San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Friday, April 20, 2012

Popular Response To "Buffet Rule" Vote Entirely Predictable

Congress has quite properly voted against the proposed "Buffet Rule", in which a mandatory 30% tax would be imposed upon all people reporting an adjusted gross income of $1 million or more.  There were enough politicians who saw it for what it was, institutionalized envy, to vote it down.  I have written earlier on this senseless rule (February 24th posting), showing that the 0.16% of the US population that actually makes over $1 million per year already pay an average of 29.1% of their income in federal taxes.  Making a law to give those folks an effective 3% tax increase is ridiculous and absurd.  It was abundantly obvious to anybody who took a moment to think about it that the proposal was entirely about political posturing and an attempt to buy the votes of the envy-ridden on the part of President Obama.
Two written responses to the negative vote showed up in the "Open Forum" section of the Denver Post today.  They are worth quoting because they once again clearly prove that the average person, who is highly motivated to use the political system to steal from his neighbor, is quick to abandon his moral principles and is utterly incapable of seeing reality for what it is. 
Jan Coffelt of Lakewood says, "In the 1950s and 1960s, when the top tax rate was about 65 percent, we laid the interstate highway system, built the Internet, sent a man to the moon, defeated communism, had an educational system that was the envy of the world, had a thriving middle class, and an economic system that was unparalleled.  Today our top tax rate is 35 percent (though the ultra-rich do not pay it), our roads are crumbling, NASA has been gutted, our educational system is failing our young, the middle class is disappearing, and our economic system is in the tank."  Wow!  All of these horrible things are happening because the top marginal tax rate fell from 65 percent to 35 percent!  Let's consider her argument for a moment.
First, Jan needs a little history lesson.  She ascribes all these prior great events to the 1960s and 1970s.  I believe any search through the historical archives of the Internet would indicate that it was not "built" during the 1960s and 1970s.  The Internet Protocol Suite was not even standardized until 1982.  In 1982 the top marginal tax bracket was 50%.  Despite Jan's assertion, communism was not defeated in the 1960s and 1970s.  Most historians date the defeat of communism with the fall of the Berlin wall which took place in 1989 when the top marginal tax bracket was 28%. 
Second, Jan needs a little economics lesson.  We have the same economic system today that we had in the 1960s and 1970s.  It is a mixture of free market capitalism and government imposed socialism.  Yet, in the 1960s and 1970s this economic mixture was "unparalleled" and today it is "in the tank"?  How can this be?  Is Jan suffering from a little post-bear market depression?  In addition, Jan's pronouncement about the death of the "middle-class" is a bit premature.  This nebulous concept has been used to describe anywhere from 25 to 65 percent of American households.  A better indicator of economic progress is inflation adjusted real income.  "Real disposable income per capita" tells a different story.  It was $10,888 in 1960, $14,916 in 1970, and $32,600 in February of this year.  A tripling of real income since 1960 is hardly indicative of the death of the middle class.
Third, Jan does not understand the difference between total federal revenue and marginal tax brackets.  She commits the infantile logical mistake of confusing correlation for causation.  She believes that higher tax brackets caused wealth and prosperity.  Consequently, she also believes that lower tax brackets cause loss of wealth and poverty.  The highest tax bracket ever applied was 94% in 1945.  By logical deduction, if Jan is correct, 1945 should have been the most prosperous year in our nation's history.  I do not believe I need to say any more about that.  The lowest tax bracket of recent times was 28%, established in 1987.  From that point forward the US stock market went on one of the greatest bull market runs in history.  I do not believe I need to say any more than that. From 1945 through 2011 the IRS has collected between 19 and 21 percent of the total GDP of the United States in federal taxes.  This percentage has held constant, despite the marginal tax brackets being used.  We should properly conclude that the marginal tax bracket is an irrelevant statistic.  Jan needs to let this argument, like her middle class, disappear.
Robert Hoffmann of Golden says this, "The ruling powers will continue to take away benefits to the common citizen while lavishing their supporters with tax breaks and expanding the military budget and big oil and big bank giveaways."  Wow!  He packs a tremendous amount of envy into just one sentence.  Robert provides no evidence in support of his thesis that Congress is out to take away his "benefits".  Indeed, he does not even describe what his "benefits" are?  Does he expect a new car every year?  A pony?  A chicken in the pot?  All we know is that he is entitled to "benefits" and he believes that he is getting less of them because Congress has decreed that his money should go to "big oil" and "big banks".  His evidence in support of this argument?  None.  Furthermore, Robert does not describe how a 3% increase in the federal taxes paid by 0.16% of the taxpaying population is going to generate enough revenue to give him the "benefits" he so richly deserves.  Robert does not say a lot of things.  What he does say indicates that he is so envy-ridden he can't see straight.
It was entirely predictable that citizens possessed by the sinful emotion of envy would be incapable of understanding the propriety of voting down the Buffet rule.  These folks see government as the source of their safety, security and wealth.  They want an expansive, Robin Hood, type of government.  They want their politicians to serve their needs by legally stealing from others and giving to them.  These people need to mind their own business.

Thursday, April 19, 2012

Obama Blames Oil Market "Speculators" For His Sins

Two days ago President Obama proposed a $52 million dollar expansion of the federal bureaucracy.  At a time the federal government desperately needs to shrink, Obama believes it is necessary to expand the powers of the federal government in order to exert more onerous control over the oil futures market.  Here is part of what Obama said, "We’re tackling issues of supply and demand, even as we’re looking at the long term, in terms of how we can structurally make ourselves less reliant on foreign oil.   We still need to work extra hard to protect consumers from factors that should not affect the price of a barrel of oil. That includes doing everything we can to ensure that an irresponsible few aren’t able to hurt consumers by illegally rigging the energy markets for their own gain.” 
The "factors that should not affect the price of a barrel of oil" are the activities of participants in the oil futures market.  The "irresponsible few" that he speaks of are the actual participants in the oil futures market.  Obama ignorantly and naively believes that oil futures traders are immorally, and perhaps criminally, manipulating the price of oil upward in order to make a profit.  Let's consider what he actually said.
First he wrongly asserts that he is addressing "issues of supply and demand".  I do not know if he is just stupid or if he is lying.  He knows that he killed the Keystone oil pipeline.  Surely, if he really cares about supply and demand issues, he would not have prevented the importation of Canadian oil.  After all, the Canadians are not nearly as bent on our destruction as the Iranians, are they?  If Obama really cares about increasing the supply of oil why does he not permit drilling in ANWR?  If Obama really cares about increasing the supply of oil why does he not encourage an expansion of off shore, deep sea drilling?  The fact of the matter is that Obama has not addressed the "issues of supply and demand" at all.  Unless one believes that doing everything he can to restrict supply constitutes addressing the issue.
Second, Obama ignorantly asserts (I do not think he believes this...nobody can be that dumb) that oil futures traders have manipulated the oil market for their own gain.  There is nothing unusual here.  Politicians always blame the free market for the necessary and logical free market reactions to their policies.  Obama has done everything he can to restrict the supply of domestic oil.  Then, he slaps sanctions on the Iranians and declares that no oil will be imported from Iran.  When the Iranians threaten to do what they have to do to ship their oil, Obama threatens military action against them.  After all of his saber rattling Obama then has the unmitigated gall to blame the oil futures traders for an increase in the price of a future barrel of oil?  What did he expect them to do?  He does everything he can to restrict the supply of imported oil, he threatens to plunge us into another expensive war,  and then he expects oil futures traders to assume that prices will not go up in the future?  How dumb can this man get?
What is especially interesting is that these exact same greedy, market manipulative, immoral oil futures traders are also responsible for the present decline in the price of natural gas.  Natural gas prices spiked at $10.79/1000cubic feet (wellhead) in July of 2008.  Since then the price has been driven down, by natural gas futures market "speculators", to a current price of $1.91.  If these greedy, evil, un-American speculators are capable of manipulating prices upward for their own personal profit, why have they not done so with natural gas?  The simple fact of the matter is that natural gas futures have been driven down by simple supply and demand issues.  Natural gas supplies are up.  Natural gas demand is down.  Natural gas futures are down.  End of story.  Futures traders are utterly incapable of manipulating the price of anything.  They simply guess on the future price of a commodity.  If they guess correctly, they make a profit.  If they guess incorrectly, they suffer a loss.  There is nothing evil, devious, or mystical going on in the futures markets.
Obama's sudden announcement that the oil futures market needs an additional $52 million in regulatory oversight has nothing to do with the price of gas in Omaha.  Rather, it has everything to do with getting reelected.  Obama's advisers have told him that rising gas prices are hurting his reelection chances.  He needs to do something to try and buy some votes.  He decided to resort to the old tried and true process of blaming the free market for all of the world's woes.  All potential voters who are so intellectually crippled by envy will jump on board his band wagon.  Stick it to the evil corporations, they will shout.  Four more years!  Free gas for all.  Pay my rent!  You can just hear the cheers.
After adjusting for inflation (1979 dollars), the price of a gallon of gas (at today's nominal price of $4.00/gal) has risen by just 15% over the past 30 years.  In 1981 a gallon of gas could be purchased for $1.20.  Today's inflation adjusted price is $1.38.  Why all the fuss?  Many people (most people?) pay more for their bottled water than they pay for their gasoline.  Last time I checked I did not see Obama crying out for additional regulations on the bottled water industry to prevent them from making obscene profits.  Last time I checked I did not see people driving from Kwik-E-Mart to Kwik-E-Mart seeking out a bottle of water that cost one penny less.  Nope, regulating the price of water will not buy a single vote.  But, you can be sure if it did Obama would be out there calling for water regulation.
Recent increases in the price of oil, and the resulting increase in the price of gasoline, are all directly related to activities and announcements made by President Obama.  Oil futures market speculators have nothing to do with the price increase.  In a lie-filled and desperate attempt to get reelected Obama has decided to blame the free market for his sins.  How presidential of him.

Wednesday, April 18, 2012

Lessons From The Revolutionary War

Yesterday was tax filing day.  Not only is it the day that all folks are expected to voluntarily submit their tax returns for 2011, it is also the day that all folks who are not subject to the immoral tax withholding system are expected to make their voluntary "estimated tax" payments for 2012.  For those of you unfamiliar with the estimated tax system, it is imposed upon those of us who are self employed and it permits the state to collect a portion of our income, in anticipation of our annual tax liability, on an on going basis during the year.  Those who are unfortunate enough to make an inaccurate estimate of their total payments for the year will end up being penalized at the end of the year.  Payments are due, strangely, on April 15th, June 15th, September 15th and January 15th.  I am not aware of the reason why the second payment is accelerated by one month.  I suspect it has something to do with getting my money even earlier.  I paid my first quarter estimated tax yesterday and, as always, it put me in a very foul mood.
Every time I make an estimated tax payment I think about what it would be like to be a citizen of colonial America.  I remember how I was taught in government school that the colonists rebelled against the authority of the British crown because they believed that they were being excessively taxed and because they believed they were being taxed without representation in Parliament.  According to most American historians, those were sufficient reasons to declare independence from Britain and effectively start a bloody revolutionary war.  At least, I have never come across anyone who believes that the Revolutionary War was unjustified.  That being the case, I wondered, should we be in rebellion today?
Just how much tax did the average colonist pay?  The first tax indirectly levied upon the colonists was contained in the "Molasses Act".  It imposed a small tax upon the production of molasses, rum and sugar produced inn the non-British islands of the new world.  It was designed to protect domestic British production and it was generally ignored by the colonists.  Since the colonies ignored the Molasses Act the British created the "Sugar Act".  The Sugar Act (1764) levied a tax of one and a half pence per gallon on wine, plus a small tax on sugar and textiles.  The British defended these taxes as necessary to support the troops that were stationed on American soil to defend the colonists from their many enemies. 
In 1765 the "Stamp Act" was passed.  This act imposed a tiny tax upon all paper, newspapers, customs documents, licenses, college diplomas, and legal forms for collecting debts and transferring property.  In addition, in 1767 the "Townsend Act" created small taxes on the sale of glass, lead, paint and tea.  A this point the colonists declared that "taxation without representation is slavery".  The protests of the colonists brought about the repeal of the Stamp Act, but the tax on tea not only remained, but was raised by the "Tea Act" of 1773.  The Boston Tea Party soon followed and we know how things went from there.
The average citizen in colonial America paid no taxes to the British crown.  Those who were directly engaged in the activities described above did pay taxes to the crown but the total taxes paid could never have risen to more than a couple of percentage points of total income.  Nevertheless, even these tiny taxes were deemed excessive and the cry for revolution went out among the people. 
Perhaps some would argue that it was not the total amount being paid in tax that irritated the colonists.  Some might argue that the fact they were being taxed without representation in Parliament was the primary issue in the minds of the revolutionaries.  If that is true, it is argued, we have no parallel to that state of affairs in modern America.  Since all tax bills originate from the House of Representatives and since we elect the men and women who will sit in the House of Representatives, we do not have taxation without representation.  Technically that is correct.  However, to quote what Thomas Jefferson said about being forced by the state to pay for ministers employed by the state, "To compel a man to furnish contributions of money for the propagation of opinions which he disagrees with and abhors is sinful and tyrannical."
Technically we have taxation with representation.  But, do any of us really believe that our interests are truly represented in the tax code?  Do any of us really believe that our Congressmen actually repesent our interests?   I know that my interests certainly are not represented in any level of government.  Government confiscates an immoral percentage of my income and spends it on hundreds of programs that are equally immoral and there is absolutely nothing I can do about it.  That is abhorrently sinful and tyrannical behavior on the part of the US government against me.  I suspect most Americans would agree with me, yet, nobody talks about "revolution".  Those few people who talk about secession are quickly written off as "nuts" and "extremists".  In fact, I find it very strange that the great majority of Americans get all misty eyed when thinking about the glories of the Revolutionary War (after all, it gave us our national anthem) and, at the same time, consider anyone who does not worship the government as it exists today as unpatriotic!  What a wild contradiction.  When speaking about the depredations of today's government, I have frequently been instructed, by folks who consider themselves to be patriots, that I need to leave and "go live under a dictatorship".  I am considered to be unpatriotic because I think exactly the way the colonial patriots did!  What a turn of events.  Today a patriot is one who worships the state.  How sad.

Tuesday, April 17, 2012

Political Speech Proves The Process Is Meaningless

The political process in the United States is utterly meaningless.  Why would anyone be foolish enough to become political involved?  It is a complete and total waste of time.  The political process in this country accomplishes nothing meaningful.  How do I know this?  Look at what just happened yesterday on the Mitt Romney campaign.
Michael D. Shear of the New York Times reports that "Senior advisers to Mitt Romney said Monday that Romney, the presumptive Republican nominee, was merely tossing around ideas, not making policy announcements, when his chat with donors about some significant changes to the tax code was overheard by reporters at a fundraiser this weekend."  The article is entitled "Tax-break remarks kick up dust" and the subtitle to the article states, "Aides say Romney was just throwing out ideas about changes for the wealthy in a 'hot-mic' moment."  Shear goes on to say that "those remarks to a backyard gathering of high-dollar donors in Palm Beach, Fla., on Sunday night were overheard by reporters for NBC News and the Wall Street Journal, prompting a day of explanation by Romney's campaign and a new opening for attack by President Barack Obama's campaign and the Democrats."
There is nothing unusual about this story.  Politicians have accused each other of hiding their true beliefs for years.  In fact, accusing each other of hiding true beliefs has been one of the major accusations found within the current presidential campaign.  The fact that it has become commonplace to hide ones true beliefs is precisely what makes my point.
Nobody is bothered by the fact that candidates for political office do everything they can to say nothing at all.  Nobody seems to be disturbed by the fact that, in those occasional moments of emotional weakness or the "open mic", a political candidate will say something that he actually believes and that statement immediately becomes fodder for the candidate who opposes him.  Nobody seems to care that after such a moment the campaign advisers immediately rush to surround their man and do "damage control" in which they fall all over themselves denying what their candidate had just said.  The entire process of pretending to make speeches and then covering up when accidental moments of real speaking take place has become completely normal to us.  What more proof do we need than this to assert that political speech proves that the political process has become totally meaningless?
What passes for a "presidential debate" is a grotesque distortion of a real debate.  The goal of the presidential debate is to try and trap your opponent with a statement he really believes while, at the same time, saying nothing meaningful or true about yourself.  Yet, people sit down in front of their television sets and watch these senseless proceedings with great interest.  After the debate the talking heads discuss not the content of the debate, for we all agree it is irrelevant, but the style and tone of the candidates.  Who made a mistake and spoke candidly?  That is the ultimate faux-pas and will make the headlines tomorrow.
I believe it is fair to say that all candidates for political office have one goal in mind when they speak.  That goal is to get elected.  Because all candidates for political office will do whatever they have to do in order to get elected, it is impossible to ever find out what they really believe prior to electing them.  The antiquated concept of the statesman-politician is dead.  Today's politician has his finger to the wind, testing the public sentiment and saying what needs to be said to get that vote.  His advisers brief him prior to each public appearance and instruct him on precisely what to say and do to push the hot buttons in today's crowd.  The goal is to whip them into a frenzy.  The goal is to make them believe the candidate is precisely what they want him to be.  The goal is to purchase their votes with cleverly designed speeches. 
In a strange and very sad sort of way, today's politician most closely resembles the old-time snake oil salesman.  The goal of the modern politician is to get in front of as many different groups as possible and tell each of those groups precisely what they want to hear.  It does not matter that what he says today contradicts what he said yesterday.  It does not matter that what he says does not correspond to what he actually believes.  All that matters is that he rings up a sale and, in order to ring up that sale, he will tell the populace precisely what they desperately want to hear.  Those that hang on his every word, believing that he has the answers to all of their problems, are suckers about to be fleeced. 
I choose not to be a sucker.  I choose not to be fleeced.  I choose to maintain my dignity.  I choose not to participate in a process that is utterly meaningless.  I choose to ignore the politicians and mind my own business. 

Monday, April 16, 2012

Feudal America

Feudal societies of the Middle Ages were characterized by three main things:  1) high rates of taxation, 2) compulsory military service, and 3) the frequent recitation of fealty oaths.  As I was sitting at the Colorado Rockies home opener last week it occurred to me that we have become a feudal society.
In the Middle Ages a vassal would be permitted to farm a parcel of land owned by a lord.  The vassal would work the land and then turn over the produce of the land to the lord at the time of harvest.  From what I could find in some quick Internet searches, it appeared that most agreements stipulated that the vassal would owe his lord somewhere around one third of what he produced.  As I was pondering this historical truth it occurred to me that tax liberation day falls on April 17th this year.  Tax liberation day is the day the average American has to work to in order to pay off his federal, state, and local tax burdens.  April 17th is roughly one third of the way through the year.  Interesting.  The average American has to turn over the same amount of his income to his government as a feudal vassal of the Middle ages turned over to his lord.
Things were tough during the Middle Ages.  The life of a peasant would be miserable, brutish, and short.  In exchange for their freedom most peasants were willing to pledge their lives to a lord who, in turn, promised to protect them from outsider invaders.  Able bodied males were expected to take part in the wars waged by the lord.  Women, children and the elderly were expected to support the lord and his warriors in some fashion.  When the lord declared war upon his many enemies, everybody was expected to be involved in the war effort..
The draft has been abolished for many years now.  Every once in a while some Congressman will resurrect the idea of reestablishing the draft but the proposal is shot down pretty quickly.  But, does it follow that simply because we no longer have a draft that we are not, somehow, subject to a form of compulsory military service?  As I was sitting at the home opener for the Colorado Rockies last week I noticed how militaristic the opening ceremonies had become.  It all began with a parade in which about a dozen ROTC groups marched around the field to the cheers of the fans.  That was followed by an honor guard that brought out the flag to great cheering.  That was followed by dozens of people spreading out a gigantic American flag that covered the entire outfield.  That was accompanied by great cheering.  That was followed by the singing of the "Star Spangled Banner", which was followed by raucous cheering.  As the national anthem was being completed a barrage of fireworks were set off just as a fighter plane "fly-over" roared over the stadium.  The people screamed in delight.  As I observed the ceremonies it occurred to me that, in many ways, we, as American citizens, are still compelled to serve the military.  I pondered how often I have seen the bumper stick exhorting me to "Support Our Troops".  I wondered, if one holds a particular military action to be morally unjustifiable,  just how is it possible to morally support the troops who are waging the war?  I realized, of course, that that was a stupid question.  I must, I must, I must support the troops, right or wrong.  I then realized how much we are like the feudal societies of the Middle Ages.
In the Middle Ages the lord would frequently ride out to visit his vassals.  A contact with a vassal usually contained the same order of events.  The lord would be identified as the vassal's supreme authority.  The lord would instruct the vassal on his duty to pay his taxes and support the military ventures of his fiefdom.  The lord would conclude the meeting by having the vassal swear an oath of loyalty to him. 
As I was sitting at the home opener of the Colorado Rockies last week a thought occurred to me.  It was during the seventh inning stretch.  Ever since 9/11 the seventh inning stretch has become "patriotized" (I realize that is not a word.  I just don't know how else to say it.).  In the old days most folks would stand up to stretch their legs and sing a refrain of "Take Me Out To The Ballgame".  We did so because we loved watching baseball.  At this game we were instructed by the public address announcer that we had a moral duty to stand, remove our hats, and sing "God Bless America".  We were then ordered to do so.  As I sat there I wondered.  Is it a safe thing to invoke the blessing of God upon a nation that murders millions of its own children?  Is it a safe thing to invoke the blessing of God upon a nation that steals from its citizens on a grand scale (through excessive taxation)?  Is it a safe thing to invoke the blessing of God upon a nation that has a political system that operates almost exclusively on envy?  I did not think it was a safe thing to do so I did not do it.  I expected to be doused in beer by an outraged fan for my lack of loyalty to my country.  Fortunately that did not happen.  I did, however, realize that I now live in feudal America.  It was not a pleasant realization.  The Rockies also lost.  What a sad day.