Economists discover people don’t behave rationally

May 30, 2016 at 1:28 pm

“Contrary to our original thinking, I’ve come to believe that people don’t behave like the economic textbooks say they should behave,” wrote Dr. Paul Wingfield, an economist at Cato University. “People don’t behave rationally.” Wingfield and his colleague, Dr. Summer Redaction, recently published an article inHigher Economics titled “Outside our corporate […]

The great tax shift: How politicians promise tax cuts, then shift the costs onto you

April 5, 2016 at 5:36 pm

Politicians make a lot of promises about taxes.

Ted Cruz claims:

As Washington pads Wall Street’s pockets, hard-working Americans get left behind. My tax plan will change that.

Donald Trump claims he’ll “make America great again” with his tax plan. Others have similar plans. Flat taxes, “fair” taxes, etc.

We’ve been hearing these same claims for 40 years. What actually happens is that politicians lower taxes, primarily for the wealthy, and then they do one of two things: 1) shift the costs onto you, or 2) run deficits.

When you hear pundits and politicians talk about taxes, forget what they say. The truth is simple: You’re going to pay more, and the wealthy are going to pay less.

As tax day approaches, here’s a story you won’t hear in the corporate media.

Donald Trump speaking at CPAC 2015 in Washington, DC (Gage Skidmore/CC-BY-SA 3.0) Donald Trump speaking at CPAC 2015 in Washington, DC (Gage Skidmore/CC-BY-SA 3.0)

‘All for each and each for all:’ Teddy Roosevelt’s Square Deal

March 22, 2016 at 10:47 am

Corporate special interest groups in our country such as the U.S. Chamber of Commerce have figured out that they can sway government in their favor if they market themselves as “good” and paint certain people as “evil.”

This is why today we live in a world where our richest businessmen and businesses are marketed as “good,” capable of doing no wrong, and all government is marketed as “bad.” In this world, government exists only for the purpose of business owners and we’re told we should just sit back and let the benefits trickle down. Only they haven’t. In fact, the opposite has happened. The rich have gotten richer and more powerful at the expense of everyone else.

We’ve seen this before. The late 1800s and early 1900s saw the rise of rich monopolies that hurt the average person. Railroads favored certain large trusts over small farmers.Upton Sinclair wrote The Jungle in 1906 exposing the health violations, labor abuses, and unsanitary conditions of the meatpacking industry. Foods and drugs were mislabeled and consumers deliberately misled.

As a result, Theodore Roosevelt, a progressive Republican, introduced a platform based on a few simple ideas that would become known as the Square Deal. On April 5, 1905, he delivered his Square Deal speech in Dallas, Texas, where he laid out his philosophy:

It is all-essential to the continuance of our healthy national life that we should recognize this community of interest among our people. The welfare of each of us is dependent fundamentally upon the welfare of all of us, and therefore in public life that man is the best representative of each of us who seeks to do good to each by doing good to all; in other words, whose endeavor it is not to represent any special class and promote merely that class’s selfish interests, but to represent all true and honest men of all sections and all classes and to work for their interests by working for our common country.

This is what everyone wants: A square deal for all.

[caption id="attachment_2018" align="aligncenter" width="550"]Theodore Roosevelt speaking from the balcony of the Hotel Allen, Allentown, Pennsylvania, 1914 (Lehigh County Historical Society). Theodore Roosevelt speaking from the balcony of the Hotel Allen, Allentown, Pennsylvania, 1914 (Lehigh County Historical Society).[/caption]

Twelve questions for Bruce Bartlett, economic historian and former Reagan adviser

March 8, 2016 at 9:56 am

Bruce Bartlett is a historian and former Reagan adviser who describes himself as a lifelong conservative that believes the current GOP panders to fools. He’s written for the Economix blog at the New York Times and has authored several books including The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take. I’m a longtime fan of Bruce’s work and when he contacted me about a post, I asked him if I could pick his brain about economics and economic myths.

Bruce Bartlett in a 2012 interview with Bill Moyers. Bruce Bartlett in a 2012 interview with Bill Moyers.[/caption]

No amount of hard work is going to pull people up if they don’t get paid for working hard

February 29, 2016 at 11:06 am

back_in_my_day_650
One of the things corporate special interest group marketing takes advantage of is differences between the generations and their understanding of the economy.

You’ve seen the memes. The most famous example was Mitt Romney characterizing 47 percent of Americans as lazy.

Typically, I see posts like this on the Internet:

A Baby Boomer friend of mine explaining how hard he’s worked. A Baby Boomer friend of mine explaining how hard he’s worked.

Implicit in my friend’s post is the idea that anyone can pull themselves up if they just work hard.

The problem is that things today are very different. There are no more paper boys. Or pensions. Hell, newspapers may not even be around much longer.

What my Baby Boomer friend experienced was very different than today’s reality. Because of these life experiences, it’s often difficult for Baby Boomers to understand just how different today’s economy is from the economy of the 1950s and 1960s.

How can you help people like this (especially in your own family) understand the realities of today’s economy?

No room for failure: How student debt impacts results

February 22, 2016 at 2:51 pm

Johns Hopkins commencement ceremony in 2010 (by Sakeeb Sabakka/CC-BY-2.0)

I was lucky: I managed to get through college with only a small amount of debt.

I was able to do this because I was fortunate enough to have middle-class parents, I attended a state school, I received scholarship help, and I got into a co-op program that helped me cover some of the costs.

At the time, I didn’t realize what this would allow me to do. I didn’t realize that it would allow me to take some risks I would never have been able to otherwise.

It allowed me to fail. Not just once, but numerous times. And failure, believe it or not, is critical to success.

This is why I want to talk about how student debt levels today are not only hurting students and recent graduates, but are hurting our businesses—and our country.

How to really make America great again: Get rid of ‘the dumbest idea in the world’

February 1, 2016 at 11:02 pm

One of the best questions you can ask people in organizations that are struggling is:

If you could get rid of one thing, what would it be?

It’s a great question (and also one that should be asked in confidentiality) because:

  1. It’s hard to think about changing everything.
  2. It’s easier to think about one thing to eliminate.
  3. People often have a really good idea about what that one thing is in an organization. Often it’s the elephant in the room that people can’t talk about publicly for fear of retribution. Sometimes, it’s a person.

One thing clearly stands head and shoulders above the rest when you talk to many people in corporate America. It’s an idea that completely removes responsibility from many corporations in our society. It’s an idea that threatens not only our constitutional democracy, but also every value Christians hold dear and every value we hold dear from modernity and post-modernity.

It’s an idea so bad that Jack Welch, former CEO of General Electric, called it “the dumbest idea in the world.”

The idea, called shareholder value theory, is that the sole purpose of publicly-held corporations is to return profit to shareholders.

Customers be damned. Society be damned. Families be damned. Results be damned. America be damned.

Where did this idea come from?

New York Stock Exchange, August 2010. (by Elbie Ancona (CC-BY_SA 3.0))

Alexander Hamilton and the principle of infant industries

December 31, 2015 at 11:08 am

Alexander Hamilton on the $10 bill.

Recently, Republican utility regulators in Nevada rolled back incentives for solar energy. One of the big arguments put forward is that these subsidies “distort markets.”

In 2013, fossil fuels accounted for 115x the amount of production from solar energy. Source: Forbes In 2013, fossil fuels accounted for 115x the amount of production from solar energy. Source: Forbes[/caption]

Solar power accounts for roughly 0.7 quadrillion Btus of annual power generation compared to 81 quadrillion Btus of annual power generation from fossil fuels.

In other words, the energy market is already “distorted.” If you think about it, we all know the problem with these distortions. It’s hard to break into a market already dominated by big existing players. Even if something better exists.

Here’s a little bit more about how markets work.

7 things it’s no longer possible to believe after Donald Trump

December 18, 2015 at 11:35 am

With the rise of Donald Trump, there’s certain things that have become almost laughable to believe. Here’s seven.

Donald Trump at CPAC. Photo courtesy of Gage Skidmore. Donald Trump at CPAC. Photo courtesy of Gage Skidmore.

Why regulations increase when you privatize government

November 15, 2015 at 11:17 pm

Every now and then some politician pulls a stunt where they print out a list of regulations from some agency or other to try to make the point about the “burden” of regulation.

Mitch McConnell speaking at the CPAC 2011 conference. Photo CC 2.0 courtesy of Gage Skidmore. Mitch McConnell speaking at the CPAC 2011 conference. Photo CC 2.0 courtesy of Gage Skidmore.

What they don’t talk about is that privatization creates more regulations.

Why?