Econ Book Club 2010

The book club continued this semester! Here is what we got to read!

The Case for Gold

"But there are further effects that would become apparent during transition to a gold system. ... Unless such a transition begins quickly, we can expect to see the most massive failure of depository institutions in our history.

A movement toward sound money, while opening up all financial institutions to the sort of competition they should have faced all along, will, at the same time, relieve some of the pressure on the most critical of these institutions.

The alternative, of course, is massive government bailouts costing tens - perhaps hundreds - of billions of dollars."

- Ron Paul and Lewis Lehrman, 1982

It took only 16 years and here we had the government spending billions. According to this site, the TARP put some $250 billion into banks. I would like to know how much of this has been returned back and how much never will...

Higher Tax Credit vs. Lower Tax

To quote this article, according to Mr. President B. Obama, "The average tax refund [this year] was 10 percent larger than last year". Well, that may sound great to the few hard core Democrats who still believe that what this Government is doing will one day save this nation from debt, diseases, poverty, swine flu, terrorism, chicken pox, mosquitoes, evil corporations, people who want to be responsible for self, and all the other 'problems' that there are.

To me, this doesn't say anything positive at all, especially because of the way this was done. After all, this must mean one of the following two things 1) more debt now or 2) higher taxes later 3) or both combined.

I am not precisely sure on what an average tax refund is, but judging from the fact that most of my friends receive a refund of $1,000 or higher, 10% being $100, the whole 'higher tax refund' business will be probably quite expensive.

What was the tax refund all about? According to Mr. Obama, most of it was due to "college tax credits, making work pay, college loan relief, and home buyer credits." Well, great, so basically the government gives people incentives to go to college to get a degree that may not give them any sort of advantage, especially due to high unemployment and the fact that a bachelor's degree is today probably as much or even less than a high school diploma 50 years ago. Additionally, we get rolling with bad loans again when people who should not own a house in the first place (and could as well rent for a while) will take a mortgage and buy a house anyways. I am not sure on what a 'making work pay' stands for. I cannot imagine it's something much better than the other tax credits.

My question is, why, instead of making these tax credits, doesn't the government just lower taxes and its expenditures? Not to mention that because of so many tax breaks and all that, way more accountants and other tax experts are employed in this giant tax industry. What if all these people for once had to do something productive? Without tax breaks, they would have to, since otherwise they would have no job.

So yes, if you think tax breaks are good, ask first why lower taxes wouldn't be even better. :)