Category: Economics

On the Tea Parties

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Around 750 “tea parties” are taking place around the country today in an effort to protest the taxation changes being made by the Obama administration. This is one of those issues that has turned into a boxing match between the left and right based media (I guess most issues are now). The tea parties are loosely based around the events that took place before the Revolutionary War, where “No taxation without representation” was the slogan. Today’s events differ because they focus on tax rates and government spending. This is a poor idea, or at least poor execution of an idea.

Sure, a government on its way to spending itself into a debt wholly owned by foreign nations is a bad idea, but focusing on tax increases for the wealthy is no better. The tea parties should instead be focused on bringing attention to what the government is doing with our money, maybe even making the slogan “No taxation with poor representation”. The officials are elected by us but make decisions based on their own prerogatives rather than the needs of the people.

The argument that Americans do not mind paying taxes is one that has been coming out of the media lately and it too is a poor one. Most Americans do not mind because it is simply a way of life and for the most part the actual payment takes place without them even noticing. The truth of the matter is, most Americans get a refund at the end of the year and have no idea that it is because they paid in too much to the system. Start taking more out of people’s paychecks and making the refunds smaller and the number of Americans who do not mind taxes is sure to take a dive.

Back to the tea parties, Paul Krugman, who I am constantly agreeing and disagreeing with, writes that the right-wing is a bunch of crazy people who are embarrassing themselves with their antics and maybe he is right. If the conservatives in this country want to avoid a social democracy then faux-protesting a slight tax hike is not the way to do it. This is not to say that what the government is doing is right, by all means, it isn’t. The idea is not to change tax rates, it is to reduce spending. If spending is reduced, then budgets are naturally cut and as a result, the tax rate stays steady or better yet, falls.

What this country needs is more students of history because then maybe we’d have our memories jogged on how things were done when the Constitution was drafted and what the role of the Federal government should be.

What Do the Europeans Want?

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Angela Merkel and Nicolas Sarkozy seem to be dead-set on getting their way at the G20 summit in London. Gordon Brown, the British Prime Minister, and President Obama have sort of joined forces to push their agenda for economic recovery, which includes more bailouts. Merkel, the German Chancellor, has said multiple times that she wants nothing to do with bailouts on a global scale. The French President, Nicolas Sarkozy, has also echoed those sentiments.

This is an impasse of sorts. Both Germany and France have experienced government intervention in the free market and have first hand knowledge of the effects of economic socialism, yet both Brown and Obama are not taking notice. Merkel seems to be jumping up and down and waving her arms at a person across the room while the person just stares past her. Her qualm is not with doing more socially, it is with taking money from healthy companies and markets and injecting it into dying companies. It is a form of evolutionary ethics and no one is taking notice.

Europe also has its own best interest at heart. If the Obama plans for more government healthcare and less military bases abroad actually come to fruition, the European way of life takes on a completely different form. For years Europe has been dependent on U.S. bases abroad to subsidize their domestic policies, if the money was to significantly reduce or dry up, the governments would be forced to make cuts and in some places completely remove programs that people rely on. This is not a cut and dry issue by any means, but Merkel and Sarkozy are trying to make it obvious that the path Obama is proposing is not the correct one. What Obama decides to agree on puts in motion what happens next here in the U.S.

Consuming Differently

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IMG_4590
Wal-Mart in Dallas, originally uploaded by Stephan Segraves.

I believe I have asked this question before but the point needs to be raised again. The economy is in the toilet and people and businesses are suffering, but does the fact that some of these companies were created out of bad habits mean that they deserve to fail? If a company is losing money is it not the company’s responsibility to change that fact? Sure, there are arguments out there that claim the government should step in, which it has in some cases, but my thesis is more focused on companies that have come to fruition out of our seemingly incessant need for “stuff”.

Looking at some examples is probably the best way to make the issue clear. Wal-Mart is a great example. They have built a business out of a false need for all kinds of, what some people would call, junk, and not just any old junk, cheap junk. Sure, they stock produce, meat, electronics, and other useful items but there are whole rows of consumer demanded garbage. If Wal-Mart is concerned with surviving through the economy, would not the smart thing to do be getting rid of waste? It seems obvious but for some reason it is not a priority.

Part of this is consumer habits, we are a nation of junk consumers. I’m guilty and I am pretty sure you are too. The difference between now and 20 years ago is that now we want our junk at a lower price, even if it means cutting jobs here. Maybe our culture needs to think back to 1950s lifestyle and look at pictures from era Life and Time magazines, home and work life were simpler. And what is wrong with that? The struggle is digging ourselves out of hole when the mentality is, “why get out, we’re already here”.

What if U.S. culture moved back from the mega-store to the local store, from the Lowe’s to the local hardware store? What if Target and Wal-Mart downsized and stopped carrying junk? For one thing, the green movement would rejoice in the street for weeks, but there would also be some semblance of simplicity. Do not get me wrong, I am not suggesting a stop in consumption, I am advocating consuming differently, focusing on what’s important, and reversing a trend that has been ingrained in our minds by culture. I think it will help the economy in the long run and I think people will flourish from it. The flip side is that companies who cannot adjust to the change in consumption behavior can and will fail, and maybe they should.

The notion of quantity over quality has been a growing phenomena, with pockets of resistance everywhere, but for the everyday Joe, it’s life. It is time to focus a little more on quality, even if it means cutting consumption somewhere else, because such behavior would stimulate growth in small businesses that specialize in quality products. Simplicity and quality, I do not see the negative. Do you?

The Economy’s Impact on Grocery Shopping

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With the economy heading nose first for the pavement there has been an increase in stories about people feeding their families on the cheap. One story last week discussed a family of five living on $100 worth of groceries a month. The family bought a lot of canned goods, frozen vegetables, and stocked up on meats when they were cheap. On the surface there is nothing wrong with this, but when health and sustenance are taken into account, the family’s plan does not sound so great.

A Google search for multiple terms did not bring up the exact story but something that did pop up was an eHow article titled “How to Spend $100 on Groceries and Eat Well For a Month“. It is basically a shopping list for an entire month and though it contains dried fruit, a majority of the items are heavily processed and/or salt heavy. By no means am I a doctor but the list looks like a terrible diet, there is barely any fiber, there is a ton of starch, and most of the starches are bleached white flower.

The family on television had a similar list and apparently shopping for so little money is becoming a trend. This leads me to my question, is sacrificing diet for cheap food a good idea? Are there not better things to knock-off of one’s budget to allow for more spending on food, a vital piece of life? I am not suggesting that everyone should be shopping at Whole Foods or upscale stores, I just think that what we feed our bodies should be more healthy than a loaf of white bread everyday.

The way that Jessica and I budget is that we figure around $80-$100 per week for food. We usually sit down one night and go through cookbooks and make a menu for the next week, the whole process takes 30-minutes. Jess writes down all of the ingredients and then compares that to what we have in the pantry and the fridge and marks things off that we already have. We then go to the grocery store together and buy as much as we can for as little as we can. Lately we have been looking at shopping at an extra store to get things that we know will be cheaper at one place, especially with meat products.

One glaring observation I have made from shopping with Jessica is that vegetables are cheap, as long as they are in season. The amount of green leafy vegetables that can be had at a low price is amazing and it does not end with them, there are tons of options ranging from avocados to leeks. Fruit is a little trickier but grapes and apples are usually available year-round and at a decent price.

The trick with all of this is to actually eat the food that is bought. Dinner is made every night and the leftovers are taken to work the next day by both of us. Some dinners last two or more lunches (soups and sandwiches). Doing the math, I figured that our daily cost for eating a meal is around $2 each. Now I am sure the families that eat on $100/month are down in the pennies per meal, but does that really matter when the meals are not necessarily healthy?

What do you think? How much do you spend a month on groceries?

Visualizing the Credit Crisis

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I noticed this video making its way through the blogosphere and thought a few comments could be made regarding the content.
[vimeo]http://vimeo.com/3261363[/vimeo]
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

The video does a great job of simplifying the current banking crisis into understandable terms but it may be a little too simplified. What the video fails to point out is the government enacted legislation used to make banks give out more loans to higher risk borrowers all in the name of lower housing costs.

What happened next was squarely on the banks, the selling of the sub-prime mortgages to investors and investment banks but as borrowers started defaulting on their mortgages, investors started losing money, sending us into the tailspin we are in now.

I like the video, I don’t like fact that it focuses on investors only.

Mango Inflation 2008

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We live down the street from a very large farmers’ market and there is a fruit stand nearby that sells mangoes. Outside of this mango stand is a large, white sign that gives the current price for half-a-dozen mangoes. Last month the price was $4 for six mangoes, over the past few weeks the price has risen to $5, and as of yesterday, the price is now $6 for six mangoes. Jessica and I have this a mass media name of, “Mango Inflation 2008”, but we could have gone with something more along the lines of “The Great Mango Inflation of 2008”, which is a little more classic and a throwback to the 1960’s and 70’s.

When Spending Should Get You Fired

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If you are a company that uses third party software for functionality, please, do not ever hire an outside “training” firm to come in and teach people who have no obvious use for the third party tool, especially if the price tag is $2,000 per person. This is even more true if you are a software company that employs people who know the third party tool and are willing to teach it to the other employees.

When the time comes for the training to take place, do not schedule meetings that will interrupt the training and to do one better than that, do not hold the training in the same building as the regular office. All that happens with these two things above are people get distracted and the trainer gets frustrated. It causes a waste of time and money.

Running a successful firm requires that management understand managing, not just moving lips and expecting things to happen.