Posts Tagged Economics

The Obama Tax Cuts and Other Myths

Robert Stacy McCain dismantles a mythical assertion by Frank Rich at the New York Times that Obama isn’t getting credit for his tax cuts:

This is, evidently, the Great Democrat Myth of 2010, a sequel to “We Didn’t Get Our Message Out” (2004) and “Bush Stole the Election” (2000). Whenever Democrats lose an election, their craving for self-esteem requires that they manufacture a myth to explain it to themselves and to the world. This year, they’re planning ahead!

What was included in the February 2009 stimulus package was not a “tax cut.” No one’s tax rates were reduced. Instead, there was a temporary two-year tax credit that reduced payroll witholding by — brace yourself — a whopping $8 a week: Read the rest of this entry »

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Obamanomics 101

Andrew B. Wilson at the American Spectator presents a rather scathing critique of Obama’s economic policies, and how they are spun as doing things that they don’t do:

For spendthrift Democrats to go around claiming that they have “cut taxes” is to engage in the most deliberate and outrageous obfuscation — throwing dirt in the eyes of an American public. What Obama and the Democrats have done, in the course of running up $2.7 trillion in federal deficits and spending nearly 25% of GDP over the past two years, is to put checks in the mail to people who, for the most part, pay no income tax — meaning that these payments from the federal government out of borrowed money are indistinguishable from welfare checks. The Obama administration has not cut tax rates for real taxpayers and has no intention of doing so (with huge tax increases soon to take effect with the expiration of the earlier round of George W. Bush tax cuts).

But none of this stops Democratic Party stalwarts from playacting the part of favoring tax cuts. On CNN, California Senator Boxer made the laughable claim that she had supported “$1.2 trillion in tax cuts” through the stimulus bill — which would suggest that the entire stimulus bill, and more, was devoted to tax cuts. In fact, she began her interview with Wolf Blitzer in claiming she had supported $2.2 trillion in tax cuts.

Since Obama came to office in January 2009, the unemployment has risen from just under 8% to close to 10% — where it has stayed for the past year.  There has been a net loss of about 2.5 million jobs.  Even so, the Obama administration continues to claim that it has “created or saved” about 3 million jobs.  That is a meaningless metric, which is not based on any evidence.  It comes from plugging data on government spending into a Keynesian computer model and assuming (against a great weight of contrary evidence) that every dollar spent would provide $1.50 in economic growth and job creation.  It is merely a restatement of what the target was at the outset of the stimulus program, as opposed to an objective measure of what the program has actually achieved.

Read the whole thing.

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How to Be Poor

Dr. Zero has a wonderful essay discussing the poverty mentality and how a person can become poor in America. Despite what the left wants you to think, poverty is not caused by exploitation by greedy capitalists or racism — in a very real sense, poverty in a country with as much opportunity as the United States is caused by developing a mindset of poverty that retards actions that take advantage of economic opportunities, discourages economic responsibility and restraint, and promotes helplessness and dependency.

Extreme poverty is not a difficult condition to reach.  All you have to do is remove yourself to a desolate wilderness area, and exert the minimum effort necessary to feed and shelter yourself.  Any increase in activity, or human interaction, will make you less poor.

It’s more difficult to become poor if you start off with the advantages of modern technology, surrounded by the incredible human resources of a capitalist republic.  Here are some techniques that both individuals, and nations, find equally reliable for impoverishing themselves:

Spend more than you earn. Nothing gets you to the poor house faster than spending money with wild abandon, especially when you borrow large sums, and pay exorbitant interest rates …

Be as inflexible as possible. Long-term commitments locking in high levels of spending will greatly reduce your ability to exploit new opportunities, and deal with setbacks.  Someone who dedicates most of their income to monthly cable service, cell phones, club memberships, and car payments is poorly equipped to investigate new business opportunities.  A financial emergency can wipe out their meager savings and push them into ruin …

Lose control of your finances. People who don’t pay attention to their bank accounts and balance sheets are always surprised to discover they’re bankrupt.  If you’re already broke, it really stings when a $20 check for pizza bounces, costing you $50 in fees.  The tumble into poverty often begins when a spendthrift relative or spouse is given access to a formerly solvent bank account …

Try not to cooperate with others. Human interaction produces wealth: the exchange of goods and services, from which both parties gain  … An individual can become poor by minimizing his contact with others.  Removing the benefits of exchange and cooperation goes a long way toward destroying wealth …

Convince yourself improvement is impossible. Poverty requires a certain lack of initiative.  The best way to remain unemployed is to stop looking for a job, because you’re certain none can be found.  Despair flourishes after the careful elimination of hope.  Some poor souls look at the ruins of a dissolute life, decide they don’t know where to start fixing it… and therefore never get started.  If success is the refusal to be beaten, failure is the refusal to pursue success …

Dr. Zero takes his analysis a step father by not only examining how the poverty mentality affects individuals, but also national policy. Read the whole thing here.

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The New Aristocracy

Henry Oliner at the American Thinker takes a look at leftist policies and the results thereof, and notices something that I’ve been seeing for a while: they’re encouraging the formation of a new left-wing aristocratic class.

While the social engineers decry the hardening and widening of discrepancies in income, this is true only if you look at the categories as static groups. As Thomas Sowell notes, when you look beyond the groups at individuals you find a fluid and mobile society. Few in the bottom tier stay there, and many in the upper tier drop out of that category.
Focusing only on the income categories ignores the social mobility that characterizes America’s success. Unfortunately, the growth in government, taxes, and regulation damages that social mobility and hardens the social order. The wealthy will focus on retaining and protecting their wealth, reducing the capital that funds the opportunity for the poorer to acquire wealth. The efficient creation and allocation of capital that we call capitalism is the most effective, productive, unbiased, and sustainable instrument of redistribution in history. It was this new social order that toppled the aristocracy in Europe and made America the wealth creation engine that it is. It was this machine that attracted the poor from the rest of the work to create their own fortune.
It is harshly ironic that this president who so openly preached redistribution will more likely hinder it. It is the young who will pay more for health care and get less, who will have to pay the interest on this record debt, and who will be penalized the most for reaching to the next income bracket.
It is also noteworthy that this president’s policies will more likely help the large corporations that he demonizes than the small business that not only more effectively redistribute the wealth, but also create most of the new jobs we so desperately need. It is the large companies getting bailed out and the small businesses with higher variable costs that will suffer more from higher taxes and mandates. It is much easier to shut down a business with lower fixed costs, leaving less competition to the established companies.

Interesting historical note: the Republican Party was so named because its founders wanted to restore republican ideals, which the Democratic party was eroding in favor of creating a white, landed aristocracy. Oh, how history repeats …

Read the whole thing here.

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Acadamia vs Reality

Now, before presenting this, I must preface it with the fact that I am at present an academic, I work with academics, and I have a great respect for several of my professors, including some who I disagree with vehemently on political issues. That said, I am often struck by the academic propensity to favor abstract theory over real-world situations (at least in the humanities), to the point where much academic discourse proceeds in the face of actual real-life examples against it. (This is one of the reasons that socialism is so popular in academic circles.)

So, ISUB Vision has a fun little video reminding us of the tendency of much of academia to dismiss real-work experience in the favor of abstract theory. (Well cultured readers will remember this movie.)

Read the rest of this entry »

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Jobs and Economics

Herbert Meyer at American Thinker explains some basic economic principles, and why free market principles are the best way to create new jobs.

Broadly speaking, a country can choose one of two economic operating systems. It can be a free-market economy, or it can be a command economy. In a free-market economy, businesses work within the rules set by government to sell their products and services, but no one is in charge. In a command economy, there may still be privately owned businesses, but the government’s role is so large that it really calls the shots. Because each country — unlike each cell phone owner — designs its own operating system, no two economies are precisely the same. So our country’s free market is somewhat different from Canada’s, which itself is different from Germany’s, Australia’s, Poland’s, and so forth. Likewise with command economies. Still, the similarities among all free-market economies are more striking than the differences, and all command economies are pretty much the same, whether it’s a left-wing or a right-wing government in power. Read the rest of this entry »

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Small Businesses face 25% Tax Hikes

IUSB Vision highlights this New York Post article on how small businesses across the US are being slowly killed by massively increasing tax burdens:

A record 25 percent increase in the taxes against US small businesses — from costs associated with new health care law, to an increased Medicare tax, increased capital gains taxes and higher state and city taxes — is repealing any ability of these entrepreneurs to add jobs to their payroll. Read the rest of this entry »

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The Parable of the Referee

Dr. Zero illustrates the fallacy of the government acting as a “competitor” in the health care or any other market, by way of another parable:

Far from opposing all regulation, I maintain that clearly written, honestly enforced, minimally intrusive laws are both just and essential for wealth creation. A nation’s wealth lies in transactions between its citizens, and the pace of those transactions would be greatly reduced if consumers had no confidence in providers. Shopping malls would be considerably less active, if the shoppers had to assume every food product was potentially poisonous, every piece of consumer electronics could explode, and all of the merchants were thieves. Read the rest of this entry »

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How the CBO Works, and Is Manipulated

Bloomberg News presents an analysis of the CBO by economist Amity Schlaes, in which she explains how the CBO comes to its conclusions via hand-picked assumptions fed to it by the writers of the bills it analyzes.

Flawed Assumptions

The CBO’s rules make it hard for the group to fulfill its own mandate. You’d think, for example, that the CBO would use its own parameters when it crunches numbers. Instead, the CBO must use the same mathematical assumptions supplied by the very lawmakers who wrote the bill the group is evaluating. No matter how improbable those formulas are. Read the rest of this entry »

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Capitalism vs Socialism: An Analogy

A brilliant account of a social experiment performed by an economics professor, courtesy of Iron Curtain Patriots:

An economics professor at Texas Tech said he had never failed a single student before but had, once, failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer. The professor then said ok, we will have an experiment in this class on socialism.

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. But, as the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too; so they studied little. The second test average was a D! No one was happy. When the 3rd test rolled around the average was an F.

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