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August 2, 2013

The Most Popular Posts On This Blog

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June 7, 2013

June 3, 2013

Forced Mobility of the Gainfully Employed

From Paul Krugman's piece:

..extraordinary rates of emigration among young people in Europe’s disaster economies — not really a surprise when you consider the incredible levels of youth unemployment. But as she says, once those young people are gone, who will pay the taxes to support retirees?

The above is asserted by Krugman WRT Eurozone, but let's reflect this on the current US Labor Policy:

How much worse it gets, beyond the immediate run, when policy rather forces those well EMPLOYED to move out! and those left do not have quite the skills and function experience to fill precisely those quasi/technical roles? Forced exodus of experienced H1B's manning quasi/technical positions, upon killing their Green Card apps on one excuse or the other, will have an even worse effect than what Krugman is speculating for Europe where but the unemployed are moving out.

To this blogger, the current US Labor, Immigration, Taxation policy is a desperate short term report card management (unemployment and fiscal deficit numbers), potentially ruinous for the medium and longer term: More.

As for Dr. Krugman's piece on Europe:
How would it be better that, in Europe's "disaster economies", those employed have to fund support for both: the Retired AND the Unemployed!?
Nay, (voluntary) mobility of the unemployed, to lands where there is work, is the relatively better phenomenon than if they stayed put.

March 21, 2013

Universal Background Check Is A New Disease Not Remedy

This author is clearly for Banning military style weapons of carnage from shop shelves and the streets.

But Universal Background Checks are no substitute for the ban. Already there is little private life left, what with hackers and cyber terrorists, completely wiping it out is no remedy. It is a new disease in itself.
There are plenty cases of people that behaved normal until they snapped. There is no point in keeping our lives pry-able because one day we might want to buy something that is not banned.

If a society thinks cigarettes can harm beyond repair more than just the person consuming it, it can ban them. Or alcohol, or what have you. But if it cannot get itself to ban the thing, no need to use that 'unbannable' thing as excuse to kill privacy of one's life.

It's like someone doesn't have the ***s to protect mine, so he'll squeeze 'em, and dig that! Doesn't make any sense...

March 6, 2013

Privatized Socialism!

When social ends cannot be left to private profits, the activity is often socialized. But some societies try to do the socialization with a wrapper of private play, and reap the worst of both Worlds.

Case in point is the American Healthcare.

The socialization, and the essentialness of it, has the prospect of getting captive buyers into Health Insurance which bills private sector prices, and captive private sector prices at that. Then they conveniently make mistakes in disbursing the benefits. And we got to run around "Appealing!" their wrong decisions, while the child that needs the treatment, whose parent and his employer paid for the coverage for that treatment all the years, has to wait in agony.

WoW! Appeal to a private sector business for their own mistakes in disbursing benefits for which you've been paying them since forever. Seriously, Appeal!!!! And you can forget about receiving an apology at the end of it. After all, was an Appeal that was...granted !


Same anguish, different context:
http://www.nytimes.com/2013/03/04/opinion/krugman-mooching-off-medicare.html?partner=rssnyt&emc=rss&_r=0

March 3, 2013

(Cutting) Size of Government

Determine the Max % of GDP that can be Government sector per popular mores...(1)

For each Category of Gov spend (Defense, Education, Food, Corporate Employment Assist et al), determine moral allocation of 1) per public opinion...(2)

Convert the figs in 1) and 2) to absolute dollars.

Now, in each Category:

The oversize is represented by:
(Actual Spend/Morally Allocable Spend)*(Actual Spend/Value of the benefits received by intended beneficiaries). This figure carries the excess moneyspend as well as excess procedure, hierarchy and hardship faced by the intended beneficiaries in the process.
It represents the Keynesian component/crutches in running the private Economy - that need to be dissolved, slowly, if not fast.

Much care needs to be taken in estimating the 'value of the benefits received by intended beneficiaries'. The value of Education received in 50 children classrooms is not the same as in 20 children classrooms. Again, a wholesome education providing exposure to music and arts is more uplifting than indiscriminately plunging every kid into the full heat of grueling Math or Spelling Bees.

Actual Spend includes spending thru the tax code = tax shields that an industry or company or individual receives that are NOT received by those that do not qualify for it.
Child tax credit, mortgage interest deductions are all spending, so are the payments to personnel employed to administer/distribute the spending. Payments to shared personnel need to be allocated over the involved Categories.

Credible Plan to bring the compound ratio down amounts to cutting the Gov. This has no reference to taxation or deficit, which are but means to fund or cut Excessive Gov, dependence, and procedure & playbook bottlenecks.

The funding choice and which direction to take the Tax-Deficit split is a separate decision in itself. This blogger further contends that the tax code should be mildly progressive from the very start of taxable income spectrum, not suddenly wake up to progressivity at $250K or 400K or some such progressivity threshhold. It is about equitably funding Governance, not being a sadist to the successful. Only the artificial maintenance of the wealthy and successful in their spot needs to go.

February 27, 2013

Good Ideas: Sequester, Taxes, Entrepreneurship, Entitlements

Fixing Sequester
Unmeatcleaverize it, choose wisely.
If this were happening at State level, e.g. in Education, I would remove Superintendents with meaningless oversight responsibilities over 4 neighborhood schools and taking in $250K price tag, but actually add some teachers in all areas, including drama, music and arts.

Tax Reform
Take up tax reform and the much needed simplification separate from Sequester. Give most of the plugged tax code spending back as rate cuts. Low marginal tax rates and simple tax and other laws do motivate one to aspire and earn more.

Liberate Entrepreneurs: Home raised and Foreign
Complex litigable laws, regulatory labyrinth and potential business creators tethered to employer's Visa and permanent residence sponsorship makes an Entry Barrier Economy where the inefficient get to thrive and suck welfare for maintaining jobs. That's not a strong economy, much less can it stay the World's foremost economy.

Entitlements Rollback
Combine Entitlement Savings (again, a non meat cleaver approach e.g. to cutting Medicare by choosing obnoxious payments over coverage) with residue from tax loophole removals and rate cuts.
Especially where rest of the policy is to drive out high income workers by not renewing work permits and hacking their permanent residence apps, makes little sense trying to defend the Entitlements Monster, it's quite a Lost Cause.

Looks like some of the above is where things are going, and is squarely a good thing. And the theater and the spinmaking on TV is darn entertaining as well.

Cutting is not way to prosperity but not cutting could be doom,....unless DC was right that "deficits don't matter anymore". This blogger has his doubts on that, but it is squarely a faith issue. You don't want to experiment and find out the truth!

Amazing! Time

"HEy! Pay this ''''''Cost''''' !!"




"Healthcare Lobbying is 4 times MIC's!"
"Ambulance Industry takes in more money than Hollywood does.."



A robbery beningn

February 20, 2013

Fair Shot (@) Entrepreneurship

Fair Shot, Competition and New Business Formation, Non Dependence - thru Simple Business and Immigration Laws & Paperless Compliance


The Seminal issues of the times are:

Fair Shot - as opposed to crony Capitalism, entrenchment and unaffordability of Education except through immense debt slavery.

Non Dependence - reduce dependence of individuals on Gov directly as also remove Gov obligation to spend to stem failure of a private for-profit business to prevent unemployment.

Indentured Labor - either the working person does not have legal status, or is undergoing an employer sponsored permanent residence process that takes forever, with the obligation to stick to the employer until the end of the rainbow.


An important angle in the solution is to delink employer from the Permanent Residence application, albeit the Guest Worker entry process can be Employer + Market based.

UnIndenturing of workers will enable new, more efficient businesses and employment, while advancing the cause of "Fair Shot" at self-made success and achievement.

But Fair Shot will take more.

Currently, the legal framework of business involves a ton of compliance paperwork that needs to be filed every year, and regulations leave a lot to judicial interpretation and harmonious constructs in litigation when a violation is actually alleged or suspected. This creates a huge, artificial entry barrier for new businesses (competitors). The existing companies have learnt to navigate legal waters and are entrenched in their position for reason that has little to do with how efficiently they produce or manage their business.
Needless to say that this is neither Capitalistic efficiency nor an advancer of fair shot.

The barrier of unclear laws and stifling compliance paperwork is also an absolute barrier - that is, it is an entry barrier even independent of the existing businesses.
And that makes it worse from another angle...

When new businesses have small possibility of springing up, the existing businesses become intensely important to the economy and for public sanity. If they are mismanaged, the Gov of the day gets armtwisted into not letting them fail, to spend as much as it takes to do that - proactively as also reactively when a really big one is going down on its mismanagement.


It is this author's clear opinion that a vital dimension of the solution to public deficits and dependent economy is competition & new business formation. The latter is enabled when:
- the immigration process is delinked from employer sponsorship and only based on taxes paid and laws followed through the years of presence. Employer sponsorship ought only be required for the initial entry as a Guest Worker.
- The legal framework of business is simple and free of judicial interpretation and harmonious construction in an actual litigation.

Without these there is only entrenchment and deficits on Corporate Welfare, not fair shot.

February 19, 2013

The Unaffordable Trickle Down: Private & Public

From the web:

"Everywhere in California, unions are relentlessly pushing back against even modest reforms to pension benefits. With unlimited money and manpower, implacable resolve, and perpetual energy, they will prevail again and again – until the tsunami of financial reality finally hits the shore.

Spokespersons for public employee unions supposedly abhor the manipulations and machinations of finance capitalists. Pointing to examples ranging from Enron to Goldman Sachs, they claim the workers are fleeced and the rich get richer. But their own house is dirty. The public institutions they control, the cities and counties of California, indulge in financial chicanery in order to create an illusion of solvency. They fail to recognize unfunded pension and retirement health care liabilities on their balance sheets. They refuse to disclose total outstanding statewide government debt. They mislead voters into believing government workers are actually undercompensated, when in fact they now earn total pay and benefits that are well over twice the average for the private sector workers they supposedly serve. They pretend budgets are balanced by offloading entire sections of government into “special districts,” playing a shell game of deception. They campaign for tax increases to “save our schools,” then instead give the money to their partners in oppression, the insatiable pension bankers.

A fair minded reader might protest that government workers should not be compared to the aristocracy of France in 1788. Fair enough. But the average pension for someone who works a full career in California’s state or local government is now nearly $70,000 per year. And to collect that much, risk free, in the private sector, requires millions (plural) in assets. And those multi-millionaires are precisely the people our public servants, through their unions, urge us to resent, to tax, to occupy, to overthrow. The language of revolt is theirs, not ours.

Filtered through the humble green eyeshades of proper accounting standards, shimmering in the Sacramento sunset, one does not see a skyline of government buildings staffed by benign bureaucrats. Rather one may see a Bastille, a Palace of Versailles, a Hall of Mirrors, the ornate furniture of an aristocracy ruled by the union noblesse."


February 1, 2013

Of Comprehensive: Humanetea, and Talent

Humane treatment if one's entry was unlawful, and one is 'Talent' if entered through an American College.

The Neocon and some ethnic voter aggregates might get pleased, but the Principles stand mauled, false pride & megalomania moralized, and ethnic identity based voting encouraged, redeemed even before it really occurred.

The key difference between a successful and a chaotic democracy is ideological voting blocks & coalitions v/s the ethnic ones. Ethnic gift making, as opposed to Ideological or Principled redemption, once set in perception, rots the realpolitic and consequently, the socioeconomy, for generations.

 

January 28, 2013

God Exists..!

The unimaginable, yet the most desirable of coalitions, might have a chance of happening. Not talking about the particular Senator in this story, but the mid left and the far right just need to craft a mutual adjustment where a humane yet robust Economy can sustain on a solid currency.

The guys in the middle are upto no good. They know top-down business welfare when they feel confident that "deficits don't matter" or they will cut human services when deficit is in focus.

It is important to realize that a business creates good, and well paying, jobs when they need good workers to win and retain customers, not when Gov is raining money by procuring stuff nobody needs, for the sake of saving employment. It's like when the Federal Reserve is throwing near interest free money at the banks, who needs our money, and the rates we land are pathetic.

The coming together of the mid Left and Far right can herald an era that saves the currency while ensuring that essential investments on the younger generation are made. This coalition holds the promise of:

1. Salary and Pension Reforms (read: rightsizing) in the Public Sector: Federal and State. It does not make sense to pay outrageous 200 grand for overseeing 4 schools, and half that as lifelong pension.

2. Gut Corporate Welfare - It is not good for workers and professionals - it reduces us to mere hostages that the CEO can threaten to fire if more money is not doled to him and look successful.

3. Ensure citizen services are not gutted, including holistic child development along his/her choice and interest areas in public schools. Like mental health and support structure for children with a different brain wiring that needs a different development and learning approach.

Only a colloperation of the mid Left and Far Right can yield a strong currency on well managed Gov finances, while not losing the very things for which all public management exists for: Namely, every individual receiving the space to actualize one's talent and interest.

December 30, 2012

Tax Principles

IMnsHO:
1. Low marginal rates: DO NOT Disincentivize Ambition and Earning.
2. Progressive rates, subject to 1. all of them.
3. Married or Single should not matter: Deductions based on number of people dependent on that income. Count home ownership as 1 person, count infant as 1.5, under 16 as 1.25.
4. Cap on total deduction claimable. No mortgage interest deduction - housing already covered in 3. above.
5. Exempt Investment cash inflow/profits within the total cap in 4. above. Beyond that:
6. All income and gains beget the same tax rate as work. Give few thousand dollars extra exemption on passive income to people near on in retirement, But:
7. Cuts in Entitlements begin with current seniors. They, after all, have repeatedly sent the spendthrift representatives into lawmaking, so cannot, should not, go simply untouched. But:
8. Cut corporate-executive welfare before Entitlements.

9. INCREASE Spending on the Young and Research and Infrastructure.

A tax fix cannot be as soulless and Principleless as "increase rates on the wealthy". It will not return good result.
Some well off pay lower effective tax rate than their Secretaries - and that is quite a tragedy. The action lies in plugging the special treatments and loopholes, while trying to reduce marginal rates. Adding marginal rates makes those that are already paying progressively getting hit even more. Similar tax preposterity also exists within the middle classes. It is better to do a Principled plugging of these tax bucking than raise rates. Raising rates is like helping the undocumented before the documented tax contributor workers.

Nor can a solution be in simply "rob the old and the very young"; or "make the current crop of workers pay in more, while they will likely get less in Entitlements when they retire."
Better to give the current workers some consolation/empathy cut in Payroll taxes if they are likely to receive less when they will retire. And better to cut Corporate-Executive welfare before Entitlement payments.

And we haven't even mentioned the taxes that have been collected from the immigrants who have to leave as their permits expire, after contributing all these years to retirement of the currently old, with the Entitlement credits on their Social Security Statements rendered meaningless. The tax deal has to also have an offshoot into Immigration fix to render justice unto the people that have been diligently contributing in the private economy, as also to tax collections: payroll taxes, income taxes, sales taxes, vehicle registration taxes, highway taxes, and what have you.

Fair taxation, Fair immigration, Gun purge - These are important. Upon doing these, the Economy will take its time to heal and grow; But not taking the high road in these issues will finish it.

December 16, 2012

Assault Weapons: It's More than About Time

Also: And the Shots Just Keep On Coming

Let's face it. Call it Reaganomics, or Corporatized Top-Down Socialism, or Bastardized Capitalism, it could not be sustained. And redoing taxes and regulatory structure with a view to competition formation, as opposed to being takers from entry-barrier protected existing businesses, is a foundational imperative, and not something that will give a Clintonesque boom in 4 years.

The politicians in power have to do something else in these years if they want their actions in these years to be remembered. It is more than time to recognize the following:

1. Assault weapons are not part of culture, as these semi-automatic weapons are not animal hunting stuff.
2. If ever a Government were to get tyrannical, it cannot be overthrown by people possessing these weapons by forming a militia. Civil Disobedience will work much better.
3. There are a lot of mentally deranged people out there, because America forces people into perfect social behavior on the outside, no matter how they feel about something on their inside. Furthermore, the American psycho-social system considers it normal for an individual to think that s/he is one against the rest, and that s/he will have to snatch his/her place in America, while appearing calm on the outside. Individual is encouraged to link every happening to themselves ("he sticking it in to me") rather than realize that s/he is not the center of the Universe other people are fixated on.
4. Constitution is not the same thing as the Bible or the Quran that it is fixed forever.
5. You let a guy buy a sexy gun over the counter, and he can go on rampage after oiling it a few years or months. If he has issues in his head, all the more.

Please get us riddance from these assault weapons, safety of our children in schools and our own selves in malls and cinemaplaces is anyday more important than a new economic boombubble or saving or paying a little more taxes.

There is no prosperity without there being life first, and some surity that it will be conserved. There is disagreement whether aborting a foetus is infanticide. But there is none that killing of children is toddlercide. And such mass toddlercides cannot occur without these deadly weapons that have no business in the hands of civilian population. Ban these weapons. No culture, religion or constitution is frozen in time. These are no hunting weapons, and these won't overthrow no Gov. But these are enabling and easing the massacre of our children by madmen. By all means work on the culture of perfect exterior behavior or any other aspect of social life that is causing so many deranged individuals, but get rid of these assault weapons from the streets....as of YESTERDAY. This is a leadership legacy begging to be made. There is not much else today, tax code overhaul, howsoever much needed, won't make a legacy. It won't make an instant boom to control the deficit. Assault weapon ban is the thing to do even if it fails. But why should it fail?

December 13, 2012

Taking Charge - Fairness Begins at Home

Not protecting Capital income ought not convolute to discouraging Capital formation, is not the same thing as slapping the rich as a statistical group. Need is to go beneath the bullet point of 2% - 98% for achieving fair share.

Aggregate Statistics show that the rich people pay twice the proportion in taxes as they have income. That sounds not bad for progressive taxation. Yet there are such among them that pay a lower tax rate than their modestly paid Secretaries. The issue is perhaps not rich man taxation v/s poor man taxation, but lopsided taxation with babycuddle treatment of certain income types, and deductions that make the tax code one that does not provide fair contribution towards national expenses. The ones that are able to avoid doing their fair share towards maintaining the collective infrastructure, in which they do achieve, dump it on others in their class to cover their fair share as well! And this is the case in both higher and middle income brackets. Simply raising tax rates on a given class, or all classes, acutes the anomaly in each affected class, or should one say, atrocity.

Fairness begins at home. The 98% need to have a paradigm of fairness that is applied to themselves as it does to the 2%. And this implies, getting rid of the special treatments and deductions that help some buck the progressiveness of the tax code, and make it overbearing on others in their own class. 
There is not a dichotomy between labor and capital. Today's labor income becomes capital for tomorrow. The businesses of today need one to work for a few years, even couple of decades, not merely to save for Capital investment, but also to understand the nuances in today's technology enabled business approach. A better paradigm of fairness is required than the macro aggregate level 2% - 98% negotiations. Else, it does become like punishing a man for suceeding when he makes it in his ambition. Confiscatory taxation is not a good thought, something that even resembles it isn't something to court.

To finds its place and prestige, Labor also needs to take responsibility, and start to view things differently than rich man-poor man or Worker and Capitalist. Rather to see everything, and every income as Labor, and ask for equal treatment for taxation. Some of the things that can be done:

Reject High Marginal Tax Rates


Prefer removal of special treatments and deductions to uplift revenue with tax rate cuts - to even the burden within the class aggregate - to provide relief to those that are bearing higher tax rates than others of their class and beyond because the special income categories and deductions do not suit them.

Not Discourage Achievement


Keep marginal tax rates low, but make sure that there aren't income and usage categories that shield the application of those rates.

Reverse the Welfare and Deficits Debate

All Welfare can be funded with taxes on the portion of one's income upto $250,000 and say, half of Corporate Tax collections. Let the other half of Corporate Tax collections and taxes on the income slice above $250,000 alone to fund the servicing of Securitized Treasury Debt and Corporate Welfare. This arrangement will see the middle classes demanding rightsizing of Government welfare delivery machinery and procedurism, and rightsizing of the welfare benefits; while the rich will be the ones figuring out whether Govt deficits matter or not, with it's reflection falling on their own taxation. Because, in this paradigm, the middle class income portion (< = $250 K) pays fully for what the middle and poor class uses (welfare).

Take Charge

It's not about isolating and slapping the rich man, it's about even spread of the burden of paying for civilization. The even burdening includes doing it in one's own class at the same time - not simply increasing the burden on the aggregate of rich people. And staying ambitious about becoming rich oneself. Taking charge implies taking responsibility for fairness and seeing the same thought about progressive taxation smoothly run across the incomes, from the bottom to the very top.


Simple, Progressive, Unatrocious Taxation
Top slab rate at 38%, even 33% I would say.

Standard Deduction: $14,000
Itemized Deduction Limit: 22,000
Financial Income Exemption Limit: $18,000 ($28,000 for those 58 years or over)
 
The individual/family uses the ONE (and Only One) that is the highest for the individual/family. On the rest of the income, the slab rates apply. A few family oriented exemptions like dependent child credits can be additionally retained.

Finally

Tax Rates simply increasing is nobody's win - it'll actually be a slap on labor and mainstreet industry and ambition, to continue cuddling of casino (finmarket) income. If rates can be decreased by removing special treatments, even the casino players will likely take the common low rates in their stride.

December 5, 2012

Crash Me Not!

This blogger might well be the last person to recommend that a Government make policy with a view to affect the stockmarket. It's a casino, and a thrilling one, best left alone.

But there is little point in causing a crash in the ubiquitous public pastime by not being able to do a simple thing that needs to be done in any case...Making the public budget sustainable, while adding physical and human Capital for the future. This blogger is bewildered with the semantics and language killing any agreement:

Why does it have to be "1 DOLLAR OF REVENUE for 3 dollar of spending cuts" and not "THREE DOLLAR OF SPENDING CUTS!!! for every dollar of Revenue added"

Why "raise tax rates on the wealthy" and not "Make and Apply a progressive AMT on slabs (0-40K, 40-110K, 110-180K, 180-250K, 250K+) of Gross Total Income (work + Cap Gains + Finance)" for until there is a Comprehensive Tax Reform that "reduces rates, and exemptions, deductions and special treatments" and frees us from the horror of struggling with taxes every year, yielding a tax code whose progressively cannot be mauled or flipped with application of loopholes.
The temporary AMT, since it'll apply on GTI, would need tax RATES *far lower* than the ones on NTI with no dodgeability unto its progressivity.

Why it needs a one time deal, and not "As you give me Revenue uplift, I will give you cuts....3 times over."

and MOST IMPORTANT:

Why not: Mr. Boehner gets to choose how to raise the revenues, while Mr. Obama gets to choose what the reciprocal 3x cuts (restructure-to-shrink) will be, as the former delivers the Revenues.

But the real thing is the Overarching deal:

The increased revenues to be exclusively applied to the deficit, as also half of the cuts. The other half of the cuts-savings used back to strengthen the delivery of Education and Physical infrastructure that the Gov directly provides, not through private parties, and not utilized for expansion of employment in pushing rules, procedures and files.

November 30, 2012

Inventions, Employees, Consumers, Business Creation and Expansion: Lesson from Business History

And applied correctly with “You cannot dip in the same river twice!”

The importance of competition and new business formation:
Today's worker, homegrown and immigrant, is tomorrow's maker; and Work income is Competitive and New Vista Capital-in-formation.

I just had a chance to watch The History Channel program: “The Men Who Made America”. It was about business tycoons that played in the turf called America and, in the process, made it what it became – the most thriving and exciting economy in the World. These businessmen: the JP Morgans, the Rockefellers, the Carnegies and the Fords worked intently even as their companies faced antitrust suits and sometimes got broken up, even under what would be called today as confiscatory taxation, and the like. What drove them even in such an environment?

As one can see through the program, the business success of these men was built on new discoveries and Inventions occurring in America: Electricity, Automobiles, Electric Lamps, and so on. The employees they hired to produce their business item became consumers of someone else’s product. In the process, Americans became recruits into the working middle class. These tycoons expanded through times when they could hoist their chosen men into political office and when they could not, when they had a Gov that caressed them and when it checked the power of their companies, when there was no Income Tax and yet when there was, and very high at that.

Firstly, why they accepted high taxes? Perhaps they understood that society needs to glue together to some point for them to have a nation and market in which to sell and be important and powerful.

Not to deny the motivational aspect of a low tax system, but the most important thing that drives investment and business expansion or creation is a desire to be important and wealthy in the economy and the excitement of creating new customers for one’s product.

But the above have come full circle now. The population of American consumers is not expanding as much, most are already out of poverty and businesses have run out of ideas for new products. Other economies now provide that opportunity that America provided before – of finding new recruits and customers, and win new territory.

America is no longer the place for existing businesses to do more of the past because “you cannot dip in the same river twice”. Cutting Corporate or investor taxes is hardly likely to help the matter, and if anything, even creation of future customers would be doomed when the younger generation and children do not get the nourishment that they need.

But there is also opportunity in “You cannot dip in the same river twice” in the light of its antiparticle: the history of business expansion in America. I see two dimensions that are important:

Increasing Population with natural Purchasing Power


The foremost lesson of history is that a business expands to conquer new customers that have the purchasing power to buy its products, or to produce and distribute products at lower price point and, again, conquer new customers that were not acquired before. So if the businesses run out of new conquests within an economy, they will go outside.
An important thing is that the purchasing power that they are trying to tap be natural. If it is largely welfare payments, the game loses its charm for the businessman. Stagnating America with restrictive policies wrt high income immigration is cross purpose to the imperative of increasing population with natural purchasing power, not to speak of losing out on innovations by ambitious immigrants.

New Business Formation

For a New business the entire market is fresh customers! Yet the contemporary American thought is sold out to existing businesses as job creators that are, in fact, domestically saturated wrt customers that can buy their stuff. Starting a new business, even running an existing one, can drown a person in compliance paperwork and navigating regulations that nobody can interpret with certainty. It produces rent for legal and financial instrument middlemen, and is a drag on the company and true entrepreneurs. Simplification of the legal steps to business launch is in order. There is much more hope from new businesses creating the next wave of real employment (not make believe clerical work created to placate the Gov for providing the entry barriers I just mentioned and the unending Corporate and Executive tax cuts and loopholes) than with existing businesses. And it is imperative to realize that today’s worker, in his head, is not a worker forever – he is looking at making a business tomorrow, especially if with his income he is able to save for it. It is neither a good idea to create entry barriers in business with legal complexities nor making work income the only source for Gov to raise the revenue that it needs for keeping the nation-market together and invest in the future working-consuming population. Also in order is freeing up the medium and high income, documented, immigrant from the clutch of the Visa sponsoring employer. Expedited Permanent Residence Scheme based on length of work done and taxes paid in the United States, and without employer sponsorship of the application, would be in order - like applying driver's license at the DMV.

There is fire in the belly of young workers, homegrown and immigrant, to go into business and be job creators. Make business launch and run simple, reduce work income taxes by merging all tax categories together; and make permanent residence-seek independent of employer sponsorship, to enable the young immigrant to launch businesses before he loses the fire forever awaiting the elusive green card tethered to the sponsoring employer.

October 3, 2012

DisEntrenchMediation: Healthcare & Education

Healthcare and College both had one problem: Entrenched mediators grabbing control of pricing rather than the market. Attempt in the former case has been to add Gov to control the Entrenchmediary, while on the latter, it has been about removing the Entrenchmediary leaving only Gov.
Are these the best options in the respective cases? This author believes that in both cases, there was a better Regulated-Market solution. The problem is not as much as the intermediary, rather it is/was its entrenchment with public purse on the hook guaranteeing the intermediary's full tummy. I have written about healthcare before, that essentially the employer mandate is best removed, and replaced by a no-frills, individual-buy, catastrophic-only public option.

In this post I focus on Education.

Like Healthcare, College prices are a scam. They are supported by the essentialness that a young person sees of College as his enabler for better earning prospects. So it's not like buying oranges. If you think you need Education, you cannot withdraw from the market if the price is too high. The intermediary banks had been willing to finance any price for a college degree, secure in the Gov guarantees for the loan they made, and the fact that College loans do not get discharged in a bankruptcy and have to be carried through one's entire life.

A Regulated-Market solution to the scam would be to let the intermediary banks stay in the game, but simply legislate that they have only 7 (or max 10) years over which they can recover their loan from the loanee, and in any given year, no more than 40% of the loanee's income can be taken as payment. And with No Gov guaranteeing what could not be recovered under the law. College Education pricing will immediately see correction to reality, as banks are no more going to finance scam pricing of these programs, and it would cost the public treasury...nothing.

Disentrenchmediation in essential items sometimes takes a little Gov or Regulation, but needs to be done smartly, where it gives the best results at least, better NIL, public cost, while forcing private sector to exert and unleash its efficiencies rather than ride the essentiality of the item helped by a Gov guarantee or perceived obligation.

Especially a Gov that wants to stay economically feasible needs to slay market capture, not subsidize it more.

September 18, 2012

Bernanke Put = Regulated Greenspan Repeat!

What caused the Financial Crisis: a certain course of action or lack of regulation?
Was it mere lack of regulation, while the course was itself a great one? Or was the crash a hopeless, unavoidable part of the course itself?

Let's revisit.

There was easy money policy to get over the recession of 2001 caused by the dot.com and telecom busts. A lot of this money that the banking system could draw for a rather cheap price began to flow into property financing that sent property prices very high. For one could buy a house for a significantly bigger price tag yet pay the same in monthly mortgage payments. On top of it, ARM (teaser initial rate, interest only) financing, to take it higher. With 'valuation' of their property soaring, was reaped 'Wealth effect spending', not to speak of HELOC spend by quite a few. Great economy! Until some of the easy money began to flow into commodities speculation, driving their prices up as well; while it was time for some of the ARMs to reset. People that could no longer pay both their mortgage obligations and their living expenses had to foreclose on the house. The smallest of supply shocks...and..Crash...like a house of cards.

Apparently the same story, and officially and consciously so this time, is intended to be repeated. Except that there is now some additional regulation around it. But the other side of the regulation is that this time more money, and sooner, will get into commodities. It could well lead to a fresh wave of foreclosures, and fresh crash, before even taking home prices significantly up first.

Talk about "going back..." This sh!t happened before. If anything, last time was probably better than this time could possibly hope to be.

September 15, 2012

Desperate Argumentation?

From:
http://krugman.blogs.nytimes.com/2012/09/15/mitt-romney-liquidationist/

..view (opposing QE) only makes sense if you believe that the problem with our economy lies on the supply side – that workers lack the incentive to work, or are stuck with the wrong skills, or something. And that’s just not what the evidence says; instead, it points overwhelmingly to an insufficient overall level of demand.


The above appears to me as the most naked attempt at pulling down straw-men.

"Insufficient overall demand" appears to me a simplistic, even false, view of a situation where demand for existing private sector goods stands saturated. The only pent up demand for these goods is with people that are unemployed, and they obviously have insufficient income and neither propensity nor worthiness in the eyes of the bank to get credit to satiate this demand.

Does QE help this situation at all? The QE worshippers believe that doing this thing will raise inflationary expectations, while reduce the real cost of borrowing for investment and consumption. So both of these will take off. People that have been sitting at the sidelines of investment or consumption will now take the plunge, lest their savings be lost to raging inflation.

But if the demand is already saturated with those that have income, what for will there be real investment, and who's there to borrow and spend that has the ability to borrow?

--
The things where there is less supply than need is in healthcare and public interest goods, especially teachers and schools. Only the marriage of unemployed to the areas of deficit demand can deepen the economy. If the skills don't exist domestically, importing professionals for these areas will help, the unemployed can then find absorption in service and recreation sectors that'll need to expand to grab the business from the skilled newcomers. In that situation, no QE will be needed. Just low'ish interest rates will suffice for investment to take off, and will harden as they do take off.

Meanwhile, there is QE, like doubling down on Tylenol when the headache has been diagnosed to be brain tumor. Not sure if it'll hurt like an overdose of medicine meant for some other situation, but it's not going to 'help', other than forcing people to take their money from their petty yield (I fondly remember the time a few years ago when FDIC-backed Internet Banking gave me a good 4.7%, term CDs a little higher) savings accounts into the stockmarket, and then lose it in the next crash. No one till date has succeeded in forever sustaining a bull run in share and property prices forever. The manipulations with monetary acrobatics, to lean on "wealth-effect" spending have always eventually crashed. I am not even sure how much of fictious wealth-effect spending one can get. Maybe one could buy the iPhone 5 (something one will buy even without a QE3) and take one extra vacation every year. Other than that...?

September 11, 2012

Average and the Marginal ~ the Case of Direct Lowering of Tax Rates


It’s a great idea to trade-in deductions for lower rates for ALL income groups. It should be given out in ALL income groups, not just the top bracket. Additionally, gains in stockmarket play are best treated on par with work income towards achieving a further cut in the rates. An illustration..
Consider an economy where there is only one tax rate = 50%, with most people having work income of about $100,000 but able to claim deductions of about $50,000.



Current Tax Bill for these people = 50% * $(100,000 – 50,000) = $ 25,000.

The marginal tax rate being 50%, any new dollar earned gets taxed at 50%.

EVENT: Deductions eliminated and tax rate directly lowered to 25%.

Tax Bill now = 25%* $ 100,000 = $ 25,000 (No Change)

However, the marginal tax rate is now 25%. Therefore, every new dollar earned by one’s hard work and ingenuity now results in only 25c in tax rather than 50c. THAT’s a great incentive to flex one’s muscles towards raising one’s income with hard work or starting a business that would employ people. Towards the latter though, the economy will also need to lose compliance paperwork requirements, simpler tax and regulatory codes, freedom to layoff and hire, and single window dealing with Gov agencies.

Additionally, bringing income from stockmarket play on par with work income (capital-in-formation) will enable further reduction in marginal rates.

August 30, 2012

National Self-Concept, Top-Down Business Welfare & Entrenched Economic “Superstars”


It always amazes me that the Government is held responsible for jobs created or lost in the economy, even as it gets rapped for paying retirement support to the old and for spending money on wholistic child education. Bailouts of financially failed companies are universally resented, yet failure pre-emption through credits, subsidies and tax cuts get the cheers. The Government is expected to be “Business friendly” and such ‘friendliness’ includes doling out welfare to business. Sometimes, a general carpet spending is advocated, so the businesses can 'survive'.

The germ of thought that underlies these disguised bailouts is that the people running businesses need to be assured of the income that they have been making, indeed of growth thereto, in order to stay motivated to continue in business. Like they have no ability to adjust to changed demand and pricing scenario, and that the top shots in these entities will not, and should not be expected, to take cuts in their "profit/performance-linked income" in line with the new surplus these businesses are able to generate. The bailed out banks were soon paying their Executives the same money that they made before they nearly drove their respective companies into the ground. The deeper thought seems to have been “what will we do if they choose not to continue in their job?”

It takes a deeply pessimistic self-concept as a pool of humans to not be able to think beyond the current “superstars”, to ‘maintain’ their “stardom”even when it has actually become fiction. Such things as suppressing the news of death or inertness of a ruler are found in countries that have been forced to attribute all their achievement unto one person. Like it were acountry largely of morons that will not throw up another competent leader.

This author calls for shedding of pessimism, seeing today’s worker as tomorrow’s confident and able entrepreneur and the executive, and an end to corporate and executive welfare policies. Top-Down Corporate maintenance assaults the importance of the highly productive and smart worker to the Enterprise, burying such people in the swarm and number of the "employed", with 'employment' effectively reduced to a corporatized welfare dole with an Employee ID. That any welfare needs be directly delivered to the individual rather than through employers, including early retirement to make way for younger workers to get into the workforce and chase the American Dream. I do support cutting file pushing, procedures, as also paperwork regulations, as the other leg of the unshacklement of the young and the ambitious, as also towards deficit management.

If nation states are now supposed to serve the Multinational Corporate States as suppliers of workers, nations will need to nourish their young with Education and health and enable the old to retire forth early enough. The companies themselves cannot be relied upon to provide these to their workers’ families as they can always do future hiring from well-nourished pools available elsewhere.
If, on the contrary, nation states are to continue to be the primary force in one’s life, then businesses and corporate bodies need to pay their taxes for the upkeep of society, and stressing the individual over collectives demands that more taxes be collected towards it from income that businesses generate rather than what they pay the individuals for their contributions to it.

August 27, 2012

And The Shots Just Keep on Coming..

Below is the picture of the gun that was used in one of the mass shootings lately. There is one coming every few weeks, and this is horrendous. And especially their occurence in schools is the most horrifying.
This gun will not help any revolution against any Government, but this toyish gun looks easy to use on innocent people and children, firing a volley of bullets as simple as accelerating a car. This is not a hunting gun either.

So what's the point of keeping oneself and one's children unsafe by allowing the sale of such weapons over the counter? When wars are fought with other countries to avenge a mass murder, why no move to ban automatic and semi-automatic assault weaponry. If "guns don't kill people, only people do" then the same should be true of WMDs.

Suicidal gun laws - that make no sensible, philosophical point at all - are the real and present danger than any others - this and that country, humanism, peopleism, socialism, and what have you. NONE are more dangerous than domestic, causeless terrorists that can buy these easy-to-use automatic weapons and their reloads by just walking into a shop. It is most ironic that the very '''philosophers''' that show the most vociferous concern for "kids and grandkids" are the most vehement supporters of 'gunsmanship'. How nonsensical it is when you drop your children off to school, switch the TV on upon getting back, and learn about a shootout at a school out there, with its blow-by-blow account. Is this supposed to be entertainment? Is it a James Bond movie?

Genetically modified food, products from animals raised on unnatural diet, mentally deranged kids and adults, easy access to automatic guns and ammunition - are quite a self annihilating complex, more dangerous than any 'enemy' outside, I think. Minor differences over economic organization are not the issue of the time. Detoxing society of non-traditional automatic and semi-automatic weapons is. We owe it to ourselves and to God, the lifegiver, as to our kids, and grandkids to come.

August 26, 2012

Capitalism: The Importance of Competition Formation

Perhaps the most extreme form of entrenchment Capitalism is Socialism. Here, the currency Sovereign owns the major means of production, and these production units never have to go bankrupt. New players, even if allowed, have little chance of winning the market, as the existing units are guaranteed to 'succeed'. The existing units are, virtually unchallengeably, entrenched.

The design of a Capitalist economy could be predominantly private sector, yet it might be no better in terms of entrenchment as a Socialist one. If the private players have to just make sure that they do not fall separate from other players they 'compete' with, and they will be saved in the event of failure as an economic sector, that is bad enough. Worse is continuous support to business entities and existing Capital as a means of preserving the employment. It actually diminishes the importance of a talented employee and his capabilities and contribution.

True Capitalism is about giving fresh Capital, therefore Competition, formation at least an equal shot as the existing Capital.

That means several things:
1) Taxation of work and professional income, from where new Capital will emerge, be taxed at no higher rate than any kind of Capital Gains or Residual income (Dividends) from business.
2) Very little paperwork towards incorporating a new Business.
3) Little or no ongoing compliance paperwork requirement towards regulations.
4) In the event of any necessary bailout of a business entity, the bailout is not inclusive of its Management or Owners, or even Bondholders, rather it is of the entity.

Formation and Entry of Competition and departure of those that lost their magic, both business entities and individuals, is the key to an Achievement Society and a vibrant Achievement Capitalism.

Support towards retraining upon unemployment and providing retirement programs is different, but Entrenchment Capitalism (artificially maintaining businesses and individual employment as-is) is no less individual-demotivating than Socialism.

Reducing tax rates while removing differential treatment between income types (work, capgains, dividends) and spend types (deductions); and broadening the tax base, while cutting procedures, paperwork and procedurecracy; are all great ideas towards individual freedom and formation of Capital and Competition. Further towards this objective, the age groups that are going to see reduction or complete breakdown of some of their entitlements could be given additional compensatory tax break in the entitlement taxes here and now. The entitlement tax break need not be in the same proportion as the dilution in payouts to them that the system is headed for.

It's a different World out here now than when Adam Smith wrote his manuscripts. The Professional and the Worker today is the Capitalist just a few years down the road -- if only the system could begin to treat his earnings as Capital&Competition-in-formation, the hotbread of Individual Acheivement Capitalism.

August 23, 2012

Loss of Worthwhile Imperatives to Unintended Socialismization

Words are important, and words can get bartardized; words can tip us from one design framework of aiming sensible objectives into another, and one cannot sell an airplane ticket for a journey for which the traveller also seeks the thrill of driving; the wrong choice of vehicle can sum to naught the whole journey, could even land us somewhere we did not even intend to go! “Fairness” and “Justice” are conjuring “socialist”, “equal outcome” imagery and could damage the imperatives of “Open, Accessible Opportunity” and “Affordable gear-up to It”. Changing structures & incentives might be more successful than fighting individuals and groups, and 'Socialismization' could prompt the dumping of even the most sensible and undisputed imperatives, like throwing away the bread with the fungus.

Prelude

For a productive, robust socio-economy, efficiency and sensible outcomes are important. A person wants to be able to earn what he keeps and keep what he earns, whether s/he operates as an individual or family. At the same time, the individual can also be explained the need to do his fair-share to maintain the very structure in which s/he achieves and keeps. That calls for, for instance, fair, equitable taxation: there can be arguments whether the tax contributions be proportional or be they mildly progressive, but it’s difficult to buy regressive taxation. Furthermore, taxation levels ought to be generally mild (read: low rates) else the motivation to produce and achieve takes a beating. Also see: Dimensions of Fair Taxation

Showering too much welfare is also a problem for it dulls the need to be individually responsible and enterprising and leads to the bad outcome of becoming “equally poor” rather than “unequally prosperous”. The latter is a much better outcome, actually desirable, than the former.

Imperatives

An anarcho-Capitalist, truly freemarket economy does not have objectives. The expectation therein is that people’s choices in the free market will decide and achieve what society desires. In fact, what exists and endures is what society must have wanted in the first place.

An anarcho-Capitalist society may or may not be functional, hard to conjecture one way or the other. The important thing is that currently it does not exists nor are there sufficient people asking for it. The aggregate free choice of people is not calling it forth.

So, there can be Societal Objectives. For example, that people be able to affordably access health, nutrition, and aspiration tools like education. That one’s life and property be protected from actions of other people and the State itself.

Design Umbrella & Landed Design

The objectives above, by themselves, do not impose one design over another. They do not, by themselves, carry whether there be Government services to deliver some of these..or none of these. The design choice is dictated by the direction the populace finds acceptable. A society could choose an overarching umbrella of Capitalism providing freedom and feasibility to achieve for one and all, but shy away from receiving achievement for free. An unbridled freemarket Capitalism demands Government inaction no matter what, yet an actual “Capitalist” society, its strong psyche in favor of Business entities notwithstanding, could be quite at home with Antitrust Laws and breakup of Too Big for Comfort corporations.

The right word for a Capitalist societal intention described above would be “Private Open Opportunity & Achievement” society. Herein, to keep opportunity and competition open, the Government can act in ways that are not dogmatically capitalist, including running free public schools. But this might not override the staunch distaste and distrust for slipping into the design choice of Socialism.

Structure & Incentives

If some market participants entrench themselves in a way that brings forth bizarre outcomes, that need to be slashed, the cause of the outcome structured or nuanced out. As an example, I was hit by a bill of more than $1,000 for waiting my turn at a medical facility’s ER for 2 hrs, the doctor’s bill comes separate! This is plain ridiculous and there is no doubt that Insurance Companies and Medical Establishments have manipulated the prices and access mechanism to shift the equilibrium of demand and prices that yields them better money for lower effort (seeing fewer patients) than what a normal freemarket would yield. In a practical Capitalist umbrella, it is possible for the Government to act on such malfunctions and undesirable outcomes, just like Antitrust. The options for the nature of intervention, or control (such as disintermediation through legislation), or participation of the Government in the domain of malfunction can be several. Also see: Thought for Medicine

Constraints & Room for Action

A “Private Open Opportunity & Achievement” society is clear as a rock that it does not want the Government to achieve for an individual. Yet it will likely want Government to ensure that the Opportunities and Achievement are open to all. That, having once achieved, the achiever does not rest on his laurels through his earning life such that his wealth multiplies passively on an autopilot, certainly not by means of a systemic creation of barriers of entry for challengers. Rather, the system even support the losers of the last battle to be able to retrain, provided they have the interest, and challenge the winner back. This is not a moral imperative, at least not merely so. It is also a practical imperative, for else the Achievement Society will be maintaining a man in his one call wonder achievement, and in effectively ~shielding him from challengers, suffer the same degradation and plummet of productive steam as socialism, albeit it will be a plummet just one step better.

Government Budget and ability to spend is a constraint as well. If college has become ridiculously priced, perhaps they need to be allowed to crumble by themselves by never guaranteeing student loans. This forces the banks to question the price (and value) of the degree for which loan is sought. Same, if a student for whom the degree did not work out is structurally enabled to have it wiped out in a bankruptcy.

The Government might be a currency sovereign, and money mere paper for it that it theoretically can print as much of as it needs to, but MMT discourse forgets that it needs to never become mere paper to the players in the economy that they can simply ask from the Gov. See: A Qualified Critique of Popular MMT Soundbites

Words

Erroneous labeling of objectives can lead to their wrong perceptions, derailment, or march in the wrong direction. In economic terms, it might be better to march to “Open Opportunity” and “Open Competitiveness” and "Widespread Motivation" (to play, replay, and succeed), than to “Justice” and “Fairness” that could degrade to protectionism and overly State-nannyism. In economic policy discourse, the latter terms have gotten corrupted to have Socialismic connotations and can even actually tip a person not originally intending Socialism headlong into it as rhetorical duels ensue. Fewer people will join an invitation into a socialist sounding vision if the overwhelming ethic is one of individual achievement. Individual achievement does not favor entrenchment or upwards redistribution or other ways of success-maintenance by Gov or Top-Down ‘shamanigan’ employment, but it will likely choose a status-quo with such elements (as opposed to lending solid support to weeding them out) when faced with a, real or perceived, onslaught of “let us all be rather equally poor” socialism.

There can be a pursuable objective of having wider, willing buy-ins to change proposals. For instance, if entitlements are planned-in, or otherwise projected, to dilute or crumble for a given demographic (Under 55, Under 45, as the case may be in the changes about to be implemented), the buy-in from the demographic could be induced by weaving-in the lowering of their entitlement taxes right now. The tax reduction for the demographic need not be in the same proportion as the cuts or dilution they will face when they receive benefits, but the sugarcoat does make the inevitable bitter pill buyable. Call it fairness, compassion, or Buy-in, normally it makes no difference. Yet it does to a population firm on not slipping into a design that is not favored by it, one that is illogical and not based in the reality of human motivation.

Replacing or cobbling Structural mal-designs and ill-structured incentives in the game might be much better geared to succeed than fighting or dissing malevolent and noxious players of the game: individuals or organizations personified. If the game is appropriately restructured, players will deliver the goods, and it could even yield a reworked player set.

It is a challenging walk of thought, words and actions – to keep the direction right - that the political leadership intending on stepping a socio-economy to the next level has the o(w)nus of executing. Some of it could be like putting popping corn on the stove and turning on the heat (of policy, structures, incentives) and see them pop only a little later.

EPILOGUE: Time to Make Amends Is Before the Next Boom

Significant changes are normally not possible when Party is in full bloom.

The time to make changes to the structure and incentives, and beef the competition formation infrastructure, is when the previous party fizzled and the new one hasn't started yet, or is still in infancy. Nobody can stop a football match after it has started and engrossed the players, betters ("investors"), sponsors and spectators.

August 14, 2012

Balancing the Overall Budget Is Like AtB Cost Cutting in a Company Whose Stuff Isn't Selling

It is not the most important thing for winning back marketshare or to deepen the market.

Time to get Auf of support of unrequired complexity that willy-nilly keeps people employed, for it can eventually strangulate the very economy that tried to be overly humane in spinning/protecting such roles and jobs.

Not to diminish the importance of thoughtful zero-base budgeting, but the most important thing for a turnaround is the restructuring - to get the best people, wherever you can find them, to be incharge of key LINE functions: production and delivery, and pay them the best. Ability is established when personnel are sought by players in the marketplace, not in the degrees they have bought in Universities. In tough times, in a turnaround process, unaffordable Staff positions are cut. So too are roles that appear to be Line functions but are actually pretense roles to keep people on the payroll - that do not add value, only procedural delays in getting the needed things done, to keep their own importance and appearance of relevance.

Open Meritocracy ultimately yields dividends for everyone, even earning back - many times over - the severance paid out to the mismatched to pursue more appropriate opportunities or retrain for them.
--
In the context of a country, this implies playing a bigger game than just managing the unemployment number and the fiscal deficit of the moment. It includes not trying to fit a square peg in a round hole, not living in denial of structural unemployment, manifest and latent.

Some make-work “job creators and protectors” that eventually turn counterproductive, strangulating, and eventually economy contracting, while also worsening the public deficit, are:

Pretense of Solid Capitalism to Create or Protect Sham Jobs

Corporate Governance & Regulation
There are complex codes of Corporate Governance in place. Yet there is no Corporate Governance on the ground. The Rajat Gupta episode is a ‘shining’ example of how pristine it truly is for shareholders’ representatives to safeguard their interests. Corporate Governance eventually condenses down to making and filing a few statements - additional paperwork with no value. But it creates a ton of white-collar employment in producing this paperwork, and verifying that all blocks in those templates are filled in.

A much simpler approach would be to simply mandate the limits of Executive compensation, linked to profits computed to published guidelines. And no need to file any paperwork, but violations will get punished, just like for stealing. We do not file paperwork every year that we did not steal from our neighbors, yet violation is punished.

Same is the case with Sorbanes Oxley. A ton of new jobs opportunities for the legal, accounting, and auditing personnel - to produce more compliance reports!

Overly complicated laws might also be connected with having a World with more employment, in legal, accounting, and litigation services. But it discourages people that want to really produce value – because they have to carry the file pushers and making-the-case-people on their shoulders – and not even as dependents but as their lords.

Healthcare
Even a blind person can see that the prices of health services are simply nonsense. Just being in a hospital facility for one hour can get you a bill of more than $1000, bill for doctor services would be separate! I know this because I have received such bills, asking me to pay up because the “insurance” provider is trying to wriggle out on some excuse. The bills for a small hospital room (just room rent) for 3 nights can come to $8,000!! Not even Four Seasons charges this. And, by the way, if you as much as used up a bottle of water in that room, THAT is separate, as is the doctor and nurse fees et al.

The insurance companies have simply manipulated all health services prices to suit their business model and controlling the consumer from actually accessing the care that he has been buying insurance for.

The right solution to obtain a market based, sensibly priced healthcare is to outlaw health insurance, and to nationalize malpractice insurance. To, at least, force health insurance to be limited to Catastrophic Only policies by law, or to seed the concept via a Public Option. With that in place, it would be best to get rid of the Employer Mandate and, instead, mandate employers to add the hitherto health spend on the employees to their paychecks, and let them obtain their own combination of insurance and direct buy of health services. I’m not sure if this approach will work for seniors, as it is difficult for them to shop around for their healthcare, especially when, at present, there is no move to outlaw health “insurers”, the market seigers, from selling “coverage” for routine illness, nor is there any to nationalize malpractice insurance.

Two things come in the way of cleanup of healthcare, with the result that raw care prices are inflated 10 times and, post insurance adjustments, we pay a little over what the market price of the health service would have been if there were no insurance (so what have we really been, additionally, paying the insurance premiums for?)

Firstly, is the desire to look like being a Capitalist Society to the extent possible - so the Government is not supposed to mandate the abolition of health insurance, cannot operate a public option, and cannot nationalize malpractice insurance. So keep suffering!

Secondly, abolishing or greatly slashing the size of the health insurance industry will mean job losses for the moment and, now somehow, supposedly Capitalist Govt becomes responsible for the Unemployment figure! So, it’s a cocktail that eventually gets lethal than life saving.

Low Income Immigration v/s High Income Immigration

The idea is to immigrate people for jobs that US persons think pay too low for them to be interested, while making it difficult for companies to bring in people for jobs that pay well. The unreasonable hope in this is that a job is a job and a person that has the University qualification it needs can do it, and do it well. This unfortunately is not true. Not every engineer is same for a given technology job. It is much more than qualification, for the individual energy, enthusiasm and aptitude for that specific job is important. Someone who has been say, a manager in a technology company cannot just pick up a technology job when his manager position is extinguished in reorganization. A market-based simple skilled immigration paradigm, not bureaucracy driven case-file approach, is a must have. In the linked article, I have argued:

An alternative approach can be to survey businesses to establish the number of workers that will need to be imported in each profession – IT, Finance, and so on. Based on these numbers, allocate Visa and Green Card numbers to be given out that year. In granting Visas, go in decreasing order of wage offered to the immigrant worker. In granting Permanent Residence, go in decreasing order of the tax the person paid in preceding 5 years. This approach automatically favors the professionals that are the best contributors into the economy (as producers and consumers) and the welfare system, and truly most needed by employers because the wage paid says more than anything else on this matter; while, with the numerical caps, also prevents the displacement of “US workers” by wage undercutting. No file-by-file procedure Bureaucracy or employer sponsorship or expensive attorney representation required to run this - this can work more like applying to DMV for a driver's license with a few required documents or merely the SSN. This approach also incidentally increases the concentration of such people in society that will be able to stomach a complete breakdown, or partial or complete rollback, of the welfare system should it occur.
Keeping and continuing a system that adds more and more low earning people in the working population, and looking the other way on structural unemployment – manifest and latent, will yield a bigger disaster on deficits and welfare when the current working age population retires. The economy needs a bigger number of young, energetic, productive people, homegrown and immigrated, that can find themselves well-paying jobs. Let young people sell themselves in a free market for talent, and the others will be able to find some service they can sell them. Ultimately, the formers will be able to cover some of the costs of retirement benefits for the previous generation, buy houses, in the process support service sector jobs in real estate and banking, and provide some support to sinking home prices. In the scenario currently running, the middle aged get artificially maintained in their jobs, then get to enjoy all their entitlements As-Is, and pass on an empty bag to those below 55 now. Any 'adjustments' need to hit everyone, starting with the ones whose elected representatives all these years ran an era of lopsided Financial Governance and Immigration.

Keeping People in Their Jobs

There are herculean procedures in removing personnel that are deadwood for a company. On top of that, to “manage” the deficit figure, the retirement age keeps receding, leaving even smaller chance for a rejuvenating refresh of company personnel with fresh workers, homegrown and immigrated. Eventually, big corporate entities begin to function like Govt bureaucracies, dependent on Government spending to rake in more Revenue (like Revenue shoring were a departmental budget allocation).

Conclusion

Government, as well as Big Business, needs to shed procedures and artificial jobs created to administer them, that strangulate producers and lord over them while actually living off their work.
Force-keeping people in their mismatched jobs and Org structures, in their homes with “value” intact, banks in the black without mark-to-market and without allowing prices to descend to the state of the economy, are eventually the most dangerous steam leaks for the economy. And like entitlements, they contribute to bigger deficits. Not to deny the need for entitlement and unemployment reform, but a singular focus on deficits, and plugging the hole merely with retirement "reform" for the Under 55, especially involving raising of the retirement age rather than cutting it, is like cost cutting measures in a company whose stuff isn’t selling. Eventually it is restructuring that brings the turnaround, and holding Govt responsible for job losses in the near term is a huge distraction.

August 10, 2012

Deficits Against Positive Value

Deficits, or even spending covered by taxes, that redistribute wealth and income upwards create a new road to serfdom, one where we desperately hope for a few trickle down jobs from the well perched and pampered. Deficits that simply redistribute downwards, with no value delivered, demotivate individual achievement.

There has to be a better way than both of the above. One of open merit achievement, like an Olympics race - yesterday's winner does not receive maintenance to stay a winner today, nor the son of yesterday's winner for that matter; One that ensures investment into, and opens opportunities for, the meritorious young, while saving the prior generation from a virtually mandated work life that never ends; and One that steers clear of, indeed slashes, the overdone Government procedurism and suffocation it mounts; Where mild disinflation is the policy hope, not inflation as the intent.

From my post A New Economic Orientation:

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July 25, 2012

Will the Real Capitalism Please Stand Up!?

In closing:
In blindsounding the bugle of Capitalism, its own objectives and intended milieu are getting compromised. In the guise of Capitalism, Individualism, and Success-celebration, nonsense athrives. Capitalism is supposed to continuously produce winners and losers - like Olympic sports, and not entrench one time winners forever.

Yet efforts, or even talk, to bring things back to sense get lost or retreated in the rhetoric of “Capitalism” pointing to “Class Warfare” and “Big Government”, even as the current state is Parsecs away from any kind of Capitalism people or intellectuals think they ever bought!


July 22, 2012

Restoring the Principle

Unbailouts, Now.

The process will have use of bright Finance professionals that truly know their stuff and not smooth sailors on Government Manufacture. They would quantify value of the institutions, pools, liens to be acquired - using probability distribution projections around eventual defaults on the underwater mortgages v/s their successful redo, home price index trends, and so on.

The Bailouts, at once, violated the foremost principle of Capitalism, both Popular and Classical versions: That there be no socialization of what you lost for yourself, if all of your achievement and wealth be deemed of your own talent alone, and if Taxation mandated to stay low and even effectively regressive rates sometimes overlooked.

I argue in my previous post that letting the Finance industry just go bust was not the same thing as letting all of the .coms 1.0 go into liquidation. And that a cleanup under the receivership of Government was perhaps infeasible in the face of escalating socialism angst, one that persists to this day.

But garage sales to new, private owners that have the confidence to bid for, buy, and manage the assets better is neither bailout nor letting bust. New Financial Institutions, with fresh Capital, could acquire the failing old ones for what the old ones are worth (like ING acquired Barings for $1 after a certain Nick Leeson wrecked it with derivatives), or acquire the mortgage pools that have nothing like the value they are being held at on the balance sheets, or acquire the individual liens that are underwater.

Withdrawal of props and encouragement of garage sale of defunct financial institutions is the necessary germ to get back onto the path of individual and organizational merit, and honestly collecting the result of one's own gambles.

The process will have use of bright Finance professionals that truly know their stuff and not smooth sailors on Government Manufacture. They would quantify value of the institutions, pools, liens to be acquired - using probability distribution projections around eventual defaults on the underwater mortgages v/s their successful redo, home price index trends, and so on - and create a bid strategy for buying the target companies or assets in a calculated-risk in quest for returns.

Bottlenecks in Private markets, whether for homes, stocks, or MBSs, can only be cleared via some Capitalist-buyout juices flowing in the lurch for killer profits.