Category Archives: Economics

Making room for both the forgotten man and the rugged invidvidual

The last 90 years of American politics and economic philosophy has been a conflict between two philosophies. The philosophy that made America, that of rugged individualism, equality of opportunity and free markets. The other is the philosophy of Franklin Roosevelt, that policy needs to focus first on the forgotten man. An interesting question is there room for both at the policy table? The left would tell us that income inequality is the issue of our time. Income inequality is a not a problem, any more than inequality of talents, ambition, goals, or activities is a problem. Not everyone should earn the same because not everyone wants to earn the same, not everyone does the same thing, not everyone wants to live in the same type house or drive the same car. If we do different things, want different things, and contribute different things then why would we want to earn the same thing? America Read more

2016 Economic Freedom Index

The United States is stuck in slow growth and has declined in freedom the last 7 years and now has its lowest score in the history of the index. It has dropped to 11th worldwide behind the United Kingdom, Canada, Chili and several Pacific nations. Hong Kong and Singapore are the leaders in worldwide economic freedom. Still out of 186, the United States is in the top 10%.

Economic Inclusion is the Key to Prosperity

The City of Dover decided to take a wrecking ball to its economic development department in spite of 5 years of work that has brought hundreds of millions in new private investment, filled empty box stores, changed the Garrison Track into the Garrison Technology Park. We finally began to address workforce development, gained needed investment to implement a downtown strategy through Restoring Central Dover and the Downtown Development District and began business training reaching all segments of the community through the Ice House project. We now have a committee charting strategy. While it was a mistake that got us here, it is an opportunity to get us to a consensus that could prove very beneficial to our city. The Mayor is the chair of the Economic Development Committee (thanks to my motion) and has already made some positive moves including the addition of our best expert with Read more

A discussion of socialism

How can anyone not know that free stuff isn't really free? The question is do you have control over how much you pay and what you get or does some bureaucrat determine those factors? Central planning doesn't work. Who is trying to move into North Korea? Government dictating prices, payments and services offered by doctors, hospitals, and nursing homes is not good. It wouldn't be any better at the college level. Why would we want to turn our collegiate system into the wonderfully ineffective and inferior system of a public high school? The first semester and often the first term at most public colleges for a large percentage of students is bridging them from high school. Most people no longer graduate in 4 years partially due to this fact. Free is expensive in that either the quality will go down as it becomes almost universal or the cost will go up to accommodate those who are Read more

Independent Report Assesses Delaware’s Spending and Revenue Situation

By: Wolf von Baumgart, Staff Writer An independent report has assessed the State of Delaware’s spending and revenue patterns and its possible impact in the context of the general economy. The non-partisan 27-page report, Delaware’s Structural Budget Problem: Causes, Potential Solutions, and Policy Tradeoffs, prepared by Michael C. Genest and Brad D. Williams of Capital Matrix Consulting, was commissioned by the Delaware Business Roundtable in an effort to offer constructive suggestions for the state’s budgetary and revenue raising processes. Well-illustrated with graphs, charts and tables. the study also illustrates some key state spending parameters and its analysis raises serious questions on how the State of Delaware raises and spends money in light of the current economy. Highlights include: • Delaware’s revenue portfolio is generally poorly structured. Read more

Tax Reform for Delaware

In 2009, Delaware brought back the Estate tax. It hardly brings in any money (this year's projection is just over 4 million dollars) and discourages rich people from staying here or moving here. It may cost us as much as it brings in. A commission on revenue recommends eliminating it. I applaud their recommendation. The tax may make sense in theory but it does not work at a state level to bring in revenue. It just encourages people to move to Florida. Other recommendations seem to lack any real creativity such as cutting the charitable deduction and pension deductions then lowering the top rate. I am sure the progressives in the state love the idea of cutting taxes on the rich instead of adding another bracket so the top tax bracket is not 60k of taxable income. I expect a heated debate within the Democratic Party. At least the commission put aside a statewide property tax for now. Read more

China’s Economy not really as big as ours

China's purchasing power may be as great as ours. It is the first step to China's climb into the top position. Reports that China has the World's largest economy are premature. It is only by one measure, purchasing power while all other measures show the U. S. solidly ahead. It also is an estimate Marketwatch did without having data to analyze after the year ends and may be off 15% either way. In other words, it is more useful as a headline than a fact. Forgive me for not hyperventilating over the headline. Still, it should open up a discussion. In the 1870's, the U. S. took over from the U. K. as the world's largest economy, at the rate we are not growing and China is, sometime in the next 15 years, China will prove their theory that the history operates in 500 year cycles between East and West. The good news for the U. S. is that we are a Pacific Rim nation. We are poised to profit Read more

Where is the recovery?

Delaware's unemployment rate has been going up even as the national numbers have been falling the last few months. The latest U. S. jobs numbers are encouraging, but it is still noteworthy that we still have not recovered the income or jobs that we lost in spite of massive stimulus from both the fiscal and monetary side. The U-6 which measures the real employment situation of full time workers shows 11.8% unemployment rate. A large number of workers are working part time or temporarily when they want full time work. Women have been negatively impacted. The labor participation rate of white women is still dropping and is at its lowest point in years. The unemployment rate for black women has been at 11% until this last month when it dropped to 9.6%, but unemployment for black men went up over 11% leaving the black unemployment rate close to 11%. Nearly 19% of white youth are unemployed Read more

Question of the Week–Why is Delaware’s Economy Stalled?

The unemployment rate in Delaware has remained frozen at a level higher than when our ruling Democratic party took sole control of the state government. Even more disturbing, Delaware is losing ground against the nation (now predominately led by Republican Governors). Delaware no longer enjoys a rate lower than the nation. Of course the official rates are an understatement; the real national unemployment rate is 8.8% (U-5) and the underemployment rate or U-6 which is the broadest measure of unemployment is 14%. Delaware does not fare well by that measure either at 14.1%. In fact Delaware and Connecticut are the only two states that did not see an improvement in any of the 6 measures of unemployment year over year from July 1, 2012 to June 30, 2013. The average weekly wage downstate is only 75% of the national average. It is not that we do not have bright and energetic leadership Read more

Guest Opinion on Immigration Reform

Amnesty Driven by Voodoo Economics By Jonathon Moseley Voices calling for amnesty do not really understand economics or free enterprise. They offer garbled misconceptions -- with graphs. But they would be kicked out of the economics courses I took in business school. The pro-amnesty camp argues from "voodoo economics." Amnesty will grow the economy, they argue. Well, if there are more people, technically the economy will be bigger. But each person may be poorer. A growing economy is only 'better' if the economy grows faster than the population increases. Otherwise, each individual is worse off among a larger crowd. Gross Domestic Product (GDP) measures total activity -- not household income for each individual family. Amnesty will create a worse economy for everyone, even if total GDP is larger. (Actually, amnesty just transfers workers from Mexico to the U.S.A., so there Read more

6.6 Trillion Federal Deficit by GAAP based Accounting

New rules have been imposed by the accounting powers on state and local governments to show future liabilites. What if the Federal government had those same rules apply? Economist W. John Williams has the numbers. The 2012 fiscal condition of the United States suffered its worst annual deterioration in the history of the Republic. Based on generally accepted accounting principles (GAAP-based accounting), the actual federal deficit hit a record $6.6 trillion in the year ended September 30, 2012, a level that was fully 42% of the nation’s annual GDP. The GAAP-based annual deficit differs markedly from the headline cash-based accounting version, which showed a $1.1 trillion cash shortfall in the government’s 2012 day-to-day operations. Using GAAP-based accrual accounting, though, as typically used by private corporations, the government’s day-to-day operations were shown Read more

European Economic Turmoil

Nothing seems to satisfy the investors. Great Britain did everything the big bond guys say they wanted, austerity through radical spending cuts and tax hikes. They were rewarded with slow economic growth prospects and downgraded from AAA. Italian voters have rejected the austerity path of pay the bankers first followed by the current government, and the bond markets are in a turmoil. The French decided to pretend they can just tax the rich and their economy is in standstill. The outflow of capital to bail out everyone else is helping slow the mighty German economy based strongly upon exporting to a world cutting back. Is there a catch 22? If you do not control debt your economy implodes, if you follow the IMF path of austerity, you suffer short term slowing and they still lower your ratings. There is no wonder policy makers are confused. I believe the casualty in this could be the multinational Read more

Obama and Sequestration, What’s He Gonna Do?

Caught in his own trap, in an effort to propose an ultimatum so laughable and obvious that it backfired, Obama could have caused a lose-lose situation for his administration and the country. Jack Lew, former director of Obama's office of Management and Budget and Rob Nabors, the president's Legislative affairs director brought the idea of a "sequester" to Senate Majority Leader, Harry Reid July 27, 2011. The idea evolved and a failure of Congress and the White House to agree on substantial deficit reductions would trigger automatic accross-the-board budget cuts. Members of both parties voted for that provision and Obama signed it into law. But the New Year's 2013 deal that raised taxes to avoid the "fiscal cliff" also delayed the sequester's impact -- $85 billion over the rest of this fiscal year -- until March 1. Democrats expected all along that some agreement would exterminate the Read more

Economy Strong and Growing, Job Creation New High–Oops

I thought the economy turned around. Didn’t we get that impression during the election? When you wondered how fewer jobs equaled lower unemployment, you were told that you were being too negative. Now we know the economy shrank ever so slightly or at least did not grow in the last quarter, and now unemployment is inching back up. Part of the shrinkage was the fact manufacturers did not build more inventory for Christmas but sold it off because they did not have confidence in the economy. If that were not true, the economy would have had very tepid growth. What is clear is that America is stuck in a Japan lost decade scenario with little hope of recovery anytime soon. High Debt and more regulations equal slow growth where ever it is tried.

The Good News: Obama Rejects Trillion Dollar Coin

The Obama Administration rejected the trillion dollar coin idea floated by some progressive economic lunatics. The idea is lunacy because once the U. S. created such a coin to fund the deficit, it could create 16 more to pay off the debt. Such a move as the trillion dollar coin would hyper-inflate the currency cutting the value of the money in half. The fear of more would cause an international run on the dollar and a sell of American debt. We would become dependent on monetizing the debt instead of bringing money into our economy to fund it. Good for them. The bad news is that we are doing the same thing on the installment plan except instead of owing the money to ourselves, we are letting the bankers own the debt. At least with the trillion dollar coin idea, we would not have to pay the money back. Over the last few years, we have engaged in quantitative easing, which has increased Read more

Paul Craig Roberts Calls Fiscal Cliff a Hoax

Instead, he warns people to keep their eye on the real problems. The “fiscal cliff” is another hoax designed to shift the attention of policymakers, the media, and the attentive public, if any, from huge problems to small ones. The fiscal cliff is automatic spending cuts and tax increases in order to reduce the deficit by an insignificant amount over ten years if Congress takes no action itself to cut spending and to raise taxes. In other words, the “fiscal cliff” is going to happen either way. The problem from the standpoint of conventional economics with the fiscal cliff is that it amounts to a double-barrel dose of austerity delivered to a faltering and recessionary economy. Ever since John Maynard Keynes, most economists have understood that austerity is not the answer to recession or depression. Regardless, the fiscal cliff is about small numbers compared to the Read more

673 Economists Signed on to Endorsement of Romney Economic Plan

Almost 700 ecomomists have publicly endorsed the Romney plan, the question is will you? The Obama propaganda machine tells you that the choice is going back to the Bush Policies or forward with Obama Policies. They say nonsense. In response, former President Bill Clinton said at the Democratic National Convention that Mr. Romney would return to “the same old policies that got us in trouble in the first place.” No, the Romney plan rejects such policies, including perpetual support of poorly regulated housing-finance agencies, such as Fannie Mae and Freddie Mac, which got us into the mess. Mr. Romney also argues against the easy-money policy by the Federal Reserve that helped lead to the crisis. Critics complain that Mr. Romney’s tax proposals favor the rich. Actually, he wants to eliminate or limit deductions from special provisions in the tax code for high-income Americans Read more

For Newer Readers–Lessons from Japan’s Lost Decade originally written July 2009

The Economist said earlier this 2010 that the Lost Decade in Japan may look good in comparison to what may be in store for us. It may be smart for us to look closer at the Lost Decade. I plan a three part examination. The nation of Japan suffered through over a dozen years of almost no economic growth. The nation shackled itself with Kyoto Protocols, which restricted fossil fuel emissions. The nation had a huge increase in public debt as the government put up one stimulus after another. It protected banks as too big to fail. It tried to protect favored corporations. All of this was to no avail. Japan 101 described the problem. The economic miracle ended abruptly at the very start of the 1990s. In the late 1980s, abnormalities within the Japanese economic system had fuelled a massive wave of speculation by Japanese companies, banks and securities companies. Briefly, a combination of incredibly Read more

Could The Overleveraging Be a Tax Reform Issue?

From the Fair Could heavy corporate debt and an underperforming economy be traced back to your tax dollars? An intriguing article published on the popular investment site, The Motley Fool, details a huge problem with our current tax code and makes this point. The article, Stop Bribing Companies to Lever Up, lays bare the backwards logic of our government essentially bribing American companies – with your tax dollars - to finance corporate investments with debt. It begins: Go ahead and pull out an income statement for your favorite stock. I'll wait. You'll notice that there is a line called "Interest Expense" that comes before the "Tax Expense" line. Now notice the absence of similar lines for "Dividend Expense" and "Share Buyback Expense." No, I'm not trying to bore you with an accounting lecture. I'm trying to point out a travesty of modern finance: the unequal Read more

Kavips Takes Over France

Actually, if France adopted the entire Kavipsian Economic Plan, it would have a chance, but alas it seems to only like the tax increases. France has a national debt of 91% of GDP and is quickly heading to the danger zone of a debt larger than the economy like Spain, Greece, Iceland, and Italy have which resulted in real problems. France's solution is to freeze not cut spending and hike taxes with a top rate of 75% and attack investments which is the one area of the economy which is keeping its economy from contracting. The socialist government of Hollande seems to have the same solutions as the left wing of the Democrat party in America. On the other hand austerity based on cuts and tax increases like some propose here are not going so well in Britain. The British coalition has belatedly realized that you must stimulate private demand in combination with cutting public consumption Read more

What is really wrong with the You Didn’t Build that

This quote has more legs than I ever would have thought. Let, me point out the President is right for most of the quote. Success has many siblings. No one did get where they got in a vacuum. As a Christian, I believe that the grace of the Sovereign Lord is somewhere in the mix. I believe that it is an investment to keep the infrastructure of success in the American system going. Education, roads, charities, and more are vital to our society being better and more prosperous. Where my dear President seems to have jumped the track into the ditch on the other side (the left side of the road I may add) is that success may have many siblings, but only one person births your success, that is you. They did in fact work hard, have a good idea, and make smart decisions. Sure they may have been blessed with good timing, just like a farmer benefits from good conditions, so do ideas, Read more

Italy Proposes Balance Budget Amendment

The markets around the world went up because Italy proposed to deal with its debt woes for real. Please respect's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email to buy additional rights or use this link to reference the article - News of the Italian plans were welcomed in Berlin, where action in both Rome and Madrid has been seen as top priority for restoring the credibility of both countries in the debt markets. The talks in Rome, joined by Gianni Letta, cabinet undersecretary, represented the first significant departure from Mr Berlusconi’s failed efforts to ride the storm by largely blaming external forces and market “speculators” for the sharp increase in Italy’s borrowing Read more