When you tax something, you get less of it. -- Jack Kemp
Smoking, gambling, teabags. Anything you want to slap a tax on it will have a diminishing effect. Take income, for instance. When you tax income, people produce less of it, or at least less of it that they would leave exposed to the higher taxes. But even if you could count on human nature to be unaffected by taxes, the numbers still have to add up.
Today, the Washington Times posted this article about the willful disregard of both simple mathematics and fundamental human nature, ... by the head of the teacher's union, no less.
I saw the Cavuto interview with the NEA Van Hoekel, and thought the same thing. What part of 2+2 is too hard to understand? As I pointed out in my July post on "Simple Economics", 19% GDP is what we have to live on. Let's figure out a way to do that.
As long as people like Van Hoekel avoid the math and human nature issues, there will be no progress. Unfortunately, elections don't seem to be about either anymore. I believe we are all in for an unexpected educational experience at any time.
Tuesday, November 20, 2012
Sunday, November 18, 2012
The Fiscal Curb
The inspiration for blog posts here usually come in the form of a concise idea. Sometimes that idea can be well expressed in only a few words. So, I today, I sit down to talk about my views on the so-named "fiscal cliff".
Yes, we've seen this drama before. The talk of big time financial doom and gloom. Debt ceiling approacheth. Blasted Republicans, Darn Democrats. Economic hardships all over the place. Woe is us. The government has to do something!
Stop right there.
The government has to do something? Let's examine how we got here. The government has to solve this artificial problem it created to avoid the other artificial problem it also created (i.e., the debt ceiling)? 99% of politicians are giving the rest of them a bad name, again.
We are subjected to this Kabuki Theater with every congress, and with every changeover of elected officials. The result is almost always the same. Crisis looming, elected officials arrive, hammer out what the press will call a compromise, and voila! Heroes are made.
The guy who has gone before the fiscal policy makers and asked for fiscal sanity, one Ben Bernanke, is credited with first using the term "fiscal cliff". He and the Federal Open Markets Committee have maxed out the printing presses. If that isn't doing enough damage, Bernanke also wants congress to back off the last existing attempt to stop the spending madness, lest we all step off the cliff.
It's not a cliff, I am here to say. I came up with the term "fiscal curb" to describe what we face on January 1st. ...I thought that was clever until I saw that over 4000 other blogs, most of them liberal, were using the same term. Let's see if they agree with this:
What's really wrong with the fiscal cliff.
Yes, we've seen this drama before. The talk of big time financial doom and gloom. Debt ceiling approacheth. Blasted Republicans, Darn Democrats. Economic hardships all over the place. Woe is us. The government has to do something!
Stop right there.
The government has to do something? Let's examine how we got here. The government has to solve this artificial problem it created to avoid the other artificial problem it also created (i.e., the debt ceiling)? 99% of politicians are giving the rest of them a bad name, again.
We are subjected to this Kabuki Theater with every congress, and with every changeover of elected officials. The result is almost always the same. Crisis looming, elected officials arrive, hammer out what the press will call a compromise, and voila! Heroes are made.
The guy who has gone before the fiscal policy makers and asked for fiscal sanity, one Ben Bernanke, is credited with first using the term "fiscal cliff". He and the Federal Open Markets Committee have maxed out the printing presses. If that isn't doing enough damage, Bernanke also wants congress to back off the last existing attempt to stop the spending madness, lest we all step off the cliff.
It's not a cliff, I am here to say. I came up with the term "fiscal curb" to describe what we face on January 1st. ...I thought that was clever until I saw that over 4000 other blogs, most of them liberal, were using the same term. Let's see if they agree with this:
What's really wrong with the fiscal cliff.
- It's not the tax increases. We all know that the national debt is a severe drain on future resources, and anything that begins to slow the increasing debt is fundamentally good. To have it fall on the shoulders of the 1% is clearly unfair, but fairness isn't really in the political playbook this season. The economy will sort itself out, as it does best when the rules are stable.
- It's not the return of the payroll tax back to 6.2%, or as otherwise known: "full" funding of the social security system. It is the only fair tax we have. It is straight off the top with no deductions. I would prefer it to be a sequestered fund, but that's a topic for another day.
- It's not the affordable care taxes. We saw these coming two years ago, and we should not take steps to hide their impact. Laws have consequences. Let's show the average American what they voted to keep. They aren't going to like it, and the law will be changed, or collapse under its own weight. This would be a very good result.
- It's not the spending cuts. $109 billion is peanuts. Chicken feed. It is 0.67% of the deficit. That won't cover the interest on the debt. Don't fear it. Don't fight it. Those who claim a reduction in GDP are really the same people wanting government spending to be a large part of GDP. The truth is that any money not spent by government, means money spent in productive enterprise. Less government spending is always good. If there is anything wrong with the spending cuts, it is that we should be looking at a minimum of 600 billion/year.
- It's not the end of extended unemployment benefits, either. It's time for everyone to go back to work, and they know it, too.
- And, It's not the ending of the medicare doc fix. If you are moving towards socialized medicine, there's nothing wrong with showing Americans what that looks like, with doctors leaving practice, and moving to Belize.
No, none of that is bad. So, what is wrong with the fiscal cliff? Only that the press has bought into the notion that it is a fiscal cliff, and eagerly await in the audience as the politicians warm up for another round of Kabuki.
If it is not averted, what it means for the economy is the average American will need to pony up another $300/ month to Uncle Sam. Chicken feed, especially when you compare it to the cost to the economy avoiding the curb entirely.
If it is not averted, what it means for the economy is the average American will need to pony up another $300/ month to Uncle Sam. Chicken feed, especially when you compare it to the cost to the economy avoiding the curb entirely.
Saturday, November 17, 2012
Of, By, and For
This explains the fatally grievous condition of mankind. Ignorance surrounds its cradle: then its actions are determined by their first consequences, the only ones which, in its first stage, it can see. It is only in the long run that it learns to take account of the others. It has to learn this lesson from two very different masters - experience and foresight. Experience teaches effectually, but brutally. It makes us acquainted with all the effects of an action, by causing us to feel them; and we cannot fail to finish by knowing that fire burns, if we have burned ourselves. For this rough teacher, I should like, if possible, to substitute a more gentle one. I mean Foresight. For this purpose I shall examine the consequences of certain economical phenomena, by placing in opposition to each other those which are seen, and those which are not seen.- Frederic Bastiat, That Which is Seen, and That Which is Not Seen, 1850.
It is rather for us to be here dedicated to the great task remaining before us -- that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion -- that we here highly resolve that these dead shall not have died in vain -- that this nation, under God, shall have a new birth of freedom -- and that government of the people, by the people, for the people, shall not perish from the earth. - Abraham Lincoln, The Gettysburg Address, 1863.
The 47% have chosen: Government of, by, and for the uninformed. The focus of the rest of us must now turn to minimizing the impact of this folly on our own lives. This means:
- Downsizing our US footprint, to minimize the resources exposed to higher taxes and degraded currency.
- Take care of our own health, because the health care provider exodus begins shortly.
- Prepare for "the strike", as producers from Hostess to Westinghouse close up shop.
- Set aside some land. Learn to grow your own food. Take measures to protect it from man and beast.
- Prepare for a better education for your children. Hasten the end of public education as we know it.
Wednesday, November 07, 2012
Quo Vadis America?
Your Wizer is relatively speechless today. Fortunately, Trader Dan blogs the best assessment I've seen today on what it means for the markets and the economy.
Monday, November 05, 2012
An Intervention
When the news from Benghazi came around, my first question was: Why are there no dead terrorists in the embassy compound? It has taken me years to develop the next question, but now that it is in my head, it's much easier to think this way often. My next question was: Why are there embassies?
When you think about it, embassies provide very little in the way of productive utility; and the only functions they provide of economic value is as a possible point of security for American Nationals located in that country. See the irony? The only function is security; its people are dead, and the compound is burned to the ground. My thought is: Why wouldn't it be better to close all our embassies, and advise all of our foreign workers to contract their security to private firms? Why wouldn't that be better for everybody? Good ideas like this happen all the time. I can't be the only one thinking this way. With practice, everybody can see these opportunities to reclaim economic opportunity.
It's really the bigger picture I want to discuss. It's high time to rethink a lot of things.
Yesterday, I wrote about the insanity of doing nothing. Today, I re-inforce that a little by asking you to read John Tamny's latest article. In the article "Obama, Romney, What's Best for the Economy", Tamny points out at the outset that the election shouldn't matter, and why it shouldn't. He goes on to explain how much it really does. He lays out, very adroitly, the economic landscape either way. It's a shame we are down to two choices when both of them have significant downside.
As a former red and/or blue voter, I realize I have been enabling this self destructive behavior. If you've ever seen (or better yet, participated in) an intervention, you realize that the dysfunctional person is often being enabled by family members, friends, and associates. I think it may be time to stop enabling the red and blue destruction, and begin voting for the return of America.
It's too late (obviously) for this election, but perhaps we can get more people to think like John Tamny, and recognize the voting path that does not end in a red or blue hell.
Below are four examples of enabling behaviors taught to families by their loved ones to help keep the addiction comfortable at the expense of the family (cut and paste from: Family First Intervention):
■Guilt - Addicts and alcoholics teach families that it is their fault and that everything bad that happens is because of some other person, place or thing. Because families feel guilty, they then enable.
■Fear - Families are taught that if they try to intervene, set rules and boundaries or make them go to rehab they will hate the family forever, they will never talk to them again, the will commit suicide or they will die if they stop.
■Hope - Your love one tries to teach you that they will stop on their own and that they have a plan. Families then believe them despite all attempts that fail. You then start to believe if they get arrested just once, get that right job or just meet that special someone this will all go away. Your loved one teaches you to wait and do nothing.
■Victim - All addicts and alcoholics become professional victims. They constantly think to themselves and teach others that if you had their terrible life you would drink or drug too. They say things like “you don’t know what it’s like to be me”, “if you were married to him/her you’d drink too”.
Now, please re-read the previous four paragraphs, substituting our politicians for the loved ones (I know, but please try anyway), and instead of drugs or alcohol, substitute power or money.
Maybe an intervention is indeed in order.
When you think about it, embassies provide very little in the way of productive utility; and the only functions they provide of economic value is as a possible point of security for American Nationals located in that country. See the irony? The only function is security; its people are dead, and the compound is burned to the ground. My thought is: Why wouldn't it be better to close all our embassies, and advise all of our foreign workers to contract their security to private firms? Why wouldn't that be better for everybody? Good ideas like this happen all the time. I can't be the only one thinking this way. With practice, everybody can see these opportunities to reclaim economic opportunity.
It's really the bigger picture I want to discuss. It's high time to rethink a lot of things.
Yesterday, I wrote about the insanity of doing nothing. Today, I re-inforce that a little by asking you to read John Tamny's latest article. In the article "Obama, Romney, What's Best for the Economy", Tamny points out at the outset that the election shouldn't matter, and why it shouldn't. He goes on to explain how much it really does. He lays out, very adroitly, the economic landscape either way. It's a shame we are down to two choices when both of them have significant downside.
As a former red and/or blue voter, I realize I have been enabling this self destructive behavior. If you've ever seen (or better yet, participated in) an intervention, you realize that the dysfunctional person is often being enabled by family members, friends, and associates. I think it may be time to stop enabling the red and blue destruction, and begin voting for the return of America.
It's too late (obviously) for this election, but perhaps we can get more people to think like John Tamny, and recognize the voting path that does not end in a red or blue hell.
Below are four examples of enabling behaviors taught to families by their loved ones to help keep the addiction comfortable at the expense of the family (cut and paste from: Family First Intervention):
■Guilt - Addicts and alcoholics teach families that it is their fault and that everything bad that happens is because of some other person, place or thing. Because families feel guilty, they then enable.
■Fear - Families are taught that if they try to intervene, set rules and boundaries or make them go to rehab they will hate the family forever, they will never talk to them again, the will commit suicide or they will die if they stop.
■Hope - Your love one tries to teach you that they will stop on their own and that they have a plan. Families then believe them despite all attempts that fail. You then start to believe if they get arrested just once, get that right job or just meet that special someone this will all go away. Your loved one teaches you to wait and do nothing.
■Victim - All addicts and alcoholics become professional victims. They constantly think to themselves and teach others that if you had their terrible life you would drink or drug too. They say things like “you don’t know what it’s like to be me”, “if you were married to him/her you’d drink too”.
Now, please re-read the previous four paragraphs, substituting our politicians for the loved ones (I know, but please try anyway), and instead of drugs or alcohol, substitute power or money.
Maybe an intervention is indeed in order.
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