Benefits of Intervention: Syria?

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Trump has recently organized an response to an alleged chemical attack in Syria. The United States along with England and France have come together to missile some targets of known chemical weapon storage and research. This post will be about this newest Syrian Intervention but it will also generally cover the track record of failure with interventions. I have actually written about this in December 2016, when under President Obama decided not to get involved in Syria despite the humanitarian crisis. (Post is linked here)

Allies: Syria and Russia

The bombing of targets in Syria in response to a alleged chemical attack comes with more controversy than usual.  The Russia President, Vladimir Putin warned against the US trying to take action against Syrian President Assad. The reason is that Syria and Russia are allies. Russia has been helping the embattled Syrian President fight against the rebels in their seven year civil war. This means that Russia is very territorial about who intervenes with the civil war. I think Russian goals in Syria are pretty clear, they want to expand their hegemony in the middle east. Putin probably has no real humanitarian interest in the Syrian people. Similar to Russia invasion and annexation of the Crimea, the nature of their allied relationship with Syria is to project power on the world stage.

False Flag Attack: Did it actually happen? 

Another interesting aspect of this particular situation is that reports came out that the chemical attack was a false flag. This means that no chemicals or possibly no attack ever occurred. Interestingly enough there is still a question about the legitimacy of the attack. Of course, Syrian President Assad has a history using chemical weapons against his own people. This alone is a serious offense especially if you consider the Geneva Convention protocol. Geneva Convention refers to the rules of engagement and genocide. The murky nature of the civil war with many different factions makes it a complex situation. Its not clear to me or to experts that there is a genocide occurring in Syria.

Another point about false flags is that many wars have started because of false pretenses. I think that this is a theme which can found throughout history especially in United States since 1917.

Precedent False Flags in US History

I believe that the intervention in the Syrian conflict is not unprecedented. The US has a history of going in on wars with the basis of a lie. For the sake of length, I want to start with the Vietnam war. The Tonkin Gulf incident occurred in 1964, it was a false attack on US ships. It led to the escalation of the Vietnam war. Moving on to the Gulf War, which had rumors about Saddam Hussein invading Kuwait. More recently, we invade Afghanistan under the pretense of fighting terror. Ironically, the terrorists main goal was have to us overreact and spend trillions upon trillions of dollars and nearly 3000 lives to kill an enemy so small.  Then we got the Iraq war, which was started over the rumor that Saddam Hussein had weapons of mass destruction. We still never found any weapons. Then you have Libya, where an NATO coalition decided the Muammar Gaddafi had to go, not for any particular reason but oil. Obviously, there are numerous examples, but the point is that lies are a great pretense for war.

Benefits of Intervention

I believe that history would tell us that intervention doesn’t work out as intended. Just look at Vietnam for example. The US mission in Vietnam was to keep the communist North Vietnam from invading the south and turning it communist. The US lost the war by a lot. The US had superior military power, bombs, 500,000 troops and state of the ark equipment. The US lost to a bunch of farmers in the jungle. Sad life. (Note that Gun Control advocates ignore this fact, farmers with guns can defeat the US military)  I think that Vietnam and others beg the question: Is there any benefit to intervention?

The answer is both yes and no. Let’s start with no. There is no benefit to the American public. War is very costly, if you add up the cost of the wars since the Korean War, the total cost is nearly equal to our national debt of 21 trillion dollars! The other costs include military causalities, lots of injured veterans, and instability in the region of conflict. There is no benefit to the American People. So you may ask who DOES benefit? I am glad you didn’t forget because ironically, the government and military contractors benefit the most. The government benefits because its a justification to raise taxes and spend more of your money! Military contractors are corporations who are given (usually awarded them) contracts to produce military equipment and research. The Department of Defense is responsible for this process of handing military contracts. Unfortunately, the DoD does a horrible job of holding these companies accountable. Many times the military contracts are exploited, because companies spend more money and take longer than they are supposed to. This lack of accountability wastes TRILLIONS of dollars. Its a big problem and a big topic for another post!

Conclusion: Intervention Sucks

Ultimately this intervention into the Syrian conflict will come back to haunt us. President Trump has shown himself to be no different than his peers (past presidents). Its a shame that the America people don’t hold the government accountable. One of the reasons for the sudden explosion of intervention is the President’s ability to declare war without Congressional approval. This needs to change. The founding fathers gave Congress the power to declare war for a reason. A President with the power to declare will eventually become a tyrant. Its a dangerous precedent. The benefits of giving congress war powers back is that Congress can’t agree on anything and therefore it will prevent 99 percent of new interventions. A great victory for the American people!

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Part 2: Monetary policy and Trump’s Tariff debacle

Before you start reading this post you should go to part 1 if you aren’t familiar with supply/demand curve and “dead weight loss”. 

In the first part of this post, I will be discussing Trump’s tariff debacle. It is a little misleading but enacting tariffs can only end in a debacle. In today’s world, we have globalization and free trade around the world. The world is much too interconnected to put protectionists policies in place is like moving backwards. I want to re-highlight these points even though I mentioned them in my other tariffs post here.  In the second part of this post, I will go over one or maybe two common monetary policies utilized by the Federal Reserve (Central Bank). The policies will be in relation to tariffs because they have to do with the actual money supply. I won’t go too far into detail, lets get right to Trump.

Globalization and Free Trade are the New Norm:

If you haven’t read the tariff post linked above then here is a brief recap about globalization and free trade. Globalization is spread of goods, people and cultures all over the world. In today’s world, if you look at how the internet let’s people access information instantly, and how you can literally go anywhere by plane, boat or car. This is globalization. The exchanging of information with people from all over world, it has us more interconnected than anytime in human history!

This connection has lead multiple free trade agreements. There are many more pending. My point is that Trump cannot possibly ignore this. Trump’s problem is, as I see it, he is thinking like the US is his business. So in order to get his business (USA) ahead he wants to cut off the competitors by pricing them out. However, there is a YUGE problem! The problem is that consumer markets are now worldwide. The USA has a population of only 320 million out of 7 billion people in the world! Clearly, the US is lucrative market but its not the only one!

Protectionism: Moving the Economy backwards:

This is painfully simple to explain. The US used to be a protectionist economy from its birth in 1776 to about 1913. The federal government collect the majority of its income from tariffs on imports and exports. In 1913, the federal income tax  started raking in more than tariffs. It has ever since. After the world wars, the world started to rapidly globalize. The US lead the way. Now the US is in a tedious position with countries like China chopping at the bit to take first place. The point is that if the US wants to go back to pre-1913, before we were considered the world’s number one economy then we should enact tariffs. Speaking of China, that brings me to my next point.

Trump will eventually lose the trade war with China:

Recently I was able to acquire membership to the Wall Street Journal. (I got connections, kidding) I came across an article that caught my eye. Let me preface it with this: Trump has already approved 50 billion dollars worth of tariffs on Chinese goods. Now Trump is threatening to raise it to 100 billion dollars worth. The Chinese have responded that they will fight back if he does it. Here is the link to the article, its called Trump Weighs Tariffs on $100 Billion More of Chinese Goods by Bob Davis. (I believe they allow a few free reads if you haven’t gotten a subscription) Davis goes into detail about the possible effects of the tariffs. He also writes about Trump’s possible plans to protect industries like agriculture. I would encourage everyone to read since it gives a decent background on the situation.

My point here is that Trump cannot win against China. The Chinese hold a ton of our debt. In other words, they buy American dollar backed government bonds. (China also cheats on its exchange rate by basing it off these debt bonds) China holds leverage because of the holding of American debt and they import more to us than we export to them. Trump will lose because China doesn’t need US goods. The US is more dependent on China. Now you can how monetary policy plays a role in the contexts of tariffs and the economy.

Exchange Rate

One of the most important aspects that any government can control is the exchange rate. The exchange rate or currency exchange rate is the value of one currency in relation to another. For example: 1 US dollar is equal to .81 Euro. Currency exchanges can done in every currency. One of the ways that the exchange rate help with Trump’s trade war is through making our money more valuable or less valuable. Unfortunately, its a great tactic because it can backfire. In a circumstance, where Trump decides to have the US Treasury take money out of the money supply or circulation. A common used is called deflation. Which refers to increase of purchasing power of money.  This usually helps everyone because less money is worth more. However, in regard to China, it would probably strengthen the Chinese position.

make the dollar worth less, it would help devalue the debt held by the Chinese. Trump would simply tell the US Treasury to print more money. However, the drawback is that it would cost more to pay back debt. It would also decrease the buying power affecting nearly everyone except the super rich. Its also called Inflation which is my next topic.

Inflation

Inflation is often seen as a bad word. Its often used to describe the fall of prices and purchasing power. There is some controversy about how its calculating using CPI or Consumer Price Index, which is explained here. Now the important thing about inflation is that it can have serious consequences.  One consequence I mentioned was decreased purchasing power. Purchasing power is very important especially everyday people like me and you. Many of my anti-minimum wage arguments on center on this exact principle. Having money be worth less means that you have work harder to make more to buy less. For example, inflation might bring your regular grocery bill from 100 dollars  a week to 150 dollars a week even if the prices of food remain about the same. The reason is because each dollar may lose 10 cents in value. (The math is a little complex)

What does inflation mean for Trump’s trade war? There is good and bad news. The good news is that Trump could try to deflate the value of the Chinese held US debt. The consequences would be as mentioned above. This method would disallow the Chinese to sell off the debt without losing value. The bad news is that even if the Chinese are forced to keep it, America would have a harder time paying it back. Trump also has to be careful not to print too much money.  The problems that arise can be dangerous for the domestic economy. Money circulation works in a supply and demand curve. If the value of money is too high or too valuable than one can print more bills to help lower it. This is rarely a problem, except when considering exchange rates, imports and exports. If the value of money is too low than one could take money of the supply to help increase its value. So really its a supply/ value curve.

To conclude: Trump’s Trade War is not easily winnable. He obviously has some tools to work with. I also read recently that he is rethinking the Transpacific Trade partnership or TPP. I think its interesting because if the countries currently in the agreement allow Trump re-join and set the rules for trade than it will the US control over trade especially in regard to China. The TPP is a trade agreement that actually just regulates trade in certain industries. Trump withdrew because of global warming clauses and “unfair” regulations.

I can write more on TPP soon because I find it interesting. Also a Syrian Bombing post is coming soon.

Thanks for reading!

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Risky Business: Health Insurance and Foreign Policy.

I have to break my hiatus. I cannot be silent on these issues any longer. Its certainly been an interesting few months since I stopped writing on this blog. But I did say I might publish an article or two if I feel really moved. There are two issues that I feel like are quite distressing. Health insurance and Foreign policy are totally different topics. So I will cover them both separately. For heath insurance, I want to discuss the failed Obamacare repeal and replace. Basically I have a way better idea of how to fix healthcare. For foreign policy, it seems that Trump has gone the military dictator route, and it might get us in big trouble.  Without further ado:

Health Insurance:

Everyone has heard about Obamacare. Its pretty much a failure. Even though it gave everyone insurance, the price was way too high. Premiums are going up. Health insurance companies are pulling out. Doctors and Hospitals are getting screwed out of jobs. The website is a mess. Trump tried to fulfill a campaign to replace it and repeal. Its failed too. Although I was not surprised when I saw the garbage they tried to replace it with. I’m young so I didn’t mind the shift of premiums to the older people since I’m young and healthy. However, the problem is the majority of older people are the ones who rely on health insurance the most. The bright spots were that Trump was going to roll back the mandatory clause and penalty. The other bright spot was the clause to keep your insurance under your parents until 26. Other than that it was Obamacare lite. Its almost like when you drink beer. If your in college you go for anything with lite in it because its cheap. Once you become an adult suddenly you can afford some Guinness.

All of this to say that I wasn’t surprised. Of course it didn’t pass. Its not just because the bill was awful either. Trump is inexperienced with Congress. Its all about lining up the votes and that’s something Trump had never done. I like the idea of repealing Obamacare because to me it violates our rights as citizens. The government doesn’t need to babysit us. We should have a choice to get healthcare or risk the consequences. Plus if you can afford to pay out of pocket then insurance is a waste of money. Its especially a waste if you are young and healthy.  So what would I do after I repeal Obamacare. Its pretty simple actually.

Once its repeal, I would write up some regulations, taking some of the good ones that exist already. I would add some new ones. It would change the government’s role in the healthcare business. If you scroll through my blog you would find that I’d do things a little differently with basic income replacing most welfare. This would enable me to privatize medicare and social security. I would continue taking government out of our personal business. The regulations would make so the government watches and monitors prices, monopolies and business practices like pre-existing conditions discrimination. Here are a just a few of the regulations I would enact:

  1. Any under the age of 26 would be able to keep their parents insurance
  2. Pre-existing conditions have to be accepted, no company can turn you away
  3. Insurance companies wouldn’t be allowed to lobby anymore
  4. No more insurance subsidies from the government
  5. Government healthcare website of all different providers (to streamline the sales)
  6. Providers would have to compete for customers based pricing and best coverage
  7. Minimum coverage requirements: like access to doctors, specialists and medications
  8. No mandatory penalties

These are just a few general regulatory things that I would enact. All together it would put the healthcare system into a free market one. The health insurance companies would be force to compete for customers.  This means the provider with the best coverage and price would attract the most customers. There are a lot of health insurances so I would allow some mergers but only for the good of the consumer. Free market will drive down premiums because of the competition element. This is what Obamacare is missing. It may include everyone but the cost is ridiculously high. Those people who can’t afford a basic plan of insurance in the free market would be put on medicare/ medicaid still. Which would be funded by the cut in both welfare costs and military budget cuts (Personnel wouldn’t be cut). Also with the enactment of basic income this will allow everyone an extra 24,000 a year to buy insurance with. If you have a job that is tax-free.

Healthcare insurance is a complicated business. Its risky to mess with it. Pulling back the government is the best way to fix the system. Government tends to make things more expensive. Free market is a better replacement for Obamacare than any alternatives.

Foreign Policy:

It interesting that Trump had almost a knee jerk reaction to the chemical attack in Syria. His bombing was definitely uncalled for but probably didn’t hurt him politically in America. However, the perception around the world is that Trump is a bit of a loose cannon. Trump should tread carefully especially when messing with Russia and North Korea. North Korea’s threat to launch missiles is a little nerve racking because in any scenario, a thermonuclear war doesn’t end well for anybody. Trump should just back off of North Korea because its not worth it. As for Syria, once again you have to be smart. The Syrians and Russians are allies. Therefore messing with Syria is always the best idea.

The good thing is that Russia isn’t as powerful as it was during the cold war. But it still wants to be assertive in its sphere of influence thanks to its President Putin. I think its best just to talk with Russia to keep them in check. Military conflict won’t end well. As for Syria itself, we really shouldn’t get too involved. We already saw what happened in Iraq and Afghanistan. The only type of intervention we need to do is humanitarian. Make sure that innocent people are out of harms way. Accepting refugees is obviously hard to do because of the costs. Also security concerns, just look at Europe with all the terrorist attacks recently. Trump has a tricky road ahead that’s for sure.

I’ll be watching closely to see what happens next here….

I’m not sure when I will post again but probably not for awhile. Thanks for reading!

 

Mixed Bag: Wrong on Tariffs, Got Hacked?, Garrett for President 2028?

My last post on tariffs was very good if you haven’t read it yet. I just want to make one clarification about that post. Throughout the post, I mention the possibility of plan to make tariffs a bigger source of national revenue. The problem is that I wrote it just trying to educate people about tariffs and thinking after research I could present a plan to help relieve the tax burden. After some research, I’ve come to the conclusion that I was totally misguided. I know that free trade is a great economic benefit for every country. I never proposed doing away with it. I’ve come to the realization that I was wrong about tariffs. I don’t think there’s way to make tariffs viable without starting multiple trade wars or killing off American businesses. The explanation is simple. Its basically a tariff on imports would make many products that aren’t produce here in America very expensive to the consumer. A tariff on exports would create tension between the US and other countries whom export to us. The bottom line is that tariffs in this free trade world just won’t work either politically or economically.

This particular post is a mixed bag of goodies such as the tariff plan which is not happening. I’m going to try to keep short, not sure that is possible for me. (See any other post) I think that first I want to address the Russia hacking. I don’t usually like to give these ridiculous stories that people call “news” any sort of attention. However, its been bothering me. The problem I have with the story is not that Russia tried to hack, or that Trump wanted to them to hack, or even the debate over whether or not its true. There are conflicting reports that the hacking was made up. Whatever the case is, I find it completely ridiculous. The best I came up with to describe it was this unusual status I made on my facebook:

The Russians interfered with my whole life, hacked my SATs scores, college transcripts, my facebook, my old myspace account, and all four of my email addresses. (I lost count actually) Apparently its totally a valid excuse for why I’m such a failure. You want to see proof just look at how big of a loser I am. This my friends is what the federal government and Democratic party are doing. How pathetic and sad can you honestly get? Trump won because people are tired of Obama and his socialist policies that really haven’t worked. They don’t like the increased terrorism and racial strife. I don’t believe that Trump is the solution but blaming your problems on Russia is ridiculous. Trying to start World War 3 is dumb. If I could run for President in 2020 I would, because the only people who seem to be politicians are idiots.

I think that I make a valid point of how this Russia hacking is playing out in the media. I’ve never actually believed anything the media tells me. I would recommend you don’t listen either. As they say: Don’t drink the kool-aid.  I thought I would just share that.

In an unrelated matter, I want point out that I made a half hearted declaration for President in 2020 even though I’m only going to be 30. If you didn’t know you need to be 35 to run for President. In the event that I turn 35 and I decide to run, I promise that my readers will be the first to know. If you are curious, I will be 35 in 2025, and eligible to run in the 2028 election. So uh, mark your calendars. If Trump doesn’t ruin us then I hope I can count on my educated readers for your support. I will be on running on the libertarian platform with a little bit of my own ideas mixed in. Just for fun, lets review my positions:

  • Against Minimum Wage
  • Pro-Adoption (Pro-Choice because 14th amendment and Against Abortion because its killing)
  • Audit the Fed (Reserve) (Hold them accountable)
  • Pro-free trade
  • Cut spending and actually lower taxes (Against raising taxes on anyone)
  • Hold the Department of Defense accountable (military industrial complex)
  • Make Healthcare a free market system (fix regulations)
  • Repeal the Patriot Act
  • Make gay marriage legal everywhere (states rights be damned, gov’t shouldn’t control marriage
  • Make marijuana legal everywhere (kills the black market and raises revenue)
  • Basic Income, see my post, Which also leads to cuts in all of the welfare portions of the budget plus a savings of about 200 billion dollars
  • Invest in infrastructure like high speed rails and roads
  • Pay down the national debt (again extra money from cuts over a course of 10 to 20 years)
  • Pull all troops station abroad and put them on the Mexican Border (Simultaneously, I would institute a streamlined immigration for legal and illegal immigrants basically just giving them citizenship after a background check and psychological evaluation plus for illegals a higher tax rate to ensure they really want to come here. No handouts here. All countries citizens welcome.
  • Slowly end all unnecessary government functions or phase them out because a big bureaucracy isn’t necessarily great in terms of cost and effectiveness. Including but not limited to my own power once I get what I see fit to be done.
  • Eliminate all Federal government regulation regarding education such as common core because teachers know their own students better.

Granted my plan is ambitious but I don’t just win the presidency not to make a major impact. I made this list off the top of my head. I made some vague positions and perhaps in the future I will get to expand on them. If I had to describe my presidential ambitions in a sentence or two I would describe it as:

I want America to be a fiscally smart, diplomatic savvy and self aware as a nation and as a people. Americans have always thrived on their freedom and their ability to govern themselves and that is exactly what I aim to do, is put the control in hands of the people.

I think my plans are simply for freedom and not much else. America has become extreme and its painfully obvious with the election of a person like Trump. I think we need to go back to our roots. People need to read the Declaration of Independence and the Constitution. These are the documents that built the country. I think the words have significant meaning that puts being American in great honor. I also think that we shouldn’t forget our past mistakes whether its invading Iraq or the whole cold war, we should not let history repeat itself. I really don’t fancy getting elected or being President easy. However, I think i would really enjoy working to make a country that I’ve been living in and studying since I was a child.

That’s will do it for this post. I had to address a few things and next post will be more coherent, I promise. Thanks for reading!

 

 

On the Basis of Democracy: Aristotle Part 1

I am so happy to be writing again. I took nearly a month off because the election just made me really want to stay out of politics. It was so demoralizing and embarrassing. Just glad that it’s over. Now with the election over and the reaction starting to cool down, I want to swing my blog into more a history based content. My true passion is history. This specific blog post is going to analyze some of the classic political writings and philosophers. Don’t worry I won’t bore you to death with just some biographies. I want to present a logical argument for a representative democracy. My last post touched on this with Alexander Hamilton writing the 68th Federalist paper. Just to recap, Hamilton presents an argument for the Electoral college that says that a small group of people who have the ability to make a decision is better than having it rest just on the everyday person. Hamilton argues that its crops out the corruption and makes sense when trying to determine who should be elected. Hamilton’s brilliant argument became my own in my defense of the Electoral college. I want to build on the representative nature of the Electoral college that makes our democracy so unique.

I want to introduce two figures of political history. One is an ancient greek and the other an Englishmen from the 17th century. Hamilton was so well versed in all political philosophers. It shows in his Federalist paper 68. I think that its important to know about where the founding fathers got their inspiration and at times their whole concept. Many people who I know and meet, are understandably ignorant on political philosophy. Unless you are a political fanatic or you love philosophy then you probably don’t know much about these two figures. For the sake of this blog post, I want present some of the most relevant theories of Aristotle and John Locke that regard democracy.

Democracy is synonymous with America. Democracy in latin means commoner. Democracy is associated with freedom. Democracy is in the words of Thomas Jefferson: ‘We the People of the United States, in order to form a more perfect union’. (If you didn’t know, the preamble of the constitution starts like that) The question or argument that I will be presenting is simply what is the basis for a democracy? Why is Democracy such a successful system of government? These are just some of the questions that may or may not be answered because I don’t believe there is just one answer. History is not an exact science when it comes to the ‘Why’. (Also known as the five W’s: What, When, Where, Who and Why. A simple way to remember how to think about a historical topic)

Aristotle was greek philosopher and lived from 384 to 322 BCE. He wrote on hundreds of different topics ranging from family life to science to politics. One of his political writings is on democracy. First, you have to realize that Aristotle was a student of Plato who had a more utopian view of society. Aristotle was the first realist. He thought that the political community was the top of society. The political community is responsible for the education, health and governance of the rest. In his writings on the best democracy he lays out a few main points. One of these points about political community being a guide: “that human life has a telos and that the political community should provide education and laws that will lead to people pursuing and achieving this telos. Given that this is the case, a regime that allows people to do whatever they want is in fact flawed, for it is not guiding them in the direction of the good life.”  This is just a summary but in simpler terms, Aristotle believes that everyone has a spirit of good in them. This spirit of good needs to guided by the political community aka the democratic government to reach what he calls the good life or happy life.

Similar to Plato, who also believed that there was level of happiness that could be achieved that was above anything in the human experience. However unlike Plato, Aristotle believed that the best democracy was made up of farmers. His reasoning is that farmers or herders are less likely to assemble and own less land.  They offer a democracy the least path of resistance. You might conclude that some of the success of American democracy can be credited with large farming industry starting before and going well after the revolution. Aristotle thinks that a democracy made up of farmers and ruled by “This is a reason why the authoritative offices can be in the hands of the wealthy, as long as the people retain control of auditing and adjudication: “Those who govern themselves in this way must necessarily be finely governed. The offices will always be in the hands of the best persons, the people being willing and not envious of the respectable, while the arrangement is satisfactory for the respectable and notable. These will not be ruled by others who are their inferiors, and they will rule justly by the fact that others have authority over the audits” .  For the purpose of this argument, I think that Aristotle makes an interesting point with  words that I underlined. Let me explain.

What Aristotle means by authority over the audits is that the people must retain control of the budgets of public spending and they should be liable to be persecuted if there is wrongdoing. Aristotle considers adjudication as a right to fair trial by being judged by your peers. I find it so interesting that in ancient greek times, Aristotle is basically laying some constitutional principles that our founding fathers definitely included in our democracy. I also feel that politicians being liable to persecution is not met across the board with all public officials. I think that sometimes politicians are protected for personal gain and to avoid political suicide. Politics is literally a house of cards, because politicians depend on each other more than they let on.

I think Aristotle remains one of the most amazing and interesting philosophers. These writings occurred well over 2000 years ago. It makes you think about just how smart the Greeks were. Let me be honest though, the Greeks did not make the perfect government by any means. Their democracy in Athens was a true democracy with a senate. The voting took place with only land owning men. The politics were corrupt and dirty. There were demagogues that rose up and messed up their elections. However, the greeks set the stage for the Roman Empire which lasted 8 centuries and used a form of democracy for some of that time.

One of things I love about Aristotle is that he is a realist. His perspective mirrors my own in that the most capable people should be in a position to run the government. However, their power should not go unchecked. In a very indirect way, Aristotle is advocating for checks and balances,  the part where he says: “authoritative offices can be in the hands of the wealthy, as long as the people retain control of auditing and adjudication:” . The people need to be in control of the government. I believe this is a problem in our American democracy. We don’t hold the government accountable for anything. When it comes to spending our money or making foreign policy decisions.

To wrap this post up, I want to say in Aristotle’s view of democracy he had envision a simple concept where by the political community and the wealthy educate and govern the farmers and herders. However, the farmers and other common folk hold the purse strings and judge their peers. Aristotle contemplates a fair system of democracy that I believe gave us the foundation to America. America started out as farming settlement in North America. The wealthy men of the settlement decide to wage a revolution and break free from Britain over a variety of reasons including taxes. The ruling class has always been primarily wealthy. However, the biggest change is the modernization of farming which has led to its decline. This is the challenge to our future democracy.

Stay Tuned within a week for Part 2 on John Locke. Thank you for reading! Have a great day!

Citation text: Internet Encyclopedia of Philosophy

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!