The Transfer of Power in the United States of America

Despite the fact that the inauguration of President Barack Obama is not necessarily a celebratory time for me I do recognize the historical aspects of the event. Not only do we now have the first Black President of the United States of America but there is something that people usually seem to overlook. The inaugural process and transition of power in our republic from one leader to another is historic every single time it happens. I found it best put into words by Trent from The Simple Dollar blog:

The United States is an amazingly stable democracy. For most Americans, the peaceful transition of power seems like a normal, common, and expected thing. Yet, over the course of human history, such peaceful transitions of power are the exception rather than the rule. Revolutions, wars, coups, and bitter transitions are the rule in most areas of the world, and the strong-armed changes that other people face undermine the stability of day-to-day lives. Currencies become worthless. People are driven from their homes and lives. Personal property is “nationalized.” In the United States, we are quite lucky that we don’t have to face such situations – and our safety from those situations is part of what gives us such prosperity.

Today, as Obama simply and quietly takes the reins of leadership, recognize that this transition isn’t taking place at the barrel of a gun – and it’s that stability and safety that plays a major role in the stability and safety in our own lives. [via - The Simple Dollar]

That is exactly why living in this country continues to be better than living in any other place in this world.

Bar Stool Economics

From an email:

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

‘Since you are all such good customers,’ he said,
‘I’m going to reduce the cost of your daily beer by $20.  Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected.

They would still drink for free.  But what about the other six men–the paying customers?

How could they divide the $20 windfall so that everyone would get his ‘fair share?’

They realized that $20 divided by six is $3.33.  But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before.  And the first four continued to drink for free.

But once outside the restaurant, the men began to compare their savings.

I only got a dollar out of the $20,’declared the sixth man.
He pointed to the tenth man,’ but he got $10!’ ‘Yeah, that’s right,’ exclaimed the fifth man.
‘I only saved a dollar, too.

It’s unfair that he got ten times more than me!’ ‘That’s true!!’ shouted the seventh man.
‘Why should he get $10 back when I got only two?
The wealthy get all the breaks!’
‘Wait a minute,’ yelled the first four men in unison.
‘We didn’t get anything at all.  The system exploits the poor!’

The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him.

But when it came time to pay the bill, they discovered something important.  They didn’t have enough money between all of them for even half of the bill!

And that, ladies and gentlemen, journalists and college professors, is how our tax system works.

The people who pay the highest taxes get the most benefit from a tax reduction.

Tax them too much, attack them for being wealthy, and they just may not show up anymore.

In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.
Professor of  Economics
University of  Georgia

United Airlines Unions: More Bodies

How many United Airlines employees does it take to assist in the deplaning? (No jetway, using stairs, small plane with plane side luggage check.) Answer: 7

2 unloading baggage, 1 to hold a green plane side luggage check tag to inform people who checked luggage at the plane to stop and wait for the other two to unload the luggage, 4 to direct people into the terminal.

How many United Airlines employees does it take to operate a concourse to concourse shuttle? Answer: 9

Starting Point: 1 person at the gate, 1 person at stairway landing, 2 people by the door, 1 person driving the shuttle.

Ending Point: 3 people by the door, 1 person at the gate.

How many United Airlines employees does it take to operate a ticket counter during heavy delays? Answer: 3 or less (total 6 possible stations to be manned.)

I’m at the Cedar Rapids airport (CID) and there is one UA flight to Chicago and its delayed 80 minutes or so. There is one lady helping a ‘vip’/first class person and 2 others helping the rest of the crowd at a time where most of them will have to visit the ticket counter to rebook flights due to delays.

What a mess. We see headline after headline about how airlines are hemorrhaging money. The same thing is happening in Detroit. Companies are being forced to keep staffing levels at an unnecessary level based on threats from Unions. I mean seriously; it doesnt take nine (9) people to operate a damn shuttle.

Des Moines Power Grab: GOP Alternative to SILO Takeover

I wrote here regarding the current attempt in Des Moines to move the SILO tax into the state sales tax and the lack of guarantees for where the money will be used as well as the destruction of the ‘local option.’ It appears that Iowa Senate GOP members have come up with an alternative which would provide the people a voice in the sales tax as well as a constitutional amendment which would specifically state that the money was to be spent on schools.

The Senate GOP alternative would seek to place a floor of $575 per student and a rolling average to be recalculated annually in distributing tax proceeds. It also would encourage a constitutional amendment to protect the school infrastructure and property tax relief money from being “scooped” for other purposes and preserve the current system of allowing voters to reaffirm the local option tax every 10 years.

This alternative is built on something that is very hard to find in Des Moines this session.. Common Sense. There is no reason there shouldn’t guarantees put on the money and the citizens of Iowa have every right to vote on local option sales taxation. Apparently these concepts escape some folks..

Senate Majority Leader Mike Gronstal, D-Council Bluffs, said he was “disappointed” Senate Republicans are choosing to abandon the bipartisan path taken in the House to do what’s right for students and property taxpayers in favor of “election-year posturing” and “pandering” to special-interest groups like Iowans for Tax Relief.

First of all, Sentor Gronstal, “bipartisanship” should be broken off when something this atrocious comes along. Second of all the Iowans for Tax Relief is a group that works to lower the tax burden Des Moines places on the citizens of this great state. Would that not then be “pandering” to the citizens?

I believe that Senator Gronstal is just a bit worried that the Democrats in Des Moines might get schooled come November. After all, who wants to keep a party in power that has increased spending more in the first two years of their run than the GOP did for their entire eight year run.

[via Gazette Online]

Des Moines Power Grab: Local? Option?

Not to long ago we went through the annoying process of voting for a local option sales tax known as the SILO tax which was meant to be used for school infrastructure funding. Linn and Johnson counties were the last two in the state to pass this new tax after it was generally approved by the state. Funny thing is now that everyone has passed it the yokels at the statehouse in Des Moines want to pull it all back in. Afterall, if everyone said yes to it.. why not just have it at the state level? Take a drive on an Iowa road and you’ll know why.

Majority Leader Michael Gronstal, D-Council Bluffs, said he won’t allow debate on the measure, which would increase the statewide sales tax by one cent to replace local option sales taxes approved in all Iowa counties that benefit school districts.

There are number of problems with this idea. First of all the whole idea of a LOCAL OPTION sales tax is that we have the OPTION… LOCALLY to regulate our taxation. If this power gets moved to Des Moines thats just another government power grab. Second of all we know how well the state manages money. They cant seem to figure out how to do anythign without raising some sort of fee or tax. So, how do we know that the money from this sales tax increase will be guaranteed to go to schools? ALL OF IT.

Republicans said they won’t support the measure without assurances the money raised won’t be used for purposes other than school repairs and property tax relief. So far, they said they haven’t received such guarantees.

“There are a lot of concerns about the money not being properly protected,” said Senate Minority Leader Ron Wieck, R-Sioux City. “I think the attitude in our caucus could be changed if there was some constitutional protection for the money.”

The measure would do away with current elections that are needed to renew the local option taxes.

If those local elections are no longer held, Republicans questioned whether use of the money would change in future years.

“The concern is we could move forward and in a year, or two years, or three years, the money could be scooped and used for other purposes,” said Wieck.

Uh.. Yeah! There’s no way they will keep that money secured for school use only. Why can’t these guarantees be made? We need this power on the local level and thats the bottom line. Des Moines… BUG OFF!

[via - QCTimes]

Perspective on Gas Prices

Gas took a flying leap today here in Cedar Rapids with prices ending up between $3.41-$3.55 per gallon. An article I was reading regarding one gas station having an influx of customers right before the spike had an interesting little chart generator for gas/oil price data. I created a chart that shows 60-months with of gas (per gallon) and oil (per bbl) in relation to each other.

In the statistical world the chart above shows a that the price of gas has been almost directly linked the price of crude oil. I have added combined the above chart with a straight line chart below which should help emphasize the relationship and point out an interesting variance.

Notice that in April of 2007 the price of crude and the price of gasoline went off on two different paths. The price of gasoline has remained relatively flat from April 2007 to now while the price of crude oil has continued on an upward path. Another interesting item that is shown in these graphs is that there has been a growing separation in the price of gas compared to the price of oil. Back in 2003 the price of each product was very nearly 1 to 1 and you can see that over the last 60 months there has been a growing gap between the cost of the two products.

Bottom line: Yes, it hurts to pay $50 to fill up your tank but the answers to the problems aren’t as easy as some may think. You can’t attack a problem like this with your feelings you have to attack it with your mind and common sense. Also keep in mind how much of the price of a gallon of gas is made up of taxes. There’s Federal, State, and Local taxes to add to the mix. John McCain is suggesting a Federal Gas Tax Holiday this summer. That one thing could do more for the economy in the long run that any other idea being floated. Then again you could opt for the redistribution of wealth mentality and tax the hell out of the oil companies but you wouldn’t want to steal Barack Obama/Hillary Clinton’s ides now would you?