Outsourcing Archives - The Allegator

California Affiliate Tax

The helping hand of the law - affiliate tax edition

California’s latest budget deal continues their now-familiar trend of chasing small business out of the state. In a desperate and unconstitutional power grab, they are saying that any business that is evenÂ affiliatedÂ with anyone in California has to pay sales tax on everything sent to customers in the state. This affiliate tax is toxic to the digital economy.

I’m most often complaining about Congress overstepping their bounds in controlling the states, but this is a rare case (Like Arizona’s recent immigration laws) where the opposite is true. Interstate commerce is squarely under the jurisdiction of Congress. Let’s say that a product is manufactured in Texas, sent to Colorado to an Amazon distributor, and then shipped to a customer in California; what’s to stop Texas from saying they can charge sales tax on the item because they made it? Or Colorado to charge it because they are where the sale was shipped from, or every state in between because it passed on through? The Federal government is there primarily for two purposes, foreign policy, and making sure states don’t enact anti-competitive laws that interfere with the commerce between the states, thus, states were only allowed to regulate transactions from those companies which they have jurisdiction over because of a physical presence in the state.

California is now claiming that I, along with ten thousand others are ‘sister companies’ of Amazon, because we are paid to advertise for them. I’m nobody’s ‘sister company’. I have no Obligations to Amazon, they don’t tell me what to do, we don’t have any claim over each other’s assets, I just post a link to Amazon on my page, and Amazon reimburses me for doing so when paying customers arrive there through my sites.Â I’m no more connected with Amazon than television networks who advertise for them, UPS who carries their products, or Visa, who handles their transactions.

Living in an extremely liberal town, I hear a lot of people cheering this affiliate tax as somehow sticking it to the evil corporations and finally making them pay their fair share, but that isn’t what is going to happen out of this.Â Amazon has already announced that they will end their business dealings with everyone in California, which means not only are ten thousand more Californians now very suddenly out of work, but California won’t see a cent of it, since the companies won’t actually be taxed after cutting ties, and California will be out the revenue from those people and quite possibly paying to add them to its welfare rolls. Also, it isn’t legally Amazon’s responsibility to pay sales tax on your purchases, it’s yours, so if you aren’t paying taxes on your online purchases, then point the finger at yourself first.

I wish I’d seen that this ship was sinking before I bought a home here. If it were any easier to leave, I would.

Sustainable Banking Industry

The greatest challenge in any form of government is finding sustainability. This is especially challenging in fiat systems to create sustainable banking. Democracy complicates things, as we have an an electorate comprising in part:

Individuals acting in their own best interests.
Religions representing different moral ideologies.
Corporations representing the interests of their investors.
The actions of the government itself, in seeking to maintain and expand its own control. This includes influential political parties.

All of these actors are working within environmental constraints, responding to the actions of others, and are most often comprised of individuals acting upon several of these influences in concert. Clearly, sustainability under the force of these tides is a near impossibility.

Our empire is in decline. There are many reasons for this. We were the only superpower left standing after WWII, there was a time not long ago when China and India barely even registered on our economic radar, and the scale of military, government, insurance, regulation, and debts both private and public have grown to the point where they consume the fruits of our labor and leave us the pits.

Some of these problems are beyond our control, and indeed shouldn’t even be considered problems. In the spirit of embracing the advance of humanity over that of nationalism, we should welcome China and India to the stage. There is no reason they need to fail in order for us to succeed, and we’ve proven many times in the past and present that suppressing nations only leads to military dictatorship. It may weaken them on the world stage, but it only strengthens the authoritarian nature of their internal affairs.

Those interested in sustaining the status quo have been pulling the puppet strings of politics. They’ve convinced us that by giving large amounts of taxpayer money to the largest and most inept banks, so that they may loan it back to us at interest, we will save ourselves money. They’ve convinced us that by getting rid of people’s old cars, we get them to buy new cars, thus providing jobs. This is the classic broken window fallacy, that in order to save the economy, we should all go out and throw a rock through our neighbor’s Â window. Think of all the people we could employ making new windows! Now they want us to believe that the best way to save small business is to make small business loans more available, as if more debt is what small business needs to succeed.

There are times when the best ideas are the ones that sound the worst on the surface, A friend sent me this video from The Renegade Economist the other day, and I must admit I’m fascinated by the concept:

As horrible and unfair an idea as it may seem to reward those who have gotten into excess debt by cancelling their debts, I think the fallout from such a plan could very well leave us in a much more sustainable society. The first round of this is the toughest, both from the perspective of fairness, and in coming up with the money. Lets assume that the government simply prints money and gives it out under the understanding that it must go to outstanding debt first if applicable. This would create a massive devaluation of the dollar, which would be bad, right?

Can we agree that the recent success of Chinese industry can be attributed to their pegging of their currency below the dollar in order to get us to buy their goods and outsource to their industry? If we can say that their success is due to them devaluing their currency, then why do we insist that doing the same would ruin ours? It would level the playing field and herald the return of manufacturing.

I’m not at all certain I support this action, and I have no illusions about the likelihood of it even making it to vote, but I’d be interested in your thoughts.

Grab Your Tinfoil Hats, Conspiracy Theory Coming Up!

What would you do if you had seen the future? If you knew, for a fact, who was going to win the next Superbowl? I think most people would start taking out loans. A lot of them.

The president of the United States is in an interesting position. To some extent they can see the future, not because they know what will happen, but because they hold the playbook and call the shots. Unlike the time travelling gambler, the president is both under a lot of scrutiny, and has a lot of responsibilities to the nation. To some extent their power transcends the petty desire for the big payout. Put yourself in their shoes. You see the economic failings. You see the coming crash and subsequent long path back to national solvency. What do you do?

You plan. With a team of economic advisers and more information at your request than any other individual in the world.

There is a science based religion out there that exists on the premise that we strive to create increasingly realistic computer simulations of the world around us, therefore, it stands to reason that the world we live in is likely such a simulation. I would propose a similar theory. Our leaders believe that by tampering with the free market, they can make it do their bidding, therefore it is quite possible that most of the economic drama that has unfolded in recent years was not by the natural course of economic chaos, but by design. The availability of credit, the housing bubble, the crash, and the bailout, all part of a bigger plan. Think back:

We had begun losing agriculture and manufacturing to countries who were able to work with lower standards and cheaper labor.Â This led to a trade imbalance as it became cheaper to buy foreign goods than domestic.

So the question arises, how do we devalue our currency enough to stem the bleeding of outsourcing?

The banks don’t want inflation, it devalues their holdings. If we try to create inflation, the banks will fail as inflation goes higher than their interest. Investors, manufacturers, and rich people in general will lose money and blame the government.

How do you create inflation while looking like the hero rather than the villain?Â Debt. Those in debt will welcome it.

Make them think they see the future, give them their credit, and when they are overstretched?

Cut off the credit. People will stop buying, sellers will drop prices in desperation. Now what?

Threats of deflation. When deflation and debt come together you have defaults.

Defaults crash the banking system. The government gets to arrive as the hero and print money to give to the banking industry and whoever else it wants, all in the name of saving us from deflation. Those who saw the future, made the future, profit.

As we snap out of the illusion of deflation into hyperinflation, the bailouts save the banks, our debts get relatively smaller, industry returns under a weaker dollar, and those who made the future profit again.

President Bush made it a priority to get people into homes. He lowered the interest rates and made sure everyone could get loans. His administration later cracked down on subprime lending. He printed the money and bailed out the banks, and then the Harvard MBA handed over the reins and sold his phony cowboy ranch in Texas. How much of the stupid was an act?

Toyota Republicans

Recently on the McLaughlin Group, Pat Buchanan coined a new term for a faction of the Republican party: Toyota Republicans. The phrase is an odd one because it is far more subtle and complicated than it seems. Under the watch of the Bush administration we saw outsourcing become the norm. We didn’t slowly lose a difficult battle to China, we eagerly gave them the plans and asked them to take over our manufacturing. The Alabama foreign car manufacturers Pat referred to are an interesting case. When we can’t even lead in our own industry in our own country selling to our own people, we have failed. It isn’t about patriotism and buying American. I’ll buy American when faced with a tough choice, but in the end I’m going with the better product, as should we all. We don’t need to bail out the failures, we need to create successes. These foreign plants on U.S. soil aren’t entirely a bad thing, although they are still sending our money overseas.

An interesting point has been made about who pays the cost of medical care. If the American auto makers are saddled with responsibility for the health care of their workers, and the foreign competitors aren’t, because the government takes care of that, then we didn’t fire the first shot in the coming Cold War Race to Socialism, they did.

As Pat puts it: “America faces nationalistic trade rivals who manipulate currencies, employ nontariff barriers, subsidize their manufacturers, rebate value-added taxes on exports to us and impose value-added taxes on imports from us, all to capture our markets and kill our great companies.“

How should we respond? Pat wants us to “produce ourselves the guns and ships to defend the republic and the necessities of our national life so we could stand alone against the world.“Â He suggests we do this by putting tariffs on imports in order to level the playing field. This isn’t a wise step forward in the new global economy; it leads to foreign retaliation, reducing our exports. Â When you are only selling things to yourself, you don’t earn any money. It would work well here in the U.S. Until the industries got lazy and corrupt. We already can see the results of such tactics in the corn industry. The reason everything we eat is packed with corn syrup is that we tax the import of sugar and subsidize the growing of corn. What we need is to be lighter on our feet. We need small specialized manufacturers.

Pat Buchanan puts the blame on neocons for removing tariffs imposed by Reagan:

“When an icon of American industry, Harley-Davidson, was being run out of business by cutthroat Japanese dumping of big bikes to kill the “Harley Hog,” Reagan slapped 50 percent tariffs on their motorcycles and imposed quotas on imported Japanese cars. Message to Tokyo. If you folks want to keep selling cars here, start building them here.“

Alabama is now home to several automotive plants:

Mercedes-Benz: Headquarted in Germany
Honda: Headquartered in Japan
Hyundai: Headquartered in South Korea
Toyota: headquartered in Japan

These U.S. plants make a total of more than 700,000 vehicles a year and employ over 11,000 workers. Â This would all be a good thing if these vehicles were being shipped out, but they are built here to be sold here. To follow the money: You buy a Toyota. Part of that money goes to the workers in the Toyota plants in Alabama and elsewhere in the US; another part goes to Japan. To some extent it is nice to have foreign industry in our country; it gives them incentive to be nice to us so they can retain their factory. On the other hand, if we are making the product in our country with our labor and selling it to our people, we could do without sending the profits to Japan.

Pat is afraid that if we don’t do whatever it takes to keep the big three in business, that these foreign owned manufacturers will take over their market share.

Agreements like NAFTA aren’t really free trade, they are managed trade. In the end, under NAFTA, manufactuuring and agriculture find advantage in moving to Mexico. This includes companies like Toyota. The question is, are these Toyota republicans opposing the bailout on strong free trade principles, or are southern politicians trying to remove the competing U.S. manufacturers in Detroit to better their own foreign owned manufacturing?

From here on I will be using the term ‘Toyota Republican’ to describe the NAFTA loving portion of the party that is partially responsible for outsourcing and the exodus of Â industry.

Update: Leo Gerard, the president of the United Steelworkers Union, went on Bill Moyers Joural with his take on the auto bailout and the Toyota Republicans.

Pat Buchanan – the Ideological Core of the Right

Pat Buchanan Chop

Pat Buchanan is my favorite political commentator. I get a lot of flak for this.

I don’t agree with a lot of what he says, but he has a solid perspective based an a mountain of knowledge. He often comes across as bigoted, which can be puzzling, since it seems to be mostly counter to the way he sees current reality. He is a paleoconservative and nationalist in the extreme.

What is often mistaken for racism is a strong conviction that if you are living in America, you should be an American first, including subscribing to what he sees as the socially conservative heritage and giving up other affiliations. Reality occasionally clashes with his faith-based convictions making it seem as if the man has two worldviews, each of which he argues with extreme conviction, but which are mutually exclusive. Maybe I’m just used to this because my dad seems to think the same way.

Pat Buchanan is one of the core members of the McLaughlin Group, where every Friday he can be seen trying desperately to get a word in edgewise while enunciating all of his points with his signature chop (pictured). In the past he has been mostly in contention with Eleanor Clift, but recently the two seem to agree with each other more than they agree with the more centrist members of the group (I can identify with this). In a recent episode he coined the term Toyota Republicans to refer to the demographic of mostly southern workers at foreign car plants here in the U.S.

Pat Buchanan is a very sharp 70 years young, and has a resume including a masters in Journalism from Columbia University, opposition speech writer and advisor to Nixon, white house communications advisor (85-87), Â and three time presidential candidate.

He coined the term ‘silent majority’

What impresses me most about him is that while he has a strong desire to turn the country towards Christianity, which he sees as its roots, he has an Â iron grip on the current reality and is able to predict how a complex political or social issue will play out with as great an accuracy if it is going against his goals as if it is moving towards them. And he strikes me as very honest, which is a sorely underrated trait in today’s politically correct and cautious commentary. Political correctness veers us towards a time in which there is only one opinionÂ the press isÂ allowed to have, which is hardly the intent of the First Amendment.

Pat Buchanan Â has biased opinions, but near impartial predictions.

Quotes:

“There are only two groups that are beating the drums for war in The Middle East â€“ the Israeli Defense Ministry and its amen corner in the United States.”

“We are thus in the position of having to borrow from Europe to defend Europe, of having to borrow from China and Japan to defend Chinese and Japanese access to Gulf oil, and of having to borrow from Arab emirs, sultans and monarchs to make Iraq safe for democracy. We borrow from the nations we defend so that we may continue to defend them. To question this is an unpardonable heresy called ‘isolationism.'”

“The village atheist has the right to be heard; he has no right to be heeded. While he has a right not to have his own children indoctrinated in what he believes are false and foolish teachings, he has no right to dictate what other children may be taught.”

“Neither Beltway party is going to drain this swamp, because to them it is not a swamp at all, but a projected wetland and their natural habitat”

Books:

Churchill, Hitler, and “The Unnecessary War”: How Britain Lost Its Empire and the West Lost the World

Day of Reckoning: How Hubris, Ideology, and Greed Are Tearing America Apart

State of Emergency: The Third World Invasion and Conquest of America

The Death of the West: How Dying Populations and Immigrant Invasions Imperil Our Country and Civilization

The Great Betrayal: How American Sovereignty and Social Justice Are Being Sacrificed to..

Where the Right Went Wrong: How Neoconservatives Subverted the Reagan Revolution and Hijacked the Bush Presidency

A Republic, Not an Empire: Reclaiming America’s Destiny

Conservative votes, liberal victories: Why the right has failed

Suicide of a Superpower: Will America Survive to 2025?

A Republic, Not an Empire: Reclaiming America’s Destiny