Importance of economics

Long-term economic growth

2011-09-23T11:02:00.000-07:00

Economics: long-term economic growth

One type of government policy that could promote long-term economic growth deals with allowing people to make untaxed contributions to their IIAs (Individual Investment Accounts). By permitted untaxed deposits and only taxing the funds when they are withdrawn, it helps promote economic growth for the future because additional taxes will be collected in the future. Also, the money that is deposited will increase and the amount withdrawn will be higher, therefore more taxes will be collected as a result.

Another government policy that has the capacity to stimulate economic growth would be to promote trade. Increase in trading helps boost not only employment, but also the financial income to the physical domain (i.e. city, county, state, country). Free trade helps stimulate the income by encouraging trade between the US and other countries. This enables money from overseas to come into the US, thus raising the GDP.

References:

Collinge, Robert A. & Ronald M. Ayers. Economics By Design: Survey & Issues, 3^rd Ed.

New Jersey: Pearson Prentice Hall, 2004.

Lambro, D. (1994). Will Congress reverse Tax Code's anti-savings bias?. Human

Events, 50(15), 8. Retrieved from Academic Search Elite database.

World Trade Organization. “Trade Stimulates Economic Growth, and That Can Be Good

News for Employment.” The 10 Benefits: 7. Growth and jobs. Internet:

<http://www.wto.org/english/thewto_e/whatis_e/10ben_e/10b07_e.htm>.

American National Debt

2011-09-12T11:11:00.001-07:00

Economics

Each newborn American inherits the national debt which they are charged with helping repay once they are old enough to pay taxes. Ironically, once these newborns are paying taxes they generally run a budget deficit as well and their children will inherit the same budget issues. The national debt continues to grow and run from generation to generation unless drastic changes and measures are implemented in order to decrease and pay off this debt.

According to the Congressional Budget Office’s budget outlook, from 2010 to 2011, the budget deficit is expected to fall from $1.3 trillion to $980 billion. This is an anticipated 6.5% of GDP. These calculations assume that no major legislative changes occur in the next year. According to this same report, the unemployment rate is expected to begin to decline starting in 2011 and significantly improving between 2013 and 2014. These projections, if correct, will most definitely help improve the budget situation because more people will be paying into the system than drawing out of it.

The view of “let’s take care of our future generations and start repaying our massive public debt!” is idealistic but not always the best option. Yes, it is a good idea to start paying down the debt, but once the debt is eliminated this will result in much higher interest rates for future generations. Carrying over a balance of some sort can prove to be beneficial for people. However, too much of a balance is detrimental because it is very overwhelming and does cause economic uncertainty when there is too great of a deficit.

References:

Collinge, Robert A. & Ronald M. Ayers. Economics By Design: Survey & Issues, 3^rd Ed.

New Jersey: Pearson Prentice Hall, 2004.

Congressional Budget Office. “The Budget and Economic Outlook: Fiscal Years 2010 to

2020.” January 2010. Internet: <http://www.cbo.gov/ftpdocs/108xx/doc10871/ BudgetOutlook2010_Jan.cfm>.

TAX the Rich to Pay the POOR?

2011-09-11T11:12:00.000-07:00

Economics

The current economic goals for the United States as a whole is to find a balance between increasing income to the government in order to support programs while attempting not to tax the citizens as there is very little money in the average American home that can be given up. Many Americans have suffered directly as a result of this economy, specifically with higher prices on everyday necessities. If the American people do not have the money, it would not be fair for the government to continue to tax them. The government is trying to find ways to tax large corporations, not average citizens.

The US economy has already gone through the economic stages of trough (a low point in economic activity), expansion (growth in the economy), and peak (the high-point of the economy). It is still in the fourth stage, recession, but appears to be getting back on track towards the trough stage in order to begin to rebuild.

In the 2010 Economic Report of the United States, it describes how the economy as a whole is healing. The article states that economy improved dramatically in the fourth quarter of 2009 and has continued to improve in the beginning of the 2010 year. The US dollar is appreciating, which is beneficial in global economics.

References:

Collinge, Robert A. & Ronald M. Ayers. Economics By Design: Survey & Issues, 3^rd Ed.

New Jersey: Pearson Prentice Hall, 2004.

Economic performance. Country Report. United States, 2010, (3), 14-16. Retrieved from

Academic Search Elite database.

Which tax laws are balanced and fair

2011-09-10T10:51:00.000-07:00

Economics: Fair Tax:?

No one wants to be taxed more than another person however there are disagreements over which tax laws are balanced and fair based on the economics surrounding an individual and/or company. For example, increasing a tax for exported items rather than imported items would cause those receiving the goods to pay for the tax increase. If the items imported were taxed, this would directly impact the US, but if only the exported items had a tax increase it would not affect the people of the US and their budgets. However, if the countries we import items from did the same thing, the US would still have to pay those taxes. If a country the US trades with had the same thought process and philosophy, the US would still have to pay higher taxes and it would achieve nothing to only increase the export taxes.

In regards to tax equity, the closest principle to my opinion is the ability-to-pay principle: “those who can afford to pay more taxes than others should be required to do so” (p.357). Especially in this economy, many families are struggling to make ends meet. Those who are making $30,000 a year to support a family of five should not be taxed the same as those who make $100,000 a year to support the same size family. Those who make more money may live a more lavish lifestyle, but each of their pennies do not count towards simply making ends meet. Those who make more money should be required to pay more because everyone has the right to live in a safe neighborhood with power and running water. These are basic necessities. Those who make a large amount of money already can afford the basics, but do not need their three cars, large mansions, etc. I realize this is more of a democratic political view, but the main point is we all deserve to live safely and securely. Having those extra luxuries are just that-luxuries.

Reference:

Collinge, Robert A. & Ronald M. Ayers. Economics By Design: Survey & Issues, 3^rd Ed.

New Jersey: Pearson Prentice Hall, 2004.

Enacting Universal Healthcare

2011-09-09T09:04:00.000-07:00

Economics enacting universal healthcare

1) Suppose the government were to enact universal coverage with $2500 deductibles. What problems would that policy solve? What problems would it cause?

Having universal health coverage comes with many pros and cons. The pros would be that all doctors would be charging the same price, so the better physicians would be more available to the poorer population. Also, many more people would be able to get the medical care they require. However, the cons include with the better physicians being more available, their patient list would be so overloaded that people would have to be on a wait list and potentially turned away in order to receive treatment. In addition, competition between physicians would decrease, thus causing a decrease in the standard level of care available.

2) One of the most significant costs of modern medicine involves malpractice insurance. Should the government limit the amounts that juries are allowed to award victims of medical malpractice, so as to reduce malpractice insurance premiums and thereby lower healthcare costs? Explain.

Malpractice insurance is a necessary evil. The high cost of malpractice insurance benefits the patients in the long run. If juries were limited to the amount they were able to award the victims of a malpractice incident, the victims would be victimized all over again. The cost of money that can be awarded should always fit the situation, and will often vary from incident to incident. By limiting the amount juries can award a victim can severely hinder a victim’s ability to survive medically and/or financially. In addition, with the change to universal health care in this given scenario, more malpractice situations are likely to happen due to the decrease in physician competition as well as patient list overloads for more reputable physicians.

Commodities prices

2011-09-08T08:35:00.000-07:00

Economics

Gas price comparison

There is much speculation as to why the prices of gasoline have sky-rocketed so drastically in the past decade. According to Lucian Pugliaresi, President Energy Policy Research Foundation, Inc., on May 7, 2008 at the Committee on House Judiciary-Antitrust Task Force, the main reason for high gasoline prices boils down to the idea of supply and demand. Due to the hindrance of societal and economical issues, the cost of crude oil has cost increased at the very source. Increases in costs are a direct result of “unilateral contract renegotiation, nationalization, lack of investment by national oil companies, restrictive access to resources, war and civil strife.” The increase in “war and civil strife” has caused an increase in demand for crude oil to fuel the battlefields and equipment. The supply has decreased as a result of the increase in obstacles that cause the production of crude oil to be more costly in the beginning of the market process.

local oil prices

Reference:

Lucian, P., President, & Energy Policy Research Foundation, I. (n.d). Rising Gasoline

Prices. FDCH Congressional Testimony, Retrieved from MasterFILE Premier database.

War Economics

2011-09-07T13:10:00.000-07:00

Cost of the war

During times of war, resources become more limited due to the import and export of resources necessary to survive and live the way people are accustomed to. For example, during World War II, there were certain resources that were difficult to receive and distribute throughout the country due to many people being overseas serving in the military as well as difficulty and new dangers regarding imports and exports. The government felt it necessary to bypass the free market and rationed common items, such as sugar, gasoline, tires, meat, and other common items. The results were mixed and the rationing ended almost immediately at the end of the war. Rationing items as opposed to rationing prices is a more effective way because the rich can always afford higher prices, while the common public and poverty stricken citizens would not be able to obtain the goods they need due to their own personal budget constraints. This enables resources to be more evenly distributed rather than having a richer person hoard a large amount of a coveted resource or even having the rich people of the US having the majority of a need resource. It balances who has the resource and ensures that everyone gets the same based on family size and need. Rounding out the economy in the usa.

Positive Economics

2011-09-07T11:17:00.000-07:00

Positive economics or Welfare economics

The US president generally makes decisions which he anticipates will positively impact the most number of people. Idealistically, the president’s job is to take into consideration scarcity and the needs of the people he governs. Ultimately, the president’s goal is to find a balance between what is available and what the people need.

From a cynical perspective, a business executive will not consider scarcity very much because they are looking to earn as much money and resources for themselves and does not consider the needs/wants of others in the company. On a more fair and balanced approach, a business executive will look at making a decision on the margin, which causes them to balance the needs versus the wants of the company as a whole.

A city manager has the role much like the president of the US does, but on a much smaller scale. The city manager must take into consideration how the decisions he/she makes will impact the city’s people. Looking at available resources and the needs of the people is critical. An example would be a potential drought or power shortage. The city manager would be charged with taking action to help minimize the impacts of these potential events.

A good mother of a baby would most definitely be looking at what is best for the child above her own needs/wants. If there is a scarce resource, such as food, the mother will most likely ensure that the baby is fed before she is. If there is another issue that involves a need of the baby, the mother will often forego her own needs to ensure that the baby has all their needs met due to the scarcity of the resource.

economics theories

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