The Rich Wasp

My wife and I got together with some of our friends, and so the women went off shopping for clothes.  I went out shopping at a couple of bookstores and other places.  One bookstore was having a store closing sale, and was mobbed by people because everything was 50% off.  The book selection had already been picked over fairly well so I didn’t buy anything.  Then we walked around the mall for a bit and wound up at the other bookstore, where I found a couple of things to buy.  So I wound up standing in line for ten minutes so that I could pay for the items I found.

Halfway through the line, I thought to myself that I should have just ordered the stuff from Amazon.  So next time I will.

At the first of the year, I got on the scale and realized my weight was now almost 250 pounds.  Ten years ago I probably weighed 80 pounds less.  I realized it was time to make a change.  My health isn’t that bad now, but I don’t want to gain another eighty pounds, that’s for sure.  So I started on the South Beach Diet and have lost 16 pounds in the last five weeks.  This is but a small step in losing some of the weight I’ve gained, but is is a small step in the right direction.

The reason I mention this is there are things we can all do to influence our health.  One of my big objections to our goverment being more involved in the health care is that I think that it will discourage people from taking responsibility for their own health.  If I stick with the diet, I think my health will continue to improve.   My wife and I are now spending more on groceries to do the diet.  If the diet leads to better health, and lower medical bills though, I’m all for that.

Something gnawed at me about the President’s proposal to use $30 billion of the TARP funds that have been repaid to lend to community banks so that they can lend it to small businesses in their community, and those small businesses can keep their doors open.   While I oppose the idea in general, because banks should already be able to borrow money from the Federal Reserve to lend if they are so inclined.   That was not what was grating on my nerves, however.  I just realized what struck me as wrong.   Small businesses shouldn’t be borrowing money to keep their doors open.  Small businesses should be borrowing money so that they can engage in profitable business activity.   Loaning money to a small business so that it can keep it’s doors open sounds like putting good money after bad.

I want to be an optimist and believe that sooner or later the economy will pick up.    I’m a realist, and think that it’s probably going to be later at best given our reluctance to face the problems which caused the economy to be bad in the first place.  I’ve worked for several businesses in my career, some big and some small, so I know a thing or two about business that those who haven’t worked outside the public sector don’t know.  Every business either makes a profit or a loss.  Working for a profitable business, large or small is far from perfect.  However, it beats working for an unprofitable business hands down.   I am currently happily employed by a small business, and hope they are a profitable enterprise.   Not only that, I hope their sales and profits both continue to grow.   I don’t know the financial details, but I hope my boss is richer than I am.  I once had a boss who was poorer than I was and that was a rather unpleasant experience to say the least.

If my employer is not profitable, I have no job security.   If my employer isn’t profitable, how can they give me a pay raise?  A loan will just postpone the inevitable.

Stories like this one about Berkeley High School’s proposed cut of after school science labs give me deep concerns about the future of our educational system.  There is already a serious science and math gap between kids born in the US and other countries when it comes to science knowledge.  I want my next doctor or nurse to have as much exposure to biology and chemistry in high school as possible  This will give them a head start on these subjects when it comes to college.  Is it any wonder that most of the students studying math and science in graduate school in the US were born in other countries?

If you have a child, you need to do everything you can to further that child’s education.  Our public schools seem to prioritize those students who are underachievers.  But we still need more doctors and scientists to compete in the world.  For those of you who can’t send your kids to private school or home school them, you still need to do everything you can to encourage your kids to learn.  Whether it’s finding a little bit of time to read to your kids, or have them read to you, you can do it.  Encourage your child to pursue his or her interests.  Take them to your town or city’s library once in a while so they can read about subjects that interest them.  Your child’s teachers are going to be spending most of their time helping the underperforming kids.   If your child is going to be better than average, you need to help them.

If your kids have an interest in science, you need to encourage this interest.  There are books like Robert Bruce Thompson’s excellent Illustrated Guide to Home Chemistry Experiments: All Lab, No Lecture that can help your child learn about chemistry. Please note that while his book is excellent, it is real chemistry, with dangerous chemicals. For example, one of the experiments is making napalm and you may already have the chemicals needed. If your child is going to do these experiments, they need adult supervision, and you both need to watch this safety video first.

If your kids are in to all those crime scene related shows, Thompson’s youtube page includes a half dozen videos that show various experiments with forensic fingerprinting that might encourage your kids to be more interested in science.

Thanks to Ann Althouse for the link to the story about Berkeley High School cutting back in science labs.

A significant part of the reason why the economy sucks is that there is a disincentive to work harder.

My wife and I were at dinner with some friends a few weeks ago, when one of them mentioned something that to me explains a very significant problem with what is wrong with our economy.   He remarked that he had worked a significant amount of overtime in the last week and would rather have time off than be paid for the overtime.  He’d rather have the money that would be left after paying all those extra taxes.  Our friend is by no means a high bracket taxpayer, but he’d still rather have the time off than the extra money.

The most vitriolic rant I’ve ever heard about our progressive tax system was from a coworker in a call center over 10 years ago.   Our employer was short-staffed and therefore offered us a deal.  If we agreed to work at least 10 hours of overtime a week, they would pay us double time for all our overtime.   His rant was inspired by seeing the tax withholding on his first check that included the overtime.  My coworker was far from rich, as he drove a 20+ year old Monte Carlo that looked its age.   We both continued working the overtime, and I’m sure we both got nice tax refunds that year, but I’m sure my colleague felt a bit punished by the relatively high taxes.

When a friend of mine was in high school, he dated a girl whose father had passed away.  Her mother got a modest check from Social Security every month.   Every summer she took several weeks off without pay because for every additional dollar she made, she would lose fifty cents in Social Security.   Actually it was a little worse than that because she had to pay Social Security taxes on that dollar, and may have had to pay state or (minimal) federal income tax on that dollar.   The woman was by no means rich, because she worked at a mall anchor department store.

If people who are not rich like the ones I describe above notice the disincentive to work harder created by our tax system, how much more likely are those who are richer and are subject to steeper taxes to decline to make the effort to make more money?  Higher tax rates don’t help our country’s debt situation if everyone decides not to work as hard, so that they don’t pay them.

Quite simply the economy sucks because we the American people have borrowed too much, and we are concerned the economy is going to get worse, not better. There are banks willing to lend, they are being more picky about who the lend their money, because they are concerned that they may not get repaid. Most Americans have figured out that they should borrow less than they were borrowing. The notable exception is our government which is borrowing like there is no tomorrow.

I was out shopping with a buddy. While our wives were out shopping for clothes, we stopped at Best Buy and looked at a beautiful 55″ TV will all the bells and whistles. Due to an zero interest promotion, I could have borrowed the money to buy the TV and only had to pay $65 per month for the next 36 months. I’d really like to have the TV, but I don’t want another $2300 in debt. The current TV in our living room works well enough. Yes, it’s a second hand analog TV, but it does what we want it to do. Likewise I could trade my car in for a new Ford Ranger for less than $320 for the next sixty months. My car still runs, and I’d just as soon have the money in the bank thank you.

In other words, the biggest problem our economy has right now is a lack of confidence. I’m concerned that the trend in the economy is toward the economy getting worse, not better. If the economy gets worse, I’d just as soon have cash in the bank, and not have any more bills. Therefore, I’m not the least bit surprised when businesses are reluctant to spend money or hire people and would rather sit on some extra cash. Furthermore, I understand why banks would rather have the money sitting in their bank than lending it to someone who might or might not repay it.