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November 27, 2015 / 15 Kislev, 5776
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Posts Tagged ‘economics’

Enough with the Praise for Stanley Fischer and Israel’s Central Bank

Sunday, February 3rd, 2013

Stanley Fischer is the head of the Bank of Israel. As such, he is the government appointed goon in charge of money printing. In his infinite wisdom, he is supposed to know exactly what the supply of money should be, because he’s purportedly a chacham she-ein kamohu – a crazy genius who has a pulsating brain and somehow knows these things. Or maybe God comes to him in his sleep and tells him how many shekels should exist and how much he should print and when.

Or maybe he’s just some guy who has no idea what he’s doing, given a power the equivalent of an economic nuclear weapon, something that no one man should ever, ever have.

Stan the Super Shekel Man recently came out with an announcement that he would be quitting his post early. Aside from the speculation as to why (I think it’s because he knows there will be an unstoppable economic tsunami in the next 3-5 years and he wants to duck out early and quit while he’s ahead), I have seen nothing but wall to wall praise for this central planning money printing soviet-style currency czar. Sure he’s kindly, has a sweet voice, an endearing Zambian accent, cutely mixes up male and female in his Hebrew grammar all the time, and the Israeli economy didn’t totally collapse in 2008 so everyone assumes the money master is responsible for saving us all from destitution. But this is all a big, sad, sorry myth.

Let’s break it down.

Let’s step aside for a moment from the persona of Stan the Man himself. He as a person is not the main problem. As I said, he’s a nice guy. The main problem is the very system of central banking that give men like him inordinate power over all of our economic lives, a power which, once you realize the scope and consequences of it, can make you dizzy.

Imagine for a moment two national economies. One where the supply of shoes and their price is controlled by one man and anybody else who manufactures or uses shoes besides him goes to jail, and another where the supply of shoes and their price is controlled by the free market, meaning a myriad of entrepreneurs freely importing and exporting shoes based on the demand for them by customers. In a free market where anyone can manufacture and buy as many or as few shoes as he wants, the supply, demand, and price of shoes will tend to reach an equilibrium point where profits will remain constant and steady. Shoe firms like wholesalers, manufactures, and retailers, will all compete with each other to sell the most shoes to the public. In order to do this, they will have to make shoes of the highest possible quality at the lowest possible prices in order to attract buyers.

If the supply of shoes gets too high, shoe prices will tend to fall, lowering profit margins, thereby restricting the amount of shoes manufactured, choking off supply, and bringing shoe prices back up to equilibrium. If demand gets too high, shoe prices will tend to rise, increasing profit margins, encouraging shoemakers to produce more in order to earn those increased profits. This brings supply back up to match demand, bringing prices back down to equilibrium again.

Now, in an economy where the supply of shoes and their price is controlled by one man, let’s call him the chairman of the Shoe Bank of Israel, we are entrusting a single person to:

  1. Manufacture every single shoe in the country, because anyone else who does that is considered a shoe counterfeiter and goes to prison
  2. Know automatically what the supply of shoes in the country should be at any given moment
  3. Set the price of shoes at whatever he thinks it should be
  4. Not abuse this power

The shoe market in such a country would be a complete mess and everyone who needs shoes would be miserable. Since only one firm would be allowed to make and sell shoes, there would be no competition and the quality of the shoes would deteriorate. If the Chairman of the Shoe Bank of Israel set the price of shoes too low, meaning he underestimates demand, people would start hoarding the shoes and buying more than they need, and there would be shoe shortages. If he sets the price of shoes too high, meaning overestimates demand, people who needed new shoes would not buy them, instead waiting for a lower price. Perhaps they would attempt to repair their old shoes, or cut open the ends if they didn’t fit. Huge surpluses of shoes would result.

How Obama is ‘Saving’ the Middle Class

Wednesday, January 2nd, 2013

President Barack Obama won re-election by selling the idea that he was the champion of the middle class.  Now he is forcing them into poverty and driving them from their homes.

That is the effect of new taxes going into effect on Jan. 1, regardless of how negotiations on the fiscal cliff turn out (unless, as seems unlikely, Congress decides to extend all of the Bush tax cuts to everyone).  The new marginal rates on dividends and interest (43.4%) and capital gains (20%, or 23.8% including the ObamaCare surcharge for high earners) will be devastating for the middle class.

Not only will it apply to those not-so-rich high earners who breach the $200,000 level, but it will harm those under the limit by undermining their desire to get ahead.  Why work longer or harder with 43.4% of marginal income going straight to Washington, another 15% to 20% going to state and local taxes, and 55% of whatever’s left going to death taxes when you pass on?  It’s easier to do what Obama wants and just stay poor.

New tax rates are just the beginning.  There’s the failure to address the Alternative Minimum Tax.  And with the president’s unwillingness to negotiate, there’s the restoration of higher tax rates on all earners.  There is also a host of indirect taxes, such as an onerous tax on medical device makers and lower reimbursements to doctors and hospitals, that will be passed on to consumers one way or another.

Altogether, Obama is “saving the middle class” with a $494-billion tax hike, three-fourths of it on the middle class.

Those who will be hurt the most are small businessmen, professionals, and modestly affluent retirees.  Many of these filers claim more than $200,000 on their tax returns, but they are hardly the evil 1% that Obama vilified during the campaign.  They operate family farms and small construction companies.  They are dentists and accountants.  They are the hardworking owners of retail stores and fast-food outlets.  In short, they are middle-class Americans.

Granted, they are successful.  But isn’t success what Americans aspire to?  By raising taxes on the middle class and especially on those among the middle class who are more successful than others, Obama is sending the message that Americans might as well not aspire to anything.  If they do, they too can expect to be taxed back into dependency.

That has been the plan all along.  That’s why the president exudes such spite toward those who aspire to be rich (while the Buffetts and Zuckerbergs who support him get a free ride).  As far as the left is concerned, all Americans should be dependent on government.  When’s the last time Obama celebrated the success of anyone other than someone like Christopher Brian Bridges (aka “Ludacris”)?  When’s the last time he spoke in a heartfelt manner about the great gift of capitalism and the everyday sacrifices of those in the middle class who make it work?

Never.  What he constantly proclaims is the glorious benefit of Big Government, with the implication that those who control Big Government possess an absolute right to rule over the middle class.  That is why he insists that Congress hand over control of the debt ceiling.  And to make government bigger, Obama demands bigger revenues.  Why should he negotiate?  On January 1, he gets up to half a trillion more in revenues to force more Americans into dependency.

Next week, all or part of that half-trillion in taxes is going into effect, including the Obama death tax.  Just think of those family farms whose owners pass away in the new year.  With Obama blocking reform, rates will return to 55% of assets over $1 million (in addition to whatever state death taxes are due).  At current prices, a typical 200-acre Midwestern farm is now valued at nearly $2 million.  That farm will have to be sold or mortgaged to pay estate taxes.  It will be difficult for surviving family members, who may be dependent on the farm for their livelihoods and may already have been operating the farm for years, to continue operating “half a farm.”  But that’s what Obama wants.

Small business owners are in the same boat. In order to pay that 55% death tax, many who inherit a franchise, a retail operation, or even a service station will be forced to sell the business.  And everyone who worked at that business loses his job.

Pairwise Matching Revisited (Podcast)

Monday, December 24th, 2012

Professor Robert Aumann, winner of the Nobel Prize for Economics in 2005, returns to Goldstein on Gelt to share more of his insights on pairwise matching, what this means, and how to apply its logic to making everyday decisions.

Secrets of Strategic Thinking (Podcast)

Monday, December 17th, 2012

How do business owners plan? Is there a specific set of thinking skills that you need to make your enterprise a success? And can strategic thinking be applied to everyday life? This week, Doug interviews Professor Stanley Ridgley, Assistant Professor in the Department of Management at Drexel University’s LeBow College of Business. Professor Ridgley is the author of The Complete Guide to Business School Presentations: What your professors don’t tell you…what you absolutely must know. Professor Ridgley tells Doug which skills you need to make the most of your business.

Two American Economists, One Jewish, Win Nobel Prize

Monday, October 15th, 2012

Alvin Roth and Lloyd Shapley, American economists with ties to Israeli universities, won the Nobel Prize for Economics.

The professors won the prize, called the Nobel Memorial Prize in Economic Sciences, for their research in how to make economic markets work better by more precisely matching supply with demand. Shapley used game theory to study the problem. Roth helped redesign the medical residents’ match program to make it more efficient for young doctors.

The prize was announced Monday.

Shapely, 89, was awarded an honorary doctorate from Hebrew University in 1986 and has worked with Israeli Nobel Prize laureate Robert Auman, who won his Nobel for his work with game theory.

Roth, who is Jewish, was a visiting professor of economics at The Technion in Haifa in 1986, and a visiting professor at the Hebrew University in Jerusalem and Tel Aviv University in 1995. Roth frequently visits Israel, Auman told JTA.

“I have been hoping for this for years,” Auman said of the award to Roth and Shapley. “It is absolutely the best choice that could be made.”

Roth, 60, is a professor at Harvard University in Boston, but will be leaving for Stanford University, where he is currently a visiting professor of economics, at the end of the year. Shapley is professor emeritus at the University of California, Los Angeles.

Surfside Welcomes New Commissioner Sheldon Lisbon

Thursday, April 5th, 2012

Sheldon “Shelly” Lisbon was sworn in recently as a new commissioner in the town of Surfside, Florida.

Lisbon was born in 1946 to Holocaust survivors in a displaced persons camp in Germany. At the age of three he sailed from Europe with his parents, starting a new life in America.

Sheldon Lisbon being sworn in as Surfside commissioner.

Lisbon is the quintessential American success story. He graduated from Boston Lubavitch High School, going on to study at Yeshiva University, the University of Maryland and Catholic University where he received advanced degrees.

He and his wife, Miriam, ran a successful Judaic gift and bookstore in Maryland for 25 years. They have a married son and daughter and seven grandchildren.

Lisbon is also an educator and has taught AP United States government, world history and economics since 1970. The couple moved to Surfside in 2006. They both teach in yeshivot in North Miami Beach.

Lisbon had served on Surfside’s planning and zoning board since 2010. The only negative effect of his new position is that the popular president of Young Israel of Bal Harbour has had to resign his position in the shul. It could have been construed as a conflict of interest.

Strike Ends, but Negotiations to Continue

Wednesday, January 18th, 2012

A two-day strike that disrupted municipal services nationwide came to an end late Tuesday night as the Union of Local Authorities and the Prime Minister’s Office found middle ground on a range of economic issues.

The most significant outcome of the understandings reached by the two sides was the granting of discounts on water tax rates, which have already risen sharply over the past year, and a freeze on planned changes to municipal tax rates that would primarily benefit large families but dig into the budgets of financially strapped towns.

Still unsolved are about a dozen issues, including education and special needs programs, the distribution of national lottery revenues and other services, with both sides insisting that the other should bear the burden of financing the programs. According to the agreement reached late Tuesday night, these issues will be examined by a committee that is to be established in the coming days.

Responses to the agreements were divided along party lines. Interior Minister Eli Yishai, of Shas spearheaded support for the ULA’s list of demands, with support from Labor and Kadima. Most of the mayors who agreed to end the strike were affiliated with the Likud Party – following the lead of Prime Minister Binyamin Netanyahu, who strongly opposed the ULA’s demands, which he said would cost the government billions of shekels.

On Wednesday, Finance Minister Yuval Steinitz announced that the Bank of Israel had adjusted its expectations for economic growth in 2012 downward, from 4% to 3.2%.

Printed from: http://www.jewishpress.com/news/strike-ends-but-negotiations-to-continue/2012/01/18/

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