June 27, 2007 by Tom Armstrong.

I don’t recall where I read it, but it is a good question, nonetheless. Would you prefer your medical care in 1940 at 1940s prices or today’s medical care at today’s prices?  Perhaps the rising cost of heathcare reflects its greater value to consumers, not just an arbitrary overcharge by the medical profession. Just don’t suggest this to Michael Moore and his minions.

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June 27, 2007 by Tom Armstrong.

The best rates are currently at e-loan. I’m transferring funds today. Want proof that market competition is healthy for consumers? The following link will take you right there to sign up. The minimum, though, is $5,000. 5.25% APY Savings Account
Absolutely No Fees. FDIC Insured. Quick & Easy Application. Open Now! Better than long-term Treasury yields at the moment, and risk-free under $100,000.

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June 27, 2007 by Tom Armstrong.

 In case you never received this via email…

Tax Cuts - A Simple Lesson In Economics
Let’s put tax cuts in terms everyone can understand. Suppose that every day,  ten men go out for dinner. 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 $7.
The eighth $12.
The ninth $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men ate dinner in the restaurant 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 meal by $20.”

So, now dinner for the ten only cost $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 eat for free. But what about the other six, the paying customers? How could they divvy up the $20 windfall so that everyone would get his ‘fair share’?

The six men 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 eat their meal.

So, the restaurant 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 paid $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 eat 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 $2? 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 dinner, so the nine sat down and ate 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, boys and girls, 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 at the table anymore.

David R. Kamerschen, Ph.D.
Distinguished Professor of Economics
536 Brooks Hall
University of Georgia

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June 27, 2007 by Tom Armstrong.

The Federal Trade Commission wants to prohibit Whole Foods acquisition of Wild Oats Markets. But is the agency defining the market too narrowly? Would this combination not also still compete with Wal-Mart, Kroger, Safeway, etc.? Of course it would. If this combination began to charge monopolistic prices, would its customers have substitutes to choose from? Of course.

The FTC is playing games. It has narrowed its scope so narrowly that a monopoly appears to be spawned with this merger. When I limit my scope, I can demonstrate that Ford has a monopoly on F-150s, Coke on its branded colas, and Dell on its computers. I, however, cannot demonstrate that Ford has a monopoly on pickups, Coke on sodas, or Dell on computers.

John Mackey, with his outspoken personality, however, is not helping matters. Read more about this story here.

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June 27, 2007 by Tom Armstrong.

The WSJ writes today about Mr. Chavez’s confiscation of foreign assets. Read more here.

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