Economies of Scale

Posted by PITHOCRATES - December 31st, 2012

Economics 101

Employers are very Reluctant to hire Additional Employees because Labor Costs are their Greatest Costs

When it comes to running a business there is nothing more costly than people.  Employee salaries and wages.  Payroll taxes.  And benefits.  People need a large paycheck to live on and will go to the employer that offers the highest pay.  Government has imposed costly taxes and regulatory costs.  And to further entice good workers employers have to sweeten the deal with some fringe benefits like health insurance, paid vacation time, holiday pay, paid sick days and retirement plans.  It adds up.  Something like this:

As you can see the amount of pay employees are familiar with (the working pay above) is far less than the total cost to the employer.  The employee doesn’t see the 63.1% markup on their working pay that their employer has to pay in addition to paying the employee.  As a business hires more employees these costs add up.  A small factory with 15 workers on the factory floor can cost the employer $1.6 million.  Which is why labor costs are the greatest costs of most businesses.  And why employers are very reluctant to add additional employees.

The more Productive you are the Lower your Unit Cost and the Lower the Selling Price in a Store

Besides labor costs a business like a factory will have material costs, too.  These are variable costs.  They’re variable because they vary with varying levels of production.  The more production there is the more variable costs there are.  In addition to variable costs businesses have fixed costs.  Often simply called overhead.

Factories make things.  Like things you can pick up off a store’s shelf.  Things with low prices on their price tags.  But when it can cost a small manufacturer $1.6 million JUST for its labor costs how can they sell things with such low prices?  By making a lot of those things to sell.  As much as they possibly can with their variable and fixed costs.  What we call economies of scale.  And the more they can make for their given costs the lower the unit cost is for each thing you can buy off a shelf at a store.   As you can see here:

Assuming a factory can produce anywhere from 1,250,000 to 2,750,000 units with a given labor force operating the same production equipment in a factory you can see how the unit cost falls the more they produce.  Which is why there is so much talk about productivity.  The more productive you are (the more you can produce for a given cost) the lower your unit cost.  And the lower the selling price in a store.  Increasing productivity could mean moving an assembly line a little faster.  Or replacing some people with machines.  Things that workers don’t like.  But things consumers love.  For they like low prices when they go shopping.

Employers are very Reluctant to Hire New Employees and Prefer Increasing Productivity with Automation

If you crunch these numbers for the labor costs of 16 and 17 workers you can see how unit costs rise as an employee or two is added to the production floor.  At an annual production of 2,000,000 units the unit cost increases $0.05 (4.6%) going from 15 to 16 workers.  Adding two workers increases the unit cost $0.11 (10.1%).  Doesn’t seem like a lot.  But we notice when something we once bought for $0.99 now costs $1.04.  And we don’t like it.  But business owners like it even less.  Here’s why.

Business may be booming.  Those on the factory floor may be working a lot of overtime to produce at a rate of 2,000,000 units per year.  And are growing unhappy with all of that overtime.  They keep demanding that the owner hire another person.  The owner does.  Increasing unit costs by $0.05.  But the owner hopes the booming economy will continue.  And that they can even increase the production rate.  For if they can sell an additional 250,000 units the unit cost can actually fall $0.07 to $1.02.  Making the addition of a new worker on the factory floor not increase costs.  As the increase in production will make costs fall greater than that increase in labor costs.

But it doesn’t always work like that.  Economic booms don’t always last.  When too many factories increase production to meet booming demand they bring too much supply to market.  Causing prices to fall.  And forcing factories to cut back on production rates.  So instead of increasing the production rate they may find themselves cutting back.  Perhaps going from 2,000,000 to 1,750,000.  A fall of 250,000 units.  Increasing the unit cost $0.21 (19.3%).  Which could very well raise the unit cost above the prevailing market price.  Requiring layoffs.  To get the unit cost back down to $1.09.  Allowing them to sell at the prevailing market price.  And at a production rate of 1,750,000 units that may require letting go more than just one worker.  Maybe even more than two.  Which is why employers are very reluctant to hire new employees.  And prefer increasing productivity with automation.  For it is far easier to make machines increase or decrease production rates than it is to hire and lay off people.  Making it easier and less costly to reach great economies of scale.  Which makes low prices.  And happy consumers.

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The British love their NHS despite a Vast and Growing Number of Patients receiving Horrible Care

Posted by PITHOCRATES - December 30th, 2012

Week in Review

At the 2012 Summer Olympics in London the opening ceremonies included a tribute to Britain’s National Health Service (NHS).  To show to the world how wonderful it is.  And how much the British love it.  As long as they were not a seriously ill patient in the NHS.  Or had a loved one that was.  Because for these people it’s not the beautiful thing they showed in the opening ceremonies (see The cult of the NHS, flinging flans and the plight of poor old Richard Dawkins by Damian Thompson posted 12/28/2012 on The Telegraph).

Just as light entertainers prance across our screens shrieking about “charidee”, so politicians and churchmen intone their devotion to the NHS, like politburo members singing the praises of the Motherland.

Our health service doesn’t deserve this sycophancy. Or, rather, it deserves better than self-serving rhetoric whose subliminal message is: “Look at me! I lurve the NHS more than you do! I am a good person..!”

Nigel Lawson famously said that the NHS was the closest thing the British had to a national religion. He was right – but we need to ask ourselves why a system of providing health care has become so sanctified. After all, the newspapers have been running stories about dirty wards and patients left to die on trolleys for many years.

We know these stories are true; yet we still applaud when Danny Boyle uses the Olympic ceremony to present a rose-tinted vision of dancing nurses and twirling beds – “Busby Berkeley on the cancer ward,” as my colleague Tim Stanley put it.

The problem is that our health service has passed the point where it can work the magic we demand. As we reported last week, Alexandra Hospital in Redditch has apologised to 38 families for neglect that left dying people screaming in pain and one old lady unwashed for 11 weeks. The staff who taunted patients there aren’t typical of their profession – but neither are the invariably “dedicated” nurses of our imagination.

The average nurse is neither more nor less dedicated than the average accountant. But he or she does face much tougher challenges – specifically, of dealing with more and more very old people whose care is difficult and expensive to manage.

Perhaps at the next Olympics the United States hosts they will have a twirling-bed tribute to Obamacare.  For Obamacare will be similar to the NHS.  And no doubt will soon have patients left dying and screaming in pain and unwashed for 11 weeks.  For if the British have these problems the U.S. will most certainly have them when they follow the British down the path of national health care.  Because both the British and the Americans have aging populations.  Only the Americans will have 5 times those very old people who are difficult and expensive to manage.  As we have 5 times the population Britain has.

Just something to look forward to as Obamacare starts going into effect in January.  In addition to going over the fiscal cliff.  And the resulting recession from those massive tax hikes.  So Happy New Year.  It’ll definitely be a year to remember.  And one we may soon want to forget.

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Exploding Shark Tank a Sign of the Failings of a State-Controlled Economy

Posted by PITHOCRATES - December 30th, 2012

Week in Review

The Left loves China.  Where there is no laissez-faire capitalism.  What they have is state-capitalism.  Where the Chinese communist government calls all the economic shots.  The American Left likes that.  And would like to have that in the United States.  Because they believe government makes everything better.  Even a government with a horrific human rights record.  Who uses prisoners in labor camps to manufacture goods for export.  Or underpaid and overworked migrant labor in the big city factories.  Where there are no unions to collective bargain for the Chinese worker.  Just the Chinese communist government giving orders and enforcing their workplace rules.  So what kind of quality do you get from people working under the lash (literally and figuratively)?  Well, you get high-speed train accidents.  And a lot of little things like this (see Shark Tank Bursts at Mall posted 12/27/2012 on ABC News).

The dramatic just-released video shows four people standing immediately in front the gigantic 23 ft-by-10 ft shark aquarium at the Oriental Shopping Center moments before it shattered. Pedestrians could be seen passing by behind them…

The video shows that the force of the explosion was so strong, it tore down cosmetic stands inside the shopping center on the other side of aquarium.

The December 19 explosion left 15 bystanders injured and three sharks dead…

There is still no official explanation as to why the shark tank exploded. The popular shark tank was only two years old but it has been speculated that a sudden cold snap that day in Shanghai may have contributed to thick aquarium glass shattering.

In a state-planned economy (like the Chinese have) the state sets standards and quality controls.  Not the market.  Aquariums don’t explode like this in a market economy because an aquarium installer couldn’t stay in business if their installed aquariums exploded.  But the state can.  Because in a state-controlled economy there aren’t competitors out there trying to sell a better aquarium installation at a lower price.  Which puts pressures on all installers to improve quality while lowering prices.  Something that just doesn’t happen in a state-controlled economy like in China.  So high-speed trains crash.  Aquariums explode.  And people who are under the persecution of the Chinese Communist Party Government write notes of their oppression and slip it into the goods they manufacture under the lash.

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Japan clings to the same Keynesian Policies that have Failed for over 20 Years

Posted by PITHOCRATES - December 30th, 2012

Week in Review

The fiscal cliff negotiations are all about deficit reduction.  The Right wants to do it with spending cuts.   The Left wants to do it with new taxes.  So they can spend more.  This is why they can’t reach an agreement.  The Right wants to reduce the deficit.  While the Left wants to increase spending.  For benefits.  For education.  For investments in Green Energy.  For infrastructure.  For economic stimulus.  Which will only increase the deficit.  So the Democrats are not exactly sincere when they talk about deficit reduction.  Which is why they can’t make a deal with the Republicans.  Who are serious when they talk about deficit reduction.

Another reason why the Democrats want to spend so much money is that they are Keynesians.  Who believe the government can bring an economy out of a recession with stimulus spending.  Despite that failing every time we’ve tried it.  In the United States in the Seventies.  Again during the Obama administration.  In the Eurozone.  In Asia.  Especially in Japan.  Where they’ve been trying to stimulate themselves out of a recession since their Lost Decade.  The Nineties (see Japan’s New Stimulus: The Race With China To The Bottom by Gordon G. Chang posted 12/30/2012 on Forbes).

The universal consensus is that the fall in manufacturing bolsters the case for Shinzo Abe’s plans to stimulate the economy.  The new prime minister is pursuing a broad-based program of shocking Japan out of its fourth contraction since the turn of the century.

First, Abe is going to prime the pump in a big way…

Second, Abe is going to push the yen down to help struggling exporters…

Third, the just-installed prime minister is leaning on the Bank of Japan to open up the taps…

Markets may love Abe’s stimulus solutions, but they are at best short-term fixes.  Tokyo, after all, has tried them all before with generally unsatisfactory results.  What Japan needs is not another paved-over riverbed—past spending programs have resulted in useless infrastructure—but structural reform to increase the country’s competitiveness.

Tokyo’s political elite, unfortunately, has got hooked on the false notion that governments can create enduring prosperity.  Two decades of recession and recession-like stagnation in Japan are proof that repeated government intervention in the economy does not in fact work.

If you keep trying to stimulate yourself out of a recession with Keynesian policies for over twenty years perhaps it’s time to give up on those failed policies.  Of course to do that may require some spending and tax cuts.  And you know how well that goes over with big government types.  It’s why the Americans can’t make a deal to avoid the fiscal cliff.  And why the Japanese are going to try more of the same failed policies of the past.

Another impetus for these bad policies decisions is what’s happening in China.  Whose economy is much younger than Japan’s economy.  So they don’t have years of failed Keynesian policies digging their economy into a deep hole.  And because of that they’re going to go big.  Their stimulus is going to include the building of cities.  And that’s what the Japanese see.  That, and the (one time) economic explosion of their export economy.  Something they once had in Japan.  And would love to have again.  So they are going to follow China’s lead.  Even though their economic expansion is pretty much at its end.

Although there has been a “recovery” beginning in October, it looks like the upturn is already running out of steam.  China’s technocrats know they’re in trouble: they are apparently planning to increase the central government’s planned deficit for 2013 by 41% to 1.2 trillion yuan ($192 billion).  At present, it is now slated to be only 850 billion yuan.  Much of the shortfall is going toward an urbanization push next year.  Last year, Beijing announced its intention to build 20 new cities a year in each of the following 20 years.

The two biggest economies in Asia are ailing at the same time, and both Beijing and Tokyo have decided that government intervention is the shortest path to long-term growth.  Neither government’s program, however, looks viable.  Unfortunately, both China and Japan are going down the wrong road at the same time.

This could help the U.S. economy.  If they enacted spending cuts for their deficit reduction they could cut tax rates to spur the economy along.  And make the U.S. competitiveness soar while Japan and China dig themselves into deeper holes.  But the Americans, being the foolish Keynesians they are, are going to follow the Japanese and the Chinese into economic stagnation.  And with President Obama’s reelection they will stay Keynesian.  Drive over the fiscal cliff.  And compete with the Japanese to see who can have more lost decades

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Keynesian Economics and Liberal Democrat Policies increase the Cost of Raising Children

Posted by PITHOCRATES - December 30th, 2012

Week in Review

A generation or two ago people got married to raise a family.  The husband typically earned the money.  And the wife raised the family.  On a single salary.  A time when most children grew up in a two-parent household.  Where boys grew up playing with toy guns.  But never took a real one to school.  Today it’s a lot harder to raise a family on a single income (see Cost of Raising a Child Up to $235K—Before College by Chris Wadsworth, special to USA TODAY, posted 12/24/2012 on CNBC).

According to the latest statistics released by the U.S. Department of Agriculture, parents will spend an average of $235,000 to raise a child born in 2011 to the age of 17. (And that’s not taking into account any savings for college).

Housing, food, clothing, health care, child care, schooling … the list of compulsory expenses goes on and on. Discretionary spending such as family vacations, birthday gifts, music lessons and the like are mostly extra…

The greatest share of these expenses is housing, which is 30 percent of the total. It’s followed closely by child care and education at 18 percent and food at 16 percent…

“Our day care expense for just our older son was over $1,000 a month,” Sutton says. “If we had put our younger son in day care as well, it would have been about $2,200 a month. That was more than our mortgage payment.”

We hear this all of the time.  But we never really hear the why.  Why is it that it takes two incomes to raise a family these days?  Forcing parents to pay so much for day care that they could buy another house with that money.  Why that house expense is so expensive.  And why education and food costs so much.  So let’s look at the why.  And here’s why.  Keynesian economics.  And liberal Democrats.

Liberal Democrats champion Keynesian economics as it sanctions what they want to do most.  Tax, borrow, print and spend.  When Nixon decoupled the dollar from gold the great devaluing of the dollar began.  In 2012 it took $8.21 to buy what $1 would by in 1955.  A $15,000 house in 1955 would cost about $127,000 today.  So that’s part of the reason why housing is so expensive.  The other reason is that Keynesian monetary policy.  Where the Federal Reserve (America’s central bank) kept interest rates artificially low to encourage people to buy houses.  Which they did.  In droves.  Driving up the price of housing.  Creating housing bubbles.  The last one bursting into the subprime mortgage crisis.  Giving us the Great Recession.

But it’s just not the Federal Reserve devaluing the dollar.  Gasoline cost about $0.23/gallon in 1955.  If you adjust that for inflation it would bring it up to $1.89 today.  At the end of summer 2012 the average gasoline price was $3.72/gallon.  Which is a $1.83 premium over the inflation-adjusted price.  A 96.8% increase in price.  What caused this near doubling in price?  Well, the American Left has shut down a lot of oil drilling due to environmental issues.  Raising the cost of crude oil.  Which increased the cost of gasoline refined from that crude oil.  Further, new environmental regulations have increased the cost of refining.  Requiring a plethora of blends depending on the time of year.  Further increasing the price of gasoline.

Higher gasoline prices make everything more expensive wherever gasoline is used.  On the farm.  The transportation from the farm to the food processor.  Transportation from the food processor to the food wholesaler.  Transportation from the food wholesaler to the food retailer.  Transportation from the family home to the grocery store and back.  High gasoline prices raise prices everywhere.  And consume more of the family budget.

Education is the one industry no one every blames those in control of the industry for being greedy.  No one every blames our universities for their high tuition fees.  They blame the taxpayers who don’t approve higher taxes to subsidize the high cost of education.  Which is high due to very generous pay and benefit packages for teachers, professors, administrators and support personnel.  Much more generous than those found in the private sector.  Why do they get away with this when liberal Democrats attack business owners for being greedy?  Because business owners don’t have as their primary mission to produce Democrat voters.

So what is increasing the cost of raising children so much?  Liberal Democrat policies.  They depreciate the currency, inflate the cost of housing (and cause Great Recessions), add huge regulatory costs that increase prices throughout the supply chain and create and protect a privileged class.  Consuming more and more of the family budget.  Making it ever more costly to raise children.

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Unions lose Members as they Spend Millions in Union Dues on Liberal Candidates and Causes

Posted by PITHOCRATES - December 30th, 2012

Week in Review

The past few years haven’t been great for organized labor.  They’ve spent a fortune in union dues to win President Obama’s reelection.  But though they won that battle they may be losing the war (see Spending large sums in state labor battles adds to unions’ problem of losing members by FOX News/AP posted 12/23/2012 on FOX News).

Unions represented roughly 30 percent of the country’s workforce in the early 1980s, when the federal government started tracking those numbers, but they now represent 11.8 percent.

The declining numbers are in part the result of the country’s shrinking manufacturing sector, but the situation has been compounded by recent efforts in Michigan and Wisconsin to limit unions’ power.

Unions had already spent roughly $22 million in Michigan on a failed November ballot issue regarding collective bargaining, before Republican Gov. Rick Snyder signed legislation this month that stops unions from making workers pay dues or representation fees to keep their jobs…

They also spent more than $20 million in Wisconsin to remove Republican Gov. Scott Walker this year in a recall election after he signed 2011 legislation stripping most public employees of much of their collective-bargaining power, but Walker still won that election.

The unions also spent roughly $24 million last year in Ohio to overturn an anti-union measure.

But unions spent more in California this year to defeat a ballot measure that would curb dues collection than they did total on political efforts in Michigan, Ohio and Wisconsin.

James Sherk, a labor expert with the conservative Heritage Foundation think tank, estimates Michigan unions, including United Auto Workers, will lose an additional $100 million annually as a result of the changes and members leaving.

Workers have already “left unions in droves in Wisconsin, Idaho and Oklahoma,” he said.

If you do the math that adds up to $66 million for Michigan, Wisconsin and Ohio.  Double that to add in California and that brings it up to $132 million.  Throwing in the estimated $400 million in the 2012 elections that brings the total up to $532 million.

That’s half a billion in union dues they spent for political purposes.  Perhaps explaining why workers are leaving the unions in droves where they can.  Especially when the American people identified themselves at the end of 2011 as 40% conservative, 35% moderate and 21% liberal (see Conservatives Remain the Largest Ideological Group in U.S. by Lydia Saad posted 1/12/2012 on Gallup).  As a lot of those union dues go to support liberal candidates and liberal causes they no doubt bothered the 79% of the population that isn’t liberal.  Especially those paying those dues.

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AARP’s Endorsement of Obamacare puts pressure on Social Security Benefits

Posted by PITHOCRATES - December 29th, 2012

Week in Review

AARP endorsed and helped pass Obamacare into law.  In exchange for an exemption from the very law they supported so they can sell their “Medigap” insurance policies easier than their competitor Medicare Advantage could sell theirs (see AARP latest to receive Obamacare break by Matthew Boyle posted 5/19/2011 on The Daily Caller).  Good for AARP.  But not for the senior citizens they represent.  For Obamacare will lower the quality of US health care.  And increase health care costs.  Especially for seniors.  So whenever AARP starts quoting Ronald Reagan one should be suspect as they are no friend of Ronald Reagan.  For Ronald Reagan would not have approved of what AARP did to help pass Obamacare into law.  Even if he and Tip O’Neill worked together to pull Social Security back from the brink of insolvency (see Ronald Reagan’s 9 Wisest Words About Social Security by Alejandra Owens posted 12/19/2012 on AARP).

That legislation, negotiated by President Reagan and Democratic House Speaker Tip O’Neill, focused on what was needed protect Social Security for the long term. Reagan understood that Social Security is a separately funded program unrelated to problems in the rest of the budget, and he clearly stated that: “Social Security has nothing to do with the deficit.”

Indeed, today the Social Security trust funds hold $2.8 trillion in government bonds. These reserves have been built up with the contributions that workers and employers have paid into the system for the dedicated purpose of paying Social Security benefits. These funds are held in legally established trusts and cannot be used for any purpose other than paying benefits. According to the latest Trustees’ report, Social Security can pay full benefits through 2033, and roughly 75 percent of benefits beyond that time.

The Social Security Trust Fund?  There’s no trust fund.  The government raided it long ago and replaced it with IOUs.  Government bonds.  Current Social Security taxes go to pay for current benefits.  There is no pile of cash earning interest anywhere.  No personalized savings accounts for individual Social Security contributors.  If there were then there would be no Social Security crisis.  No, that money is gone.  Spent by the government to fund their current spending obligations.  Which are so great that even by raiding the Social Security Trust Fund they still can’t find enough cash to prevent a deficit.

The government spends our Social Security contributions for every other purpose they want to other than paying our benefits.  They just launder the money first through the Treasury Department.  Exchange IOUs (i.e., government bonds) for that cash.  Then they go and spend that cash.  And when it comes time to redeem those government bonds they’ll probably just print money.  Inflating the money supply.  And depreciate the dollar.  Making it ever harder for a senior to live on their retirement savings.  And because of what AARP did to help pass Obamacare into law there will even be less money available for Social Security benefits.  Requiring more printing of money.  And more devaluing of the dollar.  Making life a living hell for the retirees they supposedly represent.  At least according to that article in The Daily Caller.

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President Obama to Reverse Trend in Falling Child Obesity Rates

Posted by PITHOCRATES - December 29th, 2012

Week in Review

When it comes to government policies there are unintended consequences.  And then they are the ‘I don’t care what the consequences are’ as long as those policies are politically expedient (see US childhood obesity dips for first time in decades: study by AFP posted 12/27/2012 on channelnewsasia.com)

CHICAGO: Obesity rates among small children may finally be on the decline after more than tripling in the United States the past 30 years, a study out Wednesday indicated.

The study found that obesity rates peaked in 2004 and then declined slightly among low-income children aged two to four who receive benefits from a federal food stamp program called SNAP…

In an accompanying editorial, Dr. David Ludwig said the declines seen are not enough, and he urged an overhaul of the federal food stamp program (SNAP) to help low-income families tackle obesity by eliminating junk food and adding more fruit and vegetables to their diet.

“SNAP is essential for hunger prevention in the United States, but its exclusive focus on food quantity contributes to malnutrition and obesity, and is misaligned with the goal of helping beneficiaries lead healthier lives,” wrote Ludwig, who works in an obesity prevention centre at Boston Children’s Hospital…

Ludwig noted that it pays for an estimated US$4 billion in soft drinks per year, which adds up to about 20 million servings of soda a day.

“The public pays for sugary drinks, candy, and other junk foods included in SNAP benefits twice: once at the time of purchase, and later for the treatment of diet-induced disease through Medicaid and Medicare,” he wrote.

“The nation’s US$75 billion investment in SNAP could provide a major opportunity to reduce the burden of diet-related disease among low-income children and families if policies that promote nutritional quality are instituted.”

Peaked in 2004?  Why, that was when George W. Bush was president.  At least 4 years before Michelle Obama began her war on childhood obesity.  To ensure success she should consult with George W. Bush.  Who must have done something right to reverse a trend that was in the making for 30 years.  And not her husband.  Who appears to be hell-bent on making children obese again.

One of the major causes of childhood obesity has been the federal food stamp program.  Which President Obama has expanded like no other president.  Even earning himself the moniker ‘The Food Stamp President’.  Guess he doesn’t like kids.  Well, not all kids.  Just the poor ones.  Who he is helping to a life of diet-induced disease.

So the president may be sacrificing another generation of children to heart disease, diabetes and all those other diet-induced diseases.  Why?  Well, like Bill O’Reilly said, to give the people stuff.  So they will vote for him.  Which he has.  And our poor children will pay the ultimate price with poor health.  While we pick up the cost for their extensive and costly medical care.

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Gun and Knife Violence in UK Despite Ban on Gun Ownership

Posted by PITHOCRATES - December 29th, 2012

Week in Review

The American Left loves the United Kingdom.  Not for their rich history of farming advances, representative government, laissez-faire economics, the Industrial Revolutions, etc.  No.  In fact, they’re not big fans of what made the English-speaking world some of the best places to live.  And for those of us lucky to live in that world we say thank you for making us English.  No, what they like is their National Health Service (NHS).  Which they hope to turn Obamacare into one day.  Despite the NHS suffering from massive costs, long wait times, shortages and rationing.  As a national health care system is wont to do.  And the other thing they love about the United Kingdom are their gun control laws.  In the UK the average person cannot own a gun.  Which, of course, according to the Left results in a safer and a less dangerous society (see Knife Crime: Funding To Tackle Youth Violence by Niall Paterson posted 12/27/2012 on Sky News).

The government has announced extra cash to help tackle youth violence and gun crime.

Half a million pounds [about $808,500 US] will be given to the voluntary sector, charities and other organisations working directly with young people at risk of becoming violent offenders and those already involved in knife and gun crime.

In addition, the Home Office intends to expand the “priority areas” in which its Ending Gang and Youth Violence frontline team works from 29 to 33.

Home Secretary Theresa May said: “Serious youth violence has a devastating impact on communities and needs to be stopped.

“We need to change the life-stories of the young people who too often end up dead or seriously injured on our streets or are sucked into a life of violence and crime.

Imagine that.  No guns but there is gun violence.  And a lot of knife violence.  Guess there is more to ending violence than just taking away weapons.  Some areas sound so bad that they could be the south side of Chicago.  Which is a city with very restrictive gun control laws.  And where there is a lot of gun crime.  Where the criminals have the guns to commit the crimes.  But the citizens subjected to this violence cannot own a gun to protect themselves from these crimes.

Guns aren’t the problem.  It’s people who are intent on hurting others.  Whether it is with a gun.  A knife.  Or pure blunt force trauma like that poor woman in India that just passed away after a vicious gang-rape on a bus (see Body of India rape victim arrives home in New Delhi by Adnan Abidi posted 12/29/2012 on Reuters).  People who are intent on hurting others will use the weapon available to them.  Whether it be a gun, a knife or a metal rod.  The choice of weapon may change.  But their intent rarely does by a simple weapons ban.

If they want to hurt someone they will find a way to do so.  Which is why new gun control legislation is a bad idea.  For it won’t change the intent of these people.  For unless we can change or interdict these individuals intent on doing harm they will find a way to do harm.  Perhaps even in a more harmful and indiscriminate way.

What we need is not new gun control laws.  We need a way to prevent these people from wanting to hurt others.  And the root cause for most of these people going astray lie in the policies of the Left.  Their attacks on religion and families (especially ‘predatory’ men) have left our inner cities virtually fatherless (see Fathers disappear from households across America by Luke Rosiak posted 12/25/2012 on The Washington Times).  And Godless.  Without a father to provide a positive male role model a lot of kids turn to the streets.  And gangs.  Inoculating them into violence.  While inoculating them from the Golden Rule.  Where they commit acts of violence with the ease and nature of an animal in the wild.  Who are also raised by a single mom.  And have no concept of the Golden Rule.

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Defying Economic Sense the 1% now support Higher Tax Rates on their Income

Posted by PITHOCRATES - December 29th, 2012

Week in Review

Now everyone is ganging up on the Republicans.  In the fiscal cliff showdown.  The Republicans want some deficit reduction coming from spending cuts.  They have modified their position to allow some higher tax rates.  But they want those spending cuts.  Which the Democrats simply refuse.  They want all deficit reduction to come from higher tax rates.  Now even the 1% are saying to tax them more.  At least, according to a new poll (see Majority of Rich Want Themselves Taxed More: Poll by Robert Frank, CNBC, posted 12/24/2012 on Yahoo! Finance).

American Express Publishing and The Harrison Group found that 67 percent of the top one percent of American earners support higher income taxes. Their support has grown since the election. This summer, 62 percent of them supported higher taxes.

Some might say the rich are hoping to tax people richer – or poorer — than themselves. The top one percent consist of people making more than $450,000 a year. But the survey clearly shows most One Percenters favor taxing themselves. More than half say that they support taxing those making $500,000 or more…

“There is an absolute willingness for the vast majority of the One Percent to take a tax increase,” said Jim Taylor, Vice Chairman Harrison Group. “What the Republicans think is not necessarily what their constituents think.”

Ask yourself this.  Why are super rich movie, television and music stars staunch supporters of the Democrat Party?  Is it because in their music studies they minored in economics?  No.  I don’t think so.  I would even go so far as to posit that they cannot differentiate between classical economics, the Austrian school of economics, the Chicago school of economics and the Keynesian school of economics.  Though they are staunch supporters of the last one.  Because the Democrats embrace Keynesian economics as it enables big government spending.  So why are super rich movie, television and music stars staunch supporters of the Democrat Party?   So they can escape the bitter attacks on wealth business owners face.

These superstars live lives like Roman Emperors.  All without having a real job.  So they have no understanding of economic fundamentals.  Or the first thing about scraping the cash together to make a payroll.  But they do know that if they support and campaign for Democrat candidates they can enjoy their obscene wealth without someone attacking them for living like Roman Emperors.  Could it be the reason why the superrich 1% are coming out in favor of higher tax rates on themselves?  Perhaps.  For there is no good economic reason to do so.

Raising taxes on them will not make a dent in the deficit.  In fact, if you added all the federal income taxes those earning $200,000 or more paid in 2010 (see Table 3.  Number of Individual Income Tax Returns, Income, Exemptions and Deductions, Tax, and Average Tax, by Size of Adjusted Gross Income, Tax Years 2001-2010) it comes to approximately $489 billion.  If you divide that number by the highest marginal tax rate (at high income levels most income is taxed at the highest marginal tax rate) that comes to about $1.397 trillion.  Which is just over the average Obama annual deficit of $1.324 trillion.  So if you confiscated 100% of all earning from those earning $200,000 or more it will pay for one year’s deficit.  So taxing the rich a few more percentage points will do NOTHING to reduce the deficit.  The deficit is just too big.  And there are just too few rich people.  No, the only way to reduce the deficit by higher taxes only is to hit the middle class with a huge tax increase.  Or you could cut spending.  Which would require no new middle class tax.  Like the Republicans want.

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