Government and the Economy

Personally, I do lean towards a capitalist society, some of the ideas of socialism need to be incorporated in our society, because without a balance of powers between classes, then our democratic society will eventually fail if the entire system is in a state of turmoil. It is evident that the economy greatly impacts the government. It is blatantly obvious that our current federal debt in the United States is a huge problem that needs to be addressed and solve as soon as possible, and without reaching a compromise between the political parties is absolutely essential if we wish to keep our current system. This burden falls on the current leaders of our government, and it is our duty to elect officials that we believe will best represent our political desires. Certain issues that I believe must be of the utmost importance this year, include education, the distribution of wealth in terms of taxation, and the government’s role in the economy.

In terms of the general role the government should play in the economy, in my opinion, is that they should be fairly involved, yet still limited in terms of the free market enterprises. Currently, the government plays a significant role in the economy for a capitalist system. The government is essentially the largest corporation in America in terms of spending, jobs, and taxes, as well as other factors. If we were to severely limit the government’s role in the economy, then we would face even more severe economic problems. However, I do believe that since the government is such a key component in the economy, I believe that they, rather than large businesses, have the power to limit the large corporate executives that hold such a large percentage of the country’s money. Some issues that I believe the government should focus more on largely revolve around the general theme of a more evenly distribution of wealth. The most effective method of dealing with this problem would be changing our current taxation system to benefit the majority of the population, rather than focusing solely on wealthy Americans.

In terms of taxation, I believe that the best form would be a national sales tax. I believe that it will suit our economy the best, and in terms of fairness, it is highly acceptable. Obviously our government requires taxes to keep the system running smoothly and avoiding complete anarchy, it is apparent that no matter what, the taxes need to be paid. I believe that in order to achieve fairness, a tax that applies to the amount of goods people purchase is more advantageous than a form of taxation that focuses solely on income. Some advantages to the NAT would be that it is fair, because it is a tax that is only added to the number of new goods that each individual buys. Furthermore, it is easy and efficient which almost entirely eliminates loopholes and makes it easier for both the consumer and the government. I suggest that the tax rate should begin at 20% and as the economy becomes more stable, then the tax can be lowered to 15%. Used goods, fresh produce, medicine, public transportation, and investments would be the few loopholes that would not be taxed, however luxury items, such as yachts, expensive cars, and additional houses would have a tax rate of 23%. I believe that this form of taxation will best suit the majority of the population, rather than the progressive system we have currently where there are so many loopholes, that a little less than half Americans don’t pay taxes.

Another issue that is important for our congress to decide is the issue of government deficit spending. Currently, our government hasn’t been in this much debt, except during the Great Depression, and it is absolutely essential that some conclusion must be made. Granted, it will take years to recover our current national debt, however if we enact certain restrictions on the government’s spending, then we have a better chance of decreasing federal debt. Most of the money that the government is spending is necessary; however, there are certain cuts that must be made on less important spending in order to close the margin of debt. There is no immediate solution that will repay our debt quickly, however if we limit the government’s spending in certain areas, we will eventually begin to repay that debt and once again make a national profit. Some of the government’s spending is necessary, yet some things can be limited and cut.

In conclusion, in order to restore our country’s economy, it is necessary that we each do our civil duty that will better prepare our country in the future. The government is of vital importance to the economy, and it still must contribute greatly to the economy. We cannot be entirely capitalist, because the government must play a role in the system; otherwise a rebellion would result. Yet it also must have limitations as to where it must limit its spending. Naturally, no one enjoys paying their taxes and seeing their money go somewhere other than their income, however taxes are necessary to keep our country functioning. It is absolutely necessary to resolve our current debt situation, yet since there is no immediate solution, a long term solution must be enacted as soon as possible that will limit deficit spending now, and will reach a productive goal in many years.

Tax Manifesto

By the end of the tax lesson, I have gotten a much better grasp of the very detailed nature of taxes, and how significant they are in each an every country. It is obvious that taxes are absolutely necessary in order to have a properly functioning society. However, it is also necessary to enact rules and regulations in order to maintain that system in the best way possible. The burden of those decisions falls on the shoulders of the taxpayers and voters, because we have a say in the forms of taxation of the government. Although it may not seem like that now, it is important that voters choose their respective congress members that they believe will most accurately represent their individual beliefs, especially their opinions on deficit spending. When considering the different forms of taxation, it is important to choose those which are able to find a balance between the taxpayers paying too much, and the taxpayers paying too little. It is very difficult to find the middle ground, but seeing as everyone is entitled to their own opinions, the United States' taxation system must accurately represent the most approved form, not only from the congress members and wealthy business owners, but also every single other taxpayer.

My personal opinion on the role that the government should have the economy is that they should play a very minimal role. The most important thing that I should think that they should do is focus much of their attention on the distribution of wealth. One way they can do that is enact a progressive taxation system. It is apparent through the Occupy movements that the lower and middle classes are unhappy with their standard of life right now. Certain congressmen and the wealthy business owners have a very significant impact on the government right now, only because of the ridiculously unfair distribution of wealth. It is also important, however, to keep in mind that the voters and taxpayers should ideally have the same leverage in the government, yet this is obviously not the case. It is our job, as citizens to voice our opinions by a productive manner by choosing congressmen and presidents that we personally believe will best voice our own opinions, and through that we will be able to accomplish what we desire to. Our economy has fluctuated greatly throughout time, and even without governmental intervention it has rebuilt itself. I would personally like to think that this recession will get better soon, and that we, as a nation, have learned valuable lessons through its consequences.

Furthermore, another important topic is the issue of deficit spending within the government. Our national debt at the moment is rapidly growing daily, and I believe it is our individual obligation to limit the government's spending. I believe that it is important to make cuts in government spending, because we are entirely unable even now to repay all of our debt. We rely heavily on the economies of other countries, and in order to reboot our economy, it is necessary to limit the government's spending now. Obviously it is unrealistic to stop spending altogether, much less reverse it, but we need to find tools that will help us begin to slowly repay it in the future, or else we will continue to pay our debt to other countries for hundreds of years. Very few times in history have we had years where we have made a larger profit than we have sold, and it is unrealistic to believe that we will get to a point where we will never have deficit spending. Yet, it is our duty to limit the government's spending, and be able to eventually begin to pay for our debt.

Market Price

As a consumer, I understand the importance of market price. Basically, market price is the determined equilibrium on supply and demand graphs; it means that the market has cleared, or supply has met demand. Before econ, I understood that the price of goods are determined by both buyers and sellers, and in econ I was able to understand how supply, demand, and market price can be represented in a graph, and can pinpoint exactly where the product sold will be the same as the product offered. An example of this is earlier this year, I was looking for jeans while back to school shopping in Old Navy. There was a huge supply of jeans on a shelf, and as I was looking for my own size, I was frustrated to find that they had about 30 pairs of 14s and 16s, a few 18s, and 2 00s. What really angered me was that I've noticed most other girls my age wouldn't be looking for those sizes, but rather all the sizes that were missing, which is understandable if they are sold out because they are in such high demand. But I found it odd that the shelves appeared full, but all the sizes were mixed up and after looking at every pair, I didn't understand why they bought so many pairs of unusual sizes. Therefore, the market price wouldn't clear, because consumers' demand for the jeans was so low already, that they would have to end up reducing the price significantly.

Supply dood

The law of supply follows a curve that is exactly opposite of the demand curve. So it like basically says that like the higher the price, the more of a product that the suppliers are willing to supply. The law os supply can also be described as a change in supply at each and every price. The law of supply depends on price fluctuations that can be caused by changes in cost of inputs, productivity, technology, taxes and subsidies, expectations, government regulations, and number of sellers. The supply curve, much like the demand curve can shift inwards and outwards based on changes in each of these. Additionally, just as the demand can have both elasticity and inelasticity, supply can as well. An example of elastic supply is how tshirt companies are making tshirts for both teams in the world series, expecting a win, yet they will still be able to make more to follow consumers demand (depending on which team wins) within a short period of time. In contrast, an example of inelastic supply can be the current situation we are facing because the destruction of pumpkins on the east coast will not be able to supply enough pumpkins for halloween, and the price has increased. The price of a product can dramatically change the suppliers willingness to provide their product for stores, depending on their profit. For instance, if most t-shirts are selling for 5 dollars, few suppliers will be motivated to provide their product at such a low price; furthermore, if tshirts were selling at 15 dollars, the suppliers profit margin would increase, and they will be willing to provide a lot more tshirts to stores in hope of making a larger profit.

DEMAND PARTY TIME!

So demand is, like, totally, like awesome, bro.

Obviously we all experience demand in our lives, but understanding the significance of it and how it affects us everyday is important so we can all be SOOO COOL 24/7!! Before I was in a tubular econ class with some McManamon dude I learned about demand in Intro to bidness freshman year. I found that demand determines the price of goods and services in accordance with the desires of the consumers. In order for bidnesses to get beacoup bucks, they need to change their products, prices, advertising, etc. to meet the demands of their customers.

What i didn't know was that demand can be represented on DEMAND CURVES, bro!! So economic and bidness majors can predict how the changes in price affects our willingness to buy. It's outta this world crazy. It's almost like they know what we're going to do! But realistically, its only a estimate. Depending on the product, it can either be elastic or inelastic. So what does that all mean? Is it like a rubber band, man? Well, when consumers don't see the products as necessary for everyday life, like candy, icecream, and souvenirs, they are less likely or more likely to buy the product based on price fluctuations. So if the price of oreos skyrockets, sales will suffer because consumers are less likely to buy them at such high prices, and if the price plummets, then the profit margin will increase because sales will go up. On the flip side, inelastic demand involves products that most consumers see as a high priority or necessary for daily life, and regardless of the price they will buy it. Some examples of that are gasoline, milk, and staple food products. When prices go up, the bidnesses make more moolah because peeps will still buy the products, and vice versa when the prices go down. The demand curve can potentially shift when the conditions of demand changes, such as a larger population, a greater demand of complementary products, and new trends or fads. Complementary products can affect an increase and decrease in demand of products and services when one good affects another, because consumers tend to purchase the goods and services in pairs. Some examples of these are when prices at disneyland increase greatly, nearby hotels will also suffer because the demand for both product decreases.

So basically demand affects us erry day and the more we know, the more you know, you know?