Friday, October 5, 2012

- Ohio's Children

In the comment section Dr. chess raised an issue that I think illustrates a weakness not only of the Romney campaign, but in the conservative position in general.

The Obama campaign is operating under the belief that higher income tax rates will result in higher tax revenues for the state. Evidence which supports this view has been something that liberal economists and policy makers have been hoping to see for decades. The closest they got was a study by the CBO which said that thanks to various issues, the original 'bush tax cuts' didn't pay for themselves.

Obama got elected on that principle, and liberals now refuse to concede the free market point. As far as they're concerned, if the government taxes away money and then spends it as it sees fit, this is at least as efficient a use of money economically, as allowing people to keep what they earn and spend or save it as they see fit.

This isn't true of course. In reality the laffer curve is indisputable, and lower rates will result in higher revenue. But unfortunately the intellectual waters are now muddy enough to give the top down economic planning types all the ammo they need. They have so dominated the airwaves, and are so beloved by their fellow travelers in the mainstream media, that many members of the voting public are no longer convinced that the basic principles of free market economics are true. This is right where the Democrats have wanted them to be .

It's not just a case of convincing snookie that "this time it really is different". It's become a remarkably mainstream view that the free market is a dangerous thing, and a top down planned economy is better for everyone except the evil rich. The pervasiveness of that view is the whole reason Obama isn't being chased from campaign event to campaign event by angry mobs who are enraged at his mishandling of the economy.

I think this piece highlights that. It talks about how the people of Ohio long for the security of the blue model - a state run life of unions and defined benefit retirement. Given Ohio's under performance during the multi-decade long Reagan initiated boom years, I'm not surprised. In every endeavor someone is first and someone is last. And the folks that stay in Ohio to make their way seem to be close to the latter than the former. But somehow we need to explain to them how that ship has sailed.

You can still have stability of course, but you can no longer have it at a level that feels like it's 'close enough" to how well everyone else is doing. There were no iphones and no cable TV in the heyday of Ohio. If they want assurances and guarantees from the rest of us (someone will have to pay for it after all) then they'll have to do it at a much lower level than they would like. But if they want the kind of comfort and luxury that the rest of us do, they're going to have to pony up some effort for it, and take some risks.

There are risks in the world - there is no getting around that. So if you really want to be exempted from them, then your only option is to be tended to like a child. But Ohio's children don't get that. They believe they can have the assurance of the past with the lifestyle of the present. Since that attitude makes them slaves to an all powerful state, the Democrats are happy to let them believe that's so. And I'm worried that they won't face the truth of the matter until it's too late.

It's a simple case of telling the people what they want to hear long enough to get power. Some people respond to that better than others I guess.


chess said...

You just gave me chills.
You are spot on I have a friend from Ohio.Her dad was a steelworker 40 yrs ago.They thought they were rich. Excellent money .Defined hefty retirement plan.Then the "darkness " came . Her word for it not mine. Gradually the mill closed. Her dad kept his retirement but a lot of folks lost all of theirs, That started a lot of hatred with in the town. Then the dems and their travelling show came around whispering that free markets were bad .And yadda yadda yadda. Free market bad.Steel made in China bad.
She goes back now and then and says the people are like zombies.. That is a hard cycle to break.

chess said...

We just want to go back to Clinton level of taxes and we all remember what a great economy that was...Barf

Vanity - Economics vs. Simple Math
10/5/2012 | Egon

Posted on Fri Oct 05 2012 08:06:06 GMT-0600 (Central Standard Time) by Egon

I generally try to stay out of political discussions whenever possible. I have blood pressure considerations to keep in mind. Every once in awhile, though, something happens that really causes my blood to boil, and I’m forced to comment on it.

Last night’s debate provided one of those moments. I avoided watching the actual debate. I try never to listen to President Obama speak—I find his delivery unpalatable, not to mention his content. Instead, I watched highlights on various news channels, and even went to MSNBC to find out how the Left responded to the debate. One of the statements made by the Leftward pundits, this one by Rachel Maddow, struck me. I paraphrase:

“Romney lied. He said his five trillion dollar tax cut wouldn’t cost five trillion dollars. He’s talking about cutting X dollars from every person. That adds up to five trillion. It’s simple math!”
Let’s look at this. First of all, two very simple premises:
Life seldom employs “simple math”

Even simple economics does not equal “simple math”
Let’s use the extremely simplified example of a lemonade stand:
Let’s suppose I sell my lemonade for $1/cup. I sell to 100 people in one day. I make $100 that day. The next day, I cut the cost of my lemonade to $.50/cup. Simple math tells us that I’m only going to make $50 that next day. Ms. Maddow would happily go on the air and exclaim that “It’s simple math!”, and her viewers would take her (presumably educated) word for it.

That’s not how it works in real life, though. In real life economics kicks in. People that balked at my whopping $1/cup price would be much more willing to purchase a cup at $.50. There’s every possibility that I would double my sales. If I double my sales, I’ve still made $100. This is called Price Elasticity. Now this is a very simplified model, it doesn’t take into account marginal costs or other factors, but it demonstrates that, even with this simple model, “simple math” isn’t going to cut it—certainly not at the level that Ms. Maddow and, arguably, the entire Left practice it.

OK, so that’s the sales side of economics vs. “simple math”. What about the taxation side?

Well, with taxation, the “math” is even less “simple”. It’s still economics, mind you—but certainly not something that Ms. Maddow should be dabbling in. The following concept has been proven throughout our recent history:

If you lower taxes, tax revenues increase—not decrease.
The reasons for this:
People retain more of their income.
Everyone purchases more products.
Wealthier people invest in businesses
Businesses have more money to invest in production, and more incentive to, as people are demanding more product
Expanding businesses hire more people
As more people get jobs, the tax base increases
Moreover, as more businesses start competing for employees, wages must increase to stay competitive
As wages increase, the tax base increases
As wages increase, people purchase more…
Rinse… repeat
This is why, despite “simple math” telling Ms. Maddow and her hapless viewers that $X time the tax base equals less five trillion dollars, simple economics tells us otherwise.

chess said...

Tom. I believe it was you who originally posted this. It is resurfacing .Good

unless the Lord builds the house
those who have built it labor in vain.

How the hell do you boo that?????

ikaika said...

Allen West just politely told Tyler Mathison to eff-off!

CNBC trying their damndest to both rescusitate and excoriate Jack Welch's comment about the labor numbers.

Tyler went all ballistic on West.
West handled it like pro.

People should remind CNBC anchors that they are not experts because they appear on a program that discusses financial news.

chess said...

Dammit I missed it . I was over watching bug wars which is a whole lot more informative that cnbc. Earlier KarlQ tried to tie Jack's comment on Mitt. Mitt;s econ advisor folded Karl up like a used bbq toss away wipe into the trash can. He deflected it as well as I could ever imagine.Karl just zipped it.
So tomorrow am Lester the jester Holt will ask Liesman about the great news on unemployment and then he will toss up a softball for stupid steve to say that these numbers cant be fudged.
I ran so many chemistry and physics dry labs that you would have thought I could create cold fusion.. Everything can be fudged.Its a 114k you idiots.

chess said...

Hope this backfires. Mitt just needs to sqy sour grapes and move on from his crappy record.end of it

Obama Campaign Shifts Into Extreme Attack Mode
Fri Oct 05 2012 11:53:09 GMT-0600 (Central Standard Time) · by seanmerc · 13 replies
White House Dossier ^ | 5 Oct 12 | Keith Koffler
With its candidate having been swamped in the debate by an aggressive and articulate Gov. Mitt Romney, the Obama campaign is switching fully into attack mode, moving beyond earlier assaults on Romney’s business record and wealth toward a new drive to destroy his character. Casting completely aside the Obama 2008 brand of a hopeful unifier, Obama’s operatives Thursday dived straight the jugular, working on multiple fronts to brand Romney a liar. The campaign, Obama aides made clear, would henceforth be conducted exclusively Chicago style. In a vicious and personal assault rarely conducted at the highest level of U.S. politics,

ikaika said...

Yeah - I mentioned earlier that the New Hussein Election Theme is "Honesty and Accountability"

except of course when its directed at the President...

You can't make this stuff up folks.

ikaika said...

Oh yeah - I'm done for day.
Have a great weekend. Tomorrow - wife and I will be pursuing wahoo, blackfins and dolphin...

I hope my biggest problem is not having room in the cooler for some fillets.


chess said...

I hope those arent local girl scout troops.!! Have fun.

chess said...

Prez Sat am address...We are back to "its not my fault"' Come on congress just pass what I tell you to pass. Please send this 9 yr old home. waaaaaaaaaaaaaaaaaaaaaaa.

chess said...

And Meet The Press ..Newt against all of em.. I hear 2+2+2+2+2+2 ad infinitim....vs 2+2 and uh...
Newt has carved them up in under 10 minutes.. Now what do they do with the next 50...Uh