Economics

Economics

California Gasoline Prices: The Damage Done

By 5.21.15

Currently the average price of regular gasoline in California is $3.81 per gallon. That is $1.11 above the national average ($2.70). What are the reasons for this 40 percent higher price? There’s a witch’s brew of factors, but in a nutshell it boils down to the fact that California’s Democrat politicians have taken on the responsibility of saving the planet. That, of course, is a quixotic endeavor. Californians are wasting billions of dollars and getting nothing in return.

Individually California consumers spend about sixteen dollars more than necessary each time they fill their gas tanks or about $600 a year on average. Collectively California consumers purchase 14 billion gallons of gasoline each year. In other words, we’re spending $15 billion a year more than what we would if gasoline prices equaled the national average. The benefit-cost ratio of those expenditures is as close to zero as you can get.

Fuel costs are a major budget item for many California businesses. High gasoline and diesel prices have impacts beyond what can be seen at the pump.

Economics

Anti-Trust Law and Lawlessness

By 4.28.15

We all make mistakes and some of us learn from them. What is even better is to learn from other people’s mistakes, where they pay for those mistakes while we learn free of charge.

Many Americans who say that we should learn from other people, especially Europeans, mean that we should imitate what they did. That may make those who talk this way feel superior to other Americans. But let us never forget that the most disastrous ideologies of the 20th century — Communism, Fascism, and Nazism — all originated in Europe. So did both World Wars.

More recently, Europe has been belatedly discovering how unbelievably stupid it was to import millions of people from cultures that despise Western values, and which often promote hatred toward Western people.

Maybe that is a mistake that we can think about when Congress finally decides to do something about our open borders and our immigration laws that we refuse to enforce.

Economics

The Costly Lie Called the Corporate Income Tax

By 4.10.15

You now know, or will soon know, what your individual (or joint) tax liability was for last year. However, you’re paying considerably more income taxes than you probably realize. How much more? That’s impossible to say, and that is a major flaw in our tax system. What you don’t know can hurt you and, in fact, is hurting us all in numerous ways.

The revenue collected for 2014 from federal personal income taxes will be roughly $1.4 trillion. The federal corporate income tax will generate an estimated $.32 trillion for the same period. Politicians would like for to believe that corporations bear the burden of that tax.

Economists, however, absolutely agree on one thing regarding corporate taxes—corporations don’t pay them. Corporations write the checks, but that means next to nothing. The tax in no way allows humans to avoid taxes any more than taxing cows would. In this context, corporations are really nothing more than the treasury’s collection agency. The corporate income tax is a public policy lie, pure and simple.

Economics

A Tale of Two Budgets: Democratic Socialism vs. Capitalist Prosperity

By 4.2.15

Long gone are the days when former Alabama Governor George Wallace could say there is not a dime’s worth of difference between the two parties. As their recently budget proposals confirm, the two parties are hurtling in opposite directions at an accelerating pace.

President Obama’s proposed budget for the next fiscal year wants to increase federal spending over the next ten years by more than 75 percent, or $2.7 trillion, from $3.5 trillion in 2014 to a record smashing $6.165 trillion by 2025. He proposes to spend an all-time record $50 trillion over those ten years.

The Republican budget proposal developed by new House Budget Committee Chairman Tom Price and adopted by the entire Republican House reduces spending growth over the ten years by $5.5 trillion. For the single year of 2025, President Obama actually proposes to spend over a trillion dollars more than Tom Price’s House budget does, and more than $7 trillion more over the next decade.

Economics

Ruinous ‘Compassion’: New Minimum Wage Laws Kick In

By 3.17.15

It is fascinating to see brilliant people belatedly discover the obvious — and to see an even larger number of brilliant people never discover the obvious.

A recent story in a San Francisco newspaper says that some restaurants and grocery stores in Oakland’s Chinatown have closed after the city’s minimum wage was raised. Other small businesses there are not sure they are going to survive, since many depend on a thin profit margin and a high volume of sales.

At an angry meeting between local small business owners and city officials, the local organization that had campaigned for the higher minimum wage was absent. They were probably some place congratulating themselves on having passed a humane “living wage” law. The group most affected was also absent — inexperienced and unskilled young people, who need a job to get some experience, even more than they need the money.

It is not a breakthrough on the frontiers of knowledge that minimum wage laws reduce employment opportunities for the young and the unskilled of any age. It has been happening around the world, for generation after generation, and in the most diverse countries.

Economics

No Triple Mandate for the Federal Reserve

By and 11.5.14

A recent speech by Federal Reserve Chair Janet Yellen got considerable attention over her subtly implied suggestion that the Fed consider taking on a third mandate—reducing economic inequality—in addition to its current dual mandate of keeping inflation in check and unemployment as low as possible. Less noticed, but just as important, were her comments that “business ownership is associated with higher levels of economic mobility,” and that “it has become harder to start and build businesses.”

So is there a role the Fed could play in making entrepreneurship easier and less risky? Yes. Be more modest. Replace the Fed’s current dual mandate with a single mandate—keep the price system as honest and stable as possible.

Economics

The Growth Gap

By From the June 2014 issue

If Ronald Reagan will be forever known as the “Great Communicator,” Barack Obama is on track to go down in history as the “Great Divider.” His single-minded message over the last several years—and especially in recent months—has been highlighting the gap in wealth or in income between different groups of people. One week he obsesses over the gap between rich and poor. The next he talks about the gaps between races. And that is followed by the gap in earnings between the sexes. What next? Tall versus short? Lefties versus righties? There’s a good possibility that this preoccupation with our differences is meant to divert attention from the real enduring economic legacy of Mr. Obama’s presidency: Just about everyone is doing worse. For the middle class, incomes have fallen by almost $3,000 since Obama was sworn into office and almost $2,000 since the recovery began.

Economics

Greens Are Reds

By From the May 2014 issue

I would like to modestly propose that it is time for conservatives to combat the most economically dangerous and statist movement in the world today, and it is not socialism. It is the modern-day green movement, which is not run by people who primarily want to keep the air we breathe and the water we drink clean, or safeguard endangered species like tigers and bald eagles, or prevent urban blight—every sane person is for those things. Its guiding principle is instead to impede economic growth, material progress, and capitalism.

As the saying goes, green is the new red. The environmental movement has been hijacked by those who worship the created and not the creator. They regard industrialization as retrograde, resource extraction as evil, and human beings as net destroyers of the planet. I remember several years ago reading an article by a prominent environmentalist who said Earth’s greatest problem is that mankind has no natural predator. In other words, it is a global curse that human beings sit atop the food chain.

Economics

Paycheck Poppycock

By 4.11.14

Here’s a headline last week: “Senate Republicans vote to block Paycheck Fairness Act.”

The quick and incorrect interpretation of that headline, if casual readers don’t have the time or interest to dig into the facts? Republicans are against “fairness” in paychecks. Republicans are against women getting equal pay for equal work.

That’s exactly the type of interpretation that is sought by the Obama administration and Congressional Democrats, increasingly fearful of losing their slim majority in the Senate in November.

From the Washington Post, here’s the midterm election forecast two months ago by Associate Professor of Political Science John Sides at George Washington University, a specialist in public opinion and American elections: “Given that President Obama is more unpopular than popular,” and given that “the relationship between presidential approval and Senate elections is stronger” today than previously, and “based on Senate elections from 1980 to 2012,” the Republicans “now have a 64 percent chance of taking the Senate.”

Economics

If You Work Full Time, You Will Not Be Poor

By 2.5.14

President Obama said in his State of the Union last week, “But Americans overwhelmingly agree that no one who works full time should ever have to raise a family in poverty.”

Thank you, Mr. President. But even without you, as already enacted in current law, for anyone who works full time in America, the minimum wage, plus the Earned Income Tax Credit, plus the Child Tax Credit, equals or exceeds the poverty level for every possible family combination, including single mothers with children.

Full time work at the current federal minimum wage of $7.25 equals $15,080 a year. That exceed the federal poverty level for 2014 for one single person living alone, at $11,670. In addition, that single person still qualifies for an earned income tax credit of $496. Because that is “refundable,” the individual still gets that in cash even if he or she is not liable for any federal income taxes.

With one child, the single person gets an additional $1,000. Plus the Earned Income Tax Credit increases to $3,305, for a grand total of $19,385. The poverty level for 2014 for a single mother with a child is $15,730.

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