Posts Tagged ‘america’
Paul Krugman is an NYT op-ed columnist, economics professor at Princeton, and everything that is wrong with academic economics. His recent article aimed at blasting Rand Paul about a tweet is a great example of his academic shortsightedness.
His worst quote is the following:
“issuing debt is a way to pay for useful things, and we should do more of that when the price is right. The United States suffers from obvious deficiencies in roads, rails, water systems and more; meanwhile, the federal government can borrow at historically low interest rates. So this is a very good time to be borrowing and investing in the future, and a very bad time for what has actually happened: an unprecedented decline in public construction spending adjusted for population growth and inflation.”
This would have made since back when the National Debt was 1/10 what it is today. Had that borrowed money been spent on infrastructure like Krugman is suggesting, we’d have amazing roads (maybe even paved in gold!), freeways, practically no student loan debt, an abundance of water retention systems in California, and massive alternative energy infrastructure. Instead, our roads are in horrible condition and cost us an average of $515/month (after double taxes – income and excise- mind you).
Sure, Krugman’s statements make sense on paper. I’ve seen this kind of thinking before when I was studying economics in college. It’s the same shortsightedness that had me question whether a degree in economics was worth anything more than the paper it is written on. Spoiler alert: the ink costs more than the paper.
Earlier this year, Krugman wrote another half-witted articles about debt (amongst so many others).
With statements like “Because debt is money we owe to ourselves, it does not directly make the economy poorer (and paying it off doesn’t make us richer)”, Krugman proves that studying economics at Princeton is a waste of money. First, our national debt is not owned entirely by American citizens. Second, owing YOURSELF money is fine (great example is taking a loan against your 401K) ONLY IF you pay it back. At some point, you aren’t going to have income, and if you’ve borrowed your entire 401K, you’re really hurting your retirement as well as what you are leaving behind for your family. The argument that the microeconomics doesn’t apply to the macroeconomics is false.
It’s certainly a reasonable argument to make that America borrowing money from itself and then paying it back is a good thing much like borrowing from a 401K is a good thing for an individual. However, if that money doesn’t get paid back and just piles up instead, you’re left with an accelerated increase in debt:
Even adjusting for inflation, the $4,118 only equals a mere $11,926.11. That’s quite a bit off from the $57K each citizen owns. It gets even worse when you only count taxpayers.
Borrowing and paying back is fine, but that’s not what America is doing. We’re borrowing and then having someone else pay it back (maybe, if they can). That’s called a Ponzi scheme. If America was borrowing from itself (which it isn’t since 35% is foreign owned) and paying back the debt within a generation, we’d see a much smaller national debt than the $18MMM+ we currently have.
At the end of the day, it appears Krugman is too smug with his academia version of national debt that he can’t see the flaws of his logic when applied to the real world as opposed to the fictitious one in which he wants to believe actually exists. He’s played his cards right and gotten to a level of academic prestige, which is great for him and the New York Times; not so good for public perceptions of debt.
In my world the American Dream is the ability to pursue whatever personal and financial aspirations I may have with limited interference from governments, protection by our judicial system against those who intend to defraud, harm or infringe on the freedoms we are all born with (including our own governments), and eventually create a better future for my family as well as future generations of Americans.
I wasn’t born into money. I spent the first 5 years of my life in a trailer park and my entire childhood living off Hamburger Helper, clipped coupons, and food stamps. I started working at a very young age. I helped my older brothers with their paper routes for the local paper when I was 8. I aspired to have my own paper route when I turned 13. I knew there was an expanding neighborhood development nearby (within bicycle distance), and I wanted to have that new route! I got that new route! It was honest work every single weekday. Eventually I ended up working with my brother for an L.A. Time distributor. We inserted local advertisements into the Sunday edition of the paper. Again, honest work.
All that work allowed me to buy my own lunches in high school, purchase my first motorcycle, and enjoy a movie here and there. It also inspired to know that if I really put everything into what I was doing, I would succeed. After failing to become a Harley Davidson mechanic, I took training from my older brother on computer programming. I read and studied as much as I could to comprehend enough to get a job with upstart Internet companies. I worked ridiculously long hours, helped businesses succeed, and made a good/honest wage.
I moved on to working for a public company that eventually saw most of it’s top brass arrested for defrauding investors. I changed career paths and got into marketing, taking an entry level job for a product development company. Within a year I was running its catalog and direct marketing division. I started my own marketing company a few years and then was tapped by the owner of the current company I work for to come back and become a managing partner of a brand I had turned into a success. The business had completely fallen apart and was collapsing. I’ve spent the last 3 1/2 years turning it around. Again, not easy work, but I’ve always known that if I put everything into it: I’ll make it work!
So, when Obama dropped his famous line about business owners not being responsible for their company’s success, that somebody else made that happen, I was a bit baffled. Certainly, no job that I’ve had have I been the only contributor to that business (even when I had my own marketing company). My paper route required the printing of the local newspaper for me to have papers to deliver. My LA Times job required the LA Times. The computer programming jobs required computers, the Internet, other businesses, etc. The current job requires employees, customers, manufacturers, shipping companies, and so much more. Along the way, I have had the need for our judicial system to settle disputes and enforce contracts. That’s what the judicial system is there for.
I listened to the full Obama speech and that’s not what he was talking about. He was echoing the speech made by Elizabeth Warren several months earlier. Hers is about “the rest of us”. Obama’s is about “somebody else made that happen”. People claimed Obama was taken out of context, but what was taken out of context? I felt the context actually made it worse because it showed that Obama doesn’t understand the role of local government in our lives vs. federal government.
I was having a conversation with a liberal friend about the topic and explained the problems I saw with the Warren-Obama rhetoric (local/state vs federal government account for all the services they refer to). So, I asked my liberal friend (a devote Democrat) what the logic was. She was very passionate about it!
My liberal friend started talking about the American Dream and how Warren and Obama were talking about the American Dream. She even threw in a comment that “I might be too young to appreciate the American Dream” (she has 9 years on me). I was a bit taken aback. I thought *I was* living the American Dream… I was born in a trailer park. I now own my own house. I was born to an unemployed mother and a father who lost his job when I was about 9 years old. I’m now the managing partner of a small business.
Then something dawned on me… For Warren, Obama, my liberal friends, and millions of Americans who support the Warren-Obama doctrine the American Dream really is embodied in the whole “rest of us speech”. I’m still at a loss for exactly what the American Dream is in that world, but it made one thing clear to me. The Warren-Obama doctrine supporters are just as passionate as I am about the American dream. Rather than it being my ability to pursue whatever personal and financial aspirations I have with limited interference from governments so that I can succeed and make our country better for future generations, it’s something that “the rest of us built” or that “somebody else made that happen”. It’s something outside me.
In their world the American Dream is something outside of ourselves. It’s something that comes from being in a democracy where you are required to pay taxes for programs and wars that you don’t support. It’s something that comes from somewhere outside you. It comes from something that we don’t have to be accountable for as individuals or as a government when we fail (government bailouts, bankrupt social programs, unjustified wars, unemployment, social inequality, etc.) but can thank our government when we succeed.
I wasn’t going to argue with my liberal friend about this topic. This wasn’t a topic that either one of us were going to win. This wasn’t a topic that we were going to find legitimate common ground on at anytime in the near future. There is an abundant divide between these two ideas of the American Dream. The only thing connecting us is a commitment to bettering America for future generations. However, the means to the end differ so dramatically between mine of reliance on self and hard work and Warren-Obama or reliance on government and entitlement. It’s a divide of the American Dream as something that you dream for yourself or one that someone else dreams for you.
My friend Jim brings up an excellent point about the redistribution of wealth and communism in his reply to my post about Flat Tax being communism. First, I’ll cover his question of why governments levy taxes. Then I’ll get back onto the topic of the flat tax and communism.
Jim is suggesting that income tax is communism but property tax is possibly justifiable if the purpose of government is the protect and to serve. There are a few problems with this, the most important being that the federal government should have absolutely nothing to do with property taxes. Second, the majority of Americans (and this hold true for most of the world) don’t own real property. Now, perhaps Jim is saying that you should pay taxes on all property you own so that you are paying your fair burden of the police and fire services in your area. Again, does this then mean that people who do not own a house are not deserving of police protection? They may be productive members of society that generate income, purchase cars, gasoline, clothing, rent an apartment from a property owner. They too are deserving of protection under the law.
Now, let’s get back to the purpose of government. There are several levels of government, but the purpose of all governments (at least in America) is the protection of life, liberty, and property. Jim is probably thinking to himself that I just proved his point about the property tax. However, life and liberty still come before property. The protection of these three equalities of all Americans takes place in several different ways via several different government agencies: Military, Police, Fire Departments, Department of Homeland Security, Commerce Department, Transportation Authority, FDA, EPA, FBI, CIA, etc.
All American’s are deserving of the services of all of the above, and all Americans should pay into those services. Now, there may be programs that an individual doesn’t support, but I’m not going to tackle that topic in this blog. Instead, I’m going to ask the next logical questions: Who stands to lose the most if our country in invaded, attacked, or bombed? Who stands to lose the most if there is a fire, earthquake, or other natural disaster? Who stands to lose the most if there is a severe disruption in the availability of natural resources, energy, or foreign services and labor? Not the guy making minimum wage, and not the guy paying 15% taxes (unless you implement a flat tax – communism).
The people who stand to lose the most in any of the above events are the business owners, investors, and wealthy Americans who utilize a great deal more of the protective and political power of or governments. Those who make more money stand to lose more money if something disastrous happens in this country. Therefore, they should pay a greater portion of the taxes. Some (like Jim) might say that wreaks of communism as it is a clear redistribution of wealth. Well, while there are certain programs that do redistribute wealth, most of them do not. Also, one need only look at history to know that a growing and increasingly upset lower-class is the demise of any ruling party.
Take any of the above departments and you will find a disproportionate amount of services being provided to those with greater wealth and income. Sure, there is some money redistributed to lower-income citizens, but again… History.
So this brings us back to the flat tax, which is ultimately the greatest form and supporter of capitalism. Yes, you read that right. A progressive taxation system is capitalism at its finest. How many of our Founding Fathers were in what we’d call the lower class? Was Washington? I think not. Jefferson? HA! Hamilton? Perhaps the closest. Franklin? You’ve got to be kidding me!
How many patent, copyright, and trademark lawsuits are there for the little guy? Barely any, but the giants are in the courtroom all the time. The wealthy utilize our legal system far more than the poor. The law, our government is supported and swayed by the wealthy far more than the the poor. Our governments have been created for the protection of all, but those who are wealthy have far more at stake and are easily responsible for a greater tax burden. In fact, it would be foolish to think otherwise because it would put at risk so much of what business owners and investors have works so hard to gain.
I can’t believe that only 23% of the people polled in a CNN poll thought Vice President Dick(head) Cheney is the worst VP in the history of America. Either these people have a strong recollection of Aaron Burr and Spiro Agnew, or they haven’t paid much attention to distortion of our constitution by the worst Vice President in history. Certainly, Agnew was a swindler, but he has nothing on Cheney. Dick easily ranks up there with Burr.
I would be interested in knowing who these people really think is the worst VP ever.
My favorite quote from Dick:
“I’m very comfortable with where we are and what we achieved substantively. And frankly, I would not want to be one of those guys who spends all his time reading the polls. I think people like that shouldn’t serve in these jobs.”
Of course he feels very comfortable. After having pulled off the largest raping of the American public, I’m sure he feels as comfortable as OJ Simpson with a glove that doesn’t fit on his hand.
Here’s an idea for the government bailout program that the vast majority of Americans don’t support. Give us an opt out clause on our taxes for the next 10 years.
Now, I’m not talking about opting out of our taxes. Those of us who don’t support the bailout will still have to pay our taxes as usual. However, we can opt out of our tax dollars being used to fund this ridiculous scam.
If you limit the government’s availability of funds, they can’t be as spendthrift as they have been. If they want to come up with $700 billion to spend on some useless bailout, they will need to get it from some other source than the American taxpayer.
Years ago, this would not have been possible. However, with technology today, this is entirely possible. In fact, we could give taxpayers the ability to opt out of any irresponsible government spending. It would really make it simple for the government to determine how much they can waste on pointless bailouts like the automobile industry bailout. If 60% of Americans don’t support the automobile bailout then they will only have access to 40% of the taxpayer funds.
This would make budgeting for the government much easier! Taxpayers don’t support something, Congress can’t just go spend the money whenever and wherever they want. I suspect that we could balance the budget within 4-5 years and keep it balanced indefinitely with a bailout opt out clause. In fact, I suspect the government would end up with considerable surpluses as government waste would now have a true checks and balance system in place. The total tax dollars collected would be the same, but the ability for Congress to spend would drop considerably.
Now, some might argue that this would create serious problems with because the funding for the bailout is something that is “necessary” to avoid a greater economic downturn or because it is something the public doesn’t understand the importance of. I have two words December 2007.
There’s a lot of crap that Biden has been getting for his comment about terrorists testing America if Obama is elected. Was he referring to the Cuban Missile Crisis? Or was he referring to the attacks of September 11?
Let’s put things in perspective here, my friends (as John McCain would say). Bush, a politician with next to zero experience, gets elected and America is attacked. Were they planning the attacks before Bush was elected? Hell if I know. Would they have attacked if Gore was in office? Who knows.
Having a noob President who also happens to be a cowboy in office certainly would give the terrorists an additional incentive to attack us. It has been well documented that the terrorists are interested in bankrupting America. This is precisely the direction that Cowboy Bush and Congress have been taking us.
However, I’m willing to bet that a McCain presidency is far more likely to result in a terrorist attack on America than an Obama presidency. Why? Because John McCain has shown that he is willing to fight a “war on terror” by invading another country that had nothing to do with the terrorist attacks of September 11. McCain is willing to turn America into a communist country (ala voting for the communist bailout of failing banks in America) and send our soldiers into harms way with misguided and fabricated military intelligence.
Just think about it for a minute. Where was his 30 years of experience when he was sounding the war on Iraq trumpet? Where was all his wisdom when he cast his votes in Congress that put us into the situation we are in now? A lot of good that experience did for us over the last 8 years, right?
I love America! I’ll joke from time-to-time about how California is our own country, but I’m not secretly promoting an independent California. As much as I think politicians like Dick Cheney has tarnished the American dream for decades to come, I still love our country.
When we hear about nut jobs in Texas and Montana who are trying to secede from America, we usually chalk it up as a bunch of crazies in the middle of the desert. Then you have Sarah Palin, John McCain’s VP running mate, who happens to be running around with the Alaskan Independence Party. No, that’s not the Independent Party in Alaska. That is Alaskans who want to secede from the United States of America.
For someone who touts her patriotism not by the taxes she pays, I’m really looking hard for how the hell she is patriotic.
If someone wants out of America so bad, why are they running on a presidential ticket? How about she just gets the hell out of America. Russia is right in her backyard. She could just swim there and take the whole Alaskan Independence Party with her.
Today gives me yet another day to gloat about the idiotic college professor I had years ago at Strayer University (yes, avoid this college. It is a waste of time and money). The CEO of Dow Chemical borrowed a page straight out of my economic philosophy and is proving that energy based inflation is a reality, not some idea that deserves a B on my term paper. Dow is going to raise their prices immediately by up to 20%
If you’re asking “Who the hell is Dow? Isn’t that a stock exchange?” Check the back of half the cleaning supplies you have in your house and ask just about every company in America where they receive a good portion of their supplies from! They don’t just make scrubbing bubbles America!
Dow is just the start too. Energy based inflation starts here. Energy prices increase, putting pressure on businesses to either cut profits or slow down. Traditional economist, aka most college professors, will tell you that energy prices will come back down and everyone will be happy. However, in the real world this doesn’t and didn’t happen over the last 10 years. The result is that every company in America (except big energy, and miraculously Walmart) is being squeezed to the brink of no ability to make a profit or even be productive at any level.
There is a solution. It isn’t cheap, but it wouldn’t cost any more than the failed tax rebate of 2008. This solution would provide a long-term solution to the energy crisis in America and heavily stimulate the US economy while building the infrastructure needed.
Where have all those “tax rebates” gone? Hats off to anyone who spends it on anything other than energy.
I’ll keep it really brief:
- Bring more attention to the “gas tax holiday”
- Point out how both of your opponents support it even though it would just put more money into the already fat pockets of oil companies
- Remind people that both Clinton and McCain support this ridiculous economic gimmick, and ask the public to decide who we think Clinton and McCain are really supporting
- Ask America if we want more of the same flat economy over the last 8 years with failed fiscal policy after failed fiscal policy
- Win handedly, so you are officially running against John McCain and then keep bringing up the fact that McCain supported this very, VERY bad economic gimmick
Free as a courtesy to democracy in America!