What positive steps can we take? The energy that is now expended by well intentioned, freedom-seeking individuals on the destructive course of politics can be turned into powerful steps that will have a positive effect on the future. All are moral, right and just. None require aggressing. Consider the following...
The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Politicians and bureaucrats are notorious for manufacturing euphemisms -- clever but deceptive substitutes for what they really mean but don’t want to admit. That’s how the phrase “revenue enhancement” entered the vocabulary. Some of our courageous friends in government couldn’t bring themselves to say “tax hike.”
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The east coast and parts of the southern U.S. were to varying degrees paralyzed by blizzards a few weeks ago. The snow as expected rendered the roads treacherous, and in anticipation of slick streets, shoppers flocked to the grocery stores in advance.The rush into grocery stores, and its aftermath, offers worthwhile lessons in economics.First up, […]
The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self-sufficient.But our systems of state charity — aka welfare — have too frequently had the opposite effect: They have actually created dependency. It is time to rethink the way we help people.I’m going to […]
Last year was quite the year for Bitcoin. We’ve seen exponential growth in Bitcoin’s exchange rate and extensive coverage in the media. Another phenomenon we have witnessed is the proliferation of alternative cryptocurrencies, five of which we’ve provided below.What all of these cryptocurrencies have in common is that they rely on a decentralized network to […]
President Obama crowed in his State of the Union speech about the economy, even mentioning “a rebounding housing market.” Maybe he was referring to friends in high places, like the seller of Penthouse One in New York, which just closed for $50.9 million, all cash. Millions of mere-mortal homeowners likely wanted to throw something at […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the HealthCare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor supply issues. Given the mounting difficulties with and growing concerns about the […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”As the inequality gap grows, there is an ideological battle unfolding in the West.On the one hand, there are those who think government can fix things. It must do more, tax more, […]
On Feb. 7 the United States will once again reach its statutory debt limit, meaning it cannot legally borrow any more money. Since the obvious option of cutting spending to match the amount of revenue that the government collects is off the table for some inexplicable reason, Congress will have to pass a new, higher […]
The New York Times published an interminable article on health care recently. Plenty of facts — how scrupulous are these journalists! — but the article displayed absolutely no comprehension of the basics of cause and effect. I was left wondering about the whole point.The article details how the health care system rewards specialists to an […]
The Largest Company in History:“The United States Corporation of Government (USCOG)”I follow global social and commercial networks, looking for entrepreneurial opportunities.Innovation surges when industry and government models change. Buggy whips. Landline phones. Railroads. The Soviet Union. Apartheid South Africa. All marked social and commercial innovation, both bad and good.We are witnessing a new form of […]
We’d like to give the banks in Australia some credit. They’ve finally gone and done it. They have caught up with 1960s technology. They’ve figured out how to use PIN numbers.How to only use PIN numbers, that is. They’re considering scrapping signatures on credit cards to cut down on fraud. Apparently, having to verify your […]
We put in a good-citizen call to the SEC the other day.“There’s a massive scheme to manipulate stock prices,” we told the friendly agent.“I have to tell you that your call is being monitored so that we can better serve the public,” he replied.“Oh, don’t worry about that. The NSA is tapping our call anyway.”“Are […]
Dr. William C. Padgett is a retired optometrist who has been trying to bring an elderly care facility to Beaufort County, North Carolina, for over a decade.“Our senior citizens,” he laments, “are finding that it is difficult and in many cases impossible to find an appropriate long-term care facility locally.” Though he has received several […]
If you don’t have the angst out of your system concerning Wall Street banksters, Government Sachs, and the Affordable Care Act, settle in with Matt Taibbi’s Griftopia to make your blood boil one more time.Investors should be reminded of 2008 as they shrug their shoulders and put their money back in the stock market. The […]
What do 8 of the 10 wealthiest people in the U.S. have in common?Aside from being able to fly in private jets, the common thread is that each of them has made their fortune thanks to a start-up.Let me explain…From tech titans like Bill Gates and Larry Ellison (founders of Microsoft and Oracle, respectively), to […]
“Inequality is the defining challenge of our time,” according to President Obama. It’s certainly the topic of the day for Paul Krugman, Joe Stiglitz and a whole raft of liberal pundits.But have you noticed that hardly anyone else is talking about it? When is the last time you heard a shoeshine person or a taxi […]
In December of last year, I left my career to travel the world for one year.My plan was to visit as many countries as possible on my Star Alliance Around-the-World ticket in the first nine months, then, for the remaining three months, return back to the country that most caught my eye and my curiosity.Nine […]
Economic history is primed to repeat in the nastiest of ways unless the government stops distorting the price of something we use every day.Every product, good, or service has a price, which is essential to rational decision-making. We use prices every day as vital data that guide us. Without true prices, prices not distorted by […]
A new survey from Harvard University found a large majority of young Americans do not believe the law will save them money, do not believe it will improve their health, and do not intend to sign up for insurance through the new exchanges.
Uh-oh!The new pope, Francis from the Pampas, has just warned us to beware the “tyranny” of capitalism.Each man worships his own gods. Some worship at the altar of Jesus of Nazareth. Some at the altar of the Almighty Dollar. The capitalists don’t bad-mouth Francis’ god. You’d think he would cut them the same slack.Bad-mouthing Catholicism […]
The market has selected different things as money throughout history. Some of these items have served as money in isolated places for specific periods of time — for instance, cigarettes in prisoner-of-war camps. Cigarettes continue to be a currency in prisons if allowed, but if not, according to Wikipedia, “postage stamps have become a more […]
Beginning last year, mainstream reporters began kvetching about a rather brilliant tax strategy used by Google, Apple and hundreds of other technology firms. It’s been the path to survival for these companies. It relies on a feature of digital goods that would have otherwise been impossible with physical goods. Firms are setting up revenue-receiving subsidiaries in lower-tax states and countries as a means of lowering their overall tax liability.
The most-colorful tactic is called the Double Irish With a Dutch Sandwich. It involves setting up holding companies to receive profits in Ireland, where corporate taxation is 12.5%, and in the Netherlands, too, rather than the in the U.S., with its outrageous rates that can be above 35%, including state taxation. Another step is to create virtual corporate offices in states with no corporate taxation.
These tactics are saving Apple, for example, some $2.4 billion annually from being confiscated, according to a report in The New York Times. Wal-Mart and other physically bound companies can’t do this. “Technology giants have taken advantage of tax codes written for an industrial age and ill-suited to today’s digital economy.”
That is true enough, and this is true in many more ways, as well. Thank goodness the tax code is ill-suited for the digital economy; if it were suited, the digital economy would be far less advanced than it is!
It is precisely because so many features of digital economic life escape the anachronistic regulatory machine that the technology sector is booming while most everything else is breaking under the weight of government control.
Consider that the latest data on U.S. economic growth are pathetic — anemic!. And this is the stuff the government dishes out, which probably paints a prettier picture than the grim reality.
Yet how can anyone be surprised given the explosive growth of government power and debt over the last 10 years? It’s crowded out private growth and left hardly any room for enterprise to breathe at all. If you doubt it, ask anyone who is actually trying to make a buck these days.
After all this bludgeoning, the real question is why hasn’t the American economy been actively shrinking 5% per year? Why are there any signs of life at all?
It has something to do with the emergence of digital technology. That’s been our one source of salvation. It’s as if government sank the economic Titanic and then lifeboats made from digits suddenly appeared in the water to save us all. Without the growth of technology, we would all be sleeping with the fishes by now.
Digits are light and quick and can scoot around to avoid the killer sights of the government tax police. The production of their most-valuable assets can take place anywhere on tiny units. They are is scalable, copyable and infinitely reproducible, to permit the marginal unit production costs of items sold to fall to zero, or close to it.
Put this all together and you have a workable model for escaping the grasping clutches of greedy governments all over the world, especially those whose systems of exploitation are rooted in analog anachronisms like Keynesian-style macroeconomic planning.
In a laissez-faire world, the advent of the digital revolution would have inspired double-digit growth like we see in many other countries today. In the American case, the government has been stealing so many of the gains that our heads are barely above water.
It is one of history’s great missed opportunities. In the Gilded Age, with relatively little regulation and taxation — plus a gold standard and a Congress that was restrained by it — innovations led to growth like we have never seen before or since in the United States. (See Thomas DiLorenzo’s How Capitalism Saved America.)
In these years between 1870 and the end of the century, lives lengthened dramatically. Per capita income soared. Innovation beget innovation. Wealthy, successful entrepreneurs were national heroes. A new model for building civilization through trade and commerce captured the imagination of an entire culture.
The things that were amazing back then were railroads, wide availability of steel, communication improvements, electricity and the possibility of commercializing automobiles and flight. That was all great stuff that showered humanity with unimaginable blessings.
But in our times, our things are even more amazing. We are all using miracle technologies we keep in our pockets that presidents couldn’t have accessed 10 years ago. We have more computing power in our digital devices than existed anywhere in the world in the 1990s. The whole world is universally and instantly networked. What’s more, the prices are falling and falling for all these things.
It’s a hinge of history, a new world. You would have to try pretty hard to prevent a moment like this from giving rise to historic levels of economic growth. And it has in countries like China, India, Turkey and Ethiopia. Indeed, a quick look at World Bank charts shows that 150 nations of the world are growing at faster rates than the United States.
Where is the outrage? It is there, but it is entirely misplaced. Opinion culture is decisively in favor of even more looting of more private wealth. According to the Institute on Taxation and Economic Policy, the top 1% of earners are funding 21.6% of all taxes taken by governments at all levels. This is wildly disproportionate. Yet a dominant policy idea out there is to loot the 1% ever more, and rope the digital economy into the planning apparatus.
It is not a scandal that Google and Apple have discovered fancy ways to reduce the extent to which they are being looted by the tax state. The real scandal is that they have to spend so much money and energy finding ways to keep the money they make. They are serving us; our governments are looting them.
If we want to restore prosperity and bring to the United States some of the economic growth other countries are enjoying, a first step would be to dramatically cut corporate taxes from their current confiscatory level. If we want to avoid the injustice of double taxation (never forget that individuals are paying too!), the right level should be zero.
A change to zero corporate taxation in the United States would bring an instantaneous end to the Double Irish.