Tuesday, February 14, 2017

February, 2017, Part 1, By The Numbers: The DeVos Fake Crisis, Obama's Continuing Economic Failures, and Low Taxes Are Good

On a periodic basis we do some posts that fall under the theme of “by the numbers.” Rather than trust what the American political tells us about reality, we like to examine the real numbers and the real reality in the world to understand what is actually going on. Relying on politicians, and their cohorts in the media, to tell us what is reality is always a sucker bet. They have their own agendas and goals, usually centering around their needs and self-enrichment. So we need to look at the reality of the numbers to determine what is really going on.

Previous analyses of “by the numbers” can be accessed by entering the phrase in the search box above. This is the third and final post this month where we look at the numbers to truly find out how good, not likely, or bad, most likely, the American political class is doing in managing our tax dollars, protecting our freedoms, and resolving major issues that affect all of us. 

1) Liberals and Democrats have been up in arms about Trump’s selection to head the Federal Department of Education, Betsy Devos. Ms. DeVos seems to be an advocate for more charter schools and privatization and that does not sit well with liberals and their teacher union pals since it would bring competition, lower costs, and higher quality education to America’s kids while weakening the union/politician grasp on power and money.

Whether or not Devos is the right candidate misses the bigger picture: why even have a Federal Department of Education? It has been around for decades, decades during which America spent the most on “education” programs for its kids that most, if not all, have failed miserably. All international tests of kids around the world continue to show that American kids fail miserably in comparison to other countries’ kids, usually scoring behind dozens of other countries on standardized tests. So who cares who runs the Department of Education: my dog, Ziva, could do a better job since the Department is an expensive failure year in and year out.

Consider a set of numbers relative to what could have been:
  • The latest annual budget for the Department of Education was $69.4 billion.
  • There are 126,000 schools across the United States at the elementary and high school level.
  • If we dissolved the useless Department of Education and gave out the $69.4 billion department budget to each school, each school, on average, would get about $550,794 EVERY YEAR to improve its education processes. 
  • How more teachers could be hired EVERY YEAR if a school or school board had an extra half a million dollars every year?
  • How many student computers could be purchased EVERY YEAR if a school or school board had an extra half a million dollars every year?
  • How many teachers could receive new training and skills enhancement EVERY YEAR if a school or school board had an extra half a million dollars every year?
The numbers show it’s a no brainer trade off: would you rather send $69.4 billion every year to Washington to pay overpriced bureaucrats to fail at improving the nation’s schools or give every school over $500,000 every year to fix what needs to be fixed, enhanced, and expanded in their local school?

Let’s look at another set of numbers to prove my point:
  • A couple of years ago there were 2,652,283 kids in the New York state schools.
  • These 2.6 million kids attended 4,822 schools throughout the state of New York.
  • New York has 6.11% of the U.S. population so let’s assume the state gets 6.11% of the $69.4 billion budget in which case each kid in the state would be theoretically given $1,599 dollars EVERY YEAR to get his or her education improved.
  • Every New York state school would get $879,373 EVERY YEAR to improve its effectiveness and operations.
So if you live in New York: would you rather have there be an additional $1,599 available every year for my kid to get a better education or $879,373 available for your kid’s school to do a better job or would your rather have some unknowns in Washington keep the $69.4 billion and never see any good come out of that money? The numbers are compelling, and a no brainer.

See, those that were fighting and opposing the DeVos nomination to head up the Department of Education were fighting a losing battle in the wrong war: they should have been fighting to disband the whole Department and spread the money around the country where it has a much better chance of doing good.

2) Before we review the latest and final set of sorry economic numbers from the Obama administration, let’s review the three tailwinds that he had to work with and yet still managed to screw up economic growth:
  1. He created, enacted, and operated the biggest economic stimulus program in the history of the United States Federal government, over $800 billion, that failed miserably.
  2. His time in office saw significant drops in energy costs that should have diverted trillions of dollars into the market and economy.
  3. The Federal Reserve pumped trillions of fake dollars into the economy for stimulus purposes.
And yet these three unprecedented economic tailwinds, he was only able to manage anemic growth, weak job creation, and stagnant wages and household incomes among just a whole bunch of economic under performing measures.

And according to the numbers in an article in the February 10, 2017 issue of The Week magazine:
  • Overall economic growth for the country in 2016 was a meager 1.6%.
  • This was the lowest economic growth since 2011.
  • It was down from the 2.6% growth in 2015.
  • It gave Obama the dubious modern day record of being a multi-term President who NEVER presided over an annual economic growth number of at least 3% despite the economic tailwinds cited above. 
Pathetic numerical performance.

3) One last set of numbers for today. We have shown similar sets of numbers before where we see that lower tax rates in a state generally correspond to more robust economic conditions in the state. Today, we will take a look at some tax numbers from a recent Forbes analysis and compare that to population growth, where we assume that population growth is a surrogate for economic growth, i.e. people are going to tend to move to places where they get to keep more of their hard earned wages and income, allowing them more freedom. 

First, let’s look at the Forbes analysis that identified the ten WORST states for taxes, i.e. the state and local governments in these states take more from their citizens than the other 40 states:

50 - New York, the state with most heavily taxed citizens in the country.
49 - New Jersey
48 - Connecticut
47 - California
46 - Wisconsin
45 - Minnesota
44 - Maryland
43 - Rhode Island
42 - Vermont
41 - Pennsylvania
Average Rank = 46.5

The states with the lowest tax burden are:

1 - Wyoming, the state with the lowest tax burden
2 - Alaska
3 - South Dakota
4 - Texas
5 - Louisiana
6 - Tennessee
7 - New Hampshire
8 - Nevada
9 - South Carolina
10 - Alabama
Average rank = 5.5

Now, consider the population trends of these twenty states over the past five years:
  • The states with the highest tax burdens have an average rank of about 36 when it comes to population growth rank, i.e. about 35 states have a larger population growth rate than the average population growth rank of the highest tax states.
  • The states with the lowest tax burdens have an average rank of about 20 when it comes to population growth rank, i.e. about 19 states have a larger population growth rate than the average population growth rank of the lowest tax states. 
  • The ten states with the lowest tax burden have four states that are growing faster than the total country.
  • The ten states with the highest tax burden have only one state that is growing faster than the total country.
Obviously, this is not a perfect correlation. But given the other times we have looked at numbers like this, the trend and correlations are pretty clear: states with the lowest tax burden tend to have the best population growth, the best economic growth, and the best unemployment results. People are simple: they want freedom, they do not want to be hassled, and they want to keep the fruits of their labors. Why is this so hard for the political class to understand?

More numbers tomorrow.

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