Topics Orwell's 1984Substantial National IssuesUSA in 2012
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The 35 million Americans living
below the poverty level is a post-Depression record both in total and
as a percentage of the population.
Many are maintained at these levels for generations by social
entitlement programs like welfare, Medicaid, and public housing. Why
get a job when it will ultimately cost you money? The bitter cynicism
of the system destroys families, discourages education and creates
crime. The
number of unreported and illegal residents
is at an all time high. World wide there is resentment of America's
superpower status and behavior.
The National Debt exceeds $8 trillion and
more importantly has reached 66% of the GDP, the highest level since
Truman after WWII. Interest on the debt is the third largest expense in
the federal budget. Budget deficits continue to increase, reaching $427
billion in 2005. Deficits are projected to decrease over the next
several years, however the projections never consider the unexpected
like a war or disaster or the predictable like economic upheaval caused
by oil price and supply instability. While Democrats are accused of
being "tax and
spend" liberals, it appears the Republicans are practicing "takes and
spends" conservatism.
Social Security is currently generating more revenue than expense and would be adding to its trust fund
each year. However those funds are being diverted to the general fund and used to finance the deficit.
Social Security is projected to go broke by 2040 as the nation
gets older, but I don't know whether this projection considers the diversion of trust fund income. Social Security is broke today. It's no wonder that government is trying to solve this problem (by taxing more now).
The US
GDP reached $12.5 trillion in 2006 making it the largest economy in the
world by far. Compare to Japan $4.5, Germany $3, China $2 and UK $2.
The European Union reports a $13.5 trillion GDP from 25 member states.
The US GDP is more than 25% of the world GDP of $44 trillion. Those
values are in nominal dollar terms, however if you adjust for local
purchasing power (cost of living) China fares much better with a $9
trillion equivalent dollar economy. In per capita terms adjusted for
purchasing power the US ranks third behind only Luxembourg and Norway.
"We the people" are older, fatter and sicker than ever.
Medical costs are overwhelming and for the first time in my
memory, medical services are being reported as worse in the US than in other
parts of the
world. We still have the best doctors and can perform the most
sophisticated procedures. Better than our counterparts around the globe,
this has not translated into better health care, as we continue to
deemphasize preventive care. 43 million people, 15% of Americans, don't have
medical insurance. Many families
expect to go broke shepherding a family member through a serious
illness.
Primary education in America is not working well. On most international
measures, Americans are falling behind the world in science and math
education. Racial integration has failed and inner city public schools
nationwide are troubled environments. Secondary education is the world
standard. However the US graduate engineering and technology schools are
populated by an ever increasing percentage of foreign nationals rather
than US citizens.
The dollar is dropping against world currencies and commodities like
oil and gold are at record levels. There is no energy policy other
than a fairy tale about ethanol (remember two years ago the cure was
hydrogen). Employment has been shifting to lower
paying jobs even while labor efficiency has grown. There are
problems with the distribution of wealth. Down the road this is bad for
the consumer economy.
The number of
incarcerated individuals is 2 million with another 4 million on
probation, parole or otherwise under legal system surveillance. 9% of
black males are in jail. The US incarceration rate of 486 per 100,000
is the highest it has ever been and the highest ever among countries with a heterogeneous population. England reports 129 per
100,000. The drug problem has contributed to incarceration but has also
created an underground economy of disenfranchised individuals living
outside the system.
The federal income tax system created by the 16th Amendment to the Constitution is under considerable fire for being unfair, unwieldy, obtrusive and for putting American business at a competitive disadvantage worldwide. Alternatives like the Flat Tax and the Fair Tax are gaining traction.
Americans are fearful of so
many threats that for the first time in our history even conservatives
are more than willing to grant powers to the government that trade
freedom for security. the New Hampshire motto of "Live Free or Die"
will have to be amended soon to "Live Safe or Die." There is widespread
current concern about government surveillance. The NSA is monitoring
phone calls and records. This has overshadowed concerns about the
Patriot Act, which in turn overshadowed earlier concerns about things
like applying RICO provisions to non-organized crime offenses and drug
and tax enforcement practices. Just too many high profile cases are
resulting in convictions on charges like "Lying to the FBI" when
primary cases regarding fraud or insider trading can't be proved.
[Who knows, some say there might be a "planet killer"
asteroid bearing down on us right now. (Don't you just love that phrase
"some say?" It's meaningless and whenever I hear it I just disregard
the rest of the sentence.)]
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Behavioral Economics
: In the 21st Century economics and psychology are merging to create a new science.
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Credit Crisis 2006-
: This crisis was a long time coming. You might claim its genesis was in the resolution of the S&L Crisis, Freddie and Fannie, repeal of Glass-Stegal, careless banking regulation, an untested securities valuation formula, inevitable boom bust cycles caused by the Fed's interest rate manipulation or just the overwhelming desire of Americans to own their own home. I blame it on cable TV's endless stream of real estate programming.
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Fair Tax
: US Constitution Article I Section 9 - Limits to Legislation No
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Immigration
: The now "dead" 2007 immigration bill tried to setup a Z class Visa. To get it immigrants who entered illegally before 1/1/7 had to file for it and pay a $1,500 processing fee and a $1,000 fine, learn English and Civics, hold a job, stay out of trouble, submit to biometric and health testing and renew their visa every four years. To upgrade to a green card, which is still the path to citizenship, they need to return home and pay an additional $4,000 fine. Illegals who entered after 1/1/7 are apparently out of luck.
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Money 2000-2006
: GDP = ($9.8T in 2000, $13.42T in 2006 nominal dollars....that looks
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Recession of 2008, what recession?
: When the GDP shrinks for two consecutive quarters, six months, it is called a recession.
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Shadow Economy
:
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Tax Theory
: Laffer Curve via Cato Institute's Center for Freedom and Prosperity
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The Great Depression
: Something happened in 1929 that changed the world. Understanding history gives us a chance to understand the present. Whether it be levees in Louisiana or banks in New York the lesson is clear. We repeat our mistakes over and over again.
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zfacts.com
: Interesting website by PhD Economist Steve Stoft
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