A Course in Economics

Economics is known as the "dismal" science (sorry, Art). Perhaps this is why many people on the Left have failed to grasp its basic truths. Truths such as --

• Government does not produce wealth. Rather, it taxes private property to sustain itself.
• The higher taxes are, the more they harm the prospects for wealth creation. Lower tax rates translate into more economic activity, more wealth creation, and higher tax receipts for the state's coffers.
• Government largesse is no substitute for job creation by the private sector.
• Excessive regulation is a drag on economic growth and job creation.
• Micro-management from a central point (read Montpelier) is usually inferior to local control over local matters.
• Social engineers and planners working for the state hinder individual initiative and degrade individual freedom.

These truths are simply ignored by the partisans of the nanny state, a class well represented in Vermont. The Left prefers statist solutions -- solutions to problems that statist ideology is responsible for to begin with. A vicious circle, I believe this is called.

It seems to me that something is needed to wake up these benighted souls to the problems they have created. Therefore, I propose the creation of a government-mandated course in economics for all Vermonters (including Messrs. Leahy, Sanders and Welch).

The course will be called, "Economics for Dummies" -- no, that might offend some people. Let's call it, "Economics for You and Me." Every adult Vermonter will be required to earn a passing grade. Failure will result in -- lessee, what penalty should the law provide? Twenty lashes with a wet term paper? Perhaps house arrest until the slackers have read through the collected works of Adam Smith, David Ricardo and Milton Friedman would be an appropriate sanction.

Learning centers will be established (at taxpayer expense, naturally) throughout the state. Instructors will be drawn from under-tenured academics and anyone else who can show that he or she has passed a college-level economics class. The course will thus double as a jobs program.

Instructors will be required to follow the course syllabus. The syllabus itself must be drawn up by a sound authority. I nominate Art Woolf for this task.

How to fund the program? A tax, of course. I propose a 25% tax on all textbook sales in the state of Vermont. Less well-off communities and poor college students who would be "negatively-affected" by the tax will receive a subsidy from the state. Determining who qualifies for this subsidy will depend on a complicated formula to be worked out by the revenue department. The formula will follow SOP and be as incomprehensible as possible.

Should the proposed revenue source prove inadequate, the state will make up the shortfall by extracting a fee from any citizen whose income has risen, year over year, at any time during the previous five years.

That should do it. Give the statists a dose of their own medicine for a change, and see how they like it. A few of them might even learn something.

Comments

[Edward Charles Ponzi Jr]

Fun beating a straw man isn't it?

People seem to think that all these goofy local costs and polices are what are the cause of economic problems in our State.

They are not -- our problems are not that much different than most other small States. Deinstrialization, escalating local costs, etc are a nationwide phenomena.

Economics 101:

1-We have a command economy about the most important thing in our economy: MONEY.

2-Virtually all important economic issues are rooted outside our borders (as with sheep in the 19th century)

3-The Nanny State is not for Nannys. It is for Banks and Wall St who have just lost TRILLIONS of dollars gambling with your money and are going to be bailed out at your expense.

Try this on for size:

http://www.federalreserve.gov/releases/h3/Current/

Do you understand what is says? it says: Nonborrowed Reserves of U.S. depository institutions have turned negative for the first time since before the Great Depression.

We in VT will be paying for that bailout (maybe by the cheapening of our currency) and we will blame it some thing under our noses!

[Jon Harrison]

You take me too seriously, Mr. Ponzi. I was actually trying to provoke a little mirth. I am sorry that the humor seems to have gone completely over your head.

[Mister Guy]

Very pithy Mr. Harrison.

Can govt. encourage the production of wealth?

"The higher taxes are, the more they harm the prospects for wealth creation."

Please explain the economic expansion that occured in the 1990s then, after tax increases helped to balance the federal budget. This "supply-side" stuff is a dead argument at this point I think.

"Excessive regulation is a drag on economic growth and job creation."

I agree that there is fine line here between too much and too little regulation. No regulation will just allow businesses to do whatever they want to, and we've already tried that I think...they were called Robber Barons.

"I propose the creation of a government-mandated course in economics for all Vermonters (including Messrs. Leahy, Sanders and Welch)."

You should write all three of them a letter and see what they say in response. I'd love to read that!

Ah, Uncle Milty...dead, gone, and (soon hopefully) forgotten.

[Jon Harrison]

There is actually no contradiction between what I said about higher taxes hampering growth, and the growth that occurred in the '90s after Clinton raised taxes. The Clinton tax increase had a positive effect in that it reassured markets that the U.S. budget deficit would not get out of control, which would have put heavy pressure on the dollar.

However, had the same goal been achieved by cutting spending rather than raising taxes, growth would have been even stronger, and probably more lasting. Much of the '90s growth was bubble in nature, unfortunately.

The Bush II administration has both cut taxes and increased spending - which has been catastrophic for the U.S. economy. The tax cuts would have been fine if combined with cuts in spending. But then G. W. Bush is a terrible president. Gore would have been preferable to this guy, who in my opinion is a head case.

Why would I waste my time writing to Moe, Larry and Curly in Washington, D.C.? They're far too arrogant to listen to me. Moreover, as I have nothing but contempt for the three of them, I wouldn't lower myself.

I bet you've never read "Capitalism and Freedom." You might appreciate Friedman's argument against conscription (p. 36).

[Mister Guy]

"There is actually no contradiction between what I said about higher taxes hampering growth, and the growth that occurred in the '90s after Clinton raised taxes."

Of course there is...you just don't see because you're blinded by the "supply-side" myth. Nope, I don't read fiction. ;)

[Jon Harrison]

Glibness is no substitute for rational thought, Mr. Guy. It's shocking that you won't read something because you believe you're opposed to the ideas it puts forward. One can't refute something one hasn't studied.

[Edward Charles Ponzi Jr]

"You take me too seriously, Mr. Ponzi. I was actually trying to provoke a little mirth. I am sorry that the humor seems to have gone completely over your head"

I understand and appreciate the light-hearted tone of your essay -- but you are still making a point -- that I think is incorrect.

viz: you saying that people on the left do not understand economics and "free market types" do -- that's nonsense.

Taxes have economic drawbacks -- but borrowing is worse -- and while a rate cut from 70% to 49% may increase revenue -- many tax cuts don't pay for themselves -- and we have sky high deficits and a sinking economy to prove it.

As for regulation -- we have removed many depression era limits on banks and brokers -- and currently the unregulated OTC derivatives market is on its way to $1 Quadrillion of notional value.

Unfortunately when that house of cards collapses and all the store windows in your town become plywood - we will gain no wisdom from the experience as most economists will just cling to the beliefs they have always held.

I am saving an Irving Fisher award for Art.

Do we need better economic education in this country? Probably more than we need air.

ODDLY the so called "liberals and conservatives" have really never been closer in their economic thought. he libs still cling to Lord Keynes and Wall St is so underwater and leveraged that its gonna be inflation or plywood.

Are in-State policies gonna make a difference for us at this point?

Ya -- if we can get past talking about yesterday's issue of "economic growth" [US GDP currently NEG] -- and start talking about what is going to be on everyone's mind a year or 2 from now: SURVIVAL.

Edward Charles Ponzi Jr.
FUTURIST
Hooverville Falls
The Republic of Vermont
http://futurist-project-beta.blogspot.com/

[Jon Harrison]

Mr. Ponzi, I have heard people predicting the end of life as we know it for decades. Someday, perhaps, the apocalypse will come. In the meantime I plan to keep striving for improvements at a more mundane, day-to-day level.

"Many tax cuts don't pay for themselves." Let's assume for a moment that that's true. All one needs to do is cut spending as well. The idea that we need to be spending over 20% of GDP in the public sector is nonsense.

Equally nonsensical is the notion that left-wingers understand economic principles. Sound economic principles, that is. No question they understand Socialism well enough.

[Mister Guy]

You should read "The Shock Doctrine" instead of Uncle Milty Mr. Harrison.

There *has* to be a limit to how high our national debt can go. I cannot envision how high that number is, but to not start working as soon as possible to reduce it is insane IMO. Bushy Boy will go down in history as one that took large budget surpluses as far as one could see and turned them into deficits & one that took unprecidented good faith for the the USA after 9/11 and turned it into dust.

[Jon Harrison]

I happen to agree completely with what you say in the above, Mr. Guy.

[Edward Charles Ponzi Jr]

"Mr. Ponzi, I have heard people predicting the end of life as we know it for decades"

I hear that all the time -- it means nothing and explains nothing. Did the doom-sayers have a good analysis? has our economy been doing so well for decades? Then how come we have $50T in TCM debt and no Sovereign Wealth fund?

"Equally nonsensical is the notion that left-wingers understand economic principles"

That was not my point -- my point was: you don't either -- but in a different way.

You are also REALLY mixed up about who the Permabears are in the economic world -- the people with the most concern about the economy are people who see a bursting credit bubble and follow the works of the Austrian School economists like Ludwig Von Mises and Murray Rothbard.

http://www.mises.org/

Those people are the purest advocates for capitalism you will ever find. The Keynes types think we will be fine.

We don't have a fundamentally sound successful market economy -- we have the greatest credit bubble in human history to explain our pho-nee affluence -- and it's over.

[Edward Charles Ponzi Jr]

"There *has* to be a limit to how high our national debt can go. I cannot envision how high that number is, but to not start working as soon as possible to reduce it is insane IMO"

There is a plan to eliminate the national debt, save the banks and all the leveraged players on Wall st -- it's called:

INFLATION