Questions and Observations

Free Markets, Free People

Tax Internet Sales – “Fiscal Relief” For The States

Down economy? Tax revenues in the toilet? Don’t worry Bunky, government will always find a way to keep it’s revenue stream full:

The days of buying online to avoid paying sales taxes may soon be over.

A bill is expected to be introduced to Congress this week that would force retailers like eBay and Amazon.com to start collecting sales taxes on behalf of states from people who shop online or through mail order.

Of course if you know anything about government you also know this was inevitable. However, it is lines like the following which make my blood boil:

“This would be fiscal relief for the states that wouldn’t require any money from the federal government,” said Neal Osten, a senior policy analyst with the National Conference of State Legislatures, which is drafting the bill.

Osten pointed to a recent study that said state sales tax collections fell to their lowest levels in 50 years at the end of 2008.

My earnings are not there to be “fiscal relief” for profligate states who find themselves with budget shortfalls due to poor budgetary practices. Osten seems to think this is some sort of money tree he’s discovered. More importantly, he seems to view the money as rightfully the government’s, not that of the wage earner. And notice, it is a lobbying group with a vested interest in the outcome writing the legislation. What happened to that promise about “no lobbyists” the new administration made? Special interest democracy is alive and well.

Of course a recession is a great time to pass tax legislation like this – why not cool another segment of the economy by giving priority to government tax collections over spurring economic growth?

The more I observe these lunatics and consider their blinkered and ignorant view of the economic world, the less confidence I have that they’ll figure out that the way out of a recession is to cut taxes, not pass new ones.

~McQ

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Pirates, Armed Guards and “Civilized” Popinjays

With the spike in interest about combating piracy suddenly, any number of people have been sought out and quoted concerning their ‘expert’ opinion about what to do.

This one simply mystifies me.

Cyrus Mody of the International Maritime Bureau said that his organisation had qualms about the use of armed guards on ships: “We always have been against the carriage of arms on vessels. First, we don’t think there is legal backing. Two, there’s a risk of escalation. Three, you cannot carry arms on ships carrying hazardous or dangerous cargo.

“If you permit armed guards on certain vessels, the others, which cannot carry the armed guards will become vulnerable and be targeted a lot more.”

Maybe it is just me, but I simply don’t understand thinking like this. It reminds me of the rightfully ridiculed “if rape is inevitable, lay back and endure it” school of thought.

Note how Mr. Mody seems not to understand that we have an inherent right to self-defense and thus shouldn’t be particularly concerned with whether or not exercising that right has “legal backing”. When armed thieves attack you and your property, they certainly aren’t concerned with the niceties of legal backing. They are called “outlaws” for a reason. But like all human beings, they’re looking for easy targets. Lay back and offer no resistance and they’ll happily take your property and, perhaps, your life. Although that hasn’t been the case yet, it certainly could happen now that the military of various states are killing pirates. In fact, because they are using deadly force now, the need for being able to defend one’s self would seem to me to be even more urgent than before.

That brings us to point two – escalation. I hate to break it to Mr. Mody, but as noted, the military reaction to piracy has escalated the situation. What is obvious, however, is the military cannot provide protection to all of the shipping transiting the area – it can only react to attacks. In the last two attacks on American ships, there was no way for our navy to react immediately. In both cases the USS Bainbridge was hundreds of miles away when the attacks occurred. That leaves immediate self-defense in the hands of the crew of the ship being attacked.pirates

As for three, of course you can have weaponry on such ships if done properly. And think of it this way, pirates don’t know whether or not the ship is carrying “hazardous or dangerous cargo” when they attack. So when they launch that RPG they’re much more of a danger to those cargoes (and the crew) than someone on the ship putting a line of .50 cal rounds across the bow of a pirate skiff and scaring them away.

And four, per Mr. Mody, it just isn’t fair if some ships have armed guards (Mr. Mody was reacting to a story about armed guards on an Italian cruise ship foiling a pirate attack) and others don’t. That’s just nonsense. It’s like “gun free zones” – what do they tell criminals? That no one will be able to defend themselves because the criminal will be the only one with a gun. It’s stupid. The whole point is to make the pirates unsure as to whether the ship has armed guards and whether it is worth it to them to attempt to attack such a ship. One way to take that sort of calculation out of their attacks is to ensure ships are “gun free zones”.

Certainly there are non-lethal ways to fight pirates, but as Gen. Petraeus said the other day, and I’m paraphrasing, I wouldn’t want to be on a water cannon when the guy at the other end has an RPG.

Fighting off pirates requires resistance, and resistance requires at least equality in firepower. The whole point is to make piracy less and less attractive. Right now the pirates pick a target, board it and name their ransom. The risk to reward ratio is so low they won’t consider returning to their former life. One way to help them make such a decision more readily is to raise that reward-to-risk ratio to a level that it is no longer attractive. Seems to me armed ships along with military intervention are certainly a good way to do that.

What we don’t need to be doing is listening to the likes of Mr. Mody and trying to dress up stupidity as some form of “civilized behavior”.

~McQ

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Are Dems Overreaching On Climate Legislation

Kimberley Strassel has a good article in today’s WSJ about what she sees as Democrats overreaching on climate legislation.

For one, they seem to be misreading the public’s support for the radical type legislation that Nancy Pelosi and Henry Waxman favor. Since the recession has hit, people are much less concerned about the environmental impact of certain industries and much more concerned about preserving the jobs they provide.

But it is more than that – the Democratic leadership seems to be misreading the political tea-leaves as well:

To listen to Congressman Jim Matheson is something else. During opening statements, the Utah Democrat detailed 14 big problems he had with the bill, and told me later that if he hadn’t been limited to five minutes, “I might have had more.” Mr. Matheson is one of about 10 moderate committee Democrats who are less than thrilled with the Waxman climate extravaganza, and who may yet stymie one of Barack Obama’s signature issues. If so, the president can thank Democratic liberals, who are engaging in one of their first big cases of overreach.

Not that you couldn’t see this coming even last year, when Speaker Nancy Pelosi engineered her coup against former Energy chairman John Dingell. House greens had been boiling over the Michigan veteran’s cautious approach to climate-legislation. Mr. Dingell’s mistake was understanding that when it comes to energy legislation, the divides aren’t among parties, but among regions. Design a bill that socks it to all those manufacturing, oil-producing, coal-producing, coal-using states, and say goodbye to the very Democrats necessary to pass that bill.

Of course, that’s precisely what the Waxman’s of the party intend to do. As Strassel notes, Pelosi engineered the replacement of Dingell with Waxman precisely to push the more radical agenda.

And 2010 looms:

There’s Mr. Matheson, chair of the Blue Dog energy task force, who has made a political career championing energy diversity and his state’s fossil fuels, and who understands Utah is mostly reliant on coal for its electricity needs. He says he sees several ways this bill could result in a huge “income transfer” from his state to those less fossil-fuel dependent. Indiana Democrat Baron Hill has a similar problem; not only does his district rely on coal, it is home to coal miners. Rick Boucher, who represents the coal-fields of South Virginia, knows the feeling.

Or consider Texas’s Gene Green and Charles Gonzalez, or Louisiana’s Charlie Melancon, oil-patch Dems all, whose home-district refineries would be taxed from every which way by the bill. Mr. Dingell remains protective of his district’s struggling auto workers, which would be further incapacitated by the bill. Pennsylvania’s Mike Doyle won’t easily throw his home-state steel industry over a cliff.

Add in the fact that a number of these Democrats hail from districts that could just as easily be in Republicans’ hands. They aren’t eager to explain to their blue-collar constituents the costs of indulging Mrs. Pelosi’s San Francisco environmentalists. Remember 1993, when President Bill Clinton proposed an energy tax on BTUs? The House swallowed hard and passed the legislation, only to have Senate Democrats kill it; a year later, Newt Gingrich was in charge. With Senate Democrats already backing away from the Obama cap-and-trade plans, at least a few House Dems are reluctant to walk the plank.

Never mind that passage of this bill would most likely retard economic recovery for the foreseeable future, it might also begin to flip the House politically when its consequences are made clear to the public. Waxman and his allies are attempting to poltically arm-twist and bribe enough Democrats to push this through the House, but it apparently faces tough sledding in the Senate, even with a filibuster-proof majority in the offing.

How this ends up is anyone’s guess, but as strange as it sounds, the recession is our best friend in this case. Cap and trade would be disasterous now – not that it wouldn’t be even in a strong economy. And there seems to be building support on both sides to stop it. What you have to hope is that somehow it will then be delayed enough that the mix in Congress changes to the point that the Dem’s radical environmental policy ends up being DOA.

~McQ

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Survey Finds Some Americans Not Averse To Price Controls

Very interesting opinion survey from the Center For Consumer Freedom. Essentially it’s about price control. Check out the first three questions and the responses:

B1 Do you think Congress should cap the interest and fees charged on short-term loans at 75 cents a week for a $100 loan?

* YES 56%
* NO 36%
* DON’T KNOW 8%

B2 Cell phones and other mobile devices can be expensive. Would you support a bill in Congress to cap the costs of cell phone service so that lower income families are able to afford these products?

* YES 57%
* NO 41%
* DON’T KNOW 2%

B3 AUTOMOBILES have risen in price dramatically over the PAST TEN YEARS. Inexpensive, high-quality vehicles are harder to find.

Would you support a bill in Congress to cap the costs of certain kinds of cars so that more families can purchase a safe, reliable vehicle?

* YES 55%
* NO 42%
* DON’T KNOW 2%

So, when it comes to items which are expensive and (and I’m guessing here) the public identifies as an industry which makes too much profit (or has been vilified as such), they’re all for capping the price on them (apparently never watching TV and seeing the competing commercials for all of this, indicating market competition has most likely pared those profits down considerably).

Speaking of TVs, and coffee as well, suddenly the public isn’t so hot on capping prices:

B4 COFFEE prices have risen dramatically over the PAST DECADE, with many locations charging more than $3.00 for a basic cup of coffee.

Would you support a bill in Congress to cap the costs of coffee and other hot beverages to a more reasonable level?

* YES 39%
* NO 59%

B5 The price of televisions has risen in the past few years. The government should cap the price that electronics companies can charge for new televisions, since many new technology changes require a new television. Would you say you strongly agree, somewhat agree, somewhat disagree or strongly disagree with this statement?
[RECORD ONE ANSWER]

1. STRONGLY AGREE 18%
2. SOMEWHAT AGREE 21%
3. SOMEWHAT DISAGREE 24%
4. STRONGLY DISAGREE 32%

56% disagree that TVs should have prices capped. And 59% say “no” to capping the cost on a cup of coffee.

I would love to see the reasoning behind the answers given on this survey, because it would appear that if you believe that government should be controlling prices, you wouldn’t differentiate between cell phones and coffee, and certainly not between TVs and cars.

I have to go with my first inclination here – the public is more likely to call for price controls on the products of industries which have been vilified by the press and government. Banks (loans), auto makers and telecommunications have all suffered from various levels of vilification rencently and in the recent past.

Coffee, however, is still “Juan Valdez”.

Unfortunately, even if true, it means that a majority of Americans have no problem with government price controls – it just means they require the industry to be out of favor before they do. And industry “vilification”, as we’ve witnessed lately, that’s certainly something this administration is more than willing to do. Above are your results.

~McQ

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Seasonal flu kills 36,000 every year

Not to talk down the seriousness of the situation with the “swine flu,” but 13,000 people have died from seasonal influenza since January:

An outbreak of swine flu that is suspected in more than 150 deaths in Mexico and has sickened dozens of people in the United States and elsewhere has grabbed the attention of a nervous public and of medical officials worried the strain will continue to mutate and spread.

Experts are nervous that, as a new strain, the swine flu will be harder to stop because there aren’t any vaccines to fight it.

But even if there are swine-flu deaths outside Mexico — and medical experts say there very well may be — the virus would have a long way to go to match the roughly 36,000 deaths that seasonal influenza causes in the United States each year.
[…]
Since January, more than 13,000 people have died of complications from seasonal flu, according to the Centers for Disease Control and Prevention’s weekly report on the causes of death in the nation.

No fewer than 800 flu-related deaths were reported in any week between January 1 and April 18, the most recent week for which figures were available.

Let’s put things into perspective for a moment. The swine flu scare is something to be concerned about, but it’s not a reason to cook up asinine conspiracy theories or use the public’s fear to advance your big government agenda.

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The “Economics” of Obama’s First 100 Days, Part 2

In addition to Bruce’s post below, chartng the rise in debt since Pres. Obama took office, I think it’s important to look at whether we can find historical parallels, and try to identify how closely such parallels may apply to the current economic situation in the US.  Fortunately, a historic parallel–and a very close on at that–comes easily to hand.

Does this look familiar?  If not, it probably will...

Does this look familiar? If not, it probably will...

The chart on the right is a comparison of how Japan’s increase in debt since 1989 compares with the performance of the Nikkei stock index.

As the authors of the chart point out:

[I]f large increases in government debt were the key to economic prosperity, Japan would be in the greatest boom of all time. Instead, their economy is in shambles. After two decades of repeated disappointments, Japan is in the midst of its worst recession since the end of World War II. In the fourth quarter, their GDP declined almost twice as fast as that of the U.S. or the EU. The huge increase in Japanese government debt was created when it provided funds to salvage failing banks, insurance and other companies, plus transitory tax relief and make-work projects.

In 2008, after two decades of massive debt increases, the Nikkei 225 average was 77% lower than in 1989, and the yield on long Japanese Government Bonds was less than 1.5% (Chart 6). As the Government Debt to GDP ratio surged, interest rates and stock prices fell, reflecting the negative consequences of the transfer of financial resources from the private to the public sector (Chart 7). Thus, the fiscal largesse did not restore Japan to prosperity. The deprivation of private sector funds suggested that these policy actions served to impede, rather than facilitate, economic activity.

They say that insanity can be defined of repeating past actions with the expectation of a different outcome.  If so, how do we characterize the current government activity in response to the economic situation?

Happily–if that is the appropriate word–we may be able to put to rest fears of hyperinflation.

The bottom line, however, is that it is totally incorrect to assume that the massive expansion in reserves created by the Fed is inflationary. Economic activity cannot move forward unless credit expansion follows reserves expansion. That is not happening. Too much and poorly financed debt has rendered monetary policy ineffective.

So, we’ve got that going for us.

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The “Economics” of Obama’s First 100 Days

I put economics is [“”] for a reason. And that has to do with the fact that there was little about the first 100 days which had much to do with economics and certainly wasn’t economical. Feast your eyes on this. Yes, it’s from the GOP, but “numbers is numbers”, folks, and check out the quote attached to the chart:

chart-first100

Heritage also weighs in with a few trenchant observations:

In his first 100 days, President Obama will have quadrupled the budget deficit he inherited while pledging to cut it in half, which would still leave a deficit double the size it was in January 2009.

Make sure you get that – quadrupled the budget deficit within 100 days. Promised to cut budget deficit in half. Even if he does that, it will still be twice the size of the budget deficit in Jan 2009 when he made the promise. Yup, smoke and mirrors.

The President came into office promising a “net spending cut” then signed the stimulus bill, which will dump $9,400 in new debt on the average American household. Under CBO’s estimate, if some programs become permanent, this would skyrocket to $26,600 per American household.

And we are reminded that there is nothing more permanent than a temporary government program (REA anyone?).

Just to give this all a little more perspective:

In his first 100 days, President Obama proposed a budget that would dump a staggering $9.3 trillion in new debt—$68,000 per household—into the laps of American children. This is more debt than has been accumulated by all previous Presidents in American history combined.

And yeah, for the lefties that includes the “selected but not elected” George W. Bush among all the president’s combined. Or said another way, 44 is spending more than the previous 42 combined (and no I didn’t screw up, Grover Cleveland was president twice at two different times).

So while you see the informationally deprived “celebrating” the “accomplishments” of his first 100 days, don’t forget that those yet to be born aren’t going to be quite as enamored with Obama as the present spendthrifts who think he’s doing such a great job economically.

~McQ

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The Growing Opacity Of The Obama Administration

As you’re seeing demonstrated in the machinations concerning GM and Chrysler, not to mention the attempt to pass the card check legislation, unions are a favored constituency within the Obama administration. And it gets even better:

The Obama administration, which has boasted about its efforts to make government more transparent, is rolling back rules requiring labor unions and their leaders to report information about their finances and compensation.

The Labor Department noted in a recent disclosure that “it would not be a good use of resources” to bring enforcement actions against union officials who do not comply with conflict of interest reporting rules passed in 2007. Instead, union officials will now be allowed to file older, less detailed conflict reports.

The regulation, known as the LM-30 rule, was at the heart of a lawsuit that the AFL-CIO filed against the department last year. One of the union attorneys in the case, Deborah Greenfield, is now a high-ranking deputy at Labor, who also worked on the Obama transition team on labor issues.

Apparently, however, it is a good use of resources to spend money on just about everything else under the sun. But of course, if they used resources to bring enforcement actions against union officials who don’t comply with conflict of interest reporting rules, they’d have to start with Deborah Greenfield, wouldn’t they?

Funny how “resource use” suddenly becomes a problem when a probable rule violation becomes fairly evident.

Critics worry that the rollback of union reporting requirements will keep hidden potentially corrupt financial arrangements aimed at rooting out corruption, but unions say the Bush administration reporting rules were unfair and burdensome.

Darn right they were because, you know, they were catching corrupt union officials. Can’t have that. So “unfair and burdensome” – something that tax payers are never able to plead about the gigantic and undecipherable tax code – now takes priority over transparent and accountable.

Hope and change.

~McQ

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Today’s Biggest Non-Surprise

It’s certainly a big political story because it almost assures a filibuster proof majority in the Senate for the Democrats. But if anyone is particularly surprised by Arlen Specter switching parties at this time, I’d have to say you’re not much of a observer of politics.

Pennsylvania Sen. Arlen Specter will switch his party affiliation from Republican to Democrat and announced today that he will run in 2010 as a Democrat, according to a statement he released this morning.

Specter blames his move on the GOP no longer being the “big tent” party he was a part of in the ’80s. But in fact, it is because he’s assured of losing in the Republican primary in 2010 while if he runs as a Democrat incumbent, he will most likely not have any real  primary opposition.  Pat Toomey, the Republican, almost beat Specter the last time out.  Those considering a run as a Democrat can most likely be talked out of it if Specter switches (and that was probably part of the deal).

I’m sure Specter will have all sorts of claims of principled reasons why he is leaving the GOP when he meets the press later. But in fact, he’s never seemed to have any foundational principle except that which could be described as “doing what is necessary to gain and maintain power.” And, what you’re seeing now is a politician with his finger firmly in the air gaging which party offers him the least resistance and best opportunity to retain his seat – and that certainly isn’t the GOP.

Here’s to Arlen Specter getting creamed in 2010.

~McQ

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