Friday, February 3, 2012

Economics Made Easy

Mitt Romney has offered me a nice segue to the next topic I wanted to pursue on this blog:  the economy.  Now I know most people think the economy is BORING, yet I think that's half the problem.  Because it's boring most of us are ignorant and easily thwarted toward myths of how to get the economy rolling.  Surely I won't be able to make economics fun, yet I can make it EASY.

When it comes to the economy there are two paths you can take:
  • It sounds like good policy
  • It is good policy
You see, sounds and is are two different things.  Since most of us are ignorant about the economy -- mainly because it's so boring -- that makes it easy for politicians to take advantage of our ignorance.  For instance, it sounds good to say, "I'm going to raise the minimum wage."  Many politicians say stuff like this to win votes.  Anyone who wants to help people starting out on a new job will want such folks to get paid well.

However, what sounds good often doesn't work.  Romney recently said he agrees with the idea that minimum wages should be automatically increased with inflation.  It sounds like a good idea.  I bet it even wins him some votes.  Yet it won't work.  If you look at statistics 25% of teenagers are out of work, and the reason falls right on the back of minimum wage laws.

Many politicians, including Obama, say they want everyone to pay "their fair share of taxes."  In order to follow on this pledge they raise taxes on the rich.  The problem here is that most people who may appear to be rich would be your small business owners, good folks who are responsible for 75% of the jobs.

So you raise their taxes and they will be forced to either cut pay, raise prices, do nothing, or layoff workers.  The bottom line is that while raising taxes on the rich sounds like good policy, it's is NOT good policy.  

So these are some of the topics I will expound upon as we close in on the 2012 election.  Once we have a good understanding of how the economy works, perhaps we will be swayed to a different candidate than the one we were thinking to vote.  Or, perhaps we will realize the importance of voting.  

Stay tuned as I delve into:  Economics Made Easy."  There are many good books that are pithy and easy, and the one I chose to read was "Economics in One Lesson," by Henry Hazlitt.  Just to give you an understanding of the accuracy and power of this book, it was first published in 1946 and still rings true today.

I have also taken two economics courses in college back in the early 1990s.  Yet since that time one of   the most interesting and important parts of politics is keeping up on economics.  I'm no economist, yet I don't think you need to be an economist to understand how the economy works.  All you need is a little common sense, something you and I have plenty of.

So stay tuned.  I will continue writing on this topic on Mondays.  (Make that every Wednesday, Mondays are already taken over by my new amendments to the Constitution.)

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