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Barstool Economics Edit

Our Tax System Explained: Bar Stool Economics (this from Nick Perkins, PEA '08) Suppose that every day, ten men go out for beer and 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 would pay $7.
  • The eighth would pay $12.
  • The ninth would pay $18.
  • The tenth man (the richest) would pay $59.

So, that's what they decided to do.

The ten men drank in the bar 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 beer by $20." Drinks for the ten now cost just $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 drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'

They 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 drink his beer. So, the bar 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 pay $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 drink 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 I!"

"That's true!!" shouted the seventh man. "Why should he get $10 back when I got only two? 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 drinks, so the nine sat down and had beers 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, ladies and gentlemen, 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 anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R. Kamerschen, Ph.D.

Professor of Economics

University of Georgia


Can Democrats be honest? Edit

When John McCain was asked at at campaign stop if the US might be in Iraq 50 years, He said, "Make it a hundred." He then went on to say," We've been in Japan for 60 years. We've been in South Korea for 50 years." He further clarified what he meant by "staying". " (It) would be fine with me, as long as Americans are not being injured or harmed or wounded or killed." "It's fine with me and I hope It would be fine with you if we maintained a presence in a very volatile part of the world."

In the first week of the Iraq War, Gen. McPeak, a war critic and now Obama's military advisor and campaign co-chariman said, "we'll be there a century, hopefully, if it works right." As McPeak said of our long stays in Germany, Japan and Korea, "this is the way great powers operate."

The role of America in the world must be one of the most critical topics in a presidential campaign. Here is how Democrats have deliberately distorted an important discussion for a cheap sound bite:

  • "He says that he is willing to send our troops into another 100 years war in Iraq" (Obama, 2/19/08)
  • "We are bogged down in a war that John McCain now suggests might go on for another 100 years" (Obama 2/26/08)
  • "He's (McCain) willing to keep this war going for 100 years (H. Clinton 3/17/08)
  • "When will he (McCain) drop this promise of 100 year war in Iraq (Chris Matthews 3/4/08)
  • " John McCain is telling us ... that we need to win even if it takes 100 years" (Sanchez on CNN 3/16/08)
  • " an endless war in Iraq" (Howard Dean, fund-raising letter)

When challenged on this falsehood, that of deliberately substituting "war" for "presence", a senior Obama advisor was undeterred, telling Politico, "It's seldom you get such a clean shot". Are Democrats capable of a principled political debate or are they so intellectually bankrupt that only partisanship is left?


Democrats and Vietnam Edit

If the Democrats win the next election and take us out of Iraq, we should contemplate what happened when they took us out of Vietnam. As the last helicopter lifted of from Siagon, the New York Times Sydney Schanberg wrote an article titiled, "Indochina without Americans: For Most, a Better Life." The Time's columnist Anthony Lewis asked, "what future could possibly be more terrible than the reality of a war that cost so much in lives and treasure?"

At least 65,000 Vietnamese were immediately executed. One-third to one-half of the South Vietnamese were sent to "re-education" camps where at least 250,000 died. There were 2-3 million Vietnamese refugees, trying to escape the murderous regime. Worries of the "domino effect" proved true with the Khmer Rouge in Cambodia killing at least 1.5 million of a total population of 8 million. Marxist-Leninist regimes emerged in Ethiopa (1974), Madagascar, Mozambique and Angola (1975), Afghanistan (1978) and Grenada and Nicaragua (1979). In 1979, Khomeini's theocracy was established in Iran, confident that an Amercian foreign policy of self-doubt would not intervene.

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