INTERESTING ECONOMICS
THE NEFF ZONE -- BY JIM NEFF
CADILLAC NEWS -- JULY 30, 2022
I am not an economist and I do not play one on television. In fact, a dearth of math skills precludes me from any management notions regarding our family budget. Still, that does not mean I am not interested in news about economics.
For instance, due to the upcoming election cycle, there seems to be a lot of talk about taxes. News about this comes from the Tax Foundation. They determined that Michigan has the fifth lowest tax burden for local and state taxes in the country.
“To calculate each state's tax burden, Tax Foundation used different types of taxes (ranging from property tax to excise tax on alcohol and inheritance tax to severance tax) to determine how each state's taxpayers are represented.” Michigan's tax burden for 2022 is 8.6 percent, the lowest it has been since 1977. (https://digg.com/money/link/each-us-state-s-local-tax-burdens-and-rates-ranked-hvlBervjww)
That percentage is illustrated in a far-ranging report at: https://taxfoundation.org/publications/state-local-tax-burden-rankings/. While WalletHub has a different ranking system, their tax burden percentage is actually lower at 8.25 percent. (https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494)
Another economics study tried to put a number on happiness. “According to a story by Purdue University, you need to make $96,000 a year in Michigan to live comfortably.”
That income level is not universally accepted. “According to 'Go Banking Rates', studies found income correlates to happiness and about $60,000 to $75,000 is needed for emotional well being in North American. It really boils down to personal expenses, more so than annual income.” (https://nbc25news.com/news/local/local-economists-weighs-in-on-recent-study-showing-michigans-suggested-annual-salary)
The job market figures into personal incomes, so it's interesting to see the products each state exports and imports. The Visual Capitalist did this and Michigan's main export is vehicles (to no one's surprise). Going along with that theme, the state's most unique export is rear view mirrors. (https://www.visualcapitalist.com/cp/mapped-the-top-us-exports-by-state/)
On the other side, oddly enough, the top import is (again) vehicles. The most unique import for our state is electrical lighting. (https://www.visualcapitalist.com/cp/mapped-the-top-u-s-imports-by-state/)
Well, with all those products zipping around, you might wonder what profits are generated. Top companies are doing very well. Take Apple for example. “Apple is one of the world’s most profitable businesses, generating over $151 billion a day, which equates to $1,752 every single second. To put that into context, the average weekly wage in the US currently stands at $1,237, meaning that the average American doesn’t even earn the same amount that Apple earns in a second after a full week at work.”
If you want to see a stunning graphic, go to: https://tipalti.com/profit-per-second/. There you can see in real time what Apple, Google, Microsoft, Bank of America, and Wells Fargo are making per second.
Most of us are not in position to generate billions of dollars per second, so we're more concerned with more basic economics – like inflation. However, there's something else going on that is sort of under the radar – shrinkflation. “The term shrinkflation describes brands selling smaller amounts of product for the same price as before. It's a sneaky way for brands to hide growing prices.” In simple terms, it's a way to charge more and deliver less.
There are many example of this phenomenon where sizes decrease while prices stay the same or increase. Paper Towels dropping from 168 sheets per roll to only 120. Corn chips going from from 9.75 ounces to 9.25 ounces. Garbage bags shrinking from 90 bags to 80 bags per roll. Family size boxes of cereal dwindling from 19.3 ounces to 18.1 ounces. Business Insider has a litany of shrinking products at: https://www.businessinsider.com/shrinkflation-grocery-stores-pringles-cereal-candy-bars-chocolate-toilet-paper-cadbury-2021-7.
Shrinkflation is a downer, but things could be worse. You could be a cat in China where thousands of felines are out of a job. “A growing group has been displaced by the contraction of China’s startup economy: laid-off office cats.”
The situation is dire. “During the venture capital fat years, many startups adopted cats as office mascots, to build a warm atmosphere, or for good luck. But in recent times a weak economy have decimated the startup scene. When companies shut down offices or go out of business, office cats can wind up out of a job, and a home.” Adoption efforts are underway, but just keeping up with the cats' demands for Fancy Feast are formidable. (https://www.sixthtone.com/news/1010601/office-cats-laid-off-as-companies-close)
Finally, thinking about economics does not have to be a dour exercise. The Tax Foundation has this to say about beer. “The United States collects an excise tax on beer at the federal level, ranging from eleven cents to fifty-eight cents per gallon, but all fifty states also collect their own taxes.” Michigan's overall rate is twenty cents, which puts in the rankings at number twenty-nine. (https://taxfoundation.org/state-beer-taxes-2021/)
Ah, but there is better news at VinePair. “We determined a definitive ranking of the best states in America for beer lovers.” The top three states were Vermont, Colorado, and Oregon. The cellar dwellers were Mississippi, Alabama, and Arkansas. (https://vinepair.com/articles/best-states-beer-lovers/)
The leader in the high tax category was Tennessee at number forty-four. “With the highest state excise tax on beer nationwide — a staggering $1.29 — it’s no wonder Tennessee finds itself near the bottom of the list.”
Be glad you live in our state. Michigan came in tenth. “Bell’s, which is located in Kalamazoo, produces Two Hearted Ale, which many people believe is the best IPA in America. The state’s 408 craft breweries are good for top ten overall.” Here's to us!
Jim Neff is a local columnist. Read Neff Zone columns online at CadillacNews.com and NeffZone.com/cadillacnews.
