Thursday, December 30, 2010

How To Reduce Unemployment.

This article posted today at Real Clear Markets offers some good advice for POTUS to consider. In addition to these 5 things, I can think of a few additional items to consider.

1. Drop the corporate income tax altogether. Business make investment choices based on after-tax returns. Increasing those returns will give more marginal investments an opportunity to generate a return and produce more income to tax. This also avoids the double-taxation of business profits and put equity and debt financing on equal ground. By giving equity financing the same status a debt financing it should reduce the need for companies to take on too much debt making our businesses more stable and strong. No corporate income tax would also free up monies that no longer have to be spent to hire tax attorneys and accountants that add no value to a business.

2. Cut government bureaucracy by 50%. The more government employees you have, the more busy-bodies there are to create rules and regulations. Reduce the number of people then slash the number regulations by 50%. Do we really need a regulation of bath room fixture height? In addition, there should not be multiple government agencies with oversight of the same issues. Take customs for instance. There are no fewer than 5 different agencies with their hand in the customs clearance process. This is absurd.

3. Every state should be a right-to-work state. The federal and state government should ban unionization of their workforce. Work rules where the people paying the salaries have little to no say in those rules is wrong. A collective bargaining agreement that is under the influence of politicians is not good for the tax payers. This government unionization drives up the cost of labor with no increase in productivity. That is not good for the economy.

4. Remove the minimum wage entirely. You cannot pay $7.25 for labor that is only producing $5 in value. Sorry that is a recipe for bankruptcy or unemployment.

I am sure there are many more ideas out there. In general, government needs to get out of the way and stop driving up the cost to hire workers.

Sunday, December 26, 2010

Poor get richer too...

From another of my favorite blogs....

Living the good life

One can argue that the gap between rich and poor is growing. I tend to doubt this, but as Professor Perry points out, life is getting better for everyone.

Merry Christmas.

Health Care as a "Right"

This might be the best editorial on Health Care ever written:

From Cafe Hayek and Don Boudreaux

Could not be better said...

Friday, December 17, 2010

Big Business Evil?

Nicholas Taleb's new book sounds like a good read, but this short story on CNBC's website seems a little too harsh on the Big Businesses of the world. I know where he is coming from, but Big Business is good for our economy. For one, they hire lots of people. Two, they use capital very efficiently. Finally, they have scale and scope that allows them to develop better, cheaper products for us little consumers.

So why do people think Big Business is evil? My guess is that in several cases Big Business actually does do evil things. In almost every case that I can think of, this evil is in conjunction with the government. This might be in the form of some protective tariff forcing consumers to pay higher prices for lower quality goods or some how hamper a competitor. Evil might also be in the form of some special deal with a government agency where others had no chance to compete. Even worse, it might be a special bailout where losses were hoisted onto tax payers while the profits went to shareholders or company executives. No doubt these all are terrible outcomes of some Big Business activities.

However, there is no way Big Business can be evil unless it is aided by some sort of government influence. If market forces are allowed to work, unimpeded, the companies that fail to create value will fail. If you cannot compete with the import, you should go broke. If your capital is best spent on a lobbyist to get a special contract or provision to available to others, you should go broke. If you have sufficient influence in DC to subsidize losses and privatize profits, you should go broke.

We need to encourage and enable Big Business to get there in a free market not through collusion with Big Government. Our big corporations are a treasure, not a curse. Let's hope they can avoid the temptation of being evil.

Monday, December 6, 2010

US World Dominance

I have read several articles lately and one by Michael Elliott in Fortune Magazine I found particularly interesting. In the article he basically makes the point that the US is no longer as dominate, relatively speaking, as it was after WWII and that's okay.

I completely agree. A higher standard of living around the world is a great thing. The US does not need to produce 50% of the value in the world economy like it did in the 1940's. Producing 20% of a bigger pie is great for America and the rest of the world. It means more ingenuity, creativity and larger markets for products. Higher standard of living tends to limit population growth, conserve energy and clean up the environment. Of course there is a lot of work to bring the rest of the world up to the living standards of the US, but that would be a great thing, not something to fear.

Rising world prosperity would mean a smaller role for the US (think smaller fish in bigger pond), but that would probably due our hubris some good. There will most certainly be fear mongers out there that will claim this is a reason to be concerned. It's not. With a higher standard of living, nations will be less inclined to start wars as citizen will be more content with their political world. It also might mean the US will stop getting so involved in the affairs of others and we can focus on domestic problems.

In any event, everyone living longer with a better quality of life is something to embrace, not fear. I hope we can live with that...

Visual Statistics

Simply amazing...