Monday, November 28, 2011

Occupational hazard

Today was the deadline the city of Los Angeles gave for the Occupy L.A. protesters to clear out their encampment at City Hall. Well take a look around: they're still there. By now, the turf is worn out and tents are still pitched everywhere. Any taxpayers wanting to quietly relax at this public property they pay for are out of luck. They'll need to share it with hundreds of other people -- most unbathed and unkempt after camping out there for days.

I'm as big of a supporter of the Occupy movement as anyone else. I hate seeing the socio-economic divide growing in our society year by year. I despise the grip Wall Street and corporate America have over our government. The 99% of us have the right to peacefully protest this inequity. But I disagree with the tactics the Occupy movement is using.

Yes, the 99% are raising awareness of the issue by being on the streets but too many of them are doing it unlawfully. All the city of Los Angeles asks is for the protesters to apply for a permit so that it can appropriately protect the health and safety of all at city hall. Yet no one has bothered to apply for one, even though they've been there at city hall for days.

Worse yet, they've picked the wrong place to protest in the first place. The city of Los Angeles has little -- if any -- power to put a stop to the growing power and wealth of the One Percent. The 99% should be occupying Capital Hill because that's the only place where there is the power to end the inequity.

The other tactical error the Occupy movement is making is to not come up with solutions. No matter how many Americans acknowledge the socio-economic divide, it won't stop it from growing. The Occupy movement needs to lay out tangible actions for the powers that be to take to put an end to Wall Street's stranglehold over our economy and government. Until they do so, the 99% have no one to blame for the status quo but themselves.

I have a better idea. The 99% should occupy their respective congressmen's mailboxes and their precinct's ballot boxes. If every one of us wrote to our federal representatives and told them what we want them to do, then threatened to elect someone else next term if our congressman doesn't do what we say, we would get some action out of them. But we'd also have to follow through on our threats instead of continuing to be the same ignorant, apathetic Americans so many of us are.

The best thing about it is that we wouldn't have to brave the hazards of an urban campground to get things done. We could mobilize an occupation from the safety of our own homes and only need to venture out on election day.

Saturday, August 13, 2011

Taxes and job creation

Raising taxes on wealthy Americans doesn't stifle job creation. In fact, it could even enhance it -- if wealthy Americans aren't greedy.

I agree that raising taxes on businesses would stifle job creation. But all the talk we hear lately is about raising taxes on personal income. If the taxes raised are those of a wealthy business owner, it is only the salary that the business pays the owner that is taxed, not the business's income. The business's net profit would be unchanged by the tax increase, so it should cause no change in the business's hiring practices.

But here's how it could actually enhance job creation. Let's say the wealthy business owner doesn't want his personal income taxed at a higher rate. All he has to do is lower the salary his business pays him to a tax bracket with a lower rate. On average, CEOs earn a hugely disproportionate income relative to the other employees in their business, so they should be able to afford a decrease in their salary -- particularly if it means growing their business so it can be more profitable in the long run.

All else unchanged, the decrease in salary would result in an increase in the retained earnings of the business. This increase in retained earnings thereby increases the wealth of the person who owns the business by the same amount but he doesn't get taxed on it because it's not regular income. However, by virtue of the business having greater retained earnings, the incremental capital assets is an incentive for the business to grow, which means increased job creation.

Tuesday, July 05, 2011


The federal government is rapidly approaching the limit of the amount of debt congress permits it to have. Meanwhile, politicians and the media alike are blustering about a debt ceiling doomsday scenario. They base this assertion on the premise that hitting the debt ceiling means that the federal government goes into default.

I believe this is a non sequitur. What I don't understand is why hitting the debt ceiling necessarily means the federal government goes into default. It has almost $200-billion in monthly revenues -- as I understand it, that's more than enough to service our current debt obligations.

Wouldn't hitting the debt ceiling just mean that the Fed would have to stop issuing new bonds and the government would have to operate without a deficit? As I recall, America was in pretty good fiscal shape the last time we ran a budget surplus -- much better than it is now. I see no problem with spending the same as the federal government did then.

The irony is that the GOP claims federal spending is the least productive application of savings. Yet many of those same Republicans support increasing the debt ceiling. There is a finite amount of savings in the financial markets. If the federal government takes on more debt, it takes the amount of that increase away from private investment. You can't have it both ways.

The most obvious question about this issue is, if congress raises the debt ceiling every time we hit it, what is the point of having a debt ceiling in the first place? If I'm missing something in this equation, please post a comment and explain.

Sunday, April 17, 2011

The Party family

The GOP is normally so disciplined -- a big reason for its success. It makes me wonder whether I'm pleased or scared that it's been co-opted by the Tea Party.

Sunday, April 10, 2011

Congress needs to eat humble pie...

...because neither the Democrats nor the GOP are taking much of a bite out of the deficit.

The Budget Pie Illustrated
Click the image above to view full-size.