Monday, December 31, 2012

Balance? We're nowhere near it! Lower Spending!

When you're in the situation pictured below, you take some boxes off the cart. You don't go get a bigger donkey!  Cutting spending is like removing some boxes, of course. Increasing taxes resembles getting a larger donkey, and also has a suspicious resemblance to getting more of our present government.

So the question is Balance? Taxing versus spending balance? We're so far from that, it makes a mockery of the word. While others debate 3 dollars of spending cuts for 1 dollar of tax increases, I think it should be somewhere above 10 dollars of spending cuts for each dollar of tax increases. That's if it's not all spending cuts, pure and simple. Government spending simply needs to be a smaller percentage of GDP. As Speaker Boehner's recent spending chart showed, spending is the problem, not taxation.

The problem with the taxation side is that we're taxed enough already. Yes, that spells TEA, as in TEA party. The meaning of the phrase "TEA party" has evolved quite a bit since it first emerged. It's had a lot of help in that evolution from people who neither like nor understand what it stands for.

By what measure are we taxed enough already? A good measure is whether the level at which entities in the economy are taxed, cause them to alter their behavior significantly to avoid taxes. Of course, rational economic actors will alter their behavior at any level of taxation, from a little to the truly crippling. That's the foundation of the saying "tax anything and you'll get less of it!" But above significant behavioral changes, markets get so distorted that people's wealth is reduced and overall economic performance suffers.

Back to balance. I'm with CNBC's Rick Santelli on balance. For another illustration see his videos using watermellons and a pea as props to illustrate how little Congress is dealing with the spending side of this "balance".  

Thursday, August 23, 2012

Todd Akin, Republicans and Winning Elections

The Two Personalities of the Republican Party

The Todd Akin brouhaha brings into focus something I've thought about the Republican party for a long time. The Republican party is a mash-up of economic thought and socio-religious thought.

As you read this, recall those circular drawings you saw way back in about forth grade. You were studying the intersection of sets. There is the set of economic conservatives who vote Republican. And there is the set of social conservatives who vote Republican. The Republicans seem to assume at times that their voters are at the intersection of those sets. I don't assume that, and as I listen to peoples' commentary I suspect that most are outside the intersection of these sets.

That is, they vote Republican for economic reasons *or* because they are socially conservative. Often I think the social conservatives don't care about economic issues and the economically-minded or free-market voters stay Republican in spite of the socially conservative platform planks.

I worry about the limiting effect of the intersection of those sets. As I survey the American scene it appears to me that the set of social conservatives is shrinking. They may be hard-core and vocal, but small in numbers. And the rise of Hispanic voters may render them less important than otherwise.

What about those who are economically conservative and socially liberal, such as myself? We are sometimes called Libertarians. The only catch with voting Libertarian is that they don't have the juice to win - and a vote Libertarian is basically a split from a Republican candidate or issue that might win. 

Into all of this comes Todd Akin

The Republican assumption seems to be that it must have hard-core religious social conservatives in the tent (with Todd Akin suddenly excepted). I don't agree - instead, the whole fiasco is just another exhibit illustrating the wisdom of separating religion and state. I could mention Islam at this point, but I won't.

George W. Bush's strategy was brilliant at the time, I thought. He said a lot of nice things to keep social conservatives in the tent, but did very little in terms of trying to change policy. I liked it that way.

I believe that in America today, and given the ways it is trending, the closer Republicans move to a Libertarian-style platform the better they will do. That's because hard-core church attendance and socially conservative believers are declining in numbers. And young people who are not constrained by any such belief systems are increasing in numbers. And those same young people can no longer assume affluence will be theirs in middle age. They  hear the constant drumbeat in the media about the economy. Some of them will give economics systematic study, and come around to free-market thinking.

I'd celebrate if the entire abortion plank were dropped from the platform. To wit, if Todd Akin does not want an abortion, he does not have to get one. :-)

In my personal experience I've seen that a woman does not get an abortion lightly. That's even if that woman fights vehemently for the right for women to have them. It seems the right to have them is important, but theoretical, before a woman is pregnant. But when the fetus is hers, a lot of feelings, hormones, religious beliefs, fears, medical risks and facts, social concerns, and advice from loved ones suddenly come into her equation. And that's probably how it should be.