Quick post about overreaching regulations

I've been reading the latest issue of The Economist, a pereodical whose virtues I cannot extoll enough. On of the focii of this week's issue is on the regulatory environment of America.

I knew that Dodd-Frank was a dense tome of legislation, but until now, I had no idea how bad it really was.

As my readers might have garnered from my writing thusfar, Adam Smith is my "homeboy" (to use the parlance of our times). I'm a firm proponent of the free-market, and the larger concept of lessez faire government, as were the founding fathers of this great nation.

Unfortunately, I feel that we've strayed far, and if the folks at The Economist have the right of things (which they often do), our economy is pretty much "effed, " unless we stop thinking we can out-think business and regulating against all of the anticipated futures.

As I've said before, too big to fail is a fallacious notion, and Dodd-Frank at least makes an attempt to hedge (pun intended)  against this. A noble ambition, but at what cost? According to The Economist, just trying to comply with Dodd-Frank will cost investment firms $150k to start and an additional $40k per annum.

This doesn't include the fact that the bill is written such that it does not have all the answers, but is open to amendment and leaves ample room for expansion. In essence, this bill is designed to spawn greater bureaucracy in regulation of financial institutions.

You know, bureaucracy is, in my estimation, the mother of fraud, waste and abuse. I challenge anyone to provide me with a thesis to the contrary.

Thus, such a bill so voluminous (well over 800 pages) and complex as Dodd-Frank, which begs for more complexity and further bureaucratic involvement is not the answer to our problems. Bear in mind that the bill passed in response to the financial collapse leading to the great depression in 1929 was a mere 37 pages.

Basically, what we have is a petri dish for more bureaucracy, more government regulations, more waste, fraud and more abuse, and to what end? Financial institutions will continue to out-think regulations, as is their job, while wasting time and money on attempts at compliance.

Basically, I advocate a rule of thumb such that, if you can't read and understand regulation in a single sitting, it has no business existing.

More on this topic to come.

Tax Talk

Disclaimer: I decided to come back and add this bit here at the beginning just so no one accuses me of bias. I am the 99%, to utilize a phrase I'm tired of seeing/hearing. Truth be told, at the moment this post is being written, I am unemployed. I do not earn more than a million per year, net or gross. I do, however, respect those who do, and don't wish to think of them as smoking cigars and twirling moustaches, thinking of ways to rob me. Just so we're clear.


I mentioned taxes before. This is the one thing that could turn me into a one-issue voter. Find me a candidate - Republican, Democrat or Other - who shares my views on tax reform, and I would vote for him/her (or even an it; it's that important to me) in a heartbeat. 


Lately, we hear a lot of talk about terms like "fairness," "income inequality," "fair share," "99%," et al. from politicians and the media. I agree that our current progressive tax system is unfair, but not in the way that they do. 


The top 10% of income earners in this country shoulder roughly 70% of the federal income tax burden, while the bottom 50% of earners account for approximately 3%. What's more, those who receive the majority of benefits from federal programs are those who pay little to no taxes. So, I ask you, where is the "fairness?" What I see of this country's tax code already borders upon, "from each according to his ability, to each according to his need," a phrase that makes my blood boil. If you know where it comes from, good for you. If you believe that that single concept is the seed of destruction of society, then I would hug you if I could.


I want tax reform for this country more than anything. And I'm sure you're thinking, "ok smart guy, if you know so much, how would you reform the tax code?" If that's what you're thinking, good, I applaud you for thinking. My answer is, quite simply, the "Fair Tax." 


If you want to truly understand the Fair Tax plan, I urge you to read The FairTax Book, by Neil Boortz. It's only 200 pages, and is written for the average Joe. Not a lot of jargon, just basic economics explained in a very accessible way. I would describe it as life-changing. I will however try to sum up the key points here.


The concept of the fair tax is basically a federal sales tax. 


It is important to understand that every purchase you make in this country gets taxed at every step of its production. Not in the sense that European countries apply a VAT (Value-added Tax), but rather because each producer in the chain pays payroll and other corporate taxes. This is called an "embedded tax." The average "embedded tax" on all goods purchased in this country is approximately 22%. That means that, everything sold in this country costs about 22% more than it would if no corporations had to pay taxes. 


Some clever economists have crunched the numbers (more specifics in the book) realized that, if you eliminate the federal income tax, all corporate taxes, inheritance taxes, capital gains taxes and the vast (read: expensive) bureaucracy that is the IRS, then the federal government could operate at its current level (written in 2005) with a 23% sales tax on everything.


The core concept is, the more you buy, the more you pay in taxes. The wealthy buy more things, because they have more money, ergo, they would pay more taxes. However, they would be able to determine how much they pay in taxes simply by determining how much to buy. At the end of the day though, prices will stay approximately the same as they are now. Supply and demand make sure this part works, trust me.


Another key point. That everything up there does include food, but the Fair Tax plan includes a monthly stipend to all families in the country on a per-person basis to cover those taxes on the basic groceries needed. If you only buy groceries that you need (bread, milk, eggs, cereal, meat, fruits and vegetables, etc.) at reasonable prices, the stipend will offset the increased food prices. If you want to buy caviar, fillet mignon and champagne for every meal, the stipend will not offset your costs.


What all of this means for the American citizen:
- NO FEDERAL INCOME TAX (big one)
- No witholding for taxes on your paycheck means more money in your pocket
- Prices of all non food items would increase by roughly 1%
- Prices on food would go up significantly
- The stipend everyone receives would offset this rise in food prices
- The money you invest will not be taxed


What all of this means for American corporations:
- Businesses, large and small, can grow because they keep the money currently pay in taxes
- Businesses can grow because investments will be untaxed
- With a corporate tax rate of 0%, America is the tax haven of the world, meaning:
      - American companies that have left will come back
      - Foreign companies will move to America
      - Jobs will be created

More jobs, more money from each paycheck for every American. I'll say it again, life-changing.


Additionally, this tax system is as transparent as it gets. There are no hidden loopholes, no wasteful bureaucracy, no way for legislators to change the tax code without it being abundantly clear to every American whether taxes are going up or down, and by how much. If you don't like it, tell your Congressmen. If they don't listen, buy less and pay fewer taxes in protest. 


Finally, this is NOT a "flat tax." This tax plan is, as the name implies, fair. It is also, broad, brilliant, and desperately needed in this country. I've done my best to highlight the key points,  and if you're on board now, great, but go read the book. If you have more questions, or think it's a stupid idea, go read the book. If, after you've read it, you still think it's a stupid idea, then I don't know what to say, because I deal in logic, not whatever you subscribe to.

An addendum to my last post

It's been a few days, and I've been busy, but I wanted to add a quick little blurb regarding my last post.


I was watching the news the day after I posted about the contraception uproar, and I heard an interview with someone high up in the Catholic Church. I can't remember who it was, or even his specific office, but it was someone on the order of a Bishop or some such.


In any event, he was talking about how the problem is that the federal government is trying to make Catholic affiliated organizations pay for something the Catholic Church finds abhorrent.


News flash: The majority of tax-paying Americans find something that the government spends money on abhorrent. I find bailouts, extensive social welfare and the very tax code itself abhorrent. I suppose that I should found a church that holds these same ideas sacred and doctrinal, and try to make this a First Amendment issue so that my congregants don't have to pay for things they find abhorrent.


The truth of the matter though, is that I wouldn't do something like that, because I believe in social contract theory. In a nutshell, the theory of the social contract says that you surrender some of your freedoms to society so that you may reap the benefits of living in that society. Like all things, this is a pretty good idea in moderation, and a system that I am willing to buy into, as long as the sacrifices aren't too great or the rewards too chintzy.


As such, I will pay my taxes, disapprove of some of the things that they're spent on, and deal with it, and would advise others to consider what Hobbes (as in Thomas, not Calvin &) had to say about life without society. He warns that life is, "solitary, poor, nasty, brutish and short,"in the absence of a social contract. It's a tough pill to swallow, but sometimes you have to do and pay for things you don't really approve of because the alternative is a little too disconcerting.

Contraception Controversy

You may have recently heard about the Obama administration trying to compel Catholic institutions to include coverage for contraceptives for women in their insurance. And you may have heard a strong Catholic backlash, as contraceptives are a no no in Catholic doctrine. And finally you may have heard significant backpedalling from the administration.


Despite the fact that I am opposed to a great many healthcare reforms that have gone on of late, I feel like the President may have the right of things on this one. 


I recognize, and respect the Catholic position on contraception, despite personally believing it's an archaic throwback to a time when population growth was desirable, not to mention a good way to grow your ranks as a religious organization. If that's what Catholics want to believe and practice, for any reason, they're free to.


However, the cynic in me says that not all Catholics (perhaps not even most in first world countries), shun contraception. Couple that with the fact that in many institutions that would be impacted by this mandate, like schools affiliated with the Catholic Church, there are non-Catholic employees, and you can see that some women will probably benefit from this mandate.


Now, I'm not a theologian, nor am I an expert on Christianity, or the Catholic brand of faith, but I seem to recall hearing somewhere that free will plays a pretty big part in all of it. That being said, I feel like the onus to keep good Catholics from making use of contraception lies with the church. So, if there are too many "bad" Catholic women using birth control, it's up to the church to persuade them, not prevent them. 


Honestly, from the Catholic perspective, the contraception taboo is doctrinal, and therefore important. However, the Ten Commandments are, if memory serves, also pretty important to Catholics. Taking a look at the Tenth of said Commandments, God admonishes us not to covet our neighbors' house, stuff and/or wives. 


If the Catholic Church feels that they shouldn't provide access to contraception, for women who might or might not wish to make use of it, because it is frowned upon in their religious doctrine, then by the same logic, the Catholic Church should prevent Catholics from having neighbors, and certainly not married ones, with stuff, lest their parishioners become covetous.


Yes, I took that to an extreme, but sometimes the most extreme points are the most illustrative. At the end of the day, be reasonable. If a woman wants to use birth control, regardless of her faith, she's going to, so long as she can afford it. Providing an allowance for that option is not tantamount to encouraging it. If you don't want people to use birth control, like you don't want people coveting their neighbors' stuff and wives, show them why they shouldn't, don't throw up preventative barriers.

Death of the American Car

Remember when you opened an account with a bank and they gave you a toaster? I don't, but I'm aware that it happened, and older readers will surely relate. For those who aren't aware of how banks work, they make money off of investing your money, so it is in their interest to get as many depositors as possible. If all it takes is a crappy toaster to get your business, so be it.


Remember when car companies made really cool cars? You know, lots of steel and chrome and horsepower? So much horsepower that they actually underrated it so the insurance would be cheaper? And speaking of cheaper, remember when those muscle cars were actually affordable by industrious young people? Yeah, I don't remember that either, but as a child of the 1980's, I was born well into the slow death of the American car.


So, what went wrong? Somewhere along the way, some bright businessman realized that car companies made more money financing cars -- that is to say, collecting interest on a loan for a car -- than they were making actually selling the car. Since that fateful day, American car companies have been banks and cars are the new toaster.


Now, I've got no problem with companies trying to make money. That's what they're supposed to do. I just don't feel like I should take out a $20-40k loan from a bank to buy a toaster from them. I want a real, honest to goodness, kickass car.


Aside from the sheer nonsense that is "too big to fail" (another post for another day), it doesn't make any sense to perpetuate a dying business paradigm, and certainly not with my tax money! If a car company would rather do something else than make cars, fine, but if no one's buying, no one's buying, and the business model will fail again and again.


Ultimately, it's up to the consumer to dictate these kinds of things. Call me unpatriotic, but I say, when it comes to cars, don't buy American (or Japanese or German) if they don't offer you the product you want at the price you're willing to pay. Supply and demand, works every time.

Where I stand on the issues...

I guess the first place to start in something like this is to give some rough approximation of where I stand on the issues, so that anyone who reads this can firmly develop their preconceived notions about me and we'll just move on from there.


To begin with, I'm what is probably best characterized as a conservative, but before anyone begins booing or cheering, I'm not that kind of conservative. 


In financial terms, I fit the mold pretty well. I favor lower taxes, limited government spending, open markets and free trade. Pretty standard stuff really. If you don't believe in these things, and instead favor marxism/communism/socialism, take an economics class. Even in the proverbial ivory tower of academia, there's a reason professors still teach Adam Smith.


Where I stray from the conservative umbrella is in the social issues. Some might call me a libertarian, but really, I'm socially apathetic. I don't really care about legalization of marijuana, gay marriage or abortion to the point that they would ever impact how I vote. In terms of personal opinion however, I say legalize and tax it (in a reasonable manner), marry whoever you want, and it's a woman's right to do with her body what she sees fit.


From these points of view, the astute will probably recognize that I am not a very religious guy. I'm not in the, "I'm atheist and if you're not, you're stupid," crowd by any stretch. If you want or feel compelled to believe in something, that's your right, and you should do so. If you want to know more about my beliefs, check out dudeism.com.


That pretty much sums my general stance on the Big Three. I will dutifully endeavor to expand upon these topics as this blog progresses.

About this blog

When I was younger, my mother always told me, like her father told her, there are three things that you should never talk about at the dinner table: money, politics and religion. The problem is, I find those three topics to be the most compelling subjects for discussion. Therefore, as a slightly techno-savvy young man, I have decided to create this blog so that I can get my thoughts out into the wide world, and hopefully make someone somewhere, at least for some fraction of a second, stop and think.


Barring such noble (if a little self-righteous) aims, I'd like to think that maybe my future progeny and I can look back on this in 30 years or so and have a laugh. But at least I can content myself with the warm, fuzzy feeling that my method of political discourse stands a greater chance of bearing fruit than the tie-dye-sporting, bongo-beating that my parents generation went for. Not to say their way isn't a good time (I may have beaten a bongo or two), but like all generations feel about their forebears, my way is better.


DISCLAIMERS:


Facts
This blog will largely focus on my opinions and interpretations of life, the universe and everything. That's not to say that I'm averse to facts. Quite the opposite really, I love facts. Facts are the cornerstone of truth. However, facts are a funny thing when it comes to the Big Three: money, politics and religion. Lots of people, on both sides of arguments in these arenas love to present "facts" to bolster their arguments, which, taken at face value, is solid argumentation. 


I have a few pet peeves about facts, so bear with me, and we'll get through this together.


The first problem I find in terms of facts and the Big Three is that, everyone's got their pet facts that they like to wave at the other side, often eschewing logic in favor of, "Look, look at all these facts. Mine list's bigger than yours, ergo, I win!" Watch two sides argue on any cable news show and tell me I'm wrong. 


My second bone of contention is in the prevalence of statistics, especially in the realm of politics. Generally, I like statistics. Statistics can provide a compelling model of many different things, and in purely scientific inquiry, one can learn and predict quite a bit from statistics. However, having, at some point in my studies, been a student of statistics, I'm here to tell you that statistics can lie, or at least misrepresent the truth. It was, in fact, a statistics professor of mine who introduced me to the phrase Mark Twain said that Benjamin Disraeli said, "There are three kinds of lies:  lies, damned lies, and statistics."


The problem with modern political discourse is that it is not purely scientific, it's political. Is it therefore too much of a logical leap to believe that, if statistics can be manipulated to reflect certain things, and the organizations which collect and report political data are, if not outright affiliated with a political organization, then at least leaning this way or that, that the results of such political statistics are at least suspect? I'm not trying to impugn anyone's honor here, just explaining why I tend to take all statistics in the political arena with a grain of salt.


Finally, in a more holistic sense, my problem with facts in discussing the Big Three, is that these are very visceral, polarizing topics. The odds of actually winning an opponent over to your side are pretty slim, let's face it. We all think, if the world thought like I do, it would be a better place, but only sociopaths actually believe that that sort of thing can happen. Discussion = good, compelling people to agree with you = bad.


I've written a few research papers in my day. For those, I have had to find facts, use them deftly and cite them thoroughly, while ignoring the facts that don't jibe with my thesis, unless I'm prepared to shoot them down. It's common in academia, as it is in discussing the Big Three. But unless future educational or employment opportunities require this behavior of me, I'm done with fact-finding for now, and anyone who reads this will have to indulge me. That concludes my rant about facts.


Profanity
A note about profanity. I might use it from time to time. If this offends you, I'm sorry, but George Carlin had some pretty compelling thoughts on the banality of words. 


And then there's this:
Mama tried to raise me better, but her pleading I denied, that leaves only me to blame 'cos mama tried - Merle Haggard


Feelings
Feelings have no place in a debate/discussion as far as I'm concerned. If you can't be disagreed with, or proven wrong, without getting upset about it, I don't know what to tell you, other than toughen up or do something else with your time. If you get legitimately mad, sad or any other elevated emotional state during any kind of discussion about the Big Three, please don't waste people's time discussing them. 


Getting emotional about a debate can only achieve limited ends. Level-headed people will be annoyed by you, emotional people will yell/cry right back at you, and stupid people will be won over by your feelings, not your logic (which shouldn't count as a gain for your side). 


Ugh. That's a lot about a little, but I think that it'll do for now. Hopefully, I will be able to follow this with some decent content, about me and about my thoughts, sooner rather than later.