On Hauser’s Law and Soaking the Rich

Whenever the subject of the deficit comes up, many well-intentioned people make the suggestion that we should repeal all or some of the Bush tax cuts and that this will go a long way to at least beginning to fix the problem.

Often times this graph (or one like it) is used in support of this notion.

First, let’s keep in mind that this is the deficit, the annual shortage when one compares money spent to money collected. This is different from the national debt which measures the sum total of the deficits.

On its face, it would seem that raising taxes (or eliminating the Bush tax cuts as some prefer to say) would be a reasonable approach. The problem is that the blue line above assumes that all taxpayers would leave their behavior unchanged. This is demonstrably false through what I have come to find out is called Hauser’s Law.

What this graph clearly shows is that raising taxes actually has little to no effect on money collected as compared to GDP. Why? Because taxpayers do change their behavior. The wealthy will shift money using tax sheltering or even move it out of the country.

What is worse is that which is unseen – The slowdown of the economy that would result from this activity. So what is to be done?

There is only one viable answer – reduce the size of government.


A Goodbye to Charles McCord

As a former New Yorker, I grew up listening to Imus in the Morning.

Earlier this month, Imus’ longtime sidekick, Charles McCord retired. In addition to “doing the news” Charles was the literary genius behind many of their most famous bits, Fractured Fairytales were my favorite.

When they begin simulcasting on MSNBC and then FOXBusiness, Charles morphed occasionally into a berater of the I-Man’s narcissism. The most classic, on Whittaker Chambers, is in the montage below. Don had been droning on for weeks about Sam Tanenhaus’ biography of Chambers when one morning Charles exploded.

Happy Retirement Charles! You will be missed.

On the Gold Standard

During my state senatorial campaign last year I had the privilege of meeting some really great people from all around the political spectrum.

imageOne of the most interesting is Wayne Richard who ran for the Texas House from Plano. While he did not get his party’s nomination he has parlayed his run into a successful radio show, Stand with Wayne, which is broadcast Saturday mornings at 10am on KVCE 1160 AM here in Dallas.

Earlier this week Wayne posted what he called an editorial on Fiat Currency. Wayne calls himself a conservative not a Libertarian, so it is interesting in that this is one issue where I part ways with most Libertarians and, in this case Wayne.

While I am all in favor of auditing the Fed, I do not think we need to a) end the Fed and b) go back to a gold standard. What we need is to reduce regulations that would allow more competition for the Fed, i.e., private money. Some of this can be based on gold, but not necessarily.

The problem is that the gold standard (or any other metal based currency) is based on some false premises.

First, that the metal itself has intrinsic value. It does not. Many astronomists believe that most gold on the planet resulted from impacts of meteors, either as a delivery system or a result of the violent impact. Ask yourself this, if a giant all-gold meteor where to impact the Earth, would we suddenly become wealthier? No, those of us that might survive would not care about gold anymore. Gold has value because we mutually agree it has value, in other words for the same reason fiat money has value. Milton Friedman spoke eloquently about this in his series Free to Choose.


Second, metal monetary standards promote the idea of wealth being a zero-sum game because there is only so much gold we have discovered. This is wrong, but it is also dangerous. Wealth is a human construct. Wealth and money, for that matter, are spiritual goods. Note, not religious, but spiritual, they are based on a belief system. For more on this idea, I highly recommend Rabbi Daniel Lapin’s book – Thou Shall Prosper.

In all, I agree with Wayne’s distrust and diagnosis of the poorly run government run monetary policy, but I disagree with his implied prescription of returning the United States to the gold standard.

Open Email to My Friends on the Left

(…especially Warren Buffet and Stephen King)

Hi all,

I just came across this wonderful opportunity for you. If you believe in bigger government, you can now directly help and the best part is you do not have to wait for the next election.


If your household makes over $88,030, you are in the top 20 percent of all households in the United States. In other words, you are certainly considered rich by the other 80 percent of your fellow citizens. And, without a doubt, you are among the super rich by world standards.

pay.gov logoSince you believe government needs to take care of those less fortunate, you have a moral obligation to go to https://www.pay.gov/paygov/forms/formInstance.html?agencyFormId=23779454 to make your voluntary contribution to reduce the public debt.

If you are not technically savvy, they will also accept a check payable to the Bureau of the Public Debt, and in the memo section, notate that it’s a Gift to reduce the Debt Held by the Public. Mail your check to:

Attn Dept G
Bureau of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188

My suggestion would be to send anything you make over $88,030, because you must believe that a government bureaucrat can spend your money more wisely than you, otherwise why would you think I need to pay more.

Any questions?

On the Loss of Manufacturing Jobs

Earlier this week, reason.tv released and excellent piece on what I will call the Made in China Myth. You can view the video in its entirety below, but the gist of it is “Who cares if the snow globes of US landmarks are manufactured in China?” Apparently, Senator Bernie Sanders (I-Vt.)does.


He should not, and nor should you and here is why – a loss of manufacturing jobs is not the same as reduced manufacturing output as this graph clearly indicates.

We are not losing our manufacturing ability we are just manufacturing higher value products with fewer people.

In the late 1700’s 98 percent of Americans were involved in agriculture, now it is less than 2 percent, yet our yields are higher. We don’t lament the loss of agricultural jobs. Maybe some do, but I sure don’t.

Frankly, I am glad to not have to farm or work a production line. Both of these are noble pursuits, but I would rather read, write and think for a living in my air-conditioned house.


Texas Travelers’ Dignity Acts

I salute State Representative David Simpson (R-Longview) who has introduced three bills to the Texas House this week.

HB 1937 with 21 co-authors will make it a crime in Texas for a person to touch specific private areas of the body during a search unless there is probable cause to believe the person committed an offense.

HB 1938 will prohibit whole body scanners that depict the “virtually stripped” images in airports in Texas.

HCR 80 expresses the Texas Legislature’s strong opposition to unwarranted and unreasonable searches by TSA and urging the administration to cease them immediately.

Visit www.SupportDignity.com to find out how you can help the effort to defend our HUMAN right to be secure in our persons from unreasonable search!

Fellow Texans, I encourage you to find out who represents you and call their office.

On Foreign Aid and Military Spending

In half a dozen places on Facebook and other online places, my mantra to many Republicans recently has been – If you don’t want to subsidize the welfare state at home, why are you willing to subsidize it abroad?

Let’s even, for the purposes of this argument, put Iraq and Afghanistan aside. Most of the countries we support with troops and cash have rich entitlement programs.

Our policy with Japan for years has been, as Christopher Preble of the Cato Institute has put it, “We agree to defend them and they agree to let us.” They can spend more on their welfare programs precisely because we provide their defense.

In Korea, I believe we are there more to keep the South from going North now than the other way around. Neocons will say, “But what if the North gets nukes?” On a Facebook post today, a friend of a friend, Warren Redlich, said this, “If North Korea uses nukes, what exactly are the US troops going to do about it other than die?”

In short, it makes no sense to say, let’s not pay for education and health programs for citizens (let’s not even discuss immigrants), yet support foreign governments who support rich welfare states.

Direct foreign aid is not smart either. I have no problem sending charitable relief to Haiti to assist temporarily the victims of a natural disaster, but to pour billions of dollars into Haiti in transfer payments does nothing to actually help the poor grow wealthy. In order for a country to increase its wealth, it must create the conditions necessary for economic freedom.

I often wonder if some people are more friends of poverty than friends of the poor.

I think I found the problem with TSA

SFO SignOn a recent return trip from the Bay Area, I snapped this photo as I was exiting the pornographic photo booth, aka the “security checkpoint.”

Aside from the general warning that your Fourth Amendment rights can be violated again at any time without your consent, the last line reads, “Your safety is our priority”.

There’s the problem! It should read, “Your rights are our priority.”

Wealth vs. Poverty

Political mentor of mine, David Hall, recently turned me on to a new Google labs web service – Books Ngram Viewer. It allows you to search for the percentage of occurrence of words or phrases in book published from 1800 until today.

While playing with it, I typed in the terms wealth and poverty. From 1800 until 1960 wealth doubled poverty consistently. In 1960, poverty is mentioned with increasing frequency.

I am not sure if it means anything, but I do find it intriguing that while actual poverty is in the decline, mentions of it are increasing. Could it be that bringing poverty to the public eye has influenced the decline? Could it be that people are writing about this decline more often?

On the end of DADT, but a troubling image

Note to readers: While running for Texas State Senate, I kept my political posts in this space to a minimum, but now that the election is over, I find it difficult to continue to separate the political stuff. So, if you don’t like the political stuff, please just ignore it. Most of my post will still be business related.

Yesterday, it was announced that the Congress has authorized an end to the “Do Ask, Don’t Tell” policy which will enable openly homosexual men and women to serve in the United States military. I applaud this decision and believe it will ultimately lead to a stronger more vital force.

I have long believed that anyone who wants to serve in this capacity should have the right to do so. My thanks to anyone who has served in the past! Here, here!

altThat said, accompanying the story was this photo of President Barack Obama:

The image of the President seems to be a common occurrence, and goes all the way back to some of his campaign shots in which the circle representing the halo was the logo from his campaign.

What is even more troubling to me is that Obama is not alone in being portrayed in this fashion. It seems this was trend for George Bush as well although the number of different images is considerably less. What is more, you cannot find this type of image for Clinton, Bush 39, or Reagan. (I did not go back any further.)

I do not think it is helpful for us to see images as sanctifying our leaders. Our Presidents, on both sides of the aisle, are humans with humans flaws and failings. They are not capable of miracles, nor, quite frankly, should we want or expect them to be.