Main Site Upgraded

Have a look at the main site. I’ve replaced the gradient buttons down the left sidebar with dropdown menus across the top. (For new visitors who wonder what the site used to look like, just add ?style=classic to the end of the url, like this.

An improvement?

In related news, I got a recent email asking if this site is still active. The answer is “yes, but so what?” All the content on the main site is meant to be evergreen. Yes, some of the older chapters are not as well written as I would like, but the info is still apropos.

As for new content, I have finally finished my chapters on liberty vs. Christianity (most of the “blue” article series), so I am now updating and adding elsewhere. Currently, I am in the process of rewriting the material currently found in The Balance of Wealth. Then, who knows?

Maybe you can influence me. If you hunt around on the main site, you can find some stubs — article series with just one chapter. I could expand these next. Other possibilities:

  • A liberty series on Democracy that Lasts. Given the amount of violence that follows failed democratic governments, this could be useful.
  • A synergy series on Tax Ideas. In the U.S. we have close to 20 trillion dollars of debt to pay off and the Baby Boomers are retiring. For those of us who want more liberty without a collapse of civilization, determining an optimal tax policy is rather important. (There are also environmental and family values implications, thus the placement under synergy.)
  • A synergy series on Better Retirement Plans. Social Security and Medicare dominate federal spending. To have any hope of small government, we need alternatives. This has egalitarian, environmental and family values implications as well, thus the Synergy category.

So, what would ye like to see next? And what do you think of the main site upgrade? Answer below, please.

 

The Eye of the Needle

Ironically, many very conservative Christians, Christians who despise the modern welfare system and our current President, are leery of personally practicing capitalism in a big way. They do in fact take the warnings towards the rich found in the New Testament seriously.

Well, if you aren’t going to have a socialist state, then somebody will end up being rich, and if those somebodies aren’t Christians, then non-Christians will control most of the institutions of the nation — unless middle class Christians do much more effective pooling of their resources than they are doing today.

And so I have continued my meditation on Christianity vs. Capitalism by asking, “Why is it harder for a camel [rope?] to pass through the eye of a needle than for a rich man to enter the Kingdom?” One possibility is that there are a rather large number of restrictions on Christian capitalists.

Follow the link to read the entire meditation.

Updating the Blog

I just installed the Headway Theme on the blog. As such I’m like a four year old kid who has been given a big box of crayons and markers. I can change box sizes, borders, colors, fonts, etc. on a page by page basis using a visual editor. And so I do so, and the results look like the artwork of the aforementioned four year old.

I’ll calm down and tidy things up in a few weeks, hopefully — after I play with all the permutations. Please bear with me.

In the meantime check out the new header. Pretentious, no? But relevant. The diverse reading list portrayed has affected my political thinking considerably. For example:

  • Quantum mechanics has taught me the futility of attempting to achieve absolute zero temperature, or absolute zero initiation of force. While we are certainly far from the achievable (or optimal) libertarian ideal, the achievable is far from that demanded by Lew Rockwell and his grumpy band of Praxeologists.
  • Paul Samuelson’s Economics describes the Keynesian paradigm clearly, with useful graphics. Critics of Keynes (such as myself) should at least try to understand him, or at least Keynesian Economics as it is understood by the mainstream.
  • My hobby of electronics and speaker building (re. The Art of Electronics) has taught me about feedback and stable and unstable filter functions. Adam Smith described negative feedback with his famous invisible hand metaphor. Karl Marx pointed out some unpleasant positive feedback loops in capitalism. I, alas, have come to the conclusion that we cannot blame all the instability of capitalism on the Federal Reserve. If we are going to get rid of the Fed, we need to address some of the positive feedback loops and unstable filters in our financial system.
  • The Dilbert Principle because freedom lovers need to be reminded that there is plenty of waste, fraud and abuse in the private sector. (And whenever we have a “too big to fail” situation, the private sector becomes as unaccountable for its failures as the government sector.)
  • Modern Chess Openings. Chess teaches the importance of getting the most out of each move. You need to consider attack, defense and long term strategic implications of each move to play well.

I leave it to the reader and/or future posts to figure out the relevance of some of the other books I put in the picture.

Are the Rich Over Taxed?

The Obama Administration annoys me. It legislates horrendously complicated healthcare legislation. It applies Keynesian pseudoscience to attempt to restart the economy, driving up our deficit ever higher.

Conservative talk show hosts annoy me even more. They pontificate over how bad Obama is about the deficit even though most of the deficit was inherited from the Bush Administration. Moreover, back when Clinton achieved a budget surplus (cash basis, not actuarial basis!) they whined about being overtaxed. Finally, they and the Republicans in Congress are fighting for tax cuts for the rich.

I am not so sympathetic to the plight of the rich. Yes, they pay a lot of taxes. But they have tax loopholes you can drive a truck through. They get protection of their wealth from the government, including restraints on competition. They get a subsidized return on passive investments because of the monstrous federal budget deficit. And don’t get me started about retroactive extensions of copyrights, and bailouts for the financial industry.

The rich are getting a fine return on the 15% tax they pay.

That’s right. 15%. That’s the long term capital gains tax. This is lower than the marginal tax rate for median income wage earners. Wage earners pay more than that in Social Security and Medicare taxes (14.2% effectively). A 10% income tax rate puts Joe Size Pack in a higher tax bracket than Bill Gates.

OK, the rich also indirectly pay corporate income tax on the stocks they hold. So does Grandma, on whetever she hold in her retirement account. This doesn’t strike me as progressive.

Here is my proposal:

  1. Fold FICA and Medicare taxes into the income tax to make a flat tax rate of 25% up to a half million dollars a year or so.
  2. Have a somewhat higher (but not outrageous) tax rate for higher than a half million per year. Maybe 35%.
  3. Treat capital gains, dividend income, wages, etc. equally.
  4. Replace all deductions and exemptions (other than charity) with a fixed amount of free money.
  5. Instead of an estate tax, treat gifts and inheritances as ordinary income…maybe.

The last provision is a bit harsh on farmers and small business owners. Clobbering people with taxes when a loved one dies is rather mean-spirited.

So here is a possible alternative: set the tax basis on all non-cash gifts and inheritances at zero. You pay when you cash out, if ever.

Should we Extend the Bush Tax Cuts?

Our national debt is nearly as large as our GDP, and it is growing at a rate of 10% per year. So what are they debating in Congress? Extending the Bush era tax cuts.

Dumb!

Don’t get me wrong. I’d love to see lower taxes – if we had enough spending cuts to go with those tax cuts. No one is talking that kind of spending cuts. Cut $1.3 trillion dollars per year in the budget and I am open to some small tax cuts.

Small.

In my book paying down the debt takes precedence over tax cuts and economic growth. Yes, we are in a recession, but the economy is scheduled to get worse. This is not mere crystal ball gazing. It is simple demographics. The Baby Boomers will retire soon. Retired people don’t produce all that much. Our economy is scheduled to have reduced overall productivity in the not so far future. We need to be paying down the debt now while the Boomers are still on the job.

So what are we doing? We are running record deficits – both trade and budget. And we are doing so not to fight a desperate world war, but merely to subjugate some primitives in the mountains of Afghanistan, and quell a potential civil war in Iraq. There is no excuse for running a deficit in these circumstances. We’ve had some sort of conflict with outgunned peoples throughout most of our history. The level of war we are at is the American norm. We should budget accordingly.

Many Republicans would whine that we need to extend the tax cuts to make the economy grow. Let’s be real. The debt is growing at 10% annually. Does anyone seriously expect the economy to grow at 10% per year if we nibble at taxes? And 10% GDP growth merely makes us break even on the debt/GDP ratio.

Even if levying a hundred billion extra dollars costs the economy a hundred billion dollars of growth, I’ll take the levy. The debt is as big as the economy.

But I don’t think that is our choice. We are below the Laffer Curve maximum for taxing the rich these days. (We might be above the Laffer maximum for corporate tax rates, but that’s a story for another day.) The economy grew just fine under the taxes raised under Bill Clinton. And let us keep in mind that the taxes raised don’t just disappear from the economy, they return in the form of less borrowing by the U.S. Treasury. When banks can’t make money buying government debt, they have to find consumers and businesses to lend to. This can grow the private sector economy.

While this is no time for tax cuts, it is a good time to think about tax simplification. We could merge FICA into the income tax to have a nice simple two or three bracket tax code. We could use a national sales tax and/or a carbon tax to supplement the income taxes. We could raise money be closing loopholes vs. raising marginal rates.

And yes, we should also cut spending. But the strategy of forcing spending cuts by cutting taxes is a proven failure. It is time for Republicans to listen to their grownups such as David Stockman.

Some Room for Hope

After re-reading the above I realized that I made an overly pessimistic assumption: I neglected inflation. We don’t need 10% real growth in GDP to keep up with the deficit, just 10% nominal growth. If the economy grows at 4% in real terms and we have 6% inflation, then we break even. For those years where we get less than 4% real growth we’d need more inflation just to break even.

But we need to do more than break even! We need to lower the debt/GDP ratio now to prepare for the aging Boomers. So we’d need even more than 6% inflation coupled with decent real growth. So if you don’t like the Stockman solution you have another: get a leisure suit. It’s Carter time!