"So, while it sounds warm and fuzzy to provide cheap apartments for people who cannot afford them, it just doesn’t work that way."IT JUST DOESN'T WORK THAT WAY!
Tuesday, November 29, 2005
A Sound Motto
Cara Garcia has a nice discussion of rent controls. I find the following to include a very good motto for an economist:
Castle Rock v. Gonzales
I tripped over this Supreme Court case when I was researching one on a completely different topic, and since one of the parties involved is the town of Castle Rock, I thought I would give it a quick read. I found it extremely interesting, so I decided to do a miniature case summary.
Case: Jessica Gonzales called the police multiple times because her husband had violated a restraining order against him and taken her children. The police did not do anything and the husband murdered the children. Gonzales based her case on the idea that when the restraining order was issued the State of Colorado assumed a certain amount of responsibility to enforce the restraining order through its police power. She held that the lack of action on the part of the police was a violation of the due process clause of the Fourteenth Amendment.
Decision: The Supreme Court decided that Castle Rock was not in violation of the Fourteenth Amendment, since Gonzales did not have a property interest in police enforcement of the restraining order against her husband.
Correct or Incorrect: I struggle with determining whether the court decided correctly. It seems to me that this is the perfect place for the Supreme Court to act in accordance with the protective state, but they did not do so. Obviously, the corrective state is not really at issue here. It seems to me, though, as much as it bothers me, that the court decided correctly.
I think this case proves a good point with regard to the Constitution and the protective state. Even though it is a reasonable to expect the government to protect us from harm, the government can only act within the framework provided for it (or at least should). Since this case was framed by the Fourteenth Amendment, the Supreme Court did what it could. I think this illustrates some of the dangers of an over-reliance on government intervention. I also think that it is a clear illustration of the limits of the Constitution. There was definitely a tragedy that could have been prevented by effective use of police power, but the Constitution appears to be silent on the subject. I certainly found the analysis interesting, and I think it illustrated an idea worth a few minutes of thought.
Case: Jessica Gonzales called the police multiple times because her husband had violated a restraining order against him and taken her children. The police did not do anything and the husband murdered the children. Gonzales based her case on the idea that when the restraining order was issued the State of Colorado assumed a certain amount of responsibility to enforce the restraining order through its police power. She held that the lack of action on the part of the police was a violation of the due process clause of the Fourteenth Amendment.
Decision: The Supreme Court decided that Castle Rock was not in violation of the Fourteenth Amendment, since Gonzales did not have a property interest in police enforcement of the restraining order against her husband.
Correct or Incorrect: I struggle with determining whether the court decided correctly. It seems to me that this is the perfect place for the Supreme Court to act in accordance with the protective state, but they did not do so. Obviously, the corrective state is not really at issue here. It seems to me, though, as much as it bothers me, that the court decided correctly.
I think this case proves a good point with regard to the Constitution and the protective state. Even though it is a reasonable to expect the government to protect us from harm, the government can only act within the framework provided for it (or at least should). Since this case was framed by the Fourteenth Amendment, the Supreme Court did what it could. I think this illustrates some of the dangers of an over-reliance on government intervention. I also think that it is a clear illustration of the limits of the Constitution. There was definitely a tragedy that could have been prevented by effective use of police power, but the Constitution appears to be silent on the subject. I certainly found the analysis interesting, and I think it illustrated an idea worth a few minutes of thought.
Video Game Industry
When I heard that Microsoft was comming out with a new version of the Xbox I was not surprised; however when I heard it would be retailing for $300-$400 I was stunned. I personally do not know anyone who can afford this and that is an they price does not even include the games or accessories. I always thought video games were for kids but this consule is clearly targeted towards older, wealthier individuals. To my amasement there was a line last tuesday to purchase the system and Target (my work) was handing out numbered tickets to buy them. The store only received 12 units and there was a line of 20 or so people before the store even opened. Not only can people afford this unit but there was competition to get it. According to the economist, Sony was not happy with this recent development. Microsoft moved their release date up when Sony announced plans to release Playstation 3 early next year. I know competition is good in terms of economics. However Microsoft is not concerned with profit- their only hope is to break even. What they are trying to gain some of Sony's market share. It amazes me that a corporation can afford to break even with something as huge as a new software release just in hopes of possibly getting their foot in the door.
Friday, November 25, 2005
Is Donation Regulation Constitutional?
After reading an article in the New York Times titled "Questions on the Legality of Campaign Fund-Raising", I was thinking are restrictions to making political donations constitutional? We have many rights as citizens and I don't believe that limits put on making donations to political parties is constitutional. There is so much corruption in our governmental system and I wonder if the limit to donate is really helping. We have found that if the government restricts us for certain activities that we will find a way around it somehow. The cases that have gone before the courts for this issue I find our wasting our tax money and police time to stop this. The Protective State would not get involved in these matters seeing that they are not causing any harm to individuals and the Corrective State would not find any market failures.
I realize that the government is trying to protect the whole of the population by not having the "rich" take control but everyone is saying that everyone else is richer than they are. When it is all said and done I don't think that this is an issue that needs to be controlled as I said if someone wants to do something that has restrictions they will find a way around it. I think that it is when the restrictions are put in place that corruption is more likely to occur. If donations where out in the open we would then be allowed to judge whether the donation was given out of support (tax right off) or if there was a deal made during the donation.
I realize that the government is trying to protect the whole of the population by not having the "rich" take control but everyone is saying that everyone else is richer than they are. When it is all said and done I don't think that this is an issue that needs to be controlled as I said if someone wants to do something that has restrictions they will find a way around it. I think that it is when the restrictions are put in place that corruption is more likely to occur. If donations where out in the open we would then be allowed to judge whether the donation was given out of support (tax right off) or if there was a deal made during the donation.
Thursday, November 24, 2005
Black Friday
Well tomorrow is the big day for shopping! Many people will be out shopping for Christmas gifts and taking advantage of the great sales. This is a time when retail stores make up for the lag in spending up to this point. In the Denver Post an article stated that many stores are taking into account the decrease in disposable income this year due to higher gas prices and travel expenses. The recognition by retailers to adjust their prices to give us even better discounts than they would in the past is taking into account the society as a wholes marginal propensity to consume. I know that I am planning on getting to the stores with my family in the morning and am ready to find the best deals! Now, being a college student does not allow for much disposable income so now is the time to take advantage of the discounts.
This time of the year also allows for retail stores to clear their shelves and get ready for the new inventory for next year. Not only is this a great way to sale the items at a 30-50% discount but increases some of the revenues that they can take in before marking items down by 80%. Now there is a dilemma, do I wait to get that extra 30% off of that item that I want tomorrow, odds are no, I love to shop and get a deal, so if it is in my budget I am getting it!! I know growing up that my grandma would have a section of her closet devoted to presents of all kinds, most of these accumulated during these great sales. Sometimes I noticed that things went to waste or where just given away in the most random occasions. The retailers know that most people who are shopping tomorrow are going to be impulsive and that is a big key to the high revenues that are brought in on Black Friday. Of course most things will be used and given away but there is something about getting that deal and the satisfaction that makes us want to consume more.
This time of the year also allows for retail stores to clear their shelves and get ready for the new inventory for next year. Not only is this a great way to sale the items at a 30-50% discount but increases some of the revenues that they can take in before marking items down by 80%. Now there is a dilemma, do I wait to get that extra 30% off of that item that I want tomorrow, odds are no, I love to shop and get a deal, so if it is in my budget I am getting it!! I know growing up that my grandma would have a section of her closet devoted to presents of all kinds, most of these accumulated during these great sales. Sometimes I noticed that things went to waste or where just given away in the most random occasions. The retailers know that most people who are shopping tomorrow are going to be impulsive and that is a big key to the high revenues that are brought in on Black Friday. Of course most things will be used and given away but there is something about getting that deal and the satisfaction that makes us want to consume more.
Wednesday, November 16, 2005
Abortion and the Constitution
"...the Constitution does not protect a right to an abortion." -Samuel A. Alito Jr.
A recent article in the New York Times revealed the above quote, written in 1985 by the Supreme Court nominee Samuel A. Alito Jr. This is a fascinating statement considering our focus in the Constitution and Economy class. I do not really want to discuss the normative implications of the statement because we all have personal beliefs about the rightness or wrongness of abortion. What I would like to do is simply look at the words of the CONSTITUTION for evidence which either supports or condemns the claim made by Alito above.
"...the Constitution does not protect a right to an abortion."
Without getting into the details which so often hold up conversation, i.e. the ethical/biological/spiritual details, I think we may be able to formulate an argument that is consistent with the Constitution. We can say that if the Constitution grants the power to Congress to PROHIBIT abortion then, as Alito claims, there is no RIGHT to abortion. However, if the Constitution does NOT explicitly grant the power to the government to PROHIBIT abortion, then we know we have a RIGHT to abortion. The Constitution either protects the "right to an abortion" OR it grants the government the power to deny it as a right. As far as I can see, these are the only two options in this matter.
As we know the Constitution specifically outlines the role of government; it grants express powers to Congress to make laws which are necessary and proper to fulfill that role, which is explicitly written in Article 1, Section 8. It is apparent that nowhere in the Constitution does it say that Congress has the power to regulate or prohibit abortion. Congress can pass laws to regulate Interstate Commerce, levy taxes, and promote the General Welfare and Public Health. I don't see how abortion falls into any of these categories which would require government intervention. This leads me to see the Constitution as protecting the RIGHT to abortion, contrary to Alito's view. The 9th Amendment tells us that just because the Constitution does not state every single right that we have, we still retain them. I believe this is relevant to the issue at hand; do we not, as an individual, own our body, i.e. have the right to do with our body as we choose as long as it does not harm another person? I understand that the term "person" is ambiguous since some consider a fetus a "person" which means a woman can not Constitutionally cause him/her harm. However, if a fetus is NOT considered a "person" then a woman does have a right to do with her body as she chooses. This is beside the point; the 9th Amendment protects our rights that are not expressly stated in the Constitution, and the 10th Amendment makes clear that unless the Constitution gives government the power, the power is reserved to the States or the people. This is a check against legislating morality. Since we did not SPECIFICALLY give government the power to PROHIBIT abortion, then the 9th and 10th Amendments guarantee that the right lies with the people. I'm not even going to address the 14th Amendment (upon which Roe v. Wade was decided) because the right to Privacy is basically captured in the 9th and 10th.
No doubt there are moral quandries here that will lead people to disagree on whether they BELIEVE it is right or wrong, but from the perspective of the Constitution there is no justification to support the quote above. Therefore, I think that Alito, in saying "...the Constitution does not protect a right to an abortion" is wrong.
A recent article in the New York Times revealed the above quote, written in 1985 by the Supreme Court nominee Samuel A. Alito Jr. This is a fascinating statement considering our focus in the Constitution and Economy class. I do not really want to discuss the normative implications of the statement because we all have personal beliefs about the rightness or wrongness of abortion. What I would like to do is simply look at the words of the CONSTITUTION for evidence which either supports or condemns the claim made by Alito above.
"...the Constitution does not protect a right to an abortion."
Without getting into the details which so often hold up conversation, i.e. the ethical/biological/spiritual details, I think we may be able to formulate an argument that is consistent with the Constitution. We can say that if the Constitution grants the power to Congress to PROHIBIT abortion then, as Alito claims, there is no RIGHT to abortion. However, if the Constitution does NOT explicitly grant the power to the government to PROHIBIT abortion, then we know we have a RIGHT to abortion. The Constitution either protects the "right to an abortion" OR it grants the government the power to deny it as a right. As far as I can see, these are the only two options in this matter.
As we know the Constitution specifically outlines the role of government; it grants express powers to Congress to make laws which are necessary and proper to fulfill that role, which is explicitly written in Article 1, Section 8. It is apparent that nowhere in the Constitution does it say that Congress has the power to regulate or prohibit abortion. Congress can pass laws to regulate Interstate Commerce, levy taxes, and promote the General Welfare and Public Health. I don't see how abortion falls into any of these categories which would require government intervention. This leads me to see the Constitution as protecting the RIGHT to abortion, contrary to Alito's view. The 9th Amendment tells us that just because the Constitution does not state every single right that we have, we still retain them. I believe this is relevant to the issue at hand; do we not, as an individual, own our body, i.e. have the right to do with our body as we choose as long as it does not harm another person? I understand that the term "person" is ambiguous since some consider a fetus a "person" which means a woman can not Constitutionally cause him/her harm. However, if a fetus is NOT considered a "person" then a woman does have a right to do with her body as she chooses. This is beside the point; the 9th Amendment protects our rights that are not expressly stated in the Constitution, and the 10th Amendment makes clear that unless the Constitution gives government the power, the power is reserved to the States or the people. This is a check against legislating morality. Since we did not SPECIFICALLY give government the power to PROHIBIT abortion, then the 9th and 10th Amendments guarantee that the right lies with the people. I'm not even going to address the 14th Amendment (upon which Roe v. Wade was decided) because the right to Privacy is basically captured in the 9th and 10th.
No doubt there are moral quandries here that will lead people to disagree on whether they BELIEVE it is right or wrong, but from the perspective of the Constitution there is no justification to support the quote above. Therefore, I think that Alito, in saying "...the Constitution does not protect a right to an abortion" is wrong.
Tuesday, November 08, 2005
Vaccines & the Heavy Hand
"I've often suggested that when you hear about a 'shortage' of something, you should first suspect not that the invisible hand in involved, but rather that the HEAVY HAND of government in involved."Check out my comment as well as the post by Russell Roberts that is linked.
Thursday, November 03, 2005
Mother Of All Debates
Todd Manzi writes:
I would hope we would discuss whether the Court should see the Constitution as evolving as Justices come and go, and as their views of evolving culture change, or whether the Court should see the Constitution as evolving through the formal ratification process. The first view seems to see the Constitution "living," and instead of seeing the Court's role as constraining government, it seems to see its role as finding a way for the Constitution to facilitate government's efforts. The second view seems to see the Constitution as limiting government's power and efforts, and it relies on WE THE PEOPLE to facilitate changes in government through the formal process by which the Constitution allows amendments.
I like the second view, and I think our country would benefit from a vigorous public discussion of these two views. Do you agree?
"The Democrats will pull out all stops in an attempt to defeat this nomination. Ultimately, they will lose the battle. Conservatives who are now happy that President Bush did not squander his opportunity regarding this nomination, must now be careful not to squander their opportunity of having the “mother of all” debates.What do you think? Are we going to have a debate about whether the Supreme Court should see the Constitution as an effective and significant constraint to national government power? I suspect we will not. Unfortunately, the political issue for debate seems to have been framed as: Should judges legislate from the bench? I think this question is easy to answer in principle: No.
The essence of the debate we are about to have is:
* Do we want the Federal Government to be bound by, and pay attention to, the Constitution?
*
Or, do we want our Federal Government to be able to disregard the Constitution when the expedience of the moment provides them with cover?
Liberals, most Democrats and far too many career Republicans do not want the debate framed so that it focuses on the Constitution. They want the debate to be about the man and whether he should have a seat on the Supreme Court. At the end of the day, the most likely scenario will be that conservatives win the seat, but miss the opportunity to move the nation back towards the original intent of the Constitution."
I would hope we would discuss whether the Court should see the Constitution as evolving as Justices come and go, and as their views of evolving culture change, or whether the Court should see the Constitution as evolving through the formal ratification process. The first view seems to see the Constitution "living," and instead of seeing the Court's role as constraining government, it seems to see its role as finding a way for the Constitution to facilitate government's efforts. The second view seems to see the Constitution as limiting government's power and efforts, and it relies on WE THE PEOPLE to facilitate changes in government through the formal process by which the Constitution allows amendments.
I like the second view, and I think our country would benefit from a vigorous public discussion of these two views. Do you agree?
Wednesday, November 02, 2005
Commerce Power Constrained
In class yesterday afternoon I think there was a question about whether there were decisions that constrained the commerce power. Here is a blog post at The Volokh Conspiracy that quotes a judge who thinks there must be some constraint:
"Judge Jones concluded her analysis by pointing out that:
Lopez reminds us forcefully that Congress's enumerated power over commerce must have some limits in order to maintain our federal system of government and preserve the states' traditional exercise of the police power. Section 922(o) is a purely criminal law, without any nexus to commercial activity, and its enforcement would intrude the federal police power into every village and remote enclave of this vast and diverse nation.
United States v. Kirk, 70 F.3d 791, 799, 802 (5th Cir. 1996) (Jones, J., dissenting)."
Tuesday, November 01, 2005
Social Security and Ownership
Social Security’s main reason for reform is not only because of its inefficiency, but its lack of well-defined property rights or ownership. For instance, the current program doesn’t allow ownership of your benefits, which was determined by Supreme Court Case, Flemming v. Nestor. The lack of ownership doesn’t give the worker a legally binding contract between the government and the worker. Therefore, there is no guarantee that the worker is going to receive the money at the age of 67. Even assuming that the government will not default on its loan, there is no way for the worker to know if he or she will live that long. So, if the worker is deceased prior to the age of 67, he or she cannot pass the benefits on to a living family member. Because, after all, how can you pass on a benefit you presumably don’t own?
But, how can you NOT own that benefit, if you worked for it?
The following proposal is called, GROW (Growing Real Ownership for Workers) and S1302 Proposal. It is designed to prevent Congress from spending the surplus and allow individual workers to save money toward their retirement. The proposal reads as follows,
Although there are differences between the House and Senate versions of the proposal,
at the core both are built around the same concept and provisions:
• Workers under the age of 55 could
choose to remain entirely within the
current Social Security system or participate
in a personal account option.
• The accounts would be financed through
a rebate of surplus Social Security taxes
(directly in the case of S1302 and
through an equivalent general revenue
transfer in the House version). That surplus
would be defined as the difference
between all OASDI tax income for a given
calendar year, minus the cost of paying
Social Security benefits for that year, plus
administrative costs. Each worker would
receive a rebate of payroll taxes directly
proportional to the size of the surplus as
a percentage of the system’s total tax
receipts.4
• Initially, workers could invest in government
bonds only. Unlike the special issue
bonds issued to the Social Security Trust
Fund, these would be fully marketable
government securities. Beginning in
2008 under the Senate proposal and in
2009 under the House plan, workers
would be offered additional investment
options.
• Workers would own the funds in their
accounts and those funds would be fully
inheritable.
• At retirement, benefits from traditional
Social Security would be reduced by an
amount proportional to the account
contributions, plus an offset interest
rate equivalent to the realized yield on
U.S. Treasury bonds less an administrative
fee of 30 basis points.
• At retirement, workers could, but would
not be required to, convert the funds in
their account to an inflation-adjusted
annuity.
http://www.cato.org/pubs/pas/pa550.pdf
This may be a small step towards reform but it is seems like a plausible one.
But, how can you NOT own that benefit, if you worked for it?
The following proposal is called, GROW (Growing Real Ownership for Workers) and S1302 Proposal. It is designed to prevent Congress from spending the surplus and allow individual workers to save money toward their retirement. The proposal reads as follows,
Although there are differences between the House and Senate versions of the proposal,
at the core both are built around the same concept and provisions:
• Workers under the age of 55 could
choose to remain entirely within the
current Social Security system or participate
in a personal account option.
• The accounts would be financed through
a rebate of surplus Social Security taxes
(directly in the case of S1302 and
through an equivalent general revenue
transfer in the House version). That surplus
would be defined as the difference
between all OASDI tax income for a given
calendar year, minus the cost of paying
Social Security benefits for that year, plus
administrative costs. Each worker would
receive a rebate of payroll taxes directly
proportional to the size of the surplus as
a percentage of the system’s total tax
receipts.4
• Initially, workers could invest in government
bonds only. Unlike the special issue
bonds issued to the Social Security Trust
Fund, these would be fully marketable
government securities. Beginning in
2008 under the Senate proposal and in
2009 under the House plan, workers
would be offered additional investment
options.
• Workers would own the funds in their
accounts and those funds would be fully
inheritable.
• At retirement, benefits from traditional
Social Security would be reduced by an
amount proportional to the account
contributions, plus an offset interest
rate equivalent to the realized yield on
U.S. Treasury bonds less an administrative
fee of 30 basis points.
• At retirement, workers could, but would
not be required to, convert the funds in
their account to an inflation-adjusted
annuity.
http://www.cato.org/pubs/pas/pa550.pdf
This may be a small step towards reform but it is seems like a plausible one.
Monday, October 31, 2005
Social Security
Social security, since it was instituted in FDR's New Deal, was supposed to give aging generations an income that would support them in retirement. Or so people thought. Old age survivors and disability insurance for one, is definitely not what it is. It is a redistributive program that is old and outdaded. I wonder, from a constitutional perspective, if it fits under the paradigms of the protective or corrective states. I also wonder, if it's constitutional at all from the plain meaning understanding of the document.
In article 1 section 8, the constitution details the areas of spending that government has the power to tax. From what I gather from reading it, it grants the power to tax to provide for militia, the army, for tribunals, to provide for the common defense and general welfare of the United States. It does not read, "provide for the financial well being of the citizens." That section is not redistributive in the sense that social security is.
From the corrective state view of the constitution, the social security program absolutely does not make the economy more efficient. It is taking money out of the hands of people who earned it, with no security, no gaurantee that the money will even be there fifty years for now. Efficiency analysis would dictate that the social security tax should be scrapped.
The protective state holds that the interpretation of the constitution should protect individual liberty. Individual liberty would say that people should be able to make their own decisions, and not be liable for the well being of people they aren't involved with. It could sound selfish, but it isn't. It's letting the economy take care of things, letting people make their own honest decisions in a process that will improve the economy and lives all the while.
In article 1 section 8, the constitution details the areas of spending that government has the power to tax. From what I gather from reading it, it grants the power to tax to provide for militia, the army, for tribunals, to provide for the common defense and general welfare of the United States. It does not read, "provide for the financial well being of the citizens." That section is not redistributive in the sense that social security is.
From the corrective state view of the constitution, the social security program absolutely does not make the economy more efficient. It is taking money out of the hands of people who earned it, with no security, no gaurantee that the money will even be there fifty years for now. Efficiency analysis would dictate that the social security tax should be scrapped.
The protective state holds that the interpretation of the constitution should protect individual liberty. Individual liberty would say that people should be able to make their own decisions, and not be liable for the well being of people they aren't involved with. It could sound selfish, but it isn't. It's letting the economy take care of things, letting people make their own honest decisions in a process that will improve the economy and lives all the while.
Social Security Reform and You
If Social Security, Medicare, and Medicaid don’t get reformed by 2040, government spending will increase to 27.1% of the GDP, compared to about 19.9% in 2003. And this is assuming that the other discretionary parts of government spending will stay at the same relative percentage of the GDP, which could turn out to be an immense understatement. The large retiring baby boom generation, along with higher life expectancy, and raising health care costs are all attributing to the problems that are expected to arise in the current Social Security system. The Projected OASDI, (old age survivors disability insurance), shows that in 2017 the Social Security program will be running a deficit, but redeeming treasury securities will compensate for the deficit until 2041, when the treasuries will be depleted. Social Security reformation is undoubtedly needed, but what if any are the clear cut answers?
In 1936 the dependency ratio, the number of retirees to the labor force, was 15%, and in 1997 it was 29%. But by the year 2030 it’s expected to be 50%. This would imply that the current tax rate to pay Social Security pensions would have to rise to 17% in 2030, compared to 12% in 1996. Is a higher continuing OASDI rate necessary for sustaining the problems we will face? It seems that could be an answer if we want to maintain Social Security benefits. Another option that has been proposed is to create personal accounts. These accounts would be run and administered by the Social Security System, and individuals could choose how to invest their funds among stock and bond mutual funds. The pensions that individuals would receive from the individual account would originate from how much they contributed and how well their investments fared. This approach would require a 1.6% increase in payroll taxes, and would raise the retirement age to 67 by the year 2011, and allow the retirement age to be raised in the future based on longevity of the population.
The advantage of a privatization scheme is that it could increase the return to Social Security payments. However the flood of new money into the stock market along with the high cost of administering the small accounts would reduce their potential net return substantially. I think we should try and increase our national savings rate because the Social Security system gives us a false illusion that the taxes we pay are going to be there for us when we get older. Obviously this is not the case, because we will not receive our paid taxes, but instead the taxes on earnings of future workers. When our time comes to collect Social Security payments, if that be in the year 2045, the payroll tax would have to be 5% more than what it is today to compensate for the higher life expectancy, higher health care costs, and a higher dependency ratio. This is not sustainable and I plan on accumulating enough wealth so I will not have to be dependent upon Social Security.
If Social Security Looked Like Insurance…
Our discussion in 321 of an alternate plan for what the Social Security program would look like were it run like an insurance program (and not a transfer program) included an aspect of new way of Social Security payments not being granted automatically upon reaching ‘retirement age’, but rather upon the occurrence of an adverse event. That event, in this case, would be running out of assets, and not retirement in and of itself – so that it truly is an insurance-type payment and not an entitlement program. In general, I think that this is a great idea, except…
Except for that fact that Congress has made it so that large corporations can dump their retirement obligations, thus wiping out workers’ retirement assets that they either worked their entire adult lives for, or sacrificed some of their ‘consumption today’ to invest in 401(k) plans that they anticipated having. Granted, 401(k) plans are meant to be supplemental to other retirement investments, and I bet that many savvy workers invested this way thinking that they were hedging their bets against their employer’s retirement compensation and what they anticipated getting from Social Security. And, oh yes – think that ESOP plan is safe? Think again.
The Broken Promise in the October 31, 2005 issue of Time gives a scary overview of how employees have been bilked out of their entire employee-sponsored retirement plans. These are employees that thought they were planning well for their Golden Years, so as to not be a burden to society and their loved ones. Thanks to Congress’ love of big business at the expense of the mass of citizen workers, these people are now left destitute. These would be the workers that would not have had to pull upon a Social Security insurance-type payment, but now would have been forced to draw upon this program. If there continues to be no strong laws and rules for corporations that offer retirement plans, 401(k)s, ESOPs, etc, then there will be no impetus to save through these avenues. What then would the options be? Not everyone has the wherewithal to invest in real estate, not everyone is comfortable with buying and selling on the open market.
In light of what employers are currently permitted to perpetrate against their own employees, I think that there had better be some serious financial education of our youth well before any changes to Social Security are made.
Except for that fact that Congress has made it so that large corporations can dump their retirement obligations, thus wiping out workers’ retirement assets that they either worked their entire adult lives for, or sacrificed some of their ‘consumption today’ to invest in 401(k) plans that they anticipated having. Granted, 401(k) plans are meant to be supplemental to other retirement investments, and I bet that many savvy workers invested this way thinking that they were hedging their bets against their employer’s retirement compensation and what they anticipated getting from Social Security. And, oh yes – think that ESOP plan is safe? Think again.
The Broken Promise in the October 31, 2005 issue of Time gives a scary overview of how employees have been bilked out of their entire employee-sponsored retirement plans. These are employees that thought they were planning well for their Golden Years, so as to not be a burden to society and their loved ones. Thanks to Congress’ love of big business at the expense of the mass of citizen workers, these people are now left destitute. These would be the workers that would not have had to pull upon a Social Security insurance-type payment, but now would have been forced to draw upon this program. If there continues to be no strong laws and rules for corporations that offer retirement plans, 401(k)s, ESOPs, etc, then there will be no impetus to save through these avenues. What then would the options be? Not everyone has the wherewithal to invest in real estate, not everyone is comfortable with buying and selling on the open market.
In light of what employers are currently permitted to perpetrate against their own employees, I think that there had better be some serious financial education of our youth well before any changes to Social Security are made.
Could we learn something from india?
The Economist writes that the Indian economy has grown at around 7% or better for the past two years, and that it will in the future as well. It reads that Manmohan Singh, India's prime minister became every economist's darling when "tariffs were slashed, exchange controls scrapped, the licence raj that strangled business in red tape was largely abolished." His ease up on government regulation led to growth that the economist says, "tended to benefit everyone and harm no one." India definitely still has trouble, and it's democratic government gives it some advantage over china as far as being able to change things. Singh, when he was the finance minister deregulated industry to stimulate growth, and the magic of the invisible hand of economics went to work, increasing growth.
This India example is a classic example of how pareto improvements can be made to economies, as well as the economic health of a country. Lower taxes benefit growth. There is a quote in the magazine explaining the hard road ahead of India to sustain this growth. It states that the problems India is encountering "is a reminder of just how powerfully politics can constrain economics."
So, maybe we should lower taxes in America to increase growth and efficiency. Lower taxes would give more money to the people who are earning it in the U.S. More money in their hands would let them make their own decisions that would ideally put them on a higher indifference curve, and find a more efficient allocation of resources. This could be very useful considering that 50% of people in the U.S. don't pay income taxes, and the upper echelon of income earners find as many tax deductions and other advantages that they can. Economically speaking, if the government stopped taxing to pay for goods and services that aren't "public" in the economic sense, and gave people more money, there would be more incentive for growth, for development, for new products. This would enable people to achieve as much benefit as possible while stimulating the economy.
This India example is a classic example of how pareto improvements can be made to economies, as well as the economic health of a country. Lower taxes benefit growth. There is a quote in the magazine explaining the hard road ahead of India to sustain this growth. It states that the problems India is encountering "is a reminder of just how powerfully politics can constrain economics."
So, maybe we should lower taxes in America to increase growth and efficiency. Lower taxes would give more money to the people who are earning it in the U.S. More money in their hands would let them make their own decisions that would ideally put them on a higher indifference curve, and find a more efficient allocation of resources. This could be very useful considering that 50% of people in the U.S. don't pay income taxes, and the upper echelon of income earners find as many tax deductions and other advantages that they can. Economically speaking, if the government stopped taxing to pay for goods and services that aren't "public" in the economic sense, and gave people more money, there would be more incentive for growth, for development, for new products. This would enable people to achieve as much benefit as possible while stimulating the economy.
The Myth of "Strict Construction"
The seventeenth of September is Constitution Day, in recognition of the 218th anniversary of that venerable document's signing by our nation's Founders. Of course, most of the federal judiciary pays no homage to that date. They are preoccupied rewriting the so-called "Living Constitution," amending it by judicial dictate rather than its prescribed method in Article V.
For the first 150 years, our Constitution stood as our Founders, and more importantly, "the people," intended, as is, in accordance with its original intent. Prior to the reign of Franklin D. Roosevelt, the courts were still largely populated with originalists, who properly rendered legal interpretation based on construction of the Constitution's "original intent." However, FDR grossly exceeded the Constitutional limits upon the authority of his office and that of the legislature in his folly to end The Great Depression. FDR's extra-constitutional exploits opened the door for the judiciary to follow the same path: To read into the Constitution what was necessary to make it conform to the demands of the prevailing political will.
In the decades that followed, the notion of a "Living Constitution," one subject to all manner of judicial interpretation, took hold in the federal courts. Judicial activists, those who legislate from the bench by issuing rulings based on their personal interpretation of the Constitution, or at the behest of likeminded special-interest constituencies, were nominated for the federal bench and confirmed in droves.
Consequently, we now have a Constitution in exile, it has become a little more than a straw man as the courts have become increasingly politicised. In recent decisions, judicial activists on the Supreme Court have cited "national consensus" and "international law" as factors in their decisions.
The Federalist Papers, as the definitive explication of our Constitution's original intent, clearly define original intent in regards to Constitutional interpretation. In Federalist No. 78, Alexander Hamilton writes, "the judicial branch may truly be said to have neither FORCE nor WILL, but merely judgment...liberty can have nothing to fear from the judiciary alone, but would have everything to fear from its union with either of the other departments." In Federalist No. 81 Hamilton notes, "there is not a syllable in the Constitution which directly empowers the national courts to construe the laws according to the spirit of the Constitution."
George Washington advised, "The basis of our political systems is the right of the people to make and to alter their Constitutions of Government. But the Constitution which at any time exists, 'till changed by an explicit and authentic act of the whole People is sacredly obligatory upon all."
Today, 218 years later, Justice Antonin Scalia says of judicial activism, "As long as judges tinker with the Constitution to 'do what the people want,' instead of what the document actually commands, politicians who pick and confirm new federal judges will naturally want only those who agree with them politically."
While the words "conservative" and "liberal" are ubiquitously used to describe Republicans and Democrats respectively, these words properly should describe whether one advocates for the conservation of our Constitution, as originally intended, or its liberal interpretation by judicial activists. Does one want to conserve Constitutional limits on the central government, or liberate those limits?Our Constitution was written and ratified "in order secure the Blessings of Liberty to us and our Posterity" as set forth in the Declaration of Independence "endowed by their Creator." It established a Republic intended to reflect the consent of the governed, a nation of laws, not men. At the close of the Constitutional Convention in Philadelphia, Benjamin Franklin was asked if the delegates formed "a republic or a monarchy." He responded, "A republic if you can keep it." We have all but lost it.
For the first 150 years, our Constitution stood as our Founders, and more importantly, "the people," intended, as is, in accordance with its original intent. Prior to the reign of Franklin D. Roosevelt, the courts were still largely populated with originalists, who properly rendered legal interpretation based on construction of the Constitution's "original intent." However, FDR grossly exceeded the Constitutional limits upon the authority of his office and that of the legislature in his folly to end The Great Depression. FDR's extra-constitutional exploits opened the door for the judiciary to follow the same path: To read into the Constitution what was necessary to make it conform to the demands of the prevailing political will.
In the decades that followed, the notion of a "Living Constitution," one subject to all manner of judicial interpretation, took hold in the federal courts. Judicial activists, those who legislate from the bench by issuing rulings based on their personal interpretation of the Constitution, or at the behest of likeminded special-interest constituencies, were nominated for the federal bench and confirmed in droves.
Consequently, we now have a Constitution in exile, it has become a little more than a straw man as the courts have become increasingly politicised. In recent decisions, judicial activists on the Supreme Court have cited "national consensus" and "international law" as factors in their decisions.
The Federalist Papers, as the definitive explication of our Constitution's original intent, clearly define original intent in regards to Constitutional interpretation. In Federalist No. 78, Alexander Hamilton writes, "the judicial branch may truly be said to have neither FORCE nor WILL, but merely judgment...liberty can have nothing to fear from the judiciary alone, but would have everything to fear from its union with either of the other departments." In Federalist No. 81 Hamilton notes, "there is not a syllable in the Constitution which directly empowers the national courts to construe the laws according to the spirit of the Constitution."
George Washington advised, "The basis of our political systems is the right of the people to make and to alter their Constitutions of Government. But the Constitution which at any time exists, 'till changed by an explicit and authentic act of the whole People is sacredly obligatory upon all."
Today, 218 years later, Justice Antonin Scalia says of judicial activism, "As long as judges tinker with the Constitution to 'do what the people want,' instead of what the document actually commands, politicians who pick and confirm new federal judges will naturally want only those who agree with them politically."
While the words "conservative" and "liberal" are ubiquitously used to describe Republicans and Democrats respectively, these words properly should describe whether one advocates for the conservation of our Constitution, as originally intended, or its liberal interpretation by judicial activists. Does one want to conserve Constitutional limits on the central government, or liberate those limits?Our Constitution was written and ratified "in order secure the Blessings of Liberty to us and our Posterity" as set forth in the Declaration of Independence "endowed by their Creator." It established a Republic intended to reflect the consent of the governed, a nation of laws, not men. At the close of the Constitutional Convention in Philadelphia, Benjamin Franklin was asked if the delegates formed "a republic or a monarchy." He responded, "A republic if you can keep it." We have all but lost it.
Inherence Tax
The life cycle of a human: Birth – Death. What is the dash? The dash represents the person’s life. A person could do so many things with that dash, but what happens to the wealth accumulated after the person dies? The wealth and assets are to be transferred to the individual’s heirs. Yet, before the heirs get any money, property, or assets everything is valued by the Internal Revenue Service and taxed. Many people have a problem with the inheritance tax and feel that it is not only an unfair double tax but feel that their life’s wealth should be passed on free of taxes. The inheritance tax can put small businesses into bankruptcy and hurt families who invest all their wealth into land, such as farmers. Not only is the government hurting the economy, but in some cases the government is collecting less then they could be.
Imagine that you owned a small auto shop and you died. All your money and assets were tied up in the shop and your two boys who worked the shop with you inherit your business. Before your boys could do anything the Internal Revenue Service comes and values your business at 5 million. Now your boys have to pay taxes on that 5 million. Yet, they have no cash to pay the taxes so they have to sell the business to Pep Boys. In a best case scenario say that Pep Boys pay 5 million for the company. Now your children can pay off the inheritance tax and your income tax with some money left over. The money that is left over is substantially less then what you wanted to leave them and they are out of a job. Not only that but, all the employees that use to work at the shop are now unemployed and Pep Boys is the only store within miles to offer auto supplies and services. Pep Boys can now mark up their prices.
In response to society’s actions because of inherence taxes an act was passed. In 2001 George Bush signed the Economic Growth and Tax Relief Reconciliation Act of 2001. This law states that the federal estate tax exemption increased to $1 million in 2002 and will continue to gradually increase to $3.5 million in 2009. Then in 2010, the federal estate tax ends and in 2011 the federal estate tax is resurrected to the rates that occurred in 2001. Not only that but the top federal estate tax rate decreased in 2002 to 50% and will continue to decrease to 45% in 2009. In 2010 there will be no federal estate tax rate. Then the top federal estate tax rate will be revived to 55% in the year 2011. Lastly, in 2010, a "carryover basis" rule will apply, which will tax heirs on the capital gains they inherit. As it stands now, heirs who decide to sell an asset don’t have to pay any taxes period. However, in 2010, heirs who sell an asset will have to pay an income tax on the asset if the asset is sold for more than it was bought for.
The Economic Growth and Tax Relief Reconciliation Act of 2001 is the first step in eliminating the tax. Yet, one thing should be changed in the act: the old tax rates should not be revived in 2011.
It hurts the economy when small farmers and businesses are forced into sale or bankruptcy. The bigger corporations have less competition and more free rein to do what they want to do. What the government should do is phase out the inherence tax all together forever. By doing this people can inherent small businesses without having to sell their business just to pay the taxes on it. If the business is allowed to continue, it will still be producing payroll taxes and income taxes. The people who are employed at the company will be paying their taxes and will not be unemployed. In the end these taxes the business generates will be more taxes collected then the inherence tax would have collected. This fact has been proved over and over by our own system of government. When we lower taxes either on a state or national level we increase the economic expansion of our nation, spurring a larger tax base to collect on, and increasing the revenues the government has available to operate. When we increase taxes, we slow economic activity, lower the base of revenues we can collect, and fall into a downward spiral which usually causes economic depressions.
Imagine that you owned a small auto shop and you died. All your money and assets were tied up in the shop and your two boys who worked the shop with you inherit your business. Before your boys could do anything the Internal Revenue Service comes and values your business at 5 million. Now your boys have to pay taxes on that 5 million. Yet, they have no cash to pay the taxes so they have to sell the business to Pep Boys. In a best case scenario say that Pep Boys pay 5 million for the company. Now your children can pay off the inheritance tax and your income tax with some money left over. The money that is left over is substantially less then what you wanted to leave them and they are out of a job. Not only that but, all the employees that use to work at the shop are now unemployed and Pep Boys is the only store within miles to offer auto supplies and services. Pep Boys can now mark up their prices.
In response to society’s actions because of inherence taxes an act was passed. In 2001 George Bush signed the Economic Growth and Tax Relief Reconciliation Act of 2001. This law states that the federal estate tax exemption increased to $1 million in 2002 and will continue to gradually increase to $3.5 million in 2009. Then in 2010, the federal estate tax ends and in 2011 the federal estate tax is resurrected to the rates that occurred in 2001. Not only that but the top federal estate tax rate decreased in 2002 to 50% and will continue to decrease to 45% in 2009. In 2010 there will be no federal estate tax rate. Then the top federal estate tax rate will be revived to 55% in the year 2011. Lastly, in 2010, a "carryover basis" rule will apply, which will tax heirs on the capital gains they inherit. As it stands now, heirs who decide to sell an asset don’t have to pay any taxes period. However, in 2010, heirs who sell an asset will have to pay an income tax on the asset if the asset is sold for more than it was bought for.
The Economic Growth and Tax Relief Reconciliation Act of 2001 is the first step in eliminating the tax. Yet, one thing should be changed in the act: the old tax rates should not be revived in 2011.
It hurts the economy when small farmers and businesses are forced into sale or bankruptcy. The bigger corporations have less competition and more free rein to do what they want to do. What the government should do is phase out the inherence tax all together forever. By doing this people can inherent small businesses without having to sell their business just to pay the taxes on it. If the business is allowed to continue, it will still be producing payroll taxes and income taxes. The people who are employed at the company will be paying their taxes and will not be unemployed. In the end these taxes the business generates will be more taxes collected then the inherence tax would have collected. This fact has been proved over and over by our own system of government. When we lower taxes either on a state or national level we increase the economic expansion of our nation, spurring a larger tax base to collect on, and increasing the revenues the government has available to operate. When we increase taxes, we slow economic activity, lower the base of revenues we can collect, and fall into a downward spiral which usually causes economic depressions.
Miers Nomination
Everyone could see this comming. The withdraw of the Miers nomination was not surprising. The nomination was hotly contested by both parties partially because of the lack of a paper trail. Miers, never having been a judge, was asked to take a constitutional law 'test'. This is a test in whcih it took her three times to get the answers right. It has been said that the Senete Judiciary Committee was sent back because members found her responses "inadequate and even insulting." Miers does not appear to come close to the level of constitutional expertise required of a Supreme Court justice. It is rediculous to be a nominee for the highest court to not have adequate knowledge of constitutional law. I also don't understand why the president would nominate someone who would make him look like he doesn't understand what it is the court does. It says right there in the constitution that the Supreme Court is meant to interpret the constitution. If a nominee doesn't understand the elements of the constitution such as the equal protection clause, the due process clause, commerce clause or even what the fourth and ninth amendments protect- how can we expect them to make rulings on the constitutionality of the law? We have enough problems with the way the Supreme Court decides opinions already, it will not help to have someone on the court who doesn't even understand the arguement. The only intelligent thing that came out of this mismanaged and uninformed nomination was the eventuall withdraw by Miers.
Hamdi Habeas Corpus
The writ of Habeas Corpus has been protecting individual freedom since its English creation in the late 1600’s
The Bush administration has said that Hamdi didn’t need legal advice because he has not been charged with a crime. If he hasn’t been charged with a crime then why has he spent the last two years in a brig? Without a crime being charged, the Bush administration has effectively not "produced the body", and had no legal ground for keeping Hamdi locked up. This was a violation of the Writ of Habeas Corpus and the Bush administration has defended this holding because he was an “enemy combatant.” Nowhere in the Constitution does it say Habeas Corpus can be suspended upon the proof that the detainee is an enemy combatant. The only time Habeas Corpus can be suspended is in times of rebellion or invasion, and Hamdi case certainly does not fit into either of those two categories. The only time when Habeas Corpus was suspended was when
Fortunately in Hamdi v. Rumsfeld, the Supreme Court ruled that detainees must have the ability to challenge their detention before an impartial judge. I completely agree with this decision because the Executive Branch does not have the power to indefinitely hold a
TABOR Revisited
With an intense debate concerning Referandems C and D, the Colorado Taxpayers’ Bill of Rights (TABOR) has re-emerged as a prominent talking point. A review of TABOR should be re-examined. TABOR possesses two features, which have generated a great deal of tax relief for Colorado residents during the past decade. First, TABOR places a tight cap on all state expenditures, limiting increases in per capita state expenditures to the inflation rate. Second, it mandates immediate refunds of all surplus revenues. As a result, when the state collects revenues above the limit set by TABOR, Colorado taxpayers are entitled to a rebate. Overall, between 1997 and 2002, Colorado has reduced taxes more than any other state, issuing annual tax rebates that have totalled more than $3.2 billion.
Even before it was enacted, Colorado Democrats sensed and feared TABOR's potency. In fact, during the 1992 campaign Governor Roy Romer repeatedly denounced TABOR, saying that defeating TABOR was the "moral equivalent of defeating the Nazis at the Battle of the Bulge." He personally attacked TABOR's author Douglas Bruce, calling him "a terrorist who would lob a hand grenade into a schoolyard full of children." Finally, Romer predicted that TABOR would result in an economic Armageddon and warned that the Colorado border would have to be posted with signs reading, "Colorado is closed for business."
However, since 1992, nothing of the sort has happened. In fact, Colorado's economy has been exceptionally strong. Between 1995 and 2000, Colorado ranks first among all states in gross state product growth and second in personal income growth. Furthermore, according to the National Association of State Budget Officers, Colorado was one of only five states that did not run a deficit during fiscal 2002. In addition to providing tax relief and fostering economic growth, TABOR has also forced Colorado residents to see the costs inherent in government programs. In other states, residents often support higher government spending because they can see the benefits of a particular program, but remain blissfully unaware of the costs that they and other taxpayers will be forced to bear.
However, in Colorado the annual tax rebates brings these tradeoffs clearly into focus. In every year from 1993 to 1999 there was a proposal on the ballot to either raise taxes or increase spending in excess of the TABOR limit. Knowing these initiatives would markedly reduce the size of their annual tax rebate, voters soundly defeated each of these measures. In 2001, for the record, an initiative to increase spending for Colorado schools did pass. However, Colorado taxpayers still received tax rebates totalling more than $900 million from fiscal 2001 revenues.
Because of this long-term success, Colorado's TABOR may well surpass California's Proposition 13 in terms of effectiveness. In 1978, Proposition 13 did an excellent job of providing taxpayers and homeowners with some much needed short-term tax relief. However, since it failed to restrain expenditures, the California state legislature eventually increased other taxes to compensate for the loss in property-tax revenue. For instance, in the years following the passage of Proposition 13, California raised the income tax, the sales tax, and taxes on beer, wine, and cigarettes. During the early 1990s, former Governor Pete Wilson even proposed increasing taxes on snack foods. This vicious cycle of spending and taxing is the root cause of California's current fiscal mess.
Overall, Colorado's Taxpayer Bill of Rights has quietly become America's most effective limitation on government. It has kept spending in check, provided tax relief to Colorado residents, and deserves a great deal of credit for Colorado's strong fiscal position.
Even before it was enacted, Colorado Democrats sensed and feared TABOR's potency. In fact, during the 1992 campaign Governor Roy Romer repeatedly denounced TABOR, saying that defeating TABOR was the "moral equivalent of defeating the Nazis at the Battle of the Bulge." He personally attacked TABOR's author Douglas Bruce, calling him "a terrorist who would lob a hand grenade into a schoolyard full of children." Finally, Romer predicted that TABOR would result in an economic Armageddon and warned that the Colorado border would have to be posted with signs reading, "Colorado is closed for business."
However, since 1992, nothing of the sort has happened. In fact, Colorado's economy has been exceptionally strong. Between 1995 and 2000, Colorado ranks first among all states in gross state product growth and second in personal income growth. Furthermore, according to the National Association of State Budget Officers, Colorado was one of only five states that did not run a deficit during fiscal 2002. In addition to providing tax relief and fostering economic growth, TABOR has also forced Colorado residents to see the costs inherent in government programs. In other states, residents often support higher government spending because they can see the benefits of a particular program, but remain blissfully unaware of the costs that they and other taxpayers will be forced to bear.
However, in Colorado the annual tax rebates brings these tradeoffs clearly into focus. In every year from 1993 to 1999 there was a proposal on the ballot to either raise taxes or increase spending in excess of the TABOR limit. Knowing these initiatives would markedly reduce the size of their annual tax rebate, voters soundly defeated each of these measures. In 2001, for the record, an initiative to increase spending for Colorado schools did pass. However, Colorado taxpayers still received tax rebates totalling more than $900 million from fiscal 2001 revenues.
Because of this long-term success, Colorado's TABOR may well surpass California's Proposition 13 in terms of effectiveness. In 1978, Proposition 13 did an excellent job of providing taxpayers and homeowners with some much needed short-term tax relief. However, since it failed to restrain expenditures, the California state legislature eventually increased other taxes to compensate for the loss in property-tax revenue. For instance, in the years following the passage of Proposition 13, California raised the income tax, the sales tax, and taxes on beer, wine, and cigarettes. During the early 1990s, former Governor Pete Wilson even proposed increasing taxes on snack foods. This vicious cycle of spending and taxing is the root cause of California's current fiscal mess.
Overall, Colorado's Taxpayer Bill of Rights has quietly become America's most effective limitation on government. It has kept spending in check, provided tax relief to Colorado residents, and deserves a great deal of credit for Colorado's strong fiscal position.
Supreme Court
Watching the news this morning I was interested to see who the new nominee for the court would be. I was fairly surprised with President Bush's pick. I was expecting someone similar to O'Conner to fill her space. Judge Samuel Alito is a conservative and has been mostly seen by the public with abortion cases. While I do think that Alito would be a great edition to the court, some are a little worried about his judicial philosophy. While I think judicial philosophy is relevent in selecting a new court justice, the more important factor, as discussed in class, is how he interprets the constitution. According to cnn.com, Alito could end up similar to Justice Scalia in that he will "choose to make law rather than interpret law and move the court in a direction quite different than it has gone." I feel that this form of ruling is incorrect. The purpose of the Supreme Court should not be to make different laws but to interpret laws that already exist, and the best way to do this is by understanding the constitution. I feel that it is important for any future Supreme Court justice to make it known how they feel about the different parts of the constitution.
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