Cartoon: The Dow and Credit Markets

Who Owns the National Debt: June 2007

another great chart from the Skeptical Optimist

Students: Questions, Comments, and Suggestions

Another week completed. Have a great weekend.

Parents: Questions, Comments, and Suggestions

Chapter 1 test was today for those on the period. Grades will not show up on edline until next Friday.

A Barter Success Story: One Red Paperclip

Kyle MacDonald traded one red paperclip for a house. He started with one red paperclip on July 12 2005 and 14 trades later, on July 12, 2006 he traded with the Town of Kipling Saskatchewan for a house.



http://oneredpaperclip.blogspot.com/

Essay: Laissez Faire is Best Medicine

New essay from Donald J. Boudreaux is chairman of the Department of Economics at George Mason University

"The ever-present demand to "do something" is unfortunately immune to the wisdom counseling that there are some problems best left to sort themselves out. Government efforts to "solve" market adjustments and dislocations typically -- and at best -- supply only short-run relief while making the longer-run situation more dire....

On the eve of entering World War II in 1941, America's economy was still quite depressed -- as it had been for more than a decade. And as economic historian Robert Higgs shows in his 2006 book, "Depression, War, and Cold War," New Deal policies and the prevailing climate of ideas from which they sprang suppressed investment.

The New Deal and the genuine risk of outright socialization of industry in the 1930s kept the American economy in deep doldrums for a much longer time than would have been the case if Uncle Sam just said "laissez faire" and had conspicuously ignored all the Very Smart People who clamored for socialism. No investor, after all, wants to put his assets at stake in a country whose government might tax away or outright confiscate these assets...

History is clear that freer trade means more opportunity and greater and more widespread prosperity. That Uncle Sam might be losing his taste for freer trade is very frightening. "


Read the entire essay here.

Mmmmm...Steak

Famous Economist: Frederic Bastiat

"And now I would appeal with confidence to men of all schools, who prefer truth, justice, and the public good to their own systems. Economists! Like you, I am the advocate of LIBERTY; and if I succeed in shaking some of these premises which sadden your generous hearts, perhaps you will see in this an additional incentive to love and to serve our sacred cause."
– Frédéric Bastiat, "To the Youth of France," Economic Harmonies

A new article about Bastiat.

Who was Bastiat?

Average Incomes Lagging

analysis at the Big Picture

Highest Paid Hip-Hop Artist

Big Five Automakers?

Market Share

23.9% General Motors
17.1% Toyota
13.7% Ford
10.8% Honda
10.5% Chrysler


How long until General Motors falls from the top spot?

How Different Investments Did Last Week

And You Thought Mailing a Letter was Expensive

Pentagon Paid $999,798 to Ship Two 19-Cent Washers to Texas

"A small South Carolina parts supplier collected about $20.5 million over six years from the Pentagon for fraudulent shipping costs, including $998,798 for sending two 19-cent washers to a Texas base, U.S. officials said...

A review of paid shipping invoices showed that fraudulent billing is ``is not a widespread problem,'' she said."



The people who it took 6 years to discover the billing fraud say the problem is not widespread. Is anyone else having doubts?

Free Market Critiques of Social Security

Social Security Reform: A Free-Market Alternative

By George Reisman

The Revolution of 1935

By Gregory Bresiger

The Roots of the Social Security Myth
by John Attarian

Attarian's conclusion

A MODEST PROPOSAL

Social Security’s history casts grave doubt on the wisdom of having any government retirement program at all. Any such program is subject to pernicious dynamics. There is an inherent asymmetry whereby expansion is politically rewarded, but retrenchment is penalized. There is too an inherent symbiosis whereby the program serves the constituency, and the constituency protects the program. An entitlement mentality disastrously compounds these tendencies. It creates enormous political pressure to make benefit outlays fixed charges on the future, and thereby sharply constrains policymakers’ options. In any such program a conflict between a political demand for rigid benefit guarantees and an economic need for flexibility is inescapable. Sound public finance, sound money, small government, individual liberty and personal responsibility are all but predestined to lose out.

The truly wise course, then, is to reverse direction, to abandon government paternalism and put the responsibility for old-age provision on individuals themselves, where it belongs. Individual responsibility is the hallmark of a free society. Coerced transfers are by definition a denial of individual rights and liberty. As the trend in Social Security itself—from the initial paternalism of the New Deal to the far vaster loss of freedom under Social Security “reform” proposals—teaches, freedom, power and responsibility march shoulder to shoulder. The more responsibility for our welfare we shunt onto the government, the more power over us we give it, and the more freedom we necessarily forfeit thereby.

Moreover, Social Security has had a very corrosive and degrading effect on our national character. Instead of fostering fortitude and self-reliance, it has encouraged whiny dependence. It has made Americans first servile and then petulant in their relations with their government: tamely submitting to crushing tax burdens in their productive years under the deliberately-cultivated delusion that they were buying something for themselves, and in their retirement years, railing at any attempt, however innocuous, to trim benefits. Its zero-sum finance, whereby the beneficiary’s gain is inescapably the taxpayer’s loss, has made the old callous toward the program’s burdens on the young, and the young resentful of the old. It is telling that the sour epithet “greedy geezer” was unknown in America until the elderly mobilized in the 1970s and 1980s to protect Social Security.

We must jettison Social Security’s pernicious entitlement mentality. Benefits are paid because people apply for them, out of a belief that they are “entitled” to them. It is an inflation of rights beyond all reason and a flouting of justice to say that one is “entitled” to retirement, or anything else, at the expense of coercion of others, and a prior lien on their income. What should be done about Social Security is fairly clear.

(1) Repeal the Social Security Act and replace Social Security with a rigorously means-tested benefit, for current and imminent retirees only. Abolish the Social Security tax and finance benefits with general revenues. This one step would begin the process of treating this program for what it is, not insurance but coercive redistribution. Total benefit termination for current and imminent retirees is politically impossible. However, as should by now be clear, Social Security benefits are not sacrosanct or an earned right. There is neither a legal nor a moral barrier for applying a means test. The payroll tax’s true purpose was to create a mentality of entitlement and make the insurance analogy plausible. Abolition of this tax is essential for exploding the false consciousness. Those born after 1945 would lose their Social Security benefits and would have to recognize the OASDI taxes they have already paid for what they are—redistributive transfers. On the other hand, they would be free to make their own arrangements for old age with the money they now pay in Social Security taxes. A less severe option would be to permit people after 1945 to make a free choice between receiving their benefits or receiving tax lifetime exemptions equal to or greater than accumulated benefits.

(2) For those born after 1945, provide a means-tested old-age benefit similar to Supplemental Security Income. Political realities being what they are, some such federal benefit would probably continue to exist for the near future. We should, however, ultimately devolve an old-age safety net provision onto churches and families, which is where it properly belongs, and fund it through private resources voluntarily contributed. And to make the need for this backup benefit minimal, and facilitate its ultimate replacement with private measures, we should:

(3) Facilitate saving for old age. The $2,000 ceiling on contributions to Individual Retirement Accounts is far too low given both the inflation which has occurred since that ceiling was created and our need to save more. It should be increased to $5,000, and indexed thereafter for inflation. To maximize the incentive to save and invest for old age, and to let the money accumulate undisturbed, taxes on IRAs should be abolished, except for a penalty for early withdrawal. Moreover, there needs to be more flexibility for withdrawing the money before retirement and fewer penalities for doing so. Ultimately, the goal should be to institute a system whereby the tax code is not used to pressure any particular tradeoff between saving and consumption.

(4) Reform employee pensions. The question of how businesses and employees should handle pensions should be taken out of the realm of regulation and be governed exclusively by the law of contract. Workers urgently need the freedom to make contracts with their employers whereby they can put together the most mutually advantageous terms. With company consent, it should be possible for pensions to be made portable and vested in the worker.

This approach makes no promises of either taxpayer- funded security or affluent retirement through forced investment in stocks, as do the “reform” plans being advanced. But in dismantling Social Security it would avert a probable fiscal and economic disaster and political crisis as the baby boomers retire; relieve Americans of a huge tax burden; avoid a dangerous government presence in the stock market; reverse the trend toward totalitarian paternalism in America; and greatly increase Americans’ liberty and control over their own lives. If these are major American values, then this approach to Social Security reform serves them better.

Students: Questions, Comments, and Suggestions

One week down.

Parents: Questions, Comments, and Suggestions

The first full week has ended. People are adjusting to the new schedule.

Social Security Cartoon

Open House Bonus

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Please leave a comment for your student to receive a few bonus points.

Tell me the student's name and what period/block I have them.

Hopefully you will find my site useful and informative.

Mayfield

The Dow Hits a 4 Month Low: 12,861.47

The Good Old Days Required a Lot of Work