Sensible Political Thoughts

My favorite videos of morons talking about guns.

2011-01-11T16:53:00.000-08:00

Please, ask yourself:

2010-11-23T13:49:00.000-08:00

What fucking threat does a timid little caucasian boy in the middle of Utah pose to our fucking national security?

Ahhhh, I love it.

2010-11-09T18:31:00.000-08:00

Arizona Immigration Law

2010-07-06T10:13:00.001-07:00

I've run into a lot of opposing arguments for this law, and I've honestly tried to understand both sides and stay neutral. It's becoming harder and harder to do that.

The arguments against the idea of Arizona enacting its own law that mirrors the federal law (as this one almost perfectly does) are ludicrous.

The Obama Adm. is about to file suit against the state of Arizona today, and for what? The President calls it "misguided", but why?

Members of Congress are having a conniption over it. Again, why?

I ran into someone arguing in favor of the law today who brought up many good points.

These aren't my words:

"In the course of lawfully and peacefully going about my private affairs, in any given week, I am required to identify myself probably a dozen times or more. I carry my identification with me at all times. Producing said identification is quick, easy, and causes me no harm. It is a simple thing that takes no more than seconds to do. As I have nothing to hide, I have nothing to fear.

If I travel to a foreign country, I am expected to carry papers with me, such as passports or visas, and to produce said papers on request of local authorities. I was born and raised in the US. I look, act, dress and speak like an American. In any foreign country, I will stand out as someone, "who isn't from around here". I may logically expect increased scruetiny as a result. If I were to immigrate to a foreign country, I may logically expect such scruetiny to continue for some time as I learn to adjust and adapt to my new homeland. Again, if I have nothing to hide, I have nothing to fear.

On constitutionality:

Article I, Section 8 gives Congress the power to "establish an uniform Rule of Naturalization". The Arizona law does not, as some have claimed, usurp that power. The Arizona law deals with those who are not naturalized and are here illegally.

Article I, Section 10 states that: "No State shall, without the Consent of Congress... engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.". Arizona has been invaded by some half million foreign nationals, its citizens are being murdered by foreign nationals, Congress hasn't done squat to deal with the problem. Arizona is in "imminent Danger as will not admit of delay".

Article IV, Section 1, states: "Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State".

Article IV, Section 4, states: "The United States shall guarantee to every State in this Union a Republican Form of Government, and shall protect each of them against Invasion".

Article I, Section 9, states: "The privilege of the Writ of Habeas Corpus shall not be suspended , unless when in Cases of... Invasion the public Safety may require it.". Invading hoards of foreign nationals enjoy no special privileges or rights. They may be rounded up and detained as needed.

The Tenth Amendment states: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.""

Pretty good, pretty good. I was watching the news and two talking heads were arguing about the matter. One disagreed on the basis that it was wrong for any state to enact laws that are more strict than the equivalent federal law. The man arguing this would probably describe himself as an open-minded liberal.

I thought about his argument, but then I thought about something else.

By and large it is the left side of the spectrum that wishes to enact stringer gun laws, and they do so by enacting ones which are much stronger than the federal laws.

I wonder what he would've said had someone brought that up.

Anyways, barring simplistic arguments about racism and bigotry, what are your thoughts on the matter?

Is healthcare a right?

2009-12-24T09:20:00.000-08:00

Many on the left think that healthcare is a right not to be denied to anyone. I think they're wrong. I think their hearts are in the right place, but they're simply wrong. And before you start with the heartless conservative crap, hear me out.

Everyone in this country deserves the opportunity for healthcare. No, and I mean no one, should be denied coverage. This, as I've said, is one of the things I think the current healthcare legislation has right. People with preexisting conditions should be able to get care, they should know however that they're going to be paying more. Smokers should be able to get healthcare insurance, but they should pay out the ass for it because they make the conscious decision to endanger their health many times a day.

Regardless of whether you think that healthcare is a right or not, let's try to look at the issue from an economic point of view. Even before we do that, we have to come to some realizations. Whether you like it or not, the United States of America was founded on free-market principles. We have a lot more regulation nowadays, but our economy is essentially a free-market, where supply and demand sets pricing. Even if you think that capitalism is the bane of humanity, it's here to stay. At least in this country. And so long as we have a capitalistic society, we can't be instituting things that will affect a large portion of the economy negatively. Healthcare is estimated to make up 16% (Washington Post), and instating a healthcare system which negatively affects the economic efficiency of said system will hurt the economy. There's no way around it.

Back to the question at hand.

Whether you believe it's a right or not, let's just consider it what it is; a good.

When you go to buy homeowner's insurance, you're purchasing a good. It's the same when you buy car insurance. You're buying a good.

"But those don't pertain to the wellness of people" you say. Some could argue that they do, but I won't. Let's dig deeper.

Health insurance is only one type of insurance used to hedge against emergencies or tragedies. What about life insurance? Life insurance is used to make sure that those who depend on someone else to make the living have fiscal security after their loved ones have died. Should this be considered a right? What about long-term care insurance. This is becoming increasingly more important as the baby boomers start to retire. LTC insurance is something bought by the insured to make sure that when the inevitable time arrives in which they are put in a care facility they won't be a drain on their family's wealth. Should this be considered a right?

We can extend this argument to dental insurance and optical insurance. Are these rights? They are certainly good things, and they should be made available to anyone, but they're not a right.

So what's a government to do? If health insurance is not a right, then what can it do to lower costs? First we have to address the first problem in this dilemma, which is the government is trying to do something (PLEASE GOD STOP THEM!). Their hearts may be in the right place, but their brains aren't.

Some people argue that the government should set prices. Hmm...

Let us explore when our government has tried to set prices in the past.

After imports of oil fell sharply in the 1970s, the government tried to "help" the citizens of the U.S. by doing two things, one good and one bad:

They reduced regulation on domestic oil companies, allowing them to pump more oil into the market. (The Good)
They started to fix prices of gasoline to keep the prices artificially below what the market would have set them at. (The Horrifically Bad)

Here's what the pricing structure looks like when the market is allowed to set prices:

Demand and Supply meet and the price is set. Let's see what happens when the government attempts to set prices lower than the market dictates:

When the government sets the price of a good it creates a shortage. When a good is in shortage, it must be rationed.

So, if the government considers healthcare a right it will start to set prices. In this case the price setting is taking the form of a heavily subsidized "public option" that still might get through both houses. As I said in my previous post, this public option business is just one more thing that will complicate the market and increase prices for free market alternatives. This will push more people into the public option and eventually drive private health insurance out of the business except for the very rich. The public option is just a stepping stone on the way to a single-payer health system for the progressives.

So after all private options are gone the government will be the only purveyor of healthcare. They'll be pressured to keep prices artificially low, which will create a shortage. The shortage (caused by everyone wanting healthcare and doctors leaving the profession because it doesn't pay as well as it used to) will create the need for rationing.

So next time a progressive, liberal, or Democrat tells you that healthcare is a right, and that government run healthcare won't result in rationing, explain to them in a nice and respectful manner why they're completely wrong and need to take a few courses on basic economics.

I did a little sleuthing of Canada's two main progressive parties, and even they admit that their healthcare system makes necessary the act of having to wait for care, both basic and specialized.

Here's a screenshot from the New Democratic Party of Canada website:

Kind of funny how the media in America keeps telling us that Canada's health system doesn't mean longer wait times for procedures.

Just like I said in my last post, if we stop looking at this issue from an emotional standpoint and start looking at it from an economic standpoint, it's starts to make more sense.

The White House's goals for healthcare reform

2009-12-10T14:59:00.000-08:00

I'll try not to be snarky about this. I have my views on the issue, everyone else has their own views. I'm not trying to change any views, I just want to explore things from a rational, economic, and common sense point of view, instead of just making decisions based on emotions, which I think is a major shortfall of the left's greatest downfalls when it comes to these things.

Taken from: http://www.whitehouse.gov/issues/health-care

Key things they want to change:

- Reduce long-term growth of health care costs for businesses and government
- Protect families from bankruptcy or debt because of health care costs
- Guarantee choice of doctors and health plans
- Invest in prevention and wellness
- Improve patient safety and quality of care
- Assure affordable, quality health coverage for all Americans
- Maintain coverage when you change or lose your job
- End barriers to coverage for people with pre-existing medical conditions

Let's take these one at a time.

"Reduce long-term growth of health care costs for businesses and government"

Government bureaucracy won't achieve this. When I say bureaucracy I'm not trying to simply use emotional words to evoke hatred or mental images of lazy government employees. I'm talking to convey the sheer amount of "movement" that has to be achieved to get anything done when it comes to getting stuff done in a government setting.

Government is inefficient. If you can't admit that then you're either so far up your own ass that you'll deny anything bad said about government, or you've never had to deal with the government doing something that should be incredibly simple but turns out to be a giant clusterfuck.

I helped my father-in-law with some government paperwork. Remember cash for clunkers? He's a car salesman, but was given the task of dealing with the immense amount of paperwork that was necessary to get the money back from the government. We spent over a month dealing with the asinine forms, scanning, filling them out, dealing with the CFC website (a horrendous experience in and of itself), and then trying to submit. Every couple of days they'd change the rules and reject an entire batch of cars. We'd do them over again.

Government is so vast that for anything to get done, it has to go through many channels. Adding more bureaucracy to the healthcare mix will not do anything to reduce long-term growth of costs. I'm not too familiar with this part of the proposals, but I've heard about increasing mandates on employers. I think it's a nice benefit when employers provide healthcare for their employees, but I also think it causes more problems than it's worth.

If people were allowed the same tax benefit as companies have when it comes to healthcare costs (such as getting rid of the 7.5% AGI floor the current tax code has now for medical-related costs), the incentive to shop around for a better deal would be greater. Not only would people be able to have more choice than just what their employer offers, it would help mitigate the effect of one of the major causes of the uninsured today, that is, having healthcare attached to a job. When your employer provides your healthcare, you'd better hope that the economy doesn't go through a down cycle. If you get fired, you will be without insurance. Sure, there's COBRA, but it's expensive and doesn't last long. Detaching coverage from employment would at least save people from being uninsured if they lose their jobs.

"Protect families from bankruptcy or debt because of health care costs"

I think this is a great idea, but you have to explore why people were in that position in the first place. If a family has a member get sick and they have to go into debt to pay the hospital, it's a clear case of not being prepared. I'm not saying they deserve the debt, but they should have been better prepared. One of the major rules of being financially responsible is keeping an emergency fund of at least nine months worth of expenses. Not only does this cover the family for nine months in case of loss of jobs, it also is there to help with enormous medical costs, should they arise.

This is actually a whole other subject that deserves its own article, but I'll have to mention it to get my point across. Too many American families are in debt. They're not in debt because of evil banks or crooked capitalists, they're in debt because they lack the long-term thought processes that are so prevalent in millionaires. Most wealthy people aren't wealthy because they make exorbitant amounts of money. They're wealthy because they think and plan for the long term. They don't finance cars because they know that if they save the money they'll save a lot in the long run. They don't spend every dime they earn on unnecessary items. They save, they invest, and they prepare for the bad times while they're in the good times.

Too many families nowadays are have negative net worths because of their spending habits. This isn't so much a healthcare issue as it is a lifestyle issue.

"Guarantee choice of doctors and health plans"

I doubt a public option would affect this in the short-term, but it would kill consumer choice in the long-term. The government doesn't pay doctors a lot when it comes to healthcare. Why do you think that doctors will order all tests necessary? Three reasons: 1) They need to actually make money doing their job 2) They want to make sure they have their asses covered so ambulance chasers like John Edwards won't come and sue them for tortious acts and 3) They have no incentive to reduce costs for their customer if their customer has no incentive to reduce costs for themselves. When you don't pay for something, you don't shop around for the best price.

There wouldn't be a mass exodus of physicians overnight, but overtime, as the government takes more and more control of the healthcare industry, the incentive to be a doctor will be diminished. At that point there WILL be rationing of care.

And let's be honest here, the "public option" is just a stepping stone on the way to a single-payer system. Don't kid yourselves.

"Invest in prevention and wellness"

I see no problem with this, but what I fail to see is why the government must step in and do this. People can do it for themselves if healthcare is more affordable.

"Improve patient safety and quality of care"

Government can't increase safety of care. They can "mandate" or "regulate" safety rules that will, in theory, increase safety, but they can't guarantee it. Think of the big peanut scare a year or so ago. The FDA had rules on how to inspect peanuts, and there was still a government failure to ensure safety.

You don't hear the words government failure in the news very often, but gee golly I sure am accustomed to hearing market failure come from the talking heads...

As for quality, see above under "Guarantee choice of doctors and health plans".

"Assure affordable, quality health coverage for all Americans"

Governmental frolics into the free market, whether they be in the form of regulatory changes and/or "competition" in the form of a government-run option, will always raise prices. Just like new taxes on businesses. You're a fool if you think that the firms simply absorbed the cost of new regulations and taxes. They pass them into you, the consumer.

"Maintain coverage when you change or lose your job"

Again, if people were allowed the same tax benefit as companies have when it comes to healthcare costs the incentive to shop around for a better deal would be greater. Detaching coverage from employment would at least save people from being uninsured if they lose their jobs.

"End barriers to coverage for people with pre-existing medical conditions"

I'm all for this. It WILL raise prices for everyone, but I think it's a noble cause. It will raise prices because more money will be leaving the insurance company's big "pot", so more money will need to go into the pot to cover costs. Too many people are denied coverage in this country. The insurance companies aren't perfect, and this is one of their major transgressions.

On a side note, keep in mind that you always will hear about the failures of insurance companies, and never the millions of people who've been helped by their insurance companies. That's not emotional enough for the media to air.

In conclusion, try analyzing important things (especially when they make up such a large portion of the economy) from an economic standpoint instead of an emotional one. It's easy to say that we should have universal healthcare because "we're the richest nation in the world" or "every human has a right to healthcare" or "because Europe does it". Try doing some critical thinking on the matter, and crunch the numbers. God forbid you pick up a calculator.

Which is more dangerous?

2009-11-01T16:15:00.000-08:00

Tell me which is more dangerous.

1) Little Jimmy is at a friend's house and comes across a loaded pistol left on a table by a negligent parent. Jimmy's parent's don't believe in owning a gun for protection and have always taught him that guns themselves were bad, only on the earth to kill, and can only be used for good when in the hands of the police or military. They also told him never, ever to touch a gun if he finds one. But little Jimmy is curious. The gun holds a certain mystique because they are forbidden to him. He's never seen one fired in real life, nor has he ever touched one. So he decides that while no one is looking he'll pick up the gun and check it out. He holds it, looks at the various parts, fiddles with the slide release, pretends to shoot it, makes "pew" sounds, looks down the barrel to see if he can see the shiny metal bullet inside, and then puts his finger on the trigger to see what it feels like. I'll stop there.

or,

2) Little Tommy is at a friend's house and comes across a loaded pistol left on a table by a negligent parent. Tommy's parents have many guns, and have involved Tommy in shooting from a young age. They taught him how to safely handle weapons and also instilled in him a healthy dose a respect for guns as a tool that, when used wrong, can be deadly. They also taught him that they, as responsible parents, will never keep guns out of locked storage unless they are carrying or cleaning them. They also told him to always tell an adult ANYTIME there is a gun out that's not attached to someone's hip or being cleaned. The gun holds no mystique for Tommy, and he goes into the backyard where Mr. and Mrs. Potential Negligent-Homicide are arguing about the amount of chlorine to throw in the crappy above-ground pool and informs them that there is a gun out in the open and that they should put it up. They go in and put the gun up.

Which is more dangerous?

Why you can't bitch and moan about your credit card debt

2009-09-29T09:45:00.000-07:00

It's a sad fact of reality that using credit cards to finance above-your-earning-capability lifestyles has become much too prevalent in our society. If someone wants a new TV they don't wait until they have the money saved up (something which would probably only take them a few months), they just stick it on the credit card. Some people don't like carrying cash, so they stick everything from groceries to lunch at McDonald's on their credit cards.

The "learned" elders in our society (baby-boomers) tend to keep a credit card around for "emergencies". The last thing you want in an emergency is to stick a couple of thousand dollars on a high interest credit card. The real learned elders (the ones who grew up during the depression) know the importance of not financing your goals, and that you should pay with cash whenever possible.

I saw a story on CNN about a woman who's Bank of America credit card's interest rate was raised from 12.99% to 30%. This angered her so she made a Youtube video about the audacity of them doing such a thing.

Here are some of the things that she listed as being wrong:

Raising her interest rate without prior notice
Not being willing to negotiate a return to the previous rate
The bailout going to banks who charge large interest rates for loans
The banks charging high interest rates when their interest rate with the Fed is 0%

I agree with her point about the bailout. We never should've passed it. But her other points are utter rubbish.

Here's a congealed list of what people hate about credit cards.

The high interest rates
The changes in interest rates without notice
The changes in minimum payment percentages
It's too easy to build large amounts of debt

Here's the scoop. When you get a home mortgage you can get low interest rates if you qualify. Rates of 5% aren't uncommon. When you get a car loan you can get a rate lower than 5% if your credit is good enough. You can get these lower rates because the loan is collateralized. Your mortgage is collateralized by the house, and your car loan is collateralized by your car. If you stop paying on the loan, the bank has something to recoup some of their lost capital. Banks aren't boogeymen for taking a house that collateralized a loan that was never paid. The people are boogymen for not paying the loan. Contrary to popular belief banks will work with you if you're going through a hardship.

Credit cards are unsecured debt. They are not collateralized by anything. If you loaned a friend $300 for a new Playstation 3, wouldn't you want to have the PS3 as collateral? If your friend stopped paying you, you could just take back the PS3. But if you let them borrow the money without a clause that said you would get the game system, wouldn't you want a little extra for the risk you're bearing? Maybe an extra $25 dollars for your trouble. That's why it's okay for credit card companies to charge you more in interest.

The credit card issuers will put in the contract booklet you receive before you activate your card a clause that will state that they can raise the interest rates whenever they want without warning. If you don't like that rule, don't activate the card.

When a bank raises the minimum payment percentage it really can hurt people, but only the people who are dumb enough to have a big balance and to only pay the minimum every month. If you're carrying $10,000 on your card and the minimum monthly payment is 2% of the balance, you'd pay $200. Banks have been known to raise that to rates such as 4-5%, so that would mean that you'd be paying $400-500 per month without notice. Now, there should be some notice of this, I'm in agreeance there. But again, it's unsecured debt. You're the risky party.

It is easy to build up a large bunch of debt with credit cards, but that's not the bank's problem. That's a problem of personal responsibility. If someone can't trust themselves with a credit card, they should not apply for one. It's not the bank's fault you reached your credit limit by with beer, a new flat-screen, and a gaggle of internet porn charges.

Not there are some reforms that need to happen in the credit card industry. Universal default is an evil tool of the devil. Universal default is when the issuing bank learns that you were late on a payment (could be an old car loan, student loan, etc.) so they raise your rate. Keep in mind that these late payments had absolutely nothing to do with your ability to pay your current credit card. The missed payments in question could've been over ten years ago, and they could've been settled.

There's been some talk lately about raising the age at which you can acquire a credit card to 21. I think that's a horrible idea. If people aren't ever allowed to make their mistakes then they can never learn the valuable lessons that come with it.

Bank fees are out of control also. There are so many that it's hard to keep straight. They sneak them in for the most ridiculous reasons. I'd love to see some reform in this area.

Moral of the story, if you have credit card debt, don't whine about it. If you have credit card debt from an emergency, I feel for you, but that's why we have emergency funds. If your bank just raised your interest rate, consider it an opportunity to pay off the balance, instead of sitting there with you arms crossed, sniveling about it and calling them names.

Aye, the moral of the story is personal responsibility.

Obama sucks at economics.

2009-09-25T18:56:00.000-07:00

He must have flunked it. Or he's been taught by someone subscribing to the Keynesian school of thought. Either way, he lacks knowledge.

I'm not speaking broadly about his handling of the economy, I'm speaking of his actual ability to comprehend the laws of economics.

Take his healthcare proposal.

Logic dictates that when a heavily subsidized option for anything undercuts the other free-market options in that particular market, it will create an unfair advantage. He says his plan will "increase competition". That's a blatant lie. His plan will push people out of private insurance and into the public plan. Give people a cheaper alternative and they'll take it. This will create an oligopoly, and eventually a government monopoly on the health insurance market.

It also won't "lower the cost of healthcare for everyone".

After everyone goes to the monopolized public option the massive demand and subsequent cost of that option means that it will need to cut costs or increase funding. This is where the healthcare rationing "scare tactic" (as the left calls it) comes into play. It's not a boogyman scenario. When things get that bad something will have to be done, and rationing is the simplest way to achieve control over costs. We'll have to wait for both routine and critical care. It's not a rightist propaganda tool, it really does happen in Canada and the UK.

My second example of his monkey-with-a-learning-disability economics intellect would be his "green jobs" plan.

He wants to increase regulation and funnel money into green energy investments, thereby "creating" green jobs.

This is what's called a broken window fallacy.

Say you intentionally break a window with the intent that it will "create" a job for someone to do. The work that it takes to fix the window will have to be done by someone willing to clean up the glass and someone willing to replace the window pane. But this isn't creating jobs at all. All it does is divert capital from more constructive things. The money spent on cleanup and replacement would have been spent elsewhere had the window not been broken. It would've been invested, or spent on goods that stimulate private business.

The exact same thing will happen when he tries to divert funds away from one thing and into another. No jobs will be created, they will just be moved from other sectors of the economy, and it certainly won't be the same people who just lost their jobs being moved. They'll have to find another job.

In order to solve our "healthcare crisis", we need to do three big things.

1) Medical Tort Reform

I'm not a fan of tort reform. I'm really not. But I REALLY FUCKING HATE AMBULANCE CHASING TRIAL LAWYERS (you know, like John Edwards, that cheating bag of retarded-monkey shit).

But tort reform isn't good for the individual. I don't need some bureaucratic twat telling me how much I can get from my lawsuit award. I do, however, understand both sides of the matter.

People who rally against reform say it's hurting people's right to fair compensation and lowering the incentive to not produce shoddy products. The proponents of reform say that the amount of lawsuits for silly things are clogging up the legal system and keeping the meaningful cases from being heard in a reasonable amount of time.

They're both right. But there are ways to make everyone happy.

a) Make the losing party pay the other side's legal expenses: This would make sure that lawsuits are only filed when the plaintiff thinks they have a legitimate claim against the defendant. Because if their case is lost, they'll be in a world of financial hurt.

b) Enact commonsense medical malpractice tort reform: Don't limit what we can get when we get hit by a negligent driver, but do limit what we can get for negligent doctors (of which there are few). Doctors build in the cost of their immense amounts of malpractice insurance into their services, as do medical supply companies. Pacemakers are about $1000-2000 more expensive than they need to be because the manufacturers need a ton of malpractice insurance to cover their asses. Doctors are also less likely to perform unnecessary tests on their patients. They do this because it's both 1) paid for by the insurance or medicare and 2) used as a hedge in making sure they can prove they did everything possible if they get taken to court.

c) Enact laws against trial lawyers advertising on TV about how they'll get those evil bastards that gave you mesothelioma and cancer and a broken arm and a workplace injury and denied disability: (See: Jeff Martin and Binder and Binder).

2) Go back to cash-based doctor visits and major medical insurance with high deductibles, and health savings accounts.

Back in the good ol' days before health plans, there was just health insurance. Anyone in need of a vaccination, checkup, or physical went to their family doctor and paid cash. It's ridiculous that it's gotten to the point where we pay a copay for a fucking checkup.

People who use the method above save money in an HSA (health savings account), which is available to people in high-deductible health insurance plans. Funds put into this account are not subject to an income tax, and the money in the account rolls over into the next year.

When people have HMOs they get lazy. HMOs negotiate with doctors on prices. One insurance company will pay a doctor less than another based on negotiations. It's also a big financial burden for physicians. They must hire on additional workers to deal with health insurance payments. It's not a fun situation.

Doctors will likely give you a discount if you're paying with cash. When their patients pay with cash, they get the money up front, instead of waiting for the HMO to pay up (often this takes over a month).

Another benefit of paying for regular is that it forces consumers to shop around for the best price. Imagine if your grocery purchases were paid for my someone else. You wouldn't worry about getting store brand items. You'd want name brands. You wouldn't get the crappy beef, you'd go for the prime. You would and you know you would. But you of course don't do that when you're shopping with your own money. The same thing applies to healthcare. If you're using your own money it behooves you to shop around for the best prices. If you have insurance paying for regular visits you get into the "well, I'm not really paying for the test so let's do it" mindset. It's wasteful.

If you end up in a bad wreck or with cancer, the major medical insurance kicks in. After you pay the deductible with untaxed dollars from you HSA, insurance does pay for things.

3) Stop listening to the media's bias

I'm talking about both sides. CNN, Fox, MSNBC, Glenn Beck, Keith Olbermann, Michael Moore, etc.. Sicko is full of misquotes and misinformation. If you really, truly believe the Cuban healthcare system is better than ours and that the Cuban government didn't take the film crew to the hospital for the "haves", then go here. For God's sake look at the pictures of those poor people. The Cuban healthcare system is atrocious, and believing it's better than the American system is damned foolishness.

4) Take a look at what the Federal Reserve has done to our money

Our money is worth squat. It's been inflated by interest rate cuts. The Fed prints money out of thin air. It's never been audited. By decreasing the value of the money we currently have earned, it essentially has used our savings to bail out big businesses. It's goal is to sooth the ups and down of the market, but it causes as many bubbles as it aims to fix.

If we did those four things, we'd be so much better off in the long run. We'd retain our freedom. We'd not be told but some buearucrat fuck-nut in Washington that we have to purchase healthcare or face a fine. We'd have sound money. We'd have more money left in our pockets.

We'd all be happier, and our medical innovations wouldn't be stifled by undue regulation.

If you still support Obama's healthcare plan after listening to common sense arguments such as the one I just laid out, then I guess there's no changing your mind.

Media Sensationalism

2009-09-15T20:44:00.000-07:00

Media sensationalism is a big problem in today's society. Americans rely so heavily on the news to help them form their opinions about certain issues. Among the hotly contested subjects that the media frequently misreports on are dangers to children, healthcare, and firearms.

I was perusing the internet, minding my own business when I came across the term "cop killer" bullets.

Let's explore this.

When the media (or a special interest group) uses the phrase "cop killer", it's meant to play to our emotions. In the very early nineties Winchester released a new type of ammunition specializing in personal defense, for both law enforcement officers and civilians. They called it Black Talon. The "black" came from the oxidized Lubalox coating and the "talon" probably came from the fact that the rounds were hollow-point bullets. The Lubalox coating was to protect the rifling in a gun's barrel.

Hollow-point bullets are designed for self-defense use. Full metal jacket bullets are not as easily stopped by a body, and are therefor much more likely to exit the body and cause potential harm to people or things behind the target. The way hollow-point bullets work is when they hit a soft target the metal petals expand, slowing the bullet's travel (to keep it from exiting through the back of the target), causing a greater area of damage (to better stop the threat), and to create hydrostatic shock (more important in more powerful cartridges).

Now for the media sensationalism. It can affect anyone. I've fallen for it before. Everyone does. Even the LEO that taught my concealed carry class fell for it.

"All armor-piercing ammunition is illegal, including Black Talon ammo and every other bullet coated with Teflon. No cop-killing ammo is allowed."

There are a few things wrong with what he said.

1. If you're wearing a bullet-proof vest for protection, you're much better off being hit with a hollow-point round. The energy is much easer dissipated because of the expanding pedals. FMJs are the bullets you don't want to get hit with.

2. Black Talon ammunition wasn't coated with Teflon. Like I said above, the coating is called Lubalox. It's meant to not harm gun barrels.

3. No Black Talon ammunition was released in FMJ. It was all HP. There goes the "cop-killer" excuse.

4. Simply coating a bullet with Teflon WILL NOT increase its penetration ability. It won't do anything except rub off on whatever it hits.

5. Black Talon bullets were simply jacketed hollow-point bullets, just like most other self-defense round, including the Speer Gold Dot HP bullets I carry in my gun.

But how could a 20-year police veteran who's teaching a class on self-defense and the law fall for such things? Because sometimes the media like to do this little thing called lie.

Back in 1996 some maniac shot up a train full of people, killed six people, and used Black Talon bullets to do it. A lawsuit was filed against the manufacturer (which oddly enough was thrown out because the judge decided that the ammo "performed as was intended"), and Winchester stopped production of the Black Talons. Fueling this outrage was the media's portrayal of the ammunition as being "cop-killers", "armor piercing", "coated with Teflon", and having "spiky metal petals" (which is a byproduct of any HP bullet). This bullet was singled out because of media sensationalism. It was no different than any other defense round on the market except for the black coating, which is now actually found on several high quality defense rounds. The media lied about the coating, its ballistics, and its purpose, and special interests perpetuated the lies.

So, by getting Winchester to stop production of the bullets, those opposed to it kept no one from dying. If maniacs are going to shoot people they're going to use whatever they can get their hands on.

The media is full of liars, both on the left and on the right.

I guess my point is to make your own damn decisions and form your own damn opinions. Don't let some dork with nice hair and a know-it-all attitude on the boob-tube sway you.

A serious proposition for the President

2009-08-20T14:46:00.000-07:00

I have a challenge for President Obama. If he's going to keep pushing for healthcare reform that's more about government intervention and control than effectiveness and efficiency, then I want him to do me a solid.

Barack Obama's net worth is estimated at being a little over $7 million. I'd like to see him invest about $1 million directly into the general healthcare fund that will be used to fund the reforms he is hawking. If he is so sure of the new way of doing things I'd like him to invest money in it. I'd also love to see him and his family make do with the public option for the next four years.

You see, in my opinion, if someone is advocating something they should be the first to finance it and sign up for it. How is this any different than what liberals ramble on and on about when it comes to a progressive tax code? Among other nonsensical reasonings they pull out of 8th grade civics textbooks, they claim that the wealthy are wealthy because of the freedoms we have so they have a moral obligation to pay more into the system than do people earning far less. How is it any less preposterous for me to wish that Obama be the first to put his money in the government managed pot and the first to sign up for mandated government healthcare? It's not.

Besides, if the system is as efficient as he says it is it might make him some serious cash. The investment would turn him into a venture capitalist, just like Al Gore. Al Gore's venture capitalist firm is invested heavily in carbon credits. I mean, if there's a crisis (healthcare or climate), why shouldn't the people perpetuating how dangerous the situation is stand to profit greatly from it? This is America after all...

Consider This

2009-07-19T10:30:00.000-07:00

I've heard a lot of arguing lately about whether or not people should be able to defend themselves against home intruders (or other threats outside of your home) by using deadly force. From Jersey City's Police Chief Thomas Comey to Chicago Mayor Richard Daley, enemies of our right to defend ourselves are becoming more prominent.

I often hear the argument that states citizens don't need to carry guns or even have them in the home for self-defense purposes, as that's what police are here for. If someone is trying to break into your home, you should just call the police, announce to the bad guy that the authorities will arrive shortly, and then hope the criminals don't slit your throat in the meantime.

Well, consider this.

You're a stay at home mother with two small children in the house. You're husband is on a business trip for the next three days. You've decided to make fried chicken for dinner. You clean the chicken, dredge it, and preheat the oil.

Then something unthinkable happens: the oil bursts into flames.

A giant oil fire is now raging in your kitchen, spreading quite quickly. You make sure your children in the other room are where you can see them, go to grab the fire extinguisher out of the pantry, and you're stunned to find that the extinguisher is gone.

Then you remember. The Washington bureaucrats outlawed using fire extinguishers inside the home a little over a year ago. Their rationale was that fighting fires is what fire departments are for. Vigilante citizens armed with fire extinguishers obviously cannot be trusted to take on the flame alone, so they should be forced to call the fire department when a fire breaks out. The government must take away their only line of defense against fires for their own good.

So, you've got a raging fire (the threat) that could be extinguished by a fire extinguisher (the tool to neutralize the threat), but since you, the lowly citizen, can't be trusted with the tool because the government says so, you are forced to grab your children, hope that your phone is charged, run outside to find shelter, all the while a raging fire is consuming everything you have.

Make sense now?

Constitutional Rights

2009-07-04T07:55:00.000-07:00

I ran into someone on the internet who claimed that your Constitutional rights are void if people around you dislike what you're doing.

His example: If you're sitting in a classroom and you're legally concealing a weapon, if the students around you are uncomfortable with you doing this they can vote to void your right (to keep and bear arms).

This example was made under the assumption that the student is legally allowed to conceal carry on campus, has gone through the necessary background checks, and has the license.

His exact words were "if the majority of your students don't want you armed in the classroom they are sharing with you, then I believe you shouldn't be armed. I would extend that to a city, state or nation."

Rights guaranteed in the Constitution, i.e. the supreme law of the land, can't be denied just because they're unpopular. So if I start speaking out against gay marriage in San Francisco they should be able to take my right to free speech away? No, it's guaranteed by the First Amendment. If I commit a hate-crime in a predominately black city should they be able to take my right to a fair trial away, just because there was an element of racism? No, because a fair, speedy, and public trial is guaranteed to me by the Sixth Amendment. If I do a news report over a corrupt presidential administration should they be able to take my freedom of the press rights away from me because the president's popular? No, because I'm guaranteed this right under the First Amendment. What if I'm a member of the Westboro Baptist Church and I stand on a street corner with a sign that reads 'GOD HATES FAGS' should I be imprisoned for my views? No, because I'm guaranteed freedom of religion under the First Amendment.

The Second Amendment is no different. Just because you're uncomfortable with my right to carry a gun for my protection doesn't mean that you can deny me that right.

Our rights are not to be compromised just because they're unpopular.

Some things are truly embarrassing.

2009-07-03T11:22:00.000-07:00

I've lived in the South all my life (or what's commonly included as the south), and I've always maintained that people from the south are not the backwards-ass, stupid, ignorant, and bigoted people that those damned yankees up north make them out to be.

But for every illogically ideological soggy-pancake-brained quasi-socialist from San Francisco who spews something moronic about "economic justice" and progressive bullshit, there's one person from down south who spews an equally ridiculous statement.

I give you Oklahoma State Representative Sally Kern (R).

She's an embarrassment to Oklahoma. I love my State, but we've got some nuts. She has started a little campaign known as the Proclamation for Morality, where she blames "abortion, pornography, same sex marriage, sex trafficking, divorce, illegitimate births, child abuse, and many other forms of debauchery" for the nation's economic crisis, among our other problems.

I set out to write a post about the absurdities of issuing permits to shoot off fireworks, but I just couldn't let this little nugget of shame go by.

The Second Amendment

2009-05-27T15:16:00.000-07:00

I got curious, so I did something crazy. I googled "repeal second amendment".

What came up made me both laugh and snort furiously at my computer.

Here I give you six opinion pieces: 1, 2, 3, 4, 5, 6.

I'll let you read them and make your own assumptions, but here's my opinion on the matter.

"A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed."

What part of "the right of the people to keep and bear Arms, shall not be infringed" don't people understand? It wasn't meant for only militias, it wasn't meant for only hunters, and it is NOT an outdated, archaic clause in an otherwise brilliant piece of work.

Social Security in trouble?? Nooooo....

2009-05-13T13:56:00.000-07:00

CNN story here.

The recession strikes again. Maybe now our dumbass politicians will consider one of the only options that will save the broken system that doesn't involve taxing us at levels that would make the Swedish blush. Social Security was created in 1935 when the Dow Jones Industrial Average was at 128. Instead of utilizing asset allocation with the taxpayer money that was flowing in the politicians decided that the "investments" needed to go into risk-free government treasury bills. Here's a logarithmic graph comparing the returns of small and large-cap stocks' returns and the T-Bills that the Social Security money is invested in. Notice that if you invested $1 back then in T-Bills it would be worth around $18 2004. If you had invested $1 in large-cap, which are relatively safe compared to mid and small-cap, you'd have around $2,500. If the politicians back then had had the balls to allocate even just a small percentage of the FICA revenue in small-cap funds we wouldn't have this problem with the system today. Here's a linear graph of the Dow's returns from about 1928 to today. Over its life, it has averaged 10.83%. So, even if you vehemently hate George W. Bush and all of his policies, can you at least see that what he wanted to do in 2005 with Social Security was a sound idea that could've helped with this today? Opponents claimed he just wanted to give Americans' retire money to Wall Street and his corporate fat-cat friends. Uh huh. People used that as an argument. Sad, huh? What he really wanted to do was let people invest 4% of the 7.65% taken from every one of your paychecks in whatever they wanted, including stocks, bonds, bank CDs, money market funds, mutual funds, etc.. Only 4% of the total (7.65% is taken from your paycheck and an extra 7.65% is paid by your employer) would be available for alternative investments. The other 11.3% would have been invested in T-Bills, just like it has always been. It was a voluntary participation program. Those who didn't want to participate didn't have to, and the system would've worked the same for them as it had for the generation before them. So, are the politicians going to look at the facts and do the right thing, or are they going to do what will keep them in office in 2010? I guess we'll see.

Great article on self defense and the State's obligation (or lack thereof) to protect you

2009-03-13T16:01:00.000-07:00

Individualism and Self Defense

My favorite parts:

"There are present in America today a very large number of citizens who believe protection of themselves and their loved ones from violent physical attack, robbery, rape and general mayhem is the sole responsibility of others. Most of these ignorant folks believe that employees of the state should be responsible for protection of the individual in our society. This view is elitist and based on false assumptions."

"Many are unaware that, according to the U.S. Supreme Court, the police have no obligation to protect the individual in society. The court ruled as late as June 27th 2005, in Castle Rock v Gonzales, that Jessica Gonzales did not have a constitutional right to police protection for herself, or her children, even though she had obtained a restraining order against her husband Simon. Simon Gonzales subsequently abducted their three children, murdered them, and was killed by police after shooting into the police station window. Ms. Gonzales called the police after the children were abducted, but, the police, believing Simon Gonzales to be non-violent, did nothing. Perhaps, had the police enforced the restraining order, the children would be alive today?"

"The Supreme Court has consistently ruled the police have no obligation to defend the individual. Beginning with South V. Maryland in 1856 and several subsequent rulings on the subject, the court has ruled, "…there is no Constitutional right to be protected by the state against being murdered by criminals or madmen." Emphasis added. Yet, the state and its myriad civilian supporters persist in the belief the individual in society should be disarmed, stating the police are there, should anyone need protection."

Ron Paul: A Patriot

2009-02-05T16:58:00.000-08:00

These are some excerpts from Ron Paul's The Revolution: A Manifesto.

On the philosophy of economic freedom:

"Economic freedom is based on a simple moral rule: everyone has a right to his or her life and property, and no one has the right to deprive anyone of these things.

To some extent, everyone accepts this principle. For instance, anyone going to his neighbor's home and taking his money at gunpoint, regardless of all the wonderful, selfless things he promised to do with it, would be promptly arrested as a thief.

But for some reason it is considered morally acceptable when government does that very thing."

- Page 69

On free trade:

"Consider a single, almost trivial example of government favoritism: sugar quotas. The United States government limits the amount of sugar that can be imported from around the world. These quotas make it more expensive for all Americans since they now have fewer choices as a result of diminished competition. The quotas also put at a competitive disadvantage all those businesses that use sugar to produce their own products. That's one reason that American colas use corn syrup instead of sugar: American sugar, thanks to quotas, is simply too expensive."

- Page 72

On government expansion:

"Once government does become involved in something, intellectual and institutional inertia tend to keep it there for good. People lose their political imagination. It becomes impossible to conceive of dealing with the matter in any other way. Repealing the new bureaucracy becomes unthinkable. Mythology about how terrible things were in the old days becomes the conventional wisdom. Meanwhile, the bureaucracy itself, with a vested interest in maintaining itself and increasing its funding, employs all the resources it can to ensuring that it gets a bigger budget next year, regardless of its performance. In fact, the worse it does, the more funding it is likely to get - exactly the opposite of what happens in the private sector,..."

- Page 74

"Take arts funding, for example. Some Americans appear to believe that there would be no arts in America were it not for the National Endowment for the Arts (NEA), and institution created in 1965. They cannot imagine things being done any other way, even though they were done another way throughout our country' existence, and throughout most of mankind's history. While the government requested $121 million for the NEA in 2006, private donations to the arts totaled $2.5 billion that year, dwarfing the NEA budget...

... NEA funds go not necessarily to the best artists, but to people who happen to be good at filling out government grant applications."

- Page 75

"To get an appreciation for the difference between public and private administration in terms of bureaucracy and cost-effectiveness, consider this. The Brookings Institution's John Chubb once investigated the number of Bureaucrats working in the central administration offices of the New York City pubic schools. Six telephone calls finally yielded someone who knew the answer, but that person was not allowed to disclose it. Another six calls later, Chubb had at last pinned down someone who knew the answer and could tell him what it was: there were 6,000 bureaucrats working in the central office.

Then Chubb called the Archdiocese of New York, to find out the figure there. (The city's Catholic schools educated one-fifth as many students as did the government-run schools.) Chubb's first telephone call was taken by someone who did not know the answer. Here we go again, he though. But after a moment she said, "Wait a minute,; let me count." Her answer: 26."

- Page 77

On welfare:

"... but private efforts could never substitute for gigantic government budgets for various forms of welfare. But private assistance would not need to match these budgets dollar for dollar. As much as 70 percent of welfare budgets has been eaten up by bureaucracy. Moreover, government programs are far more easily abused, and the money they they dispense more readily becomes a destructive habit, than with more local or private forms of assistance."

- Pages 75-76

On the income tax and the redistribution of wealth:

"In another chapter I explain my opposition to the military draft, a government institution based on the idea that the government owns its citizens and may direct their destinies against their will. The income tax applies the same things: government owns you, and graciously allows you to keep whatever percentage of the fruits of your labor it chooses. Such an idea is incompatible with the principles of a free society.

Robert Nozick... minced no words when it came to the taxation of earnings from labor. How, he demanded to know, was this any different from forced labor? In America, the average citizen in effect does unremunerated work for various levels of government for the equivalent of size months out of the year. People who favor this system should be honest about what they are saying: we have the right to force you to work against your will. Strip away the civics-class platitudes about "contributions" to "society", which are mere obfuscations designed to engineer the people's consent to the system, and that is what the income tax amounts to."

- Page 78

"Abolishing the income tax on individuals would cut government revenue by about 40 percent. I have heard the breathless claims about how radical that is - and compared to the trivial changes we are accustomed to seeing in government, I suppose it is. But in absolute terms, is it really so radical? In order to imagine what it would be like to live in a country with a federal budget 40 percent lower than the federal budget of 2007, it would be necessary to go all the way back to... 1997."

- Pages 79-80

On regulation:

"Americans have been the impression that "regulation" is always a good thing, and that anyone who speaks of lessening the regulatory burden is an antisocial ogre who would sacrifice safety and human well-being for the sake of economic efficiency. If so much as one of the tens of thousands of pages in the Federal Register, which lists all federal regulations, were to be eliminated, we would all die instantly.

The real history of regulation is not so straightforward. Businesses have often called for regulation themselves, hopeful that their smaller competitors will have a more difficult time meeting regulatory demands. Special interests have helped to impose utterly senseless regulations that impose crushing burdens on private enterprise -- far out of proportion to any benefit they are alleged to bring -- but since those interests bear none of these burdens themselves, it costs nothing to advocate them."

- Page 91

"It is not unusual for American students to find their textbooks telling them that injustice was everywhere before the federal government, motivated by nothing but a deep commitment to the public good, intervened to save them from the wickedness of the free market."

- Page 93

"An argument we hear even now is that a hundred years ago, when the federal government was far smaller than it is today, people were much poorer and worked in less desirable conditions, while today, with a much larger federal government and far more regulation in place, people are much more prosperous. This is a classic case of the post hoc, ergo propter hoc fallacy. THis fallacy is committed whenever we carelessly assume that because outcome B occurred after action A, then B was caused by action A. If people are more prosperous today, that must be because government saved them from the ravages of the free market.

But that is nonsense. Of course people were less prosperous a hundred years ago, but not for the reason fashionable opinion assumes. Compared to today, the American economy was starved for capital. The economy's productive capacity was miniscule by today's standards, and therefor very few goods per capita could be produced."

- Pages 93-94

"Soaking the rich works for only so long: the rich eventually wise up and decide to hide their income, move away, or stop working so much. But investing in capital makes everyone better off. It is the only way we can all become wealthier. We are wealthier today because our economy is physically capable of producing so much more at far lower costs. And that's why, just from a practical point of view, it is foolish to levy taxes along any step of this process, because doing so sabotages the only way wealth can be created for everyone."

- Pages 94

On the Constitution:

"Our Constitution was written to restrain government, not the people. Government is always tempted to turn that maxim upside down. Little wonder that George Washington, the father of our country, once said, "Government is not reason; it is not eloquent; it is force. Like fire, it is a dangerous servant and a fearful master.""

- Page 135

He has an entire chapter on the Federal Reserve that is so good it cannot be adequately summarized here.

Paying off your mortgage early, and the rewards that ensue...

2009-02-05T16:15:00.000-08:00

Let's do an example problem.

Let's say you're 25 years old and find a house on the market for $150,000. You love the house so much that you decide to buy it. You have the required 20% ($30,000) to put down in order to avoid PMI (private mortgage insurance), and you put the rest on a 15-year $120,000 mortgage at 7%. You decide to be billed once every two weeks, instead of once every month.

Principal: $120,000.00

Biweekly Payment: $497.37

Total Amount of Payments Per Year: $12,931.62

Total Amount of Interest (15-years): $73,975.02

Now, let's say that after you get the house you get a nice raise and are able to pay an extra $150 every two weeks towards the principal. That would make your total biweekly payment $647.37. If you keep paying this amount every two weeks for the duration of the loan, it'll be paid off in October of the 9th year, 5-years and 2-months early.

Principal: $120,000.00

Biweekly Payment: $647.37

Total Amount of Payments Per Year: $16,831.62

Total Amount of Interest (9-years, 10-months): $46,440.58

So that's great! You'll have an extra $647.37 to spend on whatever you want! But what if you took the money that would've gone towards the mortgage and invest it in growth-stock mutual funds? That sounds good, right? After all, the money that would normally be going towards the mortgage is freed up now. That amount would total $64,658.10 for the 5-years and 2-months.

If the $647.37 was invested at 8% starting the second week after the mortgage was paid off and ending with the original last payment period you would end up with $109,611.81. If left invested for 25 more years until age 65 (at 8%), you'd end up with $807,446.68. That's without even having to add any extra money after age 40!

Hmmm, and yet the average person wouldn't consider a 15-year mortgage. They'd just go with the 30-year and end up paying $167,278.51; $120,837.93 more than the accelerated plan.

But people will be people...

P.S. See my post on why keeping a mortgage for the "tax breaks" will make you look a damn fool.

Garbage In, Garbage Out

2009-01-20T08:49:00.000-08:00

Congratulations to Mr. Obama for becoming the 44th President of the United States. I mean this genuinely, and with all of my heart. It is a great thing that not only have we come far enough that we can elect someone with a funny name, dark skin, and so many new ideas can be elected to that post.

I just hope that he and his administration can bring some real change to Washington that benefits all. But please excuse me if I remain cynical about all politicians.

Keeping an emergency fund while augmenting retirement savings.

2008-11-21T16:01:00.001-08:00

• Save up one year's worth of expenses
• Keep fund in interest-bearing account
• Invest yearly interest from account into high-yield aggressive-growth stocks
• Continue every year until retirement
• Sell upon retirement and put into interest-bearing account
• Create cash flow with money based on expected age of death
• Use the annuity to augment retirement savings

Example:
• One year's expenses: $25,000
• Kept in money market account: 4%
• Yearly interest earned: $1,000
• Invested in stocks averaging 18%
• Age of beginning investment: 30
• Age of retirement: 65

Amount earned at age 65: $1,816,652
• Invested at 4.5% in money market account

• Two options

1) Create a perpetuity
⁃ Money ($1,816,652) is invested at 4.5% and the yearly interest ($81,749) is drawn out at the end of the year to supplement next year's retirement income. Invested in a separate money market account (at 4%) for general retirement income. Assuming biweekly payments, this method earns you an extra $3,209.93 every two weeks to supplement the primary retirement savings. This creates a near-guaranteed supplemental income for the remainder of the person's life.

2) Create an annuity
⁃ This method requires an assumption of the length of investor's life. Calculations are based on retirement at age 65 and death at age 100. Money ($1,816,652) is invested at the same 4.5% (no need to transfer the supplemental money to the primary money market account) earning a biweekly annuity payment of $3,966.40 until age 100.

Comparisons: Biweekly Payment: Remaining Amount at Age 100:
• Perpetuity $3,209.93 $1,816,652
• Annuity $3,966.40 ø

-Difference $756.47 $1,816,652

What my facebook friends think about Obama's victory.

2008-11-05T09:28:00.001-08:00

It's cute how people can have so much faith in someone so inexperienced and full of rhetoric.
So, in honor of Obama's nomination, I give you the Ten Cannots William J. H. Boetcker.

"You cannot bring about prosperity by discouraging thrift.
You cannot strengthen the weak by weakening the strong.
You cannot help the poor man by destroying the rich.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away man's initiative and independence.
You cannot help small men by tearing down big men.
You cannot lift the wage earner by pulling down the wage payer.
You cannot keep out of trouble by spending more than your income.
You cannot establish security on borrowed money.
You cannot help men permanently by doing for them what they will not do for themselves."

Words of wisdom.

It amazes me how swayed people are by empty rhetoric about hope and change and not by policy, experience, and most of all common sense.

Common sense is a great thing. Too bad our country lacks it. More on that in another post.

Great explanation of the causes of the financial crisis.

2008-09-29T17:32:00.000-07:00

I'm a devoted follower of Jason Kearney's blog, Out Here In the Middle. He recently posted a great entry about the big causes of this crisis we have going on these days.

Social Security.

2008-09-21T12:49:00.000-07:00

Obama and McCain are both jackasses. This much is known. But Obama has been caught acting a damn fool again.

"Obama Criticizes McCain on Social Security

DAYTONA BEACH, Fla. — Senator Barack Obama delivered an ominous warning to Florida voters on Saturday, suggesting that Senator John McCain would “gamble with your life savings” by investing Social Security money in private accounts that could be affected by the roiling financial markets.

While Mr. McCain has not called for a full privatization of Social Security, he has supported the concept of allowing individuals to invest part of their payroll taxes in stock and bonds, and he has pledged to consider all options to prevent the program from going insolvent. But the idea has taken on a new air of political vulnerability because of the upheaval on Wall Street, which Mr. Obama sought to seize on as his campaign intensified its efforts in Florida.

“If my opponent had his way, the millions of Floridians who rely on it would’ve had their Social Security tied up in the stock market this week,” Mr. Obama told an audience here. “How do you think that would have made folks feel? Millions would’ve watched as the market tumbled and their nest egg disappeared before their eyes.”"

Let me tell you what Social Security privatization is. It would allow everyone who has a stake in the SS retirement system, i.e. everyone who has a job and pays into it, to control where it goes. Right now SS is invested in government bonds that pay 3.5%. Inflation is around 4%. Is the absurdity of this system showing up yet? The SS trust isn't even matching inflation.

So here's what we do. Either let young people like you and me opt out of the system (not pay anything in, not get anything out later), or let us control where the money that we pay in goes. It's all about personal freedom (something the left likes to think they support more than the right). If you want the old guaranteed way you can still choose to have your funds invested in the same government bonds. If you want something with a higher yield then you get to choose something with a higher yield. There are great mutual funds out there paying over 10% with minimal risk.

But I'll leave you with these facts: Ss is invested at 3.5%, inflation runs around 4%, and the stock market has averaged a little under 11% since its creation. That's an overall average, and yes, there are peaks and valleys. It loses money 1 out of every 4 years, but the overall average is almost 11%.

So tell me what's so horrible about people having a choice how their money is spent?

Great article.

2008-09-20T11:09:00.000-07:00

This is a great article written by Dave Ramsey.

Butt Scratching and Bass Fishing

"A couple of weeks ago, I worked late like I sometimes need to do to run my business. It was a nice Tennessee summer evening, and I was enjoying the drive home. About 7:30, as I pulled to a stop light a few blocks from my office, I noticed a light on in the corner office of a friend’s office building. Through the twilight I could make out my friend’s silhouette as he bent over his desk. Being a fellow entrepreneur, I knew what he was doing.

He was looking over some receivables. Some turkey hadn’t paid him, and he was trying to make his accounts balance so he would have the cash to make it another day. In that instant, I had a flashback to some of the ridiculous statements I’ve been hearing on the talking-head news channels and from some individuals during this political year. And I’ll be honest—I instantly felt the heat of anger flow through my body.

Let me tell you why. You see, my friend who I saw working late—we’ll call him Henry—is a great guy. He’s what you want your son to grow up to be. He loves God, his country, his wife, and his kids. He didn’t have the academic advantage of attending a big-name university. Instead, he started installing heating and air systems as a grunt laborer after he graduated from high school. He was and is a very hard and diligent worker, and before long, the boss taught him the trade. But when he was 24, after 6 years of service, the company he was working for got into financial trouble and laid him off.

Henry still had his tools, so he bought an old pickup to haul around his materials and tools, and suddenly he was in business. He knew about heating and air-conditioning, but not about business, so he made a lot of mistakes.

He persisted. He took accounting and management at the community college to learn about business. He started reading books on business, HVAC, marriage, kids, God, and anything else someone he respected recommended. Today he is one of the best-read men I know. Soon, because of his fabulous service and fair prices, he developed a great reputation, and his little business began to grow.

Henry started 15 years ago, and now he has 17 employees whose families are fed because he does a great job. He is in church on Sunday and seldom misses his kids’ Little League games. Sometimes he has to miss a game because some poor soul has their AC go out in the 96-degree Tennessee summer heat, but Henry makes sure they are served. He is, by all standards, a good man. He is, by all standards, what makes America great.

Henry and I are friends, and so he asked me some financial questions last year. I learned in the process that his personal taxable income last year was $328,000. I smiled with pride for this 70-hour a week guy because he is living the dream.

At the stop light that evening, I also thought of another guy I know—and that is where the anger flash came from. We will call him John. While John does not have the same drive Henry has, I can say that he, too, is a good man.

John also graduated from high school and did not attend a big-name university. He went to work at a local factory 15 years ago. When 5:00pm comes around, John has probably already made it to his car in the parking lot. He comes in 5 minutes late, takes frequent breaks, and leaves 5 minutes early. However, to his credit, he is steady and works hard.

Over the years, due to his steadiness and seniority, he has worked his way up to about $75,000 per year in that same factory. He seldom misses his kid’s ballgames, but most nights you will find him in front of the TV where he has become an expert on “American Idol,” “The Biggest Loser,” and who got thrown off the island. When he is not in front of the TV, he spends a LOT of time and money bass fishing on our local lake. He never works over 40 hours a week and hasn’t read a non-fiction book since high school.

This is America, and there is nothing wrong with either set of choices. Nothing wrong, that is, until the politicians and socialists get involved ...

I have seen several elitist people on the talking-head channels make the statement lately that people making over $250,000 per year have a “moral imperative” to pay more in taxes to take care of the country’s problems. This is not only infuriating—it is economically, spiritually, and morally crazy!

Where in the world do these twits get off saying that Henry should be punished for his diligence? If you are John, where do you get off trying to take Henry’s hard-earned money away from him in the name of your misguided “fairness”? If you want to sit on the lake, drink beer, scratch your butt, and bass fish, that is perfectly fine with me. I am not against any of those activities and have engaged in some of them myself at one time or another. But you HAVE NO RIGHT to talk about “moral imperatives” about what other people have earned due to their diligence. That money is not yours! You want some money? Go earn some! Get up, leave the cave, kill something, and drag it home.

We are in a dangerous place in our country today. A segment of our population has decided that it is the government’s job to provide all of their protection, provision, and prosperity. This segment has figured out that government doesn’t have the money to give them everything they want, so somebody else has to pay for it. That is how the “politics of envy” was born. “Tax the rich” has become the mantra of the left, and this political season it has been falsely dubbed a “moral imperative.”

Ninety percent of America’s millionaires are first-generation rich. They are Henry. To tax them because you think it is a “moral imperative” is legalizing governmental theft from our brightest, most charitable, and most productive citizens.

If I can get a law passed that says you must surrender all your cars to the government because it is the “moral imperative” of anyone who owns cars to support the latest governmental program, that would be a violation of private property rights and simply morally wrong. This new “moral imperative” to redistribute wealth is no different from that. It’s the SAME THING!

Please, America, re-think the politics of envy! You are sowing the seeds of our destruction when you punish the Henrys of our culture.

If you think taxing the populace to support government programs is the best way—and I don’t—then at least tax every single person the same! There are very few Henrys out here who would squawk much about paying a set percentage of their income—if everyone else did, too. But this idea of some butt-scratching bass fisherman saying government should tax his neighbor and not him—just because his neighbor has succeeded—must stop.

So the next time an elitist media talking-head starts telling you it is the moral imperative of our culture to tax my friend Henry, change the channel.

The next time you see someone wealthy who feels guilty and is preaching the politics of envy, change the channel.

The next time you see some celebrity who feels guilt over their income preaching socialism, change the channel.

And the next time you run into a misguided, butt-scratching bass fisherman who says the evil rich people in our culture should have their private property confiscated because that is fair… well just shake your head walk away—and make sure to vote against his candidate. If he and his type win, God help America."

Why mortgage tax breaks are bullshit.

2008-09-16T12:44:00.001-07:00

I suppose I'm being too harsh. It's not the tax breaks that are bullshit, it's that people will hang on to their mortgage, paying only the minimum, because they think they're smart to "keep the tax break".

Say there's a person who has a good job paying $130,000 (28% tax bracket).

They get a house, put 20% down ($40,000) to avoid PMI, and puts the other $200,000 on a 30-year note at 6.5%.

The mortgage tax break comes in the form of interest deductions. For the amount of interest you pay to the bank in a given fiscal year, you'll get to deduct, or not pay taxes on that amount. In other words, the amount of interest is deducted from your overall earnings.

The interest they'll pay for the first year with this mortgage is $11,861.92. That means that they'll get to deduct $11,861.92 from their overall earnings for that year. With me so far?

Well, normally they'd pay $30,382 in taxes, ending up with $99,618 after federal income taxes.

But they get that tax break, right? So they get to deduct $11,861 from that original $130,000, which, in the 28% tax bracket, will end up saving them $3,321 in federal taxes.

So, because it's so smart to keep your mortgage for as long as you can for the tax break, this person will pay a bank $11,861 in order to avoid paying the government $3,321. Keep in mind that this figure doesn't include home owners insurance, home owners association dues, unexpected repairs, and local and state property taxes.

Does that sounds smart to you?

I mean, the tax break is a nice perk, but it's hardly worth not paying off your mortgage early if you have the means.

Our great country needs change.

2008-09-04T22:13:00.000-07:00

I'm not too far right to admit it. The United States needs change. The past 8 years have been atrocious, wasteful, and at points, very bad for our country as a whole. The national debt has doubled. We're running a huge budget deficit this year. The economy is so close to recession it could tickle it on the ass and make recession giggle with glee. Inflation is on the rise. Social security is going to go bankrupt. Our troops are too far stretched that if we really needed to defend ourselves on the home front we'd have to rely on the 5 national guardsmen that are still stateside and various state militias. The dollar's value is the lowest it's been in a long time. Peoples' incomes are being stretched more than ever. The price of food is up.

So what's a country to do? Well, it can elect change. That's a good choice.

So what can be changed?

The economy? The president doesn't control the economy. Not even close. He can influence it by signing new laws, but that's such a small influence it's not worth counting on. Even if he did, the economy doesn't need ANY HELP right now. The best thing we can do is leave it the hell alone. No more "economic stimulus packages", and no more believing everything that the big media says. I once heard a writer say "The media has correctly predicted 2 of the past 36 recessions." There's a lot of truth to that. The economic slowdown we're experiencing now isn't Bush's fault. Get over it.

How about the deficit? Yeah, this has got to change. But here's something that's going to blow your mind; the deficit can be solved without raising taxes. *gasp* I know, hard to think of, right? We should cut the federal budget in half. This would mean no more war, less wasteful spending, and (here's the hard one) decrease the amounts of entitlements given out. Entitlements are one of the biggest wasteful spending items, and one of the most abused. Another thing that needs to end is corporate welfare. It's estimated that the government loses $92 billion a year because of corporate welfare.

How about this social security problem? The baby boomers are going to be retiring en masse soon. Again, the easy fix is to raise taxes. Raise the payroll tax rate, get rid of the FICA income cap, and get that sweet dolla' rolling in. Obama of course has expressed interest in doing both of those things, although if memory serves me he's against raising the $102,000 cap, which is at least not too bad. Now for the real solution: We need to privatize social security. SS retirement benefits were never meant to provide and actual income to retired persons, it was meant to provide extra spending money so little old ladies could buy their hard candy. It was meant to argument a person's life savings. But for so many people it's a crutch. You know what I say? I say decrease benefits for the baby boomers. Decrease them by at least half. The baby boomers have known about this problem their entire lives, and they've done absolutely nothing to prevent it. Bush tried to do something in 2000 but special interests shut that plan down. They don't deserve the retirement benefits. They paid into the system, but they knew it was broken all along and did nothing, so now our generation is going to have to deal with the repercussions. Give me the form and I'll opt out of the SS retirement system. I'll be the first to sign my name, releasing the government from having to provide me anything during my retirement. I'll be the guinea pig, and I'll show people that you can provide for your own retirement (just like people did before Mother Government did in the 30's).

The troops? Bring 'em home. Iraq wants a timetable, so give it to them. I believe we already have one. 2011. That's good.

Inflation? Let's stop the Federal Reserve from inflating our money supply. When the "mortgage crisis" hit, they lowered interest rates and pumped money into the system. This decreased the value of the dollar, made it easy to get credit, and punished investors, including the elderly who are trying to provide steady income with CDs, money market accounts, and high-interest savings accounts. When the Fed lowered rates, my savings account rate went from 1.5% to .25%. We have a lot of money in a money market account and we're only getting 1.98%, when a year ago we would've been getting 4-5%. Lowering rates rewards debt and punishes investors.

Also, to clear something up, there was never a "mortgage crisis", there was a sub-prime mortgage crisis. There WAS NOT a rise in the number of foreclosures for traditional mortgages, just for sub-prime, adjustable-rate, straight from hell mortgages. The people being foreclosed on weren't all defenseless people 'just trying to make it, most were dumb shits who thought they could cash-flow a heavily leveraged investment property, or people who bought into the whole "house-flipping" fad. The rest of them were people who bought way too much house than they could afford. These people DID NOT deserve a bail-out.

So what's a country to do? Elect the hotshot first term senator who's barely on the Senate floor, will push a socialist agenda, raise taxes, increase spending and entitlements, and will almost certainly be picked as prom king? No, that would be awful for the country. So we should elect the elderly, forgetful, often be-frazzled veteran of Congress? Well, he's done a lot to fight wasteful government spending, but he still has many problems.

So, you probably could guess, I'll be voting for McCain, albeit begrudgingly.

But why am I voting for him? Tax policies.

I'm in college for one reason and one reason only: to make myself marketable enough to get a good job. You never go to college to make less money.

McCain wants to create an alternative flat tax system and let Americans choose which system to use (old or new) depending on which saves them the most money.

He wants to get rid of the AMT, which is sucking more and more money out of the middle-class every year.

He wants to lower the corporate income tax which will do much more to keep businesses here in our country than any of Obama's tax-breaks (remember how much I hate corporate welfare?).

He wants to keep the capital gains rates low, unlike Obama who wants to raise it, seemingly based on general principle since it's been proven that federal revenue goes down when the CG rates are raised. How does this affect you? When you start working and saving for retirement you'll feel the crunch of the CG tax.

Say you invest $10,000 and you're able to get 8% average for 15 years. You make extra payments into the investment every month to the tune of $200. At the end of the 15 years you'll have an investment worth $102,738. You would have paid in a total of $46,000, making your earned interest $56,738. If you're in the 28% tax-bracket you'll pay 15% of your investment's gain to the government (all in the name of 'fairness'). So you'll only end up with $94,227, losing out $8,510 to the government. Plus you have to factor in inflation, which is about 4% every year. If Obama is able to raise the capital gains tax to something around the short-term rate of 28%, you'll end up paying $15,886 to the government (because you make too much damn money you greedy capitalist pig). You'll only end up with $86,851, not including 4% inflation. Factor in inflation and you'll end up with about $61,541, which would make your overall earning for the investment around 2.27%, which is only slightly more than our shitty money market is doing.

He also wants to kill the estate tax, which after a 2010 hiatus will go back up to the old rate of the federal gov't taking 55% of all estates worth over $1,000,000, which will kill an ungodly amount of small business. (so if you have a large estate and you're about to die, hold off until 2010, but don't live into 2011).

He's definitely not a perfect candidate but I'm a fiscal voter and since Ron Paul dropped out, McCain gets my vote.

Obama 's only plan is to tax the rich. Which brings me to my next bitch-about-town: Why tax the rich? Yeah they can afford to pay more, but they shouldn't have to. It's not fair. It's not morally fair, it's not ethically fair, it creates a large disincentive to earn, and it's economically inefficient.

90% of American millionaires are first generation. That means they left the cave, killed it, and brought it home. They didn't have help from daddy, or daddy's contacts, they didn't have any special hand up, and a good portion of them came from poor households.

The average millionaire is a small business owner (keep in mind that most employers in America are small businesses), most drive cars that aren't flashy, but rather are a few years old and well-kept, and the vast majority live in very reasonable houses.

Did I mention that most already donate a substantial amount of their income?

Our country needs more self-reliance, without the false sense of entitlement and the 'gimme gimme' attitude. The progressive-left, welfare, and class warfare have turned us into a bunch of whiny babies. Redistribution of wealth is inefficient, and most importantly un-America.

Back to Obama's tax-policies.

It really is a shame. America was founded as a place of equality, where someone can come and make millions. We are the greatest country in the world, and "progressive" interest will stop at nothing to turn us into a quasi-European welfare state. Those are some pretty harsh words, but somebody has to say them.

Progr essive taxation does nothing but reinforce the thought that we're all different. The whole idea of progressive taxation is based on nothing more than fiscal jealousy. Supporters say that "everyone, despite how much they make, must have a tax burden that hits them as much as the bottom bracket is it". In other words, a person making $200,000 must be hit as hard by income taxes as a person making $15,000. That's hardly the reason why they support it (in America at least).

It's all about fiscal jealousy. The idea that "if I can't have it, no one can". It's an asinine thought process. The liberal, democrats, and so called progressives can't stand that some people make more money than other people. But that's not even the real reason, or at least the main one. All the progressives that are hawking the idea of a European-esque socialist utopia are just doing it for the votes. Who do you think there are more of, the wealthy or the poor? Who do you think is going to rely on Mother Government more, the wealthy or the poor? Who has the greatest numbers at the polling booth, the wealthy or the poor?

I crack up when they point out that "the vast majority of the wealthy people either didn't work for their money or they had a tremendous amount of help from their daddy's connections." Never mind the fact that almost 90% of millionaires in the U.S. are first generation, meaning they built that wealth without daddy's help.

Wealth building takes a certain kind of person, and if you're not willing to control your habits you'll never build wealth. The typical millionaire drives a 3-4 year-old car, invests, has a good amount of self-discipline, has a household budget, they didn't get rich quick, they don't gamble or play the lottery, and they don't buy mansions that could hold 303 elephants.

People who are jealous about not being rich are usually the ones who play the lottery, buy as much house as they can barely afford, buy new cars every 3 years, and go out to eat way too often to show people that they have money. Most actual millionaires aren't concerned about letting people know about their wealth.

Speaking of un-American acts, let's talk about the oil companies.

Take, for example, Obama's plan for a windfall profits tax on the largest domestic oil companies. Ask your parents how that whole idea went down in the 70's. He also bitches about the subsidies (Which I'm also against, but for a much different reason. We wouldn't need subsidies if we lowered our horrendously high corporate income tax rate). The argument about the oil company tax breaks is such a nonsensical argument on his part. If he thinks that taking away tax subsidies is going to lower prices for consumers then he needs to go back to college and take a couple of economic courses.

The oil companies aren't making out like bandits like everyone seems to think they are. There profit margin is fairly low for as large of a business as it is. Exxon Mobile posted the biggest profit ever made in the history of man last quarter. The left see it as too much, but nobody seems to realize that Exxon Mobile is the largest company on the planet, dwarfing even Wal-Mart (which is the second largest).

It's also important to realize that only about 1% of domestic oil company stock is owned by their rich CEOs. Roughly 50% of domestic oil companies stock is owned by individual investors (i.e., people like me who invest on Scottrade because we know the government isn't going to take care of our retirement, nor do we want it to). The other roughly 40-49% of oil stock in America resides in 401(k)s and pension funds. These are the same 401(k)s and pensions that millions and millions of Americans are relying on for their retirement, including teachers, firemen, and police officers.

Taking away from oil companies' bottom lines will drive gas prices up and drive their stock prices down, along with million of American's retirements. If one was twisted enough one might conclude that Barack Obama is wanting to make people more reliant on government help by reducing peoples' individual retirements. I don't buy into this, but I've heard people say similar things.

Anywho, Obama's plan is a horrible one. But I think most importantly, it goes against everything America was created for. In socialist-Europe it may be okay for the governments to dictate what a "reasonable profit" for companies to make is, but America was founded by brilliant men on capitalist principles. Windfall profit taxes are un-American and will raise prices for the consumer.

What about Obama's federal income tax plan? Well, it's going to indirectly increase the tax burden on the middle-class.

"But Michael, Obama's plan will LOWER taxes for 95% of Americans!!! You don't know what you're talking about!"

An Obama presidency would be HORRIBLE for the middle-class.

Sure, his tax plan lowers FEDERAL INCOME TAXES for middle-class earners, but the effects of his tax plan will create many tax-increases in other areas. He's expressed interest in raising the gas tax, energy taxes, a quasi-tax on the American people in the form of higher gas prices caused by not drilling our reserves to their fullest potential, capital gains tax, FICA taxes, estate taxes, and income taxes...

The list goes on. So, yeah, the middle-class families who get the tax cuts will have to deal with all of these, effectively negating their tax cut.

There are many reasons why Barack Obama shouldn't be our next president, but I think the issue of our money and financial security are paramount.

Hope I rustled some feathers. It seems to anger people when I point out that Obama is not the Second Coming.

Cheerio.

The importance of starting early.

2008-08-16T13:37:00.000-07:00

This is a political blog, but I find that peoples' security is just as important as my whining about a certain Marxist Democratic candidate and a certain wimpy Republican candidate. I intend to show that you can retire in comfort without the help of Mother Government.

This is a spreadsheet about how much a Roth IRA can make you if you set it up correctly and have the self-control to actually save your money instead of blow it on stupid things.

This spreadsheet doesn't take into account that at age 50 you are able to save $1000 more per year than people below the age of 50. I was trying to make the scenario fairly conservative in its expectations. It als0 doesn't include other such investments that you'll undoubtedly make such as non-sheltered stocks and mutual funds and you're house's equity. It's also is very conservative in that normally a person around 50 years of age will be able to pay much more than $1500 into investments every month.

I know my pushiness about all things finance gets old, but if you want to retire in style (or at least moderate comfort) you'll need to start early and be diligent.

Income inequality rising, and the bullshit that ensues.

2008-06-01T18:29:00.000-07:00

I've been a devoted follower and cynic of the Progressive Intelligence and Opinion blog for many months now. There are many things that we disagree on, and a few things that agree on. This post is about one of the things we disagree on. Really disagree on. His new post, "Mindblowing inequality isn't just unfair but inefficient!"

(Never mind the fact that "mindblowing" isn't one word)

From what I've read about him he was born in the U.S., grew up in Germany, and moved back here, fully indoctrinated with that good ol' European socialist attitude.

He's had many-a post about the travesty of income inequality. With this blog, I'll show that not only are most claims of income inequality and wealth distribution grossly overstated, but that rich people being rich doesn't cause poor people to be poor. Imagine that.

Here are some income distribution facts from the U.S. Census Bureau.

Household Income Group % of Total Income Income Range
Lowest 20%------3.4%------$0-18,500
Second 20%------8.7%------$18,500-34,738
Third 20%--------14.7%-----$34,738-55,331
Fourth 20%------23.2%-----$55,331-88,030
Highest 20%-----50.1%-----$88,030 and up

The top 20% has roughly 14 times the total share of money than the bottom 20%. For a comparison, in 1971, the top 20% had only 11 times the share of total money than the bottom 20%.

But why is this? Is the same old saying "The rich get richer and the poor get poorer" true? Well, while a rich person has more money to invest (more on savings amounts later), and thus more of an opportunity to invest and earn more interest than someone at the bottom, income inequality has not risen by that much over the course of the 33 years in question.

The overstating of income inequality in our country is due in large part to two factors:

1. Measurements of inequality don't take into account in-kind transfers (medical assistance, food stamps, etc.).

2. The inequality expressed was taken from one point in time.

There are other things that come into play, such as immigrants and mindsets.

The steady increase in income inequality in recent decades is due largely to increased immigration. Between 1970 and 2000, foreign-born population in our great country increased from 9.6 million to 31.1 million. The percentage of the U.S. population that is foreign-born increased from 4.7% in 1970 to 11.1% in 2000.

Immigrants' median annual income is about 15% lower than native-born Americans. This is why the gap between the top and bottom groups has increased.

However, income is even more equally distributed after taking out taxes and in-kind (food stamps, medical assistance, etc.) transfer payments. The current measure of inequality is skewed by this lack of inclusion.

Higher incomes pay a higher percentage of their income in federal taxes, but in-kind transfers are received disproportionately by lower income households.

Another way that inequality is overstated is that the distribution of money income expressed above overstates the actual degree of income inequality by focusing on income distribution at one point in time.

A large chunk of the people in the lowest 20% of households are young people at the start of their careers. Most of these young people will move into higher income groups as their careers progress and they develop more human capital (developed ability that increases a person's productivity).

If career incomes were compared or if incomes were compared for households at the same career stage the gap between the highest and lowest would be much smaller.

Wealth distribution is also overstated. This is caused by the measure of wealth distribution comparing different people at different career stages. Comparing the wealth of a 60-year-old to the wealth of a 25-year-old overstates the inequality.

Wealth distribution is also overstated because human capital is NOT included in measuring wealth. For most people, their human capital is the most valuable asset owned. An example would be a 25-year-old recent Harvard Law School grad may have very little accumulated wealth in terms of physical assets, but the Harvard Law degree is very valuable human capital.

These are the causes of the continuing income inequality, which people might find interesting.

1. Natural ability: Some people are born with skills in math, music, or athletics. A person with a high level of marketable natural ability may earn a higher income than a person with a lower level of natural ability.

2. Human capital: Mean earning increase as education levels rise, but, again, a degree in chemical engineering and a degree in elementary education will have different earning potential in the marketplace.

3. Work and leisure choices: Contrary to popular belief rich people don't just sit back and make money off the backs of hardworking proletarians. Most people who've accumulated much wealth and have high earning potential have worked incredibly hard for it.

4. Risk taking: People differ in their willingness to take risks. An example would be that self-employed entrepreneurs make up a disproportionately large share of society's millionaires, but they also make up a disproportionately large share of those filling for bankruptcy.

5. Employment discrimination: This occurs when employees make hiring, promotion, and pay decisions based on factors unrelated to employee productivity.

6. Luck: A person can have good luck (winning the lottery) or bad luck (suffering a debilitating illness). Most people experience a mix of good and bad luck.

There will always be poverty, because honestly a lot of it has to do with how impoverished people think. They don't seek out wealth, but rather they tend to think that wealth shows up on its own. Wealth doesn't just come up and bite you on the butt, contrary to popular belief it seems.

Wealthy people aren't born trust fund babies 100% of the time; in fact it's quite the contrary. 90% of all millionaires in the U.S. are first generation, which means they left the cave, killed it, and brought it home. Their thought processes are different from people living in perpetual poverty. If you wants some more information about what the typical millionaire is really like check out Thomas J. Stanley's books The Millionaire Next Door and The Millionaire Mind.

Poverty isn't the fault of government and it's certainly not the fault of rich people. The majority of the problem rests with the people. The government and the already-wealthy are just easy targets.

The wealthy also differ in their savings rate. The average millionaire focuses on saving, investing, and building wealth, and not on spending their money on frivolous items. It is much easier for the wealthy to save money, as they need only save a small percentage of income rather than the larger chunk that must be saved by people with lesser incomes.

So again, don't buy into the fact that millionaires are automatically evil. Most are self-made, first generation, good-hearted people who live in modest houses, drive used cars, and take the time to learn about wise investing.

I'll leave you with this: Making rich people poorer doesn't make poor people richer.

So take your God damned socialism back to the Old World, buddy.

Obama's Answer

2008-04-14T00:30:00.000-07:00

A quickie here.

I'm watching CNN's "Compassion Forum" and Barack Obama and he was asked what he would do to reduce poverty in our great country.

Before he even opened his mouth I knew where he would go with his answer.

He talked briefly about the banking industry, but quickly went on to the tax code.

He talked about how people at the bottom pay too much and how George Bush's "tax cuts for the rich" were hurting the lower and middle classes. Now, for now we'll forget that Bush's tax cuts lowered not only the top rate from 39.5% to 35%, but also lowered the bottom rate from 15% to 10%.

Let's forget all of that for a second. How does giving people at the top tax cuts hurt poor people? Other than decreased government revenue, how is that directly affecting people at the bottom? It doesn't. The reason that tax breaks for the rich haven't worked in the past three decades was because the revenue cuts weren't met with cuts in government spending.

Let's just make this clear: Making the rich poorer does not make the poor richer.

I just had to get that off of my chest.

People make stupid decisions.

2008-04-02T13:29:00.000-07:00

It's a fact of life that people are inevitably going to make stupid decisions. Kids do it, teens do it, adults do it, and seniors do it. Republicans do it, Democrats do it, Socialists do it (a lot),
and independents do it. Every race does it, every religion does it, every government does it, and every meteorologist does it. There is no way around making stupid decisions.

But the mistakes I'm talking about today were made by people who are on the news all the time and yet are never named. They are the people that are facing foreclosure because they got into a house they couldn't afford.

Now before I get the liberal smack down argument that the predatory mortgage lenders are at fault, let me say that I halfway agree. The mortgage companies are like a good portions of Americans; they think about the short term, not the long term.

The problem that many people are facing these days with their homes is a big one, and apparently one that the government thinks they need to solve. More on that later.

***Let me make it clear that the "crisis" only pertains to sub-prime mortgages. Foreclosures are up for people who borrowed sub-prime loans, but not for regular, traditional mortgages.***

I've heard many arguments about who's at fault for the sub-prime mortgage crisis. The lenders, the government, the Fed, and I've even heard the nation's rich people are to blame because they make the people who don't have as much money envy them.

Like I said above, the blame partially resides with the unethical lenders, who in order to make a quick buck lent money to people who couldn't afford the payments or the principal. But the main blame resides with the people who borrowed the money.

They weren't forced to borrow the money, they were just mislead by what we many call the "right" of all Americans to own homes.

Owning a home isn't a right in America, it's a privilege for those who earn it and can afford it.

We've become a nation of "gimmees" and takers. A good portion of the population it seems thinks that everything needs to be handed to them by the government and that rich people should foot the bill for their wants. I, of course, am completely against this way of thinking.

I don't see why people think that the government needs to intervene with everything. People think they need to stop the recession and that they need to stop the mass foreclosure. I just can't help but wonder why. Why is it the government's responsibility to help people that made stupid decisions? IT'S NOT! It's that simple.

I'm sure if you ask around you can find many people age 25 and older who got themselves into deep trouble and had their parents refuse to help them., and I guarantee you that whatever that experience was it made them stronger, more responsible, and more apt to deal with their problems themselves instead of relying on other people to bail them out. There should be more accountability with people that make stupid decisions.

I know it sounds mean, but people need to face the consequences of their actions, and if that involves losing their house and having to start from scratch then so be it. It will make them stronger, more appreciative of things they have, and much smarter about how they go about it the next time around.

I think that Americans' collective idea that we deserve everything is partially to blame for this problem of buying things we know we can't afford. That's why the average American has around $9,000 in unsecured credit card debt.

We Americans have lost sight of the old way of doing things. We used to buy frugally. We used to pay for things with cash only. Hell, people used to save up and buy houses with cash! Imagine how many people would make fun of you if you did that today.

"Well that's stupid! Why are you doing that? You'll lose your tax break! C'mon, lemme show you how it's done..."

America, here's a piece of advice that a very smart and responsible man once told me: Don't take money advice from broke people.

Okay, so Dave Ramsey didn't say that just to me, but it's a good message nonetheless.

Just because you work hard doesn't mean that you deserve a house. You deserve it when you can afford it. And if you do make a stupid decision, you should deal with the consequences, not have the government bail you out.

Here's a little example of how one decision in your life can either make it great or make it regrettable.

In an economics class I heard the story of a 22 year old whose dad recently passed away. His son was the sole beneficiary of his $250,000 life insurance policy. Now what do you think would happen if you received $250,000 when you were 22?

He had two paths in front of him.

Path 1:

He could keep his job and continue school and take out$30,000 to pay for the rest of his college education.

250,000 - 30,000= 220,000

He could move out of his apartment and put a half-price down payment on a nice $150,000 house.

220,000 - 75,000 = 145,000

He could put $15,000 in a money market account or CD ladder as an emergency fund, reinvesting the interest.

145,000 - 15,000 = 130,000

He could then invest the remaining $130,000 in safe, growth stock mutual funds at a very realistic average of 12% until he retires at the age of 65.

130,000 x (1.12)^43 = 16,994,888

That's $16,994,888 that he'll have when he retires. If he continues school, gets his degree, at age 24 and finds a good job he could contribute $400 a month into mutual funds until he retires.

((400 x (1.01)^(41 x 12)) - 1)/.01 = 5,307,809

5,307,809 + 16,994,888 = 22,302,697

He would have $22,302,697 at age 65 before taxes just for making good decisions.

Unfortunately he didn't choose that path.

Path 2:

He chose this path.

He took the $250,000 and right off bought a $60,000 Ford Mustang Shelby GT500.

250,000 - 60,000 = 190,000

He then bought a $175,000 house.

190,000 - 175,000 = 15,000

Then, by the time he was done buying video games, booze, computers, and iPods, he only had about $1,000.

But don't worry. He did what he thought was the smart thing to do and put the rest of the money in his savings account with a 1% APY. So in 43 years he'll have $1,043.92. Boy, that's smart.

My point is that we all make stupid decisions. Whether it's turning what was meant to be a blessing into a bunch of useless things or buying a house that you can't afford, you shouldn't expect the government to bail you out for your stupid decisions.

Quiz

2008-03-14T15:43:00.000-07:00

I found this funny little quiz on another blog. But it originally came from here.

1) "We're going to take things away from you on behalf of the common good."

A. Karl Marx
B. Adolph Hitler
C. Joseph Stalin
D. None of the above

2) "It's time for a new beginning, for an end to government of the few, by the few, and for the few...and to replace it with shared responsibility for shared prosperity."

A. Lenin
B. Mussolini
C. Idi Amin
D. None of the Above

3) "(We)...can't just let business as usual go on, and that means something has to be taken away from some people."

A. Nikita Khrushev
B. Jose f Goebbels
C. Boris Yeltsin
D. None of the above

4) "We have to build a political consensus and that requires people to give up a little bit of their own...in order to create this common ground."

A. Mao Tse Dung
B. Hugo Chavez
C. Kim Jong Il
D. None of the above

5) "I certainly think the free-market has failed."

A. Karl Marx
B. Lenin
C. Molotov
D. None of the above

6) "I think it's time to send a clear message to what has become the most profitable sector in (the) entire economy that they are being watched."

A. Pinochet
B. Milosevic
C. Saddam Hussein
D. None of the above

Answers:

(1) D. None of the above. Statement was made by Hillary Clinton 6/29/2004
(2) D. None of the above. Statement was made by Hillary Clinton 5/29/2007
(3) D. None of the above. Statement was made by Hillary Clinton 6/4/2007
(4) D. None of the above. Statement was made by Hillary Clinton 6/4/2007
(5) D. None of the above. Statement was made by Hillary Clinton 6/4/2007
(6) D. None of the above. Statement was made by Hillary Clinton 9/2/2005

I couldn't help but laugh at how true it is. Of course most of her supporters will say those quotes were taken out of context, and they were, but the tone of the entire speech reflects the quotes perfectly.

"It's time for a new beginning, for an end to government of the few, by the few, and for the few, time to reject the idea of an "on your own"society and to replace it with shared responsibility for shared prosperity. I prefer a "we're all in it together" society. I believe our government can once again work for all Americans. It can promote the great American tradition of opportunity for all and special privileges for none." -Hillary Clinton May 29th, 2007

Expect a new post about income inequality and the reason it's increased within the next few days. Cheers.

Aren't politics odd?

2008-03-03T14:20:00.000-08:00

They are, and they're endlessly fascinating for me. I find it a bit amusing how people have voted so far in the primaries.

The conservatives haven't elected a conservative, and the liberals have gone incredibly far to the left (straight into socialist territory).

I ponder to myself why the Democrats would be fighting it out to elect a candidate so far to the left. Could it be that Obama and Clinton are the farthest away from the evil right, so they must be good? Maybe. Have the Democrats stopped thinking clearly and started to bow down for European-type socialism? Possibly. But I think that the real problem here is the left's hard on for pointless rhetoric. The right has this problem too, but it's not as bad as what we've seen lately with the Democrats.

Buzzwords like "hope" and "change" have become big, well, issues for the Democrats. This is all well and good, but shouldn't there be a little more substance in their campaigns? Promises of universal healthcare, getting the troops out of Iraq, their version of "fiscal responsibly" (which is their way of saying they'll be spending just as much as the current administration, but in different, much more popular areas).

It troubles me that in one of the early Democratic debates all of the candidates were asked a simple question: Raise your hand if balancing the federal budget is going to be one of your top priorities. I believe only two people raised their hands, and they weren't Obama or Clinton.

I'm a libertarian with very conservative fiscal views and some fairly liberal social views. Here's how my tiny little brain works:

1. Universal healthcare won't work

2. We need out of Iraq. Not because the strategy is not working, but because we can't afford it.

3. We need to cut spending. I'm talking CUTTING spending. The defense budget is obscene. We can protect our great country in a much more fiscally responsible fashion.

4. Pay our soldiers more and stop sending the National Guard troops overseas. Our troops risk their lives, come home, and are refused healthcare? This is shameful.

5. Stop socialism. I know that socialism has become a buzz-word that's not paid attention to, but we need to take a look at ourselves and think about why we're supporting socialist candidates. I'm not against all socialist programs. I love the postal service! They always get my Car & Driver to me on time. But that's about where I draw the line.

6. No more redistribution of wealth. I know that CEOs get paid too much, but unless you're a stockholder of that CEO's company, it's none of your business.

What's mine is mine. What's yours is yours. What's theirs is not ours. What's ours is not theirs.

How hard is that to understand? You're not entitled to my income, no matter how superfluous it is. You have no constitutional right to it, you have no moral right to it. If I chose to donate my money to worthy causes, that's my business. If I want to give my children my fortune, that's my business. If I want to give my family a large gift, that's my business. If I want to spend ludicrous amounts of my money buying expensive things for myself while other people can't afford to go to college, as big of a jerk as it makes me sound, that's MY BUSINESS.

It's none of your business, you're not entitled to my money, and your high taxes on income, both personal and corporate are hurting America. Oh snap, I said it.

Why is it that companies are moving their workforce to other countries? Yes, it is partly because of cheap labor, but I'd venture to guess that the main reason companies decide to make the switch is because the place in which they're moving has a much lower corporate income tax than America's. If we, I don't know, cut the corporate income tax rates they might be inclined to stay here despite the lack of cheap labor.

But back to the question I raised earlier.

Why is that the two parties are electing people who harbor views that are either very extreme (obama and Clinton) or very soft (McCain). McCain's views are not exactly the most conservative.

So why are we electing these people?

Comment and tell me what your opinions are.

By the way, I'm still rooting for Ron Paul. It's a shame he's been panned by the media powers to be.

Tax the rich!!!

2008-02-13T22:38:00.000-08:00

Tax the rich!!!

This is the battle-cry of the two remaining Democratic presidential candidates. Sounds good right?

I mean, think about it. Those damn richers make so much, and they're all evil. Every cent of their fortune is somehow stolen from us folks at the bottom. We need retribution! They make too much! They don't deserve it! KILL!

This little ditty is sung in many-a middle-class home. Should we blame them for thinking this way? No. I mean growing up I was always told that life isn't fair, and it isn't. But should we really be taxing the rich on general principle? I don't think so. There are so many loopholes in our much-too-extensive tax code for the rich. You know what I say? Stop bitching about it and fix it! I see the loopholes as a sort of built in, accidental anti-socialism device. But there is a serious injustice that the rich pay less than a lot of middle-class families do.

But what to do... What to do...

In a perfect world we wouldn't have the government taxing our money that we earn. But Ron Paul has no chance, so we can forget this.

How about the FairTax? I personally don't like it.

Taxes on consumption are regressive, but this is remedied by a tax pre-bate, making it a fairly progressive structure. It would most likely fall of near the top of the ladder and the middle-class would end up paying a bulk of the taxes.

The real reason I don't like it is admittedly a little selfish. I'm in college and due to student loans my net worth is in the red. I don't want to have to pay a 23% premium on my various retail purchases at this point in my life. Or ever really.

So what about the flat tax? A 10% federal flat tax on every earner's income. How about we sweeten the deal? Let's let everyone with an income lower than $35,000 pay no federal income taxes.

$0-$35,000: 0%

But wait, there's more. How about in the $35,000 to $80,000 bracket we only put that up to 5%

$0-$35,000: 0%
$35,001-$80,000: 5%

It gets better. Everything above $80,000 is taxed at 10%. No matter if you make $90,000 to $1.2 million.

Okay, so it's not a flat-tax anymore, but it's a nice compromise. Well hell, it's the only progressive tax I'd ever endorse.

What's that? You say it's not fair that someone can make more money than you and pay the same taxes? Suck it up and innovate. Work that brain of yours, find a way to better the world and make yourself a profit.

If you want to make millions but the corporate ladder is just too big, then quit your whining and do something productive. Don't just be jealous at the CEOs who make $38 million a year.

You say they're overpaid? Yeah they are. Why don't you buy some stock in the company and go to some stockholder conferences and express your concern.

Before we all cry out "tax the rich more" we need to be looking at all of the problems.

- The government needs to spend less. Yeah, this means cutting back on unnecessary programs, which includes a lot of wasteful social programs.

Before you go calling me a horrible person without a heart let me say this: I'm not against social programs for the truly needy, the truly disabled, or the truly sick. Medicare, Medicaid, Disability; I'm not against these. My father paid into the system his entire life and became medically disabled (the real kind, not the 'I slipped in Wal-Mart' kind). He's on disability. Anybody who pays into the system and can truly not work is entitled to the money they were forced to pay in. Medicare and Medicaid need to be managed more efficiently. Social security needs to be partially privatized. We need to stop electing people who are hemorrhaging our tax dollars away on pet projects and unnecessary wars.

- We need to stop with the jealousy.

It's an epidemic in this country. I'm a dirt poor 21 year old who's financing his college education. Have an image of me yet? Well, let me alter it. I've started up two business since I was 15. I detailed cars before I could drive. If you had never seen one of the cars I worked over you had never seen a clean car. I would rock the toothbrush and q-tips for hours to earn my money. I'm now a photographer who works very hard for my money. I spend hours fine tuning images so that families can have memories for years and years, and I earn every penny.

-We need to lower the income tax for corporations.

I know, it hurts me even to type it. But if we don't do something about companies moving over seas for the tax benefits we're going to be in deep trouble. I'm not talking about subsidies, I'm talking about the income tax rates on a federal level.

- We need to stop with the double taxation.

Retired people who are collecting on social security shouldn't have to pay taxes on their benefits even if they are still earning income after they retire.

- Don't start wars unless Congress votes for it.

Hopefully we can stop electing morons to run our country before we have to do this again.

- We need to scrap the party systems and vote for people.

Too much loyalty comes from political parties. Loyalty isn't a bad thing, but when people vote for their parties' candidate even when they completely disagree with their views it's going overboard. The two party system rips America apart and creates an environment that makes it very difficult to get important things done.

- STOP FINANCING THE GOVERNMENT WITH CHINA'S MONEY

If you don't understand this one, go stick your head in a toilet, because that's where it belongs.

- We need less political correctness.

It's ridiculous and a waste of brain power to whine about somethign that's not PC.

- We need a more transparent government.

I hate to quote a trendy movie, but people shouldn't fear their governments, governments should fear their people. All the secrecy in the government is aimed at creating fear in order to incite mass loyalty.

- Let gay people have the same benefits as straight couples.

Whether you call it a marriage or a civil union, that's fine, but love is love, and if two HUMANS commit to each other for the rest of their lives then they deserve to have the same benefits as more politically correct couples.

- We need to respect peoples' private property and other personal rights.

Eminent domain needs to be struck down by the high courts. Just because a condo-complex will bring more tax revenue to a city than the row of small houses that sit on the land now doesn't give the city the right to seize the land and sell it to condo developers for a reduced price.

- Stop whining about people with guns.

I don't like guns, but I really don't trust the police to protect me. Strengthening gun control is fine, but radical liberals wanting all guns to be seized or destroyed need to realize that guns are here to stay, like it or not. Taking away guns from everybody isn't really taking away guns from everybody. Anybody worth their weight in cheesecloth can figure out that it wouldn't do a damn thing about guns within the gang, drug dealing, and general crime rings. It would just leave honest people defenseless.

- Stop worshiping celebrities.

Good God please stop caring about Paris Hilton's bajingo.

- Go to church

Any church. If not for the faith aspect, then for the therapeutic aspect. You don't have to believe in it to enjoy it.

There are many more reasons, but it 1:26 in the morning and I'm working on getting rid of a migraine.

But when it all comes down to it, as depressing as it is, change will not happen anytime soon (No matter what Barack Obama says).

The rich are always going to get richer, the politicians are always going to be greedy and corrupt, celebrities are always going to attract unnecessary attention, liberals are always going to hate conservatives, conservatives are always going to hate liberals, Rush Limbaugh is always going to be a fat artard, the government will always over-spend, people are always going to be jealous of people who have what they want, governments are always going to infringe on personal rights and be secretive, and people will always laugh at racial jokes in private but will always decry them in public.

What shall we do? You tell me. Leave a comment with your thoughts.

Invest young or have fun and do it later?

2008-02-04T18:47:00.000-08:00

I have many friends, but only two or three that actually invest. I see this as a major problem. This is directed towards my friends and other young people that aren't investing.

Consider this:

Most of my friends on myspace are a year or two above or below my age and a good portion of them have a job.

So what are you making? How much do you work?

I'll assume you work for $7.00 an hour, 28 hours a week. That's $196 per week before taxes. You get paid once every two weeks. We now have $392 before taxes. Last time I was working I had 17% taken out of my paycheck.

392(1-.17) = 325.36

So if you're getting $325 every two weeks what do you have to pay?

I'll take these two into consideration. I wouldn't expect a 20 year old living with their parents to pay much more.

Gas: ~$30 per week ($60 for two weeks)
Phone: ~$50 per month ($25 allotted every two weeks)

So that's $85 that needs to be taken out of every pay check. That leaves you with $240. If you're like me you like a beer with dinner, so that's about $10 a week. You'll need fast-food allotments; $25 for two weeks. You'll also need blow money; $60.

This leaves you with $135 from every paycheck.

Now I have no idea what your spending habits are, this is just a rough estimation.

Say you took that $135 and put the $35 into a savings account (to have emergency money on hand) and the remaining $100 into a growth stock mutual fund.

So every paycheck you'd be building your savings account with emergency money and you'd be funding a retirement account.

So what can $100 turn into if it's not spent on pointless things? Well, let's see:

Say we put the $200 a month (from two paychecks) of investing money into a mutual fund that averages 8% (a pretty conservative fund considering the overall average of the market has been almost 11% since it was created).

Let's fit this into the future value of an annuity equation.

$200 a month at 8% interest for, oh, let's say, 10 years.

200 being the monthly payment, .006666666667 being the interest rate (8%) adjusted in monthly increments, 120 being the amount of months in 10 years.

200 x ((1+.006666666667)^120-1)/.006666666667 = 36589.21

That comes out to $36,589.21 you'll have in 10 years.

$24,000 in principal, which means your $200 a month has earned $12,589 in 10 years. That might not seem like much, but it's a very conservative estimate considering your income will most likely grow considerably throughout those 10 years, enabling you to put more into the investment.

Say after the ten years you've kept to your guns and not gone into debt for silly things like TVs and other toys, and have managed to stay away from new cars (the number one mistake that college graduates make is buying the new car right when they get a job because they "deserve it") and you want to start investing more heavily into your future.

Now we're going to be hitting the market more aggressively.

$1200 a month into a mutual fund averaging 10% for 10 more years. We use the same formula.

1200 x ((1+.008333333333)^120-1)/.008333333333 = 245813.97

$245,814

Now include your previous investment that's been sitting in that same 8% fund for the past 10 years.

245,814 + (36589(1.08)^10) = $324,807

So you're 40 years old, have no debt other than a mortgage (unless you've managed to pay that down also!) and you've got a bitchin' emergency fund and $324,807 sitting there gathering that good ol' compound interest.

So you get a nice promotion and you keep sticking to your guns. You move all of your investments into that 10% fund and keep adding $2200 a month for 10 more years.

(324807(1.1)^10) + (2200 x (((1+.008333333333)^120-1)/.008333333333) = 1,293,124

That $1,293,124 at the ripe old age of 50.

You want to have $1.2 million when you're 50? We should all be so lucky. And if you want to retire at 60 and you let that $1.2 million compound at 10% for ten more years, you'll have $3,354,030. Without even adding anything for the last 10 years!

If you kept adding $2200 a month you'd have $3,804,688!

(If you upped the monthly payments to $3000 you'd have $3,968,565!)

Now let's tally up the amount you put into the investment.

The total principal if you invest for 10 years at $200 a month, 10 years at $1200 a month, and 20 more years at $2200 a month.

You would have put in a total of $432,000. That's an interest amount of almost $3.4 million dollars, all because you decided to start early and live like no one else so later you could live like no one else.

Say you plan on living to the age of 95. You've got a solid 35 years left. After you retire you could draw out $120,000 a year.

After today's capital gains tax (fancy way to say the government is stealing from your investment gains) of 15% you'll have approximately $102,000 before other federal, state and local taxes.

But the great thing is you could take out quite a bit more and still have your large nest-egg compounding in a safer, more conservative fund. There'll be plenty of money for you to live on, your healthcare, your funeral, and a little left over for donating or to give to your family.

My point is, Social Security isn't going to take care of you. You're going to have to start retiring sooner or later, and if it's later it'll be much harder to catch up. Buying stupid shit like new cars and other things is not going to help you in the long run.

Tax structures?

2008-01-13T22:10:00.000-08:00

Taxes suck. We can all agree on this. That's why I'm supporting Ron Paul for president, but that's another post.

America currently levies a progressive tax on all citizens.

The marginal tax rates in our country range from 10% to 35%.

The more money you make, the higher the tax bracket you are in, the higher the percentage of your income the government steals.

There are tons of arguments for and against the progressive tax structure (as well as whether or not the idea of an income tax is constitutionally allowed). Some of the arguments in favor of a progressive tax structure are generally rooted on the liberal side of the political spectrum.

I'm a frequent reader of the "Progressive Intelligence and Opinion" blog. Its author describes himself as a center-left liberal. He argues for more taxes for the rich and has repeatedly rallied against supply-side economic theory. Needless to say that I disagree with him.

I don't argue that supply-side economic theory will solve all the problems, but it's still better than Keynesian theory.

Back to tax structures.

There are (basically) five different options.

1. Progressive tax structure: With this tax structure the rich pay a larger percentage of their income to the government. The more you make, the more you pay.

2. Regressive tax structure: This is the opposite of a progressive tax structure. The more money you make the lower the percentage of your income you pay to the government.

3. Flat tax structure: With this tax structure everyone pays the same percentage of their income no matter how much they make.

4. National Sales Tax (FairTax proposal): This would get rid of the national income tax altogether and put a 23% (with the FairTax proposal) national sales tax on retail items.

5. No sales tax or income tax: Self explanatory.

While we would all love #5, there's basically no change of this happening (unless Ron Paul somehow wins the election) anytime soon.

Proponents argue that #4 is a more efficient way to redistribute wealth than the progressive system.

The most we can hope for is either #4 or #3. Let's face it, the politicians and bureaucrats love spending our money, so they're not going to try too hard to reform the system.

Liberals and socialists argue that the progressive tax system is essential for ensuring that everyone is hit equally hard by the tax burden. They also argue that it is essential that we tax the rich more heavily to fund social programs for those who are impoverished. Universal healthcare is a hot-button issue these days and is most likely going to make its way into America. The liberals plan on raising taxes for the highest tax brackets in order to fund it.

On a side not, my personal opinion is that universal healthcare won't work. There's no doubt that something needs to be done about the healthcare situation in this country, but universal coverage, raising taxes, and increasing the size of the government aren't the answers. Look at America in contrast to the rest of the world. We have lots of land, so we don't allocate it efficiently. We overuse most of our resources. We use too much energy. We waste money with big government. What do yo think will happen when everyone has 'free' coverage? The resource ('free' healthcare) will be overused. That's just our nature. Without co-pays we'll be going all of the time. Now I don't think that waiting room wait times would be increased by hours like some opponents say, but they would most likely increase, especially in the short term. If we can somehow fix the healthcare problem and stop enlarging the government life would be a whole lot better.

Why should the rich be taxed more heavily than the poor? It seems that they are taxed on general principle, a form of "fiscal jealousy".

Wouldn't it be nice to get a big raise at work and not have it ruined by the government taxing you more.

The progressive tax is unfair and it punishes productivity. Just based on the actual cost of implementing such a tax (think of how much money the IRS hemorrhages) it's a bad idea.

Center-left liberal's recent post on this issue is an interesting read, but still doesn't justify the wasteful system. Instead of babying those who don't do enough to provide for themselves (I'm not talking about the people who genuinely need help; we as the richest nation in the world should help them) we should be ensuring that if they do better themselves they won't be paying a higher tax rate as they increase their productivity. This means more incentive for productivity.

Just my thoughts on the subject.