How the Fair Tax is not Regressive

Herman Cain, now a candidate for the Republican nominee for President, is proposing a 999 tax plan that would put a 9 percent tax on income, 9 percent tax on business, and a 9 percent sales tax as a tax system that would replace the entire tax code. This plan is not permanent and eventually becomes the "Fair Tax". The Fair Tax would replace the entire tax code that we currently have and replace it with a simple 23% sales tax. The number is not official but it would be around that amount.

The purpose of this blog entry will be to explain how the number one argument against this tax system, its regressiveness, is false. Regressive meaning it will penalize the poor and middle class more so than the rich. Our current tax system in progressive in that it taxes rich people more as you make more money. That is absolute truth contrary to what you see in the media and by some on the left who try to mischaracterize the truth.

The reason Cain's "Fair Tax" is NOT regressive is because of a number of reasons:

First: The elimination of the Payroll tax. All workers who work legally and are paid legally pay two taxes on Medicare and Social Security even if they end up paying no other Federal Income Tax (FICA). That tax is roughly 7%. In reality it is 14% because your employer must match that tax with what is termed their "payroll tax". Now businesses are not stupid. When they hired you they took into consideration what it costs to hire you and adjust your pay accordingly. In other words, you would be paid slightly more if not for this payroll tax. Well now this tax is eliminated. Thus not only do you not pay that tax, but your employer will likely pay you more since they no longer have to match your contribution as well.

Second: You get a Pre-bate check for all products up to the poverty level. In other words, whatever the government statistic is for what it would cost to raise a family and pay for food to feed that family and other necessities, you would receive a check to cover that part of the tax. In other words, the "Fair Tax" will only be a sales tax on items you buy that are above the necessity level. Thus the poorest among us will continue to not pay taxes on those items. If your income is only at the level in which you can only afford the basic necessities of life, you will still not be paying taxes to the federal government on those necessary items.

Third: With businesses no longer paying taxes, it will now be easier to get a job and wage rates are likely to rise as well. this helps the poor and the working class, as well as the middle class more than anyone. That is not regressive that is amazing!

Fourth: this tax will not cause the price to change that much. Some are confused because you were just told that the tax would be a new sales tax of roughly 23%. That is true. But currently due to our tax structure where all businesses pay taxes, and often in large amounts, those taxes are passed down already into the price of goods. You just don't see it. When a business provides the raw materials for a good, that business is taxed on its profits. The business that transports the goods to the company that makes it into a saleable item also pays taxes. The marketing firm that is paid to advertise the product is also paying taxes. And finally the store and company that you buy from as a consumer, also pays taxes. Those taxes are passed down to you as the customer. Why? Because the money companies use to pay those taxes are obviously from their constomers. So when all those taxes are eliminated, as they would be under the Fair Tax, prices would drop. Many economist believe roughly as much as 20-22%. Thus when the Fair tax is then placed on that good, the price will only go back up to where it was originally and maybe just slightly more. But hey remember earlier, you are making more money now and you are not paying income taxes, so you have more money to spend anyways.

Lastly: The tax is only on new items bought not old or used items. Thus since most working class people buy "Durable" items that are most often used, such as a house or car, they will not be paying taxes on it. It is the more wealthy that buy new things, they will pay the "Fair Tax".

This tax system is not regressive. It will help the poor in fact. There are concerns that I have for it. But those concerns are not NEAR the concerns I have with the current tax structure. Thus I can fully support this new tax structure. I would also support the Flat tax as well. But the current tax system, is a failure and is outdated... and quite frankly, should never have been started to begin with.

In Defense of Derek Dooley

In a shift away from the political or economic discussion, I'm going to give my take on Dooley and his football coaching staff in regards to what they should be doing with this team.

I'm one of the most passionate Tennessee Football fans I know. My Ringback tone is Rocky Top and my actual ringtone is John Ward saying "Its Football Time in Tennessee!" I read every News Sentinel article on the football and basketball team for that matter. I also have a subscription for GVX 247 to get up to the minute recruiting information and other deeper sports information than you can get from the main sports page of Knoxnews where they have to cover all sorts of other sports news. So some would say my passion might blind me from reality. No my passion is what brings to light the reality to me.

Our starting defense is composed of a DE that has have multiple knee surgeries and is not the same player he game to TN to be when he was much lighter and faster out of high school. The other DE is our "stud" pass rusher but can barely get to the QB because while he is our best, he was not recruited out of high school like many of the starting DE at the other SEC schools. I know because he is from the Chattanooga area. He was good and recruited, but not as a guy to come in day one and be a stud like many of the other DE in this league are. Our DTs include a guy who was suppose to play DE at a high level. The other kid from Catholic that I love everything about did not originally go to Tennessee to the the Starting DT as a sophomore. A guy like him is not suppose to start. And he came as an OL but was not good enough there so they moved him to DT where he was more needed. He is suppose to be the guy that plugs up the middle on early down plays when the starter is hurt or tired. The guy that was projected to start at DT-Nose Guard has been kicked off the team in Hughes. Their backups are also players that have converted from other positions or are also young.

Our LBs were suppose to be a stud from West TN in King, a stud from Virginia in Askew, and Herman Lathers. Instead the first two have done nothing like many of the other Kiffin recruited kids and the latter has a broken foot. Instead we have a guy who was a 3star RB that has converted to MLB and two Freshmen linebackers that are arguably our best Pro prospects on Defense. They are Freshmen none the less. We have Seniors who sometimes back up these guys and starts in Nickel situations only.

In our secondary, we were suppose to have Jackson the best player on the team, another stud who can't get into school in Lofton, and a stud at CB that was a trouble maker and was also kicked off a while ago in 5 star athlete Vinson. Instead our best CB is a converted WR. Our second best CB is having to play safety because our best player on the entire team got kicked off. We have a converted professional baseball player at the other safety position that had everyone excited because of the hits he puts on people. His cover skills are very low, and he is still trying to relearn how to play a sport he did not play for years before now. We have a JUCO guy competing with a Senior(Evans) who was at best suppose to be a pure backup if not third string CB when recruited as a 3star guy. We also have a who I do feel will be good one day but not good enough to play big minutes now in Coleman. Our back up safety is a Freshmen and our other CB is often a kid from Tennessee who is a great athlete but was not suppose to be a starter on a team that was suppose to have multiple studs who have been dismissed from the team.

That is out Defense. We have some really young guys who are suppose to be really good. We have had two Freshmen groups come in under Dooley in which many are making contributions and being productive players young in their careers which is a good sign. We have a good and could be great recruiting class coming in. This would be the second in a row that were really good but this one could be great. I have not even began to talk about our offense which is even YOUNGER if you could believe it. We have a new strength coach in his first year there to add strength to the team.

This team is not good. But we are not suppose to be good. We are suppose to be good next year. And maybe great the year after. If that does not happen, then I will begin to question this coaching staff. for Heaven's sake lets not try to judge Dooley and his staff now as if they are suppose to be wining this year.

We cannot stop the run because our DL is small and not deep. Our best DT this year is suppose to be a kid named Arthur Jeffery Jr. You recognize the name? No! Not unless you follow recruiting like I do. He can't get on the field. Our LBs are young and our DBs are not good yet because of the attrition. We can't blitz much because of the youth and therefore can't get pressure because our DL is not good enough to do it without help. Lets relax a bit. I can write a a column on the offense but it would sound the same. In fact we have been hurt more there possibly. Next year if we are not back on track as a top 25 team in the nation... then I will begin to question Dooley. But as a coach... its way too early with what team he took over. Lets wait until his recruiting classes can get up there.. Lets wait until way over half our team is not Freshmen and Sophomores and many of the other starters who are not young are 3 star guys that have not been kicked off the team or left already. Lets be patient. We said we would be... Lets follow through with that.

Companies Shipping Jobs overseas?

Its been a while since I have blogged due to school and golf. Thought I'd drop in and discuss something we did in class recently when I was evaluated by one of my Administrators.

I blogged about whether America still makes "stuff" anymore a few weeks ago. Today I will speak about something along the same lines. If you read that blog before this one you will understand that most factories and other manufacturing jobs that are lost in America are not lost due to companies shipping those jobs overseas for cheaper labor. Most are lost due to the progress in the realm of technology and thus productivity is much higher and we need fewer workers in manufacturing because of this. Kind of like the decline of farming that began years ago despite not having a drop in production due to the better technology.

Although this is true, companies still often DO ship jobs overseas due to cheaper labor. Should that happen? Should we allow it? Is it a good thing?

First the morality of the issue. We in America like to talk about hating some people's speech but honoring their right to say what they want because the Constitution says: Congress shall make no law... restricting free speech. Yet we often say that companies should not ship jobs overseas. Given the fact that a company is a free enterprise and independent company that is not owned by congress or any other government entity, is it moral to restrict their freedom to move anywhere? Would you force a person who wanted to move out of America to stay in America? North Korea does that, so does Cuba. I find it immoral to restrict a company from doing as they want to do in order to please their stockholders who own the company.

On a more economic note is it hurtful for our economy? The answer is no if that company is freely making this decision without government pressure or regulation forcing it to make a decision outside of the Free Market. Meaning unless crazy high taxation, or regulation, entitlements for workers, or some other unconstitutional force is forcing companies to make these decisions. If a company freely chooses to leave without these being the reasons, then this company sending jobs overseas is a good thing for the economy although hurtful for some workers.

If a business sends some jobs overseas it is in essence saying that those jobs are low skilled jobs that can be done by low paid low skilled workers in other countries that can thus more efficiently perform those tasks. When this happens, the companies keep their costs down and are more competitive in our economy. This allows them to keep prices lower than they would be if those jobs were kept here in America.

Now some would argue: But if those jobs are kept in America then that is more money and more jobs and thus that helps the economy. That is incorrect and believed by many people because they do not understand trade-offs. If inefficient jobs are kept in the country, this means more resources (IE: money) is used on this production which means fewer resources to be used on more efficient areas. In other words, the jobs saved by continuing to do something inefficient is dwarfed by the jobs that are lost, when those resources (IE: money) are not used in efficient ways. Let me close by giving you a local example:

Would you argue that Tennessee should save jobs by refusing to buy oranges from Florida or California in an effort to keep "Orange farms" around here in Tennessee? No one would argue for this because they would say: Those oranges can be made in Florida and California more cheaply thus saving Tennessee Consumers more money to spend in other areas that can put Tennesseans to work in more efficient areas. It works the same way when countries trade with each other. We just don't understand that and thus most Americans are not happy when companies send some work to be done overseas.

My take on the Debt Deal

I might in the future comment on this post to add/revise some of this information as I will be no doubt reading many articles written by economists that I follow. I confess, many of my ideas that I write about on here come from other people. Many ideas are mine. But most of my views are based in large part on the ideas and beliefs of those that I study. I add/revise them to fit my own belief system. But I study those other guys a lot. Now back to the current Debt Deal.

On surface I am against the compromise. To briefly sum up: Small rise in the Debt Ceiling for small cuts to spending up front to non-defense and non-entitlement areas. All these cuts will be cut over a period of probably 10 years. The debt ceiling rise is immediate. So truly these cuts are marginal at best. Then a committee is formed to determine what other cuts are possible and the President will be able to get another larger rise in the debt if the commission can come up with cuts that are agreed upon. If the committee cannot come up with cuts, automatic cuts take place. Most of these cuts(little more than 50%) will come from defense spending. Other cuts from entitlement programs. Its amazing that Defense gets the largest cut, when off all the major programs, Defense is one of the few Constitutional obligations our federal government actually has. The later vote on a balanced budget means nothing, Democrats will not support it.

The truth is drastic change is needed and needed fast. Our debt is a problem that is growing out of control. The public in America is far too weak to mustard up the courage to allow what needs to happen take place. Senior Citizens (on average the most wealthy amongst us) are too cowardly to accept cuts to their benefits. This, although the great majority of them will receive far more than they ever paid into the entitlement system. Thus, the wealthiest amongst us will be living off the tax dollars of the still working and less wealthy people. Go figure! I love our elders by the way. But lets not act as if they are not to blame for any of this. They were the voters during a time that America grew its government to Communist sizes and thus they deserve a large part of the blame.

There is only one segment of the government that will take the necessary steps needed to deal with the problem. And that segment is roughly 2/3 of 3/5 of 1/2 of 1 of the 3 branches of our federal government. Did you follow that? I am referring to the conservative and "tea" party side of the Republican Party. The tea party members of the Republican party only control the House of Representatives. This is 1/2 of the Legislative branch of our government. The Legislative branch is 1 of 3 branches of our federal government. And the Tea party/Conservatives make up probably just 66% of all Republicans who are true conservatives.

Thus there are 2 situations we have here:

1) On principal as a conservative Libertarian (somewhat in line with many tea party members) I am against this deal and any deal that as Senator Rand Paul says: "Does not balance the budget". To balance the budget would require massive cuts. We borrow about half of what our Federal government spends. I believe we need a non-violent revolution of government principled on Constitutional ideas. I'm glad that the compromise did not include tax raises. To raise taxes on people at this time is ignorant. You can read past blog entries to understand how taxes always end up being paid by consumers, most of which are not rich people. On principal I would vote against the plan despite this positive aspect of the deal. If I were in congress, I would vote against the plan. But I am glad that the deal got done. What you say? Well now for the 2 situation.

2) Our founding fathers set up a form of government that does not allow things to be done quickly. For good reason. It requires that a law be Constitutional (this of course has not stopped past laws from being passed but the courts are highly populated with anti-Constitutional Liberals). A bill has to be passed by both houses of Congress. Then has to be approved by the President. Elections only take place ever 2 years. And it takes 6 full years before each seat of congress has come up for election because Senators serve 6 year terms. Those with my principals again make up a very small part of that government. Therefore this deal might be the only thing that could have gotten done. So in conclusion:

Obey the rule of law and understand that just as it has taken 80 years, beginning with FDR mainly, to cause this problem, it will take years to reverse. In the 2012 elections, win the Presidency with someone like Rick Perry as President. Expand your control in the House and take the Senate by just enough seats this year. All these takeovers need to be done by conservative Republicans who will stand on good principal. Meaning not the same Republicans that were leading during the Bush Administration. If this takes place then serious reform can be accomplished.

Does America Make anything anymore?

One of the worries in America is the idea that we can no longer feed ourselves, cloth ourselves, or make things for ourselves. This is typically the fear when people are debating that America is becoming a service economy and no longer a manufacturing economy that makes anything. Lets keep in mind that over a hundred years ago, most families individually fed themselves and clothed themselves when everyone had a farm and most everyone sewed their own clothes. But today we do not have anxiety over the fact that most people have never farmed much of anything and very few people have ever clothed themselves one outfit much less all their clothes. We would not complain that our lives are worse today than then! But yet when America as a whole shifts jobs overseas, we all the sudden fear that we are headed down a path to destruction. Aside from the fact that that in itself is ridiculous... even those who disagree might be surprised to find out that their facts are wrong to begin with:

America makes more "stuff" than anyone today! According to a U.N study (and we know the U.N hates us, so trust me if this article makes us look good you know its the truth) American manufacturing output in 2009 was 2.15 trillion dollars (in 2005 dollars) compared to China's 1.48 trillion dollars. Yes! America manufactured more than China, the place everyone fears is taking our jobs. In fact America accounted for 20 percent of the entire world's manufacturing output. That is just one percent below the 1990 amount of 21%! Yes your math is correct, in a 20 year period of time, America's manufacturing as a percentage of the world's manufacturing, only dropped one percent.

In 2009, we manufactured more than Japan, Germany, Britain, and Italy combined. And we keep increasing our manufacturing! You say what? How can this be from everything I have heard? American manufacturing today has more than doubled since 1970.

It is true that we have lost millions of American manufacturing jobs. But this is not because all those jobs are moving overseas. This is because we have become so much more productive! Technology today allows the American worker to produce far more than the American worker of decades ago. Many decades ago young people could dream about working in the factory as opposed to farming jobs which were dropping off due to this same increase in productivity levels in agriculture. Today young people can dream about becoming doctors, nurses, lawyers, mechanics, teachers, architects, engineers, or many other jobs due to technological improvements in manufacturing.

Many speak of how everything they buy is "made in China"! That is often true. This is because China specializes in producing toys, shoes, sporting equipment and other low-tech, labor-intensive jobs. These products do not require the high tech and sophisticated factories of America.

In fact a large amount of "stuff" is made in the United States. Of course this is not usually the cheap inexpensive items you find on the shelf of your local wal-mart or target. America specializes in making things like: planes, air-conditioners, automobiles, pharmaceuticals, semiconductors, and more. These are not on your weekly shopping list. Nor is this "stuff" you pick up off the shelf and can turn over and read where it was made.

The fact is, the cheap items we buy on the shelf of our stores should and are made in cheap labor countries. America prospers when we free up labor to do the high tech jobs by allowing other nations do the low-tech jobs. Are some workers hurt for a time in America? Absolutely. The farmer had a tough time making changes years ago when many of them lost their jobs. So did the blacksmiths and buggy makers when the automobile replaced horse and buggy. But was America worse off? No! Today the fighter jet maker, mechanic, doctor, nurse, engineer, lawyer, teacher, and more are replacing the factory worker. But as it was true a hundred years ago, we are better for it today!

*Much of this comes from author Jeff Jacoby

ignorance needed to pass an agenda

Politicians, mostly Democrats these days push for policies (their agenda) by using talking points that are easily proven wrong with just a smidgen of evidence. Lets look at it...

Those who favor larger government control over our lives often try to discredit our founding fathers by misrepresenting some of their Constitutional ideas. One of the most often misrepresentations used is the three-fifths compromise. Rhetoric such as: "They only counted black people as 3/5 a person!" "How can we listen to these people when they considered my people (this is said by a Black American liberal) 3/5 a person?!"

Politicians are often pretty intelligent people. They know what the 3/5 compromise really was. But that means nothing to them when they are trying to push an agenda through. But with a public that is as undereducated as our public is, its easy to see why they choose to speak in talking points and not reality. Even some of my readers might not be able to defend this example. The three-fifths compromise counted slaves as 3/5 a person when counting for the House of Representatives and for the electoral college. IN other words, if slaves were counted as a whole person for these considerations, it would have made the southern slave states even stronger politically. This would have in effect hurt the African American at the time.

Tax cuts for the rich is another issue. What is rich? Some say its an income of $250,000 a year or more. But many small businesses that just get by file taxes under individual income. If their company has revenue of just over $250,000 they might be taxed at that top income bracket percentage. Thus to lower taxes for small businesses would require you to lower the tax rate on the highest income tax bracket. Politicians know this. But they public often does not.

These are also the people that hire individuals. So do corporations. The fact is, lowering these taxes often allows companies to expand and become larger. This in effect can actually increase the amount of taxes these rich people pay because of increased wealth and increased incentive to move operations back to America. This is seen throughout history where lowering these taxes has led to economic expansion and increased government revenue. Also corporations do not pay taxes only people do. Higher taxes on corporations means one of three things: higher prices for consumers, lower pay for workers, lower dividends for investors.

Lastly is Rent Control laws: Designed to keep the price of rent lower in low income areas actually has the opposite affect. I have explained the affects of this in other blog entries. You can read those to understand that. But the two most prominent cities with strong rent control laws are San Francisco and New York City. These two cities also have some of the highest rent prices despite these controls. Politicians know this but the public does not.

Our job: Become educated and vote out these politicians that no longer can take advantage of our ignorance.

Why tax cuts work for the country... and liberal governments

Today one of the largest debates is taking place in our nation's history. How to correct our deficit and ultimately our national debt. (Deficit is the yearly debt that the United States government racks up, the national debt is all those years added up through the years).

Today there are two main arguments. One group is for major spending cuts(conservative Republicans, libertarians, those in the so called "tea party") the other group is for bringing in more revenue through higher taxation (liberals and most democrats). Those who are for bi-partisan negotioting will go for a little of both(this is probably what will come about). The sad fact is that this argument is stupid to have considering the argument has been going on for years(in fact at least since 1920) and there is irrefutable proof that both can be accomplished by cutting spending and you can also raise revenues by yes LOWERING TAX RATES.

Economist Thomas Sowell writes that most would think a liberal democrat once made this statement: ""It is incredible that a system of taxation which permits a man with an income of $1,000,000 a year to pay not one cent to his Government should remain unaltered." In fact the man that made this statement was the Secretary of the Treasury under the conservative republican president Calvin Coolidge.

Andrew Mellon made this statement because he knew that at higher prices people buy and invest less. When taxes are high on something, capital will not fly towards those things that are being taxed so highly. Therefore one might consider lowering these rates which will lead to an increase capital investment and in fact an increase revenue from those taxes. Lets look at the facts to back up this claim:

In 1916 there were 206 people who reported making over one million dollars according to the IRS. Five years later under liberal democrat Woodrow Wilson, there were only 21 people reporting making that much money. Why? tax rates on the rich skyrocketed. But then Congress later passed the tax cuts that Andrew Mellon was asking for and by 1925, there were once again 207 people reporting an income of a million dollars or more. So what had happened during that time when all the sudden millionaires disappeared?

Those rich people had put their money towards tax-exempt securities like local and state bonds. Sowell goes on to say that Mellon argued for two things. To get rid of those tax-exempt securities and to also lower the tax rates. He succeeded in only the latter after a long debate, just as we are having again today. Yes they used the "tax cuts for the rich" argument even years ago. This is not a new phenomenon. Some more facts:

In 1924 the federal government collected $50 million dollars in capital gains taxes. In 1925 that amount reached over $100 million dollars. When taxes were lowered, it made more sense to invest money in the economy because you got to keep more of the money you made, than to invest it in the tax-exempt securities that do not lead to economic expansion. Expansion that eventually leads to these increases in tax revenues. And as for those "rich" people in the top income bracket, they paid 30% of all taxes in 1920 but paid 65% of all taxes by 1929 after those "tax cuts for the rich". The reality is, there were more rich people that came about paying taxes and the already existing rich were investing money into the economy that allowed for this and thus they too were now paying into the nation's tax revenues.

All this was then replayed again under JFK, Reagan, and Bush 43 administrations. Some can bring about statistics that show a strong economy even with high taxes. But this proves nothing other than the economy can still grow to some extent even with high taxes. I will not argue with that. Its easy to use that argument when prosperity unforeseen does not exist. In other words, we cannot know whether at lower taxes the economy would have even been stronger during those "strong" periods.

What is easy to judge is economic theory and science that makes sense. People will invest more when they can keep more of their return on investment. That common sense knowledge in itself should be enough. But if not the before mentioned evidence provided for nearly a century should be more than enough evidence that tax cuts work.

Cut spending and lower taxes!!

a painful truth...that could lessen the long term pain

No doubt it would be hard for a person such as Paris Hilton who is born into riches to have to give up that life for a life of struggle or responsibility. But this is the unfortunate thing that is going to have to take place nationwide to fix our coming financial collapse (as opposed to the financial meltdown we are currently facing). Individuals who are use to nice handouts will soon have to face the fact that those handouts are no longer feasible.

According to the most recent census, "around 80 percent of Americans 65 and older own their own homes compared to 43 percent under 35. Twenty-three million households, or 37 percent of all homeowners, own their homes free and clear, and most of these are seniors aged 65 and older. According to the Federal Reserve Board's 2007 "Survey of Consumer Finances," the median net worth of people 65 and over is $232,000, those under 35 years have a net worth of $12,000 and for those 35-44, it's $87,000." (Economist Walter Williams)

Naturally older people have accumulated more wealth than younger people. This is for good reason-they have had longer to do so. The question is why would our federal government's soon to be largest single expenditure program be a program that subsidizes of this wealthiest group of American's healthcare-Medicare.

Obviously not all senior citizens are rich but if the median net worth is 232,000 then half of senior citizens have at least that much. Currently those people's healthcare (medicare) is subsidized by taxpayers(yes some of it was their own taxes but someone living decades after retirement, receives far more money back than they ever paid into the program). Why not allow that senior citizen to make a deal with a financial institution(bank) to relinquish their home to the bank at the end of her life for a large lump sum of cash up front that will allow that senior citizen to live the rest of his/her/their life off the thousands of dollars he/she/they are worth. At death the bank comes into complete ownership of those belongings that were agreed upon. Anything she does not have to give up in order to get that lump sum of cash, will still be passed on to his/her/their heirs.

Currently heirs to these people greatly benefit. When Senior Citizens die their belongings go to their kids or benificiary. For years, taxpayers pay for much of their retirement(Social Security) and for their healthcare(Medicare). These people may not have the cash on them to pay for their own healthcare. But their accumulated wealth is plenty to pay for these services for the rest of their lives. With the above program our taxes could be lowered, and taxpayers would not subsidize the wealthiest amongst us. Some citizens would still need assistance. I would support a state by state approach to handle this. But for most Senior Citizens, they would have plenty enough to pay for these services.

Instead a tax payer supported program that is going broke and bankrupting our nation is used with no serious change in sight. Why? Probably because only 50% or less of young people vote while 70% of seniors vote. Since this distruction will not take place until these seniors and politicians are dead, why committ political suicide and consider fixing a serious destructive program with a system like the simple description above?

Tunica and beyond

Friday afternoon shortly after lunch time, my and a friend left for Tunica. A trip that in the past has always resulted in success (financially) and in terms of entertainment and fun. This trip was however much different.

After arriving Friday I went to play poker for hours straight. For those who know me well, they know that I play a tight but aggressive poker style. However it does take me a few hours to become comfortable enough to truly be aggressive. Tight-aggressive is also the style that most poker pros (those who make a living off poker, obviously putting down the belief that it is a game of pure luck) use. This time however my luck was not in my favor. Playing for up to 5 hours and only getting around 15-20 playable hands. I struggled to get anything going. I profited a grand total of 20 dollars during that 5 hour period. Keep in mind this is a trip of 6 1/2 hours. Not worth it up to this point.

After playing, me and Justin left to go to a local gas station. When we returned to my Trailblazer the vehicle would not start. It is over 90 degrees and about 2AM local time. Tunica has no real business that is open at this time. The closes Wal-Mart is 45 minutes away. I had no idea what was wrong with the vehicle. We believed it was a battery issue. We were correct. Luckily for us there was a kind good hearted slender black Gentlemen that saved our lives. He tested his battery on my vehicle and confirmed it was in fact the battery. My truck started no problem. As long as it keeps running I could drive to Wal-Mart and get a new battery and install it at roughly 3:30 AM. But the car died before even pulling out. This man then offered to drive us 45 minutes to the nearest Wal-Mart to buy a battery! I know of very few people who would have been willing to do this.

Roughly 2 hours later we returned to the gas station at around 4:30. New battery worked, we drove back to the Goldstrike Casino/Hotel and slept that night. I got a wonderful 4 hours of good sleep. The next morning we awoke and drove around to banks to go to the ATM. Justin's card was not working despite having plenty of money in his checking account. While out we stopped at one last gas station to try that ATM machine. As we are getting out of my car I see first hand the hardest T-Bone collision I have ever seen! A small white car hit an SUV causing it to roll over in the middle of the street! I thought for sure this was an injury resulting in serious injury. To the contrary the safety of those big gas using American SUV's that destroy the environment (according to some odd people) once again saved two people's lives. This type of accident would usually do me little harm but functioning on 4 hours of sleep over the past 30 was not the best thing for my soul.

We drove back to the Casino where we had little money. I knew Justin of course was good for it so I got money out of the ATM instead for us to use. I continued to play cards for another 4-5 hours. What was the result? More terrible cards! Finally on one of my last 6 hands I got pocket JJ and ended up rivering quad JJ's. This put me up 90 dollars for a grand total profit of $110 over about 10 hours of playing poker. In the past I had averaged winning about $700 in each of the past trips.

This profit paid for half of my battery trouble as we did pay the man for his great help to us. There were other misfortunes that are not to be posted publicly. But last night driving home on 4 hours of sleep over the past 42 was not easy. I bought coffee that poured out onto Justin, blistering his butt. Finally returned home this morning around 3:30 local time.

Tunica is a place of surprises. I have always had pleasant surprises. This trip did not have many. But the most pleasant surprise I have ever had from a stranger came from a slender, older, black gentleman in the middle of the night who blessed our hearts by driving us 45 min two ways to get a battery that he then installed for us. this man was truly a blessing on a trip that was not much of a blessing in any other fashion. thank you sir!!!

Government's power

Is it more dangerous to do something stupid or is it more dangerous to have a government which restricts your right to do that stupid thing? I believe the second is far more dangerous.

I have listed in many blog entries where government involvement in our lives based on good intentions has led to dire consequences. Government is primarily responsible for unemployment amongst individuals, especially young people, the housing meltdown and current economic turmoil, and even the Great Depression. It is responsible for so much more but I digress. Because of these historical facts, the latter is far more dangerous in my humble opinion.

I believe it to be stupid to not buckle your seat belt while driving a car. I believe almost all studies show that the chances of someone surviving a wreck with their seat belt on is is far greater than it not being on. But as a libertarian I also defend to the utmost the right for stupid people to choose not to wear their seat belts while driving their own cars. Its their body and lives.

Drive a motorcycle on the highway without a helmet? That is more stupid than not buckling up. But it is even more ridiculous and stupid for the government to force an individual to wear a helmet to protect his/her own head and health. What power delegated from the constitution gives the government that kind of power?

I believe smoking is harmful to a person's health. but to charge an excess "sin" tax on cigarettes and alcohol is more harmful because it adds to the growing power of government. The government has no right to infringe upon my desire to put tobacco in my own body. The government does not own my body. This is also why I support the legalization of Marijuana.

Government has gone even further. They do not allow restaurants that are owned by individuals to allow people to smoke in those establishments. This is insane in that the owner of his/her own business should have the right to allow any activity as long as it does not harm other individuals private property by force. In other words if I am allowed to choose not to eat at the establishment because the owner allows smoking, they should be allowed to go elsewhere and the owner should be allowed to function as he/she pleases.

The government also wants to restrict the amount of Salt (Sodium) restaurants put in their food. The fact that the government has to control our diets is now becoming a huge issue. I should be able to eat where and what I want without the government restricting my right to do so. If a store wants to add salt to their food to make it taste better, I have the right to go elsewhere if I believe it to be harmful. That is what the market is for.

Many of you who are my "conservative" friends might argue that these laws "protect" individuals and are not truly that harmful. But that is exactly the problem. These simple measures lead to more harmful measures. An economist I read made the perfect example: It can start out simple: Less sodium in our foods bought from businesses. Then parents who like turkey with more sodium will buy more sodium. As with cigarettes, salt containers will have to have warning signs put on them. Then if that does not work there will be a "Sin" tax put on the purchase of salt. Then parents who want to adopt children will have to pass a health screenings that does blood work to make sure you do not use too much salt and break the law. On and on we go until one day we say "how did we get here?

What if a vegetarian gets elected and says no more meat to be served in grocery stores or restaurants? What then my conservative friends? They will argue that it is harmful to your body as well as these animals. Should government have the power to restrict that?

Stupidity is a choice and should be allowed. Not allowing that choice it is the height of stupidity! Not to mention unconstitutional

The Greatest Generation

Many refer to today's seniors as those who are of "The Greatest Generation". This statement is true in many respects. This group grew up post WWII, were some of the most patriotic of past Americans, and defended America while defeating Communism during the Cold Wars. These Americans grew up through often tough times and still prospered and stood strong. From my perspective they also have been around for some of the largest growth of government in U.S. History so I'm bias against calling them this but I digress. This generation might now have to stand strong and truly earn that title in the upcoming elections. Make no mistake about it, true budget changes might not come until after this next election.

Today our nation is facing some of the toughest questions in our nation's young history. European countries (ie: Greece), facing financial meltdowns are making major changes. Some are eliminating lots of government(responsible for these meltdowns) in their lives. But while these same financial crisis's are now being discussed here in America, some recent polls show that most might be against major reform to the Medicare and Social Security Systems in America. Furthermore, important states that are strongholds for conservatives, such as Florida, indicate that they are against major change. Other districts that include large numbers of Senior Citizens are against major change as we have seen in certain areas of New York. These are Seniors that most often vote for Republicans to begin with. But these new young Republican stars in congress that are proposing major changes to Medicare and Social Security might not get support from these staunch Republicans.

This blog might sound pro-Republican(in that I support some of these plans proposed by these Republicans) but keep in mind Republicans are partially to blame for the current crisis. My worry is that this "Greatest Generation" might prove to be no different from other generations. They might prove to have happened to grow up during a tough time in American history when many great things came about. They might be termed the "Greatest" due to circumstances they had no control over not because they did something special. We will soon find out.

Given that most young people who will be most hurt by these programs that will cause massive financial hardship in the future do not vote, and those who do often look to Hollywood, Comedy Central, MTV, and Musical stars for their voting expertise, we can not count on young people to turn out and show support for these plans to overhaul these failing programs. I do not blame Seniors for not wanting change, they benefit big time from my and others who pay for their healthcare and retirement. But if they want to truly be the "Greatest Generation" then we need them one more time to be great Americans and think with their brains and not with their hearts and desires. If that does not happen (and I am not optimistic that it will), then we need young American Libertarians and true conservatives (to support candidates who are willing to do the hard thing that will not win support from the large voting segment of the population (elderly).

People like Tim Pawlenty who have called for an end to subsidies in Iowa to corn farmers and a rise in age for social security benefits while in Florida need our support. This was courageous in that these are two issues that he is correct on all accounts but very much controversial to their respective states for the reason that Iowa is full of farmers, and Florida is full of Seniors. I'm not pledging my support... but if he stands by those issues... I might have to back him come November 2012

the mindset of today's athletes

To step aside from economics today, I want to dive into an issue that has been bothering me for sometime now. The mindset of many high school athletes today.

It bothers me, it eats at my insides, when I hear constant criticism of another team during competition. The baseball player comes off the field and says something along the lines of "his curve ball does not break", "he does not throw that hard at all", "he's got nothing!" And that after popping out, grounding out, or even striking out.

Earlier this year: "the kid from Sequoyah you talked about, he was really not that good, I was not that impressed." "He did not really throw that hard." "I felt like you talked him up too much". I was thinking oh my so what was the score? "8-0". Well I suppose if you put up 8 runs against him, maybe he had a bad day or is not as good as I thought. Then find out "no... we lost 8-0!" What? Yes after getting shut out by a pitcher players have the audacity to act as if he was nothing after being embarrassed by him and the team. Oh, and that kid is wanted by Walters State, one of the top 5 teams in the nation in JUCO D1.

I go to Sequoyah last week and run into a couple former players. One of which constantly talked down about the players of the other team. One of which is really good.

I just don't understand why most athletes today, when losing, try to make them feel better about themselves by talking the others down. I don't know that they do so on purpose. I just know that it bothers me. When I played Anderson County had two really good pitchers. Loudon had a couple really good players. And there was Kingston, a team with a kid that got on people's nerves. Very cocky player, a guy that few really liked that much from the outside (no one really knew him that well). Yet each of those players were bragged on by us. They all could play. We knew it. When they struck us out or popped us up, the phrases used were: "his fastball is not overpowering but it moves a lot so get your hands thru". "His curve ball is not 12-6 but it does break pretty good". "He got me on the high fastball when you get behind he is going to try and throw it past you". At worst: "Its not as hard as it looks from here, but get in the back of the box, its still coming pretty fast."

This is just how we talked. Especially after getting out (which often happened to me). We had respect for the other team and the players. I don't know that these players actually feel that their opponents are not that good. I wonder if they are just embarrased, jealous, or so insecure with themselves that they have to bring others down to make them feel better about themselves.

Do not get me wrong, I am critical of people. I have high standards and often put other people down(although usually in a jokingly manner). But the last 2-5 sporting events I have been to have involved in each contest statements like that. And most often from the team that loses.

I don't know... its just something that bothers me about the mindset of many of our athletes today.

Beware of comparisons

A friendly conversation with a friend of mine ended with me noticing a problem with so much information we get today. Economics is about efficiently allocating scare resources(all resources are scare) which have alternative uses. Meaning lets get what we need where me MOST need it as quickly and as cheaply as we can....

However understand that efficiency is different in different places. Let me explain by explain: My friend was arguing for America to use more cheap uses of power such as solar and wind. He cited that in Europe they have a couple places where wind is used to power large portions of cities. I have not looked up to concur this is the situation but even if it is, it can have zero relevance to our situation here in America.

Just as different parts of our country are powered differently (water in Vegas, Coal in the South, Oil in the NE) so is the rest of the world based on different resources. Europe can claim that Americans are inefficient at agriculture because they in Europe produce more food per acre than we do in America. But we can argue that our farmers produce more per farmer than they do in Europe. Each continent is both efficient in different ways. Europe has less land available for use and thus it is more efficient to spend more time on each acre getting all that you can out of the available land. WHile in America it makes since for the farmer to fly by rocks and not worry as much about weeds since we have so much land that can be used. Thus the efficiencies are far different.

Third world countries get more work done with a given amount of capital because they use the capital more than we do in America. But that is because in a rich nation like America we have more capital to use and our labor is far more expensive. Let me explain. In America it makes sense for a truck driver to drive his trailor to a location and let it sit until morning to be unloaded by workers who arrive for their "morining" shift. He can attach his truck to another trailor and continue on. In a third world country they would have workers waiting for trucks to arrive and immediately unload them. Why the difference? America has more access to capital than third-world countries and third-world countries have cheaper labor costs as compared to America. So while the trailor sits idle till morning in America, poor nations have to get in unloaded quickly to then be used very soon after.

The point it that different nations have different situations. It makes sense that Europe would have more public transportation and use less oil and gasoline than in America because they have far less land but have 100,000,000 more people than America does. So the population is more dense and thus they can spread out the costs to far more people when they ride public transportation. We in America have to drive more because there are not enough people in Knoxville and Crossville to have a train of some sort connecting the two cities. Thus we drive. Furthermore our roads and highways, while built really well are high speed roads and have lots of hills. IE: drive from Crossville to Knoxville. If I'm making that trip I want to be in a SUV for protection purposes not some environmentally friendly 50 miles to the gallon car that many in Europe can use. And lastly if we do not have the English Channel to generate wind but have tons of coal, it makes sense for us to use coal and let europeans use more wind energy than us. Our efficiencies are based on available resources.

Our efficiencies are different based on our circumstances and resources. So when you hear professors, teachers, media, politicians, or even parents talk about "well in Europe they do this and its good why are we behind?" Its often that we are not behind... its that those individuals are behind on their understanding of economics and geography differences.

Why I'm a libertarian

It is very easy for me to be a libertarian but was very hard for me to become one. There are a wide range of Liberals and Conservatives. There are people that will refer to themselves as conservative because their Baptists. And therefore they are against Gay Marriage and Abortion. Very few other issues matter. Now they will come out and protest when people try to take "under God" out of our pledge. They will come out when bills to allow more evolution to be taught are being considered. There are also many intelligent conservatives that follow issues and are wise.

There is also a wide range of liberals. Some liberals are liberals because they are anti-Christian and want to be against anything Christian Conservatives are for. They believe in equal rights for all people and make up the fact that these rights exist in our Constitution although no rights are given to us in our Constitution. Some are liberals because they, in a simplistic way support helping the poor. So if someone says "program to help poor people" they go running and support it regardless of the unintended consequences. Then there are some educated liberals that have studied and have come to the conclusion that capitalism helps the rich but does not help the poor. They truly want a just society and they feel that America is not a superior nation and we have flaws and government needs to fix those flaws.

But there are very few if any self-proclaimed libertarians that are not very smart and educated on the ideas. This is because it is hard to become a libertarian. It requires a different way to look at the world and an understanding that there are costs and benefits and the policy that needs to be taken is the best when taking into consideration both costs and benefits. This is far more complex way of thinking but one that never contradicts itself. Thus it is hard to become a libertarian but not hard remaining one. One of these new ways of viewing issues is through "opportunity costs".

A common simple and quite frankly normal human being would not object to spending 20 Billion dollars on Aids research. And I understand this. I would never be against this myself... until I became a libertarian. When I wised up I realized I was wrong. A libertarian knows that there are costs and benefits to any and everything. Let me explain what I mean:

I am against spending 20 Billion dollars on Aids research because that is 20 billion dollars that could be spent in a more valuable area such as CANCER research. Now before mentioning that many would have called me heartless because I just said I was against Aids research. But when you understanding that the opportunity costs of something is whatever you give up in order to pursue something then you understand that 20 billion spent there is 20 billion not spent researching something that affects far more people.

This is why I am against governments running programs. Not because I believe government is evil. But a free market allocates resources (including money) to the most valuable uses. Since there is more money to be made in curing or improving cancer conditions, more and most money will be spent on Cancer research if left to the free market. This guarantees the most people's lives to benefited.

And that principal is why I have become a libertarian.

Just a little mental relief

Today it is common to hear individuals complain about gas prices. And who blames them? Gas prices are high. For the record one of the main things holding back the decline of gas prices is the regulation on drilling for oil. With demand rising around the world, supply needs to also rise and even at a slight quicker rate so that speculators are not as worried about international conflicts that could hurt the supply of gas.

But this column is not about lowering gas prices but more so about trying to bring some calmness of mind. I hope that it is some relief to know that gas prices rising is mostly due to a rise in demand. Profit margins are not much higher if any higher for oil companies than they are for other areas of commerce. A rise in demand world wide can be most impactful on gas prices. Our allowing free trade with foreign countries such as China and India has allowed us to save lots of money when buying their products. If these products were made in America they would cost far more and thus we would have less money to spend in other ares of our lives.

This saving of money has not only benefited us but it has also benefited India and China in their ever growing economies. Due to that, those two countries have continued to add to their infrastructure and technology. This has allowed hundreds of millions of people to begin driving. This has led to a large increase in the demand for oil around the country and thus the higher prices.

So just remember the lower prices we pay for foreign goods has allowed us to save money that we can then spend on gas. I know this might be of little comfort to most of you. But that is only because we have never lived in a society that does not allow free trade. We have no idea what the prices of goods would be if we could only buy goods made in America. But rest assure, those prices would be far higher than the higher gas prices we are paying now.

Tenure

My apologies... this blog is not allowing me to split the post up into paragraphs for some reason!! School Principals do not have tenure because the governing bodies of our education system, and common sense individuals, deem our schools to be too important to be left in the hands of an individual who has no fear of losing their job due to poor performance. Why do we not view the individual classroom the same way??? Most people view issues from idealistic viewpoints and not from economic perspectives. Most think of economics as money and businesses. But in reality economics is about decisions that are made based upon cost/benefit analysis. I had a discussion with a lovely new friend of mine recently about tenure laws. We agreed nearly on every point. But how I come to my conclusions might have been slightly different from her ways of coming to an opinion. I view issues from an economics perspective. If you were to tell me that a teacher who has no fear of losing their job will work as hard as a teacher who does fear losing their job than you are telling me that teachers are the most holy individuals in society and quite frankly are the most holy individuals ever. Let me explain: If you told a drug company that they would stay in business and receive the same money whether they created new helpful drugs for our medical care or not do you think that drug company would be motivated to work as hard? Most would say NO. Its the desire for profit and competition of the free market that motivates these companies to create new things for us. These companies create medicines that improve, sustain, and most importantly save lives. But the drug company does not think of it from that perspective but from the perspective of "lets make a lot of money!" The motivation behind drug companies are profits and the need to survive in the marketplace. This is why America still creates the most new drugs. We still have a profit motive in our healthcare system. Why do we have a holier than thou view of teachers in that we believe they ALL will perform their job because they want to do great things and are motivated to help people. Its proof in cities that have "rubber rooms" to house teachers who are harmful to the education experience that this is not the case. Many teachers, protected by tenure laws have become so bad that administrations have placed them in these separate buildings performing paper work and have hired new teachers to replace them because that is cheaper than fighting the unions in court over firing a bad teacher. How pathetic! Would most teachers still work just as hard if they knew they would have a job whether they did a supered job or not? For some reason union leaders say yes. And yet there is ample proof that is not the case in many cities with the before mentioned problems. Want another example?: As a principal what teachers are hardest to find. If you said math and science go to the front of the room you are correct. Do you know why? Its because they are the hardest subjects to get a degree in. But wait... if teachers are all motivated to help students, would they not want to help them in two of the most important and under staffed fields? The answer is NO. Since pay is no more for those tougher fields, more teachers have chosen to pursue the easier subjects to earn a degree in. You see many things motivate teachers. I believe we have teachers that are great and would be great regardless. But there are many out there who are not like that. Tenure will only save a very few good teachers who might not get to keep their jobs because they have personality complications with the administration. And that sucks when good teachers are let go due to this. But the amount of good teachers let go due to that is far exceeded by the number of teachers who no longer work as hard when they are not motivated to survive as the private sector is. thus since the cons outweigh the pros... I choose to be against tenure and favor its replacement with another benefits for teachers: Merit pay being one. Pay your best teachers more. Pay the teachers of the harder subjects more so there will be no shortage of some teachers and a surplus of others. In the end these issues are not to be viewed from a teachers perspective but from the students perspective because that is what education is suppose to be about anyways. And I never hear those in favor of tenure talk about the ramifications upon students from those laws. And nor can I blame them. Unions are suppose to be about their clients. But the education of our children should never be viewed from the perspective of the union but of the students involved. P.S. Refer to some of my older education blogs about the overall education system

The Economic Principal that has molded most of my beliefs

For you who follow my blog or come by and read it from time to time, I want to shed some light on just one principal that has so molded my beliefs when it comes to economic policies and government involvement in our lives. This is one of the most basic principals of economics but so few understand. The idea is based on there always being the kind of cost that so few people think about: OPPORTUNITY COSTS

Opportunity Costs is that which is given up in order to pursue something else. These costs involve the time you could have spent doing something else and that in which you could have spent your money on but can't due to spending it somewhere else. In other words the true cost of watching TV for 2 hours is what you could have spent those two hours on. The cost of spending 10 dollars on anything is not really the 10 dollars. Money is only a median of exchange. The true cost is anything else you could have done with that 10 dollars.

I was watching briefly the Tennessee Girls State basketball championship today. I'm excited about Stone Memorial boys basketball team being in the State next week along with head coach Mike Buck and assistant coach Neil Capps. So I was somewhat in the state tournament mood. But as funny as it is I was finding it hard to keep the tv on because it was showing on PBS. I totally disagree with the idea of PBS. As a libertarian, I am against state ran telivision. Aside from the Constitutional reasons are the Opportunity Costs reasons. Many will talk about the positives of PBS and how it can help educate some children and is good programming in a world with such filth on telivision today. But that is only half of economics.

Economics is about the BENEFITS but also about comparing that with the COSTS. Most will say that it is worth tens of millions of dollars to have that broadcast channel. They base this on the benefits and the fact that in a government with a 2 trillion dollar budget what is a few ten or hundred millions of dollars each year. Well the cost is anything else that money could have been spent on. That money could have been spent on better armor for our troops, better weapons for our police, better training for police and fire fighters. It could have been spent on fixing roads and making them safer for drivers. All things that government is suppose to do according to the constitution but also because there is not true market (supply/demand) for public goods as such.

PBS is fine and has some good things. But the question is not whether its good. The question is whether that is the best place for government to spend tax payers money? And I hope the paragraph above makes you rethink that. Money spent on Aids research is money that could have been spent on Cancer research. It is not that I have no sympathy for Aids victims, but quicker cures and better treatments for cancer would do far more good than the same for the disease of Aids. Often I sound heartless but I feel that since I agree with doing the greater good for the greater number of people, that my ideas have the most compassion.

One last example of opportunity costs. Years ago due to an incident at an airport in which an airplane hit another object on the runway, a small infant child was killed in the incident. To fix the problem, many were calling for the simple fix: Require a child proof seat on an airplane as you do in a car. The famous slogan: "If we buckle our kids at 55 mph, why not at 550 mph?" it makes a lot of sense. If those seats were required that child would be living today most likely. But that is not economics, that is only half of economics. The cost is what? Well with that law, the parent is now required to purchase another seat to put her child in, instead of holding onto his/her child. At this cost, many families might choose to drive to their destination instead of fly. Flying is much safer than driving statistically speaking! Thus this laws true cost: Far more deaths by driving than would have been saved flying!

When I decide my opinion on issues... I always think about OPPORTUNITY COSTS... I hope you start doing the same

Nothing is more dangerous than good intentions

The title might sound odd considering there is nothing that people like more than someone who has a good heart and intends to do good for others and society as a whole. The dangerous part is that good intentions and a good heart are hard to argue with and thus can be dangerous when the heart is WRONG! Think with your head not your heart Washington D.C.! See that sounds bad because we always love the heart but when it comes to government, use your head! Parents... use your heart!

My students are learning about Price Control laws in school right now. One of my favorite subjects to talk about is when good intentions have bad consequences. No doubt everyone out there knows the most basic principal in economics: We buy more at lower prices and buy less at higher prices. The other half of that principal is not common sense but obvious too: Producers produce more when they can get a higher price and produce less when their goods sell for lower prices. Pretty simply huh?

San Francisco and NYC are known for their gracious Rent Control laws. They love to help out the poor people by not allowing those nasty landlords keep raising their rent! Only problem is that homelessness is a huge problem in NYC and was in San Francisco until most poor people left that city making it now one of the most wealthy cities in America. Why did this happen? Government wanted to help people my not allowing rent prices to rise so high. So prices were kept low! Now people who had the money began renting bigger apartments than they needed, and the landlords stopped building or taking care of existing apartments because they as the basic principal says: produce less at lower prices. Now the poor people have a hard time finding a place to rent and they end up homeless! Such a great law huh? Its true recently a study showed that about 175,000 single adults in NYC rent apartments... that have 4 bedrooms!! Why? because their located in rent controlled areas and are cheaper. This takes up all the room for larger families that need housing!

Now, guess what Minimum Wage laws do: Well they keep the price for workers high (currently $7.25/hr) Well remember what the most basic principal of economics is: People buy less at higher prices. And producers become consumers when it comes to hiring workers. So they hire fewer workers at the higher price and thus what is created? If you said a higher UNEMPLOYMENT RATE go to the front of the class your right! Thus in countries with high worker protection laws and high minimum wage laws, there are also lots of jobless benefits programs to help them when they lose their jobs because its common to have lots of unemployed workers where these laws exist. This hurts teenagers more than anyone. Who often in Germany (where they have more of these laws than nearly any other place) have a normal unemployment rate of around 25%! Terrible! Yet those government officials were well intended! So I sound like a monster arguing against Tenure laws, benefit programs, minimum wages for hard workers, and rent control to help poor people. But in reality I'm just choosing to think with my head not my heart... and in the end that is actually more compassionate whether it sounds like it or not!

Gender Income Inequalities Part 3

Regular and Irregular Work

Many jobs are 8-4 or 9-5 hours jobs but many require hours whenever and wherever they happen to be required. When a multimillion-dollar lawsuit is in progress or a death penalty case is being appealed, the attorneys cannot quit work in the afternoon after their 8 hour shift. Nights and weekends might also be required.

In general it does not matter if the attorney is male of female but in practice women more often carry the burden of domestic responsibilities for children and the care of the home and thus these kinds of jobs are less attractive to women. Due to this, whole professions might not always be put off-limits but range of work within that profession can be restricted. Thus more often women attorneys are civil service attorneys with regular hours then working for a leading high-pressure law firm where the work week might average 60-70 hours and those hours are to be worked at unpredictable times. These law firms might also have to fly these attorneys to distant places on short notice.

Economist Thomas Sowell says that in principle this is the same problem for men and women. But in practice, a mother is more likely to stay home with children while the father is tied up at the office or flying off to someplace to deal with legal emergencies. Moreover, since men are never pregnant, women are disadvantaged in such work by the physical limitations of pregnancy. A Harvard Business Review surveyed people whose earnings were int he top 6 percent and it showed that 62% worked more than 50 hours a week and 35% worked more than 60 hours a week. Among those with "extreme" jobs-meaning high in hours and stress, lean than 20% were women. Among those people who did hold these jobs, women were only half as likely to say they wanted to still be working like this five years later.

The Economist magazine observed recently: "The main reason why women still get paid less on average then men is not they they are paid less for the same jobs but they they tend to not climb so far up the career ladder, or they choose lower-paid occupations, such as nursing and teaching."

Other studies show that jobs where women with college degrees earn at least as much as men are computer engineers, petroleum engineer, and a variety of other engineering occupations, as well as journalist, portfolio manager and medical technologist. But these jobs have fewer women than men in them. So the main reason that women are paid less than men is not that they are paid less to do the same job, but that "they are distributed differently among jobs and have fewer hours and less continuity in the labor force."

Among college-educated, never married individuals with no children who worked full-time and were from 40-64 years old, that is beyond usual child bearing years, men averaged $40,000 a year in income while women earned $47,000. Even in the top-level universities like Harvard and Yale, women have not worked full-time, or worked at all, to the same extent as male graduates. Among Yale alumni in their forties, 56% of women still worked while 90% of men did according to the New York Times. Women are also more likely to work part-time than men. This restricts the range of industries and occupations available that they can work in. Half of all women who work part-time do so in only ten industries out of 236 industries surveyed.

Domestic Responsibilities

Given the importance of being able to support having children, it should not be surprising that married men with children have usually earned the highest income of all, since higher earning are more imperative for fathers with a family to support. Marriage has the exact opposite affect on women since their domestic responsibilities are different. Women who have never married have higher average incomes than women who have, and women with no children have higher average incomes than women with children. In nations where most women get married, this can have obvious overall affects. Now that marriage rates are declining, one could see why women's incomes are gaining ground on men's income.

Gender Income Inequalities Part 2

Part 1 of this blog entry covered some of the historical aspects of gender income. Now lets look at the economic implications of gender income differences. To truly see if employer discrimination takes place you would have to compare men and women who had truly comparable educations, skills, experience, continuity of employment, full-time or part-time work, what occupations they choose, whether they are more or less likely to want promotions, whether they want to travel or work in different environments, among other variables. This is hard to do. Besides there are very few men and women who all have these same variables. Let us examine a few of these variables now.

Occupational Differences

Although physical strength is no longer the most important quality to have for most jobs as it use to be when most people worked in agriculture, heavy industry, or mining, there are still particular industries today where considerable physical strength remains a requirement. Some of these fields requiring more strength are fields with higher pay than the national average. This would thus lead men to have higher average incomes then women. According to the U.S. Census Bureau, women have been 74 percent of what the Bureau classifies as "clerical and kindred workers". But they have been less than 5 percent of "transport equipment operatives." In other words, women are are more likely to sit behind a desk than to steer an eighteen-wheel truck. Women are less than 4 percent of workers in "construction, extraction, and maintenance." They are less than 2 percent of roofers or masons and less than one percent of mechanics and technicians who service heavy vehicles and mobile equipment. These have obvious economic implications, since miners earn nearly double the income of office clerks when both work full-time and year-round. There is still a premium paid for workers doing heavy physical work as well as hazardous work. While men are 54 percent of the labor force, they are 92 percent of job-related deaths. This is due to working the more dangerous jobs which of course pay more.

Continuity of Employment

Women have also made career choices based on the likelihood they would at some point or other become mothers. This usually means a time of withdrawal from the full-time work outside the home, the cost of this factors in occupational choices. Where a occupation is unionized and withdraw means a loss of seniority, this hurts their prospects of being promoted and being retained during times of lay-offs.

This also hurts women's work experience especially when they do not re-enter the workforce until the child reaches a certain age. These interruptions are less common among men of course. The effect of this loss time depends on the occupation. Due to this, promotions are rare but not just those who have lost work time but to those who are likely to lose work time in the future. A promotion to a high level senior position that requires lots of time will be less likely to be given to a woman since there is a good chance for a future interruption of work.

Occupation skills change over time today as well. Rapidly changing computer technology means that computer engineers and programmers are constantly upgrading their skills to keep up with advances in their field. Tax accountants also have to keep up with changes in tax laws, and attorneys must keep up with changes in laws in general. To drop out of these fields and then return in a few years after children have grown up may mean they are behind in the developments in these occupations. Thus women consider these issues when choosing a career. It has been estimated that physicist loses half the value of their knowledge in four years while a professor of English would take more than a quarter of a century to lose half the value of the knowledge in that field. Thus it is not surprising that women work in fields with lower rates of these losses such as teachers and librarians rather than computer engineers or tax accountants. Even when the proportion of women receiving Ph.D.s rose dramatically from the 1970s on, male-female differences in the fields of specialization remained large. As of 2005, women received more than 60 percent of the doctorates in education but less than 20 percent of doctorates in engineering, a field that pays far more.

More in part 3

Gender Income Inequalities Part 1

I recently had a short text conversation about gender studies/income differences with a new good fun friend of mine. For the record I rarely have those conversations through text messaging. The discussion went away from gender studies and specifically about the discrimination of women in our society primarily through income differences and occupations and promotions. And the discrimination is apparent and obvious due to the differences in income between men and women. Well this is the thought of most Americans but in reality and I will attempt to show you in the following two posts, discrimination plays a small if any true significant affect on income differences amongst men and women. This will not be a typical blog entry. It will be longer than usual even for my blog posts. In Part 1: I will look at the history of these differences and the correlations that are apparent.

There is not doubt and no argument against the fact that in most societies throughout history, women have earned lower incomes than men. But this has caused many fallacies to form. For most people, the prevailing opinion is that discrimination is the main factor in these differences. This is mostly due to the media, political arena, the intelligentsia(colleges and teachers/professors), and finally the courts of law even. But Thomas Sowell says that this "explanation cannot withstand the scrutiny of history and of economics."

There is no question that in almost all societies, women and men have been treated differently from birth on. In some societies, girls have not been educated as often as boys or to the extent of boys. This undoubtedly has led to women being less qualified to hold jobs requiring education. Societies that do this throw away much of the economic and other potentials of half their populations. But this is not to say that employers discriminate when hiring workers given this fact. Under this scenario, women and men would end up with different levels of knowledge, skills, and work experience. These times have changed though and fewer societies have these same restrictions against women. But this is not going to change employment and income differences over night. Even in the twenty-first century, "two-thirds of the world's illiterate adults are women" according to The Economist magazine.

Years ago when most work was done on the farm, mines, or in regards to shipping, physical strength was a necessity to be a truly productive worker. We can blame God that he made men stronger then women in general but discrimination is definitely not the reason that more men had jobs in this era. Over time human muscle has been replaced by machine power and skill development and education has become more important than pure physical power. This has lessened the gap between the productivity levels of men compared to women. At the time when physical strength was a priority, many desperately poor people in China, who were living on the edge of starvation, would kill their infant girls due to the fact that their physical development would not be enough to produce enough food to sustain themselves and thus without a surplus of food these families often killed their newborns who were girls. This was not always an attempt to control population growth but an economic concern in China.

With this change in productivity characteristics, the age of which people reached their peak earnings began to rise as skill development and experience were now a prime for productivity. This lowed the differences in male-female comparisons. But today the top factor affecting the still sizable gap between men and women incomes is real simple: Child bearing. Again we can blame God for this. Mothers as a group fall behind men in income as domestic responsibilities reduce the ability of women with babies and small children to work continuously at full-time in the workforce. This means they lose two things: skill development and experience. Those are the two most important factors in productivity of an individual. Many of these changes have ran in correlation to the 1960's feminist movement amongst other movements. Many contribute the lessening income gap to the more "enlightened" views of women by society. Thus they want more government policies and laws passed to continue this trend. But history contradicts this theory.

History shows us that employer discrimination and the career paths of women bore very little resemblance. The fact is that the proportion of women in the professions and other high level positions was greater during the first decades of the twentieth century than in the middle of the twentieth century- and all of this was before either anti-discrimination laws or the rise of the feminist movement. The proportion of women among the people listed in Who's Who In America in 1902 was more than double the proportion in 1958. The trend of women as a percentage of academic was up from 1910 to 1930 and down after that, with a possible upward trend in recent years, according to the same 1964 study. Other facts back this up like more women received doctoral degrees in 1921 and 1932 but this was back down again in the late 1950's and early 1960's. These same trends existed in biological sciences, economic degrees, humanities, chemistry, and law. Even employment in colleges amongst women was down in 1961 as compared to the 1930's. This was even seen in women's colleges, run by women such as Smith, Wellesley, Vassar, and Bryn Mawr. There is no way this was due to discrimination.

Why did these changes take place? Really simple in fact. Women's marriage and child-bearing patterns changed during those same times. During the early decades, the median age that women were first married was higher than at the mid-century. Most women who staffed women's colleges during the early era were not married at all. As the median age of marriage began to decline, the representation of women in high-level occupations and recipients of postgraduate degrees also declined. This decline in the median age of marriage ended in 1956 and began to rise again. This is why more recent data shows the gaps again closing between men and women. The birth rate also began to decline from 1957 on, and by 1966, it was as low as it have been back in 1933. The 1970's saw women's share of doctoral degrees again rise. Remember also the role that the "baby-boom" would have played shortly after WWII.

Women's rise in higher-level occupations in the second half of the twentieth century continued to follow the rise in their age of marriage which rose sharply and finished the century much higher than it was at the beginning. The birth rate also fell sharply and was much lower at the end of the century than even the beginning. Women rose to record high levels in higher education and higher occupations. Women's percentage of postgraduate degrees in general, master's degrees in business and law degrees, medical degrees, and Ph.D.s all skyrocketed from the 1970's on according to Economist Thomas Sowell.

There was also a narrowing of the labor force participation gap as well. In 1950, 94% of men but only 33% of women were in the workforce. The gap of of 61% points narrowed to 45 by 1970. At the end of the century the gap was only 12 points as 86 percent of men and 74 percent of women were in the labor forces. Almost as important, women also entered occupations where men were previously predominant, especially those fields requiring a college degree. The continuity of women's employment also increased after 1970, although the gap between the continuity of men's and women's employment did not disappear and women continued to work part-time more so than men.

These positive changes in the second half of the twentieth century all follow in line with the changes of women's age of marriage and child-bearing. Male-female differences in income did not disappear completely. These differences have more to do with career choices than they do discrimination. That is more economics and less history... which I will cover in part 2 coming soon.

Book most of this came from: Economic Facts and Fallacies by economist Thomas Sowell

Sowell cites:

The Economist magazine
A New York Times article by Tama Lewin
Charles Murrays IThe Inequality Taboo"
Quarterly Review of Economics & Business, Feb 1961
Jesse Bernards: Academic Women
U.S. Bureau of the Census, Historical Statistics of the United States Colonial Times to 1970