Thursday, April 26, 2012

Fear Not the Lame Duck

The left built the super majority of 111th Congress during the lame duck years of the Bush presidency.

Conversely, in the lame duck years of Clinton proved good for the country. Despite all of its faults, the Gingrich House actually passed a balanced budget. (This budget was largely the result of unexpected economic growth, but at least it was a balanced budget).

Sadly, Republicans chose the worst possible candidate for president.

Mitt Romney has a long history as a progressive. Like the Bush administration, he will seek to move the Republican Party to the left and will silence the dissent of the Tea Party.

The reaction of the Democratic Party will an even sharper turn to the left.

Meanwhile, on the world stage, governments around the world seem to move in the opposite direction of the US presidency. During the Bush administration, the governments of the world shifted left. During the Obama administration, they've started shifting right.

If Romney wins the general election, we will see the Republican Party move to the left. We will see the Democratic Party move the left. We will see world governments moving to the left while Romney implements an agenda that is substantially left of where the nation needs to be.

If independents and the base of the Republican Party abandons Romney and votes for either the Constitution Party or the Libertarian Party (letting Obama wins because of a split vote), then we would see something interesting.

Obama would be an unpopular lame duck. Democrats would seek to distance themselves from the unpopular president. In 2016, both the Republican and Democratic Party would seek to create a liberty centric agenda to attrack the libertarians and independents.

This would set up the nation for bipartisan pro-market reform in 2016.

2012 is clearly a loss, but if the Tea Party votes for a third party, then it will set up America for renewal in 2016.

Please, ignore Fox News. Do not repeat the mistake of 2000 by voting the bad to avoid the worse. Things will get better if the Tea Party thinks about the future.

A split in 2012 sets up a true renewal in 2016.

Tuesday, April 24, 2012

A Brokered Convention

The talking heads of the Republican Establishment have been talking as if a brokered convention would some how be the end of the world.

I find this argument funny because I've been lectured more than once by Republicans about how the United States is not a Democracy but a Republic.

I've attended multiple lectures in which learned Republicans praised the Electoral college for putting a buffer between the direct vote of the people and the leaders.

If Republicans were true to their spoken beliefs then they would look forward to a brokered convention in which the different factions of the Party have a say in laying out a strategy for the post Obama years.

I confess. I am a single issue voter this year. My single issue is the repeal of PPACA and a re-establishment of the free market in health care.

By repeal, I do not mean replacing ObamaCare with RomneyCare.

Rebranding government controlled health exchanges is not a free market solution. It is simply the Republican Establishments attempt to grab the ring of power forged by Obama.

The April 23rd primary includes New York, Pennsylvania, Connecticut, Delaware and Rhode Island.

I hope the voters in these states dismiss this nonsense about how Repubicans must unite behind Romney in the primary. A true Republican sees values in a brokered convention.

Failure to have a brokered convention would leave large segments of the Republican base disenfranchised and is more likely to result in a lost election than a brokered convention.

If I were voting in any of the April 23rd primary, I would be voting for the candidate most likely to strip Romney of delegates with the hope of achieiving a brokered convention.

A brokered convention is the best solution for a split Republican Party.

The Republican Party, after all, is not a Democracy. It is a Republic. Nothing would be better than for the duly elected representatives of the states to meet in a brokered convention and elect a candidate.

Tuesday, April 17, 2012

Taxing Question

I was asked a question about the proposed Object Tax reform.

This reform replaces the current income tax system with direct taxation. With the income tax, your employer pays a withholding tax. You file an annual tax reform.

The Object Tax has your entire paycheck deposited into a tax aware bank account. You pay the tax when you withdraw money from this account.

If my paycheck was $10,000 and my tax rate was 30%, then I would have $10,000 deposited into the account. When I withdraw the money, I would pay $3,000 in taxes and get $7,000 in cash.

The question was: Will people have to pay a tax on every transaction?

The answer is that you only pay taxes when you withdraw money from the inbound tax account. Most people will do this once a pay cycle.

For example, I do all of my spending in a checking account and with a credit card that I pay from my checking account. All of my income goes into a savings account and each month, I transfer money from savings to checking to cover expenses.
So, the object tax essentially forces everyone to go through a budgeting process. I would get my money deposited into my inbound account. I would plan how much money I will spend for the month and pay the tax when I transfer money from my inbound account to my checking account.

Some people like to spend cash. In this case, they would get their paycheck deposited into a tax aware inbound account. They would pay their tax when they withdrew cash for spending.

Our tax code has a bizarre mix of deductions and tax-free expenses. These expenses might come directly from the inbound tax account. For example, you might pay your property tax from the inbound account with no taxes withdrawn.

The super cool thing about this tax is that the system takes the money when people plan on spending. It effectively forces people into developing a personal budgetting processs.

The object tax has the effect of a consumption tax because it forces people to consider taxes when they prepare to spend.

Since the tax is taking place at banks, which are equipped to handle money, this would be the absolute easiest tax in the world to implement.

Sunday, April 15, 2012

The Object Tax

One problem with our tax system is that we touch every transaction twice. I have to touch the paperwork when I spend or earn money. At tax time, I must go through all that paperwork a second time while filling out tax forms.

The tax system creates all sorts of extra transactions. Self-employed people must pay estimated taxes each quarter. Employers burn resources paying withholding taxes each pay cycle.

I created a tax reform proposal called the Object Tax that eliminates all of this extra paperwork.

The Object Tax taxes an abstract object between income and consumption. That abstract object, of course, is your bank account.

You would have your entire paycheck (no funds withheld) deposited in a savings account. You pay a tax when you withdraw money.

Let's say your income is $1000. That full amount would go into your savings account. You pay a tax to spend money. Let's say your tax rate is 20%, when you go to withdraw the funds, you would get $800 in cash and pay a $200 tax.

The program eliminates the capital gains tax. You can sell investment A and buy investment B without having to pay a tax; However, to spend the money, you must pay a hefty tax.

The progressive rate would be based on a combination of net worth and income. Let's say I had a stock portfolio worth a million dollars. I would have to pay the top tax rate even if my reported income is a few thousand dollars.

This way the program fulfills the Buffett Rule.

Deductions are simple. Rather than declaring deductions, the Object Tax would allow certain transactions to go through without a tax. This means you make your personal tax decisions at the moment you spend the money and you never have to touch the transaction again.

The object tax is best understood as an account tax. I used the fancy name "object tax" because the basic idea can be used on any financial object. The program has a progressive tax rate based on a combination of income and networth. The program fulfills the Buffett Rule. Since the taxation happens at the bank, it is easier to implement than either an income tax or a sales tax.

Now, the trouble is getting someone to listen to the idea. If your group would like to host a presentation on this idea or the Medical Savings and Loan, please contact me.

This tax has you touching tax related decisions once and only once. You would pay your taxes when you move

Saturday, April 14, 2012

Self Rule

The problem isn't liberalism. The problem is that left used the dialectics of Hegel and Marx to twist liberalism into its opposite.

The American Founders were trained in classical logic (via Arnauld, etc). They applied classical logic to the question of liberty. I call this application of classical logic to questions of liberty "classical liberalism."

The founder's understanding of "liberty" could be summed up with the term "self-rule." The ancient regime held that man was an inherently savage creature and there needed to be a top heavy system to keep man in check. The Great Chain of Being had a whole class system with a monarchy, feudal lord and onerous social structure to keep people in check.

The founders realized that people are capable of ruling themselves.

Notice how this concept of self-rule implies self-discipline. It is not a libertine free-for-all.

Freedom is seen in opposition to kingdom. A free man rules himself as opposed to being ruled by the king's court.

Self-rule means people controlling themselves as opposed to a state controlling them.

Ruling over one-self requires that people have strong values including honesty, hard work, respect for others, charity, etc.. Let's call these values CL Values.

Classical logicians sought to avoid the reflexive paradox.
Classical liberals realized that if people had the freedom to deny the freedom of others, the free society would fall. The Christian Golden Rule is important to this view: A free man treats others as he would have others treat himself.

Sadly, the founders were incapable of ridding themselves the scourge of slavery that they inherited. The generations from 1800s to 1860s were consumed with this paradox. This corrupt period saw the rise of a number of extremely ugly dialectical ideologies and partisanship.

The Civil War is proof that the discourse of the early republic was poison.

The term "modern" refers to things happening post Kant (1724-1804). Things like Hegelianism, Mormonism, Marxism are part of the modern era. It was in this period that pretty much all of the ISMs appeared. The term "Capitalism" was actually popularized by the Marxists.

Modern philosophers captured the term "liberal" and turned it from meaning self-rule into meaning open-mindedness and libertine morals. Freedom is not seen in contrast to kingdom, but as a freedom from any form constraint, including moral constraint.

The other side of the great dialectic split that divides our nation is "conservatism."

Conservatism traces back to the revolution war, when the conservatives supported the British.

The partisan left/right split traces back to the French Revolution. The progressive left sought social change, and the reactionary right sought preservation of the social order of the ancient regime.

The post-modern conservativism that we know today arose under William Buckley. It adopted many of the positions of the early classical liberals, clings to the preservation of social order as its primary aim.

Buckley conservatives hold a moral code that is similar to the classical liberal moral code. Conservatives have the fault of assuming that this moral code is unique to themselves.

The primary difference between classical liberals and Buckley conservatives is that the former is based on classical logic, and the latter is part of the Hegelian/Marxist dialectical tradition.

Modern conservativism hold many of the positions of the US Founders (the classical liberals), but blames liberalism for all social ills ... effectively undermining itself.

Because modern conservatism has adopted this stance, it is incapable of restoring the system of self rule (classical liberalism) envisioned by the Founders.

The partisan left/right split of the French revolution coupled with the dialectical logic of Hegel, Joseph Smith, Marx, etc., has created a trap in which political control swings between two groups set on domination and not on restoring self rule.

Because conservatives are committed first and foremost to their partisanship and have adopted the dialectical mindset, they are incapable of the task of restoring freedom.

Saturday, April 07, 2012

Classical Individualism

Classical thinkers spent a great deal of time thinking about things like the mind and soul.

As far as we can tell, the individual is the only thing with a soul.

You may notice that any group of people can physically divided until one gets down to the the indivisible unit of the individual ... notice the root of the word!?

The individual is the only entity with a soul.

In the American experiment in self rule, classical liberal thinkers held the individual in high esteem.

This was a radical concept. Through the centuries of feudalism, people struggled under the notion that the group was everything and the individual was a expendable part of the group.

Holding the individual in high esteem does not mean an end to groups. People are social creatures and tend to form groups.

 It turns out that, when one holds the individual in high esteem, the groups within society become more dynamic.

The Founders considered freedom of association a fundamental human right. People do not willingly live in complete isolation. They want to form associations. The United States became an extremely dynamic society, because free people run around forming new groups, and quitting those groups that treat individuals poorly.

It's communitarianism that leads to systemic isolation. Communitarians drive out the people who are not willing to bow to the power structure of the community. These people are then isolated.

A society that holds the group over the individual inevitably devolves into a class society as the people on the inside of the group become an upper class and those forced to the outside become a lower class.

By holding the individual in high esteem, one creates vibrant communities.

The classical liberal concept of a free individual was revolutionary. In the 1800s, there was a great deal of reaction to the concept of liberty. The political world quickly devolved into partisanship as powerful groups sought to dominate the government. A large number of reactionary utopian societies formed communes to revive the idealized tribal camaraderie of Feudalism.

The classical liberals of the early 1800s had great success using classical logic (analytics) to explain why a society that held the individual in high esteem works.

The reactionaries, inevitably, turned to dialectics. Analytics centers on reason (a logic model for society). Dialectics centers on conflict. (a system of thought centered on conflict is as much an ideology as one centered on logic).

The dialecticians of the 1800s developed all sorts of clever little tricks (mostly logical fallacies) to project false images onto the classical liberal ideas of the free individual.

Since communitarians drive out the people who don't bend to the power structure, individualism must be about isolution. When individuals succeed they project false images about individuals as tyrrants.

Since communitarians hold loyality to their group as the highest virtues, they claim individualism is without virtue.

The real aim of the 19th century dialectician was to form a power base.

Dialecticians would routinely tell their followers that they had to form into powerful groups to dominate their hated opponents. You must dominate else you will be dominated.

The game of uniting one part of a community against another sounds compelling, but actually creates greater and deeper divisions.

Dialecticians from Hegel and Joseph Smith to Popper and Soros all repeat the same argument: "One must dominate or be dominated." All these groups have the common form of claiming that there is some mysterious "them" who people must united and struggle against. Joseph Smith said his followers were the righteous against the gentiles. OWS says they are the 99% against a sinister 1%.

he left claim they must united against the right and the right against the left.

People fail to realize that both progressive and conservative dialecticians lead society to ruin.

It's an ugly, ugly, ugly way to be.
The classical liberal ideals are a better path. The path starts by holding the individual in high esteem. When you have a free society with a limited government set on protecting property rights of the individual, then you end up with robust communities.

The communitarian appraoch, in which power players form ugly, nastry groups that kick people down devolve into oppressive groups.

Friday, April 06, 2012

Credit Based Enterprise

Free enterprise is not the foundation of the free market. Ownership is the foundation.

A free society is inclusive. Not everyone in a free society is an entrepreneur, but they are all owners. Everyone starts with the ownership of their body and mind. Pundits do the free market a disfavor when they overemphasize free enterprise. Overemphasizing entrepreneurship allows the enemies of freedom to falsely frame the free market as exclusive.

Even worse, overemphasizing enterprise creates openings for progressives to undermine the free market.

I need to jump back to Adam Smith for a moment. In The Wealth of Nations, Smith described a system in which merchants gradually re-invested their profits in their business as they saw fit. This created a self regulating system.

In the last century, progressives have created a financial system that allows entrepreneurs to leverage against the property of others. For example, the Federal Reserve makes possible fractional reserve lending. Fractional reserve lending floods the market with easy money.

It takes a great deal of work for an business to earn $1M in profit. With a snap of the fingers, banks can create multiples of the hard earned profit that is equal in the market to the hard work. If a company worked hard to get $1M in the bank and the fraction is 1/8th then the bank can generate $8M to be lent to competitors.

We've created a credit based entreprise system in which entrepreneurs are seduced into taking on huge debt loads in efforts to dominate markets.

The entrepreneurs engaged in this business model will either experience over the top success, or they will crash into bankruptcy.

Most crash.

Businesses seeking to protect their market are apt to take on debt until the law of diminishing returns forces even the successful credit based businesses into bankruptcy.

I've lost alot of hard-earned money as creditors go bankrupt. Oddly, bankruptcy is not as bad for the bank as it is for people with hard earned money. The bank, after all, created the money lent from the aether. The Federal Reserve system allows for a high bankruptcy rate.

When you look at a business. It is impossible to tell if it was financed through the gradual process of increased profit or by taking on a massive debt position.

Likewise, it is difficult to distinguish the entrepreneur who took the route of building capital from the leveraged buyout artists.

By over-emphasizing entrepreneurship, progressives are able to mask the difference between debt and equity financing.

If free-marketeers caught on to this game and started emphasizing ownership over entrepreneurship, they would be able to take the high ground in debates.

They can then directly attack the credit economy by showing that loose money undermines the property rights of the people with hard earned money.

Remember:  An ownership society is inclusive. Everyone owns something ... starting with their mind and their body.

This inclusiveness is a very important point. Since everyone owns their mind and body, everyone is engaged in an ownership society to some extent.

The entrepreneur society only engages a few people who are are aggressively seeking wealth. In most cases, entrepreneurs aggressively leverage off others.

A credit based economy will always be subject to wicked business cycles in which banks flood the market with easy money at the start of the cycle and the markets come crashing when the debt load of the society is too large.

An equity based ownership society is less prone to business cycles as businesses guage the amount of profit to re-invest in the market by their knowledge of the current market.

In an ownership society, there will always be a few people aggressively seeking to increase their ownership. There will be entrepreneurs in an ownership society.

However, emphasizing entrepreneurship over ownership creates a society in which a few entrepreneurs take actions that undermine the ownership of the people at large.

Thursday, April 05, 2012

Skip the Political Action, We Need Private Action

The way to make the world a better place is by doing, not by complaining.

I was really hoping that the Tea Party would wake Americans from their lethargy and inspire people to act in ways to restore the American experiment in self-rule.

During the Tea Party, many Americans awoke to the erosion of liberty. Sadly, people were drawn into political action. Political action, by its nature, breeds more politics which inevitably leads to more government.

The Tea Party created a great deal of noise without racking up accomplishments.

I contend that the way to restore the free market is through private action.

If we don't like the world of big business and big finance, then we must get together and start small businesses to replace the big businesses.

I've been working on the question of restoring a free market for decades. I have developed a number of business ideas that could start the process of standing against the machine.

One of the businesses is recreation related. (It is a social networking game). To get the game started, I need to find a few people who like to get out on a Saturday and play sports. If anyone would like to start a fun business, please contact me. I live in Utah, and am willing to travel to Colorado, Arizona, Nevada, Idaho or possibly Southern California.

The business is a social networking game designed as a fundraiser. The first people who respond will be at the top of the social network.

The system works as follows: A person will host a game. The host will sell game-related products that cost from $10 to $20 to the participants in the game. (I designed this as a fundraiser). The game involves agility and has a free market message.

To host a game, you will need to reserve a spot at a local park, or find a place that will let access a yard for free.

Here is my Contact Form.

Monday, April 02, 2012

LDS Vision for America

The primary question is whether Republicans want a top-down structured economy or a bottom up organic one?

During the Tea Party, there was a brief glimmer of hope that Republicans would opt for the bottom up economy.

During the presidential primary, however, we find that the voices for a small organic market shoved aside while Republicans nominate the architect of government controlled health care.

I've been following election returns carefully and making county by county comparisons to databases of LDS Church membership. It appears the LDS church is voting as a political machine.

We should ask if this political machine has a top-down economic view or a bottom up vision for America?

I think we can answer this question by looking at the organization and actions of the LDS Church itself.

Internally, the LDS Church has a tightly controlled top-down political structure. Every member of the Church has a neatly defined place in the hierarchy. The Church has well defined positions for each person. Males are given the title "priest" when they are relatively young. They go on a mission, an act which affects one's career and political life. People get other titles like "bishop," etc..

In many Utah companies, people seem to get a promotion when they become a Bishop. I have personally suffered under incompetent managers who got their job on being named "bishop."

The LDS Church, from its inception, has been active in politics and business.

Notably, Joseph Smith started a number of banks which issued currencies that failed. In Utah, Brigham Young, suspicious of non-LDS Merchants established the Zions Merchantile Cooperative Institution (ZCMI) and instructed LDS members to avoid non-LDS stores and shop exclusively at the church run store.

The LDS Church pioneered a business model in which a politically connected group takes out a massive capital position to dominate the local commercial sector with a department store.

Department stores are a top-down business model. This model stands in contrast to the Main Street model with independently stores, lining a main street … each store working on a different niche of the local market.

In recent history (by recent, I mean last week) the LDS opened up its latest business center called the City Creek Center. This is a 20 acre open air shopping mall at the defined center of town. The two story mall cost $1.5B and is part of a $5B mixed use project. Pretty much all of the stores in the mall are national chains.

I confess, I was completely dazzled by the store when I walked through it last week. I love that there is a little fake creek running the length of the store. Yet, I was dismayed that I didn't find any funky new independently owned shops. Pretty much all of the stores listed in the directory are national chains.

I see two distinct paths that a market can. The free market path has a large number of indpendently owned businesses with each small business owner seeking to maximize a little piece of the business puzzle, or there is the top-down controlled approach in which large politically connected players dominate the entire market. Some call this second approach crony-capitalism, others call it fascism. Regardless, the actions of both Mitt Romney indicate that the political machine behind Romney holds to the top down vision for America.
invisible hand working on ZCMI