Around May 6, 2005, Time Magazine published an article about the current state of inflation. The excessively negative view portrayed in the article belied a fundamental lack of understanding about the economic forces that shape society. What is often labeled as bias is actually ignorance, or a lack of quantitative reasoning skills that undermine the usefulness of news media.

Earlier this week, I posted a story called Time Magazine is worse than you think, not inflation that critiqued an article in Time Magazine about inflation. The author of the article does not seem to understand why consumer debt has gone up, even while interest rates have gone down.

The old Europe's resentment of the successful British economy seems to be building. The European parliament recent voted to put a stop to the United Kingdom's ability to opt-out of European limits on working hours (which are 48 hours a week).

To some in the U.S., Europe is a paradise of progress, with broad-based social welfare and a narrower gap between the wealthiest citizens and the poorest. These same people are also highly concerned about sluggish economic growth in the U.S., high unemployment and an increase in children living in poverty. The problem with this line of thinking is this: The U.S. economy is fairing much better than most of our European counterparts and, in an effort to correct this, European countries are reluctantly being forced to make reforms that move them from their decidedly socialist tendencies in the direction of free-market capitalism. Germany is the poster-child for failed economies (France is competing heartily for this position). In recent months, The Economist has been reporting on the state of the German economy and we in the U.S. should pay close attention.

Business Process Outsourcing (BPO) is not new. It's been with us for quite some time. Centuries ago, when the farmer took his horse to the farrier to get new shoes, he was outsourcing. The farrier outsourced, too, using the local blacksmith to forge his supply of horseshoes. It's true, the farmer could forge his own iron, form his own shoes and deftly nail them to his own horses hooves, but it's not very likely that he did that.

The Associated Press is reporting the France has decided to abolish the 35 hour work week, as long as businesses pay the workers for the extra time. In order to make sense of this, you need a little background information. A few years ago, someone came up with a novel way to address the persistent unemployment problems in France. At that time, workers worked a standard 40 hour week. So the thinking was that if we just limit the work week to 35 hours per week, then businesses will need to hire more people in order to make up for the time lost.

Recently I asked a group of adult students to write a paper about Social Security reform. I asked them to tell me what has been proposed, what proponants of reform say and what opponants say. It was an interesting exercise to see the degree to which misunderstandings persist regarding the idea of private investment accounts. A significant number of students thought that private accounts were an attempt to "destroy" Social Security and that they would have less money when they retired as a result.

I am constantly amazed at the capacity for individuals and organizations to lie. In a recent commercial from AARP, they compare the president's proposal on social security to tearing down a house in order to fix a leaky faucet. They conclude by saying that the system needs a few tweaks and not dismantling.

Socialists have long used the rhetoric of morality to defend their economic point of view. People are by and large decent and care for the poor, so when words like compassion and justice and equality are bandied about, they evoke a visceral reaction, a natural sympathy for those to whom the least has been given. On it's own, this is not a bad thing. I do not advocate questioning their good intentions. If you genuinely care for the poor, however, then the question you are most concerned about answering is the question of what is the best, most effective way of helping people. It is here that I do not disagree with the ideals of socialism, per se. I disagree with their program of action.

The IRS says that we're losing about $300 billion (a year?) from people not paying their taxes. The culprit is income tax and the incredible complexity of it all. People under-report their income (imagine this, we require people to report their tips) and the take too many deductions. This is an example of how the current tax system, based on income taxes with lots of deductions, is a drain on the economy because it's not enforceable. This is one of the burdens.