Welcome and a Stimulus Intro

First of all, I'm not sure who is actually going to read this thing, but I've decided that I complain a lot about a lot of different issues, so in order to reach a larger audience I've decided to start my own blog. What I am actually going to write about is still very much up in the air, but I think it is going to be a mix of many different topics. I am passionate about sports, especially Philadelphia and Penn State teams, so I'm sure they will come up at some point. I am also very disgusted with the direction America is moving on the political front, both parties included, so politics and economics will also probably be a large source of potential posts. Lastly, everyday life, especially the stupidity of dumb people, tends to get me angry sometimes, so I'm sure there will also be some very random posts about some very random topics. I am hoping to update this thing at least once a week for as long as I can fit it into my schedule. Hopefully I don't burn out. Well, please add any comment with things you want to discuss or hear me rant about, but otherwise let's jump right into my first entry.

I read the Wall Street Journal on a daily basis, and I found an article from Monday's paper entitled How Government Prolonged the Depression by Harold Cole of the University of Pennsylvania and Lee Ohanian of UCLA extremely well researched and articulated. The main premise of the article is that FDR's New Deal programs actually lengthened the great depression by slowing private economic growth and creating an economic situation that maintained high unemployment.

Now I went to a very good public high school in a suburb of Philadelphia. I took American history in 8th and 11th grades and learned all about FDR and the New Deal. I was taught, as I'm sure many of you were, that FDR was one of our greatest presidents and that it was his policies that led us out of the great depression. What complete bullshit. It enrages me that this kind of stuff is taught with no other alternative explanations. This theory of the end of the great depression are based on the Keynesian theories that government deficit spending during a recession is good and will help spur new economic growth. I can say fairly certainly that in 2009 most respected economists (that communist Paul Krugman excluded) have rejected Keynes' viewpoint and adopted the Austrian and Chicago schools of economics expressed by Friedrich Hayek, Ludwig von Mises, Frank Knight and Milton Freidman. However, I never learned any of these names in school. Instead I was force fed the usual crap you hear about FDR creating new jobs and helping curb out of control capitalism that was rampant in the 1920's.

Well there are so many things wrong with the last statement that I won't address them all here, but I do want to address the idea that massive deficit spending by the federal government is good way to strengthen the economy and end a recession because it is directly relevant to the proposed $800 billion stimulus being debated by Congress and supported by President Obama. Once again the American people are being fooled into thinking that this will save the economy and "change" America. In reality this "stimulus" bill is nothing more than a massive spending bill for pet projects for special interest groups. For a more detailed breakdown of how the proposed bill will be spent see Highlights of $825 Billion Economic Stimulus Plan. Although the spending seems to most like it is being spent on worthwhile causes, as is true with 95% of government spending, it will surely be spent more on bureaucracy and greasing the chops of powerful lobby groups than going towards legitimate projects like roads and bridges. Due to administrative costs, government spending is inherently less efficient than private distribution of capital.

If Obama were serious about saving the economy he would issue an $800 billion tax cut that would cut the marginal tax rate, not issuing useless $500 rebates. For a tax cut to stimulate economic growth it must be at the margin. In other words, the tax cut must lower the rate that applies to the last dollar of the individual's taxable income. If tax cuts are not marginal, as in the case with so called "rebates," then there is no incentive for an individual to produce more and earn more income. As we saw with the Bush tax cuts, cutting marginal tax rates create the incentives necessary to create growth and actually increase government receipts even though the average tax rate is lower.

Instead of cutting the marginal tax rate, Obama wants to increase deficit spending to the highest levels in American history. I am going to address the effects deficit spending, the national debt, and the true cost of an entitlement society in a later entry. I am sure you are all very excited. Anyway, sorry for the length of this first post. I'm sure later updates will be much shorter. As I said comments are appreciated, whether you love or hate my ideas, so say what you want. Thanks for reading.