Monday, February 28, 2011

The State of Everyone's little empire

I read something like this, and begin to fear for the entire field of economics. I possess the growing suspicion that the entire economic modeling process has like the Income Tax, become so riddled with Exceptions, that a valid Reading can hardly be found. We are supposed to be powering out of the last Recession, but Why is Production still below par, and Unemployment at such height? I can answer the later Question myself, but where is the failure to achieve Production levels consistent with the modeling? It reminds of the CPI, I wondering what is the Inflation rate on the thrown-out, volatile elements like Fuel and Food, and How much does the Two constitute in the total performance of the economy. Remember, any worth must show the progression over a decade at least, so no false fiddling with that stats.

Paul Krugman does not agree with me, but hell, I don’t even agree with God most of the time. He would choose to ignore all the indications of Inflation–in imitation of the Fed. Still, he would probably be the last to advance real stats on how much Household Income has be absorbed by the inflation of those volatile elements which Households so often have to purchase. I would like to know if this absorption is interrupting Intermediate and Long-Term Goods purchases–which Everyone knows that they are–but not by How Much? I am not trying to be mean to Paul Krugman or any other economists; it simply stands that We must get uncorrupted information to base sound economic decisions, and the models don’t lie unless the modelers have something to hide. We need a profundity of accuracy in this business, and We are giving an excess of garbage.

Here is an Outline of what I am beginning to fear, and it remains a valid deterrent to economic expansion. Conservatives have captured State Legislatures and Congress, and all insist on Tax Cuts, continued Government Spending on profitable projects for Business and Corporation, and limiting both Welfare and Government employment. It is incredibly foolish for Anyone to expect that the economy will improve under conditions where the Wealthy get the Welfare, and the Poor gain in both Population and Need. A Day of Reckoning will come, and it will basically consist of Interest rate going up again, and our Collective Debt generated by Tax Cuts without reason will finally destroy our economic position. My Conservative fellow Citizens do not understand that their positions will collapse long before the U.S. Government, but both can and will collapse. lgl

Sunday, February 27, 2011

Actual Impact of Unions

I read this and think about how much further We must go to gain Understanding. It is simply another caricature examination of the position of Labor by Management. Neither even wants to understand the position of the Other. Labor desires to believe Management wants to suppress their interests under a proclamation of necessary support of Stockholder rights; while simply desirous of vast Wages, Benefits, and Profits for themselves. Management holds to the illusion that they are granting privileges to Labor, like negotiating with them, all the way to the idea that Wages were a Gift; under some illusion that they could get Labor for some type of Slave Wages. The article outlines that it is a question of different Mind-sets, but it might not go far enough to explain the rationale.

I once drew a sketch outlining various Costs of Labor under Slave Conditions, Starvation Wages, Management Desires and Union Desires. It was particularly loose, and Most would consider it untruthful, but I only utilized it for reference to Labor Costs. I adopted the estimated Costs of Slavery: thinking of the Cost of Warehousing and Heat of the Slaves, the Cost of feeding the Slaves, and such ascetic Costs of Slave Catchers to catch escaped Slaves; finishing with the inevitable Cost of purchase of Slaves in the first place. I found that paying Starvation Wages was actually cheaper than Slavery if one did not have to maintain the health of Workers; there being a truly heightened rise in pandemic conditions from poor Housing and poor Food quality. I ran through a uniform Wage rate on the order of what Management would likely desire to pay, all without Labor ability to improve its position. Then I ran in that which Union and Labor would desire to be paid.

The humor I found in my personal model, since destroyed, consisted of there being only a 39% Wage difference between Starvation Wages and Union Demands, and the difference would only make up about a 2% difference in the Profitability of most Businesses. Talk about your marginal utilities of which Tyler Cowen is so fond! It all seems like a tremendous lot of trouble for little Gain for Anyone. My model was created in the early 1970s, and could possibly differ greatly from the Present, though I doubt by very much. Subsequent work at the time estimated it would cost Stockholders a possible Penny per Share in dividends in the difference, and Management a possible 12% of their Pay Packages. The Range may have altered greatly under the current matrix of Business, but I doubt it. One wonders how such sharp animosities could develop over the Issue in the Present Day. lgl

Saturday, February 26, 2011

How Things are, and How they should be

I possess a real problem with the stated causation here. Paul Krugman does more than hint that it remains the political clout of smaller, less population states which allows for greater stimulus to them, accounting for the more solid employment rates. There exists great difficulty in subscription to this Concept. Senators may be able to influence given amounts of Stimulus, but only at the behest of the Special Interests, never the relative size of their Electorate. I would enter a Statement that there is higher Profits in constructing Highways in rural areas than in congested Zones, greater Profits in constructing new Roadways rather than resurfacing older pavement, and the greater Profits come from elimination of extensive bridging in those Roadways. Rural paving also achieves much higher daily surfacing rates. The final comment must state that rural roadway construction requires far less Personnel, and much greater per unit use of Equipment. I would not blame or praise the smaller Populations of States for any such Awards.

One can join either side on whether Commodity price increase come from excess Stimulus, or from Supply Shortages. I personally think that Supply Shortages are present, but not for the reasons Most state. I think Government and Tax Cuts have made it too easy for Business and Mining to show high Profits. Most of the Commodity industry has found that they can maintain their Profit ratios with lower Production, and vastly reduced Labor and Equipment overuse. I believe (sincerely, for those Doubters out there) that Governments and Tax Writers have developed the wrong Business model, which far too many businesses have adopted. We have far too much Rent-Seeking in the Tax Cut and Stimulus industry today; all having nothing to do with Employment rates.

I finish today with this Post, which actually says little, unless One follows trend lines. The American economy continues to require greater education for Labor. This occurs when the extended education provides little direct Training for most personnel obtaining Work. I am going to sound Liberal here, but this means that Business and Industry are demanding their Labor force spend Four or More years outside the labor force, with a Cost to Labor of about $50k per year for the designated Individual who must foot this bill. This constitutes a Trap which costs the economy much Productive labor due to relative discrimination, and a vast pool of Debt for the financial world to draw Interest upon. I do not like the Trend, and could almost accept a Tax upon Employers to minimize their Demand for education, especially when coupled to the fact that vast amounts of Training Costs occasion due to Employment Upgrades from Staff. I will sound like a Socialist, but think that Workers have a Right to contention for Jobs matching their Skill level without discriminatory bias. lgl

Friday, February 25, 2011

Potential Start of Sanity

I have just read this short Post from Catherine Rampell. I agree with her on this issue, and felt I should discuss procedural policies by which modifications could be made. I have always felt in economic policy decisions that simplest is best, and minimum is always far better than maximum. Here is my short List of things I would do to set the House in order:

1) I would pass a federal law insisting that States and Local Governments create Minimum Wage Jobs of at least 16 hours per Week for All Unemployed who would apply, with the federal government mandated to pay for all such Labor conducted up to 16 hours per Week. The amount would at least pay for the normal Cost of Groceries for a family of 5 with tight Buying care exercised. This would have nothing to do with Unemployment Benefits, other than bringing to an end any extension of those benefits. A high number of Unemployed live in a Household which have other Income Earners who supply a great share of the Maintenance.

2) I would limit the largesse of Tax Breaks overall, setting federal Income Tax law prohibiting more than $100,000 per individual, $160,000 per joint filing, or $1 million per business or Corporation to be granted as Tax Break. It would mean that there is a Top End to how much Anyone can game the Tax Code to save Money.

3) I would advocate the initiation of a national health care system. The current system where People put off going for medical treatment until massive intervention must be conducted is an idiocy. The practice of Doctors, Clinics, and Hospitals being able to manipulate their fees to eliminate Patients who they do not desire to serve must be stopped. We must enact federal law which tells Insurers in a Public/Private system that they can only sell health insurance which pays 100% of the liability which Medicare sets, and on which they themselves pay. Supplemental Co-Pay Insurance can only be sold if it does pay 100% of the remaining Cost of all Procedures paid in order to sell such policies. The overuse of medical care can be limited by charging a $35 Door payment for every visit to a Doctor, Clinic, or Hospital. It also means that no Doctor, Clinic, or Hospital Testing Procedure can be scheduled more often than once a month.

4) People will automatically ask How I would expect to pay for the above programs considering the ballooning deficit. I will say I favor Health Insurance premiums replacing all Personal Exemptions and Dependent Exemptions in federal Income Tax without choice on the part of the Taxpayers, though they can sign up for those Premiums going to their own designated health Insurance policy; though they must pay for all Co-Pay Supplemental Insurance themselves. Those who are unemployed or unable to create such Exemptions will be paid from Gain from these Exemption removals. The Minimum Wages paid under the law will be paid by a Surtax on Income paid by Business prior to consideration of Deductions or Reductions of any type, and segregated by position of the Businesses in which the Minimum Wages were paid by State.

5) Advanced Public Employees in the Top Pay Grades must prove that they possess the Living Expenses necessary to get paid; at a rate only 125% of the total provable Living Expenses. This also includes all Specialty Consultants employed by the Executive, Legislative, or Judicial branches of Government. It is a law I strongly suggest that State and Local Governments also employ. lgl

Thursday, February 24, 2011

Shirer's designation of Nazi lack of empathy

Ask me if this is a prelude to things which We do not want. I wish first to state that it indeed is a Report on Durable Goods for January, a month associated with poor economic performance because of Weather and Accounting Infringements. Here are the details which worry me! Aircraft Orders are generally placed after the First of the Year. New non-Transport Orders are generally placed within the Winter months to get placement in the Production queue for the high Production months; they being down 3.6% without the Transport. I would really like to know the magnitude of long-term Contracted Production, whether these Contracts currently are reduced in size. Worse than the Libya Crisis could be stagnation of the Markets, which will cause excess Speculator Cash to flow into Oil; funds bounding into the Market faster than real barrels of Oil. We are looking to a downgrade of value in the Stock Markets from my last Check, and the World economy does not need a Speculator-driven bubble in the Oil markets.

Megan makes more of this than is warranted, but it stands as fact that Greece has never ventured far from the City-State political format for which they are so famous. One has to understand the tribalism of the Greeks, something akin more to the Afghani than western nation-states. I can picture the disintegration of the Greek national government faster and more forcefully than that of the Libyan government. Watch, and if the several Greek cities start sending their own Trade representatives to various Ports of Call, then one can assume an unnatural form of existence will fail. Many Greeks will be outraged by this evaluation, but their anger will be far greater for my Statement, than for an eventual truthful outcome to my Words.

I will finish my tirade with this Post today. It seems that the Old Conservatives are somewhere to the Left of our current Liberals. Eisenhower sponsored Social Security, ranted against the military-industrial complex, and supported an extremely Progressive Income Tax. Ronald Reagan passed a massive increase of Tax impacts. Nixon wanted a extended health care system to the Left of Hillary Clinton. It is interesting that Those who in their millions witnessed the horrors of War, and it’s effect upon Civilian populations left desolate, found all these programs necessary; with the better-off bearing the brunt of the funding. Today, We have people who never witnessed the horrors of War trying to tell Us what people do not need. It may be destroying our Society, as Everyone leaves the care of people to Others, as they pursue Profits they will never realize. lgl

Tuesday, February 22, 2011

Watching Rome Burn???

The Reader may not believe my Take on this article, but here it is. Capital flows have become an extreme problem within the last 30 years; one element of the problem consisting of rapid reversals and removals which impact every economy. The genus of the Problem derives from excess Profits building in established Production, and the tendency of business leadership to closely watch financial markets, switching to those venues which show the greatest expectation of Returns. It is a Problem which has come to Us within a matter of decades, and one has to ask Why.

The extreme Profits deriving from established Production comes from technological improvement, static suppression of Wage rates, and avoidance of payment of Communication and Transport Costs through outsourcing those Costs to local and national communities. Corporations have utilized the economic blackmail of Production transference to get both lower Wages and lower Property taxation. The real construction behind the excess Returns from Production comes in the concerted effort by Business to limit or suppress the taxation on those Profits. There has been such a transfer of taxation that where Business taxation paid practically half of the tax revenues of the federal government in 1963, they now pay about 20%; down even from 2000. This means a huge cache of extra Cash swinging around in the financial world, more Cash than either established economies or emerging economies can absorb effectively.

Business leadership has sold the idea that lower Taxes promotes economic expansion. This is true in only limited context, and when there is too much Investment Cash, it holds the potential for disaster. Inflation not based upon resource shortages remains the Threat which is the real danger behind Inflation. Here is the Inflation that really bites. A Case in Point is the current Spot Price of Sweet Crude Oil, where Speculators are driving the price of the Oil upwards, even though there is a surplus of the Product. The natural correction for excess Investment Cash is higher taxation, a condition which is anathema to Business and Tea Party society. The ideation had better change in the near future, else We will attain a bankruptcy for governments of all types, alongside a degrading Production capacity due to excessive Resource Pricing. It is time for real Economists to step up to the Plate! lgl

Monday, February 21, 2011

Common Goodwill

I liked this Post from Bruce Bartlett probably a bit more than it deserves, though it is very good, simply because it churned many ideas inside my head. The first Concept I determine is that We must separate Social Security from Medicare and Medicaid. A slight increase in FICA taxation would cover Social Security benefits, especially if the benefits were set at uniform amount. The second Thought came as a blazing Star: Medicare and Medicaid could be far better financed by replacement with a National Health Insurance program underwritten by elimination of the Personal Exemption and Dependent Exemptions now on the books.

Bruce decides to move on so I follow, and find that tax revenues will consume only 14.4% of GDP this year. Bruce goes into a slight contempt, richly deserved, for the ineffective Bush Tax Cuts. Many will disclaim about the Tax Cuts for the Wealthy in the sharp reduction of tax revenues. I will assert that the reduction in tax revenues coming from Business and Industry did as much, if not greater, damage to the revenue system. Bruce Bartlett would say that Obama must renounce his pledge not to increase taxes on Those making less than $250,000+. I suggest that Obama must raise Business Tax revenues by 34% overall to actually balance the Budget. One has to understand that through the Period of 1870–1963, Business taxes paid for much of the federal government; a Time where the United States advanced to be the leading industrial power in the World, though it was also a Time without major Entitlements. I am not suggesting that We should force the Business world to pay for Our Spendthrift Souls; yet, We could increase Business taxation to a point that Business leadership only made a few dozen times the Salary and Benefits of the Average American Laborer.

Bruce’s discussion on the possibility of a greater increase in GDP to aid in deficit relief ignores the long history of short intervals between Recessions with proclaimed needed Stimulus, and requires the Dreams of Mankind not yet witnessed on this Earth. It is obvious a new tax system must be created to actually reduce the deficit and debt, and I have previously discussed many potential amendments to the Tax Code in attempts to correct the relevant flaws. 60% of American Households are losing Life-Sustaining Income at a relatively rapid rate; We are not becoming a Third World country, but Second World maybe. My favorite Tax change for the Day is a 8% Tariff whereby foreign competition will have to suffer the same distress as domestic Producers in payment of Social Welfare Costs. We do not really need to be competitive in foreign markets, We could simply be Cooperative in domestic affairs and politics. lgl

Sunday, February 20, 2011

Trade, Unions, and Inflation

One must first read the Post, and then assume (correctly) that both are to some degree wrong. The major loss to Trade resides in the Welfare Costs (Taxes) which each Trading partner must pay, simply to alternate political entities. The secret success of Trade consists of the ability of the Trading partner to minimize those Welfare Costs to his advantage. Domestic production always has to pay those Taxes, while foreign production can avoid those Welfare Costs, at least at the domestic level of Trade unless there is a viable Tariff. The true Winner of Trade is the Partner who pays the lowest Welfare Costs; the true Loser is the Partner who pays the highest Welfare Costs, the domestic Taxpayer, and eventually–the Consumer. One may ask about the later inclusion, but the Consumer inevitably must buy the shoddiest Product in a decaying infrastructure over the long-term.

I found this Post which is far too critical of Collective Bargaining. There must be a place for both Unions and Employers, outlawing one will not resolve any issue. I would enjoy new legislation which handled the observed Problems far better than current observation. I would enjoy a law which made Unions completely free to Join, forbidden to collectively bargain over Wages, but able to force all Employers to collectively bargain over the Unions Dues they are forced to pay per hour of Union member employment. Unions themselves would be committed to decide what level of Health Care they would provide to Union members and their families, and what level of Pension they must grant to all members past a certain Age. Employers could set their own Wage levels, Employees could decide if they wanted to Work under such level Wages, and Unions could declare Employers deficient in Unions Dues payment if labor Contracts were not reached and fulfilled under this law (Blackball those companies). Employers could still hire Scab labor, but Unions would have the right to Picket the Production facilities and Headquarters, employing Union members not gainfully employed elsewhere.

I will finish today with this Post, where James Hamilton suggests that The Days of Wine and Roses may be over; as Inflation seems to be picking up again. One can and should ask if the Fed can maintain their suppression of Interest rates under such Conditions. The Answer is No! No one but myself may have asked what happens to the federal debt if Interest rates return to say a potential of 6% per annum? I do not like the way the economy is going, but have lived through so many Booms and Busts that I can’t even tell what is a Recession anymore. lgl

Saturday, February 19, 2011

Product Tax

I tire so easily these days, especially after hearing Commentary about Core Inflation not rising as quickly as the CPI, when the later throws out all those Products and eventually Services which are actually increasing. An individual asked me What there was to do with Government organs who would not admit that American Consumers were being taxed by adverse Pricing policy in the interest of the Multinationals. I told the individual that one had to hit such leadership where it hurt, and the best avenue was Tax policy. It is here where political leadership is most vulnerable as the Tax Code is a ridiculous Joke. He returned with a query of How Tax law could handle both static Wages and rising Prices. I told him that We would need to force the Price increases across the board, so that all Wage levels would bring universal demand for enhanced Wages at the same time. He wanted to know how such could be done, but I had not ready Answer.

I thought that We had to get a little Crazy here, but in a specific way which would accomplish the task. I brought out the old venerable Product Tax. It is highly similar to the old Salt Taxes, except it has a uniform rate through the economy unlike the later. I would suggest a real punch to the assessment, with understanding that We have real need to raise revenues. I determined that 20% of total Sales will provide both revenues and shake loose Wages as well as Prices. States and Local entities could be aided by directing 2% of raised revenue to the States, and 6% of the revenue to the Local governments; under the strict proviso that the federal government was off the hook for Medicaid and Welfare. Producers will all scream about no consideration for their heavy Costs, so that with the periodic filing of Expenses, they would receive 92% of those Costs; the 8% ensuring that Business itself was taxed in manner where they could not pass the tax onto the Consumer.

The Product Tax differs from ordinary Income tax in several important ways. There remains little chance to hide Income by fictional Costs or magical debt which is never paid. The static nature of Wages is almost impossible to maintain under such circumstances as presented by the Product Tax; One can hide neither the Income or the Income loss from taxation. It strengthens the hand of Labor for Wage Increases, with vengeful Quitting if Workers do not get proper response to their own crisis from their Employers. Business can still hide their total sources of Income under such taxation, but Tax law can insist that Business must register all Cash Register tapes; a simple routine of filing each Slip daily by Internet access; the law should also include an exorbitant Fine for non-compliance, such as 50 times the sum found non-Reported. The Whole should shift the Game Rules to where Labor can achieve a greater share of the Profits of that productivity they have been showing over the decades. lgl

Friday, February 18, 2011

More Study of Solutions

I really enjoyed this article, but believe that the thinking is somewhat backward. The author would attempt to make current tax policy direction more efficient. He would suppress or limit the revenue capacity of Income Tax. There is the Dream of an Consumption Tax–the goal of Businessmen since time began–shoving all Cost of Government off on the Consumers. Business does minimize the impact of reduced Customers, knowing that All must return eventually; simply to acquire the maintenance of life. We need another look at the data, and alternate Suggestions.

I think hard on the Tax dilemma, and reach certain conclusions. Income Tax has to be cut down in rates charged, and tax remissions must be eliminated. One of the ideas I have come up with stands that the World has speeded because of technological conditions, and Taxes based on yearly outcomes may be outdated. We might require a Income Tax based upon a single Week, even a Month possibly too long. It is an interesting concept, as Income suddenly develops the same status as Sales in taxable quantity; Income taxed at point of origin for all Types, not just Payroll taxes. It becomes clear that the Issuer of Income become liable for both reportage of Income, and payment of said taxation as Tax.

There would be the automatic contention that there would have to be an elimination of progressive taxation. I don’t believe this to be the Case. We can set different rates for the differing amounts of Check or Cash issued; higher compliance on the part of the Issuer gained by allowing them to keep 2% of the revenues collected to defray the Costs of Collection and possibly to even pay some Profits from the Collections; this places the Issuer in the position of desiring the highest revenue generation possible. There will be Complaint that there is no place for Tax exemptions, deductions, etc., from the matrix; a great loss expounded by Rich people bemoaning the fate of poor people, and in reality, the chance to game the system to save Money. The Solution would be to force each Taxpayer to register each Week’s Income online with statement of what sources of Income were received and from Whom, all in order to gain their desired tax deductions–which will be paid directly into a registered Bank Account upon approval of all deductions. The IRS could check both for honesty of reportage, incite a disincentive to claim all of the ridiculous tax reduction claims which will require lengthy Periods to confirm, and such automatic Returns could take Months, Years, or Decades to confirm. My tirade might seem foolish, but it could become a competent system to handle Tax collections. lgl

Thursday, February 17, 2011

Estimates on the Situation

Do We need to worry about people being liars in economic surveys? Could it be that both Politicians and Economists fear the views of ordinary people, simply because they themselves need some work in the arena of truthfulness? I most detest the concept of mandatory spending. I think it is the greatest lie of them all, and utilized every time someone suggest a real decision be made. A basic Cap has to placed on the growth of individual benefits granted to Anyone under his total program access. Such a Cap could be used to limit Social Security benefits, Medicare and Medicaid payments, even full utilization of Tax Cuts. I would love a Cap on Defense development spending, where Cost Overruns could not exceed $10 million per Company per year. I could change that stated Word to Billion, but when talking about this range of Income stream, Why? There are means to traverse lying to honest truth, if one has only the Incentive.

Tyler Cowen claims a stagnation of Health Care in this Country. What is the Problem? A cynical man might suggest that they spend way too much time finding ways to increase the total amounts of their bills. A more sensible man might hazard that the human body machine has basically reached it normal Life span, and that increased inputs on Maintenance and Lubrication can only have limited benefit. Someone like myself might come up with increased funding in advertisement for Christian Science. I question on a national level the propriety of spending One-Quarter of an individual’s lifetime Income on keeping him alive for the last decade of his life. This is the Stoney road on which We had set off on–possibly to damnation.

Readers will find it unlikely that I can link this Piece with the above Content, but it might be a Solution to the above Problems of Budget Deficit and Health Care stagnation. We tax Drug Sales at 50% rate, so that Drugs are still lucrative, but paying towards the deficit. The price for Drugs will of course increase in Consumer Retail, and with more Violence throughout the Transport chain. Reduction in Health Care Costs can easily be gained by an enforced 1-Hour Response delay on all Ambulance and Paramedic Treatment; something which will reduce Health Care Costs along the entire Health Care chain as well. It also works well for Stroke and Heart Attack victims as well. There are simple Solutions to Complex problems; you only have to adopt a simple attitude. lgl

Wednesday, February 16, 2011


I found a Post whose information I have considerable doubt on the accuracy of all expressed views, but which is excellent as a teaching element. John Maynard Keynes was an economist of his Times. He basically started his leadership role in Economics writing on the economies of the First World War. He watched the development of the Versailles Treaty, and felt compelled to note that it would never work. He observed Winston Churchill commit his second political Suicide by clinging to the Gold Standard. He endured the Great Depression alongside his fellow Englishmen, and understood that the laboring classes were dropping into the Hunger and Privation under which they had lived prior to the Corn Laws. He proposed his famous Stimulus theory trying to avoid horrors which he understood too well; never contemplating these measures to be more than a temporary expedient. He had the misfortune to continue his career through Breton Woods. He is crucified or deified by modern day economists, depending on which of his Works they want to examine; often both at the same time, using Words written in different decades. Keynes’ only fault was that he was a functioning economist attempting to find Solutions to arisen problems; he was never dedicated to creating a magnificent economic theory for all Mankind for all Time.

Here is another article on which I do not agree with much. Economists make too much of the value of Productivity Gains. I do not know whether any specific Reader has seen such a graph, but We are talking about those graphs whose traveling line is composed of interlocking U’s, graph line denoted by the lowest point of each U. This means that Productivity Gains increase with both increased and reduced Production (actual New Hires, or new Fires), with the bottom of each U means the lowest Productivity rate witnessed. Production levels depend on Consumer Demand, and labor employment can affect rise or fall from the lowest point of the U. The retirement of the Baby Boomers leads to a smaller labor force, but a maintained Consumption population. An increase or decrease in the later population governs Consumer Demand, which governs Production; Productivity Gains means little outside a math model.

Now here is a Post on which I can agree. I do have doubts that my reasoning coincides with Stan though. I believe there is a time of confrontation, where any level of Government will be forced to shut down, if Taxes are not raised. This means there is a Point where there will be no further subscription of Government debt. Government leadership will have to decide to actually print more money (this easier done with Computer keystrokes), or shut down programs. Then it becomes a decision of which Government employees to tell to stay home. Could they possibly decide to raise Taxes?–Oh Yes, but only after the whole nation suffers. lgl

Tuesday, February 15, 2011

A Request

I listen to my friends complain about current taxation, then I come home and read this! European central banks cannot ease monetary policy, because of the VATs which put pressure on Prices. Trade reduces as a production factor, when and if foreign nations also adopt fiscal restraint. The Fed believes in monetary easing, but Commodity prices are starting to skyrocket. The financial system has not been fixed, and is not back to providing the necessary capital to functioning business; here We are not talking about incentive for new production, just maintenance of current Production rates. Republicans want fiscal restraint, though Britain already expresses some difficulties with the entire Concept, both in Welfare terms as well as economic performance. Everyone parades Tax Cuts before me in the blogger world; no one actually presenting any Studies definitely outlining any great assistance from these Cuts. None of it contains exactly what I want.

I remember back in the old days, some even after the Start of the Tax Cut parade with John Kennedy. I witnessed the Times when the Unemployment rate was relatively high, even after the great Tax Cuts. I agree with economists that there has been a vast increase in the Labor Pool since the initial Tax Cuts, and that the expansion of the economy has been massive. My trouble sits in the fact that the economic expansion has not been relatively consistent, at least not to the Point where the Tax Cuts can find any statistical validity in raising the Employment rates–either alone, or joined at the Hip with Technology and Infrastructure development. I ponder on this, and desire specific economic models to answer some of the Questions I possess.

I would like some keen Economics Dept. to develop a Model combining the rising pattern of GDP since 1945 with the growth of Tax Receipts throughout the entire Period. It would delight myself if another line was added for the growth of State Tax Receipts throughout the Period, and even throw in the growth of Local Government Tax Receipts during the Period. I would also enjoy a second economic model detailing the separate impact lines of using the current GDP with different tax structures of 1945, 1950, 1956, 1962, 1965, 1972, 1980, 1988, 1992, 2000, 2005, and 2010 in term lines of total Tax Receipts which would have been gained from each Tax structure. These models would be great to overlay the growth of Government Expenditures–Local, State, and Federal–over the same Period. We could finish with an Overlay of the statistical growth in the Labor Rolls within the Period. The information would please me to tremendous degree, and could even help in making economic policy decisions. lgl

Monday, February 14, 2011

The Solution--Simple!

I consider all arguments to be a ‘Tempest in a Teapot’. It is not the proportional nature of the decline, or the lack of such proportion, the reality is a reduction in all Employment throughout the sectors. The Concept that education and retraining exist as Solutions for the Unemployment must be discarded. Economists all look to inflationary Wage rates which suppress Employment. I would rather turn to suppressed Interest rates which holds down Consumer Demand (Most would disagree, simply because they always insist on the inclusion of Big-Ticket items). This I believe is foolish. The suppressed Interest rates support Product pricing throughout all Product lines, and only make a marginal difference in purchase of Big-Ticket Product; here, Purchases stand essentially based upon long-created necessity. Interest rate suppression affects all Product lines, though, and bring Resistence to lowering Product pricing specifically in those sectors of immediate need–namely, Food, Clothing, and Short-Term Household needs. The later sectors are where We get the consistent Consumer Demand volume, and greatest reaction to market demand. Suppressed Interest rates destroy the flexibility of those markets.

The previous contemplated Studies which had little relevance because of erroneous formulation of the Problem; this Post examines a statistical study where there cannot be real benefit to economic policy formation. Two years is too long an interval to expect genuine policy effect; there being far too many forthcoming distortions, while examination over time cannot adjudge the effectiveness of the policy. This means the medium strength correlation is so slight that minimal economic shocks could alter the outcome to a negative correlation. So much of Economics continues to be the correct Outline of the Problems, then essential decision of What is being decided.

I will finish with this Post, which poses the right Questions, but no Solutions to those Questions. The budget deficit will never be resolved without an increase in Taxes. Entitlements will never be paid adequately until the benefits are uniform and limited in total amount per individual. Defense will never become a sound element in a sound budget, until and unless Generals give up their expensive Toys which never work effectively without decades of R&D, and Corporate leadership cannot buy political influence. We need to Downsize the federal government, and state governments, and local governments; ??–even regulatory agencies. We need to do this without getting the benefits eliminated, just the deadweight of excess payments, excess labor positions, and excessively priced supply contracts for Government programs. lgl

Sunday, February 13, 2011

History Lesson

I would in no way think to justify Mao Zedong, a creature of vast evil tendency. I will refer you to this Post, and state all Works cited within it minimize the specter of poor harvests within the matrix. The most humane administration at the times described would have been highly pressured to prevent any Famine from taking place. The China of the Time had low agricultural capacities, degraded Transportation, and few or little Export options. Chinese bureaucracy long held a tradition of refusing Shipments of potential necessary Goods from local Province, and farm families had a consistent tradition of hoarding Supples to later charge as highly for their Product as possible. This was combined with a long history of military and bandit confiscations of almost any needed Good without payment. One has to understand the nature of the Chinese at the Time; Mao possibly was the only individual, or usage of his methods, constituting the sole method to unify the nation. Mao may be Meat for post-condemnation, but every Problem in the China at the Time was not at his inception.

There are much better ways to criticize past leadership, and this might be one of those examples. It sets out to highlight the specific areas where banking leadership deliberately abandoned long-established practice to engineer high Profits for themselves. They did not deny funds to their older Client criteria, they simply opened the Client list to Everyone; no matter the lack of financial solvency involved. They actively decided to destabilize the banking system; after starting their financial careers at exactly the point where Congress was in the midst of the S&L Bailout of the 1980s. They realized when they ascended to Power that they had a vast opportunity to achieve great personal Wealth for themselves, knowing they would get active Salvation when the banking system cracked from Congress and President. Mao Zedong was simply trying to unify a nation, and see it through an economic disintegration. Our own brand of Polecats not only achieved their Mission of huge Wealth, but got the American people forced into paying the residual bill for their malfeasance.

The Reader can ask How I could possibly compare the Two: Our bankers versus Mao. The later killed Millions, but he did build a nation; admittedly according to the wrong Rules, with its eventual failure. Our bankers only stole Billions of Dollars, swiping out family fortunes, and creating conditions where those fortunes cannot be rebuilt easily; all at the expense to American Taxpayers. Mao is dead now, and cannot come again. Our bankers are alive and well, fully stocked, capable of a repetition of the Theft of yore. Who do you think is in better position: The Chinese people, or Ourselves? lgl

Friday, February 11, 2011


The Republicans are trying to right a sinking Ship without throwing any cargo overboard. They want everything untouched which pleases them, and will junk anything from which they do not directly benefit as a Class or personally. Catherine Rampell hints at the idea these Republicans may lack for foresight. Almost every household utilizes Medicare, dito for Student loans, Home mortgage deductions, Unemployment Insurance upon need, and any Veterans’ benefit which apply. They are allowed Investment Tax Credits, and chose to place their pre-School children in organizations drawing assistance to defray the Cost of this baby-sitting. There is no comfort for Anyone who would champion Cuts in these programs.

I think the Problem should be approached differently. I once heard of a thing called ‘Spanish Casino’ or ‘Spanish Bingo’. I am not saying any Casino ever used this system in the World, or ever will; I am simply saying I have heard of such a system. The Rule of the Casino is that no Player can cash out more than a set amount of Chips per evening, except for the additional replacement of purchased Chips which were Signed for. The Players could play as long as they wanted facing the House Odds, but could only gain the stipulated amount per night. There was always sufficient Casino surveillance to ensure that Players were not cashing out each other’s Chips. Such a system could be adapted to suit both Republican and Democrat needs.

We need a law which states that no Citizen or Resident can draw more than a set stipulated amount in Government benefits per year. This would call for a universal Check-Writing Agency which Local, State, and Federal payments are made to the Agency, which issues all Checks to the individual Citizen or Resident. A stipulated maximum amount shall be established for every Citizen or Resident that can be drawn per year; anywhere from $35k–$85,000. It is a rigged Game where any amount left unused stays with the House. It helps with the Tax load somehow. It also helps if balancing the budget on every level is mandatory as well by federal law or Constitutional Amendment. This is the beautiful time where Congress and Legislature gets to decide what Tax remissions are for the good of the Republic, and which are not! It is a positive system which will work if only utilized. lgl

Thursday, February 10, 2011

Principles of Pure (Uncorrupted) Keynesian Policy

I decided to arouse the ire of economists and business leadership today, basically because the economic student needs an alternate explanation of What is going Right, and What is going Wrong with the current economy, and some suggestions as to Why these effects are in force. I made this weighty decision, then decided of course to go off Topic. I leave to my Readers to wonder Why this be the Case, and its importance to the issues at hand. Here resides my Concept of genuine Keynesian policy, and Why almost All policymakers would disagree with me:

1) Pure Keynesian policy will never allow disruption of Consumer Demand. This seems simple in statement, but vastly complicated in actuality. Keynesian policy is in direct contradiction to Monetary policy on this Issue, thinking that screwing with the Interest rates suppresses the natural purchase pattern of the older generations, while artificially inflating the Pricing of alternate forms of Investment other than traditional Savings in Banks. The Elderly curtail their purchases by as much as 40%; Investment instrument markets are skewed, with elevated Profits and Losses occurring simultaneously with not real increase in hard capital investment; and Banks find themselves short of Cash and fearful of extending Credit in the normal outlets traditional to Banking.

2) Pure Keynesian policy should know better than to protect or promote business Profits at any juncture. Loss of business Profits remains the real driving force behind business management improvement and technological innovation. Protecting and supporting business Profits only means that continued poor management and production practice will still be with Us. It is also a Truism that Business will not invest to greater degree within their own sector, if current Consumer Demand for their Product is being met with sufficient Product. This leads Business leadership to turn to already inflated Investment instrument markets to produce Profits, and inciting an paper investment bubble; this bubble will burst to huge losses if hard capital investment does not match the funds coming into the paper markets.

3) Government fiscal policy is extremely important to pure Keynesianism. It is here that Keynesian policy splits off from business leadership. The later would desire increased heavily capitalized Government projects employing their specialized expertise and Profits ratios; able to pay for their highly-skilled labor. Pure Keynesian policy knows that What is needed consists of mass labor employment at Minimum Wages levels of a vast segment of the labor force. This means there will be continuous search for better Jobs, high increase in Consumer Demand per Dollar spent on Stimulus Hiring, and an upgrade in actual Job Skills for Those employed by teaching organizational and Production management skills. There are any numbers of potential mass labor endeavors to chose: I like military reserve training, but One could chose brush clearing in Fire areas, planting of Trees, Clean-up efforts ranging from suburban and urban clearing of garbage and trash to refurbishment to homes for the Elderly.

I could possibly pick out other elements which prove current policy is deficient in actual economic stimulus, but I have named the essential Three. They will need to be worked upon before We witness improvement in our economic fortunes. lgl

Tuesday, February 08, 2011

Read It and Weep

I went yesterday into How Tax remissions eliminations do not directly impact economic growth rates, suggesting that Tax rates need not be raised; that only wildfire tax exemptions and reductions need to be eliminated. Mark Thoma today outlines How the economic recovery can be hampered by the Cost-Cutting efforts at the State and Local levels of Government. Conservatives seem to have conquered State and Local levels of Government, and have chosen an economic policy favoring Tax Cuts over retained Spending on these levels. I do not believe this is the proper economic policy to follow, and suggest that serious economic evaluation should be brought to bear on this area.

I advanced an hypothesis yesterday which stated that Consumer Demand showed no Sign of reduction when overall taxation was less than 25% of total Sales transactions. This is commentary on all taxation on the Products, and is an area which should be studied. This is setup for a necessary secondary analysis, questioning whether State and Local taxation have been reducing as a percentage of taxation on final Sales transactions. It is inconceivable that States and Local governments could maintain a stable Budget performance in past decades, but now finds itself in such dire straits. Only two conditions could explain the Situation: State and Local governments had splurged into a huge increase in Spending; or two, these governments have been surrendering their necessary taxation rates to maintain integrity.

The Conservative movement has been producing reduction of Tax receipts at every level of government, and everyone have been watching the deficits pile up. Conservatives utilize what is basically corrupted Keynesian policy to justify this reduction of Tax receipts by claims that it stimulated economic growth. I asserted yesterday that there may be some gain from actual reduction of Tax rates, but this is still to be proven when total Taxation of final Sales transactions remain below 25%. I also proposed that Tax remissions and reductions did nothing for economic stimulus; here, We must examine whether is produces more economic growth than the Cost of the stimulus, considering the financial cost, the pressures on the Price schedules of resources consumed, etc. I contend that such Tax activity does not advance economic growth, and eats up necessary and beneficial Tax revenues required for actual economic stimulus. lgl

Monday, February 07, 2011

The Tax Accountants suggest Lynching

I like an honest man who will admit that he cooked the books. Economics creates the land where fairy tales may come true; such as Tax rates basically alter the purchase patterns of Consumers, especially in the existence of serial Inflation. Consumers buy their Products because they need or desire those Products, and there will never be a direct correlation between Tax rate and purchase decision. I bet my Readers are now contemplating I am about to start a tirade to insist that Tax rates are more sporadic in design and force. I am not, though there is a good argument to be made on that point.

I am going to generate a sleight of hand, and attempt to cook the books for my own thought pattern. Tax rates are relatively non-reactive in the Markets, if they are set at reasonable low levels; here I am talking somewhere below 25% of the price of total value Transactions. I say this to outrage Economists, before heading totally off-tangent in a new direction. The subject I will talk about is the total lack of impact of Tax remission eliminations. End-Consumers must pay for the full value of the Tax, whether there are reductions of that Tax for the Producers in gift deductions; they not affecting the Product price at all at the primary point of Sale. There are very good arguments for suggesting there is much provisional restrictions on 2nd Generation of Production provision, though even these are somewhat hollow as most Business wants to stay in business, and alternate production is always capitalized if there is unfulfilled Consumer Demand.

Here is where my argument gets highly contemplative–this means a great lack of Proof, and some degree of Doubt. I suggest that Tax remissions, increasing or decreasing, do not affect Price scheduling in the slightest. Product Prices are determined by the Tax rates, and Business does not pass on any Savings from Tax remissions back to the Consumers. I am so clear in this belief that I would claim no alteration in Price schedules after elimination of Tax remissions due the actuality of competition–both domestic and International. There I have proved the two main elements to as great a degree as I ever devote–no unfilled Consumer Demand, and no alteration of Prices higher or lower–after elimination of Tax benefits to Producers. I await the screams of my fellow Bloggers. lgl

Saturday, February 05, 2011

Government ability to destoy your efforts!

I basically agree with most of this, but have some serious reservations concerning the material. Here is where We enter the debate over farm subsidies. One should first know that I myself came from a farm family, and live in an agricultural community. I will go even farther, and state that much of the industry of my city relies on ethanol production from a local Plant. I will go further out on a limb, and suggest that guarantees of Income for farm families and agribusiness is in the nature of life support for all of Us. This all said, I do not believe that farm subsidies should be based upon production crops, but on the after-Cost Incomes of the Participants. Price supports for specific Grains, or Price supports for their conversion usage, simply forestalls the market adaptability as expressed by Price changes. We should keep the poor farm families from getting Poorer, but We should never allow for the Rich to get Richer by Government support systems; especially when it distorts the market system for the Products.

Here is another Case where Congress works through Government activity to help the Rich to become Richer. One group of people want to charge royalties on use of loopholes in the Tax Code they find. The other group wants to fully utilize the loopholes found without payment of an excess charge for using that loophole. All such Tax strategy Patents should be denied because of the ease of Discovery of the loopholes, but almost Everyone wants the Patent system maintained, at least for the Patents which they currently hold. This could all be resolved by altering the Patent laws to signify the magnitude of the royalties for which any User can be legally bound by the issuance of the Patent specific. Congress, though, will never accept that Individuals and Business cannot forestall economic innovation through the simple process of demanding Windfall Profits on an idea in the first place.

A final look at Government interference with the natural flow of Business comes here. The interesting fact one should witness here relies on the fact that it is not the Business responsible for the Unemployed who are charged with the Tax increases, but the ones still trying to maintain a labor force. The bill for the extended Unemployment should be thrown back upon the initial Employers, not the current Employers who have their own problems with maintaining their Employees. Some would call this ex-Post facto taxation, yet their action of yesteryears caused the welfare liability today. Is it so much a taxation, as it is a replenish able Fine? The transgression does not reside with the current Employers, so Why should they pay for the misdeeds of Others? lgl

Friday, February 04, 2011

Reality which must be given birth

I bring my avid Readers to this Post, which is testimony before Congressional Committee; the graphs constituted to provide substantive defense from denial of the information. It indicates that We as a nation are going bankrupt; my current estimate (remember the unreliable mine) suggests that We would need an additional 16-18 million Employed working full-time in order to cover the deficit under the current Tax rates. The Unemployment rate stays persistently at 9%, the terrible triple three, where it has remained too long. It is also not lack of liquidity or finance, as most small bankers have complained the major difficulty in extending Credit comes in Consumers’ lack of participation, and businessmen asserting that they have sufficient capital to meet current Product commitments. The most bullish of economic estimates will go on Record only with the Tax Cuts providing at most a 2% Unemployment relief through the Intermediate Term. Tax Cuts have did nothing for the economy, and soured the temper of all Americans. It is time to tell the lobbyists to ‘Kiss our Grits’ and raise an equitable amount of tax revenue.

There are Those out there so in the Dark that they don’t know I mean raising Taxes. I would far rather do this by eliminating the Tax Dodges from the system, than go into raising Tax rates. The trouble comes in that these Tax exemptions are so shelved that it hurts the lower-range of Taxpayers far more than the Wealthy. This means that the major benefit from such a Tax Dodge goes to the Wealthy, but the Poor Taxpayers complain about losing piddling amounts maybe up to a 1k of Tax burden. The Wealthy think they have blocked any action, but there are reparative methods to the Problem.

The method that I prefer is legislative action to make all Tax allowance, Exemptions, Deductions, and Tax Credits progressive in nature. Remember that I want elimination of all these discriminatory allotments, but when this proved impossible; you make do with a cheap fix. I immediately call for a Tax law revision which insists that all such remissions of taxation must be Progressive. I will extend a list of my placement:

0—$50,000----------100% deduction
$50k–$100k----------80% reduction of tax
$100k–$500k---------50% reduction of tax
$500k—Infinity-------0% reduction of taxation.

My Momma always said I would one day be assassinated, but she didn’t wait around to see if her prediction turned out True–got tired of waiting, I guess. lgl

Wednesday, February 02, 2011

Truth in Discussion

This is a good example of the majority of economic thinking, without the humanist chatter which is most often added to express some caring nature. I read the Post, and ask How the Answers could be so critical without provision of additional information. I need a Spreadsheet containing the specific Production Costs and their alteration over time. Here are some of the Questions I would like answered:

1) Has the Cost of Labor been rising in relation to total Production Costs in the industries discussed? Or has it been decreasing in percentage terms?
2) Were the Pension funds involved fully funded, and if not, why was there not adequate funds sat aside?
3) Has the Pay Packages to Management absorbed any reduction of Labor Costs which might have occurred over the extended Period of Time, and if so, how much was absorbed?
4) Has the debt of such industries increased over the Period, and if so, was that debt raised to fulfill Labor Costs or Pension benefits derived from that Labor?
5) Is there indication that Management has been paying themselves excessive Pay Packages, possibly coming from refusal to fully fund Pension funds?

There are many more Questions which could be asked about each industry or organization cited in the Post, but the only element consistent in the past history is a steady reduction of Tax revenues coming from such enterprise; though Peter sought to mention the inability of Labor to pay for the Government services deemed necessary in the Government agencies discussed. This bothers me somewhat, as I wonder Why Labor Costs must always seem to pay for themselves, while Tax Cuts are never required to pay for themselves in increased Production, or does Management fees see need to be justified; this in a context where they are the fastest increasing Production Cost across almost every industry. lgl

Tuesday, February 01, 2011

The real impact of Tax Cuts

I read this Post from Tyler Cowen, which leads me back to this Post from Paul Krugman. Cowen suggests that immigration has little to do with median Income stagnation. Krugman would have Us believe that Inflation has nothing to do with Commodity Pricing. Krugman takes the Phelps position, and contests that Wages are the ultimate core price mechanism without resort to Commodity pricing. Myself, I can only see two things which could create the divergence between the rapid response of Inflation to Commodity pricing in the 1970s, and the expressed lack of inflationary response of Today. The first possibility is the widespread development of Consumer Credit and its consistent use, and the second possibility stands as the alteration of the Tax system in force.

The development of Consumer Credit seems more a response to the need for Consumer Credit, than it does a propellent of such need. I would at least like to believe that people would not propel themselves into debt except that they could not maintain their lifestyle and commitments without assumption of such debt. The only way they would need this accessary source of Income was if something had curtailed the natural flow of Wages coming their way. This is to say that the wild swings in Commodity pricing propelled their thrust into Consumer debt, the underlying cause being a stagnation of Wages.

This leaves Us with the Tax system currently in place. We are in the land of Tax Cuts everywhere, though no one ever presents solid Proof that it actually provides economic growth. They never seem to be reversed under any circumstances, even to Cities, States, and the federal government potentially falling into debt Receivership. Why there is such commitment to Tax Cuts is another Story which may be brought up later. I am trying to discern what impact that Tax Cuts could possibly have on Wage stagnation. Tax Cuts grant business leadership a greater retained amount of business Profits after Wages have already been paid. This is a distinct advantage to business leadership, since it greatly enhances their own economic position and status. Here is the element in Question: Does business perceive any heightened advantage to suppression of Wage increases? I submit that they do desire an increase in after-Cost Profits, now that they can personally keep a great share of the after-Tax Profits. It takes little visualization to view business leadership as the enemies of both expanded labor force and Wage increases which would seem natural given the volume of Production. This is what I believe holds the real impact on Wage stagnation and suppressed Hiring. lgl