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Economics: Category Archive (Page 3)

Commentary on issues of money and commerce

2006 Year in Review: The Bad

Here's part 2 of the 3-part series “2006 Year in Review: The Good, the Bad, and the Ridiculous.” While part 1 dealt with items that are bad on a ridiculous level, there is nothing humorous about these happenings during 2006.

Congress Goes Democrat

(Link: CNN)

I covered this in depth with my post “Why the Republicans Lost” earlier in the year. Now, Harry Reid and Nancy Pelosi are going to be in control of the legislative branch. While our nation can survive, this does signal the end of many meaningful reforms. Immigration enforcement, strict-constructionist judicial nominees, and meaningful energy reforms are all distant memories. In their place we'll get amnesty for illegal aliens, judicial activists, and economy-crushing minimum wage increases.

The majority of Americans don't seem to understand that the latter is a ploy by union workers, who want raises but are contractually tied to a level above minimum wage. When it goes up, their pay goes up. However, businesses only have money as they collect it from their customers - increased payroll expense will only drive prices higher, at which point the buying power of the new minimum wage is about the same as the buying power of the old. Higher minimum wage levels also reduce the number of entry-level jobs held by students and retirees - I'm really surprised that the same party who panders to seniors and says that everything they want to do is “for the children” is in favor of such a move.

Hey, Terrorists Have Rights, Too!

(Link: Wikipedia)

The Supreme Court decision in Hamdan v. Rumsfeld established that military tribunals could not be used to try detainees at Guantanamo Bay, Cuba. This ruling, in effect, gave unlawful combatants official status, and required that they be given access to our justice system. President Bush asked Congress to clarify rules for detainee treatment, leading to what some have dubbed the “Terrorist Bill of Rights.” During debate on this and other bills throughout the year, Sen. John McCain (R-AZ) and others were adamant about adding “no torture” language into bills. Techniques such as water-boarding (where a person feels like they're drowning, but they really aren't), which had been used to extract intelligence that prevented attacks, were now no longer allowed.

This is a trend that I hope and pray does not continue into 2007. We Americans are gracious to our enemies, sometimes to a fault. But, there comes a point when we need to realize that they are our enemies. When they take up arms against us, when they align themselves with organizations that have, as their stated goals, the destruction of our nation - if we capture you, expect to be made to talk.

We Support Prosecute the Troops

(Link: Euphoric Reality)

Eight Marines have been charged with murder and other charges relating to an incident in the Iraqi town of Haditha. These men were part of a patrol in this city, when their patrol was attacked with an IED (improvised explosive device). After the IED went off, they were also receiving hostile fire from both sides of the street. As their training taught them, they laid down suppressive fire to remove the casualties that they had taken, then launched a counter-offensive to kill the insurgents that had inflicted this attack on them.

Once the shooting had stopped, some of the Iraqis in that town began complaining about the counter-offensive, saying that the people who had been killed were innocent civilians who had nothing to do with the attack. These stories were often contradictory, but that didn't matter to the folks here who never miss a chance to broadcast bad news. The link above is very lengthy (and the other information it links are also lengthy), but it is a detailed analysis as to what happened that day, and how it is being prosecuted. Even an embedded CNN reporter does not believe these allegations.

This is disgraceful, and I hope that the court-martial comes out in favor of these dedicated Marines. “War is hell” isn't just a quip - it's reality.

Iran and North Korea Go Nuclear

(Links: Federation of American Scientists | Sign on San Diego)

With current concerns over terrorism, and nukes that Russia can't find, two nations hostile to the United States declared their nuclear capabilities this year. North Korea has been testing missiles (although these tests were, by all accounts, an abject failure) and nuclear warheads. Iran claims that their nuclear capability is only to be used for power. Why do I not trust Iran? Let me count the ways… They are the primary supplier of personnel and weapons for the insurgency in Iraq. They teamed up with Syria to support Hezbollah in their attacks on Israel earlier this year. They hosted a holocaust denial conference. And that was all this year!

All nations have a right to defend themselves. However, when these nations have proved themselves hostile to us and friendly to our enemies, we must demand that they pursue their defense using conventional weapons.


That is certainly not all of the bad things that happened this year, but I believe they are some that will have the most enduring impression on our world and our nation. Next up - the good!

Liberalism, Explained

I found an excellent series of posts entitled “What is a Liberal?” In the first installment, Mr. Freeberg sets up three scenarios, then describes what the liberal and conservative solution would be to each. In parts two and three, he recounts reactions and things that have happened since his initial post. (Part III has some language in it that may be offensive - you have been warned.)

Debunking Democrat Demagoguery (Economically)

John Kerry and John Edwards (“Kedwards” hereafter) are making some significant claims about their plan for this country, and using some pretty strong but rather hackneyed rhetoric to get their point across. The term “demagoguery” is defined as “impassioned appeals to the prejudices and emotions of the populace.” Democrats are renowned for this, from the “New Deal” to Clinton's famous “I feel your pain,” Democrats base a lot of their policies on what they can spin to appeal to emotions, rather than facts. Let's take some of these areas, specifically some of those having to do with economics, and see why, I believe, Kedwards is wrong for America.

Tax Cuts for the Rich

This has been a favorite claim of Democrats for ages, and it shows a basic lack of understanding regarding basic economic principles. The biggest thing that Democrats have wrong is their belief that taxes are the governments, to be “given back” to the people. Taxes are the people's money, given to the government to fund needed programs, such as national defense, highways, etc. Tax cuts are not “giving back,” they are letting people keep more of their money.

Another problem with their rhetoric is that speaking of taxes in dollar amounts is inherently going to sound skewed to someone who isn't paying attention (which, sadly, represents a lot more of our current electorate than we'd like). Imagine that there are two people - one makes $10,000 a year, and the other makes $200,000 a year. In this imaginary world, everyone pays 10% taxes. This means that person A pays $1,000 in taxes a year, and person B pays $20,000. Now, here come the media reports about a budget surplus, and Congress and the President decide to cut taxes by 1%. Person A saves $100, and person B saves $2,000 - in both cases, a 10% reduction in the total amount of taxes they have to pay. If you use Democrat thinking, person B got 95% of the tax cut.

Tax cuts benefit everyone. Those who make more, by virtue of simple mathematics, will receive a larger amount reduction whenever tax rates are lowered. However, these are also people who will use this money to reinvest in our economy, either through business expansion (which leads to more jobs), investments in stocks and bonds (which helps fund the economy), or through charitable donations (which improves the quality of life in local communities).

Another point on tax cuts - sometimes a reduction in the tax rate can actually increase tax income. If done correctly, tax cuts don't have to be “paid for,” they pay for themselves. If a gas station lowers its price for unleaded gasoline by $.02 a gallon, they will more than make up for their $.02 loss with their increase in volume. Taxes work the same way - when the rates are reduced, the economy grows; so, while we all pay less rate-wise, we pay more in real dollars. Everyone wins.

Minimum Wage Increase

Yet another favorite topic, and another place that Democrats don't understand economics. A wage is a negotiated contract between employee and employer. Most often, all negotiating is done on the part of the employee, as an employer would say “Here's a job, and here's the pay - want it?” Very few people are raising families on minimum wage, and in their “average annual minimum-wage salary” statistics, the Democrats are including teens, college students, and spouses who work as secondary wage earners in their household. When the government interferes in business by forcing them to pay their entry-level workers more, what do the businesses do? There are either fewer entry-level jobs, or the products and/or services the company produces begin costing more.

There is one segment of the population who benefits from minimum-wage increases - union members. Many union contracts stipulate their wage in relation to the minimum wage - when it increases, their wages increase as well.

Corporate Tax Loopholes

Again, more cries of how these evil corporations are trying to get out of paying their taxes. And, yet again, this is a place that the Democrats don't just get it. They miss it because, economically, there is no such thing as a “corporate tax”. There is a finite amount of money in this country, and corporations only have money if they extract it from the general public. The most common method is by providing a good or service for which people will give their money. With this money, they have to cover their operating expenses, the cost of the good or service itself, the cost of paying their employees, and what is left is called “profit.” Under the current structure, they also have to pay taxes with that money, which eats into profits. The company sets their price based on a few factors, two of which are desired profit, and the market value of their good or service.

With that, what happens when the government takes more money from the corporation? Who pays that tax? The general public, that's who. Corporate taxes make everything cost more, while giving no benefit to the economy whatsoever. All they do is penalize success.

(Things have been pretty crazy here lately - lots of work and family events, with little free time. I hope to have time to attack some other lines from Kedwards in the next few days.)