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Thursday, December 27, 2012

A Proposed Way to Reduce Gun Violence

I support the right of sane & law-abiding citizens to own and use
guns. But many guns that were originally purchased by regular people
are now in the hands of criminals or mentally ill persons.  I think
that the law should make gun owners more responsible for preventing
such transfers.  So what I'm proposing is that whenever a gun is found
in the possession of someone other than the original owner, there is a
presumption of a crime by the owner. The crime would most likely be
culpable negligence. That would be the case if there was no criminal
intent, but the owner sold the gun, or left it behind when moving, or
failed to take reasonable measures to keep it from being stolen. In
order to transfer a gun from one private party to another, there would
have to be a registration process. To skip this registration process
would be culpable negligence.  If a gun is stolen, the police must be
notified so that there is a record of that event.  When an heir
acquires a gun due to a death, a similar procedure must occur.

What this would do is give gun owners additional motivation to prevent
their guns from falling into the wrong hands.  Would it have prevented
Adam Lanza from getting his hands on one of his mother's guns in her
basement, loading it, and killing her?  We cannot know that, but at
least Nancy Lanza, as part of her weapons training, would have been
told about the law. That might have made her more aware of the risk
she was taking.

But this approach certainly cannot prevent all gun violence.  What it
would do is cause many gun owners to think a little more about the
whereabouts of their guns. That ought to have a positive effect on our
national gun violence problem.

Monday, November 12, 2012

Safely Descending the Fiscal Cliff

I'm of course referring to the U.S. national debt, and the law that the congress passed in 2011, the Budget Control Act.   This law mandates substantial cuts to many government programs, including defense, and tax increases for most taxpayers.  This is to happen at the beginning of next year, unless congress and the president can agree on another plan for getting the national debt under control.

This has been called the "Fiscal Cliff" because it would throw the economy into recession, due both to the large number of layoffs that would result from program cancellation, combined with the money removed from the economy by the tax increases.

However, doing nothing, and continuing business as usual, is not an attractive option.  The U.S. now owes an amount roughly equal to our annual Gross National Product (GDP).  At the moment this is not really hurting us, because interest rates are very low, so we can afford the interest on the debt.  However, this debt is rapidly growing, since our government spends a lot more than it collect in taxes each year.  This difference is called the deficit.  In order to keep the debt from growing, we need to reduce the deficit to zero.  It does not have to be done in one year; taking a decade might be OK, as long as it is clear that it will happen.  But the longer it takes, the larger the debt will become.  Furthermore, interest rates will not stay low forever, and a growing debt will eventually cause interest rates to rise sharply.

There is no good way to reduce the deficit; but we (the congress and president) can try to choose the least bad.  Let's look at some of the options:

What if we just keep doing what we have been doing, running a large deficit?  At first, nothing special happens, but the national debt will continue to grow, and therefore the interest payments will also grow, and these interest payments add to the deficit.  But that's not the worst of it; what's really bad is that the interest rates will eventually rise, and what's more they will shoot up sharply.  The rates are low now because the U.S. still has a great reputation as a very safe country to loan money to.  If our debt continues to grow we will lose that reputation.  It might take 2 years, or 5 or 10, but once we are considered a risky place to loan money to, the rates will rise, and once they do, we quickly become much riskier, because the rising interest make the deficit worse!  Then we will no longer be able to borrow money at reasonable rates.  Then we will default on some of our debt, or, more likely, very high inflation will ensue, permitting us to repay the debt with dollars that are worth much less.  If either of these things happen, then we will no longer be able to borrow money.   The government will still be able to pay it's bills, but with dollars that don't buy as much, so most Americans will be much poorer.

OK, suppose we simply cut government spending a whole lot.  This is the austerity approach.  If the economy is strong we can cut it a little bit without harm, but most government spending is income to someone, so if spending is cut, lots of people will have less income.  That means they will buy less, and that means layoffs at the businesses that lose that business.  If the spending cuts are small, and if the economy is producing lots of jobs, then those that lose work due to the spending cuts can find other jobs.  But if the spending cuts are large it will tip the economy into recession.

What if we raise taxes enough to greatly reduce the deficit?  This will also be bad for business, since taxes used for deficit reduction are not spent on goods and services.   Depending on the size of the tax hike, and who it is applied to, we may have just a slowdown, or a recession.  Either of those results mean that the tax hike does not bring in the money it is supposed to, since tax collections depend on economic activity.  A slowdown or a recession reduces tax collections substantially, thus it is at least partially self-defeating.

Are there any other options?  I don't think there are any other major options, but a careful mix of selected spending cuts and revenue increases, along with keeping total employment high, gives us our best chance of successfully handling this problem.

A first principle here is that it's very important to keep almost everyone working.  The unemployed do not pay taxes, they do not buy much stuff, and they get money from the government.  All of that worsens the deficit.  When total employment is very high then most businesses have plenty of business, and plenty of taxes are collected, which directly helps the deficit problem.

A relevant fact that most economists agree on is that people in the less advantaged economic classes quickly spend all or most of the money they earn.  Conversely, wealthy people put a large fraction of their earnings into long term investments of various kinds.  Hence if taxes take an extra dollar from a typical wage earner, there will be a dollar less spent on goods and services.  But if taxes take an extra dollar from a rich person, there might be only fifty cents less spent on goods and services, depending on how rich they are and what their spending habits are.  A clear lesson to draw from this is that, if you want to reduce the deficit by increasing revenues, you should get that revenue from the wealthy.

Another principle to consider is how different types of spending cuts will impact the economy.  We want to cut spending to reduce the deficit, but if the economy shrinks as a result, then less taxes will be collected, and we will not get the hoped for deficit reductions.  Since the people with lower incomes spend most of their money quickly, it is self-defeating for the government to reduce their income.  An example of this is unemployment benefits; those are almost all spent on goods and services, so if those are cut, business is reduced and less taxes are collected.  The same can be said of all kinds of federal assistance to poor or lower middle class people.

So if the goal is to cut spending without harming the economy, then we must reduce payments to the wealthy.  In most cases this would also apply to corporations, since wealthy people own most of the shares of most corporations of significant size.  Hence we should reduce or eliminate subsidies that are paid to agribusiness, oil companies, and any other large corporate interests.

What about defense?  The military industrial complex receives roughly one sixth of all government spending.  Can this be cut without harming the economy?  Any cuts will have some negative  effect, but the size of the affect depends on the program.  For example, if we bring soldiers back from Germany or Japan, that has a minimal effect on our economy.  It may do some damage to those foreign economies, and they may then have less money to buy stuff from us, but that is a relatively small effect.
But if we halt production on a weapon system that is ongoing, and has many workers involved, that may have an immediate negative effect.  So my conclusion is that the myriad ways that money is spent on the military and the defense industry, need to be carefully evaluated to identify those which have a relatively small near-term economic impact.  Those are the ones that should be cut.  Of course a related issue is that we cannot cut programs that, realistically, would endanger national security.  However, many people, including myself, feel that our military could be pruned substantially without risk to our national security.

My conclusion is that the way to get the deficit under control is with a careful mix of spending cuts and revenue increases, and which are oriented toward keeping a high level of employment.   This would mean getting most of the added revenue from those with high incomes, and from medium and large corporations.  The spending cuts must be those that have little impact on people with incomes below the U.S. median income.

Wednesday, September 5, 2012

Full Employment Revisited

During the last two decades there have been major structural changes in the U.S. labor situation. These are primarily the result of the microcomputer revolution. Computers, with appropriate software, enable a great reduction in required staffing levels. This is true both in the office and the factory. In the factory it is by the use of manufacturing robots, and also by automated logistical systems. In the office it has eliminated typing pools, and reduced the number of bookkeepers and accountants and inventory clerks required. So nowadays the goods and services that are really needed can be produced by a fraction of the total workforce, and many people are left without jobs.

But there exist numerous ways to keep almost everyone working, if the government had the political will. Many of them are already in use, else we would have much higher unemployment than we currently do. Many of you probably have read my article here:
Now I want to expand on that a little.

What some business people would like would be to emulate China. If real wages are made low enough we can sell lots of stuff to the rest of the world at very low prices. This would be one way of having low unemployment. But most of the U.S. population would not like this at all. The bulk of our population would be in poverty, as in China. The business owners, however, would be raking in previously unimaginable incomes.

The biggest make-work program that we currently have is defense. This uses tax receipts to employ tens of millions of people. Most of these are employees of the various defense contractors. Many more are military personnel. And then there are the many cities with military bases. These local economies depend on the personal spending of the local military personnel. Why do I call this a make-work program? Isn't it necessary to defend the nation from foreign aggressors? Well, our defense establishment is about twice as big as necessary for this purpose. (So it's only half a make-work program, and half a necessary program.) Defense is also a form of corporate welfare, and that in fact is why it's so large. The various companies that manufacture all of that military stuff also spend lots of money lobbying our congress, and contributing to the campaigns of favored politicians.

If it was up to me I would greatly increase spending on all kinds of scientific research, including the space program. Plus I would embark on a vast infrastructure improvement program to give us roads, bridges & railroads as good as they have in Germany. Also, we should be building many medical schools and clinics and providing scholarships to train medical personnel at all levels. Money for all of this stuff would come from restoring the tax code to what it was in America's best economic years, the 60's and 70's, but also, the greatly increased GDP that would result would bring in substantially increased tax receipts.

Finally, I would start a long term program to gradually reduce the standard workweek from the present 40 hours.

Wednesday, July 25, 2012

An "Occupy Tucson" Speech by Al Anzaldua - Part 2

Is it a coincidence that after the 1933 Glass-Steagall Act, which kept investment banks from merging with insurance companies & commercial banks, was overturned by the 1999 Gramm-Leach-Bliley Act (Financial Services Modernization Act) and after Senate Banking Committee head Phil Gramm also inserted a provision into the 2000 Commodity Futures Modernization Act that exempted derivatives like credit-default swaps from government oversight, that Wall Street banks went into a frenzy of mergers & then a frenzy of creating and selling opaque derivatives based on sub-prime loans leading to the 2008 economic collapse?  It is not a coincidence!  These acts of deregulation let the Wall Street foxes run wild in the U.S. economy henhouse!

We must break up the banks and bring back Glass-Steagall!  It was a good law that protected us for 66 years!   We must push for strengthening the Dodd-Frank Act so that all Wall Street derivatives are traded on open, transparent exchanges, like the stock exchange – not just in so-called “clearing houses” dominated by Wall Streeters.  Why is Wall Street so against derivative transparency?  Can you guess?

Some in the richest 1% have influenced members of Congress with bribes (political donations) and lobbyists to rig the tax system so that now the richest 1% make more money than the bottom 140 million people!  And the gap between rich & poor is growing!

If you hold up a 7-11 for a hundred dollars, you will go to jail, but if one of the banking plutocrats steals millions, he at most gets a “naughty naughty” from the press & slap-on-the-wrist fine.  What kind of justice is this?

… because the enemies of our 99% movement are perpetrating a lie – a big rotten lie – that 51% percent of Americans pay NO tax!  They repeat it over and over.  That’s what you do with a big lie.  The truth is that people working for a wage pay 15.3% payroll tax.  (In effect, they are paying 30%, etc.)  Then there’s state, county, and city sales taxes.  And property taxes.  Even renters pay property taxes (indirectly)!  Don’t let them get away with this lie!

Glenn Beck and others are predicting violent class war from us.  (“They will drag rich people out of their homes and businesses and kill them.”)  Don’t give the foes of the 99% movement ammunition to use against us!  Don’t let them divide, discredit, weaken us.  Don’t let them make a lie out of 99% unity.  We therefore must avoid not only violence, but even the hint of violence. Avoid masks and other face coverings.  Avoid compiling rich-people lists, especially ones with addresses.  We don’t need them to prevail.  We have nothing to hide.  They have plenty to hide!  Let them continue to wear their phony American-loving masks.  We can see beneath those masks!  Always remember that we have something stronger, more powerful than violence: We have persistence, we have the numbers, we are the 99%!

At the very least:  We continue demonstrating and organizing.  Before voting for a particular politician, find out how many of his/her staff aids and former staff aids are/were ex-corporate lobbyists or corporation officers.  Find out who the corporate front groups I mentioned are supporting.  Go to Source Watch and other websites and follow the money.  It will amaze you!  Support public financing bills for every level of government.

If you go to you will find a Declaration of Independence from Corporate Power to sign.  It reads:
I pledge my support for America’s founding principle of government of, by, and for the People.  I believe that a corporation is not a person, money is not speech, and corporate money should not be allowed in our country’s elections.
I pledge to work with other grassroots Americans for reforms that will free today’s politics from the dominating power of what Thomas Jefferson called “the aristocracy of our moneyed corporations.”
I encourage you sign this pledge and continue to demonstrate for economic justice!

Remember that we have something more powerful than violence, we have the power of persistence, the power of non-violent action, and if need be, non-violent resistance.  Persistence, Resistance, Non-Violence!  We have the power of numbers.  Potentially vast numbers.

Saturday, July 21, 2012

An "Occupy Tucson" Speech by Al Anzaldua - Part 1

Al Anzaldua gave this speech at an Occupy Tucson event in October, 2011:


In my lifetime, I’ve never seen the 99% of Americans so economically beleaguered, and I think I know

… because giant, multinational corporations have hijacked our politics and economy.  They are controlling or at least influencing the elections and political agendas of legislators (Fed & state), governors, and even some mayors and judges, as well as the agencies that are supposed to protect us, such as the FDA, USDA, & EPA.  Which corporations?  Examples include:  Monsanto, Exxon/Mobil, Mellon/Scaife Industries, Philip Morris (Altria), Merck, Cargill, Phizer, Koch Industries, Wall Street banks  -- i.e. Big Tobacco, Big Oil, Big Chemical, Big Agriculture, Big Coal, Big Pharmaceutical, Big Banking.  And don’t be fooled that just because a business is family owned, or is based in the U.S., that it’s a purely domestic company.  Koch industries, for example, family-owned and headquartered in Wichita, Kansas, has branches in 59 other countries!

…because a new type of fascism is creeping upon us.  The old fascism was national.  This new fascism is multinational.  In the old fascism, governments took over corporations.  In the new fascism, corporations are taking over governments!  I am not talking about mom & pop companies here.  I am speaking of group of gargantuan, multinational corporations moving towards monopoly or cartel as they squeeze out smaller businesses.  They are seizing power to the detriment of smaller businesses, which we need for a healthy economy.

The biggest of these corporations use the masquerade of libertarianism and American-sounding front groups to mislead, trick, the average U.S. citizen into thinking they are for a free market and freedom from “BIG GOVERNMENT.”  This is a cruel joke.  They want nothing of the sort!  They want big government, a powerful government with claws and teeth to protect them instead of you!  And the last thing they want is a freer market with lots of competition.  They want a rigged market, a rigged economy with taxpayer subsidies & government contracts for themselves!  For example, Koch Industries gets millions in government contracts each year and billions in government subsidies.  BTW, they don’t call this welfare.  No way!  They only call “welfare” what poor people get from government.  When they get government help, it’s called free enterprise!

Make no mistake, the corporate plutocrats lust for government, but a convenient government that always says “yes” to them, a government which allows them to produce deceptively labeled junk and GM food -- a Big Fat Government for them, but a lean and mean government for everyone else.  The humbug “libertarians” who run these corporations want liberty alright, the liberty to poison our air & water, while they foist tired, old, dirty technologies and fuels on us.  What are the front groups they employ?  Listen closely to their deceptive and wholesome-sounding names:  The Heritage Foundation, American Enterprise Institute, Hudson Institute, Cato Institute, Americans for Prosperity, Citizens for the Environment, Citizens for a Sound Economy, Freedom Works, Reason Foundation, American Legislative Exchange Council, Claude R. Lambe Charitable Foundation, Bill of Rights Institute, Heartland Institute (I pass Heartland full-page ad around).  These front groups provide deceptive ads and studies, money & logistical support for politicians & movements they favor, and supposed neutral “experts” on TV & radio.  I want to remind you all that the biggest insurance companies & banks (AIG, Citigroup, Goldman Sacks, JP Morgan Chase, Morgan Stanley, and Bank of America) are still too big to fail!!
As long as they remain gigantic, they can threaten our economy and blackmail us into bailing them out with our hard-earned money, which they use for million dollar bonuses and lobbying against our interests.

(Part 2 will be published next week)

Monday, July 9, 2012

Reducing Suffering Worldwide

There is a great deal of suffering in the world.  There always has been, and many philosophers have noted it.  For humans, suffering may be due to famine, war, incarceration, disease, and many other causes, although those first four are probably the most important.  Over the past several hundred years, human suffering has been reduced considerably.  Famine, as always, is a regional phenomenon, but nowadays there are usually serious efforts to transport food to where it is needed.  There are not as many wars as there used to be.  Prisons are mostly less cruel than they used to be, although with many local exceptions.  And modern medicine and public health practices have reduced the prevalence of most diseases, as well as the suffering of those afflicted.  The pain of childbirth has also been greatly reduced by modern medical practice.  The same is true for injuries due to accidents.  Of course a large fraction of the world's population does not have access to modern medical practice, so there is still a lot of future progress possible.  In order for the world to continue the trend of reducing suffering, there must be enhanced food security globally, increased access to effective medical treatment, fewer & shorter wars, and fewer prisons with inhumane practices and conditions.  It's not clear that these things will happen.  One important impediment is continued growth of the human population, which reduces food security and motivates nations to go to war over dwindling resources.

The potential exists for the human race to reduce suffering for many species of animals as well.  I'm certainly not claiming it's likely any time soon, and may never happen.  I just want to point out that it's possible. Humans would have to first get their act together, stop having so many children worldwide, and get the human population down to a level that is sustainable, and with a good quality of life for all.  This is necessary because as the human population increases it is accompanied by a decrease in animal habitat.  This causes much suffering among the animal populations.  There are also many animals that are in the custodial care of humans.  These would be farm animals, laboratory animals, zoo animals, and pets.  There are already trends in place to reduce suffering of these animals; these trends would merely need to be continued.  When wild animals suffer it can be due to many different causes, and those vary from species to species. But a major cause of suffering for many of the large mammals is overpopulation. Most animals have high birth rates, and if conditions are right for a few years their populations can acheive levels such that the food supply is inadequate, leading to death by starvation for many.  Starving IS suffering.  Deer in many parts of North America illustrate this phenomenon.  Humans can reduce suffering of this type by population control efforts, either by hunting, or by birth control drugs administered either by bait or by dart.

In order for the processes described above to be implemented worldwide, it would probably require forcible intervention by some world body to change the governments and cultures of the many dysfunctional or nasty nations around the world.  (Syria, Zimbabwe, Somalia, North Korea, etc.)  I wrote about this possibility in an earlier article:

All of the above could be achieved by 2100 if that was what people, and their leaders, wanted.  Of course they don't actually want that, or rather it is very low on their list of priorities, so this is just a fantasy. A fantasy of the possible.

Friday, June 29, 2012

Should you go to college, young person?

This article is going to be controversial, because nowadays it's an article of faith that if you go to college you will be much better off financially than if you don't.

I don't think that everyone benefits by going to college, and I don't believe the statistics that claim to show that going to college makes you earn more money.  It's true that the large group of people who went to college are making more money (per person) than the large group who did not go to college.  But could that be because the people are different?   Could it be that the people who went to college tend to be more willing to study and persevere in a regulated environment than those who did not go?  Could it be that those who went to college had more aptitude for white collar careers than those who did not go? Could it be that many of those who did not go to college would have done poorly in college if they had gone?  Could it be that many of those who went to college would have done well even if they had not gone? All of those things seem likely to me, so my hypothesis is that the difference between those two groups of people is mainly due to differences in their personal characteristics, and not because one group went to college.  Of course I'm speaking statistically, not for every single individual.

So I'm advising you to go to college if you want to train for a white collar career, or because you seek knowledge for it's own sake.  If you were thinking of going to college because your friends are going, or because your parents want you to, think twice.  Do you have any other good options?  Are you prepared to attend classes and do lots of homework for several years?

Now to be better off financially as a result of college, it's not enough that you simply get a higher paying job than you would have otherwise. You will have to earn enough extra money to make up for the 4 to 6 years that you spent in college, the experience or training that you will miss by being in college, and the money that you will have borrowed. For example, if instead of going to college you learn a skilled trade that is in demand, you are likely to be earning good money and be better off than many of your high school friends that went to college.  Of course that's not necessarily true for those that have the dedication and talent necessary to become an engineer, attorney, physician, accountant, or other well-paid white collar careers.  If one of those careers is right for you, then by all means, go for it!

Saturday, June 16, 2012

Iran, Israel, and Nuclear Weapons

As a news junkie, I have formed some educated guesses as to what is going on over there.  The following is merely speculation based only on what I hear on the public airwaves:

I think Iran is working on developing nukes.  They have plenty of motivation.  The U.S. government frequently make hostile statements about Iran.  Of course Bush famously named them as part of an "Axis of Evil".  The present U.S. government continues to speak in ways that are not reassuring to the Iranians.  Furthermore, they notice that North Korea seems safe from attack.  Iran has never fully cooperated with the U.N. Atomic energy people.  If they had nothing to hide you would expect them to cooperate.

About Israel, I believe they will do whatever they think necessary to prevent Iran having a nuke.  I think they have an active spy network within Iran.  I think their present tactic is to disrupt progress, both by cyber attacks, and by assinations of key scientist and administrators. But if their spies tell them that Iran has the materials and is actually building a nuke, then they will launch an air attack.  The goal would be to set Iran's progress back by several years.  They would achieve this by massive damage to much of the infrastructure necessary to support Iran's nuclear development efforts.

My best guess about the U.S. government is that they are cooperating with Israel on the spying and cyber attacks.  If Israel launches an air attack they won't object, and may even participate.  They will try to delay such an attack as long as possible, for fear of the many unknown consequences and complications.  

Thursday, June 14, 2012

What do Henry Ford & Joseph Stiglitz have in common?

Henry Ford was a leading industrialist, perhaps THE leading industrialist, of the early 20th century.

Joseph Stiglitz is a current leading economist, and a winner of the Nobel Prize in economics.

Here's what they have in common:  They both recognized that, in order for the society as a whole to be a prosperous one, the common person needs to have much more than a subsistence income.  It's pretty simple, really.  If most people are broke, who's gonna buy the products of industry?  In order to sell lots of cars & washing machines & insurance policies, lots of people need to have money to spend.  If only the rich have extra money, well, there are not very many of them, so you can sell only a much smaller number of these items.

Ford came upon this principle early in the rise of the Ford Motor Company.  Through innovations in assembly line production of automobiles, the company rapidly increased the number of cars they were able to produce each week.  When this number was small, Ford had no trouble selling all of them, because his car was very practical, and his prices were lower than his competitors.  But as his output rose, eventually there came a time when there just weren't enough buyers that could afford a car.  This was at a time when most people earned just enough money for the basic necessities, which did not include a car.  Ford then began to pay his employees a lot more than the prevailing wage at the time.  This had multiple effects.  It got him the most qualified employees available, and an endless supply of them, so that he was able to continue to expand his factories and his production.  It also caused an economic boom in the Detroit area because of all of the money that Ford's employees were spending in all of the common types of businesses.  The well-know multiplier effect was in operation here; most of the businesses in the Detroit area prospered, and this caused even more spending.  Furthermore, other employers were forced to raise wages in order to prevent losing their employees to Ford.  Detroit became a boom town, with new residents flocking there, lots of cash being spent, and plenty of that going to buy new Ford cars.

This principle, of prosperity resulting from good wages for the common worker, has been known to economists ever since that time. The reason that Joseph Stiglitz is invoked here is because he recently wrote a book about it.  His book is entitled: "The Price of Inequality: How Today's Divided Society Endangers Our Future."  It seems that in recent decades America has drifted away from this prosperity principle, as the common worker has been losing spending power, while the rich are getting richer.

Friday, March 16, 2012

Should the government get out of the marriage business?

In our country it's mostly the state governments.  They issue marriage licenses and give certain privileges to married couples.  The federal government treats married couples differently for income tax purposes.  The following quotation is from Wikipedia:

"According to the United States Government Accountability Office (GAO), there are 1,138[1] statutory provisions in which marital status is a factor in determining benefits, rights, and privileges. These rights and responsibilities apply to only male-female couples, from the 1996 Defense of Marriage Act (DOMA), defining marriage as between a man and a woman."

I'm nowhere near the first to propose this, but I think marriage is basically a religious rite, and should be left entirely to the churches.  (and of course synagogues, temples, etc.)  The governments of the fifty states should deal with civil unions, AKA domestic partnerships.

This approach would end the current controversy over whether same sex marriages should be allowed.  Some churches would perform same sex marriage and some would not.  There would be controversies within many churches, but that's just a matter for those believers.   Most states would recognize civil unions between two people; I think eventually all states would.

A few, very few, public figures have suggested that marriage, being traditionally a sacrament, should be something for religious organizations to deal with.  Governments, on the other hand, should be responsible for defining and regulating civil unions, or domestic partnerships, however they might be named.

This makes a lot of sense to me.  It would end all of the quarrelsome controversy over same sex marriage, except within individual churches.  Each religion could make its own rules about marriage.  Same sex couples presumably would qualify for civil unions.  Those who also want to marry would have to find a church that accepts that.  Disputes on that issue would take place within individual churches.

Each state government would have the responsibility of defining civil union and deciding how it works. Presumably, the vast majority would not specify that the partners need to be of opposite sexes.  I think that eventually, all states would permit same sex domestic partnerships.

This also make it possible for the civil union concept to be extended toward non-sexual partnerships.  There are many cases of long time friends, who are not lovers, and who have no other highly important relationships in their lives, who might benefit from a civil union, if it was divorced from sexuality. Civil unions might not even be restricted to pairs; small groups of single people who are very close friends might benefit from such an arrangement, and I see no downside for society.

So, in conclusion, I advocate that marriage be exclusively the domain of religion, and that government promote only domestic partnerships.  Many couples, especially those with religion, would choose to have both.  Although this is primarily an issue for the individual states, the federal government would have to confirm that the benefits, rights, and privileges formerly given to married couples, would now apply to domestic partnerships.

Wednesday, February 22, 2012

Our Jails are too Full

What I might say has been said many times.  Every month or so I read or watch some reportage about our huge prison population.  How can we feel good about our country when so many humans are locked up?
We lock up a far higher fraction of our population than any other country!  How can this be?  Is the typical American a cruel, sadistic bastard?  I don't think that's the case, but there is something very wrong that needs to be changed.  The latest article that I have read is entitled The Caging of America, by Adam Gropnik.  It's in The New Yorker, and you can read it here:

That's a better article than anything I can write.  This situation won't change until enough people badger their elected representative to change it.  Of course, those who are cruel sadistic bastards will be content with things as they are.

Friday, January 13, 2012

The Right Way to Tax Capital Gains

If I buy something, and sell it later for more than I paid, I have made a capital gain.  If I waited less than a year before I sold it, my profit is taxed like any other income.  The capital gain is added to my other sources of income.  But if I wait a year or more before I sell, then our current tax code treats it differently.  It's considered a "long term" capital gain, and the tax will be 15%.

So what's wrong with that system?  The most common complaint that one hears is that people who earn their living via long term capital gains are getting a tax break that is unfair to regular people.  Those who think this way say that all capital gains should be taxed the same as ordinary income.  But there is another issue that is talked about much less often, and that is the effect of inflation.  Inflation can produce long term capital gains that are totally illusory.  Suppose, for an example, that I bought a house in 1991 for $100,000.  then in 2011 I sold it for $200,000.  It seems like I earned $100,000, right?  But I didn't really, because the 2011 dollars are each worth less than the 1991 dollars.  According to the Bureau of Labor Statistics the $100,000 that I paid in 1991 has the same purchasing power as $166,100 in 2011.   If I had sold the house for $166,100 I would have broken even, or exactly gotten my money back.  Since I sold it for $200,00, my true profit is $33,900.  But I will have to pay tax as if the profit were $100,000.  My tax will be $15,000, which is almost 50% of my true profit.

So it seems that the current system is capable of taxing both too little and too much depending on the circumstances.  My proposal to remedy this is to take inflation into account when computing capital gains. The government already considers inflation for other purposes.  For example, social security checks are adjusted upward annually to compensate for inflation.  And the government sells a type of bond, Treasury Inflation-Protected Securities, or TIPS, whose value is adjusted for inflation.  Hence there is already a precedent for considering inflation in government financial matters.  So what I suggest is that capital gains be inflation adjusted by the change in the CPI from the time of purchase to the time of sale.  The distinction between long and short term capital gains is no longer necessary; it could be eliminated.  All capital gains could be taxed as ordinary income, but they would be computed differently.  The effect of this difference in computation would be to reduce the tax on long term capital gains, but the amount of reduction would depend on how much inflation occurred during the interval between purchase and sale.

My main point here is that capital gains should be adjusted for inflation.  Whether to tax them at the same rate as ordinary income, or to treat them differently, is another issue.  Since new business formation is aided by readily available capital, there is justification for giving favorable tax treatment to long term capital gains.  If this is done I think the waiting period should be something like 3 to 5 years, not 1 as is currently the case.  The latter encourages "flipping", which is not something to be encouraged.  5 years is a reasonable time to wait when you invest in a new business.