The Economic Way of Thinking

They Say It's Your Birthday...

On this day in 1521, Martin Luther was excommunicated from the Roman Catholic Church.  Back in 1892 on this day, J.R.R. Tolkien was born.  In 1959, Sarah Palin's state--Alaska--was admitted to the Union as the 49th state. 

And, just one year later, EWOT co-blogger and the developer of the blog formerly known as The Austrian Economists, Pete Boettke, was born.  Happy Birthday to you, Pete!  (Are there any Kirznerian surprise parties awaiting you on this big day???)

Merry Christmas!!!

Merry Christmas, readers!  Here's to peace and happiness this holiday season, and to holiday time being less stressful on you than it was for Yellow Dog when she was asked to pose as our reindeer in this pic:

 

Am I Just Paranoid?

Alright, tax wizards, legal experts, and forecasters who read our blog, here's a question that I haven't been able to answer with any degree of confidence: should I be switching some of my household's retirement assets from a traditional to a Roth IRA now that the 2010 income limit will soon be lifted for people wanting to convert from a traditional to a Roth? 

Here's a little background for you about our situation...

Early in our relationship, my wife and I were convinced that a traditional IRA was the best bet because one should take an immediate tax credit whenever they can get it.  We had (and still do have) a hard-core streak in us.  We were convinced the promises being made of no taxes late in the Roth plans would be broken by the time we retired.  So, for "take your money and run" reasons, we opted for taking the quick benefit right away. 

A few years into my career (2006ish), a finance friend told me this was "silly" of us, that I was "just being paranoid" (he never cited this Green Day song, however!), and that there'd be no way Congress would ever touch Roth tax laws.  I was skeptical at first, but I became persuaded by his arguments.  As a result, we abandoned any additional investments in traditional plans and instead went "all in" with as much money as we could into Roth accounts.  However, because of the income limits, we were unable to switch the old traditional accounts over. 

That brings us to the present.  I fully understand the greater potential for appreciation that comes with the Roth plan, and I'm inclined to switch my traditional accounts over to Roths in 2010 (especially since they're underwater after the 2008 financial crisis).  But, I must say: I'm more scared now than I was a few years ago about the government reneging on their tax free promises under the Roth IRA. 

So, with this long-winded story before you, I'm left asking you, our readers: is there anything stopping Congress from reneging on their Roth promises to us?  When those of you who have many years ahead before retirement look into your crystal balls, do you really believe politicians will leave Roth tax laws alone? 

You're a Mean One, Mr. Grinch

Pardon the interruption this Sunday morning for a bit of public shaming and ranting...

Here in Macon this year, we have a Grinch...a real, live Grinch who did his or her (their?) best to steal someone's Christmas this year.   

There must be a very special place where thieves who steal Christmas gifts (and diapers!) get to go.  (I bet it's very close to the place where the people who egged my car and the Mercedes down the street will one day go.) 

For any local readers wanting to help, I'm told you can throw money in the Jittery Joe's tip jar right now to help support Shanella Henry this holiday season.   

Miscellany

* An interview with a beautiful mind.  (HT: Tyler Cowen)

* Is the marriage bond an inferior good?

* Obama's Nobel speech.

Hair Cuts: A Cyclical Asset?

I recently visited the very metro guy who cuts my hair.  As he always reminds me, I tend to put off hair cuts longer than I should; I tell him I'm just too busy to visit him every 5-6 weeks. 

When I do get around to visiting him, however, the conversation tends to be informative and a hoot.  For example, I always thought hair cuts might be moderately countercyclical (because of the "get a hair cut and get a real job" effect) or acyclical, but my guy insists that they're strongly cyclical. 

A dialogue that helps to make his point is below the fold:

Great North Woods Conspiracy Theories

It's back to work this morning, so this post will conclude my series of hunting-related posts for 2009.  I, once again, struck out on getting a deer.  Nonetheless, it was a good time had by all members of my hunting party. 

Since our EWOT categories include "Conspiracies," here are a few conspiracy theories related to the Great North Woods that I encountered during my time at home:

(1) The Michigan wolf population is adversely affecting deer numbers.  According to Michigan's Department of Natural Resources, the severity of winter remains the biggest determinant of the deer herd; wolves play a fairly minimal role.  That said, I did see two sets of deer bones scattered around the woods this year.  (I had only seen two other sets in all of my time outdoors until this hunting season). 

(2) The crew I travel with in the UP insist that cougars roam the woods of Michigan.  Here's an old WSJ story about the cougar conspiracy that suggests otherwise.  

(3) As people with a natural libertarian streak, my hunting buddies also have tremendous skepticism of Michigan's Department of Natural Resources.  Each year the DNR provides an estimate of the deer herd and projects fairly rosy scenarios for the deer harvest.  My boys insist that the estimates are consistently higher than reality because high estimates help the DNR get more money from the state and encourage tourism to Michigan.  Does this sound like an appropriate public choice model of the DNR? 

(4) There were no Bigfoot sightings. 

Happy Thanksgiving

There are many things I'm thankful for today--family, this lovely Upper Peninsula air that I'm breathing, good health, and...you, our readers!  Happy Thanksgiving! 

Entrepreneurship Everywhere: Upper Michigan Style

Long before I formally learned the economic way of thinking in Dave's classes, I was learning economics and finance from my grand-father as a kid.  On our drives to and from "the woods" during hunting season, he would have me read the Wall Street Journal to him and explain what I had just read.  Many of the articles were about specific stocks and investing strategies, and it was my grand-father who first introduced me to the benefits of diversification and mutual fund investing.  (I won't hold his Fruit of the Loom stock recommendation against him for too much longer...the company went from $9 per share to bankrupt with me on board for the ride!). I bring up my grand-father because he also taught me something about entrepreneurship during our years hunting together. 

Long ago, in a galaxy that seems far, far away, my grand-father shot a HUGE 14 point buck.  So the story begins...

The rack on the buck was so large that he actually saw the deer's horns while it was bedded down in an open field.  After shooting and cleaning up the deer, another hunter from lower Michigan came onto the scene.  The man cut right to the chase and told my grand-father he was on his way back south.  The man wanted more than anything to be bringing home a deer to his family, and he offered my grand-father $50 for the deer.  It was the largest deer my grand-father had ever shot, and the decision must've been a tough one.  Within seconds, though, my grand-father said, "Sure," and the man was on his way with a 14-point buck and, no doubt, a completely fabricated story to impress his wife.   

It's one of my favorite hunting stories.  Now that I'm an economist, my grand-father's thinking makes so much more sense to me than it did when I was a kid. 

Back to God's Country

Here's an action shot for y'all from last year's hunt:

 

I'll be in God's country for the next week chasing after deer (kind of) and enjoying the peace, serenity, and freezing cold air that comes with early mornings on the deer stand.  My blogging may be light, and it may take on a bit more of a hunting and economics theme over the next week or so...

Miscellany

* Tyler Cowen's third or forth-best health care reform proposal.

* Thank goodness for this news.

* Vote for your favorite podcast.

ADDENDUM:  links are fixed.

Assorted Links

(1) I'm not a fan of generalizations about generations (e.g., Gen X, Gen Y, Baby Boomers), but here's a story about the increased restlessness of Gen X (which I'm barely a member of!). 

(2) Holy schnikes water!  Here's Don Boudreaux's latest "cleaned by capitalism" post. 

(3) Here are Pete Boettke and I arguing for debt repudiation instead of the usual government "juggling tricks" in the East Valley Tribune.  We think it's ranked 100th in the US by circulation. 

(4) In praise of Belichick. 

(5) Gold prices keep rising. 

Miscellany

* Another example of moral hazard.

* Barney Frank's hazardous bet.

* I've said this for years.

* What is the value of a college education? The answers differ (HT Tyler Cowen)

* Do babies adopt accents in the womb?

Does Detroit Have The Potential To Be A Great American City?

According to this piece, yes.

HT:  Tyler Cowen

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