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~ USA Headed for a 5th Revolution! Why?

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Monthly Archives: May 2015

#132 Education Policy: Separate but Equal an Improvement?

30 Saturday May 2015

Posted by Jordan Abel in Education Issues, Gov't Policy, Societal Issues

≈ Leave a comment

Scene: Continuation of conversation between Jordan and JC.  Conversation centers on themes for government policies following Revenge Revolution.  Jordan and JC have agreed to a deadline of this evening to complete the work.  When finished, Jordan will attempt to review with POTUS.  Conversation begins Entry #131.

Background: JC and Jordan have concluded that the standard measure for future government policies should be ‘treat thy neighbor as thyself.’  The first ‘test’ of the standard is education policy.

Jordan:  “First criteria for education policy should be a quality education opportunity for all students.”

010414_1635_16TeachingS1.jpgJC:  “Public or private education?”

Jordan:  “Public education.  The country needs to make a quality education available to everyone.  Otherwise the country is not treating citizens fairly.”

JC:  “Does fair mean no private education?”

Jordan:  “No, fair allows private education as long as public education meets acceptable quality standards.”

JC:  “You just implied that separate but equal is OK.  You really mean that?”

Jordan:  “Yes, separate but equal is OK.”

supreme_court_buildingJC:  “That takes the country back to Plessy v. Ferguson and overturns Brown v. Board of Education.”

Jordan:  “Think about this.  We’re more than 100 years after Plessy v. Ferguson and more than 50 years after Brown v. Board of Education.  And what’s changed?  The US does not have even separate but equal public education.”

JC:  “Whoa, Bubba.  You really think so?”

Jordan:  “Pick a city.  Any city.”

JC:  “Alright.  Let’s take Charlotte, NC.  You used to live there.”

TurtleneckJordan:  “Still do when I’m not trapped in Washington.”

JC:  “Charlotte claims it is a world-class city and a leader in all that new south stuff.”

Jordan:  “And what does Charlotte have?  A very strong private school base and a public school system with widely divergent quality and test scores.”

JC:  “Maybe Charlotte should balance out the public schools…with you know, more bussing.”

Jordan:  “Mandated bussing is what caused the boom in private schools.  Charter School-Bus-Clipartschools and vouchers made the problem even worse.”

JC:  “What’s the problem with charter schools?  I thought they were the answer to weak public schools.”

Jordan:  “Charter schools…and vouchers…use public money to fund schools that are privately run with little accountability.  Why should my tax dollars…or anyone’s tax dollars…support someone’s religious brainwashing…excuse me education.”

JC:  “The term ‘brainwashing’ is probably correct.  Many religious-based private schools seem to ban critical thinking.  The schools might as well build robots the kids are so programmed.”

Jordan:  “You asked me whether I supported separate but equal education.  My answer is ‘yes.’”

JC:  “How are you…we, the country…going to manage ‘separate but equal?’?”

Jordan:  “Let’s start with the kids first.  And back to the reference point, ‘treat thy neighbor as thyself.’”

122813_2140_15Education4.jpgJC:  “I agree that kids should have a neighborhood school.  Having a school one can attach to…sort of bond with emotionally…is important.  If possible, the kids should walk or ride a bike to school.  And go to class with other kids from the neighborhood.”

Jordan:  “So what do the kids get with bussing?”

JC:  “Kids get to spend a lot of time on the bus and don’t necessarily know the other kids in the neighborhood.”

Jordan:  “Exactly.  And had we been bussed in grammar school, you and I likely never would have met.  And no comment whether that would have been better.”

JC:  “I’m all for bussing.  Just kidding, Jordan.  I agree with you.  But how do you enforce consistent quality in the different schools?”

Jordan:  “A lot of decisions need to be made at the local level.  But the very first standard for all decisions needs to be ‘treat thy neighbor as thyself.’”

JC:  “I guess that’s what Plessy v. Ferguson was trying to do…but without really enforcing the standard.”

Jordan:  “No one said setting new government policies would be easy.  But a clear standard allows real discussion to take place, especially at the local level.”

JC:  “So the measurement standard for education is ‘treat thy neighbor as thyself?’  That’s it?”

Jordan:  “Well, yes, and why not?”

JC:  “The standard does not seem very clear.”

Jordan:  “Au contraire, I think the standard is very clear.  The standard forces the community into equal educational opportunity for all.”

meeting-clipart-board-clip-artJC:  “You’re counting on the local community to enforce the standard?”

Jordan:  “Who better to enforce it?  Right now, those groups that want unequal educational opportunity find all kinds of ways around supporting public education – private schools, private religious schools, vouchers, charter schools, home schools.  Everything but equal-opportunity public education.”

JC:  “Your logic seems to be the more specific the standard or rule, the more time and creativity some groups will spend on finding a way around it.”

Jordan:  “You got it.  Keep the policy standard simple and easy to understand.”

JC:  “I get it.  The government can then force those who don’t support the standard to justify why.”

Jordan:  “The federal government has been perceived as the bad guy in education, at Constitution-Dayleast by many Republicans.  Let’s turn that image around.  The federal government should set an easy to understand standard that is consistent with the US Constitution…equal justice for all…and consistent with virtually every religion.”

JC:  “Hard to argue with such a standard.”

Jordan:  “Besides, the entire country needs to crank up the focus on education.  The US is way behind much of the developed world in quality of education.”

JC:  “Mmmm.  The ‘treat thy neighbor as thyself’ seems to work with education policy.  What about say health care policy?”

Jordan:  “Let’s tackle that one after a break.”

JC:  “Don’t take too long.  Remember you’ve got a mock broadcast from the Oval Office at 9:00pm tonight.”

(To be continued)

Previous entries: #121-#130, Issues related to Federal budget.  Download in e-book format, 15 05 23 Do They Really Understand Entries #121-#130.

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#131 How Treating Others Affects Gov’t Policy: Overview (Part 1)

27 Wednesday May 2015

Posted by Jordan Abel in Education Issues, Gov't Policy

≈ 9 Comments

Scene: Jordan’s office.  (More about the blog’s origin and the author.)

Gelly (Jordan’s assistant): Mr. Abel, you have an unexpected visitor, JC.  You have no woman_parentappointments for the next hour if you want to see her.”

Jordan:  “Sure.  Send her in.”

JC:  “Thanks, Gelly.  Well, well, Mr. Bigshot.  I feel honored to be able to see you.”

Jordan:  “C’mon, JC, cut the BS.  Come over here and let me give you a hug.”

JC:  “Careful, that might be considered sexual harassment and get you fired.”

Jordan:  “I wish.  Please report me.”

010414_1635_16TeachingS1.jpgJC:  “What’s the matter?  Things not going well for little Jordie?  Wanna talk to mama?”

“JC, you have a way of humbling most anyone.  Yes, let’s talk.”

JC:  “Gelly was nice enough to get coffee for me.  You need another cup?  I’ll get it.”

Jordan:  “Yes, please.  Thanks.”

JC:  “Well, he still has manners.  And, yes, I know, black, no sugar.  Now, what’s the issue?”

Jordan:  “Not one overriding issue.  Just frustrated that progress after the Revenge Revolution seems so slow.”

JC:  “What did you expect?”

TurtleneckJordan:  “Thought the country would turn around more quickly.  Get on a track where we were making real progress.”

JC:  “Progress toward what?”

Jordan:  “More effective government.”

JC:  “What went wrong?  Something happen to put things sideways?”

Jordan:  “Nothing in particular.  I think people did not have a clear vision of what they wanted after the Revenge Revolution.”

JC:  “People knew what they didn’t want – the old way of governing will all the inequities.”

Jordan:  “In retrospect, the Revenge Revolution was the easy part.  The hard part is what to do afterwards.”

dogchasingcar_1JC:  “I suppose like the dog chasing the car.  What’s he do after he catches it and sinks his teeth into the tire?”

Jordan:  “Good analogy.  It’s like war.  If the enemy is clear, then war is easy…well the strategy is easy.  War is always painful.”

JC:  “So pretend you’re king.  OK, pretend you’re POTUS.  What’s your plan?  The people and government need some direction.”

Jordan:  “You’re making this tough.”

JC:  “I’m making it real.  For too long people in Washington functioned by being against something…whatever something was.”

Jordan:  “Then the populous revolted.”

021214_1242_24Resultsof1.gifJC:  “And said, we don’t want you to be against something.  We want you to stand for something.  So, OK, great swami…I mean POTUS…whadda stand for?”

Jordan:  “How much time do I have to decide?”

JC:  “Assume you have a nationwide broadcast from the Oval Office at 9:00PM eastern tonight.  You better be ready.”

Jordan:  “I know this is just an exercise…at least for now.  But I think we should finish it and then consider presenting to POTUS…soon.  Real soon.”

JC:  “Now he understands.”

Jordan:  “Gelly, if no major conflicts, could you, please reschedule appointments for the rest of the day?  Thanks.”

Gelly: “No major conflicts.  I’ll reschedule.  And I’ll order in lunch.  Tuna sandwiches OK.”

JC:  “Great.  Thanks.”

checklistJordan:  “Alright, let’s list the topics we need to address.”

JC:  “In no particular order, tax rate, national defense, trade policy, infrastructure, election funding…”

Jordan:  “Whoa, you’re covering a lot of ground.”

JC:  “You need to cover a lot of ground.  The list is really made up of sub-topics.  But we need to put these topics on the list before we develop a broader strategy.  The grand plan, as it were.”

Jordan:  “You’ve got my head spinning.”

JC:  “Don’t worry, the big picture will become clear in a few minutes.  Let’s keep going on the list.”

Jordan:  “Social Security, health care, education, social issues…what else?”

JC:  “Energy policy, foreign policy, economic policy…”

Jordan:  “Yikes!!  Enough, already.”

stupid Resized clipart-illustration-443616JC:  “OK, the list is long enough.  If you had to pick a few words to describe how each of these issues should be addressed, what would the words be?”

Jordan:  “You are tough.”

JC:  “Quit stalling.”

Jordan:  “I’m thinking.”

JC:  “OK, let me give you an idea that might help.”

Jordan:  “When you think of how personal relationships should be handled, what words come to mind?”

Jordan:  “Something very basic…and something most of us learned a long time ago.”

JC:  “And that is?”

Jordan:  “Treat your neighbor as thyself.”

JC:  “Well, well, well, Mr. Religion himself.  You working on becoming a rabbi soon?  torahClipSuch insight.”

Jordan:  “Well, it’s true…and, no I’m not working on going to rabbinic school.  My Hebrew is not that good.”

JC:  “But you picked out the foundation for many religions?  Why not apply the same standard to government policy?”

Jordan:  “Separation of church and state.”

JC:  “You’re not promoting a specific religion.  You’re promoting a philosophy.  Let’s try it as a reference for policy.”

122813_2140_15Education4.jpgJordan:  “Alright, let’s try education policy.  The measurement is ‘treat thy neighbor as thyself.’”

JC:  “Now, what does education policy look like?”

 

(To be continued)

Previous entries: #121-#130, Issues related to Federal budget.  Download in e-book format, 15 05 23 Do They Really Understand Entries #121-#130.

#130 Do They Really Understand? Flat Tax Fallacy. (Part 10)

22 Friday May 2015

Posted by Jordan Abel in Economics, Federal Budget, Societal Issues

≈ Leave a comment

Scene: Jordan and Sandy, a former business colleague, are having coffee.  The discussion begins Entry #121,.  This is the final segment of a series that includes Jordan’s description of a conversation with the Speaker of the House and the Senate Majority Leader, which begins Entry #123

Sandy:  “That conversation with the Speaker of the House and the Senate Majority hunterLeader sounds fascinating.  How often do you get private time with those guys?”

Jordan:  “First time in my career.”

Sandy:  “Maybe the three of you should play golf more often.”

Jordan:  “Not sure they need to be around me very often but your point is well taken.  They need to be around some people who can really help them understand the issues.”

Sandy:  “From what my parents tell me, Washington used to be more like what you guys did.  Sort of informal where people actually talked to one another.”

CongressJordan:  “Your parents are right.  Guys from both parties…it was mostly men then…used to play golf, play poker and whatever.  The families used to socialize and the kids knew one another.”

Sandy:  “You mean they acted like real people?”

Jordan:  “Good way to put it.  Yes, they acted like real people.  And, frankly, a lot more got done in Washington then, too.”

Sandy:  “You think the Revenge Revolution will bring back the old Washington?  How can we make that happen?”

Jordan:  “Shorter political campaigns and public funding of campaigns would be a good start.”

Sandy:  “You mean no more PAC’s (Political Action Committees)?”

TurtleneckJordan:  “No more PAC’s.  Every candidate gets so many dollars for his or her campaign…and that’s it.  No transferring money to other candidates.  No money for personal expenses.”

Sandy:  “How would that really work?”

Jordan:  “Sandy, let’s save that conversation for another day.  Before the break you said you had a couple of questions.  What were they?”

Sandy:  “One big question really.  Why doesn’t Congress implement a flat income tax?”

Jordan:  “What’s the appeal of the flat tax?”

Sandy:  “Two reasons.  One, a flat tax would be much easier to calculate.  Two, and more important, everyone would then pay taxes.”

taxpayerJordan:  “I agree a flat tax would be much easier to calculate.  But when you say everyone would pay taxes, exactly what do you mean?”

Sandy:  “A lot of people pay no tax.  And that’s not fair.  They’re free-loaders.”

Jordan:  “You mean some people don’t pay any income tax or not pay any kind of tax?”

Sandy:  “Never really thought about taxes other than income.  I guess I mean pay no income taxes.”

Jordan:  “And you think it’s not fair that some people don’t pay income taxes.  Right?”

Sandy:  “It’s not fair.  Those of us who work hard pay all the taxes.”

Jordan:  “You mean, pay all the income taxes.”

UnfairSandy:  “What’s the difference?  If someone doesn’t pay income tax, that’s not fair.  Period.”

Jordan:  “First, let’s talk about different type of taxes.  Name a few taxes.”

Sandy:  “Income tax, sales tax, property tax.”

Jordan:  “What about FICA?”

Sandy:  “You mean Social Security…and Medicare?”

Jordan:  “Yes, Social Security and Medicare.  While not a big amount, another one is excise tax?  Check your phone bill every month and see what you pay.”

Sandy:  “OK, there are lots of different taxes.  What’s your point?”

Jordan:  “If I showed you credible data that people who do not pay income tax still pay 15-20% of their income in taxes, would you stop calling these people free-loaders?”

Sandy:  “Yes…but I don’t believe you.”

 

total-tax-bill by income

Sandy:  “I never knew this.  Why don’t people look at the tax burden this way?

Jordan:  “The same reason people don’t look at debt as a percent of GDP.  They either do not understand percentages…or more likely, the data destroys their argument.”

Sandy:  “The data makes the case for a flat tax almost moot.  While the tax burden is not flat across the board, it’s a lot flatter than I thought.  But what about the argument that higher income people pay all the taxes…and lower income people don’t?  That still seems like a fair argument.”

Jordan:  “I agree higher income people pay a lot more tax.  But, Sandy, higher income people also make a whole lot more money.”

Sandy:  “That seems so obvious when you say it like that.”

Jordan:  “OK, here’s a chart that shows the percentage of income by group and the percentage of taxes paid by group.  See much difference?”

Share of Taxes by Income

Sandy:  “Not really.  The lowest 20% income group pays a little less tax than their share of income and the highest income group pays a little more tax.  But, overall income and taxes look pretty balanced to me.”

Jordan:  “So I ask you.  Would you rather be in the highest income group and pay a little more tax or the lowest income group and pay a little less tax?

Sandy:  “Another one of those trick questions?  Put me in the highest income group any day.  I’ll gladly pay a little more tax.”

Jordan:  “Feel better that the tax burden is spread evenly among all groups?  Think we need a flat tax?”

Sandy:  “No we don’t need a flat tax.  We have one already.  We need a simpler tax code but we don’t need a flat tax.  Just baffled why no one really talks about the tax burden this way.”

fife-drum%201Jordan:  “Welcome to Washington, the land where objective and fair arguments have been gobbled up by self-interest and greed.”

Sandy:  “Let’s hope the revenge Revolution changes that.  Jordan, you’ve converted me.  I’ll help tell the story.”

Jordan:  “Great.  Really enjoyed seeing you again.”

 

 

 

#129 Do They Really Understand? Federal Debt con’t (Part 9)

16 Saturday May 2015

Posted by Jordan Abel in Economics, Federal Budget

≈ 1 Comment

Scene: Jordan and Sandy, a former business colleague, are having coffee.  The discussion begins Entry #121,.  This segment is a continuation of Jordan’s description to Sandy of a conversation with the Speaker of the House and the Senate Majority Leader, which begins Entry #123

Mackey:  “Alright, I agree that the Federal debt as a percent of GDP (Gross Domestic occupations_lawyerProduct) was up less under Obama than Bush 43 but…”

Jordan:  “We’re making real progress.”

Mackey:  “Jordan, please, let me finish.  The debt percentage was less under Obama because Republicans forced him to cut back on his ridiculous expenditures.”

John Boy:  “That’s right.  And Republicans deserve all the credit for the economic recovery.”

Jordan:  “I must say, you guys have real chutzpah.”

Mackey:  “Jordan, just what is chutzpah?”

Jordan:  “For the average Joe, I would say, having a set of you know what…kahunas.  But ‘chutzpah’ is Yiddish and is best described with a story.”

man_with_speechJohn Boy:  “This should be interesting, but just don’t take too long.”

Jordan:  “The short version is this.  A hoodlum kills his mother and father, then begs for forgiveness from the court because he is an orphan.  That’s chutzpah.”

Mackey:  “The kid was disingenuous to say the least.”

Jordan:  “That’s why I said you guys had chutzpah.”

John Boy:  “You think we’re being disingenuous?”

Jordan:  “Look, Republicans tried to block nearly every program Obama proposed to stimulate the economy.  The Republicans mantra was ‘we need to save our way into prosperity.’  And, by the way, John Boy, how many times did the House vote to overturn the Affordable Care Act, aka Obamacare?”

Jordan:  “I quit counting after 50.”

Mackey:  “But Obama’s stimulus programs would have raised the debt?”

man_with_piggy_bank_2Jordan:  “True, but raised it only temporarily.  Mackey, if you’ve learned nothing else from this little session in the club house, I hope you’ve learned that one cannot save their way into prosperity.”

John Boy:  “Are you saying if I don’t spend money – or if someone doesn’t spend money – then demand will not increase?”

Jordan:  “Yes…and?”

John Boy:  “And without consumer demand there will be no additional jobs and no additional income…maybe no income for me, or most anyone.”

Jordan:  “And no income means no tax revenue from those unemployed.”

Mackey:  “But why doesn’t business spend more?”

down chartJordan:  “If you owned a business and demand for your product was flat to down, would you hire more people?

Mackey:  “No, of course not.”

Jordan:  “Which leaves government to get the economy started again.”

Mackey:  “If I hear you correctly, in a recession since business is not spending, government needs to spend more money.  If government cuts back also, it makes the economy worse.  Kinda creates a spiral downward.”

SpiralJordan: “You’re on a roll, Mackey.”

Mackey:  “But what about paying back the debt?”

Jordan:  “Pay it down when the economy is stronger.  Then you can raise taxes.”

John Boy:  “You’re giving me apoplexy.  Raise taxes?  That’ll kill everything!”

taxpayerJordan:  “OK, Mr. No-Tax-Increase-Ever, what was the maximum marginal tax rate at the end of the Reagan Administration?”

John Boy:  “25%…and that was still too high.”

Jordan:  “Mackey, want to guess?”

Mackey:  “25% seems low but I’ll stick with it.”

Jordan:  “How ‘bout the maximum tax rate under Clinton?”

John Boy:  “Clinton got lucky.  Reagan and Bush created the environment and he benefitted.  Clinton probably raised it to 35%.  I really don’t remember.”

Mackey:  “Agreed.”

Jordan:  “Good guesses.  Reagan was 28% and Clinton was 35%.  But the 28% was short-lived.  The max rate was raised to 31% under Bush 41.”

John Boy:  “That’s why the economy went in the tank and he didn’t get reelected.  Taxes went up.  Proves my point.”

Jordan:  “Just what is your point?”

John Boy:  “Like I said earlier, Reagan deserves all the credit for the economic recovery.”

voodoo-2015958Jordan:  “And what about all the deficits under Reagan and the voodoo economics?  And, oh yes, when was the last time there was a budget surplus?  C’mon, John Boy, take a guess.”

John Boy:  “OK, you made your point.  There was a budget surplus under Clinton, not Reagan.  We went through that a few minutes ago.”

Jordan:  “At least one of the lessons stuck.  John Boy…and you, too Mackey…if someone offered you $1.00 but said that you had to pay $0.35 tax, you would turn down the $1.00 and have nothing or pay the tax and have $0.65 left?”

John Boy:  “No, I’d take the $1.00 and pay my $0.35 tax.”

Jordan:  “What if the deal was you could keep $0.61.  Would you still take it?”

Mackey:  “Of course, take the $1.00.”

John Boy:  “Mackey, be careful.  Jordan is setting up another one of those intellectual traps.”

TurtleneckJordan:  “Look, I agree there is some point at which you would not take the $1.00.  You might reject it because of the risk involved, the amount of money you already make, the time involved…whatever.  But for most everyone except the very wealthy, would take the $1.00.  Taxes would need to be higher than 35% before they stopped seeking the extra $1.00.”

Mackey:  “Are you saying we should raise taxes?”

Jordan:  “I’m saying it is OK to raise taxes when the economy is strong, maybe even raise them a bit while the economy is starting to recover.  Then use the extra taxes to pay down the debt.  But people need to have income in order to generate tax revenue.”

bomb-hiJohn Boy:  “Jordan, why do you keep making such logical statements?”

Jordan:  “Comes with the territory.  I just wish we…collective we…would spend more time thinking through and talking through issues rather than throwing ideologue bombs at one another.”

Mackey:  “Listen, we need to get out of here.  But I want to make one final comment.  You know I can never admit to this publicly, but I very much appreciate the lessons in economics.”

122913_1337_14BringingU2.pngJohn Boy:  “Hear, hear.  A toast to our host, Jordan Abel.”

Jordan:  “Thanks.  Glad I could be of help.”

Waiter:  “Mr. Abel, the check.”

(Back to the conversation with Sandy.)

Sandy:  “Wow, Jordan that was quite a story.  Have you got a few more minutes?  hunterHave a couple of questions.”

Jordan:  “Yes, Sandy, but let’s take a break first.”

(To be continued.)   

 

#128 Do They Really Understand? Federal Debt con’t (Part 8)

10 Sunday May 2015

Posted by Jordan Abel in Economics, Federal Budget

≈ 1 Comment

 

Scene: Jordan and Sandy, a former business colleague, are having coffee.  The discussion begins Entry #121,.  This segment is a continuation of Jordan’s description to Sandy of a conversation with the Speaker of the House and the Senate Majority Leader, which begins Entry #123

man_with_speechJohn Boy:  “Let me repeat the questions.  ‘What was wrong with tax cuts under Bush 43?”

Mackey:  “Yes, Jordan, what was wrong with them?”

Jordan:  “Two fold.  First, Bush 43’s economic policy created huge deficits.  Remember CBO (Congressional Budget Office) had predicted budget surpluses for a number of years into the future.  Rather than reducing Federal debt…as many Republicans are wont to do…the tax cuts make the debt much worse.”

occupations_lawyerMackey:  “And what was the second reason?”

Jordan:  “Let me add to the first.  Remember guys the US was at war with Iraq so military expenditures are starting to soar…and we’re cutting taxes.  Doesn’t seem very Republican-like to me.”

John Boy:  “OK, Jordan, what was the second reason?”

Jordan:  “You guys always interrupt someone when they are speaking?”

John Boy:  “Yes, just finish and quit evading the question.”

Tilted-scale-hiJordan:  “The tax cuts were weighted heavily toward upper income.”

John Boy:  “Everyone…well most everyone…got a tax cut.  So the middle class benefitted.  Why are you always so worried about the middle class?  The wealthy pay way more than their fair share of taxes.”

Mackey:  “Right.  What’s your problem?”

Jordan:  “Just how short is your collective memory?  We just talked people needing money to buy things.  No money, no purchases, no demand and no new jobs. And, therefore less income for the wealthy. Remember?”

Mackey:  “You keep trying to convince us the Republicans economic theory…”

Jordan:  “…Trickle-Down theory.  And pardon me for interrupting.”

waterfall-clipart-dTrMkL7XcMackey:  “Trying to convince us the Trickle Down theory doesn’t work.  You know, like a waterfall, those at the bottom benefit from the work done at the top.  You know, workers at the top of the income scale and moochers at the bottom.”

Jordan:  “I’ll ignore your last comment.  You guys are old enough to remember the 1980 presidential campaign.”

John Boy:  “Unfortunately, we are old enough.  And so are you.”

Jordan:  “George Herbert Walker Bush, eventually #41, was running against Ronald Reagan to be the Republican presidential nominee.  And what label did Bush put on his fellow Republican’s economic policy?  The Trickle Down theory.”

Mackey:  “He called it ‘voodoo economics’ or something like that.”

Jvoodoo-2015958ordan:  “Voodoo economics…and truer words were never spoken.”

John Boy:  “The voodoo economics label was campaign talk.’

Jordan:  “Spoken during the campaign, yes.  But merely ‘campaign talk’ as you claim, no.  The label was spot on.”

Mackey:  “But the economy expanded under Reagan.  Proves he was right.”

Jordan:  “One more time, let’s look at the Federal debt as a percent of GDP.  Under Reagan what happened?”

John Boy:  “I know, I know.  Under Mr. Conservative, Ronald Reagan, the Federal debt ronald_reagannearly doubled as a percent of GDP.  That’s still hard for me to believe.”

Mackey:  “Seems as if someone is cooking the books.”

Jordan:  “Forget the conspiracy theories about distorting the data.  Remember the data were gathered when Reagan was president.”

Mackey: “But all those liberal bureaucrats in Washington hated Reagan and they fudged the data to make him look bad.”

Jordan:  Guys, whether you like it or not, economic growth under Reagan was a case of Keynesian economics at its best.  Reagan, the great communicator, roped you in to believing it was Trickle-Down economics.”

Mackey:  “Why doesn’t Trickle-Down work.  Seems as if it should.”

service jobJordan:  “Let’s go back to basics.  Add $1,000 to the income of someone making say $20,000-$30,000 per year.  What will they do with the money?”

John Boy:  “Spend it all.”

Jordan:  “What about $1,000 to people who make say $100,000 per year?”

Mackey:  “Might spend some of it.  Same with people making more than $100k.  But most over $100k won’t even notice.”

John Boy:  “Mackey, we keep falling into Jordan’s traps.”

TurtleneckJordan:  “John Boy, these aren’t traps.  Just facts.”

John Boy:  “I know but your approach is frustrating.”

Jordan:  “Truth is sometimes frustrating.”

John Boy:  “You know it is, especially since we’ve been preaching the opposite for so long.”

Mackey: “Preaching what?”

John Boy: “That Keynesian economics does not work and the most effective way for economic growth in a recession is to cut back on Federal spending, not increase it.”

Jordan:  “Maybe it’s time to put away the ideologue rhetoric and start focusing on solutions.  The US had a Revenge Revolution and then threw out many sitting members of Congress.  The public said it was time to rethink policies like tax cut that benefit the wealthy and don’t create good jobs.”

FiascoJohn Boy:  “Alright, we can make some policy changes.  But…and I emphasize but…we don’t want another Obama Administration fiasco.”

Jordan:  “What was the alleged fiasco?”

Mackey:  “Alleged?  The fiasco was huge deficits.  Wild spending on health care.  The Administration was absolutely out of control.  Obama ruined the country.  He caused the Revenge Revolution.”

John Boy:  “Mackey, raise your right hand and repeat after me.  ‘Beginning now and henceforth I will think before making what are really outrageous political statements.”

US Debt Percent GDPMackey:  “OK, no more statements without thinking first.  What’s the issue in telling the truth about Obama?  His fiscal deficits made Bush look like a piker.”

John Boy:  “Mackey, Mackey.  Look at Jordan’s charts.  Then get ready to eat some crow.”

 

crow-clip-art-COLOR_CROW(To be continued.  Included on the dinner menu, crow.)

#127 Do They Really Understand? Federal Deficit con’t (Part 7)

05 Tuesday May 2015

Posted by Jordan Abel in Economics, Federal Budget, Possible Solutions, Societal Issues

≈ 1 Comment

Scene: Jordan and Sandy, a former business colleague, are having coffee.  The discussion begins Entry #121,.  This segment is a continuation of Jordan’s description to Sandy of a conversation with the Speaker of the House and the Senate Majority Leader, which begins Entry #123

John Boy:  “Your point about companies replacing debt with stock…equity…is something I never really thought about.”

occupations_lawyerMackey:  “Me either.  Wonder what would happen if the US Government issued stock instead of debt?”

Jordan:  “Interesting questions but obviously lots of barriers to make it happen.”

John Boy:  “And highly unlikely…no impossible…given the attitude of many Republicans.

Mackey:  “John Boy, I agree the chance of passage is slim to none.  But we should bring it up for discussion.  Doing so would at least make people think.”

Jordan:  “Think?  Ideologues actually think?  Surely you jest.”

man_with_speechJohn Boy:  “Alright you guys let’s get back to the issue at hand – debt as a percent of GDP.  How ‘bout looking at the 230th Century?”

Jordan:  “OK.  Debt jumps in the Civil War…”

Mackey:  “Excuse me, the War of Northern Aggression.”

John Boy:  “Mackey, put that idea to rest.  The war was more than 150 years ago.  And which side wanted to secede?”

US Debt Percent GDPJordan:  “Children, no bickering.  Debt as percent of GDP (gross domestic product) jumps during the Civil War, then declines, jumps again in WWI, then declines until the Great Depression.”

Mackey:  “Yes, and the crazy public elects that socialist, Mr. ‘spend-at-all-costs’ himself, Franklin Delano Roosevelt.”

John Boy:  “Right.  Just look at how much debt jumped under FDR.  Mackey’s right.  What a socialist!”

fdr_~FdrJordan:  “And just what happened to the economy?”

Mackey:  “The economy recovered…sort of.”

Jordan:  “Sort of?”

Mackey:  “Sort of.  The country didn’t need all those socialist program.  The country could have saved its way out of the Depression.”

John Boy:  “You’re right again, Mackey.”

Jordan:  “And just what do you think drives the economy?”

John Boy:  “Tax cuts.  Incentives to invest.”

TurtleneckJordan:  “Here’s a simple question.  For someone out of work…through no fault of their own…what good is a tax cut?”

Mackey:  “An incentive to work.  Go find a job.”

Jordan:  “And just who is going to hire that unemployed worker?”

John Boy:  “Create your own job.”

Jordan:  “Let’s put politics aside and think this through.”

(John Boy and Mackey both sigh.)

Jordan:  “You own a business.  Why would you hire someone?  Just because the person needs a job?”

Mackey:  “Of course not.  Jordan, where do you come up with these stupid questions?”

John Boy:  “Mackey, I think we’re about ready to have another ‘ah ha’ moment.”

Mackey:  “Whadda mean?”

John Boy:  “As much as I hate to admit it, Jordan’s right.  Why would you hire someone?”

Mackey:  “Because you were busy and needed more help.”

John Boy:  “You got the right answer – because you need more help.”

Mackey:  “Simple isn’t it.  People want to buy your product, eat at your restaurant, whatever.  You need help.  What’s wrong with you guys?”

John Boy:  “And where did the tax breaks fit into that decision?”

Mackey:  “The tax breaks didn’t.  Oops.  What made the difference was demand.”

Jordan:  “Waiter, may we have some more snacks and another round?  Time to celebrate.”

Mackey:  “What are we celebrating?”

mr_know-it-allJohn Boy:  “Our enlightenment…at least enlightenment according to Jordan.  OK Mr. Know-It-All, what’s next?”

Jordan:  “Look, all I’m trying to do is present some basic economic principles.  Not left, not right, just basic economics.”

Mackey:  “So you’re claiming…”

Jordan:  “I’m not claiming anything.  I’m just stating.”

Mackey:  “OK, since you’re buying…you’re stating.  And you’re stating the only real way out of a recession is to stimulate demand.”

Jordan:  “Yes, that’s exactly what I am stating.  Talk about all the other theories you want.  When you do, you have to go back to one basic question?  Is a company going to hire another employee…or even retain existing employees…if enough people are not buying the company’s products?”

John Boy:  “Why do you make economics so simple?”

Jordan:  “The fundamentals of economics are simple…but not always intuitive.”

John Boy:  “Next you are going to tell Mackey and me that if the private sector is not hiring people…or laying off people…then the government needs to stimulate the economy.”

Jordan:  “You’re on a roll.  I told you most of economics was simple.”

OppositeMackey:  “Wait, you’re saying the government should do the exact opposite of what a household should do?  I mean, rather than cut back on spending when times are tough like real people do, the government should spend more?”

Jordan:  “See how easy this lesson is?”

John Boy:  “I don’t believe it.  If it’s bad for business it’s bad for government.”

Jordan:  “I’m going to show you why business benefits and makes more money by supporting a Federal deficit when in a recession.”

(To be continued)

#126 Do They Really Understand. Federal Deficit con’t (Part 6)

01 Friday May 2015

Posted by Jordan Abel in Economics, Federal Budget

≈ Leave a comment

Scene: Jordan and Sandy, a former business colleague, are having coffee.  The discussion begins Entry #121,.  This segment is a continuation of Jordan’s description to Sandy of a conversation with the Speaker of the House and the Senate Majority Leader, which begins Entry #123.

Jordan:  “A little surprised, Mackey?”

occupations_lawyerMackey:  “Absolutely.  I had no idea.  John Boy, did you know about this?”

John Boy:  “I’ve heard Democrats talk about it but never really believed them.”

Mackey:  “Jordan, could you walk us through this chart?  I want to make sure I understand it.”

Jordan:  “Gladly.  Let’s start with what is displayed.”

man_with_speechJohn Boy:  “Federal debt as a percent of GDP, right?”

Jordan:  “Yes, debt as a percent of gross domestic product.  Not the absolute level of debt, just the percent.”

Mackey:  “So the chart really is more like what we talked about re Bill Gates.  He can afford to take on a lot more debt than any one of us because he makes a lot more money than any one of us.”

Jordan:  “True.  But we also need to consider wealth in addition to income.  A lot of people make a lot of money every year but spend most of it…and therefore really haven’t accumulated a lot of wealth.”

bill_gatesMackey:  “But Gates has income and wealth.  In fact, a whole lot more wealth than his annual income.”

John Boy:  “As simple as that sounds, talking about the combination of income and wealth really helps me understand.  The United States has a lot of assets, really accumulated wealth, which could be used to back-up the debt.  What do they call that back-up?”

Mackey:  “Collateral.  The back-up is like what they do for your mortgage.  The bank uses your house as security or back-up for the loan.”

John Boy:  “Jordan, you sure no one is recording this discussion?  I’d really be house_on_hill_scene_color_2embarrassed if someone heard us asking these questions.”

Jordan:  “No one is recording the conversation.  And I think you hit on a good point.”

Mackey:  “You mean that a lot of people, including many of our legislative colleagues, do not understand the basics of finance.  And especially how the Federal government is financed.   From what you’ve said, financing the government is similar in some ways to your household finances, but there are some key differences.”

John Boy:  “Let’s get started with the chart, please.”

Jordan:  “What most people don’t realize, is the US has been in debt since the Revolutionary War.”

John Boy:  “What?  Debt since the Revolutionary War?  That seems hard to believe.”

Jordan:  “Think about it.  During the Revolution, the US was really like a start-up Mickey-Mouse-fingercompany…but really a country.  With the Revolution we gave the finger to our biggest trading partner – call it our biggest customer, mother England.”

Mackey:  “Now what do we do for money?  And where do we get some key supplies to fight the motherland?”

John Boy:  “We’ve got to import goods.”

Jordan:  “Goods cost money, which we don’t have.  But…”

Mackey:  “But like Bill Gates, we have lots of assets that other countries can use.”

John Boy:  “So now some countries, notably France, lend us money and also buy some of our products.”

Jordan:  “A new country going into debt is not unusual.  Really no different than a start-up company going into debt.”

Mackey:  “OK, the US has lots of debt but the economy starts to grow.”

US Debt Percent GDPJohn Boy:  “Yeah and according to the chart by 1835 or so we paid off the debt.  Who was president then?”

Jordan:  “Andrew Jackson.”

John Boy:  “What happened?  We were debt free and then we go back into debt again.  Seems stupid to me.”

Jordan:  “Try the Civil War for starters but let’s move beyond that.  Think of the US as a fast-growing company.  Give me some license in this comparison but I think you’ll get the point.”

John Boy:  “Many companies have no debt.  So why shouldn’t the US operate that way?”

Jordan:  “Here’s something I’ll bet you’ve never thought about.  Do you own stock in any companies?”

John Boy:  “Of course.”

TurtleneckJordan:  “Mackey, how about you?  Own stock?”

Mackey:  “Absolutely.”

Jordan:  “Many of those larger companies replaced their debts…loans…by issuing stock.”

Mackey:  “What a minute.  Are you saying the people who bought the stock are really financing the company…just like the bank?  They’re really loaning it money?”

Jordan:  “Yes, but with one difference.  The company never needs to pay off the loan.”

John Boy:  “Aren’t stockholders protected?  The company has all the assets.”

Jordan:  “Stockholders can benefit by having the value of the stock increase and/or by receiving dividends…at least some companies pay dividends.  But there is no guarantee of anything.  If the company goes bankrupt, stockholders are at the back of the line and hold what is probably a worthless stock certificate.”

printing_dollar_billsMackey:  “If there’s no guarantee or no backing to the stock certificate, isn’t the company effectively printing money?  All they have to do to get more money is issue more stock, rather than going to the bank and getting a loan.”

John Boy:  “Mackey, we get all exorcised because the government issues money without backing it up with gold or silver.  When you stop and think about it, the companies that sell stock are, in essence, doing the same thing – printing money.

Jordan:  “A real eye opener, eh?  But let’s hold the conversation about printing money.  Back to the chart and more about when debt as a percent of GDP went up and then came down.”

(To be continued)

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