Common Sense Economics

I want to talk a little about economics. Admittedly I am not an economist, but I’m also not an idiot. I like to think I have, at the very least, an average amount of common sense. Using that common sense is how I am going to discuss economics.

Let’s say that I have a product. It doesn’t make a difference what the product is so long as it is something that other people either need or desire. I know that I want to maximize my profit on this product. The question economically is how? Do I sell as many as possible? The logical way to sell as many as possible is to price my product at my costs. But that doesn’t maximize my profit. In fact there is no profit selling at cost. OK so let’s raise the price as much as possible. Well I am now maximizing my profit on each unit of my product, but I’m not selling nearly as many. So I’m still not maximizing my profit. In fact if my price is too high I won’t sell any at all. In order to maximize my profit I have to find the price that is somewhere between selling at cost where there’s no profit and pricing it so high that I’m not selling any at all where there is again no profit.

This is how the tax structure should work. Obviously if the tax rate is zero revenue to the government will also be zero. Conversely if the tax rate is 100% revenues will also be zero. Who is going to want to work if every cent they make is confiscated by the government? The optimum tax rate has to fall somewhere between zero and 100%. There is only one way to find out what that rate is and that’s to change the rates until the optimum rate is found.

Back in the 1980’s when the Tip O’Neill lead Congress and Ronald Reagan lowered the tax rates revenue to the treasury increased. In fact they more than doubled. This shocked many of the experts who expected just the opposite to happen. Unfortunately for every dollar that the treasury took in Congress spent two dollars, but that’s a different topic. Not only did revenues to the treasury increase, but employment went up as well. How could this have happened? The answer is pretty simple. When people are able to keep more of what they earn they are able to spend and save more. When they spend more demand for the products they want goes up thereby causing manufacturers and service providers to hire more people to meet the demand. More people being employed means there are more tax payers contributing part of what they earn into the treasury. If instead of spending more they decide to save what the government is no longer taking this is also good for the economy. More money being saved means lenders have more funds available to loan. More funds available to be lent means interests rates go down. When interest rates go down people and businesses are more willing to take out loans. Individuals use these loans to buy houses, cars and all sorts of products. Businesses use these loans to expand their businesses thereby producing more goods and services and hiring more employees to provide those goods and services.

Now let’s stop and think for a second. If lowering the tax rates does all of this good stuff what happens if tax rates are raised? Just the opposite happens. Treasury revenues go down and unemployment and interest rates go up and the economy contracts.

...Than For One Not Guilty Person to be Convicted

Here I go again. Once again I find myself sitting here about to complain. What is it this time? The Casey Anthony trial is the short answer. Actually it's not the trial itself or even the verdict. It's the reaction to the verdict. I know this trial was on T.V. and that thousands of people watched at least part of it (I am not among that number). However many thousands tuned in I doubt very much that anyone other than the jury, the judge, the prosecutors and the defense team heard and saw every piece of evidence that was presented.

It is painfully obvious that school systems across the United States need to bring back Civics as a core requirement. I was taught in school that our judicial system is set-up so that it is better for ten guilty people to go free than for one not guilty person to be convicted. This might sound stupid to most people and to a degree it is. It's stupid right up to the point where you're the not guilty person.

Juries do not find defendants innocent. They find defendants either guilty or not guilty. Just because a jury finds a defendant not guilty does not mean that the defendant was innocent. It merely means that the jury did not find enough evidence to convict.

All juries are charged with weighing all of the evidence and testimony that was presented to them and to come to a verdict based on that alone. If they are to come to a guilty verdict they must be convinced beyond a reasonable doubt. Take notice what that says. It doesn’t say up to a reasonable doubt. It says beyond. It means that before voting guilty a juror must know in their heart that the accused did the crime. No matter how heinous the crime it is not a jury’s job to see that the victim gets justice. That’s the job of the prosecutor. The prosecutor must present a case to the jury that convinces them so fully that they cannot possibly vote for acquittal.

When a trial begins the accused is to be considered not guilty by each and every juror. If after all of the evidence is presented and the closing arguments are made a juror is convinced beyond a reasonable doubt that the defendant did the crime then, and only then, should they vote to convict. They should not and must not vote to convict if they feel that the defendant probably did the crime. If you have a feeling about something you’re not convinced.

Since the verdict in this case came down on July 5, 2011 I have witnessed on social media outlets a backlash against the jury. People have been crying out that justice for Caylee has been denied. Their fury is misdirected. If their outrage should be directed at anyone in this case it should be at the prosecutors. The prosecutors didn’t present the jury a convincing enough case that left it with any choice but to acquit.

The day after the verdict juror number 3, Jennifer Ford, said on ABC News "I did not say she was innocent," but also, "I just said there was not enough evidence. If you cannot prove what the crime was, you cannot determine what the punishment should be." Another juror, juror number 2 is quoted in the St. Petersburg Times as saying "everybody agreed if we were going fully on feelings and emotions, she was done”. “I just swear to God...I wish we had more evidence to put her away. I truly do...But it wasn't there." It is obvious that the jurors took their responsibility very seriously. And that is as it should be.

What Part of Limit Don't They Understand?

Our representatives in Washington DC are at it again. Some of them are insisting that the national debt limit must be raised. This country is $14 TRILLION in debt already and they want us to go further into debt. Maybe I shouldn't have spelled out trillion as that doesn't show exactly what I want it to show. Here's what it looks like as a number; $14,000,000,000,000.00. Yes, that's 12 zeros before getting to the decimal point.

What does that mean to you and me? Well, based on the 2010 census, the U.S. population is 310 million. Dividing $14 TRILLION by 310 million means that each of us is in debt to the tune of $45,161.29. That's over and above your mortgage, car payments, college loans and any credit card or other type of personal debt you may already have. My household consists of 3 people so combined our share of the debt is $135,483.87.

Unfortunately the $45,161.29 figure is also too low since only people that actually pay taxes are really in debt since they’re the ones that will actually pay it. According to the Bureau of Labor Statistics May 2010 figures the unemployment rate was 9.1% or almost 14 million people. Further, while I am aware that there are tax payers that are less than 17 years old, the vast majority of those younger than 17 don't pay taxes. So we now have to deduct 74,181,467 (according to the 2010 census) from the 310 million. That brings the number of people that can pay the national debt down to almost 222 million people. Now deduct illegal immigrants which is conservatively estimated at 14 million (a figure I personally think is low) people. Now we’re down to 208 million. Guess what that does to each of our shares of the national debt. It brings it up to more than $67,300.00. If you're married that's $134,600.00 for you and your spouse. If those in Congress that want to increase the debt ceiling get their way all it will do is increase your share.

So what should Congress do? Do I really have to spell it out for you? In your household, if you, for whatever reason, went credit card crazy and increased the amount you owed to an almost unreachable ability to pay off, what would you do? I can tell you what I would do and have done. I cut up the credit cards and quit making the hole I was already in any deeper. It's that simple. No matter what those that want to increase the debt limit say, it is that simple. If you agree I beseech you to contact your Congressional representative and Senators and tell them to cut spending and do not attempt to increase the national debt. Things may be, and probably will be hard for a while as they were for me, but in the end a valuable lesson will have been learned. And we will all be better for it.

Ch Ch Ch Changes

On the first day of my college philosophy class the professor asked, by a show of hands, if it was possible to step into the same river twice. Almost all of my classmates thought that of course you could step into the same river twice. I didn’t raise my hand. The professor noticed this and asked me why? I told him that because rivers flow and time constantly moves it was not possible to step into the same river twice. The river wasn’t the same river the second time it was stepped into nor was the person that stepped into it. If nothing else, they were both older. My professor agreed with me and announced that there is one universal constant in life. That one constant is flux. Everything that ever happens everywhere is in a constant state of flux. What is flux? Flux simply means change.

Life is constantly changing and you never know when and how it will change. Last night I was home relaxing watching American Idol. Outside there was an early spring mixture of snow, hail and rain. Other than the weather it was just a typical Tuesday night with nothing going on. Then the phone rang. How often is it that our lives suddenly change and it begins with the phone ringing? The caller ID said it was coming from Nicky’s (my nephew/god son) cell phone. This in itself wasn’t unusual. My nephew is a responsible, caring young man. He’s taking some evening classes at the local community college two nights a week. For convenience sake on the nights that he has classes instead of going home he sleeps at our house. So getting a call from him on a night he’s expected to be with us telling us he’s going to be late or that he’s already eaten, or that he’s going to the gym isn’t out of the ordinary. My wife answered the phone and it wasn’t that typical phone call. He was calling from his car where he was pinned in because he had just been in an accident. Shortening the story, other than some superficial burns on his arms from the airbag and his knee being somewhat banged up, he’s expected to be fine.

On October 14, 2001 my son Robby was diagnosed with leukemia. He was 12 years old. He underwent 3 ½ years of treatment and is fine today. It goes without saying that his, my wife’s and my lives were profoundly changed because of that diagnosis.

My point in writing about change is that there is no avoiding it. And being that there is no avoiding it we have to accept and deal with it. You’ll notice I didn’t say embrace it. Who would want to embrace having their child diagnosed with leukemia? Or having their car totaled? No sane person would embrace those situations. However we can and must deal with changes. On the night of learning about Robby’s leukemia my wife Janice and I were devastated. This devastation lasted just that night. Janice stayed with Robby at the hospital while I went home to care for our dogs and get some essentials. When I got home I sat on the couch and bawled my eyes out. Naturally I prayed. I also sent an email to every one of my contacts letting them know what was happening. The next day I went to the hospital where Janice and I set our minds on what had become the one overriding goal in our lives, curing our son. From that point on we dealt with this change that fate had put in our path. We didn’t embrace it, but we did deal with it. And that is what everyone has to do with change.

A People to Admire

As anyone that has a radio, television or is able to read a newspaper knows last week the nation of Japan was struck with an earthquake measuring 9.0 on the Richter scale and numerous after shocks. If this wasn’t bad enough this quake was followed shortly thereafter by a devastating tsunami. These twin disasters have, as of 3/15/11, killed a confirmed total of 3,373 people with the death toll rising every day. Estimates are that the total killed could be more than 20,000. Along with these natural disasters is a potential disaster of melt downs in nuclear power plants. Millions of people are now homeless where whole towns have been washed away.

How have the Japanese people responded to what has happened to them? How are they dealing with the shortage of housing, food and fuel? Well the answer as of this writing is remarkable. I have not seen, heard or read about any civil unrest in Japan. While I am not surprised by this I have to express my heartfelt admiration of the Japanese people. While I would hope that if a disaster of this magnitude were to have occurred in the United States the people of this country would respond similarly I have extreme doubts this would happen. I have good reason for my doubt. Do you recall what happened after hurricane Katrina hit the U.S. gulf coast? If you need a reminder take a look at this video. Post Katrina Looting  As Carl Quintanilla noted even those charged with preventing this from happening were involved in the looting. He said they were police, but to me they looked like they were security guards Regardless of whether they were police or rent-a-cops doesn’t make a difference. Their behavior was just plain wrong, and they knew better. I would ask that you compare that behavior with this report from the 3/15/11 airing of the NBC Nightly News with Brian Williams. Extraordinary Resilience (you have to watch the commercial before the story) A stunning difference, don’t you think? We should all strive to follow the examples the Japanese people have displayed.

They Are Illegal

I am under no delusion that the problem with illegal immigrants has a simple solution. I am fully aware that with the exception American Indians (and don’t bother me with the term being Native Americans since every American Indian I know prefers American Indian, not Native American) every citizen of the United States is either an immigrant or descended from someone that immigrated. We are a nation of immigrants and as Bill Murray said in the movie Stripes “We’re Americans! With a capital A! Huh? You know what that means? Do ya? That means that our forefathers were kicked out of every decent country in the world.” Now obviously the vast majority of our forefathers weren’t kicked out of their homelands. Many came for the opportunity this country provided, some came to escape the oppression of their former countries, others were stolen or sold to be enslaved and yet others came to escape some type of natural disaster. Regardless of why or how people came to the U.S. we’re all immigrants. Thanks to these immigrants the U.S. came to be the world’s only super power and we live a life that is distinctly American. We are one of the only countries in the world where the lyrics from Brad Paisley song American Saturday Night are true.

Woahhhhh woahhhhhhh
She’s got Brazilian leather boots on the pedal of her German car
Listen to the Beatles singing back in the USSR
she’s goin’ around the world tonight
but she ain't leavin him
she’s just going to meet her boyfriend down at the street fair

It's a French kiss, Italian ice
Spanish moss in the moonlight
just another American Saturday night

There's a big toga party tonight down at Delta Chi
they've got Canadian bacon on there pizza pie
they've got a cooler for cold Coronas and Amstel lights
It's like were all livin' in a big ol' cup
just fire up the blender, mix it all up

It's a French kiss, Italian ice
margaritas in the moonlight
just another American Saturday night

you know everywhere there's something they’re known for
although usually it washes up on our shores
my great great great granddaddy stepped off that ship
I bet he never ever dreamed we'd have all this

You know everywhere has somethin' they’re known for
although usually it washes up on our shores
little Italy, Chinatown, sittin' there side by side
live from New York, It's Saturday Night!

French kiss, Italian ice,
Spanish moss in the moonlight
just another American, just another American, its just another American Saturday night

In the late 19^th and early 20^th century the U.S. had a huge influx of immigrants. Between 1881 through 1930 over 27,500,000 people immigrated to the U.S. Other than being immigrants, do you know what else they all had in common? Each and every one of them was documented. The government had a record of who they were and they had a legal standing to be here. Unfortunately today it is estimated there are between 11,000,000 and 15,000,000 illegal aliens in the U.S. The politically correct term is undocumented alien. That’s a bogus term. It’s a term that someone made up to disguise the fact that what is really being discussed are people that are committing a crime. Therefore they are not undocumented aliens, they are illegal aliens or illegal immigrants if you prefer. Regardless of which term you prefer the point is that they’re in the U.S. illegally.

One might say, so what? It’s no big deal and has no effect on me. Well that’s not true. It’s estimated that illegal immigrants cost U.S. tax payers $113 billion. That’s over $1,100.00 for each native household. Of that $113 billion nearly 75% of it ($84 billion) is burdened by state and local governments. For states with lesser numbers of illegal aliens the $1,100.00 figure is smaller, but for states like California, Texas, Florida and New York with huge populations of illegal aliens that figure increases exponentially.

The biggest cost created by illegal immigrants is the education of their children with an estimated outlay of $52 billion. But wait a second, aren’t these children U.S. citizens, and shouldn’t they be educated? So how can the cost of their education be included in the illegal immigrant expenses? The answer to that is simple. First not all of these children are U.S. citizens and secondly for those that are U.S. citizens if their parents weren’t here illegally they wouldn’t have been born here, Therefore they wouldn’t be afforded the education they’re currently being provided and wouldn’t cost the states and localities.

Now if the costs of educating illegal aliens or the U.S. born children of illegal aliens doesn’t bother you, although I can’t imagine why it wouldn’t, perhaps the effect the illegal alien has on the job market does. Don’t misunderstand me on this. I have no doubt that those illegal aliens that are working, whether on the books or as part of the underground economy, are hard workers. That’s not the point. The point is that if they’re working it means that a U.S. citizen isn’t working. Some say that illegal immigrants are only taking jobs that Americans won’t take. That’s ridiculous. We currently have unemployment of nearly 10%. Americans will do those jobs. What Americans won’t do is be underpaid for doing those jobs. Illegal immigrants will take jobs where they’re underpaid and because of their illegal status they’re exploited. That is good for neither the illegal immigrant nor the native worker.

What needs to be done? First and foremost we need to secure our borders. They are much too porous. This is not a reflection on the border agents. We simply do not have enough of them. Along with stemming the tide of illegal aliens this will also have the side benefit of slowing down the smuggling of drugs into the country. Secondly since the current penalties on employers that hire illegal aliens don’t seem to be enough of a deterrent they need to be much more severe. Right now there is no deterrent to crossing our border illegally. Those that are caught are simply sent home. So my third proposal is to build and then populate prisons for illegal immigrants that are caught. Prior to sending them back home they need to be punished for violating our law. A first offense would be a mandatory 1 year sentence. A second offense would be 5 years. A third offense would be 10 years. There would be no parole on any of the sentences. Is this too severe? Not when compared to the laws of Mexico. Under Mexican law, illegal immigration is a felony. It is punishable by up to two years in prison. Immigrants who are deported and attempt to re-enter can be imprisoned for 10 years. Visa violators can be sentenced to six-year terms.

Time to End the Segregation

Ever since I was a kid I have been perplexed as to why this condition exists. As I got older I understood it to a degree, but to this day it still bothers me. What’s that you ask? The answer is simple. It’s segregation. But more specifically the most segregated hour of each and every week. That hour is when Christians worship. It is far and away the most segregated hour in any week.

The neighborhood where I grew up was completely desegregated. My neighbors, classmates and friends were of all different ethnicity. We went to school together, played together, hung out together and yes, got in trouble together. However when Sunday came around, with rare exception, we didn’t worship together. Now I know that to a degree some of that had to do with us being of different denominations and some being Catholics. I understand that. What I don’t understand is there being two churches of the same denomination with congregations that are predominantly of one race in the same area.

As I said earlier I came to understand, to a degree, segregation. That segregation I came to understand is what I’ll refer to as the segregation of commonality. This simply means people with things in common will tend to gravitate to one another. Using myself as an example, I am a huge fan of Walt Disney World. As I write this I’m wearing a Mickey Mouse watch and a Tigger rugby shirt. If I see two people that I don’t know, one wearing Disney paraphernalia and one not, I am far more likely to speak with the person with the Disney gear on than the other person. I do this because my initial perception is that I will have more in common with that person than the person not decked out in Disney. This may or may not turn out to be true, but it’s a starting point. I don’t have a problem with this natural segregation. People with things in common will naturally gravitate to each other (Poles to Poles, Irish to Irish, Blacks to Blacks, Hispanics to Hispanics and within Hispanics Dominicans to Dominicans, Cubans to Cubans and Puerto Ricans to Puerto Ricans) etc. etc. etc…

Recognizing this segregation during worship is the first step. The second step is obviously to do something about it. But the question is what? People, me included, have a comfort level in attending their home church. So I guess the first step is to come out of that comfort level and attend a worship service in a church that is predominantly of a different race. It doesn’t have to be a permanent change. Just do it a couple of times a year. I think you’ll find that while the ways we worship are different they’re all beautiful in their own way. And in the end what we’ll be doing is praising God which is what it’s all about anyway.