Sunday, December 7, 2014

Drinking the Kool-Aid

Overall, I agree with many points in the article, but the Libertarian Party would need to gain much-needed popularity before their calls would be taken more seriously. It does appear that the article has good intentions for the nation when it comes to increasing overall wealth, but downsizing the federal government to only a tenth of its present size may face great pressures. Much in the article sounds like a great idea, but making such great changes would require many years, if not decades. Simply firing most government employees does not seem like a good solution. This raises a question whether they actually know how much government spending is enough. 10 percent of current spending is a very small budget for such a large and wealthy country. I understand we have a great amount of government spending, but cutting the budget that much does not seem to be reasonable. Such a great claim that the government spending should be cut to a tenth requires great evidence to be taken seriously by me. I do understand that federal and state spending amounting to about a third of the GDP is high, but what ratio of government spending is ideal for the U.S.? This question raises many debates, but the article answers that question with very radically. What began as attempting to discourage the use of the term "government shutdown" ended with claims that the federal government should nearly disappear from our lives. Can the article focus on point without going all over the place? There was not enough evidence presented for me to be just "Drinking the Kool-Aid" and simply ignoring reality. 

Alternative Explanation

The article cites Jeffrey Dorfman's article to claim that there was no $24 billion loss for the U.S. economy. Dorfman's disputation of the $24 billion loss that S&P claims is weak. Dorfman states that he can't find any evidence for the number, then admits towards the end of his article that places where the economy is growing to to match the losses in places that the economy is shrinking can be "difficult" to find evidence of, despite evidence of the failing businesses being not only apparent but rampant.

The article relies on the idea of a "government shutdown" not really being a "government shutdown" until there is a tangible affect on the private sector's growth in a negative direction. If the economy is shrinking by $24 billion (which is certainly effecting the economy in a tangible way) then we can determine the conclusion of the article is false (or at least not supported). I'm not convinced that a "government shutdown" really is a "government slowdown".

Monday, December 1, 2014


In the article "Immigration Reform 2014: Economic Impact of Obama Helping Immigrants Includes More Jobs, Tax Revenue" by Morgan Winsor the topic of Obama's new immigration policies is discussed. Some of the common arguments against immigration from an economic side are that immigration places a heavy burden on schools, social welfare systems, overpopulation, and scarce resources. The article in question argues these against these points by proposing the fact that instead the incoming pool of immigrants would be a boon to the local economies in the form of increased jobs, increased labor income and increased tax revenues. It also brought up the fact that if these same immigrants were removed from their new homes in america the states would lose significant revenue and tax flow. What does SWEET think?

Sunday, November 30, 2014

A Nation of Immigrants

The U.S. population was almost entirely the result of immigration that occurred throughout many decades and centuries, so this country is essentially built by immigrants that began to call themselves Americans. Still, there is a heating political battle over immigration, especially because of terrorism, the drug war, and the national debt. Even though much attention has been provided to illegal immigration it appears that less was paid to legal immigration, and I view that as a problem. There are many who have drastically different views on the solution to the problem. I do not believe any solutions should be labeled as as strictly Liberal or Conservative because both sides constantly argue on how to approach the situation. However, the is little agreement in Congress between both sides as they fight political battles against each other, largely for monetary gain or self-interest. I believe the level of legal immigration should be increased and the illegal immigrants that lived in the U.S. for many years should be given a clear path to citizenship. I fail to understand why someone that may have lived in the country for many years should not be given the right to vote when they do not plan to leave the country and have so much interest in the nation's success. Obviously, allowing all the illegal immigrants a right to vote would significantly shift the political landscape, especially in political powerhouses like Texas, but I view that as a positive development for democracy when millions of people living in the country cannot vote today. I believe that immigration is great for the country to grow economically, culturally, demographically, and in general as it would increase the nation's decreasing weight on the world stage. I believe the nation's image would improve drastically on the international stage with more viewing America as an open and welcoming country. The labor force would increase and those struggling financially would finally get a chance for a better life, and this is important considering the country was built on immigrants and by immigrants. Still, other countries would lose their top intellectuals to America and less-skilled Americans may have fewer job opportunities with increased competition in the job market, but I view competition as a positive development that can decrease complacency of those without skills to encourage them to acquire valuable skills for the job market. There are many other factors to consider that I would rather leave for the Wednesday discussion. 


As a believer in free markets I believe that free exchange of one's labor and being able to travel unhindered will, in a free market, promote wealth. In our society there is enough subsidization that this is not the case. In a free market you have the motivation of wealth (or at least survival) to be productive; In the United States survival is rarely a motivation we encounter (I imagine the obsession with apocalypse scenarios is spawned from our innate desire to need to survive). Wealth, too, is becoming less of a motivation for productivity.

In this sort of society, those who are productive are drained to support those who are not productive. The end result is a decline in productivity and thereby a decrease in wealth.

I support freedom of travel, though. It will likely accelerate a descent into economic decay but that's OK because it was bound to happen anyway.

Sunday, November 16, 2014

Privatize or Increase Age of Eligibility?

What should we do about social security? There are many answers to this question that, in my opinion, tend to center on whether social security should be privatized or to increase the age of beginning eligibility. Some benefits to privatization would be the stock value getting an increase in value with billions of dollars being injected into corporate investment, which can be an economic stimulus. However, poor portfolio management can leave many retirees much worse off and the transition costs would be tremendous, which would drastically increase the deficit. Still, good portfolio management can be arise for many in historically safe long-term portfolios diversified from unsystematic or diversifiable risk, but there would still be systemic or nondiversifiable risk caused by the market. This means personal responsibility and ownership would be created for citizens' retirement, which means they would have a personal stake in the nation's economy and it could cause for benefit cuts that are believed to be inevitable without raising the age of eligibility. Also, it would allow for many in poverty to have a chance for a wealthy retirement, but the market risk could leave very large numbers of retirees in a bad financial situation if they happen to retire when there is an economic downturn they weren't protected from. Furthermore, there are less complicated corrections available to social security and the privatizing the system would take money away from an already underfunded system when current IRA's and 401K's offer practically the same benefits as private social security accounts. Thus, what should be done can depend on one's political, economic, or ideological beliefs that are definitely not universal. The question of what should be done is still not answered in my mind because I would want to see further research into the issue with concrete parameters discussed.

How to Change Social Security

Reading the article "The Social Security Myth" by Nick Newel the idea of the inadequacy and wastefulness of social security is explored. Nick states that “The SI (Old-Age and Survivors Insurance) program is in no sense a federally-administered “insurance program” under which each worker pays premiums over the years and acquires at retirement an indefeasible right to receive for life a fixed monthly benefit, irrespective of the conditions which Congress has chosen to impose from time to time” which is so counter to what you would have been led to believe Social Security is there for.

A significant reason that Social Security has remained in place and continued to increase in premiums is that a large majority of the political power - the elderly - are the ones voting for policy change. In the instance where they directly benefit from the increase in premiums on the younger generations they have no incentive to change the direction of their votes.

At this point in time looking towards the future and future generations is it feasible to think that we can continue to raise the costs of social security to benefit us once we retire? To me it seems like a economic policy destined for failure in that eventually the premiums will become too large to bear. What changes could be made to reroute the direction Social Security is going in? Is there any hope that changes in policy could make Social Security a worthwhile endeavor?

Social Insecurity

The system was supposed to be a service in which the qualifying parties paid into. Then if became used for welfare. This has lead to the funding of the welfare of mentally disabled people, and those that are of retirement age that may not have paid into the social security system. The problem with the system is that there was too much money in there for a debt ridden government such as the USA. The misapplication of funds was legally bound in the fine print. The government isn't always honest, therefore people will suffer. I do believe it is unfair to the potential recipient who has paid their dues and got shafted on the deal. I do believe that welfare helps people, but social security was not meant to be the way it is. I think if you were born after the 1970's your chances of receiving the retirement fund are very slim. Taking THE GOVERNMENT TO COURT SHOULD HAPPEN MORE OFTEN. There is a serious opportunity cost being thrusted upon the tax-payers. This is because people could have saved their money privately or in a trust fund. guaranteeing them benefits. however its like a raffle where everyone is buying tickets, but not everyone will win. The negative externality is that elders who have no family around are living in poverty, limited mobility, and no one is assisting them. The independence and safekeeping in which they invested can and in some cases, has dissipated. The system sounded great, but the reality has left people without a way to live after their dues to society and to the social security fund have been paid.

The Social Security Myth

Its obvious that Social Security is broken and a drain on our productivity and efficiency as a society. What to do about it? I argue that immediately eliminating it completely would be a fine method of handling the situation if carried to term, but the fallout would be so extreme that political intervention would stop a recovery from occurring.

The next best option, then, is to phase it out at the fastest rate possible while not being extreme enough to incite political intervention. To this end, I look at a special case study provided by Chile, in which that exact thing has happened.


Entering into the work force, workers were given a private pension fund that requires them to contribute 10 to 20 percent of their income. The amount put into the fund depends on the age the employee wants to retire. At retirement, the private fund is transferred into an annuity with an insurance company. The individual is given the choice to decide what insurance company to work with and what plan best fits the circumstances. If the individual is not satisfied with the company or plan, they have the freedom to change companies. This also allows competition between insurance companies, which would lead to better service and greater returns over time.

For those who were already paying into the public system, they were given a choice to stay public or to enter the private system. The major cost created by the transition is the money Chile loses from the people switching to the private system. The cost was financed by the selling of state-owned enterprises that would provide for those who stayed on the public pension system. Due to the success of the privatization, around 93 percent Chilean workers switched to the new program. The public pension program will be completely eliminated the day the last person in the system passes away.

The effects of the program model include generating surpluses without raising taxes, inflation, or interest rates; Old-age pensions are 40-50 percent higher than the public pension system; Disability and survivor pensions are 70-100 percent higher than the public pension system; There has been a significant decrease in the payroll taxes have contributing to an unemployment rate below 5%; Savings rates have sky rocketed and have deepened investment; Growth rates have more than doubled in the past 10 years.

Sunday, November 9, 2014

Environmental Victory

I believe the law is an environmental victory for the state of California, and it's an especially significant victory for a state making up 12 percent of the nation's population. The fact that the law was passed in such a large state will have a very significant environmental impact for the planet. Plastic is very chemically stable, and the fact that nearly all bags are not made of biodegradable material by being plastic means the law should have a significant impact on the oceans being polluted with plastic that does not decompose. Marine life, in my opinion, will be the prime beneficiary of the environmentally-friendly law. Too much plastic ends up being thrown into the oceans and it is very costly to clean up the mess, so the measure might end up saving future generations an immense amount of money if the world will ever decide to clean up the oceans. Furthermore, the opinion of plastic bag manufacturers is very biased because they profit directly from such laws not being passed, so it's a significant environmental victory that such a law was passed over the lobbyists of the plastic industry, which is very large multi-billion dollar industry that holds immense political influence. If anyone thinks plastic bags are good they should simply see what the Great Pacific garbage patch is to see what the true environmental impact of plastic particles is on the fragile environment of our planet.

Slippery Slope

There's a reason grocery stores use plastic bags; they're inexpensive. Paper bags are expensive enough that they are not used in a majority of stores. What does this mean? It means that if a grocery store can no longer use the inexpensive option, they must resort to a more expensive one. That means that prices will rise and wages will lower in order to meet their bottom line.

The benefit of this law is supposed to be less pollution; less plastic pollution specifically. I expect that it will meet this goal, but the cost to the consumers will be substantial enough that the plebeians in California will demand price controls on the goods from grocery stores. Ultimately, I think this is a bad move for California.

But I'm biased.

Friday, November 7, 2014

Will the Cutbacks Even be Visible??

I thought that story was lacking depth into the situation. Very poor theory. Where is the proof? I honestly don't know a  single person who doesn't re-use grocery store plastic bags. I think they are taking the ethical, social responsibility approach to cleverly disguise their decision to make cutbacks. The issue is petty and the argument is very poor...just like California's current economic state. If they are truly concerned about ocean life, the waste management source should re-vamp it's system. The consumer has always been entitled to free grocery bags. It should be the consumer's decision to accept or decline. There are always "green" bags for purchase. There are also biodegradable bags that are very popular.Why wouldn't that be the next option? Because it is a money issue! this is the same as sandwich shops not offering toothpicks, or restaurants regulating the amount of condiments a customer may receive.