Capital and Income

"Live long and prosper."
--Spock (Star Trek)

Nice graph showing the relationship between capital/worker and income/worker.

Any country wishing to improve its standard of living should be doing all it can to free markets and encourage capital formation (i.e., saving). It should avoid policies that deter capital formation--such as lowering interest rates to boost spending and consumption as well as taxing capital and gains from capital.

Unfortunately, this is precisely what the US and other 'developed' nations are doing.

Voter ID and Fraud

"Look at that. That's a complete fucking fraud, and it looks one hundred percent real. It's the best work I've ever done in my life, because it's so honest."
--Stanley Motss (Wag the Dog)

Nice point made by Prof Williams. Laws requiring voters to show ID have been deemed racist by many progressives. Yet, progressives rarely challenge other ID requirements as racists (e.g., boarding a plane or cashing a welfare check).

It is therefore straightforward to conclude that progressives support voter ID in order to gain an unfair advantage in democratic elections determined by majority vote. Stated differently, progressives favor processes of voter fraud, which is more likely to occur when no ID requirement exists, to sway elections.

Walker's Wilderness

In a big country, dreams stay with you
Like a lover's voice fires the mountainside
Stay alive
--Big Country

Years ago, former head of the General Accounting Office David Walker launched a campaign to increase public awareness about fiscal responsibility in the US. He's still at it. As in the past, he observes that unfunded liabilities substantially increase the 'headline' federal debt number.

Today's $18.5 trillion in federal debt is really closer to $65 trillion when future social security and health care liabilities are factored in.

Like a few other voices in the wilderness, people heed not his message.

Yield Sign

Life is demanding

Without understanding

--Ace of Base

End of week sell of in govies finds 10 yr yields above recent resistance at 2.3%.

Next near term level above is ~2.5%.

Printing Tax Cuts

"One thing is true of all governments. Their most reliable records are tax records."
--Finch (V for Vendetta)

These pages have long posited that a primary way for central banks to circumvent the deflationary credit money system is to send people money directly (i.e., 'drop money from helicopters'). The tax cut and stimulus rebate checks a few years back were examples of this.

This article suggests that a less direct approach could be have government issue a tax cut citizens, but then finance federal spending that would otherwise have to be cut by printing money.

Same end effect, of course, but by using means more prone to deceive.

Forced Rates

"But, again, truth be told, if you're looking for the guilty you need only look into the mirror."
--V (V for Vendetta)

Few instruments of force are more damaging than forced interest rates. Markets distorted. Resources misallocated. Standard of living compromised. 

And people generally have no clue about the mechanism.

Tax Receipts and Stocks

Now my advice for those who die
Declare the pennies on your eyes
--The Beatles

Interesting observation that state and local income and sales tax receipts seem to align with stock market extremes.

Intuitive, as economic activity and equity performance should be correlated to some degree, whether through fundamental or sentimental reasons.

For completeness, fed tax receipts should be included as well.

position in SPX

Producer-led Price Declines

In the paper today
Tales of war and waste
But you turn right over the the TV page
--Crowded House

ECON 101 tells us that lower prices occur when supply increases relative to demand. What policy decisions of producers drive prices lower?

One is improving productivity. Implementing projects that create more output per unit of input means that dollars are spread across more goods, thereby reducing price per unit.

Another is adding more supply than necessary to meet demand. By building more capacity than is needed, capacity utilizations fall, causing operators to reduce price in order to move more units.

Improving productivity increases social welfare because it more fully utilizes productive resources to alleviate scarcity. Adding unnecessary capacity is wasteful to the world because it ties up resources in unproductive endeavors.

In unhampered markets, lower prices achieved by improving productivity are rewarded while lower prices stemming from adding unnecessary capacity are penalized.

Obama's Lawlessness

"Gentlemen, whenever you have a group of individuals who are beyond any investigation, who can manipulate the press, judges, members of our Congress, you are always going to have in our government those who are above the law."
--Nico Toscani (Above the Law)

These pages have discussed the lawless behavior of the Obama administration before (e.g., here, here, here). Here is another list of some this president's most egregious acts of lawlessness--although I think Judge Nap offers a more comprehensive list.

An interesting aspect of executive lawlessness is that partisans are prone to look the other way when their administration suspends law, while arguing that "it's the law" when seeking legal compliance from opposing administrations.

Kelo Takings

Our house, was our castle and our keep
Our house, in the middle of our street
Our house, that was where we used to sleep
--Madness

Kelo v. New London was a Supreme Court ruling that significantly expanded the scope of government authority for forcibly taking real estate from private owners. Essentially, it legitimized government expropriation of eminent domain rationale for taking property for private--not public--development if it is deemed that the community at large would benefit from the development.

This can be viewed as another expression of greater good accounting.

One study estimates that a million homes have been taken since Kelo. Unfortunately, the precise reason for each taking was not measured in the investigation, although most of them are presumed to have been taken using eminent domain justification. Another limitation is that the study does not compare pre Kelo to post Kelo takings.

An important observation is that eminent domain rulings are biased toward the poor and blacks, whose households are being taken at about twice the rate of the general population.

Developer identifies some prime real estate currently occupied by low income people...developer uses the Kelo precedent to influence government to evict the occupants and score the land for its project...another mechanism for distributing wealth by force.