The Need for Balance

"A word to the wise isn't necessary, it's the stupid ones that need the advice." - Bill Cosby

It Is All About Balance

In light of Mitt Romney's "47 percent" comments last week, was thinking about all the ways I have depended on the government in my life.  First, I received a public school education through high school, courtesy of the taxpayers.  Second, I have received Social Security survivor benefits for the past 13 years, courtesy of the American taxpayer.  Of course, I have also received other benefits such as roads (some obviously better than others!), national defense and others that I cannot think of at this moment.  And I am one of the 53% of income tax filers that pays an income tax.  It is not just the 47% of filers that do not pay taxes that are dependent upon the taxpayer.

Surely, we do need a safety net for the most unfortunate in our society.  However, there is a balance to all things.  President Obama says we need to strengthen the middle class.  I agree with this statement.  We create a stronger middle class by creating a favorable business environment, so that employers will be inclined to hire more workers.  We need a strong private sector that creates wealth so that we can provide for the "47 percent" and more.  We need a strong private sector that incentivizes innovation and entrepreneurship.  Business start-ups have fallen dramatically in the last five years, and this needs to change.

Breaking down the economy to its most basic element, nothing happens in our economy until someone sells something to someone else.  Until something gets sold to someone else, there is no revenue out of which to pay an employee (who then pays his/her own income tax), a supplier or to pay for basic business services.  Until something gets sold to someone else there is no profit to tax for streets, roads, bridges, police and fire protection.  And this all emanates from the private sector.  Yes, we need to provide for the "47 percent", but we must also have a strong private sector, one with a favorable business environment. 

As an aside, my guess is that many of the "1%" have no problem paying a higher tax.  It is those that aspire to the 1% that are most likely to oppose it, since their growth opportunities are the ones most likely to get shut down.  Just an educated guess.

Washington DC versus United States?

Interesting article from Ross Douthat from the New York Times asking if it is good for the rest of us when Washington DC booms.  Washington has had quite the boom in the last 10 years, thanks largely to a larger government complete with the army of lobbyists and other sharks that come with it.  Seven of the ten richest counties in the country now surround DC, according to this article.  This article is a good read.

Jobs, Jobs, Jobs

Last week I saw a commercial for Barack Obama that touts the 4.6 million private sector jobs created over the past 30 months.  The number is factually correct and it is definitely a good thing.  So, why does this still feel like a recession?  Total employment is still 3 million below the employment peak in December 2007.  Incomes have fallen by over $4,000 per household since then.  Much of the job loss occurred on George Bush's watch (I would blame much of the first year of Obama's presidency on Bush).  But overall job creation remains weak.  To put some perspective on this, in 1984, President Reagan stood before the Republican Convention and bragged about his policies had created 6.5 million private sector jobs in the previous 19 months.  With an employment base that was 40% smaller than today's employment base (85 million versus 140 million).  If you applied Reagan's results to today's economy (controlling for the size of the employment base and the amount of time), we would be talking about 16 million new private sector jobs in the last 30 months, not 4.6 million.  Just something to think about.

Football Results

Overall, not bad.  I called Kansas, Kansas State, and the Kansas City Chiefs.  I whiffed on Missouri, California and Michigan.  Maybe I should stick to the local teams!

Until next time...take care!