Top Down Economic Policies

It amazes me how confused people get when discussing economics.  I would not be amazed if they were confused as to how the elasticity of demand is one of the most important things for companies to understand when deciding the marginal product they want to supply.  That's confusing and I do not know all that goes into that.  But understanding the media frenzy that is covering this so called "top down" economic approach should be much easier.

The Republican candidate for president, Mitt Romney, I believe wants to reduce all marginal tax rates by roughly 20%.  He also wants to eliminate enough loop holes and cut spending enough to make this change deficit neutral.  Eliminating loop holes meaning the deductions that many companies take advantage of in order to get around paying taxes.

Obviously since the rich and upper class citizens pay the most taxes and the highest marginal tax rates already, they will receive the largest tax cut.  When the poorest 50% of Americans pay around 3% of the taxes, how can you give that group a comparable tax cut anyways?  The fact is when it comes to Federal Income Taxes, the rich pay the most of the taxes by far.  Thus they will receive the largest tax cut.  That should be simple to understand.

Furthermore, cutting taxes for those making over $250,000 a yr in income/profit will cut taxes for the most important among us.  That is the larger of the "small businesses" in our society.  These companies are responsible for most of the jobs that are lost or created in our nation.  These companies usually file their taxes under individual taxed income and thus to reduce their taxes you have to cut taxes on the very rich.  Why do this?  If you cut taxes on people who create jobs and produce goods, they will be willing to produce more and thus hire more workers.  It allows them to invest more money to expand their business which is what we need right now with unemployment at 8.2% and the real unemployment being much higher than that when you calculate those who have stopped looking for a job because of discouragement or have taken a part time job for the moment.

The purpose of taxation is to raise money for the government to provide services.  The best way to do this is by raising money without impeding the economy.  That is what Mitt Romney wants to do.  Or at least that is what he says.  Forget about politicians for a moment.  That is what I and other people who understand economics wants.

Those who are against the "top down" approach are people who do not see taxation this way.  They see taxation as a way to more equally redistribute wealth.  To take from those who are the richest and most successful to help those less fortunate.  That sounds good even if it is immoral from a liberty standpoint.  But even if you think its benefits outweigh the costs when it comes to the morality argument, how about the economic argument?  If you tax the rich and the businesses who hire people and the economy continues to slowly progress or even go back into another recession, millions of more people will be negatively affected for many more years than would have benefited short term by the benefits of receiving government assistance through higher taxation.

I for one want to use taxation the way it needs to be.  Raise money for the federal government to do what the Constitution allows it to do while not impeding the economy from being a well oiled wealth creating machine!

Where did the time go part II

Personally I am doing really well right now.  I have recently lost some weight and would like to continue this. Such an important part of my life.  The motivation is coming from all over the place.  But most importantly I want to get or stay healthy.

I am still single but I go out and date I guess you could say.  This might be one of the motivating factors of me wanting to lose weight.  I have been seeing some people more regularly but nothing serious.  They are all more attractive than me so maybe that is why I need to lose more weight... haha

As a strong big tough guy I'd like to say I'm always strong but the truth is I have many weaknesses.  I live alone now and often get lonely.  Not that depressed lonely but I have almost always lived with someone.  I moved out of home as a Freshmen in college playing a little baseball and have not moved back home but for one year since.  But I have always lived with my future best man and younger brother or one of my best friends.  So this is different.  Humans are designed to be social.  And I'm a very social person.  Nothing wrong with admitting when you get lonely from time to time.

I deal with anxiety sometimes.  That is embarrassing to admit.  I really have little to get anxious about.  I have a good life as it is right now.  I have a good job and I'm doing what I love.  I am in good health.  But I worry about that.  I have never been one to get sick hardly ever in fact and have had very very little health issues in the past.  But I still worry about that from time to time and that is probably one of the motivating factors with wanting to get into shape.

Most importantly is someone's spiritual life.  I can tell you right now that I do not stack up to my family.  I have two of the most God loving brothers in the world.  That is not a joke.  I have another brother that is married and seems to have kind of rededicated himself spiritually and a sister that has had life change recently and is also on fire for Christ.  My parents are as well and possible motivated by recent changes in our lives attending one of the greatest churches in east Tennessee at Northstar Church.

I personally am battling things and need to be better.  Prayer is needed.  I have been a Sunday Christian for a while now.  Don't get me wrong I still witness some and talk about Christ.  But I do not live it like I use to. I need to work on that as much as anything in life.

My church and family are awesome.  Personally I'm in such a great position in life.  My lifestyle has changed recently with exercise and eating right and trying to get in the scripture.  I have a long ways to go.  I guess until I die I will have to work on it.

I love America as well and will continue to blog and talk about politics and economics in our society.  Which is what I will begin doing once again with my next blog entry.

Where did the time go?

By my account it has been since February that I have blogged.  I apologize to those of you that occasionally read my blog for political commentary and other things.  I am ashamed that I have not prioritized this as much as I should have.  I will most likely bring some more political commentary with an emphasis on the economics of some current events and the upcoming presidential election in the near future.  But today lets get caught back up.

My life has changed a lot since I last blogged.  That has been like a 1/2 year so that is to go expected.  I still teach at Stone Memorial High School and love it.  Some things have changed.

I no longer teach Economics! Not happy about that but there is no economics offered at my school now.  I do not like nor agree with that decision.  I won't bore you with why it has been dropped.  Instead i am teaching U.S. History.  Not just any history but the Advanced Placement and Honors History courses.  Kind of excited about this considering I get the brightest of students.  But doing AP things is a little nerve wracking.  In fact doing this, golf, basketball, and baseball as well as PA responsibilities will keep me busy the next 10 months I'm sure.

I no longer coach girls basketball.  I will miss those girls.  I think from a Junior Varsity/Freshmen standpoint we have two of the most if not the most successful seasons ever at SMHS.  I had a small part in that but the players of course had the largest impact there.  My coaching style was not always appreciated by all.  That is to be expected in high school.  Coaching girls is also different.  I'm sure I will blog about this alone in the future about why I treat girls and guys very much the same on the court and in the classroom.  For the most part, I feel that I was appreciated and well liked by most all the girls and parents.  

After going to the Semi-finals in the TSSAA state tournament, the head coaching position opened up this past off-season and I applied for it.  I did not get the head coaching position.  Why? Well probably a lack of support from some.  I'm not too upset about it now but those reasons are the human reasons that "I" see.  But as a human "I" am very limited as to what I can see.  My relationship with God needs much work but I know he still guides me and loves me and the reason I did not get it is simple... God did not want that for me.

That is hard to accept because a head coach is what I want to be.  But to be honest I'm much better off now.  I am Neil Capps' assistant with the boy's basketball team.  Coach Capps has as much integrity as anyone in Crossville in my opinion.  In the summer that I worked with them I have changed the way I would have ran a practice prob by nearly 20%.  That means I have learned a ton in such a short time.  I'm learning from him and he learned from one of the best college coaches around and one of the best high school coaches around in Coach Buck.  I am now better prepared to be a head coach by far just a few months after I would cry and whine about not getting the girls head job.  How foolish huh?  I still have some disappointment about it but I am very much at peace in what I'm doing now.

For the record.. the guy they hired... Coach Walker... was an excellent choice.  I'd say people in authority would be impressed with the way me and him are already becoming good friends.  Some might have feared that I would have butt heads with whoever they brought in.  That is just part of my job though and stupid anyways.  Why in the world would I hold anything against the new coach?  There is nothing to be impressed with there.  People need to be professional in their lives and not be excited when someone does what they are suppose to do.  We have a great relationship and is fun to work with.  I hope he does well.

I'll cover more personal/spiritual things in my next blog which I plan to post sooner than the next half year.

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.