Friday, February 19, 2010

Adam Smith was not an Economist.

Today, we hear the name Adam Smith and envision a stuffy old economics professor droning on about various econometrics. You may think of a powdered wig from the late 1700's, or a thick book that is far too imposing to actually read. We forget that economics is the study of free markets. Adam Smith's rail against big government-big business collusion is what Karl Marx calls "Capitalism", so it is difficult to label him an economist. It is like labeling Jesus a Christian.

Adam Smith was a moral philosopher brought up in a Judeo-Christian system. He wanted to find a way for the poor to rise up through a westernized, Judeo-Christian moral system. That free market system is what we study in economics today as "Capitalism."

Theology is not my strongest suit, but the parallels between the fundamental tenants of Christianity and Capitalism are clear. The government promotes certain aspirational goals by setting the legal and regulatory framework for free markets much like a Church dictates which virtues are most valued. Furthermore, the individual Capitalist's unique perspective allows him or her to provide value to the community which is very similar to an individual's "soul" in religion.

Capitalism's strongest moral sentiment is against the collective and for the individual. Governments and big businesses grow detached from morality as individual choices become detached from the ability of the community to admonish bad behavior by individuals within the system. As more immoral and illegal behavior can be blamed upon "systemic policy," the more out of control the entity becomes. For this reason, Adam Smith's moral philosophy relies upon the failure of "too big to fail" entities to provide opportunity to the moral individual through "creative destruction." It sounds like the story of the Great Flood to me.

(This was written as a example submission to a popular San Diego news media outlet.)

Friday, February 12, 2010

Evil and Truth

Evil enslaves,
and relies upon ignorance to bind us alone in the dark.

Truth is a fire that burns away the ropes that hold us down,
Illuminates knowledge,
Shows the path,
Beacons to others that they are not alone,
and is fueled by diligence, courage and the freedom of ideas.

Wednesday, February 3, 2010

The $3.8 Trillion Federal budget, WASHINGTON STEP OFF!

I have spent entirely too much time reviewing the new budget. I read the documentation, analyzed the graphs, watched the debates, and listed to President Obama try to sell the budget at the fake "townhalls" where only supporters attended. It is entirely a disgusting situation of lies, deceit, misinformation, mischaracterization, and misunderstanding of American ideals.

To quote our President, "Let me be clear..." we Americans understand that the alleged $100 billion savings that health care reform supposedly creates is at best fictional and at worst the cost of lowering quality of care by allowing government bureaucrats to decide which care is "comparatively effective." In other words, that is $100 billion in savings from refusing preventive and reducing quality of care. In the context of $3.8 Trillion, that is no real savings, and it is spread over 10 years and based on increased tax revenues for several years before the plan starts. It is a scam to provide unions with Cadillac health care, while taxing everyone else.

The President's budget increases taxes on small business, and the middle class through backdoor "tricks." Meanwhile, asking someone else to make the hard decisions on the huge national debt by asking for a committee to review the situation.

Reuters reported then retracted the following:

"Middle-class families also will find fewer tax breaks available to them in 2010 if other popular tax provisions are allowed to expire. Among them:

*Taxpayers who itemize will lose the option to deduct state sales-tax payments instead of state and local income taxes;

*The $250 teacher tax credit for classroom supplies;

*The tax deduction for up to $4,000 of college tuition and expenses;

*Individuals who don't itemize will no longer be able to increase their standard deduction by up to $1,000 for property taxes paid;

* The first $2,400 of unemployment benefits are taxable, in 2009 that amount was tax-free."

Claims that the above report is false because there is a promise to continue these Bush era tax breaks for the middle class are LIES because the $250,000 FAMILY income is often pass through income from small business. This injects more disincentives for entrepreneurs to create jobs and for the economy to grow.

Additionally, the capital gains rate will be increased to 20%. This means investors are going to be soaked along with savers and the entire supply side of the economy. This is more "Doo Doo Economics" and exactly the wrong thing to do in a recession, but another example of tax and spend demand-side non-economic thought.

Finally, there is the blame Bush mentality of going from budget surplus to budget deficits. The Bush administration made all the tough choices that led us out of the economic crisis, which Obama of course takes credit for. Meanwhile, Obama blames Bush for the cost of these policies. Maybe, these people need to remember that the job losses and huge deficits really started after congress was taken over by the Democrats in 2006-2007 (see chart)

To summarize the problem, American families make these hard choices everyday, and the government's inability to make these choices reflects the fundamental reason that government cannot be allowed to grow and take on additional responsibilities. These decisions are best left up to the people.

Economically, twenty five to thirty-three cents of every dollar in U.S. economic growth reduces the national debt even according to Timothy Geithner. This is why Reagan era supply-side policies allowed the country to grow out to a projected budget surplus. All the American people need is for Washington to STOP SPENDING! 

Wishy-washy Washington, particularly our weak willed President Obama, needs to "STEP OFF!"




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