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Random Absurdities, Pt. 2.

 

sisyphus

By Mike Cronin

It’s OK to kill our (human) enemies, but we dare not name them.  On the other hand, we have no compunction about conducting war against all sorts of things that aren’t enemies: Terrorism is a tactic used by our aforementioned unnamed enemy, but terrorism itself is not an enemy. Drugs are a commodity sold by enemies taking advantage of the risk/reward conditions our drug laws create, but drugs themselves are not an enemy. Poverty is a condition often perpetuated by people who refuse to accept that they are responsible for the choices they make.  Poverty is not an enemy, but the “War on Poverty” often treats the most productive among us as foes.

The “Occupy Wall Street” types who made a stink a few years ago railing against capitalism were often seen wearing name-brand clothing, drinking coffee from famous-brand cafes, and calling and texting each other on smart phones.  How can one accept an anti-capitalist argument from spokes-dudes wading up to their necks in the products, goods, and services created at the hands of some of our most effective capitalists?

Scientifically speaking, anything with a carbon molecule is organic. Virtually all of the food items we eat, with the exception of water, salt, and trace minerals, are organic in the most factual sense possible: they contain carbon atoms and molecules in the structures of carbohydrates and proteins.   The idea that a vegetable or box of cookies or a can of soda might not be legally “organic” when they are factually “organic” is a semantic absurdity fostered by the pipsqueaks of panic.

Ditto for “genetically modified organisms” (GMOs).  Virtually every domesticated food plant and animal produced and consumed today is a result of genetic modification that has been going on since the dawn of agriculture.  Here again, the pipsqueaks are pandering to fear.  It makes no difference to your body if a tomato or grape or a chicken was modified over many generations in the field or one generation in a test tube.  You are going to eat the stuff, draw energy from it, and eliminate it, not blend it into your genetic code. Eating “Franken-food” will not cause you to turn into a shambling mutant!

I am reliably informed that airline pilots for most of the big domestic airlines (American, United, Delta) are paid by the hour, from the time the jet is pushed back from the gate at the departure airport until the door is opened at the arrival airport.  Is it not absurd to incentivize your highest-paid hourly employees to NOT be efficient in an industry with such low profit margins that attention to efficiency is essential for financial success?

The concept of “white privilege” has been instigated as a way to induce guilt in white people for (supposedly) causing, or at least not having to suffer, the woes (real or imagined) of every other demographic. It is a racist concept, and it absurd.  It is racist because it attributes advantage to whites solely on the basis of their skin color.  It ignores the fact that there are many non-white people who attain as many, or more, rewards and advantages in their lives than most whites.  It is absurd when applied to Americans because all of us in the US enjoy far more “privilege” (in the form of better living conditions, more freedom, and more opportunities for some, and sadly, also in the form of government handouts for others) than most people in most countries around the world.  The constant stream of immigrants pouring into this country (legally and illegally) aren’t coming here seeking to be oppressed by the man!

We are supposed to take it for granted that income inequality is a bad thing and accept all kinds of wealth redistribution schemes to help resolve it.  There is never any allowance for the possibility that income inequality might be a direct result of ingenuity inequality or effort inequality. That would mean that people are responsible for their own achievements (or lack thereof).  We can’t have that – it would be absurd!

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Taxation without Confiscation

wealth-confiscation

By Mike Cronin

With income taxes dues in a little over a month and presidential hopefuls in the news every day, now might be a good time to consider some changes to our tax code.  I’ve opined in previous posts that it is not greedy to want to keep what you earn, but it is the essence of greed to want what others have earned.  Our current tax and fiscal policy system is fueled by the greed of politicians who promise things they have no right to give, and by the people who want what those politicians are promising. The primary weapon used for the plunder is income tax withholding, i.e. the taking of your money before you ever see it. This is called confiscatory taxation – your taxes are confiscated from you.

There is a movement afoot to take the government’s power to relieve you of your hard-earned money and put it back in to your hands.  The general idea is to replace the confiscatory income tax with a consumption-based tax – which means taxing you on what you buy and consume instead of on what you make. The most notable proposal for a consumption-based tax system is called the Fair Tax.

The philosophical difference between the confiscatory system we have now and a consumption based system is stark.

The confiscatory system requires the government take money from you by force (i.e. the threat of arrest and punishment for not filing/paying).  It encourages politicians to use taxes to fund elements of the government that have no Constitutional right to exist, and worse, to use taxes to change behavior. It places a huge compliance burden on you and businesses. Lastly, and perhaps most egregiously, it fuels envy politics by allowing demagogues to cry for the rich to pay an ever-increasing portion of the tax bill, while allowing nearly half the population to consume an enormous amount of government benefits and entitlements w/o consequence or motivation to change. Worst of all, the harder you work and the more you produce, the more you are taxed. Americans have accepted this for a while, but we are beginning to wake up and see that punishing productivity is insane – if you want more productivity, jobs, and economic growth.  On the other hand, if you want power over millions, a good way to obtain it is to divide and conquer by pitting the masses with low incomes against the few with extraordinary incomes.

A consumption-based taxation system more closely aligns government revenue collection with the morality most of us follow every day.   First, it allows the taxpayer much more control over how much tax he or she will pay, and it puts the government in the role of beneficiary instead of bully.  Second, it more logically aligns with how we pay for almost everything else in life. (E.g. if we don’t buy much jewelry, then we aren’t forced to pay for jewelry).  A person (or business) with large consumption habits is presumably using more government than someone with low consumption habits. Under a consumption-based taxation system, big consumers will pay more for government than the small consumer, and income will no longer be a factor.  In short, people will pay their taxes in direct proportion to how much they consume instead of how much they make.   This will return some of the power Washington stole from us and put back in our hands. Oh, and it will mean no more 1040s and no more IRS!

Sounds eminently fair to me.

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Quantitative Easing or Quantitative Fleecing?

By Mike Cronin

Q: You’ve heard the talking heads talk about quantitative easing, so what the heck is it?

A: Put in the most basic terms, quantitative easing, or QE, is weasel-ese for the Federal Reserve (aka “the Fed”) attempting to stimulate consumption by making up money out of nothing and injecting it into the economy.

Q: What’s wrong with that?

A: Multiple things:

  1. The Constitution gives the government the power to print and coin money. That is one of the functions of the Dept of the Treasury.  The Constitutionality of the government making monetary policy (i.e. manipulating interest rates or “stimulating” the economy) has been debated since the time of Jefferson and Hamilton.  The powers enumerated to the government in the Constitution manifestly do not include allowing it to charter a central bank (which is what the Federal Reserve is), but Congress created one anyway with the passage of the Tenth Amendment in 1913.
  2. The “money” that the Federal Reserve puts into the economy is created out of thin air. The process is convoluted, but the net effect is that the Fed accomplishes QE by changing the balance in the accounts it is “depositing” the money into, i.e. creating electronic “money” out of thin air. The theory is that by giving banks more money (quantitative) to lend at low rates (easing), more businesses will borrow that money and put it to work, which will in turn generate more commerce.  In other words, the economy will have been “stimulated.”  The problem is, after the financial crises in 2007-2009, banks are only lending money to those with top-tier credit ratings.  A great deal of the money that is meant to stimulate commerce has instead stimulated stock trading.  That’s why we can have record stock prices even as the rest of the economy (especially on the employment side) is unspectacular.
  3. Since the value of a thing, including money, is directly related to its relative scarcity, adding hundreds of billions, or even trillions of dollars into electronic circulation reduces, or debases, the value of our already existing money. If the money isn’t worth as much as it used to be, but the value of the things we buy hasn’t changed, the price will have to go up. That’s price inflation.  If your income rises with prices, inflation may not be alarming, but how often do you get a raise just because your money loses value?

Q: If I’m not going to make more money at work, making money in the stock market isn’t so bad, is it?

A: In and of itself, making money on stocks is not bad.  The problem is that there shouldn’t be any QE and there shouldn’t be a central bank!

In reality, instead of stimulating the economy, QE amounts to a second, insidious way to tax you.  The first way is income and capital gains taxes. They are painful, but at least they are overt and articulated in law.  The second is in currency debasement (the deliberate erosion of the buying power of the dollar to increase the amount of dollars moving in the system) by the unelected, unaccountable, and opaque Federal Reserve.  It is not nearly as overt, but it takes value from you just the same.

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Stuff I Want My Kids to Know #1: There ain’t no Such Thing as a Free Lunch

FreeLunch

By Mike Cronin

Have you ever heard the phrase “there ain’t no such thing as a free lunch,” often abbreviated TANSTAAFL?  Well, it doesn’t just refer to meals.  It means that whenever something is advertised as “free,” there’s always a catch or a string attached. “Buy one, get one free” doesn’t really mean you get one free, it means you get two for the price of one, or two for half-price each. It might be a good deal, but you are not getting anything free.

It’s the same deal when you are offered a “free” gift or a “free” upgrade when you purchase goods or services.  You are paying for the thing that’s free in the price of the thing that isn’t.

Sometimes you really do get a good or a service for no money, but it still isn’t really free. “Free” software often comes with adware or malware that will cost you time, money, or in some other way cause you stress. Even if it didn’t cost you money, you are still paying for it in other ways.

Many times, the catch or the string is buried in the “fine print.”  All of the big, bold, splashy fonts and bright colors on an ad are just a lure. The legal facts are in the tiny text buried in the middle of the insert or at the bottom of the ad. The fine print section is like the ingredients portion of a food label – it tells you what’s really in there.

The bottom line is that you can’t get something for nothing except in very rare circumstances. One way or another you have paid, or will pay, for what you receive.  That is not necessarily a bad thing.  For example, when you receive a birthday or Christmas present, in a sense, you have already “paid” for it by being a friend worthy of receiving a gift. The trick is to remember TANSTAAFL whenever you are excited about a seemingly good deal.  If it seems to good to be true, it probably is, because you will pay for it one way or another!

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The Minimum Wage Makes Minimum Sense

Cartoon from: http://tunnelwall.blogspot.com/2014/03/political-populism-not-economics-behind.html
Cartoon from: http://tunnelwall.blogspot.com/2014/03/political-populism-not-economics-behind.html

 

By Mike Cronin

Minimum wage laws, which are meant to reduce poverty, actually cause dysfunction and increase poverty and criminality. The political architects of such laws know this, or remain purposely blind to it, so that they can make promises, get votes, and gain or remain in office.

So how does a mandated minimum wage increase poverty?  While the person who has a minimum-wage job may or may not be defined as poor, it is the person who can’t get a job that suffers the worst effects of minimum wage laws. Since there is no corresponding minimum revenue laws, minimum wage laws dis-incentivize job creation.  Business owners, especially small business owners, have to make a certain amount of money in order to break even, that is, just to pay for their business loans, employees, suppliers, landlords, taxes, and whatnot. Yet there is no law forcing anyone to buy the offerings of a given business.  If a business doesn’t earn enough revenue, they can’t afford to pay even the minimum wage to their employees, so they either have to hire less people than they otherwise might have, they have let people go, or they have to go out of business. In any of those cases, jobs were either lost or not created, which makes it harder for unskilled people to find work, which leads to increased unemployment and poverty.

For example:  If you are old enough, you might remember the days when movie theaters had ushers.  It’s an extremely low-skill job; you could teach it to a high-school kid in an hour or two – and pay him or her correspondingly low wages. There was a match between worker skill level, worker responsibility level, and worker pay.  These days, no one is going to pay a kid $8.00 or $10.00 an hour just to usher, so the usher’s duties got blended into other jobs (assistant manager?) and the job all but disappeared.

Similar entry-level jobs are hard to find anywhere, which makes it harder for high school kids to find work and establish an employment track record.  Instead, such kids either remain with their parents longer, causing the parents to have to support a child longer than they had planned, reducing the parents’ own wealth; or the kid lives on the streets, greatly increasing the likelihood he or she will resort to criminal conduct to survive.

There is a another way some employers skirt the minimum wage laws and pay cheap rates for low-skill labor: They pay illegal immigrants illegally low wages in cash under the table.  This incentivizes illegal immigration, which, in effect, imports more poverty. The illegal immigration “infrastructure” is an underworld, and it attracts other crime: tax evasion, prostitution and other forms of human trafficking, narcotics, gunrunning, gambling (esp. on illegal dog and cock fights), ID forgery, and so on.

To be sure, the minimum wage laws aren’t solely responsible for poverty, illegal immigration, and vice.  Rather, they are a large and obvious contributor to those maladies, even as they fail to produce the promised positive effect.  But they sure sound good.

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Weasel Words: Poor and Poverty

By Mike Cronin

When you are told that you need to help the poor in this country, what image comes to mind?  Are you thinking about the homeless lady pushing around a shopping cart full of her meager possessions? Do you envision whole communities in America that live in shanty towns and dig through landfills to scrounge for their daily sustenance?  Well, that kind of abject, absolute poverty may exist somewhere in America, but it’s exceedingly rare. When politicians, clerics, and pundits demand your sacrifices so they can help the poor, they are speaking “Weaselese.”

Most of the poor in this country may suffer from relative poverty, but not absolute poverty. According to 2010 Census Bureau and other government statistics cited in a Heritage Foundation backgrounder:

  • 80 percent of poor households have air conditioning. In 1970, only 36 percent of the entire U.S. population enjoyed air conditioning.
  • 92 percent of poor households have a microwave.
  • Nearly three-fourths have a car or truck, and 31 percent have two or more cars or trucks.
  • Nearly two-thirds have cable or satellite TV.
  • Two-thirds have at least one DVD player, and 70 percent have a VCR.
  • Half have a personal computer, and one in seven have two or more computers.
  • More than half of poor families with children have a video game system, such as an Xbox or PlayStation.
  • 43 percent have Internet access.
  • One-third have a wide-screen plasma or LCD TV.
  • One-fourth have a digital video recorder system, such as a TiVo.
  • 96 percent of poor parents stated that their children were never hungry at any time during the year because they could not afford food.
  • 83 percent of poor families reported having enough food to eat.
  • 82 percent of poor adults reported never being hungry at any time in the prior year due to lack of money for food.
  • Over the course of a year, 4 percent of poor persons become temporarily homeless.
  • Only 9.5 percent of the poor live in mobile homes or trailers, 49.5 percent live in separate single-family houses or townhouses, and 40 percent live in apartments.
  • 42 percent of poor households actually own their own homes.
  • Only 6 percent of poor households are overcrowded. More than two-thirds have more than two rooms per person.
  • The average poor American has more living space than the typical non-poor person in Sweden, France, or the United Kingdom. In fact, at 1,400 square feet, the dwelling of the average poor American is still substantially larger than the average dwelling in every European nation except Luxembourg.
  • The vast majority of the homes or apartments of the poor are in good repair.

The next time you feel shamed into to voting for a politician that demands a sacrifice from you in order to help “the poor” through his government programs, understand that your hard-earned money, and your neighbors’, isn’t helping “the poor” stave off starvation, it’s enabling them to buy cars, air conditioning, flat screen TVs, TiVos, and Xbox-es.

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Four Branches of Dysfunction in US Government, Part V

Dysfunction-Jct

By Mike Cronin

To recap the first three major strains of dysfunction in our government: Keeping the institution of slavery while proclaiming all men are created equal introduced the strain of accommodating hypocrisy in our national psyche right from the birth of the nation. Trying to maintain that contradiction led to the Civil War, which ended the chattel slavery of blacks…but the income tax, given its first trial run during the Civil War and made permanent in 1913, made all of us tax slaves to the government and thieves to our fellows.

The fourth major branch of dysfunction is currency debasement. Currency debasement is the act of reducing the value of money by increasing its supply. This can only be done with fiat currency, and usually by central, or national, banks, such as the US Federal Reserve.

So what is fiat currency, and why is currency debasement a dysfunction?

Fiat currency is money that has nothing backing it. US dollars used to be backed by gold. For a long time in this country, you could exchange a given amount of dollars for a given amount of gold, and the prices of goods and service remained relatively the same. A man from 1800 would not have been shocked by the prices in 1900. This is what the original meaning of the term “gold standard.” Our money was as good as gold.  Then, in 1913, the Federal Reserve was established, and it began manipulating the economy. In 1973, President Nixon dissolved the gold standard altogether, our money became mere paper, and the only thing backing it became faith.

toilet-paper-money1-293x150

Once a currency becomes fiat, it is relatively easy for the central bank to manipulate the value of the money. Central banks ostensibly manipulate the currency to control inflation by “stimulating” the economy or changing interest rates, but the reality is that injecting additional money into the economy is the source of inflation. There are two aspects to inflation. When the newsies report inflation, they are usually talking about price inflation. When the Fed injects money into the economy (i.e. by stimulus, AKA quantitative easing), it is inflating the money supply. That is monetary inflation. Monetary inflation dilutes the value of the money already in existence, so merchants have to raise prices in order to receive the same value for their products. Monetary inflation is meant to control price inflation by “stimulating” consumption, but it actually causes price inflation because it makes our money worth less than it was before!

This leads to all kinds of trouble. First, just like income taxation, it concentrates power that should belong to the people into a few select hands, namely the operators of the central bank. (In the case of the US, it’s the board of the Federal Reserve). Second, when a powerful group like the Fed lowers the value of your money, it is, just like income taxation, using the force of government to take value from you. Third, if the central bank goes too far with its machinations, it will create hyperinflation. This is when the money loses value so fast that prices may rise weekly, daily, or even hourly.  The money literally becomes more valuable as fuel for the fireplace or as wallpaper than as currency. If it is still accepted, it will take a literal wheelbarrow full of cash to buy a loaf of bread.  Can this happen in the US? Consider:

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Four Branches of Dysfunction in US Government, Part IV

tax-slavery_cropped

By Mike Cronin

In Part III, I argued that income taxation is theft, and that it turns the rest of us into thieves and slaves. I also argued for a national sales tax, such as the Fair Tax. Why would I make such an argument? Isn’t one form of taxation just like another?  Nope.

Income taxation is rotten for at least two reasons: 1. It is taken from you, before you ever see it, through the coercive power of government. That is theft, plain and simple.  2. Then, as if that’s not bad enough, income taxation penalizes productivity – the more you make, the more you pay; and it’s not even a simple percentage; it’s “progressive.” That means that not only do have to pay more because you made more, you have to pay a progressively larger percentage of your income as your income increases.  It is insane to want and need people to be productive on the one hand, while progressively penalizing them for that very productivity on the other.

To make a simple analogy: if you try to teach and encourage a puppy to go outside to do his business, then smack him every time he does, and smack him harder and more often as he gets more insistent to go out, how long do you think it will be before he quits trying and just goes on the floor? Especially if you then give him a treat when he does?  Everyone may pretend to be happy in such a house, but the price of that feigned happiness is to either have to continuously clean up dog waste, or to live in a progressively more filthy and stinking residence.

A national sales tax, like the Fair Tax, is based on consumption, not income. That means you pay in based only what you buy and use. If you consume more goods and services and government, you pay more; if you consume less goods and services and government, you pay less. You are in control of how much you pay, not the government. There is no force, no penalty for productivity, no byzantine regulations, no loopholes, no escape for illicit profits, and no more IRS.

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Four Branches of Dysfunction in US Government, Part III

Taxation-791x1024

By Mike Cronin

Another dysfunction that has corrupted the fabric of our freedom in countless ways is the confiscatory (i.e. to take) income tax system.  It is a dysfunction because it corrupts all of us.

Income taxation allows lawmakers and appointed bureaucrats to use the coercive power of government to take our property (i.e. the fruits of our labor) from us without our consent. That power then further corrupts our elected leaders by enabling them to “re-distribute” the collected revenue by spending it on government programs that favor their own constituencies. It has corrupted the citizenry by enabling us to obtain “benefits” that exceed the limits imposed on our government by its founding charter. Such “benefits” ultimately come to us from our neighbors’ pockets, which is property we had no right to. Our taxation system has essentially made Americans simultaneously into thieves and slaves.

Prior to the Civil War, there was no income tax. During that war, there was small tax of 3% on high incomes ($600-10,000 per year – a lot of money then!). It was abolished after the war. Congress flirted with income taxes a few more times between the Civil War and the turn of the century. In 1913, the government started taxing our income again, and it hasn’t stopped since.

Our founders went to war with Britain over far fewer provocations, including unfair taxation, than our own government imposes on us today. In fact, their grievances were listed on a single sheet of paper – the Declaration of Independence.  Could we catalog all of the grievances our tax laws generate today on even just one ream of paper? Our taxation bondage may not seem brutal to you, especially compared to what people living under fully tyrannical governments have to endure, but the proper comparison of our burden is not to what others have to endure elsewhere, it is to what it means to be “the land of the free.” If your government takes half of everything you earn, or more, either directly or indirectly, are you free?

Perhaps it sounds to you like I am advocating violent revolution, or that you break the law and dodge your tax obligations.  I am not.  As long we have the freedom of speech, we have the means to peaceably restore a bit of sanity to our system. One possible way is by switching from a confiscatory income tax to a national sales tax, such as that espoused by The Fair Tax proposal.

When it comes to income taxation, you may be happy to “pay your fair share,” or you might deny that withholding income taxes is any kind of slavery, but consider: If your property is taken from you by threat of force by  another, we call it robbery. When people are treated as property and forced to work for others, with no right to keep the fruit of their labor, that is slavery. Our taxation system is a whole lot of both .