Monday, December 26, 2011

The best day of the week for Christmas

Most of the holidays in the United States are on Monday.  But Christmas is always on the 25th December and is on a different day of the week every year.  If you are in retail, what day would you prefer to have Christmas?  In 2011, Christmas was on a Sunday and it seemed to work out.  Let's discuss some of the options, from best to worst.

1.  Tuesday.  Really?  That does not make any sense at first blush.  But when you think about it, it makes perfect sense.  Why?  The earliest that Thanksgiving can be is the 22nd of November.  When Thanksgiving falls on the 22nd of November, Christmas will fall on a Tuesday.  This gives retailers 32 days between Thanksgiving and Christmas.  People do not do a lot of shopping on Christmas Eve, which is on a Monday, therefore, there is a full weekend of shopping buildup to the holiday.  The makes the Christmas weekend and the New Year's weekend a de-facto 4-day weekend, except the banks and government offices are open on Monday.  Christmas Eve and New Years Eve are on Monday.  These work days are easy work-days for a Monday.  Tuesday is the best day of the week for Christmas and it happens next in 2012.

2.  Monday.  There are a lot of reasons why having any holiday on a Monday works.  First, it makes the holiday travel-friendly.  It gives those traveling for the holiday an entire weekend to get where they are going.  It means that Super Saturday is the last full shopping day of the season.  When Christmas is on a Monday, Thanksgiving is on the 23rd, which gives retailers 31 days between Thanksgiving and Christmas.  Nobody likes working on a Monday, and it is a bonus whenever a holiday is the first day of the week.  Because of leap year, it will be a while before Christmas falls on a Monday again.

3.  Sunday.  Banks and federal employees will take Monday off when Christmas is on a Sunday.  Thanksgiving is on the 24th of November, giving retailers a full 30 days to push holiday sales.  But Christmas Eve falls on a Saturday, and the last weekend push has to happen earlier.  Sunday is the worst day for the Holiday if you are traveling, but banks and government offices observe the holiday on Monday and there is an extra day for travel if needed.

4.  Thursday.  Thanksgiving falls on the 27th, there are 27 shopping days between Christmas and Thanksgiving.  The work week before Christmas is and there is a Friday after New Years day that people have to work before enjoying the first weekend of the New Year.  However, if you are traveling, this may be the best day.  If your plans take you out of town for Christmas and New Years Day, the de-facto 4 day weekend will provide some extra travel time.  Why worry about getting back so quickly.  While it may not be good for retail, Thursday is the most travel-friendly day for Christmas.  Therefore, Thursday sneaks ahead of some of the other days of the week for these holidays.

5.  Friday.  This is not the best day for Christmas, but there are worse days to have this holiday.  Thanksgiving will fall on the 26th and retailers will have only 28 days for holiday sales.  The week before Christmas is a shortened week and it is not conducive to holiday travel, unless people are staying until New Years Day, then you have the entire weekend to recover and return home.  You would not have to return to work after New Years until the 4th.  It is not a bad day to have the holiday if you are traveling.  You have the whole weekend to get back.

6.  Saturday.  This is beginning of not-so-good days for Christmas to fall.  Banks and Federal offices will take Friday, Christmas eve off.  Thanksgiving falls on the 25th, and retailers have less than a full month to push for holiday sales.  It's not bad, but there are better days for the holiday

7.  Wednesday is the worst day for Christmas.  A holiday in the middle of the week is the most disruptive to business and when Christmas is on a Wednesday Thanksgiving is on the 28th, giving retailers a short shopping season.

Here is the day of the week for Christmas the next few years.

2012--Tuesday
2013--Wednesday
2014--Thursday
2015--Friday
2016--Sunday
2017--Monday
2018--Tuesday
2019--Wednesday
2020--Friday
2021--Saturday
2022--Sunday

Friday, December 23, 2011

Should Drugs Be Legalized?

Some people have suggested that soft drugs, like marijuana, should be legalized as a source of revenue for the government.  After all, other "sin" taxes have provided a large amount of revenue to the governments of all 50 states.  But let's whether or not this would really be helpful, without discussing the morality of any of these activities.

Alcohol

According to the Tax Policy Center, alcohol generates nearly 6 billion for state governments nationwide.  Even in tea totaling Utah, taxes on alcohol sales generate nearly 40 million dollars of tax revenue annually, a state which has one of the highest alcohol tax rate in the US, with the lowest per capita rate of alcohol consumption.  That dollar amount is nothing to sneeze at.

But the cost to society is much greater that 6 billion dollars.  An economist for Forbes Magazine, Tom Van Ripper, estimates that alcohol costs America 166 billion dollars annually.  That is more than 27 times the amount of money that booze puts in tax coffers.  The total loss is not just to government, but to business as well.  The total costs include lost productivity and wages as well as the costs of alcohol-related health care.  There is also the immeasurable costs of life when a drunken driver takes the life of an innocent person, which can not be calculated as part of the 166 billion.  There are 18 billion dollars spent annually for alcohol abuse treatment which represents about 1.3% of all health care related spending.

Tobacco

According to the Tax Policy Center, Tobacco taxes generate a whopping 17 billion in aggregate tax revenue for all 50 states and the US government as well.  Smoking is an addiction which helps most US states balance their budgets.  In Utah, where the per capita smoking rate is also the lowest, tobacco generates nearly 60 million dollars.  Puffing is the most generous of all of the "sin" taxes.

But tobacco has a costly side as well.  Van Ripper estimates that tobacco costs the US 157 billion dollars, about 3 times as much as it generates in tax revenue.  More than half of that money is in direct health expenses to treat a variety of problems that range from cancer and heart disease to impotence.  The rest is in lost productivity where ill employees miss work.

Overeating

If there is an addiction that makes profit for the US, it has to be food.  People have to eat, so why not profit from it?  According to the Michigan Restaurant Association, the food industry generates 11 billion dollars in tax revenues and employs over 400,000 people.  Very good for the economy.

But there is a downside.  Many people, especially those who eat almost exclusively at restaurants, are obese and their poor health is draining the economy.  Overeating costs the US about 107 billion annually, nearly 10 times the amount collected in restaurant taxes.  Obesity is the cause of about 1 out of every 5 heart attacks and is responsible for a large host of other health problems.

Gambling

According to the American Gambling Association, tax revenues from casinos topped 7 billion in 2010.  In addition, states earned nearly 24 Billion from lotteries, according to the Las Vegas Business Press.

Gambling is the only "sin" tax that comes close to earning back what it costs from society.  Gambling earns back more than 3/4 of the 40 billion dollars it costs the economy.  Gamblers will often chase bad bets by gambling even more money.  Gamblers face job loss, foreclosure and bankruptcy and gamblers are more likely to commit other crimes.

Legalizing drugs?

Notice a pattern?  Sin taxes generate money for the government, but they do not offset the costs to society.  But what about drugs?  Drugs costs society an estimated 110 billion, according to Van Ripper.  The argument is that legalizing drugs could generate some revenues to offset the costs.  You might even say that the costs to society may even decrease if drugs are legalized.  Many people will seek treatment sooner, when it is less costly if the stigma of drugs is removed.  There will be less spent on law enforcement as well.

As far as I know, there is no credible cost/benefit study on what legalized drugs would cost or would benefit society, but it would likely be similar to alcohol.  When Prohibition was repealed, the main benefit to the government was the reduced spending on enforcement.  If drugs are legalized, crime syndicates will have to find another source of revenue and some will go away.    The Cato institute estimates that nearly 45 billion dollars can be saved by government if drugs are legalized.  47 billion dollars can be generated in tax revenues, more than currently comes into state coffers from alcohol and tobacco combined. The total benefit is still less that the cost to society.  However, this is if current prices hold.  If drugs are legalized, there will be more producers and a greater supply and prices will go down significantly.  If recreational drugs are legalized, there will be many enter the market who can produce them more efficiently than the current producers do. Therefore the 47 billion dollars in tax revenue is probably an optimistic estimate.  One will also argue that society pays the cost whether or not drugs are legal, but again, there has been no study to determine if the costs to society will decrease or increase.  But if recreational drugs are legalized, couldn't one also argue that more people will experiment and therefore the costs of addiction and treatment will increase and not decrease.  What will happen to the societal cost is a more difficult question to answer.

What questions are unanswered?  Here are a few.  How many more people will indulge once the stigma of illegal drugs is gone?  Will fewer people seek treatment for their drug addiction if it is legal, or will it be more?  Will there be more or less loss in productivity in the economy if drugs are legalized?  Will legal drugs lead to higher or reduced health care costs?  If costs increase, who will pay for these costs and how will it effect the economy?  Will the legalization of something that is currently illegal really benefit society as a whole?

This blogger is of the opinion that "sin" taxes are a bad idea.  Not that I am for addiction and sin, but it unethical for government to profit from something that we really hope will go away.  It is using people's weaknesses to fund the activities of government.  Is taxing a bad activity is a tacit endorsement by government of a poor and destructive habit?  It seems obvious by these examples that no sin can be taxed at a rate high enough to make up for the costs to society and to the aggregate economy.  Therefore, should drugs be legalized to fund the government...no.


Sources:
Tax policy center on alcohol revenues
Tom Van Ripper's article
Tax Policy Center on tobacco revenues
MRA
AGA
Las Vegas Business Press
Cato institute on legalizing drugs

Friday, December 16, 2011

The Economic Consequences of a Balanced Budget Amendment

Many I've talked to who support a Balanced Budget Amendment agree that there will be economic consequences, but view them and necessary pain.  Much like chemotherapy.  So, as your oncologist, let me explain what I have been able to find out about a BBA.  Balancing the budget within the next two years is likely impossible in this economy.  Here is why.


Many employed persons today are employed by the Federal Government either indirectly or directly.  Indirect government employees are contractors or those whose paychecks are not signed by Uncle Sam, but signed by the paymaster of a private company, like Northrup Grumman, but the money they make still comes from tax dollars.


An economist at the Macroeconomic Advisers Group, based in Clayton, Missouri estimates that the Balanced Budget Amendment would, cause "the economy would shrink by 12 percent, and unemployment would jump to 16 percent from the current 9 percent.  The dire consequences wouldn't stop there. As people lost their jobs, they'd pay less in taxes, so Congress would have to make more spending cuts. We'd be in a downward spiral of suffering" (Nicklaus, 2011).


I must emphasize that when the government taxes and spends, there is no benefit to the economy.  The only way that the government stimulates the economy is by borrowing and spending.  The 16% is the total effect that current borrowing activities have on the economy.


The question should be asked, why do we need a balanced budget amendment?  This blogger's opinion is that our elected leaders, from President Obama to Congressman Chaffetz do not have the courage to propose the needed spending cuts.  You can publicly assail government spending all you want, but when it comes time to actually ax a program, it does not happen.  Not one member of Congress has the courage to make the tough choices.  Not Hatch, nor Matheson, nor Bishop, nor Chaffetz not even the Tea Party Senator, Mike Lee.


It is argued that most people do not live off of a balanced budget every year.  If you have borrowed money for a car, a house or school, this year then you do not have a balanced budget and are spending more money than you take in.  I know people who have not borrowed for a car or for school, but I know of almost no one who can pay cash for a house.  That is what a balanced budget means.  You borrow money for nothing, ever.  Not even for your home.


You might say at this point, "Ben, you have just contradicted yourself, shouldn't government spending remain at the same level during this recession?"  I will respond by saying that there are ways to cut the federal budget even today, but no one in congress has the courage to do this.  Here are some ideas.


1.  A freeze in pay increases for all civilian federal government employees GS-5 and higher and for all military officers above the rank of O-2.  This should be easy to sell.  If your civilian counterparts are not getting raises, then neither should you.


2. A whistle-blowers award and protection for anyone who reports fraud, waste and abuse in the government.  Much of our taxpayer money is wasted.  We should reward those who help us stop it.  I have no problem in rewarding with thousands someone who saves us millions.


3. And end to all double and triple dipping in government pensions.  One pension should be enough for everyone.  This will take a ton of courage to stop double dipping and a ton of courage to justify it's continuation.


4. A ban on all congressional earmarks.  Let's stop sneaking spending.


5. A requirement that anyone requesting a government grant prove that they have exhausted all private funding options first.  Government grants should be last resort grants instead of first resort grants.


6. A bonus to government contractors who hire people unemployed for new government contracts first before they hire internally or hire someone from another firm.  This will take people off of unemployment and welfare rolls and will save the government money.


There are many ideas out there of how the government can spend less money and not have a negative effect on the economy.  Not all dollars that the government spends are multiplied equally.  Perhaps my readers can think of other ways the government can save money in this economy.  If your suggestion is good, I will post it.  Please no comments like, "just kill the department of education" or "let's legalize marijuana."  I will address options like that in later blogs.


It is very easy to say, "Hey, we need a balanced budget."  But taking a scalpel to the Federal Budget is another reality altogether.  Before the surgeon has scrubbed, there will be a flood of lobbyist in Congress hoping to cancel what has been done.  There is even a cow flatulent lobbyist stating that studies on bovine methane should be kept and promising gifts and dinners to keep them.  For every dollar spent in Washington, someone has lobbied for it.  For every dollar cut from the budget, someone will lobby to keep it.


Most Republicans are in one of two camps.  One camp is that balancing the budget now is the best way to help the economy.  It has been done at the state level in many states.  But most of this happened in better economic times.  The other camp realizes that there will be some economic pain, but the economic pain we experience because of a balanced budget will be better than the economic pain we would experience because of a balanced budget.


The people who are in the second camp are closer to the truth.  But the people in the first camp could be right if the budget is balanced in a growing economy.  In a growing economy, displaced government workers should quickly find new work.  When the economy is growing, less government debt would be welcome.  Investors who were vested in government bonds can move their investments to private companies.  The stock market will grow and companies looking for experienced people will hire government workers.

But understand that there is a reason why financial advisers help people focus on credit ratings.  The ability to borrow money is something that all businesses and families need.  That does not mean that you have to borrow, but it is nice to know that you can if you have to.  A business that does not have the ability to borrow money may resort to passing on expenses to consumers when times get bad.  

Imagine what could happen if the BBA is passed.  The next time there is a minor economic crisis, Congress could resort to raising taxes.  They may justify by telling people that the increases are necessary to cover unemployment claims or increased welfare needs.  They may tell people that if companies would only hold on the laid off workers, the tax increases would not be needed.  They may tell people that the tax increases are temporary.  But how many tax increases are temporary?

If the BBA passes, increased taxes will be the only tool the government has to deal with unexpected decreases in revenue, like a new recession is to raise taxes.  If the BBA passes, the only tool that Congress has to deal with an unexpected expense, like a new war or a major natural disaster is increased taxes.

This blog is in favor of a balanced budget in a reasonable time frame.  In this country, we do not tax wealth, we tax economic activities.  It will be easier to balance the budget in an improved economy.  That should be the top priority of Congress.  With a growing economy, resources can be transferred from the public sector to the private sector and the debt can be paid down.  If this happens, the burden of interest payments can be reduced and momentum in paying down the national debt can be gained.

Congress needs to have the courage to balance the budget and get rid of wasteful spending.  They do not need to hide behind prohibitive constitutional amendment to do so.


Reference:

Wednesday, December 14, 2011

Support for Ron Paul by the Military...

The Ron Paul campaign has claimed the following:

Active duty soldiers overwhelmingly support Ron Paul as their next commander in chief.  Now, I asked a Ron Paul Supporter to prove the claim, and I was directed to the Federal Elections web site.

Here is the link

http://query.nictusa.com/pres/2011/Q3/C00495820/A_EMPLOYER_C00495820.html

Keep in mind that the site only reports dollar amounts, but not actual numbers of people.  Here are what they report by employer

Army...585.98
UUS Army...60.00  (I assume this is a mis-print)
US Army...16,092.86
US Army/DOD...250.00

Army Total...16,988.84

Now, I have checked the Mitt Romney, Newt Gingrich and Michelle Bauchmann contributions, and they contributions by military-associated persons is negligible.  So yes,  the overwhelming majority of dollars coming from those who list the US Army as an employer are for Ron Paul.  More than any other candidate. More than Romney, Bauchmann and Gingrich combined.

Now, let's assume that each person who contributed to Ron Paul donated a dollar.  That means that 16,988.84 soldiers contributed to the Ron Paul campaign.  It's a big stretch, but I'm giving Ron Paul people the benefit of the doubt.  This would mean that 3.39% of the Army financially supports Ron Paul, with an active duty force of 500,000.

Now, lets shed some reality on the subject, from the perspective of someone who spent five years on active duty, myself.

1.  The majority of people who contribute to campaigns usually contribute more than 1 dollar.  Let's say the average contribution per person is a modest 25 per person; which is very modest, but most politically active soldiers can afford 25.  This means that 670 people employed by the Army financially supported Ron Paul.  This means that 1/10 of 1% of Army supports Ron Paul.  But that is still more than Romney, Bauchmann and Gingrich combined.

2.  The Army, and all other branches of the service employ civilians.  These people would also list US Army as an employer.  About 330,000 full-time civilians are employed full-time by the Army, in fact, where there are about 500,000 active duty soldiers in the Army.  Therefore, only 66% of people employed full-time by the Army are active duty soldiers.  66% of 670 people is 442.  That is less than 1/10 of 1% of active duty soldiers have contributed to Ron Paul's campaign.  Again, I think this is giving Paul people the benefit of the doubt.  Most people who contribute to campaigns contribute more that 25 dollars.  Now, the contribution to the Ron Paul campaign could be more soldiers than civilians, and it could be the other way round.  There is no way to tell.  For all we know it could be all civilians, and it could be all active duty.  The reports are not that granular.  We are just assuming it is the same mix as they Army as a whole.

So yes, more military people contribute to money to Ron Paul's campaign than all of the other candidates combined.  It says something.  But not what Ron Paul's people think it does.  It's like the claim in the Trident commercials...9 out of 10 dentists recommend sugarless gum, but that does not mean they recommend Trident.  We do not know if these all or any of these contributors are active duty soldiers.  Here are some other facts about the military that people should understand.

Military people can financially contribute to a campaign, financially.  But NCO's and Officers are not allowed to voice their support for anyone while in uniform, other than to say that they support the decisions made by the President and by Congress.  This does not mean that they will vote for the President or current members of Congress.  The reason is concern that their voice could be interpreted as coercion to vote a certain way.  There is also concern that in uniform support could be interpreted as support by the military as a whole.

Also keep in mind that many military families struggle to make ends meet.  And, military life is so demanding that many military people do not get involved in politics at all.  But they do vote.  They do not vote as a block.

The Armed Forces draw from America as a whole and the force is really a minor, mirror-image of America as a whole.  Perhaps there are sectors of society that supply more soldiers than others, and sectors that supply fewer soldiers.  But the military that I served in was a microcosm of the entire country.

Therefore, there are supporters of Ron Paul in the Active Duty Military.  But there are also supporters of Mitt Romney and Newt Gingrich and all of the other GOP candidates.  Even if no other candidate gets financial support from military members.  There are also members of the military who want to see President Obama get another term.  I am willing to offer a Mitt Romney-type wager to prove it.  In fact, I could probably drive to the nearest military post to my residence, find an Obama supporter in uniform and be back before my dog knew I was gone.

Ron Paul has also promised to bring home soldiers serving in Afghanistan, and Germany, and England and South Korea and every other foreign shore.  I was in the military during the 1990's draw down.  It was a very difficult thing to experience, even when the economy was good and the lion share of my brothers in arms found civilian jobs very quickly.  In today's economy, it is much more difficult for recently de-activated veterans to find work.  It was a difficult adjustment for me when I left the Armed Forces in 1997.  I found my new job within a month, and it took me another 2 months to find another job less than a year later after I was fired from my first job.  But remember, this was 1997 and 1998.  Unemployment is quadruple what it was them.  (The only time I was ever fired, by the way.  I was fired because my boss did not believe that anyone can make the transition from public sector to private sector.  I will admit that it is very difficult to go from the military to complete self-reliance.)

Imagine what it would do to the psyche of our country to suddenly put about 200,000 military people on the streets.  Imagine the outcry if most of these soldiers were still looking for work a year later.  Any President who would be bold enough to do this will likely be a one-term President.  But Ron Paul has said, "let's just bring them home."  Nothing more, nothing less.

Would you support the hire of a CEO at your company who promised lay-offs?  Well, maybe you think it will not be you that would lose your job.  Maybe you would because you think it is the best for the long-term survivability of your company.  Maybe you believe that the company will get rid of the dead beats, and will keep good employees.  Maybe you believe that your company shouldn't meddle in certain markets.  This describes most Ron Paul supporters.  They believe that Ron Paul is what this country needs.  They are very vocal about it and very passionate about what they believe.  Most people, I'm guessing, would not want their company to hire a CEO who was a only hatchet man, whose sole purpose is to lay people off.

Let me also state that Mitt Romney and most of the Tea Party-minded candidates will cut the size of the Federal Government and will lay off people who believed that they had a life-time job and career.  There may even be some military cut backs if one of the other GOP candidates gets elected.  There will even be some overseas bases closed.  But the cut backs to the military will not be a steep as they will be if Ron Paul gets elected.

One person I spoke to said that returning soldiers could work the jobs that deported illegal immigrants are now working.  My response was, "you first."  Personally, I think those willing to lay down their lives for our freedom deserve better.

Tuesday, December 13, 2011

Why the Tea Party Supports Gingrich.

It is baffling to many of us as to why the Tea Party has thrown their support to Newt Gingrich.  I have found three reasons why this is the case.

1. Gingrich was not in Congress during the mid-2000s.  The Tea Party has been focused on cleaning house of the Republicans who were in congress from 2000 to 2008 and to blame them for the recession that we have been mired in since.  Because Gingrich was not in Congress or government at that time, he is free from blame.  Newt did not vote to authorize wars in Iraq and Afghanistan.  Newt did not vote for the post-Katrina spending spree.  Newt had nothing to do with Medicare Part-D.  Newt did not vote for the Bush-era tax cuts.  Newt did not vote for the bailouts of Fannie and Freddie.  Newt did not vote for the other bail-outs of 2008.  Newt did not vote for cash for clunkers.  Newt did not vote for porkulus.  All of the other GOP candidates are not entirely free from this stain because they were all in office and did not do enough to prevent the collapse of the housing market and the bail-outs the ensued afterwards.  Newt also did not sign a health insurance mandate, either.

2. Gingrich was partly responsible for the Contract with America.  This was the last time, in the view of many Tea Party members, that the GOP really was united and stood for something.  He was Speaker the last time the Federal Budget was balanced.  He successfully pushed welfare reform and many other programs that Tea Party people are proud of.  He introduced tax relief.

3. Many have taken to Newt's confession of marital problems and forgiveness and have personalized it.

Here is my rebuttal.

1.  True, Newt was not in Congress during the mid-2000s, but he was indeed lobbying for Freddie Mac and Fannie Mae in fact profited quite a bit from it.  He is just as much to blame for the economic meltdown of 2008 as anyone in government including his chief rivals.  Four of his rivals were state governors at the time and all of them balanced their state budgets and none of them voted for any of the runaway spending of the late 2000's.

Let's take a look at Mitt Romney, the only person who seems to be able to knock Newt from the top of the hill at this time.  Mitt did not vote for the Bush-ear tax cuts.  Nor did Mitt vote to authorize the wars in Afghanistan and Iraq.  Mitt did not vote for the post-Katrina spending spree.  Mitt did not vote for Medicare-Part D.  Mitt did not vote for any of the bial-outs.  Mitt did not vote for porkulus nor cash for clunkers.  Mitt's hands are not entirely clean in these matters, but there are no dirtier nor cleaner than Newt's.

2.  Gingrich did accomplish many things as House Speaker.  But during his time as Speaker, he was not only at odds with the Clinton Administration, but with many in his own party.  He was the only House Speaker ever to be indicted on ethics violations, may in his own party voted to convict him.  There are also plenty of Tea Party allies who are not at all happy with the prospect of Newt becoming the GOP nominee.

It is true that the budget was balanced when Newt was speaker, it is not true that he cut the budget to get it done.  Spending actually increased by almost 15% when Newt was speaker while revenue increased by 18%.  In your household, if you managed your personal finances this way, you could look like a hero to your family.  Again, the surplus came from increased revenue, not from disciplined spending.

Don't forget that Newt has lambasted real Tea Party conservatives like Congressman Matt Ryan.

Here are some links.

Weekly Standard
Ann Coulter
Here is a funny transcript from Rush Limbaugh trying to tap dance his way around talking down Newt, and then talking up Newt.  Rush has been famously on both sides of Newt.
Michael Savage
Brit Hume
Rich Lowry

3.  I have no rebuttal.  Religion is personal.  The only problem I have with this is the number of times Newt has dragged out his own dirty laundry and aired it.  Maybe it was needed and maybe it was not.  I believe that when a person repents, he will confess and foresake his sins.  Newt definitely has the confession part down. No one has come forward with proof that he has cheated against his current wife, Callista.  I have no reason to doubt Newt's sincerity in this matter.  Gingrich has enough other flaws that GOP Primary voters need to think about.  Unless a new allegation of adultery is brought forth, then we should leave this one alone.

Monday, December 12, 2011

What it will take to get an electric car?

I was looking at the specifications for the Nissan Leaf, which is a step to where electric cars will become the norm.  This will help the pollution in big cities if certain conditions are met.  Here are those condition.

The electric car will need to be comparable to the gasoline car in every respect.

1.  It will need to run 350-400 miles are more between charges.  Now, the Nissan Leaf runs 100 miles between charges.
2.  It will need to be able to charge in 10 to 15 minutes.  Right now, the Leaf needs to be plugged in overnight.
3.  It will have to cost less than 20,000 new.  Right now, the leaf costs 32,000.
4.  One requirement has been met.  The Leaf will go 90 MPH.

So, there is some work to do.  It must also be pointed out that for electric cars to really take off in the United States, we will need the capacity to produce more electricity.  Much more than we have now.  We will really need a much heavier investment into non-coal power sources including hydro-electric and nuclear power.  The Nissan Leaf, however, is a step in the right direction.  It does not necessarily reduce our carbon footprint, but it does step us away from dependence on foreign sources of fuel.  That is a step in the right direction for America.  It will keep more of our hard-earned dollars in the United States.

I would love to see a day when not only passenger cars can have electric engines, but long-distance trucks, trains, ships and air craft.

Friday, December 9, 2011

What Fox News Can Gain from President Newt

Newt gains front runner status in the GOP nomination and gets an entire hour on Hannity.
Newt strengthens his front runner status, and you get the now infamous Brett Biar interview with Romney.
Newt gains Herman Cain supporters and you get Sarah Palin on the Hannity saying now is the time for republican candidates to stop fighting each-other and focus on defeating Obama.

Anyone else notice a pattern?

So, the question now is, why does the Fox News Channel want Newton Leroy Gingrich to become the President of the United States?  The answer to that question is pretty obvious.  Newt would not be politically viable today were it not for Fox News.  In the years since Gingrich ignominiously left Congress, it has been FNC that has kept Newt's face in front of GOP voters.  Any time that there has been a Congressional issue, it has been Newt that FNC has called in to explain the issue to potential voters.

Therefore, out of the entire GOP field, Fox has more to gain from a Gingrich presidency than with any other candidate.  And, coincidentally, Fox News is the most powerful media outlet among GOP-leaning voters.  So what does Fox News really have to gain from a Newt Presidency?

Unprecedented access to the Oval Office.  Anytime there is an issue affecting the presidency, in one way or another, Fox News can call in a favor and interview the President before anyone else.  Before CNN, before ABC, NBC or CBS.  TV networks would kill for that kind of access.  In President Gingrich's White House, Fox News will have it.

Fox has little to gain from a Romney presidency, therefore why not portray Romney as a flip flopper and downplay Newt the flop flipper.

Fox gains nothing if President Ron Paul is in the Oval Office, so why not over-emphasize the disagreements that Ron Paul has had with his fellow republicans and down play the problems that Newt has had with his fellow republicans.

In the book and film, All the President's Men, there is a term for this kind of tactic, but since this is a family-friendly blog, I will not say the term here.  It has something to do with rats and how adults use each-other.  The family-friendly way is to call this a discrediting tactic.  In the court room, it is called impeaching the witness.  You are making those unfriendly to your cause look bad, while making those who you like look good.

In the end, Newt is using Fox News to get to the White House.  How will Fox News use President Gingrich?  That remains to be seen.

Thursday, December 8, 2011

Inefficiencies and Transfer Payments


There is much debate in Washington about the morality of transfer payments, basically taxing people who have income and giving to people who do not have income.  I will address the morality and the practicality of transfer payments and what should have been done and what can be done about the issue now.

Are Transfer Payments Moral?

There is no doubt that Jesus taught that it is the duty of the wealthy to take care of the poor, "He that hath two acoats, let him bimpart to him that hath none; and he that hath meat, let him do likewise" (Luke 3:11). But the scriptures also teach self-reliance "In the sweat of thy face shalt thou eat bread, till thou return unto the ground" (Genesis 3:19).  The scriptures also teach that we are not to judge the intent of others, but that we should give willingly.  "Judge not, that ye be not judged.  For with what ajudgment ye judge, ye shall be judged: and with what bmeasure ye mete, it shall be cmeasured to you again " (Matthew 7:1-2).  We are are given this instruction on how to give.  "But when thou doest alms, let not thy left hand know what thy righthand doeth" (Matthew 6:3).

At this point, it sounds as if those who advocate government transfer payments have scripture to back them up.  It is true that the scriptures advocate giving of our substance to the poor.  But the question is, do the teachings of the Bible or any other scripture advocate government transfer payments.  Here is what I was able to find in the scriptures.

First, when Jesus was asked if it was lawful to give tribute to Caesar, he answered, "Render therefore unto bCæsar the things which are Cæsar’s; and unto God the things that are God’s" (Matthew 22:19).  Again, it sounds like the Bible advocates taxing people and giving to the poor.  

Jesus did not say whether or not the taxpayers had the right to question what Caesar was going to spend the money on, but Jesus also offered this advice. "For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it?  Lest haply, after he hath laid the foundation, and is not able to finish it, all that behold it begin to mock him, Saying, This man began to build, and was not able to finish.  Or what king, going to make war against another king, sitteth not down first, and consulteth whether he be able with ten thousand to meet him that cometh against him with twenty thousand (Luke 14:28-31).  In other words, before you begin something, consult as to whether or not you will be able to finish it.  

Therefore, if a government is going to tax and give the money to the poor, the question needs to be asked if the government is going to have the ability to finish the job.  What is finishing the job?  It is to continue to make those payments until that assistance is no longer needed.  Either you have to lift the poor above their economic circumstances and get the poor to a point to where they no longer need the money.  Or you have to plan on paying that person until the end of their life.

Therefore, it may not be immoral to tax people to assist the poor and the needy.  But the government is not doing itself a favor unless they help people rise above poverty.  However, there are many examples, both in the scriptures and otherwise, where taxes have become burdensome for the people and have led to revolt.  There is obviously a limit to how much tax burden the people are able to bear and it is not smart for any government to overtax their people, not matter what the money is spent on.  It makes good sense to limit transfer payments and to take steps to ensure that any assistance provided is temporary, even if it is moral.

I would also be remiss if I did not mention that all of the directives in scripture to assist the poor and needy are directed at individuals, not at governments.  I do not believe that you will settle the question of whether or not governments should assist the poor and needy by going to scripture.  But governments need to do what is prudent.  Revolution is not a good thing.

Do Transfer Payments Help the Economy?

Many will tell you that the answer is yes, transfer payments help the economy.  Some may even go as far as to say, "well duh, you are taking money from people who have extra and giving the money to people who have nothing.  More people are able to purchase things, so yes, you are helping the economy."  In the micro-economic sense, you are helping someone.  But in the macroeconomic sense, at best transfer payments have no effect on the economy at all and arguably hurt the economy.
Taking money from one person and giving it to another in theory has no effect on aggregate demand at all.  The purchasing power of the overall economy does not depend on who holds the gold.  The problem is that there are inefficiencies in the system.
The Keynesian economic theory acknowledged this.  Keynes advocated borrowing and using the money to put unemployed people to work.  This would be beneficial to people.  This is in essence transferring money from the future to the present...a transfer payment.
Arguably, to introduce public welfare into the economy is a positive because it takes people to run the system and those people are saved from unemployment.  In bad economic times, this is a positive.  Keynes would agree with this and that is why he pushed for heavy government borrowing in the Great Depression.  
But in good economic times, it is a negative to have a large bureaucratic system to care for the poor and needy.  In good economic times, the government competes for employees with the private sector and introduces wage inflation.  This will exacerbate unemployment when the economy cycles to bad, as private industry looks to cut costs, and will provide an incentive to off-shore jobs.  In good economic times, it is more efficient to transfer the care of those who are in need to private agencies.
Because it takes time for money to get from the pockets of the rich to the hands of the poor, inflation is an inefficiency of government welfare and reduces aggregate demand.  Another inefficiency is interest, especially if the owner of the debt is outside of the economy.
When the government borrows money, the interest has to be paid.  It is true when any of us borrow money.  Interest must be paid.  If our debt holders were all domestic, someone in the economy would always benefit from interest payments, and those payments would reduce the aggregate demand.  But when foreign investors hold public debt, the interest payments will leave the economy and reduce aggregate demand.
This is why it is important for the government to make an extra effort to reduce their size and retire public debt when times are good.  It is a necessary step to take to prepare for times when the economy is not humming.
Another inefficiency in transfer payments is the three headed monster of fraud, waste and abuse.  In the newspapers this week is the story of a Seattle couple who defrauded the state welfare system even though the couple owned an expensive home and traveled overseas frequently.  In the aggregate sense, any money that this couple spent in the US did not leave the economy and did not hurt overall demand.  But any money that they spent overseas did cause a problem with the US economy.
And finally, one other inefficiency is an inefficiency with the economy as a whole.  And that is our trade deficit.  When we purchase a million dollars in goods from China, we should be selling a million dollars worth of goods to them.  In reality, it is not working that way.  Arguably, a person who has money to burn has a greater choice in how that money is spent and has the ability to chose domestic goods and services over those made overseas.  Where a person who is scrapping for his living has to primarily consider cost.
Opportunities lost
Perhaps the biggest opportunity to fix the problems with the welfare system came in the late 1990's when presidential candidate Newton Leroy Gingrich was the House Speaker.  It is true that he successfully pushed welfare reform into law and he should be applauded for this.  He also helped balance the federal budget.
However, some opportunities were lost.  Remember when the federal government had a surplus in the late 1990's?  Well, truth is, the government did not have a surplus at all.  There is no surplus unless all debt is retired.  Yes, there was that brief period of time when government revenues were greater than government expenditures, and some of the national debt was retired.  But government spending was not reduced at all and not enough of the overall debt was reduced very much.  When Gingrich was house speaker, the federal budget increased every year.


There was an assumption at the time that the good times would continue indefinitely.  But nothing about the economy is definite.  It is always in motion and what goes up must come down.  The economy will never be forever in growth unless all of the inefficiencies are removed.  That is impractical if not impossible.  There will always be inflation, interest and crime.  Jesus also said, "For ye have the poor always with you" (Mark 14:7).
If you subscribe to Keynesian economic theory, the federal budget should have been slashed and the public debt retired at a much greater rate than it was.  More people who were employed in the public sector could have found jobs in the private sector.  Wage inflation could have been reduced.  This demand is what first caused many companies to off-shore work.  Companies at first went overseas because they could not find enough people to employ in the US.  This lack of foresight also led to a new wave of undocumented immigration and it could be argued that it even opened the door for the terrorist who crashed airplanes into the Twin Towers and the Pentagon.  The economic troubles that caused the current recession could have been softened if more had been done when times were good.  If you believe in Keynes, then you have to take in all of it.  If you borrow when times are bad, then you repay debt when times are good.
When Newt was House Speaker, during the greatest economic expansion since the end of World War II, the public debt remained at 6 trillion dollars and was not much reduced.  This was our best opportunity to reduce one of the biggest inefficiencies in our welfare system.  That opportunity was lost.  Gingrich did a lot of good things as House Speaker, but in hindsight, it was not nearly enough.  As a result, we are in a situation where we have began the construction of a bridge, and we do not have sufficient to complete it.
There are four men gunning for the GOP nomination that have experience at cutting the budgets of their states, and we see the results in their states economies.  Mitt Romney, Jon Huntsman, Rick Perry and Gary Johnson all succeeded where Gingrich failed.  Perhaps one of these men can help us today.