Tuesday, January 30, 2018

My Emerald Jubilee

Friends, your beloved Peasant is turning 60 years of age (!)
this week on Friday, and I'm taking time to commemorate
this personal milestone. I shall be celebrating not just on the
day but throughout the week! Not to worry, we'll get down to
business again after the day, getting on with the business of
scrutinizing the political and economic news of the day and
the people who make it.

A person's sixtieth birthday is a special occasion. It requires
time to reflect, remember, give thanks, and to begin, if one has
not already been doing so, to closely cherish each and every day
as they come, for one is going to have less of them on the horizon
at this point. Oh, I'll be around for a few more years; as a matter of
fact I'll do my best to be around for a few more decades, giving
my fellow conservatives good cheer while giving the lefties
headaches, conniptions, and maybe some ulcers all the while.
And we'll have a lot of fun as we go!

If time permits me on the big day (February 2) I'll come back for
a quick visit with you, my fabulous readers! Otherwise, we'll
gather again on the following Thursday. Thank you all for your
generous indulgence and for your friendship! You are my birthday
gift on every day of the year!


MEM

Thursday, January 25, 2018

An Economist Who Blazed a Trail That Changed the Lives of Millions

About seventy years ago then-President Harry Truman
declared that if one were to line up all the economists
end-to-end, they would all point in different directions.
The 2017 Nobel Prize committee gave their economics
prize to an economist who spent the last forty years
showing that people don't act, in the investing sense,
the way that most economists have long said they do.
Moreover, this economist has enabled millions of
people to save more money than they thought they
could.

Over forty years ago two Israeli psychologists,
Amos Tversky and Daniel Kahneman, had exploded
the long-held idea that people are "rational" in a
series of experiments. Many economists, however,
stubbornly clung to their notion of people's
"rationality" for dear life. Professor Richard Thaler,
in a series of brilliant and amazingly humorous articles
published in highly respected academic journals since
the early 1980s, posited that people think the way
economists think they think, rationally and disciplined.
Instead, non-economists think like the human beings
that they, first and foremost, are: inconsistently,
distracted by secondary things of less importance,
emotionally. In other words, typically human in
thought and resultant action. Furthermore, Prof. Thaler
pointed out that most economists think like the human
beings that they, too, in fact are. In summation, he
showed that human and financial behavior is much
less orderly and much more complicated than is
presented in traditional economic models.

An economist thinks that everything is about incentives
and information; Prof. Thaler demonstrated that financial
behavior is mostly a matter of faulty self-control.
Rather than deciding on their goals and investing in a
diversified portfolio likely to net the highest possible
return on investment for an acceptable risk level,
people often can't act on their own investment ideas,
figuring "Why invest today when you will have still more
money to invest tomorrow?". This shows that people
are more procrastinators than investment managers,
according to Stephen Utkus, head of the Vanguard
Group's Center for Investor Research.

If  prospective investors are signed up automatically for
a 401(k) retirement plan rather than asked whether they
would like to sign up, 90% of them would stay with it.
Convince them to invest more when they get a raise
and they won't miss the money from their paychecks.
Thanks to Prof. Thaler's research, over 15 million
Americans are saving more for retirement. This, notes
Mr. Utkus, is a very conservative estimate.

Congratulations to Prof. Richard Thaler for his being
awarded the Nobel Prize in economics. In reaction to
having so been informed, Prof. Thaler quipped at a
press conference "I basically have made a career stealing
ideas from psychologists!". Would that the Nobel Prize
people also had a prize to award for possessing a keen wit.


MEM



Thursday, January 18, 2018

Tax Reform and Financial Growth

President Trump's recently enacted tax reform
legislation shows great promise regarding
enabling economic growth in both the short
and long term. With the final legislation signed
by the president there is a reduction in the
marginal tax rates, which is critical to facilitating
the promised economic growth.

The Tax Policy Center, a think-tank which focuses
on national tax policy, reckons that the weighted-
average marginal tax rate from individual income
and payroll taxes will decline in 2018 by 3.2%.
Moreover, the TPC discovers that the marginal tax
rates will drop for taxpayers across the income
distribution, so that whomever pays any income tax
(and will be paying income tax this year) will get
this beneficial easement. Robert J. Barro, professor
of economics at Harvard University and a visiting
scholar at the American Enterprise Institute, states
that he finds that the tax reform package relies on
the "user cost of capital"; this is a concept economists
utilize to get a fix on what the cost is for businesses
to acquire and deploy capital. This return is high,
roughly around 8% per annum in real terms, the reason
being that investing involves large risks.

The tax rate on corporate profits will be reduced from
35% (the highest such rate in the world) to 21%.
The degree of expensing allowed on business investments
will be impacted by this rate cut. On equipment, the new tax
law raises the depreciation allowance will be hiked from
80% to 100%, with this change to lapse after five years.
On structures, the depreciation allowances will also be
considerably discounted. Although the new tax legislation
does not change depreciation schedules for structures such
as factories and office buildings, the lower tax rates come
into play because whatever output comes about from
investment is taxed at the new rate of 21% -- a nice break.

When the user cost of capital is lowered, the long-run ratios
of corporate capital to labor are increased. This means that
companies will be more able and willing to provide each
worker with more structures, along with more equipment
in those structures, to do their jobs. This makes raising wages
possible by cutting corporate taxes.

Prof. Barro thus finds that cutting income taxes on individual
taxpayers will fuel economic growth in the short term, and
tax reform with an eye toward lessening the tax load for
businesses will fuel that growth over the long term. This
makes for more investment, increased production and
higher wages for millions of American workers. After the
eight years of punishing taxation and a resulting paucity of
investment capital courtesy of President Obama, this plan
will be a welcome breath of fresh air.


MEM


Thursday, January 11, 2018

Note to Police Chief Flynn: Don't Let the Door Hit You on the Way Out

Just a few days ago an unexpected, wonderful event
took place in Milwaukee: Police Chief Ed Flynn
announced his retirement, ending the puppet show
that has featured Flynn and Mayor Tom Barrett
which had run since 2008.

A career cop with a heretofore sterling service record,
Flynn came from Massachusetts when he applied for
and was offered the post of Milwaukee Police Chief
by Mayor Barrett. Not long upon assuming his duties,
he entered into an extramarital affair with Jessica
McBride, a journalist, having publicly fessed up
when word got out. The illicit activity having made
for, among other things, a sticky PR situation, Mayor
Barrett was able to exert some leverage on his new hire
to get him to make Milwaukee's finest go easier on
criminals, especially those involved in car thefts.
Barrett had Flynn institute a no-chase policy regarding
them, including car-jackers. The resultant policy also
called for lenient treatment for first- and second-time
offenders, especially if they were juveniles; never mind
that the car-jackers oftentimes forced people out of
their vehicles at gunpoint. Barrett said that first-time
car thieves were most likely just going joy-riding (?!)
and that second-time offenders were not much more,
if any more of a problem than the first-timers. But the
third-timers and other multiple-time offenders, Ah!
THEY would be dealt with most severely. All this
made for some fodder for some stand-up comics
in the local night clubs, but had perplexed and angered
many Milwaukeeans, making them wonder what kind
of fool they have for a mayor, never mind for a police
chief. And to avoid getting chucked out no sooner than
getting started in his position, Flynn dutifully went along
with everything Barrett wanted him to do. Why, when
you saw them together at press conferences, whenever
Flynn spoke you never saw Barrett's mouth move at all;
a most convincing ventriloquist act, with Flynn being
Charlie McCarthy to Barrett's Edgar Bergen.

Along the way in his time as Milwaukee's top cop Flynn
also had the department massage the statistics related to
police efforts to investigate crimes and make arrests, to
make it look like the police were performing much more
effectively than they actually were. Whether this was
Flynn's or Barrett's brainchild is not clear, but it certainly
caused a loss of confidence that the public had for the
controversial chief. Flynn also had his officers take
possession of guns used by law-abiding gun owners
in self-defense and/or defense of their businesses
or other property supposedly to aid in their investigations
of these incidents, and taking forever to return them to
their owners after the guns' owners were found to be
innocent of any wrongdoing. Some of these gun owners
have been waiting months, even years, for the return
of their firearms. Seems that Barrett and Flynn don't care
for the recently enacted laws regarding carrying firearms,
and this is their petulant way of dealing with it.

And when Mayor Barrett pushed for his trolley project,
a folly which hizzoner claims will enable more people to
get around Milwaukee and its immediate suburbs more
easily, never mind that similar transportation schemes
in other major US cities have not resulted in the forecasted
riderships and resultant revenues, oftentimes diving deeply
into the red ink from their implementation, resulting in
among other things more and higher taxes for the taxpayers
in those cities. Local opinion polls have consistently shown
that Milwaukeeans opposed the building of this system
by large margins. In fact, many of the local citizenry have
instead stated that the mayor should instead beef up the
police and fire department budgets and hire more police
and firefighters to station in or to dispatch to their neigh-
borhoods, especially those with high rates of crime.
Barrett turned a deaf ear and gave the one-fingered salute
to these citizens, and Flynn obediently went along with
his boss.

Your observant Peasant is delighted to see Chief Flynn
go; I just wish that Mayor Barrett would have the decency
to announce his departure as well, so that both parts of this
sorry show would finally fade away. But Barrett will,
of course appoint another chief that will be his willing
toady, being the Mortimer Snerd replacing Flynn's
Charlie McCarthy in the act. However, there is a ray of
hope: the police department and its union, along with
the backing of the few members of Milwaukee's
Common Council that are not cohorts of Barrett's can ---
and certainly shall --- demand a say in who Chief Ed Flynn's
successor will be, and what they require in their next
chief. Perhaps they can muster and apply some pressure
to Mayor Barrett to get the right candidate. But with a
mayor who treats our city like his own little fiefdom,
surrounding himself with his deep-pocketed supporters
and political hangers-on, listening to them and the
sycophants in the local newspaper The Milwaukee 
Journal Sentinel who never write anything less than
glowing about their elitist hero, the situation is a
sticky one to be sure. Your faithful Peasant will keep
you, my fantastic readers, apprised.


MEM




Thursday, January 4, 2018

So Long Al (Not the Ladies' Pal!)

United States Senator Al Franken (D-MN) has gotten caught up
in the national sexual harassment storm with seven women to date
alleging his having groped them. After hemming and hawing about
the allegations against him, also announcing that he would not heed
calls for him to resign from the Senate but would instead "reflect"
on the accusations and his behavior toward these women, about
whom he claimed that he didn't recall his interactions with them
in the same way they did, had announced his resignation after
all.

In one instance, the former Saturday Night Live performer
and comedy writer was photographed fondling a female reporter's
breasts while she slept. They were together on a plane flying
to a U.S. military encampment with other entertainers and reporters
to entertain the troops in the Middle East. Leeann Tweeden,
a California-based radio broadcaster and model, tweeted the photo,
touching off the whirl of accusations against Sen. Franken, adding
her account of her having been grabbed by Franken and forcibly
kissed on another occasion during the trip.

In the wake of the accusations and allegations rendered against
Hollywood movie chief Harvey Weinstein, many victims of various
types of sexually predatory behavior have come forward and spoken
out against their tormentors; both women and men in entertainment,
business, politics, and journalism (and some other fields I'm sure)
have found the courage to tell their painful stories. And their cries
have rocked the walls and halls of power, a very good thing.
In this case a United States Senator has been shaken out of his
comfy and rarefied surroundings, and a very haughty and arrogant
sort he is! Having attained the Senate seat he has occupied for one
term and part of another in controversy (Franken won election
with an overall vote total that included some district vote totals
being greater than the number of registered voters in same districts)
and now giving up the seat in controversy, the not-so-funny-after-all
Senator Al Franken will be leaving the Senate, and good riddance.
An arrogant, elitist pig in public office is abominable, but throw in
one that is also a sexual predator and you have a festering boil on
the body politic.

Thank heaven this boil has now been lanced.


MEM