Archive for July, 2012

A Simplified Tax Plan

July 27, 2012

Fix the tax laws, Congress. That should be job one. Do that, then with the additional income, put people to work. Infrastructure needs investment, and it’s easy to make it domestic-only. American firms, American workers, no outsourcing or offshoring.
Dump all of the tax laws, all the thousands of pages, in favor of a revised tax on businesses and individuals. Instead of 39% (only the simple-minded ever pay that), reduce it to, say, 15%…but make that a gross-receipts tax. And tax anyone doing business in America by requiring merchants selling foreign-produced goods to collect the tax.
Real competition; no more deductions for the jet the executives use or their cars or spectacular salaries and bonuses or golden parachutes or business lunches. Loopholes only allow creative accountants to hide anticompetitive measures that protect big business. Compete, GE, and Caterpillar and Big Oil and Big Pharma and Big Agriculture, or go under.
And for income taxes, a small tax for the poor, a bigger one for middle class people, a larger one for the wealthiest…and no loopholes. If it’s money, it’s income. All loopholes were put in because of bribes paid to congresscritters; throw them out. This is necessary because not everyone is a stockholder, hence subject to the effect of the ‘business taxes’.
It’s not that 9-9-9 nonsense. But it would work.
For anyone hiding assets offshore, put in a real penalty: say, 150% of the hidden assets. Pay part of that to people who report the hidden assets. And any American company doing business offshore, require that they bring those profits home within a year. For Google and similar who establish ‘Home offices’ overseas, consider them foreign companies and establish a tax basis for them; say, 25%, which is about the average collected by foreign governments. But keep the gross-receipts standard. And watch them move back home quickly. In most cases, it only means acknowledging that the home office was always in America; only a tax shelter was ever overseas.
But no loopholes. For any exceptions to tax law, require that a separate bill be introduced in the House and passed by 70% of the Senate. Sixty-five percent? OK; but make it a separate law that every legislator must vote on and the vote must be public.
See how easy that is? It increases participation, increases competitiveness, streamlines business, puts everyone in the game of government;.
And if I can think of this, why can’t Congress?

Noblesse Oblige

July 19, 2012

This is a concept that’s gone missing in our modern world. But I think the idea is important and we should consider what its absence has cost us.
Robert Heinlein understood what this is. In To Sail Beyond the Sunset, Dr Johnson says, “Does your common man understand chivalry? Noblesse oblige? Aristocratic rules of conduct? Personal responsibility for the welfare of the state?” And in Glory Road, “Noblesse oblige is an emotion felt only by the truly noble.”
But it’s an ancient concept, this idea of responsibility that goes with privilege.
Homer wrote of it in The Iliad. Honore de Balzac, William Faulkner, so many others have written of it.
Some grasp the concept even if they don’t articulate it. When they finish work, a tool is cleaned and any necessary maintenance done before it is put away. It’s responsibility at the most basic level.
Horsemen know of it. It’s a poor horseman who doesn’t care for his horse when he’s finished riding. And it’s also selfish; next time, that horse might well be sore or lame or simply unwilling to cooperate.
Heads of families, tribal leaders, understand. They accept responsibility for the welfare of their people.
Military officers and noncommissioned officers know of it. Not all, but those who are privileged to command people, from the sergeant leading a squad or section to the general officer commanding an army, they’ve been indoctrinated in the concept from the first day they assumed a position of leadership. Care for your troops. If there’s no shelter, you the leader should be there sharing the hardship. When you’re in the field, the troops eat first. The day you’re offered mashed potato sandwiches because that’s all that’s left, or perhaps nothing when even that is gone, you understand. I was a sergeant and got the mashed potatoes; the lieutenants got a slice of bread each.
Henry Ford understood. He deliberately paid his workers well because, as he said, he wanted them to be able to afford one of his cars.
Our business leaders now don’t understand the concept. The Walton family owns Walmart and Sam’s, and they’re among the richest people in the world. Their annual income collectively is in the billions. Their workers are barely above minimum wage…if that. Apple doesn’t understand the concept; their CEO gets a salary that, with stock options, is in the hundreds of millions; the Apple salespeople and the ones who operate the Genius Bar are again, paid very poorly.
The managerial elites don’t understand the concept. They use free-trade agreements to offshore jobs. In effect, they force American workers to compete directly with the most poorly paid workers in the world.
The world has a visceral understanding of the concept. Around the world, you find unrest because people understand that the game is rigged, that there will be winners but that the part of the common man is to be exploited, the loser every time.
That was acceptable once, at least to a degree. Nobles, royalty, were expected to take the field in war. They might not share all the hardships, but they shared the danger. The British royal family still does this; princes serve, and they even go to war. In America, our ‘new nobility’ rarely serves in the armed forces. In Dick Cheney’s words, they “have other priorities.”
Even the American electorate has in large part lost the concept. So many simply rely on a bumper sticker or a talking point from a TV personality. They recognize no responsibility to learn, to attempt to see past the slick façade. They accept no responsibility to help the less fortunate.
A few of us haven’t forgotten. You’ll see us, the political activists, the demonstrators, the Occupy people, and in other places you’ll see the Indignados and the Arab Spring and perhaps a Chinese demonstrator burning himself alive. Even the common man often understands, where the New Nobility has forgotten, if indeed they ever learned of this at the elite schools they attended.
Our political leaders don’t understand the concept. They don’t use Social Security as their primary retirement system or Medicare as their health care. They accept no responsibility for the voters who elected them.
Instead, they recognize only their own profit.
Before any action is taken, their first consideration is “Will this help me get reelected?” Included in this is the pandering to lobbyists who come provided with fistfuls of cash, some of it in the form of campaign contributions, a thin disguise at best. And some of it is hidden among favors done but not admitted to and occasionally even as direct bribes. It happens; we all know of it. Duke Cunningham is serving a prison term because of it…but he was not the only one.
Their second consideration is akin to the first: will this help the party, which by extension asks will the party later help me get reelected?
If there’s a third consideration, for the public who elected them, it’s well hidden. Consider this worst-ever Congress; they made no effort to hide their intention, not to govern for the well-being of the nation but to act in such a mannas to deny Mr Obama a second term. And the American public elected them. We should not be surprised that they’ve done just as they promised to do.
And now the Republican Party is represented by Mitt Romney. He has no concept of noblesse oblige.
He has the arrogance of the New Nobility, but not the requisite sense of responsibility.
He famously declared that he paid only those taxes that the law required, and not a penny more.
We now find that he may well have paid less. We don’t know. He has not yet released a single complete tax return, despite the law requiring that.
He’s not concerned with the poor; he said that. He also continued by reminding us of the safety net. He failed to mention that he intends to do all he can to destroy that. We don’t need things like teachers and firemen and cops, said My Romney. More correctly, HE doesn’t need those things. And feels no responsibility for helping to provide them to you.
Mitt Romney doesn’t understand the concept of noblesse oblige.

In Defense of a Progressive Point of View

July 16, 2012

I wrote this in answer to a comment made by a conservative friend.
OK, Harry; I agree with your comment, “if only we could do the same for abused children…”
It’s where your philosophy and mine differ.
I read this, and I think you’re right, and that we, collectively, human beings all, members in this case of a city, a state, a nation, even a multinational organization, need to do this. We recognize that it’s much easier to breed children than it is to care for them. Across the world, from the fields of starvation in Africa to the favelas of South America, to the slums of America and even to places where the abuse isn’t always the practice solely of the impoverished…and there’s no place for the abused to turn.
There is no help to be had.
Once in a while, we hear of someone helping. Occasionally, abuse comes to the attention of overworked, understaffed police (twice yesterday in New Mexico, fortunately not life-threatening) and something gets done. But in so many cases, a child is born, dies through abuse and neglect, and the world never sees it.
And I think that this, being a collective responsibility, is a job for government. There really is no other agency that represents all of us.
And that government must be paid for by taxes; in this case, a tax would buy us some peace of mind and self-satisfaction that we’ve acted to ameliorate a problem.
But according to your expressed philosophy (shared by many others, of course), government has no role to play and we shouldn’t pay taxes to solve this problem. Taxes are best spent by those who’ve earned the money, right? Even though that means that nothing will be done. I’ve got mine, tough shit for everyone else. Besides, those kids are worthless. There’s no profit to be made from them.
And so, you and those who style themselves conservative see, wring your hands, and then do nothing. Those of us who consider ourselves progressive see, think that we as a society can do better, and seek to use our collective identity, our government, to try to find a solution.
It’s seldom a pure exercise; government is messy, sometimes foolish, sometimes corrupt, and sometimes efforts fail.
But are the shortcomings reason enough not to even try?
The abused children are still there.
Abused animals are still there.
Crooks in the stock market are still there, because we don’t have enough regulators and a regulatory system that would discourage them.
Teachers get laid off, others face overloaded classes, the best see this disfunction and leave or never enter the profession. The children, even those not subject to physical abuse, never see opportunity. The children of the wealthy, of course, attend the best schools. But don’t suggest that this amounts to abuse of children who are denied education and opportunity and later comfort and a life of fulfillment instead of a life of impoverishment and lack of success, always exploited by and at the mercy of those at the top. Work, save, buy a house, see a downturn, lose the job to ‘efficiency’, lose the house, get sick, see a whole life washed away in a short time as your house and everything you’ve worked for goes to a bankster…because government isn’t the employer of last resort, and there aren’t enough regulators to control the greed of the banksters who indeed have legal protection for their crimes…they’ve bought it from congresscritters, and healthcare still isn’t available to all through a single-payer system…
Multinational corporations and businesses are still there, still purchasing loopholes from venal congresscritters to protect gains, loopholes not available to the rest of us, money hidden offshore so that profits aren’t taxed, while we have the world’s most complicated and lengthy tax code, all consisting mostly of loopholes purchased from congresscritters to benefit someone.
A small group of elites buys our politics. We know it, but can do nothing. There is no mechanism to prevent this, no functioning Supreme Court (constant 5-4 decisions along ideological splits defines judicial non-functioning; what is the law if it can only be determined by ideology?)
Such a little thing, Harry; a human regret that children are abused…

Microeconomics: Education and Work.

July 3, 2012

It has often been pointed out that the curriculum in the public schools is geared toward preparing students to enter college. This is a disservice for an increasing number of students. Fewer students will be able or willing to pay the high costs of higher education and so they will leave high school without job preparation and with no good prospects of attending college and gaining an economically-valuable degree. And even for those who do go on to college, few understand that they will be expected to work to obtain a degree, and then obtain a job after college. High schools allow most to underachieve, to learn a minimum amount and move on. Students in high school are expected to be self-motivated and not to require so much close supervision and individual attention. Some, perhaps most, are not ready for this. Physically, they are mature; mentally, not so much.

College has proven to be an economic trap for too many middle class students. Easy loans provide income to colleges, but meaningful education isn’t provided in return that will allow the student to pay off the loan. Statistics that show how much more a college graduate is likely to make during a career versus what a non-graduate is likely to earn are misleading. For every highly paid engineer or financier or business MBA, there are dozens of graduates in women’s studies or ethnic studies or philosophy or art who can’t find good jobs.

The changes in college prospects and the difficulty of finding a job means that graduates of a high school are going to have to leave the sheltered school environment and move into employment that they aren’t prepared for. They have little idea of what is expected of them. Many will begin their work career in the fast food industry because such jobs are plentiful, have a high turnover rate, and require no experience in order to be hired. Most will be fired at least once before they begin to understand hard economic truth, that employers expect more of them than school required. Employers expect them to be at work on time, to do the work assigned, and to be cooperative and friendly to customers and other staff. It may well take 5 years or more before they understand this. While the graduate is learning this, he/she may be forced by economics to remain at home with parents. Entry level jobs simply don’t pay enough for an independent life. Many recent graduates find themselves in this condition.

Not all degrees are equal. A degree in engineering, mathematics, science, accounting, or business is likely to pay well, and for some will pay very well. Even now, in a severe recession, many jobs that require this type of education either go unfilled or are filled by foreigners. Intel, for example, has been unable to hire local graduates for skilled positions even though such are given preference in employment. Skilled, educated, employees simply aren’t available. Lots of college graduates; not many engineers or scientists or mathematicians.

A degree in humanities, art, or social services or even education may provide self-satisfaction, but these are easier to obtain and require much less effort than that engineering degree to obtain. They aren’t likely to impress employers.

So what should a young person understand about employment? Why are employers prepared to pay them to do a job?

Simply put, employers exploit labor. There’s a trade-off, of course.

If the employee is prepared to market his own skills, say by going into business for himself, he can sell his labor and acquired knowledge/experience for more money than he will get from an employer.
But if he doesn’t work, there is no income. Sick? Too bad. Feel like taking a vacation? Your business stops and potential customers will turn to another service provider. Plus the process of acquiring knowledge and experience takes time, and most often tools and equipment must be bought. For some jobs, a van to house the tools and equipment will suffice, but then there are fuel and maintenance costs and time traveling to and from a job that cannot be billed to a customer. If the tools and vehicle are financed, then finance charges, insurance, taxes, and consumables must also be accounted for. For others, auto mechanics for example, a shop is required. This is often leased so there’s the cost of the lease to pay. And of course, if one operates a business, it’s necessary to account for income and expenses for tax purposes. Doing this yourself takes time that can’t be sold to a customer and a specialized knowledge that can’t be acquired short of full-time work in the field. All of this goes under the general heading of “overhead”. Self employed people need to account for and pay all these expenses…and more.

The plumber that charges $100 for a house call is not making $100 profit for himself. He may, after all the expenses are taken out, be making only a bit more than he would have made working for an employer.

The trade off for the employee who works for someone else is a guaranteed market for their labor and skills. A job enables someone to acquire knowledge and experience that can later be applied to self-employment, should the employee choose to go into self-employment.

Employers, entrepreneurs, can make a profit and if they have a lot of employees, they can make quite a substantial profit. They also take substantial risks. They hope to sell the fruits of the employee’s work, but if they can’t do that, they must still pay the employee. Inability to make hard choices when that employee labor can’t be sold leads to bankruptcy.

Employers hire employees because they expect to make a profit from their labor. That’s the part that graduates and beginning employees don’t understand; the employer isn’t just paying them for their time, because that time cannot be resold for a profit. Instead, they plan on selling the results of that time, goods or services produced by the employee. The lazy employee, the unwilling one who argues before undertaking a task, or the one who can’t be productive for whatever reason will be fired or will be the first to be laid off.

Such a simple concept, and so obvious. And virtually no beginning employee, and many experienced ones, can’t really state this. If they know it, it’s a subconscious kind of knowledge.

The employee who quickly learns this basic truth and applies it is likely to be promoted. Employers often have better jobs available and they select motivated efficient employees, the ones who produce the most profit for the least amount of employer effort in training and supervision, to fill those better jobs. They also are willing to pay those employees more.

If the job is a dead end with no hope of advancement, the employee who has learned the above truth is better equipped to get another job.

Some prospective employees depend on the resumé to convince an employer that he/she should hire them. A simple understanding of the basic truth above, and the willingness to state it to an employer and then to apply it after becoming employed, will give any employee an enormous advantage over his colleagues.