The Age of Intolerance

Welcome to a By-Gone Era

Quakers, Protestants and other religiously persecuted Europeans, mainly from Britain, escaped the government-run Anglican church and other intolerance hundreds of years ago.  They came to America.  They pledged to support each other’s beliefs, not by forcing everyone to conform, but by simple tolerance of each other.

Tolerance is not truly “support” but at least it’s not interference.  The various groups having differing religious beliefs agreed not to interfere in the practices and beliefs of other groups.  They agreed to tolerate the others’ views, respecting them.

Tolerance, Acceptance, Support, Adherence

Your beliefs in the After-Life or in a number of other things, like whether milk and meat can be cooked in the same pot, whether people are reincarnated into life after life until they ‘get it right,’ whether a man can marry 4 women, whether driving cars on Sunday is wrong, whether God exists at all, whether the King is the Son of God, and so on and so forth, are in fact your beliefs.  No one else may believe the same thing you do, or maybe a billion other people have a lot of the same beliefs as you.

If someone else disagrees with your beliefs, do you want them to disagree violently with you, wielding the power to behead you?  Probably not.

Would you want to be able to give your case for your beliefs to them and possibly convert them, or would you prefer to be rendered mute and unable to express even a single word about your own beliefs?  Probably outlawing free speech seems too restrictive.  Some people believe in allowing on speech that they consider acceptable.  This love of political correctness chills the first Amendment right that some consider worthy of restrictions.

Support by Edict or Teaching Understanding

Would you want them to be able to force you to come to their synagogue, mosque, temple, church, or to be able to force you to donate your time, money or effort to support their beliefs?  Maybe you should be able to force them to do the same?  Not.  Teaching the fundamental tenets of a religion may be possible for adults when studying comparative philosophies or religions, but care must be exercised with younger students not to cross the line between comparative study and advocating.

Would you want to have all commercial operations cease on your “holy day” – whatever day you choose, because that would be adhering to your beliefs?  Or, would their day be “holy” too and commercial-free?  Maybe forcing you to open your store on your holy day is just as unacceptable as forcing them to open on their holy day.

Which of the words best describes how you want other who don’t believe in your religion (or lack thereof) to behave:

  • Adherence – forced compliance with someone’s beliefs
  • Support – forced payment, participation, attendance or ‘training’
  • Acceptance – forced silence for all
  • Tolerance – live and let live, but freedom to act and speak according to beliefs

Freedom to Believe is Not License

If we agree that Tolerance of others’ beliefs is the correct approach, we need to recognize that some behavior is simply unacceptable, period.  For example, it is never acceptable that someone is allowed to die or be killed as a direct consequence of a religious belief and in most cases as an indirect consequence either.

Equally, it is never acceptable for harm to be a consequence of religious belief.  One may argue about social behavior, but violence or resultant harm is just wrong.  It may be unkind or uncivil to deny someone when they ask for some voluntary action, but is it actually a crime?

A doctor, who has power of life and death, has sworn a duty to do no harm under the Hippocratic Oath, but does this oath obligate the doctor to accept the religion of the patient or embrace their religion?  The sworn duty clearly obligates the doctor to accept and be silent in order to comply with the Oath.  It does not obligate support or adherence of the religious beliefs of the patient, although some believe it does.

Religious Tolerance and the Law

A nurse who is ordered to administer a treatment that the nurse believes is against religious tenets may want to object, but does her duty override her beliefs?  We have to go back to her medical Oath, if any, not to do harm.  Absent a sworn duty to treat, a nurse has the right to obey his religious beliefs and not to render aid, legally, but it is not a license to commit an act adverse to the health of the person he is aware of.

Just because someone believes through their religious teachings that some act that the law has specifically proscribed is desirable, the law does not grant license to the believer to act contrary to the law and commit the proscribed act.  Belief in doing some illegal act is not license to do the illegal act.  If some men believe that their religion grants license to have sexual intercourse with underage children, the law takes precedence over those beliefs.

On the other hand, if someone believes through their religious teachings that some act is proscribed by their religion, the law cannot compel the believer to commit the act unless the life or limb of the person requesting the commission of the act.  If some believe that water must not pass the lips of a believer during identifiable times, this prohibition cannot override medical necessity to drink liquids.

Some claim that the law may compel a doctor, for example, who has sworn a duty to protect life to perform an act that the doctor may believe is proscribed by his religion.  We must look to the Hippocratic Oath for guidance and allow no harm whether through action or inaction.

Instead, with the PC police patrolling we find ourselves in an Age of Intolerance, completely lacking in traditional personal freedom.

Freedom – A Viewpoint

Imagine a scene in rural America not long after the Constitution.  A family lives in a log cabin built by the husband and wife near a stream, far from any townspeople, with farm animals and planted crops for the family to survive off of.  Freedom includes the family’s right to believe what they want about their Creator, if any, but also extends into how they live their lives on a day-to-day basis.

  • If they want to turn grape juice into wine and serve it to the whole family, including children, is that a part of their freedom?
  • Are they free to slaughter animals on their property for food or for any purpose, or must they answer to townspeople about what they do with the flesh or how they kill the animals?
  • Can the family dump its waste into the stream without regard to the neighboring farms or downstream property-owners who might be affected?
  • Can the family dig up and use the minerals and wealth of the land as they see fit or must they obey rules from the townspeople?
  • What will the family’s reaction be to townspeople claiming taxes on the family’s wealth that only the family worked so hard to create and maintain?

The notion that “it takes a village” is not part of the thinking of this family.  They live on their own apart from the “village” and interface only as they see fit with the rest of the world.  No one from town comes to the farm to plow the fields or tend the animals, but when the time comes for the bounty of their hard work to come to market, the villager want their pound of flesh.  Like Shylock they care not if the farmer dies from their taxation.  They want their pound and half of flesh.  The farmer after all has eyes, and will suffer from the townspeople’s visiting their view of the world on him.

What, then, is the meaning of freedom as envisioned over two hundred years ago?

  • Does the village play any part?  Are the views of townspeople important at all?
  • Or, does the farmer do as he wants up to the edge of his property, so long as nothing spills over onto a neighbor?
  • When dealing with his neighbors, does he negotiate as an equal and a neighbor or does he allow the townspeople to slant the table towards those they favor or feel need to be granted an upper hand?
  • Does he obey the townspeople’s rules solely when he’s in the village?
  • Does the farmer take on the role of “the Little Red Hen” and simply enjoy the product of his work, since no one stepped up to help him produce his farm output?
  • Does the farmer allow the townspeople to come onto his property, confiscate his grain and livestock, and re-distribute them to those the townspeople feel are needy?

Clearly to the farmer and his family “Freedom” means freedom from interference of those outsiders who appoint themselves to rule over him, and freedom to live as he sees fit, dealing with his neighbors honestly and only on an equal basis.


Government Should Be More Business-like

You Don’t Need an MBA

So many people are afraid to try to figure out their own spending habits and make a budget.  Young people don’t want to be restricted and never had the practice handling money to understand what “budget” actually means.

Before turning to government budgeting, let’s look at family budgeting.  Whether you’re a single person living in an apartment or a multi-generational family living in a huge house, in order to avoid problems like calls from collection agencies or being evicted for non-payment you have to plan your monthly and annual spending so that at least you don’t run out and maybe you actually save some money.

Income vs. Outgo

Usually people try to figure it out the hard way – run out of cash or max out their credit cards, and then plan what they should have done instead.  Maybe they can dig out at that point, maybe not.

Look at your paystubs.  You earn so much every pay period, but there are deductions before you even see the paycheck.  Mostly they’re taxes, but also things you have some control over, like insurance and retirement contributions.  You might also have some other income from a stock account your parents gave you or you created yourself.

Look at your bills.  Food, housing, car, auto insurance, entertainment, cellphone, electricity – the list is long.  Most of the bills are monthly but some are daily or annually, and some are one-off, like buying a stereo for your living room.

You know that over the course of a year that total paychecks must not exceed total bills, plus you’d like to save a little for your retirement fund, or an emergency fund.  When you’re first starting out in life, that can be really hard to do, even to balance the paychecks with the expenses.  The tiniest emergency expense can deplete your meager savings and send you into a cycle of paying late on every single bill.

You have to have a balanced budget for your family finances

Unless you can literally tighten your belt by not eating as much, it may take a while to recover.  If by some magic you have a credit account, you can load it up and then suffer just a little belt-tightening each month to pay back the borrowing.

Expenses, Assets, etc.

It may make sense to borrow money to buy a car.  The car is a long-term asset and so an installment payment plan can also make sense.  If the car will last 5 years, a loan for 5 years seems acceptable, but a 10-year loan would not be sensible.  Why be paying for some asset that is no longer useful?  Pay it off over its life or earlier, if possible.

What is really irrational is borrowing money to pay for daily expenses.  Getting a car loan may be rational, but paying for last week’s groceries over 18 months is not.  You should reduce your food expense to match your funds available for food, or else you will build up a sizable debt just for eating every day.

Your available funds for spending will shrink as you take on more loans to be repaid.  This is the real meaning of budgeting.  Yes, you can borrow, but eventually you have to pay it back, and you should only borrow to purchase assets that have a useful life – not something perishable or quickly consumed.

Businesses are like Families

how statements are linked

Income-Expense Cash Flow to Net Worth

Businesses (because they’re run by people who budget their own family finances) learn early on in their existence to bring in more money than they spend – the leftover is “margin” not mad money.  Margin must be dedicated to retained earnings, rolled over and set aside to pay for growth, improvements in equipment and paying stockholders and, yes, taxes on business income (note other taxes are expenses before margin).

When a business plans their budget, they must include their expenses of production or for services on a daily or unit basis, plus include the monthly lease, annual business insurance and the like.  This is just like what families do.  They have accumulate money to pay annual or quarterly bills in addition to paying the invoices that come on a monthly basis.

Master of Business Administration (MBA)

In business school MBAs learn to plan Cash Flow, one of the basic 4 accounting statements.  When cash runs out, bills can’t be paid – so running out of cash is a crucial aspect of budgeting.  A Cash Flow statement attempts to predict how much cash will flow in from Sales and how much will be needed to pay all the Expenses, both of these are normally done on a monthly basis looking forward 1 to 3 years.

In MBA school we learn that when cash is negative for one or more months, a loan must be taken out to cover the shortfall.  If an asset is to be acquired and that “caused” the shortfall, then a bond could be sold to cover the gap.  The bond has quarterly payments that cover the interest and eventually the whole face value of the bond (principal) must be paid off.

The quarterly payments are tacked onto the monthly “expenses” to re-calculate Cash Flow.  Maintenance on the asset is also added to the list of expenses for Cash Flow calculation.  A non-cash expense is the depreciation of the asset.  The term of the bond is never longer than the useful life asset purchased.

Basic Accounting Statements

Cash Flow analysis is crucial to balancing a business budget.  In addition to Cash Flow, a business has a Balance Sheet, which tracks Assets, Liabilities and resulting Net Worth.  Liabilities are forward-looking obligations that must be paid.  In the Cash Flow statement we must enter the monthly repayments and payments, but the total borrowing or other amounts the business owes are liabilities on the Balance Sheet, like the face amount of the bonds issued to borrow money.

Borrowing to balance income with outgo

When we subtract the Liabilities from the Assets, we know what the business is worth.  This is what the Balance Sheet shows owners and shareholders.  All of the Margin from Sales less Expenses is shown in the Income Statement.

The Income Statement feeds the cash into the Cash Flow statement where Depreciation increases cash and the result flows back into the Balance Sheet.

A Budget is just the planned figures that managers plug into each of these statements, starting with the Income Statement: Sales & Expenses.  If Cash Flow analysis indicates a shortfall, borrowing can be done, but this increases liabilities and lowers Shareholder Equity.

Government Accounting Statements

Have anyone ever seen a Balance Sheet for the United States Government?  Maybe there’s one, probably not understandable, but certainly not discussed.  What does the US own, what liabilities are there to be paid off in the future, and are the income and outgo flows balanced?

When the government borrows to meet shortfalls, eventually those liabilities need to be paid off.  Future Cash Flow must not leave a deficit (shortfall), else Treasury must issue bonds and sell them for cash in the international market.  They become liabilities on our National Balance Sheet that future generations have to pay off.

Businesses know that temporary shortfalls can be filled with Working Capital loans.  Those are paid back quickly, not over 30 years.  If the government operated on a biennial budget, a working capital loan would be repaid within those 2 years.

Long-term borrowing is done by business for long-term assets.  The repayment terms of borrowing for a piece of equipment is always less than the useful life of the equipment.  No business borrows for 20 years to pay for a luncheon.  There is no such thing as “investing” in consumables or disposables.  Government needs to follow the same repayment rule for loans to acquire durable assets: pay it back within the useful life of the asset.

Accounting & Budgeting

Before a budget can be constructed for the next year, last year’s figures have to be gathered.  Then the changes can be compared.  Changes in spending or revenues have to added to the analysis.

We first need the basic 4 statements for government before we can analyze our current situation.  The Office of Management and Budget (OMB) and the Congressional Budget Office (CBO) do have figures but they are separate.  You can find income tax figures, both estimated and actual, but not in an Income Statement form – they are disjoint to obscure how little income there is versus expenditures.

National Balance Sheet does not exist showing all the land Bureau of Land Management (BLM) manages or General Services Administration (GSA) owns are buildings, equipment, vehicles, furniture and so on.  Never mind the assets the military possesses.

balance the budget amendment

Biennial Budget with Borrowing for Assets

How can we manage a business as huge as the Federal Government when reports that Sarbanes-Oxley requires of all businesses aren’t even available?  Worse, S-Ox requires CEOs to sign off on the veracity their financial reports, but no one swears even the Unemployment figures are accurate, much less the non-existent National Balance Sheet.

Making Big Data Understandable

No one can grasp the magnitude of the Federal government.  It is, after all, $3,900,000 Million.  A family household income of $50k is common – so a Million is 20 families’ households’ budgets.  The Federal budget is 3.9M times 20 families’ budgets.  It is nearly unfathomable.

In broad brush a normal person can understand a statement with up to about 50 or 100 items.  A top-level budget would be better understood if it had items up to about $39B so that only 100 or so items appeared on it.

For management purposes those 100 entries should be further broken down in more detailed statements also consisting of around 100 items, or roughly $390M.  And, in turn, those detailed breakdowns should be broken down further to chunks of $3.9M, making them less than the budget of 100 families’ household budgets.

If the most detailed breakdown had 1,000,000 line-items we would have sufficient detail to track down waste and fraud.  But what about the income side?

Off-Budget vs. Budgeted Revenue

Seizures are a wonderful way to hide waste.  If GSA can seize property and sell it at auction or IRS can seize assets and not have to go back to Congress to get permission to use those seized assets, how can Congress ever hope to control spending?

When TARP funds were repaid by bailed out companies, where did those funds go?  Shouldn’t they have gone to reduce the deficit?  They didn’t.

When the National Park Service or the Passport Agency in Immigration service collects funds, do those get deposited into the Treasury or are those funds held out as if they “belonged” to those respective departments?  How can we manage a budget that doesn’t bring the revenue back to a single point, but allows independent autonomous funding or whatever self-funding the agency wants?  The obvious single accounting point is the US Treasury.  All funds must flow from or to Treasury – nothing hidden.

It is not necessary for all revenue to be a tax or a fee, the US Government can dispose of assets it owns or it can lease those assets out for additional revenue.  A business would consider disposing of assets to fund its business plan.

Continuing Resolutions

It doesn’t make sense to plan one year and then not have a plan for 5 years.  Circumstances continually change, each Congress was elected with an agenda in mind, and their budget should reflect that election.  In limited situations it may take a while to resolve budget conflicts, but not the entire term of the Congress.  If Congress cannot come to terms over the budget, then only a complete shutdown will apply enough pressure to reach a resolution.  timeline for shutdown

At the beginning of each term of Congress, the President needs to propose a budget based on the current situation in the government and economically.  If the President refuses to do his duty to propose, then it devolves to Congress to set a budget without his proposal.  However, if the President continues to fail to propose a budget, then the Executive does not need to pay for his staff, who are not performing.

When sufficient time has passed and Congress must create a budget, with or without Presidential input, they also must do their duty to pass a budget law, establishing revenue and expenditure levels that the Executive must abide by.  Should the Congress itself fail to perform its duty, then like for the Executive first Congressional staff should not be paid.  If Congress continues to fail to resolve its differences then Senators and Representatives should lose their compensation.

The loss of compensation can simply be a delay in payment at first, then become a permanent loss of pay.  Finally, once Congress has done its duty if the President fails to enact the law passed, the President himself (and his expense account) should permanently lose his compensation until a budget law is passed and signed.

If no budget law is ever passed as was the case under Senator Harry Reid, nothing should be paid out of Treasury at all, whatsoever.  If a family could decide how to budget its money, they should just stop spending until they do decide.  The same for government.


State-based Healthcare Insurance by age cost_of_healthcare_graph male femaleHealth Savings accounts that belong to employees to pay for healthcare insurance negotiated with employers is a better solution than one-size-fits-all Federally-forced insurance.

Healthcare costs are low when young, but a person should be able to save up while covered using a HSA they own and control. Insureds should be able to decide what coverage they want at what time in life.  The graphic from illustrates the costs over a lifetime for men and women.

Of course insurance companies exist for profit, but terminating insurance because the company had to pay out is just wrong.  Maybe they could re-rate an insured, but dropping people should be outlawed as a violation of the insurance contract.  Naturally, we have to protect insurers from fraud and hiding the truth by insureds, but refusing to pay a claim is equally wrong.

Promised Reforms

When Obama ran for office we all thought his “reform” of healthcare insurance involved having insurance companies:

  • Pay claims in a timely fashion
  • Pay the whole claim and not pick & choose
  • Maintain coverage (no-drop, no-cancel policies)
  • Provide more choices of coverages, like including optical & dental

We didn’t get that.  We got a massive Federal takeover of healthcare via massive regulation of healthcare insurance and new taxes.  Small businesses with only 50 employees would be required to hire a non-producing insurance administrator (or contract out the work) to comply with new Federal regulations.  This is an absurd burden on small business.  How do you hide a 2% increase in labor costs?

Worse, the “new” insurance includes all sorts of ‘gimmes’ like free mammograms for both sexes, free pregnancy, free birth control and abortions, and so on.  Free or included is irrelevant, since the insurer has to account for the included costs in their premiums, making them higher.  And employees and employers right to choose was curtailed, especially painful was violation of matters of conscience and religion.  The promised savings of $2,500 per family did not appear and have no chance of happening.

What’s Wrong

Fine, refusing to rate someone (accept them into the insurance system) is wrong.  We need to accept all applicants, but it is only fair to charge them according to risk.  This is especially true for matters that insureds have control over, like smoking and obesity or other choice of lifestyle and choice of risky behaviors.

Currently, “standard” versus “preferred” versus “substandard” are insufficient to classify risks of potential insureds.  But this is an industry choice, not a government matter to regulate.  “Poor” risk insureds should still be accepted with their own rating below substandard, but allowing someone to get protection once they have detected a medical condition and be accepted without paying extra is wrong.

Perhaps the contract should require a waiting period, which was common under old regulation, or perhaps the contract should require the insured to remain paying as a customer for a certain period of time in order to recoup its upfront losses.

Universal Life Insurance

A parallel policy called “Whole Life” insurance is instructive.  Actuaries rate individuals and the company collects a monthly premium that will pay a certain amount in event of death of the insured, but the insured can actually add in extra money every month to accumulate at some specified rate.  The rate can be fixed or variable according to some index, like stock market pricing.  But over a period of decades the accumulated extra amount grows Federal tax-free.

If the insured does not die, then the accumulation is payable to the insured.  Some contracts allow the accumulation to be set up as a source of payment for the insurance policy itself.  Sometimes this is called a Modified Endowment Contract.  But the upshot is that the insurance coverage with a specified death benefit is paid each year by the earnings from the accumulation in the savings account.  The insured can also borrow against the policy value before the final payout.

“Whole Healthcare” Insurance

Why don’t insurance companies offer a “Whole Healthcare” insurance policy, similar in structure to the Whole Life policy but geared toward healthcare and with a similar accumulation account?  click to see full sized Whole Healthcare Brief

The accumulation can be Federal tax-free and grow over a lifetime until needed for hospice care, eldercare, or the expected massive costs at end of life.  During other times the accumulation could be used to meet deductible, if the insured so chose, or to pay for non-covered medical expenses.  While these uses would reduce the accumulation and could result in shortfall decades later, they should be allowed tax-free.  Clearly, insureds should be advised to borrow the funds and pay them back and advise the insured of the potential consequences later in life.

Forced Compassion by Government

Almost all of us have compassion for people who cannot afford to pay for healthcare procedures, but government is so bad at doing anything involving money, we simply cannot afford government-run compassion.  No subsidies for some people and not others.  No special credits via income taxes.  Let those of us who choose to help others with their expenses do so on a case-by-case basis, allowing us to judge how much we will give compassionately and who is worthy.

States need to unfetter the insurance industry to find solutions.  Feds need to get out of the way.


End Taxation on “Income”


28th Amendment repeals 16th – Clarifies Not to Tax Incomes

For a century we have seen the unfettered rise in taxes levied on incomes.  Taxes are “always” temporary and applied only to “bad things” or “bad people” or so the voters believe.  This belief continues unabated even when good things and good people wind up paying the tax.

Disbelief is often suspended even when the amount of the tax, the rate of the tax, the things that are taxed all increase, and griping begins only when the time required to pay the tax after filling in the form(s) takes more than 3 minutes total.

Today 1040s and the associated schedules filed with Federal income tax reporting consumes an average of 9 work-hours to complete.  Billions of work-hours are spent each year on gathering information, like 1099s, W-2s, and receipts of all types, to be used in completing the annual exercise, installing software or using web-based commercial services to compute the tax after submitting all the gathered information.  We also spend an enormous amount of time trying to interpret whether a rule applies to us, what a definition means, and what additional information is needed to follow the complicated rules.

Income tax preparation software also sets us back some dough that we could use for our enjoyment.  If we had a clue how to calculate the deductibility of a particular expense, we could have saved almost 20 minutes looking it up on-line or trying to read the IRS publication about it, after we searched through 4 other publications that might have the thing we’re wondering about.  It dawns on all of us at some point, that the whole thing is a giant exercise in waste.

Is all this waste of time and money and effort that could be applied to something useful what Americans really want?

No, it’s not a good use of time and effort, and it’s counter-productive.  Taxing incomes basically punishes success.  A graduated tax rate (often called progressive) is actually worse than just punishment.  Taxpayers will attempt to redefine some types of income as others or delay or advance income events to correspond to taxing periods, not economic milestones.

Federal versus State and Local Determination of Taxation

Do we really want a 1-on-1 relationship with the Federal government?  Federal income tax is an attempt to bypass the states as the primary governance with individuals.  The Founding Fathers envisioned the Federal government budgeting and presenting an invoice to each state, based on its population, for the the state’s share of the national budget.  The state, then would decide how that bill would be paid.

The IRS circumvents this thinking by taking the money directly from individuals and businesses, regardless of whether they conduct affairs across state lines or not.  Besides the enormous waste of time for individuals and expense of accounting/tax preparation software the income tax violates the principle of state’s paying its share and worse, it creates a direct link to individual citizens of each state to monitor them.

Amendment XXVIIITaxes are punishment – so what do we want to punish?  Success, failure, or mere existence?  Maybe we want to punish consumption and reward saving or investment.  After all, if someone saves for the future, there is less risk they’ll be dependent on the rest of us.

If everybody consumes less, we’ll all have a smaller carbon footprint, won’t we?

Non-Renewable, Non-Recyclable, Non-Recycled Consumption

But some consumption is of renewable items or from recycled leftovers of previous consumption.  It doesn’t make sense to tax, for example, electrical energy produced from solar power.  Neither does taxing food, at all, unless the food consumed can never be re-grown or renewed.  Labor is also clearly renewable.  Labor should never be taxed as consumption.

Plastic may be recyclable, but it took millions of years to produce the crude oil that plastic is originally manufactured from.  So, the original act of producing plastic may be a good thing to tax as consumption, because the renewal period is so long.  Wood, on the other hand, is renewable within a couple of decades, except of course for majestic trees like redwoods.

Tax All Consumption or Just a Some Things

But, should we punish the necessaries of life?  Consumption of bottled water might be something we should cut back on, and what about red meat or cigarettes or gasoline?

Who gets to decide what should be taxed more than other things, just because they’re not the essentials?  Maybe all food should be tax-free (as if obesity weren’t already a big problem).  If everything we consume simply cost more, then maybe we’d prioritize spending on consumables better.  Taxing consumption would certainly discourage it.

Bottled Water and Mixed Use Consumption

Taxing bottles of water might best be reined in by making the water tax-free but the bottle itself taxable with the tax determined by whether the whole container is recycled, recyclable, or brand new.  So, some consumption should be tax-free and some taxable, but many activities are both at the same time.

But in line with our general principle that taxes should be used to repair damage caused by forces not accounted for in the free market, we have to ask what consumption taxes should be used for.  What harm could consumption do that would not be accounted for by normal free-market forces?

By consuming a non-recycled or non-recyclable bottle did someone lose a job?  Did the oil the plastic came from simply disappear – never to be recycled or re-used again?  What actual harm was done by consuming oil for production of a plastic bottle?  We might also ask what harm is done by depleting oil to be refined and used in transporting us around in gasoline-powered cars?  Climate change acolytes could claim it will raise the temperature of the Earth.  But really by consuming we’re choosing not to save for later consumption.

If using money is a choice between saving and consuming, maybe the mere act of consuming means a person is not saving.  Savings allow a person to weather rainy financial times, to have something to draw on in case of unemployment, to invest in one’s own future, like education or even durable physical things, or to use when one turns old and gray or sick.  So, these things are normally provided for by our setting aside savings and are legitimate possible uses for savings.  We should promote, not tax, saving.

Saving for retirement clearly should never be taxed.  What about gains in the savings due to appreciation or increase in value?  Since no consumption was involved, NO.  Taxing capital gains is ridiculous.  The loss in value of an investment due to inflation is never considered, distorting the market by taxing government-induced inflation of asset values.

The Golden Rule and Retirement

You buy a bar of gold for $100 and the government debases the money supply, making the gold bar price rise to $1,000.  If you convert it back into the debased money, the IRS wants to tax the “gain” in value of $900.  This is just wrong.

Perhaps instead of 15.3% FICA we should have a 15.3% consumption tax allocated to Social Security-type programs.  Or perhaps unemployment re-training and the like.  What government uses the collected tax for is the key factor.  Taking money from us just because they can is immoral and counter-productive.

Ending the taxation of incomes, no matter how defined, is extremely important.  To that purpose the 28th Amendment is proposed.


Define Congress’ Power of Oversight

Power of Congress to Oversee Government Operations

The purpose of Congressional oversight is to verify that laws passed by Congress are being adhered to, being properly enforced, and whether any improvements to the legislation are needed.  Note that this power is not specifically called out in the Constitution, although it should be.

The Supreme Court has ruled that Congress has this power, because the power to legislate includes the power to verify that legislation is actually implemented as intended by the Executive.  It may be necessary to clarify the extent of this power and how it consummated.

Executive Over-reach

Complaints of Executive over-reach are really about the President or his administration twisting the intent or express provisions of law to do something other than what the law calls for.  Regulations that implement a law are these days written by the Executive branch and then read into the Federal Register to publish them.

Of course, the President has the power to issue orders that clarify laws passed by Congress.  Those Executive orders are not supposed to change the intention of a law, nor thwart the enforcement of law, because the President swears to uphold the laws of the United States and to defend the Constitution.

Amnesty via Executive Order

Recently, President Obama refused to enforce the Federal immigration laws by

  1. Filing lawsuits against state and local police to prevent them from enforcing Federal statutes
  2. Ordering border patrol officials not to detain certain persons arriving at the border without proper authorization to enter the US
  3. Ordering the printing and distribution of forms for some of those unauthorized persons to apply for temporary authorization to stay and to work, despite existing laws prohibiting those actions
  4. In addition, President Obama sent his Justice Department attorneys to threaten state officials with legal action if they refused to issue identification cards or driver licenses to those he “authorized” to stay without visas.

Drafting Federal Regulations for a Federal Law

Amendment XXXII

Part A of 3 parts [see below]

Administration staffers and lawyers also have the task to write up instructions for Federal officials, designing and publishing any needed forms for gathering information or recording data, and written regulations for filling those forms, processing them and storing them.  This regulatory authority is generally written into public laws.  Some states specify the exact content of regulations as part of law, not the agency appointed to enforce the law.

Hearings Administrative and Civil

In addition to regulatory-drafting authority Federal agencies are also often authorized to conduct administrative hearings for those affected by the regulations.  These hearings are intended to supplement individual judgment calls by officials to prevent misapplication of the regulations or the law in processing, basically to assure fairness and justice.

Often these administrative hearings can be appealed into the Federal civil court system (or possibly the criminal side of the courts).  Generally, administrative hearings merely enforce the process as detailed in the regulations without referring to the actual written public law.

The civil court on appeal is then faced with trying to judge the intention of the law but as implemented via the regulations.  The line between the words in the law and the provisions in the regulations often becomes blurred.  The court can side with the more detailed regulatory process as documented, or it can try to read between the lines of actual law to determine what was intended.

The Need to Clarify Oversight into the Constitution

amendment XXXII b

Part B [see Parts A, C]

Oversight is hampered when Congress doesn’t have the power to subpoena witnesses and evidence.  Moreover, once subpoenaed witness need to be cooperative in order to get the testimony needed to evaluate the implementation of laws.

Congressional hearings are not criminal hearings, but a Supreme Court might hold that testimony given in a Congressional hearing could later be used in a criminal proceeding and therefore the 5th Amendment applies.

Constitutionally, an impeachment proceeding is not criminal, since the worst outcome of a successful impeachment hearing is removal from office.  Of course, criminal charges might also be pursued later.  But, if construction of oversight authorization limits outcome to the same as other impeachment proceedings and restricts the use of evidence gathered in Congressional oversight to at most impeachment, we may be able to compel appearance and to compel testimony under penalty of contempt of Congress.

Amendment XXXII

amendment XXXII c

Part C [see Parts A, B]

Provide standing for members of Congress and States to challenge executive actions before the Supreme Court or other such inferior court as Congress may designate.  While Amendment XXXII is somewhat lengthy, it does restore Constitutional checks of power against the Executive by the Legislative branch in

  1. Granting the power to inquire into matters of conduct by the Executive with regard to the proper discharge of duties as prescribed by law or the Constitution
  2. Granting subpoena power by any member of either House over all documents and information held by the Executive or its employees or agents and to enter upon any place over which Congress exercises legislative authority
  3. Provide penalties for failure to appear or failure to produce, and to provide for removal from office and forfeiture of pay and pension, and disqualification to hold office as prescribed in Article I Section 3
  4. Granting the power to review and to approve only by affirmative roll-call vote of at least 2/3 of those present in each House all actions, interpretations, orders and written regulations that implement laws passed by Congress

District of Columbia is NOT a State

33rd Amendment puts DC voters into Maryland for Federal voting purposes

When the District of Columbia was originally formed in 1791 as a 10-mile by 10-mile square, about half of the land was cut out of Maryland and half was cut from Virginia.  The square of land was ceded by the two states and divided by the Potomac river, the original border between Virginia and Maryland.

Decades later (1846) Virginia took its portion back, which gave voting rights back to its residents.  The Federal government maintained control of the remaining part of DC, but until the 23rd Amendment voting rights were somewhat in limbo. Map of District of Columbia

In 1961 the 23rd Amendment gave DC voters 3 electoral college votes for Federal elections.  The population is estimated at 600,000 total, making it the second smallest state (if it were one) in the US, ahead of only Wyoming in population.  If DC population were part of Maryland for Federal elections, the state;s population would climb from 19th place to 17th place, gaining MD 1 Electoral College vote.  Tennessee would lose 1 Representative, and Missouri would remain unchanged.

Because DC was not a state but was part of one before, it should not be allowed to garner more weight in the Electoral College than it would have had as part of its original state.  Another troublesome matter is that the seat of any government tends to do things for itself that other cities or (in this case) states don’t do for themselves and can’t, like massive public works projects, unusually generous contracts, disproportionate generosity of all types.  Repeal the 23rd

DC should not get more than its fair share of Electoral voting power.  The 23rd Amendment needs to be repealed and those voters who would be disenfranchised by the repeal need to be added to the voters in Maryland.


No Taxation without Representation

Voting today is limited to only those voters residing within the jurisdictional boundaries of the election.  Typically, the geographic limitations are imposed by requiring citizens to prove residence in a jurisdiction before allowing them to vote.  Residence implies that those voting have a vested interest in the outcome because they have to live with those results and pay the taxes that are used to fund the governance in the jurisdiction.  If a citizen pays taxes, they should have a right to say how those taxes are spent.  In 1776 we fought for the principle “No Taxation without Representation.” No Taxation without Representation

If a foreigner visits NYC and pays sales tax on items he buys there, should he get a voter card there?  If he is only visiting, he probably does not have more than a passing interest in who’s mayor or whether a sewer project is voted and funded by taxes and fees.

However, if the NJ citizen who commutes in every workday has to pay taxes on his paycheck he earns in NYC, he probably wants to have a say in whether tunnel fees rise or a stadium is paid for by his taxes.  That’s only fair.

The same is true of a citizen who owns a second home, a dwelling he rents to others or property he simply pays real estate taxes on.  He should have the right to say how those taxes are spent.  While we’re sympathetic to the citizen who crosses a state line to buy goods that are cheaper or not available where he lives, we don’t think he should get a voter card for that situation, even though he pays sales tax.

But why does the apartment-dwelling suburban homeowner have to choose between voting in the city or voting in the suburbs?  Why does the real estate investor have no say over how his taxes are spent that are collected on his rental property?  By requiring residence in the property even though real estate taxes are paid the government has disenfranchised the investor and second home owner.

A citizen should have the right to vote in every jurisdiction where he lives and/or pays taxes.

We need a Constitutional Amendment to assure this. amendmentXXXII

We do need to limit this proposal with the notion we also adhere to “One Man, One Vote.”  For example, suppose the suburban family owns a house in CT and a working parent of the family also owns an apartment in the city (NYC).  Should the apartment dweller be able to vote in both NYC and suburban CT?

Yes, but she or he gets only one vote in each distinct jurisdiction.  So, in each city he or she gets a vote and in each state, but not 2 votes for President, since that violates the One-Man One-Vote principle.  The voter must decide which is the principal residence and vote for President in that precinct only.

When a voter is eligible to vote in more than one precinct because of her taxpayer or residence status, then any overlapping jurisdictions between the precincts have to be resolved to a single vote.  If an investor owns 10 houses in 5 cities with 3 school districts, then she’ll get 5 city votes and 3 school board votes.

One does wonder, though, after due consideration, if “No Taxation without Representation” is a sound principle, is the converse also valid.  If you pay no taxes, should you be able to vote to raise taxes on other citizens?

no-representation-wo-taxationThis parapraxis actually captures the concept described above.  But since it generally disenfranchises people if they pay no taxes, we need to word any Constitutional limitation to cover the case where non-taxpayers are prohibited from setting tax rates or taxes for taxpayers.  This might also include officials responsible for setting taxes and tax rates.  If a person isn’t currently paying a particular tax, that person should not be able to increase taxes on those who are paying.


Taxes are Punishment

Necessary Evil or Avoidable Punishment?

A short article on taxes

Supreme Court Justice Learned Hand in his famous Helvering v Gregory ruling said:

“Any one may so arrange his affairs that his taxes shall be as low as possible. He is not bound to choose that pattern which will best pay the Treasury. There is not even a patriotic duty to increase one’s taxes.”

In fact, many courts have tried to clarify that taxes are not something unavoidable, meaning we have the right to minimize them, avoiding them altogether if we legally can.

Does that mean that we should feel guilty about doing so, or should feel morally obligated to pay, even when we don’t have to?

Evading isn’t Avoiding Taxes

Here we’re not talking about evading taxes, meaning a justified levy for tax purposes that we simply figure we’re not going to pay because we don’t want to.  We mean searching the rules laid down by the IRS or whoever is making the laws, regulations and rules to implement them simply to find a way to minimize what we legitimately obligated to pay.  We also don’t mean taking illegal steps to evade paying taxes.

Changing your name to evade taxes obviously is wrong.  You incurred the liability – just do what’s right and pay.

However, we’ve come to look at what other people do and ask why not apply the same rules to ourselves.  My wallet contains my money, and I should be able to preserve it for what I want to spend it on or just save it to spend later.  Right?  That’s what freedom is about.  Using your assets in the way you want (so long as nobody else has their equal right to do the same thing impinged upon by your so doing) is freedom.

Where do taxes come from, then?  Why do we owe them?  To whom are they actually owed?  How do we collect them?  How do we decide how much they are?  Some say they’re punishment.  In some ways they are.

Taxes for Streets and Highways

For example, if the average vehicle weighs 6,000 lbs and causes a certain amount of wear and tear on our roadways, then we can figure the cost per vehicle or per mile per vehicle to maintain the roadway(s).

But when some truck is allowed to share the road with the 6,000-lb cars and it weighs 80,000 lbs fully loaded, we can expect that the truck causes more wear and tear per vehicle-mile than the passenger cars.  Yes, engineers studied this issue decades ago and revealed a few engineering facts to the public and to political decision-makers those facts were egregiously ignored.

For easy math, let’s say the truck is 10x heavier than the car.  The engineers computed that the wear and tear was actually several thousand times greater.  For you engineers out there, the math is related to strength of materials and does vary over temperature.  Clearly, whether the truck is loaded, partially loaded or an empty tare also affects the answer.  But, if the 9,000x greater damage caused by trucks is to be taken into account, shouldn’t the truck (when loaded) pay more to maintain the roadway than the passenger car?

The roadway may know the difference but only the government (the owner of the road) can assess the cost on the truck.  We call this process of levying costs imposing taxes.  Wait, you say.  Don’t trucks get worse fuel mileage than cars, and in effect, don’t they pay more per mile than cars do?  Well, 9,000x is a heck of lot more damage than 5 mpg versus 20 mpg.  So, they’re buying 4x the fuel (laden with tax), but they’re burdening the road with 200x that in damage.

How do we recoup that cost?  Taxes.

Of course, we could simply ignore the cost burden.  Railroad companies spent mega-millions to improve their roadbeds, but unlike train trackbeds, the roadbeds (and surface) for highways and streets are not paid for by the company that owns them, because the company is the government.  We own and pay for the roads.

We pay for their construction and for their maintenance through taxes.  That system of tax collection and usage should be fair, easy to understand, and straight-forward to fund.

Fair doesn’t mean exactly equal, although some people believe things can’t be fair unless they’re equal.  But, ask yourself how you would react to the following scenario.

Your HOA has a clubhouse that can be “rented” by the members (or others).  The fee is fixed for any usage: no matter which day, what time, how large a group, or what happens to the facility.  So, a small group comes almost a year in advance and reserves the clubhouse for New Year’s Eve to have a party.  They carry on until the wee small hours of January 1 and leave an untidy mess inside.

Another larger group uses the clubhouse Wednesday afternoons to play bridge at their own card tables for a couple of hours and leaves the room immaculate.  Should both groups pay exactly the same thing?  Fairness comes into play, doesn’t it?

Some would argue that the large group should pay more because of the size of the group.  Some would say the messy should be assessed a cleanup fee.  Some would say the holiday rate should be higher than the non-weekend usage.  And so on.  The thinking here is somewhat obscured, but the large group does cause more wear and tear, the shorter time of use should be reflected in the wear and tear, and the demand for holiday usage costs other people the opportunity to use the facility equally.  A profit-seeking firm would not pass up the opportunity to charge more for the holiday time with its higher demand.

We can’t capture all the relationships easily, but we can see the cleanup is a burden that the bridge group shouldn’t have to bear, can’t we?  We can also see that the general members should not have to bear the cleanup cost either.  If the bridge people do no harm, but the party people place a cost burden on the facility owned in common by the neighborhood, then clearly the fee for the party-goers is going to be much higher than the bridge-players.  Goren would be pleased to hear that.

Moreover, demand on scarce items needs to be accounted for.  If 20 families want to use the facility on New Year’s Eve, shouldn’t we let the one offering the most money pay, and then the whole neighborhood benefits by having their portion of the shared cost of clubhouse ownership reduced from the large payment of the highest net bid to use the facility.  “Net” here means accounting for the damage and cleanup, etc.  The other 19 families will have to look elsewhere to hold their party, but presumably they picked the clubhouse for its closeness and low price.  So, another place will be priced to account for its closeness on better terms, or else those families would have bid more for the clubhouse.  Trying to give “everyone” the “equal opportunity” to rent the clubhouse will result in lower revenue and thus higher cost to everybody but the member who wins the cheap rental.

Some would say that it’s not fair that the clubhouse be rented at the highest net revenue to the HOA.  They would want the clubhouse available for free and then a lottery to decide who gets it.  This isn’t the capitalist way, but it can be an acceptable way to do it.  If you were one of the families, would you not be able to decide how much the party venue is worth to you?  Would you be equally happy if a bunch of frat guys got the place and your family mini-reunion were displaced, simply because you lost the lottery?  (You might even feel that someone cheated.)

Suppose your HOA had a Sales Manager reporting to the board.  His job would be to maximum revenue for the association within the rules established for the clubhouse.  He might allow free usage Tueday through Thursday for groups less than 10 for daytime use, and set a $20 price for non-holiday weekends.  Maybe he would set a $50 fee until the day before the proposed use and then lower it to $25.  His job is to bring in revenue so that your HOA fees go down.  You want him to fill the clubhouse regularly and bring in paying customers, while keeping the cost down.

That’s government’s job, too.  Bring in voluntary revenue to keep the cost down for the rest of us.  But in a bureaucratic system the price would be fixed and not adjusted to sell the “empty seats” or account for low-cost usage.  An airline, for example, offers seats to flyers at the last minute at much reduced pricing so they get something for the empty seat rather than nothing.  A government body doesn’t think that way.  They are not profit motivated, and therefore not about reducing the taxes they need to collect by generating extra income.  Government simply doesn’t think in a way to minimize the cost burden to non-players.  Non-players are the vast majority of people who just don’t ask for services, don’t laden the government with demands, and basically don’t do anything but pay for everybody else.

Getting back to the loaded tractor-trailer versus the passenger car, the government thinks in terms of axles, not damage to the road from weight, and in terms of fixed pricing, not about selling empty seats.  A tollway, for example, that is well underutilized between 10 AM and 2 PM, could sell passage for reduced prices and bring in additional revenue (maybe).  Alternatively, when tollways are nearly empty at 3 AM, the toll could be half or less to encourage drivers to get off the roadbed built for street traffic and travel the toll-paying highway to save time.

Tolls and Taxes

Both forms of collecting money are in use today.  We tax the gasoline, we extract fixed tolls by axle from vehicles, and we don’t try to understand the market implications of these actions.  Taxes on all vehicles raise their costs.  A per vehicle tax is even worse.  The vehicle could sit at home undriven for months and yet the government wants the owner to share in road costs – that’s wrong.

The truck usage increases road maintenance enormously, especially in colder weather, yet pays only slightly more than the cars to – that’s wrong, too.  In effect, the taxes punish everybody who owns a vehicle or who drives one, but heavier and more effectively utilized vehicles pay a disproportionately lower share of costs.  The punishment is not according to the crime.  Tolls by axle are even more ridiculously imbalanced and favor huge vehicles.  Why should a 4-axle truck pay only double what a 2-axle passenger car pays, in light of the wear and tear caused?

The same principle applies to government levies in general.  Why should the couple in their 30s pay taxes equal to the family of 5 in their 30s?  Why should the 50-year old doctor pay taxes equal to the 25-year old single guy working in a restaurant and living at home?  Why should be low-income single mother pay more or pay less than anyone else?

The principle of punishment for burdening the rest of us should come into play.  Government isn’t about equality of payment, and fairness is in the eye of the beholder.  A female who spends 12 years getting her medical degree and internship to become a well-paid doctor is somehow placed in the same bin with a used car salesman making the same money.  Is that fair?  A day laborer, a doctor, an engineer, a call-center representative – should they all be taxed the same?  The same in what way?  The same percentage?  The exact dollar amount?

Should we look at the total bill that has to be paid and then divide it up evenly for all of them?  Should we punish the doctor for not contributing all those years into the tax coffers?  Should we punish the day laborer for not getting a job that adds more value to society?  Should we punish the engineer for making a good salary?  Should we punish the CSR for participating in an enterprise we all find frustrating?  After all, taxes take away money from people.

Maybe the bills the government pay are just a necessary expense and we need to collect tax any way we can to pay them, regardless of how it affects short- or long-term actions.  If everyone knows that doctors pay more in taxes, then maybe there will be fewer doctors.  Or, if day laborers pay the same tax as CSRs and engineers, then maybe everybody will look for a way to earn more money to pay for a tax that is evenly split for everybody.

Some would argue that the day laborer just doesn’t make enough money to pay the tax and the doctor makes so much more than he needs.  So we have all swallowed the “progressive” tax dogma that people who earn more money should pay a higher percentage of that money they earn than those who earn less.  They even call it “progressive” as if anything else would not cause progress.  And they call a straight percentage tax “regressive” as if it would take us back to some horrible past time where dinosaurs rule.

The Disconnectedness of Taxes

The heart of the problem is budgeting.  When you or I plan on spending for some large ticket item, maybe a new car, maybe a flatscreen TV, maybe a new house, we sit down and figure out how much we can afford.

If the numbers indicate we can’t afford to buy it now, we save up and come back when we can pay more down and carry a smaller balance.  We know our income is connected to what we spend.  We budget.  If we don’t make enough, we plan on how we can get a little more training and get a higher paying job.  We can also use some of our free time to work at a second job.  The additional income may be enough to cover a short term gap so we can get the item we’re craving or just plain need to have.

Government doesn’t think this way.  The spending budget isn’t really a budget – it’s a plan to spend.  Income is an afterthought.  If the government doesn’t bring in enough revenue, then it first borrows the shortfall (which we sometimes do on our credit cards, if it’s temporary) and then because each purchase or program is not tied to a particular revenue stream, they have to increase some tax somewhere to make up the shortfall.  But, usually they wait until it’s a crisis of some sort, and claim that some other “budgeted” item has to be scrapped because not enough taxes were paid in.

Robbin’ the Hood

This is a lot like the sheriff of Nottingham sending his tax guys out again to collect more money when the sheriff overspends.

So, how is a tax collection punishment?

The sheriff of Nottingham doesn’t look at the second tax collection as punishment – it’s just a necessary action.  The fact that the sheriff’s peasants don’t have enough money to buy flour to bake bread or can’t feed their children doesn’t seem like punishment to the sheriff.  That deprivation is a price we all have to pay to belong to a fair and equal society, right?

We all know it’s the fat cats are at fault for the deprivation, right?  Those lords and ladies who live it up in the castle off the food stolen off the peasants’ tables are to blame.  Probably you’re right that the other people in the sheriff’s castle are benefiting from the burden of taxes.  But is it the guy who sells his vegetables in the market who benefits?  No, we know he can’t be a fat cat because he has to pay taxes just like the rest of us, but at least he can afford it.

He will afford it as long as he doesn’t get so discouraged by working his butt off and giving most of it to the sheriff.  At some point, though, he will simply move to Scotland.  Then the number of stalls in the market will be fewer and filled with less and less.  The sheriff will step forward and accuse those market-creators who headed north of not playing fair.  Others will accuse the departed small business owner of being in the 1% and not helping the 99% by sacrificing more.

Who are the 1% – fat cats?

Perhaps then you’ll think that the fat cats are actually the people in the castle – the sheriff’s men. The sheriff, however, collaborates with other powerful people, like neighboring dukes, barons and other nobility.  He also cooperates with powerful church leaders, who are tax-exempt.  So, where are the big, multi-national corporations?  Back in the sheriff’s time, only the Catholic church would qualify for that title.  Imperial governments might be classified the same way if they were large enough.  The Ottomans ran such a huge empire.

Back to present day.  We know the Federal government, and each of the state and local governments don’t consider taxes a punishment nor do they think that anyone is being deprived by paying taxes.  Some figures might help clarify the truth of it.

Medicare collects 2.9% of your paycheck.  In addition, the Social Security Administration also collects 15.3% of your paycheck.  That 18.2% sum is evenly split between you and your employer.  Your employer coughs up the same amount you do.  When you get a salary of $50,000, the government is receiving $4,550 out of your paycheck plus another $4,550 directly from your boss.  Your $50,000 salary actually costs $54,550 when the Federal Medicare and Social Security taxes are included.

You’re the Fat Cat – that the government wants to tax

If you could put away 18.2% of your wages or salary every year consistently for 40 years, you’d be a fat cat yourself.  Imagine there were zero inflation and that your paycheck remained constant forever.  At the end of 40 years you would have donated 728% of your annual earnings.  For a $50,000 earner that’s $364,000 in the bank.

Of course, money in the bank always earns a little interest, maybe 1-3% per year (net of inflation).  No, we’re not talking about stock market growth or real estate bubbles – just normal real returns after accounting for consumer price inflation.  Your $364,000 with the actual net interest would be around $560k.

That’s like having 16 years of salary coming in if you stopped working.  Huh?  $560,651 accumulated after 40 years of putting aside $9,100 a year and earning 2% interest per year with zero inflation means you lived on $40,900 a year and $560/41 leaves about 16.2 years to receive the same income when the interest it will earn while being depleted is counted.

Where is my retirement?

So, if the government “saves” 18.2% of your salary every year (and assuming there is no government-induced inflation), then after 40 years your account balance should have over half a million dollars in it.  If the government is holding $560k for me, where is it?  I earned $50k a year and lived on only $41k of that.  Do I now have an account with money in it or not?  No.  Social Security is not an individual account with a balance in it that you can transfer or roll over into a stock portfolio or purchase a real estate with.  In fact, the aggregate account where everybody’s money is held is actually empty.

The government pretends that it’s holding the money and pays you with money it receives from others paying into their “accounts” in a large Ponzi scheme.  Ponzi convinced people he was getting fantastic returns by paying huge dividends on investments he received by taking money from new investors and giving to the old ones, telling them they had 20% returns in only 30 days.  Of course, the winners told their friends, who told their friends, and they was a huge influx of new investors with large returns also.  But the whole time the original investment money was gone.

Ponzi spent what he didn’t return to old investors as if the money were his own.  His lavish lifestyle came to a crash when investors wanted the actual money, not just a statement saying they were rich.  If the number of withdrawing investors was small, they might feel foolish that they weren’t patient (but of course they did live well on the proceeds).  As the number of withdrawing investors grew, the problem suddenly became apparent: there was no money in the bank with their name on it.

In Social Security the number of withdrawing investors is about half of the new investors.  Decades ago the withdrawing investors were only a few percentage points of the total.  The problem has now come home to roost.  Who will rescue this Ponzi scheme?


Let There Be Light!

Civilization Needs Light

The true measure of the degree of civilization is how much light it casts into outer space.  When viewed from space, the large cities are lit up like a Christmas tree all over the face of the Earth.  That’s how we know civilization exists on Earth. 

Edison’s Incandescent Bulb

Invention = 99% Perspiration + 1% Inspiration

Thomas Edison once commented that being prolific in any field, including inventing things, required a simple formula.  He worked hard at his inventions, slaving for weeks to find solutions to common problems, until the proverbial light bulb came on.  His inspiration and his tenacity can be an inspiration for us all.  We just need to keep trying and when we have an epiphany, voila – the solution. 

Passing Electrons

When electrons pass through a conductor (or more correctly through a partial conductor), heat and light can be generated.  Edison experimented tirelessly with different conductors and with different containment gases.  The filament in his bulb eventually “burned out” due to the heat’s breaking down the structure of the filament material, but his efforts finally brought us to the familiar screw-in socket in use throughout the civilized world. 

AC versus DC

Many of Edison’s numerous inventions relied on delivery of electrons to homes and businesses.  One of the great debates of the day was over transmission of electricity, either by direct current (DC) or by alternating current (AC).  As you will see later, Edison, it turned out, was right after all.  The advantage of alternating current is that it can be sent longer distances over copper wires than direct current can be.  The physics of it is somewhat muddled these days, when extremely high voltages are considered, but up to a few hundred kiloVolts are more efficiently transmitted long distances because of losses to heating in the transmission wire itself. 

Fluorescent Lighting

When certain gases are stimulated with AC, they heat up and glow.  The light given off can be quite bright.  In fact, the consumption of electrical power for a given lumen power is generally more efficiently done using fluorescent technology than incandescent technology.  We won’t get into the physics of the mercury vapor causing the phosphor coating to glow, but you can read about it at if you’re interested. 

The main point about fluorescent technology is that it is more efficient and in recent years has been developed into compact fluorescent bulbs, which have been designed to screw into Edison’s old fixtures.  Efficiencies of 4x to 5x incandescent bulbs are common.  But, material costs are higher for CFL bulbs.  The manufacturing costs are higher, but over the lifetime of a bulb the energy cost to light it can simply swamp the purchase price out. 

Lifetime Cost

If a bulb burns 24×7, then in a year a 10W bulb will consume 87,600 W-hr of energy.  While a 60W bulb will consume 6x that.  At 10 cents/kW-hr, the CFL 10W with the same lumen output as a 60W standard lightbulb will burn only $8.76 versus $52.56.  The $10 CFL cost versus $2 incandescent cost of the two bulbs is swamped out by the energy consumption cost.  (You can read more at GE’s website – yes, that’s Edison’s company.) 

Moreover, the incandescent bulb may be rated to last an average of 3,000 hours, while the CFL may be rated to last 30,000 hours.  So, during that year the incandescent bulb may have to be replaced twice or more, while the compact fluorescent may not need to be replaced for another 2-1/2 years.  Even the purchase cost will favor the longer-lasting CFL bulbs. 

There is an oddity about CFL bulbs for the inquisitive minds.  AC (120 or 240 VAC) is delivered to the base of the bulb so that it can screw into a standard lighting fixture, but inside the bulb the AC is first converted to DC (for you EEs, see the bridge).  This may seem particularly odd since that DC is then re-converted to AC but at a much higher voltage.  To start the gas in the tube fluorescing you may need to apply up to 900 VAC across the tube.  Once it has fired off, the voltage is still AC but can be reduced to a few hundred volts. 
Typical CFL internal schematic

So, CFLs and the 4-foot long fluorescent lights hanging overhead in factories and Wal-Mart aren’t all that different on the inside, except that the ballast common in standard fluorescent lighting is handled by electronic circuitry inside the CFL.  Fluorescents also have a couple of drawbacks.

  • The floor lamp with 2 settings, say, 25W and 100W, doesn’t exist in CFL.  The bulb is either ON or OFF, no dual Wattage bulbs. 
  • Dimming influorescents is more complex (and costly).  Special CFLs can be dimmed, but it’s not like the incandescent dimming. 

Along came Holonyak

What LED to more efficient Lighting?

Once again a GE inventor discovered the ability to light things but this time using semiconductor diodes.  These devices have evolved greatly in the last decade to the point that Light Emitting Diodes (LEDs) are practical. 

You may have seen small flashlights powered by AAA cells that are extremely bright.  The “bulbs” in these flashlights are actually LEDs, sometimes 5 to 10 of them (or more on larger units).  LEDs run off DC, not AC, and the efficiency of these in terms of lumens per Watt of electrical power is simply shocking!

LEDs seem to be averaging 46 lumen/Watt of power, which puts them head to head with CFL.  Advantageously, LEDs operate off DC voltage at much lower supply levels, i.e. around 3 VDC or so.  The actual junction of a semi-conductor diode has only a 0.7 V drop across it. 

Even with a lot of current running through it, the voltage across the diode is still under 1 Volt.  Most LED modules (incorporating the actual diodes surrounded by other circuitry) can operate on less than 43 Volts DC.  They may need several Amperes of operating current to produce lots of lumens, but the more dangerous 120 or 240 VAC is not needed to operate the module. 

 Comparison of Lumens per Watt

The reason both LEDs and CFLs are designed to operate off standard 120/240 VAC is for compatibility.  Standard house current in residences and businesses around the world are all either 120 VAC or 240 VAC (nominally).  We simply don’t have a 5 VDC or 12 VDC bus running around the house that you might find inside a computer.  Neither do we have houses or businesses wired for any other standardized DC voltage. 

LEDs can more easily solve the 2-setting bulb issue and the dimmer issue.  By illuminating only a portion of the array of LEDs the light output can easily be reduced.  For the common Edison base bulb with 2 connections, one for the low Wattage filament and one for the high, the LED equivalent can have some LEDs connected to the low-Wattage contact and the remainder to the high-Wattage contact – simple.  Dimming with LEDs is a little more complex but far easier to solve than for CFLs and with greater precision. 

The Sun Illuminates the Problem

Photovoltaic cells generate DC from being placed in sunlight.  The amount of current is related to the density of light hitting the surface of the PV cell.  So, when the angle of the sun, as it traverses across the sky, changes the angle of light hitting the solar cell, the current produced changes.  The maximum current is when the sun is aligned directly above the plane of the cell. 

Daily the sun changes the angle left-right to the solar cell as it rises in the morning and sets at night, but the angle top-bottom to the solar cell also changes with the seasons.  Ever notice the “figure 8” on a globe?  This is trying to describe the angle in the sky (from north to south) of the sun, month by month.  In summer the sun is more directly overhead than in winter, when it comes in at a lower angle to the ground. 

This phenomenon has to do with the 22.5 degree angle that the Earth rotates on, and it gives us the seasons.  Placing a solar cell panel flat on a roof may seem logical but the daily angle changing and the seasonal angle changing will not result in good performance from the cell. 

If you could change the angle daily and seasonally, the performance would be maximal (except for weather).  But mechanical means to move a panel consume energy and are prone to failure, compared to a fixed bracket on the roof or side of a building. 

The energy is also produced when the sun is out, not necessarily when you need it.  During the day you may not be home.  Nighttime rolls around and you go home to a dark house.  Now you need the energy from the sun to power your lights.  So, in addition to producing energy from PV “solar” cells you need to be able to store the energy for later use. 

Selling Electricity to Your Neighbors

If you did invest in solar cells to produce electricity, you could “co-generate” and send energy in AC form back over the distribution grid to places where it’s needed.  When you left home for work, your workplace probably needs electricity to run the lights there and power the computers and other equipment that business runs on.  And current thinking is that we simply don’t store energy anywhere in the system. 

Who Gives a Dam

Yes, hydro-electric plants (dams) store energy by not releasing the water, but no one runs pumps in reverse to put the water back behind the dam.  Yes, there are some giant capacitor banks in the electric grid to handle inductive loads, but they store only milliseconds of energy.  Your house is still tied to that grid and needs to have the dam releasing water when you go home, or burn some natural gas to power a turbine, or boil some water for our steam-powered nuclear turbines. 

Storage is Simple with DC, not AC

Maybe from this you can tell, but to be explicit: DC can be stored in batteries, while AC must be converted to DC first to store it and then re-converted to AC to use it.  Lots of DC storage devices exist.  Hundreds of millions of 12 VDC batteries have been manufactured for automobiles.  Perhaps some other voltage may be appropriate for storage of locally co-generated electricity, like 48 VDC or 6 VDC, but the storage technology is well known. 

Edison carried on, as previously mentioned, a campaign to have DC used for household appliances and lighting.  The issue was resolved in favor of Tesla, making transmission lines and wiring inside buildings all alternating current (AC).  For modern day electronics this is a poor choice.  After all, Edison may have been correct.  Hindsight is often 20-20.

Conversion from AC to DC (or DC to AC) generates heat from the lost power.  Transformers heat up from internal resistance and current-carrying wires heat up, too.  A 10% loss for high tension lines may seem acceptable, but when you’re dealing with megaWatts of power, the amount of heat generated along the length of the high tension line is enormous. 

  • AC is the mode of choice for magnetic equipment, like motors
  • DC is the mode of choice for modern electronic devices and now lighting, too

We pay for that heating of wires in higher costs for electricity.  If a source of electric power is 20 miles away, versus 20 feet, and the current flow heats up the wire all along the distance, which source makes more sense in the overall picture? 

New Concept Saves a Para-dimes

Saving money and not heating up wires or converter boxes just makes sense for DC-powered devices.  Our new paradigm of local DC power in houses and buildings can save quite a few dimes.  With PV “solar” cells charging local batteries (and possibly other sources like wind) the energy generated when the sun is up or the wind is blowing.  We use it from the storage batteries as needed, but we don’t transport it miles away over lossy lines into a network. 

We still may need a network for backup power and we still prefer AC for motors and other electro-magnetic uses.  Local conversion of stored DC for AC motors is a process less efficient than taking AC and down-converting the voltage for the motor.  DC motors do exist, but they are somewhat noisy (electrically) compared to AC and not quite as efficient, plus their brushes tend to wear out faster than those on AC motors. 

Besides, every paradigm shift need a path to go from A to B, i.e. we need to be able to retrofit all the houses and buildings to operate on DC with new low voltage wiring and the existing stock of lighting fixtures and bulbs need to be accommodated in the changeover process.  The shift needs to be as painless as possible.  Changing from gasoline to propane or from gasoline to electric would be equally challenging. 

First step: add new DC wiring to homes, maybe 12 V, 24 V or 5 V.  This wiring would be overlaid onto the existing structure.  It would have to terminate in a service area where we can add a new battery bank. 

Second step: add solar cells to power the battery bank plus control circuits.  Solar cells are currently a pretty penny (per Watt, that is).  Perhaps in volume they’ll come down a lot to make the payback period less than a year, but right now the investment would take years to recoup. 

Third step: change fixtures and devices to utilize the DC power now installed.  Every time an incandescent bulb burns out we should consider the choice of replacing it with LEDs, maybe even running the fixture off DC instead of AC.  In other words, re-wiring each lighting fixture as its old bulb retires.  Of course, wholesale replacement may make sense economically if the payback is short enough.  Slowly, over time all the lighting fixtures would be replaced and rewired to work on the DC overlaid wiring.  The AC wiring never really goes away until motors can be re-created for our DC world. 

Fouth step: solar cells would probably need more umph.  Adding more on the roof might require reinforcement.  We’ll also need to add capacity to the battery bank, if it wasn’t large enough to begin with.  At some point other energy generating methods would look attractive to add on, such as wind-turbine generation, fuel cells and the like. 

Does the connected grid make sense now?  Should we have a massive power grid with huge generators of electrical power that send current using AC down from nuclear plants or hydro-electric plants for scores of miles to transformers that buzz and heat up where the electricity is converted for local use in a house that re-converts the AC into DC for powering flatscreen TVs and LED lighting?

Or, should we try to co-generate DC locally using solar cells and storing the energy in local batteries and power those electronic devices and LEDs directly with the DC?


Two Wrongs Make a Right!

When do two wrongful acts turn out to be right?

A short review of the Exclusionary Rule

Maybe you’ve heard of the right of a defendant on trial to exclude evidence that was obtained illegally.  Say, for example, that police went to a residence and just decided on their own that something was wrong, without any real cause or complaint from anyone, and they broke the door down, and voila found a small bag of marijuana in the back of the upstairs closet.

The district attorney, citing the evidence discovered by the police, gets the owner of the house brought in for questioning.  During the owner’s interview with police, the owner admits he knew there was a plastic bag containing some crumbled leaves in a disused room, but he denies any wrongdoing.  After several long hours of discussion, the owner signs a statement and tries to leave, but he is simply arrested.

After the weekend, the accused is brought before a judge, and the owner tries to explain what happened.  The judge, however, repeats his question of whether the accused has counsel and promptly appoints a lawyer in the courtroom to be the owner’s attorney.  Just as promptly, the lawyer enters a plea of ‘not guilty’ and asks for release of the owner on his own recognizance.

The state asks that bail be denied because of the seriousness of the crime the owner is accused of, Possession with the Intent to Distribute a Control Substance. The judge binds the defendant over for trial.   The judge sets bail for $25,000 and bangs his gavel.

So far, you may wonder whether the owner is guilty and whether things have proceeded according to rules that are designed to protect us from intrusion by the government and the Constitutional protections against self-incrimination and against unreasonable search and seizure.

Silence is Golden

You Have the Right to Remain Silent, Mr. Miranda!

Eventually, the defendant is able to connect with someone outside of jail and they arrange for a bail bondsman to post bail after paying him $2,500 and pledging other property for the full amount.  Hours later the defendant is released and goes home to find his home ransacked and many things broken, including the front door jamb.  He doesn’t know how much stuff was stolen by passers-by or neighbors, but he realizes that his expensive flat-screen television is gone.

Some weeks later, after interviews with the court-appointed attorney, the defendant re-appears in court and the defense lawyer moves that the case be dismissed on the grounds that the defendant’s rights were violated.  That is, the search was not properly authorized by a judge via a search warrant.  Quickly, the district attorney consults with his colleagues and asks for a brief recess.

Returning from the recess, the district attorney withdraws the charge of intent to distribute and the defendant is set free.

This could have played out in several different ways.  The trial could have proceeded instead of having a review of the admissibility of the evidence, and the defense lawyer could have brought it up later.  Alternatively, the officer testifying as to the conduct of the search that resulted in the find could have been cross-examined by the defense attorney to reveal the lack of proper procedure to obtain a proper search warrant.  Any of these or some other processes could have resulted in the ‘tainted’ evidence being made beyond consideration by the jury.  The jury could have been asked without the bag found as evidence to decide whether a crime was committed.

If, hypothetically, we could have stepped into our time-machine viewport and witnessed for ourselves whether the defendant actually had distributed the outlawed weed and some portion was stashed by him in the closet, we’d know.  If on the one hand we knew that the defendant was guilty, the wrongful act of the police in failing to get a search warrant resulted in the wrong of the defendant being canceled out.  In effect, the two wrongs made a right!

There is a long history that led up to the Exclusionary Rule and it does encompass other acts that the police could have committed to cancel out the evidence obtained by them.  Confessions and testimony can also be excluded.  The question for us is whether, as a matter of public policy, the Exclusionary Rule makes sense.

Are the defendant’s rights so paramount that any failure along the way should nullify evidence against him?  Put yourself in the place of a defendant.  You know that the Constitution guarantees your right under the Fourth Amendment against unreasonable search and seizure.

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and Warrants shall not be issued, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

This seems rather clear.  Your body, your home, your records, and your things all are “reasonably” safe from search and some government official grabbing them and carting them off, period.  Plus, a warrant to perform a search or other act can’t just be signed in blank – it has to describe what or where the police will search and what they will take, and only after someone has sworn to a judge that something was observed that appeared to be wrong and the judge agrees with that assessment.

Note that a reasonable search is not precluded in this portion of the Bill of Rights, but what is reasonable is left for later evolution.  Also, notice that no consequence of violating these rights is described.  Courts did, however, reason that the State somehow benefited from unconstitutional searches.  [Remember, we the people are the state.]  And to punish the State is a good counter to any benefit derived.

Never mind that officials of the State and the State (We, the People) are two distinct entities.  When an official of the State steals from the State’s bank account, he will be charged (unless of course he is a Congressman taking foreign currency) with a crime.  But, when an official violates a person’s rights by conducting a search illegally, he is not acting on his own behalf, but rather on behalf of the State and therefore the State benefits, not the official.  At least this is the reasoning.

A reasonable person would say that we the people derive no benefit from the seizing of evidence in a search without a proper warrant.  A policeman of some official may derive some benefit from the illegal act by increasing his prestige and possibly emolument (paycheck, rank, award, etc.).  However, the court punishes the whole State by releasing a potential criminal, forever tainting the evidence against him with the exclusionary rule, but in fact a policeman who decides to break into a home without proper authorization on improbable cause is not punishable by law (this was changed about a century ago around the time of income tax).  Certainly, he may suffer some administrative action against him, but it seems clear that because the criminal was released and the bad policeman was not charged that:

Two wrongs were committed, but the larger crime goes unpunished.  Effectively, two wrongs make a right!

Now, we can disagree on whether a crime was actually committed and whether any crime is a large one or a small one.  But, we should all agree that the policeman who breaks the law is breaking the law, and the criminal who breaks the law is also breaking the law.  The court’s current thinking nullifies the wrong of the criminal because the policeman wronged him.  But, what about the State?  Why are we the people punished along with the official?

The policeman should have to face charges as if he were an ordinary citizen breaking into someone’s home.  The damages he and his colleagues inflicted on the personal effects in the home and the home itself are vandalism.  If these acts were authorized by a judge in the form of a warrant, the State has a positive defense.  Who does pay for the broken doorframe or missing items?

If not authorized by a judge, then it would be like a neighbor breaking in, and at trial the government agent could defend his actions by saying there were exigent circumstances (some person or thing was in immediate danger, for example).

A neighbor could break in to save a child at risk from a fire, and we would all laud his efforts and dismiss the case against him.  But, if he helped himself to things he found inside, we would probably let him spend some time alone to consider his character flaws, besides making restitution of the taken items or the damage.

A policeman could break in and just leave the place a disheveled mess with impunity.  This is wrong on the face of it.

The accused should never be able to claim immunity because the evidence against him was obtained without a warrant or by some other breach of faith.  The prohibition against self-incrimination in the Fifth Amendment overrides the acts of police or even judges to obtain confessions,

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

but the evidence obtained in an illegal search is another matter.

So, doesn’t it make more sense that the police should be able to search even without a warrant and find evidence of a crime against someone, but not be able to compel someone to testify against himself.  Afterwards, without the warrant the policeman may find himself on trial for his (unconstitutional) acts, too, or for their acts if other policemen participated.

Note that double jeopardy applies only in criminal cases if we read it in the normal fashion, but not in civil cases.  Also note that this restriction appears to be for bench or jury trials only, not in other administrative matters outside of trials, but one could easily argue that, for example, a Congressional hearing where testimony is compelled might result in gathering evidence of a crime.  Could that evidence that was compelled then be used against the person giving it?  Probably not, but probably against others.

Here we’re not talking about a whole police department going on trial but only those who actually participated or gave orders to perform acts not ordered by a warrant signed by a judge.  A policy promulgated from the top down to search cars on routine traffic stops without reasonable cause, probably is a valid reason to charge the whole police department with a crime, although it may engender civil liability, too.

So, in our brave new world, the FBI can without reasonable cause look into financial accounts and if they find evidence of wrong-doing, the account-holder can be legitimately charged, but also the FBI agent (and possibly his boss who ordered it or was reasonably responsible for supervising) can be charged with the illegal search.

Of course, the agent who searches without a warrant may be found guilty (or possibly not guilty) depending on his jury, and if guilty, his punishment could be harsh or very light, depending on the circumstances and the judgment of the jury or judge.  What, after all, is the damage to a victim of illegal search and therefore a just recompense?  Or, perhaps, it is We the People who are harmed by the act and deserve compensation or justice.

But to letting the criminal go for lack of admissible evidence because the search was not properly ordered is just plain wrong, isn’t it?  We, the people (the State), would be happy if they both went to jail – the criminal for his crime and the police agent for his crime.