Saturday, October 18, 2008

Economics, Obama, Stupid Voters

"The number of ignorant people in America is growing much faster than the number of intelligent ones." (Chris H, paraphrase)

The Saturday morning business segment on FOX News has its moments of silliness and posturing. But if you listen carefully, you'll learn more about jobs and the economy in one morning than the average Obama Supporter has learned in a lifetime.

For example, "the top 10% of wage-earners [Joe the Plumber is smiling] pay 80% of federal income taxes." Barack Obama knows this startling fact, but you'll never hear him or and other left-wing Democrats admit it. The average American, according to various surveys, knows nothing about the huge "patriotic" (?) "contributions" (?) made by high wage earners. Our typical American apparently believes -- falsely, absurdly -- that high wage-earners pay little or nothing in taxes.

People like Obama and Biden make lucrative careers out of fostering such illusions. Alas, when its comes to economic knowledge, the average American is relentlessly . . . average. As such, he or she is the custodian of a vast horde of misinformation.

Another FOX insight: since the stock market crash in 1987, how much has the "tech-heavy" NASDAQ index declined? In fact, since that sharp market decline two decades ago, the NASDAQ has gone UP by 486%. That number takes into account the the recent decline.

If you focus on that time period (1987 until now), it would have been wise to put ALL your money in NASDAQ equities. Your investment then to now would have skyrocketed. Oh, and if you'd been able to put a portion of your Socal Security contributions into the NASDAQ, as Bush and McCain proposed -- and Obama opposed -- you'd be looking at an affluent retirement. Of course, your involuntary "contributions" to the Social Security Trust Fund really didn't grow at all -- since the money went out as fast as it came in.

Again, we turn to FOX: What about Obama's plan to dole out $500 (or more) to all Americans earning less than $250,000 a year? Isn't that just what he calls it, a tax "rebate?" No, it isn't because the $500 would go both to most of the 60% of wage earners who DO pay taxes -- and to all the 40% who don't pay taxes.

In other words, for approximately 100 million Americans who don't pay federal income taxes, the $500 would be a welfare check. It would be especially welcomed by Obama's core demographic: the tens of million of non-income-tax payors who will be voting for the Illinois Senator.

There are just a few paragraphs in this piece. But they contain information that most American voters should know -- but don't. The smart Americans, those who are economically savvy, will not generally be voting for Obama. The stupid Americans -- those who know as much about economics as they do astrophysics -- will cast their ballots heavily for the Illinois Senator.

Why do left-wing Democrats like Obama continue humoring -- and deceiving -- ignorant people, uninformed voters? They do so because it's good politics. They may end up wrecking the economy, but -- unfortunately -- such demagogues will rarely lack for work themselves.

Putting Obama in charge of the economy is like making Rev. Wright president of a theology school.

Sarah Palin's motto is: "Serve the people." Her motto, unlike Obama's, is NOT "delude the people."

steve maloneyambridge, pa


langsimon said...


You'd have more credibility if you quoted someone else other than Fox News...the BBC maybe, or the Financial Times?.....if you are trying to reach any swing voters out there then it's better not to be so reliant on one news source.

ps, Joe the Plumber has a tax lien on him from 2007, so while he wants low taxes, looks like he doesn't like paying any...just throwing that out there, have a good Sunday :-)

Travis said...

I'd have to agree; savings still equal investment, "a rising tide lifts all boats"-J.F.K, and we never landed on the moon. haha you have no idea what you're talking about. I'll try to leave the writting to you; you leave the economics to us economists.

I'll keep it short; starting from the beginning:

1. You're absolutely right. The top income earners pay a high portion of the tax burden. However, they do only pay a small portion of their income. To paraphrase Warren Buffet, "why is it fair that I pay only 17.7% while my secretary pays 34%?" (Washingtonpost 2008). This one is all true, but only half valid.

2. The whole Nasdaq thing, ridiculous. Let's put all of our social security on the stock market; let's create a huge bubble and then when it pops... The government will have to bail us out. Another indication that the money supply is truely indogenous. Look at what's happenning today....

3. A few problems with your statistics, most notably that $100 million American's don't pay taxes; completely innacurate.

4. Here's how tax cuts for the lower class and tax hikes for the upper echelon actually work (not in favor of taxing the wealthy absurd amounts, but for arguments sake). Poorer families have a higher propensity to consume than those who are wealthier. Giving tax breaks to the poorer families results in, you guessed it, well actually you didn't but others have, an increase in consumption. What happens when we decrease the taxes on the upper echelon? Consumption falls, especially during a recession. THey will save most of their income; probably in foreign banks or domestic banks that won't lone it for the fear of default. But wait, surely it will trickle down into the economy? We will eat the bread, but the peasants will eat our crumbs; not likely in the current crisis. Maybe during economic growth but definitely not during contraction.

The stimulus package works in much the same way causing an increase in consumption. Here's the REAL argument against the stimulus package, and any fiscal spending. Pay attention so that you know where the actually weaknesses lie...
It's based on the naive premise that any decrease in taxes, or increase in government spending will shift the economy's production and total output (Y) out far enough that the increase in tax revenues will make up for it. However, it's hard to implement the policy correctly. For instance it takes about 6 months for us to come to a concensus that we're actually in a recession, even longer for Congress to pass a bill, and longer yet for that fiscal package to actually reach the market. Thus after all this time what are the chances that we are still in a recession? That the package is the right size (i.e. not too much; money that will have to pay back later+interest because the economy's rebounding), or that it was misdirected in the first place. Keep in mind that the average recession lasts 11 months and we're looking at easily that long. The other argument against fiscal policy is crowd out model II, but we'll ignore that considering interest rates are not likely to rise; 1% fed rate; real rate around 0%.

I hope you read this, my apologies for being such a brat. As I'm sure there are many grammatical errors that you, as an English major, are blatently aware of, I feel the same way when I discover errors in economic reasoning. I'll correct you this once, and if you feel up to the challenge will allow you to correct my grammar:) But in the meantime I'll consult my Strunk and White handbook and I hope you consult a macroeconomic theory textbook.