A little wisdom from the Dish

This is a recent post by Andrew Sullivan over at The Daily Dish, enjoy...

http://andrewsullivan.theatlantic.com/the_daily_dish/2008/10/the-real-mcca-1.html

TAXES

The U.S. Tax System explained in Beer:

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go something
like this:

   The first four men (the poorest) would pay nothing.

   The fifth would pay $1.

   The sixth would pay $3.

   

   The seventh would pay $7.

   The eighth would pay $12.

   The ninth would pay $18.

   The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. 'Since you are all such good customers,' he said, 'I'm going to reduce the cost of your daily beer by $20. 'Drinks for the ten now cost just $80.The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers?

How could they divide the $20 windfall so that everyone would get his 'fair share?' They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested  that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so the fifth man, like the first four, now paid nothing (100% savings).

    The sixth now paid $2 instead of $3 (33%savings).

    The seventh now pay $5 instead of $7 (28%savings).

    The eighth now paid $9 instead of $12 (25% savings).

    The ninth now paid $14 instead of $18 ( 22% savings).

    The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.

'I only got a dollar out of the $20,' declared the sixth man.

He pointed to the tenth man,' but he got $10! ''Yeah, that's right,' exclaimed the fifth man.

'I only saved a dollar, too.. It's unfair that he got ten times more than I! ''That's true!!' shouted the seventh man.

'Why should he get $10 back when I got only two?

The wealthy get all the breaks!

''Wait a minute,' yelled the first four men in unison. 'We didn't get anything at all. The system exploits the poor!

'The nine men surrounded the tenth and beat him up. The next night the tenth man (the richest) didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

By David R. Kamerschen, Ph.D.Professor of Economics University of Georgia

What are your views on U.S. Taxes?  

Are you in favor of higher taxes on the wealthily few, tax cuts for all, or the almighty flat tax?  

What happened to the flat tax idea anyway?

The Fear of Socialism

There has been a robust discussion happening among many conservative leaning people. Many are claiming that Obama's health care plan is socialist. Is Obama planning to socialize our health care system? I say no more that it already is. Let me explain...

I think Michael Cannon's definition of socialized medicine is reasonable: Socialized medicine exists to the extent that government controls medical resources and socializes the costs. (http://www.cato.org/) The point Cannon goes on to make is that it doesn't matter who owns the hospital, its who provides the resources. The label of 'socialized medicine' as a condemnation of his plan is nothing more than an epithet. This label has been used against Harry Truman and even Mitt Romney. To me is sounds like political posturing by right-wingers in order to gain votes by scaring voters with the word socialism.

If anything, America's health care system is already heavily socialized. Here are three examples:

1. Federal and State licensing laws control how many physicians can be hired, what operations they can and cannot perform and how much they get paid. (Cato Institute Policy Analysis no. 621, September 17, 2008..0)

2. The government sets the price for most medical products through Medicaid and Medicare. The FDA says who, how, and how much each clinic or hospital can use or market the products.

3. Even though most hospitals are privately owned, through 'certificate of need' laws, the government controls which hospitals are opened and what technology is used.

Using the the label of 'socialism' as an epithet is nonsense. Much of our daily lives are 'socialized' in one way or the other. Our schools and the postal service are run by our government. The software that we use today was payed for by tax dollars through government subsidies to the military in the 80's.

Before we go about condemning all things 'socialized' we need to be sure we have a firm grip on what truly socialized programs are. If our definition becomes too narrow then no one would be purely democratic or capitalist.

I Love Europe

This has to be the funniest European commercial ever!  I'm not sure what debate we can have over it but it sure is funny.

A New Way To Do Banking?

I recently read about a fascinating new company called LendingClub.  It's a web bank that distributes, what I'm calling "micro-loans" to qualifying individuals.  These loans can be used for education, vacation, home improvments, small business, and more.  What makes this bank unique is how its lending capitol is raised and how bowers are connected to lenders.

Basically, anyone can become a lender assuming they are credible sources.  The average joe invests a little money, entering into LendingClub's lending pool.  Each investor earns interest on his or her invest based on the risk of the loan (higher risk equates to higher interest and profit).  Its very simple and a great way to get more return on a small amount of investment cash.

The process of borrowing is what I love about this business.  Borrowers seeking a loan are processed through a system called LendingMatch, which connects people based on varying degrees of separation.  I like what LendingClub says, "LendingMatch™ finds relationships between borrowers and lenders based on geography, education, profession, or connectedness within a given social network and then presents lenders with diversified loan portfolios reflecting these relationships as well as the lenders' individual risk preferences. Moreover, LendingMatch™ serves to show borrowers that their loans are being funded by real people who rely on their loan payments to meet their own obligations."

Check it out: http://www.lendingclub.com

You might be wondering why I'm promoting this company.  Well, America's current financial crisis has me wondering about the reality of nationalized banking system.  I started reading about LendingClub and thought it would be cool to see a banking system, on a national level, that does business like the LendingClub.

I'd like to hear your thoughts.  Do you think America needs a nationalized banking system like in Great Britain (or some other country)?  Why?  What are the benefits and/or pitfalls?

The VP Debate.

The feared melt-down that many were expecting to see last night from Sarah Palin did not happen. Far from it. I thought Palin did a better job than anyone could have expected; she was civil, smiled through each point, and answered each question without hesitation. The 'folksy-charm' that so many right-wingers love was in full swing (Mayberry should be proud). She appealed to soccer moms and 'joe-six pack', making it clear that she was not of Washington.

I was also impressed with Biden. I was afraid he might eat the microphone in anger or ramble for 90 minuets. Biden flexed his 35 years of experience last night with a menagerie of facts and policy details. His knowledge of foreign affairs and voting records went unmatched. It seemed that Biden was focused on linking McCain to 8 years of a disastrous Bush administration. He continued the campaign strategy by focusing on McCain and not Palin, thus taking the focus away from the Palin sideshow.

Overall, as many commentators and political analysts have said, this debate was not a deal breaker. I don't think anyone who was leaning toward Obama will jump to McCain and vise versa. Palin used all the right language for conservatives, (unabashed love for Israel, traditional definition of marriage, and America is a city on a hill.) Biden used strong language to emphasise Obama's desire to end the War in Iraq and the need for environmentally friendly fuel alternatives.

Although I wasn't swayed to vote for McCain/Palin I thought she showed a much better side of their campaign. For me the folksy, hockey mom, 'Gosh darn it', personality doesn't do it for me. Floating through my head last night was a picture of Palin slapping the hand of Ahmadinejad and saying "Now you watch your mouth young man!, We don't speak that way down in Wasilla, don't cha' know!"