GDP

The GDP has been weak since the recovery started and it is getting weaker. With unemployment at just over 5%, how can this be? The answer is that there are 90 million people who are eligible to work who are not working. In additions there are 70 million people collecting social security either by retirement or disability and these people are not producing. When you have 150 million productive adults and 160 non-productive adults it is hard to get the GDP up and that is why the first quarter results were negative 0.7 percent

Super-rich

I believe it is time for Republicans to stop saying no new taxes and consider taxing the ultra-rich, that is, those in the top one-tenth of one percent. This small elite group earns 11% of the total income or 1.4 trillion dollars. It is estimated that to repair and bring up to date the infrastructure throughout the country would cost 2 trillion over 5 years. If the super-rich were taxed an additional 35%, this would be enough to cover this cost. The new tax law would sunset in 5 years, after the improvements are in place. This would stimulate the economy and provide good paying jobs. There are 90 million Americans who are eligible for work who are not working. In the long run all of this economic activity would likely return more to the super-rich than they invested.

College cost

The cost of higher education is rising faster than other cost and the reason is the number of staff people and the availability of federal student loans. Forty years ago, America’s colleges employed more professors than administrators. The efforts of 446,830 professors were supported by 268,952 administrators and staffers. Over the past four decades, though, the number of full-time professors or “full-time equivalents”—that is, slots filled by two or more part-time faculty members whose combined hours equal those of a full-timer—increased slightly more than 50 percent. That percentage is comparable to the growth in student enrollments during the same time period. But the number of administrators and administrative staffers employed by those schools increased by an astonishing 85 percent and 240 percent, respectively. Today, administrators and staffers safely outnumber full-time faculty members on campus. In addition the kind of courses offered has increased dramatically. Today at the University of Minnesota there are 765 degree programs. What ever happened to the three R’s. 90% of the population lives within short driving distances from a college or university so students can live at home and go to college. This cuts the cost by half or more. Going to school this way would reduce the need for student loans and provide the structure that many young people need.

Income inequality

A number of politicians running for president are now talking about income inequality. Most everyday citizens agree that CEO’s making over $10 million including bonus is too much. Many CEO’s make up words of $100 million. Others such as Floyd Mayweather earning $150 million for a one hour fight. There are soccer players and basketball players who make over $50 million per year. Movie stars like Robert Downey Jr who made $75 million last year and some hip-hop guy named Dr. Dre earned $620 million last year selling his company. There are many young dot com wizzes who make billions. What all of these rich people have in common is that they can only do three things with the money. The can save it, spend it or give it away. If they save it they do not put in under the mattress but they bank it or invest it. When they spend it, say on a house, they put tradesmen to work and they purchase lots of household items which provides jobs in the homebuilding business. If they save it, banks loan it out to help other businesses and if they invest in stocks and bonds they provide capital for other companies to grow. And finally if they give it away which many do they help the various charities. If the public agrees that these people have too much money and tax laws are changed to take some away, what will happen to it? Today there are 150 million people working and 90 million who are of working age but not working. The total income in the United States is 15 trillion and the top one percent gets 3.3 trillion. If the government takes one half of what these rich folks earn and gives that to those 150 million who are working they will each get $11,000. If the beneficiaries include the 90 million who are not working, each will received $7,000. While this will be a nice bonus many of these people would rather have a job that paid them a little more and those not working might prefer just having a job period. Is concentrating on inequality causing the country to take its eye off job creation?

Tesla Motors

Tesla Motor Company started in 2003 with the idea of selling some high end electric cars. The plan was to get wealthy people, mostly from Silicon Valley to buy cars at over $100,000 each and then build a less expensive model for the average guy. As they got underway they caught the eye of politicians who believed in global warming and wanted to do something about it. This led in 2009 to a 465 million dollar loan from the US Dept of Energy. They started producing a model that cost $35,000 but the federal government would offer $7,500 tax credit and some states offered as much so the consumer could purchase this car for $20,000. The company was losing money and needed a boost which they got from a California program called, “ZEV” or zero emissions vehicle. This was to encourage the development of electric cars and companies that did not receive a set percent of their income from such cars had to purchase these ZEV credits from companies who had an excess. Since Tesla produced only electric they had excess credits. Typically a company like Ford Motors had to pay Tesla $35,000 for each car that Tesla sold. In the first quarter of 2013 Tesla announced its first profit. This was done by turning a 57 million dollar loss into an 11 million dollar profit by receiving 68 million dollars in ZEV credits from their competitors. In 2010 Tesla went public and their stock has gone from $10 to $235 and the company has a market value of $30 billion. They have sold a total of 70,000 cars meaning that each car added $450,000 to the company’s worth. Is this a great country, or what!