You didn’t put that fire out

Nestled deep within President Obama’s infamous “you didn’t build that” speech is a subtle statist sentiment that has escaped the slings and arrows of his detractors. Perhaps because, being statist themselves, they agree with it. He says:

“The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together.  There are some things, just like fighting fires, we don’t do on our own.  I mean, imagine if everybody had their own fire service.  That would be a hard way to organize fighting fires.”

There are two flaws in this statement, the first philosophical, the second practical. The philosophical flaw is the implication that a necessary condition for success is human cooperation (true) that is facilitated by government action (false). This notion rests on the faulty premise that absent government coercion certain types of cooperation are simply not possible. To underscore this sentiment he utilizes what many statists consider to be the “slam dunk” example against privately supplied “public goods”: fire fighting. Alas, he has picked just about the most easily debunked example.  This one is almost too easy to dispense with. Here goes:

To the statist the question is this: We want to protect our homes from fire, but how shall we pay for this service? If your house is burning down you aren’t going to compare prices, therefore market failure is implied. In fact some have made the most ironic of arguments against privatization of such services by citing the recent example of a public fire department that allowed a house to burn due to lack of fee payment. The irony lies within their straw man argument that mischaracterizes the distortions of normal market incentives inherent in a public monopoly as being examples of flaws in putative private market.

To understand how any private market works requires an understanding of incentives. Who has an incentive to prevent property destruction? The owner and the insurer. In a private system insurers would REQUIRE homeowners to purchase fire protection (if not outright inclusion of such costs in the premium). Because the insurer wants to be reasonably confident that these companies are competent, the insurer will have a vested interest in auditing and regulating these fire companies to be sure they know what they’re doing. And the fire companies will welcome such regulation because meeting the insurer’s standards will ensure they are on the insurer’s short list of approved fire mitigation vendors. The mutually beneficial incentive structure of the relationships ensures their continued maintenance. No outside compulsion or force is necessary. The homeowner is protected from fire and loss, the insurer is protected from loss and the fire company receives remuneration for their valuable service to both parties.

What would be the benefits of this private system over the current system? The amount the homeowner pays will be related to risk. Riskier homeowners pay more, less risky ones pay less. Our current system simply assumes expensive homes are somehow inherently more likely to catch fire than inexpensive homes. This is absurd on its face.  In a private system costs will be driven downward as each party tries to minimize risk. Owners suffer fewer losses, insurers pay fewer claims and fire companies decrease their capital overhead and operate more efficiently. In our current monopoly system, fire prevention technology may help the owner and the insurer however it has minimal to no impact on the budget of public fire departments. Because there is no price feedback in the public system, resources may be under or over allocated due to budgets driven by bureaucrats rather than customers.

So, the President is wrong. If we all had our own fire service it would work just fine. It is indeed possible to cooperate without the gentle fist of government.

The Mortgage Interest Myth

There is a persistent myth that the Home Mortgage Interest Deduction (HMID) does the following: (a) promotes home ownership by (b) providing a financial benefit to the middle class taxpayer. That’s the funny thing about myths; they aren’t true. In fact, the truth here is the exact opposite. The HMID has not expanded homeownership in any meaningful way. Between 1960 and 1997 the rate of owner occupied homes has bounced around in the 62-66% range. This is no different than other Western countries that lack a tax favored deduction for mortgage interest. Why? The HMID is a government subsidy and subsidies drive the costs of whatever they are subsidizing upward (healthcare, education, sugar, etc). The government is effectively paying people to engage in approved behavior (home buying). However, these subsidies do not occur in an information vacuum: home sellers are aware of this subsidy and adjust asking prices upward accordingly. There is no net benefit to the buyer (who pays more upfront and is then reimbursed by the government) or to the seller (who gets more when selling but paid more when buying). The only consistent beneficiary is the real estate agent. The National Realtors Association lobbies hard to maintain the HMID. Their protestations to the possibility of losing this part of the tax code make clear current policy benefits them. Their reaction makes sense in light of the fact that by their own admission the HMID drives prices upward (as much as 15% higher) thus effectively keeping all home prices 15% higher than they otherwise would be. A government-sponsored program that maintains artificially high prices is beneficial for what reason again?

The second part of this myth is that the HMID actually benefits the middle class. As of 2009 only 22% of federal returns took advantage of the HMID and of that only 30% were classified as “middle class”. In other words, only a mere 6% of returns constitute middle class usage of this deduction. The average tax savings for people in this group is only $152/year. The primary beneficiaries of the HMID are the “wealthy” – those making over $200k/year. Over 70% of returns above $200k/year claim the HMID. Because the wealthy pay disproportionately more tax they reap a likewise disproportionate advantage from this deduction with an average savings of $1862/year. Technically no taxpayers “benefit” from the HMID. Absent this deduction they would have paid a lower price for their home so their net payment is roughly the same.

Eliminating tax subsidies coupled with a lowering of marginal rates would allow a tax savings to be spread around to ALL taxpayers, not just a narrow few. In fact, Obama’s own “Deficit Commission” aka the bipartisan Bowles-Simpson Deficit Reduction Plan called for eliminating nearly ALL tax exemptions coupled with lowered rates. Those benefiting the most (the wealthy with large exemptions) from current exemptions will effectively pay more tax even with decreased marginal rates because the net benefit to all other taxpayers from lowered rates must come from somewhere if revenue neutrality is maintained.

It’s time to let go of tax myths that act as obstacles to change and move toward a simplified tax system (ideally the Fair Tax but for now we are discussing income tax) with a low (and ideally flat) rate structure and broad base that is built on a relative foundation of fairness (to the extent that the concept of “tax fairness” is not an oxymoron) that does not attempt to manipulate behavior by rewarding a few for behavior that many are unable to participate in.

Who shall steer us then?

This week the Republican Party will be carrying out their well-scripted coronation of Mitt Romney as the party’s presidential nominee. Sadly, those in control of the party are either moles for the Obama campaign or are criminally inept. They have done everything in their power to suppress any possibility of Ron Paul’s name going into the nomination ring at the convention (in case you’re not aware, he never officially dropped out of the race and technically can be nominated were it not for recent RNC shenanigans).

What is the result? The nomination of a candidate who is more like Obama than unlike him. Yes, their rhetoric may be different, but both are in stark agreement on many issues: the war on drugs, the war on terror, bailouts for big banks (TARP), increasing government spending, and government managed socialized healthcare (Obamacare v Romneycare) to name just a few. So while the American people watch the cleverly orchestrated marionette show between Mitt and Barry, little do they realize there is only one manipulator controlling the strings: the elite party bosses of the centralized state (D’s and R’s are two sides of the same coin). In that respect I suppose it should not be surprising that Ron Paul was ignored and shut out of the process at every turn. He represented an opportunity for a meaningful choice between the two major parties. Why would the party push a candidate who is nearly identical to the opposition rather than a candidate that can offer a real alternative in the market place of ideas? If I’m trying to sell a product I don’t do it by copying my competition and then claiming the product is different because mine comes in a red box and theirs comes in a blue box.

Libertarians don’t want to pilot the ship, they want to dock it so people are free to come and go as they please.

Of course one could make the same argument against the Democrats. Their candidate claimed to stand in stark contrast to the policies of Bush yet he furthers Bush-era policies: bank bailouts, DEA raids of state-legal marijuana dispensaries, Guantanamo, and strong support of the PATRIOT Act and the NDAA. The Democrats are becoming war hawks and pawns of the military industrial complex (NDAA support) while the Republicans are becoming socialists (Romneycare, Medicare Part D, No Child Left Behind). Both parties are merging into the single Bureaucratic State Party. This “BS” Party is a monopoly that suppresses all outside dissent and rigs the rules to prevent you, the voter, from even hearing about other options. For example, the Commission on Presidential Debates (a non-profit organization literally controlled by the Democratic and Republican parties) has a “15% rule” that prevents Libertarian Party presidential candidate Gov. Gary Johnson from being on the debate stage with Romney and Obama this fall. The media, rather than acting in its regulatory role as part of the Fourth Estate, is willingly involved in the suppression of dissenting opinions by not even placing Gov. Johnson (or any other party’s candidates) in any polls used as the metric for the magical 15% threshold.

So again I ask, why would both parties be so aligned across so many issues while feigning the appearance of difference in order to give the populace the illusion of choice? Because the goal of both parties is power. Their policy alignments all have one thing in common: expansion or maintenance of government power. The bureaucrats write rules that validate the existence of more bureaucrats. The parties may fight over who is steering the ship, but what they both agree on is that the people must never ever leave the ship. If the people find out they can live on land and take care of themselves, then there won’t be much need for a ship and her crew, will there? Libertarians don’t want to pilot the ship, they want to dock it so people are free to come and go as they please. It’s all about choice. You may not agree with Gov. Gary Johnson, but fairness in the political process is a very basic American principal. There is no legitimate reason to establish rules that suppress ideas that fall outside of the 3×5 card of approved political opinion. Let the voters hear all sides and make up their own minds.

Breaking Bad

I’m old enough that I now find most entertainment to be fairly derivative and predictable. However the TV series “Breaking Bad” is a welcome exception. If you are not familiar with it but enjoy solidly unpredictable drama you owe it to yourself to look into it. The August 12 episode’s ending left the audience in a state of numbed denial [spoiler alert: stop here if you have not seen the episode yet]. The main characters have just clandestinely robbed a train of a key chemical needed to prepare crystal meth when a young boy on a motorbike happens them upon. Without a word one of them pulls out a gun and simply dispatches the boy as blithely as one would a troublesome fly. Why? Because the boy might say something which could lead to their arrest.

After the shock of witnessing the senseless onscreen (albeit fictional) death of a young innocent wore off I came to realize why this scene was so disturbing: this type of violence occurs routinely. The boy’s death is iconic of the reprehensible loss of civilian life in wars. In “traditional” wars civilians usually know where the front line is and can avoid it. Today that is impossible. The wars on “terror” and drugs occur on a global battlefield from which there is no escape. Innocence is no defense: you are just one street address typo away from no-knock raid carried out by machine gun festooned goons.

Apropos to the “preventive” murder depicted, the US repeatedly goes to war upon the same principal of “potential threat neutralization” (Spain-1898, Korea-1950, Vietnam-1965, Iraq-2003). Unsurprisingly the neocons and chicken hawks are now rattling their swords to do the same to other countries (Iran, Syria). We as a nation are engaging in the same onscreen behavior as the thieves in “Breaking Bad”: shooting first for fear of what might happen. This behavior is reprehensible at the individual level and at the national level. The moral validity of actions does not change based on the numbers that simultaneously engage in those actions.

The moral validity of actions does not change based on the numbers that simultaneously engage in those actions.

For parents there is no greater fear than contemplating the untimely death of your child. So consider what kind of a country would inflict on foreign parents our most horrid nightmare. The US has killed both directly (drone strikes) and indirectly (sanctions) hundreds of thousands of children through the cold indifference of our leaders. Former Secretary of State Madeline Albright in a 1996 interview with 60 Minutes stated that “we think the price is worth it” when asked if the confirmed deaths of half a million Iraqi children due to UN sanctions was “worth it” in relation to the goals of those sanctions. The Bush administration fares no better: he (and Congress) restarted the Iraq war (of which even low estimates are 100,000 Iraqi civilian casualties and authorized the use of torture. Likewise Obama has failed to live up to his 2009 Nobel Peace Price. He acts as a remote executioner via the deployment of the “judge, jury, and executioner” drone strikes that have killed countless civilians who are written off as “collateral damage.” Ah, yes, the ends always justify the means. Wake up America. We have “broken bad” and are now the “bad guys.” Would we tolerate Chinese drone strikes of Americans because China deemed them to be a potential “threat” ?

In terms of this country’s meddling, interventionist, blow-back prone foreign policy it doesn’t matter whether Obama or Romney wins; they will both continue our current wars and will have no qualms about starting new ones. If you are tired of the endless wars (drug and terror) and have no more desire for the blood of innocents to be on your hands by way of voting for the “lesser of two evils” (“hmmm… who should I vote for, Hitler or Stalin…”) then consider the alternative that the media is so afraid you might hear about they won’t even include him in national polls: Libertarian Party candidate for president Gary Johnson. 

Who counts the votes?

“Voting is every citizen’s constitutional right.” The operative word in this uncontroversial statement is “citizen.” In order to validate one’s right to vote one must verify that one is an eligible* citizen (*over 18 and not a felon). To claim verification is an undue barrier to this right would be to likewise claim that a member of a health club should not have to substantiate that they are in fact, you know, members of such club. If you walk into a club and try to use the facilities would you not expect to be challenged with a request to prove that you are entitled to use such facilities? Then why is the idea of demanding that voters demonstrate their eligibility to vote seen as an outrageous request? The typical response is to trot out some sob story about how some poor person can’t afford the bus fair across town to pick up their free ID. Please, there is always some pathetic excuse that betrays the complainer to be someone that can’t be bothered to expend even the slightest effort in securing this supposedly sacrosanct right.

The next complaint is that voter ID laws are a solution in search of a problem, citing various studies that show extremely limited cases of fraud. Absence of evidence is not evidence of absence. Uncovering voter fraud is like finding a cockroach… for every one you see there are a million more you don’t see. In person voter fraud by its very nature is all but impossible to determine objectively after the fact. It would be like determining the crime rate in a city by asking people if they have broken the law. Unsurprisingly crime rates would be much lower if measured that way. Voter ID is a simple precaution to prevent possible fraud. Car theft is pretty rare, but I’ll bet you still lock your car in public? Why? Because it is a trivial preventive step in the same way voter ID is a trivial preventative.

Could the process be easier and more streamlined? Yes, of course. For example, why do we register to vote in one process and then provide an unrelated ID to vote? We should be able to present the voter registration card (a card that every voter currently gets when they register) as proof of eligibility. Problem solved.

Unfortunately voter fraud is all too common in American elections. Jimmy Carter was the victim of such a severe case of fraud in 1962 (that by some miracle of persistence he was able to prove and eventually had the results reversed in his favor) that it is believed this is the primary reason his Carter Center now takes a keen interest in worldwide election monitoring. If someone wants to steal an election it is much easier to manipulate the vote count rather than the vote itself. That doesn’t mean we should leave the door open and make it easy for in person fraud to occur, but it does inform us as to where we can most effectively allocate resources to prevent fraud. The weak link in the chain is the human link. Sure the vote is 40 to 60, but if that information is relayed by me calling Bob on the phone or sending him an email, then I can tell him any number I want. Don’t think it goes on today? Think again.  I personally witnessed this type of fraud (vote total relay) myself this past spring (a recount was done which negated the attempted fraud). To paraphrase Joseph Stalin, “It’s not who votes that counts, it’s who counts the votes.”

Hey man, you owe me!

President Obama’s now infamous “You didn’t build that” speech offered up two worldviews that betray his social-collectivist tendencies. The President engaged in a non-sequitur fallacy in his effort to establish the validity of two falsehoods by invoking a truism that is best embodied in the quote of Isaac Newton, “If I have seen further, it is by standing on the shoulders of giants.” That is to say, we owe our entire standard of living to the countless billions that came before us. Each new innovation relies on the tools and knowledge of prior generations. No one builds anything in a vacuum. The President falsely presumes that societal advancement is necessarily impossible without government involvement (e.g. building roads and schools). This presumption rests on the notion that absent government it would simply never occur to the simpletons in society to build a road, a bridge, a school, or to pursue research. We are but helpless babes that require the gentle guidance of our wise overlords.

Upon the (false) precept that government must play an integral role in society he now presumes this establishes a basis to conclude that society (the people) are morally obligated to pay government whenever, however and in whatever arbitrary amount deemed appropriate by government. More abstractly he is saying that because party A did something for party B then it is permissible for party A to unilaterally impose an open ended arbitrary obligation onto party B in perpetuity. This is little different than a drug dealer who showers gifts on a kid for a few years and then expects that kid to return the favors by doing anything that is asked: “Hey man, you owe me!”

The President’s fatal conceit is in believing that because government plays a tangential role in producing some societal goods it must then follow that government has the right to erect a barrier to the collective goods of society that may only be breached by accepting the necessity of an arbitrary debt obligation (taxes) to that gatekeeper (government). We do not owe any particular group or individual in society anything as a consequence of something they did or are doing. If that were so then perhaps we should pay taxes to GE as well for all the things they have produced that benefit society.

The only barrier to society’s goods is a natural one: our ability to produce goods or services that society values. If we desire to take something out of society’s pot of goods, we must first deposit something equivalent to the value that we wish to withdraw. Money is merely a claim ticket to the value put in the pot; it gives us the right to withdraw that value later (which is why counterfeiters and thieves are reviled, they withdraw without putting anything in). Conspicuous consumption must be preceded by conspicuous production. Taxes represent confiscation of our withdrawal rights that are diverted to government favored industries or classes of individuals. Government puts nothing in the pot; it simply forces us to pay for things we don’t want or to overpay for things we might want. Government’s limited role in society cannot justify arbitrary taxation with specious appeals to “fair share” (an objective definition for which you will have as much success in extracting from a progressive as you will in nailing Jello to a wall.)

Government’s Olympic Journey

For an Olympics host city the games are akin to a credit card financed trip to Vegas: lots of wagering on someone else’s dime and hoping for the best. The poster child for poorly executed games was Montreal, 1976. Those games were 800% over-budget – residents are STILL paying off the bonds. On average most cities do a poor job (an average of 170% over budget for the past 50 years). However being over-budget doesn’t necessarily mean the effort was for naught. Atlanta was 147% over budget (1) but was actually one of the success stories (spending a “mere” $2 billion compared to the nearly $15 billion spent on the current London Olympics). In fact most of the games since 1984 have been financial successes. What was special about 1984? The games were held in that good ol’ bastion of capitalism, the United States (Los Angeles). After the financial debacle of Montreal, Californians were wise enough to reject tax increases to cover the cost of the games. This forced the US Olympic Committee to turn to the private sector. The 1984 games were almost entirely privately funded and made frugal use of existing venues. They were the first games to be highly marketed and although criticized at the time for the “unseemliness” of such a sacred event being commercialized, the games turned a profit and that commercialization model has been used ever since.

Events like the Olympics are putatively part of the assumed economic development mandate that some believe is a role government should play. Although I dispute the need for government to play such a role (insomuch as they can play a role by simply getting out of the way) I do agree that the Olympics are about one thing: money. I do not say this as a cynic, but as an observer of human interactions. Money is simply the physical embodiment of humans producing things that other humans want. These people want to consume (watch) sporting events and those people want to produce (participate in) sporting events. Thus the act of facilitating both parties coming together has value. There is no more of a reason for governments to be involved in the Olympics than there is for it to run oil production or mining operations. It’s not that in theory government couldn’t do a good job on its own and actually make money, it’s simply that this has never happened, so why do we keep hoping “this time will be different.” Only the privately “outsourced” games have been successful (as happened in Atlanta and Los Angeles). Which begs the question: if the partial privatization has led to success, why not make the games a wholly private affair? The IOC (International Olympic Committee) could simply rent existing venues from private owners. The IOC would invest profits from the games into programs that foster youth and amateur athletics worldwide thus ensuring a steady supply of future Olympians. Private business would build new venues only where it was profitable. If there were no profits then the private investors would lose their money, not the taxpayer. Businesses that would be positively impacted would come together to form a consortium that would fund infrastructure improvements thereby unburdening the taxpayer from such expenses. In short, those that stand to gain economically from Olympic games should be the ones to (voluntarily) foot the bill. Government has started on the right path by privatizing part of the games, now it needs to complete the journey and stop socializing the costs (taxes) in order to benefit the few (private investors).

Needs and Wants

The TSPLOST frenzy has moved into high gear as we approach the July 31 election. The “pro” side makes some compelling arguments. Compelling that is until you actually think about them.

Needs and wants: It is argued that all projects are beneficial. Ok, I’ll bite. Every project is beneficial. But, just because some proposal IS beneficial in some tangential way, it does not then logically follow that it MUST be funded. Finishing out my basement, remodeling the kitchen and buying a new car are all beneficial for me…but does that necessarily mean I MUST do these things? No, I prioritize those things that are most important. The “pro” side seems to mistake wants for needs. Needs are limited, wants are unlimited; therein lies the danger of confusing the two.

Broad, low taxes are easier to hide than narrow, high taxes: We are told we need more revenue because motor fuel tax receipts have fallen over the last few decades (due to increased fuel efficiency). So why is the obvious solution of raising the motor fuel tax not on the table? Because it is politically unfeasible to add 30¢ of tax to a gallon of gas (currently 47¢ total or 29¢ of GA tax). However, it apparently is politically feasible to slip in a 1¢ tax on every dollar of every sale (except for motor fuel and automobiles, of course, the two things that, you know, are actually correlated to road use).

How much should we spend on roads?: Another argument is that we are spending $1 per year on roads and since this is not “working” the only solution is to spend $2 a year. In this “more is better” argument how does one ever determine “ok, this is enough.” Why not $3? $8? By what non-arbitrary method can anyone determine the ideal amount? Some say define it as a % of the economy or of tax revenue. Oh, please. Do you buy food based on what percentage it is of your total income? (“ahh yes, I better be sure I spend 5% of my pay on food this week!”). No, nobody does that. Pulling arbitrary percentages out of thin air does not provide a rational basis for determining the proper cost of anything. Ok, so how can we know the proper amount? The same way other scarce resources are allocated in a market economy: prices. If we had a mostly private road system prices would rationally allocate monetary resources where they are most needed (just as it does for other goods – prices inform us that it makes more sense to build homes out of wood than out of titanium). Heavily used roads would receive more attention (due to higher toll receipts) than lightly travelled roads.

Jobs: This argument is more of the same old Keynesian fallacies about government spending creating jobs. $18 billion in increased taxes merely removes $18 billion worth of some jobs in order to create $18 billion in other jobs. Moving money from my left pocket to my right pocket does not increase my wealth. The Keynesians are quite fond of this resource shuffle that suggests moving checkers around the board increases the number of checkers. For example, they use this argument to claim that new roads foster growth of new businesses (the “if you build it, they will come” argument). Businesses do come, however they are simply diverted from where they would have otherwise gone. Moving stuff is not the same as creating stuff.

A permanent tax to maintain a permanent bubble: For those old enough to remember Carnac the Magnificent  – the answer is: “Politicians plead to prevent a crisis of massive unemployment in heavy construction.” The question: “What will the news headline be in 2022 when the TSPLOST is up for renewal?” This tax is the quintessential government bubble: turn on the tax spigot to fill the tub but once that spigot is turned off the tub quickly drains. Anyone who threatens to turn off that spigot is vilified as anti-<insert locality> and anti-job.

The pro side insists, “We must DO something!” Yes, we must. Perhaps that “something” should be to force those in government to reprioritize expenditures with the money they already get. Maybe we’re “short” on funds due to massive mismanagement. Should we reward those that have already squandered our money with even more money, because this time, this time they promise to get it right?

On July 31, vote NO on TSPLOST.

Cui bono?

I recently saw a pro-TSPLOST bumper sticker on a truck. I thought “that’s odd, why would average Joe Citizen be so impassioned about infrastructure policy that they would feel the need to advertise it on their vehicle.” Then as I passed the truck the reason became all too clear: a bright blue logo signified that this truck was owned by a road construction firm. Yes my friends, that company is a “rent seeker.” Rent seeking is that process that distinguishes the market entrepreneur (one who must compete in the free market for paying customers) from the political entrepreneur (one who gains an advantage over his competitors by lobbying the government to pass laws favorable to his line of work, such as regulations, licensing laws, or outright government purchasing.) The construction company in question sees the potential $18 billion that will be raised and they want their share of that pie.  If you want to evaluate the merits of any newly proposed program, simply ask “cui bono” (to whose benefit). If the answer comes back in the form of concentrated benefits (construction firms and those selling right of way) and diffuse costs (“it’s only a penny!”) spread among the taxpayers, then chances are it is a political boondoggle that will accomplish little at a greatly inflated cost and should be promptly voted down.

The TSPLOST is being sold to the public the same way every new government expenditure is sold to the citizenry: through FUD (fear, uncertainty, doubt). The fear of what will happen if we don’t pass it (roads will crumble, bridges will fall, kittens and babies will be slaughtered!) comes first, then uncertainty surrounding our future (how else can we build and maintain roads?) and ultimately the third leg of doubt is brought to bear (there’s no way anything else can work). The tenuous justifications for “regional” projects are laughably juvenile in their simplicity. The Project Sheets for the Constrained Project list were apparently assembled from the “TSPLOST” template found in Microsoft Word; only the titles and locations have changed. Miraculously all the projects “could assist in having a positive impact on the economic vitality for this region”, “improve access to jobs”, and “improve travel times for drivers.” Sounds grand, however these descriptions were used to describe the two projects for Morgan county: a 1 mile driveway (Stanton Springs parkway) extension and widening of a lightly travelled rural highway (441 south of I-20). Someone please explain to me how widening a road will enhance access to jobs? Is there some impenetrable Great Wall of Georgia that these new wider roads are going to get us around?  The sad part is that for Morgan county the two projects aren’t even fully funded by TSPLOST. The county will come up $24 million short after 10 years (see spreadsheet). Naturally we’ll need to extend the TSPLOST for ANOTHER 10 years when it comes time for renewal in 2022 else we will have to raise property taxes to make up for the shortfall.

Which raises a final point. It has been suggested TSPLOST will save money through reduced property taxes, however that math does not work. It was stated that county officials “hope” to lower taxes by 1 mil. Using the median home value in Morgan county (US Census) of $169,400 we find that would be savings of about $67. Using the median household income in Morgan county (same source) of $46,000 and the fact that people on average spend about 36% of income on sales taxable goods (food will be taxed under TSPLOST), that translates into an increased sales tax burden of about $165 per year or a net increase of $100 on average. Everyone that would like to reach into their pocket at Christmas and hand over $100 to the government, please raise your hand. Yeah, that’s what I thought. Property tax savings is a red herring. For the overwhelming majority of residents there will be a net increase in taxes. Who benefits? The public or the politically well connected?

On July 31, vote NO on TSPLOST.

Will you still pay me, when I’m sixty-four?

The mainstream media likes to occasionally publicize statistics demonstrating an ever-widening income/wealth gap. This is usually either in response to some left-wing talking head (Obama) mentioning it in a speech, or, it is simply a slow news day and nothing whips the masses into a frenzy like giving them the impression they are somehow being cheated out of their “fair share” of the economic pie, “yeah, let’s stick it to those evil rich people!” Yeah, grandma and grandpa are pretty evil, aren’t they? That’s the little tidbit they leave out of these numbers, although it is one that should be obvious: old people have lived longer than the rest of us, therefore they’ve had more to time to accumulate wealth and the work experience that allows them to demand higher wages. Duh. If the relative proportion of the aged in this country were constant the effect of age on relative changes in income distribution would be nil. But, the proportion of the aged is not constant, it is increasing. The “baby boomers”, the largest single age demographic in this country, are getting older. What do we get when we put those two together? We see a growing demographic that is increasingly earning and accruing more and more wealth. And how would we expect an increasing proportion of increasingly wealthy elderly to effect wealth distribution statistics? That’s right…a growing statistical disparity when people are lumped into wealth brackets that ignore age.

I’m not suggesting age is the sole contributor to changes in wealth/income disparities (increased productivity being another important factor) but it is obviously a major influence considering the overall “greying” of America (see US Census site and compare 1990 v 2025). And it is not merely the size of the group. The financial savvy of today’s “elderly” coupled with an increasingly productive economy have led to a poverty rate among those 65 and older one-third of what it was in 1967 (11% down from 33%). This is HALF the rate for those under 35 (22%). Bear in mind Social Security had been paying the elderly benefits since 1937, so it apparently wasn’t all that effective if the poverty rate was still 33% after 30 years of operation. We as a society need to shed the idea that old=poor and that Social Security is the only thing that stands in the way of grandma turning tricks for her next meal.

So what is the point? It is not to pick on the “age challenged”, but rather to point out that social benefits and tax policy based merely on age, race, or gender make no sense. They are inherently discriminatory insofar as such policies assume ALL in some demographic must be poor or disadvantaged in some way. If we must* have a government run social safety net or constituency-pandering tax breaks they should be means tested at the individual level, not group level. In other words, property tax breaks for the elderly: bad, but, property tax breaks based on income, good. Social Security based on age: bad, but Social Security based on need, good (I’ll leave it as an exercise to the reader as to how one should objectively define an inherently subjective concept like “need” – Warning, your head may explode).

We are a nation of individuals, not groups. We owe it to ourselves to evaluate need at the individual level, not the “group” level, else every self-entitled special interest group lobby will bankrupt this country as each group jockeys to live at the expense of every other group.

 

* Just not to leave anyone with the wrong impression here, I do not believe government is the most efficient vehicle by which assistance and charity can be distributed to those that truly need it, therefore I am in no way advocating a government run “safety-net”. I am merely suggesting that since it is politically unlikely that we will as a society unburden ourselves with the ponzi-esque social safety net we have established, the least we can do is force the government to run it more efficiently and effectively. Private charities do a fine job of that now and could do so much more were the government to get out of the way, lower the tax burden on the “wealthy” so they could give even more and allow the efficiencies of the market (good charities survive, bad ones go away) to provide needed help.