Richard J Grant

Published in The Tennessean , February 28, 2010 Social Security is based on poor business model by Richard J. Grant Suppose you decide that you need a vacation, and the price of that vacation just happens to be $5,000. But you don't have enough cash, so you borrow the $5,000 from your retirement account and place an IOU for that amount in your account. Now you can go enjoy your vacation and pay yourself back later – perhaps with interest. What is the effect of this action? Instead of $5,000 in cash assets, you now have a $5,000 IOU from yourself, as well as a $5,000 liability to yourself. Instead of a $5,000 net-asset position, you have happy vacation memories. Also, you might be pleased that you do not owe the money to a bank: you "owe it to yourself." If you are happy with this outcome, that is fine. But what does it mean for your future? If the IOU is still in your account when you retire, what is it worth? Let's pretend you could sell it for $5,000. But you would

Published in The Tennessean , February 21, 2010 Government regulations limit consumers' options by Richard J. Grant A business succeeds by moving resources from less-valued uses to higher-valued uses. The willingness of customers to pay for the product is a visible sign of its value to them. If customers provide a stream of revenue that significantly exceeds the firm’s expenditures, then the managers can conclude that the business is worth continuing. If the managers believe that the firm's capital could be better used in another line of business, then they will shift into that other use. Again, customer reaction will guide them in their decision as to whether or not to continue. If customers are not willing to pay enough to cover the firm's expenses, then the managers must act on that information and change course. Though we speak in terms of "businesses" and "managers," all commercial activity involves individual people interacting directly with one an

Published in The Tennessean , February 14, 2010 Raising tax rates eventually results in smaller tax base by RICHARD J. GRANT Ibn Khaldun, the 14th-century historian, observed that, "It should be known that at the beginning of the dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments." Throughout history, governments have tried to squeeze more revenue from the people by progressively increasing tax rates. But beyond a certain point, and in the long run, increases in tax rates reduce the growth of the tax base. The amount of tax revenue the government is able to reap will be less than it would have been. The modern geometric representation of Ibn Khaldun’s observation is called the Laffer Curve (after the Nashville-based economist, Arthur Laffer, who has done a superb job of explaining the benefits of lower marginal tax rates). The curve shows that for any tax base, such as capital gain

Published in The Tennessean , February 7, 2010 Liberals take Bush's few foibles and multiply them by Richard J. Grant In January 2001 when George W. Bush was sworn in as president, it probably never occurred to him that his administration’s economic policy would become the new standard of excellence for liberal Democrats. All of Bush's fiscal excesses, and there were many, are now the established benchmarks of liberal best practice. It is as if he has taken his place in history as the giant upon whose shoulders liberals now stand stretching out toward new adventures in profligacy. Of course liberals won't express it that way: they really can't quite see Bush as one of their own. But they are very quick to use him as justification for their own excesses. Not having a coherent theory of how the world works, they are unable to distinguish between what is a relevant "fact" and what is not. Without a coherent defense of their proposals, and unwilling to admit that