Skip to comments.Vanity - Economics vs. Simple Math
Posted on 10/05/2012 7:06:06 AM PDT by Egon
I generally try to stay out of political discussions whenever possible. I have blood pressure considerations to keep in mind. Every once in awhile, though, something happens that really causes my blood to boil, and Im forced to comment on it.
Last nights debate provided one of those moments. I avoided watching the actual debate. I try never to listen to President Obama speakI find his delivery unpalatable, not to mention his content. Instead, I watched highlights on various news channels, and even went to MSNBC to find out how the Left responded to the debate. One of the statements made by the Leftward pundits, this one by Rachel Maddow, struck me. I paraphrase:
Romney lied. He said his five trillion dollar tax cut wouldnt cost five trillion dollars. Hes talking about cutting X dollars from every person. That adds up to five trillion. Its simple math!Lets look at this. First of all, two very simple premises:
Lets suppose I sell my lemonade for $1/cup. I sell to 100 people in one day. I make $100 that day. The next day, I cut the cost of my lemonade to $.50/cup. Simple math tells us that Im only going to make $50 that next day. Ms. Maddow would happily go on the air and exclaim that Its simple math!, and her viewers would take her (presumably educated) word for it.
Thats not how it works in real life, though. In real life economics kicks in. People that balked at my whopping $1/cup price would be much more willing to purchase a cup at $.50. Theres every possibility that I would double my sales. If I double my sales, Ive still made $100. This is called Price Elasticity. Now this is a very simplified model, it doesnt take into account marginal costs or other factors, but it demonstrates that, even with this simple model, simple math isnt going to cut itcertainly not at the level that Ms. Maddow and, arguably, the entire Left practice it.
OK, so thats the sales side of economics vs. simple math. What about the taxation side?
Well, with taxation, the math is even less simple. Its still economics, mind youbut certainly not something that Ms. Maddow should be dabbling in. The following concept has been proven throughout our recent history:
If you lower taxes, tax revenues increasenot decrease.The reasons for this:
The less education one has, either academic or empirical, in economics the simpler economics seems. Ask any fine arts major if he would pay more for a high interest bond or for a low interest bond and why. Their answer will tell you all you need to know.
I try never to listen to President Obama speakI find his delivery unpalatable, not to mention his content.
I thought I was the only one who can’t listen to “0”. His delivery is like nails on a blackboard to me and his lies are even more unpalatable. And, now, that he did a belly flop in the swimming pool the other night, the left is bring their “liar” game which, by the way, comes naturally to them. Half the country will believe those “new and improved” economic numbers and the other half who didn’t vote for “0” won’t. By the grace of God, we need to have our White House back from the thugs.
No, you most certainly are NOT the only one. Makes my spine spaz.
Trying to convince a liberal they are wrong is impossible, especially when it comes to economics.
This is what I do with the economic illiterates (80%+ of the USA population):
I ask them 2 questions.
1. How much tax would be collected if rates were 0%?
2. How much tax would be collected if rates were 100%?
If they’re too illiterate to figure it out, I explain how both questions have the same answer. If they get that, then they must agree that lowering the tax rates can increase tax dollars collected.
We, the literate, must ALWAYS correct someone when they talk about lowering and raising TAXES. That is incorrect verbiage. Only RATES can be raised or lowered. Once they get that, got to the 2 questions and repeat.
They would also say that if you raised your price to $100/cup, you'd generate $10,000 in revenue.
Individualistic Capitalists MAKE money,
Communistic Socialists TAKE money.
President Clinton's greatest decision was to keep Alan Greenspan on as Fed Chairman.
In addition to that, there's this huge disconnect in the minds of leftists. They seem to know instinctively that if you don't like a product or activity, tax it, effectively increasing the price, and people will buy or do less of what you don't like. But at the same time, they don't seem to understand that this is the case for ALL products and activities, even those that are beneficial. So they don't seem to understand that when they increase taxes on productive activities that produce revenues, the result is actually less revenue to the government, because they're discouraging those activities, and at some point, people will simply do less of it.
BTW, did anyone else notice that during the debates, Obama continually use the term "revenues" incorrectly when he actually meant "taxes." Someone should send him a dictionary so he could learn the difference. "Revenue" is the money coming into the government. Taxes are a means to generate revenue for the government. But even Obama realized and is on record admitting that increasing taxes actually DECREASES revenues to the government, but that it's OK, since it's "more fair."
This certainly shows the priorities of leftists.
Trying to convince a liberal they are wrong is impossible, especially when it comes to economics
That’s because they make up their “economics” as they go along. They haven’t a clue what works and what doesn’t all they know is that the rich need to pay more taxes (the rich being people like me making a lot less than $100,000 per year) so they can give it to the poor, under educated, needy ones. Of course, they have created the poor, under educated, needy ones by rotten educational opportunities and entitlement programs. Now, these grateful recipients of all that wealth of entitlements will vote lock step for their benefactors. It is a form of slavery the liberal/progressive/democrats have been practicing forever. Economics is not in their vocabulary - greed and power is.
Lying liars who keep on lying — yep. In the Garden, it began with a lie. Jesus said to the Pharisees (religious leaders of their day) that they were liars and their father was a liar, referring to the Serpent/Satan. There is Truth in the world, and there is the Lie. Ann Coulter’s book, Demonic, really sums it up beautifully - the mob mentality - witness Sodom in Genesis - has its roots in the lies of the Liar. Those who embrace that way of dealing in the world are of their father, the Devil. People need to be aware of which father their characteristics are putting on display.
It won’t go well for habitual liars to be calling Romney a liar. God is watching.
Great piece up top.
OK, if you sell 100 cups of lemonade for $1 apiece you make $100, and if you sell 200 cups at 50 cents apiece you make $100...but doesn’t it cost the seller more to make enough lemonade to fill 200 cups than to fill 100 cups?
Now this is a very simplified model, it doesnt take into account marginal costs or other factors, ... -- Egon
Of course it costs more in materials to make 200 cups of lemonade, and more for the cups, but the per cup material cost would be the same, or actually less (because larger quantities of materials can be bought cheaper because of bulk discounts).
P = SR - C, or in other words profit equals sales revenues minus costs. If the sales revenues stay the same at $100, but the costs of producing 200 cups is higher than producing 100 cups, then overall profit decreases.
As someone else pointed out, I purposely left out factors like that for this model.
...but: it goes directly to my point, which is: even the simplest real-world business/tax model cannot be reduced to "simple math".
Rachel Maddow, and Leftists in general should stick to what they do best: Adding their own snarky spin onto other peoples' talking points.
...or maybe that's what she was doing.
God is watching.
It is truly amazing how many deny the fundamentals of the Laffer Curve.