After Two Years

April 17, 2013

A little follow-up to my July 2009 post on Google’s Chrome OS. Ed Bott is now reporting the first usage numbers that include Google’s attempt to convince people to give up their personal computers and switch to terminals where everything they do goes through the Silicon Valley Ad Agency’s servers.

It turns out that after almost two years on the market, Chrome OS has achieved a market share of 0.023%. Yes. Really. Not the 23% that would mark it as a contender. Not the 2.3% that would mark it as a niche product. Being a niche product would be a massive success by comparison. Google really has spent the last four years hyping a product and two years selling a product that’s achieved 1/100th of what it would take to be even considered a niche player.

The Ryan “Budget Plan”–Déjà Vu All Over Again

March 16, 2013

If you thought the Bush Tax Cuts for the Rich plan was bad, just wait until you see the Ryan Budget Plan (or as it’s sometimes called, Paul Ryan’s attempt at Ayn Rand Fan Fiction). It cuts $5,700,000,000,000 over 10 years from the government’s income and then doesn’t actually explain in more than vague "it’s magic" terms how it’s going to cut enough of that out of the budget to keep that off the deficit while claiming it’ll balance the budget. Remember, he not only doesn’t cut Pentagon spending – the largest part of the discretionary budget – he raises it.

Of course, while those new debts go into everyone’s purse, the tax cuts themselves are massively geared toward the very rich.

  • If you make less than $22,000 per year you’ll save less than $40.
  • If you are middle income you’ll get $900.
  • If you are, however, in the group making over $3,300,000 per year (up in the 99.9% group that Ryan actually thinks aren’t parasites) then your tax savings would be $1,200,000 per year.

Or put into percentages

  • Bottom 20% get a 0.3% cut
  • 2nd 20% get a 0.9% cut
  • Middle 20% get a 1.6% cut
  • 4th 20% get a 2.1% cut
  • Top 20% get a 5.9% cut

But the biggest gifts go to the very top

  • The top 1% get a 10.9% tax cut
  • The top 0.1% get a 12.1% tax cut

Yes, the top bracket don’t just get more in cuts but the percentage of their cuts is forty times as great as the cut for the person struggling to put food on their family (we’re talking Bush logic – may as well use Bush phrasing).

So, tax cuts mostly for the wealthy and no real way of absorbing those cuts without putting them into the deficit except "by magic".

Sorry. We’ve been there before and we’ll be paying, as a nation, for that mistake for decades.

For the actual numbers and analysis by the Tax Policy Center, here is the link.

And if you want to see just how UnFlat this tax cut is…

Ryan Proposed Tax Cuts

I Won’t Pay for Your Star Trek V Collector’s Plate

March 13, 2013

The second in a series of posts to answer questions I’m tired of explaining over and over again. See Flattened Taxpayers for the first.

Let’s start by clearing up a misimpression that people seem to have.

Buying and selling stocks is not investment income

Buying stock is not “investing in a company”, it is gambling on reselling some collectable you bought based on your assumption that the stock or Limited Edition Star Trek V Collector’s Plate is going to fetch more in the collectors market than it did when you bought it.

Actually investing in a company would require that the money you paid went to the company. Aside from when you buy into a public offering of new stock, your money did not go to the company, it went to another collector. It does nothing to help the company fund their start-up costs to produce a new product for the actual marketplace. And even in the case of a public offering you don’t help the company when you cash out that investment. You bought, say, 0.1% of that company and that was the only time you helped them bring something new to the market. If you purely sold that 0.1% of the company for 1/1000th of the actual value of the company at the time you sold it, then your income would be “investment” and your profits would be actual investment income tied to the increase in the actual value of the company you risked money on.

No purchase and sale of stock is investment. By the time the company is ready to float an Initial Public Offering they’re cashing out on the investment by selling off the company’s assets. Any purchase and sale of stock after the IPO is just gambling income and does not contribute to the free marketplace that Capitalism revolves around.

Neither is most venture capital

That said, now lets talk about actual investment income. If you are an “angel investor” or “venture capitalist” (which is really another name for unregulated banking with no guarantee on either your return nor their costs) then your income from that risk is the increase in valuation of the company’s actual assets over the time you were a partial owner. Any income you get beyond that isn’t investment and in no case does your selling your share benefit the company’s ability to bring products to market – they get no benefit from your profit so stop thinking that you’re risking your money to help get a startup going when you cash out.

Adam Smith, Capitalism and “Investment Income”

One of Adam Smith’s premises in The Wealth of Nations – the book that defined Capitalism back in 1776 – is that the greatest harm to a Capitalist market based economy was the creation of instruments that brought in income without producing valuable items that could be traded in the marketplace.  He called these instruments “rents”.

These practices produced income sources for an essentially parasitic class that could use their wealth to create ongoing revenue for themselves with no risk and no contribution to society nor the marketplace. It’s important to remember that despite what the GOP or some Randian tells you, Adam Smith was an Enlightenment radical who created Capitalism to flatten society to a level competitive playing field. He was doing so at a time and place where most wealth was held by the landed houses of England who did nothing but being born into the right family to achieve wealth far beyond even the worst robber barons the US ever produced – families with trillion dollar plus family assets in current dollars.

Smith’s central premise was that society did best when ideas and products competed equally and the wealth created through the market was by production and sale of competitively better goods at a better value as determined by consumers.

What we call “investment income” does none of this. It is a Smith “rent” scheme. It is wealth distributed not by the competitive value of new inventions and improved products but by passing valueless paper around from one wealthy family to another. This is neither Capitalism nor good for a Capitalist economy. Smith himself said that as this is something that damages the efficiency and fairness of the market it is the job of the government to regulate it into harmlessness and to re-level the playing field so actual competition can continue.

As an aside and a reward for reading this far, the next time some “get the government out of the free market” idiot blathers on, you can now safely assume he doesn’t know what Capitalism actually is.

Now, let’s look at some “investor” assertions I’ve actually gotten in my discussions…

I earned the money I spend on stock from a job.

That’s really irrelevant. If I say “I used the money I made by selling food to starving orphans at minimal costs to buy equipment to torture kittens” do we really care how you got the money to torture kittens? No. No matter how you got the money it’s the issue of whether we as a society should subsidize what you choose to do with it.

I take risks

Should taxpayers subsidize your losses in your hobby of buying and selling collectables? We currently do. Investment loss is deductible and when we do that we’re precisely taking tax dollars from other people to cut your risks. I’d argue that we should not do this at all but that isn’t the question at hand.

I should be able to cash in on my gains

And I think so, too. In the case of long-term investment I suggest taxing your “cashing in” collectable sales profits at the same rate as income you gained by actually producing something of value to the market. That’s probably too generous but I’m trying to be reasonable during the transition period of moving toward actual Capitalism.

I also suggest that we tax short term gains at a 50% rate. Yes, it really should be higher as its meant to discourage if not eliminate a dangerous hobby. There are several damaging aspects of short-term investment that need to be addressed but lets focus on the worst of those. Short term profit taking discourages businesses from actually producing goods and services for the market and ends up replacing the productive free market with optimization for short-term shareholder return.

As a compromise, how about we say “if you want to claim short-term stock gain as regular income you are prohibited from voting your shares directly or via proxy, are prohibited from participating in any shareholder litigation and are barred from any interaction with the company you partly own during your period of ownership for a period of two years prior to your intended or actual sale. Any of these activities triggers marking the “investment” as stock manipulation and requires your shares to be sold at the price you paid for them or the current market value, whichever is lower and any income you received above that amount to be added to your tax bill.

The increase in stock price funds innovation

Some people will say that the increase in stock price in the speculation market continues to fund the company since that company gains as the shares they own increase in value. That anyone thinks that way shows that we have let the tail wag the dog. The purpose of the company in actual Capitalism is to produce a product for sale in the competitive marketplace. When their income is now tied to the immediate stock price rather than the value of their products in that marketplace they no longer are participating in the market and are now just speculators themselves and no longer focused on producing goods and services to stimulate the market based economy.

Summing up…

Summarizing, I fully support actual investment as measured by the purchase of a share of a company and the gain in wealth of the value of that share of the company itself. That is investment income. It is unsubsidized risk being rewarded by the marketplace. Speculating on buying and reselling collectables that do not directly fund the value of the company is both harmful to the company and to the economy and should be discouraged by any Capitalist government as part of their role to keep Adam Smith’s playing field level.

A Little Checkpoint

December 16, 2012

I saw a little reminder today. A checkpoint on where we’ve been and where we are and where it looks like we’re going. It was the opening clip from Aaron Sorkin’s show The Newsroom. If you haven’t seen it, watch it. If you have seen it, watch it again.

Here’s the video clip:

The opening of The Newsroom’s pilot episode

Yep. A great show and one of many great moments.

The difference between today’s left and right in the US is their response to those numbers Sorkin cites in that speech.

Liberals respond to all the "we’re number 14 in this" and "we’re number 34 in that" with "That sucks and we need to fix it" while conservatives respond with "How dare you think we’re not best at everything? Why do you hate America?"

The most recent, really on point, example is not the shootings last week – horrific as they were – but the vote on the UN treaty on the disabled. This was the UN saying "The USA created a great policy for a nation to follow with the Americans with Disabilities Act and we think all nations should aspire to be as good to their citizens as the USA is to theirs". An action that we used to deserve and used to receive with a fair degree of regularity.

Now, however, rather than having the vision and courage to produce legislation like the ADA, we can’t even get our own nation to support a non-binding, toothless resolution applauding our own actions because the tin foil hat brigade thinks the UN is about to send blue helmeted soldiers in black helicopters to seize Billings, Montana.

And that’s pathetic.

And we need to not only recognize that but we need to fix that.

Why a UN Declaration of Palestine as a Non-Member State Dooms Hamas

November 29, 2012

With the UN declaration of Palestine as a non-member state almost certain to pass today, Hamas is left in a very interesting position. They have to choose whether to accept the decision of the UN granting their people a limited declaration of statehood.

Now, this might seem an easy choice for them. But it is a choice that gives them no choices that are good and two that are pyrrhic victories at best.

If Hamas does not accept the UN declaration as valid then they have to admit that Fatah achieved a significant improvement in legal status for the people they both claim to represent. And that will have consequences not exactly good for Hamas.

If Hamas does accept the UN declaration as valid then things are actually even worse for them.

They will have acknowledged that the UN has the legal right to declare states valid and thus:

  • They will have retroactively admitted the validity of the UN declaration 65 years ago today that created Israel
  • They retroactively admit that same declaration created a state for them in the Arab part of the British Mandate and that they could have legally had that state any time in the last 65 years
  • They publicly acknowledge that Israel has a legal right to exist by the same legal means they use to justify their own existence
  • And since that original UN declaration is something they now admit is valid, they also retroactively admit Jerusalem’s status as legally bound to the results of a vote of the city’s population – and Jerusalem has had a Jewish majority for well over a century.

If Hamas accepts the UN declaration, effectively all their remaining objections to Israel as a Jewish state now become no more than a border dispute over the details between the 1949 cease-fire line that was Israel’s border prior to 1967 and the UN authorized adjustments to that cease-fire line that were declared in the UN SC242-1967 and SC338-1973 resolutions that ended the Six Day and Yom Kippur wars.

And that is a far cry from everything Hamas has ever stood for.

Today we lost George McGovern

October 21, 2012

For those too young to remember or so partisan they choose not to remember, Watergate was about the Republican party breaking the law, violating the Constitution they claimed to love, embracing racists and not being called on their lies by a press corps that chose not to call them on those facts (with the sole exception of The Washington Post) with the goal of beating Senator George McGovern in the 1972 presidential campaign.

We have been fighting that Republican philosophy of hatred, corruption and lies to varying degrees ever since it succeeded for them 40 years ago.

This November we are being offered that same choice once again. Do we vote for lies and hatred and bigotry and a view of party and power over country and Constitution or do we tell the GOP and their candidates, "Enough. I refuse to accept your contempt for the nation, its philosophies and its people ever again. Clean these people and their philosophies out of your party or never see the vote of any decent man or woman in this nation."

Today, I choose to vote for those who understand, as Senator McGovern put it, that “the highest patriotism is not a blind acceptance of official policy, but a love of one’s country deep enough to call her to a higher plain”.

Thank you for your decades of service to the cause of calling for us to raise our standards higher, Senator. Your voice will be missed.

A Simple Arithmetic Problem

September 8, 2012

An word problem for those thinking about picking a President in November. Don’t worry, I did all the hard 3rd Grade arithmetic for you and the answer key is available at the bottom.

The government needs to buy a product that’s sold by multiple resellers. The product wholesales for $100 for each unit and the government plans to buy millions of them.

The least expensive resellers charge a 67% markup because if they charge less than that their shareholders are unhappy and the company might lose the "Strong Buy" rating on their stock. If the government decides to get a wholesale license as a volume purchaser it’ll cost them 2% overhead to handle the extra costs of paperwork and inventory.

Should the government:

  1. Get a license to buy wholesale and pay $100 for the product plus $2.04 overhead costs
  2. Pay the $166.67 to the least expensive supplier
  3. Negotiate a better deal from the suppliers to pay no more than $117.65 for the life of the contract

Those are real numbers in a real multi-billion dollar deal with real taxpayer dollars on the line.

Which choice should the President make?

 

Answer Key

Now that you’ve had a chance to make your decision, let’s look at the answers:

Choice 1 is a single payer healthcare insurance program like Medicare

Choice 2 is what we did prior to “Obamacare”

Choice 3 is what “Obamacare” did by requiring insurance providers to spend no less than 80-85% of their insurance fees on payments for medical costs rather than for overhead, promotions and profits for their owners

Flattened Taxpayers

August 17, 2012

Eventually pretty much every political discussion I have with today’s right-wing comes down to people thinking magical thoughts about a flat tax. It’s almost a Godwin’s Law of political discussions.

For example, I was just told by somebody on Facebook that if we had a flat tax of 10% that we’d not only pay for the Federal government but also raise enough money to pay for State, County and Local governments and all the assorted other taxes, fees and special assessments that go around and still have money left over from that 10% tax to pay down the deficit.

Since I try to be efficient, rather than type up the same discussion time after time I figured that it was time to just put it into a blog post and send them the link whenever the subject came up.

So. Let’s go there.

To start with let’s look at it from just the basic arithmetic. No discussion of fairness or national goals or purposes of government, let’s just do a cold-eyed look at the numbers…

Before we do the math, let’s define what we’re talking about. To have a real "flat tax" we’re talking about a single fixed rate for taxation on all income. We’ll let the math determine about how much that should be later but let’s first agree that we’re talking about taxing all income in the United States at a single rate. Now if that sounds simple, great. By agreeing that’s what we mean, we have, however, taken virtually every "flat tax proposal" offered up in the last 30 years out of the running since they almost always say "well, we don’t mean taxing businesses at that rate" or "well, we don’t mean taxing businesses income, we want to tax your income but their profits" or "well, investment is important so profits from investments shouldn’t count" or "inheritance income shouldn’t really count". Usually, they include all of those in there so the "Flat" in their “Flat Tax” only applies to working people with little to no income from investments or trust funds. But, so be it, we’ll go with a real flat tax since that is what they expect you to think they mean.

And, to simplify things and keep the discussion easy, let’s skip the hyperbole about removing all taxes at all levels by a single Federal tax. That would mean that states and counties and cities would all have to tax at the same rate and our multi-tier system doesn’t allow for that and I don’t feel like fighting a civil war over states rights (for the first time, actually, but that’s another discussion).

So, we’re down to a simple tax on all income inside the United States that would pay for the United States government.

That is what most people think of when they hear "flat tax" even if it’s not what they ever are told to support if you actually read the proposals. Now it’s time to look at the numbers. Now, bear with me, this is actually simple 3rd Grade arithmetic. No fancy high-level math needed, no complexities of econometrics or monetary supply modeling. Just simple long division.

To figure out the rate all we have to do is take the amount of the US Federal Budget and divide it by the Gross National Product of the United States. Do that and we get what percent of all income needs to go to the federal government.

Ready?

Here goes…

The current budget is: $3,796,000,000,000  and, yes, that’s a lot of zeros but they’ll divide out so don’t worry about them.

The current Gross Domestic Product is: $15,596,000,000,000

We’ll cancel out the zeros and so we get 3,796 divided by 15,596

That gives us a flat tax of 24.3%

That won’t pay down the debt or pay for other levels of government but it is a flat rate that would produce a balanced Federal budget.

Now, remember, before you get too happy about that, realize that is 24.3% of your Gross Income. That means no standard deductions, no deductions for mortgage interest, no exemptions for kids, no deductions for medical bills, no deductions for money you give to charities. No nothing coming in “before taxes”, just roughly 1/4 of your gross paycheck.

Now if you still support a flat tax, you get to sell the idea. Remember that this is double the rate that Governor Romney paid in the one year he’s willing to talk about and he’s complaining his taxes are too high at half of what a flat tax proposes. And that rate is many, many, many times more than most large corporations pay if they pay at all and remember we’re going to have to tax them on their gross income this time to keep it flat. And they’re going to have to give up all their deductions, too. Speaking of deductions, non-profits, charities and churches will also have to pay 24.3% of their gross income as well.

For anyone saying “well, that’s true under Obama but not with a Republican in office…” or, “well the economy is broken now but in the past it would have been  10%”, here are some comparative numbers…

Event Flat Tax Rate
When Bush II left office 24.7%
When Bill Clinton left office 18.2%
When Bill Clinton entered office 21.4%
Highest under Jimmy Carter 21.7%
Highest under Nixon/Ford 21.4%
Highest under Kennedy/Johnson 20.5%
Lowest under Kennedy/Johnson 18.5%
Highest under Reagan/Bush I 23.5%
Lowest under Reagan/Bush I 21.2%
Highest under Eisenhower 18.8%

Brief Side Note: Yes, this does mean that the current “Obama Budget” is smaller than what Bush II had when he left office. Yes, Bill Clinton’s budget really did cost 3% less of the GDP than the best Reagan/Bush I were able to do (and was a 22% smaller government than their largest) and yes, Bill Clinton really did leave office with the smallest Federal Government in 35 years and one of the smallest since the days of Harry Truman. Those are topics for another day, though.

OK. So now we can have a conversation about whether this is a fair plan or whether it is a good plan or whether it’s good for the goals of the nation. But at least now we’re using actual numbers.

So the next time a politician says “If I’m elected we can pay for the government with a flat tax of 9%” or a SuperPAC advertises that they can pay for government with a 17% flat tax and still give you a standard deduction (both of which happened this year and surprisingly didn’t get met with the proper response of laughter and embarrassment) you’ll know that either they can’t do 3rd Grade arithmetic or they’re just hoping you can’t.

Mass Shootings and Filters

July 21, 2012

This isn’t the post I’d planned to write this weekend but events drive thoughts and thoughts drive blogs, so…

It seems that whenever we have a mass-shooting we get essentially the same story:

Insane Right-wing man kills 12 people with gun.

The Right and the Left see this headline differently and deal with it differently.

The Left

The Left sees this headline and since they don’t discuss the mental health of the murderer because that would be unfair and might get into the question of whether we should hold the insane responsible for their actions and the left is paranoid of being accused of being “soft on crime” it becomes:

Insane Right-wing man kills 12 people with gun.

And they then ignore that mass shootings tend to be done by people fascinated with guns and power and thus are most often on the right of the political spectrum because it would be unseemly to be partisan at a time of mourning and so it becomes:

Insane Right-wing man kills 12 people with gun.

And then, despite that,  they then make a few speeches about how we need to restrict guns followed by doing nothing about it because they don’t want to be targeted in their next election by the NRA.

The Right

The Right sees this headline and immediately drops the connection between their philosophy that violence and power are what real people do and that diplomacy is a sign of weakness and so disown any responsibility for creating a violence prone climate in the right and thus we start with:

Insane Right-wing man kills 12 people with gun.

After that, of course, they immediately ignore that nobody kills and wounds dozens of people with a stick or a rock and loudly delete the weapon of choice that is so universal that these type of acts are generally known as mass shootings and we get:

Insane Right-wing man kills 12 people with gun.

And they then ignore it altogether so they can avoid discussion how their party slashed mental health treatment in the 1980s and has fought tooth and nail to prevent that budget from being restored.

The Result

This gives an end result that is the same for both sides of:

Insane Right-wing man kills 12 people with gun.

And everyone then goes “tsk, tsk. How awful that these things happen” and returns to life as normal having accomplished nothing.

Ah, Back to Geek Life as Normal

July 16, 2012

Just a quick post that I’m writing this in Word 2013 on Windows 8. Yes, back to the norm of beta applications on a beta operating system.

Life is geeky.


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