Random Nuclear Strikes

Everyone remember those White House petitions, the “We The People” petitions.  Where the promise was:

If a petition meets the signature threshold, it will be reviewed by the Administration and an official response will be issued. And we’ll make sure that the petition is sent to the appropriate policy makers in the Administration.

So I’ve got my first response back from a petition I signed.  Here is the title of the petition:

Edit the Pledge of Allegiance to remove the phrase “Under God”.

I find the idea of a Pledge of Allegiance to be annoying to start with, and I’m agnostic, so the “Under God” part just irks me a bit more.  Here is the reply:

Religion in the Public Square

By Joshua DuBois, Executive Director of the Office of Faith-Based and Neighborhood Partnerships

Thank you for signing the petition “Edit the Pledge of Allegiance to remove the phrase ‘Under God.’” We appreciate your participation in the We the People platform on WhiteHouse.gov.

The separation of church and state outlined in the First Amendment to the United States Constitution is an important founding principle of our nation. Our nation’s Bill of Rights guarantees not only that the government cannot establish an official religion, but also guarantees citizens’ rights to practice the religion of their choosing or no religion at all.

Throughout our history, people of all faiths – as well as secular Americans – have played an important role in public life. And a robust dialogue about the role of religion in public life is an important part of our public discourse.

While the President strongly supports every American’s right to religious freedom and the separation of church and state, that does not mean there’s no role for religion in the public square.

When he was a Senator from Illinois, President Obama gave a keynote address at the Call to Renewal conference where he spoke about the important role religion plays in politics and in public life.

“A sense of proportion should also guide those who police the boundaries between church and state. Not every mention of God in public is a breach to the wall of separation – context matters.” (bold to denote quote within a quote)That’s why President Obama supports the use of the words “under God” in our Pledge of Allegiance and “In God we Trust” on our currency. These phrases represent the important role religion plays in American public life, while we continue to recognize and protect the rights of secular Americans. As the President said in his inaugural address, “We are a nation of Christians and Muslims, Jews and Hindus, and non-believers.” We’re proud of that heritage, and the strength it brings to our great country.

So, basically, piss off.  Not that I expected much else.

It’s all about incentives. A funding program might be created with the best of intentions, but if insufficient imagination is applied to the problem of what perverse incentive it can create, and steps are not taken to safeguard against it… well, there is a reason good intentions pave the way to hell.

Don’t let David see this or we may never see him again.

It’s even the right color.

Questions will very likely be answered here

or Here

But the comments are a riot

I need a tissue.

Despite being very libertarian, and very much of the opinion that giving money to a government that spends money more irresponsibly than a drunken sailor is sending good money after bad, I do recognize that the accumulation of wealth at the top is not a good thing.  One might argue that such an accumulation is a result of the phenomenal talent of a few at making and building wealth.  While there is no “pie”, or other limit on wealth in the long term, wealth alone does not beget wealth, you have to put it to work.  Money sitting in a bank, or in real estate that isn’t doing anything, isn’t really working.  That said, this highlights part of the reason wealth isn’t being put to work:

The risk of the venture is relatively low, but that which exists is of the nature that Harriet through her superior talent and experience could offset more than Ozzie. Indeed, in Harriet’s hands, the opportunity would be better managed and a better product would emerge. Both for their own reasons seek to borrow money in order to acquire the opportunity, Ozzie because he prefers to and Harriet because she has to. Who would the bank finance on the most favorable terms?

The answer is easy.

Ozzie.

Even though Ozzie does not actually want to deploy his own wealth, he can pledge a small slice of it as collateral. Even though in Ozzie’s hands the opportunity is at greater innate risk than it would be in Harriet’s hands, the bank can eliminate that risk for itself entirely by securing it with other collateral from Ozzie. Consequently, its position guaranteed, the bank is willing to provide money to Ozzie at a low interest rate. Harriet has no collateral to pledge, and though hers is the superior talent, the bank would take on more risk by loaning to her than to Ozzie, for its loan would depend exclusively on the success of the venture, and not on other collateral. The bank will loan to Harriet only at a higher interest rate, if at all. While both propose to borrow the money, Ozzie can outbid the talented Harriet using cheaper money. ( Remember, though, it is not Ozzie’s money any more than it would have been Harriet’s money.)

So at first glance, Harriet is out entirely, unable to match Ozzie’s bid for the opportunity. She does have an option though. If Harriet wants to participate in the opportunity, she can bring Ozzie to the table as a guarantor or even go to work for Ozzie. Ozzie still comes out ahead, though, because the acquisition of the opportunity now depends on Ozzie who is able, in turn, to demand greater reward for it than Harriet. The greater reward for Harriet’s talent therefore accrues to Ozzie.

In the long run, the more talented person should be able to gain wealth once the venture is joined, but the barrier to entry is obvious; Harriet has to convince Ozzie to back her because the bank refuses to accept the risk (risk-adverse banks, or maybe I should say banks that were willingly risk-blind and are now risk-adverse, are a big part of the reason our economy is in the tank).  If only the wealthy are allowed to play the game, for whatever reason, the barrier to entry for the small guy is pretty high.  Also, if there is a very small slice of people controlling the vast majority of wealth, it is just not possible for them to put it to work, a person can only make so many investment decisions in a day.  The founding fathers were right to be concerned about wealth concentrations if for no other reason than such wealth stagnates.

I like to think of the economy as a power plant sitting on an island with a coal mine (the wealth).  A power plant can only burn coal at a set rate (a fixed max & min), and will only produce up to a max amount of power.  It can waste power by not running as efficiently as possible, and a certain amount of waste is a given even during the most efficient operation.  The power plant can stockpile the coal it digs up all it wants, but absent the construction of additional boilers, it can not create more power, and the island can only support so many boilers and coal bins.  At some point, that extra coal needs to find another power plant to burn in.  Luckily, there are as many islands as there are people in the world.  The more the coal gets moved around, the more power is available to do work (like mine more coal).  It’s not the best analogy, but I think it gets the point across.

Now, I do loathe linking Daily Kos, and would prefer to not give them a link back, but this has a salient point or two.  First, regarding tax rates for the wealthy:

Here is a secret about rich people:  we wouldn’t have noticed a 3.5% tax increase.  That is not only because there isn’t a material difference between having $1 million and $965,000, which is obvious, but also because most of us don’t actually know how much money we are going to make in a given year.  Most income at that level is the result of profits rather than salary, whether it comes in the form of bonuses, stock options, partnership distributions, dividends or capital gains.  Profits are unpredictable and they tend to vary wildly.  At my own firm, the general rule of thumb is that if we are within 5% of our budget for the year, everyone is happy and no one complains.  A variation of 3.5% is merely a random blip.

Not an invalid point.  Here is the important bit, though:

…rebranding the wealthy as “job creators.”  While true in a very basic sense, it obscures the fact that jobs are a cost that is voluntarily incurred only as a result of demand.  Hiring has no correlation at all to profits or to income - none.  Let me keep more of my money without increasing customer demand and I will do just that – keep it.  Perhaps I will spend a little more of it, though probably not, but even if I do it won’t help the economy very much.  Here is another secret of the well-to-do:  we don’t really buy much more stuff than everyone else.  It may be more expensive stuff, sure, but I don’t buy cars, or appliances, or furniture, or anything else more frequently than the average consumer.  The things I do spend more money on are services such as travel, entertainment, restaurants and landscaping, none of which generate well-paying middle class jobs.

The whole crux of the argument for not raising taxes on the wealthy is that they won’t be able to create jobs if the government takes all their money, except for the fact that absent demand, they aren’t using their money to create jobs.  They are unwilling to take the risks necessary to rebuild our economy.  Some of that risk-aversion is understandable, what with the cost uncertainty of ObamaCare and the like, but that is beside the point.  If the wealthy want to continue building wealth in the long term, they need to be a lot more willing to risk some of it.

Again, I am unconvinced that merely raising taxes is the best idea.  Without a massive increase, it won’t raise that much money for the government (and I don’t want to give them anymore than they already have; Warren Buffet was right, make a constitutional amendment that anytime the federal government is in the hole by more than 3% GDP, no member of the legislature is eligible for re-election until it’s fixed) and I don’t think it’ll do anything except chase wealth out of the country.

What we need to do is give the wealthy & banks a powerful incentive to take on risk and small business investment.  We don’t want to do that by repeating past mistakes, such as socializing risk.  I don’t think lowering taxes will do it, since they are pretty low as it is (historically).  Maybe we should raise taxes, but also raise the amounts that people can deduct for investment.  I know that if I could lower my tax burden by buying stock, or some other investment vehicle (maybe I can, I’m not sure), I would.  If I had money, and my choice was give my money to the government, give it to charity, or risk/invest it in a job growth venture, I’d at the very least keep it away from the drunken sailor.

Although I’m not sure if every investment vehicle should count.  CDOs and other investment products seem to have created few jobs and a lot of problems (I think Chris is right, too much money chasing too few growth opportunities grew crap like CDOs and shorting).  Of course, Chris’s identifying of the problem also supports my position that a single person can only chase a fixed number of opportunities to grow wealth.  Once that person has more wealth than available growth opportunities, they start to chase other bets, including some that don’t create jobs or real (physical) economic growth.

Aside : caps on charitable giving deductions are just stupid (I think Obama backed off of that one), If I make $5M and I want to give $4M to charity, I should only be taxed on the $1M left.  Some wealthy people might not care if their money goes to government or charity, but I bet enough do to make it worth not having any caps (does giving money to your Alma Mater count as charitable?).  Still, charity doesn’t often create many jobs.

So how do we de-concentrate wealth & get it working again without outright stealing it?

ETA: This made me laugh (and I think it’s a great idea, why should Wall Street catch all the heat)

NSFW. She is clothed the whole time, but barely.

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and flashing breasts, and fighting poses.  That is how you know your protest has come into it’s own.

And Rogue Drum Circles!