/moral for some and legal/moral for others.

Those who oppose same-sex marriage focus on what they believe to be religious/moral factors. They quote the Leviticus passage, “Do not lie with a man as one lies with a woman.” Those who support same-sex marriage focus on what they believe to be legal/moral factors. Many laws grant special privileges to married couples, not offered to unmarrieds. This is felt to be a violation of the 14th Amendment’s, “equal protection clause.”

Although the above is something of an oversimplification, it is impossible for people to agree, when they’re arguing about two different things. More examples:

Israelis and Palestinians may disagree on some facts (“Who was here first? Who fired first?), but fundamentally, the Jews really are talking about the Holocaust and Jewish survival (“Never again”) and the Palestinians really are talking about choice and Palestinian survival (“We have nowhere else to go.”) They are talking past each other.

The pro-lifers are talking about morals (“Do not murder.”) and the pro-choicers are talking about science (“An embryo is not yet a sentient human”). They are talking past each other.

Democrats feel caring for people is good for the economy. Republicans feel caring for the economy is good for people. They are talking past each other, and when people talk past each other, they don’t hear each other.

Listen to any argument, and eventually you’ll hear the words, “Yes, but.” That’s shorthand for, “I don’t want to listen to, or even think about, what you said” (That’s the “Yes” part). “I only want you to think about what I’m about to say.” (That’s the “but” part.)

There lies deep within us, the fear that if we listen too closely, our own arguments will be demolished. So we resist listening, lest we are forced to admit we are wrong, and our world will come crashing down.

Being consciously aware of this, I make a special effort to try to listen to debt hawks’ facts. Unfortunately, their favorite word seems to be “idiot, ” often followed by “stupid,” and they never get around to offering facts I can evaluate. They focus on popular wisdom and I focus on data, so we simply talk past each other, something like the creationists and the scientists.

What’s the solution? Courage. Have the courage to see your treasured beliefs proved wrong. Have the courage to evaluate the other guy’s side. Have the courage to listen, and perhaps to come to an accommodation. Any fool can close his mind and shout louder. It takes real courage and intelligence to listen, truly listen, to the other guy’s side.

Of course, that depends on the other guy presenting a side, rather than limiting himself to telling you you’re an idiot.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–There is no wasteful federal spending

The debt hawks are to economics as the creationists are to biology.

As usual, some stimulus spending has been criticized because it is “wasteful” and doesn’t create jobs. Here are a couple examples published recently:

“ $1.9 million spent to photograph ants has created two jobs.. Other ant research stimulus projects: $451,000 has created one job, $276,000 created six one-hundredths of a job, and $800,000 created no jobs. The $144,000 spent to study the behavior of monkeys on cocaine created four-tenths of a job. To study why monkeys respond to unfairness cost $677,000 – and has created no jobs yet.”

I am reminded of former Wisconsin Democratic Sen. William Proxmire, who published his monthly “Golden Fleece” awards for what he considered wasteful spending. He often was criticized for opposing basic research he did not understand, for instance NASA, SETI and the Aspen Movie Map. Many worthwhile, federal research projects have been killed because some politician thought they were frivolous. This is especially true of basic research, where the ultimate benefits are yet to be determined.

The notorious Mansfield Amendment prohibited the Defense Department from carrying out “any research project or study unless such project or study has a direct and apparent relationship to a specific military function.” Such Congressional meddling in research virtually eliminates discoveries based on serendipity.

Whether or not you consider ant research to be wasteful, it is highly unlikely that $1.9 million created only two jobs. Let’s speculate on where that $1.9 million might have gone. Photographers, photographic equipment, rent, researchers, travel, computers, chemistry equipment – all of which helped various businesses and people. Then those businesses and people spent the money they received on things like food, clothing, shelter and transportation, all of which helped more people and businesses. And on and on and on. In a similar vein, the monkey research expenses were paid to people and businesses.

In short, when the government spends money, that money costs you nothing. (Taxes do not pay for the spending of a monetarily sovereign nation.) In fact, that spending adds money to the economy, and that money circulates throughout the economy, stimulating as it goes. Every time the federal government spends, people and businesses benefit, and in turn these people and businesses spend, which benefits more people and businesses. Ultimately, all federal spending creates jobs.

There always will be a politician who tries to look heroic and prudent, by pointing out what he considers to be wasteful spending. While state and local governments, which do not have the unlimited ability to create money, can spend wastefully, it almost is impossible for any federal spending to be wasteful, even in cases where the original expenditure seemed frivolous in some eyes. Even spending for the notorious Alaskan “Bridge to Nowhere” would have benefitted the economy by pumping money into the hands of people and businesses.

Good rule of thumb: The more federal spending, the healthier the economy. Reduced growth in federal spending has resulted in nearly every recession and depression, and increased federal spending dragged this economy out of the recession.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–The fallacy of taxing the rich

The debt hawks are to economics as the creationists are to biology.

Cynical populist politicians try to gather votes by playing Robin Hood. They think taxing the rich will make them popular with poor, and sadly, they are right. As the poor don’t realize, but readers of this blog have learned, TAXING THE RICH actually hurts everyone, especially the poor. Read the following article By JEANNINE AVERSA, AP Economics Writer, dated Aug 1, 2010
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“WASHINGTON – Wealthy Americans aren’t spending so freely anymore. And the rest of us are feeling the squeeze. […] Economists say overall consumer spending has slowed mainly because the richest 5 percent of Americans — those earning at least $207,000 — are buying less. They account for about 14 percent of total spending.
[…]
“President Barack Obama wants to allow the top (tax)rates to increase next year for individuals making more than $200,000 and couples making more than $250,000. The wealthy may be keeping some money on the sidelines due to uncertainty over whether or not they will soon face higher taxes. […] Think of the wealthy as the main engine of the economy: When they buy more, the economy hums. When they cut back, it sputters. The rest of us mainly go along for the ride.

“Earlier this year, gains in stock portfolios had boosted household wealth. And the rich responded by spending freely. That raised hopes the recovery would strengthen. […] The affluent went back to tightening their belts in June after months of vigorous showing. Data from MasterCard Advisors’ SpendingPulse showed luxury spending fell in June for the first time since November. […] “It isn’t a good omen for the consumer recovery, which cannot exist without the luxury spender,” said Mike Niemira, chief economist at the International Council of Shopping Centers.

“[…] And it helps explain why economists expect the rebound to lose momentum in the second half of the year. Especially if the rich don’t resume bigger spending. “They are the bellwether for the economy,” says Mark Zandi, chief economist at Moody’s Analytics. “The fact that they turned more cautious is why the recovery is losing momentum. If they panic again, that would be the fodder for a double-dip recession.”

“That’s because whether they’re saving or spending, the wealthy deliver an outsize impact on the economy. What’s not clear is whether they will remain too nervous to spend freely again for many months. That’s what happened when the recession hit in December 2007 and then when the financial crisis ignited in September 2008.

“As their stock holdings and home values sank, the affluent lost wealth. Their jobs weren’t safe, either. Bankers, lawyers, accountants and mortgage brokers were among those getting pink-slipped. Those who did have jobs feared losing them. Neither group spent much. Instead, Americans’ savings rate spiked. And most of the increase came from the richest 5 percent, according to research by Moody’s Analytics. In the first quarter of this year, stocks rebounded, layoffs slowed and the rich were spending again. But now the rich are building up their savings and splurging less on discretionary items. That’s starting to show up in softer sales at upscale retailers, such as Neiman Marcus and Saks Inc.

“’The affluent — as their wealth goes down — they’ll become more and more conservative,’ predicts David Levy, chairman of the Jerome Levy Forecasting Center.”

So, if you feel raising taxes on the rich is harmless, think again.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity

–Four lessons about Congress and our economy

The debt hawks are to economics as the creationists are to biology.

What lessons does the following article provide?

7/31/10: (AP) “WASHINGTON (AP) – Tucked into the new health care law is a requirement that could become a paperwork nightmare for nearly 40 million businesses. They must file tax forms for every vendor that sells them more than $600 in goods.

“Business groups say it will swamp their members in paperwork. “This foolish policy hammers our business community when we should be supporting their job growth,” Sen. Mike Johanns of Nebraska said. The requirement would hit about 38 million businesses, charities and tax-exempt organizations, many of them small businesses already swamped by government paperwork . It would also create an avalanche of paperwork that could strain the IRS.

“Republicans want to repeal the filing requirement and pay for it by changing other parts of the new health care law. Democrats want to repeal the filing requirement and pay for it by raising taxes on international corporations and limiting taxpayers’ ability to use special trusts to avoid gifts taxes.”

Four lessons:

#1. Federal taxes represent the single most damaging factor in our economy – far more damaging than bankers’ greed or speculators’ law-breaking. Taxes not only remove massive amounts of money from our economy, but they waste millions of hours for preparation, and enforcement.

#2. Congress does not understand the fundamentals of government finance. Federal taxes do not pay for federal spending, and tax reductions do not need to be “paid for” by increases in other taxes.

#3. Taxing business, while simultaneously trying to stimulate employment, makes no sense. Every tax on business hurts the economy, while increasing unemployment.

#4. Senators and Representatives are far worse than the “greedy” businessmen Congress loves to criticize. Congress’s greed is both for money and for votes. Members of Congress have one concern, and it is not the best interests of America. It is re-election. In that sense, Congresspersons are the least patriotic people in America, often taking actions they know will hurt the country, merely to assure themselves of ongoing personal power. Each day, Congress does more damage to America than have Al Qaeda, the Taliban and oil spills combined.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

No nation can tax itself into prosperity