I have nothing conclusive or in-depth about economic policy to offer. I am not an analyst, nor do I study the market. What I know about the current state of economic affairs in the U.S. as it pertains to financial matters is this: I am on unemployment, I have very little income and a tax cut for me might only help slightly.
So many pundits, depending on your bias leanings, are blathering about the Economic Stimulus package each party in Congress is offering up. It all sounds like the same old song and dance. Republicans want tax breaks for the rich using the old "trickle down" theory, and the Democrats want tax breaks for the middle class using the old, "put the money in the pockets of the working man theory."
In my recent discussions as servant to the wealthy (who are ALL Republicans) the "trickle-down" theory works and as far as they are concerned that is the only way to stimulate the economy. Seeing as how I am dependent on them for the pocket change I have (.32 cents as of this post) I am happy to see them with more money to spend on the little people.
In fact, the way I see it, in the service industry that I am working hard to break into, the upper tiers of the economy are the people I am most dependent on. I need for them to have disposable income. What they have is more money than time, and what I have is more time than money. For most wealthy people, it's much easier to make more money, but no one has been able to generate more time.
I also understand the need for the middle class to get a break. Dual income families with kids in college, mortgages and car loans need more money in order to become consumers again. The '90s boom was about consumption and even an economic naif such as myself knows that consumption drives the economy. I spent less this year on Christmas than I EVER have. Obviously my impending unemployment fueled my spending habits, but retailers just weren't offering the kinds of deals I needed to part with my precious cash.
Article comments
1 - Eric Olsen
Excellent job of making macro theory personal and micro. Next you should address the whole gratuity system.
2 - Kevin Murphy
Speaking of the gratuity system, do you include or exclude the tax from your gratuity calculations?
3 - andy
I exclude the tax - and I also try to leave cash tips when paying by credit card so they can pocket all of it.
4 - Eric Olsen
Andy is correct on both counts.
5 - Phillip Winn
Wow, I haven't seen anything this interesting since the last time I saw two evangelical Christians arguing over whether to tithe on gross income or net income (the answer, incidentally, is "If you win $170 million in PowerBall, definitely 'net'")!
I've always tithed, I mean tipped on the total check, including tax. What a chump I've been! At 8.25% sales tax (or 7.25%, depending on which part of town I'm in), I could have been saving about $1.65 out of every $100 spent! (I'm a 20% tipper normally.)
Thanks!
6 - Phillip Winn
BTW, nice article, Dawn. The pedant in me is struggling, wanting to point out that the nine remaining diners probably wouldn't spend the same amount on dinner as the ten did, and in fact it is quite likely that the tenth diner spent a little more of the total than the others, but I've managed to restrain that part of me with another part of me pointing out that thanks to the Earned Income Tax Credit, the poorest one or two diners quite possible got change back every night after paying nothing for dinner.
Whew! Anyway, great story. Someday I expect to be either the first or at least the second diner, so I appreciate your future support. 8^)
7 - Eric Olsen
I tipped on the total until my bartender friend pointed out that the government had nothing to do with the quality of my service. I typically go 20% also if the service is good, rarely below 15%. If you really want to save, go to Japan where they still don't tip much at all.