Tuesday, May 19, 2009
Monday, May 18, 2009
Taxing the Rich
Few things make less sense than the arguments for raising taxes on the "rich." After all, the "rich" are the job-creators, either by building companies or by consuming products. The concept of taxing the rich grows out of the idea, among others, that the "rich" came by their "riches" improperly. "They" inherited it, without working for it: "they're" spoiled brats. "They" made it on the backs of the "poor": "they" exploited workers. Etc. Myriad anecdotal examples exist; however, those are the exceptions to the rule. The rule: by seeking to improve their own lot in life (self-interest), they purchase products, which allows other companies to grow and employ more people, and they start companies, which employs people and consumes products. States run the "rich" out of their state by attempting to right the perceived wrongs (by redistributing wealth) through taxation. Here's the story: http://online.wsj.com/article/SB124260067214828295.html.
Thursday, May 7, 2009
Stamps Going Up, Revenue Going Down
The U.S. Postal Service is raising stamp prices this coming Monday (5/11/2009) from $.42 to $.44.
It lost $1.9 billion during the second quarter of its fiscal year, which began October 1. http://tinyurl.com/dzbyg4. Volume was down 15%; revenue was down 10.5%. However, expenses were only down 4.0%.
In the real world, when a company's sales fall dramatically, particularly when losing customers to a competing company/product, the company typically does two things: (1) cuts expenses, and (2) keeps prices stable or cuts them (many will also create new products that customers desire). When consumers are not paying the prices the company is charging, the company does not increase prices. Doing so would defy common sense. If the consumer doesn't want what you're selling at current prices, are they going to pay more?
In the government world, when an agency is losing money, it raises prices. How? In the case of the USPS, it has the power to tax - raise the prices of stamps.
With the introduction of electronic mail more than a decade ago, the USPS has hemorraged customers. Instead of responding as a company would by innovating, cutting prices, and cutting expenses, it raises taxes (prices). How does the USPS expect such a move to increase revenues to cover not only its third quarter expenses but to cover its $2.3 billion, year-to-date loss?
The common sense question: will more people buy stamps at $.44 than at $.42?
It lost $1.9 billion during the second quarter of its fiscal year, which began October 1. http://tinyurl.com/dzbyg4. Volume was down 15%; revenue was down 10.5%. However, expenses were only down 4.0%.
In the real world, when a company's sales fall dramatically, particularly when losing customers to a competing company/product, the company typically does two things: (1) cuts expenses, and (2) keeps prices stable or cuts them (many will also create new products that customers desire). When consumers are not paying the prices the company is charging, the company does not increase prices. Doing so would defy common sense. If the consumer doesn't want what you're selling at current prices, are they going to pay more?
In the government world, when an agency is losing money, it raises prices. How? In the case of the USPS, it has the power to tax - raise the prices of stamps.
With the introduction of electronic mail more than a decade ago, the USPS has hemorraged customers. Instead of responding as a company would by innovating, cutting prices, and cutting expenses, it raises taxes (prices). How does the USPS expect such a move to increase revenues to cover not only its third quarter expenses but to cover its $2.3 billion, year-to-date loss?
The common sense question: will more people buy stamps at $.44 than at $.42?
Friday, May 1, 2009
rich and poor
@talkmaster makes an interesting point: "The rich keep getting richer 'cause they keep doing what it was that made them rich. Ditto for the poor."
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