Government leaders use public opinion as a tool to come up with these brand new liberties in exchange for votes. They try to address a problem but they come up with the wrong answer. A century ago, if you suggested health care as a liberty you would be laughed at. Today it is a serious discussion because of government incentives. If government hadn't created the tax incentive for providing health care to employees, it probably wouldn't be thought of as a liberty today. Government is not as efficient as business. I only mention this because there has been a lot of talk from Occupation Wall Street protesters about how education should be a right. I disagree with that statement more than I could ever say. I think in the future education will become a tool that future incumbents or leaders will use in the future to barter votes (much in the way that healthcare is used). Whereas government healthcare was seen as a right when government provided incentives for employer funded healthcare; education will be seen as a right as government continues to be the grantor/monopoly on college loans or passes legislation tampering with interest rates. If government does keep playing with college loans, students will eventually expect free college. If a student can't financially afford to go to college, they should wait until they do have the money to go to college. Education is not a liberty. 

Let me prove why I'm so confident government will use education to barter future votes. Government interest rates on college loans are a lot like price controls that affect agriculture. When government artificially lowers the interest rate (with both Federal Loans and actual loans via the Federal Reserve) it creates a false incentive for people to go to school. It seems even more attractive to students as most colleges are raising their prices of tuition (you can borrow money more cheaply to buy a service that is rising in cost). It creates an influx of students (surplus) to borrow money that otherwise wouldn't because borrowing is cheap and schools (who aren't told to keep tuition rates constant like in the case of price controls) are raising the price to decrease the demand for classes. Government keeps lowering student interest rates to send more students into school that might otherwise be deterred by tuition costs and schools keep increasing prices to send a message to students and government but they aren't listening. If anything our youth are over educated and there are not enough jobs for them to fill. Eventually the economy will suffer as more students default on loans when they can't find jobs after graduating. In response, eventually the government will stop decreasing interest rates. When they do colleges will keep high tuition costs to pay for the additions to campuses they had to build to keep up with demand that is no longer there because demand has fallen in response to higher interest rates. Because both interest rates and college costs will be high, the next generation will have a huge deficit in college educated youth. It will take years for market prices of higher education and the rate of students to attend college to reach equilibrium again. It is a huge problem just waiting to happen and in the mean time, you can bet that government politicians will capitalize on the problem to -fix- the government created problem. I bet the proposed solution will be that government pays for all college tuition.... I don't even want to think about all of the repercussions that will have on the economy, especially if America has a high deficit like we have now... a drop in the credit rating will be the very least of our problems!

Government should stay away from education. Seriously! Who are they kidding, they have no business educating our youth! It is no secret that US students test poorly in comparison to international students. It is government that the national standards teachers must meet. Even then, America has massive scandals that splatter the news when government employed teachers are afraid their classes won't meet national standards and cheat in order to meet the standards (Chicago and in Atlanta to name big cities). The education system needs serious overhaul in America and unlike most people I think the solution is less government, not more. There is a reason private schools have higher percentages of students that get into college... it is because they are more efficient at getting students to succeed. Because the private students do better on tests, with less hand holding that takes place in public schools, private students are better prepared for a college environment. If you don't believe that, think of how many private schools create advertisements promising that their students will be admitted into practically any college. By comparison, does the US Department of Education send pamphlets in the mail guaranteeing entrance into specific colleges? I have been personally handed many pamphlets on government loans instead... That should really highlight the difference between private schools and government schools. 

I'll share a thought that I think of each time I make a payment on a student loan.... The government has a lower rate of interest than any other private loan, by definition they ARE a monopoly on college loans. They also are the monopoly on K-12 education and use government school systems to impress the importance of a college education in each of those grade levels. Government makes a good profit via the interest rate of college loans. If it were Chase, Wells Fargo, etc. who were educating a good deal of America's youth and advertising higher education (they would profit from the interest rate of student loans) there would be a massive public outrage. It is a huge conflict of interest for government to have this monopoly on education and might be part of the reason why so many kids are now unable to pay for college. Government heavily influence students to go to college, knowing full well not every student can afford it! I'm not the biggest fan of Wal-Mart but it would be really interesting to see them destroy the monopoly on government student loans by being grantors themselves in the future.... I think it will happen eventually, only a matter of time!

Rolling in the Derp

I'm spending way too much time on forums...

Tax Reform

I've written about it before but especially in terms of the financial crisis we really need to take a closer look at tax reforms. Something that is really popular to talk about in my area is Fair Tax. 

There are so many tax breaks for lobbyists, etc. embedded in the current tax system that I think a complete overhaul is needed. As controversial as it sounds, sometimes it just is easier to start over from scratch. Right now, people seem to be stuck on all the loopholes that are in the current tax system where millionaires are paying little to no taxes. I agree, it isn't fair. Any reform presented by Obama or any other politician will still have loopholes, just different ones designed to benefit different people which is why a complete overhaul of the system is so important.

Fair Tax is fair because its based on consumption, the more you buy, the more you are taxed. It gets rid of all of the loopholes in the current tax laws that enable people to pay less taxes than others who may not even be aware of all of the loopholes out there that exist. I wish people would take Fair Tax more seriously, it is a fair compromise. It eliminates the need for the IRS and Try out the Fair Tax calculator, it compares what you pay under the current tax system vs what you would pay under the Fair Tax system and shows how you would have more purchasing power.

I don't think it is fair for Republicans to try and make the issue of tax reform about class warfare. I think it is mostly partisan, political rhetoric by Republicans who are struggling with an identity crisis. I don't think they are completely over losing the election against Obama and because of their identity crisis, they are picking poor strategies to fight against the democratic party.

Drives me crazy when people in my area support Mitt Romney just because he supports Fair Tax, truth is he has a different sort of whargable that he advocates that’s a hybrid of Fair Tax and the existing system. The Washington Examiner (previous link) posts the results of a Kotliffoff study that states; “42 hypothetical families, including a middle-aged couple with two children earning $20,000, $70,000 and $500,000 per year. The low-, middle- and high-income couples' Fair Tax rates were determined to be 1.5, 11.6 and 20.5 percent respectively, versus 11.0, 21.3 and 35.6 percent today. The low-income family received an 86 percent cut in its average remaining lifetime tax rate; the middle-income family a 46 percent cut, and the high-income family a 42 percent cut.” There you go politicians, a beautiful compromise, you are taxed based on what you spend.

Congressional Corruption

I thought this was pretty interesting, Citizens for Responsibility and Ethics in Washington (CREW), which leans left identified take of the fourteen of the most corrupt members in Congress. CREW named ten Republicans and five democrats. They named Sen. David Vitter (R-Louisana), Reps. Charles Bass and Frank Guinta (R-NH), Reps. Vern Buchanan and David Rivera (R-Fl), Stephen Fincher (R-Tn), Michael Grimm (R-NY), Hal Rogers (R-Ky), Jean Schmidt (R-Oh), Joe Walsh (R-IL), Reps. Gregory Meeks (D-NY), Laura Richardson and Maxine Waters (D-CA), and Nick Rahall (D-WV). I've never really heard of CREW before but thought it was a little unusual that there were so many more Republicans than Democrats in their corruption figures. The Center for Consumer Freedom recently released that CREW attacks conservatives by a ratio greater than 8:1. Was an interesting read.

I've talked about Solyndra before but I just can't get over it. Congressional corruption makes issues like Solyndra make more sense. Solyndra gave the Federal government a list of 22 reasons why the company could fail. If Solyndra gave 22 reasons why they could fail, I'm curious as to why the government didn't take a closer look at their existing business plan and suggest serious changes to it in exchange for money. If we are giving businesses money, we might as well do it intelligently so we aren't throwing our money away. My biggest fear about the jobs bill is that money will be invested into companies like Solyndra that aren't solid investments and end up going bankrupt later on, further raising unemployment. No wonder 46% of Americans think Congress is corrupt. 

Russian Domestic Affairs

Russia has been a pet project of mine after reading about it being refereed to as a mafia state in Wikileaks. Wikileaks seems to have opened the door to talk about political instability in Russia as Gorbachev came out a few days ago and let the world know that Russia faces serious political instability. That is an incredibly strong statement coming from Gorbachev. He pretty much stated that the economic strength seen through Putin's presidency from 2000 to 2008 was pretty much a charade and that oil prices was Russia's saving grace. He warned that the presidential figurehead in Russia had become “a new Russian monarch” and that reforms in Russia were more cosmetic than real. 

As far as their economy goes, Business Week just came out and said Russia's economy needs change or it will have stagnation comparable to the Brezhnev Era The price of crude oil, that Gorbachev stated was what shielded Russia from the worst of the economic downfall, was falling. With that happening, jobs, wages, and the real value of the ruble was also falling. Kasyanov stated, “If the price of oil falls to $70, that means the ruble will sink, the price of food and medicine will go up 30 percent as most are imported, and there will be a wave of social discontent.” As Putin prepares to become re-elected, this isn't good news for the people.

Coca Cola

Found an article on Fox Business where the Muhtar Kent, CEO of Coca Cola criticized the US while praising countries like China, Russia, and Brazil for their business environments. Seems for now, the risks of seizure of product and risks of corruption are worth the profits. As Kent says in the Fox Business article, "If you talk about an American company doing business in the world today with its Chinese, Russian, European or Japanese counterparts, of course we’re disadvantaged. A Chinese or Swiss company can do whatever it wants with those funds [earned overseas]. When we want to bring them back, we are faced with a very large tax burden." 

There is a lot of risk to operating in China, Russia, and Brazil. In China, you face political risks, seizure of intellectual property, and a situation where China keeps the value of its currency artificially low (makes it seem like they are doing better economically than they really are). Russia has a problem because of the level of corruption and bribes a company has to take in order to do business there. General consensus seems to be the risk is worth it as there are huge profits to be made doing business in Russia. To put it into perspective on how bad corruption is in Russia, BP just got itself into trouble over 365 violations of of company rules geared towards limiting corruption. As far as Brazil, China, and Russia are concerned, some people are concerned that the large amount of foreign investments into these countries might have created a bubble.

Russia has developed a reputation as being challenging for the West to succeed there due to their business environment. Despite the challenge and the risks involved, companies keep investing there. Coca Cola recently decided to invest $3 Billion into Russia over the next 5 years and it will be interesting to watch Russia and see what happens. The US has to do something to make it more competitive or risk more companies outsourcing or investing more money into other countries. Steep taxation isn't the answer to help bring us out of the political crisis but will continue to alienate American businesses away from the US. 

Just a thought but we need a businessman in the White House (I am not endorsing Donald Trump under any means) because a businessman would understand a a few moments that the Jobs bill is going to be a bust.

For starters, the Jobs Bill is a stimulus bill, and the president is playing with semantics to gain the support of the public for this bill. Playing politics and mixing in so many emotions into this bill is a cheap political trick. I understand it comes with the territory of being a politician but that doesn't make it right, no matter who is in office.

Second of all, the president has said that it will not affect the deficit because he plans to raise taxes on the wealthy and on businesses. This is a mistake. Businesses do not need a reason to relocate overseas. Already, it is much cheaper to do business overseas and the risks involved with relocating are going to be seen as minimal compared to the amount of taxes businesses will be required to pay. If these businesses relocate, we lose out on future revenue we could be gaining from these countries, in addition to money we need right now. In a budget crunch we need to be encouraging these businesses to stay. Also, when businesses have to focus more on expenses like taxes, they have to reallocate money away from future investments which will affect their future profits, i.e. less taxable income for the US government in the future. So the government will lose money from businesses on two fronts due to this policy. Taxing the wealthy sounds like a good idea, but the wealthy are the ones with more capital that could help spend money to help boost the economy. With more taxes, they have less money to spend. With more taxes also comes more incentive for them to relocate overseas where they don't have to pay as much in taxes, hey they are wealthy and can afford to move. People have been known to move to a different state because of a high sales tax, is it really that unreasonable to think people wouldn't leave the country for cheaper tax rates?

Third of all, the Jobs Bill will likely not spend the money wisely and will be used to fund companies that would not survive in the economic climate otherwise. Because these companies don't earn the start up cash, and didn't work for the money to invest, its just given to them, they don't have solid business plans and play around with money loosely. If these companies don't have the business plans to survive in the economy, i.e. Solyndra, they eventually will go bankrupt and further raise unemployment leaving us exactly where we started off only with less tax revenue because of businesses relocating oversees, loss of future investments, and wealthy persons relocating overseas. We would be worse off with this bill. Keynesian economics clearly isn't working to fix the economy, rising inflation, rising deflation, stagflation, and rising unemployment are all economic indicators to prove it.

Mr. President, would you please appoint three new members to be your new council of financial advisors? Getting rid of Ben Bernanke probably wouldn't be a bad idea either.