When Will the Deal Happen?

It seems that these days, Congress takes a few breaks each year from legislating on important topics like who can marry who and baseball to bicker over some massive piece of legislation. This legislation is always claimed to be crucial to the continuation of society as we know it (sometimes it really is!), and has a deadline for doom avoidance. For months we see news anchors biting their nails over which side is going to win and whether it will pass in time to avert disaster.

The answer is always the same: It will pass. It will pass because if it doesn’t, the legislators will lose money like the rest of us, their constituents will abandon them, and the populace will make what remains of their now final term really unpleasant.  Sure, some will vote the other way, but all they need is a majority.

Why do they wait? Why not just make a deal early on and be done with it? Because somebody has to lose, in fact, most of us have to lose.

Our problems are too big to solve in a way that makes everyone happy.  Take the budget for example. Taxing the rich isn’t nearly enough (and it makes them not rich), reducing the military is slow and more expensive in the short term than leaving it alone, and the problem needs to be solved now. Raising taxes on the middle class just shifts the overwhelming burden to another group who can’t bear it, without fixing the core problem of a lack of national wealth, and the middle class are the majority of the voters. Stimulus is not much more than smoke and mirrors, and costs money we don’t have. Spending cuts cause outrage among those who are being cut and their sympathizers.

So what’s a politician to do? It’s pretty simple really. Put on a good show. Bang your fist on the podium, cry, point the finger at the other guys, all the while drilling home the point that the deadline of doom is approaching. The most important part is that you don’t make a deal until the clock has nearly run out. If you wait until the very end, you can vote something in that appears to address the problem and helps out your biggest donors (you know, the insurance companies, the unions, and the military industrial complex). Then you go to the American people and you tell them that the other guys put the bad stuff in there, but you had to pass it to avert catastrophe because the deadline was up. If you make the deal early, they will claim you should have kept fighting, and that you sold out.

How do we fix the system?

• Take on problems in smaller bites. Deadlines should be staggered rather than overwhelming. Bills should be mandated to be short and legible.
• Transparency. These people are public servants and we should be allowed to hear what they say on our behalf. All discussions should be on public record.
• Our taxes are a percentage of our earnings, so funding should be percentage based as well. That way, when revenue goes down, spending automatically matches it without the need for an emergency vote.
• Stop taxing the trade of Dollars for gold and silver. It’s Constitutional and allows people to shield themselves from the toxic inflationary effects of Congressional irresponsibility.
• If you want the money out of politics, take away the power from politicians to choose winners and losers. Take away the mandated insurance, the mandated union memberships, the private military contractors, and the corporate bailouts, and the money will take itself out of politics.

“Son, if you can’t take their money, drink their whiskey, screw their women, and then vote against ‘em, you don’t deserve to be here.” – Sam Rayburn, longst serving Speaker of the House

For Everyone Else, There’s WikiLeaks

I haven’t spoken much about WikiLeaks, but I’m glad that such organizations exist to shine some sunlight on the back-room dealing of those in power. It’s a sad day when the truth is a crime.

Our secrets are a weakness, not our power. Who can be blackmailed, if they have no secrets? Who embezzles money in the light of day? If torture is humane and effective, then why don’t we do it publicly? What investor invests in a market they know is overvalued?

If the state of our Union is strong, don’t tell us it is strong, show us it is strong. Open the books. Knowing that the data they see is the truth will brink confidence in our Dollar and our nation, not chase it away. Besides, if you don’t open the books, Assange will do it for you.

California Affiliate Tax

California’s latest budget deal continues their now-familiar trend of chasing small business out of the state. In a desperate and unconstitutional powergrab, they are saying that any business that is even affiliated with anyone in California has to pay sales tax on everything sent to customers in the state.

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. 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 bill 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. 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.

Keynesian Fail

This was our Nobel for Economics winner of 2008. More proof that our economic situation wan’t an accident, wasn’t the result of insufficient regulation, but was engineered by those very regulators.

“To fight the recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley or Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.” -Paul Krugman, 2002

(via FalkenBlog)

Sustainable Banking Industry

The greatest challenge in any form of government is finding sustainability. This is especially challenging in democracies. We have an an electorate growing ever more complicated, and 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.

Those interested in sustaining the status quo have been pulling the puppet strings of politics in order to convince us that what we need to do to save ourselves is to feed them. 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  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 pays off all debts acquired before the passing of the bill. 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.

If everyone knew their debts would disappear every four years, wouldn’t they just rack up uncontrollable debt again? Assume now that the government says up front that they won’t be paying the debts in the future, just cancelling them, why would the credit industry loan anyone money in the first place? They would cease to exist, and give up their jobs breaking windows in favor of something more useful. There would be no more housing booms or busts, as housing prices would never adjust beyond people’s ability to buy them outright. This would also serve to remove the divide we are currently seeing between tangible assets and fiat wealth.

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.

« Previous Page — Next Page »