Saturday, November 29, 2008

Who's to blame for our economic situation? I blame Star Trek!

In a free market environment, people try to better themselves by finding ways to create value for others. That is, they create something, be it a product or a service, that is of more value to someone else than it is to them. Then they trade. Some ideas succeed. Some fail. It's an evolutionary process of natural selection that brings to market the things people most want at prices they're willing to pay.

In the United States today, we increasingly look to the government to provide the things we want. We also look to them to take the pain away from trying and failing. We've subverted the evolutionary process. Even politicians who once championed capitalism and limited government have gotten on the bandwagon. The government now owns stakes in banks, insurance companies and soon, the auto makers. In exchange for the cash infusions, government will have a say in how the companies are run, who they hire, what they produce and how much they'll make. There is no longer a debate as to whether or not the government should ensure everyone gets health care. There's just some disagreement as to the terms. Worrying about the national debt is not even on anyone's radar in this new paradigm.

How did we get here? Well, I blame sci-fi, at least in part. Science fiction has the ability to stir our imaginations. Some of the nifty devices used on shows like Star Trek have actually been produced and are in every day use (automatic doors, "communicators"). There have been many positive influences. But one thing most every popular science fiction drama has in common is a view of the future built by the government. Nobody uses cash in Star Trek. Everyone simply does their duty and is happy to do it. We see the dozen or so folks who get to go on the occasional adventure, but I can't help but wonder about the other 400 who simply do their jobs, day in and day out, and never get paid. All their needs are met by the Federation. Once in a while a "capitalist" type will appear on an episode, but they are backward, goofy, greedy and usually ugly comic relief.

The Stargate series is no better. The government is engaged in inter-gallactic trade and diplomacy on the taxpayers dime. Not only does the general public not know anything about it, they have no direct access to any of the benefits or technology. Yet the government forces that carry on this clandestine operation are the heroes.

There wasn't much mention of the common man in Star Wars, outside of the bar scenes, but there again the main characters who were engaged in private commerce were depicted as selfish, greedy, unreliable and eventually saw the error of their ways.

We have been sold a vision of a Utopian future without free markets, without capitalism, without the free association of independent individuals. Of course the message is subtle and packaged with lots of explosions and drama sprinkled with comedy, but it's there and it's effective.

We are reaching for Never Never Land; a future that will never come to pass because the fact is that an economic system based on resource allocation determined by an elite group, even a democratically elected elite group will never achieve the efficiency and genius of a system based on resource allocation by the cumulative effects of free individuals making voluntary decisions in a free market.

If we truly want to go where no man has gone before, we're not going to get there in a government chartered bus.

Monday, November 24, 2008

Too Big To Fail

One by one the CINO's are showing their true colors: Capitalists In Name Only.

The bail outs continue. Now it's Citigroup. The standard line is "I don't like it, but we had to do it." or "Yes it makes me angry that we're in this situation, but we have no choice." What does that mean exactly? That we've gone so far toward the China model that there's no turning back? If these entities are too big to fail now, what happens when we've consolidated power in just a few of them and they begin to fail again? I'll tell you what happens. We exercise the warrants that the "taxpayers" are going to receive in exchange for this round of bailouts. A warrant is an option to buy stock in the future at a fixed price. It's supposed to ensure that if and when these companies become profitable, the government can recoup some of its investment by selling the warrants. What will actually happen is the failing business models will continue to fail and the government will not sell the warrants but exercise them. That is, buy the stock, giving the companies another cash infusion and the government a seat on the board. In the name of negotiating on behalf of the taxpayer, of course they'll negotiate a lower exercise price. (write that down, you heard it here first).

The government will have a major equity stake in banks, insurers, the auto industry, more control over the health care industry and of course, the alternative energy initiatives are not going to be without strings attached.

The collectivists have won the war without firing a shot because most of the capitalists still aren't even aware that there was a war.

Tuesday, November 18, 2008

Whistling past the graveyard

The economy continues to slow even as the Fed cuts interest rates and injects capital into the banking system. Other industries are likely to get low interest loans and other forms of capital infusion as well. Why isn't all this "economic stimulus" causing optimism and rising prices on the stock exchanges? Because none of it addresses the real problems, which are only getting worse.

You stimulate economic activity not by manipulating data and artificially inflating the numbers, but by making it easier and more rewarding to take risks in the market place. That is not happening. Business is continually being curtailed by more and more regulation and mandates. Next on the agenda is some kind of universal health care, which will be the responsibility of employers. Man made global warming is no longer permitted to be questioned and more regulation, mandates and subsidies will be coming our way from the priests and priestesses of that cult. Minimum wage will be increased, this time probably with some kind of automated increase for inflation. The new administration has said that more funding for education "can't wait", although they've yet to connect throwing piles of money into the system with smarter students. There will be infrastructure spending as well as more subsidies for alternative energy. The federal deficit is completely out of control, so anyone who does manage to achieve some measure of success will be immediately targeted as a revenue source for the government. Those who keep their income low enough, will get a check.

As government doles out cash to struggling industries, it also gains more control. The cash comes with strings. Professional campaigners and attorneys will be making human resource and production decisions on behalf of some of the largest corporations in the country. The people who brought you Amtrak, the DMV and the Postal Service will soon be calling the shots for the major banks, insurance companies and auto makers. The Postal Service, has a federally protected monopoly on first class mail delivery, yet consistently cites cash flow shortages as an excuse for every rising prices, and now will be conducting the first layoffs in its history. That's the level of competence we're empowering.

The small business community is being zoned, taxed and regulated out of existence while large box stores gain multi-year exemptions from the taxes everyone else must make up. This, in spite of the fact that small business accounts for the vast majority of new job creation. Politicians pay lip service to small business, even as they are strangling it.

If you wonder how this mingling of government and big business, along with near zero interest rates and frequent cash infusions might play out, look at Japan. They've been following the same program for over a decade, with no success. Entrepreneurship is out. Bureaucracy is in. We're well on our way to becoming a fascist nation, but nobody's calling it that, probably because most don't really know what it means. Fascism is when producers still get to own their businesses, on paper, but the government dictates what will be produced, how it will be produced, where and when it will be distributed and at what cost. This is being done through subsidy, regulation and the tax code, rather than outright proclamation, but the nature is the same.

Saturday, November 15, 2008

TIme for a New Tea Party

(A Guest Post by Wifezilla)

Taxes are the life blood of the government. Unfortunately, government treats tax money like a teenager treats your refrigerator. It grabs whatever it wants, doesn't care if there is anything left for any other members of the family, and constantly whines for more. No matter which party a politician claims to belong to, there always seems to be a reason the government needs your money more than you do. The only way I can see to change the situation is to cut off their allowance so to speak.

Reforming our government because of taxes is not a new concept. Our founding fathers let England know how they felt about taxes when they dumped crate after crate of tea in to Boston Harbor back in 1773. Lacking a ship, a harbor and only having a small stash of Celestial Seasonings Bengal Spice herbal tea that I would rather not part with, I decided to find a slightly different way to protest taxes and the government waste of those tax dollars.

Below is a list of ways that you can cut off or reduce the flow of your money in to the pockets of politicians.

1. Drive a fuel efficient car.
A large chunk of the price of a gallon of gas is taxes. In Colorado, between state and federal taxes, you pay approximately 58¢/gallon which is abut 25% of the cost of each gallon of gas. The more fuel efficient your car is, the less money you pay for taxes. Driving a motorcycle or scooter will cut your gas costs down even more. If you can't afford to switch cars or a motorcycle is impractical in your situation, make sure the car you do have is in top condition. By keeping the oil changed, your tires properly inflated, and keeping your air filter changed, you can increase your fuel efficiency and reduce the amount of taxes you give to the government. Even something as simple as keeping your car washed can increase your fuel efficiency by up to 7%.

2. Buy fresh, whole foods.
Though it varies from state to state (or even town to town), usually fresh whole foods meant for home consumption are not taxed. Restaurant food and convenience foods are. By eating food you cook yourself, not only will you be healthier, you will avoiding giving money to wasteful politicians.

You may even want to consider planting your own garden. Foods that are shipped in to your local store gets taxed in many hidden ways. From the fuel taxes paid on the truck that ships it, to sales taxes paid on the pesticides that were dumped on the crops, there is money being taken at every step. What happens to that tax money? According to Citizens Against Government Waste, $1,529,220 was spent last year on an Appalachian Fruit Lab. The government also spent $188,000 on a Lobster Institute in Maine.

3. Learn to use Craigslist may be best know for their colorful personal ads, but it is much more than a way to plan a "casual encounter". It is a giant local tax-free garage sale without all the sitting at the end of your driveway hoping you don't get rained on. Neither buyers or sellers pay fees to use the site or list items for sale. Most items show photos and it makes it easy to shop as well as to sell your items. There is no telling how much longer a service like this will remain tax-free, but it still is as of now so use it to your advantage. Of course, if you are a "SWM in 2 BDSM seeking same", you can always shop for true love at the same time you shop for a slightly used lawn mower.

4. Buy new online
Online sales across state lines are not subject to sales tax....yet. Sure, you will pay shipping fees, but if you shop carefully, you can find sites with flat rate shipping or reduced shipping fees for larger purchases. Two examples of sites with great shipping policies are and Netrition sells health food and charges a flat $4.95 regardless of how much you buy or how much it weighs. Overstock sells a large variety of items from furniture to clothing to jewelry, electronics and more. They often feature $1 shipping or provide free shipping options.

5. Shop thrift stores

While you still pay sales tax at a thrift store, your overall bill will be much smaller than it will be if you purchase items new. Since the bill is smaller, the amount of money you pay to greedy government spend-aholics will also be lower. Besides, thrift stores purchases also give you a chance to help the needy. The Salvation Army, Disabled American Veterans, and ARC thrift stores are all run by charitable organizations.

6. Stop smoking
Cigarettes are one of the most taxed items available. The national average with state and federal taxes is 98 cents per pack. If you stop smoking, you stop giving money away that will be blown on studying cow flatulence, or the mating habits of the Northern snail darter. If you aren't ready to kick the nicotine habit just yet, consider switching to smoking a pipe or buying loose tobacco and rolling your own. Pipe tobacco and loose tobacco is much less expensive than pre-made cigarettes, so switching to these will mean less money for programs like the $492,000 Rocky Flats Cold War museum.

7. Brew your own beer and wine
Like cigarettes, beer and wine are easy tax target for tax takers. Brewing beer and wine is a fun hobby that also lets you deprive politicians of your hard-earned money. The highest taxes are reserved for liquor. From 50-80% of the cost of a bottle of hooch is tax. Unfortunately, while brewing your own beer and wine for private consumption is perfectly legal, it is illegal to distill your own spirits.

8. Go to garage sales
In most communities, people who hold the occasional garage sale are not required to collect sales tax. While more time consuming that popping in to your local Walmart, garage sales give you the opportunity to legally avoid paying sales tax and find unique, one-of-a-kind items. Along with listings in your local paper, is a great source for garage sale listings. Since they allow posting for free and picture uploads, you can often get a more detailed list of items available at any particular sale. Veteran garage salers plan a route of 4 or 5 sales they want to hit and shop early for the best selection.

9. Shop for lower sales tax rates.
A short drive can make quite a difference in the final price you pay for an item. If you are near a state or county border, check to see what the sales tax rate are in the next taxing district. In the Security/Widefield area South of Colorado Springs, CO, shopping at Walmart means you pay 6.9% sales tax between federal, state and City of Fountain Sales tax. Shopping at Ross less than 2 minutes away you pay only 3.9% since it is located in unincorporated El Paso County. In some areas, it pays to cross state lines. While the state of Washington charges a 6.5% sales tax, you pay zero in Oregon.

10. Make less money
The more money you make in salary, the more the government wants to take away. Working overtime usually results in very little extra take home pay for you but a big bonus for the government. If you are sick and tired of being sucked dry by government vampires, you may want to take a serious look at your income and lifestyle. Are you sacrificing valuable time with your children in order to make more money and buy more"stuff"? If you are married, can you and your spouse get by on one income instead of two? By simplifying your life, not only do you give the tax monster the brush off, you may reduce your stress level, make more time for your family, and gain peace of mind. ( has a nifty "Stay at Home Calculator" that lets you figure out if having one of the spouses leave the work force is feasible. Often times the person bringing in the second income finds out that their $20/hour job is actually only netting them $1.75/hour after deducting day care costs, commuting expenses, business meals, dry cleaning bills, taxes, etc...

11. Move!
Some towns and states have moved from the category of excessively taxes to downright business and worker hostile. MSN money lists the best and worst states for taxes in this article

According to MSN, "The state in which residents pay the most in combined state, local and federal taxes, per capita, is Connecticut (38.3%), followed by New York (37.1%), New Jersey (35.6%) and Nevada (35.2%). Oklahoma residents pay the least (27.8%), followed by those in Alabama (28.0%) and Alaska (28.1%)."

Any state or town that thinks you are their own personal cash cow doesn't deserve to have you. Take yourself and your family to an area of the country that appreciates your hard work, values your individual freedoms, and realizes that while government is necessary, it doesn't have to be oppressive or intrusive.

Then What?
It would be hard to see an immediate effect of people actively engaging in a tax protest of this sort, but the economic slow down we have seen in the past six months does give us some clues. Many cities and states are reporting reduced income due to lower sales tax collections. They have cut budgets while upping traffic enforcement in an effort to generate more revenue. State governments are also conducting random sales tax inspections at business locations.

In New York City , it was recently announced that Mayor Bloomberg is considering a 15% personal income tax hike on New York City residents. Also under consideration are cutting 3,000 jobs, canceling the January Police Academy class, cutting school budgets, rescinding previously passed tax cuts, increasing fees and fines, all in an effort to address a 4 billion (Yes, BILLION...with a B) budget shortfall over the next 2 years.

According to the Daily News, "The proposed increase in personal income tax would hit the middle class, costing those who earn $50,000 to $90,000 about $116 to $356 more next year, according to City Hall's estimates.

Bloomberg's latest fiscal blueprint is the harshest since he coped with a post-9/11 budget fiasco, causing him to hike property taxes 18.5% and temporarily raise income and sales tax."

Now, higher taxes and more fees hardly sounds like a good result to a personal tax protest, but this is only a short term result. What it is really doing is forcing politicians to show their true colors. Mayor Bloomberg, who was once a Democrat, was elected to office as a Republican after switching parties in 2001. Republicans are SUPPOSED to be the party of smaller government and lower taxes. Even with a small reduction in staff, the fact that taxes on INCOME are even on the agenda shows you where he really stands.

Instead of worrying about your carbon footprint, start worrying about your tax footprint. Denying the government vampires a steady supply of taxpayer blood reduces the likelihood vampires will be running for office in the future. Like an alcoholic, you won't be able to get them to stop drinking, but you are under no obligation to continue buying them booze.

Saturday, November 1, 2008

Obama takes a jab at Rand

If you listened to one of Obama's rally speeches yesterday, you may have heard the phrase "I don't know when they decided that selfishness was a virtue...". To most, this little phrase would not strike them as anything terribly significant. But to a student of capitalism, it was an obvious burn.

Obama has two masters degrees. He chooses his words carefully. He is, no doubt, familiar with the work and writings of Ayn Rand. Rand was a champion of capitalism and authored many books, fiction and non-fiction. One of them elaborated specifically on a fundamental principal of capitalism: "The Virtue of Selfishness".

The burn is perhaps well deserved. Capitalists have done such a lousy job of communicating and selling their ideas that most people are totally unaware of the work of one of capitalism's greatest advocates. They have a vague idea of what capitalism means...sort of, but few can define it with any real clarity.

Ayn Rand did a good job of illustrating capitalist principals, but she did so in a language, tone and manner that was largely directed at academia. Her non-fiction was quite dry and employed vocabulary the average working stiff would probably not be familiar with. Her signature novel "Atlas Shrugged" was very lengthy and included a several hundred page monologue that beat the reader over the head with the point of the book, if they took the time to endure it. She also incorporated capitalism into her brand name philosophy: Objectivism, which has unfortunately evolved into a kind of cult or religion of its own, which is ironic, since she was staunchly opposed to religion. That was another error I think. She suggested that capitalists must all be atheists. Marketing to a population that is over 95% theist and telling them that to truly enjoy your product they need to abandon their religion, is a non-starter. The only principals we need to agree on are that people should be free to pursue voluntary associations and mutually agreed upon transactions in the absence of force, deception or intimidation. That no man has a right to the time, resources and/or talents of another, and that society is a convenience item, created by and for individuals to make use of when and if they so desire. It is not a super-entity to be worshiped and served.

The point here is not to dog Ayn Rand, but to emphasize that the battlefield of ideas is not in the halls of academia, but on the streets of Anytown. It's in the bowling alleys, the pizza joints, the laundramats and the cafeterias. The left realized that very early on. They have always relied on a base of disgruntled working class people who either don't have the time to leisurely pursue scholastic material or don't have access to it. They don't distribute position papers, they spotlight their constituents' lack of wealth, focus blame on their opponents and promise to fix it.

The counter-measure is to take the principals of capitalism and clearly communicate and illustrate them in a language, manner and media that everyone can understand. One of the earliest examples of this is the Ant and the Grasshopper parable. It is probably more widely known than anything Rand ever wrote. It can be read or told in less than 30 minutes, and it clearly illustrates the underlying principal.

The challenge to today's generation of capitalism's advocates: Spot opportunities to illustrate a principal. Speak to your audience, not at them. Don't try to sell the whole package in one sitting. Support one underlying idea at a time. Good ideas resonate. They just need a little reinforcement. Briefly, but effectively reinforcing a single point to a single person can have a lasting ripple effect. The truth is your friend. Be a good friend in return.