Some Thoughts on Romney's Economic Thoughts

I would like Mr. Romney to explain how tax cuts that benefit business and the all ready wealthy will help our economy? The problem is that the driving force of the American Economy (ie the consumer) is heavily in debt. While lowering taxes in the long run is a good thing (as long as it is done in an efficient way) in the short term none of that will matter if Americans are still unable to spend on goods. By freeing them from that debt you open up their ability to spend again, which benefits business as well as shareholders. Where as his plan only benefits business and shareholders (but I would argue the other way would benefit them far greater).

From there one is better able to reform the tax code by lowering rates and broadening the base. Admittedly I would love to see Romney's end goal but I think how he gets there will never work.


Here is the Charlie Rose interview that spurred this.

Some Thoughts on the 10th Amendment

With the "introduction" of Rick Perry into the GOP race for the Presidency has come the debate pertaining to his "ideas". One of his so called "ideas" is that the 10th Amendment is supreme and lays most of the federal government unconstitutional. Now besides the fact that the 10th Amendment is at odds with this clause, this clause and this clause, or that the 10th has basically been dead since the Civil War, and forgetting the fact that Perry used to be a Democrat, rule by the 10th is a really really really bad way to govern.

Imagine if each state had their form of Social Security as Perry insinuates they should. Think of the redundant costs and overlapping pensions. Or think about how much this would restrict movement between states for employment. There are certain things that are better done on a large and national scale, such as currency, defense, entitlements, pensions, etc. Unfortunately the founding fathers did not have the foresight to write them all into the Constitution, hence why they wrote in escape clauses such as Necessary and Proper and the Commerce Clause. But it appears that Rick Perry sees something that he likes and just runs with it and he will be damned with the facts and contradicting arguments.

Some Thoughts on Social Security

In this weeks Businessweek there is a short interview that Tom Keene Had with former Reagan OMB Director David Stockman. There is really nothing knew in it; he advocates means testing and outright stripping of benefits for the rich. It's just that it hit me; how is treating Social Security like the large part of the budget it is (and not the so called trust fund it is perceived to be) and eliminating its payouts to high earners not a political win for both sides? It would preserve the benefits for those that need it while "taxing" the rich (both Dem talking points). While at the same time it "reigns in entitlement spending" for Conservatives. Throw in slightly lower taxes for the rich (not as much as this change would save) or an increase in the retirement age by a year and I don't see how this could not look good for both sides.

It's the creative ideas and true compromises that will win the day. This isn't a benefits cut that Democrats would hate (you could sell it as a revenue creator) and this isn't a tax increase (hell you could sell it as a spending cut paired with a tax cut if you were so inclined). I really hope this is something the super committee takes a look at.

Thoughts on Latin Alternatives to China

This weeks economist saw two articles in regards to good news for Latin American economies (Panama and China). And for those of you China haters and doom/gloom lovers this should be where you should be focusing your misguided worry. Free trade agreements and better relations with Latin American countries would likely help diversify our trade towards more Latin American goods not to mention help the environment, halt the influx of illegal immigrants and just be all around great for the world economy.

Though if you are looking for continued cheap all inclusive vacations to suspect countries in Central America then maybe you should ignore this.

Some Thoughts on Proportional Representation, by State Delegation, in the US House of Representatives

After listening to Ken Rudin & Ron Elving talk about redistricting for a brief couple of minutes on last weeks It's All Politics (I really wish they dedicated more time to it) I was struck with a brilliant idea (of which I have many): Why not determine House delegations via proportional representation? Now my initial reaction was that this must not be constitutional. Yet upon a reading of Article I of the US Constitution it became evidently clear that the election of a defined number of representatives is up to each individual state unless superseded by federal law. Which means states can do whatever they want as long as they come to the correct total of legislators unless Congress says no.

That is of course where I hit a snag. Federal law since 1967 does in fact say all Reps must come from districts of equal size.

I do however think the benefits of proportional representation are great enough to warrant the repeal of that law. I think it would promote the use of third parties in the US, in more populous states it would allow for greater representation among minorities, and would result in less "big wave elections". With that said I am a huge proponent of a system that has more than 2 parties and can't be trusted.

Now if the US were to repeal that law I am worried that Wesberry v. Sanders might get in the way of constitutionality. I would argue that because the ratio of population to the number of reps is more or less equal in each state then therefore you are achieving 1 person 1 vote. But I can entertain the argument that because, under a proportional system, I have access to 9 Reps in MA that I have more of a say on issues that come before the US House than one in ND does.

The Bottom Line: Is proportional representation in the US House by state delegations legal? No because of a 1967 law requiring districts. Upon repeal of that law would it be Constitutional? More likely than not.

Links

Even more on the phenomenon known as Bit Coins.

Adam Davidison's pro Airline fee rant at the beginning of this Planet Money podcast (which you really should listen to the whole thing) is exactly how I feel on the matter. If I don't have to pay as much for a ticket because airline's withhold free things such as a meal, reserved seat or checked luggage (just as long as if I really want it I can still pay for it) then I am all for it.

I largely agree with Bloomberg (editorial not the mayor) that though debit fees do seem rather high the answer is not to regulate. It is the business community that should band together to bring down the fees and if that proves not to be possible then Anti-Trust laws should be used not regulation. Personally I think this is the perfect opening for the US government to start offering a basic checking account to US citizens and provide free terminals to qualifying merchants. I would assume the savings from less currency in circulation and benefits to the IRS (I would assume the IRS would have some reporting tools built into the system not to mention the ability to withdraw and deposit tax directly from the accounts) would defray most of the cost. Of course that is never going to happen. In light of that I would encourage the Federal government to encourage things such as Square.

Saudi Arabia is currently trying to stop a global recession, pacify it's people and fund a cold war against Iran. Color me skeptical.

India loses a whopping 1/3rd of it's power production to thieves and inefficiency. Oh and that's equal to 1.2% of GDP.

People will always try to get high, and the US government is foolish for trying to stop them. That last part was my opinion.

Great profile on Turkey in last weeks Businessweek. Oh and if you want to buy me a subscription, please do so.

Some Thoughts on Happiness & Politics

My initial reaction to this Businessweek story was "Really?" Mostly because I would never blame the current state of the economy on the President, good or bad. Then I realized what the article really was saying; more than anything people vote with their happiness. If times are good, people are more obliged to keep it that way, and are less likely to vote in an unknown. But when times are bad, people are more likely to take a look at what the other guy is selling. I think the best example of this was Ronald Reagan's famous line, "Are you better off than you were four years ago?" That line directly linked the state of one's life to Jimmy Carter's election in 1976 (to be fair unemployment was practically the same when he came in as when he went out but it was the lower numbers in between that he was judged on) and back to the present, and guess what? A whole lot of people said no.

It doesn't matter how trustworthy Barack Obama is or how cool he seems, if he is tagged with making millions of people unhappy then he stands no chance at reelection and with the current economic numbers and the inability of Washington to do anything good for the economy, one never knows.