Rap the Economists

Palin & Quantitative Easing (QE2)

Palin's recent criticism of Fed's Chairman Bernanke plan to inject $600 billions into the US economy have gotten some notice. Her timing was impeccable.

Firstly, she was ahead of any other Anti-Obama politician to publicly voice opposition. A leader rather than a follower.

Secondly, she made this ahead of the G20 meeting, where Bernanke's, and thus Obama's as well, plan was panned. Her vocal opposition nicely planted a seed of her economic philosophy in international minds.

Economic Growth

As we all know, this supposed "Recovery Summer" is any thing but and this should come as no surprise. What is a surprised is that the Democrats actually believe their economic plans would actually stimulate the economy. Lets review what their plans entailed. Firstly was the 800 billion dollars stimulus package. Common sense would say that government spending is always wasteful and inefficient and that any such money that does make it to projects will only be short lived and at best, maintain employment as is rather than grow it. Once the government fund dries up, so would the activities associated cease and those employed for the project be at risk for being cut.

The second plan the Democrats enacted was Obamacare. The argument goes that if the cost of health care was reduced, the cost savings would go toward economic growth and increased hiring. The first fallacy here is that nothing in Obamacare actually goes toward decreasing the cost of health care, it just spread the cost around differently. Then there is the second fallacy is that if it the healthcare cost of hiring is reduced, more people will be hired. Things just simply do not work that way. Employers do not hire because they can afford to hire, they hire only because they have work that needs to be done, work that will help them generate a profit. In addition, Obamacare also increases the administrative cost for the employer so that while it may be cheaper upfront to hire, it will be more costly to administer the hiring.

The third plan the Democrats enacted was regulating the financial market. By financial market I mean Wall Street and the banks, not the home purchase lending policies that led to the housing bubble burst that led to the economic collapse 2-3 years ago. While more rigid standards and oversight may make for a more stable financial environment, a more stable financial environment in itself does not stimulate economic growth, especially in the short term as firms have to spend administrative costs to stay in compliance.

Lets look at things from a different perspective, what it does take to generate economic growth.
Firstly, there has to be a perceived opportunity for profit. By painting the economic environment as impending depression rather than a transitory recession to correct for the housing bubble burst. The Democrats intentionally fear mongered to get justification to enact their economic plans (faulty plans at that) without sufficient regards for the national perception. They then made it worse by predicting an over optimistic scenario that never came. Never came because their policies and plans are just wrong. The Democrats then made a second mistake in criticizing capitalism and the drive for profit. The opportunity well for profit was deliberately poisoned.

Secondly, there has to be available credit to finance project to take opportunity for profit. This was the main reason for the bail-outs but the bail-outs was resented by most Americans. The bail-outs was also directed at a few large firm whereas the majority of economic activities in the nation were with small and medium firms. These small and medium firms also suffered disproportionately from the housing bubble defaults. Thus the bail out did not and could not stimulate growth. In addition, the low interest rate as determined by the Federal Reserves was not in any meaningful way different from the interest rates before the economy soured. And since it cannot really go lower even when the economic environment is worse, there wasn't any growth to be derived.

Thirdly, there has to be an economic infrastructure facilitative for profit. Stability of the financial market is facilitative but not stimulative; it is the minimum necessary. When the financial market is unstable, economic growth is unlikely. When the the financial market is stable, economic growth is not a result. What is more important regarding economic infrastructure is the administrative cost or barrier to profit. There are two aspects here, the actual administrative cost to remain in legal compliance. The greater the cost, the more onerous the process, the less likely the risk to make a profit will be taken. This administration has sought to increased regulations of business. When you add on increased taxation on profits, even just the threat of increased taxation on profit, will dampen any enthusiasm for growth. Note, the other aspect of economic infrastructure that impedes economic growth is the amount corruption. I have no doubt that a significant amount of the economic stimulus was spent with a political component.

These same factors also explain why centralized economies do not produce the same economic growth as free capitalism.

Bottom line is that this administration has done everything possible to impede economic growth. It has demonized profit. It has increased the cost to make a profit. It threatened taxation on profit.

Humor: Our National Debt

The First Shot: Cap & Trade

It has begun.

There is no shortage of threats to our economy. America's unemployment rate recently hit its highest mark in more than 25 years and is expected to continue climbing. Worries are widespread that even when the economy finally rebounds, the recovery won't bring jobs. Our nation's debt is unsustainable, and the federal government's reach into the private sector is unprecedented.

Unfortunately, many in the national media would rather focus on the personality-driven political gossip of the day than on the gravity of these challenges. So, at risk of disappointing the chattering class, let me make clear what is foremost on my mind and where my focus will be:

I am deeply concerned about President Obama's cap-and-trade energy plan, and I believe it is an enormous threat to our economy. It would undermine our recovery over the short term and would inflict permanent damage.

American prosperity has always been driven by the steady supply of abundant, affordable energy. Particularly in Alaska, we understand the inherent link between energy and prosperity, energy and opportunity, and energy and security. Consequently, many of us in this huge, energy-rich state recognize that the president's cap-and-trade energy tax would adversely affect every aspect of the U.S. economy.

There is no denying that as the world becomes more industrialized, we need to reform our energy policy and become less dependent on foreign energy sources. But the answer doesn't lie in making energy scarcer and more expensive! Those who understand the issue know we can meet our energy needs and environmental challenges without destroying America's economy.

Job losses are so certain under this new cap-and-tax plan that it includes a provision accommodating newly unemployed workers from the resulting dried-up energy sector, to the tune of $4.2 billion over eight years. So much for creating jobs.

In addition to immediately increasing unemployment in the energy sector, even more American jobs will be threatened by the rising cost of doing business under the cap-and-tax plan. For example, the cost of farming will certainly increase, driving down farm incomes while driving up grocery prices. The costs of manufacturing, warehousing and transportation will also increase.

The ironic beauty in this plan? Soon, even the most ardent liberal will understand supply-side economics.

The Americans hit hardest will be those already struggling to make ends meet. As the president eloquently puts it, their electricity bills will "necessarily skyrocket." So much for not raising taxes on anyone making less than $250,000 a year.

Even Warren Buffett, an ardent Obama supporter, admitted that under the cap-and-tax scheme, "poor people are going to pay a lot more for electricity."

Not hesitating to naming names!


Related: The Economy Is Even Worse Than You Think
The average length of unemployment is higher than it's been since government began tracking the data in 1948.

Healthcare Admin Cost: Government vs Private

Last week I was at a dinner of healthcare provider and naturally the discussion turned to Obamacare. One physician stated that Medicare administrative cost was only 3% compared to substantially higher numbers for private insurance plans. This figure shocked me because it seems unbelievably low. And as it turns out, it should not be believed. As it turns out, this percentage is based on administrative cost as a percentage of medical payment.



However, there are other ways to crunch these numbers, and one such way is how much medicare spends to administer the cost of managing each person's healthcare payment. Robert Book at the Heritage Foundation have done just that.

Obamacare: the "Public Option"

What is the "public option" under Obamacare? What is being proposed is that all citizens are required to be a part of a healthcare plan. To cover those that cannot afford private plans, the government would provide for a government rant "public option."

What is the problem then with the "public option?" It will drive the private plans out of business. Private plans collects money only for the members it serves. The "public option" collects money from all tax payers and covers only those without a private plan. There is no way that any private plan can come even close to the intake:outlay ratio of the "public option" plan. Thus initially the "public option" plan will be substantially cheaper as well. Those who pays for healthcare plan, whether it be individual or business, will gradually gravitate to the "public option" plan to reduce cost. (And cost has been and will continue to be the main problem of healthcare in the US).

What is wrong with the US government's "public option" plan being the primary provider of healthcare in the US? Because the government is inept and incompetent and inefficient when it comes to providing any service. Talk to any patients who has experience both the Veterans Administration care (Government care for veterans) and the private sector and they will tell you which is better. Talk to any healthcare provider regarding ease of providing care to their patients between Veterans Administration care and the private sector. They will all tell you that the private sector does it better. The private sector does it better because they are competing among themselves and competition always stimulate quality. I do not mean to suggests that Veterans Administration care is inadequate, I only suggests the private sector does it better.

Thus the end result is that the "public option" will result in the government being the primary and dominant healthcare provider, near universal healthcare. The result will also be healthcare that is delivered inefficiently and poorly. As such, either the quality of care will fall, and or the cost of care will increase. When the cost of care increase, the likely response will be to reduce the care provided, i.e. rationing. Then healthcare will certainly be worse than what we have today. At least today, if you are unhappy with the care, you have alternatives and options.

Government & Healthcare

The government is once again making a push to assume a greater role in health care. This move is nominally to provide health care to the millions uninsured. This guise is at best well intentioned ignorance, and at worse a ruse for greater control. Yes there are millions uninsured. Firstly, the vast majority of these people are young health people who do not need insurance. The young and elderly are already covered under Medicaid and Medicare. Secondly, for those uninsured who needs health care, they have access to care as no hospital can turn away a sick patient. True an argument can be made that preventive care to avoid becoming sick is better than being treated once sick, but the data on preventive care remains rather soft. And for preventive care that does make a difference, like screening mammograms, there are plenty of programs that will provide free screenings. But this is where the truth can be found, in that if you are uninsured and needs treatment, you will be laden with a huge bill. The problem of health care in the US is not coverage of the uninsured, the problem of health care in the US is a problem of cost.

Put it another way. Why are there uninsured at all? Because either they choose not to buy health care insurance, or because they cannot afford health care insurance. If they choose not to buy, it is probably because they don't see the need for it. If it is because they cannot afford health care insurance, then this again is certainly the problem of health care cost rather than a problem of uninsured.

Does the high cost of US health care means better health care? Yes and no. We spend an exhorbitant amount of money keeping premature infants and the terminally ill patients alive as long as we can. Frequently we fail, and especially with the terminally ill, we only prolonged their lives by days or weeks rather than years. Is this a smart spending of our health care resources? This aspect deserves a serious conversation in our society and culture. But this is not being discussed because the politicians would much rather talk about providing universal coverage rather than smart spending.

Certainly this is out of concern of a slippery slope that if we restrict money to be spent for premies and the terminals, we might restrict money spent on other areas of health care as well. And this gets us back to the essential problem of health care, cost. And anyone will tell you that the solution to cost increases is to control cost. Initially cost reduction can be gained through better efficiency and better care process to reduce complications (another direct contributor to cost). However, these cost control gains will never be as much as projected. Many different forms of health care delivery has been tried in the US in the past 20 years, all promising to reduce health care cost. All has provided a few years of cost control only to be followed by rising cost along the previous trajectory. Part of the problem here with government heath care and cost is that the government is never cost effective or sufficiently cost conscientious. Then it will come down to either accepting the increasing cost of health care or reducing service available.

Will the government accept the increase cost of health care? Will the people accept increasing taxation? For a while yes, but only for a while. When the cost of taxation for government health care is too high, what typically would happen next is that services will slowly but surely be restricted. And what we would all end up with would be universal coverage with less health services.

One other consideration. We all get what we paid for. When we pay for our health care directly, service is owed to us. When the government pays for health care, service is owed to the government.

Reject the Stimulus Package as is

Having listened to Obama on TV encouraging support for the Stimulus package, I have to come out fully against it. He is clearly fear mongering of economic collapse, and thus some action is better than inaction. He never fully explain why the stimulus would create jobs rather than works.

And he is clearly the opposite of W. He speaks a lot but doesn't really say much. No efficiency of words.


Update: sign the petition at NoStimulus

Economic Stimulus: Work vs. Job

This exchange between Steele & Stephanopoulos highlights something that has been adequately addressed by the media's discussion regarding Obama-Democrat's "stimulus/pork package."

When the government spends money on short term projects, such as construction, work is created but not jobs. A job is something is stead work, something you can go to the bank with and use to get credit for a house or a car. A work is a temporary arrangement where you get paid for a limited duration, whether it be picking crops in the field or building a bridge. Any stimulus spending should keep this difference in mind.

The more I think about it, the less it make sense for the Government to spend money as a stimulus. Firstly, it takes money from taxes to spend, and in the process serves as the middle men. Be certain that the money it collects and the money doled out is not one for one. Secondly, the Government consistently acts in the short term, without sufficient thought to long term consequences. The government emphasis on works rather than jobs is a clear example of this. Thirdly, the taxpayer is in a much better position through his or her interaction with out capitalistic economy to direct spending dollars to what he, she, and the community needs as a whole. Fourthly, the increased in government spending for any stimulus package will only drive the deficit up, further limiting the availability of credits to the economy while increasing foreign ownership of our economy.

As such, the government stimulus should primarily be in the form of tax cuts. This will also have the added benefit of forcing the government to trim its budget. The primary spending of the government should be directed toward national defense.

The only stimulus spending at this point that makes sense to me are grants for research (both scientific, industrial and economic) that will lay the foundation for further discoveries.


HT: Right Wing Sparkle

Government Bailout & Executive Pay Cap

I am all for the government imposing a cap on executive compensations with regard to salary, bonuses, and buy-outs. Firstly, it only applies to companies accepting government buy-outs and thus the government has a responsibility to see to it that the money is well spent and not wasted. This occurs in most other circumstances of government financial supports whether it be NIH research grants or federal moneys to states. Federal money should always come with restrictions. Secondly, and perhaps even more important, I hope this executive compensation restriction is such that the vast majority of large companies, those that are "too big to fail" would think twice about asking for federal hand-outs. I rather them take a chance on failure. I think this would be better for the companies, the economy, and the tax payers. Now small companies might be tempted to take government money but since our economy is built on the back of small and medium companies, I am fine with this.

Government & the Economy

I recognize that in difficult economic times, the public expect the government to act. And it would be appropriate for the government to act but clearly not all actions are beneficial.

Firstly, bailing out any commercial entities because they are "too big to fail" is just ridiculous. Spending money, even tax payer money, should be seen as an economic investment for success. Investing money in failing companies is just absurd. I understand the reason is to minimize job lost but in this is a horrible way to achieve this. When you give money to large companies, the company executives are more likely to see the money than the average worker. The government would be better off increasing the money available to unemployment than to give it to failing companies. In addition, by bailing out failing companies, their legacy actions for continued failure delay their necessary demise so that other, smaller companies with better vision and ability can rise. If anything, it should be the ascendant companies that receive federal funds (in terms of tax breaks rather than hand-outs) rather than the descendant companies.

Secondly, the best way to stimulate the economy is to get more money into the economy for circulation. I believe that this is best achieved by giving more money to the tax payers hand. This can be done as either a tax rebate or as unemployment benefits. The individuals are the one best position to decide how to spend money, not the government, and especially not failing companies that are too big to fail.

Thirdly, if the government feels that it is necessary to direct some of the spending themselves, the money would be best spent toward projects that is not likely to cause dependency. Infrastructure projects, while they may be both necessary and desirable, will require long term commitment for upkeep and maintenance. I suggest a combination of small business grants in new scientific or technology fields, as well as education grants as scholarships for students and research grants.

Automaker Bailout

W is using the TARP moneys to bailout the auto industry. It would have been best if no bailout occurs at all. Second best would have been restructuring ala bankruptcy as a precondition for a bailout. But using the TARP at least means no additional new money is being spent by the feds during the whole economic crisis.

Job Economics

Two interesting reads today regarding jobs and economics. Firstly, a review from the MIT Press on a book entitled "Minimum Wages" by David Neumark and William L. Wascher.

In this book, David Neumark and William Wascher offer a comprehensive overview of the evidence on the economic effects of minimum wages. Synthesizing nearly two decades of their own research and reviewing other research that touches on the same questions, Neumark and Wascher discuss the effects of minimum wages on employment and hours, the acquisition of skills, the wage and income distributions, longer-term labor market outcomes, prices, and the aggregate economy. Arguing that the usual focus on employment effects is too limiting, they present a broader, empirically based inquiry that will better inform policymakers about the costs and benefits of the minimum wage.

Based on their comprehensive reading of the evidence, Neumark and Wascher argue that minimum wages do not achieve the main goals set forth by their supporters. They reduce employment opportunities for less-skilled workers and tend to reduce their earnings; they are not an effective means of reducing poverty; and they appear to have adverse longer-term effects on wages and earnings, in part by reducing the acquisition of human capital. The authors argue that policymakers should instead look for other tools to raise the wages of low-skill workers and to provide poor families with an acceptable standard of living.

Now complement the above with the following article by C Edmund Wright at American Thinker

When the jobs report for November came out last week, many so-called "experts" were shocked at the massive loss of an estimated 533 thousand jobs. Even a Time /CNN organization called "The Curious Capitalists" were at a loss to explain it.


Let me attempt to help out these "curious capitalists" (though I am still skeptical that anyone working for CNN or Time is either curious or a capitalist). I caused part of this job loss and I know precisely why; the election. The results portend big trouble for small business.


The job destruction process has started. We are about 20% of the way through our ramp down process and on schedule to complete the shut down by spring 2009. Watch the financial news and you will see continued job cuts each month. We are not alone in our strategy. Far from it. Atlas has shrugged all over the country.


Like many business owners, we are no longer willing to take all of the financial and legal risks and put up with all of the aggravation of owning and running a business. Not with the prospects of even higher taxes, more regulation, more litigation and more emboldened bureaucrats on the horizon. Like others we know, we are getting out while the getting is, well, tolerable. Many who aren't getting out are scaling back.

Those in government, especially the recently elected administration, just do not seem to understand how economic work. While the government intention may be good, their results is far short of good.

Automakers Bail-out

The big three US are looking to the US government for cheap loans to continue business as is. This would be a mistake for the automakers, the US government, and ultimately the US taxpayers. The first question to be asked in all this is why are the US automakers having a problem being competitive. In manufacturing there are three factors to being successful: cost efficiency of production, quality of product, and appeal of product. Currently the cost efficiency of production for the US automakers is prohibitive. While it cost the foreign automakers about the same to manufacture automobiles in the US, the big three automakers are burdened by legacy payments to retired United Auto Workers union members. This substantially increased the cost of operation for the big three. While it is not necessarily wrong to guarantee retired workers a pension, it was a poor decision to use operational budget for this rather than set up a separate fund/portfolio to do so. Considering that the quality of US autos have improved significantly in the past decade, as well as the appeal of SUVs and pickup trucks remain high for US automakers (their major products rather than passenger cars) I believe this aspect of cost inefficiency to be the primary factor for the big three financial woes at this point. For the US government to bail out the US automakers as is would only perpetuate a broken system and reset the date of failure. (Didn't we bail out Chrysler in the 80s?)

I see two potential solutions.
Firstly, let the automaker fail. The benefit would be that in the restructuring and reconstruction of the automaker, a better and more efficient company would arise that would then be competitive. This is the most free capitalist approach to the problem and sets the best precedence for other large companies facing similar problems. We cannot be bailing large inept companies out over and over again. There can be no true success without a chance of failure. I believe this to be the superior, though harder, solution. Harder to do as well as harder to suffer through. I am skeptical this option will be chosen.
Secondly, the federal government could assume the retirement cost and thus remove the financial burden from the big three automakers, thus allowing them a chance of being cost efficient again. Naturally this sets a poor precedence for future bailouts. However, this allows a political solution for politicians wanting to, or expected to, do something to help. And this option would certainly be more palatable than a hand out to the big three, whether they take on new management of not.

PotUS: Issues & Challenges

What i expect from my president, in order.

A. Protect the US from outside threats. I view this as the primary responsibility of the executive because this is the essential and historical role of any community leader from a family patriarch, the tribal chieftain, to a people’s King. The constitution sets foreign diplomacy and commander in chief as the responsibility of the President. Performing these responsibilities well is the most important function for the PotUS in a world that remains full of dangerous challenges. Ultimately, regardless of how generous and responsible the US is as a member of the international community, some out there will want to hurt and harm us. Once they believe this is in their best interest, we will not be able to talk them out of it. I want a president willing to make war before we are attacked as well as one willing to talk so we won’t be attacked. It certainly won’t sound fair but I rather have foreign blood spilt than ours, foreign lands bombed than ours. I do not want war all and I want wars prevented within reasons. But I recognize that there will be times when undesirable war is preferable to hoped for peace. But once a war I want us resolved and determined to win. Once won I want to see the US as magnanimous in victory in order to jointly build a new future with our former foes. In short I want our foreign policy predicated on the simple idea of “There is no better friend and no worse enemy than the US of A”.


B. The second responsibility for the executive branch is to maintain a secure environment for Americans to pursue happiness. Here the president will need to lead, direct and set the agenda for Congress to formulate legislations further secure the American pursuit of happiness. Factors essential for a secure American environment are sound fiscal policies, fair resource management, and secure individual liberties.

B1. Sound fiscal policies have three aspects: first is a fair taxation plan that would stimulate economic growth, second would be appropriate federal spending to grow the essential governmental function, and to reduce the federal deficit.

B1a. Regarding taxation, it may seem tempting to tax the rich and give it to the poor, but in practice this just does not work. Firstly, who has the most money? Large businesses. But if for every penny they are taxed, they certainly pass it down to the consumer in terms of higher product cost. Sadly, it is the poor consumer that pays more as a percentage of their income on buying essential products for living than do the rich. If not big businesses then what about medium size businesses? Some of the tax they will certainly pass along to us, the consumer voter. But what tax they cannot pass along will eat into their bottom line and reduce available capital. Less capital means less growth in terms of hiring as well as building a better business. Either way, the community loses. Alternatively the rich individual can be taxed. From the Tax Foundation the fact is that this is already happening, with the top 10% (those making about $109,000) earners paying 70% of the federal income tax revenue. The bottom 50% earners (making less than $32,000) currently pay less than 3% of the federal income tax revenue. Squeezing the rich individual is harmful in three ways. Firstly it makes the rich even more involved in politics to reduce their tax, and once tax issue resolved, they will try to influence the governments in other ways. We cannot afford a plutocracy. Secondly like with small businesses less disposable income due to higher taxes mean less money to spend on personal services, from assistants to maids, cooks, and gardeners. Again the working voters get cut. Thirdly taxing the more financially fortunate is just counter intuitive to the American dream to become more financial fortunate. While my personal bias currently is for a federal flat tax along with a federal sales tax instead of the federal income tax (less tax bureaucracy too!) this is currently not likely. In lieu of this, I am and think we all ought to be opposed to raising taxes on any segment of the public.

B1b. Appropriate federal spending to grow the essential governmental functions covers firstly maintaining an active and competitive military, secondarily a national security program, and a functional transportation infrastructure for internal commerce. Maintaining the military is the primary function of any national government to defend its people and existence. The military must be well trained and well supplied in terms of men and equipment. Naturally we must care for our military personnel as they are serving and once they have served. I support a well-funded program to support the family of soldiers on active service; the families of those who love ones have died in service, and for our veterans after they have served our country. I also believe the best defense is a strong offence and this requires a technologically advanced military. To go on the offense you need accurate and reliable intelligence service. A similarly effective intelligence capability needs to be applied to protect against foreign terrorist acts within the US. There can be no freedom or prosperity without security. And prosperity will also require a well-maintained infrastructure for communication and transportation, especially as the US is structured as a federal union of states.

B1c. The president proposes the federal budget to Congress. If the US government is not in deficit, then it might be alright for the government to spend liberally, but given the size of the federal government, there needs to be limits on non-essential federal spending to reduce the federal deficit. The deficit needs to be reduced because these credits are especially sorely needed elsewhere right now. The first way to reduce the deficit would be to cease the expansion of government services except as above (B1b). The second way to cut the deficit is to increase revenue. This will occur if governmental policy stimulates economic growth. Increasing taxation usually inhibits economic growth. Thirdly, there needs to be a serious discussion with the American voters about reducing welfare.

B2. For fair resource management, the essential resources to focus on firstly is human labor, secondly promotion of trade, and finally energy independence, and promotion of trade. Human labor isn’t just about fair wages, human labor development is about having the opportunity to work and earn a living as well as opportunity for both personal and professional growth through work. The opportunity of work can only come about through a growing economy. And once employed, we need to provide circumstances for the American worker to be both productive and opportunities for advancement. I believe essential to productivity and advancement is a sound education, from grade school through high school (to provide the basic understanding of how life and our country works) as well as appropriate trade and vocational education. As the American voters progress, by necessity we will have others to do the more menial and more labor intensive jobs to others. But by doing so more people will have opportunity for employment and grow the market for goods. This is true whether these lower paying jobs will remain here in the US or is sent across our borders. And if sent across our borders, we need to establish trade agreements with these other nations to make it easier to both allow them to accept our needs for basic labors as well as open their markets for our goods. These trade agreements should be both free and mutually beneficial. But one thing we cannot depend on oversea for is our energy needs. The US needs to become less dependent, or even independent, for our energy resources. Energy is to our economy what food is to our body. The US cannot perpetuate the energy import as we have been. The PotUS needs to take leadership to promote expansion of our traditional energy sources as well as build up more energy resources, both green and nuclear.

B3. Secure individual liberties by preserving the bills of rights and protecting against act of crime or terrorisms. The most important bill of rights are the first protecting freedom of speech, to essentially speak against the government, and the second to keep and bear arms, also to personally defend oneself. But regardless of how the Bill of Rights is interpreted, it becomes meaningless if America is entrenched in fear due to crime or terrorist acts. I do not believe our liberties need to be sacrificed in order to obtain personal security. I believe we can navigate through and preserve both liberty and security. A president needs to understand the significance of both and take consideration of both.


C. Everything thus far discussed, to protect the US against foreign threat and to maintain a secure environment for Americans to be happy, are all practical and earthly responsibilities but won’t be enough without something for the soul and spirit for America. In my opinion the most important them for America to move forward with is the concept of “individual and personal responsibility.” No nation can ever be great if its people do not have the initiative to act or to act without personal accountability or responsibility. Without personal responsibility, then the state becomes responsible for everything. This can only lead to failure. Accepting personal responsibility means accepting that an individual can change the future. I believe this is cause for optimism, for through actions from each and every individual America can be made better and greater. This is what I would like to see for America.

Taxes: McCain & Obama

From today's WSJ:

When it comes to taxes, the difference between Barack Obama and John McCain is arguably as wide as it's been in a presidential race since Ronald Reagan and Walter Mondale battled in 1984. Sen. Obama is proposing to raise taxes more than any recent candidate, while Sen. McCain wants to cut them substantially. Most of the campaign debate has been over whose taxes would be raised, and whose cut.

Here are the facts:

My personal stance on Taxes.
1. Some taxation is necessary to protect and maintain the function of our society.
2. Too much taxation inhibits economic growth.
3. Taxation cannot and should not be used for income redistribution.

In review, as this article evaluated, McCain's taxation is better for our country.

As a reminder as to the impact on the average American family:

Black Civic Leaders: Political Intergration vs Economic Independence

From today's WSJ.

For more than a century, black civic leaders have tangled over whether to pursue economic independence or focus their energies on integrating political, corporate and educational institutions. W.E.B. Du Bois, author of the groundbreaking 1903 treatise, "The Souls of Black Folk," argued for the latter, while his contemporary, Booker T. Washington, said "political activity alone" was not the answer. In addition, insisted Washington, "you must have property, industry, skill, economy, intelligence and character."

Since the 1960s, the black civil-rights leadership has sided with Du Bois. Between 1970 and 2001, the number of black elected officials in the U.S. grew from fewer than 1,500 to more than 9,000. And while impressive socioeconomic progress has been made, wide black-white gaps remain in educational achievement, homeownership rates, labor-force participation, income levels and other measures.

Nor should we conclude that civil-rights laws are responsible for the black progress that has occurred. For example, up until the 1950s, and in an era of open and rampant racial discrimination, the jobless rate for blacks was much lower than today and similar to that of whites in the same age group. In fact, blacks had higher labor-force participation rates than whites in every Census taken between 1890 and 1950. And in the decades preceding the 1960s -- that is, prior to the passage of landmark civil-rights bills and affirmative-action legislation -- there were sharp rises in black educational achievement, both absolutely and relative to whites.

The economist Thomas Sowell has spent decades researching racial and ethnic groups in the U.S. and abroad. And his findings -- in books like "Race and Culture: A World View," "Affirmative Action Around the World" and "Civil Rights: Rhetoric or Reality?" -- show that political activity generally has not been a factor in the rise of groups from poverty to prosperity.

Many Germans came to the U.S. as indentured servants during colonial times. And while working to pay off the cost of the voyage they studiously avoided participation in politics. Only after they'd risen economically did Germans begin seeking public office, culminating with the election of presidents Hoover and Eisenhower.

A similar pattern can be found among Chinese populations in southeast Asia, the Caribbean and the U.S. In Argentina, where English minorities have done well financially and played a major role in the development of the economy, they've played almost no role in Argentine politics. And so it goes with Italians in the U.S. and Jews in Britain: In both places economic gains have generally preceded political gains. "Empirically, political activity and political success have been neither necessary nor sufficient for economic advancement," writes Mr. Sowell. "Nor has eager political participation or outstanding success in politics translated into faster group achievement."

Black Americans might keep in mind that in those rare instances where the political success of a minority group has come first, it has often resulted in slower socioeconomic progress. The Irish immigrants who came to the U.S. in the mid-19th century hailed from a country where 80% of the population was rural. Yet they settled in industrial centers like New York, Philadelphia and Boston and took low-skill jobs. Their rise from poverty was especially slow -- as late as 1920, 80% of all Irish women working in America were domestic servants -- despite the fact that Irish-run political organizations dominated many big-city governments.

"The Irish were fiercely loyal to each other, electing, appointing and promoting their own kind," writes Mr. Sowell. "This had little effect on the average Irish American, who began to reach economic prosperity in the 20th century at about the same time when the Irish political machines began to decline."

I have read this divergence of ideas before and I remain convinced that it remains true today. The choice for black civic leaders years ago to pursue a political path rather than economic independence was a tragic error. The current result is an astounding economic dependency of Blacks on Government with resulting dissolution of the black family. Too many black mens have become absent fathers and too many black boys grow up without adequate male role models. And like most dependencies, it only grow with time. I admire the few Black leaders who try to speak out against this trend, Bill Cosby for instance, but too often they are derided and their message lost.
I do not necessarily believe this was the intent of the Democratic party but certainly the Democratic party political agenda of more government services will not make things better. Certainly Obama as part of the Democratic establisment will only further this process.
It is a tragic consequence of choosing the wrong agenda years ago. It reminds me of similar bad choices in the Palestinians rejecting a separate states along side Israel decades ago. It also reminds me of the difference between the growth of cities like New Orleans compared to Houston.
Bad political choices have lasting consequences and the hole gets deeper and harder to come out of. I hope it does not happen to the US should Obama gets elected.

Obama's tax cut for 95%

Read how he means it in Obama's 95% Illusion in today's WSJ.

Here's the political catch. All but the clean car credit would be "refundable," which is Washington-speak for the fact that you can receive these checks even if you have no income-tax liability. In other words, they are an income transfer -- a federal check -- from taxpayers to nontaxpayers. Once upon a time we called this "welfare," or in George McGovern's 1972 campaign a "Demogrant." Mr. Obama's genius is to call it a tax cut.

The Tax Foundation estimates that under the Obama plan 63 million Americans, or 44% of all tax filers, would have no income tax liability and most of those would get a check from the IRS each year. The Heritage Foundation's Center for Data Analysis estimates that by 2011, under the Obama plan, an additional 10 million filers would pay zero taxes while cashing checks from the IRS.

The total annual expenditures on refundable "tax credits" would rise over the next 10 years by $647 billion to $1.054 trillion, according to the Tax Policy Center. This means that the tax-credit welfare state would soon cost four times actual cash welfare. By redefining such income payments as "tax credits," the Obama campaign also redefines them away as a tax share of GDP. Presto, the federal tax burden looks much smaller than it really is.

08 Presidential Election & the Credit Crash

The popular thought is that the current economic crisis helps Obama. I am less certain that this is true. Yes a down turn in the economy favors Obama as the agent of change. However, a sever economic down turn I believe may actually help McCain. Why? Lets look at Obama's economic program. Firstly it is about more government oversight and regulation. I think the average vote realize this doesn't mean squat when businesses are failing. Secondly the mathemagic tax cut for 95% americans also become meaningless if there aren't jobs for them to earn income for tax cuts. Thirdly, while yet to be announced, should Obama propose some kind of government mass employment projects, there just isn't enough tax revenue from this, especially after the bailout and with a bad economy.

Things McCain may have in his favor with the credit crisis are as follows. Firstly, using the bailout funds to directly refinance homebuyers mortgages will make it easier for them to keep their home. I cannot stress enough the safe haven perception of having a secure home when the world appears to be falling down around you. And his proposal could be easily tweaked to allow homeowners a forbearance should they become unemployed. This really isn't disimmilar to student education loans so lets not worry too much about socialism just yet. Secondly, McCain's healthcare plans involve giving individuals tax safe allowances to purchase medical coverage regardless of whther they have a job or not. Again this becomes more flexible in a period of severe economic downturn. In addition, I think that McCain's tax plans are much more friendly to small business that may have been permissive with Obama's tax plans and McCain will become much more appealing.

Currently polls have Obama's lead shrinking as the economy worsens, and McCain's favorable ratings equivalent to that of Obama. I interpret this as those polled want a better economy but are not certain that Obama will deliver. I also take it to mean they don't blame McCain himself for the economic crisis which means he still has a chance to convince voters he can do better than Obama. Also considering that approval rating for Congress is substantially less than of Bush linking McCain as Bush 3rd term gets weaker and weaker. Especially whether right or not, Bush is actually doing something to help stop the hemorrhage in the economy. Thus the severe economic downturn may turn voters back to the more business friendly economic proposals of McCain.