I Paid More Taxes Than GE

April Fools Day!

The New York Times reports that GE made $14.2 billion last year, $5.1 billion here in the US.

Its American tax bill?  Zero.  $00000.00.

In fact, G.E. claimed a tax benefit of $3.2 billion.  And Obama's cool with it, poking his head out of GE boss HeMelt's blazer pocket to tell us so.

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. (NY Times)

Are Corporate tax Rates Too High?

Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation’s tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.

Yet many companies say the current level is so high it hobbles them in competing with foreign rivals. (NY Times)

How do you reconcile this apparent discrepancy?

Easy. Tax avoidance ain’t cheap. This is how high tax rates can rob the treasury by resulting in less taxes. Businesses hide their money in unproductive pursuits and spend more on financial trickery. All money that could have gone to capital expansion that brings more jobs.

This is why many democrats and republicans are talking up tax reform that cuts out the swiss cheese exemptions and loopholes in exchange for a lower rate. It also explains why the move would be revenue neutral. At a certain point, it’s easier and cheaper to just pay the tax rather than pay skyscrapers full of accounting wizards and tax lawyers.

Crony Crapitalism

Unfortunately, too many people think "free market" means pro-business. It doesn't. Free market means laissez faire -- prohibit force and fraud, but otherwise leave the marketplace alone. No subsidies, no privileges, no arbitrary regulations. Competition is the most effective regulator. (John Stossel)

Government statists have a vested interest in the kind of crony capitalism that allows GE to pay no taxes.  You can't have your campaign sponsors wasting money on frivolities when you need that cash to finance your next election.

How the DC-NY Axis of Evil Screws Ordinary Americans

Rising government debt creates more money, diluting our purchasing power and our savings

“To finance the government deficit, the Treasury now sells bills and bonds at a rate of about $120 billion a month, or about $1.5 trillion per year. But this new Fed-created money, which finances the government deficit, is not associated with any production of new goods and services. Thus, total monetary demand, or purchasing power, exceeds the existing supply of goods, equities, and services at prevailing prices, with the predictable result that prices rise."

Inflation enriches the fatcats...

At home, bankers and speculators have been and are the first in line, along with the Treasury, to get zero interest money and credit from the Fed. They are first to get bailed out. Then with new money, they finance stocks, bonds, and commodities, anticipating, as in the past, a Fed-created boom.

Being first in line has its advantages.  So the fat cats get the new money first, before the inflationary effects kick in, giving them maximum purchasing power...

Prices rise first for the most volatile goods, especially stocks, commodities, and financial claims, because they are relatively liquid vehicles for speculators and banks. This is the story of the past two years, with stocks and commodities advancing amidst a sluggish U.S. economy. This is also the story of postwar Fed-created booms. Each cycle experiences an inflation boom, often in different assets, e.g., Internet stocks in the late ’90s and real estate in the last boom and bust.”

After the fat cats have their investments safely locked away, the inflation trickles down to the rest of us, eroding our purchasing power and our savings.  Yeah, you can buy into the bubble, but the previously steep curve is already starting to dampen by the time your average Joe Schmo has a chance to get in on it.

But middle-income professionals and workers, on salaries and wages, and those on fixed incomes and pensions, are impoverished by the very same inflationary process that subsidizes speculators and bankers. Those on fixed incomes will likely earn very little or even a negative return on their savings. Thus, they save less.

It’s a rigged game, and those manipulating OUR US Currency control the game…

The inequality of wealth and privilege in American society is intensified by the Fed-induced inflationary process.

The subsidized banking and financial community, along with the chaos of floating exchange rates and an overvalued dollar, underwritten by China and other undervalued currencies, has submerged the American manufacturing sector, dependent as it is on goods traded in a competitive world market. 

In a word, the government deficit and the Federal Reserve work hand in hand, perhaps unintentionally, to undermine the essential equity and comity necessary in a democratic society. Equal opportunity and the harmony of the American community cannot survive perennial inflation.

We can dream of demolishing the Fed’s printing presses, or we can demand that the dollar again be pegged to something tangible, like gold, and convertible upon demand.  Or you can just sit there while your savings is stolen by the government.

All quotes taken from Lewis E. Lehrman's Weekly Standard article, Fiat Money, Fiat Inflation.

For those of you who do not understand currency and what the fed is doing, read this very informative article by Seth Lipsky, The Floating Dollar as a Threat to Property Rights. He does a great job breaking it down for us non-economists.

Government-Sponsored Ignorance

This is an absurd statement:

And as the housing market continues to be vulnerable, deep caution greets any proposal that might pass on higher borrowing costs to consumers. (WSJ – Fannie and Freddie)

God forbid that the costs be borne by the consumer! What economic idiocy. Of course the costs should be paid by the consumer. This is the fallacy of the free lunch that is perpetuated by government.

“We’re lowering borrowing costs!” venal politicians shout from the stump.

“No,” retorts anyone with a fundamental understanding of basic economics, “you’re just spreading the cost around.”

So the government forces apartment dwellers, renters, and those who own their homes outright to subsidize home buyers. This masks the true cost of buying a home and distorts the market, resulting in a bubble. Fannie and Freddie can keep lending standards low because these insurers know they will not bear the brunt in a collapse--Uncle Sam will.  Another market distortion.

We need just the opposite of what our politicians are peddling
Each consumer must bear the cost of what he or she consumes, and we must also be allowed to face the consequences, good or bad, of our decisions.  That goes for homebuyers, mortgage companies, and mortgage insurers. This will inject sanity into the marketplace.

Some cry that ordinary people will no longer be able to afford a home if the government shuts down Fannie and Freddie and stops picking everyone’s pockets for the benefit of the few.  I say balderdash! Private companies will step in and back those who can provide evidence of financial stability. Some people will no longer be able to buy a home, but those are the people who should not be buying anyway, as evidenced by events of the past five years.

And what place is it of government to say owning a home is more noble than renting?  

Nuclear Power – No Silver Bullet

I have been an advocate of nuclear power, but it is not the panacea we imagine it to be, even putting aside the current Japan crisis.

I demand intellectual honesty from those I argue with, but I also demand it from myself and the ideas and philosophies I adopt and espouse.  I've been reading about nuclear power, and while I am far from the No Nukes crowd, I now see it is not all it's cracked up to be.

It’s Not Cheap

Affordable nuclear power, says Taylor, is a Republican fantasy. Promoting it makes no more sense than Nancy Pelosi's promotion of wind and solar power. "Take a Republican speech about nuclear power, cross out the phrase 'nuclear,' and put in 'solar' — you've got a Democratic speech about energy." (Stossel)

Environmental Impacts?
Water usage is another issue. Nuclear power advocates speak in eye-droppers, while opponents invoke billions and billions of gallons, so I don’t know what the facts are. I have heard credible sources say that nuclear power requires a lot of water. We had a plant in Northern Colorado, Fort St. Vrain, that was build specifically to save water, and it ended up a failure and was converted to a conventional natural gas plant.

Construction costs aside, here is what each form of energy is projected to cost in 2016:

Reason:  Veronique de Rugy

Nuclear beat Bio, Fossils beat Nuclear

This doesn't take nuclear power off the table, it just puts it in perspective.  It is a cheaper, more reliable alternative to wind and solar.  Still, natural gas beats it hands down, and the US has been described as the Saudi Arabia of natural gas, notwithstanding extraction problems.

Nuclear only really makes sense from an environmental standpoint as a replacement for coal-fired plants, which are being replaced anyway by natural gas.  Only around 1% of our energy is produced by petroleum, so nuclear does little to break our addiction to dictator-provided oil.

So nuclear stands between cheap efficient fossil fuels and green pipe dreams.

The Economic Solution? Keep using coal and natural gas to power the nation.  Drill for oil for our cars.  As the supply diminishes, the price will go up and other forms of energy become economically viable. Not because government apparatchiks manipulated price schedules, but because of the law of supply and demand. 

Once people start using these new technologies, the market, as it always does, will become a contest to see who can provide energy to the consumer for the cheapest price.

Such a strategy will not put us at a global economic disadvantage since other nations will be facing the same fossil fuel shortages and forced to go through the same conversions to alternatives.

The Environmental Solution says clean coal, nuclear, wind and solar.  Costs be damned.  As the technology advances, prices will go down, as is always the case in a free market.  But here's the wrinkle:  Prices cuts will only occur if government can refrain from worming its tentacles into every aspect of the green energy industry while simultaneously fending off the crony crapitalist rent-seekers.  Fat chance of that happening.

Wind, Solar and Nuclear can cut petroleum use only by the US embracing electric and natural gas powered vehicles.  And this saves us nothing, because these replacement energies are not free.

It's true, there really is no free lunch.  As Dr Thomas Sowell is fond of saying, there are not magic bullets, only trade-offs. 


Further Reading:
Stossel – What We Know that Just Aint So
Reason – The Truth about Nuclear Power

Slouching Towards Disorder

Peter Beinart puts a charitable face on Obama’s Libya dithering...

"...it’s a reasonable bet that had Barack Obama not been able to promise that it would be a mostly European affair, Gates would now be a military analyst on Fox News.

He gives the president too much credit.   Obama staggered in to this, pulled this way and that by France and his own Valkyries.  Regardless, I agree with the president that it’s a good thing for others to lead this latest foreign adventure.

It’s not the 1990s anymore. The American public’s appetite for humanitarian war has always been meager. And now the American government’s capacity for waging it is meager, too.

But in a strange twist, Europe’s appetite has grown. The continent’s military capacity is still tiny compared to America’s, and it still lacks unity, but the shame of European inaction in Bosnia lingers in British, French, Italian, and German minds. (Peter Beinart – The Daily Beast)

It's Time for Europe and the Middle East to Grow Up

Arabs and Europeans need to grow up and take care of their own problems. We should always be faithful to our global friends, but we can do so by playing a supporting role instead of full out fighting their battles for them.  Europe is much closer than we are to Iran, The Middle East and North Africa .

This is only the beginning of the "unraveling of the Middle East"

We learned of the Sunni-Shia blood rivalry during the early years of Operation Iraqi Freedom.  Look for it to explode across the wider region, says respected scholar and foreign policy expert Robert Kaplan.  Add to this the anger spilling over in the Muslim street, financial crises in the west, and the fact that we're already tied up in two wars, and for what? 

China is not a "responsible stakeholder" in the international system, as we proclaim it should be; it is a free rider. We are at war in Afghanistan to make it a safe place for China to extract minerals and metals. We have liberated Iraq so that Chinese firms can extract its oil. (Robert Kaplan - Beyond Libya)

Events are sliding sideways, and each country is fracturing in its own way.  This Arab revolution began with a humiliating slap, has included virginity checks, rapes, twitter feeds and Facebook posts, and no one can predict how it will all end, or if it will end at all.  We should not be picking sides between rotten murderous dictators and rotten murderous Islamists.  I know, they're not all America-hating terrorists, but we've proven woefully inept a sorting the friends from the enemies.  Better to stay out of it.

Globally and domestically, things will get worse before they get better.  Instead of dropping million-dollar packages from 50,000 feet, we should be marshaling our forces here at home.

Angry Apes

Unbalanced
The world is unbalanced, and not because of the Japanese earthquake that shortened our days by 1.8 microseconds, shifted the earth’s axis 6.5 inches, and moved the island of Japan 8 feet to the east.

No, we are unbalanced morally, financially and politically.  We suffer a societal disequilibrium. Up is down, down is up, and the walls are caving in.  Progress has left us bankrupt and sliding backwards.






In 1944, Aldous Huxley wrote:

"Industrial man --a sentient reciprocating engine having a fluctuating output, coupled to an iron wheel revolving with uniform velocity. And then we wonder why this should be the golden age of revolution and mental derangement." (Time Must Have a Stop)

Have we all been crucified upon the wheel?  Is our Western wheel only a less brutal, velvet covered version of the Middle Eastern and Third-World Wheel?  Our internal rhythms are no longer our own, life has become digitized, incompatible with analog souls.
 
Knowledge without love, technology without common sense, progress without morality

In the same book, Huxley also injects this Shakespeare quote from a wounded Hotspur...

But thought's the slave of life,
and life's time's fool,
And time that takes survey of all the world
Must have a stop.

When we can no longer imagine the infinite, our thoughts become a slave to life, here and now.  Time marches on, making a fool of life and our hopes and dreams.  So life can't be the great end, can it?  There must be more...  Otherwise, as Huxley concludes, our lives are reduced to a "pointless or diabolic foolery."

Huxley on Shakespeare
Google Books – Henry IV

Who Says You Can't Go Home?

I found an old friend by doing an internet search, so the innerwebz really is good for something.  You know you're a true musician when you look up fiddle players you've known and not old girlfriends.  It was with excitement tinged by trepidation that I went to see him.  He's almost 80 years old now, and it's true, you can never go home again.  Time marches on and things are not as you remember them.

We played together in a band back when I was single, but I got the most enjoyment from simply sitting down at his house or wherever and just the two of us playing.  We'd go into these dark dusty taverns in Southern New Mexico and unplug the jukebox and play.  Bob Seger, Bob Wills, Fiddle Tunes, Motley Crue, whatever.  Bikers, cowboys, Indians and Mexicans would eat it up, throw money in the hat and buy us drinks.

I took the family down to meet him, and we played all afternoon just like the good old days.  Words cannot express how happy I was to be playing with Valentino again, if only for a few hours.  I was out of practice, country music was never my forte, but it was awesome.

Valentino is a Pueblo Indian, born in Taos Pueblo, New Mexico.  Blind from birth, his family sent him to the Blind School in Alamogordo where he learned to play the violin.  He is the best damned fiddle player I've ever had the pleasure of knowing.
 
Here's a little montage...