Category Archives: Economics

Sexism or Just Good Business

Posted on September 11, 2011 | 1 comment

I have a really cool old used book store I like.  It’s big, full, extensive and unpretentious.  You just go and shop and no one stops to bug ya unless you go ask to be bugged.

The other day I was shopping for old Free Mason texts, found a few and just kinda asked:

“Do you have the ability to notify me when these things come in?”

Voila.  I’m now on the list.  And here is what I got today:

As we are near the Holiday season, have mustered a collection that will please everyone.  We’ve prepared sets of products for both men and women, books that will serve as great gifts, leisure reading, or help guides.  For men, we’ve placed our Science Fictions, Outdoor Sporting, and Business sections with awesome discounts.  Also for women, our Crafts, Cooking and Romance Novel prices are slashed.

To review.

MEN:

  • Science Fiction
  • Outdoor Sporting
  • Business

WOMEN:

  • Romance
  • Cooking
  • Crafts

For the record, the owner is a woman and successful.  Is she sexist or just right?

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Posted in Economics, Liberty

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Thoughts on Minimum Wage

Posted on September 9, 2011 | 5 comments

So, my son belongs to a dojo down the street next to the pizza joint.  On the other side is the dance studio that my daughter belongs to.

As I bounced back and forth tonight, my son to karate and my girl to dance that I noticed the Sensei mopping the mats and the studio owner sweeping her floors.  I asked each, individually, why they had to dedicate time for such tasks.  My question:

“Why don’t you just hire one of the kids to do this?”

Their answer?  Each of them?

“It costs too much to pay someone to do this; it’s just easier to do it myself.”

And so it is that 2-3-4 kids who might have had the chance to step on that first rung of the job ladder are out of luck.  If I know kids, they don’t need the money, they need the experience.  The experience of showing up on time, listening to a boss and meeting expectations.

I started working when I was 10.  My dad got me a paper route on my birthday.  I’ve been pulling a paycheck for the last 30+ years.  I graduated high school, graduated college and have been a member of the work force for more than 3 decades.  And it is THAT experience that has allowed me to succeed to the extent that I have.

So, live with the fact that when you price labor out of the market, they will not be mobilized and you will lose years of experience.

You know where I stand.  Explain where you stand.

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Posted in Economics

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Income Disparity

Posted on September 5, 2011 | 1 comment

Income disparity.

Wikipedia describes it like this:

Income inequality in the United States of America is the extent to which income, most commonly measured by household or individual, is distributed in an uneven manner.

Pretty fair I think.  It hits what I think are the important aspects of the topic:

  1. Income
  2. How measured
  3. Distributed
  4. Uneven

I think that most reasonable people wanna help out the folks who need the help.  Further, I think that most reasonable people wouldn’t personally help those folks, who-while down on their luck, aren’t down due to luck.

Anyway, very often when solutions are discussed, or when examples of success are presented, I am faced with the argument that the Income Disparity, the Income Inequality of America is very very poor.  So poor, perhaps, that we rank near, tied for or dead, last.  A common tool to measure the disparity in incomes is the GINI Coefficient.  Or the GINI Index.

The Gini coefficient is a measure of statistical dispersion developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper “Variability and Mutability”

The Gini coefficient is a measure of the inequality of a distribution, a value of 0 expressing total equality and a value of 1 maximal inequality. It has found application in the study of inequalities in disciplines as diverse as sociology, economics, health science, ecology, chemistry, engineering and agriculture.

It is commonly used as a measure of inequality of income or wealth.  Worldwide, Gini coefficients for income range from approximately 0.23 (Sweden) to 0.70 (Namibia) although not every country has been assessed.

Most uses of the GINI Coefficient that I have ever heard of deal with Income Disparity.  Though from reading wiki, it seems that the GINI Coefficient is simply a tool to measure dispersion.  So, it’s nice to learn that the GINI is simply a statistical tool that has been applied to measure income disparity.

As I am generally ignorant of many things the measuring of income between the people of a nation, I think it’s important to learn more.  As I enter into this investigations, I’m struck by two aspects of the inquiry:

  1. Does it matter?
  2. What is being measured?

The second first.  Because the GINI can be used to measure seemingly anything at all;  fish in a body of water, water in a body of land or pine cones in a body of grass.  It’s important to know what the subject of the measurement is.  And I think that most discussions surrounding the GINI are clear on what they are measuring.

For example, we are having a discussion concerning taxation on my post concerning Denmark and the United States.  One of my friends  points out that:

The US pre-tax and transfer GINI index is at .46, while Sweden is at .43, and Denmark and Norway are at .42. That means pre-tax they are slightly more even in income distribution, but not much. German has a bigger pre-tax gap between the rich and the poor than the US at .51.

After tax the US GINI index moves to .38 — a modest improvement. But it is the most income disparity of the entire industrialized world. Taxes and transfers move the wealth distribution from .46 to .38.

After taxes and transfers Denmark is at .23.

Clearly the GINI is being used to measure two different things.  Income pre-tax and then income post-tax.  Which is valid as long as the measurements are clearly labelled.  And again, I think in most cases they are honestly so represented.

Now the first.  Does it matter?

This is trickier.  Does the fact that the richest among us make more than the poorest among us matter?  Perhaps.  It sounds like there is a body of evidence that suggests it does matter AND that when that disparity is high, society suffers.  I don’t know, I haven’t looked at it.  First blush, I think my take is that I don’t care as long as I have a reasonable shot at getting pretty close to the top.  And reasonable can mean many things.  When I buy a lottery ticket I have as reasonable a shot as anyone else.  I certainly would resent the rich having a better shot at winning numbers than me JUST because they were rich.

So, where are we.

I wanna look at Income Disparity.  Perhaps as it’s measured by the GINI.  And I wanna know, at the end, several things.  The first of which is: DOES IT MATTER?

And if it does, which of the following matters the most:

  1. Straight income.  The MONEY paid from employer to employee.
  2. Total compensation.  The total compensation from employer to employee.
  3. This measurement BEFORE taxes.
  4. This measurement AFTER taxes.
  5. Finally, this measurement AFTER social entitlement programs.

Let’s see how this goes.

Thoughts?

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Posted in Economics, Economy, Liberty, Politics: National

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Beware The Liberal Siren Song

Posted on September 2, 2011 | 9 comments

If you believe the likes of Barack Obama and his of his socialist, fascist friends, you will believe that the American system of economics benefits the wealthy at the expense of the poor.

The rich get the breaks and the poor are exploited.

Don’t believe it:

Did you know that in Denmark, the poorest 30 percent pay 14.1 percent of all taxes and the richest pay 48.7 percent, while in the United States, the poorest 30 percent pay just 6.1 percent of all taxes and the richest 30 percent pay a whopping 65.3 percent? The surprising thing is not that the richest pay most of the taxes but that the U.S. has nearly the most progressive tax system in the world, while the Scandinavian countries have about the least progressive tax systems, contrary to commonly held belief.

Obama and his team are radical extreme thinkers when it comes to organizing our economy.  The only thing saving us is the fact that he and his team don’t have any experience in running an organization.  He simply couldn’t manage his way out of a wet paper sack.
Thank God!

9 Comments

Posted in Economics, Politics: International, Politics: National

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Lessons From South America: Chile, Argentina and Venezuela

Posted on August 30, 2011 | Leave a comment

Some time ago I stumbled on the CATO Institute’s Dan Mitchell.  He has an awesome video on how to balance the budget; a concept I’ve taken a liking to:

He also has his own blog that he regularly contributes to.  The other day he referenced a great post of his where he links economic freedom to prosperity:

What’s responsible for the turn-around in each of these nation’s welfare?

As Mr. Mitchell says:

— Chile’s score jumped from 5.6 in 1980 to 8.0 in 2008, and the country now ranks as the world’s 4th-freest economy (ahead of the United States!).

— Argentina’s ranking has improved a bit, rising from 4.4 to 6.0 between 1980 and 2008, but that still only puts them in 94th-place in the world rankings.

— Venezuela, by contrast, is embarrassingly bad. The nation’s score has dropped from 6.3 to 4.4, and its ranking has plunged from 22nd-place in 1980 to 121st-place in 2006.

Chile was the poorest and is now the most wealthy of the three.  Venezuela has seen just the reverse.

Fascinating.

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Posted in Economics, Politics: International

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Disaster Planning: Free Market vs. Government

Posted on August 27, 2011 | Leave a comment

Sadly, most conversations regarding damage, preparedness and reaction to catastrophes take place during or AFTER an event takes place.  Such is the nature of people, and is what separates us from even squirrels.  Even they gather for the winter.

However, there are people, organizations who do look ahead and plan.  They take the responsibility seriously and give great thought to the subject.  These people study disasters and recoveries.  In fact, the organizations they work in are aptly named; Disaster Recovery.  We have one for my company, in fact, we have staff at my building.

As with anything, there are certain people more skilled at this than others.  In fact, again, just like we would expect, there are groups of people, organizations, that are better at it than other groups of people.  It should not surprise anyone that when it comes to government preparedness and the private sector’s planning, who’s side I’ll take.

Consider this: Via Carpe Diem

Forecasters don’t expect Hurricane Irene to make landfall until Saturday. But for nearly a week now, big-box retailers like Walmart and Home Depot have been getting ready.

They’ve deployed hundreds of trucks carrying everything from plywood to Pop-Tarts to stores in the storm’s path. It’s all possible because these retailers have turned hurricane preparation into a science.

…

At Home Depot’s Hurricane Command Center in Atlanta, for example, about 100 associates have been trying to anticipate how Irene will affect its East Coast stores from the Carolinas to New York.

At times like this, the Command Center looks much like NASA Mission Control during a shuttle launch, says Russ Householder, the company’s emergency-response captain.

“We’ve got all the key news agencies on the big screens up front,” he says. “We’re also monitoring our store sales so we can better be in tune to what’s happening in our stores, and we’re also connected live one-on-one with district managers in the impacted areas.”

…

Walmart is able to anticipate surges in demand during emergencies by using a huge historical database of sales from each store as well as sophisticated predictive techniques, Cooper says.

He says that with Irene on the way, that system is helping them allocate things like batteries, ready-to-eat foods and cleaning supplies to areas in the storm’s path.

Walmart also has the advantage of having a staff meteorologist, Cooper says.

…

Walmart’s preparedness system helped the company emerge as a hero after Katrina, says Steve Horwitz, an economist at St. Lawrence University in Canton, N.Y., who studied the company’s response.

“They know exactly what people want after a hurricane,” he says. “One of my favorite stories from Katrina is that the most popular food item after a major storm like this is strawberry Pop-Tarts.”

Wanna see what Wal-Mart’s preparation for moving supplies in, before Katrina, looked like?

Care to see the Government’s preparation for moving people OUT?

As 1,000’s of people needed to leave the city, a city that sits BELOW sea level, the government left a fleet of buses to simply flood.

Government simply can not DO like the private, for profit, sector operating in a free market.

 

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Posted in Economics, Politics: National

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Ice and Gas Shortage: Hurricane Irene

Posted on August 26, 2011 | 8 comments

She’s coming.  There’s been little doubt about that now for 2 days.  Irene is coming and she is big.

As the storm hits and does her damage, residents in her path are going to find that they’re short critical supplies; water, ice, gasoline, propane to name a few.  Part of the reason we’ll be short these key commodities is because people have bought more than they usually would have in advance of the storm.  The second is because we’re just gonna use more of ’em.

Demand will impact supply.

And, just as the law of supply and demand would dictate, as those items begin to run out, the price will rise.  In some cases doubling or even tripling.  This does several things:

  1. It reduces the desire of people to hoard.
  2. It signals to suppliers that a need has been established and in the interest of profit, will work to fill that need.
  3. It activates politicians to fulfill the law of politics: Pass laws that try to break the law of economics.

See, people vote politicians in, so politicians react in irrational ways to this problem:

RALEIGH, NC (NCDOJ) — North Carolina’s strong price gouging law is now in effect because a state of emergency has been declared due to Hurricane Irene, Attorney General Roy Cooper notified businesses and consumers today.

“We’re warning price gougers that you can’t use a crisis as an excuse to make an unfair profit off of consumers,” said Cooper.

Price gouging—or charging too much in times of crisis—is against North Carolina law when a disaster, an emergency or an abnormal market disruption for critical goods and services is declared or proclaimed by the Governor. The law also applies to all levels of the supply chain from the manufacturer to the distributor to the retailer.

What people WANT is for suppliers to supply goods at the normal price even as the cost of doing so goes up.  IF the law above were written to say :

The people of North Carolina have decided that during times of crisis, we do not want to encourage exceptional efforts to deliver necessary and critical goods.  We don’t want to pay any price for this effort and would rather, instead, save our money and do without.

THAT is what this law is doing.

And if you don’t think so, or if you think that we should allow prices to reflect demand, then I suggest YOU buy a U-Haul truck of water or a refer truck full of ice and drive to the coast and deliver that water and ice yourself.

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Posted in Economics, Politics: North Carolina, Rocket Surgery

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The Fonz Is Going To Jump A Shark

Posted on August 24, 2011 | 9 comments

A long time ago there was a really good economist.  Then something happened and now that economist doesn’t exist anymore.

After claiming that aliens would solve our economic woes, now rumors are out that the aforementioned Krugman has claimed that a larger earthquake would drive economic recovery:

“People on twitter might be joking, but in all seriousness, we would see a bigger boost in spending and hence economic growth if the earthquake had done more damage.”

Right.

Reminds me of this:

Milton Friedman went to Asia to visit a jobs project; it seems that a canal needed to be built.  When he arrived on the site, he witnessed that the workers were using shovels and wheelbarrows.  He asked the government administrator why there wasn’t any heavy earth-moving machinery?  The official responded that this was a “jobs program”.

Milton responded, “Well, if that’s the case, why not give them spoons and buckets?”

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Posted in Economics, Economy

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Taxing The Rich

Posted on August 23, 2011 | 2 comments

There were 3,912,980 tax returns in 2009 that had a taxable income of $200,000 or more.  These 3,912,980 households combined for a total taxable income of $1,625,622,124,000.  That is $1.6 trillion.  A lot, right?

Well, in 2009 our deficit was $1.4 trillion.

Blink.  Blink.

Imagine if you were to raise the tax rate on our richest friends and neighbors to 100%.  Not marginal mind you.  Marginal is where an individual is taxed at one percentage for a certain amount of his income, then another higher percentage at the next set of income and then more yet again at the next set.

That is, say the marginal rates were something like this:

Low Boundary High Boundary Rate
$0.00 $20,000.00 10.00%
$21,000.00 $50,000.00 20.00%
$51,001.00 $100,000.00 30.00%
$100,001.00 on up 40.00%

And someone made $200,000.  She would be taxed 10% on her first $20,000 for a total of $2,000.  Next she would be taxed 20% on her next $30,000 for a total of $6,000.  Her next step is to be taxed 30% on her income from $50,000 to $100,000, or $50,000 for a total of $15,000.  Last is her income above $100,000.  Because she makes a total of $200,000, she is taxed 40% on the remaining $100,000, or $40,000.

So, adding her taxes up as she climbs the progressive tax system, her tax is $2,000+$6,000+$15,000+$40,000 for a grand total of $63,000.

Imagine making $200,000 and having to give $63,000 of that to the government.  Ugh!

Anyway.  That’s how the system works today, in general; I didn’t use real numbers.  So, in our NEW tax world, we REALLY hate the rich so we’re gonna tax ’em at 100% total tax.  That is, for every $1 they earn, we’re gonna tax ’em $1.

If they make $285,000 we’ll collect $285,000 from ’em.  Alex Rodriguez and his $22 million contract?  All ours.  All of it.

Every dime.

The United States government would bring in $1.6 trillion.  After paying off the deficit we would have $200 billion left.  Not enough to even dent our remaining debt.

But guess what happens when people work their freakin’ asses off and get no money?  They conduct a value analysis and conclude that they could work for a whole year and make zero dollars OR they could do NOTHING and and make ZERO dollars.  Actually, what they’d ‘prolly do is accept a salary of $199,999 and be allowed to keep at least some of it.  But…but they probably wouldn’t do as much work as they were doing when they were earning all that money before.

The point is this.  You can tax the wealthy at 100% REAL tax and it wouldn’t even make a difference.  Raising the rate by 4 points isn’t gonna make a difference either.

None.

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Posted in Economics, Government, Politics: National

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Capitalism Gone Wrong?

Posted on August 22, 2011 | 7 comments

6 months ago I was involved in a head on collision as I attempted to turn left onto  the Inter-State near where I live.   I suspect that the little college girl was texting right as she managed to miss the first car in front  of me turning left and hit me, the second car.  However, I can’t know for sure. I was lucky that night and walked away from the wreck.  Because I suffered no injuries and her insurance eventually covered my car I didn’t press charges or bring suit; I haven’t seen her since.  In fact, I’ve waited this 6 months to say anything about it on anything resembling “social-media” in the event some consequence of that accident made itself known.

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Posted in Economics

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