Let’s look at price controls in another way. You know what an equal sign (=) looks like. Now imagine that on one side is price controls. The question is what is on the other side? The other side of the equal sign is income controls. When governments introduce price controls they are really introducing, through the back door, income controls. When you control a person’s income, you in essence control them.

The above is important because the recently passed Obama Care national health plan will inevitably lead to price controls on health care and income controls on providers. The results are predictable—less choices and reduced quality of health care.

You can not fight history.

The 4,000 Year Old Econ Lesson is a post from: Business Speaker

Companies that have 50 or fewer full-time employees are exempt from having to provide health insurance. They have absolutely no incentive to go over the 50 limit. Those companies that are over the 50 limit by a dozen or so full-time employees will, most likely, layoff employees to get under the 50 limit. They could also get under the 50 limit by laying off workers and hiring them as temp or part time workers. Again, this does not exactly increase standards-of-living for workers.

Moving on. Companies with 51 to 200 workers that don’t offer health insurance coverage would pay an assessment of up to $3,000 per full-time employee if any of their workers were to receive a tax credit to buy health coverage. This would significantly increase the cost of labor. Companies would be forced to drastically cut labor expenses.

I would like to conclude this discussion with companies that have 200 or less employees. Why? According to a recent study of the U.S. Census Office, since 1980 almost 100% of the net new job creation in the U.S. came from companies that have been in operation five years or less. In other words, the great great majority of net new job creation came from not only small companies—but new small companies.

In economics as in life there are NO FREE LUNCHES. The economy, job creation, and opportunities will take a big hit from the Federal Government taking over one-sixth to one-seventh of the U.S. economy.

The Mother of All Ironies is a post from: Business Speaker

Raising the capital gains tax and taxes on investors will do nothing to promote long term economic growth.  Since 1980, almost 100% of the net new job creation has come from firms opened 5 years or less–in other words small new businesses.  Yet the massive Federal deficits that feed the government and starves free enterprise looks like a prescription for long-term economic/business stagnation and falling living standards. 

Welcome to the 1930s again.

The Attack Against Capital is a post from: Business Speaker

I am a strong believer in brevity.  These four simplified laws of economics are:

1. There is no such thing as a free lunch.  There is always a “price” which has to be paid by someone.  This law is of paramount importance.

2. The markets are the masters.  Price controls do not work.  You can not simultaneously control both the price and quanity of anything.  If you control the price of any good or service, the supply of that good or service will dimish.

3. Economic events do not exist in isolation.  We do not live and work in an economic vacuum.

4. Economic and politics are inseparable.  Your two generic choices are:

a. Policies that lead to real income growth

b. Policies that lead to redistribution of income.

Note:   There is a price to be paid for both a & b above.

Your comments are welcomed.

Sanford Kahn, Business Author & Speaker

The 4 Simplified Laws of Economics is a post from: Business Speaker

With the just released national unemployment figure of 10.2% for the month of October, 2009, it would be wise to look at the Obama’s administration basic philosophy to drive down unemployment and get the economy moving.

Their basic assumption is that for every $1.00 they spend on domestic spending will add $1.50 to the GDP.  In other words a 1.5 multiplier.  Post World War II experience teaches a different story.  Research into the effects of government spending shows the the best multiplier in the post WWII period was  .80.   Anything less than a 1.0 will lead to negative effects on economic and employment growth.

The more the government borrows to finance their wasteful spending, the more liquidity and capital they suck out of the private economy.  Government spending is alway less efficient than the spending by the private sector.  Therefore, the multiplier will always be less than 1.0.

The important point is–YOU CAN NOT SPEND YOUR WAY TO PROSPERITY. 

Be Solvent and Prosperous,

Sanford Kahn,  Business Author/Speaker

The Downward Economic Multiplier is a post from: Business Speaker

It’s coming—the tsunami of All Tax Increases.

This is tax on all carbon emissions (also known as the cap-and-trade) generated in the U.S. It is a massive tax increase of at least $1.2 trillion in the next ten years—and possibly going higher. It will hit all sectors of the economy with the result of draining liquidity, buying power, and capital out of the U.S. economy. This is scary stuff that can do further harm to the economy.

It is nice to hope for the best, but be prepared for the worst.   I strongly encourage you to plan for the above when formulating your plans and strategies.

Be Solvent & Prosper,

Sanford Kahn, Business Author/Speaker

The Mother of ALL Tax Increases is Coming is a post from: Business Speaker

First, you must define who are the real “movers and shakers” of economic growth?  The genesis of economic growth are those individuals who put their money (capital) at risk to start legitimate business enterprises and hire people.

Therefore, to get our business economy moving in the direction of sustained growth, implement these three simple tax policies:

1. Effective January 1, 2010 the Capital Gains tax rate is ZERO.
2. Effective January 1, 2010 the corporate income tax rate is ZERO.  Corporations don’t pay taxes, people do (corp. pass on all taxes in higher prices for goods and services).
3. Effective January 1, 2010 the top marginal personal income tax rate is 25%.  Eliminate all tax phase-ins, phase-outs, and the alternate minimum tax.

This is the first but very important step.  The next step involves the other important economic ingredient–the Federal Govt. spending habit.  If the Federal government doesn’t get a rope around its out-of-control spending habit, it will suck vital resources out of the private sector lessening the positive impact of the three tax policies above. Federal spending should not increase any faster than the rate of increase in population and consumer prices.  This would currently be about 3% per year.  This number includes all Federal spending along with entitlement programs.

If these three actions are implemented, our economy will begin a prolong period of sustained economic growth.  The stock market will boom and New Wealth will be created.

It will take guts and determination for a national leader to fight for this.

Grow and Prosper,
Sanford Kahn, Business Author/Speaker

How to Get the Economy Galloping is a post from: Business Speaker