Category Archives: Economics

Rule Five Bitcoin Friday

I don’t know a lot about Bitcoin, or any other cryptocurrency.  Fortunately my fellow Glibertarian “Richard” has provided a pretty neat primer on the topic.  Excerpt:

There is no such thing as a bitcoin. When someone says “I own a bitcoin,” what they mean is “I know the code or codes that can authorize the transfer of up to one bitcoin.” If you buy a “loaded” physical token for 0.01 bitcoin on eBay, the token contains a code. Neither the token nor the code is “bitcoin,” but the code enables you to transfer amounts adding up to 0.01 bitcoin to other accounts.

Bitcoin’s foundation is a public transaction ledger called the blockchain. Every bitcoin transaction is recorded on the blockchain and anyone can inspect the transaction history going back to the creation of the first block of the chain. Because the blockchain is public, bitcoin transactions are not as anonymous as some people currently in prison had hoped. Every new account is anonymous, but that anonymity will probably be compromised by the first transfer of bitcoin into it because the bitcoins in the source account probably have a history–and there are companies whose business plan is to delve through the blockchain to link accounts to owners and sell the information.

Here’s how the blockchain works: people with codes that control bitcoin create transactions. Transactions can have one or more input accounts and one or more output accounts. Newly created transactions are sent to the cloud of computers running bitcoin protocol clients and added to a list of pending transactions. Anyone can download a bitcoin protocol client and run it on their computer, but running a full “node” takes a lot of disk storage space and Internet bandwidth.

Some of the computers running bitcoin protocol clients are “mining” bitcoin. To mine bitcoin, one selects transactions from the pending list and packs them together into a binary blob called a “block”. The block is then scanned to create a “hash” value. The last digit of a 16 digit credit card number is a hash value calculated from the first 15 digits. This is how web sites can automatically determine if you’ve mistyped a credit card number.

By all means, read the whole thing.

I’m not sure I get the whole thing.  Somewhere in my IRA portfolio there are a few shares of a stock that trades in bitcoin futures, and it’s turned a modest profit for me, but that’s probably as far as I’ll go in dealing with the fiat-iest of fiat currencies.

It’s not at all clear to me how you pay for things with bitcoins, how you obtain them or how you store them.  You can’t put them in a bank account – or can you?  Can I use them to put a tank of gas in my truck?  Can  I buy guns with them?

Supposedly fortunes have been made by those smart enough to buy bitcoins when they sold for pennies apiece, or even a few dollars apiece.  Now the value of a single bitcoin hovers between seven and eleven thousand dollars.  If you had bought a thousand of them for a dollar each, you’d be virtually wealthy now – if you could find a buyer to take those bitcoins in exchange for a more tradable currency.

As a libertarian I love the idea of an untraceable currency that isn’t controlled by any government.  As a child of the pre-Internet era, I can’t quite bring myself to engage fully with a currency that I just don’t understand.

Richard’s article answered a lot of my questions.  But I still have more.  I suppose I’ll keep looking for answers.

Goodbye, Blue Monday

Goodbye, Blue Monday!

Thanks as always to Pirate’s Cove and, while we forgot to send in our links to The Other McCain this week, check out their Rule Five links.  Also, thanks to our blogger pal Doug Hagin over at The Daley Gator for the linkback.

Here is Reason on the recently-passed Senate tax reform bill.  Excerpt:

The Senate bill makes major changes to both individual and corporate taxation. It permanently slashes the corporate tax rate from 35 percent down to 20 percent, alters the way that businesses can expense new equipment, and reduces taxes on income earned by pass-through businesses, a tax structure in which corporate profits are taxed as individual income. Those changes could create an incentive for many businesses to restructure as pass-throughs as a form of tax arbitrage, which is what happened when the state of Kansas attempted a similar change. An analysis by the Tax Foundation found that the Kansas provision encourage tax avoidance but not economic growth.

The bill also cuts individual tax rates, nearly doubles the standard deduction, gets rid of the personal exemption, expands the child tax credit, and eliminates or caps several major tax code deductions, including the state and local tax deduction. It modifies, but unlike the House plan does not repeal, the alternative minimum tax, which disallows some deductions by high earners. Over the next decade, filers at all income levels would see a tax cut.

However, unlike the corporate tax reduction, which is permanent, the individual rate reductions are phased out by 2026, creating a major policy cliff, and nearly guaranteeing high-stakes legislative showdowns. The sunset was designed largely to ensure that the bill conformed with Senate budget rules, which require that legislation passed via the reconciliation process not increase the deficit after a decade. Republican leaders have argued that Congress is not likely to let those tax cuts expire. That, in turn, would result in a significant long-term deficit increase.

Full disclosure:  My consulting business, as in all of Mrs. Animal’s and my business ventures, are set up as pass-through businesses.  This bill (while Mrs. A, who manages our financial affairs, hasn’t had the chance to read the bill yet) will help us, assuming the pass-through rate cut stays in place in the final product.

Now, I may not be in the 1%, but I sure as hell am in the 10%.  Schumer and Company are predictably bemoaning the “wealth transfer from poor to rich,” which is laughably clueless – not that this is anything new for Congressional liberals.  But it is the categorization of lower-income people as “the working class” that bugs me.

This characterization of white-collar or higher-income earners as somehow not being “working people” has always been a peeve.  Sorry, but I work – part of the reason my consulting business has been a success is because I’ve worked pretty damn hard to make it one, including (especially in the beginning) a hell of a lot of unpaid hours.  I’ve produced a lot of value for a lot of businesses, and after a few years of building a reputation in my industry, have ended up earning a pretty good living at it.

So, yes, the idea of lower marginal tax rates is pretty damned appealing.  The RHEEEE from the professional Left on this issue is pretty entertaining, given their sudden concern with deficit spending – to which my response can only be “cut spending.”

Animal’s Daily Birth Control News

I’m inclined to agree with this:  If you can pay for aspirin, you can pay for birth control.  Excerpt:

Religious concerns aside, the new White House rule leaves the birth-control mandate in place. Trump’s “tweak won’t affect 99.9 percent of women,” observes the Wall Street Journal, “and that number could probably have a few more 9s at the end.” Washington will continue to compel virtually every employer and insurer in America to supply birth control to any woman who wants one at no out-of-pocket cost.

Yet there is no legitimate rationale for such a mandate. Americans don’t expect to get aspirin, bandages, or cold medicine — or condoms — for free; by what logic should birth control pills or diaphragms be handed over at no cost? It is true that a woman’s unwanted pregnancy can lead to serious costs, but the same is also true of a diabetic’s hyperglycemia. Should insulin be free?

By and large, birth control is inexpensive; as little as $20 a month without insurance. For low-income women who find that too onerous, the federal government’s Title X program provides subsidized contraception to the tune of nearly $290 million per year. American women are not forced to choose between the Pill or the rent. And access to birth control, as the Centers for Disease Control reported in 2010, was virtually universal before Obamacare.

The White House is right to end the burden on religious objectors. But it is the birth-control mandate itself that should be scrapped. Contraception is legal, cheap, and available everywhere. Why are the feds meddling where they aren’t needed?

Condoms are cheap.  Wal-Mart offers birth control pills at greatly reduced prices.  But that’s not really the issue here; the issue is more simple than comparative costs.  The issue is this:

Why the hell does anyone think it is the proper role of the Imperial government to subsidize people’s sex lives?  Our poor – and mind  you, we have little or no abject poverty in the U.S., only relative poverty – have cell phones, game consoles, laptop computers and microwave ovens.  But for some reason, they expect the taxpayers to subsidize an elective medical product that costs less than a weekly cup of coffee at Starbucks.

Lunacy.  Sheer lunacy.

Animal’s Daily Enforced Pedestrian News

California, does thy nutballery ever end?  Now the Golden (hah) State is considering outlawing gasoline or diesel-powered cars.  Excerpt:

The head of the California Air Resources Board told Bloomberg News that the state is seriously looking into whether and how to make internal combustion engine cars illegal in the state, as part of its self-imposed plan to cut state CO2 emissions in 2050 to 80% of what it emitted in 1990.

That follows announcements over the summer that the UK and France will try to ban the sale of gas- and diesel-powered cars by 2040. More recently, China claims it will impose a ban in 2030.

The CARB’s Mary Nichols says California could implement such a ban in 13 years, and one state lawmaker plans to introduce a bill that would enforce it in 2040.

To put it bluntly, this is one of the most ill-conceived public policy ideas in a state that seems to have them in abundance.

First, some perspective.

According to the EPA, all transportation — cars, trucks, planes, trains and boats — are responsible for about a quarter of the nation’s CO2 emissions. The share contributed by passenger cars alone is considerably smaller than that. In the European Union, for example, cars account for 12% of CO2 emissions.

California’s move would make no noticeable dent in global CO2 emissions. Plus, it would take well over a decade before the entire car fleet turned over to all electric.

What’s more, the CO2 reduction claims from such a ban are wildly exaggerated.

Remember, electric cars don’t run on magic. They run on electricity. So forcing car owners to buy only electric cars will mean a massive surge in demand for electricity, which is generated largely by greenhouse-emitting natural gas and coal. In California, these fuel sources account for 40% of the state’s electricity. Solar and wind add up to just 17%.

Much of the CO2 “cuts” will really just be a shift from one source to another.

Here’s a consideration that the article doesn’t mention; how much of California’s economy depends on tourism, and how many of those tourists drive into that state?  If those people drive into California after the ban, will they find any gasoline stations to greet them, or will they be barred from bringing their faithful benzene-burners into the state?  What will that do to California’s economy?

Maybe whoever dreamed this piece of nitwittery up just believes in putting everybody afoot; perhaps they think there will be less mischief that way.

I don’t really care what China and France do in this regard.  But California has just produced another dumb idea in a long list of dumb ideas.

Rule Five Tax Reform Friday

Now that the Senate has well and truly screwed the pooch on health care, they are taking up tax reform.  A few select pieces of commentary:

Trump pitches tax cut as ‘middle class miracle’

Tax reform: Trump, GOP mull surcharge on wealthy, doubling standard deduction

GOP tax plan still has lots of holes and a surprising twist – Cowen analyst

Norquist: GOP Tax Cut Plan Will Turbo-charge the Economy

House Freedom Caucus Supports Trump’s Tax Plan

Here, from that last article, are the outlines of the proposal, with my comments.

-The lowest federal income tax bracket for individuals will sit at 12 percent, an increase from 10 percent, but will be offset by an expansion of the child tax credit. There will be three brackets total, down from seven, with the other two at 25 and 35 percent.

A good start.  I’d vastly prefer just one rate, for everyone.  I’d actually prefer a consumption tax rather than the intrusive income tax, which requires you to disclose all of your personal financial affairs to the Imperial government every year.

-The small business tax rate will drop to 25 percent, the lowest in America since the 1930s.

Again, a good start.  Why not zero?

-The corporate tax rate will be decreased from 35 percent to 20 percent, prompting American money to come home from overseas.

Again, why not zero?  Businesses don’t pay taxes, they collect them.  Corporate and small business taxes are paid by consumers; the cost of the tax and the administration required to calculate it are added in to the cost of every product.  Business taxes are just a backhanded way to add another tax onto the people.

-The child tax credit will be expanded. Administration officials nor the President will provide an exact number and will rely on proper congressional committees to come up with one they deem appropriate.

I’ve never been quite certain of the purpose of this tax.  Certainly it makes financial life a little easier for parents, especially younger parents who tend to be harder pressed.  And it’s certainly a vote-getter.  But are we subsidizing people to reproduce?

-Rewriting tax regulations so Americans can complete their taxes on a single page.

Oh hell yeah.

-Getting rid of double taxes, including the death tax.

About damn time.  Get rid of the capital-gains tax while you’re at it.  If double taxation is wrong in one case, it’s wrong in any case.

-Eliminate itemized deductions

I’m generally in favor of this, as long as the overall tax burden is decreased.  And make no mistake; this provision will be vigorously opposed by the enormous tax-return preparation industry, accountants and tax attorneys across this golden land.  These people are desperately afraid of having to earn an honest living.

-Eliminate state and local deductions

This will suck if you live in a blue state, like New York or California.  This provision now allows you to deduct from your Imperial tax return’s taxable income the amount you pay in state and local taxes.  I’d say this:  Don’t like it?  Take it up with your state and local governments.  This provision offers a shield to high-tax states, and it would be interesting to see the backlash from removing this deduction.

-Charitable deductions are not changing

-Retirement taxes will not be touched

-Mortgage deductions will not change

No change, no comment.

I would like to interject one thing in this debate, intended for when I hear opponents whine about “how the GOP intends to pay for this” (always from the same people who propose enormous new spending programs while never worrying about how to pay for those).  That interjection is this:

Fuck you.  Cut spending.

That goes for both political parties.

The nation is now past $20 trillion in debt.  Add in unfunded liabilities in Social Security, Medicare and Medicaid and we’re waaaaaaay past that.  We are broke, True Believers, and it would be nice if someone – anyone – in the Imperial City would figure that out.

But back to the tax proposal.  I’ll cautiously characterize this as “a good start.”  As far as its chances of passing, I’m not so optimistic.  This GOP Congress could fuck up a soup sandwich.  I’m guessing they’ll screw this up too.

Animal’s Daily Soda Tax News

Oh, Chicago – or to be precise, Cook County.  What funny predicaments these metro areas get themselves into.  It seems a while back some Cook County pol got the bright idea to put a tax on carbonated beverages – and that has proved the biggest mistake since Julius Caesar walked alone into the Roman Senate building one March day.  Excerpt:

When Cook County Board President Toni Preckwinkle first floated the idea of a pop tax to commissioners last October, a big part of her pitch was an appeal to their sense of self-preservation.

“We said to people, ‘We’re going to take one tough vote in the next three years, that’s it. Then we’re done,'” said Preckwinkle, making a reference to the financial stability the new money would bring. “And needless to say, that’s very attractive when you have to run for election.”

As political calculations go, this one backfired in a big way.

A botched rollout coupled with a huge public backlash fueled by general tax fatigue and the beverage industry’s well-funded pushback campaign has made the pop tax the biggest issue in county government in nearly a decade.

Now a repeal vote is slated for next month, and several commissioners could find themselves fighting for their political lives next year. So could Preckwinkle, who a few months ago seemed like a shoo-in to win her third and final term despite pushing through the soda tax on top of a 1-percentage-point sales tax increase in 2015.

“It’s really simple,” said Commissioner Sean Morrison, a Palos Park Republican and the lead sponsor of the repeal measure. “It’s going to come down to an up-or-down vote and, at the end of the day, the residents are tellin’ ’em ‘Can the tax or can the commissioner.’

I’d be tempted to say that this sets a new level of stupid, but unfortunately I can’t – not about Cook County.  Not about the Chicago metropolis.

This line from the story is telling:

At the same time, Preckwinkle has not been shy about promoting the tax as a public health benefit.

In other words:  “It was for their own good.”

How many government oversteps have been implemented with the disclaimer “it was for their own good”?  This is another such.

I’m dead-set against sin taxes of every stripe.  Whether they be levied against unapproved foodstuffs, drinks (alcoholic or otherwise), sex toys or any other stuffs and sundries that, when used, do no harm to any other than the user.  This attempt by Cook County is just more high-handed moralizing by “public servants” presuming to make choices for the population at large in the name of enhancing revenues.  It’s good to see the citizenry slapping these intrusive pols down.

 

Animal’s Daily Burger-bot News

Honestly, I haven’t eaten a fast-food burger in years and years.  I prefer good burgers.  But it seems the fast-food burger industry is in the news again.  Remember those folks still “fighting for $15??”  Meet the inevitable result:  The burger-bot.  Excerpt:

As fast food employees across the U.S. continue to protest for higher wages, a California chain restaurant has decided to hire a new staff member that works for free. The competition for the company’s low-wage workers: a burger-flipping robot named “Flippy.”

CaliBurger has announced they will be installing the high-tech replacement in 50 of their locations around the world. “Flippy,” the robotic kitchen assistant, was created by a California startup company called Miso Robotics and is expected to roll out in 2018.

“We are excited about the impact Miso’s AI-based solutions will have for the restaurant industry,” Miso’s David Zito said. The CEO added that their creation will likely push workers out of their current jobs.

“Humans will always play a very critical role in the hospitality side of the business… We just don’t know what the new roles will be yet in the industry.”

Note:  When Mr. Zito says “We just don’t know what the new roles will be yet in the industry,” he fails to add “…but there will be fewer of them.”

Who doesn’t love a burger?

This, True Believers, is the inevitable consequence of setting an artificial wage floor in the economy.  Not only do you price the low-skilled right out of the market, you price some existing semi-skilled workers – like fast-food workers – out as well.

And let’s be honest about one thing at least – if you are trying to support a family on the minimum wage, you need to take a long, hard serious look at your life choices.

Animal’s Daily Tax Reform News

Yesterday President Trump went on the stump for his tax reform plan.  Excerpt:

“We’re here today to launch our plans to bring back Main Street by reducing the crumbling burden on our companies and on our workers,” Trump said in Springfield, Missouri. “The foundation of our job creation agenda is to fundamentally reform our tax code for the first time in more than 30 years.”

Even as he laid out his tax reform pitch in broad strokes, Trump sought to turn up the pressure on members of Congress to get behind his still-undetailed effort and he called out Missouri’s Democratic Sen. Claire McCaskill.

“She must do this for you and if she doesn’t do it for you, you must vote her out of office,” Trump said. “She’s gotta make that commitment. If she doesn’t do it, we can’t do this anymore.”

And:

The Trump administration outlined the broad strokes of its proposal for tax reform in April, proposing slashing the number of tax brackets from seven to three and bringing the corporate tax rate down to 15%. It also called for income tax brackets to be set at 10%, 25% and 35% — the latter for the wealthiest Americans, down from the current 39.6% rate.

Congressional Democrats will call that “draconian,” “tax cuts for the rich” and so on.  I call it a good start.

How about eliminating the capital gains tax next?  You want people to invest their hard-earned in business ventures, then stop double-taxing them on income earned from money they already paid taxes on once.  Want businesses to start bringing capital back from overseas?  Eliminate the capital repatriation penalty.  Both of those taxes are well to the left of stupid if economic growth is on the agenda, but these taxes were sold by the “we’ll soak those rich bastards” school of political campaigning.

President Trump needs to work harder to make this case on economic grounds.  Last year Americans spent more of their hard-earned paying taxes than they spent on food and clothing combined.  To call that a disgrace is like calling gang rape a mild social deviation.

Animal’s Daily Bad Deal News

Congressional Democrats are pushing back against the Trump Administration with something called a “Better Deal”, which apparently is NewSpeak for “more government.”  Excerpt:

Fittingly, top Democrats were back in D.C. this week to offer more detail on “A Better Deal.” At a Wednesday press conference in front of the Capitol, they outlined plans for an “independent trade prosecutor” to investigate businesses that shift jobs overseas, and an unelected “American Jobs Council” to investigate foreign investments in American businesses.

The American Jobs Council, Schumer said, will “slam the door shut on foreign companies who want to buy-up American businesses and harm our workers.” The council appears to be the centerpiece of a seven-point plan that includes penalties for federal contractors who outsource jobs, guarantees that taxpayer-funded subsidies flow only to American-based companies, and creates a public “shame list” for companies that move jobs offshore, according to The Washington Post’s Dave Weigel, who reported on some of the details of the Better Deal plan this week.

In other words, more bureaucracy and more regulations aimed at trying to freeze a dynamic economy and halt the flow of capital and goods around the world.

Maybe this is, as Slate has suggested, the basis of a plan “to campaign against cable companies, airlines, and other things everyone hates,” but I’m not seeing it. It seems more like the basis for a campaign that says government bureaucrats know what’s best for a country, or one that promises to centralize more rulemaking at the expense of businesses and workers.

The focus on preventing outsourcing—something Trump and the Democrats have in common—ignores the benefits of being able to produce goods in places where labor is more inexpensive. That makes it possible for Americans to buy products that would otherwise be unaffordable, but it also allows global supply chains to lower the cost of living for everyone. Government controls over trade drive up costs and raise prices for the very low- and middle-income workers the Democrats (and Trump) claim to be trying to help.

As a purely political matter, if Democrats are trying to turn Trump’s economic populism their direction, this seems like a misguided effort.

Out on a limb.

Democrats have never seen a government regulation or tax on the business world that they weren’t in favor of.

Granted, at the moment this is pure political theater.  There isn’t the slightest chance Congressional Dems will even get this bill/bills out of committee, much less on the President’s desk to be vetoed.  But there are two things the Democrats have always been good at; two things the GOP could stand to take a few pointers on:

  1. Solidarity.  The Dems hang together.
  2. Persistence.  The Dems never give up.

The Gang That Couldn’t Shoot Straight needs to buy a vowel and get together on a few things, like tax reform; instead, it looks like they are going to wander around some more.  To paraphrase an old gag:  “I don’t belong to an organized political party.  I’m a Republican.”

Goodbye, Blue Monday

Goodbye, Blue Monday!

Thanks as always to Pirate’s Cove for the Rule Five links!

One of my favorite free-range, largely unedited and uncontrolled libertarian web sites is Glibertarians.com.  Over the weekend one of the regular Glib posters discussed the first round of the Trump tax wars.  Excerpt:

Now that Team Red has demonstrated their utter hackery by suddenly changing their minds about dismantling the government-controlled health insurance system and demonstrating their deep and abiding love for expansive government, the next ripe target is so-called “tax reform.” Team Blue is already manning the ramparts in the certain fear that any adjustments in the tax code will be away from their moneybags and toward the Team Red moneybags (we know for certain that actually cutting taxes and pushing all the moneybags away from the trough is as likely as the sudden heat death of the Universe).

So it was with that thought in mind that I approached a Vox article written by the reliably mendacious Matt Yglesias as a general hit-piece on Trump. The article doesn’t disappoint, it was the expected (and at this point yawn-inducing) brew. The section on taxes drew my attention: as expected, the well-past-damn-lies use of statistics, cherry-picked quotes, emotional appeals, and the Diana Moon Glampers view of the purpose of economic manipulation.

Back on the policy front, Trump says of his tax plan that “if you add what the people are going to save in the middle income brackets, if you add that to what they’re saving with health care, this is like a windfall for the country, for the people.”

Trump’s actual tax plan would raise taxes on millions of Americans while delivering a windfall to the rich…

But here’s the real kicker, right at the end of the article:

It was the very next several paragraphs which floored me:

TPC could not model an actual Trump tax plan since far too many critical details are unknown. For instance, the Administration has been sending mixed signals about whether it wants a tax bill to raise as much revenue as current law or whether it prefers a version that reduces overall taxes and add to the deficit.

Beyond those threshold questions, the White House outline left out many critical details. For instance, during the campaign, candidate Trump said he’d increase the standard deduction but eliminate both the personal exemption and head of household filing status. The April outline repeated the promise to boost the standard deduction but was silent on the two revenue-raisers.

In other words, “We have no idea of what the plan we’re criticizing actually is.” But it gets better:

As a result, TPC created a stylized version of what the key elements of a Trump plan might look like. It first analyzed the tax cuts that the White House outlined in April, adding key assumptions to fill in unspecified details. For instance, TPC assigned income ranges to the proposed tax brackets, which the Administration did not.

In other words, WE JUST MADE THIS SHIT UP OURSELVES. And THAT was what got cited, and Yglesias still had to apply the usual lying sack of shit spin and misquotation to it.

Ladies and Gentlemen, Journalism Circa 2017.

This is the pass we have come to, True Believers, when “journalist” has pretty much become a synonym for “lying sack of shit.”

Which is also a synonym for “Congressman.”

Seriously, though – are there any thinking people at all who can’t see through this “tax cuts for the rich” horseshit?  Of course the higher-income earners will see more of a tax reduction in any tax reform plan; they pay most of the goddamn taxes.  When most pols yap about a “tax cut for working people” they really mean “handing out more Free Shit.”

And what the hell does “working people” mean, anyway?  I’m not a 1%-er but I sure as hell am a 10%-er, mostly through dint of a lot of hard work and nearly 30 years in an industry sucking up every little bit of knowledge I found lying around, to the point where now I have a reputation in the industry and people will pay me to come in to their businesses to fix things.

Are these politics-of-envy assholes implying I don’t work?  Because it sure feels to me like I’ve been working my ass off for quite a long while now.  And considering that I lose somewhere between a third and half my income in taxes every year, yeah, I’d like to have some kind of a fucking break.

With that said, I’ll just state that Matt Yglesias is a dishonest shitbag and a stupid prick, and leave it at that before I end up any more pissed off about the whole thing.