China's Red Flags

Interesting GMO report on China - LINK

Someone want to explain to me...

...how on Earth granting workers the right to choose whether or not they want to belong to a union is "sticking it" to the thousands of unionized workers (!?!).

Robert Reich Misleads

     So this video by Robert Reich explaining the economy has been popping up lately on many forums I've noticed:

Now I'm no economist, but I can spot nonsense and propaganda on this kind of stuff, and Mr. Reich really takes the cake for it here. First, note how he pulls two stunts, which are to cite wages and act as if America is divided into fixed classes. Wages are not incomes. Wages are a part of incomes. Incomes are wages plus the various fringe benefits that people get. In certain areas, wages have been stalled, yes, even though incomes per capita have been going up consistently over the years, but that is likely because of the rising cost of healthcare which is making it where more and more of a person's income is having to go towards healthcare costs instead of wages.

And "the top 5%" are not a fixed class. There is not a permanent poor class, a permanent middle-class, and a permanent rich class that people are born into, there are income quintiles. The actual people in those income quintiles change all the time. Many of the people currently in the top 5% were in the bottom earners ten, twenty, or thirty years ago, and probably quite a few in the middle-income quintiles or even lower-income quintiles now are folks who were in the highest-earning quintiles up until the recession hit. Essentially, Mr. Reich is making the very widespread fallacy of confusing what is happening in statistical categories with what is happening with actual human beings. So when Leftists say things like, " 'The Rich' have gained X amount over the years," it's really a nonsensical statement, because "The Rich" are oftentimes the same people who were "The Poor" some years ago. Also, Mr. Reich might bother looking at just who has gotten the major tax cuts over the years. We currently have 50% of Americans paying ZERO Federal income tax (LINK), with more of the overall tax burden being shouldered by the highest-earning 5%.

President Bush cut taxes for everyone, with some of the biggest percentage cuts going to the bottom earners. And he did things like double the Child Income Tax Credit from $500 per child to $1000 per child. It is through these various tax credits that many people end up paid by the federal government as opposed to paying it. No politician could say it, but personally I think what really what needs to be done at some point is to re-levy taxes on this 50% not paying anything. I'm not saying lower and middle-income people should pay high taxes by any means, but the ones not paying anything, that needs to stop, especially the ones getting paid by the government. There also is the problem in that while the amount of tax revenue as a percentage of the GDP that the government takes in has stayed relatively uniform, government spending per capita has continually been increasing over the years. In addition, Mr. Reich seems to expect equal gains across the economy, which makes no sense at all. Of course the wealthier are going to gain more than the lower earners, otherwise they would never have gotten wealthy in the first place. And also, again, "The Rich" aren't a fixed class.

Regarding public schools and infrastructure, well the U.S. has some of the highest per pupil spending with not necessarilly the best results, and if one compares on a state-to-state level, it depends. Some states spend more and get better results, some states spend less and get better results. Washington D.C. has the highest per pupil spending with some of the worst results. As for infrastructure, well we had a $820 billion stimulus of which only a fraction was allocated for infrastructure work, so I don't buy this argument either. The government had ample opportunity to spend money on fixing America's infrastructure, but didn't do it.

Tax Cuts and Government Spending Are Not the Solution to Every Problem

     So I've been thinking lately, that both Democrats and Republicans both seem to havethe perfect little setup when it comes to their favorite things (tax cuts for Republicans, government spending for Democrats). With Democrats, when the economy is roaring and the Treasury is flush with revenue, they always want to spend, spend, spend. They will lambast the Republicans as greedy, uncaring meanies should they advocate fiscal conservatism, and say that the whole idea is silly because the Treasury has plenty of money right now (apparently the idea that at some point in the future the economy will tank and a recession will occur and tax revenues will drop doesn't ever seem to occur; the fact that government programs grow exponentially in cost usually also doesn't seem to occur to them either). Of course, then when the economy does tank and a recession occurs, we here, "The Worst Thing You Can Do In A Recession Is Cut Spending." Well, maybe. But there's a difference between deficit spending during a recession in the sense that the tax revenues decline, and you just don't cut government spending, but you don't increase it either, versus engaging in running a massive deficit by greatly increasing spending in order to try and stimulate the economy. Usually, the Left prefer the latter, and their idea of stimulus is often spending money on a bunch of programs they have wanted to spend money on in the past (as we saw with the recent $820 billion stimulus in which only around $40 billion or so was allocated for infrastructure work). They also want to make the spending increases permanent. If they gun up spending during the recession and then the economy recovers, just let Republicans try to engage in big-time fiscal conservatism, and they will scream. Of course, that is all assuming the fiscal stimulus even worked, which as I have written in past articles pretty much never has happened.
     Now the Republicans, they are the exact opposite. Whereas the Democrats want to always spend, spend, spend, the Republicans are always wanting tax cuts, tax cuts, tax cuts. If the economy is roaring and the Treasury is flush with revenue, the Republicans will want to give people a tax cut. If Democrats dare talk about how this will blow up the deficit, they get called socialists and get told that tax cuts = more revenue because they create more economic growth which makes up for the drop-off in revenue (this does have an element of truth in it, but much of it is also Republican boiletplate---similarly, many times Democrats will refer to spending as "investing" in America, and claim that thus by "investing" in the economy, the economy will produce more revenue and the investment will pay for itself....this too has an element of truth to it, but is also used as Democratic boilerplate). Now of course, when the economy tanks and a recession happens, what is the Republican solution to the problem? You guessed it, tax cuts! And just like the Democrats with wanting to make their stimulus spending, which is supposed to be temporary, permanent, the Republicans want to make their tax cuts permanent.
     With both parties, this results in either too much spending for the current revenue, or too little revenue for the current spending, and thus deficits will result with either policy. With both parties, the policies are essentially a different variant of the same thing, which is to give money to the people. Some Republicans might try to claim, "Well, unlike with Democrats, we don't seek to have government control everything or give freebies to people, we just seek to let people keep more of their money..." but that isn't necessarilly true. Part of the reason about 50% of America pays no federal income tax right now is because of the Bush tax cuts, which included for example doublind the Child Tax Credit, which went from $500 to $1000 per child. A credit means the government is paying you, so if you are able to reduce your federal tax bill to zero, but the tax credit makes it negative, it means the government is paying you money (credits aren't the same as say deductions).
     I guess the point of this semi-rant is that both parties need to stop with the going overboard. Republicans should not call every government spending attempt by Democrats socialism and Democrats should not accuse Republicans of being evil meanies for seeking to be fiscally conservative. Just the same, Republicans also should not seek a tax cut every time the Treasury is flush with revenue (which also is not necessarilly fiscally conservative) and Democrats should not lambast Republicans for wanting to only "help the rich" when they do seek tax cuts. Legitimate investments in America and legitimate tax cuts in taxes that legitimately are too high are both good policies.
    

Wisconsin Supreme Court Upholds Scott Walker's Union Bill

LINK - And this folks shows why it is so important to vote. There was an election recently held in Wisconsin for a justice on the state's Supreme Court. The unions tried their best to get Supreme Court Justice David Prosser removed and have a new, activist justice it seems, appointed who would change the balance of the state's SCOTUS so they would uphold the ruling made by Judge Maryanne Sumi that Scott Walker's union law was invalid (on the grounds that it vioalted the state's open meetings law). If anyone followed the election that night, it was very close, as at first everyone had thought Prosser lost, then it turned out a bunch of votes hadn't been counted, and it turned out he had actually won. The SCOTUS ruled in a 4-3 decision, which means had the union judge won, it would have been a 4-3 decision and agreed with Judge Sumi.

Luke Johnson

     You will probably have to sign up, but an awesome columnist I found on the subject of entrepreneurship, business, and so forth is Luke Johnson of the Financial Times. He is himself a very successful entrepreneur, and he just put out a new book that is a collection of his columns written for the FT as well.