Jeff Neal for C.U.R.E. - Certain Unalienable Rights Endowment

Posts Tagged ‘wealth’

I’ll personally pay back the National Debt

In Financial, Opinion on January 26, 2015 at 6:47 pm

Screen Shot 2015-01-26 at 6.37.57 PMWith patriotic hearts, a friend and I have a deal for America. We are going out on a limb – we’re going to offer a solution to the country’s national debt problem, a problem estimated at approximately $18 trillion. We are going to deliver personal checks to the US Treasury in amounts that will total $18 trillion (we’re still negotiating the allocation between the two of us).

First: You’re welcome – glad we could help.

Second: We know what you’re thinking; “Guys, no way you have 18 trillion dollars. Maybe 2 or 3 trillion, but 18!?!?  Get real.” Well, we know that, and we also know that neither does the US Government have 14 trillion dollars. That’s why they OWE it, that’s why the nation is in debt by that amount. It’s not there, their check would bounce, just like ours would; so what’s the difference between the government’s check and ours?

Just one thing . . .  see, we’re math guys, and mathematically we have a chance of making our check good; the government . . . well, read on.

So let’s do a little math; it’s a little complicated, so read slowly. The two of us think we can create, say, $5.0 million of wealth every year, and we will commit all of that wealth to reduction of the national debt – that’s a 100% tax rate on our income, and we won’t even ask for any interest. In about 4.7 million years, give or take a few millennia, we’ll be old and tired, but we’ll have it paid off.

Alternatively (and now we need you to really concentrate – this will sound foreign at first) we can let the government pay it off, no help from us; we’ll keep our trillions. At its current rate of wealth creation, the US Government will pay back this debt in – more math, divide by n+1, carry the 3, and we get . . . .  NEVER. They’ll never pay it back, not one red Lincoln penny of it.

You see, your government – including the Congress, the White House, all of the executive agencies – creates exactly $0 in wealth each and every year. Government consumes money and it has the power to pay bills only by TAKING wealth from its citizens, the free men and women who create it.

That brings us to our more serious point, which we think is made clearer by the hypothetical offer above.

Unless paired with less spending, there is no such thing as a tax cut; there are only tax-deferrals. Every dollar of spending represents a tax and OUR COUNTRY IS taxed each year the amount which the government spends. How much we’ll pay now and how much we’ll pay later is decided by a government that arbitrarily sets tax rates and writes convoluted rules that sound “fair.” Every dollar the government spends must be matched by a dollar of taxation – either today or tomorrow or in 30 years, when our children should instead be toiling and sweating to pay for their own current consumption rather than paying back our debts. Any “tax-cut” for the middle class, for the billionaires, and for small business owners was no such thing. It is a deferred tax increase for you and your children.

Cutting spending – entitlements, discrerionary – all of it, is the only answer. Let free men and women dispose of their money without government incentives and direction.  536 people in Washington, DC are not smarter than 320 million Americans.


Obama (Finally) Admits Support of Theft

In Opinion, Political Critique on January 26, 2012 at 7:44 pm

Earlier today in Las Vegas, after cracking wise about the wealth of Bill Gates, President Obama told us his views about ‘fairness’ in the tax code and in the fiscal policies of the USA.

This has nothing to do with envy.  It has everything to do with math.  It’s what I talked about earlier.  We’ve got to make choices.  Americans understand if I get a tax break I don’t need and a tax break the country can’t afford, then one of two things are going to happen.  Either it’s going to add to our deficit or somebody else is going to have to make up the difference.  [Or the government could spend less money?  Nah, no need to consider that.]

A senior suddenly is going to have to start paying more for their Medicare, or a student is going to have to pay more for their student loan, or a family that’s trying to get by, they’re going to have to do with less.  And that’s not right.  That’s not who we are.  Each of us is only here because somebody somewhere felt a responsibility to each other and to our country and helped to create all this incredible opportunity that we call the United States of America.

I guess he thinks it’s cute to personalize it (and remind us that he makes millions of dollars) but his policy agenda will affect more than Barack and Michelle Obama’s tax return.  Furthermore, I’m not sure, but I think that if the president told the Treasury to stop sending his $400,000 per year salary to him, they’d stop – just think how many people $400,000 of food stamps could feed, Mr. President.

But, here’s the point.  Look at his words.  He plainly, boldly and proudly admits that purpose of increasing taxes on ‘the rich’ is to give their money to other people.  Usually Democrats talk about taking money from the rich to fund a ‘program’ or to fulfill some laudatory objective (to provide relief, fund research or cure a disease).  Now they’re unafraid to be explicit about it.  See the bolded words above which are followed by: “And that’s not right.


Then, to top it off, he tells us the big lie that America is only here because of that way of thinking – ‘somebody somewhere felt a responsibility to each other . . .”  If there is any truth in that statement, it is only to the extent that free men and women decided of their own volition to work together for their mutual benefit.  American’s successes, America’s greatness, is not the result of the government acting as the arbiter of the right or fair amount of money one person is allowed to make before he’s informed that, as a matter of law, he must give 30% of the next dollar to the tax-man so the agent of fairness can determine which lucky third person should be rewarded by the gift of someone else’s money.

Frederic Bastiat warned us of legal plunder in 1850. *

But how is this legal plunder to be identified?  Quite simply.  See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong.  See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals.  If such a law — which may be an isolated case — is not abolished immediately, it will spread, multiply, and develop into a system.

Some have accused Mr. Obama and his supporters of being socialists, and they scream “NO WE’RE NOT!”  Some accuse them of “class warfare” with the same result.  His defenders are correct; this is neither socialism nor class warfare.  It is theft and plunder.  That the crimes are carried out by the government and is ‘legal’ does not make them just or right.  And, it has become a ‘system’ and it perverts the law.  That systematic, sanctioned plunder has pitted Americans against one another just as Bastiat predicted.  It has created two America’s – the looters and the producers, with the government purporting to be the arbiter of fairness between the two.

This cancer must be excised from our lives or our nation will soon collapse under the weight of so-called entitlements, something more accurately called, in Mr. Obama’s words “spreading the wealth” by stealing from one man for the benefit of another.

* See HERE for Frederic Bastiat’s The Law for more on legalized plunder.

Mitt Obama’s 28.3 MegaByte Tax Return

In Opinion on January 22, 2012 at 4:21 pm

Mitt Obama?  Of course you think I meant Mitt Romney’s return, but read on.  Maybe I meant that Irish fellow, Barack O’Romney.

First, The Wall Street Journal editorial board reported on January 19, that “[w]hen he recently visited the Journal, Mr. Romney all but said he didn’t think he could propose a tax reform with lower rates because he’d be attacked as a rich guy.”

And, then on January 22nd, Mitt Romney revealed his plans to release his 2010 tax return on January 24th along with an estimate of his 2011 taxes.  The left (and Rick Santorum) will scowl, scour and find in his return signs of ‘unfairness’ in the system along with innumerable ways the deck is “stacked in favor of the wealthy, the 1%.”  They will wax indignant and at length.

Then, in the next debate, Mitt will squirm, smile, nod, pause and then say “Well, ya know, I just followed the tax code as written by a bunch of Washington insiders, so if you think taxes are unfair, elect me and help me make taxes more fair for all Americans.”  Then remembering his consultants’ best line, he will add, “I won’t apologize for being successful.  I won’t apologize for the free enterprise system.”

So, what’s the problem?  Well, we know already that Mr. Romney is proud of himself and his accomplishments, and none of us begrudge anyone’s success.  The problem is that Mitt Romney doesn’t have enough pride (or money) for all Americans to be successful.  He has not proposed and will not (can not? – see above quote from WSJ) support policies that protect every American’s right to pursue happiness.  Mitt Romney wants to trim the hedges around the DC establishment’s playground, and they know he has no intention of taking away any of their toys.

Here’s how we know that.  Mitt Romney should have said, weeks ago, one of two things about his tax returns.

1.  “Screw it.  I’m not releasing my tax returns.  You know I’m wealthy and you can assume that I’ve filed every form and paid every dollar of tax the law requires.  It’s no one’s business exactly how much I’ve paid in taxes, given to charity or otherwise invested money that is mine.  If that means you will vote for someone else, so be it.”  It’s what he wanted to say, it would’ve been admirable, and it also would have cost him most of his votes.


2.  “My tax returns for the last 25 years will be on the web as soon as they can be scanned into the computer.  They will reveal that I have used umpteen dozen legal tax deferral and avoidance tactics.  They will reveal that I have an investment portfolio designed, at great cost by the best tax accountants money can buy, to minimize how much of my income is exposed to taxation and, then, at the lowest legal rate.  Critics will suggest that had I invested my money differently, had the code been written differently, more of my income would be taxable, and Uncle Sam would have taken more of what is mine.  They’ll suggest that the tax code that encouraged me to invest in projects X, Y and Z rather than projects A, B and C should be made more ‘fair.’  And, they’re right.  Every last one of the tax avoidance schemes I have used to minimize my tax liability for the last 25 years should be repealed, and I want you to elect me to make that happen.”

Right.  He’s gonna say that last part; and, I’m going to be in the NBA Hall of Fame!

Imagine the howling that would ensue.  That’s why Mitt Romney must not be the GOP nominee.  He can not lead a revolution against the establishment, because the establishment’s life-blood, their unifying mission, their raison d’être is their ownership and control of Title 26 of the US Code.  The Internal Revenue Code, the most powerful weapon ever known to mankind, gives the US government and its moochers the power to steal from the most free, most productive, most wealthy people the planet has ever seen.

Title 26 of the US Code was followed to the letter by Mitt Romney.  It was in place and subject to any change Barack Obama would have liked while the Democrats controlled the Senate and the House from January 21, 2009 through December 31, 2009, the last day on which the Internal Revenue code could have been changed to make Mitt Romney’s 2010 tax return more fair.  Why would the men and women who control the most powerful weapon ever give up their power?  Why would they give their weapon to Mitt Romney now that they know Barack Obama wants it to make it more powerful?  What incentive does Mitt Romney have to force them to give him the ability to take the bullets out of their gun – his accountants figured out how to dodge most of the bullets already?

This is where it becomes clear that Mitt Obama was not a typo.  Anyone who dislikes Mitt Romney’s 2010 tax return can send their complaints directly to one of three offices – The Oval Office, Majority Leader Harry Reid’s office, or former Speaker Nancy Pelosi’s office.

It’s not just Mitt Obama’s tax return, it’s Barack O’Romney’s tax code, all 28.3 MegaBytes and 9,127 PDF pages of it.

That new little baby: Mouth or Mind?

In Economics, Opinion on October 25, 2011 at 12:47 pm



And Baby Makes Seven Billion –

Is a newborn an asset or a liability to his fellow man?  Your answer will reveal all we need to know about your world view.  Mr. McGurn of the Wall Street Journal says the newborn is a mind that will feed itself and others, not a mouth to be fed.

I say he’s correct and add that it depends on whether you let him be free.

Humans, free to use their minds, produce more than they consume.  Modern life is proof.

Humans, dependent on others, merely consume and learn to feel entitled – they’re not born that way.

A free man produces until he can produce no more.  He accumulates knowledge and wealth for himself and his posterity.  He and his billions of co-workers do things for YOU that you’d never accomplish on your own.  Think of the thousands of men who made the pencil you used to take your SAT or the one man, Steve Jobs, who created things you never imagined but seemingly can’t live without.

A slave produces just enough to subsist and escape punishment.  He makes it through today so he might breathe tomorrow.

Free newborns are assets.  Let’s hope there are more of those born today.

Let freedom ring anew with every birth.  The more the merrier!

Do we live in a free country?

In Opinion, Political Critique on October 11, 2011 at 1:37 pm

Many Republicans believe that Mitt Romney is ‘good enough’ and that at least he’s not Obama and he’ll steer us clear of more of his disastrous policies.  The GOP and we conservatives had similar thoughts about George W Bush in 2000.  His conservative convictions were deeper than are Mr. Romney’s, yet even Dubya could not defeat the monster that is devouring our nation.  That monster can’t be tamed, it must be caged – that was, as I see it, the primary objective of our founders in drafting the Constitution – to restrain the powers granted to a federal government, to keep it subordinate to the sovereignty of the individual.

No serious surveyor of what is now referred to as the ‘US government’ can conclude that it is the product of the US Constitution, properly administered.  Rather, it is clearly the product of its occupants.  For starters, if a government is to be the subject of its people, for it to govern and not rule, it must be chosen by a process that is independent of itself, no?  For evidence that is not the case, one need only peruse the Federal Election Commission’s rules and regulations that dictate how a person can mount a campaign for federal office.

The entire FEC rule book is, essentially, a non-compete agreement that, by severely restricting the financing activities of any nascent political ‘party,’ grants the Democratic and Republican parties a monopoly on political activity.  The parties’ sole purpose is to elect government officials from among their inside-crowd membership.  From such an anti-constitutional starting point, there is no hope that the resulting ‘government’ will find itself bound by the Constitution.  Consequently, we are stuck with an over-weening, omni-present, omnipotent monster that is controlled by the political class and that feeds and empowers itself by dispensing favors to powerful interests – when a people gives a government more power, it will use it to perpetuate itself and it’s enablers; there can be and has never been any other outcome.  It follows that moneyed interests will buy protection from that power, and the two (power and money) are increasingly concentrated in a smaller and smaller cadre – exactly the outcome our founding fathers meant to prevent.

The “Romney-wing” of the GOP is no different from the McCain- or Dole- or Ford- or Rockefeller- wings were.  They all exist for the perpetuation of government power.  Most of its inhabitants are men/women who would last not one week outside of the cocoon they have created for themselves in Washington, DC.  Just look at Rep. Paul Ryan – his supposedly “radical” reform budget proposed spending ONLY $3.5 Trillion, as opposed to that spendthrift Obama/Reid budget which would total $3.6 Trillion.  Really, $100 billion, a whopping 2.7% difference is the GOP’s attempt at radical reform?  That won’t help our country survive.  It will merely delay the inevitable a couple weeks or so.

I wish I could share the more sanguine point of view of the Romney supporters.  I’m in the prime of my life; I’m hungry for freedom – freedom for me and, as importantly, for every man who therewith will make his life better and, while he’s at it, make MY and my 2 sons’ world better.  I don’t think any grant-giving or loan-guaranteeing government bureaucrat (Dem or Rep) would have ‘found’ Steve Jobs in 1975 and had the foresight to tell him “here’s $538,000,000 [see Solyndra]; now go be creative and change the world.”  He had to be free to take risks, along with the millions of others who succeed and fail day after day.  Each step we take, every tax dollar confiscated along the government path makes someone less free.  ZERO government is, of course, not the answer, but there has to be a limit, and it seems clear to me that the political class stepped over that line some many years ago.

Is there a level of spending between $3.6 trillion and $0 that is acceptable?   Is our government too small or too big.  In the language that most people use the word big to describe the government they mean to describe a government that commandeers >25% of the economic output of the country pursuant to a 70,000 page tax-code, a legal code that exceeds 200,000 pages and rules and regulations that consume millions of pages.  Big is an entity that commandeers $3.6 trillions dollars from the private sector and spends it the way 536 men and women want it spent.

That’s not a free country.  We need radical change, and Mr. Romney will not deliver anything of the sort.

Reset Button – Break the Glass

In Economics, Opinion on July 1, 2011 at 12:16 pm

We can only keep the promise by breaking it.

A good friend had a moment of brilliance a couple days ago. Terminate Medicare and Social Security.  No cuts.  No new formulae.  No delayed increases.  End them, PERIOD.

For a moment, forget the political feasibility. Think about it.

The country has incurred debts it can’t repay.  Our balance sheet, as it were, can’t be fixed short of a tectonic shift in our thinking. The estimated net worth of all of the households and businesses in America is estimated at between $60 and $75 trillion. Our total unfunded liabilities (i.e. the future cost of all promises made by the US Government under Medicare, Medicaid and Social Security) is approximated at $114 trillion.  TILT!

Now, go back now to political feasibility: what’s the likelihood that the men and women of this country will stand by and let our government TAKE all of our wealth and give it to itself to pay for those promises? Not bloody likely, eh?! But that’s what we’re letting them do, all day and every day.

Social Security and Meidcare are inaccurately described as an insurance program – funds we pay into in exchange for a promise of future payments to support us in retirement. They are more accurately described as a Ponzi Schemes. You pay retirees’ benefits now, future workers will pay for yours later. Only the math doesn’t work.

So, eliminate the programs and, drum roll . . . the resultant creation of wealth will fulfill the promises. The stock market will soar. Commodities’ prices will decline. The US Dollar will rise in value against all other currencies.  The wealth produced will dwarf the liability of the ‘broken promises’ because we will have freed ourselves to keep those promises.

See, we owe all that money to ourselves, right? Asked that way, the question sounds a little different. We made those promises to ourselves. This approach suggests that we let ourselves pay ourselves back instead of relying on the anti-productive government machine to do so. We’re the unsecured creditors in the US Government bankruptcy. But we’re also the shareholders (to stretch the metaphor) – we own the place (the country, not the government) AND we are the assets that have been pledged to fulfill the promises. Let’s foreclose and take the assets back.  Let’s let ourselves off the government hook so we can go back to producing wealth.

It will cause some dislocation and serious discontent, of course. But those are manageable and safety-nets raised by newly-freed men and women of America will care for the elderly and the sick who are temporarily displaced – we always have. On the other hand, the inevitable catastrophe we face  as a result of politicians’ constant tinkering with the cancer, repeatedly moving the tumor from one part of the corpus to the other, is not manageable. It’s deadly.

Let’s keep the promise. There is no choice.

Government Beats Freedom in a Shut-out; Film at 5:00

In Opinion, Political Critique on May 15, 2011 at 9:59 pm

It is reported that lines are drawn in the sand; each political party has staked out its respective position from which there will be no retreat.  The Democrats want to run the government, i.e.  rule the people, by taking from them $3.6 trillion dollars per year, and the GOP would prefer to starve the beast and support an annual spending figure of a measly $3.5 trillion – a whopping 2.777% delta!

Differences of opinion about immigration policy, spending on planned parenthood, and whether Osama bin Laden should have been captured or killed are trivial in comparison to the fact that BOTH national parties are on board for commandeering upwards of 25% of the nation’s economic output (not counting state and local government spending) so it can be distributed by 535 politicians and their enablers instead of allocated efficiently by free men and women in the free market.  Why do government-lovers think that money left in the bank accounts of the men and women who earned it, that wealth left in the control of its creators, will do either nothing or, they seem to believe, mostly evil?  Why do they have such an awful opinion of free people and their priorities – are they projecting?

There is no fundamental difference between the two parties so long as neither party stands up for FREEDOM by way of demanding that there must be a significantly smaller federal government – NOW.  If a majority of the public won’t vote for that party because a majority is already dependent on the largess of their fellow citizens – then so be it; let the train-wreck happen, and we’ll pick up the pieces and start a new nation after this one fails.*

But the GOP (or someone) should at least give it a shot.  Government spending must be controlled so that free men and women can do what they think is the right thing with their money – and that might not be the same as the demands of a mob led by Harry Reid and Barack Obama, with the armed power of the IRS to back them up.  The confiscation of wealth from America’s productive class and the expenditure of that wealth to buy the votes of multiple constituencies were not the intended outcomes of the taxation and general welfare clauses of the Constitution.  Those clauses can’t (OK, should not) be stretched to mean that the confiscation of all or half or even 1% of Bill Gates’s money is moral so long as a majority of Congress says so – theft is theft.  Even if one takes the position that the general welfare clause is Congress’s wild card, am I denied the right to attempt to elect men/women to serve in Congress who agree with me that government’s power has moral boundaries?  I believe that Bill Gates has no obligation to fund AIDS research, feed the poor, build bike paths in Arlington, VA, or fund NPR.  Those are not acts that promote the general welfare AND his right to equal protection is found in the very same document.

I spent my lunch hour on Wednesday with a DC lobbyist employed by a Boston-based firm that is vocal in their support of the candidacy of Mitt Romney, because . . . . drum roll . . . Mr. Romney’s from their world; they’re very closely associated with the former governor, so it helps them as they recruit new clients to say “we’re very close to the presumptive presidential nominee for the GOP.”  They’re not even quiet, subtle or embarrassed about it – “hire us and we’ll help you convince the government to do favors for you.”  That is the standard sales pitch for all of their cohorts and competitors.  It’s a cesspool and the government-power drug courses through the veins of every man and woman in the big business of politics.  The media, the consultants, the lobbyists, the fundraisers, the candidates, their staffers . . . all of them are addicted to the same drug and are complicit in the send-the-bills-to-the-taxpayers game.  Their food is bought and rent paid for with the power they wield over you and me, the power of taxation, limited, they are convinced, only by their appetite and their ability to assemble a majority for long enough to get arcane language buried in a legislative act.

We need a new brand of politician – a brand that knows freedom is a more powerful force for good than is a government run by men who covet power bought with tax dollars – and SOON.


* “When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.”

The Ryan Plan – A Deeply Flawed Compromise

In Economics, Political Critique on April 17, 2011 at 10:38 pm

The Wall Street Journal is correct about President Obama and the poison he’s poured into the dialogue.  (See editorial here)  However, the Ryan plan is part of the problem, too.

Ryan’s plan is akin to something that, say, Bill Clinton could have proposed in 1996.  It does not contain a single clear statement of principals that could distinguish it from any other partisan economic plan.  “Economic plan” – that phrase alone tells us all we need to know, doesn’t it?

Ryan’s plan is merely a collection of compromises and marginally different government solutions that MAY result in there being a smaller government – until another Nancy Pelosi Congress undoes it all again.  The Ryan Plan contains no rational for smaller government or any defense of lower taxes for the sake of making men more free – it suggests small government and lower taxes are mere policy preferences that will accomplish some preferred economic outcome or another.  That is NOT the way a free people ought to be governed.  It is not what our founding fathers envisioned for their posterity.  It is not the government men and women have died to preserve.

When we argue on such terms, government wins.  If instead we use individual liberty and freedom as the moral rational and basis for a small government with limited powers, lower taxes, etc., we have a winning argument.  When the GOP says “we have to tax the rich less because they create jobs,” they’re merely make another rebuttable statement, adding to the cacophony – whoever shouts last or loudest wins the public’s attention, and defending ‘the rich’ is drowned out by ‘help your fellow man.’

Defending freedom and individual liberty, a man’s right to dispose of his income and wealth as he sees fit, not based on some split-the-difference compromise between John Boehner and Barack Obama, will gain support of Americans.  Vowing to fight Barack Obama in order to take slightly less money from the rich and spend it differently is not an inspirational platform.

Tax Cuts for the Rich!

In Economics, Financial, Humor on March 17, 2011 at 10:28 am

The Tax System Explained In Beer – by unknown author.

Suppose that every day, ten men go out for beer & the bill for all ten comes to $100. 

If they paid their bill the way we pay our taxes, it would go something like this : 

The first four men (the poorest) would pay nothing. 
The fifth would pay $1 
The sixth would pay $3 
The seventh would pay $7 
The eighth would pay $12 
The ninth would pay $18 
The tenth man (the richest) would pay $59 

So, that’s what they decided to do. 

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. 

“Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20”. Drinks for the ten men would now cost just $80. 

The group still wanted to pay their bill the way we pay our taxes. 

So the first four men were unaffected. They would still drink for free. But what about the other six men- the paying customers? 

How could they divide the $20 windfall so that everyone would get his fair share? 

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. 

So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay. 

And so the fifth man, like the first four, now paid nothing (100%saving). 

The sixth now paid $2 instead of $3 (33% saving). 

The seventh now paid $5 instead of $7 (28% saving). 

The eighth now paid $9 instead of $12 (25% saving). 

The ninth now paid $14 instead of $18 (22% saving). 

The tenth now paid $49 instead of $59 (16% saving). 

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings. 

“I only got a dollar out of the $20 saving,” declared the sixth man. 

He pointed to the tenth man, “but he got $10!” 

“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than me!” 

“That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!” 

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!” 

The nine men surrounded the tenth and beat him up. 

The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill! 

And that, boys and girls, journalists and government ministers, is how our tax system works. 

The people who already pay the highest taxes will naturally get the most benefit from a tax reduction.. 

Tax them too much, attack them for being wealthy, and they just may not show up anymore. 

In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier. 
For those who understand, no explanation is needed. 
For those who do not understand, no explanation is possible.


Who is John Galt?

Bailouts – Debt vs Equity

In Financial, Opinion on February 1, 2011 at 11:47 pm

This piece from Cafe Hayek (Link Here) by one of our best economists about a distinction that we don’t hear much about.  Generally speaking, government bailouts saved lenders and management, not shareholders.

Moral Hazard is not some academic theory.  It is exactly why the financial markets unwound in 2008.  The consequences of risk were distorted and difficult to trace – often the owners of the upside potential of investments had no downside, having passed that risk on to unsuspecting bondholders who thought the rating agencies, who had nothing at stake, had correctly assessed the risks of securities that were rated as AAA (or some other ‘investment grade’ rating).

Neither greed nor deregulation caused the financial markets to seize-up in 2008.  A disconnect between risk evaluators and risk takers caused much of the problem.  Risk takers naively let others with nothing at risk evaluate the risk takers’ exposure.  That never has worked.