Simple Math From the Other Half

Every once in a while, it is interesting (scary?) to peek over and see how the other half thinks (well, hopefully it is not quite half).

Somehow, this post was recently stumbled upon. It defines seeing is believing, and other concepts such as the pot calling the kettle black ("idiot", "dolt", etc.).

Okay, there is some semblance of an intelligent point: There is hypocrisy in a Republican leader of the 2001-2006 era calling for spending restraint.

But from there it loses all semblance of rational thought. The post claims a simple formula for GDP: C+I+E+G = GDP. It is seemingly discernable from the text that a higher GDP is a desirable goal - an assumption that this site will always make. The post continues to cross off terms from the equation. To paraphrase: C(onsumption) is in the tank, I(nvestment) is weak, E(xports) are out. That leaves G. Thus, if GDP is to rise, the only way to do it is to increase G. If you do not want a depression, you must make G stand for ginormous.

If the teachers' union were really interested in increasing school funding, they need merely present the post to the taxpayers (this half). In all fairness, the simple math is correct, the logic (or lack thereof) is what boggles the mind.

G cannot be created out of thin air. Dollars added to G are taken from C and I. So what, pray tell, are those in control of G to do to increase GDP? Lower taxes and C + I will increase! Even if one thought that the change in G would be equal to the change in C + I (which empirically and logically it would not), which is preferred: a dollar of G, or a dollar of C + I???

Scary...

Where in the Constitution is a Bailout of the Auto Industry Described?

An astute reader might have expected an economic attack of the proposed automotive industry bailout. Though the truly shrewd would also understand that some issues are actually precepts, needing little in the way of explanation. Congressman Jared Polis (D, CO) stated in today's Wall Street Journal, "Any pretension of a government bailout being a good deal for taxpayers should be abandoned for the insincere (or perhaps ignorant) rhetoric that it is." Really, what more needs to be said?

Nonetheless, even sans a team of legal experts, it is somewhat interesting to delve into the Constitutionality of the bailout. One might argue the Preamble says it all ("in order to...promote the general welfare"). Perhaps more explicitly, Article 1, Section 8 spells out the powers of the Congress ("The Congress shall have the power to...provide for the...general welfare of the United States"). These two references seem to be the closest the Constitution comes to touching on the auto industry. The definition of "welfare" is vague at best, and open to wild interpretation at worst (with the current Congress clearer in the latter camp).

This, of course, begs the question of how exactly bailing out the auto industry promotes the general welfare of the United States. It is barely debatable whether it even promotes the welfare of the auto industry itself. The answer is that it simply does not.

As a side note (though of great importance nonetheless), Congressman Polis' piece was a suggestion to cut capital gains taxes on investments in the auto industry. He is correct in theory, but wrong in practice. Government should not be determinative in the allocation of capital. Thus, the solution is to simply eliminate all capital gains taxes.

Socialized Medicine Part 857

Yesterday on the "Ask the Governor" show that is regularly hosted by Jim and Margery on WTKK in Boston, MA Governor Deval Patrick made a comment regarding healthcare that required at least five Advil.

A caller had been taking care of three foster children. She complained to the Governor that the assistance they were receiving from the state was insufficient. But it lacked relative to what the deadbeat, drug addicted parents were receiving. As in, she was not complaining as much about her lack of assistance - more so the lack of relative assistance. She then touched a nerve. She mentioned health insurance.

Governor Patrick quickly chimed in, (paraphrasing) "Now, you're not suggesting that they shouldn't be receiving health insurance, but rather that you should be".

Of course not! Who would even conceive of suggesting that the government should not provide healthcare to such people???

A Simple Plan

Front page headline in today's WSJ: U.S. Eyes Plan to Lift Home Sales.

From the text of the article: The Treasury has struggled for months to come up with a plan that would ease the strains on borrowers without appearing to bail out homeowners and lenders.

A simple plan: FLAT TAX