automotive bailout i say nay

As stated in my classmate's blog about the bailouts we have a problem. Everyone is looking to Obama to solve their problems. Why do these car companies and money investors get special treatment, and when does the throwing money around to fix a problem stop. Every time I turn on the news I hear about Obama's new proposal that will cost us even more money yet he is planning on cutting taxes. Has he forgotten about the deficit? And to answer your question the reason that the car companies are in trouble is because unlike foreign companies we have to worry about unions. In the American car companies you can come right out of high school and make more than $100,000 a year with outstanding benefits. Now I went hunting with some high up business men this weekend, most of whom own their own businesses, and they explained how this could be fixed. First the automotive companies must file for bankruptcy. Then when the bankruptcy judge is determining which contracts the company can retain, he voids the contract with the unions. This then makes the cost of cars go down which makes the price go down, which in turn more people buy the cars, and poof no more problem. We are so caught up in the little guy we have given him too much power. So you can complain about high price of cars and what the government is doing but it is you, the people who want the government to do everything for them, that are creating this problem.

Complaining about the Complainers

One of the big campaign promises from Obama is the finding of new sources of energy. But let’s take a look at some of his promises and why many people believe we need to find these new sources of energy. What it mainly comes down to is the person’s need to whine.

It isn’t about the lack of alterative energy people just don’t want to use it. We have the ability to use nuclear power. It is clean, safe, and efficient but the moment you mention it people break into fear thinking of Chernobyl. But what people do not understand is that the Chernobyl power plant was in bad shape. It was not kept up to code and was many years past the destruction date. We are also the only major power country that does not use nuclear power. But instead of looking at the technology we already have people need to complain at one accident and want others. So what is one that Obama promises, geothermal energy. This is just a big word for producing steam from the ground. The problem is that the only places this works is in highly volcanic zones. So who could use this power? There is the North West coast and Hawaii so rounding up about 2% of the nation’s population. So what about the other 98% of us?

People also want to bring the oil companies down because they are too powerful so they want the government to give money into finding new alternative fuels. The problem with that logic is that the oil companies do the most research on alternative fuels, so all that money to bring down the oil industry is just going into their pockets anyway.

So we have another form clean energy that is better than coal but people don’t want that. They want to get rid of the oil companies by giving them money. So why are people still angry at the energy and oil companies if it is their fault that they are the way they are? Because I believe people are not happy unless they have something to be unhappy about.

Better Cars for All

Although the time to change minds has passed, there are some things that need to be mentioned about my classmate’s article, “McCain’s Supportive Nature.” So let’s start with the first two plans mentioned. First there is McCain’s idea of the five thousand dollar tax credit to those who buy zero carbon emission cars. The other option is Obama’s seven thousand dollar tax credit to those who buy “progressive cars.” Now at first glance Obama’s idea sounds better, the problem is that is only at first glance.

Let’s start looking at demographics. The entire reason for Obama’s plan is to help those who are not as privileged to buy better cars. Let’s take a basic car that you see everywhere, a Ford Mustang. Its starting price is around $20,000. Now assuming this is a progressive car you can now take off the $7,000 in tax credit. You are still left with a $13,000 car. I don’t know about you but at that price I will still be looking at old used cars for half the price. So tell me how does that get more fuel efficient cars out of lots and into consumers’ hands?

However we need to now take a look at McCain’s plan to give a tax credit to people looking at a zero-carbon emitting car. As stated in the article not everyone could afford these cars. This would be geared to the upper class, those who buy new cars. Now let’s say that Donald Trump is looking to buy a new car. Then for the sake of argument say that he is trying to decide between two fairly equal priced cars. One a brand new zero carbon emitting car and a Porsche. Now everyone would go for the Porsche but say we give him a $5,000 tax credit on the zero carbon car. Suddenly he is buying a fuel efficient car instead of the Porsche. Now like many other higher class car buyers when the new model comes out he will want to buy it instead and sell his old one back. The used car like all the others gets trickled down to the lower classes. Thus more fuel efficient cars are put into the economy. We help our environment and lessen our dependence on foreign oil with less cost to the tax payers.

So even though when you first read about the two proposed plans it looks like one is better, only by completely thinking about them can you truly decide which one is actually better for our economy and environment.

Attack of the Negative Ads

Every campaign that I can remember has been about bringing the other person down more than telling why you are better for the job. This election is no different. Both sides are claiming that the other is running the more negative campaign. The problem is how do you know since negative is a subjective term in this case. So I decided to watch a sample of each of the candidates’ latest television ads.
I watched seventeen from McCain and seventeen from Obama. Now I had to use an objective ruling so I decided that for a campaign ad you can have one of two types, either pro-you or anti-other person. As I watched McCain I thought it was pretty bad. Only eight of McCain’s ads talked about why you should vote for him, the other nine just stated why you should not vote for Obama. This personally made me a bit angry. However, I had yet to watch Obama’s. As it turned out, Obama only had one message that told us why he was the better candidate. The other sixteen ads were attacks on McCain. So who is running the more negative campaign? I would have to say Obama.
The biggest problem with this sort of campaigning, apart from the vicious attacks, is that it turns us into a group who votes not because the one candidate is better, but instead we cast our ballots on the candidate that is the least bad. So what could the candidates do instead of the malicious ads? Why not tell us what you stand for instead of telling us why the other person is so bad. Simply state why should we vote for you instead of why we shouldn’t vote for the other. That way when you are elected people can say, “That is the best man for the job!” instead of the usual, “At least he is better than the alternative.”

Unfair is Being Fair

The blog posting “Spread Your Own Power and Wealth” on the Powerlineblog.com is intended for the more conservative reader. The author seems to know what he is talking about giving exact evidence from the IRS, and historical background of taxes in the United States. His argument is about the proposed tax raise that Obama is campaigning about. Obama proposes an increase on income tax for the wealthy. The problem is the top 5% paid almost half of the income taxes for 2006 and the bottom 50% paid virtually no income taxes. Also knowing that the poor will always out number the rich, the constitution put barriers in place to “protect personal property from unjust confiscation.” So from the beginning of our country until 1913 the only taxes were indirect, such as tariffs, and duties. However, in 1913 the sixteenth amendment was passed allowing federal taxation of income. Now the question remains why the majority hasn’t taken more money from the rich. The author accredits this to the idea that the barriers to protect individual property erected by the founding fathers still work. The other reason is because a large number of Americans think of themselves as rich or have the ability to become rich, thus keeping them from trying to attack the wealthy. I agree with this author, the idea of taking something away from someone just doesn’t seem right. The easiest way I have been taught to think about this in terms more relevant to me is by linking it to grades. Let’s assume that you work your hardest on a test, study every night and take great notes. Now let’s say you get a 97 on your test. Then let’s look at another kid, and say that for some fault not of his own, such as not being able to understand the material or having a learning disability, takes the test and gets a 59. Well he obviously needs help so that teacher takes 17 of the points that the top person got on his or her test and gives them to the person that got a 59. Now you have two people one with an 80 and the other with a 76. Most people would find this horrible, saying the person should have tied harder; you earned the 97 you should get to keep it. But the fact is this is exactly what Obama wants to do with the wealth. So why is it ok to do with money but not grades? I understand that there are people that did not earn their wealth, but some like my dad were born a farmer and worked hard to get where he is and to have people take it away from him and give it to others because it “isn’t fair” that he has more money than someone else bugs me.

Editorial Commentary 1

“Pandora’s Bailout”, by Holman W. Jenkins Jr., is the best commentary I could find for the recent fiasco in the economy and the multi-billion dollar buyout of investment banks. Unlike the others I have read, he is the first to actually state a solution to the problem. Jenkins has written for The Wall Street Journal since 1992, he has done articles for Policy Review and National Review. He also holds a Masters from Northwestern in journalism. His article is intended for a more educated audience.
Jenkins does not agree with the buying out of the investment banks. There are three main reasons why he disagrees with the proposition. First, besides the multibillion dollar buyout of the investment banks, the government would also have to buy out all of the houses to secure the investment. Second by buying all of the mortgages the government would become the world’s largest landlord. Finally the taxpayers’ gains would be filtered into keeping non payers in their houses.
His solution would be to let the government be a last resort buyer for mortgage derivatives. Then to help stop the price decline of houses in the southwest and Florida, he talks of having the government buy up and demolish the surplus creating an increase in price for the houses still standing. This would up the price of mortgages, which would in turn recapitalize banks. This also lessens the government involvement by instead “buying thousands of houses, not millions of mortgages”.
I believe this is sound thinking on a basic level. There is a problem with a surplus, and there is one of two ways to fix a surplus. You can either lower the supply or increase demand. Now to increase the demand you must lower the price of the houses on surplus, in turn lowering the value of the houses already built. This in turn hurts the people who did the right thing and bought the house they could afford and helps those who made a mistake. Also to do this you would need a subsidy form somewhere to make up for the capital lost in the price drop. This would either come from the taxpayers or bank loans which got us in this predicament to begin with. However a decrease in supply would cause the price of the houses left to move up in value, allowing the people who did spend wisely to come out on top.

Economy Today

The article by Time magazine entitled, “Obama, McCain Try to Seize Economy Issue” is about the two candidates’ different views on how the economy should be fixed. While both agree in saying that it is not the public’s fault for obvious reasons, who they blame, are two different stories. Obama points his finger at the current administration, and their trickle down theory when it came to tax cuts. McCain, on the other hand, blames the greed on Wall Street. To fix the problems both have talked of tax cuts. Obama wants tax cuts for the poor and middle class workers, while McCain wants bigger tax cuts for corporations and wealthy businessmen. Obama wants stricter regulation on businesses, and McCain would like less federal involvement.
The reason this article is so important is because economics is what fuels everything. It is the big topic. The number one cause of divorce is money. The easiest way to have peace between nations is through open trade. This article specifically has to deal directly with you, unless you feel like never getting paid or having a job. The questions of “how much say should government have in private business?”, “why give a tax cut while we are in extreme debt?”, and “what do I stand to gain?”, because let’s face it Americans are individualists, all come up in this article.
http://www.time.com/time/politics/article/0,8599,1841314,00.html