Author: Administrator

How misgovernment discourages economic growth

Small business sidelined in slow recovery from recession reports the L A Times (via Chicago Tribune). The article clearly states some of the reasons that independent businesses are reluctant to expand.  Of course, one is the uncertainty of the economic outlook, which is largely a result of mismanagement of the economy. Another concern is the increasing regulatory thicket, particularly difficult for those too small to make significant lobbying or campaign funding efforts. Impending increases in tax rates are also a problem.

One thing that isn’t a problem is the availability of loans, altho “”In olden days, many of the start-ups got financing by refinancing their homes. That’s gone.”

Beyond that, here’s a classic land speculator as “businessman”

…a small auto dealer in Los Angeles who made most of his money not by selling cars but by frequently refinancing the mortgage on his lot, which until recently kept rising in value.

The article doesn’t say whether this guy’s business was ever viable, or merely helped support the speculation.

Of course, had the land bubble been minimized by public collection of land rent, financing would have had to come from some other source, but less financing would be needed.

None of the businessfolks interviewed in this article are accountants nor attorneys. Probably their revenue is doing pretty well.

Lawyer tax

Many years ago, I encountered a prosperous attorney who was (and probably still is) pushing for a national sales tax covering all goods and services.  This was before Bush’s tax panel outlined in some detail the exhorbitant rates that would need to be applied if such a tax was intended to replace the federal income tax, but I had a general sense that it wasn’t a workable replacement.  So I asked this lawyer whether he intended that such a tax would cover legal services.  He said that he really hadn’t made up his mind about that.

There are good arguments why legal services oughta be exempt, but the same can be said about all other services and all goods, too.  So I was kind of pleased to note that the Province of Ontario will now apply the 13% “harmonized sales tax” to legal services, while continuing to exempt newspapers and shoe repairs.  (British Columbia will do the opposite.)

America Speaks “National Town Meeting”

Anyone who’s been paying attention is aware that the Federal budget is out of control, unsustainable, and politicians dare not display any consensus on what to do about it.  So several wealthy foundations are funding the “America Speaks” project, which seems to have focused on a fleet of 19 “town meetings” (plus a few dozen less-connected gatherings) held today.  I attended Chicago’s, at Navy Pier.

The concept is at least a little bit promising.  I guess we had about 600 people, assigned to tables of a dozen or so each, and we talked about how the Federal financial situation might be improved.  But first we had a very loud presentation from Philadelphia. (Philadelphia is apparently standing in for Washington and New York, so we won’t suspect that political professionals and Wall Street are involved in the effort.) We were told that, yes, the deficit is a big deal(as described in this pdf). And before talking about the options for reform, we were directed to determine our values.  The “values” are listed below (and on worksheet #3 of this document), along with the reasons that they make no sense at all. Continue reading America Speaks “National Town Meeting”

I P and the Petro-Kleptocracy

Florida journalists Robert Block and Mark K. Matthews see it as a conflict of interest that a former Marathon Oil Director, who still owns over half a million dollars worth of Marathon stock, is working to prevent NASA, which he heads, from developing a method of creating oil from waste, algae, and seawater, while absorbing CO2.  The scandal apparently is that the suspect, Charlie Bolden, sought advice from Marathon before seeking to delay the project.

Buried deep in the text is the note that Marathon has its own “proprietary microbe” to produce ethanol from wood chips. Whereas, one hopes, that a successful NASA project would produce technology available to all.

I suppose Bolden wanted, not to kill the project, but only to slow it until Marathon’s attorneys can figure a way to monopolize the “intellectual” “property” which it produces.  Am I cynical?

btw, I think Tribune Company still owns the Orlando Sentinel, where this article was produced, but there is, so far, no sign of it in on Chicagotribune.com.

Debt trolls

One (of several) good arguments for eliminating, or at least drastically scaling back, patents, is the existence of patent trolls, entities whose sole business is trying to hinder the diffusion of innovation. They buy patents believed to have little value, and try to intimidate actual productive individuals or companies into licensing them.  If you’re, say, a manufacturer, and a troll offers you a license for a few thousand dollars, you might just pay up to avoid the expense and risk of defending yourself.

Now, we have debt trolls.  These are (per second page of this article) “well-funded, aggressive and centralized collection firms, in many cases run by attorneys, that buy up unpaid debt and use the courts to collect.”  The reason it’s news is that, in Minnesota and some other states, taxpayer-funded police, jails, and courts are used to arrest the alleged debtor and collect the debt. It’s not exactly debtor’s prison, but it is going to jail because you’ve failed to pay what you (presumably) owe.

via Naked Capitalism.

Are tariffs even more regressive than I thought?

Tariffs– fees charged by the U S Government for the import of goods– are designed to protect politically-powerful interests who would otherwise be unable to compete as profitably with foreign producers.  So they are regressive in the sense that politically-powerful interests are likely to be relatively wealthy.

But according to this article, tariffs are also regressive in the sense that their direct impact on the poor exceeds that on the wealthy. “Luxury goods have very low tariffs, while cheap clothes, underwear, shoes and household products have much higher rates.”  Several examples are cited; I have no idea whether they’re typical.  Both the Cato Institute and the Democratic Leadership Council are quoted in support, an official of the former calling tariffs “our most regressive tax that the federal government imposes.”

Patent Absurdity

New (to me, anyhow) video from Luca Lucarini about software patents.  I already knew that patents seem to stifle innovation in most fields, diverting resources into trolling and defenses.  I didn’t know that programmers have an incentive not to keep track of patents which they might infringe, because ignorance apparently reduces the penalty for infringement.

California retrieves TIF funds for “education”

Faced with fiscal strains similar to ours, California legislators observed that TIF funds weren’t particularly well-used, and are taking them to fund government schools.  Since Illinois TIFs are authorized by the State it seems that the State could control or limit them, and divert the funds to some more effective use (not necessarily the schools).

Of course, if this reform got serious support, I suppose the TIF authorities would promptly find it necessary to sign long-term contracts with connected developers or consultants, to be paid out of anticipated cash flows, so it might take quite a while to have any effect.  And anything beyond the next election is too far away to see.

How we’re subsidizing the big banksters

This will not be news to most of us, but here’s a nice summary posted on Yahoo’s Tech Ticker.  Banksters borrow from the Federal Reserve Bank at zero (or from savers at practically zero), lend to the U S Treasury at 2% or 3% (by buying U. S. Bonds), and pocket the difference. Courtesy of the taxpayers, and especially those of us who have saved.  (Yeah, I know many folks don’t pay federal income taxes, but isn’t everyone entitled to a share of what the government could fund if it wasn’t paying the banksters?)