The Amateur Citizen

Why Ron Paul > Newt Gingrich, and More Thoughts on the Revolution

2011-12-13T15:40:00.000-08:00

Newt is a status-quo candidate. Newt is a slog-it-out candidate with an uninspiring message. Newt communicates fear rather than thought. Newt talks the talk the median GOP voter wants to hear. Newt does not profess; he calculates and thinks quantitatively. Newt shamelessly panders. He has barely a shred of political and personal decency left. Newt as nominee is another episode of the same phony soap opera.

We have come to expect our presidential candidates to be full of (sh)it. We know they pander to what we want to hear; always walking a tight line between the median voter, careful not to deviate too far from the status quo.

Ron Paul is the antithesis of the status quo. He is consistent and has been fighting for his beliefs since 1976, when he first was elected to Congress. He is not wishy-washy. Ron Paul is a momentum candidate with inspiring, new messages. Paul does not make you fear, he makes you think. Paul is a paradigm shift. Ron Paul professes, he does not calculate. Paul thinks qualitatively. Paul walks the walk, even when it’s not the “cool thing to do”. Paul is humble and a gentleman. Ron Paul is an indisputable change from the status quo.

Yet it’s widely acknowledged people don’t like change. We shy away from what is perceived as different. We are infamously intolerant. We prefer to be boxed into the viewpoint we know, rather than explore a viewpoint we don’t. We don’t bother to evaluate the opportunity costs and externalities of our viewpoints. Given this, it’s no surprise Paul is ridiculed for not delivering a politically safer message; a message more in line with the status quo. But that doesn’t mean Paul is wrong.

Many people think Paul is right. Like Ron Paul, his supporters do not flip-flop. Ron Paul’s supporters do not care about the stigma and intolerance associated with challenging the status quo. Paul’s followers are just as genuine about him as Paul is for his message. The more support Paul picks up, the more “cool” his messages becomes, and the more momentum he picks up. Paul is viral.

The status quo is a drug and we are addicts. When you think about Paul’s explanations for his positions, our drug loses its appeal. It’s only a matter of time before people vote for rehab.

The True Costs (and Opportunity Costs) of War

2011-12-08T13:33:00.000-08:00

"Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children. The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people. This is, I repeat, the best way of life to be found on the road the world has been taking. This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron. […] Is there no other way." - President Eisenhower

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist." - President Eisenhower

From: MilitaryEducation.org

Just Who is Threatening Who?

2011-12-07T18:03:00.001-08:00

Visually, this whole Iran debate looks much much different.

The Difference Between Isolationism and Non-Interventionism

2011-12-03T09:01:00.001-08:00

Here's my comment on George Will's latest Op-Ed in yesterday's Washington Post:

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I have much respect for George Will, but to label Ron Paul as an "isolationist" is flat out disingenuous. Isolationists believe their country should abstain from political or economic relations with other countries (paraphrase from Webster dictionary).
Ron Paul has publicly stated he supports trade between countries (not any big news there...most candidates believe trade is good), and cites peace as one of the main benefits of international trade (based on the assumption you're less likely to go to war with your business partner). North Korea is an isolationist state. Ron Paul is not an isolationist.

Ron Paul is a non-interventionist, and there is a big difference. Noninterventionists (again paraphrasing from Webster) think their country should not intervene in the affairs of another nation, specifically military affairs that are not related to their own direct self-interests. Thomas Jefferson once said, "Commerce with all nations, alliance with none, should be our motto." Sounds like he had a bit of the non-interventionist streak in him as well.

I would expect other, less-reputable, and more flamboyant conservative writers to disingenuously label Ron Paul an isolationist, but not George Will. He should be ashamed for not holding himself to higher standards in today's column.
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Apart from Will's poor choice of one adjective, he writes a pretty darn good article on why neither Mitt nor Newt are good for the GOP nomination. It's too bad he dismisses Paul based on his own misunderstanding of isolationism and non-interventionism.

Is Ron Paul Definitively Bad for Science?

2011-11-22T08:41:00.001-08:00

On my way to work this morning I received my usual weekly Quora update email (for those unfamiliar with Quora, it's a website that allows users to seamlessly submit questions and answers about a range of topics..HT Omar El-Ayat) and, for some reason, got really fired up when I saw Josh's answer to the question: Is Ron Paul definitively bad for science?

You can read Josh's answer here, and my reply to Josh here.

Here's to the End of Energy Subsidies

2011-11-11T09:37:00.000-08:00

Here is an interesting op-ed by Jigar Shah, the co-founder of SunEdison (which was bought my my company MEMC in 2009). Shah was an early pioneer in the utility and commercial scale solar market and, like most entrepreneurs and legendary visionaries, has a perceptive and enlightening personality. In the article, Shah argues that America benefits from China's support of it's solar cell and module manufacturers. I wholeheartedly agree!

For the record, America should not emulate nor envy China's mistaken policies of using government to promote certain industries. Industrial policy is a terrible idea and usually comes back to bite governments and their economies in the butt. China's industrial policy is unsustainable; their loose monetary policy and cheap debt has led to price inflation and civil unrest.

Mr. Shah also addresses energy subsidies in his op-ed and argues "[America needs] incentives to incubate new technologies to reach the scale necessary to reduce costs, we do not need to incentivize proven existing technologies."

I partially disagree with this statement because solar and wind are not "new". Both are proven technologies that have existed for decades and therefore should not receive federal subsidies or special tax treatment of any kind. Secondly, the federal government should quit subsidizing all forms of energy. Doing so would create a level playing field where energy technologies compete based on their inherent advantages (aka benefits) and disadvantages (aka costs).

If the government wanted to promote renewable energy deployment, it would be best implemented at the state level via renewable portfolio standards (RPS). Under RPS the state’s ratepayers who benefit from, for example, a large scale solar farm would see the costs and benefits of that solar farm reflected in their electricity rates, and hopefully the air they breath (although there are positive externalities since air does not adhere to artificially created state boundary lines).

Most governments promote alternative energies via feed-in-tariffs (FIT) subsidies, which, if not properly structured (an easy mistake since FIT are set by politicians/bureaucrats and not the market), can lead to unsustainable bubbles and inefficient costs for renewable electricity. Spain in 2008-2009 is a good example. The U.S. thankfully does not have a national FIT administered by the federal government. Unfortunately, we still have other energy (and non-energy) subsidies.

When the federal government involves itself in energy via FIT, investment tax credits and loan guarantees, then the taxpayers of all 50 states share in the associated costs and a disproportionate amount of the benefits. Why should taxpayers in the not-so-sunny state of Minnesota subsidize California’s alternative energy ambitions?

If you read my blog (you probably don't...nobody reads this thing) then you know I have my qualms about the federal government's one-size-fits-all/monopoly approach to governing. The federal government could do Americans a favor by ending all energy subsidies (and all other subsidies too) primarily because 1) it's not explicitly stated in the Constitution, and 2) they do a poor job executing on their strategy. State governments are better suited to pick up the slack by providing their own RPS incentives--if that’s what their constituents want.

Opponents to my anti-subsidy position may ask, “how will these technologies achieve scale and lower costs?” To that I answer: fossil fuels took off in the 19th and 20th centuries because consumers were excited about the new possibilities that were suddenly available to them thanks to fossil fuels and the internal combustion engine. The fundamentals surrounding fossil fuels enabled private investment to flow into the sector. Scale was achieved. Costs came down.

In the early 2000s, prices for fossil fuels began to rapidly increase as demand for fossil fuels exploded and supply stagnated. High energy prices, plus worries surrounding pollution and global warming, excited consumers about the prospects of alternative energy and energy efficiency. Sure enough, global investment began to flow into the alternative energy sector. Scale increased. Costs continue to fall.

Take for example Evergreen Solar's November 2000 IPO. This capital raise was, at the time, a highly successful event for the Company and their venture capital backers. Private investors took on Evergreen’s technology, execution and scale risk. Subsequent to the IPO, the state of Massachusetts offered Evergreen a low interest loan as an incentive for locating the Company's manufacturing plant in Marlborough, MA. Evergreen accepted and shortly thereafter, Massachusett's high labor costs hamstrung the Company and Evergreen eventually declared bankruptcy (but not before Evergreen's executive team desperately attempted to save the Company by raising more private capital and moving to China in 2010). Of course Evergreen's unconventional wafers didn't help their economic vitality.

Starting in 2000 and continuing to present day, private investors have taken on a great deal of alternative energy risk because the global consumer wants cleaner energy. Public entities have been less successful at creating sustainable alternative energy markets. Public entities can help deploy alternative technologies, but they should not repeat the mistakes of Massachusetts…oh wait they already did in 2009 when they gave a ~$530 million loan guarantee to risky Solyndra who, like Evergreen, attempted to manufacture in a high-wage region and also had an unconventional product. The point is that the U.S. is not a good place to manufacture low-tech products (e.g. solar cells and modules). Our workers have higher wages than Chinese workers because, on average, U.S. products and services add more value than Chinese products and services. Therefore, U.S. workers should focus on their competitive advantage, which include activities like: designing more efficient and less expensive solar technologies, installing/developing solar projects, etc, and does not include monotonous activities like solar cell and module manufacturing.

"Smart government" (translation: smart bureaucrats and smart politicians) needs to realize how difficult it is to subsidize the "right" solar company, or alternative energy technology. Let the market do that. And if citizens want to have cleaner energy, then state-level RPS standards seem like the best way to go.

America's Crumbling Infrastructure?

2011-11-09T10:48:00.001-08:00

"America's infrastructure is crumbling" is an oft repeated belief held by both conservatives and liberals.

But just how true is that statement? Charles Lane explores the question in this WaPo article.

Here is an excerpt:

"The United States probably needs more infrastructure spending. It also needs a serious debate about how much cash to invest and how to invest it. Alarmism promotes the former, not the latter."

Misaligned Costs and Benefits

2011-10-17T21:45:00.000-07:00

The public's overwhelmingly favorable ratings for their individual representatives, while Congress as a whole enjoys overwhelmingly negative ratings, is a side effect of America's century long experiment with the Federal government's one-size-fits-all approach to governing. Constituents naturally prefer representatives that "bring home the bacon" for local projects however, the bacon is bought and paid for at the expense of the general public. Districts with high ranking representatives witness spending increases, which is a perverse system that produces perverse, unsustainable results.

The "benefits" of federal government subsidies, regulations, programs, and spending is not matched with any specific cost. In many cases the benefits of federal government policy are concentrated among a select group while the costs are dispersed across every American citizen. For every $1 Californians send to DC in taxes Californians receive ~$0.70 back. This arguably leads to a system ripe with inefficiency, inequity--due to the freedoms sacrificed by State citizens as we continue the Fed's one-size-fits-all experiment--and displeasure.

My ideal model is one where America followed a libertarian-like view of the Constitution--where the Feds played a more limited, nationally defined role and States took more responsibility for taxing and spending--State government policy would be more transparent than our current experiment of increased centralized/Federalized governing. In my ideal State-centered governing model the frustrations, inequity and inefficiencies associated with any policies that concentrate benefits and disperse costs are more glaring and harder to hide, if nothing more than for the simple reason there are fewer (absolute) number of citizens per State government than the absolute number of citizens per Federal government. Costs and benefits are more closely linked, which arguably leads to increased efficiency, equity, efficacy and happiness.

Utterly Despicable - Teacher's Unions Harming Education (Again)

2011-10-11T11:29:00.001-07:00

What other ways can unions hurt our education system?

Tenure-based pay, rather than merit-based pay. The concept of tenure. Nearly impossible and very expensive to fire bad teachers. And now the UC system can't offer online courses without union approval.

Why? The UC-AFT isn't hiding anything:

"Bob Samuels, the president of the union, says this effectively gives the union veto power over any online initiative that might endangers the jobs or work lives of its members. “We feel that we could stop almost any online program through this contract,” Samuels told Inside Higher Ed."

Someone please make it stop. Unions need to be reigned in!

Right Now! Should Raise An Eyebrow

2011-10-07T17:53:00.000-07:00

Here is this article on Politico talking about Obama's, for lack of a better term, flip-flop on recently passed patent reform. No real controversy here, just the typical politics that has defined this President and the others before Obama.

The last line is interesting: "[Obama] admitted that “there's nobody out there who actually thinks that [patent reform] is going to immediately fill the needs of people who are out of work or strengthen the economy right now."

Right now. How to create jobs right now so the unemployment picture begins to show signs of improvement in 13 months, just in time for reelection.

But giving the economy a "jolt right now" is not as straight forward as people wish because the economy is a complex network of billions upon billions of incentives (inputs), microeconomic transactions, and consequences (outputs). Jolting that network via a top-down approach like government stimulus yields unpredictable results (e.g. ARRA in 2009). Furthermore, what if the economy doesn't need a jolt right now via government stimulus. What if stimulus makes matters worse?

The inputs and consequences of any economic transaction can be very very subtle because the moving pieces (input, transaction and consequence) all occur on the micro level. There are hundreds, if not thousands, of inputs that go into each transaction. The outcome of every transaction will lead to intended and unintended consequences, no matter how trivial the transaction.

Every transaction has costs and benefits; when analyzing our complex economy how can the President and his economic advisers be certain the benefits of the American Jobs Act will be worth the costs? The answer is they can't. Nobody can.

This dynamic makes the economy that much harder to accurately control via a top-down, centrally planned economic action like stimulus. This is not what politicians like to hear, nor what voters like to hear from politicians. However, it's up to us citizens to be educated on the limitations of government involvement in our lives and economies.

When considering economic transactions, politicians' inputs are very different than businesses' inputs. The definition of "long-term" to a politician is every two years because 535 members of Congress plus 1/3 of the Senate are up for renewal. Businesses make investment decisions often looking farther than two years out. Politicians like to focus on creating private sector jobs. Good businesses will focus on creating value--which may create jobs simultaneously with the value, or sometimes the value created will initially destroy an industry (and its associated jobs) but will give rise to another industry (and its associated jobs).

Stimulus in the short-run may provide a jolt to GDP, but how can Obama's team accurately predict the long-term results of stimulus? How sure is Obama's team that our economy would be better off in the long-run if we didn't pursue short-term stimulus right now?

I know there are many unemployed folks right now, and I agree the economy could use a jolt right now. However, I don't believe fiscal stimulus right now will be the jolt that creates long-term economic prosperity. No one entity, in this case government, has the knowledge, capability and motivation to engage in a stimulus plan that will create long-term economic prosperity because markets and economies consist of too many moving parts.

Our economy would be better off if government focused on creating a consistent, stable and predictable launching pad. My prescription would include the very policies that Obama dismissed because they "wouldn't provide the economy with a jolt right now" such as patent reform and signing the three pending free trade agreements.

Additional remedies would include reforming the tax code, drastically reforming entitlements, reforming our education system, transferring federal government programs (e.g. education, welfare, minimum wages) to the states, negotiating more free trade agreements and removing onerous regulations that impede growth.

We need this type of reform right now, not more patches to the tax code (e.g. payroll tax cuts) nor federal bailouts to teachers (who need a bailout because our education system is so terrible) nor bailouts to states.

We need to drastically shift our federal government's spending priorities, entitlement programs and economic policies right now so we can jolt our economy into long-term economic growth. Short-term pain brings long-term gains.

Obama Expectations Vs. Obama Reality...

2011-10-07T13:00:00.000-07:00

I voted for Obama because I thought he 1) was the peace candidate and 2) would stop interfering with state medical marijuana laws.

What happened in reality:1) he expanded the wars and even added a conflict (Libya), rather than cut our losses and leave, and 2) now his Justice Department (and IRS) are raiding and forcing marijuana dispensaries to shut down.

There is no respect in this Administration for the Constitution and state's rights. Not even on marijuana.

Apples-to-Apples

2011-10-02T17:10:00.000-07:00

This article has been trending on The Economist and I'm wondering why. The Economist's brief write-up summarizes a KPMG study on the average effective tax rates across 93 countries. The U.S. is shown near the bottom of the chart. My guess is that people looked at the study or chart and concluded the U.S. is a low-tax government relative to other industrialized nations.

However, this study is not an apples-to-apples comparison.

Why? Because each of the 93 countries have different constitutional structures, levels of government, taxes, etc. Unlike Sweden, Belgium, Greece and Denmark, the U.S. has 50 different state governments that collect income taxes. Additionally, all of these countries have different corporate taxes (FYI, America has a ~42% corporate tax rate when you include state and local income taxes), death taxes, sales taxes, etc. Belgium's corporate tax rate is ~19%, therefore common sense tells me Belgium's politicians have more "dry-powder" to justify a 48% income tax.

The Economist's popular chart cannot be used to compare America's tax culture to other countries. It would be interesting to see a similar study that normalizes for the 93 different tax cultures...something like the average effective income tax rate collected by all levels of government across 93 countries.

To Democrats & Independents: Become a #BlueRepublican, Just For a Year

2011-09-30T09:50:00.000-07:00

Some Videos

2011-09-29T20:39:00.000-07:00

Here is Ron Paul on the Daily Show Part 1, Part 2 and Part 3.

If you know me then you know I love Ron Paul. Not because I agree with 100% of his policies, but because he is extremely consistent, examines government and economics through a contrarian framework, foundation and I always appreciate politicians who tells me what they really think instead of always telling me what I want to hear. This guy is 99.9% principle. He doesn't participate in Congress's pension plan out of principle alone and he has been elected to Congress 12 times.

My goal this weekend is to add some additional talking points to Congressman Paul's responses. Let's see how that goes.

Here is Ron Paul on Freedom Watch, and here is Juan Williams Freedom Watch discussing Ron Paul.

Chris Matthews on Rand Paul

2011-09-17T17:07:00.000-07:00

This is interesting to hear, especially the stuff at the end when Chris says (and I'm paraphrasing) "hey we have a $13 trillion national debt, we need guys to think outside the box".

Social Security is a Poor Investment Vehicle

2011-09-14T14:20:00.000-07:00

Don Boudreaux of Cafe Hayek had a great post on whether Social Security is a Ponzi scheme. As always, it was an entertaining read. The best part was reading that Paul Krugman himself said Social Security looks like a "Ponzi-game" back in 1996.

Flash forward to 2010 and Krugman defended Social Security as "a program that has brought dignity and decency to the lives of older Americans". Naively, Krugman left out that Social Security brings dignity and decency to older Americans at the expense of younger Americans. What type of economist has Krugman become where he forgets that there is no such thing as a free lunch.

Well Krugman is at it again today, this time defending his 1996 comments that Social Security shares some characteristics of a "Ponzi-game".

My issue with Social Security is there must be a better way to go about saving for retirement. Back in the 1930s when Social Security was signed into law, there was no market for retirement products. Now that has all changed. Turn on the TV and how many retirement and financial planning ads do you see?

Why should I, a young adult, have ~14% of my paycheck taken from me and then paid into a system where I "may well get less than [I] put in"? That doesn't make any sense! I would much rather take that 14% and put it into a mutual fund that earns 4-8% per year and not give it to Social Security which earns me 0% interest and may not even pay back my principle! An additional benefit of having a private retirement account is that it creates an ownership culture where we all have a stake (for example via mutual funds) in the equity and debt of our local businesses, banks, and governments.

Instead of defending this program Paul Krugman, why don't you offer a solution to fix it and get me my fricken 14% back?!?! I have a house, kid's college, my Economics Masters and PhD, and retirement to save for. The government's Social Security system is making me poorer and it's NOT FAIR! Furthermore, "Ponzi-game" investment strategies are overall a terrible investment vehicle and, rightly so, have been outlawed in the private sector.

Oops

2011-09-14T12:13:00.000-07:00

The headline reads: "Report: White House tried to rush Solyndra loan"

The reason: "so that Vice President Joe Biden could announce its approval at the September 2009 opening of the California company’s factory, the emails obtained by the Washington Post reveal."

The problems:

“We have ended up with a situation of having to do rushed approvals on a couple of

occasions,” one OMB official wrote to Terrell P. McSweeny, Biden’s domestic policy adviser, adding, “We would prefer to have sufficient time to do our due diligence reviews.”

In another email, an OMB official expressed concern that the model being used to assess the financial risk to taxpayers was not optimal, but that there wasn’t time to change it. “Given the time pressure we are under to sign-off on Solyndra, we don’t have time to change the model,” the staffer wrote.
An OMB official asked that the announcement be postponed, writing in an email, “I would prefer that this announcement be postponed. … This is the first loan guarantee and we should have full review with all hands on deck to make sure we get it right.”
“This deal is NOT ready for prime time,” wrote an OMB staffer nine days before the announcement of the loan, in an email obtained by ABC News.
In fact, one OMB reviewer pointed out that a credit-rating agency predicted that the project would run out of cash in September 2011.
Corporatism "But Democrats have a message of their own: The Republicans backed the California solar company too...Lobbyists with tight GOP connections helped the clean technology start-up company headed by a registered Republican."

The result: Solyndra closed its doors on the last day of August, leaving taxpayers on the hook for over half a billion dollars.

The solution: The federal government has no business making loans nor loan guarantees to companies that have massive technology and/or execution risks no matter how good the intentions seem to be. The use of public funds for private investments is not good policy.

I've said it before and will say it again: when the government decides to spend/"invest" other people's money, it does so for political reasons. If the project fails, the typical response is "more money is needed" (e.g. education, infrastructure, defense). However, throwing money into a broken system will not fix the system.

When the private sector spends or invests their own money, it does so for economic reasons. If it fails, creative destruction occurs. Capital is set free to flow to its most productive use and the evolution continues.

I'll take the private sector approach any day over the government approach.

Paul Ryan on Taxes

2011-09-14T12:08:00.000-07:00

Paul Ryan's great video posted today on YouTube reminds me of my August 14th blog post No Death, Just Taxes.

Close loopholes and simply the tax code, then lower the statutory tax rate (flat or simple progressive...almost anything would be better than what we have today) for both corporations and individuals.

On Rick Perry and Ron Paul

2011-09-12T11:23:00.000-07:00

No I'm not blogging about their seemingly contentious meeting at last week's debate.

Here is a quick read on what worries me about Perry and why I question how genuine he is: http://www.politico.com/news/stories/0911/63221.html. With all of his donations, vacations, concerts, sporting events and other gifts, just how likely is Perry to actually govern like he campaigns? If Rick Perry gets into office, just think of all the influential people who have financed the Perry's lifestyle? Again, I think Ron Paul has more principle in his balding hair follicles than Perry has in his whole body. Rick Perry seems to be another slick/slimy politician, and worse, seems to be using the whole "Tea Party" phenomenon to his political advantage.

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Last night I shared Sunday dinner with Kaitlyn's family. I asked her grandfather (Bob) to get his thoughts on Ron Paul. His answer "Paul is cooky". When I asked Bob for an example, Bob asked back "What's Ron Paul's foreign policy?" I chose not to get into it with Bob because I didn't want to ruin dinner, but here is Ron Paul in his own words.

Many Republicans like to say Paul is a non-interventionist, but that is not an absolute truth. In Paul's own words "Yes, the attacks of 9/11 deserved a response", however Paul goes on to say, as he has for years and years, that a careful exercise in prudence was needed back in 2001, and is most certainly needed in 2011 and going forward.

Again, Paul's foreign policy is a strength not a weakness. If Paul gets the nomination, his foreign policy is what can win over independents and liberals who must be frustrated with Obama's foreign policy politicking.

Sorry Feds, One Size Doesn't Fit All

2011-09-03T00:42:00.000-07:00

It's not that libertarians don't like government, it's just that we don't trust big, powerful, central governments...largely because when a central government gets as big as ours, it tends to look out for itself and the politically powerful, rather than looking out for our best interests.

Above and beyond the typical "special interests are ruining Washington" argument, for which there is much legitimacy, the federal government's one-size-fits-all approach to governing has it's limitations. To be clear--and I believe I speak for most libertarians--I want states to have more power because states are better suited to design and execute their own programs and policies that are most beneficial to their citizens. The Fed's one-size-fits-all approach acts as a large plastic bag that currently suffocates the states taxing and governing powers.

Per a libertarian's interpretation of the Constitution and the 10th amendment, the federal government should: maintain a national defense, maintain strong courts, protect our civil liberties and rights (e.g. discrimination), regulate interstate commerce--which was mainly established as a response to a slew of damaging inter state tariffs that crimped trade and economic growth, but could be extended to issues surrounding the environment.

But at the 50,000 foot level, I believe the federal government should transfer more programs to the states because it's harder to please 311 million people than 30 million, and a policy that "works" (i.e. achieve its stated benefits at the stated costs) in NY doesn't mean it will "work" in CA or Texas.

For instance, progressives love to use the Scandinavian countries as an example of well run, strong central governments. The Scandinavians have strong safety nets, relatively good economic growth, more efficient and effective healthcare than the U.S., and one of the least corrupt governments on Earth. Progressives point to Scandinavia and say, "see, look at their strong central government model...it works great!"

The reason Scandinavia's model works better than the U.S. is because the average number of citizens in the five Scandinavian countries is 5 million. It's much easier for 5 million citizens to oversee government programs, than for 311 million Americans to oversee our federal government's programs.

Progressives argue that America's federal government should be strong, provide safety nets to all 311 million citizens, blah blah blah. The oft cited theory among progressives is a strong central government leads to "increased efficiency". Haha! That's a funny joke. If you imagine the government as a business (bear with me), it would be near impossible to efficiently manage $3.5T in spending, and effectively (and equitably) execute hundreds of thousands of regulations, programs, etc. In reality, it just doesn't work out too well and we are all left with a bad taste in our mouths. It's like that saying "different strokes for different folks".

Imagine if we approached our federal and state governments like the Scandinavians...if Utah's 2.3 million citizens don't want to run a social security program and CA's 36 million citizens do, it would be easier for the disgruntled citizens of Utah to move to CA compared to another another country outside the U.S. Or the disgruntled citizen could participate with other citizens and argue for a Utah Social Security program, and could cite CA's safety net successes as evidence to establish such a program in Utah.

I believe this would establish a platform of competition among the 50 states, and provide an incentive for the 50 states to innovate new policies that best serve the citizens of these great united states (purposefully lower case).

Summary:

Different strokes for different folks! One size doesn't fit all.
The federal government has NO competition, and therefore no incentive to get better. Transferring power to the 50 states creates competition, and competition almost always directly benefits the consumer (if you don't believe that then we have problems).
Rather than a federal government overseeing hundreds of thousands of tasks at the risk of running them poorly, the feds should instead focus on a dozen or so tasks and do them well. This will make our citizenry oversight duties much easier compared to the major cluster f&#% that is the current reality of Washington DC.
We all have certain unalienable liberties and rights that state governments cannot take away and the federal government should protect those rights if a state violates them.

The President Has Very Little Power

2011-08-25T10:24:00.000-07:00

The President has very little power relative to Congress. However, the President's primary tool is their ability to cheerleader and promote the agenda that will resonate with the American people by year 4. Whether that 4 year agenda aligns with the American public, Congress, and special interests is another story. Congress writes the final agenda, the American public votes for Congress and the President. The checks and balance seem to be in place.

My theory for the reason why Presidential campaigns receive the lion's share of our attention is based on my belief that the President sets the tone of discussing all of the agendas that are out there in the public sphere. If the President's agenda resonates with the American public for the next four years, then Congress's bills will more closely resemble the President's agenda. If the President's agenda did not resonate with the American public, special interests and Congress then the President's agenda is less likely to be adopted, and more likely to morph during the 4 years.

The President's most useful tool is their ability to win over the American public's trust, albeit in the short term or long term, and make the American public believe the President's agenda will make America the strongest best nation in the whole wide world. The American public matter more than Congress and special interests.

Enter Ron Paul. Let me know what you think (interview is seven minutes)?

Flash forward to the 2012 Republican Presidential nomination: which GOPer would you like to see own the nomination?

I think you can guess who I'm voting for.

No Death, Just Taxes

2011-08-14T22:25:00.000-07:00

Here is a common wrap against corporations: "Corporations need to pay their fair share of taxes." The current statutory federal tax for businesses is 35% for profits over $18.333 million. Including state income taxes, businesses across the U.S. pay an average tax rate of 39.27% (data circa 2008). That is the second highest average in the world.

But just because the statutory tax rate is ~39% that doesn't mean businesses earning over $18.333mm pay ~39% of their taxes to the federal, state and local governments. There are thousands of tax credits and deductions that businesses lobby for. That being said, the U.S. is the 6th highest in the world with an average effective tax rate of ~30%.

Within that ~30% average lays a large range…on average companies pay 30% of their income in taxes, yet other larger businesses pay far less. A big company like GE is infamous for paying very low taxes, while many smaller companies like Amtech Systems--a manufacturer of diffusion furnaces for solar cell manufacturers--pay 42% of their income in taxes.

Why the wide range? The simple answer is that GE can afford an army of tax lawyers to find loopholes, and they can pay lobbyists to make influence how the tax code and regulations are written.

Politicians and MSNBC pundits like Rachel Maddow and Chris Matthews (the “M&Ms”) love to blast big corporations like GE for "not paying their fair share". This is a sensationalist knee-jerk reaction. How can you really blame corporations for going to such extremes to avoid high taxes? Many of us would do the same thing if in their position.

However, the more profound response to M&M's overused Democrat/liberal/progressive rallying cry that corporations don't pay their fair share is really a question: what is the opportunity cost (i.e. cost of not pursuing the next best option) of Amtech's 42% tax rate?

Answer: Amtech is losing out on investing in new technologies, new processes, more production equipment and more research…the combination of which could lower the cost of solar power and increase society's total net benefit. Asian and European solar companies that pay lower taxes have more resources to find innovative ways to lower the cost of solar, while Amtech is stuck paying taxes that subsidize inefficient government programs (e.g. Social Security, farm subsidies, pensions for federal workers, a decrepit and wasteful education system, etc.).

Progressives frequently counter the above argument with, "corporations would have just used the money they didn't pay in taxes to hand out to their shareholders and executives". Once again, this is a typical knee jerk comments that is frequently used by the left. First off, and despite the negative connotation associated with "shareholders", many of us own GE stock via our retirement plans. That which benefits Amtech and GE also benefits us.

Secondly, the overlooked question is why does GE spend millions on an infantry regiment of tax lawyers and lobbyists? GE uses those resources so it can distribute cash to shareholders, invest in new technologies, grow markets and do their part to increase efficiency and prosperity.

I'm not trying to exalt GE and make them sound like saints. And I certainly wouldn't describe GE as proponents of free market since they have a big incentive to influences government policy to protect GE's interests from competitive free markets. All I'm saying is that GE is mature and has enough money to get around the tax code and good for them. Again, what’s good for GE is good for America. However what's not good is the billions of offshore profits sitting in foreign banks because repatriating those profits means paying %30+ taxes. This offshore money does America no good sitting in offshore bank accounts doing nothing.

How can Amtech pay less in taxes? Perhaps if Amtech knew the right politicians in Washington, could make many hefty Congressional campaign contributions, or lobbied, or started their own super PAC then Amtech could also fight to pay less taxes. But honestly, Amtech shouldn’t have to jump through all those hoops to compete with European and Asian solar cell manufacturers.

Now before Amtech goes through all the trouble of hiring tons of unproductive tax lawyers, or restructuring Amtech's legal structure to take advantage of offshore tax shelters, or getting friendly with dozens of politicians, or moving production to low-tax nations like Ireland...before they do all this, isn't there an easier way to avoid this whole taxation nightmare?

Yes, and this is my plea to President Obama, all 635 members of the House and Senate and the average citizens (especially the progressive, liberal left wingers). Wouldn't it be better to just lower the U.S. corporate tax rate and institute a simple, low flat tax of 20% (or even better--0%)? Let's get rid of all the confusing and inefficient tax credits, tiered tax rates, tax compliance headaches, costly tax expenditures, etc. Lower the damn corporate tax rate. Simplify the tax code by instituting a flat tax with no credits or deductions. I argue that doing so would: increase tax revenues by growing the nation's tax base, create new investment opportunities, create more jobs, and raise our standard of living.

America’s current corporate tax rates and tax code hurts economic growth by inhibiting the Amtech's of the world, while simultaneously enriching the GEs of the world (thereby increasing plutocracy).

Change starts with people, not politicians.

Big Government, Plutocrats and Our Shrinking Middle Class

2011-08-06T16:35:00.000-07:00

Here is a tweet from Robert Reich, former Labor Secretary under Bill Clinton and current Chancellor of Berkeley's Goldman School of Public Policy:

RBReich Robert Reich

R's are winning the big one -- framing Am's core problem as big government rather than the shrinking middle class & growing plutocracy.

25 Jul Unfavorite Retweet Reply

Some people, probably Mr. Reich and most self-identified progressives, blame freer markets, freer trade, less American manufacturing and capitalism in general for a shrinking middle class and growing plutocracy. Allow me to refer you to posts here and here to refute any claims that capitalism, free trade, free markets, competition, etc. is to blame for a long-term shrinking middle class.

The more important question I pose to Mr. Reich is: did big government come before a shrinking middle class and growing plutocracy? Or did a shrinking middle class and growing plutocracy come before big government?

Spoiler alert! I think big government comes first. And let me start off by convincing you that we have a big government relative to historical standards.

The kicker isn't that the federal government spends too much of our GDP, it's that the feds spend too much of our GDP on low return projects and programs. In other words, the feds are inefficient when spending our tax dollars.

The federal government is inefficient for a number of different but related reasons. One of the big reasons is that the fed's centralized influence on society and large purse attracts plutocrats (e.g. corporations, unions and rich families) that have an incentive to shape federal policies in a way that benefits and protects their interests from competition and markets. The acronym CBDC, which stands for concentrated benefits with dispersed costs, describes the effect of plutocrat-influenced policies.

The costs associated with CBDC policies are passed onto the poor and middle classes. CBDC policies: distort the micro economy, waste our tax dollar resources, hurt our economic productivity, hurt growth, destroy jobs, lead to market and government inefficiencies, makes us poorer, reduce the middle class, and, most importantly, increase plutocracy.

A perfect example of CBDC are sugar tariffs, which provide concentrated benefits for U.S. sugar producers (mainly a handful of 6-7 sugar farming families) at a dispersed cost born by U.S. consumers, citizens and taxpayers. The corn industry also benefits because these sugar tariffs keep the price of sugar artificially higher, which incentivizes producers to substitute sugar with high-fructose corn syrup. Think that's bad? Well it gets worse. The government also subsidizes corn producers which makes HFCS cheaper and exacerbates its use.

Sugar tariffs, corn subsidies, soy subsidies and other farm subsidies are perfect examples of well intentioned policy gone bad. The policies are bad because the resulting real world effects include: a distorted micro economy, a poorer middle class poorer, and more plutocracy.

But why do the feds spend our money inefficiently? Especially when politicians and pundits frequently make the federal government sound like it's the white knight? The short answer is that government has inherent design flaws that discourage efficiency, prudence and responsibility. These design flaws result in flawed policies that distort markets and hurt our economic well-being.

The federal government's first flaw is a lack of natural competition. Without competition, what motivations and incentives exist to inspire the government to be more efficient with our tax dollars? In its basic form competition--which also inspires collaboration--incentivizes suppliers (i.e. government, private businesses) to provide demanders (i.e. us, the consumers and taxpayers) with higher quality products and services at a lower cost. Without competition government has little, if any, incentive to increase the quality of programs and services at a lower cost to the taxpayer.

A lack of competition is one of the cornerstone characteristics of monopolies. Yes, the federal government is a monopoly. To understand why the government is a monopoly, let's examine public schools.

~90% of students attend public schools and we all know how bad and inefficient the public school education system is in the U.S. Education spending since 1970 has doubled, yet test scores have stagnated and graduation rates have fallen from 77% in 1970 to 69% in 2008. So the government has a monopoly in K-12 education and does a poor job...no new news there.

Another design flaw: the feds have a guaranteed source of revenue. As long as the government maintains its jails, the IRS can keep collecting taxes.

On top of the lack of competition, guaranteed revenues and monopoly status, the federal government is so large and complicated that it practically takes a degree from Dartmouth, Oxford, and Yale (Robert Reich graduated from all three...yes all three) just to understand how it works.

To give you an idea of how big the government is: Wal-Mart was #1 in 2010 with ~$422 billion in revenue (and $405 billion in expenses). On the other hand, the U.S. government's 2010 revenues were ~5x Wal-Mart's revenues and the 2010 expenses were ~8x Wal-Mart's expenses!

One could argue the average voter provides adequate motivation for the federal government to be efficient. However, if voters provided adequate motivation for the government to operate efficiently and effectively then our education system would do a better job educating our youth, health care costs would go down while quality increased, and the economy would be pumping out jobs.

To add to the confusion, the federal government is easy to romanticize. Don't ask me why, but people romanticize the feds and their programs for some masochistic reason. Worse, people have a tendency to romanticize politicians (cough Obama cough). Truth is, I romanticized Obama too, evidenced by my earlier blog posts.

Anyway...

Mr. Reich's tweet represents an ideology that is prevalent among Democrats, liberals and progressives. Their ideology argues for an active role for government in our society. Ezra Klein, self-defined progressive, let it slip in yesterday's column when he whined "Those of us in Washington who would like to see the government work...". Well Mr. Klein, that's the problem with big and small government...it's hard to get anything to work! So why make the federal government bigger, give it more money, and give it more power when it's so hard to get our already big federal government working?

Back to the my main question for Mr. Reich...did the shrinking middle class and growing plutocracy come before big government, or did big government come before a shrinking middle class and growing plutocracy?

America's core problem is that we have a big, monopolistic government that collects a guaranteed source of cash flow and has very little incentive nor motivation to wisely spend our tax dollars on projects and programs that increase society's total net benefit. The projects and programs big government puts in place, at the request of plutocrats and, very rarely, the general populace, cause unintended consequences that continue to shrink the middle class and grow plutocracy.

Going forward the best path to grow the middle class and shrink plutocracy is to promote government policies that increase economic freedom, increase free trade, free up markets, and decrease the size and scope of the federal government. This path begins with citizens supporting policies and representatives that promote economic freedom, and rejecting policies and representatives that squabble about equal income or wealth distribution.

Recent Issues of Annoyance

2011-07-26T21:18:00.000-07:00

#1 Issue of Annoyance...

The U.S. government isn't going to default if the debt ceiling isn't raised by August 2. Using the word "default" is misleading and amounts to nothing more than fear mongering. In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract. Uncle Sam brings in plenty of cash flow to pay interest and principle on the debt (along with entitlement payments to Seniors) so therefore we will avoid a technical default.

I hate it when politicians use scary words like "default" to strike fear in the hearts of citizens. It reminds me of Bush scaring us with WMDs and we all know how that turned out. If we don't raise the debt ceiling there is a good chance the U.S. will lose its AAA rating and interest rates will increase, but not "skyrocket" (again...fear mongering). AA rated governments still pay low interest rates. Additionally, I hold out hope that Washington can fix the federal government's spending problems and earn back our AAA rating within 24-48 months however, doing so will require an ideological change about the federal government's role in American society.

#2 Issue of Annoyance...

The assumption that the U.S. government deserves a AAA credit rating. In my opinion an entity that has trillions upon trillions in unfunded liabilities, has not passed a budget for over two years, has not shown it can balance it's budget during the next 10 years, and relies on its struggling economy and struggling citizens to service >$14.5 trillion in federal debt and an additional $3 trillion of state and local government debt...anyway, I don't think the U.S. government deserves a AAA credit rating. It appears some of the credit rating committees are beginning to think this as well, even if our elected officials raise the debt limit.

#3 Issue of Annoyance...

People who think we need to raise taxes to fix the deficit problem. I already pay enough in taxes! Jesus between the feds and state, plus sales tax, I spend 38-40% of my income on taxes! Here is a clear analysis by Daniel Mitchell of Cato that shows spending, not taxes, is the real problem with our nagging deficits. The economy isn't going to grow, and jobs aren't going to be created, if the government keeps taking 38-40% of our income and spending it on low return (low at best...I'd argue that most government spending produces negative IRRs) "investments".

What annoys you?

Nonsensical Food Talk?

2011-07-20T21:42:00.000-07:00

Barack Obama post on Facebook dated 7/20/2011:

Barack Obama
Quote of the day: “We can give people all the information and advice in the world about healthy eating and exercise, but if parents can’t buy the food they need to prepare those meals because their only options for groceries are the gas station or the local minimart, then all that is just talk.” -- Michelle Obama.
6 hours ago · ·

My comment:

John Vignocchi Why would their only options be minimarts or gas stations? There are hundreds of thousands of grocery stores across the U.S.? And grocery stores have the same food as convenience stores (i.e. minimarts or gas stations) but the former are, in my experience, always less expensive. Wal-Mart has inexpensive groceries too, but they aren't unionized (i.e. less campaign funds).

2 minutes ago ·

Back in the Saddle

2011-07-14T18:42:00.000-07:00

I'm back in the saddle. It's been a while since my last post and much has changed in the past few months. Just got married :) Wrapping up the honeymoon as I type (Kait is napping as I sneak out this post). Also, no more 100 hour weeks! Yep, I am no longer an investment banking analyst anymore which should allow for more blogging time. Lastly, I'm not unemployed anymore. I will be taking my clean technology/solar talents to MEMC and working for their corporate development team starting 8/1. All great changes since April.

$352M is to Politicians as $38.5B is to BS

2011-04-14T00:26:00.000-07:00

Could private firms blatantly and repeatedly deceive customers and investors as easily as our government and politicians deceive their citizens and taxpayers?

I think not.

Hard CBO data here.

Your Humility is Missing

2011-04-10T22:57:00.000-07:00

My response to PK's latest Op-Ed.

"cuts that will slow growth and increase unemployment"

How can Paul Krugman be so sure? His entire argument against cuts is based on the presumption that any cut will slow growth...but what if he is wrong? The macroeconomy is an extremely complex system, yet Paul Krugman claims to understand that if the government cuts ANY form of spending it will reduce economic growth and increase unemployment. How can he be so sure?

Krugman doesn't know if cutting spending will lead to short term pain and long term prosperity, or vice-versa. No one really knows the answer to that, however I find it hard to believe that the government can burden us with insane amounts of debt and simultaneously spend (or "invest" per Obama's SOTU and subsequent rhetoric) our nation back into prosperity.

Krugman's intellectual arrogance sickens me. "The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge." And I don't think Krugman would describe himself as economically ignorant.

"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." - F.A. Hayek

Who Picks Up The Tab of HSR?

2011-03-04T20:37:00.000-08:00

My response to this GTM article:

I’m sure if GE lobbies the government hard enough it could get the U.S. to adopt HSR. HSR is great, unless the revenues don’t cover the costs. It’s a big risk to take since most HSR projects cost well north of $1 billion.

The only thing I care about is the following: who picks up the tab if high speed rail can’t cover it’s operating costs? If the answer is taxpayers, then this is a no-go. We cannot afford this right now. We can’t have social security, Obamacare, Medicare, an outrageously large imperial-style military, and expensive HSR.

Unions and Renewables? Leo Gerard Runs His Mouth

2011-03-04T19:59:00.000-08:00

Here's a response to the Herman K. Trabish and Leo Gerrard interview from this Greentech Media article on labor ties to the renewable energy industry:

Leo’s arguments are confusing because the first part of the interview discusses private sector unions, who would benefit from working on unionized renewable energy projects (assuming renewable energy continues to take off, and I hope it does). Private sector unions are fine, unless they cause their employer to go out of business (GM, Chrysler, almost Ford, airlines, etc.)...then everyone loses.

In his last answer, Leo Gerard disingenuously conflates the Wisconsin attack on public sector workers as an attack on private sector unions. Public sector union members have nothing to do with renewable energy projects, and certainly don’t wire electricity or fix plumbing for a living. “Republican governors, legislators and their billionaire financiers” (Koch brothers?) are not trying to strip *private* sector unions of their collective bargaining privileges, they are trying to strip public sector unions of their privileges because the system is very corrupt.

Public sector unions are a completely different story than private sector unions because they collectively bargain with the government, i.e. indirectly the taxpayers. Unions force members to pay dues, then those dues go to lobbying legislators who in turn grant their union supporters guaranteed pensions (after 20-30 years of service) and full health benefits (for the entire family) at very little, or almost no cost, to the unionized employee. Who pays for those pensions and health benefits? Taxpayers. So who is getting ripped off by the system? Taxpayers, including the taxpayers employed in private sector unions.

The other Republican “assault” on unions are right-to-work bills. But I struggle to see a problem with this…people should be free to opt out of their unions and still keep their job as electricians, plumbers and DMV workers. Unions should not be allowed to bully their members into paying their union dues, which the unions then use to fund Democrat politicians, who in turn grant sweet benefits at taxpayer expense.

Thank you FDR for warning us against public sector unions in 1937. Sadly people don’t remember that speech.

Housing for All! - F&F

2011-03-03T23:05:00.000-08:00

A letter to my buddy:

I've been composing a manifesto response to your email! I need to find a way to cut it down.Until then...

I found this very interesting article written by the NYT about Fannie Mae and Freddie Mac, the two government institutions that own or guarantee $6 trillion in U.S. mortgage debt (i.e. 50% of outstanding mortgage debt), and currently guarantee 90% of all new mortgage debt issuance. I highly recommend reading the article. After you do so, please allow me to give you my background on the situation (parens are my additions to the following story):

The first time I learned of F&F was summer 2006 at UBS. Some of my boss's clients (my boss's name is Danny) owned F&F debt. I had never heard of a Fannie Mae nor a Freddie Mac company, and asked Danny what F&F did, thinking they were normal businesses. Danny answered, "F&F are government entities, but are also corporations and are listed on the NYSE. F&F buy mortgages directly from banks (both big and small), and then guarantee the mortgages (i.e. if the mortgage doesn't get paid, F&F pays the bills). They then resell these mortgages in packages to investment banks, who then packaged the F&F mortgages and lastly turn around and sell them to investors, or hold them on their balance sheet, or sell them back to F&F."

"Investors buy F&F debt because there is an implicit guarantee that if F&F can't pay back their debt, the government will bail them out. Based on this perverse perception, F&F issue debt to investors and pay very low interest rates, rates so law that they are barely above U.S. government debt (U.S. gov't is the lowest debt of them all, because they are backed by the full faith and credit of the U.S. gov't). This is an attractive investment for my older clients who want higher interest payments, but don't want to hold riskier corporate bonds (riskier because 100% private corporations can't tax or print money to pay the bills)."

When I spoke with Danny again during summer 2008 I asked him what he thought about F&F needing a bailout He said, "I advised my clients to sell F&F debt before the 2007 F&F bubble popped. Even though everyone knew the government would cover F&F losses, I urged my clients to hold cash and straight U.S. government debt (which subsequently increased in price and became a top investment during 2009-2010)."

Now it would be crazy to say that the government didn't have a hand in the mortgage crisis. F&F was a government subsidy of the housing market...it's a fact that the government owns or insurers ~40% of mortgages...talk about an environment for perverse incentives! F&F makes buying a house more easier, which sounds like a great goal and a way the government can intervene to shorten that socioeconomic ladder, however the unintended consequence of F&F's subsidies is increased housing demand which causes prices to rise, creating a a misallocation of resources (how many incoming Poly freshman wanted to do Construction Management in 2005, myself included) a large bubble, and ultimately a painful crash with a whole lot of unemployed construction workers. F&F's guarantees led to longer (riskier) mortgages, less prudent credit profiling and smaller down payments, all of which do not promote responsible lending and borrowing. Add on top of that Wall Street's penchant for making easy money, and boom goes the dynamite.

So I haven't seen the 2011 Best Documentary "Inside Job" (cue to 1:50), but when I do, I will be very disappointed if the directors don't touch on the government's role in this most recent economic crisis via F&F, not to mention the U.S.'s mortgage interest rate tax deductions, the Federal Reserve's purchase of F&F mortgage debt, and the Federal Reserves extended low interest rates after 2001. It wasn't just a corrupt private sector (which arguably took advantage of the easy F&F subsidy and low interest rates by the U.S. Federal Reserve Bank, now a major holder of F&F debt) alone that promoted a perverse incentive structure pre-2008, it was very much the government's fault too.

I've been saying it since Winter 2009...F&F must go. Finally Obama, Republicans and Democrats are beginning to agree. Now remember, F&F cost us over $200 billion...more than any bank bailout, GM bailout, or AIG bailout...combined (but don't get me wrong, I don't think any of them should have been bailed out!).

On top of all this, F&F was a top lobbyer on the hill. Chris Dodd, author of the recent Dodd-Frank financial regulatory bill, was a top recipient of F&F lobbyist money. In fact, F&F lobbied everyone hard, the GOP and Dems. So it was the government lobbying the government--a conflict of interest similar to the Federal Reserve buying Federal government debt and then calling that debt money--all in the name of promoting something so well intentioned: housing for all! All in the name of trying to shorten that socioeconomic ladder.

I say, beware of unintended consequences. The greatest enemy of knowledge is not ignorance, it is the illusion of knowledge. I place my trust in a purely private mortgage market where the government does not interfere in the marketplace (talk about a slippery slope).

Side note: who was pushing for more regulation of F&F? Find out here!

Overall, you have to blame the government and the private sector for the crisis. I will take it a step further and say that it was the collusion of government and powerful corporations, known as "corporatism" (aka crony capitalism), that helped bring the economy to its knees.

Thoughts?

John

--
John Vignocchi

Twitter: @J_Viggs

Best 40 Minutes of Politics Ever

2011-02-17T02:27:00.000-08:00

Chris Christie is the man, I highly encourage you to watch this video. Christie tackles the big issues and offers specifics, and prides himself on being honest with voters (and treating voters like adults) which is rare in politics.

Full version here: http://www.aei.org/video/101395

Abbreviated version here: http://www.politico.com/news/stories/0211/49670.html

Vast Necessity of Government...psych

2011-02-07T00:13:00.000-08:00

A letter I wrote to a Friend:

I read this article and thought of your comment, "I recognize the vast needs that only government can meet, but I don't naively believe that it will meet those needs perfectly all or even some of the time."

http://www.realclearmarkets.com/articles/2011/02/04/crony_capitalism_or_raw_corruption__98852.html

If you believe the vast needs of the people should be met via government, which I don't, I argue the majority of these needs should be delivered via a more local form of government (i.e. state/local) because it's less susceptible to corruption and corporatism compared to a large, central federal government. Reasons:

1) There are 800,000 citizens to 1 member of congress...with such a big ratio, and so much power given to the federal government, the only interests that will be heard are those who have money, connections and other resources (i.e. corporations, unions, other shady special interests that want to suck off the powerful federal government's teat). State/local governments can better tailor policy to their citizens. For instance, San Francisco can do all the liberal shit it wants to, Texas can do all the conservative shit it wants to, and both can pay the price of their policies...of course, things like racism, sexism, etc. should not be tolerated and is the main reason we have a Supreme Court. Since the federal government will have less power, citizens will pay more attention to their local governments.

2) This is the way the founders wanted it. They gave the federal government limited powers in the Constitution and granted the states a lot of power. (side note: health care and insurance coverage does not affect interstate commerce...what's to stop the federal government from legislating that I buy a hat to protect me from skin cancer--it's absolutely ridiculous that members of Congress and the Oval Office, who are subject to the very corruption mentioned in this article, can force me to buy health insurance).

Overall, I largely believe that the federal government should NOT be allowed to distribute services that fulfill the vast needs of the people because the government by nature, is inefficient. The more power we give the federal government, the more we allow the feds to legislate our lives, the more we allow the feds to tax us and distribute our tax dollars, the more we invite powerful special interests to manipulate the federal government (i.e. politicians like Obama, McConnell, Pelosi, Reid, Ami Bera) into serving the powerful special interests wants. This causes inefficiency because usually what the special interests want is not the most efficient solution!

The system described above, what I know as "corporatism", is what we have had in the U.S. We don't have free-market capitalism, we have corporatism, and it's because the Republican and Democrat politicians and bureaucrats in Washington believe they can better serve the vast needs of the people compared to a free market. I don't buy it. The government can define the rules, but it should free markets.

I view my tax dollars as an investment, and the federal government is a HORRIBLE investment because it's an inefficient system. The returns are terrible and the costs usually far outweigh the benefits. There are better ways to serve the vast needs of the people than by the federal government, and I strongly believe that these needs are better served by private, free markets. The ones that can't be served by free markets should be administered by state and local governments, and defined and overseen by the citizens of those state and local governments.

At the end of the day, who knew Obama was going to be more of the same? I voted for him because I thought he would change the type of corruption mentioned in this article, but he didn't. He is the same as every other politician--and he still can't perfect markets...no one can.

Best,

John

PS: I dislike Republicans more than Democrats because the former say they want small government but tax and spend like the latter, which makes them full of shit. At least Democrats tell you they want more of our tax dollars to spend. Basically, they both suck. Just wanted to be clear.

Evil Begets Evil

2010-11-28T23:24:00.000-08:00

My future father-in-law and I had a heated political debate this weekend which began with the TSA pat downs and ended in an argument about America’s strategy against terrorism.

Heated arguments with the future father-in-law are not unusual given my tendencies to be politically outspoken...thank god Kaitlyn is patient and puts up with me (albeit she does have her limits as many of you know).

I was arguing that we are getting patted down (IMO, huge violation of privacy and I'm completely against the TSA's new inspection procedures) because we are afraid of terrorists attacking us. But why do terrorists want to attack us?

I stood by my usual MO...our efforts to “get” the terrorists in Iraq, Afghanistan and Pakistan end up creating more terrorists because we have accidentally killed thousands of innocent Iraqis, Afghanis and Pakistanis. Imagine you live in one of these three countries...when a member of your family or friends are killed by Americans, would you be more or less likely to join your neighboor's jihadist club? Arguably more likely. If your Iraqi brother was killed by an American missile, troop, etc. how would you react? Most likely you would want America to leave Iraq because of the horrible event that just occurred. But you don’t have a voice because your government is more dysfunctional than Americas (imagine that). So what do you do? Strap a bomb to your chest to make a point and hopefully take someone down with you?

Now let’s look at the macro level, who has killed more of who? Have Muslim extremists killed more U.S. civilians through acts of terror, or have more Muslim civilians been killed by U.S. actions in the name of fighting terrorism? I added up the deaths of 9/11 plus any deaths associated with the Iraq and Afghan wars…and counted ~7,500. Then I added up the deaths of innocent Iraqi civilians in just the first year of Occupation Iraqi Freedom (OIF), and the number is over 12,000, according to Iraq Body Count. Think about it, that’s more innocent Iraqi civilians dead in one year due to a war that we got suckered into because of WMDs and “Iraq’s involvement in 9/11”, which both turned out to be lies (thank you G.W. Bush). WMDs and 9/11 are a shitty reason for American to, directly or indirectly, be involved with 12,000 dead civilians in 2003 (a total of ~100,000 innocent Iraqis have died since OIF). That’s a lot of pissed off people that don’t have much of a voice but may have a crazy jihadist neighbor.

So I believe our war campaigns abroad, combined with our global military empire (730 military bases in 130 countries) only create future terrorists, promote hatred of America, and therefore only aggravate the problem. Plus, the costs associated with servicing a global military empire are helping bankrupt our country (What’s the IRR on a bomb? What’s the IRR on our 730 military bases? Arguably a very poor investment with our scarce resources.) War isn’t a good investment with our money (i.e. tax dollars).

The rant below is an extrapolation of my thoughts from this weekend:

This article is an indirect example of why it's good to not have a global presence in every corner of the world.

Read the article first, especially what he says about our 30,000 U.S. troops stationed in South Korea.

Now if we weren't involved everywhere in the world, including S. Korea, we could react quicker to assholes like Kim-Jong-Il and have a louder, more respectable voice in the global political arena.

If we didn't have our military tied up in Iraq and Afghanistan, we could kick the shit out of North Korea in two weeks, and still have money left over to rebuild Seoul. Rather we prefer to waste money fighting 3rd world "terrorists" (and killings thousands upon thousands of innocent civilians, which directly creates more people who hate us, aka terrorists...oh the irony). Don't forget, Bush lied to us about WMDs in Iraq, we are in another unconstitutional war in Afghanistan; we wage another unconstitutional war against Pakistan (and give their corrupt regime BILLIONS of OUR money); and there exists another war against our liberties and freedoms (Patriot Act, TSA pat downs, whatever comes next designed to "protect" us...it's a slippery slope).

Some battles are worth fighting...fighting 3rd world, extremist assholes door-to-door is not a battle I want to fight. I'd much rather take out North Korea and Iran's crazy leaders than some losers in the third world (Iraq and Afghanistan). Side note: America gave Iran a voice by removing Saddam from power. Now Iran doesn't need to worry about their crazy next-door neighbor and can focus on funding and training Iraqi extremists to kill our troops and ally with the Iraqi tribes! Oh the irony is stinging now!!

Stupid stupid stupid foreign policy decisions begin with a shoot first - ask questions later reaction, and end in a painful defeat, a lousy economy, debt, death, and something worse than disco and punk rock.

Challenge conventional thinking.

The economic mindset of the Obama Administration

2010-10-30T09:45:00.000-07:00

I was reading Politico this week and came across this quote from Joe Biden: “Every single great idea that has marked the 21st century, the 20th century and the 19th century has required government vision and government incentive. In the middle of the Civil War you had a guy named Lincoln paying people $16,000 for every 40 miles of track they laid across the continental United States…. No private enterprise would have done that for another 35 years”

As you can imagine, this boiled my blood. This is the number 1 thing that pisses me off about Obama's admin, his "progressive-liberal" following, and "intellectuals" like Paul Krugman...they ACTUALLY believe, or look at the world from the viewpoint, that the private sector and average citizen require government vision and incentives to complete their "great" ideas...it's complete bulls*%t. When you understand that this is the Obama administration's mindset, it makes sense why they want to take more control of the economy, do more "stimulus", and write more overbearing legislation like Obamacare...they are completely out of touch with REALITY.

If Joe Biden was with me on my Amtrak train right now, I'd b*$%^ slap him in the face with the article below. Read how Joe lies (it's short) and can't even back up the concrete details that "support" his belief that "Every single great idea that has marked the 21st century, the 20th century and the 19th century has required government vision and government incentive."

The Geniuses Who Lord Over Us

by Don Boudreaux

2 people liked this

Here’s a letter to the New York Daily News:

Celeste Katz reports that Vice-President Joe Biden recently remarked that “Every single great idea that has marked the 21st century, the 20th century and the 19th century has required government vision and government incentive. In the middle of the Civil War you had a guy named Lincoln paying people $16,000 for every 40 miles of track they laid across the continental United States…. No private enterprise would have done that for another 35 years” (“The Daily Politics,” Oct. 26).
Let’s overlook such fruits of private creativity and enterprise as the light bulb, refrigeration, the assembly line, container shipping, and the polio vaccine and focus instead on Mr. Biden’s example of America’s first transcontinental railroads. The Great Northern – conceived in 1886 and owned and run by the immigrant James J. Hill – received no government assistance (not even free grants of rights-of-way). Moreover, unlike the other three transcontinental lines that were completed in the 19th century – and each of which was indeed government subsidized – the Great Northern never went bankrupt. It’s with us still today as the BNSF Railway.
Sincerely,
Donald J. Boudreaux

And Bob Higgs tells me, by e-mail, the following:

He’s [Biden's] got the subsidy amount wrong, too. For the UP [Union Pacific] and CP [Central Pacific], it was $16,000 or $32,000 or $48,000 per mile, depending on the grade (paid in U.S. bonds, of course).

This Stuff Is Always Hard to Believe

2010-09-26T23:18:00.000-07:00

What powerful stimulus

A Useless Comparison

2010-09-26T23:03:00.000-07:00

Kevin Williamson writes here about a response to one of his pieces about communism vs. socialism.

M.S.'s response irks me: "I have lived or spent time in several of the northern European social-democratic countries that are often described by American conservatives as “socialist”, and I don’t remember seeing anything like this going on. Let’s see, the Netherlands, Denmark, France . . . nope, don’t remember seeing The Man coming to anyone’s house with a gun to tell them to go serve the community."

Don't forget the effects of scale. The Netherlands, Denmark and France are all small countries, relative to the America, which arguably make them easier countries to implement "socialist" type entitlement programs. For instance, it's easier for the Dutch to align their costs (i.e. taxes) with their benefits (cheap health care) because their capitol isn't 3,000 miles away and the government is more visible, and therefore accountable, to the people.

Obama Says No Thanks to Carter Comparisons...Duh

2010-09-26T22:58:00.001-07:00

http://www.renewableenergyworld.com/rea/blog/post/2010/09/obama-no-thanks-to-carter-solar-panels#readercomments

Comment number 4.

This is just awesome

2010-09-19T23:04:00.000-07:00

http://www.youtube.com/watch?v=yuri7p_9pm4&feature=related

No wonder they're mad Krugman

2010-09-19T22:50:00.000-07:00

My response to Krugman's OpEd today

Perhaps the reason why the poorest Americans have seen their incomes stagnate over the past decade is because the government has grown in size as a % of GDP from 33% in 2000 to 44% in 2010. An increasing government is not the best way to create prosperity, nor lift those on the bottom of the wage ladder out of poverty, because the free market is the best, most efficient, and most fair way to distribute wealth among citizens...not the government. I know that may be a tough one for you to swallow Dr. K, but not everyone has the same definition of “fair”, especially when it comes to money and income.

No wonder the rich (defined as the top 1% if income earners) are “angry”! Their share of total federal income taxes paid has increased from 24.8% since 1987 to 40.4% in 2007. However the money that the rich pay in taxes isn’t being used efficiently, nor is their money going to its highest valued purpose (because it’s being spent by the government). It's hard to deny or paint data that the IRS provides as biased.

The rich are rich for a reason…they have been smart with their savings and invest their capital into opportunities, businesses and industries which in turn creates jobs. I trust that the rich will spend their own money far more efficiently than the burgeoning and cumbersome federal government.

Reflections on Food Inc.

2010-09-07T23:50:00.000-07:00

My takeaways from the documentary Food Inc are:

The government's subsidy of corn and soy products create an incentive for farmers and big businesses to do what they do best, efficiently produce what consumers want. I guess that if we took 90% of the products in the typical grocery story, they would contain corn and soy be it in the typical junk foods, like chips, candy, and sodas, or in food that is considered to be healthy, like juice. Not only are these corn and soy processed foods engineered by scientists at Food Inc. to be tempting (think salt, fat and sugar), but they are very very cheap to buy--and it all starts with the federal government subsidizing the production of the basic ingredients of these processed foods.
The government's food industry subsidies disenfranchise the poor who find more value in the BK value meal and not nutrient dense fruits and vegetables. Then that poor family gets diabetes or some other Western diet related disease and has an additional expense, and is even further from buying higher quality foods. These subsidies create a negative feedback loop so the government is indirectly subsidizing unhealthy habits and Western diet related diseases.
It's not a sin to buy foods that aren't local. I think it's great to buy in season fruits and vegetables, and to buy local produce at farmer's markets, but no one needs to go crazy locovore. Flash frozen fruits and vegetables are picked and immediately frozen, which locks in precious nutrients, and many stores offer organic flash frozen produce.
The food industry value chain, from seed to supermarket, is highly responsive to consumer tastes and preferences. We all vote with our wallets and most of us have the option to buy high quality, nutrient dense food. We should change the food industry's incentive structure by repealing government farm subsidies.
The failures presented in Food Inc are not failures or short comings of the free market, because the market is not free so long as the government subsidizes. The failures are a problem with corporatism, not capitalism. There is an important distinction between the two.

Krugman Roasted

2010-09-07T20:45:00.000-07:00

Love it. Krugman shows his true love affair with Fannie and Freddie.

Robert Samuleson, via Russ Roberts, on the failure of improving education since 1970. On the same topic, the folks at American Thinker offer additional perspective on the failure of public schools.

Uncontrolled BS

2010-08-30T23:32:00.000-07:00

"Democratic House campaign chief Chris Van Hollen was quoted saying Republicans are working on a plan to "abolish Medicare in its current form" and "throw seniors to the whims of the uncontrolled costs of the private-insurance market."

Costs are already uncontrollable because most medical payments in the U.S. are paid by the federal government, not by a private system nor the individual receiving the benefits. The incentives in health care seem out of whack since scarce resources are being used inefficiently and prices continue to increase. I find it amusing that markets with an absence of government influence--personal computers, semiconductors, the Internet, etc.--prices fall over time. In areas like breast implants and dentistry--areas of health care where government does not play--prices fall as well. In the markets with little government influence, scarce resources are used efficiently and prices decline over time.

Sure we don't want our seniors to suffer if they can't pay for health care services, and there are other solutions that won't bankrupt the country. However, Chris Van Hollen doesn't need to lie about the "uncontrolled costs of the private (health) insurance market" when the health care market is dominated by the public sector and costs are currently uncontrollable.

Confusing Income with Capital Gains and Conflating the Two to Argue the Rich Don't Pay Their Fair Share

2010-08-19T01:54:00.000-07:00

Here is a reply to an article titled "Effective Tax Rates of the Richest 400 Americans". The article's argument is often a rally cry by people who think we should raise taxes on the rich to help plug our fiscal hole.

"One less-noticed finding in the report is that the super rich have been paying smaller and smaller portions of their incomes to taxes."

Imagine you are number 400. You probably have hundreds of millions of dollars, if not close to $1 billion. How did you get that money? Income or investment? If I examined your tax returns, I would come to a similar conclusion as the article–you give more cash to the government via capital gains and less through income. Duh.

Now you are back to being you, with no money. How many jobs do you know pay wages that would get you $1 billion dollars? Not many. Many CEOs of the largest U.S. corporations aren't even on the 400 list. For instance, Jeff Immelt makes $3.3 million a year in wages. Even if you add his stock options to his salary, he is not on the 400 list, and Jeff Immelt is the CEO of General Electric. Lloyd Blankfein isn't on the 400 list and he is CEO of despised Goldman Sachs.

Some of the 400 richest people in America include: Sergey Brin (Google founder, owns a lot of stock) – $15.3 billion, Leon Black (founder of the $14.8 billion private equity fund) – $2 billion, Sam Wyly (private equity) – $970 billion...and others on Forbes 400 richest list.

The majority of the 400 list don’t get paid income for work like you and I work because the 400 club grows their money through investment which is taxed as capital gains.

For those that say the rich don't pay their fair share, don't use this data to justify it.

Truth be told that the top 10% of America’s income earners pay 70% of all federal taxes…up from 56% in 1987. http://www.taxfoundation.org/publications/show/23408.html

Rather than blame rich, successful people that create businesses which create jobs, blame the real problem with government--government spending. The problem is spending, not taxing. We all pay too much in taxes and the cost of doing so should be much much lower for the benefits received.

Civil Rights from Rand Paul's Dad

2010-05-31T21:16:00.000-07:00

Apparently Congressman Paul is not your typical Republican, libertarian and tea partier given the recent brouhaha surrounding son Rand Paul.

Less radical than big brother's coercion

2010-05-31T20:47:00.001-07:00

Below are some details on a bill Ron Paul put forward that I believe is pretty interesting. The bill attempts to tackle oversized malpractice lawsuits by implementing a tax credit for purchasing malpractice insurance, establish health insurance portability and competition across state lines--currently illegal at the request of insurance lobbies (not to mention there are 5,000 U.S. health insurers that are restricted from competing across state lines), and also provide a tax credit for individual and employee sponsored health care expenses (including insurance premiums), and other "outside-the-Beltway" legislative acts.

Sounds less radical then having the government force citizens to purchase private insurance under threat of fines and imprisonment...

H.R. 5444, the “Private Option Health Care Act,” would completely repeal ObamaCare and replace it with free market solutions.

In sharp contrast to mandates and force, H.R. 5444 would:

Provide all Americans with a tax credit for 100% of health care expenses. The tax credit is fully refundable against both income and payroll taxes;
Allow individuals to roll over unused amounts in cafeteria plans and Flexible Savings Accounts (FSA);
Provide a tax credit for premiums for high-deductible insurance policies connected with Health Savings Accounts (HSAs) and allow seniors to use funds in HSAs to pay for medigap policies;
Repeal the 7.5% threshold for the deduction of medical expenses, thus making all medical expenses tax deductible;
Guarantee individuals can purchase health insurance across state lines;
Permit a tax credit for negative outcomes insurance purchased before medical treatment, reducing expensive malpractice suits;
Reduce barriers to importing FDA-approved prescription drugs.

A memorial day of political thought

2010-05-31T20:22:00.000-07:00

A friend shares this article with me, authored by Tom Friedman (not related to Milton Friedman, the Nobel economist).

I don't think Tom realizes that oil companies invest much capital into clean technology companies. I work in cleantechnology investments and know the oil companies are active investors in clean technology. The whole "think like a kid" theme is cute and clever, but stops short of being a persuasive argument.

Courtesy of Cafe Hayek, David Henderson offers some perspective on the meaning of Memorial Day.

When I googled Ron Paul (#1)

2010-03-25T01:07:00.000-07:00

My response. I didn't get past opening paragraph on the first go around:

Ron Paul is not crazy! Is he crazy because he acts differently than other DC politicians? For instance, Paul gives back part of his salary each year, he is not enrolled in the congressional retirement plan (which allows members to keep full retirement and health benefits after 5 years), and he has never taken a junket according to public records.

I don't think that's crazy. I think that's an example of a politician following their principles and sticking to their guns...so good for him. If sticking to principles in your private life and voting records, even when they are unpopular, is a bad thing then we need more craziness in DC. I thought what we had now was crazy (massive deficits, bailouts, government ownership, gigantic unfunded promises of SS and Medicare...not to mention a society crumbling at the foundation).

If only you had some more faith in the idea of freedom for ALL members of the human race, perhaps you would see Ron Paul's free-market policies as a welcoming sign of the next stage of political evolution. An evolution to where we don't let federal government programs and departments inefficiently waste our tax dollars.

PS: Republicans suck too and Glen Beck is a weirdo

National Education Standards--The Wrong Direction

2010-03-16T23:28:00.000-07:00

I read an article this week in the NYT which expressed much relief at president Obama's call for national educational standards. Not to confuse the two, national standards differ from a national teaching curriculum where federal bureaus in DC decide which textbooks to use in classes. The proposed national standard has been vigorously researched to provide an overarching set of well-intentioned standards with the goal of preparing students for college and life thereafter. This picture may comfort people, but I it confuses me.

Before I get to the public school system, the core problem of a national standard is that it's a standard, a regulation. The arguable belief that the federal government fails at enforcing its own regulations and well-intentioned programs is a separate argument. I'm confused about how national standards on a macro level will motivate teachers to perform better on a micro level? How will standards motivate teachers to rethink their old habits and stale teaching methods? How will it encourage teachers to build better relationships with their students?

Albeit there are many dedicated, innovative and thoughtful teachers in public schools across the nation...but there could easily be far more. Especially in poorer cities and states. We as a nation should be able to assemble the resources needed to teach the future of our country. This WSJ article argues the charter system, which Obama has supported but sporadically now, will most likely help poor students by providing education with more quality and at a lower cost than traditional public schools. But how? Why?

The answer is simple: competition. Sure competition and the concept of creative destruction (also mentioned in the WSJ article) is harsh...it's not easy losing your job. But sometimes we need to fire bad teachers. And we should be worried about the powerful influence of teacher unions in both state and federal politics.

Now let's look inside the public, i.e. government controlled, education market (FYI Department of Education budget was $60 billion in 2009). How many students attend public vs. private schools? 81% of students attend public schools, 10% attend private, 4.0% attend Catholic and 2.3% attend charter schools (plus 2.5% homeschooled) according to the Education Digest's data.

With a presence of 80% in the education market, the public school system is a monopoly monopolies serve their own interests before their client's and customer's interests. Isn't this so true in the education market with respect to how much influence their unions have? How else can you explain tenure? And why is it so hard to fire bad teachers? (great Newsweek article)

Strong and stubborn teacher unions play a big part in the education debacle, but they aren't the whole story. Look at teacher efficiency. The same data from the Education Digest report shows 82.1% of all teachers teach in public schools and there is 1 teacher per 15.5 students. More data below:

Private schools have 12.9% of teachers, or 1 teacher per 12.2 students--understandable because private schools cost a pretty penny and are built on a model of quality over quantity.
Catholic schools have 3.9% of the teachers, or 1 per 16--understandable because the Catholic church provides much charitable education work in poor neighborhoods...Kaitlyn works at St. Patricks in a low-income neighborhood in Sacramento
Charter schools have 1.1% of the teachers but teach 2.3% of the market, or 1 per 33.4. According to the studies in the WSJ article, charter students do much better compared to their public school counterparts! Not to mention their reputations are well-respected in poor communities. And charter teachers aren't unionized...I know it's shocking for unionized teachers to actually have to worry that their sub par work can get them fired

Competition is key, because demanders will always look for the best services for their dollar. There is much data pointing towards the benefits of more choices and freedom in the education system, but the real question is: how long can we afford to let the current system operate when it's the kids who are suffering? Cliche I will admit, but still it's for the kids.

I would campaign for more competition in the education system rather than legislating national school standards. Perhaps well intended, let's take a more rational approach first.

Mr. President, How is This Change?

2010-03-10T01:52:00.000-08:00

This post is a compilation of some articles I found yesterday (3/8/2010) and I feel compelled to share it.

How can Obama’s health care proposal be fiscally responsible? How are budget tricks a change from politics as usual? Didn't Obama campaign on change? This seems like the same old dirty DC poltics: http://www.nytimes.com/2010/03/09/opinion/09brooks.html.

Also, note that Brook’s main arguments are eerily familiar with this transcript (http://online.wsj.com/article/SB10001424052748703807904575097394068626652.html) of Rep. Paul Ryan speaking at Obama’s health care summit two weeks ago.

Obama’s dream that his plan will cut costs and lower premiums for everyone (http://online.wsj.com/article/SB10001424052748704869304575109300800922486.html?mod=WSJ_WSJ_US_HealthCareReform26_2) is mostly BS and it may destroy his presidency if he tries to keep pushing this “reform” through…especially via budget reconciliation.

-John

2009-11-04T01:38:00.000-08:00

http://money.cnn.com/pf/features/lists/taxes_marijuana/table.html

These numbers seem low to me. I live in California and I've heard that marijuana is the state's largest cash crop at over $8 billion in total market size. A normal statutory business tax rate on just selling cannabis for smoking (not including all the money from sales hemp for paper, clothes, food, fuel, most things that use trees) would be 38%, but let's be conservative and say 20% effective. Take a low ball $5 billion estimate of the CA cannabis industry and multiple that by 20% and you get $1 billion dollars of taxes. Reduce government spending on cannabis prohibition, replace some of it for education and rehab from hard drugs and there is a net benefit of more than $1 billion dollars...plus the creation of a nice private industry selling its somkeable product through regulated establishments (e.g. alcohol).

I don't know if CNN was just quoting the federal taxes at $100 million but that is wayyyy to low. Of course the article is from 2005...

Good article on the front page Fortune

2009-11-04T01:36:00.000-08:00

http://money.cnn.com/2009/09/11/magazines/fortune/medical_marijuana_legalizing.fortune/index.htm

This is related to the next post.

My response to Krugman--Social Security, Round 1

2009-05-25T09:02:00.000-07:00

Hating on Social Insurance (from Krugman's blog posted 5/25)

What Digby said. Of all the things to worry about in today’s world, the prospect of Social Security shortfalls several decades from now doesn’t rank high on the list. But there’s a whole generation of Very Serious People who think that worrying about entitlements is how they demonstrate their seriousness — while, say, worrying about climate change is hippy-dippy. Indeed, we find the same people who declare that to show how responsible we are we must do something about Social Security RIGHT NOW declaring that saving the planet is, you know, expensive, so let’s not.

My response to Krugman:

I worry about entitlements AND climate change…however SS faces short falls within THIS next decade. You do know that Congress doesn’t actually keep the the excess payroll taxes in a special coffer? All the extra tax revenues from SS are placed in Congress’s General Fund and SPENT. What is left are IOUs from the Federal Government to the Social Security Administration (SSA). When SS receipts are outweighed by SS payouts to retirees in less than one decade, the SSA will have call Congress and demand repayment of the IOUs. Congress will have three decisions when this happens and may choose a combo of all three: increase borrowing, taxes, and/or decrease spending. The best thing Congress could do would probably be to get RID of this inefficient retirement program–however is unlikely to happen since many millions of Americans (including some of my family members) are now dependent on SS for a majority of their retirement.

Back in the Great Depression, when the idea of SS was born in America, there existed very few, if any, private market solutions for retirement. Now that reality has changed and private firms offer many retirement solutions in the form of annuities, IRAs, mutual funds, etc. So why is the inefficient federal government burdening employers and employees with a 15% tax to fund a pay-as-you go ponzi scheme also known as Social Security. I’m 22 and will probably never receive ANY benefit from this program even though people in my generation will (respectively) be funding SS recipients at a ratio of 2:1.

— John Vignocchi

Tired of crazy Catholics

2009-05-18T00:27:00.000-07:00

From an assignment for Bus 404:

America’s News HQ – Fox News 5/17/09

Fox News hosted Randall Terry and Fr. Jonathan Morris—two radical, right wing, pro-life activists—to fill in the space between the boring parts of the controversial Notre Dame graduation ceremony. Both Terry and Morris were criticizing the Catholic University for giving President Obama an honorary law degree. 2 hours.

Fox News was obviously leaning towards the right during this story. Their guests shared similar viewpoints: against Obama and anti-Notre Dame citing the President’s “unholy” voting record on the abortion subject.

The overall bias of this show is completely obvious. I heard some backing for Obama and the University, the anchor bringing up the point that many Presidents have been invited to speak at Notre Dame’s commencement, however both guests refuted the point citing Obama’s unholy record of defending the “most innocent of lives”—nobody was there on the show to challenge Fr. Morris and Mr. Terry. I would have replied that not giving Obama an honorary degree would have been disrespectful and close-minded, and Obama is Mr. Open Dialogue compared to the previous administration. The same crazy pro-lifers who are intruding on the Notre Dame graduates and their ceremony, were backers of President Bush and his close-minded approach to dealing with differences of opinion. I may have interjected that Obama is also the commander in chief of our behemoth, inefficient federal government; none-the-less he deserves respect and honor—as the Vice-President of Notre Dame said in the President’s introduction, Mr. Obama transcended race (and unscrupulous allegations) to become elected President in a time of crisis.

Lastly, how boring are most graduation ceremonies? If the President of the United States came and spoke at my college, and received an honorary gesture of kindness and respect in the form of a degree, I wouldn’t be bored at all and I would be thankful that I had the opportunity to listen to an influential figurehead. All I have to look forward to is a boring stateeee schooooool graduation ceremony. Maybe John Madden will come back to speak now that he is retired.

Sen. Grassley and Politician's Pretense of Knowledge

2009-03-19T08:57:00.000-07:00

http://www.usatoday.com/news/washington/2009-03-19-grassley-marijuana_N.htm?csp=34

Grassley's argument exemplifies the stupidity and close-mindedness we have come to expect from lawmakers, especially at the federal level, as they battle their rivals in a fight for the median voter. Their all too common weapon--worthless political rhetoric. Grassley is a federal Senator from Iowa complaining about how California handles its own state laws. Worse, he cites the "gateway drug" farce to support his worhless rhetoric! I describe this as Grassley's pretense of knowledge--a common trait among politicians who actually believe they can make the world a better place simply by writing laws. Like Grassley, FDR and Congress may have had honorable intentions when they banned cannabis in 1937 via tax legislation. However, there are un-intended consequences to all laws written by politicians because they aren't perfect--politicians just have a pretense that they are perfect. That's why it pays to follow rules when it comes to government--so please respect the Constitution Mr. Grassley.

Why doesn't this guy just worry about what's happening in Iowa and leave what happens in California to Californians--the same Californians who voted for Prop 215. Since Grassley works within the federal government system, his opinions on this matter are biased because feds don't think twice about expanding the federal government's influence on states. Our founding fathers warned against a tyrannical federal government so I choose to largely ignore Grassley's rhetoric and take comfort with the concept of state's rights.

As citizen financiers of the California state government, we have rights built into the Constitution to protect against the tyranny of a federal government monopoly. Citizens are less heterogeneous within state lines, and more hetergeneoeous at the federal government level which oversees all 50 states (depending on how the Consitution is interpreted); that is different states have different cultures. The writers of our Constitution incoporated an idea of states' rights so conservative Senators from Iowa can't patronize us while we live our lives in California.

In an apparant attempt to further confuse constituents, "the senator said Thursday that [Attorney General] Holder isn't doing health care reform any good" by not using federal taxes to infringe on the right's of California citizens to use medical marijuana. I do see a link between decriminializing cannabis and prison reform, but health care reform? When has marijuana ever caused a health care problem, besides a cough or two. Grassley doesn't detail how medincinal cannabis would strain any rare attempt at decent health care reform, but it's rhetoric--what would you expect. Something of value? Please, he is a politician in today's government. Both sides of the aisle are full of it (by "it" I mostly mean their arrogance). I struggle to see the link between the two, so I assume Grassley expects a sharp rise in health related ailments of hard drug use by users who wandered through the drug gateway via cannabis. Never mind that no study's prove this theory, or the fact that tens of millions of Americans have smoked cannabis.

Grassley, go back to the cornfileds of Iowa (not meant to be an insult) and stay the F&*$ out of California state policies.

American Imperialism?

2009-03-19T08:25:00.000-07:00

America accounted for 45% of the world's military spending—$1.2 trillion in 2007—more than the next 14 biggest countries combined.

Is our defense budget sustainable? Probably not, just like Social Security (and Medicare) is/are unsustainable. Once again, America is living beyond her means but with the defense industry it's systematic--the military industrial complex.

"Change" would mean repealing the drug war now.

2009-02-14T18:53:00.000-08:00

http://www.youtube.com/watch?v=oyystXOfDqo, http://online.wsj.com/article/SB123439889394275215.html, http://www.nytimes.com/2009/02/14/opinion/14sat1.html?_r=1, http://online.wsj.com/article/SB123457326090086555.html

These articles and video are all talking about the same problem. As an example, the ideal level of pollution is zero however there will always be pollution. Similarly the ideal level of drug use may be zero, however there will always be drug use of some sort, whether it be cannabis or crack or meth. The drug war (which includes drug legislation and its enforcement) is the MOST expensive war we have ever fought to the tune of trillions of dollars, and it isn't making the situation any better. Incarcerating drug offenders isn't the answer because prison is a breeding ground for violence.

If arrested for selling weed or using crack you will most likely go to prison (in fact crack laws are stricter than cocaine laws even though crack costs less than coke...think about the race implication behind this penalty). In the interest of self-preservation and not wanting to get your ass beat, you are tempted to ally with a gang (most likely the gang operating within vicinity of your neighborhood). While in prison, you pick up more violent tendencies and once released you are on the street with your gang (because no one will hire an ex-con), again selling drugs in order to provide for yourself, and perhaps being involved in gang related violence.

This cycle leads to more prison, more gangs, more violence on the streets, and on and on. The high recidivism rates support this theory. Putting non-violent offenders in jail for prison exposes them to an unsustainable and negative cycle. Unsustainable because we cannot afford to pay for the repercussions of this cycle (i.e. more prisons, guards, unemployment, future drug dealers and gang members) and negative because the cycle becomes a trap for many. Give people a chance, don't lock them up.

If you make drugs legal, won't more people become users?

Perhaps. Friedman brings up a good point in the YouTube video--drug laws drive people from mild drugs to harder drugs. To support this statement, Friedman speaks of "new" drugs like crack (the old meth) to prove his point. Judging from the quality and content of the video, I'd say it was probably filmed in the late 80's when crack was a relatively new phenomena. As a testament to Friedman's statement, ater the "crackdown on crack" a newer drug emerged. Meth proves that the government, the DEA, and paternalistic citizens cannot rely the drug war (which again includes the legislation and enforcement of drug laws) to fight this problem. It is rare for laws and regulations to halt human ingenuity. If anything they foster ingenuity as citizens try to circumvent the law. People are smart, they will find a way to create new substances and circumvent the authorities. People will find a way to make a drug out of products you can buy at the store, and indeed such a substance has been created--it's called crystal meth. If marijuana was legal, who would want to do cocaine, crack, meth, heroin, etc.?! Do you think most addicts want to be dependent on those substances? They would probably settle for pot if they could buy it legally. In Amsterdam, where cannabis is legal, "crystal meth" is not a problem at all.

Now onto another topic. If drugs were legalized, wouldn't more people die because drugs are inherently dangerous...right?

Maybe. The word "drug" is a widely used term and to associate the it with "inherently dangerous" is a classic MADD or DARE induced stereotpye. Some drugs are more dangerous than others. Marijuana for instance is relatively harmless compared to heroin, alcohol, or tobacco (I don't need a chart to tell me that).

Current illicit drug overdose rates are approximately 10,000 a year. Alcohol and tobacco kill 550,000 a year. Prescription drug and alcohol addiction (and tobacco addiction) are higher than illicit drug addiction--and these are all legal! Remember Friedman's argument--people have a tendency to go from harder drugs to softer drugs. Well currently, legal drugs kill more people than illicit drugs, yet legal drugs like alcohol and tobacco are more dangerous compared to the illicit drugs MDMA (pure ecstasy), LSD, and cannabis. Of course one could argue that making illicit drugs legal would increase that fatality number from 10,000 a year to higher levels. However, I believe "hard" drug use (heroin, crack, cocaine) would fall over time if marijuana was legal. The majority of those who die from illicit drugs are from heroin and cocaine.

People do more dangerous drugs when they are illegal. What Friedman argues is also what I believe--people naturally move from hard drugs to soft drugs. The statistics of the Netherlands shows that hard drug use is less than in the US. And as for productivity and creativity...prison kills both more than any drug ever would. Keep asking yourself, would people en masse choose to do a substance like meth if they could buy marijuana at a regulated dispensary?

Now cannabis is California's largest cash crop...~ $9-10 billion...that's a lot of tax revenue. Banning this drug stemmed from a Puritanistic/Evangelical ideology, government paternalism (sounds liberal to me! Except most liberals want the drug war to end as well), and a drug czar who wanted to expand his bureaucracy.

Side note: this is a good website to visit: http://www.leap.cc/cms/index.php. Although many law enforcement officials and the special interest groups they form will tell you drugs are the worst thing in the world, they have a profitable incentive to do so. If society considers drugs a big problem, then the police and prison workers will "need" a big budget. However the law enforcement and prison workers are part of the problem, and their special interest groups make it a bigger problem by convincing people to shoot down good legislation like Prop 5.

Why is Mexico blaming us for a drug problem in their borders?

Mexico is one of our largest trading partners. The country has never had a stable government powerful enough to combat the many issues afflicting it's population, much less rich drug lords. The reason why the drug lords are rich is because there is a HUGE black market (estimated by the Bush admin to be $60 billion dollars) for drugs in the US. This market equals opportunity for Mexicans and Americans (and Canadians). Yes, our policies do affect people in other countries. Why else would people pay so much attention to our politics? Mexico's drug problems CAN BE blamed on our drug policies because those same policies create the economic opportunity for the drug lords! Perhaps if the Mexican government stopped dedicating as many resources to fighting these strong drug lords they would be able to combat more important issues like education, poverty, hunger, etc.

People just don't think outside the box on this issue because they cannot imagine living in a world where marijuana can be bought in a store. That's illogical! No matter how many MADD and DARE presentations your children sit through, the government and paternalistic citizens will never be able to stop people from smoking a harmless substance. The government, and society in general, has more important battles to fight and should stop appeasing the same Puritanistic/Evangelicals who were in support of alcohol prohibition.

Repealing the drug policies and replacing them with European type models (which treat addiction as a health issue) is a policy supported by those on the right and left because it makes sense. You can't use laws and the police to combat every "sinful" drug user. As we see now it's an un-winable war.

Today on CNN...

2009-02-09T14:05:00.000-08:00

"DEA Raids Los Angeles Cannabis Dispensaries"

The reporter on this story addressed a key issue, namely Obama's campaign indication that Justice Department resources will not be used on pointless medicinal cannabis club raids. The Obama Administration also argued the federal government should not spend federal revenues infringing on state laws (e.g. California's Prop 215 which made medical cannabis legal), an argument with strong constitutional backbone.

Of course a DEA spokeperson had to spoil the good news, or at least try to, by telling CNN, "Despite what Obama said during the campiagn, the DEA will continue to raid marijuana dispensaries because they are a front for drug trafficking and crime...they profit by preying on our communities." Now the DEA would say that because who doesn't want a bigger budget, especially in this economy? Right now America doesn't have the extra cash to be chasing harmless cannabis shops (never mind that cannabis is CA's largest cash crop that could provide the cash strapped state with over $1 billion in tax revenue per year...and don't forget about hemp).

But why is the DEA talking like this when Obama promised to end raids? Is he a liar? Maybe. But Obama has yet to find a replacement to G.W. Bush's DEA appointee, who continued the Clinton policy-era cannabis dispensary raids. However this a promising story coming from the Obama Admin...

I'll believe it when I see it but it's comforting to read.

Brain stimulating Obama stimulus suggestions

2009-01-19T19:30:00.000-08:00

There has been a great deal of media surrounding Obama’s proposed stimulus package. As always, there have been the usual political discussions on television and in newspapers regarding how and where the money should be spent. When it comes to government, there is always an abundance of opinions and interests, some being more powerful than others. However one idea caught my attention, partly because it came from a friend, and not a lobbyist or politician, but mostly because the logic seems to be widely adopted in today’s conservative Republican culture—dedicate more public resources to our already behemoth military. The sad thing is that many mature, adult citizens I know cannot see outside the Bush's administrations love affair with the defense industry.

I grew up in a conservative-Republican household during the late nineties and early 2000s, so I can smell red-state ideologies from a mile away. Therefore, I was not shocked to hear how my friend’s stimulus proposal centered on the defense industry and projects such as building a new aircraft carrier.

A job created in the defense industry will provide different long-run benefits for Americans compared to a job in health care, education, or clean technology. Increasing defense spending would provide the public with a return on investment close to zero, since bombs just blow up and aircraft carriers require sailors and costly maintenance.

President Eisenhower delivered a speech 60 years ago where he listed the opportunity costs of increased defense spending. My Republican friends miss the theme behind Eisenhower’s speech, which is “do we really need another carrier?” In the grand scheme of things, America does NOT need another aircraft carrier—we have an over-supply of warships and military bases. If our government abandoned building battleships and weapons for the next 5 years we would still command the world’s most powerful military. Although the defense industry provides jobs in the short run, its products do not give America a long-term competitive advantage. Building more schools does.

Thankfully Obama’s proposed stimulus invests in projects that give America a competitive advantage in today’s global economy. One part of the bill dedicates $11 billion to upgrading America’s old, inefficient electric grid. The new Smart grid technology vastly improves the efficiency of electricity transmission and is a necessary investment if we want to implement renewable sources of electricity on a grand scale (smart grids are also an excellent export opportunity for the US economy since many countries need new grids). Since our current electricity grid cannot handle the demands of energy technologies like wind and solar, we have to upgrade our electric grid anyway. More efficient and cleaner electricity makes America more competitive compared to countries with older electric grid, so why not upgrade now? Smart grids, and not another another aircraft carrier, have proven benefits to both consumers and businesses.

And what’s not to like about investing in a future industry? The Clean Tech industry has been the top pick for private investment capital, even in the most recent quarter amidst $40 oil and weak capital markets. Another $43 billion of the proposed stimulus will invest in Clean Tech by upgrading existing public buildings and schools to be more energy efficient, providing loan guarantees and grants to advanced battery technology, and loan guarantees for renewable energy and transmission projects. Compared to building another aircraft carrier, the Clean Tech sector has the potential to lead a future wave of “Made-in-America” economic productivity, prosperity, and (most importantly) environmental sustainability.

The Obama proposal is priced at $825 billion and don’t forget that the US government is already deep in debt. Due to the past 8 years of fiscal irresponsibility and poor public investment, it is more important than ever to make sure we receive the most bang for our taxpayer buck. This is no time to ask for more warships when our roads, grids, and schools are crumbling.

2009-01-03T12:39:00.000-08:00

So I think it's best to start off and tell you where I am coming from when writing my opinions on my blog.We are all shaped by our individual experiences and environments; so far mine, like many of my fellow white, middle-class Americans, have been fairly sheltered.

I was raised in a conservative, traditional Catholic household. My family-friends were either Catholic or Lutheran, mostly all card-carrying Republicans who voted for George W. Bush in 2000 and 2004, and a long line of Republicans before that. We, my family and I, watched Fox News and I actually considered it to be a reliable, truthful source of "no-spin"news. Consequently, throughout high school I was a loud supporter of the Bush administration and would have voted for him in 2004 if I had the chance.

Admittedly I have grown up in fairly non-diverse environments, so the more and more I experience life, the more I see how much we all have in common--regardless of our race, religion, or nationalities. In college, I have challenged the ideologies of my past community, and now I want to write about it.

That's me. The soon to be fresh out of college, tax-paying, amateur citizen.