The Sequestration Farce

Well, now that the Stuporcommittee has spent many long nights having fine dinners on the taxpayer dime and accomplished absolutely nothing, it’s time for the whole of congress to do the same.

In theory, they are “under the gun” of something called “Sequestration”. The prior “law” these Sausage Kings made which created the stupid, vapid, and probably illegal Stuporcommittee (are a FEW congress critters REALLY constitutionally empowered to make laws for everyone, or does my representative have a mandate from ME to be involved?); also called for an automatic “cut” (or is that just a ‘reduction in the growth’?) in the budget if nothing else were done. That “cut” is supposed to be $1.2 Trillion. Half from the DOD.

OK, clearly they are lying. The question is: How is the lie embroidered?

The Lie

How do I know they are lying? Well, lets take a look at the 2012 budget (that started in October of 2011… guess they are not so good with dates either…)

The 2012 United States federal budget is the United States federal budget to fund government operations for the fiscal year 2012, which is October 2011–September 2012. The budget is the subject of a spending request by President Barack Obama, while the Republican-held House of Representatives, coming off of a major victory in the 2010 Congressional elections associated with the Tea Party movement, announced a competing plan for the 2012 budget. The budget plans are intended to focus on deficit reduction, but differ in their changes to taxation, entitlement programs, defense spending, and research funding. The budget was greatly effected by the Budget Control Act of 2011, which was passed in August 2011 as a resolution to the debt-ceiling crisis, which mandated budget cuts over the subsequent ten years beginning with Fiscal Year 2012. The actual appropriations for Fiscal Year 2012 must be authorized by the full Congress before the budget can take effect, according to the United States budget process.

So this is the Obama budget, not the Republican suggestion, and despite our already being in it’s operational year, is still up for grabs… Guess it’s easier to “plan” things that have already happened.

So what does this current sort of a budget hope post-diction political football ploy propose as the Mandatory Spending and the Defense Spending level?

Mandatory spending: $2.382 trillion (-3.2%)
Item 	February 2011 Obama administration request 	
Social Security 	$761 billion (+2.6%)
Medicare 	$485 billion (-0.6%)
Medicaid and the State Children's Health Insurance Program (SCHIP) 	$269 billion (-2.5%)
Unemployment/Welfare/Other mandatory spending 	$612 billion (-14.0%)
Interest on National Debt 	$242 billion (+17.1%)
Troubled Asset Relief Program 	$13.0 billion (-54.0%)

Again we have the entirely discretionary welfare state programs described as “mandatory” (when the truth is that they are simply ‘pre-authorized’ and can be changed at will by congress – but who ever expected them to use words honestly). TARP is on a ramp down, interest is on a giant ramp up (soon to explode whenever the economy starts to recover and interest rates roughly double from 2% to the more normal 4% range). Unemployment is finally dropping some (and would plunge if they stopped handing out perpetual unemployment payments as a form of welfare payments).

But of the $1.2 Trillion to be “cut”, it is to be done as 1/2 DOD and 1/2 other stuff. You can pretty much bank on the idea that $600 Billion will not be taken out of Granny and The Kids as that would just look too bad on a reelecton bumpersnicker… Can’t touch interest, and TARP is pretty much something we’re stuck with as it runs down.

How about the “discretionary” side, and that $600 Billion from Defense?

Discretionary spending: $1.344 trillion (-3.1%)
Item 	February 2011 Obama administration request 	April 2011 House Republican proposal 	Enacted
Department of Defense 	$553.0 billion (+0.7%)
Overseas Contingency Operations 	$118.0 billion (-26.0%)
Department of Health and Human Services 	$79.9 billion (-1.8%)
Department of Education 	$77.4 billion (+6.2%)
Department of Veterans Affairs 	$58.8 billion (+3.1%)
Department of Housing and Urban Development 	$49.8 billion (+0.5%)
Department of State and Other International Programs 	$50.1 billion (-0.9%)
Department of Homeland Security 	$43.2 billion (-0.9%)
Department of Energy 	$29.6 billion (+4.2%)
Department of Justice 	$28.2 billion (-7.2%)
Department of Agriculture 	$23.8 billion (-7.1%)
National Aeronautics and Space Administration 	$18.2 billion (-6.7%)
Department of Transportation 	$13.4 billion (-4.1%)
Department of the Treasury 	$14.0 billion (+0.8%)
Department of the Interior 	$12.1 billion (+0.3%)
Department of Labor 	$12.8 billion (-8.3%)
Department of Commerce 	$8.8 billion (-2.3%)
Army Corps of Engineers 	$4.6 billion (-6.2%)
Environmental Protection Agency 	$9.0 billion (-10.3%)
National Science Foundation 	$7.8 billion (+4.6%)
Small Business Administration 	$1.0 billion (-1.0%)
Corporation for National and Community Service 	$1.3 billion (-11.1%)
Disaster costs 	$6.0 billion (+200%)
Other On-budget Discretionary Spending 	$44.9 billion (-3.9%)

Well, there’s your second clue that the politicians are lying. (The first, of course, being the fact that their mouth is moving…)

The whole shebang is only $1.344 Trillion. I can pretty much guarantee that they are not going to be taking $1.2 T out of $1.3 T, so there is another “gimmick” in play here.

Also, look at the DOD budget. $553 Billion. Not going to get $600 Billion out of that, either.

Nope, now it is a Slam Dunk that their is a Big Fat Lie in the notion that we’re going to “cut” “THE Budget” by $1.2 Trillion. When they spent a couple of $Trillion on things like TARP and bailing out their friends, that was spent as hard cash and immediately. (But, strangely, as ’emergency spending’ didn’t raise the budget…)

Even the rather left wing “Times” is not amused:

Sequestration. So Far…
Posted by Mark Thompson Tuesday, November 22, 2011 at 8:28 am

The Joint Select Committee on Deficit Reduction’s failure to come up with a dime – never mind $1.2 trillion – in deficit reduction over the coming decade has set the stage for both tragedy – if you’re a defense secretary given to supersonic flights of rhetoric – and farce, if you’re an American taxpayer.

Now here we have the next clue (which is also in the description of the budget at Wiki).

Over a decade.

We’re going into the hole at about $1 T / year, so it sounds like a $1.2 T ‘cut’ is supposed to fix that, but it is “over a decade”, so all they are really saying is “not going to do a thing about the bulk of the $1 Trillion added debt each year, just going to fight over the error band.”

So we’re not looking for $1.2 Trillion out of this budget. We’re looking for $120 Billion. The DOD Share to be $60 Billion. Oh.

Also realize that the 2012 Budget is NOT what was spent in the last budget. They are not starting from the same starting gate. It’s a total fiction made up new with whatever folks wanted in their Christmas stockings. Ignoring for the moment that what is actually spent may be more than the budget; and ignoring that many things are funded ‘ex-budget’ or ‘off budget’ (little things, like a few $Hundred Billions in war adventures in various countries…): What was the 2011 budget? (Real managers think of a ‘cut’ as being less than you spent last time, rather than just a diminution of your wildest dreams of avarice…)

Well, the wiki for 2011 is a bit unsure (but aren’t we all rather unsure what the hell congress is doing?), having no nice listing by department as we have for 2010 and 2012. Even the total is a bit, er, vague:

In the Obama administration’s initial spending request, the federal budget for 2011 was originally projected at $3.69 trillion in total spending.
Total requested spending is $3.83 trillion and the federal deficit is forecast to be $1.56 trillion in 2010 and $1.27 trillion in 2011.

So there’s about $140 Billion of “slop” just in the guesses about what we might have already spent…

Compare that to 2012: “The President’s budget for 2012 totals $3.729 trillion.”

It is either more, or less, maybe… but what’s $100 Billion among friends?

(Which just leads me wondering how do I become a “Friend”? Clearly it’s more lucrative than actually working for a living…)

But lets assume that the “request” for 2012 ought to be compared with the “request” for 2011 and 2012 will have about the same amount of actual over run. $3.729 – $3.69 = $0.03 Trillion, or about $30 Billion of “Hope For More” in the budget request. As we’re (supposedly) looking for $120 Billion of “cuts”, we can see that $30 Billion of it are “hope”… leaving $90 Billion in actual “cuts” in 2012. Well inside the error band of actual spending last year.

Gee… $90 Billion is looking a whole lot smaller than $1,200 Billion. Guess it’s that Special Congressional Math they use…

Now, cut that $90 Billion in half, you get $45 Billion for the DOD share and $45 Billion for the rest of the budget.

I make that less than 10% of the Defense budget. Even less for the rest (especially if some of the ‘non-discretionary’, like TARP and Unemployment benefits get the axe too… you know, that unemployment that was supposed to run out about 2 years ago but was continued as ‘social welfare bribe money’ to buy votes for Obama and the Dims?) At $13 B and $612 B it looks like they have room for a few Billion of ‘cuts’ to their aspirations. Heck, just bumping off “Housing and Urban Development” covers the whole tab. I think it’s pretty clear that whatever they have been doing with housing it has not been very effective…

So all this noise and nonsense, all the histrionics, Kabuki theatre, hair pulling, character assassinations, and wailing, and all the lies and deception are all over nearly nothing. Less than a few percent. Something the average person or corporation does without even noticing. No bonus this year? OK, skip the new car.

Our family is dealing with “furlough days”. Days that the local school district does not pay you to work. (They have a budget issue too). So the spouses paycheck took a hit. I had a contract that ended earlier than expected, a significant cut in expected pay. No big deal, we do what all families do, we adjust.

But the monster we call The Federal Government? Ask it to eat just one less Ice Cream Bon Bon and it acts like you are a child abuser about to hit it with a baseball bat. Wailing, gnashing teeth and wringing hands, screaming and having a royal tantrum.

THEN has the gall to tell bald faced lies as a matter of course. Spending $1 Trillion can happen in a week with a bill that “we have to pass it to see what is in it” and the money evaporates without a trace into the maw of the beast. “Cutting” a $Trillion is really cutting $120 Billion this year that’s really only $90 Billion of money, the rest being aspirational spending. For THAT the Dimocrats wanted changes to the tax code to “soak the rich” and want to add a variety of other taxes as available? For THAT the Republicrims are talking about doing things like adding a National Sales Tax? (I’m sorry, Herman, your 9-9-9 sounds good at first, but after seeing what the Sale Tax part would be wasted on, I think you need to look again. Make it a 9-9-0 tax and you might have something. 9% flat tax on corporations and individuals.)

Were it not for the fact that the collapse of the private economy is already causing a 10% or so cut in people working, so slapping The Beast with a 10% loss of income taxes, I’d be advocating a “take a few days off” slowdown in economic participation to get the point across to these loons that we’re more than a little bit P.O.d. As it is, natural economic forces are acting to kick them in the deficit. This is the inevitable consequence of THEIR policies that send industry to lower tax locations and that think “government spending” can either create jobs or create wealth to tax (as income taxes or otherwise). All it can do is cause one person to lose a job so someone ELSE gets a government job. The end result of which is the loss of the tax base to pay for that government job. What we are seeing now. (California has it in spades. Greece only a little more so.)

IMHO, we’re in the ‘end game’ of this particular game. Our political masters have promised $Hundreds of Trillions of “free” medical care and other goodies including welfare and unemployment payments that they can not fund. They have entered into about a $Trillion of military adventures (much of it ‘off budget’ so not even in the numbers above) to play Cop To The World (all of it unsustainable and unfunded). They have passed laws – signed by Clinton and foisted on us by Barney Frank – to make sure everyone could get a subsidized mortgage home and causing a housing bubble / collapse. And so much more…

Like all ‘sugar highs’ you feel excited for a moment during the rush. Then comes the crash. Not only is there no money with which to pay those “mandatory” welfare benefits, there is none to pay the even larger public pensions that have been promised and none to pay the overseas adventures. The collapse of the housing bubble has taken with it all the home construction jobs (and resulted in a massive drop of transfer payments to Mexico from all the Mexicans it employed. What? You thought all those folks speaking Spanish in the construction trades were US Workers? Silly person…) but all the tax take dropped with them.

But it is even worse than that. There is a Demographic Bomb for income, too.

The Income Side

I’ve talked about the Demographic Bomb in terms of retirement and medicare payments. But there is another side to it as well. Look at the income side of the 2012 Federal Budget:

Total receipts

Estimated receipts for fiscal year 2012 are $2.627 trillion.
Item 	February 2011 Obama administration request 	
Individual income tax 	$1.141 trillion
Corporate income tax 	$329 billion
Social Security and other payroll tax 	$925 billion
Excise tax 	$103 billion
Customs duties 	$30.0 billion
Estate and gift taxes 	$14.0 billion
Deposits of earnings and Federal Reserve System 	$66.0 billion
Other miscellaneous receipts 	$20.0 billion

Individual Income Tax and Social Security come from people working. I make that about $2 Trillion total. Out of $2.6 Trillion.

What happens when the Baby Boom leaves their highest paid and most productive work years and retire?

I’m sorry, but our kids are just not making the same amount of money we did. A “boomer” at peak earnings is being replaced by a “20 something” selling retail goods for cheap.

Even if the economy were to recover (a prospect highly in doubt as long as our Congress Critters keep doing exactly the wrong things and believing their own bullshit, telling each other sweet lies they choose to embrace) it is recovering right into a national income curve reduction built into the demographics of our nation.

Not only are the boomers a bolus of demand to Medicare, Social Security, and Retirement Plans, they are also a bolus exiting the working wage earner tax payer cohort who make up the bulk of Federal Revenues.

But since that happens during some other guy’s term, nobody cares.

In Conclusion

The Feds have an incurable problem. Several, actually. They have no foresight and can not even see the actual size of their problem.

There is little hope they could do anything sane about it, even if they DID have the foresight and will.

Their present actions speak loudly and say that not only are they not looking at the problems to come, not only are they ignoring the problems directly in front of them, but they are proposing fantasy solutions based on believing their own lies about what is happening.

They are indulging in Theater at best, delusions at worst. They could cut any one of several substantially worthless departments and do much more to help the nation. As an example, the Department of Education at $77 Billion. Did not exist prior to Carter and we had much better education systems then. The entire history of Federal meddling in education has been one long downhill slide in educational quality with ever more time wasted on stupidity. (My wife spends most of her time now filling out forms and doing mandated testing rather than actually teaching kids and has expressed a desire to exit the field as it’s not doing anything for the kids – her reason for teaching and entering Special Ed in particular.) I’m sure there are many other departments that would also create positive results in their demise, but I’m most familiar with the Education Department and it is one of the newest, so easiest to show that things were better without it, and not that long ago. It’s also a ‘bi-partisan screw-up’ as NCLB Nickle-Be is a Baby Bush catastrophe that can be trashed with it.

But no, it is not in the DNA of The Beast to remove any stupidity what-so-ever once it is a line item in the budget. Maybe “trim the growth” in one year or other, but only if it is the darling of the opposition.

IMHO this insanity will not end without a major calamity of some sort providing the sword with which to do the chopping. I would suggest a major war and the attendant war effort, but the last couple of those were exploited by Progressives to give us much of the albatross we have today. “Never let a disaster go to waste”… No, I’m pretty sure that war will be the broom that sweeps parts of Eurasia, but here not so much. Here I suspect it will need to be a different process. Perhaps a collapse of the State Budgets such that they finally get off their asses and use their collective States Rights to reform THEIR government. The Federal Government is a creation of The States. At any time they can take it back and discipline it. Perhaps they will realize that sending money to D.C. in the hopes of getting some of it back as ‘block grants’ is just stupid. Perhaps they will decide to put themselves back in charge of any non-defense things. Perhaps…

One can hope… “But hope is not a strategy. -E.M.Smith”

The fear, of course, is that we continue on with ‘business as usual’ down the Progressive Path we’ve been on since Nixon or so. (Yes, Nixon was a progressive. He gave us such things as the EPA, OSHA, and Environmental Impact Statements and was on board with Obama Care… Don’t think so?

“In 1971, Senator Edward Kennedy of Massachusetts proposed a plan for universal federally run health insurance, partly motivated by dramatic rises in public and private health care expenditures. In response, Nixon proposed a health care plan which would provide insurance for low-income families, and require that all employees be provided with health care. As this still would have left some forty million people uncovered, Kennedy and the other Democrats declined to support it, and the measure failed, though a Nixon proposal for increased use of health maintenance organizations passed Congress in 1973.”

A mandate for all employees to have healthcare and poor folks too. Just not quite socialist enough for Teddy Kennedy who wanted 100% universal Federally Run or nothing… and got nothing.

So I’d suggest that the Republicans are just as bad as the Democrats in getting us into this “mandated mess” and heading down the progressive road to economic hell (handbaskets optional…)

From the “Nixon Wiki”

In talking about his domestic initiatives with me, Nixon insisted that all of them reflected his own background and association with the progressive wing of the Republican party
Nixon closest aides usually placed revenue sharing and environmental and land-use policies higher on the list of his domestic achievements than the former president did himself. According to John Ehrlichman, this continuing difference of opinion arose from the fact that Nixon paid more personal attention during his first term to those domestic issues with “political juice,” such as cancer research, labor legislation, drugs, crime, taxes, desegregation, and welfare, than he did to economic matters involving revenue sharing, housing, hunger, transportation, and consumer protection, or environmental and general health concerns.

So the issue is about to which of the Progressive issues he gave the most attention, not getting conservative issues advanced.

The problem here is pretty simple. BOTH Democrats and Republicans are infected with The Progressive Disease. They dress it up in different doll cloths and give it different names, but each side is just fighting over WHICH progressive football they advance down the field. Baby Bush gave us a national Medicare Drug Plan and National NCLB Federal control of local teachers daily work products (tests, not teaching). Obama gives us Obamacare and Endless Unemployment Welfare. You can make matching sets from just about every president with the possible exception of Ronald Reagan, back to before Roosevelt (the first one. Wilson, who followed him, was dramatically “Progressive”). Even Harding (while generally for cutting government budgets) gave a call for Federal regulation of radio and transocean cable. He also freed some Socialists from prison:

On December 23, 1921 Harding calmed the 1919–20 Bolshevik scare and released election opponent, socialist leader Eugene Debs, from prison. This was done as an effort to get the United States returned to “normalcy” after the Great War. Debs, a forceful World War I antiwar activist, had been convicted under sedition charges brought by the Wilson administration for his opposition to the draft during World War I. Despite many political differences between the two candidates Harding commuted Debs’ sentence to time served; however, not granted an official Presidential pardon. Debs’ failing health was a contributing factor for the release. Harding granted a general amnesty to 23 prisoners, alleged anarchists and socialists, active in the Red Scare.

No, we’ve had this Progressive Disease for a very long time now, on both sides of the isle.

The Progressive Movement began in the late 19th and early 20th centuries in cities with settlement workers and reformers who were interested in helping those facing harsh conditions at home and at work.
The term progressivism emerged in reference to a more general response to the vast changes brought by industrialization: an alternative to the traditional conservative response to social and economic issues and, despite being associated with left-wing politics, to the various more radical streams of communism or anarchism.

So, not quite as bad as communism or anarchism. “Communism lite” I suppose? Today we would call it some form of Socialism (but the American Progressives don’t like to be called that as they seem afraid of the truth, never approaching it if at all possible in any venue, as near as I can tell… )

Political parties, such as the Progressive Party, organized at the start of the 20th century, and progressivism made great strides under American presidents Theodore Roosevelt, Woodrow Wilson, Franklin Delano Roosevelt, and Lyndon Baines Johnson.

Which gives you the ‘early’ shopping list of policies and departments to eliminate. I’d add Nixon to the list with his legacy departments and clearly Carter belongs (along with The Clintons who are self avowed Progressives).

Do I think we can ‘walk back’ 100 years of presidential “legacy” any time soon? Nope, not at all. If we could, things would be solved in no time flat.

Unfortunately, I think it will take a collapse into rather hideous hardship before folks will toss out the legacy departments and Progressive functions of government. I can only hope that the collapse phase either comes after I am gone, or happens very very fast… So far we’ve run up to the wall, then stepped back just a bit each time. Just enough to not auger in. The election of Reagan is a good example. Bought us a couple of decades of prosperity and growth again. But with each cycle the pendulum has swung with less vigor and the recovery less strong; the added parasitic agencies grow larger and more numerous. I’m pretty sure that the next Conservative Hope will do even less to rescind the Progressive Agenda. The present budget mess only confirms that impression.

So I’m left to conclude that the lemmings will continue their march into the ice cold ocean of Progressivism, ever more numb with each icy step… dragging the rest of us with them. So march on, Greece and Italy. Perhaps you can serve as a signpost that “Here There Be Dragons!”. And remember, we’ve ‘got your back’ as we’re marching right behind you…

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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57 Responses to The Sequestration Farce

  1. PhilJourdan says:

    The “Mandatory” cuts are less than 10% of the deficit. It is a sham to begin with. When you are failing to pay your mortgage, cutting out sliced bread is not going to help you.

  2. Jason Calley says:

    I pretty much agree with everything you wrote above. In fact, when it comes to the government’s ability to waste money, I would mind you of the 2001 minor news story (now mostly forgotten) that the Pentagon could not account for 2.3 trillion dollars. Yes, that is “trillion” with a “t.” they did not know where they had spent it, could not account for how it had been used, were unable to verify that it had been paid to the proper recipient. Oh well, boys will be boys…Luckily no one had to be demoted or punished over that embarrassing faux pas.

    Also on the subject of military expenditures, most folk do not realize that the so-called military budget is only part of the real budget for the military. The Department of Energy spends about half of its budget on military functions — building, repairing and maintaining nuclear weapons — and other departments do similar things. No one knows exactly how much goes to military functions, but most estimates run about a trillion dollars a year. That is very close to the sum total of military expenditures of all other nations on Earth. Something is crazy here. We know that the money is not going to pay million dollar salaries to the National Guard, so where is the money going?

    It would be easy enough to say the same thing about the various “entitlement” programs. Entitled? By whom? Every dollar mispent by the national government moves me slightly further from a state of liberty toward a state of subservience. If the past is any guide to the future, then any reasonable person has to admit that the Federal government no longer considers your money to be yours. It considers ALL money to belong to itself, and, being a good master, it has allowed us the kindness to keep some fraction of it.

    Anyway, I do not see an easy way out of the mess, and yet, as years go by I am less and less reticent to see things undergo a collapse. Why? Because the last ten years have convinced me that the longer the current system is propped up, the closer I get to serfdom. Every year there are more cameras, more restrictions, more mandatory searches, more intrusion into my life. I do not want to have hyperinflation. I do not want to see another civil war happen in the US. I do not want to see the nation Balkanized into competing regions. I do not want to see bread lines and soup kitchens and children with their ribs sticking out. None of that appeals to me… and yet… And yet I would take any of that if it came with freedom to run my own life. Something has to change. I refuse to agree that 600 people in Washington, DC, are my masters, to do with me as they wish. I am not a serf, not an indentured servant, not cattle for governmental ranchers.

    Pardon the rant. Some days I feel more Patrick Henry-ish than others.

  3. One subtlety is the fact that many of the numbers being tossed around are not per year, or now, but ten-year projections. Not only does this confuse comparisons, it also requires that the next ten years go by without interference from legislation.

    ===|==============/ Keith DeHavelle

  4. tckev says:

    The more I read, hear, and see how the government (and the military) can squander other peoples’ hard earned wealth on endless programs that produce nothing – one question re-echoes in my mind.

    What is a government for?

    IMHO these words would be a good starting place….
    “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America”

  5. E.M.Smith says:

    Frankly, were it up to me, I’d not ask for a balanced budget amendment. I’d ask for one that says the Federal REVENUES must be 10% smaller in every year than they were in the prior year and Federal SPENDING must be 11% smaller… reducing to 10% once debt is below zero… Only to be suspended when Federal Revenues are less than 10% of total national GDP.

  6. pyromancer76 says:

    Finding a little energy to comment on these most essential issues for our Republic(?), I remain committed to the man from Texas as the main hope to begin some sensible financial moves, first toward 18% government spending per GDP. Next knock off some departments and seriously trim others. The choice in tax plans (for the present — after all life’s planning, at least the last five year’s worth — ought to be respected) gives everyone the “least’ amount due in taxes. He has headed the 13th (he reports) largest government in the world with more success than most others, certainly in the U.S. That is some track record, even if there are problem areas.

    The other essential element is “jobs, jobs, jobs”, both for the declining demographic and those who “must” now work until they are 80. (We have spent all the savings — and then some — of the post-WWII generations.) Again Texas, as a model, has more of what we need than most others.

    My one beef is with giving away the term “progressive” to those who are clearly European socialists, many of whom were/are radical marxists. There were many aspects to the Progressive movement some of which wanted competition rather than monopoly or oligopoly or bought-off state and federal legislatures. The so-called free market had become corrupt crony corporatism at the end of the 19th century, too. As with any other historical category, I think some nuance is in order. Woodrow Wilson and the marxist Democrats would never have had such a chance if TR had not pulled the reformist (also called Progressive) elements out of the Republican Party.

    I blanch whenever I think of a Romney or a Gingrich or a Cain being thought of as a non-crony corporatist or a limited-government-free-market type. (I realize, E.M., that you know it all is corrupted with what I would call “socialism” — even the part I remain hopeful about.

  7. The current demise of society was apparently caused by failure to accept reality of the creative, destructive forces that sustain life:

    a.) Realistic but irrational fear of the destructive force released on 6 July 1945 when Hiroshima was vaporized by neutron-repulsion-induced fission of U-235;

    b.) A secret decision to end the nuclear and space races and unite nations against a common enemy – “Global Climate Change” in 1971 [1];

    c.) Failure to appreciate the creative role of neutron repulsion in generating our elements and giving birth to the Solar System five billion years (5 Gyr) ago [2, 3], with evolving forms of life responding to Earth’s continuously changing global climate [4].

    d.) Continued unwillingness to admit complete powerlessness over unseen forces [5] in the stormy, explosive Sun [6,7] that sustain life as an evolving process in a climate that continuously changes as the Sun evolves [4].

    Ref [1] is being updated tonight to include the link to the actual message that the USSR’s Premier sent to the US President on 24 Oct 1962.


    1. “Deep roots of the global climate scandal (1971-2011)”

    2. “Plutonium-244 fission xenon in the most primitive meteorites”

    3. “Fall-out particles trapped in meteorites”

    4. “Origin and evolution of life: Constrains on solar models”
    J Modern Physics 2, 587-594 (2011)

    Click to access JMP20112600007_31445079.pdf

    5. “Neutron Repulsion”, The APEIRON Journal, in press (2011)

    6. “Living with the Stormy Star”, National Geographic Magazine (July 2004)

    7. “Our Explosive Sun”, in press (2011)

    Click to access Sun_climate_SantaFe.pdf

  8. P.G. Sharrow says:

    I remember when California had the best schools in the country! Of course that was before the state forced unification of school districts and then, control of the use of funding with the help of federal judges. Close down of the state department of education would free up as least 6 billion dollars for local controlled education.

  9. Richard Ilfeld says:

    Most of the events that come to mind as serious enough to focus the attention of our “public servants” sufficiently to actually address the problems we face are, alas, too serious for the republic to survive through to the cure; as most of the empires of history have discovered. A sufficiently bloody revolution in a supposedly civilized European country might be one.
    A failure of one of our states with considerable civil disorder might be another. The most likely “solution” the printing press, does not have a good history.

  10. When trying to cut spending one should start with the departments that are worse than useless. By this I mean departments that cause real harm in addition to wasting tax dollars.

    For example the Department of Education became a cabinet level agency in 1980. Ronald Reagan pondered abolishing this agency but stayed his hand owing to Terrell Bell’s impressive report “A Nation at Risk” (1983). Sadly, the DoE only made matters worse so the nation is even more at risk than it was 28 years ago.

    The Department of Education only contributes 6% of the total cost of public K-12 education and yet states bend over backwards to make sure they get funding on the “top down” solutions emanating from Washington. Abolishing the Department of Education would save a modest sum ($77.4 billion according to Chiefio) but it would improve education by simplifying the decision making processes in education.

    This camel freely confesses to his misguided efforts to influence the federal Department of Education when he should have been fighting to abolish it.

    Scroll down the above page to see me pandering to Rod Paige, US secretary of education.

  11. During the 2008 election I pledged my vote to whichever candidate would come out against the bailouts of the banks and the corporations that were “Too Big To Fail”.

    Obama and McCain both failed this litmus test so I voted for write in candidate Boris Johnson (Lord Mayor of London).

    This time around there is a real chance that the GOP will nominate a conservative such as Herman Cain or the almost conservative Newt Gingrich. While I would prefer Herman Cain or Michele Bachmann, I will hold my nose and vote for Newt if he is nominated. Romney is “Obama Lite” so if he is the candidate Boris will get my vote again.

    One thing I like about Newt is that he has borrowed some of my ideas. For example he noticed that “Targeted” industrial incentives create a never ending series of scandals (e.g. Solyndra). He recommends a “Low Corporate Taxation” strategy that avoids the need for governments to pick winners and losers. This strategy is quite rare given that only Hong Kong, Singapore, the Republic of Ireland and a few ex-Comecon countries use it.

    In 2002 I recommended that North Carolina should follow Ireland’s lead in industrial incentives. This idea was ridiculed in the media back then but maybe it is an idea whose time has come:

  12. Mark says:

    The historian Ronald Pestritto has said that the closest analogy to progressivism is conservative socialism. I don’t know how to refine that analogy down to a specific example, but the one that comes to mind is the Conservative Party in the UK and Canada.

  13. E.M.Smith says:

    Part of the problem with dividing Progressives from Liberals (American ‘progressive lite’ not the European Classical Liberals who were ‘Libertarian Lite’ – or perhaps ‘Libertarian not nutty’ ;-) from Socialists from Communists from Leftists from … is that ‘they’ regularly muddy the definitions as they ‘recandle’ to hide behind new names (thus the American Progressives changing their name to the honorable Liberal of old and eventually corrupting it, too into the Aso-Liberal of American SOcial-Liberals. The other major issue is that there are not just 2 poles… there are at least 3.

    So missing from the right – left and conservative – (aso)liberal and progressive – socialist is the axis of “individual responsibility and liberty” vs “central authority collectivism”.

    The American LIbertarians and the (clasi)Liberals come closest to the “individual responsibility and liberty” axis (with minor participation by part of the Republicans and some of the Conservatives in America). Clearly Communism, Socialism, Fascism, and various forms of American Progressives and a small part of the Republican Party are all for collective and central authority solutions. (Big Business / Big Government Republicans, and Nixon-eque central authority Progressive Republicans, for example).

    I can’t help but believe that this bastardization of the terms is a deliberate act so as to make it nearly impossible to say “the bastards that believe in central power, authority and collectivism” vs “us freedom lovers” without resorting to phrases that are near sloganeering in their sound. (And to allow any political party be be suborned to the central authority model…)

    As near as I’ve been able to come is to call it “centralist” or “centralizers” vs “individualist” or “liberty lovers”.

    At any rate, American Progressives are ALL in favor of central power and authority ‘for the greater good’, as are American Liberals. The Republican Party has a load of folks interested in Central Authority (who would claim not to be ‘liberals’, ‘progressives’, or ‘socialists’ in any way – but are, just as long as it is ‘socialism for the rich’… Socialists, of course, are clearly about central ‘social control’… Essentially, there is hardly any place where you can find a party dedicated to the original funding principles of bottom up authority and minimal centralization (with the possible exception of the Libertarians where it comes bundled with a load of orthogonal ‘strange stuff’ like the notion that just about everything ought to be litigated in court on a case by case basis…)

    On my someday list is to sort it all out and put new labels on things, but that’s a low priority as the new labels would only mean something to me… and I’m fairly comfortable with just date tagging and geography tagging the existing terms… (liberal Europe 1800 vs liberal USA 2000 that I’ve christened ClasiLiberal and AsoLiberal in another posting)

    For now it’s enough to just realize that pretty much all the folks in the country subscribe to some kind of Centralized Dominant Authority and Loss of Liberty as a good thing… Most folks want a comfy cage, three buckets of fresh kibble a day, and a quick end when the master is hungry. It’s easier than being responsible for their own destiny…

    Sorry, I’m getting maudlin…

  14. Individualists versus big-government asols, perhaps.

    ===|==============/ Keith DeHavelle

  15. PhilJourdan says:

    @gallopingCamel – it seems we have the same preferences in candidates. Although I did vote for a name on the ballot in 08 – Bob Barr.

  16. Jason Calley says:

    @ E.M. “liberal Europe 1800 vs liberal USA 2000 that I’ve christened ClasiLiberal and AsoLiberal in another posting”

    Minor typo correction to the name “AsoLiberal.” You left out the “sh” as the third and fourth letters.

  17. E.M.Smith says:


    It’s all in the (irregular?) pronunciation ;-)

    (Short A- as in American, not long A, -so- with a ligation to the L, intake of breath, continuance of ligation-L, … )

  18. Mark says:

    Meant to follow up on a point made in the article about the “financial lie.” It was no mystery to me that the committee was talking about $1.2 trillion over 10 years. I did not consider the $1.2 trillion figure a “lie.” Since I can divide, I figured $120 billion a year. That to me was a disappointment, as all the other Republican-hatched budget-cutting measures were disappointments, which were negotiated down to nothing. $120 billion is a chunk, but a small one compared to the real problem. The problem with the 10-year budget plans we’ve been hearing about all year is they are grandiose and disingenuous. They could’ve passed such a plan this year, and then revoked it next year. Just because the projections go out 10 years doesn’t mean that congress won’t change its mind, especially with an election.

    What I’ve been saying since early this year is the government needed to cut at least $400 billion this year. It should then use baseline budgeting to cut at least another $400 billion each year for the next 3-4 years. That would finally bring the deficit down to where it was when Obama took office. Had they done just that this year (to heck with the out years), they would’ve avoided the S&P downgrade.

    Progressives like to romanticize “democratizing” services by socializing industries, rather than leaving them private, but the budget mess we’ve seen is what happens when you do that: The idea of responding to economic realities goes out the window. Economics is still very much in force in all government programs, but they are only acknowledged when they are politically convenient. Hence, anyone who is not involved with the government in some way gets the economic downside of what the government decides, while those involved with the government get the spoils.

  19. Mark says:

    @E.M. Smith:

    For now it’s enough to just realize that pretty much all the folks in the country subscribe to some kind of Centralized Dominant Authority and Loss of Liberty as a good thing… Most folks want a comfy cage, three buckets of fresh kibble a day, and a quick end when the master is hungry. It’s easier than being responsible for their own destiny…

    Unfortunately, I think you’re right. It’s been interesting to observe how the progressives respond to someone who puts forward a liberty-oriented agenda. I can plainly see that the intent of the idea is to get the government’s hands off of what individuals should do and decide on their own. The moment that happens, though, the progressives cast aspersions on it to make people afraid of it: “This is being done to benefit the wealthy,” or, “This is racist,” or, “This is going to leave grandma on the floor with no one to pick her up.” In other words, freedom is bad. It’s horrible. It’s heartless. Freedom is to be feared, because that means someone more rich and powerful can make your life a living hell. It goes right along with the idea that the rich “stole” what they have, and that there is too much income inequality. You need to be protected from the rich, and the “ravages of capitalism” for your own good. It’s all a psychological mind game. They pretend that they can do better than the market, that the market is a failure (think “death,” fatal), and that they need to protect most people from it.

    For the most part, the rich didn’t steal anything. They won their riches by providing something of value, and it is profoundly ungrateful of us to now say, “You have to give that to us.” It leads me to the profound question, “Why?” What have these people done to create value for society that would merit them being granted the wealth of others? I cannot relate to this thinking. I also cannot relate to the idea bandied about by OWS that “I’ve done ‘the right thing.’ I’ve done what I was supposed to do, but I’ve been left holding the bag.” What? What was this “right thing” they thought they were “supposed to do?” What a lot of Americans have missed (and I have trouble recognizing this myself, I must admit) is that “what you’re supposed to do” is provide value! When you do that, you will make an income, you will be able to save, and from that you will likely become financially secure. That is, so long as the government doesn’t mess up markets, and debauch the currency, as it’s currently doing!

    What’s being forgotten is what the Founders believed, which is that every person has the opportunity and power to create their own safety net by providing something that people want and/or need, and it’s the government’s job to create an environment where those opportunities can materialize. It’s a lot of hard work, but it can be done.

    I think too many Americans are afraid of failure. Failure is seen as fatal, not a mistake that you can recover from. I am afraid of failure as well, but I’m not looking to the government to make everything okay if I do.

  20. Mark,

    Good point! It is easy to cut trillions in the far years. What we need are leaders who can make cuts this year and next year.

    When the money is coming from the government (as mine used to do) there is pressure to spend every penny of this year’s budget. Failure to do so means that next year’s budget will be based on a lower “Continuation Budget” (what you spent last year).

    Fiscal responsibility in government can only be achieved by removing the built in incentives to spend every penny in the budget this year while fighting for the maximum increase in next year’s budget.

    A good start could be made by giving bonuses to the top brass in government departments proportional to their UNDERSPENDING relative to this year’s budget. Please don’t hold your breath!

  21. Hamish McDougal says:

    Welcome to Europe! ;-)
    The Peoples’ Democratic Republic of Kalifornia (Do they still pine after Maximilian – or is it now Franco?) got there just after Greece collapsed, in a shower of marble, under the weight of ……. well, you’re learning.

  22. Jason Calley says:

    Peter Schiff points out that even the cuts are not cuts.
    I especially like the $216 Billion “cut” created from counting the interest that we would have paid if we had borrowed more.

    “Over the next decade, the U.S. government expects to spend more than $40 trillion. Even if the $1.2 trillion in automatic cuts are allowed to go through, the amount totals just 3% of the expected outlays. In a masterstroke of hypocritical accounting, $216 billion of these proposed “cuts” merely represent the expected reductions in interest payments that would result from $984 billion of actual cuts. These cuts won’t make a noticeable dent in our projected deficits, which if history can be any guide, will likely rise by much more as economic reality proves far gloomier than government statisticians predict. Finally, the cuts are not cuts in the ordinary sense of the word, where spending is actually reduced. They are cuts in the baseline, which means spending merely increases less than what was previously budgeted.”

    @ Mark “For the most part, the rich didn’t steal anything. They won their riches by providing something of value, and it is profoundly ungrateful of us to now say, “You have to give that to us.”

    In a true free market, yes, I would agree with you 100%. By the way, there is a book “Starving the Monkeys” which emphasizes that point over and over: people get rich by doing good things which others are willing to pay for. The question is, do we in fact have a free market? Did the rich get that way by providing honest and valued products and services?

    Obviously, some rich got that way ethically, (through hard work, smart work, or inheritance, or maybe even simple luck (Lotto ticket, anyone?)), but many got rich through unethical means. There are the obvious unethical ways; bribing a politician to swing legislation toward the benefit of certain companies or individuals, paying a bureaucrat to falsify inspections, adulterating products, etc. Then there are the not-so-obvious ways, things such as the misuse of the H1B visas which E.M. spoke about, various forms of, uh, “creative” bookkeeping, which allow shifting of profits from one set of books to another center, etc. Lastly, (and this is maybe where you and I may find some disagreement,) there are the not-at-all-obvious-even-when-it-is-pointed-out ways.

    I am thinking of, firstly, the common use of incorporation as a business structure. We see corporations so often that we do not even stop to think whether such an entity is natural or ethical, but stop for a moment. One of the main purposes of a corporation is to shield individuals from the consequences of their actions. As one person quipped, “A ‘criminal’ is an evil-doer who does not have enough capital to form a corporation.” All decisions, all actions taken by a corporation are decisions and actions that, in truth, are taken by individuals. And yet, with rare exceptions, responsibility for the actions of those decisions is allowed to rest with the corporation, and not with the individual. Let us suppose that General Motors builds an auto with a gas tank prone to fires when struck. GM, the corporation, may be fined, may suffer civil damages, etc., but what are the chances that the CEO of GM will do jail time or be stripped of his property? Similarly, corporations will never be sent to jail, gassed, beaten, gang raped or electrocuted. In fact, even law abiding corporations have advantages that we humans do not have. Corporations are immortal, and are allowed to accumulate capital ad infinitum; you and I will certainly die. Anyway, once you think of corporations as children born of and created by the government with special privileges, it is more difficult to say that all rich people are playing on the ethical even surface of a free market. After all, part of the free market is the need for individuals to be responsible and legally liable for the consequences of their acts. A market where some actors are allowed to function with diminished liability is neither free nor honest.

    Likewise, the big banking entities have (in my opinion) unethically taken wealth from regular people by the illegal creation of a fiat monetary system. The words of the Constitution and the clear actions and words of the founders of the US tell us that the nation is only authorized to use a hard money system. Every transaction (other than straight barter) in the market place has part of its profit stolen by the use of this illegal system. I would have a hard time justifying the wealth of the large banking corporations as having been honestly won, and yet, because we have grown up in, and been totally immersed since birth in the present system, it hardly dawns on most people to question even the justification for, much less the ethics of, how money is created and controlled.

    Anyway, I think you are right about riches being created by service in the marketplace, but the problem is that many people have forsaken the free market for less honest means of acquiring riches. Those people, unless they are stopped, make it less and less profitable for ethical businessmen to continue acting in the market. As the criminals become more active, the John Galts of the world are increasingly motivated to a collective shrug. Who can blame them?

    As for those who gained their riches by deceit and coercion — should they be allowed to keep their wealth? I say this as a real question. Should they be allowed to keep it? Maybe so… it may be that unraveling the ball of yarn is just too difficult a problem. Besides, who decides what was honestly acquired? Maybe they should be taxed, or stripped, or tarred and feathered and thrown in a ditch! I am not bright enough to know what is best here, but I don’t think the question is easily dismissed, either pro-rich or anti-rich.

  23. Pascvaks says:

    A’fierd we got a problem , right here in River City, and it don’t start with P and end in ool. We got ourselves a predickament! We got some first term polly-wogs that ain’t been totally currupted by the other bad apples in Congress, that’s true enough, but we can’t be sure who they be or where they at. And we got a mess of spoiled rotten fruit that’s been soaking up sunshine and water like there’s no tomorrow, doin’ nuttin’ a’tall. So, here’s my recommendation to all my fellow country men, women, and children who are old enough to vote: look around your district and state and pick 3 honest people, who know the words to the Star Spangled Banner, who can count to ten, who can cuss and fight like a real s.o.b. (but don’t normally), and who are as faithful to god, country, you, their mom and apple pie, and the pledge of allegience as you are. Now comes the hard part, and it don’t matter if you’re a damnocrat, a repolicker, and indi, or a ‘nuttin, ya gotta get up off your dead ass and get out of the house and get ’em good folks elected. That’s it! Simple as fallin’ out’a bed. You throw the bad apples out, you put some good apples in. You reelect the good apples once (just once) if they really are any good. Then ya start all over again.

    PS: It might be a good idea if yer senators and congressperson has a gun and knows how to shoot too. Gott a feelin they might be called on occassionaly to defend their honor and yer mattress money from a bunch of socialist, commiecrat, bleeding-heart Harvard millionaires. I don’t know why there’d be any, but there just might be one or two still in Congress after We The People take back control of our government. We ain’t had a real good duel in Congress in years.

  24. Pascvaks says:

    PPS: Q – Who started the Civil War and is very likely to start another one real soon?

    (A – The worthless, good for nothing, United States Congress;-)

    It’s true! When Congress fails the people and States take matters into their own hands.

  25. Mark says:


    We agree about the monetary system. The whole reason the banking system had any leverage over the issue of being bailed out in ’08 is that almost our entire economy runs on credit. This isn’t due to credit card debt, or mortgage debt. It’s that our currency is mostly backed by bond instruments, and the only way money gets out into the economy is if a bank loans it, or the Fed “spends” it into the economy in exchange for bonds.

    If the credit system were to have shut down, our economy would’ve contracted precipitously, as money was extinguished through loan repayments, but not re-loaned.

    Now, I’ve heard some knowledgeable people say that the bailout was unnecessary, because the banks could’ve gone through the bankruptcy process, and this would’ve been orderly. Bankruptcy, as we’ve seen with other companies, is not the end of the world. Our credit system could’ve recovered through that process. The disruption would’ve been temporary.

    The unfortunate consequence of the Fed’s policy to keep interest rates insanely low is that since then money *has* been re-loaned, but mainly to the federal government. Personally I think it needs to raise interest rates above that of treasury bonds to get the economy going. Only problem is, if that were to happen, the curtain would be pulled back on the Fed’s past policy decisions, because inflation would skyrocket, and there would be an outcry.

    I’d much prefer a monetary system backed by an asset, or a basket of assets, so that it would retain its value, and would have some chance of remaining independent of our banking system. We could do it via. a ratio other than 1:1, which might be too severe for our population and economic activity.

    Re. corporations, I agree that the way many are structured leads to unethical behavior, because of their incentives. Partnerships are more ethical, because the executives have skin in the game. They not only have a potential upside, but also a potential downside if the company’s fortunes go south. The value of their invested assets has a direct relationship to the real performance of the company, not to its perceived performance.

    It used to be conventional wisdom that tying executive compensation to the stock price made good sense, because the executives’ compensation would be tied to the performance of the company. That assumes the stock price is tied to performance. We’ve found out over the last 20 years this isn’t so. This is the main reason, I think, we see so many cases of companies cooking the books. Most stockholders do not have enough information to know what’s going on inside these companies. They are vulnerable to market manias that promote mindless buy-in as the stock price goes up and up (a positive feedback loop if we ever saw one). What really goes on in these arrangements is executive compensation is tied to investor psychology, not company performance. Personally I think we’d be better off getting rid of this corporate structure, but I’m cautious about getting rid of corporations completely.

    What I don’t like about this discussion about “the rich” is that all the focus is on the big corporations. Well what about the small businesses? What about holders of real estate? They’re rich, too, with a lot more at risk that’s at the whim of the market, but they’re not big corporations.

    In this whole discussion I think we must respect the rule of law. Once we get into “Well it was legal, but it was immoral, so we must balance it out somehow,” and the prescribed solution is assumed to do that (which it may not–the Dodd-Frank bill being a great example of this), we could get ourselves into more trouble. If the law needs to be corrected, let’s admit that we screwed up, correct it, and go forward. I know, easier said than done with the interests involved, but I think that’s the better way to correct it.

  26. E.M.Smith says:

    If I might suggest a partial solution?

    Make all corporate officers and board members personally liable for both corporate debts and any ‘crimes’ the corporation might commit, but allow them to dodge personal liability if the corporation can show / hand over the individual who IS personally liable…. So if a construction company makes a building that collapses and kills a dozen folks, either the executives take it and head to prison for involuntary manslaughter or they pony up the guys who DID sign off the design who get to head up river (and the corporate liability is now left with ‘only’ the money damages part…)

    Lets you keep the large leveraged structure but ‘focuses the mind’ a bit more…

  27. Impressive post E.M.! Keep up the great work.

  28. Jason Calley says:

    @ Mark As nearly as I can tell, you and I have reached the same conclusions, very nearly identical. At this point we would be arguing the difference between canary yellow and lemon yellow, which is to say, there is no substantive difference, not really.

    One of the problems with large scale institutions is not in the seeing what is wrong, but rather in the process of fixing things. “How do we get THERE from HERE?” It may be that there is no way to change without killing the patient. On the other hand, how bad is it if the patient dies? After all, our culture is less of a unitary thing, and more like one of E.M.’s slime amoebas, an entity which only exists temporarily, as long as the real individuals agree to subsume their self in that larger mass. We know that Iceland refused to prop up their banking system, and yes, it failed, went bankrupt, and the people even rewrote their constitution. The result, while fatal for many of the big banks, turned out to be beneficial for the individual citizens; they already have mostly recovered and have one of the more stable banking systems. Funny how we do not hear much about Iceland in the news…

    @ E.M. I have to admit, I rather like your approach to the problem of corporate liability. Still not quite as good as the Roman solution, but I like it! In ancient Rome, the folks who built the bridges and aquaducts — those structures with their beautiful and graceful Roman arches — had to stand beneath the arch when it came time for the temporary building support scaffolds to be removed. If the bridge stood, it was time to pay the builder. If it fell — well, if it fell, then there was not need to pay the builder or to prosecute him for malfeasance. :)

  29. Jason Calley says:

    @ Mark I guess I cannot resist one small nit to pick. “In this whole discussion I think we must respect the rule of law. Once we get into “Well it was legal, but it was immoral, so we must balance it out somehow,” and the prescribed solution is assumed to do that (which it may not–the Dodd-Frank bill being a great example of this), we could get ourselves into more trouble. If the law needs to be corrected, let’s admit that we screwed up, correct it, and go forward.”

    They say the Devil is in the details. With the present system, do we even know what is legal? Can we even confidently say, this was legal but immoral?” For example, the Wall Street Journal has, every spring for some years, sent out the financial details of an imaginary family to a half dozen or so CPAs and tax accountants. They are each asked to prepare an honest tax return for the family. Every year, the returns vary wildly. Not just a little, but a lot. Here we have a set of laws and regulations which not even the experts can agree on. Do we even know what is legal? For another example, we both mentioned the current fiat money created from debt. The highest law of the land — the US Constitution — says such money is not legal. Does that mean ALL banks, ALL home mortgages, ALL financial transaction for the last almost century are illegal? Not just immoral, but illegal? Like you, I do not see how these eggs can be unscrambled… or maybe they can. The saying is “you can’t unscramble an egg” but really you can. Sort of. Feed it to a chicken — that will unscramble an egg. Maybe the vast amount of debt based money needs to be fed back to the people of the US.

    Jubilee anyone?

  30. Tim Clark says:

    I believe the stock market is broken because corporations do not pay dividends as in the past. Google it. Very little income comes to the small-fry stockholder, and leads to erroneously valued stock price.

    Then tie compensation of the top 4 or 5 executives (CEO. CFO, others?) to the amount of the stock dividend in some mathematical formula. Pay them a smallish salary (plus the ubiquitous perks) and stock, with the majority of additional income dependent on the dividend. This forces them to make decisions that benefit the stockholders.

    Of course, i also think that dividend payments should be tax deductible to the corporations and taxed at the personal income level. I would benefit from wise investment choices, the corporations would have less incentive to invest in loophole deductions that in my analysis are not the best use of money.

  31. E.M.Smith says:

    @Jason Calley:

    I like it… We can call the new corporate form “The Arch Corporation” ;-)

    @Tim Clark:

    The reduction of dividends is a direct result of the tax code double taxing them. Dump the income tax, the problem goes away. Simply repeal the 16th amendment…

    Like the idea of the executive getting payment in dividends. How about this: Execs get stock options that 1/2 vest slowly, over a period of years. Only finally vesting upon their departure from the company. During the 1/2 vested time, they get the dividends, but not the ownership / right to sell / right to vote.

    Oh, and I personally think execs ought NOT get perks such as company cars and jets unless counted as “pay”… then again, I also think income ought to be tax free… so it’s a bit of a moot point… Still, when the company buys ME a free lunch on their tax deduction, I’ll be all for free executive lunches, but not before… Ditto cars, planes, insurance, second homes, extended ‘working’ vacations, …

  32. Tim Clark says:

    Hey, we agreed.

  33. @E. M. Smith:

    Like the idea of the executive getting payment in dividends. How about this: Execs get stock options that 1/2 vest slowly, over a period of years. Only finally vesting upon their departure from the company. During the 1/2 vested time, they get the dividends, but not the ownership / right to sell / right to vote.

    These is a subtlety here. Either you are for these changes as a hoped-for outcome of the free market (as a result of removing legislation you referred to), or you are in favor of implementing these ideas as laws, with their own set of unintended consequences.

    I have no problem with letting the market make its own adjustments. But I’m strongly in favor of getting the US out of the business of involvement with markets, because that will remove most of the cachet (and bad outcomes) of lobbying.

    ===|==============/ Keith DeHavelle

  34. E.M.Smith says:

    @Keith DeHavelle:

    I’m a “shades of gray” guy. I can want one thing as The Best outcome (repeal the 16th and then everything else leaves with it, as with no income tax, markets decide, not the income tax laws). Yet I can still accept that until that day, 1/2 a loaf is better than starving. So as long as we DO have the government being stupid and thinking it can run things, I can at least try to suggest less stupid ways to be stupid… all the while hoping for the day when we collectively just tell it “sorry, gov, but you just don’t have what it takes to drive, so we’re going to be driving now; please sit in the back, there you go, comfy? Alrighty then, here’s how it’s done…”

    In short, I’m “Inc-OR” and you are suggesting that “X-OR” is the only possible. But I have my preference as to which of the inc-OR outcomes I’d like better…

    “Would you like to go out to dinner or make something at home?” Is often answered with “Yes.” Especially when I’m hungry… Sometimes with “going out is fine, but we can probably scrounge something up at home if you don’t feel like going out.” The “scrounge” implying there isn’t much of interest, but it’s better than not eating dinner at all…

  35. Mark says:


    We didn’t totally decouple the Dollar from precious metals until the early 1970s, from what I understand, though I’m not sure when Federal Reserve notes changed to “this note is legal tender for all debts public and private.” I’ve seen some old Federal Reserve Notes from the 1950s that say right on them that they can be redeemed for some amount of silver, though what I used to hear was the only way you could do that was to go to a Federal Reserve bank. What you’d get back was a small bag of silver powder. Most people didn’t do that, since they had no use for the silver. That wasn’t the point, though. The point was that the Federal Reserve could not so easily print more paper currency, since each note had to be redeemable.

    As I’ve looked back at our country’s financial history, it seems to me that we didn’t get off the rails until we decoupled the currency. This enabled the federal government to run up debt for as far as the eye could see, and it enabled the Fed to monetize that debt, as it’s been doing for the past few years. So from the standpoint of the government acting illegally with respect to money, I’d say it really started in the 60s or 70s.

    As a practical matter, we shouldn’t think of all financial transactions since then as illegal. The government gave us little choice but to accept their fiat currency. If we really wanted to blame anybody, we should blame the voters who elected a government that put itself in the position where it had to decouple the currency in order to continue to function. From what I understand, the catalyst for that was the cost of the Vietnam War. The only practical remedy I can think of is a reformist government that puts us back on the right course, by transitioning us back towards coupling the currency with something of value.

    As to vague laws, all I can say is that’s one reason we have courts. They can provide a benchmark for the law’s interpretation. If there are conflicting interpretations, the appeals court system, or the Supreme Court can resolve them. If our legislators are sloppy with the law, that’s a sign we need to elect better legislators, though I don’t expect that we’ll see most voters be that discerning. I’m just saying that’s how such a trend would be fixed–theoretically.

    As with so many things that are wrong with our government, I’ve noticed it comes back to the voters. We’ve been sleeping on the job. My worry is I don’t know if we’ll ever wake up enough to remedy what’s been going wrong. The Tea Party has given me a little hope, though it’s not without its problems, from my perspective. People who are aware of the problems in government, but not their source, tend to blame financial contributors to political campaigns. I say they’re not the problem. The problem is political candidates understand that the people and organizations who really help them along take their role in politics seriously. Voters have tended not to do so. So the former get to dictate the rules, and the rest of us are stuck with the consequences after the fact. As much as a lot people hate it, politics and the business of government (concerning what government should and should not be doing) need to be a part of our lives, like our work and family, if our republic is to serve us, rather than push us around, and take us for suckers.

  36. @Mark
    Nixon in 1971, in fact, put us on a fiat currency basis, though we’d been heading that way since 1965.

    Wikipedia, always suspect, has a reasonable recap:

    @E. M. Smith
    To me, the issue of adding additional regulatory processes to corporations is rarely good. And in this case, putting government in a position to second-guess the market would have its own negative consequences. It is rare that such a balance would weigh positive, it seems to me, especially in the light of previous attempts in that direction.

    Why do we care what corporations pay their CEOs and CFOs? When we look in their pockets to try to guess what’s “fair,” we use exactly the logic of the occupy folks, the “ows” mob[1].

    If corporations pay their executives too much, their stock price will fall until corporate governance reacts and once again makes sense. And if it doesn’t react, it will serve as an object lesson for the next corporation.

    As a side issue, one could amusingly note that any CEO is at risk of needing hazard pay, as the “ows” folks might come crap out on his or her lawn.

    ===|==============/ Keith DeHavelle

    [1] Always written in lower case; they hate capitalism.

  37. Tim Clark says:

    Why do we care what corporations pay their CEOs and CFOs? When we look in their pockets to try to guess what’s “fair,” we use exactly the logic of the occupy folks, the “ows” mob[1].

    That’s not true at all. The ows want something for nothing. When I have invested in a company, I expect a return. But the choice is limited because there are so few corporations that pay dividends. Paying the bigwigs through dividends from company earnings is paying them what they are WORTH, not what is fair.

  38. E.M.Smith says:

    @Keith de Havelle:

    Um, maybe I was unclear…. I was not saying they ought ONLY get dividends. I was thinking more of “Salary as desired AND only dividends from their stock until it vests on exiting the company”. (Though I could see having it be ‘or after 10 years’ or some other long time).

    TOTAL executive pay still entirely up to the board. But it more tightly couples the “bonus” of dividends to corporate performance (not just emotion of traders over stock prices this week…) Dividends require real earnings to pay out for any decent length of time. The end result is that the executive wants a more sound company earnings base and wants some ‘return’ to the shareholders.

    WHY do it? WHY care? Because the present system is broken in many ways that together make it “a good idea” to have growth stocks with no dividend in sight for decades (many of them) and with stock prices being more a momentum casino than the result of prudent business growth. (Again, from stupid laws).

    So you can EITHER fix all the stupid laws (the best path, IMHO, but not going to happen in my lifetime) or you can put a better patch on that arterial cut…

    Basically, it undoes some of the damage from things like the double taxation of dividends, the fictional Net Present Value of a non-dividend stream, handing out stock dilution like popcorn via options and voting rights (harder to swallow if you have to pay dividends on it too AND the guy doesn’t vest for a decade+), etc. etc.

    Yeah, better to fix all those things, but like I said, I’d be happy with 1/2 a loaf (or swapping metaphors back to medical again: I’d be happy with a tourniquet if the alternative is bleeding out… )

    If you think either / any of:

    1) Dividends do not stabilize stock prices somewhat.
    2) Dividends do not discipline corporate financial behaviour.
    3) Executives can’t game the boards (often hand picked and with interlaced boards… mutual back scratching).
    4) The shareholders have close effective control of major public companies.
    5) Tax policy does not distort dividend payouts and thus stock values.
    and more…

    Then there’s nothing to fix. Personally, I see loads to fix… And since stock corporations are a legal construct by human hands and minds, I think they are not perfect and can benefit from improvement, even if that too has some human failings in it.

  39. Pascvaks says:

    Our lack of faith and confidence in our own system is terminal. Think, maybe, Roman investors lost faith too? Bet it’s something in the water. Damn Commies!

  40. Tim Clark says:

    @ E.M
    Yeah, that’s what I meant to say. ;~D

  41. Of course executive compensation affects profits (though that relationship is not straightforward), and it is one of the factors that makes the entity less or more attractive as an investment.

    And anyone who has an interest in economics and systems — probably descriptive of all of us here — would like to see this work as well as possible.

    The issue here is when we step out of the role of “encouraging good behavior with our wallets” and instead move to “forcing market behavior behavior through regulation,” we create exactly the sort of “gaming the system” antics you’re describing.

    The current tax code creates bizarre, non-market incentives, always for the best of reasons and noblest of causes. After Katrina, Congress created Public Law 109-135 which allowed people to write a check for $5k, buy an overpriced home in Louisiana, and get a check back from the IRS for $50,000 cash. This was well-intentioned, and was just one more factor producing very stupid effects, and contributing to the housing collapse. In fact, it spun up an industry dedicated to those stupid effects: look up “GO ZONE.”

    This is one of countless examples of unintended behavior that was encouraged because we thought we could add regulations to create a better world.

    If we’re only able to do a little, let’s take away, not add.

    Let’s unplug regulations from the system, a bit at a time, and thus weaken the power of legislators to run markets. The benefits from this approach will be broad, and the unintended consequences will be exposed more and more to market fixes. And cronyism will be less profitable.

    ===|==============/ Keith DeHavelle

  42. E.M.Smith says:

    @Keith DeHavel:

    So I have an old car that needs an overhaul and smokes like crazy when I keep the oil full, and it has a leak in the water system so needs the water topped up all the time (and when it leaks, makes a mess on the garage floor).

    I have no way to buy a new car in my lifetime.

    Do I:

    1) Give up and stop going anywhere. Junk it.
    2) Ask my heirs to buy a new car, someday after I’m dead.
    3) Put a new hose on the radiator, add some Rislone to the oil (or STP or goo of your choice) and manage the oil so it’s ‘full enough’ but not so full as to smoke a lot, and have the mechanic look for other ways to keep it alive and non-smoking for the next year or two.
    4) Dream of someday owning a new car and refuse to do any ‘life extension’ work on my problem car, just letting it smoke, pee on the garage floor, and complain about it while doing nothing.

    I’m willing to do #3 while I save the money for a new car (even if only my kids will get to buy it, #2).

    IMHO, you are advocating a position rather like #4…

    Yes, the old car will be a PITA for a few more years, but at least I can ‘get around’ and to work to save the money to make that new car happen, someday… And believe me, that old car is NOT going to make me stop wanting the new one…

  43. I’m suggesting fixing the system, not waiting for a happier time. Work to find regulations that distort the market (which is most of them) and undo them. Repeal them. Eliminate them. A piece at a time. Sacred oxen will be gored; we must live with the screams of bureaucrats for a while.

    I do not advocate repairing a system of too much market-distorting regulation by adding regulation to it.

    We can do this now. There is no reason to wait. And there’s no reason to give up on the idea that it could be better, justifying making it worse as an interim fix.

    This particular car analogy surprised me: I at first thought you were talking about the “Cash for Clunkers” program, which has in real life made buying a good used car much more expensive. It’s exactly the sort of market-distorting government interference I was talking about. And I think that you agree.

    But you have here the government as the clunker — and adding more market-distorting legislative “fixes” as the “repair.” Are you sure this is the right analogy?

    If you want to continue with the car as metaphor, perhaps its current poor performance can be attributed to a slew of government-mandated pollution controls done to us “for our own good.” Adding more won’t make it run better, it seems to me, and the judicious removal of performance-stealing devices would produce a good result.

    Let me make sure that I understand your position fairly. You’ve expressed that some changes in executive compensation schemes are desirable (and I generally agree). But you seem to be asserting that you want these changes forced upon the companies through new securities regulations. Do I have that right?

    ===|==============/ Keith DeHavelle

  44. Mark says:

    @E.M. Smith:

    I think your characterization of a broken down car is the wrong analogy (though I might be able to save it, by shifting the focus :) .) You get very little advantage from a broken down car, and as you say, look forward to getting a new one. The problem with this is there are people who benefit from the system as it is, and they don’t want to change it, because to them it’s not broken. It works just fine for them.

    It reminds me of a comedy skit George Carlin did years ago. He started off about getting into a friend’s car, and the guy goes through red lights like they’re nothing. He gets alarmed, and demands of his friend, “What are you doing?!” Each time his friend says, “Relax. My brother drives like this.” Finally, his friend comes to a green light, and he stops the car. He again demands of his friend, “What are you doing?!” The driver says, “My brother might be coming the other way.”

    The driver felt like he was getting away with something, but he really wasn’t. Nevertheless, everything made sense to him. It was the passenger, meanwhile, who was freaking out, because he feels like the driver is in “opposite land” while the real world is working as normal. Hence the driver is acting irrationally and dangerously. Now, even this is rather exaggerated, because I don’t think most people are even aware that the “driver” is acting irrationally. They get the dangerous part. A lot of people want to replace the “driver.” The only question is who to replace him with. Do we go with “government guy,” who promises to be our friend, while backhandedly supporting the crony “driver,” or “market guy” who’s hopefully more principled and disciplined? A problem for “market guy” is that a lot of people mistake him for being just another dangerous “driver.” “Government guy” encourages that notion, because someday…*he* wants to be in the driver’s seat!

  45. Tim Clark says:

    ‘I’m suggesting fixing the system, not waiting for a happier time. Work to find regulations that distort the market (which is most of them) and undo them. Repeal them. Eliminate them. A piece at a time. Sacred oxen will be gored; we must live with the screams of bureaucrats for a while.
    I do not advocate repairing a system of too much market-distorting regulation by adding regulation to it.
    We can do this now. There is no reason to wait. And there’s no reason to give up on the idea that it could be better, justifying making it worse as an interim fix.”

    What’s your step by step plan of action? What’s your first move? I want a one year synopsis of proposed changes with verifiable demonstration of progress.

    Otherwise, this is just whimsical pie in the sky thinking. Call me cynical, I’ll concur…… Considering ~50% of the populace is on the dole and ~90% have been gubmint schooled.

  46. Pascvaks says:

    @ Keith DeHavelle-
    I think you might be taking the analogy too far, you are the guy with the car, as am I, as is Chiefio, as are we all. We’re bound, hands tied, by a system that won’t change in our lifetime. What do we do?

    PS: That’s the way I read it. Make sense to me;-) It takes quite a mob to change the system we have; short of the kind of Riots we had in the 60’s, I don’t think anything’s going to happen in our lifetimes —but I guess we could always try;-).

  47. Tim Clark says:

    Here’s my plan. it doesn’t address some issues you lament, but it may be a realistic possibility. (I had these ideas before Herman)

    1. Imposition of a National sales tax. Credits those who save and invest. Everybody pays, including those on the dole.

    2. One rate income tax. Everybody pays equal (including corporations as individuals) excepting those below the “poverty” line.

    3. Dividends for corporations a write off as I’ve suggested above.

    4.Eliminate all loopholes………

    5.Whack 5% off all, and i mean ALL, government agencies, cabinets, departments, etc. etc. ect. budgets.

    6.At the end of a budgetary year, any remaining funds in a specific department…..remains in the account. What usually happens is the government “takes” that money away, then reduces the next years budgetary allotment. This results in end of the year splurging. Been there, done that. Of the money that’s left over, distribute a portion of the money as bonuses. Make the government more like a business instead of just more money each year. Should make the whole operation more efficient.

    7. Eliminate at least 4 cabinet levels.

    8. Can the czars.

    9.In the remaining departments (exempting secretary of state and similar international agencies), 90% of the money is distributed to the states on a pro rata basis as a block grant. I bet the states would be more efficient. if not, the people get less and will throw the state assemblies out.

    10. Term limits—senate two terms, reps 3 terms, grandfathered.

    Just my top ten. more left.

    BTW, re our earlier discussion, i haven’t had time to look up my sources, but I came across this today—-.

    Central to our strategy is investing in the middle class. The America we know was built by middle-class workers and consumers, innovators, and entrepreneurs. The fortunes of the Forbes 400 have their roots in the opportunities our country has offered those in the middle class. Policies that invest in the middle class are investments in a successful American economy.
    Center For American Progress

  48. E.M.Smith says:

    @Keith DeHavelle:

    I’ve often observed that X-OR people do not like Inc-OR solutions. There seems to be some inevitable cultural divide between the two ways of thinking. I’d hoped the ‘car analogy’ would get the point across, but it has not.

    It really IS a simple point, and Pascvaks has clearly seen it, as, I think, has Tim Clark.

    I would prefer, advocate for, work towards, and with every fibre of my being embrace your all encompassing step by step rapid progress to the ideal solution.

    But WHILE I’M WAITING for that surgeon, I’ll take that uncomfortable unlikely to work for very long with bad side effects tourniquet that prevents my bleeding out…

    We make these kinds of decisions all the time, in many parts of our lives, and for the very same reasons. The “field expedient” patch that keeps things working or makes them work somewhat better as we then push toward the desired end solution.

    It is not because they are the BEST solution, it is because they are a partial solution we CAN GET NOW as we work to the best solution.

    We put the spare tire on the car even though it’s only a 55 mph compact spare, and drive with only 4 wheels and no spare, because waiting for the express delivery of a matching tire by the side of the freeway at 3 am is NOT a very desired experience.

    We swallow a couple of cups of coffee and ‘press on’ to get home rather than spend 8 hours sleeping in the hotel. Sometimes as we just want to be home (where things are best) and sometimes as we just don’t have the money or time for the hotel stop. It’s never ideal to drive on caffeine instead of sleep, but it is often the best alternative available right now.

    We still want 4 matching tires and a spare on the car (and eventually get them).
    We still want 8 hours in the bed at home (and eventually get them).
    We still want that surgical repair that keeps the arm working (and avoid that being dead from bleeding out part…)
    We still want normal blood pressure unmedicated, but take the BP meds as we work on the diet and exercise plan…

    Inclusive OR solutions are often far better than exclusive OR solutions. And more importantly, advocating that Part A of an A INC-OR B set is a ‘good thing’ does not in any way or to any degree say that Part B is not a ‘good thing’ or even a ‘better thing’ or even a ‘best thing’.

    Would you like $100 dollars or $200 dollars? I’ll take the INC-OR answer please ;-)

    You seem to proceed from the position that changing executive compensation rules such that more focus would be put on longer term equity appreciation, more sound business focus on earnings, and causing the executives to be more aligned with the shareholders (and less with the other executives, board members, peer groups, and ‘compensation consultants’) would somehow be a bad thing as it is not your ideal solution of a company free of tax system distortions. I would assert that to the degree it constrains bad behaviours, it is a good thing and might even push folks (as their ‘special deals’ are curbed) to help advocate for that longer term more ideal solution.


    You make a good point about the folks who benefit from the ‘broken’ system (then muddy it up with an old joke …) but to run with the point:

    Part of the benefit from setting restrictions that would encourage ‘countervailing force’ against some of the tax system distortions is precisely because it negates pressures from some of the folks who ‘benefit’ otherwise. It would be ideal to simply get rid of the ‘tax distortion’, but negating the impact is still helpful. Unfortunately, the nub of your point, that they will not let go easily of privilege, is exactly why we will get neither… Neither A NOR B…

  49. @E. M. Smith:
    It is not clear to me why you have decided to label me an “exclusive-or” person. You and I have both been writing and thinking about these issues for decades, and we have reached similar conclusions.

    In this instance, the issue is smaller and simpler than the large notions of throwing out entire systems.

    You’ve never answered this direct question, but I think you are proposing to add regulations to achieve a beneficial effect upon executive compensation.

    I propose removing some current regulation that contributes to the distortion in the marketplace, also getting to a beneficial effect.

    That’s it.

    The reason I favor an approach based on subtract rather than add is the nature of such legislation. For example, the Katrina bill I mentioned earlier was intended to help the people of the Gulf states recover from a natural disaster. It was bipartisan, passed both houses readily in different versions and was reconciled quickly. What’s not to like? It helps people.

    It explicitly funded undercover operations by the IRS against American citizens on American soil, using that language explicitly. The paragraph is entitled “SEC. 304. AUTHORITY FOR UNDERCOVER OPERATIONS” — it is an extension of IRS funding for such actions.

    It was one of many unlikable things that crept into the bill, just as unlikable things creep into all such legislation.

    (The Obamacare provisions are similar unhappy; there are just more of them.)

    Now, reducing regulations in this particular area is not an unachievable, “pie in the sky” notion. It is not an “exclusive or” proposition. In fact, through the Obama administration has added regulations that will cost trillions to implement, it has at the same time repealed regulations that will save an estimated $1.5 billion. That ratio augurs poorly, of course, but repeal is possible.

    Moreover, it seems to me that any attempt to fix an apparent inequity in corporate decisions would likely produce undesirable side-effects and unintended consequences, completely separate from those effects that arise from the sort of tag-along provisions that make up the bulk of legislation these days.

    The chances of actually achieving the result you want is small. The repeal process, at least, works in the generally good direction.

    Appointing a SWAT team — a “stop waste of American taxes” task force that is paid based upon what they save — is something we’ve talked about before. Considering every piece of legislation now on the books to be subject to a sunset clause would be a good start, and require each piece of this to be reviewed and reconsidered.

    Wouldn’t it be nice if the process of examining and justifying current legislation kept legislators so busy that they didn’t make more? Even if nothing else happened, that would be a plus. And it would have a huge, positive economic impact.

    It seems to me that much of the current business (and investor) caution is directly tied to uncertainly as to how much further damage the legislation is likely to do. Any effort to point Congress away from the notion of “fixing” market behaviors by legislation is a good thing, it seems to me.

    ===|==============/ Keith DeHavelle

  50. PhilJourdan says:

    @Mark – Silver Certificates. There were also Gold Certificates. The lettering was blue on the Silver Certificates and Yellow on the Gold Certificates. I have several Silver certificates (the highest denomination is a $5). I had my hands on a gold certificate once (that was back in the 70s), but unfortunately the lady who got it would not sell it to me. I still have the silver ones, safely stored away. I do not think the government will redeem them for metal any longer, so they are merely collector’s items.

    Did you know the treasury also issued notes? They are called United States Notes, and the lettering is Red. I have several of those as well.

    On the issue side, a great discussion. Sorry I missed it. But one thing I did get from the whole discussion – I am not alone in both recognizing the problem, and seeing the bitter medicine that is needed. However, I believe we are a minority and nothing will be done. Perhaps just the pessimism of advancing years. I have seen the obvious problems go unresolved for too long to believe things will change now – at least not without a total collapse first.

  51. Pascvaks says:

    @Keith DeHavelle –
    I like the way you think. I wish we had a 150 million more like you to make it happen with their individual ballots. It will take a major “something” to change either of the two Big parties. They do seem bent on suicide so that might be what we’ll have to wait for. I don’t see much happening in the wings to give me much hope at the moment of any group forming to take either of their places. Today, one side is hellbent on European Socialism (or worse) and the other side behaves like a bunch of stupid kids who’d rather have a waterballoon fight with each other than face up to and fight the schoolyard bully –but they love to call them names– and they’re not to sure what they really believe anyway. You’re absolutely right in 99.999% of what you say but I just don’t see it happening before I croak.

  52. adolfogiurfa says:

    The day has come for those European and American “kids” to act like grown ups and be serious, buy they keep on playing as nothing has happened.
    For us, all what is left, is to wait and see, I don´t know if enjoying too, the final economic armageddon. We use to learn the hard way, not by action but by reaction.

  53. Pascvaks says:

    Those “kids” won’t budge without a pretty BIG push, that’s definitely the Law of “Action/Reaction”;-) It’s NOT that they’re stupid or lazy, they’re just not motivated to do anything but mill-around in tieght lazy circles sniffing each other’s rear-end. Don’t know what they find so interesting. Anyway, I think it’s going to take something with the force of a few thousand Cat V Huricanes to get them moving in the right direction. Another Cat IX Great Depression might do it, but I have my doubts, their skulls are pretty thick.

    I just know that there’s another Great Depression or Great War or Great Climate Change or Great SuperVolcano Explosion or Great Tsunami in the works, but I really have my doubts about it getting here in time to save the World and all the CarbonUnits infesting it;-)

  54. adolfogiurfa says:

    Meaningful, as “sequestration” means “secuestro” in spanish= Kidnapping.

  55. E.M.Smith says:

    @Keith DeHavelle:

    I’ve not labeled you an x-or person. I’ve pointed out a problem with x-or persons and suggested that, at least in this case, there seems to be some x-or thinking going on.

    In particular, this quote:

    These is a subtlety here. Either you are for these changes as a hoped-for outcome of the free market (as a result of removing legislation you referred to), or you are in favor of implementing these ideas as laws, with their own set of unintended consequences.

    “Either…or” is the usual construct in English to denote a firm Exclusive-Or proposition. I’m from the “I’m for the changes as laws, with their own set of unintended consequences AS we work to change to a free market driven better solution”.

    After that, every attempt to explain my inc-or advocacy of 1/2 a loaf now being met with “but it’s not the whole loaf” type responses… That tended to reinforce the perception of an X-Or idea (not ‘to the person’, to the idea… though my broad statement / gripe was about X-Or people in an Inc-Or world, it was not tagged with your name or to you in particular)

    I suspect the “answer” may be in your simplified paradigm. You simply list adding or removing “regulations”. I’m looking at WHICH regulations.

    Add SOME now that have SOME benefit, then rip out large chunks of them later (perhaps including the ‘new ones’ if the package is right then) if possible.

    I fully agree it would be better to start with the ‘ripping out’, but it isn’t going to happen now. So I’d settle for a short term patch NOW, and hope for a full rip out of all the bad bits, including any ‘new ones’ that were no longer of benefit “when times permit”.

    So yes (and I thought I HAD answered directly in my original statements of what I would see as helpful): I would ADD REGULATIONS, specifically on the nature and types of executive compensation, such that they encouraged real earnings growth in companies, distributed as dividends; and such that they discouraged “casino trading” of stocks (due to things like those dividends meaning short sellers have to pay a dividend…); and have longer vesting periods so as to induce more ‘prudent profit and dividends’ motivation and less ‘take equity and gamble’ motivations. And, directly, YES, I think that would be a good thing. Just as directly: Yes, I think it would be better to eliminate the income tax on corporations and let them do whatever they want with executive compensation.

    However, since the odds of no income tax code on corporations in general; and the odds of removing the double taxation of dividends in particular is very slim: the distortions THAT induces will continue, so a ‘countervailing distortion’ to try and straighten it out just a little bit is ‘worth trying’. IMHO.

    BTW, I’m not advocating “waiting” for the pruning stage. I’d like it to happen starting last century… I’m just recognizing what I think are reasonable odds on its probability.

    Is that a direct enough answer? Too much regulation is best fixed by less regulation, but if you can’t get that, you can at least get some of the worst distortions flattened out while trying to fix it all.

    Your points about the legal process being garbage are correct (as I said indirectly in my “we will get neither A NOR B'” point about what really happens). I have no expectation that any beneficial change of either sort will happen. Our congress is too self centered and screwed up for that. IMHO.

    FWIW, I’m becoming ever more enamored of the Heinlein idea of two houses of congress: One that makes laws and one that can only remove them… IT’s a serious flaw in our system that the crap just accumulates. The notion of having every law ‘sunset’ has it’s merits, but I could just see a congress critter holding some Pork Project up as ‘needed’ to get his vote on the bill to renew murder as a crime…

    I’ve also been enamored of the idea of just setting a byte limit. “Congress shall have 1 GB of laws and no more”… But that would just encourage more of the (bogus delegation, IMHO) behaviour of laws like “EPA shall mandate all environmental rules”…


    “What you said!!!” ;-)


    Like the translation…

    But don’t expect the kids to start growing up now. They are often children of power and position who went to the right schools and impressed the right people. Their whole world view is based on knowing who to impress and which butt to sniff and kiss. They get great favor for doing it. (People, and lobbyists too ;-) shower them with millions of dollars; often for just milling around and making sure nothing changes… plus great perks, pensions, and other goodies. Besides occasionally getting their butts kissed… So where is THEIR motivation to change anything in the system?

    No, the ‘solution’ has to come from the “plain folks” at the bottom of this heap (as it always has). But they are too distracted with new toys right now to really care. One can only hope it can still be done via ballots once things get bad enough for them to notice and care.

    Unfortunately, we have Rome (both the Republic and the Empires) as an existence proof that things are often prone to going through tyranny on the way to a reset of power and privilege… One can only hope things move faster this time through the cycle… I’m not fond of the idea of another 1000 years of the slow slide to Empire and Domination…

    Basically, when most folks are more worried about J-Lo and the newest Nintendo or X-Box release; there isn’t much for the Dear Leaders of the world to worry about. Just put a bit more sawdust in the bread and tell folks they are getting more bread, and put on some reruns of the Circuses…

  56. Mark says:


    I’ve been “gubmit schooled,” though I spent a few years in private schools when I was young, which is probably what saved me.

  57. Jason Calley says:

    @ E.M. “I’ve also been enamored of the idea of just setting a byte limit. “Congress shall have 1 GB of laws and no more”…”

    LOL! I actually laughed loud and long when I read that. Not a bad idea though…

    I can just imagine how Congress would react: “Let’s see, we can save memory by numbering all the words in the dictionary by order of most common usage…”

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