Friday, May 23, 2003


There's mini-controversy brewing. Many are upset because Clay is getting equal treatment as the Idol himself. Some say what is the point of having an idol if there isn't going to be a distinction. Others charge racism. I wouldn't go as far, I would say prejudice.

A publisher accepted a fiction manuscript of mine and I'm reviewing the contract and contemplating making the leap into the world of publishing. I'll probably do it. The story is Catholic sci-fi and quite interesting if I may say so myself.

On tax cuts, I sincerely hope they help the economy, but I don't see them in themselves doing much. For stimulus, we need to restore business confidence. That only happens if businesses see an improvement in the demand/consumer side going forward. A one time bump in economic activity is not going to inspire business to make investments because there is no provision for sustained consumer demand. There are two major problems here, one is extremely high consumer debt and excess business capacity and inventory. These two factors create a parched earth syndrome. What I mean is that, when a drought stricken region gets rain, because the earth is so dry, it takes so much more rain to soak up the earth to make it useful. So also with this tax cut that will give many families an extra $400-$800, this extra money will get sucked up the paying down of consumer debt such as credit cards, mortgages, etc, or on the other hand, business will use this opportunity to get rid of excess inventory, i.e., they know there are extra $$ out there and so they'll slash prices to move excess inventory as opposed to making new investments. This is why these tax cuts are not a great stimulus.

A sensible tax cut would be not to tax the first $20,000 of income and create investment incentives for small and mid sized businesses. This way you create the conditions for sustained consumer demand and that demand inspires the supply side to invest to meet the anticipated demand.


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