Thursday, April 17, 2014

Taxation in Spoonerville

Thug #1: Excuse me sir, but it appears that you haven't paid your taxes.

Man: I'm sorry, you're mistaken. I actually have paid my taxes.

Thug #1: [nodding to Thug #2] Our Treasurer here has no record of you having paid.

Thug #2: [taking out a notebook and flipping through it] What's your name?

Man: [cautiously laughing] Mark.

Thug #2: [Before Mark has finished saying his name] Nope, no record.[quickly closes notebook]

Thug #1: So you see, you need to pay your taxes. Cash only I'm afraid.

Mark: [irritated] Ok, that's enough. [moves to escort wife around men]

[Thug #3, a large man, steps in front of the couple, blocking their way]

Thug #1: I'm sorry, we cannot let you leave until you have paid your taxes. That money is needed. Stan here [gestures at Thug #4] was recently laid off and so needs his unemployment insurance. And Joe's [gestures at Thug #5] kid needs some medicine for his ... acne. Plus, with the recession and everything, we must provide the local economy with much needed stimulus [gestures toward a pub/bar behind them].

Woman: This is ridiculous! This isn't a tax, it's stealing!!

Thug #1: Not at all ma'am. We represent the government of Spoonerville.

Mark: What? This is Chicago.

Thug #1: Well, I'll admit that our jurisdiction is a tiny little spit, but it's as legitimately elected as any other.

Man: Hmpf. Hardly. I've never even heard of it, let alone voted for it.

Thug #1: Because you chose not to vote doesn't mean you're not subject to the laws of its government.

But because we never wish to appear unfair, I move that we hold a special election. All in favor?

All Thugs: Aye!

Thug #1: Opposed?

[Shot of couple standing there confused]

Thug #1: The motion carries, a special election shall commence at once.

Man: Now wait a minuite...

Thug #1: [ignoring man] Now, those in favor of continuing the charter of Spoonerville and the authority of its current government, say Aye.

All Thugs: Aye!

Thug #1: Those opposed?

Mark: [quickly catching on] Nay!

Woman: No, not at all!!

Thug #1: [smiling] The aye's have it. The government of Spoonerville is once again received it's authority through the consent of the people.

Woman: But that's not fair! This is immoral!

Thug #1: [getting angry] Don't you dare question the sanctity of democracy in our fair hamlet. In fairness to you, we held a special election - in which you participated voluntarily I might add - and in which you lost fair and square, 5 to 2. You can't turn around and complain about fairness and morality just because you don't want to pay your fair share.

Man: [trying to calm things and find a way out] Ok, ok. Calm down. How much is the tax?

Thug #1: Well, we here in Spoonerville operate under a flat tax system. It'll be one hundred dollars.

Woman: One hundred dollars!

Thug #1: [Smiling] Each.

Man: And if we refuse.

Thug #3: [Pulls out a gun] We have to deal with those that break the law.

Woman: [starting to cry] Please ... Just let us go.

Thug #1: I'm sorry ma'am. We cannot simply ignore the law. There'd be anarchy.

Besides, if you don't like the laws of Spoonerville, you can always just leave .... once you have paid your taxes and we say you may leave.

Man: I don't have two hundred dollars though.

Thug #1: Well, don't let it be said that we aren't flexible and willing to adjust to the needs of taxpayers. To cover the difference, we will graciously accept your watch and the jewelry that the young lady has on. It's the least we can do.

[With thug #4 holding the gun, the couple start to hand over their jewelry]

Thug #1: We appreciate you voluntarily paying your taxes.

Woman: Voluntarily!?

Thug #1: Yes, voluntarily. Nobody has laid a hand on you physically or even touched you. And we so appreciate your voluntary participation. It avoids things becoming ... unfortunate.

Man: Can we go now?

Thug #1: Absolutely. After all, this is a free country and you are free to travel as you wish. We hope you have enjoyed your visit to Spoonerville. Please come again.

[Couple walks past the thugs and down the street swiftly]


Friday, August 02, 2013

Eliminate "Gov-co"

Why doesn't McDonald's charge $40 for a cheeseburger? After all it'd more profitable. Why does Wal-Mart or the Dollar General or 5andDimes or Goodwill even exist if name-brand stores can charge as high as "the wealthy" can pay? Most people seem to inherently understand the cause-and-effect of prices and competition in the retail market. But is that only because we see it everyday in our current lives?

Consider an alternative history where during the Great Depression, advocates for the poor pressured the govt to pass a bill that created "Gov-co" retail stores. Gov-co stores are a nation-wide chain that provide cheap, generic food and goods for the poor at massively discounted prices (subsidized by taxes). Adjusted for inflation, they had prices like $1 for a new pair of tennis shoes or a button up shirt or $10 for new car tires or $20 for a new dishwasher because the rest of the cost of the goods is subsidized with taxes. At such discounted prices, no private company can compete and so not only have Gov-co stores became a national chain in virtually every town, but now the only alternative to those Gov-co stores are high-end, brand name stores selling high-end goods that cost top dollar and are only affordable to the middle class and above. At this point, very few really remember what it was like before Gov-co existed. People only recognize that only "the rich" can afford the brand name goods. But that only reinforces the need for a Gov-co to provide affordable goods for the poor.

Unfortunately, people have recognized that while the prices of Gov-co goods have remained stable (only raising with inflation), the quality of the goods has not. In addition, the quality and price of goods in the south is slightly different than the price and quality in the northeast as well as differences between urban, suburban and rural communities. Meanwhile, brand name goods continue to improve and increase in quality, though prices still cannot compete with Gov-co.

People are decrying the further and further separation between what the poor can afford vs what the rich can afford. In fact, they point out that the rich are able to afford goods that make them more productive and able to make more money compared to the poor. Something must be done. Many advocate to increase tax spending on Gov-co products to help increase the quality while keeping the prices low. Others advocate setting mandated regulations - maybe even establishing a federal agency to oversee and inspect manufacturers to ensure sufficient and consistent quality products. Tweaks to the system are constantly introduced, customer feedback mechanisms, product quality control tests are standardized, but nothing appears to really be improving the situation. (Not to strain the analogy, but imagine if IN ADDITION to everything else, if you did choose to shop at Gov-co instead of the brand name stores, you could only shop at your local Gov-co nearest your home.)

In such a situation, if someone advocated simply and completely eliminating Gov-co and allowing the free market to work in the retail space, I think few would dispute that there would be large numbers of people pointing at those high-end stores that cater to the more well-off and decry "What about the poor?" and lament that the poor would go hungry and naked because they couldn't afford to buy from those high-end stores. They'd claim that those private stores would just continue to charge high prices because people have to have food and clothing and stuff, right? The suggestion to completely eliminate Gov-co would be treated as nonsense - of being harsh, unsympathetic, and cruel. Accusations would abound that advocates are only concerned for the rich or are "in the pocket of big business".

But in reality, we know that without a Gov-co, we actually have a vibrant retail market with an enormous segment dedicated specifically to low-income consumers. Stores like mentioned above: Wal-Mart, Dollar General, 5andDimes, Goodwill, etc. all directly aim to serve low-income consumers. Critics of eliminating Gov-co overlook that the poor are a market in and of themselves and that many companies would move into that market to serve them - providing cheaper goods for lower prices and that competition in that market would help improve quality while keeping prices low.

Now this understanding that free market competition DOES encourage businesses to keep prices low and to increase the quality to attract customers is pretty common. We seem to inherently understand this about retail goods because we see it in action everyday. But many seem to have a problem with the idea that the same effects and incentives apply to education as to retail goods - I would argue, because we're only familiar with the current setup where only "the rich" can afford private schools.

Those who suggest simply eliminating public education are dismissed as naive. They are told, often even by other advocates of limited-govt, that without public education, the poor wouldn't be able to afford to send their children to school, only continuing the generational poverty and further widening the gap between the rich and the poor. Perhaps another look at the nature of competition in a free market, only in a different market, may help them see that we cannot simply assume that the current structure of "only the rich can afford private education" would continue if we eliminated public education. In fact, based on looking at other markets like retail, there is significant evidence to conclude that education providers would likely actively focus and pursue low-income customers.

Eliminating public education and allowing free market competition into the market for education couldn't be a whole lot worse than modern public education in many places, and it has the potential to be much, much better.

Wednesday, June 19, 2013

Conversation with a Conservative: A compromise between a Conservative and a Libertarian on Immigration

I had a conversation about immigration with a ardent die-hard conservative Republican recently. I feel the discussion was valuable. I got a better sense of their concerns on the issue and it's more than just "foreigners are bad" or "they took our jobs" or "terrorists!!" like many seem to caricature them to be and in addition to educating them on the libertarian perspective, got their thoughts on that perspective.

For background, I guess I would call myself a voluntarist as I often make the argument for no govt though I'm not willing to say I'm completely convinced that everything would work out perfectly in an ancap society (I simply haven't looked at every issue or challenge, so don't feel educated enough to make that declaration). So my ideal immigration policy is no policy - open borders, no govt required registration. Nobody is directly being harmed by people simply crossing a political line in the sand.

However, there are challenges to that view right now due to the policies of our current govt. For example, we currently face a threat from terrorism that our foreign policy exacerbates and invites. If you also have a non-interventionist foreign policy, I believe your risk from the threat of terrorism is significantly less and thus the need (or perceived need) to comb over every person that gets in an airplane or visits from another country is drastically reduced.

At the same time, however, I am a strong pragmatist and feel that libertarians are not going to get anywhere close to a free society by just declaring the govt is immoral and demanding that everyone stop using it. So I am often more willing to compromise on issues than I feel many libertarians are.

After a nearly 2 hour discussion with my conservative friend, we were able to reach an agreed-upon compromise for immigration reform:

Secure the border
If you're going to have any immigration policy and any restrictions or controls on those who come in, it makes little sense if people can bypass and disregard the law and the process anyway. I'm not sure how effective it would be, but I'm fine with enacting it as part of a bill.

Application process is a background check
A single, simple form (in English - govt should not add the complexity, expense, and likelihood for confusion involved with trying to maintain and accept forms in 57 different languages) to apply for immigration. This form should only require the basic information to identify the person and will be used to perform a background check. The only purpose of the entire application process is to determine if you are a threat to others - i.e. if you have a violent criminal history, ties to terrorists, etc. If you do not, you're free to enter the country at your earliest convenience. No multi-month/year long process of various approvals for different types of immigration.

This should change the legal immigration process from taking months or even years to a couple weeks. By making the process significantly more simple as well as shorter, I feel it will make legal immigration much more attractive compared to the risk and disadvantages of illegal immigration. In addition, with a drastically smaller number of illegal immigrants I think illegal immigration itself will be easier to deal with and certainly less of a problem.

A one-time fee
Applying for legal immigration will require a flat fee that simply pays for the cost of performing the paperwork and background check - no more, no less.

No fines or back taxes
There's little value beyond retribution in trying to excise fines or figure and collect back taxes on illegal immigrants already here. Besides, it would likely cost more in trying to audit and calculate those taxes on individuals who likely earned little income and have no record of it than the tax itself would amount to.

No English fluency/literacy requirements or tests
This is simply unnecessary. Plus, allowing immigrants to come out of the shadows of illegality would likely lead to them being more likely to assimilate and learn the common national language.

No expiration on legal immigration
There's nothing immoral and nobody is directly harmed by someone remaining here after govt has told them that they have stayed here long enough. If they are not a direct physical threat to anyone, there's no reason to put a time limit on their stay here.

Eliminate the dozen+ types of immigration statuses
A single status, either legal or not. Whether you're coming here for a single business meeting, a week long trip, a summer tour, or to live here for years doesn't matter. As long as you are not a threat to anyone, govt shouldn't care.

No Federal Welfare
One of the concerns of many conservatives are those unskilled immigrants that come here and directly latch onto the govt dole. As a compromise between no restrictions whatsoever and no welfare whatsoever, we agreed that legal immigrants should be able to take advantage of as many state and local govt assistance programs as they are eligible for, but they should not be eligible for federal govt welfare programs. This is a basic decentralization/"laboratories of democracy" position (I hold the same pragmatic position on all welfare programs). Get the national govt out of it and let the states and localities decide how and to what extent to provide assistance to people - in this case immigrants.

Eligible for citizenship after a period
An immigrant can apply for naturalized citizenship after 10 years from the point they were approved for legal immigrant status. Time period is debatable, 10 years was just what we came up with, but some period of time from the point they received approval should be required before they can apply for full citizenship.

I just barely touched on these items to convey the basic premise. But it seemed like a good compromise that deals with both the concerns of conservatives while making the system and process more simple and open.

So what do you think? What does this overlook? What problems (besides political) might this create?

Tuesday, August 28, 2012

What would your 5 Point Plan be?

We (appear to) sit at the precipice of a large economic chasm. Something needs to be done and that something cannot be tweaking at the margins.
Obama seems to suggest more of the same. But Mitt Romney has come out with his 5 point plan (note his 5 points are buried in a single paragraph halfway down that article). I personally do not feel it focuses on the right things nor is bold enough.
We all obviously have dozens of policy differences with our conservative/liberal counterparts and I recognize that many reject the entire edifice of govt and others advocate a complete govt takeover. But from a pragmatic viewpoint, if you were limited to just 5 specific issues to address with the knowledge that we may hit a huge economic crisis during the administration of the winner of this election, which 5 would you advocate to voters, which 5 do you believe are most important to accomplish to avoid an economic collapse and set things on track for improvement?
Here are my 5:
  • Monetary Policy - I believe we cannot continue with our current monetary policy and it must be decoupled from the current monopoly cartel. The most politically viable, in my opinion, as well as probably the smoothest transition would be to legalize competing currencies in concurrence with a full audit of the Federal Reserve. I only hope it would be sufficiently effective in time.
  • Foreign Non-Interventionism - I believe that we waste enormous resources, life, and liberty with our current approach. All while inciting the type of animosity that requires more "security", more resources, more loss of life and liberty to deal with. This cycle must stop.
    • While this may not have the direct economic impact of some of the other issues, I believe it is critically important to a free society.
  • Corporate Protectionism - There is a great deal of agreement, on both sides of the aisle, that corporations do not need the level of govt protection, guarantees, promises and bailouts. Without govt to "socialize losses", corporations would have to be more conscious of risk.
  • Taxation - Taxation in general is not only overly complex, but, in my opinion, the worst part is how unseen it is. So many hidden "sin" taxes, excise taxes, fee taxes, etc. The income tax (as hidden as it is since it's taken out before you ever get the money) is still one of the most visible and certainly most talked about. Taxes need to be simplified and reduced.
    • Govt spending is the other side of this coin, and while I obviously believe we need massive curtailments to spending, I think that putting a check against profligate abuse of our monetary policy may actually help in this regard (plus ending foreign interventionism and corporate protectionism will reduce spending a fair amount).
  • Regulatory Reform - Regulations hamper virtually every industry now. What's worse is that the vast majority of these regulations are written by unelected bureaucrats. While I obviously think a free market (without govt bailouts/guarantees/protections) is the ideal, I think the most politically viable would be something like Write the Bills Act. Requiring all regulations be written and voted on by Congress itself would, I think, go a long way to reduce regulatory red tape (or at the very least, to put a speed limit on its growth).
    • Whenever one considers reducing regulations, concerns about protecting consumers arises. So part of regulatory reform should also look at strengthening private property protections for individuals.
Honorable Mentions:
    • Ending Drug War - While I feel this is important for a free society, it didn't make my list because I am not educated about the economic impact of doing this.
    • Ending Patents - This I cannot determine exactly how impactful this would be to the economy. While I think it is important, again, I cannot justify adding it to my top 5 without more knowledge of the impact.
    • Ending minimum wage - Encouraging additional hiring as well as providing additional work experience for many low skilled workers.
    • One Subject at a Time Act - just necessary for a responsible representative govt.
    • Entitlement reform - Though this seems to be more of a mid/long term problem, I feel that putting this on a path to better sustainability could go a long way toward improving market confidence, currency stability and credit prospect.
    • [others I'm sure I forgot]
    So what would your 5 be?

Friday, May 25, 2012

Obama the fiscal miser

This image has been circulating the net as "proof" of Obama not being a big spender. 
Obama is downright stingy

Looking at actual spending numbers (as % of GDP) seems to actually support their case:

2009 - 42.63
2010 - 40.75
2011 - 40.09
2012 - 40.27 (projected)
2013 - 39.22 (projected)

Even looks like a downward trend until you take them in greater context:

2004 - 34.86
2005 - 34.83 (-0.03)
2006 - 35.12 (+0.29)
2007 - 35.09 (-0.03)
2008 - 37.14 (+2.05)
2009 - 42.63 (+5.49)
2010 - 40.75 (-1.88)
2011 - 40.09 (-0.66)
2012 - 40.27 (+0.18) (projected)
2013 - 39.22 (-1.05) (projected)

When you look at it in graph form you can see the misleading nature of this. Yes, they skyrocketed spending in 2008-2009 (Bush and Obama were both involved in that). But then, Obama basically maintains that high level of spending. Add in a slight reduction from the 2009 peak and, statistically, it appears that Obama is downright stingy.

It's interesting that when global warming skeptics were pointing at the % temp change over the last decade to 15 years by starting with 1998, the warming advocates were chastising them for "playing statistics" because 1998 was a spiked record high year. Now that people do basically the same thing with spending growth by starting with that spiked record year of 2009, it's lauded as "proof" of Obama being a responsible steward of taxpayer money.

Even if you look at absolute spending you can see where the spike of 2008-2009 and then the slight reduction after that would statistically make the spending growth seem small even though spending itself matches the 2000-2007 trend almost perfectly. 
BONUS: An even scarier trendline

Thursday, April 12, 2012

Ron Paul Next Steps

With Santorum having dropped out, many are concluding that Romney has virtually won the nomination. Ron Paul, however, is not dropping out and will continue to try to push his delegate strategy. However, in my opinion, with the vacuum of good news about the primary, I'd like to see Paul do something bold to get the attention of people and let them know that not only is this thing not over, but he is a viable (and better) alternative to Romney.