Shared Sacrifices and liberty islands 20110817

View 688 Wednesday, August 17, 2011

Now Obama has taken up the “shared sacrifice” arguments. All we have to do is soak the rich and our financial problems will be over. After all, Warren Buffett has said so. The President finds that refreshing. There are those who say that Buffett was not entirely accurate in his analysis. The Wall Street Journal even has an editorial on the subject. It’s worth your attention. But leaving out Buffett’s arguments, there are other considerations. Is the purpose of taxing the rich more to raise revenue or simply because we can do it, and we want more equality?

The Journals also points out that if the goal is equalization, “Obamanomics has been a raging success.” I haven’t been able to find a proper link to that article, but the title is “Millionaires Go Missing.” (There is a similar article about Maryland missing millionaires here.)

The important notion is the amounts involved. According to the journal:

2009 Tax information:

Tax Returns

$200,000 and above   3,924,000
$1 million and above      237,000
$10 million and above        8,274

Taxes Paid

$200,000 and above   $434 Billion
$1 million and above      178
$10 million and above      54

This is way down from 2007 when the numbers for the three categories were 4.6 million, 390 thousand, and 18.4 thousand respectively. In 2007 the 18,394 people who made $10 million a year paid $111 billion in taxes, about double what we got from the 8,274 who made that much in 2009. That is the point of the Journal article: if you want more money, you need more rich people. The poor don’t pay much in the way of taxes.

If Buffett wants to donate money to the government, he’s certainly free to do so: but in fact we all suspect that more good would come from his deciding where to invest his money, or on what enterprises he ought to spend it – including simply turning it over to the Gates Foundation – than would come from sending it to the government where we will cycle it through the SEIU. We all know that if the government gets money it spends it, generally on hiring more government workers. It doesn’t reduce the deficit. There are never any deals that actually reduce spending, even on Bunny Inspectors, who will duly get their raises. I note that the three senior officials who approved the scheme to sell guns to be delivered to drug cartels have been promoted despite the undesirable outcome of what they approved. Parkinson’s Laws apply to the government: it’s expenses rise to exceed income, and there will be exponential growth in departments independent of the amount of work those departments do.  This always happens, and the only way to stop it is to control spending – which seldom happens. If a government activity exists it will have strong advocates for doing it and expanding it; while there won’t be many who oppose it. Look again at Bunny Inspectors.

Giving the government more money to spend will result in the growth of government to exceed that new income. It always works that way. The only way to actually cut government is to force it to cut programs, either by reducing their cost, or by eliminating them. I didn’t see any such proposals in the Deficit Dance. Nothing about reducing regulatory activities.

Note too that any proposal to reduce regulation always gets the response that the first program to be eliminated will be the control of putting arsenic in the water, or industrial pollution running rampant by dumping sewage upstream.. When it is answered that no, we don’t think that ought to be eliminated but – the argument is cut off in mid sentence. The rest of the sentence would have been “Yes, but just because you can detect something doesn’t mean it is at a dangerous level; surely the level of enforcement can be discussed? Surely we can tolerate some levels of pollution when the result is an increase in employment? Surely we can discuss this. But it is never discussed. It is the same with the city budgets, where the first thing proposed for elimination is the police and the second the first grade.

The United States managed to survive for a very long time with a much smaller and less active federal government. It could do so again, but none of the Deficit Dance proposals I know of even considered the notion that we might actually cut the size of government, not just cut its rate of growth in half. (And cutting the rate of growth in half would have been considered an intolerable cut with accusations of balancing the budget on the backs of the poor.)

I note that Peter Thiel has invested some of his billions in the concept of “Islands of Liberty”, sovereign ocean living platforms. I explored some of that concept in early stories, and for a while I was on the board of the Ocean Living Foundation which looked into engineering factors and even cast a few experimental designs onto the waters, so to speak. Such places can exist in an orderly world. Historically the attempt to found a new Republic has been difficult because someone else will want it. In the Caribbean there were a couple of independent city states in the Golden Age of Piracy, but they were subsumed into existing Imperial schemes as colonies, and went through the usual history of West Indies colonies. Some are now independent nations, some in the British Commonwealth. Others are “Overseas Regions” of France, which is essentially the same status that Algeria had until wars – war of allegiance, war of independence, civil war – ended that.

My point being that I wish the libertarians well, but I have less confidence in the international community allowing them to exist. I can see them being “defended” by an international peace keeping force that levies taxes on them to pay for that defense – might be an interesting story to write. And of course I had some sort of scheme of my own in some of my early stories.

I wish them well. Maybe the US Navy could help…