Investing Journal: Economics

Milton Friedman - Limited government video

Sun, 18 Mar 2007 06:38:53 GMT

Last month, I mentioned that there was a PBS special on the free-market economist (and author of Free to Choose) Milton Friedman. The special was a biography, and didn't get into too much of his beliefs, so I was slightly disappointed by it. Recently I found a video on Google Video that is what I was hoping for. I love how he explains complicated policies so simply.

Documentary on Milton Friedman tonight on PBS

Fri, 02 Feb 2007 19:37:49 GMT

This may be late for many to see, but I've loved Friedman's books, so I thought I'd broadcast. These details are for Seattle. Note, I love the Remote Record, I just wish it was more reliable.

http://tv.msn.com/tv/details/pop/?view=details&progId=50144679&chanPos=9&chanId=10392&utc=2007-02-03T05:00:00

The Power of Choice: The Life and Ideas of Milton Friedman

The winner of the 1976 Nobel Prize in economics, Friedman struggles to convince the world that free market capitalism brings prosperity and growth.

Channel: KCTS 9
Airing Time: Fri 2/2, 9:00 PM (90 minutes)

Taxing the rich

Fri, 06 Oct 2006 19:00:00 GMT

In the Wall Street Journal today there's a good article on taxes that provides insight into how much the rich are taxed. I don't profess to know how much is a good tax rate, but I'm disgusted at how frequently politicians and others deride the rich. Note the part highlighted in red.

Personal income tax payments are up by 30.3% since 2004 too, despite the fact that the highest tax rate is down to 35% from 39.6%. The IRS tax-return data just released last month indicates that a near-record 37% of those income tax payments are received from the top 1% of earners -- "the rich," who are derided regularly in Washington for not paying their "fair share."

More good news is that dividend-tax payments appear to be up as well, even though the tax rate was lowered to 15% from as high as 39.6%. A National Bureau of Economic Research study found that "after a continuous decline in dividend payments over more than two decades, total regular dividends have grown by nearly 20%" and that this reversal happened at "precisely the point at which the lower tax rate was proposed and subsequently applied retroactively." There hasn't been a purer validation of the Laffer Curve since Ronald Reagan rode off into the sunset.

As for the budget deficit, at $260 billion it is now about 2% of our $13 trillion economy, well below the 2.7% average of the last 40 years.

Also, before anyone points out that the rich keep getting richer, and this just proves it, I'd like to state my rebuttal. Yes they're getting richer, and I'd hate to live in an economy that has so many restrictions and controls that a rich person would not get richer faster than a middle class or poor person. But I already covered that more in depth in my analysis of the Democratic Leadership council's platform.

Freedom - The real American Dream

Wed, 26 Jul 2006 06:52:07 GMT

I'm not usually one to be interested in politics, except recently since I've been learning so much about economics, and the economy happens to be pretty much controlled by politicians, I'm taking an interest. I forgot to include an interesting point in my review of Applied Economics yesterday. Politicians obviously enact laws to achieve a specific outcome. I can't remember exactly how he put it, but he made a point about how they try to make it appeal to the public purely based on the desirability of the outcome. Of course something that helps the poor is desirable, but how is it to be achieved in such a way that maintains the freedoms of all people, does not require wasteful bureaucracy, and end up hurting the very people it was intending to protect? It is a very hard thing to do.

I read (or skimmed though) several of the Democratic Leadership Council's platform that was published a few days ago, including Hillary Clinton's Saving the American Dream Initiative. The initiatives cover college, retirement, business, home ownership, and health care, in kind of a "government knows best" Robin Hood approach. As Friedman's book, Free to Choose, states, the government cannot reduce the cost of anything. It can only transfer the burden of the cost from one group of people to another. The only mention of how to pay for these programs seems to be to tax the rich, and reduce inefficient government programs. Well I'll agree with reducing the inefficient programs, but that's still the taxpayer's money, and it should be returned, and not replaced with another inefficient program.

Friedman's book also mentions that 50% of the taxes are paid by the richest 4% of the people. This doesn't seem particularly unfair to me, but why is it that in these articles the rich are made to seem like all the tax laws are written to benefit only them. Yes they still keep getting richer. It's America, and they're free to do so... mostly anyway. It's the result of the miracle of compounding interest, and getting a good education (formal and informal), not thanks to Bush's tax cuts. Think past stage one here people. In the article Democratizing Capitalism, whatever that means, Austan Goolsbee throws out all sorts of numbers with his spin to try to prove his point about the rich getting richer. I want to know how anyone proposes to have my net income grow as fast (on a percentage basis) as the founder of a successful corporation (which is what the rich usually are), and not take away freedoms from the rich. Quoting that the rich are getting richer isn't going to solve the problem. Goolsbee actually tries to use 401K contribution deductions, and the large difference between the highest tax rate and the capital gains rates to suggest that the tax laws are written for the rich. Both of these examples are backwards, because the higher the rate on the highest tax bracket, the greater the benefit for the rich from these deductions. It's the fact that the rich are taxed at such a higher rate than the poor that actually make this a "problem" in the first place. If they were taxed at the same rate, these "problems" wouldn't exist. Can the rich be made to not get richer? It sounds crazy to even ask the question, because what would be the point of placing barriers in front of the very people who create the most wealth in this country?

I don't believe that government can get involved in college, and healthcare, and retirement without creating an even more inefficient system, with more laws, and more loopholes to be exploited. My "American Dream" isn't to have high taxes and high benefits, it's to have the liberty to be an entrepeneur (or whatever I want) without the government interfering with those liberties. This isn't about a definition of the American Dream, it's about politicians enacting laws purely based on desirablility of results, without a way to achieve those results in a free market and society.