Hiatus Break: Big Picture Policies

Once again, I have been inspired to write. This time its because I witnessed a discussion in a class that I’m taking in college (Occupational Therapy Assistant is my major).  The class is a community health lecture. I expected to learn about health and how to be a healthcare professional.  Instead I got a lot of political statements that were pretty controversial. Given the fact that it was a health class and not politics 101 I kept my mouth shut. Trust me I was probably one of the few to feel that way.  I won’t even mention what was said but it got me thinking.

When people espouse political views and opinions do they actually think about the big picture? My personal belief is that most of time, people just have beliefs and views in a vacuum with no reference to the realities. I have studied history and politics for years and have learned to think about the reality before choosing to accept a certain view. A lot of times for me, I don’t know about anyone else, but I find myself objecting to the means of political policy not the ends. Typically political views and beliefs express the need for a positive outcome that everyone should want. However, I feel that most of time the means is either impossible, more destructive than helpful or just plain nonsense. I want to give a few examples of policies that express positive outcomes but the means of getting there is just not worth it.

Before I give my examples I want preface it with just a little explanation on my title. Big Picture Policies. I think the title is simple enough to understand because the words aren’t complex. But grasping the big picture of complex and difficult issues is very hard to do. It takes something they rarely teach kids anymore, critical thinking and logic. I know they say that they teach it but the reality is that kids are guided too much and aren’t allowed to have an original thought because education is all repetition and brainwashing. Fortunately, you can break it by studying things on your OWN. Self learning is very important. So when dealing in Big Picture Policies or BPP as I want to abbreviate it, you need to look the realities of your surroundings.

The realities of your surroundings is basically the effect that a policy has on other policies and people. For example, my first example is healthcare. Recently Bernie Sanders is back at again with a universal single payer healthcare system. (changes every week?) So Sanders supports this single payer medicare for all system. Now lets say he get his way and Congress (by some unholy miracle passes a friggin law!!! Unreal!) passes this single payer medicare for all. Obviously the outcome is positive for everyone because they get government subsidized healthcare. But what about the policies affected this legislation? Once again this sounds great in a vacuum but when you start looking around at your surroundings you can see the problems. One of the biggest policies affected is the US Federal budget. This new single payer healthcare cost billions even trillions of dollars. Recently, the national debt went above 20 trillion dollars! Massive debt is never a good thing. Another surrounding affect is the doctors, nurses and hospitals that have to deal with the changes in payments, patient frequency, and increased operational expenses.

Expanding medicare for all would also affect tax policy because the federal government doesn’t just have money they would need to raise taxes. Which directly affects everyone with a tax increase, rich or poor. So you could say it would even affect yourself. Unbelievably many people are just fine with these realities. I imagine they aren’t thinking too clearly about the consequences of massive national debt that is being bought up and held by our enemies and rivals as leverage over US interests.

Okay Garrett, so you made your point the realities are shitty but isn’t healthcare is a right? Glad you brought that up. Healthcare is in fact a privilege that you pay for. Let me explain like this: If you are doctor with a private practice, just imagine you drive a Mercedes Benz and live in a nice house in a gated community. One day the police and someone in need of medical care barge into your practice. The police tell you that this patient requires medical care. You oblige and say is it life threatening? They say no. So you ask for the potential patients health insurance or however they might pay. The patient refuses to give you any health insurance info or money. The police threat to take you to jail. Do you still help this patient? If you still help them would you continue to do for every patient? If you don’t help then its obvious that healthcare is privilege because taking care of patients might be your passion but its also your only source of income.

The point is that healthcare for everybody is achievable but you can’t force it. The government is not good at running things. (Country is a mess have you looked around? Veteran Affairs is government healthcare program and its horrible) I believe that good ideas don’t necessary need to be laws. One easy way of making healthcare for everybody is by decreasing the price. One of the best way to decrease prices is to let the consumers decide which service is the best for the money. This is called a free market system. Also natural competition creates lower prices because companies are competing for business. All it would take on the government’s side is the repeal everything and replacing it with just a few regulations to keep everything fair in terms of monopolies and consumer safety.

This is essentially how I look at every policy and judge it based on how it affects other policies. One of my favorite policies is Universal Basic Income. I did a whole post explaining how it might be implemented. Go read that first. Obviously UBI (Universal Basic Income) is a positive outcome for everyone because every citizen over 18 (non-felon) would receive a monthly stipend from the government. This policy over top of all other welfare programs would quite literally end America because of the massive amount money it would take. Things like inflation and lack of motivation would be huge problems. In my post, I revised it so that it could eliminate some of those problems.

One thing that I didn’t cover or even really think of in that post was inflation. I read something recently that made me go: oh shit! I think the easiest solution is to end the Federal Reserve. This would allow the government to stop printing money and readjust the interest rates and all that. To stop inflation created by UBI, basically no money could be printed and they would have take money out of circulation. By my calculations, the government would put about 500 billion dollars into the economy artificially so they would need remove 500 billion dollars from the currency circulating.

If you don’t know how inflation works then here is simple example: If you and five of your friends each have 5 dollars. You can all go to subway and buy a six inch sub of the day with your 5 dollars. Now lets say everybody gets an extra 2 dollars bringing each person total to 7 dollars. You all go to subway to buy that same exact sub which now instead of costing 5 dollars they raised it 8 dollars. So you can’t afford that sub. Inflation is devaluation of money. Essentially can it occur when minimum wage is raised, more money is printed than is backed up by gold or government bonds or when the government artificially stimulates the economy.  Now you may ask why did subway raise their price by 3 dollars? Well remember if everyone gets a two dollar raise then so do those subway workers. The cost of pretty much everything that is required to run that subway goes up, the workers are paid more so the ownership has to cover those costs. Usually its pass to the consumer because profits might be slim especially if his location has high renting cost.

Once again, this is a very simplistic example. Its much more complex than I explained. My point of this post is that when you espouse political views or beliefs try to think about the surrounding realities. Try to understand that policies don’t just have one positive outcome. You also understand that the negatives of policies might weigh more than the positives for some people. Its hard for people to understand but I’m for affordable healthcare, free college, and personal freedom on every level. However, I’m not a democrat or republican. I want all those things but I want them in a way that doesn’t hurt our future or present. Once you understand the realities and complexities you can come up with solutions to make dreams a reality. Unfortunately, the hardest part will be getting Congress to pass anything, so Good LUCK!

Thank you for reading! Have an awesome day!

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The Argument for the Electoral College

Since the election of Donald Trump, there has been an unprecedented amount of media coverage and debate surrounding the Electoral College. I have not been even slightly swayed by any of these opinions and arguments. I think as a student of history having read parts of the classics like Aristotle and Adam Smith; add to that the reading biographies of influential founding fathers. A student of history knows that the founding fathers read and studied all the classics. The prevailing ideas of the day were based on the enlightenment movement starting in Europe and spreading throughout the world. It was truly a renaissance of ideas that transformed governments. Now we are here about 227 years of democracy later and people are suddenly up in arms about the electoral college? I want to defend the Electoral college as a necessary and proper institution in the American representative democracy. I think the term ‘representative’ is the most important word that validates the Electoral College. My opening salvo can be summarized as the blame game of the system that has worked over 200 years with approximately 56 elections taking place.

My first argument is to say that why must we blame the electoral college? Why is it not the candidates that we picked? The system is merely in place to keep the election fair and offset any disadvantages that typically plague a representative democracy. The two candidates that we’re voted in the primary to run in the presidential election, were by far the most despicable candidates in history. Both of them polarizing. One candidate had 30 years of public office experience with multiple scandals, corruption, and mistakes. The other candidate is an international businessman who went through multiple bankruptcies. He was a television reality star. During the campaign became well-known for vulgar statements about different races and the opposite sex. These unlikable candidates were the only ones who had a shot to win. So why is the electoral college the fault for electing Donald Trump? That brings me to my first argument for the Electoral college.The bad candidates has to make one wonder if it’s actually the electorate that is at fault for putting up the two worst candidates in history. We must remember that the people or the citizens of the United States are in charge of voting for the candidates in the primaries. The primaries can be rigged like the DNC did, however, in an honesty primary you would think the electorate would vote out the bad candidates? Hence, my first argument is essentially this: The founding fathers installed the electoral college because they didn’t feel that the voting  populace could effectively elect the right leaders.

The original source of this argument is from the Federalist Papers. If you paid attention in history class or if you have been reading this blog you probably know about the Federalist Papers. If you don’t then please look it up. The specific number was Federalist paper 68. Federalist paper 68 was written by none other than Alexander Hamilton. In no uncertain terms, Hamilton argues that the President and Vice President should have a ‘small number of persons, selected by their fellow-citizens from the general mass, will be most likely to possess the information and discernment requisite to such complicated investigations’. The translation of that old English is that Hamilton believes its necessary that a small group would choose as a surrogates to make the final decision on the election of the President and Vice President. He even goes on to say this about who the Electoral college will made up of: “No Senator, representative or other person holding a place of trust or profit under the United States“. Hamilton believes the electoral college can prevent corruption because of these stipulations. Hamilton keeps repeating his argument and each time it gets clearer. This line that Hamilton writes at the beginning of the 8th indentation, is exactly why the Electoral college exists today.

The process of election affords a moral certainty, that the office of President will never fall to the lot of any man who is not in an eminent degree endowed with the requisite qualifications.

I  would strongly encourage you read the whole Federalist Paper 68 because Hamilton is a master of his craft and gives a very persuasive argument.

My second argument is based on  previous Supreme Court cases that have been decided in favor of the Electoral College. The last time a candidate won a popular vote and lost the electoral college vote was George W. Bush vs. Albert Gore. The case happened over a just few days in early December 2000. However, it was not the first case about the Electoral College. The issue that is typically argued in the Supreme Court is over the 14th amendment. The specific clause in this case is the equal protection clause. The equal protection clause simply protects all people under the law within its jurisdiction. This means that you can’t make law that excludes a specific type of person based on sex, religion, gender, etc;etc. The equal protection clause also includes voting laws and vote counting laws. The first case on how states count their votes and tally it up for the electoral votes was McPherson vs Blacker. In this case, Michigan’s legislature wanted to change the way it calculated it votes for the electoral college. The Supreme Court ruled that the constitution gives the power of the legislatures to choose how electors are counted based on the popular vote. The constitution says the legislatures have power to decide in the second article. It was later expanded by the 14th amendment. In the Bush vs. Gore case it was over the re-count of the vote processes by county or district in Florida. If you recall the election of 2000 was too close to call because of Florida and their ‘hanging chads’. The controversy came from the fact that recount policies were different but the court didn’t find that the equal protection clause was being broken. The reason is that the Florida legislature had let the rules vary by county and district. Granted, Supreme court cases can be overturned. However, the point here is that the laws within our constitution and amendments actually do protect us from any sort corruption or problem that is purely systematic.

My last argument is one of simple logic. I have now presented two legitimizing reasons for the Electoral College. Here’s is my third one, that also doubles as a challenge to those nay-sayers. Let’s say we want to get rid of the Electoral College because it is not perfect by any means. What would you replace it with? My third argument is simply that I truly don’t think that the citizens of the United States would like the replacement. The replacement would be a similar system to almost every European and every other democracy or republic in the world. We would have to discard our two-party system. We would have to allow multiples of candidates on the ballot . The system that we would change to is called a “single vote majority” or a “plurality vote”. This means that the candidate with the largest majority of the vote would win. Straight up. In the case of this election between Clinton and Trump, neither of them would have won. We would have to have a re-vote. There was only three candidates in every state ballot for president. Clinton had 47 percent, Trump had 46, Johnson had 3 percent and Stein had 1 percent. The other 3 percent was for Harambe or Bernie I assume. Depending on the rules, the winner would either have to have 51 percent in our current system with two main candidates. If there was more than 2 candidates, then the winner would be the person who takes the most, in that case it would be a Hillary Clinton victory. It would certainly invite a wider range of candidates. I think its pretty stupid to ask for majority vote when reality is that this specific election might have had a different outcome with a majority vote. This doesn’t mean the future elections won’t also be negative outcomes with a majority vote. If another candidate similar to Trump comes along after getting rid of the Electoral College then we are at the mercy of majority. It’s odd that many of the same people who want to get rid of the Electoral College are in the minority. (Very strange to me?)

To wrap up my post and conclude my point, I want to finish my arguments by saying that the Electoral College actually levels the playing field in every election. The electoral college makes sure that every voice is heard. The states with the higher electoral votes are more populated, like California, New York, Florida, Texas, Ohio, Pennsylvania and Virginia. The states with the lower electoral votes are less populated and it’s not surprising that there is more of them. I believe that if you think population shouldn’t matter then you probably don’t understand urbanization. America used to be a farming society and it has transitioned into a mostly urban society. The cities on each of the coasts and elsewhere hold nearly 50 percent of the United States populace.You can almost guarantee whoever the cities vote for will have a chance to win. If in the off-chance like this  year and in 2000, you can get a coalition of rural states and a few swing states to change color, that is when you get a President Trump. Let’s face the facts the electoral college isn’t to blame for Trump. Remember that Trump was elected in the primary. Trump was basically allowed the majority of Republican and non-Republican voters alike to run for President. If nothing else, Trump used the electoral college to his advantage better than Hillary. I could easily argue that Hillary had an easier path to victory. All she had to do was win either Ohio or Florida plus two other states like Michigan and Pennsylvania. Her coalition of Democrat states includes two of the biggest in New York and California.

So please next time you want to blame the Electoral College, don’t blame the system that was put in place and has worked for 227 years. Look at the voters, look at yourself. People vote for the president. People are responsible for the candidates that are put up to run for office. Thank you for reading and I hope this helps people understand why the Electoral College is necessary and proper!

“Though we cannot acquiesce in the political heresy of the poet who says: For forms of government let fools contest That which is best administered is best,” yet we may safely pronounce, that the true test of a good government is its aptitude and tendency to produce a good administration.” — Alexander Hamilton, Federalist 68

Citations:

Quotes From Sources in Bold or Italics.

Hamilton, Alexander. Federalist Paper 68: Mode of Electing the President, March 14th 1788. Lillian Goldman Law Library, 2008. Link Here

Denniston, Lyle. Constitution Check: Is winner take all Electoral College Voting in trouble?, Constitution Center. January 29, 2013. Link Here

Cornell University Law: Legal Information Institute: Bush vs. Gore, Supreme Court. December, 2000 Link Here

The featured picture is the electoral map of the US for the 2016 Election. The red represents where Trump won. The blue represents where Hillary won. Trump won mostly rural areas meanwhile Hillary won mostly urban. Population does matter.

Economic Series Part 3: What is Gross Domestic Product?

Welcome to the third part of my economic series. This final part will explain what GDP is and why it is so often used as politicians go to economic figure of success or failure. Gross Domestic Product or GDP as I will call it by the acronym, is an economic indicator. It measures a very specific part of the economy in any given country. If you have not read parts ONE and TWO of this economic series I strongly suggest that you do. My first two parts of the series describe the arguments for and against minimum wage in part one. In part two, I  go over the basics of government budget and taxation. It’s important to recognize that economics is a very complex subject and many topics involved having an understanding of other topics. In this case, I think that GDP is definitely the most advanced of all the topics that I have covered thus far. In order to properly discuss GDP and the politics that usually surround it, I feel its necessary to explain how it come to be and what it involves.

The book that has inspired me to write on this topic and my primary source of information is called GDP: A Brief but Affectionate History by Diane Coyle. Coyle’s book gives a full rundown of everything GDP. I would strongly recommend it because this post won’t even cover 1/4 of what she does in this book. Coyle gives a simple word breakdown of GDP. Gross meaning not deducted as opposed to net (Her example was like net weight of a cereal box, it’s only the weight of the cereal without the packaging) Product meaning stuff made, and Domestic is simply at home.(Page 7) GDP is much more complex than the three simple words that make up its name. The history and founding of GDP begins at the start of World War II. However, the idea goes back throughout the ages.

One of the many controversies over GDP that still exist today was first explored by one of the greatest economic scholars to ever write. Adam Smith wrote the Wealth of Nations. In his book, he went over some relevent facts of GDP. His point to paraphrase is this: The manufacturer that produces something with their labor creates value and adds it to the economy. The person who employs many menial servants grows poor while the person who employs many manufacturers grows rich. The point here being that Smith sees the production of goods as adding value to an economy. He sees the services of a servant or a service in general adds nothing. GDP has often not included services because it’s too hard to measure the true output of a teacher. Also the word “Product” in GDP lends itself to the production of goods not services. (Page 10)

GDP’s history comes out of collection of statistical data and economists. Colin Clark calculated the expenditures and national income of the United Kingdom. Clark based his work on a publication by Alfred Marshall who wrote Principals of Economics before the Great Depression. Franklin Roosevelt encourage more research and work on the national income and expenditures during the Great Depression. This led to Simon Kuznets to work with the National Bureau of Economic Research, which earned him a nobel prize. One of things that Kuznets brought up is an important facet of GDP. Kuznets thought that he was working to measure welfare rather than just output. GDP is often used to measure the welfare of any given country. However, because like I said previously, GDP is typically measured by the output of an economic. The problem of welfare and GDP is one of modern criticisms of GDP. Coyle dedicates two chapters to the subject of GDP and welfare. (Page 12-14)

I want to focus more on the particulars of GDP and how it’s calculated. Coyle covers this topic quite well. I want to save welfare and GDP for another post because it’s too much for this post. Coyle goes over the three different ways to measure and calculate GDP. She gives a two charts. One chart shows how these calculations are done. Since I don’t have the chart, I will just describe each way. The first way is a Value Added production. Value Added production adds up the Gross Output. The gross output is the all the sales made in an economy. The gross output excludes the inventory because it’s counted by the next category of intermediate inputs. Which stuff like staffing, inventory, and other things that businesses pay money for to make their business work. Finally you get to a number that tells you how much value added each industry in an economy.

The second way to calculate GDP is through Income (by type) approach. This approach uses a set of different incomes and expenditures to make final figure of Total Domestic Incomes earned. There are rental income, profits and proprietors’ income, Taxes on production and imports, Less: Subsidies, Interest and miscellaneous payments, and depreciation. These are the categories of the Income (by type) approach. The third way to calculate GDP is through Final Demand (or Expenditures) approach. This approach uses the sum of these categories to make up the final sales of domestic product to purchasers. The categories are the consumption of final goods and services by households; Investment in plant, equipment, and software; Government expenditures on good and services; and net exports of goods and services (export-import). No matter how you calculate GDP, the measurement always is trying measure how much an economy produces and what kind of income the country who benefits from it makes. (Page 25-26)

The most popular and most used method in modern times is the Expenditures approach. Coyle also goes over the equation along with an awesome chart. The equation simply is GDP= C+I+G+(X-M). The letters stand for Consumer Spending plus Investment plus government spending plus exports less imports. (Trade deficit/surplus). Coyle also tries to show some problems with the GDP equation which is mostly that GDP is not so simple. The categories have multiple sub-categories. There is a lot of gray area. The numbers can be shaky. However, in the end GDP is the most reliable measurement of economy. Coyle mentions other indicators which can help round out the welfare aspect and government impact. The awesome chart I was referring is a two circles. On the left side there is the word “Individuals” and on the right side there is “Business”. The top of the circles, have two words. On the bottom circle it says Expenditures, and on the top circle it says Goods and Services. In the lower two circles, the top one says Income and the bottom says Labor. (page 26-27)

The story is that Individuals and Businesses interact in two different ways. The circles represent the different ways. The bigger circle with Labor and Goods and Services basically shows that Individuals supply the labor for business. The Business supplies the good and services. This is basic economics, it shows a supply/demand for labor and good and services.  The smaller circle with Expenditures and Income show that Businesses supply the Individual with income and the Individual supplies the business with Expenditures. The vice-versa is also true. Businesses make income on the Individual’s expenditures. This is a simple economics lesson that can help you understand GDP. (Page 27)

GDP is an important facet of economic measurement of any given country. As Coyle notes in later chapters which this post won’t cover, that GDP is not accurate in second and third world countries because of faulty accounting and statistics. She also covers a great deal of debate over whether welfare should be measured by GDP or not. These are more complex questions than I really want to go. I think the point of this post is to say that GDP is important to understand. GDP is not a true measure of welfare. It’s the statistical measure of economic input and output. As an example, GDP measures the number of phones that Apple sells after the release of the Iphone 7. It doesn’t take into account the welfare of the people who buy those phones. GDP is also a political tool especially when it comes to arguing over the economy.

Moving away from Coyle’s book in some ways, I want to briefly discuss why politicians like to use GDP. I think that much of the political controversy surrounding the use of GDP comes from the myths of GDP. Many people don’t realize the history of GDP. The misunderstanding of what GDP represents. Many politicans including present candidates for President seem to think that GDP shows how well the economy doing or more often how bad it’s doing. However, the reality is that GDP can fluctuate just based on how you calculate it. One increase or decrease in any given category there could be a 1-2 percent fluctuation. Another important myth to dispel is that government spending actually helps GDP. The debate that surrounds government spending and its effect on the economy is prevalent.

This is where I want to end this post and this series for now. My last words is that government spending doesn’t necessary make for the best economic move. The problem with government spending is that the government is NOT a business. Government makes their money from taxpayers. Its mandatory, you can’t just not pay taxes. It also makes a problem with counting the statistics for GDP. The government doesn’t have a real income with the exception taxes. This means that when the government tries to invest in anything it only represents an expenditure. If you recall the chart, the point of an economy is a cycle of labor into good and services that make income provided by expenditures. One example, that I know the best is that of the spending on the military. Military spending has often been one of the biggest items on US government budget. The national debt is nearly 20 trillion dollars. Some scholars have estimated that 16 trillion of that was spent during the cold war on military research and wars. The way that the DOD (Department of Defense) and the government have gone about spending this money is the problem. The military contracts assigned to military contractors during these years were given without little scrutiny. Many of the biggest contractors were able to contracts with no competition. The contracts included very little accountability or responsiblity especially in regards to money spent.

The point being is that GDP has actually suffered since the Cold War. This mainly due to stagnant economy. I mentioned that GDP doesn’t measure services which now is the most prominent feature of our economy. The reckless spending and bad fiscal policy by the government has given us some unfortunate consequences. GDP will always be controversial because of its complexity. I believe that its important to understand how GDP works. If you understand economics and GDP then you can understand that fallacy that politicians try to push on us. For me, this topic is fairly new but I wanted to try to introduce a little bit of the controversy and facts of economics and GDP.

Thanks you for reading! Have a great day!

 

Citation:

Coyle, Diane. GDP: A Brief but Affectionate History. Prinction University Press, 2014. 

 

Economic Series Part 2: Government Budget: Taxation and Spending

The most dreaded time of year is when everyone must file their taxes. Taxes are certain like death. Taxes are a necessary evil. To many people it seems that our taxes do very little for our own interests. Taxes are supposed to help the people who pay them but rather they seem to help special interests or people who don’t pay them. The responsible party of handing our taxes is the government. The IRS is the collector, Congress is the spender. I believe that this Economic Series Part 2 is probably one of the more important topics. This part will be a sort of contextual background for the last part of this series on GDP. (Gross Domestic Product) I think its very important to understand how the government balances or fails to balance the budget. The topic I choose is quite broad. However, I want to focus on why taxes are collected and how they are spent. I also want to point out how the national debt is growing and what we might do to stop it.

My own view on government taxation and spending is very much libertarian. I believe the government should spend as little as possible. This way our taxes are not the burden they have become. Government spending tends to go to ineffective programs and usually becomes wasteful. I think the best way to understand the federal government budget is by understanding some of the history behind. The creation of our federal budget and tax system was mostly implemented by one man. Alexander Hamilton is the responsible person for most our budget system.  If you remember from history class there was a lot of rebellion and distrust among the citizens of our new country. Many of Hamilton’s critics thought he wanted to become a pawn of the British or king of America through a tight relationship with England. Luckily for us, Hamilton’s set up turned out to be brilliant, and was kept in place until now.

One of the first ways that Hamilton helped set up the federal budget was by creating an import and customs service. It was necessary because when Hamilton became the secretary of treasury, the US had a war debt due to the revolution. In order to pay this war debt off, Hamilton created what is now the Coast Guard. He also set up customs and import agents along the ports. These agents were to collect the duties on the imports to America. The duties or tariffs were basically a tax on imported goods. This was the main source of income for the federal government after the Revolution. Another piece of the system that Hamilton created was the banking system. Hamilton realized that the US need a national bank. In part because of the debt and in part because of the wide range of currencies that existed among the former colonies. The Bank of America (similar to the one we have now) was created. Congress wrote a charter for it and it opened up by selling shares. These shares is how the bank made its money. The controversy came when it lead a lot money speculating among men who wanted to risk an investment in the bank.

The Bank of America also set up a line of credit for the federal government. This is was necessary because in order to pay back the war debt the US would need to take out a loan. Hence this created what we call credit. Hamilton’s system was much criticized by Republicans like Thomas Jefferson and Aaron Burr. One of Hamilton’s primary supporters was actually George Washington. With increasing responsibility due to the growing population and turmoil in France, the US needed to increase its revenue. Hamilton proposed and got a whiskey tax passed. This whiskey tax would put a small tax on whiskey and liquor. This lead to the Whiskey Rebellion in western Pennsylvania. Hamilton himself lead a rather big militia to help quell this protest.

Hamilton’s role in the banking, budget and tax collection in the US is monumental. It is often forgotten that he nearly created the whole system by himself. An impressive feat. It wasn’t until the 16th amendment that make income tax a thing in the US. This was passed in 1913 long after Hamilton’s death. Woodrow Wilson brought us into the modern era of taxes with the 16th amendment and the Federal Reserve Act. The Federal Reverse Act created the Fed as its usually called. The Federal Reserve Act basically moderates the US dollar according to the economic conditions. It also prints and controls the US dollar. Unfortunately, the Federal Reserve is mostly privatized. You may have heard the phrase “Audit the Fed” from politicians like Rand and Ron Paul. The problem is essentially, the Fed is undermining the US dollar and devaluing it. The Fed has its own agenda and nobody except the Fed knows what that agenda is. (Another post, another day)

Now in 2016, after over 200 years running our government, we find ourselves in 19 trillion-dollar debt. What could have gone wrong since Hamilton? The answer is hard to pinpoint. However, my working theory is that after War World 2, during the cold war, we started to spend more and more on defense. Defense spending became out of control and the Department of Defense was not held accountable. The DoD was allowed to “cook the books” on their budget numbers. Some estimates that I’ve seen put our spending during the Cold War at 16 trillion dollars. I would encourage you to check the national debt clock that shows our debt in real-time. It breaks down the debt into categories. The national debt being so high is due to overzealous spending and lack of accountability in the government.

As for a breakdown in spending and what we spend our tax money on. I found a nice infographic that shows how we spend our federal budget. It focuses on how the debt is effected by certain factors like raising and lowering taxes. You should definitely check it out right now. It’s from the Congressional Budget Office, a government agency. I think that paying taxes is obviously important however, I believe that some of our tax dollars are wasted. One of things that needs to happen is for the federal government to cut spending. Unfortunately, we don’t hold our government accountable for the money that it spends. A good analogy is like when you take your parents credit card and go on shopping spree. Your parents may give you the credit card with a reasonable expectation of what you will be spending it on.  Instead though, you spend it without any kind regard for how much or on what. Imagine if your parents never held you accountable for spending all their money. They would probably go bankrupt in most cases because without restrictions, then what’s the point of spending less?

This is how the federal government and taxpayer relationship basically works. The federal government is you as teenager with a parent’s credit card. The taxpayers are the parents. As taxpayers we are pretty irresponsible parents. We don’t hold our government accountable for their actions in spending money. The tragedy is that the US is in big trouble because of reckless government spending. The 19 trillion-dollar deficit is almost an insurmountable sum of money. Rather than discussing who is to blame for the problem, I think its more productive to discuss how to remedy it. The blame can be distributed to many people and government agencies. The blame can be put on US foreign policy too. However, there is a relatively easy and pain-free way to help cut the deficit and still keep our standard of living intact without raising taxes sky-high.

There are two primary solutions that I feel would work to greatly reduce our debt. One of those is a simple cut in unecesary government programs and spending. One of our biggest expenses is the military budget as you can see below:2016-budget-chart-total-spending2

So just imagine if we pulled back most of military troops from abroad and cut most of the unecessary research and development budet. I would only cut about half of the military budget. At nearly 634 billion dollars, let’s cut it down to 300 billion. The 300 billion left for the military would go towards the salaries of personnel mostly and all the war material necessary. In the case of an attack on us or our allies, then obviously the money could be restored. So where would that 334 billion that I cut off go to?

Take a look at the pie chart again. 60 precent of our budget is spend on healthcare and social security. Social Security, by the way is going bankrupt. So let’s put 334 billion into both of those. Approximately 150 billion to each service. In addtion, lets cut off the foreign aid to other countries and add another 30 billion to the pot. So imagine over eight years during just one president for two terms, with approximately 165 billion dollars going to sinking welfare programs. So in 8 years, the US would put nearly 2.6 trillion dollars into those welfare programs. You could even take a step further, take about 2 billion or 3 billion out of the 364 billion and put that into higher education. You could pay off the loans of all students each year. Just think about all this, this is just cutting the military budget by half. Which by the way, is nearly 10 times as big as the next country’s military budget.

My other option, which I have written about before and have over time, really have come to like is Basic Income. You should definitely read my post on Basic Income. I will explain in short, that Basic Income is basically a replacement for welfare. You cut all social programs including medicare and medicaid. Cut minimum wage. Cut everything related to social security.  Instead you give everyone over the age of 18 a check from the government for a certain amount each month. Now just imagine if we did as I describe in my basic income post and we cut the military budget. I truly believe that the effect of both of these actions could lower taxes and help eliminate the deficit.

The taxation and government budget problems are ones of responsibility and accountability. This in part comes from the lack of education how the taxes and spending work within the government. I hope that my brief explanation can help clear up some of the confusion and misunderstanding about how taxes and government budgets work. I mentioned that this series post prefaces my next topic of Gross Domestic Product. Its important to note that GDP is calculated without the input and outputs of the government. The government spending money on military war material and other research does not count towards GDP. This is a very significant fact in that it strongly affects the GDP numbers. As you will find out in my next post that GDP only measures the input of labor and the output of production by the private sector.

I would encourage you to research more outside of my post. Its a very interesting topic. Thank you for reading! Have a great day!

 

Economic Series Part 1: To Raise or not to Raise the Minimum Wage?

Welcome to the first part of my three topic series on Economics. If you haven’t read this blog before then you should check out my last two posts that explain exactly what this series will be about. One post is here, and the introduction to this series is here. I would also suggest reading some of my previous posts, many of which cover this very topic of Minimum Wage. In particular, this post and this post among others. I have already prefaced this topic on multiple occasions so in this post, I will dive straight into the question that I want to present both arguments for and against. I will briefly explain what the minimum wage is, first. Then I will give you brief history of it. The bulk of this post will be my arguments, however, it will be up to you to decide what side you are on.

The title of post implies that my question is about raising the minimum wage. This has been in recent years, a hotly debated and controversial question. My question is: Should the government raise the minimum wage? Now it’s not a simple yes or no question. If you say yes, then you have to explain why you think that raising it is such a good idea. Or If you say no then why not raise it?  The principle of minimum wage is fairly simple to understand. Minimum wage is the base wage of all workers in the United States. Typically, the federal government sets a standard wage. However, the states also have the ability to set their own wage higher than the federal government if they choose. Right now, the federal wage is 7.25 an hour. There are 29 states that have minimum wages above the federal level.

The history of the minimum wage starts in the beginning of 20th century. The progressive movement that help develop labor laws and other regulations on business helped bring about the minimum wage. Before the minimum wage existed, workers were paid based on how much skill their job involved. They were also paid according to market value. Just like today, typically the less skilled your work, the less pay you received. According to the Department of Labor website, the minimum was officially brought into law on June 26, 1940. The name of the act bringing it to life was called Minimum Wage and Maximum Hours Standards Under the Fair Labor Standards Act. It originally started out at 1 dollar then worked its up. In January 1980 it was $3.10 and by 2007 it had increased to $5.85. Now in 2016, we see movements to increase it even further from 7.25. This is where the controversy and debate starts.

There are two distinct sides, I want to present arguments for and against raising the minimum wage. I want to present it fairly. So I feel obligated to tell you that I am against raising the minimum wage. However, I’m not against raising a reasonable amount that is in accordance with the market value of labor. In other words, if the economy can handle a raise in the minimum wage then so be it. Let me first present the supposed arguments for raising it. This is even hotly debated among economists. So you can expect to be baffled by the contradictory arguments for each side.

For Raising the Minimum Wage:

The line of reasoning for raising the minimum wage is that it will help the poor and single parents. The various other reasons for raising it are that big corporations can afford it, CEO’s make too much and workers deserve it. Typically the Democrats champion these raises in Minimum wage. In recent years, there has been push to raise to 15 dollars an hour. You might hear about the rationale to raise it as a living wage. A living wage really means an increase that is adjusted for inflation. These are just some of the arguments made for the minimum wage to be raised. I want to quote some interesting pro-minimum wage Mythbusters facts from the Labor Department website. (I seriously couldn’t believe this government website sounds like a liberal Facebook page. Talk about propaganda) Without further or ado:

Myth: The federal minimum wage is higher today than it was when President Reagan took office.

Not true: While the federal minimum wage was only $3.35 per hour in 1981 and is currently $7.25 per hour in real dollars, when adjusted for inflation, the current federal minimum wage would need to be more than $8 per hour to equal its buying power of the early 1980s and more nearly $11 per hour to equal its buying power of the late 1960s. That’s why President Obama is urging Congress to increase the federal minimum wage and give low-wage workers a much-needed boost.

Myth: Increasing the minimum wage lacks public support.

Not true: Raising the federal minimum wage is an issue with broad popular support. Polls conducted since February 2013 when President Obama first called on Congress to increase the minimum wage have consistently shown that an overwhelming majority of Americans support an increase.

Myth: Increasing the minimum wage will result in job losses for newly hired and unskilled workers in what some call a “last-one-hired-equals-first-one-fired” scenario.

Not true: Minimum wage increases have little to no negative effect on employment as shown in independent studies from economists across the country. Academic research also has shown that higher wages sharply reduce employee turnover which can reduce employment and training costs.

Once again these are straight from the Department of Labor website. They tried to make the argument that the minimum wage being higher is actually good for the economy. I want to show just a few more for the sake argument. You might read all of this and say looks the minimum wage being 15 dollars an hour isn’t so bad?  If you believe the Department of Labor’s website then yes. Here those other myths before I move onto to the against argument:

Myth: Increasing the minimum wage will cause people to lose their jobs.

Not true: In a letter to President Obama and congressional leaders urging a minimum wage increase, more than 600 economists, including 7 Nobel Prize winners wrote, “In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front.”

Myth: Small business owners can’t afford to pay their workers more, and therefore don’t support an increase in the minimum wage.

Not true: A July 2015 survey found that 3 out of 5 small business owners with employees support a gradual increase in the minimum wage to $12. The survey reports that small business owners say an increase “would immediately put more money in the pocket of low-wage workers who will then spend the money on things like housing, food, and gas. This boost in demand for goods and services will help stimulate the economy and help create opportunities.”

Let’s move onto why one might be against raising the minimum wage. The against argument will consist of a series of rebuttals. In my personal experience, I can rebuke quite a few of the arguments to raise minimum wage. Let’s start with the things I can agree with. I do agree that the public supports raising the minimum wage. More people are for it than against it. Its obvious why too, being paid more money is not something that most would have objections. However, I believe the Department of Labor website completely contradicts a different government agency report on raising minimum wage and the effects it would have on the economy. In order to keep this post from becoming a book, I will just list my rebuttals to the common Pro-minimum wage arguments:

  1. It’s true that minimum wage has not been adjusted for inflation, however, it’s not advisable to raise too quickly since businesses are used to the current level.
  2. It’s a false notion to say that minimum wage WILL NOT cause job losses because according to a Congressional Budget Office study done in 2014, a raise of the minimum wage to just 9 dollars an hour would lead to a short-term decrease in both employment and hiring of low skilled workers. In the long-term it would see the hiring of  higher-skilled workers. The effect would be a little more pronounced at 10.10 an hour and potentially more so at 15. However, the study only takes increases to 9 or 10.10 into account.
  3. The notion that people will won’t lose jobs once again is rebutted by the CBO study on minimum wage. (I will make sure to link the study to this post)  Also just based on a basic knowledge of economics you can make an argument. The way that businesses work and the economy works with the minimum wage is complicated but its a simple concept. Workers who make minimum wage are usually low skilled. Low skilled workers are needed in any capitalist market economy. They are typically the majority and typically short-term. Raising the minimum actually hurts them. Businesses are in business for profits. If they have to pay workers more than that hurts their bottom line. They either have to raise prices or cut workers. Which is different from a business raising their wages on their own.
  4. Small Business owners are for a minimum wage increase. This has to be bullshit because I work for a small business. I’ve worked in companies with low skilled workers. In fact, I am one of those such workers. Let me tell you that most employers in my experience would rather cut the hours or cut the workers than raise prices. A minimum wage increase would only cut employment for the majority of workers in low skilled positions.
  5. My last rebuttal, is that minimum wage will help the poor or single parents. This is the biggest lie ever told. Since the conception of minimum wage it has not helped anybody. Even if it was adjusted for inflation, money is always fluctuating in value according to the markets. Also if the minimum wage is let’s say 15 dollars an hour. That is the base wage for everybody in the country. If the base wage is higher than companies won’t keep their prices lower, they will increase their prices. Not only because they have to pay workers more, but also because people will have more money. So in the end, the rich get richer, the poor stay poor. Minimum wage can’t help poor people because when the government arbitrarily raises the price of labor it only hurts the workers and consumers.

There are my arugments for and against the minimum wage being raised. I know I said I am against it. However, I would be ok with a small increase because of inflation. According to the CBO study it would help a little bit at 9 dollars an hour. But I think there will adverse effects if we raise it to 15 dollars too soon. I also think that theres other options like Baisc Income. I would suggest you read my post on that. So consider my arguments and my sources. Look into some articles about minimum wage yourself. The problem is truly not that raising minimum wage is a bad thing, its only bad if the government is trying to force it on an economy that isn’t ready for it. Like I said if a business raises its own wages thats ok but because the business made that decision on its own. For example, Starbucks recently give all its workers a 5 to 10 percent raise. They also raised their prices. The cause and effect of minimum wage is more important than the amount of the wage itself.

Thank you for reading! Have a great day! My sources are linked below:

CBO Minimum Wage Study: 2014

Department of Labor Website Mythbusters

History of Minimum Wage; also DOL Website

Introduction to Economics: A Historic Review of Modern Political Economic Argument.

Welcome to my very first series post on Economics. Don’t be scared by the long title and big words. Essentially the words: ‘Historic Review’ and ‘Modern Political Economic Argument’ are fancy ways of saying that I will be using historical findings and writings to preview how we look at various economic policies that are used in today’s politics. The word ‘Argument’ has a double meaning because it means I will also being arguing that certain economic policies are less effective than others. This particular post is just an introduction. It won’t be too long, but knowing me that could be a complete lie. In this introduction, I will briefly go over the topics which will conveniently become a post of this series. Each topic will have a dedicated post. I intend to make this a three-part series. However, I cannot rule out expanding if necessary, especially since sometimes it takes a lot of words to explain complex subjects. That being said, I’m going to try to keep it as simple as I can. Albert Einstein was once quoted as saying that any fool can make something more complex but it takes real genius to make it simple.

As I mentioned in my last post that I have been reading up and have an increasing in economics. In this blog, I have often discussed economics due to ignorance of certain politicians and in general. I take great umbrage at people who ignore the facts of economics and still repeat the same lies. However, politic disagreements aside, I truly just want to educate and show people that economics is not just made up out of thin air. It has a deep and rich historical basis. There are a broad number of scholars who made economics what it is today. Much of the Economic policies that you hear about come from the writings of these scholars. There is also the economic measures and policies that many people just don’t understand because it’s not typically taught in school (Highschool many of these subjects I will touch are probably not covered, and in college it would be an elective unless you major in economics)  and it’s just not deemed important.

The three subjects that I want to discuss and argue about are as follows:

Minimum Wage

Gross Domestic Product (GDP)

Taxation/ Government Budgets

In no particular order, I will proceed to write at least three blog posts about each of these. In each case, I will cover some history about the topic. I will draw on many different sources available either online or in book form. After I use history to help explain what the topic is and how its evolved over time then I will go into the ‘argument’ part. As example, I might take minimum wage. I might try to argue that minimum wage should not be raised. I will lay out arguments both for and against. In the end, I want you to decide how it should be. The point of this series is to educate people on how economics works and how has worked in the past. Granted, I don’t know everything. I’m sure I will miss some things. However, that’s where you come in and fill in the blanks. A healthy democracy involves a citizenry that is educated and asks questions.

Let me just introduce each of the three topics. The first one probably needs no introduction if you follow politics or read this blog. Minimum wage is the floor wage or base wage that is set by the federal, state or local governments. It’s a little fuzzy because the legality and assigned power is not specifically mentioned in the constitution. I may go deeper into this issue, my initial thought would be to say the federal government is overreaching by trying raise the minimum wage because its power that should belong to the states and local government. Let’s face it, the state and local government probably knows what best for its people. I digress. Minimum wage is a hotly debated issue that comes up almost every election cycle.

Gross Domestic Product or its better known acronym GDP is the measure of output and input of any given country. Now in my posts, I will just refer to Gross Domestic Product as GDP. GDP is a very complex and challenging economic indicator. I recently read a book about it. It has history that is very interesting and very controversial. GDP is by no means a perfect measure of economy. Its often used by politicans to justify certain policies. GDP can be misleading because its calculated by a bunch of different statistics that are pieced together. Sometimes and in many cases, the statistics of poorer or less well off countries are skewed or incomplete. This will probably be the last post of series because of its complexity and because my knowledge is somewhat limited.

Taxation/ Governemnt Budgets is a very broad subject and to narrow it down, I mainly just want to disucss how taxes fix into the government’s budget. On the other side of the coin, I want to talk about the fiscal responsibility of the government. Today more than any other time in our history, the government seems to have a dangerous spending problem. The problem is not that our citizens don’t pay their taxes but rather the government out spends the amount of taxes collected. There is a wealth (pun intended, literally) of scholarhsip on taxes. They say there are two things certain in this life, Death and Taxes. In this post, I will almost definitely argue for the fiscal accountability of the government. You will see that fiscal accountability would actually lead to lower taxes. I think everyone can agree with lower taxes?

If  you have any suggestions for other topics, drop me a line. I’m willing to write about almost anything. I think these topics will bring some good questions and maybe answers about certain economic policies. I also think it will be good to explore some lesser known economic topics like GDP. In addition to educating you, I am also learning myself. In my life, I’ve taken two economic classes. Once I took a half year course in highschool. To be honest I did not learn anything. Then in college, I took a course in economics. I believe it was Marco-Economics. I learned the basics like supply and demand. I learned about the importance of scarcity. Now after college, I have been reading up on economics and trying understand how it works. Its definitely a topic that everyone should at least a little bit about it.

In the coming days you should expect the first post of this series. Thanks for reading! Have a great day!

Protests: Are they effective?

In today’s news you see a lot of protests and riots over a variety of issues. Some of the protests have a point. While other protest seem to be just a waste of time. In light of the recent police oppression protests and Trump protests at the GOP Convention. I want to discuss briefly how these protests have points but in the end, they just aren’t that effective. One group behind these protests is the BlackLivesMatter group who say they are for protection of black lives. (Ironically, they only care about black lives if killed by white cops)  This group certainly has a right to protest but I think they are going about it the wrong way. They are inspiring domestic terrorism against police instead of peaceful change. An example of a successful protester for civil rights is Martin Luther King Jr.

Martin Luther King Jr. used certain methods and peaceful negotiations to get what he thought was equality for colored people. King  was arrested many times for peaceful resistance to unjust laws. He inspired people like Rose Parks to sit in the front of bus and break the social norm of racism. More importantly, King didn’t try to incite riots or violence. He went through more diplomatic means to achieve his ultimate goal. He made political connections with powerful people in the government. One of those people was Lyndon B. Johnson. From the time that Johnson was the senate majority leader under Kennedy to the Johnson’s time as President, King had Johnson as his ally.

John F Kennedy was also persuaded by Martin Luther King Jr. to consider passing civil rights legislation. It was never passed under Kennedy because of his unfortunate assassination in 1964. King worked closely with the new President, Lyndon B. Johnson. Johnson had a knack for passing legislation through congress. He spent most of his political career in congress. He knew the Congress people well, and he knew process even better. So when King met with Johnson on multiple occasions before 1965, it turned out one of the most advance civil right laws to ever be passed in the US. Martin Luther King Jr. wrote and help shape most of what is known as the Voting rights Act. It was the first step towards equality for colored people. It took away the southern states ability to pass Jim Crow laws about voting.

Let’s fast forward to now, where black people still perceive racism. However, its a bit different than how King perceived it. Now many people see it as police oppression and systematic priviledge or underpriviledge. This is not to say that voter suppression still doesn’t take place. Unfortunately, the supreme court has overturned parts of the voting rights act. So my question is, does protesting the police really help the victims of this oppression? The answer for me is not really. Donald Trump is another controversial topic because of his candidancy for President. Trump has not been very low key about his intentions as President especially regarding things like illegal immigrants from Mexico, women, and others. So naturally people have been protesting Trump. Once again, do I think these protests are effective? No, I really don’t. Let me explain why.

The problems that people perceive with the police and Trump are real. It may not be real to everybody but real enough for people to protest them. In my opinion, the protests are great for raising awareness. However, they do no good to actually change the problems. The reason why they don’t change problems is because the protests are directed at the wrong people. For starters, Trump isn’t even president yet, he has no real legal power. So clearly protesting him won’t change anything because he knows that people will hate him. As for the police protests, lets remember who’s in charge of our police. The government, State and Local. In reality, the police only take orders from your top government officials. People like Mayors, Governors, Police Commissioners. The police are merely following their orders and training.

My point is that protesting these pawns in a grander scheme of government is not going to be the most effective way. So you might ask who should I direct my anger torwards?  If anything, you should direct torward elected and appointed government officials. They produced and enforced all these policies that may add to the perceived racism or systematic injustice. If you don’t realize already, the world is not run by normal everyday people like you and me. Its run by elites. Elites are not just rich or wealthy. Elites hold 90 percent of the wealth and 99 percent of the world power. Many elites are government officials or serve in the US Congress. There is a handful of rich families about 300 of them. These families control all politicians all over the world. Just look up illumati or 300 wealthiest families. Trust me, Elites run this planet.

Once you realize that elites are the true power holders, then you can see why protesting these lower level pawns is useless. If you want real change befriend someone with power in government who has influence. Martin Luther King Jr was able to do this and achieved some amazing things. There is nothing wrong with standing up for what you believe in. I think its better to not waste your time and talent on protesting two things that don’t really hold any power to change.

Thanks for reading! Make sure to subscribe and watch my podcast on my youtube channel: Garrett’s Life Experience’s Blog.