The rich want to pay more in taxes: Let them but don't force me.

In this video Ms. McGibney, a television producer, responds to Ben Stein's comments over the weekend that forcing him to pay higher taxes is a form of punishment for reasons he does not understand.

Ms. McGibney says that paying higher taxes is "patriotic" and the right thing to do. Nothing could be further from the truth. First, this country was founded, in some part, over a tax rebellion. We were fed up with paying high taxes. To argue that it is patriotic is rather silly. Even if we were to agree that paying higher taxes was "patriotic" or somehow morally superior, we must then take the inexplicable leap to saying that forcing (by threat), someone else to pay higher taxes is also patriotic or moral. This is what the wealthy left fail to understand.

If people like Ms. McGibney, Bill Gates or Warren Buffett want to pay higher taxes, let them. If they think the government can use their money better than they can, or a charity they would give money to can, give them that option. What we should not do, is let the few wealthy liberals dictate that we all have to pay higher taxes.

The practical reality is that these people don't really believe that paying taxes is patriotic or even better than donating. If they did, they would give more to taxes and keep less. They want to pay the least amount of taxes as possible, just like the rest of us but feel the need to morally condemn us. It is not about what is best for the country, but what is best for their egos.

Shocking: While told to eat healthy, American's continue to eat foods they like

This article was linked to by HuffPo using the headline American's eat shockingly few vegetables, despite Healthy Food Campaigns. And in further news, the sky is blue today.

Every time the government tried to interfere in people's actions in inevitably fails. They say not to do drugs, and the drug rate climbs. They put DARE in our kids' schools and it still has no effect. Now they say to eat healthy, but we refuse.

Since it's Sunday I'll keep this short.

Here's the practical reality, people will act in their own perceived self interest. The only thing that stopped people from smoking was an increase in prices. The surgeons general warning did absolutely nothing. If you really want people to change their behavior you have to change the incentives.

Please note that I am not encouraging a so-called fat tax. That would basically be a poor tax, as most fast food restaurants are in lower class areas. I have four within walking distance, btw. People should feel free to eat what they want. You do not need an ad campaign to tell people vegetables are healthy for you and fries are not. People already know that. They are choosing to eat foods then enjoy despite its consequences. I would fight for that right as we all should. Now, I'm off to order a big mac.

Raising Taxes doesn't raise tax revenues

This is a myth the fiscal liberals and haters of freedom have spread. Imagine if the government took 100% of your salary. Would you work? Of course not. Why would you? This is just an illustration of how absurd it is to say that always raising the tax rate raises tax revenues.

There are certain situations when raising tax rates raises tax revenues. If taxes were at 1%, raising to 2% might not affect the number of people choosing to work very much but could dramatically increase the tax revenues. This is not the situation we find ourselves in today.

Mother Jones magazine, of course, does not understand this fact as shown in this article. They claim that the Republicans want to keep the tax rate at the low low rate of the federal government stealing more than 1/3rd of people's salary to an even higher rate. That sounds fine if you believe in redistribution, but even if you believe in redistribution you should not want to increase the tax rate. As this chart shows, tax revenues are higher when tax rates on people are lower than they would be under the proposed Obama plan. Notice what this means. There will be more money for public works and services if we let the rich keep more of their money. It is the very definition of a win/win. How is this possible? First, people will choose to take higher paying jobs. Second, people will invest more creating increased employment, something we desperately need to commence. Lastly, people will feel more comfortable spending their money, further increasing employment if they have lower tax rates. This was the very premise of Milton Friedman's marquee book The Monetary Policy of the United States.

The practical reality is that the left and haters of freedom, like Mother Jones, knows these facts. They do not want to tax the rich because they love the poor. They want to tax the rich because they hate the rich. They believe in punishing those who have more than me or you. You cannot tax the rich enough to make the poor wealthy. It just isn't possible. People need to be responsible for their own actions. They need to work towards the American dream not collect this week's dream at the welfare office. No one ever said the American dream was easy, but you will never get to fulfill it standing in the welfare line waiting for someone else's money. It is time every take a little more responsibility for their actions.

For what it's worth, from my current economic standing I cannot even see the rich, let alone the super rich. I am in debt up to my eyeballs, but I did it to chase the American dream.

CNN is shocked by Harvard. I am shocked by them.

http://www.cnn.com/2010/OPINION/09/22/syed.harvard.peretz/index.html?hpt=C2

The part of this article I wish to highlight is:

The Harvard platform for Peretz gives racism an intellectual cast and authority and that is a very dangerous thing. When groups like the Tea Parties espouse bigoted views, they are more easily dismissed. But when Harvard chooses to distinguish a man who cloaks his prejudice in intellectual jargon, and then gives him additional credibility by choosing to recognize him out of thousands of its distinguished alumni, it makes scholarship a haven for prejudice.

I disagree with a lot of what Peretz allegedly said. His views are abhorrent and should not be honored. Please note I am not saying whether Harvard should honor him, or not, frankly I know very little about him.

The part I find intriguing is that the CNN author says: "When groups like the Tea Parties espouse bigoted views, they are more easily dismissed." He claims that Peretz should not be honored for his views because Peretz extrapolated a bad trait from a small part of a group to the entire group. (Muslims abusing first amendments.) He then does the exact same thing by talking about a bigoted tea party.

Why is it ok for this man to fight bigotry with bigotry? Why is it ok for CNN to "honor" the author's bigotry by giving him prominent placement on their website while Harvard should be forbidden from doing the same? This is the new left. Their bigotry is fine and if you disagree with them you are a racist, or a bigot and will be "called out" on their news cites.

The practical reality is that the elite universities already have a form of bigotry built into them. The students and professors alike are known to condemn conservatives. The elite, liberal, ivy-league schools need to open their doors not only to people of other races and religions but also to people with more diverse opinions. Harvard has done a comparatively good job of this, especially the law school when Kagan was Dean. I do not know enough about Peretz to say if he should be honored; I do know that Harvard is on the right track by accepting students and hiring professors of differing opinions. We should honor Harvard, not the bigoted views of Mr. Syed.

*Full Disclosure: I am currently a student at Harvard University but am by no means opposed to criticizing it if I think it is proper.

Shocking: Incentives matter even in health insurance

http://www.latimes.com/health/la-fi-kids-health-insurance-20100921,0,799167.story

Even the LA times might be starting to understand the downside of Obamacare. Of course, the tone of the article is against the health insurance companies for simply responding to market incentives.

The insurance companies are going to stop selling child-only insurance policies because there is no profit in it anymore. The new health care bill mandated that insurance companies must cover all kids, no matter how risky, but caps the rate they can charge. This creates a situation where insurance companies are forced to lose money. Instead of doing this, they of course, stopped selling the policies that will lose money.

This is not the fault of greedy health insurance companies. They would be more than happy to sell policies if the market could set the rates. Health insurance companies must be able to compete across state lines so the market rate will prevail. When the government confuses signals, these are the kinds of adverse results we can see. Obamacare will slowly but surely kill private sector insurance. This is just the beginning.

The practical reality is that we are losing more than just a type of insurance that can be purchased. We are restricting people's freedom. Anthem Blue Cross is being coerced to provide a service they do not want to provide to people they do not think they can adequately treat. To make it worse, they are dictated the prices they are forced to charge. The consumer is no better off. The consumer now has less choices, less freedoms than before. The consumer who might have been willing to pay a rate that would have allowed their child to be insured is no longer permitted to do so. This is not just a loss of a service, but rather, a loss of one of the core freedoms this country once cherished.

What would we do to fix the economy?

Yesterday and today President Obama challenged the Tea Party to write what would we do about the economy. It is important to note that this is only a small fraction of what needs to be done, but it is only a start. Here is my letter:

President Obama,

Today you challenged the Tea Party to answer what specifically we would do to fix the economy. While I would never speak on behalf of the tea party, I can write what I believe could have done to solve this crisis, then and now. I will answer this question in two parts. The first will discuss what we should have done as the economy collapsed. The second is what can be done now, after trillions spent on bailouts and stimulus packages.

As the economy collapsed President Bush left everything he ran on. He ran on promoting free markets both here and abroad. President Bush, like President Clinton before him, understood that free markets not only lead to increased efficiency (especially for the poorest amongst us) but also leads to a free people. The greatest economists to ever live have been nearly universal on this point, that free markets are a necessary but not sufficient clause for having a free people. When the markets started to sour, President Bush left all of that economic understanding behind and quickly scrambled to approve a bailout of banks and other large financial institutions. This action, along with the unnecessarily dramatic rhetoric from his administration caused nothing short of a panic. When you tell the market everything is going to be terrible for the next few months/years, they will listen.

We should have handled the entire situation differently. The major problem was not the collapsing housing market; rather it was the contagion effect that that had on the rest of the financial structure. We should have immediately tried to remove all government interference from the housing and banking structure. Unlike some of my more radical economists, I would disagree with ending the fed. We should have immediately moved to wind down Fannie Mae, Freddie Mac, and end the Community Reinvestment Act. This would have hurt the housing market, to be sure, but also would have instilled confidence in the rest of the markets that they would not be nearly as effected because of the seemingly random actions of the government.

The next step should have been to tread more cautiously with the so-called stress-tests. When the government first announced they were conducting stress tests on individual banks, the market did not take it seriously. It was only after the government refused to release the results of these stress-tests that people began to panic. First, the government likely should not have done theses tests. There is already a stress test for the banks, everyday, and it is called the market. If the market does not believe any bank will not survive the downturn, they will soon be out of business as their stock plummets. Using taxpayer dollars for a stress test was unnecessary at best, but was likely far worse creating a wave of panic in the industry, further spreading the contagion.

Both President Bush and yourself also should not have passed any stimulus package. The stimulus packages served to cause further panic (contagion) and confused the signals of the market. Companies should succeed by successfully serving their customers or creating a good that people want to purchase. When the government interferes and states that no matter how inferior the product is, the government will esnsure the corporation not only stay in business, but even turn a profit, it disincentivizes corporations from creating profitable goods or completing profitable services.

In short, President Obama, the government should have responded with a calm rationality and removed the causes of the economic collapse, mainly government intervention in allowing people who are unable to own a home to get a loan everyone knew they could not afford while guaranteeing banks would not lose in the process. Conversely, the government further incentivized bad lending by giving the banks taxpayer money, and even worse, created widespread panic, by doing the equivalent of shouting fire in the crowded room.

What we should do now:

We need to take a few immediate actions to improve the economy, and this country as a whole. The first is to put aside all of the uncertainty that comes from the government selecting winners in the market. This can be accomplished through putting a hold on all undelivered stimulus and bailout money. This money should not be granted and should just be used to pay down America’s sizeable debt.

The next step is to restore the culture of work. We need to take the tough step of limiting the number of weeks someone is on unemployment. Before I go any further, let me first state that my mother, father step mother, aunt, uncle, and two cousins have all been unemployed during this recession or currently are, partly as a result of this recession. I do not say that we need to limit the weeks of unemployment lightly or without understanding the impact of that statement. Studies have now shown, however, that a great deal of people find jobs the week after their unemployment runs out. This would only shock some inside the beltway. Economists understand that unemployment disincentivizes work because they are essentially getting paid to not work. If we force people back to work by either increasing their incentive to work, through tax cuts or disincentivizing not working, by limiting unemployment, or both.

We should also pass real financial reform. The reform bill congress passed and you, unfortunately, signed into law is nothing short of just punishing the successful because they are successful. I, frankly, demand more from my government than pitting us against one another. I demanded more from President Bush and I demand more from you. The following are likely major causes of the financial collapse: Fannie Mae, Freddie Mac, CRA, loose monetary policies and the government propping up banks and encouraging them to make risky bets by, basically insuring against losses with taxpayer dollars. The financial reform bill does not alleviate any of those problems, with the possible exception of the last. The government needs to understand that printing money will not solve any recession, but just postpone it. If the government had passed meaningful reform, it would include changes to the entire list of causes above.

Lastly, and I know this one is going to hurt, we have to stop the government from picking winners in given markets. This is a comprehensive problem and I am sorry is must start on your watch. We need to stop the government from paying subsidizing corn, because it artificially deflates ethanol prices, which leads to American car companies creating “flex fuel” cars that no one wants, and are unrealistic. We need to get the government out of the health care business, not because I hate people without health insurance, but because I want them to have numerous choices in which company can best serve them. The health care bill you signed into law continues the process of both parties to artificially restrict competition in this profitable sector of the economy. Insurance companies are not allowed to compete against state lines so the companies are charging rates above what they should. Instead of forcing people to buy any single insurance company’s plan, let the company’s compete and let the people choose which plans best suits them.

It is also time to let the market decide which new inventions deserve our money and which ones do not. The more the government invests in businesses the market does not believe have a chance of turning a profit, the greater the likelihood the government will interfere with proper market signals and we will end up with greater wastes of resources, like the cars and trucks powered by ethanol. America will eventually become more “green.” This will occur not because of any action of the government, in fact, it will happen in spite of the government. The nation can only become green when the average citizen thinks he can benefit from the new electric car, or solar panels, or inventions we have not even yet dreamed of. If we let the market work, investments will be directed towards areas where there is the greatest chance of success in market infiltration.

President Obama, I hope you understand that I write this letter not out of disrespect but because I have so much hope for this country and our economy. The economy is best served by letting people act in their own best interest, which was the whole point of Adam Smith’s Wealth of Nations.

I pray that this letter finds you well,

George J. Wendt

Masters in Management Candidate Harvard University

Masters in Dispute Resolution Candidate Pepperdine University School of Law

J.D. Tulane University School of Law.