Quote of the Day
Never anger a heathen, a snake, or a pupil.Talmud
Pro-Liberty Thought of the Day
Iraq Vet Blows Up Over Inappropriate Flag Display
I caught this courtesy of a Drudge Report feed. Being brought up as an Air Force brat and having served as a Navy officer, I have always had pride in the flag; one moment I'll never forget was marching as the flagbearer of my Scout troop marching in the annually televised South Texas George Washington birthday parade. But I've become more critical of politicians rallying behind the flag to justify international meddling, how matter how noble the high-sounding objectives. Politicians who abuse the trust of voters spending a trillion or more dollars in American treasure we didn't have to begin with and responsible for thousands of casualties, American and others, are unconscionable.
I understand the indignation of the vet here, but a professional soldier must never let his emotions cloud his judgment. Freedom to express dissent, including of the government, through symbolic abuse of the flag, is part of what the original American Revolution was all about. What other people do or say are not within your locus of control; you need to model the civic virtues that are part of our heritage. Don't let uncivil protesters jerk your chain; these jerks were filming in the hope that some conservative would fall into their trap and overreact, showing conservatives to be alleged unprincipled hypocrites. What matters is how you yourself treat your own flag.
More on Piketty (French Socialist Income-Inquality Guru)
Chris Giles of the Financial Times has uncovered a number of anomalies with Piketty's spreadsheet data, not unlike some of the infamous Reinhart-Rogoff issues (HT Valuewalk). (Reinhart and Rogoff published an influential study noting when national debt approaches a high percentile of GDP, the nation's economic growth rate takes a hit. This study has confirmed what we fiscal conservatives have argued during the post-2008 politics involving fiscally irresponsible government overspending and trillion-dollar deficits, and other studies using different measures and statistical approaches have supported related conclusions. For a Reinhart-Rogoff response to their critics, see here; in brief, they point out they used median values, less vulnerable to data outliers, they left out even more compelling datapoints, and they had not necessarily bought into short-term austerity policies.) I'm not going to paraphrase all of Giles' critique here of Piketty except to point out British wealth share of the upper 1% is significantly overstated, there are some typos in spreadsheet data from source data, and Piketty had made several unexplained adjustments to spreadsheet factors.
Holcombe has published the fourth post of his critique of Piketty. (I summarized his first 3 posts here.) In this essay, Holcombe argues that morally hazardous welfare state policies have contributed to the observed inequality because instead of saving for a rainy day, the down payment for a house, for retirement, etc., lower-income people tend to spend all their income. Since program benefits like social security, which is really an income transfer scheme, do not leave descendents with residual assets, and since one of Piketty's Politics of Envy obsessions deals with inherited wealth, the expansion of social welfare programs over the past 3 decades, government policy has exacerbated differences in household wealth.
I think I paraphrased Bob Murphy's objections in the first commentary on Piketty (see my Piketty tag), but Murphy also notes that Piketty's description of American tax policy is incompetent. In part, Piketty has bought into the myth that Hoover was some laissez-faire President. It is true that Hoover recoiled from FDR's more ideological government intervention and joined forces with former Democratic nominee Al Smith and the Old Right in opposing FDR's "progressive" empirebuilding, but his Presidential record was different: he raised income taxes in his attempt to balance the budget (FDR would later on increase taxes even more), he raised protectionist tariffs, he invested in public infrastructure projects, he jawboned companies against cutting wages and other spending, etc. So here is Piketty, whom confuses calendar years with tax years (e.g., Hoover signed the 1932 Revenue Act, effective with 1932 personal income but formally assessed on Tax Day 1933), not to mention confounding the effects of fiscal with monetary policy (which Murphy doesn't discuss here):
[T]he Great Depression of the 1930s struck the United States with extreme force, and many people blamed the economic and financial elites for having enriched themselves while leading the country to ruin. (Bear in mind that the share of top incomes in US national income peaked in the late 1920s, largely due to enormous capital gains on stocks.) Roosevelt came to power in 1933, when the crisis was already three years old and one-quarter of the country was unemployed. He immediately decided on a sharp increase in the top income tax rate, which had been decreased to 25 percent in the late 1920s and again under Hoover’s disastrous presidency. The top rate rose to 63 percent in 1933 and then to 79 percent in 1937, surpassing the previous record of 1919. [Piketty pp. 506-507]Martin Feldstein penned a WSJ op-ed where he argues that Piketty's numbers don't add up. For example, he points out increases in income and wealth, adjusted for inflation, since 1960 has been roughly 3.2%. (He points out the dilutive effects of heirs and other beneficiaries, not to mention the death tax.) Then there are nuances of personal and business income; for example, before Reagan's tax reforms, corporations were taxed at below top income tax brackets, which provided an incentive for owners to shift income at the corporate level and minimize highly-taxed salaries; on the other hand, when the personal income tax rate went below corporate tax, it provided more incentive for owners to shift distribution of income to the personal level. This didn't really result in a higher income, just its allocation, and Pinketty's assessment only looks at the income distributions at the personal level. (In other words, Pinketty is comparing apples to oranges.) Second, a tax cut provides an increased incentive to invest because of the risk-reward tradeoff. For example, municipal bonds generally pay a tax-free, low interest rate. At lower tax rates, there are more private-sector opportunities to obtain a higher post-tax yield than municipal bonds.
Leef's Forbes critique is from first principles, the morally corrupt solution of Politics of Envy redistribution schemes. He echoed a variation of some themes I've repeated repeatedly: the Statist Dems are far from their party's founder, Thomas Jefferson, whom obsessed about the growth of the federal government at the expense of the States and was worried about corrupt bankers and mercantilism protecting Northeast business interests, Jackson, whom shut down a central bank and paid down the national debt, and Grover Cleveland, whom supported sound money and free trade. Today's Dems are interested in growing the State bureaucracy, which takes its cut before the pretense of lipstick-on-a-pig high-sounding rhetoric versus the reality which misallocates whatever remains to politically favored constituencies. We had the Keynesian pipedream that wasteful spending somehow propped up the economy, that infrastructure, particularly earmarked boondoggles like money-losing supertrains in the People's Republic of California, had a multiplier effect on the economy, that if you threw more money at teachers and Big Green subsidies, it was better than growing the business tax base by reducing uncompetitive higher tax brackets.
There is a struggle, but not between the rich and the poor, but between the economically successful and the parasitic governing class. Principled legislation becomes corroded with corrupt political bargains with a maze of exemptions, guarantees, and handouts providing a bragsheet for each legislator's next reelection effort. It is the odious sausage making in Congress, far worse than anything Upton Sinclair could have imagined. Maybe economically illiterate voters are confused, whom mistake the lipstick-on-a-pig name of a bill with the reality of 2000 page bills that you have to vote for, before you know what's inside, according to the Wicked Witch of the West Coast.
Leef notes, spot on:
What would [the economically successful] have done with the money that the taxman confiscates? They would have spent some (and that spending is one reason why the rich don’t keep getting geometrically richer), they would have donated some to charities (ditto), and they would have invested some in whatever ways they thought best. Nothing harmful in any of that. On occasion, rich people make poor decisions in the use of their money, but they usually make far better use of it than politicians do.Exactly. They have a vested interest because it's their own money. And there's an opportunity cost of what the private sector would do if its resources were not squandered to "invest" in wasteful spending, to bribe voters with unsustainable programs..
He then points out the point I've made about baseless leftist conspiracy theories about crony capitalists. The way to get rid of government corruption is by designing it out: limit government's resources and authority, which attract parasitic businesses (like Big Green companies whom pick government turkeys clean, whom otherwise can't win in the real democracy, the marketplace). Who doesn't understand what Warren Buffett means when he says his wind farm operations wouldn't make sense without government giveaways, all but ensuring a profit?
Piketty frets that unless we have national, and indeed global wealth redistribution, the rich will become excessively powerful. Now, it’s true that wealthy people sometimes try to buy themselves governmental favors and often succeed. The solution to that problem, however, is not to tax away everyone’s wealth, most of which is used, as I argued above, for beneficial things. The solution is to get rid of those features of government that allow people (rich or not) to obtain favors from the state.Facebook Corner
(Reason). Why would anyone need a permit to cook a meal in their own home?
http://reason.com/blog/2014/05/24/cheeseburger-with-fries-and-a-permit
Don't give the fascists any ideas: soon the health gestapo will be doing health inspections in any residence with a kitchen or microwave... You'll have to register every time you host a dinner party or have relatives over for the holidays....
The cultural Marxists think the whole thing of accepting cash to help defray expenses is intrinsically dirty. If your kid gives away the lemonade she made at her own cost, it's fine (no doubt because it is a teaching moment for redistribution...), but if she sells it in a stand on your front lawn, heaven forbid: is your neighborhood zoned for "business", have you procured necessary permits and licenses, does your glass of lemonade come with an ingredient label, has the health department inspected the operation, the handling of ice, etc.?
Many of the pro-Big Nanny commentators below don't understand the sharing economy or the nuances of operations. In this case, the cooks/hosts actually eat with the guests; they typically don't have economies of scales associated with brick restaurants, and you are not going to clear much, if any profit, when you factor in the overhead of shopping, cleanup. It's also a way of getting to know new people in the area and fulfilling social needs. I see the business model as an incubator of sorts (like food trucks) for prospective new restaurants without covering the initial high costs of procuring a lease, outfitting the restaurant, hiring staff, etc. Only parasitic, greedy government would devour the entrepreneurs of the future economy.
So you make food for strangers and charge them. How is that not a business?
So a public school charges students for lunch, or the local church has a pancake breakfast as a fundraiser, how are they not businesses? /sarcasm
This thread is rather pathetic; it's like people don't realize the distinction between a hobby or a business. There are tax implications. This is from the IRS:
The Internal Revenue Service reminds taxpayers to follow appropriate guidelines when determining whether an activity is a business or a hobby, an activity not engaged in for profit.
Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.
In order to make this determination, taxpayers should consider the following factors:
Does the time and effort put into the activity indicate an intention to make a profit?
Does the taxpayer depend on income from the activity?
If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
Has the taxpayer changed methods of operation to improve profitability?
Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
Has the taxpayer made a profit in similar activities in the past?
Does the activity make a profit in some years?
Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?
The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year
These people are running a restaurant out of their kitchen. Get a permit! But these people are doing it on a regular schedule, for pay, and not just chipping in. If the cook and server make a profit, it is a business. And it needs an inspection and permit just like anuy other food business. Either all restaurants should be exempt from permits and inspections [bad idea!], or these people need to get a permit to serve paid dinners in their house. Simple as that. These people seem to think they are above the law.
I don't think if someone slips and falls or gets food poisoning in someone else's home, he doesn't have cause for possible legal action, whether or not money changed hands. But the main point in this thread confuses a hobby (hopefully a profitable one) with a business. The slippery slope argument is patently absurd. It's like saying if I sell an occasional book or CD on Half.com, I'm running a business.
More Innovative Proposals
(although I think I've had my fill of Bruno Mars...)
Political Cartoon
 |
| Courtesy of Gary Varvel and Townhall |
England Dan and John Ford Coley, "Nights Are Forever Without You"
