Context

Numbers are important.  But even more important is figuring out what those numbers mean. 

Say for example you see a statistic saying that US military spending is some huge amount greater than the military spending of say, China.  That may be true, is true actually, but what does it buy us.  Given that materials and manpower are substantially more expensive here in the good old USA, turns out that our military isn't actually as much stronger than our spending would seem to indicate.  Good to know. 

Proper context for numbers and statistics is important to understand the true amount of money the US has spent in Iraq and Afghanistan.  Yes, we have spent a lot of money.  According to THIS ARTICLE, total federal spending over the entire course of military operations in I&A has amounted to about 4.4% of total federal spending during the same period of time. 

Context is extremely important.  Is 5% large or small?  $10,879,442?  No idea.  Context. 

Recession in DC

What recession?  The economic doldrums have been felt in the NOVA/DC area, but only slightly when compared to the rest of the country.  An excellent article and discussion of this is HERE. 

Beyond all the discussion about how now government jobs are both secure AND lucrative, past the contractors who do not really have to concern themselves with the amount of consumable income possessed by their customer b/c their customer is Uncle Sam, there is the issue of isolation.

I really think that being economically isolated from the rest of the country (as in, "the "Great Recession" isn't so bad..., I don't know anyone who's lost their job") exacerbates the typical isolationism of being of the "Beltway Mentality". And that is one factor that

"Experts" and How Much Taxpayers Pay

There are so many ways for an expert to misrepresent information, whether they mean to or not.  Consider THIS ARTICLE, talking about the difference between assessing taxes paid on the basis of annual income or of total wealth. 

On the one hand, using annual income gives a relatively neat, clean, number to use.  If we are looking at tax rates, it makes sense too.  But like all technical tools, it quickly loses effectiveness when used for anything else.  For example, if we are looking at the real impact of various tax plans, than using annual income doesn't really make sense.  Not only does income not account for savings, investments, etc..., but also fails to account for some forms of wealth growth (capital gains, interest on muni bonds, etc...).   Read the article. 

Rich Getting Poorer

Interesting but true.  Despite what politicians and the occupy protestors are telling us, "income inequality" has actually decreased in the past three years.

The top 1% of income earners earned 16.9% of all income in 2010, but in 2008 the top 1% earned 20% of all income.  And the number of American millionaires has fallen 39% since 2007.  And the number of people earning more than $10Million/year has fallen 55% since 2007. 

Interestingly, as the number of "rich" has decreased and equality has increased, this country has had high unemployment and very slow (or no) growth.  Now, I recognize that this might be both correlation and  causation, but it remains very interesting. 

From HERE.

Income of the 1%

Did you know....

$50,000/year puts you in top 10%.

$250,000/year puts you in the top 1.5%.

$353,000/year puts you in the top 1%. 

Hmmmm.  Guess not everyone at the top of the income distribution are "millionaires and billionaires". 

Wealth and the Environment

Economists have long recognized that a clean environment is somewhat of a luxury good.  Any restriction of enterprise will increase cost of living, and when people are struggling to make ends meet.  Peoples' first priority, at least in the overall society sense, will always be the well-being of themselves and the people they care about. 

Bearing that in mind, I am really not surprised by accounts that I read about waning popular support for policies designed to "curb" global warming.  To the economics reasons for fading support, you have to add in the various unethical and anti-scientific actions of recent years by those that support climate change legislation.

THIS ARTICLE is about as charitable and generous as you can get. 

Tax Holidays

Tax holidays do not create jobs, permanent tax cuts do.  Why?  Simply because a business would be foolish, and the manager would get fired by his/her boss, if they hired an employee based solely on a short term tax cut.  Sure, based on marginal analysis, some employees will get hired, but the insidious fact is that the longer they work for the company, the less effect the tax holiday has.  Say a $5,000 holiday.  If the employee works for 10 years, that holiday is only able to bridge $500 a year difference between productivity and cost.  Less actually if you account for the time-preference of money. 

THIS is how free people do emergency aid.

See THIS ARTICLE.

Snippet version:  Wildfire threatens.  Local moms establish command/rest/food/supply/repair/first-aid base at local school.  Local businesses donate food/equipment/supplies.  Volunteers do an amazing job supporting the firefighters.

That is how it should be done.  That is how free Americans can do it.

Not that the government didn't try to help.  Here are the relevant paragraphs:

The Red Cross came in, looked at what they were doing, and quietly went away to set up a fire victim relief center nearby. They said they couldn’t do it any better.

FEMA came in and told those volunteers and Kenna that they had to leave, FEMA was here now. Kenna told them she worked for the firefighters, not them. They were obnoxious, bossy, got in the way, and criticized everything. The volunteers refused to back down and kept doing their job, and doing it well. Next FEMA said the HEB supplies and kitchen had to go, that was blatant commercialism. Kenna said they stayed. They stayed.

Uncertainty or Certainty

It is no secret that I believe that one reason businesses have not been willing to take risks and grow over the past several years has been a generous dosage of uncertainty, courtesy primarily of the federal government. 

However, recently I read an article that challenged my thinking.  Perhaps the uncertainty isn't the main factor businesses are frozen, perhaps it is the certainty.  

Uncertainty still exists, but Obamacare is certainty, political financial favoritism is certainty, increased future taxes are almost certainty, etc....  While businesses are still nervous about what they don't know, they are perhaps more worried about what they do know.  They things they have seen with their very own eyes. 

Minimum Wage and Poverty

HERE is an excellent article that does a very good job dismissing many faulty beliefs about people who work for minimum wage.  In particular, the column addresses the question "should we raise the minimum wage so that minimum wage earners do not live in poverty?" 

The answer?  No. 

Why?

Because the vast majority of minimum wage jobs are not the sole income for a household, or even the sole income for that single person. Think of all the teenagers who work their first job or adults who work an extra job for minimum wage. Further, even for those single parents who earn minimum wage, about 75% of them move out of single-parenthood status within 6 years. 

So, no, the great majority of minimum wage earners do not live in households at or below the poverty line. 


But even if they did, remember that being poor in the United States means you have about as much disposable income as a family earning $60,000. 

Very Interesting

Courtesy of the Economist, a Global Debt Clock.  Have fun. 

Cost of Regulation

Really, rather remarkable how so very often the very regulations intended to help the poor/middle income end up instead hurting them. 

Pass a bill designed to limit how much banks can charge for debit transactions, and banks look to recoup their costs by decreasing services or increasing other fees.

Require that banks look into the identities of customers, in an attempt to make money laundering more difficult, and create a situation where banks have to charge more money to the poor than to the rich b/c it is typically more difficult to establish the financial identify of someone without a financial past. 

More detail?  Look here.

Protest Song

Listen to the words.  While the protesters have the right idea talking about the corruption in government (though I'm upset at the government for encouraging the corruption, while the protesters are mad that businesses try to make money), they are profoundly mistaken in asserting that 99% of Americans haven't benefited from businesses.

Listen to the words.

Warning: Video contains images of protest signs with profane language.

When Working Hurts

We know that people appreciate the things they work for.  That people tend to care for and maintain those things that have taken effort to acquire.  So for no other reason (though there are many others) the balance would seem to stand in favor of making sure that people have the incentive to continue working, or to start working.  Oh, and working adults, if they are employed through mutual voluntary exchange, create this thing for society called wealth.

But...a couple of years ago a study was conducted about the implicit marginal tax rate faced by people on the low skill / low income side of the equation.  What is "implicit marginal tax?"  Simply the percentage amount by which the paycheck of a worker is reduced as they earn more money.  This takes into account not only the increasing types and rates of taxes they must pay, but also their advancing ineligibility for federal and state hardship aid of various kinds.  For example, if I make an additional $10,000 and am taxed 10%, it looks like my marginal tax rate for that $10K is 10%.  However, if by making that $10K I am now too "rich" for $5K of housing assistance, my implicit marginal tax rate is now 60%!  So by working hard and earning $10K, I have only made myself $4K better off!

And it gets worse.  These charts are from this column.




And...



Essentially, if you earn between $25,000 and $50,000/year, each additional dollar of income you earn results in the LOSS of MORE than a dollar of buying power.

Remind me, what is the message we want to send to the younger generation, those getting in on the ground floor of their working lives?