Big Government

The Little Things

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Since the government is in a partial shutdown, I decided to very carefully keep track of the things that I miss. I have also been keen to keep tabs on my wife, to see if she has noticed anything in her circle that is closed, altered, inconveniences her, etc. She really hasn’t said anything as of yet (I am not asking or prompting, just listening to hear how her day is, waiting for her to say “such and so was closed”, or something of that nature).

The one thing so far that I have been blocked on is the NOAA radar website that I visit every day, to get some weather news. I am in the HVAC industry and as such it is important that I keep up on the weather. The NOAA site now redirects here, with an ominous message.

Of course, this is bullsh1t, as even though I don’t know how these things work, I imagine that the federal government pays its server fees far in advance, and this is just plain old punishment for the “regular folks”, just like closing the national parks is punishment for those who have planned vacations. The amount of money needed to keep our parks and websites like NOAA open is so tiny it is almost laughable when compared to the enormous benefits and waste that the government is involved in and it is simply a stick in the eye to us.

So that is it so far – one website down that has affected me so far. And it isn’t like there aren’t any other places where I can get the weather.

Robert Reich Movie “Inequality for All”

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I saw the movie “Inequality for All” starring Robert Reich, the former labor secretary for Bill Clinton and a very short guy (he’s 4′ 11″) who is pretty personable and funny. Reich uses his day job as a university professor while teaching a class to illustrate his thoughts on inequality from the movie.

In the movie he attempts to link:
– decline in average wages, in “real” terms (adjusted for inflation)
– growth in the highest wages (the top 1%)
– with various factors, including globalization, automation, declines in unions, and the financial bubble
– income inequality with lower marginal tax rates on the rich

There are certainly some concepts in here than anyone can agree with. It would be good if more people in the USA earned a higher salary, had better educations, and were more productive.

In the movie he mentions Warren Buffett, who famously pays a lower marginal tax rate than everyone else in his office, which is due to the fact that he receives long term capital gains and dividend income which are taxed at a lower rate. This is grist for the “raise taxes on the wealthy” discussion, as Buffett plays the likable old man. However, what he fails to mention is that Warren Buffett is the very candidate that the ESTATE TAX is designed to catch… rather than nickel and dime him every year on his assets as they rise in value (and cause friction and force him to sell them off to meet the tax bill), the estate tax would be levied on the super rich and it would effectively make up for the lower marginal rate during his lifetime by taxing increases on his wealth at a rate of 40%, for all amounts greater than about $5M. However, Warren Buffett is choosing to “evade” these taxes by setting up trusts and / or giving it away to his favorite causes; if Warren couldn’t avoid his estate tax through these loopholes (the same way you or I can’t avoid the payroll or sales taxes) then 40% of his $60B estate ($24B) would go to the Federal government, to fund the “investments in people” that Robert Reich is so passionate about. Funny that Reich didn’t call that out (didn’t follow his narrative, apparently).

Another element he fails to mention is the growth in illegal immigration in the USA, and the havoc that this causes with unskilled labor (as they are willing to work for far less). It is funny because two professions he specifically mentions, meat packing and short order cooks, are magnets for immigrants and their arrival is a direct cause for falling wages in these fields. Not surprisingly, Reich didn’t want to alienate a core Democratic group.

There is a rich “pillow manufacturer” who makes $10M+ / year who also describes how ridiculous it is in his opinion that his marginal rate isn’t higher. That same entrepreneur says that he invests in “funds of funds” and due to this he makes money without creating any jobs. That is quite a statement – what do you think those hedge funds invest in? They invest in commodities, stocks, real estate and debt (I’m assuming). When you are an investor and you provide money for stock and debt you are supporting companies that, in turn, hire staff. I can’t believe that Reich let this comment slide, but since it was what Reich wanted to hear, why interject?

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How to Win the Debt Ceiling Battle

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I don’t have the time nor inclination to argue why the GOP is self-destructing in its idiotic drive to trigger a shutdown of the government. It suffices to say that such shutdown likely costs the GOP the House in 2014 at a juncture where it probably could win the Senate…

…If the party (or its waxing, aggressive right flank) wasn’t insane.

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The reason for this post is to propose a solution for the upcoming budget crises/debt-ceiling battle. I call it the “Rolling Sequester,” and it is designed to attract independents and fiscally conservative voters, not drive them away in droves.

Rather than layout the plan on this blog post, I’ve uploaded the 2-page memo that I sent to some folks in DC. I hope it finds its way into the hands of someone who can do something with it. Maybe the readers of this blog can help with that.

Critiques welcome.

Rolling Sequester Strategy

Illinois Legislators’ Lincolns

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Way back in the day when LITGM used to do a bit more of the political type articles I wrote about Illinois representatives’ automobiles. I confused the Lincoln Navigator that Danny Davis (district one) drove vs. the Ford equivalent that Jesse Jackson Jr. drove, and a bit of web hilarity ensued.

Recently I saw another politician’s car and the first thing I did was look it up – and this Lincoln is owned by a Republican in the 6th district, which happened to be Henry Hyde’s old district. It is a matter of how jaded I’ve become that the fact that an elected official drives a Lincoln is barely worth a web peep.

While American’s think that “big money” has captured politics, it is literally nothing compared to the wealth of China’s politicians. This WSJ article describes how wealthy the top Chinese politicians are vs. the USA…

According to the Hurun Report, as cited by Bloomberg, the 70 richest delegates in China’s National People’s Congress have a combined net worth of 565.8 billion yuan or $89.8 billion. That’s more than 10 times the combined net worths of all the members of Congress, the Supreme Court and the President. (Their collective riches are only $7.5 billion.)

Thus I can only imagine the rage I’d have over the same type of rich trappings if I were Chinese. Unfortunately, they can’t vote, and protests tend to go down badly with authorities. As bad as our system is, in terms of being captured by the interests of the wealthy, it is a comparatively egalitarian route compared to our largest economic competitor.

Cross posted at LITGM

Freedom, the Village, and the Internet

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I’ve reviewed two books by German writer Hans Fallada: Little Man, What Now?, and Wolf Among Wolves  (the links go to the reviews), both of which were excellent. I recently finished his novel Every Man Dies Alone, which is centered on a couple who become anti-Nazi activists after their son Ottochen is killed in the war…it was inspired by, and is loosely based on, the true story of  a real-life couple who distributed anti-Nazi postcards and were executed for it.

I thought this book was also excellent…the present post, though, is not a book review, but rather a development of some thoughts inspired by a particular passage in the story.

Trudel, who was Ottochen’s fiancee, is a sweet and intelligent girl who is strongly anti-Nazi..and unlike Ottochen’s parents, she became an activist prior to being struck by personal tragedy: she is a member of a resistance cell at the factory where she works.  But she finds that she cannot stand the unending psychological strain of underground work–made even worse by the rigid and doctrinaire man (apparently a Communist) who is leader of the cell–and she drops out. Another member of the cell, who has long been in love with her, also finds that he is not built for such work, and drops out also.

After they marry and Trudel becomes pregnant, they decide to leave the politically hysterical environment of Berlin for a small town where–they believe–life will be freer and calmer.

Like many city dwellers, they’d had the mistaken belief that spying was only really bad in Berlin and that decency still prevailed in small towns. And like many city dwellers, they had made the painful discovery that recrimination, eavesdropping, and informing were ten times worse in small towns than in the big city. In a small town, everyone was fully exposed, you couldn’t ever disappear in the crowd. Personal circumstances were quickly ascertained, conversations with neighbors were practically unavoidable, and the way  such conversations could be twisted was something they had already experienced in their own lives, to their chagrin.

Reading the above passage, I was struck by the thought that if we are now living in an “electronic village”…even a “global village,” as Marshall McLuhan put it several decades ago…then perhaps that also means we are facing some of the unpleasant characteristics that–as Fallada notes–can be a part of village life. And these characteristics aren’t something that appears only in eras of insane totalitarianism such as existed in Germany during the Nazi era. Peter Drucker, in Managing in the Next Society, wrote about the tension between liberty and community:

Rural society has been romanticized for millenia, especially in the West, where rural communities have usually been portrayed as idylic. However, the community in rural society is actually both compulsory and coercive…And that explains why, for millenia, the dream of rural people was to escape into the city.  Stadluft macht frei  (city air frees) says an old German proverb dating back to the eleventy or twelfth century.

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