Saturday, January 28, 2012

Mitt's taxes: An Australian perspective

Let’s face it. The two-year-long process leading to the inauguration of an American president has more in common with Madison Avenue and Sunset Boulevard than Pennsylvania Avenue, so we should not be surprised or shocked. But it is downright bizarre to see one Republican candidate tearing into another Republican candidate for not paying enough tax. After all, aren’t these guys supposed to favour a lower tax burden?

Newt is criticising Mitt because he pays only 15% income tax. If Mitt had been caught evading tax, Newt would be onto something, but Mitt is just complying with the tax code created by a Republican president, George W. Bush. If Mitt had paid more, he would be making voluntary contributions to the public purse, which as the late Kerry Packer once said is a mug’s game.

Soon the US media will go into a frenzy over Mitt’s tax affairs because he will have to go through that obligatory ritual for all presidential candidates of making public tax returns for the past few years. (Thank goodness our candidates for high office don’t have to do that.) But there is a perfectly good reason why Mitt’s overall tax rate is low: his income is mainly from capital gains and dividends, which are taxed at 15% in America. Australia prevents double taxation of dividends through the imputation system; the United States mitigates it by taxing dividends at a low rate. But taking into account the 35% company tax rate and the 15% rate on dividends in America, any dividends paid out of taxed profits are in fact taxed at almost 45% in the hands of the shareholder. The 15% rate on capital gains in America is approximately half the top marginal personal rate, as is the case in Australia.

The real issue is not whether Mitt is paying too little but whether the tax system as sketched above is right. There is nothing exceptional about taxing capital income more lightly than labour income. Australia does it to a point, and even the Henry review said we should keep doing it (albeit in different ways). The real worry in America isn’t so much the fate of Newt or Mitt at the hustings but that if the Republican primary campaign can take this bizarre turn, perhaps the populism of Barack Obama, Warren Buffett, and the Occupy crowd is setting the terms of the public debate on tax policy more than anyone realised.



Antitrust Kills

Brian Caplan does rather overstate a good point below. He assumes that antitrust laws have no benefits. That may be true but it needs to be argued or at least referenced

Since 2007, Bill Gates has given away $28B, 48% of his net worth. Frugal Dad estimates that he's saved almost 6 million lives. I haven't double-checked his sources, but it's a plausible estimate.

Back in the nineties, Bill Gates was experiencing far less favorable publicity - and legal persecution. The U.S. government sued Microsoft for antitrust violations. In 2000, Alex Tabarrok estimated that the antitrust case had cost Microsoft shareholders $140B. Yes, Microsoft ultimately reached a relatively favorable settlement. But Gates probably would have been billions richer if antitrust laws didn't exist.

You might say, "Who cares? He can afford it." But hold on. We're talking about a great philanthropist. If Bill Gates were $5B richer, he almost certainly would have increased his charitable giving. A conservative assumption is that he would have stuck with his current ratio, giving away 48% of the extra $5B. It's quite possible that he would have given away every dollar.

If Gates' philanthropy is as efficacious as most people think, there's a shocking implication: The antitrust case against Microsoft had a massive body count. Gates saves about one life for every $5000 he spends. If the case cost him $5B, and he would have given away 48%, antitrust killed 480,000 people. If the case cost him $5B, and he would have given away every penny, antitrust killed a million people. Imagine how many people would be dead today if the government managed to bring Microsoft to its knees, and Gates to bankrutpcy. It staggers the imagination.

You might object, "By the standard, Gates himself is killing millions by failing to give even more." If you're a consequentialist, that's exactly correctly; we're all murderers in the eyes of Jeremy Bentham and Peter Singer. But if we stick to the common sense distinction between "killing" and "letting die," Gates is innocent, and the government remains guilty. Outsourced to philosopher Michael Huemer:
It is possible to harm someone not only by directly inflicting a harm, but also by actively preventing that person from taking actions to avert or remedy a harm. Suppose that, through no fault of mine, Marvin is in danger of starvation. He asks me for food. If I refuse to give him food, I thereby fail to confer a benefit on Marvin and, at the same time, allow Marvin to go hungry. If Marvin then starves to death, those who accept the doing/allowing distinction would say that I have not killed Marvin, but merely allowed him to die. And some believe that this is much less wrong than killing, possibly not even wrong at all. But now consider a different case. Suppose that Marvin, again in danger of starvation, plans to walk to the local market to buy some food. In the absence of any outside interference, this plan would succeed--the market is open, and there are people willing to trade food for something that Marvin has. Now suppose that, knowing all this, I actively and forcibly restrain Marvin from reaching the market. As a result, he starves to death. In this situation, I would surely be said to have killed Marvin, or at least done something morally comparable to killing him.

The same holds, of course, if someone robs a philanthropist who otherwise would have come to Marvin's assistance.



Thou Shalt Not Covet

President Obama says that people are poor because others are rich. What a crock that is. It’s nothing more than a refusal to accept personal responsibility for the failure of the welfare-warfare way of life and the managed-economy way of life that that statists have foisted upon our nation.

What’s even a bigger crock is Obama’s solution for making the poor better off. He says that if the government seizes more money from the wealthy, that will improve the lot of the poor.

Oh? And how is that? Let’s assume that someone is worth $10 million and that there are thousands of people in society who are worth $1,000. The government decides to seize $3 million from the rich person. Okay, so the government now has $3 million more dollars in its coffers and the rich person is now worth $7 million.

How does that help those poor people except to satisfy their sense of envy and covetousness? So what if those poor people are celebrating that the rich person isn’t as rich as he was before. What does that do for them?

Let’s take it a step further and say that the government distributes the $3 million to all those poor people in equal shares. Sure, they’d all be wealthier, but wouldn’t that be the case if they had simply stolen the money from the rich person, without the forcible intervention of the government? Isn’t a thief always wealthier after the theft?

Where does it stop? Won’t there be people who are worth $2,000 — the new poor — demanding “equality”? Won’t the government have to seize another $3 million from the rich person and give it to that group of people? And then what about the people who are worth $4,000, who are now on the bottom rung?

The process just keeps going on and on, until there are no more rich people. Everyone is now truly equal. But in the long run, everyone ends up poor, equally poor. The rich no longer have private businesses in which they are employing the poor. That leaves the government as the sole employer in society.

People end up realizing that a tree based on violations of the natural law and God’s law that prohibit covetousness, envy, and stealing will inevitably produce bad fruit, which includes poverty across society.

We have a real-life example of this phenomenon — Cuba. When he took over as president of Cuba, Fidel Castro had the exact same mindset that guides President Obama. Castro believed that the reason there was so much poverty in Cuba was not because of the U.S.-government-supported “crony capitalism” that characterized Cuba but rather because there were so many wealthy people in society. So, Castro, like Obama, began taking money from the rich and redistributing it to the poor, with the aim of equalizing wealth in society.

But with each distribution, more confiscation was necessary in order to equalize the new segment of poor people at the bottom of the economic ladder. Castro decided to take the socialist principle to its logical conclusion. He ended up seizing all the wealth of the rich people, including their money, their industries, and their mansions.

No longer would money be wasted in the form of “profits” because the government would be running all the industries. No longer would people face unemployment because the government would be the sole employer. No longer would there be disparities of wealth because everyone would be working for the government on salary.

The result has been mass impoverishment in which most everyone is on the verge of starvation. Like Obama, Castro refuses to acknowledge that the root cause of the impoverishment is Cuba’s socialist system. He blames Cuba’s poor economic conditions entirely on the U.S. embargo.

The question that Castro and Obama and other statists never ask is: What are the causes of wealth in a society? That’s the critical question. That’s the question that Adam Smith asked in his landmark treatise, An Inquiry into the Nature and Causes of the Wealth of Nations. He wanted to know what it was that made some nations wealthy.

The answer is one that doesn’t please statists. The key to rising standards of living in a society is the following:

1. Prohibit government from waging war on poverty by confiscating and redistributing wealth.

2. Prohibit government from managing the economy and intervening in economic activity.

3. Prohibit government from controlling and regulating economic activity.

4. Prohibit government from engaging in imperialist military adventurism that inevitably contributes to excessive spending, debt, and bankruptcy.

5. Prohibit the government from managing the monetary system, especially with paper money and a central bank (i.e., the Federal Reserve).

In other words, the key to ending poverty in any society is to prohibit the government from using its coercive power to help the poor. Leave everyone, including the poor, free to engage in economic enterprise free of government control, permit, or regulation. Leave people free to accumulate unlimited amounts of wealth. Leave people free to do whatever they want with their own money.

No income tax. No welfare programs, including Social Security, Medicare, and Medicaid. No regulatory programs. No warfare programs. No monetary programs. Just nothing but free enterprise — that is enterprise totally free of government control and intervention.

That’s the key to ending poverty in every society on earth. When people are free to engage in enterprise and to accumulate unlimited amounts of wealth, the poor have the chance to become wealthy. When people are free to accumulate wealth, they inevitably save some of their income. That savings goes into capital, which is then converted into tools and equipment, which make employees more productive. More productivity means higher revenues. Higher revenues mean higher wages. Higher wages mean higher standards of living, especially for the poor.

Thus, contrary to what Obama, Castro, and others of the statist ilk suggest, there is a natural harmony between the wealthy and the poor. The wealthy risk their money to establish businesses. They hire the poor to work there. To succeed, the business must produce goods or services that please consumers. If the business succeeds, the owner wins, the consumers win, and the employees win. Thus, employees have a vested interest in helping the business succeed.

God did not create an inconsistent, contradictory universe, one in which such sins as covetousness, envy, and stealing produce good results. On the contrary, such wrongful actions inevitably bring bad consequences, not only personally but also when they are enshrined within government policy.

The best thing that could ever happen to the poor is the dismantling of America’s immoral and destructive experiment with socialism, interventionism, and imperialism.




TN: Businesses press for end of estate tax: "Robert Doochin says his next step is fairly simple: After nearly half a century at the helm of American Paper & Twine Co., pass the business on to his three children. But with an estimated value of $10 million to $20 million, there’s one problem: the tax bill. Doochin’s estate attorney has advised him to move out of state, he says. ... Doochin, like many successful business owners, has been pressing state leaders to lower Tennessee’s main tax on wealth, the estate tax."

What’s so special about the 1%?: "Making more money than 99% of one's countrymen is, by itself, no more morally objectionable than scoring in the 99th percentile of the SAT. Indeed, generally, it's much more morally praiseworthy; creating wealth benefits people other than oneself. Of course, some people cheat on the SAT. Cheating is wrong. But high-scorers generally aren't screwing anyone over."

Kiddie porn punitory: "Few reasonable people would argue least of all me that victims of child sexual abuse were injured and deserve damages for their suffering and humiliation -- from the criminal; the abuser who caused the damage -- not from those who merely looked at the pictures. To argue or hold otherwise is patently insane. It’s like holding a person fully responsible for a murder for merely looking at a picture of the victim after the fact."

Doug Casey on the collapse of the euro and the EU: "Interview with Doug Casey. Casey: "Right now the Eurocrats in Brussels really only have the power to regulate, which is bad enough. But if the European Union had the power to tax, it would become an actual empire. Especially if they then created a European army -- there's no telling what kind of mischief they'd get into. On the bright side, they can't really afford an army."

President Obama’s definition of fairness is precisely the opposite: "His use of the word fairness ultimately begs the question of why Obama is advocating progressive taxation which, by its very nature, is unfair. By increasing the proportion of tax paid on incomes over certain arbitrary thresholds those deemed to be too rich or too wealthy are simply being discriminated against. To Obama, earning more than $1million clearly means one is a proper target for discrimination."

To re-inflate the bubble …: "The Fed announced they will maintain near-zero interest rate levels until the end of 2014, the continuation of a policy implemented in 2008 to 'spur economic growth.' In reality, the Federal Reserve is continuing more of the same that caused the financial crisis in the first place. The Fed caused the crisis by keeping interest rates artificially low for too long a period of time spurring investment in areas of the economy (like housing) that already had been overinvested in, thus inflating the bubble that nearly crippled the US economy when it burst in the December 2007"



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Poland signs copyright treaty and gets street protests

What about the USA? Has Communism made Poles more wary of threats to their liberty?

Poland on Thursday signed an international copyright agreement which has sparked days of protests by Internet users who fear it will lead to online censorship.

Poland's ambassador to Japan, Jadwiga Rodowicz-Czechowska, signed the Anti-Counterfeiting Trade Agreement, or ACTA, in Tokyo, she told the all-news station TVN24.

Later in the day, hundreds of people took to the streets of the eastern city of Lublin to express their anger over the treaty.

ACTA is a far-reaching agreement that aims to harmonize international standards on protecting the rights of those who produce music, movies, pharmaceuticals, fashion, and a range of other products that often fall victim to intellectual property theft.

It shares some similarities with the hotly debated Stop Online Piracy Act in the U.S., which was shelved by lawmakers last week after Wikipedia and Google blacked out or partially obscured their websites for a day in protest.

Poland was one of several European Union countries to sign ACTA Thursday, but it appeared to be the only place where support for the agreement has caused outrage and protests by Internet activists.

Rodowicz-Czechowska said other countries that signed included Finland, France, Ireland, Italy, Portugal, Romania and Greece. Several other industrialized countries, including the United States, Canada and South Korea, signed the agreement last year.

Poland's support for ACTA has sparked attacks on Polish government websites by a group calling itself "Anonymous" that left them unreachable for days, as well as street protests in several Polish cities.

ACTA aims to fight the online piracy of movies and music, and those opposed to it fear that it will also lead authorities to block content on the Internet. Critics also say governments have negotiated the agreement in secret and failed to consult with their societies along the way.

Thousands of people took to the streets in past days across Poland to voice their outrage over ACTA. Some taped their mouths shut in a sign that they fear their online freedom of expression will be hampered by it.

In reaction to the widespread opposition, Polish leaders have been struggling to allay fears over it. Poland's Foreign Minister Radek Sikorski defended his government's position in a TV interview Wednesday evening, arguing that ACTA is not as threatening as young people fear.

But he said the Internet should not be allowed to become a space of "legal anarchy." "We believe that theft on a massive scale of intellectual property is not a good thing," Sikorski said.


The U.S. signature to the treaty would have to be ratified by the Senate to come into effect so public protests could stymie that


Obama's Justices vs. Obama

Obama has appointed to the Supreme Court people who don't entirely share his taste for aggressive statism

Barack Obama, the law professor who railed against the Bush administration's disdain for privacy, has been to civil liberties what the Hindenburg was to air travel: an unexpected debacle. Time after time, he has chosen to uphold government power at the expense of individual protections.

Warrantless wiretapping in national security cases? For it. Detaining citizens indefinitely without trial? Sure. Assassinating Americans abroad without making public the evidence or the legal rationale? Done. In October 2010, American Civil Liberties Union Executive Director Anthony Romero pronounced himself "disgusted" with the administration's record.

But there is one big redeeming item on his record: He has appointed to the Supreme Court people who don't entirely share his taste for aggressive statism. In two recent major decisions, both Sonia Sotomayor and Elena Kagan have declined to indulge ominous encroachments on personal freedom and privacy.

Their latest stand came in a case where police put a Global Positioning System on a suspect's car and monitored his every move for nearly a month -- without a warrant. The Fourth Amendment to the Constitution bars "unreasonable searches and seizures." But the Justice Department said that's irrelevant because attaching the device did not amount to a search.

At that point during oral arguments, Justice Stephen Breyer said, "If you win this case, then there is nothing to prevent the police or the government from monitoring 24 hours a day the public movement of every citizen of the United States" -- a prospect he likened to the totalitarian surveillance depicted in George Orwell's "1984." The government's lawyer did not contradict him.

Obama's Supreme Court appointees recoiled at that prospect -- along with the rest of the court, in a rare unanimous verdict. Both also indicated a willingness to put tighter constraints on police than some of their colleagues might prefer.

Kagan signed onto an opinion by conservative Justice Samuel Alito taking the view that modern technology demands a new interpretation of what constitutes a search. In this instance, police can acquire far more extensive information about far more people than would have been imagined two centuries ago, when the Fourth Amendment was written.

In cases like this, Alito said, "society's expectation of privacy has been that law enforcement agents and others would not -- and indeed, in the main, simply could not -- secretly monitor and catalogue every single movement of an individual's car for a very long period."

To do that without a warrant violates the Fourth Amendment. The same, he suggested, might hold true for other new sources of information, such as outdoor video cameras and automatic toll equipment. Kagan agreed with all this.

Sotomayor took an even warier view of police use of modern data-collection systems. Under past Supreme Court decisions, you can unwittingly surrender your privacy by doing business with a bank, insurer or other company. The government can commandeer those records without a warrant -- on the odd theory that they are not private because you've already let someone see them.

Of course, the fact that you have to contract with a cell phone provider to function in the modern world doesn't mean you have no stake in keeping your call log strictly between you and Verizon. Sotomayor said the existing, government-enabling doctrine "is ill suited to the digital age." Her position, if shared by other justices, could lead to sensible new constraints on cops.

The Obama justices also firmly rebuked the government when it trampled on freedom of religion. The administration had taken the side of a religion teacher at a religious school who claimed she had suffered employment discrimination.

Ministers and other religious leaders are normally not covered by such laws, on the theory that the government has no business telling sectarian bodies who should lead the faithful. But the Justice Department not only said the teacher was not covered by the "ministerial exception"; it said there should be no such exception.

How did that argument work out? During oral arguments, Kagan called it "amazing," and the court rejected it 9-0. The religion clauses of the First Amendment, it said, "bar the government from interfering with the decision of a religious group to fire one of its ministers."

Obama would like to extend the government's reach into that as well as other places that were once off-limits. When he tries, though, he can't assume his justices will have his back.



Obama's game plan: Do nothing?

Toward the end of his State of the Union speech, President Obama observed that Washington politicians should learn from the example of the U.S. military: "When you're marching into battle, you look out for the person next to you, or the mission fails."

Obama recalled the successful Navy SEAL mission, which under his watch took out Osama bin Laden, and observed, "the mission only succeeded because every member of that unit trusted each other - because you can't charge up those stairs, into darkness and danger, unless you know that there's someone behind you, watching your back."

At first blush, it seemed like a stirring call to action. But when you look at the speech as a whole, and in context, it was a sad admission. Obama constantly carps about his lack of support from the Republican-led House. I think the president has decided that he cannot succeed in the face of political opposition. So he is not charging up those stairs.

Unless Washington walks in lockstep behind Obama, he's not going to try to get anything done.

Consider the White House decision on the Keystone XL pipeline. Last week the administration announced that the president denied the project because of "a rushed and arbitrary deadline" of Feb. 21 embedded in a two-month extension of the 2011 payroll-tax holiday. "I'm disappointed that Republicans in Congress forced this decision," the president lamented.

Obama also lauded the military toward the beginning of his address. "They focus on the mission at hand. They work together," he noted. " Imagine what we could accomplish if we followed their example."

I can imagine it, but what I see is a president who nixed a shovel-ready job-rich pipeline project that had been under review since 2008, and had passed State Department vetting twice - without exhausting every effort to approve the pipeline, or extend the deadline.

Ryan Lizza wrote an illuminating piece on Obama's "post-post-partisan presidency" in the current New Yorker. As Lizza reported, in 2004 and 2008 Obama framed himself as a Democrat who was above hyper-partisanship. Yet a year into his presidency, a Gallup poll showed Obama to be "the most polarizing first-year president in history - that is, the difference between Democratic approval of him and Republican disapproval was the highest ever recorded."

Lizza wrongly, I think, concludes: "At this political juncture, there appears to be only one real model of effective governance in Washington: political dominance, in which a president with large majorities in Congress can push through an ambitious agenda."

Last month Deputy Press Secretary Josh Earnest told Politico that extending the two-month payroll-tax holiday "is essentially the last must-do item of business" the president has with Congress. After that, "in terms of the president's relationship with Congress in 2012 ... the president is no longer tied to Washington, D.C."

In other words, Obama can only govern if Democrats control both houses. Until then, he has taken his marbles and gone home. As Steve Jobs described his dealings with Obama to biographer Walter Isaacson, "The president is very smart. But he kept explaining to us reasons why things can't get done."




Google announces privacy settings change across products; users can’t opt out: "Google said Tuesday it will require users to allow the company to follow their activities across e-mail, search, YouTube and other services, a radical shift in strategy that is expected to invite greater scrutiny of its privacy and competitive practices. The information will enable Google to develop a fuller picture of how people use its growing empire of Web sites. Consumers will have no choice but to accept the changes."

Judge: Fifth Amendment doesn’t apply when that would be inconvenient to prosecutors: "A judge on Monday ordered a Colorado woman to decrypt her laptop computer so prosecutors can use the files against her in a criminal case. The defendant, accused of bank fraud, had unsuccessfully argued that being forced to do so violates the Fifth Amendment's protection against compelled self-incrimination."

Pentagon to cut Air Force drone program: "Officials say Pentagon budget cuts will end the Air Force's long-range surveillance drone known as the Global Hawk, but keep the Navy's version of the unmanned aircraft. Defense analyst Loren Thompson says defense officials have decided to rely on the less expensive, high-altitude U-2 spy plane, which has a shorter range but has been used in Asia, particularly to keep an eye on North Korea."

IN: Senate OKs people resisting police “unlawful entry”: "The Indiana Senate today passed a bill 45-5 that would clarify the right of people to resist the unlawful entry into a dwelling by police under certain conditions. ... A person can use force, though, if the officer hasn't identified himself or herself, is not wearing a badge or uniform, and isn't engaged in the execution of duty. But physical force is only permitted if there is no adequate alternative. The legislation is in response to a 3-2 Indiana Supreme Court decision in May that Hoosiers can't resist unlawful police entry into their homes."

Mexico: National voter IDs part of culture: "Office worker Ana Martínez lined up at 7 a.m. on a recent Sunday to renew her voter credential, a document required at a polling station to vote. But voting was not the main reason she was getting it. The free photo ID issued by the Federal Electoral Institute had become the accepted way to prove one's identity -- and is a one-card way to open a bank account, board an airplane and buy beer."

An unconscionable threat to conscience: "In May 2009, President Obama delivered the commencement address at the University of Notre Dame where he proclaimed, to naïve applause: 'Let's honor the conscience of those who disagree with abortion, and draft a sensible conscience clause, and make sure that all of our health care policies are grounded not only in sound science, but also in clear ethics ...' What a difference a few semesters make. Last week, Health and Human Services (HHS) Secretary Kathleen Sebelius ordered most employers and insurers to provide contraceptives, sterilization, and abortifacient drugs free of charge. Taxpayers and premium payers are complicit in paying for these 'preventive health services' whether they object or not."

Paul Krugman is wrong about capital gains taxes: "Capital gains are a wonderful, beautiful, magical thing allowing millions of Americans to change their status in life, and live the American Dream. They aren’t just for Mitt Romney. They are for anyone who ever wants to become Mitt Romney. Or, wants their kids to do better than the last generation."

Gingrich rise is triumph of style over substance: "Gingrich has an enviable rep as a one-man think tank, but in his wilderness years, he made a sweet living as a 'forceful' pitchman for utterly conventional center-left policies: Medicaid expansion, the individual mandate, cap and trade, 'clean energy' subsidies, and the like. Newt does a great impression of a red-state firebrand, but when it comes to policy, 'the color is blue.'"



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Thursday, January 26, 2012

If The TSA Will Treat Senator Rand Paul Like A Scumbag, What Will They Do TO YOU?

On Monday, U.S. Senator Rand Paul was detained by the TSA for about two hours at an airport in Nashville. By doing so, TSA officials directly violated the U.S. Constitution and they demonstrated once again why the rest of the world is coming to regard us as a bunch of disgusting, arrogant "pig people".

Do we really want to get such a bad reputation that virtually nobody will ever want to visit this country? We are going to absolutely destroy our tourism industry with this nonsense. Yes, we all want to fly safely, but other countries get the job done without their security officials running around acting like a bunch of Nazi prison guards.

The TSA should be shut down, but if Congress wants it to continue to exist it should be given a dual mandate. It should be directed to protect the dignity of the American people first, and the safety of the American people second. If those running the TSA don't believe that this is possible, then they should be immediately replaced, because there are a whole lot of good people out there that could get the job done.

Right now, TSA officials are treating American citizens like they aren't even human. The truth is that Rand Paul got off easy compared to what has happened to many other Americans. As I have written about previously, some elderly Americans have been strip-searched, some have had their adult diapers removed, and some have even been left covered in urine by invasive TSA searches. If the TSA will treat Senator Rand Paul like a scumbag, and if they will brutally strip-search elderly women, than what do you think they are going to do to you when the time comes?

I don't know about you, but I did not sign up to live in North Korea. I signed up to live in America. But the country we are living in does not look much like America anymore. It is as if the U.S. Constitution does not even matter anymore.

When TSA thugs detained Senator Rand Paul, they directly violated the U.S. Constitution, and nobody in the mainstream media seems upset by this.

Fortunately, many in the alternative media have taken note of this constitutional violation. The following is from an article by Steve Watson....
The Constitution specifically protects federal lawmakers from being detained while en route to Washington DC.

Article I, Section 6 states:

“The Senators and Representatives…shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrest during their Attendance at the Session of their respective Houses, and in going to and returning from the same….”

Rand Paul was travelling from his home in Louisville to attend a session in the Senate today.

The TSA is publicly saying that "normal procedure" was followed during the episode involving Senator Rand Paul. He was detained in a small cubicle for approximately two hours after he inadvertently set off a scanner alarm.

A Daily Caller article described what happened to Senator Paul when he attempted to leave the cubicle that he was being held in.... “I tried to leave the cubicle to speak to one of the TSA people and I was barked at: ‘Do not leave the cubicle!’ So, that, to me sounds like I’m being asked not to leave the cubicle. It sounds a little bit like I’m being detained.”

That is how TSA agents are trained to behave. They are trained to bark orders at us. It doesn't even matter if you are a U.S Senator apparently.

TSA agents on the scene wanted to subject Senator Paul to an "enhanced pat-down" during which his genitals would be touched. Understandably, Senator Paul did not want to submit to such a humiliating inspection.... "For an hour and a half, they said ‘absolutely, I would have to [accept a pat-down],’” Paul said. “And, because I used my cell phone, they told me I would have to do a full body pat down because you’re not allowed to use your cell phone when you’re being detained.”

Thankfully, Senator Paul was eventually allowed to go back through the original scanner and it did not beep the second time through. Other travelers have not been treated so nicely.

When informed about this incident, the Obama administration was quick to defend the TSA. White House press secretary Jay Carney said the following about the incident.... "I think it is absolutely essential that we take necessary actions to ensure that air travel is safe."

Of course that is a bunch of nonsense. Dozens of other countries have a far better air security record than we do and yet they do not subject their citizens to this kind of abuse.

Rand Paul's father, presidential candidate Ron Paul, issued a statement which strongly condemned the actions of the TSA.... "The police state in this country is growing out of control. One of the ultimate embodiments of this is the TSA that gropes and grabs our children, our seniors, and our loved ones and neighbors with disabilities. The TSA does all of this while doing nothing to keep us safe."

Hopefully this will become a major issue during the race for the Republican nomination. Instead of spending all of our time discussing Mitt Romney's taxes or Newt Gingrich's "skeletons", we should be spending a lot more time talking about how the United States of America is rapidly being transformed into a totalitarian police state. It is absolutely disgusting what some Americans are being forced to endure just to get on a flight.

During a Congressional hearing in 2011, Senator Paul expressed outrage over the fact that TSA agents are feeling up the private areas of little girls in the name of "national security".... "You’ve gone overboard and you’re missing the boat on terrorism because you’re doing these invasive searches on six-year-old girls."

And you know what? What the federal government does sets an example for the rest of the nation. Over in Stark County Ohio a couple of years ago, it was documented that police strip-searched female suspects until they were fully naked, recorded them on video and then left them naked in their cells for up to six hours.

Of course all of that was done in the name of "keeping us safe", right? Some example we are setting for the rest of the world, eh? Our country is going downhill so fast that it is hard to find words to describe it.

A lot of us are not flying anymore because we don't want the TSA examining our private parts, but now the TSA is bringing its own special brand of "security" to thousands of other locations across the United States as the Los Angeles Times recently detailed....
The Transportation Security Administration isn't just in airports anymore. TSA teams are increasingly conducting searches and screenings at train stations, subways, ferry terminals and other mass transit locations around the country.

"We are not the Airport Security Administration," said Ray Dineen, the air marshal in charge of the TSA office in Charlotte. "We take that transportation part seriously."

The TSA's 25 "viper" teams — for Visible Intermodal Prevention and Response — have run more than 9,300 unannounced checkpoints and other search operations in the last year. Department of Homeland Security officials have asked Congress for funding to add 12 more teams next year.

Who ever thought that we would see the day when "VIPER teams" were running around all over America setting up internal security checkpoints?

Even if you just sit home all day there is still a good chance that you will get the attention of the Department of Homeland Security. The Department of Homeland Security has announced that it is now diligently watching the Internet. According to a recent Fox News article, the Department of Homeland Security has decided that it is important for them to keep an eye on "forums, blogs, public websites and message boards"....
Though still in development, DHS is looking to establish a system for monitoring "forums, blogs, public websites and message boards." The idea is to gather and analyze publicly available information, and then use that information to help officials respond to disasters and other situations.

In case you were wondering, yes, they will probably read this article. Hopefully it will shame some of them into cleaning up their acts.

This country is being run by a bunch of psychotic control freaks that are obsessed with watching, monitoring, tracking and controlling virtually everything that we do.

Sadly, most Americans have bought into the lie that unless they give up huge chunks of liberty and freedom none of us will be safe. But when we give these un-American control freaks an inch, they just keep trying to take a mile.

America is supposed to be about freedom and liberty. It is supposed to be a place where we don't have control freaks on our backs 24 hours a day. But instead we are becoming the exact opposite of what America is supposed to be.

No matter how much liberty and freedom we give up, the world is always going to be a very dangerous place.

In the future, there are undoubtedly going to be some very bad things that happen in our world. But having TSA thugs touch the private parts of our women and our children is not going to prevent any of it from happening.

Instead of being an example for the rest of the world, we are becoming a bad joke. Please wake up America.



24 Facts That Show How Ridiculously Unfair Our Economy Is For Americans Under The Age Of 30

If you are an American under the age of 30, you have probably figured out by now that the entire economic system is stacked against you. The way that our economy is structured today is ridiculously unfair to younger Americans.

First, we endlessly push our young people to go to our ridiculously expensive colleges and universities where the pile up enormous amounts of debt. Then they get out into the real world where they find that only a handful of really good jobs are available for the vast army of college graduates entering the workforce.

Sadly, most of the jobs that our young people are working these days do not pay enough to be able to support a family or buy a decent home.

Meanwhile, our politicians are busy mortgaging their future. Our young people are expected to support a Social Security system that will not be there when they get older, and every single day more than 2 billion dollars is added to a debt that will hang around the necks of younger Americans and their children for the rest of their lives.

If you stop and think about all of this for too long, your head might just explode with anger. Well, not literally, but you get the point. The truth is that this is going to be the first generation in U.S. history that is going to do significantly worse than their parents, and that is a terrible shame.

Are you not convinced that things are really bad for younger Americans? Do you think that they should just shut up and quit whining about things? Well, keep reading. You just might change your mind by the time this article is over. The following are 24 facts that show how ridiculously unfair our economy is for Americans under the age of 30 that will make your head explode....

#1 U.S. households led by someone 65 years of age or older are 47 times wealthier than U.S. households led by someone 35 years of age or younger.

#2 Today, only about 55 percent of all Americans between the ages of 16 and 29 have a job.

#3 Back in the year 2000, more than 50 percent of all Americans teens had a job. This past summer, only 29.6% of all American teens had a job.

#4 Since the year 2000, incomes for U.S. households led by someone between the ages of 25 and 34 have fallen by about 12 percent after you adjust for inflation.

#5 It is absolutely ridiculous how much it costs to get a college education in America today. After adjusting for inflation, U.S. college students are now borrowing about twice as much money as they did a decade ago.

#6 Average yearly tuition at private colleges and universities in the United States is now up to $27,293. That figure has increased by 29% in just the past five years.

#7 Back in 1952, a full year of tuition at Harvard was only $600. Today, it is $35,568.

#8 The cost of college textbooks has tripled over the past decade.

#9 In 2010, the average college graduate had accumulated approximately $25,000 in student loan debt by graduation day.

#10 At some point this year, total student loan debt in the United States will surpass the 1 trillion dollar mark for the first time ever.

#11 The total amount of student loan debt in the United States now exceeds the total amount of credit card debt in the United States.

#12 Our economy is not producing nearly enough jobs for our college graduates. The percentage of mail carriers with a college degree is now 4 times higher than it was back in 1970.

#13 One-third of all college graduates end up taking jobs that don't even require college degrees.

#14 In the United States today, there are more than 100,000 janitors that have college degrees.

#15 In the United States today, 317,000 waiters and waitresses have college degrees.

#16 Right now, there are 5.9 million Americans between the ages of 25 and 34 that are living with their parents. According to recent Census data, men are almost twice as likely to live with their parents as women are.

#17 At this point, there are more than 3.5 million Americans that are behind on their mortgage payments. Young people that were offered "teaser rates" on their first homes before the housing collapse represent a large proportion of these mortgages. CNN recently featured the story of 29-year-old Ginny Gant....
I followed "the plan" to achieve the American dream and now I feel like I'm caught in a stagnant nightmare.

My husband now works for the Navy as a civilian and I am a high school teacher. We bought our two-bedroom townhouse nearly at the peak of the housing boom for $196,500. We're underwater on our mortgage with a high interest rate. I'm looking at having to stick with this house for eight, nine, 10 years.

I really would like to have two or three children, but I just don't think it's feasible to have that many children in this house. It's too small to have a family and it's not what I envisioned for myself when I followed the rules.

#18 The total value of household real estate in the U.S. has declined from $22.7 trillion in 2006 to $16.2 trillion today. As noted above, large numbers of young Americans bought homes in the years leading up to the housing crash, and they lost a ton of wealth when home values plummeted.

#19 We are facing a retirement crisis that is absolutely unprecedented in U.S. history. Right now, more than 10,000 Baby Boomers are turning 65 every single day. Young Americans are expected to pay for their Social Security benefits, but Social Security will not be there when Americans under the age of 30 get older.

#20 Young Americans get arrested at a far higher rate than older Americans do. Amazingly, 30% of all Americans get arrested by the time they reach the age of 23. Once you spend time in prison, getting a good job becomes much tougher.

#21 Approximately one out of every five Americans under the age of 30 is currently living in poverty.

#22 In 2010, 42 percent of all single mothers in the United States were on food stamps. A very large percentage of those single mothers are under the age of 30.

#23 According to one recent survey, only 14 percent of all Americans that are 28 or 29 years old are optimistic about their financial futures.

#24 The U.S. government is stealing about 150 million dollars from our children and our grandchildren every single hour. Younger Americans will have to bear the burden of this debt far longer than older Americans will.




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Wednesday, January 25, 2012

Burns night tonight!

I am fully prepared with the haggis, clootie dumpling, tablet, oatcakes, Dunlop cheese, Scotch whisky etc. Anne is preparing the tatties and neeps as I write and I will be getting into the kilt.

But most of all, of course, we have the wonderful words of the poet to read

Spending Can Be Cut Our Way, Or Europe's

Better-than-expected job growth in recent months is increasing confidence that the economy may become more robust this year. However, serious challenges remain, especially on the federal budget, that are likely to constrain the recovery. To encourage investors to take more risks, businesses to hire more workers, and consumers to spend more money, lawmakers must resolve the budget deadlock soon, and in the right way. That should include privatization of social insurance programs such as Medicare and Social Security.

Recent sharp increases in interest rates on European government debt have forced Greece, Spain, Italy, and other nations to adopt austerity policies involving deep cuts to their social insurance programs. This should serve as much-needed notice to U.S. lawmakers, especially liberal-leaning ones: If they continue to make outlandish demands for more revenue, and the policy deadlock continues until U.S. debt valuations begin to slide, it will be too late to avoid a fate similar to that of the fiscally strapped Europeans facing forced austerity policies.

Why shouldn't America just raise taxes to cover deficits that stem primarily from social insurance programs? For one thing, even the Europeans are emphasizing spending cuts. Moreover, it would be counterproductive to finance U.S. spending commitments by increasing taxes, which would require roughly doubling payroll taxes immediately and permanently.

A recent International Monetary Fund analysis shows that closing deficits by raising more revenue tends to lead to deeper recessions and slower growth. It's far better to follow the example of Canada's mid-1990s reforms, which involved just $1 in tax increases for every $7 in cuts, and which resulted in strong economic performance over the next decade.

Emphasizing tax hikes would also reinforce high levels of social insurance benefits, diminishing individual incentives to acquire skills, work, save, and invest. In a key 1937 Supreme Court ruling establishing Social Security's constitutionality, Justice Benjamin Cardozo paraphrased those opposed to the program as arguing "that aid from a paternal government may sap those sturdy virtues and breed a race of weaklings."

U.S. productivity growth weakened during the early 1970s, soon after health entitlements were established and Social Security benefits were protected from inflation. More recently, the brief productivity spurt of the 1990s information-technology shock has dwindled. America is suffering from poor skill acquisition, with education performance sliding for the past two decades; a reduced work ethic, with average weekly work hours having declined from 39 during the mid-'60s to 34 today; and saving and investment rates that have been dropping since the late '70s. The fear about our "sturdy virtues" is proving true.

Reinforcing social spending through taxes would increase the chances that, like the Europeans, we will discover such spending can't be financed by an economy of "weaklings." That would eventually force austerity measures that would amount to a backdoor privatization of social programs. That is, Americans would have no choice but to increase savings, work longer, or scale back their living standards in retirement.

Unfortunately, a long-term agreement to reduce the deficit seems unlikely this year. The failure of Congress and President Obama to achieve a deal thus far is a double-edged sword. On the one hand, it signals Republicans' willingness to steadfastly reject destructive tax increases. On the other, it brings us closer to an undesirable, European-style privatization through forced austerity.

Isn't it time to think about actively privatizing our social programs to make them sustainable while we can still decide who will bear the cost?



Stimulus was Designed to Provide Pork and Payoffs, Not to Revive the Economy

Harvard University economist Jeffrey Miron argued that the $800 billion stimulus package wasn’t even designed to stimulate the economy, but rather to benefit special-interest groups, since it flunked even old-fashioned Keynesian policy prescriptions about how to revive the economy. Recently-disclosed memos obtained by the New Yorker provide more evidence for this argument: “over the objection of his economic advisors, President Obama replaced $60 billion of ‘highly stimulative spending’ with a slow-spending but ‘inspiring’ $20 billion for high-speed trains and $40 billion in pork for his Senate Democratic allies. And this is starting from a point at which he knew that his advisors thought that not more than $225 billion of the $826 billion total was high-quality, fast-spending, efficient stimulus.”

This is not the only way that Obama ignored economics in favor of politics when drawing up the stimulus. Originally, economists wanted the stimulus to include the kinds of transportation spending that could boost the economy. But the stimulus package was purged of most investments in roads and bridges, and filled instead with welfare and social spending, out of political correctness, after feminist leaders complained that fixing roads and bridges would put unemployed blue-collar men to work, rather than women.

Christina Hoff Sommers points out that “of the 5.7 million jobs Americans lost between December 2007 and May 2009, nearly 80 percent had been held by men,” because men “predominate in manufacturing and construction, the hardest-hit sectors.” But when some administration officials floated the concept of “an ambitious . . . stimulus program to modernize roads, bridges,” and infrastructure as a way of “reinvigorating the hardest-hit sectors of the economy,” “Women’s groups were appalled,” denouncing “The Macho Stimulus Plan.”

The Obama administration quickly knuckled under to this pressure, resulting in a “stimulus” package that spent money instead on social services like welfare that are administered mostly by female employees. As an AP story noted “Stimulus Aid Favors Welfare, Not Work, Programs.” (The stimulus package largely repealed welfare reform).

The little “transportation” spending that remained in the stimulus package was disproportionately wasted on laying the groundwork for “high-speed” rail boondoggles that are not actually “high” in speed. These multibillion dollar rail boondoogles would provide work at inflated wages for politically-powerful unions. But these projects are expensive white elephants that would be used by very few travelers at an enormous cost per mile, and not enable trains to go anywhere near as fast as they do in Europe, Japan, or China. (Other union-backed provisions in the stimulus package wiped out jobs in America’s export sector.)

Similarly, the “green jobs” Obama promised in the stimulus package never came into being, as even The New York Times has conceded. Instead, the stimulus package’s green-jobs spending ended up inadvertently outsourcing American jobs to China. The administration’s green-energy programs also wiped out jobs in the furniture industry.

Obama relied on exaggerated claims to push through the stimulus package, claiming it was needed to prevent an “irreversible decline” in the economy, even though the Congressional Budget Office admitted that the stimulus package would shrink the economy “in the long run.” Even an old-fashioned Keynesian stimulus might have been something that America could not afford at a time of record deficits. The Congressional Budget Office, ignoring the above flaws in the stimulus package, argued that it would boost the economy in “the short run.” But even the CBO conceded that the stimulus would shrink economic output in “the long run” by increasing the national debt and thus crowding out private investment.



Not much hope for unskilled workers in America's highly efficient factories

Since at least the 1970s, when the farsighted could see the consequences of Japan’s rising manufacturing power, some observers have declared a crisis in American manufacturing, and have called for the federal government to fix it. Some suggestions, such as higher tariffs or fewer free-trade agreements, have been politically attractive but economically unconvincing. (Retreating from global trade might help save some manufacturing jobs in the short term, but at the cost of making the entire country poorer.)

Other proposals have been self-serving and unlikely to have much impact, like subsidies and tax cuts for manufacturers (the benefits of which go disproportionately to the owners of factories, not to the workers, who still must compete with legions of ever-cheaper robots).

Probably the most popular rallying cry lately has been the demand that China stop interfering with currency markets. Just about every economist would argue that China should stop artificially cheapening its currency, but getting it to do so would not dramatically increase low-skill manufacturing employment in the U.S. Most analyses show that in response to a rising yuan, American manufacturing companies would more likely shift production to other low-wage countries—like Indonesia, Bangladesh, or Mexico—than to U.S. factories.

Is there a crisis in manufacturing in America? Looking just at the dollar value of manufacturing output, the answer seems to be an emphatic no. Domestic manufacturers make and sell more goods than ever before. Their success has been grounded in incredible increases in productivity, which is a positive way of saying that factories produce more with fewer workers.

Productivity, in and of itself, is a remarkably good thing. Only through productivity growth can the average quality of human life improve. Because of higher agricultural productivity, we don’t all have to work in the fields to make enough food to eat. Because of higher industrial productivity, few of us need to work in factories to make the products we use. In theory, productivity growth should help nearly everyone in a society. When one person can grow as much food or make as many car parts as 100 used to, prices should fall, which gives everyone in that society more purchasing power; we all become a little richer. In the economic models, the benefits of productivity growth should not go just to the rich owners of capital. As workers become more productive, they should be able to demand higher salaries.

Throughout much of the 20th century, simultaneous technological improvements in both agriculture and industry happened to create conditions that were favorable for people with less skill. The development of mass production allowed low-skilled farmers to move to the city, get a job in a factory, and produce remarkably high output. Typically, these workers made more money than they ever had on the farm, and eventually, some of their children were able to get enough education to find less-dreary work. In that period of dramatic change, it was the highly skilled craftsperson who was more likely to suffer a permanent loss of wealth. Economists speak of the middle part of the 20th century as the “Great Compression,” the time when the income of the unskilled came closest to the income of the skilled.

The double shock we’re experiencing now—globalization and computer-aided industrial productivity—happens to have the opposite impact: income inequality is growing, as the rewards for being skilled grow and the opportunities for unskilled Americans diminish.

It’s hard to imagine what set of circumstances would reverse recent trends and bring large numbers of jobs for unskilled laborers back to the U.S. Our efforts might be more fruitfully focused on getting workers the education they need for a better shot at a decent living in the years to come. Subsidized job-training programs tend to be fairly popular among Democrats and Republicans, and certainly benefit some people. But these programs suffer from all the ills in our education system; opportunities go, disproportionately, to those who already have initiative, intelligence, and—not least—family support.

Those with the right ability and circumstances will, most likely, make the right adjustments, get the right skills, and eventually thrive. But I fear that those who are challenged now will only fall further behind. To solve all the problems that keep people from acquiring skills would require tackling the toughest issues our country faces: a broken educational system, teen pregnancy, drug use, racial discrimination, a fractured political culture.

This may be the worst impact of the disappearance of manufacturing work. In older factories and, before them, on the farm, there were opportunities for almost everybody: the bright and the slow, the sociable and the awkward, the people with children and those without. All came to work unskilled, at first, and then slowly learned things, on the job, that made them more valuable. Especially in the mid-20th century, as manufacturing employment was rocketing toward its zenith, mistakes and disadvantages in childhood and adolescence did not foreclose adult opportunity.

For most of U.S. history, most people had a slow and steady wind at their back, a combination of economic forces that didn’t make life easy but gave many of us little pushes forward that allowed us to earn a bit more every year. Over a lifetime, it all added up to a better sort of life than the one we were born into. That wind seems to be dying for a lot of Americans. What the country will be like without it is not quite clear.

Much more HERE



SCOTUS: Warrant required for police use of GPS: "The Supreme Court says police must get a search warrant before using GPS technology to track criminal suspects. The court ruled in the case of Washington, D.C., nightclub owner Antoine Jones. A federal appeals court in Washington overturned his drug conspiracy conviction because police did not have a warrant when they installed a GPS device on his vehicle and then tracked his movements for a month."

US Senator Rand Paul detained after declining TSA sexual overtures: "Republican Sen. Rand Paul of Kentucky on Monday found himself in a showdown with the Transportation Security Administration in Nashville, Tennessee after refusing to undergo a full-body pat down. Paul was later re-screened and booked on a subsequent flight. ... According to the Associated Press, Paul said he was 'detained' in a small cubicle in the airport, which is about an hour from his Bowling Green, Kentucky home, and missed his flight to Washington for a Senate session. The TSA disputed the characterization that Paul was 'detained.'"

Marine only demoted at end of Haditha trial: "Did the US military justice system work? That’s the question defense analysts are asking on the heels of a Marine Corps judge’s recommendation Tuesday that the sergeant in charge of a team of US troops responsible for killing 24 Iraqis, including seven children, receive 90 days confinement and reduction to the rank of private. As a result of a pretrial agreement, however, Staff Sgt. Frank Wuterich will not serve any time in prison."

Mitt Romney heads south: "When John King asked Newt about the comment from an ex-wife that he had asked for 'an open marriage,' Newt leveled the guy -- and won South Carolina. Newt discovered that evangelical Republicans dislike, even more than infidelity, a smug, biased, leftist 'moderator.' Oddly, women seem to let the open marriage thing slide. As for men, the only thing most men would prefer to an open marriage is an open bar. If you combine that with football on a flat-screen HD TV and serve hot wings, you would carry 99 percent of the straight male vote."

IL: Community group accused of paying school protestors: "In tactics similar to ones used by a former ACORN group in New York City during the Occupy Wall Street movement, a Chicago-based not-for-profit paid people to attend protests that backed the closing of public schools. Two of the 'rent-a-protestors' reportedly blew the whistle on the Hope Organization, claiming that they were offered money to attend the rallies back on Jan. 6 and that they were provided with pre-made signs and prepared scripts."

Tibet: Chinese occupation troops fire on protesters, killing at least two: "Deadly showdowns between Chinese security forces and Tibetans in [occupied Tibet] spread to a second town on Tuesday, outside advocacy groups reported. At least two and perhaps as many as five Tibetans were killed by gunfire and many more wounded, the groups said, in what appeared to be the most violent outbreak in the region in nearly four years."

NJ: Christie says he’d veto same sex marriage bill: "Republican Gov. Chris Christie said Tuesday he'd veto a gay marriage bill advancing in the Legislature and instead wants same-sex unions put to a referendum. Angry Democrats said lawmakers have an obligation to protect civil rights and the issue should not be put off for a public vote. Christie made his first explicit promise to veto a gay marriage bill during a visit to Bridgewater, just hours before the Democrat-controlled Senate Judiciary Committee forwarded the measure to the full Senate on an 8-4 party-line vote."



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Tuesday, January 24, 2012

A brass age?

By Thomas Sowell

This may be the golden age of presumptuous ignorance. The most recent demonstrations of that are the Occupy Wall Street mobs. It is doubtful how many of these semi-literate sloganizers could tell the difference between a stock and a bond.

Yet there they are, mouthing off about Wall Street on television, cheered on by politicians and the media. If this is not a golden age of presumptuous ignorance, perhaps it should be called a brass age.

No one has more brass than the President of the United States, though his brass may be more polished than that of the Occupy Wall Street mobs. When Barack Obama speaks loftily about "investing in the industries of the future," does anyone ask: What in the world would qualify him to know what are the industries of the future?

Why would people who have spent their careers in politics know more about investing than people who have spent their careers as investors?

Presumptuous ignorance is not confined to politicians or rowdy political activists, by any means. From time to time, I get a huffy letter or e-mail from a reader who begins, "You obviously don't know what you are talking about..."

The particular subject may be one on which my research assistants and I have amassed piles of research material and official statistics. It may even be a subject on which I have written a few books, but somehow the presumptuously ignorant just know that I didn't really study that issue, because my conclusions don't agree with theirs or with what they have heard.

At one time I was foolish enough to try to reason with such people. But one of the best New Year's resolutions I ever made, some years ago, was to stop trying to reason with unreasonable people. It has been good for my blood pressure and probably for my health in general.

A recent column that mentioned the "indirect subsidies" from the government to the Postal Service brought the presumptuously ignorant out in force, fighting mad.

Because the government does not directly subsidize the current operating expenses of the Postal Service, that is supposed to show that the Postal Service pays its own way and costs the taxpayers nothing.

Politicians may be crooks but they are not fools. Easily observed direct subsidies can create a political problem. Far better to set up an arrangement that will allow government-sponsored enterprises -- whether the Postal Service, Fannie Mae, Freddie Mac or the Tennessee Valley Authority -- to operate in such a way that they can claim to be self-supporting and not costing the taxpayers anything, no matter how much indirect subsidy they get.

As just one example, the Postal Service has a multi-billion dollar line of credit at the U.S. Department of the Treasury. Hey, we could all use a few billions, every now and then, to get us over the rough spots. But we are not the Postal Service.

Theoretically, the Postal Service is going to pay it all back some day, and that theoretical possibility keeps it from being called a direct subsidy. The Postal Service is also exempt from paying taxes, among other exemptions it has from costs that other businesses have to pay.

Exemption from taxes, and from other requirements that apply to other businesses, are also not called subsidies. For people who mistake words for realities, that is enough for them to buy the political line -- and to get huffy with those who don't.

Loan guarantees are a favorite form of hidden subsidies for all sorts of special interests. At a given point in time, it can be said that these guarantees cost the taxpayers nothing. But when they suddenly do cost something -- as with Fannie Mae and Freddie Mac -- they can cost billions.

One of the reasons for so much presumptuous ignorance flourishing in our time may be the emphasis on "self-esteem" in our schools and colleges. Children not yet a decade old have been encouraged, or even required, to write letters to public figures, sounding off on issues ranging from taxes to nuclear missiles.

Our schools begin promoting presumptuous ignorance early on. It is apparently one of the few things they teach well. The end result is people without much knowledge, but with a lot of brass.



The Contrarian View of Argentina

There is no doubt that America is in for some hard times. Obama is spending $3 for every $2 he raises in taxes and that bubble has got to burst. When it does all sorts of nastiness are possible. And Obama's verbal war on the "rich" will be remembered -- meaning that anybody with substantial assets will most likely be hit particularly hard. A small number of Americans are trying to protect themselves in various way from the turmoil to come. The much-travelled David Galland gives his solution below. I think he overlooks Australia but be that as it may:

After receiving a number of queries on the topic, I felt compelled to further clarify the rationale for helping to establish a community of largely libertarian-thinking individuals in the remote northwest of Argentina.

I am, of course, referring to La Estancia de Cafayate – or "Casey's Gulch" as it is often referred to in deference to the role Doug Casey played in creating the vision for the place. As we have mentioned in the past, La Estancia has made incredible progress over the past five years and now boasts a community of over 200 property owners from over 30 countries.

Simply, after investigating and living in a number of countries, Argentina was the hands-down winner because of the quality of life, which is very high. Especially if you have a certain net worth, the bulk of which resides in a different country: no one with any other option would leave serious money in an Argentine bank… but that’s a detail, not a problem.

This gets to a common misperception about the nature of internationally diversifying your life. Namely, no one who has any understanding of the topic would dream of picking up everything from one country and dropping it into another. That would be simply trading one set of problems and risks for another. Successfully diversifying – which has never been more important – involves doing as much as possible of the following:

* Securing your assets in a number of countries.

* Having your tax residency in one country (ideally, one with favorable tax policies)

* Your actual residence(s) in places where you can enjoy a very high standard of living, but ideally not where you are a citizen – as that makes you a serf as opposed to a welcomed visitor.

* Your business incorporated elsewhere (which is much easier these days, thanks to the Internet).

In other words, Argentina, for those of us who love the place, is just one part of the equation, the part about living well. As I mentioned a moment ago, after wandering the globe for three full years, I couldn't find a more agreeable country – and Doug would tell you the same thing.

That is especially true of Salta province, where the up-and-coming wine-growing town of Cafayate is located. It boasts altogether excellent weather – with sunshine on the order of 330 days a year. Importantly to those of us who care about such things, it’s an agricultural community, meaning high-quality, naturally grown food, almost all of which is grown within a 50-mile radius of the town, as well as excellent wines and free-range beef. Then there’s the still relatively inexpensive domestic help, friendly people and an active lifestyle that always makes time for leisurely meals with friends and family.

In the case of La Estancia de Cafayate, the lifestyle is supplemented by the many amenities (South America’s largest golf course, a world-class athletic club, polo fields, horseback riding, etc.) and a community of intelligent and largely like-minded individuals. In short, the place has an abundance of the best things in life.

The things that are not present also define the place. For example, unlike developed countries, when you are in Argentina – and especially in the countryside – you will be amazed how quickly all of the noise that comes from living in the frenzy of an “always-on” modern society fades away. No more constant drums of war or cable news programs blaring excitedly about the latest fabricated emergency or threat.

(And, no, Argentina isn’t about to go to war with the UK over the Falklands again – the relatively recent debacle from military rule has left the Argentines viscerally against all things military. Today, as a percentage of GDP, the Argentines spend the same amount on their military as does Switzerland – just 0.9%. By comparison, the Chileans spend 3.2% and the US 4.8%.)

Absent all that noise, it’s always a very pleasant surprise to discover how tranquil everyday life can be. The only thing I can compare it to is a sort of peace of mind that settles over you in the second week of a long vacation.

What Most People Don't Know About Argentina

I bet you didn't know that, in dollar terms, the Argentine economy has been growing at a compounded year-over-year growth rate of around 15% for the last decade.

That level of growth is on par even with China. Of course, like China years ago, Argentina was starting from a low point following its last crisis – but it has certainly not stagnated since.

Thanks to the Argentine government’s controversial default in 2002, the country has almost no public-sector debt, very much not the case with most of the world’s large economies. Specifically, its current debt-to-GDP ratio, net of debt held within the public sector, is less than 14%.

The private sector is also virtually debt-free. That is because credit in Argentina is viewed entirely differently than it is in the West, in part because of the country’s regular bouts of inflation, but also because it's just not part of the culture. For example, almost no one has a mortgage on a house – they just aren't available. That means prices for property aren’t inflated by a bubble of debt.

On a macro-level, Argentina is currently running a minimal overall public-sector deficit and, thanks to the commodity boom, steadily runs a current account surplus. As I don't need to tell you, the US government’s deficits are now running close to $1.5 trillion a year, and the country has been running a current account deficit on the order of 5% of GDP for decades – trading the nation’s wealth for other countries' products. In Argentina, it is the other way around.

Of course, as just touched upon, one big advantage that Argentina has is that it is a commodity producer in a world with a growing appetite for commodities. Furthermore, a country that deals in tangible assets – corn, beef, soy, oil, minerals – has a big structural advantage in a world undergoing an explosion of money printing.

Still in the positive camp, anyone who has spent time in the country will tell you that, on the whole, the country’s population is well educated, and those from the higher social strata are typically well read and sophisticated (with an Argentine, you are far more likely to find yourself in a conversation about philosophy than the weather or sports scores). I can’t tell you the situation throughout the country, but the public school kids in Cafayate are given inexpensive personal computers as part of the curriculum.

Also important, the country has a young population, so while there is always some nonsense going on with the unions, it pales in comparison to the endemic problems related to old-age pensioners in Europe – problems that will only get worse.

Furthermore, while the US and so many Western countries are struggling with high levels of unemployment, Argentina has almost no unemployment.

And, finally, while the uninformed might be tempted to think of Argentina as a Latin American backwater, that’s hard to square up with its membership in the G20.

Of course, Argentina’s economic successes are very much in spite of the government, which seems determined to take every opportunity to throw sand in the wheels of progress. Clearly, however, Argentine businesses have learned how to deal with those interventions. More than that, they have managed to prosper at a time when so many industries around the world are struggling: earnings for publicly traded Argentine companies rose by 13% in 2011, second only to Peru in South America, which was up 14% (earnings in Chile were up only 6% and Brazil 7%).

The resilience of the Argentine economy is important on a number of levels, starting with the reality that economies with a lot of desperately poor people tend to have more property crimes. A recent ranking of countries by per-capita purchasing power (an indicator of how much of life’s essentials you are able to afford) placed Argentina at 58 out of 192 countries, ahead of Chile, Turkey, Mexico, Uruguay, Costa Rica, Thailand, Panama and, of course, China and India. Argentina’s per-capita income is the highest in South America.

It is worth noting, too, that while many dear readers may not be in favor of socialized medicine, in Argentina health care is free and the quality of the doctors, in my direct experience, very good, even in the public facilities. In Cafayate, there is a new and reasonably well-equipped hospital, and the doctors are well trained: one of our partners recently had an emergency appendectomy done there, laparoscopically, and was impressed with the high quality of care.

Not to go on, but here’s another little-known fact – that Argentina has one of the highest levels of per-capita water usage (500 l/day) in the world. While I haven’t verified the actual reason, I was told by someone I trust it is because a high-level personal hygiene is the cultural norm, so much so that it is standard to provide showers to construction workers as part of normal work practices. That people pay attention to their appearances, as well as their hygiene, is also evidenced by the fact that Buenos Aires has a reputation as one of cosmetic surgery capitals of the world. (Need a little tuck? Prices are about half of what they are in the US.)

The Challenges of Argentina

Now, nothing I have said here should give you the impression that Argentina is perfect. As I learned from the aforementioned three-year quest for paradise, there is no such thing. Every country has its flaws.

In the case of Argentina, dealing with the bureaucracy can be incredibly frustrating. Not so much in terms of daily interactions; for example, the odds of your being pulled over for a traffic offense are barely above zero, and transiting through airports for local flights involves minimal interference (and yes, you get to keep your shoes on).

The dealings with the government become cumbersome when trying to do business or get an official stamp on some document related to what should otherwise be a mundane activity. For example, buying a car. There are, of course, ways that you can circumvent much of this if you have a few dollars – and I'm not talking about paying a bribe, because I've never been asked for a bribe in any of my dealings in Argentina – but rather by hiring a good local attorney (or an inexpensive gofer) and letting them deal with the nuisance issues.

This unfortunate truth aside, however, there is no question that you can get business done in Argentina. Using La Estancia de Cafayate as a relevant example, five years ago the place was literally a horse pasture. Today, it is almost fully built out with all the infrastructure in place and about 30 homes either finished or in the construction process. By infrastructure, I refer to a championship golf course that has been playable for going on two years, a beautiful clubhouse, all the roads, power, water systems and a world-class athletic club, which is now in the final stage of being equipped before opening. A deluxe boutique hotel operated by the award-winning Grace Hotel Group is under construction and moving towards completion next year.

It is no exaggeration to say in any developed country in the world you'd be lucky to even have your permitting at this point. Most likely, you'd still be deep into investigating the natural habitats of the local insects to make sure you weren't going to inconvenience any of them.

The shame of Argentina is that it literally has everything necessary for it to be one of the most successful countries in the world. The only thing standing in its way is a government that, thanks to circumstances from a half-century ago, is supported by many in the population who remain steadfast in their misdirected affection for the long-dead wife of a hardcore populist.

Should common sense prevail – perhaps forced upon it by the next government-engendered crisis – and the free market be allowed to regain even a little lost ground, the country's economy would be a force to reckon with. I'm not optimistic in that regard – either it will eventually happen, or it won't. But that has nothing to do with the quality of life in the wine country of rural northwest Argentina, a place of stunning beauty, a warm and intelligent population, very high-quality food and all the other essentials for living well.




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Monday, January 23, 2012

America's Ongoing Tort Litigation Nightmare

When companies break the law or produce a defective product, they should, and are, held accountable. But the problem with our nation’s tort system is that so often companies are punished when they haven’t done anything wrong – sometimes to the tune of tens of millions of dollars. And the problem is only getting worse.

Tort litigation costs Americans more than $250 billion, that’s the equivalent to 2.2 percent of GDP and roughly $838 per person, according to Towers Watson. This has real economic consequences. In healthcare alone, it’s estimated that tort reform could eliminate up 27 percent of medical costs. In other words, 27 cents of every healthcare dollar goes toward litigation. How does that help lower- and middle-class families struggling to make ends meet?

A case study on America’s tort crisis is playing out in New York. In 2004, a young physical therapist was tragically paralyzed after she pulled a piece of exercise equipment on top of herself. The equipment, a Cybex leg extension machine, was not broken or faulty. Rather, the machine tipped because the therapist wasn’t using it properly – she was standing on the side of the machine pulling backward in order to stretch. Nevertheless, she was awarded the largest personal-injury verdict in Western N.Y. history, a whopping $65 million.

Now, no one argues that what happened to this woman wasn’t terrible. But to punish a company that’s product was not faulty and is safe when used properly is a travesty of our justice system. What about the hundreds of Cybex employees, whose very livelihoods are in danger?

But Cybex is just the tip of the iceberg in Americas’ tort nightmare. With the public policy debate heating up on how to get the economy started and secure the middle class, its obvious tort reform deserves to be front and center.

The force behind the abuse is the well-heeled trial lawyer lobby which claims that tort reform would hurt the average American. In truth, tort reform would only hurt trial lawyers and would provide an immediate boost to the economy.

According to the Center for Responsive Politics, which tracks campaign contributions, the lawyer/law firm industry invested a staggering $234 million in federal political campaigns during the 2008 cycle. Barack Obama was the biggest benefactor, receiving more than four times as much as the nearest Republican, John McCain. Trial lawyers have already spent almost $50 million in the current cycle, with more than $4 million of it going to Obama. The industry is consistently in the top 3 in political giving, beating out energy, pharmaceutical, insurance, commercial banks, entertainment and a host of other industries for prominence in the Washington favor-buying game.

All that donating to Democrats pays big dividends. In 2009, Obama appointed Kathleen Sebelius as his Secretary of Health and Human Services, and directed her to “move forward” on tort reform. Right. Sebelius spent eight years as the director of a trial lawyers association. Not surprisingly, Sebelius hasn’t “moved” anywhere on tort reform, except perhaps backwards.

Democrats love to crow about how Republicans only do the bidding of their Wall Street fat cat buddies. Et tu, Brute? Time and again meaningful tort reform is blocked by Democrats lest they lose the cash hose that is their trial lawyer donation stream.



It’s Credit, Not Race, that Drives Mortgage Pricing

One would think that after a housing boom driven by cheap credit, we would have heard the end of the “minorities charged higher rates regardless of credit” narratives. But our friends at the Economic Policy Institute continue to spin the myth that it is really race, and not credit history, that determines a borrower’s interest rate.

EPI cleverly starts out by lumping most borrowers into the same category: “In recent years, Latino and African American consumers with good credit scores of 660 and higher have too often ended up with high interest rate mortgages, mortgages which are supposed to go to risky borrowers.” First of all, 660 is not a good credit score. We can debate whether it’s poor or mediocre, but it isn’t good. According to the Federal Reserve, loans with a FICO of around 660 default at a rate of almost nine times that of loans with a FICO of 720 or higher (see table below). To mix the two and claim they are the same risk is misleading, at best.

So let’s start with some basic facts:

For a variety of reasons, including differences in age, Latino and black borrowers have lower credit scores than white borrowers. This still holds even when you exclude loans to borrowers with credit scores below 660 or 620. Second, defaults continue to vary, by large magnitudes, even for rates above 660. To imply 660 is equal to 700 or that 700 is equal to 780 is false.

There have also been a number of studies that reject the claim of large, or even any, differences in mortgage pricing by race, when one includes relevant variables. A recent NY Federal Reserve Bank study concludes: "We find no evidence of adverse pricing by race, ethnicity, or gender in either the initial rate or the reset margin. Indeed, if any pricing differential exists, minority borrowers appear to pay slightly lower rates."

A recent study in the peer-reviewed Journal of Real Estate Research concludes "that up to 90% of the African American APR gap, and 85% of the Hispanic APR gap, is attributable to observable differences in underwriting, costing, and market factors that appropriately explain mortgage pricing differentials. Although any potential discrimination is problematic and should be addressed, the analysis suggests that little of the aggregate differences in APRs paid by minority and non-minority borrowers are appropriately attributed to differential treatment".

We all should be offended by racial discrimination. But these vast claims of discrimination, where none actually appears to exist, contributed to the federal push to get everyone a mortgage. This push has come at great cost to the taxpayer, our economy, and—as importantly—to the very families it claimed to help.



Obama's Phony War on the Rich

Ever since the First Couple entered the White House, their social life has swirled around the very rich. Hollywood actors, pop star singers, Wall Street hedge fund managers, billionaire investors — these are the fabled "top 1 percent" in terms of income and wealth.

The Obamas invite them to White House dinners. They vacation with them on Martha’s Vineyard. They party with them. They sup with them at $35,000-a-plate fundraisers.

(Have these affairs ever included an auto worker? A mine worker? How about someone who is unemployed and looking for a job? What about someone who has lost his home? As far as I can tell, the bottom 99 percent never seems to make the cut.)

Here is what we are being asked to believe. During his three years in office, the president has come to realize that all of the people he plays golf with, has dinner with and collects millions of dollars from have too much. All of the people he never sees, never talks to and never socializes with have too little. So the president’s campaign-for-re-election theme will be: take from his friends and give to all those strangers.

Is any of this believable?

If you are inclined to take it seriously, let me remind you that you have heard it all before. Remember the 2008 presidential campaign? Health care was the number one issue. Remember the Democratic primary mantra? It was "universal coverage." And how was it to be paid for? Almost every serious candidate for the Democratic nomination gave the same answer: taxes on the rich. Barack Obama was explicit: "If you make less than $200,000 your taxes will not go up at all."

So what happened? We got Obama Care, at a cost of almost $1 trillion over the next ten years. And who is going to pay for all that? You are. And so is everybody else. My best estimate is that only about one-fifth of the cost of this measure will fall on the shoulders of the "rich." The vast bulk of the burden will fall on everyone else.

According to the Congressional Joint Committee on Taxation, about 73 million Americans earning less than $200,000 a year will see their direct taxes rise as a result of ObamaCare.In addition there are indirect taxes that no one will be able to avoid. These include:

-A "medical devices" tax that will reach everything from bedpans to wheelchairs and crutches will raise $20 billion over the next ten years; it will hit pacemakers and artificial hips and knees, as well.

-A tax on health insurance plans will raise about $60 billion.

-A tax on prescription drugs will raise another $27 billion.

The Republican staff of the Senate Finance committee estimates that these three taxes alone will ultimately push up health insurance premiums for a typical family of four by about $1,000 a year.

A tax on tanning salons is already collecting revenues from ordinary folks. Because of new restrictions on the use of medical accounts (Health Savings Accounts, Health Reimbursement Arrangements, and Flexible Spending Accounts), people are now paying more for such over-the-counter items as Claritin, aspirin and Advil. All told, "medicine cabinet" taxes are expected to raise about $45 billion over the next ten years.

Then there is the tax on sickness. Right now, people can deduct medical expenses in excess of 7.5 percent of their income. That figure will soon rise to 10 percent. Families who have the misfortune of incurring high medical bills will have to pay more to Uncle Sam as a result.

Pity the elderly and the disabled. More than half the cost of the health reform bill will be paid for by reduced spending on Medicare — a whopping $523 billion reduction over the next ten years. Although this is technically a spending reduction rather than a tax increase, the economic impact is the same.

Medicare’s chief Actuary predicts that in eight more years, Medicare will be paying doctors and hospitals less than what Medicaid (for poor people) pays. If so, senior citizens will be lined up behind welfare mothers, seeking care at community health centers and at the emergency rooms of safety net hospitals.

Will seniors be able to survive by paying more out of pocket to offset the reduction in Medicare spending? Maybe. But if they do so, it’s going to them 10 percent of their Social Security checks within eight years.

Here’s the bottom line: when President Obama talks taxes on the rich, expect even more taxes on the middle class.

But what about the rich? Is the president really going to sock it to his friends and golfing buddies?

Would you believe that under the president’s higher-taxes-on-the-rich proposals most of Warren Buffett’s income won’t be taxed at all. More on that in a future column.




US aircraft carrier enters Gulf without incident: "A U.S. aircraft carrier sailed through the Strait of Hormuz and into the Gulf without incident on Sunday, a day after Iran backed away from an earlier threat to take action if an American carrier returned to the strategic waterway. The carrier USS Abraham Lincoln completed a 'regular and routine' passage through the strait, a critical gateway for the region's oil exports, 'as previously scheduled and without incident,' said Lieutenant Rebecca Rebarich, a spokeswoman for the U.S. Fifth Fleet."

Croatia: Voters back EU membership: "Near complete results from Croatia's referendum on European Union membership suggest that a large majority of people want to join the EU in 2013. With nearly 99% of the votes counted, 66% of voters backed the membership. About 33% were against. But officials expressed disappointment at the low turnout of about 44%."

U.S. drones active in Somalia: "An alleged al-Qaida member from London is reported to have been killed in a missile attack from a US drone while fighting alongside Islamist insurgents in Somalia. Bilal el-Berjawi is said to have died when three missiles fired from the unmanned aircraft hit his car on the outskirts of Mogadishu."

Egypt: Islamists take almost half of parliament: "Islamists will dominate Egypt's first parliament following Hosni Mubarak's ousting almost a year ago, as the country prepares for the anniversary of the protests that ended his three-decade rule. The alliance led by the Muslim Brotherhood's Freedom and Justice Party won 235 of the 498 elected seats (47 per cent) in the lower house, while the ultra-conservative Nour party won 25 per cent."

BBC’s biased coverage of capitalism: "On the BBC website an interview was featured recently with the famous orthodox Marxist, Eric Hobsbawm, who promptly denounced capitalism as if he had established definitively its inferiority as a political economic system. Is the BBC such an irresponsible news organization that it will feature Mr. Hobsbawm’s characterization of capitalism with no one who champions that system featured responding to him?"

True religious freedom means freedom for all: "True religious liberty is impossible when leviathan involves itself in every intimate avenue of our personal, social, and economic lives. This is because the state itself compels all its subjects to act in ways that may very well violate their consciences and deeply held values. To allow it to do so when religious values would be undermined is a threat to religious freedom. To make exceptions that declare only religion can exempt people from state obligations is also a problem, for then the state is involved in deciding what is and is not a valid religious belief."

There is a new lot of postings by Chris Brand just up -- on his usual vastly "incorrect" themes of race, genes, IQ etc.



List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here (Academic) or here (Pictorial) or here (Personal)