TRIFECTA: NEW NORMALS & THE JOBLESS RECOVERY

HOW LIBERAL "SOLUTIONS" HURT YOUNG PEOPLE

Student Loan Scam - July 17, 2012

Federal student aid, whether in the form of grants or loans, is the main factor behind the runaway cost of higher education.  As Cato Institute economist Neal McCluskey explained in an April 2012 article for U.S. World & News Report: "The basic problem is simple: Give everyone $100 to pay for higher education and colleges will raise their prices by $100, negating the value of the aid. And inflation-adjusted aid - most of it federal - has certainly gone up, ballooning from $4,602 per undergraduate in 1990-91 to $12,455 in 2010-11."

Higher Minimum Wages - February 27, 2013

Are people responsive to changes in price? For example, if the price of cars rose by 25 percent, would people purchase as many cars? Supposing housing prices rose by 25 percent, what would happen to sales? Those are big-ticket items, but what about smaller-priced items? If a supermarket raised its prices by 25 percent, would people purchase as much? It’s not rocket science to conclude that when prices rise, people adjust their behavior by purchasing less.

Obama's War on the Young - May 15, 2013

According to recent polls, younger Americans are increasingly disillusioned with government and cynical about the political process. Maybe they will finally realize that they are being played for patsies by the Obama administration. After all, on issue after issue, President Obama has fed younger voters a steady diet of high-minded rhetoric and then delivered policies that leave them holding the bag.

Obamacare will hurt young people the most - February 20, 2013

Younger, healthier people, many of whom voted for Mr. Obama in droves, will see their insurance premiums climb sharply as Obamacare demands that insurers provide them with more medical coverage than they want or need.

Young people get short end of Social Security - January 21, 2013

The year 2013 has not brought a happy New Year for the salaries of workers across the United States. The two-year Social Security payroll tax reduction, which brought the employees’ share of the tax down to 4.2 percent from 6.2 percent, is over. Young workers - who have particularly struggled in this economy - will be hit hardest as they are forced to pay more toward the promise of far-off retirement instead of making ends meet today.

Hey Kids: Tonight You're Young, Tomorrow You're Unemployed - February 18, 2013

So knock yourselves out, kids, when it comes to boozy hook-ups at bars – or the ballot box for that matter. Set the world on fire, burn bright, and all that. Tonight, you're young. Tomorrow, you're either unemployed or working to pay for the retirements of the folks who are cleaning out the buffet tables before you're even out of your seats.

DEBUNKING MYTHS ABOUT THE NEW DEAL

It's been said a million times since the fall of 2008: the financial collapse was the worst this country has experienced since the Great Depression.  So it's only natural to take a look back at that earlier time and to figure out what worked and what didn't.  As the video below explains, neither Hoover nor Roosevelt were exactly what they've been portrayed to be over the subsequent decades.



Five Myths About the Great Depression

The current financial crisis has revived powerful misconceptions about the Great Depression. Those who misinterpret the past are all too likely to repeat the exact same mistakes that made the Great Depression so deep and devastating.

Here are five interrelated and durable myths about the 1929-39 Depression:

• Herbert Hoover, elected president in 1928, was a doctrinaire, laissez-faire, look-the-other way Republican who clung to the idea that markets were basically self-correcting.
• The stock market crash in October 1929 precipitated the Great Depression.
• Where the market had failed, the government stepped in to protect ordinary people.
• Greed caused the stock market to overshoot and then crash.
• Enlightened government pulled the nation out of the worst downturn in its history and came to the rescue of capitalism through rigorous regulation and government oversight.

ECON 101: PRICE VS. COST

In an article published last week, the economist Walter Williams explains the difference between price and cost.  Understanding the difference is necessary to grasp the importance to our economy of keeping taxes as low as reasonably possible.

Suppose you buy a gallon of gas for $3. How much did it cost you? You say, "Williams, that's a silly question. It cost $3." That's where you're mistaken, because there's a difference between price and cost. To prove that price and cost are not the same, consider the following. Suppose you live and work in New York City and routinely pay $15 for a haircut. Imagine you were told that there's a barber in Boise, Idaho, who can give you the identical haircut for just $5. Would you start going to the Boise barber? I'm betting you'd answer no because even though the price is cheaper, the cost is greater.

We might think of price as the money that's actually given in exchange for the transfer of ownership. When you purchased the gallon of gas, you simply transferred your ownership of $3. What the gas cost you is a different matter. One way to determine the cost of a gallon of gas is to ask yourself what sacrifice you had to make in order to have $3 to buy it. Say that your annual salary is $75,000. Your total federal income tax, state income tax, local taxes and Social Security and Medicare taxes come to about 35 percent of your salary. That means that in order to purchase the $3 gallon of gas required that you earned about $4.60 in order to have $3 after taxes. That means a gallon of gas costs you $4.60 worth of sacrifice. But that's not so costly as it is to a richer person — for example, someone earning a yearly salary of $500,000. He has to earn more than $5 before taxes in order to have $3 after taxes to purchase gas.

If taxes only concealed hidden costs of what we buy, we'd be lucky, but taxes are destructive in another hidden way. Suppose I want to hire you to repair my computer. Having the work done is worth $200 to me, and performing the work is worth $200 to you. The transaction occurs because we have a meeting of the minds. Suppose Congress imposes a 30 percent income tax on you. That means that if you repaired my computer, you would receive not $200, what it was worth to you to do the job, but instead $140 after taxes. You might say the heck with repairing my computer; spending time with your family is worth more than $140.

You might then offer that you'd do the job if I paid you $283. That way, your after-tax earnings would be $200 — what doing the job is worth to you. There's a problem. The repair job was worth $200 to me, not $283. So it's my turn to say the heck with it.

This simple example demonstrates that one effect of taxes is that of destroying transactions and hence jobs. But politicians have what economists call a zero-elasticity vision of the world. In other words, they're fool enough to believe that people will behave after taxes are levied just as they behaved before and that the only effect of a tax is to bring in more revenue. Of course, a more flattering assessment is that politicians are not fools and know that their actions destroy transactions and hence jobs but they don’t give a damn and only care about revenue.

Here's a question: Would you and I, as well as our nation, be better off if you repaired my computer and I gave you $200 in cash and we agreed not to report the transaction to the agents of Congress? I'd answer yes and no. Yes, because there'd be more transactions, more jobs and greater wealth. No, because we'd be criminals.

Taxes are necessary to fund the constitutionally mandated functions of the federal government. If Congress spent according to its authority under Article 1, Section 8 of our Constitution, taxes wouldn't be any more than 5 percent of the gross domestic product, as it was between 1787 and 1920, as opposed to today's 20 percent.

And here is an Econ 101 video from 2011 that further explains why higher taxes do more harm than good.

THE FACTS ABOUT THE AUTO BAILOUT

ECONOMICS 101: DON'T BE OBAMA'S "JULIA"