Perry Glasser

SNAPSHOT OF A NATION

In Business, Economics, Economy, Finance, MILITARY, Personal Finance, Political Economy, Politics, TAXES on September 14, 2011 at 9:53 am

It’s official. Those of us not yet in the poorhouse are on the way.

Yesterday’s US Census Bureau annual report will not surprise anyone who works for a living. For the third year in a row, adjusted for inflation, the average household income fell, more people are living in poverty, more children are living in poverty, and gains have been made been women, though not in any way the make anyone should for joy.

No matter how you slice and dice the data, the news is grim. The story is that same for all ethnic groups, pretty much the same for every state and region.

If you’ve been feeling the pinch, that’s because your household income is off more than 7% since it peaked in 1999. Welcome to the land of opportunity.

That’s 11 years of decline.

Dollar$ is glad you asked why.

In a world of rising population, economic activity has to increase, right? Babies get born and cribs get made, diapers get consumed, houses build additions, food is produced. It goes on and on and on, the basic driver of all economic activity. Oh, sure, on the short term, people might pull in their belts a bit, maybe borrow a used crib, dress the kid in hand-me-down to save a few bucks, but in the longer term population pressure has to spur economic activity.

Dollar$ is sorry for your shallow understanding, but seeks to illuminate.

Alas, an increase in economic activity does not guarantee equal distribution of the fruits of that activity.

Economic policy is an umbrella term that suggests we have some control over the distribution. We do. That’s called Political Economy. Economists disagree on the political economy’s components, but they agree on two things:

  • Politics is the power to make others do one’s bidding; and
  • The power to tax is granted to the US Congress by the Constitution.

Some will champion monetary policy as the key to all policy decisions. Others believe that tax policy is a tool to right social injustice. Chief Justice John Marshall in 1819 in McCulloch v. Maryland noted that “the power to tax is the power to destroy,” when the state of Maryland decided to tax only banks chartered outside its own borders. Some will claim the key to the Political Economy is fiscal policy, the national budget and such. Others will point to  the realities of the Global Economy and claim that foreign policy is the key to the Political Economy. NAFTA? Tariffs?

Dollar$ is no Solon, and like most ordinary Citizens is sure the key to the Political Economy is a mix of all of these.

Citizen

However, he notes that with the ongoing, persistent, pressure of population growth, these matters should take care of themselves. Things reach equilibrium if left alone.

All bets are off, however, when Foreign Policy includes a money pit into which a nation throws wealth it does not have into wars on shepherds and goatherds.

It costs the average opium farmer in Afghanistan a few cents each year to wage war on the US. It costs the average US Citizen $30,000 in a decade to wage a war against people with bombs in their underwear.

That’s money sucked out of the economy that returns nothing to us. We are no more secure, no wealthier, no richer for it.

What we are is screwed.

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