Yes. I know that today is not Friday, but I will be out of town this Friday so I wanted to make sure to post this video. Every Friday I am going to be posting a video or article by Economist Milton Friedman. He is a Nobel Prize-winning economist and staunch defender of the free-market (that is putting it lightly!).
Whether you are a political novice or know far far more than me about politics, do me a favor and watch this 2 min video. It is awesome.
Enjoy :)
Wednesday, June 30, 2010
Monday, June 28, 2010
Deficit Spending
While I don’t advocate the lyrics or the lifestyle of G-Unit, he did get one thing right; Money Makes the World go Round. The flow of money and debt around the world shapes policy, dictates relationships, and greatly effects individual countries financial markets. The interconnection of monetary markets from the US to China and everywhere in-between causes each country to care deeply about the other players in the game. No country lives in comfortable seclusion away from the ups and downs of the rest of the world. For countries to truly prosper, the other markets need to be at least stable. For this reason, at the G-20 summit that ended in Canada yesterday, the consensus among our European brethren was for the world’s leading economic countries to halve their deficits by 2013. Why would they want such a thing? Because they know that fiscal irresponsibility around the world hurts everyone, even the responsible. So, the very Europeans that have led the way into socialistic style government spending are realizing that their actions are not sustainable. To right the financial markets, government spending has got to be reined in and deficits must be addressed. The idea of borrowing to increase current consumption is becoming a bad idea (always has been, but turns out politicians are good at skewing facts to make bad ideas look good). Using debt for future growth is not necessarily a bad thing, using it for present consumption, not such a bright idea.
Even with many leaders calling for governments to cut deficits, there was at least one that’s not quite ready to turn in his credit card, enter Mr. Barack Obama. Leave it to him to still believe spending your way out of a recession works, when clearly, it hasn’t. Check the unemployment numbers. Before the first stimulus passed, guarantees were made that unemployment numbers would not pass 8%. We are trying hard to get 10% currently; maybe another stimulus or two will get us to the mythical double digit range. The 8% promise was made around a year and half go and we’ve been flying over 9% for over a year now. Just a tad bit off there fellas. And also, the stimulus has been poorly directed, the small businesses that create the majority of US jobs missed the boat for the benefits, but somehow will get stuck with the bill. Not sure of that logic. I wouldn’t be surprised to see this government buy the fishing poles from fishermen and call that a stimulus.
In defense of his spending habits, Obama warned that if the world moves to quickly to cut the deficits that we would risk a deeper worldwide recession. German leaders countered with a more logical argument in that failing to act would create unsustainable debt and raise the cost of borrowing. After years of getting it wrong, Europeans are figuring it out (hopefully). Stimulus spending is not only unsustainable in the long term, but the short term benefits are minimal at best.
As of now the US credit rating is near perfect and the government can borrow at very favorably low rates, but the current rates will not last forever. The weak economy has made debt even cheaper as investors are more apt to seek the safety of treasuries instead of the volatility of the public stock and bond markets. The scary prospect is when the US overspends and faith in American markets begins to wane. This will drive interest rates upwards and those who had sought the safety of American debt will leave the market for other assets. I truly hope this never happens and we will always have access to cheap debt to help fund government expenditures. However, it’s hard to overlook the current crisis in Greece that came about because of irresponsible government spending and not think that we are immune to heading down the same road. At the current pace, a Greek style financial crisis is in the making.
Quick fact: In 2009, 7.7% of America’s tax income went to servicing the national debt. That percentage may seem low, but consider that percentage is $383,071,060,815.42 of the total taxable income.
American does not have to suffer at the hands of poor fiscal policy. The recent recession has brought about tough political decisions and some of the very ideas put in place to help the economy recover have weighed us down and handicapped us moving forward. Nevertheless, it’s not too late to reverse the trend. Spending can be controlled and a responsible government can start making strides towards a prosperous future. The answer is not in thousand page spending bills that nobody fully comprehends but in promoting an economy that supports the growth and profitability of business. No more irresponsible stimulus, how about a tax code that allows those that hire and grow the economy to prosper. Wake me up when November comes.
And trust me, I obviously know what I’m talking about, I opened with a rap lyric by G-Unit……
Even with many leaders calling for governments to cut deficits, there was at least one that’s not quite ready to turn in his credit card, enter Mr. Barack Obama. Leave it to him to still believe spending your way out of a recession works, when clearly, it hasn’t. Check the unemployment numbers. Before the first stimulus passed, guarantees were made that unemployment numbers would not pass 8%. We are trying hard to get 10% currently; maybe another stimulus or two will get us to the mythical double digit range. The 8% promise was made around a year and half go and we’ve been flying over 9% for over a year now. Just a tad bit off there fellas. And also, the stimulus has been poorly directed, the small businesses that create the majority of US jobs missed the boat for the benefits, but somehow will get stuck with the bill. Not sure of that logic. I wouldn’t be surprised to see this government buy the fishing poles from fishermen and call that a stimulus.
In defense of his spending habits, Obama warned that if the world moves to quickly to cut the deficits that we would risk a deeper worldwide recession. German leaders countered with a more logical argument in that failing to act would create unsustainable debt and raise the cost of borrowing. After years of getting it wrong, Europeans are figuring it out (hopefully). Stimulus spending is not only unsustainable in the long term, but the short term benefits are minimal at best.
As of now the US credit rating is near perfect and the government can borrow at very favorably low rates, but the current rates will not last forever. The weak economy has made debt even cheaper as investors are more apt to seek the safety of treasuries instead of the volatility of the public stock and bond markets. The scary prospect is when the US overspends and faith in American markets begins to wane. This will drive interest rates upwards and those who had sought the safety of American debt will leave the market for other assets. I truly hope this never happens and we will always have access to cheap debt to help fund government expenditures. However, it’s hard to overlook the current crisis in Greece that came about because of irresponsible government spending and not think that we are immune to heading down the same road. At the current pace, a Greek style financial crisis is in the making.
Quick fact: In 2009, 7.7% of America’s tax income went to servicing the national debt. That percentage may seem low, but consider that percentage is $383,071,060,815.42 of the total taxable income.
American does not have to suffer at the hands of poor fiscal policy. The recent recession has brought about tough political decisions and some of the very ideas put in place to help the economy recover have weighed us down and handicapped us moving forward. Nevertheless, it’s not too late to reverse the trend. Spending can be controlled and a responsible government can start making strides towards a prosperous future. The answer is not in thousand page spending bills that nobody fully comprehends but in promoting an economy that supports the growth and profitability of business. No more irresponsible stimulus, how about a tax code that allows those that hire and grow the economy to prosper. Wake me up when November comes.
And trust me, I obviously know what I’m talking about, I opened with a rap lyric by G-Unit……
Newsworthy News
Longest Serving (D-WV) Sen. Robert Byrd Passes at 92
Prayers go out to Sen. Byrd and his family. He was an expert on the procedures of the Senate. Interesting to see how the Governor will act to fill the seat.
Supreme Court Rules Against Christian Group
As troubling as this decision really is, it is more troubling to read the comments.
Supreme Court Strikes Down One of Last Gun Ban in U.S.
Interesting how we see the importance of the High Court in our lives this week. In other news--Elena Kagan is going through her confirmation hearings this week.
So America is No Longer the Best?
America Lectured by Europe on Capitalism?
Never thought we would have a President of the United States who downplays the role of America in the Global economy and then, Europe lectures him for wanting another stimulus. Are we losing our prominence?
Prayers go out to Sen. Byrd and his family. He was an expert on the procedures of the Senate. Interesting to see how the Governor will act to fill the seat.
Supreme Court Rules Against Christian Group
As troubling as this decision really is, it is more troubling to read the comments.
Supreme Court Strikes Down One of Last Gun Ban in U.S.
Interesting how we see the importance of the High Court in our lives this week. In other news--Elena Kagan is going through her confirmation hearings this week.
So America is No Longer the Best?
America Lectured by Europe on Capitalism?
Never thought we would have a President of the United States who downplays the role of America in the Global economy and then, Europe lectures him for wanting another stimulus. Are we losing our prominence?
Friday, June 25, 2010
Emotion or Principle--Unemployment Benefits
Well... This is not what I pictured for my first post in the blogging world with Brett Boothe, but it just couldn't wait. Later today or tomorrow, I am going to write my retroactive introductory post on what the "arena" actual is and represents. So in case anyone cares, here we go:
Sometimes you have to take an argument out to an extreme in order to reveal the principle. The extension of unemployment benefits that was just considered on the Senate Floor and struck down with no republican support and with Ben Nelson dissenting sent liberal pundits just spinning. Here is a clip from Ed Schulz:
http://www.youtube.com/watch?v=cL9nSWGocPw
Here is my question… Would anyone out there agree to give indefinite unemployment benefits to a person out of work? Obviously, even some of the most liberal pundits wouldn’t agree that it is prudent or fiscally responsible to extend benefits to someone up to 2, 3, 10, 20 years until they find a job. Now, we unveil the principle of the argument: Where does government stop in providing a safety net to the jobless?
Settled law (http://jobsearch.about.com/cs/unemployment/a/unemployment.htm) says that a person can collect unemployment benefits for up to 26 weeks or approximately half a year. The reason is to give a minimum safety net to let a person have sufficient time to find adequate employment. During times of high unemployment, you can get an extension up to 13 weeks. The Democrats (and Republicans) have responded to the recession by extending unemployment benefits for up to 99 weeks or approximately two years. Faced with the floor debate to extend them once more, the Republicans finally said no in the face of screaming pundits like Ed Schulz. So, my question to Ed is since you won’t agree to give indefinite benefits to the unemployed, when does it stop? At what point in the recovery is it right to not extend unemployment benefits? Does the GDP have to be growing by more than 5%, 6% or 10%? Does the unemployment rate have to be below 8%, 7%, or 5%? Does a certain percentage of people on benefits have to have found adequate employment? If so, what is that percentage? What if 70% come off benefits and find a job? But, what about the other 30%? At some point, Ed would have to end the extension leaving thousands out of help. So, is he immoral? A hate-monger? Does he not care about the unemployed? Does that make him different than the angry GOPers who cut it off too soon? Or… Is he just emotional? We have seen what happens when the country and its leaders get emotional—Patriot Act, TARP, the Stimulus, you name it. The principle of the matter is that settled law cannot always be circumstantial and based on emotion.
We will discuss the merits of the government’s role in unemployment benefits and many other topics in the days and weeks to come.
Blake
An Introduction
For me, the world of blogging is completely new and uncharted territory, but in hopes of keeping up with the times and not letting the technological world pass me by, I am entering into this forum. I was the laggard among my friends accepting Facebook in 2004, a little quicker to jump on the Twitter trend of 2009 and not real sure about my relativity to the blogosphere in comparative terms, but none the less, I have arrived. All can take comfort in the fact that my mind and its endless wonders will be opened to the general public and free of charge. I welcome disagreement, actually respect disagreement when a counter argument can be presented, and look forward to finding at least a couple of folks who think like me. I could spend a great deal of energy explaining myself but I think that will come with time. So, without further ado, let’s get to it.
In the 1770s, while America was hard at work securing its freedom as a country, Adam Smith was hard at work putting pen to paper and laying out the basic frameworks of economics and the power of markets and market structures. The Wealth of Nations was published in 1776 and helped shape the formation of America’s economic development; funny that some other major events that shaped the American future happened at right around that same time. And while Adam Smith can't necessarily take credit for the rise of America or any other country through economic superiority, he is considered the Father of economics and was first to understand and explain the benefits to purely competitive markets, the effects of supply and demand, and how prosperity for all is rooted in economic freedom and the political rights that allow its citizens to compete in the free market, utilizing competitive advantages and supply and demand as the best way to allocate finite resources.
The capitalistic structure that would come to define the United States had already begun to resonate as an idea in other parts of the world but was really able to take shape and become a unique strength in the upstart of a new country. It was the ideas behind political and economic freedom that allowed America to grow into the Worlds economic superpower in less than 200 years. For the first time in history, the development of a country was built on the will of the people and abilities of those people to use their competitive advantages and as Adam Smith identified, a diversified dexterity to allow each member of the society to contribute to the society based on their strengths. I could go on for a while about the economic development of the country and how different events shaped the history, but to keep it simple, the idea of a free market, capitalistic society is responsible for the rise of America into a superpower in short order. However, even with a proven track record of success, there are some in positions of power today and sprinkled throughout our history who feel it necessary to back track towards socialism and undo the very system that built this country. I will refrain from naming names though.
Al Gore, oops, wrote an opinion article in the Wall Street Journal yesterday and led off with an opening statement summing up the strengths and overall power of the free market system. Before I realized it, a smile had crept up on my face and I thought maybe ole Al and myself were finding some common ground, however, as I continued to read I found the word I dreaded, but…… He went on to degrade the free market system and inserted his personal ideas to take power out of the market and grow the government. It was kinda like he said, I love a good salad, but I don’t really like lettuce, croutons, vegetables, crackers or salad dressing of any kind. Really? Seems convenient to promote the very system that made this country great and then proceed to tear it apart to fit a political agenda that grows government and undermines the capitalistic system. I guess that’s politics though, and he almost sucked me into his article with genuine historical success but I caught him when he started trying to push his political ideas. Didn’t quite get me there you sly politician. So why would a political party promote distancing our country from the very foundation that it’s built on? Why fix a system that’s not broken? Is it worthwhile to focus on short term fixes for long term issues? Moving forward maybe I can take a look into a few of these questions and throw my opinions around. It’s my blog so I guess I can do whatever I want, right?
Milton Friedman, building on economic theory of the previous generation was quick to point out that even the free market, capitalistic system has its problems, but it is by far the best solution available for economic viability. He also has spoken in great length about the need for and the role of government. Some will call government a necessary evil, I might not go to that level, but I will not hesitate to say that the role of government should be limited and the same people that built this country, the American people, should be in charge of driving the market into the future and future prosperity. The only way that is possible though is through limited government intervention and the knowledge that over implementation of government policy handicaps our country. I have a lot more to say about this topic, but I’ll give it a rest for now.
In the 1770s, while America was hard at work securing its freedom as a country, Adam Smith was hard at work putting pen to paper and laying out the basic frameworks of economics and the power of markets and market structures. The Wealth of Nations was published in 1776 and helped shape the formation of America’s economic development; funny that some other major events that shaped the American future happened at right around that same time. And while Adam Smith can't necessarily take credit for the rise of America or any other country through economic superiority, he is considered the Father of economics and was first to understand and explain the benefits to purely competitive markets, the effects of supply and demand, and how prosperity for all is rooted in economic freedom and the political rights that allow its citizens to compete in the free market, utilizing competitive advantages and supply and demand as the best way to allocate finite resources.
The capitalistic structure that would come to define the United States had already begun to resonate as an idea in other parts of the world but was really able to take shape and become a unique strength in the upstart of a new country. It was the ideas behind political and economic freedom that allowed America to grow into the Worlds economic superpower in less than 200 years. For the first time in history, the development of a country was built on the will of the people and abilities of those people to use their competitive advantages and as Adam Smith identified, a diversified dexterity to allow each member of the society to contribute to the society based on their strengths. I could go on for a while about the economic development of the country and how different events shaped the history, but to keep it simple, the idea of a free market, capitalistic society is responsible for the rise of America into a superpower in short order. However, even with a proven track record of success, there are some in positions of power today and sprinkled throughout our history who feel it necessary to back track towards socialism and undo the very system that built this country. I will refrain from naming names though.
Al Gore, oops, wrote an opinion article in the Wall Street Journal yesterday and led off with an opening statement summing up the strengths and overall power of the free market system. Before I realized it, a smile had crept up on my face and I thought maybe ole Al and myself were finding some common ground, however, as I continued to read I found the word I dreaded, but…… He went on to degrade the free market system and inserted his personal ideas to take power out of the market and grow the government. It was kinda like he said, I love a good salad, but I don’t really like lettuce, croutons, vegetables, crackers or salad dressing of any kind. Really? Seems convenient to promote the very system that made this country great and then proceed to tear it apart to fit a political agenda that grows government and undermines the capitalistic system. I guess that’s politics though, and he almost sucked me into his article with genuine historical success but I caught him when he started trying to push his political ideas. Didn’t quite get me there you sly politician. So why would a political party promote distancing our country from the very foundation that it’s built on? Why fix a system that’s not broken? Is it worthwhile to focus on short term fixes for long term issues? Moving forward maybe I can take a look into a few of these questions and throw my opinions around. It’s my blog so I guess I can do whatever I want, right?
Milton Friedman, building on economic theory of the previous generation was quick to point out that even the free market, capitalistic system has its problems, but it is by far the best solution available for economic viability. He also has spoken in great length about the need for and the role of government. Some will call government a necessary evil, I might not go to that level, but I will not hesitate to say that the role of government should be limited and the same people that built this country, the American people, should be in charge of driving the market into the future and future prosperity. The only way that is possible though is through limited government intervention and the knowledge that over implementation of government policy handicaps our country. I have a lot more to say about this topic, but I’ll give it a rest for now.
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