A More Inconvenient Truth

Archive for the ‘Domestic’ Category

News Flash: negative news for profit

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In a ground-breaking piece of investigative reporting, the Washington Post laments the public’s growing dissatisfaction with our economy. Via Carpe Diem, Drew Carey hosts a piece called “Living Large: America’s Middle Class” for reason.tv.

Despite news outlets singing the sorrows of subprime and heralding a recession, we have never been better. Among all the negativity, I have yet to hear anyone suggest they would be better off living in 1905 or even 1995.

Watch the video and start living large. And then maybe you won’t believe all the negative junk you hear day in and day out in the papers and on the news.


Written by WithConfidence

February 6, 2008 at 3:52 pm

You are bankrupting your children

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Via Mankiw’s blog, a piece in the NY Times by Mankiw himself, entitled “My Birthday Wish: Not Burdening Our Children.” He talks about America’s long-term economic future, hitting on several important points that are (somewhat surprisingly) politically neutral:

  1. Social Security, FDR’s “compact among the generations” has grown well beyond its original and intended scope.
  2. 4.5 percent to 15.3 percent and the current level of taxation is not sustainable.
  3. Healthcare has advanced at a rapid pace, bringing higher costs and benefits.
  4. Something needs to be done and the national debate is not up to the task currently.

He sums up my attitude about the current correction a/k/a “recession”:

My birthday wish is for all of us to stop asking what the government can do for us today. Instead, we should focus on what we can do together to prepare the economy for our children and grandchildren. That means getting ready to care more for ourselves in old age, perhaps by retiring later, perhaps by saving more. I hope that when I celebrate my 100th birthday in 2058, my descendants won’t look upon Grandpa and his generation as the biggest economic problem of their time.

One step in the right direction is acknowledging the unfunded liability on the government’s balance sheet, something I talked about before. As a young American, newly in the workforce, each paycheck causes me to shake my head. I see money I need, money I earned, going to a program I will likely never benefit from.

FDR’s “compact among the generations” was not a compact with my generation. It was passed on to us without our consent. And we are forced to abide to it–in my case, on a bi-weekly basis.

Written by WithConfidence

February 4, 2008 at 11:51 pm

Free trade is economics, fair trade is marketing

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Via Greg Mankiw, Steven Landsburg in the NY Times talks about the myth of protectionism. Interesting look at the moral side of the debate. Friedman often cited free trade as one concept that almost all economists–from Adam Smith on up–agree on. “Fair trade” makes for good marketing but doesn’t help those it intends to. It’s important to judge based on outcomes, not intentions.

Written by WithConfidence

January 28, 2008 at 9:42 pm

Cash out of Social Security

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Came across an article from 2003 (by Arnold Kling at EconoLog) about the logic behind Friedman’s proposal to transition out of Social Security. Friedman himself sums it up:

What you should do, in my opinion, is to give every person who now has a claim on Social Security bonds equal to the value of his claim, and set him free. Let him save. Let him do what he wants with it. That would not add a dollar to the debt we now have; it would just convert an unfunded debt into a funded debt.

Currently, government liabilities are hidden. We don’t let private companies account this way, why then the federal government? It isn’t privatization, it is transparency that would force debate on the issue. Unfortunately, Social Security lingers in the dark–to the tune of over $50 trillion–without resolve in Washington.

Written by WithConfidence

January 28, 2008 at 7:07 pm

Corporate tax competition to improve global competitiveness

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Informative video on tax competition from the Center for Freedom and Prosperity. The US is at the center of global markets–just look at the international reaction to the market’s current correction. But how can US leaders secure this position against long-term threats from China, India, and other developing (and developed) economies?

With the R-word being brandied everywhere you turn, the best that our government can come up with is a fairy tale fiscal stimulus. Instead of reiterating the thrashing this “feel good economics” has received, I’ll point you to Mankiw’s Coalition against Fiscal Stimulus.

Where is the corporate tax rate in this debate? Paulson called for this back in July 2007 but I haven’t recently heard anyone propose to slash corporate tax rates–a move which would do more than anything else to anchor the US at the center of the global economy. The “flight to quality” would surely be accelerated by this type of pro-growth tax reform. Once again, politicians push intentions over outcomes. I shouldn’t be surprised…

Written by WithConfidence

January 28, 2008 at 4:29 pm