The China Syndrome – Part I

No, I’m not referring to the movie from 1979, but the theme of the movie about the coverup of a nuclear meltdown at a nuclear power plant is much like the real China coverup over the COVID-19 plague that is causing such catastrophic damage to the entire world.  You have undoubtably heard that more and more evidence is coming to light that the virus originated from a lab in Wuhan, China, and that the communist government of China deliberately hid critical information about it from the rest of the world.  As a result, there are cries from those in Congress and many among our citizenry for the US to take retaliatory action against China and understandably so.  There are several proposals as to what the US should do, and although I would like to see these actions taken, we need to hit the “pause” button and carefully and soberly consider their ramifications and not take actions in a “knee-jerk” fashion and later suffer damaging unintended consequences (which often happens with such hasty government actions, e.g., the invasion of Iraq).

Perhaps, in my humble opinion, the most dangerous action being floated by several is the cancellation of the US debt held by China.  At first, I also promoted this idea as China has inflicted trillions of dollars of damage on our economy and the lives of millions and millions of our citizens.  It made perfect sense as the estimated value of the damaged caused by China’s deliberate actions is far greater than the amount of our debt they hold.  Consider, however, these untended consequences that are far-reaching in scope both in time and outside of China:

  • The US has never – never – defaulted on its debt; it has always been considered a “safe haven” for investors around the world looking for someplace to “park” their money when threatening economic times come. If we default on paying our debt to China to retaliate against actions we consider egregious to our welfare, then other individuals and especially foreign governments and companies may hesitate to loan us money and prop up our proliferate spending as they may fear we could default on their loans if they ever got cross-ways with the US.  Without other nations willing to buy our debt, then we would have economic devastation.
  • Without this debt purchasing by others, with our bloated deficits, inflation would soar to levels unimaginable (think the Weimer Republic in pre-Nazi Germany). This would be further exacerbated if the leading world economies pushed even harder to replace the dollar as the world’s reserve currency (such as what BRIC – Brazil, Russia, India, China – have been pushing for some time now).
  • With such weakened currency, our entire economy with all of our “safety net” programs that so many of us depend on would implode and the human misery would be catastrophic. With this would come total societal anarchy.

Now you may think after a two-year hiatus from writing my essays I’ve gone completely bonkers, but the laws of economics and geo-political high-level finances are as certain as any other laws of science.  The only good thing that could come of such a scenario as I’ve warned about above would be it would sure stop a lot of the unconstitutional spending that has been going on by the federal government for well over a century; problem is, it would probably be too late to stave off the destruction that would come about.

So, do we just give China a pass on their duplicity?  Is the communist government of China going to be allowed to skate by on their actions?  Hardly; there are things that could be done, but I’ll discuss them in a subsequent essay – hopefully sooner than two years from now!

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The Real Problem with President Trump’s Tax Return

So now the whole world knows.  In 2005 the Trumps paid $38 million in income taxes to the general government, or 25% of their taxable income.  As we follow this “bombshell” dud in the news, pundits are assailing it on multiple fronts, but none are touching on the real problem with this incident.

Most of what I’ve heard is how whoever leaked this return committed a felony in that tax returns are, by law, to be kept private unless the individual chooses to voluntarily make them known.  This incident is used as yet another example of how there are those on the left are trying to undermine the new president and his administration.  All of that is true, but that is not the real problem.

Others have drawn comparisons of how much the Trumps paid in taxes compared to the percentages paid by others, especially those on the left to have attacked the president over how much he paid in taxes or whether or not he even paid any taxes.  It has been rightly pointed out that the president paid an outrageous portion of his income in taxes – twenty-five cents out of every taxable dollar he earned.  This illustrates how counter-productive any income tax system is, namely it punishes success and productivity.  From an economic standpoint and the principle of individual freedom as enunciated by the British political philosopher John Locke in the 17th century, this is a problem, but again, it is not the real problem.

Some commentators have rightly stated that this leak and it’s intended purpose of discrediting the president is illustrative of how dangerous it is for the government to have such information on us and how someone who has something against us can then use that information in an attempt to destroy our lives. This is getting close to the real problem with the president’s tax return, but it is not the real problem.

The real problem with the president’s tax return is that the government has possession of that information to begin with.  Think about it.  Last week I wrote about how the government is violating our fourth amendment rights (Badges?  We Don’t Need No Stinkin’ Badges!) by collecting all of our communication data, but on our income tax returns they capture how much money we earn, perhaps what we spend it on, the status of our health (depending upon our medical deductions), our business dealings and investments, and much more, and they have been doing so since 1913 when the 16th amendment was added to our Constitution.

This real problem with President Trump’s tax return is the same as with yours and mine – the government’s access to all sorts of our private information.  Underlying this real problem is that which gives the government this access, namely the 16th amendment.  If those pushing to amend our Constitution were really serious about restoring individual freedom and our liberties, repealing the 16th amendment would be one of their top three priorities (but more on that next week).

-March 17, 2017

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What “-ism” Are We?

Our founders championed the political structure of “republicanism”, i.e. a system of government based upon democratically elected representatives who would govern in behalf of those who elected them and to whom they would be accountable for the manner of their governance.  Since then we have seen the rise of socialism and its variants of communism and fascism throughout the world and more alarmingly, our transitioning from the republicanism upon which we were founded to fascism.

This week Michelle Obama demonstrated another “-ism” towards which our country has been lurching for decades – “nannyism”.   One of the actions advocated by the first lady’s “Let’s Move” campaign was an overhaul of the nutrition labels on food packaging.  These updates that she will be announcing were recently finalized by the Food and Drug Administration (another agency without authority granted to the federal government among the enumerated powers in Article I Section 8 of the Constitution).  It is not the government’s role to tell companies what and how they must label their products – that is the role of consumers in the marketplace who can bring pressure on companies to do so or, if necessary, by the states.

Furthermore, as is usual with governmental regulations, it will only place more burdens on businesses, the cost of which will ultimately be borne by us, the consumers as all such costs are.  According to industry estimates, it will cost companies at least $640 million to make the updates, with a net social cost of at least $1.4 billion.

The question to be asked is “Will this be an improvement or just more government heavy-handedness?”  A number of scientists are going on record that these new guidelines are not based upon sound science.  A dozen scientists have signed a joint letter stating that the new requirements are misleading.   Among those signing this letter are Roger Clemens, a member of the 2010 Dietary Guidelines Advisory Committee, and Eric Decker, head of the Department of Food Science at the University of Massachusetts.  They further state that these regulations are based upon the 2015 Dietary Guidelines, which were formulated by a committee that did not include even one expert on sugars; yet the first lady boasts that the most important change in these regulations is information about sugar content!

So as with most other similar government regulations, they are outside the scope of the role and authority of government as well as being inaccurate, misleading and costly.   But then again, we are too stupid to know better than to consume an entire bag of Oreos, so we need the government to tell us.

-May 27, 2016

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Government Intervention into Labor Relations

The Department of Labor has announced new regulations redefining the classification of workers who will be entitled by law to overtime compensation and the salary levels below which workers must be reclassified.  As with all such interventions by government, there are issues to be taken with this one on many levels.

First is the existence of a Department of Labor which is tasked with regulating labor relations within our economy.  Nowhere in the enumerated powers of the US Constitution is the government granted the power to create such laws and regulations.  We claim to have a “free marketplace”, but it is only lip service; in fact it is, by the definition of Fascism economics, a Fascist marketplace.  As Ayn Rand put it, “…a system in which the government does not nationalize the means of production, but assumes total control over the economy is fascism.”  This is the very description of the direction our government has been heading for decades, and is only picking up steam with such encroachments into business practices such as this.

Second, as with most, if not all, governmental encroachments into labor matters, the opposite end of what is desired is what is achieved.  For example, consider Milton Friedman’s excoriating of the idea of a minimum wage (which is making the headlines nowadays):  “Minimum wage laws are about as clear a case as one can find of a measure of the effects of which are precisely the opposite of those intended by the men of good will who support it.  Many proponents of minimum wage laws…hope, by outlawing wage rates below some specified level, to reduce poverty.  In fact, insofar as minimum wage laws have any effect at all, their effect is clearly to increase poverty…The effect of the minimum wage is therefore to make unemployment higher than it otherwise would be.”

 The consequences of this latest regulation will be no different from what Friedman stated about the effect of the minimum wage.  Are there occupations where individuals are being taken advantage of by companies that this regulation is intended to help?  Most definitely.  However the solution is not the heavy hand of government interference, but rather the power of the marketplace.  When enough people refuse to perform certain kinds of jobs for the wages offered, companies will be forced to raise the salaries and/or benefit packages to attract the quality of employees they seek.  As one who has earned professional certifications in the field of compensation I can attest that market forces are extremely forceful in determining compensation levels.

In Jesus’ parable of the workers in the vineyard, those who worked all day were paid the same wages as those who only worked a small portion of the day.  When they complained because they had worked longer than the others, the owner said “Didn’t you agree to work for a denarius?  Take your pay and go.”  If we accept a position in exchange for a certain amount of compensation, then that is our decision; it is we who made the agreement and if we don’t like it, then either don’t accept the offer or stay in that position while seeking better employment.  I have done this more than once in my career.  It is not the function of government to improve our situation in life; it can only make life more difficult when it goes beyond the purpose for which it was created.

-May 20, 2016

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The Political “Football” of Social Security

There are many things that I’ve come to find hard to believe, but I was squarely confronted with another one this past week when my wife and I attended a two evening seminar on filing for Social Security and Medicare benefits.  I’m not supposed to be old enough to be concerned with this issue yet there I sat!  However, I did learn just how convoluted this entire setup is and how it is not hard to believe how these programs will destroy our country if they are not addressed and dealt with.  Discounting the fact for the moment that such systems are not within the purview of government and outside the its Constitutional authority, we are in too deep to terminate them cold turkey; but we as a country must understand the truth behind them and wean ourselves off of them over the next few generations.

There are several myths about social security that have become ingrained in our social conscious.  First is the idea that it was designed to be a pension plan for retirement; that was the bogus lie used to “sell” the concept to the populace in 1937.  Yet when the Supreme Court stuck the law down as unconstitutional, FDR’s attorneys argued that it was really just a general tax and so it was allowed to stand.

A second myth is that the monies contributed are “held” in a trust fund for us.  There is no social security trust fund as the monies withheld from our paychecks and matched by our employers has gone into the general treasury and been spent.

A result of this first myth is the common attitude among retirees and those like myself who are closing in on that mile marker that those monies are “my money – I’m entitled to it because I paid into this plan.”  Again, that is based upon the belief that Social Security was intended to be a pension plan, which behind the scenes it was not.  Want proof?  When the law went into effect, the average lifespan for the most Americans was 64 years of age; the retirement age to collect Social Security benefits – 65 years of age!  The government was betting that for the most part, it would collect more in taxes than it would have to pay out because most would die before collecting their benefits!  Such is the cynical tyranny of socialist governments.

According to the Center on Budget and Policy Priorities, in 2015 Social Security benefits amounted to 24% of the federal budget.  Medicare, Medicaid and other similar insurance programs added another 25%.  A grab bag of other safety net programs took up yet another 10%.  The problem – these percentages are only growing exponentially at a rapidly increasing rate.  Witness how the projected date by government economists as to when these systems will be “broke” is a target constantly being updated to a date closer and closer to our immediate future.

I hope that my health will permit me to work for many more years so that I will be able to forego my benefits and do a small part of saving the financial future of my children and grandchildren, but who knows what the future may hold?  This one thing I do know will hold – these programs are not sustainable and our politicians must put our future ahead of their political futures by addressing this looming time bomb.  John Taylor said it well in regards to pension and welfare programs which had already started in the early 1800s’:

“That the error of trusting republican governments with this tyrannical power [i.e., creating pension and welfare programs], has probably caused their premature deaths, because they are most likely to push it to excess”  (Construction Construed and Constitutions Vindicated, p. 341, published 1820).

-April 29, 2016

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