San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Saturday, April 16, 2016

Corporate Profits Should Be Tax Free

The idea of corporate inversions is getting a lot of press recently.  King Obama made a big deal about them during a press conference this past week.  According to this website, "A corporate inversion is when a US company merges with a smaller foreign firm and adopts its address to avoid paying domestic taxes on foreign earnings. Many do this instead of upping sticks and redomiciling abroad, which is usually a long, costly and painful process—mergers are a handy short-cut. Inversions aren’t illegal, but politicians hate them since they love maximizing tax revenue. Hence the White House has been chipping away at inversions, in the name of 'economic patriotism.'"  Economic patriotism eh?  That sounds like Orwellilan doublespeak to me.  Since when is it a patriotic thing to pay taxes, especially when those taxes are fundamentally immoral?
The Socialist Democracy of Amerika is one of only three countries in the world that taxes its profit seeking corporations for profits earned from operations outside the country.  There is something fundamentally unfair about taxing the profits of a company that are earned in another country.  The country in which the profits are earned is taxing those profits and then the IRS piles on and taxes them again.  The practice of merging with a foreign firm to avoid having to pay taxes on profits earned in that foreign firm's country makes good economic sense.  It is in the best interest of the shareholders of the company, which is what the Board of Directors is charged to do, and it is not an unpatriotic act, whatever that might be, to pay less taxes than the law currently requires.  
Just how much potential revenue is lost to the IRS when firms invert?  According to that same article, "Contrary to what many politicians argue, corporate inversions aren’t economic bogeymen bleeding Uncle Sam dry. Companies don’t invert to avoid paying all taxes—they still pay US rates on profits booked domestically, just as they always did. Inverting simply lets them avoid US taxes on profits earned abroad....Though it is tough to estimate just how much inversions are costing the country, as there is no counterfactual, one group in 2014 put the number at about $20 billion over the next 10 years. That’s $2 billion a year—sounds like a lot! But consider:  in the current fiscal year through February 29, 2016, a period of four months, the US took in almost $600 billion in individual income taxes alone." So there you have it.  The brouhaha about corporate taxes is not really about revenue.  It is about politicking and career politicians, surprise, surprise, taking anti-corporate stances in order to appeal to the masses of ignorant and envy-filled voters.
cnbc.com published a story this weekend with a very different view of corporate inversions.  In case you do not know, cnbc.com is not a pro-business website.  Although the website ostensibly is dedicated to reporting business news, it is actually committed to an activist Keynesian and pro-statist economic position.  The good folks at cnbc.com never met a tax they didn't like and they certainly agree that it is the patriotic duty of every profit seeking corporation to do all it can to maximize its tax payments to the SDA Treasury.  According to this story, "Big multinational companies that shelter overseas profits from federal taxation cost the U.S. economy more than $100 billion a year by withholding more than $1 trillion collectively, according to a new study that may inflame the debate over tax fairness.  This week, anti-poverty group Oxfam America published a report that analyzed the financial reports of the 50 largest publicly traded U.S. companies. The organization found that behemoths such as Apple, General Electric, Microsoft and Google engage in tax havens that costs the U.S. $111 billion annually. Apple was cited by Oxfam as one of the biggest corporate offenders, holding some $181 billion in money offshore, followed by GE's $119 billion and Microsoft's $108 billion. The U.S's effective corporate tax rate is 35 percent, but the study found that companies used a variety of tax strategies to cut that rate to just 26.5 percent—with only 5 of the 50 companies paying the full 35 percent." Someone is not telling the truth.  Can you guess who it is?
According to one source corporate inversions "cost" the SDA Treasury $2 billion per year and according to another source they "cost" the SDA Treasury $100 billion per year.  That is quite a difference, don't you think?  The difference can be accounted for by the fact that the Oxfam American study presupposes that all profits earned in a foreign country must be repatriated to the SDA.   Oxfam simply took the annual reports of some companies and multiplied their total foreign profits by 35%.  Although that makes for an interesting, and inflammatory, story to tell, it is very far from economic reality.  Apple, the worst offender we are told, has profitable business operations all over the world.  Why should the fact that Apple is domiciled in the SDA mean that a foreign branch of that company, earning profits on goods produced in foreign lands and sold to the stinkin' foreigners who live there, should be legally required to pay taxes to the IRS on those foreign profits?  The arrogant and anti-business career politicians and bureaucrats who believe that fiction are betraying their real motivations.  They want as much money as they can get to expand their political empires and they will stop at nothing to raise revenues.  Taxing foreign profits made on sales of goods produced in foreign lands and sold to citizens living in foreign lands just because the parent company files an SDA corporate tax return is grossly unfair and immoral. Somebody needs to stand up to these lying thieves and put an end to their wretched behavior.
Another tactic commonly used by the "tax businesses now" crowd has to do with their definition of a subsidy.  Anyone with a lick of common sense understands that a subsidy is a direct payment from the treasury of a government to a company in exchange for a future vote.  Famous subsidies include the money given to ethanol producers, sugar producers and the state-worshiping folks who operate wind farms.   But if you Google "subsidy" you will be surprised to discover that the list of companies receiving them is dominated by oil companies.  How can that be?  Digging beneath the rhetoric of the socialists who prepare those lists you will find that they have redefined what a subsidy is.  According to them, an oil company receives a government subsidy when it reduces it corporate tax burden by claiming deductible expenses related to the discovery, extraction and processing of oil.  They wildly claim that tax deductions taken for drilling costs are a subsidy.  They argue that income reducing depletion allowances are a subsidy.  It is all utter nonsense but it works to inflame the infantile and envy-filled minds of the business hating socialists among us.  Applying the same standard used by the socialists who hate profit seeking businesses to your personal income tax return would mean you receive a government subsidy when you reduce your gross income by subtracting your personal exemptions, interest payment deductions and charitable contributions.  Yet the same people who would scream to high heaven about their right to deduct their mortgage interest line up against profit seeking corporations for deducting the interest paid on their business loans.  Go figure.
Last year corporate income taxes made up about 11% of all federal revenues.  In other words, corporate taxes are a small fish in a big pond.  This once again illustrates that all of the talk and publicity about corporate taxation is more about propaganda than it is fiscal policy.  Let me go out on a limb and make a bold statement.  Corporate taxes should not exist.  Corporate taxes are immoral.  Corporate taxes are theft.  Now let me explain why.
Corporate taxable income is an accounting fiction and nothing else.  In reality there is no such thing as a corporate profit.  A profit seeking corporation will have gross revenues from its operations and it will then deduct whatever the IRS permits it to deduct as business expenses.  Whatever is left over is deemed to be a taxable profit and taxed at a flat 35% rate.  This sounds reasonable for people who are accustomed to filing personal tax returns but a corporation is not a person.  The money that is left over, called "profits" by the IRS, can and will eventually be used for a multitude of activities and should never be taxed.  If the money is saved, with the intention of using it to purchase capital equipment a year later, it is taxed despite the fact it is going to be spent on business expansion.  Corporations keep money in cash because they plan on doing something with it later, not because their CEOs like going to the vault and dancing atop mounds of gold coins.  The only level at which taxation should take place is the personal level.  Business owners who take draws from their businesses should pay tax on those draws.  Employees who work for corporations should pay taxes on their salaries and wages.  Business profits create the source of wealth that pays the personal incomes of everyone in the world, including all government employees and career politicians, and they should never be taxed. 
In one of the most unfair parts of the SDA tax code, companies are taxed on the money they distribute to their shareholders in the forms of dividends.  That is right, dividends are not tax deductible to the company that pays them. The net impact is that dividends are taxed twice, first at the corporate level via the corporate profits tax and second at the individual level as a dividend distribution to an individual taxpayer.  Double taxation is always immoral and constitutes an act of theft.
As I posted to this blog earlier, businesses are patsies in this immoral country.  They are required to pay for everything that exists in this God-hating land.  They have to pay for their employees health insurance, their female employees abortions, their child-bearing employees time off when junior gets the sniffles and, now, for 11% of the federal budget. Will hatred for the profit seeking corporation ever end?  I doubt it.

Friday, April 15, 2016

Abortion: The Evangelical's Conundrum

Yesterday I posted to this blog about Robert Dear, the fellow who murdered three people and injured several others during a gun slinging attack upon an abortion mill in Colorado Springs.  In the course of preparing that post I quoted and interpreted a section from the newspaper which said, "The final bit of evidence offered up in the story in support of Dear's radical and bizarre belief system is that Dear dreamed that when he 'died and went to heaven, he would be met by all the aborted fetuses at the gates of heaven, and they would thank him for what he did because his actions saved the lives of other unborn fetuses.'  Dear believes in heaven and his beliefs about heaven are consistent with millions of evangelical Christians in the SDA."  Let's consider that statement for a while today.
The problem that all Evangelicals face with abortion is that their practice does not square with their theological beliefs.  Evangelicals quite properly oppose abortion.  They do what they can to convince women to not kill their babies.  Some Evangelicals spend enormous amounts of time and money to try and save the lives of unborn babies.  They are to be commended for that behavior.
Unfortunately for Evangelicals, their theological beliefs contradict their practice when it comes to abortion. Keith Drury, of the Christian Resource Institute, summarizes the theological condition of evangelical Christianity in the Socialist Democracy of Amerika with these words:  "For the last several hundred years, the church in America has been mostly Calvinist while Arminianism has been a minority position. All that has changed. The evangelical church today is basically Arminian in its approach. For now, Arminianism has triumphed and Calvinism is in retreat. I don't mean that the Calvinist denominations have officially changed their doctrine. Most Calvinistic theologians have stuck with their five-points.  But most of the ordinary people have drifted from traditional Calvinism toward the Arminian position. The average Christian today might claim to be Calvinist, but they function as a 'practical Arminian.' While many Calvinist pastors still ascribe to the Calvinist shibboleths, in their practical theology, they are functioning Arminians.  Arminianism has triumphed. This great theological battle was won without warfare, with few debates, with 'dueling magazine articles.' How ironic that in a day when theology no longer matters to most people, one of the great theological battles of all times seems to have been settled. Droves of Calvinists have become Arminians—at least in practice."
I would take exception with Keith on one point.  Arminianism is based upon the theology of a man named Arminius.  Arminius reacted against the Reformation doctrines elucidated by Calvin and Luther and posited a different system of theology that asserted the twin beliefs of original innocence and the reality of human free will.  Arminius was not a stupid man.  He realized that the Christian Church had condemned both of his beliefs as heresies hundreds of years earlier.  Arminius did not want to be harassed, and possibly executed, for holding heretical beliefs so he changed some of the components of his doctrines in order to avoid the executioners blade.
The classic, orthodox and historical Christian doctrine of original sin declares that all men are evil, with no good to be found within them whatsoever.  As such, all men naturally hate and oppose the God of the Bible.  It necessarily follows that no man, in his natural state, is willing or able to turn to God in repentance for his sins.  It follows from that that no man can be saved if God does not first act to save him.  Man has nothing to do with his salvation, can take no credit for it and must ultimately confess that if God had not acted on his behalf he would have died in his sins.  As you have probably surmised, Evangelicals generally despise this doctrine.
The assertion that human beings have free will had first been advanced by a British monk named Pelagius in the 400s.  Pelagius' teachings, known as Pelagianism, were opposed by Saint Augustine in Africa and Saint David in Britain.  Pelagius argued that men have free will and are not impacted by the fall of Adam to the point where they cannot exercise their free will and save themselves, with God's help.  Pelagius believed in the original innocence of infants.  Pelagianism was universally condemned by the historic Christian Church and it faded into obscurity until, almost a thousand years later, it reemerged at the time of the Reformation in Arminius.
Arminius did not adopt Pelagianism outright as doing so would have endangered his life.  Back in those days people could be killed for propounding heretical doctrines.  Instead, he proposed a new doctrine he called "prevenient grace" by which God, at the moment of birth, grants all infants a special dispensation of prevenient grace which allows them to overcome the impact of original sin and exercise some modicum of free will.  Evangelical Arminians who profess to follow the teachings of Arminius should hold to the doctrine of prevenient grace and not the teachings of Pelagius who believed in original innocence and human free will without the need for a special work of grace, but they don't.  Arminianism was also declared to be heretical shortly after its followers demanded a series of Church councils to address the issue.  However, unlike what the Roman Catholic Church had been able to do with Pelagianism, the Reformation Church was unable to suppress the heresy and it continued to exist down to this very time, eventually, as Mr. Drury points out, becoming the dominant and ostensibly orthodox Christian view in the Socialist Democracy of Amerika today. 
I have never met an Evangelical who believes in prevenient grace.  Indeed, when I mention the doctrine to Evangelicals I receive a blank stare in response.  Every Evangelical I have ever had a theological discussion with is a full blown Pelagian, adopting and preaching the doctrines of original innocence and the free will of men.  I conclude that, although they are not aware of the historical theology in support of my view, Evangelicals are really Pelagians and not Arminians. 
One more doctrinal point must be made.  If all infants are born into original innocence, why do they need to be saved from the sins they are not guilty of?  Arminians, if you can find one, and evangelical Pelagians answer this question the same way.  Just like they cooked up the extra-biblical doctrine of prevenient grace, so they now cook up another doctrine to try and wiggle off the hook of theological heresy.  According to Evangelicals, all infants grow up in original innocence.  If they die they go to heaven because they are initially sin-free and, if they do sin as they grow up, God does not hold them morally accountable for those sins.  However, at some undefined point in their lives, they reach the "age of accountability."  At the age of accountability all children suddenly become morally accountable for their sins and in need of a Savior.  How a creature born into original innocence can sin is never addressed.  Empirical evidence alone is enough to convince all Evangelicals that their children are sinners.  Where the doctrine of the age of accountability comes from is not clear.  It is certainly not found in the Bible but it does serve a vital and useful purpose in Evangelical theology, allowing them to believe that all infants that die in infancy go to heaven.
You should now be able to see the problem.  When an infant grows up to become a child and that child reaches a specific day in which his original innocence is lost and he becomes accountable for his sins, on that day he suffers spiritual death.  If the child were to die the day before his day of accountability he would go to heaven.  If he dies one second after he becomes accountable for his sins he will go to hell.  The day of accountability is a horrible day because that is the day all children lose their salvation.
The Evangelical's conundrum is now apparent.  All babies that are aborted are guaranteed heaven.  Saving a baby from the knife of the abortion provider only means that the child will likely grow up to lose his salvation, quite possibly forever, if he refuses to exercise his free will and accept the free gift of salvation offered to him in Jesus.  Since "narrow is the gate" to heaven and "few are those who find it," it necessarily follows that not killing babies before they are born brings about an enormous spiritual carnage as millions of previously saved babies grow up, become accountable and die in their sins.
Robert Dear expects to be welcomed to heaven by all of the babies that have been aborted.  By shutting down the abortion mill in Colorado Springs for a couple of weeks he prevented the deaths of who knows how many babies.  Those babies now stand a good chance of not being in heaven to greet him when he arrives.  In a sense, and according to evangelical doctrine, Dear will be responsible for the spiritual deaths of all the babies that might have been murdered in the abortion mill.
Evangelicals can quickly and efficiently eliminate their theological dilemma by adopting the hated doctrines of Calvinism which declare that all children are born into original sin and doomed to hell until they repent.  Along with that doctrine is the even more hated, if that is possible, doctrine of election. That, of course, will never happen.  Evangelicals would rather live with an enormous self contradiction than believe that innocent looking babies would go to hell when they die or, even worse, God would predestine some people to hell.  Evangelicals would rather potentially send babies to spiritual hell by saving their physical lives. How ironic.

Thursday, April 14, 2016

Why Would Anyone Attack An Abortion Mill?

Abortion mills are places where women go to obtain the services of a government licensed professional who will skillfully perform a surgical operation that sucks a living baby out of her body.  The baby never survives the operation but the woman always does.  Women go to abortion mills as a form of post hoc birth control.  After discovering that she is pregnant, usually after a night of drunken sexual debauchery, the woman will make an appointment with an abortion mill doctor to make sure that she does not have to live with the consequences of her behavior.  The majority of the citizens in the Socialist Democracy of Amerika say that a woman going to an abortion mill to have her baby killed is a medical procedure that is nothing more than a routine health care practice, like having a mole removed or liposuction.  Since morality, in the SDA, is determined by majority vote, it necessarily follows that abortion is a moral procedure that God thinks is just dandy.
The front page headline of my Denver Post this week featured a story about the fellow who killed several people at a Colorado Springs abortion mill several months ago.  You all probably remember what happened as Robert Dear drove up to the clinic and started shooting. By the time the shooting was done three people were dead and nine were injured.  Dear was taken into custody and is now awaiting trial on 179 different criminal counts. There is no disputing what happened.  According to the prosecutors, Dear drove up to a medical clinic where routine medical procedures were taking place and with vicious premeditation murdered three innocent people.  If those are the facts, and the majority of those involved in the case say they are, they Dear should be publicly executed right now.  There is no need for the taxpayers to have millions of dollars extracted from them to pay for legal proceedings to prove Dear guilty of 179 different criminal counts.  He killed at least one person and his act of killing, according to the majority, was murder.  He should die as a result of his murder.  The whole process should only take a couple of days and cost little more than the price of a single cartridge.  But that is not the way things will go down.  In the SDA trials serve a very important propaganda purpose and, in this case, that purpose must be served.
To maintain the fiction that abortion is an amoral medical procedure it is very important to cast anyone who disagrees with that religious doctrine as a lunatic.  The story in the newspaper was designed to accomplish just that goal.  The sub-headline to the story said, "The suspect, who wore a ballistic vest of silver coins, called the clinic for directions."   Well there you have it!  No rational person would ever believe that abortion is murder.  Dear had fashioned a bullet proof vest for himself out of a bunch of junk silver coins.  Clearly this man is a lunatic.  Clearly this man does not belong among the sane.  And as if the vest were not evidence enough, Dear had the audacity to telephone the clinic and ask for directions on how to get there!   What sort of disconnection madman would do something like that?  We all know that everyone else in the universe would consult with their PEDs to find directions to an abortion mill.  (For the uninitiated, a PED is personal electronic device.)
The news story salaciously informed me that hard working government employees had uncovered numerous facts about Dear that show the depths of his insanity.  In one case I was informed that, "Long before the attack...Dear harbored a respect for and fascination with violent acts against abortion providers."  The story also told me that after he was arrested Dear insanely declared that the attack made him happy because, "it ensured that no more abortions would be conducted at the clinic."  What more proof do we need that Dear is nothing like any of us and deserving of life in prison?  Did he not know that morally perfect abortions would be taking place in that clinic a scant couple of weeks later?  His efforts did nothing to stop abortions.  The final bit of evidence offered up in the story in support of Dear's radical and bizarre belief system is that Dear dreamed that when he "died and went to heaven, he would be met by all the aborted fetuses at the gates of heaven, and they would thank him for what he did because his actions saved the lives of other unborn fetuses." Dear believes in heaven and his beliefs about heaven are consistent with millions of evangelical Christians in the SDA.  Clearly this man is insane.
I finished reading the story scratching my head.  I was scratching my head not because I could not understand why Dear did what he did.  That was the obvious goal of the person who wrote the story but it did not work on me.  I was scratching my head because I could not believe the author of the story would believe I am that stupid.  Why is it hard to understand why anyone would attack an abortion mill?  That is the more important question here.  Let's see if I can answer it.
Imagine for a moment that you are living in Germany during WWII.  There is a prison camp outside your door, poorly guarded and insufficiently staffed, that is dedicated to the eradication of Jews.  Thousands of Jews have been brought into the camp and they have only escaped in the ashes that come out of the smokestack of the incinerator each night.  You know what is happening.  Jews are being murdered by the thousands, right under your nose.  You are not the only one who knows what is going on.  The entire community knows what is taking place.  If you were to rally your neighbors together you might be able to come up with some weapons and successfully attack the compound.  You could storm it and then burn it to the ground, thus ensuring that, at least in your neighborhood, no more Jews would be killed.  The Nazis would probably kill you for your actions but do you not have a moral duty to protect human life if it is in your power to do so?
The morality play described above has been used millions of times by government school teachers as they try to make school children feel bad about the Holocaust.  Why did those evil German citizens do nothing to stop it?  Why did they look the other way and pretend that nothing was happening.  Certainly good old Amerikan citizens would not have tolerated the mass killings.  Certainly Amerikans would have done whatever it took to stop them.  I believe it is fair to say that every government school teacher since I was in school has concluded that bystanders have a moral duty to at least try to protect the lives of those who are being murdered by evil men.  That brings us to the central issue.
Is abortion murder?  The majority of the citizens of the SDA say that it is not so we must conclude that it is not.  However, there is still a minority group in this land that believes, for biblical reasons, that abortion is murder.  What are we to do with them?  Can we attempt to understand why they might attack an abortion mill and believe that action to be a morally good thing to do?  Can we attempt to understand that they might think putting an abortion mill out of business, even temporarily, saves lives?  Can we attempt to understand that they believe God is pleased by their actions?  I can understand those beliefs, although I do not share them,why can't anyone else?
Let me answer my own question.  The majority of the citizens in this God-hating country pretend that they can't understand why Dear would attack an abortion mill first, and foremost, because they know he is right about abortion.  Everyone knows that abortion is murder.  The problem is not one of knowledge.  The problem is how to construct a universe in which an obvious truth becomes easy to deny.  To perpetuate the starry-eyed belief that abortion is a mere medical procedure anyone who disagrees must be discredited.  If we speak of Jews in Germany everyone sees it for what it is.  If we talk about protecting innocent people killed in drive-by shootings everyone sees it for what it is.  If we talk about innocent black citizens being gunned down by the cops everyone sees it for what it is.  If we talk about innocent babies being killed by their mothers and a government approved executioner everyone pretends that it is impossible to understand why that would bother anyone.
For the record, Dear was wrong.  He should not have killed those people at the abortion mill.  For the record, the people who get abortions are murderers.  For the record, doctors who perform abortions are murderers.  God has providentially decreed that the citizens of the SDA should execute tens of millions of their own offspring in order to fill up our iniquity and give Him just cause to judge us most severely on judgement day.  Count on that.  There will be no way to deny it.


Wednesday, April 13, 2016

"The Free Market Is A Stupid Market"

I was listening to Bill O'Reilly interview Donald Trump earlier this week.  The interview was filled with the usual blather about how Trump is going to make Amerika great again, whatever that means.  It was also filled with the usual attempts by Bill to get Trump to agree with him that he is a brilliant political analyst.  At one point in the interview Donald, ranting and raving about how China and Mexico are at war with us over trade, made the statement that "the free market is a stupid market."  That comment put my feeble mind on a path of thought that has resulted in today's post.  See what you think.
The essential presupposition behind Donald's belief that free markets harm his concept of what the Socialist Democracy of Amerika should be is that when foreign governments devalue their currencies they obtain an unfair advantage for their domestic industries, thus allowing their domestic industries to produce goods for a cheaper price than those same goods can be produced in the SDA.  When foreign countries devalue (inflate) their money supplies one of the necessary consequences of that action is that the dollar, provided it is not being inflated even more quickly, strengthens.  A strong dollar can buy more units of currency in the foreign land that is inflating and, thus, can purchase more goods from that country for less total dollars.  Donald sees this as an act of war and wants to punish countries like China for doing it.
Donald has been less than clear about how he will engage China in a trade war.  If he decides to go the route of devaluing (inflating) the dollar, he ends up shooting the SDA in the foot.  The worst possible response to one country inflating its currency is for the SDA to do the same thing.  Contrary to popular opinion, a strong dollar is a good thing.  Yes, it is true, a strong dollar makes foreign goods cheaper and, in some cases, it also makes selling domestic goods in foreign market more expensive, thus suppressing some of that type of trade.  But the situation is a whole lot more complicated than Donald is willing to admit.  Or perhaps he is not even aware of how things operate in the world of international trade.  Either way, Donald's desire to engage in a trade war can only bring about negative consequences.
If Donald does not go the route of inflating the dollar to "level the playing field" and make SDA goods "more competitive,"  maybe he is thinking about asking Congress to make laws that prohibit the citizens of the SDA from purchasing goods produced in foreign countries which are being subsidized due to the fact that those countries are engaging in inflationary practices.  Good luck with that one.  What omniscient bureau is he going to create, and which body of omniscient bureaucrats is he going to hire, to determine exactly who is subsidizing production and to what extent they are doing so?  It is an impossible task, even for the federal government of the SDA.
Most amazing to me in this entire discussion is the apparent belief that the hands of the SDA are clean in this matter.  Donald always speaks as if we are blindly and stupidly engaging in free trade with the citizens of other countries around the world while all of them are ripping us off by subsidizing their goods.  As Donald tells the story the SDA is a babe in the woods when it comes to foreign trade.  Donald believes the free market is stupid because only the SDA is really operating in a free market. As he sees it, the SDA is robbed daily by robber baron foreign nationals who sell us subsidized goods.  Nothing could be further from the truth.
The graphic below shows how much a select group of SDA companies have received in direct federal government subsidies in the fifteen year period ending 1-1-15.  This is only a partial list and includes only the most subsidized companies.  To show up on this list the company had to receive over a half billion dollars in taxpayer funds during that period.  I do not know what each of these companies produces but I do know one thing.  Receiving over a half billion dollars in federal subsidies most certainly creates an unfair playing field.  It also most certainly gives an unfair competitive advantage to each of the companies listed below.  If any of these companies ever sold a single item to a foreign country then the SDA is guilty of the exact same practice Donald is so disturbed by.


Parent Companies Receiving More Than $500M Since 2000

Parent Company Federal Grants and Allocated Tax Credits
Iberdrola $2,172,641,752
NextEra Energy $1,938,811,949
NRG Energy $1,730,060,410
Southern Company $1,475,553,962
Summit Power $1,441,936,555
SCS Energy $1,254,154,000
Tenaska $966,252,326
Duke Energy $898,436,173
General Electric $836,524,548
Exelon $734,674,010
EDP-Energias de Portugal $722,468,855
Leucadia National $651,647,087
SunEdison $649,564,635
General Atomics $614,658,667
Abengoa $605,128,646
Air Products & Chemicals $604,170,312
Ameren $594,809,786
E.ON $576,149,728
AES $566,920,950
Invenergy $531,915,559
General Motors $529,398,581
SOURCE: Good Jobs First

Federal subsidies are not the only way the taxpayers are fleeced in this envy filled country.  State and local subsidies are also rampant throughout the land.  I am not sure of the time frame for the graphic shown below so take it with a grain of salt.  I show it to you here only to make my point that when it comes to subsidizing domestic industries, the very thing Donald finds so reprehensible, the SDA is no neophyte.  Here is a list of the top 30 state and local subsidy beneficiaries:



Is it not fascinating to see that foreign companies, like Hyundai, also receive SDA subsidies?  What sense does it make to engage in a trade war when you are subsidizing the alleged enemy?  Most all of the companies on the list above have profits from foreign operations.  Is Donald willing to admit that those profits are immoral because of the domestic subsidies those companies have received?  Furthermore, is Donald willing to stop all domestic subsidies immediately?
Besides federal, state and local subsidies to businesses directly, there are also hundreds of federal subsidies to small businesses based upon what they produce.  This is especially true in the area of agricultural production.  The graphic below shows how many taxpayer dollars were used to subsidize various agricultural products in 2004:

2004 U.S. Crop Subsidies
Commodity Millions of US$ Share
Feed grains, mostly corn 2,841 35.4%
Upland cotton and ELS cotton 1,420 17.7%
Wheat 1,173 14.6%
Rice 1,130 14.1%
Soybeans and products 610 7.6%
Dairy 295 3.7%
Peanuts 259 3.2%
Sugar 61 0.8%
Minor oilseeds 29 0.4%
Tobacco 18 0.2%
Wool and mohair 12 0.1%
Vegetable oil products 11 0.1%
Honey 3 0.0%
Other crops 160 2.0%
Total 8,022 100%

It does not take a genius to realize that when the SDA government subsidizes agricultural products it does so at the expense of foreign producers.  Sugar subsidies are a case in point.  Because of more favorable growing conditions, economies of scale and the division of labor there are several countries in the world that can produce sugar less expensively than it is produced in the SDA, without subsidies in their own countries.  SDA career politicians, in order to buy votes, have long subsidized the price of sugar, thus effectively keeping less expensive foreign sugar out of the country.  The net impact of the domestic sugar subsidies is the fact that SDA citizens pay more for sugar and foreign nationals are unable to compete on a level playing field for sugar.  Will Donald stop all sugar subsidies in the name of fairness and a level playing field?
Tariffs are another form of subsidy.  A career politician enacts a tariff on an imported good for only one reason....to make it more expensive, thus protecting domestic producers of that good.  Does the SDA have many tariffs?  Go here for a list of SDA tariffs.  I really want you to do this.  Go to the link I just gave you and type "sugar" into the search box.  Click on search and watch what happens next.  The list of tariffs that comes up are just for items that involve sugar in them somewhere.  There are dozens of categories and hundreds of individual tariffs on sugar and products related to it.  Have fun with this. Type in any product at random and observe how hundreds of tariffs are associated with thousands of different products.  Anyone foolish or stupid enough to believe that the SDA operates as a free market needs to be made aware of this website.  Anyone crazy enough to deny that the SDA is the world's biggest violator of the principle of a level playing field is simply not looking at the facts. Donald wants to engage in a what he deems to be a defensive trade war while at the same time he is unwilling to admit that the SDA is already the world's most aggressive trade warrior.  I call that hypocrisy.  What do you call it?
Donald is wrong. The free market is not a stupid market.  The free market is the only way citizens from different countries can trade with one another in a fair and equitable fashion.  Sadly, and according to all usual expectations about the role of government in this immoral land, career politicians are incapable of keeping their hands out of the free market. There are too many votes to be purchased and privileges to be sold to allow markets to operate freely.  When Donald says that we need to engage in a trade war with countries all around the world he fails to notice that the SDA is already engaged in a significant trade war, and has been so for as long as I have been alive.  The solution to the problem of unfair international trade is not more rules, laws and tariffs.  The solution is freedom.  But I don't ever expect a career politician to understand that.

 

Tuesday, April 12, 2016

The Fiduciary Standard vs The Suitability Standard

Last week King Obama announced that he had conspired with the Department of Labor to create new, extra-congressional, federal laws for providers of investment advice to unquestionably obey.  This is typical of the executive branch of government in our land.  Rather than following constitutional limitations on which branch of government can create law, the executive branch arrogates to itself the right to create law by means of bureaucratic action.  Lest you think this is the result of some left-wing conspiracy to ram  progressive ideology down our collective throats please remember that King Nixon, a warfare statist Republican if there every was one, created the Environmental Protection Agency by Executive Order back in the 1960s.  Today the agency has over 15,000 full time employees and proposes to waste almost $12.5 billion taxpayer dollars this year on such noble efforts as fighting global warming and subsidizing wind farms.  How quaint.
If you are an investor, as I am, you will be impacted by the new law.  The new law declares that broker/dealers are now subject to the "fiduciary standard," a standard that registered investment advisors have been subject to but that brokers were exempt from.  Brokers had previously been subject to a "suitability standard" as they considered which investments to recommend to their clients.  Briefly, the distinction between the two standards is this:
  • Fiduciary Standard:  Applies to all registered investment advisors (RIAs).  RIAs are under the federal supervision of the Securities and Exchange Commission (SEC).  RIAs derive their income by charging fees for rendering investment advice to the general public. According to SEC regulations, the fiduciary standard requires them to only recommend the "best" investment vehicle for each specific client.  The "best" investment vehicle is defined as one that does not pay a commission to the RIA when he sells it.  If a RIA sells an investment and earns a commission it is automatically deemed to be a "conflict of interest" and he is in violation of the fiduciary standard.  Whether a particular investment is actually a good idea is not really the point of the fiduciary standard.  The primary reason the fiduciary standard exists is to create the fiction that the advice given by RIAs is objective because they do not earn commissions on the investments they recommend.
  • Suitability Standard:  Applies to all registered broker/dealers (BDs) of investment securities.  BDs are under the federal supervision of the Financial Industry Regulatory Authority (FINRA) which is a quasi-governmental organization with over ten thousand rules and regulations that apply to every BD doing business in this grossly over regulated country.  Under the terms of the suitability standard a broker does not have to recommend the "best" investment to his client but he is free to recommend any investment that is deemed suitable for him instead.  Thus, if a BD is faced with the option of recommending an investment that pays him a 4% commission versus another investment that would pay him a 3% commission he would satisfy the suitability standard by selling the higher paying investment, provided both are "suitable."  According to King Obama this looser standard for investment advice costs "working families," whatever they are, billions of dollars as the years go by.  
Although there is technically a difference between the two standards it really does not make any difference which standard is applied to the real world.  RIAs give horrible investment advice most all the time but they can claim to be compliant with the fiduciary standard because they do not earn any commissions from the terrible investment vehicles they recommended.  BDs also can give horrible advice and the fact that they make a commission by selling terrible investments is not a conflict of interest, it is just a fact.  Horrible advice is horrible advice, no matter how the purveyor of that advice is compensated for it.  All RIAs and all BDs know that if they are going to build a long term successful investment business they must serve their clients well.  The investment business is highly competitive and any RIA or BD who does a poor job will soon find himself waiting tables for a living.
I have been an investor since I graduated from college.  I use a BD for my investments and do so because I have carefully considered what is in my best financial interest over the long term.  I am happy to pay my broker a commission in exchange for a quality investment.  I do not see his recommendation as a conflict of interest simply because he earns a commission when I make a purchase.  The claims being made by King Obama are patently false and give neophyte investors bad information when it comes to selecting whether to go with an RIA or a BD.  In fact, Obama has things exactly backwards in my view.  People who go with RIAs spend much more money  on fees and expenses than those who go with a BD.  Allow me to explain why.
When I buy a mutual fund from my broker I pay an upfront commission somewhere between the maximum of 5.75% and the minimum of 1%.  Because I have been investing for many decades my commission is towards the lower end of the spectrum.  The broker makes a maximum of 5% and a minimum of 1% on all trades that I send his way.  If I were to buy the exact same mutual fund from a RIA I would end up purchasing  “R” class shares and pay no commission to the RIA whatsoever.  So far it looks like the RIA is the way to go, right?   Let’s continue.
All mutual funds have operating expenses.  Class A shares, which are all I have ever owned or ever will own, have operating expenses that include a trail commission, paid to my broker, known as the 12b-1 fee.  The 12b-1 fee on all my shares is .25%/year.  If a fund has operating expenses of 1.25%/year my overall total return will be reduced by that amount each year.  .25% of those expenses are the fee I pay to my broker for the privilege of his services on my accounts.  If I buy R class shares in the exact same fund I will pay annual expenses of 1.00%/year.  Once again it looks like the RIA route is the way to go, doesn’t it?  Not quite.  There is one more thing you need to know.
Let me let you in on a shocking revelation.....RIAs do not work for free.  From what you have seen so far you there is no way for them to derive income for their services, either from upfront commissions or 12b-1 trail commissions.  Where, exactly, does their income come from?  All RIAs derive their income in the exact same way.  They place your portfolio into an in-house account that they then enter into a contract with you to “manage” for the tidy little sum of 1%/year.  The net impact is that once you add in the fee for service charged by the RIA (some charge even more than 1%/year and a very small handful charge less than that amount) you will be paying 2%/year for the advice on how to manage your account compared to the 1.25% I pay to my broker.  That extra .75% comes right off the top of your total returns, thus giving you significantly lower total returns over the lifetime of your portfolio when you use the RIA model.   You can tell yourself you are saving all sorts of money in commissions and that the advice you are receiving is objective but that will be cold comfort when you realize, years later, that your portfolio value is much lower than it could have been if you had not paid the 1%/year fee to your RIA.
My broker has told me that he could convert his firm to an RIA shop, thus escaping the burdens of the regulatory scrutiny of FINRA, and sell me commission free shares only.  He would also charge me 1%/year on the value of my accounts in order to earn his living.  The net impact of changing his business model would be an immediate 4X increase in his annual income.  Now as much as I like my broker and appreciate his advice over the years, I would really not like to see his income quadruple, knowing that his extra income is coming out of my portfolio value.  It galls me to no end that RIAs claim to have the best interests of their clients at heart when they make 4X what my broker makes to recommend the same funds.  It galls me even more that Obama has sided with the RIAs and accused honest brokers of dealing with their clients in an underhanded fashion simply because they earn commissions. 
There is one further downside associated with RIA accounts in which you pay the advisor 1%/year of the value of your account for the privilege of following his market timing and investment selection advice.  Being paid 1%/year gives RIAs a strong incentive to do something with your funds.  All RIA accounts that I have seen over the years are guilty of attempting to time the market, switching to and fro between various funds and sectors and inevitably deriving a lower rate of total return for the client than a simple buy and hold approach would have derived.  So not only are you paying 1% for the market timing advice of your RIA, you are paying for it again as he executes his recommendations and harms your overall total returns.  
The federal government needs to get out of the regulatory business.  The federal government needs to stop regulating investment advisors, whether they be RIAs or BDs.  Let the free market determine which advisors are good and which are bad.  Let the free market determine how much they should be paid for their advice.  Freedom is always good for the consumer, even consumers of investment products.  Sadly, like every other part of life in the Socialist Democracy of Amerika today, there is no freedom to be found in the realm of investment advice.

Monday, April 11, 2016

Evangelical Pastors Are Conflicted

I have had the pleasure, if I can call a painful experience a pleasure, of attending several evangelical churches in the past year.  When I am on the road and not able to attend my own church on Sunday I like to drop into small to mid size evangelical churches just to get a feel for what is going on in them.  I usually come away angry at the heresy and apostasy I witness there, but it is still something I believe needs to be done. 
Evangelicals are generally best described as "law and order" warfare statists.  They preach the importance of following the law of the land and they support our troops.  Most of them are Republicans and they love to integrate their statism into the sermons and services they conduct.  I have written in this blog before about how evangelicals love to honor the police and the military.  Entire services are dedicated to the worship of those who enforce immoral laws upon us and who expand the Amerikan empire around the world.  They are all classified as heroes.  How sad it all is.
One part of most services that usually inflames me with anger is the congregational or pastoral prayer.  This prayer is delivered by the pastor on behalf of the congregation and usually comes somewhere in the middle of the service.  Ironically, in many churches the pastoral prayer is concluded by having the entire congregation recite, from memory, the "Lord's prayer."  I say that is ironic because Jesus rebuked the Pharisees for a form of prayer that is practiced in many churches in this land every Sunday.  He said, "when you are praying, do not use meaningless repetition, as the Gentiles do, for they suppose that they will be heard for their many words."  Reciting the Lord's prayer verbatim week after week seems to me to rise to the level of meaningless repetition.  But who am I to judge?
I took the time to write down two direct quotes from two different prayers I have heard in the past year.  I will use them as what I believe to be two perfect examples of what passes for typical congregational prayers uttered in evangelical churches in our land.  If you attend an evangelical church the two quotes will no doubt sound very familiar.  You have probably heard these prayers spoken hundreds of times over your lifetime. Evangelicals are infamous for their uniformity of practice.  They are experts at saying the same thing, provided it is consistent with their state-loving theology. 
The first pastor prayed, "Grant wisdom to our leaders, that they might rule in justice and fairness."  Sound familiar?  You have no doubt heard the prayer for wisdom for our leaders hundreds of times.  The Bible commands us to publicly pray for those who are in civil authority over us.  This prayer is the typical response to that command.  It is also an unbiblical response to that command.  Let's consider it for a moment.
I begin with the accurate presupposition that most, if not all, of the career politicians who rule over us are God-hating pagans.  The professions of faith that come from each of their mouths, as they seek the votes of various factions of Christians, are slathered in hypocrisy and never to be taken as truthful.  Jesus told His followers that true believers will be known by the fruit that is evident in their lives. Looking at the despicable actions of career politicians clearly betrays the fact that they share a universal hatred for the God of the Bible.  Even the outspoken Ted Cruz, who never passes up an opportunity to invoke the blessing of God upon the state that just gave him a bunch of electoral votes, is a weekly practitioner of theft in the eyes of God.  Go here for the story. 
The prayer for wisdom is a strange one.  The book of Proverbs says that the "fear of the Lord is the beginning of wisdom."  The book of Romans declares that no men in their natural state ever evidence any fear for the Lord. The logically necessary conclusion that must be made is that no career politician can ever display any wisdom, for which the pastor is praying, without first repenting and becoming a Christian.  The pastor would be better off praying that God would have mercy upon the career politicians who rule over us and convert them.  I rarely hear that prayer.  I wonder why?  In its place I heard meaningless and repetitive prayers for God to "grant wisdom" to men who clearly hate Him.  That makes no sense at all.
The prayer for wisdom is made even more bizarre when the pastor also asks God that our rulers might "rule in justice and fairness."  Just what does that mean?  The Law of God, which every career politician in the land swears an oath to ignore, is the only just and fair standard by which men can or should be judged.  Asking God to help our rulers to rule in justice and fairness then must mean that the pastor is asking God to convert them, thus allowing them to break their vows to uphold the laws of secular humanism and embrace the Law of God as the law of the land.  But we all know that is not true.  For the most part Evangelicals despise the Law of God as found in the Old Testament.  They proudly proclaim that we have been freed from that law.  They then proudly proclaim that we are to joyfully submit to the immoral laws created by career politicians in this immoral country.  Apparently the pastor rejects the Law of God as the only just and fair standard to be found in this life and embraces the immoral and contradictory laws of man as a fair and just standard by which men should live and be judged.  How a pastor who allegedly believes in the doctrinal principle of sola scruptura can utter the words of this prayer is not clear.
The second prayer had this sentence embedded within it, "...for military, police, firefighters and all who protect us; keep them safe."  The hidden presupposition behind this prayer is the belief that the military and police actually protect us.  It is also presupposed that what the military and the police are doing is right, good, proper and generally consistent with the revealed will of God in the Bible.  It is also presupposed that what the military and the police are doing should bring us to our knees to pray for their safety, so essential are their actions for our well being.  All of those presuppositions are in error.
A great number, probably the majority, of the laws enforced upon me, a Christian,  every day as a citizen of the Socialist Democracy of Amerika are contrary to the revealed will of God in the Bible.  Those who enforce those laws upon me, far from being God's servants, are serving the God-hating whims of the Beast of civil government.  When the Sheriff arrived at the home of a man in Park County a month or so ago with an order to evict him from his home because he had not paid his tribute to the county, he began shooting at them in defense of his property.  He died in a hail of bullets fired by those dedicated public servants doing the expressed will of God found in the Bible, didn't he?  Should we pray for those heroes who gunned down a man while enforcing an immoral law that stole his property from him because he would not pay tribute to the state?  I believe we should, but not in the way the pastor was praying.  I believe we should pray imprecatory prayers against them and ask God to judge them for the murder they committed.
Praying for the military forces of the SDA is standard practice in evangelical churches.  The prayers are always the same.  Supplications to keep them safe and bring them home uninjured are common.  The questions related to what they are actually doing as they fight wars of aggression in service to the expanding Amerikan empire are never considered.  The fact that they are acting as murderers of foreign nationals is never confessed.  Yes, we should pray for the members of the military services.  We should pray that they will repent of their murderous rampages, go AWOL and tell the truth about what they are doing around the world.  No pastor will ever pray that prayer.  Why?  Because too many churches have too many members with adult children in service of the military.  It is not a good idea, if a pastor wishes to maintain his salary and pay the church mortgage, to anger the parents of adult children in military service.
So I conclude that evangelical pastors are seriously conflicted.  If they would allow themselves to think about it they would have to admit that their prayers are disingenuous at best.  But other factors come into play making it so that theological consistency and personal integrity must be abandoned.  Ultimately there is scarcely one pastor in a hundred who can maintain a rigorous logical and theological consistency in the face of the potential wrath of his government worshiping congregation.  How sad.