San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Friday, November 23, 2012

More Lies About The Rich And Taxes

I am out of town for the Thanksgiving holiday.  I am reposting this piece from February 1st because I thought it was well done and, according to my pageview tracker,  nobody read it.  I believe that the information contained in this post is well worth considering as we enter into another federal budget cycle.  I think you will too.  While many of you are "enjoying" black Friday, I am hiking around the Tonto plateau in the Grand Canyon.  Enjoy your shopping.

"Earlier this week Senator Sheldon Whitehouse (D-RI), author of the "Buffet Rule" bill stated that, "In theory, we have a progressive tax code in which the more successful you are, the more money you make, the greater rate you pay in taxation.  Unfortunately what turns out to be the fact in practice is that you have these huge exceptions."  Senator Whitehouse certainly seems to be saying that he does not believe the US tax code to be progressive enough.  He seems to be saying that the "rich" (never defined) are not paying their "fair share" (also never defined).  These "huge exceptions" he refers to need to be penalized through the creation of a new tax that will guarantee that all folks making more than $1 million per year pay more than everyone below them.  Senator Whitehouse is grossly ignorant when it comes to who pays how much of the federal tax bill.
The following information can be found at the IRS website.  I am not making this stuff up.  The information presented below comes from 2009, the most recent year for which the IRS has complete data.  In light of the wildly inaccurate statement made by Senator Whitehouse, please note the following truths:
1.  There were 140,494,127 tax returns filed in 2009.  Of those, 236,883 were filed by households earning $1 million or more.  That represents 0.2% of all federal tax returns. Are these the "rich"?  If so, it is a mighty small group.
2. Despite the envy filled slanderous claims constantly being made about "excess executive compensation", only 8,274 returns were filed by households making more than $10 million.  That represents .006% of all federal tax returns.  I would guess a good percentage of those 8,274 households are made up of sports stars, music stars, and movie stars.  Nevertheless, those unfortunately folks were saddled with a tax payment burden that equaled 6.2% of all federal taxes paid in 2009.  Get this straight Mr. Whitehouse.  .006% of the "rich" paid 6.2% of all federal taxes.  You are correct.  This is not fair!  They should be paying much less.  How can anyone examine the data and conclude that the tax code is not progressive enough?
3.  The 0.2% of households that filed returns showing income in excess of $1 million for the year ended up paying 20.4% of all federal taxes.  That is not fair!  They should be paying much less.
4.  The top 3.0% of households (those making more than $200,000) paid 50.2% of all federal taxes.  Robbery!   Get this straight Senator Whitehouse.  Three percent paid fifty percent.  The only thing "unfair" about this truth is the fact that the three percent are paying way too much. The three percent are being legally robbed.
5.  The top 12.6% of households (those making more than $100,000) paid 74.7% of all federal taxes. Let's call this group the "rich".  The rich already pay three quarters of all federal taxes.  Why is that not progressive enough?  Why must they pay more?
6.  Conversely, the bottom 48.2% (those making less than 30,000) paid only 1.7% of all federal taxes.  How could anyone possible consider this group to be overtaxed?  How could anyone who is not insane argue that this group pays more in taxes than Warren Buffet?
Two conclusions can be drawn from the above information:
1.  We have arrived at the pure democracy that our founding fathers feared and attempted to prevent.  The lower half of the income population has now become a voting bloc that uses the federal tax law to extort income from the upper half of the income population. The bottom half is forcing the upper half to pay for all government services.  How can anyone consider this state of affairs to be unfairly biased in favor of the upper half?  Have we all lost our minds?  How can anyone justly maintain that the upper half needs to pay more?
2.  Anyone who believes that the "rich" (defined as the top 12.6% of the income population) are not paying their "fair share" (they are paying 74.7% of all federal taxes....significantly more than their fair share) is so filled with the desire to perpetuate class envy (in order to buy votes, if he is a politician) that he cannot think straight.
Senator Whitehouse believes that the US tax code is not progressive enough.  The application of a progressive tax code is a socialist-communist idea designed to deter the operation of the free market and give the state control of the fruits of economic production.  It is based upon the economic reality that there will always be more lower income people than upper income people.  When all people have a vote,  politicians will always pander to the envious lusts of the majority.  Senator Whitehouse is pandering to the hate filled envy of the lower income voters against the "rich" in order to retain his seat in the Senate.  This proposed bill will garner him many accolades from "the American people" (that half in the lower income bracket) and justify his exorbitant lifetime pension when he retires.  This is not what the founding fathers intended."

Thursday, November 22, 2012

Government Creates Extra Hour

Since I am out of town for the Thanksgiving holiday, and unable to upload a post for today, I have decided to repost this piece from February 23rd.  It was entitled "Government Grants US Citizens One More Hour A Day".  I thought this was a good post and, according to my pageview calculator, nobody read it.  So here it is again.  I hope you enjoy it.  I am spending today hiking from the south rim of the Grand Canyon down to the river and back.  Happy Thanksgiving.

"News Flash:  In a rare example of unanimity, the Federal Reserve, Treasury, the Congress, the Obama administration, and the Federal Trade Commission decided to give all US citizens an extra hour each day.  It has been decreed that the hour from noon to one o'clock each day will be immediately replayed.  In an unprecedented move, the US Supreme Court declared that this extra hour is a constitutional right that should be enjoyed by all US citizens.
President Obama immediately called a news conference in which he spelled out all of the advantages inherent in the government's latest decree about our civil right to an extra hour per day.  He pointed out that we have been granted this extra hour without any need to raise taxes.  He was disappointed that the rich got the same 60 minutes as the average working family but he said he could not figure out any way to make time move at two different speeds.  Obama declared that this extra hour will increase the productivity of the US worker as well as reduce the number of unemployed.  He went on to say that the extra hour will level the playing field with those countries who are dumping their manufactured goods in America by giving us more time to produce.  The President said that the Surgeon General had informed him that the extra hour would reduce stress in the life of the average American as well as improve marital and family relationships.  Lastly, the President congratulated himself for his brilliance in coming up with such a clever scheme.
News Flash (one year later):  The implementation of OMHFUSCA (One More Hour For US Citizens Act) has proven to be an unmitigated disaster.  It did not take long for US citizens to realize that the earth continued to spin on its axis at the rate of one revolution per 24 hours despite the fact that the government had granted them an extra hour each day.  The replay of the noon hour soon caused all time schedules to go haywire.  Work schedules have been disrupted, worker productivity has plunged, domestic workers have fallen behind their foreign counterparts in manufacturing ability, family relationships are strained, juvenile delinquency is on the rise, and the economy is in a deep depression.  In a news conference earlier today President Obama stated that OMHFUSCA would have succeeded in reaching its goals had it not been for the greedy bankers who have subterfuged the process. According to the President, banks seized upon the idea of an extra hour per day as a way to make more money.  That greedy desire was enough to ruin the plan.  He announced that he had just issued an Executive Order to tax 50% of the windfall profits the banks were receiving due to the extra hour of business and use the proceeds of that tax to commission a Congressional committee to look into the possibility of extending the length of a day by another hour.
Is the above scenario ridiculous?  Of course.  Is it untrue?  Of course.  Is it an example of what the government does every day?  Absolutely.  Consider the following.
The Federal Reserve Board has set short term interest rates at zero.  The primary reason the Fed has set short term interest rates at zero is to attempt to bring down long term (10 to 30 year notes and bonds) interest rates.  It has been largely successful in doing so as the ten year treasury now yields less than 2% and 30 year mortgages can be obtained for 4%.  Just like the mythical creation of an extra hour in the story above, the Fed has apparently been able to overrule an economic law and produce an outcome that is better than what the free market would have delivered.  But, the end of the story has not yet been told.
The Fed has no more ability to set the rate of interest in the economy than the government has the ability to determine how long it will take for the earth to complete one revolution on its axis.  The rate of interest in the economy is set by the combination of all the time preferences of all of the voluntary participants in the market.  The Fed can attempt to set a rate that is lower than the true rate but that act is doomed to failure.  All that the Fed is accomplishing with an artificially low rate of interest is to distort the financial signals that are sent through the market by the real rate of interest.  Businesses are now making decisions about future production based upon information that is not correct.  The artificially low rate of interest will create the next business cycle boom (it already has) but it is also sowing the seeds for the next business cycle contraction (recession).  When the next recession comes, don't blame the market, blame the Fed."

Wednesday, November 21, 2012

Hurricanes, Heroes And Politicians

Since I am out of town for Thanksgiving, and unable to put up a new post for today, I have decided to go back through my posts of the last year.  I wrote several good posts, in my opinion, that nobody ever read (according to my "pageview" tracker program).  I am reprinting one today from March 6th.  It was originally entitled "Tornadoes, Politicians and Real Heroes".  In light of hurricane Sandy, I think it is quite appropriate.  Just replace the references to tornadoes with the hurricane and it will fit.

"Most everybody is familiar with the record number of tornadoes that struck parts of the Ohio valley last Friday.  Several small towns in southern Indiana are practically gone.  I have had the misfortune of watching many news reports on the tornado damage and there have been two consistent themes in the coverage.
First, the people in the area are tough, courageous and going to rebuild.  This I will not dispute.  To have two small towns virtually eliminated from the face of the earth is a horrific thing.  The courage required to face down a tornado is something impressive.  The tenacity required to emerge from the tornado shelters and survey the damage is commendable.  The willpower evident in the assertions of the homeowners to rebuild their homes is a testimony to the capacity of human beings to endure hardship and persevere in the face of it.  All of these are praiseworthy activities and worthy of being reported on the news.
As a part of the coverage about the courage of those who have suffered loss are the usual reports of the "miraculous" events that have taken place.  A small baby was found alive submerged in the rubble of one home.  Pet owners and their pets are reunited despite long odds against the survival of the animals.  Big, tough guys are seen rummaging through the remains of their homes, searching for lost mementos of emotional significance to them.  More big, tough guys give interviews with quivering lips and tears in their eyes about how important their families are to them.  People from neighboring communities bring in water and set up barbecue grills to prepare meals for the displaced.  All of these are praiseworthy human interest stories worthy of being reported on the news.
The second theme in the television coverage of the tornado damage is not praiseworthy.  The second theme in the television coverage should be eliminated because it involves a parasitic class of people.  The second theme in the television coverage is about people who have flocked to the area purely out of their self interest and desire to be seen on the television.  Yes, you guessed it.  The second class of coverage is about politicians.
Practically every news report I have witnessed about the tornado damage has had, at some point in the report, an interview with some politician.  I have seen interviews with mayors and other local politicians.  I have seen an interview with the governor of Indiana.  I have seen an interview with one of the state senators of Indiana.  Unfortunately, I have seen President Obama's speech about the event.  In all of these interviews the politicians put on their gravest expressions and pontificate about how the government is rushing to the rescue.  Without exception, the help that the politicians promise to deliver consists of forcibly extracting the income from people who do not live in the area and giving it to politically connected people who do live in the area.  Disgusting!  In no case have I seen a politician actually open his own wallet and make a voluntary donation to a relief effort.  Politicians do not use their own money.  Politicians use other people's money and they use it very freely because it can buy them a lot of votes.
There is one theme that is conspicuously absent from all of the television reports I have watched about the tornado outbreak.  The theme that is missing is any story about the real heroes in this situation.  I have not seen a single report about the hundreds (probably thousands) of insurance adjusters and estimators who have rushed to the area to evaluate the damage to their client's homes and writen them checks to begin the rebuilding.  This is going on all over the area and not one single reporter considers it worthy to report.  Without the presence of corporations that sell homeowners insurance all talk of rebuilding would be in vain.  Without the checks from the insurance companies it would be impossible for this area to once again become economically productive.
In addition to the checks being written by insurance companies, I have not seen a single report on the construction workers, plumbers, electricians, roofers, architects, and other folks involved in the building of homes who are rushing to the area in order to find work in the rebuilding effort.  The mere writing of a check would not rebuild a home.  It takes an entire crew of people to do the work necessary to rebuild a home. The insurance company pays the bill but the construction workers build the house.  These two groups are going to be entirely responsible for rebuilding the hopes and dreams of those who have lost their homes and these two groups are being ignored in the media coverage.  It is the insurance companies and the construction workers who are the real heroes in this event.  Politicians are getting lots of air time and pretending to care and look like heroes because they promise to throw around a lot of money that they have previously taken from someone else, but they are not heroes.  They are parasites.
So, if you take a moment to consider the events of the past week in the tornado ravaged zones, remember those who are the real heroes.  Insurance companies and construction workers are all businessmen.  They engage the public in voluntary transactions that are for their mutual benefit.  Human beings engaging in voluntary, mutually beneficial transactions in the absence of government influence (also known as the free market) are who will rebuild this area.  They are heroes."

Tuesday, November 20, 2012

Hostess Pulls A John Gault

 [Note:  This blog might be obsolete before I actually post it. I wrote this post on Saturday, November 17th.  It was scheduled to be posted to my blog on Tuesday, November 20th.  On Monday, November 19th I saw a headline saying Hostess might still be in business as the union mentioned below finally came to its senses.  I am posting this article anyway.  If the company survives I will celebrate with a Suzy Q.]

I have been dreaming of this day for many years.  Scarcely a week goes by when I do not have the thought about how glorious it would be if some company followed the advice of John Gault (main protagonist in Ayn Rand's Atlas Shrugged) and simply shut down operations in response to oppressive government persecution.  In light of recent events, I am reconsidering my position.  The company that shut down last week was Hostess, maker of the most delicious snack cakes in the world.  Woe is me, I have received what I have dreamed of and it hurts.
For those of you who are not into the world of snack cakes, Hostess, makers of Twinkies, Cupcakes, Zingers, Suzy Qs, Fruit Pies and an assortment of other tasty treats, declared bankruptcy last week and closed its doors forever.  18,500 employees were told to not report for work last Monday.  The company is gone.  It vanished overnight.  Of course, blame is still being assigned and, depending upon your economic bent, Hostess is either an evil corporation or a victim of changing attitudes towards snack foods.  All I know is that when I went into my local Kwik-E-Mart on Saturday for my morning Suzy Q, the shelves were bare and the clerk informed me that the Hostess delivery man had told her he was never coming back.  Arghh!
Hostess has been losing money for years.  Although devotees of their goodies continued to make daily purchases of the treats, more and more people eschewed the sugary treats in favor of what some folks consider to be more healthy alternatives.  (What do those people know?  As any self respecting cyclist can tell you, a Twinkie is the perfect cycling food.)  As a result, margins were pinched and losses began to accrue.  The management at Hostess realized that if they were to stay in business and continue to deliver the goods to their shrinking base of loyal fans they would have to cut costs.  Cutting costs meant dealing with the labor union that represented the majority of the employees at the 33 factories around the country.  Frank Hurt, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, described the decision to shut down as "disappointing".  He said that workers had already agreed to "numerous concessions".  Obviously they did not agree to enough.
Hurt's response to the shut down was to declare that, "The crisis facing Hostess Brands is the result of nearly a decade of financial and operational mismanagement that resulted in two bankruptcies, mountains of debt, declining sales and lost market share.  Hostess attempted to resolve the mess by attacking the company's most valuable asset--its workers."  I am trying to be as polite as I can towards Mr. Hurt but what he said about the death of Hostess is a pile of manure.
Hostess is gone for one reason and one reason alone.  Hostess is gone because of the intransigence of the union.  The union workers were unwilling to take cuts to their pay and benefits thus ensuring that Hostess would remain unprofitable.  Rather than compromise with the company the union made the decision to strike.  The union decided cut off their nose to spite their face.  Rather than face certain losses the owners of Hostess made the Gaultian decision to simply quit.  Overnight the company disappeared.  Overnight those 18,500 union workers found themselves without a job.  Good for Hostess!  John Gault would be proud.  I am proud.  I hope every union worker who voted to strike never finds another job for the rest of his life.
The propaganda spewing from the foaming mouth of the union president is typical of union presidents.  Union folks are incapable of having a rational economic thought.  Everything Hurt said was based upon his envy and greed for the income of the company.  Blaming management for the demise of the company is ridiculous.  Management was trying to do everything it could to keep the company alive.  That is why management had run up large amounts of debt.  Sales were declining not due to managerial mistakes but due to demographic changes.  Management was trying to adjust to those changing demographics but the greedy, selfish and immoral unions would not hear of it.  The union did not care about the health of the company. It only cared about itself.  How can I make this harsh assertion?  Let me rewrite what Hurt said.
According to union president Hurt, the "most valuable assets" of the Hostess company were "its workers"!  What?  Does Hurt have a lick of economic sense in his puny brain?  Everyone who has ever spent one second running a business knows that the most valuable assets for any company are its customers.  The company does not exist to employ workers.  The company exists to serve the customer.  No union man seems capable of ever getting this simply economic truth into his thick skull.  Union presidents are all alike.  They believe the world revolves around the union and the union members.  Now hear this----entrepreneurs do not engage in business to employ union workers.  The employment of workers, in any business, is a direct result of first having served the public.  The public and the customer must reign supreme.  The unionized workers at Hostess ignored this truth and forced the hand of the owners.  Would they continue to suffer losses so workers could have jobs or would they close the shop because they could no longer operate at a profit, thus proving that they were serving their customers well?  They made the right decision, and I write that through tears of grief being shed for the fact that I will never again eat a Hostess cupcake or a Twinkie.  The courageous owners of Hostess pulled a John Gault and I commend them for it.

I am going out of town for the Thanksgiving holiday and will not be posting new material to this blog for the rest of the week.  I will, however, be posting to this blog for Wednesday, Thursday and Friday.  I went back through the 200+ posts I have put up over the past year and found quite a few that have been read by a grand total of zero people, according to my pageview counter program.  Several of those posts were quite good, in my opinion.  I have selected three of them, one each day, to re-post over the next three days.  I think you will find them worth reading.

Monday, November 19, 2012

Creating Morality By Majority Vote

A fascinating thing happened in Colorado last election day.  Those who made the decision to go to the polls ended up changing the nature of morality.  Or at least I think that is what they did.  I have been raised to believe that it is wrong to break the law.  I have been told that breaking the law is an immoral act that is properly punished by state sanctions.  I have been told that I am behaving immorally when I break the law.  All of my beliefs are now being challenged by those who went to the voting booth two weeks ago.  As it turns out, law is created by majority vote.  Since law is, by definition, moral, morality is now being created by majority vote as well.   Something that was criminal and immoral yesterday can be proper and moral today, if the majority declares it to be so.  Wow, democracy is a lot more powerful than I had imagined.
Voters in Colorado have just determined that growing, selling and using marijuana is no longer an immoral act.  The will of the majority has been declared and it is now the case that what was previously an immoral action and a crime punishable by incarceration and fines is now simply an innocuous behavior like washing my face or flossing my teeth.  I wonder what time the morality of using marijuana changed?  Do you think it was when the final vote was counted?  Or perhaps it happened the moment the polls opened.  Or maybe marijuana suddenly became moral the moment the actual vote guaranteeing the creation of the new morality was cast.  I wish somebody had recorded the moment on video.  It seems to me that, in the ebb and flow of human history, suddenly having something change from immoral to moral is a highly significant event.
There is a strange new twist about the new morality however.  If I am driving down the road smoking some marijuana and accidentally cross a geo-political boundary into a state that did not declare marijuana to be moral, I am suddenly behaving immorally.  If pulled over by the local authorities I could be arrested, fined and imprisoned for doing something that is moral when I do it on my side of the border.  How strange. My mama never told me that morality is contingent upon which side of a geo-political boundary I live on. We really do live in a strange new world.  It kind of makes me want to just stay home and mind my own business.
In many ways this strange new world is not very fair.  I was sitting in the back of a courtroom several years ago, waiting for my case to come up, when I observed something that now strikes me as being very unfair.  Actually, it struck me as being unfair at the time as well, but that is another story. A poor, hapless soul was on trial for possession of marijuana.  He had been caught with more than one ounce of marijuana for the third time.  Under the Colorado "three strikes and your are out" law he was facing a prison sentence in the neighborhood of 15-20 years.  This man was not a dealer of marijuana.  He was just a fellow who liked to have enough around the house to smoke it whenever he felt the urge to do so.  He had been entrapped, in my opinion, by the local police force.  The officer who testified against him knew that he had two prior convictions and had sat outside his house waiting for him to come out and go to work.  He pulled him over and asked if he could search the poor man's motorcycle.  The man who had been charged with possession was not a smart man.  In fact, he seemed quite dumb.  He allowed the cop to search his motorcycle and the cop quickly found a baggie of marijuana stashed in the motorcycle equivalent of a glove box.  He was arrested and hauled into court.
I do not know how the case against that man was resolved.  I suspect he was found guilty and sentenced to somewhere between 15 and 20 years in Canon City.  The cops had an airtight case against him and the law was very clear about how immoral he was.  Nothing less than several decades in prison was the proper sentence at the time for his grossly immoral behavior.  As I was pondering the fact that marijuana is no longer immoral my thoughts went to that poor man.  I wonder if he has been sodomized while in prison?  I wonder if he has been beaten by the guards?  I wonder if his wife has left him?  I wonder if his children hate him?  I wonder if he believes it is at least a little bit unfair that he is spending decades of his life in jail for doing something that is now known to be moral?
If I were a lawyer I would jump at the opportunity to represent all of the people who are presently in jail for possession of marijuana.  It seems to me that representing those folks could be the new growth industry in this state.  How can the state morally justify holding prisoners in its prisons for committing an act that is now considered to be moral?  It seems to me that every person ever convicted and sentenced to prison for marijuana possession should be immediately released from prison.  That is the only moral thing to do, isn't it?  Or maybe it is not.  Maybe the world we live in today has decreed that the exact same action can be moral one day and immoral the next.  The only thing that matters is how many people think it is right or wrong.
Weird things happen when we decide to create law by majority vote.  About forty years ago a majority of the justices on the Supreme Court of the Socialist Democracy of America decided that removing extraneous tissue from the womb of a woman was no longer killing a baby.  With the stroke of a pen and the casting of a vote, what had been a capital offense became an outpatient surgical procedure akin to liposuction or an appendectomy.  I am told by various pollsters that the majority of the folks living in the SDA think that the decision of the court was a good one.  I guess the principle should be clear to me by now.  If the majority of the people in a particular geo-political area think that something is moral or immoral, then that thing is moral or immoral.
Morality in the SDA no longer comes from any objective standard and certainly no longer has any permanence.  Something is moral when the majority says it is.  Something is immoral when the majority says it is.  That kind of scares me.  I find myself in the minority a lot of the time.  All of the things my mama taught me about moral behavior have to be thrown out the window now.  For me to figure out what I should do these days I have to read the public opinion polls.  The problem is I find myself on the other side of the fence with the majority most of the time.  I suspect it will not be too long before I am behaving immorally for believing the things that I find in the Bible about law and moral behavior.  That is certainly the direction that things are going in the SDA.  I hope I die before then.