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February 5, 2004

Toward proficiency in economics

President Calvin Coolidge once said, “The business of America is business.” This nation has developed a sophisticated industrial complex that affects everyone’s life. The laws of economics are constantly in operation whether or not you are aware of it.

African Americans have not fared as well as others in this country. For decades racial discrimination has been an insuperable impediment. However, with the success of the civil rights movement, the challenge for blacks now is to improve their economic status and create wealth.

The rules of economics are the same for everyone. Unlike public policy, they do not discriminate on the basis of race or religion. In order for African Americans to prosper, it will be necessary for everyone to become familiar with the rules of the game.

Fortunately, The Gillette Company, together with the Foundation For Teaching Economics, has prepared a primer on basic economics. Over the next seven weeks the Banner shall publish the Gillette study to teach the basic economic concepts of scarcity, opportunity cost, incentives, private property rights, voluntary exchange, competition and money.

These lessons are for everyone, not just those who plan a life in business or the professions. However, the Banner has also decided to showcase some local entrepreneurs who have learned these basic economic principles and have put them to good use.

Of course everyone who learns these principles will not decide to go into business, but he or she will certainly be a more sophisticated consumer. James M. Kilts, CEO of The Gillette Company said that these lessons “… may not be the first step to building a global business – but you never know. What we do know is that these lessons can help anyone learn the basics of economics, and with that knowledge, be better prepared for success in a free market society.”

The deficit kills the safety net

When he became president, one of Bill Clinton’s goals was to reduce the national debt. He did better than that. He even created a $236 billion surplus. When George Bush succeeded Clinton, he ran through the surplus and is projected to run up the largest deficit ever — $477 billion and counting by the end of the year.

When individuals spend more money than they earn they too run up deficits, usually as credit card debt. The only solution for both the government and individuals is to increase revenue or cut expenditures. The only way for the government to increase revenues is through taxation. If the economy grows tax revenues should increase, but Bush has no plans to reverse the tax cuts he has already authorized.

Generally speaking, African Americans do not concern themselves with the federal budget. However, now is the time to be aware of the cost cutting of important programs, which will have to occur to bring the budget in balance.

 

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