Young Americans: Luckiest Generation in History

Source: http://mjperry.blogspot.com/

To demonstrate how free market capitalism generates increased prosperity over time for average (or even low-income) Americans, economist W. Michael Cox of the Dallas Federal Reserve has compared the purchases at different points in time from the income earned by high school graduates or entering college freshmen working at a full-time, minimum-wage summer job (ignoring taxes). Here's a summary of his article "Capitalism's Many Benefits Create 'Luckiest Generation,'" which appeared in Investor's Business Daily in October 2000.  Several years ago, I presented an updated comparison of the purchases from summer jobs in 1949 and 2009 in this CD post. Here's another update:

In 1952, the minimum wage was $0.75 per hour (equivalent to $6.39 in today's dollars), and a full-time summer job at 40 hours per week for 12 weeks would have generated $360 in total summer earnings (ignoring taxes). Using retail prices from a 1952 Sears Christmas Catalog, I found that a teenager then would have only been able to purchase the following 3 items with his or her entire pre-tax summer earnings of $360 working at the minimum wage (with $15 borrowed from the parents to cover the full $375 cost):

Items Purchased in 1952 with Summer Wages @ $0.75 hour
Royal Deluxe Portable Typewriter	$120
Silvertone Portable Phonograph	$65
Silvertone 17-inch TV	$190
Total	$375

Now compare that to the items in the table below that could be purchased by a teenager or college student this year with his or her summer earnings of $3,480 (ignoring taxes) at the current minimum wage of $7.25 per hour:

Items Purchased in 2011 with Summer Wages @ $7.25 hour
Dell Inspiron Laptop	$450
Apple iPod Touch	$210
Apple iPhone 4G	$200
Garmin GPS	$100
Canon 14.1 Megapixel Digital Camera	$120
HP Officejet Wireless Printer	$100
Westinghouse 32 inch LCD HDTV	$330
Sharp 3D Wi-Fi Ready Blu-Ray Player	$200
Samsung 5.1-Channel Blu-ray Home Theater System	$260
Sonicare Rechargable Power Toothbrush	$110
Sony PlayStation 3	$400
Sony Clock Radio with Apple iPhone and iPod Dock	$40
TiVo Premiere HD DVR - 45 hours	$149
XM OnyX Sirius XM Satellite Radio Tuner	$47
De'Longhi EC702 Espresso Machine	$150
Kindle	$114
Apple iPad	$500
Total	$3,480

According to Cox: "Add it all up. When it comes to their economic prospects, today’s young Americans are the Luckiest Generation in history—at least until their children grow up and forge an even luckier one. And even if real wages are flat, the explosion of new products over time at lower and lower prices translates into a rising standard of living for all income groups, even minimum wage workers." 

MP: Teenagers today can afford products today like laptop or notebook computers, Kindles, digital cameras, GPS systems, iPads, iPhones, and iPods that even a billionaire couldn't have purchased 20 years ago.  The comparison above illustrates that we've made a lot of economic progress over the last 60 years since 1952 that has increased our national prosperity - and that's happened in spite of ten recessions, the stagflation of the 1970s with 18.5% mortgage rates and a 20% prime rate, the S&L crisis with almost 3,000 bank failures, several major stock market corrections, the Great Recession, etc. 

Even though the economy is still struggling to recover from the 2008-2009 recession, and we've had sub-par economic growth and sluggish job creation this year, economic progress and a rising standard of living will continue to move forward.  The economic challenges of the past haven't stopped innovation and prosperity in the long run, and the current challenges might slow progress in the short run, but won't in the long run.  Just like today's teenagers are infinitely more abundant than their counterparts in 1952 and can afford items not available to billionaires of past eras, the teenagers 60 years from now in 2070 will be infinitely more abundant than today's teens and will be able to afford products that today's billionaires can't even imagine, much less afford.  

Warren Buffett's Call for Higher Taxes on the Rich Doesn’t Fit the Facts

Source: http://www.taxfoundation.org/blog/show/27542.html

by David S. Logan

The United States currently boasts the most progressive income tax in the industrialized world. Meaning, our wealthy pay a greater share of the tax burden than do the wealthy in any other capitalist nation. Yet in an August 14^th New York Times op-ed, Warren Buffett called for even higher taxes on the rich in order to lower the federal deficit.  He believes that he and his wealthy friends are under-taxed.  However, Mr. Buffett's actions and the facts tell the real story.

• Mr. Buffett chose to leave most of his fortune to the Bill & Melinda Gates Foundation and, thus, avoided an estate tax that could potentially give 55 percent of his wealth to Uncle Sam.  Moreover, keeping that wealth actively working in the private sector would generate deficit reducing tax revenues indefinitely.   

• Mr. Buffett seems to forget that capital gains and dividends taxes are a double tax on corporate income.  Before it gives out a dollar in dividends, Berkshire Hathaway - like all U.S. corporations - must first pay a 35 percent federal corporate income tax, one of the highest in the world.  Then, shareholders pay the individual tax rate of 15 percent on their dividend income or the gains from appreciated stock. As a result, the combined tax rate of 50 percent is the 4^th highest combined dividend rate in the industrialized world. Ironically, we had the 8^th highest combined rate under Bill Clinton.

• In his op-ed, Mr. Buffett suggests that increasing taxes on the rich ensures that they pay their fair share.  Perhaps, but while the top 1 percent of taxpayers earn 20 percent of the nation's income, they currently pay nearly 40 percent of the income taxes. That's a greater share of the burden than the bottom 90 percent combined (that's everyone earning under $100,000 by the way). 

• Let's not forget that when the top marginal income tax rate was 70 percent in 1980, the rich paid 20 percent of all income taxes.  Yet now, when the top marginal rate is 35 percent they pay twice that. 

• Finally, while the tax burden on the rich has been growing, the burden on low and middle-income Americans has been shrinking. By most accounts, roughly 50 percent of American households pay no income tax at all.  Indeed, the IRS will give out roughly $110 billion in "refundable" tax credits this year to households that pay no income taxes.

Contrary to Mr. Buffett's and President Obama's perceptions, America's wealthiest taxpayers are paying a disproportionate share of the income tax burden. Before we ask the rich to pay more, perhaps we should ask those who are paying nothing to contribute at least something to the basic cost of government.
Of course, like any American, Mr. Buffett can voluntarily write a check or make an electronic payment to the Treasury to help reduce the deficit by simply clicking here.  To be consistent with his message, however, he should resist taking the corresponding charitable donation deduction.  This would at least ensure that he still pay those low income taxes of which he so passionately speaks.
Follow David Logan on Twitter @Loganomix

Mileage Kills

Source:http://jewishworldreview.com/0811/stossel081011.php3

A Government That Kills
By John Stossel




http://www.JewishWorldReview.com | President Obama has declared that auto companies' fleets must average 54.5 miles per gallon by 2025, almost double the current 27.5. Standing at his side when he made the announcement were executives from the Big Three automakers.
The New York Times reported: "It is an extraordinary shift in the relationship between the companies and Washington. But a lot has happened in the last four years, notably the $80 billion federal bailout of General Motors, Chrysler and scores of their suppliers, which removed any itch for a politically charged battle from the carmakers."
Right. They're happy to agree to stupid rules, since they are now dependent on government favors.
Obama said that under his new rule, "everyone wins. Consumers pay less for fuel, the economy as a whole runs more efficiently."
Sounds impressive, but he didn't mention the costs. The Center for Automotive Research says the new standard will raise the price of cars by about $7,000. You'd need to save a lot on fuel to break even.
But that's not the worst of it. The new rules will kill people.
Sam Kazman of the Competitive Enterprise Institute explained this to me. The MPG standard "has been killing people for the last 30 years," Kazman said.
How can that be?
"It forces cars to be ... made smaller and lighter. ... They are simply worse in just about every type of auto collision."
The National Highway Traffic Safety Administration actually backs Kazman up. It estimates that smaller cars are responsible for an additional 2,000 deaths each year.
Imagine that — a government safety agency promotes a rule that kills people.
"Think about the minute risks that agencies like Environmental Protection Agency go into a tizzy about. ... If any private product had a death toll one fraction of what the miles-per-gallon rules cost, that product would have been yanked off the market years ago."
Do we at least end up using less gasoline and saving money?
No, given the increased upfront cost of the car. "It is not clear that it saves people money," Kazman said. "If these technologies in fact save people money, you don't need a government law to force them down people's throats."
Right. We're not stupid.
Bob Deans of the Natural Resources Defense Council, one of America's biggest environmental groups, said that Kazman and I are wrong.
"Cars like the Chevy Cruise — 42 miles per gallon — get top marks on safety. The Ford Focus, more than 40 miles per gallon — top marks in safety. We're getting safer cars, and they're not coming at the expense of fuel efficiency."
Deans added: "By increasing that gas mileage for our auto fleet, we can cut our oil consumption in this country by 4 million barrels per day by 2030. That would almost wipe out our OPEC purchases daily. It will make our country stronger."
But we use oil for lots of things. If we cut gasoline use by a third, unlikely as that would be, we'd still only reduce our fossil fuel use by 7 percent. That does not make much difference for $7,000 a car and 2,000 extra deaths each year.
"It's not necessarily a smaller car that we're talking about," Deans replied. "You look at Chevy Malibu. That is a 3,400-pound car. It's not a small car. It's getting 33-miles to the gallon. We believe Detroit can do this."
Maybe they can. Maybe they can't. If they could, I'd think they would do it to meet consumer demand. They'd do it without government forcing it on us.
"New technologies can make cars safer," Kazman acknowledged. "The point is, if you put the technologies in a large, heavier car, that car will be safer still. ... None of the proponents of these standards would acknowledge (the lives lost). It's always win-win, and that is nonsense."
Life involves tradeoffs. If we want to minimize deaths from auto accidents, we may use more fuel than we might otherwise use. Who should make that decision, the government? Or you and I?
In the land of the supposedly free, that really should not be a tough question.