Some Common Cents for October 7th, 2016

The American public goes through the same spectacle every four years; actually, some would argue it is every two years. Suffice it to say, we go through it a lot. ‘It’ meaning campaign promises and ranting & raving about how the ‘other party’ is wrong or evil. This year seems to be just like every other election year, but on anabolic steroids.

Personally, I don’t think either party is mean spirited or wants to destroy America. Nor do I think America has to become ‘great again,’ because we already are. We are in an enviable position where the only real example we have is, well, ourselves. Some of us want the government to ‘do more,’ and others want it to ‘do less.’ I will let you decide just what that means for you.

What if both groups are right? That the government can do both more and less at the same time? Truly, that would be fantastic. Wouldn’t it?

I have run the data. I took overall Federal government receipts for every calendar year going back to 1949 (through 2015)and compared it to the nominal GDP number for that year. Care to guess what I found? That’s right; government revenue goes up in lock step with GDP. In fact, my handy dandy Excel add-in function suggests there is a +0.995278 correlation between these two data points. For all intents and purposes, that is perfect correlation.

You know what else? We have had any number of different tax rates, policies, and schemes over the years, and they all shrink to irrelevance when staring at the data in the spreadsheet. …Read More…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.